Before XX century Continental Europe has had many right-wing movements, though none with the organization
and numbers of corporatism variants. Corporatism is a distinctively different ideology for right wing
forces. Until the twentieth century, continental right-wing parties usually simply rejected democratic
principles and institutions and preferred monarchies (e.g. France, 1814-48) or authoritarian despotism
(e.g. Bonapartism, 1799-1814 and 1851-70).
In corporatist regimes, which are often one party states (although two parry system with "the
first after the post" rule can work as well or even better) this limitation of political representation of folk outside narrow caste of
elite is preserved, and any attempt to challenge the elite is skillfully and forcefully (sometimes
even brutally) suppressed. Brainwashing of population with particular corporatist ideology is
rampant (Mussolini Italy, Hitler Germany). Interests of ordinary people are suppressed
in favor of interests of corporations and are taken into account only if they channeled with
corporatist structures, such as large corporations (which actually are dominant political players),
(emasculated) trade unions, military, and political party or parties. Outside of them there is
no legitimate political representation. Each "corporation" is represented by tiny strata of
corporate elite, which like mosaic form this society elite.
All economic power and political power in most Western societies including the USA and GB belongs to the corporations, whatever this term means. Power
of multinational corporation lead existing postwar democracy regimes to becoming an empty shells. Corporations
became not only powerful lobbyists and owners of most senators and representatives via contributions
to the election complain, but major insider players in the political establishment. Look at Goldman
Sachs as an example of merger of corporation and Washington establishment. Alumni of the corporation
essentially dominates Treasury department. This is something that no economic or political theory
advocates in any way but this is the central reality of the USA today. As well as most other countries.
Confrontation of interests of large multinational and states is presented as "state vs. market"
although
large multinationals are as far from the concept of free market as state. That ideological trick weakens
the position of state. In other words neoliberalism transforms classic corporatism in "neo-corporatism".
Military industrial complex in this sense
is just another cartel of manufactures and related government agencies and politicians. After the WWI
Corporatism became the most popular right-wing economic doctrine in Europe. And now hunder years
later corporatism remain dominant political ideology and social system for the USA and most European
states. Neoliberalism in this sense is just a late stage of corporatism that change nothing in dominance
of large corporation both in economic sphere and, by extension, in political life. It is just financial
oligarchy that comes into forefront instead of traditional manufacturing and connected to it military
industrial complex.
Despite the hysteria whipped up about the evils of the Welfare State it is there because it
was underpinned by the democratic process. One person's vote is priceless in a democracy, the
greatest medium of exchange that we have is through the ballot box, the ultimate leveller.
The corruption of politics and the placement of power in the hands of the profoundly undemocratic
corporate world is leading to an inevitable conclusion and the rise of extreme right wing politics
at the heart of society.
The corruption of politics is the single most danger to freedom of all. The Welfare State is
there because we voted for it and the consensus was established over decades.
The challenge of resisting the attack on the Welfare State, for instance, is that this attack
is a symptom of a much broader malaise in politics, as hinted at in this article. It's the democratic
process that is under duress and it is that which needs addressing. Justice will prevail under
proper circumstances but it is hard to see where the leadership is going to come from to set about
correcting the democratic deficit.
The stakes are that high.
As a political ideology and practice Corporatism initially appeared on historical scene in the form
of Italian fascism and later various Continental fascist regimes (Germany, Spain, Portugal). Later
Latin American regimes of the first half of the twentieth century joins that movement.
In the 60's it got a second breath with the rise to power (via a coup d'�tat ) of military industrial
complex (the moment of violent coup d'�tat, the assassination of JFK in November 1963, more then 50
years ago is widely considered to be a switch of power to "deep state" ). Later it was transformed
in casino capitalism, a neoliberal flavor of corporatism.
The key question here is how to cope with the new brave world in which democracy is dead and ordinary
people
Formally corporatism can be defined as a system of interest representation in which the constituent
units are organized into a limited number of compulsory, non competitive, hierarchically ordered and
functionally differentiated categories (aka corporations), recognized or licensed (if not created) by
the State. They can be iether granted a deliberate representational monopoly within their respective
sphere of interest (labour unions), of grab it due to availability of financial resources
(banks and other financial institutions). In exchange they are required to observe certain
restrictions and controls on their selection of leaders and articulation of demands(Schmitter,
1979). State under corporatism serves as powerful mediator of various corporate interests and enforcer
of the "rules of the game" for corporation. Individual voters do not matter as they can only be represented
by corporations.
Classic corporatism was an extreme-right political movement, ideology, and the corresponding form
of government of a dictatorial type. Defining characteristics of which were:
the militaristic nationalism (in the broad sense),
anti-communism,
xenophobia
chauvinism,
a cult of the leader,
contempt for electoral democracy and liberalism,
a belief in the supremacy of the elites and the social hierarchy,
statism.
The most typical features of the historical corporatism was its strong appeal to a frustrated middle
class, a class suffering from an economic crisis or feelings of political humiliation, and frightened
by the pressure from lower social groups. As such it was by-and-large a militant middle-class
movement, much like Tea party today expresses "the rage of white middle class" which is losing its economic
position in the USA.
Among typical features of such regimes researchers uncovered the following:
Powerful and continuing promotion of nationalism.From the prominent displays of flags
to the ubiquitous lapel pins, the fervor to show patriotic nationalism is carefully stroked up.
Catchy slogans, pride in the military, and demands for unity were common themes in promoting
such attitudes. Sometimes it is coupled with a suspicion of foreigners, or particular ethnic group,
which often borders on xenophobia.
Disdain for the importance of human rights. The regimes views human rights of opponents
as of little value and a hindrance to realizing the objectives of the ruling elite. At the same time,
they can promote human right as false flag operation at home and at foreign policy. Through clever
use of propaganda, the population was brought to accept these human rights abuses of opponents by
marginalizing, even demonizing, nations and groups that are being targeted. When abuse was egregious
as was the case in
Guantanamo Bay
detention camp and
Abu
Ghraib, the tactic was to use secrecy, denial, and disinformation.
Identification of enemies/scapegoats as a unifying cause. The most significant common
thread among these regimes was the use of scapegoating as a means to divert the people's attention
from other problems, to shift blame for failures, and to channel frustration in controlled directions.
Active opponents of these regimes were inevitably labeled as subversive elements, or terrorists and
dealt with accordingly. The methods of choice -- relentless propaganda and disinformation --were
usually effective. In addition thos propaganda, fascist the regimes sometimes incite "spontaneous"
acts ( aka "pogroms") against the target scapegoats, usually communists, socialists, liberals, Jews,
ethnic and racial minorities, traditional national enemies, members of other religions, secularists,
homosexuals, and "terrorists."
The supremacy of the military/avid militarism. Ruling elites always identified closely
with the military and the industrial infrastructure that supported it. A disproportionate share of
national resources was allocated to the military, even when domestic needs were acute. The military
was seen as an expression of nationalism, and was used whenever possible to assert national goals,
intimidate other nations, and increase the power and prestige of the ruling elite.
A controlled mass media. Under some of the regimes, the mass media were under strict direct
control and could be relied upon never to stray from the party line. Other regimes exercised more
subtle power to ensure media orthodoxy. Methods included the control of licensing and access to resources,
economic pressure, appeals to patriotism, and implied threats. The leaders of the mass media were
often politically compatible with the power elite. The result was usually success in keeping the
general public unaware of the regimes excesses.
Obsession with national security. Inevitably, a national security apparatus under direct
control of the ruling elite is the most effective tool for crushing social protest, operating in
secret and beyond any constraints. Its actions were justified under the rubric of protecting 'national
security,' and questioning its activities was portrayed as unpatriotic or even treasonous.
Religion and ruling elite tied together.Most of the regimes attached themselves
to the predominant religion of the country and chose to portray themselves as defenders of religion.
The fact that the ruling elite's behavior was incompatible with the precepts of the religion was
generally swept under the rug. Propaganda is used to keep up the illusion that the ruling elites
are defenders of the faith. A perception was manufactured that opposing the power elite was tantamount
to an attack on religion.
Power of corporations protected, while power of labor is suppressed. Labour unitions are marginalized.
Although the personal life of ordinary citizens is under strict control (police state or
national security state), the ability of large corporations to operate in relative freedom is protected
and even enhanced via so called deregulation. The ruling elite saw corporations in general and large
corporations especially as a way to not only to increased the speed of economic development and military
production, but also as an additional means of social control. Members of the economic elite are
intermixed with the political elite ("revolving door policy") to ensure a continued mutuality of
interests, especially in the repression of 'have-not' citizens. Since organized labor was seen as
the one power center that could challenge the political hegemony of the ruling elite and its corporate
allies, it was inevitably crushed or made powerless. In all these cases, corporatist structures of
labor bargaining are primarily a decorative fa�ade for state repression of independent trade unionism.
The poor form an underclass, viewed with suspicion or outright contempt ("the guilt of the poor").
Under some regimes, being poor was considered akin to a vice. Important investment decisions, although
influenced by the state partly through corporatist structures, remain domain of private corporations.
Suppression of labour which leads to the inherent instability due to loss of purchasing power
and shrinking middle class. Corporatism presuppose the extreme asymmetry of the power of capital
and labor. Which can lead to conflicts. One sign of such an instability is the tendency of members
of trade unions to withdraw their co-operation in wage-restraint policies when members insist that
their leaders represent their demands rather than act as junior partners in managing the modern capitalist
economy. In turn, the elite have shown themselves less and less interested, for their part, in maintaining
such partnerships, and sometimes resort to open suppression, just to teach an example. Organized
labor's power to control wages and working conditions, which has traditionally been grounded in its
ability to limit the supply of workers, has been decimated by the mobility of capital. In a global
market, there will always be workers willing to accept a lower wage as opposed to no wage. So classic
corporatist "partnership" between capital and labor postulate is abandoned along with the Keynesian
welfare state through the last two decades of the 20th century.
Suppression of "non-conformist" intellectuals. Intellectuals and the inherent freedom
of ideas and expression associated with them were anathema to these regimes. Intellectual and academic
freedom were considered subversive to national security Universities are tightly, but indirectly,
controlled; politically unreliable faculty harassed and deprived of funding. Unorthodox ideas or
expressions of dissent are silenced. To these regimes, art and literature should serve the national
interest or they had no right to exist.
Obsession with crime and punishment. Most of these regimes maintained Draconian systems
of criminal justice with huge prison populations, directed at lower classes. The police were often
glorified and had almost unchecked power, leading to rampant abuse. Difference between regular and
political crimes sometimes is fuzzy due to trumped-up criminal charges which sometimes are used against
political opponents of the regime. Fear, and hatred of criminals is promoted among the population
as an excuse for more police power.
Rampant cronyism and corruption. Those in business circles and close to the power elite
often used their position to enrich themselves. This corruption worked both ways; the power elite
would receive financial gifts and property from the economic elite, who in turn would gain the benefit
of government favoritism. Members of the power elite were in a position to obtain vast wealth from
other sources as well: for example, by stealing national resources (That's what Yeltsin's regime
did in Russia). With the national security apparatus under control and the media muzzled, this
corruption was largely unconstrained and not well understood by the general population. See
Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime
Fraudulent elections. Elections in the form of plebiscites or public opinion polls were
usually bogus. When actual elections with candidates were held, they would usually are perverted
by the power elite to get the desired result. Common methods included maintaining control of
the election machinery, intimidating and disenfranchising opposition voters, destroying or disallowing
legal votes, and, as a last resort, turning to a judiciary beholden to the power elite.
Corporatist Regimes of the Early Twentieth Century
System Name
Country
Period
Leader
National Corporatism
Italy
1922-1945
Benito Mussolini
Country, Religion, Monarchy
Spain
1923-1930
Miguel Primo de Rivera
National Socialism
Germany
1933-1945
Adolph Hitler
National Syndicalism
Spain
1936-1973
Francisco Franco
New State
Portugal
1932-1968
Antonio Salazar
New State
Brazil
1933-1945
Getulio Vargas
New Deal
United States
1933-1945
Franklin Roosevelt
Third Hellenic Civilization
Greece
1936-1941
Ioannis Metaxas
Justice Party
Argentina
1943-1955
Juan Peron
You can add to this list all US presidents since Ronald Reagan, as well as Russian presidents Gorbachov,
Yeltsin and Putin.
The key idea of corporatism is that political actors are not individual people, but associations
and first of all corporations (which are officially considered to be "persons" and have rights) as well
as trade unions. And that politically an individual is represented not directly, but only via those
organizations or parties created by those organizations. Conflict between capital and labor is resolved
by bargaining with state intermediation only between "organizational players". The state acts as the
supreme arbiter of labor disputes which decisions are binding to both parties but openly favor interests
of the corporations.
After a setback caused by WWII, corporatism reemerged in 70th the modified form of
neoliberalism in Great Britain, the USA and other countries.
The USA model of neoliberalism has some idiosyncratic features due to the fact that the USA is the most
powerful neoliberal state. It is often called
Casino Capitalism due to its deification
of "free markets" (and by extension stock markets) as the key instrument of achieving fast development
and social harmony (which in reality is a smoke screen for achieving a free reign of transnational corporations).
Like communism formally propels proletarians as the new dominant social class under socialism (while
in reality the dominant class is
nomenklatura), neoliberalism
promotes entrepreneurs and "creative class" (which paradoxically include financial oligarchy, one of
the worst performer in creativity among entrepreneurs, if we discount devising criminal schemes of enrichment).
The extreme manifestation of this ideology is Ayn Rand
and her Objectivism Cult. Again, in reality the key players in neoliberalism regime are transnational
corporations, which, especially financial corporations, acquired enormous political power (see
Quiet coup) and put themselves above the law, much like military in the occupied country.
In an economic sense, neoliberalism, communism (or bolshevism as implemented in the USSR and China)
and fascism are closely related
and can be considered to be just different flavors of the same social system. In all these
systems, corporate power is primary, but level of state control is higher under fascism and is highest
under bolshevism. In both cases state is used as a means to eliminate the conflict between
the owners of capital represented by management and labor represented by unions by suppression of labor
demands.
Using the quote attributed to Benito Mussolini (Benito
Mussolini) : "Fascism should more appropriately be called
Corporatism because it
is a merger of State and corporate power."
The Website PublicEye.org has offered a reward for anyone who can find the original source:
"If you have a source for the quote based on an actual original document that you copy and mail
us, please let us know, and you will receive a free 3-year subscription to the Public Eye magazine"[1]
Despite unknown origin of the quote what it states is pretty accurate. For example, the 1983 copy
of the American Heritage Dictionary's definition of fascism was very similar to the misattributed quote:
"fascism - A system of government that exercises a dictatorship of the extreme right, typically
through the merging of state and business leadership, together with belligerent nationalism."
American Heritage Dictionary, 1983
Also, Franklin D. Roosevelt in an April 29, 1938 message to Congress warned that the growth of private
power could lead to fascism:
"The first truth is that the liberty of a democracy is not safe if the people tolerate the growth
of private power to a point where it becomes stronger than their democratic state itself. That, in
its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling
private power."
Modern, post WWII corporatism is associated with the term National Security State and the term Military-Industrial Complex introduced
by President Dwight D. Eisenhower in his farewell address to the Nation (Eisenhower initially wrote
"military-industrial-congressional complex", the term which is of course more technically correct,
but, of course, politically unacceptable):
In the councils of government, we must guard against the acquisition of unwarranted influence,
whether sought or unsought, by the military-industrial complex. The potential for the disastrous
rise of misplaced power exists and will persist.
... ... ...
The prospect of domination of the nation's scholars by Federal employment, project allocations,
and the power of money is ever present and is gravely to be regarded.
This merger, which now includes financial corporation became what we call a
neoliberalstate, or as Sheldon Volin called it "Inverted Totalitarism". The neoliberal transformation of the society initialed in GB
by Margaret Thatcher and in the USA by President Reagan has distinct features of corporatism including
elitism and creation "above the law" strata (or more correctly governing class) similar to the
USSR "nomenklatura", the merger of state and large corporations via revolving doors mechanism,
deregulation in the interests of large transnational corporation, and gutting workers benefits to
increase profitability .
Another similar terms
related to neoliberal state are casino capitalism and "crony
capitalism". The latter term is connected with the fact that
corruption
of regulators is the intrinsic property of such a social system. Because it is often not clear who
owns whom. For example, whether Goldman Sacks indirectly owns NY Fed, or NY Fed indirectly owns Goldman
Sacks.
The term "crony capitalism" is connected with the fact that
corruption
of regulators is the intrinsic property of such a social system. Because it is often not clear
who owns whom. For example, whether Goldman Sacks indirectly owns NY Fed, or NY Fed indirectly
owns Goldman Sacks.
The second stage of this transformation was the transformation of the USA to the classic
National Security State, which happned
after 9/11 and is related to activities
of President George W Bush and his close advisors (which included Rumsfeld and Cheney).
It's important to note that while 9/11 was the trigger event, the foundation for the national
security state was built shortly after World War II with the National Security Act signed by President
Truman. And first demonstrated its power with the JFK assassination in 1963.
It is public interest to understand the extent to which the National Security State has become a
status quo in many countries. People need to understand what's at stake when such extraordinary surveillance
capabilities are technically available and are affecting practically every aspect of our
lives. Because so much money are at stake this becomes a a self-fulfilling prophecy, which is
impossible to stop, as it continues to justify itself by saying we have to have America secure and we
have to keep people feeling safe. In this situation a pathological incentive develops to react of every
failure as a justification for even more surveillance.
While the corporatist state tend to assume authoritarian forms which are -- like European fascist
regimes -- highly bureaucratized and "statist", variant with pseudo-democratic cosmetics are also
possible. One of such variants is so called Inverted
Totalitarism. The latter replaces directrepression of opposing social forces with indirect,
but no less effective measures based on ostracism. Still there is difference between authoritarian
and totalitarian regimes: Authoritarian regime deprives you the right to speak, while totalitarian regime
goes one step further -- it deprives you the right to remain silent. Anyone who does not express support
for the course adopted by the local elite, is subjected to harassment, if not legal prosecution and
loss of of work.
Modern neoliberal variant of corporatism has complex links with international capital which differentiates
it from classic fascists states with their national supremacy ideologies. That does not exclude
a trend of substituting "racial supremacy" with "cultural supremacy" which is very well demonstrated
in American Exceptionalism
Also repression in the regime of Inverted Totalitarism
is presented in "velvet gloves" and works mainly via the process of silencing and exclusion,
much less via direct physical repression. The focus switched from physical elimination of political
opposition to its isolation and fragmentation. Political exclusion of opposition is sold as a necessary
prerequisite to "order" and "social peace".
One telling sign of corporatism is existence of too big to fail (TBTF) corporations. In a
way
�Too Big To Fail� corporations are an immanent future of
neoliberalism. As neoliberalism presuppose high level of inequality it transforms the stat
in National Security State (which militarizes policy
and introduces total surveillance to protects top one 1% from proles under the pretext of protecting
proles from terrorists).
As a social doctrine corporatism is connected to Catholicism and is an expression of Roman
Catholic social doctrine, and was inspired by two Catholic encyclicals:
Rerum novarum (1891)
Quadragesimo anno (1931).
As such it was prevalent in Catholic countries, but in no way it was limited to them. The key
idea is to create an alternative to socialism, which helps to eliminate social protest, while preserving
private property and private corporations with their owners. Corporatism is not a unified phenomenon
and shows significant variety of implementations. We can talk about
Authoritarian corporatism (classic corporatism of Fascist Italy, Span and Portugal).
Neo-liberalism
Still the fundamental feature of corporate ideology was/is the neo-Christian notion of moral
transformation of the society. To quote
Mihail Manoilesco
"The essential social function of the corporation is to create a new moral environment, favorable
to the idea of collaboration between employers and workers."
In the last half of the 19th century people of the working class in Europe were beginning to show
interest in the ideas of socialism and syndicalism. Some members of the intelligentsia, particularly
the Catholic intelligentsia, decided to formulate an alternative to socialism which would emphasize
social justice without the radical solution of the abolition of private property. The result was called
Corporatism, the attempted merge of corporate power and the state power.
Corporatism has been particularly significant in the countries with strong Catholicism traditions
such as Latin countries of Europe (Portugal, Spain, Italy and France). Germany also has significant
catholic population which was the core of the NSDP. The connection between Catholicism and the Continental
corporatism movements is most obvious in the various Christian Democrat parties (where for �Christian�
we can read �Roman Catholic�). In USA corporatism initially got fertile ground in states with significant
Catholic population like Wisconsin (senator McCartney represented Wisconsin in the US senate). However,
its influence goes much wider.
This idea was maintained throughout their time in power, with state control used as a means
to eliminate the conflict between the owners of capital represented by management and labor represented
by unions. Mainly by suppressing demands of workers and decimating labor unions.Quoting Benito Mussolini (it is actually an attributed quote, difficult to find in his writings):
"Fascism should more appropriately be called
Corporatism because
it is a merger of State and corporate power.
Depending of which elements are stressed and which are somewhat tempered or subdued, we can
distinguish among at least five different forms of corporatism:
Spanish model (which is most closely connected with Catholicism, stresses bargaining of
labor and corporations). It has been particularly significant in the Latin countries of Europe (Portugal,
Spain, Italy and France) and Latin America. The connection between Catholicism is the most prominent
in this model and various Christian Democrat parties (where for �Christian� we can read �Roman Catholic�)
are important political players.
Fascism and neo-fashism (which is characterized by rampant
militarism and xenophobia). Mussolini Regime in Italy and Nazi Germany are two classic variant of
this type of corporatism.
American New Deal model (in which repressive elements were subdued)
Asian model (which emphasized economic development of the nation)
Neoliberalism(which emphasize the role of
transnational corporations and local, connected with them, financial oligarchy (Russian oligarchs
like Khodorkovsky are good example here) as the only first class citizens and suppresses or eliminates
the power of trade unions. This form, in various modifications dominates post Communist countries.
The Reagan Neoliberal Model. Under President Reagan, the USA experienced transformation
in a unique variation of neoliberal model, which can be considered a class of its own.
The term "Quiet
coup" which means the hijacking of the political power in the USA by financial oligarchy was
introduced by Simon H. Johnson, a British-American economist, Professor at the MIT in his article
in Atlantic magazine, published in May 2009 (The
Quiet Coup - Simon Johnson - The Atlantic). From March 2007 through the end of August 2008, he
was Chief Economist of the International Monetary Fund. The article opens with a revealing paragraph:
The crash has laid bare many unpleasant truths about the United States. One of the
most alarming, says a former chief economist of the International Monetary Fund, is that the
finance industry has effectively captured our government
As John Ralston Saul noted in his
The Unconscious Civilization, one central aspect of the neoliberral corporatist doctrine is
its hijacking of the term "individualism," defining it as self-absorption or selfishness. Paradoxically
in the USA both Democratic Party and Republican Party positions are based upon that definition. The
US "Democrats", which under President Clinton became the Party of Financial oligarchy, just a more moderate
wing of Republican Party, agree with Republicans that individualism presuppose anti-social
selfishness (the slogan "greed is good"). In reality as Saul aptly puts it:
"Rights are a protection from society. But only by fulfilling their obligations to society
can the individual give meaning to that protection. . . Real individualism then is the obligation
to act as a citizen."
Is essence, like communism before corporatism (both in its neoliberal and fascist forms) is a
secular religion," which the key idea of salvation as the blind pursuit of self-interest. It is
led by an ideology of "corporatism," which has deformed the American ideal of a life worth living into
one devoid of a concept of the common public good
The corporate compartmentalization of, and distortion of public knowledge, and the accompanying
enforced conformity has so confused the majority of US citizens (99%) that they eat blatant corporate
propaganda without questioning and it makes via effect on our consciousness act against their own economic
interest. In other words, this cult of "individual selfishness" as modeled by corporate self-interest
has hi-jacked Western civilization as we have come to know it.
The most analyzed flavor of corporatism is its extreme form -- fascism. In 2002, Laurence W. Britt's
analyzed seven fascist regimes in order to find the common elements that mark them as fascist: Nazi
Germany, Fascist Italy, Franco's Spain, Salazar's Portugal, Papadopoulos's Greece, Pinochet's Chile,
and Suharto's Indonesia (Fascism
Anyone?) He found 14 common characteristics (some of them are reprinted with some changes below
based on later work by
Umberto Eco (1995))
and concluded:
"Does any of this ring alarm bells? Of course not. After all, this is America, officially a democracy
with the rule of law, a constitution, a free press, honest elections, and a well-informed public
constantly being put on guard against evils. Historical comparisons like these are just exercises
in verbal gymnastics. Maybe, maybe not."
In the 1980th in the USA corporatism was transformed into a very specific form of "free market capitalism"
(aka Neoliberalism) with a set of pseudoscience theories
("greed is good") that create "chosen" people, which in a fuzzy way mirror of Hitler theories of superiority
of Arian race in economic terms (replace the Arian race with the financial and technocratic elite
;-). In reality like any corporatism it has nothing common with free market (it is socialism for rich,
which is as far from free market as one can get). Large financial players were subsidized (and rescued)
by state. It is the same merger of state power and corporations as classic corporatism with more
prominent role of financial oligarchy in the mix and globalization as key component.
Johnson (The
Quiet Coup - Magazine - The Atlantic) called acquiring by financial oligarchy dominant influence
on the state a "Quiet coup" (not very dissimilar to NSDP takeover of power in Germany).
Corruption of government and putting economic elite above the law is an immanent feature of
corporatist regimes and it became a prominent feature of the US capitalism (and a real problem) immediately
after Reagan (Saving and Loan crisis was the first act of this drama) and
became
pervasive under Clinton & Bush administration during which all "socialist" elements of "New Deal"
(government regulation of private sector) were completely dismantled.
See also Casino Capitalism which is
another name often used for the form of neoliberalism established in the USA. It reflects inordinate
influence of stock and other financial markets on the society and rampant speculation that accompany
this.
The key idea of the book is that liberal democracy is not liberal and is not a democracy. It is
just a smoke screen maintained for propaganda focus. Of course there can be democratic moments in
the life of any society but they are more of exception to the rule, then the rule.
Reality is that individual never participate in a political process as himself, typically he/she
participate as a member of some interest group. The author sites Alan Cawson:
"Pluralism has proven to be deficient because of its underling assumption of a competitive
political marketplace, its voluntarism and methodological individualism in its implicit theory
of interests and especially in its portrayal of the a neutral state which is disengaged from interests
at the same time as it preserves an institutional boundary between public and private sphere"
Organization are viewed as instruments for pursing the elite strategies of control, rather then
being directly responsible to members' interests. Organizations are top led not bottom led by the
members and should be viewed in bureaucratic terms rather then democratic ones. For example in trade
unions members typically became just consumers of benefits provided by an organization. Organization
permanent bureaucracy became permanently detached from it "rank-and-file" members. Influence of the
members are demonstrated only indirectly in the area of difficulties of enforcing compliance by leadership
of the decision made, decisions which otherwise would not be accepted by the members. Sanctions applied
to dissidents is an important part of organizational dynamics.
Most of powerful interest groups are state licensed. Licensing can be viewed as a coercive intervention
of the bureaucratic state subsidizing the organization existence in exchange for compliance and defining,
distorting, encouraging, regulating and repressing the activities of such groups and interest associations.
Organizations have status (p 86) which ahs several aspects. Among them:
Resource status -- the extent to which resources for the organization are supplied
by the state. For example tax exemptions up certain areas or for certain activities.
Representation status. Contrary to the idea of voluntarily organizations, mature organization
are much more then passive recipients of their constituents interests and preferences. In
other words they represent individual they way they want, not the way the individual wants them.
This is more pronounced for associations of producers, which represent class interests. Representing
class or social strata is not the only basis of status. Social closure gives such organization
a representative monopoly in return to cooperating with the state policy. The state grants privileges
to interest association in exchange for moderation of the scale of demands they can make
to the state, and for selecting leaders who are generally acceptable to state authorities. Extreme
version of non-compliant organizations are labeled terrorist organizations and are persecuted
by the state. This is related to the non-competitive nature of associations under corporatism.
Under such circumstances the individual is faced with a limited channel of structures through
which he/she can pursue his/her interests and, critically, is not in positional to change the
organizational landscape. In other words, there are significant limits to the extent to which
individuals can impose their interests on the organization. Instead the process of identification
of their interests is taken out of their hands and placed into semi-permanent (and able to survive
the election challenges) leadership of the organization. State molds interests by attributing
public resources and powers to particular groups and indirectly coerce individual members interests.
This does not mean that individuals are always pushed into organizations with which they have
no interest of common (although this often happens under authoritarian corporatism). Rather it
implies that general interest held by an individual are completely redefined and channeled in
a particular form: certain aspects of this interest are excluded via filtering process.
In corporatist theory in no way organization is a simple association of individuals. As soon as
the organization formed, the natural internal processes start creating the organizational elite.
Many corporate writes have been influenced by the ideas of Marxist analysis, but few adhere to anything
approaching a view that all political interests are reducible to class interests as determined by
relations to production,,. But most concur with Marxists that there is deep structural asymmetry
between capital and labor which is reflected in unequal distribution of political power. So while
corporatism affords capital and labor the same status, the latter is inhibited in their freedom to
pursue its respective interests. In other words trade unions are always junior partners to organizations
of capital. At the same time corporatists stress that organizations do not operate exclusively on
a class basis, even within the confines of production associations. In many instances sectional interests
may be an important basis of actions. Certainly in corporatist ideology the dominant view is that
"professional loyalties" should supersede "class loyalties".
Outside the USA corporatist regimes, especially in Latin America, often became direct clients of
international corporation and first of all based in the USA. Military coup d'etat that often
brings such regime to power is often supported or even directly financed by USA or its allies (1953
Iranian coup d'�tat and Pinochet coup d'�tat in Chile are two classic, textbook examples here).
Recently coup d'�tat was replaced by more subtle form of overthrow of legitimate (or semi-legitimate)
government (especially those that can be considered "resource nationalists" like government of Russia,
Libya, Iraq, Iran, Ukraine) called Color revolutions.
Systemic fraud was the second nature of corporatist regimes from its humble beginning
is the first half of the XX century in Mussolini Italy to reincarnation of corporatism by Reagan. Like
Mussolini used to say: to friends everything, to enemies the law. Mussolini claimed that this
way dynamic (or heroic) capitalism based on private initiative could be prevented from degenerating
into stale crony capitalism.
This is a fundamental difference in which corporatism (especially in its most criminogenic,
Neoliberalism form) can to be distinguished from state
capitalism, despite the fact that policies has many similarities. Many analysts assert that
China is one of the main examples of state capitalism in the 21st century. Bremmer describes state capitalism
the following way (We're
All State Capitalists Now - By Niall Ferguson Foreign Policy):
In this system, governments use various kinds of state-owned companies to manage the exploitation
of resources that they consider the state's crown jewels and to create and maintain large numbers
of jobs. They use select privately owned companies to dominate certain economic sectors. They use
so-called sovereign wealth funds to invest their extra cash in ways that maximize the state's profits.
In all three cases, the state is using markets to create wealth that can be directed as political
officials see fit. And in all three cases, the ultimate motive is not economic (maximizing growth)
but political (maximizing the state's power and the leadership's chances of survival).
This is a form of capitalism but one in which the state acts as the dominant economic player and
uses markets primarily for political gain.
Mussolini also aptly characterized corporatism as "state
socialism turned on its head": instead of state controlling the corporations, corporations
became primary actors which control the state.
Instead of state controlling the corporations, corporations became primary
actors which control the state.
20190116 : Corporatism is the control of government by big business. This is what we have in the USA today. The main difference between corporatism and fascism is the level of repressions against opposition. Corporatism now tales forma of inverted totalitarism and use ostracism instead of phycal repressions ( Jan 16, 2019 , profile.theguardian.com )
I'm not sure that it is global private finance that is the key. Although I used to.
Either we consider the Oligarchs (Bezos Zuckerberg) as the newest form of low life, or the
Banking cartels and billionares are even lower.
BUT - There is a third class of Global financiers. That is "Corporations" (as a class).
Corporations are immortal, and like a hydra, with many heads, have more arms than an "image
of a covid-virus" ( Octopussii are simply too limited, although they are a good example of
multi-brained resourceful animals ). They are also "persons" in front of the law, with
all the protections and privilges that offers. On other occasions they are simply above the
law (Twit-Facebook and free speech). The people running them are only occasionally
reprimanded, but the "corporation" itself is never touched. *1*
They pay, sometimes, a bit of taxes, have different laws and have lobbies working in their
favour. Can corrupt Politicians with the offer of directorships or whatever. They can even be
"foundations" and pay no tax at all. They deal across many different National laws, obey what
they will, and are extra terrritorial in scope. They can have a nominal "center", while
decisions are made elsewhere. They are in fact a new type of alien supra-being .
Of course, the "leaders" of Corporations are rich, but they can be replaced by others at the
wishes of "shareholders". Untouchable and unknown.
Very useful for storing wealth and speculating at the same time.
In spite of Musk and others taking all the limelight, it is the corporations that work in
the background that seem to be the real seat of power.
--- *1* One of the last real actions taken against Corporate power was the breaking up of
Rockefellers Standard Oil .
*****
*2* In the case of the "breakup" of either the US or the EU - would the corporations be
touched (eliminated), or hailed as saving civilisation?
This does not comport with Article II(Section 2) of the USA constitution.. which says
"The President shall be the Commander in Chief of the Army and Navy of the usa, and of the
Militia of the serveral states, when into the actual service of the USA,
but no where do I find a private corporation may exercise the power of the Office of the
President ...? What did I mis?
A classic villain of 1970s and 80s was the evil tycoon. James Bond took on some of them.
Meet Hugo Drax of the Moonraker , or Karl Stromberg of The Spy Who Loved Me ;
these guys were willing to destroy mankind to replace it with a better version. Stromberg
planned to trigger a global nuclear war and survive it underwater. Drax intended to poison
mankind with his deadly gas and repopulate the world with his new chosen ones. Another one was
de Wynter, the super-villain of The Avengers, played by Sean Connery. He controlled the world
weather, and could kill us all off by hurricanes and tsunamis.
Before the tycoons, when the Cold war raged, a villain was a KGB agent or a Chinese
operative. As détente calmed relations between the blocks, the agents went out of
fashion; later, the fantastic villains of Marvel came into a vogue. The evil tycoons were
uncomfortably close to the real thing; and they moved from the cinematic world into our
reality.
The world we live in is the world formed by evil tycoons. They are the modern Demiurges, the
evil creators of the Gnostics, an early sect that confronted the Church. Like the Demiurges,
they are practically omnipotent; stronger than the State. The government needs lot of
permissions and authorisations to spend a penny. If a penny had been misspent, the dark word
'corruption' will sound. 'Corruption' is a silly concept; by applying it, the oligarchs
eliminated state competition, for they can pay whatever they want to whomever they wish. The
State must observe intricate arcane rules, while the tycoons have no such limits. As a result,
they shape our minds and lives, making the State a poor legitimate king among powerful and
wealthy barons.
The Corona crisis is a result of their activity. Now, a group of WHO scientists completed
its four weeks inspection tour of Wuhan trying to find out how the virus found its way to
humans; some of them think (as President Trump did) the virus escaped the Wuhan Lab. Matt
Ridley of The Daily Telegraph concluded
his piece analysing their findings: "A growing number of top experts [he provides the list] say
that a lab leak remains a plausible scientific hypothesis to be investigated". It is rather
unlikely, said the WHO , but other
explanations (pangolins etc) also
border on the improbable . The Chinese are understandably upset. Hua Chunying, the
spokeswoman for the Foreign Affairs ministry (the Chinese counterpart for the State
Department's Ned Price)
rejected the idea saying, "The United States should open the biological lab at Fort
Detrick, and invite WHO experts to conduct origin-tracing in the United States". The Guardian
report said she promoted "a conspiracy theory that it came from a US army lab"; while Ms Hua
accused the US of spreading "conspiracy theories and lies" tracing the source to Wuhan.
Whatever we say is a fact-based result of diligent research; whatever you say is a conspiracy
theory – both the US and China representatives subscribe to this mantra.
Our own Ron Unz made an excellent analysis of these accusations and counter-accusations in
his April 2020 piece
. He noted that the virus attack in Wuhan took place at the worst possible time and place for
the Chinese; therefore, an incidental release (or intentional release by the Chinese) is
extremely unlikely. Ron Unz suggested that it was an American biowarfare attack upon China.
Didn't American people suffer from the disease? Yes, the US government is "grotesquely and
manifestly incompetent " and they were likely to expect "a massive coronavirus outbreak
in China would never spread back to America".
Perhaps, but a better explanation is that some evil tycoon(s) played the part of Karl
Stromberg who intended to nuke both Moscow and New York causing war and world-wide devastation,
as in the James Bond movie. It could be somebody like Bill Gates, who is a major investor in
Wuhan Lab. A fact-checking site with its
weasel language admitted that the Lab "has received funding from the Bill & Melinda Gates
Foundation, but Bill Gates can hardly be called a "partner" in the laboratory." Sure, not a
partner. Just an investor, and that is more important than a partner. And he is not the only
one; other multi-billionaires also are involved in bioresearch, in vaccine manufacturing, in
Big Pharma. "Glaxo, BlackRock, and Bill Gates are all partners, but not owners of Pfizer", says
another
fact-checker . "In 2015, Anthony Fauci did issue a USD 3.7 million grant to the Wuhan
Institute of Virology, but not to "create the coronavirus" – the
fact-checking site adds. Well, you could not possibly expect Fauci to word the grant in
such a straightforward way, could you?
Perhaps it is too formidable a job even for an evil tycoon like Gates. A plot of several
evil tycoons is more likely. Together, they could try to change the world and mankind to suit
them.
The evil tycoons could poison China on their New Year holiday and take this uppity state
down a ring or two. They could import the virus into the US to undermine and remove Trump whom
they hated. (He was certain to win the elections but for Corona.) They could poison Europe to
weaken it and make it more docile and obedient to their demands – and to buy their assets
on the cheap. Corona and lockdown did not harm them for they are normally withdrawn from the
bustle of the common man's life.
The billionaires control the media; that much we know, and the part media has played in the
Corona crisis was enormous. The media coverage of the crisis has a huge hidden cost. Try to
publish information you consider important on the front page of a newspaper. It will cost you a
lot. Still, all newspapers belonging to the Billionaires' Media block beginning with the New
York Times and ending with Haaretz gave at least a third of its front page to Corona news each
day. The sheer cost of this advertising runs into billions. Will we ever know who paid for
it?
Steven Soderbergh's (2011) film Contagion predicted many features of the Covid-19, notably
the origin of the virus. In the film, the disease originates from bats in China and is spread
through markets where contaminated pork meat is sold. How could Soderbergh (or his script
writer Scott Z. Burns) possibly know eight years before the event that the contagion should
originate in the Chinese bats? Who told him? Wouldn't you expect he knew something? Burns was
instructed by WHO experts, the CNN
site explains. Isn't it interesting that the same Bill Gates is a major donor of WHO? Is it
entirely impossible that already in 2011 Gates' people began to leak some details of the future
virus through their own WHO to Hollywood?
The tycoons could force a weak state to follow their instructions. Scientists do obey
orders: otherwise, no grants, no positions. In April 2020, the German
scientists were ordered , "to instill the fear of Corona". And they did it, as we learned
this week, producing numbers of dead on demand.
It seems that tycoons gained most from the Corona Crisis. Their assets grew by trillions,
while the assets of the middle classes decreased by the same amount. More importantly, all
states suffered from the crisis; they took loans and credit, they were responsible for their
citizens' health, while billionaires just had fun and enjoyed it. For this reason, I tend to
dismiss the case against states, be it the US or China, while (some) billionaires appear the
only possible villains.
These billionaires are able to influence people much better that the state. Consider Pierre
Omidyar. Besides being the owner of eBay, he is the force behind hundreds of NGOs. His
organisations form the 'progressive' agenda and train the foot soldiers of the Green Deal.
Roslyn
Fuller of Spiked-online checked the plethora of NGOs he employs.
She says his NGOs and charities are "engaged in 'social engineering' – that is, using
their resources to artificially change the structure of society to how they think it should be.
If successful this would amount to an extreme circumvention of democracy, utilising money not
just to win elections, but to substitute paid or subsidised content for actual support, and
thereby flip an entire political culture on to a different track by amplifying some voices and
drowning out others."
He is just one of the Masters of Discourse, next to the infamous George Soros. Facebook,
Google, Twitter and Amazon are even more powerful. The billionaires have immense clout and they
decide what we can and can't say and write. Just last week Amazon banned my Cabbala of
Power , a book that was sold by them for some ten years. The estimable The Unz
Review is banned on Facebook and shadow-banned on Google. Twitter switched-off President
Trump, showing who is the real boss of the United States. Probably almost all movements
described as 'leftists' nowadays are engineered by the tycoons like Omidyar or Soros. True left
had been left for dead on the battlefield of ideas.
The tycoons are directly involved in the Corona Crisis, because its results are good for
them. And it means they have us where they want to have us, and they won't let us out. We are
cancelled until we regain the government and cancel them.
SAGE, as British Corona management team rather presumptuously named itself (it included the
ridiculous figure of Neil Ferguson, he of the millions of predicted deaths), already declared that
lockdowns will be a part of British life for years to come, vaccine or no vaccine. The
Guardian , the Voice of the Oligarchs, gently pooh-poohed them, for it is not good to
declare what must happen right away. Let people have some hope, so they run to vaccinate
themselves, and then only afterwards can we reveal that, sorry, it does not help, you still
have to don a mask and observe social distance and, yes, suffer lockdowns. "It's much easier to
follow the rules if we think of them as temporary."
The plotters' plans aren't secret; they were described by Klaus Schwab in his book
The Great Reset .
Schwab is not a great thinker, being merely a weak scientist with just a few publications, and
not a good or even decent writer. He had to collaborate with a journalist Thierry Malleret to
produce the book. He is just a voice for the tycoons. But the question is, will he/they get
what they want?
"Why does the US use the winter storm as the excuse every time?" Shu Bin, director of the
State Grid Beijing Economics Research Institute, told the Global Times on Thursday, noting
that the power grid system is very vulnerable and requires constant maintenance and
upgrade.
A report from the US Department of Energy (DOE) in 2015 said that 70 percent of power
transformers in the country were 25 years or older, 60 percent of circuit breakers were 30
years or older, and 70 percent of transmission lines are 25 years or older. And the age of
these components "degrades their ability to withstand physical stresses and can result in
higher failure rates," the report noted.
[...]
"The US has no nationwide power grid network allocation plan like China. When it
encounters extreme weather, a state won't help another state like some Chinese provinces
and regions do with flexible allocation plans," Lin Boqiang, director of the China Center
for Energy Economics Research at Xiamen University, told the Global Times on Thursday.
[...]
"China uses 50Hz across the country, like the country has the same heartbeat," he said,
adding that China has never experienced such a scale of blackouts as the US.
[...]
China has mastered the top technologies such as "UHV transmission" and "flexible DC
transmission" and started the strategic "west-east electricity transmission" and
"north-south electricity transmission" projects, which in turn offer an opportunity for the
development of the country's western region.
Not as apocalyptic as it may seem. I wrote a comment on the situation in the earlier
thread
here .
Temps are starting to move up and tomorrow (Thursday) should begin the thaw. Friday is
sunny and 47 deg F for a high, then sunny weekend and following. So we're over the worst of
it. The lowest it ever got was around 0 deg F.
The infrastructure failed - the people paid to manage this failed - everybody is angry, 10
people died so far last I heard.
Rolling blackouts, some people very much suffering, townships opening warming shelters -
probably not millions of pipes bursting. Not totally iced in, just nowhere to go. People
stayed home. Businesses stayed closed. Not totally without food, people stocked up staples in
2020.
Not that dire. Absolutely fucking disgusting, and a hardship that touched everyone - some
people got really screwed and I don't know why the treatment was uneven like that - not
demographics, something with the grid. Dire, yes, and life-threatening to some or perhaps
many (numbers not clear to me yet), but not so dire as your picture suggests. Nothing like
Katrina, except the same ineptness.
But heads will roll. The governor has mandated an investigation into the regulator, ERCOT.
What follows next is of great interest. Facts will appear. I'll post anything useful.
I heard a rumor it was getting better. Could be less blackouts. Will post now in case
power goes off ;)
This Texas debacle may light a heated debate in the USA for the next weeks, for two
reasons:
1) Texas is the big alt-right/Trumpist Festung for the foreseeable future. Their
nation-building process involve catapulting Texas as the anti-California ,
the conservative version of the Shining City on the Hill, around which the USA will be
rebuilt;
2) What is happening in Texas right now goes directly to the heart of neoliberalism, which
is the political doctrine that vertebrates the alt-right. That's why conservative ideologues
such as Tucker Carlson et al are desperately scrambling on TV and social media to blame the
outage on the so-called Green New Deal.
What is happening right now in Texas, therefore, may be another episode on the battle for
the soul of the American Empire.
For many years, a handful of people have postulated that those who control industry, finance
and governments are essentially the same people – a cabal of sorts that have, over
generations, solidified their relationships in order to gain greater wealth and power, whilst
systematically making things ever more difficult for the free market to exist.
But why should this be? Surely, corporate leaders are more ardently capitalist than anyone
else?
Well, on the surface, that might appear to make sense, but once a significant position of
power has been achieved, those who have achieved it recognize that, since they've already
reached the top, the primary concern changes. From then on, the primary concern becomes the
assurance that no others are able to climb so high as they have.
At that point, they realise that their foremost effort needs to be a push toward corporatism
– the merger of power between government and business. This is a natural marriage. The
political world is a parasitic one. It relies on a continual flow of funding. The world of big
business is a study in exclusivity – the ability to make it impossible for pretenders to
the throne to arise. So, big business provides the cash; government provides protective
legislation that ensures preference for those at the top.
In most cases, this second half of the equation does not mean a monopoly for just one
corporation, but a monopoly for a cabal – an elite group of corporations.
This corporatist relationship has deep roots in the US, going back over one hundred years.
To this day, those elite families who took control of oil, steel, banking, motor vehicles and
other industries a century ago, soon created a takeover of higher learning (universities),
health (Big Pharma) and "Defense" (the military-industrial complex).
Through legislation, the US was then transformed to ensure that all these interests would be
catered to, creating generations of both control and profit.
Of course, "profit" should not be an evil word, but under crony capitalism, it becomes an
abomination – a distortion of the free market and the death of laissez faire
economics.
Certainly, this sort of collectivism is not what Karl Marx had in mind when he daydreamed
about a workers' paradise in which business leaders retained all the risk and responsibility of
creating and building businesses, whilst the workers had the final word as to how the revenue
would be distributed to the workers themselves.
Mister Marx failed in being objective enough to understand that if the business creator took
all the risk and responsibility but gave up the ability to decide what happened to the revenue,
he'd never bother to open a business. Even a shoeshine boy would reject such a notion and elect
to go on the dole, rather than work.
Mister Marx sought more to bring down those who were successful than to raise up those who
were not, yet he unwittingly created a new idea – corporate collectivism – in which
the very people he sought to debase used the appeal of collectivist rhetoric to diminish both
the freedoms and wealth of the average worker.
On the surface, this might appear to be a hard sell – to get the hoi polloi into the
net – but in fact, it's quite easy and has perennially been effective.
Hitler's New Order was such a construct – the promise to return Germany to greatness
and the German people to prosperity through increasingly draconian laws, warfare and an
economic revolving door between government and industry.
Of course, a major influx of capital was required – billions of dollars – and
this was eagerly provided by US industry and banks. Heads of New York banks not only funded
Nazi industry; families such as the Fords, Rockefellers, Morgans, etc., sat on the boards of
German corporations.
The Nazi effort failed, as they underestimated the Russian will to fight to the death.
(Eighty percent of all German Army deaths were due to the Russian campaign.)
But those in New York were able to regroup and be first in the queue for the restructuring
of German industry after the war and, ultimately, profited handsomely.
But most significantly, the idea of corporatist collectivism did not die. Even before the
war, the same group of families and corporations had drawn up the plan for Franklin Roosevelt's
New Deal.
Mister Roosevelt was a dyed-in-the-wool Wall Street man and a director of New York banks. In
the 1930s and early 1940s, he created, as president, a revolving door that favoured large
corporations, whilst the average American was consciously kept at the subsistence level through
government entitlements.
The scam worked. Shortsighted Americans not only were grateful; they deified him for it.
Likewise, John Kennedy's New Frontier sought to revitalize the concept, as did Lyndon
Johnson's Great Society: Give the little people entitlements that keep them little. Tax smaller
businesses and create a flow of tax dollars to the elite industries, who, in turn, provide
monetary favours to the political class.
The Green New Deal is merely the latest corporate collectivist scheme on the list.
Corporate collectivism can be defined as a system in which the few who hold the legal
monopolies of finance and industry gain an overriding control over all others, and in so doing,
systematically extract wealth from them.
Today, this system has become so refined that, although the average American has a flat
screen TV and an expensive smartphone, he cannot raise $400 to cover an emergency that occurs
in his life. He is, for all practical purposes, continually bankrupt, but still functioning in
a zombie-like existence of continual dependency.
This, on the surface, may not seem all that dangerous, but those who cannot buy their way
out of a small emergency are easily controlled. Just create an emergency such as an uber-virus
and that fact will be illuminated quickly.
In order to maximise compliance in a population, maximise their dependence.
As stated above, this effort has been in play for generations. But it is now reaching a
crescendo. It's now up to speed in most of the former Free World and those who hold the strings
are ready for a major step forward in corporate collectivism.
In the coming year, we shall see dramatic changes appearing at a dizzying rate. Capital
controls , migration controls, internal movement controls, tax increases, confiscation of
assets and the removal of "inalienable" rights will all be coming into effect – so
quickly that before the populace can even grasp the latest restrictions, new ones will be
heaped on.
As this unfolds, we shall witness the erosion of the nation-state. Controls will come from
global authorities, such as the UN, the IMF and the WEF. Organisations that have no formal
authority over nations will increasingly be calling the shots and people will wonder how this
is possible. Elected officials will increasingly become mere bagmen, doing the bidding of an
unelected ruling class.
The changes that take place will be not unlike a blanket that is thrown over humanity.
The question then will be whether to, a) give in to this force, b) to fight it and most
likely fall victim to it, or c) seek a means to fall outside the perimeter of the blanket.
* * *
Unfortunately most people have no idea what really happens when a government goes out of
control, let alone how to prepare The coming economic and political crisis is going to be much
worse, much longer, and very different than what we've seen in the past. That's exactly why New
York Times best-selling author Doug Casey and his team just released an urgent video.
Click
here to watch it now .
When it comes to debate about US military policy, the 2020 presidential election campaign is
so far looking very similar to that of 2016. Joe Biden has pledged to ensure that "we have the
strongest military in the world," promising to "make the investments necessary to equip our
troops for the challenges of the next century, not the last one."
In the White House, President Trump is repeating the kind of anti-interventionist head
feints that won him votes four years ago against a hawkish Hillary Clinton. In his recent
graduation address at West Point, Trump re-cycled applause lines from 2016 about "ending an era
of endless wars" as well as America's role as "policeman of the world."
In reality, since Trump took office, there's been no reduction in the US military presence
abroad, which last year required a Pentagon budget of nearly $740 billion. As military
historian and retired career officer Andrew Bacevich notes ,
"endless wars persist (and in some cases have
even intensified ); the nation's various alliances and its empire of
overseas bases remain intact; US troops are still present in something like
140 countries ; Pentagon and national security state spending continues to
increase astronomically ."
When the National Defense Authorization Act for the next fiscal year came before Congress
this summer, Senator Bernie Sanders proposed a modest 10 percent reduction in military spending
so $70 billion could be re-directed to domestic programs. Representative Barbara Lee introduced
a House resolution calling for $350 billion worth of DOD cuts. Neither proposal has gained much
traction, even among Democrats on Capitol Hill. Instead, the House Armed Services Committee
just
voted 56 to 0 to spend $740. 5 billion on the Pentagon in the coming year, prefiguring the
outcome of upcoming votes by the full House and Senate.
An Appeal to Conscience
Even if Biden beats Trump in November, efforts to curb US military spending will face
continuing bi-partisan resistance. In the never-ending work of building a stronger anti-war
movement, Pentagon critics, with military credentials, are invaluable allies. Daniel Sjursen, a
37-year old veteran of combat in Iraq and Afghanistan is one such a critic. Inspired in part by
the much-published Bacevich, Sjursen has just written a new book called Patriotic Dissent:
America in the Age of Endless War (Heyday Books)
Patriotic Dissent is a short volume, just 141 pages, but it packs the same kind of punch as
Howard Zinn's classic 1967 polemic, Vietnam: The Logic of
Withdrawal . Like Zinn, who became a popular historian after his service in World War II,
Sjursen skillfully debunks the conventional wisdom of the foreign policy establishment, and the
military's own current generation of "yes men for another war power hungry president." His
appeal to the conscience of fellow soldiers, veterans, and civilians is rooted in the unusual
arc of an eighteen-year military career. His powerful voice, political insights, and painful
personal reflections offer a timely reminder of how costly, wasteful, and disastrous our post
9/11 wars have been.
Sjursen has the distinction of being a graduate of West Point, an institution that produces
few political dissenters. He grew up in a fire-fighter family on working class Staten Island.
Even before enrolling at the Academy at age 17, he was no stranger to what he calls
"deep-seated toxically masculine patriotism." As a newly commissioned officer in 2005, he was
still a "burgeoning neo-conservative and George W. Bush admirer" and definitely not, he
reports, any kind of "defeatist liberal, pacifist, or dissenter."
"The horror, the futility, the farce of that war was the turning point in my life,"
Sjursen writes in Patriotic Dissent .
When he returned, at age 24, from his "brutal, ghastly deployment" as a platoon leader, he
"knew that the war was built on lies, ill-advised, illegal, and immoral." This "unexpected,
undesired realization generated profound doubts about the course and nature of the entire
American enterprise in the Greater Middle East -- what was then unapologetically labeled the
Global War on Terrorism (GWOT)."
A Professional Soldier
By the time Sjursen landed in Kandahar Province, Afghanistan, in early 2011, he had been
promoted to captain but "no longer believed in anything we were doing."
He was, he confesses, "simply a professional soldier -- a mercenary, really -- on a
mandatory mission I couldn't avoid. Three more of my soldiers died, thirty-plus were wounded,
including a triple amputee, and another over-dosed on pain meds after our return."
Despite his disillusionment, Sjursen had long dreamed of returning to West Point to teach
history. He applied for and won that highly competitive assignment, which meant the Army had to
send him to grad school first. He ended up getting credentialed, while living out of uniform,
in the "People's Republic of Lawrence, Kansas, a progressive oasis in an intolerant, militarist
sea of Republican red." During his studies at the state university, Sjursen found an
intellectual framework for his "own doubts about and opposition to US foreign policy." He
completed his first book, Ghost Riders , which combines personal memoir with counter-insurgency
critique. Amazingly enough, it was published in 2015, while he was still on active duty, but
with "almost no blowback" from superior officers.
Before retiring as a major four years later, Sjursen pushed the envelope further, by writing
more than 100 critical articles for TomDispatch and other civilian publications. He was no
longer at West Point so that body of work triggered "a grueling, stressful, and scary
four-month investigation"by the brass at Fort Leavenworth, during which the author was
subjected to "a non-publication order." At risk were his career, military pension, and
benefits. He ended up receiving only a verbal admonishment for violating a Pentagon rule
against publishing words "contemptuous of the President of the United States." His "PTSD and
co-occurring diagnoses" helped him qualify for a medical retirement last year.
Sjursen has now traded his "identity as a soldier -- the only identity I've known in my
adult life -- for that of an anti-war, anti-imperialist, social justice crusader," albeit one
who did not attend his first protest rally until he was thirty-two years old. With several
left-leaning comrades, he started Fortress on A Hill, a lively podcast about military affairs
and veterans' issues. He's a frequent, funny, and always well-informed guest on progressive
radio and cable-TV shows, as well as a contributing editor at Antiwar.com , and a contributor to a host of mainstream liberal
publications. This year, the Lannan Foundation made him a cultural freedom fellow.
In Patriotic Dissent , Sjursen not only recounts his own personal trajectory from military
service to peace activism. He shows how that intellectual journey has been informed by reading
and thinking about US history, the relationship between civil society and military culture, the
meaning of patriotism, and the price of dissent.
One historical figure he admires is Marine Corps Major General Smedley Butler, the recipient
of two Medals of Honor for service between 1898 and 1931. Following his retirement, Butler
sided with the poor and working-class veterans who marched on Washington to demand World War I
bonus payments. And he wrote a best-selling Depression-era memoir, which famously declared that
"war is just a racket" and lamented his own past role as "a high-class muscle-man for Big
Business, for Wall Street, and for the Bankers."
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Sjursen contrasts Butler's anti-interventionist whistle-blowing, nearly a century ago, with
the silence of high-ranking veterans today after "nineteen years of ill-advised, remarkably
unsuccessful American wars." Among friends and former West Point classmates, he knows many
still serving who "obediently resign themselves to continued combat deployments" because they
long ago "stopped asking questions about their own role in perpetuating and enabling a
counter-productive, inertia-driven warfare state."
Sjursen looks instead to small left-leaning groups like Veterans for Peace and About Face:
Veterans Against the War (formerly Iraq Veterans Against the War), and Bring Our Troops Home.
US, a network of veterans influenced by the libertarian right. Each in, its own way, seeks to
"reframe dissent, against empire and endless war, as the truest form of patriotism." But
actually taming the military-industrial complex will require "big-tent, intersectional action
from civilian and soldier alike," on a much larger scale. One obstacle to that, he believes, is
the societal divide between the "vast majority of citizens who have chosen not to serve" in the
military and the "one percent of their fellow citizens on active duty," who then become part of
"an increasingly insular, disconnected, and sometimes sententious post-9/11 veteran
community."
Not many on the left favor a return to conscription.
But Sjursen makes it clear there's been a downside to the U.S. replacing "citizen
soldiering" with "a tiny professional warrior caste," created in response to draft-driven
dissent against the Vietnam War, inside and outside the military. As he observes:
"Nothing so motivates a young adult to follow foreign policy, to weigh the advisability or
morality of an ongoing war as the possibility of having to put 'skin in the game.' Without at
least the potential requirement to serve in the military and in one of America's now
countless wars, an entire generation -- or really two, since President Nixon ended the draft
in 1973–has had the luxury of ignoring the ills of U.S. foreign policy, to distance
themselves from its reality ."
At a time when the U.S. "desperately needs a massive, public, empowered anti-war and
anti-imperial wave" sweeping over the country, we have instead a "civil-military" gap that,
Sjursen believes, has "stifled antiwar and anti-imperial dissent and seemingly will continue to
do so." That's why his own mission is to find more "socially conscious veterans of these
endless, fruitless wars" who are willing to "step up and form a vanguard of sorts for
revitalized patriotic dissent." Readers of Sjursen's book, whether new recruits to that
vanguard or longtime peace activists, will find Patriotic Dissent to be an invaluable
educational tool. It should be required reading in progressive study groups, high school and
college history classes, and book clubs across the country . Let's hope that the author's
willingness to take personal risks, re-think his view of the world, and then work to change it
will inspire many others, in uniform and out.
Do we need to be in 160 countries with our military and can we afford it?
Cat Daddy , 1 hour ago
I am all for bringing the troops home except for this one unnerving truth; nature abhors a
vacuum, specifically, when we pull out, China moves in. A world dominated by the CCP will be
a dangerous place to be. When we leave, we will need to make sure our bases are safely in the
hands of our friends.
dogbert8 , 1 hour ago
War is effectively the way the U.S. has done business since the Spanish American War, our
first imperial conquests. War is how we ensure big business has the materials and markets
they demand in return for their support of political parties and candidates. War is the only
area left with opportunities for growth and profit. Don't think for a minute that TPTB will
ever let us stop waging war to get what we (they) want.
TheLastMan , 2 hours ago
If you are new to zh all you need to do is study PNAC and the related nature of all
parties to understand the criminality of USA militarization and for whose benefit it
serves
Anonymous IX , 2 hours ago
I have written many times on this platform the exact same sentiments.
I am most disheartened by the COVID + Antifa/BLM Riots because of the facts this author
presents.
We are distracted with emotional and highly volatile MASSIVELY PROPAGANDIZED stories by
MSM (I don't watch) while the real problem in the world is as the author describes above.
We are war-mongering nation who needs to bring our troops home and disband over half of
our overseas installations and bases.
We have no right to levy economic sanctions to impoverish, sicken, and weaken the citizens
of Iran, Cuba, Venezuela, or anywhere else.
Yet, we run around arguing about masks and who can go into a restaurant or toppling
statutes and throwing mortar-type fireworks at federal officers. This is what we do instead
of facing a real problem which is that we are war-mongering nation with no moral/ethical
conscience. These scraggily bearded white Antifas need to WTFU and realize who their true
enemy.
Oh, wait. They work for the true enemy! Get it?
Max21c , 1 hour ago
We have no right to levy economic sanctions to impoverish, sicken, and weaken the
citizens of Iran, Cuba, Venezuela, or anywhere else.
I don't agree with the economic sanctions nonsense thing as they seem to be more of a
crutch for people that are not any good at planning, strategy, analytical thinking, critical
thinking, strategic thinking, and lack much in the way of talent or creativity or
intellectual acumen or intellectual skills...I believe there's around just shy of 10k
economic sanctions by Washington...
But the USA does have the right to receive or refuse to receive foreign Ambassadors and
Consuls and to recognize or not recognize other nations governments thus it does have some
degrees of the right to not trade or engage in commerce with other nations to a certain
extent... per imports and exports... et cetera... though it's not necessarily an absolute
right or power
IronForge , 2 hours ago
Sjursen may admire General Butler; but he doesn't seem to know that several of the
General's Descendants Served in the US Military.
Sjursen isn't Butler. The General Prevented a Coup in his Time.
The USA are a Hegemony whose KleptOchlarchs overtook the Original Constitutional
Republic.
PetroUSD, MIC, Corporate Expansion-Conquest, AgriGMO, and Pharma Interests Span the
Globe.
Wars are Rackets; and Societies to Nation-States have waged them over Real Estate, Natural
Resources, Trade Routes, Industrial Capacity, Slavery, Suppresive Spite,
Religious/Ideological Zeal, Economic Preservation, and Profiteering Greed.
YET, Militaries are still formed by Nation-States to Survive and for Some - Thrive above
such Competitive Existenstential Threats.
*****
The Hegemony are running up against New Shifts in Global Power, Systems, and Influences;
and are about to Lose their Unilateral Advantages. The Hegemon themselves may suffer Societal
Collapses Within.
Sjursen should read up on Chalmers Johnson. Instead of trying to Coordinate Ineffective
Peace Demonstrations, the Entire Voting/Political Contribution/Candidacy Schemes should be
Separated from the Oligarchy of Plutocrats and Corporate/Political KleptOchlarchs.
Without Bringing the Votes back to the Collective Hands of Citizenry Interests First and
Foremost, the Republic are Forever Conquered; and the Ethical may have to resort to
Emigration and/or Secession.
Ink Pusher , 2 hours ago
Nobody rides for free,there's always a cost and those who can't pay in bullion will often
pay in bodily fluids of one form or another.
Profiteers that create warfare for profit are simply parasitical criminals and should not
be considered a "special breed" when weighed upon the Scales of Justice.
gzorp , 2 hours ago
Read 'Starship Troopers' by Robert A Heinlein (1959) pay especial attention to the
"History and Moral Philosophy" courses... that's where his predictions for the future course
of 'America's' future appear.... rather accurately. Heinlein was a 1930's graduate of
Annapolis (Navy for you dindus and nohabs).....
A DUDE , 2 hours ago
t's not just the war machine but the entire system, the corporatocracy, of which the MIC
is a part. And there is no way to change the system from within the system because whatever
is anti-establishment becomes absorbed and neutered and part of the system.
Tulsi Gabbard ran on anti interventionism foreign policy.
Look how fast the DNC disappeared her.
Of course destroying Kamala Harris in a debate and going after the ancient evil Hitlery
sealed her fate.
BarkingWolf , 2 hours ago
In reality, since Trump took office, there's been no reduction in the US military
presence abroad, which last year required a Pentagon budget of nearly $740 billion. As
military historian and retired career officer Andrew Bacevich notes ,
"endless wars persist (and in some cases have
even intensified ); the nation's various alliances and its empire of
overseas bases remain intact; US troops are still present in something like
140 countries ; Pentagon and national security state spending continues to
increase astronomically ."
Now wait just a minute there mister, that sounds like criticism of the Donald John PBUH
PBUH PBUH ... you can't do that ... the cult followers will call you a leftist and a commie
if you point out stuff like that even if it is objectively true! That's strike one, punk.
An Appeal to Conscience
Even if Biden beats Trump in November, efforts to curb US military spending will face
continuing bi-partisan resistance.
November doesn't have anything to do with anything really. The appeal to conscience is
wasted. The appeal would be better spent on removing the political class that is on the AIPAC
dole and have dual citizenship in a foreign country in the ME while pretending to serve
America while they are members of Congress. That's only the tip of the spear ... and that is
a nonstarter from the get go.
Sjursen skillfully debunks the conventional wisdom of the foreign policy establishment,
and the military's own current generation of "yes men for another war power hungry
president."
I don't think Trump is necessarily a war power hungry president. While it is true that we
have not withdrawn from Syria and basically stole their oil as Trump has repeated promised he
would do, it is also true that Trump has yet to deliver Israels war with Iran and in fact had
called back an invasion of Iran ten minutes before a flotilla of US warships was about to set
sail to ignite such an invasion leaving Tel Aviv not only aggrieved, but angry as well.
Sjursen has now traded his "identity as a soldier -- the only identity I've known in my
adult life -- for that of an anti-war, anti-imperialist, social justice crusader," albeit
one who did not attend his first protest rally until he was thirty-two years old. With
several left-leaning comrades ...
Okay, this is where you are starting to lose me .... i't like listening to a concert and
suddenly the music is hitting sour notes that are off key, off tempo, and don't seem to fit
somehow.
Marine Corps Major General Smedley Butler, the recipient of two Medals of Honor for
service between 1898 and 1931. Following his retirement, Butler sided with the poor and
working-class veterans who marched on Washington to demand World War I bonus payments. And
he wrote a best-selling Depression-era memoir, which famously declared that "war is just a
racket" and lamented his own past role as "a high-class muscle-man for Big Business, for
Wall Street, and for the Bankers."
Butler was correct, war especially nowadays, is a racket that makes rich people who never
seem to get their hands dirty, even richer. As one grunt put it long ago, "it's a dirty job,
but somebody has to do it."
That "somebody" is going to be the kids of the little people (the real high-class
muscle-men ) who are hated by their political class overlords even as the political class are
worshipped as gods.
Sjursen looks instead to small left-leaning groups like Veterans for Peace and About
Face: Veterans Against the War (formerly Iraq Veterans Against the War), and Bring Our
Troops Home. US, a network of veterans influenced by the libertarian right.
The problem here is that the so-called "left" brand has always been about war and the
capitalism of death.
The Democrat party is really the group that started the American civil war for instance,
they are the ones behind legacy of Eugenists like Margaret Sanger who was a card carrying
Socialist who founded the child murder mill known today as Planned Parenthood that sadly
still exists under Trump but has turned into the industrialized slaughter of children ...even
after birth so that their organs can be "harvested" for profit.
Sjursen's affinity for "the left" as saintly purveyors of peace, goodness, love, and life
strikes me as rather disingenuous. Then he seems to argue if I read the analysis correctly
that conscription will somehow be the panacea for the insatiable appetite for war?
One false flag such as The Gulf of Tonkin or 911 or even Perl Harbor or the Sinking of the
Lusitania or the assassination of an Arch Duke ... is all that is really needed to arouse the
unbridled hoards to march off to battle with almost erotic enthusiasm -the political class
KNOWS IT!
Amendment X , 2 hours ago
And don't forget President Wilson (D) who was re-elected on the platform "He kept us out
of the war" only to drag U.S. into the hopeless European Monarchary driven WWI.
11b40 , 1 hour ago
Yo! Low class muscle man here, and I have to agree with bringing back the draft. It should
never have been eliminated, and is the root of the golbalists abiity to keep us in
Afghanistan, and other parts of the ME, for going on 20 years.
Skin in the game. It means literally everything. As noted we now have 2 generations of men
who never had to give much thought at all to what's happening around the world, and how
America is involved....and look at the results. It would be a much different situation today
if all those 18 year olds had to face the draft board with an unforgiving lottery.
Yes, one false falg can whip up the country to a war time fever pitch, but unless there is
a real, serious threat, the fever cannot be maintained. The 1969 draft lottery caught me when
I stayed out the first semester of my senior year. Didn't want to go, but accepted my fate
and did the best job I could to stay alive and keep those around me as safe as possible. In
1966, I was in favor of the war, and was about to go Green Beret on the buddy system. We were
going to grease gooks with all the enthusiasm of John Wayne. My old man, an artillery 1st Sgt
at the time in Germany, talked me out of it. More like get your *** on a plane back to the
States and into college, befroe i kick it up around your shouders. A WW2 & Korea vet, he
told me then it was the wrong war, in the wrong place, at the wrong time.
The point is, when kids are getting drafted, Mom's, Dad's, and everyone else concerned
with the safety of their friends & relatives, start paying attention and asking hard
questions of politicians. Using Afghanistan as an example, we would have been on the way out
by the 2004 election cycle, or at max before the next one in 2008. That was 12 years ago, and
we are still there.
I addition, the reason we went would have been more closely examined, and there may have
been a real investigtion into 9/11. Plus, I am convinced that serving your country makes for
a better all around citizen, and God knows, we need better citizens.
Cassandra.Hermes , 2 hours ago
Trump and Pompeo started new cold war with China, but have no way to back up their threats
and win it!! When i was in Kosovo peace corps i heard so many stories from Albanian who were
blamed to be Russian or American spy because of double cold war against Albania. Trump and
Pompeo just gave excuse to Xi to blame anyone who protest as American spy. BBC were showing
China's broadcast of the protests in Oregon to Hong Kong with subtitle "Do you really want
American democracy?", LMFAO
Max21c , 2 hours ago
Joe Biden has pledged to ensure that "we have the strongest military in the world,"
promising to "make the investments necessary to equip our troops for the challenges of the
next century, not the last one."
The United States shall continue to have a weak military until it starts to fix its
foreign policy and diplomacy. You cannot have the strongest military in the world if you lack
a good foreign policy and good diplomacy. Brains are a lot more important than battleships,
battalions, bullets, barrels, or bombs. Get a frickin' clue you friggin' Washington
morons.
Washington is weak because they are dumb. Blind, deaf, and dumb.
Heroic Couplet , 2 hours ago
Too little, too late. Great ad for a book that will be forgotten in a week. Read Bolton's
book. The minute Trump tries to reduce troops, Bolton is right there, saying "No, we can't
move troops to the perimeter. No, we can't move troops from barracks to tents at the
perimeter." Who needs AI?
Erik Prince wrote 3.5 years ago that 4th gen warfare consists of cyberwarfare and
bio-weapons. The US military is fooked. There's probably an interesting book to be
researched: How do Republicans feel about contracting COVID-19 after listening to Trump
fumble?
ChecksandBalances , 3 hours ago
Blame the voters. Run on a platform to reduce military and police spending. See how many
of those lose. Probably all of them. You have to stop feeding the beast. This is a slogan
Trump correctly said but as usual didn't actually mean. We should cut all military and police
spending by 1/2 and then take the remaining money and build a smarter, more efficient
military and police force.
Max21c , 3 hours ago
It's not just the "Deep State." It's Washingtonians overall. It's Deep Crazy. They're all
Deep Crazy! They're nuts. And the rare exceptions that may know better and have enough common
sense to know its wrong to sick the secret police on innocent American civilians aren't going
to say anything or do anything to stop it. The few that know better in foreign policy aren't
going to say anything or do anything against the new Cold Wars on the Eastern Front against
China or on the Western Front against Russia since they're not willing to go up against the
Regime. So the Regimists know they have carte blanche to persecute or terrorize or go after
any that stand in their way. This is how tyrannies and police states operate. It's the nature
of the beast. At a minimum they brow beat people into submission. People don't want to stick
their neck out and risk going up against the Regime and risk losing to the Regime, its secret
police, and the powers that be. They shy away from anything that would bring the Regime and
its secret police and its radicals, extremists, fanatics, and zealots their way.
nonkjo , 4 hours ago
It's okay to be against "forever war" and still not have to be a progressive douchbag.
Sjursen is an unprincipled ******** artist. He leaves Iraq disillusioned as a lieutenant
but sticks around long enough for them to pay for his grad school and give him some sweet
"resume building" experiences that he can stand on to sell books? FYI, from commissioning
time as a second lieutenant to promotion to captain is 3 years...that means Sjusen was so
disillusioned that he decided to stick around for 12 more years which is about 9 years longer
than he actually needed to as an Academy grad (he only had to serve 6 unless he elected to go
to grad school).
The bottom line is Sjusen capitalizes on people not knowing how the military works. That
is, that his own self-interest far outweighs his the principles he espouses. Typical leftist
hypoctite.
Max21c , 4 hours ago
...the U.S. "desperately needs a massive, public, empowered anti-war and anti-imperial
wave ..."
Perhaps the USA just needs a better foreign policy. Though we all know that's not going to
happen with the flaky screwballs of Washington and the flaky screwballs in the Pentagon, CIA,
State Department, foreign policy establishment, think tanks et cetera.
Minor technical point: the time for the "anti-imperial wave" was before Washingtonians
destroyed much of the world and created their strategic blunders and disastrous foreign
policy. You folks all went along with this nonsense and now you have your quagmires, forever
wars, and numerous trouble spots that have popped up here and there along the way to
boot.
Pottery barn rule: you broke it and you own it and it's yours...Ma'am please pay at the
register on the way out...Sorry Ma'am there's no more free gluing...though the gluing
specialist may be in on the third Thursday this month though it's usually the second Tuesday
each month...
Contemporaneously, in the same vein the American public has been brainwashed into going
along with the new Cold Wars on the Western Front against Moscow and the even newer Cold War
on the Eastern Front against Beijing. It's like P.T. Barnum said "There's a sucker born every
minute," and you fools in the American public just keep buying right in to the brainwashing.
They're now successfully indoctrinating you into buying into their new Cold Wars with Russia
and China. The Cold War on the Eastern Front versus Peking is more getting more fanciful
attentions at the moment and the Cold War on the Western Front has temporarily been relegated
to the back burner but they'll move the Western Front Cold War from simmer to boil over
whenever it suits their needs. It's just a rendition of the Oceania has always been at war
with East Asia and Eurasia is our friend are just gameplays right out of George Orwell's
1984.
Most of the quagmires can be fixed to a certain extent by applying some cement and
engineering to the quicksand and many of the trouble spots can become more settled and less
unstable if not stable in some instances. Even some of the more serious strategic problems
like the South China Sea, North Korean nuclear weapons development, and potential Iranian
nuclear weapons development can still be resolved through peaceful strategies and
solutions.
In re sum, while I won't disparage a peace movement I do not believe it is either
necessary nor proper simply because you will not solve anything through a peace movement. The
sine qua non or quintessential element is simply to end one of these wars successfully
through a peaceful diplomatic solution or solve one of these serious foreign policy problems
through diplomacy which is something that hasn't been the norm since the downfall of the
Berlin Wall, is no longer in favor, and which is the necessary element to prove that peace
can be achieved through strategy and diplomacy and thereby change the course of the country's
future.
In foreign affairs the foreign policy establishment has its pattern of behavior and it is
that pattern of behavior that has to be changed. It's the mindset of the Washingtonians &
elites that has to be changed. Just taking to the streets won't really change their ways or
their beliefs for any significant part of the duration. They may pay lip service to peace
& diplomacy but it won't win out in their minds in the long run. They are so warped in
their views and beliefs that it'll have little or no effect over the long haul. As soon as
the protests dissipate they'll be right back at it, back to their bad ways and bad
behavior.
Son of Captain Nemo , 4 hours ago
For the past 19 years... And as Anti-War as you will ever get!...
Was it George Carlin that said " if voting made a difference they wouldn't let us do it "
? The only way to stop these forever wars is for people to stop joining the military. Parents
should teach their children that joining the military and trotting off to some country to
fight a war for the elite is not being patriotic . I was in the military from 1964 -1968.
When Lyndon Johnson became president he drug out the Vietnam war as long as he could. Oh !
Lady Byrd Johnson bought Decon Company [ rat poison ] when most people never heard of it.
Johnson bought this rat poison , government paid for ,at an inflated price . Sent ship loads
of it to Vietnam .Never mind all the Americans and so called enemy killed.. Jane Fonda ,
Hanoi Jane , was really a hero who helped save countless lives by helping to end the war.
Tommy and **** Smothers , Smother Brothers , spoke out against the war . Our government had
them black balled from TV. Our government is probably as corrupt as any other country.
A piece of irony, one of our greatest generals was Dwight Eisenhower, the Allied Supreme
Commander in WWII and two term president. He kept the peace for almost 10 years and warned
Americans to beware of the "military-industrial complex." Most military men never want war,
they just make sure they are ready if it comes. We have had the military industrial complex
for way too long, it needs to be reduced and we need more generals to run for president, Gen.
Flynn maybe? I'll also take Schwartzkoff.
cowboyted , 7 hours ago
The U.S. should only use our military if we are attacked, period. Otherwise, as Jefferson
astutely stated, a standing army is a threat to democracy.
captain noob , 7 hours ago
Capitalism has no morals
Profit is the driving force of every single thing
cowboyted , 7 hours ago
The U.S. should only use our military if we are attacked, period. Otherwise, as Jefferson
astutely stated, a standing army is a threat to democracy.
Chief Joesph , 7 hours ago
After what General Smedley Butler had to say and warned us about, here we are, 90 years
later, doing the very same thing. Goes to show how utterly dumb, unprogressive, sheepish, and
Medieval Americans really are. And you thought this is what makes America Great????
cowboyted , 8 hours ago
The U.S. Constitution provides for a "national defense." Yet, the last time we were
attacked by a foreign nation was on Dec. 7, 1941 in which, the Congress declared war on
Japan. Yet, in the past 100 years our country's leaders have convinced Americans that we can
wage war if the issue concerns our "national INTEREST." This is wrong and needs to be deleted
and replaced with our Constitution's language. Also, Congress is the ONLY Constitutional
authority to declare war, not the executive branch. Too many countries, including the U.S.,
spend too much money preparing for war on levels of destruction that are unnecessary. We must
attain a new paradigm with leading countries to achieve a mutual understanding that the
people of the world are better off with jobs, food, families, peace, and a chance at a better
life, filled with hope, faith, and flourishing communities. Things have to change.
transcendent_wannabe , 8 hours ago
I have to agree in sentiment with the author, but the reality of humans on earth almost
demands constant war, it is the price we pay for the modern city lifestyle. There are various
reasons.
1. Ever since WW1, the country has become citified, and the old peaceful country farm life
was replaced with the rat race of industrial production. Without war, there is no need for
the level of industrial production required to give full employment to the overpopulated
cities. People will scream for war and jingoism when they have no city jobs. How do you deal
with that? Sure, War is a Racket, but so far a necessary racket.
2. Every 20 years the military needs a real shooting war to battle test its upcoming
soldiers and new equipment. Now the battles are against insurgencies... door-to-door in
cities and ghettos, and new tactics need to be field tested. If the military goes more than
20 years without a real shooting war, they lose the real men, the sargeant majors, who just
become fat pot bellied desk personel without the adrenaline of a real fight.
3. Humans inately like to fight. Even children, boys wrestle, girls taunt one another.
There is no way discovered yet to keep people from turning violent in their attempts to steal
what others have, or to gain dominance thru physical intimidation. Without war, gangs will
form and fight over territorial boundaries. There is no escaping it.
4. Earth is where the battle field is, Battlefield Earth. There is no fighting allowed in
heaven, so Earth is where souls come to fight. Nobody on earth likes it, but fighting and war
is here to stay, and you should really use this life to find out how to transcend earth and
get to a place where war is not needed or allowed, like heaven or Valhalla.
Tortuga , 8 hours ago
So. He thinks the crooked, grifting, regressive hate US murdering dim pustules aren't the
warmongering, globalist, hate US, crooked, grifting, murdering republicrats. What a mo
ron.
HenryJonesJr , 8 hours ago
Real conservatives were always against foreign intervention. It was the Left that embraced
foreign wars (Wilson / Roosevelt / Truman / Johnson).
messystateofaffairs , 8 hours ago
From my perspective being a professional goon to serve the greater glory of international
criminals, is, aside from having to avoid the mirror, way too much hard and dangerous work
for the money. As a civilian of a society run by criminals on criminal imperialist
principles, I have no literal PTSD type of skin in that filthy game, but like most citizens,
knowing and unknowing, I do swim in that sewer everyday, doing my best to avoid bumping into
the larger turds. My "patriotism" lies where the turds are fewest, anywhere in the world that
might be.
bh2 , 8 hours ago
The threat to US interests is not in the ME (apart from Israel). It's in the Pacific.
NATO was never intended to be a defense arrangement perpetually funded by the US. Once
stood up and post-war economies in Europe were restored, it was supposed to be a European
defense shield with the US as ultimate backup. Not as a sugar-daddy for wealthy nations. Now
that Russia is no longer situated to attack through the Fulda Gap, NATO is a grotesque
expression of Parkinson's Law writ large.
China is a real threat to US interests. That's obvious simply by consulting a map.
Military assets committed to engagement in theaters that no longer seriously matter is
feckless and spendthrift. Particularly when Americans are put in harm's way with no prospect
of either winning or leaving.
Worse yet is the accelerating prospect of being drawn into conflict in the South China Sea
because fewer than decisive US and allied assets are deployed there.
While nations are now responding to that threat (including Japan, who are re-arming),
China must realize a successful Taiwan invasion faces steadily diminishing prospects. They
must act soon or give up the opportunity. Moreover, the CCP are loosing face with their own
people because of multiple calamities wreaking havoc. The danger of a desperate CCP turning
to a hot war to save face is an ever-rising threat. (If Three Gorges Dam fails, that could be
the final straw.)
FDR deliberately suckered Japan into attacking the US (but apparently never guessed it
would be on Pearl Harbor). It appears modern neo warmongers of all stripes would be delighted
if China were tempted into yet another senseless war in the Pacific. And more lives lost on
all sides.
While the size of US military and (ineptly named) "intelligence" budgets are vastly out of
scale, the short-term cost in money is secondary to risk of long-term cost in blood. Surging
the budget may make good sense when guns are all pointing in the wrong direction and
political donors don't care as long as it pays well.
Defeating that outrageously wasteful spending is the first battle to be won. Disengaging
from stupid, distracting, unwinnable conflicts is an imperative to achieve that goal.
The Judge , 8 hours ago
US. is the real threat to US interests.
DeptOfPsyOps-14527776 , 8 hours ago
An important part of this statue quo is propaganda and in particular neo-con
propaganda.
Once it was clear that agitating against the Russian federation had failed, they started
agitating against the PRC.
FDR administration wasn't that clever, they just had (((support))). They wanted Imperial
Japan unable to strengthen itself against the United Kingdom as it was waging a war against
the European Axis, did not realize that the Japanese fleet could reach as far as Hawaii and
after Pearl Harbor, believed the West Coast could have been attacked as well.
Hovewer, they likely expected the Japanese to intercept their fleet on the way to the
Phillipines after a war between Imperial Japan and the Commonwealth had started.
Salzburg1756 , 8 hours ago
"FDR deliberately suckered Japan into attacking the US (but apparently never guessed it
would be on Pearl Harbor)." No, we knew the japs were going to attack Pearl Harbor. We had
broken their code. That's why we sent our best battle ships away from Hawaii just before the
attack. Most of the ships they sank were old and worthless; our good ships were out at
sea.
TheLastMan , 4 hours ago
What constitutes "America's interests"?
the us military is the world community welcome wagon for global multi national Corp
chamber of commerce
Do us citizens serve corporations or do corporations serve us citizens?
next ?, who owns / controls corporations?
Alice-the-dog , 8 hours ago
There is a reason why suicide is the leading cause of death among active duty military.
They come to realize that what they are doing is perfect male bovine fecal matter. That they
are guilty of participating in completely unwarranted death and destruction.
847328_3527 , 9 hours ago
Liberals and "progressives" are traditionally against wars. This new "woke" group of
Demorats shows they are NOT liberals or progressives since they support the Establishment War
Criminals like Obama and his side kick, demented Biden, and Bloodthirsty Clinton.
Posted by: time2wakeupnow | Jul 18 2020 18:59 utc | 13 But there are also very real First
Amendment interests implicated by laws which bar entities from spending money to express
political viewpoints."
With regard to Greenwald's opinion, mine is relatively simple: ban corporations from doing
*anything* in the political arena. Corporations are *not* people, regardless of the legal
myth that they are. Officers of corporations have no standing other than their personal
standing, and they should be barred from contributing to campaigns, or lobbying for
legislation or anything else outside of conducting the business they are *licensed by the
state* to do.
This does not apply to incorporated non-profit organizations which are organized to do
precisely what corporations should be banned from doing: advocate and attempt to influence
specific legislation or policies or candidates for office. For profit corporations should be
banned from doing anything to influence non-profit organizations, by the way, otherwise
corporations will do an end-run around the ban on political action by funding fake
"non-profit" organizations.
With regard to the large social media, there should be a law passed which 1) prevents them
from being sued regardless of anything their subscribers say on their platforms, and 2)
prevents them from censoring anything their subscribers say on their platforms. This was true
on the street and should be true on the Internet. Freedom of speech is a cornerstone of the
Constitution and should be protected on the Internet.
That does not apply here in MOA because MOA is a small operation owned and operated by one
person. He has the right to ban or censor anything he likes. But if he was the size of
Facebook or Twitter, he would have serious social influence. In that case, it would be
justified to both hold him blameless for the trolls and also prevent him from censoring
trolls.
Dealing with offensive people on the large platforms (and even here) should be done by
providing the users adequate personal controls in their interface which enable the users to
remove content from their view that they don't like, while the content remains in view for
anyone who approves of it or doesn't care. Some forums have been doing this for years, such
as Slashdot.
These solutions are incredibly simple. The reason they are not implemented is because
different factions see benefit in not implementing them.
Naturally, as an anarchist, the solutions I suggest are predicated on the idiocy of having
states and corporations in the first place. Otherwise, all these "issues" wouldn't even
exist. This is what you get when you have a religious belief in the state and society.
"... Although corporations are legally a person (see history below), they are in fact an entity. The sole goal of that entity is
profit. There is no corporate conscience. ..."
"... Perhaps it would be useful to look at the nature of our global expansion. The global expanse of US military bases is well-known,
but its actual territorial empire is largely hidden. The true map of America is not taught in our schools. Abby Martin interviews history
Professor Daniel Immerwahr about his new book, ' How To Hide An Empire ,' where he documents the story of our "Greater United States."
This is worth the 40 minute watch...I learned several new things. One more long clip. However this one is fine to just listen to as
you do things. This is a wonderful interview with Noam Chomsky. The man exudes wisdom. ..."
"... The oligarchy has been with us since perhaps the tribal origins of our species, but the corporation is a newer phenomenon.
A faceless, soulless profit machine. Ironically it is the 14th amendment which is used to justify corporate person-hood. ..."
"... Corporations aren't specifically mentioned in the 14th Amendment, or anywhere else in the Constitution. But going back to the
earliest years of the republic, when the Bank of the United States brought the first corporate rights case before the Supreme Court,
U.S. corporations have sought many of the same rights guaranteed to individuals, including the rights to own property, enter into contracts,
and to sue and be sued just like individuals. ..."
"... But it wasn't until the 1886 case Santa Clara County v. Southern Pacific Rail Road that the Court appeared to grant a corporation
the same rights as an individual under the 14th Amendment ..."
"... The United States is home to five of the world's 10 largest defense contractors, and American companies account for 57 percent
of total arms sales by the world's 100 largest defense contractors, based on SIPRI data. Maryland-based Lockheed Martin, the largest
defense contractor in the world, is estimated to have had $44.9 billion in arms sales in 2017 through deals with governments all over
the world. The company drew public scrutiny after a bomb it sold to Saudi Arabia was dropped on a school bus in Yemen, killing 40 boys
and 11 adults. Lockheed's revenue from the U.S. government alone is well more than the total annual budgets of the IRS and the Environmental
Protection Agency, combined. ..."
"... http://news.nidokidos.org/military-spending-20-companies-profiting-the-m... For a list of the 20 companies profiting most off
war... https://themindunleashed.com/2019/03/20-companies-profiting-war.html ..."
"... Capitalism, militarism and imperialism are disastrously intertwined ..."
"... Corporations are Religions Yes they are. They have ethics, goals, and priests. They have a god who determines everything "The
Invisible Hand". They believe themselves to be superior to the state. They have cult garb, or are we not going to pretend that there's
corporate dress codes, right down to the things you can wear on special days of the week. They determine what you can eat, drink and
read. If you say something wrong, they feel within their rights to punish you because they OWN the medium that you used to spread ideas.
OF course they don't own your thoughts... those belong to the OTHER god. ..."
Chris Hedges often says "The corporate coup is complete". Sadly I think he is correct. So this week I thought it might be interesting
to explore the techniques which are used here at home and abroad. The oligarchs' corporate control is global, but different strategies
are employed in various scenarios. Just thinking about the recent regime changes promoted by the US in this hemisphere...
The current attempts at the Venezuelan, Nicaraguan, Cuban, and Iranian coups are primarily conducted
using economic sanctions
.
The US doesn't even lie about past coups. They recently
released a report about the 1953
CIA led coup against Iran detailing the strategies. Here at home it is a compliant media and a new array of corporate laws designed
to protect and further enrich that spell the corporate capture of our culture and society. So let's begin by looking at the nature
of corporations...
The following 2.5 hour documentary from 2004 features commentary from Chris, Noam, Naomi, and many others you know. It has some
great old footage. It is best watched on a television so you have a bigger screen. (This clip is on the encore+ youtube channel and
does have commercials which you can skip after 5 seconds) https://www.youtube.com/watch?v=zpQYsk-8dWg
Based on Joel Bakan's bestseller The Corporation: The Pathological Pursuit of Profit and Power , this 26-award-winning
documentary explores a corporation's inner workings, curious history, controversial impacts and possible futures.
One hundred
and fifty years ago, a corporation was a relatively insignificant entity. Today, it is a vivid, dramatic, and pervasive presence
in all our lives. Like the Church, the Monarchy and the Communist Party in other times and places, a corporation is today's dominant
institution.
Charting the rise of such an institution aimed at achieving specific economic goals, the documentary also recounts
victories against this apparently invincible force.
Although corporations are legally a person (see history below), they are in fact an entity. The sole goal of that entity is
profit. There is no corporate conscience. Some of the CEO's in the film discuss how all the people in the corporations are against
pollution and so on, but by law stockholder profit must be the objective. Now these entities are global operations with no loyalty
to their country of origin.
Perhaps it would be useful to look at the nature of our global expansion. The global expanse of US military bases is well-known,
but its actual territorial empire is largely hidden. The true map of America is not taught in our schools. Abby Martin interviews
history Professor Daniel Immerwahr about his new book, ' How To Hide An Empire ,' where he documents the story of our
"Greater United States." This is worth the 40 minute watch...I learned several new things. One more long clip. However this one is
fine to just listen to as you do things. This is a wonderful interview with Noam Chomsky. The man exudes wisdom.
So much of this conversation touches on today's topic of our corporate capture. Amy interviewed Ed Snowden this week... (video or text)
This is a system, the first system in history, that bore witness to everything. Every border you crossed, every purchase you
make, every call you dial, every cell phone tower you pass, friends you keep, article you write, site you visit and subject line
you type was now in the hands of a system whose reach is unlimited but whose safeguards were not. And I felt, despite what the
law said, that this was something that the public ought to know.
The oligarchy has been with us since perhaps the tribal origins of our species, but the corporation is a newer phenomenon.
A faceless, soulless profit machine. Ironically it is the 14th amendment which is used to justify corporate person-hood.
Corporations aren't specifically mentioned in the 14th Amendment, or anywhere else in the Constitution. But going back
to the earliest years of the republic, when the Bank of the United States brought the first corporate rights case before the Supreme
Court, U.S. corporations have sought many of the same rights guaranteed to individuals, including the rights to own property,
enter into contracts, and to sue and be sued just like individuals.
But it wasn't until the 1886 case Santa Clara County v. Southern Pacific Rail Road that the Court appeared to grant a corporation
the same rights as an individual under the 14th Amendment
More recently in 2010 (Citizens United v. FEC): In the run up to the 2008 election, the Federal Elections Commission blocked the
conservative nonprofit Citizens United from airing a film about Hillary Clinton based on a law barring companies from using their
funds for "electioneering communications" within 30 days of a primary or 60 days of a general election. The organization sued, arguing
that, because people's campaign donations are a protected form of speech (see Buckley v. Valeo) and corporations and people enjoy
the same legal rights, the government can't limit a corporation's independent political donations. The Supreme Court agreed. The
Citizens United ruling may be the most sweeping expansion of corporate personhood to date.
https://www.motherjones.com/politics/2014/07/how-supreme-court-turned-co...
Do they really believe this is how we think?
More than just using the courts, corporations are knee deep in creating favorable laws, not just by lobbying, but by actually
writing legislation to feed the politicians that they own and control, especially at the state level.
Through ALEC, Global Corporations Are Scheming to Rewrite YOUR Rights and Boost THEIR Revenue. Through the corporate-funded
American Legislative Exchange Council, global corporations and state politicians vote behind closed doors to try to rewrite state
laws that govern your rights. These so-called "model bills" reach into almost every area of American life and often directly benefit
huge corporations.
In ALEC's own words, corporations have "a VOICE and a VOTE" on specific changes to the law that are then proposed in your state.
DO YOU? Numerous resources to help us expose ALEC are provided below. We have also created links to detailed discussions of key
issues...
There is very little effort to hide the blatant corruption. People seem to accept this behavior as business as usual, after all
it is.
Part of the current ALEC legislative agenda involves stifling protests.
I think it started in Texas...
A bill making its way through the Texas legislature would make protesting pipelines a third-degree felony, the same as attempted
murder.
H.B. 3557, which is under consideration in the state Senate after passing the state House earlier this month, ups penalties for
interfering in energy infrastructure construction by making the protests a felony. Sentences would range from two to 10 years.
Lawmakers in Wisconsin introduced a bill on September 5 designed to chill protests around oil and gas pipelines and other energy
infrastructure in the state by imposing harsh criminal penalties for trespassing on or damaging the property of a broad range
of "energy providers."
Senate Bill 386 echoes similar "critical infrastructure protection" model bills pushed out by the American Legislative Exchange
Council (ALEC) and the Council of State Governments over the last two years to prevent future protests like the one against the
Dakota Access Pipeline.
And Chris was on the evening RT news this week discussing how the US empire is striking back against leaders who help their own
people rather than our global corporations.
Financially, the cost of these wars is immense: more than $6 trillion dollars. The cost of these wars is just one element of
the $1.2 trillion the US government spends annually on wars and war making. Half of each dollar paid in federal income tax
goes towards some form or consequence of war . While the results of such spending are not hard to foresee or understand:
a cyclical and dependent relationship between the Pentagon, weapons industry and Congress, the creation of a whole new class of
worker and wealth distribution is not so understood or noticed, but exists and is especially malignant.
This is a ghastly redistribution of wealth, perhaps unlike any known in modern human history, certainly not in American history.
As taxpayers send trillions to Washington. DC, that money flows to the men and women that remotely oversee, manage and staff the
wars that kill and destroy millions of lives overseas and at home. Hundreds of thousands of federal employees and civilian contractors
servicing the wars take home six figure annual salaries allowing them second homes, luxury cars and plastic surgery, while veterans
put guns in their mouths, refugees die in capsized boats and as many as four million nameless souls scream silently in death.
These AUMFs (Authorization for Use of Military Force) and the wars have provided tens of thousands of recruits to international
terror groups; mass profits to the weapons industry and those that service it; promotions to generals and admirals, with
corporate board seats upon retirement ; and a perpetual and endless supply of bloody shirts for politicians to wave via
an unquestioning and obsequious corporate media to stoke compliant anger and malleable fear. What is hard to imagine, impossible
even, is anyone else who has benefited from these wars.
The United States is home to five of the world's 10 largest defense contractors, and American companies account for 57 percent
of total arms sales by the world's 100 largest defense contractors, based on SIPRI data. Maryland-based Lockheed Martin, the largest
defense contractor in the world, is estimated to have had $44.9 billion in arms sales in 2017 through deals with governments all
over the world. The company drew public scrutiny after a bomb it sold to Saudi Arabia was dropped on a school bus in Yemen, killing
40 boys and 11 adults. Lockheed's revenue from the U.S. government alone is well more than the total annual budgets of the IRS and
the Environmental Protection Agency, combined.
The obvious industry which was not included nor considered is the fossil fuel industry. Here's another example of mutual corporate
interests.
"Capitalism, militarism and imperialism are disastrously intertwined with the fossil fuel economy .A globalized economy
predicated on growth at any social or environmental costs, carbon dependent international trade, the limitless extraction of natural
resources, and a view of citizens as nothing more than consumers cannot be the basis for tackling climate change .Little wonder
then that the elites have nothing to offer beyond continued militarisation and trust in techno-fixes."
The US military is one of the largest consumers and emitters of carbon-dioxide equivalent (CO2e) in history, according to an
independent analysis of global fuel-buying practices of a "virtually unresearched" government agency.
If the US military were its own country, it would rank 47th between Peru and Portugal in terms of annual fuel purchases, totaling
almost 270,000 barrels of oil bought every day in 2017. In particular, the Air Force is the largest emitter of greenhouse gas
emissions and bought $4.9 billion of fuel in 2017 � nearly double that of the Navy ($2.8 billion).
The fossil fuel giants even try to control the climate talks...
Oil and gas groups were accused Saturday of seeking to influence climate talks in Madrid by paying millions in sponsorship
and sending dozens of lobbyists to delay what scientists say is a necessary and rapid cut in fossil fuel use.
The corporations are so entwined that it is difficult to tell where they begin and end. There's the unity of private prisons and
the war machine. And it's a global scheme...this example from the UK.
One thing is clear: the prison industrial complex and the global war machine are intimately connected. This summer's prison
strike that began in the United States and spread to other countries was the largest in history. It shows more than ever that
prisoners are resisting this penal regime, often at great risk to themselves. The battle to end prison slavery continues.
The 2017 tax bill cut taxes for most Americans, including the middle class, but it heavily benefits the wealthy and corporations
. It slashed the corporate tax rate from 35 percent to 21 percent, and its treatment of "pass-through" entities -- companies organized
as sole proprietorships, partnerships, LLCs, or S corporations -- will translate to an estimated $17 billion in tax savings for
millionaires this year. American corporations are showering their shareholders with stock buybacks, thanks in part to their tax
savings.
Even Robert Jackson Jr., commissioner at the Securities and Exchange Commission. Appointed to the SEC in 2017 by President Donald
Trump. Confirmed in January 2018 sees the corporate cuts as absurd.
"We have been to the movie of tax cuts and buybacks before, in the Republican administration during the George W. Bush era.
We enacted a quite substantial tax cut during that period. And studies after that showed very clearly that most corporations use
the funds from that tax cut for buybacks. And here's the kicker. That particular tax cut actually required that companies deploy
the capital for capital expenditures, wage increases and investments in their people. Yet studies showed that, in fact, the companies
use them for buybacks. So we've been to this movie before. And what you're describing to me, that corporations turned around and
took the Trump tax cut and didn't use it in investing in their people or in infrastructure, but instead for other purposes, shouldn't
surprise anybody at all."
So the corporations grow larger, wealthier, more powerful, buying evermore legislative influence along the way. They have crept
into almost every aspect of our lives. Some doctors are beginning to see the influence of big pharma and other corporate interests
are effecting the current practice of medicine.
Gary Fettke is a doctor from Tasmania who has been targeted for promoting a high fat low carb diet...threatened with losing
his medical qualifications. He doesn't pull punches in this presentation discussing the corporate control of big ag/food and big
pharma on medical practice and education. (27 min)
Corporations are Religions
Yes they are. They have ethics, goals, and priests. They have a god who determines everything "The Invisible Hand". They believe
themselves to be superior to the state. They have cult garb, or are we not going to pretend that there's corporate dress codes,
right down to the things you can wear on special days of the week. They determine what you can eat, drink and read. If you say
something wrong, they feel within their rights to punish you because they OWN the medium that you used to spread ideas. OF course
they don't own your thoughts... those belong to the OTHER god.
At least the crazy made up gods that I listen to don't usually
fuck over other human beings for a goddamn percentage. ON the other hand, if a corporation can make a profit, it's REQUIRED to
fuck you over. To do otherwise would be against it's morals. Which it does have, trust us... OH, and corporations get to make
fun of your beliefs, but you CANNOT make fun of theirs. Because that would be heresy against logic and reason.
In a local newspaper showed a couple coming out of a Wal-Mart with their carts piled high with big boxed foreign junk, then
shown cramming their SUV full of said junk. The headline read "Crazy Busy". It pretty much summed up what is wrong with the American
consumer culture. The next day's big headline spotlighted our senator's picture affixed to a LARGE headline boasting "$22 Billion
Submarine Contract Awarded". A good example of of what is wrong with the american war economy.
Thank you for your compilation Lookout! If we can get beyond the headlines, working at grass root and local solutions, maybe
even underground revolution, there may be hope for us. Barter for a better future.
My buddies always say about their mayor..."There's no way we will trade down after this election...but then we do." Perhaps
it is true for more than just their town.
The line running in my head is..."What if they gave a war and nobody came". I want to expand it to..."What if they made cheap
junk no one really wanted and nobody bought it". Or substitute junk food for cheap junk, or...
My point in today's conclusion is much as I try to walk away from corporate culture/control, I really can't totally escape...but
at least I spend most of my time in the open, breathing clean air, surrounded by forest. We do what we can.
Consumerism in our society is a plague, a disease perpetrated upon us by our corporate lords. It has taken over everything
about being an American.
I think the youth are catching on, as they are thrifting more, but they don't understand about food, and that's the rub. Our
youth will be more unhealthy until they understand what corporations are doing to us through food addictions.
We're expecting rain today for most of the day and actually it's just started. The person who will drill our well came by yesterday
and figured out some details. We are behind two other wells, so it will probably be the holiday week when it happens - we'll see.
I can wait til January and hope we do.
Ideas is that new deal of FDR's day had corporate opponents far different than those of today. Sanders does not seem to understand
that the corporations of yesterday, and what worked against them, will not work against the corporations of today. In the early part of the 20th century, corporations were still primarily domestic and local often with charters from the state
where they conducted their primary business, many times all of their business.
Regulation and unions were reasonable anti-dotes to the abuses of these local and domestic corporations. The state still had
some semblance of control over them.
But today corporations are global. They have no allegiance to, or concern for the domestic economy or local people. They do not fear of any anti-dotes that worked for years against domestic or local corporations. Global corporations just leave
and go elsewhere if they don't like the domestic or local situation if they have not managed to completely take over the government.
There is only one reason to incorporate in the first place. That is for the owner(s) of the business to avoid personal liability
or responsibility. The majority of people never understand this idea. Corporate owners are the people who are the genuine personal
responsibility avoiders. Not the poor. The only antidote to corporations these days is the total demise of the corporation and
its similar business entities that dodge personal responsibility. And the state must refuse to allow any such entities to do business.
It is the only way forward. Otherwise nation states will give way to corporate states. Corporate governance is the new feudalism
from which the old feudalism morphed.
Sanders isn't going to advocate doing away with corporate entities or other similar business entities. Nor will any of the
Democratic contenders. They all require corporations to rail against as the basis for their political policy.
...and I've always wondered just how Bernie would dismantle them. However like the impotence of the impeachment, is the impotence
of the primary process.
When the DNC was sued after 2016, they were
exonerated based on the ruling they were a private entity entitled to make rules as the wanted. The primary is so obviously
rigged I can almost guarantee Bernie will not be allowed the nomination, so the question to how he would change corporate control
is really moot.
@Lookout I probably
could get on board with a Sanders campaign if he would run as an Independent. But it is really hard to get on board with him as
a Democrat. If he loses the nomination, he will probably not run as an Independent once again. Once he bailed on an Independent
run last time, I and many others bailed on him. I would support his Independent candidacy just to screw with the Electoral College.
I thought last time an independent candidacy might have thrown the election to the House of Representatives. I could see a Democratically
controlled House voting for him over Trump in a three way EC split if the Democratic candidate took low EC numbers.
But he is so afraid of being tarred with the Nader moniker.
What I said many times on websites last election is that an EC vote is very similar to a Parliamentary Election. And that would
be an interesting change for sure. It would also be a means of having the popular vote winner restored if there is a big enough
margin in the House. And what would be equally cool is that the Senate picks the VP. So you could have President and VP from different
parties.
if Bernie got the nomination, I would vote for him, especially in this imaginary world, if Tulsi was his running mate. Then there
the question about your vote being counted? We'll just have to see what we see and make judgements based on outcomes, IMO.
#4.1 I probably could get on board with
a Sanders campaign if he would run as an Independent. But it is really hard to get on board with him as a Democrat. If he loses
the nomination, he will probably not run as an Independent once again. Once he bailed on an Independent run last time, I and
many others bailed on him. I would support his Independent candidacy just to screw with the Electoral College. I thought last
time an independent candidacy might have thrown the election to the House of Representatives. I could see a Democratically
controlled House voting for him over Trump in a three way EC split if the Democratic candidate took low EC numbers.
But he is so afraid of being tarred with the Nader moniker.
What I said many times on websites last election is that an EC vote is very similar to a Parliamentary Election. And that
would be an interesting change for sure. It would also be a means of having the popular vote winner restored if there is a
big enough margin in the House. And what would be equally cool is that the Senate picks the VP. So you could have President
and VP from different parties.
@Lookout The only
way the Democrats might beat Trump is to have Sanders run as an Independent and prevent Trump from reaching 270. That is a far
better way to beat Trump than impeachment. Would the house vote for the Democrat or an Independent? I guess it would depend on
how Sanders did in the popular vote and EC against his Democratic rival.
#4.1.1 if Bernie got the nomination, I would vote for him, especially in this imaginary world, if Tulsi was his running mate. Then
there the question about your vote being counted? We'll just have to see what we see and make judgements based on outcomes,
IMO.
If it was Hillary "Dewey Cheatem & Howe" Clinton, all bets are off.
#4.1.1.1 The only way the Democrats
might beat Trump is to have Sanders run as an Independent and prevent Trump from reaching 270. That is a far better way to
beat Trump than impeachment. Would the house vote for the Democrat or an Independent? I guess it would depend on how Sanders
did in the popular vote and EC against his Democratic rival.
Good lord.that she did that is unbelievable. Great point. Boycott Fox News, but go on Stern's show. It's going to be fun to
watch how much lower she falls.
MSNBC invited on two former Hillary Clinton aides to criticize Bernie Sanders for taking a "long time to get out of the
race" and that he didn't do "enough" campaigning for her in 2016. pic.twitter.com/6Vsqo0DKZI
@TheOtherMaven They
have to choose from actual EC vote getters. So if she is not the candidate she could not win.
Having Sanders run as an Independent and Warren or Biden run as a Democrat would be a much better strategy to ensure a Trump
loss in the House. Of course it might take some coordination as in asking the voters to vote for the candidate who has the best
chance of beating Trump in certain states. But voters could probably figure that out.
Or a candidate could just withdraw from a state in which the other candidate had a better chance of beating Trump.
Lookout as usual you have done an excellent job of giving me a lot of articles to read and think about this next week.
Of course I need to be loading my car and shutting this place down as I head to the Texas hill country. Will look for an article
about Kinder Morgan and small communities that are fighting the pipeline through their towns. The read was a little hopeful.
Watching the weather and it looks like sunshine and clear skies as I travel. Thanks for all your work in putting this together.
I like to travel on the old roads
I like the way it makes me feel
No destination just the old roads
Somehow it helps the heart to heal.
I hope your road trip is a good one. The less busy tracks are almost meditative....soaking in scenery as the world passes by.
Have fun and be careful.
Lookout as usual you have done an excellent job of giving me a lot of articles to read and think about this next week.
Of course I need to be loading my car and shutting this place down as I head to the Texas hill country. Will look for an
article about Kinder Morgan and small communities that are fighting the pipeline through their towns. The read was a little
hopeful.
Watching the weather and it looks like sunshine and clear skies as I travel. Thanks for all your work in putting this together.
Here are a couple of links to how free markets
help in the corporate takeover. Amazon a corp that has only made a profit by
never paying taxes and accounting fraud. It
became a trillion dollar corp through the use
of monopoly money(stock) it's nothing but the
perfect example of todays "unicorn" corp, i.e.
worth what it is w/out ever making a penny
Corporations can live far beyond a persons lifespan. Corporations can commit homicide and escape execution and justice. Unfortunately,
unions are just as likely to be on the corporations side to get jobs and wages, and bust heads if anything interferes with that.
If we protest we've seen the police ready to use deadly force at the drop of a hat, and get away with it. We get to vote on
candidates that some political club chose for us, and have little incentive to work for the 99%. The gov. has amassed so much
information on us we can't even fathom its depth. We have nowhere left, no unexplored lands out of reach of the government. We
think we own things, but if you think you own a home, see how long it is before the gov. confiscates it if you don't pay your
property taxes.
If I were younger, or a young person asked what to do, I would say.... learn some skill that would make you attractive for
emigrating to another country, because the US looks like it's over. It's people are only here to be exploited. And if Bernie were
to become president I hope he gets a food taster.
run to. No where to hide. As in the U.K., corporations are seeking to to dismantle the NHS and turn it into a for-profit system
like ours. Even as the gilllet-jaune protesters risk life and limb, Macron seeks to install true neoliberalism in France. And
the beat goes on.
Corporations can live far beyond a persons lifespan. Corporations can commit homicide and escape execution and justice.
Look at what chevron did to people in Borapol. I'm sure I spelled this wrong but hopefully people will know what I'm talking
about. They killed lots of people and poisoned their land for decades and the fight over it is still going on. How many decades
more will chevron get to skirt justice? Banks continue to commit fraud and they only get little fines that don't do jack to keep
them from doing it again. Even cities are screwing people. Owe a few dollars on your property taxes and they will take your home
and sell it for pennies on the dollar. How in hell can it be legal to charge people over 600% interest? What happened to usury
rules if that's the correct term.
The International Court of Justice at The Hague ruled last week that a prior ruling by an Ecuadorean court that fined Chevron
$9.5 billion in 2011 should be upheld, according to teleSUR, a Latin American news agency. Texaco, which is currently a part of
Chevron, is responsible for what is considered one of the world's largest environmental disasters while it drilled for oil in
the Ecuadorian rainforest from 1964 to 1990.
https://www.ecowatch.com/will-chevron-and-exxon-ever-be-held-responsible...
The legal battle has been tied up in the courts for years. Ecuador's highest court finally upheld the ruling in January
2014, but Chevron refused to pay.
This is another thing that corporations get away with. Contaminating land and then just walking away from it. How many superfund
sites have we had to pay for instead of the ones who created the mess. Just declared bankruptcy and walked away. Corporations
are people? Fine then they should be held as accountable as the people in the lower classes. Fat chance though right?
Weren't people killed by a gas cloud released from the plant? I read something recently that said the case is still going
through the courts. How much money have they spent trying not to spend more?
Byedone just needs to pack it in and drop out already. Today he was defending the republican party after someone said something
about them needing to go away. Joe said that we need another party so one does not get more power than the other. Yeah right,
Joe. It's not like the Pubs are already weilding power they don't have and them dems cowering and supporting them.
Newsweek reporter quit after being censored on the OPCW story.
I have collected evidence of how they suppressed the story in addition to evidence from another case where info inconvenient
to US govt was removed, though it was factually correct.
First frustrate us with gridlock. Then pass bills benefiting the corporate overlords. Then leading up
to elections pass bills like the one against animal cruelty (who doesn't love kitties and puppies?), or propose a bill to consider
regulating cosmetics. This second bipartisan effort is glaringly cynical since no one apparently knows what is in beauty products.
Sanders must have politicians worried for them to attempt something which has managed to go unregulated for so long.
All this bipartisanship is not even up to the level of rearranging the deck chairs on the Titanic. It's more like wiping at
them with a dirty rag while the ship of state continues to sink. While animal cruelty and cosmetic safety are important issues,
they pale in comparison to the systemic ills America suffers. Our fearless leaders will continue to scratch the surface while
corruption and business as usual continue to fester. These bipartisan laws may look good on a politician's resume, but they won't
really help the 99%.
@snoopydawg
the propaganda to give NATO a raison d'�tre for a pivot to China. This will be doomed to complete failure just as the Russian
pivot has.
But Putin and Xi Jinping are both much too skilled and intelligent to defeat. American WWE trash talkers are completely outclassed
by an 8th dan in judo paired with a Sun Tzu scholar.
Tomoe nage - use your opponent's weight and aggression against him.
"If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him. If your opponent
is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant. If he is taking his ease, give him no rest.
If his forces are united, separate them. If sovereign and subject are in accord, put division between them. Attack him where he
is unprepared, appear where you are not expected ."
― Sun Tzu, The Art of War
@Lookout
What they want is
a controlled collapse. If they can get the US to continue to overspend on war mongering rather than programs of social uplift
the country will rot from the inside.
"A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching
spiritual death." - Martin Luther King, Jr.
So much more to say really. Had to stop somewhere but as you know the corruption runs deep and is intermixed with the CIA/FBI/MIC
corporate government under which we live.
On we go as best we can!
There is great dignity in the objective truth. Perhaps because it never flows through the contaminated minds of the unworthy.
Corporate charters were initially meant to be for the public good if i'm not mistaken in recall, it was a trade-off for their
privilege to exist. Maybe a movement political leader could highlight this and move the pendulum back to accountability.
Had a conversation with good friend today, a 3M rep, and he was griping about his competitor's shady marketing product practices
apparently lying to manufacturers about the grades and contents of their competing products.
Bezos held a party in DC recently at his place attended by top officials from the Trump
Administration. Jared Kushner was there before. They hang out together.
How odd that Bezos is somehow portrayed as some anti-Trump owner of WaPo. Bezos serves his
role in Beltway...
"... By Paul Adler, Professor of Management and Organization, Sociology and Environmental Studies, University of Southern California. Originally published at The Conversation ..."
Yves here. I wish Sanders would use even more pointed
messaging, like "socialism for the rich". But for those who complain about Sanders not going
after important targets, this slap back at Dimon, who criticized Sanders and socialism at
Davos, shows that the Vermont Senator is landing punches, but choosing his fights carefully.
And banks are much bigger welfare queens than the public realizes. They get all sorts of
subsidies, from underpriced deposit insurance to Federal guaranteed for most home mortgages to
the Fed operating and backstopping the essential Fedwire system. These subsidies are so great
that banks should not be considered to be private sector entities, yet we let them privatize
their profits and socialize their train wrecks.
As we wrote in 2010 :
More support comes from Andrew Haldane of the Bank of England, who in a March 2010 paper compared the banking
industry to the auto industry, in that they both produced pollutants: for cars, exhaust
fumes; for bank, systemic risk. While economists were claiming that the losses to the US
government on various rescues would be $100 billion (ahem, must have left out Freddie and
Fannie in that tally), it ignores the broader costs (unemployment, business failures, reduced
government services, particularly at the state and municipal level). His calculation of the
world wide costs:
.these losses are multiples of the static costs, lying anywhere between one and five
times annual GDP. Put in money terms, that is an output loss equivalent to between $60
trillion and $200 trillion for the world economy and between £1.8 trillion and
£7.4 trillion for the UK. As Nobel-prize winning physicist Richard Feynman observed,
to call these numbers "astronomical" would be to do astronomy a disservice: there are only
hundreds of billions of stars in the galaxy. "Economical" might be a better
description.
It is clear that banks would not have deep enough pockets to foot this bill. Assuming
that a crisis occurs every 20 years, the systemic levy needed to recoup these crisis costs
would be in excess of $1.5 trillion per year. The total market capitalisation of the
largest global banks is currently only around $1.2 trillion. Fully internalising the output
costs of financial crises would risk putting banks on the same trajectory as the dinosaurs,
with the levy playing the role of the meteorite.
Yves here. So a banking industry that creates global crises is negative value added from a
societal standpoint. It is purely extractive . Even though we have described its
activities as looting (as in paying themselves so much that they bankrupt the business), the
wider consequences are vastly worse than in textbook looting.
Back to the current post. As to JP Morgan's socialism versus the old USSR's planned economy,
one recent study which I cannot readily find due to the sorry state of Google offered an
important correction to conventional wisdom.
Recall that Soviet Russia initially did perform extremely well, freaking out the capitalist
world by industrializing in a generation. There was ample hand-wringing as to whether a less
disciplined free enterprise system could compete with a command and control economy. Economists
got a seat at the policy table out of the concern that capitalist economies needed expert
guidance to assure that they could produce both guns and butter.
The study concluded that central planning had worked well in Soviet Russia initially, until
the lower-level apparatchiks started gaming the system by feeding bad information so as to make
their performance look better (for instance, setting way too forgiving production targets, or
demanding more resources than they needed). The paper contended that the increasingly poor
information about what was actually happening on the ground considerably undermined the central
planning process. That is not to say there weren't also likely problems with motivation and
overly rigid bureaucracies. But the evolution of modern corporations, of devaluing and ignoring
worker input and treating them like machines that are scored against narrow metrics, looks as
demotivating as the stereotypical Soviet factory.
Finally, this post conflates socialism, which includes New Deal-ish European style social
democracy, with capitalist systems alongside strong social safety nets, which the public
ownership and provision of goods and services. It should be noted that public ownership has
regularly provided services like utilities very effectively.
By Paul Adler, Professor of Management and Organization, Sociology and Environmental
Studies, University of Southern California. Originally published at
The Conversation
With his Dimon ad, Sanders is referring specifically to the bailouts JPMorgan
and other banks took from the government during the 2008 financial crisis. But accepting
government bailouts and corporate welfare is not the only way I believe American companies
behave like closet socialists despite their professed love of free markets.
In reality, most big U.S.
companies operate internally in ways Karl Marx would applaud as remarkably close to
socialist-style central planning. Not only that, corporate America has arguably become a
laboratory of innovation in socialist governance, as I show in
my own research .
Closet Socialists
In public, CEOs like
Dimon attack socialist planning while defending free markets.
But inside JPMorgan and most other big corporations, market competition is subordinated to
planning. These big companies often contain dozens of business units and sometimes thousands.
Instead of letting these units compete among themselves, CEOs typically direct a strategic
planning process to ensure they cooperate to achieve the best outcomes for the corporation
as
a whole .
This is just how a socialist economy is intended to operate. The government would conduct
economy-wide planning and set goals for each industry and enterprise, aiming to achieve the
best outcome for society as a whole.
And just as companies rely internally on planned cooperation to meet goals and overcome
challenges, the U.S. economy could use this harmony to overcome the existential crisis of our
age – climate change. It's a challenge so massive and urgent that it will require
every part of the economy to work together with government in order to address it.
Overcoming Socialism's Past Problems
But, of course, socialism doesn't have a good track record.
One of the reasons socialist planning failed in the old Soviet Union, for example, was that
it was so top-down
that it lacked the kind of popular legitimacy that democracy grants a government. As a result,
bureaucrats overseeing the planning process could not get reliable information about the real
opportunities and challenges experienced by enterprises or citizens.
Moreover, enterprises had little incentive to strive to meet their assigned objectives,
especially when they had so little involvement in formulating them.
A second reason the USSR didn't survive was that its authoritarian system
failed to motivate either workers or entrepreneurs. As a result, even though the government
funded basic science generously, Soviet industry was a laggard in
innovation .
Ironically, corporations – those singular products of capitalism – are showing
how these and other problems of socialist planning can be surmounted.
Take the problem of democratic legitimacy. Some companies, such as
General Electric , Kaiser Permanente
and General Motors ,
have developed innovative ways to avoid the dysfunctions of autocratic planning by using
techniques that enable
lower-level personnel to participate actively in the strategy process.
Although profit pressures often force top managers to short-circuit the promised
participation, when successfully integrated it not only provides top management with more
reliable bottom-up
input for strategic planning but also makes all employees more reliable partners in carrying it out.
So here we have centralization – not in the more familiar, autocratic model, but
rather in a form I call "participative centralization." In a socialist system, this approach
could be adopted, adapted and scaled up to support economy-wide planning, ensuring that it was
both democratic and effective.
As for motivating innovation, America's big businesses face a challenge similar to that of
socialism. They need employees to be collectivist, so they willingly comply with policies and
procedures. But they need them to be simultaneously individualistic, to fuel divergent thinking
and creativity.
One common solution in much of corporate America, as in the old Soviet Union, is to
specialize those roles ,
with most people relegated to routine tasks while the privileged few work on innovation tasks.
That approach, however, overlooks the creative capacities of the vast majority and leads
to widespread employee disengagement and sub-par business performance.
Smarter businesses have found ways to overcome this dilemma by creating cultures and reward
systems that support a synthesis of individualism and collectivism that I call "interdependent
individualism." In my research, I have found this kind of motivation in settings as diverse as
Kaiser Permanent
physicians , assembly-line workers at Toyota's NUMMI
plant and software
developers at Computer Sciences Corp . These companies do this, in part, by rewarding both
individual contributions to the organization's goals as well as collaboration in achieving
them.
While socialists have often recoiled
against the idea individual performance-based rewards, these more sophisticated policies could
be scaled up to the entire economy to help meet socialism's innovation and motivation
challenge.
Big Problems Require Big Government
The idea of such a socialist transformation in the U.S. may seem remote today.
But this can change, particularly as more Americans, especially young ones,
embrace socialism . One reason they are doing so is because the current capitalist system
has so manifestly failed to deal with climate change.
Looking inside these companies suggests a better way forward – and hope for society's
ability to avert catastrophe.
Just to add, as a former bank and buy side lobbyist, the industry is not always opposed to
regulation. It's a barrier to entry.
This post is on the money. Banksters and their clients love corporate welfare and
socialism for the rich, especially when so much of, for example, UK QE "leaked" into asset
bubbles in emerging markets, commodities and real estate.
You are right to say that Sanders should use more pointed language. Like Nina Turner, he
should call out oligarchs. That term is used for Russians and Ukrainians, but never for the
likes of Zuckerberg, Musk, Dimon, Blankfein, Schmidt, Branson, Dyson, Arnault et al. The term
regime should also be used. If it's good enough to delegitimise certain governments, it's
good enough to describe the Trump and Johnson administrations. After all, William Hague in
talks with the US government called the British government the Brown regime.
Feynman and Haldane are mentioned above. It emerged this week that Dominic Cummings,
Johnson's main adviser, is an admirer of both, regarding them as free thinkers and
technicians of substance, and championed Haldane's candidacy to be Bank of England governor.
Johnson sided with Chancellor Sajid Javid.
Sanders should use more pointed language or may be not for the moment. May be after the
Super Tuesday. He is being careful and that is good IMO. He doesn't want to give excuses for
easy attacks. I would say, instead of "socialism for the rich", "socialism for the 1%" or the
0,1% even better. Sounds more neutral. A comment yesterday linked an article comparing
Sanders with Gandhi and others and I think it was well pointed. The quiet and careful
revolution!
Sanders understands (as does Trump), that the 2020 battle is *not* for the 35-40% whose
minds are basically made up at each end. Trying to win those over in any numbers (especially
by shrieking invective at them) is a pathetic waste of time and effort.
The winning message must move the 20-30% of voters who either:
(a) voted Obama (hope, for something more than soothing patter) and then Trump (a giant
stubby middle finger to the establishment).
(b) voted Obama in 2008 but have stayed at home since (what's the point? they're all lying
scum)
Sanders simply doesn't bring socialism to America, because he doesn't have a New Deal
(i.e. SocDem) party. That kind of movement will take time (and the upcoming global
climatolo-economic crisis) to build up, under savage attack from the propertied unterests and
continuously subverted by credentialed PMC weasels and Idpol misleadership grifters.
This last is vitally important, but must also be approached prudently lest the entire
movement lose focus, overextend and fall prey to the next Trump .
IMHO, it must focus ruthlessly on delivering:
(a) single payer health care, to starve (if not incinerate) the bloated ticks gorging on
the US health/elder 'care' . cesspool, I can't bring myself to call it a 'system'. This above
all: without it, Americans simply can't compete in any world, walls and tariffs or not.
(b) *real* infrastructure, for the 80%. That's water and sewerage, cross-class public
housing, and busways and light rail to coax Americans out of their cars and suburbs. It's not
5G, vanity EVs and high speed Acelas. And sorry Keynesians, shovel ready is a side benefit,
not the primary purpose. There's a lot to do.
(c) an overhaul of American higher education (still rooted in 17th century divinity
schools). Teaching (and medicine) must again become honored occupations in the country;
administrators must give way to front line practitioners.
. Only then can Bernie move on to the more deeply embedded and multinational targets:
(a) big finance,
(b) extractive industries
(c) the MIC
These behemoths can really only be attacked during a time of crisis. Or they will simply
crush their opponents like insects, or buy them off.
In the case of the MIC, Berniecrats will likely need to be content with strong reassertion
of Federal oversight (more stick, less carrot), and disengagement from doing our 'allies'
dirty work (Trump is already on that road, with one huge Ixception .)
Total dismantlement sounds very nice, but consider: whatever's left of US industrial power
is concentrated in the MIC. America doesn't need to 'buy prosperity down at the armoury', but
like FDR, Bernie and (Tulsi) will also need to have the keels laid down against whatever
whirlwind we have reaped. Baring our breast and saying 'we deserve destruction for our sins'
is a fatuous open invitation to fascism. FDR knew better.
Paul Adler's post here reminds me of John Kenneth Galbraith's New Industrial State, except
Professor Adler was referring to the financial (i.e. parasitical) sector of the economy. Am I
off the mark in thinking this?
You're right on. Galbraith showed that planning comes naturally from very large projects.
Soviets went to planning because they couldn't bet the entire national economy on some gut
feeling -- they needed to know what would happen. Ditto the gigantic industries in what JKG
called the Planning Sector in the west. Projects spending millions or billions of dollars
over many years couldn't be left to chance. Eliminating chance meant imposing control, which
the gigantic industries could try to do, helped by their access to gigantic capital, and
which the Soviets had done with State power.
IMHO the modern FIRE sector arose from the old Planning Sector. They eliminated the
uncertainties that complicated their planning; they cut their ties with physical processes
that brought those uncertainties; they dumped physical industries onto throwaway economies
overseas (that could be abandoned if they failed); they finally became pure businesses that
dealt only with nice, clean contracts. No muss, no fuss, no bother.
So planning is a tool of any organization, yet is required more the larger it becomes?
While planning may make sense for a company with a single product such as automobiles, does
it make sense for a conglomerate? I mean I think the purpose of a conglomerate is to contain
many diverse product sectors to reduce risk of the conglomerate as a whole to any one sector.
In that way each sector does its own planning, but the conglomerate as a whole does not,
apart from choosing which companies to buy and sell, which can be considered a different type
of planning? In that way are the goals of society planning are different from the goals of
conglomerate planning or that of smaller single product sector companies? Yet in spite of
these differences the techniques of planning are the same? Is that the main point of Alder's
article? Can someone explain please.
If you surf around a bit you can find links to Bernie's views and support of worker
co-ops. There is nothing on his website. In light the burgeoning Socialist smear tsunami, it
is probably not something he wants to emphasize right now. Imagine someone getting up at a
CNN Town Hall and asking him about his attitude towards worker cooperatives. (corporate heads
explode on golf-courses all over America)
Modern theses about leadership, expertise and management underline agile learning and self
leadership to everyone himself and within team and then within larger entities. While I'm
somewhat pessimistic about these corporate trends they still look like they would work much
better with worker co-ops than in traditional top down owned corporations. Basically they are
asking higher dedication from workers, but this only works really well if the profits are
shared with workers in somewhat equitable manner in my opinion.
Also it seems common nowadays that many coding/programming companies, especially the
highly productive ones seem to act more akin to co-ops than monolithically led traditional
companies. The programmers are often engaged more to the company by giving or selling them
shares, and if this happens in large scale the company ownership structure can skew more
towards worker owned 'co-op'-like entity than more hierarchical traditional company, where
owners and workers are usually clearly separated.
Be nice if one could have posted the Forbes 400 but, listed next to each entry, is the
amount of money that they receive from the Federal government both directly and
indirectly.
Yves here. So a banking industry that creates global crises is negative value added
from a societal standpoint. It is purely extractive. [bold in the original]
Which leads to this obvious question: Why should banks be privileged, explicitly or
implicitly, in any way then?
E.g. why should we have only a SINGLE payment system (besides grubby physical fiat, paper
bills and coins) that recklessly combines what should be inherently risk-free deposits with
the inherently at-risk deposits the banks themselves create? I.e. why should a government
privileged usury cartel hold the entire economy hostage?
If you mean "why" in the moral sense, which I believe you do, there is no answer.
If you mean why in the technical sense, examine this sentence:
>why should a government privileged usury cartel
It's not "government privileged", it owns the government. Anything the government is
allowed to do outside of making Jamie Dimon et al richer are considered the actual privileges
by this group, and can, will and have been retracted at will.
If the banks cognitively "own" the government, it's because almost everyone believes TINA
to government privileges for them.
This is disgracefully true of the big names of MMT, who should be working on HOW to
abolish those privileges, not ignore or, in the case of Warren Mosler at least, INCREASE*
them.
*e.g. unlimited, unsecured loans from the Central Bank to banks at ZERO percent.
That neither extreme, capitalism or socialism, works, and that what is best for human
society is some middle ground between the two is a very important message. So I'm very glad
for this post. I realize that a black and white way of perceiving the world is an easy one.
Yet as Alder points out, humans are both individuals and social beings. If people in this
world could get back to thinking more like Ancient Greece in its appreciation for the golden
mean, we would have a much better chance of surviving. Dispensing with all these useless
socialism vs capitalism discussions would be a great time saver. I realize most people
believe in some middle ground, yet making it explicit would simplify things quite a bit. As
for the rest of the article, I need to think about it more. The corporate socialism idea does
tie in with the link yesterday about limited liability.
>That neither extreme, capitalism or socialism, works,
Exactly! Because: There. Is. No. Economic. Equilibrium. Never was, never will be, anywhere
and everywhere. Heck for billions of years, before humans existed let alone learned to talk,
the world changed. Things developed, other things went extinct (although not in the
heart-wrenching way of the Anthropocene, I personally am happy never to have met a T. Rex in
truth), the way the world works even without us is continual change.
So adjust as necessary. Our healthcare system sucks, bring full bore socialism on it. Our
corporate overlords suck, bring full bore free markets (kill patents to start) on them.
You might want to re-think the "kill patents" idea. Our Founders liked them. I just had a
patent "killed" by an examiner who "killed" 42 of 43 patents he examined. It was for a device
which could be saving Corona/Flu victims Right Now. I am going to try to Donate the idea to
Society, but preventing people from profiting from valid Novel ideas is not the solution. I
realize Corporations abuse the Patent System, like every other thing they touch. But I am a
low level individual who is trying to "innovate" and reduce illness. My main motivation was
not monetary but it is always a factor.
I believe you have the wrong target on this issue.
My first rejection on a related patent was just received 2.5 years after initial filing. It
took this long because the Govt. takes money from USPTO (which runs a surplus) and sends it
to the General Fund. USA innovation friendly? Not the way I see it.
"But for those who complain about Sanders not going after important targets "
Consider the wisdom of Susan Webber:
"Wisdom of the CEO is comprimised work. These CEOs "know" that too much candor,
either individually or institutionally, is not a pro-survival strategy."
I think the comparison of banks to welfare queens is quite unfair.
To welfare queens, that is.
Assuming they exist outside of the sweaty PR fantasies of those of a certain political
stripe, presumably even a welfare queen is not living 100% off of the munificence of the
state, whereas the implied value of the "Too Big To Fail" guaranty subsidy was determined to
be very nearly in the same amount as the annual profits of the recipient banks. In other
words, they're complete wards of the state. Doesn't get much more socialistic than that.
Thank you, Yves for this post. Alder has very logical and accessible ideas.
"Interdependent Individualism" is a good way to begin. When he says "socialists recoil
against individual performance-based rewards" I can't help but think the rewards should be
gifted from the workers to the bosses. Because that would be very change-promoting. Top down
has a tendency to stagnate motivation – even offensively – like tossing them a
few crumbs to keep them quiet. imo. This also really does sound Japanese. I'm not sure I can
relate to the way they cooperate; from them there is not so much as a polite argument;
certainly no sarcastic barbs. Americans are the exact opposite – we cooperate
competitively in a sense. But Climate Change will dictate our direction regardless of
decorum. My own sense of our dilemma is that "free market" corporations make their profits by
extracting from labor and the exploitation of the environment, and by externalizing costs to
society. Big disconnect. Huge, in fact. This is why "capitalism" has failed to address
climate change. Anybody else notice that China has forbidden short selling as we speak? Just
like the Fed did in 2009 with QE, etc. That's probably because if the economy crashes
(regardless of how illogical it has become) it will take way too long to put back together.
And there's work to be done. I remember Randy Wray dryly responding to Jacobin's criticism
(of MMT) that the ideological socialists would rather see a bloody Marxist uprising than a
peaceful evolution. I do think Wray is right on ideological blinders on both sides. One
quibble I have with this very wise post is that it assumes (I think) that we cannot change
our ways fast enough to mobilize adequately to address climate change. I think we've been
doing it pretty aggressively since 2009. Literally a world war to control oil and maintain
financial supremacy; serious consideration of our options by the political class (turning to
MMT, etc.); slamming the breaks on trade and manufacturing; subsidizing essential industries.
I'm sure there are other things going on under the radar. So I wouldn't discount our ability
to mobilize – just our inability to admit it. Clearly we want to do things
selectively.
>the Vermont Senator is landing punches, but choosing his fights carefully.
Yes, as Objective Function laid out nicely (funny word for this mess, but whatever) above
– this isn't gonna be easy. If you hope to beat Mike Tyson in his prime, you don't
start by trading heavy blows. Defeat him with small but continuous cuts from multiple
directions.
" senior leaders of three of the largest and most elite U.S. banks were serial criminals
whose frauds are (we pray) without equal." -- William K. Black
Wallstreet on parade website does great job laying out JPM's crime spree. They (JPM) just
came off parole(?) in January on some Felony charges. Someone (Eliz. Warren?) might start a
movement to prohibit public pensions / State and local Govts. from conducting business with
any banks convicted of felonies or entering plea agreements more than, let's say, ten per
year.
A convicted felon can not get a job at a bank run by a 22 times loser- Jamie Dimon, a fellow
felon who should have some empathy.
Wallstreet on parade is one of few sites who discuss Citi's crimes, and the fact that the
Federal Reserve tried to cover up (and succeeded until about 2012) the secret 2.5 TRILLIION
in revolving loans provided to a bankrupt Citibank around 2009. This in addition to the
hundreds of billions we did know about.
I do tend to harp on this because the felon Robert Rubin cost me about 500K in expired Put
options on shittybank because of his blatant, felonious (per FCIC) lies right before the
implosion. His referral for prosecution by the Financial Crises Inquiry Commission
mysteriously withered away
This is a timely article for me as I have been pondering the relationship between Jews and
neoliberalism for some time now.
At university I studied under a brilliant Neo-Marxist professor who showed me some theory
and arguments that went a long way towards explaining how to make sense of the global power
structure.
(Just a quick not for those who recoil at the mere mention of Neo-Marxist: the academics
that use a Marxist lens as a tool to criticize the powerful are not all the cuckold communist
SJW types – some of these individuals are extremely intelligent and they make very
powerful arguments backed by loads of data.)
One of the theories I was introduced to was the notion of the Transnational Capitalist
Class in this article called Towards A Global Ruling Class? Globalization and the
Transnational Capitalist Class:
Sklair's work goes the furthest in conceiving of the capitalist class as no longer
tied to territoriality Inherent in the international concept is a system of nation-states
that mediates relations between classes and groups, including the notion of national
capitals and national bourgeoisi. Transnational, by contrast, denotes economic and related
social, political, and cultural processes – including class formation that supersede
nation-states
What distinguishes the TCC from national or local capitalists is that it is involved
in globalized production and manages globalized circuits of accumulation that give it an
objective class existence and identity spatially and politically in the global system above
any local territories and polities.
Since reading your (Dr Joyce) work on the JQ I began to see the connection between age old
complaints of Jews, and what Ford referred to as "The International Jew". In fact, replace
the term "transnational capitalist class" from my passages quoted above (and many others) and
what you have is perfect mirror image of the argument.
This question has come up often lately, synchronistically (or maybe not). I'm somewhat new
to the JQ, having consumed many hours of work (including much of your own) after being sent
down the rabbit hole by the ongoing Epstein case. I was pondering that perhaps, Jews take the
blame for what the predatory capitalists are doing. Not even a week later you addressed this
precise question in your piece about Slavoj Ziszek and now with "vulture capitalism" it is
coming up yet again in Carlson's segment followed by the article right here. It also came up
on the "other side" in the blog I follow of a professor of globalization in this article:
https://zeroanthropology.net/2019/11/27/global-giants-american-empire-and-transnational-capital/
The link above is a review of the book Giants: The Global Power Elite . The review
provides a summary of the book which once again could be a text about Jews if one were to
replace the term "transnational capitalist class" with "Jews". Why I mention it, though, is
the following:
"Chapter 2, "The Global Financial Giants: The Central Core of Global Capitalism,"
identifies the 17 global financial giants -- money management firms that control more than
one trillion dollars in capital. As these firms invest in each other, and many smaller
firms, the interlocked capital that they manage surpasses $41 trillion (which amounts to
about 16% of the world's total wealth). The 17 global financial giants are led by 199
directors. This chapter details how these financial giants have pushed for global
privatization of virtually everything, in order to stimulate growth to absorb excess
capital. The financial giants are supported by a wide array of institutions: "governments,
intelligence services, policymakers, universities, police forces, militaries, and corporate
media all work in support of their vital interests" (p. 60).
Chapter 3, "Managers: The Global Power Elite of the Financial Giants," largely
consists of the detailed profiles of the 199 financial managers just mentioned.
This caught my eye because I immediately wondered how many of those 199 directors are
Jewish. It also pertains directly to this exact article because I am confident that the
vulture capitalists you targeted here are profiled in the book, probably with many
others.
Now, I am not in the business of writing about the JQ, so I wanted to suggest to anyone
out there that is that if they were to obtain a copy of this book and determine how many of
the 199 directors are jews. What this could accomplish is a marriage of the major two
theories of the "anti-semites" (for lack of a better word) and the "Neo-Marxists". I would
argue that perhaps both sides would learn they are coming at the same thing from two
different angles. Most would ignore it, but maybe a few leftist thinkers would receive a much
needed electric shock if they were to see the JQ framed in marxist terms. Perhaps some
alliances could be forged across the cultural divide in this struggle. Personally I believe
that both angles are perfectly valid, and that understanding one without the other will
leaves far too much to be desired when studying the powerful.
"... we have sent the factories to distant lands and eliminated your jobs, and all the meaning and purpose in your lives -- and cheap stuff from Asia is your consolation prize. Enjoy ..."
"... Homelessness in America runs way deeper than just the winos and drug addicts living on the big city sidewalks. ..."
All the people of America, including the flyovers, are responsible for the sad situation
we're in: this failure to reestablish a common culture of values most people can subscribe to
and use it to rebuild our towns into places worth caring about. Main Street, as it has come to
be, is the physical manifestation of that failure. The businesses that used to occupy the
storefronts are gone, except for second-hand stores. Nobody in 1952 would have believed this
could happen. And yet, there it is: the desolation is stark and heartbreaking.
Even George Bailey's "nightmare" scene in It's a Wonderful Life depicts the
supposedly evil Pottersville as a very lively place, only programmed for old-fashioned
wickedness: gin mills and streetwalkers. Watch the movie and see for yourself.
Pottersville is way more appealing than 99 percent of America's small towns today,
dead as they are.
The dynamics that led to this are not hard to understand. The concentration of retail
commerce in a very few gigantic corporations was a swindle that the public fell for.
Enthralled like little children by the dazzle and gigantism of the big boxes, and the free
parking, we allowed ourselves to be played.
The excuse was "bargain shopping," which actually meant we have sent the factories to
distant lands and eliminated your jobs, and all the meaning and purpose in your lives -- and
cheap stuff from Asia is your consolation prize. Enjoy
The "bones" of the village are still standing but the programming for the organism of a
community is all gone: gainful employment, social roles in the life of the place, confidence in
the future. For a century starting in 1850, there were at least five factories in town. They
made textiles and later on, paper products and, in the end, toilet paper, ironically enough.
Yes, really.
They also made a lot of the sod-busting steel ploughs that opened up the Midwest, and cotton
shirts, and other stuff. The people worked hard for their money, but it was pretty good money
by world standards for most of those years.
It allowed them to eat well, sleep in a warm house, and raise children, which is a good
start for any society. The village was rich with economic and social niches, and yes, it was
hierarchical, but people tended to find the niche appropriate to their abilities and
aspirations -- and, believe it or not, it is better to have a place in society than to have no
place at all, which is the sad situation for so many today.
Homelessness in America runs way deeper than just the winos and drug addicts living on
the big city sidewalks.
It seems there's a major political party exactly working against a common American
culture. They jeer at the thought of it. It seems to be the main platform, above all
else.
It is a major party alright BRH, but it is no so much political as it is economic and
socially stratified. They are opulent, self consumed and greedy as hell (literally). There
can only be so many parasites sucking the lifeblood out of any herd of servant beasts, and
they can only suck so long on their hosts before the poor beasts fall over and die. And that
is the tipping point, where we lose enough life blood that we can no longer stand upright,
but drop to the deck and are consumed. It is the classic Goose that laid the Golden Egg fairy
tale being acted out in real life and coming to a neighborhood near you soon.
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Beautiful, thoughtful post Jim, yet to be honest it fills me with a sense of anxiety, and
this is simply because the catastrophic events you forecast, although for the better in the
long run (as they will compel a return to a world made by hand, or the recovery of human
scale) will nonetheless bring much suffering to a lot of people ( including my own family). I
would personally like to believe there is another way a more sustainable civilization could
be attained than on the heels of societal collapse. I do believe the world is full of
mystery, and that life itself is a series of unfolding miracles we lack the capacity to
comprehend due to our limited perspective. Yet perhaps you are right and some type of
collapse is inevitable before a new beginning can be made. If such be the case, as
individuals we will be compelled to tap into inner potentials that will needed to meet the
approaching apocalypse, potentials which currently lie dormant and undeveloped. Maybe in the
process of doing so we will recover our wholeness as well.
In 2012, when economist Thomas Philippon was looking into some data, something odd caught
his attention.
His homeland, France, was undergoing another revolution, although a much different one: a
revolution in the country's telecommunication market. A new mobile operator, Free, had
entered the market and disrupted it almost overnight. The new operator slashed prices,
offering plans that hadn't been seen before in France.
France's three legacy mobile operators were forced to react and drop their own prices. It
didn't help. In only three months, Free's market share reached 4 percent. At the end of the
following year, its market share tripled. Today, Free controls 15 to 16 percent of the
market, making it France's third largest mobile operator. (If you add the six virtual
operators to the mix -- meaning companies who lease broadband space -- you'll get a total of
10 different mobile operators in a country with a population one-fifth the size of the United
States.)
"Digging deeper into that crystallized everything for me," says Philippon. "It was an
oligopoly based on three legacy carriers that lobbied very hard to prevent anybody from
getting a fourth (mobile) license. For 10 years they were successful. But then, in 2011, the
regulator changed and gave a license [to] Free. It wasn't a technological change or a change
in consumers' taste. It was purely a regulatory decision."
For French consumers, this one decision changed everything. Instead of paying $55 for a
1-gigabyte plan, the new prices for much better plans cost half that. And prices continued to
drop. Today, a Free 60-gigabyte plan costs only $12.
But Philippon wasn't just interested in what the new competition in the French telecom
industry said about French markets. Having lived in the United States since 1999, he compared
the French telecom revolution to the American market. The numbers blew his mind. While in
France the number of mobile operators was rising, in the US the number was getting smaller
(and that number might even decline further, if the planned Sprint-T-Mobile merger goes
through).
The result was a huge price gap between the two countries.
"France went from being much more expensive to much cheaper in two years," he says. "The
change in price was drastic -- a relative price move of 50 percent. In such a big market with
gigantic firms, that's a big change. And it was not driven by technology, it was driven by
pro-competition regulation." He immediately adds, just to emphasize the irony: "It happened
in France of all places, a country that historically had a political system that made sure
there wasn't too much competition. This is not the place where we expected this kind of
outcome."
The opposite was very surprising too: The level of competition in the United States, the
role model of free-market democracy, was declining.
Philippon, an acclaimed professor of finance at the New York University Stern School of
Business, kept pulling that thread. He gathered an overwhelming amount of data on various
markets, took a few steps back to look at the big picture, and then identified a pattern. The
result is "The Great Reversal," his recent book, in which he explores and explains when, why,
and how, as his subtitle puts it, "America Gave Up on Free Markets."
The telecom story is just one of many examples Philippon provides throughout the book of
non-competitive US markets, in which most or all of the power is concentrated in the hands of
a few big companies. It's a situation that makes it almost impossible for new competitors to
enter and lower prices for consumers. The airline market is another example, as is the
pharmaceutical industry, the banking system, and the big tech companies such as Google and
Facebook, who have no real competition in the markets they operate in.
The book's main argument has a refreshing mix of both right- and left-leaning economic
thinking. It goes like this: During the last 20 years, while the European Union has become
much more competitive, the United States has become a paradise for monopolies and oligopolies
-- with a few players holding most of the market share. As US companies grew bigger, they
became politically powerful. They then used their influence over politicians and regulators,
and their vast resources, to skew regulation in their favor.
The fight over net neutrality, to name one example, demonstrates it well.
"Guess who lobbied for that? It's a simple guess -- the people who benefited from it, the
ISP's [internet service providers]. And they are already charging outrageous prices, twice as
high [as] any other developed country," Philippon says.
This growing concentration of power in the hands of a few has affected everything and
everyone. It has inflated prices because consumers have fewer options. Wages are stagnant
because less competition means firms don't have to fight over workers. Financial investment
in new machinery and technology has plummeted because when companies have fewer competitors
they lose the incentive to invest and improve. It has driven CEO compensation up, and
workers' compensation down. It has caused a spike in inequality, which in turn has ignited
social unrest.
If all of this is too much to wrap your head around, Philippon puts a price tag on it:
$5,000 per year. That's the price the median American household pays every year for the lost
competition. That's the cost of the United States becoming a Monopoly Land.
How did this happen? According to Philippon, it's a story with two threads. The European
side of this story happened almost by mistake. The American side, on the contrary, was no
coincidence.
When the European Union was formed in the early 1990s, there was a lot of suspicion
between the member states, namely France and Germany. (Two World Wars tend to have that
effect.) This mistrust birthed pan-European regulators who enjoyed an unprecedented amount of
freedom, more powerful than any of the member countries' governments.
"We did that mostly because we didn't really trust each other very much," he says. Now, 20
years later, "it turns out that this system we created is just a lot more resilient towards
lobbying and bad influences than we thought."
At the same time in the United States, the exact opposite was happening. Adopting a
free-market approach, regulators and legislators chose not to intervene. They didn't block
mergers and acquisitions, and let big companies get bigger.
This created a positive feedback loop: As companies grew stronger, the regulators got
weaker, and more dependent on the companies they are supposed to regulate. Tens of millions
of dollars were channeled into lobbying. The Supreme Court's Citizens United decision gave
corporate money even more political influence.
At some point, big companies started using regulation itself to prevent new competitors
from entering the market.
The result wasn't free markets, but "the opposite -- market capture," says Philippon,
referring to a situation in which the regulator is so weak it depends completely on the
companies it regulates to design regulation.
Philippon is not the only one who's making these claims. A group of economists from the
University of Chicago Booth School of Business holds a similar view. They are called
Neo-Brandeisian, after the late Justice Louis Brandeis, who, a century ago, fought to broaden
antitrust laws. They believe the big tech companies, for example, managed to rig the system,
and fly under current antitrust regulation. They think it is time to break them apart.
But not everyone agrees with Philippon's narrative or his conclusions. Economists like
Edward Conard, author of "The Upside of Inequality," thinks Philippon's claim that big
companies are evidence of less competition is upside down. According to his criticism, it's
exactly the opposite: These companies became big and powerful because they innovate and give
a lot of value to consumers. He also argues that the conclusion that Europe is more
competitive and innovative than the United States is preposterous, given that the biggest
tech companies are American, not European.
Philippon addresses this counterclaim in his book. The United States is one giant market
of English speakers. Theoretically, if you have a good idea for a new product and you can
finance it, you have more than 300 million potential users on day one. In the EU, on the
other hand, there are 28 countries, with residents who speak 24 different languages. It's not
as simple.
Philippon, who by the age of 40 was named one of the top 25 promising economists by the
International Monetary Fund, also differentiates himself from the Chicago school of thought
in one important way: He's not dogmatic, he's pragmatic. Instead of a one-size-fits-all
solution to the problem, he suggests a more nuanced approach. This is exactly what makes his
case both unique and somewhat tricky to grasp. His approach is neither right nor left.
"The idea that free markets and government intervention are opposites, that's bogus. So
half of me agrees with the Chicago School and half disagrees," he says.
"But if you think that you can get to a free market without any scrutiny by the
government, that's crazy. That's simply untrue empirically. We need to make entry easier to
increase competition, that's the objective," he says. "And the way to do so sometimes means
more government intervention."
OK, but how do you do that? According to Philippon, each case is different.
"In some cases it will be by more intervention. Like maybe force Facebook to break from
WhatsApp. And sometimes it will be by less intervention. Kill a bunch of regulations and
requirements for small companies," he says.
The first idea, at least, has caught a lot of public attention during the last year, and
has been a talking point of the presidential campaigns of Senators Bernie Sanders and
Elizabeth Warren. Facebook's CEO Mark Zuckerberg was recorded saying that if Warren wins, it
will "suck for us." Warren's plan for the big tech companies, for example, includes
"reversing mergers," which means uncoupling WhatsApp and Instagram from Facebook. Her plan
would also forbid Amazon being both a marketplace and a vendor at the same time.
But can any of these interventions actually happen? And if so, what would they mean for
American consumers? Those are more complicated questions.
If big tech companies were broken up, Philippon estimates that the average American
consumer won't be affected financially.
"Since people don't pay these companies directly, it won't change the bottom line for the
middle class, it won't have a big impact on people's disposable income," he says.
What would have a tremendous impact on Americans' lives and income is to keep on going
beyond the big tech companies. "We should go after the big ticket items -- telecom,
transport, energy, and healthcare. That's where you want action, but there is much less
bipartisan support for that," he says.
Something similar to the French telecom revolution is still far from happening in the
United States, but the fact that the 2020 campaign is already pushing competition-promoting
ideas back into the public discourse is a reason for cautious optimism, according to
Philippon. Nevertheless, he warns, we should not let this mild optimism mislead us.
"Free markets are like a public good: It is in nobody's interest to protect them.
Consumers are too dispersed and businesses love monopolies," he says. "So to take free
markets for granted, that's just stupid."
(Shaul Amsterdamski is senior economics editor
for Kan, Israel's public broadcasting corporation.)
(Hmmm. Our largest monthly bill is for 'telecom',
from Comcast, for TV, phone & internet service.
There's no competitive offering in our town.)
"...Our largest monthly bill is for 'telecom',
from Comcast, for TV, phone & internet service..."
[I got the same information from the service tech doing the annual clean and test on my
propane fireplace insert yesterday, in reference to his parents though. They were on Verizon
Fios for cable. He thought they should dump cable for a web-TV solution and just use cell
phones. Their bill was over $400/month. Mine is a little over $200/month for the same
service, which in both cases includes land line. In my zip code Verizon does not bundle Fios
with mobile. The only difference that I know is that we have neither any premium channels nor
DVR boxes and I assume that his parents must have both to run up a bill that high. When we
pony up for Fios Gb, then at least for three years our bill will fall below $100/month, then
return to a higher monthly yet if we do not take another new contract after that upgrade
contract ends. Verizon only makes new contracts when new services are added or upgraded.
Customers get next to no benefit for loyalty/retention. We have both Verizon and Comcast
available in our area. I have had both in my present home at different times, but hate
Comcast for failures on their part to provide tall vehicle clearance to pass down my driveway
until forced to do so by the power company whose poles they must use and for a duplicate
billing error where they billed me for two separate addresses and put me into collections for
the one that I never resided at since I never saw that bill or knew of it prior to the first
collections call.]
Bernie Sanders unveils plan to boost broadband
access, break up internet and cable titans https://cnb.cx/34TzaQw
CNBC - Jacob Pramuk - Dec 6
Bernie Sanders unveiled a plan Friday to expand broadband internet access as part of a
push to boost the economy and reduce corporate power over Americans.
In his sprawling "High-Speed Internet for All" proposal, the Vermont senator and
Democratic presidential candidate calls to treat internet like a public utility. His campaign
argues that the internet should not be a "price gouging profit machine" for companies such as
Comcast, AT&T and Verizon.
Sanders' plan would create $150 billion in grants and aid for local and state governments
to build publicly owned broadband networks as part of the Green New Deal infrastructure
initiative. The total would mark a massive increase over current funding for broadband
development initiatives. The proposal would also break up what the campaign calls "internet
service provider and cable monopolies," stop service providers from offering content and end
what it calls "anticompetitive mergers."
Sanders and his rivals for the 2020 Democratic presidential nomination have pushed to
boost high-speed internet access for rural and low-income Americans, saying it has become a
necessity to succeed in school and business. The self-proclaimed democratic socialist has
unveiled numerous plans to root out corporate influence as he runs near the top of a jammed
primary field. ...
Aa excellent article that brings no new ideas to the debate but updates the debate to today.
One thing economist Thomas Philippon did not mention is that voters must turn out the
elected and get new ones who will vote to create more and vigorous competition instead of
oligopoly.
LYNN FRIES : This newsdoc explores the folly of expecting private enterprise to
operate in the service of the public interest on a grand scale, globally, in key fields:
Financing the United Nations 2030 Agenda and Sustainable Development Goals, Climate change,
Health, Digital cooperation, Gender equality and the empowerment of women, Education and
skills. Specifically, it explores the United Nation's Strategic Partnership Agreement with the
World Economic Forum. The agreement was signed by the Office of the UN Secretary-General and
Executives of WEF, the World Economic Forum better known as DAVOS, a leading proponent of
public-private partnerships and a multistakeholder approach to global governance.
The United Nations as the world's intergovernmental multilateral system should always focus
on protecting common goods and providing global public benefits. That's the position of
signatories of an Open Letter sent to the UN Secretary-General by hundreds of civil society
organizations from all regions of the world. The letter states: "This public-private
partnership will permanently associate the UN with transnational corporations, some of whose
essential activities have caused or worsened the social and environmental crises that the
planet faces. This is a form of corporate capture". The letter calls on the Secretary-General
to terminate the Agreement.
I met up with Harris Gleckman to get his take on all this. Harris Gleckman is the author of
"Multistakeholder Governance and Democracy: A Global Challenge" and is currently working on a
handbook on the governance of multistakeholderism. Harris Gleckman is a Senior Fellow at the
Center for Governance and Sustainability, UMass Boston. We go now to our featured clips of that
meeting.
LYNN FRIES : Civil society is calling the World Economic Forum-UN Agreement as a
corporate takeover of the UN.
HARRIS GLECKMAN: The UN Charter starts with the words "We the Peoples". What the
Secretary-General is doing through the Global Compact and now through the partnership with the
World Economic Forum is tossing this out the window. He is saying: I'm going to align the
organization with a particular structural relationship with multinationals, with
multistakeholderism, and set aside attention to all the different peoples of the world in their
particular interests of environment, health, water needs and really talk about how to govern
the world with those who have a particular role in creating problems of wars from natural
resources, of creating problems relating to climate, creating problems relating to food supply
and technologies. That is undermining a core element of what the United Nations has been and
should be for its next 75 years.
LYNN FRIES : It's striking that the Agreement was signed as the UN is celebrating 100
years of multilateralism, the centenary year 1919 to 2019. And next year 2020 will mark the
1945 signing of the UN Charter 75th anniversary.
HARRIS GLECKMAN : Lynn, if I could give you an overview of what I'm concerned about
the aspect of this about multistakeholderism is that the Secretary-General is the leading
public figure for the multilateral system, the intergovernmental system. The World Economic
Forum is the major proponent or one of the major proponents that a multi-stakeholder governance
system should replace or marginalize the multilateral system. So the Secretary-General is
taking steps to just jump on the bandwagon of multistakeholderism without a public debate about
the democratic character of multistakeholderism, about a public debate about whether this is
effectively able to solve problems, without a public debate about how stakeholders are selected
to become global governors or even a public debate about what role the UN should have with any
of these multistakeholder groups.
LYNN FRIES : I noted that the letter that was sent to the UN Secretary-General was
also copied to the President of the General Assembly, the President of the Security Council and
the Chair of the G77 with a request that it be circulated to all Governments as an Official
Document.
HARRIS GLECKMAN : The Secretary-General should have gone to the intergovernmental
process to debate this issue and now civil society is saying to the intergovernmental process:
If the Secretary-General isn't going to tell you about it, we want you to have that debate
anyway.
LYNN FRIES : In addressing the UN Secretary-General the letter by Civil Society
Organizations recognized that the Secretary-General faced serious challenges.
HARRIS GLECKMAN: Yes it is absolutely the case that the Secretary-General is caught
in a very difficult bind. Governments are not able to collect and are not collecting their
taxes from the bulk of international business activities because of movements around tax
havens. Government's say: well we don't have the money, so we cannot underwrite an effort to
have a credible global governance system and this is affecting the operation of the UN. So the
Secretary-General is looking at a challenge. He has the financial challenge: under payment of
current dues and underfunding of the whole organization and an aggressive effort by the Trump
administration to deconstruct all the organizations of the international system in a period
Lynn where as you observed it's the hundredth year of multilateralism and the 75th year of the
United Nations. And here the Secretary-General has two major crises on his hands in terms of
the integrity of the system.
LYNN FRIES: Briefly give us some context on what you see as the motivation of the
World Economic Forum.
HARRIS GLECKMAN : The World Economic Forum's motivation for joining, for perhaps,
even driving forward this idea of a strategic partnership came from their work following the
financial crisis starting n 2008-09. Davos, the common name for the World Economic Forum,
convened 700 people working for a year and a half on a project that they called Global Redesign
Initiative. They created that project because they realized that the whole public view about
globalization as "a good for the world" was crumbling as a result of the financial crisis. And
so they wanted to propose a new method of governing the world. And two of the elements of their
proposal – that's actually a 700 page research paper – were to have a new
relationship with governments in the United Nations system and to advocate that the global
problems of the world should be solved by multistakeholder groups. This new partnership with
the Secretary-General is an implementation of what they laid out in their Global Redesign
Initiative to have a special place in the United Nations system for corporations to influence
the behavior of the international organizations. And also for those corporations to be able to
say to other people: Look we're in partnership with the United Nations so treat us as if we
were neutral friendly bodies.
Let me just share with you a couple of examples that may help convey how serious that is.
The Sustainable Development Goals were negotiated by governments in open sessions and they
determined what the goals should be in 17 areas. Multistakeholder groups have announced that
they are going to implement Goal 8 or Goal 6. And in the process, they declare: Here is how we
will work on health, here's how we will work on education, here's how we will work on the
environment. And rewrite what is the outcome of the Sustainable Development Goals in their own
organizational interest. In some ways, that's not surprising. You bring together a group of
companies, selected governments, selected civil societies, selected academics and they will
have their own internal dynamic of concern. But what they do is they assert that what they are
doing- their rewritten version- actually they are telling the world: Well, we are actually
doing the UN version. But that is not what their text is.
For example, in the energy field, in the energy goal there are five key adjectives that
describe the target about global energy needs. The leading multistakeholder group, Sustainable
Energy for All, their target has four of those adjectives and they drop the one which was
AFFORDABILITY. This is how the process of multistakeholders taking over an area, redefining it
but to the public announcing that they are implementing the intergovernmental goals is an
unhealthy development in global governance.
LYNN FRIES : The Civil Society letter referred to the Agreement as a public-private
partnership as did you in a recent OPED. Explain more about the public interest issue with
public-private partnerships.
HARRIS GLECKMAN : Well let's take a particular effort of a public-private partnership
in providing water in a city. Historically this is a public or a municipal function to make
sure that there is adequate amounts of water. The quality of water is healthy and its safety.
And that it's regularly and reliably available to the residents in the area. When a
public-private partnership comes in, the corporate side may have an interest in some of these
goals but add an additional one. That is they want a return on their investment, they want a
profit from it. So some of the items of those various public functions – access, quality
of material of water, reliability of water, access to all people then gets suddenly changed. So
if there's a manufacturing facility in one part of town more water may be diverted in that
direction. If water purification is a little hard about a particular element: We may get a
little lazy about doing that in the interests of profits. If it's going to take a lot of work
to dig up a street and replace pipes, they'll say: Well, we can wait another five years and use
those pipes which may have lead in them. All because now you add the fact that this
public-private partnership needs to make a return of profit on what should be, what
historically has a public municipal function. So you create this unequal development in terms
of meeting public needs against the now new requirement that if you want a water system, you
have to produce a profit for some of the actors involved.
LYNN FRIES : Food security is a major issue for vast populations. Comment on the
implications for food security.
HARRIS GLECKMAN : If we want to build, recover, create a food secure world, you need
to work with those who are growing, producing foods directly. Not those who are processing,
distributing, marketing, rebranding. We need to start at the very base and create a system of
engagement with small farmers, with small fishing families, with those around the world who are
the actual food producers. Who have been preserving knowledge and building knowledge for
centuries, they received that knowledge from centuries. That's the direction that would change
the way in which we could actually look at the issues of hunger and food security in the world
in a quite different fashion. Going to those who have a profit-centered motive in global
governance will sharply narrow what might be possible to do. That's what the partnership will
tend to do as the Secretary General and WEF have private discussions about how do we address
the issue of food security while not talking very loud about how we make a profit in that
process.
LYNN FRIES : If the UN Secretary-General invited you for a 1:1 what would you
say?
HARRIS GLECKMAN : I think that I would say to the Secretary-General that he needs to
give a major re-examination of the way the United Nations works with all of the peoples of the
world. In order to provide a stronger base for the United Nations, the doors have to be made
wider so that the views of various popular bodies, social movements, communities around the
world have far greater access to the United Nations. I'd also say to him. Mr. Secretary
General, the UN needs an open and clear conflict of interest policy and a conflict of interest
practice. For those multinationals who are causes of problems, who aggravate the global
problems of inequality we need and you as Head of the United Nations need to separate the
United Nations from that process. They should not be invited to attend meetings. They should
not be allowed to make statements. In the climate area, those who are continuing to extract
natural resources from the ground where they should stay we have taken too much of carbon out
of the ground. If we're going to meet the Paris Accord, they should have no role entering the
United Nations. I'd also say to the Secretary General that he needs to establish a much bigger
office to support civil society. At the moment, the UN support for civil society organization
institutional support is about two people. That is absolutely the wrong level of engagement
with the wider elements of civil society. And the last thing I would probably say to the
Secretary-General is that the UN is very proud of having developed a system of internal
governance that protects the weaker countries, the smaller countries, that their views can be
heard in the intergovernmental governance process. The Secretary-General should not engage with
multi stakeholder groups who do not have a rulebook that allows for the protection of smaller
members of the group, that does not have a way to appeal and challenge decisions that does not
require public disclosure of their finances, all of those characteristics of
multistakeholderism. The Secretary General should have and the UN should have no relationship
with those who are not interested in protecting core concepts of democracy
LYNN FRIES : We have to leave it there. Special thanks to our guest contributor,
Harris Gleckman, and thank you for watching and for your interest in this segment of
GPEnewsdocs coming to you from Geneva, Switzerland.
The WEF and its various constituencies try to overtake control of development with their
"public-private partnership" flag but how these, let's say, partnerships, actually work and
interact with local communities and governments is an issue that need to attract more
scrutiny and transparency. If one uses the migratory pressure as a measure, so far,
development in Africa, South America and South Asia is not doing a good job on the part of
local communities. There may be a few success cases, as it seems to be the case that
deforestation in Brazil that while proceeding it's way, has somehow slowed down compared to
the last decade of the XXth century. But when a success story is analysed what you find
behind is simply strong government action as the Brazilian did starting in 2004 when they
begun the monitoring of development in the Amazon basin and expanded in 2006 with a
moratorium in soya culture and beef production. The WEF has a series of initiatives on what
they call sustainable development that sound excellent in their web pages but in reality do
not seem to work so well and the UN should be kept independent and legally above of the WEF
initiatives to monitor development and accountability. This initiative will almost certainly
result in foxes governing henhouses.
As I see it the WEF makes the hell of a good PR job without counterbalancing parties.
Truly scary stuff and why does it remind me of the way public transport was destroyed in
the US: step 1 – starve it of revenue; step 2 – privatize it (while promising
better service); step 3 – let it rot; and step 4 – close it down (responding to
the public, gripping about how bad the service had become). The job accomplished!
One has to wonder what the Sec. General has been smoking lately and where are Russians and
Chinese to push back?
The UN will never accomplish its mission, man is incapable of bringing about world peace.
The UN is here for one reason and one reason only and that is to destroy the false religious
system when the political rulers hand it their power to accomplish just that.
If WEF is looking at doing infrastructure on a global scale that is based on good science,
is sustainable and maintainable, the ultimate power over the "multi-stakeholder groups"
submitting their bids to the UN should be the UN – this means a new UN mandate that
must be ratified yearly by voters, and bureaucrats that must win elections. If this big idea
is going to accomplish what needs to be done the "stakeholders" might want to take a close
look at what happened to the dearly departed ideas of neoliberalism. Neoliberalism was
destroyed from within by the need for ever more profit; by the" rat-race to the bottom" and
by externalizing costs in the form of pollution – by the most obviously unsustainable
practices, both social and environmental. If the goal is clear and comprehensive all these
problems inherent in yesterday's capitalism will have to be addressed at the get-go. It is a
difference of scale whether a city hires a contractor to do new waterlines, or the UN hires
"multi stakeholder groups" to do some continent-wide 50 year project. That means the UN will
need to become answerable to the people for the management of all these big ideas. Because
conflict of interest will be so massive as to be unmanageable otherwise. And one definition
will be imperative – Just what stake or stakes is/are held by "multi-stakeholder
groups"? Because what is at stake is the planet itself. Not money.
The UN problem has always been money. The 200 nation states are dilatory in paying their
dues. This gives the few rich countries power – 'cooperate with us and we'll fund your
activities.' Its not as bare-faced as I state it but you get the picture. To solve this
problem we need the majority of countries to vote to make national dues a precedent claim on
each government. Publish the result of the vote and monthly progress towards the aim. Name
the countries cooperating.
Once the UN administration is confident of its income it can plan its activities better,
make peoples' health and livelihoods a priority and achieve a much higher profile amongst
humanity.
"Mining transnationals find it cheaper to buy water rights than to desalinate seawater and
transport it for tens or hundreds of kilometers. Even more so if they have to use less
polluting but more expensive desalination technologies.
This is an unequal and unjust war where the main victims are the poor population, small
farmers and the sustainable development of our region of Atacama.
We continue to approve and facilitate the approval of mining projects and mega-projects
without making it a condition not to consume water from the basin.
– The population of Copiapó, Caldera, Tierra Amarilla and Chañaral,
particularly the lower income population, suffers the consequences of having to endure
repeated supply cuts, low pressure and a terrible quality of drinking water.
The drinking water crisis in the mentioned cities is a direct consequence of the over
exploitation of the Copiapó river basin by foreign mining companies, of the
purchase-sale and speculation with water rights, as well as of the irrationality and
indolence of the State in not establishing priorities in the use of the vital water" https://www.youtube.com/watch?v=8lGEONBfvTM
Although corporate meddling is not unheard of in the UN system, under the new terms of the
UN-WEF partnership, the UN will be permanently associated with transnational corporations. In
the long-term, this would allow corporate leaders to become 'whisper advisors' to the heads
of UN system departments.
The UN system is already under a significant threat from the US Government and those who
question a democratic multilateral world. Additionally, this ongoing corporatization will
reduce public support for the UN system in the South and the North, leaving the system, as a
whole, even more vulnerable.To prevent a complete downfall, the UN must adopt effective
mechanisms that prevent conflicts of interest consistently. Moreover, it should strengthen
peoples and communities which are the real human rights holders, while at the same time build
a stronger, independent, and democratic international governance system.
There is a strong call to action going on by hundreds of organizations against this
partnership agreement http://bit.ly/33bRQZP
"... Monday, that same company which was saved by the United States government was thrown a birthday party in the halls of the United States Congress committee which dispersed those funds? It literally doesn't get more corrupt than that. These people are so shameless they bragged about this party. They allowed it to be reported in Politico because that's just business as usual in our capital city ..."
"... So many on the right lecture the millennial generation and the working class as lazy. They give no credence to why exactly these people are angry. They watched the middle class get decimated, money get sent to Wall Street while our student debt exploded and any surplus cash that happened to be laying around was spent trying to turn the Middle East into a democratic paradise. America voted twice for change-agent Barack Obama to try and clean up the system, but he mostly just lectured corporations with an upturned chin and wagging finger, while letting them continue shipping jobs to China and Mexico. ..."
"... Institutionalized corruption has yielded disastrous results. ..."
The House Ways and Means Committee threw a bipartisan "birthday bash" for insurance company
AIG, that was widely attended by staffers across the aisle. The chairman of the committee,
Richard Neal , who is a
Democrat, gave remarks at the party. It included snacks, and an open bar serving a "centennial
smash" signature cocktail, all while an acapella group serenaded the group to the tune of
Pharrell's "Happy."
This is Versailles 1790's level stuff. It is a repulsive illustration of the bipartisan
corruption that has seeped into our system. Don't forget this is the company received 190
billion dollars in bailout funds while the rest of the American middle class plummeted to
destruction. It's also the same company which paid out $165 million in bonuses to its
executives after receiving bailout money and facing zero repercussions from the Obama
administration.
Monday, that same company which was saved by the United States government was thrown a
birthday party in the halls of the United States Congress committee which dispersed those
funds? It literally doesn't get more corrupt than that. These people are so shameless they
bragged about this party. They allowed it to be reported in Politico because that's just
business as usual in our capital city
Corporatism does not know any party. It has wormed its way into the highest levels of the
United States government. It has ruled us to our detriment now for almost 40 years now. The
left has responded to this moment with democratic socialism. The right looking at this movement
is learning all of the wrong reasons; they're flying socialism sucks banners all across America
without responding to the underlying structure of the American system as extraordinarily
flawed
So many on the right lecture the millennial generation and the working class as lazy. They
give no credence to why exactly these people are angry. They watched the middle class get
decimated, money get sent to Wall Street while our student debt exploded and any surplus cash
that happened to be laying around was spent trying to turn the Middle East into a democratic
paradise. America voted twice for change-agent Barack Obama to try and clean up the system, but
he mostly just lectured corporations with an upturned chin and wagging finger, while letting
them continue shipping jobs to China and Mexico.
Institutionalized corruption has yielded disastrous results. A new survey from the Victims
of Communism Memorial Foundation finds that more than 70% of millennials say they are likely to
vote socialist, and that 1 in 5 think that America would be better off if private property was
abolished. This makes perfect sense to me, because this generation sees the AIG bailout and the
party 10 years later and goes, well if that's capitalism, then this crap is not for me
I know some of the people watching this probably are actual socialists. I don't think most
of you are though. You're just fed up and you've been told that if you're against our current
system then you're a socialist. So you shrug and go, sure, I guess. It is incumbent upon the
right to restore and equitable and fair playing field within our system if we, correctly in my
view, believe that capitalism is intrinsic to the strength of the United States
The libertarian streak of the Republican Party will be the electoral and moral death of it.
Libertarianism was founded upon the idea that the greatest threat to you and your life is
institutionalized power in the form of the government. It's time they understood that the
government isn't the only institution which can hold power in our society. It's time to reign
in that power wherever it reigns.
"... As Hudson points out, WW1 was a coup for the USA's financial sector and allowed them to gain control of academia to erase Marx and his Classical Economist allies and replace them with their own toadies along with their newly formed product--Propaganda and the nascent Police State, which the institution of Prohibition greatly facilitated. ..."
The latest by Crooke I found a curious read since he bases his article on his interpretation
of Adam Tooze's books about the world wars, neither of which I've read. Curious because we
know from Hudson that the counterrevolution by the Feudal Lords of banking and land holding
against Classical Economists and their political allies began in earnest well before then in
@1870 and that their Race for Africa was a big part of their efforts to regain their hold on
their home governments.
Within the USA, a similar revolution was being waged although it began several decades
later in response to the Populists.
As Hudson points out, WW1 was a coup for the USA's financial sector and allowed them
to gain control of academia to erase Marx and his Classical Economist allies and replace them
with their own toadies along with their newly formed product--Propaganda and the nascent
Police State, which the institution of Prohibition greatly facilitated.
I wrote the above to provide barflies with a contrasting historical context much of which
was recently reviewed via all the Marxian discussion and where the actual roots of
Neoliberalism are seated.
Deep at the core is the battle by Banksters and their allies to keep their institutions
private versus the Classical and Populist goal of making them public utilities and how the
World Wars helped the former to gain their goals.
Tooze's narrative seems okay on the surface, and it clearly fooled Crooke, but it's
incomplete. What did the European Powers run out first that generated WW1's stalemate? Money
for arms as posited or human bodies to man those arms? In George Seldes's censored interview
with Hindenburg a week after the Armistice, published in You Can't Print That! ,
the defeated Field Marshal admitted it was the entry of American Men--human numbers--that
turned the tide and made it clear to him that the war couldn't be won. Sure, money helped get
the doughboys over there, but before they arrived masses of money were sent in both
directions that didn't change the balance other than to create the unpayable postwar debts
the Americans demanded be paid.
karlofi@103
Hindenburg realised that the manpower resources of the US were crucial, though they hardly
came into play on the battle field. But it was US raw materials, combined with the British
blockade, that were the crucxial factor.
With the US the Alliance was simply, even minus Russia, too big, too powerful. And then
there was the military reality that the Allies were beginning to organise themselves on the
battlefield: including tanks etc.
As for the "Feudal Lords of Banking..." Hudson is a great resource, but his theory sounds
wrong to me.
When I first happened across Seldes's interview and knowing the "stabbed in the back"
claim that Hitler used in his rise to power, I was very curious as to why it was
censored--what possible reason could be claimed to withhold such an important set of
revelations? Clearly as Seldes himself says, if it had been published at the time, the entire
course of subsequent history would likely have taken a different direction. Are you familiar
with Seldes? He was I.F. Stone's idol and model with a penchant for truth-telling regardless
of the subject or people involved. The book I linked to is filled with similar stories that
contradicted the current narrative being sold to the masses, and his subsequent works are
similar. But as you might guess, few people have ever heard of him or his writings.
Given what Hudson reveals about the manipulation of the learning/teaching of
political-economy, it would be very wise to suspect much of what was/is produced via the
"social sciences," (history written by the victors) which is why my collegiate mentor
stressed the learning methodology he devised to try and arrive at the best non-subjective
conclusion as possible whatever the inquiry--to try and duplicate as closely as possible the
scientific method for confirmation of theories. I've discovered quite a lot of metaphysics
within the entire spectrum of social science disciplines that's made me question a vast
catalog of assumptions. As Fischer and other historians have discovered, historical truth
often lies literally in the margins--the annotations--made by decision makers or obscure
signals reports filed away within deep archives or forensic chemical reports detailing what
is or isn't present within the samples. The learning of the revealed truths can be painful,
making the adage Ignorance is Bliss rather powerful and enticing. But that's not for me as I
subscribe to the alternative adage, The Truth will set you Free.
I'm just reading Keen's 2nd Edition of his Debunking Economics: The Naked Emperor
Dethroned? where he writes on page 29: "[...], conventional Marxsim is as replete with
logical errors as is neoclassical economics, even though Marx himself provides a far better
foundation for economic analysis than did Walras or Marshall."
To my knowledge, Keen refers to himself as a Post-keynesian economist (not to be confused
with bastardized Keynesian or central banks' Neo-Keynesian economics), highly influenced by
the work of Hyman Minsky who learned under Schumpeter.
Unemployment benefits currently are usually is just six month or so; this is the time when you can plan you "downsizing". You do
not need to rush but at the same time do not expect that you will get job offers quickly, if at all. Usually it does not happen.
many advertised positions are fakes, another substantial percentage is already reserved for H1B candidates and posting them is the
necessary legal formality.
Often losing job logically requires selling your home and moving to a modest apartment, especially if no children are living with
you. At 50 it is abut time... You need to do it later anyway, so why not now. But that's a very tough decision to make... Still, if the current housing market is close to the top
(as it is in 2019), this is one of the best moves
you can make. Getting from your house several hundred thousand dollars allows you to create kind of private pension to compensate for
losses in income till you hit your Social Security check, which currently means 66.
$300K investment in A quality bonds that returns 3% per year is enough to provides you with $24K per year "private pension" from 50 to
age of 66 when social security kicks in. That allows you to pay for the apartment and amenities. The food is extra but with this
level of income you qualify for food assistance.
This way you can take lower paid job, of much lower paid job (which mean $15 per hour), of temp job and survive.
And if this are many form you house sell your 401k remains intact and can supplement your SS income later on. Simple Excel spreadsheet can provide you with
a complete picture of what you can afford and what not. Actually the ability to walk of fresh air for 3 or more hours each day worth a lot
of money ;-)
Notable quotes:
"... Losing a job in your 50s is a devastating moment, especially if the job is connected to a long career ripe with upward mobility. As a frequent observer of this phenomenon, it's as scary and troublesome as unchecked credit card debt or an expensive chronic health condition. This is one of the many reasons why I believe our 50s can be the most challenging decade of our lives. ..."
"... The first thing you should do is identify the exact day your job income stops arriving ..."
"... Next, and by next I mean five minutes later, explore your eligibility for unemployment benefits, and then file for them if you're able. ..."
"... Grab your bank statement, a marker, and a calculator. As much as you want to pretend its business as usual, you shouldn't. Identify expenses that don't make sense if you don't have a job. Circle them. Add them up. Resolve to eliminate them for the time being, and possibly permanently. While this won't necessarily lengthen your fuse, it could lessen the severity of a potential boom. ..."
Losing a job in your 50s is a devastating moment, especially if the job is connected to a long career ripe with upward mobility.
As a frequent observer of this phenomenon, it's as scary and troublesome as unchecked credit card debt or an expensive chronic health
condition. This is one of the many reasons why I believe our 50s can be the most challenging decade of our lives.
Assuming you can clear the mental challenges, the financial and administrative obstacles can leave you feeling like a Rube Goldberg
machine.
Income, health insurance, life insurance, disability insurance, bills, expenses, short-term savings and retirement savings are
all immediately important in the face of a job loss. Never mind your Parent PLUS loans, financially-dependent aging parents, and
boomerang children (adult kids who live at home), which might all be lurking as well.
When does your income stop?
From the shocking moment a person learns their job is no longer their job, the word "triage" must flash in bright lights like
an obnoxiously large sign in Times Square. This is more challenging than you might think. Like a pickpocket bumping into you right
before he grabs your wallet, the distraction is the problem that takes your focus away from the real problem.
This is hard to do because of the emotion that arrives with the dirty deed. The mind immediately begins to race to sources of
money and relief. And unfortunately that relief is often found in the wrong place.
The first thing you should do is identify the exact day your job income stops arriving . That's how much time you have
to defuse the bomb. Your fuse may come in the form of a severance package, or work you've performed but haven't been paid for yet.
When do benefits kick in?
Next, and by next I mean five minutes later, explore your eligibility for unemployment benefits, and then file for them if
you're able. However, in some states severance pay affects your immediate eligibility for unemployment benefits. In other words,
you can't file for unemployment until your severance payments go away.
Assuming you can't just retire at this moment, which you likely can't, you must secure fresh employment income quickly. But quickly
is relative to the length of your fuse. I've witnessed way too many people miscalculate the length and importance of their fuse.
If you're able to get back to work quickly, the initial job loss plus severance ends up enhancing your financial life. If you take
too much time, by your choice or that of the cosmos, boom.
The next move is much more hands-on, and must also be performed the day you find yourself without a job.
What nonessentials do I cut?
Grab your bank statement, a marker, and a calculator. As much as you want to pretend its business as usual, you shouldn't.
Identify expenses that don't make sense if you don't have a job. Circle them. Add them up. Resolve to eliminate them for the time
being, and possibly permanently. While this won't necessarily lengthen your fuse, it could lessen the severity of a potential boom.
The idea of diving into your spending habits on the day you lose your job is no fun. But when else will you have such a powerful
reason to do so? You won't. It's better than dipping into your assets to fund your current lifestyle. And that's where we'll pick
it up the next time.
We've covered day one. In my next column we will tackle day two and beyond.
Peter Dunn is an author, speaker and radio host, and he has a free podcast: "Million Dollar Plan." Have a question for Pete
the Planner? Email him at [email protected]. The views and opinions expressed in this column are the author's and do not
necessarily reflect those of USA TODAY.
Is Big Necessarily Bad?
Antitrust cannot be used as a cudgel based on size. There are other ways of whacking at corporate excess.
By
Marshall Auerback
�
August 19, 2019
Teddy Roosevelt with trust-busting stick, circa 1904. (Image: Library of Congress/Wikimedia Commons)
When it comes to relations between consenting adults, size may not matter (or so one
hears). But it's a different story in regard to companies and the politically fraught area of antitrust law.
Today, a number of
policymakers
,
economists
,
and
legal scholars
connect a host of
problems -- excessive wealth inequality, wage stagnation, political dysfunction, market distortions -- directly to the
corporate
"curse of bigness
," which they argue is a product of lax antitrust
enforcement. But they may be misdiagnosing the cause of these diseases and, in so doing, offering up the wrong cure.
Instead of moving toward a new antitrust paradigm, we might do better to consider a
more robust utility system of regulation that is "function-centric," rather than size-centric. In other words,
regulation that restricts the range of corporate activities (e.g., structural separation so as to prevent companies like
Amazon and Google from owning both the platform as well as participating as a seller on that platform), or the prices
such companies can charge (as regulators often do for utilities or railways). These considerations would be "size
neutral": they would apply independently of corporate size per se. Regulation, rather than antitrust, also better
addresses other issues like privacy protection (via a national model that could replicate
California's Consumer Privacy Act of 2018
),
labor abuses (it shouldn't matter whether workers are employed by Apple or mom-and-pop sweatshops), and controlling
"fake news" dissemination (by placing social media companies under the purview of the Federal Communications
Commission).
"Break 'em up" has great historical resonance in the United States. Yet one of the
nation's earliest trust-busters, President Theodore Roosevelt,
argued that
"the remedy for [corporate] abuse was not mindlessly breaking up big firms, but preventing specific abuses by means of a
strong national regulation of interstate corporations." Likewise, in the early days of the New Deal, his cousin,
Franklin Delano Roosevelt, initially embraced the antitrust philosophy of
Supreme Court Justice Louis
Brandeis
(who, like many of today's modern trust-busters, prioritized power
and business structure over consumer welfare). Ultimately though, frustrated that the incessant focus on corporate
concentration was hindering World War II efforts to mobilize greater industrial production, FDR
concluded
that
optimal outcomes were more likely to be achieved via "prudent government oversight and using antitrust laws to police
abuses -- not to break up every big company simply because it's big."
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After World War II, historian Richard Hofstadter
noted a gradual public acceptance of big
business
. In large part, this was due "to the emergence of countervailing
bigness in government and labor" that ultimately led to the "big three tripartite" model among government, business, and
unions exemplified in the Treaty of Detroit agreement between General Motors and the United Auto Workers (UAW).
From the 1950s through the 1970s, "Tripartism" was exceptionally successful at
promoting economic growth and high wages (the wage growth was explicitly linked to rising productivity in the Treaty of
Detroit). Big unions flourished alongside growing conglomerates that emerged as the new face of corporate consolidation
(a prime example being International Telephone and Telegraph -- ITT). Equally significant, as the economist Thomas Piketty
observed in his sweeping account of rising inequality,
Capital in
the Twenty-first Century
, a new wave of corporate consolidation did not
exacerbate prevailing inequalities. To the contrary, this period coincided
with a diminution of wealth inequality
, as
relative wealth gains for the top tier stabilized for the first time in decades.
That all changed in the 1980s with the rise of Ronald Reagan's market fundamentalist
agenda. His presidency was characterized by a
sustained attack on unions
, cuts in public
services, and the ascendancy of the doctrine of "shareholder capitalism," used to legitimize the establishment of
SEC Rule 10b-18
. That rule engendered an
explosion in share buybacks (until it was introduced, companies buying back their own shares was considered a form of
stock manipulation). Rather than focusing on job-creating investment, corporate cash flow was thus directed toward stock
repurchases to fatten executive compensation.
The legacy of Reagan's market fundamentalism persists today. It is the most cogent
explanation we have for growing wealth inequality, wage stagnation, and reduced emphasis on corporate R&D.
This period also coincided with the rise of the
"Bork Doctrine,"
when, citing
Robert Bork, the Supreme Court asserted that the main focus of antitrust law should be on economic efficiency and
consumer welfare, as opposed to granting the government broad discretion to shape the economy. That shift in priorities
is a major source of the
neo-Brandeisians'
criticism of Bork's antitrust
philosophy. It reflects their Jeffersonian vision of a social-economic order organized along the lines of small-scale
businesses, with atomistic competition between a large number of equally advantaged units, in theory producing greater
innovation and economic dynamism.
But that's a highly idealized vision that doesn't comport with reality. Our modern
economy isn't comprised of village blacksmiths, yeoman farmers, and cobblers. A crucial component of the economy today
is big business, including many large multinational corporations that operate globally. And it is questionable whether
their size automatically equates to market power (in the sense of having the ability to manipulate prices at will and
exclude competitors), especially in the context of a global economy featuring a multiplicity of competing national
champions. Seldom do we hear calls to break up Detroit's "Big Three," despite global revenues in the hundreds of
billions. Why? Because there is a widespread recognition that these companies face significant challenges in a global
market dominated by similarly large competitors.
On virtually every meaningful indicator, including wages, productivity,
environmental protection, exporting, innovation, employment diversity and tax compliance, large firms as a group
significantly outperform small firms.
That insight parallels the scholarship of Joseph Schumpeter, the intellectual
godfather of the economics of innovation, who showed that R&D spending and productivity increase with scale. Latterly,
Schumpeter's insights have been validated by a recent study from Professors Ann Marie Knott and Carl Vieregger, who
conclude (emphasis added):
Not only do large firms (using the U.S. Small Business Association definition of
greater than 500 employees) conduct 5.75 more R&D in aggregate than small firms, they have 13% higher productivity
with that R&D. However this merely captures the private returns to their R&D. A further benefit of large firm R&D is
that
it generates the spillovers upon which small firm innovation free-rides
.
Size-centric antitrust proposals also ignore the increasing prevalence of economic
network theory, which suggests that social networks like Facebook or search engines such as Google lend themselves to
becoming natural monopolies in order to function optimally. Here again, function-centric regulation -- i.e., separation
between the control of content and distribution -- makes more sense to rectify market abuse. And this could be achieved via
utility-style regulation,
as no less a figure than right-wing populist Steve Bannon has suggested
,
rather than creating a bunch of new mini-Facebooks or Googles via court-mandated break-ups (especially if the owners of
the newly broken-up companies retain full control of algorithms to determine what people see in their News Feeds, what
privacy settings they can use, and even what messages get delivered to news consumers,
as Mark Zuckerberg does today
).
It is also the case that many businesses characterized by minimal levels of corporate
concentration -- construction, education, entertainment, accommodation, food, business services, transportation,
warehousing -- generally experience sub-standard productivity levels, sluggish growth, and low real wages, according to an
INET-funded study
by Professors Lance Taylor
and �zlem �mer. Working conditions are generally worse, and wages and employment benefits lower, as small business
owners are often the first to protest increased regulation or "burdensome" mandates, such as health care provisions. The
real point is not to beat up on small businesses, but simply to note that the abuses commonly ascribed to big business
are just as, if not more, likely to manifest themselves in smaller industries less prone to corporate concentration.
What about the claim that corporate consolidation
contributes to a
corrosion of American democracy
? It is true that as companies get bigger, it
maximizes their abilities to "pay to play," as Professor Thomas Ferguson asserts in his seminal work,
Golden Rule
. Ferguson says that powerful blocs of business elites, large
and
small, with durable (largely
economic) interests, are a constant feature of American politics. All have an incentive to get bigger in order to
maximize political leverage. That includes smaller businesses that scale up via trade associations to maximize the
impact of their "political investment." But again, what is needed here is not an antitrust remedy, but a change in the
"pay to play" rules so as to ensure that money and corporate scale have less of a polluting impact on the American
polity.
So it may be time to reconsider the simplistic notion that "big is bad." Yes, we want
a dynamic economy and a thriving democracy. But mindlessly breaking up big businesses may not be the best path to get us
there.
Marshall Auerback is a market analyst and a research associate at the
Levy
Economics Institute
at Bard College.
This article was supported by the Ewing Marion Kauffman Foundation.
I notice that this entire article only once uses the word "monopoly", which AFAIK was the
entire point of America's antitrust laws. Instead the author chooses to focus on corporate
size. Hence the article's title: "Is Big Necessarily Bad?"
That suggests that he is
either missing the point of the antitrust laws or he's choosing to ignore it so as allow
him to bathe large corporations in a rosy glow.
BTW, as an FYI, I notice that this article was supported by Ewing Marion Kauffman
Foundation. As it happens that particular non-profit was founded by Ewing Marion Kauffman
who also founded Marion Laboratories. As it happens, Marion Laboratories was later bought
by Dow Chemicals, one of the top three chemical corporations.
That being the case, one can kinda see why they might support an article arguing that
big corporations aren't "necessarily bad".
The author might be right about attacking vertical domination, but it seems to me that an
important shortcoming of his analysis is failure to define "bigness," except to cite
someone else's definition as any company with more than 500 employees. Such a low bar
prevents the author from seriously grappling with the issue of "bigness." Any discussion
about whether or not "big is bad" must reckon with the extent to which the bigness in
question creates industry consolidation. Potential oligopoly is seen by most analysts and
economists as the major issue with "bigness." Oligopoly means loss of industry
competition, and it is therefore oligopoly that is rightly the target of antitrust law.
Interesting article cover quite a scope of time. Am an American Ex pat working in Canada.
In Canada to avoid total integration with the US aside from controlling the currency
Canada has very successful Oligopolies . I see that with the US airline Industry.
Oligopolies are mandated to work in concert with Government regulations, to retain their
protected status.Biggest example in Canada is the extremely successful 5 big Banks. Our
government doesn't have lawyers with the expertise to challenge the likes of Google,
Facebook, etc.
Antitrust laws aren't enforced because those corps. who are at fault pay generously for
campaigns to ensure they aren't enforced. Besides, the SCOTUS made rulings in the past
allowing monopolies, which is against the Constitution. But, the Constitution gets in the
way of business and profits, doesn't it?
Size isn't the determining factor. It's competition. You need at least 5 companies in a
product category to ensure that a pricing oligarchy won't be formed. I also agree on
breaking up companies horizontally to ensure that they can't create platform monopolies.
Competition is what drives innovation.
There he goes again! with the charge that Reagan was an unabashed union buster, by way of
what could be taken either as the classic push toward GOP monopolism, or nihilistic
competition, take your pick -- we are not clear what the administration stood for by way
of this article.
Just who would defend the behavior of the Teamsters, which earned
itself a forced trusteeship under NY attorney general Guiliani? Or PATCO, whose strike was
illegal under federal law, which warranted the right to fire airline staff? Much criticism
has been leveled against the reorganization of the trucking industry, whereby the
elimination of freight tariffs and also of the mandate to force deadhead backhauling did
lower wages and effectively bust union organizing. But this deregulation was actually
initiated under Carter, and it did have the longterm effect of enlarging national carriers
-- though that had not done Consolidated Freight much good in this century. Similarly, the
creation of CSX under Reagan only followed a huge history of consolidations, mergers, and
rail closures.
What of the villainous Robert Bork? In "The Antitrust Paradox", he raised the issue
that "mush language" attends many legal rationales for government action, such as the
notion that such and such action be "reasonable". We have heard all this again and again
in field after field of American jurisprudence, and there is no reason for conservatives
to disagree.
To this day, the granddaddy of bad antitrust law is the Leow's Theatre case. Had the
chain simply been allowed to keep both its theaters and some of its block booking system,
provided that fair access, booking, and payment be provided to film production
competitors, the monopolism problem would have been solved. But rest assured, chain
theaters could not avoid a massive pruning in the 50's.
I find it ironic that for all our solicitude for trust busting, corrupt unions escape
scrutiny. The fact that they are largely organized along the lines of the former CPUSSR
(that was progress in 1934),have carte blanche in siphoning dark money into political
campaigns in contravention of most campaign laws, and have spent more effort colluding
with employers in back deals to stifle dissenters within truly independent union forces
than actually fighting corrupt corporate boards, says a lot.
Global market power and its macroeconomic implications
By Federico Diez, Daniel Leigh and Suchanan Tambunlertchai
The rise in the market power of large firms is assumed to affect economic activity, but
measuring either market power or its effects is challenging. Based on firm-level data for 74
countries, this column shows that market power has increased around the world, driven mostly
by 'superstar' firms. Higher markups are initially associated with increasing investment and
innovation, but the reverse is true when market power becomes too strong. The share of income
paid to workers also declines with rising market power.
The US justice department is opening a broad antitrust review into major technology firms,
as criticism over the companies' growing reach and power heats up.
The investigation will focus on growing complaints that the companies are unlawfully
stifling competition.
"The Department's review will consider the widespread concerns that consumers, businesses
and entrepreneurs have expressed about search, social media, and some retail services online,"
the Department of Justice said in a statement.
ss="rich-link"> A new antitrust frontier – the issue closing partisan divides in
the name of policing big tech Read more
"Without the discipline of meaningful market-based competition, digital platforms may act in
ways that are not responsive to consumer demands," added the assistant attorney general Makan
Delrahim, of the antitrust division.
The review will investigate practices of online platforms including Facebook , Alphabet's Google, Amazon and
Apple.
The investigation comes amid calls from lawmakers, including Democratic presidential
candidates such as Elizabeth Warren, that the companies should face more scrutiny.
Lat week, Facebook, Google, and Amazon
faced a grilling before the House subcommittee on antitrust, commercial and administrative
law over their hold on markets including digital advertising, e-commerce and cloud
computing.
Lawmakers questioned Amazon over the fees it levies against
third-party sellers on the platform and whether this creates a monopoly of power. They also
questioned Facebook executives over practices of targeting startups for acquisition and copying
features of companies that decline to be acquired.
Lawmakers also grilled Facebook this month over its plans to launch a global cryptocurrency,
called Libra. In the hearing, Senator Sherrod Brown of Ohio said Facebook showed "breathtaking
arrogance" in attempting to launch a digital financial service after a number of major privacy
scandals.
In July, the Federal Trade Commission approved a $5bn fine against Facebook for its handling
of user data surrounding the Cambridge
Analytica scandal in 2018.
"Facebook is dangerous," Brown said, likening the company to a toddler playing with matches.
"It has burned the house down repeatedly and called every attempt a learning experience. Do you
really think people should trust you with their bank accounts and their money?"
The Department of Justice investigation is already under way, the Wall Street Journal
reported on Tuesday. The department hosted a private presentation from critics of big
technology companies, who walked legislators through concerns and arguments for breaking up the
firms.
Facebook, Alphabet , Amazon and Apple did not
immediately respond to requests for comment.
Only the greedy, selfish, well off, egotistical and share holders believe that Public
Services should, could and would benefit from privatisation and deregulation.
Education and Health for example are (in theory) a universal right in the UK. As numbers
in the population rise and demographics change so do costs ie delivery of the service becomes
more expensive.As market force logic is introduced it also becomes less responsive - hence
people not able to get the right drugs and treatment and challenging and challenged young
people being denied an education that is vital for them in increasing numbers.
Meanwhile - as Public Services are devalued and denuded in this system the private sector
becomes increasingly wealthy at the top while its workers become poorer and less powerful at
the bottom.
With the introduction of Tory austerity which punishes the latter to the benefit of the
former there is no surprise that this system does not work and has provided a platform for
the unscrupulous greedy and corrupt to exploit Brexit and produce conditions which will take
'Neoliberalism' to where logic suggests it would always go - with the powerful rich protected
minority exerting their power over an increasingly poor and powerless majority.
The competitive tender approach ensures the cheapest bids get the contracts and the cheapest
bids are those most likely to employ exploited labour and cheap materials as well as cutting
corners. Result? a job of sorts gets done, but the quality is rubbish, with no investment or
pride in the product. Look at Hong Kong where this is longstanding practice: new tunnel, half
the extractor fans do not work correctly because they were poorly installed. I once spoke to
the Chief Engineer of the Tsing Ma bridge, he was stressed out of his socks for the whole
construction period trying to monitor all the subcontractors who had bid so low they had to
cheat to make a profit with the result that they would try to cut corners and avoid doing
things if they thought they could get away with it. Good job that engineer was diligent.
Others may be less able or willing.
BTW: I seldom find comparisons in UK-media to other countries when those countries are
better.
I think that's because most of the UK media is propaganda for the established system,
which they rely on for advertising revenue and access to information. If an outlet's
journalists start seriously questioning the existing system, a few things happen: 1.
the journo doesn't get promoted within the system; 2. their access to information is
curtailed (they are not invited to briefings etc., and; 3. advertising revenue drops. As the
business model of most mainstream media is to present consumer audiences to advertisers, this
is not going to sit well with the owners, see 1 and 2 above leading to poor evaluations. Any
journo with half a brain quickly learns this and fits in. Only so far and no further.
As a Tory for most of my longish life, I have to agree that whilst some things have
flourished once privatised, certain services must remain in public ownership and control to
enable governments to improve or reduce, depending on national taxation and expenditure - if
people want better services then they must be prepared to pay for them, and of course the
long-term pensions of the workforce. Managers should be subject matter experts before running
departments, not just accountants or management consultants, so they can improve delivery not
just constantly re-structure or carp on about 'efficiency savings'.
Having worked in shipping, that industry has oscillated several times but rail is an
interesting example - a disaster in the dying days of national ownership, the private world
started well improving safety, reliability and capacity but has gone downhill in recent
years, not helped by the track management system. Again, the airlines started well but now
several have gone into administration and BA has 'down-qualitied' itself to become one of the
worst.
Some parts of the NHS can be provided by private industry but limited to service provision
and collective buying only - certainly NOT cancer screening.
Then, when you look at private providers who go bust and completely fail to provide any
acceptable capability - jails, probation, social care etc. one wonders when, if ever,
politicians will realise that it costs them, the civil service and commercial management an
incredible amount of time, effort and cost just to fail!
Outsourcing government work is the most inefficient way of getting it done for the benefit of
taxpayers. When the profits private companies make from it are added to what economies must
invest to pay the taxes for it it's astonishing how popular it has become throughout the
world, something only explicable if those authorising it are amongst the most stupid of
financial administrators or the most corrupt.
Outsourcing for example £1m worth of work requires that amount to be paid in taxes,
which needs about £5m to be earned in wages and profits to pay £1m in taxes,
which in turn needs an investment of perhaps ten times that amount, when the £1m is
borrowed by debt laden governments to be repaid by over-borrowed and overtaxed economies.
If the outsourced company is not profit-making it will borrow the capital to be able to
deliver what's required and that in turn will raise the amount it will want for future work,
which is what I think accounts for Carillion and the other outsource giants going to the
wall.
The process is generally the fault of governments failing to adhere strictly to the necessity
of only paying its workforce on average the same as the private sector pays its workers,
which in democracies is not an unfair requirement demanded by equality legislation. Many
would claim that such was why Margaret Thatcher decided on privatising so many public
utilities especially after the miners' strike in Ted Heath's government and why it gained so
much support and popularity when wages and benefits for similar skill levels seemed so much
better and jobs more secure for many public sector workers involved than they were in the
private sector. Now of course, the high costs of private necessary public services are making
life unbearable for the majority of workers and welfare recipients while profits are going
abroad to those who own them and the EU in getting the flak – courtesy of the media -
for the resultant poverty and austerity, allowed the false £350m a week to win the
referendum. The £4 billion a week worth of exports to the EU paid most of that and the
way companies are relocating to hedge against Brexit means a lot of lost jobs will go with
them – some earlier estimates but it at more than 100,000 - which doesn't seem to deter
those determinedly wanting out of the EU one little bit.
This is a blessing for the low labour cost Member States, who being in the populous markets
the multinationals need, can attract the UK industries looking to further cut costs and
freight charges so those that go will never come back because higher costs in the Brexit UK
will not be compensated for easily with uncompetitive price hikes for EU customers, unlike
CAP payments that have been promised to farmers by the government proBrexit Minister.
The doom and gloom felt by many I think is well justified when sovereign debt and bank credit
is considered relative to taxes. While sovereign debt is regarded as an asset and future
taxes are acceptable for bank credit and both can be securitized by banking systems to borrow
even more capital that will be acceptable to central banks as QE, it's not surprising that
sovereigns don't need to worry about economies being unable to provide the taxes their
governments unlawfully spend even when leaving it for future generations is also unlawful
i.e. is a crime, since if they don't, their central banks and bond holders covered by them
will. When the cost in trillions since 2016 already spent by government in preparing for
Brexit is included one can't help but think that the financial economy has made a proverbial
killing from UK incorporated and now owns most if not all of it. If most of the finance for
Brexit came from its financiers and investors is it possible that after Brexit they'll pour
trillions back into the economy to make it capable of not only surviving but also competing
favourably with the EU, Japan, China, and the US?
I have to disagree. Hardly anything has flourished after privatisation. The big failures,
which get all the publicity, were generally basket case private businesses which had to be
nationalised to save them from collapse.
Sometimes they are stuffed with public money and
sold at a loss to the public, like the Tory nationalisation of Rolls Royce, or deprived of
funds like British Rail to provide an excuse to liberate thousands of square miles of real
estate
This latter is the scheme for the NHS with hospitals and other property provided at
great public expense sold off to any shark who says he has the money, and once it's private
load the enterprise with debt and walk away.
Unlike the privatisations of the 80s and 90s there's barely any pretence these days
that new sell-offs are anything more than simply part of a quest to find new avenues for
profit-making in an economy with tons of liquid capital but not enough places to profitability
put it.
Back in the Thatcher/Reagan years there were at people around who genuinely believed in the
superiority of the market, or at least, made the effort to set out an intellectual case for
it.
Now we're in a different era. After 2008, hardly anyone really believes in neoliberal
ideas anymore, not to the point that they'd openly make the case for them anyway. But while
different visions have appeared to some extent on both left and right, most of those in
positions of power and influence have so internalised Thatcher's 'there is no alternative'
that it's beyond their political horizons to treat any alternatives which do emerge as
serious propositions, let alone come up with their own.
So neoliberalism stumbles on almost as a reflex action. Ben Fine calls it a 'zombie' but I
think the better analogy is cannibalism. Unlike the privatisations of the 80s and 90s there's
barely any pretence these days that new sell-offs are anything more than simply part of a
quest to find new avenues for profit-making in an economy with tons of liquid capital but not
enough places to profitability put it. Because structurally speaking most of the economy is
tapped out.
Privatising public services at this point is just a way to asset strip and/or funnel
public revenue streams to a private sector which has been stuck in neoliberal short-term, low
skill, low productivity, low wage, high debt mode for so long that it has lost the ability to
grow. So now it is eating itself, or at least eating the structures which hold it up and
allow it to survive.
The central premise used by Governments for privatising public servcies seems to have been
that publicly run services are inefficient compared to private companies; that the need to
turn a profit means wasteful systems and behaviours are minimised. Therefore, money can be
saved by outsourcing as private companies can provide the same or better service more
cheaply.
I think this is very disrespectful to all those who work in public service, many of whom
are dedicated to their jobs to provide care or a good service to members of the public. The
idea that making money is the only motivating force that can make someone do their job well
seems flawed. Further, if efficiency gains alone are not enough to make a profit, then the
only recourse for companies is to provide a poorer service or be more exploitative of their
employees, which is regularly played out.
This central premise is not widely challenged by politicians. It seems accepted as fact. I
wonder if there have been any studies to either support or challenge this idea.
"... "When the modern corporation acquires power over markets, power in the community, power over the state and power over belief, it is a political instrument, different in degree but not in kind from the state itself. To hold otherwise -- to deny the political character of the modern corporation -- is not merely to avoid the reality. It is to disguise the reality. The victims of that disguise are those we instruct in error." ..."
"There
was time when average Americans could be counted upon to know correctly whether the country was going up or down, because in those
days when America prospered, the American people prospered as well. These days things are different.
Let's look at it in a statistical sense. If you look at it from the middle of the 1930's (the Depression) up until the year
1980, the lower 90 percent of the population of this country, what you might call the American people, that group took home 70
percent of the growth in the country's income. If you look at the same numbers from 1997 up until now, from the height of the
great Dot Com bubble up to the present, you will find that this same group, the American people, pocketed none of this country's
income growth at all.
Our share of these great good times was zero, folks. The upper ten percent of the population, by which we mean our country's
financiers and managers and professionals, consumed the entire thing. To be a young person in America these days is to understand
instinctively the downward slope that so many of us are on."
Thomas Frank, Kansas City Missouri, 6 April 2017
"When the modern corporation acquires power over markets, power in the community, power over the state and power over belief,
it is a political instrument, different in degree but not in kind from the state itself. To hold otherwise -- to deny the political
character of the modern corporation -- is not merely to avoid the reality. It is to disguise the reality. The victims of that
disguise are those we instruct in error."
John Kenneth Galbraith
One of the older male anchors on financial TV today noted, in a very condescending tone, that for some reason Elizabeth Warren
'has an attitude' when it comes to corporations.
I hope she and some of her like minded fellows get their opportunity to extend the hand of equal justice to these smug serial
felons, pampered polecats, and corporatist clowns. It has been a long time coming.
Looks like pendulum start swinging against privatization...
Notable quotes:
"... As corporate profits are the private sector's yardstick of success, privatized monopolies are likely to abuse their market power to maximize rents for themselves. Thus, privatization tends to burden the public, e.g., if charges are raised. ..."
"... In most cases, privatization has not closed the governments' fiscal deficits, and may even worsen budgetary problems. Privatization may worsen the fiscal situation due to loss of revenue from privatized SOEs, or tax evasion by the new privatized entity. ..."
"... In most cases, profitable SOEs were privatized as prospective private owners are driven to maximize profits. Fiscal deficits have often been exacerbated as new private owners use creative accounting to avoid tax, secure tax credits and subsidies, and maximize retained earnings. ..."
"... As a rule of thumb, I'd say that any privatisations that require the introduction of convoluted pseudo-market structures or vast new regulatory bureaucracies or which derive most of their ongoing income from the public sector are likely to be contrary to the long-term public interest. In the UK, unfortunately, all these ships sailed a long time ago ..."
"... Chicago is the proving grounds for thirty or so years of the Democrats' surrender to neoliberalism and austerity politics. Let us not forget, brethren and sistren, that Rahm is the Spawn of Bill + Hill as well as dear friend and advisor of Obama. So there is the work of Daley to undo and the work of the Clintonians to undo. It will take more than one term for Lightfoot. ..."
"... Privatization, at any cost, is no longer a choice. We have abused the pension system and now the public must pay for private companies to provide the most basic services. ..."
"... I keep thinking that perhaps an Act could or should be introduced here in UK (same for the States, i suppose), which should ensure that all politicians that enable any type of privatisation of public resources or PFI arrangement (yes that old chesnut), should be made personally responsible for the results therof. ..."
"... And any losses to the public accidentally or "accidentally" occasioned by such commandeering over public resources, to be treated like deliberate misappropriation by the said public officials. With the financial and custodial penalties as may be appropriate. ..."
"... lots of private services that are suspiciously similar to public utilities in terms of natural monopoly, such as cable TV, internet and even railroads. Maybe these should be nationalized and treated more like public services. It can work when they're adequately funded and oversight accountability has teeth; major airports are a good example. ..."
"... Plus the state giveaways includes tens of millions of dollars each year in corporate tax credits in the name of job creation. A report by the nonprofit " Good Jobs First " revealed that over 300 Illinois companies are keeping the state taxes paid by their employees. EDGE- the Economic Development in a Growing Economy is a corporate freebie tax credit, which is partly from the state personal income taxes paid by workers. That's right, the biggest welfare queens are the corporations collecting and keep their employees state income tax payments. ..."
"... Can it get worse? According to the Chicago Trib , "The Chicago Mercantile Exchange (CME), for example, with billions of untaxed contracts worth well over a quadrillion dollars, and whose profit margin in recent years is higher than any of the top 100 companies in the nation, had the hubris to demand an $85 million per year tax break. They got it." The money is there to secure the pensions and budget but has been diverted to the corporate welfare queens for honoring us mere serfs with their presence in the humble fiefdom of Illinois. ..."
"... Michael Hudson, to his immense credit, explains the pernicious effects of privatization of common goods repeatedly throughout his work, and demonstrates that it has been with us at least as long as the ancient practice of land alienation and rural usury. ..."
Posted on April 7,
2019 by Jerri-Lynn Scofield Jerri-Lynn
here. Another succinct post by Jomo Kwame Sundaram that makes clear the "benefits" of
privatization are not evenly distributed, and in fact, typically, "many are even worse off"
when the government chooses to transfer ownership of the family silver.
Note that SOE is the acronym for state owned enterprise.
For those interested in the topic, see also another short post by the same author from last
September, debunking other arguments to promote the privatization fairy, Revisiting
Privatization's Claims .
By Jomo Kwame Sundaram, former UN Assistant Secretary General for Economic Development.
Originally published at Inter Press
Service
In most cases of privatization, some outcomes benefit some, which serves to legitimize the
change. Nevertheless, overall net welfare improvements are the exception, not the rule.
Never is everyone better off. Rather, some are better off, while others are not, and
typically, many are even worse off. The partial gains are typically high, or even negated by
overall costs, which may be diffuse, and less directly felt by losers.
Privatized Monopoly Powers
Since many SOEs are public monopolies, privatization has typically transformed them into
private monopolies. In turn, abuse of such market monopoly power enables more rents and
corporate profits.
As corporate profits are the private sector's yardstick of success, privatized monopolies
are likely to abuse their market power to maximize rents for themselves. Thus, privatization
tends to burden the public, e.g., if charges are raised.
In most cases, privatization has not closed the governments' fiscal deficits, and may even
worsen budgetary problems. Privatization may worsen the fiscal situation due to loss of revenue
from privatized SOEs, or tax evasion by the new privatized entity.
Options for cross-subsidization, e.g., to broaden coverage are reduced as the government is
usually left with unprofitable activities while the potentially profitable is acquired by the
private sector. Thus, governments are often forced to cut essential public services.
In most cases, profitable SOEs were privatized as prospective private owners are driven to
maximize profits. Fiscal deficits have often been exacerbated as new private owners use
creative accounting to avoid tax, secure tax credits and subsidies, and maximize retained
earnings.
Meanwhile, governments lose vital revenue sources due to privatization if SOEs are
profitable, and are often obliged to subsidize privatized monopolies to ensure the poor and
underserved still have access to the privatized utilities or services.
Privatization Burdens Many
Privatization burdens the public when charges or fees are not reduced, or when the services
provided are significantly reduced. Thus, privatization often burdens the public in different
ways, depending on how market power is exercised or abused.
Often, instead of trying to provide a public good to all, many are excluded because it is
not considered commercially viable or economic to serve them. Consequently, privatization may
worsen overall enterprise performance. 'Value for money' may go down despite ostensible
improvements used to justify higher user charges.
SOEs are widely presumed to be more likely to be inefficient. The most profitable and
potentially profitable are typically the first and most likely to be privatized. This leaves
the rest of the public sector even less profitable, and thus considered more inefficient, in
turn justifying further privatizations.
Efficiency Elusive
It is often argued that privatization is needed as the government is inherently inefficient
and does not know how to run enterprises well. Incredibly, the government is expected to
subsidize privatized SOEs, which are presumed to be more efficient, in order to fulfil its
obligations to the citizenry.
Such obligations may not involve direct payments or transfers, but rather, lucrative
concessions to the privatized SOE. Thus, they may well make far more from these additional
concessions than the actual cost of fulfilling government obligations.
Thus, privatization of profitable enterprises or segments not only perpetuates exclusion of
the deserving, but also worsens overall public sector performance now encumbered with remaining
unprofitable obligations.
One consequence is poorer public sector performance, contributing to what appears to be a
self-fulfilling prophecy. To make matters worse, the public sector is then stuck with financing
the unprofitable, thus seemingly supporting to the privatization prophecy.
Benefits Accrue to Relatively Few
Privatization typically enriches the politically connected few who secure lucrative rents by
sacrificing the national or public interest for private profit, even when privatization may not
seem to benefit them.
Privatization in many developing and transition economies has primarily enriched these few
as the public interest is sacrificed to such powerful private business interests. This has, in
turn, exacerbated corruption, patronage and other related problems.
For example, following Russian voucher privatization and other Western recommended reforms,
for which there was a limited domestic constituency then, within three years (1992-1994), the
Russian economy had collapsed by half, and adult male life expectancy fell by six years. It was
the greatest such recorded catastrophe in the last six millennia of recorded human history.
Soon, a couple of dozen young Russian oligarchs had taken over the commanding heights of the
Russian economy; many then monetized their gains and invested abroad, migrating to follow their
new wealth. Much of this was celebrated by the Western media as economic progress.
As a rule of thumb, I'd say that any privatisations that require the introduction of
convoluted pseudo-market structures or vast new regulatory bureaucracies or which derive most
of their ongoing income from the public sector are likely to be contrary to the long-term
public interest. In the UK, unfortunately, all these ships sailed a long time ago
After the recent Chicago municipal elections, I wrote up some notes on the reasons for the
discontent. This article by Sundaram explains exactly how these schemes work. Further, you
can apply his criteria of subsidies for the rich, skimming, and disinheriting the middle
class and poor to all of the following instances in Chicago.
If I may–some for instances of how Sundaram's observations turn up in U.S.
cities:
Chicago is the proving grounds for thirty or so years of the Democrats' surrender to
neoliberalism and austerity politics. Let us not forget, brethren and sistren, that Rahm is
the Spawn of Bill + Hill as well as dear friend and advisor of Obama. So there is the work of
Daley to undo and the work of the Clintonians to undo. It will take more than one term for
Lightfoot.
Consider:
–Parking meters and enforcement have been privatized, starving the city of funds and,
more importantly, of its police power.
–Taxes have been privatized in TIFs, where money goes and is never heard from
again.
–There have been attempts to privatize the park system in the form of the Lucas museum
and the current Obama Theme Park imbroglio, involving some fifty acres of park land.
–The school system has been looted and privatized. The Democrats are big fans of
charter schools (right, "Beto"), seeing them as ways to skim money off the middle class and
the poor.
–Fare collection on public transit has been privatized using a system so deliberately
rudimentary and so deliberately corrupt that it cannot tell you at point of service how much
you have paid as fare.
–Boeing was enticed to Chicago with tax breaks. Yes, that Boeing, the one that now
deliberately puts bad software in your airplane.
–Property tax assessment has been an opaque system and source of skimming for
lawyers.
–Zoning: Eddie Burke, pond scum, is just the top layer of pollution.
–And as we have made our descent, all of these economic dogmata have been enforced by
petty harassment of the citizenry (endless tickets) and an ever-brutal police force.
And yet: The current Republican Party also supports all of these policies, so let's not
pretend that a bunch of Mitch McConnell lookalikes are headed to Chicago to reform it.
Providing professional services i.e. architecture, engineering, etc. for a public entity,
local or federal, does not yield unreasonable profits. Typically, the public agencies have
their own staff to monitor and cost control a project. The professional services provided to
private developers yields far more profit- oftentimes twice the profits associated with
public agency work. Most professional services companies will transition their work to the
public agencies during a recession.
At any rate, especially in Illinois, privatizing the work to avoid pension liabilities is
no longer a choice. Michael Madigan pension promises will require the public to maintain a
public service budget with no staff to fill potholes. Essentially, these are the no work jobs
made popular by the Soprano crew twenty years ago.
Discussion of the downside of the privatization of public services is merely an
oscillation from discussing the weather, the Bears or any other kitchen table discussion
– nothing more than pleasant small talk to pass the time.
Privatization, at any cost, is no longer a choice. We have abused the pension system and
now the public must pay for private companies to provide the most basic services.
The question is, what can one do to help arrest this wholesale theft of public resources
and their expropriation into the hands of well connected. " Public", as in, it is the working
public over the last 100 or 200 years that created (or paid for), the electricity grid, or
public schools, or entire armed or police forces
I keep thinking that perhaps an Act could or should be introduced here in UK (same for the
States, i suppose), which should ensure that all politicians that enable any type of
privatisation of public resources or PFI arrangement (yes that old chesnut), should be made
personally responsible for the results therof.
And any losses to the public accidentally or "accidentally" occasioned by such
commandeering over public resources, to be treated like deliberate misappropriation by the
said public officials. With the financial and custodial penalties as may be appropriate.
Anybody out there with similar thoughts or should i really try harder and give up on
drugs?
I vociferously disagree with the assertion that the wrecking of pension funding in the
past is the reason we are forced to leave privatization schemes in place today.
In a similar vein, the are lots of private services that are suspiciously similar to
public utilities in terms of natural monopoly, such as cable TV, internet and even railroads.
Maybe these should be nationalized and treated more like public services. It can work when
they're adequately funded and oversight accountability has teeth; major airports are a good
example.
Let's not forget the privatization of the
Chicago Skyway , not once but twice.
Plus the state giveaways includes tens of millions of dollars each year in corporate tax
credits in the name of job creation. A report by the nonprofit " Good Jobs
First " revealed that over 300 Illinois companies are keeping the state taxes paid by
their employees. EDGE- the Economic Development in a Growing Economy is a corporate freebie
tax credit, which is partly from the state personal income taxes paid by workers. That's
right, the biggest welfare queens are the corporations collecting and keep their employees
state income tax payments.
Can it get worse? According to the
Chicago Trib , "The Chicago Mercantile Exchange (CME), for example, with billions of
untaxed contracts worth well over a quadrillion dollars, and whose profit margin in recent
years is higher than any of the top 100 companies in the nation, had the hubris to demand an
$85 million per year tax break. They got it." The money is there to secure the pensions and
budget but has been diverted to the corporate welfare queens for honoring us mere serfs with
their presence in the humble fiefdom of Illinois.
Paging Mike Madigan- The Institute on Taxation and Economic Policy lists Illinois as one
of the "Terrible Ten" most tax-regressive states, imposing a much higher rate on poor
residents for sales and excise taxes, property taxes and income taxes. Al Capone would be
proud of him.
Michael Hudson, to his immense credit, explains the pernicious effects of privatization of
common goods repeatedly throughout his work, and demonstrates that it has been with us at
least as long as the ancient practice of land alienation and rural usury.
Natural monopolies ought to be nationalised, full stop.
I support public ownership of natural monopolies, however it would be helpful if these
pieces contained data, case studies or footnoted entries providing some empirical evidence of
the author's thesis.
This article comes at a time when the clarion call for privatizing Eskom, SA's electricity
utility, is hitting deafening levels. To the private sector, efficiency = maximizing profits
by making the "bloated" enterprise lean (aka cutting the workforce) and quite literally mean
(aka cutting services to "unprofitable" segments of the market, iow, the poor and
vulnerable). When profits soar because the holy grail of efficiency is achieved, the
mainstream business press brings out the champagne and toasts this "success" as proof that
the previously "moribund" (they always exaggerate the state of things) monopolistic monolith
has been given a new lease on life by privatizing it and the template is set for rescuing
other "ailing" SOEs.
The drawbacks are never laid out as cleary as they are in this article and the plight of
those worst affected, whether laid-off workers or those whose services have been cut, never
makes it into the headlines.
And then there is prison privatization where the burden of operation and maintaining the
institution should clearly be on the public so as to be constant reminder of the burden,
among others reasons. The motivations by private prison operators to reduce services and
costs out of site of the pesky prying eyes of the public are manifold.
Privatization is a great way to avoid having user fees wasted by providing services, and
instead put to better use funding the re-election campaigns of politicians supporting
privatization. Plus, it provides much-needed consulting fees for former politicians as well
as job-creating 7-figure salaries for the CEOs,
(/snark, if you couldn't tell)
On a side note, the Dilbert comic strip is written about private industry ,
There was a rudimentary plan
put forward last June that recommended some pretty substantial privatizations of U.S.
government assets and services which include:
-Privatizing the US Post Office ( through an Initial Public Offering or outright sale to a
private entity ).
-Sell off U.S. government owned electricity transmission lines ( U.S. government owns 14% of
this nations power transmission lines through TVA, Southwestern Power Administration, Western
Area Power Administration, and Bonneville Power Administration ).
-Spin-off the Federal Aviation Administrations air traffic control operations into a private
nonprofit entity.
-Spin-off the Department of Transportations operations of the Saint Lawrence Seaways Locks
and Channels into a private non-profit entity.
-End the federal conservatorship of Fannie Mae and Freddie Mac, then regulate a new system of
private guarantors for their MBS securities.
At heart, the problem with privatization is that marketing to a government-employed
purchaser or "purchase influencer" is ridiculously cheap, due to their poor accountability
strictures.
This is abetted by the Katamari Damacy process (self-accretionary tendency) of money and
power.
In Oz the electricity grids were privatized as they would be cheaper that way – or
so people were told. Instead, the cost of electricity has risen sharply over the years to the
point that it is effecting elections on both the State and Federal level as the price hikes
are so controversial. A problem is that those companies have to pay back the loans used to
buy the public electricity grids and as well, the senior management award themselves sky-high
wages because they are totally worth it. These are factors that were never present when it
was publicly owned. And just to put the boot in, those very same companies have been
'gold-plating' the electricity grid for their gain-
Meanwhile, whatever money the governments made selling their electricity companies has
been long spent on white elephants or buying themselves re-elections by giving out goodies to
voters.
buying themselves re-elections by giving out goodies to voters.
I don't reside in the states, so I don't see much of the detail of daily life. What are
these "goodies" of which you speak? In what I am able to read on the internet, people aren't
being given goodies any more. At least the old-time politicians handed out jobs, and turkeys
at Christmas. The current crop do hand out jobs to their kids and immediate family, but not
so much to anyone else.
The county "poorhouse" in Lebanon County, PA over the years evolved into a bare-bones but
very well run nursing home with caring, long-term staff. The Republican county commissioners,
however, year after year, avoided raising taxes by underfunding the retirement plan for the
employees. Then, "suddenly" there was a crisis because the underfunding had become legally
untenable.
The solution was to sell the operation to a for-profit operator to fund the pansion plan
shortfall at the minimal level required legally. In the next contract, the new owner cut
health care and other benefits. The wages had always been minimal and he was free of the old
pension plan requirements.
The employees went on strike for many months, the owner brought in replacements from
companies that specialize in that service, until the employees had to cave in.
I had been counting on that facility when my sister was diagnosed with Alzheimers. I have
family that is able to step in so she is provided for. Many others in the county are not so
fortunate. Here are some staff comments: https://www.indeed.com/cmp/Cedar-Haven-Healthcare-Center/reviews?fcountry=ALL
" instead of trying to provide a public good to all, many [ordinary working people] are
excluded because it is not considered commercially viable or economic to serve them."
There are also social and class dimensions to the exclusion. Private Internet Service
Providers (ISPs) in the USA have made the "not commercially viable or economic to serve them"
argument for decades when pressed about their refusal to wire the entire country. Their
"business model" leaves millions without reliable broadband service in a variety of settings,
from rural areas and small towns to inner cities and low income suburbs. In many cases,
citizens in those areas have no access to broadband at all.
When small towns and counties in the US have taken the initiative to wire their
localities, the ISPs have bribed state legislatures to pass laws prohibiting public broadband
throughout the rest of the state. Talk about subversion of democracy! Insult to injury: the
ISPs who wailed about "unfair competition" to state legislators then refuse to wire areas
throughout the rest of the state.
Lack of universal and affordable broadband has two major effects:
➤ Local governments are shut out of economic opportunities because they lack
connectivity. They are unable to shepherd business startups and existing businesses that need
broadband to thrive. People move away. Businesses relocate or downsize. Local economies are
left with erroding tax bases and boarded up downtowns.
➤ Children and young people in "broadband deserts" cannot tap into the many sources
of learning that exist on the web. In particular, they don't have the opportunity to learn
anything about frontend or backend web development applications such as, html, php, Ruby on
Rails, Photoshop or Indesign.
That is one reason the US tech industry lacks workers from different backgrounds. Most
tech workers grew up in areas the ISPs considered "commercially viable". In addition, many
tech workers are self taught to some degree, even those with computer science degrees. It is
difficult to be self taught if you lack access to the most basic resources and tools.
The "Independent" Federal Reserve Isn't Quite What It Is Cracked Up to Be
By Dean Baker
Neil Irwin had a New York Times article * warning readers of the potential harm if the
Federal Reserve loses its independence. The basis for the warning is that Donald Trump seems
prepared to nominate Steven Moore and Herman Cain to the Fed, two individuals with no obvious
qualifications for the job, other than their loyalty to Donald Trump. While Irwin is right to
warn about filling the Fed with people with no understanding of economics, it is wrong to
imagine that we have in general been well-served by the Fed in recent decades or that it is
necessarily independent in the way we would want.
The examples Irwin gives are telling. Irwin comments:
"The United States' role as the global reserve currency -- which results in persistently
low interest rates and little fear of capital flight -- is built in significant part on the
credibility the Fed has accumulated over decades.
"During the global financial crisis and its aftermath, for example, the Fed could feel
comfortable pursuing efforts to stimulate the United States economy without a loss of faith
in the dollar and Treasury bonds by global investors. The dollar actually rose against other
currencies even as the economy was in free fall in late 2008, and the Fed deployed trillions
of dollars in unconventional programs to try to stop the crisis."
First, the dollar is a global reserve currency, it is not the only global reserve
currency. Central banks also use euros, British pounds, Japanese yen, and even Swiss francs
as reserve currencies. This point is important because we do not seriously risk the dollar
not be accepted as a reserve currency. It is possible to imagine scenarios where its
predominance fades, as other currencies become more widely used. This would not be in any way
catastrophic for the United States.
On the issue of the dollar rising in the wake of the financial collapse in 2008, this was
actually bad news for the U.S. economy. After the plunge in demand from residential
construction and consumption following the collapse of the housing bubble, net exports was
one of the few sources of demand that could potentially boost the U.S. economy. The rise in
the dollar severely limited growth in this component.
The other example given is when Nixon pressured then Fed Chair Arthur Burns to keep
interest rates low to help his re-election in 1972. This was supposed to have worsened the
subsequent inflation and then severe recessions in the 1970s and early 1980s. The economic
damage of that era was mostly due to a huge jump in world oil prices at a time when the U.S.
economy was heavily dependent on oil.
While Nixon's interference with the Fed may have had some negative effect, it is worth
noting that the economies of other wealthy countries did not perform notably better than the
U.S. through this decade. It would be wrong to imply that the problems of the 1970s were to
any important extent due to Burns keeping interest rates lower than he might have otherwise
at the start of the decade.
It is also worth noting that the Fed has been very close to the financial sector. The
twelve regional bank presidents who sit on the open market committee that sets monetary
policy are largely appointed by the banks in the region. (When she was Fed chair, Janet
Yellen attempted to make the appointment process more open.) This has led to a Fed that is
far more concerned about keeping down inflation (a concern of bankers) than the full
employment portion of its mandate.
Arguably, Fed policy has led unemployment to be higher than necessary over much of the
last four decades. This has prevented millions of workers from having jobs and lowered wages
for tens of millions more. The people who were hurt most are those who are disadvantaged in
the labor market, such as African Americans, Hispanics, and people with less education.
Insofar as the Fed's "independence" has meant close ties to the financial industry, it has
not been good news for most people in this country.
"... Privatization typically enriches the politically connected few who secure lucrative rents by sacrificing the national or public interest for private profit, even when privatization may not seem to benefit them. ..."
"... For example, following Russian voucher privatization and other Western recommended reforms, for which there was a limited domestic constituency then, within three years (1992-1994), the Russian economy had collapsed by half, and adult male life expectancy fell by six years. It was the greatest such recorded catastrophe in the last six millennia of recorded human history. ..."
"... Soon, a couple of dozen young Russian oligarchs had taken over the commanding heights of the Russian economy; many then monetized their gains and invested abroad, migrating to follow their new wealth. Much of this was celebrated by the Western media as economic progress. ..."
<img
src="http://b.scorecardresearch.com/p?c1=2&c2=16807273&cv=2.0&cj=1" />
Has
Privatization Benefitted the Public? Posted on April 7,
2019 by Jerri-Lynn Scofield Jerri-Lynn
here. Another succinct post by Jomo Kwame Sundaram that makes clear the "benefits" of
privatization are not evenly distributed, and in fact, typically, "many are even worse off"
when the government chooses to transfer ownership of the family silver.
Note that SOE is the acronym for state owned enterprise.
For those interested in the topic, see also another short post by the same author from last
September, debunking other arguments to promote the privatization fairy, Revisiting
Privatization's Claims .
By Jomo Kwame Sundaram, former UN Assistant Secretary General for Economic Development.
Originally published at Inter Press
Service
In most cases of privatization, some outcomes benefit some, which serves to legitimize the
change. Nevertheless, overall net welfare improvements are the exception, not the rule.
Never is everyone better off. Rather, some are better off, while others are not, and
typically, many are even worse off. The partial gains are typically high, or even negated by
overall costs, which may be diffuse, and less directly felt by losers.
Privatized Monopoly Powers
Since many SOEs are public monopolies, privatization has typically transformed them into
private monopolies. In turn, abuse of such market monopoly power enables more rents and
corporate profits.
As corporate profits are the private sector's yardstick of success, privatized monopolies
are likely to abuse their market power to maximize rents for themselves. Thus, privatization
tends to burden the public, e.g., if charges are raised.
In most cases, privatization has not closed the governments' fiscal deficits, and may even
worsen budgetary problems. Privatization may worsen the fiscal situation due to loss of revenue
from privatized SOEs, or tax evasion by the new privatized entity.
Options for cross-subsidization, e.g., to broaden coverage are reduced as the government is
usually left with unprofitable activities while the potentially profitable is acquired by the
private sector. Thus, governments are often forced to cut essential public services.
In most cases, profitable SOEs were privatized as prospective private owners are driven to
maximize profits. Fiscal deficits have often been exacerbated as new private owners use
creative accounting to avoid tax, secure tax credits and subsidies, and maximize retained
earnings.
Meanwhile, governments lose vital revenue sources due to privatization if SOEs are
profitable, and are often obliged to subsidize privatized monopolies to ensure the poor and
underserved still have access to the privatized utilities or services.
Privatization Burdens Many
Privatization burdens the public when charges or fees are not reduced, or when the services
provided are significantly reduced. Thus, privatization often burdens the public in different
ways, depending on how market power is exercised or abused.
Often, instead of trying to provide a public good to all, many are excluded because it is
not considered commercially viable or economic to serve them. Consequently, privatization may
worsen overall enterprise performance. 'Value for money' may go down despite ostensible
improvements used to justify higher user charges.
SOEs are widely presumed to be more likely to be inefficient. The most profitable and
potentially profitable are typically the first and most likely to be privatized. This leaves
the rest of the public sector even less profitable, and thus considered more inefficient, in
turn justifying further privatizations.
Efficiency Elusive
It is often argued that privatization is needed as the government is inherently inefficient
and does not know how to run enterprises well. Incredibly, the government is expected to
subsidize privatized SOEs, which are presumed to be more efficient, in order to fulfil its
obligations to the citizenry.
Such obligations may not involve direct payments or transfers, but rather, lucrative
concessions to the privatized SOE. Thus, they may well make far more from these additional
concessions than the actual cost of fulfilling government obligations.
Thus, privatization of profitable enterprises or segments not only perpetuates exclusion of
the deserving, but also worsens overall public sector performance now encumbered with remaining
unprofitable obligations.
One consequence is poorer public sector performance, contributing to what appears to be a
self-fulfilling prophecy. To make matters worse, the public sector is then stuck with financing
the unprofitable, thus seemingly supporting to the privatization prophecy.
Benefits Accrue to Relatively Few
Privatization typically enriches the politically connected few who secure lucrative rents by
sacrificing the national or public interest for private profit, even when privatization may not
seem to benefit them.
Privatization in many developing and transition economies has primarily enriched these few
as the public interest is sacrificed to such powerful private business interests. This has, in
turn, exacerbated corruption, patronage and other related problems.
For example, following Russian voucher privatization and other Western recommended reforms,
for which there was a limited domestic constituency then, within three years (1992-1994), the
Russian economy had collapsed by half, and adult male life expectancy fell by six years. It was
the greatest such recorded catastrophe in the last six millennia of recorded human history.
Soon, a couple of dozen young Russian oligarchs had taken over the commanding heights of the
Russian economy; many then monetized their gains and invested abroad, migrating to follow their
new wealth. Much of this was celebrated by the Western media as economic
progress.
Yes it does. I've now added a sentence to my introduction to make that clear. I noticed
the omission when I was uploading the post, but wasn't sure whether readers would be
confused.
As a rule of thumb, I'd say that any privatisations that require the introduction of
convoluted pseudo-market structures or vast new regulatory bureaucracies or which derive most
of their ongoing income from the public sector are likely to be contrary to the long-term
public interest. In the UK, unfortunately, all these ships sailed a long time ago
After the recent Chicago municipal elections, I wrote up some notes on the reasons for the
discontent. This article by Sundaram explains exactly how these schemes work. Further, you
can apply his criteria of subsidies for the rich, skimming, and disinheriting the middle
class and poor to all of the following instances in Chicago.
If I may–some for instances of how Sundaram's observations turn up in U.S.
cities:
Chicago is the proving grounds for thirty or so years of the Democrats' surrender to
neoliberalism and austerity politics. Let us not forget, brethren and sistren, that Rahm is
the Spawn of Bill + Hill as well as dear friend and advisor of Obama. So there is the work of
Daley to undo and the work of the Clintonians to undo. It will take more than one term for
Lightfoot.
Consider:
–Parking meters and enforcement have been privatized, starving the city of funds and,
more importantly, of its police power.
–Taxes have been privatized in TIFs, where money goes and is never heard from
again.
–There have been attempts to privatize the park system in the form of the Lucas museum
and the current Obama Theme Park imbroglio, involving some fifty acres of park land.
–The school system has been looted and privatized. The Democrats are big fans of
charter schools (right, "Beto"), seeing them as ways to skim money off the middle class and
the poor.
–Fare collection on public transit has been privatized using a system so deliberately
rudimentary and so deliberately corrupt that it cannot tell you at point of service how much
you have paid as fare.
–Boeing was enticed to Chicago with tax breaks. Yes, that Boeing, the one that now
deliberately puts bad software in your airplane.
–Property tax assessment has been an opaque system and source of skimming for
lawyers.
–Zoning: Eddie Burke, pond scum, is just the top layer of pollution.
–And as we have made our descent, all of these economic dogmata have been enforced by
petty harassment of the citizenry (endless tickets) and an ever-brutal police force.
And yet: The current Republican Party also supports all of these policies, so let's not
pretend that a bunch of Mitch McConnell lookalikes are headed to Chicago to reform it.
Providing professional services i.e. architecture, engineering, etc. for a public entity,
local or federal, does not yield unreasonable profits. Typically, the public agencies have
their own staff to monitor and cost control a project. The professional services provided to
private developers yields far more profit- oftentimes twice the profits associated with
public agency work. Most professional services companies will transition their work to the
public agencies during a recession.
At any rate, especially in Illinois, privatizing the work to avoid pension liabilities is
no longer a choice. Michael Madigan pension promises will require the public to maintain a
public service budget with no staff to fill potholes. Essentially, these are the no work jobs
made popular by the Soprano crew twenty years ago.
Discussion of the downside of the privatization of public services is merely an
oscillation from discussing the weather, the Bears or any other kitchen table discussion
– nothing more than pleasant small talk to pass the time.
Privatization, at any cost, is no longer a choice. We have abused the pension system and
now the public must pay for private companies to provide the most basic services.
The question is, what can one do to help arrest this wholesale theft of public resources
and their expropriation into the hands of well connected. " Public", as in, it is the working
public over the last 100 or 200 years that created (or paid for), the electricity grid, or
public schools, or entire armed or police forces
I keep thinking that perhaps an Act could or should be introduced here in UK (same for the
States, i suppose), which should ensure that all politicians that enable any type of
privatisation of public resources or PFI arrangement (yes that old chesnut), should be made
personally responsible for the results therof.
And any losses to the public accidentally or "accidentally" occasioned by such
commandeering over public resources, to be treated like deliberate misappropriation by the
said public officials.
With the financial and custodial penalties as may be appropriate.
Anybody out there with similar thoughts or should i really try harder and give up on
drugs?
Michael Hudson, to his immense credit, explains the pernicious effects of privatization of
common goods repeatedly throughout his work, and demonstrates that it has been with us at
least as long as the ancient practice of land alienation and rural usury.
Natural monopolies ought to be nationalised, full stop.
I support public ownership of natural monopolies, however it would be helpful if these
pieces contained data, case studies or footnoted entries providing some empirical evidence of
the author's thesis.
This article comes at a time when the clarion call for privatizing Eskom, SA's electricity
utility, is hitting deafening levels. To the private sector, efficiency = maximizing profits
by making the "bloated" enterprise lean (aka cutting the workforce) and quite literally mean
(aka cutting services to "unprofitable" segments of the market, iow, the poor and
vulnerable). When profits soar because the holy grail of efficiency is achieved, the
mainstream business press brings out the champagne and toasts this "success" as proof that
the previously "moribund" (they always exaggerate the state of things) monopolistic monolith
has been given a new lease on life by privatizing it and the template is set for rescuing
other "ailing" SOEs.
The drawbacks are never laid out as cleary as they are in this article and the plight of
those worst affected, whether laid-off workers or those whose services have been cut, never
makes it into the headlines.
And then there is prison privatization where the burden of operation and maintaining the
institution should clearly be on the public so as to be constant reminder of the burden,
among others reasons. The motivations by private prison operators to reduce services and
costs out of site of the pesky prying eyes of the public are manifold.
Privatization is a great way to avoid having user fees wasted by providing services, and
instead put to better use funding the re-election campaigns of politicians supporting
privatization. Plus, it provides much-needed consulting fees for former politicians as well
as job-creating 7-figure salaries for the CEOs,
(/snark, if you couldn't tell)
On a side note, the Dilbert comic strip is written about private industry ,
There was a rudimentary plan
put forward last June that recommended some pretty substantial privatizations of U.S.
government assets and services which include:
-Privatizing the US Post Office ( through an Initial Public Offering or outright sale to a
private entity ).
-Sell off U.S. government owned electricity transmission lines ( U.S. government owns 14% of
this nations power transmission lines through TVA, Southwestern Power Administration, Western
Area Power Administration, and Bonneville Power Administration ).
-Spin-off the Federal Aviation Administrations air traffic control operations into a private
nonprofit entity.
-Spin-off the Department of Transportations operations of the Saint Lawrence Seaways Locks
and Channels into a private non-profit entity.
-End the federal conservatorship of Fannie Mae and Freddie Mac, then regulate a new system of
private guarantors for their MBS securities.
At heart, the problem with privatization is that marketing to a government-employed
purchaser or "purchase influencer" is ridiculously cheap, due to their poor accountability
strictures.
This is abetted by the Katamari Damacy process (self-accretionary tendency) of money and
power.
In Oz the electricity grids were privatized as they would be cheaper that way – or
so people were told. Instead, the cost of electricity has risen sharply over the years to the
point that it is effecting elections on both the State and Federal level as the price hikes
are so controversial. A problem is that those companies have to pay back the loans used to
buy the public electricity grids and as well, the senior management award themselves sky-high
wages because they are totally worth it. These are factors that were never present when it
was publicly owned. And just to put the boot in, those very same companies have been
'gold-plating' the electricity grid for their gain-
Meanwhile, whatever money the governments made selling their electricity companies has
been long spent on white elephants or buying themselves re-elections by giving out goodies to
voters.
buying themselves re-elections by giving out goodies to voters.
I don't reside in the states, so I don't see much of the detail of daily life. What are
these "goodies" of which you speak? In what I am able to read on the internet, people aren't
being given goodies any more. At least the old-time politicians handed out jobs, and turkeys
at Christmas. The current crop do hand out jobs to their kids and immediate family, but not
so much to anyone else.
described
as "probably the most dishonest argument in the entire Medicare for All debate."
"People who love their employer-based insurance do not get to hold on to it in our current
system. Instead, they lose that insurance constantly, all the time. It is a complete
nightmare."
-- Matt Bruenig, People's Policy Project
In an
interview with the Washington Post , the Democratic leader said she is "agnostic" on
Medicare for All and claimed, "A lot of people love having their employer-based insurance and
the Affordable Care Act gave them better benefits."
Matt Bruenig, founder of the left-wing think tank People's Policy Project, argued in a
blog post that Pelosi's statement "implies that, under our current health insurance system,
people who like their employer-based insurance can hold on to it."
"This then is contrasted with a Medicare for All transition where people will lose their
employer-based insurance as part of being shifted over to an excellent government plan,"
Bruenig wrote. "But the truth is that people who love their employer-based insurance do not get
to hold on to it in our current system. Instead, they lose that insurance constantly, all the
time, over and over again. It is a complete nightmare."
To illustrate his point, Bruenig highlighted a University of Michigan study showing that
among Michiganders "who had employer-sponsored insurance in 2014, only 72 percent were
continuously enrolled in that insurance for the next 12 months.
"This means that 28 percent of people on an employer plan were not on that same plan one
year later," Bruenig noted.
"Critics of Medicare for All are right to point out that losing your insurance sucks,"
Bruenig concluded. "But the only way to stop that from happening to people is to create a
seamless system where people do not constantly churn on and off of insurance. Medicare for All
offers that. Our current system offers the exact opposite. If you like losing your insurance
all the time, then our current healthcare system is the right one for you."
All On Medicare -- a pro-Medicare for All Twitter account -- slammed Pelosi's remarks,
accusing the Democratic leader of parroting insurance industry talking points:
The Speaker's alternative to the Medicare for All legislation co-sponsored by
over 100 members of her caucus is a bill to strengthen the Affordable Care Act (ACA), which
she
introduced last week .
"We all share the value of healthcare for all Americans -- quality, affordable healthcare
for all Americans," Pelosi told the Post . "What is the path to that? I think it's the
Affordable Care Act, and if that leads to Medicare for All, that may be the path."
The nation's largest nurses union was among those who expressed disagreement with the
Speaker's incrementalist approach.
In a
statement last week, National Nurses United president Zenei Cortez, RN, said Pelosi's plan
would "only put a Band-Aid on a broken healthcare system."
"National Nurses United, along with our allies, will continue to build the grassroots
movement for genuine healthcare justice and push to pass Medicare for All," Cortez concluded.
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License
@Andrei Martyanov All true. And one more point: compared with China, how much of the
present-day US economy is even real – i.e., results in the production of actual
goods that people might want, as opposed to dodgy financial/insurance transactions which may
add a lot of dollar value to GDP, but don't create anything real that enhances the quality of
life for the masses?
Economist used to have a joke: every time you break your leg, you increase GDP. First, you
gotta pay the hospital (transaction), then you gotta pay your doctor (another transaction),
then you gotta pay for your case (yet another transaction). All those transactions make it
look like 'wealth' is being created, because they are–numerically, at
least–increasing per capita GDP. But still: wouldn't you and the country actually be
better off if you hadn't broken your leg in the first place?
China, emerged as an "honest broker" among countries in the Middle East, and used the
free market system to improve relations with its trading partners and grow its economy. The
IC appears to find fault with Russia because it is using the system the US created to
better advantage than the US.
Industrial Capitalism is the system China and Russia are running on. America briefly had
this system from 1868 to 1912; it was called the American System of Economy (Henry
Clay/Peshine Smith).
This type of economy uses state credit (from Treasury not banks) and injects it into
industry. Industry then grows, and people's welfare is increased through improved
productivity.
Finance Capitalism came out of London and hopped to America, especially post WW2. At the
same time Atlantacism and Rim theory hopped. America still runs under this BIZWOG (Britain
Israel World Government) matrix. This matrix depends on finance capitalism.
Finance Capitalism is the placing of EXISTING ASSETS onto a private bank ledger, to then
hypothecate said assets into new bank credit. For example, a ships bill of lading may be used
to create new bank credit, or existing homes are put on double entry ledger to make housing
bubbles.
The closer analogs to China and Russian economy are American System of Economy, not the
current American BIZWOG finance capital. The historical analogs would also be Canada
1938-1974, when Canada had a sovereign economy. Canada post 1974 was converted to finance
capitalism and now are debt laden and suffering like the rest of the west.
Kaiser's Germany used industrial capitalism then Japan's Manchurian Railroad Engineers
copied it for Japan. Mussolini in Italy copied parts of it, and NSDAP in Germany resurrected
Frederick List and the Kaiser's methods.
Finance Capital out of wall street funded the Bolsheviks in what amounted to a looting
operation of Russia. It is any wonder that finance capitalism found succor with communism
since they are both pyramid schemes?
Rim Theory, Atlantacism, Finance Capitalism, and Brzezinsky's chessboard are part of the
same thing, an excuse matrix for gobbling up the world into one double entry private bank
ledger, to then benefit a special (((usury))) finance class of plutocrats.
The "markets" that China and Russia operate on are those of industrial capitalism, using
state credit. China has four large state banks, and they often cancel debt instruments
(housed in the state bank) to then effectively put debt free money into their economy. Russia
injects gold into their Central Bank Reserves, to then emit Rubles. Both China and Russia
inject into industry, their farm sectors, and other sectors to get a desired output to help
their people, not put them into debt servitude.
The BIZWOG matrix will collapse, it is anti-logos and hence against the natural order. It
is on the wrong side of history.
W e are still trying to fathom the apparent but transient palace-coup attempts of Rod
Rosenstein and Andrew McCabe. No one has gotten to the bottom of the serial lying by McCabe and
James Comey, much less their systematic and illegal leaking to pet reporters.
We do not know all the ways in which James Clapper and John Brennan seeded the dossier and
its related gossip among the press and liberal politicians -- only that both were prior
admitted fabricators who respectively while under oath misled congressional representatives on
a host of issues.
The central role of Hillary Clinton in funding the anti-Trump, Russian-"collusion,"
Fusion/GPS/Christopher Steele dossier is still not fully disclosed. Did the deluded FISA court
know it was being used by Obama-administration DOJ and FBI officials, who withheld from it
evidence to ensure permission to spy on American citizens? Could any justice knowingly be so
naïve?
Do we remember at all that Devin Nunes came to national prominence when he uncovered
information that members of the Obama administration's national-security team, along with
others, had systematically unmasked surveilled Americans, whose names then were leaked
illegally to the press?
One day historians will have the full story of how Robert Mueller stocked his legal team
inordinately with partisans. He certainly did not promptly disclose the chronology of, or the
interconnected reasons for, the firings of Lisa Page and Peter Strozk. And his team has largely
used process-crime allegations to leverage mostly minor figures to divulge some sort of
incriminating evidence about the president -- none of it pertaining to the original mandated
rationale of collusion.
These are the central issues and key players of this entire sordid attempt to remove a
sitting president.
But we should remember there were dozens of other minor players who did their own parts in
acting unethically, and in some cases illegally, to destroy a presidency. We have mostly
forgotten them. But they reflect what can happen when Washington becomes unhinged, the media go
berserk, and a reign of terror ensues in which any means necessary is redefined as what James
Comey recently monetized as a "Higher Loyalty" to destroy an elected president.
Here are just a few of the foot soldiers we have forgotten.
Anonymous
On September 5, 2018 (a date seemingly picked roughly to coincide with the publication of Bob
Woodward's sensational tell-all book about the inside of the Trump White House), the New
York Times printed a credo from a supposed anonymous Republican official deep within the
Trump administration. In a supposed fit of ethical conviction, he (or she) warned the nation of
the dangers it faced under his boss, President Trump, and admitted to a systematic effort to
subvert his presidency:
The dilemma -- which he does not fully grasp -- is that many of the senior officials in
his own administration are working diligently from within to frustrate parts of his agenda
and his worst inclinations. I would know. I am one of them.
Anonymous elaborated:
Given the instability many witnessed, there were early whispers within the cabinet of
invoking the 25th Amendment, which would start a complex process for removing the president.
But no one wanted to precipitate a constitutional crisis. So we will do what we can to steer
the administration in the right direction until -- one way or another -- it's over.
We do not know whether Anonymous was describing the coup attempt as described by Andrew
McCabe that apparently entailed Rod Rosenstein at the Justice Department informally polling
cabinet officials, or marked a wider effort among Never Trump Republicans and deep-state
functionaries to ensure that Trump failed -- whether marked by earlier efforts to leak
confidential calls with foreign officials or to serve up unsubstantiated rumors to muckrakers
or simply slow-walk or ignore presidential directives.
In any case, Anonymous's efforts largely explain why almost daily we hear yet another mostly
unsubstantiated account that a paranoid, deranged, and dangerous Trump is holed up in his
bedroom with his Big Macs as he plans unconstitutional measures to wreck the United States --
and then, by accident, achieves near-record-low peacetime unemployment, near-record-low
minority unemployment, annualized 3 percent GDP growth, record natural-gas and oil production,
record deregulation, comprehensive tax reform and reduction, and foreign-policy breakthroughs
from the destruction of ISIS to cancellation of the flawed Iran deal.
James Baker
In the course of congressional testimony, it was learned that the FBI general counsel, James
Baker, for a time had been under investigation for leaking classified information to the press.
Among the leaks were rumored scraps from the Steele dossier passed to Mother Jones
reporter David Corn (who has denied any such connection) that may have fueled his sensational
pre-election accusation of Trump–Russian collusion.
Nonetheless, about a week before the 2016 election, Corn of Mother Jones was writing
lurid exposés, such as the following, to spread gossip likely inspired from the
Christopher Steele dossier (italics inserted):
Does this mean the FBI is investigating whether Russian intelligence has attempted to
develop a secret relationship with Trump or cultivate him as an asset? Was the former
intelligence officer and his material deemed credible or not?
An FBI spokeswoman says, "Normally, we don't talk about whether we are investigating
anything." But a senior US government official not involved in this case but familiar with
the former spy tells Mother Jones that he has been a credible source with a proven record of
providing reliable, sensitive, and important information to the US government. In June,
the former Western intelligence officer -- who spent almost two decades on Russian
intelligence matters and who now works with a US firm that gathers information on Russia for
corporate clients -- was assigned the task of researching Trump's dealings in Russia and
elsewhere, according to the former spy and his associates in this American firm.
What does "assigned" mean, and by whom? That Fusion/GPS (which, in fact, is a generic
opposition-research firm with no particular expertise in Russia) hired with disguised Clinton
campaign funds a has-been foreign-national spy to buy dirt from Russian sources to subvert a
presidential campaign?
Those leaks of Christopher Steele's dirt also did their small part in planting doubt in
voters' minds right that electing Trump was tantamount to implanting a Russian asset in the
White House. Baker has been the alleged center of a number of reported leaks, even though the
FBI's general counsel should have been the last person to disclose any government communication
to the press during a heated presidential campaign. And there is still no accurate information
concerning what role, if any, Baker played in Andrew McCabe's efforts to discuss removing the
president following the Comey firing.
Evelyn Farkas
On March 1, 2017, just weeks after Trump took office, the New York Times revealed that.
in a last-minute order, outgoing president Obama had vastly expanded the number of government
officials with access to top-secret intelligence data. The Obama administration apparently
sought to ensure a narrative spread that Trump may have colluded with the Russians. The day
following the disclosure, a former Pentagon official, Evelyn Farkas (who might have been a
source for the strange disclosure of a day earlier), explained Obama's desperate eleventh-hour
effort in an MSNBC interview:
I was urging my former colleagues, and, and frankly speaking the people on the Hill . . .
it was more actually aimed at telling the Hill people, get as much information as you can,
get as much intelligence as you can before President Obama leaves the administration.
Because I had a fear that somehow that information would disappear with the senior people
who left so it would be hidden away in the bureaucracy, um, that the [stutters] Trump folks
-- if they found out how we knew what we knew about their [the] Trump staff, dealing
with Russians -- that they would try to compromise those sources and methods, meaning we no
longer have access to that intelligence.
So I became very worried because not enough was coming out into the open and I knew that
there was more. We have very good intelligence on Russia, so then I had talked to some of my
former colleagues and I knew that they were also trying to help get information to the
Hill.
Despite media efforts to spin Farkas's disclosure, she was essentially contextualizing how
outgoing Obama officials were worried that the incoming administration would discover their own
past efforts ("sources and methods") to monitor and surveil Trump-campaign officials, and would
seek an accounting. Her worry was not just that the dossier-inspired dirt would not spread
after Trump took office, but that the Obama administration's methods used to thwart Trump might
be disclosed (e.g., " if they found out how we knew what we knew about their [the] Trump
staff, dealing with Russians -- that they would try to compromise those sources and methods,
meaning we no longer have access to that intelligence" ).
So Farkas et al. desperately sought to change the law so that their rumors and narratives
would be so deeply seeded within the administrative state that the collusion narrative would
inevitably lead to Congress and the press, and thereby overshadow any shock at the improper or
illegal methods the Obama-administration officials had authorized to monitor the Trump
campaign.
And Farkas was correct. Even today, urination in a Russian hotel room has overshadowed
perjury traps, warping the FISA courts, illegal leaking, inserting a spy into the Trump
campaign, and Russian collusion with Clinton hireling and foreign agent Christopher Steele.
Samantha Power
We now forget that for some reason, in her last year in office, but especially during and after
the 2016 election, Power, the outgoing U.S. ambassador to the United Nations, reportedly asked
to unmask the names of over 260 Americans picked up in government surveillance. She offered no
real explanations of such requests.
Even stranger than a U.N. ambassador suddenly playing the role of a counterintelligence
officer, Power continued her requests literally until the moments before Trump took office in
January 2017. And, strangest of all, after Power testified before the House Oversight and
Government Reform Committee, Representative Trey Gowdy reported that "her testimony is 'they
[the unmasking requests] may be under my name, but I did not make those requests.'"
Who, in the world, then, did make those requests and why and, if true, did she know she was
so being used?
And were some of those unmasking requests leaked, thus helping to fuel media rumors in late
2016 and early 2017 that Trump officials were veritable traitors in league with Russia? And why
were John Brennan, James Clapper, Susan Rice, and Sally Yates reportedly in the last days (or,
in some cases, the last hours) requesting that the names of Americans swept up in surveillance
of others be unmasked? What was the point of it all?
In sum, did a U.N. ambassador let her name be used by aides or associates to spread rumors
throughout the administrative state, and thereby brand them with classified government
authenticity, and then all but ensure they were leaked to the press?
We the public most certainly wondered why the moment Trump was elected, the very name Carter
Page became synonymous with collusion, and soon Michael Flynn went from a respected
high-ranking military official to a near traitor, as both were announced as emblematic of their
erstwhile complicit boss.
Ali Watkins and James Wolf
Watkins was the young reporter for Buzzfeed (which initially leaked the largely fake
Steele dossier and erroneously reported that Michael Cohen would implicate Trump in suborning
perjury) who conducted an affair with James Wolf, a staffer, 30 years her senior, on the Senate
Intelligence Committee.
Wolf, remember, systematically and illegally began leaking information to her that found its
way into sensationalized stories about collusion. But as Margot Cleveland of the
Federalist pointed out, Watkins was also identified by Buzzfeed "in court filings
as one of the individuals who 'conducted newsgathering in connection with the Dossier before
Buzzfeed published the Article' on the dossier. This fact raises the question of whether
Watkins received information from Wolfe concerning the dossier and, if so, what he leaked."
In other words, the dossier was probably planted among U.S. senators and deliberately leaked
through a senior Senate aide, who made sure that the unverified dirt was published by the press
to damage Donald Trump.
And it did all that and more.
The list of these bit players could be easily expanded. These satellites were not
coordinated in some tight-knit vast conspiracy, but rather took their cue from their superiors
and the media to freelance with assumed impunity, as their part in either preventing or ending
a Trump presidency. And no doubt the Left would argue that the sheer number of federal
bureaucrats and political appointees, in a variety of cabinets and agencies, throughout the
legislative and the executive branches, all proves that Trump is culpable of something.
Perhaps. But the most likely explanation is that a progressive administrative state, a
liberal media, and an increasingly radicalized liberal order were terrified by the thought of
an outsider Trump presidency. Therefore, they did what they could, often both unethically and
illegally, to stop his election, and then to subvert his presidency.
In their arrogance, they assumed that their noble professions of higher loyalties and duties
gave them exemption to do what they deemed necessary and patriotic. And others like them will
continue to do so, thereby setting the precedent that unelected federal officials can break the
law or violate any ethical protocols they please -- if they disagree with the ideology of the
commander in chief. We ridicule Trump for going ballistic at each one of these periodically
leaked and planted new stories that raised some new charge about his stupidity, insanity,
incompetence, etc. But no one has before witnessed any president subjected to such a
comprehensive effort of the media, the deep state, political opponents, and his own party
establishment to destroy him.
Subversion is the new political opposition. The nation -- and the Left especially -- will
come to regret the legacy of the foot soldiers of the Resistance in the decades to come.
The Pentagon's inspector general has formally opened an investigation into a watchdog
group's allegations that acting Defense Secretary Patrick Shanahan has used his office to
promote his former employer, Boeing Co.
Citizens for Responsibility and Ethics in Washington filed an ethics complaint with the
Pentagon's inspector general a week ago, alleging that Shanahan has appeared to make statements
promoting Boeing and disparaging competitors, such as Lockheed Martin.
Shanahan, who was traveling with President Donald Trump to Ohio on Wednesday, spent more
than 30 years at Boeing, leading programs for commercial planes and missile defense systems. He
has been serving as acting Pentagon chief since the beginning of the year, after James Mattis
stepped down.
The probe comes as Boeing struggles to deal with a public firestorm over two deadly crashes
of the Boeing 737 Max 8 jetliner within the last five months. And it focuses attention on
whether Trump will nominate Shanahan as his formal pick for defense chief, rather than letting
him languish as an acting leader of a major federal agency.
Dwrena Allen, spokeswoman for the inspector general, said Shanahan has been informed of the
investigation. And, in a statement, Pentagon spokesman Tom Crosson said Shanahan welcomes the
review.
"Acting Secretary Shanahan has at all times remained committed to upholding his ethics
agreement filed with the DoD," said Crosson. "This agreement ensures any matters pertaining to
Boeing are handled by appropriate officials within the Pentagon to eliminate any perceived or
actual conflict of interest issue(s) with Boeing."
During a Senate hearing last week, Shanahan was asked by U.S. Sen. Richard Blumenthal,
D-Conn., about the 737 Max issue. Shanahan said he had not spoken to anyone in the
administration about it and had not been briefed on it. Asked whether he favored an
investigation into the matter, Shanahan said it was for regulators to investigate.
On Wednesday, Blumenthal said that scrutiny of Shanahan's Boeing ties is necessary. "In
fact, it's overdue. Boeing is a behemoth 800-pound gorilla -- raising possible questions of
undue influence at DOD, FAA and elsewhere," said Blumenthal.
Shanahan signed an ethics agreement in June 2017, when he was being nominated for the job of
deputy defense secretary, a job he held during Mattis' tenure. It outlined the steps he would
take to avoid "any actual or apparent conflict of interest," and said he would not participate
in any matter involving Boeing.
The CREW ethics complaint, based to a large part on published reports, including one by
Politico in January, said Shanahan has made comments praising Boeing in meetings about
government contracts, raising concerns about "whether Shanahan, intentionally or not, is
putting his finger on the scale when it comes to Pentagon priorities."
One example raised by the complaint is the Pentagon's decision to request funding for
Boeing 15EX fighter jets in the 2020 proposed budget. The Pentagon is requesting about $1
billion to buy eight of the aircraft.
Shanahan, 56, joined Boeing in 1986, rose through its ranks and is credited with rescuing
a troubled Dreamliner 787 program. He also led the company's missile defense and military
helicopter programs.
Trump has seemed attracted to Shanahan partially for his work on one of the president's
pet projects -- creating a Space Force. He also has publicly lauded Shanahan's former employer,
Boeing, builder of many of the military's most prominent aircraft, including the Apache and
Chinook helicopters, the C-17 cargo plane and the B-52 bomber, as well as the iconic
presidential aircraft, Air Force One.
This is only the third time in history that the Pentagon has been led by an acting chief,
and Shanahan has served in that capacity for longer than any of the others.
Presidents typically take pains to ensure the Pentagon is being run by a Senate-confirmed
official, given the grave responsibilities that include sending young Americans into battle,
ensuring the military is ready for extreme emergencies like nuclear war and managing overseas
alliances that are central to U.S. security.
3 hours ago Why did Trump
appoint a former Boeing executive and industry lobbyist to the the Secretary of Defense to
replace General Mattis? What in Shananhan's background makes him qualified to lead our nation's
military forces? 3 hours ago WITHOUT A DOUBT HE DID., ALSO INVESTIGATE NIKKI HALEY'S APPOINTED
ON BOEING'S BOARD TO REPLACE SHANAHAN. FOLLOW THE HOEING KICKBACKS(MONEY), TO DONALD TRUMP'S
FAMILY. 3 hours ago
Shanahan probably helped Boeing on the promise of a later payback just like Ms. Nikki Haley did
while Gov of SC where Boeing built a new plant on her watch. She helped big time to keep the
Unions out of the new Boeing plant and now Boeing is going to put her on their board of
directors. Nothing like a bit of an obvious payoff. 2 hours ago Reminds me of the Bush Jr days in
the White House. During the Gulf War (#2) Vice President #$%$ Cheney awarded oil company
Halliburton (Cheney was CEO before accepting the VP job) to deliver meals for the troops. The
contract was ?No Bid.? Why was an oil company delivering food to troops with a no bid contract?
After Cheney?s Job was over being VP he went back to being CEO at Halliburton and moved
Halliburton?s headquarters to Dubai. What an American! 2 hours ago Now we understand why Boeing
& the FAA hesitated to ground those planes for few days despite many countries who did
grounded those plane which is a precedent for a country to ground & NOT wait for the
manufacturer. ONLY after Canada grounded those planes Boeing & the FAA & that's because
Canada IS a the #1 flight partner of the US ! 4 hours ago Years ago there was a Boeing
procurement scandal and Trump does love the swamp he claims to hate.
Foreign policy is no longer controlled by the President of the USA. It is controlled by the Deep state.
This article is from 2015 but can easily be written about Trump administration
Notable quotes:
"... Indeed, as Putin himself had proposed in his visionary October 2011 article, the Eurasian Union could have become one of the pillars of a huge harmonized economic area stretching from Lisbon to Vladivostok and based on the EU's single-market rules (acquis communautaire). ..."
"... First and foremost, because the self-proclaimed "exceptional" power (actually, a mere "outlying island" in the Atlantic, according to the founder of geopolitics, Halford Mackinder) and its dysfunctional "deep-state" officialdom did not want it to be. How could they have permitted such a thing? How could they have allowed other countries to get on with improving the lives of their citizens without being obliged to seek Washington's approval every step of the way? ..."
"... In order to make sure that they were not side-lined, the US elites had to intervene. The Western propaganda machine started churning out all sorts of nonsense that Putin is a new Hitler who is bent on restoring the Soviet empire and who is bullying Europe, while continuing to bang on about his "increasingly autocratic rule". ..."
"... Deadly attacks by chauvinistic proxies were launched on the Russophone people in South Ossetia, Georgia in 2008 and more recently in Ukraine. ..."
"... Stuck in an Orwellian nightmare, Europe has to demonstrate its unfailing loyalty to Big Brother and go along with the view that Russia, an intrinsic and valuable part of the European mainstream both historically and culturally, represents universal evil and that the Earth will not be safe until the Federation has been dismembered and Putinism wiped out once and for all. ..."
"... Having self-destructed in two world wars, it has become an easy and even willing prey to an arrogant, ignorant and power-drunk predator that has never experienced the hardships and horrors that Europe has. ..."
"... Even more terrifying, intellectually third-rate Washington viceroys such as Victoria Nuland and the freelancing armchair warrior Senator McCain are allowed to play God with our continent. ..."
"... Indeed, the damage extends beyond the economy. By aligning with the forces of chaos � such as chauvinistic extremists in Ukraine � Washington and its Euro-vassals are corrupting the moral (and intellectual) core of the West. ..."
"... 'My Ph.D. dissertation chairman, who became a high Pentagon official assigned to wind down the Vietnam war, in answer to my question about how Washington gets Europeans to always do what Washington wants replied: "Money, we give them money." "Foreign aid?" I asked. "No, we give the European political leaders bagfuls of money. They are for sale. We bought them. They report to us." Perhaps this explains Tony Blair's $50 million fortune one year out of office'. ..."
"... "We, the [CENSORED] people, control America and the Americans know it." -- Benjamin Netanyahu, Prime Minister of [CENSORED] ..."
Washington is betraying the best interests of the American people through its current foreign policy... European
democracy is threatened by US, not Russian, foreign policy
The avalanche of commentary since the Ukrainian crisis erupted a year ago has overshadowed any reflections on the immense forgone
benefits (technically speaking, the "opportunity cost") of what might have been if Washington had been working for peace and stability
instead of war and chaos.
Imagine the following: After the unraveling of the Communist bloc, Europe, in partnership with the US, had forged a new security
system in which Russia was treated as a valued and equal partner � one whose interests were respected. Russia, decimated by a century
of wars and Communist imperialism, would doubtless have eagerly reciprocated in kind. Most countries of the former Soviet Union would
have then proceeded to build a new Eurasian structure of which Russia would have served as the natural umbrella, given its long-standing
interaction with the region's diverse nations and cultures.
Indeed, as Putin himself had proposed in his visionary October 2011 article, the Eurasian Union could have become one of the
pillars of a huge harmonized economic area stretching from Lisbon to Vladivostok and based on the EU's single-market rules (acquis
communautaire).
The rising Far Eastern economic powerhouse, with the world's most populous country, China, at its centre, would have linked up
with the world's largest economy (the EU). An enormous Eurasian production and financial bloc would have been created � one that
drew primarily on secure supplies of Russian energy and other natural resources. Untold investment opportunities would have opened
up in Siberia and Russia's Far East as well as in Central Asia. Hundreds of millions of people in Eurasia and elsewhere would have
been lifted out of poverty. And, not least, the EU would have been refashioned as an integral part of the dynamic trans-Eurasian
economy (rather than as a German-centred empire, as appears to be the case today), thereby making a major contribution to overcoming
the ongoing global economic depression.
All of this was not to be, however. Why not? First and foremost, because the self-proclaimed "exceptional" power (actually, a
mere "outlying island" in the Atlantic, according to the founder of geopolitics, Halford Mackinder) and its dysfunctional "deep-state"
officialdom did not want it to be. How could they have permitted such a thing? How could they have allowed other countries to
get on with improving the lives of their citizens without being obliged to seek Washington's approval every step of the way?
European democracy is threatened by US, not Russian, foreign policy
In order to make sure that they were not side-lined, the US elites had to intervene. The Western propaganda machine started
churning out all sorts of nonsense that Putin is a new Hitler who is bent on restoring the Soviet empire and who is bullying Europe,
while continuing to bang on about his "increasingly autocratic rule".
Deadly attacks by chauvinistic proxies were launched on the Russophone people in South Ossetia, Georgia in 2008 and more recently
in Ukraine.
And in what is eerily reminiscent of Stalinist "bloc discipline", the EU/NATO nomenclature was ordered to implement the absurd
strategy of severing the Russian economy from the EU. For their part, the cowering Eurocrats willingly obliged by imposing sanctions
on Russia that, perversely, have had a negative impact on their own economies (but, let it be stressed, not that of the US). No questions
raised and no public debate on the wisdom of such a strategy permitted.
Stuck in an Orwellian nightmare, Europe has to demonstrate its unfailing loyalty to Big Brother and go along with the view
that Russia, an intrinsic and valuable part of the European mainstream both historically and culturally, represents universal evil
and that the Earth will not be safe until the Federation has been dismembered and Putinism wiped out once and for all.
This abuse and humiliation of Europe is unparalleled. The continent that gave the world the wonders of the Antiquity, modern democracy,
the industrial revolution and what is arguably the greatest tradition of philosophy, fine arts and classical music is being bullied
by its oversized offspring. Having self-destructed in two world wars, it has become an easy and even willing prey to an arrogant,
ignorant and power-drunk predator that has never experienced the hardships and horrors that Europe has. War and extermination
camps are etched into the European DNA. America "knows" about them only from afar � and, not least, from the Hollywood entertainment
industry.
Even more terrifying, intellectually third-rate Washington viceroys such as Victoria Nuland and the freelancing armchair warrior
Senator McCain are allowed to play God with our continent. The so-called European "leaders" are colluding with them in plunging
Europe into the abyss and thereby risking nuclear confrontation.
America, too, is a loser
But this is not just a tragedy for Europe and Eurasia. We are also witnessing the wilful misrule of America and, by default, of
the entire West. Indeed, Washington is betraying the best interests of the American people through its current foreign policy. The
"democracy-promoters" running Washington's foreign-policy apparatus apparently do not understand that America has nothing to lose
and a lot to gain from the Eurasian economic project: the rising tide of global economic welfare would lift everyone's boats, including
its own. Why should it matter to Washington if the rising tide comes from other quarters beyond its control?
Indeed, the damage extends beyond the economy. By aligning with the forces of chaos � such as chauvinistic extremists in Ukraine
� Washington and its Euro-vassals are corrupting the moral (and intellectual) core of the West. If it continues to support such
forces against Russia, united Europe will lose not only its backbone but its very soul. The moral consequences of this loss will
be enormous and could lead to the precipitous erosion of Western democracy.
The 'autocrats' want to work with the West, not against it
US and EU leaders believe that the Russian and Chinese "autocrats" are out to destroy the West because the latter hate freedom
(as George W. Bush might have put it). And hence, they argue, the autocrats must be stopped in their tracks. The simple truth is
that Western leaders are too blinkered to understand that far from desiring to destroy the West, Russia and China want it to prosper
so that they can work with it to everyone's benefit. Having enjoyed a privileged position over several centuries and having attained
unprecedented prosperity in recent decades, the West simply cannot understand that the rest of humanity has no interest in fomenting
the "clash of civilizations" but rather craves peace and stability so that it can finally improve its economic lot.
Perhaps, however, all is not yet lost. It is still possible that reason � and economic forces � will prevail and force the West
to correct the errors of its ways. What we need, perhaps, more than ever is the ability to step out of the box, question our fundamental
assumptions (not least about Russia and China) and find the courage to change policies that have proved disastrous. After all, critical
thought, dispassionate analysis and the ability to be open to new ideas is what made the West so successful in the past. If we are
to thrive once again in the future, we must resurrect these most valuable and unsurpassed assets.
What I cannot understand is the naive belief that elected politicians would act in the interests of those whom they represent.
Under what other circumstances do we see human beings act with disinterested altruism? So why would a bunch of people who have
been ruthlessly selected for selfishness, arrogance, and callousness - a bunch of carefully chosen psychopaths, if you will -
behave in that way?
'My Ph.D. dissertation chairman, who became a high Pentagon official assigned to wind down the Vietnam war, in answer to
my question about how Washington gets Europeans to always do what Washington wants replied: "Money, we give them money." "Foreign
aid?" I asked. "No, we give the European political leaders bagfuls of money. They are for sale. We bought them. They report to
us." Perhaps this explains Tony Blair's $50 million fortune one year out of office'.
- Paul Craig Roberts
jabirujoe
"Washington is betraying the best interests of the American people through its current foreign policy".
Not only it's foreign policy but it's domestic policy as well. Let's call it for what it really is. The Wall Street/Corporate
policy which is the driving force behind behind everything the US does
Toddrich
"We, the [CENSORED] people, control America and the Americans know it." -- Benjamin Netanyahu, Prime Minister of [CENSORED]
"When we're done with the U.S. it will shrivel up and blow away." -- Benjamin Netanyahu, Prime Minister of [CENSORED]
The welfare or future of the American people are not part of the equation.
"... "If that was to happen and no energy source can cover the decline rate, wouldn't the world be pretty fucked economically thereafter? Hence one can assume or take a wild ass guess that the decline after peak would resemble something like Venezuela. So not a smooth short % decline rate." ..."
"... Realistically the global economy is already in a tight spot. It started back in 2000 when Oil prices started climbing from about $10/bbl in 1998 to about $30/bbl in 2000. Then the World Major Central banks dropped interest which ended triggering the Housing Boom\Bust and carried Oil prices to $147/bbl. Since then Interest rates have remained extremely low while World Debt has soared (expected to top $250T in 2019). ..."
"... Probably the biggest concern for me is the risking risks for another World war: The US has been targeting all of the major Oil exporters. The two remaining independent targets are Venezuela & Iran. I suspect Venzuela will be the next US take over since it will be a push over compared to Iran. ..."
"If that was to happen and no energy source can cover the decline rate, wouldn't the world be pretty fucked economically
thereafter? Hence one can assume or take a wild ass guess that the decline after peak would resemble something like Venezuela.
So not a smooth short % decline rate."
Energy is the economy, The economy cannot function without energy. Thus its logical that a decline in energy supply will reduce
the economy. The only way for this not to apply is if there are efficiency gains that offset the decline. But at this point the
majority of cost effective efficiency gains are already in place. At this point gains become increasing expensive with much smaller
gains (law of diminishing returns). Major infrastructure changes like modernizing rail lines take many decades to implement and
also require lots of capital. Real capital needed will be difficult to obtain do to population demographics (ie boomers dependent
on massive unfunded entitlement & pensions).
Realistically the global economy is already in a tight spot. It started back in 2000 when Oil prices started climbing from
about $10/bbl in 1998 to about $30/bbl in 2000. Then the World Major Central banks dropped interest which ended triggering the
Housing Boom\Bust and carried Oil prices to $147/bbl. Since then Interest rates have remained extremely low while World Debt has
soared (expected to top $250T in 2019).
My guess is that global economy will wipe saw in the future as demographics, resource depletion (including Oil) and Debt all
merge into another crisis. Gov't will act with more cheap and easy credit (since there is no alterative TINA) as well as QE\Asset
buying to avoid a global depression. This creating a wipesaw effect that has already been happening since 2000 with Boom Bust
cycles. This current cycle has lasted longer because the Major central banks kept interest rates low, When The Fed started QT
and raising rate it ended up triggering a major stock market correction In Dec 2018. I believe at this point the Fed will no longer
seek any further credit tightening that will trip the economy back into recession. However its likely they the global economy
will fall into another recession as consumers & business even without further credit tighting by CB (Central Banks) Because they've
been loading up on cheap debt, which will eventually run into issues servicing their debt. For instance there are about 7M auto
loans in delinquency in March of 2019. Stock valuations are largely driven by stock buybacks, which is funded by debt. I presume
companies are close to debt limit which is likely going to prevent them from purchase more stock back.
Probably the biggest concern for me is the risking risks for another World war: The US has been targeting all of the major
Oil exporters. The two remaining independent targets are Venezuela & Iran. I suspect Venzuela will be the next US take over since
it will be a push over compared to Iran. I think once all of remaining independent Oil Exports are seized that is when the
major powers start fighting each other. However is possible that some of the proxy nations (Pakastan\India),(Israel\Iran), etc
trigger direct war between the US, China, and Russia at any time.
Notice that the US is now withdrawing from all its major arms treaties, and the US\China\Russia are now locked into a Arms
race. Nuclear powers are now rebuilding their nuclear capacity (more Nukes) and modernizing their deployment systems (Hypersonic,
Very large MIRV ICBMS, Undersea drones, Subs, Bombers, etc.
My guess is that nations like the US & China will duke it out before collapsing into the next Venezuela. If my assessment is
correct, The current state of Venezuela will look like the garden of Eden compared to the aftermath of a full scale nuclear war.
Currently the Doomsday clock (2019) is tied with 1953 at 2 minutes:
1953 was the height of the cold war. I presume soon the Doomsday clock will be reduced to less than 2 Minutes later this
year, due to recent events in the past few weeks.
"the world's nuclear nations proceeded with programs of "nuclear modernization" that are all but indistinguishable from
a worldwide arms race, and the military doctrines of Russia and the United States have increasingly eroded the long-held taboo
against the use of nuclear weapons."
" The current international security situation -- what we call the "new abnormal" -- has extended over two years now.
It's a state as worrisome as the most dangerous times of the Cold War, a state that features an unpredictable and shifting
landscape of simmering disputes that multiply the chances for major military conflict to erupt."
Elizabeth Warren had a good speech at UC-Berkeley. She focused on the middle class family balance sheet and risk shifting.
Regulatory policies and a credit based monetary system have resulted in massive real price increases in inelastic areas of demand
such as healthcare, education and housing eroding purchasing power.
Further, trade policies have put U.S. manufacturing at a massive disadvantage to the likes of China, which has subsidized
state-owned enterprises, has essentially slave labor costs and low to no environmental regulations. Unrestrained immigration policies
have resulted in a massive supply wave of semi- and unskilled labor suppressing wages.
Recommended initial steps to reform:
1. Change the monetary system-deleverage economy with the Chicago Plan (100% reserve banking) and fund massive infrastructure
lowering total factor costs and increasing productivity. This would eliminate
2. Adopt a healthcare system that drives HC to 10% to 12% of GDP. France's maybe? Medicare model needs serious reform but is
great at low admin costs.
3. Raise tariffs across the board or enact labor and environmental tariffs on the likes of China and other Asian export model
countries.
4. Take savings from healthcare costs and interest and invest in human capital�educational attainment and apprenticeships programs.
5. Enforce border security restricting future immigration dramatically and let economy absorb labor supply over time.
As I have said in other comments, I like Liz Warren a lot within the limits of what she is good at doing (i.e. not President)
such as Secretary of the Treasury etc. And I think she likes the media spotlight and to hear herself talk a little to much, but
all quibbling aside, can we clone her??? The above comment and video just reinforce "Stick to what you are really good at Liz!".
I am not a Liz Warren fan boi to the extent Lambert is of AOC, but it seems that most of the time when I hear Warren, Sanders,
or AOC say something my first reaction is "Yes, what she/he said!".
Two hundred years after the birth of Karl Marx and fifty years after the last Western
upsurge of revolutionary ferment in 1968, the term "monopoly capitalism" might seem like a
relic of outmoded enthusiasms. But economists are increasingly coming to the view that
monopolies, and associated market failures, have never been a bigger problem.
and the conclusion
The problems of monopoly and inequality may seem so large as to defy any response. But we
faced similar problems when capitalism first emerged, and Western countries came up with the
responses that created the broad-based prosperity of the mid twentieth century. The internet,
in particular, has the potential to enhance freedom and equality rather than facilitate
corporate exploitation. The missing ingredient, so far, has been the political will.
"Monopoly" is such an ugly term. We prefer to call it "market power" these days, because of
course it's a good thing if the job creators and their enterprises have more power to do all
the good things they do for us. It's clearly class warfare, if not racism, to use the term of
abuse, "monopoly", when you mean "market power".
Of all the examples to choose, airlines would seem to be a bad one. They come and go with
rapidity, and airlines are now being used as an example of how to reform banks.
Running the modern air industry needs lots of infrastructure and lots of regulations, so
would seem to be an obvious place to have monopoly airlines. The critical thing that has
happened has been the splitting of the infrastructure from the market-facing entities. So the
booking systems, airport handling, and other services are all done by firms who don't
directly face the paying customer. Pretty much anyone can set up an airline, and they
can become quite
big
Banking regulation is going in the direction of the airline industry. The idea being to
split up the major systems and financial risk repositories from the market-facing companies.
Hence, again, anyone can set up a bank.
One significant issue behind the growth in monopolies is regulation. The debate in the UK
over the EU has included much discussion of regulation, much of it from a Remain/pro EU angle
being that more regulation is a costless good. But there is an obvious and well-known cost,
that regulation acts as a barrier to new entrants, and hence destroys innovation and creates
conditions for monopolies, cartels, and oligopolies. It is surely no coincidence that the EU,
an organisation that cannot look at any object without trying to regulate it, is sliding into
recession and has effectively zero productivity increase this century. If you regulate what
you have now, you just make the status quo your future. In the end, you just end up like the
CBI, reduced to demanding
more and more cheap labour to fuel your dinosaur members' wishes for more profit.
So. Split the resource-heavy stuff from the market-facing stuff, and try to avoid
regulating your economy into a coma.
A significant fraction of the population can't keep track of their actual cost structures
and will, cheerful and unknowing, sell at a loss. Unless you can exclude them from the market
-- unless you have some mechanism for excluding people from the market -- the clearing price
will be below the cost price: no market that does not have exclusion mechanisms can possibly
be profitable.
That is to say: a profitable sector of industry requires exclusion mechanisms and all
profit relies on rent .
The question we have to ask is, then: how do we distribute rent opportunities? We used to
be able to use transport costs to create rent "naturally", but we can't do that any more: at
least with monopoly some things still get made and some people still make
money.
[honestly? I think uniform tariff barriers coupled with socialism [or
socialism-approximating structures like dirigisme among firms with
effectively-universally-held shares] are the only real solution.]
Um. "Monopoly" triggers thoughts of a scotty dog and a flat iron. Regarding the minimum wage,
I'm encouraged to see oligopsony mentioned, not just because I love rare words; it's only
recently than in such discussions the more common word "monopsony" was used. But how else to
explain how Walmart greeters and burger flippers, despite their disparate productivity and
different employers, are paid the same meager wage?
It says something about our common discourse, by which I mean American politics, that
people preach as though market power was as unimaginable as ethical conduct, the first of
which is tacitly assumed and the second generally acknowledged as nonexistent.
@Dipper I'm sure you'll sympathize when I observe that Australia is different from other
places (a point you've often made about Britain), at least with respect to airlines.
We've only had one successful entry on a substantial scale in the history of commercial
aviation (when Virgin Blue displaced Ansett in 2001). Against that, there has been a long
string of failed attempts to break up the duopoly (now consisting of two full-service
airlines each with a low-cost subsidiary).
So, in an Australian publication, airlines are on obvious example.
You argue that what has been missing is political will, but at the same time you acknowledge
that new versions of the old solutions for these problems must be found. I would focus more
on the latter than the former. Yes, the EU is creating stronger privacy protection now, but
one of the main impacts will be to strengthen existing large players. Do we really want to
move to a regulated monopoly model so quickly? These new markets have been evolving rapidly
over the past 15 years and models of the internet economy that made sense even 10 years ago
are now out-dated. I think we still need to figure out what people need out of these new
provided services and how to get there. It seems a lot harder than simply breaking up the
producers and distributers of basic commodities.
And here i was thinking Dipper would try to make his weak case with the strongest arguments-
Ryanair or Easyjet*. Virgin Atlantic, really? While airlines in Europe are probably not the
most obvious easy to comprehend example for monopoly or oligopoly one could pick, those terms
are still quite accurate as a description of the current situation in most submarkets.
*The crux with those two is that there are and were a gazillion other discount carriers,
but non of those are sucesfull, Ryanair in particular in contrast produces an insane return
on equity.
Have you read 'Game of Mates' about cronyism among the elite in Australia ? Kind of
interesting and eye opening(at least for an outsider like me) Might be of interest if you
havent.
The Boeing Company BA recently won a $250 million contract to offer weapon system
integration for the Long Range Stand-Off (LRSO) Cruise Missile. Work related to the deal is
scheduled to be completed by Dec 31, 2024.
The contract was awarded by the Air Force Nuclear Weapons Center, Eglin Air Force Base,
Florida. Per the terms of the deal, this aerospace giant will provide aircraft and missile
carriage equipment development and modification, engineering, testing, software development,
training, facilities and support necessary to fully integrate the LRSO Cruise Missile on the
B-52H bomber platform.
Attributes of LRSO
The LRSO is a nuclear-armed air-launched cruise missile, under development. It is set to
replace the current AGM-86 air launched cruise missile (ALCM). LRSO, might be up to about 50%
longer than Joint Air-to-Surface Standoff Missile-Extended Range (JASSM-ER) and still be
suitable for internal carriage by the B-2 and B-52.
Our View
AGM-86 ALCM has been serving the U.S. Air Force quite efficiently. However, with
increasingly sophisticated air defense systems developed by America's nemeses, especially
Russia, demand for a new stealth nuclear-armed cruise missile capable of either destroying
these defenses or penetrating them has been increasing consistently. In this scenario, the LRSO
comes as the most credible stealthy and low-yield option available to the United States
(according to Strategic Studies Quarterly Report).
Boeing's B-52, which has been the U.S. Air Force's one of the most preferred bombers, is
completely dependent on long-range cruise missiles and cannot continue in the nuclear mission
beyond 2030 without LRSO. As B-52 is expected to play a primary role in the U.S. nuclear
mission for at least next decade and ALCM is already well beyond its originally planned end of
life, we may expect more contracts similar to the latest one to usher in from the Pentagon in
the coming days. This, in turn, should prove conducive to Boeing.
Price Performance
In a year's time, shares of Boeing have gained about 16.5% against the industry's 2.2%
decline.
I first suggested the U.S. economy was headed toward a recession more than a year ago, and now others are forecasting the same.
I give a business downturn starting this year a two-thirds probability.
The recessionary indicators are numerous. Tighter monetary policy by the Federal Reserve that the central bank now worries it
may have overdone. The near-inversion in the Treasury yield curve. The swoon in stocks at the end of last year. Weaker housing activity.
Soft consumer spending. The tiny 20,000 increase in February payrolls, compared to the 223,000 monthly average gain last year. Then
there are the effects of the deteriorating European economies and decelerating growth in China as well as President Donald Trump's
ongoing trade war with that country.
There is, of course, a small chance of a soft landing such as in the mid-1990s. At that time, the Fed ended its interest-rate
hiking cycle and cut the federal funds rate with no ensuing recession. By my count, the other 12 times the central bank restricted
credit in the post-World War II era, a recession resulted.
It's also possible that the current economic softening is temporary, but a revival would bring more Fed restraint. Policy makers
want higher rates in order to have significant room to cut in the next recession, and the current 2.25 percent to 2.50 percent range
doesn't give them much leeway. The Fed also dislikes investors' zeal for riskier assets, from hedge funds to private equity and leveraged
loans, to say nothing of that rankest of rank speculations, Bitcoin. With a resumption in economic growth, a tight credit-induced
recession would be postponed until 2020.
"Recession" conjures up specters of 2007-2009, the most severe business downturn since the 1930s in which the S&P 500 Index plunged
57 percent from its peak to its trough. The Fed raised its target rate from 1 percent in June 2004 to 5.25 percent in June 2006,
but the main event was the financial crisis spawned by the collapse in the vastly-inflated subprime mortgage market.
Similarly, the central bank increased its policy rate from 4.75 percent in June 1999 to 6.5 percent in May 2000. Still, the mild
2001 recession that followed was principally driven by the collapse in the late 1990s dot-com bubble that pushed the tech-laden Nasdaq
Composite Index down by a whopping 78 percent.
The 1973-1975 recession, the second deepest since the 1930s, resulted from the collapse in the early 1970s inflation hedge buying
of excess inventories. That deflated the S&P 500 by 48.2 percent. The federal funds rate hike from 9 percent in February 1974 to
13 percent in July of that year was a minor contributor.
The remaining eight post-World War II recessions were not the result of major financial or economic excesses, but just the normal
late economic cycle business and investor overconfidence. The average drop in the S&P 500 was 21.2 percent.
At present, I don't see any major economic or financial bubbles that are just begging to be pricked. The only possibilities are
excess debt among U.S. nonfinancial corporations and the heavy borrowing in dollars by emerging-market economies in the face of a
rising greenback. Housing never fully recovered from the subprime mortgage debacle. The financial sector is still deleveraging in
the wake of the financial crisis. Consumer debt remains substantial but well off its 2008 peak in relation to household income.
Consequently, the recession I foresee will probably be accompanied by about an average drop in stock prices. The S&P 500 fell
19.6 percent from Oct. 3 to Dec. 24, but the recovery since has almost eliminated that loss. A normal recession-related decline of
21.2 percent � meeting the definition of a bear market � from that Oct. 3 top would take it to 2,305, down about 18 percent from
Friday's close, but not much below the Christmas Eve low of 2,351.
A. Gary Shilling is president of A. Gary Shilling & Co., a New Jersey consultancy, a Registered Investment Advisor and author
of "The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation." Some portfolios he manages invest
in currencies and commodities.
The_Mick, 9 hours ago
"I first suggested the U.S. economy was headed
toward a recession more than a year ago, and now others are forecasting the same." And yet you were WRONG a year ago! You don't get excused for last year just because you're still predicting it!
Of course a recession is coming - maybe this year but maybe not for 10 years. Recessions happen from time to time but they are not
predictable because economics has too many variables we can't quantify.
And do you think you're impressing anyone by adding "maybe a bear market too"???
What do you mean "maybe"? If there's a recession then, of course, our slightly overpriced market will experience a bear market! DUH!
Terry7 hours ago I expected a deeper understanding from My Shilling.
This article seems very week. If he had submitted it as an an economic paper I don't think he would get high marks. Many historical
economic facts glossed over or omitted. Terrible job of describing the causes of the early 1970s world recession . As for a recession
without a bear market.....? Don't make me laugh.... And buy the way we are already in a bear market !
This decade is a lot like the 1990s in that it has been a nice long run. But no business cycle goes on for every. It's just does
not work like that because it is cycle in nature. After a ten year run in stocks it is less risky for serious money to be out of
them that in them. That is why the bond market is so solid right not. Because it's not work risking all your cash for maybe a couple
more percent when you have already make 300% or more..
The western economies are just running off free or very cheap money being constantly pumped into investment assets by the central
banks. There are no real guts to them. USA, EU and Japan have been running the printing presses with abandonment. At the same time
China and India are becoming the industrial power houses because they had over one billion people who will work for next to nothing.
Because every investment asset is pumped up of "free" money in the form of very low interest rate loans from the FED etc. Things
are very fragile. And someone has give Powel this "reality check". So the FED does a 180 on policy and now looks like a Wall St poodle.
And they speculators have gone back to pumping FANG stocks
But they all know this market is very pumped up and fragile. And they all keep their stop loss triggers very tight. That is why
it falls so dramatically when it takes a hit. Like OMG the FED funds rate going from 2.75% to 3.00% !! So tread very carefully .
The cracks are all around
Salo, 7 hours ago
I am only surprised when I read
that another recession is not coming.
Almost 10 years since the "end" of the Great Recession, and all it took was $22 Trillion of borrowed money, a $4 Trillion in the
red Fed balance sheet and interest rates just barely north of 2%. Oh, and one big beautiful corporate tax cut. Who knew expansionary
economies were so uncomplicated?
Ricardo, 6 hours ago
I remember reading
Gary Shilling's articles a few years after the Crash of 2009 when he attempted to prove without a doubt that market returns would
be sub-par for decades to come. He was wrong and you would have missed out on the longest and biggest bull market in history. Be
wary of what Gary has to tell you.
Boeing Co. tumbled early Monday on heightened scrutiny by regulators and prosecutors over
whether the approval process for the company's 737 Max jetliner was flawed.
A person familiar with the matter on Sunday said that the U.S. Transportation Department's
Inspector General was examining the plane's design certification before the second of two
deadly crashes of the almost brand-new aircraft.
Separately, the Wall Street Journal reported that a grand jury in Washington, D.C., on
March 11 issued a subpoena to at least one person involved in the development process of the
Max. And a Seattle Times investigation found that U.S. regulators delegated much of the plane's
safety assessment to Boeing and that the company in turn delivered an analysis with crucial
flaws.
Boeing dropped 2.8 percent to $368.53 before the start of regular trading Monday in New
York, well below any closing price since the deadly crash of Ethiopian Airlines Flight 302 on
March 10. Ethiopia's transport minister said Sunday that flight-data recorders showed "clear
similarities" between the crashes of that plane and Lion Air Flight 610 last October.
U.S. Federal Aviation Administration employees warned as early as seven years ago that
Boeing had too much sway over safety approvals of new aircraft, prompting an investigation by
Transportation Department auditors who confirmed the agency hadn't done enough to "hold Boeing
accountable."
The 2012 investigation also found that discord over Boeing's treatment had created a
"negative work environment" among FAA employees who approve new and modified aircraft designs,
with many of them saying they'd faced retaliation for speaking up. Their concerns pre-dated the
737 Max development.
In recent years, the FAA has shifted more authority over the approval of new aircraft to the
manufacturer itself, even allowing Boeing to choose many of the personnel who oversee tests and
vouch for safety. Just in the past few months, Congress expanded the outsourcing arrangement
even further.
"It raises for me the question of whether the agency is properly funded, properly staffed
and whether there has been enough independent oversight," said Jim Hall, who was chairman of
the National Transportation Safety Board from 1994 to 2001 and is now an aviation-safety
consultant.
Outsourcing Safety
At least a portion of the flight-control software suspected in the 737 Max crashes was
certified by one or more Boeing employees who worked in the outsourcing arrangement, according
to one person familiar with the work who wasn't authorized to speak about the matter.
The Wall Street Journal first reported the inspector general's latest inquiry. The watchdog
is trying to assess whether the FAA used appropriate design standards and engineering analysis
in approving the 737 Max's anti-stall system, the newspaper said.
Both Boeing and the Transportation Department declined to comment about that inquiry.
In a statement on Sunday, the agency said its "aircraft certification processes are well
established and have consistently produced safe aircraft designs," adding that the "737 Max
certification program followed the FAA's standard certification process."
The Ethiopian Airlines plane crashed minutes after it took off from Addis Ababa, killing all
157 people on board. The accident prompted most of the world to ground Boeing's 737 Max 8
aircraft on safety concerns, coming on the heels of the October crash of a Max 8 operated by
Indonesia's Lion Air that killed 189 people. Much of the attention focused on a flight-control
system that can automatically push a plane into a catastrophic nose dive if it malfunctions and
pilots don't react properly.
In one of the most detailed descriptions yet of the relationship between Boeing and the
FAA during the 737 Max's certification, the Seattle Times quoted unnamed engineers who said the
planemaker had understated the power of the flight-control software in a System Safety Analysis
submitted to the FAA. The newspaper said the analysis also failed to account for how the system
could reset itself each time a pilot responded -- in essence, gradually ratcheting the
horizontal stabilizer into a dive position.
Software Fix
Boeing told the newspaper in a statement that the FAA had reviewed the company's data and
concluded the aircraft "met all certification and regulatory requirements." The company, which
is based in Chicago but designs and builds commercial jets in the Seattle area, said there are
"some significant mischaracterizations" in the engineers' comments.
The Organization of Petroleum Exporting Countries will once again become a nemesis for U.S.
shale if the U.S. Congress passes a bill dubbed NOPEC, or No Oil Producing and Exporting
Cartels Act, Bloomberg
reported this week , citing sources present at a meeting between a senior OPEC official and
U.S. bankers.
The oil minister of the UAE, Suhail al-Mazrouei, reportedly told lenders at the meeting that
if the bill was made into law that made OPEC members liable to U.S. anti-cartel legislation,
the group, which is to all intents and purposes indeed a cartel, would break up and every
member would boost production to its maximum.
This would be a repeat of what happened in 2013 and 2014, and ultimately led to another oil
price crash like the one that saw Brent crude and WTI sink below US$30 a barrel. As a result, a
lot of U.S. shale-focused, debt-dependent producers would go under.
Bankers who provide the debt financing that shale producers need are the natural target for
opponents of the NOPEC bill. Banks got burned during the 2014 crisis and are still recovering
and regaining their trust in the industry. Purse strings are being loosened as WTI climbs
closer to US$60 a barrel, but lenders are certainly aware that this is to a large extent the
result of OPEC action: the cartel is cutting production again and the effect on prices is
becoming increasingly visible.
Indeed, if OPEC starts pumping again at maximum capacity, even without Iran and Venezuela,
and with continued outages in Libya, it would pressure prices significantly, especially if
Russia joins in. After all, its state oil companies have been itching to start pumping
more.
The NOPEC legislation has little chance of becoming a law. It is not the first attempt by
U.S. legislators to make OPEC liable for its cartel behavior, and none of the others made it to
a law. However, Al-Mazrouei's not too subtle threat highlights the weakest point of U.S. shale:
the industry's dependence on borrowed money.
The issue was analyzed in depth by energy expert Philip Verleger in an Oilprice
story earlier this month and what the problem boils down to is too much debt. Shale, as
Total's chief executive put it in a 2018 interview with Bloomberg, is very capital-intensive.
The returns can be appealing if you're drilling and fracking in a sweet spot in the shale
patch. They can also be improved by making everything more efficient but ultimately you'd need
quite a lot of cash to continue drilling and fracking, despite all the praise about the decline
in production costs across shale plays.
The fact that a lot of this cash could come only from banks has been highlighted before: the
shale oil and gas industry faced a crisis of investor confidence after the 2014 crash because
the only way it knew how to do business was to pump ever-increasing amounts of oil and gas.
Shareholder returns were not top of the agenda. This had to change after the crash and most of
the smaller players -- those that survived -- have yet to fully recover. Free cash remains a
luxury.
The industry is aware of this vulnerability. The American Petroleum Institute has vocally
opposed NOPEC, almost as vocally as OPEC itself, and BP's Bob Dudley said this week at CERAWeek
in Houston that NOPEC "could have severe unintended consequences if it unleashed litigation
around the world."
"Severe unintended consequences" is not a phrase bankers like to hear. Chances are they will
join in the opposition to the legislation to keep shale's wheels turning. The industry,
meanwhile, might want to consider ways to reduce its reliance on borrowed money, perhaps by
capping production at some point before it becomes forced to do it.
"... Making matters worse, America's low tax-to-GDP ratio � just 27.1% even before the Trump tax cut � means a dearth of money for investment in the infrastructure, education, health care, and basic research needed to ensure future growth. These are the supply-side measures that actually do "trickle down" to everyone. ..."
"... The policies for combating economically damaging power imbalances are straightforward. Over the past half-century, Chicago School economists , acting on the assumption that markets are generally competitive, narrowed the focus of competition policy solely to economic efficiency, rather than broader concerns about power and inequality. The irony is that this assumption became dominant in policymaking circles just when economists were beginning to reveal its flaws. The development of game theory and new models of imperfect and asymmetric information laid bare the profound limitations of the competition model. ..."
"... The law needs to catch up. Anti-competitive practices should be illegal, period. And beyond that, there are a host of other changes needed to modernize US antitrust legislation. Americans' need the same resolve in fighting for competition that their corporations have shown in fighting against it. ..."
Rising inequality and slow growth are widely recognized as key factors behind the spread of public discontent in advanced economies,
particularly in the United States. But these problems are themselves symptoms of an underlying malady that the US political system
may be unable to address.
The world's advanced economies are suffering from a number of deep-seated problems. In the United States, in particular,
inequality is at its highest since 1928 ,
and GDP growth remains woefully tepid compared to the decades after World War II.
After
promising
annual growth of "4, 5, and even 6%," US President Donald Trump and his congressional Republican enablers have delivered only
unprecedented deficits. According to the Congressional Budget Office's
latest projections , the federal budget deficit will reach $900
billion this year, and will surpass the $1 trillion mark every year after 2021. And yet, the sugar high induced by the latest deficit
increase is already fading, with the International Monetary Fund
forecasting US growth
of 2.5% in 2019 and 1.8% in 2020, down from
2.9% in 2018.
Many factors are contributing to the US economy's low-growth/high-inequality problem. Trump and the Republicans' poorly designed
tax "reform" has exacerbated existing deficiencies in the tax code, funneling even more income to the highest earners. At the same
time, globalization continues to be poorly managed, and financial markets continue to be geared toward extracting profits (rent-seeking,
in economists' parlance), rather than providing useful services.
But an even deeper and more fundamental problem is the growing
concentration of market power , which allows dominant firms to exploit their customers and squeeze their employees, whose own
bargaining power and legal protections
are being weakened . CEOs and senior executives are increasingly extracting higher pay for themselves at the expense of workers
and investment.
For example, US corporate executives made sure that the vast majority of the benefits from the tax cut went into dividends and
stock buybacks, which exceeded a record-breaking
$1.1 trillion in 2018 . Buybacks raised share prices and boosted the earnings-per-share ratio, on which many executives' compensation
is based. Meanwhile, at 13.7% of GDP , annual investment
remained weak, while many corporate pensions went underfunded.
Evidence of rising market power can be found almost anywhere one looks. Large markups are contributing to high
corporate profits . In sector after sector,
from little things like cat food to big things like telecoms, cable providers, airlines, and technology platforms, a few firms now
dominate 75-90% of the market, if not more; and
the problem is even more pronounced at the level of local markets.
As corporate behemoths' market power has increased, so, too, has their ability to influence America's money-driven politics. And
as the system has become more rigged in business's favor, it has become much harder for ordinary citizens to seek redress for mistreatment
or abuse. A perfect example of this is the spread of arbitration clauses in labor contracts and user agreements, which allow corporations
to settle disputes with employees and customers through a sympathetic mediator, rather than in court.
Multiple forces are driving the increase in market power. One is the growth of sectors with large network effects, where a single
firm � like Google or Facebook � can easily dominate. Another is the prevailing attitude among business leaders, who have come to
assume that market power is the only way to ensure durable profits. As the venture capitalist Peter Thiel famously
put it , "competition
is for losers."
Some US business leaders have shown real ingenuity in creating market barriers to prevent any kind of meaningful competition,
aided by lax enforcement of existing competition laws and the failure to update those laws for the twenty-first-century economy.
As a result, the share of
new firms in the US is declining.
None of this bodes well for the US economy. Rising inequality implies falling aggregate demand, because those at the top of the
wealth distribution tend to consume a smaller share of their income than those of more modest means.
Moreover, on the supply side, market power weakens incentives to invest and innovate. Firms know that if they produce more, they
will have to lower their prices. This is why investment remains weak, despite corporate America's record profits and trillions of
dollars of cash reserves. And besides, why bother producing anything of value when you can use your political power to extract more
rents through market exploitation? Political investments in getting lower taxes yield far higher returns than real investments in
plant and equipment.
1
Making matters worse, America's low tax-to-GDP ratio � just
27.1% even before the Trump tax cut �
means a dearth of money for investment in the infrastructure, education, health care, and basic research needed to ensure future
growth. These are the supply-side measures that actually do "trickle down" to everyone.
The policies for combating economically damaging power imbalances are straightforward. Over the past half-century,
Chicago School economists , acting on the assumption that markets are generally competitive, narrowed the focus of competition
policy solely to economic efficiency, rather than broader concerns about power and inequality. The irony is that this assumption
became dominant in policymaking circles just when economists were beginning to reveal its flaws. The development of game theory and
new models of imperfect and asymmetric information laid bare the profound limitations of the competition model.
The law needs to catch up. Anti-competitive practices should be illegal, period. And beyond that, there are a host of other changes
needed to modernize US antitrust legislation. Americans' need the same resolve in fighting for competition that their corporations
have shown in fighting against it.
The challenge, as always, is political. But with US corporations having amassed so much power, there is reason to doubt that the
American political system is up to the task of reform. Add to that the globalization of corporate power and the orgy of deregulation
and crony capitalism under Trump, and it is clear that Europe will have to take the lead.
"... I thought we lived in a corporate state and since the Supreme Court has ruled corporations have rights – the voting morons already have loyalty to their corporate masters – "one nation, under God and all of his defense contractors " ..."
I thought we lived in a corporate state and since the Supreme Court has ruled corporations
have rights – the voting morons already have loyalty to their corporate masters –
"one nation, under God and all of his defense contractors "
Anti-Semitism theater – a carefully staged social movement organized by Government
owned media to divide the peons and make them hate each other. Real hate-group profit lies in
charging for vast quantities of militarism but making just enough to kill women and children
overseas.
Back home the flag waving patriots insist they need a giant military with weapons
for anyone who can pay to protect them and their families. Dual loyalty to the Jewish lobby
and the defense lobby.
"At this point in the cycle, a pickup in inflation will generally lead to corporate margin
compression, which is potentially more supportive of maintaining a long duration stance,"
Bartolini, lead portfolio manager for U.S. core bond strategies, said after the jobs figures.
He sees annual CPI remaining around this report's consensus of 1.6 percent -- the slowest since
2016 -- for a while.
Benchmark 10-year yields enter the week at 2.63 percent, close to the lowest level in two
months. In the interest-rate options market, traders have been ramping up positions that target
lower yields in five- and 10-year notes.
DougDoug,
The Fed is pretty much DONE with rate hikes, as paying the INTEREST on, 22 Trillion in
Debt will get,.. UGLIER and UGLIER ! Especially with, all the new,.. Tax and SPEND Demo'Rat
Liberals, coming into, Congress ! "We the People", will be,.. TOAST !!
I'm HOLDING, my "Floating Rate" senior secured, Bond CEF's and my Utility and Tech, CEF's,
too ! Drawing NICE Dividends,.. Monthly !
The World is NOT ending for, the USA,.. THANKS,.. to Trump !
NEW YORK (Reuters) - The U.S. Securities and Exchange Commission is launching a review of the main set of rules governing stock
trading, opening the door to the biggest potential changes in a decade-and-a-half, the head of the agency said on Friday.
The possible changes are aimed at making it easier to trade illiquid stocks, making more trading information available to investors,
and improving the speed and quality of public data feeds needed for trading.
The SEC in 2005 adopted a broad framework called Regulation National Market System that was largely aimed at ensuring retail investors
get the best price possible and preventing trades from being executed at prices that are inferior to bids and offers displayed on
other trading venues.
Since then, faster, more sophisticated technology has put a bigger focus on rapid-fire, high-speed trading. There has also been
an influx of new electronic stock exchanges, fragmenting liquidity and increasing costs for brokers around exchange connectivity
and market data needed to fuel algorithmic trading.
"It is clear that the market challenges we faced in the early 2000s are not the same as the issues that we confront over a decade
later," Jay Clayton, chairman of the SEC, said at an event in New York.
To get a better grasp of current market issues, the SEC held a series of roundtable discussions with industry experts last year
that led to potential rule-making recommendations around thinly-traded securities, combating retail fraud, and market data and market
access, Clayton said.
Some areas the SEC is looking at include:
- Increasing the speed of, and adding more stock price information to, public data feeds to help make them more competitive against
the more expensive, private data feeds sold by most stock exchanges.
- Allowing thinly-traded securities to trade only on their listing market, rather than on all 13 U.S. stock exchanges.
- Improving disclosure around reverse mergers.
- Adjusting the quote size of some high-priced stocks.
The 2019 review follows an active 2018 for the SEC.
The regulator adopted rules to increase transparency around broker-dealer stock order routing and private off-exchange trading
venues. It also ordered a pilot program to test banning lucrative rebate payments that exchanges make to brokers for liquidity-adding
stock orders.
judi 1 hour ago What about Naked Shorting? It is out of control and no one including the SEC is doing anything to stop it??
Tara 41 minutes ago The rules implemented in 2005 did nothing to help retail traders with accounts under 25K.
When are you going to address the real issue of stock price manipulation? Also, bring back the uptick rule. And while you are at
it, we need rules to punish dishonest analysts who publish opinions of price that are so far off the charts, they never reflect actual
earnings often announced days later.
Rob 38 minutes ago They are going to make it more in favor of big boys aka the banks
� The OPEC+ cuts have likely already tipped the oil market into a supply deficit,
according to Barclays.
� OECD inventories fell dramatically over the past two years, and came back to
the five-year average in 2018, where they have mostly remained.
� The OPEC+ cuts quickly headed off a renewed surplus, and will likely drain
inventories over the course of this year. Inventories are set to fall below the
five-year average.
� Still, Barclays says the market return to balance or even a small surplus in
the second half of 2019.
� Some of the more catastrophic oil forecasts for 2019 centered on a sharp
slowdown in Chinese demand.
� China's car sales actually contracted year-on-year over the last few months,
and car sales could continue to fall this year.
� But China's demand, while slowing relative to years past, is still expected to
grow by 0.5 mb/d in 2019, according to Barclays, the same rate of expansion as
2018.
� Next year, however, China's demand growth could slow a bit more, dipping below
0.4 mb/d, continuing a gradual deceleration in demand growth.
Senator Brian Schatz (D-Hawaii) is expected to introduce a new tax bill today. The senator
says his bill would tax the sale of stocks, bonds and derivatives at a 0.1 rate. It would apply
to any transaction in the United States. The senator says his proposal would clamp down on
speculation and some high frequency trading that artificially creates more market
volatility.
I have been meaning to write something on faux Libertarians of the corporatist ilk for a
while. However, since I
switched to forecasting mode instead of advocacy , I have tried to leave the political
element out of my posts as much as possible. I'll leave the politics to those who enjoy it; I
don't. But, I think this is an important topic so I am going to give it a go here.
If you do a search
for the word 'liberty' on the Internet, invariably you find the Wikipedia entry for that word.
I think the definition used there is a good one. Here's what Wikipedia says about Liberty :
Liberty is the concept of ideological and political philosophy that identifies the
condition to which an individual has the right to behave according to one's own personal
responsibility and free will. The conception of liberty is influenced by ideals concerning
the social contract as well as arguments that are concerned with the state of nature.
Individualist and classical liberal conceptions of liberty relate to the freedom of the
individual from outside compulsion or coercion and this is defined as negative liberty.
What you will notice is there is nothing in this definition regarding corporations. It is
all about individual liberty and the freedoms of individuals . Individuals are born with
innate, natural and inalienable rights to liberty that are
self-evident. This philosophical view of humankind gained currency during the enlightenment and
is now universally accepted. It also underpins the very concept of democracy and is the origin
of the founding of the United States of America.
For example, the U.S. Declaration of Independence begins [highlighting added]:
When in the Course of human events it becomes necessary for one people to dissolve the
political bands which have connected them withpowers of the earth, the separate and equal
sta
We hold these truths to be self-evident, that all men are created equal, that they are
endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty
and the pursuit of Happiness . -- That to secure these rights, Governments are instituted
among Men, deriving their just powers from the consent of the governed, -- That whenever any
Form of Government becomes destructive of these ends, it is the Right of the People to alter
or to abolish it, and to institute new Government, laying its foundation on such principles
and organizing its powers in such form, as to them shall seem most likely to effect their
Safety and Happiness.
As always, I have to note that the writer of the Declaration was a slaveholder in a country
in which government killed the indigenous population. So, there is certainly a gap between the
high-mindedness of this wonderful document and actual events on the ground. Don't let that
detract from the aspirational quality of the words.This is exactly what individual liberty is
all about.
On the other hand, a corporation is a societal construct codified
into legal existence to further the mutual interests of individuals. A corporation is "an
artificial being, invisible, intangible, and existing only in contemplation of the law,"
according to
Chief Justice Marshall in the Dartmouth College Case of 1819. Trustees of Dartmouth College v.
Woodward , won by Daniel Webster when
the state of New Hampshire attempted to turn the college into The University of New Hampshire,
was an early American test of eminent domain-type property seizure.
A corporation has no inalienable or natural rights. Nevertheless, it is the fact that
corporations represent a group of individuals that allows the 'corporatist' to claim that these
fictional legal entities should enjoy the same natural and legal liberties and rights with
which individuals are born.
Let me be bold here: The 'Corporatist' is a kleptocrat masquerading as a believer in
liberty. He uses terminology based in liberty to construct an ideology solely as a means of
furthering the gains of a specific strata of society allied with the corporatist and at
the expense of other strata, by coercion if necessary .
Remember my post on
kleptocracy from 2008? If not, here are the four methods Jared Diamond says ruling elites
use to maintain power:
Disarm the populace, and arm the elite.
Make the masses happy by redistributing much of the tribute received, in popular
ways.
Use the monopoly of force to promote happiness, by maintaining public order and curbing
violence. This is potentially a big and underappreciated advantage of centralized societies
over noncentralized ones.
The remaining way for kleptocrats to gain public support is to construct an ideology or
religion justifying kleptocracy.
I broadened the argument on this in my year in review in 2009. Please read
The year in review at Credit Writedowns – Kleptocracy to get a fuller perspective.
Here's the statement from that post I want to concentrate on:
The last (and perhaps most important) issue [of the four ways elites maintain power], in
my view, has to do with the unabiding faith in free markets that many now have. It is with
religious zeal that these so-called Libertarians defend the primacy of markets over all else
when in reality common sense would tell you that those with the greatest influence and money
will always be at an advantage without some check on that influence and power.
This is the corporatism, the faux Libertarianism, to which I refer. The logic goes like
this:
Individuals have inalienable rights to freedom. This is a fundamental right that all
individuals have and efforts by government to undermine these rights must be resisted at all
costs.
Corporations are groups of individuals which have banded together for mutual benefit. In
so doing, they can express their individual natural rights more effectively than they could
as individuals.
As such, corporations must retain the same rights as individuals legally in order to
allow those individuals the corporation represents to express there natural rights.
Therefore, the same resistance to denying the rights of individuals must also be transferred
to the corporations which represent them .
This logic will take you much further in furthering the aims of corporations, the point
being that corporations, businesses, should enjoy the same rights that individuals have.
That is not to say that businesses should not have rights. They should; and we should grant
them as much liberty as is reasonable and warranted. But let's be clear, corporations are not
individuals; they are collections of individuals. Often, individuals hide behind this
collective using the corporate veil to shield themselves from sanction for behaviour that
abuses individual liberties. In a very real sense, the rights and liberties of businesses and
individuals often come into conflict. A real libertarian would always favour the individual in
that conflict . A corporatist would favour the corporation. That's the difference.
Let me give you an example. Say I was walking down the street in Louisville, Kentucky and
saw a cute little shop that sold Kettle Korn. For those of you who don't know kettle korn, it
is salted and sweetened popcorn that was brought to the U.S. by German immigrant farmers in
Pennsylvania, Maryland and into the Midwest over two hundred years ago. In Germany, popcorn is
sweet not salty like it is in the U.S. So, I see this store and I am thinking, "They have
Kettle Korn in Kentucky? Wow, who knew. I love this stuff. Let me go get some." Here's the
problem: the owner of the store has a business policy that no black people are allowed inside.
Mind you, this isn't a government policy because government discrimination based on race or
ethnicity is illegal in the United States. But, this business owner doesn't want Blacks in his
store. So when I enter, he tells me to leave because I am violating his store's liberty to
choose its own policies.
I would say the individual liberty trumps the business liberty in this case, especially
since the owner is violating his own government's business policy as well as societal norms. A
corporatist would say that the business owner wins since it is his business. Again, that's the
difference.
There are lots of other examples of corporatism at work in the U.S. legal system regarding
property rights in particular. My November 2009 post "
New York to use eminent domain to build a basketball stadium " showed the New York State
Court of Appeals ruling that the Atlantic Yards basketball project can go
forward as planned, dislocating the residents in the Brooklyn, NY area where the stadium is to
be built. The decision means that government can evict you from your own home, seize your
property, and give you what it believes is a fair price without your consent to build a
sports arena,
ostensibly for the public good but certainly for state and private profit.
This and other cases like it are occurring because of the decision in Kelo v. City of New
London, Conn . If a state or local government deems a private project – funded by
private monies and profiting private enterprises – to be in the public interest, it can
seize your property to allow this project to occur. In the New London case, residents were
evicted to make way for a luxury hotel and up-scale condos, from which private developers would
profit handsomely. Kelo was an outrageous example of cronyism completely at odds with
the ethos of the Dartmouth College Case of 1819. Because of Kelo , government can now
abuse its power to enrich specific private interests. That's corporatism at work.
Corporatism has nothing to do with liberty. It is all about power and coercion. It's about
favouring the big guy over the little guy, the more well-connected over the less
well-connected, the insider over the outsider. And in society that means favouring large,
incumbent businesses over smaller businesses, new entrants or individuals. How does
deregulation and free market ideology fit into this ?
"Obviously, if some always have more power and wealth than others, there is never a
situation in which the economic playing field is level. Moreover, it is axiomatic that those
with the means and access will always have greater influence over government than those
without. So, in a very real sense, the socioeconomic elite of any advanced, stratified society
will always have disproportionate control of the economic and political system.
"Now, I happen to be a Libertarian-minded individual, so I have nothing against the free
markets or the concept of limited government and deregulation. Freer markets and more limited
government are my preferred ideal. However, I am a realist. I understand that markets are never
truly free and
government fulfils a necessary function .
"So, when you hear someone talking about getting government out of the way and allowing the
free markets to work, you should be thinking about the influence and control this would
naturally engender.
"Think crony capitalism
"In fact, I would argue that the deregulation and free market capitalism that these
individuals refer to is really crony capitalism in disguise. I will explain.
"When I think of deregulation, I think of two related but distinct concepts. The one is the
actual de-regulation, which is the permission of economic actors to compete in markets
previously unavailable to them by order of legislation or de facto government intervention and
coercion. The other is regulatory oversight, which is the maintenance of specific rules of
engagement under threat of penalty on economic actors by government. De-regulation and
regulatory oversight are related concepts but they are not the same."
Mars Descending? U.S. Security Alliances and the International Status of the Dollar
A
decade after the global financial crisis, the dollar continues to maintain its status as the
chief international currency. Possible alternatives such as the euro or renminbi lack the broad
financial markets that the U.S. possesses, and in the case of China the financial openness that
allows foreign investors to enter and exit at will. Any change in the dollar's predominance,
therefore, will likely occur in response to geopolitical factors.
Linda S. Goldberg and Robert Lerman of the Federal Reserve Bank of New York provide an
update on the dollar's various roles. The dollar remains the dominant reserve currency,
with a 63% share of global foreign exchange reserves, and serves as the anchor currency for
about 65% of those countries with fixed exchange rates. The dollar is also widely utilized for
private international transactions. It is used for the invoicing of 40% of the imports of
countries other than the U.S., and about half of all cross-border bank claims are denominated
in dollars.
This wide use of the dollar gives the U.S. government the ability to fund an increasing debt
burden at relatively low interest rates. Moreover, as pointed out by the New York
Times , the Trump administration can enforce its sanctions on countries such as Iran
and Venezuela because global banks cannot function without access to dollars. While European
leaders resent this dependence, they have yet to evolve a financial system that could serve as
a viable alternative.
The dollar's continued predominance may also reflect other factors. Barry Eichengreen of UC-Berkeley and Arnaud J. Mehl and
Livia Chitu of the European Central Bank have examined the effect of geopolitical factors
-- the "Mars hypothesis" -- versus pecuniary factors -- the "Mercury hypothesis" -- in
determining the currency composition of the international reserves of 19 countries during the
period of 1890-1913. Official reserves during this time could be held in the form of British
sterling, French francs, German marks, U.S. dollars and Dutch guilders.
The authors find evidence that both sets of factors played roles. For example, a military
alliance between a reserve issuing country and one that held reserves would boost the share of
the currency of the reserve issuer by almost 30% if there was a military alliance between these
nations. They conjecture that the reserve issuer may have used security guarantees to obtain
financing from the security-dependent nation, or to serve the role of financial center when the
allied country needed to borrow internationally.
Eichengreen, Mehl and Chitu then use their parameter estimates to measure by how much the
dollar share of the international reserves of nations that currently have security arrangements
with the U.S. would fall if such arrangements no longer existed. South Korea, for example,
currently holds 84% of its foreign reserves in dollars; this share would fall to 54% in the
absence of its security alliance with the U.S.
Similarly, the dollar component of German foreign exchange reserves would decline from 98% to
68%.
The dollar may be safe from replacement on economic grounds. But the
imminent shrinkage of the British financial sector due to the United Kingdom's withdrawal
from the European Union shows that political decisions follow their own logic, sometimes
without regard for the economic consequences. If the dollar lose some of its dominance, it may
be because of self-inflicted wounds.
What is this amazingly accurate indicator of a coming recession? The unemployment rate
trend. I first came across this idea on the Philosophical Economics blog ,
whose author has adopted the pseudonym Jesse Livermore, in honor of the 20th-century
investor.
This Livermore conducted a rigorous analysis in search of the perfect recession indicator.
He evaluated several potential signals, including real retail sales growth, industrial
production growth, real S&P 500 earnings-per-share growth, employment growth, real personal
income growth, and housing starts growth. While some of these indicators were promising, none
of them compared to the predictive ability of the unemployment rate trend.
Note that it's the unemployment rate trend that's the great predictor of a recession and not
the unemployment rate itself. The unemployment rate is a lagging indicator of a recession. In
other words, the rate goes up significantly only after a recession is in effect.
But before the unemployment rate moves significantly higher, the unemployment rate trend
must change from downward to upward. And that's what Livermore found was a great leading
indicator, or predictor, of an economic recession. This change in trend is determined by simply
seeing when the latest unemployment rate is higher than the 12-month simple moving average of
previous monthly unemployment rates.
So how well does this predictor work? Over the last 70 years, a change in the unemployment
rate trend predicted every recession that occurred. In two cases, the recession came
immediately after the change in the unemployment rate trend. In other cases, the trend changed
several months in advance of the start of a recession.
The U.S. hasn't experienced an economic recession since the Great Recession of 2008 and
2009. Unemployment rates remain low. However, the U.S. unemployment rate for January, which was
reported in early February, moved higher than the 12-month simple moving average of previous
monthly unemployment rates.
The subtle signal that has proven to be accurate at predicting the onset of a recession has
flashed. And if a recession is indeed on the way, the bull market will soon end.
One
drawback
Is there a catch? Yep. While the unemployment rate trend has been uncannily accurate at
indicating recessions, it also sometimes provides a false signal. In other words, the trend
changes but a recession doesn't occur.
This scenario happened as recently as September 2016. The unemployment rate rose above the
12-month simple moving average for previous unemployment rates for one month. A recession
didn't ensue, though, and the bull market kept on trucking.
Late last year, the S&P 500 ( ^GSPC ) tumbled 20% from its Oct. 3 intraday high
to its Dec. 24 intraday. And despite the market's sharp 17% rally from those lows, Bond king
Jeffrey Gundlach says we're in a bear market and that we could see new lows.
"A bear market has nothing to do with this 20% arbitrary thing," Gundlach, the CEO of $121
billion DoubleLine Capital, told Yahoo Finance in an exclusive interview. "It has to do with
something crazy happening first, and then the crazy thing gives it up. And yet more traditional
things continue to march on. But one by one they give it up." December's dip buyers will
sell at lower levels
The market has since been saved by the Fed's pivot to be "patient" on monetary policy and
the subsequent rally in the bond market, all of which has kept interest rates low. For now.
"If the long end of rates starts to rise, as I expect, and if we break through 3.50% on the
30-year, I think it's over," Gundlach added. "Because the competition from the bond market,
particularly against a climate of limiting one of the engines of stock price appreciation,
which is buybacks , is thought to be potentially in jeopardy."
Gundlach believes that investors who bought during December's dip will likely end up selling
at a lower point.
"... The CAPE aims to correct for those distortions. It smooths the denominator by using not current profits, but a ten-year average, of S&P 500 earnings-per-share, adjusted for inflation. Today, the CAPE for the 500 reads 29.7. It's only been that high in two previous periods: Before the crash of 1929, and during the tech bubble from 1998 to 2001, suggesting that when stocks are this expensive, a downturn may be at hand. ..."
"... is 36.1% higher ..."
"... Here's the problem that the CAPE highlights. Earnings in the past two decades have been far outpacing GDP; in the current decade, they've beaten growth in national income by 1.2 points (3.2% versus 2%). That's a reversal of long-term trends. ..."
"... Right now, earnings constitute an unusually higher share of national income. That's because record-low interest rates have restrained cost of borrowing for the past several years, and companies have managed to produce more cars, steel and semiconductors while shedding workers and holding raises to a minimum. ..."
"... t's often overlooked that although profits grow in line with GDP, which by the way, is now expanding a lot more slowly than two decades ago, earnings per share ..."
"... The reason is dilution. Companies are constantly issuing new shares, for everything from expensive acquisitions to stock option redemptions to secondary offerings. New enterprises are also challenging incumbents, raising the number of shares that divide up an industry's profits faster than those profits are increasing. Since total earnings grow with GDP, and the share count grows faster than profits, it's mathematically impossible for EPS growth to consistently rise in double digits, although it does over brief periods––followed by intervals of zero or minuscule increases. ..."
"... The huge gap between the official PE of 19 and the CAPE at 30 signals that unsustainably high profits are artificially depressing the former. and that profits are bound to stagnate at best, and more likely decline. ..."
"... In an investing world dominated by hype, the CAPE is a rare truth-teller ..."
For the past half-decade, a controversial yardstick called the CAPE has been flashing red,
warning that stock prices are extremely rich, and vulnerable to a sharp correction. And over
the same period, the Wall Street bulls and a number of academics led by Jeremy Siegel of the
Wharton School, have been claiming that CAPE is a kind of fun house mirror that makes
reasonable valuations appear grotesquely stretched.
CAPE, an acronym "Cyclically-adjusted price-to-earnings ratio," was developed by economist
Robert Shiller of Yale to correct for a flaw in judging where stock prices stand on the
continuum from dirt cheap to highly expensive based on the current P/E ratio. The problem:
Reported earnings careen from lofty peaks to deep troughs, so that when they're in a funk,
multiples jump so high that shares appear overpriced when they're really reasonable, and when
profits explode, they can skew the P/E by creating the false signal that they're a great
buy.
The CAPE aims to correct for those distortions. It smooths the denominator by using not
current profits, but a ten-year average, of S&P 500 earnings-per-share, adjusted for
inflation. Today, the CAPE for the 500 reads 29.7. It's only been that high in two previous
periods: Before the crash of 1929, and during the tech bubble from 1998 to 2001, suggesting
that when stocks are this expensive, a downturn may be at hand.
The CAPE's critics argue that its adjusted PE is highly inflated, because the past decade
includes a portion of the financial crisis that decimated earnings. That period was so unusual,
their thinking goes, that it makes the ten-year average denominator much too low, producing
what looks like a dangerous number when valuations are actually reasonable by historical norms.
They point to the traditional P/E based on 12-month trailing, GAAP profits. By that yardstick
today's multiple is 19.7, a touch above the 20-year average of 19, though exceeding the
century-long norm of around 16.
I've run some numbers, and my analysis indicates that the CAPE doesn't suffer from those
alleged shortcoming, and presents a much truer picture than today's seemingly reassuring P/E.
Here's why. Contrary to its opponents' assertions, the CAPE's earnings number is not
artificially depressed. I calculated ten year average of real profits for six decade-long
periods starting in February of 1959 and ending today, (the last one running from 2/2009 to
2/2019). On average, the adjusted earnings number rose 22% from one period to the next. The
biggest leap came from 1999 to 2009, when the 10-year average of real earnings advanced
42%.
So did profits since then languish to the point where the current CAPE figure is
unrealistically big? Not at all. The Shiller profit number of $91 per share is 36.1%
higher than the reading for the 1999 to 2009 period, when it had surged a record 40%-plus
over the preceding decade. If anything, today's denominator looks high, meaning the CAPE of
almost 30 is at least reasonable, and if anything overstates what today's investors will reap
from each dollar they've invested in stocks.
Indeed, in the latest ten-year span, adjusted profits have waxed at a 3.2% annual pace,
slightly below the 3.6% from 1999 to 2009, but far above the average of 1.6% from 1959 to
1999.
Here's the problem that the CAPE highlights. Earnings in the past two decades have been
far outpacing GDP; in the current decade, they've beaten growth in national income by 1.2
points (3.2% versus 2%). That's a reversal of long-term trends. Over our entire 60 year
period, GDP rose at 3.3% annually, and profits trailed by 1.3 points, advancing at just 2%. So
the rationale that P/Es are modest is based on the assumption that today's earnings aren't
unusually high at all, and should continue growing from here, on a trajectory that outstrips
national income.
It won't happen. It's true that total corporate profits follow GDP over the long term,
though they fluctuate above and below that benchmark along the way. Right now, earnings
constitute an unusually higher share of national income. That's because record-low interest
rates have restrained cost of borrowing for the past several years, and companies have managed
to produce more cars, steel and semiconductors while shedding workers and holding raises to a
minimum.
Now, rates are rising and so it pay and employment, forces that will crimp profits. I
t's often overlooked that although profits grow in line with GDP, which by the way, is now
expanding a lot more slowly than two decades ago, earnings per share grow a lot
slower, as I've shown, lagging by 1.3 points over the past six decades.
An influential study from 2003 by Rob Arnott, founder of Research Affiliates, and co-author
William J. Bernstein, found that EPS typically trails overall profit and economic growth by
even more, an estimated 2 points a year.
The reason is dilution. Companies are constantly issuing new shares, for everything from
expensive acquisitions to stock option redemptions to secondary offerings. New enterprises are
also challenging incumbents, raising the number of shares that divide up an industry's profits
faster than those profits are increasing. Since total earnings grow with GDP, and the share
count grows faster than profits, it's mathematically impossible for EPS growth to consistently
rise in double digits, although it does over brief periods––followed by intervals
of zero or minuscule increases.
The huge gap between the official PE of 19 and the CAPE at 30 signals that unsustainably
high profits are artificially depressing the former. and that profits are bound to stagnate at
best, and more likely decline. The retreat appears to have already started. The Wall
Street "consensus" Wall Street earnings forecast compiled by FactSet calls for an EPS decline
of 1.7% for the first quarter of 2017, and zero inflation-adjusted gains for the first nine
months of the year.
In an investing world dominated by hype, the CAPE is a rare truth-teller .
Oil climbed as Saudi Arabia was said to curtail some output from its Safaniyah offshore oil
field, the largest in the world.
Futures in New York rose as much as 2.2 percent Friday, pushing toward its biggest weekly
gain in a month. Saudi Arabia was said to trim supply from Safaniyah to repair a damaged power
cable, while Russia plans to accelerate the output cuts it agreed to with OPEC+.
... ... ...
Saudi Arabian Oil Co.'s Safaniyah field has the capacity to pump 1.2 million to 1.5 million
barrels of crude a day, and is a major component of the Arab Heavy grade. The cable was damaged
in an accident about two weeks ago and repairs are expected to be completed by early March,
people with knowledge of the matter said.
IEA is one-half EU marketing agency with the explisit goal to keep oil price low, and one
half a research organization. In different reports one role can be prevalent.
The U.S. Energy Information Administration (EIA) estimates that margins for U.S. Gulf Coast
refiners have declined to the lowest levels since late 2014, based on recent price trends in
certain grades of crude oil and petroleum products. https://www.eia.gov/petroleum/weekly/
Comment on Yahoo are absolutly idiotic. I have dount only a couple more or less reasonable
comment in the first 48. This level of incompetence and brainwashing is simply amazing.
The "call" on OPEC crude is now forecast at 30.7 million bpd in 2019, down from the IEA's
last estimate of 31.6 million bpd in January.
U.S. sanctions on Iran and Venezuela have choked off supply of the heavier, more sour crude
that tends to yield larger volumes of higher-value distillates, as opposed to gasoline. The
move has created disruption for some refiners, but has not led to a dramatic increase in the
oil price in 2019.
"In terms of crude oil quantity, markets may be able to adjust after initial logistical
dislocations (from Venezuela sanctions)", the Paris-based IEA said.
"Stocks in most markets are currently ample and ... there is more spare production capacity
available."
Venezuela's production has almost halved in two years to 1.17 million bpd, as an economic
crisis decimated its energy industry and U.S. sanctions have now crippled its exports.
Brent crude futures have risen 20 percent in 2019 to around $63 a barrel, but most of that
increase took place in early January. The price has largely plateaued since then, in spite of
the subsequent imposition of U.S. sanctions.
"Oil prices have not increased alarmingly because the market is still working off the
surpluses built up in the second half of 2018," the IEA said.
"In quantity terms, in 2019, the U.S. alone will grow its crude oil production by more than
Venezuela's current output. In quality terms, it is more complicated. Quality
matters."
dlider909, 7 hours ago Story will change in 30 days.
Robert, 7 hours ago ... ... ...
What this report fails to do is to pay the appropriate homage to American oilfield
roughnecks...
ralf
7 hours ago Nonsense. I see military action against Venezuela soon, just because of
our thirst for oil.
Talk about shale is like talk about Moon conquests, not supported by hard facts.
Saudi Arabia planning to drop March crude output by more than a half a million barrels per
day below its initial pledge.
... ... ...
OPEC said on Tuesday it had reduced oil production almost 800,000 bpd in January to 30.81
million bpd under its voluntary global supply pact.
Saudi Arabia Energy Minister Khalid al-Falih told the Financial Times that the kingdom would
reduce cut production to about 9.8 million bpd in March to bolster oil prices.
Microsoft co-founder Bill Gates does not think the way
to increase U.S. tax
revenue is through policies like raising the tax rate on the wealthy to 70 percent – as
has been floated by some Democratic lawmakers like New York Rep. Alexandria Ocasio-Cortez.
During a podcast interview with
The Verge , Gates responded to a question about whether raising the top rate to 70 percent
in order to fund social programs – like infrastructure initiatives – appeals to him
by saying government can be more effective in running social programs, but that's not the best
way to raise revenue.
"You finally have some politicians who are so extreme that I'd say, 'No, that's even
beyond,'" Gates said. "You do start to create tax dodging and disincentives, and an incentive
to have the income show up in other countries and things."
Gates added that the country's richest people often don't pay the highest rate because their
wealth doesn't always show up as income, it can be in the value of their stock, for
example.
"So it's a misfocus," he added. "If you focus on that, you're missing the picture."
The billionaire businessman, however, does believe there are ways to make the current tax
code more progressive. Some of those ways include more progressive policies regarding the
estate tax, the tax on capital, or reforming FICA and Social Security taxes. Independent
Vermont Sen. Bernie Sanders recently released a proposal to expand the estate tax to a rate of
77
percent for those passing on assets in excess of $1 billion.
Bill Gates also called modern
monetary theory (MMT) – which asserts that because the government controls its own
currency, there is no need to worry about balancing the budget – "some crazy talk."
Ocasio-Cortez recently indicated she was open to supporting MMT.
Gates is one of the richest people in the world. He has said, despite the fact that he has
paid more in taxes than most, he should be
paying more .
Middle East oil benchmarks Dubai and DME Oman have nudged above prices for Brent crude, an
unusual move as U.S. sanctions on Venezuela and Iran along with output cuts by OPEC tighten
supply of medium to heavy oil, traders and analysts said.
Heavier grades, mainly produced in the Middle East, Canada and Latin America, typically have
a high sulphur content and are usually cheaper than Brent, the benchmark for lighter oil in the
Atlantic Basin.
DUBAI/LONDON (Reuters) - Saudi Arabia, the world's top oil exporter, cut its crude output in
January by about 400,000 barrels per day (bpd), two OPEC sources said, as the kingdom follows
through on its pledge to reduce production to prevent a supply glut.
Riyadh told OPEC that the kingdom pumped 10.24 million bpd in January, the sources said.
That's down from 10.643 million bpd in December, representing a cut that was 70,000 bpd deeper
than targeted under the OPEC-led pact to balance the market and support prices.
The Organisation of the Petroleum Exporting Countries, Russia and other non-OPEC producers -
an alliance known as OPEC+ - agreed in December to reduce supply by 1.2 million bpd from Jan.
1.
The agreement stipulated that Saudi Arabia should cut output to 10.311 million bpd, but
energy minister Khalid al-Falih has said it will exceed the required reduction to demonstrate
its commitment.
Crude shipments to the U.S. from OPEC and its partners fell to 1.41 million barrels a day in
January, the lowest in five years, according to data from cargo-tracking and intelligence
company Kpler. Shrinking Iraqi imports and deep output cuts by Saudi Arabia fueled the
decline
New York collected $2.3 billion less income-tax revenue than predicted for December and
January, a development that Governor Andrew Cuomo blamed on wealthy residents leaving for
second homes in Florida and other states that received more favorable treatment in the tax law
enacted by President Donald Trump and the Republican Congress.
The shortfall will require a new look at the $175 billion budget Cuomo submitted to the
legislature last month, he said. If the trend continues, the governor said it would affect
spending on high-expense items such as health, education, infrastructure and a planned
middle-class tax cut.
"There is no doubt that the budget we put forward is not supported by the revenue," the
Democratic governor said during a news conference in Albany. "If even a small number of
high-income taxpayers leave, it has a great effect on this tax base. You are relying on a very
small number of people for the vast amount of your tax dollars."
While acknowledging that stock market volatility is among several factors that may have
suppressed income-tax revenue in the past two months, the governor placed most of the blame on
Trump and the Republican-dominated Congress of 2017, which enacted a tax plan limiting federal
deductions on real estate and other local taxes.
Related: New York's Income-Tax Revenue Falls 'Abruptly' Under Forecast
"It was politically diabolical and also highly effective," Cuomo said. "And if your goal is
to help Republican states and hurt Democratic states this is the way to do it."
The bank expects oil supply to tighten in the first quarter as top exporter Saudi Arabia
cuts production , but Citi's Ed Morse also forecasts a soft spot for demand in the opening
months of 2019. Further complicating matters are a series of geopolitical and market dramas
that will play out through the beginning of May.
This follows a three-month period that saw oil prices spike to nearly four-year highs as the
market braced for U.S. sanctions on Iran. Prices then tumbled more then 40 percent to 18-month
lows, blowing up long-held trading strategies and forcing drillers to rethink their 2019
budgets.
"The volatility every year is a good $20 to $25 a barrel between low and high," Morse said.
"December was kind of the nightmare for the world where the swings were $50 at a low, $86 at a
high and $68 for the average of Brent."
... ... ...
Citi expects Brent crude to continue rising into the mid-$60 range and hit $70 before year
end. That will be enough to keep in play another wild card: surging U.S. oil production.
Financial industry has inherent trend toward parasitism and gangsterism and as such should be
as tightly regulated as gambling. Probably even more. But under neoliberalism where financial
oligarchy a the ruling class this is a pipe dream. I do not see any significant countervailing
force other the far right nationalism. Far right nationalism has power to brake bankers spine,
but usually they allied with them (fascism)
Those that have been following events for several years know they are under attack by an
enemy that has no face and means to do them great harm. Nothing less than their sovereignty and
freedom is at stake.
Absolute control over people and resources is the ultimate goal.
...the bankers want to show up after the population has lost everything in a collapse,
to be their savior and gain control of everyone by offering resources in exchange for
compliance.
In the end these bankers are just people . They yield NO power other than a
cheap magi c trick called money. They are simply losers pulling levers behind the curtain .
They are terrified of real people. They are terrified of being exposed. They are worthless
conjurers of useless paper. Their power is a cheap spell. They always have known that once
people are aware of the trick, they are done. They are afraid of elevated souls. They are
afraid of the awakened. They are terrified of the big red pill that is coming for the masses. Game over.
Technological superiority is a weapon and the USA know how to use it.
Notable quotes:
"... Made in China 2025 is the Chinese government's 10-year plan to update the country's 10 high-tech manufacturing industries, which include information technology, robotics, aerospace, rail transport, and new-energy vehicles, among others. ..."
"... Without U.S. semis, China will not be able to process the technology necessary to push forward the Made in China 2025 program. "American chips in many ways form the backbone of China's tech economy," Shah said. ..."
"... The Trump Administration's tariffs on Chinese goods were intended to severely disrupt the Chinese tech-advancement initiative. But Shah says that making U.S. chips more expensive for China could have consequences for the U.S. as well. ..."
"... "Over 50% of Chinese semiconductor consumption is supplied by U.S. firms In 2017, China consumed $138bn in integrated circuits (ICs), of which it only produced $18.5bn domestically, implying China imported $120bn of semis in 2017, up from $98bn in 2016 and $73bn in 2012." ..."
"... If the two leaders are unable to come to some sort of trade resolution at the meeting, U.S. tariffs on over $200 billion worth of Chinese goods will increase from 10% to 25% on January 1, 2019. ..."
"... While US has the upper hand on semis, a trade embargo on semis will (1) slows down China's move towards achieving Made in China 2025, (2) at the same time give China the impetus to rush ahead will all resources available to achieve the originally omitted goal of being self-sufficient in tech skills and technology, and (3) seriously hurt companies like Intel, AMD, Micron, and Qualcom as a huge percentage of their businesses are with China, and with that portion of their business gone, all these companies will end up in a loss and without the needed financial resources to invest into new technology in the near future. ..."
As trade tensions run hot between the U.S. and China, President Trump might have one key advantage in the trade war, according
to Nomura.
Analyst Romit Shah explained that China's dependence on U.S.-made advanced microchips could give Trump the upper hand.
"We believe that as China-U.S. tensions escalate, U.S. semiconductors give Washington a strong hand because the core components
of Made in China 2025 (AI, smart factories, 5G, bigdata and full self-driving electric vehicles) can't happen without advanced microchips
from the U.S.," Shah said in a note to clients.
BEIJING, CHINA � NOVEMBER 9, 2017: US President Donald Trump (L) and China's President Xi Jinping shake hands at a press conference
following their meeting at the Great Hall of the People in Beijing. Artyom Ivanov/TASS (Photo by Artyom Ivanov\TASS via Getty Images)
Made in China 2025 is the Chinese government's 10-year plan to update the country's 10 high-tech manufacturing industries, which
include information technology, robotics, aerospace, rail transport, and new-energy vehicles, among others.
One of Made in China 2025's main goals is to become semiconductor self sufficient. China hopes that at least 40% of the semiconductors
used in China will be made locally by 2020, and at least 70% by 2025. "Made in China 2025 made abundantly clear China's commitment
to semiconductor self-sufficiency. Made in China 2025 will upgrade multiple facets of the Chinese economy," Shah said.
According to Nomura's estimates, China is currently about 3 to 5 years behind the U.S. in dynamic random-access memory (DRAM)
chip production. However, Shah explained that if the trade war persists, the consequences could set Chinese chip production behind
by 5 to 15 years.
Without U.S. semis, China will not be able to process the technology necessary to push forward the Made in China 2025 program.
"American chips in many ways form the backbone of China's tech economy," Shah said.
Consequences for U.S.
The Trump Administration's tariffs on Chinese goods were intended to severely disrupt the Chinese tech-advancement initiative.
But Shah says that making U.S. chips more expensive for China could have consequences for the U.S. as well.
One concern centers around intellectual property theft. The Department of Justice (DOJ) has been working hard to punish China
for allegedly attempting to commit espionage. For example, the DOJ believes China was attempting to spy on the U.S. through Huawei
and asked U.S. allies to drop
the Chinese tech equipment maker.
However, while many U.S. chipmakers, such as Advanced Micro Devices (
AMD ), Qualcomm (
QCOM ) and Micron (
MU ), expressed gratitude that the DOJ was intervening
to prevent intellectual property theft, the companies are also concerned that it could spark retaliation from their Chinese business
partners and result in loss of access to the Chinese market. "Joint ventures, IP sharing agreements and manufacturing partnerships
are the price of admission into China, and thus far, companies are playing ball," Shah explained.
Shah essentially calls the Chinese tariffs a double-edged sword. While tariffs will hurt the Chinese if they can't have access
to freely source U.S. chips, it could also hurt U.S. chipmakers if they lose their business in China. According to Shah's research,
"Over 50% of Chinese semiconductor consumption is supplied by U.S. firms In 2017, China consumed $138bn in integrated
circuits (ICs), of which it only produced $18.5bn domestically, implying China imported $120bn of semis in 2017, up from $98bn in 2016 and $73bn
in 2012."
Trump
and China's President Xi Jinping are scheduled to meet at the G20 summit in Buenos Aires, Argentina, on Thursday for a two-day
meeting. If the two leaders are unable to come to some sort of trade resolution at the meeting, U.S. tariffs on over $200 billion
worth of Chinese goods will increase from 10% to 25% on January 1, 2019.
"China could source equipment from Europe and Japan; however, we believe there are certain mission-critical tools that can only
be purchased from the U.S. We believe that U.S.-China trade is the biggest theme for U.S. semis and equipment stocks in 2019. Made
in China 2025 can't happen without U.S. semis, and U.S. semis can't grow without China. We hope this backdrop drives resolution,"
Shah said.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter:
@heidi_chung .
R
While US has the upper hand on semis, a trade
embargo on semis will (1) slows down China's move towards achieving Made in China 2025, (2) at the same time give China the impetus
to rush ahead will all resources available to achieve the originally omitted goal of being self-sufficient in tech skills and
technology, and (3) seriously hurt companies like Intel, AMD, Micron, and Qualcom as a huge percentage of their businesses are
with China, and with that portion of their business gone, all these companies will end up in a loss and without the needed financial
resources to invest into new technology in the near future.
Apart from semis, China holds the throat of the US in the supply of
rare earth (used in semis, military weaponry, ans astronomical), as well as antibiotics..
This is a classic, textbook example of financial astrology... You probably should read it in full to appreciate the depth of junk
science here. But this is financial casino my friends, and they try to entice you with naked girls and drinks...
A gain in January has foretold an annual gain 87 percent of the time with only 9 major errors going back to 1950, according
to the Stock Trader's Almanac.
The S&P 500 was up 7.9 percent in January, its best performance for the first month of the year since 1987.
Some market pros are skeptical of the January barometer, but Jeff Hirsch, editor-in-chief of the Stock Trader's Almanac, says
it makes sense because that's when Wall Street expectations are reset for the year.
Stocks had their best January gains in more than 30 years, and that should mean 2019 will be a pretty good year for the
market.
That's what the widely watched January barometer tells you - as goes January, so goes the year. According to Stock Trader's Almanac,
going back to 1950, that metric of January's performance predicting the year has worked 87 percent of the time with only nine major
errors, through 2017. In the years January was positive, going back to 1945, the market ended higher 83 percent of the time, according
to CFRA.
But the indicator also signaled a positive year last year, and the market suffered an unusual late-year sell-off, wiping out all
of the gains. The S&P 500 ended 2018 down 6.6 percent, despite rising 5.6 percent in January. But the S&P also defied history with
a terrible December decline of 9.6 percent , the biggest loss for the final month of the year since 1931.
This January, the S&P 500 was up 7.9 percent. The best January performance since 1987, when it rose 13.2 percent. It was its best
overall month since October 2015.
Some market pros worry the sharp snapback in stocks since the late December low means January could be stealing the gains from the
rest of the year. Some also believe there could be another test at lower levels in the not too distant future. Yet, Wall Street forecasters
have a median target of 2,950 for the S&P 500 at year end, a big leap from the current 2,704.
"I'm still struck between the contrast of a year ago and now," said James Paulsen, chief investment strategist at Leuthhold Group.
"We came in last year with nothing but optimism. At this point last year, we had synchronized global growth, confidence had spiked
to record post-war highs, and everyone knew we had this steroid-induced earnings boost coming. The thought was how could stocks lose,
and of course they did."
The market has sprung back from December's low, with the S&P gaining 15 percent since Dec. 26.
"This year, we came in with nothing but bad news - the economy was slowing down. ... The rest of the world is slowing. We have trade
wars. We have the shutdown, and analysts are revising earnings lower," Paulsen added. "We're worried about a recession and a bear
market. It's strikingly different, and yet it's kind of like how can stocks win, but they are and I think they will."
Strategists also point to the differences in the way the market traded in each January. This January has been full of volatile swings,
with ultimately larger gains than losses. Last year, the market was at the end of a long smooth glide path higher.
Last year didn't work
Stocks did well through most of January 2018, but by the end of the month, a correction started. "On January 30, in 2018, it was
the first 1 percent decline in 112 days. That was basically the start of the fall off the cliff. In terms of percent gains, this
January is similar to last, but in terms of where we've come from, it's very different. That was one of the calmest advances in history,"
said Frank Cappelleri, executive director at Instinet.
Cappelleri said it's important to put this year's market move in context, when considering the January barometer. "You have one of
the biggest snapbacks after a very bad December, so the odds were in the market's favor to do better than that. I think maybe you
have to look where we are now. You're up 15, 20 percent from the low depending on where you look. Are we going to go up that much
more for the rest of the year?" he said.
Paulsen sees the gains continuing, after a possible pause. "I think it's going to continue to be a fairly good year, and I think
we probably go up and get close to the highs or 3,000 on the S&P, and I'm not expecting hardly anything on the economy, and earnings
are going to be weak, if not flat or maybe down," Paulsen said.
He said the slowing economy and a potential U.S.-China trade deal could push the dollar down and that would be a positive for stocks.
At the same time, the Fed has paused in interest rate hikes and may even stop its balance sheet unwind.
Jeff Hirsch, editor-in-chief of the Stock Trader's Almanac, said there's another set of statistics that are in the market's favor
for a positive 2019, though they also failed last year. He said for the years when the S&P 500 was positive in the first five days
of the year, plus gained during the Santa rally period, and was up for the month of January, the S&P 500 had a positive year 27 out
of 30 times. It also had an average gain of 17.1 percent in those years, since 1950.
Nick 29 minutes ago
Job growth is solid. Unemployment remains near all time lows even while labor force participation increases. Wage growth outpaced
inflation last year. The economy is humming right along...its just the liberal media wants to bombard us with articles claiming
the Trump recession is imminent.
I'm surprised they actually published an article sayings its going to be a good year.
Parade of eminent astrologists ;-) Those financial prostitutes of casino capitlism, aka financial analysts most often are wrong
year after year, but still have a solid coverage by the neoliberal media due to the shire wieght of the companies they represent. This
bets are not connected with some kind of possible financial loss so they just talking up this firms portfolio, which of course is heavily
tilted in favor of stocks. God even Vanguard retirement 2015 fund has 40% in stock, while formula 100-age would give you less then 35%.
If this is bullish bias I do not know what is. Of course, they play with "other people money" and commissions are everything...
Notable quotes:
"... Their guesses about a great market in 2018 was kind of a miss. But they only had like 340 days so far. They still have 25 days left to turn in around. ..."
"... These guys are seldom right. I've been tracking these predictions more closely since 2014, usually 12-15 of the large financial institutions. Last year's average consensus was the SP at 2874. We closed Tuesday (Dec 4) at 2700. ..."
"... The average of the figures cited in the article is 3068. I think that is wishful thinking considering the slow downs in many sectors, slowing GDP and a flattening yield curve. ..."
"... With regard to upside potential, these all sound wildly optimistic to me. Ten years of printing money out of thin air and exploding deficits does not a future robust economy make, IMO. ..."
"... They cannot say 2500 cause people will not invest (and no commissions); they have to say equal or higher than today. To me it is screaming between the lines the index will hit 2500. ..."
"... So all of them predict the S&P will be higher then it is today even though many are saying we are already in a Bear Market...these people only make money if the market goes up so don't trust them! ..."
Morgan Stanley (Target: 2,750; EPS: $176) -- Beware tightening financial conditions and decelerating growth. (Price
target as of December 17)
Bank of America (Target: 2,900; EPS: $170) -- 'Wildcards' will make for more volatility. (Price target as of November
20)
Jefferies (Target: 2,900; EPS: $173) -- It's a 'mature, not end of, cycle.' (Price target as of December 9)
Oppenheimer (Target: 2,960; EPS: $175) -- Negative sentiment is 'setting the stage for upward surprises' (Price target
as of December 31)
Goldman Sachs (Target: 3,000; EPS: $173) -- Get defensive. (Price target as of December 14)
David
Kostin, chief equity strategist at Goldman Sachs, has a main message for investors going into 2019: Start getting defensive.
Barclays (Target 3,000; EPS $176) -- Growth will revert to trend. (Price target as of November 19)
Wells Fargo Securities (Target: 3,079*; EPS: $173) -- Sell-off will create 'double-digit opportunity' (*Note: Harvey
reduced his price target for 2019 to 2,665 and expected EPS to $166 as of December 21)
Citi (Target: 3,100; EPS: $172.50) -- Bearish sentiment makes for bullish outcomes. (*Levkovich
reduced his S&P 500 price
target for the year-end 2019 to 2,850 as of December 31, 2018)
JP Morgan (Target 3,100; EPS $178) -- A pain trade to the upside. (Price target as of December 7)
BMO (Target 3,150; EPS $174) -- Take a longer-term perspective. (Price target as of November 16)
UBS (Target: 3,200; EPS $175) -- A rough 2018 should make for a better 2019. (Price target as of November 13)
Deutsche Bank (Target: 3,250; EPS: $175) -- A while to "regain its prior peak." (Price target as of November 19)
Credit Suisse (Target: 3,350*; EPS $174) -- Bet on multiples expanding. (*Golub
reduced his S&P 500 price target
for the year-end 2019 to 2,925 as of December 18, 2018)
Joseph, 2 months
ago
So their best guess is a relatively flat to roughly a 20% gain...thanks for narrowing it down. Their guesses about a great market in 2018 was kind of a miss. But they only had like 340 days so far. They still have 25 days
left to turn in around.
M 2 months ago
These guys are seldom right. I've been tracking these predictions more closely since 2014, usually 12-15 of the large financial
institutions. Last year's average consensus was the SP at 2874. We closed Tuesday (Dec 4) at 2700.
We will need a 7% Santa Claus
rally to get there.
In 2017 the consensus was 2367; the year closed at 2673.
2016 was very close with a predicted average of 2223
and a close of 2238.
However, the market was far behind until the post-election rally.
The average of the figures cited in the article is 3068. I think that is wishful thinking considering the slow downs in
many sectors, slowing GDP and a flattening yield curve. I'll take 3068, but not going to bet a lot of money on it.
Omnipotent, 2 months ago
With regard to upside potential, these
all sound wildly optimistic to me. Ten years of printing money out of thin air and exploding deficits does not a future robust
economy make, IMO.
Linda, 2 months ago
Wall Street Strategists predicted G20 China meeting was the best news for markets and were looking for strong upside , market
tanked 800 points 2 days after. Enough said .
Gilad, 2 months ago
They cannot say 2500 cause people will not invest (and no commissions); they have to say equal or higher than today. To me it
is screaming between the lines the index will hit 2500.
PathFinder ofWhatis, 2 months ago
Not a single prediction says the market will finally have a Bear Market decline of 20%.... even after a 10 year Bull Market?
Is that called Group Think?
Todd2 months ago
So all of them predict the S&P will be higher then it is today even though many are saying we are already in a Bear Market...these
people only make money if the market goes up so don't trust them!
"... Big tech companies have bullied competitors and outrun ethical standards in an effort to "own the world," Jean Case, the CEO of the Case Foundation and a former senior executive at AOL, told Yahoo Finance this week. "Many of those big companies are crowding out new innovations of young upstarts. That's not healthy," she said, in response to a question about Google and Facebook. ..."
Big tech companies have bullied competitors and outrun ethical standards in an
effort to "own the world," Jean Case, the CEO of the Case Foundation and a former
senior executive at AOL, told Yahoo Finance this week.
"Many of those big companies are crowding out new innovations of young upstarts.
That's not healthy," she said, in response to a question about Google and
Facebook.
"On the technology side, look, things have changed so fast," Case said. "I think
we just haven't kept pace with some of the ethics policies and frameworks that we
need to put around this stuff...used by millions of millions before thought is
given to implications."
Case made the comments in a conversation that aired on Yahoo Finance on Thursday
at 5 p.m. EST in an episode of "
Influencers
with Andy Serwer
," a weekly interview series with leaders in business,
politics, and entertainment. In addition to her comments on big tech, Case
explained why a woman can be elected president, what National Geographic has done
to thrive amid media industry tumult, and how it felt at AOL in the heady early
days of the internet.
"... In the meantime, the strategy for oil and gas executives to appease investors is to focus on "quick cash, quarterly payouts and fast talk," Sanzillo says. "Either way the stocks lack a long-term value rationale." ..."
"... Meanwhile, the Wall Street Journal reports that the U.S. shale industry has been over-hyping the production potential from their wells. The WSJ compared well-productivity estimates from shale companies to those from third parties. After looking at the production data at thousands of wells and how much oil and gas those wells were on track to produce over the course of their lifespans, the WSJ found that company forecasts seemed to be misleading. ..."
"... Schlumberger, for instance, has reported that secondary shale wells near older wells in West Texas have been 30 percent less productive than the initial wells, the WSJ found. Also, many shale companies used data from their best wells and extrapolated forward, projecting enormous growth numbers that have not panned out. ..."
Of course, that is largely just a reflection of the sharp decline in oil prices. But the share prices of most oil and gas companies
are also largely based on oil price movements. So, the steep slide in oil prices in the final two months of 2018 led to disaster
for investors in energy stocks.
"The stock market went to hell in December. And when it got there, it found that the energy sector had already moved in, signed
a lease and decorated the place," Tom Sanzillo, Director of Finance at the Institute for Energy Economics and Financial Analysis
(IEEFA), wrote in a
commentary
.
The energy sector was at or near the bottom of the S&P 500 for the second year in a row, Sanzillo pointed out. And that was true
even within segments of the oil and gas industry. For instance, companies specializing in hydraulic fracturing fell by 30 percent,
while oil and gas supply companies lost 40 percent. "The fracking boom has produced a lot of oil and gas, but not much profit," Sanzillo
argued.
Looking forward, there are even larger hurdles, especially in the medium- to long-term. Oil demand growth is flat in developed
countries and slowing beginning to slow in China and elsewhere. The EV revolution is just getting started.
The last great hope for the oil industry is to pile into
petrochemicals
, as oil demand for transportation is headed for a peak. But profits in that sector could also prove elusive. "The industry's rush
to invest in petrochemicals to maintain demand for oil and gas is likely to continue, but the profit potential in this sector is
more limited than oil and gas exploration, and is likely to keep the energy sector at or near the bottom of the S&P 500," Sanzillo
concluded.
In the meantime, the strategy for oil and gas executives to appease investors is to focus on "quick cash, quarterly payouts
and fast talk," Sanzillo says. "Either way the stocks lack a long-term value rationale."
Meanwhile, the Wall Street Journal reports that the U.S. shale industry has been over-hyping the production potential from their
wells. The WSJ compared well-productivity estimates from shale companies to those from third parties. After looking at the production
data at thousands of wells and how much oil and gas those wells were on track to produce over the course of their lifespans, the
WSJ found that company forecasts seemed to be misleading.
"Two-thirds of projections made by the fracking companies between 2014 and 2017 in America's four hottest drilling regions appear
to have been overly optimistic, according to the analysis of some 16,000 wells operated by 29 of the biggest producers in oil basins
in Texas and North Dakota," reporters for the
WSJ wrote . "Collectively, the companies that made projections are on track to pump nearly 10% less oil and gas than they forecast
for those areas, according to the analysis of data from Rystad Energy AS, an energy consulting firm."
Schlumberger, for instance, has reported that secondary shale wells near older wells in West Texas have been 30 percent less
productive than the initial wells, the WSJ found. Also, many shale companies used data from their best wells and extrapolated forward,
projecting enormous growth numbers that have not panned out.
The upshot is that shale companies will have to step up spending in order to hit the promised production targets. However, so
many of them have struggled to turn a profit, and the recent downturn in oil prices has put even more pressure on them to rein in
costs.
That raises questions about the production potential not just from individual shale companies, but also from the U.S. as a whole.
"... The Trump administration's $1.5 trillion in tax cuts appears to have not made any major impact on businesses' capital investment or hiring plans, according to a new survey. ..."
"... "A large majority of respondents, 84%, indicate that one year after its passage, the corporate tax reform has not caused their firms to change hiring or investment plans," NABE President Kevin Swift said in a release. "Fewer firms increased capital spending compared to the October survey responses, but the cutback appeared to be concentrated more in structures than in information and communication technology investments." ..."
"... The lower tax rates did have an impact in the goods-producing sector, NABE found, with 50% of respondents reporting increased investments at their companies, and 20% saying they redirected hiring and investments to the US from abroad. ..."
The Trump administration's $1.5 trillion in tax cuts
appears to have not made any major impact on businesses' capital investment or hiring plans,
according to a new survey.
A quarterly poll from the National Association for Business Economics
published Monday found that some companies reported accelerating investments because of
lower corporate taxes, but a whopping 84% of respondents said they had not changed their plans.
That's up slightly from 81% in the previous survey published in October,
Reuters reports.
The White House had said the massive stimulus package, which cut the corporate tax rate to
21% from 35%, would boost business spending and job growth. The tax cuts that came into effect
in January 2018 were the biggest overhaul of the U.S. tax code in more than 30 years.
"A large majority of respondents, 84%, indicate that one year after its passage, the
corporate tax reform has not caused their firms to change hiring or investment plans," NABE
President Kevin Swift said in a release. "Fewer firms increased capital spending compared to
the October survey responses, but the cutback appeared to be concentrated more in structures
than in information and communication technology investments."
The lower tax rates did have an impact in the goods-producing sector, NABE found, with 50%
of respondents reporting increased investments at their companies, and 20% saying they
redirected hiring and investments to the US from abroad.
An analysis of how S&P 500 firms were reacting to the tax cut by researchers at the
University
of Michigan found that 4% of the sample said in Q1 of 2018 they would pay some of their tax
savings back to workers, and 22% mentioned in earnings conference calls they would increase
investment because of the tax cuts.
Though for small businesses, a new survey from the
National Federation of Independent Business released earlier this month found 61% of owners
reported making capital investments, unchanged from last month but 5 points higher than in
August. In December, 35% of small-business owners reported increasing employee compensation and
24% reported planned increases in the next few months.
Q: I am 62. Last year, I got a Social Security calculation showing that when I am
66-plus-years-old, I will receive $400-plus in Social Security benefits per month. Because of
my health, I started to work only three days a week. Will this reduce the amount of my
benefits? If l decide to quit my job, but not apply for my Social Security benefits until I'm
66-plus, will it reduce my monthly Social Security benefits?
A: Social Security calculates your monthly benefit by taking your highest 35 years of
earnings and your age, says Rick Fingerman, a managing partner with Financial Planning
Solutions. "So, if you stop working before your full retirement age or FRA, as you suggest, you
could see a lower benefit if you do not have 35 years of higher earnings already."
The same answer applies if you quit your job altogether at 62 and wait until 66 to collect,
he says.
One option, says Fingerman, could be if you were going to wait until your FRA and you have a
spouse that is already collecting on their own benefit. "You might receive a higher monthly
benefit on their record as you would get 50% of what they are receiving, which could be more
than the $400 a month under your own benefit," he says.
Of course, nobody can predict exactly how long they'll live -- the average man and woman
turning 65 today can expect to live until age 84 and 86, respectively, according to the Social
Security Administration. However, if you're facing health issues and don't expect to live that
long, it may be wiser to claim as early as possible rather than waiting until you have only a
few years left to enjoy your benefits.
... ... ...
Your
full retirement age (FRA) is the age at which you'll receive 100% of the benefits to which
you're entitled. So if your FRA is 67, and you wait until then to claim, you'd receive $1,300
per month. If you claim at 62, your benefits will be cut by 30% -- leaving you with just $910
per month.
... ... ...
If you wait until your FRA to claim, you'll receive 100% of your entitled benefits. But if
you wait beyond that age, you'll receive a bonus on top of your full amount to make up for all
the months you weren't receiving benefits at all. If your FRA is, say, 67 and you wait to claim
benefits until 70, you'll receive a 24% bonus over your full amount. So if you would have
received $1,300 per month by claiming at 67, you'd receive $1,612 by waiting until 70. (Keep in
mind, too, that this bonus maxes out at age 70, so there's no additional benefit to waiting to
claim until after that age.)
This can be a lifesaver for those who are
seriously behind on saving for retirement . If you're going to rely on Social Security to
make ends meet, it's in your best interest to maximize those benefits.
The amount you receive in benefits will be locked in once you claim. If you delay and
receive that boost, you'll continue receiving that boost for the rest of your life. Likewise,
if you claim early and your benefits are reduced, you'll receive those smaller checks for life.
So delaying can play out in your favor if you spend several decades in retirement -- the longer
you live, the more you will receive over your lifetime.
While delaying claiming benefits by a few years will result in bigger checks, you may not
actually receive more over a lifetime than you would if you had claimed earlier. Although
you're receiving more each month, that's just to make up for the years you weren't receiving
any benefits at all. If you don't reach your "break even age" -- or the age at which you've
received more over a lifetime by waiting to claim than you would have received by claiming
early -- it may not be worth it to wait.
For example, say your FRA is 67. If you claim early at 62, you'd receive $910 per month (or
$10,920 per year), and if you delay until 70, you'd receive $1,612 per month ($19,344 per
year). Here's how much you'd have received in total benefits at different ages:
Age at Death
Total Lifetime Benefits When Claiming at 62
Total Lifetime Benefits When Claiming at 70
70
$87,360
N/A
75
$141,960
$96,720
80
$196,560
$193,440
85
$251,160
$290,160
Source: Author's calculations
So in this scenario, you'll have to live past age 80 in order to "break even" and earn more
in lifetime benefits by delaying rather than claiming early. That can be a good thing if you
expect to live a long time, but if you don't expect to live past 80, it may be more
advantageous to claim earlier rather than later.
[Video] He views housing prices as a leading indicator, but he is not ready to forecast
slowdown yet. Yes Home
Sales Sank 6.4% in December . No, a recession isn't about to hit. The International Monetary
Fund still thinks the global economy will grow
a respectable 3.5% this year . By with the recent downgrade risks are higher and probably
highest since 2010.
As for 2019 he said we are always at risk entering the recession. He thinks that as in June
there will be the longest recession, that might be time for a recession including in housing
market. Inverted curve is a sign of such comes are coming.
Housing market is closing down and that can lead to recession, but he is not giving it
probability higher that 50 for this year. He also mentions that real interest rate of short end
there are not much above inflation.
Yale Economics Professor and Nobel Laureate Robert Shiller spoke with Yahoo Finance at
Davos, telling Editor-in-Chief Andy Serwer: "People are starting to think housing is expensive,
and that could lead to a turnaround and a drop in home prices. But I'm not ready to forecast
that yet."
Interesting discussion... He said tariff might not work as expected. He does not think
recession in probable in 2018 but later it might became inveitable
14% are functionally illiterate. Those people are at he bottom and will stay at the
bottom.
David Rubenstein, Co-Founder and Co-Executive Chairman of The Carlyle Group, sits down for a
one on one with Yahoo Finance editor-in-chief Andy Serwer at the World Economic Forum's annual
meeting in Davos, Switzerland. They discuss U.S.-China relations, Alexandria Ocasio-Cortez,
income inequality, the government shutdown, and more.
Speaking at a panel discussion on the first day of the
World Economic Forum (WEF) , Dalio said: "The US, Europe, China – all of those will
experience a greater level of slowing, probably a greater level of disappointment.
"I think there's a reasonable chance that by end of that, monetary policy and fiscal policy
will have to become easier relative to what is now discounted in the markets.
He added: " What scares me the most longer-term is that we have limitations to monetary
policy, which is our most valuable tool, at the same time as we have greater political and
social antagonism.
"So the next downturn worries me the most. There are a lot of parallels with the late
1930s.
"In 1929-1932 we had a debt crisis, and interest rates hit zero. Then there was a lot of
printing of money and purchases of financial assets which drives financial assets higher.
"It creates also a polarity, a populism and an antagonism. We also had at that time the
phenomenon of a rising power, like China, dealing with conflict with an existing power.
"These types of political issues are now very connected to economic issues in policy."
Asked at the summit
in Switzerland about increasing debt levels and signs of a global slowdown, Dalio said the
world economy was in the later stages of a short-term debt cycle.
He said there had been an "inappropriate, mistaken desire to tighten monetary policy at a
level that was faster than what the capital markets could handle."
He said: "W hen we cut corporate taxes and made interest rates low enough that it was
attractive enough to buy financial assets, particularly by companies having mergers and
acquisitions, that caused a lot of growth in corporate debt. And that growth in corporate debt
was used to finance the purchases. That is going to be less."
He suggested a slowdown could increase the link between politics and economic policy, and
predicted increased debate over a 70% income tax rate next year.
yesterday How does he on
one hand say that the Fed has little room to lower rates in case of a downturn and at the
same time blame the Fed for raising rates in order to prepare for such an eventuality?
Seriously, I'm asking. I'm not wagging my finger at him, because I sure don't pretend to
know more than he does. I asking somebody to further explain, because I don't get it. I'm
raising my hand in class. Anybody? 2 days ago democracy has become a slave
for finance - that is what an actual worry is brought in by fitting words - 26 people own
more than 4billion other people 2 days ago The rich have to pay higher
marginal tax rates. Period. "To those who are given much, much is expected." - Former NY
governor Elliott Spitzer. yesterday Of course. If we
had been unable to loosen monetary policy after Bush crashed the economy, we would have
been in the 2nd great depression. Trump is hurtling us towards the next economic disaster,
but without the tools to dig out. And his comments that the fed is raising interest rates
too fast is counter productive (like everything else Trump does). 2 days ago How He hedging when people
panic about his bias comment ??
Remember ... He is a Hedge Fund manager , makes money from panic and quick market moves
!
enough said ...
I
yesterday So what does all that mean for the economy and stock market? With a growing
disparity in distribution of income something needs to change before we start to see social
and political upheaval. The top 1% to 5% can't get 80% of all the wealth.
Billionaire Michael Dell, chief executive officer of the eponymous technology giant, rejected a suggestion by U.S. Representative
Alexandria Ocasio-Cortez of a 70-percent marginal tax rate on the wealthiest Americans.
"No, I'm not supportive of that," Dell said at a Davos panel on making digital globalization inclusive. "And I don't think it
will help the growth of the U.S. economy. Name a country where that's worked."
She may not be in Davos, but the New York representative's influence is being felt on the slopes of the Swiss Alps. Three weeks
after Ocasio-Cortez floated the idea in an interview on "60 Minutes" to raise the top marginal tax rate on Americans' income of more
than $10 million to 70 percent, it was a hot topic at the gathering of the global financial and political elite.
... ... ...
"My wife and I set up a foundation about 20 years ago and we would've contributed quite a bit more than a 70 percent tax rate
on my annual income," Dell said. "I feel much more comfortable with our ability as a private foundation to allocate those funds than
I do giving them to the government."
Erik Brynjolfsson, a professor at the Massachusetts Institute of Technology who was on the panel with Dell, said such a rate worked
in the U.S. after World War II. But other executives were opposed, including Salesforce.com Inc. Co-Chief Executive Officer Keith
Block.
... ... ...
Billionaire investor Ray Dalio suggested that the idea may have legs in the run-up to the U.S. presidential election. Discussing
the outlook for a slowing world economy Tuesday, Dalio said that next year will see "the beginning of thinking about politics and
how that might affect economic policy beyond. Something like the talk of the 70 percent income tax, for example, will play a bigger
role." He didn't mention Ocasio-Cortez by name.
Currently in the U.S., the top marginal tax rate is 37 percent, which takes effect on income of more than $510,300 for individuals
and $612,350 for married couples, according to the Tax Foundation.
The fortunes of a dozen attendees at the World Economic Forum in 2009 have soared by a combined $175 billion, a Bloomberg analysis
found. The same cannot be said for people on the other end of the social spectrum: A report from Oxfam on Monday revealed that the
poorest half of the world saw their wealth fall by 11 percent last year.
Credit Suisse came out today with a doozy of a 90-page "study" looking at global debt
levels. A shout out like this in the report does nothing to engender confidence in risk assets:
"Defaults are likely to rise in segments of the corporate debt markets once economic growth
weakens more markedly or if monetary policy tightens further; in such a situation, an unwinding
of positions could generate significant market stress due to illiquidity."
Credit Suisse Chairman Urs Rohner suggests on the first page of the report that a full-scale
global debt blowup is unlikely. But the overall scope of the report is bearish to stocks, trust
this writer who read the study in its entirety.
We've known since WW2, that fighting fascism is difficult. Benito Mussolini defined fascism
as "Barely able to slip a cigarette paper between business and government." And when business
runs government, we have even exceeded fascism. The new battle against fascism is not going
to be easy.
The International Monetary Fund just uncorked a sobering outlook on the global
economy and asset markets for the elite billionaires huddled up in Davos,
Switzerland for the World Economic Forum to ponder.
In its latest World Economic Update report, the IMF said Monday the global
economy is projected to grow at a meager 3.5% this year and only accelerate to
3.6% in 2020. The outlooks for 2019 and 2020 are 0.2 percentage point and 0.1
percentage point below the IMF's projections issued in October.
Hat tips to the ongoing U.S. trade war with China, tightening financial
conditions globally and more volatile risk asset markets.
The finer points:
The IMF pretty much had nothing good to say on
the outlooks for developed and emerging markets. Although that is nothing unusual
for the IMF -- who often takes a cautious stance on its outlooks for economies and
financial markets -- it may give many investors a wake up call amid a somewhat hot
start to the stock market in 2019.
Of note, U.S. growth is seen slowing to 2.5% in 2019 and dipping to 1.9% in 2020
at the hands of the unwinding of fiscal stimulus (see Trump tax cuts), higher
interest rates and the U.S. trade war with China. The IMF tossed the U.S. a bone
by noting the pace of expansion is above the country's estimated potential growth
in both years.
As for Europe, the IMF is now more bearish on growth compared to its October
outlook. Growth for emerging and developing Europe in 2019 is forecast to cool to
0.7% (from 3.8% in 2018) and then bounce to 2.4% in 2020. Previously, the IMF was
looking for growth of 2% and 2.8% in 2019 and 2020, respectively. Lackluster
growth in Italy, France and Germany as well as policy tightening in Turkey are
the main culprits for the IMF's European growth downgrade.
Growth in emerging and developing Asia is expected to drop from 6.5% in 2018 to
6.3% in 2019 and reach 6.4% in 2020, said the IMF. The IMF expects growth in
China to be 6.2% both in 2019 and 2020 versus 6.6% in 2018.
Interestingly, the IMF incorporates the impact of continued tariffs by the U.S.
on China and vice versa in its baseline forecast. In other words, the
organization does not expect there to be a trade truce between the countries on
their self-imposed March 1 deadline.
For the investors out there:
For those bulls that have returned
to beaten up stocks in January, the IMF does its best to squash the hopium
infiltrating your brains. "A range of catalyzing events in key systemic economies
could spark a broader deterioration in investor sentiment and a sudden, sharp
repricing of assets amid elevated debt burdens. Global growth would likely fall
short of the baseline projection if any such events were to materialize and
trigger a generalized risk-off episode," cautioned the IMF.
China's growth slowdown is also a risk that the IMF suggests investors don't
fully appreciate.
"As seen in 2015�16, concerns about the health of China's economy can trigger
abrupt, wide reaching sell-offs in financial and commodity markets that place its
trading partners, commodity exporters, and other emerging markets under
pressure," the IMF pointed out.
The bottom line:
The IMF isn't exactly super plugged into global
asset markets in the same vein as forecasters at Goldman Sachs and Morgan
Stanley. But their latest assessment of the global economy and risk markets
offers up a good counterbalance to the enthusiasm that has begun to creep back
into financial markets after the October 2017 through December 2018 rout.
Happy trading, folks.
Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on
Twitter
The stock market has staged a rebound in January, but Morgan Stanley sees a number of
bearish indicators. Indeed, they estimate that odds of the U.S. economy slipping into a
recession are now the highest since the financial crisis of 2008, and they project that the
S&P 500 Index (SPX) ultimately will settle back to a value of 2,400 in 2019, revisiting the
recent lows seen in December and more than 18% below the record high set in September 2018. "We
expect upcoming negative data will prove 2600-2650 [on the S&P 500] to be a good sale
before a proper retest of the December lows," Morgan Stanley says in the latest Weekly Warm-Up
report from their U.S. equity strategy team headed by Michael Wilson.
People who are kicked out of their IT jobs around 55 now has difficulties to find even
full-time McJobs... Only part time jobs are available. With the current round of layoff and job
freezes, neoliberalism in the USA is entering terminal phase, I think.
A survey by
Transamerica Center for Retirement Studies found on average Americans are retiring at age
63, with more than half indicating they retired sooner than they had planned. Among them, most
retired for health or employment-related reasons.
... ... ...
On April 3, 2018, Linda LaBarbera received the phone call that changed her life forever. "We
are outsourcing your work to India and your services are no longer needed, effective today,"
the voice on the other end of the phone line said.
... ... ...
"It's not like we are starving or don't have a home or anything like that," she says. "But
we did have other plans for before we retired and setting ourselves up a little better while we
both still had jobs."
... ... ...
Linda hasn't needed to dip into her 401(k) yet. She plans to start collecting Social
Security when she turns 70, which will give her the maximum benefit. To earn money and keep
busy, Linda has taken short-term contract editing jobs. She says she will only withdraw money
from her savings if something catastrophic happens. Her husband's salary is their main source
of income.
"I am used to going out and spending money on other people," she says. "We are very generous
with our family and friends who are not as well off as we are. So we take care of a lot of
people. We can't do that anymore. I can't go out and be frivolous anymore. I do have to look at
what we spend - what I spend."
Vogelbacher says cutting costs is essential when living in retirement, especially for those
on a fixed income. He suggests moving to a tax-friendly location if possible.
Kiplinger ranks Alaska, Wyoming, South Dakota, Mississippi, and Florida as the top five
tax-friendly states for retirees. If their health allows, Vogelbacher recommends getting a
part-time job. For those who own a home, he says paying off the mortgage is a smart financial
move.
... ... ...
Monica is one of the 44 percent of unmarried persons who rely on Social Security for 90
percent or more of their income. At the beginning of 2019, Monica and more than 62 million
Americans received a 2.8 percent cost
of living adjustment from Social Security. The increase is the largest since 2012.
With the Social Security hike, Monica's monthly check climbed $33. Unfortunately, the new
year also brought her a slight increase in what she pays for Medicare; along with a $500
property tax bill and the usual laundry list of monthly expenses.
"If you don't have much, the (Social Security) raise doesn't represent anything," she says
with a dry laugh. "But it's good to get it."
"... On Tuesday, Dimon and JPMorgan CFO Marianne Lake said they think the current outlook for growth is positive considering the consumer is still strong and healthy. ..."
During an interview with FOX Business earlier this month, Dimon told FOX Business' Maria Bartiromo that while it didn't look like
a recession was imminent, there will eventually be a meaningful slowdown.
"There will be a recession one day. So when people say, 'Is there going to be a recession?' Yeah, I don't know when it's going
to be, but there will be one and something will trigger it and it will be a little bit different than the last one," he said.
On Tuesday, Dimon and JPMorgan CFO Marianne Lake said they think the current outlook for growth is positive considering the
consumer is still strong and healthy.
For the fourth quarter, the largest U.S. bank by assets reported lower-than-expected profit despite gains from higher interest
rates and a bump within its loan sector. Losses were driven by market volatility, global growth worries and an ongoing trade war
between the U.S. and China.
Ryan S 8 hours ago
Yes the pending recession will cause many debt bubbles to burst and not just isolated primarily to banking and housing sector.
Think of what happens to the college/university system when student can no longer get loans for subsidized rates. A house
or vehicle can serve as an asset to be used as collateral to control rate ceilings. However, there is no collateral in Billy
and Genie's BA History degree. Good luck to all these ivory tower universities when your funding dries up and nobody can afford
your way overpriced programs. Anubis 9 hours ago I have read Americans
hold over 50 trillion in debt yet over half the population has only $1,000 in savings.
Bob 9 hours ago
Why is the US increasing deficit spending doing a good economy???? Reply
s 8 hours ago
Why does no one ask....why does higher education cost so much compared to other costs? The rate of increases in higher education
is never challenged by anyone. It is automatically assumed good. People are so blind and accepting.
Bart 7 hours ago
"At some point in the future we will have a recession and it will be a little bit different from the last recession." He is
paid $28,500,000.00 a year and sounds like my car mechanic.
buddhist 8 hours ago
Same like it was in 2007. Everything in the world was fine until Lehmann declared bankruptcy and hell started to break. May
be this time around it's Deutsche bank's turn.
Sam 5 hours ago
Signs of the economy slowing are everywhere. Company earnings are down and layoffs are increasingly more common. Min wage jobs
might be plentiful right now, but that will change in less than a year. Better hold on and you better keep your job. Next recession
will eliminate a lot of jobs. Those over 40 - forget it.
Chinas Love 8 hours ago
The next recession will occur when the US government hit over $25 Trillion in debt thus surpassing out total GDP thus making
the US bankrupt or Trump enacts the remaining $600 billion of the $820 Billion in tariffs on China and the rest of the world
because China trade deficit has grown under his watch to historic levels each each!
Half of Americans don't bother voting for president. Why is the American media full only of people who insist that the country
is divided in half between Democrat and Republican supporters? Where are the people of influence who think it's a problem and
reflects poorly on the country that half of eligible voters don't see a reason to participate, and that it's worth changing things
in order to get more people to change their minds about that?
Both parties are content with being unpopular, but with political mechanisms ensuring they stay in power anyway. The Democrats
aren't concerned with being popular. They're content with being a token opposition party that every once in a while gets a few
token years with power they don't put to any good anyway. It pays more, I guess.
It still looks like if Americans want to live in a progressive country, they'll have to move to one. But as it is clear that the
neoliberalism of establishment Democrats has little or nothing to offer the poor and working class, or to non-wealthy millennials,
the times they are a-changing.
[Jan 16, 2019] Corporatism is the control of government by big business. This is what we have in the USA today. The main difference between corporatism and fascism is the level of repressions against opposition. Corporatism now tales forma of inverted totalitarism and use ostracism instead of phycal repressions
That is why we need a Constitutional amendment to get the money OUT of politics. Make bribery illegal. THEN, we will not need
Wall Street, which doesn't serve MOST of the population of this country, and is mostly responsible for the wealth gap and lack
of opportunities for most of the population.
I'm not fooled. These are not progressives, they are corporatists, beholden to their donors. They have no courage, no interest
in serving their constituencies, but are only interested in the power and money. What our country , and the world, needs is radical
change from the profit-first point of view. I won't support either one of them.
"... I watched Greg Hunter's show on this. Very disturbing because of it's currency. This backdoor off-the-books financing of whatever they want is as she says, the introduction of free fascism in the US. ..."
"... Deep State is REAL: https://www.youtube.com/watch?v=LLTzpDFGWjI ..."
Investment advisor and former Assistant Secretary of Housing Catherine Austin Fitts says it
looks like a "global recession is coming."
Is that going to cause the debt reset we've been hearing about for years? Fitts says, " Make
no mistake about it, there is no reason for the federal government to default or monkey with
any debt because they can literally print the currency..."
" The question is how do they make sure whatever they are printing really holds any kind
of store of value. I think the reason you are seeing them reengineer the federal bureaucracy
and financial transactions infrastructure is because they want much greater and tighter
control to do whatever they do, and that includes to continue to debase the currency. They
could do this (reset) entirely by debasing the currency...
What we are watching . . . is essentially a coup. We had a financial coup, and now we are
watching a legal coup to consolidate that financial coup. I would keep my eye on the
fundamental governance structure of the U.S. The important thing is not what they do. The
important thing is who controls no matter what they do. Now, we have created a mechanism for
them to control entirely in secret and create policies entirely in secret, including around
the back of a U.S. President... It's pirating by the 'just do it' method. I said to someone
the other day, what is it about secret money for secret private armies that you don 't
understand? "
$21 trillion in "missing money" at the DOD and HUD that was discovered by Dr. Mark Skidmore
and Catherine Austin Fitts in 2017 has now become a national security issue.
The federal government is not talking or answering questions, even though the DOD recently
failed its first ever audit. Fitts says, "This is basically an open running bailout..."
"Under this structure, you can transfer assets out of the federal government into private
ownership, and nobody will know and nobody can stop it. There is no oversight whatsoever. You
can't even know who is doing it. I'm telling you they just took the United States government,
they just changed the governance model by accounting policy to a fascist government. If you
are an investor, you don't know who owns those assets, and there is no evidence that you
do...
If the law says you have to produce audited financial statements and you refuse to do so
for 20 years, and then when somebody calls you on it, you proceed to change the accounting
laws that say you can now run secret books for all the agencies and over 100 related entities
."
In closing, Fitts says, "We cannot sit around and passively depend on a guy we elected
President..."
"The President cannot fix this. We need to fix this...
This is Main Street versus Wall Street. This is honest books versus dirty books. If you
want the United States in 10 years to resemble anything what it looked like 20 years ago, you
are going to have to do it, and there is no one else who can do it. You have to first get the
intelligence to know what is happening."
Join Greg Hunter as he goes One-on-One with Catherine Austin Fitts, Publisher of "The Solari Report."
"If the law says you have to produce audited financial statements and you refuse to do so
for 20 years, and then when somebody calls you on it, you proceed to change the accounting
laws that say you can now run secret books for all the agencies and over 100 related entities
."
She's referring to FASB standards, but those dont sound like a Constitutional Amendment to
me.
Article i, Section 9, paragraph 7: "No Money shall be drawn from the Treasury, but in
Consequence of Appropriations made by Law; and a regular Statement and Account of the
Receipts and Expenditures of all public Money shall be published from time to time."
Perhaps when $20+ trillion are involved, the Constitution be damned, I suppose. Or perhaps
the govt boys will claim the $20T didn't come from an appropriation but instead from their
own "industrious" activities...you know, like drug and gun running, and human trafficking
perhaps?
I watched Greg Hunter's show on this. Very disturbing because of it's currency. This
backdoor off-the-books financing of whatever they want is as she says, the introduction of
free fascism in the US.
One of the smartest women out there. Huge fan here. She almost got snuffed for blowing the
whistle at HUD (two sets of books and all). It's only recently that she's come out and said
that there's no such thing as the "money being lost". It's digital and 100% traceable.
Fitts is correct and her approach is sound. Money flows are traceable. The problem is more
complicated, though. As Enron proved and the Parmalat scandal cemented, the CRONY CUT is
fatal. The Auditors gave up fiduciary duties for FIDOCIARIES riches. They rolled over and played
dead.
They've already tried to off her. They broke her financially and she bounced back. She
made a lot of enemies but luckily she has some good friends in high places too. Watch a few
Vids about what they did to her after she blew the whistle at HUD. She's lucky to be above
ground.
Her extensive studies and reports that follow crack cocaine being dumped into various
areas the subsequent drug related violence and BS "WOD" response and then what happened to
the real estate, as in, WHO WINDS UP BUYING block after block after block of blighted
buildings is absolutely fascinating . She should have gotten more recognition for those
exhaustive studies.
There's a VERY LARGE HAND at work there...for profit.
"... However, despite the signs, Goldman Sachs assumes the indicators are wrong and that "recession risk remains fairly low, in the neighborhood of 15% over the next year." The bank has predicted that the S&P 500 will finish 2019 at 3,000, up from the current value just below 2,600. ..."
Confidence in continued economic growth has been waning. A huge majority of chief financial officers
around the world say a recession will happen by the end of 2020. Most voters think one will hit by the end
of this year.
Now the Goldman
Sachs economic research team says that the
market shows a roughly 50% chance of a recession over the next year, according to
Axios.
Goldman Sachs looked at two different measures: the yield curve slope and credit spreads.
The former refers to a graph of government bond interest rates versus the years attaining
maturity requires. In a growing economy, interest rates are higher the longer the investment
because investors have confidence in the future. A frequent sign of a recession is the
inversion of the slope, when investors are uncertain about the future, so are less willing to
bet on it.
Credit spreads compare the interest paid by government bonds, which are considered the
safest. Corporate bonds, which are riskier, of the same maturity have to offer higher interest
rates. As a recession approaches, credit spreads tend to expand, as investors are more worried
about companies defaulting on their debt.
However, despite the signs, Goldman Sachs assumes the indicators are wrong and that
"recession risk remains fairly low, in the neighborhood of 15% over the next year." The bank
has predicted that the S&P 500 will finish 2019 at 3,000, up from the current value just
below 2,600.
ABU DHABI (Reuters) - United Arab Emirates Energy Minister Suhail al-Mazrouei said on
Saturday the average oil price in 2018 was $70 a barrel.
The Organization of the Petroleum Exporting Countries and other leading global oil producers
led by Russia agreed in December to cut their combined oil output by 1.2 million barrels per
day to balance the oil market starting from January.
"Today we look at an average year of around $70 for Brent," Mazrouei told an industry news
conference in Abu Dhabi, adding that this level would help encourage global oil investments. An
energy ministry spokesman said the minister was referring to the average oil price in 2018.
I especially like the phase "This directive was particularly surprising in the context of
Canada's free market economy" That's really deep understanding of the situation ;-) . It is so
difficult to understand that Canada as a large oil producer, needs higher oil prices and it does
not make sense from the point of market economy to pollute the environment and at the same time
lose money in the process ?
Notable quotes:
"... Alberta's oil production has been cut 8.7 percent according to the mandate set by the province's government under Rachel Notley with the objective of cutting out around 325,000 barrels per day from the Canadian market. ..."
"... So far, the government-imposed productive caps have been extremely successful. In October Canadian oil prices were so depressed that the Canadian benchmark oil Western Canadian Select (WCS) was trading at a whopping $50 per barrel less than United States benchmark oil West Texas Intermediate (WTI). now, in the wake of production cuts, the price gap between WCS and WTI has diminished by a dramatic margin to a difference of just under $13 per barrel. ..."
"... The current production caps in Canada are only intended to last through the middle of this year, at which point Canadian oil companies will be permitted to decrease their cutbacks to just 95,000 barrels per day fewer than the numbers from November 2018's production rates. ..."
In an attempt to combat a ballooning oil glut and dramatically plummeting prices, the
premier of Alberta Rachel Notley introduced an unprecedented measure at the beginning of
December when she is mandating that oil companies in her province cut production. This
directive was particularly surprising in the context of Canada's free market economy, where oil
production is rarely so directly regulated.
Canada's recent oil glut woes are not due to a lack of demand, but rather a severe lack of
pipeline infrastructure. There is plenty of demand, and more than enough supply, but no way to
get the oil flowing where it needs to go. Canada's pipelines are running at maximum capacity,
storage facilities are filled to bursting, and the pipeline bottleneck has only continued to
worsen .
Now, in an effort to alleviate the struggling industry, Alberta's oil production has been
cut 8.7 percent according to the mandate set by the province's government under Rachel Notley
with the objective of cutting out around 325,000 barrels per day from the Canadian
market.
Even before the government stepped in, some private oil companies had already self-imposed
production caps in order to combat the ever-expanding glut and bottomed-out oil prices. Cenovus
Energy, Canadian Natural Resource, Devon Energy, Athabasca Oil, and others announced
curtailments that totaled around 140,000 barrels a day and Cenovus Energy, one of Canada's
major producers, even went so far as to plead with the government to impose production caps
late last year.
So far, the government-imposed productive caps have been extremely successful. In
October Canadian oil prices were so depressed that the Canadian benchmark oil Western Canadian
Select (WCS)
was trading at a whopping $50 per barrel less than United States benchmark oil West Texas
Intermediate (WTI). now, in the wake of production cuts, the price gap between WCS and WTI has
diminished by a dramatic margin to a difference of just under $13 per barrel.
While on the surface this would seem to be a roundly glowing review of the production caps
in Alberta, production cuts are not a long-term solution for Canada's oil glut woes. The
current production caps in Canada are only intended to last through the middle of this year, at
which point Canadian oil companies will be permitted to decrease their cutbacks to just 95,000
barrels per day fewer than the numbers from November 2018's production rates. The cuts are
a just a treatment, not a cure, for oversupply in Alberta. The problem needs to be addressed at
its source--the pipelines.
Unfortunately, the pipeline shortage in Alberta has no quick and easy fix. While there are
multiple major pipeline projects underway, the two largest, the Keystone XL pipeline and the
Trans Mountain pipeline, are stalled indefinitely thanks to legal woes and seemingly endless
litigation. The Enbridge Line 3 pipeline, intended to replace one of the region's already
existing pipelines, is currently under construction and
projected to be up and running by the end of the year, but will not go a long way toward
fixing the bottleneck.
Even if the Albertan government re-evaluates the present mid-2019 expiration date for the
current stricter production cuts, extending the production caps could have enduring negative
consequences in the region's oil industry. Keeping a long-term cap on production in Alberta
would potentially discourage investment in future production as well as in the infrastructure
the local industry so sorely needs. According to some
reporting , the cuts will not be able to control the gap between Canadian and U.S. oil for
much longer anyway, just another downside to drawing out what should be a short-term solution.
The government will need to weigh the possible outcomes very carefully as the expiration date
approaches, when the and the pipeline shortage is still a long way from being solved and the
price of oil remains dangerously variable.
(Bloomberg) -- Jeffrey Gundlach said yet again that the U.S. economy is gorging on debt.
Echoing many of the themes from his annual "Just Markets" webcast on Tuesday, Gundlach took
part in a round-table of 10 of Wall Street's smartest investors for Barron's. He highlighted
the dangers especially posed by the U.S. corporate bond market.
Prolific sales of junk bonds and significant growth in investment grade corporate debt,
coupled with the Federal Reserve weaning the market off quantitative easing, have resulted in
what the DoubleLine Capital LP boss called "an ocean of debt."
The investment manager countered President Donald Trump's claim that he's presiding over the
strongest economy ever. The growth is debt-based, he said.
Gundlach's forecast for real GDP expansion this year is just 0.5 percent. Citing numbers
spinning out of the USDebtClock.org website, he pointed out that the U.S.'s unfunded
liabilities are $122 trillion -- or six times GDP.
"I'm not looking for a terrible economy, but an artificially strong one, due to stimulus
spending," Gundlach told the panel. "We have floated incremental debt when we should be doing
the opposite if the economy is so strong."
Stock Bear
Gundlach is coming off another year in which his Total Return Bond Fund outperformed its
fixed-income peers. It returned 1.8 percent in 2018, the best performance among the 10 largest
actively managed U.S. bond funds, according to data compiled by Bloomberg.
Gundlach expects further declines in the U.S. stock market, which recently have steadied
after reeling for most of December since the Great Depression. Equities will be weak early in
the year and strengthen later in 2019, effectively a reversal of what happened last year, he
said.
"So now we are in a bear market, which isn't defined by me as stocks being down 20 percent.
A bear market is determined by the way stocks are acting," he said.
Rupal Bhansali, chief investment officer of International & Global Equities at Ariel
Investments, picked up on Gundlach's debt theme in the Barron's cover story. Citing General
Electric's woes, she urged investors to focus more on balance-sheet risk rather than whether a
company could beat or miss earnings. Companies with net cash are worth looking at, she
said.
One of the most sought-after visa programs in the U.S., the H-1B, could see some significant
changes in 2019, according
to President Trump , including a potential path to citizenship for recipients of the
non-immigrant visa.
The H-1B visa program allows U.S. employers to hire graduate-level workers in specialty occupations, like IT,
finance, accounting, architecture, engineering, science and medicine. Any job that requires
workers to have at least a bachelor's degree falls under the H-1B for specialty
occupations.
Each year, the U.S. Citizenship and Immigration Services (USCIS) allots about 85,000 of the
H-1B visas -- 65,000 for applicants with a bachelor's degree or equivalent, and 20,000 for
those with a master's degree or higher.
As of April 2017, when Trump signed an executive order -- "Buy American and Hire American"
-- it's become more difficult for U.S. companies to hire people via H-1B. It directs the
Department of Homeland Security to only grant the visas to the "most-skilled or highest-paid
beneficiaries."
Here's a look at the American companies (and industries) that benefited the most from the
program in 2017.
Cognizant: The IT services business had a whopping 3,194 H-1B initial petitions approved in
2017, the most of any U.S. company by almost 600.
Amazon: In 2017, the e-commerce behemoth hired 2,515 employees via
the H-1B visa program, according to data compiled by the
National Foundation for American Policy . That was about a 78 percent increase from 2016,
or 1,099 more employees.
Microsoft: Microsoft hired 1,479 workers through H-1B in 2017, the second most of U.S.
companies -- an increase in 334 employees from the year prior, or close to 29 percent.
IBM: In 2017, IBM employed about 1,231 workers through the H-1B visa program.
Intel: The California-based company employed 1,230 workers through H-1B in 2017, 200 more
workers -- or a 19 percent increase -- compared to 2016.
Google: The search engine giant had 1,213 H-1B initial petitions approved for fiscal year
2017, a 31 percent increase of about 289 from 2016.
"... You should have come here in the 90's to see a shock of the Doctrine to face social trauma of "PGR"(Huge National Farms) workers (it's the electorate of PiS (Law and Justice)), Miners near Wałbrzych, workers of textile industry near łï¿½dź bereft of everything from day to day (literally). Even the contemporary visit might ensure you quite a thrill if you knew where to look. Most of the firms that would easily survive if given some protectionism were hostily taken over by a foreigner capital and shut down with their production instantly replaced by imported goods. ..."
"... I do remember his speeches well. Form the spectrum offered by the Chicago boys he chosen the hardest option. It was Michnik and Kuroń who opted for less "Chicago" direction. But they were in minority. The prevailing Zeitgeist of the period caused words "social", "common" to be treated as a curse and socially stigmatizing. ..."
"... For a better understanding what went wrong you may take example of railroad privatization and compare it to the Czech way. ..."
"... the global elite perspective is that a quick way to rid the globe of the problems we face is to kill off enough people so that the problem dissipates -- war, fraud, nationalism/racism used to point the finger at the other (making it easier for people to harm one another or look the other way (Arendt). ..."
"... Efficiency requires a variety of gains, returns, profits and fairness. Otherwise it is simply theft. And when all is accounted for there might not be any profit to be had in the real world. Only in the minds of the neoliberals. Efficiency is something that should be accounted for carefully so that no vital systems are harmed. ..."
The level of the naivety of Barkley Rosser is astounding.
Poland was a political project, the showcase for the neoliberal project in Eastern Europe and the USSR. EU was pressed to provide
large subsidies, and that marionette complied. The commenter ilpalazzo (above) is right that there has been " a tremendous development
in real estate and infrastructure mostly funded by the EU that has been a serious engine of growth." Like in Baltics and Ukraine,
German, French, Swedish and other Western buyers were most interested in opening market for their products and getting rid of
local and xUSSR competitors (and this supported and promoted Russophobia). With very few exceptions. University education system
also was partially destroyed, but still fared better than most manufacturing industries.
I remember talking to one of the Polish professors of economics when I was in Poland around 1992. He said that no matter how
things will develop, the Polish economy will never be allowed to fail as the USA is interested in propelling it at all costs.
Still, they lost quite a bit of manufacturing: for example all shipbuilding, which is ironic as Lech Wałęsa and Solidarity emerged
in this industry.
Eventually, Poland emerged as the major US agent of influence within the EU (along with GB) with the adamant anti-Russian stance.
Which taking into account the real state of Polish manufacturing deprived of the major market is very questionable. Later by joining
sanctions, they lost Russian agricultural market (including all apple market in which they have a prominent position).
But they have a large gas pipeline on their territory, so I suspect that like Ukraine they make a lot of money via transit
fees simply due to geographic. So they parochially live off rent -- that why they bark so much at North Stream 2.
Polish elite is a real horror show, almost beyond redemption, and not only in economics. I do not remember, but I think it
was Churchill who said " Poland is a greedy hyena of Europe." This is as true now as it was before WWII.
Gosh! I used to actively fight the commies here in the 80's. But then with Balcerowicz I almost regretted it. as to your words:
"Balcerowicz himself at one point advocated something pretty much like what came to pass, a gradual privatization and
maintaining most of the sociaal safety net while advocating shock monetary policies to bring inflation under control."
� They derail.
You should have come here in the 90's to see a shock of the Doctrine to face social trauma of "PGR"(Huge National Farms)
workers (it's the electorate of PiS (Law and Justice)), Miners near Wałbrzych, workers of textile industry near łï¿½dź bereft of
everything from day to day (literally). Even the contemporary visit might ensure you quite a thrill if you knew where to look.
Most of the firms that would easily survive if given some protectionism were hostily taken over by a foreigner capital and shut
down with their production instantly replaced by imported goods.
I do remember his speeches well. Form the spectrum offered by the Chicago boys he chosen the hardest option. It was Michnik
and Kuroń who opted for less "Chicago" direction. But they were in minority. The prevailing Zeitgeist of the period caused words
"social", "common" to be treated as a curse and socially stigmatizing.
For a better understanding what went wrong you may take example of railroad privatization and compare it to the Czech way.
Don't believe the official statistics, we have a huge part of our working poors here. Their voice will never be heard as they
live in a subsistence economy and the've got neither time nor power to shout struggling to survive..
One wonders why there is a need to revisit Klein's thesis to debunk parts of it in this moment?
And the point is so small in this article about Poland, that one wonders why a James Madison prof of econ does not have more
time to look at significant problems everywhere instead of parse the progressive beast?
In my lifetime, I have not witnessed a time where more of the political machinery has drifted to the right -- caught in the
headlights of what Chris Hedges calls the illusion of democracy in the decay of capitalism.
Its important to not forget Gina Haspel's contribution here and torture -- how torture (economic, physical, and social shock)
is implicated, vaulting her to the head of our top Spy agency --
It reminds me of a recent article from Arundhati Roy's, that the global elite perspective is that a quick way to rid the
globe of the problems we face is to kill off enough people so that the problem dissipates -- war, fraud, nationalism/racism used
to point the finger at the other (making it easier for people to harm one another or look the other way (Arendt).
China is wisely looking at the efficiency of state owned enterprises with a reluctance to privatize them. It will become very
clear now that everyone is sobering up from the collapse of the USSR that neoliberal capitalist efficiency (profits) can only
be made by socializing costs and externalizing everything that reduces their bottom line with answers like "That ain't mine."
If even the doofuses at Davos are looking at various forms of "capital" (social, political, civil, environmental, etc.) they
have begun to mitigate their global catastrophe.
Efficiency requires a variety of gains, returns, profits and fairness. Otherwise it is simply theft. And when all is accounted
for there might not be any profit to be had in the real world. Only in the minds of the neoliberals. Efficiency is something that
should be accounted for carefully so that no vital systems are harmed.
Barkley insists on a left-right split for his analysis of political parties and their attachment to vague policy tendencies
and that insistence makes a mess of the central issue: why the rise of right-wing populism in a "successful" economy?
Naomi Klein's book is about how and why centrist neoliberals got control of policy. The rise of right-wing populism is often
supposed (see Mark Blyth) to be about the dissatisfaction bred by the long-term shortcomings of or blowback from neoliberal policy.
Barkley Rosser treats neoliberal policy as implicitly successful and, therefore, the reaction from the populist right appears
mysterious, something to investigate. His thesis regarding neoliberal success in Poland is predicated on policy being less severe,
less "shocky".
In his left-right division of Polish politics, the centrist neoliberals -- in the 21st century, Civic Platform -- seem to disappear
into the background even though I think they are still the second largest Party in Parliament, though some seem to think they
will sink in elections this year.
Electoral participation is another factor that receives little attention in this analysis. Politics is shaped in part by the
people who do NOT show up. And, in Poland that has sometimes been a lot of people, indeed.
Finally, there's the matter of the neoliberal straitjacket -- the flip-side of the shock in the one-two punch of "there's no
alternative". What the policy options for a Party representing the interests of the angry and dissatisfied? If you make policy
impossible for a party of the left, of course that breeds parties of the right. duh.
Likbez,
Bruce,
Blowback from the neoliberal policy is coming. I would consider the current situation in the USA as the starting point
of this "slow-motion collapse of the neoliberal garbage truck against the wall." Neoliberalism like Bolshevism in 1945 has
no future, only the past. That does not mean that will not limp forward in zombie (and pretty bloodthirsty ) stage for another
50 years. But it is doomed, notwithstanding recently staged revenge in countries like Ukraine, Argentina, and Brazil.
Excessive financialization is the Achilles' heel of neoliberalism. It inevitably distorts everything, blows the
asset bubble, which then pops. With each pop, the level of political support of neoliberalism shrinks. Hillary defeat would
have been impossible without 2008 events.
At least half of Americans now hate soft neoliberals of Democratic Party (Clinton wing of Bought by Wall Street technocrats),
as well as hard neoliberal of Republican Party, which created the " crisis of confidence" toward governing neoliberal elite in
countries like the USA, GB, and France. And that probably why the intelligence agencies became the prominent political players
and staged the color revolution against Trump (aka Russiagate ) in the USA.
The situation with the support of neoliberalism now is very different than in 1994 when Bill Clinton came to power.
Of course, as Otto von Bismarck once quipped "God has a special providence for fools, drunkards, and the United States of America."
and another turn of the technological spiral might well save the USA. But the danger of never-ending secular stagnation is substantial
and growing. This fact was admitted even by such dyed-in-the-wool neoliberals as Summers.
This illusion that advances in statistics gave neoliberal access to such fine-grained and timely economic data, that now it
is possible to regulated economy indirectly, by strictly monetary means is pure religious hubris. Milton Friedman would
now be laughed out the room if he tried to repeat his monetarist junk science now. Actually he himself discarded his monetarist
illusions before he died.
We probably need to the return of strong direct investments in the economy by the state and nationalization of some assets,
if we want to survive and compete with China. Australian politicians are already openly discussing this, we still lagging because
of "walking dead" neoliberals in Congress like Pelosi, Schumer, and company.
But we have another huge problem, which Australia and other countries (other than GB) do not have: neoliberalism in the USA
is a state religion which completely displaced Christianity (and is hostile to Christianity), so it might be that the lemming
will go off the cliff. I hope not.
The only thing that still keeps neoliberalism from being thrown out to the garbage bin of history is that it is unclear what
would the alternative. And that means that like in 1920th far-right nationalism and fascism have a fighting chance against
decadent neoliberal oligarchy.
Previously financial oligarchy was in many minds associated with Jewish bankers. Now people are more educated and probably
can hang from the lampposts Anglo-Saxon and bankers of other nationalities as well ;-)
I think that in some countries neoliberal oligarchs might soon feel very uncomfortable, much like Soros in Hungary.
As far as I understood the level of animosity and suppressed anger toward financial oligarchy and their stooges including some
professors in economics departments of the major universities might soon be approaching the level which existed in the Weimar
Republic. And as Lenin noted, " the ideas could become a material force." This true about anger as well.
There is probably an optimum size of financial sector after which it easily go out of control
and start grabbing political power. So it is important to prohibit banksters to participate in
political activity of any kind or in lobbing. Lobbing by financial sector should be criminalized.
They also should be prohibited from hired any for government employee for 10 years after he/she
left this/her position in government (revolving door style of corruption).
The other interesting point is that taxes can server as powerful inhibitor of destructive
behaviour of financial sector. So the fight for the level of taxation of particular social groups
is the most important political fight in modern society.
Also some actions of banksters sho</blockquote>uld be criminalized with high duration
of jail term, just to create negative incentives for certain types of behavior. For example
selling insurance without adequate capital to cover loses. Also important is to criminalize
changing more then a minimum fees (say, 0.25% a year) in 401K accounts as well as provided
insufficiently diversified 401k portfolios.
This was a fascinating piece, very readable for those of us with minimal financial
education. However, since this is such a good explainer for the layman, I think it would be
very beneficial to explain how big a difference 1% in fees makes for an investor over a
lifetime. I know personally when I used to compare funds the difference between 1 and 2% in
fees seemed negligible. But then I saw that fantastic PBS Frontline on this topic
and saw how much that 1% could cost me over a lifetime! I now have everything that I
personally manage in index funds!
You can't really argue with what has been said, and all (of us) involved in the sector
know it is massive rip off.
While a free market advocate, I think a first step would be to introduce meaningful fee
caps on all state promoted or mandated saving arrangements (eg ISAS, and Pensions), on the
grounds that the market is skewed by the government intervention that creates the glut of
forced buyers, and so to correct that imbalance the market (i.e. consumers) need protection
through fee caps. I'd say no more than 20 – 25bps should be permitted for all ISAS and
pension savings (DC or DB). Individual wealthy investors (investments of more than say
£5m?) can pay what they like.
>>The job of the finance sector is simply to manage existing resources. It creates
nothing.
This is a dubious assertion, but you clearly believe it. How then, can you in good
conscience, charge 1.25% (plus indirect costs for the funds you hold in client portfolios) to
manage people's money when you yourself admit you are adding no value?
(source: http://strubelim.com/wp/our-funds/ar-fund/
)
There are 6000 publicly traded companies. Some of them will have rising stock prices, some
falling. If a money manager can steer you to the rising ones, he is doing something of value.
It doesn't mean he created anything physical that didn't exist before. He's doing a service
for you that would otherwise have taken you some time and effort to do, and that's what you
pay for.
Yes, it's a different definition of value. The growth of financial services has been
outpacing the growth of other sectors to a monstrous scale, and that makes this distinction
important. It signals a kind of corruption that can only mean high inflation and decoupling
money from economic output.
I don't follow. How is financial services different from any other kind of services, in
the impact on inflation? Why not also actors, barbers, or any other service profession?
The growth of the financial sector might be explained by the fact that it is the industry
most able to exploit computers, and the first to do so on a large scale.
The corruption is, I think, a separate issue that is present whenever other people's money
is involved. Financial services and government are simply more involved that way than most
other industries, and have been all along, dating to long before the recent growth.
Corruption is not impossible in any industry, just more attractive when the numbers are
larger.
Corruption is never a separate in ANY corporate activity. The TAX CODE treats the wealth
of the .01% radically different than Income from Labor, because all Taxes on Capital Gains
are deferred until taken and are not TAXED as ordinary income. The TAX CODE is responsible
for the corruption of our government because it has put real POWER, the Power of Wealth in
the hands of the .01%, to buy whatever it wants, while labor and the poor spend everything
they earn or are given , every single year to survive in a economic culture designed for the
benefit of the .01%, something no one will write about!
Change the TAX CODE and the Corruption of Society will end!
Barbers and actors being paid for their labor do not have the same impact on inflation as
a bank giving out loans and consumer credit at interest. It's not equivalent at all.
Corruption in financial industries is what this article is discussing. If it's a separate
issue, I'm confused as to the point of talking about this at all!
No, I wasn't, though I have heard that. My theory of markets, and human group behavior in
general, is a statistical approach. There are averages, distributions, and temporary
equilibriums, but the interesting parts are the outliers. I guess that is more of a quantum
flavor than Newtonian. Over time, economies behave cyclically. Much of nature and human group
behavior is cyclical.
"This argument hinges on everyone that purchases these services knowing their true
value."
In a literal sense, you are correct, it is an imperfect measure of value. However, I think
it is far and away the most reliable one we have as value is extremely subjective. I don't
think it is right or prudent for third, non cost bearing parties to preempt decisions made by
consenting adults, rather, I would accord them the dignity of free choice. There are many
things that consumers purchase that I do not understand, why anyone would pay a premium for a
fast car seems like a waste of money to me, for example. Why anyone would pay money to golf,
not to mention the huge cost in terms of time it takes to get through 18 holes, seems like a
waste of money to me. These are things that make no sense to me because I do not see the
value there. But, I recognize that people have various tastes and preferences, and I respect
that and presume that individuals know themselves and their own tastes and preferences better
than I (or someone else) does. Therefore, when someone values something that I do not
understand, I tend to believe it is a result of a difference in preference, rather than they
are too dumb to figure out what they like, or that they are "tricked" into buying something
and hence need protection delivered by those who fancy themselves as enlightened enough to
see the real truth. Nothing about this is unique to the financial industry, by the way.
"Countless services and products we rely on were funded by taxes to make them profitable.
They are "worthwhile" but apparently not "profitable" enough to invest in. Making money and
creating value aren't the same thing. Ideally, everyone decides what is worthwhile."
Apparently not enough people decided these services and products were worthwhile, so
politicians decided they were worthwhile and used the force and power of government to get
them done. Substituting preferences of politicians, spending other people's money for those
of millions of individuals spending their own money does not seem like an efficient way to
allocate resources.
"... The following is a transcript of CounterPunch Radio – Episode 19 (originally aired September 21, 2015). Eric Draitser interviews Michael Hudson. ..."
"... The Troika and IMF doctrine of austerity and privatization ..."
ED: Thanks so much for coming on. As I mentioned already, the title of your book –
Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy –
is an apt metaphor. So parasitic finance capital is really what you're writing about. You
explain that it essentially survives by feeding off what we might call the real economy. Could
you draw out that analogy a little bit? What does that mean? How does finance behave like a
parasite toward the rest of the economy?
MH: Economists for the last 50 years have used the term "host economy" for a country that
lets in foreign investment. This term appears in most mainstream textbooks. A host implies a
parasite. The term parasitism has been applied to finance by Martin Luther and others, but
usually in the sense that you just talked about: simply taking something from the host.
But that's not how biological parasites work in nature. Biological parasitism is more
complex, and precisely for that reason it's a better and more sophisticated metaphor for
economics. The key is how a parasite takes over a host. It has enzymes that numb the host's
nervous system and brain. So if it stings or gets its claws into it, there's a soporific
anesthetic to block the host from realizing that it's being taken over. Then the parasite sends
enzymes into the brain. A parasite cannot take anything from the host unless it takes over the
brain.
The brain in modern economies is the government, the educational system, and the way that
governments and societies make their economic policy models of how to behave. In nature, the
parasite makes the host think that the free rider, the parasite, is its baby, part of its body,
to convince the host actually to protect the parasite over itself.
That's how the financial sector has taken over the economy. Its lobbyists and academic
advocates have persuaded governments and voters that they need to protect banks, and even need
to bail them out when they become overly predatory and face collapse. Governments and
politicians are persuaded to save banks instead of saving the economy, as if the economy can't
function without banks being left in private hands to do whatever they want, free of serious
regulation and even from prosecution when they commit fraud. This means saving creditors
– the One Percent – not the indebted 99 Percent.
It was not always this way. A century ago, two centuries ago, three centuries ago and all
the way back to the Bronze Age, almost every society has realized that the great destabilizing
force is finance – that is, debt. Debt grows exponentially, enabling creditors ultimately
to foreclose on the assets of debtors. Creditors end up reducing societies to debt bondage, as
when the Roman Empire ended in serfdom.
About a hundred years ago in America, John Bates Clark and other pro-financial ideologues
argued that finance is not external to the economy. It's not extraneous, it's part of the
economy, just like landlords are part of the economy. This means that if the financial sector
takes more revenue out of the economy as interest, fees or monopoly charges, it's because
finance is an inherent and vital part of the economy, adding to GDP, not merely siphoning it
off from producers to pay Wall Street and the One Percent. So our economic policy protects
finance as if it helps us grow, not siphons off our growth.
A year or two ago, Lloyd Blankfein of Goldman Sachs said that the reason Goldman Sachs'
managers are paid more than anybody else is because they're so productive. The question is,
productive of what? The National Income and Product Accounts (NIPA) say that everybody is
productive in proportion to the amount of money they make/take. It doesn't matter whether it's
extractive income or productive income. It doesn't matter whether it's by manufacturing
products or simply taking money from people, or simply by the fraud that Goldman Sachs,
Citigroup, Bank of America and others paid tens of millions of dollars in fines for committing.
Any way of earning income is considered to be as productive as any other way. This is a
parasite-friendly mentality, because it denies that there's any such thing as unearned income.
It denies that there's a free lunch. Milton Friedman got famous for promoting the idea that
there's no such thing as a free lunch, when Wall Street knows quite well that this is what the
economy is all about. It's all about how to get a free lunch, with risks picked up by the
government. No wonder they back economists who deny that there's any such thing!
ED: To get to the root of the issue, what's interesting to me about this analogy that we're
talking about is that we hear the term neoliberalism all the time. It is an ideology I that's
used to promote the environment within which this parasitic sort of finance capital can
operate. So could you talk a bit about the relationship between finance capital and
neoliberalism as its ideology.
MH: Today's vocabulary is what Orwell would call DoubleThink. If you're going to call
something anti-liberal and against what Adam Smith and John Stuart Mill and other classical
economists described as free markets, you pretend to be neoliberal. The focus of Smith, Mill,
Quesnay and the whole of 19th-century classical economics was to draw a distinction between
productive and unproductive labor – that is, between people who earn wages and profits,
and rentiers who, as Mill said, "get rich in their sleep." That is how he described landowners
receiving groundrent. It also describes the financial sector receiving interest and "capital"
gains.
The first thing the neoliberal Chicago School did when they took over Chile was to close
down every economics department in the country except the one they controlled at the Catholic
University. They started an assassination program of left wing professors, labor leaders and
politicians, and imposed neoliberalism by gunpoint. Their idea is you cannot have anti-labor,
deregulated "free markets" stripping away social protections and benefits unless you have
totalitarian control. You have to censor any idea that there's ever been an alternative, by
rewriting economic history to deny the progressive tax and regulatory reforms that Smith, Mill,
and other classical economists urged to free industrial capitalism from the surviving feudal
privileges of landlords and predatory finance.
This rewriting of the history of economic thought involves inverting the common vocabulary
that people use. So, the idea of the parasitism is to replace the meaning of everyday words and
vocabulary with their opposite. It's DoubleThink.
Democratic vs. oligarchic government and their respective economic doctrines
ED: I don't want to go too far off on a tangent, but you mentioned the example of Chile's 1973
coup and the assassination of Allende to impose the Pinochet dictatorship. That was a
Kissinger/Nixon operation as we know, but what's interesting about that is Chile was
transformed into a sort of experimental laboratory to impose the Chicago school economic model
of what we now would call neoliberalism. Later in our conversation I want to talk a bit about
some recent laboratories we have seen in Eastern Europe, and now in Southern Europe as well.
The important point about neoliberalism is the relationship between totalitarian government and
this form of economics.
MH: That's right. Neoliberals say they're against government, but what they're really
against is democratic government. The kind of governments they support are pre-referendum
Greece or post-coup Ukraine. As Germany's Wolfgang Schäuble said, "democracy doesn't
count." Neoliberals want the kind of government that will create gains for the banks, not
necessarily for se the economy at large. Such governments basically are oligarchic. Once high
finance takes over governments as a means of exploiting the 99 Percent, it's all for active
government policy – for itself.
Aristotle talked about this more than 2,000 years ago. He said that democracy is the stage
immediately proceeding oligarchy. All economies go through three stages repeating a cycle: from
democracy into oligarchy, and then the oligarchs make themselves hereditary. Today, Jeb Bush
wants to abolish the estate tax to help the emerging power elite make itself into a hereditary
aristocracy. Then, some of the aristocratic families will fight among themselves, and take the
public into their camp and promote democracy, so you have the cycle going all over again.
That's the kind of cycle we're having now, just as in ancient Athens. It's a transition from
democracy to oligarchy on its way to becoming an aristocracy of the power elite.
ED: I want to return to the book in a second but I have to interject that one particular
economist hasn't been mentioned yet: Karl Marx. It's an inversion of Marx as well, because
Marx's labor theory of value was that that value ultimately is derived from labor. Parasitic
finance capital is the opposite of that. It may increase prices without value.
MH: Correct, but I should point out that there's often a misinterpretation of the context in
which the labor theory of value was formulated and refined. The reason why Marx and the other
classical economists – William Petty, Smith, Mill and the others – talked about the
labor theory of value was to isolate that part of price that wasn't value. Their purpose was to
define economic rent as something that was not value. It was extraneous to production, and was
a free lunch – the element of price that is charged to consumers and others that has no
basis in labor, no basis in real cost, but is purely a monopoly price or return to privilege.
This was mainly a survival of the feudal epoch, above all of the landed aristocracy who were
the heirs of the military conquers, and also the financial sector of banking families and their
heirs.
The aim of the labor theory of value was to divide the economy between excessive price
gouging and labor. The objective of the classical economists was to bring prices in line with
value to prevent a free ride, to prevent monopolies, to prevent an absentee landlord class so
as to free society from the legacy of feudalism and the military conquests that carved up
Europe's land a thousand years ago and that still underlies our property relations.
The concept and theory of economic rent
ED: That's a great point, and it leads me into the next issue that I want to touch on. You've
mentioned the term already a number of times: the concept of economic rent. We all know rent in
terms of what we have to pay every month to the landlord, but we might not think about what it
means conceptually. It's one of the fabrics with which you've woven this book together. One of
the running themes, rent extraction, and its role in the development of what we've now termed
this parasitic relationship. So, explain for laymen what this means – rent extraction
– and how this concept evolved.
MH: To put the concept of economic rent in perspective, I should point out when I went to
get my PhD over a half a century ago, every university offering a graduate economics degree
taught the history of economic thought. That has now been erased from the curriculum. People
get mathematics instead, so they're unexposed to the concept of economic rent as unearned
income. It's a concept that has been turned on its head by "free market" ideologues who use
"rent seeking" mainly to characterize government bureaucrats taxing the private sector to
enhance their authority – not free lunchers seeking to untax their unearned income. Or,
neoclassical economists define rent as "imperfect competition" (as if their myth of "perfect
competition" really existed) stemming from "insufficient knowledge of the market," patents and
so forth.
Most rent theory was developed in England, and also in France. English practice is more
complex than America. The military conquers imposed a pure groundrent fee on the land, as
distinct from the building and improvements. So if you buy a house from a seller in England,
somebody else may own the land underneath it. You have to pay a separate rent for the land. The
landlord doesn't do anything at all to collect land rent, that's why they call them rentiers or
coupon clippers. In New York City, for example, Columbia University long owned the land
underneath Rockefeller Center. Finally they sold it to the Japanese, who lost their shirt. This
practice is a carry-over from the Norman Conquest and its absentee landlord class.
The word "rent" originally was French, for a government bond (rente). Owners received a
regular income every quarter or every year. A lot of bonds used to have coupons, and you would
clip off the coupon and collect your interest. It's passively earned income, that is, income
not actually earned by your own labor or enterprise. It's just a claim that society has to pay,
whether you're a government bond holder or whether you own land.
This concept of income without labor – but simply from privileges that had been made
hereditary – was extended to the ideas of monopolies like the East India Company and
other trade monopolies. They could produce or buy goods for, let's say, a dollar a unit, and
sell them for whatever the market will bear – say, $4.00. The markup is "empty pricing."
It's pure price gouging by a natural monopoly, like today's drug companies.
To prevent such price gouging and to keep economies competitive with low costs of living and
doing business, European kept the most important natural monopolies in the public domain: the
post office, the BBC and other state broadcasting companies, roads and basic transportation, as
well as early national airlines. European governments prevented monopoly rent by providing
basic infrastructure services at cost, or even at subsidized prices or freely in the case of
roads. The guiding idea is for public infrastructure – which you should think of as a
factor of production along with labor and capital – was to lower the cost of living and
doing business.
But since Margaret Thatcher led Britain down the road to debt peonage and rent serfdom by
privatizing this infrastructure, she and her emulators other countries turned them into
tollbooth economies. The resulting economic rent takes the form of a rise in prices to cover
interest, stock options, soaring executive salaries and underwriting fees. The economy ends up
being turned into a collection of tollbooths instead of factories. So, you can think of rent as
the "right" or special legal privilege to erect a tollbooth and say, "You can't get television
over your cable channel unless you pay us, and what we charge you is anything we can get from
you."
This price doesn't have any relation to what it costs to produce what they sell. Such
extortionate pricing is now sponsored by U.S. diplomacy, the World Bank, and what's called the
Washington Consensus forcing governments to privatize the public domain and create such
rent-extracting opportunities.
In Mexico, when they told it to be more "efficient" and privatize its telephone monopoly,
the government sold it to Carlos Slim, who became one of the richest people in the world by
making Mexico's phones among the highest priced in the world. The government provided an
opportunity for price gouging. Similar high-priced privatized phone systems plague the
neoliberalized post-Soviet economies. Classical economists viewed this as a kind of theft. The
French novelist Balzac wrote about this more clearly than most economists when he said that
every family fortune originates in a great theft. He added that this not only was undiscovered,
but has come taken for granted so naturally that it just doesn't matter.
If you look at the Forbes 100 or 500 lists of each nation's richest people, most made their
fortunes through insider dealing to obtain land, mineral rights or monopolies. If you look at
American history, early real estate fortunes were made by insiders bribing the British Colonial
governors. The railroad barrens bribed Congressmen and other public officials to let them
privatize the railroads and rip off the country. Frank Norris's The Octopus is a great novel
about this, and many Hollywood movies describe the kind of real estate and banking rip-offs
that made America what it is. The nation's power elite basically begun as robber barons, as
they did in England, France and other countries.
The difference, of course, is that in past centuries this was viewed as corrupt and a crime.
Today, neoliberal economists recommend it as the way to raise "productivity" and make countries
wealthier, as if it were not the road to neofeudal serfdom.
The Austrian School vs. government regulation and pro-labor policies
ED: I don't want to go too far off on a tangent because we have a lot to cover specific to your
book. But I heard an interesting story when I was doing a bit of my own research throughout the
years about the evolution of economic thought, and specifically the origins of the so-called
Austrian School of Economics – people like von Mises and von Hayek. In the early 20th
century they were essentially, as far as I could tell, creating an ideological framework in
which they could make theoretical arguments to justify exorbitant rent and make it seem almost
like a product of natural law – something akin to a phenomenon of nature.
MH: The key to the Austrian School is their hatred of labor and socialism. It saw the danger
of democratic government spreading to the Habsburg Empire, and it said, "The one thing we have
to stop is democracy. Their idea of a free market was one free of democracy and of democratic
government regulating and taxing wealthy rentiers. It was a short step to fighting in the
streets, using murder as a "persuader" for the particular kind of "free markets" they wanted
– a privatized Thatcherite deregulated kind. To the rentiers they said: "It's either our
freedom or that of labor."
Kari Polanyi-Levitt has recently written about how her father, Karl Polanyi, was confronted
with these right-wing Viennese. His doctrine was designed to rescue economics from this school,
which makes up a fake history of how economics and civilization originated.
One of the first Austrian's was Carl Menger in the 1870s. His "individualistic" theory about
the origins of money – without any role played by temples, palaces or other public
institutions – still governs Austrian economics. Just as Margaret Thatcher said, "There's
no such thing as society," the Austrians developed a picture of the economy without any
positive role for government. It was as if money were created by producers and merchants
bartering their output. This is a travesty of history. All ancient money was issued by temples
or public mints so as to guarantee standards of purity and weight. You can read Biblical and
Babylonian denunciation of merchants using false weights and measures so see why money had to
be public. The major trading areas were agora spaces in front of temples, which kept the
official weights and measures. And much exchange was between the community's families and the
public institutions.
Most important, money was brought into being not for trade (which was conducted mainly on
credit), but for paying debts. And most debts were owed to the temples and palaces for pubic
services or tribute. But to the Austrians, the idea was that anything the government does to
protect labor, consumers and society from rentiers and grabbers is deadweight overhead.
Above all, they opposed governments creating their own money, e.g. as the United States did
with its greenbacks in the Civil War. They wanted to privatize money creation in the hands of
commercial banks, so that they could receive interest on their privilege of credit creation and
also to determine the allocation of resources.
Today's neoliberals follow this Austrian tradition of viewing government as a burden,
instead of producing infrastructure free of rent extraction. As we just said in the previous
discussion, the greatest fortunes of our time have come from privatizing the public domain.
Obviously the government isn't just deadweight. But it is becoming prey to the financial
interests and the smashers and grabbers they have chosen to back.
ED: You're right, I agree 100%. You encounter this ideology even in the political
sociological realm like Joseph Schumpeter, or through the quasi-economic realm like von Hayek
in The Road to Serfdom.
MH: Its policy conclusion actually advocates neo-serfdom. Real serfdom was when families had
to pay all their income to the landlords as rent. Centuries of classical economists backed
democratic political reform of parliaments to roll back the landlords' power (and that of
bankers). But Hayek claimed that this rollback was the road to serfdom, not away from it. He
said democratic regulation and taxation of rentiers is serfdom. In reality, of course, it's the
antidote.
ED: It's the inversion you were talking about earlier. We're going to go into a break here
in a minute but before we do I want to touch on one other point that is important in the book,
again the book, Killing the Host: How Financial Parasites and Debt Bondage Destroyed the Global
Economy, available from CounterPunch – very important that people pick up this book.
MH: And from Amazon! You can get a hard copy for those who don't want to read on
computers.
Finance as the new mode of warfare
ED: Yes, and on amazon as well, thank you. This issue that I want to touch on before we go to
the break is debt. On this program a couple of months ago I had the journalist John Pilger. He
and I touched on debt specifically as a weapon, and how it is used as a weapon. You can see
this in the form of debt enslavement, if you want to call it that, in postcolonial Africa. You
see the same thing in Latin America where, Michael, I know you have a lot of experience in
Latin America in the last couple of decades. So let's talk a little bit, if we could, before we
go to the break, about debt as a weapon, because I think this is an important concept for
understanding what's happening now in Greece, and is really the framework through which we have
to understand what we would call 21st-century austerity.
MH: If you treat debt as a weapon, the basic idea is that finance is the new mode of
warfare. That's one of my chapters in the book. In the past, in order to take over a country's
land and its public domain, its basic infrastructure and its mineral resources, you had to have
a military invasion. But that's very expensive. And politically, almost no modern democracy can
afford a military invasion anymore.
So the objectives of the financial sector – of Wall Street, the City of London or
Frankfurt in Germany – is to obtain the land. You can look at what's happening in Greece.
What its creditors, the IMF and European Central Bank (ECB) want are the Greek islands, and
they want the gas rights in the Aegean Sea. They want whatever buildings and property there is,
including the museums.
Matters are not so much different in the private sector. If you can get a company or
individual into debt, you can strip away the assets they have when they can't pay. A
Hayek-style government would block society from protecting itself against such asset stripping.
Defending "property rights" of creditors, such "free market" ideology deprives the rest of the
economy – businesses, individuals and public agencies. It treats debt writedowns as the
road to serfdom, not the road away from debt dependency.
In antiquity, private individuals obtained labor services by making loans to families in
need, and obliging their servant girls, children or even wives to work off the loan in the form
of labor service. My Harvard-based archaeological group has published a series of five books
that I co-edited, most recently Labor in the
Ancient World . Creditors (often palace infrastructure managers or collectors) would get
people into bondage. When new Bronze Age rulers started their first full year on the throne, it
was customary to declare an amnesty to free bond servants and return them to their families,
and annul personal debts as well as to return whatever lands were forfeited. So in the Bronze
Age, debt serfdom and debt bondage was only temporary. The biblical Jubilee law was a literal
translation of Babylonian practice that went back two thousand years.
In America, in colonial times, sharpies (especially from Britain) would lend farmers money
that they knew the farmer couldn't pay, then they would foreclose just before the crops came
in. Right now you have corporate raiders, who are raiding whole companies by forcing them into
debt, and then smashing and grabbing. You now have the IMF, European Central Bank and
Washington Consensus taking over whole countries like Ukraine. The tactic is to purposely lend
them the money that clearly cannot be repaid, and say, "Oh you cannot pay? Well, we're not
going to take a loss. We have a solution." The solution is to sell off public enterprises, land
and natural resources. In Greece's case, 50 billion euros of its property, everything that it
has in the public sector. The country is to be sold off to foreigners (including domestic
oligarchs working out of their offshore accounts). Debt leverage is thus the way to achieve
what it took armies to win in times past.
ED: Exactly. One last point on that as well. I want to get your comment on and we see this
in post-colonial Africa, especially when the French and the British had to nominally give up
control of their colonies. You saw debt become an important tool to maintain hegemony within
their spheres of influence. Of course, asset stripping and seizing control, smashing and
grabbing was part of that. But also it is the debt servicing payments, it is the cycle of debt
repayment and taking new loans on top of original loans to service the original loans –
this process this cycle is also really an example of this debt servitude or debt bondage.
MH: That's correct, and mainstream economics denies any of this. It began with Ricardo,
who's brothers were major bankers at the time, and he himself was the major bank lobbyist in
England. Right after Greece won its independence from Turkey, the Ricardo brothers made a
rack-renting loan to Greece at far below par (that is, below the face value that Greece
committed itself to pay). Greece tried to pay over the next century, but the terms of the loan
ended up stripping and keeping it on the edge of bankruptcy well into the 20th century.
But Ricardo testified before Parliament that there could be no debt-servicing problem. Any
country, he said, could repay the debts automatically, because there is an automatic
stabilization mechanism that enables every country to be able to pay. This is the theory that
underlines Milton Friedman and the Chicago School of monetarism: the misleading idea that debt
cannot be a problem.
That's what's taught now in international trade and financial textbooks. It's false
pleading. It draws a fictitious "What If" picture of the world. When criticized, the authors of
these textbooks, like Paul Samuelson, say that it doesn't matter whether economic theory is
realistic or not. The judgment of whether an economic theory is scientific is simply whether it
is internally consistent. So you have these fictitious economists given Nobel Prizes for
promoting an inside out, upside down version of how the global economy actually works.
ED: One other thing that they no longer teach is what used to be called political economy.
The influence of the Chicago School, neoliberalism and monetarism has removed classical
political economy from academia, from the Canon if you will. Instead, as you said, it's all
about mathematics and formulas that treat economics like a natural science, when in fact it
really should be more of a historically grounded social science.
MH: The formulas that they teach don't have government in them,. If you have a theory that
everything is just an exchange, a trade, and that there isn't any government, then you have a
theory that has nothing to do with the real world. And if you assume that the environment
remains constant instead of using economics to guide public and national policy, you're using
economics for the opposite of what the classical economists did. Adam Smith, Mill, Marx, Veblen
– they all developed their economic theory to reform the world. The classical economists
were reformers. They wanted to free society from the legacy of feudalism – to get rid of
land rent, to take money creation and credit creation into the public domain. Whatever their
views, whether they were right wingers or left wingers, whether they were Christian socialists,
Ricardian socialists or Marxian socialists, all the capitalist theorists of the 19th century
called themselves socialists, because they saw capitalism as evolving into socialism.
But what you now have, since World War I, is a reaction against this, stripping away of the
idea that governments have a productive role to play. If government is not the director and
planner of the economy, then who is? It's the financial sector. It's Wall Street. So the
essence of neoliberalism that you were mentioning before, is indeed a doctrine of central
planning. It states that the central planning should be done by Wall Street, by the financial
sector.
The problem is, what is the objective of central planning by Wall Street? It's not to raise
living standards, and it's not to increase employment. It is to smash and grab. That is the
society we're in now.
A number of chapters of my book (I think five), describe how the Obama administration has
implemented this smash and grab, doing the exact opposite of what he promised voters. Obama has
implemented the Rubin-omics [Robert Rubin] doctrine of Wall Street to force America into what
looks like a chronic debt depression.
ED: Exactly right. I couldn't agree more. Let's take a short break and we'll continue the
discussion. Again, I'm chatting with Michael Hudson about his new book, Killing the Host: How
Financial Parasites and Debt Bondage Destroy the Global Economy.
The case of Latvia: Is it a success story, or a neoliberal disaster?
ED: I want to go back to some of the important issues that we introduced or alluded to in the
first part of our discussion. As I was mentioning to you off-air, a couple years ago I twice
interviewed your colleague Jeffrey Sommers, with whom you've worked and co-published a number
of papers. We talked a lot about many of the same issues that you and I are touching on.
Specifically Sommers – and I know you as well – did a lot of work in Latvia, a
country in the former Soviet space in Eastern Europe on the Baltic Sea. Your book has a whole
chapter on it, as well as references throughout the book.
So let's talk about how Latvia serves as a template for understanding the austerity model.
It is touted by technocrats of the financial elite as a major success story – how
austerity can work. I find it absurd on so many different levels. So tell us what happened in
Latvia, what the real costs were, and why neoliberals claim it as a success story.
MH: Latvia is the disaster story of the last two decades. That's why I took it as an object
lesson. You're right, it was Jeff Sommers who first brought me over to Latvia. I then became
Director of Economic Research and Professor of Economics at the Riga Graduate School of
Law.
When Latvia was given its independence when the Soviet Union broke up in 1991, a number of
former Latvians had studied at George Washington University, and they brought neoliberalism
over there – the most extreme grabitization and de-industrialization of any country I
know. Latvians, Russians and other post-Soviet countries were under the impression that U.S.
advisors would help them become modernized like the U.S. economy – with high living and
consumption standards. But what they got was advice to emulate American experience. It got
something just the opposite – how to enable foreign investors and bankers to carve it up,
dismantle its industry and become a bizarre neoliberal experiment.
You may remember the Republican presidential candidate Steve Forbes, who in 2008 proposed a
flat tax to replace progressive taxation. The idea never could have won in the United States,
but Latvia was another story. The Americans set the flat tax at an amazingly low 12 percent of
income – and no significant property tax on real estate or capital gains. It was a
financial and real estate dream, and created a classic housing and financial bubble.
Jeff and I visited the head of the tax authority, who told us that she was appointed because
she had done her PhD dissertation on Latvia's last land value assessment – which was in
1917. They hadn't increased the assessments since then, because the Soviet economy didn't have
private land ownership and didn't even have a concept of rent-of-location for planning
purposes. (Neither did Russia.)
Latvia emerged from the Soviet Union without any debt, and also with a lot of real estate
and a highly educated population. But its political insiders turned over most of the government
enterprises to themselves. Latvia had been a computer center and also the money-laundering
center of the Soviet leadership already in the late 1980s (largely as a byproduct of Russian
oil exports through Ventspils), and Riga remains the money-laundering city for today's
Russia.
Privatizing housing and other property led to soaring real estate prices. But this bubble
wasn't financed by domestic banks. The Soviet Union didn't have private banks, because the
government had simply created the credit to fund the economy as needed. The main banks in a
position to lend to Latvia were Swedish and other Scandinavian banks. They pounce on the
lending opportunities to opened up by an entire nation whose real estate had almost no tax on
it. The result was the biggest real estate bubble in the world, along with Russia's. Latvians
found that in order to buy housing of their own, they had to go deeply into debt. Assets were
only given to insiders, not to the people.
A few years ago there was a reform movement in Latvia to stop the economic bleeding. Jeff
and I brought over American property appraisers and economists. We visited the leading bank,
regulatory agencies. Latvia was going broke because its population had to pay so much for real
estate. And it was under foreign-exchange pressure because debt service on its mortgage loans
was being paid to the Swedish and foreign banks. The bank regulator told us that her problem
was that her agency's clients are the banks, not the population. So the regulators thought of
themselves as working for the banks, even though they were foreign-owned. She acknowledged that
the banks were lending much more money than property actually was worth. But her regulatory
agency had a solution: It was to have not only the buyer be obligated to pay the mortgage, but
also the parents, uncles or aunts. Get the whole family involved, so that if the first signer
couldn't pay the cosigners would be obligated.
That is how Latvia stabilized its banking system. But it did so by destabilizing the
economy. The result is that Latvia has lost 20 percent of its population over the past decade
or so. For much the same reasons that Greece has lost 20 percent of its population, with
Ireland in a similar condition. The Latvians have a joke "Will the last person who leaves in
2020 please turn off the lights at the airport."
The population is shrinking because the economy is being run by looters, domestic and
foreign. I was shown an island in the middle of the Daugava river that runs to the middle of
Latvia, and was sold for half a million dollars. Our appraisers said that it's worth half a
billion dollars, potentially. There are no plans to raise the property tax to recapture these
gains for the country – so that it can lower its heaviest labor taxes in the world,
nearly half each paycheck for income tax and "social security" spending so that finance and
real estate won't be taxed.
A few years ago, I was at the only meeting of INET (George Soros's group) that I was invited
to, and in the morning one of the lead talks was on how Latvia was a model that all countries
could follow to balance the budget. Latvia has balanced the budget by cutting back public
spending, reducing employment and lowering wage levels while indebting its population and
forcing to immigrate. The neoliberal strategy is to balance by selling off whatever remains in
the public domain. Soros funded a foundation there (like similar ones he started in other
post-Soviet countries) to get a part of the loot.
These giveaways at insider prices have created a kleptocracy obviously loyal to neoliberal
economics. I go into the details in my chapter. It's hard to talk about it without losing my
temper, so I'm trying to be reasonable but it's a country that was destroyed and smashed. That
was the U.S. neoliberal model alternative to post-Stalinism. It wasn't a new American economy.
It was a travesty.
Why then does the population continue to vote for these neoliberals? The answer is, the
neoliberals say, the alternative is Stalinism. To Latvians, this means exile, deportations and
memories of the old pro-Russian policy. The Russian-speaking parties are the main people
backers of a social democracy party. But neoliberals have merged with Latvian nationalists.
They are not only making the election over resentment against the Russian-speaking population,
but the fact that many are Jewish.
I find it amazing to see someone who is Jewish, like George Soros, allying with anti-Semitic
and even neo-Nazi movements in Latvia, Estonia, and most recently, of course, Ukraine. It's an
irony that you could not have anticipated deductively. If you had written this plot in a
futuristic novel twenty years ago, no one would have believed that politics could turn more on
national and linguistic identity politics than economic self-interest. The issue is whether you
are Latvian or are Russian-Jewish, not whether you want to untax yourself and make? Voting is
along ethnic lines, not whether Latvians really want to be forced to emigrate to find work
instead of making Latvia what it could have been: an successful economy free of debt. Everybody
could have gotten their homes free instead of giving real estate only to the kleptocrats.
The government could have taxed the land's rental value rather than letting real estate
valuation be pledged to pay banks – and foreign banks at that. It could have been a
low-cost economy with high living standards, but neoliberals turned in into a smash and grab
exercise. They now call it an idea for other nations to follow. Hence, the U.S.-Soros strategy
re Ukraine.
ED: That's an excellent point. It's a more extreme case for a number of reasons in Ukraine
– the same tendency. They talk about, "Putin and his gaggle of Jews." That's the idea,
that Putin and the Jews will come in and steal everything – while neoliberals plan to
appropriate Ukraine's land and other resources themselves. In this intersection between
economics and politics, Latvia, Lithuania, Estonia – the Baltic States of the former
Soviet Union – are really the front lines of NATO expansion. They were some of the first
and most pivotal countries brought into the NATO orbit. It is the threat of "Russian
aggression" via the enclave at Kaliningrad, or just Russia in general. That is the threat they
use to justify the NATO umbrella, and simultaneously to justify continuing these economic
policies. So in many ways Russia serves as this convenient villain on a political, military and
economic level.
MH: It's amazing how the popular press doesn't report what's going on. Primakov, who died a
few months ago, said during the last crisis a few years ago that Russia has no need to invade
Latvia, because it owns the oil export terminals and other key points. Russia has learned to
play the Western game of taking countries over financially and acquiring ownership. Russia
doesn't need to invade to control Latvia any more than America needs to invade to control Saudi
Arabia or the Near East. If it controls exports or access to markets, what motive would it have
to invade? As things stand, Russia uses Latvia it as a money laundering center.
The same logic applies to Ukraine today. The idea is that Russia is expansionary in a world
where no one can afford to be militarily expansionary. After Russia's disaster in Afghanistan,
no country in the world that's subject to democratic checks, whether it's America after the
Vietnam War or Russia or Europe, no democratic country can invade another country. All they can
do is drop bombs. This can't capture a country. For that you need major troop commitments.
In the trips that I've taken to Russia and China, they're in a purely defensive mode.
They're wondering why America is forcing all this. Why is it destroying the Near East, creating
a refugee problem and then telling Europe to clean up the mess it's created? The question is
why Europe is willing to keep doing this. Why is Europe part of NATO fighting in the Near East?
When America tells Europe, "Let's you and Russia fight over Ukraine," that puts Europe in the
first line of fire. Why would it have an interest in taking this risk, instead of trying to
build a mutual economic relationship with Russia as seemed to be developing in the 19th
century?
ED: That's the ultimate strategy that the United States has used – driving a wedge
between Russia and Europe. This is the argument that Putin and the Russians have made for a
long time. You can see tangible examples of that sort of a relationship even right now if you
look at the Nord Stream pipeline connecting Russian energy to German industrial output –
that is a tangible example of the economic relationship, that is only just beginning between
Russia and Europe. That's really what I think the United States wanted to put the brakes on, in
order to be able to maintain hegemony. The number one way it does that is through NATO.
MH: It's not only put the brakes on, it has created a new iron curtain. Two years ago,
Greece was supposed to privatize 5 billion euros of its public domain. Half of this, 2.5
billion, was to be the sale of its gas pipeline. But the largest bidder was Gazprom, and
America said, "No, you can't accept the highest bidder if its Russian." Same thing in Ukraine.
It has just been smashed economically, and the U.S. says, "No Ukrainian or Russian can buy into
the Ukrainian assets to be sold off. Only George Soros and his fellow Americans can buy into
this." This shows that the neoliberalism of free markets, of "let's everybody pay the highest
price," is only patter talk. If the winner in the rigged market is not the United States, it
sends in ISIS or Al Qaeda and the assassination teams, or backs the neo-Nazis as in
Ukraine.
So, we're in a New Cold War. Its first victims, apart from Southern Europe, will be the rest
of Europe. You can imagine how this is just beginning to tear European politics apart, with
Germany's Die Linke and similar parties making a resurgence.
The Troika and IMF doctrine of austerity and privatization
ED: I want to return us back to the book and some other key issues that you bring up that I
think are most important. One that we hear in the news all the time, and you write extensively
about it in the book, is the Troika. That's the IMF, the European Central Bank (ECB) and the
European Commission. It could be characterized as the political arm of finance capital in
Europe, one that imposes and manages austerity in the interest of the ruling class of finance
capital, as I guess we could call them. These are technocrats, not academically trained
economists primarily (maybe with a few exceptions), but I want you to talk a bit about how the
Troika functions and why it's so important in what we could call this crisis stage of
neoliberal finance capitalism.
MH: Basically, the Troika is run by Frankfurt bankers as foreclosure and collection agents.
If you read recently what former Greek finance minister Yanis Varoufakis has written, and his
advisor James Galbraith, they said that when Syriza was elected in January, they tried to
reason with the IMF. But it said that it could only do what the European Central Bank said, and
that it would approve whatever they decided to do. The European Central Bank said that its role
wasn't to negotiate democracy. Its negotiators were not economists. They were lawyers. "All we
can say is, here's what you have to pay, here's how to do it. We're not here to talk about
whether this is going to bankrupt Greece. We're just interested in in how you're going to pay
the banks what they're owe. Your electric companies and other industry will have to go to
German companies, the other infrastructure to other investors – but not from Russia."
It's much like England and France divided up the Near East after World War I. There's a kind
of a gentlemen's agreement as to how the creditor economies will divide up Greece, carving it
up much like neighboring Yugoslavia to the north.
In 2001 the IMF made a big loan to Argentina (I have a chapter on Argentina too), and it
went bad after a year. So the IMF passed a rule, called the No More Argentinas rule, stating
that the Fund was not going to participate in a loan where the government obviously can not
pay.
A decade later came the Greek crisis of 2011. The staff found that Greece could not possibly
pay a loan large enough to bail out the French, German and other creditors. So there has to be
a debt write-down of the principal. The staff said that, and the IMF's board members agreed.
But its Managing Director, Strauss-Kahn wanted to run for the presidency of France, and most of
the Greek bonds were held by French banks. French President Sarkozy said "Well you can't win
political office in France if you stiff the French banks." And German Chancellor Merkel said
that Greece had to pay the German banks. Then, to top matters, President Obama came over to the
G-20 meetings and they said that the American banks had made such big default insurance
contracts and casino gambles betting that Greece would pay, that if it didn't, if the Europeans
and IMF did not bail out Greece, then the American banks might go under. The implicit threat
was that the U.S. would make sure that Europe's financial system would be torn to pieces.
ED: And Michael, I just want to clarify, I guess it's sort of a question: about what you're
talking about here in terms of Geithner and Obama coming in: These would be credit default
swaps and collateralized debt obligations?
MH: Yes. U.S. officials said that Wall Street had made so many gambles that if the French
and German banks were not paid, they would turn to their Wall Street insurers. The Wall Street
casino would go under, bringing Europe's banking system down with it. This prompted the
European Central Bank to say that it didn't want the IMF to be a part of the Troika unless it
agreed to take a subordinate role and to support the ECB bailout. It didn't matter whether
Greece later could pay or not. In that case, creditors would smash and grab. This lead the some
of the IMF European staff to resign, most notably Susan Schadler, and later to act as whistle
blowers to write up what happened.
The same thing happened again earlier this year in Greece. Lagarde said that the IMF doesn't
do debt reduction, but would give them a little longer to pay. Not a penny, not a euro will be
written down, but the debt will be stretched out and perhaps the interest rate will be lowered
– as long as Greece permits foreigners to grab its infrastructure, land and natural
resources.
The staff once again leaked a report to the Financial Times (and maybe also the Wall Street
Journal) that said that Greece couldn't pay, there's no way it can later sell off the IMF loan
to private bondholders, so any bailout would be against the IMF's own rules. Lagarde was
embarrassed, and tried to save face by saying that Germany has to agree to stretch out the
payments on the debt – as if that somehow would enable it to pay, while its assets pass
into foreign hands, which will remit their profits back home and subject Greece to even steeper
deflation.
Then, a few weeks ago, you have the Ukraine crisis and the IMF is not allowed to make loans
to countries that cannot pay. But now the whole purpose is to make loans to countries who can't
pay, so that creditors can turn around and demand that they pay by selling off their public
domain – and implicitly, force their population to emigrate.
ED: Also, technically they're not supposed to be making loans to countries that are at war,
and they're ignoring that rule as well.
MH: That's the second violation of IMF rules. At least in the earlier Greek bailout, Strauss
Kahn got around the "No More Argentinas" rule by having a new IMF policy that if a country is
systemically important, the IMF can lend it the money even if it can't pay, even though it's
not credit-worthy, if its default would cause a problem in the global financial system (meaning
a loss by Wall Street or other bankers). But Ukraine is not systemically important. It's part
of the Russian system, not the western system. Most of its trade is with Russia.
As you just pointed out, when Lagarde made the IMF's last Ukrainian loan, she said that she
hoped its economy would stabilize instead of fighting more war in its eastern export region.
The next day, President Poroshenko said that now that it had got the loan, it could go to war
against the Donbass, the Russian speaking region. Some $1.5 billion of the IMF loan was given
to banks run by Kolomoisky, one of the kleptocrats who fields his own army. His banks send the
IMF's gift abroad to his own foreign banks, using his domestic Ukrainian money to pay his own
army, allied with Ukrainian nationalists flying the old Nazi SS insignia fighting against the
Russian speakers. So in effect, the IMF is serving as an am of the U.S. military and State
Department, just as the World Bank has long been.
ED: I want to interject two points here for listeners who haven't followed it as closely.
Number one is the private army that you're talking about – the Right Sector which is
essentially a mercenary force of Nazis in the employ of Kolomoisky. They're also part of what's
now called the Ukrainian National Guard. This paramilitary organization that is being paid
directly by Kolomoisky. Number two – and this relates back to something that you were
saying earlier, Michael – that IMF loan went to pay for a lot of the military equipment
that Kiev has now used to obliterate the economic and industrial infrastructure of Donbass,
which was Ukraine's industrial heartland. So from the western perspective it's killing two
birds with one stone. If they can't strip the assets and capitalize on them, at least they can
destroy them, because the number one customer was Russia.
MH: Russia had made much of its military hardware in Ukraine, including its liftoff engines
for satellites. The West doesn't want that to continue. What it wants for its own investors is
Ukraine's land, the gas rights in the Black Sea, electric and other public utilities, because
these are the major tollbooths to extract economic rent from the economy. Basically, US/NATO
strategists want to make sure, by destroying Ukraine's eastern export industry, that Ukraine
will be chronically bankrupt and will have to settle its balance-of-payments deficit by selling
off its private domain to American, German and other foreign buyers.
ED: Yes, that's Monsanto, and that's Hunter Biden on the Burisma board (the gas company).
It's like you said earlier, you wouldn't even believe it if someone would have made it up. It's
so transparent, what they're doing in Ukraine.
Financialization of pension plans and retirement savings
I want to switch gears a bit in the short time we have remaining, because I have two more
things I want to talk about. Referring back to this parasitical relationship on the real
economy, one aspect that's rarely mentioned is the way in which many regular working people get
swindled. One example that comes to my mind is the mutual funds and other money managers that
control what pension funds and lots of retirees invest in. Much of their savings are tied up in
heavily leveraged junk bonds and in places like Greece, but also recently in Puerto Rico which
is going through a very similar scenario right now. So in many ways, US taxpayers and
pensioners are funding the looting and exploitation of these countries and they're then
financially invested in continuing the destruction of these countries. It's almost like these
pensioners are human shields for Wall Street.
MH: This actually is the main theme of my book – financialization. Mutual funds are
not pension funds. They're different. But half a century ago a new term was coined: pension
fund capitalism, sometimes called pension fund socialism. Then we got back to Orwellian
doublethink when Pinochet came to power behind the natural alliance of the Chicago School with
Kissinger at the State Department. They immediately organized what they called labor
capitalism. n labor capitalism labor is the victim, not the beneficiary. The first thing they
did was compulsory setting aside of wages in the form of ostensible pension funds controlled by
the employers. The employers could do whatever they wanted with it. Ultimately they invested
their corporate pension funds in their own stocks or turned them over to the banks, around
which their grupo conglomerates were organized. They then simply drove the businesses with
employee pension funds under, wiping out the pension fund liabilities – after moving the
assets into their captive banks. Businesses were left as empty corporate shells.
Something similar happened in America a few years ago with the Chicago Tribune. Real estate
developer Sam Zell borrowed money, bought the Tribune, using the Employee Stock Ownership Plan
(ESOP) essentially to pay off the bondholders. He then drove/looted the Tribune into bankruptcy
and wiped out the stockholders. Employees brought a fraudulent conveyance suit.
Already fifty years ago, critics noted that about half of the ESOPs are wiped out, because
they're invested by the employers, often in their own stock. Managers give themselves stock
options, which are given value by employee purchases. Something similar occurs with pension
funds in general. Employee wages are paid into pension funds, which bid up the stock prices in
general. On an economy-wide basis, employees are buying the stock that managers give
themselves. That's pension fund capitalism.
The underlying problem with this kind of financialization of pensions and retirement savings
is that modern American industry is being run basically for financial purposes, not for
industrial purposes. The major industrial firms have been financialized. For many years General
Motors made most of its profits from its financial arm, General Motors Acceptance Corporation.
Likewise General Electric. When I was going to school 50 years ago, Macy's made most of its
money not by selling products, but by getting customers to use its credit cards. In effect, it
used its store to get people to use its credit cards.
Last year, 92% of the earnings of the Fortune 100 companies were used for stock buy-backs --
corporations buying back their stock to support its price – or for dividend payouts, also
to increase the stock's price (and thus management bonuses and stock options). The purpose of
running a company in today's financialized world is to increase the price of the stock, not to
expand the business. And who do they sell the stock to? Essentially, pension funds.
There's a lot of money coming in. I don't know if you remember, but George W. Bush wanted to
privatize Social Security. The idea was to spend all of its contributions – the 15+% that
FICA withholds from workers paychecks every month – into the stock market. This would
fuel a giant stock market boom. Money management companies, the big banks, would get an
enormous flow of commissions, and speculators would get rich off the inflow. It would make
billionaires into hundred-billionaires. All this would soar like the South Sea Bubble, until
the American population began to age – or, more likely, begin to be unemployed. At that
point the funds would begin to sell the stocks to pay retirees. This would withdraw money from
the stock market. Prices would crash as speculators and insiders sold out, wiping out the
savings that workers had put into the scheme.
The basic idea is that when Wall Street plays finance, the casino wins. When employees and
pension funds play the financial game, they lose and the casino wins.
ED: Right, and just as an example for listeners – to make what Michael was just
talking about it even more real – if we think back to 2009 and the collapse of General
Motors, it was not General Motors automotive manufacturing that was collapsing. It was GMAC,
their finance arm, which was leveraged on credit default swaps, collateralized debt obligations
and similar financial derivatives – what they call exotic instruments. So when Obama
comes in and claimed that he "saved General Motors," it wasn't really that. He came in for the
Wall Street arm of General Motors.
Obama's demagogic role as Wall Street shill for the Rubinomics gang
MH: That's correct. He was the Wall Street candidate, promoted by Robert Rubin, who was
Clinton's Treasury Secretary. Basically, American economic policies can run by a combination of
Goldman Sachs and Citigroup, often interchangeably.
ED: This was demonstrated very clearly in the first days of Obama taking office. Who does he
meet with to talk about the financial crisis? He invites the CEOs of Goldman Sachs and JP
Morgan, Bank of America, Citi and all of the rest of them. They're the ones who come to the
White House. It's been written about in books, in the New Yorker and elsewhere. Obama basically
says, "Don't worry guys, I got this."
MH: Ron Suskind wrote this. He said that Obama said, "I'm the only guy standing between you
and the pitchforks. Listen to me: I can basically fool them." (I give the actual quote in my
book.) The interesting thing is that the signs of this meeting were all erased from the White
House website, but Suskind has it in his book. Obama emerges as one of the great demagogues of
the century. He may be even worse than Andrew Jackson.
ED: So much of it is based on obvious policies and his actions. The moment he came to power
was a critical moment when action was needed. Not only did he not take the right action, he did
exactly what Wall Street wanted. In many ways we can look back to 2008 when he was championing
the TARP, the bailout, and all the rest of that. None of that would have been possible without
Obama. That's something that Democrats like to avoid in their conversations.
MH: That's exactly the point. It was Orwellian rhetoric. He ran as the candidate of Hope and
Change, but his real role was to smash hope and prevent change. By keeping the debts in place
instead of writing them down as he had promised, he oversaw the wrecking of the American
economy.
He had done something similar in Chicago, when he worked as a community organizer for the
big real estate interests to tear up the poorer neighborhoods where the lower income Blacks
lived. His role was to gentrify them and jack up property prices to move in higher-income
Blacks. This made billions for the Pritzker family. So Penny Pritzker introduced him to Robert
Rubin. Obama evidently promised to let Rubin appoint his cabinet, so they appointed the vicious
anti-labor Rahm Emanuel, now Chicago's mayor, as his Chief of Staff to drive any Democrat to
the left of Herbert Hoover out of the party. Obama essentially pushed the Democrats to the
right, as the Republicans gave him plenty of room to move rightward and still be the "lesser
evil."
So now you have people like Donald Trump saying that he's for what Dennis Kucinich was for:
a single payer healthcare program. Obama fought against this, and backed the lobbyists of the
pharmaceutical and health insurance sectors. His genius is being able to make most voters
believe that he's on their side when he's actually defending the Wall Street special interests
that were his major campaign contributors.
ED: That's true. You can see that in literally every arena in which Obama has taken action.
From championing so-called Obamacare, which is really a boon for the insurance industry, to the
charter schools to privatize public education and also become a major boon for Wall Street, for
Pearson and all these major education corporations. In terms of real estate, in the
gentrification, all the rest. Literally every perspective, every angle from which you look at
Obama, he is a servant of finance capital of investors, not of the people. And that's what the
Democratic Party has become, delivering its constituency to Wall Street.
A left-wing economic alternative
MH: So here's the problem: How do we get the left to realize this? How do we get it to talk
about economics instead of ethnic identity and sexual identity and culture alone? How do we get
the left to do what they were talking about a century ago – economic reform and how to
take the side of labor, consumers and debtors? How do we tell the Blacks that it's more
important to get a well paying job? That's the way to gain power. I think Deng said: "Black
cat, white cat, it doesn't matter as long as it catches mice." How do we say "Black president,
white president, it doesn't matter, as long as they give jobs for us and help our community
economically?"
ED: I think that's important and I want to close with this issue: solutions. One of the
things I appreciate in reading your book is that it is broken up into sections. The final
section, I think, is really important. You titled it: "There Is An Alternative." That is of
course a reference to Margaret Thatcher's TINA (There Is No Alternative). That ideology and
mindset took over the left, or at least the nominally left-wing parties. So you're saying that
there is an alternative. In that section you propose a number of important reforms. You argue
that they would restore industrial prosperity. Now, I'm not asking you to name all of them, to
run down the list, but maybe touch on a little bit of what you included, and why that's
important for beginning to build this alternative.
MH: There are two main aims that classical economists had 200 years ago. One was to free
society from debt. You didn't want people to have to spend their lives working off the debt,
whether for a home, for living or to get an education. Second, you wanted to fund industry, not
by debt but by equity. That is what the Saint-Simonians and France did. It's what German
banking was famous for before World War I. There was a debate in the English speaking
countries, especially in England saying that maybe England and the Allies might lose World War
I because the banks are running everything, and finance should be subordinated to fund
industry. It can be used to help the economy grow, not be parasitic.
But instead, our tax laws make debt service tax deductible. If a company pays $2 billion a
year in dividends, a corporate raider can buy it on credit and, if there's a 50% stock rate, he
can pay $4 billion to bondholders instead of $2 billion to stockholders. Over the past twenty
years the American stock market has become a vehicle for corporate raiding, replacing equity
with debt. That makes break-even costs much higher.
The other point I'm making concerns economic rent. The guiding idea of an economic and tax
system should be to lower the cost of living and doing business. I show what the average
American wage earner has to pay. Under the most recent federal housing authority laws, the
government guarantees mortgage loans that absorb up to 43% of family income. Suppose you pay
this 43% of income for your home mortgage, after the 15% of your wages set aside for Social
Security under FICA.
Instead of funding Social Security out of the general budget and hence out of what is still
progressive taxation, Congress has said that the rich shouldn't pay for Social Security; only
blue-collar workers should pay. So if you make over $115,000, you don't have to pay anything.
In addition to that 15% wage tax, about 20% ends up being paid for other taxes – sales
taxes, income taxes, and various other taxes that fall on consumers. And perhaps another 10%
goes for bank loans besides mortgages – credit card loans, student loans and other
debts.
That leaves only about 25% of what American families earn to be spent on goods and services
– unless they borrow to maintain their living standards. This means that if you would
give wage earners all of their food, all their transportation, all their clothing for nothing,
they still could not compete with foreign economies, because so much of the budget has to go
for finance, insurance and real estate (FIRE). That's why our employment is not going to
recover. That's why our living standards are not going to recover.
Even if wages do go up for some workers, they're going to have to pay it to the bank for
education loans, mortgage loans (or rent), bank debt and credit card debt, and now also for our
amazingly expensive and rent-extracting medical insurance and health care and medications. The
result is that if they try to join the middle class by getting higher education and buying a
home, they will spend the rest of their lives paying the banks. They don't end up keeping their
higher wages. They pay them to the banks.
ED: You don't have to tell me. I'm living that reality. Interestingly, in that final section
of your book you talk about alternatives, like a public banking option that many people have
discussed. You talk about the Social Security cap that you were just mentioning, and focus on
taxing economic rent. Some critics would suggest that these sorts of reforms are not going to
be able to salvage the capitalist model that is so ensconced in the United States. So I want to
give you a chance to sort of present that argument or maybe rebut it.
MH: I won't rebut that criticism, because it's right. Marx thought that it was the task of
industrial capitalism to free economies from the economic legacies of feudalism. He saw that
the bourgeois parties wanted to get rid of the "excrescences" of the industrial capitalist
marketplace. They wanted to get rid of the parasites, the landowners and usurious creditors.
Marx said that even if you get rid of the parasites, even if you socialize finance and land
that he dealt with in volume II and III of Capital, you're still going to have the Volume I
problem. You're still going to have the exploitation problem between employers and employees
– the labor/capital problem.
My point is that most academic Marxists and the left in general have focused so much on the
fight of workers and labor unions against employers that they tend to overlook that there's
this huge FIRE sector – Finance, Insurance, and Real Estate – tsunami is swamping
the economy. Finance is wrecking industry and government, along with labor. The reforms that
Marx expected the bourgeois parties to enact against rentiers haven't occurred. Marx was overly
optimistic about the role of industrial capitalism and industrialized banking to prepare the
ground for socialism.
This means that until you complete the task of freeing of society from feudalism –
corrosive banking and economic rent as unearned income – you can't solve the industrial
problems that Marx dealt with in Volume I. And of course even when you do solve them, these
problems of labor exploitation and markets will still exist.
ED: Yes, absolutely. Well we're out of time. I want to thank you for coming onto the
program. Listeners, you heard it. There's so much information to digest here. The book is
really brilliant, I think essential reading, required reading – Killing the Host: How
Financial Parasites and Debt Bondage Destroy the Global Economy, available through
CounterPunch, as well as on Amazon. Michael Hudson professor of economics at University of
Missouri Kansas City, his work is all over the place. Find it regularly on CounterPunch, as
well as on his website michael-hudson.com. Michael Hudson thanks so much for coming on
CounterPunch Radio.
MH: It's great to be here. It's been a wonderful discussion.
The key point is that financial industry needs to be strictly regulated and suppressed, because after a cirtain point it stage
coup d'�tat, banksters come to power and turn the industry into cancer for the society with it uncontrolled parasitic growth.
Notable quotes:
"... In economics, the financial sector is typically lumped in with the insurance sector and real estate (the financial portion of the real estate sector, not construction) sector. Together, the sectors are often abbreviated and called the FIRE sector. In this article I will talk mainly about the finance portion of the FIRE sector since it is by far the largest, most visible, and most corrupt. ..."
"... The job of the finance sector is simply to manage existing resources . It creates nothing. Therefore, the smaller the financial sector is the more real wealth there is for the rest of society to enjoy. The bigger the financial sector becomes the more money it siphons off from the productive sectors. ..."
"... Neither of these two friendly fellows actually does much, if anything, in the way of actual investing. Sure, they learn the lingo, dress sharply, and probably know more than the average Joe, but they don't call the shots. That happens at Big Bank HQ. ..."
"... Somewhere in the belly of the beast there is a gaggle of highly paid, largely worthless economists and market technicians. Using some combination of tea leaves, voodoo, crystal balls, and tarot cards, these guys come up with the selection of one-size-fits-most, happy-meal portfolios that clients will be invested in. Actually, scratch that. Portfolios aren't assembled using all kinds of mystical methods; they are assembled using cold hard cash. (It's the finance sector. Did you think they spoke a language other than green?) See, various mutual fund companies pay marketing fees and other dubiously legal payments to the advisory firms to get them to sell their funds. In 2010, mutual fund companies paid $3.5B in perfectly legal "pay to play" schemes to get their funds featured in various investment lineups. ..."
"... One significant source of profit for the financial sector has been exploiting public, taxpayer-owned infrastructure. It should be blatantly obvious that these deals are bad for citizens, as the fees charged to citizens for use of the asset must not only cover servicing costs and maintenance capital expenditures but must also generate profit for the firms buying the assets. ..."
"... As the financial sector funnels more and more resources into lobbying and bribes (let's face it, campaign contributions are nothing more than legal bribery), it has been able to strip an ever-greater amount of state-owned assets from the public. Public asset strip mining is one of the chief causes of the increasing profitability of the financial sector. ..."
Before I begin this article want to make the point that what I'm about to say doesn't apply to everyone in the industry. While
the average mutual fund, broker, wealth manager, and hedge fund charges high fees and delivers poor results it doesn't apply to everyone.
I know lots of good, honest hedge fund managers that charge reasonable fees. I know lots of wealth managers that act in their client's
best interest and don't gouge them on fees. Unfortunately these are the exceptions rather than the rule.
Over the past year or so, the issue of rising income inequality in the United States (and even worldwide) has come front and center.
Most of what I've read has focused on wages, union membership, unemployment, taxation, government subsidy, and executive pay issues.
There is one issue whose role I think is overlooked in the mainstream media: the role the financial sector plays in exacerbating
income inequality. In fact, I believe the financial sector is one of the prime causes, and at its current point is perhaps the greatest
parasite in human history. It is sucking wealth from the productive sectors of the economy at an unprecedented rate.
Before we go any further, I want to define the term "income inequality." When I use that term, I am referring to the fact that,
on average, the incomes and standard of living of American workers is not keeping pace with productivity. I'm also using the term,
in part, to explain why workers and executives in some parts of the economy are overpaid in relation to the benefits they provide.
What I am not doing is making a blanket statement that money should be taken away from successful, hardworking people and
given or "redistributed" to the lazy.
The Role of the Financial Sector
In economics, the financial sector is typically lumped in with the insurance sector and real estate (the financial portion
of the real estate sector, not construction) sector. Together, the sectors are often abbreviated and called the FIRE sector.
In this article I will talk mainly about the finance portion of the FIRE sector since it is by far the largest, most visible, and
most corrupt.
The problem is that the financial, insurance, and real estate (FIRE) sectors do not actually produce any goods or services. If
you go on Google Finance you'll see it divides the economy into ten sectors: energy, basic materials, industrials, cyclical consumer
goods, non-cyclical consumer goods, financials, healthcare, technology, telecommunications, and utilities.
The nine nonfinancial sectors all produce goods or services. For example, the energy sector companies drill for our oil and refine
it into gasoline (e.g., ExxonMobil); the basic materials sector mines our iron (BHP Billiton) and refines it into steel (Nucor);
the industrial sector produces the mining equipment (Caterpillar) used by the previously mentioned sectors; the cyclical consumer
goods sector produces our cars (Ford) or sells our everyday items (Wal-Mart); the non-cyclical consumer goods sector sells the things
we need no matter what, such as groceries (Safeway); the healthcare sector provides the medicines that heal us (Johnson & Johnson);
the technology sector gives us the computers and software we use (Apple); the telecommunications sector gives us the ability to communicate
(Verizon); and the utility sector gives us the power to run our homes and businesses (Duke Energy).
The financial sector? Well, according to Harvard professor Greg Mankiw, chief academic apologist for the financial sector, this
is what it's supposed to do:
Those who work in banking, venture capital, and other financial firms are in charge of allocating the economy's investment resources.
They decide, in a decentralized and competitive way, which companies and industries will shrink and which will grow.
The job of the finance sector is simply to manage existing resources . It creates nothing. Therefore, the smaller
the financial sector is the more real wealth there is for the rest of society to enjoy. The bigger the financial sector becomes the
more money it siphons off from the productive sectors.
The graph below shows how the financial sector has grown since 1960. The figures are shown as a percentage of investment (using
both gross and net investment).
Graphic source: Jacobin Magazine
As you can see, the financial sector has almost doubled or tripled in size since 1960. That means it is extracting double or triple
the amount of money from the real economy!
Just how much?
I want to go through several areas of the economy to show you how the financial sector is extracting money and offering no benefit.
The Grift in Your Retirement Plan
I want to start with the industry I work in, wealth management. When I started my business, I was cognizant of how investors were
ill served by the traditional model of wealth management and vowed to run my business differently. Unfortunately, a vast majority
of the financial industry has built an unrivaled apparatus for extracting huge sums of money from retirees and mom-and-pop investors.
Say, you're sitting on your couch, watching TV and thinking about retirement. You just got part of your inheritance and think
investing it for the future would be a sensible idea. Imagine you haven't the slightest idea how to get started. Then a commercial
comes on with Tommy Lee Jones telling you how trustworthy Ameriprise is. Maybe you hear the reassuring voice of John Houseman pitching
Smith Barney, or you might see the iconic bull charging across the desert for Merrill Lynch.
Say you decide to go down to your local brokerage and meet with a financial advisor. His (or her) pitch sounds good, so you decide
to become a client.
The first problem is the guy you met. Remember how he told you he has his finger on the pulse of the market, he has access to
the best investment research, he is always taking continuing education classes, and he is always monitoring your portfolio? He isn't.
He could be a complete moron. He got hired (and survived and thrived) because he is a good salesman. Nothing less and nothing more.
He takes his orders on what to sell from the top -- the gaggle of people with their fingers in your retirement pie, helping themselves
to regular bites.
The first person behind the scenes telling our hapless salesman what to do is some sort of office, district, or regional manager.
This is manager is just like the salesman but with more ambition. Almost all of these guys were promoted from sales, and their job
is do an impersonation of Alec Baldwin from Glengarry Glen Ross, yelling at the underperformers ("Coffee is for closers!") to get
out there and sell the turd of the month. ("XYZ Mutual Fund Company just paid our firm $200M," this manager says, "so get out there
and sell their funds! And, Jones, if you don't gross $20,000 by the end of this month you're fired! Meeting adjourned.")
Neither of these two friendly fellows actually does much, if anything, in the way of actual investing. Sure, they learn the
lingo, dress sharply, and probably know more than the average Joe, but they don't call the shots. That happens at Big Bank HQ.
Somewhere in the belly of the beast there is a gaggle of highly paid, largely worthless economists and market technicians.
Using some combination of tea leaves, voodoo, crystal balls, and tarot cards, these guys come up with the selection of one-size-fits-most,
happy-meal portfolios that clients will be invested in. Actually, scratch that. Portfolios aren't assembled using all kinds of mystical
methods; they are assembled using cold hard cash. (It's the finance sector. Did you think they spoke a language other than green?)
See, various mutual fund companies pay marketing fees and other dubiously legal payments to the advisory firms to get them to sell
their funds. In 2010, mutual fund companies
paid $3.5B in perfectly legal "pay to play" schemes to get their funds featured in various investment lineups.
You, the investor, are usually charged somewhere around 1% to 1.5% of assets annually for this "service." I've seen clients charged
as much as 1.65% and I've come across firms advertising fees as high as 2% per year for clients with small account balances. For
large portfolios (typically $1M or more) the fees start going down and I've seen rates as low as .5% or less. These fees are split
up between your advisor, the district manager, and the firm itself. Keep in mind that these are fees before any investments have
been made!
So who actually makes the investments in stocks and bonds? It's the portfolio managers at the mutual fund companies. According
to the Investment Company Institute 2011 Fact Book (the ICI is a pro-mutual fund organization), the average mutual fund in
2010 charged 1.47% of assets annually. That's in addition to an average up-front sales charge of 1%.
Why so expensive? Well, the funds are towing a lot of dead weight. According to the ICI 2013 Fact Book, only 42% of mutual
fund employees were employed in fund management positions or fund administrative positions. The rest, 58%, were employed in either
investor servicing (34%) or sales and distribution (24%) job functions.
Like any good infomercial says, "But wait! There's more!" When you buy a stock or bond, you can't just go grab it off the shelf
like you are shopping at Wal-Mart. You need to go through a brokerage. A 1999 study by Chalmers, Edelen, and Kadlec found that the
average mutual fund incurs trading expenses of .78% per annum. A newer study in 2004 by Karceski, Livingston, and O'Neal found brokerage
commissions cost funds around .38% per annum, or .58% if you account for the effect trading large blocks of stock has on the bid-ask
spread.
But wait! There's more! Mutual funds and your average retail investor are relatively unsophisticated, so a new industry has popped
up to take advantage of them. It's called "high frequency trading" or HFT for short. These are powerful computers programmed to take
advantage of "dumb" traders in the market. These HFT firms place their computers physically next to the stock exchange computers
in the datacenters and buy access to market quotes milliseconds before they are made public. They use these and other advantages
to skim
profits from other legitimate investors (that is, people buying stocks because they want to own part of the underlying company).
All told, it's not uncommon to see investors incurring annual expenses of 2%, all the way up to 4% per year.
Institutions and the Rich Have the Same Problem
The problem isn't just limited to Joe Six-pack Retiree. Large institutional investors, such as pension funds, and "sophisticated"
rich investors get taken to the cleaners too.
Once upon a time someone came up with a great idea: Since an all-stock portfolio is volatile, why not "hedge" the portfolio and
sell some stocks short? If you bet that good stocks will go up (buying stocks in the good companies or going long) and bad stocks
will go down (selling the stock short) then you could limit volatility and maybe make some extra money. (You'd make money both when
the good stocks went up and the bad stocks went down). It was and is a pretty good idea when done correctly. Unfortunately, the term
"hedge fund," like the term "mutual fund," has lost its original meaning. The term hedge fund is now used to refer to any type of
pooled investment vehicle that is limited to select clients (usually rich, sophisticated investors and institutions, although the
rules vary worldwide).
The rule of thumb is that hedge funds charge a 2% per year management fee and keep 20% of all profits, the proverbial "2 and 20"
compensation. According to a
WSJ article , this
old adage isn't too far off; the average hedge fund charges 1.6% per year and keeps 18% of profits.
In 2012, hedge funds removed $50.5B from their investors' pockets. In fact, according to an article in Jacobin Magazine, the top
25 hedge fund managers make more money than the CEOs of all S&P 500 companies combined. Combined!
Have they earned it? Well, the answer seems to be no. I pulled the last four years of return data for two hedge fund indices:
the Barclays Hedge Fund Index and the Credit Suisse AllHedge Index. These two indices track thousands of hedge funds across the globe.
I compared them with the returns of the Vanguard Total World Stock Index Fund and the Vanguard Total World Bond Market Index Fund
as well as a 50/50 portfolio of the two Vanguard Funds. All returns shown are net of fees.
The Vanguard stock fund trounced both hedge fund indices, and the Credit Suisse index managed only to beat the returns of bonds
by .01%.
Right about now you will hear the howls of the "hedgies" complaining. I wasn't quite fair to the hedge funds. A lot, but not all,
of them are hedged so returns in down markets will be better and four years isn't a terribly long time to look at.
The two graphs below show the returns for the Credit Suisse index since 2004 and the maximum drawdowns (losses) since 2004.
First, over 10 years the returns for hedge funds are atrocious, only about 25% in total. They do have a point that the draw downs
are lower. The maximum losses experienced during the downturn only averaged about 25%. Fine, but the Vanguard Total Bond Market Index
had barely any draw downs during the crisis and returned over 50% during a similar time period.
Unfortunately, Vanguard does not have return data for any of its World Stock funds for a complete 2008 calendar year so I was
unable to get exact data for my 50/50 portfolio. But I'd be willing to bet it beats the hedge fund indices on a risk adjusted basis.
When you hear about underfunded pension plans, part of the blame lies with pension investment committees and their investments
in hedge funds. These funds, in aggregate, have not earned the fees they charge and have instead funneled the money of retirees into
the hands of a wealthy few.
I'm not alone in reaching this conclusion. Pension funds are slowly starting to see the light and
reducing their allocations to "alternative" investments, such as hedge funds, and
reallocating the capital to indexed products or negotiating with the funds for lower fees.
It's not just the traditional investment arena where the financial sector has run wild. Its unending quest for siphoning money
from the economy has spilled out into other areas.
Speculation in Commodities Costs Main Street Billions
Speculation by the financial sector in the commodities market is impacting the entire world. The passage of the Commodities Futures
Modernization Act (CFMA) has allowed big banks to engage in almost limitless speculation in the commodities market. Wall Street has
convinced everyone from individual investors to pension funds and endowments that they need to include commodities in their portfolios
for deworsification, I mean, diversification purposes. Between investors plowing more than $350B into the commodities market and
what appears to be outright manipulation of commodities prices, the financial sector has increased the costs of everything from wheat
to heating oil and aluminum to gasoline.
An executive for MillerCoors testified that manipulation of the aluminum market cost manufacturers over $3B. The World Bank estimated
that in 2010, 44 million people worldwide were pushed into poverty because of high food prices. The chief cause?
More than 100 studies
agree the cause is speculation in the commodities market. (Goldman Sachs made
$440M in 2012
from food market speculation.) For Americans who love their cars (and SUVs), the biggest impact might be felt at the gas pump where
experts estimate
that financial speculation has added anywhere from $1 to $1.50 to gas prices.
For more information on speculation in the commodities, I recommend Matt Taibbi's
excellent pieces, in-depth information at Better Markets , or some
of myarticles on commodities.
If you think it's bad enough that Wall Street is raising the price of your food, heating oil, gasoline, and Pepsi, then wait until
you get a load of one of the Street's other ingenious ideas for helping themselves to more of your money.
Corruption of Public Infrastructure
One significant source of profit for the financial sector has been exploiting public, taxpayer-owned infrastructure. It should
be blatantly obvious that these deals are bad for citizens, as the fees charged to citizens for use of the asset must not only cover
servicing costs and maintenance capital expenditures but must also generate profit for the firms buying the assets.
The first and most obvious examples of this type of fraud (I choose to use the term "fraud" because I believe that is exactly
what these deals are) are government entities selling public, taxpayer-owned infrastructure, such as road, bridges, parking facilities,
and ports, to the private sector so that they can extract rent from the users. The deals are usually touted as saving taxpayers money
and letting the "more efficient" private sector better manage the asset. This is false. Many studies show private ownership of public
goods does not lead to any cost savings. A comprehensive econometric
study done in 2010 of all available public vs. private studies by Germa Bel, Xavier Fageda, Mildred E. Warner at the University
of Barcelona found no cost saving in privatizing public water or solid waste management services and infrastructure.
The case is no different when it comes to public roads. A
2007 paper by US PIRG found that
privatizing roads never benefits citizens. Financial firms were typically able to buy the assets on the cheap and then raise toll
rates while usually sneaking language into the agreements that prevented governments from building competing infrastructure. The
paper presented evidence that the Indiana Toll Road lease will cost taxpayers at least $7.5B.
One of the most egregious examples of the financial sector extracting rent is the
2009 sale of Chicago's parking meters
to a consortium led by Morgan Stanley. Shortly after the lease was finalized, rates at many parking meters increased (in some case
by quadruple the amount). The Chicago Inspector General found that the city was underpaid by almost $1B for the lease. Meanwhile,
in 2010 Morgan Stanley banked $58 million in profits from the parking meters. With
no way
out of the deal , the citizens of Chicago are now paying Morgan Stanley for the right to use assets they used to own!
The second way in which taxpayers are exploited by the financial sector is so-called public-private partnerships (also referred
to as PPP or P 3 ). There is no set definition for what constitutes a PPP arrangement, and it is possible some might be
beneficial in limited circumstances. I want to focus on one specific type of PPP that enriches the financial sector: when public
projects are privately financed. There is absolutely no reason for any government project to ever require paying "rent" to the financial
sector in the form of financing.
The United States federal government is the monopoly supplier of US dollars. It can add them to the economy at will through deficit
spending or remove them via taxation. There is no earthly reason for a public entity to be forced to depend on the private sector
to provide any type of financing. The only constraint on whether or not money should be spent is whether the economy is at full capacity
(full employment and full industrial capacity utilization) where the additional deficit spending may cause inflation.
State and local governments are unable to issue currency and therefore must depend on revenue raised via taxation, distributions
from the federal government, or money raised through bond issuance. Even then, studies have shown that PPPs are more expensive compared
to the state or local entity securing financing through the municipal bond market.
As the financial sector funnels more and more resources into lobbying and bribes (let's face it, campaign contributions are
nothing more than legal bribery), it has been able to strip an ever-greater amount of state-owned assets from the public. Public
asset strip mining is one of the chief causes of the increasing profitability of the financial sector.
So far we've dealt with examples that are pretty easy to see. Everyone who owns a car knows that gas prices have been rising too
fast and food is more expensive. The citizens of Chicago know they are getting shafted on the parking meter deal since parking rates
have quadrupled. But there are hidden areas of the economy where the financial sector is ripping off the public too.
Interest Rate Manipulation
Do you know what LIBOR is? And what it's used for? A lot of financial types read my newsletters, so I'm sure some of you do. But
the average man or woman on the street likely does not.
LIBOR stands for London Interbank Offered Rate and is the average interest rate banks in London estimate that they would be charged
if they borrowed from other banks. This rate is used worldwide by mortgage lenders, credit card agencies, banks, and other financial
institutions to set interest rates. By some estimates, more than $350T in financial products, derivatives, and contracts are tied
to LIBOR.
In 2012, it was discovered that, since 1991, banks were falsely inflating or deflating the interest rates they reported. (Remember
banks essentially make up their own interest rates and report them with the results being essentially averaged and reported as LIBOR.)
The banks did this in order to profit from trades or to make themselves look more creditworthy than they were.
The Macquarie Group estimated that the
manipulation of LIBOR cost investors $176B. (Keep in mind this is an estimate coming from a financial firm, so it would be prudent
to assume it's on the low end.)
Andrew Lo, a finance professor at MIT, said the fraud "dwarfs by orders of magnitude any financial scam in the history of the
markets."
Food Stamps (SNAP) and Welfare (TANF)
I highly doubt any of my clients or readers are beneficiaries of the SNAP or "food stamps" program and are probably not very familiar
with it. While it is nominally a government program it has been corrupted by the big banks. Benefits are provided electronically
via debit cards (EBT cards). JP Morgan
has made over $500M
from 2004 to 2012 providing EBT benefits to 18 states. The banks then are free to reap fees from users for such things as cash
withdraws for TANF benefits, out of network ATM fees, lost card replacement fees, and even customer service calls.
I believe you can judge how profitable a service is to a company how much it spends on lobbying. In the case of JPMorgan, its
bribes, I mean campaign contributions to Agriculture Committee (SNAP is part of the Department of Agriculture) members increased
sharply after it entered the EBT market in 2004.
(Graphic source: GAI via data from CRP) Summary
A bloated and out-of-control financial sector does not add any value to society. Society benefits when the financial sector is
kept as small as possible.
The financial sector is a parasite that depends on its host organism, the productive sector of the economy, to fuel its profits.
The larger the financial sector grows, the more wealth it extracts from the productive sectors of the economy. With all due respect
to Matt Taibbi, Goldman Sachs isn't a vampire squid; the entire financial sector is the vampire squid with its tentacles reaching
into the pockets of citizens everywhere and sucking out money.
Quite a damning critique, and if I may step away from the main point I have to ask: why is it that some guys involved with
finance, Strubel as well as Auerback, Mosler and Ritholtz, talk like this while so many in the field do not? Does everyone involved
"know" all this but most simply choose to put on blinders?
Great Article about the .01% "Taker Class". This can all end by the 99% demanding a change to the TAX CODE! Yet another clear
indication of the manipulation of the "Giver Class" by government!
Its truly frightening to see how the public has been blindsided/mislead about the root causes of rapid income inequality. As
a social worker I am somwhat familiar with the SNAP benefit program Depressing to think JP Morgan Chase skimmed at least 500m
over an eight year period for SNAP and welfare benefits. I suppose this is the new age enclosure movement where Wall Street is
picking up public assets for pennies on the dollar and charging enormous rents..
The questions is.. what happens when it is used up?? A scorched wasteland of dysfunctional infrastruture/gated communites housing
a tiny elite protected from beggars, street criminals, and gang bandits??
Excellent article. Easy for a layperson to understand and covers a good portion of the pervasive, ongoing, worldwide financial
system theft. I worked for a stock brokerage firm years ago while studying for the series 7. Once I figured out they were all
just well-dressed telemarketers, I quit and found a more productive job. Remember 'dogs of the Dow' ?
A very well-written and eye-opening post � thanks, Ben. I think the formulation of this central point may be a little skewed,
though: " the smaller the financial sector is the more real wealth there is for the rest of society to enjoy. The bigger the financial
sector becomes the more money it siphons off from the productive sectors."
I think this formulation may be somewhat muddling the real-vs.-financial dichotomy that MMT revolves around. Sort of by definition,
the financial sector is 100 percent nominal � even when it posits ownership of real assets, it is really just money-valuing them,
applying the unit-of-account property of money. The ownership is an abstraction. The owner of a share of stock or a gold ETF has
no concrete interaction with the company or commodity in question. So, contrasting the total size of the financial sector to the
totality of real wealth available � for those members of society who do *not* receive income from the financial sector � leaves
me scratching my head. I'm not clear what is being measured. I know that profits flowing to the financial sector have exploded
from around two percent of total corporate profits in the 1950s to around forty percent now. This means it is over-charging for
its so-called services, but I think the real-economy effects are non-linear, and more complex than this.
Regarding the financial sector's growing tendency to siphon off money from the productive sectors � yes, they do this. But
it is up to the state, with its currency-issuing and taxing powers, to regulate how far this process goes and what happens next.
In a recent post, J.D. Alt took note of the ephemeral nature of the financial sector's nominal money-wealth. It is "fictitious
capital". Electronic poker chips. Just zeros and ones, really. As long as the plutocrats simply hoard them � use them to keep
score � the state can just replace them by increasing spending. I also tend to think that the consumption spending of the .01
percent is rather inelastic. They already have everything they want. Keynes' attitude was to let them live it up, up to a point,
and then tax the excess back when they die.
For me, the most important part of your post is the section on commodity speculation and infrastructure privatization. This
truly is a huge deal, a clear interaction with the real economy and a terrible crime, actually. Again, though, it is up to the
state to permit these outrages or ban them � we used to ban them but we stopped. So. One more big thank-you to the Big Dog, I
guess. To think � before Clinton, America actually based aid to poor children on their ages and their poverty rather than the
supposed moral imperfections of their parents. We even had no-fee food stamps.
Obviously, the other reason we can't just let the one percent play their casino games is that they eventually blow up the real
economy, as a totality, through financial crises and destabilization. And, due to all the fabulist monetary propaganda out there,
there is now a big reservoir of public opinion and political will *in favor* of financial collapse. The libertarians and other
Paul-Partiers think it would do us all good. And bring back the gold standard. And "End the Fed", and all the rest of that good
19th Century stuff. I'm not a ready-for-Hillary kind of guy in general, but is it possible to imagine a scarier idea than President
Rand?
While most of your specific criticisms are quite valid, I think your brush is a bit too broad. "The problem is that the financial,
insurance, and real estate (FIRE) sectors do not actually produce any goods or services. "
This is obviously false. I have many times used services provided by banks, credit unions, insurance companies, and real estate
brokers and agents. It would be practically impossible to find the right house to buy, to sell it for a fair price, to get the
loan necessary to buy it, or to protect myself and my family from a catastrophic loss without their services.
It is undoubtedly true that most of the volatility of the FIRE sector since 1990 is due to speculation and parasitical activities,
but there is undoubtedly also some growth of useful services that has facilitated growth of the other sectors, not detracted from
it. Thus it is not always true that "the smaller the financial sector is the more real wealth there is for the rest of society
to enjoy".
Bottom line, you have a good point. Excessively broad statements might be more dramatic, but if they are not true they don't
help your cause.
I have gotten real value from real estate brokers. Did you ever try to sell a house without one? Qualify the serious buyers
and deal with the lookie-loos? And the government paperwork!! I've always gotten my money's worth.
No, the fire doesn't care if you have insurance, but the insurance company will advise you on how to prevent fires and minimize
the damage. Paying an insurance company has protected me from paying the unaffordable high cost of the insured risks. The service
provided by insurance is not incident prevention, it is management of financial risk, and it does that very well. My claims have
been handled quickly and fairly. I had one unusual case where I thought the insurance company should have paid me more than their
original offer (the nation-wide blue book value of the car didn't reflect the unique situation in my State), and after discussion
they agreed with me and paid. I've been with them for over 40 years and I'm very happy with their services.
If you want your bank to create wealth for you, you're looking in the wrong place. Banks are good for storing and protecting
your money, and many will do that for you without fees, and even pay you interest. They'll let you use their computers to pay
your creditors, also without charge. They'll even give you short-term interest-free loans, and pay you cash rebates, if you use
their credit cards. I like my banks' services, too. And, of course, if you want to borrow money they will lend it to you and if
your payment is late they don't break your legs. They will make a profit, though. That's why they do it. You don't have to participate
if you don't want to.
Not every bank is Goldman Sachs, and not every insurance company is AIG. Those are good examples of companies that often serve
no useful purpose, but there are many others who do provide useful services at a reasonable cost.
Although I can be sympathetic of the no-value creation thesis in the financial industry, comparing the performance of hedge
funds with the recent performance of bonds is a no big no-no, because it assumes a negative correlation between equities and bonds.
If one look at the world markets in the last 100 years, that has been the exception rather than the rule.
And you forgot to mention the important roles of capital markets in deploying capital and financing companies through IPOs,
bond offers, etc.
You missed another big point, negative real interest rates. The Fed Funds Rate is currently 0%-0.25%, while real inflation
is much higher. (The CPI is not an accurate measure of inflation.) Big banks can profit by borrowing at 0% and buying stuff (bonds,
stocks, commodities, real estate, politicians, whatever).
On LIBOR, here's another interesting bit. Cities and states lost a TON of money on interest rate swaps with banks. What was
sold as a "hedge" wound up blowing up and costing a fortune.
This was a fascinating piece, very readable for those of us with minimal financial education. However, since this is such a
good explainer for the layman, I think it would be very beneficial to explain how big a difference 1% in fees makes for an investor
over a lifetime. I know personally when I used to compare funds the difference between 1 and 2% in fees seemed negligible. But
then I saw that fantastic PBS Frontline
on this topic and saw how much that 1% could cost me over a lifetime! I now have everything that I personally manage in index
funds!
You can't really argue with what has been said, and all (of us) involved in the sector know it is massive rip off.
While a free market advocate, I think a first step would be to introduce meaningful fee caps on all state promoted or mandated
saving arrangements (eg ISAS, and Pensions), on the grounds that the market is skewed by the government intervention that creates
the glut of forced buyers, and so to correct that imbalance the market (i.e. consumers) need protection through fee caps. I'd
say no more than 20 � 25bps should be permitted for all ISAS and pension savings (DC or DB). Individual wealthy investors (investments
of more than say �5m?) can pay what they like.
>>The job of the finance sector is simply to manage existing resources. It creates nothing.
This is a dubious assertion, but you clearly believe it. How then, can you in good conscience, charge 1.25% (plus indirect
costs for the funds you hold in client portfolios) to manage people's money when you yourself admit you are adding no value?
I know this was for Ben, but there's a pretty simple answer to that question: They don't charge 1.25% because they create value,
they're charging a fee to access the profit created by companies they invest in. Say I told you that I knew a guy named Jimmy
who was going to make three bucks for every buck he gets, and I asked if you'd lend me a dollar to give to Jimmy with the promise
that he'd give me 1.50 cents of it. I'd want to keep 25 cents but you can have 1.25, and so you agree. I didn't create the 2 extra
dollars of value -- Jimmy did -- but I feel justified in asking for a cut because I gave you the tip about Jimmy's value creation
ability.
At least, that is my understanding of Ben's statement.
There are 6000 publicly traded companies. Some of them will have rising stock prices, some falling. If a money manager can
steer you to the rising ones, he is doing something of value. It doesn't mean he created anything physical that didn't exist before.
He's doing a service for you that would otherwise have taken you some time and effort to do, and that's what you pay for.
Yes, it's a different definition of value. The growth of financial services has been outpacing the growth of other sectors
to a monstrous scale, and that makes this distinction important. It signals a kind of corruption that can only mean high inflation
and decoupling money from economic output.
I don't follow. How is financial services different from any other kind of services, in the impact on inflation? Why not also
actors, barbers, or any other service profession? The growth of the financial sector might be explained by the fact that it is
the industry most able to exploit computers, and the first to do so on a large scale.
The corruption is, I think, a separate issue that is present whenever other people's money is involved. Financial services
and government are simply more involved that way than most other industries, and have been all along, dating to long before the
recent growth. Corruption is not impossible in any industry, just more attractive when the numbers are larger.
Corruption is never a separate in ANY corporate activity. The TAX CODE treats the wealth of the .01% radically different than
Income from Labor, because all Taxes on Capital Gains are deferred until taken and are not TAXED as ordinary income. The TAX CODE
is responsible for the corruption of our government because it has put real POWER, the Power of Wealth in the hands of the .01%,
to buy whatever it wants, while labor and the poor spend everything they earn or are given , every single year to survive in a
economic culture designed for the benefit of the .01%, something no one will write about!
Change the TAX CODE and the Corruption of Society will end!
Barbers and actors being paid for their labor do not have the same impact on inflation as a bank giving out loans and consumer
credit at interest. It's not equivalent at all.
Corruption in financial industries is what this article is discussing. If it's a separate issue, I'm confused as to the point
of talking about this at all!
I don't think your explanation is correct. Why wouldn't I go directly to Jimmy in that case and cut out the middle man since
he is offering no value add? The fact is, the middle man, Ben, in this case, believes that he can identify superior companies
to invest his clients money in and earn a greater return. This is Ben's value add and why he charges 1.25%.
Golfer John is correct and that point, essentially, blows a hole in Ben's thesis here that the financial sector adds no value
because they only manage "existing resources". Steering capital to the good ideas that improve consumer wealth and generate a
return is a value add and the fact that millions of transactions like this happen voluntarily between consenting adults further
supports this.
Physics tells us that matter cannot be created or destroyed, so the same resources that are on this earth today are the same
ones that were here 10,000 years ago. So, in that sense, Apple is simply managing "existing resources" when they build the iphone,
Toyota simply managing "existing resources" when they build a car, and UPS and US Mail are merely moving "existing resources"
from one location to another when they make deliveries, must be no value add there right?
Asserting that the financial sector only manages existing resources, and then citing that as proof of no value add is simply
a non sequiter.
No, I wasn't, though I have heard that. My theory of markets, and human group behavior in general, is a statistical approach.
There are averages, distributions, and temporary equilibriums, but the interesting parts are the outliers. I guess that is more
of a quantum flavor than Newtonian. Over time, economies behave cyclically. Much of nature and human group behavior is cyclical.
Paul -- That's true, and a good analogy, except you're getting a bit reductive with the term "existing resources". I agree
that "no value" is a bit extreme, which is why I became more interested in the -type- of value.
John � My physics is flawed to the extent that the law of conservation of matter is flawed, this I admit. I am much more economist
than physicist though so better that I get my physics wrong and econ right! I see a lot of similarities between the two, as well
as crucial differences, but I don't want to get too off topic.
Briana � "No Value is a bit extreme"
I agree, and as the absurdly hyperbolic title* of this article states, the author takes it to an even greater extreme � namely
that the financial sector is actually a systematic destroyer of value (parasite) that is created by all of the other industries.
The crux of his assertion rests on that they only "manage existing resources" and also calling Greg Mankiw an apologist, neither
strikes me as an intellectually rigorous argument.
And interestingly, on his own firm's website, the author apparently contradicts the thesis of this article when advertising
his financial services and the fees he charges for his own value add. I can think of several explanations for this, none of which
are particularly flattering, others can draw their own conclusions.
*a worse parasite than all of the murderous dictatorial regimes in human history that have institutionalized the slaughter
and torture of millions? Really? I note this because it is so obviously false that it makes the rest of the content seem unserious
and shallow even if valid points exist. Acidic comments tend to preach to the already converted, but perhaps that is the goal
here.
Yeah, ok. I should know better, Paul. My brain tried to rationalize the argument by making it less extreme. The goal probably
was to mobilize the choir to go Occupy Wall Street for a few more months, haha.
Those valid points shouldn't be ignored because of the poorly handled hyperbole, though. The financial sector does have a great
capacity to act as a parasite by overvaluing their services and squandering wealth generated by other industries instead of reinvesting
it in worthwhile, valuable enterprises; or using that wealth to essentially 'gamble' or invent money that is not attached to any
real value (i.e. shorting or credit default swaps). As the fruits of these behaviors are becoming obvious, it gets harder to justify
policies that allow them to happen.
In many ways that is my point. You found those "valid points" obviously correct before reading the article, so it rang true
despite the extreme hyperbole. I did not find those points self-evidently true so this poorly constructed argument relying on
clearly false assumptions struck me as uncompelling.
For example, how does one "overvalue their services"? If one charges too much, no one is forced to buy. I may find Ben's management
fee of 1.25% to be overvaluing himself, but I have the option of not paying and instead going to less expensive alternatives.
Why wouldn't the financial industry invest in "worthwhile valuable enterprises" if they provide a worthwhile return? After
all, aren't they driven by an insatiable desire for profit? Who determines what enterprises are worthwhile?
I do not see anything inherently wrong with short selling. Indeed, the ability to short a stock is simply expressing a view
about its value, and leads to greater and more accurate price discovery. What is wrong with shorting a stock if one believes it
is overpriced relative to its instrinsic value? Is it not preferable that prices reflect underlying economic fundamentals rather
than being disconnected from such? Shorting puts downward pressure on prices, and helps prevent overvaluation.
Credit Default Swaps are nothing more than insurance against a bond default. There is nothing inherently wrong with insurance.
I'm not suggesting that you, here in the comments, need to write a paper elaborating on those, just that this article did a
poor job of pursuading, though again, I am coming to the realization that I am likely not the intended audience.
This discussion in the comments has actually been more fruitful than the article itself.
(Sorry for the late response, I've been away for a few days.)
"For example, how does one "overvalue their services"?"
This argument hinges on everyone that purchases these services knowing their true value. It's very simplistic to say that if
someone purchases it, that is the real value. It gets complicated when you take into account the psychological pressures of purchasing
behavior, such as "middle-price" preferences, "money you don't see is money you don't miss" and other tricks that are employed
to get people to pay higher prices.
"Why wouldn't the financial industry invest in "worthwhile valuable enterprises" if they provide a worthwhile return? After
all, aren't they driven by an insatiable desire for profit? Who determines what enterprises are worthwhile?"
Countless services and products we rely on were funded by taxes to make them profitable. They are "worthwhile" but apparently
not "profitable" enough to invest in. Making money and creating value aren't the same thing. Ideally, everyone decides what is
worthwhile.
"I do not see anything inherently wrong with short selling."
Shorting is basically a bucket shop in disguise.
"Credit Default Swaps are nothing more than insurance against a bond default. There is nothing inherently wrong with insurance."
"This argument hinges on everyone that purchases these services knowing their true value."
In a literal sense, you are correct, it is an imperfect measure of value. However, I think it is far and away the most reliable
one we have as value is extremely subjective. I don't think it is right or prudent for third, non cost bearing parties to preempt
decisions made by consenting adults, rather, I would accord them the dignity of free choice. There are many things that consumers
purchase that I do not understand, why anyone would pay a premium for a fast car seems like a waste of money to me, for example.
Why anyone would pay money to golf, not to mention the huge cost in terms of time it takes to get through 18 holes, seems like
a waste of money to me. These are things that make no sense to me because I do not see the value there. But, I recognize that
people have various tastes and preferences, and I respect that and presume that individuals know themselves and their own tastes
and preferences better than I (or someone else) does. Therefore, when someone values something that I do not understand, I tend
to believe it is a result of a difference in preference, rather than they are too dumb to figure out what they like, or that they
are "tricked" into buying something and hence need protection delivered by those who fancy themselves as enlightened enough to
see the real truth. Nothing about this is unique to the financial industry, by the way.
"Countless services and products we rely on were funded by taxes to make them profitable. They are "worthwhile" but apparently
not "profitable" enough to invest in. Making money and creating value aren't the same thing. Ideally, everyone decides what is
worthwhile."
Apparently not enough people decided these services and products were worthwhile, so politicians decided they were worthwhile
and used the force and power of government to get them done. Substituting preferences of politicians, spending other people's
money for those of millions of individuals spending their own money does not seem like an efficient way to allocate resources.
I agree with you on purchasing decisions. People should be free to determine value. I'm not saying people are always dumb,
but I do think they are manipulated. If you want to believe they are not, that is up to you, but apparently you've never seen
advertising. The financial industry advertises itself heavily, especially in consumer credit markets and insurance. But if we're
going to gauge something as nebulous as "true value", it requires a level of conscientiousness from everyone, and accepting whatever
people purchase as reflecting it's actual value is a quick way to guarantee abuse, especially when you have something like consumer
credit. If people are free to determine value, they should also be held to the consequences of their choices, which is currently
not the case in the financial industry and increasingly in the general population.
"Apparently not enough people decided these services and products were worthwhile, so politicians decided they were worthwhile
and used the force and power of government to get them done. Substituting preferences of politicians, spending other people's
money for those of millions of individuals spending their own money does not seem like an efficient way to allocate resources."
You mean like electricity, phone services, railroads, airlines, fortified wheat, water treatment, the internet, satellites,
healthcare.. the list could go on and on. It is less efficient (a word that really needs to be defined clearly, but I'll assume
I know what you mean!), and it happens because otherwise it wouldn't be possible, and yet it becomes widely adopted and lauded
none-the-less; progress, they say. Like I said, worthwhile and profitable are not 1-to-1 correlation, just as willingness to purchase
doesn't necessarily indicate true value.
I thought you might have some interesting opinion on the CDS as money creation I'm still trying to figure that one out!
"... Bankers, pharmaceutical giants, Google, Facebook ... a new breed of rentiers are at the very top of the pyramid and they're sucking the rest of us dry @rcbregman ..."
"... 'A big part of the modern banking sector is essentially a giant tapeworm gorging on a sick body' ..."
"... This piece is about one of the biggest taboos of our times. About a truth that is seldom acknowledged, and yet � on reflection � cannot be denied. The truth that we are living in an inverse welfare state. These days, politicians from the left to the right assume that most wealth is created at the top. By the visionaries, by the job creators, and by the people who have "made it". By the go-getters oozing talent and entrepreneurialism that are helping to advance the whole world. ..."
"... To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means tapping into our knowledge and know-how (our "human capital" in economic terms) to create something new, whether that's a takeout app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth. ..."
"... But there is also a second way to make money. That's the rentier way : by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others' expense, using his power to claim economic benefit. ..."
"... For those who know their history, the term "rentier" conjures associations with heirs to estates, such as the 19th century's large class of useless rentiers, well-described by the French economist Thomas Piketty . These days, that class is making a comeback. (Ironically, however, conservative politicians adamantly defend the rentier's right to lounge around, deeming inheritance tax to be the height of unfairness.) But there are also other ways of rent-seeking. From Wall Street to Silicon Valley , from big pharma to the lobby machines in Washington and Westminster, zoom in and you'll see rentiers everywhere. ..."
"... It may take quite a mental leap to see our economy as a system that shows solidarity with the rich rather than the poor. So I'll start with the clearest illustration of modern freeloaders at the top: bankers. Studies conducted by the International Monetary Fund and the Bank for International Settlements � not exactly leftist thinktanks � have revealed that much of the financial sector has become downright parasitic. How instead of creating wealth, they gobble it up whole. ..."
"... In other words, a big part of the modern banking sector is essentially a giant tapeworm gorging on a sick body. It's not creating anything new, merely sucking others dry. Bankers have found a hundred and one ways to accomplish this. The basic mechanism, however, is always the same: offer loans like it's going out of style, which in turn inflates the price of things like houses and shares, then earn a tidy percentage off those overblown prices (in the form of interest, commissions, brokerage fees, or what have you), and if the shit hits the fan, let Uncle Sam mop it up. ..."
"... Bankers are the most obvious class of closet freeloaders, but they are certainly not alone. Many a lawyer and an accountant wields a similar revenue model. Take tax evasion . Untold hardworking, academically degreed professionals make a good living at the expense of the populations of other countries. Or take the tide of privatisations over the past three decades, which have been all but a carte blanche for rentiers. One of the richest people in the world, Carlos Slim , earned his millions by obtaining a monopoly of the Mexican telecom market and then hiking prices sky high. The same goes for the Russian oligarchs who rose after the Berlin Wall fell , who bought up valuable state-owned assets for song to live off the rent. ..."
"... Even paragons of modern progress like Apple, Amazon, Google , Facebook, Uber and Airbnb are woven from the fabric of rentierism. Firstly, because they owe their existence to government discoveries and inventions (every sliver of fundamental technology in the iPhone, from the internet to batteries and from touchscreens to voice recognition, was invented by researchers on the government payroll). And second, because they tie themselves into knots to avoid paying taxes, retaining countless bankers, lawyers, and lobbyists for this very purpose. ..."
"... Even more important, many of these companies function as "natural monopolies", operating in a positive feedback loop of increasing growth and value as more and more people contribute free content to their platforms. Companies like this are incredibly difficult to compete with, because as they grow bigger, they only get stronger. ..."
"... Most of Mark Zuckerberg's income is just rent collected off the millions of picture and video posts that we give away daily for free. And sure, we have fun doing it. But we also have no alternative � after all, everybody is on Facebook these days. Zuckerberg has a website that advertisers are clamouring to get onto, and that doesn't come cheap. Don't be fooled by endearing pilots with free internet in Zambia. Stripped down to essentials, it's an ordinary ad agency. In fact, in 2015 Google and Facebook pocketed an astounding 64% of all online ad revenue in the US. ..."
"... Rentierism is, in essence, a question of power. That the Sun King Louis XIV was able to exploit millions was purely because he had the biggest army in Europe. It's no different for the modern rentier. He's got the law, politicians and journalists squarely in his court. That's why bankers get fined peanuts for preposterous fraud, while a mother on government assistance gets penalised within an inch of her life if she checks the wrong box. ..."
"... The biggest tragedy of all, however, is that the rentier economy is gobbling up society's best and brightest. Where once upon a time Ivy League graduates chose careers in science, public service or education, these days they are more likely to opt for banks, law firms, or trumped up ad agencies like Google and Facebook. When you think about it, it's insane. We are forking over billions in taxes to help our brightest minds on and up the corporate ladder so they can learn how to score ever more outrageous handouts. ..."
"... One thing is certain: countries where rentiers gain the upper hand gradually fall into decline. Just look at the Roman Empire. Or Venice in the 15th century. Look at the Dutch Republic in the 18th century. Like a parasite stunts a child's growth, so the rentier drains a country of its vitality. ..."
Bankers, pharmaceutical giants, Google, Facebook ... a new breed of rentiers are at the very top of the pyramid and they're
sucking the rest of us dry @rcbregman
'A big part of the modern banking sector is essentially a giant tapeworm gorging on a sick body'.
This piece is about one of the biggest taboos of our times. About a truth that is seldom acknowledged, and yet � on reflection
� cannot be denied. The truth that we are living in an inverse welfare state. These days, politicians from the left to the right assume that most wealth is created at the top. By the visionaries, by the job
creators, and by the people who have "made it". By the go-getters oozing talent and entrepreneurialism that are helping to advance
the whole world.
Now, we may disagree about the extent to which success deserves to be rewarded � the philosophy of the left is that the strongest
shoulders should bear the heaviest burden, while the right fears high taxes will blunt enterprise � but across the spectrum virtually
all agree that wealth is created primarily at the top.
So entrenched is this assumption that it's even embedded in our language. When economists talk about "productivity", what they
really mean is the size of your paycheck. And when we use terms like "
welfare
state ", "redistribution" and "solidarity", we're implicitly subscribing to the view that there are two strata: the makers and
the takers, the producers and the couch potatoes, the hardworking citizens � and everybody else.
In reality, it is precisely the other way around. In reality, it is the waste collectors, the nurses, and the cleaners whose shoulders
are supporting the apex of the pyramid. They are the true mechanism of social solidarity. Meanwhile, a growing share of those we
hail as "successful" and "innovative" are earning their wealth at the expense of others. The people getting the biggest handouts
are not down around the bottom, but at the very top. Yet their perilous dependence on others goes unseen. Almost no one talks about
it. Even for politicians on the left, it's a non-issue.
To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means
tapping into our knowledge and know-how (our "human capital" in economic terms) to create something new, whether that's a takeout
app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth.
But there is also a second way to make money.
That's the rentier way : by leveraging control over something that already exists, such as land, knowledge, or money, to increase
your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others' expense, using his
power to claim economic benefit.
'From Wall Street to Silicon Valley, zoom in and you'll see rentiers everywhere.'
For those who know their history, the term "rentier" conjures associations with heirs to estates, such as the 19th century's large
class of useless rentiers, well-described by the
French economist
Thomas Piketty . These days, that class is making a comeback. (Ironically, however, conservative politicians adamantly defend
the rentier's right to lounge around, deeming inheritance tax to be the height of unfairness.) But there are also other ways of rent-seeking.
From Wall Street to Silicon Valley , from big
pharma to the lobby machines in Washington and Westminster, zoom in and you'll see rentiers everywhere.
There is no longer a sharp dividing line between working and rentiering. In fact, the modern-day rentier often works damn hard.
Countless people in the financial sector, for example, apply great ingenuity and effort to amass "rent" on their wealth. Even the
big innovations of our age � businesses like Facebook
and Uber � are interested mainly in expanding the rentier economy. The problem with most rich people therefore is not that they are
coach potatoes. Many a CEO toils 80 hours a week to multiply his allowance. It's hardly surprising, then, that they feel wholly entitled
to their wealth.
It may take quite a mental leap to see our economy as a system that shows solidarity with the rich rather than the poor. So I'll
start with the clearest illustration of modern freeloaders at the top: bankers. Studies conducted by the
International Monetary Fund and the
Bank for International Settlements � not exactly leftist
thinktanks � have revealed that much of the financial sector has become downright parasitic. How instead of creating wealth, they
gobble it up whole.
In other words, a big part of the modern banking sector is essentially a giant tapeworm gorging on a sick body. It's not creating
anything new, merely sucking others dry. Bankers have found a hundred and one ways to accomplish this. The basic mechanism, however,
is always the same: offer loans like it's going out of style, which in turn inflates the price of things like houses and shares,
then earn a tidy percentage off those overblown prices (in the form of interest, commissions, brokerage fees, or what have you),
and if the shit hits the fan, let Uncle Sam mop it up.
The financial innovation concocted by all the math whizzes working in modern banking (instead of at universities or companies
that contribute to real prosperity) basically boils down to maximizing the total amount of debt. And debt, of course, is a means
of earning rent. So for those who believe that pay ought to be proportionate to the value of work, the conclusion we have to draw
is that many bankers should be earning a negative salary; a fine, if you will, for destroying more wealth than they create.
Bankers are the most obvious class of closet freeloaders, but they are certainly not alone. Many a lawyer and an accountant wields
a similar revenue model.
Take
tax evasion . Untold hardworking, academically degreed professionals make a good living at the expense of the populations of
other countries. Or take the tide of privatisations over the past three decades, which have been all but a carte blanche for rentiers.
One of the richest people in the world,
Carlos Slim , earned his millions by obtaining a monopoly of the Mexican telecom market and then hiking prices sky high. The
same goes for the Russian oligarchs who rose after the
Berlin Wall fell , who bought up valuable state-owned assets for song to live off the rent.
But here comes the rub. Most rentiers are not as easily identified as the greedy banker or manager. Many are disguised. On the
face of it, they look like industrious folks, because for part of the time they really are doing something worthwhile. Precisely
that makes us overlook their massive rent-seeking.
Take the pharmaceutical industry. Companies like
GlaxoSmithKline and
Pfizer regularly
unveil new drugs, yet most real medical breakthroughs are made quietly at government-subsidised labs. Private companies mostly manufacture
medications that resemble what we've already got. They get it patented and, with a hefty dose of marketing, a legion of lawyers,
and a strong lobby, can live off the profits for years. In other words, the vast revenues of the pharmaceutical industry are the
result of a tiny pinch of innovation and fistfuls of rent.
Even paragons of modern progress like Apple, Amazon, Google
, Facebook, Uber and Airbnb are woven from the fabric of rentierism. Firstly, because they owe their existence to government discoveries
and inventions (every sliver of fundamental technology in the iPhone, from the internet to batteries and from touchscreens to voice
recognition, was invented by researchers on the government payroll). And second, because they tie themselves into knots to avoid
paying taxes, retaining countless bankers, lawyers, and lobbyists for this very purpose.
Even more important, many of these companies function as "natural monopolies", operating in a positive feedback loop of increasing
growth and value as more and more people contribute free content to their platforms. Companies like this are incredibly difficult
to compete with, because as they grow bigger, they only get stronger.
Aptly characterising this "platform capitalism" in an article,
Tom Goodwin writes : "Uber, the world's largest taxi company, owns no vehicles. Facebook, the world's most popular media owner,
creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world's largest accommodation provider,
owns no real estate."
Facebook
Twitter
Pinterest 'Every sliver of fundamental technology in the iPhone, from the internet to batteries and from touchscreens to voice
recognition, was invented by researchers on the government payroll.' Photograph: Regis Duvignau/Reuters
So what do these companies own? A platform. A platform that lots and lots of people want to use. Why? First and foremost, because
they're cool and they're fun � and in that respect, they do offer something of value. However, the main reason why we're all happy
to hand over free content to Facebook is because all of our friends are on Facebook too, because their friends are on Facebook because
their friends are on Facebook.
Most of Mark Zuckerberg's income is just rent collected off the millions of picture and video posts that we give away daily for
free. And sure, we have fun doing it. But we also have no alternative � after all, everybody is on Facebook these days. Zuckerberg
has a website that advertisers are clamouring to get onto, and that doesn't come cheap. Don't be fooled by endearing pilots with
free internet in Zambia. Stripped down to essentials, it's an ordinary ad agency. In fact, in 2015 Google and Facebook pocketed an
astounding
64% of all online ad revenue in the US.
But don't Google and Facebook make anything useful at all? Sure they do. The irony, however, is that their best innovations only
make the rentier economy even bigger. They employ scores of programmers to create new algorithms so that we'll all click on more
and more ads.
Uber has
usurped the whole taxi sector just as
Airbnb has upended the hotel industry and Amazon has overrun the book trade. The bigger such platforms grow the more powerful
they become, enabling the lords of these digital feudalities to demand more and more rent.
Think back a minute to the definition of a rentier: someone who uses their control over something that already exists in order
to increase their own wealth. The feudal lord of medieval times did that by building a tollgate along a road and making everybody
who passed by pay. Today's tech giants are doing basically the same thing, but transposed to the digital highway. Using technology
funded by taxpayers, they build tollgates between you and other people's free content and all the while pay almost no tax on their
earnings.
This is the so-called innovation that has Silicon Valley gurus in raptures: ever bigger platforms that claim ever bigger handouts.
So why do we accept this? Why does most of the population work itself to the bone to support these rentiers?
I think there are two answers. Firstly, the modern rentier knows to keep a low profile. There was a time when everybody knew who
was freeloading. The king, the church, and the aristocrats controlled almost all the land and made peasants pay dearly to farm it.
But in the modern economy, making rentierism work is a great deal more complicated. How many people can explain a
credit default swap
, or a collateralised debt obligation ? Or the revenue
model behind those cute Google Doodles? And don't the folks on Wall Street and in Silicon Valley work themselves to the bone, too?
Well then, they must be doing something useful, right?
Maybe not. The typical workday of Goldman Sachs' CEO may be worlds away from that of King Louis XIV, but their revenue models
both essentially revolve around obtaining the biggest possible handouts. "The world's most powerful investment bank," wrote the journalist
Matt Taibbi about
Goldman Sachs , "is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything
that smells like money."
But far from squids and vampires, the average rich freeloader manages to masquerade quite successfully as a decent hard worker.
He goes to great lengths to present himself as a "job creator" and an "investor" who "earns" his income by virtue of his high "productivity".
Most economists, journalists, and politicians from left to right are quite happy to swallow this story. Time and again language is
twisted around to cloak funneling and exploitation as creation and generation.
However, it would be wrong to think that all this is part of some ingenious conspiracy. Many modern rentiers have convinced even
themselves that they are bona fide value creators. When current Goldman Sachs CEO
Lloyd Blankfein
was asked about the purpose of his job, his straight-faced answer was that he is "
doing God's
work ". The Sun King would have approved.
The second thing that keeps rentiers safe is even more insidious. We're all wannabe rentiers. They have made millions of people
complicit in their revenue model. Consider this: What are our financial sector's two biggest cash cows? Answer: the housing market
and pensions. Both are markets in which many of us are deeply invested.
Recent decades have seen more and more people contract debts to buy a home, and naturally it's in their interest if
house
prices continue to scale new heights (read: burst bubble upon bubble). The same goes for pensions. Over the past few decades
we've all scrimped and saved up a mountainous pension piggy bank. Now pension funds are under immense pressure to ally with the biggest
exploiters in order to ensure they pay out enough to please their investors.
The fact of the matter is that feudalism has been democratised. To a lesser or greater extent, we are all depending on handouts.
En masse, we have been made complicit in this exploitation by the rentier elite, resulting in a political covenant between the rich
rent-seekers and the homeowners and retirees.
Don't get me wrong, most homeowners and retirees are not benefiting from this situation. On the contrary, the banks are bleeding
them far beyond the extent to which they themselves profit from their houses and pensions. Still, it's hard to point fingers at a
kleptomaniac when you have sticky fingers too.
So why is this happening? The answer can be summed up in three little words: Because it can.
Rentierism is, in essence, a question of power. That the Sun King Louis XIV was able to exploit millions was purely because he
had the biggest army in Europe. It's no different for the modern rentier. He's got the law, politicians and journalists squarely
in his court. That's why bankers get fined peanuts for preposterous fraud, while a mother on government assistance gets penalised
within an inch of her life if she checks the wrong box.
The biggest tragedy of all, however, is that the rentier economy is gobbling up society's best and brightest. Where once upon
a time Ivy League graduates chose careers in science, public service or education, these days they are more likely to opt for banks,
law firms, or trumped up ad agencies like Google and Facebook. When you think about it, it's insane. We are forking over billions
in taxes to help our brightest minds on and up the corporate ladder so they can learn how to score ever more outrageous handouts.
One thing is certain: countries where rentiers gain the upper hand gradually fall into decline. Just look at the Roman Empire.
Or Venice in the 15th century. Look at the Dutch Republic in the 18th century. Like a parasite stunts a child's growth, so the rentier
drains a country of its vitality.
What innovation remains in a rentier economy is mostly just concerned with further bolstering that very same economy. This may
explain why the big dreams of the 1970s, like flying cars, curing cancer, and colonising Mars, have yet to be realised, while bankers
and ad-makers have at their fingertips technologies a thousand times more powerful.
Yet it doesn't have to be this way. Tollgates can be torn down, financial products can be banned, tax havens dismantled, lobbies
tamed, and patents rejected. Higher taxes on the ultra-rich can make rentierism less attractive, precisely because society's biggest
freeloaders are at the very top of the pyramid. And we can more fairly distribute our earnings on land, oil, and innovation through
a system of, say, employee shares, or a
universal basic
income .
But such a revolution will require a wholly different narrative about the origins of our wealth. It will require ditching the
old-fashioned faith in "solidarity" with a miserable underclass that deserves to be borne aloft on the market-level salaried shoulders
of society's strongest. All we need to do is to give real hard-working people what they deserve.
And, yes, by that I mean the waste collectors, the nurses, the cleaners � theirs are the shoulders that carry us all.
"... "The entire US economy today is about the quick buck." ..."
"... " When market tumbled in 2015 and 2016, global central banks embarked on the largest combined intervention effort in history giving us a grand total of over $15 trillion." ..."
Central banks are founded for one reason only: to save
[private] banks from bankruptcy, invariably at the cost of society at large. They'll bring down markets
and societies just to make sure banks don't go under. They'll also, and even, do that when
these banks have taken insane risks. It's a battle societies can't possibly win as long as
central banks can raise unlimited amounts of 'money' and shove it into private banks. Ergo:
societies can't survive the existence of a central bank that serves the interests of its
private banks.
For years critics of U.S. central-bank policy have been dismissed as Negative Nellies,
but the ugly truth is staring us in the face: Stock-market advances remain a game of
artificial liquidity and central-bank jawboning, not organic growth. And now the jig is up.
As I've been saying for a long time: There is zero evidence that markets can make or sustain
new highs without some sort of intervention on the side of central banks. None. Zero. Zilch.
And don't think this is hyperbole on my part. I will, of course, present evidence.
In March 2009 markets bottomed on the expansion of QE1 (quantitative easing, part one),
which was introduced following the initial announcement in November 2008. Every major
correction since then has been met with major central-bank interventions: QE2, Twist, QE3 and
so on. When market tumbled in 2015 and 2016, global central banks embarked on the largest
combined intervention effort in history. The sum: More than $5 trillion between 2016 and
2017, giving us a grand total of over $15 trillion, courtesy of the U.S. Federal Reserve, the
European Central Bank and the Bank of Japan:
When did global central-bank balance sheets peak? Early 2018. When did global markets
peak? January 2018. And don't think the Fed was not still active in the jawboning business
despite QE3 ending. After all, their official language remained "accommodative" and their
interest-rate increase schedule was the slowest in history, cautious and tinkering so as not
to upset the markets.
With tax cuts coming into the U.S. economy in early 2018, along with record buybacks,
the markets at first ignored the beginning of QT (quantitative tightening), but then it all
changed. And guess what changed? Two things. In September 2018, for the first time in 10
years, the U.S. central bank's Federal Open Market Committee (FOMC) removed one little word
from its policy stance: "accommodative." And the Fed increased its QT program. When did U.S.
markets peak? September 2018.
[..] don't mistake this rally for anything but for what it really is: Central banks
again coming to the rescue of stressed markets. Their action and words matter in heavily
oversold markets. But the reality remains, artificial liquidity is coming out of these
markets. [..] What's the larger message here? Free-market price discovery would require a
full accounting of market bubbles and the realities of structural problems, which remain
unresolved. Central banks exist to prevent the consequences of excess to come to fruition and
give license to politicians to avoid addressing structural problems.
is it $15 trillion, or is it 20, or 30? How much did China add to the total? And for what?
How much of it has been invested in productivity? I bet you it's not even 10%. The rest has
just been wasted on a facade of a functioning economy. Those facades tend to get terribly
expensive.
Western economies would have shrunk into negative GDP growth if not for the $15-20 trillion
their central banks injected over the past decade. And that is seen, or rather presented, as
something so terrible you got to do anything to prevent it from happening. As if it's
completely natural, and desirable, for an economy to grow forever.
It isn't and it won't happen, but keeping the illusion alive serves to allow the rich to put
their riches in a safe place, to increase inequality and to prepare those who need it least to
save most to ride out the storm they themselves are creating and deepening. And everyone else
can go stuff themselves.
And sure, perhaps a central bank could have some function that benefits society. It's just
that none of them ever do, do they? Central banks benefit private banks, and since the latter
have for some braindead reason been gifted with the power to issue our money, while we could
have just as well done that ourselves, the circle is round and we ain't in it.
No, the Fed doesn't hide the ugly truth. The Fed is that ugly truth. And if we don't get rid
of it, it will get a lot uglier still before the entire edifice falls to pieces. This is not
complicated stuff, that's just what you're made to believe. Nobody needs the Fed who doesn't
want to pervert markets and society, it is that simple.
The word your looking for "abyss"
definition --
a catastrophic situation seen as likely to occur to the people with wealth that is built
upon "leverage."
Leverage results from using borrowed capital as a funding source when investing to expand
the firm's asset base and generate returns on risk capital. Leverage is an investment
strategy of using borrowed money -- specifically, the use of various financial instruments
or borrowed capital -- to increase the potential return of an investment. Leverage can also
refer to the amount of debt a firm uses to finance assets. When one refers to a company,
property or investment as "highly leveraged," it means that item has more debt than
equity.
"The entire US economy today is about the quick buck."
Even the stock market these days seems to be about the quick buck. In the US, the
average holding period for stocks has dropped from 8 years (1960), to 5 years (1970), to 2
years (1990), to 4 months (in the past few years).
The policies of the Fed (as well as the Board of Directors of the companies) are
evidently geared towards the short-term benefits of the owners who will be leaving in a few
months. The long-term health of the companies, the economy, and the overall society (mostly
non-owners) is evidently not so important to the Fed and the CEOs.
" When market tumbled in 2015 and 2016, global central banks embarked on the largest combined intervention effort
in history giving us a grand total of over $15 trillion."
Those $15 trillion in assets being held by the central banks propped the global stock market capitalization up to around
$75 trillion. Short term thinking that gives short-term benefits. Take away the props and of course that sucker is going to
fall.
What were they thinking, the overweight patient with all of those systemic problems is going to be able to walk just
fine when the crutches are taken away?
"... At least in nature, "smart" parasites may perform helpful functions, such as helping their host find food. But as the host weakens, the parasite lays eggs, which hatch and devour the host, killing it. That is what predatory finance is doing to today's economies. It's stripping assets, not permitting growth or even letting the economy replenish itself. ..."
"... MH: The financial sector is a rentier sector – external to the "real" economy of production and consumption, and therefore a form of overhead. As overhead, it should be a subtracted from GDP. ..."
"... In the name of saving "the market," the Fed and ECB therefore overruled the market. Today, over 80 percent of U.S. home mortgages are guaranteed by the Federal Housing Authority. Banks won't make loans without the government picking up the risk of non-payment. So bankers just pretend to be free market. That's for their victims. ..."
"... The "flight to security" is a move out of the stock and bond markets into government debt. Stocks and bonds may go down in price, some companies may go bankrupt, but national governments can always print the money to pay their bondholders. Investors are mainly concerned about keeping whatthey have – security of principal. They are willing to be paid less income in exchange for preserving what they have taken. ..."
"... But the way Wall Street administrators at the Treasury and Fed plan the crisis is for small savers to lose out to the large institutional investors. So the bottom line that I see is a slow crash. ..."
"... U.S. diplomats radically changed IMF lending rules as part of their economic sanctions imposed on Russia as result of the coup d'état by the Right Sector, Svoboda and their neo-Nazi allies in Kiev. The ease with which the U.S. changed these rules to support the military coup shows how the IMF is simply a tool of President Obama's New Cold War policy. ..."
"... The main financial innovation by Apple has been to set up a branch office in Ireland and pretend that the money it makes in the Untied States and elsewhere is made in Ireland – which has only a 15 percent income-tax rate ..."
"... It would seem to be an anomaly to borrow from banks and pay dividends. But that is the "cannibalism" stage of modern finance capitalism, U.S.-style. For the stock market as a whole, some 92 percent of earnings recently were used to pay dividends or for stock buybacks. ..."
Michael Hudson: The financial sector today is decoupled from industrialization. Its main
interface with industry is to provide credit to corporate raiders. Their objective isasset
stripping, They use earnings to repay financial backers (usually junk-bond holders), not to
increase production. The effect is to suck income from the company and from the economy to pay
financial elites.
These elites play the role today that landlords played under feudalism. They levy interest
and financial fees that are like a tax, to support what the classical economists called
"unproductive activity." That is what I mean by "parasitic."
If loans are not used to finance production and increase the economic surplus, then interest
has to be paid out of other income. It is what economists call a zero-sum activity. Such
interest is a "transfer payment," because it that does not play a directly productive function.
Credit may be a precondition for production to take place, but it is not a factor of
production as such.
The situation is most notorious in the international sphere, especially in loans to
governments that already are running trade and balance-of-payments deficits. Power tends to
pass into the hands of lenders, so they lose control – and become less democratic.
To return to my use of the word parasite, any exploitation or "free lunch" implies a host.
In this respect finance is a form of war, domestically as well as internationally.
At least in nature, "smart" parasites may perform helpful functions, such as helping their
host find food. But as the host weakens, the parasite lays eggs, which hatch and devour
the host, killing it. That is what predatory finance is doing to today's economies. It's
stripping assets, not permitting growth or even letting the economy replenish itself.
The most important aspect of parasitism that I emphasize is the need of parasites to control
the host's brain. In nature, a parasite first dulls the host's awareness that it is being
attacked. Then, the free luncher produces enzymes that control the host's brain and make it
think that it should protect the parasite – that the outsider is part of its own body,
even like a baby to be specially protected.
The financial sector does something similar by pretending to be part of the industrial
production-and-consumption economy. The National Income and Product Accounts treat the
interest, profits and other revenue that Wall Street extracts – along with that of the
rentier sectors it backs (real estate landlordship, natural resource extraction and
monopolies) – as if these activities add to Gross Domestic Product. The reality is that
they are a subtrahend, a transfer payment from the "real" economy to the Finance, Insurance and
Real Estate Sector. I therefore focus on this FIRE sector as the main form of economic overhead
that financialized economies have to carry.
What this means in the most general economic terms is that finance and property ownership
claims are not "factors of production." They are external to the production process. But they
extract income from the "real" economy.
They also extract property ownership. In the sphere of public infrastructure – roads,
bridges and so forth – finance is moving into the foreclosure phase. Creditors are trying
to privatize what remains in the public domains of debtor economies. Buyers of these assets
– usually on credit – build interest and high monopoly rents into the prices they
charge.
JR: What is your vision for the next few decades of the global economy?
MH: The financial overhead has grown so large that paying interest, amortization and fees
shrinks the economy. So we are in for years of debt deflation. That means that people have to
pay so much debt service for mortgages, credit cards, student loans, bank loans and other
obligations that they have less to spend on
goods and services. So markets shrink. New investment and employment fall off, and the economy
is falls into a downward spiral.
My book therefore
devotes a chapter to describing how debt deflation works. The result is a slow crash. The
economy just gets poorer and poorer. More debtors default, and their property is transferred to
creditors. This happens not only with homeowners who fall into arrears, but also corporations
and even governments. Ireland and Greece are examples of the kind of future in store for
us.
Financialized economies tend to polarize between creditors and debtors. This is the dynamic
that Thomas Piketty leaves out of his book, but his statistics show that all growth in income
and nearly all growth in wealth or net worth has accrued to the One Percent, almost nothing for
the 99 Percent.
Basically, you can think of the economy as the One Percent getting the 99 Percent
increasingly into debt, and siphoning off as interest payments and other financial charges
whatever labor or business earns. The more a family earns, for instance, the more it can borrow
to buy a nicer home in a better neighborhood – on mortgage. The rising price of housing
ends up being paid to the bank – and over the course of a 30-year mortgage, the banker
receives more in interest than the seller gets.
Economic polarization is also occurring between creditor and debtor nations. This
issplitting the eurozone between Germany, France and the Netherlands in the creditor camp,
against Greece, Spain, Portugal, Ireland and Italy (the PIIGS) falling deeper into debt,
unemployment and austerity – followed by emigration and capital flight.
This domestic and international polarization will continue until there is a political fight
to resist the creditors. Debtors will seek to cancel their debts. Creditors will try to
collect, and the more they succeed, the more they will impoverish the economy.
Background
JR: Let's talk about your history, why did you become an economist?
MH: I started out wanting to be a musician – a composer and conductor. I wasn't very
good at either, but I was a very good interpreter, thanks to working with Oswald Jonas in
Chicago studying the musical theories of Heinrich Schenker. I got my sense of aesthetics from
music theory, and also the idea of modulation from one key to another. It is dissonance that
drives music forward, to resolve in a higher key or overtone.
When I was introduced to economics by the father of a schoolmate, I found it as aesthetic as
music, in the sense of a self-transforming dynamic through history by challenge and response or
resolution. I went to work for banks on Wall Street, and was fortunate enough to learn about
how central mortgage lending and real estate were for the economy. Then, I became Chase
Manhattan's balance-of-payments economist in 1964, and got entranced with tracing how the
surplus was buried in the statistics – who got it, and what they used it for. Mainly the
banks got it, and used it to make new loans.
I viewed the economy as modulating from one phase to the next. A good interpretation would
explain history. But the way the economy worked was nothing like what I was taught in school
getting my PhD in economics at New York University. So I must say, I enjoyed contrasting
reality with what I now call Junk Economics.
In mainstream textbooks there is no exploitation. Even fraudulent banks, landlords and
monopolists are reported as "earning" whatever they take – as if they are contributing to
GDP. So I found the economics discipline ripe for a revolution.
JR: What is the difference between how economics is taught vs. what you learned in your
job?
MH: For starters, when I studied economics in the 1960s there was still an emphasis on the
history of economic thought, and also on economic history. That's gone now.
One can easily see why. Adam Smith, John Stuart Mill and other classical economists sought
to free their societies from the legacy of feudalism: landlordism and predatory finance, as
well as from the monopolies that bondholders had demanded that governments create as a means of
paying their war debts.
Back in the 1960s, just like today, university courses did not give any training in actual
statistics. My work on Wall Street involved National Income and Product Accounts and the
balance-of-payments statisticspublished by the Commerce Department every three months, as well
as IMF andFederal Reserve statistics. Academic courses didn't even make reference to accounting
– so there was no conceptualization of "money," for instance, in terms of the liabilities
side of the balance sheet.
New York University's money and banking course was a travesty. It was about helicopters
dropping money down – to be spent on goods and services, increasing prices. There was no
understanding that the Federal Reserve's helicopter only flies over Wall Street, or that banks
create money on its own computers. It was not even recognized that banks lend to customers
mainly to buy real estate, or speculate in stocks and bonds, or raid companies.
Economics is taught like English literature. Teachers explain the principle of "suspension
of disbelief." Readers of novels are supposed to accept the author's characters and setting. In
economics, students are told to accept just-pretend parallel universe assumptions, and then
treat economic theory as a purely logical exercise, without any reference to the world.
The switch from fiction to reality occurs by taking the policy conclusions of these
unrealistic assumptions as if they do apply to the real world: austerity, trickle-down
economics shifting taxes off the wealthy, and treating government spending as "deadweight" even
when it is on infrastructure.
The most fictitious assumption is that Wall Street and the FIRE sector add to
output, rather than extracting revenue from the rest of the economy.
JR: What did you learn in your work on the US oil industry?
MH: For starters, I learned how the oil industry became tax-exempt. Not only by the
notorious depletion allowance, but by offshoring profits in "flags of convenience" countries, in
Liberia and Panama. These are not real countries. They do not have their own currency, but use
U.S. dollars. And they don't have an income tax.
The international oil companies sold crude oil at low prices from the Near East or Venezuela
to Panamanian or Liberian companies – telling the producing countries that oil was not
that profitable. These shipping affiliates owned tankers, and charged very high prices to
refineries and distributors in Europe or the Americas. The prices were so high that these
refineries and other "downstream" operations marketing gas to consumers did not show a profit
either. So they didn't have to pay European or U.S. taxes. Panama and Liberia had no income tax.
So the global revenue of the oil companies was tax-free.
I also learned the difference between a branch and an affiliate. Oil wells and oil fields
are treated as "branches," meaning that their statistics are consolidated with the head office
in the United States. This enabled the companies to take a depletion allowance for emptying out
oil fields abroad as well as in the United States.
My statistics showed that the average dollar invested by the U.S. oil industry was returned
to the United States via balance-of-payments flows in just 18 months. (This was not a profit
rate, but a balance-of-payments flow.) That finding helped the oil industry get exempted from
President Lyndon Johnson's "voluntary" balance-of-payments controls imposed in 1965 when the
Vietnam War accounted for the entire U.S. payments deficit. Gold was flowering out to France,
Germany and other countries running payments surpluses.
The balance-of-payments accounting format I designed for this study led me to go to work for
an accounting firm, Arthur Andersen, to look at the overall U.S. balance of payments. I found
that the entire deficit was military spending abroad, not foreign aid or trade.
Junk Economics
JR: Why do you think there is a disconnect between academic economic theory and the way
that international trade and finance really works?
MH: The aim of academic trade theory is to tell students, "Look at the model, not at how
nations actually develop." So of all the branches of economic theory, trade theory is the most
wrongheaded.
For lead nations, the objective of free trade theory is to persuade other countries not to
protect their own markets. That means not developing in the way that Britain did under its
mercantilist policies thatmade it the first home of the Industrial Revolution. It means not
protecting domestic industry, as the United States and Germany did in order to catch up with
British industry in the 19 th century and overtake it in theearly 20 th
century.
Trade theorists start with a conclusion: either free trade or (in times past) protectionism.
Free trade theory as expounded by Paul Samuelson and others starts by telling students to
assume a parallel universe – one that doesn't really exist. The conclusion they start
with is that free trade makes everyone's income distribution between capital and labor similar.
And because the world has a common price for raw materials and dollar credit, as well as for
machinery, the similar proportions turn out to mean equality. All the subsequent assumptions
are designed to lead to this unrealistic conclusion.
But if you start with the real world instead of academic assumptions, you see that the world
economy is polarizing. Academic trade theory can't explain this. In fact, it denies that
today's reality can be happening at all!
A major reason why the world is polarizing is because of financial dynamics between creditor
and debtor economies. But trade theory starts by assuming a world of barter. Finally, when the
transition from trade theory to international finance is made, the assumption is that countries
running trade deficits can "stabilize" by imposing austerity, by lowering wages, wiping out
pension funds and joining the class war against labor.
All these assumptions were repudiated already in the 18 th century, when Britain
sought to build up its empire by pursuing mercantilist policies. The protectionist American
School of Economics in the 19 th century put forth the Economy of High Wages
doctrine to counter free-trade theory. None of this historical background appears in today's
mainstream textbooks. (I provide a historical survey in Trade, Development and
Foreign Debt , new ed., 2002. That book summarizes my course in international trade
and finance that I taught at the New School from 1969 to 1972.)
In the 1920s, free-trade theory was used to insist that Germany could pay reparations far
beyond its ability to earn foreign exchange. Keynes, Harold Moulton and other economists
controverted that theory. In fact, already in 1844, John Stuart Mill described how paying
foreign debts lowered the exchange rate. When that happens, what is lowered is basically wages.
So what passes for today's mainstream trade theory is basically an argument for reducing wages
and fighting a class war against labor.
You can see this quite clearly in the eurozone, above all in the austerity imposed on
Greece. The austerity programs that the IMF imposed on Third World debtors from the 1960s
onward. It looks like a dress rehearsal to provide a cover story for the same kind of
"equilibrium economics" we may see in the United States.
JR: Can the US pay its debts permanently? Does the amount of federal debt, $18 or $19
trillion even matter? Should we pay down the national debt?
MH: It is mainly anti-labor austerity advocates who urge balancing the budget, and even to
run surpluses to pay down the national debt. The effect must be austerity.
A false parallel is drawn with private saving. Of course individuals should get out of debt
by saving what they can. But governments are different. Governments create money and spend it
into the economy by running budget deficits. The paper currency in your pocket is technically a
government debt. It appears on the liabilities side of the public balance sheet.
When President Clinton ran a budget surplus in the late 1990s, that sucked revenue
out of the U.S. economy. When governments do not run deficits, the economy is
obliged to rely on banks – which charge interest for providing credit. Governments can
create money on their own computers just as well. They can do this without having to pay
bondholders or banks.
That is the essence of Modern Monetary Theory (MMT). It is elaborated mainly at the
University of Missouri at Kansas City (UMKC), especially by Randy Wray – who has just
published a number of books on money – and Stephanie Kelton, whom Bernie Sanders
appointed as head of the Senate Democratic Budget Committee.
If the government were to pay off its debts permanently, there would be no money –
except for what banks create. That has never been the case in history, going all the way back
to ancient Mesopotamia. All money is a government debt, accepted in payment of taxes
This government money creation does not mean that governments can pay foreign
debts. The danger comes when debts are owed in a foreign currency. Governments are unable to
tax foreigners. Paying foreign debts puts downward pressure on exchange rates. This leads to
crises, which often end by relinquishing political control to the IMF and foreign banks. They
demand "conditionalities" in the form of anti-labor legislation and privatization.
In cases where national economies cannot pay foreign debts out of current
balance-of-payments revenue, debts should be written down, not paid off. If they are not
written down, you have the kind of austerity that is tearing Greece apart today.
JR: You say that mainstream economic theory and academic study is pro-creditor? Why is
this the case?
MH: Thorstein Veblen pointed out that vested interests are the main endowers and backers of
the higher learning in America. Hardly by surprise, they promote a bankers'-eye view of the
world. Imperialists promote a similar self-serving worldview.
Economic theory, like history, is written by the winners. In today's world that means the
financial sector. They depict banks as playing a productive role, as if loans are made to help
borrowers earn the money to pay interest and still keep something for themselves. The pretense
is that banks finance industrial capital formation, not asset stripping.
What else would you expect banks to promote? The classical distinction between productive
and unproductive (that is, extractive) loans is not taught. The result has been to turn
mainstream economics as a public-relations advertisement for the status quo, which meanwhile
becomes more and more inequitable and polarizes the economy.
JR: What can be learned by studying the history of economic thought? What did Adam Smith
and the people in his era and those which followed him understand that would be useful to us
now?
MH: If you read Adam Smith and subsequent classical economists, you see that their main
concern was to distinguish between productive and unproductive economic activity. They wanted
to isolate unproductive rentier income, and unproductive spending and credit.
To do this, they developed the labor theory of value to distinguish value from price –
with "economic rent" being the excess of price over socially necessary costs of production.
They wanted tofree industrial capitalism from the legacy of feudalism: tax-like groundrent paid
to a hereditary landed aristocracy. They also opposed the monopolies that bondholders had
insisted that governments create to sell off to pay the public debt. That was why the East
India Company and the South Sea Company were created with their special privileges.
Smith and his followers are applauded as the founding fathers of "free market" economics.
But they defined free markets in a diametrically opposite way from today's self-proclaimed
neoliberals. Smith and other classical economists urged markets free from economic
rent.
These classical reformers realized that progressive taxation to stop favoring
rentiers required a government strong enough to take on society's most powerful and
entrenched vested interests. The 19 th -century drive for Parliamentary reform in
Britain aimed at enabling the House of Commons to override the House of Lords and tax the
landlords. (This rule finally passed in 1910 after a constitutional crisis.) Now there has been
a fight by creditors to nullify democratic politics, most notoriously in Greece.
Today's neoliberals define free markets as those free for rent-seekers and
predatory bankers from government regulation and taxes.
No wonder the history of economic thought has been stripped away from the curriculum.
Reading the great classical economists would show how the Enlightenment's reform program has
been inverted. The world is now racing down a road to the Counter-Enlightenment, a neo-
rentier economy that is bringing economic growth to a halt.
JR: Why does economic thought minimize the role of debt? I.e. I read Paul Krugman and he
says the total amount of debtisn't a problem, for example you can't find the internet bust in
GDP or the 1987 crash?
MH: When economists speak of money, they neglect that all money and credit is debt. That is
the essence of bookkeeping and accounting. There are always two sides to the balance sheet. And
one party's money or savings is another party's debt.
Mainstream economic models describe a world that operates on barter, not on credit. The
basic characteristic of credit and debt is that it bears interest. Any rate of interest can be
thought of as a doubling time. Already in Babylonia c. 1900 BC, scribes were taught to c
alculate compound interest, and how long it took a sum to double (5 years) quadruple (10 years)
or multiply 64 times (30 years). Martin Luther called usury Cacus, the monster that absorbs
everything. And in Volume III of Capital and also his Theories of Surplus
Value , Marx collected the classical writings about how debts mount up at interest by
purely mathematical laws, without regard for the economy's ability to pay.
The problem with debt is not only interest. Shylock's loan against a pound of flesh was a
zero-interest loan. When crops fail, farmers cannot even pay the principal. They then may lose
their land, which is their livelihood. Forfeiture is a key part of the credit/debt dynamic. But
the motto of mainstream neoliberal economics is, "If the eye offends thee, pluck it out."
Discussing the unpayability of debt is offensive to creditors.
Anyone who sets out to calculate the ability pay quickly recognizes that the overall volume
of debts cannot be paid. Keynes that made point in the 1920s regarding Germany's inability to
pay reparations.
Needless to say, banks and bondholders do not want to promote any arguments explaining the
limits to how much can be paid without pushing economies into depression. That is what my
Killing the
Host is about. It is the direction in which the eurozone is now going, and the United
States also issuffering debt deflation.
Turning to the second part of your question, Krugman and others say that debt doesn't matter
because "we owe it to ourselves." But the "we" who owe it are the 99 Percent; the people who
are "ourselves" are the One Percent. So the 99 Percent Owe the One Percent. And they owe more
and more,thanks to the "magic of compound interest."
Krugman has a blind spot when it comes to understanding money. In his famous debate with
Steve Keen, he denied that banks create money or credit. He insists that commercial banks only
lend out deposits. But Keen and the Modern Monetary Theory (MMT) school show that loans
create deposits , not the other way around. When a banker writes a loan on his computer
keyboard, he creates a deposit as the counterpart.
Endogenous money is easily created electronically. That privilege enables banks to charge
interest. Governments could just as easily create money on their own computers. Neoliberal
privatizers want to block governments from doing this, so that economies will have to rely on
commercial banks for the money and credit they need to grow.
The mathematics of compound interest means that economies can only pay their debts by
creating a financial bubble – more and more credit to bid up asset prices for real
estate, stocks and bonds, enabling banks to make larger loans. Today's economies are obliged to
develop into Ponzi schemes to keep going – until they collapses\ in a crash.
JR: The models of the macroeconomy to forecast the future and to develop policy at
institutions like the IMF, often consider finance and banking as just another sector of
industry, like construction or manufacturing. How do these institutions consider their model of
the financial sector?
MH: The IMF acts as the collection agent for global bondholders. Its projections begin by
assuming that all debts can be paid, if economies will cut wages and wiping out pension funds
so as to pay banks and bondholders.
As long as creditors remain in control, they are quite willing to sacrifice the 99 Percent
to pay the One Percent. When IMF "stabilization" programs end up destabilizing their hapless
victims, mainstream media blame the collapse on the debtor country for not shedding enough
blood to impose even more austerity.
Economists often define their discipline as "the allocation of scarce resources among
competing ends." But when resources or money really become scarce, economists call it
a crisis and say that it's a question for politicians, not their own department. Economic
models are only marginal – meaning, small changes, not structural.
The only trend that does grow inexorably is that of debt. The more it grows, the
more it slows the "real" economy of production and consumption. So something must give: either
the economy, or creditor claims. And that does indeed change the structure of the economy. It
is a political as well as an economic change.
Regarding the second part of your question – how creditor institutions model the
financial sector – when they look at prices they only consider wages and consumer prices,
not asset prices. Yet most bank credit is tied to asset prices, because loans are made to buy
homes or commercial real estate, stocks or bonds, not bread and butter.
Not looking at what is obviously important requires a great effort of tunnel vision. But as
Upton Sinclair noted, there are some jobs – like being a central banker, or a New
York Times editorial writer – that require the applicant not to understand
the topic they are assigned to study. Hence, you have Paul Krugman on money and banking, the
IMF on economic stabilization, and Rubinomics politicians on bailing out the banks instead of
saving the economy.
If I can add a technical answer: The IMF does not recognize that the "budget problem"
– squeezing domestic currency out of the economy by taxing wages and industry – is
quite different from the "transfer problem" of converting this money into foreign exchange.
That distinction was the essence of the German reparations debate in the 1920s. It is a focus
of my history of theories of Trade, Development and
Foreign Debt .
Drawing this distinction shows why austerity programs do not help countries pay their
foreign debt, but tears them apart and induces emigration and capital flight.
JR: Does the financial sector add to GDP?
MH: The financial sector is a rentier sector – external to the "real" economy
of production and consumption, and therefore a form of overhead. As overhead, it should be a
subtracted from GDP.
JR: In the way that oil industry funded junk science on global warming denial, Wall
Street funds and endows junk economics and equilibrium thinking?
Falling on your face is a state of equilibrium. So is death – and each moment of
dying. Equilibrium is simply a cross section in time. Water levels 20 or 30 feet higher would
be another form of equilibrium. But to the oil industry, "equilibrium" means their earnings
continuing to grow at the present rate, year after year. This involves selling more and more
oil, even if this raises sea levels and floods continents. That is simply ignored as not
relevant to earnings. By the time that flooding occurs, today's executives will have taken
their bonuses and capital gains and retired.
That kind of short-termism is the essence of junk economics. It is tunnel-visioned.
What also makes economics junky is assuming that any "disturbance" sets in motion
countervailing forces that return the economy to its "original" state – as if this were
stable, not moving down the road to debt peonage and similar economic polarization.
The reality is what systems analysts call positive feedback: When an economy gets out of
balance, especially as a result of financial predators, the feedback and self-reinforcing
tendencies push it further and further out of balance.
My trade theory book traced the history of economists who recognize this. Once a class or
economy falls into debt, the debt overhead tends to grow steadily until it stifles market
demand and subjects the economy to debt deflation. Income is sucked upward to the creditors,
who then foreclose on the assets of debtors. This shrinks tax revenue, forcing public budgets
into deficit. And when governments are indebted, they becomemore subject to pressure to
privatization of public enterprise. Assets are turned over to monopolists, who further shrink
the economy by predatory rent seeking.
An economy going bankrupt such as Greece and having to sell off its land, gas rights, ports
and public utilities is "in equilibrium" at any given moment that its working-age population is
emigrating, people are losing their pensions and suffering.
When economists treat depressions merely as self-curing "business downturns," they are
really saying that no government action is required from "outside" "the market" to rectify
matters and put the economy back on track to prosperity. So equilibrium thinking isbasically
anti-government libertarian theory.
But when banks are subjected to "equilibrium" by writing down debts in keeping with the
ability of borrowers to pay, WallStreet's pet politicians and economic journalists call this a
crisis and insist that the banks and bondholders must be saved or there will be a crisis. This
is not a solution. It makes the problem worse and worse.
There is an alternative, of course. That is to understand the dynamics at work transforming
economic and socialstructures. That's what classical economics was about.
The post-classical revolution was marginalist. That means that economists only look at small
changes, not structural changes. That isanother way of saying that reforms are not necessary
– because reforms change structures, not merely redistribute a little bit of income as a
bandage.
What used to be "political economy" gave way to just plain "economics" by World War I. As it
became increasingly abstract and mathematical, students who studied the subject because they
wanted to make the world better were driven out, into other disciplines. That was my experience
teaching at the New School already nearly half a century ago. The discipline has become much
more tunnel-visioned since then.
Present state of financial world
JR: We see around the world something like 25% of all national debt is now has a yield
priced in negative interest rates? What does this mean? Do you see this continuing?
MH: On the one hand, negative interest rates reflect a flight to security by investors. They
worry that the debts can't be paid and that there are going to be defaults.
They also see that the United States and Europe are in a state of debt deflation, where
people and businesses have to pay banks instead of spending their income on goods and services.
So markets shrink, sales and profits fall, and the stock market turns down.
This decline was offset by the Federal Reserve and the European Central Bank trying to
re-inflate the Bubble Economy by Quantitative Easing – providing reserves to the banks in
exchange for their portfolio of mortgages and other loans. Otherwise, the banks would have had
to sell these loans in "the market" at falling prices.
In the name of saving "the market," the Fed and ECB therefore overruled the market. Today,
over 80 percent of U.S. home mortgages are guaranteed by the Federal Housing Authority. Banks
won't make loans without the government picking up the risk of non-payment. So bankers just
pretend to be free market. That's for their victims.
The "flight to security" is a move out of the stock and bond markets into government debt.
Stocks and bonds may go down in price, some companies may go bankrupt, but national governments
can always print the money to pay their bondholders. Investors are mainly concerned about
keeping whatthey have – security of principal. They are willing to be paid less income in
exchange for preserving what they have taken.
Here's the corner that the economy has backed itself into. The solution to most problems
creates new problems – blowback or backlash, which often turn out to be even bigger
problems. Negative interest rates mean that pension funds cannot invest in securities that
yield enough for them to pay what they have promised their contributors. Insurance companies
can't earn the money to pay their policyholders. So something has to give.
There will be breaks in the chain of payments. But the way Wall Street administrators at the
Treasury and Fed plan the crisis is for small savers to lose out to the large institutional
investors. So the bottom line that I see is a slow crash.
JR: Could there be a more symbiotic relationship with global financial institutions? For
money to have value, doesn't it need a functioning economy, rather than an
entirelyfinancialized one?
MH: Money is debt. It is a claim on some debtor. Government money is a claim by its
holder on the government, settled by the government accepting it as payment for tax debts.
Being a claim on a debtor, money does not necessarily need a functioning economy. It can be
part of a foreclosure process, transferring property to creditors. A financialized economy
tends to strip the economy of money, by sucking up to the creditor One Percent on top. That
is what happened in Rome, and the result was the Dark Age.
JR: In 2007/2008 we had a subprime crash and since 2014 we've had a commodities crash
where oil prices are low, is this because of what's going on in emerging market economies? Are
emerging market economies and China the next subprime?
MH: The current U.S. and Eurozone depression isn't because of China. It's because of
domestic debt deflation. Commodity prices and consumer spending are falling, mainly because
consumers have to pay most of their wages to the FIRE sector for rent or mortgage payments,
student loans, bank and credit card debt, plus over 15 percent FICA wage withholding for Social
Security and Medicare (actually, to enable the government to cut taxes on the higher income
brackets), as well income and sales taxes. After all this is paid, consumers don't have that
much left to spend on commodities. So of course commodity prices are crashing.
Oil is a special case. Saudi Arabia is trying to drive U.S. fracking rivals out of business,
while also hurting Russia. This lowers gas prices for U.S. and Eurozone consumers, but not by
enough to spur economic recovery.
JR: You've written that we're entering a financial cold war – the IMF and the US
have been very strict on debt repayment for loans from debtor nations, but in Ukraine they've
made an exception regarding Russia, could you discuss your recent writing on that?
MH: U.S. diplomats radically changed IMF lending rules as part of their economic sanctions
imposed on Russia as result of the coup d'état by the Right Sector, Svoboda and their
neo-Nazi allies in Kiev. The ease with which the U.S. changed these rules to support the
military coup shows how the IMF is simply a tool of President Obama's New Cold War policy.
The
aim was to enable the IMF to keep lending to the military junta even though Ukraine is in
default of its $3 billion debt to Russia, even though it refuses to negotiate payment, and even
though IMF money has been used to fund kleptocrats such as Kolomoisky to field his own army
against Russian speakers in Donbas. Ukraine has no foreseeablemeans of paying off the IMF and
other creditors, given its destruction of its export industry in the East. My articles on this
are on my website, michael-hudson.com
.
JR: Today's economy has some truly amazing technology from companies like Apple, but
Apple is also example of financial engineering, you outline this in your book, what financial
innovations havebeen associated with the story of Apple's stock?
MH: The main financial innovation by Apple has been to set up a branch office in Ireland and
pretend that the money it makes in the Untied States and elsewhere is made in Ireland –
which has only a 15 percent income-tax rate
The problem is that if Apple remits this income back to the United States, it will have to
pay U.S. income tax. It wants to avoid this – unless Wall Street can convince politicians
to declare a "tax holiday" would let tax avoiders bring all their foreign money back to the
United States "tax free." That would be a tax amnesty only for the very wealthy, not for the 99
Percent.
JR: This tax angle explains why Apple, almost the wealthiest company in the world, has
been urged by activist shareholders to borrow. Why should the richest company have to go into
debt?
MH: The answer is that Apple can borrow from U.S. banks at a low interest rate to pay
dividends on its stock, instead of paying these dividends by bringing its income back home and
paying the taxes that are due.
It would seem to be an anomaly to borrow from banks and pay dividends. But that is the
"cannibalism" stage of modern finance capitalism, U.S.-style. For the stock market as a whole,
some 92 percent of earnings recently were used to pay dividends or for stock buybacks.
JR: What is the eventual outcome of all theses corporate buybacks to pump up share
prices?
MH: The problem with a company using its revenue simply to buy its own shares to support
their price (and hence, enable CEOs to increase their salaries and bonuses, and make more
capital gains on their stock options) is that the price fillip is temporary. Last year saw the
largest volume of U.S. stock buybacks on record. But since January 1, the market has fallen by
about 20 percent. The debts that companies took on to buy stocks remain in place; and the
earnings that companies used to buy these stocks are now gone.
Corporations did not use their income to invest in long-term expansion. The financial time
frame always has been short-term. Projects with long-term paybacks are cut back, because CEOs
and financial managers simply want to take their money and run. That is the financial
mentality.
JR: What is the outcome of all theses corporate buybacks to pump up share
prices?
MH: When the dust settles, companies financialized in this way are left as debt-leveraged
shells. CEOs then go to their labor unions and threaten to declare bankruptcy if the unions
don't scale back their pension demands. So there is a deliberate tactic to force companies into
debt for short-term earnings and stock-price gains in the short term, and a more intensive
class war against present and past employees and pensioners as a longer-term policy.
JR: Why do business schools endorse of financialization? Reversing
short-termism?
MH: The financial sector is the major endower of business schools. They have become training
grounds for Chief Financial Officers. AtHarvard, Prof. Jensen reasoned that managers should aim
at serving stockholders, not the company as such. The result was an "incentive" system tying
management bonuses to the stock price. So naturally, CFOs used corporate earnings for stock
buybacks and dividend payouts that provided a short-term jump in the stock price.
The ideological foundation of today's business schools is that economic control should be
shifted out of government hands into those of financial managers – that is, Wall Street.
That is their idea of freeenterprise. Its inevitable tendency is to end in more centralized
planning by Wall Street than in Washington.
The aim of this financial planning is quite different from that of governments. As I wrote
in Killing the
Host : "The euro and the ECB were designed in a way that blocks government money
creation for any purpose other than to support the banks and bondholders. The financial sector
takes over the role of economic planner, putting its technicians in charge of monetary and
fiscal policy without democratic voice or referendums over debt and tax policies."
Financial planning always has been short-term. That is why planning should not be consigned
to banks and bondholders. Their mentality is extractive, and that ends up hit-and-run. What
passes for mainstream financial analysis is simply to add up how much is owed and demand
payment, not help the economy grow. To financial managers, economic prosperity and unemployment
is an "externality" – that is, not part of the equation that they are concerned with.
Future
JR: The story of Greece in recent years is relevant to our discussion because the
political party Syriza took over with ideas that were traditionally representing the left? Does
the body of traditional left ideas have the ability to solve some of the challenges regarding
financial warfare?
MH: The left and former Social Democratic or Labour parties have dome to focus on political
and cultural issues, not the economic policy that led to their original creation. What is
lacking is a focus on rent theory and financial analysis. Part of the explanation probably is
covert U.S. funding and sponsorship of Blair-type neoliberals.
The eurozone threatened Greece with domestic destabilization if it did not surrender to the
Troika's demands. Syriza's leaders worried that the ensuing turmoil would bring a right-wing
neo-Nazi group such as Golden Dawn into power, or a military dictatorship as a client oligarchy
for U.S. and German neoliberals.
So the political choice today is much like the 1930s, when the global economy also broke
down. The choice is between nationalism and populism on the right, or socialism reviving what
used to be left-wing politics.
JR: Could there be a debt write down? Isn't someone's debts another person's savings, i.e.
pension funds, 401k, retirement funds?
MH: The problem is indeed that one party's debt finds its counterpart in some other party's
savings. Not paying debts therefore involves annulling some other party's financial claims on
the debtor. What happens to the savings on the other side of the savings/debt balance
sheet?
JR: The political question is, who will lose first?
MH: The answer is, the least politically protected. The end game is "Big fish eat little
fish." Pension funds are in the front line of sacrifice, while government bondholders are the
most secure. Greek pensionsalready have been written down, and the savings of U.S. pension
funds, Social Security and other social programs are the first to be annulled.
The only way to achieve a fair debt cancellation is to write down the debts of the
wealthiest, not the most needy. That is the opposite of how matters are being resolved today.
That is why southern Europe is being radicalized over the debt issue.
JR: Will financialized economies implode? Leaving the non-financialized ones?
MH: The One Percent who hold most of the economy's savings are quite willing to plunge
society into depression to collect on their savings claims. Their greed is why we are in an
economic war much like Rome's Conflict of the Orders that shaped the Republic, and its century
of civil war between creditors and debtors, 133-29 BC.
Argentina has been imploding, just as Third World debtors were obliged to do when they
accepted IMF austerity programs and "conditionalities" for loans to keep their currencies from
depreciating. To avoid being forced to adopt such self-defeating and anti-democratic policies,
it looks like countries will have to move out of the U.S. and Eurozone orbit into that of the
BRICS. That is why today's financial crisis is leading to a New Cold War. It is as much
financial as it is military.
JR: How would you advise a politician to restore prosperity in the future?
MH: The problem is who to give advice to. Most politicians today – at least in the
United States – are proxies for their campaign contributors. President Obama is basically
a lobbyist for his Wall Street in the Democratic Party's Robert Rubin gang. That kind of
demagogue wouldn't pay any attention to policies that I or other economists would make. Their
job is not to make the economy better, but to defend their campaign contributors among the One
Percent at the economy's expense.
But when I go to China or Russia, here's what I advise (without much success so far, I
admit):
First, tax land rent and other economic rent. Make it the tax base. Otherwise, this rental
value will end up being pledged to banks as interest on credit borrowed to buy rent-yielding
assets.
Second, make banks into public utilities. Credit creation is like land or air: a monopoly
created by society. As organs of public policy they would not play the derivatives casino, or
make corporatetakeover loans to raiders, or falsify mortgage documents.
Third, do not privatize basic utilities. Public ownership enables basic services to be
provided at cost, on a subsidized basis, or freely. That will make the economy more
competitive. The cost of upgrading public infrastructure can be defrayed by basing the tax
system on economic rent, not wages.
Does it have to be this way ?
The Eurozone die is cast. Countries must withdraw from the euro so that governments can
create their own money once again, and resist creditor demands to carve up and privatize their
public domain.
For the United States, I don't see a concerted alternative to neoliberalism squeezing more
and more interest and rent out of the economy, making the present slump even deeper in
debt.
How won't debts be paid?
There are two ways not to pay debts: either by annulling or repudiating them, or by
foreclosure when creditors take or demand property in lieu of monetary payment.
The first way not to pay is to default or proclaim a Clean Slate. The most successful
example in modern times is the German Economic Miracle – the Allied Monetary Reform of
1948. That cancelled Germany's internal debts except for wages owed by employers, and minimum
working balances.
The United States Government has fought against creation of an international court to
adjudicate the ability of national economies to pay debts. If such a court is not
created, the global economy will fracture. That is occurring in what looks like a New Cold War
pitting the United States and its NATO satellites against the BRICS (China, Russia, South
Africa, Brazil and India) along with Iran and other debtors.
The US preferred policy is for countries to sell off whatever is in their public domain when
they lack the money to pay their debts. This is the "foreclosure" stage.
Short of these two ways of not paying debts, economies are submitting to debt deflation.
That strips income from producers and consumers, businesses and governments to pay creditors.
As the debtor economy weakens, the debt arrears mount up – often at rising interest rates
to reflect the risk of non-payment as creditors realize that there is no "business as usual'
way in which the debts can be paid.
Debtor countries may postpone the inevitable by borrowing from the IMF or U.S. Treasury to
buy out bondholders. This saves the latter from taking a loss – leaving the debtor
country with debts that are even harder to annul, because they are to foreign governments and
international institutions. That is why it is a very bad policy for countries to move from
owing money to private bondholders to owing the IMF or European Central Bank, whose demands are
unforgiving.
In the long term, debts won't be paid in the way that Rome's debts were not paid. The money
economy itself was stripped, and the empire fell into a prolonged Dark Age. That is the fate
that will befall the West if it continues to support the "rights" of creditors over the right
of nations and economies to survive.
This is a transcript from an interview on the
XE Podcast conducted by Justin Ritchie.
America is now the largest producer of oil in the world. For the U.S., this is great news as
the dream of energy independence grows and maybe one day we can tell OPEC to go take a
hike.
However, while the shale oil revolution has helped change the energy landscape forever, we
cannot take shale for granted. We can't just assume that the industry can withstand any price
and that production can keep rising despite the market conditions. We can't assume that shale
oil producers can match OPEC production cuts barrel for barrel.
We also can't assume OPEC, weakened by falling prices of late, won't strike back like they
did in 2014. That's when OPEC declared a production war on U.S. shale producers. The then de
facto head of the OPEC Cartel Ali al-Naimi spoke about market share rivalry with the United
States and said that they wanted a battle with the U.S. There were no winners in that
production war. Ali al-Naimi was sacked as he almost bankrupted Saudi Arabia. It took its toll
on U.S. producers as well, as many were forced into bankruptcy despite making significant
progress on efficiency and cost cutting.
With 2019 underway, OPEC, along with Russia, agreed to remove 1.2 million barrels per day
off the market for the first six months of the year. Early reports on OPEC compliance to the
agreed upon production cuts is overwhelming at a time when there are new questions about how
shale oil producers are faring after this recent oil price drop.
Private forecasters are showing that there are major cuts in Saudi exports and even signs
that OPEC production is falling sharply. Bloomberg News confirmed that by reporting "observed
crude exports from Saudi Arabia fell to 7.253 million barrels per day in December on lower
flows to the U.S. and China." Furthermore, other private trackers believe that the drop may be
the biggest in exports since Bloomberg began tracking shipments in early 2017. Oil saw another
boost after Bloomberg reported that OPEC oil production had the biggest monthly drop in two
years falling by 530,000 barrels a day to 32.6 million a day last month. It's the sharpest
pullback since January 2017.
Rewind to 2017, there was talk that shale oil producers would make up the difference and the
cut would not matter, but that was proven wrong. This time expect the same because it is likely
that shale oil producers may have to cut back as the sharp price drop has put them in a bad
position. The Wall Street Journal pointed out that, even now, some shale oil wells are not
producing as much oil as expected. This coupled with a large declining production rate in shale
swells means that they need capital to keep drilling to keep those record production numbers
moving higher. "Two-thirds of projections made by the fracking companies between 2014 and 2017
in America's four hottest drilling regions appear to have been overly optimistic, according to
the analysis of some 16,000 wells operated by 29 of the biggest producers in oil basins in
Texas and North Dakota. Collectively, the companies that made projections are on track to pump
nearly 10% less oil and gas than they forecast for those areas, according to the analysis of
data from Rystad Energy AS, an energy consulting firm. That is the equivalent of almost one
billion barrels of oil and gas over 30 years, worth more than $30 billion at current prices.
Some companies are off track by more than 50% in certain regions" the Journal reported.
"While U.S. output rose to an all-time high of 11.5 million barrels a day, shaking up the
geopolitical balance by putting U.S. production on par with Saudi Arabia and Russia. The
Journal's findings suggest current production levels may be hard to sustain without greater
spending, because operators will have to drill more wells to meet growth targets. Yet shale
drillers, most of whom have yet to consistently make money, are under pressure to cut spending
in the face of a 40% crude-oil price decline since October."
Of course, none of this matters if we see a prolonged slowdown in the global economy, Demand
may indeed turn out to be the great equalizer. Yet if growth comes back, say if we get a China
trade deal or if they ever reopen the U.S. government, we will most likely see a very tight
market in the new year. The OPEC cuts will lead to a big drawdown in supply and shale oil
producers will find it hard to match OPEC and demand growth barrel for barrel.
While Apple's profit warning was truly a shocker -- the first time in 16.5 years the company
had issued such a guidance release, according to Bespoke Research -- the forces pressuring
global equity markets today are more macro than micro. To put it simply: the yield curve looks
horrible. The table at the bottom of this report contains the details, but with a
near-inversion of the 12-month/10-year Treasury yield spread the market's demand for stocks is
understandably pressured.
"... The 30-year U.S. yield fell to 2.91 percent on Thursday, the lowest since January 2018 ..."
"... The other interpretation is that the company chose to refinance with long-term fixed-rate debt because it sees the big drop in 30-year yields as unsustainable ..."
Berkshire, with the third-highest credit rating from both Moody's Investors Service and
S&P Global Ratings, is expected to price the debt on Thursday with a spread of 150 to 155
basis points above benchmark Treasuries. The 30-year U.S. yield fell to 2.91 percent on
Thursday, the lowest since January 2018.
The other interpretation is that the company chose to refinance with long-term fixed-rate
debt because it sees the big drop in 30-year yields as unsustainable. After all, if a borrower
expects interest rates to rise in the future, it would prefer to lock in a fixed rate now
rather than face higher payments down the road.
OPEC oil supply fell by 460,000 barrels per day (bpd) between November and December, to
32.68 million bpd, a Reuters survey found on Thursday, as top exporter Saudi Arabia made an
early start to a supply-limiting accord, while Iran and Libya posted involuntary declines.
OPEC, Russia and other non-members - an alliance known as OPEC+ - agreed last December to
reduce supply by 1.2 million bpd in 2019 versus October 2018 levels. OPEC's share of that cut
is 800,000 bpd.
"If OPEC is faithful to its agreed output cut together with non-OPEC partners, it would take
3-4 months to mop up the excess inventories," energy consultancy FGE said.
No sooner did you pass the fake fireplace than you heard an ungodly roar, like the roar of a
mob ... It was the sound of well-educated young white men baying for money on the bond
market.
TOM WOLFE, The Bonfire of the Vanities. 1987
We are Wall Street. It's our job to make money. Whether it's a commodity, stock, bond, or
some hypothetical piece of fake paper, it doesn't matter. We would trade baseball cards if it
were profitable. ...
We get up at 5am & work till 10pm or later. We're used to not getting up to pee when we
have a position. We don't take an hour or more for a lunch break. We don't demand a union. We
don't retire at 50 with a pension. We eat what we kill, and when the only thing left to eat is
on your dinner plates, we'll eat that....
We aren't dinosaurs. We are smarter and more vicious than that, and we are going to
survive.
Reported by STACY-MARIE ISHMAEL, FT Alphaville, 30 April 2010
Looks like Guardian start turning away from neoliberalism.
Notable quotes:
"... What price is paid when a promise is broken? Because for much of my life, and probably yours, the political class has made this pledge: that the best way to run an economy is to hack back the public realm as far as possible and let the private sector run free. That way, services operate better, businesses get the resources they need, and our national finances are healthier. ..."
"... I don't wish to write about the everyday failings of neoliberalism – that piece would be filed before you could say "east coast mainline". Instead, I want to address the most stubborn belief of all: that running a small state is the soundest financial arrangement for governments and voters alike. Because 40 years on from the Thatcher revolution, more and more evidence is coming in to the contrary. ..."
"... The other big reason for the UK's financial precarity is its privatisation programme, described by the IMF as no less than a "fiscal illusion". British governments have flogged nearly everything in the cupboard, from airports to the Royal Mail – often at giveaway prices – to friends in the City. Such privatisations, judge the fund, "increase revenues and lower deficits but also reduce the government's asset holdings". ..."
"... IMF research shows is that the Westminster classes have been asset-stripping Britain for decades – and storing up financial trouble for future generations ..."
The fund reports that Britain's finances are weaker than all other nations except Portugal,
and says privatisation is to blame
Columnists usually proffer answers, but today I want to ask a question, a big one. What price
is paid when a promise is broken? Because for much of my life, and probably yours, the
political class has made this pledge: that the best way to run an economy is to hack back the
public realm as far as possible and let the private sector run free. That way, services operate
better, businesses get the resources they need, and our national finances are healthier.
It's why your tax credits keep
dropping , and your mum has to wait half a year to see a hospital consultant –
because David Cameron slashed public spending, to stop it "crowding out" private money. It's
why water bills are so high and train services can never be counted on – because both
industries have been privatised.
From the debacle of universal credit to the forced conversion of state schools into
corporate-run academies, the ideology of the small state – defined by no less a body than
the International Monetary Fund as neoliberalism – is all pervasive. It decides how much
money you have left at the end of the week and what kind of future your children will enjoy,
and it explains why your elderly relatives can't get a decent carer.
I don't wish to write about the everyday failings of neoliberalism – that piece would
be filed before you could say "east coast mainline". Instead, I want to address the most
stubborn belief of all: that running a small state is the soundest financial arrangement for
governments and voters alike. Because 40 years on from the Thatcher revolution, more and more
evidence is coming in to the contrary.
Let's start with the IMF itself. Last week it published
a report that barely got a mention from the BBC or in Westminster, yet helps reframe the
entire debate over austerity. The fund totted up both the public debt and the publicly owned
assets of 31 countries, from the US to Australia, Finland to France, and found that
the UK had among the weakest public finances of the lot. With less than £3 trillion
of assets against £5tn in pensions and other liabilities, the UK is more than £2tn
in the red . Of all the other countries examined by researchers, including the Gambia and
Kenya, only Portugal's finances look worse over the long run. So much for fixing the
roof.
'British governments have flogged nearly everything in the cupboard from airports to
the Royal Mail – often at giveaway prices – to friends in the City.' Photograph:
Amer Ghazzal/Rex/Shutterstock
Almost as startling are the IMF's reasons for why Britain is in such a state: one way or
another they all come back to neoliberalism. Thatcher loosed finance from its shackles and used
our North Sea oil money to pay for swingeing tax cuts. The result is an overfinancialised
economy and a government that is £1tn worse off since the banking crash. Norway has
similar
North Sea wealth and a far smaller population, but also a sovereign wealth fund. Its net
worth has soared over the past decade.
The other big reason for the UK's financial precarity is its privatisation programme,
described by the IMF as no less than a "fiscal illusion". British governments have flogged
nearly everything in the cupboard, from airports to the Royal Mail – often at giveaway
prices – to friends in the City. Such privatisations, judge the fund, "increase revenues
and lower deficits but also reduce the government's asset holdings".
Throughout the austerity decade, ministers and economists have pushed for spending cuts by
pointing to the size of the government's annual overdraft, or budget deficit. Yet there are two
sides to a balance sheet, as all accountants know and this IMF work recognises. The same goes
for our public realm: if Labour's John McDonnell gets into No 11 and renationalises the
railways, that would cost tens of billions – but it would also leave the country with
assets worth tens of billions that provided a regular income.
Instead, what this IMF research shows is that the Westminster classes have been
asset-stripping Britain for decades – and storing up financial trouble for future
generations.
Privatisation and austerity have not only weakened the country's financial position –
they have also handed unearned wealth to a select few. Just look at
a new report from the University of Greenwich finding that water companies could have
funded all their day-to-day running and their long-term investments out of the bills paid by
customers. Instead of which, managers have lumbered the firms with £51bn of debt to pay
for shareholders' dividends. Those borrowed billions, and the millions in interest, will be
paid by you and me in our water bills. We might as well stuff the cash directly into the
pockets of shareholders.
Instead of competitively run utilities, record investment by the private sector and sounder
public finances, we have natural monopolies handed over to the wealthy, banks that can dump
their liabilities on the public when things get tough, and an outsourcing industry that feasts
upon the carcass of the public sector. As if all this weren't enough, neoliberal voices
complain that we need to cut taxes and red tape, and further starve our public services.
This is a genuine scandal, but it requires us to recognise what neoliberalism promised and
what it has failed to deliver. Some of the loudest critics of the ideology have completely
misidentified it. Academics will daub the term "neoliberal" on any passing phenomenon. Fitbits
are apparently neoliberal, as is Ben & Jerry's ice-cream and Kanye West. Pundits will say
that neoliberalism is about markets and choice – tell that to any commuter wedged on a
Southern rail train. And centrist politicians claim that the great failing of neoliberalism is
its carelessness about identity and place, which is akin to complaining that the boy on a moped
who snatched your smartphone is going too fast.
Let us get it straight. Neoliberalism has ripped you off and robbed you blind. The evidence
of that is mounting up – in your bills, in your services and in the finances of your
country.
• Aditya Chakrabortty is a Guardian columnist and senior economics commentator
Overinvestment in stocks of retires is very common under neoliberalism.
There are several factors here: one is greed cultivated by neoliberal MSM, the second is
insufficient retirement funds (gambling with retirement savings) and the last and not least is
lack of mathematical skills an inability to use Excel for viewing their portfolio and making
informed decisions.
Notable quotes:
"... At the end of 2016, 69 percent of investors in their 60s had at least 40 percent of their 401(k) portfolio invested in stocks, up from 65 percent in 2007, according to the Employee Benefit Research Institute in Washington. ..."
"... 19 percent had more than 80 percent of their 401(k) invested in stocks in 2016 ..."
"... "We had lousy forecasts in 2008. The housing market was in a tailspin," said 76-year-old John Bauer, who worked for McDonnell Douglas and Boeing Co for 36 years in St. Louis. "Today, employment is way up. The housing market is steady and corporations are flush." ..."
BOSTON (Reuters) - Nancy Farrington, a retiree who turns 75 next month, admits to being in a
constant state of anxiety over the biggest December stock market rout since Herbert Hoover was
president.
"I have not looked at my numbers. I'm afraid to do it," said Farrington, who recently moved
to Charleston, South Carolina, from Boston. "We've been conditioned to stand pat and not panic.
I sure hope my advisers are doing the same."
Retirees are worrying about their nest eggs as this month's sell-off rounds out the worst
year for stocks in a decade, and some fear they are headed for a day of reckoning like the 2008
market meltdown or dot-com crash of the early 2000s.
Retirees have less time to recover from bad investment moves than younger workers. If they
or their advisers panic and sell during a brief downturn, they may lock in a more meager
retirement. But their portfolio could be even more at risk if they hold on too long in a
prolonged decline.
"I have no way of riding it out if that happens," said Farrington. "I can feel the anxiety
in my stomach all the time."
While many industrialized countries still have generous safety nets for retirees, pensions
for U.S. private-sector workers largely have been supplanted by 401(k) accounts and other
private saving plans. That means millions of older Americans are effectively their own pension
managers.
Workers in countries like Belgium, Canada, Germany, France and Italy receive, on average,
about 65 percent of their income replaced by mandatory pensions. In the Netherlands the ratio
of benefits to lifetime average earnings is abut 97 percent, according to a 2017 Organization
for Economic Cooperation and Development report.
The OECD says the comparable U.S. replacement rate from Social Security benefits is about 50
percent.
U.S. retirees had watched their private accounts mushroom during a bull stock market that
began in early 2009. Meanwhile, the Federal Reserve kept interest rates near zero for years,
enticing retirees deeper into stocks than previous generations as investments like certificates
of deposit, government bonds and money-market funds generated paltry income.
At the end of 2016, 69 percent of investors in their 60s had at least 40 percent of their
401(k) portfolio invested in stocks, up from 65 percent in 2007, according to the Employee
Benefit Research Institute in Washington.
Still, fewer have gone all in on stocks in recent years. Just 19 percent had more than 80
percent of their 401(k) invested in stocks in 2016, down from 30 percent at year-end 2007,
according to nonprofit research group EBRI.
"Nothing has gone wrong, but it seems the market is trying to figure out what could go
wrong," said Brooke McMurray, a 69-year-old New York retiree who says she became a financial
news junkie after the 2007-2009 financial crisis.
"Unlike before, I now know what I own and I constantly read up on my companies," she
said.
The three major U.S. stock indexes have tumbled about 10 percent this month, weighed by
investor worries including U.S.-China trade tensions, a cooling economy and rising interest
rates, and are on track for their worst December since 1931.
The S&P 500 is headed for its worst annual performance since 2008, when Wall Street
buckled during the subprime mortgage crisis. But some are not quite ready to draw
comparisons.
"We had lousy forecasts in 2008. The housing market was in a tailspin," said 76-year-old
John Bauer, who worked for McDonnell Douglas and Boeing Co for 36 years in St. Louis. "Today,
employment is way up. The housing market is steady and corporations are flush."
Still, Bauer said he is uneasy about White House leadership. He and several other retirees
referenced U.S. Treasury Secretary Steve Mnuchin's recent calls to top bankers, which did more
to rattle than assure markets. U.S. stocks tumbled more than 2 percent the day before the
Christmas holiday.
Nevertheless, Bauer is prepared to ride out any market turmoil without making dramatic moves
to his retirement portfolio. "When it's up, I watch it. When it's down, I don't," he said. And there are some factors helping take the sting out of the market rout, said Larry Glazer,
managing partner of Boston-based Mayflower Advisors LLC.
Compare with "That's set to worsen in the new year, experts told CNBC on Monday, pointing to
risks including the Federal Reserve likely raising interest rates further and mounting concerns
about a global economic slowdown." The problem iether expecting rally or expecting further
downturn is that stock prices are so detached from reality that everything is possible.
Wall Street will see a "relief rally" in stocks that would offer a better selling
opportunity for investors, technical analyst Katie Stockton says.
The rally would last for several weeks and would be up to 8 percent higher than where
the markets closed on Friday, she says.
The S&P crashed below its bear market level of 2352.7 - the lowest since April 2017 -
ending the longest bull market in history. This is the worst December for the S&P 500 since
The Great Depression
Volatility on Wall Street has led shares worldwide on a wild ride in recent months,
resulting in a number of stock markets dipping into bear territory -- typically defined as
20 percent or more off a recent peak.
That's set to worsen in the new year, experts told CNBC on Monday, pointing to risks
including the Federal Reserve likely raising interest rates further and mounting concerns
about a global economic slowdown.
"I think the worst is yet to come next year, we're still in the first half of a global
equity bear market with more to come next year," said Mark Jolley, global strategist at CCB
International Securities. Volatility on Wall Street has led shares worldwide on a wild ride
in recent months, resulting in a number of stock markets dipping into bear territory --
typically defined as 20 percent or more off a recent peak.
That's set to worsen in the new year, experts told CNBC on Monday, pointing to risks
including the Federal Reserve likely raising interest rates further and mounting concerns
about a global economic slowdown.
"I think the worst is yet to come next year, we're still in the first half of a global
equity bear market with more to come next year," said Mark Jolley, global strategist at CCB
International Securities.
It was over two years ago that Wells Fargo's fake accounts scandal burst into the headlines, and since then, there has been an
unrelenting torrent of bad news. In late October, the American Banker
reported
that two executives were placed on leave after they received notifications of pending sanctions from the Office of the Comptroller
of the Currency. In November, Federal Reserve chairman Jerome Powell sent a
letter
to Senator Elizabeth Warren saying the Fed will not lift a cap on Wells's growth until the bank addresses deficiencies in oversight
and risk management. "The underlying problem at the firm was a strategy that prioritized growth without ensuring that risks were
managed, and as a result the firm harmed many of its customers," Powell wrote.
In early November, Jay Welker, who was the head of the private bank, which sits within the bank's wealth management business,
retired . Under Welker,
the private bank
pushed wealth advisors to vigorously sell
high-fee products . There may be more bad news about this aspect of the embattled bank. The Justice Department, the SEC, the
Labor Department, and Wells Fargo's own board are conducting ongoing investigations into its wealth management business that have
yet to be resolved.
There's still one aspect of how the wealth management business pushed for growth that former Wells Fargo employees say hasn't
gotten the scrutiny it should. For four years, starting in 2012 and through the end of 2015, Wells incentivized some of its advisors
in that business through something called the "Growth Award." Some former employees say these awards led to behavior that was not
in the best interest of clients, including steering them towards higher-fee products. The Growth Award was much discussed internally,
says a former investment strategist at Wells, although not everyone was privy to the details of how it worked.
Last summer, the Wall Street Journal
reported
the existence of the growth award, but not the details of how the money worked. Essentially, the growth award was a way of motivating
advisors to grow their businesses. In and of itself, that isn't unusual. The industry has for years offered successful brokers incentives,
often in the form of elaborate trips to exotic locales.The SEC is
weighing new rules that may curtail the use of such rewards under the theory that they could make brokers "predominantly motivated"
by "self enrichment." Firms have also long used rich packages to lure successful brokers to move their business.
But firms are cutting back on the use of such packages, according to industry insiders. When told about the details of the growth
award, three financial advisors at other firms with whom Yahoo Finance spoke expressed shock at both the sheer size and the way it
incentivized advisors for short-term growth, rather than long-term business building. (Another advisor thought that in the context
of the packages that were used to incentivize brokers to switch, it wasn't so surprising.) Or as former Wells Fargo executive, who
was in the retail brokerage industry for decades, says, "If a free golf outing is bad business, then the Growth Award is bad business
on steroids."
In a statement to Yahoo Finance, spokesperson Shea Leordeanu said, "At Wells Fargo Wealth and Investment Management, we are committed
to taking care of our clients' financial needs every day and take seriously our responsibility to help them preserve and invest their
hard-earned savings. Our primary goal is to be a trusted advisor to our clients and to act in their best interests. And we have supervisory
processes and controls in place so that, if a team member acts in a manner not in line with our values and our policies, we take
appropriate action."
An enormous, compounding bonus for bringing revenue to Wells Fargo
The Growth Award wasn't available to the entire army of some 14,000 advisors, who make up the broad group of Wells Fargo Advisors.
(Many others, most prominently those who came with the 2008 Wachovia merger, had different compensation plans with lock-ups that
are just now expiring, leading to something of an
exodus , according to press reports.) This Growth Award, on the other hand, was meant for the 3,000 or so advisors who were part
of something known as Wealth Brokerage Services, or WBS. These advisors are located in the bank branches, or in hubs -- Wells Fargo
buildings in cities -- that housed wealth management personnel among others like business bankers. (Wells Fargo subsequently
announced a reorganization
that is expected to combine what were separate groups of advisors.) To be eligible, you couldn't be a newbie -- you needed a two
year minimum at the bank -- and you had to be doing more than $350,000 in annual revenue. The former executive and another advisor
estimate that narrowed the group down to about 2,000 people.
The amounts people stood to make were extraordinary. Here's how the math worked. The goal was for an individual financial advisor
to increase his or her revenue by at least 15% for each of the four years that the Growth Award was in place. The award multiplied
each year the goal was achieved. So if you achieved 15% growth in the first year, you received a 15% bonus. If you achieved 15% growth
again in the second year, you received a 30% bonus. If you achieved 15% growth in the third year, you received a 45% bonus. Finally,
if you achieved 15% growth again in the 4th year, you received a whopping 60% bonus.
If you didn't achieve the goal, you were not penalized, but you didn't receive the bonus.
To get specific about just what these percentages could mean, say you generated $1 million in revenue in 2011, and you achieved
precisely 15% growth each year for the next 4 years. In year one, your revenue would be $1,150,000, and your bonus, at 15% of that,
would be $172,500. The new 2013 goal would be $1,322,500 (a 15% increase from the $1,150,000.). If you hit that goal, your Growth
Award bonus for 2013 would be $396,393. And so on. If you hit the goals for 2014 and 2015, you stood to make a bonus of $684,393
and $1,049,403, respectively. That means you stood to make $2.3 million in total Growth Award bonuses. In other words, the financial
incentives to hit the numbers were enormous.
Perhaps for the very reason the incentives were so enormous, more advisors hit the numbers than Wells had expected. (Of course,
there was also a strong bull market during that period.) The Journal reported that Wells had allotted $250 million for the Growth
Award bonuses. Instead, Wells had to pay $750 million between 2012 and 2015. "It's widely known inside Wells that they were so way
over budget," says another former advisor. "I personally know brokers who were awarded bonuses of over $2 million, which is a stunning
amount of money," says a former investment advisor.
Roughly two-thirds of the 2,000 or so eligible advisors earned an award.
"When you throw that kind of money out, it incentivizes."
Now consider the Growth Award from the perspective of a client, who might wander into a bank branch, maybe having gotten an unexpected
inheritance. "You have to connect the dots," the former executive says. "This is where the sales pressure in the bank branches meets
the wealth and investment management business."
The staff of the branch was incentivized to steer clients to a Wells financial advisor, because investment management referrals
helped them meet their sales goals, and that advisor, in turn had incentives -- really big incentives -- to steer the clients toward
products that generate upfront revenue. "If you don't have a high moral background, it'll put you in a position to do things for
clients that aren't in their best interest," says a former advisor. "I'm always looking at what's best for the client but it's also
what's best for my paycheck." "You are absolutely incentivizing advisors to sell the products with the highest upfront fees," says
the former executive.
"Yeah, when you throw that kind of money out, it incentivizes," says another former advisor. "Jesus would probably be okay. But
the disciples probably would have had some morals put to the test on that one."
Multiple sources say the Growth Award helps explain why annuity sales at Wells Fargo were so high, especially after the bank tried
to tamp down on the amount the Award was going to cost them. In 2014, Wells Fargo decided to stop "fee fronting," which allowed advisors
to count fees that would be paid in subsequent years toward their annual tally. So advisors began to search for products with high
initial fees, one former advisor said.
Annuities come with high upfront revenues for the broker, making them an obvious choice for someone who is trying to hit a revenue
target -- but maybe not the optimal choice for the client. "You think Wells Fargo's Bankers Are Bad? Take a Look at its Brokers,"
was the headline of an October 2016 piece in thestreet.com. The piece
noted that Wells had argued to the Securities and Exchange Commission that it should not be subject to rules to put its investors
first in cases where its advisors were making referrals for products including annuities, and that in 2015, Wells was number one
in the country for annuity sales.
"It's pretty stunning that a firm that has just half the assets of its larger competitors sells more annuities," says a former
advisor. "I think that just speaks to the emphasis on making sales numbers and a need to sell more of the highest payout products."
Indeed, the Journal reported and several former advisors corroborate that internally, 2015 was dubbed "The Year of the Annuity."
It wasn't just annuities. One former advisor also noted that advisors trying to chase the growth award also favored mutual funds
with high upfront fees. "You'd think if revenue was going up by 15% a year, your AUM would at least go up at least 12% or 13%," a
former advisor said. "That was not the case. The award was only revenue based -- there was nothing in there for AUM, longevity, or
anything like that. Strictly show us the money and we'll show you the money."
All the fees were disclosed to Wells Fargo's clients. But what clients didn't know was the incentive structure that was in place
for their advisor. So yes, clients understood the fees -- but they were in the dark as to at least part of the reason one product
might have been recommended over another. "Imagine that it's November," says the former executive. "You have to do $250,000 in revenue,
or you going to leave a million dollars on the table. What are you doing to do?" He continues, "Every client of WBS has to go back
and look at every trade, every single decision, from 2012 to 2015 and scrutinize whether it was impacted by the Growth Award." "I
think if clients and the public knew that Wells Fargo Advisors had given such substantial and amazing well-timed retention bonuses
to lock up their advisors, they would begin to wonder whether their advisors were giving the best advice to their clients," says
another former investment strategist.
There could be another problem, too. "If you achieved the goal early, you would stop doing business so you didn't have the higher
base to start from in the next year," says the former executive. "You'd sand bag -- and that might not be in the client's best interest
either."
A golden handcuff at a very good time for Wells Fargo
The Growth Award may also help explain why Wells has been able to retain as many advisors as it has, despite the ongoing scandals.
Six months before the end of the Growth Award program, midway through 2015, Wells Fargo asked those advisors who had qualified for
the award how they would like to receive their pay. There were two options. The first option essentially allowed the advisor to unlock
all the money at the end of February 2021. If the advisor left before that, the money was forfeited. A third of the advisors who
earned awards chose this option.
The other option paid out a tenth of the bonus each year for 10 years. If the advisor so chose, they could get that money up front
as a forgivable loan. Every year the advisor remained at Wells Fargo, he or she would simply pay the interest on their bonus, and
a tenth of the principle would be forgiven. But if the advisor left, he or she had to pay back the unforgiven principle. (Or if the
advisor hadn't taken the forgivable loan, the annual checks would stop.) Two-thirds of advisors opted for this route.
The Growth Award also had the potential to create another problem for advisors. The nice thing about building a fee-based business
is that it's an annuity for the advisor. Every year, there's a fee. If, on the other hand, the advisors put clients' money into things
that generate a one-time pop of revenue, the advisor doesn't get the same type of ongoing fees. So, the former executive says, some
advisors are in a hole, where they owe taxes on the Growth Award, while their income has shrunk dramatically. "I know guys who got
it who built or bought a huge house and are now stuck," he says.
The golden handcuff of the Growth Award has been good for the bank in the face of all of the scandals. One advisor told Yahoo
Finance that the growth in the number of clients also shrank dramatically amid the unrelenting negative news.
"I went from around 30 referrals to two in six months after the scandal hit," this person said. What had been a solid stream of
clients slowed to a trickle. But the only out for advisors would have been to have another firm hire them away and pay off their
loan.
Perhaps the most interesting thing about the Growth Award is how deliberate it was. "It was not a computer glitch or an oversight,"
as the former executive says. "It was not perpetrated by a few rogue employees. The Growth Award was conceived by the Compensation
Committee. The Compensation Committee is the most senior of senior management. The goal was to drive growth and drive growth it did."
But perhaps at a price for clients -- making the Growth Award, in its way, the most telling evidence yet of the cultural issues within
Wells Fargo.
"... Nearly 50% of the top executives and managers surveyed admit that they mobilize their workers politically. ..."
"... The most important factor in determining whether a firm engages in partisan mobilization of its workers-and thinks that that mobilization is effective-is the degree of control it has over its workers. ..."
"... But the problem isn't corruption. It's capitalism. Workers are dependent on employers for their well-being. That makes them vulnerable to their bosses' demands, about a great many matters, including politics. The ballot and the buck are fused. Not because of campaign donations but because of the unequal relationship between capital and labor. Not just in the corridors of Congress but also in the halls of the workplace. Unless you confront the latter, you'll never redress the former. Without economic democracy, there's no political democracy. ..."
"... I'd argue though that in terms of the overall discourse, "the bosses" have won without even resorting to anything so crude. ..."
"... people soak up attitudes about economics and trade policy from work. ..."
"... They aren't being threatened, it's simply a matter of culture � of lionising the "private sector" and bashing the "public sector" and those out of work. The identity comes out of water cooler moments and the lunch break. It takes a strong outside-work identity not to want the halo of "private sector wealth creator" and thus disdain a union, or a strike or a dole recipient ..."
"... But hey, it's not him getting black lung or dying in a mine collapse. It's his workers. The ones he's been fined repeated times for ignoring safety regulations to save a buck here and there. ..."
"... Much conservative rhetoric, especially in the US, is caught up in an anachronistic big-government/small-government debate. But real government is not where the nominal authority lies, but who has the real power! ..."
"... conservatives are leading a revolution, in which national governments are being usurped by the big government of the international corporate oligopoly. ..."
"... . . . the problem isn't corruption. It's capitalism. ..."
"... 15% report that employer messages affected their vote choice. ..."
"... Some workers are terribly underpaid, forcing them to work extra hours/job; some are subject to capricious scheduling, and irregular hours; others in prestige jobs intentionally overworked, makes for easier conditioning. All around the 40hr/week standard persists despite massive productivity gains. At least the French get August off to take a proper trip to the beach. ..."
In
my Salon column today, I look at new research examining how corporations influence politics.
Money talks. But how?
From "Mr. Smith Goes to Washington" to
Citizens United, the story goes like this: The
wealthy corrupt and control democracy by purchasing politicians, scripting speech and writing laws. Corporations and rich people
make donations to candidates, pay for campaign ads and create PACs. They, or their lobbyists, take members of Congress out to
dinner, organize junkets for senators and tell the government what to do. They insinuate money where it doesn't belong. They don't
build democracy; they buy it.
But that, says Alex Hertel-Fernandez, a PhD student in Harvard's
government department, may not be the only or even the best way to think about the power of money. That power extends far beyond
the dollars deposited in a politician's pocket. It reaches for the votes and voices of workers who the wealthy employ. Money talks
loudest where money gets made: in the workplace.
Among Hertel-Fernandez's findings:
1. Nearly 50% of the top executives and managers surveyed admit that they mobilize their workers politically.
2. Firms
believe that mobilizing their workers is more effective than donating money to a candidate, buying campaign ads, or investing
in large corporate lobbies like the Chamber of Commerce.
3. The most important factor in determining whether a firm engages in partisan mobilization of its workers-and thinks that
that mobilization is effective-is the degree of control it has over its workers. Firms that always engage in surveillance
of their employees' online activities are 50 percent more likely to mobilize their workers than firms that never do.
4. Of the workers who say they have been mobilized by their employers, 20% say that they received threats if they didn't.
My conclusion:
When we think of corruption, we think of something getting debased, becoming impure, by the introduction of a foreign material.
Money worms its way into the body politic, which rots from within. The antidote to corruption, then, is to keep unlike things
apart. Take the big money out of politics or limit its role. That's what
our campaign finance reformers tell us.
But the problem isn't corruption. It's capitalism. Workers are dependent on
employers for their well-being. That makes them vulnerable to their bosses' demands, about a great many matters, including
politics. The ballot and the buck are fused. Not because of campaign donations but because of the unequal relationship between
capital and labor. Not just in the corridors of Congress but also in the halls of the workplace. Unless you confront the
latter, you'll never redress the former. Without economic democracy, there's no political democracy.
That's a disgusting state of affairs, and one which I hope is confined to the US. I've never seen anything remotely like that
� never had a hint that my boss wanted to influence my vote � at any of the places I've worked, including the ones with no pension
scheme and no union recognition.
.2
Metatone 06.07.15 at 3:44 pm
I think in terms of campaigning (letter writing) etc. these abuses have clear effects.
I'd argue though that in terms of the overall discourse, "the bosses" have won without even resorting to anything so crude.
At least here in the UK it's palpable that people soak up attitudes about economics and trade policy from work. And
those policy preferences aren't designed around their prosperity
They aren't being threatened, it's simply a matter of culture � of lionising the "private sector" and bashing the "public
sector" and those out of work. The identity comes out of water cooler moments and the lunch break. It takes a strong outside-work
identity not to want the halo of "private sector wealth creator" and thus disdain a union, or a strike or a dole recipient
Josh Jasper 06.07.15 at 4:38 pm
cassander : Seems to me that coal miners and coal mine owners have a lot of interests in common.
You might want to mention that to someone who's worked for Massey energy at the Upper Big Branch Mine. Suggest to him that
he really ought to be giving his wages to the PACs if Massey tells them to.
I suggest having your dentist on speed dial.
For that matter, it's evident that the lot of interests Murray and his labor force have in common exclude worker safety as
well
But hey, it's not him getting black lung or dying in a mine collapse. It's his workers. The ones he's been fined repeated
times for ignoring safety regulations to save a buck here and there.
Does mobilization to vote Republican affect coal workers? Yes. It makes it very likely that the industry will get away with
ignoring safety regulations to save money, because destroying mining safety regulations for major donors is a Republican party
practice.
Sasha Clarkson 06.07.15 at 6:45 pm
Much conservative rhetoric, especially in the US, is caught up in an anachronistic big-government/small-government debate.
But real government is not where the nominal authority lies, but who has the real power!
Like it or not, conservatives are leading a revolution, in which national governments are being usurped by the big government
of the international corporate oligopoly. This of course is barely accountable for its actions, nor subject to democratic
oversight, and hence can ride roughshod over the broad mass of humanity. Of course, like the Star Wars Trade Federation, the oligopoly
also subverts/coerces the loyalties of employees from the wider community to itself.
I suspect that the trend is that national governments will be important only in that they will provide the armies to enforce
the will of the corporate elite. Eventually even this may become unimportant as other means are found to suppress us!
. . . the problem isn't corruption. It's capitalism.
So simple, then. So obvious.
More than a century of organizing work in hierarchy was all just a big mistake, but no worries, we'll just exchange it for
"economic democracy" at the service desk at Best Buy.
Ronan(rf) 06.07.15 at 8:11 pm
Not to display a put on world weary cynicism , but I'm surprised people are surprised by this. It isn't "capitalism" , it's politics.
People have always been pressured into how they vote, whether by domineering individuals in their family, notable families in
their community , factions in their village, political machines in their towns and cities , so on and so forth. In workplaces
of all sizes, from small shops to local factories, individuals have been coerced, whether implicitly (through peer pressure) or
explicitly (threats of dismissal) into supporting political positions a dominant faction wants them to. (Is this not part of what
trade unions do, or have done?)
It is a fallacy of WEIRD thinking to imagine away such pressures historically. Obviously this situation in the OP isn't ideal,
but it is politics , as it has existed since time immemorial. (Or at least a date I can't place)
Alex Hertel-Fernandez 06.07.15 at 8:24 pm
Cassander: I've looked at workers' self-reports of whether employer messages changed their behaviors. About half of all workers
who have been contacted by their bosses report a change in at least one of their political behaviors or attitudes, and 15%
report that employer messages affected their vote choice. Is this a lot or a little? I think the answer depends on whether
you think it is an appropriate role for managers to play in the political lives of their employees.
You're definitely right that the economic interests of workers and managers are often aligned on things like trade and regulation.
But many times they are not - as in the cases of working conditions (e.g. minimum wage) or redistributive policies. And independent
of the content of employers' political messages, we might be worried about the power that managers have over their workers. For
instance, I find that about 28% of contacted workers reported that their employers' messages either made them uncomfortable or
included threats of economic retaliation. I think whether you are troubled by these statistics or not depends on whether you are
concerned about power differentials between employers and their employees.
Barry Freed: Many of these employer tactics used to be illegal, for the most part, before Citizens United. And some states
have taken action to curb the most coercive practices (NJ and OR). But most states haven't.
hix 06.07.15 at 8:40 pm
Well, I associate such behaviour with defect democracy � which is how id think of most historical democracies. So for me it is
shocking to see this kind of mechanism in a modern long established rich democracy (ok not that shocking, considering all the
other fingerpointers towards that direction with regards to the US).
gianni 06.07.15 at 8:46 pm
Not to mention the ways in which American corporations especially have worked to diminish the employee's time for political activity.
Some workers are terribly underpaid, forcing them to work extra hours/job; some are subject to capricious scheduling, and
irregular hours; others in prestige jobs intentionally overworked, makes for easier conditioning. All around the 40hr/week standard
persists despite massive productivity gains. At least the French get August off to take a proper trip to the beach.
Added to this our antiquated infrastructure and sprawling residential geography make the simple fact of getting to work a huge
time investment. While in your car you are more likely to be fed the political opinions of well-funded media figures than to those
of your peers. Don't forget that this is in the country that invented the internet � how many of those people could just be telecommuting
anyway?
Ronan(rf) 06.07.15 at 8:55 pm
@13 � I don't know if I'd see the US as an institutionally mature democracy akin to what exists in Northern Europe, more as a
hybrid of areas that are economically and politically developed, and others that are more comparable to weak states or emerging
democracies (at best the European 'periphery', Spain, Greece, Italy, Ireland- perhaps in the 80s more than now) You can see this
in the weak state capacity, corrupt militia like police forces and late agrarian style of politics.
Also, perhaps I'm wrong.
Bruce Wilder 06.07.15 at 9:44 pm
Rich Puchalsky @ 11:
I appreciate that when you're going against an established story, you have to emphasize that what's really
going on is a whole different story.
That's what I'd take "the problem isn't corruption. It's capitalism." to be.
Chinese refineries that used to purchase U.S. oil regularly said they had not resumed buying
due to uncertainty over the outlook for trade relations between Washington and Beijing, as well
as rising freight costs and poor profit-margins for refining in the region.
Costs for shipping U.S. crude to Asia on a supertanker are triple those for Middle eastern
oil, data on Refinitiv Eikon showed.
A senior official with a state oil refinery said his plant had stopped buying U.S. oil from
October and had not booked any cargoes for delivery in the first quarter.
"Because of the great policy uncertainty earlier on, plants have actually readjusted back to
using alternatives to U.S. oil ... they just widened our supply options," he said.
He added that his plant had shifted to replacements such as North Sea Forties crude,
Australian condensate and oil from Russia.
"Maybe teapots will take some cargoes, but the volume will be very limited," said a second
Chinese oil executive, referring to independent refiners. The sources declined to be named
because of company policy.
A sharp souring in Asian benchmark refining margins has also curbed overall demand for crude
in recent months, sources said.
Despite the impasse on U.S. crude purchases, China's crude imports could top a record 45
million tonnes (10.6 million barrels per day) in December from all regions, said Refinitiv
senior oil analyst Mark Tay.
Russia is set to remain the biggest supplier at 7 million tonnes in December, with Saudi
Arabia second at 5.7-6.7 million tonnes, he said.
19 hours ago This is an
economic/political tight rope for both countries. China is the largest auto market in the
world with numerous manufacturers located inside its borders. Apple sales will disappoint
inside China after Meng's arrest over Iran sanctions (Huawei is a world heavy weight in terms
of sales), and this has already begun inside China due to national pride. Canada has already
seen one trade agreement postponed over her detention. US firm on the main have already
issued orders to not have key employees travel to their Chinese plants unless absolutely
necessary for fear of retaliation. Brussels is actively working on a plan to bypass US
Iranian sanctions, which are deeply unpopular in Europe.
The key to this solution might be in automotive. Oil is possibly on the endangered bargaining
list. Russia is a key trading partner (for years) with China and, along with Saudi Arabia and
Iran (or even without Iran) will be able to supply their needs. Our agricultural sector,
particularly in soybeans, has been hit hard, forcing the US govt. into farm subsidies. Brazil
just recorded a record harvest in soybeans. The US could counter with lifting Meng from
arrest in return for an agricultural break, but those negotiations won't make the mainstream
news. Personally, I think her arrest was a very ill-thought move on the part of law
enforcement, as the benefits don't even begin to outweigh the massive retaliation to US firms
operating inside their borders. It is almost akin to arresting Tim Cook of Apple or Apple's
CFO. You don't kill a bug with a sledge hammer.
Flynn "treason" is not related to Russia probe and just confirm that Nueller in engaged in witch hunt.
I believe half of Senate and House of Representative might go to jail if they were dug with the ferocity Mueller digs Flynn's past.
So while Flynn behavior as Turkey lobbyist (BTW Turkey is a NATO country and not that different int his sense from the US -- and you
can name a lot of UK lobbyists in high echelons of the US government, starting with McCabe and Strzok) is reprehensible, this is still a witch hunt
When American law enforcement and intelligence officials, who carry Top Secret clearances and authority to collect intelligence
or pursue a criminal investigation, decide to employ lies and intimidation to silence or intimidates those who worked for Donald
Trump's Presidency, we see shadow of Comrage Stalin Great Terror Trials over the USA.
Former U.S. national security adviser Michael Flynn passes by members of the
media as he departs after his sentencing was delayed at U.S. District Court in
Washington, U.S., December 18, 2018. REUTERS/Joshua Roberts
By Jan Wolfe and Ginger Gibson
WASHINGTON (Reuters) - A U.S. judge fiercely criticized President Donald
Trump's former national security adviser Michael Flynn on Tuesday for lying to
FBI agents in a probe into Russian interference in the 2016 election, and
delayed sentencing him until Flynn has finished helping prosecutors.
U.S. District Judge Emmet Sullivan told Flynn, a retired U.S. Army
lieutenant general and former director of the Defense Intelligence Agency,
that he had arguably betrayed his country. Sullivan also noted that Flynn had
operated as an undeclared lobbyist for Turkey even as he worked on Trump's
campaign team and prepared to be his White House national security adviser.
Flynn pleaded guilty to lying to FBI agents about his December 2016
conversations with Sergei Kislyak, then Russia's ambassador in Washington,
about U.S. sanctions imposed on Moscow by the administration of Trump's
Democratic predecessor Barack Obama, after Trump's election victory but before
he took office.
Special Counsel Robert Mueller, leading the investigation into possible
collusion between Trump's campaign team and Russia ahead of the election, had
asked the judge not to sentence Flynn to prison because he had already
provided "substantial" cooperation over the course of many interviews.
But Sullivan sternly told Flynn his actions were abhorrent, noting that
Flynn had also lied to senior White House officials, who in turn misled the
public. The judge said he had read additional facts about Flynn's behavior
that have not been made public.
At one point, Sullivan asked prosecutors if Flynn could have been charged
with treason, although the judge later said he had not been suggesting such a
charge was warranted.
"Arguably, you sold your country out," Sullivan told Flynn. "I'm not hiding
my disgust, my disdain for this criminal offense."
Flynn, dressed in a suit and tie, showed little emotion throughout the
hearing, and spoke calmly when he confirmed his guilty plea and answered
questions from the judge.
Sullivan appeared ready to sentence Flynn to prison but then gave him the
option of a delay in his sentencing so he could fully cooperate with any
pending investigations and bolster his case for leniency. The judge told Flynn
he could not promise that he would not eventually sentence him to serve prison
time.
Flynn accepted that offer. Sullivan did not set a new date for sentencing
but asked Mueller's team and Flynn's attorney to give him a status report by
March 13.
Prosecutors said Flynn already had provided most of the cooperation he
could, but it was possible he might be able to help investigators further.
Flynn's attorney said his client is cooperating with federal prosecutors in a
case against Bijan Rafiekian, his former business partner who has been charged
with unregistered lobbying for Turkey.
Rafiekian pleaded not guilty on Tuesday to those charges in federal court
in Alexandria, Virginia. His trial is scheduled for Feb. 11. Flynn is
expected to testify.
Prosecutors have said Rafiekian and Flynn lobbied to
have Washington extradite a Muslim cleric who lives in the United States
and is accused by Turkey's government of backing a 2016 coup attempt. Flynn
has not been charged in that case.
'LOCK HER UP!'
Flynn was a high-profile adviser to Trump's campaign team. At the
Republican Party's national convention in 2016, Flynn led Trump's
supporters in cries of "Lock her up!" directed against Democratic candidate
Hillary Clinton.
A group of protesters, including some who chanted "Lock him up,"
gathered outside the courthouse on Tuesday, along with a large inflatable
rat fashioned to look like Trump. Several Flynn supporters also were there,
cheering as he entered and exited. One held a sign that read, "Michael
Flynn is a hero."
Flynn became national security adviser when Trump took office in January
2017, but lasted only 24 days before being fired.
He told FBI investigators on Jan. 24, 2017, that he had not discussed
the U.S. sanctions with Kislyak when in fact he had, according to his plea
agreement. Trump has said he fired Flynn because he also lied to Vice
President Mike Pence about the contacts with Kislyak.
Trump has said Flynn did not break the law and has voiced support for
him, raising speculation the Republican president might pardon him.
"Good luck today in court to General Michael Flynn. Will be interesting
to see what he has to say, despite tremendous pressure being put on him,
about Russian Collusion in our great and, obviously, highly successful
political campaign. There was no Collusion!" Trump wrote on Twitter on
Tuesday morning.
After the hearing, White House spokeswoman Sarah Sanders told reporters
the FBI had "ambushed" Flynn in the way agents questioned him, but said his
"activities" at the center of the case "don't have anything to do with the
president" and disputed that Flynn had committed treason.
"We wish General Flynn well," Sanders said.
In contrast, Trump has called his former long-time personal lawyer
Michael Cohen, who has pleaded guilty to separate charges, a "rat."
Mueller's investigation into Russia's role in the 2016 election and
whether Trump has unlawfully sought to obstruct the probe has cast a shadow
over his presidency. Several former Trump aides have pleaded guilty in
Mueller's probe, but Flynn was the first former Trump White House official
to do so. Mueller also has charged a series of Russian individuals and
entities.
Trump has called Mueller's investigation a "witch hunt" and has denied
collusion with Moscow.
Russia has denied meddling in the election, contrary to the conclusion
of U.S. intelligence agencies that have said Moscow used hacking and
propaganda to try to sow discord in the United States and boost Trump's
chances against Clinton.
Lying to the FBI carries a statutory maximum sentence of five years in
prison. Flynn's plea agreement stated that he was eligible for a sentence
of between zero and six months.
(Reporting by Jan Wolfe and Ginger
Gibson; Additional reporting by Susan Heavey; Editing by Kieran Murray and
Will Dunham)
Matt o'Brien and Barbara Ortutay, AP Technology Writers
,
Associated Press
�
December
17, 2018
<img alt="Key takeaways from new reports on Russian disinformation" src="https://s.yimg.com/ny/api/res/1.2/9VGA29inJ83dPeqC.cvqTg--~A/YXBwaWQ9aGlnaGxhbmRlcjtzbT0xO3c9ODAwO2lsPXBsYW5l/http://globalfinance.zenfs.com/images/US_AHTTP_AP_HEADLINES_BUSINESS/e66de17c8e1a4cecaf1da81f2bf87093_original.jpg" itemprop="url"/>
Some suspected Russian-backed fake social media accounts on Facebook.
Russians seeking to influence U.S. elections through social media had their
eyes on Instagram and the black community.
These were among the findings in two reports released Monday by the Senate
intelligence committee. Separate studies from University of Oxford researchers
and the cybersecurity firm New Knowledge reveal insights into how Russian
agents sought to influence Americans by saturating their favorite online
services and apps with hidden propaganda.
Here are the highlights:
INSTAGRAM'S "MEME WARFARE"
Both reports show that misinformation on Facebook's Instagram may have had
broader reach than the interference on Facebook itself.
The New Knowledge study says that since 2015, the Instagram posts generated
187 million engagements, such as comments or likes, compared with 77 million
on Facebook.
And the barrage of image-centric Instagram "memes" has only grown since the
2016 election. Russian agents shifted their focus to Instagram after the
public last year became aware of the widespread manipulation on Facebook and
Twitter.
NOT JUST ADS
Revelations last year that Russian agents used rubles to pay for some of their
propaganda ads drew attention to how gullible tech companies were in allowing
their services to be manipulated.
But neither ads nor automated "bots" were as effective as unpaid posts
hand-crafted by human agents pretending to be Americans. Such posts were more
likely to be shared and commented on, and they rose in volume during key dates
in U.S. politics such as during the presidential debates in 2016 or after the
Obama administration's post-election announcement that it would investigate
Russian hacking.
"These personalized messages exposed U.S. users to a wide range of
disinformation and junk news linked to on external websites, including content
designed to elicit outrage and cynicism," says the report by Oxford
researchers, who worked with social media analysis firm Graphika.
DEMOGRAPHIC TARGETING
Both reports found that Russian agents tried to polarize Americans in part by
targeting African-American communities extensively. They did so by campaigning
for black voters to boycott elections or follow the wrong voting procedures in
2016, according to the Oxford report.
The New Knowledge report added that agents were "developing Black audiences
and recruiting Black Americans as assets" beyond how they were targeting
either left- or right-leaning voters.
The reports also support previous findings that the influence operations
sought to polarize Americans by sowing political divisions on issues such as
immigration and cultural and religious identities. The goal, according to the
New Knowledge report, was to "create and reinforce tribalism within each
targeted community."
Such efforts extended to Google-owned YouTube, despite Google's earlier
assertion to Congress that Russian-made videos didn't target specific segments
of the population.
PINTEREST TO POKEMON
The New Knowledge report says the Russian troll operation worked in many ways
like a conventional corporate branding campaign, using a variety of different
technology services to deliver the same messages to different groups of
people.
Among the sites infiltrated with propaganda were popular image-heavy services
like Pinterest and Tumblr, chatty forums like Reddit, and a wonky geopolitics
blog promoted from Russian-run accounts on Facebook and YouTube.
Even the silly smartphone game "Pokemon Go" wasn't immune. A Tumblr post
encouraged players to name their Pokemon character after a victim of police
brutality.
WHAT NOW?
Both reports warn that some of these influence campaigns are ongoing.
The Oxford researchers note that 2016 and 2017 saw "significant efforts" to
disrupt elections around the world not just by Russia, but by domestic
political parties spreading disinformation.
They warn that online propaganda represents a threat to democracies and public
life. They urge social media companies to share data with the public far more
broadly than they have so far.
"Protecting our democracies now means setting the rules of fair play before
voting day, not after," the Oxford report says.
4 hours
ago
so where's the evidence that Russian
facebook or twitter posts changed a single vote?
"... If you can keep your head when all about you are losing theirs ... If you can wait and not be tired by waiting ... If you can think – and not make thoughts your aim ... If you can trust yourself when all men doubt you ... Yours is the Earth and everything that's in it. ..."
The stock market has had a volatile year, and it's not over yet: The Dow Jones Industrial
Average lost more than 520 points on Monday and the S&P 500 fell 2.1 percent. Both are in
correction and on pace for their worst December performance since the Great Depression in
1931.
But for the average person, shifts in the market , even ones as dramatic as the ones we've
seen this year, shouldn't be cause for panic. During times of volatility, seasoned investor
Warren Buffett says it's best to stay calm and stick to the basics, meaning, buy-and-hold for
the long term.
So, during downturns, "heed these lines" from the classic 19th century Rudyard Kipling poem
"If -- " which help illustrate this lesson, Buffett wrote in his 2017 Berkshire Hathaway
shareholder letter :
If you can keep your head when all about you are losing theirs ...
If you can wait and not be tired by waiting ...
If you can think – and not make thoughts your aim ...
If you can trust yourself when all men doubt you ...
Yours is the Earth and everything that's in it.
Market downturns are inevitable, Buffett pointed out, using his own company as an example:
"Berkshire, itself, provides some vivid examples of how price randomness in the short term can
obscure long-term growth in value. For the last 53 years, the company has built value by
reinvesting its earnings and letting compound interest work its magic. Year by year, we have
moved forward. Yet Berkshire shares have suffered four truly major dips."
He went on to cite each of the steep share-price drops, including the most recent one from
September 2008 to March 2009, when Berkshire shares plummeted 50.7 percent.
Major declines have happened before and are going to happen again, he says: "No one can tell
you when these will happen. The light can at any time go from green to red without pausing at
yellow."
Rather than watch the market closely and panic, keep a level head. Market downturns "offer
extraordinary opportunities to those who are not handicapped by debt," he says, which brings up
another important investing lesson: Never borrow money to buy stocks .
"There is simply no telling how far stocks can fall in a short period," writes Buffett.
"Even if your borrowings are small and your positions aren't immediately threatened by the
plunging market, your mind may well become rattled by scary headlines and breathless
commentary. And an unsettled mind will not make good decisions."
Don't miss: Warren Buffett and Ray Dalio agree on what to do when the stock market
tanks
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Stock Sell-Off Defies Everything the Bulls Hoped Would Stop It
(Bloomberg) -- Valuations aren't stopping it. Jerome Powell's softer tone failed
to soothe anyone. The moratorium on tariffs is a fading memory and now the
sturdiest chart level of the year is in danger of giving way.
A stock rout that bulls thought was finished three different times since October
is in a new and ominous phase, with the Dow Jones Industrial Average losing 1,004
points in two days. No Santa Claus rally. Instead, the S&P 500 Index is hurtling
toward the second-worst December on record.
"The stock market doesn't care what looks good now. It's wondering if
fundamentals will deteriorate in the future," said Peter Mallouk, co-chief
investment officer of Creative Planning, which has around $36 billion under
management. "You have a lot of people that are scared, and they're sitting on the
sidelines to wait it out."
Waiting it out is starting to look like the only viable strategy. On Monday, the
S&P 500 briefly pierced a level that had been a psychological foundation for 10
months, its intraday low from Feb. 9. Valuations shrink and shrink -- computer
and software stocks trade at 15 times next year's earnings estimates, cheaper
than utilities and soapmakers -- and the selling just gets worse.
With Monday's 54-point loss, the S&P has now fallen 2 percent or more six times
this quarter. The Nasdaq Composite has done it 10 times. Both are the most since
the third quarter of 2011.
Pinning a single cause on the carnage has become an exercise in absurdity, with
analysts cycling through a rotating list of reasons that include trade, Donald
Trump's legal travails, China data, sinking oil and cooling home prices. Anyone
daring to suggest economic growth may slow in 2019 is pointed to charts showing
factories, employment and profits are booming -- but those assurances are
starting to fall on deaf ears.
While S&P 500 Index futures indicated a potential respite in Asian trading
Tuesday, rising as much as 0.5 percent, traders remained cautious.
Investors "are too worried, but that's the big driver behind the declines we've
seen recently, overall worries about U.S. growth and worries about global
growth," said Kate Warne, investment strategist at Edward Jones. "Investors have
gotten very nervous about the changes they're seeing ahead and they're uncertain
about what they mean."
A troubling sign for Americans: equity pain, which all year has been worse
overseas, is landing with more force in the U.S. The Russell 2000 Index of small
caps, a proxy for domestically oriented companies, slid into a bear market
Monday, falling 21 percent since Aug. 31.
On the other hand, since hitting a 19-month low in late October, the MSCI
Emerging Markets Index has trended higher, even as the S&P 500 Index keeps making
new lows. Stocks in the EM gauge have outperformed the S&P 500 for three
consecutive weeks, the most since late January, data compiled by Bloomberg show.
To comfort themselves in the face of such depressing facts, beaten-up investors
have looked at past corrections and noticed that this one is still playing out
according a relatively benign plan. Under the pattern, major swoons that have
interrupted the bull market that began in 2009 have taken around 100 days to tire
out before dip-buyers swooped in to put things right.
At the same time, anyone betting the New Year will bring an end to the volatility
should be aware that bull markets can die slow deaths. The 88-day sell-off has
been going on roughly one-third as long as it has taken for the S&P 500 to fall
into the 11 bear markets it's suffered going back to World War II.
How many more sellers than buyers were there on Monday? The volume of stocks
trading lower on the New York Stock Exchange reached 1 billion shares, compared
with 158 million that were bought. The difference in trading volume, at 883
million shares, is on track to become the biggest weekly gap since 2016, data
compiled by Bloomberg show.
That the worst two-day sell-off since October landed on the same week Powell's
Federal Reserve is expected to announce its ninth interest rate hike was grist
for those who see central bank policy behind everything. As willingly as the Fed
chairman has walked back his most hawkish pronouncements, nobody thinks monetary
policy is likely to loosen even as growth in the economy and earnings slows from
this year's pace.
"That's what the market is struggling with right now -- do they believe in a
growth slowdown to trend or something more sinister than that?" said Phil
Camporeale, managing director of multi-asset solutions for JPMorgan Asset
Management. "I don't think people really want to take risk, but especially
trying to catch a falling knife on equity prices."
(Adds details on S&P 500 futures trading in seventh paragraph.)
j
3 hours ago
Don't borrow money to buy stocks. Got
that ? No margin accounts. Ever.
H
5
hours ago
This has been a long, ho-hum recovery
from the Great Recession. Asset prices got way ahead of the
fundamentals. Everything returns to the mean; margins, interest
rates, unemployment, etc. Count your blessings, a nine year
bull is rare.
s
3
hours ago
To make matters worse I read a
story earlier today indicating that the hedge funds in
Europe are literally being wiped out and those are their
favourite & biggest ones. Yup, Alex Jones (yeah I know
how everyone in mainstream media loves to hate the guy
and even censors him) predicted what would happen back in
2008 or 2009. He said that the recession then was just
the start of it. That the powers that be would facilitate
a come back, so that people could get into EVEN BIGGER
DEBTS (which they did with the 0% interest rates) and
then they'd engineer an even more massive crash that
would suck all the liquidity and equity out of the
markets towards the big wigs that controls everything -
read BOIS (Bank of International Settlements) which is
owned by a few very wealthy secretive people and they are
the ones that basically owns and operates the banks the
world over - and dictating all the banking laws too. They
just keep getting richer & richer at our expense. Like as
if they need all that wealth.
K
1 hour ago
40 years watching markets and people
just do not understand that forward PE's get cut in half or go
as low as 5x PE with a recession -- all the fluff on the upside
gets parsed out and once the income flows slow the gratuitous
accounting stops and suddenly there is transparency and people
wait 10 years to get even-maybe 20 this cycle- and the public
realizes they have been hoodwinked
b
2 hours
ago
Maybe POTUS can rehire Yellin after he
fires Powell (if only he could)
"... Jeffrey Gundlach, chief executive of DoubleLine Capital, on Monday said the S&P 500 stock index is headed to new lows and that U.S. equities are in a long-term bear market. ..."
"... "I think it is a bear market. I think we've had the first leg down and the second leg down is usually more painful than the first leg down," said Gundlach, who oversees more than $123 billion. ..."
"... "I think this lasts a long time. It has a lot to do with the fact that, I believe, that we're in a situation that is ... highly unusual - that we're increasing the budget deficit so spectacularly so late in the cycle while the Fed is hiking interest rates." ..."
"... The intraday low for the year in the S&P was on Feb. 9, when it bottomed at 2532.69. The low close for the year was on April 2 at 2581.88. On Monday, the S&P closed 2545.94. ..."
<img alt="FILE PHOTO: Jeffrey Gundlach, CEO of DoubleLine Capital, speaks during the Sohn Investment Conference in New York" src="https://s.yimg.com/it/api/res/1.2/BXVsdhZsK0OiZdcOd8_ffw--~A/YXBwaWQ9eW5ld3M7c209MTt3PTQ1MDtoPTMwMDtpbD1wbGFuZQ--/http://media.zenfs.com/en_us/News/Reuters/2018-12-17T182416Z_1_LYNXMPEEBG1NJ_RTROPTP_2_FUNDS-DOUBLELINE-GUNDLACH.JPG.cf.jpg" itemprop="url"/>
NEW YORK (Reuters) -
Jeffrey Gundlach, chief executive of DoubleLine Capital,
on Monday said the S&P 500 stock index is headed to new lows and that U.S.
equities are in a long-term bear market.
Gundlach, speaking on CNBC TV, said passive investing has reached "mania status"
and will exacerbate market problems.
"I think it is a bear market. I think we've had the first leg down and the
second leg down is usually more painful than the first leg down," said
Gundlach, who oversees more than $123 billion.
"I think this lasts a long time. It has a lot to do with the fact that, I
believe, that we're in a situation that is ... highly unusual - that we're
increasing the budget deficit so spectacularly so late in the cycle while the
Fed is hiking interest rates."
The S&P 500 briefly erased its losses in late-morning trade on Monday but resumed
its steep decline and pierced through Gundlach's target after he made his "bear
market" comments.
The intraday low for the year in the S&P was on Feb. 9, when it bottomed at
2532.69. The low close for the year was on April 2 at 2581.88. On Monday, the S&P
closed 2545.94.
Investors are also bracing for the Federal Reserve's last rate decision of the
year on Wednesday, when they are expected to raise U.S. interest rates for a
fourth time for 2018.
Gundlach said the Fed should not raise rates this week but will. "The bond market
is basically saying, 'You know, Fed, there's no way you should be raising
interest rates'," he said.
The U.S. central bank's quantitative tightening campaign has made markets nervous
because of the ultra-low levels that have remained in place for several years,
Gundlach said.
"The problem is that the Fed shouldn't have kept them (rates) so low for so long.
The problem is, we shouldn't have had negative interest rates like we still have
in Europe. We shouldn't have had done quantitative easing, which is a circular
financing scheme," he said.
Gundlach also said the China-U.S. trade war gets worse from here. "China doesn't
like to be told what to do by President Trump," he said. For its part, "I think
they (the United States) will probably ratchet up the tariffs."
The remarks by Gundlach, who in April recommended investors short Facebook Inc,
extended losses in Facebook shares on Monday after he characterized the social
media giant as a "diabolical data-collection monster that would ultimately fall
victim to regulation." The stock closed 2.69 percent lower.
Gundlach took a shot at passive investment strategies such as index funds,
declaring the investing strategy a "mania" that is causing widespread problems in
global stock markets.
"I'm not at all a fan of passive investing. In fact, I think passive investing
... has reached mania status as we went into the peak of the global stock
market," Gundlach said. "I think, in fact, that passive investing and robo
advisers ... are going to exacerbate problems in the market because it's hurting
behavior," he said.
(Bloomberg Opinion) -- Traders and investors will be glad to see the back of 2018. It's been
the worst rout since 1901, by Deutsche Bank AG's reckoning, with almost every asset class
delivering losses. These charts illustrate the backdrop to what went wrong this year –
and hint at what could go better in 2019.
$14,889,930,106,680
That's how much the total value of companies listed on the world's stock markets has
declined since peaking at $87,289,962,917,450 on Jan 28. In other words, almost $15 trillion
has been wiped off the global equity market this year.
The list of potential motivations for the sell-off is long and includes rising geopolitical
risks, the prospect of trade wars erupting, the risk that a slowdown in global growth that
could degenerate into a worldwide recession, and the evergreen what-goes-up-must-come-down. But
might it just be possible that investors start to take the view stocks have fallen far and fast
enough to offer value next year?
Talkin' About a Recession
It's clear that one of the fundamental worries spooking investors is that the period of
coordinated global growth that propelled stock markets higher in recent years is coming to an
end.
The R word is increasingly cropping up in news articles. But economists put the chances of a
recession in the coming year at 15 percent in the U.S. and 18 percent in the euro zone,
according to Bloomberg surveys. Even the Brexit-battered U.K. economy is only at a 20 percent
risk, while for Japan the likelihood rises to 30 percent. Perhaps those concerns about a
recession are overdone.
Curving to Inversion
Or perhaps not. One trend was omnipresent in 2018 – the relentless flattening of the
yield curve in the U.S.
Yields at the short end of the Treasury market pushed higher with every quarterly increase
in the Fed's benchmark interest rate. Longer-dated bonds danced to a different beat,
particularly as the October equity shakeout drove a flight to quality.
An inverted yield curve – when yields on shorter-dated bonds are higher than their
longer-dated counterparts – is often seen as an indicator of impending recession. It's
finally happened: yields on five-years are below those for two-years. A key question for 2019
will be how the feedback loop develops between the Federal Reserve's policy intentions and the
shape of the curve.
Quantitative Tightening
The Fed has been reducing its economic stimulus by not replacing the bonds it bought under
its Quantitative Easing program as they mature.
But this "normalization" is already taking its toll as the sharp equity market sell off in
October showed. The Fed has a tricky choice to make in 2019 about whether it can persist both
with hiking rates and reducing quantitative easing. Is the world ready yet to stand on its own
feet without ongoing central bank support?
No Alarms and No Surprises
Economic surprise indexes – which measure actual economic data compared to forecasts
– are designed to be portents of the future. And for 2018 they largely did their job.
U.S. strength is waning and Brexit is taking a toll on the U.K. In particular the third-quarter
weakness in euro-zone growth, when both Germany and Italy turned negative, was well-flagged
from as early as the first quarter.
For 2019 there is a more neutral outlook, but it is interesting that the U.S. economic data
is much more evenly balanced in terms of expectations. Europe continues to be the worst
performer – quite something considering the predicament the U.K. is in.
Europe Stumbles
Europe has seen growth falter this year, with Italy's political crisis and Germany's diesel
vehicle emissions scandal taking their toll.
Italy's third-quarter growth was revised to -0.1 percent, beating only Germany. The
prospects for 2019 are none-too-rosy, bar the notable exception of Spain, as momentum has
evaporated. Europe remains in the sick bay of the developed world – just as the European
Central Bank prepares to remove its monetary stimulus to the economy.
Relying on China
China came to the global economy's rescue in the wake of the financial crisis, but it is
starting to pay the price for increasing its debt to create additional GDP growth. Total social
financing as a percentage of gross domestic product – a broad measure of credit creation
– is flat-lining. Adding extra debt to boost the economy is becoming a less effective
measure. It is not just the threat of a trade war with America that has pushed Chinese equities
down by 20 percent in 2018.
China faces the classic emerging-market middle-income trap where growth fueled by credit
runs out of road. This debt bubble will not be easily fixed.
Finding Reverse Again
Japanese Prime Minister's famous three economic arrows are failing to hit their mark. Debt
that stands in excess of 250 percent of GDP is hampering all efforts to resuscitate inflation
and sustainable growth in the world's third-largest economy. Third-quarter GDP contracted 2.5
percent on an annualized basis, the worst performance for four years.
Tokyo might be hosting the Olympics in 2020, but there is little benefit flowing through so
far. Japan, like the rest of the once dominant Asian export powerhouses, is just as beholden to
the outcome of the trade war with Trump as China is.
Hunting for Neutral
Until very recently, many economists were anticipating at least four more rate increases
from the Fed next year at a pace of one per quarter. While the futures market still suggests a
Dec. 19 hike is a done deal, the outlook for monetary policy in 2019 has shifted significantly
in recent weeks.
Goldman Sachs Group Inc. has trimmed its forecast for number of potential Fed rate increases
in 2019; billionaire fund manager Paul Tudor Jones said earlier this month that he's not
expecting any additional tightening from the U.S. central bank next year. A halt to the hikes
might prove as pleasing to financial markets as to President Donald Trump.
Credit Squeeze
Companies with dollar bonds have seen their borrowing costs soar relative to those of the
U.S. government as the Fed has driven its benchmark interest rate higher this year. Investors
have seen a corresponding slump in the value of the corporate debt they own.
Any slowdown in the ascent of U.S. borrowing costs as the Fed pauses for breath should give
succor to corporate bonds – provided it isn't accompanied by a rise in defaults.
Other People's Money
It's been a terrible year for the stocks of firms that manage other people's money for a
living.
Fund managers tend to invest in each other's shares. And you'd expect them to have
better-than-average insight into the business prospects of their peers. So watch for an
inflection point in asset management stocks – it might be a sign of a turning point for
the wider market.
Happy Birthday to the Euro
The common European currency celebrates its 20th birthday at the start of January. During
the two decades of its existence, rumors of the euro's demise have been proven to be greatly
exaggerated.
The European debt crisis at the beginning of this decade posed an existential threat to the
euro's well-being. The currency survived. At several points in the past few years, Greece
seemed on the verge of either quitting or being ousted from the project. Its membership
survived. And Italy's election of a populist government earlier this year raised the prospect
of a founding member threatening to leave if it wasn't allowed to break the bloc's budget
rules. Still, the euro survives.
In fact, as the chart above shows, investors are close to the most relaxed they've been
about the euro fracturing in more than five years based on the Sentix Euro Break-Up Index, a
monthly gauge of investor concern about the threat. So let's end by wishing the euro many happy
returns.
To contact the editor responsible for this story: Edward Evans at [email protected]
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP
and its owners.
Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was
the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and
Collusion Made the Credit Crisis Unstoppable."
Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three
decades in the banking industry, most recently as chief markets strategist at Haitong
Securities in London.
"... christophere steele admitted before a british court today that he was hired by the clintons/obama/DNC to make up the dossier as a weapon to use against trump as a backup plan in case he won the election.. this proves the DNC lied, paid for a fake dossier, and comey admitted he knew the fake dossier was false before using it to get a FISC warrant and to spy on trump, which was used as an excuse for the mueller investigation.. yahoo news and leftwing media arent covering the story.. educate yourselves ..."
1 hour ago
When I read articles like this I look to see who wrote it, printed it etc. When I see
Bloomberg, Yahoo, HuffPo I approach it as fake news. Now I no longer watch any of Fox news
as they are fast becoming just like the rest of the propaganda outlets. This is just
inflammatory anti Trump drivel with no basis in fact.
O 1 hour
ago Was this the interview report that was written 7 months after the interview?
R 44 minutes ago
Actually this story is not accurate. Mueller released copies of the 302 memos, which are in
effect official documentation to a case file. The 302 was dated seven months after the
interview, when the FBI policy requires such reports to be filed within five days. The
judge will ask tomorrow for copies of agent's contemporaneous interview notes and any other
documents supporting what is written in the 302, as well as an explanation for the delay in
filing the memo. 1
hour ago You mean the notes the FBI, in the person of one Peter Strzok, (yes that Strozk)
made seven months after he was interviewed? with the required 302 documents that are either
to be taken extemporaneously or done within days of the interview being dated months later?
You mean those notes?!!!! Nice try Bloomberg, but no amount of yellow journalism spin will
stop this case from being thrown out! 15 minutes ago christophere steele
admitted before a british court today that he was hired by the clintons/obama/DNC to make
up the dossier as a weapon to use against trump as a backup plan in case he won the
election.. this proves the DNC lied, paid for a fake dossier, and comey admitted he knew
the fake dossier was false before using it to get a FISC warrant and to spy on trump, which
was used as an excuse for the mueller investigation.. yahoo news and leftwing media arent
covering the story.. educate yourselves 1 hour ago Not so bias garbage news .. they
entrapped him what 302 form you want to go with .. FBI doctored the original.. FBI
curuption runs rampant.. comey lied so much about knowing about fake dossier.. then what
the hell was he doing.. comey the tall guy phony
"... By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate professor of economics and law at the University of Missouri-Kansas City, and co-founder of Bank Whistleblowers United. Jointly published with New Economic Perspectives ..."
"... Wall Street Journal ..."
"... Wall Street Journal ..."
"... The idea that examiners should not criticize any bank misconduct, predation, or 'unsafe and unsound practice' that does not constitute a felony is obviously insane. ..."
"... The trade association complaint that examiners dare to criticize non-felonious bank conduct – and the WSJ ..."
"... I have more than a passing acquaintance with banking, banking regulation, and banking's rectitude (such an old fashioned word) in the importance for Main Street's survival, and for the country's as a whole survival as a trusted pivot point in world finance , or for the survival of the whole American project. I know this sounds like an over-the-top assertion on my part, however I believe it true. ..."
"... Obama et al confusing "banking" with sound banking is too ironic, imo. ..."
"... It was actually worse than this. The very deliberate strategy was to indoctrinate employees of federal regulatory agencies to see the companies they regulated not as "partners" but as "customers" to be served. This theme is repeated again and again in Bush era agency reports. Elizabeth Warren was viciously attacked early in the Obama Administration for calling for a new "watchdog" agency to protect consumers. The idea that a federal agency would dedicate itself to protecting citizens first was portrayed as dangerously radical by industry. ..."
"... Models on Clinton and Bush. What's not to like? Why isn't msm and dem elites showing him the love when he's following their long term policies? And we might assume these would be hills policies if she had been pushed over the line. A little thought realizes that in spite of the pearl clutching they far prefer him to Bernie. ..."
By Bill Black, the author of The Best Way to Rob a Bank is
to Own One, an associate professor of economics and law at the University of Missouri-Kansas
City, and co-founder of Bank Whistleblowers United. Jointly published with New Economic Perspectives
The Wall Street Journal published an article
on December 12, 2018 that should warn us of coming disaster: "Banks Get Kinder, Gentler
Treatment Under Trump." The last time a regulatory head lamented that regulators were not
"kinder and gentler" promptly ushered in the Enron-era fraud epidemic. President Bush made
Harvey Pitt his Securities and Exchange Commission (SEC) Chair in August 2001 and, in one of
his early major addresses, he spoke on October 22, 2001 to a group of accounting
leaders.
Pitt, as a private counsel, represented all the top tier audit firms, and they had
successfully pushed Bush to appoint him to run the SEC. The second sentence of Pitt's speech
bemoaned the fact that the SEC had not been "a kinder and gentler place for accountants." He
concluded his first paragraph with the statement that the SEC and the auditors needed to work
"in partnership." He soon reiterated that point: "We view the accounting profession as our
partner" and amped it up by calling accountants the SEC's "critical partner."
Pitt expanded on that point: "I am committed to the principle that government is and must be
a service industry." That, of course, would not be controversial if he meant a service agency
(not "industry") for the public. Pitt, however, meant that the SEC should be a "service
industry" for the auditors and corporations.
Pitt then turned to pronouncing the SEC to be the guilty party in the "partnership." He
claimed that the SEC had terrorized accountants. He then stated that he had ordered the SEC to
end this fictional terror campaign.
[A]ccountants became afraid to talk to the SEC, and the SEC appeared to be unwilling to
listen to the profession. Those days are ended.
This prompted Pitt to ratchet even higher his "partnership" language.
I speak for the entire Commission when I say that we want to have a continuing dialogue,
and partnership, with the accounting profession,
Recall that Pitt spoke on October 22, 2001. Here are the relevant excerpts from the NY
Times' Enron
timeline :
Oct. 16 – Enron announces $638 million in third-quarter losses and a $1.2 billion
reduction in shareholder equity stemming from writeoffs related to failed broadband and water
trading ventures as well as unwinding of so-called Raptors, or fragile entities backed by
falling Enron stock created to hedge inflated asset values and keep hundreds of millions of
dollars in debt off the energy company's books.
Oct. 19 – Securities and Exchange Commission launches inquiry into Enron
finances.
Oct. 22 – Enron acknowledges SEC inquiry into a possible conflict of interest
related to the company's dealings with Fastow's partnerships.
Oct. 23 – Lay professes confidence in Fastow to analysts.
Oct. 24 – Fastow ousted.
The key fact is that even as Enron was obviously spiraling toward imminent collapse (it
filed for bankruptcy on December 2) – and the SEC knew it – Pitt offered no warning
in his speech. The auditors and the corporate CEOs and CFOs were not the SEC's 'partners.'
Thousands of CEOs and CFOs were filing false financial statements – with 'clean' opinions
from the then 'Big 5' auditors. Pitt was blind to the 'accounting control fraud' epidemic that
was raging at the time he spoke to the accountants. Thousands of his putative auditor
'partners' were getting rich by blessing fraudulent financial statements and harming the
investors that the SEC is actually supposed to serve.
Tom Frank aptly characterized the Bush appointees that completed the destruction of
effective financial regulation as "The Wrecking Crew." It is important, however, to understand
that Bush largely adopted and intensified Clinton's war against effective regulation. Clinton
and Bush led the unremitting bipartisan assault on regulation for 16 years. That produced the
criminogenic environment that produced the three largest financial fraud epidemics in history
that hyper-inflated the real estate bubble and drove the Great Financial Crisis (GFC).
President Trump has renewed the Clinton/Bush war on regulation and he has appointed banking
regulatory leaders that have consciously modeled their assault on regulation on Bush and
Clinton's 'Wrecking Crews.'
Bill Clinton's euphemism for his war on effective regulation was "Reinventing Government."
Clinton appointed VP Al Gore to lead the assault. (Clinton and Gore are "New Democrat" leaders
– the Wall Street wing of the Democratic Party.) Gore decided he needed to choose an
anti-regulator to conduct the day-to-day leadership. We know from Bob Stone's memoir the sole
substantive advice he gave Gore in their first meeting that caused Gore to appoint him as that
leader. "Do not 'waste one second going after waste, fraud, and abuse.'" Elite insider fraud
is, historically, the leading cause of bank losses and failures, so Stone's advice was sure to
lead to devastating financial crises. It is telling that it was the fact that Stone gave
obviously idiotic advice to Gore that led him to select Stone as the field commander of Clinton
and Gore's war on effective regulation.
Stone convinced the Clinton-Gore administration to embrace the defining element of crony
capitalism as its signature mantra for its war on effective regulation. Stone and his troops
ordered us to refer to the banks, not the American people, as our "customers." Peters' foreword
to Stone's book admits the action, but is clueless about the impact.
Bob Stone's insistence on using the word "customer" was mocked by some -- but made an
enormous difference over the course of time. In general, he changed the vocabulary of public
service from 'procedure first' to 'service first.'"
That is a lie. We did not 'mock' the demand that we treat the banks rather than the American
people as our "customer" – we openly protested the outrageous order that we embrace and
encourage crony capitalism. Crony capitalism's core principle – which is unprincipled
– is that the government should treat elite CEOs as their 'customers' or 'partners.' A
number of us publicly expressed our rage at the corrupt order to treat CEOs as our customers.
The corrupt order caused me to leave the government.
Our purpose as regulators is to serve the people of the United States – not bank CEOs.
It was disgusting and dishonest for Peters to claim that our objection to crony capitalism
represented our (fictional) disdain for serving the public. Many S&L regulators risked
their careers by taking on elite S&L frauds and their powerful political fixers. Many of us
paid a heavy personal price because we acted to protect the public from these elite frauds. Our
efforts prevented the S&L debacle from causing a GFC – precisely because we
recognized the critical need to spend most of our time preventing and prosecuting the elite
frauds that Stone wanted us to ignore..
Trump's wrecking crew is devoted to recreating Clinton and Bush's disastrous crony
capitalism war on regulation that produced the GFC. In a June 8,
2018 article , the Wall Street Journal mocked Trump's appointment of Joseph Otting
as Comptroller of the Currency (OCC). The illustration that introduces the article bears the
motto: "IN BANKS WE TRUST."
Otting, channeling his inner Pitt, declared his employees guilty of systematic misconduct
and embraced crony capitalism through Pitt's favorite phrase – "partnership."
I think it is more of a partnership with the banks as opposed to a dictatorial perspective
under the prior administration.
Otting, while he was in the industry, compared the OCC under President Obama to a fictional
interstellar terrorist. Obama appointed federal banking regulators that were pale imitation of
Ed Gray, Joe Selby, and Mike Patriarca – the leaders of the S&L reregulation. The
idea that Obama's banking regulators were akin to 'terrorists' is farcical.
The WSJ's December 12, 2018 article reported that Otting had also used Bob Stone's
favorite term to embrace crony capitalism.
Comptroller of the Currency Joseph Otting has also changed the tone from the top at his
agency, calling banks his "customers."
There are many terrible role models Trump could copy as his model of how to destroy banking
regulation and produce the next GFC, but Otting descended into unintentional self-parody when
he channeled word-for-word the most incompetent and dishonest members of Clinton and Bush's
wrecking crews.
The same article reported a trade association's statement that demonstrates the type of
outrageous reaction that crony capitalism inevitably breeds within industry.
Banks are suffering from "examiner criticisms that do not deal with any violation of law,"
said Greg Baer, CEO of the Bank Policy Institute ."
The article presented no response to this statement so I will explain why it is absurd.
First, "banks" do not "suffer" from "examiner criticism." Banks gain from examiner criticism.
Effective regulators (and whistleblowers) are the only people who routinely 'speak truth to
power.' Auditors, credit rating agencies, and attorneys routinely 'bless' the worst CEO abuses
that harm banks while enriching the CEO. The bank CEO cannot fire the examiner, so the
examiners' expert advice is the only truly "independent" advice the bank's board of directors
receives. That makes the examiners' criticisms invaluable to the bank. CEOs hate our advice
because we are the only 'control' (other than the episodic whistleblower) that is willing and
competent to criticize the CEO.
The idea that examiners should not criticize any bank misconduct, predation, or 'unsafe
and unsound practice' that does not constitute a felony is obviously insane. While
"violations of law" (felonies) are obviously of importance to us in almost all cases, our
greatest expertise is in identifying – and stopping – "unsafe and unsound
practices" because such practices, like fraud, are leading causes of bank losses and
failures.
Third, repeated "unsafe and unsound practices" are a leading indicator of likely elite
insider bank fraud and other "violations of law."
The trade association complaint that examiners dare to criticize non-felonious bank
conduct – and the WSJ reporters' failure to point out the absurdity of that
complaint – demonstrate that the banking industry's goal remains the destruction of
effective banking regulation. Trump's wrecking crew is using the Clinton and Bush playbook to
restore fully crony capitalism. He has greatly accelerated the onset of the next GFC.
Thank you for this, Bill Black. IMO the long-term de-regulatory policies under successive
administrations cited here, together with their neutering the rule of law by overturning the
Glass-Steagall Act; de-funding and failing to enforce antitrust, fraud and securities laws;
financial repression of the majority; hidden financial markets subsidies; and other policies
are just part of an organized, long-term systemic effort to enable, organize and subsidize
massive control and securities fraud; theft of and disinvestment in publicly owned resources
and services; environmental damage; and transfers of social costs that enable the organizers
to in turn gain a hugely disproportionate share of the nation's wealth and nearly absolute
political control under their "Citizens United" political framework.
Not to diminish, but among other things the current president provides nearly daily
entertainment, diversion and spectacle in our Brave New World that serves to obfuscate what
has occurred and is happening.
I'm with you Chauncey. I believe the rot really got started with creative accounting in
early 1970s. That's when accountants of every flavor lost themselves and were soon followed
by the lawyers. Sauce for the goose.
Banks and Insurers and many industrial concerns have become too big. We could avoid all
the regulatory problems by placing a maximum size on commercial endeavour.
A number of years ago I did both the primary capital program and environmental (NEPA) review
for major capital projects in a Federal Region. Hundreds of millions of dollars were at
stake. A local agency wanted us (the Feds) to approve pushing up many of their projects using
a so-called Public Private Partnership (PPP). This required the local agency to borrow many
millions from Wall Street while at the same time privatizing many of their here-to-fore
public operations. And of course there was an added benefit of instituting a non-union
shop.
To this end I was required to sit down with the local agency head (he actually wore white
shoes), his staff and several representatives of Goldman-Sachs. After the meeting ended, I
opined to the agency staff that Goldman-Sachs was "bullshit" and so were their projects.
Shortly thereafter I was removed to a less high-profile Region with projects that were not
all that griftable, and there was no danger of me having to review a PPP.
Oh, and I denied, denied, denied saying "bullshit."
Thank you, NC, for featuring these posts by Bill Black.
I have more than a passing acquaintance with banking, banking regulation, and banking's
rectitude (such an old fashioned word) in the importance for Main Street's survival, and for
the country's as a whole survival as a trusted pivot point in world finance , or for
the survival of the whole American project. I know this sounds like an over-the-top assertion
on my part, however I believe it true.
Main Street also knows the importance of sound banking. Sound banking is not a 'poker
chip' to be used for games. Sound banking is key to the American experiment in
self-determination, as it has been called.
Politicians who 'don't get this" have lost touch with the entire American enterprise,
imo. And, no, the neoliberal promise that nation-states no longer matter doesn't make this
point moot.
adding: US founding father Alexander Hambleton did understand the importance of sound
banking, and so Obama et al confusing "banking" with sound banking is too ironic, imo.
It was actually worse than this. The very deliberate strategy was to indoctrinate
employees of federal regulatory agencies to see the companies they regulated not as
"partners" but as "customers" to be served. This theme is repeated again and again in Bush
era agency reports. Elizabeth Warren was viciously attacked early in the Obama Administration
for calling for a new "watchdog" agency to protect consumers. The idea that a federal agency
would dedicate itself to protecting citizens first was portrayed as dangerously radical by
industry.
Models on Clinton and Bush.
What's not to like? Why isn't msm and dem elites showing him the love when he's following
their long term policies?
And we might assume these would be hills policies if she had been pushed over the line.
A little thought realizes that in spite of the pearl clutching they far prefer him to
Bernie.
CIA democrats are still determined to sink Tramp, and continues to beat the dead cat of
"Russian collision". What is interesting is that Jacob Schiff financed Bolsheviks revolution in
Russia.
Yahoo comments reflect the deep split in the opinions in the society, which is positioned
mainly by party lines. Few commenters understadn that the problem is with neoliberalism, not
Trump, or Hillary who represent just different factions of the same neoliberal elite.
Notable quotes:
"... Schiff said Deutsche Bank has paid hundreds of millions of dollars in fines to the state of New York for laundering Russian money, and that it was the one bank willing to do business with the Trump Organization. ..."
"... In an interview with the New Yorker that was posted on line on Dec. 14, Schiff said the Intelligence Committee is "going to be looking at the issue of possible money laundering by the Trump Organization, and Deutsche Bank is one obvious place to start." ..."
"... A Senate investigation, which Warren and Van Hollen want to see followed by a report and a hearing, could put further pressure on the lender. The written request from the senators, sent Dec. 13, cites Deutsche Bank's "numerous enforcement actions" and a recent raid by police officers and tax investigators in Germany. ..."
"... Schiff, a target of Trump's on Twitter, also referred to reported comments by the president's sons some years ago that they didn't need "to deal with U.S. banks because they got all of the cash they needed from Russia or disproportionate share of their assets coming from Russia." He said Sunday he expects to learn more about that claim through financial records. ..."
The incoming chairman of the House Intelligence Committee joined Democratic colleagues in
questioning ties between Deutsche Bank AG and President Donald Trump's real estate
business.
Representative Adam Schiff of California said on NBC's "Meet the Press" Sunday that any type
of compromise needs to be investigated. That could add his panel's scrutiny to that of
Representative Maxine Waters, who's in line to be chair of the House Financial Services
Committee and has also focused on the bank's connections to Trump.
Schiff's comments came three days after Wall Street critic Elizabeth Warren of Massachusetts
and fellow Senate Democrat Chris Van Hollen called for a Banking Committee investigation of
Deutsche Bank's compliance with U.S. money-laundering regulations.
Schiff said Deutsche Bank has paid hundreds of millions of dollars in fines to the state
of New York for laundering Russian money, and that it was the one bank willing to do business
with the Trump Organization.
"Now, is that a coincidence?" Schiff said. "If this is a form of compromise, it needs to be
exposed."
In an interview with the New Yorker that was posted on line on Dec. 14, Schiff said the
Intelligence Committee is "going to be looking at the issue of possible money laundering by the
Trump Organization, and Deutsche Bank is one obvious place to start."
More Pressure
A Senate investigation, which Warren and Van Hollen want to see followed by a report and
a hearing, could put further pressure on the lender. The written request from the senators,
sent Dec. 13, cites Deutsche Bank's "numerous enforcement actions" and a recent raid by police
officers and tax investigators in Germany.
It also notes the lender's U.S. operations being implicated in cross-border money-laundering
accusations such as in a recent case involving Danish lender Danske Bank A/S and the movement
of $230 billion in illicit funds.
"The compliance history of this institution raises serious questions about the national
security and criminal risks posed by its U.S. operations," the senators said in their letter.
"Its correspondent banking operations in the U.S. serve as a gateway to the U.S. financial
system for Deutsche Bank entities around the world."
Troy Gravitt, a Deutsche Bank spokesman, responded that the company "takes its legal
obligations seriously and remains committed to cooperating with authorized investigations."
Van Hollen, a Maryland Democrat, had questioned the Federal Reserve earlier this year about
how it would keep the White House from interfering with oversight of the lender, which had been
a major lender to Trump's real estate business.
Schiff, a target of Trump's on Twitter, also referred to reported comments by the
president's sons some years ago that they didn't need "to deal with U.S. banks because they got
all of the cash they needed from Russia or disproportionate share of their assets coming from
Russia." He said Sunday he expects to learn more about that claim through financial
records.
To contact the reporter on this story: Jesse Hamilton in Washington at
[email protected]
To contact the editors responsible for this story: Jesse Westbrook at
[email protected], Mark Niquette, Ros Krasny
55 seconds ago A
special Special Prosecutor must be appointed with a billion dollar budget. Where will the
money come from? Fines, penalties, and restitution by the Godfather.
U 46 seconds ago With
all these investigations, who should die hard Republicans vote for in 2020? Should it be
Donald Trump or Individual 1 or David Dennison? Gonna' be a hard choice next year.
F 1
minute ago Investigations of Trump are just getting started! hahaha
A 7 minutes ago Don
the Con is certainly getting a lot of probes of his illegal, criminal business deals. He
was a total idiot to become president and draw all this attention considering all the
crimes he has committed.
W 3 minutes ago
"Shifty" Schiff....doing everything to bring America together again!
D 17 minutes ago Lets investigate SLIMEY SHIFTLESS SCHIFF for leaking to
the News Media and running faster than a speedy bullet to a microphone and running his
loose lips !
B 3 minutes ago One of
the problem is that politicians, like schiffhead, have never had a real job and only have
scammed their donors and havent a clue how the real world works.
"... Bob Marley got it right.... the human race is becoming a rat race, and it's a disgrace. ..."
"... The biggest problem is the financialisation of the economy... what is the actual value of things? The market is so manipulated that real price discovery is not possible. ..."
"... We have an over-cooked service-sector economy unsustainably reliant on cheap debt, cheap energy, and cheap manufactured goods to fuel our 'high-end levels of consumption, and mobility or living standards, and an over-heated housing market that is unsustainably run according to the needs of investors and landlords rather than residents or tenants. ..."
"... What we need is a coordinated approach between our nations. Undercutting each other on corporate taxes, writing tax avoidance into law, and continuing to allow multinationals to influence our politicians and play our governments against each other is exactly the game we must end. ..."
"... Instead, it places the financially powerful beyond any state, in an international elite that makes its own rules, and holds governments to ransom. That's what the financial crisis was all about. The ransom was paid, and as a result, governments have been obliged to limit their activities yet further.... ..."
"... "Ransom". There is no better word to describe it. This (the ransom mentality) is exactly the reactionary, vindictive, doctrinaire psychology that must be extracted like a cancer from our institutional lives and the human species. A monolithic task. But identifying the cause is the first step to cure. ..."
"... these are the new medieval transnational barons ..."
@Crackerpot - The whole austerity crisis thing appears to have been engineered so that a few blinkered and unpatriotic, vulture
mafia privateers can make a killing, selling off vital state assets, such as infrastructure and ports, to the Chinese. This is
a very suspicious and widespread trend.
Bob Marley got it right.... the human race is becoming a rat race, and it's a disgrace.
I see it every day from the window of my flat, on a main road, in Bethnal Green. There's a 'mentally unstable' Rastafarian
who stands by the overground station, and shouts things out to people like "You're living in babylon".
The biggest problem is the financialisation of the economy... what is the actual value of things? The market is so manipulated
that real price discovery is not possible.
We have an over-cooked service-sector economy unsustainably reliant on cheap debt, cheap energy, and cheap manufactured
goods to fuel our 'high-end levels of consumption, and mobility or living standards, and an over-heated housing market that is
unsustainably run according to the needs of investors and landlords rather than residents or tenants.
The whole thing is going to blow apart. Our 'aspirations' are slowly killing us - they're destroying the social fabric.
What we need is a coordinated approach between our nations. Undercutting each other on corporate taxes, writing tax avoidance
into law, and continuing to allow multinationals to influence our politicians and play our governments against each other is exactly
the game we must end.
Deborah Orr:Instead, it places the financially powerful beyond any state, in an international elite that makes
its own rules, and holds governments to ransom. That's what the financial crisis was all about. The ransom was paid, and as
a result, governments have been obliged to limit their activities yet further....
I never thought I would live long enough to see this level of honesty ATL. It should have been published long ago, but at least
the discussion now begins.
"Ransom". There is no better word to describe it. This (the ransom mentality) is exactly the reactionary, vindictive, doctrinaire
psychology that must be extracted like a cancer from our institutional lives and the human species. A monolithic task. But identifying
the cause is the first step to cure.
"... Neoliberalism? This is not just a financial agenda. This a highly organized multi armed counterculture operation to force us, including Ms Orr [unless she has...connections] into what Terence McKenna [who was in on it] termed the `Archaic Revival'. That is - you and me [and Ms Orr] - our - return to the medieval dark ages, if we indeed survive that far. ..."
"... The conscious and intelligent manipulation of the organised habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are moulded, our tastes formed, our ideas suggested, largely by men we have never heard of. ..."
"... the UK government did intervene in the economy when it bailed out the banks to the tune of many billions of pounds underwritten by the taxpayer. The markets should always be regulated sufficiently (light touch is absolutely useless) to prevent the problems currently being experienced from ever happening again. ..."
"... Traditional liberalism had died decades before WWII and was replaced by finance capitalism. What happened after WW II was that capitalism had to make various concessions to avoid a socialist revolution: social and political freedoms indeed darted ahead. ..."
"... No chance mate, at least not all the time greasy spiv and shyster outfits like hedge funds are funding Puffin face and the Vermin Party. They are never going to bite the hand that feeds them ..."
"... And in case we get uppity and endeavour to challenge the economic paradigm and the rule of these neoliberal elites, there's the surveillance state panopticon to track our movements and keep us in check. ..."
"... There is not a shred of logical sense in neoliberalism. You're doing what the fundamentalists do... they talk about what neoliberalism is in theory whilst completely ignoring what it is in practice. In theory the banks should have been allowed to go bust, but the consequences where deemed too high (as they inevitable are). The result is socialism for the rich using the poor as the excuse, which is the reality of neoliberalism. ..."
"... She, knowingly, let neo-liberal economic philosophy come trumpeting through the door of No10 and it's been there ever since; it has guided our politicians for the past 30 odd years. Hence, it is Thatcher's fault. She did this and another bad thing: the woman who glorified household economics pissed away billions of pounds of North Sea Oil. ..."
"... Bailouts have been a constant feature of neoliberalism. In fact the role of the state is simply reduced to a merely commissioning agent to private parasitical corporations. History has shown the state playing this role since neoliberalism became embedded in policy since the 1970s - Long Term Capital Management, Savings and Loans, The Brady Plan, numerous PFI bailouts and those of the Western banking system during the 1982 South American, 1997 Asian and 2010 European debt crises. ..."
@EllisWyatt - Here's the funny thing about those who cheer the broken neoliberal model. They
promise we will get to those "sunny uplands" with exactly the same fervor as old Marxists.
Neoliberalism has spawned a financial elite who hold governments to ransom
Neoliberalism? This is not just a financial agenda. This a highly organized multi armed counterculture operation to
force us, including Ms Orr [unless she has...connections] into what Terence McKenna [who was in on it] termed the `Archaic
Revival'. That is - you and me [and Ms Orr] - our - return to the medieval dark ages, if we indeed survive that far.
The same names come up time and time again. One of them being, father of propaganda, Edward Bernays.
Bernays wrote what can be seen as a virtual Mission Statement for anyone wishing to bring about a "counterculture." In the
opening paragraph of his book Propaganda he wrote:
"..The conscious and intelligent manipulation of the organised habits and opinions of the masses is an important
element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government
which is the true ruling power of our country. We are governed, our minds are moulded, our tastes formed, our ideas
suggested, largely by men we have never heard of.
This is a logical result of the way in which our democratic society is organised. Vast numbers of human beings must
cooperate in this manner if they are to live together as a smoothly functioning society. In almost every act of our daily
lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by
the relatively small number of persons who understand the mental processes and social patterns of the masses.
It is they who pull the wires which control the public mind..."[28]
Bernays' family background made him well suited to "control the public mind." He was the double nephew of psychoanalysis
pioneer Sigmund Freud. His mother was Freud's sister Anna, and his father was Ely Bernays, brother of Freud's wife Martha
Bernays.
@OneCommentator - the UK government did intervene in the economy when it bailed out the banks
to the tune of many billions of pounds underwritten by the taxpayer. The markets should
always be regulated sufficiently (light touch is absolutely useless) to prevent the problems
currently being experienced from ever happening again.
Those at the bottom of society and
those in the public sector are the ones paying the price for this intervention in the UK. If
you truly believe in the 'free' market then all of these failing organisations (banks, etc)
should have been allowed to fail. The problem is that the wealth created under the current
system is virtually all going to those at the top of the income scale and this needs to
change and is one of the main reasons that neo liberalism should be binned!
Traditional liberalism had died decades before WWII and was replaced by finance
capitalism. What happened after WW II was that capitalism had to make various concessions to
avoid a socialist revolution: social and political freedoms indeed darted ahead.
@brighton2 - No chance mate, at least not all the time greasy spiv and shyster outfits like hedge funds are funding Puffin
face and the Vermin Party. They are never going to bite the hand that feeds them.
And in case we get uppity and endeavour to challenge the economic paradigm and the rule of
these neoliberal elites, there's the surveillance state panopticon to track our movements and
keep us in check.
I know what you are saying it's just sooner or later as those at the bottom continue to be
squeezed the wealthy will sow their own seeds of destruction. I think we are witnessing the
end game which is reflected in the desperation of the coalition to flog everything regardless
of the efficacy of such behavior, they feel time is running out and they would be right.
Call it what you will - "neoliberalism", "neoconservatism", "socialism" or whatever it is...
This debate is not even really solely about money: this is about liberty , about
free choice, about being permitted to engage in voluntary exchange of goods and services with
others, unmolested. About the users of services becoming the ones paying for those
services.
Ultimately the real effect will be to remove power from governments and hand it back to
where it belongs - the free market.
voluntary transactions among free agents. That's called a free market and it is by far
the most efficient way to produce wealth humanity has ever known.
Could you explain how someone bound by a contract of employment, with the alternative,
destitution, is a 'free agent'?
@SpinningHugo - Nothing comes out of nothing and i well remember black Monday in the City.
That was the start of the spivs running the economy as if it were a casino. If you think its only on CiF that Thatcher gets the blame, think on this, Scotland, a
whole nation blames her too.
Unless you are completely confused by what neoliberalism is there is not a shred of
logical sense in this.
There is not a shred of logical sense in neoliberalism. You're doing what the
fundamentalists do... they talk about what neoliberalism is in theory whilst completely
ignoring what it is in practice. In theory the banks should have been allowed to go bust, but
the consequences where deemed too high (as they inevitable are). The result is socialism for
the rich using the poor as the excuse, which is the reality of neoliberalism.
Savers in a neoliberal society are lambs to the slaughter. Thatcher "revitalised" banking, while everything else withered and died.
Neoliberalism is based on the thought of personal freedom, communism is definitely not.
Neoliberalist policies have lifted millions of people out of poverty in Asia and South
America.
Neoliberalism is based on the thought that you get as much freedom as you can
pay for, otherwise you can just pay... like everyone else. In Asia and South America it has
been the economic preference of dictators that pushes profit upwards and responsibility down,
just like it does here.
I find it ironic that it now has 5 year plans that absolutely must not be deviated from,
massive state intervention in markets (QE, housing policy, tax credits... insert where
applicable), and advocates large scale central planning even as it denies reality, and makes
the announcement from a tractor factory.
Neoliberalism is a blight... a cancer on humanity... a massive lie told by rich people and
believed only by peasants happy to be thrown a turnip. In theory it's one thing, the reality
is entirely different. Until we're rid of it, we're all it's slaves. It's an abhorrent cult
that comes up with purest bilge like expansionary fiscal contraction to keep all the money in
the hands of the rich.
@MickGJ - You are wrong about the first 2 of course.
Banksters get others to do their shit.
But unfortunately the poor sods who went down on D Day were in their way fighting for Wall
Street as much as anything else. It's just that they weren't told about it by the Allies massive propaganda machine. So partly right
The response should be a wholesale reevaluation of the way in which wealth is created
and distributed around the globe
Which would be what? State planning? Communism? Totally free market capitalism? Oh wait, we already have the best of a bad bunch, a mixed capitalist economy with
democracy. That really is the crux of it, our system isn't perfect, never will be, but nobody has come
up with a better solution.
Barclays bank "only" paid out £660m in dividends to the bearers of risk capital,
while its bonus pot for a very select number of its staff was £1.5bn.
Fascinating! Now, one could infer that Barclays represent "beneficial capitalism",
rewarding its hard-working employees, but maybe we won't.
This is not the traditional capitalist style
The Traditional capitalist is not an extinct species but under threat. For the time
being the population is stagnant in some countries and even increasing in some others.
However, due to the foraging capacity of Neoliberal creature , competing in the same
economical niche, the size and life expectation of it are diminishing.
She, knowingly, let neo-liberal economic philosophy come trumpeting through the door of
No10 and it's been there ever since; it has guided our politicians for the past 30 odd years.
Hence, it is Thatcher's fault. She did this and another bad thing: the woman who
glorified household economics pissed away billions of pounds of North Sea Oil.
@MickGJ - No, you're right. Why let yesterdays experience feed into what you expect of the
future? Lets go forwards goldfish like, every minute a brand new one, with no baggage!
And by the way, who saved the hide of the very much private sector banks and financial
institutions? The hated STATE, us tax payers!
I think I agree with everything that you say here? The people at the top these days aren't
really of much use for anything, including capitalism. The only thing that they do excel at
is lining their own pockets and securing their privileged position in society.
They have become quite up front about it. There was a bit of a fuss last year when
Barclays bank "only" paid out £660m in dividends to the bearers of risk capital, while
its bonus pot for a very select number of its staff was £1.5bn. Barclays released a
statement before their AGM explaining:
"Barclays is fully committed to ensuring that a greater proportion of income and profits
flow to shareholders notwithstanding that it operates within the constraints of a
competitive market."
This is not the traditional capitalist style competition that they are talking about where
companies competed as to who can return the biggest profit for their shareholders this now
comes secondary to the real competition which is for which company can return the biggest
bonuses for a small group of employees.
Bailouts have been a constant feature of neoliberalism. In fact the role of the state is
simply reduced to a merely commissioning agent to private parasitical corporations. History
has shown the state playing this role since neoliberalism became embedded in policy since the
1970s - Long Term Capital Management, Savings and Loans, The Brady Plan, numerous PFI
bailouts and those of the Western banking system during the 1982 South American, 1997 Asian
and 2010 European debt crises.
No wonder you're so ignorant of the basics of economic policy if you won't flick through a
book - fear of accepting that you're simply wrong is a sure sign of either pig ignorance or
denial, and is as I said embarrassing so its not really much point in wasting anymore time
engaging with you.
The neoliberal idea is that the cultivation itself should be conducted privately as
well. They see "austerity" as a way of forcing that agenda.
..."neoliberal", concept behind the word, has nothing to do with liberal or liberty or
freedom...it is a PR spin concept that names slavery with a a word that sounds like the
opposite...if "they" called it neoslavery it just wouldn't sell in the market for political
concepts.
..."austerity" is the financial sectors' solution to its survival after it sucked most the
value out of the economy and broke it. To mend it was a case of preservation of the elite and
the devil take the hindmost, that's most of us.
...and even Labour, the party of trade unionism, has adopted austerity to drive its
policy.
...we need a Peoples' Party to stand for the revaluation of labour so we get paid for our
effort rather than the distortion, the rich xxx poor divide, of neoslavery austerity.
Of course it has. And it will continue to "fail", while provide us with all
sorts of goodies, for the foreseeable future. Capitalism's endless "failure" is of no more
concern than human mortality. Ever tried, ever failed, try again, fail better.
"... Now we see moneyed entities with vested interests, carpet bagging and flogging off the NHS and an unelected fossil fuel mandarin, at the heart of government decision making, appointing corporate yea-sayers, to the key government departments, with environmental responsibilities. Corporations capturing the state apparatus for their own ends, is 'corporatism.' ..."
"... "Neoliberalism in practice is every bit as bad as Communism in practice, with none of the benefits." ..."
"... The bailout is simply actual neoliberalism as opposed to the theory inside tiny right wing minds. The system depends on the wealthy not being allowed to suffer the consequences of their own greed, or it would represent revolution and still not work. ..."
"... Neoliberalism in practice is every bit as bad as Communism in practice, with none of the benefits. It always amusing to see neoliberal morons shout about the red menace when they're two sides of the same coin. ..."
"... Neoliberalism is nothing if not the opposite extreme of the communist planned economy. Like the communist planned economy, neoliberalism is doomed to failure. I think we've all been sold a lie. ..."
@NotAgainAgain - this is very true, it reminds me of an engineering company I worked for in
Nottingham (since gone under). The production manger was a corrupt thief. He gradually
sub-contracted the production work out to other companies in the area, taking backhanders for
his troubles.
Once all the production was farmed out, he somehow got himself promoted to
director level, where he and a sycophant subbed all the design work out. So all the
production and design was done out of house, standards dropped and the company closed,
leaving him with a nice payoff, just prior to retirement.
Some would say he played a blinder, my interpretation is he ruined a perfectly viable
company, making a very good product, and over the course of about 5 years put over 30 people
out of work.
In a just world he would be spending his retirement in prison.
Income distribution and a happy workforce is actually very good for business as well as
society!
Of course it is, but the capitalists do not know it. In many countries, including Finland,
the "condition of the working classes", ie. working conditions, have been in rapid decline
for the last 20 years.
Permanent salaried jobs have been replaced with temps from agencies, unpaid overtime is
becoming the norm, burnouts are commonplace and so on.
If in your country things are different, no mass lay-outs and outsourcing to China, count
yourself lucky!
But even though an illiterate market wouldn't be so great for them, they avoid their
taxes, because they can, because they are more powerful than governments
Noam Chomsky pointed this out aeons ago though-that the American model is to use tax money
to benefit private interests through technological infrastructure.
It was ever thus, if in slightly different forms. Still it is surprising that they have gone
so quickly from their stated position at the start of the republic of a rejection of kings
and emperors to their position now of corruption so ingrained it is impossible to make
distinctions. Proxy emperors are emperors all the same, no matter the rhetoric that promotes
them.
One senses that there is very little 'going back' possible. Besides, the great Neoliberal
scam is predicated upon the qualities of the 'governments' we have and the capacity of those
'rhetoricians' with the capacity to say anything or play any role, to lick any arse, to get
elected. Such apparent strength is weakness. In this world that now exists here, we have now
entered the same world as the USSR in the eighties, where the announcement of bumper harvests
of wheat, made everyone with a brain cell groan and think
'Oh fuck! no bread this winter-quick, run to the shops now, and buy up all the flour
there'.
But there is now no way to declare that without being seen as beyond the pale-a bug eyed
conspiracist.
Still, I am a believer in the connectedness of this world. The economic system and its
mythologies are just weird and distorted canaries in the coalmine of the wider environment.
It is indicating that there is a misalignment between the way we think and what is possible
in this world. Austerity promoters and 'Keynsian' Ballsites are one and the same thing-both
pretenders that the key to the problems is within their narrow gifts
Hubris is followed by nemesis. In a wider sense what we seen now is a complete failure of
the capacity to educate and to learn,and moderate behaviour, and find some way of caring for
our 'others', beyond the core of 'self'. nationalism is essentially an extension of 'self'.
We now shall see the failure of a retraction of thought into nationalism and
scapegoating.
I predict that the population of the world will decline over the next century-quite
markedly.
The only solace is that at the end of the process, the pain will be forgotten. It always
is.
@MickGJ - Cameron said 'We will cut the deficit, not the NHS,' and promised to be the
'greenest government ever,' saying that you could 'go green,' if you voted 'blue.'
Now we see
moneyed entities with vested interests, carpet bagging and flogging off the NHS and an
unelected fossil fuel mandarin, at the heart of government decision making, appointing
corporate yea-sayers, to the key government departments, with environmental responsibilities.
Corporations capturing the state apparatus for their own ends, is 'corporatism.'
Much of the healthy economic growth – as opposed to the smoke and mirrors of many
aspects of financial services – that Britain enjoyed during the second half of the
20th century was due to women swelling the educated workforce.
There was very little 'healthy economic growth' in Britain in the second half of the 20th
century.
Britain was bankrupt after WW2 with its people dependent on Marshall Aid and food
contributions from its former 'colonies'.
Whatever 'growth' occured after Marshall Aid arrived was scuppered by a class system where
company managers were more concerned with walking on the workers than with keeping their
businesses afloat while such discrimination provoked hard left trade union policies which
left british industry uncompetitive and ultimately non-existent.
If that wasn't enough, Thatcherism arrived to re-inforce class discrimination, sell off
national services and assets and replace social policy with neo-liberal consumerism.
Whether the workforce was swollen by women or anyone else is immaterial.
The anti-democratic incestuous class conflict latent in British society continues to ensure
that the UK will remain a mere vassal state of foot-soldiers and consumers for international
neo-liberal capitalism.
@DasInternaut - Completely agree. The performance has been poor to absymal. But this is a
failure of democratic governance because the collective interests of citizens as consumers
and service users are not being represented and enforced by the elected politicians since
they have been suborned by the capitalists elites and their fellow-travellers.
The people, indeed, have been sold a lie, but, unfortunately, it is only UKIP which is
making the political waves by revealing selected aspects of this lie. The three established
parties have been 'bought' to varying extents. But more and more citizens are beginning to
realise the extent to which they have been bought.
There is an upside to all of this, maybe I wont get modded so much from now on for being so
angry at the ideological criminals . Hopefully the middle classes will cotton on to the fact
that all this is not a mad hatters tinfoil hobby, we need more of them to be grumpy.
@MickGJ - We've already seen it. Not great so far. GS4, Winterbourne view, southern cross,
trains...............Welfare to work companies, delivering no better results than people left
to their own devices. Energy companies.
We'll see if the new wave of free schools, academy schools, and all the service outsourced by
the council perform any better.
Doubtful, as to make a profit, they have to employ poorer paid people, less well qualified,
and once they've got a contract, they've got very little competition, as when the second
round of bidding comes around, as the firms having got the first contract are the only one
with relevant experience, they are assured of renewal, the money machine will keep going!
Neoliberalism are policies that are
influenced by neo classical economics. If you are suggesting that the neoliberal school of
thought would advocate any kind of a bailout then you are mistaken. Where else have I
"apparently" embarrassed myself?
@TedSmithAndSon - This is just an inaccurate rant not a reply.
"The system depends on the wealthy not being allowed to suffer the consequences.."
Unless you are completely confused by what neolibralism is there is not a shred of logical
sense in this.
"The debt industry are the lenders who take advantage of a financial system..."
Which is what savers are. They come in the form of individuals businesses and governments.
This encompasses everyone.
"whilst paying the lowest possible rate. Wonga, for instance."
If you are a lender you do not pay anything, you receive.
"Thatchers revolution was to take our citizenship and give it a value, whilst making
everyone else a consumer, all for a handful of magic beans in the shape of British Gas
shares."
...not forgetting that she revitalised the economy and got everyone back to work
again.
"Neoliberalism in practice is every bit as bad as Communism in practice, with none of the
benefits."
Neoliberalism is based on the thought of personal freedom, communism is definitely not.
Neoliberalist policies have lifted millions of people out of poverty in Asia and South
America. Communism has no benefits for society open your eyes!
@ATrueFinn - After they are finished, what do Singaporeans eat?
Next year's harvest (possibly of GM food which makes better use of scarce
resources). I imagine the sun will eventually stop bombarding us with the energy that powers
photosynthesis but I'm not losing any sleep over it.
@MurchuantEacnamai - I think the point is this, Amazon make money by selling books, they
avoid paying taxes, yet expect an educated, literate population to be provided for them, on
the grounds that illiterate people don't buy books, and expect roads to move the books around
on.
@theguardianisrubbish - No! The bailout is simply actual neoliberalism as opposed to
the theory inside tiny right wing minds. The system depends on the wealthy not being
allowed to suffer the consequences of their own greed, or it would represent revolution and
still not work.
The debt industry are the lenders who take advantage of a financial system designed to
push profits upwards (neoliberalism in practice), whilst paying the lowest possible rate.
Wonga, for instance.
Thatchers revolution was to take our citizenship and give it a value, whilst making
everyone else a consumer, all for a handful of magic beans in the shape of British Gas
shares.
Neoliberalism in practice is every bit as bad as Communism in practice, with none of the
benefits. It always amusing to see neoliberal morons shout about the red menace when they're
two sides of the same coin.
.and provides them at a massively inflated cost accompanied by unforgivable waste and
inefficiency, appalling service and life-threatening incompetence.
as opposed to the private sector, who always does what it says it will do, at reasonable
cost, for the benefit of their customers, and with due regards to ethics?
Like the Banks, the financial sector, who will never sell you a product that isn't the best
for you, regardless of their interest? the private companies like Southern Cross, GS4?
The private insurance who refuse to take you on the minute you've got some illness or
disability? Get off it! The state isn't perfect, the services it provides are not perfect,
but replacing them with private provision isn't the answer!
@MurchuantEacnamai - How would you rate how well British government has done in ensuring
markets are genuinely competitive. How well has British government done in ensuring our
energy market is competitive, for example. Does the competitiveness we observe in the energy
market give customers better or worse value than they had before deregulation? How do you
rate the British government's performance in rail and public transport, with respect to
competitiveness?
Personally, and notwithstanding the notable exception of telecoms, I rate the British (and
US) government's performance in deregulating state entities, creating new markets and
ensuring competition, as poor.
Neoliberalism is nothing if not the opposite extreme of the communist planned economy.
Like the communist planned economy, neoliberalism is doomed to failure. I think we've all
been sold a lie.
"... Neoliberalism has spawned a financial elite who hold governments to ransom ..."
"... Neoliberal ideology acted as a smokescreen that enabled the financially powerful to rewrite the rules and place themselves beyond the law. ..."
"... So it seems that your suggestion is for a return to western capitalism post-war style - would that be right? (b.t.w. if I bring up the whole Soviet Union thing, it is partly because quite a few commentators in this debate come across as if they wish for something much more leftist than that). ..."
"... What you have missed, is that the lions share of the proceeds of that growth are not going to ordinary people but to a tiny minority of super rich. It is not working for the majority. ..."
"... The taxpayers are left to pick up the tab, nations are divided against immigrants and scroungers and then unfettered evangelists like you can spout as pompously as you like about how much big business would like to remove the state from corporate affairs. ..."
"... Without the state there wouldn't be neo-Liberalism, it took state regulated capitalism to build what unfettered purists insist on tearing apart for short term greed. ..."
"... The trouble is Neo-Liberals do not want to remove the state at all, they want to BE the state and in the process rendering democracy pretty much meaningless. And they've succeeded. ..."
"... The biggest swindle ever pulled was turning the most glaring and crushing failure of unfettered corporatism into the biggest and most crushing power grab implemented in order to suppress the will of the people ..."
"... Nobody hates a market more than a monopoly and capitalism must inevitably end in monopoly as it has. For the profiteering monopolies investment especially via taxation is insane as it can only undermine their monopoly. ..."
"... The bankers have always known that the austerity caused by having to pay off un-payable loans, that increase every year, will eventually produce countries very similar to the "Weimar Days" in pre-Hitler Germany. ..."
"... They also know that drastic conditions such as these often lead to a collapse of democracy and a resurgence of Fascism. ..."
"... Neoliberalism could not exist without massive state support. So the term is meaningless. There is nothing "liberal" about having a huge state funded military industrial complex that acts a Trojan horse for global corporations, invading other countries for resources. ..."
"... Neoliberalism is a branch of economic ideology which espouses the value of the free-market, and removing all protective legislation, so that large companies are free to do what they want, where-ever they want, with no impediments from social or environmental considerations, or a nation's democratic preferences. ..."
"... Business-friendly to who exactly: the nation or hostile overseas speculators? ..."
"... The golden age of 1945 - 1975 or so witnessed huge rises in standards of living so your point linking neo-liberalism to rising standards of living is literally meaningless. There was an explosive growth in economic activity during the three or four post war decades ..."
"... The assumption shared by many round here that the young are some untapped resource of revolutionary energy is deeply mistaken ..."
A wonderful article that names the central issue. Neoliberal ideology acted as a smokescreen
that enabled the financially powerful to rewrite the rules and place themselves beyond the
law. The resultant rise of financial capitalism, which now eclipses the productive
manufacturing-based capitalism that was the engine of world growth since the industrial
revolution, has propelled a dangerous self-serving elite to the centre of world power. It's
not just inequality that matters, but the character of the global elite.
The neo-liberal order commenced only in the late 1970s - there was a very different
order prior to this which was not "soviet socialism" as you term it.
So it seems that your suggestion is for a return to western capitalism post-war style -
would that be right? (b.t.w. if I bring up the whole Soviet Union thing, it is partly because
quite a few commentators in this debate come across as if they wish for something much more
leftist than that).
Anyway, my worry with this idea is that I am just not convinced that life in "The West
1945-80" was better on the whole than in "The West 1980-present". It's true that
unemployment is higher these days, but a lot of work in the post-war years was boring and
physically exhausting; in factories and mines where conditions were degrading and bad for
health; and where industrial relations were simply terrible. I think as well that the higher
unemployment is a localized phenomenon that many developing countries are not experiencing
(this is relevant because Deborah Orr proposes change for the whole world, not merely the
West).
There were also frequent recessions and booms - in fact, more frequent (albeit shorter)
than now. What seems to have changed in this respect is that, whereas we used to alternate
regularly between 2-3 years of boom and 1-2 years of bust, we now have 15 years of continuous
boom followed by a (maybe?) 10 year bust (this pattern began around 1980). If you asked me
which of these two patterns I preferred, then I think I'd go for the pre-1980 pattern, but
its not clear to me that the post-1980 pattern is so much worse as to underwrite a savage
indictment of the whole system.
As for Casino banking: they should reform that. Britain's Coalition Government has done
something in that respect, although its not very radical - I am hoping Labour can do more.
There is certainly a lot to be said for banks going back to a pre-"Big Bang" sense of
tradition and prudence.
Buts let's not also forget the plus sides in the ledger for post-1980 capitalism: hundreds
of millions in the former third world lifted out of poverty; unprecedented technological
innovation (e.g. the internet, which makes access to knowledge more equal even as income
inequality grows); and the accomodation (at least in the West) of progressive social change,
such as the empowerment of ethnic minorities, LGBT people and women.
Change, yes - but lets be careful not to throw the baby out with the bathwater.
OK, but both the claim and the link cited in support talk only about a problem in the US.
This can't really answer my point, which was that the rest of the world should not be
expected to support a change to the economic system of the whole world just because of
problems that are mostly localised to North America and Europe. People in developing
countries might like the fact that they are, at last, catching "the West" up, and might well
not care much about widening inequality of incomes in Western societies.
If you are going to propose changes that you want the whole world to adopt, as Deborah Orr
does, then you should be careful to avoid casually assuming that Africa, India, China, et al,
feel the same way about the world's recent history as we do. It seems to me that not enough
care has been demonstrated in this regard.
@MickGJ - Left to their own devices the most extreme neo-liberals would remove the state
almost completely from corporate life.
Except when the State has to step in to prop up an unsustainable ideology. Then it's all
meek murmurings and pleas for forgiveness and a timid "we'll be better from now" concessions
and the Government obliges the public with the farce that they actually intend to do anything
at all but make the public pay for the financial sector's state subsidized profligacy.
Once the begging bowl is re-filled of course then the pretense of "business as usual"
profligacy rises to the fore.
The taxpayers are left to pick up the tab, nations are divided against immigrants and
scroungers and then unfettered evangelists like you can spout as pompously as you like about
how much big business would like to remove the state from corporate affairs.
When you well know that is the last thing big business would like to do. More of the state
owned pie is always the most urgent of priorities. Poorer services at inflated costs equates
as 'efficiency' until the taxpayer is again left to step in and pick up the bill.
Without the state there wouldn't be neo-Liberalism, it took state regulated capitalism to
build what unfettered purists insist on tearing apart for short term greed.
The trouble is Neo-Liberals do not want to remove the state at all, they want to BE the
state and in the process rendering democracy pretty much meaningless. And they've
succeeded.
The biggest swindle ever pulled was turning the most glaring and crushing failure of
unfettered corporatism into the biggest and most crushing power grab implemented in order to
suppress the will of the people.
Just as IMF loans come with 'obligations' the principle of democracy itself was sold as
part of 'the solution'.
The unsustainable, sustained. By slavery to debt, removal of society's safety net and an
economy barely maintained by industries that serve the rich, vultures that prey on the weak
and rising living costs and the drudgery of a life compounded by a relentless bombardment of
everything in life that is unattainable.
Nobody hates a market more than a monopoly and capitalism must inevitably end in monopoly as
it has. For the profiteering monopolies investment especially via taxation is insane as it
can only undermine their monopoly. With the economy now globalised not even a world war could
sweep away the current ossified political economy and give capitalism a new lease on life.
It's socialism or monopoly capitalist barbarism. Make your choice.
Money that the governments don't actually need as they can print their own money and spend it
to use their countries own resources and then raise taxes to offset the extra spending and
thus maintaining monetary value. The reality is that a government should never, ever borrow
money.
The beginning period between the two world wars (1919-33) in Germany called the Weimar
Republic shows us exactly what severe austerity imposed by the Treaty of Versailles caused.
Because the German economy contracted severely due to reparations payments, steady inflation
and severe unemployment ensued. Of course the FED having started the Great Depression in
America had not helped matters much anywhere in the world. The bankers have always known that
the austerity caused by having to pay off un-payable loans, that increase every year, will
eventually produce countries very similar to the "Weimar Days" in pre-Hitler Germany.
They
also know that drastic conditions such as these often lead to a collapse of democracy and a
resurgence of Fascism.
What causes inflation is uncontrolled speculation of the kind we have seen fed by private
banking at various crucial points in history, such as the Weimar Republic. When speculation
is coupled with debt (owed to private banking cartels) such as we are seeing in America and
Europe now, the result is disaster. On the other hand, when a government issues its own "good
faith" commerce-related currency in carefully measured ways as we saw in Roman times or
Colonial America, it causes supply and demand to increase together, leaving prices
unaffected. Hence there is no inflation, no debt, no unemployment, and no need for income
taxes.
In reality, the Weimar financial crisis began with the impossible reparations payments
imposed at the Treaty of Versailles. It is very similar to the austerity being imposed on
European Nations and America as we speak – regardless of the fact that the IMF is
trying to pose as "the Good Cop" at the moment! The damage has been done to nations like
Greece, and others are soon to follow. The uncontrollable greed of banks and corporations is
leading to an implosion of severe magnitude! It's time to open their books and put a stop to
these private banks right now!
@MysticFish - So the US who has a greater spend on the military than communist China is
neoliberal?
Neoliberalism could not exist without massive state support. So the term is
meaningless. There is nothing "liberal" about having a huge state funded military industrial complex
that acts a Trojan horse for global corporations, invading other countries for resources.
The term neoliberal is not only meaningless but misleading as it implies a connection with
true liberalism, of which it has no meaningful connection.
Do away with deceptive terms like neoliberalism, capitalism, socialism, left wing and right
wing and things become clearer.
At root a lot of the people who get involved in all of the above have very similar
character traits - love of power, greed, deceitful, ruthlessness. Most start out with these
character traits, and others gain them as a result of power.
Anyone high up in politics or business is unhinged. You have to be. The organizational
structures in these things are so synthetic, the beliefs so artificial, rigid, dogmatic and
inhuman that only a unhinged person could prosper in this climate.
Most reasonable people admit doubt, are willing to accept compromise, are willing to make
the occasional sacrifice for the greater good. All these things are what make us human,
however all these things are seen as weaknesses in the inverted world of business and
politics.
Business and politics creates an environment where the must inhuman traits prosper.
"no but the highly placed banking and financial class are along with their venal
political mates"
For sure but are they capitalists? Although they may well own capital does their power
derive from the ownership of capital? You may, or may not be interested in this
lecture on the future of capitalism by John Kay.
@AssistantCook - Neoliberalism is a branch of economic ideology which espouses the value of
the free-market, and removing all protective legislation, so that large companies are free to
do what they want, where-ever they want, with no impediments from social or environmental
considerations, or a nation's democratic preferences. Von Hayek was a major influence and
Thatcher was a loyal disciple, as was the notorious dictator, Pinochet. It is economic
theory, designed for vulture capitalists, and unpopular industries like fossil fuel or
tobacco, and usually the 'freedom' is all one-sided.
@DavidPavett - If states are too big, then what about multinational banks and corporations? I
wonder why Neoliberal ideology does not try to limit the size of these. They are cumbersome
and destructive, predatory dinosaurs and yet our politicians seem mesmerised to the point of
allowing them special favours, tax incentives and the ability to determine our nation's
policies in matters such as energy and health. Why not 'Small is Beautiful,' when it comes to
companies? It doesn't make sense to shrink the state but then let non-transparent and
unaccountable, multinational companies become too powerful. One gets the feeling the country
is being invaded by the interests of hostile nations, using all-too-convenient Neoliberal
ideology and hidden behind a corporate mask.
Is the IMF ever stop evading its responsibility and blaming others for the worldwide
financial tragedy it has provoked? Is it ever stop hurting the working class?
"Neo-liberalism is based on the thought of personal freedom for the rich and powerful
elites is all."
No it is not that is what you want to believe. There is nothing in this statement other
than an opinion based on nothing.
"Many people across the globe were lifted out of poverty between 1945-1980 so what does
your statement about neo-liberalism prove"
Which countries during this period saw massive sustainable reductions in poverty without
some free market model in place?
"It is you who should open your eyes and stop expecting people on here to accept your
ideological beliefs and statements as facts."
I don't expect people to accept my beliefs I am just pointing out why I think their
beliefs are wrong. This is a comment section the whole idea of it is to comment on different
views and articles. How can you ever benefit or make an accurate decision or belief if you do
not try to understand what the opposite belief is? I think nearly everything I have said has
been somewhat backed up by logic or a fact, I have not said wishy washy statements like:
"Neo-liberalism is based on the thought of personal freedom for the rich and powerful
elites is all."
Unless you can expand on this and give evidence or some form of an example why you think
its true then it makes no sense. You are not the only commentor on this article to make a
similar statement and the way people have attempted to justify it is due to bailouts but as I
have said a bailout is not part of the neoliberal school of thought so if you have a problem
with bailouts you don't have a problem with neoliberalism.
@murielbelcher - I don't want to go to far into Thatcherism because it is slightly off topic.
The early 80s recession was a global recession and yes during the first few years
unemployment soared. Why was that because the trade unions were running amok the UK was
losing millions of days of work per month.
Inflation was getting out of control and the only
way to solve it was a self induced recession. You cannot seriously believe that without the
reforms that she implemented we would not have recovered as quick as we did nor can you argue
that it was possible for her or anyone else to turn around such an inefficient industry.
Don't forget the problems of the manufacturing industry go back way before Thatcher's time.
"Here's your problem. You believe that banks lend savings. They don't. Loans create
deposits create reserves."
I am not claiming to be an expert on this if you are then let me know and please do
correct me. I agree banks do not lend deposits but they do lend savings. There is a
difference putting money on deposit is different to say putting money into an ISA. I don't
agree though that deposits create reserves I believe that they come from the central bank
otherwise banks would be constrained by the amount of deposits in the system which is not
true and something you have said is not true.
Nevertheless, the majority of liquidity in the bond markets (like most other markets)
comes from institutional investors, i.e pension funds, unit trusts, insurance companies, etc.
They get their money from savings by consumers as well as sometimes companies. Ok we don't
always give our money to insurance companies when we save but via premiums is another way the
ordinary consumer contributes to this so called "debt industry". I also said that foreign and
local governments buy debt and companies invest directly into the debt market.
"In theory the banks should have been allowed to go bust, but the consequences where deemed
too high (as they inevitable are). "
Iceland would disagree.
"The result is socialism for the rich using the poor as the excuse, which is the reality
of neoliberalism."
Why have only the rich benefited from the bailout? You are not making any sense.
"The result is socialism for the rich using the poor as the excuse, which is the reality
of neoliberalism."
Why? You cannot just say a statement like that and not expand, it makes no sense.
"Thatcher "revitalised" banking, while everything else withered and died."
...but also revitalised the economy and got everyone back to work.
"Neoliberalism is based on the thought that you get as much freedom as you can pay for,
otherwise you can just pay... like everyone else."
Again you have to expand on this because it makes no sense.
"In Asia and South America it has been the economic preference of dictators that pushes
profit upwards and responsibility down, just like it does here."
Don't think that is true in most cases nor would it make sense. Why would a dictator who
wants as much power as possible operate a laissez-faire economy? You cannot have personal
freedom without having economic freedom, it is a necessary not sufficient condition. Tell me
a case where these is a large degree of political freedom but little to no economic freedom.
Moreover look at the countries in Asia and South America that have adopted a neoliberal
agenda and notice their how poverty as reduced significantly.
"I find it ironic that it now has 5 year plans that absolutely must not be deviated from,
massive state intervention in markets (QE, housing policy, tax credits... insert where
applicable), and advocates large scale central planning even as it denies reality, and makes
the announcement from a tractor factory."
Who has 5 year plans?
"In theory it's one thing, the reality is entirely different."
If the reality is different to the theory then it is not neoliberalism that is being
implemented therefore it makes no sense to dispute the theory. Look at where it has been
implemented, the best case in the world at the moment is Hong Kong look at how well that
country has performed.
"a massive lie told by rich people "
I can assure you I am not rich.
"Until we're rid of it, we're all it's slaves."
Neoliberalism is based on personal freedom. If you believe this about neoliberalism in your
opinion give me one economic school of thought where this does not apply.
"Bailouts have been a constant feature of neoliberalism."
What you are saying does not make sense. Whatever you say about that there was no where else
to turn the government had to bailout out the banks a neolibralist would disagree.
"In fact the role of the state is simply reduced to a merely commissioning agent to
private parasitical corporations. "
That's corporatism which so far you have described pretty well.
"History has shown the state playing this role since neoliberalism became embedded in
policy since the 1970s - Long Term Capital Management, Savings and Loans, The Brady Plan,
numerous PFI bailouts and those of the Western banking system during the 1982 South American,
1997 Asian and 2010 European debt crises."
What?! Bailouts have been occurring before the industrial revolution. Deregulation in the
UK occurred mainly during the 80s not 70's. Furthermore financial deregulation occurred in
the UK in 1986. In the USA the major piece of financial deregulation was the Gramm Leach
Bliley Act which was passed in 1999. So you have just undercut your own point with the
examples you gave above. You could argue Argentina and we could argue all day about the
causes of that, but I would say that any government that pursues an expansionary monetary
policy under a fixed ER is never going to end well.
"...policy if you won't flick through a book."
My point was that when people quote a source they tend to either quote the page that the
point comes from. To be honest if this book is telling you that neoliberalism and
neoclassical are significantly different (which you seemed to suggest in you earlier post)
then I would suggest put the book down.
"Google, Amazon and Apple... avoid their taxes, because they can, because they are more
powerful than governments."
Yes to the first, no to the second. Corporations with revenues exceeding the GDP of a small nation have quite a lot of power:
Exxon's revenue is between the GDP of Norway and Austria. In Finland Nokia generated 3 4 % of the GDP for a decade and the government bent backwards
to accommodate its polite requests, including a specific law reducing the privacy of
employees' emails.
We percieve a problem in (most of) Europe and North America because our economies are
growing more slowly than this, and in some cases not at all. The global growth figure comes
out healthy because of strong growth in the emerging countries, like China, Brazil and
India, who are narrowing the gap between their living standards and ours. So, the world as
a whole isn't broken, even if our bit of it is going through a rough patch.
@Fachan - Except that it isn't capitalism that was being criticized here, but neoliberalism:
a distinction that's often lost on neoliberals themselves, ironically.
I'm sure that Denis Healy and any number of African economists would confirm that the IMF is
quite simply a refuge of absolutely last resort, when investor confidence in your economy is
so shattered that the only way ahead is to open the shark gates and allow big money to
plunder whatever value remains there, without the benefit of any noticeable return for your
people. Greece is but one more victim of a syndrome that encompasses all the science and
forensic analysis of ritual sacrifice.
@OneCommentator - don't confuse economic deregulation which acted as handmaiden to global
finance and multinationals as economic freedoms for population
China's govt was doing what china's govt had decided to do from 1978 BEFORE the election
of Thatcher in 1979 or Reagan in 1980 (office from Jan 1981), so very little correlation
there I think
The GATT rounds whether you agree with their aims or not were the products of the post war
decades, again before Thatcher and Reagan came to power
The golden age of 1945 - 1975 or so witnessed huge rises in standards of living so your
point linking neo-liberalism to rising standards of living is literally meaningless. There
was an explosive growth in economic activity during the three or four post war decades
@theguardianisrubbish - you can't get away with this
She DID not get everyone back to work again. There were two recessions at either end of the 1980s. She TRIPLED unemployment during the first half of the 1980s and introduced the phenomenon
of high structural unemployment and placing people on invalidity benefits to massage the
headline unemployment count. Give us the figures to back up your assertion that she "got
everyone back to work again." I suspect that you cannot and your statement stands for the
utter nonsense that it is in any kind of reality.
A few months after she was forced out Tory Chancellor Norman Lamont in 1991 during yet
another recession declared that "unemployment was a price worth paying"!!!
Neo-liberalism is based on the thought of personal freedom for the rich and powerful
elites is all. Many people across the globe were lifted out of poverty between 1945-1980 so
what does your statement about neo-liberalism prove
It is you who should open your eyes and stop expecting people on here to accept your
ideological beliefs and statements as facts.
"The IMF exists to lend money to governments, so it's comic that it wags its finger at
governments that run up debt. And, of course, its loans famously come with strings attached:
adopt a free-market economy, or strengthen the one you have, kissing goodbye to the Big
State."
That's glib and inaccurate. A better read about the IMF from an insider:
http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/ Digest: the biggest problem the IMF have to deal with in bailouts is always the politics
of cronyism; free-market oligarchs and government in cahoots.
"Many IMF programs "go off track" (a euphemism) precisely because the government can't
stay tough on erstwhile cronies, and the consequences are massive inflation or other
disasters. A program "goes back on track" once the government prevails or powerful oligarchs
sort out among themselves who will govern -- and thus win or lose -- under the IMF-supported
plan. The real fight in Thailand and Indonesia in 1997 was about which powerful families
would lose their banks. In Thailand, it was handled relatively smoothly. In Indonesia, it led
to the fall of President Suharto and economic chaos."
Generally whoever happens to be in opposition at the time. This made the LibDems
the ideal (sorry) choice for a long time but then they broke a long-standing if unspoken
promise that they would never actually be in government.
Last weekś Economist has some very interesting stuff from the British Social
Attitudes survey which shows the increasing drift away from collectivist ideals towards
liberalism over each succeeding generation.
The assumption shared by many round here that the young are some untapped resource of
revolutionary energy is deeply mistaken
"... The crash was a write-off, not a repair job. The response should be a wholesale reevaluation of the way in which wealth is created and distributed around the globe ..."
"... The IMF also admits that it "underestimated" the effect austerity would have on Greece. Obviously, the rest of the Troika takes no issue with that. Even those who substitute "kick up the arse to all the lazy scroungers" whenever they encounter the word "austerity", have cottoned on to the fact that the word can only be intoned with facial features locked into a suitably tragic mask. ..."
"... Yet, mealy-mouthed and hotly contested as this minor mea culpa is, it's still a sign that financial institutions may slowly be coming round to the idea that they are the problem. ..."
"... Markets cannot be free. Markets have to be nurtured. They have to be invested in. Markets have to be grown. Google, Amazon and Apple haven't taught anyone in this country to read. But even though an illiterate market wouldn't be so great for them, they avoid their taxes, because they can, because they are more powerful than governments. ..."
"... The neoliberalism that the IMF still preaches pays no account to any of this. It insists that the provision of work alone is enough of an invisible hand to sustain a market. Yet even Adam Smith, the economist who came up with that theory , did not agree that economic activity alone was enough to keep humans decent and civilised. ..."
"... Governments are left with the bill when neoliberals demand access to markets that they refuse to invest in making. Their refusal allows them to rail against the Big State while producing the conditions that make it necessary. ..."
The crash was a write-off, not a repair job. The response should be a wholesale reevaluation of the way in which wealth is
created and distributed around the globe
Sat 8 Jun 2013 02.59 EDT First published on Sat 8 Jun 2013 02.59 EDT
The IMF's limited admission of guilt over the Greek bailout is a start, but they still can't see the global financial system's
fundamental flaws, writes Deborah Orr. Photograph: Boris Roessler/DPA FILE T he International Monetary Fund has admitted that some
of the decisions it made in the wake of the 2007-2008 financial crisis were wrong, and that the �130bn first bailout of Greece was
"bungled". Well, yes. If it hadn't been a mistake, then it would have been the only bailout and everyone in Greece would have lived
happily ever after.
Actually, the IMF hasn't quite admitted that it messed things up. It has said instead that it went along with its partners in
"the Troika" � the European Commission and the European Central Bank � when it shouldn't have. The EC and the ECB, says the IMF,
put the interests of the eurozone before the interests of Greece. The EC and the ECB, in turn, clutch their pearls and splutter with
horror that they could be accused of something so petty as self-preservation.
The IMF also admits that it "underestimated" the effect austerity would have on Greece. Obviously, the rest of the Troika takes
no issue with that. Even those who substitute "kick up the arse to all the lazy scroungers" whenever they encounter the word "austerity",
have cottoned on to the fact that the word can only be intoned with facial features locked into a suitably tragic mask.
Yet, mealy-mouthed and hotly contested as this minor mea culpa is, it's still a sign that financial institutions may slowly be
coming round to the idea that they are the problem. They know the crash was a debt-bubble that burst. What they don't seem to acknowledge
is that the merry days of reckless lending are never going to return; even if they do, the same thing will happen again, but more
quickly and more savagely. The thing is this: the crash was a write-off, not a repair job. The response from the start should have
been a wholesale reevaluation of the way in which wealth is created and distributed around the globe, a "structural adjustment",
as the philosopher
John Gray has said all along.
The IMF exists to lend money to governments, so it's comic that it wags its finger at governments that run up debt. And, of course,
its loans famously come with strings attached: adopt a free-market economy, or strengthen the one you have, kissing goodbye to the
Big State. Yet, the irony is painful. Neoliberal ideology insists that states are too big and cumbersome, too centralised and faceless,
to be efficient and responsive. I agree. The problem is that the ruthless sentimentalists of neoliberalism like to tell themselves
� and anyone else who will listen � that removing the dead hand of state control frees the individual citizen to be entrepreneurial
and productive. Instead, it places the financially powerful beyond any state, in an international elite that makes its own rules,
and holds governments to ransom. That's what the financial crisis was all about. The ransom was paid, and as a result, governments
have been obliged to limit their activities yet further � some setting about the task with greater relish than others. Now the task,
supposedly, is to get the free market up and running again.
But the basic problem is this: it costs a lot of money to cultivate a market � a group of consumers � and the more sophisticated
the market is, the more expensive it is to cultivate them. A developed market needs to be populated with educated, healthy, cultured,
law-abiding and financially secure people � people who expect to be well paid themselves, having been brought up believing in material
aspiration, as consumers need to be.
So why, exactly, given the huge amount of investment needed to create such a market, should access to it then be "free"? The neoliberal
idea is that the cultivation itself should be conducted privately as well. They see "austerity" as a way of forcing that agenda.
But how can the privatisation of societal welfare possibly happen when unemployment is already high, working people are turning to
food banks to survive and the debt industry, far from being sorry that it brought the global economy to its knees, is snapping up
bargains in the form of busted high-street businesses to establish shops with nothing to sell but high-interest debt? Why, you have
to ask yourself, is this vast implausibility, this sheer unsustainability, not blindingly obvious to all?
Markets cannot be free. Markets have to be nurtured. They have to be invested in. Markets have to be grown. Google, Amazon
and Apple haven't taught anyone in this country to read. But even though an illiterate market wouldn't be so great for them, they
avoid their taxes, because they can, because they are more powerful than governments.
And further, those who invest in these companies, and insist that taxes should be low to encourage private profit and shareholder
value, then lend governments the money they need to create these populations of sophisticated producers and consumers, berating them
for their profligacy as they do so. It's all utterly, completely, crazy.
The other day a health minister,
Anna Soubry
, suggested that female GPs who worked part-time so that they could bring up families were putting the NHS under strain. The
compartmentalised thinking is quite breathtaking. What on earth does she imagine? That it would be better for the economy if they
all left school at 16? On the contrary, the more people who are earning good money while working part-time � thus having the leisure
to consume � the better. No doubt these female GPs are sustaining both the pharmaceutical industry and the arts and media, both sectors
that Britain does well in.
As for their prioritising of family life over career � that's just another of the myriad ways in which Conservative neoliberalism
is entirely without logic. Its prophets and its disciples will happily � ecstatically � tell you that there's nothing more important
than family, unless you're a family doctor spending some of your time caring for your own. You couldn't make these characters up.
It is certainly true that women with children find it more easy to find part-time employment in the public sector. But that's a prima
facie example of how unresponsive the private sector is to human and societal need, not � as it is so often presented � evidence
that the public sector is congenitally disabled.
Much of the healthy economic growth � as opposed to the smoke and mirrors of many aspects of financial services � that Britain
enjoyed during the second half of the 20th century was due to women swelling the educated workforce. Soubry and her ilk, above all
else, forget that people have multiple roles, as consumers, as producers, as citizens and as family members. All of those things
have to be nurtured and invested in to make a market.
The neoliberalism that the IMF still preaches pays no account to any of this. It insists that the provision of work alone
is enough of an invisible hand to sustain a market. Yet even Adam Smith, the economist who
came up with that theory , did not agree
that economic activity alone was enough to keep humans decent and civilised.
Governments are left with the bill when neoliberals demand access to markets that they refuse to invest in making. Their refusal
allows them to rail against the Big State while producing the conditions that make it necessary. And even as the results of their
folly become ever more plain to see, they are grudging in their admittance of the slightest blame, bickering with their allies instead
of waking up, smelling the coffee and realizing that far too much of it is sold through Starbucks.
"... The era of neoliberalism has seen a massive increase in government, not a shrinkage. The biggest change is the role of governments - to protect markets rather than to protect the rights and dignities of its citizens. When viewed by outcome rather than ideological rhetoric, it becomes increasingly clear that neoliberalism has nothing to do with shrinking the state, freeing markets, or freeing the individual, and everything to do with a massive power grab by a global elite. ..."
"... What was the billions of pounds in bank bailout welfare and recession on costs all about? You tell me. All the result of the application of your extremist free market ideology? Let the banks run wild, they mess up and the taxpayer has to step in with bailout welfare and pay to clear up the recession debris ..."
"... Market participants and their venal political friends have during the past 30 years of extremist neo-liberal ideology rigged, abused, distorted and subverted their market and elite power to tilt the economic and social balance massively in their favour ..."
"... Neo liberalism = the favoured ideology of the very rich and powerful elite ..."
"... at last somebody is looking at globalisation and asking whose interests is it designed to serve? It certainly ain't for the people. ..."
"... the highly placed banking and financial class are along with their venal political mates ..."
"... We've had three decades of asset stripping in favor of the rich elites and look at the mess we're in now. ..."
"... I strongly believe that people are not being told the full story. Like the NSA surveillance revelation, the effects will not be pretty when the facts are known. No country needs the IMF. ..."
"... The mythology surrounding deficits and national debt is a religion that the world is in desperate need of debunking. Like religion, the mythology is used as a means of power and entrenchment of privilege for the Ruling Caste, not the plebs (lesser mortals). ..."
This article is a testament to our ignorance. Orr is no intellectual slouch, but somehow,
like many in the mainstream, she still fails to address some fundamental assumptions and thus
ends up with a muddled argument.
"What they don't seem to acknowledge is that the merry days of reckless lending are never
going to return;"
Lending has not stopped - it's just moved out of one market into another. Banks are making
profits, and banks profit are made by expanding credit.
Neoliberal ideology insists that states are too big and cumbersome, too centralised and
faceless, to be efficient and responsive.
Yes and no. There is a difference between what is preached and what happens in practice. The
era of neoliberalism has seen a massive increase in government, not a shrinkage. The biggest
change is the role of governments - to protect markets rather than to protect the rights and
dignities of its citizens. When viewed by outcome rather than ideological rhetoric, it
becomes increasingly clear that neoliberalism has nothing to do with shrinking the state,
freeing markets, or freeing the individual, and everything to do with a massive power grab by
a global elite.
@MurchuantEacnamai - well righty ideologues such as yourself and your venal political
acolytes have utterly failed to support the case or institute measures that: "apply effective
democratic governance to ensure market
What was the billions of pounds in bank bailout welfare and recession on costs all about?
You tell me. All the result of the application of your extremist free market ideology? Let
the banks run wild, they mess up and the taxpayer has to step in with bailout welfare and pay
to clear up the recession debris
Market participants and their venal political friends have during the past 30 years of
extremist neo-liberal ideology rigged, abused, distorted and subverted their market and elite
power to tilt the economic and social balance massively in their favour
You the taxpayer are good enough to bail us out when we mess up but then we demand that
your services are cut in return and that your employment is ever more precarious and wages
depressed (at the lower end of the scale - never ever the higher of course!! That's the
neo-liberal deal isn't it
Neo liberalism = the favoured ideology of the very rich and powerful elite and boy don't
they know how to work its levers
Very insightful commentary and at last somebody is looking at globalisation and asking whose
interests is it designed to serve? It certainly ain't for the people. Amazing it's been
approved on a UK liberal newspaper as well!
@Fachan - There was nothing in the article about envy. It was an exposition of the failure of
our present system which allows the rich to get ever richer. That would be fine if it weren't
for the fact that the increasing disparity in wealth is bringing down the economy and making
it less productive while leaving a large part of the population in, or on the verge of,
poverty.
@CaptainGrey - but we're not talking about that form of capitalism are we?
Surely you must realise that there are very very different forms of capitalism. The capitalism that reigns now would not have permitted the creation of the NHS had it not
been devised in the1940s when a very different type of capitalism reigned. Its political acolytes and its cheerleader press would have denounced the NHS as an
extremist commie idea!!
The Chicago boys swarmed into eastern Europe after 1989 to introduce a form of gangster
unbridled capitalism. The very Chicago boys led by Milton Friedman who used the dictator Pinochet's Chile as
test bed for their ideology from September 1973 after the coup that overthrew Allende
The neo-liberal order commenced only in the late 1970s - there was a very different order
prior to this which was not "Soviet Socialism" as you term it.
As such this extremist rich man's ideological experiment has had a long innings and has
failed as the events of 2008 laid bare for all to see - it has been tried out disastrously on
live human beings for 34 years and has now been thoroughly discredited with the huge bank
bailouts and financial crash and ensuing and enduring recession It was scarcely succeeding
prior to this with high entrenched rates of unemployment, frequent recessions/booms and busts
and unsustainable property bubbles and deregulated unstable speculative aka casino banking
activity
1. Neoliberalism cannot be pinned on one party alone. It was accepted by the Thatcher
government, but no Prime Minister since has seriously challenged it.
2. Neoliberalism is logically contrary to conservative values. Either there are certain
moral imperatives so important that it is worth wasting money over them, or there are not. No
wonder that Tories are torn in two, not to mention Labour politicians who also try to combine
neoliberalism and moral principle.
3. Saying "even Adam Smith" is understandable but unfair. His work was rather enlightened
in the context of mercantilism, and of course the Wealth of Nations was not his only book.
Others will know his work better than me, but I think he dwells rather strongly on problems
of persistent poverty.
4. The political and redistributive functions of nations are indeed damaged by neolib, but
I don't think there is any realistic way of getting that power back without applying capital
controls. If we apply capital controls, all hell breaks loose.
5. Ergo, we are stuck with a situation where neolib is killing democracy, distributive
justice and conservative moral values, but there is nothing we can do about it without
pulling the plug altogether and unleashing a sharp drop in wealth and 1930s nationalistic
havoc. A bit of a tragedy, indeed.
Deborah Orr: The IMF exists to lend money to governments, so it's comic that it
wags its finger at governments that run up debt.
I strongly believe that people are not being told the full story. Like the NSA
surveillance revelation, the effects will not be pretty when the facts are known. No country needs the IMF. Any national government with its own national currency
sovereignty can pay its own debts within its own country with its own currency. International
borrowing in foreign markets is the biggest myth since religion. But since neoliberalism and
its inherent myths have been swallowed whole for so long, we are still at the stage where the
child points and laughs at the nude emperor. The fallout from the revelation and remedy is to
follow.
The problem with the Eurozone is not that the Euro is the "national" currency. Control of
the Euro resides with the European Central Bank, not the Troika (European Commission,
European Central Bank, IMF). The European Central Bank, as sole controller of the Euro (the
"national" currency), can issue funds to constituent Eurozone states to the extent necessary.
I challenge anyone to demonstrate how any central bank does not have power over its own
currency!
The mythology surrounding deficits and national debt is a religion that the world is in
desperate need of debunking. Like religion, the mythology is used as a means of power and
entrenchment of privilege for the Ruling Caste, not the plebs (lesser mortals).
@DavidPavett - Does anyone have any idea what this is supposed to mean? There are
certainly no leads on this in the link given to "the philosopher" John Gray
Gray wrote this in the Guardian in 2007:
Whether in Africa, Asia, Latin America or post-communist Europe, policies of wholesale
privatisation and structural adjustment have led to declining economic activity and social
dislocation on a massive scale
This doesn't seem to support Orrś assertion that he is calling for a
structural adjustment, rather the opposite. I'ḿ not really familiar with Grayś work
but he seems to be rather against the universal imposition of any system, new or old.
@CaptainGrey - Capitalism is not an undifferentiated mass. Late-stage neoliberal
hypercapitalism as practiced in the US and increasingly in the UK is a very different beast
than the traditional European capitalist social democracy or the Nordic model, which have
been shown to work relatively well over time. In fact, neoliberal capitalism - the sort Orr
is talking about here - is marked by increasing decline both in the state and in the economy,
as inequality in wealth distribution creates a society of beggars and kings instead of
spenders and savers. The gains achieved through carefully regulated capitalism won't stick
around in the free-for-all conditions preferred by those whose ideology demands the sell-off
of the state.
@PeterWoking - For some parts of the world , yes they are more affluent now , but a huge part of the globe is still without
food and water .
I think de regulation of the financial sector has caused a huge amount of damage to the world all round and
to be honest, i expect more of the same as the Bankers are still in control.
I believe that banking institutions are more dangerous to our liberties than standing armies.~Thomas Jefferson~
When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since
the hand that gives is above the hand that takes Money has no motherland; financiers are without patriotism and without decency;
their sole object is gain." � Napoleon Bonaparte, Emperor of France, 1815
This is about destruction of neoliberalism. Transnational financial elite under neoliberalism is above the law. the USA blatantly
breaches this convention now. And will pay the price.
This is Onion-style humor is no it : White House, Trudeau seek to distance themselves from Huawei move
Notable quotes:
"... The official, speaking on condition of anonymity, acknowledged that the arrest could complicate efforts to reach a broader U.S.-China trade deal but would not necessarily damage the process. ..."
"... Meng's detention also raised concerns about potential retaliation from Beijing in Canada, where Prime Minister Justin Trudeau sought to distance himself from the arrest. ..."
Huawei Technologies Co Ltd's chief financial officer, Meng Wanzhou, the 46-year-old daughter of the company's founder, was detained
in Canada on Dec. 1, the same day Trump and Chinese President Xi Jinping dined together at the G20 summit in Buenos Aires.
A White House official told Reuters Trump did not know about a U.S. request for her extradition from Canada before he met Xi and
agreed to a 90-day truce in the brewing trade war.
Meng's arrest during a stopover in Vancouver, announced by the Canadian authorities on Wednesday, pummeled stock markets already
nervous about tensions between the world's two largest economies on fears the move could derail the planned trade talks.
The arrest was made at Washington's request as part of a U.S. investigation of an alleged scheme to use the global banking system
to evade U.S. sanctions against Iran, according to people familiar with the probe.
Another U.S. official told Reuters that while it was a Justice Department matter and not orchestrated in advance by the White
House, the case could send a message that Washington is serious about what it sees as Beijing's violations of international trade
norms.
The official, speaking on condition of anonymity, acknowledged that the arrest could complicate efforts to reach a broader
U.S.-China trade deal but would not necessarily damage the process.
Meng's detention also raised concerns about potential retaliation from Beijing in Canada, where Prime Minister Justin Trudeau
sought to distance himself from the arrest.
"The appropriate authorities took the decisions in this case without any political involvement or interference ... we were advised
by them with a few days' notice that this was in the works," Trudeau told reporters in Montreal in televised remarks.
"... In bull markets, everything works. In bear markets, the only thing that really works is short-term government and municipal bonds and cash. Ample opportunity is being given to cut exposure to risk, and it's clear that few people are taking advantage of it. They never do. ..."
(Bloomberg Opinion) -- As a longtime market observer, what I find most interesting about the latest correction in equities has
the feeling of inevitability that it will turn into something worse. It wasn't this way in late January, when everyone wanted to
buy that dip. It certainly wasn't this way in 2007, when the magnitude of the recession was grossly underestimated.
Even the Federal Reserve is getting into the pessimism. Chairman Jerome Powell signaled last week that a pause in interest-rate
hikes might be forthcoming. What's interesting about that is Powell surely knew that such a reference might be interpreted as
bowing to pressure from President Donald Trump and yet he did it anyway. In essence, he risked the perception of the Fed's
independence probably because he knows the economic data is worsening.
Just about everyone I talk to in the capital markets, including erstwhile bulls, acknowledges that things are slowing down. Yes,
the Institute for Supply Management's monthly manufacturing index released earlier this week was strong, but jobless claims are
ticking up and I am hearing anecdotal reports of a wide range of businesses slowing down. Even my own business is slowing.
Anecdotes aside, oil has crashed, home builder stocks have been crushed, and the largest tech stocks in the world have taken a
haircut. If we get a recession from this, it will be a very well-telegraphed recession. Everyone knows it is coming.
A
recession is nothing to fear. We have lost sight of the fact that a recession has cleansing properties, helping to right the
wrong of the billions of dollars allocated to bad businesses while getting people refocused on investing in profitable
enterprises. Stock market bears are so disliked because it seems as though they actually desire a recession and for people to
get hurt financially. In a way, they are rooting for a recession because they know that the down part of the cycle is necessary.
There are signs that capital has been incorrectly allocated. In just in the span of a year, there have been three separate
bubbles: one in bitcoin, one in cannabis and one in the FAANG group of stocks: Facebook, Apple, Amazon.com, Netflix and
Google-parent Alphabet. This is uncommon. I begged the Fed to take the punch bowl away, and it eventually did, and now yields of
around 2.5 percent on risk-free money are enough to get people rethinking their allocation to risk.
Yet, I wonder if it is possible to have a recession when so many people expect one. The worst recessions are the ones that
people don't see coming. In 2011, during the European debt crisis, most people were predicting financial markets Armageddon. It
ended up being a smallish bear market, with the S&P 500 Index down about 21 percent on an intraday basis between July and
October of that year. It actually sparked a huge bull market in the very asset class that people were worried about: European
sovereign debt. We may one day have a reprise of that crisis, but if you succumbed to the panic at the time, it was a missed
opportunity.
But just the other day, the front end of the U.S. Treasury yield curve inverted, with two- and three-year note yields rising
above five-year note yields. Everyone knows that inverted yield curves are the most reliable recession indicators. Of course,
the broader yield curve as measured by the difference between two- and 10-year yields or even the gap between the federal funds
rate and 10-year yields has yet to invert, but as I said before, there is an air of inevitability about it. Flattening yield
curves always precede economic weakness. They aren't much good at exactly timing the top of the stock market, but you can get in
the ballpark.
I suppose all recessions are a surprise to some extent. If you are a retail investor getting your news from popular websites
or TV channels, you might not be getting the whole picture. In the professional community, it is becoming harder to ignore the
very obvious warning signs that a downturn is coming. In bull markets, everything works. In bear markets, the only thing
that really works is short-term government and municipal bonds and cash. Ample opportunity is being given to cut exposure to
risk, and it's clear that few people are taking advantage of it. They never do.
S 25 minutes
ago If our country is going bankrupt, there is no better President, with greater experience
at going bankrupt, than this President.
M 24 minutes ago
Another Republican recession whoda thunk that would happen trump's "greatest economy ever".
D 9 minutes ago So
let's see the market is up over 20% since January 3 2017 which means it's above it's
historical average gain per year. Meanwhile everyone is screaming recession and bear
market. I want to know why anyone who has been invested in the market longer than the last
two years is so upset about. Do you think your entitled to a gain of more than 10% a year.
"... 'Neoliberalism' is just a sanitised-sounding expression, to cover-up the fact that what we are really seeing here is re-branded, far-right, corporatist ideology. ..."
"... There is a major dividing line. There are those who recognise the abuses of the system and lobby for changes and there are those who lobby for further exploitation. ..."
"... The West became over-indebted when it embraced globalisation which necessarily impoverishes the Middle and Working Classes of the developed nations. A chap called Jimmy Goldsmith warned of this and was widely condemned for it. There is another issue Guardianistas would rather not confront : you can a welfare state or you can have open borders. But you can't have both. ..."
"... Private enterprise is inefficient because at it's heart it rules out cooperation. Being happiest if it's a monopoly, there's nothing a business would like better than wipe out all competition. ..."
"... Right now, the neoliberals think that those in the Far East are the workers and those in the West are the consumers, until the Far East becomes the market and wages so low in the West that they become the workers, unless of course some kind souls decide to invest money in Education, Health and infrastructure in Africa on a huge scale, so we then have Africa as the workers and the far East as the market, and the West, apart from those who own large numbers of shares or business outright, presumably either starve to death or pull themselves up by their bootstraps, and start all over again, inventing and setting up completely new industries, providing the newly universally educated and healthy Chinese and Africans and South Americans haven't done it first. ..."
"... The economic model we have is bankrupt and in its death throes ..."
"... Except it's not. It is still very much alive and growing. ..."
"... deregulated capitalism has failed. That is the product of the last 20 years. The pure market is a fantasy just as communism is or any other ideology. In a pure capitalist economy all the banks of the western world would have bust and indeed the false value "earned" in the preceding 20 years would have been destroyed. ..."
"... "Multinationals need to recognise that paying tax is an investment. Without that tax, their markets will slowly evaporate." However, the gains for the transnational rich are immediate and enormous, while the failure of their markets is slow and, so far, almost entirely painless. ..."
"... Accountants now hold the whip hand in government and business. They know the price of everything but the value of nothing. They advocate selling off industries, outsourcing to low wage economies, zero hours contracts and deregulation (under the bogus campaign line of cutting red tape). ..."
"... Google, Amazon and Apple haven't taught anyone in this country to read. But even though an illiterate market wouldn't be so great for them, they avoid their taxes, because they can , because they are more powerful than governments. ..."
"... If you invent a set of rules that says a country that deficit spends above an arbitrary percentage of its GDP is horribly inefficient and far too high then it should not be a surprise that when that happens, it is described as such. ..."
"... But the basic problem is this: it costs a lot of money to cultivate a market � a group of consumers � and the more sophisticated the market is, the more expensive it is to cultivate them. A developed market needs to be populated with educated, healthy, cultured, law-abiding and financially secure people ..."
"... The economic model we have is bankrupt and in its death throes is gobbling up the last scintilla of surplus that can be extracted from the poor ( anyone not independently wealthy). ..."
'Neoliberalism' is just a sanitised-sounding expression, to cover-up the fact that what we are really seeing here is re-branded,
far-right, corporatist ideology.
"Fascism should more properly be called corporatism because it is the merger of state and corporate power."
- Benito Mussolini
There is a major dividing line. There are those who recognise the abuses of the system and lobby for changes and there
are those who lobby for further exploitation.
So on the one hand there are relatively rich philanthropists who are quietly supporting campaigns to redistribute wealth and
our abstaining, and on the other you have people arguing for repealing employment legislation.Worst of the lot are people who
pretend to care about the poor but then proceed to fill their own boots.
As consequence people like Warren Buffet should perhaps be among the good guys, whilst people like Tony Blair are the worst
of lot.
All very true. The failures of markets are well documented in economics: the tendency towards monopoly, the failure to value social
goods etc.
In addition, it is ironic that the arch advocates of the 'free market' came begging ( read lobbying) to their governments insisting
upon public financial bailouts for themselves or their counter parties. It was the 'free markets' failure to correctly price 'risk'
that was the route of the economic collapse.
As regards access to 'free markets' it seems patently obvious that if you extract the most money from that market (Amazon et
al), you should contribute a fair share towards the infrastructure of that market: roads, educations, health care etc.
@EllisWyatt - ... we have a real problem with corporations that have a default setting of minimize taxes through ever more
complex structures. It can't be beyond the wit of HMRC to reduce the complexity of the tax legislation and make it harder to
avoid? The prize is continued access to the UK market
We also have the problem that for half the households in the land the level of welfare and benfits rather than wages is the
major determinant of their disposable income and general prosperity.
The welfare code is now comparable in size to the tax code. The tax-benefit affairs of the working poor in the UK are now becoming
as complex as those of the companies that employ them.
The welfare rights industry, which is essentially tax-benefit-lawyering for claimants, is now as large and complex as the tax-lawyering
industry for companies.
It really is insane that we set the minimum wage so low that it attracts income tax, and then attempt to collect tax from the
employing company to fund a tax credit to top up the same low wages that the same company is paying.
The neoliberalism that the IMF still preaches pays no account to any of this. It insists that the provision of work alone is
enough of an invisible hand to sustain a market
Does it? where does it say that? An article which as usual blanket condemns "financial institutions" but actually means banks.
The West became over-indebted when it embraced globalisation which necessarily impoverishes the Middle and Working Classes of
the developed nations. A chap called Jimmy Goldsmith warned of this and was widely condemned for it. There is another issue Guardianistas
would rather not confront : you can a welfare state or you can have open borders. But you can't have both.
Though I'd say private enterprise is capable of building markets - but not of sustaining them. Take books: If few people
know how to read, someone will start a fee paying school to teach those who can pay for it. Then books will take off. And that
will generate money for some, who'll send their kids to school.
However it will always, inevitably, crash at some point: Business can build up, but will always do it in destructuve cycles
- exactly like the brush fires that destroy and regenerate the savannas. As somebright spark once said: Capitalism contains the
seeds of it's own destruction, or something along those lines.
And we don't want to live like that - so we have regulation, and the state.And the state fertilises, and safeguards, by cutting
the grass, making mulch, and spreading the rich gooey muck all over the nice, green, verdant, state controlled pampa.
The cowboys, now, they prefer no cutting of grass, and letting their cattle chomp away undistrurbed. And now my analogy is
starting to wear thin.
The bottom line: Private enterprise is inefficient because at it's heart it rules out cooperation. Being happiest if it's
a monopoly, there's nothing a business would like better than wipe out all competition.
Hence, the necessity for state spending, and state regulation, which the private sector is blind to, because it can't look
ahead.
People are members of families, and are employers and workers, who are customers or clients, and part of
their local communities and professions and trades and hobbyists/clubs who are large scale wholesale consumers who create the
markets that provides employment and income to individuals who are workers. And, and, one big circle.
Right now, the neoliberals think that those in the Far East are the workers and those in the West are the consumers, until
the Far East becomes the market and wages so low in the West that they become the workers, unless of course some kind souls decide
to invest money in Education, Health and infrastructure in Africa on a huge scale, so we then have Africa as the workers and the
far East as the market, and the West, apart from those who own large numbers of shares or business outright, presumably either
starve to death or pull themselves up by their bootstraps, and start all over again, inventing and setting up completely new industries,
providing the newly universally educated and healthy Chinese and Africans and South Americans haven't done it first.
OK. I was against it for a long time, but go ahead. There's no way of avoiding it. Eat the Rich. Apart from the fact that ultra
thin is fashionable, and with all that dieting and exercising, they are the only people who actually get the time for lots of
exercise these days, and they'll taste incredibly tough and stringy.
@CaptainGrey - Ssshhh not on CiF, we all know that capitalism has failed its just that we can't point to a successful alternative
model because such a thing has never existed, its just that this time its different and the model I advocate will lead us all
to the sunny uplands of utopia.
Obviously there will be a little bit of coercion and oppression to get us to those sunny uplands, but you can't make an omlette
etc. plus don't worry that stuff will only happen to "bad people"
The economic model we have is bankrupt and in its death throes
Except it's not. It is still very much alive and growing. The "alternatives" have crashed and burned save Cuba and North
Korea. Capitalism, especially the beneficial capitalism of the NHS, free education etc. has won and countless people have gained
as a result.
@CaptainGrey - deregulated capitalism has failed. That is the product of the last 20 years. The pure market is a fantasy just
as communism is or any other ideology. In a pure capitalist economy all the banks of the western world would have bust and indeed
the false value "earned" in the preceding 20 years would have been destroyed.
In the 19th century based on experience the public services became part of the public sector to avoid corruption and corporate
blackmail. The neoclassical revolution of the late 20th century has pushed us back to days when elites regarded the state as their
property. Democracy was a threat which won out either through the British model or violent revolution. A small elite cannot endure
if the majority feel exploited.
The Bilderberg Conference should look to the past and learn from the mistakes committed. Neoclassicism will eventually impoverish
them
@UnevenSurface - Multinationals need to recognise that paying tax is an investment. Without that tax, their markets will
slowly evaporate.
"Multinationals need to recognise that paying tax is an investment. Without that tax, their markets will slowly evaporate."
However, the gains for the transnational rich are immediate and enormous, while the failure of their markets is slow and, so far,
almost entirely painless.
@UnevenSurface - I think corporation tax is becoming obsolete given globalization and the increasing dominance of online / global
distribution.
Amazon, Starbucks (and to a lesser extent Google) need to have people on the ground in their market, for customer service,
distribution, warehouse staff, baristas etc. So they'll pay employer taxes etc.
The question is is that enough? I think we are missing a trick with the UK market due to outdated tax legislation that hasn't
really changed in 30 years.
After the US the UK is arguably the most attractive market in the world. Large, homogenous, wealthy with a low propensity to
save and a rapid rate of adoption of new technology / products. We need to think about how we can exploit this in relation to
corporate taxes because even though I am far from left wing, we have a real problem with corporations that have a default setting
of minimise taxes through ever more complex structures.
It can't be beyond the wit of HMRC to reduce the complexity of the tax legislation and make it harder to avoid? The prize is
continued access to the UK market
Accountants now hold the whip hand in government and business. They know the price of everything but the value of nothing.
They advocate selling off industries, outsourcing to low wage economies, zero hours contracts and deregulation (under the bogus
campaign line of cutting red tape).
All of these policies will ultimately end up with capitalism destroying itself. Low wage stagnation will result in penniless
consumers which results in no growth which results in cuttin wages to maintain shareholder returns which results in penniless
consumers etc etc etc. All our institutions are gradually eroded and life for the average citizen will become more and more unpleasant.
Profit share may be a way forward, it's not perfect, companies can effectively use it to freeze wages and benefit from unpaid
overtime, that creates unemployment as four people working a couple of hours extra ever day are denying someone else a job, but
used in the right way it could ensure people get a share in the wealth they help create.
At the sharp end it's tough, at the
company I worked at, all the managers were summoned to a meeting in September and told they had until Christmas to increase turnover
and profits, or they would be out of a job.
At the same company, one of my managers complained that a successful manager at another branch was a crook. The CEO replied
'Yes, but he's a crook that makes a million pounds in profit every year'. I wonder how Deborah's article would have gone down
with him?
Everything was easier when the U S and Europe ran the world's economies with Bank regulations, currency controls and only the
establishment could avoid income, capital gains and IHT taxes and grow wealthy generation after generation. Today there are simply
too many players in the global arena and the rules have been torn up. We are in a jungle where greed is rife and only the powerful
and corrupt survive, shipping and burying their loot in offshore havens.
We need a new global order with a change of mentality
and more morality among the world's politicians, banking and corporate leaders. Unless we end corruption and exploitation of natural
resources in the poor nations and a fairer distribution of the economic wealth the world faces economic and social collapse
Google, Amazon and Apple haven't taught anyone in this country to read. But even though an illiterate market wouldn't
be so great for them, they avoid their taxes, because they can , because they are more powerful than governments.
Is it beyond the wit of government to close these (perfectly legal) loopholes? Otherwise, what you are asking for is for these
companies to make charitible donations to government - nothing wrong with that per se, but let's not hide behind the misleading
term 'tax avoidance' - companies are obliged to minimise taxes within the law, face it.
It is perfectly clear that in much of the EU public expenditure has been horribly inefficient and far too high
If you invent a set of rules that says a country that deficit spends above an arbitrary percentage of its GDP is horribly
inefficient and far too high then it should not be a surprise that when that happens, it is described as such.
Whether that has any basis in reality or, as I suspect, is only relevant within its own ridiculous framework, is surely the
question.
Deborah Orr is established writer for the Guardian and Married to a Will Self whose is almost certainly a millionaire. She
is one of the rich. The idea that envy is driving her politics is just utterly absurd, and suggests a total lack of reflection.
But the basic problem is this: it costs a lot of money to cultivate a market � a group of consumers � and the more sophisticated
the market is, the more expensive it is to cultivate them. A developed market needs to be populated with educated, healthy,
cultured, law-abiding and financially secure people
Not really; Amazon is just as happy to sell us trashy films, multipacks of chocolate, obesity drugs and baseball bats to stove
our neighbour's head in. There's certainly an argument to be made that companies should have a duty to invest in the infrastructure
that enables their product to be transported, stored etc...but they shouldn't be expected to give a toss if their customers are
unhealthy ignoramuses. A market's a market.
But some countries manage to do this much more efficiently and effectively than others.
In Europe it would appear to be the Social Democratic Nordic countries and Germany which has very strong employment rights.
Korea's economic growth was based on government investment and a degree of protectionism. These are precisely the ideas that neoliberalism
opposes.
If they had adopted The Keynes Plan at the 1944 Bretton Woods conference then the IMF and the World Bank would never have been
set up. We most likely would not have had the euro crisis and the problem of trade imbalances between counties would most likely
have gone away.
Now that is what I call 'Keynesian'. Feel free to continue to make up your own definitions though.
Socialism for the 1% with the rest scraping around for the crumbs in an ever more divided world run by The Bilderbergers who play
the politicians like puppets.
@emkayoh - I am not sure its in its death throes, I think what we are seeing is capitalism attempting to transform itself again.
The success of that transformation will depend on how willing people across the western world to put up with reduced welfare,
poverty pay and almost no employment rights. If we say no and make things too hot for the ruling class we have a chance to take
control of the future direction of our world, if not then what's the point.
This is a strange rant. Everyone agrees that free markets need to be nurtured by appropriate state institutions. But some countries
manage to do this much more efficiently and effectively than others. It is perfectly clear that in much of the EU public expenditure
has been horribly inefficient and far too high.
There is no contradiction between being in favour of free markets and believing that markets and societies should be nurtured
appropriately. We think people should be free and all accept that they should be nurtured.
So why, exactly, given the huge amount of investment needed to create such a market, should access to it then be "free"?
Corporate taxation is best explained as the license that business pays to access the market -- which is in turn created through
the schools, hospitals, roads, etc. that the tax pays for. Unfortunately the new Corporate Social Irresponsibility being acted
out by multinationals today neatly avoids paying that license, and sooner or later will damage them. Multinationals need to recognize
that paying tax is an investment. Without that tax, their markets will slowly evaporate.
The economic model we have is bankrupt and in its death throes is gobbling up the last scintilla of surplus that can be extracted
from the poor ( anyone not independently wealthy).
"... What sticks in the neoliberalism craw is that the state provides these services instead of private businesses, and as such "rob" them of juicy profits! The state, the last easy cash cow! ..."
"... Who could look at the way markets function and conclude there's any freedom? Only a neoliberal cult member. They cannot be reasoned with. They cannot be dissuaded. They cannot be persuaded. Only the market knows best, and the fact that the market is a corrupt, self serving whore is completely ignored by the ideology of their Church. ..."
"... when Thatcher and Reagan deregulated the financial markets in the 80s, that's when the trouble began which in turn led to the immense crash in 2008. ..."
"... Neo-liberalism is just another symptom of liberal democracy which is government by oligarchs with a veneer of democracy ..."
"... The state has merged with the corporations so that what is good for the corporations is good for the state and visa versa. The larger and richer the state/corporations are, the more shyster lawyers they hire to disguise misdeeds and unethical behavior. ..."
"... If you support a big government, you are supporting big corporations as well. The government uses the taxpayer as an eternal fount of fresh money and calls it their own to spend as they please. Small businesses suffer unfairly because they cannot afford the shyster lawyers and accountants that protect the government and the corporations, but nobody cares about them. ..."
"... Deborah's point about the illogical demands of neoliberalism are indeed correct, which is somewhat ironic as neoliberalism puts objective rationality at the heart of its philosophy, but I digress... ..."
"... There would not be NHS, free education etc. without socialism; in fact they are socialism. It took the Soviet-style socialism ("statism") 70 years to collapse. The neoliberalistic capitalism has already started to collapse after 30 years. ..."
"... I'm always amused that neoliberal - indeed, capitalist - apologists cannot see the hypocrisy of their demands for market access. Communities create and sustain markets, fund and maintain infrastructure, produce and maintain new consumers. Yet the neolibs decry and destroy. Hypocrites or destructive numpties - never quite decided between Pickles and Gove ..."
"... 97% of all OUR money has been handed over to these scheming crooks. Stop bailing out the banks with QE. Take back what is ours -- state control over the creation of money. Then let the banks revert to their modest market-based function of financial intermediaries. ..."
"... The State can't be trusted to create our money? Well they could hardly do a worse job than the banks! Best solution would be to distribute state-created money as a Citizen's Income. ..."
"... To promote the indecent obsession for global growth Australia, burdened with debt of around 250 billion dollars, is to borrow and pay interest on a further 7 billion dollars to lend to the International Monetary Fund so as it can lend it to poorer nations to burden them with debt. ..."
This private good, public bad is a stupid idea, and a totally artificial divide. After all,
what are "public spends"? It is the money from private individuals, and companies,
clubbing together to get services they can't individually afford.
What sticks in the
neoliberalism craw is that the state provides these services instead of private businesses,
and as such "rob" them of juicy profits! The state, the last easy cash cow!
Neoliberalism is a modern curse. Everything about it is bad and until we're free of it, it
will only ever keep trying to turn us into indentured labourers. It's acolytes are required
to blind themselves to logic and reason to such a degree they resemble Scientologists or
Jehovah's Witnesses more than people with any sort of coherent political ideology, because
that's what neoliberalism actually is... a cult of the rich, for the rich, by the rich... and
it's followers in the general population are nothing but moron familiars hoping one day to be
made a fully fledged bastard.
Who could look at the way markets function and conclude there's any freedom? Only a
neoliberal cult member. They cannot be reasoned with. They cannot be dissuaded. They cannot
be persuaded. Only the market knows best, and the fact that the market is a corrupt, self
serving whore is completely ignored by the ideology of their Church.
It's subsumed the entire planet, and waiting for them to see sense is a hopeless cause. In
the end it'll probably take violence to rid us of the Neoliberal parasite... the turn of the
century plague.
"Capitalism, especially the beneficial capitalism of the NHS, free education etc. has
won and countless people have gained as a result."
I agree with you and it was this beneficial version of capitalism that brought down the
Iron Curtain. Working people in the former Communist countries were comparing themselves with
working people in the west and wanted a piece of that action. Cuba has hung on because people
there compare themselves with their nearest capitalist neighbor Haiti and they don't want a
piece of that action. North Korea well North Korea is North Korea.
Isn't it this beneficial capitalism that is being threatened now though? When the wall
came down it was assumed that Eastern European countries would become more like us. Some have
but who would have thought that British working people would now be told, by the likes of
Kwasi Kwarteng and his Britannia Unchained chums, that we have to learn to accept working
conditions that are more like those in the Eastern European countries that got left behind
and that we are now told that our version of Capitalism is inferior to the version adopted by
the Communist Party of China?
@bullwinkle - No , when Thatcher and Reagan deregulated the financial markets in the 80s,
that's when the trouble began which in turn led to the immense crash in 2008.
Neo-liberalism is just another symptom of liberal democracy which is government by oligarchs
with a veneer of democracy.
This type of government began in America about 150 years ago with the Rockefellers,
Carnegie, J.P. Morgan, Ford etc who took advantage of new inventions, cheap immigrant labour
and financial deregulation in finance and social mores to amass wealth for themselves and
chaos and austerity for workers.
All this looks familiar again today with new and old oligarchs hiding behind large
corporations taking advantage of the invention of the €uro, mass immigration into
western Europe and deregulation of the financial "markets" and social mores to amass wealth
for a super-wealthy elite and chaos and austerity for workers.
So if we want to see where things went wrong we need only go back 150 years to what happened
to America. There we can also see our future?
The beneficial capitalism of the NHS, free education etc. has won
Free education and the NHS are state institutions. As Debbie said, Amazon never taught
anyone to read. Beneficial capitalism is an oxymoron resulting from your lack of
understanding.
especially the beneficial capitalism of the NHS, free education etc. has won and
countless people have gained as a result.
At one and the same time being privatized and having their funding squeezed, a direct
result of the neoliberal dogma capitalism of austerity. Free access is being eroded by the
likes of ever larger student loans and prescription costs for a start.
they avoid their taxes, because they can, because they are more powerful than
governments
Let's not get carried away here. Let's consider some of the things governments can do,
subject only to a 5 yearly check and challenge:
force people upon pain of imprisonment to pay taxes to them
pay out that tax money to whomever they like
spend money they don't have by borrowing against obligations imposed on future taxpayers
without their agreement
kill people in wars, often from the comfort of a computer screen thousands of miles
away
print money and give it to whomever they like,
get rid of nation state currencies and replace them with a single, centrally controlled
currency
make laws and punish people who break them, including the ability to track them down in
most places in the world if they try and run away.
use laws to create monopolies and favour special interests
Let's now consider what power apple have...
- they can make iPhones and try to sell them for a profit by responding to the demands of
the mass consumer market. That's it. In fact, they are forced to do this by their owners who
only want them to do this, and nothing else. If they don't do this they will cease to
exist.
The state has merged with the corporations so that what is good for the corporations is good
for the state and visa versa. The larger and richer the state/corporations are, the more
shyster lawyers they hire to disguise misdeeds and unethical behavior.
If you support a big government, you are supporting big corporations as well. The
government uses the taxpayer as an eternal fount of fresh money and calls it their own to
spend as they please. Small businesses suffer unfairly because they cannot afford the shyster
lawyers and accountants that protect the government and the corporations, but nobody cares
about them. Remember, that Green Energy is big business, just like Big Pharma and Big Oil.
Most government shills have personally invested in Green Energy not because they care about
the environment, only because they know that it is a safe investment protected by government
for government. The same goes for large corporations who befriend government and visa
versa.
@NeilThompson - It's all very well for Deborah to recommend that the well paid share work.
Journalists, consultants and other assorted professionals can afford to do so. As a
self-employed tradesman, I'd be homeless within a month.
@SpinningHugo - Interesting that those who are apparently concerned with prosperity for all
and international solidarity are happy to ignore the rest of the world when it's going well,
preferring to prophesy apocalypse when faced with government spending being slightly reduced
at home.
@1nn1t - That is a point which just isn't made enough. This is the first group of politicians
for whom a global conflict seems like a distant event.
As a result we have people like Blair who see nothing wrong with invading countries at a
whim, or conservatives and UKIP who fail to understand the whole point of the European Court
of Human Rights.
They seem to act without thought of our true place in the world, without regard for the
truly terrible capacity humanity has for self destruction.
Deborah's point about the illogical demands of neoliberalism are indeed correct, which is
somewhat ironic as neoliberalism puts objective rationality at the heart of its philosophy,
but I digress...
The main problem with replacing neoliberalism with a more rational, and fairer system,
entails that people like Deborah accept that they will be less wealthy. And that my friends is the main problem. People like Deborah, while they are more than
happy to point the fingers at others, are less than happy to accept that they are also part
of the problem.
(Generalisation Caveat: I don't know in actuality if Deborah would be unhappy to be less
wealthy in exchange for a fairer system, she doesn't say)
Good critique of conservative-neoliberalism, unless you subscribe to it and subordinate any
morals or other values to it.
She mentions an internal tension and I think that's because conservatism and neoliberal
market ideology are different beasts.
There are different models of capitalism quite clearly the social democratic version in
Scandinavia or the "Bismarkian" German version have worked a lot better than the UKs.
Yet, mealy-mouthed and hotly contested as this minor mea culpa is, it's still a sign
that financial institutions may slowly be coming round to the idea that they are the
problem.
How is it a sign of that? We are offered no clues.
What they don't seem to acknowledge is that the merry days of reckless lending are never
going to return;
Try reading a history of financial crashes to dislodge this idea.
... even if they do, the same thing will happen again, but more quickly and more
savagely.
This may or may not be true but here it is mere assertion.
The IMF exists to lend money to governments, so it's comic that it wags its finger at
governments that run up debt.
At this point I start to have real doubts as to whether Deborah Orr has actually read even
the Executive Summary of the Report this article is ostensibly a response to.
All the comments that follow about the need for public infrastructure, education,
regulated markets and so on are made as if they were a criticism of the IMF and yet the IMF
says many of those same things itself. The IMF position may, of course, be contradictory -
but then that is something that would need to be demonstrated. It seems that Deborah has not
got beyond reading a couple of Guardian articles on the issues she discusses and therefore is
in no position to do this.
Efforts are being made to narrow the skills gap with other countries in the region, as
the authorities look to take full advantage of Bangladesh's favorable demographics and help
create conditions for more labor-intensive led growth. The government is also scaling up
spending on education, science and technology, and information and communication
technology.
Which seems to be the sort of thing Deborah Orr is calling for. She should spend a little
time on the IMF website before criticising the institution. It is certainly one that merits
much criticism - but it needs to be informed.
And the solution to the problems? For Deborah Orr the response
... from the start should have been a wholesale reevaluation of the way in which wealth
is created and distributed around the globe, a "structural adjustment", as the philosopher
John Gray has said all along.
Does anyone have any idea what this is supposed to mean? There are certainly no leads on
this in the link given to "the philosopher" John Gray. And what a strange reference that is.
John Gray, in his usual cynical mode, dismisses the idea of progress being achieved by the
EU. But then I suppose that is consistent from a man who dismisses the idea of progress
itself.
... Conservative neoliberalism is entirely without logic.
The first step in serious political analysis is to understand that the people one opposes
are not crazy and are not devoid of logic. If that is not clearly understood then all that is
left is the confrontation of assertion and contrary assertion. Of course Conservative
neoliberalism has a logic. It is one I do not agree with but it is a logic all the same.
The neoliberalism that the IMF still preaches pays no account to any of this [the need
for public investment and a recognition of the multiple roles that individuals have].
Wrong again.
It insists that the provision of work alone is enough of an invisible hand to sustain a
market.
And again.
This stuff can't be made up as you go along on the basis of reading a couple of newspaper
articles. You actually have to do some hard reading to get to grip with the issues. I can see
no signs of that in this piece.
@NotAgainAgain - We are going off topic and that is in no small part down to my own fault, so
apologies. Just to pick up the point, I guess my unease with the likes of Buffet, Cooper-Hohn
or even the wealthy Guardian columnists is that they are criticizing the system from a
position of power and wealth.
So its easy to advocate change if you feel that you are in the vanguard of defining that
change i.e. the reforms you advocate may leave you worse off, but at a level you feel
comfortable with (the prime example always being Polly's deeply relaxed attitude to swingeing
income tax increases when her own lifestyle will be protected through wealth).
I guess I am a little skeptical because I either see it as managed decline, a smokescreen
or at worst mean spiritedness of people prepared to accept a reasonable degree of personal
pain if it means other people whom dislike suffer much greater pain.
"There is a clear legal basis in Germany for the workplace representation of employees in
all but the very smallest companies. Under the Works Constitution Act, first passed in 1952
and subsequently amended, most recently in 2001, a works council can be set up in all private
sector workplaces with at least five employees."
The UK needs to wake up to the fact that managers are sometimes inept or corrupt and will
destroy the companies they work for, unless their are adequate mechanisms to hold poor
management to account.
Capitalism, especially the beneficial capitalism of the NHS, free education etc. has
won
There would not be NHS, free education etc. without socialism; in fact they are
socialism. It took the Soviet-style socialism ("statism") 70 years to collapse. The neoliberalistic
capitalism has already started to collapse after 30 years.
I'm always amused that neoliberal - indeed, capitalist - apologists cannot see the hypocrisy
of their demands for market access. Communities create and sustain markets, fund and maintain
infrastructure, produce and maintain new consumers. Yet the neolibs decry and destroy.
Hypocrites or destructive numpties - never quite decided between Pickles and Gove, y'see.
@JamesValencia - Actually on reflection you are correct and I was wrong in my attack on the
author above. Having re-read the article its a critique of institutions rather than people so
my points were wide of the mark.
I still think that well heeled Guardian writers aren't really in a position to attack the
wealthy and politically connected, but I'll save that for a thread when they explicitly do
so, rather than the catch all genie of neoliberalism.
@CaptainGrey - deregulated capitalism has failed. That is the product of the last 20
years. The pure market is a fantasy just as communism is or any other ideology. In a pure
capitalist economy all the banks of the western world would have bust and indeed the false
value "earned" in the preceding 20 years would have been destroyed.
If the pure market is a fantasy, how can deregulated capitalism have failed? Does one not
require the other? Surely it is regulated capitalism that has failed?
97% of all OUR money has been handed over to these scheming crooks. Stop bailing out the
banks with QE. Take back what is ours -- state control over the creation of money. Then let
the banks revert to their modest market-based function of financial intermediaries.
The State can't be trusted to create our money? Well they could hardly do a worse job than
the banks! Best solution would be to distribute state-created money as a Citizen's
Income.
@1nn1t - Some good points, there is a whole swathe of low earners that should not be in the
tax system at all, simply letting them keep the money in their pocket would be a start.
Second the minimum wage (especially in the SE) is too low and should be increased.
Obviously the devil is in the detail as to the precise rate, the other issue is non
compliance as there will be any number of businesses that try and get around this, through
employing people too ignorant or scared to know any better or for family businesses - do we
have the stomach to enforce this?
Thirdly there is a widespread reluctance to separate people from the largesse of the
state, even at absurd levels of income such as higher rate payers (witness child tax
credits). On the right they see themselves as having paid in and so are "entitled" to have
something back and on the left it ensures that everyone has a vested interest in a big state
dipping it hands into your pockets one day and giving you something back the next.
@Uncertainty - Which is why the people of the planet need to join hands.
The only group of people in he UK to see that need were the generation that faced WW2
together.
It's no accident that, joining up at 18 in 1939, they had almost all retired by 1984.
To promote the indecent obsession for global growth Australia, burdened with debt of around
250 billion dollars, is to borrow and pay interest on a further 7 billion dollars to lend to
the International Monetary Fund so as it can lend it to poorer nations to burden them with
debt.
It is entrapment which impoverishes nations into the surrender of sovereignty,
democracy and national pride. In no way should we contribute to such economic immorality and
the entire economic system based on perpetual growth fuelled by consumerism and debt needs
top be denounced and dismantled. The adverse social and environmental consequence of
perpetual growth defies all sensible logic and in time, in a more responsible and enlightened
era, growth will be condemned.
"... Socialism for the 1% with the rest scraping around for the crumbs ..."
"... Don't you think a global recession and massive banking collapse should be classified as 'crash and burn'? ..."
"... It's one of the major contradictions of modern conservatism that the raw, winner-takes-all version of capitalism it champions actually undermines the sort of law abiding, settled communities it sees as the societal ideal. ..."
"... Rich people have benefited from this more than most: they need workers trained by a state-funded education system and kept healthy by a state-funded healthcare system; they depend on lending from banks rescued by the taxpayer; they rely on state-funded infrastructure and research, and – like all of us – on a society that does not collapse. Whether they like it or not, they would not have made their fortunes without the state spending billions of pounds ..."
"... You have to be careful when you take on the banksters. Abe Lincoln John Kennedy and Hitler all tried or (in Kennedy's case planned) on the issuance of money via the state circumventing the banks. All came to a sticky end. No wonder politicians run scared of them. ..."
"... Now, that's a novel interpretation! The working people in "Communist" countries had free healthcare and education, guaranteed employment and heavily subsidized housing. The reason we have healtcare and free education is that working people in Capitalist countries would otherwise have revolted to have Socialism. In the absence of competition, there is no benefit for the Capitalist to be "beneficial". ..."
"... The banks could plainly see that they were stoking a bubble, but chose not to pass on the increased risk of lending to consumers by raising their interest rates and coolling the market. Why? Because they were making a handsome short-term profit. The banks put their own short-term interests above their long-term interests of financial stability. When the house of cards came tumbling down - we bailed them out. It was idiotic banks who failed to properly control their risk of lending that caused the crash, not interventionist politicians. ..."
Virtually everyone knows what went wrong, with the exception only of uncontrollable
ultra-right neoliberal buffs who try and put the blame on everyone else with various out and
out lies and deceptions, and they are thankfully petering and dying out by the day, including
deluded contributors to CiF, who seem to be positively and cruelly reveling in the suffering
their beloved thesis has and is causing.
So, now that we know the symptoms, what about the cure? The coalition want to make the poor
and vulnerable suffer even more than they have done over the last three decades or so while
still refusing to clamp down and wholly regulate the bankers, corporates and free markets, who
still hold too much power like the unions in the 70's,while Ed Miliband and 'One Nation
Labour' merely suggest in mild, diffident terms about financial regulation and a more balanced
economy, while still not wanting to upset those nice bankers too much.
It's time they were
upset though, and made to pay for their errors and recklessness; while they still award
themselves bonuses and take advantage of Gideon's recent tax cut, the poor and vulnerable who
were never responsible for the long recession now have money taken off them and struggle to
feed, pay bills and clothe themselves and their families, supported by the Daily Fail and co.
who look on them as scrounging, lazy, criminal, violent, drunken, drug addicted and promiscuous
sub-humans, who deserve their fate.
There's quite a few in the middle/professional classes
(many bankers) if they didn't know, but they don't bother with such, do they?
The economic model we have is bankrupt and in its death throes
I am not sure if this is true. We have the same economic system (broadly speaking,
capitalism) as nearly every country in the world, and the world economy is growing at a
reasonable rate, at around 3-4% for 2013-14 (see http://www.imf.org/external/pubs/ft/weo/2013/01/pdf/c1.pdf
for more details).
We perceive a problem in (most of) Europe and North America because our economies are
growing more slowly than this, and in some cases not at all. The global growth figure comes
out healthy because of strong growth in the emerging countries, like China, Brazil and India,
who are narrowing the gap between their living standards and ours. So, the world as a whole
isn't broken, even if our bit of it is going through a rough patch.
This is pertinant to a discussion of Deborah Orr's article, because in it she calls for
global changes:
The response from the start should have been a wholesale reevaluation of the way in
which wealth is created and distributed around the globe, a "structural adjustment", as the
philosopher John Gray has said all along.
My point is: I don't think this argument will work, because I don't see why the emerging
countries would want wholesale change to what, for them, is quite a successful recipe, just
because it going down badly in Europe. Instead, European countries need to do whatever it
takes to fix their banking systems; but also learn to live within their means, and show some
more of the discipline and enterprise that made them wealthy in the first place.
@Uncertainty - I`m not defending philanthropy, i am saying in answer to some personal attacks
on Miss Orr below the line, that her status as either rich or poor is irrelevant, it is her
politics that count .
Tony Benn and Polly Toynbee both receive much abuse in this manner on Cif.
@kingcreosote - Socialism for the 1% with the rest scraping around for the crumbs
And yet the rest have more crumbs than under any other conceivable system. Look
at the difference that even limited market liberalisation has made to poverty in China. No loaf, no crumbs. You can always throw the loaf out of the window if you don't like the
inequality and then no-one can have anything.
@jazzdrum - I don't have much time for those rich who feel guilty about their greed and do
'charity' to salve their souls. Oh and get a Knighthood as a result.
The more honest giver is the person who gives of what little they have in their purse and
go without as a result. Not a tax dodge re-branded as philanthropy.
Also, such giving from the rich often has strings and may be tailored to what they think
are the 'deserving poor'. I don't like that either.
@Herbolzheim - It's one of the major contradictions of modern conservatism that the raw,
winner-takes-all version of capitalism it champions actually undermines the sort of law
abiding, settled communities it sees as the societal ideal.
More and more people are beginning to understand this as a fundamentally political problem (
ref. @XerXes1369). The 'left' prefers to concentrate on the role of a financial elite (which
is supposed to be exerting some kind of malign supernatural force on the state), to divert
attention from what mainstream 'left' poltics in this society has turned out to be.
When the state is taking over 60% of the income of even those on minimum wages we se
how, from the very top to the very bottom, that the state is the problem.
It's become a monster that will destroy us all.
I would query where you get these figures from, but where it not for the state, do you really
think that somebody on the minimum wage, keeping 100% of their wages, would be able to
afford, out of these wages, health care, schooling for their children, infrastructure
maintenance, their own police force and army, their own legal system?
This from an article in the Independent:
Rich people have benefited from this more than most: they need workers trained by a
state-funded education system and kept healthy by a state-funded healthcare system; they
depend on lending from banks rescued by the taxpayer; they rely on state-funded
infrastructure and research, and – like all of us – on a society that does not
collapse. Whether they like it or not, they would not have made their fortunes without the
state spending billions of pounds.
So the state, although not perfect benefit all of us, get over it!
You have to be careful when you take on the banksters.
Abe Lincoln John Kennedy and Hitler all tried or (in Kennedy's case planned) on the
issuance of money via the state circumventing the banks. All came to a sticky end. No wonder politicians run scared of them.
Free education and the NHS are state institutions. As Debbie said, Amazon never taught
anyone to read. Beneficial capitalism is an oxymoron resulting from your lack of
understanding.
Yes they are state institutions and the tax system should be changed to prevent
Amazon et al from avoiding paying their fair share. But beneficial capitalism is not an
oxymoron, it is alive and present in virtually every corner of the world. Rather than accuse
me of not understanding, I think you would do well to take the beam out of your eye.
I agree with you and it was this beneficial version of capitalism that brought down the
Iron Curtain. Working people in the former Communist countries were comparing themselves
with working people in the west and wanted a piece of that action.
Now, that's a novel interpretation! The working people in "Communist" countries had free
healthcare and education, guaranteed employment and heavily subsidized housing. The reason we have healtcare and free education is that working people in Capitalist
countries would otherwise have revolted to have Socialism. In the absence of competition, there is no benefit for the Capitalist to be
"beneficial".
The banks couldn't stop property hyperinflation, at 20% a year for well over a
decade.
The banks could plainly see that they were stoking a bubble, but chose not to pass on the
increased risk of lending to consumers by raising their interest rates and coolling the
market. Why? Because they were making a handsome short-term profit. The banks put their own
short-term interests above their long-term interests of financial stability. When the house
of cards came tumbling down - we bailed them out. It was idiotic banks who failed to properly
control their risk of lending that caused the crash, not interventionist politicians.
Last week there was a story where HSBC have taken on a senior ex-MI5 person to shore up
their money laundering 'problems'. They're being fined over a billion dollars by the fed
for taking blood money from murderers, drug dealers and corrupt politicians.
Not the Security Services' Director General by any chance?
-- In a filing to the Bermuda Stock Exchange ("BSX"), HSBC Holdings plc (Ticker:
HSBC.BH), announced the appointment of Sir Jonathan Evans to the Board of Directors.
The filing stated:
Sir Jonathan Evans (55) has been appointed a Director of HSBC Holdings plc with effect
from 6 August 2013. He will be an independent non-executive Director and a member of the
Financial System Vulnerabilities Committee.
Sir Jonathan's career in the Security Service spanned 33 years, the last six of which as
Director General. During his career Sir Jonathan's experience included counter-espionage,
protection of classified information and the security of critical national infrastructure.
His main focus was, however, counter-terrorism, both international and domestic including,
increasingly, initiatives against cyber threats. As Director General he was a senior
advisor to the UK government on national security policy and attended the National Security
Council.
He was appointed Knight Commander of the Order of the Bath (KCB) in the 2013 New Year's
Honours List and retired from the Service in April 2013.
I think there's some really good points in the article.
Last week there was a story where HSBC have taken on a senior ex-MI5 person to shore up
their money laundering 'problems'. They're being fined over a billion dollars by the fed for
taking blood money from murderers, drug dealers and corrupt politicians.
Their annual fee for this guy with 20 years experience to tackle a billion dollar fine and
the disfunction in their organisation? A lousy 100 k. Fee to UK for training him? 0.
Ridiculous! It should have been 10 times that for him and a finders fee of perhaps 10
million to the state.
Realistically, the state has NO clue about it's real value, or the real value of the UK
population. And the example above, I think, demonstrates banks' attitude to the global demand
that they clean up their act. We neef to take this lot to the cleaners before the stench gets
any worse.
"... Ship of Fools is no apology for Trumpism. Indeed, Carlson calls Trump "vulgar and ignorant." But he rightly points out that Trump "didn't invade Iraq or bail out Wall Street. He didn't lower interest rates to zero, or open the borders, or sit silently by as the manufacturing sector collapsed and the middle class died." Basically, Donald J. Trump is not your average American politician. Thank God. ..."
"... Well, Ship of Fools excoriates finance capitalism and the class that has constantly reaped economic benefits out of the labor of American workers without contributing anything of substance to the American body politic. The Democrats used to be the party of populist rabble rousers like Huey Long and Al Smith. ..."
"... Explicit in this critique of America's Ruling Class is the fact that democracies are unstable and prone to self-destruction. In modern America, the elite do not attend to the population, cynical race-mongering is used to win votes at the cost of internal peace, and chicken hawks like Max Boot and William Kristol still receive adulation in the Main Stream Media despite their disastrous record of cheering on military misadventures that kill thousands of Americans. (To say nothing of their fanatical opposition to Trump -- despite the fact that he won the presidency when their catspaws McCain and Romney ignominiously failed). Ship of Fools correctly notes that this is what an empire looks like in its final days. ..."
"... Jake Bowyer [ Email him ] is the pseudonym of an American college student. ..."
Since the late fall of 2016, Democrats and other Leftist types have been decrying President
Donald J. Trump as "not normal" and a "threat to democracy." Of course, this is hogwash of the
most rank sort. The same people lambasting Trump for his supposed " authoritarianism " are the
same people who have created the modern American oligarchy. Tucker Carlson , the popular Fox News who wrote
the single most brilliant and prescient Main Stream Media article on the Trump phenomenon:
Donald Trump Is Shocking, Vulgar and Right | And, my dear fellow Republicans,
he's all your fault, by Tucker Carlson, Politico, January 28, 2016.
For Carlson, moral and social rot in the United States starts at the very top -- the place
where Democrats and Republicans
https://vdare.com/posts/they-want-to-lose-gop-congress-sounds-retreat-on-border-wall-funds-democratic-priorities
to maintain unpopular elite rule. Carlson compares this American elite to blind drunk captains
steering a sinking ship. Making matters worse: the fact that, in keeping with Carlson's
nautical parallel, "Anyone who points out the consequences of what they're [the elite] doing
gets keelhauled." Gavin
McInnes (banned from Twitter ) and
Alex
Jones (banned from
everything ) would agree.
Ship of Fools is no apology for Trumpism. Indeed, Carlson calls Trump "vulgar and
ignorant." But he rightly points out that Trump "didn't invade Iraq or bail out Wall Street. He
didn't lower interest rates to zero, or open the borders, or sit silently by as the
manufacturing sector collapsed and the middle class died." Basically, Donald J. Trump is not
your average American politician. Thank God.
For much of Ship of Fools , Carlson comes off sounding like someone with his heart
in the center-left. Some cheeky Twitter users might even dub Carlson's latest book National
Bolshevism.
Why? Well, Ship of Fools excoriates finance capitalism and the class that has
constantly reaped economic benefits out of the labor of American workers without contributing
anything of substance to the American body politic. The Democrats used to be the party of
populist rabble rousers like Huey Long and Al Smith.
But Carlson points out that "the Democratic Party is now the party of the rich." Rather than
attacking mega-wealthy people
like Amazon's
Jeff Bezos or Apple's Tim Cook , the
modern American Left is completely in thrall to money and
corporate power. This hurts every American not in the upper income bracket.
Republicans are no better. They remain wedded to the idea of being the party of business,
and as such many Republican elected officials support Open Borders because that would provide
their donors with an endless supply of cheap labor. This support comes at the cost of angering
a majority of Republican voters.
In sum, both parties have given up on the native-born American workers. And, beginning in
2016, American workers began pushing back at the ballot box.
Ship of Fools is a bleak book. It is also much better than the usual fluff penned
(or signed) by Fox News pundits. Carlson tells uncomfortable truths and
engages with topics that until very recently were only considered fit for the fringe Right
(like VDARE.com ).
Take for instance the displacement of white Americans, especially white working-class
Americans. America is a nation of 200 million white people. Native-born whites pay more in
taxes, provide the majority of America's soldiers, sailors, Marines, and airmen, and are the
offspring of the people who built this country. For this hard work and loyalty,
foreign-born editors at the New York Times tweet
"#CancelWhitePeople." Hordes of
Antifa types cheer on the displacement of native-born whites, while the political elite do
nothing to combat rising drug overdose deaths and suicides in the Midwest, rural Northeast, and
South. As Carlson warns, " White
identity politics will be a response to a world in which identity politics is the only game
there is."
And, as anti-white vitriol increases and whites are demoted from majority status, Carlson
predicts that white interest groups will form and flex their muscles when they feel that their
backs are up against the wall.
At several points in Ship of Fools , Carlson sincerely grieves for the lost
Liberal-Left of his childhood. He misses the environmentalists who cared about littering, not
about some abstract thing called climate change. He misses those Leftists who cried about
injustice in the world rather than ranting and raving at the behest of the elite class. Without
an honest Left, America could further descend into corporate anarcho-tyranny
-- a place where businesses control free speech and only a small sliver of people enjoy the
benefits of the modern and high-tech economy.
Ship of Fools ends with a warning: either practice democracy or be prepared for
authoritarian rule.
"In order to survive, democracies must remain egalitarian," Carlson argues."When all the
spoils seem to flow upward, the majority will revolt in protest."
Explicit in this critique of America's Ruling Class is the fact that democracies are
unstable and prone to self-destruction. In modern America, the elite do not attend to the
population, cynical race-mongering is used to
win votes at the cost of internal peace, and chicken hawks like
Max Boot and William
Kristol still receive adulation in the Main Stream Media despite their disastrous record of
cheering on military misadventures that kill thousands of Americans. (To say nothing of their
fanatical opposition to Trump -- despite the fact that he won the presidency when their
catspaws McCain
and Romney ignominiously failed). Ship of Fools correctly notes that this is what an
empire looks like in its final days.
In this sense the elites may be right to characterize President Trump as a populist. After
all, Julius
Caesar gave the common man order, security, and bread in the face of a cold and sterile
system. By attempting to dismantle the elite consensus, Trump, Trumpism
, and America
First may just be the first entries in a new age of all-American Caesarism.
We should only be so lucky!
Jake Bowyer [ Email him ] is the pseudonym of an American college
student.
I enjoyed the book immensely even though I'm a socialist myself. Tucker's disdain for wars,
technology companies, and the ruling class are a breath of fresh air. I also enjoy his show
but I do wish he wouldn't talk over the guests he disagrees with.
There must be a reason why people like j g strijdom and curmudgeon, with their slimy
unsubstantiated charges, despise Tucker Carlson. I suspect it is this:
During the administration of President George W. Bush, state attorneys general used state
authority to prosecute securities and financial transgressions. Notably, former New York
state Attorney General Eliot Spitzer relied on authority provided by the state's 1910 Martin
Act, which predates the federal securities law, to take legal action actions against
insurance firms for brokerage practices, hedge funds for improper trading practices in mutual
fund shares, and investment banks for conflicts of interest that distorted the investment
research they provided, to name some of the most significant initiatives. Spitzer's
successors as attorney general, current New York Governor Andrew Cuomo and current Attorney
General Eric Schneiderman, have not had the impact that Spitzer had when he was lauded as the
Sheriff of Wall Street.
Another New York regulator, Benjamin Lawsky, superintendent of New York's Department of
Financial Services used the threat of denying a NY state banking charter to force tougher terms
on settlements in which the Eric Holder/Loretta Lynch DoJ and other federal regulators had
rolled over (see this post by Yves for a summary:
Wall Street's Nemesis, Benjamin Lawsky, to Resign in June .).Other states, such as
California, have their own expansive statutes– though now-US Senator Kamala Harris
demonstrated when she served as California's AG that she more interested in virtue-signalling
than taking scalps.
has been a longstanding bugbear of environmentalists. In his previous role as attorney
general for the state of Oklahoma– a major producer of oil and natural gas– he
either filed or joined lawsuits that sought to stymie the modest pro-regulatory environmental
and climate change agenda the EPA previously espoused.
Like-minded Republicans AGs often joined him in these efforts.
So, What's On the Agenda for These AGs?
The most immediate threat to the tech industry might arise in the area of antitrust
enforcement– which, shall we say, has not been a major priority for recent
administrations, although the European Union has investigated and fined Google over competition
concerns. Yet as recently as the Clinton administration, Microsoft was a target of an major
antitrust action instigated by multiple state AGs in conjunction with the DoJ
Over to the WSJ again:
The [Sessions meeting ] announcement -- released amid last week's
congressional hearings into the practices of Facebook and Twitter -- shed little light on
who was raising the concerns or what remedies might be under consideration. But recent
comments by several of the state attorneys general suggest they are actively exploring an
antitrust investigation and hope to enlist Washington.
"I think the companies are too big, and they need to be broken up," Republican Louisiana
Attorney General Jeff Landry said Thursday in a radio interview.
There is some evidence that party politics are driving this potential enforcement
initiative:
Republicans' allegations that the tech companies suppress conservative voices has bubbled
up for months in conservative media and was amplified
by Mr. Trump late last month . Democrats have said that is the issue -- more than
antitrust policy -- behind the coming Justice Department meeting, with Republicans hoping to
stir their conservative base ahead of November elections
All the attorneys general who are expected to attend this month's meeting in Washington
are Republicans, with Democratic officials saying they have yet to be invited.
Although it's too soon to say where these preliminary discussions between the DoJ and the
the state AGs may lead, I want to draw attention to another development– the weakening of
the hold of corporate Democrats on the direction of the party. David Sirota published an
interesting piece in Monday's Guardian,
Yes, let's wipe out Trump. But take neoliberal Democrats with him, too .
Sirota's piece wasn't especially concerned about Big Tech per se, and focused on a
percolating progressive policy agenda. He mentions regulation, but only as it affects financial
firms and pharmaceutical companies and where so far, corporate Democrats have successfully
insulated their paymasters from any significant increase in legal liability.
But if progressives start to wield greater influence on the Democratic side– and
Republican AGs follow through with a tougher approach to enforcement– the future might
shape up to be a less comfortable operating environment for US internet companies. Or at least
we might hope. /n
I can understand antitrust and data-privacy violations but with regard to "stifling the
free exchange of ideas" on their platforms, what legal statutes are being violated even if
these companies were found to be supressing conservative speech?
The OLG Munich recently decided that Facebook violated the right to free speech of a
politician by deleting her post. Facebook gave their community rules as a reason for the
deletion. The court ruled that Facebook could not rely on their rights a privat entity to do
as they please in their own place (Hausrecht in German) but rather had to uphold the right to
free spreech granted by the German constitution. This is a new interpretation of the law by a
significant court and possibly transfers some of the burden ususally only placed on the state
(uphold free speech) unto a privat company. The reason given is that Facebook is a
controlling, monopolistic entity in the realm of social interaction and has therefore more
responsibilties. The OLG Munich is the highest court in its court-district, Southern Bavaria,
only below the federal court (BGH) and the ruling sets a binding precedent in its district
and serves as an interesting opinion for the rest of Germany. Mind you precedent is of a lot
less important in Germany than in the case-law US system and there are many differing rulings
out there.
I suppose the arguments for supressing conservative speech or something like that might go
a similar route in the US.
PS: Please excuse the rambling source it is the only one in English I could find; also
take my reasoning regarding the court ruling with a pinch of salt since I am not an attorney.
At least the apparent confusion between forced deletion on one hand and forced non-deletion
on the other hand mentioned in the source is easily explained. Free speech has its limits and
violating those is in some cases a criminal offence, e.g. criminal insults, incitement to
violance against people, etc.. A recent law in Germany requires sites like Facebook or
Twitter to take obvious cases of such posts down, instead of waiting for the police or
prosecution to act. This is worthy of a discussion in itself but it still leaves room between
what Facebook arbitrarily deems acceptable based in its guidelines and what is acceptable
under free speech in Germany, and here the court made their ruling.
"... Fourth, privatization was supposed to reduce public sector monopolies, but there is often little evidence of significant erosion of the monopolies enjoyed by privatized SOEs. Arguably, technological change and innovation, e.g., in telecommunications, were far more significant in eroding privatized monopolies and reducing costs to consumers, than privatization per se. ..."
"... Also, natural monopolies (such as public utilities) are often deemed inefficient due to the monopolistic nature of the industry or market. The question which arises then is whether private monopoly is better, even with regulation intended to protect the public interest. ..."
Jerri-Lynn here. This short post usefully debunks arguments advanced to promote the privatization fairy. The author's reminds us
that state ownership, when done properly, as in Singapore, can offer its own benefits and " is recognized there as the reason for
public accountability, better governance and management."
By Jomo Kwame Sundaram, former UN Assistant Secretary General for Economic Development. Originally published at
Inter Press Service
KUALA LUMPUR, Malaysia, Sep 4 2018 (IPS) � Several arguments have been advanced to justify privatization since the 1980s. Privatization
has been advocated as an easy means to:
Reduce the government's financial and administrative burden, particularly by undertaking and maintaining services and infrastructure;
Promote competition, improve efficiency and increase productivity in providing public services;
Stimulate private entrepreneurship and investment to accelerate economic growth;
Help reduce the public sector's presence and size, with its monopolistic tendencies and bureaucratic support.
Moot case for privatization
First, privatization is supposed to reduce the government's financial and administrative burdens, particularly in providing services
and infrastructure. Earlier public sector expansion was increasingly seen as the problem, rather than part of the solution. Thus,
reducing the government's role and burden was expected to be popular.
Second, privatization was believed by some to be a means to promote competition, improve efficiency and increase productivity
in service delivery. This belief was na�ve, confusing the question of ownership with that of promoting competition.
It was believed that privatization would somehow encourage competition, not recognizing that competition and property rights are
distinct, and not contingent issues. Associated with this was the presumption that competition would automatically result in greater
efficiency as well as improved productivity, not recognizing economies of scale and scope in many instances.
Third, privatization was expected to stimulate private entrepreneurship and investment. There is also a popular, but na�ve belief
that privatization was going to stimulate private entrepreneurship when, in fact, the evidence is strong, in Malaysia and elsewhere,
that privatization often crowds out the likelihood of small and medium-sized enterprises actually emerging to fill the imagined void,
presumed to exist following privatization.
Admittedly, there is scope for new entrepreneurship with privatization as new ways and ideas offered by the private sector are
considered � or reconsidered � as the new privatized entity seeks to maximize the profits/rents to be secured with privatization.
However, the private purchase of previously public property, in itself, does not augment real economic assets. Private funds are
thus diverted, to take over SOEs, and consequently diminished, rather than augmented. Hence, private funds are less available for
investing in the real economy, in building new economic capacities and capabilities.
Fourth, privatization was supposed to reduce public sector monopolies, but there is often little evidence of significant erosion
of the monopolies enjoyed by privatized SOEs. Arguably, technological change and innovation, e.g., in telecommunications, were far
more significant in eroding privatized monopolies and reducing costs to consumers, than privatization per se.
From the 1980s, if not before, various studies have portrayed the public sector as a cesspool of abuse, inefficiency, incompetence
and corruption. Books and articles, often with clever titles such as 'vampire state', 'bureaucrats in business' and so on, provided
the justification for privatization.
Undoubtedly, there were some real horror stories, which have been conveniently and frequently cited as supposedly representative
of all SOEs. But other experiences can also be cited to show that SOEs can be run quite efficiently, even on commercial bases, confounding
the dire predictions of the prophets of public sector doom.
Has privatization improved efficiency?
Although some SOEs have been better run and are deemed more efficient after privatization, the overall record has hardly been
consistent. Thus, it is important to ascertain when and why there have been improvements, or otherwise. It is also important to remember
that better-run privatized SOEs, in and of themselves, do not necessarily serve the national or public interest better.
Undoubtedly, most SOEs can be better run and become more efficient. But this is not always the case as some SOEs are indeed already
well run. For instance, very few privatization advocates would insist that most SOEs in Singapore are poorly run.
As its SOEs are generally considered well-run, public ownership is not used there to explain poor governance, management or abuse;
instead, public ownership is recognized there as the reason for public accountability, better governance and management.
Principal-agent managerial delegation dilemma
Hence, in different contexts, with appropriately strict supervision, SOEs can be and have indeed been better run. Privatization,
in itself, does not solve managerial delegation problems, i.e., the principal-agent problem, as it is not a problem of public ownership
per se.
With SOEs, the principal is the state or the government while the agents are the managers and supervisors, who may -- or may not
-- pursue the objectives intended by the principal.
This is a problem faced by many organizations. It is also a problem for private enterprises or corporations, especially large
ones, especially where the principal (shareholders) may not be able to exercise effective supervision or control over the agent.
Also, natural monopolies (such as public utilities) are often deemed inefficient due to the monopolistic nature of the industry
or market. The question which arises then is whether private monopoly is better, even with regulation intended to protect the public
interest.
The answer needs to be ascertained analytically on the basis of evidence, and cannot be presumed a priori. If an industry is a
natural monopoly, what does privatization achieve? Often, it means a transfer to private hands, which can be problematic and possibly
dangerous for the public interest.
"... The Four: The Hidden DNA of Amazon, Apple, Facebook and Google ), ..."
"... Power and influence has shifted. Political leaders have little of these relatively speaking, certainly over the behavioural consistency and content of subjects and citizens. Someone like Mark Zuckerberg, distinctly outside a political process he can still control, does. "He can turn off or on your mood. He can take any product up or down. He can pretty much kill any company in the tech space." And that's just Facebook. ..."
It seems a distant reality, or nightmare now: a company that was near defunct in 1996, now
finding itself at the imperial pinnacle of the corporate ladder. Then, publications were
mournful and reflective about the corporation that gave us the Apple Computer. An icon had
fallen into disrepair. Then came the renovations, the Steve Jobs retooling and sexed-up
products of convenience.
Apple's valuation last Thursday came in at $1 trillion and may well make it the first
trillion dollar company on the planet. That its assets are worth more than a slew of countries
is surely something to be questioned rather than cheered. This un-elected entity, with
employees versed in evading, as far as possible, the burdens of public accountability, poses a
troubling minder about how concentrated financial power rarely squares with democratic
governance.
Chalking up such a mark is only impressive for those keeping an eye on the trillion dollar
line. China's state-owned PetroChina is another muscular contender for getting there first , while the
Saudi Arabian energy company Aramco, which produces a far from negligible 10 percent of the
world's oil, could well scoot past Apple should it go public.
Cheering was exactly what was demanded by James Pethokoukis of the American Enterprise
Institute, whose piece in The Week suggests
that Apple reached that mark "the right way". The critics of such concentrated power,
technology company or otherwise, were simply wrong. "For them, superbig is automatically
superbad."
Praise for Apple, an abstract being, is warranted in the way that its ally, modern
capitalism, should be. "The story of Apple is really the story of modern capitalism doing what
it does best: turning imagination into reality." The author prefers to see Apple, and Amazon,
as products of US genius in the capitalist context.
The New York Times is
similarly impressed, linking individual gargantuan successes to the broader American effort in
the economy. A small gaggle of US companies commanding "a larger share of total corporate
profits" than at any time since the 1970s, is not necessarily something to snort at. The
nine-year bull market has, essentially, been powered by the four technology giants. "Their
successes are also propelling the broader economy, which is on track for its fastest growth
rate in a decade."
To its credit, the paper does pay lip service to concerns that such "superstar firms" are
doing their bit to stifle wage growth, shrink an already struggling, barely breathing middle
class, while jolting income inequality.
This is where the trouble lies: a seemingly blind understanding of capitalism's inner quirks
and unstable manifestations. The paradox behind the tech giant phenomenon does not lie in the
wisdom that innovation comes from competition. The converse is claimed to be true: that
concentration, oligopolistic power, and strings pulled by a few players is the way to keep
innovation alive. This was Microsoft's vain argument during the 1990s, something that did not
sit well with the antitrust denizens.
The fraternity of economists, rarely capable in agreeing on broader trends, has become abuzz
with literature focused on one unsettling topic: the continuing, and accelerating concentration
of US industry. Gustavo Grullon, Yelena Larkin and Roni Michaely noted in
April last year that government policies encouraging competition in industry had been
"drastically reversed in the US" with a 75 percent increase in the Herfindahl-Hirschman index (HHI) measuring
market concentration. (Antitrust regulators beware.) The authors observe how, "Lax enforcement
of antitrust regulations and increasingly technological barriers to entry appear to be
important factors behind this trend."
Marketing professor from NYU, Scott Galloway, is one who has supped from the cup of the tech
giants. He has written about their exploits ( The Four: The Hidden DNA
of Amazon, Apple, Facebook and Google ), his addresses having become something of a
viral phenomenon with analyses of the companies at the DLD Conference in Munich. Initially
seduced by the bling and the product, he enjoyed the magic mushroom inducements the tech giants
supplied, relished in their success and stock options, extolled their alteration of human
behaviour. "This started as a love affair. I want to be clear. I love these companies."
This year, a
change of heart took place. Galloway, after spending "the majority of the last two years"
of his life "really trying to understand them and the relationship with the ecosystem" is
convinced that these behemoths must be broken up. The big four, striving all powerful deities,
sources of mass adoration, have become "our consumptive gods". "And as a result of their
ability to tap into these very basic instincts, they've aggregated more market cap than the
majority of nation's GDP".
Power and influence has shifted. Political leaders have little of these relatively speaking,
certainly over the behavioural consistency and content of subjects and citizens. Someone like
Mark Zuckerberg, distinctly outside a political process he can still control, does. "He can
turn off or on your mood. He can take any product up or down. He can pretty much kill any
company in the tech space." And that's just Facebook.
What Galloway points out with a forceful relevance is that liberties and freedoms are not
the preserve of estranged markets and their bullish actors. Regulation and oversight are
required. A return to competition would only be possible through some form of intervention and
coaxing, perhaps even economic violence. The memory of the great financial crisis initially
stimulated an appetite for regulation. In recent years, such urgings have been satiated. The
tech giants, fully aware of this, continue to burgeon.
"... These laws allow a company that believes a foreign rival is selling a product below cost to request that the government impose special tariffs to protect it. Selling products below cost is called dumping, and the duties are called dumping duties. Often, however, the U.S. government determines costs on the basis of little evidence, and in ways which make little sense. To most economists, the dumping duties are simply naked protectionism. Why, they ask, would a rational firm sell goods below cost? ..."
"... Cartels work by restricting output, thereby raising prices. O'Neill's interest was no surprise to me; what did surprise me was the idea that the U.S. government would not only condone a cartel but actually play a pivotal role in setting one up. He also raised the specter of using the antidumping laws if the cartel was not created. These laws allow the United States to impose special duties on goods that arc sold at below a "fair market value," and particularly when they are sold below the cost of production. ..."
"... The reality is that the US empire was always conducting trade wars that included not only tariffs on specific products, but even deliberately created cartels. ..."
"... In the early 90s the Clinton administration uncritically adopted the neoliberal doctrine from Ronald Reagan and continued the big fraud against the majority of the Americans. ..."
"... On the one hand, the Clinton administration was selling the big fairy tale of neoliberalism to the American public: free market capitalism would bring prosperity for all through that trickle-down fiasco. And it was translated, as always, in further cuts in public spending - more tax-cuts for the super-rich. On the other hand, behind the scenes, the same administration was implementing the most aggressive protectionism in favor of some US corporations and against consumers. ..."
Donald Trump is using his trade wars to support the part of the US capital that has heavily
lost from free trade globalization, which is more powerful than ever in our days. This is also
part of the Trump agenda to persuade Americans for his "patriotic devotion" based on his
"America First" slogan.
The reality is that the US empire was always conducting trade wars that included not only
tariffs on specific products, but even deliberately created cartels.
In the early 90s the Clinton administration uncritically adopted the neoliberal doctrine from
Ronald Reagan and continued the big fraud against the majority of the Americans.
On the one hand, the Clinton administration was selling the big fairy tale of neoliberalism to
the American public: free market capitalism would bring prosperity for all through that
trickle-down fiasco. And it was translated, as always, in further cuts in public spending -
more tax-cuts for the super-rich. On the other hand, behind the scenes, the same administration
was implementing the most aggressive protectionism in favor of some US corporations and against
consumers.
In his book Globalization and its discontents , Joseph Stiglitz describes how the United
States under Clinton administration set up a cartel in favor of the US aluminum industry:
The United States supports free trade, but all too often, when a poor country does manage to
find a commodity it can export to the United States, domestic American protectionist interests
are galvanized. This mix of labor and business interests uses the many trade laws - officially
referred to as "fair trade laws," but known outside the United States as "unfair fair trade
laws"- to construct barbed-wire barriers to imports.
These laws allow a company that believes a foreign rival is selling a product below cost to
request that the government impose special tariffs to protect it. Selling products below cost
is called dumping, and the duties are called dumping duties. Often, however, the U.S.
government determines costs on the basis of little evidence, and in ways which make little
sense. To most economists, the dumping duties are simply naked protectionism. Why, they ask,
would a rational firm sell goods below cost?
During my term in government, perhaps the most grievous instance of U.S. special interests
interfering in trade - and the reform process - occurred in early 1994, just after the price of
aluminum plummeted. In response to the fall in price, U.S. aluminum producers accused Russia of
dumping aluminum.
Any economic analysis of the situation showed clearly that Russia was not dumping. Russia was
simply selling aluminum at the international price, which was lowered both because of a global
slowdown in demand occasioned by slower global growth and because of the cutback in Russian
aluminum use for military planes. Moreover, new soda can designs used substantially less
aluminum than before, and this also led to a decline in the demand.
As I saw the price of aluminum plummet, I knew the industry would soon be appealing to the
government for some form of relief, either new subsidies or new protection from foreign
competition. But even I was surprised at the proposal made by the head of Alcoa, Paul O'Neill:
a global aluminum cartel.
Cartels work by restricting output, thereby raising prices. O'Neill's interest was no surprise
to me; what did surprise me was the idea that the U.S. government would not only condone a
cartel but actually play a pivotal role in setting one up. He also raised the specter of using
the antidumping laws if the cartel was not created. These laws allow the United States to
impose special duties on goods that arc sold at below a "fair market value," and particularly
when they are sold below the cost of production.
I worked hard to convince those in the National Economic Council that it would be a mistake to
support O'Neill's idea, and I made great progress. But in a heated subcabinet meeting, a
decision was made to support the creation of an international cartel.
While I had managed to convince almost everyone of the dangers of the cartel solution, two
voices dominated. The State Department, with its close connections to the old-line state
ministries, supported the establishment of a cartel. The State Department prized order above
all else, and cartels do provide order. The old-line ministries, of course, were never
convinced that this movement to prices and markets made sense in the first place, and the
experience with aluminum simply served to confirm their views.
Rubin, at that time head of the National Economic Council, played a decisive role, siding with
State. At least for a while, the cartel did work. Prices were raised. The protfits of Alcoa and
other producers were enhanced. The American consumers - and consumers throughout the world -
lost, and indeed, the basic principles of economics, which teach the value of competitive
markets, show that the losses to consumers outweigh the gains to producers. Donald Trump is
using his trade wars to support the part of the US capital that has heavily lost from free
trade globalization, which is more powerful than ever in our days. This is also part of the
Trump agenda to persuade Americans for his "patriotic devotion" based on his "America First"
slogan.
The reality is that the US empire was always conducting trade wars that included not only
tariffs on specific products, but even deliberately created cartels.
In the early 90s the Clinton administration uncritically adopted the neoliberal doctrine from
Ronald Reagan and continued the big fraud against the majority of the Americans.
On the one hand, the Clinton administration was selling the big fairy tale of neoliberalism to
the American public: free market capitalism would bring prosperity for all through that
trickle-down fiasco. And it was translated, as always, in further cuts in public spending -
more tax-cuts for the super-rich. On the other hand, behind the scenes, the same administration
was implementing the most aggressive protectionism in favor of some US corporations and against
consumers.
In his book Globalization and its discontents , Joseph Stiglitz describes how the United
States under Clinton administration set up a cartel in favor of the US aluminum industry:
The United States supports free trade, but all too often, when a poor country does manage to
find a commodity it can export to the United States, domestic American protectionist interests
are galvanized. This mix of labor and business interests uses the many trade laws - officially
referred to as "fair trade laws," but known outside the United States as "unfair fair trade
laws"- to construct barbed-wire barriers to imports.
These laws allow a company that believes a foreign rival is selling a product below cost to
request that the government impose special tariffs to protect it. Selling products below cost
is called dumping, and the duties are called dumping duties. Often, however, the U.S.
government determines costs on the basis of little evidence, and in ways which make little
sense. To most economists, the dumping duties are simply naked protectionism. Why, they ask,
would a rational firm sell goods below cost?
During my term in government, perhaps the most grievous instance of U.S. special interests
interfering in trade - and the reform process - occurred in early 1994, just after the price of
aluminum plummeted. In response to the fall in price, U.S. aluminum producers accused Russia of
dumping aluminum.
Any economic analysis of the situation showed clearly that Russia was not dumping. Russia was
simply selling aluminum at the international price, which was lowered both because of a global
slowdown in demand occasioned by slower global growth and because of the cutback in Russian
aluminum use for military planes. Moreover, new soda can designs used substantially less
aluminum than before, and this also led to a decline in the demand.
As I saw the price of aluminum plummet, I knew the industry would soon be appealing to the
government for some form of relief, either new subsidies or new protection from foreign
competition. But even I was surprised at the proposal made by the head of Alcoa, Paul O'Neill:
a global aluminum cartel.
Cartels work by restricting output, thereby raising prices. O'Neill's interest was no surprise
to me; what did surprise me was the idea that the U.S. government would not only condone a
cartel but actually play a pivotal role in setting one up. He also raised the specter of using
the antidumping laws if the cartel was not created. These laws allow the United States to
impose special duties on goods that arc sold at below a "fair market value," and particularly
when they are sold below the cost of production.
I worked hard to convince those in the National Economic Council that it would be a mistake to
support O'Neill's idea, and I made great progress. But in a heated subcabinet meeting, a
decision was made to support the creation of an international cartel.
While I had managed to convince almost everyone of the dangers of the cartel solution, two
voices dominated. The State Department, with its close connections to the old-line state
ministries, supported the establishment of a cartel. The State Department prized order above
all else, and cartels do provide order. The old-line ministries, of course, were never
convinced that this movement to prices and markets made sense in the first place, and the
experience with aluminum simply served to confirm their views.
Rubin, at that time head of the National Economic Council, played a decisive role, siding with
State. At least for a while, the cartel did work. Prices were raised. The protfits of Alcoa and
other producers were enhanced. The American consumers - and consumers throughout the world -
lost, and indeed, the basic principles of economics, which teach the value of competitive
markets, show that the losses to consumers outweigh the gains to producers.
"... By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street. ..."
"... But don't cry for Google. These practices helped it earn it a net profit of $12.7 billion in 2017 and of $19.5 billion in 2016. The decision and a fine of enormous magnitude has been expected. And Google's shares are currently flat for the day. ..."
"... "The decision and a fine of enormous magnitude has been expected. And Google's shares are currently flat for the day." ..."
"... An unlocked phone direct from the mfg instead of the carrier will have fewer apps. Also you can disable many apps, just ignore the "may cause other apps to misbehave " message; it isn't true. Some of the apps you do need, and online forums will list which you need and which you don't. ..."
"... if you can quit FB cold turkey you can reduce your exposure to Google. For example I went back to using a paper calendar. ..."
"... LineageOS is a current Android version and not several years old like with earlier Moto G versions, it gets up to date security patches, has no spyware. You can even install only the Google Apps you want, and can delete or uninstall pretty much anything. Especially on older phones with limited storage this is a godsend. ..."
Lambert here:
The EU doesn't mess around, does it?
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and
author, with extensive international work experience.
Originally published at Wolf Street.
In the US, the internet giants – Google, Facebook, Amazon, et al. – can do
pretty much as they please, interrupted only by occasional hearings in Congress, where Mark
Zuckerberg, or whoever, has to grin-and-bear it for a few hours, knowing that this too shall
pass. The EU takes antitrust actions against super-dominant giants a tad more seriously.
The EU's Competition Commission, after a three-year investigation, hit Google with a
€4.3 billion antitrust fine – $5 billion – the highest fine ever by any
antitrust agency anywhere.
No one dominates like Google. According to earlier EU findings cited by
Bloomberg , Google's market share exceeds 90% for general Internet search, licensed mobile
device operating systems, and app stores for Android software.
"Google has used Android as a vehicle to cement the dominance of its search engine," EU
Competition Commissioner Margrethe Vestager told reporters. "These practices have denied rivals
the chance to innovate and compete on the merits."
The fine is so large because of Google's "very serious illegal behavior" going back to 2011
and due to the huge revenues Google has earned with this behavior, she said.
In addition, Google was given 90 days to stop its "illegal practices" of forcing cellphone
makers that use Google's Android operating system to install Google apps.
This fine comes on top of the €2.4-billion fine the EU hit Google with in 2017 after an
investigation into Google's shopping-search service.
And the EU is not through yet. It's investigating Google's online advertising contracts and
could issue an additional fine. Online advertising is Google's primary revenues source.
Bloomberg:
The EU said Google ensures that Google Search and Chrome are pre-installed on "practically
all Android devices" sold in Europe. Users who find these apps on their phones are likely to
stick with them and "do not download competing apps in numbers that can offset the
significant commercial advantage derived on pre-installation."
Google's actions reduce the incentives for manufacturers to install and for users to seek
out competing apps, it said.
The probe targeted contracts that require Android-phones makers to take Google's search
and browser apps and other Google services when they want to license the Play app store,
which officials say is a "must-have" for new phones.
The EU also found illegal Google's "significant financial incentives" to telecoms
operators and manufacturers that exclusively install Google search on devices. Rivals
couldn't compete with these payments, making it difficult for any other search engine to get
their app pre-installed. The EU said Google stopped doing this in 2014.
Google's contracts also prevented handset makers selling phones using other versions of
Android, the EU said. This hampered manufacturers from making devices using Amazon.com Inc.'s
Fire OS Android version, it said.
Regulators rejected arguments that Apple Inc. competes with Android, saying Apple's phone
software can't be licensed by handset makers and that Apple phones are often priced outside
many Android users' purchasing power. Users face "switching costs" to move from Apple to
Android and would continue to face Google Search as a default on Apple devices.
In a long statement on its
blog , holier-than-thou Google praises itself from A through Z, in essence portraying
itself as the greatest gift to mankind and that therefore, it should be allowed to do as it
pleases. It includes this:
Today, because of Android, there are more than 24,000 devices, at every price point, from
more than 1,300 different brands, including Dutch, Finnish, French, German, Hungarian,
Italian, Latvian, Polish, Romanian, Spanish and Swedish phone makers.
And these devices are running on Android. In other words: Google is everywhere, and its ads
and apps are on all these devices. Hence the Competition Commission's point: if you're this
dominant, you've got to follow some rules.
At the end of its long statement, Google said: "We intend to appeal." Companies always
appeal fines. Google is no exception. And the end product might be much less ambitious.
At the press conference, Vestager said it was up to Google to figure out how to comply with
the Commission's order. "The obvious minimum" Google would need to do, she said, is that the
"contractual restrictions disappear."
But don't cry for Google. These practices helped it earn it a net profit of $12.7 billion in
2017 and of $19.5 billion in 2016. The decision and a fine of enormous magnitude has been
expected. And Google's shares are currently flat for the day.
It's interesting free market advocates are always going on about regulations, the need for
free markets and market efficiency but don't seem to care so much about monopolies, outsize
profits, the concentration of market power and its abuse that further impedes the operation
of free markets and the billionaires that result.
Google's dominance in search and mobile is market failure. Facebook's dominance of social
is market failure. Amazon's dominance is market failure, Apple being able to accumulate $800
billion it does not know what to do with is market failure.
Under conventional market theory all these entities would have stiff competition and not
be able to accumulate outsize profits or monopoly power so the question is where is the
competition and how come the the market is not working? And while the theories continue these
firms concentrate even more power, control and windfall profits.
How come free market advocates always seem to be more concerned about attempts to impose
minimum wages, health care or proper working conditions on amazon workers for instance than
any of this? And we will not even talk about negative externalities like the emergence of a
global spyware economy based on surveillance and creepily staking people 24/7. And using
seemingly endless 'VC funds' to build these US centric monopolies.
We are being stalked; and a virtual individual, more or less fleshed-out, is created in
the Cloud for each of us it is based on our behavior, every possible detail of which is
incorporated into the dossier. How accurate these representations are can be affected by
multiple variables Fake news? How about *Fake Browsing* or *Fake Shopping*. Feel free to
experiment!!!
We are being stalked by allowing ourselves to be stalked. All Android apps carry a
"permissions" warning telling how they are planning to stalk you. And of course smartphones
themselves are spybots by design–a business model pioneered by Apple, not Google. One
could argue that many of the worst current practices of Google are the result of trying to
imitate competitors such as Apple and Facebook.
Android is based on open source Linux and there's probably no reason why smartphone
manufacturers couldn't get their free operating systems elsewhere. Perhaps one big reason
they don't is that they are in on the stalking.
The patent was filed by a Google software engineer on behalf of the firm It describes a
system that analyses a user's online posts, emails and texts The system, or bot, would then
generate automated replies for future posts These replies would be written in a way that
mimics that person's usual language and tone
From the patient:
( 1 of 1 )
United States Patent 8,589,407
Bhatia November 19, 2013
Automated generation of suggestions for personalized reactions in a social network
Abstract
A system and method for automatic generating suggestions for personalized reactions or
messages. A suggestion generation module includes a plurality of collector modules, a
credentials module, a suggestion analyzer module, a user interface module and a decision
tree. The plurality of collector modules are coupled to respective systems to collect
information accessible by the user and important to the user from other systems such as
e-mail systems, SMS/MMS systems, micro blogging systems, social networks or other systems.
The information from these collector modules is provided to the suggestion analyzer module.
The suggestion analyzer module cooperates with the user interface module and the decision
tree to generate suggested reactions or messages for the user to send. The suggested
reactions or messages are presented by the user interface module to the user. The user
interface module also displays the original message, other information about the original
message such as others' responses, and action buttons for sending, discarding or ignoring
the suggested message.
If representations are not accurate, you need to volunteer more info till they get you
right.
"The decision and a fine of enormous magnitude has been expected. And Google's shares
are currently flat for the day."
As big a fine as this is that last sentence shows that fines don't work. A monopolist will
always pass on fines for it's illegal behaviour to its (captive) consumer/s. The only remedy
is for criminal proceedings to be bought against it's senior officers with guaranteed jail
time to persuade them to stop. That or breaking up the company.
One serious project for the left, once it gains power, will be to reverse and destroy the
entire line of legal argument that grants personhood to corporations.
Of particular harm are the court decisions on this point in the last 20 years or so, which
have brought this concept to its logical extreme. (I'm thinking in particular of the recent
gay-wedding-cake case, in which the Court [i.e., Justice Kennedy] implied that corporations
have a right to hold, promote, and exercise political opinions, just as if they were a real
person with the fiat. The so-called rationale of that decision is far worse in its long-term
implications than the immediate outcome of the case.)
Even a monopolist cannot simply Ma pass on the fines. Cause if they could have increased
prices already since as you write, they are monopoly. Why haven't they done it? Monopolists
are not dumb, they already extract the maximum price they think the market can bear.
In the end, the only effect that this is going to have is to transfer money from Google to
the EU. Cell phone manufacturers will install Chrome and Google Search whether Google
requires it or not. There simply isn't anything else out there that works as well.
Yours Truly has an Android phone. With more than 150 apps, and guess what: I didn't
install most of them. They simply came with the phone.
I can recall a recent incident when I needed to call 911 and my phone was off. I turned it
on, and, guess what, those 150-plus apps just HAD to update. That process took 15
minutes.
Fortunately, I wasn't in a life-threatening situation. I was only trying to call to report
gunfire nearby. In central Tucson, that happens fairly often.
Since the phone was in update mode for 15 minutes before I could even get to the opening
screen with the "emergency call" link, I decided not to call 911. It was simply too late to
make a timely report.
If I had my druthers, I'd rather have a phone with just a handful of apps. I don't need
all of this Google crud. Especially if if poses a risk to health and safety.
An unlocked phone direct from the mfg instead of the carrier will have fewer apps.
Also you can disable many apps, just ignore the "may cause other apps to misbehave " message;
it isn't true. Some of the apps you do need, and online forums will list which you need and
which you don't.
On my current Android form I have not signed into Chrome and use DDG instead of Google.
Pretty much easy as pie Slim, attagirl -- if you can quit FB cold turkey you can reduce
your exposure to Google. For example I went back to using a paper calendar.
Root your phone and delete all those apps including Google's. Don't use anything google --
gmail, youtube, chrome, google search, google voice, google groups and more of the EVIL
company's concoctions created solely to spy on you and sell your data.
Needless to say the crooked cell phone carriers will farm your data and track you.
I'm so sick of these crooked companies, google, facebook, netflix, whatsapp, linkedin and
others that snoop on you. Get tutamail or protonmail for your e-mail.
Root your phone and delete all those apps including Google's.
This is the wrong way to approach this. The right way ist to install a 3rd party ROM like
LineageOS and then not install any gapps.
Be prepared however that only very few programs will work. You will then lack Google play
services and they are needed for many many programs. Not much more than what is in f-droid.
There is of course no play store whatsoever then.
For whatever reason my reply didn't go through this morning.PS: this is now the third
attempt even. Now replacing all URLs in hope it will go through
I wrote exact model for a reason: there are about two dozen different Moto G versions over
6 years of releases.
Pretty much all of them allow however LineageOS or other third party Android images. Those
have no bloatware apps except what comes with the OS itself. If the LineageOS download
section has no image for your specific phone, then visit xda-developers forum or needrom
which both have even more.
LineageOS is a current Android version and not several years old like with earlier
Moto G versions, it gets up to date security patches, has no spyware. You can even install
only the Google Apps you want, and can delete or uninstall pretty much anything.
Especially on older phones with limited storage this is a godsend.
I believe that under German law (and I'm not 100% positive of this), executives and
directors can become personally liable for the actions of the businesses they manage.
A $5 Billion levied on directors and management, and not shareholders, would appear to be
more effective.
Those responsible bear none of the penalty. And, if corporation be people, then is the
corporation and its officers conspiring?
I hope Eric Schmidt pays all $5b out of his pocket and they use it to fund the studies of
monopoly impacts he put the kibosh on. Some community service too wouldn't be a bad idea for
such a bully.
We have the same sort of corporate veil in Germany as all other modern western capitalist
countries in form of "Kapitalgesellschaft". A public company is such a company, the other
would be the GmbH aka Ltd.
A manager who does criminal things (see Diesel scandal VW/VAG an Audi manager was recently
held in custody) can be held liable including fines or jail. But I don't know of any
anti-trust actions which pierced the veil.
"... For many years some have seen the US as a form of corporatism* - as a country run in the interests of the corporations and those who lead them. There is considerable evidence that in many senses they are correct. However to see Trump as the epitome of this 'rule by corporations' I think misses something important. Trump is different from what went before in important respects. ..."
"... The government of Donald Trump is different. It is a selective plutocracy , and with one important exception that plutocracy is selected by Trump. In that way it can also be seen as a democratic dictatorship , where the complexity of government requires some delegation of power to other individuals. Like many dictatorships, some of those individuals are the dictator's family members. ..."
"... The photo above is taken from an extraordinary recent event (watch here ) where Trump walks down a line of senior executives, who in turn stand up and say what they are doing for the US and pledge to do more. Each statement is applauded with a positive statement by Trump, as his daughter trails behind. These are top companies: IBM, Microsoft, General Motors etc. It is all a show, of course, but of a kind the US has never seen before. It seems indicative that this is not just a continuation of past corporatism but something quite different. These are corporate executives doing the President's bidding for fear or favour. ..."
For
many years some have seen the US as a form of corporatism* - as a country run in the interests
of the corporations and those who lead them. There is considerable evidence that in many senses
they are correct. However to see Trump as the epitome of this 'rule
by corporations' I think misses something important. Trump is different from what went before
in important respects.
The way business influenced politicians in the past was straightforward. Campaigns cost a lot
of money (unlike the UK there are no tight limits on how much can be spent), and business can
provide that money, but of course corporate political donations are not pure altruism. The
strings attached helped influence both Republican and Democratic politicians. It was influence
that followed the money, and that meant to an extent it was representative of the corporate
sector as a whole. The same point can be made about political lobbying.
The government of Donald Trump is different. It is a selective
plutocracy , and with one important exception that plutocracy is selected by Trump. In
that way it can also be seen as a democratic
dictatorship , where the complexity of government requires some delegation of power to
other individuals. Like many dictatorships, some of those individuals are the dictator's family
members.
A dictatorship of this form would not be possible if Congress had strongly opposed it. That it
has not is partly because the Republican party chooses not to oppose, but also because Trump
wields a power over Congress that can override the influence of corporate money. That power
comes from an alliance between Trump and the media that has a big influence on how Republican
voters view the world: Fox News in particular but others as well. The irony is that under these
conditions democracy in the form of primaries gives Trump and the media considerable power over
Congress.
The distinction between traditional corporate power 'from below' and the current Trumpian
plutocracy can be seen most clearly in Trump's trade policy. It would be a mistake to see
past US trade
policy as an uninterrupted promotion of liberalisation, but I think it is fair to say that
trade restrictions have never been imposed in such a haphazard way, based on such an obviously
false pretext (US surpluses good, deficits bad). Trump's policy is a threat to the
international trading system that has in the past been lead by the US, and therefore it is a
threat to most of corporate USA. Yet up till now Congress has done very little to stop Trump's ruinous policy.
The photo above is taken from an extraordinary
recent event (watch here ) where Trump
walks down a line of senior executives, who in turn stand up and say what they are doing for
the US and pledge to do more. Each statement is applauded with a positive statement by Trump,
as his daughter trails behind. These are top companies: IBM, Microsoft, General Motors etc. It
is all a show, of course, but of a kind the US has never seen before. It seems indicative that
this is not just a continuation of past corporatism but something quite different. These are
corporate executives doing the President's bidding for fear or favour.
All this matters because it creates a tension that could at some stage drive events. So far the
Republican party has been prepared to allow Trump to do what he wishes as long as didn't
require their explicit approval (i.e their votes in Congress), but it has not as yet bent its
collective agenda to his. (Arguments that it already has tend to look at past
Republican rhetoric rather than actions.) This uneasy peace may no longer become tenable
because of developments on trade, or Russia, or the mid-term election results. If enough
Republicans think their future is safer by opposing Trump rather than indulging him, they still
have the power to bring Trump to heel. But the longer the peace lasts, Trump's influence on the
Republican party will only grow.
* Readers outside the US may be confused by my use of the term corporatism: it is one of those
terms with many meanings. I'm using it in the fourth and final sense described
here .
EDITOR'S NOTE: This article originally appeared at TomDispatch.com
.
Leaders are routinely confronted with philosophical dilemmas. Here's a classic one for our Trumptopian times: If you make enemies
out of your friends and friends out of your enemies, where does that leave you? What does winning (or losing) really look like? Is
a world in which walls of every sort encircle America's borders a goal worth seeking? And what would be left in a future fragmented
international economic system marked by tit-for-tat tariffs, travel restrictions, and hyper-nationalism? Ultimately, how will such
a world affect regular people? Let's cut through all of this for the moment and ask one crucial question about our present cult-of-personality
era in American politics: Other than accumulating more wealth and influence for himself,
his children
, and the
Trump family empire , what's Donald J. Trump's end game as president? If his goal is to keep this country from being, as he likes
to complain, " the world's
piggy bank ," then his words, threats, and actions are concerning. However bombastic and disdainful of a history he appears to
know little about, he is already making the world a less stable, less affordable, and more fear-driven place. In the end, it's even
possible that, despite the upbeat economic news of the moment, he could almost single-handedly smash that piggy bank himself, as
he has many of his own
business
ventures . Still, give him credit for one thing: Donald Trump has lent remarkable new meaning to the old phrase "the imperial
presidency." The members of his administration, largely a set of aging white men, either conform to his erratic wishes or get fired.
In other words, he's running domestic politics in much the same fashion as he oversaw the boardroom on his reality-TV show The
Apprentice . Now, he's begun running the country's foreign policy in the same personalized, take-no-prisoners, you're-fired
style. From the moment he hit the Oval Office, he's made it clear at home and abroad that it's his way or the highway. If only,
of course, it really was that simple. What he will learn, if "learning process" and "President Trump" can even occupy the same sentence,
is that "firing" Canada, the European Union (EU), or for that matter China has a cost. What the American working and the middle classes
will see (sooner than anyone imagines) is that actions of his sort have unexpected global consequences. They could cost the United
States and the rest of the world big-time. If he were indeed emperor and his subjects (that would be us) grasped where his policies
might be leading, they would be preparing a revolt. In the end, they -- again, that's us -- will be the ones paying the price in
this global chess match.
The Art of Trump's Deals
So far, President Trump has only taken America out of trade deals or threatened to do so if other countries don't behave
in a way that satisfies him. On his
third day in the White House, he honored his campaign promise to remove the United States from the Trans-Pacific Partnership,
a decision that opened space for our allies and competitors, China in particular, to negotiate deals without us. Since that grand
exit, there has, in fact, been a boom in side deals involving China and other Pacific Rim countries that has weakened, not strengthened,
Washington's global bargaining position. Meanwhile, closer to home, the Trump administration has engaged in a barrage of NAFTA-baiting
that is isolating us from our regional partners, Canada and Mexico.
Conversely, the art-of-the-deal aficionado has yet to sign a single new bilateral trade deal. Despite steadfast claims that he
would serve up the best deals ever, we have been left with little so far but various tariffs and an onslaught against American trading
partners. His one claim to bilateral-trade-deal fame was the
renegotiation of a six-year-old
deal with South Korea in March that doubled the number of cars each US manufacturer could export to South Korea (without having to
pass as many safety standards).
As White House Press Secretary Sarah Sanders
put
it , when speaking of Kim Jong-un's North Korea, "The President is, I think, the ultimate negotiator and dealmaker when it comes
to any type of conversation." She left out the obvious footnote, however: any type that doesn't involve international trade.
In the past four months, Trump has imposed tariffs, exempting certain countries, only to reimpose them at his whim. If trust were
a coveted commodity, when it came to the present White House, it would now be trading at zero. His supporters undoubtedly see this
approach as the fulfillment of his many campaign promises and part of his
classic method of keeping both friends and enemies guessing until he's ready to go in for the kill. At the heart of this approach,
however, lies a certain global madness, for he now is sparking a set of trade wars that could, in the end,
cost millions of American jobs.
The Allies
On May 31st, Commerce Secretary Wilbur Ross
confirmed that Canada, Mexico, and the EU would all be hit with 10 percent aluminum and 25 percent steel tariffs that had first
made headlines in March. When it came to those two products, at least, the new tariffs bore no relation to the previous average 3
percent tariff on US-EU traded goods.
In that way, Trump's tariffs, initially supposed to be
aimed at
China (a country whose president he's praised to the skies and whose trade policies he's lashed out at endlessly), went global.
And not surprisingly, America's closest allies weren't taking his maneuver lightly. As the verbal-abuse level rose and what looked
like a possible race to the bottom of international etiquette intensified, they threatened to strike back.
In June, President Trump ordered
that a promised 25 percent tariff on
$50 billion worth of imported
goods from China also be imposed. In response, the Chinese, like the Europeans, the Canadians, and the Mexicans, immediately
promised a massive response in kind. Trump countered by threatening another
$200 billion in tariffs against China. In the meantime, the White House is targeting its initial moves largely against products
related to that country's "
Made in China 2025 " initiative, the Chinese government's strategic plan aimed at making the country a major competitor in advanced
industries and manufacturing.
Meanwhile, Mexico began adopting retaliatory tariffs on American imports. Although it has a far smaller economy than the United
States, it's still the second-largest importer of US products, buying a whopping
$277 billion of them last year. Only Canada buys
more. In a mood of defiance stoked by the president's
hostility to its people, Mexico
executed its own trade gambit, imposing
$3 billion in 15
percent�25 percent tariffs against US exports, including pork, apples, potatoes, bourbon, and cheese.
While those Mexican revenge tariffs still remain limited, covering
just 1 percent
of all exports from north of the border, they do target particular industries hard, especially ones that seem connected to President
Trump's voting "base." Mexico, for instance, is by far the largest buyer of US pork exports, 25 percent of which were sold there
last year. What its 20 percent tariff on pork means, then, is that many US producers will now find themselves unable to compete in
the Mexican market. Other countries may follow suit. The result: a possible loss of up to 110,000 jobs in the pork industry.
Our second North American Free Trade Agreement (NAFTA) partner (for whose prime minister, Justin Trudeau, there is "
a special place in hell ," according to a key Trumpian trade negotiator) plans to invoke tariffs of up to 25 percent on about
$13 billion in US products beginning on July 1st. Items impacted
range "from ballpoint
pens and dishwasher detergent to toilet paper and playing cards sailboats, washing machines, dish washers, and lawn mowers." Across
the Atlantic, the EU has similarly announced retaliatory tariffs of 25 percent on 200 US products, including such American-made classics
as Harley-Davidson motorcycles, blue jeans, and bourbon.
Trump Disses the Former G7
As the explosive Group of Seven, or G7, summit in Quebec showed, the Trump administration is increasingly isolating itself from
its allies in palpable ways and, in the process, significantly impairing the country's negotiating power. If you combine the economies
of what might now be thought of as the G6 and add in the rest of the EU, its economic power is collectively larger than that of the
United States. Under the circumstances, even a small diversion of trade thanks to Trump-induced tariff wars could have costly consequences.
President Trump did try one "all-in" poker move at that summit. With his game face on, he first suggested the possibility of wiping
out all tariffs and trade restrictions between the United States and the rest of the G7, a bluff met with a healthy dose of skepticism.
Before he left for his meeting with North Korean leader Kim Jong-un in Singapore, he even suggested that the G7 leaders "consider
removing every single tariff or trade barrier on American goods." In return, he claimed he would do the same "for products from their
countries." As it turned out, however, that wasn't actually a venture into economic diplomacy, just the carrot before the stick,
and even it was tied to lingering
threats of severe penalties.
The current incipient trade war was actually launched by the Trump administration in March in the name of American "
national security
." What should have been highlighted, however, was the possible "national insecurity" in which it placed the country's (and the
world's) future. After all, a similar isolationist stance in the 1920s and the subsequent market crash of 1929 sparked the global
Great Depression,
opening the way for the utter devastation of World War II.
European Union countries were
incredulous when Trump insisted, as he had many times before, that the "U.S. is a victim of unfair trade practices," citing the
country's trade deficits, especially with
Germany and China. At the G7 summit, European leaders did their best to explain to him that his country isn't actually being
treated unfairly. As French President Emmanuel Macron
explained , "France runs trade
deficits with Germany and the United Kingdom on manufactured goods, even though all three countries are part of the EU single market
and have zero tariffs between them."
"... A Stigler Center panel examines the influence of Big Five tech firms over political discourse and the marketplace of ideas. ..."
"... "Our country has allowed the concentration of power in giant intermediaries -- Google, Facebook, and Amazon -- vastly more powerful than the original intermediary which we fought, which was the British East India Company." ..."
"... "We have reporters, editors, and publishers of our newspapers who live in fear every day. This is true of the people who publish our books and who write our books. They live in fear [that] Amazon is going to shut them down. Whose fault is that? It's the people in the antitrust community." ..."
"... "Google not only vanquished competition. What it did is it vanquished the antitrust enforcers who are supposed to protect the process of competition." ..."
"... "Basically, Section 230 was a libertarian's dream. They got what they wanted. I am a limited government conservative. What they wanted was a no-government world." ..."
At one point during Mark Zuckerberg's
Senate hearing in April , the Facebook CEO had the following peculiar exchange with Senator Lindsay Graham (R-SC):
Graham: But you, as a company, welcome regulation?
Zuckerberg: I think, if it's the right regulation, then yes.
Graham: You think the Europeans had it right?
Zuckerberg: I think that they get things right.
Graham: . So would you work with us in terms of what regulations you think are necessary in your industry?
Zuckerberg: Absolutely.
Graham: Okay. Would you submit to us some proposed regulations?
Zuckerberg: Yes. And I'll have my team follow up with you so, that way, we can have this discussion across the different
categories where I think that this discussion needs to happen.
Graham: Look forward to it.
This telling bit of dialogue was part of an overall pattern: the hearing was meant to hold Facebook (and Zuckerberg himself, as
the company's founder, CEO, and de facto
single ruler ) accountable for the
mishandling of
millions of people's private data. Yet
one after
another , the senators were asking an evasive Zuckerberg if he would be willing to endorse their bills and proposals to regulate
Facebook. This mode of questioning repeated itself (to a somewhat lesser extent) during the House's
tougher questioning of Zuckerberg the following day.
Needless to say, most company CEOs grilled by Congress following a major scandal that impacts millions of people and possibly
the very nature of
American democracy are not usually treated in this way -- as private regulators almost on equal footing with Congress.
Facebook, however, is not a typical company. As
a recent Vox piece noted, with its vast reach of more than two billion users worldwide, Facebook is more akin to
a government or a "powerful sovereign," with Zuckerberg -- due to his unusual level of control over it -- being the "key lawgiver."
Zuckerberg acknowledged as much himself when he said, in a
much-quoted moment of candor
, that "in a lot of ways Facebook is more like a government than a traditional company." More than other technology companies,
he added, Facebook is "really setting policies."
The notion that corporations can become so powerful that they are able to act as a "form of private government" (to quote
Zephyr Teachout )
has long been part of the antitrust literature. Indeed, as the Open Market Institute's Barry Lynn and Matt Stoller recently noted
during a panel at the Stigler Center's Digital Platforms and Concentration antitrust conference, it is deeply rooted in the
rich tradition of antimonopoly
in America.
That digital platforms are major political
players has also been
well documented
.
Once disdainful of politics, in the past two years Google, Facebook, and Amazon have dramatically ramped up their lobbying efforts,
as the public and media backlash against their social, economic, and political power intensified. Google, which enjoyed
unprecedented access to the Obama White House, is now the
biggest lobbyist in Washington, with other tech platforms not far behind.
Market power begetting political power is
not new in itself. As the participants
of the Stigler panel noted, it is the immense power
that concentrated digital intermediaries like Google and Facebook wield over digital markets, human interaction and the marketplace
of ideas, particularly when it comes to the distribution of political information, that presents a unique challenge. As Lina Khan
(also of Open Markets)
recently
noted , the current landscape of Internet media is one in which a handful of companies "are basically acting as private regulators,
as private governments, over the dissemination and organization of information in a way that is totally unchecked by the public."
The latter part, at least, seems to be changing rapidly, as Americans (and millions more worldwide) grapple with
ongoing revelations showing the profound
impact that digital monopolies have on political opinions and outcomes, in the US and across the world. As Congressman John Sarbanes
(D-MD) said during Zuckerberg's House hearing
in April: "Facebook is becoming a self-regulated superstructure for political discourse."
Left to right: Scott Cleland, Ellen Goodman, Matt Stoller, Barry Lynn, Guy Rolnik
The exact nature of tech platforms' political power, its roots, and how to best deal with it -- all questions debated during the
Stigler Center panel -- are complex and varied. But the key question seems rather simple. As Sarbanes put it during the same Congressional
hearing: "Are we, the people, going to regulate our political dialogue, or are you, Mark Zuckerberg, going to end up regulating the
political discourse? ״
A Private Regulator of Speech
Facebook, said Rutgers Law School professor Ellen Goodman, operates as a private speech regulator. As such, much like public governments,
it "privileges some [forms of] speech over others." Unlike governments, however, which as regulators of speech purport to support
public good, Facebook has adopted a "First Amendment-like radical libertarianism" through which it has so far refused to differentiate
between "high- and low-quality information, truth or falsity, responsible and irresponsible press."
Facebook, famously, argues that it is not a media company, but a technology company. "It's not a player, it's not a [referee],
it's just the engineer who made the field," said Goodman, the co-director of the Rutgers Institute for Information Policy & Law.
The purpose of Facebook's "First Amendment rhetoric," she noted, is "to maximize data flow on its platform," but by doing so, "it
implies, or even says explicitly, that it's standing in the shoes of the government."
Facebook and other platforms, said Goodman, have benefited from the process of deregulation and budget cuts to public media --
a process that has predated the Internet, and led to Washington essentially "giving up" on media policy. The government effectively
"exempted these platforms from the kind of ordinary regulation that other information intermediaries were subjected to." With "platforms
in the shoes of government, [and] government out of media policy," the concentration of platform power over information flows was
allowed to continue undisturbed.
The problem, however, is that much like fellow FAANGs Amazon and Google, Facebook is not just an impartial governor, but a market
participant interested in "monopolizing the time of its users," with a strong incentive to privilege its own products and business
model that "eviscerates journalism."
"It also tunes its algorithm to favor certain kinds of speech and certain speakers," added Goodman. "There's almost no transparency,
save for what it selectively, elliptically, and sometimes misleadingly posts on its blog."
"People Live in Fear"
In a seminal
1979 essay on what he termed the "political content" of antitrust, former FTC chairman Robert Pitofsky argued that "political
values," such as "the fear that excessive concentration of economic power will foster anti-democratic political pressures," should
be incorporated into antitrust enforcement. In recent years, this view has been
echoed by a
growing number of
antitrust scholars
, who argue that the way antitrust enforcement has been conducted in the US for the past 40 years -- solely through the prism of
"consumer welfare" -- is ill equipped to deal with the new
threats posed by digital platforms.
The Unites States, remarked Lynn during the panel, was born "out of rebellion against concentrated power, the British East India
Company." The original purpose of antimonopoly in America, said Lynn, was the protection of personal liberty from concentrated economic
and political power: "to give everybody the ability to manage their own property in the ways that they see fit, manage their own
lives in the way that they see fit. To be truly independent of everybody else. To not be anybody else's puppet." Liberty and democracy,
he added, "are functions of antimonopoly."
A state in which Facebook and Google wield enormous influence over the flow of information -- where, to quote
a recent piece by Wired
's Nicholas Thompson and Fred Vogelstein, "every publisher knows that, at best, they are sharecroppers on Facebook's massive
industrial farm" -- is antithetical to this ethos, said Lynn, and is firmly rooted in the "absolute, complete failure" of antitrust
in the United States. "Our country has allowed the concentration of power in giant intermediaries -- Google, Facebook, and Amazon
-- vastly more powerful than the original intermediary which we fought, which was the British East India Company." These digital
intermediaries, he added, are "using their power in ways that are directly threatening our most fundamental liberties and our democracy."
"Our country has allowed the concentration of power in giant intermediaries -- Google, Facebook, and Amazon -- vastly
more powerful than the original intermediary which we fought, which was the British East India Company."
The blame for the outsize influence that Facebook and other digital platforms have over the political discourse, said Lynn, rests
squarely on the shoulders of the antitrust community: "For 200 years in this country, antimonopoly was designed to create freedom
from masters. In 1981, when we got rid of our traditional antimonopoly and replaced it with consumer welfare, we created a system
that has given freedom to master."
In today's concentrated media landscape, he contended, "people live in fear. We have reporters, editors, and publishers of our
newspapers who live in fear every day. This is true of the people who publish our books and who write our books. They live in fear
[that] Amazon is going to shut them down. Whose fault is that? It's the people in the antitrust community."
"We have reporters, editors, and publishers of our newspapers who live in fear every day. This is true of the people
who publish our books and who write our books. They live in fear [that] Amazon is going to shut them down. Whose fault is that?
It's the people in the antitrust community."
Lynn went on to quote from Thompson and Vogelstein's Wired piece: "The social network is roughly 200 times more valuable
than the Times . And journalists know that the man who owns the farm has the leverage. If Facebook wanted to, it could quietly
turn any number of dials that would harm a publisher -- by manipulating its traffic, its ad network, or its readers."
"This was hidden in the middle of the article," said Lynn. "[Thompson], as a journalist, felt obliged to put this out there He
was crying out to the people in this community, in the antitrust community. He's saying 'protect me, the publisher, the editor of
this magazine. Protect me, the reporter. Please make sure that I have the independence to do my work.'"
The "Code of Silence" Has Been Broken
Recent
changes
to Facebook's newsfeed have caused referral traffic from Facebook to media companies' websites to
sharply decline , once again raising concerns about the significant impact that the company has on the media industry. The satirical
news site The Onion , for instance, has launched a public war against Facebook, calling it "an unwanted interloper between
The Onion and our audience." "We have 6,572,949 followers on Facebook who receive an ever-decreasing amount of the content
we publish on the network," the site's editor-in-chief, Chad Nackers, told
Business Insider .
The
backlash by major news outlets and
politicians across
the
political spectrum against the power of Facebook and other tech platforms as de facto regulators of speech on the Internet is
a new phenomenon, said Guy Rolnik, a Clinical Associate Professor for Strategic Management at the University of Chicago Booth school
of Business, during the panel. Until not too long ago, he said, Internet monopolies were the "darlings of the news media." Less than
a year ago , he noted, Zuckerberg was even
touted
by several media outlets as a viable presidential candidate. "The idea that a person who has unprecedented private control over personal
data and the public discourse at large would also be the president of the United States was totally in the realm and perimeter of
what is legitimate," he said.
What has changed? "In many ways, what has changed is that many people associate Facebook today with the election of Donald Trump.
This is why we see so much focus on those issues that were very salient and important for years," Rolnik maintained. Trump's election,
and Facebook's role in the lead-up to it, broke the "code of silence."
Nevertheless, newsrooms today, he said, still do everything in their power "to make sure that everything is shareable on Facebook."
In the words of Thompson and Vogelstein, they are still "sharecroppers on Facebook's massive industrial farm."
Google has "Politically Hijacked the US Antitrust Enforcement Process"
Scott Cleland, president of the consultancy firm Precursor LLC and former deputy US coordinator for international communications
and information policy in the George HW Bush administration, has long warned that concentration among digital platforms will negatively
impact the US economy and society at large.
In 2007, Cleland testified
before the Senate on the then-proposed Google-DoubleClick merger, calling upon antitrust enforcers to block the merger and warning
that lax antitrust enforcement (of the kind that ultimately led the Google-DoubleClick merger to be approved) would allow Google
to become the "ultimate Internet gatekeeper" and the "online-advertising bottleneck provider picking content winners and losers"
-- both of which came true. In 2011, he published the book Search & Destroy: Why You Can't Trust Google Inc . , in which he warned readers of Google's surveillance-based business
model and its "unprecedented centralization of power over the world's information."
US antitrust enforcers, he said, were initially "very tough" on Google during the first years of the George W. Bush administration.
Between 2008 and 2012, both the Bush II and Obama administrations brought "strong and consistent antitrust scrutiny and enforcement
to Google." Then, in 2013, the Federal Trade Commission decided to drop its case against the company, despite the
conclusion of its
staff that Google had used anticompetitive tactics. Following Obama's reelection, which Google at the time was credited with delivering,
antitrust enforcement against Big Tech firms essentially ceased. "They shut down all those investigations and they did nothing for
the last five years. DOJ went from very active -- four or five major antitrust actions -- to nothing. Crickets."
Back then, Google and Facebook were still "fiercely competing," he said. Google was going after Facebook's territory with Google
Plus, and Facebook countered by going after Google search with Yahoo and Bing. But then, in 2014, something happened: the large tech
firms "mysteriously stopped competing."
"Yahoo returned to working with Google. Apple dropped Bing for Siri and moved to Google search. Apple and Microsoft dropped their
patent suits, and then Microsoft and Google made peace after scratching each other's eyes out. Google went from 70 percent share
of search and search advertising in the PC market to 95 percent of that in both of those markets today," said Cleland.
What happened? Cleland points to the what he calls the "Google School of No-Antitrust," a narrative with which according to him
Google had been trying to "influence public opinion, the media, elected and government officials, and US and state antitrust enforcers,
to make the public believe Google (and other Internet platforms) have no antitrust risk or liability, because they offer free innovative
products and services, and to make conservatives believe that the Google School of No-Antitrust and the Chicago School's consumer
welfare standard and application are the same, when they are not."
Google, he asserted, "not only vanquished competition. What it did is it vanquished the antitrust enforcers who are supposed to
protect the process of competition." It did so, he argued, by "politically hijacking the most important market, which is information."
"Google not only vanquished competition. What it did is it vanquished the antitrust enforcers who are supposed to protect
the process of competition."
Cleland, who identifies as a free market conservative, argued that the current Internet is far from a free market. "Who thinks
it's a good idea that all of the world's information goes through one bottleneck?" he asked, adding that "all the bad things that
you're seeing right now are the result of policy."
One such policy is Section 230 of the Communications Decency Act of 1996, which provided Internet companies with legal immunity
for the content their users generated or shared and is
often
credited with enabling the creation of the Internet as we know it today. Cleland sees Section 230 as "market structuring" and
has compared it to the libertarian concept of creating artificial islands outside any governmental territory, known as "
seasteading ."
"Section 230 says -- I'm paraphrasing, but that's what it says -- that US policy recognizes that the Internet is a free market
that should be unfettered by federal and state regulations," said Cleland. "Basically, Section 230 was a libertarian's dream. They
got what they wanted. I am a limited government conservative. What they wanted was a no-government world."
"Basically, Section 230 was a libertarian's dream. They got what they wanted. I am a limited government conservative.
What they wanted was a no-government world."
Much of today's problems regarding the conduct of digital platforms, he said, results from this policy. "Twenty-two years ago,
we as a nation immunized all interactive computer services from any civil liability. We said, 'It is OK. There is no accountability,
no responsibility for you looking the other way, when your platform or things that are going on on your platform harm others.'"
Section 230, he maintained, "basically created 21 st -century robber barons. Those guys know they have the full weight
of the government. If they go to court, they're going to win, and they have almost all the time."
Antitrust Is "One Part of the Answer"
When it comes to addressing these threats to free speech and democratic discourse, said Goodman, antitrust is only "one part of
the answer." The other part, she asserted, is regulation.
"The First Amendment that we have, that we know and love today," she said, "was not born in 1789 in Philadelphia. It developed
in the latter part of the 20th century against a particular set of industrial and social practices that mitigated some of the costs
of free speech and spread the benefits."
Lawmakers and policymakers, she argued, should "retrieve and resuscitate the vocabulary of media policy," focusing on three core
values: "freedom of mind and autonomy; non-market values of diversity and localism/community; and a concept of the public interest
and fiduciary responsibility."
Whenever someone makes an argument for using antitrust or regulation as a way to structure markets of information, Stoller cautioned,
there are those who will argue that this amounts to censorship. When asked how to avoid censorship when discussing the use government
power over speech, Goodman was conflicted: "There is no way around that. There's a real tension here between absolute liberty of
speech and controls on speech," she said. We cannot have this whole conference with us fantasizing about various regulatory possibilities
that involve use restrictions -- limits on the flow of data, limits on the collection of data -- without acknowledging that under
our First Amendment doctrine right now, probably none of that passes muster."
However, Goodman pointed to the Northwest Ordinance as a possible roadmap. "Nobody would say, or maybe they did, that [the Northwest
Ordinance ] was an anti-private property rule. It was structuring the market so that more people could own property. That's what
the history of media regulation in this country has been: structuring speech markets so that more people can speak."
Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts
represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its
faculty. For more information, please visit ProMarket
Blog Policy .
Fascism is the word that most interests me when looking a the present trajectory in
Australia
We're not there yet
And there's no one on the government benches who's a new Hitler or Stalin or Mussolini
But the next generation ..............
They make me uncomfortable. Some of the younger and as yet unheralded apparatchiks on the
conservative fringe worry me. They're smart. Know the advertising and selling the message
strategies. Have money and are well connected to the barons/oligarchs who pull the strings
and they're ambitious.
Paradoxically a collapse of the Liberal Party will help them. In spite of it all we need a
fiscally conservative, slightly socially conservative political movement in Australia but the
drift to extremism is quite pronounced and profoundly worrying, especially in a time where
climate change poses existential questions about our future.
This next election will not be a cakewalk. It'll be as bitterly fought as any in a
generation and the consequences of a loss will be, for progressive forces, catastrophic.
"Although people with low expectations are easier to con, fomenting cynicism about democracy
comes at a long-term cost. Indeed, as the current crop of politicians is beginning to
discover, people with low expectations feel they have nothing to lose."..... Yes, but that's
part of the Devilish Plan: Why do you think that the Neoliberals and Conservatives spend so
much time nurturing their relationship with both Police and the Army?.... They want to be
sure that if their Neoliberal-Conservative project goes truly belly up, they will be the ones
holding the guns.
Yes, it's sinister.... it's dangerous.... it's a time bomb, and we can only defuse it with
the help of a majority of Australians waking up, standing up and Democratically vote against
Fascism.
...President Barack Obama, who had run a quasi-antiwar liberal campaign for the White House, had embraced the assassination program
and had decreed, "the CIA gets what it wants." Intelligence budgets were maintaining the steep upward curve that had started in 2001,
and while all agencies were benefiting, none had done as well as the CIA At just under $15 billion, the agency's budget had climbed
by 56 percent just since 2004.
Decades earlier, Richard Helms, the CIA director for whom the event was named, would customarily
refer to the defense contractors who pressured him to spend his budget on their wares as "those bastards." Such disdain for commerce
in the world of spooks was now long gone, as demonstrated by the corporate sponsorship of the tables jammed into the Grand Ballroom
that evening. The executives, many of whom had passed through the revolving door from government service, were there to rub shoulders
with old friends and current partners. "It was totally garish," one attendee told me afterward. "It seemed like every arms manufacturer
in the country had taken a table. Everyone was doing business, right and left."
In the decade since 9/11, the CIA had been regularly blighted by scandal-revelations of torture, renditions, secret "black site"
prisons, bogus intelligence justifying the invasion of Iraq, ignored signs of the impending 9/11 attacks-but such unwholesome realities
found no echo in this comradely gathering. Even George Tenet, the CIA director who had presided over all of the aforementioned scandals,
was greeted with heartfelt affection by erstwhile colleagues as he, along with almost every other living former CIA director, stood
to be introduced by Master of Ceremonies John McLaughlin, a former deputy director himself deeply complicit in the Iraq fiasco. Each,
with the exception of Stansfield Turner (still bitterly resented for downsizing the agency post-Vietnam), received ringing applause,
but none more than the night's honoree, former CIA director and then-current secretary of defense Robert M. Gates.
Although Gates had left the CIA eighteen years before, he was very much the father figure of the institution and a mentor to the
intelligence chieftains, active and retired, who cheered him so fervently that night at the Ritz-Carlton. He had climbed through
the ranks of the national security bureaucracy with a ruthless determination all too evident to those around him. Ray McGovern, his
supervisor in his first agency post, as an analyst with the intelligence directorate's soviet foreign policy branch, recalls writing
in an efficiency report that the young man's "evident and all-consuming ambition is a disruptive influence in the branch." There
had come a brief check on his rise to power when his involvement in the Iran-Contra imbroglio cratered an initial attempt to win
confirmation as CIA director, but success came a few years later, in 1991, despite vehement protests from former colleagues over
his persistent willingness to sacrifice analytic objectivity to the political convenience of his masters.
Gates's successful 1991 confirmation as CIA chief owed much, so colleagues assessed, to diligent work behind the scenes on the
part of the Senate Intelligence Committee's staff director, George Tenet. In 1993, Tenet moved on to be director for intelligence
programs on the Clinton White House national security staff, in which capacity he came to know and esteem John Brennan, a midlevel
and hitherto undistinguished CIA analyst assigned to brief White House staffers. Tenet liked Brennan so much that when he himself
moved to the CIA as deputy director in 1995, he had the briefer appointed station chief in Riyadh, an important position normally
reserved for someone with actual operational experience. In this sensitive post Brennan worked tirelessly to avoid irritating his
Saudi hosts, showing reluctance, for example, to press them for Osama bin Laden's biographical details when asked to do so by the
bin Laden unit back at headquarters.
Brennan returned to Washington in 1999 under Tenet's patronage, initially as his chief of staff and then as CIA executive director,
and by 2003 he had transitioned to the burgeoning field of intelligence fusion bureaucracy. The notion that the way to avert miscommunication
between intelligence bureaucracies was to create yet more layers of bureaucracy was popular in Washington in the aftermath of 9/11.
One concrete expression of this trend was the Terrorist Threat Integration Center, known as T-TIC and then renamed the National Counter
Terrorism Center a year later. Brennan was the first head of T-TIC, distinguishing himself in catering to the abiding paranoia of
the times. On one occasion, notorious within the community, he circulated an urgent report that al-Qaeda was encrypting targeting
information for terrorist attacks in the broadcasts of the al-Jazeera TV network, thereby generating an "orange" alert and the cancellation
of dozens of international flights. The initiative was greeted with malicious amusement over at the CIA's own Counterterrorism Center,
whose chief at the time, José Rodríguez, later opined that Brennan had been trying to build up his profile with higher authority.
"Brennan was a major factor in keeping [the al-Jazeera/al-Qaeda story] alive. We thought it was ridiculous," he told a reporter.
"My own view is he saw this, he took this, as a way to have relevance, to take something to the White House." Tellingly, an Obama
White House spokesman later excused Brennan's behavior on the grounds that though he had circulated the report, he hadn't believed
it himself.
Exiting government service in 2005, Brennan spent the next three years heading The Analysis Corporation, an obscure but profitable
intelligence contractor engaged in preparing terrorist watch lists for the government, work for which he was paid $763,000 in 2008.
Among the useful relationships he had cultivated over the years was well-connected Democrat Anthony Lake, a former national security
adviser to Bill Clinton, who recommended him to presidential candidate Barack Obama. Meeting for the first time shortly after Obama's
election victory, the pair bonded immediately, with Obama "finishing Brennan's sentences," by one account. Among their points of
wholehearted agreement was the merit of a surgical approach to terrorist threats, the "need to target the metastasizing disease without
destroying the surrounding tissue," as Brennan put it, for which drones and their Hellfire missiles seemed the ideal tools. Obama
was initially balked in his desire to make Brennan CIA director because of the latter's all-too-close association with the agency's
torture program, so instead the new president made him his assistant for counterterrorism and homeland security, with an office down
the hall from the Oval Office. Two years into the administration, everyone in the Ritz-Carlton ballroom knew that the bulky Irishman
was the most powerful man in U.S. intelligence as the custodian of the president's kill list, on which the chief executive and former
constitutional law professor insisted on reserving the last word, making his final selections for execution at regularly scheduled
Tuesday afternoon meetings. "You know, our president has his brutal side," a CIA source cognizant of Obama's involvement observed
to me at the time.
Now, along with the other six hundred diners at the Helms dinner, Brennan listened attentively as Gates rose to accept the coveted
award for "exemplary service to the nation and the Central Intelligence Agency." After paying due tribute to previous honorees as
well as his pride in being part of the CIA "family," Gates spoke movingly of a recent and particularly tragic instance of CIA sacrifice,
the seven men and women killed by a suicide bomber at an agency base, Forward Operating Base Chapman, in Khost, Afghanistan, in 2009.
All present bowed their heads in silent tribute.
Gates then moved on to a more upbeat topic. When first he arrived at the Pentagon in 2007, he said, he had found deep-rooted resistance
to "new technology" among "flyboys with silk scarves" still wedded to venerable traditions of fighter-plane combat. But all that,
he informed his rapt audience, had changed. Factories were working "day and night, day and night," to turn out the vital weapons
for the fight against terrorism. "So from now on," he concluded, his voice rising, "the watchword is: drones, baby, drones!"
"... This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output. ..."
"... This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties. ..."
Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery
and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television
and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked
staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy,
the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses
that depend upon it. Elements of the firm's structure and conduct pose anticompetitive concerns -- yet it has escaped antitrust
scrutiny.
This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined
as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize
the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output.
Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business
lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons. First, the
economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded.
Under these conditions, predatory pricing becomes highly rational-even as existing doctrine treats it as irrational and therefore
implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these
platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit
information collected on companies using its services to undermine them as competitors.
This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive
aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two
potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying
common carrier obligations and duties.
"... Neoliberalism is a theory of political economic practices proposing that human well-being can best be advanced by the maximization of entrepreneurial freedoms within an institutional framework characterized by private property rights, individual liberty, unencumbered markets, and free trade. ..."
"... Furthermore, if markets do not exist (in areas such as education, health care, social security, or environmental pollution), then they must be created, by state action if necessary. ..."
"... State interventions in markets (once created) must be kept to a bare minimum because the state cannot possibly possess enough information to second-guess market signals (prices) and because powerful interests will inevitably distort and bias state interventions (particularly in democracies) for their own benefit. ..."
"... State after state, from the new ones that emerged from the collapse of the Soviet Union to old-style social democracies and welfare states such as New Zealand and Sweden, have embraced, sometimes voluntarily and sometimes in response to coercive pressures, some version of neoliberal theory and adjusted at least some of their policies and practices accordingly. Post apartheid South Africa quickly adopted the neoliberal frame and even contemporary China appears to be headed in that direction. Furthermore, advocates of the neoliberal mindset now occupy positions of considerable influence in education (universities and many "think tanks"), in the media, in corporate board rooms and financial institutions, in key state institutions (treasury departments, central banks), and also in those international institutions such as the International Monetary Fund (IMF) and the World Trade Organization (WTO) that regulate global finance and commerce. Neoliberalism has, in short, become hegemonic as a mode of discourse and has pervasive effects on ways of thought and political-economic practices to the point where it has become incorporated into the commonsense way we interpret, live in, and understand the world. ..."
"... Neoliberalization has in effect swept across the world like a vast tidal wave of institutional reform and discursive adjustment. While plenty of evidence shows its uneven geographical development, no place can claim total immunity (with the exception of a few states such as North Korea). Furthermore, the rules of engagement now established through the WTO (governing international trade) and by the IMF (governing international finance) instantiate neoliberalism as a global set of rules. All states that sign on to the WTO and the IMF (and who can afford not to?) agree to abide (albeit with a "grace period" to permit smooth adjustment) by these rules or face severe penalties. ..."
"... For any system of thought to become dominant, it requires the articulation of fundamental concepts that become so deeply embedded in commonsense understandings that they are taken for granted and beyond question. For this to occur, not any old concepts will do. A conceptual apparatus has to be constructed that appeals almost naturally to our intuitions and instincts, to our values and our desires, as well as to the possibilities that seem to inhere in the social world we inhabit. The founding figures of neoliberal thought took political ideals of individual liberty and freedom as sacrosanct -- as the central values of civilization. And in so doing they chose wisely and well, for these are indeed compelling and greatly appealing concepts. Such values were threatened, they argued, not only by fascism, dictatorships, and communism, but also by all forms of state intervention that substituted collective judgments for those of individuals set free to choose. They then concluded that without "the diffused power and initiative associated with (private property and the competitive market) it is difficult to imagine a society in which freedom may be effectively preserved." 1 ..."
"... The U.S. answer was spelled out on September 19, 2003, when Paul Bremer, head of the Coalition Provisional Authority, promulgated four orders that included "the full privatization of public enterprises, full ownership rights by foreign firms of Iraqi U.S. businesses, full repatriation of foreign profits . . . the opening of Iraq's banks to foreign control, national treatment for foreign companies and . . . the elimination of nearly all trade barriers." 4 The orders were to apply to all areas of the economy, including public services, the media, manufacturing, services, transportation, finance, and construction. Only oil was exempt. A regressive tax system favored by conservatives called a flat tax was also instituted. The right to strike was outlawed and unions banned in key sectors. An Iraqi member of the Coalition Provisional Authority protested the forced imposition of "free market fundamentalism," describing it as "a flawed logic that ignores history." 5 Yet the interim Iraqi government appointed at the end of June 2004 was accorded no power to change or write new laws -- it could only confirm the decrees already promulgated. ..."
"... The redistributive tactics of neoliberalism are wide-ranging, sophisticated, frequently masked by ideological gambits, but devastating for the dignity and social well-being of vulnerable populations and territories. The wave of creative destruction neoliberalization has visited across the globe is unparalleled in the history of capitalism. Understandably, it has spawned resistance and a search for viable alternatives. ..."
Neoliberalism has become a hegemonic discourse with pervasive effects on ways of thought and
political-economic practices to the point where it is now part of the commonsense way we
interpret, live in, and understand the world. How did neoliberalism achieve such an exalted
status, and what does it stand for? In this article, the author contends that neoliberalism is
above all a project to restore class dominance to sectors that saw their fortunes threatened by
the ascent of social democratic endeavors in the aftermath of the Second World War. Although
neoliberalism has had limited effectiveness as an engine for economic growth, it has succeeded
in channeling wealth from subordinate classes to dominant ones and from poorer to richer
countries. This process has entailed the dismantling of institutions and narratives that
promoted more egalitarian distributive measures in the preceding era.
Neoliberalism is a theory of political economic practices proposing that human well-being
can best be advanced by the maximization of entrepreneurial freedoms within an institutional
framework characterized by private property rights, individual liberty, unencumbered markets,
and free trade. The role of the state is to create and preserve an institutional framework
appropriate to such practices. The state has to be concerned, for example, with the quality and
integrity of money. It must also set up military, defense, police, and juridical functions
required to secure private property rights and to support freely functioning markets.
Furthermore, if markets do not exist (in areas such as education, health care, social security,
or environmental pollution), then they must be created, by state action if necessary. But
beyond these tasks the state should not venture. State interventions in markets (once created)
must be kept to a bare minimum because the state cannot possibly possess enough information to
second-guess market signals (prices) and because powerful interests will inevitably distort and
bias state interventions (particularly in democracies) for their own benefit.
For a variety of reasons, the actual practices of neoliberalism frequently diverge from this
template. Nevertheless, there has everywhere been an emphatic turn, ostensibly led by the
Thatcher/Reagan revolutions in Britain and the United States, in political-economic practices
and thinking since the 1970s. State after state, from the new ones that emerged from the
collapse of the Soviet Union to old-style social democracies and welfare states such as New
Zealand and Sweden, have embraced, sometimes voluntarily and sometimes in response to coercive
pressures, some version of neoliberal theory and adjusted at least some of their policies and
practices accordingly. Post apartheid South Africa quickly adopted the neoliberal frame and
even contemporary China appears to be headed in that direction. Furthermore, advocates of the
neoliberal mindset now occupy positions of considerable influence in education (universities
and many "think tanks"), in the media, in corporate board rooms and financial institutions, in
key state institutions (treasury departments, central banks), and also in those international
institutions such as the International Monetary Fund (IMF) and the World Trade Organization (WTO) that regulate global finance and commerce. Neoliberalism has,
in short, become hegemonic as a mode of discourse and has pervasive effects on ways of thought
and political-economic practices to the point where it has become incorporated into the
commonsense way we interpret, live in, and understand the world.
Neoliberalization has in effect swept across the world like a vast tidal wave of
institutional reform and discursive adjustment. While plenty of evidence shows its uneven
geographical development, no place can claim total immunity (with the exception of a few states
such as North Korea). Furthermore, the rules of engagement now established through the WTO
(governing international trade) and by the IMF (governing international finance) instantiate
neoliberalism as a global set of rules. All states that sign on to the WTO and the IMF (and who
can afford not to?) agree to abide (albeit with a "grace period" to permit smooth adjustment)
by these rules or face severe penalties.
The creation of this neoliberal system has entailed much destruction, not only of prior
institutional frameworks and powers (such as the supposed prior state sovereignty over
political-economic affairs) but also of divisions of labor, social relations, welfare
provisions, technological mixes, ways of life, attachments to the land, habits of the heart,
ways of thought, and the like. Some assessment of the positives and negatives of this
neoliberal revolution is called for. In what follows, therefore, I will sketch in some
preliminary arguments as to how to both understand and evaluate this transformation in the way
global capitalism is working. This requires that we come to terms with the underlying forces,
interests, and agents that have propelled the neoliberal revolution forward with such
relentless intensity. To turn the neoliberal rhetoric against itself, we may reasonably ask, In
whose particular interests is it that the state take a neoliberal stance and in what ways have
those interests used neoliberalism to benefit themselves rather than, as is claimed, everyone,
everywhere?
In whose particular interests is it that the state take a neoliberal stance, and in what
ways have those interests used neoliberalism to benefit themselves rather than, as is claimed,
everyone, everywhere?
For any system of thought to become dominant, it requires the articulation of fundamental
concepts that become so deeply embedded in commonsense understandings that they are taken for
granted and beyond question. For this to occur, not any old concepts will do. A conceptual
apparatus has to be constructed that appeals almost naturally to our intuitions and instincts,
to our values and our desires, as well as to the possibilities that seem to inhere in the
social world we inhabit. The founding figures of neoliberal thought took political ideals of
individual liberty and freedom as sacrosanct -- as the central values of civilization. And in
so doing they chose wisely and well, for these are indeed compelling and greatly appealing
concepts. Such values were threatened, they argued, not only by fascism, dictatorships, and
communism, but also by all forms of state intervention that substituted collective judgments
for those of individuals set free to choose. They then concluded that without "the diffused
power and initiative associated with (private property and the competitive market) it is
difficult to imagine a society in which freedom may be effectively preserved." 1
Setting aside the question of whether the final part of the argument necessarily follows
from the first, there can be no doubt that the concepts of individual liberty and freedom are
powerful in their own right, even beyond those terrains where the liberal tradition has had a
strong historical presence. Such ideals empowered the dissident movements in Eastern Europe and
the Soviet Union before the end of the cold war as well as the students in Tiananmen Square.
The student movement that swept the world in 1968 -- from Paris and Chicago to Bangkok and
Mexico City -- was in part animated by the quest for greater freedoms of speech and individual
choice. These ideals have proven again and again to be a mighty historical force for
change.
It is not surprising, therefore, that appeals to freedom and liberty surround the United
States rhetorically at every turn and populate all manner of contemporary political manifestos.
This has been particularly true of the United States in recent years. On the first anniversary
of the attacks now known as 9/11, President Bush wrote an op-ed piece for the New York Times
that extracted ideas from a U.S. National Defense Strategy document issued shortly thereafter.
"A peaceful world of growing freedom," he wrote, even as his cabinet geared up to go to war
with Iraq, "serves American long-term interests, reflects enduring American ideals and unites
Americas allies." "Humanity," he concluded, "holds in its hands the opportunity to offer
freedom s triumph over all its age-old foes," and "the United States welcomes its
responsibilities to lead in this great mission." Even more emphatically, he later proclaimed
that "freedom is the Almighty's gift to every man and woman in this world" and "as the greatest
power on earth [the United States has] an obligation to help the spread of freedom."
2
So when all of the other reasons for engaging in a preemptive war against Iraq were proven
fallacious or at least wanting, the Bush administration increasingly appealed to the idea that
the freedom conferred upon Iraq was in and of itself an adequate justification for the war. But
what sort of freedom was envisaged here, since, as the cultural critic Matthew Arnold long ago
thoughtfully observed, "Freedom is a very good horse to ride, but to ride somewhere."
3 To what destination, then, were the Iraqi people expected to ride the horse of
freedom so selflessly conferred to them by force of arms?
The U.S. answer was spelled out on September 19, 2003, when Paul Bremer, head of the
Coalition Provisional Authority, promulgated four orders that included "the full privatization
of public enterprises, full ownership rights by foreign firms of Iraqi U.S. businesses, full
repatriation of foreign profits . . . the opening of Iraq's banks to foreign control, national
treatment for foreign companies and . . . the elimination of nearly all trade barriers." 4 The orders were to apply to all areas of the economy, including public services,
the media, manufacturing, services, transportation, finance, and construction. Only oil was
exempt. A regressive tax system favored by conservatives called a flat tax was also instituted.
The right to strike was outlawed and unions banned in key sectors. An Iraqi member of the
Coalition Provisional Authority protested the forced imposition of "free market
fundamentalism," describing it as "a flawed logic that ignores history." 5 Yet the
interim Iraqi government appointed at the end of June 2004 was accorded no power to change or
write new laws -- it could only confirm the decrees already promulgated.
What the United States evidently sought to impose upon Iraq was a full-fledged neoliberal
state apparatus whose fundamental mission was and is to facilitate conditions for profitable
capital accumulation for all comers, Iraqis and foreigners alike. The Iraqis were, in short,
expected to ride their horse of freedom straight into the corral of neoliberalism. According to
neoliberal theory, Bremers decrees are both necessary and sufficient for the creation of wealth
and therefore for the improved well-being of the Iraqi people. They are the proper foundation
for an adequate rule of law, individual liberty, and democratic governance. The insurrection
that followed can in part be interpreted as Iraqi resistance to being driven into the embrace
of free market fundamentalism against their own will
It is useful to recall, however, that the first great experiment with neoliberal state
formation was Chile after Augusto Pinochet s coup almost thirty years to the day before Bremers
decrees were issued, on the "little September 11th" of 1973. The coup, against the
democratically elected and leftist social democratic government of Salvador Allende, was
strongly backed by the CIA and supported by U.S. Secretary of State Henry Kissinger. It
violently repressed all left-of-center social movements and political organizations and
dismantled all forms of popular organization, such as community health centers in poorer
neighborhoods. The labor market was "freed" from regulatory or institutional restraints --
trade union power, for example. But by 1973, the policies of import substitution that had
formerly dominated in Latin American attempts at economic regeneration, and that had succeeded
to some degree in Brazil after the military coup of 1964, had fallen into disrepute. With the
world economy in the midst of a serious recession, something new was plainly called for. A
group of U.S. economists known as "the Chicago boys," because of their attachment to the
neoliberal theories of Milton Friedman, then teaching at the University of Chicago, were
summoned to help reconstruct the Chilean economy. They did so along free-market lines,
privatizing public assets, opening up natural resources to private exploitation, and
facilitating foreign direct investment and free trade. The right of foreign companies to
repatriate profits from their Chilean operations was guaranteed. Export-led growth was favored
over import substitution. The subsequent revival of the Chilean economy in terms of growth,
capital accumulation, and high rates of return on foreign investments provided evidence upon
which the subsequent turn to more open neoliberal policies in both Britain (under Thatcher) and
the United States (under Reagan) could be modeled. Not for the first time, a brutal experiment
in creative destruction carried out in the periphery became a model for the formulation of
policies in the center. 6
The fact that two such obviously similar restructurings of the state apparatus occurred at
such different times in quite different parts of the world under the coercive influence of the
United States might be taken as indicative that the grim reach of U.S. imperial power might lie
behind the rapid proliferation of neoliberal state forms throughout the world from the
mid-1970s onward. But U.S. power and recklessness do not constitute the whole story. It was not
the United States, after all, that forced Margaret Thatcher to take the neoliberal path in
1979. And during the early 1980s, Thatcher was a far more consistent advocate of neoliberalism
than Reagan ever proved to be. Nor was it the United States that forced China in 1978 to follow
the path that has over time brought it closer and closer to the embrace of neoliberalism. It
would be hard to attribute the moves toward neoliberalism in India and Sweden in 1992 to the
imperial reach of the United States. The uneven geographical development of neoliberalism on
the world stage has been a very complex process entailing multiple determinations and not a
little chaos and confusion. So why, then, did the neoliberal turn occur, and what were the
forces compelling it onward to the point where it has now become a hegemonic system within
global capitalism?
Toward the end of the 1960s, global capitalism was falling into disarray. A significant
recession occurred in early 1973 -- the first since the great slump of the 1930s. The oil
embargo and oil price hike that followed later that year in the wake of the Arab-Israeli war
exacerbated critical problems. The embedded capitalism of the postwar period, with its heavy
emphasis on an uneasy compact between capital and labor brokered by an interventionist state
that paid great attention to the social (i.e., welfare programs) and individual wage, was no
longer working. The Bretton Woods accord set up to regulate international trade and finance was
finally abandoned in favor of floating exchange rates in 1973. That system had delivered high
rates of growth in the advanced capitalist countries and generated some spillover benefits --
most obviously to Japan but also unevenly across South America and to some other countries of
South East Asia -- during the "golden age" of capitalism in the 1950s and early 1960s. By the
next decade, however, the preexisting arrangements were exhausted and a new alternative was
urgently needed to restart the process of capital accumulation. 7 How and why
neoliberalism emerged victorious as an answer to that quandary is a complex story. In
retrospect, it may seem as if neoliberalism had been inevitable, but at the time no one really
knew or understood with any certainty what kind of response would work and how.
The world stumbled toward neoliberalism through a series of gyrations and chaotic motions
that eventually converged on the so-called 'Washington Consensus" in the 1990s. The uneven
geographical development of neoliberalism, and its partial and lopsided application from one
country to another, testifies to its tentative character and the complex ways in which
political forces, historical traditions, and existing institutional arrangements all shaped why
and how the process actually occurred on the ground.
There is, however, one element within this transition that deserves concerted attention. The
crisis of capital accumulation of the 1970s affected everyone through the combination of rising
unemployment and accelerating inflation. Discontent was widespread, and the conjoining of labor
and urban social movements throughout much of the advanced capitalist world augured a socialist
alternative to the social compromise between capital and labor that had grounded capital
accumulation so successfully in the postwar period. Communist and socialist parties were
gaining ground across much of Europe, and even in the United States popular forces were
agitating for widespread reforms and state interventions in everything ranging from
environmental protection to occupational safety and health and consumer protection from
corporate malfeasance. There was. in this, a clear political threat to ruling classes
everywhere, both in advanced capitalist countries, like Italy and France, and in many
developing countries, like Mexico and Argentina.
Beyond political changes, the economic threat to the position of ruling classes was now
becoming palpable. One condition of the postwar settlement in almost all countries was to
restrain the economic power of the upper classes and for labor to be accorded a much larger
share of the economic pie. In the United States, for example, the share of the national income
taken by the top 1 percent of earners fell from a prewar high of 16 percent to less than 8
percent by the end of the Second World War and stayed close to that level for nearly three
decades. While growth was strong such restraints seemed not to matter, but when growth
collapsed in the 1970s, even as real interest rates went negative and dividends and profits
shrunk, ruling classes felt threatened. They had to move decisively if they were to protect
their power from political and economic annihilation.
The coup d'état in Chile and the military takeover in Argentina, both fomented and
led internally by ruling elites with U.S. support, provided one kind of solution. But the
Chilean experiment with neoliberalism demonstrated that the benefits of revived capital
accumulation were highly skewed. The country and its ruling elites along with foreign investors
did well enough while the people in general fared poorly. This has been such a persistent
effect of neoliberal policies over time as to be regarded a structural component of the whole
project. Dumenil and Levy have gone so far as to argue that neoliberalism was from the very
beginning an endeavor to restore class power to the richest strata in the population. They
showed how from the mid-1980s onwards, the share of the top 1 percent of income earners in the
United States soared rapidly to reach 15 percent by the end of the century. Other data show
that the top 0.1 percent of income earners increased their share of the national income from 2
percent in 1978 to more than 6 percent by 1999. Yet another measure shows that the ratio of the
median compensation of workers to the salaries of chief executive officers increased from just
over thirty to one in 1970 to more than four hundred to one by 2000. Almost certainly, with the
Bush administrations tax cuts now taking effect, the concentration of income and of wealth in
the upper echelons of society is continuing apace. 8
And the United States is not alone in this: the top 1 percent of income earners in Britain
doubled their share of the national income from 6.5 percent to 13 percent over the past twenty
years. When we look further afield, we see extraordinary concentrations of wealth and power
within a small oligarchy after the application of neoliberal shock therapy in Russia and a
staggering surge in income inequalities and wealth in China as it adopts neoliberal practices.
While there are exceptions to this trend -- several East and Southeast Asian countries have
contained income inequalities within modest bounds, as have France and the Scandinavian
countries -- the evidence suggests that the neoliberal turn is in some way and to some degree
associated with attempts to restore or reconstruct upper-class power.
We can, therefore, examine the history of neoliberalism either as a utopian project
providing a theoretical template for the reorganization of international capitalism or as a
political scheme aimed at reestablishing the conditions for capital accumulation and the
restoration of class power. In what follows, I shall argue that the last of these objectives
has dominated. Neoliberalism has not proven effective at revitalizing global capital
accumulation, but it has succeeded in restoring class power. As a consequence, the theoretical
utopianism of the neoliberal argument has worked more as a system of justification and
legitimization. The principles of neoliberalism are quickly abandoned whenever they conflict
with this class project.
Neoliberalism has not proven effective at revitalizing global capital accumulation, but it
has succeeded in restoring class power.
If there were movements to restore class power within global capitalism, then how were they
enacted and by whom? The answer to that question in countries such as Chile and Argentina was
simple: a swift, brutal, and self-assured military coup backed by the upper classes and the
subsequent fierce repression of all solidarities created within the labor and urban social
movements that had so threatened their power. Elsewhere, as in Britain and Mexico in 1976, it
took the gentle prodding of a not yet fiercely neoliberal International Monetary Fund to push
countries toward practices -- although by no means policy commitment -- to cut back on social
expenditures and welfare programs to reestablish fiscal probity. In Britain, of course,
Margaret Thatcher later took up the neoliberal cudgel with a vengeance in 1979 and wielded it
to great effect, even though she never fully overcame opposition within her own party and could
never effectively challenge such centerpieces of the welfare state as the National Health
Service. Interestingly, it was only in 2004 that the Labour Government dared to introduce a fee
structure into higher education. The process of neoliberalization has been halting,
geographically uneven, and heavily influenced by class structures and other social forces
moving for or against its central propositions within particular state formations and even
within particular sectors, for example, health or education. 9
It is informative to look more closely at how the process unfolded in the United States,
since this case was pivotal as an influence on other and more recent transformations. Various
threads of power intertwined to create a transition that culminated in the mid-1990s with the
takeover of Congress by the Republican Party. That feat represented in fact a neoliberal
"Contract with America" as a program for domestic action. Before that dramatic denouement,
however, many steps were taken, each building upon and reinforcing the other.
To begin with, by 1970 or so, there was a growing sense among the U.S. upper classes that
the anti-business and anti-imperialist climate that had emerged toward the end of the 1960s had
gone too far. In a celebrated memo, Lewis Powell (about to be elevated to the Supreme Court by
Richard Nixon) urged the American Chamber of Commerce in 1971 to mount a collective campaign to
demonstrate that what was good for business was good for America. Shortly thereafter, a shadowy
but influential Business Round Table was formed that still exists and plays a significant
strategic role in Republican Party politics. Corporate political action committees, legalized
under the post-Watergate campaign finance laws of 1974, proliferated like wildfire. With their
activities protected under the First Amendment as a form of free speech in a 1976 Supreme Court
decision, the systematic capture of the Republican Party as a class instrument of collective
(rather than particular or individual) corporate and financial power began. But the Republican
Party needed a popular base, and that proved more problematic to achieve. The incorporation of
leaders of the Christian right, depicted as a moral majority, together with the Business Round
Table provided the solution to that problem. A large segment of a disaffected, insecure, and
largely white working class was persuaded to vote consistently against its own material
interests on cultural (anti-liberal, anti-Black, antifeminist and antigay), nationalist and
religious grounds. By the mid-1990s, the Republican Party had lost almost all of its liberal
elements and become a homogeneous right-wing machine connecting the financial resources of
large corporate capital with a populist base, the Moral Majority, that was particularly strong
in the U.S. South. 10
The second element in the U.S. transition concerned fiscal discipline. The recession of 1973
to 1975 diminished tax revenues at all levels at a time of rising demand for social
expenditures. Deficits emerged everywhere as a key problem. Something had to be done about the
fiscal crisis of the state; the restoration of monetary discipline was essential. That
conviction empowered financial institutions that controlled the lines of credit to government.
In 1975, they refused to roll over New York's debt and forced that city to the edge of
bankruptcy. A powerful cabal of bankers joined together with the state to tighten control over
the city. This meant curbing the aspirations of municipal unions, layoffs in public employment,
wage freezes, cutbacks in social provision (education, public health, and transport services),
and the imposition of user fees (tuition was introduced in the CUNY university system for the
first time). The bailout entailed the construction of new institutions that had first rights to
city tax revenues in order to pay off bond holders: whatever was left went into the city budget
for essential services. The final indignity was a requirement that municipal unions invest
their pension funds in city bonds. This ensured that unions moderate their demands to avoid the
danger of losing their pension funds through city bankruptcy.
Such actions amounted to a coup d'état by financial institutions against the
democratically elected government of New York City, and they were every bit as effective as the
military overtaking that had earlier occurred in Chile. Much of the city's social
infrastructure was destroyed, and the physical foundations (e.g., the transit system)
deteriorated markedly for lack of investment or even maintenance. The management of New York's
fiscal crisis paved the way for neoliberal practices both domestically under Ronald Reagan and
internationally through the International Monetary Fund throughout the 1980s. It established a
principle that, in the event of a conflict between the integrity of financial institutions and
bondholders on one hand and the well-being of the citizens on the other, the former would be
given preference. It hammered home the view that the role of government was to create a good
business climate rather than look to the needs and well-being of the population at large.
Fiscal redistributions to benefit the upper classes resulted in the midst of a general fiscal
crisis.
Whether all the agents involved in producing this compromise in New York understood it at
the time as a tactic for the restoration of upper-class power is an open question. The need to
maintain fiscal discipline is a matter of deep concern in its own right and does not have to
lead to the restitution of class dominance. It is unlikely, therefore, that Felix Rohatyn, the
key merchant banker who brokered the deal between the city, the state, and the financial
institutions, had the reinstatement of class power in mind. But this objective probably was
very much in the thoughts of the investment bankers. It was almost certainly the aim of
then-Secretary of the Treasury William Simon who, having watched the progress of events in
Chile with approval, refused to give aid to New York and openly stated that he wanted that city
to suffer so badly that no other city in the nation would ever dare take on similar social
obligations again. 11
The third element in the U.S. transition entailed an ideological assault upon the media and
upon educational institutions. Independent "think tanks" financed by wealthy individuals and
corporate donors proliferated -- the Heritage Foundation in the lead -- to prepare an
ideological onslaught aimed at persuading the public of the commonsense character of neoliberal
propositions. A flood of policy papers and proposals and a veritable army of well-paid hired
lieutenants trained to promote neoliberal ideas coupled with the corporate acquisition of media
channels effectively transformed the discursive climate in the United States by the mid-1980s.
The project to "get government off the backs of the people" and to shrink government to the
point where it could be "drowned in a bathtub" was loudly proclaimed. With respect to this, the
promoters of the new gospel found a ready audience in that wing of the 1968 movement whose goal
was greater individual liberty and freedom from state power and the manipulations of monopoly
capital. The libertarian argument for neoliberalism proved a powerful force for change. To the
degree that capitalism reorganized to both open a space for individual entrepreneurship and
switch its efforts to satisfy innumerable niche markets, particularly those defined by sexual
liberation, that were spawned out of an increasingly individualized consumerism, so it could
match words with deeds.
This carrot of individualized entrepreneurship and consumerism was backed by the big stick
wielded by the state and financial institutions against that other wing of the 1968 movement
whose members had sought social justice through collective negotiation and social solidarities.
Reagan's destruction of the air traffic controllers (PATCO) in 1980 and Margaret Thatchers
defeat of the British miners in 1984 were crucial moments in the global turn toward
neoliberalism. The assault upon institutions, such as trade unions and welfare rights
organizations, that sought to protect and further working-class interests was as broad as it
was deep. The savage cutbacks in social expenditures and the welfare state, and the passing of
all responsibility for their well-being to individuals and their families proceeded apace. But
these practices did not and could not stop at national borders. After 1980, the United States,
now firmly committed to neoliberalization and clearly backed by Britain, sought, through a mix
of leadership, persuasion -- the economics departments of U.S. research universities played a
major role in training many of the economists from around the world in neoliberal principles --
and coercion to export neoliberalization far and wide. The purge of Keynesian economists and
their replacement by neoliberal monetarists in the International Monetary Fund in 1982
transformed the U.S.-dominated IMF into a prime agent of neoliberalization through its
structural adjustment programs visited upon any state (and there were many in the 1980s and
1990s) that required its help with debt repayments. The Washington Consensus that was forged in
the 1990s and the negotiating rules set up under the World Trade Organization in 1998 confirmed
the global turn toward neoliberal practices. 12
The new international compact also depended upon the reanimation and reconfiguration of the
U.S. imperial tradition. That tradition had been forged in Central America in the 1920s, as a
form of domination without colonies. Independent republics could be kept under the thumb of the
United States and effectively act, in the best of cases, as proxies for U.S. interests through
the support of strongmen -- like Somoza in Nicaragua, the Shah in Iran, and Pinochet in Chile
-- and a coterie of followers backed by military assistance and financial aid. Covert aid was
available to promote the rise to power of such leaders, but by the 1970s it became clear that
something else was needed: the opening of markets, of new spaces for investment, and clear
fields where financial powers could operate securely. This entailed a much closer integration
of the global economy with a well-defined financial architecture. The creation of new
institutional practices, such as those set out by the IMF and the WTO, provided convenient
vehicles through which financial and market power could be exercised. The model required
collaboration among the top capitalist powers and the Group of Seven (G7), bringing Europe and
Japan into alignment with the United States to shape the global financial and trading system in
ways that effectively forced all other nations to submit. "Rogue nations," defined as those
that failed to conform to these global rules, could then be dealt with by sanctions or coercive
and even military force if necessary. In this way, U.S. neoliberal imperialist strategies were
articulated through a global network of power relations, one effect of which was to permit the
U.S. upper classes to exact financial tribute and command rents from the rest of the world as a
means to augment their already hegemonic control. 13
In what ways has neoliberalization resolved the problems of flagging capital accumulation?
Its actual record in stimulating economic growth is dismal. Aggregate growth rates stood at 3.5
percent or so in the 1960s and even during the troubled 1970s fell to only 2.4 percent. The
subsequent global growth rates of 1.4 percent and 1.1 percent for the 1980s and 1990s, and a
rate that barely touches 1 percent since 2000, indicate that neoliberalism has broadly failed
to
In what ways has neoliberalization resolved the problems of flagging capital accumulation?
Its actual record in stimulating economic growth is dismal. Aggregate growth rates stood at 3.5
percent or so in the 1960s and even during the troubled 1970s fell to only 2.4 percent. The
subsequent global growth rates of 1.4 percent and 1.1 percent for the 1980s and 1990s, and a
rate that barely touches 1 percent since 2000, indicate that neoliberalism has broadly failed
to stimulate worldwide growth. 14 Even if we exclude from this calculation the
catastrophic effects of the collapse of the Russian and some Central European economies in the
wake of the neoliberal shock therapy treatment of the 1990s, global economic performance from
the standpoint of restoring the conditions of general capital accumulation has been weak.
Despite their rhetoric about curing sick economies, neither Britain nor the United States
achieved high economic performance in the 1980s. That decade belonged to Japan, the East Asian
"Tigers," and West Germany as powerhouses of the global economy. Such countries were very
successful, but their radically different institutional arrangements make it difficult to pin
their achievements on neoliberalism. The West German Bundesbank had taken a strong monetarist
line (consistent with neoliberalism) for more than two decades, a fact suggesting that there is
no necessary connection between monetarism per se and the quest to restore class power. In West
Germany, the unions remained strong and wage levels stayed relatively high alongside the
construction of a progressive welfare state. One of the effects of this combination was to
stimulate a high rate of technological innovation that kept West Germany well ahead in the
field of international competition. Export-led production moved the country forward as a global
leader.
In Japan, independent unions were weak or nonexistent, but state investment in technological
and organizational change and the tight relationship between corporations and financial
institutions (an arrangement that also proved felicitous in West Germany) generated an
astonishing export-led growth performance, very much at the expense of other capitalist
economies such as the United Kingdom and the United States. Such growth as there was in the
1980s (and the aggregate rate of growth in the world was lower even than that of the troubled
1970s) did not depend, therefore, on neoliberalization. Many European states therefore resisted
neoliberal reforms and increasingly found ways to preserve much of their social democratic
heritage while moving, in some cases fairly successfully, toward the West German model. In
Asia, the Japanese model implanted under authoritarian systems of governance in South Korea,
Taiwan, and Singapore also proved viable and consistent with reasonable equality of
distribution. It was only in the 1990s that neoliberalization began to pay off for both the
United States and Britain. This happened in the midst of a long-drawn-out period of deflation
in Japan and relative stagnation in a newly unified Germany. Up for debate is whether the
Japanese recession occurred as a simple result of competitive pressures or whether it was
engineered by financial agents in the United States to humble the Japanese economy.
So why, then, in the face of this patchy if not dismal record, have so many been persuaded
that neoliberalization is a successful solution? Over and beyond the persistent stream of
propaganda emanating from the neoliberal think tanks and suffusing the media, two material
reasons stand out. First, neoliberalization has been accompanied by increasing volatility
within global capitalism. That success was to materialize somewhere obscured the reality that
neoliberalism was generally failing. Periodic episodes of growth interspersed with phases of
creative destruction, usually registered as severe financial crises. Argentina was opened up to
foreign capital and privatization in the 1990s and for several years was the darling of Wall
Street, only to collapse into disaster as international capital withdrew at the end of the
decade. Financial collapse and social devastation was quickly followed by a long political
crisis. Financial turmoil proliferated all over the developing world, and in some instances,
such as Brazil and Mexico, repeated waves of structural adjustment and austerity led to
economic paralysis.
On the other hand, neoliberalism has been a huge success from the standpoint of the upper
classes. It has either restored class position to ruling elites, as in the United States and
Britain, or created conditions for capitalist class formation, as in China, India, Russia, and
elsewhere. Even countries that have suffered extensively from neoliberalization have seen the
massive reordering of class structures internally. The wave of privatization that came to
Mexico with the Salinas de Gortari administration in 1992 spawned unprecedented concentrations
of wealth in the hands of a few people (Carlos Slim, tor example, who took over the state
telephone system and became an instant billionaire).
With the media dominated by upper-class interests, the myth could be propagated that certain
sectors failed because they were not competitive enough, thereby setting the stage for even
more neoliberal reforms. Increased social inequality was necessary to encourage entrepreneurial
risk and innovation, and these, in turn, conferred competitive advantage and stimulated growth.
If conditions among the lower classes deteriorated, it was because they failed for personal and
cultural reasons to enhance their own human capital through education, the acquisition of a
protestant work ethic, and submission to work discipline and flexibility. In short, problems
arose because of the lack of competitive strength or because of personal, cultural, and
political failings. In a Spencerian world, the argument went, only the fittest should and do
survive. Systemic problems were masked under a blizzard of ideological pronouncements and a
plethora of localized crises.
If the main effect of neoliberalism has been redistributive rather than generative, then
ways had to be found to transfer assets and channel wealth and income either from the mass of
the population toward the upper classes or from vulnerable to richer countries. I have
elsewhere provided an account of these processes under the rubric of accumulation by
dispossession. 15 By this, I mean the continuation and proliferation of accretion
practices that Marx had designated as "primitive" or "original" during the rise of capitalism.
These include
(1) the commodification and privatization of land and me forceful expulsion or peasant
populations {as in Mexico and India in recent times);
(2) conversion of various forms of property rights (common, collective, state, etc.) into
exclusively private property rights;
(3) suppression of rights to the commons;
(4) commodification of labor power and the suppression of alternative (indigenous) forms of
production and consumption;
(5) colonial, neocolonial, and imperial processes of appropriation of assets (including
natural resources); (6) monetization of exchange and taxation, particularly of land;
(7) the slave trade (which continues, particularly in the sex industry); and
(8) usury, the national debt, and, most devastating of all, the use of the credit system as
radical means of primitive accumulation.
The state, with its monopoly of violence and definitions of legality, plays a crucial role
in backing and promoting these processes. To this list of mechanisms, we may now add a raft of
additional techniques, such as the extraction of rents from patents and intellectual property
rights and the diminution or erasure of various forms of communal property rights -- such as
state pensions, paid vacations, access to education, and health care -- won through a
generation or more of social democratic struggles. The proposal to privatize all state pension
rights (pioneered in Chile under Augusto Pinochet s dictatorship) is, for example, one of the
cherished objectives of neoliberals in the United States.
In the cases of China and Russia, it might be reasonable to refer to recent events in
"primitive" and "original" terms, but the practices that restored class power to capitalist
elites in the United States and elsewhere are best described as an ongoing process of
accumulation by dispossession that grew rapidly under neoliberalism. In what follows, I isolate
four main elements.
1. Privatization
The corporatization, commodification, and privatization of hitherto public assets have been
signal features of the neoliberal project. Its primary aim has been to open up new fields for
capital accumulation in domains formerly regarded off-limits to the calculus of profitability.
Public utilities of all lands (water, telecommunications, transportation), social welfare
provision (public housing, education, health care, pensions), public institutions (such as
universities, research laboratories, prisons), and even warfare (as illustrated by the "army"
of private contractors operating alongside the armed forces in Iraq) have all been privatized
to some degree throughout the capitalist world.
Intellectual property rights established through the so-called TRIPS (Trade Related Aspects
of Intellectual Property Rights) agreement within the WTO defines genetic materials, seed
plasmas, and all manner of other products as private property. Rents for use can then be
extracted from populations whose practices had played a crucial role in the development of such
genetic materials. Bio-piracy is rampant, and the pillaging of the worlds stockpile of genetic
resources is well under way to the benefit of a few large pharmaceutical companies. The
escalating depletion of the global environmental commons (land, air, water) and proliferating
habitat degradations that preclude anything but capital-intensive modes of agricultural
production have likewise resulted from the wholesale commodification of nature in all its
forms. The commodification (through tourism) of cultural forms, histories, and intellectual
creativity entails wholesale dispossessions (the music industry is notorious for the
appropriation and exploitation of grassroots culture and creativity). As in the past, the power
of the state is frequently used to force such processes through even against popular will. The
rolling back of regulatory frameworks designed to protect labor and the environment from
degradation has entailed the loss of rights. The reversion of common property rights won
through years of hard class struggle (the right to a state pension, to welfare, to national
health care) into the private domain has been one of the most egregious of all policies of
dispossession pursued in the name of neoliberal orthodoxy.
All of these processes amount to the transfer of assets from the public and popular realms
to the private and class-privileged domains. Privatization, Arundhati Roy argued with respect
to the Indian case, entails "the transfer of productive public assets from the state to private
companies. Productive assets include natural resources: earth, forest, water, air. These are
the assets that the state holds in trust for the people it represents. ... To snatch these away
and sell them as stock to private companies is a process of barbaric dispossession on a scale
that has no parallel in history." 16
2. Financialization
The strong financial wave that set in after 1980 has been marked by its speculative and
predatory style. The total daily turnover of financial transactions in international markets
that stood at $2.3 billion in 1983 had risen to $130 billion by 2001. This $40 trillion annual
turnover in 2001 compares to the estimated $800 billion that would be required to support
international trade and productive investment flows. 17 Deregulation allowed the
financial system to become one of the main centers of redistributive activity through
speculation, predation, fraud, and thievery. Stock promotions; Ponzi schemes; structured asset
destruction through inflation; asset stripping through mergers and acquisitions; and the
promotion of debt incumbency that reduced whole populations, even in the advanced capitalist
countries, to debt peonage -- to say nothing of corporate fraud and dispossession of assets,
such as the raiding of pension hinds and their decimation by stock and corporate collapses
through credit and stock manipulations -- are all features of the capitalist financial
system.
The emphasis on stock values, which arose after bringing together the interests of owners
and managers of capital through the remuneration of the latter in stock options, led, as we now
know, to manipulations in the market that created immense wealth for a few at the expense of
the many. The spectacular collapse of Enron was emblematic of a general process that deprived
many of their livelihoods and pension rights. Beyond this, we also must look at the speculative
raiding carried out by hedge funds and other major instruments of finance capital that formed
the real cutting edge of accumulation by dispossession on the global stage, even as they
supposedly conferred the positive benefit to the capitalist class of spreading risks.
3. The management and manipulation of crises
Beyond the speculative and often fraudulent froth that characterizes much of neoliberal
financial manipulation, there lies a deeper process that entails the springing of the debt trap
as a primary means of accumulation by dispossession. Crisis creation, management, and
manipulation on the world stage has evolved into the fine art of deliberative redistribution of
wealth from poor countries to the rich. By suddenly raising interest rates in 1979, Paul
Volcker, then chairman of the U.S. Federal Reserve, raised the proportion of foreign earnings
that borrowing countries had to put to debt-interest payments. Forced into bankruptcy,
countries like Mexico had to agree to structural adjustment. While proclaiming its role as a
noble leader organizing bailouts to keep global capital accumulation stable and on track, the
United States could also open the way to pillage the Mexican economy through deployment of its
superior financial power under conditions of local crisis. This was what the U.S. Treasury/Wall
Street/IMF complex became expert at doing everywhere. Volker s successor, Alan Greenspan,
resorted to similar tactics several times in the 1990s. Debt crises in individual countries,
uncommon in the 1960s, became frequent during the 1980s and 1990s. Hardly any developing
country remained untouched and in some cases, as in Latin America, such crises were frequent
enough to be considered endemic. These
debt crises were orchestrated, managed, and controlled both to rationalize the system and to
redistribute assets during the 1980s and 1990s. Wade and Veneroso captured the essence of this
trend when they wrote of the Asian crisis -- provoked initially by the operation of U.S.-based
hedge funds -- of 1997 and 1998:
Financial crises have always caused transfers of ownership and power to those who keep
their own assets intact and who are in a position to create credit, and the Asian crisis is
no exception . . . there is no doubt that Western and Japanese corporations are the big
winners. . . . The combination of massive devaluations pushed financial liberalization, and
IMF-facilitated recovery may even precipitate the biggest peacetime transfer of assets from
domestic to foreign owners in the past fifty years anywhere in the world, dwarfing the
transfers from domestic to U.S. owners in Latin America in the 1980s or in Mexico after 1994.
One recalls the statement attributed to Andrew Mellon: "In a depression assets return to
their rightful owners." 18
The analogy to the deliberate creation of unemployment to produce a pool of low-wage surplus
labor convenient for further accumulation is precise. Valuable assets are thrown out of use and
lose their value. They lie fallow and dormant until capitalists possessed of liquidity choose
to seize upon them and breathe new life into them. The danger, however, is that crises can spin
out of control and become generalized, or that revolts will arise against the system that
creates them. One of the prime functions of state interventions and of international
institutions is to orchestrate crises and devaluations in ways that permit accumulation by
dispossession to occur without sparking a general collapse or popular revolt. The structural
adjustment program administered by the Wall Street/Treasury/ IMF complex takes care of the
first function. It is the job of the comprador neoliberal state apparatus (backed by military
assistance from the imperial powers) to ensure that insurrections do not occur in whichever
country has been raided. Yet signs of popular revolt have emerged, first with the Zapatista
uprising in Mexico in 1994 and later in the generalized discontent that informed
anti-globalization movements such as the one that culminated in Seattle in 1999.
4. State redistributions
The state, once transformed into a neoliberal set of institutions, becomes a prime agent of
redistributive policies, reversing the flow from upper to lower classes that had been
implemented during the preceding social democratic era. It does this in the first instance
through privatization schemes and cutbacks in government expenditures meant to support the
social wage. Even when privatization appears as beneficial to the lower classes, the long-term
effects can be negative. At first blush, for example, Thatchers program for the privatization
of social housing in Britain appeared as a gift to the lower classes whose members could now
convert from rental to ownership at a relatively low cost, gain control over a valuable asset,
and augment their wealth. But once the transfer was accomplished, housing speculation took over
particularly in prime central locations, eventually bribing or forcing low-income populations
out to the periphery in cities like London and turning erstwhile working-class housing estates
into centers of intense gentrification. The loss of affordable housing in central areas
produced homelessness for many and extraordinarily long commutes for those who did have
low-paying service jobs. The privatization of the ejidos (indigenous common property rights in
land under the Mexican constitution) in Mexico, which became a central component of the
neoliberal program set up during the 1990s, has had analogous effects on the Mexican peasantry,
forcing many rural dwellers into the cities in search of employment. The Chinese state has
taken a whole series of draconian measures through which assets have been conferred upon a
small elite to the detriment of the masses.
The neoliberal state also seeks redistributions through a variety of other means such as
revisions in the tax code to benefit returns on investment rather than incomes and wages,
promotion of regressive elements in the tax code (such as sales taxes), displacement of state
expenditures and free access to all by user fees (e.g., on higher education), and the provision
of a vast array of subsidies and tax breaks to corporations. The welfare programs that now
exist in the United States at federal, state, and local levels amount to a vast redirection of
public moneys for corporate benefit (directly as in the case of subsidies to agribusiness and
indirectly as in the case of the military-industrial sector), in much the same way that the
mortgage interest rate tax deduction operates in the United States as a massive subsidy to
upper-income home owners and the construction of industry. Heightened surveillance and policing
and, in the case of the United States, the incarceration of recalcitrant elements in the
population indicate a more sinister role of intense social control. In developing countries,
where opposition to neoliberalism and accumulation by dispossession can be stronger, the role
of the neoliberal state quickly assumes that of active repression even to the point of low
level warfare against oppositional movements (many of which can now conveniently be designated
as terrorist to garner U.S. military assistance and support) such as the Zapatistas in Mexico
or landless peasants in Brazil.
In effect, reported Roy, "India's rural economy, which supports seven hundred million
people, is being garroted. Farmers who produce too much are in distress, farmers who produce
too little are in distress, and landless agricultural laborers are out of work as big estates
and farms lay off their workers. They're all flocking to the cities in search of employment."
19 In China, the estimate is that at least half a billion people will have to be
absorbed by urbanization over the next ten years if rural mayhem and revolt is to be avoided.
What those migrants will do in the cities remains unclear, though the vast physical
infrastructural plans now in the works will go some way to absorbing the labor surpluses
released by primitive accumulation.
The redistributive tactics of neoliberalism are wide-ranging, sophisticated, frequently
masked by ideological gambits, but devastating for the dignity and social well-being of
vulnerable populations and territories. The wave of creative destruction neoliberalization has
visited across the globe is unparalleled in the history of capitalism. Understandably, it has
spawned resistance and a search for viable alternatives.
"... The Trump Plan is actually the product of the former Goldman-Sachs investment bankers who have been in charge of Trump's economic policy since he came into office. Steve Mnuchin, the Treasury Secretary, and Gary Cohn, director of Trump's economic council, are the two authors of the Trump tax cuts. They put it together. They are also both former top executives of the global shadow bank called Goldman Sachs. ..."
"... Given that economic policy under Trump is being driven by bankers, it's not surprising that the CEO of the biggest US banks, Morgan Stanley, admitted just a few months ago that a reduction of the corporate nominal income tax rate from the current 35% nominal rate to a new nominal rate of 20% will provide the bank an immediate windfall gain of 15%-20% in earnings. ..."
"... Big multinational companies like Apple, i.e. virtually all the big tech companies, big Pharma corporations, banks and oil companies, pay no more than 12-13% effective tax rates today -- not the 35% nominal rate. ..."
"... Tech, big Pharma, banks and oil companies are the big violators of offshore cash hoarding/tax avoidance schemes. Microsoft's effective global tax rate last year was only 12%. IBM's even less, at 10%. The giant drug company, Pfizer paid 18% and the oil company, Chevron 14%. One of the largest US companies in the world, General Electric, paid only 1%. When their nominal rate is reduced to 20% under the Trump plan, they'll pay even less, likely in the single digits, if that. ..."
"... Tax cutting for business classes and the 1% has always been a fundamental element of Neoliberal economic policy ever since the Reagan years (and actually late Jimmy Carter period). Major tax cut legislation occurred in 1981, 1986, and 1997-98 under Clinton. George W. Bush then cut taxes by $3.4 trillion in 2001-04, 80% of which went to the wealthiest households and businesses. He cut taxes another $180 billion in 2008. Obama cut another $300 billion in his 2009 so-called recovery program. When that faltered, it was another $800 billion at year end 2010. He then extended the Bush tax cuts that were scheduled to expire in 2011 two more years. That costs $450 billion each year. And in 2013, cutting a deal with Republicans called the 'fiscal cliff' settlement, he extended the Bush tax cuts of the prior decade for another ten years. That cost a further $5 trillion. Now Trump wants even more. He promised $5 trillion in tax cuts during his election campaign. So the current proposal is only half of what he has in mind perhaps. ..."
"... Neoliberal tax cutting in the US has also been characterized by the 'tax cut shell game'. The shell game is played several ways. ..."
"... To cover the shell game, an overlay of ideology covers up what's going on. There's the false argument that 'tax cuts create jobs', for which there's no empirical evidence. There's the claim US multinational corporations pay a double tax compared to their competitors, when in fact they effectively pay less. There's the lie that if corporate taxes are cut they will automatically invest the savings, when in fact what they do is invest offshore, divert the savings to stock and bond and other financial markets, boost their dividend and stock buybacks, or stuff the savings in their offshore subsidiaries to avoid paying taxes. ..."
"... All these neoliberal false claims, arguments, and outright lies continue today to justify the Trump-Goldman Sachs tax plan -- which is just the latest iteration of neoliberal tax policy and tax offensive in the US. The consequences of the Trump plan, if it is passed, will be the same as the previous tax giveaways to the 1% and their companies: it will redistribute income massively from the middle and working classes to the rich. Income inequality will continue to worsen dramatically. ..."
"... Nothing will change so long as the Corporate Party of America is allowed to continue its neoliberal tax giveaways, its tax cutting 'shell games', and is allowed to continue to foment its ideological cover up. ..."
Contradicting Trump, the independent Tax Policy Center has estimated in just the first year half
of the $2 trillion plus Trump cuts will go to the wealthiest 1% households that annually earn more
than $730,000. That's an immediate income windfall to the wealthiest 1% households of 8.5%, according
to the Tax Policy Center. But that's only in the first of ten years the cuts will be in effect. It
gets worse over time.
According to the Tax Policy Center, "Taxpayers in the top one percent (incomes above $730,000),
would receive about 50 percent of the total tax benefit [in 2018]". However, "By 2027, the top one
percent would get 80 percent of the plan's tax cuts while the share for middle-income households
would drop to about five percent." By the last year of the cuts, 2027, on average the wealthiest
1% household would realize $207,000, and the even wealthier 0.1% would realize an income gain of
$1,022,000.
When confronted with these facts on national TV this past Sunday, Trump's Treasury Secretary,
Steve Mnuchin, quickly backtracked and admitted he could not guarantee every middle class family
would see a tax cut. Right. That's because 15-17 million (12%) of US taxpaying households in the
US will face a tax hike in the first year of the cuts. In the tenth and last year, "one in four middle
class families would end up with higher taxes".
The US Economic 'Troika'
The Trump Plan is actually the product of the former Goldman-Sachs investment bankers who
have been in charge of Trump's economic policy since he came into office. Steve Mnuchin, the Treasury
Secretary, and Gary Cohn, director of Trump's economic council, are the two authors of the Trump
tax cuts. They put it together. They are also both former top executives of the global shadow bank
called Goldman Sachs. Together with the other key office determining US economic policy, the
US central bank, held by yet another ex-Goldman Sachs senior exec, Bill Dudley, president of the
New York Federal Reserve bank, the Goldman-Sachs trio of Mnuchin-Cohn-Dudley constitute what might
be called the 'US Troika' for domestic economic policy.
The Trump tax proposal is therefore really a big bankers tax plan -- authored by bankers, in the
interest of bankers and financial investors (like Trump himself), and overwhelmingly favoring the
wealthiest 1%.
Given that economic policy under Trump is being driven by bankers, it's not surprising that
the CEO of the biggest US banks, Morgan Stanley, admitted just a few months ago that a reduction
of the corporate nominal income tax rate from the current 35% nominal rate to a new nominal rate
of 20% will provide the bank an immediate windfall gain of 15%-20% in earnings. And that's just
the nominal corporate rate cut proposed by Trump. With loopholes, it's no doubt more.
The Trump-Troika's Triple Tax-Cut Trifecta for the 1%
The Trump Troika has indicated it hopes to package up and deliver the trillions of $ to their
1% friends by Christmas 2017. Their gift will consist of three major tax cuts for the rich and their
businesses. A Trump-Troika Tax Cut 'Trifecta' of $ trillions.
1.The Corporate Tax Cuts
The first of the three main elements is a big cut in the corporate income tax nominal rate, from
current 35% to 20%. In addition, there's the elimination of what is called the 'territorial tax'
system, which is just a fancy phrase for ending the fiction of the foreign profits tax. Currently,
US multinational corporations hoard a minimum of $2.6 trillion of profits offshore and refuse to
pay US taxes on those profits. In other words, Congress and presidents for decades have refused to
enforce the foreign profits tax. Now that fiction will be ended by officially eliminating taxes on
their profits. They'll only pay taxes on US profits, which will create an even greater incentive
for them to shift operations and profits to their offshore subsidiaries. But there's more for the
big corporations.
The Trump plan also simultaneously proposes what it calls a 'repatriation tax cut'. If the big
tech, pharma, banks, and energy companies bring back some of their reported $2.6 trillion (an official
number which is actually more than that), Congress will require they pay only a 10% tax rate -- not
the current 35% rate or even Trump's proposed 20%�on that repatriated profits. No doubt the repatriation
will be tied to some kind of agreement to invest the money in the US economy. That's how they'll
sell it to the American public. But that shell game was played before, in 2004-05, under George W.
Bush. The same 'repatriation' deal was then legislated, to return the $700 billion then stuffed away
in corporate offshore subsidiaries. About half the $700 billion was brought back, but US corporations
did not invest it in jobs in the US as they were supposed to. They used the repatriated profits to
buy up their competitors (mergers and acquisitions), to pay out dividends to stockholders, and to
buy back their stock to drive equity prices and the stock market to new heights in 2005-07. The current
Trump 'territorial tax repeal/repatriation' boondoggle will turn out just the same as it did in 2005.
2. Non-Incorporate Business Tax Cuts
The second big business class tax windfall in the Trump-Goldman Sachs tax giveaway for the rich
is the proposal to reduce the top nominal tax rate for non-corporate businesses, like proprietorships
and partnerships, whose business income (aka profits) is treated like personal income. This is called
the 'pass through business income' provision.
That's a Trump tax cut for unincorporated businesses -- like doctors, law firms, real estate investment
partnerships, etc. 40% of non-corporate income is currently taxed at 39.6% (the top personal income
tax rate). Trump proposes to reduce that nominal rate to 25%. So non-incorporate businesses too will
get an immediately 14.6% cut, nearly matching the 15% rate cut for corporate businesses.
In the case of both corporate and non-corporate companies we're talking about 'nominal' tax rate
cuts of 14.6% and 15%. The 'effective' tax rate is what they actually pay in taxes -- i.e. after
loopholes, after their high paid tax lawyers take a whack at their tax bill, after they cleverly
divert their income to their offshore subsidiaries and refuse to pay the foreign profits tax, and
after they stuff away whatever they can in offshore tax havens in the Cayman Islands, Switzerland,
and a dozen other island nations worldwide.
For example, Apple Corporation alone is hoarding $260 billion in cash at present -- 95% of which
it keeps offshore to avoid paying Uncle Sam taxes. Big multinational companies like Apple, i.e.
virtually all the big tech companies, big Pharma corporations, banks and oil companies, pay no more
than 12-13% effective tax rates today -- not the 35% nominal rate.
Tech, big Pharma, banks and oil companies are the big violators of offshore cash hoarding/tax
avoidance schemes. Microsoft's effective global tax rate last year was only 12%. IBM's even less,
at 10%. The giant drug company, Pfizer paid 18% and the oil company, Chevron 14%. One of the largest
US companies in the world, General Electric, paid only 1%. When their nominal rate is reduced to
20% under the Trump plan, they'll pay even less, likely in the single digits, if that.
Corporations and non-corporate businesses are the institutional conduit for passing income to
their capitalist owners and managers. The Trump corporate and business taxes means companies immediately
get to keep at least 15% more of their income for themselves -- and more in 'effective' rate terms.
That means they get to distribute to their executives and big stockholders and partners even more
than they have in recent years. And in recent years that has been no small sum. For example, just
corporate dividend payouts and stock buybacks have totaled more than $1 trillion on average for six
years since 2010! A total of more than $6 trillion.
But all that's only the business tax cut side of the Trump plan. There's a third major tax cut
component of the Trump plan -- i.e. major cuts in the Personal Income Tax that accrue overwhelmingly
to the richest 1% households.
3. Personal Income Tax Cuts for the 1%
There are multiple measures in the Trump-Troika proposal that benefits the 1% in the form of personal
income tax reductions. Corporations and businesses get to keep more income from the business tax
cuts, to pass on to their shareholders, investors, and senior managers. The latter then get to keep
more of what's passed through and distributed to them as a result of the personal income tax cuts.
The first personal tax cut boondoggle for the 1% wealthiest households is the Trump proposal to
reduce the 'tax income brackets' from seven to three. The new brackets would be 35%, 25%, and 12%.
Whenever brackets are reduced, the wealthiest always benefit. The current top bracket, affecting
households with a minimum of $418,000 annual income, would be reduced from the current 39.6% to 35%.
In the next bracket, those with incomes of 191,000 to 418,000 would see their tax rate (nominal again)
cut from 28% to 25%. However, the 25% third bracket would apply to annual incomes as low as $38,000.
That's the middle and working class. So households with $38,000 annual incomes would pay the same
rate as those with more than $400,000. Tax cuts for the middle class, did Trump say? Only tax rate
reductions beginning with those with $191,000 incomes and the real cuts for those over $418,000!
But the cuts in the nominal tax rate for the top 1% to 5% households are only part of the personal
income tax windfall for the rich under the Trump plan. The really big tax cuts for the 1% come in
the form of the repeal of the Inheritance Tax and the Alternative Minimum Tax, as well as Trump's
allowing the 'carried interest' tax loophole for financial speculators like hedge fund managers and
private equity CEOs to continue.
The current Inheritance Tax applies only to those with estates of $11 million or more, about 0.2
of all the taxpaying households. So its repeal is clearly a windfall for the super rich. The Alternative
Minimum Tax is designed to ensure the super rich pay something, after they manipulate the tax loopholes,
shelter their income offshore in tax havens, or simply engage in tax fraud by various other means.
Now that's gone as well under the Trump plan. 'Carried interest', a loophole, allows big finance
speculators, like hedge fund managers, to avoid paying the corporate tax rate altogether, and pay
a maximum of 20% on their hundreds of millions and sometimes billions of dollars of income every
year.
Who Pays?
As previously noted, folks with $91,000 a year annual income get no tax rate cuts. They still
will pay the 25%. And since that is what's called 'earned' (wage and salary) income, they don't get
the loopholes to manipulate, like those with 'capital incomes' (dividends, capital gains, rents,
interest, etc.). What they get is called deductions. But under the Trump plan, the deductions for
state and local taxes, for state sales taxes, and apparently for excess medical costs will all disappear.
The cost of that to middle and working class households is estimated at $1 trillion over the decade.
Trump claims the standard deduction will be doubled, and that will benefit the middle class. But
estimates reveal that a middle class family with two kids will see their standard deduction reduced
from $28,900 to $24,000. But I guess that's just 'Trump math'.
The general US taxpayer will also pay for the trillions of dollars that will be redistributed
to the 1% and their companies. It's estimated the federal government deficit will increase by $2.4
trillion over the decade as a result of the Trump plan. Republicans in Congress have railed over
the deficits and federal debt, now at $20 trillion, for years. But they are conspicuously quiet now
about adding $2.4 trillion more -- so long as it the result of tax giveaways to themselves, their
1% friends, and their rich corporate election campaign contributors.
And both wings of the Corporate Party of America -- aka Republicans and Democrats -- never mention
the economic fact that since 2001, 60% of US federal government deficits, and therefore the US debt
of $20 trillion, are attributable to tax cuts by George W. Bush and Barack Obama: more than $3.5
trillion under Bush and more than $7 trillion under Obama. (The remaining $10 trillion of the US
debt due to war and defense spending, price gouging by the medical industry and big pharma driving
up government costs for Medicare, Medicaid, and other government insurance, bailouts of the big banks
in 2008-09, and interest payments on the debt).
The 35-Year Neoliberal Tax Offensive
Tax cutting for business classes and the 1% has always been a fundamental element of Neoliberal
economic policy ever since the Reagan years (and actually late Jimmy Carter period). Major tax cut
legislation occurred in 1981, 1986, and 1997-98 under Clinton. George W. Bush then cut taxes by $3.4
trillion in 2001-04, 80% of which went to the wealthiest households and businesses. He cut taxes
another $180 billion in 2008. Obama cut another $300 billion in his 2009 so-called recovery program.
When that faltered, it was another $800 billion at year end 2010. He then extended the Bush tax cuts
that were scheduled to expire in 2011 two more years. That costs $450 billion each year. And in 2013,
cutting a deal with Republicans called the 'fiscal cliff' settlement, he extended the Bush tax cuts
of the prior decade for another ten years. That cost a further $5 trillion. Now Trump wants even
more. He promised $5 trillion in tax cuts during his election campaign. So the current proposal is
only half of what he has in mind perhaps.
Neoliberal tax cutting in the US has also been characterized by the 'tax cut shell game'.
The shell game is played several ways.
In the course of major tax cut legislation, the elites and their lobbyists alternate their focus
on cutting rates and on correcting tax loopholes. They raise rates but expand loopholes. When the
public becomes aware of the outrageous loopholes, they then eliminate some loopholes but simultaneously
reduce the tax rates on the rich. When the public complains of too low tax rates for the rich, they
raise the rates but quietly expand the loopholes. They play this shell game so the outcome is always
a net gain for corporations and the rich.
Since Reagan and the advent of neoliberal tax policy, the corporate income tax share of total
US government revenues has fallen from more than 20% to single digits well below 10%. Conversely,
the payroll tax has doubled from 22% to more than 40%. A similar shift within the personal income
tax, steadily around 40% of government revenues, has also occurred. The wealthy pay less a share
of the total and the middle class pays more. Along the way, token concessions to the very low end
of working poor are introduced, to give the appearance of fairness. But the middle class, the $38
to $91,000 nearly 100 million taxpaying households foot the bill for both the 1% and the bottom.
This pattern was set in motion under Reagan. His proposed $752 billion in tax cuts in 1981-82 were
adjusted in 1986, but the net outcome was more for the rich and their corporations. That pattern
has continued under Clinton, Bush, Obama and now proposed under Trump.
To cover the shell game, an overlay of ideology covers up what's going on. There's the false
argument that 'tax cuts create jobs', for which there's no empirical evidence. There's the claim
US multinational corporations pay a double tax compared to their competitors, when in fact they effectively
pay less. There's the lie that if corporate taxes are cut they will automatically invest the savings,
when in fact what they do is invest offshore, divert the savings to stock and bond and other financial
markets, boost their dividend and stock buybacks, or stuff the savings in their offshore subsidiaries
to avoid paying taxes.
All these neoliberal false claims, arguments, and outright lies continue today to justify
the Trump-Goldman Sachs tax plan -- which is just the latest iteration of neoliberal tax policy and
tax offensive in the US. The consequences of the Trump plan, if it is passed, will be the same as
the previous tax giveaways to the 1% and their companies: it will redistribute income massively from
the middle and working classes to the rich. Income inequality will continue to worsen dramatically.
US multinational corporations will begin again to divert profits, and investment, offshore;
profits brought back untaxed will result in mergers and acquisitions, dividend payouts, and financial
markets investment. No real jobs will be created in the US. The wealthy will continue to pump their
savings into financial asset markets, causing further bubbles in stocks, exchange traded funds, bonds,
derivatives and the like. The US economy will continue to slow and become more unstable financially.
And there will be another financial crash and great recession -- or worse. Only this time, the vast
majority of US households -- i.e. the middle and working classes -- will be even worse off and more
unable to weather the next economic storm.
Nothing will change so long as the Corporate Party of America is allowed to continue its neoliberal
tax giveaways, its tax cutting 'shell games', and is allowed to continue to foment its ideological
cover up. More articles by:
Jack Rasmus
Amazon, Facebook and Google: The new robber barons?
Amazon CEO Jeff Bezos in 2010. Credit:
/CreativeCommons/SteveJurvetson
Earlier this month Amazon,
announced its
plans to establish a second headquarters in North America. Rather than simply reveal which city would
become its second home, the Seattle-based tech company opted instead to open a bidding war. In an
eight page
document published on its website, Amazon outlined the criteria for prospective suitors, and
invited economic developers to submit proposals advocating for why their city or region should be
the host of the new location.
Its potential arrival comes with the claim that the company will invest more than $5 billion in
construction and generate up to 50,000 "high paying jobs." Mayors and governors, hard at work crafting
their bids, are no doubt salivating at the mere thought of such economic activity. Journalists and
editorial teams in eligible metropolises are also playing their parts, as newspapers have
published a series of articles and editorials
making the case for why
their city should be declared the winner.
Last Tuesday Bloomberg
reported that Boston was the early frontrunner, sending a wave of panic across the continent.
Much to the relief of the other contenders, Amazon quickly discredited the report as misinformation,
announcing in a series of
tweets on
Wednesday that it is "energized by the response from cities across [North America]" and that, contrary
to the rumors, there are currently no front-runners on their "equal playing field."
That Amazon is "energized" should come as no surprise. Most companies would also be energized
by the taxpayer-funded windfall that is likely coming its way. Reporters speculate that the winner
of the sweepstakes!in no small part to the bidding war format!could be forced to cough up hundreds
of millions of dollars in state and local subsidies for the privilege of hosting Amazon's expansion.
Amazon has long been the beneficiary of such subsidies, emerging in recent years as a
formidable opponent
to Walmart as the top recipient of corporate welfare. According to Good Jobs First, a Washington,
D.C. organization dedicated to corporate and government accountability, Amazon has received
more than $1 billion in
local and state subsidies since 2000. With a business plan dedicated to amassing long-term market
share in lieu of short-term profits, Amazon, under the leadership of its founder and chief executive,
Jeff Bezos, operates on razor-thin profit margins in most industries, while actually operating at
a loss in others. As such, these state and local subsidies have played an instrumental role in Amazon's
growth
Advocates of free market enterprise should be irate over the company's crony capitalist practices
and the cities and states that enable it. But more so than simply ruffling the feathers of the libertarian-minded,
Amazon's shameless solicitation for subsidies capped off a series of summer skirmishes in the Democratic
left's emerging war against monopolies.
Earlier this summer when Amazon announced its $13.7 billion purchase of Whole Foods, antitrust
advocates
called upon the Department of Justice and the Federal Trade Commission's Antitrust Division to
block the sale and
update the United States government's legal definition of monopoly. Although the acquisition!which
was
approved in August!only gives Amazon a 1.5 percent market share in the grocery industry, it more
importantly provides the tech giant with access to more than 450 brick-and-mortar Whole Foods locations.
Critics say that these physical locations will
prove invaluable to its long term plan of economic dominance, and that it is but the latest advance
in the company's unprecedented control of the economy's
underlying infrastructure.
Google also found itself in the crosshairs of the left's anti-monopoly faction when, in late June,
the European Union imposed a $2.7 billion
fine against the tech company for anti-competitive search engine manipulation in violation of
its antitrust laws. The Open Markets Program of the New America Foundation subsequently published
a press release applauding the EU's decision. Two months later, the Open Markets Program was
axed . The former program director Barry Lynn
claims that his employers caved to pressure from a corporation that has donated more than $21
million to the New America Foundation. The fallout emboldened
journalists to share their experiences of being silenced by the tech giant, and underscores the
influence Google exerts over
think tanks and
academics
Most recently, Facebook faced criticism after it was
discovered that a Russian company with ties to the Kremlin purchased $100,000 in ads from the
social media company in an effort to influence the 2016 presidential election. Facebook, as a result,
has become the latest subject of interest in Robert Mueller's special investigation into Russian
interference in last fall's election. But regardless of whether the ads influenced the outcome, the
report elicited demands for transparency and oversight in a digital ad marketplace that Facebook,
along with Google,
dominates . By using highly sophisticated algorithms, Facebook and Google receive more than
60 percent of all digital ad revenue, threatening the financial solvency of publishers and creating
a host of economic incentives that
pollute editorial autonomy.
While the Democratic left!in an effort to rejuvenate its
populist soul !has been at the front lines in the war against these
modern-day robber barons, Stacy Mitchell, co-director of the Institute of Local Self-Reliance,
suggests that opposition to corporate consolidation need not be a partisan issue. In a piece published
in The Atlantic , Mitchell traces the bipartisan history of anti-monopoly sentiment in American
politics. She
writes :
If "monopoly" sounds like a word from another era, that's because, until recently, it was.
Throughout the middle of the 20th century, the term was frequently used in newspaper headlines,
campaign speeches, and State of the Union addresses delivered by Republican and Democratic presidents
alike. Breaking up too-powerful companies was a bipartisan goal and on the minds of many voters.
But, starting in the 1970s, the word retreated from the public consciousness. Not coincidentally,
at the same time, the enforcement of anti-monopoly policy grew increasingly toothless.
Although the modern Republican Party stands accused of cozying up with corporate interests, the
history of conservative thought has a rich intellectual tradition of being skeptical!if not hostile!towards
economic consolidation. For conservatives and libertarians wedded to the tenets of free market orthodoxy!or
for Democrats
dependent on campaign contributions from a donor class of Silicon Valley tycoons!redefining the
legal definition of monopoly and rekindling a bipartisan interest in antitrust enforcement are likely
non-starters.
But for conservatives willing to break from the principles of free market fundamentalism, the
papal
encyclicals of the Roman Catholic Church, the
distributist thought of Hilaire Belloc and G.K. Chesterton, the
social
criticism of Christopher Lasch, and the
observations of agrarian
essayist Wendell Berry provide an intellectual framework from which conservatives can critique and
combat concentrated economic power. With a respect for robust and resilient localities and a keen
understanding of the moral dangers posed by an economy perpetuated by consumerism and convenience,
these writers appeal to the moral imaginations of the reader, issuing warnings about the detrimental
effects that economic consolidation has on the person, the family, the community, and society at
large.
The events of this summer underscore the immense political power wielded by our economy's corporate
giants. To those who recognize the dangers posed by our age of consolidation, the skirmishes from
this summer could serve as a rallying cry in a bipartisan war for independence from our corporate
crown.
Daniel Kishi is an editorial assistant at The American Conservative . Follow him on
Twitter at @DanielMKishi
The Amazon-Walmart Showdown That
Explains the Modern
Economy
https://nyti.ms/2sxhIkx
via @UpshotNYT
NYT - Neil Irwin - June 16
With Amazon buying the high-end grocery chain Whole Foods,
something retail analysts have known for years is now
apparent to everyone: The online retailer is on a collision
course with Walmart to try to be the predominant seller of
pretty much everything you buy.
Each one is trying to become more like the other - Walmart
by investing heavily in its technology, Amazon by opening
physical bookstores and now buying physical supermarkets. But
this is more than a battle between two business titans. Their
rivalry sheds light on the shifting economics of nearly every
major industry, replete with winner-take-all effects and huge
advantages that accrue to the biggest and best-run
organizations, to the detriment of upstarts and second-fiddle
players.
That in turn has been a boon for consumers but also has
more worrying implications for jobs, wages and inequality.
To understand this epic shift, you can look not just to
the grocery business, but also to my closet, and to another
retail acquisition announced Friday morning. ...
Amazon's business model is to become the dominant
intermediary between producers and consumers.
Whole Foods
positions it to ideally serve this role in every local market
in America...one stop shopping, whether you're buying from
China or from the local Chinatown.
When a company like Amazon is capturing market share,
profits don't matter, as its stock price shows.
And Bezos ownerships of the Washington Post gives him a
powerful bully pulpit against anyone with thoughts about
anti-trust...that and his deep pockets.
I wouldn't call it confidence. Any line or mode of business
can be grown only to a certain size. At some point S-curve
effects and scale complexity lead to diminishing returns,
even if the business is managed as well as it can be. Also in
some cases there may simply not be enough demand for the one
or few things the company does.
Then companies have to
branch out into other ways of business, typically outside
their current activities. Sometimes there is synergy,
sometimes not, and it's just about buying market and revenue
with the imagination one can manage it better to a higher
rate of profit.
An enlightening discussion on the tendency toward monopoly among data gathering disrupters.
Especially important seems to be the possibility of fine-grained price discrimination. While saying
not all price discrimination is considered negative by economists without studying it, it does
seem discrimination should be taken as prima facie evidence of monopoly.
While the article talks about monopoly and capture in this area, let me reiterate that looking
around the more regular corporate ecosystem there is increasing concentration among buyers and
often among suppliers that seems not to attract anti-trust attention as long as the final consumer
seems to be not harmed. "Not harmed" does not include missing out on falling prices no longer
competed for.
Valletti, who is also a Professor of Economics at the Imperial College Business School and the University of Rome Tor Vergata,
discussed the EC's investigation into the Facebook-WhatsApp merger during the panel. Facebook, he said, had "lied" to European regulators
about its ability to absorb WhatsApp's user data, but the larger issue was market definition.
"Would the decision on the merger have changed had the Commission known that information at the time?" asked Valletti, who joined
theEC in 2016. "At the time, the Commission defined the relevant market as non-search advertising. This is a huge market. In that
ocean, even Facebook doesn't have a lot of market power. If instead the market definition had been, for instance, advertising on
social networks, [it's]likely theywould have concluded that Facebook would have been dominant in that particular market, and that
integrating that useful information from [WhatsApp] could have enhanced its market power." Valletti also stressedthe importance of
having individual-level data when discussing issues like competition at the advertising market, and not just looking at market shares.
Pasquale and Taplin, meanwhile, criticized U.S. antitrust authorities, with Taplin saying that digital platforms have "done very
well because they have a certain regulatory capture" and Pasquale remarkingthat "U.S. antitrust policy is rapidly becoming a pro-trust
policy."
As an example of this "pro-trust" policy, Pasquale cited the FTC's lawsuit against online
contact lens retailer 1-800 Contacts
. 1-800 Contacts was sued by the FTC last yearfor having reached agreements with 14 other online contact lens sellers that they
would not advertise to customers who had searched for 1-800 Contacts online."You would imagine that given the power of these [companies],
and given the activity in Europe and many other nations, our enforcers would be extremely concerned about these platforms. They are-they're
concerned about little companies hurting the platforms," he said.
The FTC, added Pasquale, had pursued the 1-800 Contacts case aggressively. "I'm not here to comment on the merits of this case,
but I think that the choice of this enforcement target speaks volumes. What does it say? It says that if small firms arebeing exploited
or hurt by a big digital behemoth, or think [they]are, don't try in any way to coordinate or maintain your independence. What you
should do is all combine and merge and become a giant, say, contacts firm. In the media, they should all combine and merge and maybe
all be bought by Comcast, so that then they can negotiate with Google in a way that they are relatively of the same size and power.
That's the pro-trust message we're getting under current non-enforcement U.S. antitrust policy."
You mean if Borders had become Barnes
& Noble? Well, B&N is struggling, too.
Just like Walmart, Amazon's business model ELIMINATES the competition.
In my view, every Amazon purchase is a rock thrown through the window of
a local retailer, large or small. Personally, if I ever throw rocks, they're
going to be aimed bigger and better targets than that.
B&N closed their Georgetown (DC)
store a couple of years ago, IIRC
right before the xmas season got
started. It was an oasis on a side
of town that would rather sell you a
$500 pair of pants dotted with
embroidered lobsters. The building
was a nicely reclaimed three-floor
warehouse space with coffee and
lounging areas, and it had become a
nice excuse to go into DC and hang
out.
I'm not sure this is entirely true. Just
as an example, a trade paperback I bought in
1998 for a cover price of $12.95 (Anne
Carson's
Eros the bittersweet
) now
has a cover price of $13.95, only a dollar
more. The BLS's CPI calculator says the book
should cost $19.54 in today's dollars.
That doesn't strike me as unaffordable.
It's possible that if I went out and bought
a copy of the book now, the printing might
be worse, or the paper of a lower quality,
but I cannot imagine it being much worse
than the copy I already own.
"Our Efforts to Deal With Tech Firms' Market Dominance in the U.S.
Have Been an Abject Failure"
: ...Q: The five largest internet and
tech companies-Apple, Google, Amazon, Facebook, and Microsoft-have
outstanding market share in their markets. Are current antitrust
policies and theories able to deal with the potential problems that
arise from the dominant positions of these companies and the vast data
they collect on users?
Our efforts to deal with the problems in the United States have been
an abject failure. ...I might note that Facebook's dominant position
in the market is due in part to its role as an innovator and partly to
"network externalities"... Microsoft's dominant position is also
attributable in part to network externalities...
But the antitrust agencies have not taken sufficient measures to
remedy abuses of this advantage.
Q: Is there a connection between the growing inequality in the U.S.
and concentration, dominant firms, and winner-take-all markets?
I believe there is. The evidence of rising wealth inequality,
especially through the work of Piketty and co-authors, is compelling.
Less well known is evidence compiled at M.I.T. of strongly rising
inequality of compensation, especially at the top executive levels.
The nexus has not to my knowledge been fully articulated.
Here's my hypothesis: In recent decades, most publicly-traded
corporations, at least in the United States, have embraced executive
compensation consultants to advise the board of directors on executive
compensation levels. Those consultants provide data on compensation
averages and distributions for companies in peer industries. But then
the Lake Wobegon effect goes to work. The boards say, "Surely, our guy
isn't below average," to the average reported by the compensation
consultants becomes the minimum standard for compensation. If each top
executive receives at least the minimum reported pay and often more,
the average rises steadily.
Indeed, and here I tread on weaker ground, those compensation costs
are built into the costs considered by companies in their product
pricing decisions (in a kind of rent-seeking model), and so price
levels rise to accommodate rising compensation. I might note that this
dynamic applies not only for chief executives, but trickles down to
embrace most of companies' management personnel. ...
As I said a couple days ago, "Good to see economists finally
addressing issues that John Kenneth Galbraith raised 50 years
ago...but were largely ignored since then by 'librul'
economists who didn't want to cross the folks who had funded
their academic chairs."
For the past 40 years, corporate
strategic planning has been all about market dominance. Back
in the late 1970s Harvard Business School professor Michael
Porter was all the rage along with the Boston Consulting
Group, Mitt Romney's Bain Capital, and GE's Jack Welch. the
mantra was that if you couldn't dominate a market, best get
out. Weaker players were tolerated mostly to allay anti-trust
intrusion.
Meanwhile, Republicans tacitly supported it, Democrats
turned a blind eye, and 'librul' economists were off doing
whatever they do.
Evidence in support of Sherer's hypothesis can be found in
Tom DiPrete et al's 2010 article in AJS: Compensation
Benchmarking, Leapfrogs, and the Surge in Executive Pay. They
write: "Scholars frequently argue whether the sharp rise in
chief executive officer (CEO) pay in recent years is
"efficient" or is a consequence of "rent extraction" because
of the failure of corporate governance in individual firms.
This article argues that governance failure must be
conceptualized at the market rather than the firm level
because excessive pay increases for even relatively few CEOs
a year spread to other firms through the cognitively and
rhetorically constructed compensation networks of "peer
groups," which are used in the benchmarking process to
negotiate the compensation of CEOs. Counterfactual simulation
based on Standard and Poor's ExecuComp data demonstrates that
the effects of CEO "leapfrogging" potentially explain a
considerable fraction of the overall upward movement of
executive compensation since the early 1990s."
https://academiccommons.columbia.edu/catalog/ac%3A139538
"... Labor market anyone -- where market power also translates to political power -- if labor has decent market power? Toothless (as in no penalty for crushing unions for 80 years) institutions are the reality. ..."
"... Do you guys ever talk about anything other but what the other guys talk about? ..."
Overview The U.S. economy has a "market power" problem, notwithstanding our strong and extensive
antitrust institutions. The surprising conjunction of the exercise of market power with well-established
antitrust norms, precedents, and enforcement institutions is the central paradox of U.S. competition
policy today.
Market power in the U.S. economy today : As this policy brief explains, the harms from the exercise
of firms' market power may extend beyond individual markets affected to include slower overall economic
growth and increased economic inequality. The implications for future economic productivity and welfare
are troubling, but before detailing these consequences, it is necessary to understand why market
power is a major issue despite well-established antitrust enforcement institutions and legal precedents.
...
Five Walmarts competing with each other would not raise worker wages above the wages Walmart pays.
In fact, it would lower wages.
I remember Milton Friedman's Newsweek columns circa 1970 which are deep behind a paywall so
I can't even find a date and title.
I remember one where he argued for utility deregulation and introduction of competition to
lower prices of electricity and telephone service.
He argued that the PUC was captured by the utility that by regulation made a business profit
only on ROIC plus a small rent on operating costs. By regulation, capital was always depreciating,
thus a power plant or the wires and poles distributing power were constantly falling in value.
The depreciation was an expense plus the labor costs which determined the base rate, with a 8-10%
return on capital, the original labor costs of the power plant and wires and poles minus depreciation
and a rent on operating labor.
So, how does a utility earn higher profit?
It must pay workers with capital to build more assets, more power plants, more and better power
wires and poles. And it must pay more to workers to operate the utility.
In other words, profit increased the more paid to labor. The PUC had to approve these labor
costs as prudent, but paying prevailing union wages was prudent. Thus, the utility could meet
the demands of unions for higher wages, for more people on the job.
Worse, the PUC would get hammered with complaints if the utility was unreliable, so most regulators
approved utility requests to build redundant power plants and build redundant power lines, plus
hire redundant workers who could be put to work recovering from storm damage.
Thus, in Milton Friedman's view, government sanctioning a monopoly resulted in too much, too
reliable service that paid too many workers too much money at the expense of all customers, especially
customers who did not need the reliability.
Worse, the utilities were constantly trying to get customers to buy more to justify building
more capital assets to increase profits.
And even worse, too many workers were paid too much which resulted in too much consumption,
thus too much production, and that created too much demand for labor, driving up wages and increasing
the number of workers, driving up I incomes and consumption.
He noted that the rush to build nuclear power plants was driven by their high capital costs
and nearly purely utility labor operating costs - the utility did not pay for coal for which it
got no business profit.
Thus his efforts to deregulate utilities: cutting labor costs, cutting business profits. He
argued for fewer workers operating utilities and building capital assets, with economic profits
driving investment decisions. Ie, a 20% profit would drive more investment, but a 5% profit would
drive layoffs and cuts in reliability. Any individual who needed reliability would simply pay
more to get higher reliability.
And as utilities were deregulated as he called or as best as it could be done, we have seen
job losses, pay cuts, higher unreliability, sometimes bankruptcy, and other times extremely high
profits, often both at the same time. When PURPA was implemented by States and utilities forced
to sell power generation, then nuclear power plants were sold below the book capital cost, by
these forced sales were deemed takings, so the losses from sales became stranded costs added to
the rate base as depreciation. Meanwhile, as investment in new power plants fell, nuclear power
plants became very profitable as market prices rose. So, the utility was going bankrupt after
forced to sell assets while the assets were generating 20% or more on purchase price returns,
but less than 10% on construction cost.
Friedman made the same argument for passenger airlines. Airlines paid high wages and had large
cabin crews and most were profitable enough to work hard to increase customer demand. They got
approval to offer low fares at the last minute to students and other classes of non-customers.
Thanks to regulation. Then deregulation happened, and every airline but one went bankrupt, service
quality declined, worker wages slashed, crews in the air and on the ground cut.
Friedman argued that everyone benefits from competition and is harmed by monopoly, especially
regulated monopoly, because too many workers are paid too much, and those workers consume too
much, and everyone is forced to pay too much to live.
Thus the creation of free lunch economics: Driving down prices but increasing profits will
make everyone better off as those evil workers get less pay, costing consumers much less.
Workers are not valued consumers. Valued consumers are not workers.
Milton Friedman was not a worker, but a valued intellectual and consumer.
"Five Walmarts competing with each other would not raise worker wages above the wages Walmart
pays. In fact, it would lower wages."
So you accept the Economism view of labor markets where monopsony power does not exist? Sorry
but the labor market evidence questions this perfectly competitive view of labor markets.
Good to see economists finally addressing issues that John Kenneth Galbraith raised 50 years ago...but
were largely ignored since then by 'librul' economists who didn't want to cross the folks who
had funded their academic chairs.
So John Kenneth Galbraith was a right winger? Could you please stop this silly parade that liberal
economists have never talked about what they often talk about. It is beyond pointless.
Oh, please. 'Librul' economists have mostly ignored monopoly and oligopoly for years. And Galbraith
was definitely NOT a conservative, but academic economists largely ignored his valuable contributions.
As a measure of 'librul' concern about monopoly and oligopoly, Krugman talks about this even less
than he talks about inequality...less than twice a year.
Nor are labor economics, trade or public economics. So what?
Competition economics is still a huge and very active topic within the discipline. Indeed,
the last but one Nobel winner, Jean Tirole, works extensively in this area.
"Overview The U.S. economy has a "market power" problem, notwithstanding our strong and extensive
antitrust institutions."
Labor market anyone -- where market power also translates to political power -- if labor
has decent market power? Toothless (as in no penalty for crushing unions for 80 years) institutions
are the reality.
Do you guys ever talk about anything other but what the other guys talk about?
"The U.S. economy has a "market power" problem, notwithstanding our strong and extensive antitrust
institutions. The surprising conjunction of the exercise of market power with well-established
antitrust norms, precedents, and enforcement institutions is the central paradox of U.S. competition
policy today."
Left off the subsequent list of possible explanations is that the first above statement just
may be false.
"... History will look back at us with the same wonder that we look back on the mad excesses of certain nations founded in devotion to extreme, almost other-worldly, ideologies of the last century. ..."
"... Apparently the slashing of health benefits for the unfortunate is not severe enough in the proposed Trump/Ryan plan. Our GOP house neo-liberals are enthusiastic to unleash the wonders of the cure-all deregulated market on the American public, again. Like a dog returns to its vomit. ..."
"The problem of the last three decades is not the 'vicissitudes of the marketplace,' but rather
deliberate actions by the government to redistribute income from the rest of us to the one percent.
This pattern of government action shows up in all areas of government policy."
Dean Baker
"When the modern corporation acquires power over markets, power in the community, power over
the state and power over belief, it is a political instrument, different in degree but not in
kind from the state itself. To hold otherwise - to deny the political character of the modern
corporation - is not merely to avoid the reality.
It is to disguise the reality. The victims of that disguise are those we instruct in error."
John Kenneth Galbraith
And unfortunately the working class victims of that disguise are going to be receiving the consequences
of their folly, and then some.
Secure in their monopolies and key positions with regard to reform and the law, the corporations
are further acquiring access to the protections of the rights of individuals as well, it appears,
at least according to Citizens United .
Maybe our leaders and their self-proclaimed technocrats will finally do the right thing. I personally
doubt it, except that if they do it will probably be by accident.
More likely, the right thing will eventually come about the old-fashioned way- under the duress
of a crisis, and the growing protests of the much neglected and long suffering.
History will look back at us with the same wonder that we look back on the mad excesses of certain
nations founded in devotion to extreme, almost other-worldly, ideologies of the last century.
... ... ...
Apparently the slashing of health benefits for the unfortunate is not severe enough in the
proposed Trump/Ryan plan. Our GOP house neo-liberals are enthusiastic to unleash the wonders of the
cure-all deregulated market on the American public, again. Like a dog returns to its vomit.
Better if they start breaking up corporate health monopolies and embrace real reform at the sources
of the soaring costs. The US pays far, far too much for drugs and healthcare, and deregulating the
markets is not the solution. We do have the example of the rest of the developed world for what to
do about this. It is called 'single payer.'
But players keep on playing. And politicians and their enablers in the professions will not see
what their big money donors do not wish them to see. And that is one of their few bipartisan efforts.
Might one suggest that our political animals stop trying to do all the reforming and cost controls
bottom up, while applying the stimulus top down? That approach they have been flogging to no avail
for about thirty years is a recipe for a dying middle class.
Here is a short video from the Bernie Sanders WV town hall that shows The Face of American Desperation.
By the way, the governor of West Virginia is a Democrat. He wasn't there.
A problem with today's views about globalization is that they look backward rather than forward.
The future's globalization is much different from the past's globalization. In particular, growing
nationalism is the future in the places, such as China, that have benefited from globalization.
By that I mean China is beginning to produce goods for China firms rather than for western firms
to compete with goods produced for western (American) firms including goods produced in China
for western firms.
It's a much different dynamic than what we have experienced in the past 30 years. And the response
to the new globalization should (and will) be much different.
Ironically, Trump's views about globalization come closer to what will be the response as western
firms adjust to the new globalization. Is Trump that smart? No, it's just that everybody else
is that dumb.
This is a very weak article from a prominent paleoconservative, but it is instructive what a mess he has in his head as for the
nature of Trump phenomenon. We should probably consider the tern "New Class" that neocons invented as synonym for "neoliberals". If
so, why the author is afraid to use the term? Does he really so poorly educated not to understand the nature of this neoliberal revolution
and its implications? Looks like he never read "Quite coup"
That probably reflects the crisis of pealeoconservatism itself.
Notable quotes:
"... What do these insurgents have in common? All have called into question the interventionist consensus in foreign policy. All have opposed large-scale free-trade agreements. ..."
"... the establishment in both parties almost uniformly favors one approach to war, trade, and immigration, while outsider candidates as dissimilar as Buchanan, Nader, Paul, and Trump, and to a lesser extent Sanders, depart from the consensus. ..."
"... The insurgents clearly do not represent a single class: they appeal to eclectic interests and groups. The foe they have all faced down, however-the bipartisan establishment-does resemble a class in its striking unity of outlook and interest. So what is this class, effectively the ruling class of the country? ..."
"... The archetypal model of class conflict, the one associated with Karl Marx, pits capitalists against workers-or, at an earlier stage, capitalists against the landed nobility. The capitalists' victory over the nobility was inevitable, and so too, Marx believed, was the coming triumph of the workers over the capitalists. ..."
"... The Soviet Union had never been a workers' state at all, they argued, but was run by a class of apparatchiks such as Marx had never imagined. ..."
"... Burnham recognized affinities between the Soviet mode of organization-in which much real power lay in the hands of the commissars who controlled industry and the bureaucratic organs of the state-and the corporatism that characterized fascist states. Even the U.S., under the New Deal and with ongoing changes to the balance between ownership and management in the private sector, seemed to be moving in the same direction. ..."
"... concept popularized by neoconservatives in the following decade: the "New Class." ..."
"... It consists of a goodly proportion of those college-educated people whose skills and vocations proliferate in a 'post-industrial society' (to use Daniel Bell's convenient term). We are talking about scientists, teachers, and educational administrators, journalists and others in the communication industries, psychologists, social workers, those lawyers and doctors who make their careers in the expanding public sector, city planners, the staffs of the larger foundations, the upper levels of the government bureaucracy, and so on. ..."
"... I have felt that this 'new class' is, so far, rather thin gruel. Intellectuals, verbalists, media types, etc. are conspicuous actors these days, certainly; they make a lot of noise, get a lot of attention, and some of them make a lot of money. But, after all, they are a harum-scarum crowd, and deflate even more quickly than they puff up. On TV they can out-talk any of the managers of ITT, GM, or IBM, or the administration-managers of the great government bureaus and agencies, but, honestly, you're not going to take that as a power test. Who hires and fires whom? ..."
"... Burnham had observed that the New Class did not have the means-either money or manpower-to wield power the way the managers or the capitalists of old did. It had to borrow power from other classes. Discovering where the New Class gets it is as easy as following the money, which leads straight to the finance sector-practically to the doorstep of Goldman Sachs. Jerry Rubin's journey from Yippie to yuppie was the paradigm of a generation. ..."
"... Yet the New Class as a whole is less like Carl Oglesby or Karl Hess than like Hillary Clinton, who arguably embodies it as perfectly as McNamara did the managerial class. ..."
"... Even the New Class's support for deregulation-to the advantage of its allies on Wall Street-was no sign of consistent commitment to free-market principles ..."
"... The individual-mandate feature of Obamacare and Romneycare is a prime example of New Class cronyism: government compels individuals to buy a supposedly private product or service. ..."
"... America's class war, like many others, is not in the end a contest between up and down. It's a fight between rival elites: in this case, between the declining managerial elite and the triumphant (for now) New Class and financial elites. ..."
"... Donald Trump is not of the managerial class himself. But by embracing managerial interests-industrial protection and, yes, "big government"-and combining them with nationalistic identity politics, he has built a force that has potential to threaten the bipartisan establishment, even if he goes down to defeat in November. ..."
"... The New Class, after all, lacks a popular base as well as money of its own, and just as it relies on Wall Street to underwrite its power, it depends on its competing brands of identity politics to co-opt popular support. ..."
"... Marx taught that you identify classes by their structural role in the system of production. I'm at a loss to see how either of the 'classes' you mention here relate to the system of production. ..."
"... [New] Class better describes the Never Trumpers. Mostly I have found them to be those involved in knowledge occupations (conservative think tanks, hedge fund managers, etc.) who have a pecuniary interest in maintaining the Global Economy as opposed to the Virtuous Intergenerational Economy that preceded. Many are dependent on funding sources for their livelihoods that are connected to the Globalized Economy and financial markets. ..."
"... "mobilize working-class voters against the establishment in both parties. " = workers of the world unite. ..."
"... Where the class conflict between the Working and Knowledge Classes begins is where the Knowledge Class almost unilaterally decided to shift to a global economy, at the expense of the Working Class, and to the self-benefit of the Knowledge Class. Those who designed the Global Economy like Larry Summers of Harvard did not invite private or public labor to help design the new Globalist Economy. The Working Class lost out big time in job losses and getting stuck with subprime home loans that busted their marriages and created bankruptcies and foreclosures. The Knowledge Class was mostly unscathed by this class-based economic divide. ..."
"... Trump's distinguishing ideology, which separates him from the current elite, is something he has summed up many times � nationalism vs. Globalism. ..."
"... The financial industry, the new tech giants, the health insurance industry are now almost indistinguishable from the government ruling elite. The old left�represented by Sanders�rails against this as big money coopting government, even while conservatives are exasperated by the unholy cabal of big business and big government in cohoots in the "progressive" remake of America. Both are right in a sense. ..."
"... The hyperconcentration of power in Washington and a few tributary locations like Wall Street and Silicon Valley, elite academia and the media�call that the New Class if you like�means that most of America�Main Street, the flyover country has been left behind. Trump instinctively � brilliantly in some ways � tapped into the resentment that this hyperconcentration of wealth and government power has led to. That is why it cuts across right and left. The elites want to characterize this resentment as backwards and "racist," but there is also something very American from Jefferson to Jackson to Teddy Roosevelt that revolts against being lectured to and controlled by their would-be "betters." ..."
"... The alienation of those left out is real and based on real erosion of the middle class and American dream under both parties' elites. The potentially revolutionary capabilities of a political movement that could unite right and left in restoring some equilibrium and opportunities to those left out is tremendous, but yet to be realized by either major party. The party that can harness these folks � who are after all the majority of Americans � will have a ruling coalition for decades. If neither party can productively harness this budding movement, we are headed for disarray, civil unrest, and potentially the dissolution of the USA. ..."
"... . And blacks who cleave to the democrats despite being sold down the tubes on issues, well, for whatever reason, they just have thinner skin and the mistaken idea that the democrats deliver � thanks to Pres. Johnson. But what Pres. Johnson delivered democrats made a mockery of immediately as they stripped it of its intent and used for their own liberal ends. ..."
"... Let's see if I can help Dreher clear up some confusion in his article. James Burnham's "Managerial Class" and the "New Class" are overlapping and not exclusive. By the Managerial Class Burnham meant both the executive and managers in the private sector and the Bureaucrats and functionaries in the public sector. ..."
"... The rise of managers was a "revolution" because of the rise of modernization which meant the increasing mechanization, industrialization, formalization and rationalization (efficiency) of society. Burnham's concern about the rise of the managerial revolution was misplaced; what he should have focused on was modernization. ..."
"... The old left�represented by Sanders�rails against this as big money coopting government, even while conservatives are exasperated by the unholy cabal of big business and big government in cohoots in the "progressive" remake of America ..."
"... . Some 3 � 5% of the population facing no real opposition has decided that that their private lives needed public endorsement and have proceeded to upend the entire social order - the game has shifted in ways I am not sure most of the public fully grasps or desires ..."
"... There has always been and will always be class conflict, even if it falls short of a war. Simply examining recent past circumstances, the wealthy class has been whooping up on all other classes. This is not to suggest any sort of remedy, but simply to observe that income disparity over the past 30 years has substantially benefitted on sector of class and political power remains in their hands today. To think that there will never be class conflict is to side with a Marxian fantasy of egalitarianism, which will never come to pass. Winners and losers may change positions, but the underlying conflict will always remain. ..."
"... State governments have been kowtowing to big business interests for a good long while. Nothing new under the sun there. Back in the 80s when GM was deciding where to site their factory for the new Saturn car line, they issued an edict stating they would only consider states that had mandatory seat belt use laws, and the states in the running fell all over each to enact those. ..."
"... People don't really care for the actions of the elite but they care for the consequences of these actions. During the 1960's, per capita GDP growth was around 3.5%. Today it stands at 0,49%. If you take into account inflation, it's negative. Add to this the skewed repartition of said growth and it's intuitive that many people feel the pain; whom doesn't move forward, goes backwards. ..."
"... People couldn't care for mass immigration, nation building or the emergence of China if their personal situation was not impacted. But now, they begin to feel the results of these actions. ..."
"... I have a simple philosophy regarding American politics that shows who is made of what, and we don't have to go through all the philosophizing in this article: Anyone who believes in same sex marriage has been brainwashed and is un-American and unreliable. Anyone who puts Israeli interests above America's is un-American. ..."
"... Re: Anyone who believes in same sex marriage has been brainwashed and is un-American and unreliable. Anyone who puts Israeli interests above America's is un-American. ..."
"... The first has nothing whatsoever to do with American citizenship. It's just a political issue� on which, yes, reasonable people can differ. However no American citizen should put the interests of any other country ahead of our own, except in a situation where the US was itself up to no good and deserved its comeuppance. And then the interest is not that of any particular nation, but of justice being done period. ..."
"... A lot of this "New Class" stuff is just confusing mis-mash of this and that theory. Basically, America changed when the US dollar replace gold as the medium of exchange in the world economy. Remember when we called it the PETRO-DOLLAR. As long as the Saudis only accepted the US dollar as the medium of exchange for oil, then the American government could export it's inflation and deficit spending. Budget deficits and trade deficits are intrinsically related. It allowed America to become a nation of consumers instead of a nation of producers. ..."
"... It's really a form of classic IMPERIALISM. To maintain this system, we've got the US military and we prop up the corrupt dictatorships in Saudi Arabia, Iraq, Libya ..."
"... Yeah, you can talk about the "new class", the corruption of the banking system by the idiotic "libertarian" or "free market utopianism" of the Gingrich Congress, the transformation of American corporations to international corporations, and on and on. But it's the US dollar as reserve currency that has allowed it all to happen. God help us, if it ends, we'll be crippled. ..."
"... The Clinton Class mocks The Country Class: Bill Clinton, "We all know how her opponent's done real well down in West Virginia and eastern Kentucky. Because the coal people don't like any of us anymore." "They blame the president when the sun doesn't come up in the morning now," ..."
"... That doesn't mean they actually support Hillary's policies and position. What do they really know about either? These demographics simply vote overwhelmingly Democrat no matter who is on the ticket. If Alfred E. Newman were the candidate, this particular data point would look just the same. ..."
"... "On the contrary, the New Class favors new kinds of crony finance capitalism, even as it opposes the protectionism that would benefit hard industry and managerial interests." This doesn't ring true. Hard industry, and the managers that run it had no problem with moving jobs and factories overseas in pursuit of cheaper labor. Plus, it solved their Union issues. I feel like the divide is between large corporations, with dilute ownership and professional managers who nominally serve the interests of stock fund managers, while greatly enriching themselves versus a multitude of smaller, locally owned businesses whose owners were also concerned with the health of the local communities in which they lived. ..."
"... The financial elites are a consequence of consolidation in the banking and finance industry, where we now have 4 or 5 large institutions versus a multitude of local and regional banks that were locally focused. ..."
Since the Cold War ended, U.S. politics has seen a series of insurgent candidacies. Pat Buchanan prefigured Trump in the Republican
contests of 1992 and 1996. Ralph Nader challenged the Clinton wing of the Democratic Party from the outside in 2000. Ron Paul vexed
establishment Republicans John McCain and Mitt Romney in 2008 and 2012. And this year, Trump was not the only candidate to confound
his party's elite: Bernie Sanders harried Hillary Clinton right up to the Democratic convention.
What do these insurgents have in common? All have called into question the interventionist consensus in foreign policy. All
have opposed large-scale free-trade agreements. (The libertarian Paul favors unilateral free trade: by his lights, treaties
like NAFTA and the Trans-Pacific Partnership are not free trade at all but international regulatory pacts.) And while no one would
mistake Ralph Nader's or Ron Paul's views on immigration for Pat Buchanan's or Donald Trump's, Nader and Paul have registered their
own dissents from the approach to immigration that prevails in Washington.
Sanders has been more in line with his party's orthodoxy on that issue. But that didn't save him from being attacked by Clinton
backers for having an insufficiently nonwhite base of support. Once again, what might have appeared to be a class conflict-in this
case between a democratic socialist and an elite liberal with ties to high finance-could be explained away as really about race.
Race, like religion, is a real factor in how people vote. Its relevance to elite politics, however, is less clear. Something else
has to account for why the establishment in both parties almost uniformly favors one approach to war, trade, and immigration,
while outsider candidates as dissimilar as Buchanan, Nader, Paul, and Trump, and to a lesser extent Sanders, depart from the consensus.
The insurgents clearly do not represent a single class: they appeal to eclectic interests and groups. The foe they have all
faced down, however-the bipartisan establishment-does resemble a class in its striking unity of outlook and interest. So what is
this class, effectively the ruling class of the country?
Some critics on the right have identified it with the "managerial" class described by James Burnham in his 1941 book The Managerial
Revolution . But it bears a stronger resemblance to what what others have called "the New Class." In fact, the interests of this
New Class of college-educated "verbalists" are antithetical to those of the industrial managers that Burnham described. Understanding
the relationship between these two often conflated concepts provides insight into politics today, which can be seen as a clash between
managerial and New Class elites.
♦♦♦
The archetypal model of class conflict, the one associated with Karl Marx, pits capitalists against workers-or, at an earlier
stage, capitalists against the landed nobility. The capitalists' victory over the nobility was inevitable, and so too, Marx believed,
was the coming triumph of the workers over the capitalists.
Over the next century, however, history did not follow the script. By 1992, the Soviet Union was gone, Communist China had embarked
on market reforms, and Western Europe was turning away from democratic socialism. There was no need to predict the future; mankind
had achieved its destiny, a universal order of [neo]liberal democracy. Marx had it backwards: capitalism was the end of history.
But was the truth as simple as that? Long before the collapse of the USSR, many former communists -- some of whom remained socialists,
while others joined the right-thought not. The Soviet Union had never been a workers' state at all, they argued, but was run
by a class of apparatchiks such as Marx had never imagined.
Among the first to advance this argument was James Burnham, a professor of philosophy at New York University who became a leading
Trotskyist thinker. As he broke with Trotsky and began moving toward the right, Burnham recognized affinities between the Soviet
mode of organization-in which much real power lay in the hands of the commissars who controlled industry and the bureaucratic organs
of the state-and the corporatism that characterized fascist states. Even the U.S., under the New Deal and with ongoing changes to
the balance between ownership and management in the private sector, seemed to be moving in the same direction.
Burnham called this the "managerial revolution." The managers of industry and technically trained government officials did not
own the means of production, like the capitalists of old. But they did control the means of production, thanks to their expertise
and administrative prowess.
The rise of this managerial class would have far-reaching consequences, he predicted. Burnham wrote in his 1943 book, The Machiavellians
: "that the managers may function, the economic and political structure must be modified, as it is now being modified, so as
to rest no longer on private ownership and small-scale nationalist sovereignty, but primarily upon state control of the economy,
and continental or vast regional world political organization." Burnham pointed to Nazi Germany, imperial Japan-which became a "continental"
power by annexing Korea and Manchuria-and the Soviet Union as examples.
The defeat of the Axis powers did not halt the progress of the managerial revolution. Far from it: not only did the Soviets retain
their form of managerialism, but the West increasingly adopted a managerial corporatism of its own, marked by cooperation between
big business and big government: high-tech industrial crony capitalism, of the sort that characterizes the military-industrial complex
to this day. (Not for nothing was Burnham a great advocate of America's developing a supersonic transport of its own to compete with
the French-British Concorde.)
America's managerial class was personified by Robert S. McNamara, the former Ford Motor Company executive who was secretary of
defense under John F. Kennedy and Lyndon Johnson. In a 1966 story for National Review , "Why Do They Hate Robert Strange McNamara?"
Burnham answered the question in class terms: "McNamara is attacked by the Left because the Left has a blanket hatred of the system
of business enterprise; he is criticized by the Right because the Right harks back, in nostalgia if not in practice, to outmoded
forms of business enterprise."
McNamara the managerial technocrat was too business-oriented for a left that still dreamed of bringing the workers to power. But
the modern form of industrial organization he represented was not traditionally capitalist enough for conservatives who were at heart
19th-century classical liberals.
National Review readers responded to Burnham's paean to McNamara with a mixture of incomprehension and indignation. It
was a sign that even readers familiar with Burnham-he appeared in every issue of the magazine-did not always follow what he was saying.
The popular right wanted concepts that were helpful in labeling enemies, and Burnham was confusing matters by talking about changes
in the organization of government and industry that did not line up with anyone's value judgements.
More polemically useful was a different concept popularized by neoconservatives in the following decade: the "New Class."
"This 'new class' is not easily defined but may be vaguely described," Irving Kristol wrote in a 1975 essay for the Wall
Street Journal :
It consists of a goodly proportion of those college-educated people whose skills and vocations proliferate in a 'post-industrial
society' (to use Daniel Bell's convenient term). We are talking about scientists, teachers, and educational administrators, journalists
and others in the communication industries, psychologists, social workers, those lawyers and doctors who make their careers in
the expanding public sector, city planners, the staffs of the larger foundations, the upper levels of the government bureaucracy,
and so on.
"Members of the new class do not 'control' the media," he continued, "they are the media-just as they are our educational
system, our public health and welfare system, and much else."
Burnham, writing in National Review in 1978, drew a sharp contrast between this concept and his own ideas:
I have felt that this 'new class' is, so far, rather thin gruel. Intellectuals, verbalists, media types, etc. are conspicuous
actors these days, certainly; they make a lot of noise, get a lot of attention, and some of them make a lot of money. But, after
all, they are a harum-scarum crowd, and deflate even more quickly than they puff up. On TV they can out-talk any of the managers
of ITT, GM, or IBM, or the administration-managers of the great government bureaus and agencies, but, honestly, you're not going
to take that as a power test. Who hires and fires whom?
Burnham suffered a stroke later that year. Although he lived until 1987, his career as a writer was over. His last years coincided
with another great transformation of business and government. It began in the Carter administration, with moves to deregulate transportation
and telecommunications. This partial unwinding of the managerial revolution accelerated under Ronald Reagan. Regulatory and welfare-state
reforms, even privatization of formerly nationalized industries, also took off in the UK and Western Europe. All this did not, however,
amount to a restoration of the old capitalism or anything resembling laissez-faire.
The "[neo]liberal democracy" that triumphed at "the end of history"-to use Francis Fukuyama's words-was not the managerial capitalism
of the mid-20th century, either. It was instead the New Class's form of capitalism, one that could be embraced by Bill Clinton and
Tony Blair as readily as by any Republican or Thatcherite.
Irving Kristol had already noted in the 1970s that "this new class is not merely liberal but truly 'libertarian' in its approach
to all areas of life-except economics. It celebrates individual liberty of speech and expression and action to an unprecedented degree,
so that at times it seems almost anarchistic in its conception of the good life."
He was right about the New Class's "anything goes" mentality, but he was only partly correct about its attitude toward economics.
The young elite tended to scorn the bourgeois character of the old capitalism, and to them managerial figures like McNamara were
evil incarnate. But they had to get by-and they aspired to rule.
Burnham had observed that the New Class did not have the means-either money or manpower-to wield power the way the managers
or the capitalists of old did. It had to borrow power from other classes. Discovering where the New Class gets it is as easy as following
the money, which leads straight to the finance sector-practically to the doorstep of Goldman Sachs. Jerry Rubin's journey from Yippie
to yuppie was the paradigm of a generation.
Part of the tale can be told in a favorable light. New Left activists like Carl Oglesby fought the spiritual aridity and murderous
militarism of what they called "corporate liberalism"-Burnham's managerialism-while sincere young libertarians attacked the regulatory
state and seeded technological entrepreneurship. Yet the New Class as a whole is less like Carl Oglesby or Karl Hess than like
Hillary Clinton, who arguably embodies it as perfectly as McNamara did the managerial class.
Even the New Class's support for deregulation-to the advantage of its allies on Wall Street-was no sign of consistent commitment
to free-market principles. On the contrary, the New Class favors new kinds of crony finance capitalism, even as it opposes the
protectionism that would benefit hard industry and managerial interests. The individual-mandate feature of Obamacare and Romneycare
is a prime example of New Class cronyism: government compels individuals to buy a supposedly private product or service.
The alliance between finance and the New Class accounts for the disposition of power in America today. The New Class has also
enlisted another invaluable ally: the managerial classes of East Asia. Trade with China-the modern managerial state par excellence-helps
keep American industry weak relative to finance and the service economy's verbalist-dominated sectors. America's class war, like
many others, is not in the end a contest between up and down. It's a fight between rival elites: in this case, between the declining
managerial elite and the triumphant (for now) New Class and financial elites.
The New Class plays a priestly role in its alliance with finance, absolving Wall Street for the sin of making money in exchange
for plenty of that money to keep the New Class in power. In command of foreign policy, the New Class gets to pursue humanitarian
ideological projects-to experiment on the world. It gets to evangelize by the sword. And with trade policy, it gets to suppress its
class rival, the managerial elite, at home. Through trade pacts and mass immigration the financial elite, meanwhile, gets to maximize
its returns without regard for borders or citizenship. The erosion of other nations' sovereignty that accompanies American hegemony
helps toward that end too-though our wars are more ideological than interest-driven.
♦♦♦
So we come to an historic moment. Instead of an election pitting another Bush against another Clinton, we have a race that poses
stark alternatives: a choice not only between candidates but between classes-not only between administrations but between regimes.
Donald Trump is not of the managerial class himself. But by embracing managerial interests-industrial protection and, yes,
"big government"-and combining them with nationalistic identity politics, he has built a force that has potential to threaten the
bipartisan establishment, even if he goes down to defeat in November.
The New Class, after all, lacks a popular base as well as money of its own, and just as it relies on Wall Street to underwrite
its power, it depends on its competing brands of identity politics to co-opt popular support. For the center-left establishment,
minority voters supply the electoral muscle. Religion and the culture war have served the same purpose for the establishment's center-right
faction. Trump showed that at least one of these sides could be beaten on its own turf-and it seems conceivable that if Bernie Sanders
had been black, he might have similarly beaten Clinton, without having to make concessions to New Class tastes.
The New Class establishment of both parties may be seriously misjudging what is happening here. Far from being the last gasp of
the demographically doomed-old, racially isolated white people, as Gallup's analysis says-Trump's insurgency may be the prototype
of an aggressive new politics, of either left or right, that could restore the managerial elite to power.
This is not something that conservatives-or libertarians who admire the old capitalism rather than New Class's simulacrum-might
welcome. But the only way that some entrenched policies may change is with a change of the class in power.
Daniel McCarthy is the editor of The American Conservative .
Excellent analysis. What is important about the Trump phenomenon is not every individual issue, it's the potentially revolutionary
nature of the phenomenon. The opposition gets this. That's why they are hysterical about Trump. The conservative box checkers
do not.
"Donald Trump is not of the managerial class himself. But by embracing managerial interests-industrial protection and, yes, "big
government"-and combining them with nationalistic identity politics, he has built a force that has potential to threaten the bipartisan
establishment, even if he goes down to defeat in November."
My question is, if Trump is not himself of the managerial class, in fact, could be considered one of the original new class
members, how would he govern? What explains his conversion from the new class to the managerial class; is he merely taking advantage
of an opportunity or is there some other explanation?
I'm genuinely confused by the role you ascribe to the 'managerial class' here. Going back to Berle and Means ('The Modern Corporation
and Private Property') the managerial class emerged when management was split from ownership in mid C20th capitalism. Managers
focused on growth, not profits for shareholders. The Shareholder revolution of the 1980s destroyed the managerial class, and destroyed
their unwieldy corporations.
You seem to be identifying the managerial class with a kind of cultural opposition to the values of [neo]liberal capitalism. And
instead of identifying the 'new class' with the new owner-managers of shareholder-driven firms, you identify them by their superficial
cultural effects.
This raises a deeper problem in how you talk about class in this piece. Marx taught that you identify classes by their
structural role in the system of production. I'm at a loss to see how either of the 'classes' you mention here relate to the system
of production. Does the 'new class' of journalists, academics, etc. actually own anything? If not, what is the point of ascribing
to them immense economic power?
I would agree that there is a new class of capitalists in America. But they are well known people like Sheldon Adelson, the Kochs,
Linda McMahon, the Waltons, Rick Scott the pharmaceutical entrepreneur, Mitt Romney, Mark Zuckerberg, and many many hedge fund
gazillionaires. These people represent the resurgence of a family-based, dynastic capitalism that is utterly different from the
managerial variety that prevailed in mid-century.
If there is a current competitor to international corporate capitalism, it is old-fashioned dynastic family capitalism. Not
Managerialism.
There is no "new class". That's simply a derogatory trope of the Right. The [neo]liberal elite� educated, cosmopolitan and possessed
of sufficient wealth to be influential in political affairs and claims to power grounded in moral stances� have a long pedigree
in both Western and non-Western lands. They were the Scribal Class in the ancient world, the Mandarins of China, and the Clergy
in the Middle Ages. This class for a time was eclipsed in the early modern period as first royal authority became dominant, followed
by the power of the Capitalist class (the latter has never really faded of course). But their reemergence in the late 20th century
is not a new or unique phenomenon.
In a year in which "trash Trump" and "trash Trump's supporters" are tricks-to-be-turned for more than 90% of mainstream journalists
and other media hacks, it's good to see Daniel McCarthy buck the "trash trend" and write a serious, honest analysis of the class
forces that are colliding during this election cycle.
Two thumbs way up for McCarthy, although his fine effort cannot save the reputation of those establishment whores who call
themselves journalists. Nothing can save them. They have earned the universality with which Americans hold them in contempt.
In 1976 when Gallup began asking about "the honesty and ethical standards" of various professions only 33% of Americans rated
journalists "very high or high."
By last December that "high or very high" rating for journalists had fallen to just 27%.
It is certain that by Election Day 2016 the American public's opinion of journalists will have fallen even further.
Most of your argument is confusing. The change I see is from a production economy to a finance economy. Wall Street rules, really.
Basically the stock market used to be a place where working folk invested their money for retirement, mostly through pensions
from unions and corporations. Now it's become a gambling casino, with the "house"-or the big banks-putting it's finger on the
roulette wheel. They changed the compensation package of CEO's, so they can rake in huge executive compensation�mostly through
stock options-to basically close down everything from manufacturing to customer service, and ship it off to contract manufacturers
and outside services in oligarchical countries like mainland China and India.
I don't know what exactly you mean about the "new class", basically its the finance industry against everyone else.
One thing you right-wingers always get wrong, is on Karl Marx he was really attacking the money-changers, the finance speculators,
the banks. Back in the day, so-called "capitalists" like Henry Ford or George Eastman or Thomas Edison always complained about
the access to financing through the big money finance capitalists.
Don't overlook the economic value of intellectual property rights (patents, in particular) in the economic equation.
A big chunk of the 21st century economy is generated due to the intellectual property developed and owned by the New Class
and its business enterprises.
The economic value of ideas and intellectual property rights is somewhat implied in McCarthy's explanation of the New Class,
but I didn't see an explicit mention (perhaps I overlooked it).
I think the consideration of intellectual property rights and the value generated by IP might help to clarify the economic
power of the New Class for those who feel the analysis isn't quite complete or on target.
I'm not saying that IP only provides value to the New Class. We can find examples of IP throughout the economy, at all levels.
It's just that the tech and financial sectors seem to focus more on (and benefit from) IP ownership, licensing, and the information
captured through use of digital technology.
"What do these insurgents have in common? All have called into question the interventionist consensus in foreign policy."
But today we have this: Trump pledges big US military
expansion . Trump doesn't appear to have any coherent policy, he just says whatever seems to be useful at that particular
moment.
[New] Class better describes the Never Trumpers. Mostly I have found them to be those involved in knowledge occupations (conservative
think tanks, hedge fund managers, etc.) who have a pecuniary interest in maintaining the Global Economy as opposed to the Virtuous
Intergenerational Economy that preceded. Many are dependent on funding sources for their livelihoods that are connected to the
Globalized Economy and financial markets.
Being white is not the defining characteristic of Trumpers because it if was then how come there are many white working class
voters for Hillary? The divide in the working class comes from being a member of a union or a member of the private non-unionized
working class.
Where the real class divide shows up is in those who are members of the Knowledge Class that made their living based on the
old Virtuous Economy where the elderly saved money in banks and the banks, in turn, lent that money out to young families to buy
houses, cars, and start businesses. The Virtuous Economy has been replaced by the Global Economy based on diverting money to the
stock market to fund global enterprises and prop up government pension funds.
The local bankers, realtors, private contractors, small savers and small business persons and others that depended on the Virtuous
Economy lost out to the global bankers, stock investors, pension fund managers, union contractors and intellectuals that propounded
rationales for the global economy as superior to the Virtuous Economy.
Where the class conflict between the Working and Knowledge Classes begins is where the Knowledge Class almost unilaterally
decided to shift to a global economy, at the expense of the Working Class, and to the self-benefit of the Knowledge Class. Those
who designed the Global Economy like Larry Summers of Harvard did not invite private or public labor to help design the new Globalist
Economy. The Working Class lost out big time in job losses and getting stuck with subprime home loans that busted their marriages
and created bankruptcies and foreclosures. The Knowledge Class was mostly unscathed by this class-based economic divide.
Beginning in the 50's and 60's, baby boomers were warned in school and cultural media that "a college diploma would become what
a high school diploma is today." An extraordinary cohort of Americans took this advice seriously, creating the smartest and most
successful generation in history. But millions did not heed that advice, cynically buoyed by Republicans who � knowing that college
educated people vote largely Democrat � launched a financial and cultural war on college education. The result is what you see
now: millions of people unprepared for modern employment; meanwhile we have to import millions of college-educated Asians and
Indians to do the work there aren't enough Americans to do.
Have to say, this seems like an attempt to put things into boxes that don't quite fit.
Trump's distinguishing ideology, which separates him from the current elite, is something he has summed up many times �
nationalism vs. Globalism.
The core of it is that the government no longer serves the people. In the United States, that is kind of a bad thing, you know?
Like the EU in the UK, the people, who fought very hard for self-government, are seeing it undermined by the erosion of the nation
state in favor of international beaurocracy run by elites and the well connected.
Both this article and many comments on it show considerable confusion, and ideological opinion all over the map. What is happening
I think is that the world is changing �due to globalism, technology, and the sheer huge numbers of people on the planet. As a
result some of the rigid trenches of thought as well as class alignments are breaking down.
In America we no longer have capitalism, of either the 19th century industrial or 20th century managerial varieties. Money
and big money is still important of course, but it is increasingly both aligned with and in turn controlled by the government.
The financial industry, the new tech giants, the health insurance industry are now almost indistinguishable from the government
ruling elite. The old left�represented by Sanders�rails against this as big money coopting government, even while conservatives
are exasperated by the unholy cabal of big business and big government in cohoots in the "progressive" remake of America. Both
are right in a sense.
The hyperconcentration of power in Washington and a few tributary locations like Wall Street and Silicon Valley, elite
academia and the media�call that the New Class if you like�means that most of America�Main Street, the flyover country has been
left behind. Trump instinctively � brilliantly in some ways � tapped into the resentment that this hyperconcentration of wealth
and government power has led to. That is why it cuts across right and left. The elites want to characterize this resentment as
backwards and "racist," but there is also something very American from Jefferson to Jackson to Teddy Roosevelt that revolts against
being lectured to and controlled by their would-be "betters."
The alienation of those left out is real and based on real erosion of the middle class and American dream under both parties'
elites. The potentially revolutionary capabilities of a political movement that could unite right and left in restoring some equilibrium
and opportunities to those left out is tremendous, but yet to be realized by either major party. The party that can harness these
folks � who are after all the majority of Americans � will have a ruling coalition for decades. If neither party can productively
harness this budding movement, we are headed for disarray, civil unrest, and potentially the dissolution of the USA.
I have one condition about which, Mr. Trump would lose my support - if he flinches on immigration, I will have to bow out.
I just don't buy the contentions about color here. He has made definitive moves to ensure that he intends to fight for US citizens
regardless of color. This nonsense about white racism, more bigotry in reality, doesn't pan out. The Republican party has been
comprised of mostly whites since forever and nearly all white sine the late 1960's. Anyone attempting to make hay out of what
has been the reality for than 40 years is really making the reverse pander. Of course most of those who have issues with blacks
and tend to be more expressive about it, are in the Republican party. But so what. Black Republicans would look at you askance,
should you attempt this FYI.
It's a so what. The reason you joining a party is not because the people in it like you, that is really beside the point. Both
Sec Rice and General Powell, are keenly aware of who's what it and that is the supposed educated elite. They are not members of
the party because it is composed of some pure untainted membership. But because they and many blacks align themselves with the
ideas of the party, or what the party used to believe, anyway.
It's the issues not their skin color that matters. And blacks who cleave to the democrats despite being sold down the tubes
on issues, well, for whatever reason, they just have thinner skin and the mistaken idea that the democrats deliver � thanks to
Pres. Johnson. But what Pres. Johnson delivered democrats made a mockery of immediately as they stripped it of its intent and
used for their own liberal ends.
I remain convinced that if blacks wanted progress all they need do is swamp the Republican party as constituents and confront
whatever they thought was nonsense as constituents as they move on policy issues. Goodness democrats have embraced the lighter
tones despite having most black support. That is why the democrats are importing so many from other state run countries. They
could ignore blacks altogether. Sen Barbara Jordan and her deep voiced rebuke would do them all some good.
Let's face it - we are not going to remove the deeply rooted impact of skin color, once part of the legal frame of the country
for a quarter of the nations populous. What Republicans should stop doing is pretending, that everything concerning skin color
is the figment of black imagination. I am not budging an inch on the Daughters of the American Revolution, a perfect example of
the kind of peculiar treatment of the majority, even to those who fought for Independence and their descendants.
________________
I think that there are thousands and thousands of educated (degreed)people who now realize what a mess the educational and
social services system has become because of our immigration policy. The impact on social services here in Ca is no joke. In the
face of mounting deficits, the laxity of Ca has now come back to haunt them. The pressure to increase taxes weighed against the
loss of manual or hard labor to immigrants legal and otherwise is unmistakable here. There's debate about rsstroom etiquette in
the midst of serious financial issues - that's a joke. So this idea of dismissing people with degrees as being opposed to Mr.
Trump is deeply overplayed and misunderstood. If there is a class war, it's not because of Mr. Trump, those decks were stacked
in his favor long before the election cycle.
--------
"But millions did not heed that advice, cynically buoyed by Republicans who�knowing that college educated people vote largely
Democrat�launched a financial and cultural war on college education. The result is what . . . employment; meanwhile we have to
import millions of college-educated Asians and Indians to do the work there aren't enough Americans to do."
Hmmmm,
Nope. Republicans are notorious for pushing education on everything and everybody. It's a signature of hard work, self reliance,
self motivation and responsibility. The shift that has been tragic is that conservatives and Republicans either by a shove or
by choice abandoned the fields by which we turn out most future generations - elementary, HS and college education. Especially
in HS, millions of students are fed a daily diet of liberal though unchecked by any opposing ideas. And that is become the staple
for college education - as it cannot be stated just how tragic this has become for the nation. There are lots of issues to moan
about concerning the Us, but there is far more to embrace or at the very least keep the moaning in its proper context. No, conservatives
and Republicans did engage in discouraging an education.
And there will always be a need for more people without degrees than with them. even people with degrees are now getting hit
even in the elite walls of WS finance. I think I posted an article by John Maulden about the growing tensions resulting fro the
shift in the way trading is conducting. I can build a computer from scratch, that's a technical skill, but the days of building
computers by hand went as fast it came. The accusation that the population should all be trained accountants, book keepers, managers,
data processors, programmers etc. Is nice, but hardly very realistic (despite my taking liberties with your exact phrasing). A
degree is not going to stop a company from selling and moving its production to China, Mexico or Vietnam - would that were true.
In fact, even high end degree positions are being outsourced, medicine, law, data processing, programming . . .
How about the changes in economy that have forced businesses to completely disappear. We will never know how many businesses
were lost in the 2007/2008 financial mess. Recovery doesn't exist until the country's growth is robust enough to put people back
to work full time in a manner that enables them to sustain themselves and family.
That income gap is real and its telling.
___________________
even if I bought the Karl Marx assessment. His solutions were anything but a limited assault on financial sector oligarchs
and wizards. And in practice it has been an unmitigated disaster with virtually not a single long term national benefit. It's
very nature has been destructive, not only to infrastructure, but literally the lifeblood of the people it was intended to rescue.
Let's see if I can help Dreher clear up some confusion in his article. James Burnham's "Managerial Class" and the "New Class"
are overlapping and not exclusive. By the Managerial Class Burnham meant both the executive and managers in the private sector
and the Bureaucrats and functionaries in the public sector.
There are two middle classes in the US: the old Business Class and the New Knowledge Class. A manager would be in the Business
Class and a Bureaucrat in the New Class.
The rise of managers was a "revolution" because of the rise of modernization which meant the increasing mechanization,
industrialization, formalization and rationalization (efficiency) of society. Burnham's concern about the rise of the managerial
revolution was misplaced; what he should have focused on was modernization.
The New Class were those in the mostly government and nonprofit sectors that depended on knowledge for their livelihood without
it being coupled to any physical labor: teachers, intellectuals, social workers and psychiatrists, lawyers, media types, hedge
fund managers, real estate appraisers, financial advisors, architects, engineers, etc. The New Knowledge Class has only risen
since the New Deal created a permanent white collar, non-business class.
The Working Class are those who are employed for wages in manual work in an industry producing something tangible (houses,
cars, computers, etc.). The Working Class can also have managers, sometimes called supervisors. And the Working Class is comprised
mainly of two groups: unionized workers and private sector non-unionized workers. When we talk about the Working Class we typically
are referring to the latter.
The Trumpsters should not be distinguished as being a racial group or class (white) because there are many white people who
support Clinton. About 95% of Blacks vote Democratic in the US. Nowhere near that ratio of Whites are supporting Trump. So Trumps'
support should not be stereotyped as White.
The number one concern to Trumpsters is that they reflect the previous intergenerational economy where the elderly lent money
to the young to buy homes, cars and start small businesses. The Global bankers have shifted money into the stock market because
0.25% per year interest rates in a bank isn't making any money at all when money inflation runs at 1% to 2% (theft). This has
been replaced by a Global Economy that depends on financial bubbles and arbitraging of funds.
"The old left�represented by Sanders�rails against this as big money coopting government, even while conservatives are exasperated
by the unholy cabal of big business and big government in cohoots in the "progressive" remake of America. Both are right
in a sense."
Why other couching this. Ten years ago if some Hollywood exec had said, no same sex marriage, no production company in your
town, the town would have shrugged. Today before shrugging, the city clerk is checking the account balance. When the governors
of Michigan, and Arizona bent down in me culpa's on related issue, because business interests piped in, it was an indication that
the game had seriously changed. Some 3 � 5% of the population facing no real opposition has decided that that their private
lives needed public endorsement and have proceeded to upend the entire social order - the game has shifted in ways I am not sure
most of the public fully grasps or desires.
Same sex weddings in US military chapels - the concept still turns my stomach. Advocates control the megaphones, I don't think
they control the minds of the public, despite having convinced a good many people that those who have chosen this expression are
under some manner of assault � that demands a legal change - intelligent well educated, supposedly astute minded people actually
believe it. Even the Republican nominee believes it.
I love Barbara Streisand, but if the election means she moves to Canada, well, so be it. Take your "drag queens" impersonators
wit you. I enjoy Mr. and Mrs Pitt, I think have a social moral core but really? with millions of kids future at stake, endorsing
a terminal dynamic as if it will save society's ills - Hollywood doesn't even pretend to behave royally much less embody the sensitivities
of the same.
There is a lot to challenge about supporting Mr. Trump. He did support killing children in the womb and that is tragic. Unless
he has stood before his maker and made this right, he will have to answer for that. But no more than a trove of Republicans who
supported killing children in the womb and then came to their senses. I guess of there is one thing he and I agree on, it's not
drinking.
As for big budget military, it seems a waste, but if we are going to waste money, better it be for our own citizens. His Achilles
heel here is his intentions as to ISIS/ISIL. I think it's the big drain getting ready to suck him into the abyss of intervention
creep.
Missile defense just doesn't work. The tests are rigged and as Israel discovered, it's a hit and miss game with low probability
of success, but it makes for great propaganda.
I am supposed to be outraged by a football player stance on abusive government. While the democratic nominee is turning over
every deck chair she find, leaving hundreds of thousands of children homeless - let me guess, on the bright side, George Clooney
cheers the prospect of more democratic voters.
If Mr. Trumps only achievements are building a wall, over hauling immigration policy and expanding the size of the military.
He will be well on his way to getting ranked one of the US most successful presidents.
I never understood why an analysis needs to lard in every conceivable historical reference and simply assume its relevance, when
there are so many non constant facts and circumstances. There has always been and will always be class conflict, even if it
falls short of a war. Simply examining recent past circumstances, the wealthy class has been whooping up on all other classes.
This is not to suggest any sort of remedy, but simply to observe that income disparity over the past 30 years has substantially
benefitted on sector of class and political power remains in their hands today. To think that there will never be class conflict
is to side with a Marxian fantasy of egalitarianism, which will never come to pass. Winners and losers may change positions, but
the underlying conflict will always remain.
State governments have been kowtowing to big business interests for a good long while. Nothing new under the sun there.
Back in the 80s when GM was deciding where to site their factory for the new Saturn car line, they issued an edict stating they
would only consider states that had mandatory seat belt use laws, and the states in the running fell all over each to enact those.
The split on Trump is first by race (obviously), then be gender (also somewhat obviously), and then by education. Even among
self-declared conservatives it's the college educated who tend to oppose him. This is a lot broader than simply losing some "new"
Knowledge Class, unless all college educated people are put in that grouping. In fact he is on track to lose among college educated
whites, something no GOP candidate has suffered since the days of FDR and WWII.
People don't really care for the actions of the elite but they care for the consequences of these actions. During the 1960's,
per capita GDP growth was around 3.5%. Today it stands at 0,49%. If you take into account inflation, it's negative. Add to this
the skewed repartition of said growth and it's intuitive that many people feel the pain; whom doesn't move forward, goes backwards.
People couldn't care for mass immigration, nation building or the emergence of China if their personal situation was not
impacted. But now, they begin to feel the results of these actions.
I have a simple philosophy regarding American politics that shows who is made of what, and we don't have to go through all
the philosophizing in this article: Anyone who believes in same sex marriage has been brainwashed and is un-American and unreliable.
Anyone who puts Israeli interests above America's is un-American.
EliteComic beat me to the punch. I was disappointed that Ross Perot, who won over 20% of the popular vote twice, and was briefly
in the lead in early 1992, wasn't mentioned in this article.
Re: Anyone who believes in same sex marriage has been brainwashed and is un-American and unreliable. Anyone who puts Israeli
interests above America's is un-American.
The first has nothing whatsoever to do with American citizenship. It's just a political issue� on which, yes, reasonable
people can differ. However no American citizen should put the interests of any other country ahead of our own, except in a situation
where the US was itself up to no good and deserved its comeuppance. And then the interest is not that of any particular nation,
but of justice being done period.
A lot of this "New Class" stuff is just confusing mis-mash of this and that theory. Basically, America changed when the US
dollar replace gold as the medium of exchange in the world economy. Remember when we called it the PETRO-DOLLAR. As long as the
Saudis only accepted the US dollar as the medium of exchange for oil, then the American government could export it's inflation
and deficit spending. Budget deficits and trade deficits are intrinsically related. It allowed America to become a nation of consumers
instead of a nation of producers.
Who really cares about the federal debt. REally? We can print dollars, exchange these worthless dollars with China for hard
goods, and then China lends the dollars back to us, to pay for our government. Get it?
It's really a form of classic IMPERIALISM. To maintain this system, we've got the US military and we prop up the corrupt
dictatorships in Saudi Arabia, Iraq, Libya
Yeah, you can talk about the "new class", the corruption of the banking system by the idiotic "libertarian" or "free market
utopianism" of the Gingrich Congress, the transformation of American corporations to international corporations, and on and on.
But it's the US dollar as reserve currency that has allowed it all to happen. God help us, if it ends, we'll be crippled.
And damn the utopianism of you "libertarians" you're worse then Marxists when it comes to ideology over reality.
"State governments have been kowtowing to big business interests for a good long while. Nothing new under the sun there. Back
in the 80s when GM was deciding where to site their factory for the new Saturn car line, they issued an edict stating they would
only consider states that had mandatory seat belt use laws, and the states in the running fell all over each to enact those."
Ah, not it's policy on some measure able effect. The seatbelt law was debate across the country. The data indicated that it
did in fact save lives. And it's impact was universal applicable to every man women or child that got into a vehicle.
That was not a private bedroom issue. Of course businesses have advocated policy. K street is not a K-street minus that reality.
But GM did not demand having relations in parked cars be legalized or else.
You are taking my apples and and calling them seatbelts - false comparison on multiple levels, all to get me to acknowledge
that businesses have influence. It what they have chosen to have influence on -
I do not think the issue of class is relevant here � whether it be new classes or old classes. There are essentially two classes
� those who win given whatever the current economic arrangements are or those who lose given those same arrangements. People who
think they are losing support Trump versus people who think they are winning support Clinton. The polls demonstrates this � Trump
supporters feel a great deal more anxiety about the future and are more inclined to think everything is falling apart whereas
Clinton supporters tend to see things as being okay and are optimistic about the future. The Vox work also shows this pervasive
sense that life will not be good for their children and grandchildren as a characteristic of Trump supporters.
The real shift I think is in the actual coalitions that are political parties. Both the GOP and the Dems have been coalitions
� political parties usually are. Primary areas of agreement with secondary areas of disagreement. Those coalitions no longer work.
The Dems can be seen as a coalition of the liberal knowledge types � who are winners in this economy and the worker types who
are often losers now in this economy. The GOP also is a coalition of globalist corporatist business types (winners) with workers
(losers) who they attracted in part because of culture wars and the Dixiecrats becoming GOPers. The needs of these two groups
in both parties no longer overlap. The crisis is more apparent in the GOP because well � Trump. If Sanders had won the nomination
for the Dems (and he got close) then their same crisis would be more apparent. The Dems can hold their creaky coalition together
because Trump went into the fevered swamps of the alt. right.
I think this is even more obvious in the UK where you have a Labor Party that allegedly represents the interests of working
people but includes the cosmopolitan knowledge types. The cosmopolitans are big on the usual identity politics, unlimited immigration
and staying in the EU. They benefit from the current economic arrangement. But the workers in the Labor party have been hammered
by the current economic arrangements and voted in droves to get out of the EU and limit immigration. It seems pretty obvious that
there is no longer a coalition to sustain the Labor Party. Same with Tories � some in the party love the EU,immigration, globalization
while others voted out of the EU, want immigration restricted and support localism. The crisis is about the inability of either
party to sustain its coalitions. Those in the Tory party who are leavers should be in a political party with the old Labor working
class while the Tory cosmopolitans should be in a party with the Labor cosmopolitans. The current coalitions not being in synch
is the political problem � not new classes etc.
Here in the US the southern Dixiecrats who went to the GOP and are losers in this economy might find a better coalition with
the black, Latino and white workers who are still in the Dem party. But as in the UK ideological culture wars have become more
prominent and hence the coalitions are no longer economically based. If people recognized that politics can only address the economic
issues and they aligned themselves accordingly � the membership of the parties would radically change.
The Clinton Class mocks The Country Class: Bill Clinton, "We all know how her opponent's done real well down in West Virginia
and eastern Kentucky. Because the coal people don't like any of us anymore." "They blame the president when the sun doesn't come
up in the morning now,"
"Trump's voters were most strongly characterized by their "racial isolation": they live in places with little ethnic diversity.
"
During the primaries whites in more diverse areas voted Trump. The only real exception was West Virginia. Utah, Wyoming, Iowa?
All voted for Cruz and "muh values".
In white enclaves like Paul Ryans district, which is 91%, whites are able to signal against white identity without having to
face the consequences.
"All three major African, Hispanic, & Asian-American overwhelming support HRC in the election."
That doesn't mean they actually support Hillary's policies and position. What do they really know about either? These demographics
simply vote overwhelmingly Democrat no matter who is on the ticket. If Alfred E. Newman were the candidate, this particular data
point would look just the same.
"On the contrary, the New Class favors new kinds of crony finance capitalism, even as it opposes the protectionism that would
benefit hard industry and managerial interests."
This doesn't ring true. Hard industry, and the managers that run it had no problem with moving jobs and factories overseas
in pursuit of cheaper labor. Plus, it solved their Union issues. I feel like the divide is between large corporations, with dilute
ownership and professional managers who nominally serve the interests of stock fund managers, while greatly enriching themselves
versus a multitude of smaller, locally owned businesses whose owners were also concerned with the health of the local communities
in which they lived.
The financial elites are a consequence of consolidation in the banking and finance industry, where we now have 4 or 5 large
institutions versus a multitude of local and regional banks that were locally focused.
"... Ford werke built trucks for the Germans up until the end of the war. And Prescott Bush (father and grandfather to POTUS 41 & 43) had his assets frozen and seized for trading with the enemy. ..."
"... Nearly all German corporations/large companies (they funded the parties rise) were complicit with the Nazi war and Holocaust machine and received the benefits of free (to them) slave Labor (reminds me of the US prison Labor system) and the seizure of capital assets in conquered countries. ..."
"... Being and oligarch or a faceless Corporation certainly has it's benefits, especially if there are any "scary" communists (or terrorists) around. ..."
I G Farben isn't alone in Holocaust related evilness. Check out IBMs' part, through their German
subsidiary, in making the efficiency of the "Final Solution" feasible. Figures for the liquidation
of "undesirables" were available to the New York headquarters of IBM in nearly real time.
As the
war wound down, special units attached to the U.S.Army secured and protected IBM 'assets' in Germany,
mainly the hardware and specialists who ran things.
Ford werke built trucks for the Germans up until the end of the war. And Prescott Bush (father
and grandfather to POTUS 41 & 43) had his assets frozen and seized for trading with the enemy.
But what do I know, I'm just a little prole with no Ivy league credentials. I should just trust
my betters.
By all means, go ahead, coronate another .01%er Oligarch to be President. Worked great so far.
Nearly all German corporations/large companies (they funded the parties rise) were complicit
with the Nazi war and Holocaust machine and received the benefits of free (to them) slave Labor
(reminds me of the US prison Labor system) and the seizure of capital assets in conquered countries.
What happened to them and their leaders. Not much, some were broken up (IG farben) some leaders
spent a short stint in prison (alfried Krupp) but nearly all of the largest were allowed to immediately
or eventually (Krupp) go on their merry way, so we could "stop communism".
So the very people that funded and were integral to the Nazi party having the funds and ability
to rise and benefited most, were slightly scolded at most.
Being and oligarch or a faceless Corporation certainly has it's benefits, especially if there
are any "scary" communists (or terrorists) around.
"... A complex web of revolving doors between the
military-industrial-complex, Wall Street, and Silicon Valley consolidates the interests of
defense contracts, banksters, military actions, and both foreign and domestic surveillance intelligence. ..."
"... While most citizens are at least passively aware of the surveillance state and collusion between
the government and the corporate heads of Wall Street, few people are aware of how much the intelligence
functions of the government have been outsourced to privatized groups that are not subject to oversight
or accountability. According to Lofgren,
70%
of our intelligence budget goes to contractors. ..."
"... the deep
state has, since 9/11, built the equivalent of three Pentagons, a bloated state apparatus that keeps
defense contractors, intelligence contractors, and privatized non-accountable citizens marching in
stride. ..."
"... Groupthink - an unconscious assimilation of the views of your superiors and peers - also works
to keep Silicon Valley funneling technology and information into the federal surveillance state.
Lofgren believes the NSA and CIA could not do what they do without Silicon Valley. It has developed
a de facto partnership with NSA surveillance activities, as facilitated by a
FISA court order. ..."
For decades, extreme ideologies on both the left and the right have clashed over the conspiratorial
concept of a shadowy secret government pulling the strings on the world's heads of state and captains
of industry.
The phrase New World Order is largely derided as a sophomoric conspiracy theory entertained by
minds that lack the sophistication necessary to understand the nuances of geopolitics. But it
turns out the core idea - one of deep and overarching collusion between Wall Street and government
with a globalist agenda - is operational in what a number of insiders call the "Deep State."
In the past couple of years, the term has gained traction across a wide swath of ideologies. Former
Republican congressional aide Mike Lofgren says it is the nexus of Wall Street and the national security
state - a relationship where elected and unelected figures join forces to consolidate power and serve
vested interests. Calling it "the big story of our time," Lofgren says the deep state represents
the failure of our visible constitutional government and the cross-fertilization of corporatism with
the globalist war on terror.
"It is a hybrid of national security and law enforcement agencies: the Department of Defense,
the Department of State, the Department of Homeland Security, the Central Intelligence Agency and
the Justice Department. I also include the Department of the Treasury because of its jurisdiction
over financial flows, its enforcement of international sanctions and its organic symbiosis with Wall
Street," he explained.
Even parts of the judiciary, namely the Foreign Intelligence Surveillance Court, belong to the
deep state.
How does the deep state operate?
A complex web of revolving doors between the
military-industrial-complex, Wall Street, and Silicon Valley consolidates the interests of
defense contracts, banksters, military actions, and both foreign and domestic surveillance intelligence.
According to Mike Lofgren and many other insiders, this is not a conspiracy theory. The deep state
hides in plain sight and goes far beyond the military-industrial complex
President Dwight D. Eisenhower warned about in his farewell speech over fifty years ago.
While most citizens are at least passively aware of the surveillance state and collusion between
the government and the corporate heads of Wall Street, few people are aware of how much the intelligence
functions of the government have been outsourced to privatized groups that are not subject to oversight
or accountability. According to Lofgren,
70%
of our intelligence budget goes to contractors.
Moreover, while Wall Street and the federal government suck money out of the economy, relegating
tens of millions of people to food stamps and incarcerating
more people than China - a totalitarian state with four times more people than us - the deep
state has, since 9/11, built the equivalent of three Pentagons, a bloated state apparatus that keeps
defense contractors, intelligence contractors, and privatized non-accountable citizens marching in
stride.
After years of serving in Congress, Lofgren's moment of truth regarding this matter came in
2001. He observed the government appropriating an enormous amount of money that was ostensibly
meant to go to Afghanistan but instead went to the Persian Gulf region. This, he says, "disenchanted"
him from the
groupthink,
which, he says, keeps all of Washington's minions in lockstep.
Groupthink - an unconscious assimilation of the views of your superiors and peers - also works
to keep Silicon Valley funneling technology and information into the federal surveillance state.
Lofgren believes the NSA and CIA could not do what they do without Silicon Valley. It has developed
a de facto partnership with NSA surveillance activities, as facilitated by a
FISA court order.
Now, Lofgren notes, these CEOs want to complain about foreign market share and the damage this
collusion has wrought on both the domestic and international reputation of their brands. Under the
pretense of pseudo-libertarianism, they helmed a commercial tech sector that is every bit as intrusive
as the NSA. Meanwhile, rigging of the DMCA intellectual property laws - so that the government can
imprison and fine citizens who jailbreak devices - behooves Wall Street. It's no surprise that the
government has upheld the draconian legislation for the 15 years.
It is also unsurprising that the growth of the corporatocracy aids the deep state. The
revolving door between government and Wall Street money allows top firms to offer premium jobs to
senior government officials and military yes-men. This, says Philip Giraldi, a former counter-terrorism
specialist and military intelligence officer for the CIA, explains how the Clintons left the White
House nearly broke but soon amassed $100 million. It also explains how
former
general and CIA Director David Petraeus, who has no experience in finance, became a partner at
the KKR private equity firm, and how former Acting CIA Director Michael Morell became Senior Counselor
at Beacon Global Strategies.
Wall Street is the ultimate foundation for the deep state because the incredible amount of
money it generates can provide these cushy jobs to those in the government after they retire.
Nepotism reigns supreme as the
revolving
door between Wall Street and government facilitates a great deal of our domestic strife:
"Bank bailouts, tax breaks, and resistance to legislation that would regulate Wall Street,
political donors, and lobbyists. The senior government officials, ex-generals, and high level
intelligence operatives who participate find themselves with multi-million dollar homes in which
to spend their retirement years, cushioned by a tidy pile of investments," said Giraldi.
How did the deep state come to be?
Some say it is the evolutionary hybrid offspring of the
military-industrial complex while others say it came into being with the
Federal
Reserve Act, even before the First World War. At this time, Woodrow Wilson remarked,
"We have come to be one of the worst ruled, one of the most completely controlled and dominated
governments in the civilized world, no longer a government by conviction and the vote of the majority,
but a government by the opinion and duress of a small group of dominant men."
This quasi-secret cabal pulling the strings in Washington and much of America's foreign policy
is maintained by a corporatist ideology that thrives on deregulation, outsourcing, deindustrialization,
and financialization. American exceptionalism, or the great "Washington
Consensus," yields perpetual war and economic imperialism abroad while consolidating the interests
of the oligarchy here at home.
Mike Lofgren says this government within a government operates off tax dollars but is not constrained
by the constitution, nor are its machinations derailed by political shifts in the White House. In
this world - where the deep state functions with impunity - it doesn't matter who is president so
long as he or she perpetuates the war on terror, which serves this interconnected web of corporate
special interests and disingenuous geopolitical objectives.
"As long as appropriations bills get passed on time, promotion lists get confirmed, black (i.e.,
secret) budgets get rubber stamped, special tax subsidies for certain corporations are approved
without controversy, as long as too many awkward questions are not asked, the gears of the hybrid
state will mesh noiselessly,"
according to Mike Lofgren in an interview with Bill Moyers.
Interestingly, according to Philip Giraldi, the ever-militaristic Turkey has its own deep state,
which uses overt criminality to keep the money flowing. By comparison, the U.S. deep state relies
on a symbiotic relationship between banksters, lobbyists, and defense contractors, a mutant hybrid
that also owns the Fourth Estate and Washington think tanks.
Is there hope for the future?
Perhaps. At present, discord and unrest continues to build. Various groups, establishments, organizations,
and portions of the populace from all corners of the political spectrum, including Silicon Valley,
Occupy, the Tea Party, Anonymous, WikiLeaks, anarchists and libertarians from both the left and right,
the Electronic Frontier Foundation, and whistleblowers like Edward Snowden and others are beginning
to vigorously question and reject the labyrinth of power wielded by the deep state.
Can these groups - can we, the people - overcome the divide and conquer tactics used to quell
dissent? The future of freedom may depend on it.
America's First Black President is a traitor
to his race and also to justice.
Obama has permitted the corrupt US Department of Justice (sic), over which he wields authority,
to overturn the ruling of a US Federal Court of Appeals that prisoners sentenced illegally to longer
terms than the law permits must be released once the legal portion of their sentence is served. The
DOJ, devoid of all integrity, compassion, and sense of justice, said that "finality" of conviction
was more important than justice.
Indeed, the US Justice (sic) Department's motto is: "Justice? We don't need no stinkin'
justice!"
The concept of "finality" was an invention of a harebrained Republican conservative academic
lionized by the Republican Federalist Society. In years past conservatives believed-indeed,
still do-that the criminal justice system coddles criminals by allowing too many appeals against
their unlawful convictions. The appeals were granted by judges who thought that the system was supposed
to serve justice, but conservatives demonized justice as something that enabled criminals. A succession
of Republican presidents turned the US Supreme Court into an organization that only serves the interests
of private corporations. Justice is nowhere in the picture.
Appeals Court Judge, James Hill, a member of the court that ruled that prisoners did not have
to serve the illegal portion of their sentences, when confronted with the Obama/DOJ deep-sixing of
justice had this to say:
"A judicial system that values finality over justice is morally bankrupt."
Obama's DOJ says that there are too many black prisoners illegally sentenced to be released
without upsetting the crime-fearful white population. According to Obama's Justice (sic)
Department, the fears of brainwashed whites take precedence over justice.
Judge Hill said that the DOJ "calls itself,
without a trace of irony, the Department of Justice."
Judge Hill added: We used to call such systems
as people sitting in prison serving sentences that were illegally imposed "gulags." "Now we call
them the United States."
America is a gulag. We are ruled by a government that is devoid of all morality,
all integrity, all compassion, all justice. The government of the United States stands for one thing
and one thing only: Evil.
It is just as Chavez told the United Nations in 2006 referring to President George W. Bush's address
to the assembly the day before: "Yesterday, at this very podium, Satan himself stood speaking as
if he owned the world. You can still smell the sulfur."
If you are an American and you cannot smell the sulfur, you are tightly locked down
in The Matrix. God help you. There is no Neo to rescue you. And you are too brainwashed and ignorant
to be rescued by me.
You are part of the new Captive Nation.
Das Capitalist
I agree with the sentiment of this article, but finality was not invented by the Federalist
Society. It's been a bedrock of American law since the earliest Supreme Ct cases. And yes, we
herald it to the detriment of justice.
TeethVillage88s
Well if I understand you correct that the Supreme Court is now the ultimate body of law and
supersedes common law, constitutional law, and other old sources of law (Roman Law)...
I would suggest that as our governments became corporations, that we began to see offices,
services, branches as profit centers within the government corporation.
Corporitization of government and reducing services to profit centers or stand alone units...
brings out concerns for business over the normal sense of what a government is for.
This is the Seed of Fascism.
I know we must be conservative in budgets for governments and small governments must balance
their budget. But something is missing where we transfer $1 Trillion to Defense Contractors
for Regional wars where the governments either don't exist or can't mount a navy or airforce
to attack us. Another example is the $1 Trillion Medicare/Medicaid that flows through the
govt.
These are constitutional issues.
But I'm thinking you are most concerned with Individual or Civil Rights which limit government
and which provide the frame work for individual rights and liberties.
Bottom line I think the Supremes are looking at Budget Concerns partly and partly are being
influences by politics, money, power, access, association, and networks.
Lore
Trump seems to be making strides because he has some grit and character, but he also seems
to be something of a loose cannon, with a streak of stereotypical Ugly Americanism, and naive
to the dangers of political life. One hopes that he has a good circle of smart and
conscientious advisors, especially in economics and foreign affairs, and can learn quickly.
zhandax
Trump is a joke but fortunately he is forcing the point to the average americun idiot that
the entire current election process is a bigger joke, although one which most of them still
don't get. I heard educated people today describing the election in terms reminiscent of a
facebook pissy-fight.
I don't care to speculate how this ends, but is is one hell of a show.
Enki Anu
In the court of law if one witnesses a crime and does nothing about it, is labeled as
accessory to crime. We have a population who does not give a rat ass about all the murder our
government commits around the world.
We are all accessory to the crime against humanity and whatever comes our way, we deserve
it. May the prime creator grant victory to the free spirited Homosapeans.
August
>>>We have a population who does not give a rat ass about all the murder our government
commits around the world.
This is the strongest argument in favor of Going Galt and/or expatriating.
Having one's labor, capital, intellect and life itself strip-mined by "government" is very
difficult to avoid, but you can at least avoid supporting Imperial America... what it stands
for, and what it does: lie, steal, and kill.
AssN9
"The UN was founded so that we would never forget the crimes of great power, are we now in
danger of forgetting ? Do we forget the lies that justified the conquest of Iraq and disguised
America's plans to dominate the world ? Do we forget that the British government has announced
for the first time that it's prepared to launch an attack with nuclear weapons echoing yet
again George Bush ? And do we accept the distortion of intellect and morality that empties
noble words like "democracy" and "liberation" of their true meaning ? That says it's wrong for
a terrorist to kill innocent people but right for government's to commit the same crimes in
our name ? The answer is that we need not accept any of this if we recognise that there are
now two superpowers, one is the regime in Washington and the other is public opinion, now
stirring all over the world as perhaps never before. Make no mistake, it is an epic struggle.
The alternative is not just the conquest of far away countries, it is the conquest of us, of
our minds, our humanity and our self-respect. If we remain silent, victory over us is
assured." John Pilger
TeethVillage88s
David Spears Addington (born January 22, 1957) was legal counsel (2001�2005) and chief of
staff (2005�2009) to Vice President Dick Cheney,[1] and is now vice president of domestic and
economic policy studies at The Heritage Foundation.[2][3][4][5]
During 21 years of federal service, Addington worked at the CIA, the Reagan White House, the
Department of Defense, four congressional committees, and the Cheney Office of the Vice
President.[6] He was appointed to replace I. Lewis "Scooter" Libby Jr. as Cheney's chief of
staff upon Libby's resignation when Libby was indicted on charges of perjury and obstruction
of justice on October 28, 2005.[7] Addington was described by U.S. News & World Report as "the
most powerful man you've never heard of" in May 2006.[8]
TeethVillage88s
People don't get it.
When your leaders can go to foreign wars against people that can't mount a navy, air force, or
army to attack you, or even have missile that can reach your shores... it is evil.
And this evil will be turned on the US Citizens at different points as their nature shows
themselves in decisions.
They dehumanize to go to war, then they do the same to people on main street later on. That is
why they don't give a shit about Jobs, Good Jobs, nor about the Wealth that was destroyed and
then transferred to the wealthy in 2008 Crisis.
- They are Fascist.
- They think like Fascist.
- The Checks and Balances are gone.
- The Balance of Powers in the 3 Branches of Government Gone
- The power Divided between People, States, and Central Govt Gone
Broken Third Estate and fourth Estate. MSM is not Free Press.
- Free Speech has been usurped by Debt, the Need to Work, the Need for a Career, the Need for
Promotions, Bonuses, and Instant Gratification.
mog
One of the best comments I have read on ZH. The only thing I would add is the co-relation
between the of the fall of the old American ideal with the rise of forces of Zion
The original gulags were also a zionist construct of their day.
The Russians are trying to break free.
henry chucho
Thank God he's got PHD in front of his name. There for a minute, I thought it was just the
rantings of another American nut job..
Really20
Do you seriously believe the BS on offer from our mainstream media? The economies,
political systems, and even the natural environment of the Earth is collapsing under human
pressure. Nature will after millions of years recover itself without our aid, but we would be
reduced to isolated tribes, a shadow of our former selves. Is this the path that you want our
species to take?
Make no mistake, our economy is about to enter a new recession; the third wave in the
cascading failure of the global economy. There was 2000, 2008, and then there will be 2015.
Given global, as opposed to localized, economic and political weakness/instability vis-�-vis
1999 or 2007, the results are going to be worse.
The government of the United States stands for one thing and one thing
only: Evil.
America is a fascist, police state. Evil can easily flourish in such a state.
Democracy has been dead in the land of the free for decades now.
The Deep State, a triad of Wall Street, MIC and spooks, runs everything in America since
at least Nov 22, 1963. The NSA spies on the Supreme Court, Congress and the White House
and you.
The most extraordinary passage in the memo requires that the Israeli spooks "destroy
upon recognition" any communication provided by the NSA "that is either to or from an
official of the US government." It goes on to spell out that this includes "officials of
the Executive Branch (including the White House, Cabinet Departments, and independent
agencies); the US House of Representatives and Senate (members and staff); and the US
Federal Court System (including, but not limited to, the Supreme Court)."
The stunning implication of this passage is that NSA spying targets not only
ordinary American citizens, but also Supreme Court justices, members of Congress and the
White House itself. One could hardly ask for a more naked exposure of a police state.
There is the visible government situated around the Mall in Washington, and then
there is another, more shadowy, more indefinable government that is not explained in Civics
101 or observable to tourists at the White House or the Capitol. The former is traditional
Washington partisan politics: the tip of the iceberg that a public watching C-SPAN sees
daily and which is theoretically controllable via elections. The subsurface part of the
iceberg I shall call the Deep State, which operates according to its own compass heading
regardless of who is formally in power.
The secret collaboration of the military, the intelligence and national security
agencies, and gigantic corporations in the systematic and illegal surveillance of the
American people reveals the true wielders of power in the United States. Telecommunications
giants such as AT&T, Verizon and Sprint, and Internet companies such as Google, Microsoft,
Facebook and Twitter, provide the military and the FBI and CIA with access to data on
hundreds of millions of people that these state agencies have no legal right to possess.
Congress and both of the major political parties serve as rubber stamps for
the confluence of the military, the intelligence apparatus and Wall Street that really runs
the country. The so-called "Fourth Estate"-the mass media-functions shamelessly as an arm
of this ruling troika.
"The Central Intelligence Agency owns everyone of any significance in the
major media." -- William Colby, former CIA Director
Parrotile
They are certainly NOT clueless. They know who holds the real power (those with the real
money), and they are going to be looking after their interests, especially when the penalties
for upsetting those with power tend to be extrajudicial, but highly effective, as certain
journalists have discovered.
"Justice", like "healthcare" comes with a price tag. Clients with a "better ability" to
afford "justice" expect (and of course GET) a better brand. Why do you think the "well
connected" seem to be able to avoid the slightest whiff of prosecution, whilst the minions are
killed for no more than "looking the wrong way" at one of the Militia?
BarkingCat
I call bullshit on this article.
DOJ cannot override a court decision.
They can challenge it and ask for higher court to look at it (in this case the supreme court).
I like reading his article but I think PCR is going off the rails.
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Shad_ow
Have you kept up the last 6 years. They have and do. Obama has ignored several court
decisions.
Duc888
"America's First Black President is a traitor to his race and also to justice. "
Jesus, so PCR actually thinks this puppet wasn't put into place? Really? A junior Senator on
the Senate banking committee? With no fucking past? Really?
Jeez, water is wet. Fire is Hot. Who knew?
gregga777
Affirmative Action Barry Soetoro's allegiance is to the "green" race, that is, the color of
money.
kappal_toba_dhu...
USA used to be one of the freest, richest countries on earth. Not today, deekras (dears).
Today in many ways it is no different from any other developing country, not only in freedom
but in police shootings searches, capital movement, infrastructure, public services, etc.
The trouble is that USA propaganda machine is still busy telling the whole world that America
is "paradise" when in fact it is more like hell for those that are not rich. After 20 years
of struggling we were lucky to get the opportunity to leave.
If you are planning to move there, DON'T!
August
PCR does skate fairly close to the edge.
I believe PCR uses the word Zionists, but he has certainly said that the Lobby basically
controls US foreign policy in the Middle East. Openly making such a statement is still not
good for a career in US Public Life (as Pat Buchanan might say), but the facts are pretty much
beyond dispute.
"...The jarring market forces? It was a political project with the desired results." . "..."We will all have to turn from the classical fixation on wealth accumulation and efficiency
to a modern economics that places imagination and creativity at the center of economic life."" . "...AN excellent paper up until Eddie tries to solve the problem. His description of the long
term societal effects of consolidation of corporations into corporatist behemoths and wealth into obscene
levels of power, isolation, and self-indulgence was unerring. Too bad he had no idea what he was depicting." . "...Our financial leaders don't want a thriving economy. The want to crush the opposition and
keep people under their thumb" . "...Perhaps well worth a rather long read, is Domhoff's piece titled, "The Class Domination Theory
of Power, here:http://www2.ucsc.edu/whorulesamerica/power/class_domination.html"
This is from Edmund Phelps. It was kind of hard to highlight the main points in brief extracts,
so you may want to take a look at the full article:
Many of us in Western Europe and America feel that our economies are far
from just...
With little or no effective policy initiative giving a lift to the less advantaged,
the jarring market forces of the past four decades-mainly the slowdowns in productivity that have
spread over the West and, of course, globalization, which has moved much low-wage manufacturing
to Asia-have proceeded, unopposed, to drag down both employment and wage rates at the low end.
The setback has cost the less advantaged not only a loss of income but also a loss of what economists
call inclusion-access to jobs offering work and pay that provide self-respect. And inclusion was
already lacking to begin with. ...
How might Western nations gain-or regain-widespread prospering and flourishing? Taking concrete
actions will not help much without fresh thinking: people must first grasp that standard economics
is not a guide to flourishing-it is a tool only for efficiency. Widespread flourishing in a nation
requires an economy energized by its own homegrown innovation from the grassroots on up. For such
innovation a nation must possess the dynamism to imagine and create the new-economic freedoms
are not sufficient. And dynamism needs to be nourished with strong human values.
Of the concrete steps that would help to widen flourishing, a reform of education stands out.
The problem here is not a perceived mismatch between skills taught and skills in demand. ... The
problem is that young people are not taught to see the economy as a place where participants may
imagine new things, where entrepreneurs may want to build them and investors may venture to back
some of them. It is essential to educate young people to this image of the economy.
It will also be essential that high schools and colleges expose students to the human values
expressed in the masterpieces of Western literature, so that young people will want to seek economies
offering imaginative and creative careers. Education systems must put students in touch with the
humanities in order to fuel the human desire to conceive the new and perchance to achieve innovations.
This reorientation of general education will have to be supported by a similar reorientation of
economic education.
We will all have to turn from the classical fixation on wealth accumulation and efficiency
to a modern economics that places imagination and creativity at the center of economic life.
I'm skeptical that this is the answer to our inequality/job satisfaction problems.
"With little or no effective policy initiative giving a lift to the less advantaged, the jarring
market forces of the past four decades-mainly the slowdowns in productivity that have spread over
the West and, of course, globalization, which has moved much low-wage manufacturing to Asia-have
proceeded, unopposed, to drag down both employment and wage rates at the low end."
The jarring market forces? It was a political project with the desired results.
JohnH said in reply to Peter K....
Indeed! And there is currently no meaningful effort to fix the problem, only to worsen it through
TPP and TAFTA.
Rune Lagman said...
"We will all have to turn from the classical fixation on wealth accumulation and efficiency
to a modern economics that places imagination and creativity at the center of economic life."
Well, ain't gonna happen by "reforming" the education system.
Everybody (more or less) knows what it takes to "fix" the western economies; lots of infrastructure
investment (preferable green) and higher wages. I'm getting fed up with all these "economists"
that keep justifying the status quo (probably because their paycheck depends on it).
Could it possibly be that your skepticism arises from the fact that -precisely because you
are an academic economist - you haven't got an imaginative or creative bone in your body?
Doc Thoma wrote "I'm skeptical that this is the answer to our inequality/job satisfaction problems."
Everybody has imagination and creative potential. Most people just lack the mean to express
it in a way that will enter the economy. Even Edmund realized that people got to eat. The obstacles
run from there. It was Edmund's answer that Doc Thoma was skeptical of. This was Phelps answer
to the question:
"... Of the concrete steps that would help to widen flourishing, a reform of education stands
out. The problem here is not a perceived mismatch between skills taught and skills in demand.
(Experts have urged greater education in STEM subjects-science, technology, engineering, and mathematics-but
when Europe created specialized universities in these subjects, no innovation was observed.) The
problem is that young people are not taught to see the economy as a place where participants may
imagine new things, where entrepreneurs may want to build them and investors may venture to back
some of them. It is essential to educate young people to this image of the economy.
It will also be essential that high schools and colleges expose students to the human values
expressed in the masterpieces of Western literature, so that young people will want to seek economies
offering imaginative and creative careers. Education systems must put students in touch with the
humanities in order to fuel the human desire to conceive the new and perchance to achieve innovations.
This reorientation of general education will have to be supported by a similar reorientation of
economic education..."
If you agree with Edmund Phelps on his answer then at least we must all admit that you have an
astronomical imagination.
djb said...
Our financial leaders don't want a thriving economy
The want to crush the opposition and keep people under their thumb
Give people real hope and the economy will thrive
anne said...
By way of Branko Milanovic, referring to randomized trials in economics:
�In that Empire, the Art of Cartography attained such Perfection that the map of a single Province
occupied the entirety of a City, and the map of the Empire, the entirety of a Province. In time,
those Unconscionable Maps no longer satisfied, and the Cartographers Guilds struck a Map of the
Empire whose size was that of the Empire, and which coincided point for point with it. The following
Generations, who were not so fond of the Study of Cartography as their Forebears had been, saw
that that vast Map was Useless, and not without some Pitilessness was it, that they delivered
it up to the Inclemencies of Sun and Winters. In the Deserts of the West, still today, there are
Tattered Ruins of that Map, inhabited by Animals and Beggars; in all the Land there is no other
Relic of the Disciplines of Geography.
(1946
Viajes de varones prudentes
Jorge Luis Borges)
cm said...
"The problem is that young people are not taught to see the economy as a place where participants
may imagine new things, where entrepreneurs may want to build them and investors may venture to
back some of them. It is essential to educate young people to this image of the economy."
He left out the part who will pay for all these new things. Aggregate demand. I don't know
where this idea comes from that young people don't imagine creating new things. They do it all
the time, until the rubber hits the road and they have to get a corporate job because there is
just not enough interest and funding for what they are interested in offering. No amount of education
will help there.
Not to put words in his mouth, but its sounds like an impersonalized form victim blaming -
schools suck and young people have no imagination.
RC AKA Darryl, Ron said in reply to cm...
Schools suck and young people have too much imagination. But Edmund Phelps has more imagination
that anyone that I have ever known :<)
cm said in reply to RC AKA Darryl, Ron...
Not sure how this relates to my point. How will "better education" fix the fact that when you
have a good idea, more likely than not there is no market for it? A lot of tech innovation "rests"
in actual or metaphorical drawers because of no ROI or no concrete customer/market to sell it.
And this is not a recent phenomenon.
RC AKA Darryl, Ron said...
AN excellent paper up until Eddie tries to solve the problem. His description of the long
term societal effects of consolidation of corporations into corporatist behemoths and wealth into
obscene levels of power, isolation, and self-indulgence was unerring. Too bad he had no idea what
he was depicting.
{... which has moved much low-wage manufacturing to Asia-have proceeded, unopposed, to drag
down both employment and wage rates at the low end.}
Yes, unopposed. Just what should any nation do about it? Forbid it?
That's not the way economies work.
The Industrial Revolution took a lot of people off the farms, brought them into large cities,
where accommodations were created for their families, and gave them jobs in factories with which
to pay the rent.
Many then moved on to purchase those properties an become homeowners, which was a typical example
of "economic progression".
Of course, the Industrial Revolution, which started in western developed nations, aided by
a couple of wars, inevitably progressed from more developed to lesser developed societies.
We in the industrially developed West should not have permitted the Chinese, Vietnamese or
Filipinos from bettering their lot by making exactly the same societal progression?
The income unfairness that has occurred since the US ratcheted down drastically upper-income
taxation was not replicated in the EU. Is a third of all income going to only 10% of the population
in Europe unfair? Perhaps.
Excerpt: {The argument over the structure and distribution of power in the United States has
been going on within academia since the 1950s. It has generated a large number of empirical studies,
many of which have been drawn upon here.
In the final analysis, however, scholars' conclusions about the American power structure depend
upon their beliefs concerning power indicators, which are a product of their "philosophy of science".
That sounds strange, I realize, but if "who benefits?" and "who sits?" are seen as valid power
indicators, on the assumption that "power" is an underlying social trait that can be indexed by
a variety of imperfect indicators, then the kind of evidence briefly outlined here will be seen
as a very strong case for the dominant role of the power elite in the federal government.}
"By collecting all of your records, we're wasting so much money, so much time, and the haystack's so large we can't find the terrorists,"
Paul said. "I'm for looking at all of the terrorists' records � I just want their name on the warrant and I just want it to be signed
by a judge just like the constitution says."
"... With controversial provisions of the Patriot Act scheduled to run out at midnight on Sunday, Paul, the Kentucky senator and Republican presidential hopeful, fielded questions about how he intended to win privacy campaigners a long hoped-for victory. ..."
"... "I think a lot of people in America agree with me," Paul said, "that your phone records should not be collected by your government, unless they suspect you of a crime and unless they call a judge and unless a warrant has your name on it." ..."
"... Apparently the real problem is Executive Order 12333, under which almost all of the mass surveillance is "authorized". ..."
"... By the time someone is a party candidate, they've already been bought off. National write-in. ..."
"... politicians listen to corporations and shareholders. What corporations dictate, their political lapdogs obediently listens. ..."
"... Please, tell me that porn sites are involved in this. Cut off Congress's porn access and they will be putty in our hands. ..."
"... "This is a blackout," read the site to which computers from congressional IP addresses were redirected. "We are blocking your access until you end mass surveillance laws." ..."
Rand Paul indicated his intention on Friday to filibuster a surveillance reform bill that he considers insufficient, as privacy
advocates felt momentum to tear the heart out of the Bush-era Patriot Act as its Snowden-era expiration date approaches.
With controversial provisions of the Patriot Act scheduled to run out at midnight on Sunday, Paul, the Kentucky senator and
Republican presidential hopeful, fielded questions about how he intended to win privacy campaigners a long hoped-for victory.
... ... ...
"By collecting all of your records, we're wasting so much money, so much time, and the haystack's so large we can't find the terrorists,"
Paul said. "I'm for looking at all of the terrorists' records � I just want their name on the warrant and I just want it to be signed
by a judge just like the constitution says."
... ... ...
"Right now we're having a little bit of a war in Washington," Paul said at the rally on Friday. "It's me versus some of the rest
of them � or a lot of the rest of them."
... ... ...
In the middle is a bill that fell three votes shy of a 60-vote threshold. The USA Freedom Act, supported by Obama, junks the NSA's
bulk collection of US phone records in exchange for extending the lifespan of the Patriot Act's controversial FBI powers.
While McConnell, Obama and many Freedom Act supporters describe those powers as crucial, a recent Justice Department report said
the expiring "business records" provision has not led to "any major case developments". Another power set to expire, the "roving
wiretap" provision, has been linked to abuse in declassified documents; and the third, the "lone wolf" provision, has never been
used, the FBI confirmed to the Guardian.
... ... ...
The White House has long backed passage of the USA Freedom Act, calling it the only available mechanism to save the Patriot Act
powers ahead of expiration now that the House has recessed until Monday.
Obama on Friday chastised what he said were "a handful of Senators" standing in the way of passing the USA Freedom Act, who he
alleged risked creating an intelligence lapse.
James Clapper, the director of national intelligence whom Paul has criticized for lying to Congress about surveillance, issued
a rare plea to pass a bill he has reluctantly embraced in order to retain Patriot Act powers.
"At this late date, prompt passage of the USA Freedom Act by the Senate is the best way to minimize any possible disruption of
our ability to protect the American people," Clapper said on Friday.
At the Beacon Drive-in diner in Spartanburg, Paul chastised proponents of the Patriot Act for arguing the law would prevent another
9/11. "Bull!" a woman in the crowd exclaimed, as others groaned at the national security excuse cited by more hawkish lawmakers.
"I think a lot of people in America agree with me," Paul said, "that your phone records should not be collected by your government,
unless they suspect you of a crime and unless they call a judge and unless a warrant has your name on it."
Multiple polls released this month have found overwhelming public antipathy for government surveillance.
Still, it remains unclear if the USA Freedom Act has the votes to pass. Senate rules permit Paul to effectively block debate on
the bill until expiration. Few who are watching the debate closely felt on Friday that they knew how Sunday's dramatic session would
resolve.
But privacy groups, sensing the prospect of losing one of their most reviled post-9/11 laws, were not in a mood to compromise
on Friday.
"Better to let the Patriot Act sunset and reboot the conversation with a more fulsome debate," said Anthony Romero, the executive
director of the American Civil Liberties Union.
He opposes indefinite detention in the NDAA, he opposes TPP and the fast track. He opposes the militarization of local police.
He opposes the secrecy of the Federal Reserve. He opposes unwarranted civil asset forfeiture. He opposes no-knock home searches.
He opposes the failed drug war. He opposes war without congressional approval. What is it about him you don't like?
Trenton Pierce -> masscraft 30 May 2015 21:14
Then line up behind Rand. He polls the best against Hilary. The era of big government Republican is over. Realize that or get
ready for your Democrat rule.
Vintage59 -> Nedward Marbletoe 30 May 2015 16:20
The machine would chew him up and spit him out and he's smart enough to know that.
ripogenus 30 May 2015 07:47
Just listened to NPR's On the Media. They did a special podcast just on the patriot act and the consequences if it expires.
Apparently the real problem is Executive Order 12333, under which almost all of the mass surveillance is "authorized".
seasonedsenior 29 May 2015 22:20
New technology is beginning to equal the playing field somewhat whether it be video of police misconduct or blocking out Congress
from 10,000 websites to stop NSA spying. This part of technology is a real positive. There are too many secrets in our democracy-light
that should be exposed for the greater good. There is too much concentrated power that needs to be opened up. I am happy to see
these changes happening. Keep up the good work.
AmyInNH cswanson420 29 May 2015 22:12
By the time someone is a party candidate, they've already been bought off. National write-in.
Viet Nguyen -> cswanson420 29 May 2015 17:44
politicians listen to corporations and shareholders. What corporations dictate, their political lapdogs obediently listens.
Best examples? Retarded laws that discriminate against gay people in states like Indiana. When major corporations such as Wal-Mart
and Apple, who only cares about money, condemn such retarded laws with potential boycotts, their political lackeys quickly follow
in line.
I am waiting for another multinational corporation to declare the NSA process detrimental to businesses, and see how many former
government supporters of the NSA do a complete 180 degree stance flip.
EdChamp -> elaine layabout 29 May 2015 17:22
Please, tell me that porn sites are involved in this. Cut off Congress's porn access and they will be putty in our hands.
Congratulations! You win the award of the day for that one gleaming guardian comment that truly made me smile.
Repent House 29 May 2015 16:13
"This is a blackout," read the site to which computers from congressional IP addresses were redirected. "We are blocking
your access until you end mass surveillance laws."
This is so freekin awesome... mess with the bull you get the horns as I always say!
They seem to under estimate the strength, knowledge, tenacity, of the "AMERICAN PEOPLE" This is what we need to do on a wider scale for a number of things wrong!
Awesome!
...Politicians and editors look for opportunities to step up its campaign for the accession to
NATO, and in the spring of 2016, the parliament is expected to approve a host-country agreements
that make it easier for NATO to with Swedish permission to use our territory as a base for
military activities, "including the attack", "in peace, emergencies, crisis and conflict or
international tensions".
Everything appears to be � and sold � as a speedy response to Russian aggression. Sweden and
other countries are prepared after the end of the cold war in the belief that European peace was
secured. But the president saw in our kindness as a weakness and took the opportunity to obtain
tear up a security order that has prevailed for decades.
The story goes is repeated again and again every day in our media. Vladimir Putin, with the
annexation of Crimea and support for separatists in eastern Ukraine have shown "that he does not
respect the European order that had been in place since the second world war and statutes that
borders cannot be changed by force", writes, for example, the Daily News, in an editorial on
January 12.
Such an argument is a deliberate memory gap. MSM presstitutes push the button "forget" and
suddenly a decade of war in the former Yugoslavia erased from the public consciousness.
We can argue about reasons and circumstances of intervention, but it is undeniable that the
USA, NATO and EU countries intervened using military force to redraw the map of the Balkans. The
leadership in Moscow has thus set a precedent to cite. Putin reiterates at the conflicts with
Georgia and Ukraine, word-for-word the reasons the western powers claimed for the bombing of
Serbia and the recognition of cessation of Kosovo.
But the right to put himself above the principles of the inviolability of borders and
non-interference in other countries ' internal affairs is in our official propaganda worldview a
privilege reserved for the "international community", which is in reality the United States and
its entourage of small and medium-sized European satellites. International law applies to all
other states, but not for the United States, NATO and the EU.
NATO expanded in 1999 their mutual defense obligations to include global dangers
such as terrorism and the "disruption of the flow of vital resources", and in 2003, the EU
adopted its first security strategy, inspired by the Bush doctrine on the right to preventive war
against terrorism and weapons of mass destruction: "With the new threats the first line of
defense will often be abroad ... We need to develop a strategic culture that fosters early,
rapid, and when necessary, robust intervention."
It was the doctrine of the first line of defense � not the dreams of peace, who guided the
Swedish defense military industrial complex. Territorial defense was abandoned at the end of the
1990s, literally send to the junkyard. What was left was prestigious military projects in
industry and the individual units of professional soldiers trained for NATO operations in foreign
countries. The restructuring was led by a consulting firm from the united states, closely tied to
the Pentagon, the NSA and the CIA The armed forces would prepare for "global action -
especially in the continents of the world in which Sweden has a vital economic and/or political
interests," the consultants wrote in a secret report.
"Sweden's role as a regional power in the Baltic sea changed from neutrality to leadership",
was said. Now for some reason "koalitionskrigf�ring and Sweden's ability to operate in
collaboration with organizations such as NATO ... get a new and greater significance". This was
written in 1998, long before the war in Ukraine.
When the U.S. interest in the Arctic and the north flank, now rising to the fore the plans.
Sweden becomes a bridgehead in the quest to penetrate back to Russia. Gotland will again be
anchored, Russian submarines tops the news and B-52 bombers taking over the sky.
The major powers have never hesitated to tramp the UN-principles, but with the doctrine of the
preventive intervention there is nothing left of the respect of all the member states'
sovereignty. If NATO considers itself have the right to place a first line of defense in
Afghanistan or Libya, then does not Russia the same rights in Ukraine?
The Russian leadership will see in the western privilege for preemptive interventions a
precedent. Europe is sinking into a black hole that draws misfortune of countries and people.
Several politicians, editors, and the military now proclaim that that we should jump in, leave
the last of the neutrality and comply with NATO going directly into the black hole. Multiyear
efforts of dragging the country into the the alliance, shall result in the membership.
We should do the opposite. Pull us out. Keep us away. Say yes to the exclusion.
It reduces the risk that our own government or the foreign power will drag us into the war.
But not only that. Swedish neutrality is also an opening for the people in eastern Europe who are
looking for a rescue out of the tug-of-war between the Russian oil and gas barons, domestic
oligarchs and western financial oligarchs.
Being outside zone of US protectorate, we can jointly deal with the social issues.
More can be read about the NATO mutual f�rsvarsf�rpliktelser in "The Alliance's Strategic
Concept, Approved by the Heads of State and Government participating in the meeting of the North
Atlantic Council in Washington, D. C., 990424".
The text was written in 1998 is available in the "SAIC: Perspective Study Dominant? Awareness
2020", Final Report, September 2, 1998, For The Swedish High Command, p. 5, 7
"If we're training cops as soldiers, giving them equipment like soldiers, dressing them up
as soldiers, when are they going to pick up the mentality
of soldiers? If you look at the police department, their creed is to protect and to serve.
A soldier's mission is to engage his enemy in close combat and kill him. Do we want police officers
to have that mentality? Of course not."
- Arthur Rizer, former civilian police officer and member
of the military
Talk about poor timing. Then again, perhaps it's brilliant timing.
Obama also indicated that less heavy-duty equipment (armored vehicles, tactical vehicles, riot
gear and specialized firearms and ammunition) will reportedly be
subject to more regulations such as local government approval, and police being required to undergo
more training and collect data on the equipment's use. Perhaps hoping to sweeten the deal, the Obama
administration is also offering $163 million in taxpayer-funded grants to "incentivize
police departments to adopt the report's recommendations."
distributed equipment designed for use on the battlefield to local police departments,
provided private grants to communities to incentivize SWAT team raids,
redefined "community policing" to reflect aggressive police tactics and funding a nationwide
COPS (Community Oriented Policing Services) program that has contributed to dramatic rise in SWAT
teams,
encouraged the distribution of DHS anti-terror grants and the growth of "contractors that
now cater to police agencies looking to cash DHS checks in exchange for battle-grade gear,"
ramped up the use of military-style raids to crack down on immigration laws and target "medical
marijuana growers, shops, and dispensaries in states that have legalized the drug,"
defended as "reasonable" aggressive, militaristic police tactics in cases where police raided
a guitar shop in defense of an obscure environmental law, raided a home looking for a woman who
had defaulted on her student loans, and terrorized young children during a raid on the wrong house
based on a mistaken license plate,
and ushered in an era of outright highway robbery in which asset forfeiture laws have been
used to swindle Americans out of cash, cars, houses, or other property that government agents
can "accuse" of being connected to a crime.
It remains to be seen whether this overture on Obama's part, coming in the midst of heightened
tensions between the nation's police forces and the populace they're supposed to protect, opens the
door to actual reform or is merely a political gambit to appease the masses all the while further
acclimating
the populace to life in a police state.
Certainly, on its face, it does nothing to ease the misery of the police state that has been foisted
upon us. In fact, Obama's belated gesture of concern does little to roll back the
deadly menace of overzealous police agencies corrupted by money, power and institutional immunity.
And it certainly fails to recognize the
terrible toll that has been inflicted on our communities, our fragile ecosystem of a democracy,
and our freedoms as a result of the government's determination to bring the war home.
It's a safe bet that our little worlds will be no safer following Obama's pronouncement and the
release of his
"Task Force on 21st Century Policing" report. In fact, there is a very good chance that life
in the American police state will become even more perilous.
Among the report's 50-page list of recommendations is a call for more police officer boots on
the ground, training for police "on the importance of de-escalation of force," and "positive
non-enforcement activities" in high-crime communities to promote trust in the police such as
sending an ice cream truck across the city.
Curiously, nowhere in the entire 120-page report is there a mention of the Fourth Amendment, which demands
that the government respect citizen privacy and bodily integrity. The Constitution is referenced
once, in the Appendix, in relation to Obama's authority as president. And while the word "constitutional"
is used 15 times within the body of the report, its use provides little assurance that the Obama
administration actually understands the clear prohibitions against government overreach as enshrined
in the U.S. Constitution.
For instance, in the section of the report on the use of technology and social media, the report
notes: "Though all constitutional guidelines must be maintained in the performance of law enforcement
duties, the legal framework
(warrants, etc.) should continue to protect law enforcement access to data obtained from cell
phones, social media, GPS, and other sources, allowing officers to detect, prevent, or respond to
crime."
Translation: as I document in my book
Battlefield
America: The War on the American People, the new face of policing in America is
about to shift from waging its war on the American people using primarily the weapons of the battlefield
to the evermore-sophisticated technology of the battlefield where government surveillance of our
everyday activities will be even more invasive.
This emphasis on technology, surveillance and social media is nothing new. In much the same way
the federal government used taxpayer-funded grants to "gift" local police agencies with military
weapons and equipment, it is also funding the distribution of technology aimed at making it easier
for police to monitor, track and spy on Americans. For instance, license plate readers, stingray
devices and fusion centers are all
funded by grants from the DHS.
Funding for drones at the state and local levels also comes from the federal government, which
in turn accesses the data acquired by the drones for its own uses.
If you're noticing a pattern here, it is one in which the federal government is not merely transforming
local police agencies into extensions of itself but is in fact federalizing them, turning them into
a national police force that answers not to "we the people" but to the Commander in Chief. Yet the
American police force is not supposed to be a branch of the military, nor is it a private security
force for the reigning political faction. It is supposed to be an aggregation of the countless local
civilian units that exist for a sole purpose: to serve and protect the citizens of each and every
American community.
So where does that leave us?
There's certainly no harm in embarking on a
national dialogue
on the dangers of militarized police, but if that's all it amounts to-words that sound good on paper
and in the press but do little to actually respect our rights and restore our freedoms-then we're
just playing at politics with no intention of actually bringing about reform.
Despite the Obama Administration's lofty claims of wanting to "ensure that
public safety becomes more than the absence of crime, that it must also include the presence
of justice," this is the reality we must contend with right now:
Americans still have no real protection against police abuse. Americans
still have no right to self-defense in the face of SWAT teams mistakenly crashing through
our doors, or police officers who
shoot faster than they can reason. Americans are still
no longer innocent until
proven guilty. Americans still don't have a right to private property.
Americans are still
powerless in the face of militarized police.
Americans still don't have a
right to
bodily integrity.
Americans still don't have a right to the
expectation of privacy.
Americans are still being acclimated to a police
state through the steady use and sight of military drills domestically, a heavy militarized police
presence in public places and in the schools, and a taxpayer-funded propaganda campaign aimed
at reassuring the public that the police are our "friends." And to top it all off, Americans
still can't rely on the courts, Congress or the White House to mete out justice when
our rights are violated by police.
To sum it all up: the problems we're grappling with have been building
for more than 40 years. They're not going to go away overnight, and they certainly will
not be resolved by a report that instructs the police to simply adopt different tactics to accomplish
the same results-i.e., maintain the government's power, control and wealth at all costs.
This is the sad reality of life in the American police state.
The term "fascism" was initially defined as a local phenomenon - the regime of Italian dictator
Benito Mussolini. Later, the term changed its meaning and has become synonymous with Nazism (national
socialism) of the Third Reich. During 1950-1990-Western political science began to call fascism any
repressive regime and introduced the term "totalitarianism". This was done in order to combine Nazism
and communism, those two social phenomenon were ideologically polar and has had a different social
base despite using similar cruel methods.--[ I do not see much difference
in enslavement via Gulag with ensavement via decration of undermench -- NNB] In
one case, the the driving force was large industrialists and the middle class, in another - mostly
the urban poor and part of intelligencia, especially Jewish intelligencia.
The theory of binary totalitarianism has no serious scientific status. The term "fascism" has
now been returned to its historical meaning. It is a synonym of racism and all of its varieties -
crops-racism (the idea of cultural superiority), the social racism (the idea of social inequality
as the nature of this division of people into masters and slaves), etc.
Usually researchers try to distill the signs of fascism. For example, the Italian philosopher
Umberto Eco counted 14. But this approach only blurs the subject. The myth of superiority is a key
symptom. The rest is optional. Additional definitions are generated by the desire to "attach" to
fascism more than that.
For example, "nationalism". Normal people are proud of their nation and its culture, but do not
seek to destroy other peoples. This is the difference between nationalism and Nazism.
Or "traditionalism". If fascism were based in the traditions of the peoples, then some nations
would have dwelt for centuries in the fascist state of fever. Tradition is the enemy of the "voice
of blood", and there is no logic of exclusion of other people in traditions, while fascism lives
this logic . Not coincidentally, he is associated with the Protestant line in Christianity and its
idea of "chosen for salvation". Apart from the idea of exclusiveness, fascism is born with the spirit
of renewal, the destruction of the weak and "unnecessary" for the sake of winning power, novelty
and rationality. I repeat: tradition is the main enemy of fascism.
The idea of a strong state accompanies fascism, but does not define it. The Olympics of 1936,
"Olympia" by Leni Riefenstahl are symbols of a strong statehood. But Hitler's fascism was not
defined by the Olympics, but by the Nuremberg racial laws, summary execution of Slavs, Jews and Gypsies,
the plans of the colonization of the Eastern territories.
Yes, the war of 1941-1945 was the war between two authoritarian States, but only from the German
side it was an ethnic war. There were no intentions to carry out the genocide of "inferior Aryans"
in minds of Soviet soldiers or Joseph Stalin.
In Europe in recent decades, it was fashionable to talk about fascism as "a reaction to Bolshevism".
Indeed, the growing influence of leftist ideas in Europe in the first half of the twentieth century
caused activation of right-wing forces. But the roots of fascism are more ancient then Marxist and
Bolshevik. Fascism arose as a justification for colonial expansion. Hitler didn't invent anything
new. He just moved to the center of Europe bloody colonialist methods of the British, the French,
the Spaniards, and made the destruction of people fast and technically perfect: gas chambers, mass
graves. In a way fascism is application of colonial methods to the part of population of the country,
internal colonization so to speak.
The regime of the 1930-ies in Germany is the legitimate child of the European liberal capitalism.
But this conclusion is seriously injures European sense of identity. That's why this statement is a strict
taboo in the West --[not really, the hypothesis of intrinsic connection
of fascism with European (colonial) culture are pretty common --NNB]. But the truth
eventually comes out. Authors from European left now more frequently touch this connection and try
to develop this hypothesis.
Today we are witnessing a return to archaization of neoliberal society and slide of neoliberalism
into "new barbarism." Hence the reasoning of the European politicians about Ukraine as an "Outpost
of civilization". However, the assertion that Russia "does not meet democratic standards", those
days unlikely will deceive anyone. Euphemisms is a product of distortion of the language, not political
reality. This phrase marks Russia as a "defective" state, inhabited by "inferior" people - "watniks",
"colorado bugs". Neo-fascist model within the framework of liberalism is often built by shifting the boundaries
of tolerance. To some people tolerance applies, to other - no. The protection of the rights of one
group in this case means the destruction of the rights of another.
Political myth about the deep opposition between liberalism and Nazism have always refuted by
independent historians. Today this myth is completely discredited.
There are obvious interplay and close relationship between the two ideas - fascist and liberal
- obviously. They both go back to the idea of natural selection, transferred to human society. In
other words, the strongest must survive at the expense of the weakest. this doctrine is often called
"Social Darwinism". Indeed, the principle of "preservation of the fittest races", transposed into
social sciences, resulted in the adoption of the Nuremberg laws designed to protect the "purity of
race and blood" - the "law of the citizen of the Reich" and "Law on the protection of German blood
and German honor."
The return of fascism is a symptom of a certain historical tendencies. To such radical measures
economic elites resort only for the postponement of the final world crisis. But in the end it is
fascism that might again bring Western societies to the wedge of collapse.
These are not isolated instances of a contradiction; they have been so pervasive that they tend
to be disregarded as background noise. During the time in 2011 when political warfare over the debt
ceiling was beginning to paralyze the business of governance in Washington, the United States government
somehow summoned the resources to overthrow Muammar Ghaddafi's regime in Libya, and, when the instability
created by that coup spilled over into Mali, provide overt and covert assistance to French intervention
there. At a time when there was heated debate about continuing meat inspections and civilian air
traffic control because of the budget crisis, our government was somehow able to commit $115 millionto keeping a civil war going in Syria and to pay at least
�100m
to the United Kingdom's Government Communications Headquarters to buy influence over and access
to that country's intelligence. Since 2007, two bridges carrying interstate highways have collapsed
due to inadequate maintenance of infrastructure, one killing 13 people. During that same period
of time, the government spent
$1.7 billion constructing a building in Utah that is the size of 17 football fields. This mammoth
structure is intended to allow the National Security Agency to store a
yottabyte of information, the largest numerical designator computer scientists have coined.
A yottabyte is equal to 500 quintillion pages of text. They need that much storage to archive every
single trace of your electronic life.
Yes, there is another government concealed behind the one that is visible at either end of Pennsylvania
Avenue, a hybrid entity of public and private institutions ruling the country according to consistent
patterns in season and out, connected to, but only intermittently controlled by, the visible state
whose leaders we choose. My analysis of this phenomenon is not an expos� of a secret, conspiratorial
cabal; the state within a state is hiding mostly in plain sight, and its operators mainly act in
the light of day. Nor can this other government be accurately termed an "establishment." All complex
societies have an establishment, a social network committed to its own enrichment and perpetuation.
In terms of its scope, financial resources and sheer global reach, the American hybrid state, the
Deep State, is in a class by itself. That said, it is neither omniscient nor invincible. The institution
is not so much sinister (although it has highly sinister aspects) as it is relentlessly well entrenched.
Far from being invincible, its failures, such as those in Iraq, Afghanistan and Libya, are routine
enough that it is only the Deep State's protectiveness towards its higher-ranking personnel that
allows them to escape the consequences of their frequent ineptitude.
More:
Washington is the most important node of the Deep State that has taken over America, but it is
not the only one. Invisible threads of money and ambition connect the town to other nodes. One is
Wall Street, which supplies the cash that keeps the political machine quiescent and operating as
a diversionary marionette theater. Should the politicians forget their lines and threaten the status
quo, Wall Street floods the town with cash and lawyers to help the hired hands remember their own
best interests. The executives of the financial giants even have de facto criminal immunity. On
March 6, 2013, testifying before the Senate Judiciary Committee,
Attorney General Eric Holder stated the following: "I am concerned that the size of some of
these institutions becomes so large that it does become difficult for us to prosecute them when
we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will
have a negative impact on the national economy, perhaps even the world economy." This, from the
chief law enforcement officer of a justice system that has practically
abolished the constitutional right to trial for poorer defendants charged with certain crimes.
It is not too much to say that Wall Street may be the ultimate owner of the Deep State and its strategies,
if for no other reason than that it has the money to reward government operatives with a second
career that is lucrative beyond the dreams of avarice - certainly beyond the dreams of a salaried
government employee.
[3]
The corridor between Manhattan and Washington is a well trodden highway for the personalities
we have all gotten to know in the period since the massive deregulation of Wall Street: Robert Rubin,
Lawrence Summers, Henry Paulson, Timothy Geithner and many others. Not all the traffic involves
persons connected with the purely financial operations of the government: In 2013, General David
Petraeus
joined KKR (formerly Kohlberg Kravis Roberts) of 9 West 57th Street, New York, a private equity
firm with $62.3 billion in assets. KKR specializes in management buyouts and leveraged finance.
General Petraeus' expertise in these areas is unclear. His ability to peddle influence, however,
is a known and valued commodity. Unlike Cincinnatus, the military commanders of the Deep State do
not take up the plow once they lay down the sword. Petraeus also obtained a sinecure as a non-resident
senior fellow at theBelfer
Center for Science and International Affairs at Harvard. The Ivy League is, of course, the preferred
bleaching tub and charm school of the American oligarchy.
Lofgren goes on to say that Silicon Valley is a node of the Deep State too, and that despite the
protestations of its chieftains against NSA spying, it's a vital part of the Deep State's apparatus.
More:
The Deep State is the big story of our time. It is the red thread that runs through the war on
terrorism, the financialization and deindustrialization of the American economy, the rise of a plutocratic
social structure and political dysfunction. Washington is the headquarters of the Deep State, and
its time in the sun as a rival to Rome, Constantinople or London may be term-limited by its overweening
sense of self-importance and its habit, as Winwood Reade said of Rome, to "live upon its principal
till ruin stared it in the face."
The Cathedral - The self-organizing consensus of Progressives and Progressive
ideology represented by the universities, the media, and the civil service. A term
coined
by blogger Mencius Moldbug. The Cathedral has no central administrator, but represents
a consensus acting as a coherent group that condemns other ideologies as evil. Community writers
have enumerated the
platform of Progressivism as women's suffrage, prohibition, abolition, federal income tax, democratic
election of senators, labor laws, desegregation, popularization of drugs, destruction of traditional
sexual norms, ethnic studies courses in colleges, decolonization, and gay marriage. A defining feature
of Progressivism is that "you believe that morality has been essentially solved, and all that's
left is to work out the details." Reactionaries see Republicans as Progressives, just lagging
10-20 years behind Democrats in their adoption of Progressive norms.
You don't have to agree with the Neoreactionaries on what they condemn - women's suffrage? desegregation?
labor laws? really?? - to acknowledge that they're onto something about the sacred consensus that all
Right-Thinking People share. I would love to see a study comparing the press coverage from 9/11 leading
up to the Iraq War with press coverage of the gay marriage issue from about 2006 till today. Specifically,
I'd be curious to know about how thoroughly the media covered the cases against the policies that the
Deep State and the Shallow State decided should prevail. I'm not suggesting a conspiracy here, not at
all. I'm only thinking back to how it seemed so obvious to me in 2002 that we should go to war with
Iraq, so perfectly clear that the only people who opposed it were fools or villains. The same consensus
has emerged around same-sex marriage. I know how overwhelmingly the news media have believed this for
some time, such that many American journalists simply cannot conceive that anyone against same-sex marriage
is anything other than a fool or a villain. Again, this isn't a conspiracy; it's in the nature of the
thing. Lofgren:
Cultural assimilation is partly a matter of what psychologist
Irving L. Janis called "groupthink," the chameleon-like ability of people to adopt the views
of their superiors and peers. This syndrome is endemic to Washington: The town is characterized
by sudden fads, be it negotiating biennial budgeting, making grand bargains or invading countries.
Then, after a while, all the town's cool kids drop those ideas as if they were radioactive. As in
the military, everybody has to get on board with the mission, and questioning it is not a career-enhancing
move. The universe of people who will critically examine the goings-on at the institutions they
work for is always going to be a small one. As Upton Sinclair said, "It is difficult to get a man
to understand something when his salary depends upon his not understanding it."
A more elusive aspect of cultural assimilation is the sheer dead weight of the ordinariness of
it all once you have planted yourself in your office chair for the 10,000th time. Government life
is typically not some vignette from an Allen Drury novel about intrigue under the Capitol
dome. Sitting and staring at the clock on the off-white office wall when it's 11:00 in the evening
and you are vowing never, ever to eat another piece of takeout pizza in your life is not an experience
that summons the higher literary instincts of a would-be memoirist. After a while, a functionary
of the state begins to hear things that, in another context, would be quite remarkable, or at least
noteworthy, and yet that simply bounce off one's consciousness like pebbles off steel plate: "You
mean the
number of terrorist groups we are fighting is
classified?" No wonder so few people
are whistle-blowers, quite apart from the vicious retaliation whistle-blowing often provokes: Unless
one is blessed with imagination and a fine sense of irony, growing immune to the curiousness of
one's surroundings is easy. To paraphrase the inimitable Donald Rumsfeld, I didn't know all that
I knew, at least until I had had a couple of years away from the government to reflect upon it.
When all you know is the people who surround you in your professional class bubble and your social
circles, you can think the whole world agrees with you, or should. It's probably not a coincidence that
the American media elite live, work, and socialize in New York and Washington, the two cities that were
attacked on 9/11, and whose elites - political, military, financial - were so genuinely traumatized
by the events.
Anyway, that's just a small part of it, about how the elite media manufacture consent. Here's a final
quote, one from
the Moyers interview with Lofgren:
BILL MOYERS: If, as you write, the ideology of the Deep State is not democrat
or republican, not left or right, what is it?
MIKE LOFGREN: It's an ideology. I just don't think we've named it. It's a kind
of corporatism. Now, the actors in this drama tend to steer clear of social issues. They pretend
to be merrily neutral servants of the state, giving the best advice possible on national security
or financial matters. But they hold a very deep ideology of the Washington consensus at home, which
is deregulation, outsourcing, de-industrialization and financialization. And they believe in American
exceptionalism abroad, which is boots on the ground everywhere, it's our right to meddle everywhere
in the world. And the result of that is perpetual war.
This can't last. We'd better hope it can't last. And we'd better hope it unwinds peacefully.
I, for one, remain glad that so many of us Americans are armed. When the Deep State collapses - and
it will one day - it's not going to be a happy time.
Questions to the room: Is a Gorbachev for the Deep State conceivable? That is, could you foresee
a political leader emerging who could unwind the ideology and apparatus of the Deep State, and not only
survive, but succeed? Or is it impossible for the Deep State to allow such a figure to thrive? Or is
the Deep State, like the Soviet system Gorbachev failed to reform, too entrenched and too far gone to
reform itself? If so, what then?
For years, Winston
Churchill's famous quote, "It has been said that democracy is the worst form of government
except all the others that have been tried," has served as Americans' last word in
any political discussion which requires validation of the US government, no matter how corrupt or
flawed in its behavior, as the best in the planet, comparatively or by default. Never mind
the meaning that Mr. Churchill had intended back in 1947, or how the international political panorama
has changed during the past seven decades.
These remarks were made by Britain's prime minister before the House of Commons a few months
before there was a changing of the guards in the "Anglo-Saxon Empire" as the Brits gave
away their colonial hegemony in favor of the super-influential economic and military power represented
by the United States. And that was symbolically marked by Britain's relinquishing
its mandate in Palestine, and the creation of Israel.
Such reference to democracy in the quote, explicitly defining it as a "government by the people,"
basically applied to Britain and the United States at the close of World War II; but such
condition has deteriorated in the US to the point where the "common people" no longer have a say
as to how the nation is run, either directly or through politicians elected with financial support
provided by special interests, undoubtedly expecting their loyalty-vote. Yet, while
this un-democratization period in our system of government was happening, there were many nations
that were adopting a true code of democracy, their citizens having a greater say as to how their
countries are governed. Recognizing such occurrence, however, is a seditious sin for an American
mind still poisoned by the culture of exceptionalism and false pride in which it has been brainwashed.
And that's where our empire, or sphere of influence, stands these days� fighting the
windmills of the world, giants that we see menacing "American interests," and doing it under the
banner of "for democracy and human rights." Such lofty empire aims appear to rationalize
an obscene military budget almost twice as large as those of Russia, China, India and United Kingdom
combined! Americans, representing less than 5 percent of the world's population, are footing
a military bill almost twice as large as that expended by half of the world's population.
If that isn't imperialistic and obscene, it's difficult to image what other societal behavior could
be more detrimental to peace and harmony in this global village where we all try to co-exist.
Empires and global powers of the past most often resorted to deposing of antagonistic foreign
rulers by invading their countries and installing amicable/subservient puppet rulers. The
United States and the United Kingdom, perhaps trying to find refuge, or an excuse, in their democratic
tradition, have resorted to regime change "manipulations" to deal with adversary governments-nations.
[Bush43's Iraq invasion stands as a critical exception by a mongrel government: half-criminal (Dick
Cheney-as mentor), and half-moronic (George W. Bush-as mentee).]
Regime change has served the United States well throughout much of the Americas from time immemorial;
an endless litany of dictators attesting to shameless in-your-face puppetry� manipulations taking
the form of sheer military force, or the fear of such force; bribery of those in power, or about
to attain power � usually via military coup; or the promise of help from the Giant of the North
(US) in improving economic growth, education and health. Kennedy's 1961 Alliance for Progress
proved to be more political-PR than an honest, effective effort to help the people in Latin America�
such program becoming stale and pass� in Washington by decade's end; the focus shifting in a feverish
attempt to counter the efforts by Castro's Cuba to awaken the revolutionary spirit of sister republics
in Central and South America (Bolivia, Ecuador, Nicaragua�).
After almost two centuries of political and economic meddling in Latin America under
the Monroe Doctrine (1823) banner, much of it involving regime change, the US is
finally coming to terms with the reality that its influence has not just waned but disappeared.
Not just in nations which may have adopted socialist politics, but other nations as well.
US' recent attempt to get other regional republics to label Venezuela (Maduro's leftist government)
as a security threat not only met with opposition from the twelve-country Union of South American
Nations (UNASUR) but has brought in the end of an era. It's now highly unlikely that secretive
efforts by the CIA to effect regime change in Latin America will find support; certainly not the
support it had in the past.
To Washington's despair, similar results, if for other reasons, are happening throughout
North Africa and the extended Middle East; certainly not the results the US had hoped for or anticipated
from the revolutionary wave in the Arab Spring, now entering its fifth year. It is
no longer the flow of oil that keeps Washington committed to a very strong presence in the Middle
East. It is America's Siamese relationship with Israel.
But if regime change is no longer an effective weapon for the US in Latin America or the Middle
East, the hope is still high that it might work in Eastern Europe, as America keeps corralling
Russian defenses to within a holler of American missilery. Ukraine's year-old regime
change is possibly the last hurrah in US-instigated regime changes� and it is still too early to
determine its success; the US counting on its front-line European NATO partners to absorb the recoil
in terms of both the economy and a confrontational status now replacing prior smooth relations.
Somehow it is difficult to envision an outcome taking place in Ukraine which would allow
the United States a foothold at the very doorsteps of Russia; something totally as inconceivable
as if China or Russia were contemplating establishing military bases in Mexico or any part of Central
America or the Caribbean.
The era of using regime change as a weapon of mass deception may have already ended for
the United States of America� and hopefully for the entire world.
8. Vietnam (Kennedy, Johnson, 1964) -- Lies: Johnson said Vietnam attacked
our ships in the Gulf of Tonkin in August, 1964.Truth: The US didn't want to lose the southeast
Asia region, and its oil and sea lanes, to China. This "attack" was convenient. Kennedy initiated
the first major increase in US troops (over 500).
9. Gulf War (G.H.W. Bush, 1991) -- Lies: To defend Kuwait from Iraq. Truth:
Saddam was a threat to Israel, and we wanted his oil and land for bases.
10. Balkans (Clinton, 1999) -- Lies: Prevent Serb killing of Bosnians. Truth:
Get the Chinese out of Eastern Europe (remember the "accidental" bombing of their embassy in Belgrade?)
so they could not get control of the oil in the Caspian region and Eastward. Control land
for bases such as our huge Camp Bondsteel in Kosovo, and for the proposed Trans-Balkan Oil pipeline
from the Caspian Sea area to the Albanian port of Valona on the Adriatic Sea.
11. Afghan (G.W. Bush, 2001) -- Lies: The Taliban were hiding Osama. Truth:
To build a gas/oil pipeline from Turkmenistan and other northern 'xxstan' countries to a warm water
(all year) port in the Arabian Sea near Karachi (same reason the Russians were there), plus land
for bases.
12. Iraq (G.W. Bush, 2003) -- Lies: Stop use of WMDs -- whoops, bring Democracy,
or whatever.Truth: Oil, defense of Israel, land for permanent bases (we were kicked out of Saudi
Arabia) to manage the greater Middle East, restore oil sales in USD (Saddam had changed to Euros)
Very poorly written article.
Better to say that Andy Jackson was about the last bad ass to fight of the banksters and die a natural
death, then Salmon Chase and his buddies passed the legal tender laws, and shortly thereafter (or
possibly before) London dispatched the Fabian socialists with their patient gradualism. We
were firmly back under the yoke of London banking cartel come 1913. And you are correct, a
republic is an EXTREMELY limited form of democracy (not truly akin to traditional 51% takes it democratic
concepts at all). The elected leader's function was supposed to be to guard the principles
of the Constitution and the limited Republic, and history will remember that, despite this cruft
of an article.
In the eyes of many who founded this nation, it was only a stepping stone to a global government,
the new Rome - but the new Rome will be the UN with a global bank, and the multinational corporations
holding court, and then the end come.
Like in the Middle East? And you will counter by saying that people are forced to live
under those governments and, yet, thousands are freely going there from around the world to join
ISIS.
Otherwise, such a system would work right up until one government church decided there wasn't
enough room in the area for competitors (probably within a year, maybe six months). Let the
political/religious tribal wars begin.
After Israeli elections and Ukrainian coup d'�tat the key question is "to what extent [...] the
contemporary right [is] linked to classical fascism". And the picture is complex.
As one reviewer of the book
Fascism and Neofascism Critical Writings on the Radical Right in Europe noted "contrary to
common perception, the Nazi movement was not repressive towards sex. In fact, it sneered at
Christian morality much the same way that modern libertines and leftists do, and favored both
premarital and extramarital sex. Attempts were made to discredit the Catholic Church by accusing
priests in general of being homosexuals (sound familiar?). Much as modern feminists and other
humanists, the Nazis accused Christianity of having a dislike for the human body and for showing
disrespect towards women. This was supposed to be a carryover of "the Oriental attitude towards
women." Similarly hate toward particular ethnic or racial group was never absolute: Among Nazi Germany
fascist brass there were notable number of Jews. Also Italian fascism was quite different from
German as well as the level of Social Darwinism adopted.
Neofascism movement share with classic fascism the belief in the
necessary of hierarchical (authoritarian) world with the dominant and subordinate groups, as well as
ethos of masculine violence. It is deeply rooted in European culture with and as Adorno noted
that "totality" is a mode of domination that lies implicit in the Enlightenment drive to
de-mythologize the world. In this sense "totalitarism" in not unique to fascism and communism but
also is inherent in "consumer capitalism", which, as such, represent a potent background for
emerging neofascist groups and movements. Fascist myths were the means of constituting
identity and as such not tat different form mass advertizing . That also entails deep similarities
of Hollywood and Nazi films. At the same time, new radical right movement and groups are
clearly distinct from fascist of the past. While fascism emerged partially as a reaction to
brutalities and injustices of WWI, new radical right is in large part the result of unease with the
neoliberalism. Several members of Western European far right groups fight in Donbass with Donbass
militia as they consider Kiev junta to be Washington puppets promoting its globalization agenda.
At the same time several members of white supremacist groups fight with Kiev junta para-military
formations (death squads) which openly brandish Nazi symbols.
Neofascist movements are using "invented historical context" or myths as a
powerful means for making sense of human differences and organizing societies. Nationalism, based on
however fictive consent of national identity, is powerful mean of organizing the society along of
axis of domination and subordination, inclusion and exclusion. Racism and nationalism while not the
same things are closely linked together. In a sense any political system that operate on the base of
nationality of race is a neofascism in its essence. that includes Israel and Baltic states. In
this sense neither the USA nor Russia can be classified as neofascist regimes became they do not
adhere to the concept of "ingenious nationality" or white race supremacy. That does not exclude
existence of groups that adhere to this mythology.
It is extremely interesting those football fans, skinheads and hooligans, who
often utilized the gesture of rebellition against the society to trigger predictable outrage against
the general population were mobilized during EuroMaydan events. Behaviors once deemed antisocial and
vandalistic were harnessed in the service of the nationalist discourse and the they served as a part
of storm troopers for the coup of February 22, 2014. Ultimately like in Serbia before unruly
football hooligans were recruited into paramilitary formations that played important role in civil
was in Donbass (like Serbia paramilitary formation in wars of Croatia, Bosnia and Kosovo) and
committed the most horrendous crimes against civil population. .
Ukrainian events definitely correlated with disillusionment of the
neoliberalism in specific form of crony capitalism of Yanukovich regime. In a way
marginalization of extreme right from 1945 to 1991 was more exception the a rule Western societies,
especially European, tend to generate powerful extreme right movements. In a few states
neofascist have chances of coming to power (Ukraine is actually is not a good example as events here
were externally driven).
The Marquis de Mor�s, returning to 1890s Paris after his cattle ranching venture in North Dakota
failed, recruited a gang of men from the Parisian cattle yards as muscle for his "national
socialism" project -- a term Paxton credits Mor�s' contemporary Maurice Barres, a French
nationalist author, with coining. Mor�s' project was potent and prophetic: his national socialism
was a mixture of anti-capitalism and anti-Semitism. He clothed his men in what must have been the
first fascist uniform in Europe -- ten-gallon hats and cowboy garb, frontier clothes he'd taken a
shine to in the American West. (Author Paxton suggests the first ever fascist get-up was the KKKs
white sheet and pointy hat). Mor�s killed a French Jewish officer in a duel during the Dreyfus
affair and later was killed in the Sahara by his guides during his quest to unite France to Islam
to Spain.
Mor�s had earlier proclaimed: "Life is valuable only through action. So much the worse
if the action is mortal."
Here assembled together are all of the elements of what Paxton would classify as first stage
fascism: "the creation of a movement." Most fascist movements stall in this first stage he notes
-- think, for instance, of the skinheads, the American Nazi Party and Posse Comitatus.
Paxton's
other stages are
the rooting of the movement in the political system;
the seizure of power;
the exercise of power; and
the duration of power, during which the regime chooses either
radicalization or entropy.
He notes that although each stage
"is a prerequisite for the next,
nothing requires a fascist movement to complete all of them, or even to move in only one
direction. The five stages permit plausible comparison between movements and regimes at
equivalent degrees of development. It helps us see that fascism, far from static, was a
succession of processes and choices: seeking a following, forming alliances, bidding for power,
then exercising it. That is why the conceptual tools that illuminate one stage may not
necessarily work equally well for others." pg. 23.
Paxton also tentatively offers a definition of fascism, but only after tracing the rise of
various movements from their beginnings in the 19th century through the present day. Other
historians and philosophers, he suggests, have written brilliantly on fascism, but have failed to
recognize that their analyses apply to only one stage or another. He also notes that often
definitions of fascism are based on fascist writings; he maintains that fascist writings while
valuable were often written as justification for the seizure of power, or the attempted seizure,
and that what fascists actually did and do is more critical to understanding these movements.
Indeed, the language of fascism has changed little since the days of the Marquis De Mores.
He hesitates in offering both his definition and his analytical stages, saying that he knows by
doing so he risks falling into the nominalism of the "bestiary." He demonstrates that this is a
common failing of definitions of fascism which are often incomplete or muddled as they typically
describe only one or two typically late stages.
Other historians, for instance, split fascism
into Nazism or Italian fascism, avoiding the problem of understanding their common elements by
concentrating on their differences, insisting that they are incommensurable. Finally in the last
pages, Paxton offers up this fairly comprehensive and useful definition:
"Fascism may be defined
as a form of political behavior marked by obsessive preoccupation with community decline,
humiliation, or victimhood and by compensatory cults of unity, energy and purity, in which a
mass-based party of committed nationalist militants, working in uneasy but effective
collaboration with traditional elites, abandons democratic liberties and pursues with redemptive
violence and without ethical or legal restraints goals of internal cleansing and external
expansion."
Paxton is particularly strong in showing how the circumstances in post WWI Germany and
Italy -- the demobilized mobs of young soldiers, sent to war by elites who had no conception of
the destruction and suffering they had unleashed upon the younger generation -- were ripe for
fascism's appeals. For many, liberalism, conservatism and socialism all seemed equally
complicit in the crack-up of Europe in the Great War. Fascism, rising from the ashes, employed
the socialistic tools of mass marches, the military techniques of terror learned in the war, and
as they gained power, the new tools of mass communication and propaganda developed in the US
during WWI.
Fascists also reacted astutely to public discomfort toward the mass migrations from
southern and eastern Europe coming in the wake of political and economic distress in those
regions, using that fear to increase their power through scapegoating and its attendant rhetoric
of purity.
Fascism is both charged and blurry word these days, used by both the left and the right to
assail their critics and enemies.
The Nazi remains the evildoer par excellence in popular and
political culture, invoked for a thrill of fear or the disciplinary scare or emotional
incitement. In this masterful synthesis of writings in politics, history, philosophy and
sociology, Paxton untangles the vast literature fascism has generated, establishes some essential
ground rules for coming to grips with its many expressions, stages, and manifestations, and
clears a space for further, better focused research.
Although academic in its orientation, it is
well and clearly written. Finally, for the reader who is not familiar with modern European
history, it is a very useful and informative text as it takes into its scope by necessity much of
European and American history over the past one hundred years. Absolutely required reading.
However, a group of Harvard professors depicted a much more grim Orwellian world, AFP reported on
Thursday.
"Privacy as we knew it in the past is no longer feasible... How we conventionally think of privacy
is dead," said Margo Seltzer, a professor in computer science at Harvard University.
Sophia Roosth, a Harvard's genetics researcher, said: "It's not whether this is going to happen,
it's already happening... We live in a surveillance state today."
Depicting a terrifying world, where mosquito-sized robots fly around stealing samples of people's
DNA, she said, "We are at the dawn of the age of genetic McCarthyism," referring to "witch-hunts"
during Second Red Scare in the 1950s in America.
Goedelite Kurt 5 hours ago
Yoni D
Just like 50 years ago people couldn't always afford a tv but now everyone does. The expensive today
is trash...
more...
Take 50 from 2015: 1965. I was 33yo then. As I recall, that was just about the high point of the middle-class
in the US, before the inflation caused by the US aggression in southeast Asia hit us. Almost everyone
who had a job - and unemployment was low - could afford a TV. Not only could they afford it, but I
believe it offered viewers far better entertainment and journalism. I don't own a TV today, because
mainstream TV news is untrustworthy.
Eric Blair 18.02 17:48
Eric Schmidt is not even close on this call. Go back and reread what he said about:
"so many devices, sensors, things that you are wearing, things that you are interacting with
that you won't even sense it, it will be part of your presence all the time," he explained.
"Imagine you walk into a room, and the room is dynamic. And with your permission and all of that,
you are interacting with the things going on in the room."
No one will be able to afford this technical world that he is describing, and which in some
degree is coming, but not to every man.
The system is headed to a cashless system where you will be compelled to trade the time in your
life to multinational corporations, that will offer you something on the line of "Employee
Purchasing Compacts" in lieu of compensation, which enable you to select a list of corporations
that are bundled, with fixed prices, for the duration of your term contract. This is how you will
be compensated and enslaved to the plutocracy.
You will be able to select from categories that include food, clothing, automobiles,
electronics, goods and services. You will be locked into term contracts for the benefit of the
corporations and controlled supply and demand.
This is what is being heralded as "Austerity". Each man and woman will only be able to purchase
those things which they can afford. So, Schmidt is way off on this one~
Samanta Power
The internet will disappear but the net (NSA) will remain.
0040 14.02 21:50
I think the Harvard guys have it right. The computer, Internet, and cell phone age has done
nothing positive for humanity. With the worlds economic and political systems all being
neo-liberal and capitalistic, these devices are used to manipulate people for profits and taxes of
a sort and on a scale not possible without them. It also puts all a countries infrastructure and
resources into the hands of the few.
Powerful, damning, and more than a little sad, November 27, 2014
This review is from: The World As It Is: Dispatches on the Myth of Human Progress (Kindle Edition)
At the beginning of "The World As It Is: Dispatches on the Myth of Human Progress," Chris Hedges
suggests that he is no longer really a journalist - now, he's more of a minister, trying to lead
his flock down the paths of righteousness. It's in this spirit that Hedges, a Harvard divinity
grad before he gave up organized religion, titles one of his essays "War Is Sin."
Hedges's tone is a mixture of anguish and anger, and his acerbic prose takes no prisoners.
His style may be unattractive, even unsettling, but I can find no fault with his main arguments.
His is a voice of truth in a wilderness of spin, and I wish that it weren't so.
Here's his assessment of Barack Obama, the candidate of change who became the president of
the status quo:
"The American empire has not altered under Barack Obama. It kills as brutally and indiscriminately
... It steals from the U.S. Treasury to enrich the corporate elite as rapaciously. It will not
give us universal health care, abolish the Bush secrecy laws, end torture or "extraordinary rendition,"
restore habeas corpus, or halt the warrantless wiretapping and monitoring of citizens. It will
not push through significant environmental reform, regulate Wall Street, or end our relationship
with private contractors that provide mercenary armies to fight our imperial wars and produce
useless and costly weapons systems."
It's hard to disagree with this appraisal, and Obama is just one of the targets in Hedges's
sights. Obama doesn't get anything close to the most space in the book - that "honour" is reserved
for the government of Israel and its oppression of the Arab peoples of Palestine.
Hedges calls himself a socialist, a term that has quickly become almost quaint, tinged with
a flavour of musty and archaic rationalism. He writes that "we must articulate and stand behind
a viable and uncompromising socialism, one that is firmly and unequivocally on the side of working
men and women."
Hedges is a journalist, and it's in this context that he blasts the mainstream media for retreating
from their moral responsibility to tell the truth into their present stance as "recorders" of
scripted and spun events. Hedges expresses his disdain for the bankrupt "objectivity" ethic of
the press with a vehemence that is typical of his prose: "The tragedy is that the moral void of
the news business contributed as much to its own annihilation as the protofascists who feed on
its carcass."
And,
"The corporate forces that destroyed the country wil use the information systems they control
to mask their culpability. The old game of blaming the weak and the marginal, a staple of despotic
regimes, will empower the dark undercurrents of sadism and violence in American society and deflect
attention from the corporate vampires who have drained the blood of the country."
In an echo of his previous book "The Death of the Liberal Class," Hedges describes liberals,
and specifically the Democratic Party which is their political home, as a spent force that "prefers
comfort to confrontation. "
Hedges writes: "It will not challenge the decaying structures of the corporate state. It is
intolerant within its ranks of those who do. It clings pathetically to the carcass of the Obama
presidency. It has been exposed as a dead force in American politics."
What, if anything, can be done? Hedges is not hopeful, but he is clear about the nature of
the solution:
"If the hegemony of the corporate state is not soon broken, we will descend into a technologically
enhanced age of barbarism."
Hedges cites Joseph Conrad's Heart of Darkness, in Hedges's version of the typical postcolonialist
indictment of the Enlightenment. This is a most appropriate citation, for in The World As It Is,
it is very clear that Chris Hedges, for one, has seen "the horror."
The horror for Hedges is the reality of war. That he has been changed, and forever scarred,
by his years as a war correspondent is clear in his scorn for the official memorials to the honoured
dead:
"War memorials and museums are temples to the god of war. The hushed voices, the well-tended
grass, the flapping of the flags allow us to ignore how and why our young died. They hide the
futility and waste of war. "
Hedges's compulsion to cut through the glorification and the censorship and instead to write
the truth keeps him writing.
He may have little hope for himself, as the rage and bitterness with which he writes make clear,
yet, as he says in the dedication, he must seek the solutions to our problems, for it is his three
children "whose joy and laughter save me from despair and for whom I must always hope."
The term "Martial Law" is thrown around with reckless disregard. "Is America under
martial law?" is a question that is often discussed in the Independent Media.
Martial law occurs when the prevailing regime feels threatened by the message being offered by the
loyal opposition. When normal means of censorship and marginalization fail, despotic regimes resort
to martial law with all intended brutality of a violent crackdown on all of those being perceived as
the "enemy".
Seventeen Martial Law Characteristics
Most experts agree that hard core martial contains the following 17 essential elements:
1-Mass roundup and/or execution of political dissidents
2-Dusk to dawn curfews
3-Rationing of essential resources
4-The seizing of personal assets such as food and water
5-Control over all food and water
6-The prohibition of weapons of any kind including guns, knives or chemicals which can be turned
into explosives
7-The confiscation of property, homes and businesses
8-Arrests without due process
9-Massive "papers please" checkpoints with intrusive searches
10-Forced relocation
11-Forced conscription into various labor camps and even into the military
12-Outlawing of free speech
13-The installation of massive surveillance programs and the establishment of snitch programs
14-The total control or elimination of religion
15-Control of the media
16-Executions without due process of law
17-Total suspension of the Constitution
Just how many of these intrusive government policies are in place in the following video?
The Chicago police department has promised for more than a century to eliminate torture from its
interrogation rooms. For more than a century, the
Chicago police department
has failed to deliver on that promise.
The latest shameful episode is the tale of Richard Zuley, a police officer who brought the tactics
he learned in Chicago to Guant�namo Bay and back again,
as reported by The Guardian.
Sadly, there is a precedent for Zuley.
For example, in
a 2000 case
that resulted in a successful federal civil rights lawsuit, a Latino teenager was held for four
days chained to a wall in an interrogation room, where he was not only questioned repeatedly, but
denied bathroom access and left to soil himself. During the boy's civil rights trial, officers could
only prove that they fed him once during the four days. The teen eventually confessed to a murder
he did not commit. After he spent just a few weeks in jail, another suspect was arrested with the
murder weapon and confessed shortly after his arrest. How many others locked up have not been so
fortunate?
Most infamously, there is highly decorated Chicago Police Commander Jon Burge who, during his
23-year tenure on the force from 1970 to 1993,
used the techniques he learned from interrogating the Vietcong as a military policeman in Vietnam
on black suspects in Chicago. These techniques included Russian roulette with pistols and shotguns,
burning suspects on radiators, suffocation with typewriter covers, beatings with phone books and
electric shocks to the ears, nose, fingers, and testicles.
Burge was a fast-rising and well-respected officer who operated with impunity; neither his colleagues
nor his supervisors blew the whistle. Neither did prosecutors or officials in the Cook County State's
Attorney's Office. Instead, Burge was accorded hero status � until community activists, public interest
lawyers and
one lonely journalist at the city's weekly exposed his horrid behavior what it really was: unacceptable.
Once public pressure mounted � and only then � Burge was finally fired in 1993, accused of torturing
confessions out of what is believed to be
more than 100 African American men. He was not, however, without his defenders: at the time of
his firing, the Chicago Fraternal Order of Police, the largest union representing officers, attempted
to run
a float honoring Burge in the Chicago's St Patrick's Day parade. And it wasn't until 2006 that
a special prosecutor was appointed to examine Burge's record and determine if a criminal case could
be brought against him. (Only a perjury charge stuck.)
The relationship between communities of color in Chicago and the Chicago Police Department hasn't
recovered from Burge's abuses. Residents remain wary, while the police remain largely unapologetic.
Today, the Chicago Police Department's tactics �
known as "touchless torture" � are less horrific but still abusive.
These new methods focus more on sensory deprivation and isolation to wear down a suspect � sometimes
with the same result: false confessions. Because these methods do not leave marks, it is much harder
for judges and juries to understand just how coercive they are.
A series of US supreme court cases over the last century have codified the rights that are supposed
to protect suspects under our system. Sadly, those rights still mean next to nothing in Chicago interrogation
rooms, which still bear too much resemblance to those in Guant�namo � and those from the now-distant
past of Vietnam.
The way forward requires reform on a system's level � not at an individual case level. The use
of these types of tactics is not a bad apple issue, but rather about a rotten-to-the-core system
that turns a blind eye to massive civil rights violations because the system benefits from those
civil rights violations. About 90% of all criminal cases in America result in a plea bargain, which
makes any given confession so much more powerful than it would normally be and thus that more desirable
to obtain. Sadly prosecutors who have a constitutional obligation to be a check on coercive police
practices fail in their obligations in America because there is an institutional incentive for them
to ignore civil rights violations and push for plea bargains using the coerced confessions.
Any meaningful reform starts with educating juries about the coerciveness of the interrogation
room and the tactics used to extract confessions; after that, judges must live up to their responsibilities
and deny plea bargains in case in which the only evidence is a confession. While hardly a cure-all,
these two massive reforms of legal procedure could help remove the institutional incentives for those
working for the system to obtain and use coerced confessions.
lostalien -> ExcaliburDefender 21 Feb 2015 09:55
The problem is most people can't afford to lawyer up, and the public defenders are over worked
and don't always have clients best interest at heart. Our sytem of justice is for the rich.
ExcaliburDefender -> mfloydhall 20 Feb 2015 16:44
mfloydhall, you wrote "......... who are the likely perps."
Just want to understand a bit more about the use of the word 'PERP'. See a few that use it
often, generally by those in support of police activities.
The only time I hear the word 'PERP' is on tv. Have never heard police use it when interviewed
on events, nor I have heard actual police officers ever use this word when communicating with
the public. Did use to work in a city ed/trauma unit, had loads of interaction with city police,
'PERP' was never uttered.
Just curious if you would care to comment.
Williamthewriter 20 Feb 2015 13:04
What goes for Chicago also goes for most American cities. Beating confessions out of suspects
has throughout our history been just as much an art form in America as it was in Stalin's Russia
and Hitler's Germany. The violence is only the most visual aspect of a corrupt system that has
had the police often working in tandem with organized crime and running protection and kickback
schemes of their own, not to mention the sexual favors expected from prostitutes if they wished
to remain in business.
The two NYPD officers who were recently found guilty of moonlighting as hit-men for the mob
is only the tip of the iceberg. Has anyone forgotten how America's Cop - Bernie Kerik - the right
hand man of America's Mayor was convicted of corruption and sent to prison for four years not
long after his name was put forward by his powerful friends to be the first head of Homeland Security?
The recent disrespect shown to the elected mayor of NYC or daring to criticize the police tactics
that resulted in the death of Mr. Garner shows both how powerful and how perverse the police in
this nation are.
imipak -> mfloydhall 20 Feb 2015 07:50
No, you want a police force that works, that's trusted, that does its job.
In the end, it's about real risk, not imagined risk. You can do nothing about fantasies. Real
risk goes down when real criminals are caught and when real trust is high. Real risk goes up when
real criminals are left on the streets and the innocent are tortured.
Real risk is the real concern of real businesses and real families.
imipak -> James Girod 20 Feb 2015 07:46
Ah, but Darth Vader helped people cross the road safely.
imipak -> mfloydhall 20 Feb 2015 07:45
People can want all they like. Democracy doesn't extend to voting on police tactics and can
never be extended to voting on what tactics work.
Harsh tactics are a fail. Unequivocally. They can never succeed. They are doomed, as are all
citizens under such a regime. Who the hell cares if the citizens want harsh? It's worse than no
police at all. If you want to live in real gangster time, don't go asking city hall for the gangsters.
It's not their job.
Give each city a referendum - mature, responsible, effective policing at cost, or no policing
at all. No other options. If a city chooses the latter, order a compulsory evacuation of all medical
staff and emergency services, seal the roads and rerun the referendum 6 months later. If they
still say no, you've got those extra staff for places that want them. The city shouldn't get what
the city doesn't want or need.
Police tactics should be tightly regulated, with clear and distinct consequences for failure.
If a cop is shown to have been involved in torture, all cases that cop was involved in are
tainted and all convictions unsafe and unsatisfactory. No exceptions. It is better to let ten
guilty people go free than to allow one innocent person to be convicted.
If a police unit is shown to have tolerated any corruption in its ranks, shut it down and fire
the lot. No exceptions, no excuses.
To go along with that, confessions and eyewitness testimony do not belong in a court room.
Evidence or bust.
Police divisions should pay out of pocket for wrongful convictions, at mean wage rates for
white collar work. They should be on fixed budgets and fixed wages, no bonuses for clean-up rates
just severe penalties for fraud and incompetence.
Police are not paramilitary units. They should not be equipt as such or trained as such. They
maintain peace, not war.
Training should reflect the expected high standards - and they should be very high standards
indeed - with pay and conditions reflecting the fact that it takes the best to be the best.
(High expectations cuts both ways. If you're going to demand high levels of integrity, a civil
attitude and competence in the field, expect to pay for it. These things aren't free to acquire
and aren't cheap to maintain. Ammunition is cheap. You get what you pay for, so pay for what you
want to get.)
AlexeiK 20 Feb 2015 01:43
More generally, juries need to be given instructions dealing with a range of issues that well-meaning
but unprepared citizens are likely to get wrong. New Jersey, for example, now requires juries
to be instructed on eyewitness identification.
Any meaningful reform starts with educating juries about the coerciveness of the interrogation
room and the tactics used to extract confessions; after that, judges must live up to their
responsibilities and deny plea bargains in case in which the only evidence is a confession.
There are already proposals to require that interrogations be videotaped, but it is extremely
important that juries watch these tapes in their entirety. If a cop keeps a suspect chained to
a radiator for hours and then the suspect "confesses" and the jury only gets to see a three-minute
clip of the confession, it just won't do. But that's what happened in the Adrian Thomas case in
NY (the man was eventually acquitted in a retrial).
consciouslyinformed 19 Feb 2015 16:17
Spencer Ackerman's piece, about Lathierial Boyd, which included a video, about three minutes
in length, left me holding back sobs, as I listened to his account, of how he was set up by this
cop, for a bogus indictment against Lathierial, for an eighty-two year sentence, of which, he
served twenty-three years. He was innocent! It is appalling. It needs to have this cop, along
with every other who have taken away the lives of our black brothers and sisters, in prison for
the rest of their miserable lives.
elaine layabout 19 Feb 2015 15:29
Chicago residents have shelled out nearly half a BILLION dollars over the past decade, spending
$84.6 million last year alone, to "compensate" the victims of police abuse. Those monies, however,
do nothing to address the costs of citizens being afraid to seek help from or cooperate with police.
Meanwhile, the City closes schools in the most victimized neighborhoods, cuts services for
all, and our unrepaired, weather-ravaged streets look like they've been hit by cluster bombs.
(But don't fret, tourists! The bulk of our infrastructure revenue goes to keeping corporate-centric
Downtown, toney Lincoln Park, and the museum campus that we riffraff cannot afford to enjoy looking
spiffy!)
Perhaps it's time that City and PD decision makers foot this bill, as well as the criminal
cops. Then maybe these horrible practices will come to an end and we can begin to make this city
liveable for all, not just the wealthy and well-connected.
About 20 protesters made their way onto the property of the former vice president's Virginia
home, where they protested the 14th anniversary of the opening of the Guantanamo Bay detention facility.
Activists from the anti-war group CODEPINK and Witness Against Torture, many of them wearing military-issued
orange jumpsuits, broke through an iron gate surrounding the former vice president's sprawling property
in McLean, Virginia, and demonstrated on his front porch.
Fairfax County Police soon arrived on the scene and escorted the protesters, some of them chanting
"arrest Dick Cheney," off the property.
Two protesters who refused to leave the premises were arrested on trespassing charges, police
spokesman Roger Henriquez said, Reuters reported.
Police identified the pair as Tighe Barry, 57, and Eve Tetaz, 83, both from the Washington DC
area. The two face misdemeanor charges of trespassing and disorderly conduct, police said.
The demonstrators carried signs that read: "Torturer lives here" and "Stop torture now" and "Close
Guantanamo Bay".
Earlier, the group staged a demonstration outside the home of CIA Director John Brennan, who also
lives in McLean, Virginia. None of the activists were arrested in that protest.
The protests come one month after the Senate Intelligence Committee released its so-called "torture
report" that revealed how the CIA allegedly misled the White House and Congress over the brutality
of its "enhanced interrogation techniques" �a military euphemism for torture.
Cheney expressed no remorse over the cruel accounts of torture techniques performed by the CIA
at various foreign "black sites" as described in the Senate Intelligence Committee's lengthy investigation.
"I'd do it again in a minute," Cheney told Meet the Press's Chuck Todd last month.
This was not the first time Cheney took to the airwaves to express his support of the controversial
methods in gaining intelligence, as well as his wish to keep Gitmo open for business.
When Barack Obama attempted in the early days of his presidency to close Guantanamo, as he had
pledged to do on the campaign trail, Cheney was suddenly ubiquitous on the news channels, demanding
that Gitmo remain open and the prisoners � many of whom are innocent of any wrongdoing � appear before
a secret military tribunal as opposed to a civil trial on US territory.
Cheney, despite basement ratings in opinion polls when he exited office, eventually got his way
and today 127 detainees are still held at Guantanamo Bay, Cuba.
READ MORE: Dick Cheney should be in prison, not on 'Meet the Press' - Greenwald
READ MORE: 'I'd do it again!' Cheney defends CIA torture, calls interrogators heroes
In this interview he talks about why he signed the petition, the NSA's spying program, and offers
some words of advice to the 9/11 Truth movement on how to pursue justice through official channels.
William Binney is a former highly placed intelligence official with the United States National
Security Agency (NSA) who, after more than 30 years of service, resigned in 2001 and became a whistleblower
exposing the NSA's unconstitutional programs. He is also a recent signatory of AE911Truth's petition
calling for a new investigation into the destruction of the Twin Towers and WTC 7 on 9/11.
In this interview he talks about why he signed the petition, the NSA's spying program, and offers
some words of advice to the 9/11 Truth movement on how to pursue justice through official channels.
Neoliberal regime is a brand of corporatism. And terror against opponents is a feature of corporatism
as asocial system. So nothing very surprising here. "The war on terror had now reduced governance
in the United States to a legalized apparatus of terror that mimicked the very violence it was meant
to combat." ... "Neoliberalism has created a society of monsters for whom pain and suffering are
viewed as entertainment or deserving of scorn, warfare is a permanent state of existence, torture becomes
a matter of expediency, and militarism is celebrated as the most powerful mediator of human relationships."
The maiming and breaking of bodies and the forms of unimaginable pain inflicted by the Bush administration
on so-called "enemy combatants" was no longer seen in violation of either international human rights
or a constitutional commitment to democratic ideals. The war on terror had now reduced governance
in the United States to a legalized apparatus of terror that mimicked the very violence it was meant
to combat. In the aftermath of 9/11, under the leadership of Bush and his close neoconservative
band of merry criminal advisors, justice took a leave of absence and the "gloves came off."
As Mark Danner states, "the United States transformed itself from a country that, officially at least,
condemned torture to a country that practised it."[13]
But it did more. Under the Bush-Cheney reign of power, torture was embraced in unprecedented ways
through a no holds-barred approach to the war on terror that suggested the administration's need
to exhibit a kind of ethical and psychic hardening-a hyper-masculine, emotional callousness that
expressed itself in a warped militaristic mind-set fueled by a high testosterone quotient. State
secrecy and war crimes now became the only tributes now paid to democracy.
... ... ...
Waterboarding, which has been condemned by democracies all over the world, consists of the individual
being "bound securely to an inclined bench, which is approximately four feet by seven feet. The individual's
feet are generally elevated. A cloth is placed over the forehead and eyes. Water is then applied
to the cloth in a controlled manner [and] produces the perception of 'suffocation and incipient panic.'"[18]The highly detailed, amoral nature in which these abuses were first defined and endorsed by lawyers
from the Office of Legal Council was not only chilling but also reminiscent of the harsh and ethically
deprived instrumentalism used by those technicians of death in criminal states such as Nazi Germany.
Andy Worthington suggests that there is more than a hint of brutalization and dehumanization in
the language used by the OLC's Principal Deputy Assistant Attorney General, Steven G. Bradbury, who
wrote a detailed memo recommending:
"nudity, dietary manipulation and sleep deprivation"-now revealed explicitly as not just keeping
a prisoner awake, but hanging him, naked except for a diaper, by a chain attached to shackles
around his wrists-[as,] essentially, techniques that produce insignificant and transient discomfort.
We are, for example, breezily told that caloric intake "will always be set at or above 1,000 kcal/day,"
and are encouraged to compare this enforced starvation with "several commercial weight-loss programs
in the United States which involve similar or even greater reductions in calorific intake" � and
when it comes to waterboarding, Bradbury clinically confirms that it can be used 12 times a day
over five days in a period of a month-a total of 60 times for a technique that is so horrible
that one application is supposed to have even the most hardened terrorist literally gagging to
tell all.[19]
... ... ...
In spite of the appalling evidence presented by the report, members s of the old Bush crowd, including
former Vice-President Cheney, former CIA directors, George J. Tenet and Michael V. Hayden, and an
endless number of prominent Republican Party politicians are still defending their use of torture
or, as they euphemistically contend, "enhanced interrogation techniques." The psychopathic undercurrent
and the authoritarian impulse of such reactions finds its most instructive expression in former Bush
communications chief Nicolle Wallace who while appearing on the "Morning Joe" show screeched in response
to the revelations of the Senate Intelligence report "I don't care what we did." As Elias Isquith,
a writer for Salon, contends, as "grotesque as that was, though, the really scary part was
[the implication that] waterboarding, sleep deprivation, stress positions and sexual assault is part
of what makes 'America 'great.'"[25]
Wallace's comments are more than morally repugnant. Wallace embodies the stance of so many other
war criminals who were either indifferent to the massive suffering and deaths they caused or actually
took pride in their actions. They are the bureaucrats whose thoughtlessness and moral depravity Hannah
Arendt identified as the rear guard of totalitarianism.
Illegal legalities, moral depravity, and mad violence are now wrapped in the vocabulary of Orwellian
doublethink. For instance, the rhetorical gymnastics used by the torture squad are designed to
make the American public believe that if you refer to torture by some seemingly innocuous name then
the pain and suffering it causes will suddenly disappear. The latter represents not just the
discourse of magical thinking but a refusal to recognize that "If cruelty is the worst thing that
humans do to each other, torture [is] the most extreme expression of human cruelty."[26]
These apostles of torture are politicians who thrive in some sick zone of political and social abandonment,
and who unapologetically further acts of barbarism, fear, willful lies, and moral depravity. They
are the new totalitarians who hate democracy, embrace a punishing state, and believe that politics
is mostly an extension of war. They are the thoughtless gangsters reminiscent of the monsters who
made fascism possible at another time in history. For them, torture is an instrument of fear; one
sordid strategy and element in a war on terror that attempts to expand governmental power and put
into play a vast (il)legal and repressive apparatus that expands the field of violence and the technologies,
knowledge, and institutions central to fighting the all-encompassing war on terror. Americans now
live under a government in which the doctrine of permanent warfare is legitimated through a state
of emergency deeply rooted in a mass psychology of violence and culture of cruelty that are essential
to transforming a government of laws into a regime of lawlessness.
... ... ...
There is another story to be told about another kind of torture, one that is more capacious and
seemingly more abstract but just as deadly in its destruction of human life, justice, and democracy.
This is a mode of torture that resembles the "mind virus" mentioned in the Senate report, one that
induces fear, paralysis, and produces the toxic formative culture that characterizes the reign of
neoliberalism. Isolation, privatization, and the cold logic of instrumental rationality
have created a new kind of social formation and social order in which it becomes difficult to form
communal bonds, deep connections, a sense of intimacy, and long term commitments. Neoliberalism
has created a society of monsters for whom pain and suffering are viewed as entertainment or deserving
of scorn, warfare is a permanent state of existence, torture becomes a matter of expediency, and
militarism is celebrated as the most powerful mediator of human relationships.
Under the reign of neoliberalism, politics has taken an exit from ethics and thus the issue of
social costs is divorced from any form of intervention in the world. This is the ideological metrics
of political zombies. The key word here is atomization and it is the curse of both neoliberal societies
and democracy itself. A radical democracy demands a notion of educated hope capable of energizing
a generation of young people and others who connect the torture state to the violence and criminality
of an economic system that celebrates its own depravities. It demands a social movement unwilling
to abide by technological fixes or cheap reforms. It demands a new politics for which the word revolution
means going to the root of the problem and addressing it non-violently with dignity, civic courage,
and the refusal to accept a future that mimics the present. Torture is not just a matter of policy,
it is a deadening mindset, a point of identification, a form of moral paralysis, a war crime, an
element of the spectacle of violence, and it must be challenged in all of its dreadful registers.
This is a particularly despicable and illuminating look into how the CIA treated its officers
who were carrying out torture techniques. After a detainee, Gul Rahman, was chained, nearly naked,
to a concrete floor for an extended time and then froze to to death, no officer on-site nor at the
CIA was disciplined � let alone prosecuted. In fact, the CIA officer in charge of the detention site
was recommended to receive a bonus of $2,500 for his "consistently superior work". Five pages earlier
in the report, we are told that this particular CIA officer was already known for dishonesty and
lack of judgment when he was sent on his first overseas assignment to head this detention site. Eleven
years and one page in the report later, the CIA acknowledged it "erred" in not holding anyone accountable
for Rahman's death.
Eleven years.
When a government agency disregards human life so recklessly � and even considers rewarding those
on the payroll who do the same � how is it possible to believe the United States can maintain the
illusion of being a human rights champion? President Obama and Congress must ensure accountability
� including prosecutions, as well as reparations for victims � and not just for torture but enforced
disappearances and other human rights violations that leave the US in serious violation of its international
legal obligations. -Steven W Hawkins, executive director, Amnesty International USA
gottliebvera, 11 Dec 2014 05:01
The 'beacon on the hill' has gone dark. Always preaching from the pulpit of hypocrisy, always
admonishing, always threatening...and look at them. 'Exceptional' by NO means.
Janice Mitich, 11 Dec 2014 02:08
When you condone the use of torture on any person or class of people, you have taken a dangerous
step that will not prevent the state from using torture on you. The 5th Amendment to the Constitution
says that the accused person "shall not be compelled to testify against himself" thus exercising
the right not to be tortured into a confession of something they may or may not have done. The
8th Amendment says that the state cannot impose excessive bail or fines, nor impose cruel or unusual
punishment which includes torture. Torture cannot be used to force a person to testify against
himself prior to trial, nor can he be tortured after being found guilty in order to name any co-conspirators---(This
is what was done in the Salem Witch Trials.)
Just as monarch, tyrants, of old, who believed they had the right to do whatever they pleased
ie: Hitler, Stalin, Saddam, Mao, to name a few, Bush and Cheney created a special class of human
beings to whom they could do anything they wanted and the right to purge them from the earth.
This is a dangerous step on the slippery slope down into hell where the people are powerless and
rulers are absolute.
I don't think that any of you want that. I hope you will reconsider your decision and decide
that torturing prisoners is in violation of our Constitution no matter what "appealing" reason
is given for that action.
Using the term "Enhanced" interrogation is a term that turns my stomach. One generally uses
the word 'enhanced' to make something better or more pleasing, or more beautiful. Leave it to
the Government to coin a term in such a way as to make you think it is a positive and rightful
thing to do.
That's like naming a cancerous tumor as "enhanced cell growth." or a nuclear bomb an "enhanced
demolition device," or an amputation of one's foot as an "enhanced pedicure.
Arcane, 10 Dec 2014 16:58
The Americans have finally fessed up to what we already suspected, namely that their spooks
were out of control and engaging in torture, murder and human rights violations without any purpose
other than an ultra-right-wing addiction to the use of violence.
The British are now looking into their own sordid and sorry involvement in this disgraceful
chapter in recent history. However, we have heard nothing from the Australian government as to
what role - if any - their spooks played in this same set of events. There were at least two Australians
held in the Guantanamo Bay prison. One of them, David Hicks, claims he was tortured and that the
Australian government knew that this was taking place but did nothing.
There needs to be a criminal trial of the CIA contractors and other officials who carried out
these crimes. If found guilty they need to be spend a lot of time in prison. Perhaps Guantanamo
Camp X-Ray might be the best option. The criminal investigation and subsequent trials need to
include the government leaders at the time, G.W. Bush, Dick Cheney, Donald Rumsfeld, Tony Blair
and of course John Howard and Alexander Downer.
feinsteins logic runs this way 'there were a few bad apples in the cia'.
was there any accountability? answer - nada. "Speaking to the New York Times, Cheney called
the interrogation tactics "absolutely, totally justified," contrary to the committee's findings."
will there ever be? no.. without the accountablity - the usa is essentially a tip pot dictatorship
run by the military complex..
i am surprised they released this.. usually they file it under 'top secret' or 'state secrets'
and people don't hear about it for another 50 years.. that is the way the folks in the land of
the brave and free usually roll.
IhaveLittleToAdd | Dec 9, 2014 12:57:09 PM | 4
The low level people did it and are unnamed. The high level people ordered them to do it, openly
brag about it, but are not prosecutable. Obama won't push it for fear that the next administrataion
will get all high and mighty about his drone campaign, NSA overreach, or whatever. Congress won't
because they either knew about it, or should have known about it. Not too mention the CIA probably,
and rightfully, scares the bajeebies out of them.
Signals Inteligence got a shout out in the WaPo coverage. Look, torturing is really bad and
we're not going to do that now that we can stare at you through your iphone camera. Then again
we have these cool drones that save the judicial branch loads of time.
Yul | Dec 9, 2014 12:57:16 PM | 5
They have redacted the countries or so called Black Sites but we know that some "democratic" European
countries, new members or prospective members of the EU are there - Poland, Lithuania, Romania,
Kosovo , Bosnia, Macedonia and Italy ( the CIA judged in absentia )
To encourage governments to clandestinely host CIA detention sites, or to increase support
for existing sites, the CIA provided millions of dollars in cash payments to foreign government
officials
Rick | Dec 9, 2014 2:21:59 PM | 6
...say anything to stop the pain...?
Peter Kropoykin gave an account a "no pain" torture,
AN attempt was made to kill Rsar Alexander mid-1800s. The pepetrtor was kept awake/denied sleep.
After 1-2 weeks, he had the appearance of a lump of jelly, in which condition he was carted to
the gallows and hung.
Pain, then, must include physical and mental and even other psychological forces such as attack
on the spiritual nature of the life force.
Rick from long ago.
WG | Dec 9, 2014 3:07:18 PM | 7
I believe the WH / CIA even redacted the pseudonyms used to identify the individuals involved
within the report. You can't even get an idea of the number of individuals involved by seeing
how often their fake names come up.
Also a few years ago the CIA destroyed all videotaped record of the actual torture sessions,
ignoring orders expressly stating they needed to keep the material.
james | Dec 9, 2014 3:49:01 PM | 8
wg - but they will go after bradley manning, snowden or anyone else who is brave enough to
show these same culpits.. shooting the messenger is all the usa knows how to do at this point..
jfl | Dec 9, 2014 3:50:02 PM | 9
The CIA is evil incarnate and needs to be disbanded. Barack Obama is under the thumb of the
CIA. All subsequent presidents will be as well, now that the criminal operation has wrapped its
tentacles so completely around the office.
The CIA wages war all the time, tells no one what it is doing, and has done so since its founding.
There are two parts to the CIA, on paper : intelligence gathering and criminal actions. The first
is just a fake cover for the other, the 'i' in CIA. The second, the CA, is the black heart of
the organization, its raison d'�tre, and the hole in Uncle Sam's arm where all the money goes.
I don't know how it can come about but the CIA, the NSA must be 'put down'. Both are incompatible
with democracy and antithetic to the rule of law. They are making over the USA in their image.
If they cannot be eliminated it will be sad testimony to the transformation's ultimate realization.
I am half way through reading
The Half Has Never Been Told. It occurs to me that violence against captives - i.e., torture
- is central to the history of the U.S. The glorification of the captor, and the demonization
of the captive, is similarly a central part of the experience of being a white American.
@13 - How ridiculous. "Hey guys, I know you're referencing a 1600 page CIA torture report,
but here's a YouTube link!"
I mean, we know you're a complete shill but jeez. Have
some self-respect.
Any organization with a $14 Billion a year budget making good money
in drug sales other illicit activities deserve at least to be called "professionals".
The fact is, no one on this planet has killed like the CIA. Since the end of the Second
World War, the United States has killed at least 10 million people - men, women, children
- through sanctions, military activity, or sponsored bloodbaths. The CIA can claim at
least 1 million of those themselves (if not two). Hardly "amateurs" in any sense.
The CIA organized massacres in Indonesia took anywhere between 500k-800k lives alone.
People ought to listen to real CIA agents like
John Stockwell
and Phil Agee
to know what bloody deeds the CIA gets up to. Not some goofy, minimum wage internet lackey
of theirs.
With respect, I disagree with our host's interpretation of this news.
This Senate document of 6.000 pages, released into the public record, is greatly significance.
I am surprised it was released. It must create a cumulative impact as time passes; and
I believe that one reason for the disclosure, from the nod that Senator Feinstein gave
it, as chairman of the intelligence committee , is in one respect to defend the Senate
from the overreach of the CIA. And let's remember that the Agency challenged the Senate's
authority not long ago,--going so far as to hack the Senate's computers,--in order to
remove evidence which Senate staff had gathered, in pursuit of this investigation of
torture. For very practical political reasons they could not capitulate, or succumb to
the threat, and the meaning of such a sinister act carried out by an intelligence agency,
which by law is subordinate to Senate authority.
Clearly, to not publish this document, would be to admit that the Senate had been
cowed into silence by the very spooks who had committed a felony against that chamber,
a higher, constitutional authority.
I believe the consequences of having conceded and enumerated and identified the practice
of torture, and placing this document in the public record, will have gathering repercussions.
Because of the diligent and praiseworthy efforts of the alternative press, done years
ago, these crimes cannot in the fullness of time, be fobbed off as a rogue activity inside
an intelligence community--as happened with the Iran-Contra affair--when Reagan was in
the White House.
On the contrary, the chain of responsibility goes straight to the legal minds (and
we know who they are) in G. W. Bush's Justice Department, who characterized these particular
war crimes as instruments legally permissible. And we have the statements of President
Bush and Vice-President Cheney, which are fully incriminating, and would likely convince
any fair-minded jury of their guilt, on the occasion of their trial.
None of us can say with any certainty, that the former President and Vice-President
will ever have to face their day in court; but the release of this Senate document, as
it details the sordid facts about a disgraceful series of crimes, must cast a mighty
long shadow over the remaining years of Bush and Cheney. The same shadow lingers upon
the loathsome attorneys who facilitated their heinous crimes.
May the sleep of these men be discomforted, and their dreams made unpleasant, because
of the prolonged legal shadow, or possibly because of the tireless determination of prosecutors.
@17 copeland. thanks for sharing your perspective which is very insightful. i would include
the push pull of dems verses republicans as well.. i really enjoyed reading your post
from december 1st on your website as well. thanks.
Copeland @17: Today's release was the highly-redacted and yet still damning 500-page
Executive Summary of the full 6,000 page report. I hadn't heard that there were plans
to release the full document, but I could be wrong. What I would give to see these war
criminals brought to trial and convicted. No high hopes.
The torture is far more widespread then is generally discussed. I heard law professor
Scott Horton state in an interview once that thousands of people have been tortured to
death by the U.S. That is not the picture we are usually given. We need to be clear about
the scope of what is taking place. I hope this report will do this.
Here are some real pros. An Elderly Man Murdered at Ukrainian Checkpoint
for Refusing to Shout "Glory to Ukraine!" in Glinka in the Starobeshevo district,
near the Russian Border. "A monument to the soldiers of the Great Patriotic War was destroyed.
A resident of the neighboring village, an elderly man took some tools to repair the monument."
Stopped at a Banderaist checkpoint, he refused to shout "Glory to the Ukraine." Beaten
to the ground, he we shot several times.
Posted by: rufus magister | Dec 9, 2014 10:50:41 PM |
22
From b's outline...
"The report is also limited to the CIA and does not include
the military which, as we know, also used torture and killed people in "interrogations".[1]
The U.S. is bound by law to prosecute all of them from top to bottom but it is unlikely
to happen.[2] Only one person from the CIA went to prison over the torture program. This not for committing
torture but for revealing it."[3]
[1] & [2] tend to expose the International Criminal Court as a fake judicial panel
every bit as corrupt, prejudiced and subservient to Power as the US judicial system.
At least the ICC's name confirms that it is inhabited by Criminals eager to do what they're
told, to whomsoever they're told to do it (by US/UK and the rest of the Incredible Shrinking
pseudo International Community).
[3] tells us everything we need to know about what and who Yankee Justice is designed
to protect.
Copeland | Dec 9, 2014 9:20:46 PM @ 17 makes some very good points. This is going
to resonate in all kinds of inconvenient ways. If nothing else it will wake up millions
more people worldwide to the fact that if you're not anti-American, the day is fast approaching
when you're going to need a VERY GOOD EXCUSE.
I don't know for a fact about the 6,000 pages; but I would be astounded if the body
of the report, in redacted form, is not released. I don't see them going to the expense,
time, and trouble, to bottle up the body of the research. What is astonishing to me is
the tone that certain CIA spokesmen have taken with the Senate. How arrogant and highhanded
these fellows have become. There are strong indications, and a good case to be made,
that this Agency is guilty of tampering with evidence, destroying video evidence of torture,
and stealing evidence or deleting files from the Senate's computers. As an educated guess,
I would think the Senate would be wise make the whole document available to the public.
For their own peace of mind and security.
I've heard a lot of whining from the Right side of the aisle in public
life about "this will endanger our people everywhere" and decrying the release of the
report.
Doesn't the other side already know what's been done to them? Isn't the whole
point of trying suppress or downplay it strictly for domestic consumption?
It's appalling. What we used to condone with distaste on the down-low by our foreign
lackeys and collaborators we now proudly boast of as evidence of our "toughness" or our
"resolve."
Copeland @ 17--
I hope you're right. One would have thought that the cumulative effect of decades
of military and foreign policy debacles would have sunk in, as well. But I fear this
will find it's way down MiniTrue's "memory hole," like Iran/Contra, the Iraq War, Syria....
Well, in fairness, drowned out by the latest celebrity gossip.
Posted by: rufus magister | Dec 9, 2014 11:12:58 PM |
26
The DOJ has already said they won't be pursuing charges against individuals named in
the report. And has been stated before, we many never know the true scope of these crimes.
This is the real difference between America and other countries. Other places never reveal
the ways they abuse their prisoners, nor do they punish them. The USA has these things
revealed, THEN refuse to punish anyone.
I think you're onto something about the institutional struggle.
We might see how that struggle plays out soon. The "intelligence community" is already
pushing back, saying, "oh no we got good intel." Cynic that I am, I wonder how long it
will be before CIA assets in the Fourth Estate start dropping bad stuff about members
of the Senate. When they do, it will be interesting to see R's v. D's on the hit list.
I would expect some of the Senate to put up a valiant rearguard action, but this war
might have been lost with hysterical over-reaction to Sept. 11. Which Barry Choom has
only intensified, really, with drones and loose talk about Russian "expansionism."
Again, I wouldn't mind be wrong on this one.
Posted by: rufus magister | Dec 9, 2014 11:24:58 PM |
28
rufus @28:
I also fear that it's only a matter of time before the CIA pushes back against
the Senate, and generally goes on the offensive. The Intel Community and the mainstream
media have historically had a more or less cozy relationship (including Hollywood). It
will certainly be interesting to see how this power struggle plays out.
Hollywood -- wasn't "24" just torture-porn? And what was that recent
feature-length wet kiss to dark side of the dark sites, with the conflicted-yet-resolute
female operative?
Posted by: rufus magister | Dec 9, 2014 11:48:52 PM |
30
This torture was permitted, with a wink and a nod, from the very top, to the very bottom.
IMO, anyone who thinks differently is delusional. A few bad apples, oh please!
Ugh, it's disconcerting the amount of hack work propaganda gets churned out
every year. I could be pessimistic and say the seventies was really the beginning of
the end and blame Warren Beatty and Reds for putting the last nail in the coffin, but
that would be sentimental. You're right it goes back a ways- I like the story of Dulles
and Animal Farm:
"The trade press reported that de Rochemont financed Animal Farm with the frozen British
box-office receipts from his racial 'passing' drama Lost Boundaries; in fact, Animal
Farm was almost entirely underwritten by the CIA. De Rochemont hired Halas and Batchelor
(they were less expensive and, given their experience making wartime propaganda cartoons,
politically more reliable than American animators) in late 1951; well before that, his
'investors' had furnished him with detailed dissections of his team's proposed treatment.
Animal Farm was scheduled for completion in spring 1953, but the ambitious production,
which made use of full cell animation, was delayed for more than a year, in part because
of extensive discussion and continual revisions. Among other things, the investors pushed
for a more aggressively 'political' voice-over narration and were concerned that Snowball
(the pig who figures as Trotsky) would be perceived by audiences as too sympathetic.
Most problematic, however, was Orwell's pessimistic ending, in which the pigs become
indistinguishable from their human former masters. No matter how often the movie's screenplay
was altered, it always concluded with a successful farmyard uprising in which the oppressed
animals overthrew the dictatorial pigs. The Animal Farm project had been initiated when
Harry Truman was president; Dwight Eisenhower took office in January 1953, with John
Foster Dulles as his secretary of state and Allen Dulles heading the CIA. Leab notes
that Animal Farm's mandated ending complemented the new Dulles policy, which � abandoning
Truman's aim of containing Communism � planned a 'roll back', at least in Eastern Europe.
As one of the script's many advisors put it, Animal Farm's ending should be one where
the animals 'get mad, ask for help from the outside, which they get, and which results
in their (the Russian people) with the help of the free nations overthrowing their oppressors'."
Posted by: Nana2007 | Dec 10, 2014 12:56:38 AM |
33
On more than one level, and for more than one reason, the Senate committee's release
of this report about past torture, permitted and encouraged by the Bush Jr, crowd, is
the right thing to do. The Senate not only drew a line against the CIA, after it invaded
the private deliberations and was bold enough to go rifling through Senate files, and
deleting some files.
Along with rufus m., I feel there is danger if the political dirty work is taken up
in the media. But the report, if it is fully released, works powerfully for the Senate,
and is more of a counteraction politically, than it is a holding action; and it is not
a sign of weakness by any means. The Senate has plenty of strong legal minds, and it
can bypass Obama's Justice Dept. and broaden its investigations, in the event of any
similar assault against it.
Yet I have some suspicion that the branch at Langley that jerked around with a powerful
institution like the Senate, in the way they did, would never do this on their own, without
the guarantee that someone in higher authority has their back. In fact, if CIA doubles
down on the belligerence and bluster, that would tend to arouse more suspicion of a hidden
hand.
Posted by:
Copeland | Dec 10,
2014 2:11:32 AM |
34
The CIA spied upon the comittee (headed by Diane Feinstein) that composed this report.
This angered Feinstein and made her more determined to publish the report.
A commentator on CNN yesterday, while admitting that the whole story was unsavory, still
had to add, that the report in itself was another sign of the United States greatness.
Why? Well, "Putin would never allow such a thing"!
@16 I thought this is what you guys have been doing here for the last half year. I post
HRW, AI and OSCE reports on Donbass - you respond with rogue translations of some Russian
blogs?
Also it's interesting to see you seriously discussing an US Senate report while you
have rejected any reports by US administration in the past as "CIA sponsored" etc. Why
this torture report is reliable, but previous reports calling for military support for
Ukraine were not reliable?
Consulting psychologists were paid 80 of an 180m contract to train torturers. I wonder
how many other programs in the 'black budget' are likewise inflated 100x.
The 6000 pages wont be released to public, its just the shorter censured version
that have been released.
Posted by: Anonymous | Dec 10, 2014 4:21:33 AM |
39
I just don't get it. NeoLiberal Capitalism IS 'torture'.
Banksters create synthetic debt out of thin air, and charge all of us egregious usury
for the use of it, while the Fat Cats roll their gambling losses into public Treasury
bailouts. Everything flows from that heinous crime: the win-or-die competitive rat race,
the vicious street life, the 90,000,000 jobless or homeless 'disappeared', the -$18 TRILLION
perpetual debt, the $4 TRILLION phony Oil Crusades, massively bloated $3.4 TRILLION Mil.Gov.Sci.Edu
rice bowl Fed bureaucracy, even the unregulated 501(c)3 tax-dodge 'rice tent' charity
(sic) fraud to take care of 'poor victims', making their CEOs rich with 30% APR 'micro-loans'.
Capitalism is raping 998 people to give 2 people a life of ease: the Ricos, and their
Pols. Born naked, die naked, immersed in a life-long electronic swamp of lies and disinformation. 'You Deserve a Break Today'. Which leg do you want to limp on?
I mean, what else do you expect? Tea and crumpets at 4PM? Jebeezus!
This is what our world would've been like if the Nazis had won. It just took a few
years longer than they planned to return to the Reign of the
Habsburgs.
Posted by: ChipNikh | Dec 10, 2014 5:48:36 AM |
40
If America is still torturing, which I don't dispute by the way, then why didn't China
detain and arrest Obama during his recent visit since he is a Human Rights abuser and
therefore a criminal? Is China not committed to Human Rights? Is China afraid? Or does
China not give a shit about Human Rights?
A commentator on CNN yesterday, while admitting that the whole story was unsavory,
still had to add, that the report in itself was another sign of the United States greatness.
Why? Well, "Putin would never allow such a thing"!
Ha! It is absurd. There is no
greatness in being only marginally more humane than a psychopathic, sadistic megalomaniac
like Putin who is hell-bent on nuking the planet.
Sick isn't it? Yes, human experimentation is what's not mentioned in all the
newsiness? The Human experimentation aspect of the torture program- which was alluded
to as early as 2009- Doctors monitoring how the torture was affecting the innocent humans-
studying it. In hopes of what? It's simply MKULTRA/DELTA etc continued on- That horror
show never went away.
What is sickening is the way this is being spun no doubt with the assistance of the
usual PR firms?
The US is a good guy for releasing this and does so at great risk (another terror
attack 9/11 9/11 9/11) but since we are just so great we have to make the sacrifice,
though we could be the victims yet again- Sickening stuff really
' Clearly, to not publish this document, would be to admit that the Senate had
been cowed into silence by the very spooks who had committed a felony against that chamber,
a higher, constitutional authority. '
Have they published the report? I don't think so. I think they redacted 90% of the
report and then re-redacted that again. And that's what everyone is reading.
There is no evidence of anyone's culpability here. It's the usual 15 minutes of 'oh,
how horrible' ... and then its over.
If the senate were 'heroic' ... even if they were just still warm ... one of them,
the poseur Udall for instance ... would have dumped the full report into the Congressional
Record. That's not even original. Mike Gravel did it 43 years ago.
No, the problem is that doing so ... looking out for the nation's interest instead
of his own ... would have disappeared the pot of gold on the other side of the revolving
door.
There are no men and women among the American political class ... have you had a look
at the video of Sahra Wagenknecht
reading Ms. Merkel
the riot act in the German Parliament that was posted in thread 30? Nothing like
that in America, just slugs and trails of slime.
I want to be hopeful as much as you do, Copeland. But hope in the American political
class is misplaced. My hope is in the poor people of Ferguson, Detroit, of all the cities
who have slipped and fallen once too often in the slime, and are working to regain control
of their lives themselves.
The most glaring example of the utter incompetence of the CIA can be seen in the people
that it contracted to develop its "enhanced interrogation" techniques.
Because I would have thought it obvious - a no-brainer - that if you wanted to know
how to "interrogate" then you would bring in people who.... do interrogations for a living.
You know, get in police officers to tell them the Secret of The Good Cop / Bad Cop
Routine.
Or ask the Customs Service to come over and explain how their "interviews" allows
them to separate the wheat from the chaff at airports and seaports all around the Good
Ol USofA.
You'd contract those guys, because those guys actually do this for a living.
But, no, those weren't the guys the CIA paid $millions for.
The CIA actually contracted in guys Who Had Never Actually Interrogated Anyone For
Real.
The CIA engaged psychiatrists who taught the US Military how to WITHSTAND torture.
Think about that: these are the guys who were going around saying: Torture doesn't
work, and I'm here to teach you why.
Those were the guys that the CIA paid untold $millions to teach the CIA how Torture
Works when - in reality - all the CIA was proving is that Money Talks.
If those countries where torture takes place
attract public dissatisfaction/opposition against things such as torture, then why is it that we never hear about such public dissatisfaction/opposition. ( i know, its a bit of a rhetorical question because there is no actual public oppsition.
whatever opposition you do see is only there for "show" purposes mainly)
Dont countries such as Italy,Canada,Germany,Greece etc have such a thing called Democracy,thru
which people can voice their opposition.
Or have these countries "privatised" their political systems to unnamed private foreigners. Is "Democracy,", "Rule of law", due process, accountability etc all dead? After all Greeks,Romans and others were the inventors of these things.
( i only refer to actions done on behalf of foreign organisations such as CIA, US Government,
and any other foreign organisation, i suppose that torture that takes place on behalf
of your own Government would be perfectly legitimate, sadly)
We are talking about western populations here, same western populations that
is getting fooled on Iraq, Syria, Russia, Iran, Palestine etcetera. Western populations are hopelessly brainwashed today.
Posted by: Anonymous | Dec 10, 2014 8:19:34 AM |
48
@42
There is no greatness in being only marginally more humane than a psychopathic, sadistic
megalomaniac like Putin who is hell-bent on nuking the planet.
"The most glaring example of the utter incompetence of the CIA can be
seen in the people that it contracted to develop its "enhanced interrogation" techniques"
I'm calling complete bullbiscuits on the incompetence meme (and will be at my blog
in a new post)
People have got to stop promoting this meme. It's utterly ridiculous. The CIA contracted these people because it was politically expedient. Gave them a "deniability" card that could be played to promote incompetence as an example
and also to enrich their compatriots. That is not incompetent. It is in fact very competent and very evil!
@17 Copeland I can see your angle, it was important that the report was released in light of the tampering
by the CIA.
But, we will never know to what degree the CIA tampering led to an untoward censorship
either. Similar to the "rectal re-hydration" being viewed as a way to leverage total
control over the prisoner, wasn't the hacking of senate computers a way for the CIA to
exert total control? They have perfected the panopticon concept. Who knows, maybe the
report initially was going to name names, or the redaction pen wasn't going to be used
so heavily.
The hacking was such a flagrant and egregious violation of any sense of the law, you
almost wonder if they wanted to get caught in order to send the message. Similarly, torture
itself doesn't have the desired effect unless the outside world knows you are using it.
The people in custody are already off the battlefield and on their way to becoming innocuous
non-persons, the object is to make someone considering joining a cause to consider it
a bit harder. I would argue this was the point of the hacking. The intended effect seems
to have manifested itself in a report that acts more of as a tonic than a disinfectant.
Posted by: IhaveLittleToAdd | Dec 10, 2014 9:04:45 AM |
51
Off topic BUT GOOD NEWS
09:01 Wednesday 10 December 2014 The Dail (Irish Parliament) last night voted in favour of the government recognising
the State of Palestine based on its 1967 borders - before Israeli occupation. The Senate
has already voted for it All parties in the Dail supported the Sinn Fein motion during Private Members time in
the Dail. The government parties backed the motion saying that they were in favour of a two state
solution for Israel and Palestine. Labour's Jed Nash said that passing the motion was an important step in what will be
a long process for Palestinian Statehood: Last month the Minister for Foreign Affairs, Charlie Flanagan, said Ireland might recognise
a Palestinian state if it helped to advance the peace process in the Middle East. Currently eight EU states recognise Palestine as a state, with Sweden the most recent
to adopt the stance and the first to do so while an EU member state. There is widespread recognition of Palestine as a state across Asia, Africa and South
America, but far less within the EU and North America. Jewish opposition has already started
Posted by: Boindub | Dec 10, 2014 11:02:57 AM |
52
Here's an interview with ex-US Military Attorney, Major Dan Mori on the ABC.net.au program,
The Drum. Major Dan was appointed by the US Military to defend David Hicks against trumped
up charges related to the Fake War on Terror. Hicks' plight was made infinitely worse
by PM John Dubya Howard, cock-sucking coward, liar, cur, and the only non-Jew ever to
be awarded the B'nai B'rith Gold Medal (+ $1,000,000) for services to "Israel", who refused
to tell G Dubya Bush to return Hicks to Oz (because the "crimes" Hicks was accused of
were NOT crimes in Australia). Howard refused and Hicks eventually appeared before a Yankee Kangaroo Court, aka Military
Tribunal where he was plea-blackmailed into accepting a sentence of two years plus time-served.
And then returned to Oz to serve out the remainder of his sentence in Australian custody.
Major Dan was a harsh critic of the US Military Tribunal system from the outset (prior
to the trial), and is, without a shadow of doubt, a Man Among Men. Not at all like the
indignant little girly-boys such as Obama, Tony Abbott, Sarkozy, Cameron, Wm Hague and
Tony Bliar who plague and litter the Western political landscape.
Anyhow, here's a 6 minute interview with Major Dan who, after his departure from the
US Military, migrated to Oz with his family and wrote a book about his experiences with
the US Military Injustice System called In The Company of Cowards.
The most stunning revelation in the interview is a reference to the fact that the
torture report points out that of 119 detainees studied during its compilation, the committee
concluded that: 1. 26 of the victims were completely innocent of any 'wrong-doing' and should never have
been detained. 2. The Report understates the number of detainees studied to less than 100.
The map of all the countries who were complicit � actively or passively � with CIA's
torture program includes most of the countries who speak loudest and most sanctimoniously
about human rights. Add to this all the other countries (Russia, China, India, South
American countries, �. ) who also use torture in some form, and I come to the conclusion
that there is not a single country today where some form of torture (physical as well
as mental) is not at least tolerated under some specific conditions.
Well gracious of you not to bitch for a welcome change sloth, but isn't your second sentence
a bit of a subtle bitch? I suspect the original Nazis that the US imported/rescued after
WWII had a lot to do with it but give the Germany of today, including b but excluding
Merkel, a break will you.
Actually it is good to hear from you again sloth. Your input
can be valuable when you're not "bitching".
[W]e are building politics of memory, which are more and more capable of understanding
the types of repression that were used against the victims of the dictatorship. There
are also now several Brazilian states and municipalities that are creating spaces
for memory and for the creation of understanding and knowledge. The truth is that
before we lived in a country that was dominated by an ethic of the forgotten and today
we have another environment, where the country is valuing our memory and the past.
A short while ago, we head from all of the principle Brazilian newspapers, which
published fairly strong and insistent editorials from the perspective that we should
not look to the past and that we should only and exclusively look toward the future.
They said that eventually, any excerise into the past would imply a rupture with our
democracy, and would put at risk the current public institutions and freedoms. The
simple affirmation of these ideas is in itself a representation of the frailty of
our democracy. And now we have a new environment.
The same American Criminals In Action responsible for so much terrorism, torture, and
death in this milennium were responsible for much of the same in Latin America ... worldwide
... in the last.
We need to build a politics of memory here in the USA, where forgetfulness in institurionalized.
The Criminal In Action In Chief here directly mouthed himself what was left to the MSM
in Brazil ... "that we should not look to the past and that we should only and exclusively
look toward the future."
We cannot understand the present without knowing the past nor can we have any control
of our future without understanding the present as it is perfected. There is no time
but the present, created by the past and in turn creating the future, and there is nobody
here but ourselves to create it. We North Americans are certainly near the end of the
line when it comes to understanding our past, and so our present, and so to deliberately
affecting our future.
FYI, the latest details. Curiously, the page linked to says nothing about
Boko Haram. Only that a Russian-owned plane with arms bound for Chad has been detained
on 6 Dec. Russia has supplied weapons to the gov't. since at least 2001, according to
Wikipedia (see army of chad and the foreign operators of t-55 tanks), so why would this
be at all suspicious?
The latest report, 8 Dec.
Nigerian govt. releases Chad-bound Russian plane detained in Kano in Premium Times
(online since 2011, so no doubt right up there with TNR, I'm sure) states that the cargo
aboard the plane, chartered by the French military, was being redeployed within the region
by French peacekeepers. The aircraft made an unscheduled landing in Nigeria due to what
the article describes as "technical problems." Local security in Kano, in the north,
apparently has a history of detaining aircraft.
This is the third time since 2009 that planes loaded with arms would be arrested in
Kano, our correspondent says.
The detained planes were later released after investigations.
The destination of the latest aircraft has however raised concerns amid increasing
worries in Nigeria over Chad's alleged role in the Boko Haram insurgency plaguing
Nigeria's northeast.
This bit at the tail of the pc. is all I see about Boko Haram.
Ponder if you would, my fellow Barflies what this might mean about the intent and
honesty of our distinguished poster, who thoughtfully provided the link on the 10th.
I wonder -- maybe it was just a scam by some local security types -- Russia, France,
the UN, perhaps financially enabled the expeditious handling of the investigation. The
article makes it clear that local authorities, in view of the nationality of the plane,
undertook the investigation.
Thanks for allowing me to wander off thread. We now return you to your regularly unscheduled
postings, already in progress.
Posted by: rufus magister | Dec 10, 2014 8:13:52 PM |
63
To get back on topic -- Chris Floyd is an old favorite of mine, from his Moscow News
days. Here he is at
Counterpunch
on the report.
A truncated version of the Senate investigation into the CIA's Terror War torture
regime has finally been released. Even in its limited form, it details an operation
of vile depravity, one which would plunge a civilized nation into a profound crisis
of conscience....
Needless to say, nothing like that is going to happen in America. Indeed, even
before the report was released, the New York Times - the standard-bearer and shaper
of "decent" liberal thought for the nation - was... demanding that we "Pardon Bush
and Those Who Tortured." This was the very first "think piece" pushed by the Times
on the morning of the report's release.
And you know, I'm a little annoyed at the Grey Lady for finally jumping the shark
after I touted it's (limited) virtues over at the TNR thread. Well, I'm sure Mrs. M has
a few good recipes for crow; she's served me up that dish before.
Posted by: rufus magister | Dec 10, 2014 8:49:01 PM |
64
@63 rufus.. you have to give it up for number 2 bullshite artist ulster.. he runs a close
2nd to cold..
No, I'm going with our distinguished correspondent as no. 1 source of
shite. Maybe I'm being a snob, imported over domestic. It's got a more subtle bouquet.
Posted by: rufus magister | Dec 10, 2014 9:18:41 PM |
66
for what it is worth, the black and tan should not get a Christmas bonus, his disinformation
is poorly produced and so sloppy that the very links he provides contradict his accusation.
if anyone is paying for that I would like to get into that racket as well.
Posted by: dan of steele | Dec 10, 2014 10:17:31 PM |
67
actually this is yet another demonstration of murikka's greatness !
dianne feinstein *But I came to the conclusion that America's greatness is being able to say we made a
mistake and we are going to correct it and go from there.*
Billmon posted a great series of tweet about the parallels between the Torture Report/
Wall St. Bailouts: the curtain coming up and everyone briefly seeing the true ugliness
of the system before they try VERY hard to make us forget.
I can guarantee however that the rest of the world will not forget. I wonder what
the reaction will be next time the US tries to come down on another country for human
rights abuses? Perhaps laughter?
@66 rufus - fair enough.. i agree with dan of steele - he can't possibly be paid for
that crap.
@69 almand.. good questions. either these human rights organizations are independent
organizations, or they are dependent on gov't or usaid type hand outs and they don't
want to bite the hand that feeds them. regardless - it is laughable at this point any
suggestion of the usa having any moral ground to stand on. we knew that beforehand, and
the cozy relationship with kiev the past year is more testimony of the wretchedness of
their ways..
@james: Kiev, and also Saddam, Pinochet, the Contras, Mobuto, Bin Laden, Suharto, Marcos,
Musharaf, and all the way back to Uncle Adolf... the list goes on and on. Like you said,
it's something we all knew, and have known for a very long time but damned if it doesn't
keep happening.
The Guardian did a story about Amnesty and HRW did come out today demanding prosecutions.
At least they have some sense of shame, it seems.
I gotta go w/our distinguished poster. CDH on occasion makes
sense (like once or twice in the Ferguson/NYC discussion) and he's got decent taste in
Pink Floyd albums. Regrettably, our faux Irishman has no such socially redeeming virtues.
But still, aren't y'all channeling your inner Grinch or Scrooge? What about Mrs. U
and all the little counties? He gets his bonus, a traditional bag of coal, perhaps, since
he is on the "naughty" list. We know he's not in the Ukraine; otherwise, that would count
as a thoughtful gift.
And besides, he's pd. to be irritating, not right.
I agree, however, that quality is not good, repertory is a bit stale & weak; see g77's
bon mot @ 15.
If I were his boss, I'd have him on a Corrective Action Program. But my guess, he's
gaming his metrics and hiding it, at least for now.
Posted by: rufus magister | Dec 11, 2014 10:25:31 PM |
72
The most shocking, if already completely buried, news of the day was that - in yet another confirmation
that Goldman Sachs is in charge of the New York Fed - a NY Fed staffer was colluding and leaking
confidential, material information to a 29-year-old Goldman vice president, himself a former Federal
Reserve employee.
This only happened because on the day Carmen Segarra disclosed her 47 hours of "secret Goldman
tapes" on This American Life, Goldman executives asked the former Fed staffer where he had gotten
what appeared to be confidential information from.
To nobody's surprise the answer was: The New York Fed. So as the latter, also known as the biggest
hedge fund of the western world with $2.7 trillion in AUM, is scrambling to once again prove it is
shocked, shocked, that it has become merely the latest subsidiary
of Goldman Sachs, Inc., it released the following statement explaining what "really" happened.
As soon as we learned that Goldman Sachs suspected one of its employees may have inappropriately
obtained confidential supervisory information, we alerted law enforcement authorities. We
have been working with law enforcement authorities since then. Because any public statement about
the investigation could be prejudicial to a potential future criminal case, we are unable to comment
on the specific facts that are under investigation.
As a general matter, we have detailed rules and controls protecting confidential information.
All employees with access to confidential supervisory information need to agree to safeguard that
information appropriately, and not to disclose it without the necessary approval. Employees
receive training relating to the handling and protection of confidential supervisory information
and other information security matters. Employees are informed that a violation of
these restrictions could lead to criminal prosecution.
Employees also receive ongoing ethics training and are required to do an annual certification
that they understand and will adhere to the Bank's Code of Conduct. In addition, we use
off-boarding procedures to confirm with departing employees that no confidential information may
be taken. With respect to all New York Fed staff, departing Officers may have no
official contact with the Federal Reserve System for a period of one year. In addition,
all departing New York Fed employees may not have substantive business contacts with the New York
Fed relating to any particular matter that he or she had worked on when employed by the New York
Fed. Further, with respect to employees departing from the financial institution supervision
group, if the departing employee had served as a senior supervisory officer or central point of
contact at a large and complex banking organization, that employee may not receive compensation
from the supervised organization as an employee, officer, director or consultant for a period
of one year. Finally, the New York Fed has in place technology to help identify
and prevent the forwarding of confidential information in violation of our rules.
So did this technology fail? Or is Goldman simply one of the exempted parties?
Is the NY FED trying to say that Goldman Sachs does not own shares in the New York Federal
Reserve Bank?
The 12 regional Federal Reserve Banks, which were established by the
Congress as the operating arms of the nation's central banking system,
are organized similarly to private corporations--possibly leading to
some confusion about "ownership." For example, the Reserve Banks issue
shares of stock to member banks. However, owning Reserve Bank stock is
quite different from owning stock in a private company. The Reserve
Banks are not operated for profit, and ownership of a certain amount of
stock is, by law, a condition of membership in the System. The stock may
not be sold, traded, or pledged as security for a loan; dividends are,
by law, 6 percent per year.
Which is why it is a complete farce and racket to have The NY Federal Reserve Bank be responsible
for regulating the member banks that own it.
The Board of Governors of the Federal Reserve System has supervisory and regulatory authority
over a wide range of financial institutions, including state-chartered banks that are members
of the Federal Reserve System (state member banks), bank holding companies, thrift holding
companies and foreign banking organizations that have a branch, agency, a commercial lending
company subsidiary or a bank subsidiary in the United States...
" Finally, the New York Fed has in place technology to help identify and prevent the
forwarding of confidential information in violation of our rules. "
Fancy way of saying the NSA, eh?
insanelysane
insanelysane's picture
It takes two to tango. Goldman wacked a couple of employees but the FED has kept all of theirs.
Apparently law enforcement led by Mr. Holder are undertaking another extensive "investigation."
Either that or they are waiting for a memo from Goldman detailing what their "investigation"
found.
Bay of Pigs
They don't need to explain anything. The William Dudley's bio....
"Prior to joining the Bank in 2007, Mr. Dudley was a partner and managing director at Goldman,
Sachs & Company and was the firm's chief U.S. economist for a decade."
If this was a just country, by now the FBI would have an undercover operation, bug Dudley and
KHenry and obtain irrefutable evidence that would be enough to end the NY FED and put them behind
bars.
As we don't, and Goldman owns the FBI, we watch and cringe at these masters of arrogance and
corruption.
"We had to struggle with the old enemies of peace--business and financial monopoly, speculation,
reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the Government of the United States as a mere appendage to their
own affairs. We know now that Government by organized money is just as dangerous as Government
by organized mob."
Franklin D. Roosevelt
"Why is JP Morgan getting so much heat? Maybe because it is a massive international
crime syndicate."
JPM and Goldman sought and obtained manipulative powers in global commodities, even while they
were being bailed out on the back of the American people? Oh no, nothing like this could
be true, or so the shills and toadies of the moneyed interests will say. Just get the government
out of our way, and everything will be all right. The market is naturally rational and efficient,
pure and pristine. No Bank would risk its reputation by doing anything
illegal.
Especially when they buy off and intimidate enforcement, write the laws, and do what they will.
I doubt that anything meaningful will be done about this. The corruption runs deep.
In corporatism the private and public elites are largely interchangeable. Different roles,
similar objectives.
The politicians may make a good show of it, and talk harshly to their witnesses. And then
take their money, and lick their hands.
But at least we know more about what is true, and what is not.
Perhaps this may help you understand those who do not wish to remain under the power of the Banking
cartel, and may be in a better position to do something about it.
Senate Report Criticizes Goldman and JPMorgan Over Their Roles in Commodities
Market
By Nathaniel Popper and Peter Eavis
November 19, 2014
A two-year Senate-led investigation is throwing back the curtain on the outsize and sometimes
hidden sway that Wall Street banks have gained over the markets for essential commodities like
oil, aluminum and coal.
The Senate's Permanent Subcommittee on Investigations found that Goldman Sachs and JPMorgan
Chase assumed a role of such significance in the commodities markets that it became
possible for the banks to influence the prices that consumers pay while also securing
inside information about the markets that could be used by the banks' own traders
Bankers from both firms, along with other industry executives and regulators, will testify
about the allegations at hearings on Thursday and Friday.
The 400-page report, which was made public on Wednesday evening, included case studies on nine
different commodities in which banks have taken big positions, including the 100 oil tankers and
55 million barrels of oil storage that were owned by Morgan Stanley, and the 31 power plants owned
by JPMorgan at one point.
The subcommittee discussed several reasons that these commodity operations could create problems.
The potential for price manipulation and the unfair advantage that banks can gain in these markets
were among the top concerns expressed by Senator Levin and Senator John McCain, the top Republican
on the subcommittee.
But both senators also echoed previous warnings that the enormous holdings of oil, uranium
and other hazardous materials could expose the banks to significant legal liability that could,
in turn, lead to runs on the banks.
A 2012 study by the Federal Reserve, cited in the report, found that banks have not put aside
enough money and insurance to adequately prepare for the "extreme loss scenarios" involving commodities...
Americans regularly insist that the U.S. is the only global governing authority that underpins
the world's security and prosperity, that without it, there would be widespread chaos, economic stagnancy,
and far more frequent international warfare. The proponents of this conception emphasize the dependency
of world order on US military, economic, diplomatic, and ideological capabilities (Falk, R., 2014).
Falk mentions Michael Mandelbaum as the most passionate proponent of this position [9]. Recently
Mandelbaum (2014) bluntly restated this argument, saying,"The United States stands alone
as the world's de facto government." Though administered from its statist headquarters in Washington,
according to its promoters, this form of world government is meta-political and unselfish, qualities
that should be appreciated by all people of good will since the U.S. is contributing to the betterment
of humanity (Kagan, R. 2006). Indeed, there was only one group on earth which claimed the right to
global governance: the US neo-conservatives.
By the mid-1970s, then
US Secretary
of DefenseDonald Rumsfeld began
to argue that the Soviet government would be ignoring bilateral treaties and secretly building up
weapons with the intention of attacking the United States. Together with
Paul Wolfowitz he wanted
to create a much more severe view of the Soviet Union, its intentions, and views about fighting and
winning a nuclear war.When George H. W. Bush became Director of Central Intelligence
in 1976, he set up a team of sixteen outside experts who were to take an independent look at highly
classified data used by the intelligence community to assess Soviet strategic forces, commonly referred
to as Team B [10].Their allegations proved all wrong. The CIA director concluded
that the Team B approach set "in motion a process that lends itself to manipulation for purposes
other than estimative accuracy."
The "neo-conservative offensive" (Hamm, B., 2005, 1-18), which started in August 1971 with the
Powell Manifesto (Nace, T., 2003 [11]), had its first great success when Ronald Reagan came into
power und brought many of the neocon hawks with him. They had been in place before and were waiting
for their chance. Ronald Reagan was the worst informed president, an old man who napped even in meetings
of the National Security Council, and who perceived the world through the lens of Hollywood movies:
"A man of limited knowledge but deep religious beliefs and strong conservative convictions, he provided
little guidance on policy and had no interest in or grasp of detail. � Reagan's disengaged style
and lack of foreign policy experience left the door open to palace intrigue among his subordinates,
who were eager to fill the void" (Stone, O., Kuznick, P., 2013:421-4).
After the collapse of the socialist regimes the neocons lost influence while still opposing the
foreign policy establishment of the republican Bush Sr. administration as well as of that of its
democratic successor under President Clinton. Their major foreign policy concern was how to prevent
the rise of a new rival. The Defense Planning Guide, a document prepared by the then Undersecretary
for Defense Policy Paul Wolfowitz mentions: "Our most important goal is it to prevent to emergence
of a new rival, whether on the territory of the former Soviet Union or elsewhere, which would represent
a threat similar to that of the former Soviet Union. This reflection governs the new regional defense
strategy and demands that we prevent every hostile power to dominate a region the resouces of which
would suffice to justify a claim to global power" [12].
In 1997, a group surfaced under the name of Project for a New American Century (PNAC),
a think tank based in
Washington, D.C. founded
by William Kristol and
Robert Kagan. The PNAC's
stated goal is "to promote American global leadership." Fundamental to the PNAC were the views that
"American leadership is both good for America and good for the world" and support for "a
Reaganite policy of military strength and moral clarity." After the faked presidential elections
of 2000 (Palast, G. 2002), its members came in numerous key administrative positions and the PNAC
exerted influence on high-level government officials in the administration of
George W. Bush and shaped
its military and
foreign
policies.
As J. Petras (2013b) writes, the restoration of "direct US imperial interventions, unhindered
by Congressional and popular opposition, was gradual in the period 1973-1990. It started to accelerate
in the 1990's and then really took off after September 11, 2001" The first military test after the
collapse of the Soviet empire was how Iraq President Saddam Hussein was lured into the Kuwait trap
in 1990. The 28 nations "coalition of the willing" was bought together, and war was waged over the
people of Iraq, a war that first was fought with murderous weapons, then with sanctions, and has
continued until this very day. On January 16, 1998, members of the PNAC, including
Donald Rumsfeld,
Paul Wolfowitz, and
Robert Zoellick drafted
an open letter to President Bill
Clinton urging him to remove
Saddam Hussein from power.
They argued that Saddam would pose a threat to the United States, its
Middle East allies, and oil
resources in the region if he succeeded in maintaining what they asserted was a stockpile of
Weapons of Mass
Destruction. The PNAC also supported the
Iraq Liberation Act
of 1998, which some have regarded as evidence that the
2003 invasion of Iraq
was a foregone conclusion (Mackay, N., 2004).
It should not be forgotten that the war against Afghanistan, too, was being planned well before
the 9/11 attacks. US officials had been in talks with the Taliban about building an oil pipeline
from the Caspian Sea to Karachi, Pakistan, via Afghanistan in order to avoid crossing Iran. In July
2001, a German diplomat was reported saying that the talks ended with the announcement from the US
side: "Either we cover you with a carpet of gold [if you comply], or we cover you with a carpet of
bombs". Even the date when bombings would begin was given as October 2001 [13]. This had nothing
whatsoever to do with the 9/11 attacks, nor with Osama bin Laden (Chossudovsky, M. 2005).
Rebuilding America's Defenses (September 2000),the most widely circulated document
of the PNAC group, was developed by
Rumsfeld,
Cheney,
Wolfowitz and Scooter
Libby, and devoted to matters
of "maintaining US pre-eminence, thwarting rival powers and shaping the global security system according
to US interests." Section V, entitled "Creating Tomorrow's Dominant Force", includes the sentence:
"Further, the process of transformation, even if it brings revolutionary change, is likely to be
a long one, absent some catastrophic and catalyzing event��like a new Pearl Harbor". Though not necessarily
implying that Bush administration members were complicit in those attacks, it was often been argued
that PNAC members used the events of 9/11 as the "Pearl Harbor" that they needed��that is, as an
"opportunity" to capitalize on in order to enact long-desired plans.
In a 2007 speech before the Commonwealth Club, retired General Wesley Clark cited a classified
Pentagon Memorandum of 2001 (months before the September attacks) which read that the US would attack
seven countries in the next five years, i.e. Iraq, Syria, Lebanon, Libya, Somalia, Sudan and Iran
in order to gain control over their natural resources, oil in the first place, and enable fabulous
profits for the arms and oil industries. "Our country was governed by a group of paranoids like Paul
Wolfowitz, Dick Cheney, Donald Rumsfeld and others who wanted to destabilize the Middle East and
gain control over its resources" [14].
By the end of 2006, PNAC was "reduced to a voice-mail box and a ghostly website", with "a single
employee left to wrap things up". In 2006,
Gary Schmitt, former executive
director of the PNAC, a resident scholar at the
American
Enterprise Institute and director of its program in Advanced Strategic Studies, stated that
PNAC had come "to a natural end." Instead, untiring neocon hawk Robert Kagan replaced it with the
Foreign Policy Initiative [15].
I got to thinking today about how neocon and neoliberal are becoming interchangeable terms. They
did not start out that way. My understanding is they are ways of rationalizing breaks with traditional
conservatism and liberalism. Standard conservatism was fairly isolationist. Conservatism's embrace
of the Cold War put it at odds with this tendency. This was partially resolved by accepting the
Cold War as a military necessity despite its international commitments but limiting civilian programs
like foreign aid outside this context and rejecting the concept of nation building altogether.
With the end of the Cold War conservative internationalism needed a new rationale, and this was
supplied by the neoconservatives. They advocated the adoption of conservatism's Cold War military
centered internationalism as the model for America's post-Cold War international relations. After
all, why drop a winning strategy? America had won the Cold War against a much more formidable opponent
than any left on the planet. What could go wrong?
America's ability not simply to project but its willingness to use military power was equated
with its power more generally. If America did not do this, it was weak and in decline. However, the
frequent use of military power showed that America was great and remained the world's hegemon. In
particular, the neocons focused on the Middle East. This sales pitch gained them the backing of both
supporters of Israel (because neoconservatism was unabashedly pro-Israel) and the oil companies.
The military industrial complex was also on board because the neocon agenda effectively countered
calls to reduce military spending. But neoconservatism was not just confined to these groups. It
appealed to both believers in American exceptionalism and backers of humanitarian interventions (of
which I once was one).
As neoconservatism developed, that is with Iraq and Afghanistan, the neocons even came to embrace
nation building which had always been anathema to traditional conservatism. Neocons sold this primarily
by casting nation building in military terms, the creation and training of police and security forces
in the target country.
9/11 too was critical. It vastly increased the scope of the neocon project in spawning the Global
War on Terror. It increased the stage of neocon operations to the entire planet. It effectively erased
the distinction between the use of military force against countries and individuals. Individuals
more than countries became targets for military, not police, action. And unlike traditional wars
or the Cold War itself, this one would never be over. Neoconservatism now had a permanent raison
d'�tre.
Politically, neoconservatism has become the bipartisan foreign policy consensus. Democrats are
every bit as neocon in their views as Republicans. Only a few libertarians on the right and progressives
on the left reject it.
Neoliberalism, for its part, came about to address the concern of liberals, especially Democrats,
that they were too anti-business and too pro-union, and that this was hurting them at the polls.
It was sold to the rubiat has pragmatism.
The roots of neoliberalism are the roots of kleptocracy. Both begin under Carter. Neoliberalism
also known at various times and places as the Washington Consensus (under Clinton) and the Chicago
School is the political expression for public consumption of the kleptocratic economic philosophy,
just as libertarian and neoclassical economics (both fresh and salt water varieties) are its academic
and governmental face. The central tenets of neoliberalism are deregulation, free markets, and free
trade. If neoliberalism had a prophet or a patron saint, it was Milton Friedman.
Again just as neoconservatism and kleptocracy or bipartisan so too is neoliberalism. There really
is no daylight between Reaganism/supply side economics/trickledown on the Republican side and Clinton's
Washington Consensus or Team Obama on the other.
And just as we saw with neoconservatism, neoliberalism expanded from its core premises and effortlessly
transitioned into globalization, which can also be understood as global kleptocracy.
The distinctions between neoconservatism and neoliberalism are being increasingly lost, perhaps
because most of our political classes are practitioners of both. But initially at least neoconservatism
was focused on foreign policy and neoliberalism on domestic economic policy. As the War on Terror
expanded, however, neoconservatism came back home with the creation and expansion of the surveillance
state.
At the same time, neoliberalism went from domestic to global, and here I am not just thinking
about neoliberal experiments, like Pinochet's Chile or post-Soviet Russia, but the financialization
of the world economy and the adoption of kleptocracy as the world economic model.
jest on
Mon, 08/20/2012 - 5:55am
I'm now under the opinion that you can't talk about any of the "neo-isms" without talking
about the corporate state.
That's really the tie that binds the two things you are speaking of.
With neocons, it manifests itself through the military-industrial complex (Boeing, Raytheon,
etc.), and with neolibs it manifests itself through finance and industrial policy.
For example, you need the US gov't to bomb Iraq (Raytheon) in order to secure oil (Halliburton),
which is priced & financed in US dollars (Goldman Sachs). It's like a 3-legged stool; if you
remove one of these legs, the whole thing comes down. But each leg has two components, a
statist component and a corporate component.
The entity that enables all of this is the corporate state.
It also explains why economic/financial interests (neolib) are now considered national security
interests (neocon). The viability of the state is now tied to the viability of the corporation.
lambert on
Mon, 08/20/2012 - 9:18am
Corporate/statist (not sure "corporate" captures the looting/rentier aspect though). We see
it everywhere, for example in the revolving door.
I think the stool has more legs and is also more dynamic; more like Ikea furniture. For example,
the press is surely critical in organizing the war.
But the yin/yang of neo-lib/neo-con is nice: It's as if the neo-cons handle the kinetic aspects
(guns, torture) and the neo-libs handle the mental aspects (money, mindfuckery) but both merge
(like Negronponte being on the board of Americans Select) over time as margins fall and decorative
aspects like democratic institutions and academic freedom get stripped away. The state and the
corporation have always been tied to each other but now the ties are open and visible (for example,
fines are just a cost of doing business, a rent on open corruption.)
And then there's the concept of "human resource," that abstracts all aspects of humanity away
except those that are exploitable.
First they ignore you, then they ridicule you, then they fight you, then you win. --
Mahatma Gandhi
jest on
Mon, 08/20/2012 - 1:37pm
I like the term much better than Fascist, as it is 1) more accurate, 2) avoids the Godwin's
law issue, and 3) makes them sound totalitarianist.
Yes, I would agree that additional legs make sense. The media aspect is essential, as it neutralizes
the freedom of the press, without changing the constitution. It dovetails pretty well with the
notion of Inverted Totalitarianism.
I think you could also make the argument that Obama is perhaps the most ideal combination
of neolib & neocon. The two sides of him flow together so seamlessly, no one seems to notice.
But that's in part because he is so corporate.
Lex on
Mon, 08/20/2012 - 8:28am
Actually, neoliberalism is an economic term. An economic liberal in the UK and EU is for open
markets, capitalism, etc. You're right that neoliberalism comes heavily from the University of
Chicago, but it has little to do with American political liberalism.
A reading of the classical liberal economists puts some breaks on the markets, corporations,
etc. Neoliberalism goes to the illogical extremes of market theory and iirc, has some influence
from the Austrian school ... which gives up on any pretense of scientific exposition of economics
or rationality at the micro level, assuming that irrationality will magically become rational
behavior in aggregate.
Therefore, US conservatives post Eisenhower but especially post Reagan are almost certainly
economic neoliberals. Since Clinton, liberals/Democrats have been too (at least the elected ones).
You nailed neoconservative and both parties are in foreign policy since at least Clinton ... though
here lets not forget to go back as far as JFK and his extreme anti-Communism that led to all sorts
of covert operations, The Bay of Pigs, Vietnam, and the Cuban Missile Crisis. Remember, the Soviets
put the missiles in Cuba because we put missiles in Turkey and they backed down from Cuba because
we agreed to remove the missiles from Turkey; Nikita was nice enough not to talk about that so
that Kennedy didn't lose face.
"Don't believe them, don't fear them, don't ask anything of them" - Aleksandr Solzhenitsyn
Hugh on
Mon, 08/20/2012 - 3:57pm
I agree that neoconservatism and neoliberalism are two facets of corporatism/kleptocracy. I
like the kinetic vs. white collar distinction.
The roots of neoliberalism go back to the 1940s and the Austrians, but in the US it really
only comes into currency with Clinton as a deliberate shift of the Democratic/liberal platform
away from labor and ordinary Americans to make it more accommodating to big business and big money.
I had never heard of neoliberalism before Bill Clinton but it is easy to see how those tendencies
were at work under Carter, but not under Johnson.
This was a rough and ready sketch. I guess I should also have mentioned PNAC or the Project
to Find a New Mission for the MIC.
Hugh on
Mon, 08/20/2012 - 10:44pm
I have never understood this love of Clinton that some Democrats have just as I have never
understood the attraction of Reagan for Republicans. There is no Clinton faction. There is no
Obama faction. Hillary Clinton is Obama's frigging Secretary of State. Robert Rubin and Larry
Summers, both of whom served as Bill Clinton's Treasury Secretary, were Obama's top financial
and economic advisors. Timothy Geithner was their prot�g�. Leon Panetta Obama's Director of the
CIA and current Secretary of Defense was Clinton's Director of OMB and then Chief of Staff.
The Democrats as a party are neoconservative and neoliberal as are Obama and the Clintons.
As are Republicans.
What does corporations need regulation mean? It is rather like saying that the best way to
deal with cancer is to find a cure for it. Sounds nice but there is no content to it. Worse in
the real world, the rich own the corporations, the politicians, and the regulators. So even if
you come up with good ideas for regulation they aren't going to happen.
What you are suggesting looks a whole lot another iteration of lesser evilism meets Einstein's
definition of insanity. How is it any different from any other instance of Democratic tribalism?
Lex on
Mon, 08/20/2012 - 11:49pm
Perhaps it should be pointed out that the Clintons became fabulously wealthy just after Bill
left office, mostly on the strength of his speaking engagements for the financial sector that
he'd just deregulated. Both he and Hillary hew to a pretty damned neoconservative foreign policy
... with that dash of "humanitarian interventionism" that makes war palatable to liberals.
But your deeper point is that there isn't enough of a difference between Obama and Bill Clinton
to really draw a distinction, not in terms of ideology. What a theoretical Hillary Clinton presidency
would have looked like is irrelevant, because both Bill and Obama talked a lot different than
they walked. Any projection of a Hillary Clinton administration is just that and requires arguing
that it would have been different than Bill's administration and policies.
The unfortunate fact of the matter is that at that level of politics, the levers of money
and power work equally well on both party's nomenklatura. They flock to it like moths to porch
light.
That the money chose Obama over Clinton doesn't say all that much, because there's no evidence
suggesting that the money didn't like Clinton or that it would have chosen McCain over Clinton.
It's not as if Clinton's campaign was driven into the ground by lack of funds.
Regardless, that to be a Democrat i would kind of have to chose between two factions that are
utterly distasteful to me just proves that i have no business being a Democrat. And since i wouldn't
vote for either of those names, i guess i'll just stick to third parties and exit the political
tribalism loop for good.
"Don't believe them, don't fear them, don't ask anything of them" - Aleksandr Solzhenitsyn
"Those who fail to exhibit positive attitudes, no matter the external reality, are seen as maladjusted
and in need of assistance. Their attitudes need correction...
Suddenly, abused and battered
wives or children, the unemployed, the depressed and mentally ill, the illiterate, the lonely,
those grieving for lost loved ones, those crushed by poverty, the terminally ill, those fighting
with addictions, those suffering from trauma, those trapped in menial and poorly paid jobs, those
whose homes are in foreclosure or who are filing for bankruptcy because they cannot pay their
medical bills, are to blame for their negativity.
The ideology justifies the cruelty of unfettered capitalism, shifting
the blame from the power elite to those they oppress."
Chris Hedges
Here is a recent conversation I had with a friend about the current state of the US recovery. As
an accountant with a wide range of exposures, I enjoy hearing his perspective since I no longer have
that sort of current insight into the corporate culture in America. I have years of background running
large businesses in corporations, and some forays into large scale M&A work, so I have seen quite
a bit of it. The methods rarely change, merely the guises and degrees.
Here are excerpts from his
side of the conversation with only one parenthetical comment of my own.
"I don't think we're seeing profits in a traditional sense. Instead, it appears to me that we're
watching a long, drawn out LBO'ing of America. It appears that companies are liquidating
capital and returning it as opposed to earnings spreads on revenue.
It seems like we're seeing the final blow-off phase that started with the stock option
becoming the primary form of compensation for corporate talent. By drawing out the LBO, they
re-stock their options each year with a guaranteed return thanks to the Fed and their own Treasury
Departments.
The problem is that you can't have systematic corporate buybacks with employment/economic
growth as they create diametrically opposite outcomes. The more work I do, the more I conclude
that the US economy has not expanded since 2006.
I was looking at mutual fund data the other day and it showed that people moved their fixed
income money into domestic equity - $185 billion in liquidated bond funds to buy $175 billion
in equity funds. This happened after the Fed announced tapering was on the table. Just like the
gold market, I suspect that "someone" forced the liquidation of bond funds and herded the money
into equity funds to keep the rally going. (I
think it is perfectly reasonable to flee bond funds at any time that interest rates
are turning higher. Bond funds often take it on the chin in such a deleveraging of a long term
interest rate trend. However, I think the whole taper thing was hyped and used by the wiseguys,
as are most things these days by our financial masters of the universe. - Jesse)
Coincidentally, corporations used half a trillion in cash flow on buybacks. It's a
liquidity game but with limitations. What's the next asset that can be liquidated or levered?They're still working on gold but sometime soon, the price of gold will be set in the East,
where the gold resides. Agricultural commodities are being liquidated but that ensures a
drop in planting next year. Oil is too valuable on the geopolitical front to liquidate.
There are certainly winners in this economy but far more losers. At some point,
the weight of the losers acts against the winners, many of whom are levered up with confidence.
Corporations can liquidate equity capital but we all know how the LBO'd companies operated in
the 1990's. In many ways, they've gotten corporations to behave like consumers did in the
2000's, only this time they're trained to buy back their own stock. Every cycle has natural limits.
We know that corporate cash flow is no longer growing and we know that it's more expensive
to sell debt today than a year ago. We also know that the Fed sees the stock market as their
proof of success. So how does this shakeout? If corporations are a lemon, how much juice can you
squeeze out of the lemon?"
Although I do not wish to be an alarmist, I have to say that this trend of attempting to sustain
the unsustainable has gone on longer than I had previously thought possible.
I am fairly sure that the next crisis will bring these things to a head and some sort of resolution.
But therein also lies great danger. Philosophies that have grown time can have deep roots, and when
faced with what to them is an intolerable change, can react somewhat excessively. They may even welcome
the opportunity to act excessively and decisively, at least in their own minds, as the path to
winning.
When a ruling subculture that has become accustomed to crushing and liquidating things for its
own power and pleasure, whether it is natural resources, the environment, crops, animals, land, or
social organizations, eventually runs out of things, it can become frustrated and angry in its seeming
impotence to continue on, to keep expanding.
Indirectly and somewhat benignly at first, but with a growing efficiency and determination
over time, it will begin with the weak and the defenseless, attacking and objectifying them, even
in the most petty of ways and impositions. It will turn to its critics, and then everyone who is
defined by them as 'the other.'
That is when a predatory social and economic philosophy can turn into pure fascism, and start
liquidating people. And finally it liquidates and consumes itself.
But really, no one wakes up one morning and suddenly decides, 'Today I will become a monster,
and wantonly kill innocent women and children.'
Otherwise ordinary people get to that point slowly, one convenient rationalization for their 'necessary
and expedient' behavior at a time. After all, they are the good people, they are the strong, they
are the most successful and the favored.
They are the entitled, and not these others who would seek to drain them, drag them back
down. They are the champions of progress and achievement and civilisation, the hardest working,
and the epitome of mankind.
What could possibly go wrong?
"He prompts you what to say, and then listens to you, and praises you, and encourages you. He
bids you mount aloft. He shows you how to become as gods. Then he laughs and jokes with you, and
gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them,
and then you are his."
J. H. Newman, The AntiChrist
If you are one who thinks that the above 'could not possibly happen here,' and I am sure that there
are many, you may wish to read the following vignette from modern US history. Alan Nasser,
FDR's Response to the Plot to Overthrow Him
"A new tyranny is thus born, invisible and often virtual, which unilaterally
and relentlessly imposes its own laws and rules...
Such an economy kills. "
Jorge Mario Bergoglio, Francis I
"When you won, you divided the profits amongst you, and when you lost, you charged it to
the Bank [of the United States]...
You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal,
(bringing his fist down on the table), I will rout you out."
Andrew Jackson
Corporatism by any other name, or brand...
h/t for the chart to those wild and crazy guys at GMU.
I think another important distinction between state capitlism and corporatism is that in state capitalism
state control corporations (like was the case in the USSR), while in corporatism corporations control
the state (like is the case in the USA).
The basic idea of corporatism is that the society and economy of a country should be organized
into major interest groups (sometimes called corporations) and representatives of those interest
groups settle any problems through negotiation and joint agreement. In contrast to a market economy
which operates through competition a corporate economic works through collective bargaining. The
American president Lyndon Johnson had a favorite phrase that reflected the spirit of corporatism.
He would gather the parties to some dispute and say, "Let us reason together."
Under corporatism the labor force and management in an industry belong to an industrial organization.
The representatives of labor and management settle wage issues through collective negotiation. While
this was the theory in practice the corporatist states were largely ruled according to the dictates
of the supreme leader.
One early and important theorist of corporatism was Adam M�ller, an advisor to Prince Metternich
in what is now eastern Germany and Austria. M�ller propounded his views as an antidote to the twin
dangers of the egalitarianism of the French Revolution and the laissez faire economics of
Adam Smith. In Germany and elsewhere there was a distinct aversion among rulers to allow markets
to function without direction or control by the state. The general culture heritage of Europe from
the medieval era was opposed to individual self-interest and the free operation of markets. Markets
and private property were acceptable only as long as social regulation took precedence over such
sinfull motivations as greed.
Coupled with the anti-market sentiments of the medieval culture there was the notion that the
rulers of the state had a vital role in promoting social justice. Thus corporatism was formulated
as a system that emphasized the positive role of the state in guaranteeing social justice and suppressing
the moral and social chaos of the population pursuing their own individual self-interests. And above
all else, as a political economic philosophy corporatism was flexible. It could tolerate private
enterprise within limits and justify major projects of the state. Corporatism has sometimes been
labeled as a Third Way or a mixed economy, a synthesis of capitalism and socialism,
but it is in fact a separate, distinctive political economic system.
Although rulers have probably operated according to the principles of corporatism from time immemorial
it was only in the early twentieth century that regimes began to identify themselves as corporatist.
The table below gives some of those explicitly corporatist regimes.
Corporatist Regimes of
the Early Twentieth Century
System Name
Country
Period
Leader
National Corporatism
Italy
1922-1945
Benito Mussolini
Country, Religion, Monarchy
Spain
1923-1930
Miguel Primo de Rivera
National Socialism
Germany
1933-1945
Adolph Hitler
National Syndicalism
Spain
1936-1973
Francisco Franco
New State
Portugal
1932-1968
Antonio Salazar
New State
Brazil
1933-1945
Getulio Vargas
New Deal
United States
1933-1945
Franklin Roosevelt
Third
Hellenic
Civilization
Greece
1936-1941
Ioannis Metaxas
Justice Party
Argentina
1943-1955
Juan Peron
In the above table several of the regimes were brutal, totalitarian dictatorships, usually labeled
fascist, but not all the regimes that had a corporatist foundation were fascist. In particular,
the Roosevelt New Deal despite its many faults could not be described as fascist. But definitely
the New Deal was corporatist.
The architect for the initial New Deal program was General Hugh Johnson. Johnson had been the
administrator of the military mobilization program for the U.S. under Woodrow Wilson during World
War I. It was felt that he did a good job of managing the economy during that period and that is
why he was given major responsibility for formulating an economic program to deal with the severe
problems of the Depression. But between the end of World War I and 1933 Hugh Johnson had become an
admirer of Mussolini's National Corporatist system in Italy and he drew upon the Italian experience
in formulating the New Deal. It should be noted that many elements of the early New Deal were later
declared unconstitutional and abandoned, but some elements such as the National Labor Relations Act
which promoted unionization of the American labor force are still in effect. One part of the New
Deal was the development of the Tennessee River Valley under the public corporation called the Tennessee
Valley Authority (TVA). Some of the New Dealer saw TVA as more than a public power enterprise. They
hoped to make TVA a model for the creation of regional political units which would replace state
governments. Their goal was not realized. The model for TVA was the river development schemes carried
out in Spain in the 1920's under the government of Miguel Primo de Rivera. Jose Antonio Primo de
Rivera, the son of Miguel Primo de Rivera, was the founder of Franco's National Syndicalism.
Corporatist regime typically promote large governmental projects such as TVA on the basis that
they are too large to be funded by private enterprise. In Brazil the Vargas regime created many public
enterprises such as in iron and steel production which it felt were needed but private enterprise
declined to create. It also created an organized labor movement that came to control those public
enterprises and turned them into overstaffed, inefficient drains on the public budget.
Although the above locates the origin of corporatism in 19th century France it roots can be traced
much further back in time. Sylvia Ann Hewlett in her book,The Cruel Dilemmas of Development:
Twentieth Century Brazil, says,
Corporatism is based on a body of ideas that can be traced through Aristotle, Roman law, medieval
social and legal structures, and into contemporary Catholic social philosophy. These ideas are
based on the premise that man's nature can only be fulfilled within a political community.
..........
The central core of the corporatist vision is thus not the individual but the political community
whose perfection allows the individual members to fulfill themselves and find happiness.
...............
The state in the corporatist tradition is thus clearly interventionist and powerful.
Corporatism is collectivist; it is a different version of collectivism than socialism but it is
definitely collectivist. It places some importance on the fact that private property is not nationalized,
but the control through regulation is just as real. It is de facto nationalization without being
de jure nationalization.
Although Corporatism is not a familiar concept to the general public, most of the economies of
the world are corporatist in nature. The categories of socialist and pure market economy are virtually
empty. There are only corporatist economies of various flavors.
These flavors of corporatism include the social democratic regimes of Europe and the Americas,
but also the East Asian and Islamic fundamentalist regimes such as Taiwan, Singapore and Iran. The
Islamic socialist states such as Syria, Libya and Algeria are more corporatist than socialist, as
was Iraq under Saddam Hussein. The formerly communist regimes such as Russia and China are now clearly
corporatist in economic philosophy although not in name.
The root cancer at the core of the U.S., and indeed global economy, is cronyism and an
absence of the rule of law when it comes to oligarchs. In the U.S., this cronyism is best
described as an insidious relationship between large multi-national corporations and big government
to funnel all of the wealth and resources of the nation to themselves at the expense of everyone
else. In a genuine free market defined by heightened competition and governed by an equal application
of the rule of law to all, the 0.1% does not aggregate all of a nation's wealth. This sort of thing
only
happens in crony capitalism, which is basically nothing more than complete and total
insider deals to aggregate newly created money into the hands of the few. The following
profile of Washington D.C.'s so-called "boom" from the St. Louis Post-Dispatch pretty much
tells you all you need to know.
* * *
The more corrupt the state, the more numerous the laws.
- Tacitus
Ever since I started writing about what is happening in the world around me, my primary theme
has been that the root cancer at the core of the U.S., and indeed global economy, is cronyism and
an absence of the rule of law when it comes to oligarchs. In the U.S., this cronyism is best described
as an insidious relationship between large multi-national corporations and big government to funnel
all of the wealth and resources of the nation to themselves at the expense of everyone else. In a
genuine free market defined by heightened competition and governed by an equal application of the
rule of law to all, the 0.1% does not aggregate all of a nation's wealth. This sort of thing only
happens in crony capitalism, which is basically nothing more than complete and total insider
deals to aggregate newly created money into the hands of the few.
The following profile of Washington D.C.'s so-called "boom" from the St. Louis Post-Dispatch
pretty much tells you all you need to know. While I think the tone of the article is absurd
considering this is no "economic boom," but merely parasitic wealth extraction on a unprecedented
scale, it is still quite telling. It is no coincidence that as D.C. has grown wealthier, the nation
has become much, much poorer. Key excerpts below:
The avalanche of cash that made Washington rich in the last decade has transformed the
culture of a once staid capital and created a new wave of well-heeled insiders.
The winners in the new Washington are not just the former senators, party consiglieri and
four-star generals who have always profited from their connections. Now they are also the former
bureaucrats, accountants and staff officers for whom unimagined riches are suddenly possible.
They are the entrepreneurs attracted to the capital by its aura of prosperity and its super-educated
workforce. They are the lawyers, lobbyists and executives who work for companies that barely had
a presence in Washington before the boom.
At the same time, big companies realized that a few million spent shaping legislation
could produce windfall profits. They nearly doubled the cash they poured into the capital.
Sorry these aren't "entrepreneurs," they are parasitic opportunists.
At Cafe Joe, a greasy spoon near the National Security Agency in suburban Maryland, software
engineers with top-secret clearances merely have to look at the place mats under their fried eggs
to find federal contractors trying to entice them away from their government jobs with six-figure
salaries and stock options. The place-mat ads cost $250 a week. They are sold out through
2014.
During the past decade, the region added 21,000 households in the nation's top
1 percent. No other metro area came close.
Two forces triggered the boom.
The share of money the government spent on weapons and other hardware shrank as service
contracts nearly tripled in value. At the peak in 2010, companies based in Rep. James
Moran's congressional district in Northern Virginia reaped $43 billion in federal contracts -
roughly as much as the state of Texas.
Back in 2000, the company spent a mere $260,000 lobbying Congress, federal records show.
Its lobbyists mostly talked to lawmakers about health care: medical manufacturing issues, Medicare
reimbursement rates, privacy of health records, and congressional oversight of the Food and Drug
Administration.
By the end of the decade, the company had broadened its horizons dramatically.
"Government relations" now accounted for $2.6 million - a tenfold increase. On one quarterly
disclosure report from 2010, Boston Scientific listed 35 different pieces of legislation on which
it was lobbying. They included proposals on patent reform, tax penalties for moving American jobs
abroad, tax credits for research and development, rules for transporting lithium batteries, limits
on workers' ability to form labor unions and federal regulation of certain types of financial
derivatives.
Government relations has become so important to the bottom line of a modern company, Becker
said, that it should be a required course at business school. The numbers suggest she's right.
Companies spent about $3.5 billion annually on lobbying at the end of the last decade,
a nearly 90 percent increase from 1999 after adjusting for inflation, political scientist Lee
Drutman notes in a forthcoming book, "The Business of America Is Lobbying."
And you wonder why the economy sucks?
Legal services also boomed, fueled by the growing complexities of federal business regulations.
The number of lawyers in the D.C. metro area increased by a third from 2000 to 2012, nearly
twice as fast as the growth rate nationwide. And those lawyers have the highest mean
salaries in the country, according to George Mason University's Center for Regional Analysis.
The more companies spend on influence, the lower their effective tax rates and the higher
their stock returns compared with competitors', according to recent research. A company called
Strategas has built an index to track the stock performance of the 50 companies that lobby the
most; last year, that index outperformed the rest of the market by 30 percent.
If you still are confused why the U.S. economy is completely stuck in the mud, look no further
than the parasites of Washington D.C.
In the aftermath of the reign of Nazi terror in the 1940s, the philosopher Theodor Adorno wrote:
National Socialism lives on, and even today we still do not know whether it is merely the
ghost of what was so monstrous that it lingers on after its own death, or whether it has not yet
died at all, whether the willingness to commit the unspeakable survives in people as well as in
the conditions that enclose them.1
.... ... ...
For Adorno, the conditions for fascism would more than likely crystallize into new forms. For
instance, they might be found in the economic organization of a society that renders
"the majority of people dependent upon conditions beyond their control and thus maintains them
in a state of political immaturity. If they want to live, then no other avenue remains but to
adapt, submit themselves to the given conditions."3
In part, this speaks to the role of corporate-controlled cultural apparatuses that normalize anti-democratic
ideologies and practices as well as to the paramount role of education in creating a subject for
whom politics was superfluous. For Adorno, fascism in its new guise particularly would launch
a systemic assault on the remaining conditions for democracy through the elimination of public memory,
public institutions in which people could be educated to think critically and the evisceration of
public spaces where people could learn the art of social citizenship, thoughtfulness and critical
engagement. He also believed that the residual elements of the police state would become emergent
in any new expression of fascism in which the corporate and military establishments would be poised
to take power. Adorno, like Hannah Arendt, understood that the seeds of authoritarianism lie in the
"disappearance of politics: a form of government that destroys politics, methodically eliminating
speaking and acting human beings and attacking the very humanity of first a selected group and
then all groups. In this way, totalitarianism makes people superfluous as human beings."4
The American political, cultural, and economic landscape is inhabited by the renewed return of
authoritarianism evident in the ideologies of religious and secular certainty that legitimate the
reign of economic Darwinism, the unchecked power of capital, the culture of fear and the expanding
national security state. The ghosts of fascism also are evident in what Charles Derber and Yale Magress
call elements of "the Weimer Syndrome," which include a severe and seemingly irresolvable economic
crisis, liberals and moderate parties too weak to address the intensifying political and economic
crises, the rise of far-right populist groups such as the Tea Party and white militia, and
the emergence of the Christian Right, with its racist, anti-intellectual and fundamentalist ideology.5
The underpinnings of fascism are also evident in the reign of foreign and domestic terrorism that
bears down on the so called enemies of the state (whistleblowers and nonviolent youthful protesters)
and on those abroad who challenge America's imperial mission; it is also visible in a growing pervasive
surveillance system buttressed by the belief that everyone is a potential enemy of the state and
should be rightfully subject to diverse and massive assaults on rights to privacy and assembly.6
... ... ...
During the past few decades, it has become clear that those who wield corporate, political and
financial power in the United States thrive on the misery of others. Widening inequality, environmental
destruction, growing poverty, the privatization of public goods, the attack on social provisions,
the elimination of pensions and the ongoing attacks on workers, young protesters, Muslims and immigrants
qualify as just a few of the injustices that have intensified with the rise of the corporate and
financial elite since the 1970s. None of these issues are novel, but the intensification of the attacks
and the visibility of unbridled power and arrogance of the financial, corporate and political elite
that produces these ongoing problems are new and do not bode well for the promise of a democratic
society.
Such failings are not reducible either to the moral deficiencies and unchecked greed of both major
political parties or the rapacious power of the mega banks, hedge funds and investment houses. Those
intellectuals writing to acknowledge the current state of politics in America understand the outgrowth
of a mix of rabid racism, religious fundamentalism, civic illiteracy, class warfare and a savage
hatred of the welfare state that now grips the leadership of the Republican Party.8
The new extremists and prophets of authoritarianism are diverse, and their roots are in what Chris
Hedges calls the radical Christian right,9
Michael Lind calls the reincarnation of the old Jeffersonian-Jacksonian right10
and what Robert Parry and Andrew O'Hehir call racist zealots.11
All of these elements are present in American politics, but they are part of a new social formation
in which they share, even in their heterogeneity, a set of organizing principles, values, policies,
modes of governance and ideologies that have created a cultural formation, institutional structures,
values and policies that support a range of anti-democratic practices ranging from the militarization
of public life and acts of domestic terrorism to the destruction of the social state and all those
public spheres capable of producing critical and engaged citizens.
Needless to say, all of these groups play an important role in the rise of the new extremism and
culture of cruelty that now characterizes American politics and has produced the partial government
shutdown and threatens economic disaster with the debt-ceiling standoff. What is new is that these
various fundamentalist registers and ideological movements have produced a coalition, a totality
that speaks to a new historical conjuncture, one that has ominous authoritarian overtones for the
present and future. There is no talk among the new extremists of imposing only an extreme Christian
religious orthodoxy on the American people or simply restoring a racial state; or for that matter
is there a singular call for primarily controlling the economy. The new counter-revolutionaries and
apostles of the Second Gilded age are more interested in imposing a mode of authoritarianism that
contains all of these elements in the interest of governing the whole of social life. This suggests
a historical conjuncture in which a number of anti-democratic forces come together to "fuse and form
a kind of configuration" - a coming together of diverse political and ideological formations into
a new totality.12
The partial government shutdown is a precondition and test run for a full coup d'�tat by the social
formations driving this totality. And while they may lose the heated battle over the government shutdown
and the debt ceiling, they have succeeded in executing their project and giving it some legitimacy
in the dominant media.
Hiding beneath the discourse of partisan politics as usual, the authoritarian face of the new
extremism is overlooked in the dominant media by terms such as "the opposing party," "hard-line conservatives"13
or, in the words of New York Times columnist Sam Tanenhous, the party of "a post consensus politics."14
In fact, even progressives such as Marian Wright Edelman fall into this trap in writing that "some
members of Congress are acting like children - or, more accurately, worse than children."15
In this case, the anti-democratic ideologies, practices and social formations at work in producing
the shutdown and the potential debt-ceiling crisis are not merely overlooked but incorporated into
a liberal discourse that personalizes, psychologizes or infantilizes behaviors that refuses to
acknowledge or, in fact, succumbs to totalitarian tendencies.
.... ... ...
Obama may not be responsible for the government shutdown and the debt ceiling crisis, but he can
be charged with furthering a climate of lawlessness that feeds the authoritarian culture supportive
of a range of political, economic and cultural interests. The American anti-war activist Fred Branfman
argues that:
Under Mr. Obama, America is still far from being a classic police-state of course. But
no President has done more to create the infrastructure for a possible future police-state. This
infrastructure will clearly pose a serious danger to democratic ideals should there be more 9/11s,
and/or increased domestic unrest due to economic decline and growing inequality, and/or massive
global disruption due to climate change.23
The new extremists in the Republican Party are simply raising the bar for the authoritarian registers
and illegal legalities that have emerged under Bush and Obama in the past decade - including the
bailing out of banks guilty of the worst forms of corporate malfeasance, the refusal to prosecute
government officials who committed torture, the undermining of civil liberties with the passage of
the Patriot Act, the National Defense Authorization Act, the establishment of a presidential kill
list and the authorization of widespread surveillance to be used against the American people without
full transparency.
The current crisis has little to do with what some have called a standoff between the two major
political parties. It is has been decades in the making and is part of a much broader coup d'�tat
to benefit the financial elite, race baiters, war mongers and conservative ideologues such as the
right-wing billionaires, David and Charles Koch, Rand Paul, Ted Cruz, Americans for Prosperity, the
Club for Growth, the Heritage Foundation policy hacks and other extremist individuals and organizations
that believe that democracy poses a threat to a government that should be firmly in the hands of
Wall Street and other elements of the military-industrial-surveillance-prison complex.
... ... ...
In 2004, I wrote a book titled The Terror of Neoliberalism: The New Authoritarianism
and the Eclipse of Democracy.33
What is different almost a decade later is a mode of state repression and an apparatus of symbolic
and real violence that is not only more pervasive and visible but also more unaccountable, more daunting
in its arrogance and disrespect for the most fundamental elements of justice, equality and civil
liberties
... ... ...
To read more articles by Henry A. Giroux and other authors in the Public Intellectual Project,
click here.
[Sep 06, 2013] William Greider on the New American Caste System (and the Slow Return to Liberalism)
By David Dayen
January 27, 2011
...you can confirm the end of New Deal liberalism with the last couple years, although the
dismantling begun in the 1970s.
We have reached a pivotal moment in government and politics, and it feels like the last, groaning
spasms of New Deal liberalism. When the party of activist government, faced with an epic crisis,
will not use government's extensive powers to reverse the economic disorders and heal deepening
social deterioration, then it must be the end of the line for the governing ideology inherited
from Roosevelt, Truman and Johnson.
Political events of the past two years have delivered a more profound and devastating message:
American democracy has been conclusively conquered by American capitalism. Government has
been disabled or captured by the formidable powers of private enterprise and concentrated wealth.
Self-governing rights that representative democracy conferred on citizens are now usurped
by the overbearing demands of corporate and financial interests. Collectively, the corporate sector
has its arms around both political parties, the financing of political careers, the production
of the policy agendas and propaganda of influential think tanks, and control of most major media.
That's a nice 150-word encapsulation of what has happened.
Writing in the same iconoclastic spirit he brought to Voltaire's Bastards: The Dictatorship of
Reason in the West, Canadian writer Saul offers a damning indictment of what he terms corporatism,
today's dominant ideology. While the corporatist state maintains a veneer of democracy, it squelches
opposition to dominant corporate interests by controlling elected officials through lobbying and
by using propaganda and rhetoric to obscure facts and deter communication among citizens.
Corporatism, asserts Saul, creates conformists who behave like cogs in organizational hierarchies,
not responsible citizens. Moreover, today's managerial-technocratic elite, while glorifying
free markets, technology, computers and globalization, is, in Saul's opinion, narrowly self-serving
and unable to cope with economic stagnation.
His prescriptions include eliminating private-sector financing from electoral politics, renewing
citizen participation in public affairs, massive creation of public-service jobs and a humanist education
to replace narrow specialization. His erudite, often profound analysis challenges conservatives and
liberals alike with its sweeping critique of Western culture, society and economic organization.
LeeBoy (Pine Bluff, Arkansas)
A coup d'etat in slow motion?, August 12, 2005
A key premise of the book is that a life worth living, the so-called examined life, the fully
aware life cannot take place without individuals in the society being fully conscious - or without
seeking the kind of self-knowledge that readily can be translated into action.
Saul maintains that we have a "new religion," the blind pursuit of self-interest.
It is led by an ideology of "corporatism," which has deformed the American ideal of a life worth
living into one devoid of a concept of the common public good. Through it, one of America's most
noble ideas, that of "rugged individualism" has been sullied, distorted and transformed into an
ideology of selfishness; an ideology that has so manipulated our reality that our the language
and knowledge, usually placed in the service of actions and designed to improve our way of life,
has become useless.
The corporate compartmentalization of, and distortion of public knowledge, and the accompanying
enforced conformity has so confused us and has so muted our voices that knowledge no longer has
any effect on our consciousness nor on our actions. Individual selfishness as "modeled" by
corporate self-interest has hi-jacked Western civilization as we have come to know it.
The book describes how corporatism has accomplished this feat: It has used its own ideology
of self-interest (and the promise of certainty that all ideologies promote) to render us passive
and conformist in areas that matter and non-conformist in those that do not. This new pseudo or
false individualism has the effect of immobilizing and disarming our civilization intellectually
and thus renders it unconscious.
The most important way it does this is by denying and undermining the legitimacy of the individual
as the primary unit and defender of, as well as the center of gravity of the public good.
The public good becomes deformed by, and subordinate to, and equated with the narrow pursuit of
corporate self-interests, as most often defined by the pursuit of profits and associated corporate
perks. The hedonistic model of the corporate life is projected on to society writ large as the
only life worth living.
The impetus for placing corporate interests (and the corporate model of our humanity) at center
stage in the drama of Western Civilization, seems to have come about through the misconception
that rugged individualism, democracy and our current understanding of the public good were once
defined by, depend on, and proceed directly from, the pursuit of economic interests. This is a
misconception because in actual fact exactly the reverse is true: It was notions of the public
good as defined by democracy and individualism that gave rise to economic interests, and not the
other way around.
Moreover, economic models have been so spectacularly wrong and unsuccessful, that they could
not have survived without an ideology that renders the public unconscious. Saul suggests that
even the best economic models amount to little more than passive tinkering. The fact that we have
come to rely on them -- even though we know they are seriously flawed and have little or no basis
in reality -- is compelling evidence of our lack of memory and thus, of our lack of collective
consciousness.
According to the author, it is the proper use of knowledge and memory that renders us conscious
(and thus by extension, also renders us human). The misuse of knowledge and memory through
corporate and technological, manipulation, specialization and compartmentalization is just a deeper
form of collective denial.
Said differently, (corporate generated) specialization creates its own illusions. When knowledge
actually becomes confused and is sufficiently narrowed, compartmentalization promotes the illusion
that knowledge is multiplied when in fact it has shrunken. It leaves the impression that more
rather than less knowledge is being created. It promotes the illusion that truth is only what
the specialist can measure; that "m (and more importantly that a managerial class is important
and necessary). Finally, it creates the illusion that the ideology, which promotes corporatism,
produces certainty (the main job of any ideology).
These illusions all have facilitated the corporate takeover of what would otherwise be seen
as, the public interest. By doing so, the legitimacy of the individual as the center of gravity
of the public good is crowded out, undermined and denied.
Thus the management elite, (with their suitcases full of money to buy off our elected representatives)
like a cancer, is let loose on society. It lives within its own insulated cocoon creating an artificially
interiorized sense of its own importance, wellbeing and its own distorted vision of civilization
as a whole. Insulated from within, the management elite is free to grow without bounds, without
accountability, and in complete disregard for the reality "out there," and always only to satisfy
and service its own selfish needs. Truth is not in the world "out there" but is in what the professionals
can measure and whatever is reported to these insulated elites. The deeper the insulated managerial
class retreats into its own interiorized illusions of reality, the more confused language becomes
and the less likely knowledge can be translated into actions that will effect the wider reality,
and thus the public good.
In its pursuit to deny the legitimacy of the public good and to replace it with corporate econometric
models of reality, Saul has traced the history of this process and gives many examples of how
it works: through media propaganda, films, ads, music, sports and style-and always through insinuations
of what is considered proper thought and ways of behaving.
One of the better examples he gives is how unemployment keeps getting redefined downward with
no relation to the reality of the labor market but mostly to suit the needs of the neo-cons (the
courtiers of the corporate elites). Or how, even as companies are losing money and are laying-off
large numbers of ordinary workers, the salaries and incentive packages of the managerial elites
continue to rise - often even until the very day the companies actually go bust.
Another example given is how through the process of globalization, that by the year 2020 the
U.S. will be fully reduced to a Third World country. We are told that our future standard of living
will depend entirely on globalization. Here globalization (like its companion concept, productivity)
is a synonym for pegging workers' wage rates to the lowest wages available worldwide. It is never
mentioned in such discussions that the salaries and incentive packages of the managerial elites
will actually rise significantly as this "mother of all least common denominators economic formulas"
is being applied to the lower end of the economic class scale. Taken to its logical conclusion,
the salary of U.S. workers will equal those of Chinese peasants by 2020; and the corporate
elites all will be filthy rich like Sam Walton. This "Wal-Martization" of America is already
well in train.
Why are we so susceptible to being manipulated by corporate generated ideology and power? Saul
gives an answer: We have an addictive weakness for large illusions that are tied to power
and that can simplify our worldview by promising emotional certainty. The examples he gives are
none other than the great religions themselves, and their spin-offs of Marxism, fascism and most
of the autocratic governments of the past, including Hitler's Third Reich.
The roads to serfdom, or to fascism or communism (or pick your own ism) all intersect at the
same ideology reference points: they begin as enforced social and political orthodoxy and conformity:
first fashion and style; then the social enforcement of ways of thinking; and then patriotism
is made into a religious-like requirement; after which rights and free speech are suppressed in
the name of national security or loyalty to the state. One-by-one laws are suspended and then
arbitrary arrests and disappearances begin; and finally the country is rendered completely passive
and unconscious - compressed into a pseudo-patriotic religious trance.
In the modern era, this progression is by now all too familiar: It leads directly to the de-legitimatization
of the citizen as the primary defender of the public good. This just as inevitably leads to handing
over power to those whose self-interests are larger than their dedication to the preservation
of the public good or even to the preservation and defense of the state itself.
The citizen then ceases to be able to determine what is, and is not real. He becomes immobilized
like a child, unable to judge what is in his own best interests -- let alone what is in the best
interest of the public good or the state. He is then forced to sing for his dinner and to dance
to the corporate tune for any sense of wellbeing or self-worth. The "public good" becomes completely
subordinate to the "corporate good."
What Saul admonishes us about is already imminently clear: that the kind of society we have
is determined by where the true source of legitimacy lies. Today legitimacy in America -- that
is its power, organization, and influence -- lies not in the vote and in stylized but impotent
public citizen participation, but in the hands of the lobbyists, the technocrats, and the anti-democratic
and anti-patriotic corporate vampires.
Saul did not need to tell us that all the serious decisions are now made in the back rooms
without consulting the people. The best "the people" can hope for (and indeed what they yearn
for) is that the decisions made over their heads will at least retain a semblance of emotional
ideological purity.
While the corporate robber barons sneak out the back door to their off-shore tax havens (with
the nations valuables in tow), the public good has been distorted and transformed into little
more than "What I have" or into bumper sticker sized emotionalisms: the advancement of creative
design and the right to post the Ten Commandments on the court house steps, abortion and gun rights,
anti-Affirmative Action, states rights, etc. Because of its lack of consciousness, Americans have
lost the ability to conceptualize a common good larger than their own immediate individual narrowly
defined self-interests.
How do we get out of this coup d'etat in slow motion? Saul's answer is that we must change
the dynamics of the process but he gives few specifics on how this can be done. This a great and
very sobering read. Five stars.
Joyce (Bonham, Texas)
Makes the complex understandable, November 29, 2012
Saul has unusual skill in making complex entanglements understandable, colorful, and often humorous.
His satire is biting. His irony is satisfying. His writing is dense with fresh insights about
difficult subjects, so reading him is challenging at times but worth the effort. In this book,
Saul explores how the dictatorship of reason unbalanced by other human qualities (common sense,
ethics, intuition, creativity, memory) leads to the rational but antidemocratic structures of
corporatism. He lays out the historical roots of corporatist doctrines (going back to Plato) and
how they are so woven into our social fabric that they threaten the practice of democracy. He
notes how our civilization is blinded to its true character by sentiment and ideology and argues
that while Fascism was defeated in World War II, its corporatist doctrines are powerfully influencing
our society today.
For Saul, one central aspect of the corporatist doctrine is its hijacking of the term "individualism,"
defining it as self-absorption or selfishness. Both Left and Right positions are based upon
that definition. The Left agrees with the Right that individualism is selfishness, only it wants
individual rights to be equally distributed and more fair. Whereas Saul talks about individualism
thus:
"Rights are a protection from society. But only by fulfilling their obligations to society
can the individual give meaning to that protection. . . Real individualism then is the
obligation to act as a citizen."
And further:
"The very essence of corporatism is minding your own business. And the very essence of individualism
is the refusal to mind your own business. This is not a particularly pleasant or easy style
of life. It is not profitable, efficient, competitive or rewarded. It often consists of being
persistently annoying to others as well as being stubborn and repetitive."
And further still:
"Criticism is perhaps the citizen's primary weapon in the exercise of her legitimacy. That
is why, in this corporatist society, conformism, loyalty, and silence are so admired and
rewarded."
Saul discusses the role that four economic pillars play in either accentuating or reducing
our unconscious state as citizens: (1) the marketplace, (2) technology, (3) globalization, and
(4) money markets.
Here is my summary of his lessons on these four.
The danger of using the marketplace as our guide is that we are limiting ourselves to the
narrow and short-term interests of exclusion. If we wish to lead society we must calculate
inclusive costs.
Business schools (following the "scientific management" Frederick Taylor brought to Harvard)
treat men and women as mechanisms to be managed along with machines. And we are lining up students
behind machines, educating them in isolation when what is really needed is to show them how
they can function together in society.
Trade cannot in and of itself solve societal problems. The main effect of globalization
has been to shift the tax burden from large corporations onto the middle class. Adam Smith's
repeated admonition has been ignored. It is: high wages are essential to growth and prosperity.
Money is not a value in itself. Money in money markets is not available for taxation, and
it doesn't really exist. It is pure speculation. We must see what is truly of value to society
and reward those things.
This is only a bit of the clarity Saul's book gives us as citizens about what we are dealing
with, empowering us with weaponry to overcome the Fascistic creation of corporatism.
Christopher (Seattle, Washington, USA)
A roundhouse shot at corporatist, group-think American life, March 19, 2002
"Are we truly living in a corporatist society that uses democracy as little more than a pressure
release valve?"
Not satisfied with hurtling the literary hand-grenade of the 1990's, "Voltaire's Bastards",
into the midst of our oblivious Western society, John Ralston Saul has now equipped his metaphorical
sniper rifle, and in his crosshairs is the 'deviant class' which has destabilized our American
dream. In "The Unconscious Civilization", Saul targets `corporatist' groups, the special interests
(both economic and social) which have lulled citizens into replacing their own thoughts with those
of factions who magically (and absurdly) claim to represent their beliefs and dreams.
"One of the difficulties faced by citizens today is making sense of what is presented
as material for public debate, but is actually no more than the formalized propaganda of interest
groups. It is very rare now in public debate to hear from someone who is not the official
voice of an organization."
Characteristic of Saul's previous work, "The Unconscious Civilization" is a firm, wind-knocking
shot to the gut. But luckily for you, your opponent is also teaching you how to fight. Hear him
shout: `Stand up, slothful citizen. Your constitution is failing.'
"The statistics of our crisis are clear and unforgiving. Yet they pass us by--in newspapers,
on television, in conversations--as if they were not reality. Or rather, as if we were unable
to convert knowledge into action."
Do you feel protected by the Internet, by the millions of voices which you feel will conglomerate
to represent you? So how's it working for you so far? Sure we have information, but what the hell
good is it doing for the spirit of our nation?
"Knowledge is more effectively used today to justify wrong being done than to prevent it.
This raises an important question about the role of freedom of speech. We have a great deal
of it. But if it has little practical effect on reality, then it is not really freedom of speech.
Without utility, speech is just decorative."
In this work, Saul scopes out the corporatist mindset, the coalescence of many minds into one
body with only one voice (corpus from Latin, meaning body), which has invaded business, politics,
and civil society alike. The result is chilling, for when we rise to speak, we find our individual
words have different meanings to each of these bodies. As a consequence, we are learning to speak
less.
"In a corporatist society there is no serious need for traditional censorship or burning,
although there are regular cases. It is as if our language itself is responsible for our inability
to identify and act upon reality."
We may be blind to the corporatist processes, but we should be able to fairly see their results.
In politics: 38% voter turnout rates, lowest political convention viewership, the quashing of
third-party voices; in business: the plastering of disclaimers, sloganeering, and that opaque
wall of business-speak between every salesman and their customer; in civil society: the inability
to progress in conversation without soundbites, and the number of people who flat-out don't want
to talk to you.
This partition of words has not obstructed John Ralston Saul, though. An advocate of "aggressive
common sense", Saul portrays himself correctly as a classic liberal, defender and klaxon for the
citizen, neither champion nor foe of the marketplace.
"The market does not lead, balance, or encourage democracy. However, properly regulated
it is the most effective way to conduct business."
"Every important characteristic of both individualism and democracy has preceded the key
economic events of our millennium. What's more, it was these characteristics that made most
of the economic events possible, not vice-versa."
John Ralston Saul's work consists of five chapters loosely based off a series of 1995 lectures
at the University of Toronto. Like "Voltaire's Bastards", Saul here is discursive and entertaining;
each chapter is a new dive into an invigorating Arctic lake of realization. Chapter One, "The
Great Leap Backwards" launches the assault. The remaining chapters focus on reconstruction...
their titles: "From Propaganda to Language", "From Corporatism to Democracy", "From Managers and
Speculators to Growth", "From Ideology Towards Equilibrium".
Moderately mistitled (resulting in a one-point demerit in the overall review score), a
more appropriate title for this book would have been "The Corporatist Civilization". A true
attack on the `unconscious' among us would have been welcome, though Saul does meander briefly
into this realm, with a few sections that fit cozily into the overall thesis:
"Perhaps the difficulty with the psychoanalytic movement is that from the beginning it has
sent out a contradictory message: Learn to know yourself--your unconscious, the greater unconscious.
This will help you to deal with reality. On the other hand, you are in the grip of great primeval
forces--unknown and unseen--and even if you do know and see them, it is they who must dominate."
One-quarter the size of "Voltaire's Bastards", Saul this time out initiates a concise attack:
on utopias, ideology, technocracy, demagoguery, and group mentality... all of which direct the
individual to replace their view of the world with that of an `official spokesman', eerily reversing
the vector of our society towards a fascist state. An insightful read; terse, but somewhat condensed
and abstract at places. The trade-offs are more than acceptable, though. Steel yourself for a
barrage of Truth.
seydlitz89
Lacks The Big Picture, July 3, 2000
John Ralston Saul is considered one of the great humanist essayists of this time. That is true
but he is also very much a man of our times, with both the advantages and disadvantages of the
current Weltanschauung. I bought this book after having read some rather rave reviews and had
high expectations. I can't say that I have got anything from this book that I didn't already have
or suspect. He's reinforced some of my opinions without adding to my empherical knowledge to back
them. The concept of the individual, individualism if you will, is dominant today, representing
a narrow and superficial deformation of the Western idea. Market Capitalism does not guarantee
democracy; you can have poor democracies and prosperous dictatorships. Today we are in an
unconscious process of masochistic suicide destroying the very substance of our public institutions,
institutions which were the products of decades of thought and democratic debate, all in the pursuit
of making things more `effective', more `business-like'. . . So according to Saul, and on
target IMHO, but what does this all mean? What can we draw from these intermediate conclusions?
He then goes on to describe the crisis that grips the West, which he dates from 1973. Bureaucratic
thinking and rationalization continue to manipulate our perceptions, dominate and drive our existence,
controlled by what he describes as `Corporatism'. He states,
"the corporatist movement was born in the nineteenth century as an alternative to democracy.
It proposed the legitimacy of groups over that of the individual citizen." Pp16-17
Napoleon, Hegel and Bismarck helped the process along by emphasizing rule by elites and adherence
to the state. This was all only a lead up to the great
"new all-powerful clockmaker god - the marketplace - and his archangel, technology. Trade
is the marketplace's miraculous cure for all that ails us. . . I would suggest that Marxism,
fascism and the marketplace strongly resemble each other. They are all corporatist, managerial
and hooked on technology as their own particular golden calf." Pp19-20
...Weber warned of the dangers of bureaucracy, of how capitalism mated with ever increasing
rationalization and technological innovation would become a very difficult beast to control. He
also warned against the subversion of democratic institutions by powerful non-democratic groups
with oligarchic tendencies. Saul's view on the triumph of rationalism is also, by the way, influenced
by Weber. So instead of damning Weber he should be thanking him. Here we see the tendency so common
among US (and Canadian) intellectuals today of putting the blame for their perceived crisis on
foreign thinkers (usually German or French) who have some how lead the well-intentioned, but all
too trusting North Americans astray. Alan Bloom, on the right, was guilty of the same thing in
his The Closing of the American Mind. In all, this tendency represents a mixing up of cause and
effect. If you want to look for a foreign culpret, how about the English Utilitarians who put
morally accepted self-interest and quest for profit in the service of individual gain above anything
else? An attitude that has since then been enthusisatically and uncritically accepted by the mass
of American intellectuals.
What is Saul's solution? Persistent public commitment by the citizenry can turn the tables
on corporatism. But how, given the power that Saul says the elites have to manipulate and
control all the spheres of our existence? What of their ability to define "freedom" in wholly
consumerist terms, making it a mere matter of material choice? As long as the US Constitution
allows for majority rule, the public will have the last say, but how to mobilize the public, how
to educate them as to defending their best interests when the reigns of mass communication are
in the hands of the corporatists? How do we make the interests of society take priority over the
interests of profit? The moral dilemma in all this is ignored by Saul who distrusts anyone who
even mentions it. Unable to follow Nietzsche's lead he stumbles. Nietzsche, alas a foreigner,
was also primarily a moralist. Morals are important since they shape the way that we adjust to
the struggle for our very existence in an ever more competitive world. While a sense of the spiritual
is necessary, the vast bulk of our actions, the reality we must deal with in our every day lives,
is economic due to the pervasive market system which is the very air we breathe. It is therefore
very much man-made, synthetic, something that has been grafted onto society, not a component of
it. Morals are as necessary now as when we lived in small farming communities, since it is by
working together, by accepting each others' strengths and weaknesses, by learning to control our
own impulses and irrational drives and by accepting the inate worth of each person that we insure
not only our own but the survival of our species in the coming hard winter. A, "myth-building"
exercise you say, but is it any more a myth than that of "the Market corrects itself and all we
need do is trust in it"?
Since the end of the 18th Century we in the West have lost almost every remnant of our pre-Capitalist
past. We have forgotten our entire community or social or human-to-human history, we are unable
to recall when an action did not infer some sort of self-benefit. We fail to see that the so-called
Third World is as we were two hundred years ago. It is not a question of scientific or technological
or commercial progress, in the most human sense, but of the maturing and decay of an ideological-based
social system.
Saul's main drawback is that he lacks the indepth knowledge of the numerous disciplines necessary
for this very complex subject. That and `distance' since he approaches the problem with far too
many preconceptions. A much better book in a related subject is Karl Polanyi's The Great Transformation.
His history of the market economy provides much of the background necessary to illuminate our
current situation. Few if any thinkers today have the breadth of knowledge to provide the big
picture of our current post-modern situation. Men like Max Weber, who had a encyclopedic knowledge
of several wide fields of study no longer walk the earth. Still a much more refined, yet wide
view which would include a fuller understanding of social economics, history, political science,
sociology, theology and philosophy is necessary in order to get a grip on the tendencies which
are slowly eating away our society and threaten to turn us all into what Max Weber described as
"a culture of specialists without spirit, sensualists without heart".
Herbert L Calhoun
Wake up and Smell the Oil Wal-Mart Shoppers, August 10, 2005
If the doubling, in less than a year, of the price of oil for no discernable reason (with no
end in sight), and with absolutely no reaction from us or our government is not evidence that
something is terribly wrong with our collective mind. Then surely an order of magnitude increase
in the cost of medical care and prescription drugs, and the quintupling of our health insurance
(for those of us who have any), should be.
Or, one might have imagined that the juxtaposition of soaring corporate profits (in these very
same areas) with an effective reduction in "actual wages" everywhere else, would also have shaken
us from our deep collective slumber?
Or maybe the fact that we have been led into yet another war for no defensible reasons and
without either an exit strategy or a fighting plan -- a war whose justifications and rationale
keeps changing with each increased attack from the terrorists as our national debt continues to
soar -- would have shaken us out of our passivity.
While our government's response to the needs of the "rank-and-file" is increasingly non-existent,
or completely ineffectual, and the "managerial class" continues to rob us blind as they laugh
all the way to the bank; we are obsessed with the risk of breast implants, abortion rights, hanging
the Ten Commandments in the public square, reality shows (that are anything but real), Janet Jackson's
wardrobe malfunction, and how to continue to win at the game of "Democrats and Republicans (or
liberals and conservatives, or Blacks versus Whites, or males versus females, or pick your own
senseless emotional dichotomy)."
But the very best evidence yet of our lack of consciousness and proof that our society is being
thrown under the bus while we watch in horror with our eyes wide open, is when the most devastating
critique of our own slothfulness is also the sanest, most compassionate and most eloquent.
Saul in this trenchant sanity check of the society that leads the Western World realizes that
the time for vitriol and shouting has long since passed. That is why with eloquence, understated
passion and with measured but devastating logic and reason (that quality he so distrusts), he
has issued a broadside at the foundation stone of what ails our society most: Rampant and immoral
Corporatism.
And even though in the end, his prescription for how we are to extricate ourselves from this
dilemma is unconvincing, he has laid the necessary groundwork for serious thinking to begin. If
"the people" in Western Democracies are ever to regain control of their minds, and then eventually
their societies; Saul's ideas in this small volume must inevitably be contended with.
A Customer
Saul is a modern secular prophet!, March 28, 1999
You can add the name John Ralston Saul to those of Noam Chomsky, Ivan Illich, Franz Fanon (and
who else?) on your list of the key late 20th century 'global conspiracy theorists' - people who
are visionary seers/prophets who have unorthodox views and make outrageous pronouncements on this
and that, but with whom you have to broadly agree. Because they operate outside the conventions
of fixed ideologies, they're able to see the broader picture, and see more deeply into the nature
of things.
The Unconscious Civilization - the 1995 Massey Lectures - was written in an oral style by Canadian
freelance intellectual, essayist and novelist John Ralston Saul.
His thesis is disarmingly simple: in the long line of history's totalitarianisms, we can
now add undemocratic 'corporatism'.
Our society, he argues, is only superficially based on the individual and democracy.
We are indeed fortunate that Dr. Robert Pangloss Shiller has shared his edifying personal story
about how to be innovative and successful through hard work and self-financing. A more straightforward
example of the psychological phenomenon of projection would be hard to find.
Phelps' observation about institutions is not a "disturbing trend" but reality. While institutions
are necessary for the efficient functioning of large industrial societies they also stifle whatever
gets in their way. America has become largely a society of institutions not citizens. It is
slightly exaggerated to say that the average citizen enjoys rights to the extent of the power
of the institution/s he or she belongs to. Individuals with wealth enjoy rights in proportion
to their wealth, an elite institution.
Too many of America's institutions, private and public, steer the country in rather the ways
that they and the wealthy did in the latter part of the 19th century when the government was much
smaller. The result is an increasingly ossified Kafkaesque society. The interests and power
of institutions makes them refractory to change no matter the toll they take on society.
The mega financial institutions are the best recent example. They (along with help from politicians
and the Fed) caused the Great Recession but have yet to be reformed. Their executives have
the power to avoid criminal prosecution even indictment e.g,, HSBC. Savings and Loan executives
were not as powerful.
Health care institutions such as medical insurance and the pharmaceutical companies blocked
reform of health care to the detriment of America. Physicians and health care organizations like
hospitals block public disclosure of their performance while fleecing patients and society.
Public and private universities like Yale have institutionalized themselves as expensive tollbooths
to employment not unlike those imposed on river traffic between 800 and 1800 on the Rhine by nobility
and the Holy Roman Empire.
Before 1980 the government more or less enforced the laws against monopolies and other illegal
combinations and collusion. This gave individuals and smaller companies with innovative ideas
and products something of a chance and created an "innovator's dilemma" for large ossified companies.
Creating economic and market space for innovators helped. Using government money to fund "incubators"
or entrepreneurs is just another way to finance R&D for large corporations who buy up the innovators.
It reinforces institutional interests and arrangements.
anne said in reply to Tom Shillock...
We are indeed fortunate that Dr. Robert Pangloss Shiller has shared his edifying personal story
about how to be innovative and successful through hard work and self-financing. A more straightforward
example of the psychological phenomenon of projection would be hard to find....
[ Projection, perfect and perfectly blinding. As for the individual-institutional tension or
conflict, that is simply copying John Kenneth Galbraith, but sadly with no particular focus that
would allow an extension of the ideas of Galbraith after all these decades since "Countervailing
Power." ]
Randy :
I don't think it is correct to think of innovation as something done by Ayn Rand heroes. Most
innovation is small and incremental, and most of it is done by workers and/or customers. A different
kind of oil here, a different resistor there, a few minor but useful modifications to an algorithm
today, and a few suggestions for more tomorrow. But the way property laws and customs exist today,
the real innovators seldom get any financial reward for it. If they're really lucky, they get
a nod and a wink in the staff meeting while the management team takes all the credit.
Second Best :
There's too much emphasis on future innovation compared to efficiency losses caused by corporatism
blocking existing innovation.
For example consider what AT&T and Verizon have done to phone service and the internet, essentially
returning to an industry structure similar to the early days of the Ma Bell monopoly, except with
a dominant unregulated monopoloy (a duopoly only if areas are served by both) free to extract
maximum economic rent while choking off bandwidth, volume throughput and access with an underbuilt
system intentionally denied technology ungrades in many areas.
This is common in many industries in different ways, where the market power acquired may not
reach that evident in telecommunications but is still substantial. Of course the important new
version of market power since Ma Bell comes on a global scale from MNCs.
The great irony is corporations achieve overwhelming lock-in of economic power politically
in the name of innovation when in fact, they selectively trample the impact of past innovation
and block competitive new innovation at the same time.
What innovation is left for themselves is used to maximize productive efficiency for which
most gains are distributed to themselves rather than consumers and labor, through targeted administered
pricing disciplined more by market power and price discrimination than competition.
No amount of pollyanish localized new innovation is going to break through the entry barriers
going forward until legal action is used to break up the vast network of monopoly and oligopoly
power already in place.
Finally, journalists have started criticizing in earnest the leviathans of Silicon Valley, notably
Google, now the world's third-largest company in market value. The new round of discussion began
even before the revelations that the tech giants were routinely sharing our data with the National
Security Agency, or maybe merging with it. Simultaneously another set of journalists, apparently
unaware that the weather has changed, is still sneering at San Francisco, my hometown, for not lying
down and loving Silicon Valley's looming presence.
The criticism of Silicon Valley is long overdue and some of the critiques are both thoughtful
and scathing. The New Yorker, for example, has explored how start-ups are undermining the purpose
of education at Stanford University, addressed the Valley's messianic delusions and political meddling,
and considered Apple's massive tax avoidance.
The New York Times recently published an opinion piece that startled me, especially when I checked
the byline. WikiLeaks founder Julian Assange, the fugitive in the Ecuadorean Embassy in London, focused
on The New Digital Age, a book by top Google executives Eric Schmidt and Jared Cohen that
to him exemplifies the melding of the technology corporation and the state.
It is, he claimed, a startlingly clear and provocative blueprint for technocratic imperialism,
from two of our leading "witch doctors who construct a new idiom for United States global power in
the twenty-first century." He added, "This idiom reflects the ever closer union between the State
Department and Silicon Valley."
What do the US government and Silicon Valley already have in common? Above all, they want to remain
opaque while making the rest of us entirely transparent through the capture of our data. What is
arising is simply a new form of government, involving vast entities with the reach and power of government
and little accountability to anyone.
Google, the company with the motto "Don't be evil", is rapidly becoming an empire. Not an empire
of territory, as was Rome or the Soviet Union, but an empire controlling our access to data and our
data itself. Antitrust lawsuits proliferating around the company demonstrate its quest for monopoly
control over information in the information age.
Its search engine has become indispensable for most of us, and as Google critic and media professor
Siva Vaidhyanathan puts it in his 2012 book The Googlization of Everything,
"[W]e now allow Google to determine what is important, relevant, and true on the Web and in
the world. We trust and believe that Google acts in our best interest. But we have surrendered
control over the values, methods, and processes that make sense of our information ecosystem."
And that's just the search engine. About three-quarters of a billion people use Gmail, which conveniently
gives Google access to the content of their communications (scanned in such a way that they can target
ads at you). Google tried and failed to claim proprietary control of digital versions of every book
ever published; librarians and publishers fought back on that one. As the New York Times reported
last fall, Paul Aiken, executive director of the Authors Guild, summed the situation up this way:
"Google continues to profit from its use of millions of copyright-protected books without regard
to authors' rights, and our class-action lawsuit on behalf of US authors continues."
The nonprofit Consumer Watchdog wrote to the attorney general on June 12th urging him "to block
Google's just announced $1 billion acquisition of Waze, developers of a mobile mapping application,
on antitrust grounds... Google already dominates the online mapping business with Google Maps. The
Internet giant was able to muscle its way to dominance by unfairly favoring its own service ahead
of such competitors as Mapquest in its online search results. Now with the proposed Waze acquisition,
the Internet giant would remove the most viable competitor to Google Maps in the mobile space. Moreover
it will allow Google access to even more data about online activity in a way that will increase its
dominant position on the Internet."
The company seems to be cornering the online mapping business, seems in fact to be cornering so
many things that eventually they may have us cornered.
In Europe, there's an antitrust lawsuit over Google's Android phone apps. In many ways, you can
map Google's rise by the litter of antitrust lawsuits it crushed en route. By the way, Google bought
Motorola. You know it owns YouTube, right? That makes Google possessor of the second and third most
visited Websites on earth. (Facebook is first, and two more of the top six are also in Silicon Valley.)
Imagine that it's 1913 and the post office, the phone company, the public library, printing houses,
the US Geological Survey mapping operations, movie houses, and all atlases are largely controlled
by a secretive corporation unaccountable to the public. Jump a century and see that in the online
world that's more or less where we are. A New York venture capitalist wrote that Google is trying
to take over "the entire fucking Internet" and asked the question of the day: "Who will stop Google?"
The tipping point
We ask that question all the time in San Francisco, because here Google isn't just on our computers,
it's on our streets. I wrote earlier this year about "the Google bus" - the armadas of private Wi-Fi-equipped
luxury buses that run through our streets and use our public bus stops, often blocking city buses
and public transit passengers while they load or unload the employees taking the long ride down the
peninsula to their corporation of choice. Google, Apple, Facebook, and Genentech run some of the
bigger fleets, and those mostly unmarked white buses have become a symbol of the transformation of
the city.
... ... ...
Like Gandhi, only with guns
Enough minions of Silicon Valley's mighty corporations could arrive to create a monoculture. In
some parts of town, it already is the dominant culture. A guy who made a fortune in the dot-com boom
and moved to the Mission District (the partly Latino, formerly blue-collar eye of the housing hurricane)
got locals' attention recently with a blog post titled "Douchebags Like You are Ruining San Francisco".
In it, he described the churlish and sometimes predatory behavior of the very young and very wealthy
toward the elderly, the poor, and the nonwhite.
He wrote, "You're on MUNI [the city bus system] and watch a 20-something guy reluctantly give
up his seat to an elderly woman and then say loudly to his friends, 'I don't know why old people
ride MUNI. If I were old I'd just take Uber.'" Yeah, I had to look it up, too: Uber.com, a limousine
taxi service you access via a smartphone app. A friend of mine overheard a young techie in line to
buy coffee say to someone on his phone that he was working on an app that would be "like Food Not
Bombs, to distribute food, only for profit." Saying you're going to be like a group dedicated to
free food, only for profit, is about as deranged as saying you're going to be like Gandhi, only with
guns.
"An influx of techies will mean more patrons for the arts," trilled an article at the Silicon
Valley news site Pando, but as of yet those notable patrons have not made an appearance. As a local
alternative weekly reported, "The tech world in general is notoriously uncharitable: According to
the Chronicle of Philanthropy, only four of 2011's 50 most generous US donors worked in tech, despite
the fact that 13 of Forbes 50 Richest Americans in 2012 had made some or all of their fortunes in
tech."
Medici in their machinations, they are not Medici-style patrons. There is no noticeable trickle-down
in the Bay Area, no significant benevolence toward the needy or good causes or culture from the new
tech fortunes.
Instead, we get San Francisco newcomer, Facebook CEO, and billionaire Mark Zuckerberg pursuing
his own interest with ruthless disregard for life on Earth. This year, Zuckerberg formed a politically
active nonprofit, FWD.us, that sought to influence the immigration debate to make it easier for Silicon
Valley corporations to import tech workers. There has been no ideology involved, only expediency,
in how FWD.us pursued its ends. It decided to put its massive financial clout to work giving politicians
whatever they wanted in hopes that this would lead to an advantageous quid pro quo arrangement.
Toward that end, the group began running ads in favor of the Keystone XL pipeline (that will bring
particularly carbon-dirty tar sands from Canada to the US Gulf Coast) to support a Republican senator
and other ads in favor of drilling in Alaska's pristine Arctic National Wildlife Refuge to support
an Alaskan Democrat.
The takeaway message seemed to be that nothing is off limits in pursuing self-interest, and that
the actual meaning and consequences of these climate-impacting projects was not of concern at least
to that 29-year-old who's also the 25th richest person in the United States. (To give credit where
it's due: Silicon Valley billionaire Elon Musk, Paypal cofounder and electric car mogul, quit FWD.us.)
Zuckerberg and his Valley associates were pushing things they didn't care about and demonstrating
that they didn't care about much except what makes their corporations run and their profits rise.
Here, where the Sierra Club was founded in 1892 and many are environmentally minded, this didn't
go over well. Protests ensued at Facebook headquarters and on Facebook itself.
Rising hostility to the tech surge in San Francisco is met with fury and bewilderment by many
Silicon Valley employees. They tend to sound like Bush-era strategists dumbfounded that the Iraqis
didn't welcome their invasion with flowers.
Here's something else you should know about Silicon Valley: according to Mother Jones, 89% of
the founding teams of these companies are all male; 82% are all white (the other 18% Asian/Pacific
Islander); and women there make 49 cents to the male dollar. Silicon Valley female powerhouses like
Facebook CEO Sheryl Sandberg get a lot of attention because they're unusual, black swans in a lake
full of white swans.
As Catherine Bracy, on whose research Mother Jones based its charts, put it, "The current research
I've seen shows that wealth creation from the tech industry is extremely unequally distributed, and
current venture capital is going overwhelmingly to a small, homogeneous elite." That's what's encroaching
on San Francisco.
... ... ...
The Armada of the .0001%
If Google represents the global menace of Silicon Valley, and Zuckerberg represents its amorality,
then Oracle CEO Larry Ellison might best represent its crassness. ...
Rebecca Solnit is just winding up several months as a research fellow at Stanford Libraries
and Stanford's Bill Lane Center for the American West. Her work there will lead to a book about California
history, but her new book, out this month, is The Faraway Nearby.
Is financial oligarchy a "special interest group" as Lawrence Davidson suggests? I think it is more
of a class.
Democracy has a very positive connotation for most modern peoples. It suggests that the individual
citizens are important and that their opinions will be paid attention to by those they elect to political
office. In a modified fashion, this is true. Take, for instance, democracy in the United States.
The U.S. is not exactly a democracy of individuals whose numbers run to over 300 million. It is instead,
a democracy competing interest groups. These interest groups are made up of subsets of the
population�that is individuals who have come together based on shared interests and outlooks.
They pool their voting numbers and financial capabilities and approach the elected government bodies
as collectives. In that way they manage to exert (in the form of lobbies) much more influence
than an individual voter ever could.
There are numerous examples of such special interests. Are you a retired or older American concerned
about maintaining social security and medicare? Then join the American Association of Retired Persons
(AARP). This organization has a membership of approximately 40 million citizens. When it speaks,
the politicians in the U.S. government tend to listen. Are you a gun afficionado who fears losing
your alleged Second Amendment right to go around the neighborhood with an automatic weapon? Then
join the National Rifle Association (NRA). This organization has approximately 4.5 million members
and has successfully prevented meaningful gun control laws from being enacted. Similar special interest
groups exist on the foreign policy side of the U.S. political scene and have proved influential enough
to control American policy toward individual countries such as Cuba and Israel as well as entire
regions such as the Middle East.
Everybody is aware that unions are in free-fall. In 2013 they represent less than 7% of private
sector workers. And, while unions are still numerically dense among workers in the public sector-they
represent a third-the recent assaults on collective bargaining at the state and local levels, the
o% four year wage settlements in New York and elsewhere, and the leadership's pervasive fear
of breaking no-strike contracts and state
laws, has weakened them. In short let us begin by stipulating the crisis of Organized Labor. Rather
than dwelling on the woes, this article will address only two aspects of the crisis: some of the
historical and structural factors that have contributed to unions' demise; and what can be done to
reverse labor's outrageous fortune.
After more than a decade of steady retreat during the 1920s and early 1930s, in 1933 and 1934
the labor movement experienced a dramatic rebirth. Without the crutch of law or the state's approbation,
workers in the mines, garment shops, textile mills, North and South, truck companies, auto factories,
and the docks staged mass strikes for union recognition, against wage cuts and onerous working conditions
and in some instances against the timidity and class collaboration by the mainstream AFL unions.
Some of these struggles were conducted by or within established unions but others, particularly
in the Minneapolis and San Francisco general strikes and the Toledo Auto Lite walkout were conducted
by insurgencies against both the corporations and the old unions.
The Roosevelt administration was alarmed. The first New Deal, 1933-35, was an effort to revive
industrial production and finances by giving federal funds to banks and imposing corporatism
upon industrial relations in which labor was assigned a subordinate role. The National Industrial
Recovery Act (NIRA) set up tri-partite industry boards-business, labor and public members-to regulate
wages, prices and profits. With the exceptions of the apparel and mining industries, labor had little
leverage over board decisions. Workers' wages were often frozen, and their power to impose better
working conditions was severly limited. Radicals judged the NIRA as an American version of
industrial fascism because it paralleled the Italian example. This perception was reinforced when,
after promising to bring textile employers to the bargaining table, Roosevelt persuaded the AFL
union leaders to call off the 400,000 worker strike. He reneged on his promise and 7000 activists
were blacklisted from the industry, many of them Southern women. Roosevelt's betrayal contributed
to the tough sledding unions faced in the American South for decades.
According to historian Richard Hofstadter Roosevelt, therefore, "stumbled" into social reform.
The mass strikes prompted pro-administration Congress members to cooperate with the administration
in proposing a new form of regulation: the Wagner Act (NLRA) granted workers the right to form
unions "of their own choosing" and provided a series of procedures for determining whether and how
workers could form unions that would be recognized by law and therefore by their employers. It also
encouraged collective bargaining to resolve labor disputes. Organized Labor did not renounce the
strike weapon-indeed before final Supreme Court approval in 1937 of the new labor law Akron
rubber workers and Flint and Cleveland auto workers staged factory occupations termed sit-down strikes
rather than conventional walkouts to gain recognition, a tactic which the Supreme Court outlawed
in 1938 because workers violated the most sacred of all common laws: the sanctity of private property.
But with the notable exception of what Jeremy Brecher termed the 1946 general strike that embraced
almost all of the major production industries, the wildcat walkouts in auto in the 1950s and 1970s,
the historic 1959 116 day steel strike over the right of workers to negotiate over the introduction
of new technology, and the early 1960s strikes among teachers and other public workers for
union recognition, in private sector organizing the strike weapon mostly gave way to the Board-supervised
representation election and to arbitration to resolve labor disputes. The public workers' strike
wave of the 1960s prompted many state legislatures and the federal government to outlaw strikes
as a condition of granting union recognition. Most public employees' unions readily accepted
the deal because it brought millions of new members into the unions and strengthened collective
bargaining, a goal that had become primary for all unions since the New Deal. As a result few public
workers' unions forged their culture in the baptism of fire; during organizing campaigns one of the
main messages to workers was that there would be little risk if they joined the union.
The post-war labor movement became an ardent devotee of the union contract, especially its main
features: locked -in wages, work-rules that gave unions some power over the labor process, a series
of benefits that constituted, in effect, a private welfare state, and by limiting management's
right to fire workers arbitrarily, a degree of job security. The union contract was the most
important concrete expression of the new social contract. It signified that Labor accepted the prevailing
capitalist economic system, management's control over the production and distribution of goods
and services, and the law of labor relations in which workers rights and responsibility were
rigorously enforced by the company and the union. In this regime the union becomes a partner of capital
as well as a representative of its members, the tension between the two roles that is more or less
constant.
Labor's adaptation to legalism was a symptom of its embrace of the key elements of modern liberalism:
a new social contract with capital that provided union recognition (except in the South); steady
wage increases at least until the late 1970s; a privately-funded social wage following the
failure of national health care legislation in 1949 and the stagnation of old age (social security)
benefits, and the privatization of workers' housing. And, besides becoming a devotee of the
law and the Democratic party, Labor became a major ally of the post-war administration's permanent
war program: perpetual off-shore military and economic interventions, huge defense contracts that
some union leaders viewed in terms of full employment, and anti-communism at home and abroad.
The post-war unions were among the most reliable allies of the Cold War. Conservative
and progressive unions alike conducted a relentless purge of Communists and others who refused to
cooperate with Congressional committees and government agencies in fingering fellow radicals. The
Taft-Hartley amendments of 1947 to the Labor Relations Act not only barred Communists from holding
union office, but barred unions from conducting solidarity strikes-sympathy, secondary boycotts,
refusal of workers to handle struck goods and gave the US president the right to impose and
80 day strike prohibition when the "national interest" was involved. The CIO and many AFL unions
blasted Taft-Hartley and vowed to seek its repeal. Brave words notwithstanding, the mainstream labor
movement failed to mount a concerted campaign and after some refused to sign the requisite non-communist
affidavits, dutifully fell in line. Even Miners president John L. Lewis and former CIO president
who characterized Taft-Hartley as a "slave labor act" finally submitted to the law.
Meanwhile the CIO expelled 11 of its affiliates for alleged Communist dominations and deprived the
labor movement of many of its most militant and capable institutions and activists. The Auto, Steel,
Electrical and Machinists unions spent much of the 1950s raiding the left-wing unions.
By the mid-1950s many on the left determined that discretion was the better part of resistance; they
re-entered the mainstream unions after publicly renouncing their Communist pasts or, in some cases,
quietly quitting the CP. After the smoke cleared only the United Electrical Workers and the West
Coast Longshore unions remained independent. Eventually Longshore re-entered the AFL-CIO, but UE
has held out to this day.
Why did the unions fail to unshackle themselves from government control? One reason was that they
were comfortable with the anti-Communist restrictions. Eliminating a large fraction of the Left
protected the leadership from criticism and potential opposition. Another is that the
CIO was actively distancing itself from its own history. It no longer had a taste for direct action
but instead sought respectability and stability in labor relations. And, the progressives no less
than the business unions became devoted to electorism as a strategy rather than relying, primarily,
on organizing. Less than a decade after the enactment of Taft-Hartley, in 1955 the two
federations merged. Among its impetuses was to halt the fierce competition that marked the 20 years
since the founding of the CIO. Never mind that most CIO unions were no longer repositories of direct
action and other forms of industrial conflict. The leaders of both federations sought labor peace
and, indeed, in the midst of post-war relative prosperity, fueled, in part, by Corporate America's
domination of world markets, the ordinary processes of collective bargaining were able to register
continuous improvements in workers' living standards. And the Labor Board elections were resolved,
generally, in unions' favor. By 1953, unions represented more than a third of private sector
workers. The South, professional and technical workers, and the retail and wholesale trades posed
the greatest challenges. Of course, until the 1960s, unions were painfully weak in the public sector,
a condition that was soon to change. By the end of that decade, unions were on the way,
especially in state and local jurisdictions, and in the Post Office. But Labor's increasing
density barely disguised growing rank and file discontent. Labor-management cooperation in
auto, coal mining and steel prompted wildcat strikes and, by the mid-1970s a burgeoning rank
and file that expressed itself as opposition slates for top and many local union offices. The auto
and steel rank and file movements did not succeed at the national level , but Miners for Democracy
took union power. The established leadership was shaken ,but remained unbowed in most
instances where a rank and file mounted a challenge.
Until the late 1960s the AFL-CIO was a bastion of support for the war policies of the Kennedy-Johnson
administrations and with the exception of some important unions like the Auto Workers and the
growing public unions, were opposed to the militant civil rights movement and when not indifferent
were hostile to feminism and environmentalism. With the exception of its core support for expanding
the social wage, Organized Labor drifted to the right on most social issues, a position that alienated
many young people women, blacks and Latinos. Although it was never true that women and blacks were
not part of the labor movement, the public face of the unions was, in the main, white, male and middle-aged.
Intellectually the unions were part of the backwater of society; more to the point, when American
unions took an interest in International Labor affairs where ideas matter, they aligned with
US foreign policy which encouraged and often financed anti-communist, antirevolutionary unions in
Italy, France, Africa and Latin America.
Having been integrated into law and prevailing capitalist social relations during the New
Deal and its successors, Labor's fate was further sealed by its profound anti-radical stances during
the second social movements' upsurge of the 1960s and early 1970s. Even as US political hegemony
was under siege in many developing countries, the American century in economic terms was challenged
by the reemergence of Japan, Germany and France which became export societies on the basis of technologies
that were, for various reasons, more advanced that those practiced by US industrial corporations.
And the productivity of US industrial workers declined, largely due to shop-floor resistance.
US corporations responded in two principal ways: intense technological investments reduced the relatively
high wage force within the United States. And Northeastern and Middle Western-based industries moved
first to the American South and then to Mexico and to the countries of Southeast Asia.
Unions adapted to these changes rather than waging struggles against plant closings and the emergence
of Southeast auto, textile and metal-working factories. For example, the Auto Workers permitted
the Big Three to move South, provided they agreed to unionize them. The union's compliance was by
no means innocent. The Mid-west, especially Detroit, was a hotbed of opposition to the national leadership.
In effect, the union colluded with management to diffuse discontent. Wages were not reduced,
but since the plants were generally relocated in rural or small town areas, the chance of shop-floor
disruption was sharply reduced. And, displaced union members had the right to relocate as well.
However, other unions faced plant closings with far less bargaining power. Most relocated plants
reopened on a non-union basis but the unions were either unable or unwilling to commit to a Southern
organizing strategy that would entail a long-term presence in the communities without an immediate
chance of obtaining recognition or winning a union contract. Having failed in the immediate
post-war years to make significance organizing gains in the South, the AFL-CIO unions were
hesitant to drain their resources on Mexico, Guatamala and Southeast Asia because even the
non-union workers in the US made too much money in the wake of global competition . The apparel industries
were the first to go, but within a few decades Chinese contractors for Apple, Hewlett Packard and
other companies were employing millions of workers in the production of computers and
electronic parts. And, in textiles, whose Southern base traced to the 1920s, even the mechanization
of the industry failed to inhibit migration to China and India. By the late 1990s, the South had
been partially deindustrialized. Its economic woes became an occasion for European and Japanese auto
corporations to install "transplants", all of them non-union. The UAW's sporadic efforts to organize
Nissan and other plants have been unsuccessful. As of this writing, there are 13 transplants, among
them a huge 4000 worker Nissan assembly plant in Mississippi. The union is engaged in organizing
drive there. This time it has forsaken the hit and run pattern of Southern organizing, declaring
it will engage the community, not only the plant, on a long-term basis. Whether the lessons of the
recent past have been fully assimilated remains to be seen.
Two contrary developments in the post-war economy have almost completely missed Organized Labor's
attention. The first was linked to the technological revolution and the expansion of health care.
In technology the programming and systems analytic basis of computerization of both the industrial
and service workplaces demanded the creation of a whole new series of job categories. From less than
4% of the labor force at the close of world war two, by the 1980s they had almost tripled in size.
By the year 2013 they were just about 20% of the workforce or about 16 million. Many are wage and
salaried workers and an expanding number are so-called "contractors" who do not draw a salary but
are paid by the job and are offered no benefits. Although they are contingent workers because they
are obliged to seek new employment when the job is finished, those with high qualifications such
as computer engineers and website designers usually find new contracts. But lower down in the
ladder, in times of economic slum programmers systems analysts and middle managers have trouble
finding a job. In New York, Philadelphia, and San Francisco many public high-tech employees
are union members. But with few exceptions-the Communication Workers (CWA) efforts among Microsoft
workers in Seattle, a small engineers union on the East Coast and technical workers at GM's Detroit
area Tech center-unions have made almost no efforts to organize intellectual labor in high-tech.
Perhaps the greatest threat to freedom and democracy in the world today comes from the formation
of the unholy alliances between government and business. This is not a new phenomenon. It used
to be called fascism� The outward appearances of the democratic process are observed, but the
powers of the state are diverted to the benefit of private interests. �
George Soros
"I
fear what they're doing� is setting the crown for a corporate state�. And by that I mean a
rather small but very powerful circle of financial institutions� also some industrial corporations�
Too big to fail� protected by (government)� The leading banks and corporations� will have the
means to monopolize democracy."
The United States and the other Allied Nations fought World War II against the Fascist nations
of the world, which posed a severe and imminent danger to world-wide freedom and livelihood. The
United Nations was conceived by
President Roosevelt and brought to fruition largely by the
efforts of President Truman
with an eye towards identifying future fascist threats to world freedom and imposing a barrier against
them.
Definition of fascism
The Fascism that we fought against is often defined by its
warning signs,
which include:
1. Powerful and continuing nationalism; 2. Disdain for human rights; 3. Identification of enemies/scapegoats
as a unifying cause; 4. Supremacy of the military; 5. Rampant sexism; 6. Controlled mass media; 7.
Obsession with national security; 8. Interweaving of religion with government; 9. The combining of
government and corporate power (corporatism); 10. Suppression of labor; 11. Disdain for intellectuals
and the arts; 12. Obsession with crime and punishment; 13. Rampant cronyism and corruption, and;
14. Fraudulent elections.
These warning signs of fascism can be seen as combining two major groups of characteristics: corporatism
(# 9) and scapegoating alleged enemies as a unifying cause (# 3). Those two characteristics represent
the core of fascism. The other traits follow as a consequence of those core characteristics.
Nationalism (# 1) is the ultimate unifying cause that fascists aim to produce. The "nation" takes
precedence over all else, and anyone who doesn't fall in line is an "enemy" of the state. Disdain
for human rights (# 2) follows, as the "enemy" is dehumanized, thus rationalizing its brutal repression.
Disdain for intellectuals (# 11) is necessary because they are among the most likely to speak out
against the state � and they make a convenient enemy.
Corporatism requires corruption (# 13) because governments are supposed to serve their people;
therefore, when they decide to serve corporate power instead, that by definition constitutes corruption.
Suppression of labor (# 10) is necessary for the corporatist state because labor is the natural enemy
of excessive corporate power.
The connection between corporatism and scapegoating
Why the connection between the scapegoating of enemies as a unifying cause and corporatism? In
a corporatist state, the corrupt alliance between government and corporate power means that power
and wealth are concentrated among a small elite few at the top, which leads to corresponding lack
of power and wealth among the vast majority of the population, with corresponding great potential
for mass suffering. The corporatist state must find a way to convince these great masses of people
to happily accept their fate. The scapegoating of alleged enemies has been found to be one of the
best ways to do this. Item #s 4, 6, 7, 8, 12, and 14 in the warning list are just more methods that
the corporatist state uses to keep its subjects in line.
The vicious cycle of increasing corporate power
In the United States today, the deepening ties between our government and private corporate power
is bringing us dangerously close to the kind of fascism/corporatism that we fought against in World
War II. The fact that bribery of government officials, in the form of "campaign donations", is essentially
legal in our country, has opened the door to the merging of government and corporate power that defines
fascism. Corporate propaganda and monopolization of our airways has opened the door still wider.
Worse yet, it creates a vicious cycle. Corporate money is used to bribe government officials to pass
legislation favorable to their agenda, which inevitably leads to further increase in corporate wealth
and power. It has gotten to the point where a majority of our elected officials at the federal level
feel dependent upon corporate contributions to remain in office. Even many of those who may have
basically good intentions have succumbed to the need to placate corporate power. In so doing, they
prioritize the desire of a small minority of corporate elites above the needs of the vast majority
of their constituents. The bottom line is that corporations have become powerful enough to enter
into corrupt bargains with government, thereby enabling private corporations and government to mutually
enrich each other at the expense of everyone else. This is the tyranny of fascism. With that in mind,
let's consider how we got to this point:
The Rise of Corporate Tyranny in the United States
The most common form of business organization, and one which is chartered by a state and given
many legal rights as an entity separate from its owners. This form of business is characterized
by the limited liability of its owners�
In 1819, the U.S. Supreme Court ruled against the state of New Hampshire when it attempted to revoke
the corporate charter of New Hampshire, in
Dartmouth College v. Woodward.
New Hampshire citizens were outraged by that decision, arguing that corporations are created by the
state, with the purpose of serving the public interest.
In a democracy, ALL actions of the state should be to serve the public interest. If the state
grants a charter to a corporation, it should have the right to regulate that corporation in the public
interest, in return for the privileges that it bestows upon the corporation.
The threat of corporate power at the founding of our nation
Adam Smith's "The Wealth
of Nations", published in the same year (1776) as the U.S. Declaration of Independence, expounded
on the advantages of a free market economic system, while at the same time warning of the dangers
of corporations. That seems ironic on the surface, since today's right wingers constantly push their
own version of the "free market", while using Smith as their authority.
But in reality, Smith was deeply antagonistic towards any view of so-called "free market" principles
that favored corporations � the very opposite of the stance advocated by today's right-wing movement.
This is what Smith had to say about the effect of corporate power on free markets:
It is to prevent this reduction of price, and consequently of� profit, by restraining that free
competition which would most certainly occasion it, that all corporations, and the greater part
of corporation laws, have been established� This prerogative of the crown seems to have been reserved
rather for extorting money from the subject, than for the defense of the common liberty against
such oppressive monopolies.
David
Corten explains that our Declaration of Independence and the American Revolution that coincided
with it were in large part a reaction against the same corporate abuses that Smith warned against
in "The Wealth of Nations":
It is noteworthy that the publication of The Wealth of Nations and the signing of the U.S. Declaration
of Independence both occurred in 1776. Each was, in its way, a revolutionary manifesto challenging
the abusive alliance of state and corporate power to establish monopolistic control of markets
and thereby capture unearned profits and inhibit local enterprise. Smith and the American colonists
shared a deep suspicion of both state and corporate power.
The conferring of corporate personhood
There is nothing in our Declaration of Independence,
nor our Constitution, nor any of the amendments to our Constitution that conferred special rights
or privileges upon corporations. Indeed, as late as 1855 the U.S. Supreme Court made perfectly clear,
in
Dodge v. Woolsey, that corporations have no special rights or privileges, and that they are subservient
to the American people:
That the people of the States should have released their powers over the artificial bodies (i.e.
corporations) which originate under the legislation of their representatives� is not to be assumed.
Such a surrender was not essential to any policy of the Union, nor required� Such an abandonment
could have served no other interest than that of the corporations, or individuals who might profit
by the legislative acts themselves. Combinations of classes in society, united by the bond of
a corporate spirit, for the accumulation of power, influence, or wealth� unquestionably desire
limitations upon the sovereignty of the people� But the framers of the constitution were imbued
with no desire to call into existence such combinations�
But in 1886, in an unofficial opinion by U.S. Supreme Court Chief Justice Morrison R. Waite, before
any oral arguments took place in
the case of
Santa Clara County v. Southern Pacific Railroad Company, and without any explanation whatsoever,
Waite simply announced:
The court does not wish to hear argument on the question whether the provision in the Fourteenth
Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction
the equal protection of the laws, applies to these corporations. We are all of the opinion that
it does.
This offhand statement � which cannot possibly constitute an official opinion of the court, which
is always preceded by extensive research and debate � has since been considered the law of the land.
And as such it greatly increased the power of corporations against individuals by allowing them
the protections given to persons under our Constitution, even though corporations are simultaneously
showered with various powers that actual persons don't have and exempted from many of the
responsibilities and obligations that actual persons have. David Korten puts this in perspective
in his book, "When Corporations Rule
the World":
Thus corporations finally claimed the full rights enjoyed by individual citizens while being exempted
from many of the responsibilities and liabilities of citizenship.
Furthermore, in being guaranteed the same right to free speech as individual citizens, they
achieved, in the words of Paul Hawken, "precisely what the Bill of Rights was intended to prevent:
domination of public thought and discourse."
The subsequent claim by corporations that they have the same right as any individual to influence
the government in their own interest pits the individual citizen against the vast financial and
communications resources of the corporation and mocks the constitutional intent that all citizens
have an equal voice in the political debates surrounding important issues.
The restraint of corporate power by FDR
Excessive corporate power led to
vast disparities of wealth,
which in the late 19th Century became known as the
Gilded Age.
This culminated in the
Stock Market
Crash of 1929, which led to the Great Depression and the election of Franklin Delano Roosevelt
as President.
FDR aggressively criticized the conditions that led to this state of affairs in his
1936
Democratic Convention speech to the American people. In that speech he condemned the men who
were responsible for the nation's economic woes, whom he referred to as "Economic Royalists".
Out of this modern civilization economic royalists carved new dynasties. New kingdoms were built
upon concentration of control over material things. Through new uses of corporations, banks and
securities, new machinery of industry and agriculture, of labor and capital � the whole structure
of modern life was impressed into this royal service. There was no place among this royalty for
our many thousands of small business men and merchants who sought to make a worthy use of the
American system of initiative and profit.
The privileged princes of these new economic dynasties, thirsting for power, reached out for
control over Government itself. They created a new despotism and wrapped it in the robes of legal
sanction. In its service new mercenaries sought to regiment the people, their labor, and their
property. And as a result the average man once more confronts the problem that faced the Minute
Man.
The hours men and women worked, the wages they received, the conditions of their labor � these
had passed beyond the control of the people, and were imposed by this new industrial dictatorship.
The savings of the average family, the capital of the small business man, the investments set
aside for old age � other people's money � these were tools which the new economic royalty used
to dig itself in.
The abuses of power that FDR detailed in that speech provided much of the rationale for his
New Deal, which lifted tens of
millions of Americans out of poverty and created a vibrant middle class, while
taxing corporations at unprecedented levels.
The New Deal didn't just fade away after FDR's death. Instead, due to its stunning success, most
of its components lasted for decades. Largely as a result of this, we experienced for the next three
decades what Nobel Prize-winning economist Paul Krugman calls "the
greatest sustained economic boom in U.S. history". Beginning in 1947, when accurate statistics
first became available,
median family income
rose steadily (in 2005 dollars) from $22,499 in 1947 to more than double that, $47,173 in 1980.
The "Reagan Revolution" reversal of New Deal economic policy
With the advent of the Reagan
Revolution in 1981, characterized by a return to the "free market" ideology of the Gilded Age,
the route marked out by FDR was reversed. Since that time, except for a brief respite during the
latter years of the Clinton presidency, the income of American workers has been virtually stagnant,
despite large increases in American productivity which have enriched the already wealthy.
The reign of "free-market" ideology has been characterized by an ideological ban against government
intervention in economic matters to help those who most need it, which played out domestically and
internationally. William Greider, in his book, "Come
Home, America � The Rise and Fall (And Redeeming Promise) of our Country", explains how this
played out on the international stage:
The World Trade Organization enforces rules that protect capital investors and corporations, but
it has no rules protecting workers and communities, that is, people. The so-called Washington
Consensus � a stern dogma imposed on developing countries that borrow from the World Bank and
International Monetary Fund preaches that national governments must not try to protect their people
from the harsh side effects of capital and commerce. America's representative democracy, meanwhile,
is offered as the model the world should follow, despite the democratic breakdown that Americans
well know is in progress
Greider mentions globalization as another of the factors contributing to the demise of the United
States. However, he also notes that other nations are affected by globalization just as much as the
United States is, and yet other industrialized nations have much less economic inequality than the
United because they are not bounded by the inflexible right wing ideology of the so-called "free
market".
James Galbraith, in his book, "The
Predator State", explains why globalization and free trade agreements need not cause serious
adverse effects for American workers, if only we would give up that radical "free market" ideology
that the right wingers have foisted upon us:
The populist objective is to raise American wages, create American jobs, and increase the fairness
and security of our economic system� Is there a better way to do this�? Of course there is � and
that is to do it directly. You want higher wages? Raise them. You want more and better jobs? Create
them.
In other words, our government should work directly for the average American, not the corporatocracy
using the rationale that expansion of corporate wealth will "trickle down" to everyone.
Corporate propaganda to pervert our concept of democracy
In addition to routinely bribing government officials to promote their agenda, the corporatocracy
has bombarded the American people for several decades with incessant propaganda aimed at perverting
our concepts of the workings of democratic government, in order to gain our acquiescence in their
continuing power grabs:
Perversion of the concept of "freedom"
The concept of freedom has become perverted in our county. Freedom has been
defined as "the power to act or speak or think without externally imposed restraints" � and that's
how most people use it. Another way of saying that is "the power to do whatever one wants to do".
As an absolute concept, it is not plausible or reasonable or even possible for a functioning
society to allow its members such powers � for a very simple reason. The freedom of the powerful
to do whatever they want tends to impinge tragically on the freedom of the vulnerable members of
society. Some men for example like to rape women. But enabling them to do that whenever they want
would impinge on the freedom of women not to be raped. The vast majority of people realize
that giving men the freedom to rape at will would be a very bad idea.
At the societal level, powerful corporations often dump vast quantities of poisons into the air,
soil, and water without having to bear the costs or other consequences of their activities. Most
Americans agree that such activities should be prohibited or otherwise strongly regulated, or that
corporations that engage in such activities should be made to bear the costs or other consequences
� in other words, that the "freedom" of corporations to pollute and ruin our environment should be
strictly controlled. Yet, corporate power in the United States has perverted the concept of "freedom"
to justify ever more unrestricted expansion of their power, with the consequent diminishment of freedom
for the vast majority of Americans.
George Lakoff discusses the nuances and frequent contradictions of the word "freedom" in great
detail in his book, "Whose
Freedom � The Battle over America's Most Important Ideal". Here is an one of many excerpts from
that book that make the point of how the freedom of the few often diminishes the freedom of the many:
The focus of (George Bush's) presidency is defending and spreading freedom. Yet, progressives
see in Bush's policies not freedom but outrages against freedom. They are indeed outrages against
the traditional American ideal of freedom� It is not the American ideal of freedom to invade countries
that don't threaten us, to torture people and defend the practice, to jail people indefinitely
without due process, and to spy on our own citizens without warrant�
Bill Moyers discussed this idea in an article titled "A
New Story for America". He notes how Ronald Reagan put our country on the road to fascism (though
he didn't use that word) by convincing many or most Americans that "big government" destroys our
freedom and that we must therefore shrink government and give business unlimited "freedom" to do
as they please. With regard to Reagan's idea of "freedom", Moyers says:
But what that� means today is the freedom to accumulate wealth without social or democratic responsibilities
and the license to buy the political system right our from under everyone else, so that democracy
no longer has the ability to hold capitalism accountable for the good of the whole� It has taken
us down a terribly mistaken road toward a political order where government ends up servicing the
powerful and taking from everyone else�
Nor does it assure the availability of economic opportunity�
Yet it has been used to shield private power from democratic accountability, in no small part
because conservative rhetoric has succeeded in denigrating government even as conservative politicians
plunder it� But government is � often the only way we preserve our freedom from private power
and its incursions.
The hypocrisy of the corporate version of "free market" ideology
There is nothing "free"
about the right wing corporate version of so-called "free markets". Rather, through the amassing
of great wealth and power and the use of that wealth and power to legally bribe our elected officials,
they have stacked the deck in their favor so as to acquire monopoly control over so many aspects
of our economic and political life. As Adam Smith, whom the right wing ideologues are so fond of
quoting, says, creation of true free markets requires at a minimum the limiting of the power of corporations.
Our corporate elites are not interested in "free" markets. They are interested only in gathering
unto themselves as much wealth and power as they possibly can.
This is all part and parcel of the utterly nonsensical doctrine of "trickle down economics", which
was never supported by a shred of evidence. They want us to believe that the road to a healthy economy
is to shower the wealthy with privileges and riches, so that eventually this wealth will shower (or
trickle) down on the rest of us, by virtue of making the wealthy more productive. Well, we're still
waiting.
With their control of the news media, corporate America has foisted a toxic ideology on the American
people that serves to maintain their wealth and power. When powerful banks lose money, they warn
that the taxpayers must save them, lest our economy go into a permanent tailspin. Yet when the American
people attempt to devise a health care system that will keep them financially solvent and
prevent twenty thousand deaths
each year, the corporate elite scream SOCIALISM!!
This is all part and parcel to the idea that "big government" is our biggest problem. The corporatocracy
would have us believe that any infringement of our government on the "freedom" of corporations do
whatever they please constitutes "interference" with the "free market". Bill Moyers takes us back
in history to explain how our country's greatest leaders, from Jefferson to Lincoln to Teddy Roosevelt
to FDR, have used the powers of government to provide opportunity for Americans to create a decent
and better life for themselves. Thus Moyers concludes about our present state:
So it is that contrary to what we have heard rhetorically for a generation now, the individualist,
greed-driven, free-market ideology is at odds with our history and with what most Americans really
care about � Indeed, the American public is committed to a set of values that almost perfectly
contradicts the conservative agenda that has dominated politics for a generation now.
Opposing the public interest
Corporations, as creations of the state were originally required
to act in support of the public interest in return for the many favors they received from the state.
But instead, they have come to oppose the public interest, in pursuit of their own private
goals and the goals of their owners, and in the process they have cast a progressively darkening
cloud of tyranny over our country and the world. In reality it is difficult or impossible to separate
the goals of a corporation from the goals of its owners � those who exercise control over the corporation.
After all, a corporation is merely a financial tool, which can be utilized for whatever purposes
those who control it wish. Yet it is legally defined as an entity separate from its
owners. Thus those who control the corporation have a powerful tool at their disposal, while at the
same time utilizing corporate law to shield them from the liabilities that mere individuals would
incur without a corporation to hide behind.
That would be ok if the state was determined to regulate corporations in the public interest.
However, especially since the 1980s corporate propaganda has achieved a measure of success in convincing
Americans that government regulation of corporations � in the public interest or otherwise � is bad
for our economy and therefore bad for our people. Perhaps most Americans don't really believe that
absurdity. But enough do that, in combination with the power of money, the public interest has taken
a back seat to corporate "freedom".
Monopoly
It has long been recognized that corporations have a tendency to form monopolies, which reduce
competition and raise prices. That is why, beginning with the
Sherman Anti-trust
law of 1890, and continuing with President Theodore Roosevelt's
trust busting efforts, the U.S. government has had a long and justified history of intervening
to prevent unfair monopolistic practices, especially with regard to services that are essential to
us, such as gas and electric utilities.
When monopolies are allowed to flourish, competition is stifled and the result is an
increasing
wealth gap and
poverty.
Specific examples of monopolies leading to bad consequences include the lax regulation that led to
the
energy blackouts in California in 2001 and policies that allow
price gouging by oil
companies. Yet, for reasons that they've never explained, the right wing "free market" ideologues
are the first ones to allow the stifling of competition by monopolies.
Monopoly provides the financial foundation of corporate power. With rampant monopolization of
U.S. industries in recent years, competitive obstacles to the accumulation of wealth have been removed
for a select few, at the expense of almost everyone else. Barry Lynn discusses in his book, "Cornered
� The New Monopoly Capitalism and the Economics of Destruction" � how the monopolization of so much
industry in the United States, which began under the Reagan Presidency, has led us towards a corporatist
state that has vastly limited the freedom of so many Americans:
The structural monopolization of so many systems has resulted in a set of political arrangements
similar to what we used to call corporatism. This means that our political economy is run
by a compact elite that is able to fuse the power of our public government with the power of private
corporate governments in ways that enable members of the elite not merely to offload their risk
onto us but also to determine with almost complete freedom who wins, who loses, and who pays.
Then suddenly there was Secretary of the Treasury Henry Paulson� using our tax money to fix his
bank and the banks of all his friends�
The Bush and Obama administrations and� Congress all
responded to the collapse of our financial system in most instances by accelerating consolidation�
The effects are clear� the derangement not merely of our financial systems but also of our industrial
systems and political systems. Most terrifying of all is that this consolidation of power � and
the political actions taken to achieve it � appears to have impaired our ability to comprehend
the dangers we face and to react in an organized and coherent manner.
The bottom line: Too much freedom for the powerful impinges greatly upon the freedom of everyone
else.
"Too big to prosecute"
Perhaps the greatest indicator of the tyranny of corporate power in America today is the approach
that our criminal justice system takes towards corporate criminals. Our country is still suffering
from our worst financial crisis since the Great Depression of the 1930s, which is largely the result
of corporate irresponsibility and malfeasance. Yet not one of those responsible for this crisis has
even been prosecuted, let alone sent to jail. To the contrary, the American taxpayers have bailed
out our irresponsible financial institutions to the tune of several trillion dollars.
The nation is left to face a disturbing spectacle: crime without punishment. Massive injuries
were done to millions of people by reckless bankers, and vast wealth was destroyed by elaborate
financial deceptions. Yet there are no culprits to be held responsible.
People know that if they rob a bank they will go to jail� Bankers should know that if they rob
people, they will go to jail too� At the end of the day this is a test of whether we have one
justice system in this country or two. If we do not treat a Wall Street firm that defrauded investors
of millions of dollars the same way we treat someone who stole $500 from a cash register, then
how can we expect our citizens to have any faith in the rule of law?
Greider explains the system that is routinely used in the United States today to deal with corporate
criminals, and its purported rationale:
Instead of "Old Testament justice," federal prosecutors seek "authentic cooperation" from corporations
in trouble, urging them to come forward voluntarily and reveal their illegalities. In exchange,
prosecutors will offer a deal. If companies pay the fine set by the prosecutor and submit to probationary
terms for good behavior� then government will defer prosecution indefinitely or even drop it entirely.
The favored argument for the more conciliatory approach was that criminal indictment may amount
to a death sentence for a corporation. The fallout will destroy it, and the economy will lose
valuable productive capacity. The collateral consequences are unfair to employees who lose jobs
and stockholders who lose wealth.
That's a lot of sympathy of corporations, corporate employees and stockholders. Where is the comparative
sympathy for the tens of millions of other Americans who are out of work or who lost their homes?
Russell Mokhiber, longtime editor of the Corporate Crime Reporter, explains the real reason
for this kid glove treatment of corporate criminals:
Over the past twenty-five years the corporate lobbies have watered down the corporate criminal
justice system and starved the prosecutorial agencies. Young prosecutors dare not overstep their
bounds for fear of jeopardizing the cash prize at the end of the rainbow � partnership in the
big corporate defense law firms after they leave public service. The result � if there are criminal
prosecutions, they now end in deferred or nonprosecution agreements � instead of guilty pleas.
Greider continues:
Deferring prosecution was made standard practice by George W. Bush's Justice Department� During
Obama's first two years, Justice deferred action on fifty-three corporate defendants� Leading
lawyers dubbed deferred prosecution "the new normal for handling corporate misconduct".
In other words, they have more money than we do, and in today's United States, justice is for sale.
Setting the crown for a corporate state � Corporate power in perspective
William Greider
has warned
us many times in the past about the dire consequences of government becoming too cozy with the
corporatocracy:
This will sound extreme to some people, but I came to it reluctantly. I fear what they're doing�
in their design is setting the crown for a corporate state�. And by that I mean a rather small
but very powerful circle of financial institutions the old Wall Street banks, famous names. But
also some industrial corporations� Too big to fail. Yes, watched closely by the Federal Reserve
and others in government, but also protected by them� The leading banks and corporations are sort
of at the trough, ahead of everybody else in Washington, they will have the means to monopolize
democracy. And I mean that literally. Some of my friends would say, hey, that already happened�.
The corporate state is here�. The fact is, if the Congress goes down the road I see them going
down, they will institutionalize the corporate state in a way that will be severely damaging to
any possibility of restoring democracy.
THE CORPORATIST MODEL Grows from a close relationship between the trade union movement and social
democratic parties. Even in "pluralist" Britain, economic policy approached the corporatist model
in brokering "SOCIAL CONTRACT" between government and unions during the 1974-79 Labour administration.
Often institutionalizes a system of centralized wage bargaining: government and the "social partners"
of organized labor and business sit round a table and trash out a national incomes policy.
As a policy-making and implementation system: set of institutional arrangements that entrenches
major social groups in the overall management of the national economy and other types of public policies
Definition from Philip Schmitter and Gerhard Lehmbruch: "Corporatism is more than a particular
pattern of articulation of interests. Rather, it is an institutionalized pattern of policy-formation
in which large interest organizations cooperate with each other and with public authorities not only
in the articulation of interests, but� in the 'authoritative allocation of values' and in the implementation
of such policies".
ORIGINS: 1) Catholic Social Thought - early decades of the twentieth century, Church leaders were
concerned that the role of the church was being undermined by trade unions, and growth of modern
state apparatus; wanted to renew social organization represented by medieval craft guilds; advocated
enhanced role for self-governing interest groups (the "voluntary" sector", involved not only in the
planning but also in the provision of major social services such as health care and education) 2)
Fascist corporation was a system of totalitarian state control of society based on an intimate interpretation
of interest groups and the state. Hitler's Germany, Mussolini's Italy and Salazar's Portugal. 3)
post-WW II impulse for "national unity" sense that industry and labor had to work together in order
to rebuild war-torn economies fostered tripartite (i.e., industry , labor and government) cooperation
in places such as Austria and Germany.
Features of corporatism systems:
most of the work force is organized into a small number of powerful unions; - the business
community is dominated by a small number of powerful firms, organized in a powerful employers'
federation; - wage bargaining between unions and employers is centralized;
state is actively involved in the economy. - interest groups are comprehensive in their representation
of particular sectors of society.
Values/behaviors (i.e political cultural prerequisites) required to make corporatism work:
consensus on broad social values shared by state, unions and employers;
a preference for bargained outcomes, rather than those that are either imposed or won through
conflict.
Interrelated contextual factors: - a long tradition of social democratic rule; - a small, open
economy; - high expenditures on social programs and low expenditures on defense.
Table 14-1 groups countries into 3 clusters.
BIG THREE CORPORATIST COUNTRIES (Austria, Norway and Sweden),
a group of moderately corporatist (Netherlands, Germany, Denmark, and Switzerland as the most
corporatist and as the less corporatist Luxembourg, Iceland and Belgium),
and countries that are hardly corporatist at all (Britain, Ireland, USA, Canada, Portugal,
Italy, Spain, Greece, and France). NOTE: those parts of Europe that are neither Anglophone nor
form the Catholic south are likely to be at least somewhat corporatist in their policy-making
style discuss why this is the case if one of the origins is in Catholic social thought � previous
experiences with Fascism steer them away or perhaps because more solidly Catholic there are other
means of building consensus, bargaining?] . Also note: 4 of the 5 most corporatist countries �
Austria, Norway, Sweden � were the ones with strongest Social Democratic parties/cabinet control
over postwar era.
CORPORATISM IN AUSTRIA
Austria is usually taken as the classic case of a political system that is characterized by a
very high level of corporatist policy making. Austria is a "model generator".
Important role of CHAMBERS, designed to provide formal representation for the interests, respectively,
of labor, commerce, and agriculture.
Statutory position and vital role that they play in decision making. All working citizens in Austria
are obliged by law to belong to the appropriate chamber. [discuss how this is perceived from an American
point of view]
The chambers have the formal right to be consulted on and represent in a wide range of matters,
as well as to nominate members to many other public bodies.
"Peak" trade union organization, the OGB, and the League of Austrian Industrialists, the VOI.
The Chamber of Labor must also consider the "public interest". OGB is highly centralized. SOCIAL
PARTNERSHIP.
The Chamber of Labor and the OGB are dominated by the Socialists (SPO), and the Chamber of Commerce
and Chamber of Agriculture are dominated by the conservative Austrian People's party (OVP).
Interpenetration of interest groups and parliament, and this symbiosis has been identified by
many as one of the strengths of Austrian corporatism.
Social partners traditionally have been concerned first and foremost with economic policy making
(prices and incomes). Both the negotiation and the implementation of policies on prices and incomes.
Concept of parity: strictly equal membership for representatives of business and labor in all
important policy-making bodies.
Success during the affluent 1960s and 1970s. The Austrian economy enjoyed steady growth and a
record on inflation and unemployment that was much better than the European norm.
Full-fledged corporatism is a comprehensive and deep-rooted decision-making culture rather than
just a collection of superficial solutions.
I think the reason is that the Corporatist model has become so entrenched in the mindset of the
ruling elite that they are unable to divest themselves from it.
The enormous success of Singapore's initial years of independence has gone to their heads. It
has fooled them into thinking Corporatism is the way to go, and that when the hardware is in place,
the software can be taken care of later. This inverted philosophy is the reason why Singapore has
evolved into the current state where control of the nation's wealth is placed in the hands of the
few and where the ordinary folk do not have much control over their own economic destinies. It is
also the reason why a culture of materialism has sunk in together with a sense of disempowerment
and disenfranchisement.
Today we have casinos causing social problems for the heartlanders. Under the government's Corporatist
model, the wealth generated for the elite by the casinos is worth these social problems.
Today, the government keeps saying that we cannot provide more social safety nets at the risk
of going down the slippery slope of becoming a welfare state. Under its own Corporatist model, the
government deems that it is better instead to invest the money into building external and foreign
reserves.
Today, public services are going up in price because under the Corporatist model, it is more important
to be profitable than it is to be caring.
This study represents the first book-length treatment of the declining significance of corporatist
governance in advanced capitalist states.
Gobeyn presents the first book-length treatment of the declining significance of corporatist governance
in advanced capitalism, linking that decline to international political economic forces. He contends
that current patterns of conflict within corporatist political bargaining institutions in capitalist
states can be traced to attitudinal shifts on the part of capitalists toward corporatist institutional
arrangements. Business interests, it is argued, may no longer be viewing traditional practices of
national corporatist action as either beneficial or necessary given recent changes in domestic and
international economic environments. Recent state modifications to corporatist forms have therefore
been initiated.
Corporatism was originally a 19th-century doctrine which arose in reaction to the competition
and class conflict of capitalist society. In opposition to the trend towards both mass suffrage and
independent trade unionism, it promoted a form of functional representation - everyone would be organized
into vocational or industrial associations integrated with the state through representation and administration.
The contention was that if these groups (especially capital and labour) could be imbued with a sense
of mutual rights and obligations, such as presumably united the medieval estates, a stable order
based on "organic unity" could be established. Although the notion of industrial parliaments was
commonly raised in liberal democracies after WWI, the only states that explicitly adopted a corporative
form of representation were the fascist regimes of Italy, Germany, Spain, Portugal, Vichy France
and various South American dictatorships.
In all these cases, corporatist structures were primarily a decorative fa�ade for authoritarian
rule, state repression of independent trade unionism being the main motive and consequence. Given
this experience, corporatist ideology has not been popular in Western liberal democratic societies,
but by the 1970s it became increasingly common for social scientists to discern that certain
political arrangements had developed within these frameworks, which in operative premise and institutional
form bore some resemblance to the functional-representation notions of corporatism.
This was particularly true in many West European countries, where the central trade-union and
business federations had joined government representatives in national economic and incomes policy
planning. These arrangements helped sustain the Keynesian welfare state, in which governments sought
to stem inflationary tendencies in the economy and encourage productivity. Central to all such arrangements
was the effort to persuade unions to accept national wage-restraint policies in exchange for representation
in economic decision making.
Corporatism temporarily came to be seen by many social scientists as either a new economic system,
successor to capitalism, where the state controls and directs a highly concentrated but still privately
owned economy; or a new form of state, where the important representation, decision making and administration
take place not in the parties, parliaments and ministerial bureaucracies but in the tripartite structures
where business, labour and governments are joined; or a new form of interest-group politics, where
instead of the competitive, lobbying activities of many pressure groups, there is a monopoly of access
to the state by one group from each sector of society, with the state exercising reciprocal influence
over the groups.
While each of these scenarios captured some aspects of modern corporatist developments, they were
all too expansive and grandiose. Corporatist structures may have supplemented parliamentary forms
in certain countries, but they hardly became the centre of the liberal democratic state. They were
confined primarily to the relations among big business, organized labour and government. Above all,
corporatist arrangements do not challenge capitalism as the economic system of these societies.
Important key investment decisions, although influenced by the state partly through corporatist
structures, remained with private corporations. Indeed, far from emerging as the new dominant institutions,
corporatist structures displayed an inherent instability, reflecting the asymmetry of the relative
power of capital and labour and the tendency of trade unions to withdraw their co-operation in wage-restraint
policies when members insist that their leaders represent their demands rather than act as junior
partners in managing the modern capitalist economy. In turn, capitalist classes have shown themselves
less and less interested, for their part, in maintaining such partnerships, and this has led to corporatist
arrangements to be increasingly abandoned along with the Keynesian welfare state through the last
two decades of the 20th century.
It has become increasingly obvious that the only difference between Barack Obama and George W.
Bush is that the famous Bush smirk has been replaced by the Obama smile. The neoconservatism
of Dick Cheney, Paul Wolfowitz, and Bill O'Reilly has given way to the neoliberalism of Bill Clinton,
Timothy Geithner, Bernie Sanders, and Chris Matthews. The differences between neoliberalism
and neoconservatism are similar to the differences between Coke and Pepsi, virtually nil.
Neoconservatism is best defined by its foreign policy agenda which includes full spectrum dominance,
imperial overstretch, nuclear primacy, the right of pre-emptive strike, and unconditional support
for the State of Israel. Although neoliberals are much less bellicose in their rhetoric than
their neoconservative counterparts, they passively acquiesce to the neocon foreign policy paradigm.
They do little or nothing to end the wars with Iraq and Afghanistan as well as the annihilation of
Palestine carried out by our close ally Israel. Obama's Nobel Peace Prize acceptance speech
in Oslo was little short of a global call to arms couched in the language of the doctrine of "just
war." Although neocons make it abundantly clear that they are military hawks, most neoliberals
are closet hawks as well.
Consider the case of Vermont Senator Bernie Sanders, the darling of the Left, who pretends to
be a socialist, which he is not. Not only does Sanders support all military appropriation bills
and military aid to Israel, but he is currently promoting the opening of a satellite facility of
the Sandia Corporation in Vermont. The Sandia Corporation, a subsidiary of Lockheed Martin
Company, develops, creates, maintains, and evaluates nuclear weapons systems. Sandia's roots
go back to the Manhattan Project in World War II. Just what peace loving Vermonters need, a
nuclear weapons manufacturer located in their own backyard.
Both neolibs and neocons are apologists for globalization and are steeped in the ideology that
bigger, faster, and more high-tech make better. In their heart of hearts neolibs and neocons
know that only the federal government can solve all of our problems, failing to realize that the
federal government is the problem. Both embrace corporate socialism, socialism for the rich,
and the social welfare state while pretending to be opposed to publicly financed social welfare.
It's all about people of the lie.
Neoliberals pretend to be concerned about inequities in the distribution of income and wealth.
Neoconservatives make it abundantly clear that they couldn't care less.
Both neolibs and neocons are authoritarian statists each with their own definition of political
correctness. Politically correct neolibs are expected to be pro-abortion, pro-gay-lesbian,
pro-affirmative action, pro-Israel, pro-gun control, anti-clerical, pro-big government, and pro-American
Empire. Anyone who does not conform to this litany or who associates with those who do not,
is at risk of being attacked by a left wing truth squad such as the Southern Poverty Law Center and
accused of the likes of homophobia, racism, anti-semitism, religious fundamentalism, or even hate
crimes. Politically correct neocons are more likely to be pro-life, anti-gay-lesbian, anti-affirmative
action, pro-Israel, anti-gun control, pro-clerical, pro-big government, and pro-Empire. Both
are vehemently opposed to secession.
Above all, what neoliberals and neoconservatives have in common is that they are technofascists.
Benito Mussolini defined fascism as "the merger of state and corporate power."
Technofascism is the melding of corporate, state, military, and technological power by a handful
of political elites which enables them to manipulate and control the population through the use of
money, markets, media and the Internet.
Neoliberals and neoconservatives alike march to the beat of the same drummer � the largest, wealthiest,
most powerful, most materialistic, most racist, most militaristic, most violent empire of all time.
Ultimately the differences between neoliberalism and neoconservatism are purely cosmetic.
You may either have your technofascism with a smirk or you can have it with a smile.
The struggle over the Trans-Pacific Partnership reveals a disturbing trend in American politics.
The much discussed Citizens United ruling granting corporations personhood has given way to a trade
negotiation process in which corporations are granted more rights than American citizens, their elected
representatives, or foreign governments impacted by the deal. That trade negotiations with such an
immense potential impact on numerous sectors of the American economy have been conducted in secret
is troubling enough. To consider that those negotiating the treaty have willfully ignored experts
and elected representatives in favor of corporate interests calls into question the sustainability
of American democracy.
tom anocu
Patricia Gray is right. It's better if we stop using the much maligned term 'democracy' to
a system that works against and NOT for the interests or ordinary people. Using it to justify
the abuses government and corporations commit against citizens the world over is a travesty. You
CAN'T have both, concentrations of power in the hands of the few and democracy. That is a contradiction
not very well understood in the US. Journalists should recognize this and stop perpetuating the
patent FARSE. The illusion of 'choice' in the Nov. elections reflects all this.
If you consider the Obama regime is almost one-to-one continuation of Bush II regime the argument
about corporatism does make sense.
It's become patently obvious to anybody with half a brain and a pulse that President Obama's
"progressivism" has more in common with Mussolini's corporatism than anything remotely connected
to a genuinely progressive agenda.
If you think I'm exaggerating, I suggest you read Denis Mack Smith's excellent accounts of Il
Duce's tenure in Smith's "Modern
Italy: A Political History", or his biography, "Mussolini".
Both works describe a country which, while claiming to reduce an inflated bureaucracy, needed
to do precisely the opposite in order to reward personal "clients" and followers. Both books also
recount that in spite of the efforts of Mussolini's first Fascist Finance Minister De'Stefani's efforts
to curb tax evasion and limit stock exchange speculation, his efforts were constantly thwarted by
other political cronies of Il Duce, as well as Mussolini himself, who soon allowed the majority of
his Cabinet to discredit one of the few competent ministers, who was of above average intelligence
and competence (Elizabeth Warren, watch out).
Great link! Barry Ritholtz NAILS IT� here is the title of the post�
The Left Right Paradigm is Over: Its You vs. Corporations
Many of us have figured this out already, but Barry does a succint job of summarizing key points.
Personally I think discussing what's wrong with the so-called left and how one might 'fix it'
is a waste of time given that premise is stuck in a fading and more-irrelevant-by-the-day political
paradigm.
brian:
Lawrence of Arabia (1962)
Dryden: Well. It seems we're to have a British waterworks with an Arab flag on
it. Do you think it was worth it?
General Allenby: Not my business. Thank God I'm a soldier.
And it seems we are to have an Italian government (1930s version)
And a Japanese economy (1980s-90s version)
Soldier on�
Doug Terpstra:
Thank you, Marshall (and Yves), for a righteously wicked post! Why not you, as Huey, Marshall?
Worried about "extra-judicial punishment", are we?
Of course, you covered key 'failures' quite well, but the full story is even worse: including
the Patriot Act, GITMO, rendition, Abu Ghraib reclassification, citizen assassination, gay rights, union disempowerment, SHAFTA, Palestine, land mine treaty abandonment, lobbying,
secrecy, etc.
In fact, Obama is doing far more damage as a Neocon ringer, a wolf in sheep's clothing,
than any naked con could get away with, and it is my suspicion that Rahm's Chicago game is far
more devious-that midterm "losses" are part of the game to consolidate a Neocon
agenda.
Next on the block, courtesy of the Obama-stacked Cat Food Commission, is Social Security-under
the cover of the same prickly briar patch Clinton used after 1994 for welfare reform, SHAFTA,
repeal of Glass-Steagall etc. The willful blindness of some Obama apologists here is rather stunning.
Stelios Theoharidis:
It takes a really special kind of idiot to think that you can have legitimate financial,
tax, military, prison, or healthcare reform without first actually having political reform in
this country. Comparing Obama to Mussolini is such absolute and utter BS, who here amongst
us expects that the political and economic class that brought us into this quagmire to be the
same one that brings us out. What just because you insert some sort of political outsider
into it that is going to change the army of insiders around him. By making that characterization
you are no better than the idiot tea baggers who want to dress him up like Hitler in posters.
Obama didn't put us where we are but he has to deal with all the complexities of our position.
Sure many decisions have led us further into collapse, but we are basically in a political system
with widespread capture, you can't make meaningful reform in that kind of situation and his and
our largest failure is chase after financial and healthcare reforms when we should first be making
political reforms.
No matter who would have been put in there the situation would have varied little. The
same people (Summers, Geitner, Orzag, or their republican counterparts) are going to get into
the political process as before. The same power brokers and lobbyists are going to influence
the direction of legislation to the benefit of special interests. You talk about Obama as
if he has options, that illusion of choice is one we like to maintain. But, choice is
basically a few predetermined options, that more and more seem the same. We had an inherited war,
an inherited debt, corporate shills in SCOTUS, a massive lobbying complex, and an inherited political
class that has put us on that trajectory and will neuter any attempt to get on a different path.
Change doesn't happen because we vote someone into office. When has real reform
happened without people getting out in the streets to get their heads beat in. It is pretty much
going to be the same political and economic class, but change will only happen when they
learn to be afraid about losing their bread and butter. Otherwise they are just going
to continue milking the cow until someone kicks the bucket out from underneath their ass. Any political class only maintains power through consent.
The decent portion of the progressive left is too busy building alternative economies and disconnecting
themselves from the detrimental social and environmental impacts that our present system is generating.
Why even try to make futile efforts to prop up this deteriorating behemoth.
Howard Dean's people, who tried to work through the political process, only managed to push
a bunch of moderates into power that did nothing but slow down any real reform.
Doug Terpstra:
"It takes a really special kind of idiot�"
"You talk about Obama as if he has options�"
Careful with the finger-pointing. Of course he has options, he also has real power, or
did, with 59-seat majority. That's what elections are supposed to be for. The problem,
as Auerbach has ably shown, is that Obama has consistently made affirmative choices in exactly
the wrong direction on issue after issue for two years now.
See Andrew Bacevich's "Prisoners of War Bob Woodward and All the President's Men" at TomDispatch
for another example of recent bad, in this case criminally insane, choices our president is making.
I repeat, "The willful blindness of some Obama apologists here is rather stunning."
Tom Hickey:
The decent portion of the progressive left is too busy building alternative economies and disconnecting
themselves from the detrimental social and environmental impacts that our present system is generating.
Why even try to make futile efforts to prop up this deteriorating behemoth.
Right. This process began back in the Sixties, when a lot of us realized what was going on
and that the mainstream would never change without a revolution. Revolutions happen spontaneously.
In the meanwhile, thinking and feeling people are continuing to network and create their own underground
economy.
readerOfTeaLeaves:
Standing in front of my computer clapping an ovation for this post� And now, to listen to it
again�.
emca:
Huey Long was an American populist's phenomena.
Sometimes credited with moving FDR more toward the Left, noted for improving the lives of many
of the rabble in Louisiana which faithfully supported him and in general, pulling the state out
of ravages of neo-feudal corporate colonialism through implementation of policy of state investment
in the welfare of the common.
The definitive work on the life of Huey Long is a book by one Harry T. Williams. For anyone
interested in a straightforward (and with Long, this is about as impartial as your going to get)
account of Long's life, I recommend this book.
Here's a quote from a Long speech given in support of re-election of Senator Hattie Caraway
(D-AR)which could still resonate today:
"They've got a set of Republican waiters on one side and a set of Democratic waiters on the
other side, but no matter which set of waiters brings you the dish, the legislative grub is all
prepared in the same Wall Street kitchen."
Long was assassinated by a disgruntled conservative 'aristocrat' (by a doctor no less)
seeking to free Louisiana from its 'demagogue' dictator.
He was though reportedly targeted by several conservative 'death squads' so it all may have
just been a matter of time and indeed Long himself may have understood this.
Their about many good quotes about H. Long, in ending here are a few to humor my indulgence:
"He has not only common ways, but a common, sordid, dirty soul."
and from Drew Pearson epitaph:
"He was a crook - but he had no money; a corrupt politician - but the cost of government
is third-lowest in the country; a demagogue - but he kept his campaign promises; a hillbilly
- but he had no racial prejudices; an ignoramus - but he ran a business administration; a dictator
- but he broadened the suffrage; an opportunist - but he had ideals."
and an observation made while Long was a mere Public Service Commissioner for the state of
Louisiana:
"They don't know Huey Long. They never saw him and would not know him if he stepped off
the train at our station. But they know him in name and you can't make them believe he is not
their defender."
Ellen Anderson:
@ Paul T. The world economy has been propped up by permanent war and, probably, drug dealing
since WWII. War is critical to keeping the current system up and running. You really can't think
that you will be able to end wars without restraining corporate control of the dialogue.
Thanks for that link, Steve from V. That is great to see this dialogue breaking out on financial
blogs.
As Bill Moyers recently discovered "It's over and money won."
Tom Hickey:
Gosh, Marshal, you are sounding like me. Or maybe I am sounding like you. Whatever, The Mussolini
analogy fits.
What we have is what President Eisenhower warned against in his farewell address, a military-industrial
(financial)-government complex aka the corporate state - or what Jamie Galbraith has called "the
predator state" in his book bearing that title.
What you did not mention is that the US runs on military Keynesianism. It is government expenditure
on the military and related operations. often black, that accounts for a major portion of US demand.
Couple that with low tax rates, low inflation due to imports that favor the multinationals but
deprive US workers of jobs, and reduced bargaining power of labor due to business-sponsored legislation
and global labor arbitrage, and you have the recipe for an economy that inflates assets and keeps
worker incomes low while allowing income and wealth to explode toward the top.
The only things needed to complete this picture are t privatizing SS by handing it to Wall
Street, privatizing government institutions thereby creating a toll booth economy, and delivering
health care including Medicare and Medicaid entirely to the insurance industry. This is all on
the table.
Ed:
There is an academic debate about what exactly fascism is. Corporatism is definitely
an important element, and US federal economic policy is increasingly corporatist. But other important
elements include a sort of hypernationalism and military adventurism, along with the silencing
of internal dissent. I'm worried that we will see more of this in the future, but we are not there
yet.
Kevin de Bruxelles makes some important points that got lost as the thread started verring
in some odd directions. First, one thing the Obama administration has demonstrated is that the
federal government may well have become too corrupt and corporate influenced to effectively deliver
"progressive" politics. The Right in the U.S. may have been more correct than they knew when they
argued that well, other countries could run single payer health care systems, but the U.S. couldn't.
The American left may have to make a strategic switch and start arguing for a weaker federal government,
plus no new programs without substantial political and administrative reform. It would look more
like the eighteenth century and nineteenth century left which, after all, included Smith and Ricardo
as well as Marx.
Kevin is correct on his second point. I'm amazed at how insistent commentators on some left-leaning
websites have become at making support for essentially open borders a litmus test. Its pretty
clear that increased immigration, at least in the short term, lowers wages by increasing competition
for employment. I'm not sure why exactly you would want to bring more workers into countries with
high rates of unemployment, nor how that benefits the immigrants. But it seems the only
people even addressing the weakening power of labor are the paleocons.
In 2008 the candidates for President who got substantial support, in terms of winning primaries,
were Obama, Hilary Clinton, McCain, Romney, and Huckabee. Of this group, the also rans were to
the right of the winner on national security policy and civil liberties, and with the possible
exception of Huckabee on economic policy as well. It was a somewhat more restricted choice than
in past presidential elections, but the options keep getting narrower each cycle.
Paul Tioxon:
I referenced Chalmers Johnson, please tell me you've read at least one of his books on the
military industrial complex. If you have, surely you must know that he calls for shutting
down nearly nearly all military bases around the world, including the ridiculous number of carriers
afloat. My response is directed to the specifics I read in MAs essay. I don't have the
time or inclination to bring up every point of the oligarchic political economy every time I address
one piece of writing here. Although I have been accused of digressing on occasion, on NC, I try
to stick at one outrage at a time. I'm glad you are voting, can you please put up the damn law
sign for the candidate of your choice. That's a good start.
Glenn Condell:
Barack Obama is the biggest disappointment in history. Never have so many felt so betrayed
by so few. We have been had. Change, my arse.
There have been worse presidents, Bush for one, and we are a long way from say Idi Amin, but
what did anyone expect of these people? The weight of the world's expectancy, generated largely
by his own soaring rhetoric (tellingly, his signature talent) has simply been ignored and those
he should have been limiting have been set free to enslave us all. He is too intelligent not to
know what he is responsible for.
My candidate for the next best disappointment in history is another who specialised in noble-browed
platitudes to move the masses, one W. Clinton, who is almost as smart as Obama.
Anyone else seeing a pattern here?
Marcello:
He sure strikes me as a Manchurian Candidate. it is a plain and simple answer to his puzzling
behaviour.
funny, but search Obama Manchurian Candidate and you get a lot of hits. Many people are thinking
the same thing
Tom Shillock:
I suspect Obama and his corrupt regime understand that ideologically and policy wise they are
the successors to the Bush Cheney regime. But he and the Democrats are playing a game similar
to the one Bill Clinton played in which they co-op Republican issues and carry water for oligarchs
and plutocrats while pretending otherwise. That enables them to snag oligarch and plutocrat campaign
funding while it forces Republicans into more of a corner, as it were, where they have to adopt
more extreme positions and tactics to distinguish themselves. Promoting Tea Party types shows
they learned something from Karl Rove about the value of clean hands.
The point is that Obama need only vaguely blather on about "change" and use the rhetoric of
social and economic justice in order to be re-elected. As angry as people may get with him the
alternative probably seems less palatable and probably is. If the majority of Americans truly
want change they will have to look to history for guidance: 1776, 1789 and 1917. After all, we
have voted many times since Jimmy Carter yet the financial crises have worsened, inequality has
widened and life has become more financially precarious for most Americans.
Ellen Anderson:
@ Paul T. I understand that this is a financial blog. I read it a lot but don't usually have
anything to contribute. However, today and yesterday Yves raised a question that I do feel qualified
to answer and have tried to do. I agree that we have a duty to vote. However, there is no point
in organizing to fight the military industrial complex or corporatism or whatever you want to
call it.
Perhaps some people will choose to try to reform around the edges, but most of the activist
lefties and other well intentioned citizens I know are busy at the local level where they may
be able to make a real difference.
The exaltation of big business at the expense of the citizen was a central characteristic
of government policy in Germany and Italy in the years before those countries were chewed to bits
and spat out by fascism.
Fascist dictatorships were borne to power in each of these countries by big business and they
served the interests of big business with remarkable ferocity. These facts have been lost to the
popular consciousness in North America. Fascism could therefore return to us, and we will not even
recognize it. Indeed, Huey Long, one of America's most brilliant and most corrupt politicians, was
once asked if America would ever see fascism. His answer was, "Yes, but we will call it anti-fascism."
By exploring the disturbing parallels between our own time and the era of overt fascism, I am
confident that we can avoid the same hideous mistakes. At present, we live in a constitutional democracy.
The tools necessary to protect ourselves from fascism remain in the hands of the citizen. All the
same, I believe that North America is on a fascist trajectory. We must recognize this threat for
what it is, and we must change course.
Consider the words of Thurman Arnold, head of the antitrust division of the US Department of Justice
in 1939: "Germany, of course, has developed within 15 years from an industrial autocracy into a dictatorship.
Most people are under the impression that the power of Hitler was the result of his demagogic blandishments
and appeals to the mob ... Actually, Hitler holds his power through the final and inevitable
development of the uncontrolled tendency to combine in restraint of trade."
Arnold made his point even more clearly in a 1939 address to the American Bar Association: "Germany
presents the logical end of the process of cartelization. From 1923 to 1935 cartelization
grew in Germany until finally that nation was so organized that everyone had to belong either to
a squad, a regiment or a brigade in order to survive. The names given to these squads, regiments
or brigades were cartels, trade associations, unions and trusts. Such a distribution system could
not adjust its prices. It needed a general with quasi-military authority who could order the
workers to work and the mills to produce. Hitler named himself that general. Had it not been Hitler
it would have been someone else."
I suspect that to most readers, Arnold's words are bewildering. Most people today are quite certain
that they know what fascism is. When asked to describe it, however, they will typically tell you
what it was, the assumption being that it no longer exists. Most people associate fascism with concentration
camps and rows of stormtroopers, yet they know nothing of the political and economic processes that
led to these horrible end results.
Before the rise of fascism, Germany and Italy were liberal democracies. Fascism did not swoop
down on these nations as if from another planet. To the contrary, fascist dictatorship was
the end result of political and economic changes these nations underwent while they were still democratic.
In both these countries, economic power became so utterly concentrated that the bulk of all economic
activity fell under the control of a handful of men. Economic power, when sufficiently vast,
becomes by its very nature political power. The political power of big business supported fascism
in Italy and Germany.
Business tightened its grip on the state in both Italy and Germany by means of intricate webs
of cartels and business associations. These associations exercised a very high degree of control
over the businesses of their members. They frequently controlled pricing, supply and the licensing
of patented technology. These associations were private, but were entirely legal. Neither Germany
nor Italy had effective antitrust laws, and the proliferation of business associations was generally
encouraged by government.
This was an era eerily like our own, insofar as economists and businessmen constantly clamored
for self-regulation in business. By the mid 1920's, however, self-regulation had become self-imposed
regimentation. By means of monopoly and cartel, the businessmen had wrought for themselves a "command
and control" economy that effectively replaced the free market. The business associations of Italy
and Germany at this time are perhaps history's most perfect illustration of 18th century economist
and philosopher Adam Smith's famous dictum, "People of the same trade seldom meet together, even
for merriment and diversion, but the conversation ends in a conspiracy against the public, or in
some contrivance to raise prices."
How could the German government not be influenced by Fritz Thyssen, the man who controlled most
of Germany's coal production? How could it ignore the demands of the great I G Farben industrial
trust, controlling as it did most of that nation's chemical production? Indeed, the German nation
was bent to the will of these powerful industrial interests. Hitler attended to reduction of
certain taxes applicable to large businesses, while simultaneously increasing the same taxes as they
related to small business.
Previous decrees establishing price ceilings were repealed such that the cost of living
for the average family was increased. Hitler's economic policies hastened the destruction of Germany's
middle class by decimating small business. Ironically, Hitler pandered to the middle class and they
provided some of his most enthusiastically violent supporters. The fact that he did this while simultaneously
destroying them was a terrible achievement of Nazi propaganda.
Hitler also destroyed organized labor by making strikes illegal. Notwithstanding
the socialist terms in which he appealed to the masses, Hitler's labor policy was the dream come
true of the industrial cartels that supported him. Nazi law gave total control over wages and working
conditions to the employer. Compulsory (slave) labor was the crowning achievement of Nazi labor relations.
Along with millions of people, organized labor died in the concentration camps. The camps were
not only the most depraved of all human achievements, they were a part and parcel of Nazi economic
policy.
Hitler's untermenschen (sub-humans), largely Jews, Poles and Russians, supplied slave labor
to German industry. Surely this was a capitalist bonanza. In another bitter irony, the gates over
many of the camps bore a sign that read "Arbeit Macht Frei" (work shall set you free). I do
not know if this was black humor or propaganda, but it is emblematic of the deception that lies at
the heart of fascism.
The same economic reality existed in Italy between the two world wars. In that country, nearly
all industrial activity was owned or controlled by a few corporate giants, Fiat and the Ansaldo shipping
concern being the chief examples. Land ownership in Italy was also highly concentrated and jealously
guarded. Vast tracts of farmland were owned by a few latifundisti (estate owners). The actual
farming was carried out by a landless peasantry who were locked into a role essentially the same
as that of the sharecropper of the US deep south. As in Germany, the few owners of the nation's capital
assets had immense influence over government.
As a young man, Mussolini had been a strident socialist, and he, like Hitler, used socialist language
to lure the people to fascism. Mussolini spoke of a "corporate" society wherein the energy of the
people would not be wasted on class struggle. The entire economy was to be divided into industry
specific "corporazioni", bodies composed of both labor and management representatives. The
corporazioni would resolve all labor/management disputes, and if they failed to do so, the
fascist state would intervene.
Unfortunately, as in Germany, there laid at the heart of this plan a swindle. The corporazioni,
to the extent that they were actually put in place, were controlled by the employers. Together with
Mussolini's ban on strikes, these measures reduced the Italian laborer to the status of peasant.
Mussolini, the one-time socialist, went on to abolish the inheritance tax, a measure
which favored the wealthy. He decreed a series of massive subsidies to Italy's largest industrial
businesses and repeatedly ordered wage reductions. Italy's poor were forced to subsidize the wealthy.
In real terms, wages and living standards for the average Italian dropped precipitously under fascism.
Even this brief historical sketch shows how fascism did the bidding of big business. The fact
that Hitler called his party the "National Socialist Party" did not change the reactionary nature
of his policies. The connection between the fascist dictatorships and monopoly capital was obvious
to the US Department of Justice in 1939. As of 2005, however, it is all but forgotten.
It is always dangerous to forget the lessons of history. It is particularly perilous to forget
about the economic origins of fascism in our modern era of deregulation. Most Western liberal democracies
are currently held in the thrall of what some call market fundamentalism. Few nowadays question the
flawed assumption that state intervention in the marketplace is inherently bad. As in Italy and Germany
in the 1920s and 1930s, business associations clamor for more deregulation and deeper tax cuts.
The gradual erosion of antitrust legislation, especially in the United States, has encouraged
consolidation in many sectors of the economy by way of mergers and acquisitions. The North
American economy has become more monopolistic than at any time in the post-World War II period. (By
way of example, US census data from 1997 show that the largest four companies in the food, motor
vehicle and aerospace industries control 53.4%, 87.3% and 55.6% of their respective markets. More
than 20% of commercial banking in the US is controlled by the four largest financial institutions,
with the largest 50 controlling more than 60%.
Even these numbers underestimate the scope of concentration, since they do not account for the
myriad interconnections between firms by means of debt instruments and multiple directorships, which
further reduce the extent of competition. Actual levels of US commercial concentration have been
difficult to measure since the 1970s, when strong corporate opposition put an end to the Federal
Trade Commission's efforts to collect the necessary information.)
Fewer, larger competitors dominate all economic activity, and their political will is expressed
with the millions of dollars they spend lobbying politicians and funding policy formulation in the
many right-wing institutes that now limit public discourse to the question of how best to serve the
interests of business. The consolidation of the economy, and the resulting perversion of public policy
are themselves fascistic. I am quite certain, however, that president Bill Clinton was not
worrying about fascism when he repealed federal antitrust laws that had been enacted in the 1930's.
The Canadian Council of Chief Executives is similarly unworried about fascism when it lobbies
the Canadian government to water down our Federal Competition Act. (The 1985 act regulates monopolies,
among other things, and itself represents a watering down of Canada's previous antitrust laws. It
was essentially written by industry and handed to the Brian Mulroney government to be enacted.)
At present, monopolies are regulated on purely economic grounds to ensure the efficient allocation
of goods. If we are to protect ourselves from the growing political influence of big business, then
our antitrust laws must be reconceived in a way that recognizes the political danger of monopolistic
conditions. Antitrust laws do not just protect the marketplace, they protect democracy.
It might be argued that North America's democratic political systems are so entrenched that we
needn't fear fascism's return. The democracies of Italy and Germany in the 1920's were in many respects
fledgling and weak. Our systems will surely react at the first whiff of dictatorship. Or will they?
This argument denies the reality that the fascist dictatorships were preceded by years of reactionary
politics, the kind of politics that are playing out today. Further, it is based on the conceit that
whatever our own governments do is democracy.
Canada still clings to a quaint, 19th century "first past the post" electoral system in which
a minority of the popular vote can and has resulted in majority control of parliament. In the US,
millions still question the legality of the sitting president's first election victory, and the power
to declare war has effectively become his personal prerogative.
Assuming that we have enough democracy to protect us is exactly the kind of complacency that allows
our systems to be quietly and slowly perverted. On paper, Italy and Germany had constitutional, democratic
systems. What they lacked was the eternal vigilance necessary to sustain them. That vigilance is
also lacking today.
Our collective forgetfulness about the economic nature of fascism is also dangerous at a more
philosophical level. As contradictory as it may seem, fascist dictatorship was made possible because
of the flawed notion of freedom that held sway during the era of laissez-faire capitalism in the
early twentieth century. It was the liberals of that era that clamored for unfettered personal and
economic freedom, no matter what the cost to society.
Such untrammeled freedom is not suitable to civilized humans. It is the freedom of the jungle.
In other words, the strong have more of it than the weak. It is a notion of freedom that is inherently
violent, because it is enjoyed at the expense of others. Such a notion of freedom legitimizes each
and every increase in the wealth and power of those who are already powerful, regardless of the misery
that will be suffered by others as a result.
The use of the state to limit such "freedom" was denounced by the laissez-faire liberals of the
early twentieth century. The use of the state to protect such "freedom" was fascism. Just as monopoly
is the ruin of the free market, fascism is the ultimate degradation of liberal capitalism.
In the post-war period, this flawed notion of freedom has been perpetuated by the neo-liberal
school of thought. The neo-liberals denounce any regulation of the marketplace. In so doing, they
mimic the posture of big business in the pre-fascist period. Under the sway of neo-liberalism, Thatcher,
Reagan, Mulroney and George W Bush have decimated labor and exalted capital. (Currently, only 7.8%
of workers in the US private sector are unionized - about the same percentage as in the early 1900s.)
Neo-liberals call relentlessly for tax cuts which, in a previously progressive system, disproportionately
favor the wealthy. Regarding the distribution of wealth, the neo-liberals have nothing to say. In
the result, the rich get richer and the poor get poorer. As in Weimar Germany, the function of the
state is being reduced to that of a steward for the interests of the moneyed elite. All that would
be required now for a more rapid descent into fascism are a few reasons for the average person to
forget that he is being ripped off. The racist hatred of Arabs, fundamentalist Christianity or an
illusory sense of perpetual war may well be taking the place of Hitler's hatred for communists and
Jews.
Neo-liberal intellectuals often recognize the need for violence to protect what they regard as
freedom. Thomas Freidman of the New York Times has written enthusiastically that "the hidden hand
of the market will never work without a hidden fist", and that "McDonald's cannot flourish without
McDonnell Douglas, the designer of the US Air Force F-15 ... ".
As in pre-fascist Germany and Italy, the laissez-faire businessmen call for the state to do their
bidding even as they insist that the state should stay out of the marketplace. Put plainly, neo-liberals
advocate the use of the state's military force for the sake of private gain. Their view of the state's
role in society is identical to that of the businessmen and intellectuals who supported Hitler and
Mussolini. There is no fear of the big state here. There is only the desire to wield its power. Neo-liberalism
is thus fertile soil for fascism to grow again into an outright threat to our democracy.
Having said that fascism is the result of a flawed notion of freedom, I respectfully suggest that
we must re-examine what we mean when we throw around the word "freedom". We must conceive of freedom
in a more enlightened way. Indeed, it was the thinkers of the Enlightenment who imagined a balanced
and civilized freedom that did not impinge upon the freedom of one's neighbor. Put in the simplest
terms, my right to life means that you must give up your freedom to kill me. This may seem terribly
obvious to decent people. Unfortunately, in our neo-liberal era, this civilized sense of freedom
has, like the dangers of fascism, been all but forgotten.
Paul Bigioni is a lawyer practicing in Markham, Ontario. He is a commentator on trade
and political issues. This article is drawn from his work on a book about the persistence of fascism.
What is American Corporatism? By
Robert Locke FrontPageMagazine.com | Friday, September 13, 2002
We are probably heading into some economic heavy weather which will spur needed debate on what's
right and wrong with our economy. This will require our being clear about what kind of economy we
really have. I have mentioned before that we increasingly live not in a capitalist society but in
a corporatist one, and I would like to flesh out this notion.
What is corporatism? In a (somewhat inaccurate) phrase, socialism for the bourgeois. It has the
outward form of capitalism in that it preserves private ownership and private management, but with
a crucial difference: as under socialism, government guarantees the flow of material goods,
which under true capitalism it does not. In classical capitalism, what has been called the "night-watchman"
state, government's role in the economy is simply to prevent force or fraud from disrupting the autonomous
operation of the free market. The market is trusted to provide. Under corporatism, it is not, instead
being systematically manipulated to deliver goods to political constituencies. This now includes
basically everyone from the economic elite to ordinary consumers.
Unlike socialism, corporatism understands that direct government ownership of the means of production
does not work, except in the limiting case of infrastructure.1 But it does
not represent a half-way condition between capitalism and socialism. This is what the West European
nations, with their mixed economies in which government owned whole industries, tried to create until
Thatcherism. Corporatism blends socialism and capitalism not by giving each control of different
parts of the economy, but by combining socialism's promise of a government-guaranteed flow of material
goods with capitalism's private ownership and management.
What makes corporatism so politically irresistible is that it is attractive not just to the mass
electorate, but to the economic elite as well. Big business, whatever its casuists at the Wall Street
Journal editorial page may pretend, likes big government, except when big government gets greedy
and tries to renegotiate the division of spoils. Although big business was an historic adversary
of the introduction of the corporatist state, it eventually found common ground with it. The first
thing big business has in common with big government is managerialism. The technocratic manager,
who deals in impersonal mass aggregates, organizes through bureaucracy, and rules through expertise
without assuming personal responsibility, is common to both. The second thing big business likes
about big government is that it has a competitive advantage over small business in doing business
with it and negotiating favors. Big government, in turn, likes big business because it is manageable;
it does what it is told. It is much easier to impose affirmative action or racial sensitivity training
on AT&T than on 50,000 corner stores. This is why big business has become a key enforcer of political
correctness. The final thing big business likes about big government is that, unlike small government,
it is powerful enough to socialize costs in exchange for a share of the profits.
The key historical moments in the development of American corporatism can be easily traced. It
got its start from the realization, during the Progressive period around 1900, that the night-watchman
state was too weak to make the large corporate actors of the economy play fair. The crucial premise
that enters here is that the capitalist economy cannot be trusted to be self-regulating, as it previously
had been. This collapse of trust was also implicit in the 1913 creation of the Federal Reserve system.
What the Great Depression did was destroy a second kind of trust: that the economy would reliably
deliver material goods without government intervention. With these two different kinds of trust gone,
corporatism becomes not only worthwhile, but necessary. Crucially, it becomes psychologically
necessary, independently of whether government can deliver on its promises, because people instinctively
turn to government as their protector.
Anyone who is serious about getting rid of corporatism must explain how they are going to restore
these two kinds of trust or persuade people to live without them. In particular, it is almost certainly
useless, as verified by the fact that government has grown under every postwar Republican administration,
to try to nibble away at big government without renegotiating the social contract that underlies
it. If we don't have a plan to renegotiate this social contract, we must face the fact that the electorate
will demand that it be respected. Newt Gingrich, who thought that the failure of Clinton's health
plan signified the electorate's rejection of "socialism," learned this the hard way.
Clearly, the New Deal was the biggest jump forward into corporatism, though this was not fully
understood at the time. Many people, both pro and con, misunderstood it as a move towards socialism.2
As is well known, Roosevelt was an empiricist, not a systematic thinker, and many elements of the
New Deal that were tried, such as the notorious National Recovery Administration, were rightly discarded.
But the fundamental proposition, that government should take responsibility for ensuring the flow
of material goods to the people, was rapidly embraced by the American people, which continues to
embrace it today whether it admits it or not. When people demand that the government "do something"
about a falling stock market, they are playing at capitalism while practicing corporatism.
The fundamental essence of corporatism is not technocratic but moral: what does government have
the responsibility to do? What do people have the right to demand be done for them?
The economic Left likes corporatism for three reasons:
It satisfies its lust for power.
It makes possible attempts to redistribute income.
It enables them to practice #2 while remaining personally affluent.
The economic Right likes corporatism for three different reasons:
It enables them to realize capitalist profits while unloading some of the costs and risks
onto the state.
The ability to intertwine government and business enables them to shape government policy
to their liking.
They believe the corporatist state can deliver social peace and minimize costly disruptions.
This process has been described as "socializing the losses, privatizing the profits" by its
leftist critics, who also call parts of it corporate welfare. What they don't get is that
in a society which grants the fundamental premise that government should take care of everybody,
government will, and big business is part of "everybody." Most economic arguments today are not between
a socialistic ideal and a capitalistic one, as many seem to believe, but are arguments within the
corporatist consensus. This consensus is incapable of gelling into a unitary consensus because it
is supported by the two sides for different reasons. There is also no public, coherent ideology of
corporatism because almost no-one is willing to admit they believe in it.
Let's look at some specific examples of corporatism:
The Export-Import Bank. This government agency helps finance exports of American products.
The aim, laudable enough, is to create jobs in the US. But there is still the problem that doing
this requires the government to consume capital, which might have created more jobs, (or just
more wealth) if it had been allocated elsewhere. So this is classic corporatism: government allocating
capital to private industry on the basis of political favoritism.
Agricultural price-supports. Contrary to myth, most of the money goes to agribusiness, not
small farmers.
Industrial bailouts, like the recent one of the airlines. People do not trust the market to
provide the airline service they think they "need." The truth is this country has more carriers
than the market can support and a few should be allowed to die. No-one who really believes in
free-market economics accepts the argument that jobs can be saved in the long run in this fashion.
Corporate bankruptcy law. This law assigns an artificial value, not supported by economics,
to keeping dying companies alive, rather than letting the carcasses of competition's losers nourish
the winners. It is responsible, for example, for preventing a needed cull of the airline business
by letting Continental Airlines pass through its protections not once but twice.
Tariffs, quotas, and other trade restrictions. These transfer wealth from consumers to producers
in the affected industries, whatever their other possible merits.
Affirmative action is generally viewed as a social-policy question rather than an economic-policy
one, but it fits neatly into the corporatist model: government forces private industry to distribute
jobs to a favored political constituency. If people really believed in markets, they would realize
that irrational discrimination imposes a cost on employers, who therefore already have an incentive
not to engage in it.
Fannie Mae, the government agency which raises money for mortgage loans in the private capital
markets. This agency has deliberately been spinning out loans to sub-par borrowers who are doomed
to default on them. It has become a major prop holding up real-estate prices, and is thus a key
culprit in the ongoing mortgage bubble. Conservatives accept it on the grounds that home ownership
makes people more conservative. But this may not be true forever if private ownership of housing
becomes a public entitlement. This is part of an ongoing phenomenon that corporatism helps to
drive: the erosion of the determination of political preferences by the ownership of property.3
Sallie Mae, the government agency which supervises student loans. The government has a system
of directly-financed public universities, but is has also in effect annexed private universities.
Cleverly, it uses a relatively small amount of public money to package the flow of a much larger
amount of private capital to tuition. The principal problem with this is that it has become a
subsidy machine for the spiraling cost of higher education. There is also the problem that any
institution receiving federal funds becomes susceptible to regulations that otherwise wouldn't
be legal. Bribes-if-you-do are a much less disruptive means of manipulating behavior than sanctions-if-you-don't,
and corporatism hates disruption and loves business as usual.4 One way
to interpret corporatism is as a systematic way for government to distribute bribes for submission
to its authority.
In local government, corporatism is principally a matter of real estate. Let's take New York
as an example, just because I know it best and the pattern is clearest here, though similar dynamics
work in other locales to a greater or lesser degree. Basically, real estate development here has
become so over-regulated and over-taxed that it is virtually impossible to do profitably without
government help. Government is aware that it has strangled development, but still wants it to
occur because voters want jobs, campaign contributors want their projects, and projects create
patronage opportunities for politicians. Therefore, government selectively lifts the burden of
taxation and regulation on certain projects to push them into the black. It does this with tax
abatements, loan guarantees, zoning changes, condemnations, outright subsidies, tax-exempt bond
issues, exemption from regulations, and selective public infrastructure investments. As a result,
only projects with political support can happen, and every skyscraper is a monument to the political
deals that enabled it to get built. The result is capitalist in the sense of being privately owned,
but it is not a free market. Government is expected by developers to keep a steady flow of profits
going (while keeping politically-unconnected competitors out of the game.) It is expected by construction
unions to keep a steady flow of construction jobs. It is expected by the public to deliver shiny
new skyscrapers full of jobs.
In science and technology, corporatism principally takes the form of federal government financing
of research expenditures whose value is difficult for the private sector to capture on its own.
Government pays for universities to provide industry with the raw feedstock of new discoveries
that can be commercialized. State governments have entered this game on a lesser scale. Tax credits
for research and development may also be interpreted as a public subsidy.
In the capital markets, the quintessential corporatist institution is the Federal Reserve
Bank. Legally, it is not technically a government agency at all but a cartel of private banks.
Prior to 1913, the maintenance of a viable capital market in the U.S. was not a government responsibility.5
From the 30's to the 70's, the Fed tried to institute the grand corporatist project of Keynesianism,
but abandoned it when inflation proved it unworkable. Nevertheless, the responsibilities of the
Fed have tended to grow as people expect it, for example, to bail out a falling stock market with
cheap credit, as I have mentioned before.
Bankers are quite well aware that they can make speculative loans to financially weak nations
and count on being bailed out by the government if anything goes wrong. Naturally, this creates
a moral hazard, not to mention a misallocation of capital. But given that the Left wants to see
capital allocated to the Third World, the Right wants banks to be profitable, and the public fears
a crash, the bankers can always count on a bailout.
One can see how corporatism is likely to expand in the future. The privatization of Social Security
is off for now, but remains inevitable, simply because there is no sustainable way to provide for
a future income stream other than saving money now. But the stock market decline of the past few
years has destroyed public trust that this market will always provide a reliable store of value,
meaning that people will inevitably turn to government to make it provide one. What form this
will take, cannot be predicted, but any privatization of Social Security will be accompanied by some
governmental mechanism to stabilize investments. At best, this may mean diversification requirements.
At worst, it may mean some horrible politicization of the capital markets.
The concept of corporatism provides a good way to analyze the failure of HillaryCare. With its
attempt to involve private insurance companies, this plan clearly made a (clumsy) attempt to conform
to the corporatist model. It was supported by big companies like GM, which saw it as a way to offload
its huge health-care costs. Fundamentally, I think it would have worked if it hadn't been such an
arrogant, secretive, heavy-handed, all-at-once undertaking. We are gradually getting the corporatist
equivalent of socialized medicine in this country anyway. Corporatized medicine will mean nominally
private health plans for the employed that are so heavily regulated in what they can charge and what
they must provide that they might as well be run by government. It will mean requirements for all
businesses to give their employees health coverage (something big business will love because it will
destroy a lot of their small-business competitors.) It will mean regulation of drug prices, which
will eventually make drug companies wards of the state. Lastly, Medicare and Medicaid will expand,
with the help of state plans, to cover whomever is left, with a tacit subsidy to emergency rooms
to cover the last dregs.
As I said, all these can be viewed as ways in which the corporatist state buys people's cooperation.
But one cannot play this game without becoming susceptible to it, so that people buy the state's
cooperation, too. Naturally, this produces the partly-valid complaint that we have a government for
sale to the highest bidder. But in a society where people, institutions, and social groups are politically
for sale to the highest bidder, what else could one possibly expect?
Both Right and Left like corporatism in practice and are very cozy with it. But they are also
ambivalent about it in theory, because it contradicts many of their cherished ideological beliefs.6
At the level of ideological self-characterization, neither side has fully grasped what corporatism
is nor can quite bring itself to admit that it endorses it. Thus in its utterances, the intellectual
Left is still reflexively anti-corporate and the Right anti-government. Part of the twisted genius
of Bill Clinton was that he came closer to admitting we live in a corporatist society than any previous
president. Bush, who made his personal fortune off a public-private deal concerning a stadium, is
just as good at playing the game in practice, but on the ideological plane he mistakenly thinks that
what the corporatist synthesis takes from socialism is "compassion." Hence his painfully sincere
efforts to be politically correct and nice about everybody, since he intuitively grasps that Americans
will not accept the rhetoric of pure capitalism.
Realizing that our society is corporatist is the key to undoing many conservative misunderstandings.
For example, we tend to be puzzled when the rich support the Left, which under classical capitalism
they generally didn't. But in a society where government takes care of business, they often have
a lot to gain from big government. Not to mention the fact that whole classes of the wealthy, i.e.
lawyers, doctors, lobbyists, environmental consultants, defense contractors and others, make their
money either helping people deal with government or are indirectly funded by government. Ownership
of property used to make people conservative because they intuitively grasped that the means of the
conservation of property were bound up with the means of the conservation of everything else: religious
orthodoxy to social mores to cultural tradition to the Constitution. But now that corporatism has
co-opted threats to property ownership, they don't feel the need for these things anymore.
I consider it highly unlikely that corporatism can be overthrown, though objectionable parts of
it can certainly be fought. I will discuss what it means to be conservative in a corporatist environment
in a future article. The key thing for us to understand is that many of our assumptions about what
furthers our cause and what doesn't were derived under the conditions of a more capitalist society
and increasingly no longer hold.
1 This is not to say that government is necessarily the most efficient
owner of infrastructure; I am well aware of the arguments for private toll roads and investor-owned
utilities. It's just that, compared with the state-owned steel mills and supermarkets of pre-Thatcher
Europe or the Soviet Union, they are not obvious failures. The quality, cost and productivity of
publicly-owned utilities compares acceptably to privately-owned ones. And privatization of natural
monopolies has problems of its own, as we saw in the California electricity crisis, even if these
problems are caused by politics and do not refute the free-market ideal itself. 2 The final irony of corporatism is that it represents the triumph of the one 20th-Century
ideology that is considered so utterly discredited that most educated people don't even bother to
learn what it believed about economics: fascism. The exact means by which the end was carried out
were very different in Mussolini's Italy, Franco's Spain, Hitler's Germany, or Tojo's Japan, and
the manner was occluded by a lot of violence caused by other things, but the fundamental dynamic
is the same as here: government assumed responsibility for guaranteeing the flow of material goods
by private means after public confidence in the market's ability to do this collapsed. The fascists
did it to avert communism. We did it for less desperate reasons, but the idea is similar. (The German
and Japanese Nazis were not fascists, strictly speaking, but the core of their economics, separate
from their use of plunder, was similar. See my article on what the
Nazis
were really about.) 3 See my review of BoBos in Paradise.
The Republican share of the rich vote is declining. 4 The political class loves corporatism because it enables them to establish themselves
in stable, profitable brokerage-relationships in which they manage the exchange of favors between
government and the public in exchange for political support. This is a much easier way to stay in
office than focusing their efforts on contentious issues and the public's fickle opinions about them. 5 This responsibility devolved in practice onto the Morgan Bank on Wall Street, which
organized ad-hoc groups of banks to stabilize markets and enforce standards when needed. See the
fascinating account in Ron Chernow's The House of Morgan. 6 The recently faddish book
Empire is an attempt to understand global corporatism from a neo-Marxist point of view. Although
rich in hit-or-miss insights, its Marxist assumptions prevent it from getting it right. Marxists
have been observing the emergence of corporatism, and desperately trying to update Marxism to accommodate
it, for a long time now, the most philosophically interesting attempt being that of J�rgen Habermas
in
Legitimation Crisis. Such attempts can only be accurate insofar as they pass out of Marxism
entirely.
Friday, 9 December 2005, 4:16 pm Opinion: Douglas Mattern
The Decline Of Democracy And Rise Of Plutocracy And Corporate Rule
We can have democracy in this country, or we can have great
wealth concentrated in the hands of a few, but we can't have both - Supreme Court Justice Louis B. Brandeis
It's difficult to comprehend how the political leadership in the United States of America has
degenerated from the brilliant leadership of Franklin Roosevelt and the inspiration of John Kennedy
to the current administration of Bush the Second.
The U.S. has sadly declined from the noble democratic ideals so eloquently expressed by President
Roosevelt on the role of government: "The pace of our progress is not whether we add more to the
abundance of those who have much, it is whether we provide enough to those who have too little."
This ideal has degraded to a "greed is good" philosophy and the Ronald Reagan drivel that "government
is the problem." Add the many politicians that are bought by corporate America through campaign donations
and the result is legislation that is transforming the U.S. from a democracy to a plutocracy where
the rich rule.
And today we do not have both. The richest 1 percent of Americans now have more income that the
bottom 96 million. The richest 1 percent owns nearly half the country's wealth. The top 10 percent
owns 80 percent of the wealth. The Census Bureau reports the gap between rich and poor is the largest
in 75 years, just before the Great Depression.
Moreover, it's getting worse under the woeful leadership of the Bush Administration. Last year,
for example, another one million Americans were added to the poverty role that now totals 37 million
of our citizens. As the number of people in poverty rises, so does the number of billionaires in
this country, over 225 and increasing.
The 2005 Human Development Report (HDR) that is issued annually by the United Nations and covers
all 191 Member States shows the U.S. ranks 10th among the world's nations in the category that combines
health quality, education, and standard of living. In the category of life expectancy the U.S. ranks
29th. In the poverty index involving the richest 18 countries, the U.S. ranks at the bottom in 17th
place. This is a disgraceful condition in the world's richest country and a betrayal of the hard-fought
struggles for democracy and equality waged in past decades by American workers.
The globalization free-market policy led by the U.S. has also produced gross inequality in many
parts of the world. The HDR states: "Large parts of the Developing World are being left behind."
and further, "human development gaps between rich and poor countries, already large, are widening."
The HDR states: "For all of the highly visible achievements, the reach of globalization and scientific
advance falls far short of ending the unnecessary suffering, debilitating diseases and death from
preventable illness that blight the lives of the world's poor people."
On the global level, 20 percent of the population holds over 75 percent of the wealth.
A few hundred billionaires have compiled as much wealth as half of humanity. This inequality is the
source of great unrest and protest with the most recent example at the Fourth Summit of the Americas
held in Argentina with most of the hostility directed at Bush the Second.
Poverty is the parent of revolution and crime - Aristotle
Academician Bernard Poirot-Delpech wrote in the French newspaper Le Monde a few years ago: "The
temptation is to shut ourselves off,cover our eyes and applaud the use of force, but the tide of
the poor keeps coming, wave after wave, each time stronger and stronger. The Third World War has
begun, waged by the rich against all others."
Globalization should mean working together to create a just world community for the 21st century
and not waging a kind of economic warfare to hoard the world's wealth and resources for a minority
that also has no consideration for leaving precious resources for future generations.
What we have is not globalization for the many, but corporate globalization to serve the interests
of a few rich governments, the multinationals, and in the process making the rich fabulously richer.
Corporate globalization is undemocratic and destructive. It is also an environmental nightmare
due to its dependency on mass consumption and waste, along with turning our planet into a giant marketplace
where everything is for sale to the highest bidder.
We must achieve globalization that is democratic and serves all the people with new economic models,
and where it would be unthinkable for a few billionaires to possess as much wealth a billion poor
people.
In addition to education and peaceful protests against unjust free- market policies and the mind-numbing
"let the market rule" mentality, we need to find, support, and elect a new kind of political leadership
with idealism and a democratic vision of the future. Senator William Fulbright described this kind
of leadership in his book, The Price of Power: "The age of warrior kings and of warrior presidents
has passed. The nuclear age calls for a different kind of leadership-a leadership of intellect, judgment,
tolerance and rationality, a leadership committed to human values, to world peace, and to the improvement
of the human condition�The attributes upon which we must draw are the human attributes of compassion
and understanding between cultures."
Such a change would bring people back to the voting booth and help rescue our democracy here and
the world community. It's a non-violent imperative revolution, and it's time to begin.
*************
Douglas Mattern is president of the Association of World Citizens, a San Francisco based international
peace organization with branches in 30 countries, and author of the forthcoming book "Looking for
Square Two - Moving From War and Violence to Global Community" published by American Book Publishing
Co.
Hitler was
a Leftist (http://constitutionalistnc.tripod.com/hitler-leftist/) - an extensive case
in favor of referring to Hitler as a Left-winger by Dr. John Joseph Ray
"Myth: Hitler was a leftist"
(http://www.huppi.com/kangaroo/L-hitler.htm) - an extensive case against portraying Hitler
as a Left-winger by Steve Kangas
Hitler the Socialist (http://willysutton.blogspot.com/2004/03/ssalistinn-adolf-hitler.html)
- The socialist remarks of Hitler and other Nazis
What Fascism Is & Isn't
(http://www.spiritone.com/~gdy52150/chpt1.htm) - with references to both Fascism and Nazism,
explaining why they are not Leftist by Glen Yeadon
"Hitler's
Boyhood" (http://www.third-reich-books.com/x-582-germanys-hitler.htm)- excerpt from
contemporary Hitler biography about his boyhood
By Juan Gonzalez,
Amy Goodman,
Democracy
Now! | Interview and Video
Adorno, Theodor W., "The Meaning of Working Through the Past," Guild and
Defense, trans. Henry W. Pickford, (Cambridge: Harvard University Press, 2010), pp. 213-214.
This
theme has been addressed with great intelligence by a number of writers, For example, John Ralston
Saul, The Unconscious Civilization (Toronto, House of Anansi Press, 2005); Sheldon S. Wolin,
Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism, (Princeton,
Princeton University Press, 2008); Charles Derber and Yale Magrass, "History's
Magic Mirror: America's Economic Crisis and the Weimar Republic of Pre-Nazi Germany," Truthout
(November 1, 2012); and Norman Pollack, "Toward
a Definition of Fascism," CounterPunch (August 6, 2013).
Cited in Elisabeth Young-Bruehl, Why Arendt Matters, (Integrated Publishing Solutions, 2006),
pp. 38-39.
On the rise of the surveillance state, see Heidi Boghosian, Spying on Democracy (San Francisco,
City Lights Books, 2013) and Zygmunt Bauman and David Lyon, Liquid Surveillance: A Conversation
(Cambridge, UK: Polity Press, 2013).
Leo Lowenthal, "Atomization of Man," False Prophets: Studies
in Authoritarianism, (New Brunswick, NJ: Transaction Books, 1987), pp. 184-185.
This theme is brilliantly
explored in Michael Halberstam, Totalitarianism and the Modern Conception of Politics (New
Haven: Yale University Press, 1999).
Manfred B. Steger and Ravi K. Roy, Neoliberalism: A Very Short Introduction, (Oxford
University Press, 2010), p. 137.
I take up this issue in detail in Henry A. Giroux, Youth in Revolt: Reclaiming a Democratic Future
(Boulder: Paradigm Publishers, 2013) and Twilight of the Social: Resurgent Publics in the Age
of Disposability (Boulder: Paradigm Publishers, 2012).
The Last but not LeastTechnology is dominated by
two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt.
Ph.D
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