In 1980, the states subsidized 70% of the cost per student. Today it is less than 30% and the amount of grants and scholarships
has likewise declined. Tax cuts for rich people and conservative hatred for education are the biggest problem.
Notable quotes:
"... "easy" student loans are a subsidy to colleges, ..."
"... 1965 median family income was $6900, more than 200% of the cost of a year at NU. Current median family income is about 75% of a year at NU. ..."
"... Allowing young adults to avoid challenging and uncomfortable and difficult subjects under the guise of compassion is the enemy of meritocracy. Financial illiteracy is the enemy of meritocracy. ..."
"... The specific market dynamics of health care expenditures are obviously different, but as categories of expenses they have some things in common. First, both are very expensive relative to most other household expenditures. Second, unlike consumer merchandise, neither lends itself very well to cost reduction via offshoring or automation. So in an economy where many consumer prices are held down through a corresponding suppression of real wage growth, they consume a correspondingly larger chunk of the household budget. ..."
"... JUST HAD AN IDEA THAT MIGHT LIMIT THE DAMAGE OF THESE PHONEY ONLINE COLLEGES (pardon shouting, but I think it's justified): ..."
"... of-paying) IF a built for that purpose government agency APPROVES said loan. What do you think? ..."
"... Kaplan Ed is among the worst of the worst of internet federal loan and grant sucking diploma mills. ..."
"... Because every event in today's economy is the wish of the wealthy. Do you see why they suddenly wish to deeply educate the proles? ..."
Thomas Piketty on a theme I've been hammering lately, student debt is too damn high!:
Student Loan Debt Is the Enemy
of Meritocracy in the US: ...the amount of household debt and even more recently of student debt in the U.S. is something
that is really troublesome and it reflects the very large rise in tuition in the U.S. a very large inequality in access to education.
I think if we really want to promote more equal opportunity and redistribute chances in access to education we should do something
about student debt. And it's not possible to have such a large group of the population entering the labor force with such a big
debt behind them. This exemplifies a particular problem with inequality in the United States, which is very high inequality and
access to higher education. So in other countries in the developed world you don't have such massive student debt because you
have more public support to higher education. I think the plan that was proposed earlier this year in 2015 by President Obama
to increase public funding to public universities and community college is exactly justified.
This is really the key for higher growth in the future and also for a more equitable growth..., you have the official discourse
about meritocracy, equal opportunity and mobility, and then you have the reality. And the gap between the two can be quite troublesome.
So this is like you have a problem like this and there's a lot of hypocrisy about meritocracy in every country, not only in the
U.S., but there is evidence suggesting that this has become particularly extreme in the United States. ... So this is a situation
that is very troublesome and should rank very highly in the policy agenda in the future in the U.S.
DrDick -> Jeff R Carter:
"college is heavily subsidized"
Bwahahahahahahaha! *gasp*
In 1980, the states subsidized 70% of the cost per student. Today it is less than 30% and the amount of grants and scholarships
has likewise declined. Tax cuts for rich people and conservative hatred for education are the biggest problem.
cm -> to DrDick...
I don't know what Jeff meant, but "easy" student loans are a subsidy to colleges, don't you think? Subsidies don't
have to be paid directly to the recipient. The people who are getting the student loans don't get to keep the money (but they
do get to keep the debt).
DrDick -> to cm...
No I do not agree. If anything, they are a subsidy to the finance industry (since you cannot default on them). More basically,
they do not make college more affordable or accessible (his point).
cm -> to DrDick...
Well, what is a subsidy? Most economic entities don't get to keep the money they receive, but it ends up with somebody else
or circulates. If I run a business and somebody sends people with money my way (or pays me by customer served), that looks like
a subsidy to me - even though I don't get to keep the money, much of it paid for operational expenses not to forget salaries and
other perks.
Just because it is not prearranged and no-strings (?) funding doesn't mean it cannot be a subsidy.
The financial system is involved, and benefits, whenever money is sloshing around.
Pinkybum -> to cm...
I think DrDick has this the right way around. Surely one should think of subsidies as to who the payment is directly helping.
Subsidies to students would lower the barrier of entry into college. Subsidies to colleges help colleges hire better professors,
offer more classes, reduce the cost of classes etc. Student loans are no subsidy at all except to the finance industry because
they cannot be defaulted on and even then some may never be paid back because of bankruptcies.
However, that is always the risk of doing business as a loan provider. It might be interesting to assess the return on student
loans compared to other loan instruments.
mrrunangun -> to Jeff R Carter...
The cost of higher education has risen relative to the earning power of the student and/or the student's family unless that
family is in the top 10-20% wealth or income groups.
50 years ago it was possible for a lower middle class student to pay all expenses for Northwestern University with his/her
own earnings. Tuition was $1500 and room + board c $1000/year. The State of Illinois had a scholarship grant program and all you
needed was a 28 or 29 on the ACT to qualify for a grant that paid 80% of that tuition. A male student could make $2000 in a summer
construction job, such as were plentiful during those booming 60s. That plus a low wage job waiting tables, night security, work-study
etc could cover the remaining tuition and expense burden.
The annual nut now is in excess of $40,000 at NU and not much outside the $40,000-50,000 range at other second tier or elite
schools.
The state schools used to produce the bedrock educated upper middle class of business and professional people in most states
west of the seaboard. Tuition there 50 years ago was about $1200/year and room and board about $600-800 here in the midwest. Again
you could put yourself through college waiting tables part-time. It wasn't easy but it was possible.
No way a kid who doesn't already possess an education can make the tuition and expenses of a private school today. I don't
know what the median annual family income was in 1965 but I feel confident that it was well above the annual nut for a private
college. Now it's about equal to it.
mrrunangun -> to mrrunangun...
1965 median family income was $6900, more than 200% of the cost of a year at NU. Current median family income is about
75% of a year at NU.
This allows a reader to understand how the graph was constructed and to work with the graph.
ilsm:
The US spends half the money the entire world spends on war, that is success!
Massive student debt, huge doses poverty, scores of thousands [of annual neglect related] deaths from the wretched health care
system etc are not failure!
tew:
Poor education is the enemy of meritocracy. Costly, bloated administrations full of non-educators there to pamper and pander
to every possible complaint and special interest - that is the enemy of meritocracy.
Convincing kids to simple "follow their dreams" regardless of education cost and career potential is the enemy of meritocracy.
Allowing young adults to avoid challenging and uncomfortable and difficult subjects under the guise of compassion is the enemy
of meritocracy. Financial illiteracy is the enemy of meritocracy.
Manageable student debt is no great enemy of meritocracy.
cm -> to tew...
This misses the point, aside frm the victim blaming. Few people embark on college degrees to "follow their dream", unless the
dream is getting admission to the middle class job market.
When I was in elementary/middle school, the admonitions were of the sort "if you are not good in school you will end up sweeping
streets" - from a generation who still saw street cleaning as manual labor, in my days it was already mechanized.
I estimate that about 15% or so of every cohort went to high school and then college, most went to a combined vocational/high
school track, and some of those then later also went college, often from work.
This was before the big automation and globalization waves, when there were still enough jobs for everybody, and there was
no pretense that you needed a fancy title to do standard issue work or as a social signal of some sort.
Richard H. Serlin:
Student loans and college get the bulk of the education inequality attention, and it's not nearly enough attention, but it's
so much more. The early years are so crucial, as Nobel economist James Heckman has shown so well. Some children get no schooling
or educational/developmental day care until almost age 6, when it should start in the first year, with preschool starting at 3.
Others get high quality Montessori, and have had 3 years of it by the time they enter kindergarten, when others have had zero
of any kind of education when they enter kindergarten.
Some children spend summers in high quality summer school and educational programs; others spend three months digressing and
learning nothing. Some children get SAT prep programs costing thousands, and high end educational afterschool programs; others
get nothing after school.
All these things should be available in high quality to any child; it's not 1810 anymore Republicans, the good old days of
life expectancy in the 30s and dirt poverty for the vast majority. We need just a little more education in the modern world. But
this also makes for hugely unequal opportunity.
One needs to differentiate between costs (total dollars spent per student credit hour or degree, or whatever the appropriate
metric is) and price (what fraction of the cost is allocated to the the end-user student).
Note that the level of state funding impacts price, not cost; that discussion is usually about cost shifting, not cost reduction.
I'd say that the rate of increase in costs is, more or less, independent of the percent of costs borne by the state. You can
indeed see this in the increase in private schools, the state funding is small/nil (particularly in schools without material endowments,
where actual annual fees (prices) must closely actual match annual costs). Price discounts and federal funding may both complicate
this analysis.
I think much more effort should be spent on understanding and controlling costs. As with health care, just saying "spend more
money" is probably not the wise or even sustainable path in the long term.
Costs were discussed at some length here a year(?) or so ago. There is at least one fairly comprehensive published analysis
of higher education costs drivers. IIRC, their conclusion was that there were a number of drivers - its not just food courts or
more administrators. Sorry, don't recall the link.
Syaloch -> to cm...
Actually for my first job out of college at BLS, I basically was hired for my "rounded personality" combined with a general
understanding of economic principles, not for any specific job-related skills. I had no prior experience working with Laspeyres
price indexes, those skills were acquired through on-the-job training. Similarly in software development there is no degree that
can make you a qualified professional developer; the best a degree can do is to show you are somewhat literate in X development
language and that you have a good understanding of general software development principles. Most of the specific skills you'll
need to be effective will be learned on the job.
The problem is that employers increasingly want to avoid any responsibility for training and mentoring, and to shift this burden
onto schools. These institutions respond by jettisoning courses in areas deemed unnecessary for short-term vocational purposes,
even though what you learn in many of these courses is probably more valuable and durable in the long run than the skills obtained
through job-specific training, which often have a remarkably short shelf-life. (How valuable to you now is all that COBOL training
you had back in the day?)
I guess the question then is, is the sole purpose of higher education to provide people with entry-level job skills for some
narrowly-defined job description which may not even exist in a decade? A lot of people these days seem to feel that way. But I
believe that in the long run it's a recipe for disaster at both the individual and the societal level.
Richard H. Serlin -> to Observer...
"Observer"
The research is just not on you side, as Heckman has shown very well. Early education and development makes a huge difference,
and at age 5-7 (kindergarten) children are much better off with more schooling than morning to noon. This is why educated parents
who can afford it pay a lot of money for a full day -- with afterschool and weekened programs on top.
Yes, we're more educated than 1810, but I use 1810 because that's the kind of small government, little spending on education
(you want your children educated you pay for it.) that the Republican Party would love to return us to if they thought they could
get away with it. And we've become little more educated in the last 50 years even though the world has become much more technologically
advanced.
Judging both from comments on this blog and from some of my mail, a significant number of Americans believe that the answer
to our health care problems - indeed, the only answer - is to rely on the free market. Quite a few seem to believe that this view
reflects the lessons of economic theory.
Not so. One of the most influential economic papers of the postwar era was Kenneth Arrow's "Uncertainty and the Welfare Economics
of Health Care," * which demonstrated - decisively, I and many others believe - that health care can't be marketed like bread
or TVs. Let me offer my own version of Arrow's argument.
There are two strongly distinctive aspects of health care. One is that you don't know when or whether you'll need care - but
if you do, the care can be extremely expensive. The big bucks are in triple coronary bypass surgery, not routine visits to the
doctor's office; and very, very few people can afford to pay major medical costs out of pocket.
This tells you right away that health care can't be sold like bread. It must be largely paid for by some kind of insurance.
And this in turn means that someone other than the patient ends up making decisions about what to buy. Consumer choice is nonsense
when it comes to health care. And you can't just trust insurance companies either - they're not in business for their health,
or yours.
This problem is made worse by the fact that actually paying for your health care is a loss from an insurers' point of view
- they actually refer to it as "medical costs." This means both that insurers try to deny as many claims as possible, and that
they try to avoid covering people who are actually likely to need care. Both of these strategies use a lot of resources, which
is why private insurance has much higher administrative costs than single-payer systems. And since there's a widespread sense
that our fellow citizens should get the care we need - not everyone agrees, but most do - this means that private insurance basically
spends a lot of money on socially destructive activities.
The second thing about health care is that it's complicated, and you can't rely on experience or comparison shopping. ("I hear
they've got a real deal on stents over at St. Mary's!") That's why doctors are supposed to follow an ethical code, why we expect
more from them than from bakers or grocery store owners.
You could rely on a health maintenance organization to make the hard choices and do the cost management, and to some extent
we do. But HMOs have been highly limited in their ability to achieve cost-effectiveness because people don't trust them - they're
profit-making institutions, and your treatment is their cost.
Between those two factors, health care just doesn't work as a standard market story.
All of this doesn't necessarily mean that socialized medicine, or even single-payer, is the only way to go. There are a number
of successful healthcare systems, at least as measured by pretty good care much cheaper than here, and they are quite different
from each other. There are, however, no examples of successful health care based on the principles of the free market, for one
simple reason: in health care, the free market just doesn't work. And people who say that the market is the answer are flying
in the face of both theory and overwhelming evidence.
I believe so, as I noted above. The specific market dynamics of health care expenditures are obviously different, but as categories
of expenses they have some things in common. First, both are very expensive relative to most other household expenditures. Second,
unlike consumer merchandise, neither lends itself very well to cost reduction via offshoring or automation. So in an economy where
many consumer prices are held down through a corresponding suppression of real wage growth, they consume a correspondingly larger
chunk of the household budget.
Another interesting feature of both health care and college education is that there are many proffered explanations as to why
their cost is rising so much relative to other areas, but a surprising lack of a really authoritative explanation based on solid
evidence.
anne -> to Syaloch...
Another interesting feature of both health care and college education is that there are many proffered explanations as to why
their cost is rising so much relative to other areas, but a surprising lack of a really authoritative explanation based on solid
evidence.
[ Look to the paper by Kenneth Arrow, which I cannot copy, for what is to me a convincing explanation as to the market defeating
factors of healthcare. However, I have no proper explanation about education costs and am only speculating or looking for an analogy.
]
anne -> to Syaloch...
The specific market dynamics of health care expenditures are obviously different, but as categories of expenses they have
some things in common. First, both are very expensive relative to most other household expenditures. Second, unlike consumer merchandise,
neither lends itself very well to cost reduction via offshoring or automation. So in an economy where many consumer prices are
held down through a corresponding suppression of real wage growth, they consume a correspondingly larger chunk of the household
budget.
[ Nicely expressed. ]
Peter K. -> to anne...
"As to increasing college costs, would there be an analogy to healthcare costs?"
Yes, exactly. They aren't normal markets. There should be heavy government regulation.
Denis Drew:
JUST HAD AN IDEA THAT MIGHT LIMIT THE DAMAGE OF THESE PHONEY ONLINE COLLEGES (pardon shouting, but I think it's justified):
Only allow government guaranteed loans (and the accompanying you-can-never-get-out-of-paying) IF a built for that purpose
government agency APPROVES said loan. What do you think?
Denis Drew -> to cm...
A big reason we had the real estate bubble was actually the mad Republican relaxation of loan requirements -- relying on the
"free market." So, thanks for coming up with a good comparison.
By definition, for the most part, people taking out student loans are shall we say new to the world and more vulnerable to
the pirates.
* * * * * * * * * *
[cut and paste from my comment on AB]
Jeff Bezos bought the Washington Post.
According to an article in the Huffington Post At Kaplan University, 'Guerrilla Registration' Leaves Students Deep In Debt,
Kaplan Ed is among the worst of the worst of internet federal loan and grant sucking diploma mills. Going so far as to
falsely pad bills $5000 or so dollars at diploma time - pay up immediately or you will never get your sheepskin; you wasted your
time. No gov agency will act.
According to a lovely graph which I wish I could patch in here the Post may actually be currently be kept afloat only by purloined
cash from Kaplan:
earnings before corporate overhead
2002 - Kaplan ed, $10 mil; Kaplan test prep, $45 mil: WaPo, $100 mil
2005 - Kaplan ed, $55 mil; Kaplan test prep, $100 mil; WaPo, $105 mil
2009 - Kaplan ed, $255 mil; Kaplan test prep, $5 mil; WaPo negative $175 mil
Wonder if billionaire Bezos will reach out to make Kaplan Ed victims whole. Will he really continue to use Kaplan's pirated
money to keep WaPo whole -- if that is what is going on?
Johannes Y O Highness:
"theme I've been hammering lately, student debt is too damn high!: "
Too damn high
but why?
Because! Because every event in today's economy is the wish of the wealthy. Do you see why they suddenly wish to deeply
educate the proles?
Opportunity cost! The burden of the intelligentsia, the brain work can by carried by robots or humans. Choice of the wealthy?
Humans, hands down. Can you see the historical background?
Railroad was the first robot. According to Devon's Paradox, it was overused because of its increment of efficiency. Later,
excessive roadbeds were disassembled. Rails were sold as scrap.
The new robots are not heavy lifters. New robots are there to do the work of the brain trust. As first robots replaced lower
caste jokers, so shall new robots replace upper caste jokers. Do you see the fear developing inside the huddle of high rollers?
Rollers now calling the play?
High rollers plan to educate small time hoods to do the work of the new robots, then kill the new robots before the newbie
'bot discovers how to kill the wealthy, to kill, to replace them forever.
Terrifying fear
strikes
Observer:
Good bit of data on education costs here
http://centerforcollegeaffordability.org/
This chart shows state spending per student and tuition ...
" overall perhaps the best description of the data is something along the lines of "sometimes state appropriations go up and
sometimes they go down, but tuition always goes up." "
In 1980, the states subsidized 70% of the cost per student. Today it is less than 30% and the amount of grants and scholarships
has likewise declined. Tax cuts for rich people and conservative hatred for education are the biggest problem.
Notable quotes:
"... "easy" student loans are a subsidy to colleges, ..."
"... 1965 median family income was $6900, more than 200% of the cost of a year at NU. Current median family income is about 75% of a year at NU. ..."
"... Allowing young adults to avoid challenging and uncomfortable and difficult subjects under the guise of compassion is the enemy of meritocracy. Financial illiteracy is the enemy of meritocracy. ..."
"... The specific market dynamics of health care expenditures are obviously different, but as categories of expenses they have some things in common. First, both are very expensive relative to most other household expenditures. Second, unlike consumer merchandise, neither lends itself very well to cost reduction via offshoring or automation. So in an economy where many consumer prices are held down through a corresponding suppression of real wage growth, they consume a correspondingly larger chunk of the household budget. ..."
"... JUST HAD AN IDEA THAT MIGHT LIMIT THE DAMAGE OF THESE PHONEY ONLINE COLLEGES (pardon shouting, but I think it's justified): ..."
"... of-paying) IF a built for that purpose government agency APPROVES said loan. What do you think? ..."
"... Kaplan Ed is among the worst of the worst of internet federal loan and grant sucking diploma mills. ..."
"... Because every event in today's economy is the wish of the wealthy. Do you see why they suddenly wish to deeply educate the proles? ..."
Thomas Piketty on a theme I've been hammering lately, student debt is too damn high!:
Student Loan Debt Is the Enemy
of Meritocracy in the US: ...the amount of household debt and even more recently of student debt in the U.S. is something
that is really troublesome and it reflects the very large rise in tuition in the U.S. a very large inequality in access to education.
I think if we really want to promote more equal opportunity and redistribute chances in access to education we should do something
about student debt. And it's not possible to have such a large group of the population entering the labor force with such a big
debt behind them. This exemplifies a particular problem with inequality in the United States, which is very high inequality and
access to higher education. So in other countries in the developed world you don't have such massive student debt because you
have more public support to higher education. I think the plan that was proposed earlier this year in 2015 by President Obama
to increase public funding to public universities and community college is exactly justified.
This is really the key for higher growth in the future and also for a more equitable growth..., you have the official discourse
about meritocracy, equal opportunity and mobility, and then you have the reality. And the gap between the two can be quite troublesome.
So this is like you have a problem like this and there's a lot of hypocrisy about meritocracy in every country, not only in the
U.S., but there is evidence suggesting that this has become particularly extreme in the United States. ... So this is a situation
that is very troublesome and should rank very highly in the policy agenda in the future in the U.S.
DrDick -> Jeff R Carter:
"college is heavily subsidized"
Bwahahahahahahaha! *gasp*
In 1980, the states subsidized 70% of the cost per student. Today it is less than 30% and the amount of grants and scholarships
has likewise declined. Tax cuts for rich people and conservative hatred for education are the biggest problem.
cm -> to DrDick...
I don't know what Jeff meant, but "easy" student loans are a subsidy to colleges, don't you think? Subsidies don't
have to be paid directly to the recipient. The people who are getting the student loans don't get to keep the money (but they
do get to keep the debt).
DrDick -> to cm...
No I do not agree. If anything, they are a subsidy to the finance industry (since you cannot default on them). More basically,
they do not make college more affordable or accessible (his point).
cm -> to DrDick...
Well, what is a subsidy? Most economic entities don't get to keep the money they receive, but it ends up with somebody else
or circulates. If I run a business and somebody sends people with money my way (or pays me by customer served), that looks like
a subsidy to me - even though I don't get to keep the money, much of it paid for operational expenses not to forget salaries and
other perks.
Just because it is not prearranged and no-strings (?) funding doesn't mean it cannot be a subsidy.
The financial system is involved, and benefits, whenever money is sloshing around.
Pinkybum -> to cm...
I think DrDick has this the right way around. Surely one should think of subsidies as to who the payment is directly helping.
Subsidies to students would lower the barrier of entry into college. Subsidies to colleges help colleges hire better professors,
offer more classes, reduce the cost of classes etc. Student loans are no subsidy at all except to the finance industry because
they cannot be defaulted on and even then some may never be paid back because of bankruptcies.
However, that is always the risk of doing business as a loan provider. It might be interesting to assess the return on student
loans compared to other loan instruments.
mrrunangun -> to Jeff R Carter...
The cost of higher education has risen relative to the earning power of the student and/or the student's family unless that
family is in the top 10-20% wealth or income groups.
50 years ago it was possible for a lower middle class student to pay all expenses for Northwestern University with his/her
own earnings. Tuition was $1500 and room + board c $1000/year. The State of Illinois had a scholarship grant program and all you
needed was a 28 or 29 on the ACT to qualify for a grant that paid 80% of that tuition. A male student could make $2000 in a summer
construction job, such as were plentiful during those booming 60s. That plus a low wage job waiting tables, night security, work-study
etc could cover the remaining tuition and expense burden.
The annual nut now is in excess of $40,000 at NU and not much outside the $40,000-50,000 range at other second tier or elite
schools.
The state schools used to produce the bedrock educated upper middle class of business and professional people in most states
west of the seaboard. Tuition there 50 years ago was about $1200/year and room and board about $600-800 here in the midwest. Again
you could put yourself through college waiting tables part-time. It wasn't easy but it was possible.
No way a kid who doesn't already possess an education can make the tuition and expenses of a private school today. I don't
know what the median annual family income was in 1965 but I feel confident that it was well above the annual nut for a private
college. Now it's about equal to it.
mrrunangun -> to mrrunangun...
1965 median family income was $6900, more than 200% of the cost of a year at NU. Current median family income is about
75% of a year at NU.
This allows a reader to understand how the graph was constructed and to work with the graph.
ilsm:
The US spends half the money the entire world spends on war, that is success!
Massive student debt, huge doses poverty, scores of thousands [of annual neglect related] deaths from the wretched health care
system etc are not failure!
tew:
Poor education is the enemy of meritocracy. Costly, bloated administrations full of non-educators there to pamper and pander
to every possible complaint and special interest - that is the enemy of meritocracy.
Convincing kids to simple "follow their dreams" regardless of education cost and career potential is the enemy of meritocracy.
Allowing young adults to avoid challenging and uncomfortable and difficult subjects under the guise of compassion is the enemy
of meritocracy. Financial illiteracy is the enemy of meritocracy.
Manageable student debt is no great enemy of meritocracy.
cm -> to tew...
This misses the point, aside frm the victim blaming. Few people embark on college degrees to "follow their dream", unless the
dream is getting admission to the middle class job market.
When I was in elementary/middle school, the admonitions were of the sort "if you are not good in school you will end up sweeping
streets" - from a generation who still saw street cleaning as manual labor, in my days it was already mechanized.
I estimate that about 15% or so of every cohort went to high school and then college, most went to a combined vocational/high
school track, and some of those then later also went college, often from work.
This was before the big automation and globalization waves, when there were still enough jobs for everybody, and there was
no pretense that you needed a fancy title to do standard issue work or as a social signal of some sort.
Richard H. Serlin:
Student loans and college get the bulk of the education inequality attention, and it's not nearly enough attention, but it's
so much more. The early years are so crucial, as Nobel economist James Heckman has shown so well. Some children get no schooling
or educational/developmental day care until almost age 6, when it should start in the first year, with preschool starting at 3.
Others get high quality Montessori, and have had 3 years of it by the time they enter kindergarten, when others have had zero
of any kind of education when they enter kindergarten.
Some children spend summers in high quality summer school and educational programs; others spend three months digressing and
learning nothing. Some children get SAT prep programs costing thousands, and high end educational afterschool programs; others
get nothing after school.
All these things should be available in high quality to any child; it's not 1810 anymore Republicans, the good old days of
life expectancy in the 30s and dirt poverty for the vast majority. We need just a little more education in the modern world. But
this also makes for hugely unequal opportunity.
One needs to differentiate between costs (total dollars spent per student credit hour or degree, or whatever the appropriate
metric is) and price (what fraction of the cost is allocated to the the end-user student).
Note that the level of state funding impacts price, not cost; that discussion is usually about cost shifting, not cost reduction.
I'd say that the rate of increase in costs is, more or less, independent of the percent of costs borne by the state. You can
indeed see this in the increase in private schools, the state funding is small/nil (particularly in schools without material endowments,
where actual annual fees (prices) must closely actual match annual costs). Price discounts and federal funding may both complicate
this analysis.
I think much more effort should be spent on understanding and controlling costs. As with health care, just saying "spend more
money" is probably not the wise or even sustainable path in the long term.
Costs were discussed at some length here a year(?) or so ago. There is at least one fairly comprehensive published analysis
of higher education costs drivers. IIRC, their conclusion was that there were a number of drivers - its not just food courts or
more administrators. Sorry, don't recall the link.
Syaloch -> to cm...
Actually for my first job out of college at BLS, I basically was hired for my "rounded personality" combined with a general
understanding of economic principles, not for any specific job-related skills. I had no prior experience working with Laspeyres
price indexes, those skills were acquired through on-the-job training. Similarly in software development there is no degree that
can make you a qualified professional developer; the best a degree can do is to show you are somewhat literate in X development
language and that you have a good understanding of general software development principles. Most of the specific skills you'll
need to be effective will be learned on the job.
The problem is that employers increasingly want to avoid any responsibility for training and mentoring, and to shift this burden
onto schools. These institutions respond by jettisoning courses in areas deemed unnecessary for short-term vocational purposes,
even though what you learn in many of these courses is probably more valuable and durable in the long run than the skills obtained
through job-specific training, which often have a remarkably short shelf-life. (How valuable to you now is all that COBOL training
you had back in the day?)
I guess the question then is, is the sole purpose of higher education to provide people with entry-level job skills for some
narrowly-defined job description which may not even exist in a decade? A lot of people these days seem to feel that way. But I
believe that in the long run it's a recipe for disaster at both the individual and the societal level.
Richard H. Serlin -> to Observer...
"Observer"
The research is just not on you side, as Heckman has shown very well. Early education and development makes a huge difference,
and at age 5-7 (kindergarten) children are much better off with more schooling than morning to noon. This is why educated parents
who can afford it pay a lot of money for a full day -- with afterschool and weekened programs on top.
Yes, we're more educated than 1810, but I use 1810 because that's the kind of small government, little spending on education
(you want your children educated you pay for it.) that the Republican Party would love to return us to if they thought they could
get away with it. And we've become little more educated in the last 50 years even though the world has become much more technologically
advanced.
Judging both from comments on this blog and from some of my mail, a significant number of Americans believe that the answer
to our health care problems - indeed, the only answer - is to rely on the free market. Quite a few seem to believe that this view
reflects the lessons of economic theory.
Not so. One of the most influential economic papers of the postwar era was Kenneth Arrow's "Uncertainty and the Welfare Economics
of Health Care," * which demonstrated - decisively, I and many others believe - that health care can't be marketed like bread
or TVs. Let me offer my own version of Arrow's argument.
There are two strongly distinctive aspects of health care. One is that you don't know when or whether you'll need care - but
if you do, the care can be extremely expensive. The big bucks are in triple coronary bypass surgery, not routine visits to the
doctor's office; and very, very few people can afford to pay major medical costs out of pocket.
This tells you right away that health care can't be sold like bread. It must be largely paid for by some kind of insurance.
And this in turn means that someone other than the patient ends up making decisions about what to buy. Consumer choice is nonsense
when it comes to health care. And you can't just trust insurance companies either - they're not in business for their health,
or yours.
This problem is made worse by the fact that actually paying for your health care is a loss from an insurers' point of view
- they actually refer to it as "medical costs." This means both that insurers try to deny as many claims as possible, and that
they try to avoid covering people who are actually likely to need care. Both of these strategies use a lot of resources, which
is why private insurance has much higher administrative costs than single-payer systems. And since there's a widespread sense
that our fellow citizens should get the care we need - not everyone agrees, but most do - this means that private insurance basically
spends a lot of money on socially destructive activities.
The second thing about health care is that it's complicated, and you can't rely on experience or comparison shopping. ("I hear
they've got a real deal on stents over at St. Mary's!") That's why doctors are supposed to follow an ethical code, why we expect
more from them than from bakers or grocery store owners.
You could rely on a health maintenance organization to make the hard choices and do the cost management, and to some extent
we do. But HMOs have been highly limited in their ability to achieve cost-effectiveness because people don't trust them - they're
profit-making institutions, and your treatment is their cost.
Between those two factors, health care just doesn't work as a standard market story.
All of this doesn't necessarily mean that socialized medicine, or even single-payer, is the only way to go. There are a number
of successful healthcare systems, at least as measured by pretty good care much cheaper than here, and they are quite different
from each other. There are, however, no examples of successful health care based on the principles of the free market, for one
simple reason: in health care, the free market just doesn't work. And people who say that the market is the answer are flying
in the face of both theory and overwhelming evidence.
I believe so, as I noted above. The specific market dynamics of health care expenditures are obviously different, but as categories
of expenses they have some things in common. First, both are very expensive relative to most other household expenditures. Second,
unlike consumer merchandise, neither lends itself very well to cost reduction via offshoring or automation. So in an economy where
many consumer prices are held down through a corresponding suppression of real wage growth, they consume a correspondingly larger
chunk of the household budget.
Another interesting feature of both health care and college education is that there are many proffered explanations as to why
their cost is rising so much relative to other areas, but a surprising lack of a really authoritative explanation based on solid
evidence.
anne -> to Syaloch...
Another interesting feature of both health care and college education is that there are many proffered explanations as to why
their cost is rising so much relative to other areas, but a surprising lack of a really authoritative explanation based on solid
evidence.
[ Look to the paper by Kenneth Arrow, which I cannot copy, for what is to me a convincing explanation as to the market defeating
factors of healthcare. However, I have no proper explanation about education costs and am only speculating or looking for an analogy.
]
anne -> to Syaloch...
The specific market dynamics of health care expenditures are obviously different, but as categories of expenses they have
some things in common. First, both are very expensive relative to most other household expenditures. Second, unlike consumer merchandise,
neither lends itself very well to cost reduction via offshoring or automation. So in an economy where many consumer prices are
held down through a corresponding suppression of real wage growth, they consume a correspondingly larger chunk of the household
budget.
[ Nicely expressed. ]
Peter K. -> to anne...
"As to increasing college costs, would there be an analogy to healthcare costs?"
Yes, exactly. They aren't normal markets. There should be heavy government regulation.
Denis Drew:
JUST HAD AN IDEA THAT MIGHT LIMIT THE DAMAGE OF THESE PHONEY ONLINE COLLEGES (pardon shouting, but I think it's justified):
Only allow government guaranteed loans (and the accompanying you-can-never-get-out-of-paying) IF a built for that purpose
government agency APPROVES said loan. What do you think?
Denis Drew -> to cm...
A big reason we had the real estate bubble was actually the mad Republican relaxation of loan requirements -- relying on the
"free market." So, thanks for coming up with a good comparison.
By definition, for the most part, people taking out student loans are shall we say new to the world and more vulnerable to
the pirates.
* * * * * * * * * *
[cut and paste from my comment on AB]
Jeff Bezos bought the Washington Post.
According to an article in the Huffington Post At Kaplan University, 'Guerrilla Registration' Leaves Students Deep In Debt,
Kaplan Ed is among the worst of the worst of internet federal loan and grant sucking diploma mills. Going so far as to
falsely pad bills $5000 or so dollars at diploma time - pay up immediately or you will never get your sheepskin; you wasted your
time. No gov agency will act.
According to a lovely graph which I wish I could patch in here the Post may actually be currently be kept afloat only by purloined
cash from Kaplan:
earnings before corporate overhead
2002 - Kaplan ed, $10 mil; Kaplan test prep, $45 mil: WaPo, $100 mil
2005 - Kaplan ed, $55 mil; Kaplan test prep, $100 mil; WaPo, $105 mil
2009 - Kaplan ed, $255 mil; Kaplan test prep, $5 mil; WaPo negative $175 mil
Wonder if billionaire Bezos will reach out to make Kaplan Ed victims whole. Will he really continue to use Kaplan's pirated
money to keep WaPo whole -- if that is what is going on?
Johannes Y O Highness:
"theme I've been hammering lately, student debt is too damn high!: "
Too damn high
but why?
Because! Because every event in today's economy is the wish of the wealthy. Do you see why they suddenly wish to deeply
educate the proles?
Opportunity cost! The burden of the intelligentsia, the brain work can by carried by robots or humans. Choice of the wealthy?
Humans, hands down. Can you see the historical background?
Railroad was the first robot. According to Devon's Paradox, it was overused because of its increment of efficiency. Later,
excessive roadbeds were disassembled. Rails were sold as scrap.
The new robots are not heavy lifters. New robots are there to do the work of the brain trust. As first robots replaced lower
caste jokers, so shall new robots replace upper caste jokers. Do you see the fear developing inside the huddle of high rollers?
Rollers now calling the play?
High rollers plan to educate small time hoods to do the work of the new robots, then kill the new robots before the newbie
'bot discovers how to kill the wealthy, to kill, to replace them forever.
Terrifying fear
strikes
Observer:
Good bit of data on education costs here
http://centerforcollegeaffordability.org/
This chart shows state spending per student and tuition ...
" overall perhaps the best description of the data is something along the lines of "sometimes state appropriations go up and
sometimes they go down, but tuition always goes up." "
The French economist Thomas Piketty argued last year in a surprising best-seller, "Capital in
the Twenty-First Century," that rising wealth inequality was a natural result of free-market policies,
a direct challenge to the conventional view that economic inequalities shrink over time. The controversial
implication drawn by Mr. Piketty is that governments should raise taxes on the wealthy.
Notable quotes:
"... His speeches can blend biblical fury with apocalyptic doom. Pope Francis does not just criticize the excesses of global capitalism. He compares them to the "dung of the devil." He does not simply argue that systemic "greed for money" is a bad thing. He calls it a "subtle dictatorship" that "condemns and enslaves men and women." ..."
"... The Argentine pope seemed to be asking for a social revolution. "This is not theology as usual; this is him shouting from the mountaintop," said Stephen F. Schneck, the director of the Institute for Policy Research and Catholic studies at Catholic University of America in Washington. ..."
"... Left-wing populism is surging in countries immersed in economic turmoil, such as Spain, and, most notably, Greece . But even in the United States, where the economy has rebounded, widespread concern about inequality and corporate power are propelling the rise of liberals like Senator Bernie Sanders of Vermont and Senator Elizabeth Warren of Massachusetts, who, in turn, have pushed the Democratic Party presidential front-runner, Hillary Rodham Clinton, to the left. ..."
"... Even some free-market champions are now reassessing the shortcomings of unfettered capitalism. George Soros, who made billions in the markets, and then spent a good part of it promoting the spread of free markets in Eastern Europe, now argues that the pendulum has swung too far the other way. ..."
"... Many Catholic scholars would argue that Francis is merely continuing a line of Catholic social teaching that has existed for more than a century and was embraced even by his two conservative predecessors, John Paul II and Benedict XVI. Pope Leo XIII first called for economic justice on behalf of workers in 1891, with his encyclical "Rerum Novarum" - or, "On Condition of Labor." ..."
"... Francis has such a strong sense of urgency "because he has been on the front lines with real people, not just numbers and abstract ideas," Mr. Schneck said. "That real-life experience of working with the most marginalized in Argentina has been the source of his inspiration as pontiff." ..."
"... In Bolivia, Francis praised cooperatives and other localized organizations that he said provide productive economies for the poor. "How different this is than the situation that results when those left behind by the formal market are exploited like slaves!" he said on Wednesday night. ..."
"... It is this Old Testament-like rhetoric that some finding jarring, perhaps especially so in the United States, where Francis will visit in September. His environmental encyclical, "Laudato Si'," released last month, drew loud criticism from some American conservatives and from others who found his language deeply pessimistic. His right-leaning critics also argued that he was overreaching and straying dangerously beyond religion - while condemning capitalism with too broad a brush. ..."
"... The French economist Thomas Piketty argued last year in a surprising best-seller, "Capital in the Twenty-First Century," that rising wealth inequality was a natural result of free-market policies, a direct challenge to the conventional view that economic inequalities shrink over time. The controversial implication drawn by Mr. Piketty is that governments should raise taxes on the wealthy. ..."
"... "Working for a just distribution of the fruits of the earth and human labor is not mere philanthropy," he said on Wednesday. "It is a moral obligation. For Christians, the responsibility is even greater: It is a commandment." ..."
"... "I'm a believer in capitalism but it comes in as many flavors as pie, and we have a choice about the kind of capitalist system that we have," said Mr. Hanauer, now an outspoken proponent of redistributive government ..."
"... "What can be done by those students, those young people, those activists, those missionaries who come to my neighborhood with the hearts full of hopes and dreams but without any real solution for my problems?" he asked. "A lot! They can do a lot. ..."
ASUNCIÓN, Paraguay - His speeches can blend biblical fury with apocalyptic doom. Pope Francis
does not just criticize the excesses of global capitalism. He compares them to the "dung of the devil."
He does not simply argue that systemic "greed for money" is a bad thing. He calls it a "subtle dictatorship"
that "condemns and enslaves men and women."
Having returned to his native Latin America, Francis has renewed his left-leaning critiques on
the inequalities of capitalism, describing it as an underlying cause of global injustice, and a prime
cause of climate change. Francis escalated that line last week when he made a
historic apology for the crimes of the Roman Catholic Church during the period of Spanish colonialism
- even as he called for a global movement against a "new colonialism" rooted in an inequitable economic
order.
The Argentine pope seemed to be asking for a social revolution. "This is not theology as usual; this is him shouting from the mountaintop," said Stephen F. Schneck,
the director of the Institute for Policy Research and Catholic studies at Catholic University of
America in Washington.
The last pope who so boldly placed himself at the center of the global moment was John Paul II,
who during the 1980s pushed the church to confront what many saw as the challenge of that era, communism.
John Paul II's anti-Communist messaging dovetailed with the agenda of political conservatives eager
for a tougher line against the Soviets and, in turn, aligned part of the church hierarchy with the
political right.
Francis has defined the economic challenge of this era as the failure of global capitalism to
create fairness, equity and dignified livelihoods for the poor - a social and religious agenda that
coincides with a resurgence of the leftist thinking marginalized in the days of John Paul II. Francis'
increasingly sharp critique comes as much of humanity has never been so wealthy or well fed - yet
rising inequality and repeated financial crises have unsettled voters, policy makers and economists.
Left-wing populism is surging in countries immersed in economic turmoil, such as Spain, and,
most notably, Greece. But even in the United States, where the economy has rebounded, widespread
concern about inequality and corporate power are propelling the
rise of liberals like Senator Bernie Sanders of Vermont and Senator Elizabeth Warren of Massachusetts,
who, in turn, have pushed the Democratic Party presidential front-runner, Hillary Rodham Clinton,
to the left.
Even some free-market champions are now reassessing the shortcomings of unfettered capitalism.
George Soros, who made billions in the markets, and then spent a good part of it promoting the spread
of free markets in Eastern Europe, now argues that the pendulum has swung too far the other way.
"I think the pope is singing to the music that's already in the air," said Robert A. Johnson,
executive director of the Institute for New Economic Thinking, which was financed with $50 million
from Mr. Soros. "And that's a good thing. That's what artists do, and I think the pope is sensitive
to the lack of legitimacy of the system."
Many Catholic scholars would argue that Francis is merely continuing a line of Catholic social
teaching that has existed for more than a century and was embraced even by his two conservative predecessors,
John Paul II and Benedict XVI. Pope Leo XIII first called for economic justice on behalf of workers
in 1891, with his encyclical "Rerum Novarum" - or, "On Condition of Labor."
Mr. Schneck, of Catholic University, said it was as if Francis were saying, "We've been talking
about these things for more than one hundred years, and nobody is listening."
Francis has such a strong sense of urgency "because he has been on the front lines with real people,
not just numbers and abstract ideas," Mr. Schneck said. "That real-life experience of working with
the most marginalized in Argentina has been the source of his inspiration as pontiff."
Francis made his speech on Wednesday night, in Santa Cruz, Bolivia, before nearly 2,000 social
advocates, farmers, trash workers and neighborhood activists. Even as he meets regularly with heads
of state, Francis has often said that change must come from the grass roots, whether from poor people
or the community organizers who work with them. To Francis, the poor have earned knowledge that is
useful and redeeming, even as a "throwaway culture" tosses them aside. He sees them as being at the
front edge of economic and environmental crises around the world.
In Bolivia, Francis praised cooperatives and other localized organizations that he said provide
productive economies for the poor. "How different this is than the situation that results when those
left behind by the formal market are exploited like slaves!" he said on Wednesday night.
It is this Old Testament-like rhetoric that some finding jarring, perhaps especially so in the
United States, where Francis will visit in September. His environmental encyclical, "Laudato Si',"
released last month, drew loud criticism from some American conservatives and from others who found
his language deeply pessimistic. His right-leaning critics also argued that he was overreaching and
straying dangerously beyond religion - while condemning capitalism with too broad a brush.
"I wish Francis would focus on positives, on how a free-market economy guided by an ethical framework,
and the rule of law, can be a part of the solution for the poor - rather than just jumping from the
reality of people's misery to the analysis that a market economy is the problem," said the Rev. Robert
A. Sirico, president of the Acton Institute for the Study of Religion and Liberty, which advocates
free-market economics.
Francis' sharpest critics have accused him of being a Marxist or a Latin American Communist, even
as he opposed communism during his time in Argentina. His tour last week of Latin America began in
Ecuador and Bolivia, two countries with far-left governments. President Evo Morales of Bolivia, who
wore a Che Guevara patch on his jacket during Francis' speech, claimed the pope as a kindred spirit
- even as Francis seemed startled and caught off guard when Mr. Morales gave him a wooden crucifix
shaped like a hammer and sickle as a gift.
Francis' primary agenda last week was to begin renewing Catholicism in Latin America and reposition
it as the church of the poor. His apology for the church's complicity in the colonialist era received
an immediate roar from the crowd. In various parts of Latin America, the association between the
church and economic power elites remains intact. In Chile, a socially conservative country, some
members of the country's corporate elite are also members of Opus Dei, the traditionalist Catholic
organization founded in Spain in 1928.
Inevitably, Francis' critique can be read as a broadside against Pax Americana, the period of
capitalism regulated by global institutions created largely by the United States. But even pillars
of that system are shifting. The World Bank, which long promoted economic growth as an end in itself,
is now increasingly focused on the distribution of gains, after the Arab Spring revolts in some countries
that the bank had held up as models. The latest generation of international trade agreements includes
efforts to increase protections for workers and the environment.
The French economist Thomas Piketty argued last year in a surprising best-seller, "Capital
in the Twenty-First Century," that rising wealth inequality was a natural result of free-market policies,
a direct challenge to the conventional view that economic inequalities shrink over time. The controversial
implication drawn by Mr. Piketty is that governments should raise taxes on the wealthy.
Mr. Piketty roiled the debate among mainstream economists, yet Francis' critique is more unnerving
to some because he is not reframing inequality and poverty around a new economic theory but instead
defining it in moral terms. "Working for a just distribution of the fruits of the earth and human
labor is not mere philanthropy," he said on Wednesday. "It is a moral obligation. For Christians,
the responsibility is even greater: It is a commandment."
Nick Hanauer, a Seattle venture capitalist, said that he saw Francis as making a nuanced point
about capitalism, embodied by his coinage of a "social mortgage" on accumulated wealth - a debt to
the society that made its accumulation possible. Mr. Hanauer said that economic elites should embrace
the need for reforms both for moral and pragmatic reasons. "I'm a believer in capitalism but
it comes in as many flavors as pie, and we have a choice about the kind of capitalist system that
we have," said Mr. Hanauer, now an outspoken proponent of redistributive government policies
like a higher minimum wage.
Yet what remains unclear is whether Francis has a clear vision for a systemic alternative to the
status quo that he and others criticize. "All these critiques point toward the incoherence of the
simple idea of free market economics, but they don't prescribe a remedy," said Mr. Johnson, of the
Institute for New Economic Thinking.
Francis acknowledged as much, conceding on Wednesday that he had no new "recipe" to quickly change
the world. Instead, he spoke about a "process of change" undertaken at the grass-roots level.
"What can be done by those students, those young people, those activists, those missionaries
who come to my neighborhood with the hearts full of hopes and dreams but without any real solution
for my problems?" he asked. "A lot! They can do a lot. "You, the lowly, the exploited, the poor
and underprivileged, can do, and are doing, a lot. I would even say that the future of humanity is
in great measure in your own hands."
"... Kiev has become an accidental, burdensome ally to the West. The North Atlantic Treaty Organization only paid lip service to future Ukrainian membership, while the EU, which never had any intention of taking in Ukraine, pushed an association agreement out of bureaucratic habit more than strategic vision. ..."
"... The least charitably inclined claim that Poroshenko prosecuted the war in eastern Ukraine as a way of delaying reform. What's undeniable is that the shaky ceasefire leaves the Kiev government at the mercy of Putin and his proxies. Should anything start going right for Poroshenko, the fighting could flare back up at any moment. ..."
"... Everybody in Kiev understands that there's no way of reconquering lost territory by force. Ukrainian politicians publicly pledge to win back breakaway regions through reform and economic success. What they hope for is that sanctions will cause enough problems inside Russia that the Kremlin will run out of resources to sabotage Ukraine. Wishful thinking won't replace the painful reforms ahead. ..."
May 19, 2015 | http://blogs.reuters.com/great-debate/2015/05/17/why-this-ukrainian-revolution-may-be-doomed-too/
At home, there is the possibility of more protests, a paralyzed government, and the rise of politicians seeking accommodation
with Putin. "Slow and unsuccessful reforms are a bigger existential threat than the Russian aggression," said Oleksiy Melnyk, a security
expert at Kiev's Razumkov Center. Even if Ukrainians don't return to the street, they'll get a chance to voice their discontent at
the ballot box. Local elections are due in the fall - and the governing coalition between Poroshenko and Prime Minister Arseniy Yatsenyuk
is so shaky that nobody can rule out an early parliamentary vote.
In its international relations, Ukraine is living on borrowed time - and money. A dispute over restructuring $23 billion in debt
broke into the open last week with the Finance Ministry accusing foreign creditors of not negotiating in good faith ahead of a June
deadline. An EU summit this week is likely to end in more disappointment, as Western European countries are reluctant to grant Ukrainians
visa-free travel.
Kiev has become an accidental, burdensome ally to the West. The North Atlantic Treaty Organization only paid lip service to future
Ukrainian membership, while the EU, which never had any intention of taking in Ukraine, pushed an association agreement out of bureaucratic
habit more than strategic vision.
... ... ...
The least charitably inclined claim that Poroshenko prosecuted the war in eastern Ukraine as a way of delaying reform. What's
undeniable is that the shaky ceasefire leaves the Kiev government at the mercy of Putin and his proxies. Should anything start going
right for Poroshenko, the fighting could flare back up at any moment.
Ukrainian security officials say that the enemy forces gathering in the separatist regions are at their highest capability yet.
The most alarming observation is that the once ragtag band of rebels - backed up by regular Russian troops in critical battles -
is increasingly looking like a real army thanks to weapons and training provided by Russia.
... ... ...
Everybody in Kiev understands that there's no way of reconquering lost territory by force. Ukrainian politicians publicly pledge
to win back breakaway regions through reform and economic success. What they hope for is that sanctions will cause enough problems
inside Russia that the Kremlin will run out of resources to sabotage Ukraine. Wishful thinking won't replace the painful reforms
ahead.
Nice illustration of ideologically based ostrakism as practiced in Academia: "Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could
be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People
- powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize
other insiders."
Notable quotes:
"... A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment to indulge themselves in their hard money and liquidity fetishes, consequences be damned. ..."
"... The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers are willing to risk and whose interests they are willing to risk policy decisions for ..."
"... Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same role which Marxism was installed in the USSR. With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities. ..."
"... To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality be damned. Money does not smell. ..."
"... Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys. ..."
"... "Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People - powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize other insiders." ..."
At the risk of oversimplifying might it not be as simple as stronger leanings towards IS-LM and kind are indicative of a bias
towards full employment and stronger leanings towards DSGE, microfoundations, and kind are indicative of a bias towards low inflation?
IN general I consider over-simplification a fault, if and only if, it is a rigidly adhered to final position. This is to say
that over-simplification is always a good starting point and never a good ending point. If in the end your problem was simple
to begin with, then the simplified answer would not be OVER-simplified anyway. It is just as bad to over-complicate a simple problem
as it is to over-simplify a complex problem. It is easier to build complexity on top of a simple foundation than it is to extract
simplicity from a complex foundation.
A lot of the Chicago School initiative into microfoundations and DSGE may have been motivated by a desire to bind Keynes in
a NAIRU straight-jacket. Even though economic policy making is largely done just one step at a time then that is still one step
too much if it might violate rentier interests.
Darryl FKA Ron -> Barry...
There are two possible (but unlikely) schools of (generously attributed to as) thought for which internal consistency might
take precedence over external consistency. One such school wants to consider what would be best in a perfect world full of perfect
people and then just assume that is best for the real world just to let the chips fall where they may according to the faults
and imperfections of the real world. The second such school is the one whose eyes just glaze over mesmerized by how over their
heads they are and remain affraid to ask any question lest they appear stupid.
A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment
to indulge themselves in their hard money and liquidity fetishes, consequences be damned.
Richard H. Serlin
Consistency sounds so good, Oh, of course we want consistency, who wouldn't?! But consistent in what way? What exactly do you
mean? Consistent with reality, or consistent with people all being superhumans? Which concept is usually more useful, or more
useful for the task at hand?
Essentially, they want models that are consistent with only certain things, and often because this
makes their preferred ideology look far better. They want models, typically, that are consistent with everyone in the world having
perfect expertise in every subject there is, from finance to medicine to engineering, perfect public information, and perfect
self-discipline, and usually on top, frictionless and perfectly complete markets, often perfectly competitive too.
But a big thing to note is that perfectly consistent people means a level of perfection in expertise, public information, self-discipline,
and "rationality", that's extremely at odds with how people actually are. And as a result, this can make the model extremely misleading
if it's interpreted very literally (as so often it is, especially by freshwater economists), or taken as The Truth, as Paul Krugman
puts it.
You get things like the equity premium "puzzle", which involves why people don't invest more in stocks when the risk-adjusted
return appears to usually be so abnormally good, and this "puzzle" can only be answered with "consistency", that people are all
perfectly expert in finance, with perfect information, so they must have some mysterious hidden good reason. It can't be at all
that it's because 65% of people answered incorrectly when asked how many reindeer would remain if Santa had to lay off 25% of
his eight reindeer ( http://richardhserlin.blogspot.com/2013/12/surveys-showing-massive-ignorance-and.html ).
Yes, these perfect optimizer consistency models can give useful insights, and help to see what is best, what we can do better,
and they can, in some cases, be good as approximations. But to say they should be used only, and interpreted literally, is, well,
inconsistent with optimal, rational behavior -- of the economist using them.
Richard H. Serlin -> Richard H. Serlin...
Of course, unless the economist using them is doing so to mislead people into supporting his libertarian/plutocratic ideology.
dilbert dogbert
As an old broken down mech engineer, I wonder why all the pissing and moaning about micro foundations vs aggregation. In strength
of materials equations that aggregate properties work quite well within the boundaries of the questions to be answered. We all
know that at the level of crystals, materials have much complexity. Even within crystals there is deeper complexities down to
the molecular levels. However, the addition of quantum mechanics adds no usable information about what materials to build a bridge
with.
But, when working at the scale of the most advanced computer chips quantum mechanics is required. WTF! I guess in economics
there is no quantum mechanics theories or even reliable aggregation theories.
Poor economists, doomed to argue, forever, over how many micro foundations can dance on the head of a pin.
RGC -> dilbert dogbert...
Endless discussions about how quantum effects aggregate to produce a material suitable for bridge building crowd out discussions
about where and when to build bridges. And if plutocrats fund the endless discussions, we get the prominent economists we have
today.
Darryl FKA Ron -> dilbert dogbert...
"...I guess in economics there is no quantum mechanics theories or even reliable aggregation theories..."
[I guess it depends upon what your acceptable confidence interval on reliability is. Most important difference that controls
all the domain differences between physical science and economics is that underlying physical sciences there is a deterministic
methodology for which probable error is merely a function of the inaccuracy in input metrics WHEREAS economics models are incomplete
probabilistic estimating models with no ability to provide a complete system model in a full range of circumstances.
YOu can design and build a bridge to your load and span requirements with alternative models for various designs with confidence
and highly effective accuracy repeatedly. No ecomomic theory, model, or combination of models and theories was ever intended to
be used as the blueprint for building an economy from the foundation up.
With all the formal trappings of economics the only effective usage is to decide what should be done in a given set of predetermined
circumstance to reach some modest desired effect. Even that modest goal is exposed to all kinds of risks inherent in assumptions,
incomplete information, externalities, and so on that can produce errors of uncertain potential bounds.
Nonetheless, well done economics can greatly reduce the risks encountered in the random walk of economics policy making. So
much so is this true, that the bigger questions in macro-economics policy making is what one is willing to risk and for whom.
The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers
are willing to risk and whose interests they are willing to risk policy decisions for.]
Darryl FKA Ron -> Peter K....
unless you have a model which maps the real world fairly closely like quantum mechanics.
[You set a bar too high. Macro models at best will tell you what to do to move the economy in the direction that you seek to
go. They do not even ocme close to the notion of a theory of everything that you have in physics, even the theory of every little
thing that is provided by quantum mechanics. Physics is an empty metaphor for economics. Step one is to forgo physics envy in
pursuit of understanding suitable applications and domain constraints for economics models.
THe point is to reach a decision and to understand cause and effect directions. All precision is in the past and present. The
future is both imprecise and all that there is that is available to change.
For the most part an ounce of common sense and some simple narrative models are all that are essential for making those policy
decisions in and of themselves. HOWEVER, nation states are not ruled by economist philosopher kings and in the process of concensus
decision making by (little r)republican governments then human language is a very imprecise vehicle for communicating logic and
reason with respect to the management of complex systems. OTOH, mathematics has given us a universal language for communicating
logic and reason that is understood the same by everyone that really understands that language at all. Hence mathematical models
were born for the economists to write down their own thinking in clear precise terms and check their own work first and then share
it with others so equipped to understand the language of mathematics. Krugman has said as much many times and so has any and every
economist worth their salt.]
likbez -> Syaloch...
I agree with Pgl and PeterK. Certain commenters like Darryl seem convinced that the Chicago School (if not all of econ) is driven
by sinister, class-based motives to come up justifications for favoring the power elite over the masses. But based on what I've
read, it seems pretty obvious that the microfoundation guys just got caught up in their fancy math and their desire to produce
more elegant, internally consistent models and lost sight of the fact that their models didn't track reality.
That's completely wrong line of thinking, IMHO.
Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking
oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after
New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same
role which Marxism was installed in the USSR.
With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to
ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities.
To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality
be damned. Money does not smell.
Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining
this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys.
But the key problem with neoliberalism is that the cure is worse then disease. And here mathematical masturbations are very
handy as a smoke screen to hide this simple fact.
likbez -> likbez...
Here is how Rubin's neoliberal boy Larry explained the situation to Elizabeth Warren:
"Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could
be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People
- powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize
other insiders."
We have just witnessed one of the most significant steps toward a one world
economic system that we have ever seen. Negotiations for the Trans-Pacific Partnership
have been completed, and if approved it will create the largest trading bloc
on the planet. But this is not just a trade agreement. In this treaty, Barack
Obama has thrown in all sorts of things that he never would have been able to
get through Congress otherwise. And once this treaty is approved, it will be
exceedingly difficult to ever make changes to it. So essentially what is happening
is that the Obama agenda is being permanently locked in for 40 percent of the
global economy.
The United States, Canada, Japan, Mexico, Australia, Brunei,
Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam all intend to sign
on to this insidious plan. Collectively, these nations have a total population
of about 800 million people and a combined GDP of approximately 28 trillion
dollars.
In hailing the agreement, Obama said, "Congress and the American people
will have months to read every word" before he signs the deal that he described
as a win for all sides.
"If we can get this agreement to my desk, then we can help our businesses
sell more Made in America goods and services around the world, and we can
help more American workers compete and win," Obama said.
Sadly, just like with every other "free trade" agreement that the U.S. has
entered into since World War II, the exact opposite is what will actually happen.
Our trade deficit will get even larger, and we will see even more jobs and even
more businesses go overseas.
But the mainstream media will never tell you this. Instead, they are just
falling all over themselves as they heap praise on this new trade pact. Just
check out a couple of the headlines that we saw on Monday…
Overseas it is a different story. Many journalists over there fully recognize
that this treaty greatly benefits many of the big corporations that played a
key role in drafting it. For example, the following comes
from a newspaper in Thailand…
You will hear much about the importance of the TPP for "free trade".
The reality is that this is an agreement to manage its members' trade
and investment relations - and to do so on behalf of each country's most
powerful business lobbies.
Packaged as a gift to the American people that will renew industry and
make us more competitive, the Trans-Pacific Partnership is a Trojan horse.
It's a coup by multinational corporations who want global subservience to
their agenda. Buyer beware. Citizens beware.
The gigantic corporations that dominate our economy don't care about the
little guy. If they can save a few cents on the manufacturing of an item by
moving production to Timbuktu they will do it.
Over the past couple of decades, the United States has lost tens of thousands
of manufacturing facilities and millions of good paying jobs due to these "free
trade agreements". As we merge our economy with the economies of nations where
it is legal to pay slave labor wages, it is inevitable that corporations will
shift jobs to places where labor is much cheaper. Our economic infrastructure
is being absolutely eviscerated in the process, and very few of our politicians
seem to care.
Once upon a time, the city of Detroit was the greatest manufacturing city
on the planet and it had the highest per capita income in the entire nation.
But today it is a rotting, decaying hellhole that the rest of the world laughs
at. What has happened to the city of Detroit is happening to the entire nation
as a whole, but our politicians just keep pushing us even farther down the road
to oblivion.
Just consider what has happened since NAFTA was implemented. In the year
before NAFTA was approved, the United States actually had a trade surplus
with Mexico and our trade deficit with Canada was only 29.6 billion dollars.
But now things are very different. In one recent year, the U.S. had a combined
trade deficit with Mexico and Canada of
177 billion dollars.
And these trade deficits are not just numbers. They represent real jobs that
are being lost. It has been estimated that the U.S. economy loses
approximately 9,000 jobs for every 1 billion dollars of goods that are imported
from overseas, and one professor has estimated that cutting our trade deficit
in half would create
5 million more jobs in the United States.
Just yesterday, I wrote about how there are
102.6 million working age Americans that do not have a job right now. Once
upon a time, if you were honest, dependable and hard working it was easy to
get a good paying job in this country. But now things are completely different.
Why aren't more people alarmed by numbers like this?
And of course the Trans-Pacific Partnership is not just about "free trade".
In one of my
previous articles, I explained that Obama is using this as an opportunity
to permanently impose much of his agenda on a large portion of the globe…
It is basically a gigantic end run around Congress.
Thanks to leaks, we have learned that so many of the things that Obama has
deeply wanted for years are in this treaty. If adopted, this treaty
will fundamentally change our laws regarding Internet freedom, healthcare,
copyright and patent protection, food safety, environmental standards, civil
liberties and so much more. This treaty includes many of the rules
that alarmed Internet activists so much
when SOPA was being debated, it would essentially ban all "Buy American"
laws, it would give Wall Street banks much more freedom to trade risky
derivatives and it would force even more domestic manufacturing offshore.
The Republicans in Congress foolishly gave Obama
fast track negotiating authority, and so Congress will not be able to change
this treaty in any way. They will only have the opportunity for an up or down
vote.
I would love to see Congress reject this deal, but we all know that is extremely
unlikely to happen. When big votes like this come up, immense pressure is put
on key politicians. Yes, there are a few members of Congress that still have
backbones, but most of them are absolutely spineless. When push comes to shove,
the globalist agenda always seems to advance.
Meanwhile, the mainstream media will be telling the American people about
all of the wonderful things that this new treaty will do for them. You would
think that after how badly past "free trade" treaties have turned out that we
would learn something, but somehow that never seems to happen.
The agenda of the globalists is moving forward, and very few Americans seem
to care.
First of all, because NAFTA means jobs. American jobs, and good-paying
American jobs. If I didn't believe that, I wouldn't support this agreement.
Freddie
Many of those NeoCon Bibi lovers and Jonathan Pollard conservatives love
TPP and H1B Ted Cruz. Ted is also a Goldman Sachs boy.
Squids_In
That giant sucking sound just got gianter.
MrTouchdown
Probably, but here's a thought:
It might be a blowing sound of all things USA deflating down (in USD
terms) to what they are actually worth when compared to the rest of the
world. For example, a GM assembly line worker will make what an assembly
line worker in Vietnam makes.
This will, of course, panic Old Yellen, who will promptly fill her diaper
and begin subsidizing wages with Quantitative Pleasing (QP1).
Buckaroo Banzai
If this gets through congress, the Republican Party better not bother
asking for my vote ever again.
Chupacabra-322
Vote? You seem to think "voting" will actually influence actions / Globalists
plans which have been decades in the making amoungst thse Criminal Pure
Evil Lucerferian Psychopaths hell bent on Total Complete Full Spectrum World
Domination.
Yea, keep voting. I'll be out hunting down these Evil doers like the
dogs that they are.
Buckaroo Banzai
I have no illusions regarding the efficacy of voting. It is indeed a
waste of time.
What I said was, they better not dare even ASK for my vote.
Ignatius
Doesn't matter. Diebold is so good at counting that you don't even need
to show up at the polls anymore. It's like a miracle of modern technology.
Peter Pan
Did the article say 40%?
I imagine they meant 40% of whatever is left after we all go to hell
in a hand basket.
Great day for the multinationals and in particular the pharmaceutical
companies.
"... the ideal markets that would produce Pareto Optimal allocations don't actually exist ..."
"... moving from actually existing non-ideal markets to ideal markets WOULD NOT BE Pareto Optimal even if it was possible to do so, which it isn't. ..."
"... In short, Pareto Optimality is a just so story that has absolutely no bearing on the real world other than as an ideological justification for tons of bullshit. ..."
"... The next step in graduate students' indoctrination is to teach them that although Pareto Optimal reallocations are implausible, you can get around that with a "principle of compensation." The principle, too is based on a same yardstick fallacy. But never mind the Pareto Optimality smokescreen and the compensation smokescreen have constrained economists to think in terms of doing what is best for the wealthiest. Funny how that happens. ..."
"Graduate students of economics learn, early in their careers, that markets allocations are Pareto
Optimal."
What they don't learn is that
1. the ideal markets that would produce Pareto Optimal allocations don't actually exist
and
2. moving from actually existing non-ideal markets to ideal markets WOULD NOT BE Pareto Optimal
even if it was possible to do so, which it isn't.
In short, Pareto Optimality is a just so story that has absolutely no bearing on the real
world other than as an ideological justification for tons of bullshit.
The next step in graduate students' indoctrination is to teach them that although Pareto Optimal
reallocations are implausible, you can get around that with a "principle of compensation." The
principle, too is based on a same yardstick fallacy. But never mind the Pareto Optimality smokescreen
and the compensation smokescreen have constrained economists to think in terms of doing what is
best for the wealthiest. Funny how that happens.
The next step in graduate students' indoctrination is to teach them that although Pareto
Optimal reallocations are implausible, you can get around that with a "principle of compensation."
The principle, too is based on a same yardstick fallacy. But never mind the Pareto Optimality
smokescreen and the compensation smokescreen have constrained economists to think in terms
of doing what is best for the wealthiest....
Richest in U.S. Shape Private Tax System to Save Billions
By NOAM SCHEIBER and PATRICIA COHEN
The very wealthiest families are able to quietly shape tax policy that will allow them
to shield millions, if not billions, of their income using maneuvers available only to several
thousand Americans.
Supposing I understand the essay, Roger Farmer is just writing the logical justification
to Herbert Spencer's (never Charles Darwin's) "survival of the fittest" rationale that Spencer
made wildly popular after Darwin published "On the Origin of Species."
Spencer was the successful ultimate justifier of British "sun-never-setting-on-the-Empire"
capitalism. Spencer sold a biological justification, Farmer is selling a logical justification
of Empire.
No, I think Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems
to do it in a way that opens up space for countless side arguments that leave Pareto
Optimality unscathed.
The bottom line is that NO ONE would have ever paid any attention to the not just
"weak" but nonsensical concept if it didn't serve the function of justifying and ultimately
glorifying great inequalities of wealth and income.
;
I understand the argument and I am entirely right:
Roger Farmer is just writing the
logical justification to Herbert Spencer's (never Charles Darwin's) "survival of the
fittest" rationale that Spencer made wildly popular after Darwin published "On the Origin
of Species."
Spencer was the successful ultimate justifier of British "sun-never-setting-on-the-Empire"
capitalism. Spencer sold a biological justification, Farmer is selling a logical justification
of Empire capitalism.
I needed to be sure the argument was as empty morally as I supposed initially, but I
supposed correctly. The Roger Farmer essay is an amoral logical justification of imperial
capitalism. Plato's "Republic" conceived amorally. ;
Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems to do it
in a way that opens up space for countless side arguments that leave Pareto Optimality
unscathed.
The bottom line is that NO ONE would have ever paid any attention to the
not just "weak" but nonsensical concept if it didn't serve the function of justifying
and ultimately glorifying great inequalities of wealth and income.
[ Agreed completely, but this argument runs with mine. ]
Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems to do it
in a way that opens up space for countless side arguments that leave Pareto Optimality
unscathed....
[ The issue is that Roger Farmer leaves Pareto Optimality unscathed,
and this is an essential point. The essay is beyond the morality of now, but there is
no beyond. ]
"... the ideal markets that would produce Pareto Optimal allocations dont actually exist ..."
"... moving from actually existing non-ideal markets to ideal markets WOULD NOT BE Pareto Optimal even if it was possible to do so, which it isnt. ..."
"... In short, Pareto Optiimality is a just so story that has absolutely no bearing on the real world other than as an ideological justification for tons of bullshit. ..."
"... The next step in graduate students indoctrination is to teach them that although Pareto Optimal reallocations are implausible, you can get around that with a principle of compensation. The principle, too is based on a same yardstick fallacy. But never mind the Pareto Optimality smokescreen and the compensation smokescreen have constrained economists to think in terms of doing what is best for the wealthiest. Funny how that happens. ..."
"Graduate students of economics learn, early in their careers, that markets allocations are Pareto
Optimal."
What they don't learn is that
1. the ideal markets that would produce Pareto Optimal allocations don't actually exist
and
2. moving from actually existing non-ideal markets to ideal markets WOULD NOT BE Pareto Optimal
even if it was possible to do so, which it isn't.
In short, Pareto Optimality is a just so story that has absolutely no bearing on the real
world other than as an ideological justification for tons of bullshit.
The next step in graduate students' indoctrination is to teach them that although Pareto Optimal
reallocations are implausible, you can get around that with a "principle of compensation." The
principle, too is based on a same yardstick fallacy. But never mind the Pareto Optimality smokescreen
and the compensation smokescreen have constrained economists to think in terms of doing what is
best for the wealthiest. Funny how that happens.
The next step in graduate students' indoctrination is to teach them that although Pareto
Optimal reallocations are implausible, you can get around that with a "principle of compensation."
The principle, too is based on a same yardstick fallacy. But never mind the Pareto Optimality
smokescreen and the compensation smokescreen have constrained economists to think in terms
of doing what is best for the wealthiest....
Richest in U.S. Shape Private Tax System to Save Billions
By NOAM SCHEIBER and PATRICIA COHEN
The very wealthiest families are able to quietly shape tax policy that will allow them
to shield millions, if not billions, of their income using maneuvers available only to several
thousand Americans.
Supposing I understand the essay, Roger Farmer is just writing the logical justification
to Herbert Spencer's (never Charles Darwin's) "survival of the fittest" rationale that Spencer
made wildly popular after Darwin published "On the Origin of Species."
Spencer was the successful ultimate justifier of British "sun-never-setting-on-the-Empire"
capitalism. Spencer sold a biological justification, Farmer is selling a logical justification
of Empire.
No, I think Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems
to do it in a way that opens up space for countless side arguments that leave Pareto
Optimality unscathed.
The bottom line is that NO ONE would have ever paid any attention to the not just
"weak" but nonsensical concept if it didn't serve the function of justifying and ultimately
glorifying great inequalities of wealth and income.
;
I understand the argument and I am entirely right:
Roger Farmer is just writing the
logical justification to Herbert Spencer's (never Charles Darwin's) "survival of the
fittest" rationale that Spencer made wildly popular after Darwin published "On the Origin
of Species."
Spencer was the successful ultimate justifier of British "sun-never-setting-on-the-Empire"
capitalism. Spencer sold a biological justification, Farmer is selling a logical justification
of Empire capitalism.
I needed to be sure the argument was as empty morally as I supposed initially, but I
supposed correctly. The Roger Farmer essay is an amoral logical justification of imperial
capitalism. Plato's "Republic" conceived amorally. ;
Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems to do it
in a way that opens up space for countless side arguments that leave Pareto Optimality
unscathed.
The bottom line is that NO ONE would have ever paid any attention to the
not just "weak" but nonsensical concept if it didn't serve the function of justifying
and ultimately glorifying great inequalities of wealth and income.
[ Agreed completely, but this argument runs with mine. ]
Farmer is dissing Pareto Optimality and using "sunspots" as sarcasm. He seems to do it
in a way that opens up space for countless side arguments that leave Pareto Optimality
unscathed....
[ The issue is that Roger Farmer leaves Pareto Optimality unscathed,
and this is an essential point. The essay is beyond the morality of now, but there is
no beyond. ]
"... The obvious candidate for this dark force [correlation between (rising) inequality and (low) growth] is crony capitalism. When a country succumbs to cronyism, friends of the rulers are able to appropriate large amounts of wealth for themselves -- for example, by being awarded government-protected monopolies over certain markets, as in Russia after the fall of communism. That will obviously lead to inequality of income and wealth. It will also make the economy inefficient, since money is flowing to unproductive cronies. Cronyism may also reduce growth by allowing the wealthy to exert greater influence on political policy, creating inefficient subsidies for themselves and unfair penalties for their rivals. ..."
"... The real problem is that money does not go to where it should go, as we see for example in the United States. The money does not flow into the real economy, because the transmission mechanism is broken. That is why we have a bubble in the financial system. The answer is not to tighten monetary policy, but to reform monetary policy so as to ensure that the money gets to the right place... ..."
"... As Stiglitz notes, the transmission mechanisms are broken. Economists trickle down monetary policy might work in theory, but not in practice, as we have seen for the last seven years, when low rates dont trickle down and were wasted instead on asset speculation by the 1%. ..."
"... Reform of the Fed, and the end of cronyism are essential to making sure that the stimulus of low rates gets to Main Street, to ordinary people, and not primarily to asset speculators. ..."
"... The recent decision by the Fed to raise interest rates is the latest example of the rigged economic system. Big bankers and their supporters in Congress have been telling us for years that runaway inflation is just around the corner. They have been dead wrong each time. Raising interest rates now is a disaster for small business owners who need loans to hire more workers and Americans who need more jobs and higher wages. As a rule, the Fed should not raise interest rates until unemployment is lower than 4 percent. Raising rates must be done only as a last resort - not to fight phantom inflation. ..."
"... And in one sentence Summers illustrates exactly why we dodged a bullet in not appointing Summers to be Fed Chair. Preserving the power of the Fed is not the most important policy. Changing the Fed composition so that it is more consumer friendly and not dominated by Wall Street interests is the most important policy change needed. ..."
"... the Balkanized character of US banking regulation is indefensible and would be ended. The worst regulatory idea of the 20th century-the dual banking system-persists into the 21st. The idea is that we have two systems one regulated by the States and the Fed and the other regulated by the OCC so banks have choice. With ambitious regulators eager to expand their reach, the inevitable result is a race to the bottom. ..."
"... Summers is also calling for higher capital requirements. Excellent stuff! ..."
This is the beginning of a long response from Larry Summers to an op-ed by Bernie Sanders:
The Fed and Financial Reform
– Reflections on Sen. Sanders op-Ed
: Bernie Sanders had an
op Ed in the New York Times
on Fed reform last week that provides an opportunity to reflect
on the Fed and financial reform more generally. I think that Sanders is right in his central
point that financial policy is overly influenced by financial interests to its detriment and
that it is essential that this be repaired.
At the same time, reform requires careful reflection if it is not to be counterproductive.
And it is important in approaching issues of reform not to give ammunition to right wing critics
of the Fed who would deny it the capacity to engage in the kind of crisis responses that have
judged in their totality been successful in responding to the financial crisis.
The most important policy priority with respect to the Fed is protecting it from stone age
monetary ideas like a return to the gold standard, or turning policymaking over to a formula,
or removing the dual mandate commanding the Fed to worry about unemployment as well as inflation.
...
JohnH said...
Disagree!!! There is more to this than just interest rates. There is the matter of how the policy
gets implemented--who gets low rates. Currently the low rates serve mostly the 1%, who profit
enormously from them. Case in point: Mort Zuckerberg's 1% mortgage!
"The obvious candidate for
this dark force [correlation between (rising) inequality and (low) growth] is crony capitalism.
When a country succumbs to cronyism, friends of the rulers are able to appropriate large amounts
of wealth for themselves -- for example, by being awarded government-protected monopolies over
certain markets, as in Russia after the fall of communism. That will obviously lead to inequality
of income and wealth. It will also make the economy inefficient, since money is flowing to unproductive
cronies. Cronyism may also reduce growth by allowing the wealthy to exert greater influence on
political policy, creating inefficient subsidies for themselves and unfair penalties for their
rivals."
As we know (although most here steadfastly ignore it) the Fed is rife with crony capitalism.
As Bernie pointed out, 4 of the regional governors are from Goldman Sachs. Other examples are
abundant. Quite simply, the system is rigged to benefit the few, minimizing any potential trickle
down.
If a broad economic recovery is the goal, ending cronyism at the Fed is likely to be far more
effective that low interest rates channeled only to the 1%.
JohnH said in reply to JohnH...
Stiglitz:
The real problem is that money does not go to where it should go, as we see for example
in the United States. The money does not flow into the real economy, because the transmission
mechanism is broken. That is why we have a bubble in the financial system. The answer is not to
tighten monetary policy, but to reform monetary policy so as to ensure that the money gets to
the right place...
Small and medium enterprises cannot borrow money at zero interest rates -
not even a private person, I wish I could do that (laughs). I'm more worried about the loan interest
rates, which are still too high. Access for small and medium enterprises to credit is too expensive.
That's why it is so important that the transmission mechanism work..."
http://www.cash.ch/news/alle/stiglitz-billiggeld-lost-kein-problem-3393853-448
And let's not forget consumer credit rates, which barely dropped during the Great Recession
and are still well above 10%. Even mortgage lending, which primarily benefits the affluent, have
been stagnant for years despite historically low rates.
As Stiglitz notes, the transmission mechanisms are broken. Economists' trickle down monetary
policy might work in theory, but not in practice, as we have seen for the last seven years, when
low rates don't trickle down and were wasted instead on asset speculation by the 1%.
Reform of the Fed, and the end of cronyism are essential to making sure that the stimulus of
low rates gets to Main Street, to ordinary people, and not primarily to asset speculators.
Peter K. said in reply to JohnH...
Bernie Sanders:
"The recent decision by the Fed to raise interest rates is the latest example of the rigged
economic system. Big bankers and their supporters in Congress have been telling us for years
that runaway inflation is just around the corner. They have been dead wrong each time. Raising
interest rates now is a disaster for small business owners who need loans to hire more workers
and Americans who need more jobs and higher wages. As a rule, the Fed should not raise interest
rates until unemployment is lower than 4 percent. Raising rates must be done only as a last
resort - not to fight phantom inflation.
"
The financial system reform legislation in 2017 will also need to include these matters:
1.
Licensure fees and higher and more differential income taxation rates based on the type of financial
trading ratios the entities have (in order to direct more emphasis to real-economy lending and
away from speculative and leveraged positions used in the financial asset trading marketplaces,
so hedge funds probably would face the highest rates in income taxation). For a certain period
after enactment these added taxes would be payable by the banks using their excess reserves, which
will simply be eliminated until the reserve accounts return to the historically normal period
when excess reserves were very small (there would no longer be a need for IOER, as the excess
would be eliminated by operation of the taxation statutes). Attaching added ways & means statutes
to all the financial service entities also serves to 'cover' some more of huge financial risk
held by society and produced by them while the success of this huge sector actually contributes
to the financing of self-government - which is also an indirect way to attach high Net Worth being
used).
2. New statutory provisions need to reach any and all entities in the financial community regardless
of definitions based on the functions they serve or provide (or the way they are named - so yes,
the prior separation for deposit-management banking from investing activities can still happen,
but this only helps to define which of the differential provisions apply, not help the entity
escape them). Perhaps as a result Bank Holding Companies and other large entities won't use a
complex network of hundreds of subsidiaries as these would not then serve as a way to avoid taxation,
regulatory standards on what are prudent expectations, or supervision; or be used simply to obfuscate
-- so investors and regulators can't see the truth of matters.
3. The newly named central bank needs to hold the discretion to buy Treasury bonds directly
from the Treasury. This would discipline these fundamental asset-trading marketplaces and the
huge primary dealer group of entities, and weaken the fox-and-hen-house influence on public finance.
4. New accounting approaches for the central bank would clarify what happens should the Congress
direct redemption amounts or asset sales for the public's purposes. A good portion of the current
FRB's book of owned assets can be redeemed or sold without affecting the 'power' of the central
bank, and the proceeds used then, for example, to lower payroll taxes via a direct transfer to
the social security trust fund's set of accounts).
Senator Sanders, good stuff. Bring out the vote, let us get others in Congress with whom you
can work.
BillB said...
Summers: "The most important policy priority with respect to the Fed is protecting it from stone
age monetary ideas like a return to the gold standard, or turning policymaking over to a formula,
or removing the dual mandate commanding the Fed to worry about unemployment as well as inflation."
And in one sentence Summers illustrates exactly why we dodged a bullet in not appointing Summers
to be Fed Chair. Preserving the power of the Fed is not the most important policy. Changing the
Fed composition so that it is more consumer friendly and not dominated by Wall Street interests
is the most important policy change needed.
Summers argument is the same we always hear from so-called "centrists." "You hippies should
shut up because you are helping the opposition."
You hear the same sort of argument with respect to Black Lives Matter.
pgl said in reply to pgl...
On financial regulation - Summers is spot on here:
"the Balkanized character of US banking regulation is indefensible and would be ended. The
worst regulatory idea of the 20th century-the dual banking system-persists into the 21st. The
idea is that we have two systems one regulated by the States and the Fed and the other regulated
by the OCC so banks have choice. With ambitious regulators eager to expand their reach, the
inevitable result is a race to the bottom."
It is called regulatory capture.
Summers is also calling for higher capital requirements. Excellent stuff!
"... Wolf concludes that America cannot do without some form of a welfare state, specifically improved training, education, and universal health care. ..."
"... Our problem is that we are asking for concessions that are beyond the acceptable limit for elites in any historical epoch. We're asking the powerful and the rich to give up their money and power for the greater good of all mankind. This is not likely to happen unless a powerful enough segment of the elite comes to the inescapable conclusion that they're literally dead meat if they don't and therefore opts for survival over position. ..."
"... Welfare etc are social services that can only be funded through the world-wide looting operation of the American empire ..."
An excellent
column by Martin Wolf in the Financial Times, where he is the lead economics editor. Starting
with principles put forward by Ben Bernanke in his recent speech on income inequality, Wolf
concludes that America cannot do without some form of a welfare state, specifically improved
training, education, and universal health care.
James Levy, December 26, 2015 at 4:32 pm
I have no idea if Marx was right, in the long run, or wrong–the verdict is still out on the
long-term viability of industrial capitalism, which is less than 250 years old and creaking
mightily as I write this. It may be that when Rosa Luxemburg said that the choice was between
Socialism and Barbarism, she underestimated how likely barbarism was. What I do know is that
capitalism today isn't just too ugly to tolerate, it is downright murderous. Its imperatives
are driving the despoliation of the planet. It's love of profit over all else is cutting
corners and creating externalities that are lethal. But it has made a few percent of the
global population comfortable and powerful, and they are holding onto that comfort and that
power come hell or high water (and, ironically, if things continue apace both are on the
menu).
Our problem is that we are asking for concessions that are beyond the acceptable limit
for elites in any historical epoch. We're asking the powerful and the rich to give up their
money and power for the greater good of all mankind. This is not likely to happen unless a
powerful enough segment of the elite comes to the inescapable conclusion that they're
literally dead meat if they don't and therefore opts for survival over position. I am not
enthusiastic that this will happen before it is way too late to save more than a fraction of
the current world population, and send those people back to the lifestyles and thought
patterns of 30 Year's War Europe.
digi_owl
Its a generational thing. Right after WW2, many of the elite had just
that epiphany that unless they have the common people behind them, they are
toast. But now they are dead or dying, and their grandkids are basically
once more thinking that they can go it alone. This because they have not had
the required experiences that help develop the wisdom.
What Marx saw long ago, we can see today, and without relegating ourselves
to his analysis, come to our own conclusions. Contradictions, summed up well by
Lincoln as a house divided against itself cannot stand is just as true today.
Millions of guns to protect the citizenry from tyranny have only resulted in a
1/4 million murders and 5 times as many shootings since Jan 1, 2000, some
placing people in wheel chairs and other crippling gunshot afflictions, and
more and more institutionalized state oppression, economic exploitation and
miserable lives propped up in an alcoholic haze until the liver or brain gives
out. We have more food than we know what to do with so we throw away almost as
much as we eat. And we have eaten ourselves into morbid obesity, diabetes and
heart disease. The contradictions abound from the kitchen table to the kitchen
cabinet of the White House where there seems to be nothing passed so freely as
bad advice.
The Welfare State arose from the sacrifices of the population in giving
their sweat, blood and tears to defend their nation during war, to be rewarded
for their sacrifices, rewards which were demands for power sharing and more in
the paycheck, more benefits and more time to enjoy the life spent in a more
prosperous world. It seems to me that Obamacare is not simply in death spiral
all of its own making, but even more so, because it is the best attempt
capitalism can produce in an America that is the most capitalist of societies
down to the marrow its bones. Little competition from the Church or the social
relations between nobles and subjects set for in the laws that were
disestablished to free markets for commodification and money making. Money
making enterprises structured the laws from slavery, to the voting franchise
with little from the state to cushion any of the hardships of life in America.
Health care is the largest industry we have. It is approaching 20% of the
GNP. I remember the great national freak out in the late 1970s when congress
realized it was approaching 10%. Nothing seems to be stopping the costs from
spiraling upward and onward. No risk of deflation here where nothing is spared
to save a life, operate on some poor little afflicted child, or buy a piece of
equipment the size of an office building that shoots a proton beam at cancer,
one cancer cell at a time.
When Obama Care becomes a clear burden to even the democrats who can point
to it now as some sort of accomplishment, and it is an accomplishment for the
people who finally get to see a doctor, get into a hospital, get that operation
or diagnosis that saves their lives, when even those accomplishments number in
the millions, it will be part of a health care industry for which $Trillions of
dollars can no longer be justified or even funded. As that financial collapse
approaches, it would be better for politicians to declare the defeat of a
program better rolled into one universal single payer system currently
operating as Medicare, than try to reform, shore up or the old tried and true
public lie, get rid of its waste and corruption.
Declare victory with Medicare as the solution and put everyone into it. The
only paper work left should be each person's medical history with diagnosis and
healing as the happy ending to the story.
There is a fundamental error in perception in the Western world that is so
pervasive that people can't even see it. As a most basic component of a healthy
society people need to be able to survive at a local community level without
outside support. Only after that is taken care of should people concern
themselves with luxuries, inter-community and international relations.
Welfare–not to mention other government services–can appear to have positive
impacts if one only looks at their effects in isolation, however I think there
is a devastating and pernicious impact on people's ability to form community
bonds and have local resilience with things like welfare.
Also, let's also not forget that Americans consume far more of the earth's
precious resources than any other group in the world. Welfare etc are social
services that can only be funded through the world-wide looting operation of
the American empire. Do these recipients of empire benefits have a moral right
to share in the loot of empire? Perhaps instead of domestic welfare it would be
more ethical for the American empire to provide social benefits for the
indigenous peoples who are forced from their lands to work like slaves for the
empire's benefit. Although admittedly if the American empire used it's loot for
the benefit of the foreign peoples whose lives it destroyed then there'd
probably be nothing left to spread around to the military, or to pacify and
police the domestic population. So I suppose that's not a serious
proposal.
Welfare etc are social services that can only be funded through the
world-wide looting operation of the American empire
This is obviously not true. Unless every social democratic country in the
world is considered as a piece of the American empire. And even then, I
would argue that we can easily afford a generous welfare state with a small
shift in priorities away from (globally destabilizing) defense spending to
social productive spending on human development.
Obvious to who? America lavishes so much money on its military not
only because of corruption, but also because it has the world reserve
currency and is a guarantor of the safety of international shipping.
These facts are inextricably linked to the America's status as the world
hegemon. The empire provides order and structure, and enforces the
extraction of resources from the periphery to the center. The bread and
circuses are inextricably linked to the empire's military activities and
trying to tease them apart will only lead to collapse of the entire
system sooner than it will otherwise happen.
"Social Democratic"–now that's an interesting phrase. Did you know
that Syria is a democracy, and was an extremely prosperous and
well-education nation prior to 2011?
Here's a telling paragraph from the Wikipedia article about Syria:
Hafez al-Assad died on 10 June 2000. His son, Bashar al-Assad,
was elected President in an election in which he ran unopposed.[68]
His election saw the birth of the Damascus Spring and hopes of
reform, but by autumn 2001 the authorities had suppressed the
movement, imprisoning some of its leading intellectuals.[84]
Instead, reforms have been limited to some market reforms.
"... When children don't get good educations, the production of knowledge falls into private control. Power gets consolidated. The official theoretical frameworks that benefit the most powerful get locked in. ..."
"... Not only were the politicians worried about votes but also the welfare state was a way to head off a left wing revolution. ..."
"... the change began in 1976 with the election of Rockefeller-funded Jimmy Carter, who immediately launched an austerity program. Support for Keynesian economics was further eroded by the 70's stagflation which we now know was caused by Mid East oil but at the time the "left" were like deer in the headlights, with no clue what to do. ..."
"... The final nail in the coffin was the fall of the Berlin Wall and the collapse of the USSR, discrediting communism. After that, "there was no alternative" to corporate capitalism. Or more accurately, the left was slow to formulate an alternative and to this day is still struggling with an alternative as we have observed with Syriza. It's not enough to oppose austerity, you have to have a constructive plan to fix things. ..."
LP: You indicate that this approach to budgeting was invented as a way of making the New Deal
acceptable to the business community. How did that work? Over time, who has benefitted from it? Who
has lost?
OC: Back in the 1940s, workers were fighting for their rights, class struggle was heating up,
and soldiers would soon be returning from the fronts. At that point, a new business organization,
the Committee for Economic Development (CED), came together. Led by Beardsley Ruml and other influential
business figures, the CED played a crucial role in developing a conservative approach to Keynesian
economics that helped make policies that would help put all Americans to work acceptable to the business
community.
The idea was that more consumers would translate into more profits - which is good for business.
After all, the economic experts and budget technicians said so, not just the politicians. And the
business leaders were told that economic growth and price stability would go along with this, which
they liked.
But things changed progressively over the 1970s and early 1980s. Firms went global. They became
financialized. The balance of power between workers and owners started to shift more towards the
owners, the capitalists. People were told they needed to sacrifice, to accept cuts to social spending
and fewer rights and benefits on the job - all in the name of economic science and capitalism. The
CAB was turned into a tool for preventing excessive spending - or justifying selected cuts.
Middle class folks were afraid that inflation would erode their savings, so they were more keen
to approve draconian measures to cut wages and reduce public budgets. People on the lower rungs of
the economic ladder felt the pain first. But eventually the middle class fell on the wrong side of
the fence, too. Most of them became relatively poorer.
I suppose this shows the limits of democracy when information, knowledge, and ultimately power
are unequally distributed.
LP: You're really talking about birth of austerity and the way lies about public spending and
budgets have been sold to the public. Why is austerity such a powerful idea and why do politicians
still win elections promoting it?
OC: Austerity is so powerful today because it feeds off of itself. It makes people uncertain about
their lives, their debts, and their jobs. They become afraid. It's a strong disciplinary mechanism.
People stop joining forces and the political status quo gets locked down.
Even the name of this tool, the "cyclically adjusted budget," carries an aura of respect. It diverts
our attention. We don't question it. It creates a barrier between the individual and the political
realm: it undermines democratic participation itself. This obscure theory validates, with its authority,
a big economic mistake that sounds like common sense but is actually snake oil - the notion that
the federal government budget is like a household budget. Actually, it isn't. Your household doesn't
collect taxes. It doesn't print money. It works very differently, yet the nonsense that it should
behave exactly like a household budget gets repeated by politicians and policymakers who really just
want to squeeze ordinary people.
LP: How does all this play out in the U.S. and in Europe?
OC: The European Union requires its members to comply with something called a cyclically adjusted
budget constraint. Each country has to review its economic and fiscal plans with the European Commission
and prove that those are compatible with the Pact. It's a ceiling on a country's deficit, but it's
also much more than that.
Thanks to the estimate, the governments of Italy or Spain, for example, are supposed to force
the economy toward some ideal economic condition, the definition of which is obviously quite controversial
and has so far rewarded those countries that have implemented labor market deregulation, cut pensions,
and even changed the way elections happen. Again, it's a control mechanism.
In the U.S. this scenario plays out, too, although less strictly. Talk about the budget often
relies on the same shifty and politically-shaded statistical tools to support one argument or the
other. Usually we hear arguments that suggest we have to cut social programs and workers' rights
and benefits or face economic doom. Tune in to the presidential debates and you'll hear this played
out - and it isn't strictly limited to one party.
LP: How do we stop powerful players from co-opting economics and budgets for their own purposes?
OC: Our education system is increasingly unequal and deprived of public resources. This is true
in the U.S. but also in Europe, where the crisis accelerated a process that was already underway.
When children don't get good educations, the production of knowledge falls into private control.
Power gets consolidated. The official theoretical frameworks that benefit the most powerful get locked
in.
In the economic field, we need to engage different points of view and keep challenging dominant
narratives and frameworks. One day, human curiosity will save us from intellectual prostitution.
craazyboy, December 25, 2015 at 10:10 am
Most people don't eat, go to college, use healthcare, rent or buy housing on the east or west
coast, or purchase military equipment (except perhaps small time stuff like assault rifles), so
the BLS greatly underweights(or hedonics prices, or just pulls rent data outta their butts) these
things in the inflation data they create. The Fed then goes into a tizzy if the data comes in
a few tenths of a percent below 2%, even if the data spent years above 2%, and floods the country
in liquidity so our job creators – banks and large corporations – will hire us and give us raises,
and once they finish doing that, the BLS will signal that inflation is 2% and the Fed will then
know all our problems are solved. It just takes time.
See the book "Treasure Island" for how things are going on the revenue side. But more tax breaks
for large corporations and the wealthy are needed so we don't force them to do any illegal tax
avoidance stuff and they will then happily pay whatever they think their fair should be. Might
be zero. They will then have money to buy stuff too, which is a big plus as well, when you think
about it.
So clearly, you can see why deficit spending almost seems inevitable.
Then the next problem is we still have unemployment, and something needs to be done about that.
For instance, lots of room for more government contracts for social purposes. Take Obamacare.
Place a single source contract, now estimated between $1 and $2 billion, with a Canadian systems
company that employs independent contractor Indian programmers. Eventually, we have Obamacare!
We can do this if we just get serious about this and say "No More Austerity In America!"
likbez, December 27, 2015 at 9:31 pm
Emperor Severus is famously said to have given the advice to his sons: "Be harmonious, enrich
the soldiers, and scorn all other men"
Brooklin Bridge
Can education provide the solution?
I suspect that the educational bias occurs at all levels in the sense that much the same misinformation
is provided regardless of neighborhood but progressively wrapped in more elegant pedagogical flim-flam-ery
for the owner class. Basically, the bias changes, but not the message, as one goes from poor (austerity
– this is your lot in life) to wealthy (austerity – you were born to make the tough decisions,
it's in your genes – and you'll just have to accept the rewards, man up to your destiny and toss
em a quarter on Sundays). The upper class does get a far better education, but the bias is or
becomes unconscious over time.
Basically, aristocracy is a nasty brutish cycle that keeps upping the ante of consequences.
washunate, December 26, 2015 at 8:09 am
Yves, INET and NEP and others have been lecturing that topic for years. How many trillions
of dollars do we have to deficit spend before the failure of things to improve indicts the hypothesis
itself?
Maybe what matters is not the amount of the spending, but rather, the distribution.
And what is so bad about deflation? The attachment of moral judgment to inflation and deflation
is rather bizarre outside of establishment monetary economics. The basic monetary problem confronting
the bottom 80% or so of American households is inflation, not deflation.
Dan Lynch, December 25, 2015 at 11:27 am
I don't buy the article's historical narrative.
Conservatives have ALWAYS opposed spending on social programs and ALWAYS used the deficit as an
excuse (unless the deficit was due to war or tax cuts for the rich). This was true during the
New Deal; FDR himself was a deficit hawk.
Nonetheless for years the public supported social programs and no politician dared to cut them.
Not only were the politicians worried about votes but also the welfare state was a way to
head off a left wing revolution.
What changed? I would say the change began in 1976 with the election of Rockefeller-funded
Jimmy Carter, who immediately launched an austerity program. Support for Keynesian economics was
further eroded by the 70's stagflation which we now know was caused by Mid East oil but at the
time the "left" were like deer in the headlights, with no clue what to do.
The final nail in the coffin was the fall of the Berlin Wall and the collapse of the USSR,
discrediting communism. After that, "there was no alternative" to corporate capitalism. Or more
accurately, the left was slow to formulate an alternative and to this day is still struggling
with an alternative as we have observed with Syriza. It's not enough to oppose austerity, you
have to have a constructive plan to fix things.
Vatch, December 25, 2015 at 12:40 pm
History teaches us that peacetime austerity can be horribly disastrous. Some examples:
British austerity during the 19th century included the Great Irish Famine of 1845-1849: The Irish
population was about 8 million people in 1841, and the death toll of the famine was at least a
million. This is a huge percentage loss of life. Due to the combination of deaths with emigration
and births that did not occur, the 1851 population of 6.5 million was estimated to be about 2.5
million lower than expected. Since food was exported during the famine, this was definitely an
extreme case of austerity.
Soviet austerity during the 1930s: Millions died, and food was exported during the famine period
of 1931-1933. Austerity is often associate with conservatives, so I guess conservative austerity
enthusiasts must be pleased with the performance of the eminent conservative Josef Stalin.
Chinese austerity during the Great Leap Forward of 1958-1962: Tens of millions died - perhaps
as many as 45 million. The same irony about conservatives and Stalin is true about conservatives
and Mao, but on a far greater scale.
This is a pretty remarkable piece of rambling drivel. To the extent coherent points can be
taken away from this, it appears there are at least two major flaws:
1) There is absolutely no link between public opinion and CAB. Germany chooses to have national
healthcare, passenger rail, and renewable energy. The US chooses to have national security, predatory
medicine, and car-dependent sprawl.
2) There is absolutely no link between austerity and concentration of wealth and power. France
has a much more equal distribution of wealth than the US. Yet the US has run enormous deficits
while France is supposedly constrained by the techno mumbo jumbo nonsense of the EU.
The notion that 'austerity' is sold to the public is just a blatant falsehood. Americans don't
support the budget priorities in Washington. It's a collective action problem, not a public opinion
problem.
"... At a time of tension for U.S. international relations, cheap oil has dovetailed with some of the Obama administration's foreign policy goals: pressuring Russian President Vladimir Putin, undermining the popularity of Venezuelan President Nicolás Maduro and tempering the prospects for Iranian oil revenue. At the same time, it is pouring cash into the hands of consumers, boosting tepid economic recoveries in Europe, Japan and the United States. ..."
Plunging crude oil prices are diverting hundreds of billions of dollars away from the treasure
chests of oil-exporting nations, putting some of the United States' adversaries under greater stress.
After two years of falling prices, the effects have reverberated across the globe, fueling economic
discontent in Venezuela, changing Russia's economic and political calculations, and dampening Iranian
leaders' hopes of a financial windfall when sanctions linked to its nuclear program will be lifted
next year.
At a time of tension for U.S. international relations, cheap oil has dovetailed with some
of the Obama administration's foreign policy goals: pressuring Russian President Vladimir Putin,
undermining the popularity of Venezuelan President Nicolás Maduro and tempering the prospects for
Iranian oil revenue. At the same time, it is pouring cash into the hands of consumers, boosting tepid
economic recoveries in Europe, Japan and the United States.
"Cheap oil hurts revenues for some of our foes and helps some of our friends. The Europeans, South
Koreans and Japanese - they're all winners," said Robert McNally, director for energy in President
George W. Bush's National Security Council and now head of the Rapidan Group, a consulting firm.
"It's not good for Russia, that's for sure, and it's not good for Iran."
... ... ...
In Iran, cheap oil is forcing the government to ratchet down expectations.
The much-anticipated lifting of sanctions as a result of the deal to limit Iran's nuclear program
is expected to result in an additional half-million barrels a day of oil exports by the middle of
2016.
But at current prices, Iran's income from those sales will still fall short of revenue earned
from constrained oil exports a year ago.
Moreover, low prices are making it difficult for Iran to persuade international oil companies
to develop Iran's long-neglected oil and gas fields, which have been off limits since sanctions were
broadened in 2012.
"Should Iran come out of sanctions, they will face a very different market than the one they had
left in 2012," Amos Hochstein, the State Department's special envoy and coordinator for international
energy affairs, said in an interview. "They were forced to recede in a world of over $100 oil, and
sanctions will be lifted at $36 oil. They will have to work harder to convince companies to come
in and take the risk for supporting their energy infrastructure and their energy production."
Meanwhile, in Russia, low oil prices have compounded damage done by U.S. and European sanctions
that were designed to target Russia's energy and financial sectors. And when Iran increases output,
its grade of crude oil will most likely go to Europe, where it will compete directly with Russia's
Urals oil, McNally said.
Steven Mufson covers the White House. Since joining The Post, he has covered economics, China,
foreign policy and energy.
Stephen Roach is worried that the Fed has set the world up for another financial market meltdown.
Lower for longer rates and the proliferation of unconventional monetary policy have created "a
breeding ground for asset bubbles, credit bubbles, and all-too frequent crises, so the Fed is really
a part of the problem of financial instability rather than trying to provide a sense of calm in an
otherwise unstable world," Roach
told Bloomberg
TV in an interview conducted a little over a week ago.
To be sure, Roach's sentiments have become par for the proverbial course. That is, it may have
taken everyone a while (as in five years or so) to come to the conclusion we reached long ago, namely
that central banks are setting the world up for a crisis that will make 2008 look like a walk in
the park, but most of the "very serious" people are now getting concerned. Take BofAML for instance,
who, in a note
we outlined on Wednesday, demonstrated the prevailing dynamic with the following useful graphic:
Perhaps Jeremy Grantham put it best: "..in the Greenspan/ Bernanke/Yellen Era, the Fed
historically did not stop its asset price pushing until fully- fledged bubbles had occurred,
as they did in U.S. growth stocks in 2000 and in U.S. housing in 2006."
Indeed. It's with that in mind that we bring you the following excerpts from a new piece by Roach
in which the former Morgan Stanley chief economist and Yale fellow recounts the evolution of the
Fed and how the FOMC ultimately became "beholden to the monster it had created".
By now, it's an all-too-familiar drill. After an extended period of extraordinary monetary accommodation,
the US Federal Reserve has begun the long march back to normalization.
A majority of financial market participants applaud this strategy. In fact, it is a dangerous
mistake. The Fed is borrowing a page from the script of its last normalization campaign – the incremental
rate hikes of 2004-2006 that followed the extraordinary accommodation of 2001-2003. Just as that
earlier gradualism set the stage for a devastating financial crisis and a horrific recession in 2008-2009,
there is mounting risk of yet another accident on what promises to be an even longer road to normalization.
The problem arises because the Fed, like other major central banks, has now become a creature
of financial markets rather than a steward of the real economy. This transformation has
been under way since the late 1980s, when monetary discipline broke the back of inflation and the
Fed was faced with new challenges.
The challenges of the post-inflation era came to a head during Alan Greenspan's 18-and-a-half-year
tenure as Fed Chair. The stock-market crash of October 19, 1987 – occurring only 69 days after Greenspan
had been sworn in – provided a hint of what was to come. In response to a one-day 23% plunge in US
equity prices, the Fed moved aggressively to support the brokerage system and purchase government
securities.
In retrospect, this was the template for what became known as the "Greenspan put" – massive
Fed liquidity injections aimed at stemming financial-market disruptions in the aftermath of a crisis.
As the markets were battered repeatedly in the years to follow – from the savings-and-loan crisis
(late 1980s) and the Gulf War (1990-1991) to the Asian Financial Crisis (1997-1998) and terrorist
attacks (September 11, 2001) – the Greenspan put became an essential element of the Fed's market-driven
tactics.
The Fed had, in effect, become beholden to the
monster it had created. The corollary was that it had also become steadfast in protecting the financial-market-based
underpinnings of the US economy.
Largely for that reason, and fearful of "Japan Syndrome" in the aftermath of the collapse of the
US equity bubble, the Fed remained overly accommodative during the 2003-2006 period. The federal
funds rate was held at a 46-year low of 1% through June 2004, before being raised 17 times in small
increments of 25 basis points per move over the two-year period from mid-2004 to mid-2006. Yet it
was precisely during this period of gradual normalization and prolonged accommodation that unbridled
risk-taking sowed the seeds of the Great Crisis that was soon to come.
Today's Fed inherits the deeply entrenched moral hazard of the Asset Economy.
The longer the Fed remains trapped in this mindset, the tougher its dilemma becomes – and the greater
the systemic risks in financial markets and the asset-dependent US economy.
Roach goes on to say that we're already seeing the beginnings of what may very well turn out to
be a dramatic unwind as high yield rolls over and the emerging world struggles to cope with a soaring
dollar (remember, even though EM has largely avoided "original sin" i.e. borrowing in dollars, at
the sovereign level, corporates are another story).
As an aside, those interested in a comprehensive account of what Roach covers in the article cited
above are encouraged to reach David Stockman's "The Great Deformation."
An interesting and plausible hypothesis: Trump as a candidate who answers voters frustration with
neoliberalism.
Notable quotes:
"... The data suggest theres some kind of connection. According to polls, whites with a high school
degree or less disproportionately favor Trump. These are the same people who have seen their economic
opportunities decline the most in recent years. This group also disproportionately favors tough restrictions
on immigration. ..."
"... A new study released this week showed that in Germany, the economic frustrations of trade nudged
many people into becoming right-wing extremists over the past two decades - throwing their support behind
the country's neo-Nazi parties. ..."
"... Still, these far-right parties have consistently earned a percentage point or two of the German
national vote. And the economists found that they have been particularly popular with people who have
been negatively impacted by trade. ..."
"... using German data on elections, employment, and commerce, they showed that places where trade
caused the most pain also had the largest increases in support for far-right parties. Over the past
20 years, Germanys exports and imports have both skyrocketed, first thanks to the fall of the Iron Curtain,
then due to Chinas rise as a major manufacturer. ..."
"... Workers whose industries were hurt by trade were were more likely to say they would start voting
for one of the extreme right parties. Even workers whose own industries were unaffected by trade were
more likely to support a neo-Nazi political party if they lived in a region hurt by trade. ..."
"... Christian Dippel, one of the authors of the study, says it's also important to look at the
context in each country. The neo-Nazi parties happen to be the voice of anti-globalization in Germany.
But in Spain, for instance, these views are the trademark of Podemos, a far-left party "known for its
rants against globalization and the tyranny of markets," according to Foreign Affairs. ..."
"... The larger lesson, Dippel says, is that globalization creates a class of angry voters who will
reward whoever can tap into their frustrations. These are usually extremist parties, because the mainstream
tends to recognize the overall benefits of trade. "When the mainstream parties are all, in a loose sense,
pro-globalization, there's room for fringe groups to latch onto this anti-globalization sentiment and
profit from it," he says. ..."
"... Author has shown that in America, recent trends in trade have hurt low-wage workers the most.
With his co-authors David Dorn, Gordon Hanson and Jae Song, he published a widely-cited 2014 paper measuring
the negative impacts of manufacturing imports from China, America's largest trading partner. Most of
those ill-effects - like unemployment and lower earnings - were borne by the workers with the lowest
wages. ..."
"... "Immigration always seems to be the most tangible evidence of the impingement of others on
your economic turf," Author adds. ..."
"... "In Germany, these three things get bundled up in these far-right platforms in a way that's
very difficult to unpack," he says. "It could be that you're bundling these ideas together for a reason.
It could be that you're bundling together what's really happening with an idea that's more tangible,
that you could sell more easily to angry voters." ..."
A popular theory for Donald Trump's success emphasizes the economic anxiety of less-educated whites,
who have struggled badly over the past few decades.
Hit hard by factory closings and jobs moving abroad to China and other places, the story goes,
blue-collar voters are channeling their anger at immigrants, who have out-competed them for what
jobs remain. Trump, with his remarks about Mexicans being rapists, has ridden this discontent to
the top of the polls.
The data suggest there's some kind of connection. According to polls, whites with a high school
degree or less disproportionately favor Trump. These are the same people who have seen their economic
opportunities decline the most in recent years. This group also disproportionately favors tough restrictions
on immigration.
But just because there appears to be a connection doesn't mean there is one. Has globalization
pushed working-class voters to the right? Nobody has proven that globalization has in fact pushed
working-class voters to the right or made them more extreme, at least not in the United States, where
the right kind of data aren't being collected. But unique records from Germany have allowed economists
to show how free trade trade changes people's political opinions.
A new study released this week showed that in Germany, the economic frustrations of trade
nudged many people into becoming right-wing extremists over the past two decades - throwing their
support behind the country's neo-Nazi parties. Written by economists Christian Dippel, of University
of California, Los Angeles, Stephan Heblich, of the University of Bristol, and Robert Gold of the
Kiel Institute for the World Economy, the paper was released by the National Bureau of Economic Research.
Germany's far-right politicians, it should be noted, are not garden-variety nationalists. German
intelligence keeps tabs on these people, who frequently use racist and anti-Semitic language. They
say things like: "Europe is the continent of white people and it should remain that way." Many believe
in a global Jewish conspiracy. They are much more radical than, say, Marine Le Pen's National Front
party in France.
Still, these far-right parties have consistently earned a percentage point or two of the German
national vote. And the economists found that they have been particularly popular with people who
have been negatively impacted by trade.
How they measured the radicalizing power of trade
The economists took two different approaches to measure the connection between globalization and
right-wing extremism.
First, using German data on elections, employment, and commerce, they showed that places where
trade caused the most pain also had the largest increases in support for far-right parties. Over
the past 20 years, Germany's exports and imports have both skyrocketed, first thanks to the fall
of the Iron Curtain, then due to China's rise as a major manufacturer.
The researchers looked individually at Germany's 408 local districts, which are roughly equivalent
to counties in the United States. Each of these places was affected by increasing trade in different
ways. Areas that specialized in high-end cars, for instance, saw a happy boost from expanded exports.
Areas that specialized in, say, textiles, were stomped on by cheap Chinese and Eastern European imports.
This map shows changes in imports (bad!) compared to exports (good!). The dark blue regions are
places where imports increased a lot more than exports. These are the places where trade made things
worse, where people lost jobs and factories were shuttered.
These also happen to be the places where far-right parties made the most gains, on average. This
is true after controlling for demographics in each county, the size of the manufacturing sector,
and what part of the country the county was in.
The researchers argue that this relationship is more than just a correlation. To prove that trade
caused far-right radicalization, they only look at changes to the German economy inflicted by external
forces - say, a sudden increase in Chinese manufacturing capacity.
(Also, to get around the problem of German reunification, which happened in 1990, the researchers
split up the analysis into two time periods. From 1987 to 1998, they only looked at West Germany.
From 1998 to 2009, they looked at both regions.)
This evidence from patterns of trade and voting records is convincing, but there is one major
hole. The turmoil from trade caused certain counties to become friendlier to extremist parties -
but was it because the people living there became radicalized? Or did all the moderate voters flee
those places, leaving behind only the crusty xenophobes?
So, to follow up, the researchers used a special German survey that has been interviewing some
of the same people every year since the 1980s. This is a massively expensive project - the U.S. doesn't
have anything quite like it - and it allowed the researchers to actually observe people changing
their minds.
Workers whose industries were hurt by trade were were more likely to say they would start
voting for one of the extreme right parties. Even workers whose own industries were unaffected by
trade were more likely to support a neo-Nazi political party if they lived in a region hurt by trade.
In part this is because trade affects more than just the people who lose their jobs when the shoe
factory closes. Those assembly line workers need to find new jobs, and they put pressure on people
in similar occupations, say, at the garment factory or the tweezer factory.
What this means for the U.S.
All in all, the power of trade to radicalize people was rather small, measured in changes of a
fraction of a percent. This makes makes sense, because, again, Germany's far-right parties are way
out there. It takes a lot of economic suffering to cause someone to start voting with these neo-Nazis.
Christian Dippel, one of the authors of the study, says it's also important to look at the
context in each country. The neo-Nazi parties happen to be the voice of anti-globalization in Germany.
But in Spain, for instance, these views are the trademark of Podemos, a far-left party "known for
its rants against globalization and the tyranny of markets," according to Foreign Affairs.
The larger lesson, Dippel says, is that globalization creates a class of angry voters who
will reward whoever can tap into their frustrations. These are usually extremist parties, because
the mainstream tends to recognize the overall benefits of trade. "When the mainstream parties are
all, in a loose sense, pro-globalization, there's room for fringe groups to latch onto this anti-globalization
sentiment and profit from it," he says.
But is there an analogy between the far-right radicals in Germany and the wider group of disaffected
working class Americans who, say, support Donald Trump or the tea party? Certainly leaders on the
left also capitalize on anti-trade sentiment, but they usually use less harsh rhetoric or seldom
attack immigration.
David Autor, a labor economist at MIT, has been working to address the question of whether the
same dynamics are at play in the U.S. But it's a tough one, he says.
"What [Dippel and his colleagues] are doing is totally sensible, and I think the results are plausible
as well - that these trade shocks lead to activity on the extreme right, that they bring about ultranationalism,"
Autor says.
"We actually started on this hypothesis years ago for the U.S. to see if it could help to explain
the rise of angry white non-college males," he said. "But so far, we just don't have the right kind
of data."
Author has shown that in America, recent trends in trade have hurt low-wage workers the most.
With his co-authors David Dorn, Gordon Hanson and Jae Song, he published a widely-cited 2014 paper
measuring the negative impacts of manufacturing imports from China, America's largest trading partner.
Most of those ill-effects - like unemployment and lower earnings - were borne by the workers with
the lowest wages.
The higher-paid (and probably higher-skilled workers) were able to find new jobs when their companies
went bust. Often, they found jobs outside of the manufacturing industry. (An accountant, for instance,
can work anywhere.) But the lower-paid workers were trapped, doomed to fight over the ever-dwindling
supply of stateside manufacturing jobs.
China, of course, has been in Trump's crosshairs. He accuses the country of being a "currency
manipulator," which may have once been true, but not any more. He has threatened to impose a 25 percent
tax on Chinese imports to punish China.
But Trump has attracted the most attention for his disparaging remarks about immigrants - which
is something of puzzle. While it's true that non-college workers are increasingly competing with
immigrants for the same construction or manufacturing jobs, Author points out that there's little
evidence that immigrants are responsible for the woes of the working class.
"There's an amazing discrepancy between the data and the perception that I still find very hard
to reconcile," he says. "The data do not strongly support the view that immigration has had big effects
[on non-college workers], but I don't think that's how people perceive it."
"Immigration always seems to be the most tangible evidence of the impingement of others on
your economic turf," Author adds.
Dippel says that conflating these ideas could be a political strategy. He makes a distinction
between three different kinds of globalization - there's the worldwide movement of capital, goods,
and people.
"In Germany, these three things get bundled up in these far-right platforms in a way that's
very difficult to unpack," he says. "It could be that you're bundling these ideas together for a
reason. It could be that you're bundling together what's really happening with an idea that's more
tangible, that you could sell more easily to angry voters."
Jeff Guo is a reporter covering economics, domestic policy, and everything empirical. He's
from Maryland, but outside the Beltway. Follow him on Twitter: @_jeffguo.
"... At a time of tension for U.S. international relations, cheap oil has dovetailed with some of
the Obama administration's foreign policy goals: pressuring Russian President Vladimir Putin, undermining
the popularity of Venezuelan President Nicolás Maduro and tempering the prospects for Iranian oil revenue.
At the same time, it is pouring cash into the hands of consumers, boosting tepid economic recoveries
in Europe, Japan and the United States. ..."
Plunging crude oil prices are diverting hundreds of billions of dollars away from the treasure
chests of oil-exporting nations, putting some of the United States' adversaries under greater stress.
After two years of falling prices, the effects have reverberated across the globe, fueling economic
discontent in Venezuela, changing Russia's economic and political calculations, and dampening Iranian
leaders' hopes of a financial windfall when sanctions linked to its nuclear program will be lifted
next year.
At a time of tension for U.S. international relations, cheap oil has dovetailed with some
of the Obama administration's foreign policy goals: pressuring Russian President Vladimir Putin,
undermining the popularity of Venezuelan President Nicolás Maduro and tempering the prospects for
Iranian oil revenue. At the same time, it is pouring cash into the hands of consumers, boosting tepid
economic recoveries in Europe, Japan and the United States.
"Cheap oil hurts revenues for some of our foes and helps some of our friends. The Europeans, South
Koreans and Japanese - they're all winners," said Robert McNally, director for energy in President
George W. Bush's National Security Council and now head of the Rapidan Group, a consulting firm.
"It's not good for Russia, that's for sure, and it's not good for Iran."
... ... ...
In Iran, cheap oil is forcing the government to ratchet down expectations.
The much-anticipated lifting of sanctions as a result of the deal to limit Iran's nuclear program
is expected to result in an additional half-million barrels a day of oil exports by the middle of
2016.
But at current prices, Iran's income from those sales will still fall short of revenue earned
from constrained oil exports a year ago.
Moreover, low prices are making it difficult for Iran to persuade international oil companies
to develop Iran's long-neglected oil and gas fields, which have been off limits since sanctions were
broadened in 2012.
"Should Iran come out of sanctions, they will face a very different market than the one they had
left in 2012," Amos Hochstein, the State Department's special envoy and coordinator for international
energy affairs, said in an interview. "They were forced to recede in a world of over $100 oil, and
sanctions will be lifted at $36 oil. They will have to work harder to convince companies to come
in and take the risk for supporting their energy infrastructure and their energy production."
Meanwhile, in Russia, low oil prices have compounded damage done by U.S. and European sanctions
that were designed to target Russia's energy and financial sectors. And when Iran increases output,
its grade of crude oil will most likely go to Europe, where it will compete directly with Russia's
Urals oil, McNally said.
Steven Mufson covers the White House. Since joining The Post, he has covered economics, China,
foreign policy and energy.
"... Enjoyed the movie, but in typical Hollywood fashion, the role of the Federal Reserve and government in pushing housing down to those unable to afford it was not even mentioned once. ..."
The Big Short opens nationwide today. But it happened to have one showing last night
at a theater near me. My youngest son and I hopped in the car and went to see it. I loved the book
by Michael Lewis. The cast assembled for the movie was top notch, but having the director of Anchorman
and Talledaga Nights handle a subject matter like high finance seemed odd.
The choice of Adam McKay
as director turned out to be brilliant. The question was how do you make a movie about the
housing market, mortgage backed securities, collateralized debt obligations, collateralized debt
swaps, and synthetic CDOs interesting for the average person. He succeeded beyond all expectations.
Interweaving pop culture icons, music, symbols of materialism, and unforgettable characters, McKay
has created a masterpiece about the greed, stupidity, hubris, and arrogance of Wall Street
bankers gone wild. He captures the idiocy and complete capture of the rating agencies (S&P,
Moodys). He reveals the ineptitude and dysfunction of the SEC, where the goal of these regulators
was to get a high paying job with banks they were supposed to regulate. He skewers the faux
financial journalists at the Wall Street Journal who didn't want to rock the boat with the truth
about the greatest fraud ever committed.
...Ultimately, it is a highly entertaining movie with the right moral overtone, despite non-stop
profanity that captures the true nature of Wall Street traders. This is a dangerous movie
for Wall Street, the government, and the establishment in general. They count on the complexity of
Wall Street to confuse the average person and make their eyes glaze over. That makes it easier for
them to keep committing fraud and harvesting the nation's wealth.
This movie cuts through the crap and reveals those in power to be corrupt, greedy weasels
who aren't really as smart as they want you to think they are. The finale of the movie is
sobering and infuriating. After unequivocally proving that Wall Street bankers, aided and abetted
by the Federal Reserve, Congress, the SEC, and the mainstream media, destroyed the global financial
system, put tens of millions out of work, got six million people tossed from their homes, and created
the worst crisis since the Great Depression, the filmmakers are left to provide the depressing conclusion.
No bankers went to jail. The Too Big To Fail banks were not broken up – they
were bailed out by the American taxpayers. They actually got bigger. Their profits have reached new
heights, while the average family has seen their income fall. Wall Street is paying out record bonuses,
while 46 million people are on food stamps. Wall Street and their lackeys at the Federal Reserve
call the shots in this country. They don't give a fuck about you. And they're doing it again.
Every American should see this movie and get fucking pissed off. The theater was deathly silent
at the end of the movie. The audience was stunned by the fact that the criminals on Wall Street got
away with the crime of the century, and they're still on the loose. I had a great discussion with
my 16 year old son on the way home. At least there is one millennial who understand how bad his generation
is getting screwed.
wee-weed up
I read the book last year... It is outstanding! Highest recommendation. If you have not read
this book, you cannot understand how today's market really works.
JRobby
This subject matter has to be put in a form that can be understood by the masses. Hopefully
the popular actors and this director is a step in that direction.
Main stream Hollywood as an informer? Hmmmmm? This adds to the current assumptions and rumors
of fractures among the elite groups.
We are reasonable people. If the banking elite is sacrificed and the other corporate oligarchs
come into a more socially acceptable line, we may be satisfied. However, the banking elite must
be sacrificed. There is no negotiation on that point.
Of course some will say I am over optimistic, they are throwing it in our faces to make $$$ and
it ends up a total police state so enjoy your "entertainment" for now.
Time goes on. Time will tell.
chunga
First you'd have to believe that politicians give a fuck about any damn thing but themselves.
REAL concern for minorities or communities LOL! Then you'd have to believe banks were forced to
do *anything* they don't want.
Then, you'd have to fall right to sleep and miss the part where all this crap was sold on Wall
Street while at the same time betting against all the "shitty deals" they made, then the whole
thing getting bailed out @ par. With par being at the absurd fraudulent property appraisals that
were made by the lenders or their agents. It's just nuts.
This was all planned, beginning with Greenspan. AIG's Greenberg KNEW their CDS paper was no damn
good, but didn't care because the also KNEW there would be a bailout. The only problem for him
was Paulson and Blankfein conspired to steal the bailout money...and they did!
That's why all this money went looking for people...it was all planned.
Hundreds of scandals have gone by since then, thoroughly unpunished, so I wonder why this movie
is coming out now. I looked into some of the cronies calling the shots at the GSE's back then
and saved it. A lot is outdated by now. Seems like a fairly bi-partisan effort.
FRANKLIN RAINES [D] – FNMA CEO (1999 – 2004) Raines accepted "early retirement"
from his CEO position while the SEC pretended to investigate accounting irregularities. Fannie's
own OHFHEO also accused him of abetting widespread accounting errors, including the shifting of
losses, so he and his fellow execs could "earn" large bonuses. The WSJ reported back in 2008 that
Raines was one of several cronies that received below market rates for mortgages from Countrywide.
Raines alone receive loans for over $3 million while CEO of FNMA. Raines' compensation for his
"work" at FNMA - $90 million.
RAINES GRADE – F
DANIEL MUDD [R] – FNMA CEO (2005 – 2008) Before becoming CEO of FNMA, Mudd
worked at the Office of the Secretary of Defense, was an advisor to Asia-Pacific Economic Corp.,
"served" on the board of the Council of Foreign Relations, "consulted" at the World Bank, and
held many positions at GE Capital including president and CEO. Mudd was dismissed as CEO of FNMA
when FHFA became conservator in 2008. In 2011 Mudd and other GSE execs were charged by SEC with
securities fraud. After his career at FNMA Mudd became CEO of a NYC hedge fund named "Fortress".
Fortress invested in purchasing tax liens on delinquent property taxes from local governments
under many benign corporate names such as "Pleasant Valley Capital" and "Travis Farm Investments".
Cozy. Mudd's compensation for his "work" at FNMA - $80 million.
MUDD GRADE – F
NEEL KASHKARI [R] – FNMA CEO (Tenure is murky) Kashkari was a former investment
banker for Goldman Sachs, was tapped by Hank "The Shank" Paulson to lend his skills over at TARP
HQ, and now rather ironically, continues God's work as a Managing Director at PIMCO. Kashkari's
compensation for his "work" at FNMA is also murky; I'll just assume it was too much.
KASHKARI GRADE - F
HERB ALLISON [D] – FNMA CEO (2008 – 2009) The esteemed Mr. Allison was quickly
whisked off to oversee the wildly successful TARP program. I didn't find much on his compensation
during his brief stint as FNMA CEO. Allison served in various positions at Merrill Lynch and became
a member of the board in 1997. He was a director of the NYSE from 2003 – 2005.
ALLISON GRADE – F
MICHAEL WILLIAMS [?] – FNMA CEO (2009 – Jan 1, 2012) Mr. Williams is a 20
year veteran at FNMA. While "serving" as FNMA CEO, Williams managed to scrape by on less than
$6 million in 2011 alone. This could and should be considered a hardship, given the complexities
involved in purloining ~ $60 billion of Fed bailout money.
WILLIAMS GRADE – F
FANNIE'S MAJOR DANCE PARTNER, FREDDIE MAC, HAS ALSO PERFORMED VERY POORLY.
Charles (my friends call me "Ed") Haldeman has announced his retirement plans but intends to
be a good sport and stay on with insolvent FHLMC until another crony can be found to fill his
wing-tips.
That might take a while. "Serving" as CEO of the ultimate backstops for the lion's share of
the MBS Ponzi is very stressful.
We'll have to accept former Freddie exec David Kellermann's testimony posthumously. Mr. Kellermann
was found hanging by the neck in the basement of his posh Vienna, VA home in the affluent suburb
of Washington. D.C. way back in April of 2009. It is presumed he had no help and local police
have stated there was no evidence of foul play.
Urban Redneck
GREED is non-partisan. And all sides agreed MOAR "home ownership" was desirable. The left
got its SJW colorblind automation, while the underwriters were able to increase volumes by
thousands of percent while reducing overall headcount. Securitization wasn't actually
"automated" since the fuckwits were using MS-Excel, but it was commoditized with Blackrock's
pricing model.
These were the days of the original algorithms of mass financial destruction, which were
primitive and largely FICO-centric, but everyone wanted to minimize the cost (of logic coding
and external data sources) so they coding decisioning based solely on information contained in
the mortgage application and the applicant's electronic credit report.
khakuda
Enjoyed the movie, but in typical Hollywood fashion, the role of the Federal Reserve
and government in pushing housing down to those unable to afford it was not even mentioned
once.
Keynesians
Wall Street is laughing at all the clowns who think this movie will "wake up America". It
would have never came out if it was any kind of danger to Wall Street, the FED, or the
establishment.
Agent P
Directed by Adam McKay (Anchorman, Step Brothers, The Other Guys....), so ... yeah I'm
going to go see it. Remember the end credits for The Other Guys? He hates Wall Street....
GoldenDonuts
Perhaps you should read the book. These are real characters from a non fiction book. They
may have changed a name or two but these are real people. I will lend you my copy if you can't
afford one.
conraddobler
Yeah I can't imagine a commercially successful movie out of this that would actually tell
the truth and make it to the screens.
What someone should do is write one of those fantastical novels where everything is a symbol
for something else and jazz it up, put some romance, danger, intrigue and of course big boobs
in it.
The real message ala the olden days usually had to be hidden to avoid the wrath of those it
was really aimed at.
"... It's now clear that if Obama had ordered a major bombing campaign against Assad's military in early September 2013, he might have opened the gates of Damascus to a hellish victory by al-Qaeda-affiliated extremists or the even more brutal Islamic State, since these terrorist groups have emerged as the only effective fighters against Assad. ..."
"... By late September 2013, the disappointed neocons were acting out their anger by taking aim at Putin. They recognized that a particular vulnerability for the Russian president was Ukraine and the possibility that it could be pulled out of Russia's sphere of influence and into the West's orbit. ..."
"... But Gershman added that Ukraine was really only an interim step to an even bigger prize, the removal of the strong-willed and independent-minded Putin, who, Gershman added, "may find himself on the losing end not just in the near abroad [i.e. Ukraine] but within Russia itself." In other words, the new neocon hope was for "regime change" in Kiev and Moscow. [See Consortiumnews.com's " Neocons' Ukraine/Syria/Iran Gambit. "] ..."
"... Putin also had sidetracked that possible war with Iran by helping to forge an interim agreement constraining but not eliminating Iran's nuclear program. So, he became the latest target of neocon demonization, a process in which the New York Times and the Washington Post eagerly took the lead. ..."
"... As the political violence in Kiev escalated – with the uprising's muscle supplied by neo-Nazi militias from western Ukraine – neocons within the Obama administration discussed how to "midwife" a coup against Yanukovych. Central to this planning was Victoria Nuland, who had been promoted to assistant secretary of state for European affairs and was urging on the protesters, even passing out cookies to protesters at Kiev's Maidan square. ..."
"... When the coup went down on Feb. 22 – spearheaded by neo-Nazi militias who seized government buildings and forced Yanukovych and his officials to flee for their lives – the U.S. State Department quickly deemed the new regime "legitimate" and the mainstream U.S. media dutifully stepped up the demonization of Yanukovych and Putin. ..."
"... Although Putin's position had been in support of Ukraine's status quo – i.e., retaining the elected president and the country's constitutional process – the crisis was pitched to the American people as a case of "Russian aggression" with dire comparisons made between Putin and Hitler, especially after ethnic Russians in the east and south resisted the coup regime in Kiev and Crimea seceded to rejoin Russia. ..."
"... Pressured by the Obama administration, the EU agreed to sanction Russia for its "aggression," touching off a tit-for-tat trade war with Moscow which reduced Europe's sale of farming and manufacturing goods to Russia and threatened to disrupt Russia's natural gas supplies to Europe. ..."
"... While the most serious consequences were to Ukraine's economy which went into freefall because of the civil war, some of Europe's most endangered economies in the south also were hit hard by the lost trade with Russia. Europe began to stagger toward the third dip in a triple-dip recession with European markets experiencing major stock sell-offs. ..."
If you're nervously watching the stock market gyrations and worrying about your declining portfolio
or pension fund, part of the blame should go to America's neocons who continue to be masters of chaos,
endangering the world's economy by instigating geopolitical confrontations in the Middle East and
Eastern Europe.
Of course, there are other factors pushing Europe's economy to the brink of a triple-dip
recession and threatening to stop America's fragile recovery, too. But the neocons' "regime change"
strategies, which have unleashed violence and confrontations across Iraq, Syria, Libya, Iran and
most recently Ukraine, have added to the economic uncertainty.
This neocon destabilization of the world economy began with the U.S.-led invasion of Iraq in 2003
under President George W. Bush who squandered some $1 trillion on the bloody folly. But the neocons'
strategies have continued through their still-pervasive influence in Official Washington during President
Barack Obama's administration.
The neocons and their "liberal interventionist" junior partners have kept the "regime change"
pot boiling with the Western-orchestrated overthrow and killing of Libya's Muammar Gaddafi in 2011,
the proxy civil war in Syria to oust Bashar al-Assad, the costly economic embargoes against Iran,
and the U.S.-backed coup that ousted Ukraine's elected President Viktor Yanukovych last February.
All these targeted governments were first ostracized by the neocons and the major U.S. news organizations,
such as the Washington Post and the New York Times, which have become what amounts to neocon mouthpieces.
Whenever the neocons decide that it's time for another "regime change," the mainstream U.S. media
enlists in the propaganda wars.
The consequence of this cascading disorder has been damaging and cumulative. The costs of the
Iraq War strapped the U.S. Treasury and left less government maneuvering room when Wall Street crashed
in 2008. If Bush still had the surplus that he inherited from President Bill Clinton – rather than
a yawning deficit – there might have been enough public money to stimulate a much-faster recovery.
President Obama also wouldn't have been left to cope with the living hell that the U.S. occupation
brought to the people of Iraq, violent chaos that gave birth to what was then called "Al-Qaeda in
Iraq" and has since rebranded itself "the Islamic State."
But Obama didn't do himself (or the world) any favors when he put much of his foreign policy in
the hands of Democratic neocon-lites, such as Secretary of State Hillary Clinton, and Bush holdovers,
including Defense Secretary Robert Gates and Gen. David Petraeus. At State, Clinton promoted the
likes of neocon Victoria Nuland, the wife of arch-neocon Robert Kagan, and Obama brought in "liberal
interventionists" like Samantha Power, now the U.S. ambassador to the United Nations.
In recent years, the neocons and "liberal interventionists" have become almost indistinguishable,
so much so that Robert Kagan has opted to discard the discredited neocon label and call himself a
"liberal interventionist." [See Consortiumnews.com's "Obama's
True Foreign Policy 'Weakness.'"]
Manipulating Obama
Obama, in his nearly six years as president, also has shied away from imposing his more "realistic"
views about world affairs on the neocon/liberal-interventionist ideologues inside the U.S. pundit
class and his own administration. He has been outmaneuvered by clever insiders (as happened in 2009
on the Afghan "surge") or overwhelmed by some Official Washington "group think" (as was the case
in Libya, Syria, Iran and Ukraine).
Once all the "smart people" reach some collective decision that a foreign leader "must go," Obama
usually joins the chorus and has shown only rare moments of toughness in standing up to misguided
conventional wisdoms.
The one notable case was his decision in summer 2013 to resist pressure to destroy Syria's military
after a Sarin gas attack outside Damascus sparked a dubious rush to judgment blaming Assad's regime.
Since then, more evidence has pointed to a provocation by anti-Assad extremists who may have thought
that the incident would draw in the U.S. military on their side. [See Consortiumnews.com's "Was
Turkey Behind Syrian Sarin Attack?"]
It's now clear that if Obama had ordered a major bombing campaign against Assad's military in
early September 2013, he might have opened the gates of Damascus to a hellish victory by al-Qaeda-affiliated
extremists or the even more brutal Islamic State, since these terrorist groups have emerged as the
only effective fighters against Assad.
But the neocons and the "liberal interventionists" seemed oblivious to that danger. They had their
hearts set on Syrian "regime change," so were furious when their dreams were dashed by Obama's supposed
"weakness," i.e. his failure to do what they wanted. They also blamed Russian President Vladimir
Putin who brokered a compromise with Assad in which he agreed to surrender all of Syria's chemical
weapons while still denying a role in the Sarin attack.
By late September 2013, the disappointed neocons were acting out their anger by taking aim at
Putin. They recognized that a particular vulnerability for the Russian president was Ukraine and
the possibility that it could be pulled out of Russia's sphere of influence and into the West's orbit.
So, Carl Gershman, the neocon president of the U.S.-funded National Endowment for Democracy, took
to the op-ed page of the neocon-flagship Washington Post to sound the trumpet about Ukraine, which
he
called "the biggest prize."
But Gershman added that Ukraine was really only an interim step to an even bigger prize, the removal
of the strong-willed and independent-minded Putin, who, Gershman added, "may find himself on the
losing end not just in the near abroad [i.e. Ukraine] but within Russia itself." In other words,
the new neocon hope was for "regime change" in Kiev and Moscow. [See Consortiumnews.com's "Neocons'
Ukraine/Syria/Iran Gambit."]
Destabilizing the World
Beyond the recklessness of plotting to destabilize nuclear-armed Russia, the neocon strategy threatened
to shake Europe's fragile economic recovery from a painful recession, six years of jobless stress
that had strained the cohesion of the European Union and the euro zone.
Across the Continent, populist parties from the Right and Left have been challenging establishment
politicians over their inability to reverse the widespread unemployment and the growing poverty.
Important to Europe's economy was its relationship with Russia, a major market for agriculture and
manufactured goods and a key source of natural gas to keep Europe's industries humming and its houses
warm.
The last thing Europe needed was more chaos, but that's what the neocons do best and they were
determined to punish Putin for disrupting their plans for Syrian "regime change," an item long near
the top of their agenda along with their desire to "bomb, bomb, bomb Iran," which Israel has cited
as an "existential threat."
Putin also had sidetracked that possible war with Iran by helping to forge an interim agreement
constraining but not eliminating Iran's nuclear program. So, he became the latest target of neocon
demonization, a process in which the New York Times and the Washington Post eagerly took the lead.
To get at Putin, however, the first step was Ukraine where Gershman's NED was funding scores of
programs for political activists and media operatives. These efforts fed into mass protests against
Ukrainian President Yanukovych for balking at an EU association agreement that included a harsh austerity
plan designed by the International Monetary Fund. Yanukovych opted instead for a more generous $15
billion loan deal from Putin.
As the political violence in Kiev escalated – with the uprising's muscle supplied by neo-Nazi
militias from western Ukraine – neocons within the Obama administration discussed how to "midwife"
a coup against Yanukovych. Central to this planning was Victoria Nuland, who had been promoted to
assistant secretary of state for European affairs and was urging on the protesters, even passing
out cookies to protesters at Kiev's Maidan square.
According to an
intercepted phone call with U.S. Ambassador to Ukraine Geoffrey Pyatt, Nuland didn't think EU
officials were being aggressive enough. "Fuck the EU," she said as she brainstormed how "to help
glue this thing." She literally handpicked who should be in the post-coup government – "Yats is the
guy," a reference to Arseniy Yatsenyuk who would indeed become prime minister.
When the coup went down on Feb. 22 – spearheaded by neo-Nazi militias who seized government buildings
and forced Yanukovych and his officials to flee for their lives – the U.S. State Department quickly
deemed the new regime "legitimate" and the mainstream U.S. media dutifully stepped up the demonization
of Yanukovych and Putin.
Although Putin's position had been in support of Ukraine's status quo – i.e., retaining the elected
president and the country's constitutional process – the crisis was pitched to the American people
as a case of "Russian aggression" with dire comparisons made between Putin and Hitler, especially
after ethnic Russians in the east and south resisted the coup regime in Kiev and Crimea seceded to
rejoin Russia.
Starting a Trade War
Pressured by the Obama administration, the EU agreed to sanction Russia for its "aggression,"
touching off a tit-for-tat trade war with Moscow which reduced Europe's sale of farming and manufacturing
goods to Russia and threatened to disrupt Russia's natural gas supplies to Europe.
While the most serious consequences were to Ukraine's economy which went into freefall because
of the civil war, some of Europe's most endangered economies in the south also were hit hard by the
lost trade with Russia. Europe began to stagger toward the third dip in a triple-dip recession with
European markets experiencing major stock sell-offs.
The dominoes soon toppled across the Atlantic as major U.S. stock indices dropped, creating anguish
among many Americans just when it seemed the hangover from Bush's 2008 market crash was finally wearing
off.
Obviously, there are other reasons for the recent stock market declines, including fears about
the Islamic State's victories in Syria and Iraq, continued chaos in Libya, and exclusion of Iran
from the global economic system – all partly the result of neocon ideology. There have been unrelated
troubles, too, such as the Ebola epidemic in western Africa and various weather disasters.
But the world's economy usually can withstand some natural and manmade challenges. The real problem
comes when a combination of catastrophes pushes the international financial system to a tipping point.
Then, even a single event can dump the world into economic chaos, like what happened when Lehman
Brothers collapsed in 2008.
It's not clear whether the world is at such a tipping point today, but the stock market volatility
suggests that we may be on the verge of another worldwide recession. Meanwhile, the neocon masters
of chaos seem determined to keep putting their ideological obsessions ahead of the risks to Americans
and people everywhere.
Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated
Press and Newsweek in the 1980s. You can buy his new book, America's Stolen Narrative, either
in
print here or as an e-book (from
Amazon and
barnesandnoble.com). For a limited time, you also can order Robert Parry's trilogy on the Bush
Family and its connections to various right-wing operatives for only $34. The trilogy includes
America's Stolen Narrative. For details on this offer,
click here.
"... The relationship between low interest rates and bubbles has nothing to do with the above. Low interest rates RAISE asset prices. Through the magic of low discount rates, the future earnings and cash flows are worth a lot higher today. This is why Bernanke cut rates and kept them low. Raising asset prices and the resultant higher net worth was supposed to lead to higher spending today. But outsized returns also attracts speculation. what is so difficult to understand? John Williams of SF Fed has shown how positive returns in asset markets raises the speculators expected returns. when this dynamic gets out of control, it is a bubble. ..."
"... That is exactly the point. Expected returns in stocks have nothing to do with earnings growth. http://www.frbsf.org/our-district/press/presidents-speeches/williams-speeches/2013/september/asset-price-bubbles-tomorrow-yesterday-never-today/ ..."
"... You think a rise in stock prices created by a fall in the cost of capital is a bubble. ..."
"... keeping the risk free rate at zero for 7 years is not a change in fundamentals. and if it is and it rises leading to a large fall in equity prices, you will be the first one crying uncle. so why put the economy through this? ..."
"... Rising stock prices allow corporations to raise debt, because the stock is put up as collateral. This makes funding easier, but it doesnt favor any particular purpose of the funding. It could be to buy back stock, for example. Said buy back can raise the stock price even more, which in turn can pay off the borrowing. Didnt cost a dime. ..."
"... It always seem to me that right wing economists credit businessmen with superhuman foresight and sophistication, except when it comes to the actions of the Fed and then something addles their brains and they become completely stupid. As I once put, it seems investors cant understand what the Fed is doing, even though they tell you. ..."
"... Thats it exactly. Markets are efficient, unless the government does anything, and then markets lose their minds and its the governments fault. ..."
"... Here is how they evaluate models: Good model; one that reaches the right good conclusions. Bad model; one that ends up saying stuff nobody should believe in. ..."
"... Obama could have at least made the investigations a high priority...but he let Holder, a Wall Street attorney, consign them to the lowest. ..."
"... Democrats filibuster-proof majority consisted of 58 Democrats and two independents who caucused with them. Only an inept President and Senate majority leader could have failed to take advantage of such a majority to implement significant parts of the party platform. ..."
"... Gullible folks like pgl and his coterie believe what these Democrats say and waste our time defending their neoliberal behavior. ..."
I wish Krugman would attack the view that is being propagated at the moment that low nominal interest
rates (it seems irrespective of the reason for them) foster bubbles. It doesn't make the slightest
bit of sense - leverage doesn't just magnify the gains, it magnifies the losses as well - what
really counts is expectations regardless of nominal interest rates.)
The distribution of the use of credit between pure financial speculation and productive investment
is not a function of interest rates, but of things like bank culture, bank regulation and macro-economic
and technological prospects.
Great comment. I especially liked this point: "The distribution of the use of credit between pure
financial speculation and productive investment is not a function of" ....
Supervising regulators
need to look carefully at the ratio of credit used for financial trading compared to credit used
for what we've called real-economy matters. They should adjust the level of monitoring based on
this view while they also inform policy makers including those in the legislature.
There may be an opportunity in 2017 to revise the statutes so the public plainly says what
the rules of Commerce are in these financial 'inter-mediation' areas - society is better served
if more of such credit offerings go to investments in the real economy where inputs are real things
like employees, supplies, equipment/technologies. The public's law can effect this change.
david said in reply to JF...
except that a significant chunk of institutional investors have sticky nominal targets for return
thanks to the politics of return expectation setting (true for pension fund and endowments) --
low interest rates do encourage chasing phantoms or looking to extract some rents, for those subject
to that kind of pressure
Are there enough of those to dominate securities prices?
I don't see how there possibly could
be. For everyone trying to reach for yield there are a lot of people happy to arbitrage or otherwise
exploit those inefficiencies.
"The distribution of the use of credit between pure financial speculation and productive
investment is not a function of interest rates, but of things like bank culture, bank regulation
and macro-economic and technological prospects."
The relationship between low interest rates and bubbles has nothing to do with the above.
Low interest rates RAISE asset prices. Through the magic of low discount rates, the future earnings
and cash flows are worth a lot higher today. This is why Bernanke cut rates and kept them low.
Raising asset prices and the resultant higher net worth was supposed to lead to higher spending
today. But outsized returns also attracts speculation. what is so difficult to understand? John
Williams of SF Fed has shown how positive returns in asset markets raises the speculator's expected
returns. when this dynamic gets out of control, it is a bubble.
So you say. And yet, stock values today conform very well with the standard model Williams says
doesn't historically fit the data. While you are talking bubbles, the equity risk premium is parked
in the normal range.
so says Williams. dividend yields, earnings yields and risk premiums are not necessarily weighted
heavily in investors' formation of expected returns. past returns do, to a great extent. that
is what Williams shows.
Williams actually tries to model the rise in stock prices and defines any increase the model cannot
explain a bubble. Of course maybe his modeling is not entirely spot on and fundamentals can explain
the rise stock prices.
But this is not what you do as you see any asset price increase as a
bubble. Which is beyond stupid. Of course it would help if you ever bothered to do what Williams
attempted - use a basic model of financial economics. Then again my guess is that is beyond your
understanding of basic financial economics. So troll on!
You think a rise in stock prices created by a fall in the cost of capital is a bubble.
But no - it is a change in fundamentals.
keeping the risk free rate at zero for 7 years
is not a change in fundamentals. and if it is and it rises leading to a large fall in equity prices,
you will be the first one crying uncle. so why put the economy through this?
The first thing pgl did when stocks corrected this summer was to call for QE4...he panicked because
his portfolio was threatened...but claimed that he was only worried about workers!
Rising stock prices allow corporations to raise debt, because the stock is put up as collateral.
This makes funding easier, but it doesn't favor any particular purpose of the funding. It could
be to buy back stock, for example. Said buy back can raise the stock price even more, which in
turn can pay off the borrowing. Didn't cost a dime.
Let me be the fourth person to compliment that comment.
"leverage doesn't just magnify the gains,
it magnifies the losses as well - what really counts is expectations regardless of nominal interest
rates."
QFT!
The one hypothetical caveat (as BINY alluded to, knowingly or not) is that expectations often
get out of whack based on momentum trading. So hypothetically, lowering rates could possibly feed
that.
But guess what? Rates are already at zero. They can't go lower. It's not even a question of
lowering rates, but rather whether to keep them where they are. So a bubbles-from-monetary-fed-momentum
argument falls completely flat. We've been at zero for 7 years now!
It always seem to me that right wing economists credit businessmen with superhuman foresight
and sophistication, except when it comes to the actions of the Fed and then something addles their
brains and they become completely stupid. As I once put, it seems investors can't understand what
the Fed is doing, even though they tell you.
That's it exactly. Markets are efficient, unless the government does anything, and then markets
lose their minds and it's the government's fault.
And somehow the RW economists see no
problem with this model
DeDude said in reply to Sanjait...
Here is how they evaluate models: Good model; one that reaches the "right" good conclusions.
Bad model; one that ends up saying stuff nobody should believe in.
likbez said in reply to Sanjait...
"Markets are efficient, unless the government does anything"
This is a dangerous neoliberal dogma.
Total lie.
=== quote === The efficient market hypothesis (EMH) is a flavor of economic Lysenkoism which became popular for
the last 30 years in the USA. It is a pseudo scientific theory or, in more politically correct terms,
unrealistic idealization of market behavior. Like classic Lysenkoism in the past was supported by
Stalin's totalitarian state, it was supported by the power of neoliberal state, which is the state
captured by financial oligarchy (see Casino Capitalism and Quiet coup for more details).
Among the factors ignored by EMH is the positive feedback loop inherent in any system based on
factional reserve banking, the level of market players ignorance, unequal access to the real information
about the markets, the level of brainwashing performed on "lemmings" by controlled by elite MSM and
market manipulation by the largest players and the state.
Economics, it is said, is the study of scarcity. There is, however, one thing that certainly isn't
scarce, but which deserves the attention of economists - ignorance. ...Conventional economics analyses how individuals choose - maybe rationally, maybe not - from a
range of options. But this raises the question: how do they know what these options are? Many feasible
- even optimum - options might not occur to them. This fact has some important implications. ... Slightly simplifying, we can say that (financial) markets are mainly efficient in separation of fools
and their money... And efficient market hypothesis mostly bypasses important question about how the
inequity of resources which inevitably affects the outcomes of market participants. For example,
the level of education of market players is one aspect of the inequity of resources. Herd behavior
is another important, but overlooked in EMH factor.
And/or the markets are telling the Fed something, like they don't believe the Fed's forecasts about
growth and inflation and are betting otherwise, but the hawks at the Fed dismiss the markets and
say we need to raise rates now.
It's all very convenient reasoning about markets.
Vile Content said...
" constant repetition, especially in captive media, keeps this imaginary history in circulation no
matter how often it is shown to be false. " ~~pK~
Last night I was invited to a screening of "The Big Short," which I thought was terrific; who
knew that collateralized debt obligations and credit default swaps could be made into an edge-of-your-seat
narrative (with great acting)?
But there was one shortcut the narrative took, which was understandable and possibly necessary,
but still worth noting.
In the film, various eccentrics and oddballs make the discovery that subprime-backed securities
are garbage, which is pretty much what happened; but this is wrapped together with their realization
that there was a massive housing bubble, which is presented as equally contrary to anything anyone
respectable was saying. And that's not quite right.
It's true that Greenspan and others were busy denying the very possibility of a housing bubble.
And it's also true that anyone suggesting that such a bubble existed was attacked furiously - "You're
only saying that because you hate Bush!" Still, there were a number of economic analysts making the
case for a massive bubble. Here's Dean Baker in 2002. * Bill McBride (Calculated Risk) was on the
case early and very effectively. I keyed off Baker and McBride, arguing for a bubble in 2004 and
making my big statement about the analytics in 2005, ** that is, if anything a bit earlier than most
of the events in the film. I'm still fairly proud of that piece, by the way, because I think I got
it very right by emphasizing the importance of breaking apart regional trends.
So the bubble itself was something number crunchers could see without delving into the details
of mortgage-backed securities, traveling around Florida, or any of the other drama shown in the film.
In fact, I'd say that the housing bubble of the mid-2000s was the most obvious thing I've ever seen,
and that the refusal of so many people to acknowledge the possibility was a dramatic illustration
of motivated reasoning at work.
The financial superstructure built on the bubble was something else; I was clueless about that,
and didn't see the financial crisis coming at all.
More and more people are using the B-word about the housing market. A recent analysis * by Dean
Baker, of the Center for Economic Policy Research, makes a particularly compelling case for a housing
bubble. House prices have run well ahead of rents, suggesting that people are now buying houses for
speculation rather than merely for shelter. And the explanations one hears for those high prices
sound more and more like the rationalizations one heard for Nasdaq 5,000.
If we do have a housing bubble, and it bursts, we'll be looking a lot too Japanese for comfort....
This is the way the bubble ends: not with a pop, but with a hiss.
Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices
fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom
goes bust.
So the news that the U.S. housing bubble is over won't come in the form of plunging prices; it
will come in the form of falling sales and rising inventory, as sellers try to get prices that buyers
are no longer willing to pay. And the process may already have started.
Of course, some people still deny that there's a housing bubble. Let me explain how we know that
they're wrong.
One piece of evidence is the sense of frenzy about real estate, which irresistibly brings to mind
the stock frenzy of 1999. Even some of the players are the same. The authors of the 1999 best seller
"Dow 36,000" are now among the most vocal proponents of the view that there is no housing bubble.
Then there are the numbers. Many bubble deniers point to average prices for the country as a whole,
which look worrisome but not totally crazy. When it comes to housing, however, the United States
is really two countries, Flatland and the Zoned Zone.
In Flatland, which occupies the middle of the country, it's easy to build houses. When the demand
for houses rises, Flatland metropolitan areas, which don't really have traditional downtowns, just
sprawl some more. As a result, housing prices are basically determined by the cost of construction.
In Flatland, a housing bubble can't even get started.
But in the Zoned Zone, which lies along the coasts, a combination of high population density and
land-use restrictions - hence "zoned" - makes it hard to build new houses. So when people become
willing to spend more on houses, say because of a fall in mortgage rates, some houses get built,
but the prices of existing houses also go up. And if people think that prices will continue to rise,
they become willing to spend even more, driving prices still higher, and so on. In other words, the
Zoned Zone is prone to housing bubbles.
And Zoned Zone housing prices, which have risen much faster than the national average, clearly
point to a bubble....
EMichael said in reply to anne...
Yeah, the only thing he missed was the timing of the collapse.
The day he wrote this the Fed had
already raised rates 250% in one year, on the way to a total of 400% in the next 6 months.
Yet prices accelerated until the top was reached a year after the column.
Bubble, bubble, Toll's in trouble. This week, Toll Brothers, the nation's premier builder of McMansions,
announced that sales were way off, profits were down, and the company was walking away from already-purchased
options on land for future development.
Toll's announcement was one of many indications that the long-feared housing bust has arrived.
Home sales are down sharply; home prices, which rose 57 percent over the past five years (and much
more than that along the coasts), are now falling in much of the country. The inventory of unsold
existing homes is at a 13-year high; builders' confidence is at a 15-year low.
A year ago, Robert Toll, who runs Toll Brothers, was euphoric about the housing boom, declaring:
"We've got the supply, and the market has got the demand. So it's a match made in heaven." In a New
York Times profile of his company published last October, he dismissed worries about a possible bust.
"Why can't real estate just have a boom like every other industry?" he asked. "Why do we have to
have a bubble and then a pop?"
The current downturn, Mr. Toll now says, is unlike anything he's seen: sales are slumping despite
the absence of any "macroeconomic nasty condition" taking housing down along with the rest of the
economy. He suggests that unease about the direction of the country and the war in Iraq is undermining
confidence. All I have to say is: pop! ...
EMichael said in reply to anne...
"Mr. Toll now says, is unlike anything he's seen: sales are slumping despite the absence of
any "macroeconomic nasty condition""
You gotta love builders and RE agents. It wasn't macro that caused it, it was default rates across
the board on supposedly safe investments that caused mortgage money supply to totally disappear.
One day people will understand that payments are the key to all finance.
JohnH said...
"and it is an outrage that basically nobody ended up being punished ."
Yes, indeed. And who do we have to blame for that? Obama and Holder, of course. They made the
investigation of mortgage securities fraud DOJ's lowest priority. Krugman's Democratic proclivities
prevent him from stating the obvious.
I' m sure that pgl and his band of merry Obamabots will try to spin this in Obama's favor...I.e.
Congress prevented him from implementing the law, even though Congress has nothing to do with it.
Fact is, Obama has intentionally been a lame duck ever since he took office. He was even clueless
on how to capitalize on a filibuster-proof majority in the midst of an economic crisis...which brings
us to Trump. Many are so desperate for leadership after Obama's hollow presidency that they'll even
support a racist demagogue to avoid another empty White House.
JohnH said in reply to anne...
Oh, please...Krugman could barely criticize Obama, even when Obama introduced an austerity budget
back in 2011.
The tendency of people like Krugman to overlook Democrats' bad behavior only encourages
more bad behavior. If Krugman really cared about the policies he champions, he would let the chips
fall wherever...and not let empty suits like Obama get away with austerity and failure to enforce
the law when Wall Street willfully violates it.
pgl said in reply to JohnH...
Did you forgot to read the post before firing off your usual hate filled fact free rant? Here - let
me help you out:
"some members of the new commission had a different goal. George Santayana famously
remarked that "those who cannot remember the past are condemned to repeat it." What he didn't point
out was that some people want to repeat the past - and that such people have an interest in making
sure that we don't remember what happened, or that we remember it wrong. Sure enough, some commission
members sought to block consideration of any historical account that might support efforts to rein
in runaway bankers."
It seems Krugman indeed bashed how the government sort of let this crooks off the hook. We know
you have an insane hatred for President Obama. But do you also hate your poor mom? Why else would
you continue to write such incredibly stupid things?
JohnH said in reply to pgl...
As I expected, rationalizations for Obama's refusal to enforce the law...since when does the buck
no longer stop at the White House? And what's with trying to defend people who refuse to do their
job and uphold the rule of law?
pgl said in reply to JohnH...
Krugman did not rationalize that. Neither have I.
Either you know you are lying or you flunked
preK reading.
JohnH said in reply to pgl...
Of course pgl rationalizs Obama's failures...he spent a lot of time denying that Obama introduced
and signed off on austerity...and that he proposed cutting Social Security. And now he can't admit
that Obama and Holder have refused to defend the rule of law by not prosecuting...or even seriously
investigating...Wall Street criminality.
RGC said in reply to William...
Prosecutions don't require congressional action.
Most of the New Deal was accomplished in 100 days.
Promotion by a president can galvanize action.
pgl said in reply to EMichael...
The lack of prosecutions was a bad thing. Of course any prosecutor would tell you putting rich people
in jail for anything is often difficult. Rich people get to hire expensive, talented, and otherwise
slimy defense attorneys. I have to laugh at the idea that JohnH thinks he could have pulled this
off. The slimy defense attorneys would have had his lunch before the judge's gavel could come down.
JohnH said in reply to pgl...
Obama could have at least made the investigations a high priority...but he let Holder, a Wall Street
attorney, consign them to the lowest.
pgl is intent on explaining away Obama's failure to enforce
the law...thereby encouraging more lawlessness.
JohnH said in reply to William...
Democrats' filibuster-proof majority consisted of 58 Democrats and two independents who caucused
with them. Only an inept President and Senate majority leader could have failed to take advantage
of such a majority to implement significant parts of the party platform. Even Lieberman had a good
record on many issues. Except for ACA, it turned out to be a do-nothing Congress, reflecting an abject
lack of leadership...which is why many are so desperate for leadership. Having lacked it for seven
years, many are willing to turn to anybody, even Trump, to provide it. Pathetic!
RGC said in reply to William...
No vitriol, just facts. And Obama had the example of FDR to follow - why didn't he follow it? I have
been deeply disappointed in Obama.
JohnH said in reply to pgl...
pgl conveniently forgets my choice words about Bill Clinton, Harry Reid and Nancy Pelosi. What I
object to is Democrats who position themselves to sound like FDR and then prosecute a neo-liberal
agenda.
Gullible folks like pgl and his coterie believe what these Democrats say and waste our
time defending their neoliberal behavior.
"... Summers is right that bubbles are usually accompanied by some kind of financial euphoria. ..."
"... There will be massive pushback because so many have wasted many years and resources building mathematically elegant but fatally flawed models that do not make accurate predictions on even represent the fundamentals of any economy. ..."
"It seems to me looking at a year when the stock market has gone down a bit, credit spreads
have widened substantially and the dollar has been very strong it is hard to say that now is
the time to fire a shot across the bow of financial euphoria. Looking especially at emerging
markets I would judge that under-confidence and excessive risk aversion are a greater threat
over the next several years than some kind of financial euphoria."
Summers is right that bubbles are usually accompanied by some kind of financial euphoria.
I disagree with your assessment. People (elite?) are talking about unusual solutions because fiscal
policy is being blocked politically.
MMT doesn't seem that different from Keynesianism, except proponents have very big chips on
their shoulders for some reason.
Right now the Keynesians are arguing that the Fed shouldn't raise rates. Are the MMTers arguing
any differently? Or are they merely giving us the blue prints for utopia. Blue prints don't help
much if the politics are against you.
Syaloch said in reply to Peter K....
Great question.
If I have two black boxes that always produce exactly the same outputs, does
it matter whether their internal mechanisms are different?
Dan Kervick said in reply to Syaloch...
"Or maybe they would be effective because people believe they ought to be effective."
Possibly. I think back in the 80's when monetarism was the super-sexy new view, there were
a lot of people who thought inflation was mainly a function of the monetary base, so if the Fed
made a big public stink about pumping up the monetary base, that could be counted on the boost
inflation expectations, at least in some quarters, and the high expectations would in turn help
to boost actual inflation. That doesn't seem to be the case any longer.
Dan Kervick said in reply to pgl...
The heyday of monetarism was the late 70's and early 80's. That's when Friedman's monetary theory
of inflation caught the public imagination, and it's the only time the Fed ever attempted (briefly)
to target the money supply.
Conservative spear-carrier Niall Ferguson knows how important monetarism
was to the neoliberal movement, and how big a deal it was during the Thatcher-Reagan era.
The heyday of monetarism was the late 70's and early 80's. That's when Friedman's monetary theory
of inflation caught the public imagination, and it's the only time the Fed ever attempted (briefly)
to target the money supply.
Conservative spear-carrier Niall Ferguson knows how important monetarism
was to the neoliberal movement, and how big a deal it was during the Thatcher-Reagan era.
"Given what we know about representative-agent models…there is not the slightest reason
for us to think that the conditions under which they should work are fulfilled. The claim that
representative-agent models provide microfundations succeeds only when we steadfastly avoid
the fact that representative-agent models are just as aggregative as old-fashioned Keynesian
macroeconometric models. They do not solve the problem of aggregation; rather they assume that
it can be ignored."
This the reason Macro needs to move into more data driven empirics.
There will be massive pushback because so many have wasted many years and resources building
mathematically elegant but fatally flawed models that do not make accurate predictions on even
represent the fundamentals of any economy.
The Advantages of Higher Inflation - The New York Times
From the article:
"A critical problem with aiming for higher inflation is how to get from here to there. The
Fed has spent enormous effort anchoring people's expectations to 2 percent. Even economists sympathetic
to a higher target are wary of what such a shift might do to its credibility.
"'A perfect world, where you could commit to 4 percent and everybody believed it, would be
great,' Mr. Mishkin told me. 'We are not in a perfect world. Moving much higher than 2 percent
raises the risk that expectations become unanchored.'
"So here is an alternative proposal. If the Fed is too cautious to risk unhinging inflationary
expectations, how about just delivering what it has promised? Among economists and investors,
the problem with the Fed's 2 percent target is that just about everybody believes it is really
a ceiling. That makes it even harder for inflation to rise to that level. The market expects the
Fed to act pre-emptively to ensure it never goes over that line - which is what it seems to be
doing now.
"If the Fed is not going to aim for higher inflation, the least it could do is re-anchor expectations
to the goal it established, allowing inflation to fluctuate above and below a 2 percent average.
That alone might help deal with the next economic crisis.
"'We haven't fully tested whether we can deal with this kind of crisis with a 2 percent inflation
target,' said David H. Romer of the University of California, Berkeley. 'Central banks have lots
of tools. If they say they are willing to keep using them until they get where they want, they
can eventually do it.'"
This highlights a confusing aspect of inflation targets. If the Fed simply announces a higher
inflation target without taking any other action, have they really done anything? What's more,
they not only need to announce the new target, they need to convince markets that they are willing
to do whatever it takes to hit that target -- it's all about credibility and re-anchoring expectations.
And while engaging in QE to push down longer-term rates might help make that statement more convincing,
it doesn't seem to be strictly necessary for the new target to be effective.
Thus inflation targets seem in at least some cases to operate purely through psychological
manipulation, as a sort of placebo effect: inflation rises not because the Fed has injected money
into the economy today or changed the cost of lending today, but rather because the Fed is able
to "trick" markets into believing it will rise in the future.
Peter K. said in reply to Syaloch...
And the reverse is true. The markets are skeptical that the Fed will hit its 2 percent ceiling
target any time soon.
Inflation expectations are becoming un-anchored on the downside but nobody cares because ....
oil.
Dan Kervick said in reply to Peter K....
I guess we'll all have to wait for Yellen's future memoirs to know the thinking that was going
on inside the Fed during 2015. But it's interesting that both Yellen and Stanley Fischer, both
formerly held in gigantic respect by the more prominent liberal economists, are now the targets
of ire for apparently not seeing eye-to-eye with their opinionated friends on the outside. Despite
the fact that BoG members have access to mountains of internal research and policy input that
people on the outside can only guess at, the default position of the outsiders is that the insiders
have been corrupted by power and fast-talking bankers or something.
Here's my conjecture about
what the Fed's thinking is: The Fed recognizes that keeping policy interest rates down at an unprecedentedly
low basement level for years on end sends this message to the global economy: the US economy is
a sick basket case. It needs the permanent life support of extraordinary monetary policy intervention
to be kept from flat-lining.
I think the people who actually work inside the Fed think that is total bunk, and that as they
gradually wean the financial sector off of the monetary ventilator, nothing bad is going to happen
at all. The patient is going to get up, walk around and breathe normally. And when that happens,
it will say, "Wow, maybe I should have tried that earlier!" Business confidence will spurt; people
will think, "Hey, I guess we're not in that gloomy post-2008 depression any more!", and the country
will get on with its business more cheerfully.
The Fed has had a devil of a time getting back to normal, because despite its best intentions
it has inadvertently re-defined a condition of zero rates and excess reserves bleeding from bankers's
ears as the new normal, and created an out-of-control public fixation on monetary policy intervention.
Fed communications strategies aimed at guiding the market have turned back on them in a reflexive
and self-defeating cycle. They got themselves into a terrible pattern for a while where every
time there was good economic news, the markets would respond negatively because they interpreted
the good news as evidence that the Fed would "taper" - which they regarded as bad news! And if
there was bad news, the markets would respond favorably because they saw the bad news as evidence
that the fed would "remain aggressive" - which is good news! Obviously that's a pretty pathological
cycle to be in: it's a mechanism fro economic self-stultification. Indicating a move toward normalization
too suddenly in 2013 caused the irrational "taper tantrum", so they have had to go more slowly
this time around with the hand-holding and by building a longer "guidance" runway.
Their chief need now is to push back against the monetary maniacs and hyperventilators who
keep trying to convince impressionable business people and consumers that the Fed has somehow
been "keeping the economy" afloat, and that when interest rates go up - from 1/4 to 1/2 of a percent!
- we're all going to drown. If you have enough ambulance chasers convincing people they are sick
and damaged, they will act sick and damaged.
"... I get the feeling that if doing a film review of The Force Awakens , most economists would be rooting for the Empire to win - after all the empire will bring free trade within its borders, like the EU. ..."
"... In market fundamentalist world, markets dont fail. They can only be failed. Though its still not clear how they think a little bit of government incentive for loans to low income borrowers caused the entire financial sector to lose its mind wrt CDOs. ..."
"... The distribution of the use of credit between pure financial speculation and productive investment is not a function of interest rates, but of things like bank culture, bank regulation and macro-economic and technological prospects. ..."
"... ....Supervising regulators need to look carefully at the ratio of credit used for financial trading compared to credit used for what weve called real-economy matters. They should adjust the level of monitoring based on this view while they also inform policy makers including those in the legislature. ..."
"... except that a significant chunk of institutional investors have sticky nominal targets for return thanks to the politics of return expectation setting (true for pension fund and endowments) -- low interest rates do encourage chasing phantoms or looking to extract some rents, for those subject to that kind of pressure ..."
"... The relationship between low interest rates and bubbles has nothing to do with the above. Low interest rates RAISE asset prices. Through the magic of low discount rates, the future earnings and cash flows are worth a lot higher today. This is why Bernanke cut rates and kept them low. Raising asset prices and the resultant higher net worth was supposed to lead to higher spending today. But outsized returns also attracts speculation. what is so difficult to understand? John Williams of SF Fed has shown how positive returns in asset markets raises the speculators expected returns. when this dynamic gets out of control, it is a bubble. ..."
"... Yes, indeed. And who do we have to blame for that? Obama and Holder, of course. They made the investigation of mortgage securities fraud DOJs lowest priority. Krugmans Democratic proclivities prevent him from stating the obvious. ..."
"... Fact is, Obama has intentionally been a lame duck ever since he took office. He was even clueless on how to capitalize on a filibuster-proof majority in the midst of an economic crisis...which brings us to Trump. Many are so desperate for leadership after Obamas hollow presidency that theyll even support a racist demagogue to avoid another empty White House. ..."
"... Yes you are correct. From 2001 into 2008 when all of the liar and ninja loans were being made, not one government official stepped forward to investigate the possibility of fraud, the predatory lending, the misrepresentation of loans taking place, the loans with teaser rates which later ballooned, the packing of loans with deceptive fees, the illegal kick backs, etc. Not one. To make matters worst, the administration from 2001-2008 aligned itself with the banks along with the maestro hisself Greenspan. ..."
"... When state AGs took on the burden of investigating the flagrant violations, the administration moves to block them saying they had no jurisdiction to do so. It did this through the OCC issuing rules preventing the states from prosecuting the banks. Besides blocking any investigation, the OCC failed in its mission to audit the banks for which it was by law to do. ..."
But some members of the new commission
had a different goal. ... Peter Wallison of the American Enterprise Institute,
wrote to a fellow Republican on the commission ... it was important that what they said
"not undermine the ability of the new House G.O.P. to modify or repeal Dodd-Frank"...; the
party line, literally, required telling stories that would help Wall Street do it all over
again.
Which brings me to a new movie the enemies of financial regulation really, really don't
want you to see.
"The Big Short" ... does
a terrific job of making Wall Street skulduggery entertaining, of exploiting the inherent black
humor of how it went down. ... But you don't want me to play film critic; you want to know
whether the movie got the underlying ... story right. And the answer is yes, in all the ways
that matter. ...
The ...housing ... bubble ... was inflated largely via opaque financial schemes that in
many cases amounted to outright fraud - and it is an outrage that basically nobody ended up
being punished ... aside from innocent bystanders, namely the millions of workers who lost
their jobs and the millions of families that lost their homes.
While the movie gets the essentials of the financial crisis right, the true story ... is
deeply inconvenient to some very rich and powerful people. They and their intellectual hired
guns have therefore spent years disseminating an alternative view ... that places all the blame
... on ... too much government, especially government-sponsored agencies supposedly pushing
too many loans on the poor.
Never mind that the supposed evidence for this view has been
thoroughly debunked..., constant repetition, especially in captive media, keeps this imaginary
history in circulation no matter how often it is shown to be false.
Sure enough, "The Big Short" has already been the subject of
vitriolicattacks
in Murdoch-controlled newspapers...
The ... people who made "The Big Short" should consider the attacks a kind of compliment:
The attackers obviously worry that the film is entertaining enough that it will expose a large
audience to the truth. Let's hope that their fears are justified.
btg said in reply to pgl...
I get the feeling that if doing a film review of "The Force Awakens", most economists would
be rooting for the Empire to win - after all the empire will bring free trade within its borders,
like the EU. Krugman would not, however.
Sanjait said...
In market fundamentalist world, markets don't fail. They can only be failed. Though it's still
not clear how they think a little bit of government incentive for loans to low income borrowers
caused the entire financial sector to lose its mind wrt CDOs.
Are markets efficient or not? I
feel like the fundiesndont really have a coherent explanation for what happened, other than insisting
the government somehow did it.
reason said...
I wish Krugman would attack the view that is being propagated at the moment that low nominal
interest rates (it seems irrespective of the reason for them) foster bubbles. It doesn't make
the slightest bit of sense - leverage doesn't just magnify the gains, it magnifies the losses
as well - what really counts is expectations regardless of nominal interest rates.)
The distribution of the use of credit between pure financial speculation and productive
investment is not a function of interest rates, but of things like bank culture, bank regulation
and macro-economic and technological prospects.
It always seem to me that right wing economists credit businessmen with superhuman
foresight and sophistication, except when it comes to the actions of the Fed and then
something addles their brains and they become completely stupid. As I once put, it seems
investors can't understand what the Fed is doing, even though they tell you.
Good model; one that reaches the "right" good conclusions. Bad model; one that ends up
saying stuff nobody should believe in.
likbez said in reply to Sanjait...
"Markets are efficient, unless the government does anything"
This is a dangerous neoliberal dogma. Total lie.
=== quote ===
The efficient market hypothesis (EMH) is a flavor of economic Lysenkoism which became
popular for the last 30 years in the USA. It is a pseudo scientific theory or, in more
politically correct terms, unrealistic idealization of market behavior. Like classic
Lysenkoism in the past was supported by Stalin's totalitarian state, it was supported by
the power of neoliberal state, which is the state captured by financial oligarchy (see
Casino Capitalism and Quiet coup for more details).
Among the factors ignored by EMH is the positive feedback loop inherent in any system
based on factional reserve banking, the level of market players ignorance, unequal access
to the real information about the markets, the level of brainwashing performed on
"lemmings" by controlled by elite MSM and market manipulation by the largest players and
the state.
Economics, it is said, is the study of scarcity. There is, however, one thing that
certainly isn't scarce, but which deserves the attention of economists - ignorance.
...Conventional economics analyses how individuals choose - maybe rationally, maybe not -
from a range of options. But this raises the question: how do they know what these options
are? Many feasible - even optimum - options might not occur to them. This fact has some
important implications. ...
Slightly simplifying, we can say that (financial) markets are mainly efficient in
separation of fools and their money... And efficient market hypothesis mostly bypasses
important question about how the inequity of resources which inevitably affects the
outcomes of market participants. For example, the level of education of market players is
one aspect of the inequity of resources. Herd behavior is another important, but overlooked
in EMH factor.
Great comment. I especially liked this point: "The distribution of the use of credit between
pure financial speculation and productive investment is not a function of"
....Supervising regulators need to look carefully at the ratio of credit used for financial
trading compared to credit used for what we've called real-economy matters. They should adjust
the level of monitoring based on this view while they also inform policy makers including those
in the legislature.
There may be an opportunity in 2017 to revise the statutes so the public plainly says what
the rules of Commerce are in these financial 'inter-mediation' areas - society is better served
if more of such credit offerings go to investments in the real economy where inputs are real things
like employees, supplies, equipment/technologies. The public's law can effect this change.
david said in reply to JF...
except that a significant chunk of institutional investors have sticky nominal targets
for return thanks to the politics of return expectation setting (true for pension fund and endowments)
-- low interest rates do encourage chasing phantoms or looking to extract some rents, for those
subject to that kind of pressure
BenIsNotYoda said in reply to reason...
"The distribution of the use of credit between pure financial speculation and productive
investment is not a function of interest rates, but of things like bank culture, bank regulation
and macro-economic and technological prospects."
The relationship between low interest rates and bubbles has nothing to do with the above.
Low interest rates RAISE asset prices. Through the magic of low discount rates, the future earnings
and cash flows are worth a lot higher today. This is why Bernanke cut rates and kept them low.
Raising asset prices and the resultant higher net worth was supposed to lead to higher spending
today. But outsized returns also attracts speculation. what is so difficult to understand? John
Williams of SF Fed has shown how positive returns in asset markets raises the speculator's expected
returns. when this dynamic gets out of control, it is a bubble.
Sanjait said in reply to BenIsNotYoda...
It's hard to see how to your claim that expected returns are high when earnings yields across
the board are historically low.
BenIsNotYoda said in reply to Sanjait...
That is exactly the point. Expected returns in stocks have nothing to do with earnings growth.
It does not seem reasonable or fair to pay practically no interest on savings, which is a consequence
of Fed policy. A consequence of this is that people go into risky investments that lead to catastrophe,
sometimes widespread. If the goal was to get people to spend (i.e. consume) more, it seems that
they are persistently & stubbornly frugal.
Last night I was invited to a screening of "The Big Short," which I thought was terrific; who
knew that collateralized debt obligations and credit default swaps could be made into an edge-of-your-seat
narrative (with great acting)?
But there was one shortcut the narrative took, which was understandable and possibly necessary,
but still worth noting.
In the film, various eccentrics and oddballs make the discovery that subprime-backed securities
are garbage, which is pretty much what happened; but this is wrapped together with their realization
that there was a massive housing bubble, which is presented as equally contrary to anything anyone
respectable was saying. And that's not quite right.
It's true that Greenspan and others were busy denying the very possibility of a housing bubble.
And it's also true that anyone suggesting that such a bubble existed was attacked furiously -
"You're only saying that because you hate Bush!" Still, there were a number of economic analysts
making the case for a massive bubble. Here's Dean Baker in 2002. * Bill McBride (Calculated Risk)
was on the case early and very effectively. I keyed off Baker and McBride, arguing for a bubble
in 2004 and making my big statement about the analytics in 2005, ** that is, if anything a bit
earlier than most of the events in the film. I'm still fairly proud of that piece, by the way,
because I think I got it very right by emphasizing the importance of breaking apart regional trends.
So the bubble itself was something number crunchers could see without delving into the details
of mortgage-backed securities, traveling around Florida, or any of the other drama shown in the
film. In fact, I'd say that the housing bubble of the mid-2000s was the most obvious thing I've
ever seen, and that the refusal of so many people to acknowledge the possibility was a dramatic
illustration of motivated reasoning at work.
The financial superstructure built on the bubble was something else; I was clueless about that,
and didn't see the financial crisis coming at all.
More and more people are using the B-word about the housing market. A recent analysis * by
Dean Baker, of the Center for Economic Policy Research, makes a particularly compelling case for
a housing bubble. House prices have run well ahead of rents, suggesting that people are now buying
houses for speculation rather than merely for shelter. And the explanations one hears for those
high prices sound more and more like the rationalizations one heard for Nasdaq 5,000.
If we do have a housing bubble, and it bursts, we'll be looking a lot too Japanese for comfort....
This is the way the bubble ends: not with a pop, but with a hiss.
Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices
fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom
goes bust.
So the news that the U.S. housing bubble is over won't come in the form of plunging prices;
it will come in the form of falling sales and rising inventory, as sellers try to get prices that
buyers are no longer willing to pay. And the process may already have started.
Of course, some people still deny that there's a housing bubble. Let me explain how we know
that they're wrong.
One piece of evidence is the sense of frenzy about real estate, which irresistibly brings to
mind the stock frenzy of 1999. Even some of the players are the same. The authors of the 1999
best seller "Dow 36,000" are now among the most vocal proponents of the view that there is no
housing bubble.
Then there are the numbers. Many bubble deniers point to average prices for the country as
a whole, which look worrisome but not totally crazy. When it comes to housing, however, the United
States is really two countries, Flatland and the Zoned Zone.
In Flatland, which occupies the middle of the country, it's easy to build houses. When the
demand for houses rises, Flatland metropolitan areas, which don't really have traditional downtowns,
just sprawl some more. As a result, housing prices are basically determined by the cost of construction.
In Flatland, a housing bubble can't even get started.
But in the Zoned Zone, which lies along the coasts, a combination of high population density
and land-use restrictions - hence "zoned" - makes it hard to build new houses. So when people
become willing to spend more on houses, say because of a fall in mortgage rates, some houses get
built, but the prices of existing houses also go up. And if people think that prices will continue
to rise, they become willing to spend even more, driving prices still higher, and so on. In other
words, the Zoned Zone is prone to housing bubbles.
And Zoned Zone housing prices, which have risen much faster than the national average, clearly
point to a bubble....
Yeah, the only thing he missed was the timing of the collapse. The day he wrote this the Fed
had already raised rates 250% in one year, on the way to a total of 400% in the next 6 months.
Yet prices accelerated until the top was reached a year after the column.
Bubble, bubble, Toll's in trouble. This week, Toll Brothers, the nation's premier builder of
McMansions, announced that sales were way off, profits were down, and the company was walking
away from already-purchased options on land for future development.
Toll's announcement was one of many indications that the long-feared housing bust has arrived.
Home sales are down sharply; home prices, which rose 57 percent over the past five years (and
much more than that along the coasts), are now falling in much of the country. The inventory of
unsold existing homes is at a 13-year high; builders' confidence is at a 15-year low.
A year ago, Robert Toll, who runs Toll Brothers, was euphoric about the housing boom, declaring:
"We've got the supply, and the market has got the demand. So it's a match made in heaven." In
a New York Times profile of his company published last October, he dismissed worries about a possible
bust. "Why can't real estate just have a boom like every other industry?" he asked. "Why do we
have to have a bubble and then a pop?"
The current downturn, Mr. Toll now says, is unlike anything he's seen: sales are slumping despite
the absence of any "macroeconomic nasty condition" taking housing down along with the rest of
the economy. He suggests that unease about the direction of the country and the war in Iraq is
undermining confidence. All I have to say is: pop! ...
"Mr. Toll now says, is unlike anything he's seen: sales are slumping despite the absence
of any "macroeconomic nasty condition""
You gotta love builders and RE agents. It wasn't macro that caused it, it was default rates
across the board on supposedly safe investments that caused mortgage money supply to totally disappear.
One day people will understand that payments are the key to all finance.
JohnH said...
"and it is an outrage that basically nobody ended up being punished ."
Yes, indeed. And who do we have to blame for that? Obama and Holder, of course. They made
the investigation of mortgage securities fraud DOJ's lowest priority. Krugman's Democratic proclivities
prevent him from stating the obvious.
I' m sure that pgl and his band of merry Obamabots will try to spin this in Obama's favor...I.e.
Congress prevented him from implementing the law, even though Congress has nothing to do with
it.
Fact is, Obama has intentionally been a lame duck ever since he took office. He was even
clueless on how to capitalize on a filibuster-proof majority in the midst of an economic crisis...which
brings us to Trump. Many are so desperate for leadership after Obama's hollow presidency that
they'll even support a racist demagogue to avoid another empty White House.
run75441 said in reply to JohnH...
Yes you are correct. From 2001 into 2008 when all of the liar and ninja loans were being
made, not one government official stepped forward to investigate the possibility of fraud, the
predatory lending, the misrepresentation of loans taking place, the loans with "teaser" rates
which later ballooned, the packing of loans with deceptive fees, the illegal kick backs, etc.
Not one. To make matters worst, the administration from 2001-2008 aligned itself with the banks
along with the maestro hisself "Greenspan."
When state AGs took on the burden of investigating the flagrant violations, the administration
moves to block them saying they had no jurisdiction to do so. It did this through the OCC issuing
rules preventing the states from prosecuting the banks. Besides blocking any investigation, the
OCC failed in its mission to audit the banks for which it was by law to do.
What was the SEC doing during this time period? What was the administration doing with Enron
in 2002? Didn't Cheney get sued by the GAO to find out who he was talking to at Enron?
Yes there is the matter of not prosecuting banking execs after 2008; however, the issue was
allowed to grow during the prior administration and left on the next administration's doorstep.
Closing the barn door after the perps have escaped is a bit late and it should have been stopped
dead in its tracks during the prior 8 years.
So keep going down that path and we can also talk about fraud with tranching, CDS, Naked CDs,
reserves, etc.
So, where was the administration during this time period?
DeDude said...
Subprime loans in poor communities represented a very small fraction of the total subprime
volume and defaulted loans. I mean talk about the mouse and the elephant. Yet the FoxBots are
being convinced to look at those scary mice and all that thundering noise they are making.
Alex H said in reply to Peter K....
In the book, one of the supposed villains went to the division of AIG that was selling CDSes (i.e.
"insuring" the toxic crap) and explained to a direct subordinate of the division exactly how his
bank and the other companies of Wall Street were suckering them into taking on absurd risks. In
*2005*.
Because he was massively short in this market, and AIG pulling the plug would have popped
the bubble. Nobody else was selling CDSes (then), and Wall Street couldn't have pretended that
their risks were covered without them. That doesn't make him a hero, but seriously, if AIG had
listened, no collapse.
Several of the characters effectively called up the ratings agencies to shout at them. Others
called NYT and WSJ reporters, who ignored them. Then they called the SEC's enforcement division,
who ignored them.
Besides, if the other side in all of those bets were foreign "widows and orphans", then it
wouldn't have wrecked the financial system. If Bear Stearns had been sitting as the middleman
between a Korean pension fund and Steve Eisman, they'd have just taken their cut and moved on.
The
seventh edition of
Manias, Panics, and Crashes has recently been published by Palgrave Macmillan.
Charles Kindleberger of MIT wrote the first edition, which appeared in 1978, and followed
it with three more editions. Robert Aliber of the Booth School of Business at the University
of Chicago took over the editing and rewriting of the fifth edition, which came out in
2005. (Aliber is also the author of another well-known book on international finance,
The New International Money Game.) The continuing popularity of Manias,
Panics and Crashes shows that financial crises continue to be a matter of widespread
concern.
Kindleberger built upon the work of
Hyman Minsky, a faculty member at Washington University in St. Louis. Minsky was
a proponent of what he called the "financial instability hypothesis," which posited that
financial markets are inherently unstable. Periods of financial booms are followed by
busts, and governmental intervention can delay but not eliminate crises. Minsky's work
received a great deal of attention during the global financial crisis (see
here and
here; for a summary of Minksy's work, see
Why Minsky Mattersby L. Randall Wray of the University of Missouri-Kansas City
and the Levy Economics Institute).
Kindleberger provided a more detailed description of the stages of a financial crisis.
The period preceding a crisis begins with a "displacement," a shock to the system. When
a displacement improves the profitability of at least one sector of an economy, firms
and individuals will seek to take advantage of this opportunity. The resulting demand
for financial assets leads to an increase in their prices. Positive feedback in asset
markets lead to more investments and financial speculation, and a period of "euphoria,"
or mania develops.
At some point, however, insiders begin to take profits and withdraw from the markets.
Once market participants realize that prices have peaked, flight from the markets becomes
widespread. As prices plummet, a period of "revulsion" or panic ensues. Those who had
financed their positions in the market by borrowing on the promise of profits on the
purchased assets become insolvent. The panic ends when prices fall so far that some traders
are tempted to come back into the market, or
trading is limited by the authorities, or a lender of last resort intervenes to halt
the decline.
In addition to elaborating on the stages of a financial crisis, Kindleberger also
placed them in an international context. He wrote about the propagation of crises through
the arbitrage of divergences in the prices of assets across markets or their substitutes.
Capital flows and the spread of euphoria also contribute to the simultaneous rises in
asset prices in different countries. (Piero
Pasotti and Alessandro Vercelli of the University of Siena provide an analysis of
Kindleberger's contributions.)
Aliber has continued to update the book, and the new edition has a chapter on the
European sovereign debt crisis. (The prior edition covered the events of 2008-09.) But
he has also made his own contributions to the Minsky-Kindleberger (and now –Aliber) framework.
Aliber characterizes the decades since the early 1980s as "…the most tumultuous in monetary
history in terms of the number, scope and severity of banking crises." To date, there
have been four waves of such crises, which are almost always accompanied by currency
crises. The first wave was the debt crisis of developing nations during the 1980s, and
it was followed by a second wave of crises in Japan and the Nordic countries in the early
1990s. The third wave was the Asian financial crisis of 1997-98, and the fourth is the
global financial crisis.
Aliber emphasizes the role of cross-border investment flows in precipitating the crises.
Their volatility has risen under flexible exchange rates, which allow central banks more
freedom in formulating monetary policies that influence capital allocation. He also draws
attention to the increases in household wealth due to rising asset prices and currency
appreciation that contribute to consumption expenditures and amplify the boom periods.
The reversal in wealth once investors revise their expectations and capital begins to
flow out makes the resulting downturn more acute.
These views are consistent in many ways with those of
Claudio Borio of the Bank for International Settlements (see also
here). He has written that the international monetary and financial system amplifies
the "excess financial elasticity," i.e., the buildup of financial imbalances that characterizes
domestic financial markets. He identifies two channels of transmission. First, capital
inflows contribute to the rise in domestic credit during a financial boom. The impact
of global conditions on domestic financial markets exacerbates this development (see
here). Second, monetary regimes may facilitate the expansion of monetary conditions
from one country to others. Central bankers concerned about currency appreciation and
a loss of competitiveness keep interest rates lower than they would otherwise, which
furthers a domestic boom. In addition, the actions of central banks with international
currencies such as the dollar has international ramifications, as the current widespread
concern about the impending rise in the Federal Funds rate shows.
Aliber ends the current edition of Manias, Panics and Crashes with an appendix
on China's financial situation. He compares the surge in China's housing markets with
the Japanese boom of the 1980s and subsequent bust that initiated decades of slow economic
growth. An oversupply of new housing in China has resulted in a
decline in prices that threatens the solvency of property developers and the banks
and shadow banks that financed them. Aliber is dubious of the claim that the Chinese
government will support the banks, pointing out that such support will only worsen
China's indebtedness. The need for an eighth edition of Manias, Panics and Crashes
may soon be apparent.
"... Any serious discussion of Fed policy would note that the banking industry appears to have a grossly disproportionate say in the country's monetary policy. ..."
But what is even more striking is the Post's ability to
treat the Fed a neutral party when the evidence is so
overwhelming in the opposite direction. The majority of
the Fed's 12 district bank presidents have long been
pushing for a rate hike. While there are some doves among
this group, most notably Charles Evans, the Chicago bank
president, and Narayana Kocherlakota, the departing
president of the Minneapolis bank, most of this group has
publicly pushed for higher rate hikes for some time. By
contrast, the governors who are appointed through the
democratic process, have been far more cautious about
raising rates.
It should raise serious concerns that the bank
presidents, who are appointed through a process dominated
by the banking industry, has such a different perspective
on the best path forward for monetary policy. With only
five of the seven governor slots currently filled, there
are as many presidents with voting seats on the Fed's Open
Market Committee as governors. In total, the governors are
outnumbered at meetings by a ratio of twelve to five.
Any serious discussion of Fed policy would note that
the banking industry appears to have a grossly
disproportionate say in the country's monetary policy.
Furthermore, it seems determined to use that influence to
push the Fed on a path that slows growth and reduces the
rate of job creation. The Post somehow missed this story
or at least would prefer that the rest of us not take
notice.
Looks like growth of financial sector represents direct threat to the society
Notable quotes:
"... Perhaps the financialization of the economy and rising inequality leads to a corruption of the political process which leads to monetary, currency and fiscal policy such that labor markets are loose and inflation is low. ..."
"... Growth of the non-financial-sector == growth in productivity ..."
"... In complex subject matters, even the most competent person joining a company has to become familiar with the details of the products, the industry niche, the processes and professional/personal relationships in the company or industry, etc. All these are not really teachable and require between months and years in the job. This represents a significant sunk cost. Sometimes (actually rather often) experience within the niche/industry is in a degree portable between companies, but some company still had to employ enough people to build this experience, and it cannot be readily bought by bringing in however competent freshers. ..."
Working Paper: : In the years since 1980, there has been a well-documented upward redistribution
of income. While there are some differences by methodology and the precise years chosen, the top
one percent of households have seen their income share roughly double from 10 percent in 1980
to 20 percent in the second decade of the 21st century. As a result of this upward redistribution,
most workers have seen little improvement in living standards from the productivity gains over
this period.
This paper argues that the bulk of this upward redistribution comes from the growth
of rents in the economy in four major areas: patent and copyright protection, the financial sector,
the pay of CEOs and other top executives, and protectionist measures that have boosted the pay
of doctors and other highly educated professionals. The argument on rents is important because,
if correct, it means that there is nothing intrinsic to capitalism that led to this rapid rise
in inequality, as for example argued by Thomas Piketty.
"...the growth of finance capitalism was what would kill capitalism off..."
"Financialization" is a short-cut terminology that in full is term either "financialization
of non-financial firms" or "financialization of the means of production." In either case it leads
to consolidation of firms, outsourcing, downsizing, and offshoring to reduce work force and wages
and increase rents.
Consolidation, the alpha and omega of financialization can only be executed with very liquid
financial markets, big investment banks to back necessary leverage to make the proffers, and an
acute capital gains tax preference relative to dividends and interest earnings, the grease to
liquidity.
It takes big finance to do "financialization" and it takes "financialization" to extract big
rents while maintaining low wages.
Finance sector as percent of US GDP, 1860-present: the growth of the rentier economy
[graph]
Financialization is a term sometimes used in discussions of financial capitalism which developed
over recent decades, in which financial leverage tended to override capital (equity) and financial
markets tended to dominate over the traditional industrial economy and agricultural economics.
Financialization is a term that describes an economic system or process that attempts to reduce
all value that is exchanged (whether tangible, intangible, future or present promises, etc.) either
into a financial instrument or a derivative of a financial instrument. The original intent of
financialization is to be able to reduce any work-product or service to an exchangeable financial
instrument... Financialization also makes economic rents possible...financial leverage tended
to override capital (equity) and financial markets tended to dominate over the traditional industrial
economy and agricultural economics...
Companies are not able to invest in new physical capital equipment or buildings because they
are obliged to use their operating revenue to pay their bankers and bondholders, as well as junk-bond
holders. This is what I mean when I say that the economy is becoming financialized. Its aim is
not to provide tangible capital formation or rising living standards, but to generate interest,
financial fees for underwriting mergers and acquisitions, and capital gains that accrue mainly
to insiders, headed by upper management and large financial institutions. The upshot is that the
traditional business cycle has been overshadowed by a secular increase in debt.
Instead of labor earning more, hourly earnings have declined in real terms. There has been
a drop in net disposable income after paying taxes and withholding "forced saving" for social
Security and medical insurance, pension-fund contributions and–most serious of all–debt service
on credit cards, bank loans, mortgage loans, student loans, auto loans, home insurance premiums,
life insurance, private medical insurance and other FIRE-sector charges. ... This diverts spending
away from goods and services.
In the United States, probably more money has been made through the appreciation of real estate
than in any other way. What are the long-term consequences if an increasing percentage of savings
and wealth, as it now seems, is used to inflate the prices of already existing assets - real estate
and stocks - instead of to create new production and innovation?
Your graph shows something I've been meaning to suggest for a while. Take a look at the last time
that the financial sector share of GDP rose. The late 1920's. Which was followed by the Great
Depression which has similar causes as our Great Recession. Here is my observation.
Give that Wall Street clowns a huge increase in our national income and we don't get more services
from them. What we get is screwed on the grandest of scales.
BTW - there is a simple causal relationship that explains both the rise in the share of financial
sector income/GDP and the massive collapses of the economy (1929 and 2007). It is called stupid
financial deregulation. First we see the megabanks and Wall Street milking the system for all
its worth and when their unhanded and often secretive risk taking falls apart - the rest of bear
the brunt of the damage.
Which is why this election is crucial. Elect a Republican and we repeat this mistake again.
Elect a real progressive and we can put in place the types of financial reforms FDR was known
for.
" and it takes "financialization" to extract big rents while maintaining low wages."
It takes governmental macro policy to maintain loose labor markets and low wages. Perhaps
the financialization of the economy and rising inequality leads to a corruption of the political
process which leads to monetary, currency and fiscal policy such that labor markets are loose
and inflation is low.
[Anne gave you FIRE sector profits as a share of GDP while this gives FIRE sector profits as a
share of total corporate profits.]
*
[Smoking gun excerpt:]
"...The financial system has grown rapidly since the early 1980s. In the 1950s, the financial
sector accounted for about 3 percent of U.S. gross domestic product. Today, that figure has more
than doubled, to 6.5 percent. The sector's yearly rate of growth doubled after 1980, rising to
a peak of 7.5 percent of GDP in 2006. As finance has grown in relative size it has also grown
disproportionately more profitable. In 1950, financial-sector profits were about 8 percent of
overall U.S. profits-meaning all the profit earned by any kind of business enterprise in the country.
By the 2000s, they ranged between 20 and 40 percent...
If you want to know what happened to economic equality in this country, one word will explain
a lot of it: financialization. That term refers to an increase in the size, scope, and power of
the financial sector-the people and firms that manage money and underwrite stocks, bonds, derivatives,
and other securities-relative to the rest of the economy.
The financialization revolution over the past thirty-five years has moved us toward greater
inequality in three distinct ways. The first involves moving a larger share of the total national
wealth into the hands of the financial sector. The second involves concentrating on activities
that are of questionable value, or even detrimental to the economy as a whole. And finally, finance
has increased inequality by convincing corporate executives and asset managers that corporations
must be judged not by the quality of their products and workforce but by one thing only: immediate
income paid to shareholders.
The financial system has grown rapidly since the early 1980s. In the 1950s, the financial sector
accounted for about 3 percent of U.S. gross domestic product. Today, that figure has more than
doubled, to 6.5 percent. The sector's yearly rate of growth doubled after 1980, rising to a peak
of 7.5 percent of GDP in 2006. As finance has grown in relative size it has also grown disproportionately
more profitable. In 1950, financial-sector profits were about 8 percent of overall U.S. profits-meaning
all the profit earned by any kind of business enterprise in the country. By the 2000s, they ranged
between 20 and 40 percent. This isn't just the decline of profits in other industries, either.
Between 1980 and 2006, while GDP increased five times, financial-sector profits increased sixteen
times over. While financial and nonfinancial profits grew at roughly the same rate before 1980,
between 1980 and 2006 nonfinancial profits grew seven times while financial profits grew sixteen
times.
This trend has continued even after the financial crisis of 2008 and subsequent financial reforms,
including the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Financial profits
in 2012 were 24 percent of total profits, while the financial sector's share of GDP was 6.8 percent.
These numbers are lower than the high points of the mid-2000s; but, compared to the years before
1980, they are remarkably high.
This explosion of finance has generated greater inequality. To begin with, the share of the
total workforce employed in the financial sector has barely budged, much less grown at a rate
equivalent to the size and profitability of the sector as a whole. That means that these swollen
profits are flowing to a small sliver of the population: those employed in finance. And financiers,
in turn, have become substantially more prominent among the top 1 percent. Recent work by the
economists Jon Bakija, Adam Cole, and Bradley T. Heim found that the percentage of those in the
top 1 percent of income working in finance nearly doubled between 1979 and 2005, from 7.7 percent
to 13.9 percent.
If the economy had become far more productive as a result of these changes, they could have
been worthwhile. But the evidence shows it did not. Economist Thomas Philippon found that financial
services themselves have become less, not more, efficient over this time period. The unit cost
of financial services, or the percentage of assets it costs to produce all financial issuances,
was relatively high at the dawn of the twentieth century, but declined to below 2 percent between
1901 and 1960. However, it has increased since the 1960s, and is back to levels seen at the early
twentieth century. Whatever finance is doing, it isn't doing it more cheaply.
In fact, the second damaging trend is that financial institutions began to concentrate more
and more on activities that are worrisome at best and destructive at worst. Harvard Business School
professors Robin Greenwood and David Scharfstein argue that between 1980 and 2007 the growth in
financial-industry revenues came from two things: asset management and loan origination. Fees
associated either with asset management or with household credit in particular were responsible
for 74 percent of the growth in financial-sector output over that period.
The asset management portion reflects the explosion of mutual funds, which increased from $134
billion in assets in 1980 to $12 trillion in 2007. Much of it also comes from "alternative investment
vehicles" like hedge funds and private equity. Over this time, the fee rate for mutual funds fell,
but fees associated with alternative investment vehicles exploded. This is, in essence, money
for nothing-there is little evidence that hedge funds actually perform better than the market
over time. And, unlike mutual funds, alternative investment funds do not fully disclose their
practices and fees publicly.
Beginning in 1980 and continuing today, banks generate less and less of their income from interest
on loans. Instead, they rely on fees, from either consumers or borrowers. Fees associated with
household credit grew from 1.1 percent of GDP in 1980 to 3.4 percent in 2007. As part of the unregulated
shadow banking sector that took over the financial sector, banks are less and less in the business
of holding loans and more and more concerned with packaging them and selling them off. Instead
of holding loans on their books, banks originate loans to sell off and distribute into this new
type of banking sector.
Again, if this "originate-to-distribute" model created value for society, it could be a worthwhile
practice. But, in fact, this model introduced huge opportunities for fraud throughout the lending
process. Loans-such as "securitized mortgages" made up of pledges of the income stream from subprime
mortgage loans-were passed along a chain of buyers until someone far away held the ultimate risk.
Bankers who originated the mortgages received significant commissions, with virtually no accountability
or oversight. The incentive, in fact, was perverse: find the worst loans with the biggest fees
instead of properly screening for whether the loans would be any good for investors.
The same model made it difficult, if not impossible, to renegotiate bad mortgages when the
system collapsed. Those tasked with tackling bad mortgages on behalf of investors had their own
conflicts of interests, and found themselves profiting while loans struggled. This process created
bad debts that could never be paid, and blocked attempts to try and rework them after the fact.
The resulting pool of bad debt has been a drag on the economy ever since, giving us the fall in
median wages of the Great Recession and the sluggish recovery we still live with.
And of course it's been an epic disaster for the borrowers themselves. Many of them, we now
know, were moderate- and lower-income families who were in no financial position to borrow as
much as they did, especially under such predatory terms and with such high fees. Collapsing home
prices and the inability to renegotiate their underwater mortgages stripped these folks of whatever
savings they had and left them in deep debt, widening even further the gulf of inequality in this
country.
Moreover, financialization isn't just confined to the financial sector itself. It's also ultimately
about who controls, guides, and benefits from our economy as a whole. And here's the last big
change: the "shareholder revolution," started in the 1980s and continuing to this very day, has
fundamentally transformed the way our economy functions in favor of wealth owners.
To understand this change, compare two eras at General Electric. This is how business professor
Gerald Davis describes the perspective of Owen Young, who was CEO of GE almost straight through
from 1922 to 1945: "[S]tockholders are confined to a maximum return equivalent to a risk premium.
The remaining profit stays in the enterprise, is paid out in higher wages, or is passed on to
the customer." Davis contrasts that ethos with that of Jack Welch, CEO from 1981 to 2001; Welch,
Davis says, believed in "the shareholder as king-the residual claimant, entitled to the [whole]
pot of earnings."
This change had dramatic consequences. Economist J. W. Mason found that, before the 1980s,
firms tended to borrow funds in order to fuel investment. Since 1980, that link has been broken.
Now when firms borrow, they tend to use the money to fund dividends or buy back stocks. Indeed,
even during the height of the housing boom, Mason notes, "corporations were paying out more than
100 percent of their cash flow to shareholders."
This lack of investment is obviously holding back our recovery. Productive investment remains
low, and even extraordinary action by the Federal Reserve to make investments more profitable
by keeping interest rates low has not been able to counteract the general corporate presumption
that this money should go to shareholders. There is thus less innovation, less risk taking, and
ultimately less growth. One of the reasons this revolution was engineered in the 1980s was to
put a check on what kinds of investments CEOs could make, and one of those investments was wage
growth. Finance has now won the battle against wage earners: corporations today are reluctant
to raise wages even as the economy slowly starts to recover. This keeps the economy perpetually
sluggish by retarding consumer demand, while also increasing inequality.
How can these changes be challenged? The first thing we must understand is the scope of the
change. As Mason writes, the changes have been intellectual, legal, and institutional. At the
intellectual level, academic research and conventional wisdom among economists and policymakers
coalesced around the ideas that maximizing returns to shareholders is the only goal of a corporation,
and that the financial markets were always right. At the legal level, laws regulating finance
at the state level were overturned by the Supreme Court or preempted by federal regulators, and
antitrust regulations were gutted by the Reagan administration and not taken up again.
At the institutional level, deregulation over several administrations led to a massive concentration
of the financial sector into fewer, richer firms. As financial expertise became more prestigious
than industry-specific knowledge, CEOs no longer came from within the firms they represented but
instead from other firms or from Wall Street; their pay was aligned through stock options, which
naturally turned their focus toward maximizing stock prices. The intellectual and institutional
transformation was part of an overwhelming ideological change: the health and strength of the
economy became identified solely with the profitability of the financial markets.
This was a bold revolution, and any program that seeks to change it has to be just as bold
intellectually. Such a program will also require legal and institutional changes, ones that go
beyond making sure that financial firms can fail without destroying the economy. Dodd-Frank can
be thought of as a reaction against the worst excesses of the financial sector at the height of
the housing bubble, and as a line of defense against future financial panics. Many parts of it
are doing yeoman's work in curtailing the financial sector's abuses, especially in terms of protecting
consumers from fraud and bringing some transparency to the Wild West of the derivatives markets.
But the scope of the law is too limited to roll back these larger changes.
One provision of Dodd-Frank, however, suggests a way forward. At the urging of the AFL-CIO,
Dodd-Frank empowered the Securities and Exchange Commission to examine the activities of private
equity firms on behalf of their investors. At around $3.5 trillion, private equity is a massive
market with serious consequences for the economy as a whole. On its first pass, the SEC found
extensive abuses. Andrew Bowden, the director of the SEC's examinations office, stated that the
agency found "what we believe are violations of law or material weaknesses in controls over 50
percent of the time."
Lawmakers could require private equity and hedge funds to standardize their disclosures of
fees and holdings, as is currently the case for mutual funds. The decline in fees for mutual funds
noted above didn't just happen by itself; it happened because the law structured the market for
actual transparency and price competition. This will need to happen again for the broader financial
sector.
But the most important change will be intellectual: we must come to understand our economy
not as simply a vehicle for capital owners, but rather as the creation of all of us, a common
endeavor that creates space for innovation, risk taking, and a stronger workforce. This change
will be difficult, as we will have to alter how we approach the economy as a whole. Our wealth
and companies can't just be strip-mined for a small sliver of capital holders; we'll need to bring
the corporation back to the public realm. But without it, we will remain trapped inside an economy
that only works for a select few.
[Whew!]
Puerto Barato said in reply to RC AKA Darryl, Ron,
"3 percent of U.S. gross domestic product. Today, that figure has more than doubled, to 6.5"
~~RC AKA Darryl, Ron ~
Growth of the non-financial-sector == growth in productivity
Growth of the financial-sector == growth in upward transfer of wealth
Ostensibly financial-sector is there to protect your money from being eaten up by inflation.
Closer inspection shows that the prevention of *eaten up* is by the method of rent collection.
Accountants handle this analysis poorly, but you can see what is happening. Boiling it down
to the bottom line you can easily see that wiping out the financial sector is the remedy to the
Piketty.
Hell! Financial sector wiped itself out in 008. Problem was that the GSE and administration
brought the zombie back to life then put the vampire back at our throats. What was the precipitating
factor that snagged the financial sector without warning?
Unexpected
deflation
!
Gimme some
of that
pgl said in reply to djb...
People like Brad DeLong have noted this for a while. Twice as many people making twice as much
money per person. And their true value to us - not a bit more than it was back in the 1940's.
Piketty looks at centuries of data from all over the world and concludes that capitalism has
a long-run bias towards income concentration. Baker looks at 35 years of data in one country and
concludes that Piketty is wrong. Um...?
A little more generously, what Baker actually writes is:
"The argument on rents is important because, if correct, it means that there is nothing intrinsic
to capitalism that led to **this** rapid rise in inequality, as for example argued by Thomas Piketty."
(emphasis added)
But Piketty has always been very explicit that the recent rise in US income inequality is anomalous
-- driven primarily by rising inequality in the distribution of labor income, and only secondarily
by any shift from labor to capital income.
So perhaps Baker is "correctly" refuting Straw Thomas Piketty. Which I suppose is better than
just being obviously wrong. Maybe.
tew said...
Some simple math shows that this assertion is false "As a result of this upward redistribution,
most workers have seen little improvement in living standards" unless you think an apprx. 60%
in per-capita real income (expressed as GDP) among the 99% is "little improvement".
Real GDP 2015 / Real GDP 1980 = 2.57 (Source: FRED)
If the income share of the 1% shifted from 10% to 20% then The 1%' real GDP component went up
410% while that of The 99% went up 130%. Accounting for a population increase of about 41% brings
those numbers to a 265% increase and a 62% increase.
Certainly a very unequal distribution of the productivity gains but hard to call "little".
I believe the truth of the statement is revealed when you look at the Top 5% vs. the other
95%.
cm said in reply to tew...
For most "working people", their raises are quickly eaten up by increases in housing/rental,
food, local services, and other nondiscretionary costs. Sure, you can buy more and better imported
consumer electronics per dollar, but you have to pay the rent/mortgage every months, how often
do you buy a new flat screen TV? In a high-cost metro, a big ass TV will easily cost less than
a single monthly rent (and probably less than your annual cable bill that you need to actually
watch TV).
pgl said in reply to tew...
Are you trying to be the champion of the 1%? Sorry dude but Greg Mankiw beat you to this.
anne said...
In the years since 1980, there has been a well-documented upward redistribution of income.
While there are some differences by methodology and the precise years chosen, the top one percent
of households have seen their income share roughly double from 10 percent in 1980 to 20 percent
in the second decade of the 21st century. As a result of this upward redistribution, most workers
have seen little improvement in living standards from the productivity gains over this period....
Between 1948 and 1980, real median family income increased by 110.2%, while between 1980 and 2014
real median family income increased by a mere 15.8%.
cm said...
"protectionist measures that have boosted the pay of doctors and other highly educated
professionals"
Protectionist measures (largely of the variety that foreign credentials are not recognized)
apply to doctors and similar accredited occupations considered to be of some importance, but certainly
much less so to "highly educated professionals" in tech, where the protectionism is limited to
annual quotas for some categories of new workers imported into the country and requiring companies
to pay above a certain wage rate for work visa holders in jobs claimed to have high skills requirements.
A little mentioned but significant factor for growing wages in "highly skilled" jobs is that
the level of foundational and generic domain skills is a necessity, but is not all the value the
individual brings to the company. In complex subject matters, even the most competent person
joining a company has to become familiar with the details of the products, the industry niche,
the processes and professional/personal relationships in the company or industry, etc. All these
are not really teachable and require between months and years in the job. This represents a significant
sunk cost. Sometimes (actually rather often) experience within the niche/industry is in a degree
portable between companies, but some company still had to employ enough people to build this experience,
and it cannot be readily bought by bringing in however competent freshers.
This applies less so e.g. in medicine. There are of course many heavily specialized disciplines,
but a top flight brain or internal organ surgeon can essentially work on any person. The variation
in the subject matter is large and complex, but much more static than in technology.
That's not to knock down the skill of medical staff in any way (or anybody else who does a
job that is not trivial, and that's true for many jobs). But specialization vs. genericity follow
a different pattern than in tech.
Another example, the legal profession. There are similar principles that carry across, with
a lot of the specialization happening along different legislation, case law, etc., specific to
the jurisdiction and/or domain being litigated.
Oil is a valuable chemical resource that is now wasted because of low prices... "The obvious follow-up
question is, how long will the sane people of the world continue to allow so much fossil-fuel combustion
to continue? An exercise for readers."
Notable quotes:
"... Iran wont flood the market in 2016. Right now Iran is losing production. It takes time to reverse decline and make a difference. ..."
"... Those who predict very low prices dont understand the industry (I do). The low price environment reduces capital investment, which has to be there just to keep production flat (the decline is 3 to 5 million barrels of oil per day per year). At this time capacity is dropping everywhere except for a few select countries. The USA is losing capacity, and will never again reach this years peak unless prices double. Other countries are hopeless. From Norway to Indonesia to Colombia to Nigeria and Azerbaijan, peak oil has already taken place. ..."
"... If oil prices remain very low until 2025 itll either be because you are right or because the world went to hell. ..."
"... But Im with Carambaman - prices will go up again. Demand is and will still be there. The excess output will eventually end, and the prices stabilises. And then move up again. ..."
"... Time to examine the real question: how long can the Saudis maintain their current production rates? Theyre currently producing more than 10 Mbarrels/day, but lets take the latter figure as a lower bound. They apparently have (per US consulate via WikiLeaks--time for a followup?) at least 260 Gbarrels (though it seems no one outside Saudi really knows). You do the math: 260 Gbarrels / (10 Mbarrels/day) = 26 kdays ~= 70 years. @ 15 Mbarrels/day - 47.5 years. @ 20 Mbarrels/day - 35 years. ..."
"... The obvious follow-up question is, how long will the sane people of the world continue to allow so much fossil-fuel combustion to continue? An exercise for readers. ..."
"... Saudi Arabia, a US ally, using oil production and pricing to crush US oil shale industry? Did I read that correctly? ..."
"... Yeah, but I suspect it was *written* incorrectly. Im betting the Saudis real target is the Russians. ..."
"... In 1975 dollars, thats $8.31 / bbl (with a cumulative inflation factor of 342% over 40 years), or $.45 / gal for gas (assuming a current price of $2.00 / gal). ..."
"... I spent 30 years in the oil industry and experienced many cycles. When it is up people cannot believe it will go down and when it is down people cannot believe it will go up. It is all a matter of time ..."
Iran won't flood the market in 2016. Right now Iran is losing production. It takes time
to reverse decline and make a difference.
Those who predict very low prices don't understand the industry (I do). The low price environment
reduces capital investment, which has to be there just to keep production flat (the decline is
3 to 5 million barrels of oil per day per year). At this time capacity is dropping everywhere
except for a few select countries. The USA is losing capacity, and will never again reach this
year's peak unless prices double. Other countries are hopeless. From Norway to Indonesia to Colombia
to Nigeria and Azerbaijan, peak oil has already taken place.
Fernando Leza -> SonOfFredTheBadman 15 Dec 2015 06:05
If oil prices remain very low until 2025 it'll either be because you are right or because
the world went to hell. I prefer your vision, of course. But I'm afraid most of your talk
is wishful thinking. Those of us who do know how to put watts on the table can't figure out any
viable solutions. Hopefully something like cheap fusion power will rise. Otherwise you may be
eating human flesh in 2060.
Fernando Leza -> p26677 15 Dec 2015 06:00
Keep assuming. I'll keep buying Shell stock.
MatCendana -> UnevenSurface 14 Dec 2015 03:36
Regardless of the breakeven price, producers with the wells already running or about to will
keep pumping. Better to have some income, even if the operation is at a loss, than no income.
This will go on and on right until the end, which is either prices eventually go up or they run
out of oil and can't drill new wells.
But I'm with Carambaman - prices will go up again. Demand is and will still be there. The
excess output will eventually end, and the prices stabilises. And then move up again.
Billy Carnes 13 Dec 2015 19:52
Also this hurts the states...Louisiana is now in the hole over 1.5 Billion or more
TomRoche 13 Dec 2015 12:31
@Guardian: Time to examine the real question: how long can the Saudis maintain their current
production rates? They're currently producing more than 10 Mbarrels/day, but let's take the latter
figure as a lower bound. They apparently have (per US consulate via WikiLeaks--time for a followup?)
at least 260 Gbarrels (though it seems no one outside Saudi really knows). You do the math: 260
Gbarrels / (10 Mbarrels/day) = 26 kdays ~= 70 years. @ 15 Mbarrels/day -> 47.5 years. @ 20 Mbarrels/day
-> 35 years.
That's just Saudi (allegedly) proven reserves. But it's plenty long enough to push atmospheric
GHG levels, and associated radiative forcing, to ridiculously destructive excess.
The obvious follow-up question is, how long will the sane people of the world continue
to allow so much fossil-fuel combustion to continue? An exercise for readers.
TomRoche -> GueroElEnfermero 13 Dec 2015 12:14
@GueroElEnfermero: 'Saudi Arabia, a US ally, using oil production and pricing to crush
US oil shale industry? Did I read that correctly?'
Yeah, but I suspect it was *written* incorrectly. I'm betting the Saudis' real target is
the Russians.
Sieggy 13 Dec 2015 11:49
In 1975 dollars, that's $8.31 / bbl (with a cumulative inflation factor of 342% over 40
years), or $.45 / gal for gas (assuming a current price of $2.00 / gal).
Carambaman 13 Dec 2015 10:25
I spent 30 years in the oil industry and experienced many cycles. When it is up people
cannot believe it will go down and when it is down people cannot believe it will go up. It is
all a matter of time
Is Angela Merkel getting bad advice from Washington neocons through their representative in Berlin?
Now we read that
Jeff Gedmin - the head of the Aspen
Institute in Berlin - is meeting on a regular basis with the Chancellor to instruct her on the Bush
administration's line:
Angela Merkel relies on the advice of Jeffrey Gedmin, specially dispatched
to Berlin to assist her by the Bush clan. This lobbyist first worked at the American Enterprise
Institute (AEI) [2]
under Richard Perle and Mrs. Dick Cheney. He enthusiastically encouraged the creation of a Euro
with Dollar parity exchange rate. Within the AEI, he led the New Atlantic Initiative (NAI), which
brought together all the America-friendly generals and politicians in Europe. He was then involved
in the Project for a New American Century (PNAC) and wrote the chapter on Europe in the neocon
programme. He argued that the European Union should remain under NATO authority and that this
would only be possible by "discouraging European calls for emancipation." [3]
Finally he became the administrator of the Council of the Community of Democracies (CCD), which
argues in favour of a two-speed UN, and became director of the Aspen Institute in Berlin [4].
Subsequently he turned down the offer from his friend John Bolton [5]
of the post of deputy US ambassador to the UN so as to be able to devote himself exclusively to
Angela Merkel.
Elsewhere we
read that Chancellor Merkel receives daily briefings from the neocon stalwart Gedmin:
Gedmin "brieft" die Kanzlerin täglich: Er hat damit die Rolle inne, die bei
der Stasi die Führungsoffiziere hatten. Wenn wir uns noch Demokratie nennen wollen, dann muss
Merkel gezwungen werden, die Inhalte dieser täglichen "Briefings" dem Land offenzulegen. In anderen
Ländern gibt es dafür Gesetze, die "Freedom of Information Act" heissen.
Could this be true? I hope not. Gedmin is known for his columns in the conservative daily
Die Welt where he reports on the marvelous successes the Iraq War. And who can forget
Gedmin's
column during last summer' s Israel/Lebanon War where he wrote about how Hezbollah fighters drank
the blood of their victims in Lebanon? If Angela Merkel is looking for good advice, there are
much
more honest and intelligent resources than Jeff Gedmin.
Note that the quality of translation from German of this article is low.
Notable quotes:
"... Frankfurter Allgemeine Zeitung ..."
"... Bild and Die Welt ..."
"... In 2003, Chancellor Gerhard Schröder opposed the Anglo-American intervention in Ira q. Angela
Merkel then published a courageous article in the Washington Post ..."
"... As Stanley Payne, the famous American historian said about Spain (or any western democracy)
that now politicians are not elected but chosen by apparatus, agencies and visible hands of the markets
..."
"... Merkel is publicly supported by Friede Springer , widow of West German press baron, Axel Springer
, whos publishing conglomerate, the Springer Group secretly received around $7 million from the CIA
in the early 1950s. ..."
"... She is counseled by Jeffrey Gedmin. Gedmin is a regular columnist in Die Welt , a publication
of the Springer Group. After becoming administrator of the Council of the Community of Democracies and
director of the Aspen Institute in Berlin in 2001, Gedmin devoted himself exclusively to Merkel . Gedmin
was too involved in the infamous Project for a New American Century (PNAC) and wrote the chapter on
Europe in the neocon programme. He argued that the European Union should remain under NATO authority
and that this would only be possible by discouraging European calls for emancipation . ..."
"... In a few years, Merkel has destroyed European solidarity, annihilated the German nuclear power
plants (an old American obsession too), impoverished Germans and their once efficient Rheinisch and
solitary economy, backed the mad dog American diplomacy and created along with an irresponsible American
administration (irresponsible because America will never win this kind of conflict) a dangerous crisis
against Russia than can end on a war or a scandalous European partition. ..."
One must understand the reasons of
Angela
Merkel's behaviour. She obeys America and
her Israeli mentor ('Israel is Germany's raison d'être'???), she threatens and mistreats Europe;
she attacks Russia and now she builds a new sanitary cordon (like in 1919) in order to deconstruct
Eurasia and
reinforce American agenda in our unlucky continent. Now Merkel advocates for the rapid adoption
on the most infamous and perilous treaty of commerce in history, the TPP (Trans-Pacific Partnership).
Dr Roberts has recently explained the meaning of 'Fast Track' expression and a courageous Guardian,
last 27th may, has exposed the corruption of American Congress on this incredible yet
terrible matter.
Why is Merkel so pro-American and anti-European?
Let us explain with the data we know the reasons of such nihilist and erratic behaviour.
Angela Merkel is not from East Germany (east-Germans
are pro-Russian indeed, see lately the declaration of generals). She was born in Hamburg in
1954 (Federal Republic of Germany). Shortly after her birth, her family made the unusual
choice of moving to the East. Her father, a pastor in the Lutheran church, founded a
seminary in the German Democratic Republic and became director of a home for handicapped persons.
He enjoyed a privileged social status, making frequent trips to the West.
She became politically involved in the Freie Deutsche Jugend (Free German Youth), the state
organisation for young people. She rose within the organisation to the post of Secretary of the
Agitprop department, becoming one of the main experts in political communication in the communist
system. She enjoys selling her convictions.
In November 1989 The CIA attempted to take over by recruiting senior individuals. One month
later, Merkel changed sides and joined the Demokratischer Aufbruch (Democratic Revival), a movement
inspired by the West German Christian Democrat party. As we know from history, these political
parties in Europe are neither Christian nor democratic. They just serve American and business
agendas. In order to avoid a mass exodus from the East to the West, Merkel argued strongly in
favour of getting the GDR to join the market economy and the Deutschmark zone. Ultraliberal but
never popular in Germany, her thesis finally imposed itself in Germany, like that of Sarkozy,
her fellow neocon in France who definitely ousted any rest of Gaullism in this country.
Her second husband, Joachim Sauer, was recruited by the US Company Biosym Technology, spending
a year at San Diego at the laboratory of this Pentagon contractor. He then joined Accelrys, another
San Diego company carrying out contracts for the Pentagon. Of course Accelrys is traded on NASDAQ...
Helmut Kohl and his closest associates had apparently accepted money from obscure sources
for the CDU. Angela Merkel then published a heroic-comical article in the Foreign Frankfurter
Allgemeine Zeitung in which she distanced herself from her mentor. One can check that she
repeatedly betrays her protectors... and electors (whose median age is of sixty).
Angela Merkel was then publicly supported by two press groups. Firstly, she was able to count
on the support of Friede Springer, who had inherited the Axel Springer group (180 newspapers and
magazines, including Bild and Die Welt). The group's journalists are required to sign an
editorial agreement which lies down that they must work towards developing transatlantic links and
defending the state of Israel. The other group is Bertelsmann.
Angela Merkel radically rejects European independence
In 2003,
Chancellor Gerhard Schröder opposed the Anglo-American intervention in Iraq. Angela
Merkel then published a 'courageous' article in the Washington Post in which she rejected
the Chirac-Schröder doctrine of European independence, affirmed her gratitude and friendship for
"America" and supported this scandalous and ridiculous war. I quote some lines of this interesting
act of submission to her American lords:
Because of decisive events,
Europe and the United States now must redefine the nucleus of their domestic, foreign and
security policy principles.
Aid to Turkey, our partner in the alliance, is blocked for days in the NATO Council by France,
Belgium and Germany, a situation that undermines the very basis of NATO's legitimacy.
The Eastern European candidate countries for membership in the European Union were attacked
by the French government because they have declared their commitment to the transatlantic partnership
between Europe and the United States. She then threatens France, then a free country run
by Chirac and Villepin, and advocates for what Gore Vidal quoted 'the perpetual war'...
involving a 'perpetual peace':
Anyone who rejects military action as a last resort weakens the pressure that needs to be maintained
on dictators and consequently makes a war not less but more likely.
Germany needs its friendship with France, but the benefits of that friendship can be
realized only in close association with our old and new European partners, and within
the transatlantic alliance with the United States.
Yet Merkel won the elections in 2007. She announced the abolition of graduated income tax, proposing
that the rate should be the same for those who only just have what is necessary and those who live
in luxury: maybe this is the a result of her Christian education?
The outgoing Chancellor, Gerhard Schröder, severely criticized this proposal in a televised debate.
The CDU's lead was decimated, and in the actual election, the CDU polled 35% of the votes and the
SPD 34%, the remainder being spread amongst a number of small parties. The Germans didn't want Schröder
any longer, but nor did they want Merkel. I repeat that she was imposed more than elected. As
Stanley Payne, the famous American historian said about Spain (or any western democracy) that now
politicians are 'not elected but chosen' by apparatus, agencies and 'visible hands' of the markets
These last weeks, "Mother" Merkel tries to re-launch the proposed merger of the North American
Free Trade Area and the European Free Trade Area, thereby creating a "great transatlantic market"
to use the words once pronounced by Sir Leon Brittan, a famous paedophile involved in scandals and
bribes since, and mysteriously found dead a couple of months ago.
Let us se now some of their connections:
Merkel is publicly supported by
Friede Springer, widow of West German press baron,
Axel Springer, who's publishing conglomerate, the
Springer Group secretly received around $7 million from the
CIA in the early 1950's.
She is counseled by Jeffrey Gedmin. Gedmin is a regular columnist in
Die Welt, a publication of the Springer Group. After becoming administrator of the
Council of the Community of Democracies and director of the
Aspen Institute in Berlin in 2001, Gedmin devoted himself exclusively to
Merkel. Gedmin was
too involved in the infamous Project for a New American Century (PNAC) and wrote the chapter on
Europe in the neocon programme. He argued that the European Union should remain under NATO authority
and that this would only be possible by "discouraging European calls for emancipation".
We have never been so far from 'emancipation' now in Europe, and never been so
near to a war with Russia and maybe (in order to satisfy American gruesome appetite) with Central
Asia and China. In France, 61% of the people who had witnessed the war asserted in 1945 that we were
saved by the Russian Army. Now, thanks to American propaganda backed by European collaborators, we
are hardly 10% to know that fact. The rest is misled by propaganda, media, TV and films. Daniel Estulin
speaks of a remade, of a re-fabricated past by US television and media agencies.
In a few years, Merkel has destroyed European solidarity, annihilated the German nuclear power
plants (an old American obsession too), impoverished Germans and their once efficient Rheinisch and
solitary economy, backed the 'mad dog' American diplomacy and created along with an irresponsible
American administration (irresponsible because America will never win this kind of conflict) a dangerous
crisis against Russia than can end on a war or a scandalous European partition.
European nationalism is an allergic reaction to neoliberalism. Guardian does not mention Ukraine and Baltic states. also far right nationalist goverment with
Baltic states imposing "Baltic version of apartheid" to Russian speaking minority.
Such is the picture in western Europe. In eastern Europe, the nationalist right is already in
power in Hungary and in Poland. Viktor Orbán in Budapest is the pioneering cheerleader. He has no
opposition to speak of. His main "opposition" comes not from the centre-left but from the
neo-fascist Jobbik movement. In Poland, Jarosław Kaczyński and his Law and Justice party in
Poland are wasting little time in aping Orbán's constitutional trickery to entrench itself in
power.
On the critical issues of the day – immigration, security and Euroscepticism – there is little to
separate Orbán and Kaczyński from President Miloš Zeman in Prague and Robert Fico, prime minister
of Slovakia, both on the left. Besides, on economics, the role of the state and welfare, the
far-right parties are way to the left of social democracy, seeking to turn the clock back to
state interventionism, full employment, generous pensions and welfare systems (for native whites,
not immigrants).
What these far-right parties in east and west all share are chipped shoulders heaving with
grievance – summed up as hostility to and rejection of globalisation and multiculturalism. They
do not like modern life. They are anti-Muslim, anti-immigration, anti-EU, anti-American (Poland
excepted), illiberal. And they like Vladimir Putin (again, except Kaczyński).
They are nationalists. This also militates against making common cause despite all the
similarities in outlook, because nationalists usually see foes rather than friends in other
nationalists.
... It is a tall order. The
European Union has never looked so temporary and fragile.
"... Can you list all of the pro- or anti- Wall Street reforms and actions Bill Clinton performed as President including nominating Alan Greenspan as head regulator? Cutting the capital gains tax? Are you aware of Greenspans record? ..."
"... Its actually pro-neoliberalism crowd vs anti-neoliberalism crowd. In no way anti-neoliberalism commenters here view this is a character melodrama, although psychologically Hillary probably does has certain problems as her reaction to the death of Gadhafi attests. The key problem with anti-neoliberalism crowd is the question What is a realistic alternative? Thats where differences and policy debate starts. ..."
"... Events do not occur in isolation. GLBA increased TBTF in AIG and Citi. TBTF forced TARP. GLBA greased the skids for CFMA. Democrats gained majority, but not filibuster proof, caught between Iraq and a hard place following their votes for TARP and a broader understanding of their participation in the unanimous consent passage of the CFMA, over objection by Senators James Inhofe (R-OK) and Paul Wellstone (D-MN). ..."
"... It certainly fits the kind of herd mentality that I always saw in corporate Amerika until I retired. The William Greider article posted by RGC was very consistent in its account by John Reed with the details of one or two books written about AIG back in 2009 or so. I dont have time to hunt them up now. Besides, no one would read them anyway. ..."
"... GS was one of several actions taken by the New Deal. That it wasnt sufficient by itself doesnt equate to it wasnt beneficial. ..."
"... "Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," said then-Treasury Secretary Lawrence Summers. "This historic legislation will better enable American companies to compete in the new economy." ..."
"... The repeal of Glass Steagal was a landmark victory in deregulation that greased the skids for the passage of CFMA once Democrats had been further demoralized by the SCOTUS decision on Bush-v-Gore. The first vote on GLBA was split along party lines, but passed because Republicans had majority and Clinton was willing to sign which was clear from the waiver that had been granted to illegal Citi merger with Travelers. Both Citi and AIG mergers contributed to too big to fail. The CFMA was the nail in the coffin that probably would have never gotten off the ground if Democrats had held the line on the GLBA. Glass-Steagal was insufficient as a regulatory system to prevent the 2008 mortgage crisis, but it was giant as an icon of New Deal financial system reform. Its loss institutionalized too big to fail ..."
"... Gramm Leach Biley was a mistake. But it was not the only failure of US regulatory policies towards financial institutions nor the most important. ..."
"... It was more symbolic caving in on financial regulation than a specific technical failure except for making too big to fail worse at Citi and AIG. It marked a sea change of thinking about financial regulation. Nothing mattered any more, including the CFMA just a little over one year later. Deregulation of derivatives trading mandated by the CFMA was a colossal failure and it is not bizarre to believe that GLBA precipitated the consensus on financial deregulation enough that after the demoralizing defeat of Democrats in Bush-v-Gore then there was no New Deal spirit of financial regulation left. Social development is not just a series of unconnected events. It is carried on a tide of change. A falling tide grounds all boats. ..."
"... We had a financial dereg craze back in the late 1970s and early 1980s which led to the S L disaster. One would have thought we would have learned from that. But then came the dereg craziness 20 years later. And this disaster was much worse. ..."
"... This brings us to Lawrence Summers, the former Treasury Secretary of the United States and at the time right hand man to then Treasury Security Robert Rubin. Mr. Summers was widely credited with implementation of the aggressive tactics used to remove Ms. Born from her office, tactics that multiple sources describe as showing an old world bias against women piercing the glass ceiling. ..."
"... According to numerous published reports, Mr. Summers was involved in. silencing those who questioned the opaque derivative product's design. ..."
"... The Tax Policy Center estimated that a 0.1 percent tax on stock trades, scaled with lower taxes on other assets, would raise $50 billion a year in tax revenue. The implied reduction in trading revenue was even larger. Senator Sanders has proposed a tax of 0.5 percent on equities (also with a scaled tax on other assets). This would lead to an even larger reduction in revenue for the financial industry. ..."
"... Great to see Bakers acknowledgement that an updated Glass-Steagall is just one component of the progressive wings plan to rein in Wall Street, not the sum total of it. Besides, if Wall Street types dont think restoring Glass-Steagall will have any meaningful effects, why do they expend so much energy to disparage it? Methinks they doth protest too much. ..."
"... Yes thats a good way to look it. Wall Street gave the Democrats and Clinton a lot of campaign cash so that they would dismantle Glass-Steagall. ..."
"... Slippery slope. Ya gotta find me a business of any type that does not protest any kind of regulation on their business. ..."
"... Yeah, but usually because of all the bad things they say will happen because of the regulation. The question is, what do they think of Clintons plan? Ive heard surprisingly little about that, and what I have heard is along these lines: http://money.cnn.com/2015/10/08/investing/hillary-clinton-wall-street-plan/ ..."
"... Hillary Clinton unveiled her big plan to curb the worst of Wall Streets excesses on Thursday. The reaction from the banking community was a shrug, if not relief. ..."
"... Iceland's government is considering a revolutionary monetary proposal – removing the power of commercial banks to create money and handing it to the central bank. The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled "A better monetary system for Iceland". ..."
Hillary Clinton Is Whitewashing the Financial Catastrophe
She has a plan that she claims will reform Wall Street-but she's deflecting responsibility
from old friends and donors in the industry.
By William Greider
Yesterday 3:11 pm
Hillary Clinton's recent op-ed in The New York Times, "How I'd Rein In Wall Street," was intended
to reassure nervous Democrats who fear she is still in thrall to those mega-bankers of New York
who crashed the American economy. Clinton's brisk recital of plausible reform ideas might convince
wishful thinkers who are not familiar with the complexities of banking. But informed skeptics,
myself included, see a disturbing message in her argument that ought to alarm innocent supporters.
Candidate Clinton is essentially whitewashing the financial catastrophe. She has produced a
clumsy rewrite of what caused the 2008 collapse, one that conveniently leaves her husband out
of the story. He was the president who legislated the predicate for Wall Street's meltdown. Hillary
Clinton's redefinition of the reform problem deflects the blame from Wall Street's most powerful
institutions, like JPMorgan Chase and Goldman Sachs, and instead fingers less celebrated players
that failed. In roundabout fashion, Hillary Clinton sounds like she is assuring old friends and
donors in the financial sector that, if she becomes president, she will not come after them.
The seminal event that sowed financial disaster was the repeal of the New Deal's Glass-Steagall
Act of 1933, which had separated banking into different realms: investment banks, which organize
capital investors for risk-taking ventures; and deposit-holding banks, which serve people as borrowers
and lenders. That law's repeal, a great victory for Wall Street, was delivered by Bill Clinton
in 1999, assisted by the Federal Reserve and the financial sector's armies of lobbyists. The "universal
banking model" was saluted as a modernizing reform that liberated traditional banks to participate
directly and indirectly in long-prohibited and vastly more profitable risk-taking.
Exotic financial instruments like derivatives and credit-default swaps flourished, enabling
old-line bankers to share in the fun and profit on an awesome scale. The banks invented "guarantees"
against loss and sold them to both companies and market players. The fast-expanding financial
sector claimed a larger and larger share of the economy (and still does) at the expense of the
real economy of producers and consumers. The interconnectedness across market sectors created
the illusion of safety. When illusions failed, these connected guarantees became the dragnet that
drove panic in every direction. Ultimately, the federal government had to rescue everyone, foreign
and domestic, to stop the bleeding.
Yet Hillary Clinton asserts in her Times op-ed that repeal of Glass-Steagall had nothing to
do with it. She claims that Glass-Steagall would not have limited the reckless behavior of institutions
like Lehman Brothers or insurance giant AIG, which were not traditional banks. Her argument amounts
to facile evasion that ignores the interconnected exposures. The Federal Reserve spent $180 billion
bailing out AIG so AIG could pay back Goldman Sachs and other banks. If the Fed hadn't acted and
had allowed AIG to fail, the banks would have gone down too.
These sound like esoteric questions of bank regulation (and they are), but the consequences
of pretending they do not matter are enormous. The federal government and Federal Reserve would
remain on the hook for rescuing losers in a future crisis. The largest and most adventurous banks
would remain free to experiment, inventing fictitious guarantees and selling them to eager suckers.
If things go wrong, Uncle Sam cleans up the mess.
Senator Elizabeth Warren and other reformers are pushing a simpler remedy-restore the Glass-Steagall
principles and give citizens a safe, government-insured place to store their money. "Banking should
be boring," Warren explains (her co-sponsor is GOP Senator John McCain).
That's a hard sell in politics, given the banking sector's bear hug of Congress and the White
House, its callous manipulation of both political parties. Of course, it is more complicated than
that. But recreating a safe, stable banking system-a place where ordinary people can keep their
money-ought to be the first benchmark for Democrats who claim to be reformers.
Actually, the most compelling witnesses for Senator Warren's argument are the two bankers who
introduced this adventure in "universal banking" back in the 1990s. They used their political
savvy and relentless muscle to seduce Bill Clinton and his so-called New Democrats. John Reed
was CEO of Citicorp and led the charge. He has since apologized to the nation. Sandy Weill was
chairman of the board and a brilliant financier who envisioned the possibilities of a single,
all-purpose financial house, freed of government's narrow-minded regulations. They won politically,
but at staggering cost to the country.
Weill confessed error back in 2012: "What we should probably do is go and split up investment
banking from banking. Have banks do something that's not going to risk the taxpayer dollars, that's
not going to be too big to fail."
John Reed's confession explained explicitly why their modernizing crusade failed for two fundamental
business reasons. "One was the belief that combining all types of finance into one institution
would drive costs down-and the larger institution the more efficient it would be," Reed wrote
in the Financial Times in November. Reed said, "We now know that there are very few cost efficiencies
that come from the merger of functions-indeed, there may be none at all. It is possible that combining
so much in a single bank makes services more expensive than if they were instead offered by smaller,
specialised players."
The second grave error, Reed said, was trying to mix the two conflicting cultures in banking-bankers
who are pulling in opposite directions. That tension helps explain the competitive greed displayed
by the modernized banking system. This disorder speaks to the current political crisis in ways
that neither Dems nor Republicans wish to confront. It would require the politicians to critique
the bankers (often their funders) in terms of human failure.
"Mixing incompatible cultures is a problem all by itself," Reed wrote. "It makes the entire
finance industry more fragile…. As is now clear, traditional banking attracts one kind of talent,
which is entirely different from the kinds drawn towards investment banking and trading. Traditional
bankers tend to be extroverts, sociable people who are focused on longer term relationships. They
are, in many important respects, risk averse. Investment bankers and their traders are more short
termist. They are comfortable with, and many even seek out, risk and are more focused on immediate
reward."
Reed concludes, "As I have reflected about the years since 1999, I think the lessons of Glass-Steagall
and its repeal suggest that the universal banking model is inherently unstable and unworkable.
No amount of restructuring, management change or regulation is ever likely to change that."
This might sound hopelessly naive, but the Democratic Party might do better in politics if
it told more of the truth more often: what they tried do and why it failed, and what they think
they may have gotten wrong. People already know they haven't gotten a straight story from politicians.
They might be favorably impressed by a little more candor in the plain-spoken manner of John Reed.
Of course it's unfair to pick on the Dems. Republicans have been lying about their big stuff
for so long and so relentlessly that their voters are now staging a wrathful rebellion. Who knows,
maybe a little honest talk might lead to honest debate. Think about it. Do the people want to
hear the truth about our national condition? Could they stand it?
"She claims that Glass-Steagall would not have limited the reckless behavior of institutions
like Lehman Brothers or insurance giant AIG, which were not traditional banks."
Of course this claim is absolutely true. Just like GS would not have affected the other investment
banks, whatever their name was. And just like we would have had to bail out those other banks
whatever their name was.
Peter K. -> EMichael...
Can you list all of the pro- or anti- Wall Street "reforms" and actions Bill Clinton performed
as President including nominating Alan Greenspan as head regulator? Cutting the capital gains
tax? Are you aware of Greenspan's record?
Yes Hillary isn't Bill but she hasn't criticized her husband specifically about his record and
seems to want to have her cake and eat it too.
Of course Hillary is much better than the Republicans, pace Rustbucket and the Green Lantern Lefty
club. Still, critics have a point.
I won't be surprised if she doesn't do much to rein in Wall Street besides some window dressing.
sanjait -> Peter K....
"Can you list all of the pro- or anti- Wall Street "reforms" and actions Bill Clinton
performed..."
That, right there, is what's wrong with Bernie and his fans. They measure everything by whether
it is "pro- or anti- Wall Street". Glass Steagall is anti-Wall Street. A financial transactions
tax is anti-Wall Street. But neither has any hope of controlling systemic financial risk in this
country. None.
You guys want to punish Wall Street but not even bother trying to think of how to achieve useful
policy goals. Some people, like Paine here, are actually open about this vacuity, as if the only
thing that were important were winning a power struggle.
Hillary's plan is flat out better. It's more comprehensive and more effective at reining in
the financial system to limit systemic risk. Period.
You guys want to make this a character melodrama rather than a policy debate, and I fear the
result of that will be that the candidate who actually has the best plan won't get to enact it.
likbez -> sanjait...
"You guys want to make this a character melodrama rather than a policy debate, and I
fear the result of that will be that the candidate who actually has the best plan won't get
to enact it."
You are misrepresenting the positions. It's actually pro-neoliberalism crowd vs anti-neoliberalism
crowd. In no way anti-neoliberalism commenters here view this is a character melodrama, although
psychologically Hillary probably does has certain problems as her reaction to the death of Gadhafi
attests. The key problem with anti-neoliberalism crowd is the question "What is a realistic alternative?"
That's where differences and policy debate starts.
RGC -> EMichael...
"Her argument amounts to facile evasion"
Fred C. Dobbs -> RGC...
'The majority favors policies to the left of Hillary.'
... The Democrats' liberal faction has been greatly overestimated by pundits who mistake noisiness
for clout or assume that the left functions like the right. In fact, liberals hold nowhere near
the power in the Democratic Party that conservatives hold in the Republican Party. And while they
may well be gaining, they're still far from being in charge. ...
Paine -> RGC...
What's not confronted ? Suggest what a System like the pre repeal system would have done in
the 00's. My guess we'd have ended in a crisis anyway. Yes we can segregate the depository system.
But credit is elastic enough to build bubbles without the depository system involved
EMichael -> Paine ...
Exactly.
Most people think of lending like the Bailey Brothers Savings and Loan still exists.
RC AKA Darryl, Ron -> EMichael...
Don't be such a whistle dick. Just because you cannot figure out why GLBA made such an impact
that in no way means that people that do understand are stupid. See my posted comment to RGC on
GLBA just down thread for an more detailed explanation including a linked web article. No, GS
alone would not have prevented the mortgage bubble, but it would have lessened TBTF and GS stood
as icon, a symbol of financial regulation. Hell, if we don't need GS then why don't we just allow
unregulated derivatives trading? Who cares, right? Senators Byron Dorgan, Barbara Boxer, Barbara
Mikulski, Richard Shelby, Tom Harkin, Richard Bryan, Russ Feingold and Bernie Sanders all voted
against GLBA to repeal GS for some strange reason and Dorgan made a really big deal out of it
at the time. I doubt everyone on that list of Senators was just stupid because they did not see
it your way.
RC AKA Darryl, Ron -> EMichael...
I ran all out of ceteris paribus quite some time ago. Events do not occur in isolation. GLBA
increased TBTF in AIG and Citi. TBTF forced TARP. GLBA greased the skids for CFMA. Democrats gained
majority, but not filibuster proof, caught between Iraq and a hard place following their votes
for TARP and a broader understanding of their participation in the unanimous consent passage of
the CFMA, over "objection" by Senators James Inhofe (R-OK) and Paul Wellstone (D-MN). We
have had a Republican majority in the House since the 2010 election and now they have the Senate
as well. If you are that sure that voters just choose divided government, then aren't we better
off to have a Republican POTUS and Democratic Congress?
sanjait -> RC AKA Darryl, Ron...
"I ran all out of ceteris paribus quite some time ago. Events do not occur in isolation.
GLBA increased TBTF in AIG and Citi. TBTF forced TARP. GLBA greased the skids for CFMA. "
I know you think this is a really meaningful string that evidences causation, but it just looks
like you are reaching, reaching, reaching ...
RC AKA Darryl, Ron -> sanjait...
Maybe. No way to say for sure. It certainly fits the kind of herd mentality that I always
saw in corporate Amerika until I retired. The William Greider article posted by RGC was very consistent
in its account by John Reed with the details of one or two books written about AIG back in 2009
or so. I don't have time to hunt them up now. Besides, no one would read them anyway.
I am voting for whoever wins the Democratic nomination for POTUS. Bernie without a like-minded
Congress would not do much good. But when we shoot each other down here at EV without offering
any agreement or consideration that we might not be 100% correct, then that goes against Doc Thoma's
idea of an open forum. Granted, with my great big pair then I am willing to state my opinion with
no consideration for validation or acceptance, but not everyone has that degree of a comfort zone.
Besides, I am so old an cynical that shooting down the overdogs that go after the underdogs is
one of the few things that I still care about.
RGC -> Paine ...
GS was one of several actions taken by the New Deal. That it wasn't sufficient by itself doesn't
equate to it wasn't beneficial.
Glass-Steagall: Warren and Sanders bring it back into focus
Madonna Gauding / May 13, 2015
Senators Bernie Sanders and Elizabeth Warren are putting a new focus on the Glass-Steagall
Act, which was, unfortunately, repealed in 1999 and led directly to the financial crises we have
faced ever since. Here's a bit of history of this legislative debacle from an older post on Occasional
Planet published several years ago :
On November 4, 1999, Senator Byron Dorgan (D-ND) took to the floor of the senate to make an
impassioned speech against the repeal of the Glass-Steagall Act, (alternately known as Gramm Leach
Biley, or the "Financial Modernization Act") Repeal of Glass-Steagall would allow banks to merge
with insurance companies and investments houses. He said "I want to sound a warning call today
about this legislation, I think this legislation is just fundamentally terrible."
According to Sam Stein, writing in 2009 in the Huffington Post, only eight senators voted against
the repeal. Senior staff in the Clinton administration and many now in the Obama administration
praised the repeal as the "most important breakthrough in the world of finance and politics in
decades"
According to Stein, Dorgan warned that banks would become "too big to fail" and claimed that
Congress would "look back in a decade and say we should not have done this." The repeal of Glass
Steagall, of course, was one of several bad policies that helped lead to the current economic
crisis we are in now.
Dorgan wasn't entirely alone. Sens. Barbara Boxer, Barbara Mikulski, Richard Shelby, Tom Harkin,
Richard Bryan, Russ Feingold and Bernie Sanders also cast nay votes. The late Sen. Paul Wellstone
opposed the bill, and warned at the time that Congress was "about to repeal the economic stabilizer
without putting any comparable safeguard in its place."
Democratic Senators had sufficient knowledge about the dangers of the repeal of Glass Steagall,
but chose to ignore it. Plenty of experts warned that it would be impossible to "discipline" banks
once the legislation was passed, and that they would get too big and complex to regulate. Editorials
against repeal appeared in the New York Times and other mainstream venues, suggesting that if
the new megabanks were to falter, they could take down the entire global economy, which is exactly
what happened. Stein quotes Ralph Nader who said at the time, "We will look back at this and wonder
how the country was so asleep. It's just a nightmare."
According to Stein:
"The Senate voted to pass Gramm-Leach-Bliley by a vote of 90-8 and reversed what was, for
more than six decades, a framework that had governed the functions and reach of the nation's
largest banks. No longer limited by laws and regulations commercial and investment banks could
now merge. Many had already begun the process, including, among others, J.P. Morgan and Citicorp.
The new law allowed it to be permanent. The updated ground rules were low on oversight and
heavy on risky ventures. Historically in the business of mortgages and credit cards, banks
now would sell insurance and stock.
Nevertheless, the bill did not lack champions, many of whom declared that the original legislation
- forged during the Great Depression - was both antiquated and cumbersome for the banking industry.
Congress had tried 11 times to repeal Glass-Steagall. The twelfth was the charm.
"Today Congress voted to update the rules that have governed financial services since
the Great Depression and replace them with a system for the 21st century," said then-Treasury
Secretary Lawrence Summers. "This historic legislation will better enable American companies
to compete in the new economy."
"I welcome this day as a day of success and triumph," said Sen. Christopher Dodd, (D-Conn.).
"The concerns that we will have a meltdown like 1929 are dramatically overblown," said Sen.
Bob Kerrey, (D-Neb.).
"If we don't pass this bill, we could find London or Frankfurt or years down the road Shanghai
becoming the financial capital of the world," said Sen. Chuck Schumer, D-N.Y. "There are many
reasons for this bill, but first and foremost is to ensure that U.S. financial firms remain
competitive."
Unfortunately, the statement by Chuck Schumer sounds very much like it was prepared by a lobbyist.
This vote underscores the way in which our elected officials are so heavily swayed by corporate
and banking money that our voices and needs become irrelevant. It is why we need publicly funded
elections. Democratic senators, the so-called representatives of the people, fell over themselves
to please their Wall Street donors knowing full well there were dangers for the country at large,
for ordinary Americans, in repealing Glass-Steagall.
It is important to hold Democratic senators (along with current members of the Obama administration)
accountable for the significant role they have played in the current economic crisis that has
caused so much suffering for ordinary Americans. In case you were wondering, the current Democratic
Senators who voted yes to repeal the Glass-Steagall act are the following:
Daniel Akaka – Max Baucus – Evan Bayh – Jeff Bingaman – Kent Conrad – Chris Dodd – Dick Durbin
– Dianne Feinstein – Daniel Inouye – Tim Johnson – John Kerry – Herb Kohl – Mary Landrieu – Frank
Lautenberg – Patrick Leahy – Carl Levin – Joseph Lieberman – Blanche Lincoln – Patty Murray –
Jack Reed – Harry Reid – Jay Rockefeller – Chuck Schumer – Ron Wyden
Former House members who voted for repeal who are current Senators.
Mark Udall [as of 2010] – Debbie Stabenow – Bob Menendez – Tom Udall -Sherrod Brown
No longer in the Senate, or passed away, but who voted for repeal:
Joe Biden -Ted Kennedy -Robert Byrd
These Democratic senators would like to forget or make excuses for their enthusiastic vote
on the repeal of Glass Steagall, but it is important to hold them accountable for helping their
bank donors realize obscene profits while their constituents lost jobs, savings and homes. And
it is important to demand that they serve the interests of the American people.
*
[The repeal of Glass Steagal was a landmark victory in deregulation that greased the skids
for the passage of CFMA once Democrats had been further demoralized by the SCOTUS decision on
Bush-v-Gore. The first vote on GLBA was split along party lines, but passed because Republicans
had majority and Clinton was willing to sign which was clear from the waiver that had been granted
to illegal Citi merger with Travelers. Both Citi and AIG mergers contributed to too big to fail.
The CFMA was the nail in the coffin that probably would have never gotten off the ground if Democrats
had held the line on the GLBA. Glass-Steagal was insufficient as a regulatory system to prevent
the 2008 mortgage crisis, but it was giant as an icon of New Deal financial system reform. Its
loss institutionalized too big to fail.]
pgl -> RC AKA Darryl, Ron...
Gramm Leach Biley was a mistake. But it was not the only failure of US regulatory policies
towards financial institutions nor the most important. I think that is what Hillary Clinton
is saying.
RC AKA Darryl, Ron -> pgl...
It was more symbolic caving in on financial regulation than a specific technical failure except
for making too big to fail worse at Citi and AIG. It marked a sea change of thinking about financial
regulation. Nothing mattered any more, including the CFMA just a little over one year later. Deregulation
of derivatives trading mandated by the CFMA was a colossal failure and it is not bizarre to believe
that GLBA precipitated the consensus on financial deregulation enough that after the demoralizing
defeat of Democrats in Bush-v-Gore then there was no New Deal spirit of financial regulation left.
Social development is not just a series of unconnected events. It is carried on a tide of change.
A falling tide grounds all boats.
pgl -> RC AKA Darryl, Ron...
We had a financial dereg craze back in the late 1970's and early 1980's which led to the S&L
disaster. One would have thought we would have learned from that. But then came the dereg craziness
20 years later. And this disaster was much worse.
I don't care whether Hillary says 1999
was a mistake or not. I do care what the regulations of financial institutions will be like going
forward.
RC AKA Darryl, Ron -> pgl...
I cannot disagree with any of that.
sanjait -> RC AKA Darryl, Ron...
"Deregulation of derivatives trading mandated by the CFMA was a colossal failure and it
is not bizarre to believe that GLBA precipitated the consensus"
Yeah, it is kind of bizarre to blame one bill for a crisis that occurred largely because another
bill was passed, based on some some vague assertion about how the first bill made everyone think
crazy.
RC AKA Darryl, Ron -> sanjait...
Democrats did not vote for GLBA until after reconciliation between the House and Senate bills.
Democrats were tossed a bone in the Community Reinvestment Act financing provisions and given
that Bill Clinton was going to sign anyway and that Republicans were able to pass the bill without
a single vote from Democrats then all but a few Democrats bought in. They could not stop it, so
they just bought into it. I thought there was supposed to be an understanding of behaviorism devoted
to understanding the political economy. For that matter Republicans did not need Democrats to
vote for the CFMA either, but they did. That gave Republicans political cover for whatever went
wrong later on. No one with a clue believed things would go well from the passage of either of
these bills. It was pure Wall Street driven kleptocracy.
likbez -> sanjait...
It was not one bill or another. It was a government policy to get traders what they want.
"As the western world wakes to the fact it is in the middle of a debt crisis spiral, intelligent
voices are wondering how this manifested itself? As we speak, those close to the situation could
be engaging in historical revisionism to obfuscate their role in the design of faulty leverage
structures that were identified in the derivatives markets in 1998 and 2008. These same design
flaws, first identified in 1998, are persistent today and could become graphically evident in
the very near future under the weight of a European debt crisis.
Author and Bloomberg columnist William Cohan chronicles the fascinating start of this historic
leverage implosion in his recent article Rethinking Robert Rubin. Readers may recall it was Mr.
Cohan who, in 2004, noted leverage issues that ultimately imploded in 2007-08.
At some point, market watchers will realize the debt crisis story will literally change the
world. They will look to the root cause of the problem, and they might just find one critical
point revealed in Mr. Cohan's article.
This point occurs in 1998 when then Commodity Futures Trading Commission (CFTC) ChairwomanBrooksley
Born identified what now might be recognized as core design flaws in leverage structure used in
Over the Counter (OTC) transactions. Ms. Born brought her concerns public, by first asking just
to study the issue, as appropriate action was not being taken. She issued a concept release paper
that simply asked for more information. "The Commission is not entering into this process with
preconceived results in mind," the document reads.
Ms. Born later noted in, the PBS Frontline documentary on the topic speculation at the CFTC
was the unregulated OTC derivatives were opaque, the risk to the global economy could not be determined
and the risk was potentially catastrophic. As a result of this inquiry, Ms. Born was ultimately
forced from office.
This brings us to Lawrence Summers, the former Treasury Secretary of the United States and
at the time right hand man to then Treasury Security Robert Rubin. Mr. Summers was widely credited
with implementation of the aggressive tactics used to remove Ms. Born from her office, tactics
that multiple sources describe as showing an old world bias against women piercing the glass ceiling.
According to numerous published reports, Mr. Summers was involved in. silencing those who questioned
the opaque derivative product's design. "
RC AKA Darryl, Ron -> Paine ...
TBTF on steroids, might as well CFMA - why not?
Bubbles with less TBTF and a lot less credit
default swaps would have been a lot less messy going in. Without TARP, then Congress might have
still had the guts for making a lesser New Deal.
EMichael -> RC AKA Darryl, Ron...
TARP was window dressing. The curtain that covered up the FED's actions.
pgl -> RGC...
Where have I heard about William Greider? Oh yea - this critique of something stupid he wrote
about a Supreme Court decision:
"Exotic financial instruments like derivatives and credit-default swaps flourished, enabling
old-line bankers to share in the fun and profit on an awesome scale."
These would have flourished even if Glass-Steagall remained on the books. Leave it to RGC to
find some critic of HRC who knows nothing about financial markets.
RGC -> pgl...
Derivatives flourished because of the other deregulation under Clinton, the CFMA. The repeal of
GS helped commercial banks participate.
RGC -> pgl...
The repeal of GS helped commercial banks participate.
Fred C. Dobbs -> pgl...
Warren Buffet used to rail about how risky derivative investing is, until he realized they
are *extremely* important in the re-insurance biz, which is a
big part of Berkshire Hathaway.
Hillary Clinton, Bernie Sanders, and Cracking Down on Wall Street
by Dean Baker
Published: 12 December 2015
The New Yorker ran a rather confused piece on Gary Sernovitz, a managing director at the investment
firm Lime Rock Partners, on whether Bernie Sanders or Hillary Clinton would be more effective
in reining in Wall Street. The piece assures us that Secretary Clinton has a better understanding
of Wall Street and that her plan would be more effective in cracking down on the industry. The
piece is bizarre both because it essentially dismisses the concern with too big to fail banks
and completely ignores Sanders' proposal for a financial transactions tax which is by far the
most important mechanism for reining in the financial industry.
The piece assures us that too big to fail banks are no longer a problem, noting their drop
in profitability from bubble peaks and telling readers:
"not only are Sanders's bogeybanks just one part of Wall Street but they are getting less
powerful and less problematic by the year."
This argument is strange for a couple of reasons. First, the peak of the subprime bubble frenzy
is hardly a good base of comparison. The real question is should we anticipate declining profits
going forward. That hardly seems clear. For example, Citigroup recently reported surging profits,
while Wells Fargo's third quarter profits were up 8 percent from 2014 levels.
If Sernovitz is predicting that the big banks are about to shrivel up to nothingness, the market
does not agree with him. Citigroup has a market capitalization of $152 billion, JPMorgan has a
market cap of $236 billion, and Bank of America has a market cap of $174 billion. Clearly investors
agree with Sanders in thinking that these huge banks will have sizable profits for some time to
come.
The real question on too big to fail is whether the government would sit by and let a Goldman
Sachs or Citigroup go bankrupt. Perhaps some people think that it is now the case, but I've never
met anyone in that group.
Sernovitz is also dismissive on Sanders call for bringing back the Glass-Steagall separation
between commercial banking and investment banking. He makes the comparison to the battle over
the Keystone XL pipeline, which is actually quite appropriate. The Keystone battle did take on
exaggerated importance in the climate debate. There was never a zero/one proposition in which
no tar sands oil would be pumped without the pipeline, while all of it would be pumped if the
pipeline was constructed. Nonetheless, if the Obama administration was committed to restricting
greenhouse gas emissions, it is difficult to see why it would support the building of a pipeline
that would facilitate bringing some of the world's dirtiest oil to market.
In the same vein, Sernovitz is right that it is difficult to see how anything about the growth
of the housing bubble and its subsequent collapse would have been very different if Glass-Steagall
were still in place. And, it is possible in principle to regulate bank's risky practices without
Glass-Steagall, as the Volcker rule is doing. However, enforcement tends to weaken over time under
industry pressure, which is a reason why the clear lines of Glass-Steagall can be beneficial.
Furthermore, as with Keystone, if we want to restrict banks' power, what is the advantage of letting
them get bigger and more complex?
The repeal of Glass-Steagall was sold in large part by boasting of the potential synergies
from combining investment and commercial banking under one roof. But if the operations are kept
completely separate, as is supposed to be the case, where are the synergies?
But the strangest part of Sernovitz's story is that he leaves out Sanders' financial transactions
tax (FTT) altogether. This is bizarre, because the FTT is essentially a hatchet blow to the waste
and exorbitant salaries in the industry.
Most research shows that trading volume is very responsive to the cost of trading, with most
estimates putting the elasticity close to one. This means that if trading costs rise by 50 percent,
then trading volume declines by 50 percent. (In its recent analysis of FTTs, the Tax Policy Center
assumed that the elasticity was 1.5, meaning that trading volume decline by 150 percent of the
increase in trading costs.) The implication of this finding is that the financial industry would
pay the full cost of a financial transactions tax in the form of reduced trading revenue.
The Tax Policy Center estimated that a 0.1 percent tax on stock trades, scaled with lower taxes
on other assets, would raise $50 billion a year in tax revenue. The implied reduction in trading
revenue was even larger. Senator Sanders has proposed a tax of 0.5 percent on equities (also with
a scaled tax on other assets). This would lead to an even larger reduction in revenue for the
financial industry.
It is incredible that Sernovitz would ignore a policy with such enormous consequences for the
financial sector in his assessment of which candidate would be tougher on Wall Street. Sanders
FTT would almost certainly do more to change behavior on Wall Street then everything that Clinton
has proposed taken together by a rather large margin. It's sort of like evaluating the New England
Patriots' Super Bowl prospects without discussing their quarterback.
Syaloch -> Peter K....
Great to see Baker's acknowledgement that an updated Glass-Steagall is just one component
of the progressive wing's plan to rein in Wall Street, not the sum total of it. Besides, if Wall
Street types don't think restoring Glass-Steagall will have any meaningful effects, why do they
expend so much energy to disparage it? Methinks they doth protest too much.
Peter K. -> Syaloch...
Yes that's a good way to look it. Wall Street gave the Democrats and Clinton a lot of campaign
cash so that they would dismantle Glass-Steagall. If they want it done, it's probably not
a good idea.
EMichael -> Syaloch...
Slippery slope. Ya' gotta find me a business of any type that does not protest any kind of regulation
on their business.
Syaloch -> EMichael...
Yeah, but usually because of all the bad things they say will happen because of the regulation.
The question is, what do they think of Clinton's plan? I've heard surprisingly little about that,
and what I have heard is along these lines:
http://money.cnn.com/2015/10/08/investing/hillary-clinton-wall-street-plan/
"Hillary Clinton unveiled her big plan to curb the worst of Wall Street's excesses on Thursday.
The reaction from the banking community was a shrug, if not relief."
pgl -> Syaloch...
Two excellent points!!!
sanjait -> Syaloch...
"Besides, if Wall Street types don't think restoring Glass-Steagall will have any meaningful
effects, why do they expend so much energy to disparage it? Methinks they doth protest too
much."
It has an effect of shrinking the size of a few firms, and that has a detrimental effect on
the top managers of those firms, who get paid more money if they have larger firms to manage. But it has little to no meaningful effect on systemic risk.
So if your main policy goal is to shrink the compensation for a small number of powerful Wall
Street managers, G-S is great. But if you actually want to accomplish something useful to the American people, like limiting
systemic risk in the financial sector, then a plan like Hillary's is much much better. She explained
this fairly well in her recent NYT piece.
Paine -> Peter K....
There is absolutely NO question Bernie is for real. Wall Street does not want Bernie. So they'll
let Hillary talk as big as she needs to . Why should we believe her when an honest guy like
Barry caved once in power
Paine -> Paine ...
Bernie has been anti Wall Street his whole career . He's on a crusade. Hillary is pulling a sham
bola
Paine -> Paine ...
Perhaps too often we look at Wall Street as monolithic whether consciously or not. Obviously we
know it's no monolithic: there are serious differences
When the street is riding high especially. Right now the street is probably not united but
too cautious to display profound differences in public. They're sitting on their hands waiting
to see how high the anti Wall Street tide runs this election cycle. Trump gives them cover and
I really fear secretly Hillary gives them comfort
This all coiled change if Bernie surges. How that happens depends crucially on New Hampshire.
Not Iowa
EMichael -> Paine ...
If Bernie surges and wins the nomination, we will all get to watch the death of the Progressive
movement for a decade or two. Congress will become more GOP dominated, and we will have a President
in office who will make Hoover look like a Socialist.
You should like the moderate Democrats after George McGovern ran in 1972. I'm hoping we have another
1964 with Bernie leading a united Democratic Congress.
EMichael -> pgl...
Not a chance in the world. And I like Sanders much more than anyone else. It just simply cannot,
and will not, happen. He is a communist. Not to me, not to you, but to the vast majority
of American voters.
pgl -> EMichael...
He is not a communist. But I agree - Hillary is winning the Democratic nomination. I have only
one vote and in New York, I'm badly outnumbered.
ilsm -> Paine ...
I believe Hillary will be to liberal causes after she is elected as LBJ was to peace in Vietnam.
Like Bill and Obomber.
pgl -> ilsm...
By 1968, LBJ finally realized it was time to end that stupid war. But it seems certain members
in the State Department undermined his efforts in a cynical ploy to get Nixon to be President.
The Republican Party has had more slime than substance of most of my life time.
pgl -> Peter K....
Gary Sernovitz, a managing director at the investment firm Lime Rock Partners? Why are we listening
to this guy too. It's like letting the fox guard the hen house.
sanjait -> Peter K....
"The piece is bizarre both because it essentially dismisses the concern with too big to
fail banks and completely ignores Sanders' proposal for a financial transactions tax which
is by far the most important mechanism for reining in the financial industry."
This is just wrong. Is financial system risk in any way correlated with the frequency
of transactions? Except for market volatility from HFT ... no. The financial crisis wasn't caused
by a high volume of trades. It was caused by bad investments into highly illiquid assets. Again,
great example of wanting to punish Wall Street but not bothering to think about what actually
works.
Peter K. said...
Robert Reich to the Fed: this is not the time to raise rates.
Iceland, too, is looking at a radical transformation of its money
system, after suffering the crushing boom/bust cycle of the private banking model that bankrupted
its largest banks in 2008. According to a March 2015 article in the UK Telegraph:
Iceland's government is considering a revolutionary monetary proposal – removing the power
of commercial banks to create money and handing it to the central bank. The proposal, which would
be a turnaround in the history of modern finance, was part of a report written by a lawmaker from
the ruling centrist Progress Party, Frosti Sigurjonsson, entitled "A better monetary system for
Iceland".
"The findings will be an important contribution to the upcoming discussion, here and elsewhere,
on money creation and monetary policy," Prime Minister Sigmundur David Gunnlaugsson said. The
report, commissioned by the premier, is aimed at putting an end to a monetary system in place
through a slew of financial crises, including the latest one in 2008.
Under this "Sovereign Money" proposal, the country's central bank would become the only creator
of money. Banks would continue to manage accounts and payments and would serve as intermediaries
between savers and lenders. The proposal is a variant of the Chicago Plan promoted by Kumhof and
Benes of the IMF and the Positive Money group in the UK.
Public Banking Initiatives in Iceland, Ireland and the UK
A major concern with stripping private banks of the power to create money as deposits when
they make loans is that it will seriously reduce the availability of credit in an already sluggish
economy. One solution is to make the banks, or some of them, public institutions. They would still
be creating money when they made loans, but it would be as agents of the government; and the profits
would be available for public use, on the model of the US Bank of North Dakota and the German
Sparkassen (public savings banks).
In Ireland, three political parties – Sinn Fein, the Green Party and Renua Ireland (a new party)
- are now supporting initiatives for a network of local publicly-owned banks on the Sparkassen
model. In the UK, the New Economy Foundation (NEF) is proposing that the failed Royal Bank of
Scotland be transformed into a network of public interest banks on that model. And in Iceland,
public banking is part of the platform of a new political party called the Dawn Party.
December 11, 2015
Reinventing Banking: From Russia to Iceland to Ecuador
"Banks would continue to manage accounts and payments and would serve as intermediaries between
savers and lenders."
OK but that means they issue bank accounts which of course we call deposits.
So is this just semantics? People want checking accounts. People want savings accounts. Otherwise
they would not exist. Iceland plans to do what to stop the private sector from getting what it
wants?
I like the idea of public banks. Let's nationalize JPMorganChase so we don't have to listen
to Jamie Dimon anymore!
sanjait -> pgl...
I don't know for sure (not bothering to search and read the referenced proposals), but I assumed
the described proposal was for an end to fractional reserve banking. Banks would have to have
full reserves to make loans. Or something. I could be wrong about that.
Syaloch said...
Sorry, but Your Favorite Company Can't Be Your Friend
To think that an artificial person, whether corporeal or corporate, can ever be your friend
requires a remarkable level of self-delusion.
A commenter on the Times site aptly quotes Marx in response:
"The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal,
idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to
his "natural superiors", and has left remaining no other nexus between man and man than naked
self-interest, than callous "cash payment". It has drowned the most heavenly ecstasies of religious
fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical
calculation. It has resolved personal worth into exchange value, and in place of the numberless
indefeasible chartered freedoms, has set up that single, unconscionable freedom - Free Trade.
In one word, for exploitation, veiled by religious and political illusions, it has substituted
naked, shameless, direct, brutal exploitation.
"The bourgeoisie has stripped of its halo every occupation hitherto honoured and looked
up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet,
the man of science, into its paid wage labourers."
"... The American Neocons are Zionists (Their goal is expanding political / military power. Initially this is focused on the state of Israel.) ..."
"... Obviously , if Zionism is synonymous with patriotism in Israel, it cannot be an acceptable label in American politics, where it would mean loyalty to a foreign power. This is why the neoconservatives do not represent themselves as Zionists on the American scene. Yet they do not hide it all together either. ..."
"... He points out dual-citizen (Israel / USA) members and self proclaimed Zionists throughout cabinet level positions in the US government, international banking and controlling the US military. In private writings and occasionally in public, Neocons admit that America's war policies are actually Israel's war goals. (Examples provided.) ..."
"... American Jewish Committee ..."
"... Contemporary Jewish Record ..."
"... If there is an intellectual movement in America to whose invention Jews can lay sole claim, neoconservatism is it. It's a thought one imagines most American Jews, overwhelmingly liberal, will find horrifying . And yet it is a fact that as a political philosophy, neoconservatism was born among the children of Jewish immigrants and is now largely the intellectual domain of those immigrants' grandchildren ..."
"... Goyenot traces the Neocon's origins through its influential writers and thinkers. Highest on the list is Leo Strauss. (Neocons are sometimes called "the Straussians.") Leo Strauss is a great admirer of Machiavelli with his utter contempt for restraining moral principles making him "uniquely effective," and, "the ideal patriot." He gushes over Machiavelli praising the intrepidity of his thought, the grandeur of his vision, and the graceful subtlety of his speech. ..."
"... believes that Truth is harmful to the common man and the social order and should be reserved for superior minds. ..."
"... nations derive their strength from their myths , which are necessary for government and governance. ..."
"... national myths have no necessary relationship with historical reality: they are socio-cultural constructions that the State has a duty to disseminate . ..."
"... to be effective, any national myth must be based on a clear distinction between good and evil ; it derives its cohesive strength from the hatred of an enemy nation. ..."
"... deception is the norm in political life ..."
"... Office of Special Plans ..."
"... The Zionist/Neocons are piggy-backing onto, or utilizing, the religious myths of both the Jewish and Christian world to consolidate power. This is brilliant Machiavellian strategy. ..."
"... the "chosen people" myth (God likes us best, we are better than you) ..."
"... the Holy Land myth (one area of real estate is more holy than another) ..."
"... General Wesley Clark testified on numerous occasions before the cameras, that one month after September 11th, 2001 a general from the Pentagon showed him a memo from neoconservative strategists "that describes how we're gonna take out seven countries in five years, starting with Iraq, and then Syria, Lebanon, Libya, Somalia and Sudan and finishing off with Iran". ..."
"... Among them are brilliant strategists ..."
"... They operate unrestrained by the most basic moral principles upon which civilization is founded. They are undisturbed by compassion for the suffering of others. ..."
"... They use consciously and skillfully use deception and "myth-making" to shape policy ..."
"... They have infiltrated the highest levels of banking, US military, NATO and US government. ..."
Mememonkey pointed my to a 2013 essay by Laurent Guyenot, a French historian and writer on the
deep state, that addresses the question of
"Who Are The Neoconservatives."
If you would like to know about that group that sends the US military into battle and tortures prisoners
of war in out name, you need to know about these guys.
First, if you are Jewish, or are a GREEN Meme, please stop and take a deep breath. Please
put on your thinking cap and don't react. We are NOT disrespecting a religion, spiritual practice
or a culture. We are talking about a radical and very destructive group hidden within
a culture and using that culture. Christianity has similar groups and movements--the
Crusades, the KKK, the Spanish Inquisition, the Salem witch trials, etc.
My personal investment: This question has been a subject of intense interest for me since I
became convinced that 9/11 was an inside job, that the Iraq war was waged for reasons entirely different
from those publically stated. I have been horrified to see such a shadowy, powerful group operating
from a profoundly "pre-moral" developmental level-i.e., not based in even the most
rudimentary principles of morality foundational to civilization.
Who the hell are these people?!
Goyenot's main points (with a touch of personal editorializing):
1. The American Neocons are Zionists (Their goal is expanding political / military power.
Initially this is focused on the state of Israel.)
Neoconservativism is essentially a modern right wing Jewish version of Machiavelli's political
strategy. What characterizes the neoconservative movement is therefore not as much Judaism
as a religious tradition, but rather Judiasm as a political project, i.e. Zionism,
by Machiavellian means.
This is not a religious movement though it may use religions words and vocabulary.
It is a political and military movement. They are not concerned with being close to God.
This is a movement to expand political and military power. Some are Christian and Mormon, culturally.
Obviously , if Zionism is synonymous with patriotism in Israel, it cannot be an acceptable
label in American politics, where it would mean loyalty to a foreign power. This is why the
neoconservatives do not represent themselves as Zionists on the American scene. Yet they do
not hide it all together either.
He points out dual-citizen (Israel / USA) members and self proclaimed Zionists throughout cabinet
level positions in the US government, international banking and controlling the US military.
In private writings and occasionally in public, Neocons admit that America's war policies are actually
Israel's war goals. (Examples provided.)
2. Most American Jews are overwhelmingly liberal and do NOT share the perspective
of the radical Zionists.
The neoconservative movement, which is generally perceived as a radical (rather than "conservative")
Republican right, is, in reality, an intellectual movement born in the late 1960s in the pages of
the monthly magazine Commentary, a media arm of the American Jewish Committee,
which had replaced the Contemporary Jewish Record in 1945. The Forward, the oldest
American Jewish weekly, wrote in a January 6th, 2006 article signed Gal Beckerman: "If there
is an intellectual movement in America to whose invention Jews can lay sole claim, neoconservatism
is it. It's a thought one imagines most American Jews, overwhelmingly liberal, will find
horrifying. And yet it is a fact that as a political philosophy, neoconservatism was born
among the children of Jewish immigrants and is now largely the intellectual domain of those immigrants'
grandchildren".
3. Intellectual Basis and Moral developmental level
Goyenot traces the Neocon's origins through its influential writers and thinkers. Highest
on the list is Leo Strauss. (Neocons are sometimes called "the Straussians.") Leo Strauss
is a great admirer of Machiavelli with his utter contempt for restraining moral principles making
him "uniquely effective," and, "the ideal patriot." He gushes over Machiavelli praising the
intrepidity of his thought, the grandeur of his vision, and the graceful subtlety of his speech.
Other major points:
believes that Truth is harmful to the common man and the social order and should be reserved
for superior minds.
nations derive their strength from their myths, which are necessary for
government and governance.
national myths have no necessary relationship with historical reality:
they are socio-cultural constructions that the State has a duty to disseminate.
to be effective, any national myth must be based on a clear distinction between
good and evil; it derives its cohesive strength from the hatred of an enemy nation.
As recognized by Abram Shulsky and Gary Schmitt in an article "Leo Strauss and the World
of Intelligence" (1999), for Strauss, "deception is the norm in political life" –
the rule they [the Neocons] applied to fabricating the lie of weapons of mass destruction
by Saddam Hussein when working inside the Office of Special Plans.
George Bushes speech from the national cathedral after 9/11 exemplifies myth-making at its
finest: "Our responsibility to history is already clear: to answer these attacks and rid
the world of Evil. War has been waged against us by stealth and deceit and murder. This nation
is peaceful, but fierce when stirred to anger. . . .[W]e ask almighty God to watch over our nation,
and grant us patience and resolve in all that is to come. . . . And may He always guide our country.
God bless America.
4. The Zionist/Neocons are piggy-backing onto, or utilizing, the religious myths of
both the Jewish and Christian world to consolidate power. This is brilliant Machiavellian strategy.
the "chosen people" myth (God likes us best, we are better than you)
the Holy Land myth (one area of real estate is more holy than another)
the second coming of Christ myth
the establishment of God's Kingdom on Earth through global destruction/war (nuclear war for
the Glory of God)
[The]Pax Judaica will come only when "all the nations shall flow" to the Jerusalem
temple, from where "shall go forth the law" (Isaiah 2:1-3). This vision of a new world
order with Jerusalem at its center resonates within the Likudnik and neoconservative
circles. At the Jerusalem Summit, held from October 12th to 14th, 2003 in the symbolically significant
King David Hotel, an alliance was forged between Zionist Jews and Evangelical Christians around
a "theopolitical" project, one that would consider Israel… "the key to the harmony of civilizations",
replacing the United Nations that's become a "a tribalized confederation hijacked by Third
World dictatorships": "Jerusalem's spiritual and historical importance endows it
with a special authority to become a center of world's unity. [...] We believe
that one of the objectives of Israel's divinely-inspired rebirth is to make
it the center of the new unity of the nations, which will lead to an era of peace
and prosperity, foretold by the Prophets". Three acting Israeli ministers spoke at the summit,
including Benjamin Netanyahu, and Richard Perle.
Jerusalem's dream empire is expected to come through the nightmare of world war. The prophet
Zechariah, often cited on Zionist forums, predicted that the Lord will fight "all nations" allied
against Israel. In a single day, the whole earth will become a desert, with the exception
of Jerusalem, who "shall remain aloft upon its site" (14:10).
With more than 50 millions members, Christians United for Israel is
a major political force in the U.S.. Its Chairman, pastor John Haggee, declared: "The
United States must join Israel in a pre-emptive military strike against Iran to fulfill God's
plan for both Israel and the West, [...] a biblically prophesied end-time confrontation with Iran,
which will lead to the Rapture, Tribulation, and Second Coming of Christ".
And Guyenot concludes:
Is it possible that this biblical dream, mixed with the neo-Machiavellianism of Leo Strauss and
the militarism of Likud, is what is quietly animating an exceptionally determined and organized ultra-Zionist
clan? General Wesley Clark testified on numerous occasions before the cameras, that one month after
September 11th, 2001 a general from the Pentagon showed him a memo from neoconservative strategists
"that describes how we're gonna take out seven countries in five years, starting with Iraq, and
then Syria, Lebanon, Libya, Somalia and Sudan and finishing off with Iran".
Is it just a coincidence
that the "seven nations" doomed to be destroyed by Israel form part of the biblical myths?
…[W]hen Yahweh will deliver Israel "seven nations greater and mightier than yourself […] you must
utterly destroy them; you shall make no covenant with them, and show no mercy to them."
My summary:
We have a group that wishes greatly expanded power (to rule the world??)
Among them are brilliant strategists
They operate unrestrained by the most basic moral principles upon which civilization is founded.
They are undisturbed by compassion for the suffering of others.
They use consciously and skillfully use deception and "myth-making" to shape policy
This is not a spiritual movement in any sense
They are utilizing religious myths and language to influence public thinking
They envision "winning" in the aftermath world war.
They have infiltrated the highest levels of banking, US military, NATO and US government.
"There is no reason for central banks to have the kind of independence that judicial
institutions have. Justice may be blind and above politics, but money and banking are not." Economic
and politics are like Siamese twins (which actually . If somebody trying to separate them it is a
clear sign that the guy is either neoliberal propagandists or outright crook.
Notable quotes:
"... I think FED chairman is the second most powerful political position in the USA after the POTUS. Or may be in some respects it is even the first ;-) So it is quintessentially high-power political position masked with the smokescreen of purely economic (like many other things are camouflaged under neoliberalism.) ..."
"... I think that is a hidden principle behind attacks on FED chair. A neoliberal principle that the state should not intrude into economics and limit itself to the police, security, defense, law enforcement and few other related to this functions. So their point that she overextended her mandate is an objection based on principle. Which can be violated only if it is used to uphold neoliberalism, as Greenspan did during his career many times. ..."
"... This kind of debate seems to be a by-product of the contemporary obsession with having an independent central bank, run according to the fantasy that there is such a thing as a neutral or apolitical way to conduct monetary policy. ..."
"... A number of commenters and authors have recently pointed out that inequality may not just be an unrelated phenomenon to monetary policy, but actually, in part at least, a byproduct of it. ..."
"... The theory is that the Fed in the Great Moderation age has been so keen to stave off even the possibility of inflation that it chokes down the vigor of recoveries before they get to the part where median wages start rising quickly. The result is that wages get ratcheted down with the economic cycle, falling during recessions and never fully recovering during the recoveries. ..."
"... Two Things: (i) The Fed should be open and honest about monetary policy. No one wants to return to the Greenspan days. (ii) Brad Delong is a neoliberal hack. ..."
"... As to why risk a political backlash in the piece, the short answer is: to invoke the debate on whether politics or fact (science) is going to dominate. Because they can't both. See: Romer. Let's have this out once and for all. ..."
Fine column, with which I agree. Federal Reserve policy as such is difficult and contentious enough
to avoid wandering to social-economic analysis or philosophy from aspects of the Fed mandate.
As for the use of the word "hack" in referring to Janet Yellen, that needlessly insulting use
was by a Washington Post editor and not by columnist Michael Strain.
anne -> RW (the other)...
As Brad notes, many Fed Chairs before Yellen have opined on matters outside monetary policy
so why is Yellen subject to a different standard?
[ Fine, I have reconsidered and agree. No matter how the headline was written, the headline
was meant to be intimidating and was willfully mean and that could and should have been made clear
immediately by the writer of the column. ]
likbez -> anne...
"Federal Reserve policy as such is difficult and contentious enough to avoid wandering to social-economic
analysis or philosophy from aspects of the Fed mandate."
Anne,
I think FED chairman is the second most powerful political position in the USA after the POTUS.
Or may be in some respects it is even the first ;-) So it is quintessentially high-power political position masked with the smokescreen of "purely
economic" (like many other things are camouflaged under neoliberalism.)
That's why Greenspan got it, while being despised by his Wall-Street colleagues...
He got it because he was perfect for promoting deregulation political agenda from the position
of FED chair.
pgl -> likbez...
Greenspan was despised on Wall Street? Wow as he tried so hard to serve their interests. I
guess the Wall Street crowd is never happy no matter how much income we feed these blow hards.
anne -> likbez...
So it is quintessentially high-power political position masked with the smokescreen of "purely
economic" (like many other things are camouflaged under neoliberalism.)
[ I understand, and am convinced. ]
Peter K. said...
I respectfully disagree. Republicans are always working the refs and despite what the writer
from AEI said, they're okay with conservative Fed chairs talking politics. They have double standards.
Greenspan testified to Congress on behalf of Bush's tax cuts for the rich. Something about
how since Clinton balanced the budget, the financial markets had too little safe debt to work
with. (maybe that's why they dove into mortgaged-backed securities). But tax cuts versus more
government spending? He and Rubin advised Clinton to drop his middle class spending bill and trade
deficit reduction for lower interest rates. That's economics which have political outcomes.
So if the rightwing is going to work the the refs, so should the left. We shouldn't unilaterally
disarm over fears Congress will gun for the Fed. There should be more groups like Fed Up protesting.
The good thing about Yellen's speech is that it's a signal to progressives that inequality
is problem for her even as she is raising rates in a political dance with hawks and Congress.
The Fed is constantly accused of increasing inequality so it's good Yellen is saying she thinks
it's a bad thing and not American.
Bernie Sanders is right that for change to happen we'll need more political involvement from
regular citizens. We'll need a popular movement with many leaders.
The Fed should be square in the sights of a progressive movement. A high-pressured economy
with full employment should be a top priority.
Instead I saw Nancy Pelosi being interviewed by Al Hunt on Charlie Rose the other night. Hunt
asked her about Yellen raising rates.
Pelosi said no comment as she wasn't looking at the data Yellen was and didn't want to interfere.
The Fed should be independent, etc. Perhaps like Thoma she has the best of motives and doesn't
want to motivate the Republicans to go after the Fed and oppose what she wants.
Still I felt the Democratic leadership should be committed to a high-pressure economy. Her
staff should know what Krugman, Summers etc are saying. What the IMF and World Bank are sayings.
She should have said "they shouldn't raise rates until they see the whites of inflation's eyes"
as Krugman memorably put it. She should have said that emphatically.
We need a Democratic Party like that.
Instead Peter Diamond is blocked from becoming a Fed governor by Republicans and Pelosi is
afraid to comment on monetary policy.
Must-Read: I would beg the highly-esteemed Mark Thoma to draw a distinction here between "inappropriate"
and unwise. In my view, it is not at all inappropriate for Fed Chair Janet Yellen to express her
concern about excessive inequality. Previous Fed Chairs, after all, have expressed their liking
for inequality as an essential engine of economic growth over and over again over the past half
century--with exactly zero critical snarking from the American Enterprise Institute for trespassing
beyond the boundaries of their role.
But that it is not inappropriate for Janet Yellen to do so does not mean that it is wise. Mark's
argument is, I think, that given the current political situation it is unwise for Janet to further
incite the ire of the nutboys in the way that even the mildest expression of concern about rising
inequality will do.
That may or may not be true. I think it is not.
But I do not think that bears on my point that Michael R. Strain's arguments that Janet Yellen's
speech on inequality was inappropriate are void, wrong, erroneous, inattentive to precedent, shoddy,
expired, expired, gone to meet their maker, bereft of life, resting in peace, pushing up the daisies,
kicked the bucket, shuffled off their mortal coil, run down the curtain, and joined the bleeding
choir invisible:
Mark Thoma: Why It's Tricky for Fed Officials to Talk Politically: "I think I disagree with
Brad DeLong...
pgl -> Peter K....
"my point that Michael R. Strain's arguments that Janet Yellen's speech on inequality
was inappropriate are void, wrong, erroneous..."
DeLong is exactly right here. Strain's argument has its own share of partisan lies whereas
Yellen is telling the truth. Brad will not be intimidated by this AEI weasel.
sanjait said...
Why would Yellen not talk about inequality? It's an important macroeconomic topic and one that
is relevant for her job. It's both an input and an output variable that is related to monetary
policy.
And, arguably I think, median wage growth should be regarded as a policy goal for the Fed,
related to its explicit mandate of "maximum employment."
But even if you think inequality is unrelated to the Fed's policy goals, that doesn't stop
them from talking about other topics. Do people accuse the Fed of playing politics when they talk
about desiring reduced financial market volatility? That has little to do with growth, employment
and general price stability.
likbez -> sanjait...
I think that is a hidden principle behind attacks on FED chair. A neoliberal principle that the state should not intrude into economics and limit itself to
the police, security, defense, law enforcement and few other related to this functions. So their point that she overextended her mandate is an objection based on principle. Which
can be violated only if it is used to uphold neoliberalism, as Greenspan did during his career
many times.
Sandwichman said...
I think I disagree with Mark Thoma's disagreement with Brad DeLong. Actually, ALL economic
discourse is political and efforts to restrain the politics are inevitably efforts to keep the
politics one-sided
Dan Kervick said...
This kind of debate seems to be a by-product of the contemporary obsession with having
an "independent" central bank, run according to the fantasy that there is such a thing as a neutral
or apolitical way to conduct monetary policy.
But there really isn't. Different kinds of social, economic and political values and policy
agendas are going to call for different kinds monetary and credit policies. It might be better
for our political health if the Fed were administratively re-located as an executive branch agency
that is in turn part of a broader Department of Money and Banking - no different from the Departments
of Agriculture, Labor, Education, etc. In that case everybody would then view Fed governors as
ordinary executive branch appointees who report to the President, and whose policies are naturally
an extension of the administration's broader agenda. Then if people don't like the monetary policies
that are carried out, that would be one factor in their decision about whom to vote for.
There is no reason for central banks to have the kind of independence that judicial institutions
have. Justice may be blind and above politics, but money and banking are not. Decisions in that
latter area should be no more politics-free than decisions about taxing and spending. If we fold
the central bank more completely into the regular processes of representative government, then
if a candidate wants to run on a platform of keeping interest rates low, small business credit
easy, bank profits small, etc., they could do so without all of the doubletalk about the protecting
the independence of the sacrosanct bankers' temple.
We could also then avoid unproductive wheel-spinning about that impossibly vague and hedged
Fed mandate that can be stretched to mean almost anything people want it to mean. The Fed's mandate
under the political solution would just be whatever monetary policy the President ran on.
likbez -> Dan Kervick...
"The Fed's mandate under the political solution would just be whatever monetary policy
the President ran on"
Perfect !
Actually sanjait in his post made a good point why this illusive goal is desirable (providing
"electoral advantage") although Greenspan probably violated this rule. A couple of hikes of interest
rates from now till election probably will doom Democrats.
Also the idea of FEB independence went into overdrive since 80th not accidentally. It has its
value in enhancing the level of deregulation.
Among other things it helps to protect large financial institutions from outright nationalization
in cases like 2008.
Does somebody in this forum really think that Bernanke has an option of putting a couple of
Wall-Street most violent and destructive behemoths into receivership (in other words nationalize
them) in 2008 without Congress approval ?
Dan Kervick -> Sanjait ...
Sanjait, with due respect, you are not really responding to the reform proposal, but only
affirming the differences between that proposal and the current system.
Yes, of course fiscal policy is "constrained" by Congress. Indeed, it is not just constrained by
Congress but actually made by Congress, subject only to an overridable executive branch veto. The
executive branch is responsible primarily for carrying out the legislature's fiscal directives.
That's the point. In a democratic system decisions about all forms of taxation and government
spending are supposed to be made by the elected legislative branch, and then executed by agencies
of the executive branch. My proposal is that monetary policy should be handled in the same way:
by the elected political branches of the government.
You point out that under current arrangements, central banks can, if they choose, effect large
monetary offsets to fiscal policy (or at least to some of the aggregate macroeconomic effects of
those policies). I don't understand why any non-elected and politically unaccountable branch of
our government should have the power to offset the policies of the elected branches in this way.
Fiscal and monetary policy need to be yoked together to achieve policy ends effectively. Those
policy ends should be the ones people vote for, not the ones a handful of men and women happen to
think are appropriate.
JF -> Dan Kervick...
"In a democratic system" is what you wrote.
It is more proper to refer to it as republicanism. The separation of powers doctrine, underlying
the US constitution, is a reflection of James Madison's characterization in the 51st The
Federalist Paper, and it is a US-defined republicanism that is almost unique:
"the republican form, wherein the legislative authority necessarily predominates."
- or something like that is the quote.
In the US framers' view, at least those who constructed the re-write in 1787 and were the leaders
- I'd say the most important word in Madison's explanation is the word "necessarily" - this
philosophy has all law and policy stemming from the public, it presumes that you can't have
stability and dynamic change of benefit to society without this.
Arguably, aristocracies, fascists, totalitarians, and all the other isms, just don't see it that
way, they see things as top-down ordering of society.
The mythology of the monetary theorizing and the notions about a central bank being independently
delphic has some of this top-down ordering view to it (austerianism, comes to mind). Well, I
don't believe in a religious sense that this is how it should be, nor do you it seems.
It will be an interesting Congress in 2017 when new legislative authorities are enacted to
establish clearer framing of the ministerial duties now held by the FRB.
Are FED officials scared that this will happen, and as a result they circle the wagons with their
associates in the financial community now to fend off the public????
I hope this is not true. They can allay their own fears by leading not back toward 1907, in my
opinion.
Of course, I could say where I'd like economic policies to go, and do here often, but this thread
is about Yellin and other FED officials.
I recognize that FRB officials can say things too, and should, as leaders of this nation (with a
whole lot of research power and evidence available to them their commentary on political
economics should have merit and be influential).
Thanks for continuing to remind people that we govern ourselves in the US in a US-defined
republican-form. But I think the people still respect and listen to leadership - so speak out FED
officials.
JF -> Dan Kervick...
But Dan K, then you'd de-mythologize an entire wing of macroeconomics in a wing referred to as
monetary theory based on a separate Central Bank, or some non-political theory of money.
Don't mind the theory as it is an analytic framework that questions and sometimes informs - but
it is good to step back and realize some of the religious-like framing.
It is political-economy.
Peter K. -> pgl...
Yellen really lays it out in her speech.
"The extent of and continuing increase in inequality in the United States greatly concern
me. The past several decades have seen the most sustained rise in inequality since the 19th
century after more than 40 years of narrowing inequality following the Great Depression. By
some estimates, income and wealth inequality are near their highest levels in the past hundred
years, much higher than the average during that time span and probably higher than for much of
American history before then.2 It is no secret that the past few decades of widening
inequality can be summed up as significant income and wealth gains for those at the very top
and stagnant living standards for the majority. I think it is appropriate to ask whether this
trend is compatible with values rooted in our nation's history, among them the high value
Americans have traditionally placed on equality of opportunity."
And even links to Piketty in footnote 42.
"Along with other economic advantages, it is likely that large inheritances play a role in
the fairly limited intergenerational mobility that I described earlier.42"
42. This topic is discussed extensively in Thomas Piketty (2014), Capital in the 21st Century,
trans. Arthur Goldhammer (Cambridge, Mass.: Belknap Press). Return to text
Sanjait said...
A number of commenters and authors have recently pointed out that inequality may not just
be an unrelated phenomenon to monetary policy, but actually, in part at least, a byproduct of it.
The theory is that the Fed in the Great Moderation age has been so keen to stave off even the
possibility of inflation that it chokes down the vigor of recoveries before they get to the part
where median wages start rising quickly. The result is that wages get ratcheted down with the
economic cycle, falling during recessions and never fully recovering during the recoveries.
Do I believe this theory? Increasingly, yes I do. And seeing the Fed right now decide to raise
rates, citing accelerating wage growth as one of the main reasons, has reinforced my belief.
A Boy Named Sue said...
Two Things: (i) The Fed should be open and honest about monetary policy. No one wants to
return to the Greenspan days. (ii) Brad Delong is a neoliberal hack.
A Boy Named Sue -> A Boy Named Sue...
I do admit, Delong is my favorite conservative economist. He is witty and educational, unlike
most RW hacks.
Jeff said...
As to "why risk a political backlash" in the piece, the short answer is: to invoke the
debate on whether politics or fact (science) is going to dominate. Because they can't both. See:
Romer. Let's have this out once and for all.
"... Most publicly traded U.S. companies reward top managers for hitting performance targets, meant to tie the interests of managers and shareholders together. At many big companies, those interests are deemed to be best aligned by linking executive performance to earnings per share, along with measures derived from the company's stock price. ..."
"... But these metrics may not be solely a reflection of a company's operating performance. They can be, and often are, influenced through stock repurchases. In addition to cutting the number of a company's shares outstanding, and thus lifting EPS, buybacks also increase demand for the shares, usually providing a lift to the share price, which affects other performance markers. ..."
"... Pay for performance as it is often structured creates "very troublesome, problematic incentives that can potentially drive very short-term thinking." ..."
"... As reported in the first article in this series, share buybacks by U.S. non-financial companies reached a record $520 billion in the most recent reporting year. A Reuters analysis of 3,300 non-financial companies found that together, buybacks and dividends have surpassed total capital expenditures and are more than double research and development spending. ..."
"... "There's been an over-focus on buybacks and raising EPS to hit share option targets, and we know that those are concentrated in the hands of the few, and that the few is in the top 1 percent," said James Montier, a member of the asset allocation team at global investment firm GMO in London, which manages more than $100 billion in assets. ..."
"... The introduction of performance targets has been a driver of surging executive pay, helping to widen the gap between the richest in America and the rest of the country. Median CEO pay among companies in the S P 500 increased to a record $10.3 million last year, up from $8.6 million in 2010, according to data firm Equilar. ..."
"... At those levels, CEOs last year were paid 303 times what workers in their industries earned, compared with a ratio of 59 times in 1989, according to the Economic Policy Institute, a Washington-based nonprofit. ..."
NEW YORK(Reuters) - When health insurer Humana Inc reported worse-than-expected quarterly earnings
in late 2014 – including a 21 percent drop in net income – it softened the blow by immediately telling
investors it would make a $500 million share repurchase.
In addition to soothing shareholders, the surprise buyback benefited the company's senior executives.
It added around two cents to the company's annual earnings per share, allowing Humana to surpass
its $7.50 EPS target by a single cent and unlocking higher pay for top managers under terms of the
company's compensation agreement.
Thanks to Humana hitting that target, Chief Executive Officer Bruce Broussard earned a $1.68 million
bonus for 2014.
Most publicly traded U.S. companies reward top managers for hitting performance targets, meant
to tie the interests of managers and shareholders together. At many big companies, those interests
are deemed to be best aligned by linking executive performance to earnings per share, along with
measures derived from the company's stock price.
But these metrics may not be solely a reflection of a company's operating performance. They
can be, and often are, influenced through stock repurchases. In addition to cutting the number of
a company's shares outstanding, and thus lifting EPS, buybacks also increase demand for the shares,
usually providing a lift to the share price, which affects other performance markers.
As corporate America engages in an unprecedented buyback binge, soaring CEO pay tied to short-term
performance measures like EPS is prompting criticism that executives are using stock repurchases
to enrich themselves at the expense of long-term corporate health, capital investment and employment.
"We've accepted a definition of performance that is narrow and quite possibly inappropriate,"
said Rosanna Landis Weaver, program manager of the executive compensation initiative at As You Sow,
a Washington, D.C., nonprofit that promotes corporate responsibility. Pay for performance as
it is often structured creates "very troublesome, problematic incentives that can potentially drive
very short-term thinking."
A Reuters analysis of the companies in the Standard & Poor's 500 Index found that 255 of those
companies reward executives in part by using EPS, while another 28 use other per-share metrics that
can be influenced by share buybacks.
In addition, 303 also use total shareholder return, essentially a company's share price appreciation
plus dividends, and 169 companies use both EPS and total shareholder return to help determine pay.
STANDARD PRACTICE
EPS and share-price metrics underpin much of the compensation of some of the highest-paid CEOs,
including those at Walt Disney Co, Viacom Inc, 21st Century Fox Inc, Target Corp and Cisco Systems
Inc.
... ... ...
As reported in the first article in this series, share buybacks by U.S. non-financial companies
reached a record $520 billion in the most recent reporting year. A Reuters analysis of 3,300 non-financial
companies found that together, buybacks and dividends have surpassed total capital expenditures and
are more than double research and development spending.
Companies buy back their shares for various reasons. They do it when they believe their shares
are undervalued, or to make use of cash or cheap debt financing when business conditions don't justify
capital or R&D spending. They also do it to meet the expectations of increasingly demanding investors.
Lately, the sheer volume of buybacks has prompted complaints among academics, politicians and
investors that massive stock repurchases are stifling innovation and hurting U.S. competitiveness
- and contributing to widening income inequality by rewarding executives with ever higher pay, often
divorced from a company's underlying performance.
"There's been an over-focus on buybacks and raising EPS to hit share option targets, and we
know that those are concentrated in the hands of the few, and that the few is in the top 1 percent,"
said James Montier, a member of the asset allocation team at global investment firm GMO in London,
which manages more than $100 billion in assets.
The introduction of performance targets has been a driver of surging executive pay, helping
to widen the gap between the richest in America and the rest of the country. Median CEO pay among
companies in the S&P 500 increased to a record $10.3 million last year, up from $8.6 million in 2010,
according to data firm Equilar.
At those levels, CEOs last year were paid 303 times what workers in their industries earned,
compared with a ratio of 59 times in 1989, according to the Economic Policy Institute, a Washington-based
nonprofit.
SALARY AND A LOT MORE
Today, the bulk of CEO compensation comes from cash and stock awards, much of it tied to performance
metrics. Last year, base salary accounted for just 8 percent of CEO pay for S&P 500 companies, while
cash and stock incentives made up more than 45 percent, according to proxy advisory firm Institutional
Shareholder Services.
...In 1992, Congress changed the tax code to curb rising executive pay and encourage performance-based
compensation. It didn't work. Instead, the shift is widely blamed for soaring executive pay and a
heavier emphasis on short-term results.
Companies started tying performance pay to "short-term metrics, and suddenly all the things we
don't want to happen start happening," said Lynn Stout, a professor of corporate and business law
at Cornell Law School in Ithaca, New York. "Despite 20 years of trying, we have still failed to come
up with an objective performance metric that can't be gamed."
Shareholder expectations have changed, too. The individuals and other smaller, mostly passive
investors who dominated equity markets during the postwar decades have given way to large institutional
investors. These institutions tend to want higher returns, sooner, than their predecessors. Consider
that the average time investors held a particular share has fallen from around eight years in 1960
to a year and a half now, according to New York Stock Exchange data.
"TOO EASY TO MANIPULATE"
Companies like to use EPS as a performance metric because it is the primary focus of financial
analysts when assessing the value of a stock and of investors when evaluating their return on investment.
But "it is not an appropriate target, it's too easy to manipulate," said Almeida, the University
of Illinois finance professor.
...By providing a lift to a stock's price, buybacks can increase total shareholder return to target
levels, resulting in more stock awards for executives. And of course, the higher stock price lifts
the value of company stock they already own.
"It can goose the price at time when the high price means they earn performance shares … even
if the stock price later goes back down, they got their shares," said Michael Dorff, a law professor
at the Southwestern Law School in Los Angeles.
Exxon Corp, the largest repurchaser of shares over the past decade, has rejected shareholder proposals
that it add three-year targets based on shareholder return to its compensation program. In its most
recent proxy, the energy company said doing so could increase risk-taking and encourage underinvestment
to achieve short-term results.
The energy giant makes half of its annual executive bonus payments contingent on meeting longer-term
EPS thresholds. Since 2005, the company has spent more than $200 billion on buybacks.
ADDITIONAL TWEAKS
While performance targets are specific, they aren't necessarily fixed. Corporate boards often
adjust them or how they are calculated in ways that lift executive pay.
When capital became unable of reaping large and fairly secure profits from manufacturing it like
water tries to find other ways. It starts with semi-criminalizing finance -- that's the origin
of the term "casino capitalism" (aka neoliberalism). I see casino capitalism as a set of semi-criminal
ways of maintaining the rate of profits.
The key prerequisite here is corruption of regulators. So laws on the book does not matter
much if regulators do not enforce them.
As Joseph Schumpeter noted, capitalism is not a steady-state system. It is unstable system
in which population constantly experience and then try to overcome one crisis after another. Joseph
Schumpeter naively assumed that the net result is reimaging itself via so called "creative destruction".
But what we observe now it "uncreative destruction". In other words casino capitalism is devouring
the host, the US society.
So all those Hillary statements are for plebs consumption only (another attempt to play "change
we can believe in" trick). Just a hot air designed to get elected. Both Clintons are in the pocket
of financial oligarchy and will never be able to get out of it alive.
GeorgeK said...
I believe I'm the only one on this blog that has actually traded bonds, done swaps and hedged
bank portfolios with futures contracts. Sooo I kinda know something about this topic.
Hilary is a fraud; her daughter worked at a Hedge fund where she met her husband Marc Mezvinsky,
who is now a money manager at the Eaglevale fund. Oddly many of the Eaglevale investors are investors
in the Clinton Foundation and have also given money to Hilary's campaign. The Clinton Foundation
gets boat loads of money from Hedge funds and will not raise taxes on such a rich source of funding.
The grooms mother is Marjory Margolies (ex)Mezvinsky, she cast the final vote giving Clinton
the winning vote to raise taxes. She subsequently lost her run for reelection to congress, then
her husband was convicted of fraud and they divorced.
This speech is an attempt to pry people away from Bernie, it won't work with primary voters
but might with what's left of rational Republicans in the general election.
When capital became unable of reaping large and fairly secure profits from manufacturing it like
water tries to find other ways. It starts with semi-criminalizing finance -- that's the origin
of the term "casino capitalism" (aka neoliberalism). I see casino capitalism as a set of semi-criminal
ways of maintaining the rate of profits.
The key prerequisite here is corruption of regulators. So laws on the book does not matter
much if regulators do not enforce them.
As Joseph Schumpeter noted, capitalism is not a steady-state system. It is unstable system
in which population constantly experience and then try to overcome one crisis after another. Joseph
Schumpeter naively assumed that the net result is reimaging itself via so called "creative destruction".
But what we observe now it "uncreative destruction". In other words casino capitalism is devouring
the host, the US society.
So all those Hillary statements are for plebs consumption only (another attempt to play "change
we can believe in" trick). Just a hot air designed to get elected. Both Clintons are in the pocket
of financial oligarchy and will never be able to get out of it alive.
GeorgeK said...
I believe I'm the only one on this blog that has actually traded bonds, done swaps and
hedged bank portfolios with futures contracts. Sooo I kinda know something about this topic.
Hilary is a fraud; her daughter worked at a Hedge fund where she met her husband Marc
Mezvinsky, who is now a money manager at the Eaglevale fund. Oddly many of the Eaglevale
investors are investors in the Clinton Foundation and have also given money to Hilary's
campaign. The Clinton Foundation gets boat loads of money from Hedge funds and will not raise
taxes on such a rich source of funding.
The grooms mother is Marjory Margolies (ex)Mezvinsky, she cast the final vote giving Clinton
the winning vote to raise taxes. She subsequently lost her run for reelection to congress,
then her husband was convicted of fraud and they divorced.
This speech is an attempt to pry people away from Bernie, it won't work with primary voters
but might with what's left of rational Republicans in the general election.
The key idea of neoliberal university if to view students as customers and the degree as a product
to sell.
Notable quotes:
"... The university of North Carolina at Chapel Hill now faces one year of probation from the Southern Association of Colleges and Schools Commission on Colleges as a result of a report that documents " widespread and long-lasting academic fraud at the university ." ..."
"... Students are increasingly perceived as customers ..."
"... the "product" the university is selling as a degree rather than an education, so it does seem counter productive to risk losing a customer for something so insignificant as failing to go to class. ..."
"... Today's college students may be ignorant, but they aren't stupid. They take the measure of an institution pretty quickly. They can smell hypocrisy, and if they have to pay tens of thousands of dollars a year for the dubious privilege of uninterrupted olfactory assault, they'll very likely develop the moral equivalent of olfactory fatigue. ..."
It isn't only athletes who get the benefit of such "no-show" courses. Small academic programs
and departments struggling to survive occasionally come up with such courses as a way of boosting
their numbers of majors. Even Harvard is now having to grapple with the question of whether their
"General
Education" program has had the effect of encouraging students to take easy courses.
Universities will bend over backwards not to fail a student–so long as he or she is actually paying
tuition. I know of a case of a professor who was told by the director of the program in which the
professor teaches to "take some responsibility" for the fact that some of this professor's students
were failing a course. Apparently, the professor was expected to find a way to ensure that all
the students passed the course. Fortunately, the professor is tenured, and hence had to freedom to
refuse to do more than to try to help the students actually LEARN the material. Would an adjunct
have felt free to do the same thing?
Students are increasingly perceived as customers and some administrators, and even some faculty,
appear to conceive the "product" the university is selling as a degree rather than an education,
so it does seem counter productive to risk losing a customer for something so insignificant as failing
to go to class.
Failing to pay tuition, however, is a different matter. Faculty are sometimes instructed not to
allow students to attend courses if they have not paid their tuition by the beginning of the term
(which, because of the glacial slowness of some financial aid programs, is frequently a problem).
There's been a lot of discussion recently about how
all students need to be
taught ethics in college. Of course you can't require everyone to take the standard ethics class
that is taught in the philosophy department. That would be too much work. If you suddenly are going
to require that everyone at your university take ethics, well, you'd better dumb it down, so students
won't object.
Keep it rigorous, or dumb it down, requiring students to take an ethics course is unlikely to
make them more ethical. The thing is, you rarely make people ethical by teaching them ethics. You
can help them to better understand the complexities of some ethical dilemmas and you can arm them
with theoretical language they can use to defend choices they probably would have made anyway, but
that doesn't make them better people so much as it makes them happier people.
Moral character is largely formed by the time students enter college. It isn't entirely formed,
of course, so what happens to students in college can affect their moral development. People
are so profoundly social that they continue to develop their conceptions of what is acceptable behavior
throughout their entire lives. Aristotle recognized that. That's why he asserted that ethics was
a subset of politics. If you want people to behave well, you have to organize your society in such
a way that it sends a clear message concerning the behavior it approves of and the behavior it condemns.
If the leaders of a given society want people to be honest and responsible, then they have to exemplify
these character traits themselves, and then reward citizens who emulate their example.
Universities would do a much better job of shaping students' characters in positive ways if instead
of requiring students to take dumbed-down ethics classes, they gave a damn about ethics themselves,
if they cared more about actually delivering the product they purport to be selling, rather than
giving mere lip service to it. Many universities are now delivering degrees that are effectively
equivalent to the indulgences sold by the Catholic church in the middle ages: expensive, but otherwise
meaningless, pieces of paper.
Today's college students may be ignorant, but they aren't stupid. They take the measure of an
institution pretty quickly. They can smell hypocrisy, and if they have to pay tens of thousands of
dollars a year for the dubious privilege of uninterrupted olfactory assault, they'll very likely
develop the moral equivalent of olfactory fatigue. The message that, sadly, is all too often driven
home to students today is that none of the traditional human values that educational institutions
purport to preserve and foster, including learning in the broadest sense, really matter. The message
they all to often receive now is that nothing really matters but money.
JKF? I didn't know that the historian John King Fairbank was assassinated.
roadrider
Then I guess you have solid evidence to account for the actions of Allen Dulles, David Atlee
Phillips, William Harvey, David Morales, E. Howard Hunt, Richard Helms, James Angleton and other
CIA personnel and assets who had
1) perhaps the strongest motives to murder Kennedy
2) the means to carry out the crime, namely, their executive action (assassination) capability
and blackmail the government into aiding their cover up and
3) the opportunity to carry out such a plan given their complete lack of accountability to
the rest of the government and their unmatched expertise in lying, deceit, secrecy, fraud.
Because if you actually took the time to research or at least read about their actions in this
matter instead of just spouting bald assertions that you decline to back up with any facts you
would find their behavior nearly impossible to explain other than having at, the very least, guilty
knowledge of the crime.
Ruby claimed he was injected with cancer in jail, which ultimately rendered his second trial
(after winning appeal overturning his death sentence) moot. It sounded crazy, but so did the
motive proffered at his first trial-- that he wanted to save Mrs. Kennedy the anguish...
that is such an amazing story.. i've yet to watch the video of Lyndon Johnson's swearing in
- where Marr states he's seen to be winking and smiling etc -
those who wish - Pick it up at around 12 minutes. actually in that lecture he may
well be showing videos of it - I wdn't know cos just listen to the audio.
Make a note of the names - rising stars in the I'm "left"
but I'm not a conspiracist gaggle - ist a standard gaggle -
Chomsky, Monbiot are in it ( to win it of course - their
fabled "socialist" kingdom" ) - yeah yeah its BritLand so
yeah why I care I suppose.
"... "The problem for early would - be neoclassical macroeconomists was that, strictly speaking, there was no microeconomic model of macroeconomics when they began their campaign. So they developed a neoclassical macro model from the foundation of the neoclassical growth model developed by Nobel laureate Robert Solow (Solow 1956) and Trevor Swan (Swan 2002). They interpreted the equilibrium growth path of the economy as being determined by the consumption and leisure preferences of a representative consumer, and explained deviations from equilibrium – which the rest of us know as the business cycle – by unpredictable 'shocks' to technology and consumer preferences. ..."
"... This resulted in a model of the macroeconomy as consisting of a single consumer, who lives for ever, consuming the output of the economy. Which is a single good produced in a single firm, which he owns and in which he is the only employee, which pays him both profits equivalent to the marginal product of capital and a wage equivalent to the marginal product of labor. To which he decides how much labor to supply by solving a utility function that maximizes his utility over an infinite time horizon, which he rationally expects and therefore correctly predicts. ..."
"... Paul Krugman is a quintessential neoclassical economist. Neoclassical economists threw the notion that economics should deal with empirical or factual reality overboard quite some time ago. ..."
"... Economists often invoke a strange argument by Milton Friedman that states that models do not have to have realistic assumptions to be acceptable - giving them license to produce severely defective mathematical representations of reality. ..."
"... Economists as a rule do not deny that their assumptions about human nature are highly unrealistic, but instead claim, following Friedman (1962, 1982), that the absence of realism does not diminish the value of their theory because it "works," in the sense that it generates valid predictions…. ..."
"... Most important, philosophers of science have almost universally rejected Friedman's position (Boland, 1979). It is very widely agreed that the purpose of a theory is to explain. Otherwise, [predictions] are unable to foretell under what conditions they will continue to hold or fail. ..."
"... With the advent of the Great Financial Crisis, which began in 2007 and continues to this day, the neoclassical models did fail. And they failed in the most spectacular way. ..."
"... Nevertheless, for those like Krugman who are in love with orthodox economic theory, when facts don't conform to theory, so much worse for the facts. ..."
"... It should be added that not everyone who rejects the orthodox, neoclassical theory of exogenous money creation and its "available funds" theory of banking, as Keen calls it, believes that debt matters. ..."
"... A very good example of this is the MMT school, which even though it rejects the orthodox theory of money creation, nevertheless discounts the importance of debt, or at least public debt. ..."
"... The distinction between private debt and public debt, however, is not a clear one. We all saw, for instance, the ease with which private debt was converted into public debt in the cases of Ireland and Spain in the wake of the GFC. ..."
"... The piece that VK posted by Keen was essentially a rejection of the macroeconomic theory that was formulated to replace Keynesian theory. ..."
"... The debate between these two economists on the role of banking and specifically the creation of credit is of fundamental importance in understanding the shortcomings of orthodox economic thinking – and why it was so ill-equipped to handle, let alone predict, the crash of 2008. ..."
"... However, because he has such an important platform, it matters more to many monetary economists (including the editor of this series) that he appears to lack a proper understanding of the nature of credit, and the role of banks in the economy. ..."
"... So yes debt is a big problem with a poorly regulated banking industry (financial industry really because of shadow banking). ..."
Beware Economics 101. The peer review mechanism has horribly failed.
When you read Krugman,
this is what he and our central bankers believe.
"The problem for early would - be neoclassical macroeconomists was that, strictly speaking,
there was no microeconomic model of macroeconomics when they began their campaign. So they developed
a neoclassical macro model from the foundation of the neoclassical growth model developed by Nobel
laureate Robert Solow (Solow 1956) and Trevor Swan (Swan 2002). They interpreted the equilibrium
growth path of the economy as being determined by the consumption and leisure preferences of a
representative consumer, and explained deviations from equilibrium – which the rest of us know
as the business cycle – by unpredictable 'shocks' to technology and consumer preferences.
This resulted in a model of the macroeconomy as consisting of a single consumer, who lives
for ever, consuming the output of the economy. Which is a single good produced in a single firm,
which he owns and in which he is the only employee, which pays him both profits equivalent to
the marginal product of capital and a wage equivalent to the marginal product of labor. To which
he decides how much labor to supply by solving a utility function that maximizes his utility over
an infinite time horizon, which he rationally expects and therefore correctly predicts.
The economy
would always be in equilibrium except for the impact of unexpected 'technology shocks' that change
the firm's productive capabilities (or his consumption preferences) and thus temporarily cause
the single capitalist/worker/consumer to alter his working hours.
Any reduction in working hours
is a voluntary act, so the representative agent is never involuntarily unemployed, he's just taking
more leisure. And there are no banks, no debt, and indeed no money in this model."
Prof. Steve Keen, Debunking Economics.
Dennis Coyne, 12/04/2015 at 6:11 pm
Hi VK,
No this is not what Krugman believes at all. There are some economists that think in these terms,
in the US it is primarily in the interior of the country, the economists on the east and west
coast, (this includes Krugman and many others) would not think in these terms at all.
Krugman gives assessments based on the representative agent models, with its no money, no debt,
no banks assumptions. Very linear models, no dynamic modeling.
Economic theory and modeling is stuck in the 19th century. Rest of the hard sciences, physics,
chemistry, atmospherics moved on with Poincare and later Lorenz to dynamic simulations.
The fractional reserve banking model taught in economics is absolutely empirically wrong. Because
banks have the power to create credit money, they can issue in excess.
Under the empirically correct credit money creation model, there can be an excessive build
up of debt. Hence the more than 250 sovereign and domestic govt debt crises since 1850.
Rune Likvern posted the link and I read the paper. US textbooks through 1990 covered
this exactly as in that paper, so it was a good refresher, but not different from what I had learned
in the past.
There can be excessive debt and banks can fail due to poor lending practices combined with
a severe recession. Nations can also default. The question is how much debt is too much debt.
In economics there are different opinions on this question. When I was studying economics the
focus was on public debt crowding out private debt when an economy was close to full employment.
Now there seems to be more focus on private debt, which nobody in economics used to worry about.
It may be that the lack of banking regulation and the rise of shadow banking has made this
more of a problem, I am out of date on the latest research.
U.S. Textbooks don't cover this at all. The assumption that Paul Samuelson used in his seminal
undergraduate textbook that millions have studied was the fractional reserve lending model which
is empirically false.
The whole of economics is empirically false, it would be a laughing stock if people looked
under the hood with its assumptions that are meant to preserve straight line thinking rather than
dealing with reality, which is highly non-linear and dynamic.
Private debt wasn't a concern in economics because they assumed away the role of banks to preserve
the equilibrium models. Once you incorporate reality into the models, which is what a true science
would do, you find that private debt levels matter.
What economists think: Saver lends to borrower. Saver loses purchasing power, borrower gains
purchasing power. Purchasing power hasn't changed in the economy. Just a shift
What really happens: Saver puts money in a bank, has access to his money anytime. Borrower
wants money, bank issues a credit and writes loan amount as asset. Purchasing power as a whole
increases across the economy as both saver and borrower now have money to buy goods and services
with.
That's how the economy grows – bank issuance of credit. And it can easily be in excess.
I tried to explain this to my father in law who is an attorney
specializing in finance and accounting. He simply could not accept it or even wrap his head around
it even after reading the Bank of England piece.
It is fraud plain and simple and the cost to humanity in both financial terms and lives lost
is huge.
Paul Krugman is a quintessential neoclassical economist. Neoclassical economists threw the
notion that economics should deal with empirical or factual reality overboard quite some time
ago.
Perhaps no one was more explicit in articulating this notion that science should discard
factual reality than Milton Friedman.
Any number of critics have pointed this out. For instance,
Economists often invoke a strange argument by Milton Friedman that states that models
do not have to have realistic assumptions to be acceptable - giving them license to produce
severely defective mathematical representations of reality.
–NASSIM NICHOLAS TALEB, The Black Swan
and
Economists as a rule do not deny that their assumptions about human nature are highly
unrealistic, but instead claim, following Friedman (1962, 1982), that the absence of realism
does not diminish the value of their theory because it "works," in the sense that it generates
valid predictions….
Most important, philosophers of science have almost universally rejected Friedman's
position (Boland, 1979). It is very widely agreed that the purpose of a theory is to explain.
Otherwise, [predictions] are unable to foretell under what conditions they will continue to
hold or fail.
AMITAI ETZIONI, The Moral Dimension
With the advent of the Great Financial Crisis, which began in 2007 and continues to this
day, the neoclassical models did fail. And they failed in the most spectacular way.
Nevertheless, for those like Krugman who are in love with orthodox economic theory, when
facts don't conform to theory, so much worse for the facts.
It should be added that not everyone who rejects the orthodox, neoclassical theory of exogenous
money creation and its "available funds" theory of banking, as Keen calls it, believes that debt
matters.
A very good example of this is the MMT school, which even though it rejects
the orthodox theory of money creation, nevertheless discounts the importance of debt, or at least
public debt.
The distinction between private debt and public debt, however, is not a clear one. We all
saw, for instance, the ease with which private debt was converted into public debt in the cases
of Ireland and Spain in the wake of the GFC.
Krugman does hold relatively mainstream views, but there are significant differences
of opinion within economics. Many economists reject Keynesian theory, Krugman does not. The
piece that VK posted by Keen was essentially a rejection of the macroeconomic theory that was
formulated to replace Keynesian theory. Krugman would make many of the exact same criticisms.
The "debt doesn't matter" theme is carried a little too far, nobody really argues this. The
argument is that when the economy is doing poorly due to low aggregate demand (during a severe
recession) and monetary policy is not effective because interest rates are near zero (so that
the federal funds rate cannot be lowered any further), cutting fiscal deficits is poor public
policy.
Are you unaware of the famous debate between Krugman and Keen, and what it is all about?
Perhaps this article by Ann Pettifor will help:
The debate between these two economists on the role of banking and specifically the
creation of credit is of fundamental importance in understanding the shortcomings of orthodox
economic thinking – and why it was so ill-equipped to handle, let alone predict, the crash
of 2008.
Many rightly applaud Paul Krugman for using his platform at the New York Times to defend
further fiscal stimulus in the US–against a hostile political crowd, not to mention the downright
opposition of neo-liberal economists –- and we commend him for that.
However, because he has such an important platform, it matters more to many monetary
economists (including the editor of this series) that he appears to lack a proper understanding
of the nature of credit, and the role of banks in the economy.
There are many of us who have studied beyond the introductory level. In my introductory
courses, I believe we were taught this correctly, but that was long ago, I know when I instructed
the introductory students as a grad student what I was teaching was essentially what I read in
the paper you cited. Perhaps the "textbooks" have improved over time, I haven't read an economics
textbook for many years.
Have you read any economics papers lately, perhaps there has been more progress than you think.
A fundamental problem with economics is that how we understand the workings of the economy can
affect the way people behave. People will always try to game the system and this then effects
the system. It is a difficult modelling problem not faced by chemists and physicists.
What economists think: Saver lends to borrower. Saver loses purchasing power, borrower
gains purchasing power. Purchasing power hasn't changed in the economy. Just a shift
Economists don't think this way at all. These kinds of lessons are often presented in introductory
economics courses to show how economists once thought things worked in 1803 when Say introduced
"Say's Law".
Then the economics professor goes on to explain how a modern economy actually works (which
we don't understand all that well.)
Generally speaking economic growth is considered a good thing, and banks lending to borrowers
that are likely to be able to repay the loan (not true leading up to the financial crisis due
to poor regulation and lending practices), is not a problem in a well regulated banking sector
(in the US this went away in the 1980s).
So yes debt is a big problem with a poorly regulated banking industry (financial industry
really because of shadow banking).
Debt is like a lot of things in life, too much or too little can be a bad thing.
The central bank can certainly influence the amount of lending by raising interest rates, as
long as inflation is moderate, there is not much reason to do so.
Many studies of the Eurozone crisis focus on peripheral European states' current account deficits,
or German neo-mercantilist policies that promoted export surpluses. However, German financialization
and input on the eurozone's financial architecture promoted deficits, increased systemic risk, and
facilitated the onset of Europe's subsequent crises.
Increasing German financial sector competition
encouraged German banks' increasing securitization and participation in global capital markets. Regional
liberalization created new marketplaces for German finance and increased crisis risk as current accounts
diverged between Europe's core and periphery. After the global financial crisis of 2008, German losses
on international securitized assets prompted retrenchment of lending, paving the way for the eurozone's
sovereign debt crisis. Rethinking how financial liberalization facilitated German and European financial
crises may prevent the eurozone from repeating these performances in the future.
After the 1970s, German banks' trading activity came to surpass lending as the largest share of
assets, while German firms increasingly borrowed in international capital markets rather than from
domestic banks. Private banks alleged that political subsidies and higher credit ratings for Landesbanks, public banks that insured household, small enterprise, and local banks' access
to capital, were unfair, and, in response, German lawmakers eliminated state guarantees for public
banks. Landesbanks, despite their historic role as stable, non-profit, providers of credit,
consequently had to compete with Germany's largest private banks for business. Changes in competition
restructured the German financial system. Mergers and takeovers occurred, especially in commercial
banks and Landesbanks. German financial intermediation ratios-total financial assets of
financial corporations divided by the total financial assets of the economy-increased. Greater securitization
and shadow banking relative to long-term lending increased German propensity for financial crisis,
as securities, shares, and securitized debt constituted increasing percentages of German banks' assets
and liabilities.
Throughout this period, Germany lacked a centralized financial regulatory apparatus. Only in 2002
did the country's central bank, the Bundesbank, establish the Bundenstalt für Finanzdienstleistungsaufsicht
(Federal Financial Supervisory Authority, known as BaFin), which consolidated the responsibilities
of three agencies to oversee the whole financial sector. However, neither institution could keep
pace with new sources of financial and economic instability. German banking changes continued apace
and destabilizing trends in banking grew.
German desire for financial liberalization at the European level, meanwhile, helped increase potential
systemic risk of European finance. Despite some European opposition to removing barriers to capital
and trade flows, Germany prevailed in setting these preconditions for membership in the European
economic union. Germany's negotiating power stemmed from its strong currency, as well as French,
Italian, and smaller European economies' desire for currency stability. Germany demanded an independent
central bank for the union, removal of capital controls, and an expansion of the tasks banks could
perform within the Economic and Monetary Union (EMU). The Second Banking Coordination Directive (SBCD)
mandated that banks perform commercial and investment intermediation to be certified within the EMU;
the Single Market Passport (SMP) required free trade and capital flows throughout the EMU. The SMP
and SBCD increased the scope of activity that financial institutions throughout the union were expected
to provide, and opened banks up to markets, instruments, and activities they could neither monitor
nor regulate, and hence to destabilizing shocks.
Intra-EMU lending and borrowing subsequently increased, and total lending and borrowing grew relative
to European countries' GDP from the early 1990s onward. Asymmetries emerged in capital flows between
Europe's core, particularly the UK, Germany, and the Netherlands, to Europe's newly liberalized periphery.
German banks lent increasing volumes to EMU member states, especially peripheral states. Though this
lending on a country-by-country basis was a small percentage of Germany's GDP, it constituted larger
percentages of borrowers' GDPs. In 2007, Germany lent 1.23% of its GDP to Portugal; this represented
17.68% of Portugal's GDP; in 2008, Germany lent 6% of its GDP to Ireland; this was 84% of Irish GDP.
Germany, the largest European economy, lent larger percentages of its GDP to peripheral EMU nations
relative to its lending to richer European economies. These flows, more potentially disruptive for
borrowers than for the lender, reflected lack of oversight in asset management. German lending helped
destabilize European financial systems more vulnerable to rapid capital inflows, and created conditions
for large-scale capital flight in a crisis.
Financial competition increased in Europe over this period. Financial merger activity first accelerated
within national borders, and later grew at supra-national levels. These movements increased eurozone
access to capital, but increased pressure for banks to widen the scope of the services and lending
that they provided. Rising European securitization in this period increased systemic risk for the
EMU financial system. European holdings of U.S.-originated asset-backed securities increased by billions
of dollars from the early 2000s until shortly before 2008. German banks were among the EMU's top
issuers and acquirers of such assets. As banks' holdings of these assets increased, European systemic
risk increased as well.
European total debt as a percentage of GDP rose in this period. Financial debt relative to GDP
grew particularly sharply in core economies; Ireland was the only peripheral EMU economy with comparable
levels of financial debt. Though government debt relative to GDP fell or held constant for most EMU
nations, cross-border acquisition of sovereign debt increased until 2007. German banks acquired substantially
larger portfolios of sovereign debt issued by other European states, which would not decrease until
2010. Only in 2009 did government debt relative to GDP increase throughout the eurozone, as governments
guaranteed their financial systems to minimize the costs of the ensuing financial crisis.
The newly liberalized financial architecture of the eurozone increased both the market for German
financial services and overall systemic risk of the European financial system; these dynamics helped
destabilize the German financial system and economy at large. Rising German exports of goods, services,
and capital to the rest of Europe grew the German economy, but divergence of current account balances
within the EMU exposed it to sovereign debt risk in peripheral states. Potential systemic risk changed
into systemic risk after the subprime mortgage crisis began. EMU economies would not have subsequently
experienced such pressure to backstop national financial systems or to repay sovereign loans had
German banks not lent so much or purchased so many sovereign bonds within the union. Narratives that
fail to acknowledge Germany's role in promoting the circumstances that underlay the eurozone crisis
ignore the destabilizing power of financial liberalization, even for a global financial center like
Germany.
susan the other, December 3, 2015 at 1:06 pm
This is very interesting. It describes just how the EU mess unfolded beginning in 1970 with
deregulation of the financial industry in the core. Big fish eat little fish. It is as if for
4 decades the banks in Germany compensated their losses to the bigger international lenders by
taking on the riskier borrowers and were able to do so because of German mercantilism and financial
deregulation. Like the German domestic banks loaned the periphery money with abandon, and effectively
borrowed their own profits by speculating on bad customers. As German corporations did business
with big international banksters, who lent at lower rates, other German banks resorted to buying
the sovereign bonds of the periphery and selling CDOs, etc. The German banks were as over-extended
looking for profit as consumers living on their credit cards. Deregulation enriched only the biggest
international banks. We could call this behavior a form of digging your own grave. In 2009 the
periphery saw their borrowing costs threatened and guaranteed their own financial institutions
creating the "sovereign debt" that the core then refused to touch. Hypocrisy ruled. Generosity
was in short supply. The whole thing fell apart. Deregulation was just another form of looting.
washunate, December 3, 2015 at 1:28 pm
German losses on international securitized assets prompted retrenchment of lending, paving
the way for the eurozone's sovereign debt crisis.
I agree with the general conclusion at the end that German financialization is part of the overall
narrative of EMU, but I don't follow this specific link in the chain of events as described. The
eurozone has a sovereign debt crisis because those sovereign governments privatized the profits
and socialized the losses of a global system of fraud. And if we're assigning national blame,
it's a system run out of DC, NY, and London a lot more than Berlin, Frankfurt, and Brussels.
Current and capital account imbalances cancel each other out in the overall balance of payments.
As bank lending decreases (capital account surplus shrinks) then the current account deficit shrinks
as well (the 'trade deficit'). The problem is when governments step in and haphazardly backstop
some of the losses – at least, when they do so without imposing taxes on the wealthy to a sufficient
degree to pay for these bailouts.
The OECD's Base Erosion and Profit Shifting (BEPS) initiative is an effort by the G20 to curb the
abuse of transfer pricing by multinationals.
Senator Hatch is not a fan:
Throughout this process we have heard concerns from large sectors of the business community that
the BEPS project could be used to further undermine our nation's competitiveness and to unfairly
subject U.S. companies to greater tax liabilities abroad. Companies have also been concerned about
various reporting requirements that could impose significant compliance costs on American businesses
and force them to share highly sensitive proprietary information with foreign governments. I expect
that we'll hear about these concerns from the business community and others during today's hearing.
Indeed we heard from some lawyer representing
The Software Coalition who was there to mansplain to us how BEPS is evil. I learned two startling
things. First – Bermuda must be part of the US tax base. Secondly, if Google is expected to pay taxes
in the UK, it will take all those 53,600 jobs which are mainly in California and move them to Bermuda:
in particular how the changes to the international tax rules as developed under BEPS will significantly
reduce the U.S. tax base and create disincentives for U.S. multinational corporations (MNCs) to
create R&D jobs in the United States
Yes – I find his testimony absurd at so many levels. Let's take Google as an example. When they say
foreign subsidiaries – think Bermuda. Over the past three year, Google's income has average $15.876
billion per year but its income taxes have only average $2.933 billion for an effective tax rate
of only 18.5%. How did that happen? Well – 55% of its income is sourced to these foreign subsidiaries
and the average tax rate on this income is only 6.5%. Nice deal! Google's tax model is not only easy
to explain but is also a very common one for those in the Software Coalition. While all of the R&D
is done in the U.S. and 45% of its sales are in the U.S. – U.S. source income is only 45% of worldwide
income. Very little of the foreign sourced income ends up in places like the UK even 11% of Google's
sales are to UK customers. Only problem is that income ends up on Ireland's books with the UK getting
a very modest amount of the profits. Now you might be wondering how Google got to the foreign taxes
to be only 6.5% of foreign sourced income since Ireland's tax rate is 12.5%. But think Double Irish
Dutch Sandwich and you'll get how the profits ended up in Bermuda as well as perhaps a good lunch!
But what about that repatriation tax you ask. Google's most recent 10-K proudly notes:
"We have not provided U.S. income taxes and foreign withholding taxes on the undistributed earnings
of foreign subsidiaries".
In other words, they are not paying that repatriation tax. Besides the Republicans want to eliminate.
Let's be honest – Congress has hamstringed the IRS efforts to enforce transfer pricing. The BEPS
initiative arose out of this failure. And now the Republicans in Congress are objecting to even these
efforts. And if Europe has the temerity of expecting its fair share of taxes, U.S. multinationals
will leave California and relocate in Bermuda? Who is this lawyer kidding?
Myrtle Blackwood
The development model in nation after nation is dependent upon global corporations. What is happening
is simply a byproduct of this.
Would the problem of transfer mythical corporate location and the resulting lost taxes be resolved
if taxes were based on point of revenue? Tax gross income where it is earned instead of taxing
profits where they are not earned.
"... Kristol argues in his book The Neoconservative Persuasion that those Jewish intellectuals
did not forsake their heritage (revolutionary ideology) when they gave up Communism and other revolutionary
movements, but had to make some changes in their thinking. America is filled with such former Trotskyists
who unleashed an unprecedented foreign policy that led to the collapse of the American economy. ..."
"... Noted Australian economist John Quiggin declares in his recent work Zombie Economics that
"Ideas are long lived, often outliving their originators and taking new and different forms. Some ideas
live on because they are useful. Others die and are forgotten. But even when they have proved themselves
wrong and dangerous, ideas are very hard to kill. Even after the evidence seems to have killed them,
they keep on coming back. ..."
"... These ideas are neither alive nor dead; rather…they are undead, or zombie, ideas." Bolshevism
or Trotskyism is one of those zombie ideas that keeps coming back in different forms. It has ideologically
reincarnated in the political disputations of the neoconservative movement. ..."
"... As soon as the Israel Lobby came along, as soon as the neoconservative movement began to
shape U.S. foreign policy, as soon as Israel began to dictate to the U.S. what ought to be done in the
Middle East, America was universally hated by the Muslim world. ..."
"... In that sense, the neoconservative movement as a political and intellectual movement represents
a fifth column in the United States in that it subtly and deceptively seeks to undermine what the Founding
Fathers have stood for and replace it with what the Founding Fathers would have considered horrible
foreign policies-policies which have contributed to the demise of the respect America once had. ..."
"... For example, when two top AIPAC officials-Steven Rosen and Keith Weissman-were caught passing
classified documents from the Pentagon to Israel, Gabriel Schoenfeld defended them. ..."
"... Israel has been spying on the United States for years using various Israeli or Jewish individuals,
including key Jewish neoconservative figures such as Paul Wolfowitz and Douglas Feith, who were under
investigation for passing classified documents to Israel. ..."
Kristol argues in his book The Neoconservative Persuasion that those Jewish intellectuals
did not forsake their heritage (revolutionary ideology) when they gave up Communism and other revolutionary
movements, but had to make some changes in their thinking. America is filled with such former Trotskyists
who unleashed an unprecedented foreign policy that led to the collapse of the American economy.
We have to keep in mind that America and much of the Western world were scared to death of Bolshevism
and Trotskyism in the 1920s and early 30s because of its subversive activity.
Noted Australian economist John Quiggin declares in his recent work Zombie Economics that
"Ideas are long lived, often outliving their originators and taking new and different forms. Some
ideas live on because they are useful. Others die and are forgotten. But even when they have proved
themselves wrong and dangerous, ideas are very hard to kill. Even after the evidence seems to have
killed them, they keep on coming back.
These ideas are neither alive nor dead; rather…they are undead, or zombie, ideas." Bolshevism
or Trotskyism is one of those zombie ideas that keeps coming back in different forms. It has ideologically
reincarnated in the political disputations of the neoconservative movement.
... ... ...
As it turns out, neoconservative think tanks such as the American Enterprise Institute are largely
extensions of Trotskyism with respect to foreign policy. Other think tanks such as the Bradley Foundation
were overtaken by the neoconservative machine back in 1984.
Some of those double agents have been known to have worked with Likud-supporting Jewish groups
such as the Jewish Institute for National Security Affairs, an organization which has been known
to have "co-opted" several "non-Jewish defense experts by sending them on trips to Israel. It flew
out the retired general Jay Garner, now slated by Bush to be proconsul of occupied Iraq."
Philo-Semitic scholars Stephen Halper of Cambridge University and Jonathan Clarke of the CATO
Institute agree that the neoconservative agendas "have taken American international relations on
an unfortunate detour," which is another way of saying that this revolutionary movement is not what
the Founding Fathers signed up for, who all maintained that the United States would serve the American
people best by not entangling herself in alliances with foreign entities.
As soon as the Israel Lobby came along, as soon as the neoconservative movement began to shape
U.S. foreign policy, as soon as Israel began to dictate to the U.S. what ought to be done in the
Middle East, America was universally hated by the Muslim world.
Moreover, former secretary of defense Robert Gates made it clear to the United States that the
Israelis do not and should not have a monopoly on the American interests in the Middle East. For
that, he was chastised by neoconservative Elliott Abrams.
In that sense, the neoconservative movement as a political and intellectual movement represents
a fifth column in the United States in that it subtly and deceptively seeks to undermine what the
Founding Fathers have stood for and replace it with what the Founding Fathers would have considered
horrible foreign policies-policies which have contributed to the demise of the respect America once
had.
... ... ...
Israel has been spying on the United States for years using various Israeli or Jewish individuals,
including key Jewish neoconservative figures such as Paul Wolfowitz and Douglas Feith, who were under
investigation for passing classified documents to Israel.
The FBI has numerous documents tracing Israel's espionage in the U.S., but no one has come forward
and declared it explicitly in the media because most political pundits value mammon over truth.
For example, when two top AIPAC officials-Steven Rosen and Keith Weissman-were caught passing
classified documents from the Pentagon to Israel, Gabriel Schoenfeld defended them.
In the annual FBI report called "Foreign Economic Collection and Industrial Espionage," Israel
is a major country that pops up quite often. This is widely known among CIA and FBI agents and U.S.
officials for years.
One former U.S. intelligence official declared, "There is a huge, aggressive, ongoing set of
Israeli activities directed against the United States. Anybody who worked in counterintelligence
in a professional capacity will tell you the Israelis are among the most aggressive and active
countries targeting the United States.
They undertake a wide range of technical operations and human operations. People here as liaisons…
aggressively pursue classified intelligence from people. The denials are laughable."
Massive open online courses (MOOCs) are often characterized as remedies to educational disparities
related to social class. Using data from 68 MOOCs offered by Harvard and MIT between 2012 and
2014, we found that course participants from the United States tended to live in more-affluent
and better-educated neighborhoods than the average U.S. resident. Among those who did register
for courses, students with greater socioeconomic resources were more likely to earn a certificate.
Furthermore, these differences in MOOC access and completion were larger for adolescents and young
adults, the traditional ages where people find on-ramps into science, technology, engineering,
and mathematics (STEM) coursework and careers. Our findings raise concerns that MOOCs and similar
approaches to online learning can exacerbate rather than reduce disparities in educational outcomes
related to socioeconomic status.
Lambert Strether, December 3, 2015 at 3:17 pm
That's not a bug. It's a feature.
jrs, December 3, 2015 at 5:40 pm
Well that's pretty much the same charge that could be leveled against most higher
education. It makes disparities worse, maybe less so community colleges, I don't know.
cwaltz, December 3, 2015 at 6:16 pm
I wonder how much of that is due to inability to access the web in neighborhoods that are
less affluent?
An online course isn't going to help me if mom or dad can't afford to pay for internet.
Bob Haugen, December 3, 2015 at 8:06 pm
Most education in the world now, whether in classrooms or MOOCs, is oriented toward
improving the personal capital of the upwardly striving. There is no "make yourself a better
citizen" or "improve your community" curriculum.
likbez, December 3, 2015 at 10:47 pm
"Most education in the world now, whether in classrooms or MOOCs, is oriented toward
improving the personal capital of the upwardly striving."
Very true. Thank you !
This is the essence of neoliberal transformation of the university education.
An old and close, but very conservative and increasingly out of touch with reality friend of
mine posted a video some days ago on Facebook. He indicated that he thought it was both funny
and also insightful. It seemed highly suspicious to me, so I googled it and found that the
person who uploaded it onto you tube stated in the comments on it that it is a spoof.
Here is a link that discusses why it is known it is a spoof as well as linking to the video itself
and its comments. It has reportedly been widely distributed on the internet by many conservatives
who think it is for real, and when I pointed out it is a spoof, my friend defriended me from Facebook.
I am frustrated.
So, for those who do not view it, it purports to show a talk show in Egypt
where a brief clip of Obama speaking last May to graduating military officers about how climate change
is and will be a serious national security issue, something the Pentagon has claimed. He did
not say it was the most serious such issue, and at least in the clip he said nothing about Daesh/ISIS/ISIL,
although of course he has said a lot about it and not only has US drones attacking it but reportedly
we have "boots on the ground" now against them in the form of some Special Ops.
So, the video then goes back to the supposed talk show where they are speaking in Arabic with
English subtitles. According to these subtitels, which are partly accurate translations but
also wildly inaccurate in many places (my Arabic is good enough that I have parsed out what is what
there) the host asks, "Is he insane?" A guest suggests he is on drugs. Another claims
he just does what Michelle says and that his biceps are small. Finally a supposed retired general
pounds the table and denounces him over Libya policy (that part is for real, although his name is
never mentioned) and suggests that Americans should act to remove him from office. Again,
conservative commentators have found hilarious and very insightful, with this even holding among
commenters to the video aware that it is a mistranslated spoof. Bring these guys on more.
Obviously they would be big hits on Fox News.
So, I would like to simply comment further on why Egyptians would be especially upset about Libya,
but that them being so against the US is somewhat hypocritical (I also note that there is reason
to believe that the supposed general is not a general). Of course Libya is just to the west
of Egypt with its eastern portion (Cyrenaica under Rome) often ruled by whomever was ruling Egypt
at various times in the past. So there is a strong cultural-historical connection. It
is understandable that they would take Libyan matters seriously, and indeed things in Libya have
turned into a big mess.
However, the move to bring in outside powers to intervene against Qaddafi in 2011 was instigated
by an Egyptian, Abu Moussa. This was right after Mubarak had fallen in the face of massive
demonstrations in Egypt. Moussa was both leader of the Arab League and wanting to run for President
of Egypt. He got nowhere with the latter, but he did get somewhere with getting
the rest of the world to intervene in Libya. He got the Arab League to support such an
intervention, with that move going to the UN Security Council and convincing Russia and China to
abstain on the anti-Qaddafi measure. Putin has since complained that those who intervened,
UK and France most vigorously with US "leading from behind" on the effort.went beyond the UN mandate.
But in any case, Qaddafi was overthrown, not to be replaced by any stable or central power, with
Libya an ongoing mess that has remained fragmented since, especially between its historically separate
eastern and western parts, something I have posted on here previously.
So, that went badly, but Egyptians blaming the US for this seems to me to be a bit much, pretty
hypocritical. It happens to be a fact that the US and Obama are now very unpopular in Egypt.
I looked at a poll from a few months ago, and the only nations where the US and Obama were viewed
less favorably (although a few not polled such as North Korea) were in order: Russia, Palestinian
Territories, Belarus, Lebanon, Iran, and Pakistan, with me suspecting there is now a more favorable
view in Iran since the culmination of the nuclear deal. I can appreciate that many Egyptians
are frustrated that the US supported an election process that did not give them Moussa or El-Baradei,
but the Muslim Brotherhood, who proceeded to behave badly, leading to them being overthrown by an
new military dictatorship with a democratic veneer, basically a new improved version of the Mubarak
regime, with the US supporting it, if somewhat reluctantly.
Yes, this is all pretty depressing, but I must say that ultimately the Egyptians are responsible
for what has gone down in their own nation. And even if those Egyptian commentators, whoever
they actually are, are as angry about Obama as they are depicted as being, the fact is that Obama
is still more popular there than was George W. Bush at the same time in his presidency, something
all these US conservatives so enamored of this bizarre video seem to conveniently forget.
Addenda, 5:10 PM:
1) The people on that video come across almost like The Three Stooges, which highlights
the comedic aspect that even fans of Obama are supposed to appreciate, although it does not add to
the credibility of the remarks of those so carrying on like a bunch of clowns.
2) Another reason Egyptians may be especially upset about the situation in Libya is that
indeed Daesh has a foothold in a port city not too far from the Egyptian border in Surt, as reported
as the top story today in the NY Times.
3) Arguably once the rest of the world got in, the big problem was a failure to follow
through with aiding establishing a central unified government, although that was always going to
be a problem, something not recognized by all too many involved, including Abu Moussa. As it
was once his proposal got going, it was then Sec. of State Hillary Clinton who was the main person
leading the charge for the US to get in over the reluctance of Obama. This was probably her
biggest mistake in all this, even though most Republicans think the irrelevant sideshow of the unfortunate
incident in Benghazi is the big deal.
4) Needless to say, Republican views at the time of the intervention were just completely
incoherent, as symbolized at one point by Senator Lindsey Graham, who within the space of a single
sentence simultaneously argued for the US to do nothing and also to go in full force with the proverbial
"boots on the ground."
Further Addendum, 7:10 PM:
One of the pieces of evidence given that supposedly shows that the video
is a spoof is that the supposed retired Brigadier General Mahmoud Mansour cannot be found if
one googles his name, except in connection with this video. There are some other Egyptians
named Mansour who show up, but this guy does not. However, it occurs to me that he might be
for real, but simply obscure. After all, Brigadier is the lowest rank of General, one star,
with Majors being two star, Lieutenants being three star (even though Majors are above Lieutenants),
and with four and five star not having any other rank assigned to them. Furthermore, Egypt
has a large military that has run the country for decades, so there may well be a lot of these Brigadier
Generals, with many of them amounting to nothing. So, if he is for real, his claim to fame
will be from jumping up and down, pounding on a table and calling for the overthrow of the POTUS.
"... Let's compare donations from people who work at Bank of America, JP Morgan Chase, Morgan Stanley, Wells Fargo, Citigroup and Goldman Sachs to Hillary Clinton and Bernie Sanders. Hillary Clinton, has received $495,503.60 from people who work on Wall Street Bernie Sanders, has received only $17,107.72. Hillary Clinton may have Wall Street, ..."
"... The false promise of meritocracy was most disappointing. It basically said that meritocracy is hard to do, but never evaluates whether it is the right thing to do. Hint - it isn't enough. We need to worry about (relative) equality of outcome not just (relative) equality of opportunity. An equal chance to starve is still an equal chance. ..."
"... Making economies games is how you continued rigged distribution apparatus. Question all "rules"! ..."
When it comes to Wall Street buying our democracy, you just need to follow the money. Let's
compare donations from people who work at Bank of America, JP Morgan Chase, Morgan Stanley, Wells
Fargo, Citigroup and Goldman Sachs to Hillary Clinton and Bernie Sanders. Hillary Clinton, has
received $495,503.60 from people who work on Wall Street Bernie Sanders, has received only $17,107.72.
Hillary Clinton may have Wall Street, But Bernie has YOU! Bernie has received more than 1.5
million contributions from folks like you, at an average of $30 each.
To be fair, don't you think we should count donations for this election cycle for Clinton?
Y'know,
she was the Senator from New York.
pgl -> EMichael,
Some people think anyone from New York is in bed with Wall Street. Trust me on this one - not
everyone here in Brooklyn is in Jamie Dimon's hip pocket. Of course those alleged liberals JohnH
uses as his sources (e.g. William Cohan) are in Jamie Dimon's hip pocket.
EMichael -> pgl,
I hate things like this. No honesty whatsoever. This cycle.
The total for Morgan Stanley, JP Morgan and Bank of America
is $326,000.
That leaves Wells Fargo, Citigroup and Goldman Sachs to contribute $169,000.
EMichael -> RGC,
I stand corrected, somewhat.
Let me know how much comes from those organizations PACs.
reason said,
The false promise of meritocracy was most disappointing. It basically said that meritocracy
is hard to do, but never evaluates whether it is the right thing to do. Hint - it isn't enough.
We need to worry about (relative) equality of outcome not just (relative) equality of opportunity.
An equal chance to starve is still an equal chance.
ilsm -> reason,
Making economies games is how you continued rigged distribution apparatus. Question all
"rules"!
"... ...It might seem counterintuitive that lack of access to credit results in delinquency-seemingly a problem of "too much debt." But in fact, lack of access to credit and delinquency are two sides of the same coin. Nearly everyone needs access to credit markets to meet basic economic needs, and if they can't get loans through competitive, transparent financial networks, poor people are more likely to be subjected to exploitative credit arrangements in the form of very high rates and other onerous terms and penalties, including on student loans. That disadvantage interacts with and is magnified by their lack of labor market opportunities. The result is exactly what we see across time and space: high delinquency rates for those with the least access to credit markets. ..."
The geography of student debt is very different than the geography of delinquency. Take the Washington, D.C. metro region. In
zip codes with high average loan balances (western and central Washington, D.C.), delinquency rates are lower. Within the District
of Columbia, median income is highest in these parts of the city. Similar results–low delinquency rates in high-debt areas–can be
seen for Chicago, as well. (See Figure 1.)
...What explains this relationship? There appear to be two possible, and mutually consistent, theories. First, although graduate
students take out the largest student loans, they are able to carry large debt burdens thanks to their higher salaries post-graduation.
Second, the rise in the number of students borrowing relatively small amounts for
for-profit colleges has augmented the cumulative debt load, but because these borrowers face poor labor market outcomes and lower
earnings upon graduation (if they do in fact graduate),
their
delinquency rates are much higher. This is further complicated by the fact that these for-profit college attendees generally
come from lower-income families who may not be able to help with loan repayments.
The inverse relationship between delinquency and income is not surprising, especially when considering that problems of credit
access have disproportionately affected poor and minority populations in the past.
...It might seem counterintuitive that lack of access to credit results in delinquency-seemingly a problem of "too much debt."
But in fact, lack of access to credit and delinquency are two sides of the same coin. Nearly everyone needs access to credit markets
to meet basic economic needs, and if they can't get loans through competitive, transparent financial networks, poor people are more
likely to be subjected to exploitative credit arrangements in the form of very high rates and other onerous terms and penalties,
including on student loans. That disadvantage interacts with and is magnified by their lack of labor market opportunities. The result
is exactly what we see across time and space: high delinquency rates for those with the least access to credit markets.
...For user-friendliness, we assign each of these student debt scale variables a qualitative category. If average loan balance
on the map is "somewhat high," for example, then it means that a zip code's average loan balance is between 25 and 35 percent higher
than the national average of $24,271. Similarly, if the delinquency reads "very low," it corresponds to a scale level between 0.067
and 0.091.
Figure 6 summarizes the relationship between each of the scale variables' levels and their qualitative description.
Americans are,
compared
with populations of other countries, particularly enthusiastic about the idea of meritocracy, a system
that rewards merit (ability
+ effort) with success. Americans are
more likely to believe that people are rewarded for their intelligence and skills and are less
likely to believe that family wealth plays a key role in getting ahead. And Americans' support for
meritocratic principles has
remained
stable over the last two decades despite growing economic inequality, recessions, and the fact
that there is
less mobility in the United States than in most other industrialized countries.
This strong
commitment to meritocratic ideals can lead to suspicion of efforts that aim to support particular
demographic groups. For example,
initiatives designed to recruit or provide development opportunities to under-represented groups
often come under attack as "reverse discrimination." Some companies even
justify
not having diversity policies by highlighting their commitment to meritocracy. If a company evaluates
people on their skills, abilities, and merit, without consideration of their gender, race, sexuality
etc., and managers are objective in their assessments then there is no need for diversity policies,
the thinking goes.
But is this true? Do commitments to meritocracy and objectivity lead to more fair workplaces?
Emilio J. Castilla, a professor
at MIT's Sloan School of Management, has explored how meritocratic ideals and HR practices like pay-for-performance
play out in organizations, and he's come to some unexpected conclusions.
In one company study,
Castilla examined almost 9,000 employees who worked as support-staff at a large service-sector company.
The company was committed to diversity and had implemented a merit-driven compensation system intended
to reward high-level performance and to reward all employees equitably.
But Castilla's analysis revealed some very non-meritocratic outcomes. Women, ethnic minorities,
and non-U.S.-born employees received a smaller increase in compensation compared with white men,
despite holding the same jobs, working in the same units, having the same supervisors, the same human
capital, and importantly, receiving the same performance score. Despite stating that "performance
is the primary bases for all salary increases," the reality was that women, minorities, and those
born outside the U.S. needed "to work harder and obtain higher performance scores in order to receive
similar salary increases to white men."
All this neoliberal talk about "maximizing shareholder value" is designed to hide a
redistribution mechanism of wealth up. Which is the essence of neoliberalism.
It's all about executive pay. "Shareholder value" is nothing then a ruse for
getting outsize bonuses but top execs. Stock buybacks is a form of asset-stripping,
similar to one practiced by buyout sharks, but practiced by internal management team.
Who cares if the company will be destroyed if you have a golden parachute ?
Notable quotes:
"... By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street . ..."
"... IBM has blown $125 billion on buybacks since 2005, more than the $111 billion it invested in capital expenditures and R D. It's staggering under its debt, while revenues have been declining for 14 quarters in a row. It cut its workforce by 55,000 people since 2012. ..."
"... Big-pharma icon Pfizer plowed $139 billion into buybacks and dividends in the past decade, compared to $82 billion in R D and $18 billion in capital spending. 3M spent $48 billion on buybacks and dividends, and $30 billion on R D and capital expenditures. They're all doing it. ..."
"... Nearly 60% of the 3,297 publicly traded non-financial US companies Reuters analyzed have engaged in share buybacks since 2010. Last year, the money spent on buybacks and dividends exceeded net income for the first time in a non-recession period. ..."
"... This year, for the 613 companies that have reported earnings for fiscal 2015, share buybacks hit a record $520 billion. They also paid $365 billion in dividends, for a total of $885 billion, against their combined net income of $847 billion. ..."
"... Buybacks and dividends amount to 113% of capital spending among companies that have repurchased shares since 2010, up from 60% in 2000 and from 38% in 1990. Corporate investment is normally a big driver in a recovery. Not this time! Hence the lousy recovery. ..."
"... Financial engineering takes precedence over actual engineering in the minds of CEOs and CFOs. A company buying its own shares creates additional demand for those shares. It's supposed to drive up the share price. The hoopla surrounding buyback announcements drives up prices too. Buybacks also reduce the number of outstanding shares, thus increase the earnings per share, even when net income is declining. ..."
"... But when companies load up on debt to fund buybacks while slashing investment in productive activities and innovation, it has consequences for revenues down the road. And now that magic trick to increase shareholder value has become a toxic mix. Shares of buyback queens are getting hammered. ..."
"... Me thinks Wolf is slightly barking up the wrong tree here. What needs to be looked at is how buy backs affect executive pay. "Shareholder value" is more often than not a ruse? ..."
"... Interesting that you mention ruse, relating to "buy-backs"…from my POV, it seems like they've legalized insider trading or engineered (a) loophole(s). ..."
"... On a somewhat related perspective on subterfuge. The language of "affordability" has proven to be insidiously clever. Not only does it reinforce and perpetuate the myth of "deserts", but camouflages the means of embezzling the means of distribution. Isn't distribution, really, the only rational purpose of finance, i.e., as a means of distribution as opposed to a means of embezzlement? ..."
"... buybacks *can* be asset-stripping and often are, but unless you tie capital allocation decisions closer to investment in the business such that they're mutually exclusive, this is specious and a reach. No one invests if they can't see the return. It would be just as easy to say that they're buying back stock because revenue is slipping and they have no other investment opportunities. ..."
"... Perhaps an analysis of the monopolistic positions of so many American businesses that allow them the wherewithal to underinvest and still buy back huge amounts of stock? If we had a more competitive economy, companies would have less ability to underinvest. Ultimately, I think buybacks are more a result than a cause of dysfunction, but certainly not always bad. ..."
"... One aspect that Reuters piece mentions, but glosses over with a single paragraph buried in the middle, is the fact that for many companies there are no ( or few) reasons to spend money in other ways. If capex/r d doesn't give you much return, why not buy out the shareholders who are least interested in holding your stock? ..."
"... Dumping money into R D is always risky, although different industries have different levels, and the "do it in-house" risk must be weighed against the costs of buying up companies with "proven" technologies. Thus, R D cash is hidden inside M A. M A is up 2-3 years in a row. ..."
By Wolf Richter, a San Francisco based executive,
entrepreneur, start up specialist, and author, with extensive international
work experience. Originally published at
Wolf Street.
Magic trick turns into toxic mix.
Stocks have been on a tear to nowhere this year. Now investors are
praying for a Santa rally to pull them out of the mire. They're counting on
desperate amounts of share buybacks that companies fund by loading up on
debt. But the magic trick that had performed miracles over the past few
years is backfiring.
And there's a reason.
IBM has blown $125 billion on buybacks since 2005, more than the $111
billion it invested in capital expenditures and R&D. It's staggering under
its debt, while revenues have been declining for 14 quarters in a row. It
cut its workforce by 55,000 people since 2012. And its stock is down 38%
since March 2013.
Big-pharma icon Pfizer plowed $139 billion into buybacks and dividends in
the past decade, compared to $82 billion in R&D and $18 billion in capital
spending. 3M spent $48 billion on buybacks and dividends, and $30 billion on
R&D and capital expenditures. They're all doing it.
"Activist investors" – hedge funds – have been clamoring for it. An
investigative report by Reuters, titled
The Cannibalized Company, lined some of them up:
In March, General Motors Co acceded to a $5 billion share buyback to
satisfy investor Harry Wilson. He had threatened a proxy fight if the
auto maker didn't distribute some of the $25 billion cash hoard it had
built up after emerging from bankruptcy just a few years earlier.
DuPont early this year announced a $4 billion buyback program – on top
of a $5 billion program announced a year earlier – to beat back activist
investor Nelson Peltz's Trian Fund Management, which was seeking four
board seats to get its way.
In March, Qualcomm Inc., under pressure from hedge fund Jana Partners,
agreed to boost its program to purchase $10 billion of its shares over
the next 12 months; the company already had an existing $7.8 billion
buyback program and a commitment to return three quarters of its free
cash flow to shareholders.
And in July, Qualcomm announced 5,000 layoffs. It's hard to innovate when
you're trying to please a hedge fund.
CEOs with a long-term outlook and a focus on innovation and investment,
rather than financial engineering, come under intense pressure.
"None of it is optional; if you ignore them, you go away," Russ Daniels,
a tech executive with 15 years at Apple and 13 years at HP, told Reuters.
"It's all just resource allocation," he said. "The situation right now is
there are a lot of investors who believe that they can make a better
decision about how to apply that resource than the management of the
business can."
Nearly 60% of the 3,297 publicly traded non-financial US companies
Reuters analyzed have engaged in share buybacks since 2010. Last year, the
money spent on buybacks and dividends exceeded net income for the first time
in a non-recession period.
This year, for the 613 companies that have reported earnings for fiscal
2015, share buybacks hit a record $520 billion. They also paid $365 billion
in dividends, for a total of $885 billion, against their combined net income
of $847 billion.
Buybacks and dividends amount to 113% of capital spending among companies
that have repurchased shares since 2010, up from 60% in 2000 and from 38% in
1990. Corporate investment is normally a big driver in a recovery. Not this
time! Hence the lousy recovery.
Financial engineering takes precedence over actual engineering in the
minds of CEOs and CFOs. A company buying its own shares creates additional
demand for those shares. It's supposed to drive up the share price. The
hoopla surrounding buyback announcements drives up prices too. Buybacks also
reduce the number of outstanding shares, thus increase the earnings per
share, even when net income is declining.
"Serving customers, creating innovative new products, employing workers,
taking care of the environment … are NOT the objectives of firms," sais Itzhak
Ben-David, a finance professor of Ohio State University, a buyback
proponent, according to Reuters. "These are components in the process that
have the goal of maximizing shareholders' value."
But when companies load up on debt to fund buybacks while slashing
investment in productive activities and innovation, it has consequences for
revenues down the road. And now that magic trick to increase shareholder
value has become a toxic mix. Shares of buyback queens are getting hammered.
Citigroup credit analysts looked into the extent to which this is
happening – and why. Christine Hughes, Chief Investment Strategist at
OtterWood Capital, summarized the Citi report this way: "This
dynamic of borrowing from bondholders to pay shareholders may be coming to
an end…."
Their chart (via OtterWood Capital) shows that about half of the
cumulative outperformance of these buyback queens from 2012 through 2014 has
been frittered away this year, as their shares, IBM-like, have swooned:
Mbuna, November 21, 2015 at 7:31 am
Me thinks Wolf is slightly barking up the wrong tree here. What needs to be
looked at is how buy backs affect executive pay. "Shareholder value" is more
often than not a ruse?
ng, November 21, 2015 at 8:58 am
probably, in some or most cases, but the effect on the stock is the same.
Alejandro, November 21, 2015 at 9:19 am
Interesting that you mention ruse, relating to "buy-backs"…from my POV,
it seems like they've legalized insider trading or engineered (a) loophole(s).
On a somewhat related perspective on subterfuge. The language of
"affordability" has proven to be insidiously clever. Not only does it reinforce
and perpetuate the myth of "deserts", but camouflages the means of embezzling
the means of distribution. Isn't distribution, really, the only rational
purpose of finance, i.e., as a means of distribution as opposed to a means of
embezzlement?
Jim, November 21, 2015 at 10:42 am
More nuance and less dogma please. The dogmatic tone really hurts what could
otherwise be a fine but more-qualified position.
"Results of all this financial engineering? Revenues of the S&P 500
companies are falling for the fourth quarter in a row – the worst such spell
since the Financial Crisis."
Eh, no. No question that buybacks *can* be asset-stripping and often
are, but unless you tie capital allocation decisions closer to investment in
the business such that they're mutually exclusive, this is specious and a
reach. No one invests if they can't see the return. It would be just as easy to
say that they're buying back stock because revenue is slipping and they have no
other investment opportunities.
Revenues are falling in large part because these largest companies derive an
ABSOLUTELY HUGE portion of their business overseas and the dollar has been
ridiculously strong in the last 12-15 months. Rates are poised to rise, and the
easy Fed-inspired rate arbitrage vis a vis stocks and "risk on" trade are
closing. How about a little more context instead of just dogma?
John Malone made a career out of financial engineering, something like 30%
annual returns for the 25 years of his CEO tenure at TCI. Buybacks were a huge
part of that.
Perhaps an analysis of the monopolistic positions of so many American
businesses that allow them the wherewithal to underinvest and still buy back
huge amounts of stock? If we had a more competitive economy, companies would
have less ability to underinvest. Ultimately, I think buybacks are more a
result than a cause of dysfunction, but certainly not always bad.
NeqNeq, November 21, 2015 at 11:44 am
One aspect that Reuters piece mentions, but glosses over with a single
paragraph buried in the middle, is the fact that for many companies there are
no ( or few) reasons to spend money in other ways. If capex/r&d doesn't give
you much return, why not buy out the shareholders who are least interested in
holding your stock?
Dumping cash into plants only makes sense in the places where the market is
growing. For many years that has meant Asia (China). For example, Apple gets
66% (iirc) of revenue from Asia, and that is where they have continued
investing in growth. If demand is slowing and costs are rising, and it looks
like both are true, why would you put even more money in?
Dumping money into R&D is always risky, although different industries have
different levels, and the "do it in-house" risk must be weighed against the
costs of buying up companies with "proven" technologies. Thus, R&D cash is
hidden inside M&A. M&A is up 2-3 years in a row.
"... As a rising economist at Harvard and at the World Bank, Summers argued for privatization and deregulation in many domains, including finance. Later, as deputy secretary of the treasury and then treasury secretary in the Clinton administration, he implemented those policies. Summers oversaw passage of the Gramm-Leach-Bliley Act, which repealed Glass-Steagall, permitted the previously illegal merger that created Citigroup, and allowed further consolidation in the financial sector. He also successfully fought attempts by Brooksley Born, chair of the Commodity Futures Trading Commission in the Clinton administration, to regulate the financial derivatives that would cause so much damage in the housing bubble and the 2008 economic crisis. He then oversaw passage of the Commodity Futures Modernization Act, which banned all regulation of derivatives, including exempting them from state antigambling laws. ..."
"... Over the past decade, Summers continued to advocate financial deregulation, both as president of Harvard and as a University Professor after being forced out of the presidency. During this time, Summers became wealthy through consulting and speaking engagements with financial firms. Between 2001 and his entry into the Obama administration, he made more than $20-million from the financial-services industry. (His 2009 federal financial-disclosure form listed his net worth as $17-million to $39-million.) ..."
"... In 2005, at the annual Jackson Hole, Wyo., conference of the worlds leading central bankers, the chief economist of the International Monetary Fund, Raghuram Rajan, presented a brilliant paper that constituted the first prominent warning of the coming crisis. Rajan pointed out that the structure of financial-sector compensation, in combination with complex financial products, gave bankers huge cash incentives to take risks with other peoples money, while imposing no penalties for any subsequent losses. Rajan warned that this bonus culture rewarded bankers for actions that could destroy their own institutions, or even the entire system, and that this could generate a full-blown financial crisis and a catastrophic meltdown. When Rajan finished speaking, Summers rose up from the audience and attacked him, calling him a Luddite, dismissing his concerns, and warning that increased regulation would reduce the productivity of the financial sector. (Ben Bernanke, Tim Geithner, and Alan Greenspan were also in the audience.) ..."
"... Over the past 30 years, the economics profession-in economics departments, and in business, public policy, and law schools-has become so compromised by conflicts of interest that it now functions almost as a support group for financial services and other industries whose profits depend heavily on government policy. The route to the 2008 financial crisis, and the economic problems that still plague us, runs straight through the economics discipline. And its due not just to ideology; its also about straightforward, old-fashioned money. ..."
"... Prominent academic economists (and sometimes also professors of law and public policy) are paid by companies and interest groups to testify before Congress, to write papers, to give speeches, to participate in conferences, to serve on boards of directors, to write briefs in regulatory proceedings, to defend companies in antitrust cases, and, of course, to lobby. This is now, literally, a billion-dollar industry. The Law and Economics Consulting Group, started 22 years ago by professors at the University of California at Berkeley (David Teece in the business school, Thomas Jorde in the law school, and the economists Richard Gilbert and Gordon Rausser), is now a $300-million publicly held company. Others specializing in the sale (or rental) of academic expertise include Competition Policy (now Compass Lexecon), started by Richard Gilbert and Daniel Rubinfeld, both of whom served as chief economist of the Justice Departments Antitrust Division in the Clinton administration; the Analysis Group; and Charles River Associates. ..."
"... I think it is interesting that Summers led the financial deregulation efforts of the Clinton administration and then made a bundle on Wall Street. I think that should be taken into account when evaluating his discussions of economics. ..."
"... It is difficult to get a man to understand something when his salary depends upon his not understanding it. ..."
The Obama administration recently announced that Larry Summers is resigning as director of
the National Economic Council and will return to Harvard early next year. His imminent departure
raises several questions: Who will replace him? What will he do next? But more important, it's
a chance to consider the hugely damaging conflicts of interest of the senior academic economists
who move among universities, government, and banking.
Summers is unquestionably brilliant, as all who have dealt with him, including myself, quickly
realize. And yet rarely has one individual embodied so much of what is wrong with economics, with
academe, and indeed with the American economy. For the past two years, I have immersed myself
in those worlds in order to make a film, Inside Job, that takes a sweeping look at the financial
crisis. And I found Summers everywhere I turned.
Consider: As a rising economist at Harvard and at the World Bank, Summers argued for privatization
and deregulation in many domains, including finance. Later, as deputy secretary of the treasury
and then treasury secretary in the Clinton administration, he implemented those policies. Summers
oversaw passage of the Gramm-Leach-Bliley Act, which repealed Glass-Steagall, permitted the previously
illegal merger that created Citigroup, and allowed further consolidation in the financial sector.
He also successfully fought attempts by Brooksley Born, chair of the Commodity Futures Trading
Commission in the Clinton administration, to regulate the financial derivatives that would cause
so much damage in the housing bubble and the 2008 economic crisis. He then oversaw passage of
the Commodity Futures Modernization Act, which banned all regulation of derivatives, including
exempting them from state antigambling laws.
After Summers left the Clinton administration, his candidacy for president of Harvard was championed
by his mentor Robert Rubin, a former CEO of Goldman Sachs, who was his boss and predecessor as
treasury secretary. Rubin, after leaving the Treasury Department-where he championed the law that
made Citigroup's creation legal-became both vice chairman of Citigroup and a powerful member of
Harvard's governing board.
Over the past decade, Summers continued to advocate financial deregulation, both as president
of Harvard and as a University Professor after being forced out of the presidency. During this
time, Summers became wealthy through consulting and speaking engagements with financial firms.
Between 2001 and his entry into the Obama administration, he made more than $20-million from the
financial-services industry. (His 2009 federal financial-disclosure form listed his net worth
as $17-million to $39-million.)
Summers remained close to Rubin and to Alan Greenspan, a former chairman of the Federal Reserve.
When other economists began warning of abuses and systemic risk in the financial system deriving
from the environment that Summers, Greenspan, and Rubin had created, Summers mocked and dismissed
those warnings. In 2005, at the annual Jackson Hole, Wyo., conference of the world's leading central
bankers, the chief economist of the International Monetary Fund, Raghuram Rajan, presented a brilliant
paper that constituted the first prominent warning of the coming crisis. Rajan pointed out that
the structure of financial-sector compensation, in combination with complex financial products,
gave bankers huge cash incentives to take risks with other people's money, while imposing no penalties
for any subsequent losses. Rajan warned that this bonus culture rewarded bankers for actions that
could destroy their own institutions, or even the entire system, and that this could generate
a "full-blown financial crisis" and a "catastrophic meltdown."
When Rajan finished speaking, Summers rose up from the audience and attacked him, calling him
a "Luddite," dismissing his concerns, and warning that increased regulation would reduce the productivity
of the financial sector. (Ben Bernanke, Tim Geithner, and Alan Greenspan were also in the audience.)
Soon after that, Summers lost his job as president of Harvard after suggesting that women might
be innately inferior to men at scientific work. In another part of the same speech, he had used
laissez-faire economic theory to argue that discrimination was unlikely to be a major cause of
women's underrepresentation in either science or business. After all, he argued, if discrimination
existed, then others, seeking a competitive advantage, would have access to a superior work force,
causing those who discriminate to fail in the marketplace. It appeared that Summers had denied
even the possibility of decades, indeed centuries, of racial, gender, and other discrimination
in America and other societies. After the resulting outcry forced him to resign, Summers remained
at Harvard as a faculty member, and he accelerated his financial-sector activities, receiving
$135,000 for one speech at Goldman Sachs.
Then, after the 2008 financial crisis and its consequent recession, Summers was placed in charge
of coordinating U.S. economic policy, deftly marginalizing others who challenged him. Under the
stewardship of Summers, Geithner, and Bernanke, the Obama administration adopted policies as favorable
toward the financial sector as those of the Clinton and Bush administrations-quite a feat. Never
once has Summers publicly apologized or admitted any responsibility for causing the crisis. And
now Harvard is welcoming him back.
Summers is unique but not alone. By now we are all familiar with the role of lobbying and campaign
contributions, and with the revolving door between industry and government. What few Americans
realize is that the revolving door is now a three-way intersection. Summers's career is the result
of an extraordinary and underappreciated scandal in American society: the convergence of academic
economics, Wall Street, and political power.
Starting in the 1980s, and heavily influenced by laissez-faire economics, the United States
began deregulating financial services. Shortly thereafter, America began to experience financial
crises for the first time since the Great Depression. The first one arose from the savings-and-loan
and junk-bond scandals of the 1980s; then came the dot-com bubble of the late 1990s, the Asian
financial crisis; the collapse of Long Term Capital Management, in 1998; Enron; and then the housing
bubble, which led to the global financial crisis. Yet through the entire period, the U.S. financial
sector grew larger, more powerful, and enormously more profitable. By 2006, financial services
accounted for 40 percent of total American corporate profits. In large part, this was because
the financial sector was corrupting the political system. But it was also subverting economics.
Over the past 30 years, the economics profession-in economics departments, and in business,
public policy, and law schools-has become so compromised by conflicts of interest that it now
functions almost as a support group for financial services and other industries whose profits
depend heavily on government policy. The route to the 2008 financial crisis, and the economic
problems that still plague us, runs straight through the economics discipline. And it's due not
just to ideology; it's also about straightforward, old-fashioned money.
Prominent academic economists (and sometimes also professors of law and public policy) are
paid by companies and interest groups to testify before Congress, to write papers, to give speeches,
to participate in conferences, to serve on boards of directors, to write briefs in regulatory
proceedings, to defend companies in antitrust cases, and, of course, to lobby. This is now, literally,
a billion-dollar industry. The Law and Economics Consulting Group, started 22 years ago by professors
at the University of California at Berkeley (David Teece in the business school, Thomas Jorde
in the law school, and the economists Richard Gilbert and Gordon Rausser), is now a $300-million
publicly held company. Others specializing in the sale (or rental) of academic expertise include
Competition Policy (now Compass Lexecon), started by Richard Gilbert and Daniel Rubinfeld, both
of whom served as chief economist of the Justice Department's Antitrust Division in the Clinton
administration; the Analysis Group; and Charles River Associates.
In my film you will see many famous economists looking very uncomfortable when confronted with
their financial-sector activities; others appear only on archival video, because they declined
to be interviewed. You'll hear from:
Martin Feldstein, a Harvard professor, a major architect of deregulation in the Reagan administration,
president for 30 years of the National Bureau of Economic Research, and for 20 years on the boards
of directors of both AIG, which paid him more than $6-million, and AIG Financial Products, whose
derivatives deals destroyed the company. Feldstein has written several hundred papers, on many
subjects; none of them address the dangers of unregulated financial derivatives or financial-industry
compensation.
Glenn Hubbard, chairman of the Council of Economic Advisers in the first George W. Bush administration,
dean of Columbia Business School, adviser to many financial firms, on the board of Metropolitan
Life ($250,000 per year), and formerly on the board of Capmark, a major commercial mortgage lender,
from which he resigned shortly before its bankruptcy, in 2009. In 2004, Hubbard wrote a paper
with William C. Dudley, then chief economist of Goldman Sachs, praising securitization and derivatives
as improving the stability of both financial markets and the wider economy.
Frederic Mishkin, a professor at the Columbia Business School, and a member of the Federal
Reserve Board from 2006 to 2008. He was paid $124,000 by the Icelandic Chamber of Commerce to
write a paper praising its regulatory and banking systems, two years before the Icelandic banks'
Ponzi scheme collapsed, causing $100-billion in losses. His 2006 federal financial-disclosure
form listed his net worth as $6-million to $17-million.
Laura Tyson, a professor at Berkeley, director of the National Economic Council in the Clinton
administration, and also on the Board of Directors of Morgan Stanley, which pays her $350,000
per year.
Richard Portes, a professor at London Business School and founding director of the British
Centre for Economic Policy Research, paid by the Icelandic Chamber of Commerce to write a report
praising Iceland's financial system in 2007, only one year before it collapsed.
And John Campbell, chairman of Harvard's economics department, who finds it very difficult
to explain why conflicts of interest in economics should not concern us.
But could he be right? Are these professors simply being paid to say what they would otherwise
say anyway? Unlikely. Mishkin and Portes showed no interest whatever in Iceland until they were
paid to do so, and they got it totally wrong. Nor do all these professors seem to make policy
statements contrary to the financial interests of their clients. Even more telling, they uniformly
oppose disclosure of their financial relationships.
The universities avert their eyes and deliberately don't require faculty members either to
disclose their conflicts of interest or to report their outside income. As you can imagine, when
Larry Summers was president of Harvard, he didn't work too hard to change this.
Now, however, as the national recovery is faltering, Summers is being eased out while Harvard
is welcoming him back. How will the academic world receive him? The simple answer: Better than
he deserves.
While making my film, we wrote to the presidents and provosts of Harvard, Columbia, and other
universities with detailed questions about their conflict-of-interest policies, requesting interviews
about the subject. None of them replied, except to refer us to their Web sites.
Yeah, after an economist has had one job in the government; one job in the banking system; and
one teaching job he should be required to stop working as an economist.
RGC said in reply to EMichael...
I think it is interesting that Summers led the financial deregulation efforts of the Clinton administration
and then made a bundle on Wall Street. I think that should be taken into account when evaluating
his discussions of economics.
EMichael said in reply to RGC...
Of course it should.
At the same time this is not taking anything into account, this is about
"subverting" economics.
Can you make a case that the only reason Summers made a "bundle" working on Wall Street is
because of the financial deregulation efforts he made? Last time I looked he did not have a vote
on the legislation.
RGC said in reply to EMichael...
I think this is especially troubling for the economics profession:
"Over the past 30 years,
the economics profession-in economics departments, and in business, public policy, and law schools-has
become so compromised by conflicts of interest that it now functions almost as a support group
for financial services and other industries whose profits depend heavily on government policy.
The route to the 2008 financial crisis, and the economic problems that still plague us, runs straight
through the economics discipline. And it's due not just to ideology; it's also about straightforward,
old-fashioned money."
EMichael said in reply to RGC...
Cause no economists actually believed in any of the policies that caused all of those things nor
did any economist fail to vote for the policies adopted.
RGC said in reply to EMichael...
Upton Sinclair:
"It is difficult to get a man to understand something when his salary depends
upon his not understanding it."
Tom aka Rusty said in reply to RGC...
As Hemingway and F. SCott Fitzgerald exchanged in their writings (the reputed face-to-face conversation
may not have happened):
The rich are different.
Yes, they have more money.
Combine elite and rich and you get a toxic combination.
Before death in Libya....Ghadaffi's crime was in "not playing along and selling out". Kinda
like Iraq and all. They all should just hand over everything and say thanks...but they did
not . There is disinfo on both sides, But the "madman" and people who actually live there never
seem to make the NYTimes.
"For 40 years, or was it longer, I can't remember, I did all I could to give people houses, hospitals,
schools, and when they were hungry, I gave them food. I even made Benghazi into farmland from the
desert, I stood up to attacks from that cowboy Reagan, when he killed my adopted orphaned daughter,
he was trying to kill me, instead he killed that poor innocent child. Then I helped my brothers and
sisters from Africa with money for the African Union.
I did all I could to help people understand the concept of real democracy, where people's committees
ran our country. But that was never enough, as some told me, even people who had 10 room homes, new
suits and furniture, were never satisfied, as selfish as they were they wanted more. They told Americans
and other visitors, that they needed "democracy" and "freedom" never realizing it was a cut throat
system, where the biggest dog eats the rest, but they were enchanted with those words, never realizing
that in America, there was no free medicine, no free hospitals, no free housing, no free education
and no free food, except when people had to beg or go to long lines to get soup.
No, no matter what I did, it was never enough for some, but for others, they knew I was the son
of Gamal Abdel Nasser, the only true Arab and Muslim leader we've had since Salah-al-Deen, when he
claimed the Suez Canal for his people, as I claimed Libya, for my people, it was his footsteps I
tried to follow, to keep my people free from colonial domination - from thieves who would steal from
us.
Now, I am under attack by the biggest force in military history, my little African son,
Obama wants to kill me, to take away the freedom of our country, to take away our free housing, our
free medicine, our free education, our free food, and replace it with American style thievery, called
"capitalism," but all of us in the Third World know what that means, it means corporations run the
countries, run the world, and the people suffer. So, there is no alternative for me, I must
make my stand, and if Allah wishes, I shall die by following His path, the path that has made our
country rich with farmland, with food and health, and even allowed us to help our African and Arab
brothers and sisters to work here with us, in the Libyan Jamahiriya.
I do not wish to die, but if it comes to that, to save this land, my people, all the thousands
who are all my children, then so be it.
Let this testament be my voice to the world, that I stood up to crusader attacks of NATO, stood
up to cruelty, stood up to betrayal, stood up to the West and its colonialist ambitions, and that
I stood with my African brothers, my true Arab and Muslim brothers, as a beacon of light. When others
were building castles, I lived in a modest house, and in a tent. I never forgot my youth in Sirte,
I did not spend our national treasury foolishly, and like Salah-al-Deen, our great Muslim leader,
who rescued Jerusalem for Islam, I took little for myself...
In the West, some have called me "mad", "crazy", but they know the truth yet continue to lie,
they know that our land is independent and free, not in the colonial grip, that my vision, my path,
is, and has been clear and for my people and that I will fight to my last breath to keep us free,
may Allah almighty help us to remain faithful and free.
Kirk2NCC1701
"they hate us for our freedoms"
No, "They hate us for our freebombs" that we keep delivering.
Suppose you lived in a town that was run by a ruthless Mafioso boss. Sure he was ruthless to troublemakers
and dissenters, but if you went about your business (and paid your taxes/respects to him), life was
simple but livable, and crime was negligible.
Now imagine that a crime Overlord came from another country and decided to wreck the town, just
to remove your Mafioso Don. In the process, your neighborhood and house were destroyed, and you lost
friends and family.
Now tell me that YOU would not make it YOUR life's mission to bring these War Criminals to justice
-- by any and all means necessary. And tell me that these same Criminals could not have foreseen
all this. Now say it again - but with a straight face. I dare you. I fucking double-dare you!
Max Cynical
US exceptionalism!
GhostOfDiogenes
The worst one, besides Iraq, is Libya.
The infrastructure we destroyed there is unimaginable.
Sure Iraq was hit the worst, and much has been lost there....but Libya was a modern arab oasis
of a country in the middle of nothing.
We destroyed in a few days what took decades to build.
This is why I am not proud of my country, nor my military.
In fact, I would like to see Nuremberg type trials for 'merican military leaders and concentration
gulags for the rest of enlisted. Just like they did to Germany.
Its only proper.
GhostOfDiogenes
The USA did this murder of Libya and giving ownership to the people who did '911'? What a joke. http://youtu.be/aJURNC0e6Ek
Bastiat
Libya under Ghadaffi: universal free college education, free healthcare, free electricity. interest
free loans. A very bad example of how a nation's wealth is to be distributed!
CHoward
The average American has NO idea how much damage is being done in this world - all in the name of
Democracy. Unbelivable and truly pathetic. Yet - most sheeple still believe ISIS and others hate
us because of our "freedoms" and i-pods. What bullshit.
Compare and contrast Assad, giving an interview very well in a second language, with O'bomb-a,
who can't even speak to school children without a teleprompter. Sad.
Razor_Edge
Along with President Putin, Dr al Assad is consistently the most sane, rational and clearly
honest speaker on the tragedy of Syria. By contrast, our satanic western leaders simply lie
outrageously at all times. How do we know? Their lips are moving. They also say the most
absurd things.
We in the west may think that at the end of the day, it's not going to harm us, so why
discomfort ourselves by taking on our own elites and bringing them down. But I believe that an
horrific future awaits us, one we richly deserve, because we did not shout stop at this ocean
of evil bloodshed being spilt in our names. We pay the taxes that pay for it, or at least in
my countrys case, (traditional policy of military neutrality), we facilitate the slaughter
(troop transports through Shannon airport), or fail to speak out for fear it may impact FDI
into Ireland, (largest recipient of US FDI in the world).
We are our brothers keepers, and we are all one. It is those who seek to separate us to
facilitate their evil and psychopathic lust for power and money, who would have us beieve that
"the other" is evil. Are we really so simple minded or riven by fear that we cannot see
through the curtain of the real Axis of Evil?
Demdere
Israeli-neocon strategy is to have the world's economy collapse at the point of maximum war
and political chaos.
Then they can escape to Paraguay. Sure as hell, if they stay here, we are going to hang them
all. Treasonous criminals for the 9/11 false flag operation.
By 2015, every military and intelligence service and all the think tanks have looked at 9/11
carefully. Anyone who looks at the evidence sees that it was a false flag operation, the
buildings were destroyed via explosives, the planes and evil Arab Muslims were show. Those
agencies reported to their civilian leaders, and their civilian leaders spread the information
through their societies.
So all of the politically aware people in the world, including here at home, KNOW that 9/11
was a false flag operation, or know that they must not look at the evidence. Currently, anyone
who disagrees in MSM is treated as invisible, and I know of no prominent bloggers who have
even done the bits of extention of 'what it must mean' that I have done.
But it certainly means high levels of distrust for the US and for Israel. It seems to me
that World Domination is not possible, because the world won't let you, and the means of
opposition are only limited by the imaginations of the most creative, intelligent and
knowledgable people. We don't have any of those on our side any more.
L Bean
In their farcical quest to emulate the Roman empire...
Auferre, trucidare, rapere, falsis nominibus imperium; atque, ubi solitudinem faciunt,
pacem appellant - Tacitus
They plunder, they slaughter, and they steal: this they falsely name Empire, and where they
make a wasteland, they call it peace.
I think it is perfectly clear that a secular policy of increasing private indebtedness is not
indefinitely extendable. Sure, if we had printed money in the past and kept monetary policy relatively
tight (or otherwise managed the international financial system so that large persistent balance of
payments deficits were not tolerated) we wouldn't have got in the mess we are in. But once we are
there just trying to get over-indebted people to take on more debt doesn't seem like a winning strategy.
1. asset taxes are tricky things to run (many assets aren't traded and the prices of other assets
are very volatile). And there is the problem of offshore ownership and offshore assets, so it requires
international co-operation.
2. This takes a very closed economy view of things - the trade deficit might end up affecting the
trade balance and hence the flow of assets into and out of the country, and eventually also the terms
of trade. You should think through how such a policy would work in say - Luxembourg.
reason:
EMichael
You see no increase in private indebtedness - when do you mean? If you mean now - then yes - that
is exactly why the economy is so sluggish. Where is the increase in demand going to come from if
the country is running a trade deficit, is not increasing its borrowing and is committed to reducing
its government deficit?
"... I can only add, that our economic system already redistributes income upward to capital and management, whose contribution to productivity is far below what they are paid. ..."
"... That's the idea of neoliberal transformation of society that happened since 80th or even earlier. Like John Kenneth Galbraith noted "Trickle-down theory is the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows" ..."
"... "The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil." John Kenneth Galbraith, The Great Crash of 1929 ..."
"... Just as was the case with his work on financial instability, Hyman Minsky's analysis of the problems of poverty and inequality in a capitalist economy, as well as his understanding of the political dysfunctions that would result from treating these problems in the wrong way, were prophetic. See this piece by Minksy's student L. Randall Wray, especially Section 2: http://www.levyinstitute.org/pubs/wp_515.pdf ..."
"... it is unjust to tell the poor that they must change before they will be entitled to work-whether it is their skills set or their character that is the barrier to work... Minsky always argued that it is preferable to "take workers as they are," providing jobs tailored to the characteristics of workers, rather than trying to tailor workers to the jobs available before they are allowed to work ..."
"... Further, NIT (and other welfare programs) would create a dependent class, which is not conducive to social cohesion (Minsky 1968). Most importantly, Minsky argued that any antipoverty program must be consistent with the underlying behavioral rules of a capitalist economy (Minsky no date, 1968, 1975a). One of those rules is that earned income is in some sense deserved. ..."
"... This misreads the politics. People who are disconnected from the job market very easily get disconnected from the political process. They don't vote. ..."
"... The problem in thinking here is the equilibrium paradigm. Equilibrium NEVER exists. If there is a glut the price falls below the marginal cost/revenue point, if the seller is desperate enough it falls to zero! Ignoring disequilibrium dynamics means this obvious (it should be obvious) point is simply ignored. The assumption of general equilibrium leads to the assumption of marginal productivity driving wages. You are not worth what you produce, you are worth precisely what somewhat else would accept to do your job. ..."
"... Never say never. There some stationary points at which equilibrium probably exists for a short period of time. But as the whole system has positive feedback loop built-in and is unstable by definition. So you are right in a sense that disequilibrium is the "normal" state of such a system and equilibrium is an exception. ..."
"... And the problem is more growth, is more growth is a trick we cannot always do in a finite resource technologically sophisticated world. (At least not growth as it is currently seen.) We need to start thinking in much longer term time scales. Saying that we have enough oil for 30 years, is not optimistic - it is an imminent crisis - or do we want our grandchildren to see the end of the world? ..."
"then more growth will simply lead to even more inequality."
Which is exactly what we have seen for the past 40 years, Great analysis
here. I can only add, that our economic system already redistributes
income upward to capital and management, whose contribution to productivity
is far below what they are paid.
ikbez -> DrDick...
"then more growth will simply lead to even more inequality."
That's the idea of neoliberal transformation of society that happened
since 80th or even earlier. Like John Kenneth Galbraith noted "Trickle-down
theory is the less than elegant metaphor that if one feeds the horse enough
oats, some will pass through to the road for the sparrows"
And another relevant quote:
"The sense of responsibility in the financial community for the community
as a whole is not small. It is nearly nil." John Kenneth Galbraith, The
Great Crash of 1929
anne -> likbez...
"The sense of responsibility in the financial community for the community
as a whole is not small. It is nearly nil." John Kenneth Galbraith, The
Great Crash of 1929
Just as was the case with his work on financial instability, Hyman
Minsky's analysis of the problems of poverty and inequality in a capitalist
economy, as well as his understanding of the political dysfunctions that
would result from treating these problems in the wrong way, were prophetic.
See this piece by Minksy's student L. Randall Wray, especially Section 2:
http://www.levyinstitute.org/pubs/wp_515.pdf
The centerpiece of Minsky's preferred approach was based on a government
commitment to "tight full employment". He believed that neither human capital
investment, economic growth, nor redistribution would be sufficient on their
own to address the problem.
As part of the critique of the human capital approach, Minsky argued
that:
"it is unjust to tell the poor that they must change before they
will be entitled to work-whether it is their skills set or their character
that is the barrier to work... Minsky always argued that it is preferable
to "take workers as they are," providing jobs tailored to the characteristics
of workers, rather than trying to tailor workers to the jobs available
before they are allowed to work (Minsky 1965, 1968, 1973)."
Minsky accurately foresaw the way in which a welfare approach to poverty,
as opposed to a full employment approach, would politically divide working
people among themselves:
"Further, NIT (and other welfare programs) would create a dependent
class, which is not conducive to social cohesion (Minsky 1968). Most
importantly, Minsky argued that any antipoverty program must be consistent
with the underlying behavioral rules of a capitalist economy (Minsky
no date, 1968, 1975a). One of those rules is that earned income is in
some sense deserved."
"With the perspective of the 1980s and 1990s now behind us, it is hard
to deny Minsky's arguments-President Reagan successfully turned most Americans
against welfare programs and President Clinton finally "eliminated welfare
as we know it." According to Minsky, a successful antipoverty program will
need to provide visible benefits to the average taxpayer."
We can note that this political problem has only gotten worse, as can
be seen from the deepening ugliness of our domestic politics, and the poll
results that MacGillis cites.
Minsky also understood the unhealthy political and economic dynamics
of an undirected aggregate demand approach to poverty, and promoted, following
ideas of Keynes, a measure of socialized investment and direct job creation:
"Minsky feared that using demand stimulus to reduce poverty would
necessarily lead to "stop-go" policy. Expansion would fuel inflation,
causing policy makers to reverse course to slow growth in order to fight
inflation (Minsky 1965, 1968). Because wages (and prices) in leading
sectors would rise in expansion, but could resist deflationary pressures
in recession, there would be an upward bias to rising wages in those
sectors. However, in the lagging sectors, wage increases would come
slowly-only with adequate tightening of labor markets -- and could be
reversed in recession. Hence, Minsky argued that a directed demand policy
would be required-to raise demand in the lagging sectors and for low
wage and unemployed workers. For this reason, he concluded that a direct
job creation program would be required."
All this adds up to a more activist role for the government sector.
As for people betraying their own economic interests, this phenomenon
was aptly described in "What's the matter with Kansas" which can actually
be reformulated as "What's the matter with the USA?". And the answer he
gave is that neoliberalism converted the USA into a bizarre high demand
cult. There are several characteristics of a high demand cult that are applicable.
Among them:
"The group is preoccupied with making money."
"Questioning, doubt, and dissent are discouraged or even punished."
"Mind-numbing techniques (for example: meditation, chanting, speaking
in tongues, debilitating work routines) are used to suppress doubts
about the group or its leader(s)." Entertainment and, especially sport
events in the US society serves the same role.
"The group's leadership dictates – sometimes in great detail – how
members should think, act, and feel." Looks like this part of brainwashing
is outsourced to economy departments ;-)
"The group is elitist, claiming a special, exalted status for itself,
its leader(s), and members (for example the group and/or the leader
has a special mission to save humanity)."
"The group has a polarized, "we-they" mentality that causes conflict
with the wider society."
"The group's leader is not accountable to any authorities (as are,
for example, clergy with mainstream denominations)."
"The group teaches or implies that its supposedly exalted ends justify
means (for example: collecting money for bogus charities) that members
would have considered unethical before joining."
"The group's leadership induces guilt feelings in lower members
for the lack of achievement in order to control them."
"Members are expected to devote inordinate amounts of time to the
group."
"Members are encouraged or required to live and/or socialize only
with other group members."
It is very difficult to get rid of this neoliberal sect mentality like
is the case with other high demand cults.
cm -> likbez...
What has any of this to do with human capital? "Capital" is basically
a synonym for productive capacity, with regard to what "productive" means
in the socioeconomic system or otherwise the context that is being discussed.
E.g. social or political capital designates the ability (i.e. capacity)
to exert influence in social networks or societal decision making at the
respective scales (organization, city, regional, national etc.), where "productive"
means "achieving desired or favored outcomes for the person(s) possessing
the capital or for those on whose behalf it is used".
Human capital, in the economic domain, is then the combined capacity
of the human population in the domain under consideration that is available
for productive endeavors of any kind. This includes BTW e.g. housewives
and other household workers whose work is generally not paid, but you better
believe it is socially productive.
likbez -> cm...
"Human capital, in the economic domain, is then the combined capacity
of the human population in the domain under consideration that is available
for productive endeavors of any kind. This includes BTW e.g. housewives
and other household workers whose work is generally not paid, but you
better believe it is socially productive."
This is not true. The term "human capital" under neoliberalism has different
semantic meaning: it presuppose viewing a person as a market actor.
No, its driven by racism. White trash will take with one hand, then walk
right into a voting both and screw themselves because they think they sticking
it to blacks, mexicans, gays, etc.
Syaloch -> kthomas...
Racism is certainly part of it, but it's really more fundamental than
that.
"This disposition to admire, and almost to worship, the rich and the
powerful, and to despise, or, at least, to neglect persons of poor and mean
condition, though necessary both to establish and to maintain the distinction
of ranks and the order of society, is, at the same time, the great and most
universal cause of the corruption of our moral sentiments. That wealth and
greatness are often regarded with the respect and admiration which are due
only to wisdom and virtue; and that the contempt, of which vice and folly
are the only proper objects, is often most unjustly bestowed upon poverty
and weakness, has been the complaint of moralists in all ages."
What is racism if not an expression of resentment?
bakho said...
This misreads the politics. People who are disconnected from the
job market very easily get disconnected from the political process. They
don't vote. The people who do have jobs and are worried about keeping
them and being paid too little are voting against the "losers" who they
see as parasites. Never mind that the Malefactors of Great Wealth are the
true parasites. Elections in the US are won or lost on voter turnout.
The Rage said...
I guess it depends on what kind of economy you want.
Growth of all kinds is not good. The 2001-2007 "growth" was badly constructed.
I think America itself is in a bad rut....and has been since 1974. That
itself will not be popular. The consensus belief was everything was rosy
up until 2001. That is lie. They used to have a saying "nothing really happens
on the X-files anymore". It really applies to America since 1974. It goes
beyond "inequality".
I mean, we could have 3% wage growth in 2016 and 4% wage growth in 2017.
That doesn't mean a damn thing for a economy's health. The infrastructure
is bad. It shows up in pop culture apathy.
pgl -> The Rage...
"The 2001-2007 "growth" was badly constructed."
Glenn Hubbard might quarrel with this. He was well constructed for George
W. Bush's base - rich people.
On the whole - great comment!!!
cm -> The Rage...
The Y2K/dotcom boom unraveled in 2000, but not all at once. It is difficult
to impossible to disentagle the boundary between dotcom bust, 9/11 and the
prolonged reaction to it, and the start of the Bush presidency (and the
top policymaking figures that came with that, I don't want to necessarily
tie it to Bush himself).
At the same time, the global rollout of the internet, telecommunication,
(start of) commodity videoconferencing, broadband and realtime data exchange,
etc. enabled the outsourcing and offshoring of large and growing segments
of blue and white collar jobs, and much increased fungibility of variously
skilled labor altogether.
On that foundation, a lot of things will appear as badly constructed.
Or from a different angle, given that foundation, how would you arrange
for things to be well constructed?
likbez -> cm...
I would view 9/11 as a perfect cure for dot-com bust. Soon after invasion
of Iraq stock market returned to almost precrash levels. War is the health
of stock market. And since probably 1998 nobody cared about real economy
anyway.
Also housing boom started around this period as conscious, deliberate
effort of Fed to blow the bubble to cure the consequences of the crash at
all costs and face the day of reckoning later (without Mr. Greenspan at
the helm)
reason said...
The problem in thinking here is the equilibrium paradigm. Equilibrium
NEVER exists. If there is a glut the price falls below the marginal cost/revenue
point, if the seller is desperate enough it falls to zero! Ignoring disequilibrium
dynamics means this obvious (it should be obvious) point is simply ignored.
The assumption of general equilibrium leads to the assumption of marginal
productivity driving wages. You are not worth what you produce, you are
worth precisely what somewhat else would accept to do your job.
Lafayette -> reason...
I could not agree more. A Market-Economy is a dynamic in constant disequilibrium,
changing positively and negatively around a mean. The mean is very rarely
an "equilibrium".
likbez -> reason...
Never say never. There some stationary points at which equilibrium
probably exists for a short period of time. But as the whole system has
positive feedback loop built-in and is unstable by definition. So you are
right in a sense that disequilibrium is the "normal" state of such a system
and equilibrium is an exception.
reason said...
And the problem is more growth, is more growth is a trick we cannot
always do in a finite resource technologically sophisticated world. (At
least not growth as it is currently seen.) We need to start thinking in
much longer term time scales. Saying that we have enough oil for 30 years,
is not optimistic - it is an imminent crisis - or do we want our grandchildren
to see the end of the world?
"... Is what you're saying here is that, by extending a lot of credit, the financial sector allowed households to maintain consumption in the face of a permanent decline in income (at least relative to expectation)? That's an important part of the story, I agree. ..."
"... the FIRE sector in particular, are parasitic on the economy. ..."
"... Perhaps financialization isn't so much a thing-in-itself as the mechanism through which wealth concentrates in periods of slow growth? ..."
"... As in the official theory of efficient markets, the financial sector is actually earning its keep by allocating capital to the most productive investments, and by spreading and managing risk. I don't see how anyone can argue this with a straight face in the light of the last 20 years of bubbles and busts." ..."
"... Did Cuba, Venezuela, Argentina and North Korea do better than the financialized economies of the world? Did the hand of the State in Russia, China and other countries secure better outcomes than the global financial sector in countries that allowed it to operate (albeit with heavy regulation)? ..."
"... The financial system can engage in usury, lending money with no connection to productive investment, by simply creating a parasitic claim on income. There are straightforward ways of doing this: credit cards with high rates of interest or payday lending. There are slightly more complicated approaches: insurance that by design doesn't pay off for the nominal beneficiary. ..."
"... "The biggest economic policy decision of the last thirty years has been the decision to de-socialise a lot of previously socially insured risks and transfer them back to the household sector (in their various capacities as workers, homeowners and consumers of healthcare). The financial sector was obviously the conduit for this policy decision." ..."
"... My feeling (based on nothing but intuition) is that the answer is (d). The government is a tool of moneyed interests. I know, it sounds awfully libertarian, but it is what it is. And I can't foresee any non-catastrophic end to it. ..."
The financialization of the global economy has produced a hugely costly financial sector, extracting
returns that must, in the end, be taken out of the returns to investment of all kinds. The costs
were hidden during the pre-crisis bubble era, but are now evident to everyone, including potential
investors. So, even massively expansionary monetary policy doesn't produce much in the way of
new private investment.
This isn't an original idea. The Bank of International Settlements put out a paper earlier this year
arguing that financial sector growth
crowds out real growth. But how does this work and what can be done about it? I'm still organizing
my thoughts on this, so what I have are some ideas rather than a fully formed argument.
First, if the financial sector is unproductive, how can it be so large and profitable in a market
economy?
There are a few possible explanations
(a) As in the official theory of efficient markets, the financial sector is actually earning its
keep by allocating capital to the most productive investments, and by spreading and managing risk.
I don't see how anyone can argue this with a straight face in the light of the last 20 years of bubbles
and busts.
(b) Tax evasion: the global financial sector allows corporations to greatly reduce their tax liabilities.
Most of the savings in tax is captured in the financial sector itself, but the amount flowing to
corporations is sufficient to offset the high costs of the modern financial sector, relative to (for
example) old-style bank finance and simple corporate structures financed by debt and equity
(c) Volatility: the financialization of the economy has produced greatly increased volatility (in
exchange rates, asset prices and so on). The financial sector amplifies and profits from this volatility,
partly through
regulatory arbitrage, and partly through entrenched and systematic fraud as in the
LIBOR and
Forex scandals.
(d) Political capture: The financial sector controls political outcomes in both traditional ways
(political donations, highly revolving door jobs for future and former politicians) and through the
ideology of market liberalism, which is perfectly designed to support policies supporting the financial
sector, while discrediting policies traditionally sought by other parts of the corporate sector,
such as protection for manufacturing industry. The shift to private finance for infrastructure, discussed
in the previous post is part of this. The construction part of the infrastructure sector (which was
always private) has suffered from the reduced flow of projects, but the finance part (previously
managed through government bonds) has
benefited massively.
The result of all this is that the financial sector benefits from an evolutionary strategy similar
to that of an Australian eucalypt forest. Eucalypts are both highly flammable (they generate lots
of combustible oil) and highly fire resistant. So eucalypt forests are subject to frequent fires
which kill competing species, and allow the eucalypts to extend their range.
dsquared 11.29.15 at 1:24 pm
Surely the answer is "risk transfer". The biggest economic policy decision of the last thirty years
has been the decision to de-socialise a lot of previously socially insured risks and transfer them
back to the household sector (in their various capacities as workers, homeowners and consumers of
healthcare). The financial sector was obviously the conduit for this policy decision. Their role
is to provide insurance to the rest of society and this is what they did – in fact, they provided
too much of it, with too little capital which is why they went bust, and why their bankruptcy was
so disastrous (there's nothing worse than an insurer bankruptcy, because it hits you with a big loss
at exactly the worst time). I think c) above is particularly unconvincing, as the biggest stylised
feature of the period of financialisation was the Great Moderation – in fact, the financial sector
stored up volatility that would otherwise have been experienced by other people, including the intermediation
of some genuinely historically massive imbalances associated with the industrialisation of China,
and stored it up until it couldn't hold any more and exploded.
I also don't think LIBOR and FX
fit into that pattern at all very well either. Financial systems have two kinds of problem, which
is why they often have two kinds of regulators. They have prudential problems and conduct problems.
Both LIBOR and FX were old-fashioned profiteering and cartel arrangements, which could happen in
any industry (hey let's talk about drug pricing and indeed university tuition some time). In actual
fact, as I wrote a while ago, it's only LIBOR that can really be considered a scandal – FX was very
much more a case of customers who wanted the benefits of tight regulation but didn't want to pay
for them, and were lucky enough to find a political moment in which the time was right for an otherwise
very unpromising case.
In other words, the answer to all your questions is "leverage". That's why financial systems grew
so fast, that's why they're associated with poor economic performance, and that's why they tend to
show up in periods of secular stagnation – a secular stagnation is almost defined as a period during
which people try to maintain their standard of living by borrowing. Of course, if the financial sector
had been required to hold enough equity capital in the first place, it would never have grown so
big in the first place, and we could all be enjoying the thirteenth year of the post-dot-com bust[1]
in relative contentment.
[1] I am never going to shut up about this. The real estate bubble was a policy-created bubble.
It was blown up in real time and intentionally, by a Federal Reserve which wanted to cushion the
blow of the tech bust. If the financial sector had refused to finance it, the financial sector would
have been trying to run a monetary policy directly opposed to that of the central bank.
I agree that risk transfer is a big deal. On the other hand, it's not obvious that the financial
sector did a lot to insure households against most of the additional risk, or that the Great Moderation
corresponded to a reduction in the volatility faced by households. On the first point, despite massive
financial innovation since 1980, the set of financial instruments easily available to households
hasn't changed all that much. Most obviously, there's no insurance against bad employment and wage
outcomes and home equity insurance hasn't really happened either.
Is what you're saying here
is that, by extending a lot of credit, the financial sector allowed households to maintain consumption
in the face of a permanent decline in income (at least relative to expectation)? That's an important
part of the story, I agree.
The secular stagnation framing of the question leads me to think more about why investment hasn't
responded to monetary policy rather than directly about households.
Yeah, that's my point – the massive extension of credit to households was the financial sector's
role in the big policy shift. At the end of the day, although we might with the benefit of hindsight
agree that "subprime mortgages with no income verification at teaser rates" were a pretty stupid
product that should never have been offered, they were a brand new financial product that had never
been offered to households before! Even the example you mention – "insurance against bad employment
and wage outcomes" – was sort of sold, albeit that what I'm referring to here is Payment Protection
Insurance in the UK, which sort of underlines that it wasn't done well or responsibly.
I guess
my argument here is that it's the combination of deregulation and stagnation that was necessary to
create the 2000s policy disaster. But if we hadn't had the bad products we got, we'd have had something
else go wrong, probably outside the regulated sector. Because the high debt levels were a policy
goal (or at least, were the inevitable and forseeable consequence of trying to do demand management
without fiscal policy), and as I keep saying in different contexts, you can't get to a stupid debt
ratio by only doing sensible things.
The secular stagnation framing of the question leads me to think more about why investment
hasn't responded to monetary policy rather than directly about households.
Isn't the answer to this just the definition of a Keynesian recession? Investment hasn't responded
to monetary policy because there's no interest rate at which it makes sense to produce goods that
can't be sold.
Capital generally, and the FIRE sector in particular, are parasitic on the economy. They provide
some minimal benefits if kept strongly in check, but quickly become destructive if allowed to grow
unchecked, as they have now.
Dumb outsider thought, turning Eggplant @6 upside down: What about r > g? Perhaps financialization
isn't so much a thing-in-itself as the mechanism through which wealth concentrates in periods of
slow growth?
"But if we hadn't had the bad products we got, we'd have had something else go wrong, probably outside
the regulated sector."
A more sophisticated version of the widely debunked theory that Fannie and
Freddie blew up the housing sector by giving loans to poor people. Rule 1: It's never ever the bankers'
fault. Rule 2: see Rule 1. At least d-squared has been consistent…
Which direction is financialization heading? It looks to be decreasing. The mutual fund industry
is in terminal decline, losing market share to ETFs. There are fewer financial advisors today than
in 2008, yet the number of millionaires has increased. Stock trading has broken a 40 year trend of
increasing volumes. Electronic and exchange trading of bonds and derivatives is increasing, driving
down margins. Bots have driven human traders out of jobs (Dark Pools has a good account of this).
Banks are earnings low single digit returns in their trading divisions, which suggests they will
be shut down if things don't improve. It looks like finance is doing a good job of shrinking itself,
with a little help from Elizabeth Warren.
There were several issues and arguments posed in the OP. I'm addressing this:
"First, if the financial
sector is unproductive, how can it be so large and profitable in a market economy?
There are a few possible explanations
(a) As in the official theory of efficient markets, the financial sector is actually earning its
keep by allocating capital to the most productive investments, and by spreading and managing risk.
I don't see how anyone can argue this with a straight face in the light of the last 20 years of bubbles
and busts."
D-squared response is of course it's the risk transfer. That flat out contradicts JQ, but d-squared
is a master of the straight face. And then he proceeds - "there has been a decision to desocilaize";
"the financial sector was obviously the conduit for this policy decision"; and "the real estate bubble
was a policy-created bubble."
So JQ, here's your answer of FIRE's ascendancy from an insider: You know me and my friends were
standing around just doing nothin' and then these policy guys come around. Next thing ya know, we've
doubled our share of GDP and put our bosses in the top 0.01%. Who woulda known? Crazy shit, huh?
Hey and if anyone asks, tell 'um "risk transfer." And if they press, tell 'um "secular stagnation."
In fact, tell 'um frickin' anything. It just wasn't our fault.
I know that I shall have to read John Kay's Other People's Money at some point.
I am wondering what people make of the old the then Marxist Hilferding's concept of promoters' profit
as a way to understand some financial sector activity. I posted this here a few years back.
Here's his example, and I am trying to figure out to the extent that it throws light on the recent
activity of Wall Street.
Start with an industrial firm with a capital of 1,000,000 marks that makes a profit of 150,000
marks with the average profit of 15 percent.
With an interest rate of 5% straight capitalization of income of 150,000 marks will have an estimated
price of 3,000,000 marks (150,000/.05=3,000,000 marks)
A deduction of 20,000 marks for the various administration costs and directors fees would make
the actual payment to shareholders 130,000 rather 150,000 marks
A risk premium of, say, 2% would be added to a fixed safe rate of interest of 5% in estimating
the actual stock price
So what, then, is the stock price (130,000/.07)? 1,857,143 or roughly 1,900.000 marks
This 900,000 is free after deducting the initial investment of 1,000,000 marks
The balance of 900, 000 marks appears as promoters' profit which arises from the conversion of
profit-bearing capital into interest bearing capital.
In 1910, Hilferding called this promoters profit, an economic category sui generis; it is earned
by the promoter by selling of stocks or the securitizing of income on the capital market.
For Hilferding the investment bank, which promotes the conversion of profit-bearing to interest-bearing
capital, claims the promoters profit.
The analysis seems pertinent to the securitization process today, and I would love to hear Henwood's
and others' thoughts about this.
As Roubini and Mihm have pointed out, we have seen the securitization of mortgages, consumer loans,
student loans, auto loans, airplane leases, revenues from forests and mines, delinquent tax liens,
radio tower loans, boat loans, state revenues, the royalties of rock bands!
We have seen, in their words, an explosion in the selling of future income of dependable projected
revenue streams such as rents or interest payments on mortgage payments as securities.
That securitization been driven by investors' quest for yield lift given the low rate of interest,
itself the result of the global savings glut and Fed policy.
And it seems that Wall Street, with the connivance of the credit agencies, was able to appropriate
value from the purchasers of securities by understating the risk premia.
The risk premium and promoters' profit are inversely correlated so there is a strong incentive
to understate the former. This is what Hilferding did not say, but seems worth emphasizing today.
I sincerely do not understand your point here. I'm not arguing, just asking for clarification:
(a) As in the official theory of efficient markets, the financial sector is actually earning its
keep by allocating capital to the most productive investments, and by spreading and managing risk.
I don't see how anyone can argue this with a straight face in the light of the last 20 years of bubbles
and busts.
For one thing, I don't see that the two bubbles and one bust of 1996 – 2015 are self-evidently
worse than the more numerous bubbles and busts of 1976 – 1995. You might say the 2008 brush with
Great Depression outweighs the hyperinflation and multiple deep recessions of the earlier era, but
certainly the Internet and housing bubbles were more productive and less threatening than the commodity,
Japan, emerging debt and other bubbles. Anyway, it's a close enough comparison that someone could
certainly keep a straight face while saying that in the last 20 years financial volatility inflicted
less real economic damage than in the preceding 20 years.
But the bigger issue is no one claims the financial system encourages steady growth. Creative
(bubble) destruction (bust) is the rule. It is command economies that outlaw bubbles and busts–and
inflation and unemployment–at the cost of unproductive employment, empty shelves, stifled innovation,
loss of freedom and other consequences.
If you want to argue that the financial system did not earn its profits in the last 20 years,
it seems to me you have to argue that economic growth was slow, or that more people in the world
are in poverty today, or that there was not enough innovation; not that the ride was too volatile.
Did Cuba, Venezuela, Argentina and North Korea do better than the financialized economies of the
world? Did the hand of the State in Russia, China and other countries secure better outcomes than
the global financial sector in countries that allowed it to operate (albeit with heavy regulation)?
It is certainly possible to argue that we could have had more growth and innovation and poverty
reduction; and less volatility; with some third way that's better than both our current financial
system and the alternatives practiced in the world today. But that point is not so obvious that any
defender of the global financial system must be joking.
Why do you think the booms and busts of the last 20 years are such a clear and damning indictment
of the financial system that the point needs no further elaboration?
The financial system can engage in usury, lending money with no connection to productive investment,
by simply creating a parasitic claim on income. There are straightforward ways of doing this: credit
cards with high rates of interest or payday lending. There are slightly more complicated approaches:
insurance that by design doesn't pay off for the nominal beneficiary.
There are really complicated
ways of doing this: derivatives, for example, which blow up (and as an added bonus, undermine the
informational efficiency of financial markets).
I keep thinking of Piketty's r > g: the ever-accumulating pile of money rising like a slow, but
unstoppable tide. It has to be invested or "invested" - that is, it can buy the assembly of resources
into productive capital assets that represent financial claims on the additional income generated
by business innovation and expansion . . . OR . . . it can be used to finance the parasitic and predatory
manipulations of an emergent neo-feudalism.
Where the secular stagnation thesis is not pure apologetic fraud, I would interpret it as saying,
there are currently few opportunities to invest in additional productive "real" capital stock. For
technological reasons, the new systems require much less capital than the old systems, so when an
old telephone company replaces its expensive copper wire with fiber optics and cellphone towers,
it may be able to fund a large part of the transition out of current cash-flow, even while maintaining
the value of the bonds that once represented investment in a mountain of copper, but are now just
rentier claims on an obsolete world.
In the brave new world, a handful of companies, who have lucked into commercial positions with
high rents, throw off a lot of cash. So, the Apples and Intels do not need to be allocated new capital,
but their distribution of cash to people who don't need it, is generating a lot of demand for "financial
product". The rest of the business world is just trying to manage a slow decline, able to throw off
modest amounts of cash, desperate to find sources of political power that might yield reliable rents,
but without opportunities to innovate that would actually require net investment in excess of current
cashflows from operations.
So, the financial system is just responding to this enlarged demand for non-productive investment
in financial products that generate return from parasitic extraction.
In the interest of parasitic extraction, the financial system pursues the politics of neoliberal
privatization as a means of generating financial products to satisfy demand.
re volatility, the thing you really want to worry about is liquidity. Pre-crash banks could warehouse
risk and so provide liquidity. One consequence was volatility was recorded because liquid markets
allowed prices to be observed.
Regulators have observed the conflict of interest caused by banks
providing a financial service but also participating in the markets with their own money, and have
acted to restrict banks from holding risk for proprietary trading (the Volcker rule). This is fine,
but there has been a noticeable decrease in liquidity in what were once deep markets. The EURCHF
un-pegging in Jan this year is a good example of reduced liquidity resulting in a massive move. There
may well be more of this to come.
"The biggest economic policy decision of the last thirty years has been the decision to de-socialise
a lot of previously socially insured risks and transfer them back to the household sector (in their
various capacities as workers, homeowners and consumers of healthcare). The financial sector was
obviously the conduit for this policy decision."I can't tell if you are arguing with John or agreeing
with him. Is this agreement with his d) [the political capture explanation]? I don't know very much
about the deep history of financial regulation, but I'm fairly certain that most voters have never
put desocialization of risk in their top 5 concerns. Is it possible that the financial sector was
the obvious conduit because they were among the important authors of the ideas?
In my opinion, finance had a passive role in the build
up of the crisis.
Others have said similar things uptread, however this is my opinion:
1) the wage share of GDP depends largely on political choices; since the late seventies there
has been a trend of a falling wage share more or less everywhere, as countries with a lower wage
share are more competitive on the world market.
2) a falling wage share means a rising profit share, and "capitalists" tend to reinvest part of their
profits, so a falling wage share caused a worldwide saving glut.
3) this worldwide saving glut caused an increased financialisation and a bubbling up of the price
of some assets, particularly those assets whose supply is inelastic (for example, the value of distribution
chains or of famous consumer brands).
4) this in turn causes an increased volatility of financial markets, and worse financial crises.
This situation is what we perceive as a secular stagnation, and IMHO depends mostly on a low worldwide
wage share.
Unfortunately, I have no idea of how to reach an higher wage share, and I don't think "the market"
has any mechanism to push up said wage share.
Bruce,
What you are saying makes sense to me. Steven Pressman has also raised the question of how r is to
be maintained with "an abundance of capital and its need for high rates of return." (Understanding
Piketty's Capital in the Twenty First Century).
It's almost as if Piketty in his criticism of the rentier has a rentier's disregard for how the returns
are actually to be made. To the extent that he considers production it is through marginal productivity
theory. Piketty claims that marginal rate of substitution of capital for labor will remain above
unity (and too bad Piketty dismissed the Cambridge Capital critique because Ian Steedman has used
Sraffian theory to show the possibilities of high profits in even a fully automated economy).
Of course as Pressman implies, this "technical" view may blind us to the higher exploitation that
may be necessary for returns to continue to remain high as capital becomes more abundant. Pressman
also implies that Piketty also does not consider how finance can make higher rates of return by making
higher-interest loans to weaker parties while having them absorb most of the risk (this would be
your second kind of investment).
" I don't know very much about the deep history of financial regulation, but I'm fairly certain that
most voters have never put desocialization of risk in their top 5 concerns."
Of course not, but
there are actors here other than "the public" and "the banks". In this case, I'm pretty sure Daniel
is referring to the destruction of unionized middle class jobs with pensions and cheap-to-the-worker
health insurance, which was carried out by their employers. While I doubt I could pick a bank owner
out of a lineup filled out with captains of industry, they aren't actually interchangeable.
"Of course, if the financial sector had been required to hold enough equity capital
in the first place, it would never have grown so big in the first place, and we could all be enjoying
the thirteenth year of the post-dot-com bust[1] in relative contentment."
Secular stagnation to me just means not enough macro (monetary/fiscal) policy to keep up aggregate
demand for full employment and target inflation.
Monetary and fiscal policy is being blocked by politics partly because filthy rich financiers
are buying their way into politics:
The question about Dsquare's alternate history I would have is: what is the response of fiscal
and monetary policy to the "domestication" of the financial sector via higher capital requirements
and leverage regulations, etc.?
If fiscal and monetary policy keeps the economy at a high-pressure level with full employment
and rising wages, I don't see why secular stagnation is a problem.
But politics is blocking fiscal and monetary policy. Professor Quiggin talks of "massive" monetary
policy, but it wasn't massive given the need. (It was massive compared to past recoveries.) It was
big enough to avoid deflation despite unprecedented fiscal austerity. It wasn't big enough to hit
their inflation target in a timely matter.
My feeling (based on nothing but intuition) is that the answer is (d). The government is a tool of
moneyed interests. I know, it sounds awfully libertarian, but it is what it is. And I can't foresee
any non-catastrophic end to it.
"... neoclassical economics cannot establish the definition/measurement of "capital" without first knowing marginal productivity of capital; but they cannot establish the definition/measurement of marginal productivity of capital without first establishing "capital". ..."
"... ironically, it is conceivable that the entire neoclassical case for invisible hand can be reconstructed based on labor theory of value; after all, Ricardo did that ..."
"... But since then there has been lots of development among the more enlightened mainstream economists that have basically established that market failures are both devastating and universal. This is serious, because this means, in fact, in their heart, they know the invisible hand argument is invalid. Stiglitz came close to admit it in some interviews. ..."
"... Whatever is/was their internal system, both the Soviet Union and China are a part of the capitalist world system and therefore both of them are obligated to pursue economic growth. ..."
"... What you are saying/suggesting presents a profound misunderstanding of open, dissipative complex systems/structures – which we (our society, our economy – indeed our entire world ) are. ..."
"... Such systems cannot be in a permanent thermodynamic equilibrium – controlled plateau, or "sustainability" if we will (which you seem to be wishing/suggesting). They are utterly and totally dependent on ever-expanding energy/resource "consumption" and they ALWAYS and without exception collapse (hint: A.Bartlet)! Indeed, if physics and mathematics is to be trusted, they must collapse! ..."
Hi Dennis, I wrote a long reply to your question on labor theory of value. But somehow after I
posted it, it appears to have disappeared. I am trying to re-post it here
Dennis:
Hi Dennis, thanks for bringing this up. This is definitely not about energy. But since you
mentioned this here, let me give you some of my thought.
First, regarding neoclassical economics, the debate between two Cambridges pretty much destroyed
the logical foundation of neoclassical economics. Because neoclassical economics cannot establish
the definition/measurement of "capital" without first knowing marginal productivity of capital;
but they cannot establish the definition/measurement of marginal productivity of capital without
first establishing "capital".
So neoclassical economics is involved in circular reasoning, and without a meaningful concept
of capital, the rest of the system collapses.
The above is mostly theoretical. It does not necessarily undermine one's faith in the efficiency
of a market economy (ironically, it is conceivable that the entire neoclassical case for invisible
hand can be reconstructed based on labor theory of value; after all, Ricardo did that)
But since then there has been lots of development among the more enlightened mainstream
economists that have basically established that market failures are both devastating and universal.
This is serious, because this means, in fact, in their heart, they know the invisible hand argument
is invalid. Stiglitz came close to admit it in some interviews.
Why does it matter? Consider the current environmental crisis. It is conceivable that we will
fail to stop climate change and the emerging climate catastrophes will bring down human civilization.
From the neoclassical perspective, this is because the market prices for fossil fuels are wrong.
Can this be corrected by government intervention? From the neoclassical perspective, to do this,
the government needs to know the correct prices and even if the government does know the correct
prices, there is still the implementation problem (principal-agent problem, people will find ways
to outmaneuver government, etc). If the government does not know the correct prices or cannot
implement, then we cannot correct market failures. If, on the other hand, the government does
know the correct prices and can implement, why not have socialist planning?
Compare this to socialism. Of course one needs to be reminded of the Soviet environmental disasters.
But the Soviet environmental failures were almost nothing compared to the contemporary Chinese
environmental crisis (and I need to remind people that China's current environmental crisis has
happened after China's capitalist transition). Whatever is/was their internal system, both
the Soviet Union and China are a part of the capitalist world system and therefore both of them
are obligated to pursue economic growth.
Although this has not happened in history, but it is definitely conceivable that a socialist
economy can be structured to be based on zero or negative growth. But this cannot be said of capitalism.
In fact the strongest economic argument against socialism is that the socialist economies did
not grow rapidly enough (even though Cuba succeeded in delivering higher life expectancy than
the United States and for some years Cuba was considered the only country that met the principle
of sustainable development by the living planet report). Therefore, the question is, if it turns
out that capitalism cannot provide sustainability for human civilization, what social system can
deliver sustainability while meeting population's basic needs?
Now, about labor theory of value. There are two different questions here. One has to do with
the labor theory of value as a theory to explain the long-term equilibrium prices in a competitive
market economy and the other has to do with what Marx called the theory of surplus value.
About the theory of surplus value, it needs to be reminded that Marx's theory of surplus value
or exploitation is not moralistic but based on observed economic facts (although it could be used
for moralistic purposes). All it says is no more than this: in a capitalist economy, a workers
has to work longer than the social labor time embodied in the commodities consumed by the worker
himself (or the worker's family) and in this sense, the capitalist profit (surplus value) derives
from the worker's surplus labor. This is factually true.
Of course, as you said, a similar quantitative relationship can be established for other production
inputs. Say, the total energy consumed in a society will have to be greater than the energy input
used for energy production (people here are of course familiar with EROEI, which has to be greater
than 1 for society to function). Based on this, one could argue that not only the workers are
exploited but energy is also "exploited".
But if one really wants to extend the concept of "exploitation" here (which I don't think makes
sense), what is being "exploited" is energy BUT NOT energy owners (even less the owners of capital
goods consuming energy).
In any case, the concept of "exploitation" or surplus value has to be used in a context of
social relations. It makes sense that the workers can take over the means of production and appropriate
their own surplus value (or products of their surplus labor). But it is obviously nonsense to
say that the energy input can somehow appropriate the "surplus energy" consumed in other energy
consumption processes.
Finally, about the long-term equilibrium prices. It can be easily established that in "simple
commodity production" (pre-capitalist market economy, where the producers own their means of production),
market prices tend to fluctuate around ratios that are in proportion to the total labor embodied
in commodities (including both direct labor and indirect labor embodied in means of production).
The problem has to do with "prices of production" or the equilibrium prices in capitalism (you
are probably aware that this is known as the "transformation problem" in the Marxist literature).
All the difficulty comes from the fact that in capitalism, the direct labor time ("live labor")
is further divided into necessary labor (the labor time it takes for the worker to replace his
value of labor power) and surplus labor. In fact, knowing the production coefficients, a unique
set of equilibrium prices and the equilibrium profit rate can be solved from a set of past labor
(indirect labor), necessary labor, and surplus labor for each commodity. Thus, a definite set
of mathematical relations can be established between the prices and the labor variables (although
it's no longer simple proportionality; but I think it does not matter)
Of course the Neo-Sraffians would like to emphasize that you can take any other important input
(say, energy) and establish a similar set of relationship between prices and say, past energy,
necessary energy, and surplus energy. But, as I said, energy cannot be a player in social relations.
In any case, labor theory of value plays an insignificant role in modern Marxist economics
(I personally still think labor theory of value is valid but it no longer provides important insights).
You will not find labor theory of value in my book. But I hope you will still find it intellectually
interesting (and a little provocative).
Hi Minqi Li,
I read your reply to Dennis and found it cogent, however I do have a problem with the standard
neoclassical economic viewpoint and as I have stated many times I find the standard capitalist
and communist economic models to be less than useful systems with which to address our current
global dilemmas. I am of the school of thought that we have to invent completely new ways of thinking
and acting. There are some people who have embarked on this journey. I think this group best embodies
my current thinking about what kinds of systems we need to develop. Some of these ideas are already
taking hold in China too.
The concept of 循环经济 or recycling economy is actually what China
borrowed from the West. Chinese economists started talking about it in the 1990s. The practice
is not as radical as it sounds. The primary intention has not been so much about saving the environment
as accelerating capital accumulation by saving costs.
Although in some cases it has had some beneficial "side effects"
I agree that we need completely new thinking and practice that go beyond the 20th century.
I am of the school that zero (if not negative) economic growth is necessary for sustainability.
The question is what kind of economic system can deliver it.
"…I am of the school that zero (if not negative) economic growth is necessary for sustainability.
The question is what kind of economic system can deliver it…."
What you are saying/suggesting presents a profound misunderstanding of open, dissipative
complex systems/structures – which we (our society, our economy – indeed our entire world ) are.
Such systems cannot be in a permanent thermodynamic equilibrium – controlled plateau, or
"sustainability" if we will (which you seem to be wishing/suggesting).
They are utterly and totally dependent on ever-expanding energy/resource "consumption" and they
ALWAYS and without exception collapse (hint: A.Bartlet)!
Indeed, if physics and mathematics is to be trusted, they must collapse!
-So, when you say:
"…The question is what kind of economic system can deliver it…", you are looking for the wrong,
non-existing thing.
I agree in principle, but it is clear that societies can be built that are stable
for hundreds to thousands of years until conditions diverge too much from those that allowed their
formation. Hunter-gatherer societies were economically and socially stable in many parts of the
world for most of the Holocene, so in principle it is theoretically possible to build a stable
society that takes from the environment not much more than what can be renewed or recycled or
last for a very long time. Animals and plants do it all the time, but of course their numbers
are checked by the environment. And of course it would have little to do with current industrial
civilization that is completely unsustainable.
Hunter-Gatherers were stable ONLY for nature kept a "big stick" over their head every time they
multiplied more than they should have…but as Ron has said multiple times: we are clever and have
bypassed that (or so we think…).
Theoretically- as you say- yes!
Practically: NO!
"…We will kill them all…"
~ Ron Patterson
-And lastly, all this is mute for we ALREADY have passed the tipping point, or the point of
no return- if you will.
I agree with the idea that trying to achieve a zero growth economy is the only path towards
sustainability.
Two points:
First the concept of the 'Circular Economy' goes far beyond simple recycling.
It incorporates systems and design thinking at a fundamental level in all aspects of the economy,
government,and social systems. It thinks of the economy as an ecosystem. It borrows heavily from
how nature builds sustainable systems. It is also very important to understand that it is not
just a greenwashing. It is about a deep and fundamental process change.
Second: At our current juncture 'Perfect' is the enemy of good enough!
We need to move forward with all aspects of the 'Circular Economy' We don't have time to design
and build a perfect system, We are in a situation where we know that our current ways of doing
things are not sustainable so we have to push ahead with imperfect solutions and learn as we go.
Best Hopes!
BTW, Petro is only technically correct here:
-What you are saying/suggesting presents a profound misunderstanding of open, dissipative
complex systems/structures – which we (our society, our economy – indeed our entire world ) are.
Without throwing the baby of ecosystem thermodynamics 101 out with the bath water, I repeat
my point 'Perfect' is the enemy of good enough. Ecosystems are relatively speaking stable and
have been for long periods of time. Nature has been tweaking them for 3.8 billion years. We on
the other hand have managed to really screw things up in just a few thousand years.
We need to go back and learn how nature does design
If we went back to when nature was
in balance, to the point to where we were no longer destroying the ecosystem, then we would be
back to only a few million Homo sapiens on earth.
While it is true that humans are a part of nature, it is also true that cancer is a part of
nature.
We need to go back and learn how nature does design
If we went back to when nature
was in balance,
Ron, that totally misses the point!
Yes, the ultimate goal would be to have sustainable systems in place. However, we are not in
a position to go back to anything. We need to go forward. The point I was making is that we can
learn from the way nature creates sustainable ecosystems and apply those lessons to our own systems.
This is why I wanted to make crystal clear that I'm not talking about greenwashing or anything
'Green' in the old hippie commune model.
Basically nature uses multiple interconnected circular systems simultaneously on various scales
from the microscopic to gigantic. Think of the multiple ecosystems on a single tree in a rainforest.
The mosses and lichens fungi living on the bark of the tree. All the insect communities, ants,
beetles, arachnids, etc, that depend on that. The tree itself using sunlight through photosynthesis,
breathing, producing O2,transporting water and recycling nutrients, the carbon and nitrogen cycles
and so on. The top of the tree is colonized with with completely different specialized ecosystems
covered with epiphytes. Tree frogs and lizards living in the water filled pools created in the
base of bromeliads. The birds and snakes living in the canopy. The large and small mammals living
in various niches within all those ecosystems, the detrivores and bacteria and fungi that recycle
all the nutrients from the organisms that die, etc… etc… and we are talking just one tree in a
forest. This is the kind of integrated systems design that we need to emulate in our cities and
businesses.
We humans, on the other hand, have built linear consumptive nonintegrated systems. These systems
are extremely wasteful. Linear systems only work when resources limits are nonexistent. We no
longer have the luxury of continuing with such systems. We need to learn how nature practically
eliminates waste by emulating a model where waste streams are resource inputs and everything is
reused there is practically no waste in a functioning stable ecosystem.
We need to learn how nature practically eliminates waste by emulating a model where waste streams
are resource inputs and everything is reused there is practically no waste in a functioning stable
ecosystem.
I totally understand your point Fred, but you are simply missing the big picture.
When you say "we" just who are you talking about? Obviously if you are talking about fixing the
terrible mess we find ourselves in, then "we" has to mean "we humans", all of us. And when you
do that you are talking absolute nonsense.
Individuals can change but human nature cannot change. "We" will go on behaving in the future
exactly as we have behaved in the past. The mass of humanity is consuming the natural resources
like a drunken sailor going through his rich uncle's inheritance. And I don't mean just fossil
resources, I mean all resources, all nature's bounty. And we are taking it from all the other
creatures who are less clever than we are.
And "we" will continue to do so until it is gone, and all the other creatures are gone also.
wimbi, 11/13/2015 at 10:50 pm
A simple engineer's suggestion for basis of new economics, based on conversation with wiser
ones elsewhere.
Proper economic structure is that which maximizes the number of options available for future
choices.
Same as, minimize irreversibility; same as second law of thermo. Or, don't mess things up for
the next guy.
Examples of violations of basic rule- kill the coral, next guy has less fish ; burn the oil,
next guy has a smaller hunk of planet at bearable temps.
Example of application of basic rule – go to solar for energy, and stick within bounds of
activity thereby set.
NB- another fundamental flaw of capitalism– like stars growing in a dust cloud where more
massive ones grab mass faster than littler ones, ending up with big one gobbling it all.
Bigger capitalists grab more resources faster than smaller ones, ending up with big ones
getting it all.
And, very serious consequence – gross maldistribution of resource relative to individual
ability to use resource wisely.
...the country's tourist board has suspended all tours to Turkey, a move that it estimated would
cost the Turkish economy $10bn (£6.6bn). Russia also said it was suspending all military cooperation
with Turkey, including closing down an emergency hotline to share information on Russian airstrikes
in Syria.
Putin accused Turkey of deliberately trying to bring relations between Moscow and Ankara to a
standstill, adding that Moscow was still awaiting an apology or an offer of reimbursement for damages.
He earlier called the act a "stab in the back by the accomplices of terrorists" and promised "serious
consequences"
... ... ...
Russia has insisted that its plane never strayed from Syrian airspace, while Turkey says it crossed
into its airspace for 17 seconds. The Russian foreign minister, Sergei Lavrov, said that even if
this was the case, shooting the plane down was an extreme over-reaction and looked like a pre-planned
provocation.
"... In the real world most credit today is spent to buy assets already in place, not to create new productive capacity. Some 80 percent of bank loans in the English-speaking world are real estate mortgages, and much of the balance is lent against stocks and bonds already issued. ..."
"... Debt-leveraged buyouts and commercial real estate purchases turn business cash flow (ebitda: earnings before interest, taxes, depreciation and amortization) into interest payments. Likewise, bank or bondholder financing of public debt (especially in the Eurozone, which lacks a central bank to monetize such debt) has turned a rising share of tax revenue into interest payments. ..."
"... even government tax revenue is diverted to pay debt service ..."
"... Contemporary evidence for major OECD economies since the 1980s shows that rising capital gains may indeed divert finance away from the real sector's productivity growth (Stockhammer 2004) and more generally that 'financialization' (Epstein 2005) has hurt growth and incomes. Money created for capital gains has a small propensity to be spent by their rentier owners on goods and services, so that an increasing proportion of the economy's money flows are diverted to circulation in the financial sector. Wages do not increase, even as prices for property and financial securities rise – just the well-known trend that we have seen in the Western world since the 1970s, and which persists into the post-2001 Bubble Economy. ..."
Incorporating the Rentier Sectors into a Financial Model
Wednesday, September
12, 2012
by Dirk Bezemer and Michael Hudson
As published in the World Economic Association's World Economic Review Vol #1.
.......
2. Finance is not The economy
In the real world most credit today is spent to buy assets already in place, not to create
new productive capacity. Some 80 percent of bank loans in the English-speaking world are real estate
mortgages, and much of the balance is lent against stocks and bonds already issued.
Banks lend to buyers of real estate, corporate raiders, ambitious financial empire-builders, and
to management for debt-leveraged buyouts. A first approximation of this trend is to chart the share
of bank lending that goes to the 'Fire, Insurance and Real Estate' sector, aka the nonbank financial
sector. Graph 1 shows that its ratio to GDP has quadrupled since the 1950s. The contrast is with
lending to the real sector, which has remained about constant relative to GDP. This is how our debt
burden has grown.
Graph 1: Private debt growth is due to lending to the FIRE sector: the US, 1952-2007
Source: Bezemer (2012) based on US flow of fund data, BEA 'Z' tables.
What is true for America is true for many other countries: mortgage lending and other household
debt have been 'the final stage in an artificially extended Ponzi Bubble' as Keen (2009) shows for
Australia. Extending credit to purchase assets already in place bids up their price. Prospective
homebuyers need to take on larger mortgages to obtain a home. The effect is to turn property rents
into a flow of mortgage interest. These payments divert the revenue of consumers and businesses from
being spent on consumption or new capital investment. The effect is deflationary for the economy's
product markets, and hence consumer prices and employment, and therefore wages. This is why we had
a long period of low cpi inflation but skyrocketing asset price inflation. The two trends are linked.
Debt-leveraged buyouts and commercial real estate purchases turn business cash flow (ebitda: earnings
before interest, taxes, depreciation and amortization) into interest payments. Likewise, bank or
bondholder financing of public debt (especially in the Eurozone, which lacks a central bank to monetize
such debt) has turned a rising share of tax revenue into interest payments.
As creditors recycle
their receipts of interest and amortization (and capital gains) into new lending to buyers of real
estate, stocks and bonds, a rising share of employee income, real estate rent, business revenue and
even government tax revenue is diverted to pay debt service. By leaving less to spend on goods and
services, the effect is to reduce new investment and employment.
Contemporary evidence for major
OECD economies since the 1980s shows that rising capital gains may indeed divert finance away from
the real sector's productivity growth (Stockhammer 2004) and more generally that 'financialization'
(Epstein 2005) has hurt growth and incomes. Money created for capital gains has a small propensity
to be spent by their rentier owners on goods and services, so that an increasing proportion of the
economy's money flows are diverted to circulation in the financial sector. Wages do not increase,
even as prices for property and financial securities rise – just the well-known trend that we have
seen in the Western world since the 1970s, and which persists into the post-2001 Bubble Economy.
It is especially the case since 1991 in the post-Soviet economies, where neoliberal (that is,
pro-financial) policy makers have had a free hand to shape tax and financial policy in favor of banks
(mainly foreign bank branches). Latvia is cited as a neoliberal success story, but it would be hard
to find an example where rentier income and prices have diverged more sharply from wages and the
"real" production economy.
The more credit creation takes the form of inflating asset prices – rather than financing purchases
of goods and services or direct investment employing labor – the more deflationary its effects are
on the "real" economy of production and consumption. Housing and other asset prices crash, causing
negative equity. Yet homeowners and businesses still have to pay off their debts. The national income
accounts classify this pay-down as "saving," although the revenue is not available to the debtors
doing the "saving" by "deleveraging."
The moral is that using homes as what Alan Greenspan referred to as "piggy banks", to take out
home-equity loans, was not really like drawing down a bank account at all. When a bank account is
drawn down there is less money available, but no residual obligation to pay. New income can be spent
at the discretion of its recipient. But borrowing against a home implies an obligation to set aside
future income to pay the banker – and hence a loss of future discretionary spending.
3. Towards a model of financialized economies
Creating a more realistic model of today's financialized economies to trace this phenomenon requires
a breakdown of the national income and product accounts (NIPA) to see the economy as a set of distinct
sectors interacting with each other. These accounts juxtapose the private and public sectors as far
as current spending, saving and taxation is concerned. But the implication is that government budget
deficits inflate the private-sector economy as a whole.
"... Every year, in the backwaters of America, that economy seems to put out fewer and fewer chairs. ..."
"... Not pull the wool over our eyes. But they both do defend and rely on a mainstream neoliberal, New Keynesian models of the economy which I think paint a very inadequate picture of the way our economy actually functions and is woefully inadequate as a guide for policy action - especially of the kinds that are urgently needed in 2015. ..."
"... I dont think Krugman and DeLong are the forces of evil. I just think the United States is in much worse shape then they seem prepared to come to grips with, and is in need of much more radical social and economic change then they seem willing to propose or entertain. They are stuck in the past and weighed down by defunct orthodoxies and theoretical abstractions. ..."
"... Most of my general criticisms of economists, by the way, are aimed at macroeconomists. I listened to a lecture by Robert Schiller the other day about his new book, and thought it sounded like great stuff. I think there is lots of great empirical work going on based on nuanced and up-to-date theories of human behavior. The macro guys often claim - on the basis of some kind of anti-reductionist credo - that their grand uniform economic theories of everything can float free of any foundation in theories of the actual behavior of actual human beings. But the theories are in practice based on analogies from individual or firm behavior to macro behavior, and the behavioral models on which they are based are extremely crude. ..."
"... But basically, I think my main axe to grind is that these economists are just not sufficiently appalled by the moral horrors of the social world we live in. There is a general lack of zeal. ..."
"... Sadly, it is also the case that the Democrats have backed way off economic issues since the late 1970s. At the time they suffered a massive fundraising disadvantage and wanted to attract big money donors (still Hillarys position). ..."
Harold Pollack (the beginning of the post talks about a recent column in the NY Times noting that
"The people who most rely on the safety-net programs secured by Democrats are, by and large, not
voting against their own interests by electing Republicans. Rather, they are not voting, period,"
and how that has turned blues states red):
What's the matter with Kentucky?: ...Viewed from afar, one might think that categories such
as "deserving poor" or "disabled" are reasonably clear-cut. Viewed up-close, things seem much
more fuzzy. Many people who rely on public aid straddle the boundaries between deserving and undeserving,
disabled and able-bodied. Many of us know people who receive various public benefits, and who
might not need to rely on these programs if they made better choices, if they learned how to not
talk back at work, if they had a better handle on various self-destructive behaviors, if they
were more willing to take that crappy job and forego disability benefits, etc.
It's easy, even
viewing our own friends and relatives, to confuse cause and effect regarding more intimate barriers.
A sad reality of psychiatric disorders is that the very symptoms which inflict mental pain on
the sufferer can make themselves felt to others in ways that undermine empathy and personal relationships.
Across the Thanksgiving dinner table, you see these human frailties and failures more intensely
and with greater granularity than the labor economist could possibly see running cold data at
the Census Bureau. But operating at high altitude, the labor economist sees structural issues
you can't see from eye level.
There have always been vulnerable people, whose troubles arise from an impossible-to-untangle
mixture of bad luck, destructive behaviors, and difficult personal circumstance. That economist
can't see why your imperfect cousin can't seem to get it together to hold a basic job. She can
see that your cousin is being squeezed out by an unforgiving musical-chairs economy. Every
year, in the backwaters of America, that economy seems to put out fewer and fewer chairs.
"Supporters of expanded social provision must find better ways to engage poor people, to get out
their votes."
Of course Republicans are doing everything they can to keep poor people from voting.
cm -> pgl...
Also in the US, elections seem to always (?) take place on work days, whereas e.g. in Germany
the happen on Sundays as a rule. Of course one can vote by mail, but that requires a pretty stable
and reliable mailing address ...
pgl -> cm...
In the South the Republicans loathe the idea that voting might occur on Sundays. Seems they fear
those black mega churches turning out the vote.
cm -> pgl...
I was thinking more of people being unable to (or "preferring" not to) miss work, and not being
able to show up for work as well as vote on the same day.
Do you think that people don't have
enough willpower to sustain their decision to vote from Sunday to Tuesday? Or that they would
vote only under the social pressure from the church group?
pgl -> cm...
I'm just saying let them vote when they can. As in your first sentence here.
Number 6 said...
The US is a militarist-imperialist, rentier-socialist, friendly fascist (for now) corporate-state
for the top 0.001-1% to ~10% (the best gov't the money of the top 0.001-1% can buy) and a moronocracy
for the rest of us, i.e., "no representation without taxation".
What is needed is 'Merikans for Moronocracy (or Morons for a New 'Merika) for us morons in
red AND blue states to write in our own names for CEO of the fascist corporate-state. Imagine
tens of millions of us unaffiliated morons writing in Joe Moron for POTUS and Jane Moron for Veep
(or switch for your gender-specific or non-specific preference, or not).
Surely, none of us could do any worse for the bottom 90%+ than the Establishmet top 0.001%'s
"choices" over the past 30-40+ years, or the current lot of Dame Hilbillary, The Donald, Crazy
Carson, et al. (Of course, Bernie Sanders speaks to the values and objectives of the vast majority
of 'Merikans who are actually democratic socialists but have been propagandized for at least a
century or more not to know it.)
Alan Abramowitz * reads the latest Washington Post poll and emails:
"Read these results ** and tell me how Trump doesn't win the Republican nomination? I've been
very skeptical about this all along, but I'm starting to change my mind. I think there's at least
a pretty decent chance that Trump will be the nominee.
"Here's why I think Trump could very well end up as the nominee:
"1. He's way ahead of every other candidate now and has been in the lead or tied for the lead
for a long time.
"2. The only one even giving him any competition right now is Carson who is even less plausible
and whose support is heavily concentrated among one (large) segment of the base-evangelicals.
"3. Rubio, the great establishment hope now, is deep in third place, barely in double digits
and nowhere close to Trump or Carson.
"4. By far the most important thing GOP voters are looking for in a candidate is someone to
'bring needed change to Washington.'
"5. He is favored on almost every major issue by Republican voters including immigration and
terrorism by wide margins. The current terrorism scare only helps him with Republicans. They want
someone who will "bomb the shit" out of the Muslim terrorists.
"6. There is clearly strong support among Republicans for deporting 11 million illegal immigrants.
They don't provide party breakdown here, but support for this is at about 40 percent among all
voters so it's got to be a lot higher than that, maybe 60 percent, among Republicans.
"7. If none of the totally crazy things he's said up until now have hurt him among Republican
voters, why would any crazy things he says in the next few months hurt him?
"8. He's very strong in several of the early states right now including NH, NV and SC. And
he could do very well on 'Super Tuesday' with all those southern states voting. I can't see anyone
but Trump or Carson winning in Georgia right now, for example, most likely Trump.
"9. And as for the idea of the GOP establishment ganging up on him and/or uniting behind another
candidate like Rubio, that's at least as likely to backfire as to work. And even if it works,
what's to stop Trump from then running as an independent?"
Indeed. You have a party whose domestic policy agenda consists of shouting "death panels!,"
whose foreign policy agenda consists of shouting "Benghazi!," and which now expects its base to
realize that Trump isn't serious. Or to put it a bit differently, the definition of a GOP establishment
candidate these days is someone who is in on the con, and knows that his colleagues have been
talking nonsense. Primary voters are expected to respect that?
The reason may well be that there is a vast group of voters who consistently vote against their
better interests, because their mindset is conservative, though they are actually middle class
or lower. - Kansas appears to be a great example. These people do not think things through but
vote on their gut (conservative they think) instincts. Education has a great deal to do with that
voting decision. Thus we seem to see a blue collar worker with a median income take positions
similar to that of the 1%. Curious but educational level is the likely answer. Such voters are
also much more susceptible to propaganda based on tainted or false information which is circulated
freely by many of the talking heads on radio and TV. Note that the Republicans work assiduously
to discourage and restrict voting by gerrymandering, rules, voting days and sometimes requiting
ID. - Democracy in America is a theoretical concept now.
cm said...
The Musical Chairs happens not only in the backwaters. It happens in and around the major job
centers too. Nor is it only a matter of no job vs. some job, also how well the job is paid, working
conditions, full time vs. part time, predictable work hours or on call (and only on-premises hours
paid), etc.
It also doesn't just affect people with various "problems". There is the meme that
when you are good you will always find a job, but that only works when employers are actually
hiring. And the unstated part is that the job will be at your level of skill/ability. In "tech",
and probably most "high skilled" fields, employers have a rather strong preference for an unbroken
career in the field, you are basically defined by the "lowest" work you have done recently.
Dan Kervick -> Peter K....
"Kervick on the other hand tells us everyday that Krugman and DeLong are trying to pull
the wool over our eyes on behalf of an evil neoliberal consensus."
Not pull the wool over our eyes. But they both do defend and rely on a mainstream neoliberal,
New Keynesian models of the economy which I think paint a very inadequate picture of the way our
economy actually functions and is woefully inadequate as a guide for policy action - especially
of the kinds that are urgently needed in 2015.
I don't think Krugman and DeLong are the forces of evil. I just think the United States
is in much worse shape then they seem prepared to come to grips with, and is in need of much more
radical social and economic change then they seem willing to propose or entertain. They are stuck
in the past and weighed down by defunct orthodoxies and theoretical abstractions.
Maybe in their hearts they really do grasp the magnitude of the problems, but just think
the political environment is not hospitable to an honest airing of the alternatives. Maybe they
are scared like everyone else.
But until prominent, established intellectuals with high profiles begin to come forward with
bolder alternatives to late 20th century thinking, the America that is being crushed underfoot
by an out-of-control capitalist leviathan is going to have to face a lot of unwelcome headwinds
in their drive for liberating progressive change.
Syaloc -> Dan Kervick...
So basically you're calling for a return to a more institutional form of economics led by figures
like John Kenneth Galbraith?
Dan Kervick -> Syaloc...
Yes, a more concrete, detailed, institution-based picture of the economic world, with more attention
to history, other branches of social science, moral philosophy, cultural criticism, etc. - as
well as just a bit more street smarts. Macroeconomists seem to have siloed themselves in self-contained
theoretical world, where engagement with the human sciences of power and control, and the moral
implications of those fields of study, are ignored.
Most of my general criticisms of economists,
by the way, are aimed at macroeconomists. I listened to a lecture by Robert Schiller the other
day about his new book, and thought it sounded like great stuff. I think there is lot's of great
empirical work going on based on nuanced and up-to-date theories of human behavior. The macro
guys often claim - on the basis of some kind of anti-reductionist credo - that their grand uniform
economic theories of everything can float free of any foundation in theories of the actual behavior
of actual human beings. But the theories are in practice based on analogies from individual or
firm behavior to macro behavior, and the behavioral models on which they are based are extremely
crude.
But basically, I think my main axe to grind is that these economists are just not sufficiently
appalled by the moral horrors of the social world we live in. There is a general lack of zeal.
djb said...
a lot of it , I am sure, has to do with the "there is no difference between democrats and republicans"
constant brainwashing
which helps the republicans big time
DrDick -> djb...
Sadly, it is also the case that the Democrats have backed way off economic issues since the
late 1970s. At the time they suffered a massive fundraising disadvantage and wanted to attract
big money donors (still Hillary's position).
djb -> DrDick...
still republicans are way worse especially now
DrDick said in reply to djb...
True, but for the poor, it is quite obvious that no one really gives a damn about them. Why
should they vote when all they get is bailouts for banksters and the TPP? Right now, Sanders is
the only one talking about programs that would really help them and he is a long shot (and I am
a Sanders supporter).
Avraam Jack Dectis said...
.
A good economy compensates for much social dysfunction.
A bad economy moves people toward the
margins, afflicts those near the margins and kills those at the margins.
This is what policy makers should consider as they pursue policies that do not put the citizen
above all else.
cm -> Avraam Jack Dectis...
"A good economy compensates for much social dysfunction."
More than that, it prevents the worst
of behaviors that are considered an expression of dysfunction from occurring, as people across
all social strata have other things to worry about or keep them busy. Happy people don't bear
grudges, or at least they are not on top of their consciousness as long as things are going well.
This could be seen time and again in societies with deep and sometimes violent divisions between
ethnic groups where in times of relative prosperity (or at least a broadly shared vision for a
better future) the conflicts are not removed but put on a backburner, or there is even "finally"
reconciliation, and then when the economy turns south, the old grudges and conflicts come back
(often not on their own, but fanned by groups who stand to gain from the divisions, or as a way
of scapegoating).
"... From the man who brought you the Iraq war and the rise of ISIS--how to solve the ISIS crisis. ..."
"... Youd think ppl who brought the Iraq war, the best recruiters of ISIS, would be nowhere to be seen; but no, are telling how to deal w/ISIS. ..."
"... Narrative is the foundation of their skewed analysis. Their object is to sell perpetual war using super high tech, exquisitely expensive, contractor maintained versions of WW II formations to expired resources eternally for the profits they deliver. They starve the safety net to pay for their income security. ..."
"... ... In July of last year, the New York Times ran two pieces tying Clinton to the neoconservative movement. In "The Next Act of the Neocons," (*) Jacob Heilbrunn argued that neocons like historian Robert Kagan are putting their lot in with Clinton in an effort to stay relevant while the GOP shies away from its past interventionism and embraces politicians like Senator Rand Paul: ..."
"... And the thing is, these neocons have a point. Mrs. Clinton voted for the Iraq war; supported sending arms to Syrian rebels; likened Russia's president, Vladimir V. Putin, to Adolf Hitler; wholeheartedly backs Israel; and stresses the importance of promoting democracy. ..."
"... It's easy to imagine Mrs. Clinton's making room for the neocons in her administration. No one could charge her with being weak on national security with the likes of Robert Kagan on board ..."
"... Kagan served on Clinton's bipartisan foreign policy advisory board when she was Secretary of State, has deep neocon roots. ..."
"... A month before the Heilbrunn piece, the Times profiled Kagan ( ..."
"... ), who was critical of Obama's foreign policy, but supported Clinton. "I feel comfortable with her on foreign policy," Kagan told the Times. "If she pursues a policy which we think she will pursue … it's something that might have been called neocon, but clearly her supporters are not going to call it that." ... ..."
"... Are Neocons Getting Ready to Ally With Hillary Clinton? http://nyti.ms/1qJ4eLN ..."
"... Robert Kagan Strikes a Nerve With Article on Obama Policy http://nyti.ms/UEuqtB ..."
"... doublethink has become synonymous with relieving cognitive dissonance by ignoring the contradiction between two world views – or even of deliberately seeking to relieve cognitive dissonance. (Wikipedia) ..."
...Europe was not in great shape before the refugee crisis and the terrorist attacks. The prolonged
Eurozone crisis eroded the legitimacy of European political institutions and the centrist parties
that run them, while weakening the economies of key European powers. The old troika-Britain, France
and Germany-that used to provide leadership on the continent and with whom the U.S. worked most closely
to set the global agenda is no more. Britain is a pale shadow of its former self. Once the indispensable
partner for the U.S., influential in both Washington and Brussels, the mediator between America and
Europe, Britain is now unmoored, drifting away from both. The Labor Party, once led by Tony Blair,
is now headed by an anti-American pacifist, while the ruling Conservative government boasts of its
"very special relationship" with China.
... ... ...
There is a Russian angle, too. Many of these parties, and even some mainstream political movements
across the continent, are funded by Russia and make little secret of their affinity for Moscow. Thus
Prime Minister Viktor Orban of Hungary has praised "illiberalism" and made common ideological cause
with Russian President Vladimir Putin. In Germany, a whole class of businesspeople, politicians,
and current and former government officials, led by former Chancellor Gerhard Schröder, presses constantly
for normalized relations with Moscow. It sometimes seems, in Germany
and perhaps in all of Europe, as if the only person standing in the way of full alliance with Russia
is German Chancellor Angela Merkel.
Now the Syrian crisis has further bolstered Russia's position. Although Europeans generally share
Washington's discomfort with Moscow's support for Mr. Assad and Russia's bombing of moderate Syrian
rebels, in the wake of the Paris attacks, any plausible partner in the fight against Islamic State
seems worth enlisting. In France, former President Nicolas Sarkozy has long been an advocate for
Russia, but now his calls for partnership with Moscow are echoed by President François Hollande,
who seeks a "grand coalition" with Russia to fight Islamic State.
Where does the U.S. fit into all this? The Europeans no longer know, any more than American allies
in the Middle East do. Most Europeans still like Mr. Obama. After President George W. Bush and the
Iraq war, Europeans have gotten the kind of American president they wanted.
But in the current crisis, this new, more restrained and intensely cautious post-Iraq America has
less to offer than the old superpower, with all its arrogance and belligerence.
The flip side of European pleasure at America's newfound Venusian outlook is the perception, widely
shared around the world, that the U.S. is a declining superpower, and that even if it is not objectively
weaker than it once was, its leaders' willingness to deploy power on behalf of its interests, and
on behalf of the West, has greatly diminished. As former German Foreign Minister Joschka Fischer
recently put it, the U.S. "quite obviously, is no longer willing-or able-to play its old role."
Mr. Fischer was referring specifically to America's role as the dominant power in the Middle East,
but since the refugee crisis and the attacks in Paris, America's unwillingness to play that role
has reverberations and implications well beyond the Middle East. What the U.S. now does or doesn't
do in Syria will affect the future stability of Europe, the strength of trans-Atlantic relations
and therefore the well-being of the liberal world order.
This is no doubt the last thing that Mr. Obama wants to hear, and possibly to believe. Certainly
he would not deny that the stakes have gone up since the refugee crisis and especially since Paris.
At the very least, Islamic State has proven both its desire and its ability to carry out massive,
coordinated attacks in a major European city. It is not unthinkable that it could carry out a similar
attack in an American city. This is new.
... ... ...
In 2002, a British statesman-scholar issued a quiet warning. "The challenge to the postmodern
world," the diplomat Robert Cooper argued, was that while Europeans might operate within their borders
as if power no longer mattered, in the world outside Europe, they needed to be prepared to use force
just as in earlier eras. "Among ourselves, we keep the law, but when we are operating in the jungle,
we must also use the laws of the jungle," he wrote. Europeans didn't heed this warning, or at least
didn't heed it sufficiently. They failed to arm themselves for the jungle, materially and spiritually,
and now that the jungle has entered the European garden, they are at a loss.
With the exercise of power barely an option, despite what Mr. Hollande promises, Europeans are
likely to feel their only choice is to build fences, both within Europe and along its periphery-even
if in the process they destroy the very essence of the European project. It is this sentiment that
has the Le Pens of Europe soaring in the polls.
What would such an effort look like? First, it would require establishing a safe zone in Syria,
providing the millions of would-be refugees still in the country a place to stay and the hundreds
of thousands who have fled to Europe a place to which to return. To establish such a zone, American
military officials estimate, would require not only U.S. air power but ground forces numbering up
to 30,000. Once the safe zone was established, many of those troops could be replaced by forces from
Europe, Turkey, Saudi Arabia and other Arab states, but the initial force would have to be largely
American.
In addition, a further 10,000 to 20,000 U.S. troops would be required to uproot Islamic State
from the haven it has created in Syria and to help local forces uproot it in Iraq. Many of those
troops could then be replaced by NATO and other international forces to hold the territory and provide
a safe zone for rebuilding the areas shattered by Islamic State rule.
At the same time, an internationally negotiated and blessed process of transition in Syria should
take place, ushering the bloodstained Mr. Assad from power and establishing a new provisional government
to hold nationwide elections. The heretofore immovable Mr. Assad would face an entirely new set of
military facts on the ground, with the Syrian opposition now backed by U.S. forces and air power,
the Syrian air force grounded and Russian bombing halted. Throughout the transition period, and probably
beyond even the first rounds of elections, an international peacekeeping force-made up of French,
Turkish, American and other NATO forces as well as Arab troops-would have to remain in Syria until
a reasonable level of stability, security and inter-sectarian trust was achieved.
Is such a plan so unthinkable? In recent years, the mere mention of
U.S. ground troops has been enough to stop any conversation. Americans, or at least
the intelligentsia and political class, remain traumatized by Iraq, and all calculations about what
to do in Syria have been driven by that trauma. Mr. Obama's advisers have been reluctant to present
him with options that include even smaller numbers of ground forces, assuming that he would reject
them. And Mr. Obama has, in turn, rejected his advisers' less ambitious proposals on the reasonable
grounds that they would probably be insufficient.
This dynamic has kept the president sneering at those who have wanted to do more but have been
reluctant to be honest about how much more. But it has also allowed him to be comfortable settling
for minimal, pressure-relieving approaches that he must know cannot succeed but which at least have
the virtue of avoiding the much larger commitment that he has so far refused to make.
The president has also been inclined to reject options that don't promise to "solve" the problems
of Syria, Iraq and the Middle East. He doesn't want to send troops only to put "a lid on things."
In this respect, he is entranced, like most Americans, by the image of the decisive engagement
followed by the victorious return home. But that happy picture is a myth. Even after the iconic American
victory in World War II, the U.S. didn't come home. Keeping a lid on things is exactly what the U.S.
has done these past 70 years. That is how the U.S. created this liberal world order.
In Asia, American forces have kept a lid on what had been, and would likely be again, a dangerous
multisided conflict involving China, Japan, Korea, India and who knows who else. In Europe, American
forces put a lid on what had been a chronic state of insecurity and war, making it possible to lay
the foundations of the European Union. In the Balkans, the presence of U.S. and European troops has
kept a lid on what had been an escalating cycle of ethnic conflict. In Libya, a similar international
force, with even a small American contingent, could have kept the lid on that country's boiling caldron,
perhaps long enough to give a new, more inclusive government a chance.
Preserving a liberal world order and international security is all about placing lids on regions
of turmoil. In any case, as my Brookings Institution colleague Thomas Wright observes, whether or
not you want to keep a lid on something really ought to depend on what's under the lid.
At practically any other time in the last 70 years, the idea of dispatching even 50,000 troops
to fight an organization of Islamic State's description would not have seemed too risky or too costly
to most Americans. In 1990-91, President George H.W. Bush, now revered as a judicious and prudent
leader, sent half a million troops across the globe to drive Iraq out of Kuwait, a country that not
one American in a million could find on a map and which the U.S. had no obligation to defend. In
1989, he sent 30,000 troops to invade Panama to topple an illegitimate, drug-peddling dictator. During
the Cold War, when presidents sent more than 300,000 troops to Korea and more than 500,000 troops
to Vietnam, the idea of sending 50,000 troops to fight a large and virulently anti-American terrorist
organization that had seized territory in the Middle East, and from that territory had already launched
a murderous attack on a major Western city, would have seemed barely worth an argument.
Not today. Americans remain paralyzed by Iraq, Republicans almost
as much as Democrats, and Mr. Obama is both the political beneficiary and the living symbol of this
paralysis. Whether he has the desire or capacity to adjust to changing circumstances is an open question.
Other presidents have-from Woodrow Wilson to Franklin Roosevelt to Bill Clinton-each
of whom was forced to recalibrate what the loss or fracturing of Europe would mean to American interests.
In Mr. Obama's case, however, such a late-in-the-game recalculation seems less likely. He may be
the first president since the end of World War II who simply doesn't care what happens to Europe.
If so, it is, again, a great irony for Europe, and perhaps a tragic one. Having excoriated the
U.S. for invading Iraq, Europeans played no small part in bringing on the crisis of confidence and
conscience that today prevents Americans from doing what may be necessary to meet the Middle Eastern
crisis that has Europe reeling. Perhaps there are Europeans today wishing that the U.S. will not
compound its error of commission in Iraq by making an equally unfortunate error of omission in Syria.
They can certainly hope.
Mr. Kagan is a senior fellow at the Brookings Institution and the author of "Of Paradise and
Power: America and Europe in the New World Order" and, most recently, "The World America Made."
You'd think ppl who brought the Iraq war, the best recruiters of ISIS, would be nowhere to
be seen; but no, are telling how to deal w/ISIS.
ilsm said in reply to anne...
Narrative is the foundation of their skewed analysis. Their object is to sell perpetual
war using super high tech, exquisitely expensive, contractor maintained versions of WW II formations
to expired resources eternally for the profits they deliver. They starve the safety net to pay
for their income security.
Fred C. Dobbs said in reply to anne...
Neoconservativism Is Down But Not Out of the 2016 Race
... In July of last year, the New York Times ran two pieces tying Clinton to the neoconservative
movement. In "The Next Act of the Neocons," (*) Jacob Heilbrunn argued that neocons like historian
Robert Kagan are putting their lot in with Clinton in an effort to stay relevant while the GOP
shies away from its past interventionism and embraces politicians like Senator Rand Paul:
'Other neocons have followed Mr. Kagan's careful centrism and respect for Mrs. Clinton.
Max Boot, a senior fellow at the Council on Foreign Relations, noted in the New Republic this
year that "it is clear that in administration councils she was a principled voice for a strong
stand on controversial issues, whether supporting the Afghan surge or the intervention in Libya."
And the thing is, these neocons have a point. Mrs. Clinton voted for the Iraq war; supported
sending arms to Syrian rebels; likened Russia's president, Vladimir V. Putin, to Adolf Hitler;
wholeheartedly backs Israel; and stresses the importance of promoting democracy.
It's easy to imagine Mrs. Clinton's making room for the neocons in her administration. No one
could charge her with being weak on national security with the likes of Robert Kagan on board.'
(The story also notes, prematurely, that the careers of older neocons like Wolfowitz are "permanently
buried in the sands of Iraq.")
Kagan served on Clinton's bipartisan foreign policy advisory board when she was Secretary
of State, has deep neocon roots. He was part of the Project for a New American Century, a
now-defunct think tank that spanned much of the second Bush presidency and supported a "Reaganite
policy of military strength and moral clarity." PNAC counted Kagan, Wolfowitz, Donald Rumsfeld,
William Kristol, and Jeb Bush among its members. In 1998, some of its members-including Wolfowitz,
Kagan, and Rumsfeld-signed an open letter to President Bill Clinton asking him to remove Saddam
Hussein from power.
A month before the Heilbrunn piece, the Times profiled Kagan (#),
who was critical of Obama's foreign policy, but supported Clinton. "I feel comfortable with her
on foreign policy," Kagan told the Times. "If she pursues a policy which we think she will pursue
… it's something that might have been called neocon, but clearly her supporters are not going
to call it that." ...
(I may be a HRC supporter but Neocons still make me anxious.)
'doublethink has become synonymous with relieving cognitive dissonance by ignoring the
contradiction between two world views – or even of deliberately seeking to relieve cognitive dissonance.'
(Wikipedia)
"... I loved that Bernie Sanders was willing to drop the "F-bomb" (fraud) on Wall Street but he needs to swing much harder at Clinton. Clinton was quick to zing O'Malley as a hypocrite by noting he appointed a former hedge-fund manager to some state regulatory position when given the chance, but yet neither Sanders or O'Malley hit back with the fact that her only child and Clinton Foundation board member, Chelsea Clinton, worked for the hedge fund of a Clinton family pal and mega-donor in 2006. ..."
"... I thought O'Malley had one of the best lines of the night when he said "I think it may be time for us to quit taking advice from economists" but it seemed to go mostly unnoticed and unappreciated. ..."
"... Sanders did a relatively good job of deflecting and not getting zinged by the 'gotcha' question but a full-frontal assault would have been much better. Stronger, more Presidential and with the added bonus of giving neo-liberal economists under the pay of plutocrats a black eye. Another missed opportunity. The questioner set it up perfectly for him. I would have loved to see the expression on her corn-fed face when Bernie turned her 'gotcha' question that she had spent so much time and thought crafting into the home-run answer of the evening. Perhaps it could happen in a debate in the near future. ..."
I couldn't believe my eyes and ears during the debate when Sanders impugned Clinton's
integrity for taking Wall Street super PAC money and she seemed to successfully deflect the
accusation by going full-bore star-spangled sparkle eagle. She played the vagina card then
quickly blurted out "9/11 New York" for applause while attempting conflate aiding and abetting
Wall Street with the 9/11 attacks and patriotism. I couldn't believe people were clapping and
I couldn't believe Clinton had the audacity to pull such a illogical and juvenile stunt on
live television, but yet CBS reported her highest approval scores of the debate were
registered during her confusing but emotionally rousing (for some people apparently) "vagina,
9/11" defense.
I loved that Bernie Sanders was willing to drop the "F-bomb" (fraud) on Wall Street but he
needs to swing much harder at Clinton. Clinton was quick to zing O'Malley as a hypocrite by
noting he appointed a former hedge-fund manager to some state regulatory position when given
the chance, but yet neither Sanders or O'Malley hit back with the fact that her only child and
Clinton Foundation board member, Chelsea Clinton, worked for the hedge fund of a Clinton
family pal and mega-donor in 2006. Neither candidate mentioned that her son-in-law and
the father of her grandchild who she is so fond of mentioning, just so happens to be an
extremely rich hedge fund manager who benefits handsomely from the Clinton's political
connections and prestige. This isn't mud, this is extremely germane, factual material already
on the public record. It gets to the core of who Hillary is and where her loyalties lie.
Hillary herself chose to identify unregulated derivatives and the repeal of Glass-Steagall as
the primary causes of the financial crisis. She either claimed directly or insinuated that she
would address these issues as President, but surprisingly no one pointed out that it was her
husband's administration that blocked Brooksley Born from regulating derivatives in the 1990's
and it was her husband's administration that effectively repealed Glass-Steagal with the
signing of Gramm-Leach-Billey act in 1999. It's not a stretch to say the Clinton's
deregulation of Wall Street paved the way for the crisis of 2008 and the extreme income
inequality of today. Wall Street is deeply unpopular and Bernie Sanders has built a candidacy
on two main issues: attacking Wall Street and addressing income inequality. These are punches
he can't afford not to throw at his rival when she holds a commanding lead in the polls plus
the support of the DNC and media establishment. Clinton is deeply corrupt and beholden to Wall
Street. She needs to be beaten with this stick hard and often. Attempting to deflect this very
accurate, very damaging criticism by wrapping herself in the flag and invoking feminism is a
cheap stunt that will only work so many times before people notice what she is doing. Bernie
needs to swing harder and keep at it, he already has the right message and Clinton is highly
vulnerable on his pet topics.
I thought O'Malley had one of the best lines of the night when he said "I think it may be
time for us to quit taking advice from economists" but it seemed to go mostly unnoticed and
unappreciated. I would have loved a frontal assault on the validity and integrity of
economists when the bespectacled lady in blue attempted to nail down Sanders with a 'gotcha'
question implying raising the minimum wage would be catastrophic for the economy because
"such-and-such economist" said so. There is so much disdain for science and academic
credentials in the heartland right now, it seems crazy not to harness this anti-academic
populist energy and redirect it to a deserving target like neo-liberal economists instead of
climate scientists. " How's that Laffer curve working out for ya Iowa? Are you feeling the
prosperity 'trickle down' yet?" Sanders did a relatively good job of deflecting and not
getting zinged by the 'gotcha' question but a full-frontal assault would have been much
better. Stronger, more Presidential and with the added bonus of giving neo-liberal economists
under the pay of plutocrats a black eye. Another missed opportunity. The questioner set it up
perfectly for him. I would have loved to see the expression on her corn-fed face when Bernie
turned her 'gotcha' question that she had spent so much time and thought crafting into the
home-run answer of the evening. Perhaps it could happen in a debate in the near future.
Last month, US Congresswoman Tulsi Gabbard went on CNN and laid bare Washington's Syria strategy.
In a remarkably candid interview with Wolf Blitzer, Gabbard calls Washington's effort
to oust Assad "counterproductive" and "illegal" before taking it a step further and accusing the
CIA of arming the very same terrorists who The White House insists are "sworn enemies."
In short, Gabbard all but tells the American public that the government is lying to them and may
end up inadvertently starting "World War III."
All this neoliberal talk about "maximizing shareholder value" and hidden redistribution mechanism
of wealth up. It;s all about executive pay. "Shareholder value" is nothing then a ruse for
getting outsize bonuses but top execs. Who cares if the company will be destroyed if you have a golden
parachute ?
Notable quotes:
"... IBM has blown $125 billion on buybacks since 2005, more than the $111 billion it invested in capital expenditures and R D. It's staggering under its debt, while revenues have been declining for 14 quarters in a row. It cut its workforce by 55,000 people since 2012. ..."
"... Big-pharma icon Pfizer plowed $139 billion into buybacks and dividends in the past decade, compared to $82 billion in R D and $18 billion in capital spending. 3M spent $48 billion on buybacks and dividends, and $30 billion on R D and capital expenditures. They're all doing it. ..."
"... Nearly 60% of the 3,297 publicly traded non-financial US companies Reuters analyzed have engaged in share buybacks since 2010. Last year, the money spent on buybacks and dividends exceeded net income for the first time in a non-recession period. ..."
"... This year, for the 613 companies that have reported earnings for fiscal 2015, share buybacks hit a record $520 billion. They also paid $365 billion in dividends, for a total of $885 billion, against their combined net income of $847 billion. ..."
"... Buybacks and dividends amount to 113% of capital spending among companies that have repurchased shares since 2010, up from 60% in 2000 and from 38% in 1990. Corporate investment is normally a big driver in a recovery. Not this time! Hence the lousy recovery. ..."
"... Financial engineering takes precedence over actual engineering in the minds of CEOs and CFOs. A company buying its own shares creates additional demand for those shares. It's supposed to drive up the share price. The hoopla surrounding buyback announcements drives up prices too. Buybacks also reduce the number of outstanding shares, thus increase the earnings per share, even when net income is declining. ..."
"... But when companies load up on debt to fund buybacks while slashing investment in productive activities and innovation, it has consequences for revenues down the road. And now that magic trick to increase shareholder value has become a toxic mix. Shares of buyback queens are getting hammered. ..."
"... Interesting that you mention ruse, relating to "buy-backs"…from my POV, it seems like they've legalized insider trading or engineered (a) loophole(s). ..."
"... On a somewhat related perspective on subterfuge. The language of "affordability" has proven to be insidiously clever. Not only does it reinforce and perpetuate the myth of "deserts", but camouflages the means of embezzling the means of distribution. Isn't distribution, really, the only rational purpose of finance, i.e., as a means of distribution as opposed to a means of embezzlement? ..."
"... "Results of all this financial engineering? Revenues of the S P 500 companies are falling for the fourth quarter in a row – the worst such spell since the Financial Crisis." ..."
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist,
and author, with extensive international work experience. Originally published at
Wolf Street.
Magic trick turns into toxic mix.
Stocks have been on a tear to nowhere this year. Now investors are praying for a Santa rally to
pull them out of the mire. They're counting on desperate amounts of share buybacks that companies
fund by loading up on debt. But the magic trick that had performed miracles over the past few years
is backfiring.
And there's a reason.
IBM has blown $125 billion on buybacks since 2005, more than the $111 billion it invested
in capital expenditures and R&D. It's staggering under its debt, while revenues have been declining
for 14 quarters in a row. It cut its workforce by 55,000 people since 2012. And its stock is
down 38% since March 2013.
Big-pharma icon Pfizer plowed $139 billion into buybacks and dividends in the past decade,
compared to $82 billion in R&D and $18 billion in capital spending. 3M spent $48 billion on buybacks
and dividends, and $30 billion on R&D and capital expenditures. They're all doing it.
"Activist investors" – hedge funds – have been clamoring for it. An investigative report by Reuters,
titled
The Cannibalized Company, lined some of them up:
In March, General Motors Co acceded to a $5 billion share buyback to satisfy investor Harry
Wilson. He had threatened a proxy fight if the auto maker didn't distribute some of the $25 billion
cash hoard it had built up after emerging from bankruptcy just a few years earlier.
DuPont early this year announced a $4 billion buyback program – on top of a $5 billion program
announced a year earlier – to beat back activist investor Nelson Peltz's Trian Fund Management,
which was seeking four board seats to get its way.
In March, Qualcomm Inc., under pressure from hedge fund Jana Partners, agreed to boost its
program to purchase $10 billion of its shares over the next 12 months; the company already had
an existing $7.8 billion buyback program and a commitment to return three quarters of its free
cash flow to shareholders.
And in July, Qualcomm announced 5,000 layoffs. It's hard to innovate when you're trying to please
a hedge fund.
CEOs with a long-term outlook and a focus on innovation and investment, rather than financial
engineering, come under intense pressure.
"None of it is optional; if you ignore them, you go away," Russ Daniels, a tech executive with
15 years at Apple and 13 years at HP, told Reuters. "It's all just resource allocation," he said.
"The situation right now is there are a lot of investors who believe that they can make a better
decision about how to apply that resource than the management of the business can."
Nearly 60% of the 3,297 publicly traded non-financial US companies Reuters analyzed have engaged
in share buybacks since 2010. Last year, the money spent on buybacks and dividends exceeded net income
for the first time in a non-recession period.
This year, for the 613 companies that have reported earnings for fiscal 2015, share buybacks
hit a record $520 billion. They also paid $365 billion in dividends, for a total of $885 billion,
against their combined net income of $847 billion.
Buybacks and dividends amount to 113% of capital spending among companies that have repurchased
shares since 2010, up from 60% in 2000 and from 38% in 1990. Corporate investment is normally a big
driver in a recovery. Not this time! Hence the lousy recovery.
Financial engineering takes precedence over actual engineering in the minds of CEOs and CFOs.
A company buying its own shares creates additional demand for those shares. It's supposed to drive
up the share price. The hoopla surrounding buyback announcements drives up prices too. Buybacks also
reduce the number of outstanding shares, thus increase the earnings per share, even when net income
is declining.
"Serving customers, creating innovative new products, employing workers, taking care of the
environment … are NOT the objectives of firms," sais Itzhak Ben-David, a finance professor of
Ohio State University, a buyback proponent, according to Reuters. "These are components in the
process that have the goal of maximizing shareholders' value."
But when companies load up on debt to fund buybacks while slashing investment in productive
activities and innovation, it has consequences for revenues down the road. And now that magic trick
to increase shareholder value has become a toxic mix. Shares of buyback queens are getting hammered.
Citigroup credit analysts looked into the extent to which this is happening – and why. Christine
Hughes, Chief Investment Strategist at
OtterWood Capital, summarized the Citi report this way: "This dynamic of borrowing from
bondholders to pay shareholders may be coming to an end…."
Their chart (via OtterWood Capital) shows that about half of the cumulative outperformance of
these buyback queens from 2012 through 2014 has been frittered away this year, as their shares, IBM-like,
have swooned...
... ... ...
Selected Skeptical Comments
Mbuna, November 21, 2015 at 7:31 am
Me thinks Wolf is slightly barking up the wrong tree here. What needs to be looked at is how
buy backs affect executive pay. "Shareholder value" is more often than not a ruse?
ng, November 21, 2015 at 8:58 am
probably, in some or most cases, but the effect on the stock is the same.
Alejandro, November 21, 2015 at 9:19 am
Interesting that you mention ruse, relating to "buy-backs"…from my POV, it seems like they've
legalized insider trading or engineered (a) loophole(s).
On a somewhat related perspective on subterfuge. The language of "affordability" has proven
to be insidiously clever. Not only does it reinforce and perpetuate the myth of "deserts", but
camouflages the means of embezzling the means of distribution. Isn't distribution, really, the
only rational purpose of finance, i.e., as a means of distribution as opposed to a means of embezzlement?
Jim, November 21, 2015 at 10:42 am
More nuance and less dogma please. The dogmatic tone really hurts what could otherwise be a
fine but more-qualified position.
"Results of all this financial engineering? Revenues of the S&P 500 companies are falling
for the fourth quarter in a row – the worst such spell since the Financial Crisis."
Eh, no. No question that buybacks *can* be asset-stripping and often are, but unless you tie capital
allocation decisions closer to investment in the business such that they're mutually exclusive,
this is specious and a reach. No one invests if they can't see the return. It would be just as
easy to say that they're buying back stock because revenue is slipping and they have no other
investment opportunities.
Revenues are falling in large part because these largest companies derive an ABSOLUTELY HUGE portion
of their business overseas and the dollar has been ridiculously strong in the last 12-15 months.
Rates are poised to rise, and the easy Fed-inspired rate arbitrage vis a vis stocks and "risk
on" trade are closing. How about a little more context instead of just dogma?
John Malone made a career out of financial engineering, something like 30% annual returns for
the 25 years of his CEO tenure at TCI. Buybacks were a huge part of that.
Perhaps an analysis of the monopolistic positions of so many American businesses that allow them
the wherewithal to underinvest and still buy back huge amounts of stock? If we had a more competitive
economy, companies would have less ability to underinvest. Ultimately, I think buybacks are more
a result than a cause of dysfunction, but certainly not always bad.
"... Can courage trump careerism? I believe that for the forseeable future the answer is "No". People are highly incentivized to take the path of least resistance and simply go along to get along. ..."
"... It would be wrong to excuse the inaction of the Obama DOJ and SEC crews as being the result of some larger "corrosion of our collective values." The capos in those crews are the people doing the corroding, and not one of them was forced to (not) do what they did. Notice that every last one of the initial bunch is presently being paid, by Wall Street, to the tune of millions of dollars per year. They opted to cover up crimes and take a pay-off in exchange. And they are owed punishment. ..."
I'm embedding the text of a short but must-read speech by
Robert Jenkins, a former banker, hedge fund manager, and regulator (Bank of England) who is now
a Senior Fellow at Better Markets. If nothing else, be sure to look at the partial list of bank misconduct
and activities currently under investigation.
Jenkins points out that regulatory reform has fallen
short on multiple fronts, and perhaps the most important is courage. Readers may understandably object
to him giving lip service to the idea that Bernanke acted courageously during the crisis (serving
the needs of banks via unconventional means is not tantamount to courage), but he is a Serious Person,
and making a case against Bernanke would detract from his bigger message about the lack of guts post-crisis.
Now there have been exceptions, like Benjamin Lawsky, Sheila Bair, Gary Gensler, Kara Stein, and
in a more insider capacity, Danny Tarullo. Contrast their examples with the typical cronyism and
lame rationalizations for inaction, particularly by the Department of Justice and the SEC. It's not
obvious how to reverse the corrosion of our collective values. But it is important to remember than
norms can shift much faster than most people think possible, with, for instance, the 1950s followed
by the radicalism and shifts in social values of the 1960s, which conservative elements are still
fighting to roll back.
We do not live in an economy or a polity that breeds or rewards the kind of public-mindedness
and civic virtue that gives you courage. The author thinks the system needs courageous people,
but posits no conception of where they would come from and how they would thrive in the current
system (news flash: they won't). So this is a classic "I see the problem clearly but can't see
that the solution is impossible under the current system" piece.
TMock
Agreed.
For those who desire real solutions, try this…
The Universal Principles of Sustainable Development
In Tavis Smiley's book, My Journey with Maya Angelou, he recounts an ongoing discussion the
two of them entertained throughout the years concerning which trait, Love or Courage, was more
important in realizing a full life. Angelou argued that acting courageously was the most important.
Smiley saw love as the moving force. While important and moving, the discussion has the dead-end
quality of not being able to move past the current system of injustice. I say this because in
the end, both support incremental change to the existing system as the means to bring about social
justice. The powerful elite have perfected the manipulation of incremental change to render it
powerless.
When trying to change a social system, courage is needed. Courage to form a vision of the future
that is based on public-mindedness and civic virtues that bring justice into the world. Our current
leaders are delivering the exact opposite of civic justice. Its time to call them out on their
duplicity, and ignore their vision of the future.
The courage that is needed today is not the courage to stand up to the criminals running things
and somehow make them change. It is the courage to make them irrelevant. Change will come from
the bottom up, one person at a time.
cnchal
And when one shows up, look what happens.
The disturbing fact is that laws have been broken but law breaking has not touched
senior management.
If they knew, then they were complicit. If they did not, then they were incompetent. Alternatively,
if the deserving dozens have indeed been banned from the field let the list be known – that we
might see some of that "professional ostracism" of which Governor Carney speaks. One person
who did lose his position and quite publicly at that was Martin Wheatley, the UK's
courageous conduct enforcer.
Meanwhile the chairman of Europe's largest bank, Douglas Flint at HSBC, remains
in situ – despite having been on the board since 1995; despite having signed off on the
acquisition of Household Finance; and despite having had oversight of tax entangled subsidiaries
in Switzerland and money laundering units in Mexico. Oh, and you'll love this: the recently retired
CEO of Standard Chartered is reportedly an advisor to Her Majesty's Government. Standard Chartered
was among the first to be investigated for violations of rogue regime sanctions. The bank
was fined heavily and may be so again.
Courageous people get fired, which leads to no courageous people left.
GlassHammer
Can courage trump careerism? I believe that for the forseeable future the answer is "No". People are highly incentivized
to take the path of least resistance and simply go along to get along.
susan the other
By extreme necessity (created by total dysfunction) we will probably wind up with planned and
coordinated economies that do not rely on speculation & credit to come up with the next great
idea. Those ideas will be forced to come from the top down. And the problems of unregulated capitalism
frantically chumming for inspiration and extreme profits will shrink back down from a world-eating
monster to just a fox or two.
Oliver Budde
It would be wrong to excuse the inaction of the Obama DOJ and SEC crews as being the result
of some larger "corrosion of our collective values." The capos in those crews are the people doing
the corroding, and not one of them was forced to (not) do what they did. Notice that every last
one of the initial bunch is presently being paid, by Wall Street, to the tune of millions of dollars
per year. They opted to cover up crimes and take a pay-off in exchange. And they are owed punishment.
Malcolm MacLeod, MD
Oliver: I believe that you hit the nail on the head, and
I wholeheartedly agree.
"... The biggest market in the world today is derivatives, money making money without a useful product or service in sight. With the market in derivatives being ten times larger than global GDP we can see that making useful products and providing useful services is nearly irrelevant even today. ..."
"... "When Capitalism reaches its zenith, everyone will be an investor and no one will be doing anything." ..."
"... This problem of debt vs income seems to reflect the ongoing financialization (extraction, not to be confused with financing) of the global economy rather than a focus on capital development of people and the social and productive infrastructure. ..."
"... The "new model" was inefficient (too many fingers in the pie, all of them extracting value), highly risky (often Ponzi finance from the beginning with reverse amortization), and critically dependent on rising home prices. Even leaving aside the pervasive fraud, the model was diametrically opposed to the public interest, that is, the promotion of the capital development of the economy. It left behind whole neighborhoods of abandoned homes as well as new home developments that could not be sold. ..."
"... In my understanding, the Great Depression was an implosion of the credit system after a period of over investment in productive capacity. The investors failing to pay the workers enough to buy the extra goods produced. The projected returns never materialised to pay back the debt… Boom! ..."
"... China still has implicit state control of the banking sector, they may still have the political will to make any bad debt disappear with the puff of a fountain pen. That option is always available to a sovereign. ..."
"... They specialized in mass production the way agribusiness has here, where the production is not where the consumption is. It's as if all the pig farmers of North Carolina and corn growers in Iowa woke up one morning and found out that the people of the Eastern Seaboard had all been put on a starvation diet. The economic results in the grain belt would not be pretty. Ditto China. ..."
"... Except that China ain't Iowa, they can create a middle class as big as Europe and US combined. ..."
"... It's just anathema for the ruling class to give the little guys a break. ..."
"... The global glut of oil and other resources can't just be attributed to rising production in "tight oil". Somehow the Powers that be are hiding a great deal of economic contraction. If the world economy were growing it would need oil, copper, lead, zinc, wood and wood pulp, gold, and other metals as inputs. What I want to know is the extent of the cover-up, and what the global economy really looks like. ..."
"... We are not competent to forecast the future yet. Even the weather surprises us. Its also the case that people who do have relevant data are quite likely to convert that into profit rather than share it. ..."
"... It's the collapse of bonded warehouse copper/aluminum/etc. lending frauds and all that rehypothecation. I don't think it's just a problem in end demand. It's a problem in the derivatives/futures market. ..."
"... Here is a very good case study for why people are always wrong about economy and markets. What happen to all the currency manipulators like Paul Krugman? ..."
We shouldn't be too surprised at falling commodity prices.
Using raw materials to make real things is all very 20th Century, financial engineering is
the stuff of the 21st Century.
When Capitalism reaches its zenith, everyone will be an investor and no one will be doing anything.
Central Bank inflated asset bubbles will provide for all.
The biggest market in the world today is derivatives, money making money without a useful product
or service in sight. With the market in derivatives being ten times larger than global GDP we can see that making
useful products and providing useful services is nearly irrelevant even today.
"When Capitalism reaches its zenith, everyone will be an investor and no one will be doing
anything."
+1000
Ah, that glorious day when we're all rich, rich, RICHer than Midas from interest, dividends, and
rents!!!
Just to amuse myself, I intend to be a dog poop scooper – and pick up some pocket change of 1
million dollars a poop…
This problem of debt vs income seems to reflect the ongoing financialization (extraction,
not to be confused with financing) of the global economy rather than a focus on capital development
of people and the social and productive infrastructure.
I liked how Wray and Mazzucato linked the two in their Mack the Turtle analogy.
"Underlying all of this financialization was the homeowner's income-something like Dr. Seuss's
King Yertle the Turtle-with layer upon layer of financial instruments, all of which were supported
by Mack the turtle's mortgage payments. The system collapsed because Mack fell delinquent on payments
he could not possibly have met: the house was overpriced (and the mortgage could have been for
more than 100% of the price!), the mortgage terms were too unfavorable, the fees collected by
all the links in the home mortgage finance food chain were too large, Mack had to take a cut of
pay and hours as the economy slowed, and the late fees piled up (fraudulently, in many cases as
mortgage servicers "lost" payments).
The "new model" was inefficient (too many fingers in the
pie, all of them extracting value), highly risky (often Ponzi finance from the beginning with
reverse amortization), and critically dependent on rising home prices. Even leaving aside the
pervasive fraud, the model was diametrically opposed to the public interest, that is, the promotion
of the capital development of the economy. It left behind whole neighborhoods of abandoned homes
as well as new home developments that could not be sold."
Interesting, the supposition here is that China is heading for a depression similar to the
Great Depression.
In my understanding, the Great Depression was an implosion of the credit system after a period
of over investment in productive capacity. The investors failing to pay the workers enough to
buy the extra goods produced. The projected returns never materialised to pay back the debt… Boom!
China could well be headed down that road, there isn't enough money getting into the pockets
of ordinary Chinese that's for sure. Elites everywhere just can't bring themselves to give a break
for those at the bottom.
China still has implicit state control of the banking sector, they may still have the political
will to make any bad debt disappear with the puff of a fountain pen. That option is always available
to a sovereign.
Then again they may just realize in time, someone needs to be paid to buy all the junk.
They were counting on us and the Europeans, but we've let them down. The race to the bottom
erased the global middle class that could buy Chinese consumer products.
They specialized in mass
production the way agribusiness has here, where the production is not where the consumption is.
It's as if all the pig farmers of North Carolina and corn growers in Iowa woke up one morning
and found out that the people of the Eastern Seaboard had all been put on a starvation diet. The
economic results in the grain belt would not be pretty. Ditto China.
The global glut of oil and other resources can't just be attributed to rising production in
"tight oil". Somehow the Powers that be are hiding a great deal of economic contraction. If the
world economy were growing it would need oil, copper, lead, zinc, wood and wood pulp, gold, and
other metals as inputs. What I want to know is the extent of the cover-up, and what the global
economy really looks like.
Where were you in 2011? I was here reading NC. One of the Links posted was a graph of the abrupt
shutdown of China's economy – It was a cliffscape.
Very long vertical drop off. So dramatic I
could hardly believe it and I said I was having trouble catching my breath. Another commenter
said it looked like a tsunami. Of exported deflation as it turns out.
Things have been extreme
since 2007 when the banksters began to fall; 2008 when Lehman crashed (just after the Beijing
Olympics, how convenient for China…) and credit shut down. China was doin' just fine until then.
In spite of the irrational mess in global capitalist eonomix.
The only way to remedy it was to
shut it down I guess. That's really not very fine-tuned for a system the whole world relies on,
is it?
Proceeds from the laughable assumption that official China economic numbers 'may not be as
reliable as we'd like' rather than being 'persistently and hugely faked,' (especially during slowdowns)
and ignores that the housing-market slowdown and huge unsold-RE-overhang will also necessarily
be accompanied by a price crash, hence a huge amount of toxic debt being exposed – really basic
boom/bust dynamics.
And no demographic boom coming to the rescue, either. (But he does repeatedly
invoke the magic 'service economy boom' mantra mentioned by Ilargi.) Thankfully most of the commenters
rightly take the author to task.
Firstly, its only China's buying that stops oil falling even further Sr Ilargi.
Secondly its a Peoples' Republic – employment must be maintained.
We are not competent to forecast the future yet. Even the weather surprises us. Its also the
case that people who do have relevant data are quite likely to convert that into profit rather
than share it.
Received a small airmail parcel today containing some replacement attachments for my Dremel
moto-tool … package was addressed from Shenzen, specifically the "Fuming Manufacturing Park".
It's the collapse of bonded warehouse copper/aluminum/etc. lending frauds and all that rehypothecation.
I don't think it's just a problem in end demand. It's a problem in the derivatives/futures market.
Here is a very good case study for why people are always wrong about economy and markets. What happen to all the currency manipulators like Paul Krugman?
"The wealth of another region excites their greed; and if it is weak, their lust for power as
well. Nothing from the rising to the setting of the sun is enough for them.
Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape,
and slaughter they falsely call empire; and where they make a desert, they call it peace."
Tacitus, Agricola
People are discouraged and disillusioned after almost thirty years of distorted governance, specially
in the aftermath of the 'Hope and Change' which quickly became 'Vain Hope for Change.'
Most cannot admit that their guys were in the pockets of Big Defense, Big Pharma, Big Energy, and
Wall Street.
The real question about Hillary comes down to this. Can you trust her to do what she
says she will do, the right things for her putative constituents and not her big money donors and
paymasters, once she takes office?
Or will that poor family who left the White House 'broke' and then mysteriously obtained a fortune
of over $100 million in the following years, thanks to enormous payments for 'speeches' from large
financial firms and huge donations to their Trust once again take care of the hand that pays them
the most?
This is not to say that there is a better alternative amongst the leading Republican candidates,
who have been and are still under the same types of payment arrangements, only with different people
signing the checks.
Or we could skip the middlemen entirely and just directly elect one of New York's most prominent
of their narcissist class directly, instead of another witless stooge of big money, and hope for
something different? And how will that likely work out for us?
It is an exceptionally hard time to be a human being in this great nation of ours.
And so what ought we to do? Wallow in cynicism and the sweet sickness of misanthropy and despair?
Vote strictly on the hope of our own narrow self-interest no matter the broader and longer term consequences,
and then face the inevitable blowback from injustice and repression?
Give up on our grandchildren and children because we are too tired and interested in our own short
term comfort? Too filled with selfishness, anger and hate to see straight, and do anything
but turn ourselves into mindless animals to escape the pain of being truly human? Do no thinking,
and just follow orders? This latter impulse has taken whole nations of desperate people into the
abyss.
Or do we stop wallowing in our specialness and self-pity, and 'stand on the shoulders of giants'
and confront what virtually every generation and every individual has had to wrestle with since the
beginning of recorded time?
Do we fall, finally stricken with grief in our blindness, on the road to Damascus and say at long
last, 'Lord, what then wilt thou have me to do?'
This is the question that circumstance is posing to us. And hopefully we will we heed the answer
that has been already given, to be 'steadfast, unshaken, always abounding in the work of the Lord,
knowing that in Him our labor is not in vain.'
And the touchstone of the alloy of our actions is love.
And so we have before us what Franklin Roosevelt so aptly characterized as our own 'rendezvous with
destiny.'
"... When it comes to the hubris of corporate chief financial officers, who have been more than happy leveraging up balance sheets in order to reward shareholders, the analysts didn't mince words. We find that corporate CFOs historically are inherently backward-looking when setting corporate financing decisions, relying on past extrapolations of economic activity, even when current market pricing suggests future investment returns may be lower, they wrote. ..."
"... That leaves downgrades by credit-rating agencies as one catalyst that could spark a turn in the cycle; downgrades of corporate credit have already exceeded upgrades this year at some of the bond graders. ..."
"... Might the rating agencies spoil the party? they asked. In the end we believe strong economic interests will overwhelm rationale considerations. Rating agencies remain heavily dependent on new issuance activity, face significant competitive pressures (as issuers will select two of three ratings) and appear unconcerned with where we are in the credit cycle (e.g., see Moody's latest conference call). ..."
"... With UBS having taken all those potential catalysts firmly off the table, that leaves just fundamentals to worry about. Who, for the past few years, has been worrying about those? [Sarcasm? - Editor] ..."
It's no secret that companies have been taking advantage of years of low interest rates to
sell cheap debt to eager investors, locking in lower funding costs that have allowed them to go
on a spree of share buybacks and mergers and acquisitions.
With fresh evidence that investors are becoming more discerning when it comes to corporate credit
as they approach the first interest rate rise in the U.S. in almost a decade, it's worth asking
whether anything might stop the trend of companies assuming more and more debt on their balance
sheets.
... ... ...
For a start, they note that higher funding costs are unlikely to dissuade companies from
continuing to tap the debt market since, even after a rate hike, financing costs will remain near
historic lows. "The predominant reason is the Fed[eral Reserve] is anchoring low interest rates,"
the analysts wrote.
When it comes to the hubris of corporate chief financial officers, who have been more than
happy leveraging up balance sheets in order to reward shareholders, the analysts didn't mince
words. "We find that corporate CFOs historically are inherently backward-looking when setting
corporate financing decisions, relying on past extrapolations of economic activity, even when
current market pricing suggests future investment returns may be lower," they wrote.
"Several management teams have been on the road indicating higher funding costs of up to 100 to
200 basis points would not impede attractive M&A deals, in their view."
Higher market volatility has often been cited as one factor that could knock the corporate
credit market off its seat...
That leaves downgrades by credit-rating agencies as one catalyst that could spark a turn
in the cycle; downgrades of corporate credit have already exceeded upgrades this year at some of
the bond graders. Here, Mish and Caprio offered some stunningly blunt words. "Might the
rating agencies spoil the party?" they asked. "In the end we believe strong economic interests
will overwhelm rationale considerations. Rating agencies remain heavily dependent on new issuance
activity, face significant competitive pressures (as issuers will select two of three ratings)
and appear unconcerned with where we are in the credit cycle (e.g., see Moody's latest conference
call)."
With UBS having taken all those potential catalysts firmly off the table, that leaves just
fundamentals to worry about. Who, for the past few years, has been worrying about those?
[Sarcasm? - Editor]
"Bottom line, we struggle to envision an end to the releveraging phenomenon-absent a
substantial correction in corporate earnings and/or broader risk assets," concluded the UBS
analysts.
It's not about Adam Smith, it's about well paid intellectual prostitutes hired to restore the rule
of financial oligarchy. The books discussed are
Chicagoedonomics: The Evolution of Chicago Free Market Economics by By Lanny Ebenstein (278pp)
and ECONOMICS RULES The Rights and Wrongs of the Dismal Science By Dani Rodrik (253pp)
Notable quotes:
"... He believed that government had a crucial role to play in a well-functioning economy. It should finance and run good schools, as well as build roads, bridges and parks, he argued. It should tax alcohol, sugar and tobacco, all of which impose costs on society. It should regulate businesses to protect workers. And it should tax the rich - who suffer from "indolence and vanity" - to help the poor. ..."
"... Which leftist economist was this? None other than Adam Smith, the inventor of the "invisible hand" and the icon of laissez-faire economics today. Smith's modern reputation is a caricature. ... ..."
David Leonhardt reviews 'Chicagonomics' and 'Economics Rules':
'Chicagonomics' and 'Economics Rules': He believed that government had a crucial role to play
in a well-functioning economy. It should finance and run good schools, as well as build roads, bridges
and parks, he argued. It should tax alcohol, sugar and tobacco, all of which impose costs on society.
It should regulate businesses to protect workers. And it should tax the rich - who suffer from "indolence
and vanity" - to help the poor.
Which leftist economist was this? None other than Adam Smith, the inventor of the "invisible
hand" and the icon of laissez-faire economics today. Smith's modern reputation is a caricature.
...
pgl
"Dani Rodrik, a Harvard economics professor, has written a much less political book than
Ebenstein has, titled "Economics Rules," in which he sets out to explain the discipline to
outsiders (and does a nice job). Yet in surveying the larger "rights and wrongs" of economics,
to quote his subtitle, Rodrik has diagnosed the central mistake that contemporary libertarians
have made: They have conflated ideas that often make sense with those that always make sense."
Dani is often under looked in these discussions which is a shame. His writings on how different
societies have dealt with their local issues is some of the most informed economics out there.
likbez -> pgl...
I think we need to distinguish between Friedman the academic economist before writing Capitalism
and Freedom (1962) and Friedman the public intellectual after.
"After" Friedman was a dismal intellectual prostitute that promoted neoliberalism for money paid
by financial oligarchy. The level of dishonesty and intellectual degradation that he displays in
his public appearances that now are available in YouTube videos is simply astonishing.
Actually Professor Wendy Brown touched the mechanics of this slick propaganda campaign in her
book "Undoing the Demos". From Amazon:
=== Start of quote === Neoliberal rationality -- ubiquitous today in statecraft and the workplace, in jurisprudence, education,
and culture -- remakes everything and everyone in the image of homo oeconomicus. What happens when
this rationality transposes the constituent elements of democracy into an economic register? In Undoing
the Demos, Wendy Brown explains how democracy itself is imperiled. The demos disintegrates into bits
of human capital; concerns with justice bow to the mandates of growth rates, credit ratings, and
investment climates; liberty submits to the imperative of human capital appreciation; equality dissolves
into market competition; and popular sovereignty grows incoherent. Liberal democratic practices may
not survive these transformations. Radical democratic dreams may not either.
In an original and compelling argument, Brown explains how and why neoliberal reason undoes the
political form and political imaginary it falsely promises to secure and reinvigorate. Through meticulous
analyses of neoliberalized law, political practices, governance, and education, she charts the new
common sense. Undoing the Demos makes clear that for democracy to have a future, it must become an
object of struggle and rethinking.
"... Lyndon LaRouche has observed that anybody acting according to this British agenda with the
intention of coming out on top is a fool, since the British financial-political empire is bankrupt and
its entire system is coming down. ..."
"... EU: British imperial interests are intent on destroying Prime Minister Putins bid for the Presidency,
and throwing Russia into deadly political turmoil. ..."
"... In her testimony, Diuk came off like a reincarnation of a 1950s Cold Warrior, raving against
the Russian government as authoritarian, dictators, and so forth. She said, The trend lines for freedom
and democracy in Russia have been unremittingly negative since Vladimir Putin took power and set about
the systematic construction of a representation of their interests within the state. She announced at
that point that the elections would be illegitimate: [T]he current regime will likely use the upcoming
parliamentary elections in December 2011 and presidential election in March 2012 with the inevitable
falsifications and manipulations, to claim the continued legitimacy of its rule. ..."
"... The British-educated Nadia Diuk is vice president of the National Endowment for Democracy,
from which perch she has spread Cold War venom against Putin and the Russian government. ..."
"... Rafal Rohozinski and Ronald Deibert, two top profilers of the Russian Internet, noted that
the Runet grew five times faster than the next fastest growing Internet region, the Middle East, in
2000-08. ..."
"... NED grant money has gone to Alexei Navalny (inset), the online anti-corruption activist and
cult figure of the December demonstrations. Addressing crowds on the street, Navalny sounds more like
Mussolini than a proponent of democracy. A Russian columnist found him reminiscent of either Hitler,
or Catalina, who conspired against the Roman Republic. Shown: the Dec. 24 demonstration in Moscow. ..."
January 9, 2012 -Organizers of the December 2011 "anti-vote-fraud" demonstrations in Moscow have
announced Feb. 4 as the date of their next street action, planned as a march around the city's Garden
Ring Road on the 22nd anniversary of a mass demonstration which paved the way to the end of the Soviet
Union. While there is a fluid situation within both the Russian extraparliamentary opposition layers,
and the ruling circles and other Duma parties, including a process of "dialogue" between them, in
which ex-Finance Minister Alexei Kudrin is playing a role, it is clear that British imperial interests
are intent on-if not actually destroying Prime Minister Vladimir Putin's bid for reelection as Russia's
President in the March 4 elections-casting Russia into ongoing, destructive political turmoil.
Lyndon LaRouche has observed that anybody acting according to this British agenda with the
intention of coming out on top is a fool, since the British financial-political empire is bankrupt
and its entire system is coming down.
Review of the events leading up to the Dec. 4, 2011 Duma elections, which the street demonstrators
demanded be cancelled for fraud, shows that not only agent-of-British-influence Mikhail Gorbachov,
the ex-Soviet President, but also the vast Project Democracy apparatus inside the United States,
exposed by EIR in the 1980s as part of an unconstitutional "secret government,"[1]
have been on full mobilization to block the current Russian leadership from continuing in power.
Project Democracy
Typical is the testimony of Nadia Diuk, vice president of the National Endowment for Democracy
(NED), before the Subcommittee on Europe and Eurasia of the U.S. House Committee on Foreign Affairs
last July 26. The NED is the umbrella of Project Democracy; it functions, inclusively, through the
International Republican Institute (IRI, linked with the Republican Party) and the National Democratic
Institute (NDI, linked with the Democratic Party, and currently headed by Madeleine Albright).
Diuk was educated at the U.K.'s Unversity of Sussex Russian studies program, and then taught at
Oxford University, before coming to the U.S.A. to head up the NED's programs in Eastern Europe and
Russia beginning 1990. She is married to her frequent co-author, Adrian Karatnycky of the Atlantic
Institute, who headed up the private intelligence outfit Freedom House[2]
for 12 years. Her role is typical of British outsourcing of key strategic operations to U.S. institutions.
EU: British imperial interests are intent on destroying Prime Minister Putin's bid for
the Presidency, and throwing Russia into deadly political turmoil.
In her testimony, Diuk came off like a reincarnation of a 1950s Cold Warrior, raving against
the Russian government as "authoritarian," "dictators," and so forth. She said, "The trend lines
for freedom and democracy in Russia have been unremittingly negative since Vladimir Putin took power
and set about the systematic construction of a representation of their interests within the state."
She announced at that point that the elections would be illegitimate: "[T]he current regime will
likely use the upcoming parliamentary elections in December 2011 and presidential election in March
2012 with the inevitable falsifications and manipulations, to claim the continued legitimacy of its
rule."
Diuk expressed renewed hope that the disastrous 2004 Orange Revolution experiment in Ukraine could
be replicated in Russia, claiming that "when the protests against authoritarian rule during Ukraine's
Orange Revolution brought down the government in 2004, Russian citizens saw a vision across the border
of an alternative future for themselves as a Slavic nation." She then detailed what she claimed were
the Kremlin's reactions to the events in Ukraine, charging that "the leaders in the Kremlin-always
the most creative innovators in the club of authoritarians-have also taken active measures to promote
support of the government and undermine the democratic opposition...."
Holos Ameryky
The British-educated Nadia Diuk is vice president of the National Endowment for Democracy,
from which perch she has spread "Cold War" venom against Putin and the Russian government.
While lauding "the democratic breakthroughs in the Middle East" in 2011, Diuk called on the Congress
to "look to [Eastern Europe] as the source of a great wealth of experience on how the enemies of
freedom are ever on the alert to assert their dominance, but also how the forces for freedom and
democracy will always find a way to push back in a struggle that demands our support."
In September, Diuk chaired an NED event featuring a representative of the NED-funded Levada Center
Russian polling organization, who gave an overview of the then-upcoming December 4 Duma election.
Also speaking there was Russian liberal politician Vladimir Kara-Murza, who predicted in the nastiest
tones that Putin will suffer the fate of President Hosni Mubarak in Egypt. In this same September
period, Mikhail Gorbachov, too, was already forecasting voting irregularities and a challenge to
Putin's dominance.
The NED, which has an annual budget of $100 million, sponsors dozens of "civil society" groups
in Russia. Golos, the supposedly independent vote-monitoring group that declared there would be vote
fraud even before the elections took place, has received NED money through the NDI since 2000. Golos
had a piecework program, paying its observers a set amount of money for each reported voting irregularity.
NED grant money has gone to Alexei Navalny-the online anti-corruption activist and cult figure of
the December demonstrations-since 2006, when he and Maria Gaidar (daughter of the late London-trained
shock therapy Prime Minister Yegor Gaidar) launched a youth debating project called "DA!" (meaning
"Yes!" or standing for "Democratic Alternative"). Gorbachov's close ally Vladimir Ryzhkov, currently
negotiating with Kudrin on terms of a "dialogue between the authorities and the opposition," also
received NED grants to his World Movement for Democracy.
Besides George Soros's Open Society Foundations (formerly, Open Society Institute, OSI), the biggest
source of funds for this meddling, including funding which was channeled through the NDI and the
IRI, is the U.S. Agency for International Development (USAID). Officially, USAID has spent $2.6 billion
on programs in Russia since 1992. The current acknowledged level is around $70 million annually,
of which nearly half is for "Governing Justly & Democratically" programs, another 30% for "Information"
programs, and only a small fraction for things like combatting HIV and TB. On Dec. 15, Assistant
Secretary of State, Bureau of European and Eurasian Affairs Philip Gordon announced that the Obama
Administration would seek Congressional approval to step up this funding, with "an initiative to
create a new fund to support Russian non-governmental organizations that are committed to a more
pluralistic and open society."
Awaiting McFaul
White House/Pete Souza
The impending arrival in Moscow of Michael McFaul (shown here with his boss in the Oval Office),
as U.S. Ambassador to Russia, is seen by many there as an escalation of Project Democracy efforts
to destabilize the country.
People from various parts of the political spectrum in Russia see the impending arrival of Michael
McFaul as U.S. Ambassador to Russia as an escalation in Project Democracy efforts to destabilize
Russia. McFaul, who has been Barack Obama's National Security Council official for Russia, has been
working this beat since the early 1990s, when he represented the NDI in Russia at the end of the
Soviet period, and headed its office there.
As a Russia specialist at Stanford's Freeman Spogli Institute for International Studies and Hoover
Institution, as well as the Carnegie Endowment, and an array of other Russian studies think tanks,
McFaul has stuck closely to the Project Democracy agenda. Financing for his research has come from
the NED, the OSI, and the Smith-Richardson Foundation (another notorious agency of financier interests
within the U.S. establishment). He was an editor of the 2006 book Revolution in Orange: The Origins
of Ukraine's Democratic Breakthrough, containing chapters by Diuk and Karatnycky.
In his own contribution to a 2010 book titled After Putin's Russia,[3]
McFaul hailed the 2004 Orange Revolution in Ukraine-which was notoriously funded and manipulated
from abroad-as a triumph of "people's political power from below to resist and eventually overturn
a fraudulent election."
Before coming to the NSC, one of McFaul's many positions at Stanford was co-director of the Iran
Democracy Project. He has also been active in such projects as the British Henry Jackson Society
which is active in the drive to overthrow the government of Syria.
The Internet Dimension
The December 2011 street demonstrations in Moscow were organized largely online. Participation
rose from a few hundred on Dec. 5, the day after the election, to an estimated 20,000 people on Bolotnaya
Square Dec. 10, and somewhere in the wide range of 30,000 to 120,000 on Academician Sakharov Prospect
Dec. 24.
Headlong expansion of Internet access and online social networking over the past three to five
years has opened up a new dimension of political-cultural warfare in Russia. An EIR investigation
finds that British intelligence agencies involved in the current attempts to destabilize Russia and,
in their maximum version, overthrow Putin, have been working intensively to profile online activity
in Russia and find ways to expand and exploit it. Some of these projects are outsourced to think
tanks in the U.S.A. and Canada, but their center is Cambridge University in the U.K.-the heart of
the British Empire, home of Bertrand Russell's systems analysis and related ventures of the Cambridge
Apostles.[4]
The scope of the projects goes beyond profiling, as can be seen in the Cambridge-centered network's
interaction with Russian anti-corruption crusader Alexei Navalny, a central figure in the December
protest rallies.
While George Soros and his OSI prioritized building Internet access in the former Soviet Union
starting two decades ago, as recently as in 2008 British cyberspace specialists were complaining
that the Internet was not yet efficient for political purposes in Russia. Oxford University's Reuters
Institute for the Study of Journalism produced a Soros-funded report in 2008, titled "The Web that
Failed: How opposition politics and independent initiatives are failing on the Internet in Russia."
The Oxford-Reuters authors regretted that processes like the Orange Revolution, in which online connections
were crucial, had not gotten a toehold in Russia. But they quoted a 2007 report by Andrew Kuchins
of the Moscow Carnegie Center, who found reason for optimism in the seven-fold increase in Russian
Internet (Runet) use from 2000 to 2007. They also cited Robert Orttung of American University and
the Resource Security Institute, on how Russian blogs were reaching "the most dynamic members of
the youth generation" and could be used by "members of civil society" to mobilize "liberal opposition
groups and nationalists."
Scarcely a year later, a report by the digital marketing firm comScore crowed that booming Internet
access had led to Russia's having "the world's most engaged social networking audience." Russian
Facebook use rose by 277% from 2008 to 2009. The Russia-based social networking outfit Vkontakte.ru
(like Facebook) had 14.3 million visitors in 2009; Odnoklassniki.ru (like Classmates.com) had 7.8
million; and Mail.ru-My World had 6.3 million. All three of these social networking sites are part
of the Mail.ru/Digital Sky Technologies empire of Yuri Milner,[5]
with the individual companies registered in the British Virgin Islands and other offshore locations.
The Cambridge Security Programme
Rafal Rohozinski and Ronald Deibert, two top profilers of the Russian Internet, noted that
the Runet grew five times faster than the next fastest growing Internet region, the Middle East,
in 2000-08.
Two top profilers of the Runet are Ronald Deibert and Rafal Rohozinski, who assessed its status
in their essay "Control and Subversion in Russian Cyberspace."[6]
At the University of Toronto, Deibert is a colleague of Barry Wellman, co-founder of the International
Network of Social Network Analysis (INSNA).[7]
Rohozinski is a cyber-warfare specialist who ran the Advanced Network Research Group of the Cambridge
Security Programme (CSP) at Cambridge University in 2002-07. Nominally ending its work, the CSP handed
off its projects to an array of organizations in the OpenNet Initiative (ONI), including Rohozinski's
SecDev Group consulting firm, which issues the Information Warfare Monitor.
The ONI, formally dedicated to mapping and circumventing Internet surveillance and filtering by
governments, is a joint project of Cambridge (Rohozinski), the Oxford Internet Institute, the Berkman
Center for Internet and Society at Harvard Law School, and the University of Toronto.
Deibert and Rohozinski noted that the Runet grew five times faster than the next fastest growing
Internet region, the Middle East, in 2000-08. They cited official estimates that 38 million Russians
were going online as of 2010, of whom 60 had broadband access from home; the forecast number of Russia-based
Runet users by 2012 was 80 million, out of a population of 140 million. Qualitatively, the ONI authors
welcomed what they called "the rise of the Internet to the center of Russian culture and politics."
On the political side, they asserted that "the Internet has eclipsed all the mass media in terms
of its reach, readership, and especially in the degree of free speech and opportunity to mobilize
that it provides."
This notion of an Internet-savvy core of the population becoming the focal point of Russian society
is now being hyped by those who want to push the December demonstrations into a full-scale political
crisis. Such writers call this segment of the population "the creative class," or "the active creative
minority," which can override an inert majority of the population. The Dec. 30 issue of Vedomosti,
a financial daily co-owned by the Financial Times of London, featured an article by sociologist
Natalya Zubarevich, which was then publicized in "Window on Eurasia" by Paul Goble, a State Department
veteran who has concentrated for decades on the potential for Russia to split along ethnic or other
lines.
Zubarevich proposed that the 31% of the Russian population living in the 14 largest cities,
of which 9 have undergone "post-industrial transformation," constitute a special, influential class,
as against the inhabitants of rural areas (38%) and mid-sized industrial cities with an uncertain
future (25%). Goble defined the big-city population as a target: "It is in this Russia that the
35 million domestic users of the Internet and those who want a more open society are concentrated."
The Case of Alexei Navalny
In the "The Web that Failed" study, Oxford-Reuters authors Floriana Fossato, John Lloyd, and Alexander
Verkhovsky delved into the missing elements, in their view, of the Russian Internet. What would it
take, they asked, for Runet participants to be able to "orchestrate motivation and meaningful commitments"?
They quoted Julia Minder of the Russian portal Rambler, who said about the potential for "mobilization":
"Blogs are at the moment the answer, but the issue is how to find a leading blogger who wants to
meet people on the Internet several hours per day. Leading bloggers need to be entertaining.... The
potential is there, but more often than not it is not used."
Creative Commons
Creative Commons/Bogomolov.PL
NED grant money has gone to Alexei Navalny (inset), the online
"anti-corruption" activist and cult figure of the December demonstrations. Addressing crowds on
the street, Navalny sounds more like Mussolini than a proponent of democracy. A Russian columnist
found him reminiscent of either Hitler, or Catalina, who conspired against the Roman Republic.
Shown: the Dec. 24 demonstration in Moscow.
It is difficult not to wonder if Alexei Navalny is a test-tube creation intended to fill the missing
niche. This would not be the first time in recent Russian history that such a thing happened. In
1990, future neoliberal "young reformers" Anatoli Chubais and Sergei Vasilyev wrote a paper under
International Institute for Applied Systems Analysis (IIASA) auspices, on the priorities for reform
in the Soviet Union. They stated that a certain personality was missing on the Soviet scene at that
time: the wealthy businessman. In their IIASA paper, Chubais and Vasilyev wrote: "We now see a figure,
arising from historical non-existence: the figure of a businessman-entrepreneur, who has enough capital
to bear the investment responsibility, and enough technological knowledge and willingness to support
innovation."[8]
This type of person was subsequently brought into existence through the corrupt post-Soviet privatization
process in Russia, becoming known as "the oligarchs." Was Navalny, similarly, synthesized as a charismatic
blogger to fill the British subversive need for "mobilization"?
Online celebrity Navalny's arrest in Moscow on Dec. 5, and his speech at the Academician Sakharov
Prospect rally on Dec. 24 were highlights of last month's turmoil in the Russian capital. Now 35
years old, Navalny grew up in a Soviet/Russian military family and was educated as a lawyer. In 2006,
he began to be financed by NED for the DA! project (see above). Along the way-maybe through doing
online day-trading, as some biographies suggest, or maybe from unknown benefactors-Navalny acquired
enough money to be able to spend $40,000 (his figure) on a few shares in each of several major Russian
companies with a high percentage of state ownership. This gave him minority-shareholder status, as
a platform for his anti-corruption probes.
It must be understood that the web of "corruption" in Russia is the system of managing cash flows
through payoffs, string-pulling, and criminal extortion, which arose out of the boost that Gorbachov's
perestroika policy gave to pre-existing Soviet criminal networks in the 1980s. It then experienced
a boom under darlings of London like Gaidar, who oversaw the privatization process known as the Great
Criminal Revolution in the 1990s. As Russia has been integrated into an international financial order,
which itself relies on criminal money flows from the dope trade and strategically motivated scams
like Britain's BAE operations in the Persian Gulf, the preponderance of shady activity in the Russian
economy has only increased.
Putin's governments inherited this system, and it can be ended when the commitment to monetarism,
which LaRouche has identified as a fatal flaw even among genuinely pro-development Russians, is broken
in Russia and worldwide. The current bankruptcy of the Trans-Atlantic City of London-Eurozone-Wall
Street system means that now is the time for this to happen!
Yale Fellows
In 2010, Navalny was accepted to the Yale World Fellows Program, as one of fewer than 20 approved
candidates out of over a thousand applicants. As EIR has reported, the Yale Fellows are instructed
by the likes of British Foreign Office veteran Lord Mark Malloch-Brown and representatives of Soros's
Open Society Foundations.[9]
What's more, the World Fellows Program is funded by The Starr Foundation of Maurice R. "Hank" Greenberg,
former chairman and CEO of insurance giant American International Group (AIG), the recipient of enormous
Bush Jr.-Obama bailout largesse in 2008-09; Greenberg and his C.V. Starr company have a long record
of facilitating "regime change" (aka coups), going back to the 1986 overthrow of President Ferdinand
Marcos in the Philippines. Navalny reports that Maria Gaidar told him to try for the program, and
he enjoyed recommendations from top professors at the New Economic School in Moscow, a hotbed
of neoliberalism and mathematical economics. It was from New Haven that Navalny launched his
anti-corruption campaign against Transneft, the Russian national oil pipeline company, specifically
in relation to money movements around the new East Siberia-Pacific Ocean pipeline. The ESPO has just
finished the first year of operation of its spur supplying Russian oil to China.
Navalny presents a split personality to the public. Online he is "Mr. Openness." He posts the
full legal documentation of his corruption exposés. When his e-mail account was hacked, and his correspondence
with U.S. Embassy and NED officials about funding him was made public, Navalny acknowledged that
the e-mails were genuine. He tries to disarm interviewers with questions like, "Do you think I'm
an American project, or a Kremlin one?"
During the early-January 2012 holiday lull in Russia, Navalny engaged in a lengthy, oh-so-civilized
dialogue in Live Journal with Boris Akunin (real name, Grigori Chkhartishvili), a famous detective-story
author and liberal activist who was another leader of the December demonstrations, about whether
Navalny's commitment to the slogan "Russia for the Russians" marks him as a bigot who is unfit to
lead. Addressing crowds on the street, however, Navalny sounds like Mussolini. Prominent Russian
columnist Maxim Sokolov, writing in Izvestia, found him reminiscent of either Hitler, or Catalina,
who conspired against the Roman Republic.
Navalny may well end up being expendable in the view of his sponsors. In the meantime, it is clear
that he is working from the playbook of Gene Sharp, whose neurolinguistic programming and advertising
techniques were employed in Ukraine's Orange Revolution in 2004.[10]
Sharp, a veteran of "advanced studies" at Oxford and 30 years at Harvard's Center for International
Affairs, is the author of The Politics of Nonviolent Action: Power and Struggle, which advises
the use of symbolic colors, short slogans, and so forth.
While at Yale, Navalny also served as an informant and advisor for a two-year study conducted
at Harvard's Berkman Center for Internet and Society, one of the institutions participating in the
OpenNet Initiative, launched out of Cambridge University in the U.K. The study produced a profile
titled "Mapping the Russian Blogosphere," which detailed the different sections of the Runet: liberal,
nationalist, cultural, foreign-based, etc., looking at their potential social impact.
Allen Douglas, Gabrielle Peut, David Christie, and Dorothea Bunnell did research for this article.
[1] "Project Democracy: The 'parallel government' behind the Iran-Contra affair," Washington,
D.C.: EIR Research, Inc., 1987. This 341-page special report explored the connection between the
National Endowment for Democracy (NED) and the illegal gun-running operations of Col. Oliver North,
et al., which had been mentioned in cursory fashion in the Tower Commission report on that "Iran-Contra"
scandal. Lyndon H. LaRouche, Jr.'s introduction to the report identified the roots of North's
"Irangate" gun-running in Henry A. Kissinger's reorganization of U.S. intelligence under President
Richard M. Nixon, in the wake of post-Watergate findings by the 1975 Senate Select Committee to
Study Governmental Operations with Respect to Intelligence Activities (Church Committee). The
process of replacing traditional intelligence functions of government with National Security Council-centered
operations, often cloaked as promoting ``democracy'' worldwide, was continued under the Trilateral
Commission-created Administration of Jimmy Carter. Supporting ``democracy''--often measured by
such criteria as economic deregulation and extreme free-market programs, which ravage the populations
that are supposedly being democratized--became an axiom of U.S. foreign policy. The NED itself
was founded in 1983.
[2] "Profile:
'Get LaRouche' Taskforce: Train Salon's Cold War Propaganda Apparat,"EIR, Sept. 29,
2006, reviews the Truman-era roots of relations among Anglo-American intelligence figures John
Train, James Jesus Angleton, Jay Lovestone, and Leo Cherne, all of whom were later active against
LaRouche and his influence. Cherne's International Rescue Committee (IRC) was described by Daniel
Patrick Moynihan, its one-time director of public relations, as an instrument of "psychological
warfare." The closely related Freedom House project was directed by Cherne for many years. Geostrategists
such as Zbigniew Brzezinski, who has written that Russia is destined to fragment as the Soviet
Union did, have sat on its board.
[3] Stephen K. Wegren, Dale Roy Herspring (eds.), After Putin's Russia: Past Imperfect,
Future Uncertain, Lanham, Md.: Rowman & Littlefield, 2010, p. 118.
[4] Craig Isherwood, "Universal Principles vs. Sense Certainty," The New Citizen, October/November
2011, p. 12 (http://cecaust.com.au/pubs/pdfs/cv7n6_pages12to14.pdf).
Founded as the Cambridge Conversazione Society in 1820, by Cambridge University professor and
advisor to the British East India Company, the Rev. Charles Simeon, the Apostles are a secret
society limited to 12 members at a time. Its veterans have held strategic intelligence posts for
the British Empire, both in the heyday of overt colonialism, and in the continuing financial empire
and anti-science "empire of the mind," for nearly two centuries, during which Cambridge was the
elite university in Britain, Trinity College was the elite college within Cambridge, and the Apostles
were the elite within Trinity. Isherwood reported, "Among other doctrines, the Apostles founded:
Fabian socialism; logical positivism specifically against physical chemistry; most of modern psychoanalysis;
all modern economic doctrines, including Keynesianism and post-World War II 'mathematical economics';
modern digital computers and 'information theory'; and systems analysis. They also founded the
world-famous Cavendish Laboratory as the controlling priesthood for science, to attack Leibniz,
Gauss, and Riemann, in particular.... John Maynard Keynes, a leader of the Apostles, ... traced
the intellectual traditions of the Apostles back to John Locke and Isaac Newton, and through Newton
back to the ancient priesthood of Babylon." The group's abiding focus on influencing Russia is
exemplified by not only Bertrand Russell himself, but also the involvement of several members
of the Apostles, including Lord Victor Rothschild of the banking family, and future Keeper of
the Queen's Pictures Sir Anthony Blunt, in the Anglo-Soviet spy rings of the mid-20th Century.
[5] Billionaire Milner is a self-described failed physicist. He worked for the World Bank
on Russian banking issues in the 1990s, before making his fortune as one of Russia's newly minted
"oligarchs"-a business partner of now-jailed Mikhail Khodorkovsky in the Menatep banking group,
among other projects.
[6] In Access Controlled: The Shaping of Power, Rights, and Rule in Cyberspace, an
OpenNet Initiative (ONI) book, Cambridge, Mass.: The MIT Press, 2010.
[8] Anatoliy Chubais and Sergei A. Vasiliev, "Privatization in the USSR: Necessary for Structural
Change," in Economic Reform and Integration: Proceedings of 1-3 March 1990 Meeting, Laxenberg,
Austria: IIASA, July 1990. The authors' notion of a charismatic businessman-entrepreneur comes
straight from Austrian economist Joseph Schumpeter who coined the term Unternehmergeist,
or "entrepreneur-spirit," to describe people he called agents of "creative destruction."
Hillary tried to play the gender card and the 9/11 card in an attempt to escape to accusation
(actually a provable fact) that she is a Wall Street sheel. "Why has Wall Street been the major
campaign contributor to Hillary Clinton?" Sanders asked loudly, concluding that big contributors only
give because "They expect to get something. Everybody knows it."
...Clinton asserted that under her
bank-regulation plan, if Wall Street institutions don't play by the rules "I will break them up."
Sanders minced her defense into peaces: "Wall Street play by the rules? Who are we kidding?!
The business model for Wall Street is fraud," Sanders fired back.
A short time later, the moderators got a tweet calling her out for "invoking 9/11" to justify taking
donations from Wall Street. One tweeter said they'd never seen a candidate "invoke 9/11 to champion
Wall Street. What does that have to do with taking big donations," Clinton was asked.
Sanders said that there's no getting around the fact that Wall Street has become a dominant political
power and its "business model is greed and fraud, and for the sake of our economy major banks must be
broken up."
Bernie compared himself to Ike, scoring one of the few real laugh lines of the night. CBS News moderator
Nancy Cordes asked Sanders how he's going to pay for expensive programs such as his tuition-free college
plan. By taxing the wealthy and big corporations, he says. Asked how much of a tax hike he's planning
to stick them with, he responded, "We haven't come up with an exact number yet … But it will not be
as high as the number under Dwight D. Eisenhower which was 90%," Sanders said of the Republican president.
"I'm not that much of a socialist compared to Eisenhower," Sanders concluded, to guffaws from the
crowd.
Senator Sanders, let me just follow this line of thinking. You've criticized then Senator Clinton's
vote. Do you have anything to criticize in the way she performed as secretary of state?
BERNIE SANDERS:
I think we have a disagreement. And-- the disagreement is that not only did I vote against the
war in Iraq, if you look at history, John, you will find that regime change-- whether it was in the
early '50s in Iran, whether it was toppling Salvador Allende in Chile or whether it was overthrowing
the government Guatemala way back when-- these invasions, these-- these toppling of governments,
regime changes have unintended consequences. I would say that on this issue I'm a little bit more
conservative than the secretary.
JOHN DICKERSON:
Here, let me go--
MARTIN O'MALLEY:
John, may I-- may I interject here? Secretary Clinton also said that we left the h-- it was not
just the invasion of Iraq which Secretary Clinton voted for and has since said was a big mistake,
and indeed it was. But it was also the cascading effects that followed that.
It was also the disbanding of-- many elements of the Iraqi army that are now showing up as part
of ISIS. It was-- country after country without making the investment in human intelligence to understand
who the new leaders were and the new forces were that are coming up. We need to be much more far
f-- thinking in this new 21st century era of-- of nation state failures and conflict. It's not just
about getting rid of a single dictator. It is about understanding the secondary and third consequences
that fall next.
JOHN DICKERSON:
Governor O'Malley, I wanna ask you a question and you can add whatever you'd like to. But let
me ask you, is the world too dangerous a place for a governor who has no foreign policy experience?
MARTIN O'MALLEY:
John, the world is a very dangerous place. But the world is not too dangerous of a place for the
United States of America provided we act according to our principles, provided we act intelligently.
I mean, let's talk about this arc of-- of instability that Secretary Clinton talked about.
Libya is now a mess. Syria is a mess. Iraq is a mess. Afghanistan is a mess. As Americans we have
shown ourselves-- to have the greatest military on the face of the planet. But we are not so very
good at anticipating threats and appreciating just how difficult it is to build up stable democracies
and make the investments in sustainable development that we must as the nation if we are to attack
the root causes of-- of the source of-- of instability.
And I wanted to add one other thing, John, and I think it's important for all of us on this stage.
I was in Burlington, Iowa and a mom of a service member of ours who served two duties in Iraq said,
"Governor O'Malley, please, when you're with your other candidates and colleagues on-- on stage,
please don't use the term boots on Iraq-- on the ground. Please don't use the term boots on the ground.
My son is not a pair of boots on the ground."
These are American soldiers and we fail them when we fail to take into account what happens the
day after a dictator falls. And when we fall to act with a whole of government approach with sustainable
development, diplomacy and our economic power in-- alignment with our principles.
BERNIE SANDERS:
But when you talk about the long-term consequences of war let's talk about the men and women who
came home from war. The 500,000 who came home with P.T.S.D. and traumatic brain injury. And I would
hope that in the midst of all of this discussion this country makes certain that we do not turn our
backs on the men and women who put their lives on the line to defend us. And that we stand with them
as they have stood with us.
JOHN DICKERSON:
Senator Sanders, you've-- you've said that the donations to Secretary Clinton are compromising.
So what did you think of her answer?
BERNIE SANDERS:
Not good enough. (LAUGH) Here's the story. I mean, you know, let's not be naive about it. Why
do-- why over her political career has Wall Street a major-- the major-- campaign contributor to
Hillary Clinton? You know, maybe they're dumb and they don't know what they're gonna get. But I don't
think so.
Here is the major issue when we talk about Wall Street, it ain't complicated. You got six financial
institutions today that have assets of 56 per-- equivalent to 50-- six percent of the GDP in America.
They issue two thirds of the credit cards and one third of the mortgages. If Teddy Roosevelt, the
good republican, were alive today you know what he'd say? "Break them up. Reestablish (APPLAUSE)
(UNINTEL) like Teddy Roosevelt (UNINTEL) that is leadership. So I am the only candidate up here that
doesn't have a super PAC. I'm not asking Wall Street or the billionaires for money. I will break
up these banks, support community banks and credit unions-- credit unions. That's the future of banking
in America.
JOHN DICKERSON:
Quick follow-up because you-- you-- (APPLAUSE) Secretary Clinton, you'll get a chance to respond.
You said they know what they're going to get. What are they gonna get?
BERNIE SANDERS:
I have never heard a candidate, never, who's received huge amounts of money from oil, from coal,
from Wall Street, from the military industrial complex, not one candidate, go, "OH, these-- these
campaign contributions will not influence me. I'm gonna be independent." Now, why do they make millions
of dollars of campaign contributions? They expect to get something. Everybody knows that. Once again,
I am running a campaign differently than any other candidate. We are relying on small campaign donors,
$750,000 and $30 apiece. That's who I'm indebted to.
BERNIE SANDERS:
Here's-- she touches on two broad issues. It's not just Wall Street. It's campaigns, a corrupt
campaign finance system. And it is easy to talk the talk about ending-- Citizens United. But what
I think we need to do is show by example that we are prepared to not rely on large corporations and
Wall Street for campaign contributions.
And that's what I'm doing. In terms of Wall Street I respectfully disagree with you, Madame Secretary
in the sense that the issue is when you have such incredible power and such incredible wealth, when
you have Wall Street spending five billion dollars over a ten year period to get re-- to get deregulated
the only answer that I know is break them up, reestablish Glass Steagall.
JOHN DICKERSON:
Senator, we have to get Senator O'Malley in. But no-- along with your answer how many Wall Street--
veterans would you have in your administration?
MARTIN O'MALLEY:
Well, I'll tell you what, I've said this before, I-- I don't-- I believe that we actually need
some new economic thinking in the White House. And I would not have Robert Rubin or Larry Summers
with all due respect, Secretary Clinton, to you and to them, back on my council of economic advisors.
HILLARY CLINTON:
Anyone (UNINTEL PHRASE).
MARTIN O'MALLEY:
If they were architects, sure, we'll-- we'll have-- we'll have an inclusive group. But I won't
be taking my orders from Wall Street. And-- look, let me say this-- I put out a proposal-- I was
on the front line when people lost their homes, when people lost their jobs.
I was on the front lines as the governor-- fighting against-- fighting that battle. Our economy
was wrecked by the big banks of Wall Street. And Secretary Clinton-- when you put out your proposal
(LAUGH) on Wall Street it was greeted by many as quote/ unquote weak tea. It is weak tea. It is not
what the people expect of our country. We expect that our president will protect the main street
economy from excesses on Wall Street. And that's why Bernie's right. We need to reinstate a modern
version of Glass Steagall and we should have done it already. (APPLAUSE)
KATHIE OBRADOVICH:
And I will also go after executives who are responsible for the decisions that have such bad consequences
for our country. (APPLAUSE)
BERNIE SANDERS:
Look, I don't know-- with all due respect to the secretary, Wall Street played by the rules. Who
are we kidding? The business model of Wall Street is fraud. That's what it is. And we-- we have--
(APPLAUSE) and let me make this promise, one of the problems we have had I think all-- all Americans
understand it is whether it's republican administration or democratic administration we have seen
Wall Street and Goldman Sachs dominate administrations. Here's my promise Wall Street representatives
will not be in my cabinet. (APPLAUSE)
BERNIE SANDERS:
But let's-- let me hear it-- if there's any difference between the secretary and myself. I have
voted time and again to-- for-- for the background checks. And I wanna see it improved and expanded.
I wanna see them do away with the gun show loophole. In 1988 I lost an election because I said we
should not have assault weapons on the streets of America.
We have to do away with the strong man proposal. We need radical changes in mental health in America.
So somebody who's suicidal or homicidal can get the emergency care they need. But we have-- I don't
know that there's any disagreement here.
MARTIN O'MALLEY:
John, this is another one of those examples. Look, we have-- we have a lot of work to do. And
we're the only nation on the planet that buries as many of our people from gun violence as we do
in my own state after they-- the children in that Connecticut classroom were gunned down, we passed
comprehensive-- gun safety legislation, background checks, ban on assault weapons.
And senator, I think we do need to repeal that immunity that you granted to the gun industry.
But Secretary Clinton, you've been on three sides of this. When you ran in 2000 you said that we
needed federal robust regulations. Then in 2008 you were portraying yourself as Annie Oakley and
saying that we don't need those regulation on the federal level. And now you're coming back around
here. So John, there's a big difference between leading by polls and leading with principle. We got
it done in my state by leading with principle. And that's what we need to do as a party, comprehensive
gun--
MARTIN O'MALLEY:
John, there is not-- a serious economist who would disagree that the six big banks of Wall Street
have taken on so much power and that all of us are still on the hook to bail them out on their bad
debts. That's not capitalism, Secretary Clinton-- Clinton, that's crummy capitalism.
That's a wonderful business model if you place that bet-- the taxpayers bail you out. But if you
place good ones you pocket it. Look, I don't believe that the model-- there's lots of good people
that work in finance, Secretary Sanders. But Secretary Clinton, we need to step up. And we need to
protect main street from Wall Street. And you can't do that by-- by campaigning as the candidate
of Wall Street. I am not the candidate of Wall Street. And I encourage--
BERNIE SANDERS:
No, it's not throwing-- it is an extraordinary investment for this country. In Germany, many other
countries do it already. In fact, if you remember, 50, 60 years ago, University of California, City
University of New York were virtually tuition-free. Here it's a new (?) story.
It's not just that college graduates should be $50,000 or $100,000 in debt. More importantly,
I want kids in Burlington, Vermont, or Baltimore, Maryland, who are in the six grade or the eighth
grade who don't have a lot of money, whose parents that-- like my parents, may never have gone to
college. You know what I want, Kevin? I want those kids to know that if they study hard, they do
their homework, regardless of the income of their families, they will in fact be able to great a
college education. Because we're gonna make public colleges and universities tuition-free. This is
revolutionary for education in America. It will give hope for millions of young people.
BERNIE SANDERS:
It's not gonna happen tomorrow. And it's probably not gonna happen until you have real campaign finance
reform and get rid of all these super PACs and the power of the insurance companies and the drug
companies. But at the end of the day, Nancy, here is a question. In this great country of ours, with
so much intelligence, with so much capabilities, why do we remain the only (UNINTEL) country on earth
that does not guarantee healthcare to all people as a right?
Why do we continue to get ripped off by the drug companies who can charge us any prices they want?
Why is it that we are spending per capita far, far more than Canada, which is a hundred miles away
from my door, that guarantees healthcare to all people? It will not happen tomorrow. But when millions
of people stand up and are prepared to take on the insurance companies and the drug companies, it
will happen and I will lead that effort. Medicare for all, single-payer system is the way we should
go. (APPLAUSE)
BERNIE SANDERS:
Well-- I had the honor of being chairman of the U.S. Senate Committee on Veteran Affairs for two
years. And in that capacity, I met with just an extraordinary group of people from World War II,
from Korea, Vietnam, all of the wars. People who came back from Iraq and Afghanistan without legs,
without arms. And I've been determined to do everything that I could to make VA healthcare the best
in the world, to expand benefits to the men and women who put their lives on the line to defend (UNINTEL).
And we brought together legislation, supported by the American Legion, the VFW, the DAV, Vietnam
Vets, all of the veterans' organizations, which was comprehensive, clearly the best (UNINTEL) for
veterans' legislation brought forth in decades. I could only get two Republican votes on that. And
after 56 votes, we didn't get 60. So what I have to do then is go back and start working on a bill
that wasn't the bill that I wanted.
To (UNINTEL) people like John McCain, to (UNINTEL) people like Jeff Miller, the Republican chairman
of the House, and work on a bill. It wasn't the bill that I wanted. But yet, it turns out to be one
of the most significant pieces of veterans' legislation passed in recent history. You know, the crisis
was, I lost what I wanted. But I have to stand up and come back and get the best that we could.
JOHN DICKERSON:
All right, Senator Sanders. We end-- (APPLAUSE) we've ended the evening on crisis, which underscores
and reminds us again of what happened last night. Now let's move to closing statements, Governor
O'Malley?
MARTIN O'MALLEY:
John, thank you. And to all of the people of Iowa, for the role that you've performed in this
presidential selection process, if you believe that our country's problems and the threats that we
face in this world can only be met with new thinking, new and fresh approaches, then I ask you to
join my campaign. Go onto MartinOMalley.com. No hour is too short, no dollar too small.
If you-- we will not solve our nation's problems by resorting to the divisive ideologies of our
past or by returning to polarizing figures from our past. We are at the threshold of a new era of
American progress. That it's going to require that we act as Americans, based on our principles.
Here at home, making an economy that works for all of us.
And also, acting according to our principles and constructing a new foreign policy of engagement
and collaboration and doing a much better job of identifying threats before they back us into military
corners. There is new-- no challenge too great for the United States to confront, provided we have
the ability and the courage to put forward new leadership that can move us to those better and safer
and more prosperous (UNINTEL). I need your help. Thank you very, very much. (APPLAUSE)
BERNIE SANDERS:
This country today has more income and wealth inequality than any major country on earth. We have
a corrupt campaign finance system, dominated by super PACs. We're the only major country on earth
that doesn't guarantee healthcare to all people. We have the highest rate of childhood poverty. And
we're the only in the world, (UNINTEL) the only country that doesn't guarantee paid family and medical
leave. That's not the America that I think we should be.
But in order to bring about the changes that we need, we need a political revolution. Millions
of people are gonna have to stand up, turn off the TVs, get involved in the political process, and
tell the big monied interests that we are taking back our country. Please go to BernieSanders.com,
please become part of the political revolution. Thank you. (CHEERING) (APPLAUSE)
"... Political Institutions under Dictatorship ..."
"... Competitive authoritarianism: hybrid regimes after the cold war ..."
"... Journal of Economic Perspectives ..."
"... Political Science Quarterly ..."
"... The Pinochet Effect: Transnational Justice in the Age of Human Rights ..."
"... the US needs to only be mildly interventionist, since moneyed interests will own the megaphones
and censor their own workers; and since the one-sidedness of information is no threat to the regime.
..."
"... In light of the New American Police State, post 9-11, it is clear to me that the United States
has undergone a coup d'etat. ..."
"... Most of us back Chavez, Morales, or Correa for the policies they have followed in their own
countries to the benefit of the great masses of the poor and their refusal to put the interests of international
capital ahead of their people. ..."
The new authoritarianism,
by Sergei Guriev, Daniel Treisman, Vox EU: The changing dictatorships Dictatorships
are not what they used to be. The totalitarian tyrants of the past – such as Hitler, Stalin, Mao,
or Pol Pot – employed terror, indoctrination, and isolation to monopolize power. Although less
ideological, many 20th-century military regimes also relied on mass violence to intimidate dissidents.
Pinochet's agents, for instance, are thought to have tortured and killed tens of thousands of
Chileans (Roht-Arriaza 2005).
However, in recent decades new types of authoritarianism have emerged that seem better adapted
to a world of open borders, global media, and knowledge-based economies. From the Peru of Alberto
Fujimori to the Hungary of Viktor Orban, illiberal regimes have managed to consolidate power without
fencing off their countries or resorting to mass murder. Some bloody military regimes and totalitarian
states remain – such as Syria and North Korea – but the balance has shifted.
The new autocracies often simulate democracy, holding elections that the incumbents almost
always win, bribing and censoring the private press rather than abolishing it, and replacing comprehensive
political ideologies with an amorphous resentment of the West (Gandhi 2008, Levitsky and Way 2010).
Their leaders often enjoy genuine popularity – at least after eliminating any plausible rivals.
State propaganda aims not to 'engineer human souls' but to boost the dictator's ratings. Political
opponents are harassed and defamed, charged with fabricated crimes, and encouraged to emigrate,
rather than being murdered en masse.
Dictatorships and information
In a recent paper, we argue that the distinctive feature of such new dictatorships is a preoccupation
with information (Guriev and Treisman 2015). Although they do use violence at times, they maintain
power less by terrorizing victims than by manipulating beliefs. Of course, surveillance and propaganda
were important to the old-style dictatorships, too. But violence came first. "Words are fine things,
but muskets are even better," Mussolini quipped. Compare that to the confession of Fujimori's
security chief, Vladimir Montesinos: "The addiction to information is like an addiction to drugs".
Killing members of the elite struck Montesinos as foolish: "Remember why Pinochet had his problems.
We will not be so clumsy" (McMillan and Zoido 2004).
We study the logic of a dictatorship in which the leader survives by manipulating information.
Our key assumption is that citizens care about effective government and economic prosperity; first
and foremost, they want to select a competent rather than incompetent ruler. However, the general
public does not know the competence of the ruler; only the dictator himself and members of an
'informed elite' observe this directly. Ordinary citizens make what inferences they can, based
on their living standards – which depend in part on the leader's competence – and on messages
sent by the state and independent media. The latter carry reports on the leader's quality sent
by the informed elite. If a sufficient number of citizens come to believe their ruler is incompetent,
they revolt and overthrow him.
The challenge for an incompetent dictator is, then, to fool the public into thinking he is
competent. He chooses from among a repertoire of tools – propaganda, repression of protests, co-optation
of the elite, and censorship of their messages. All such tools cost money, which must come from
taxing the citizens, depressing their living standards, and indirectly lowering their estimate
of the dictator's competence. Hence the trade-off.
Certain findings emerge from the logic of this game.
First, we show how modern autocracies can survive while employing relatively little violence
against the public.
Repression is not necessary if mass beliefs can be manipulated sufficiently. Dictators win
a confidence game rather than an armed combat. Indeed, since in our model repression is only used
if equilibria based on non-violent methods no longer exist, violence can signal to opposition
forces that the regime is vulnerable.
Second, since members of the informed elite must coordinate among themselves on whether
to sell out to the regime, two alternative equilibria often exist under identical circumstances
– one based on a co-opted elite, the other based on a censored private media.
Since both bribing the elite and censoring the media are ways of preventing the sending of
embarrassing messages, they serve as substitutes. Propaganda, by contrast, complements all the
other tools.
Propaganda and a leader's competency
Why does anyone believe such propaganda? Given the dictator's obvious incentive to lie, this
is a perennial puzzle of authoritarian regimes. We offer an answer. We think of propaganda as
consisting of claims by the ruler that he is competent. Of course, genuinely competent rulers
also make such claims. However, backing them up with convincing evidence is costlier for the incompetent
dictators – who have to manufacture such evidence – than for their competent counterparts, who
can simply reveal their true characteristics. Since faking the evidence is costly, incompetent
dictators sometimes choose to spend their resources on other things. It follows that the public,
observing credible claims that the ruler is competent, rationally increases its estimate that
he really is.
Moreover, if incompetent dictators survive, they may over time acquire a reputation for competence,
as a result of Bayesian updating by the citizens. Such reputations can withstand temporary economic
downturns if these are not too large. This helps to explain why some clearly inept authoritarian
leaders nevertheless hold on to power – and even popularity – for extended periods (cf. Hugo Chavez).
While a major economic crisis results in their overthrow, more gradual deteriorations may fail
to tarnish their reputations significantly.
A final implication is that regimes that focus on censorship and propaganda may boost relative
spending on these as the economy crashes. As Turkey's growth rate fell from 7.8% in 2010 to 0.8%
in 2012, the number of journalists in jail increased from four to 49. Declines in press freedom
were also witnessed after the Global Crisis in countries such as Hungary and Russia. Conversely,
although this may be changing now, in both Singapore and China during the recent decades of rapid
growth, the regime's information control strategy shifted from one of more overt intimidation
to one that often used economic incentives and legal penalties to encourage self-censorship (Esarey
2005, Rodan 1998).
The kind of information-based dictatorship we identify is more compatible with a modernized
setting than with the rural underpinnings of totalitarianism in Asia or the traditional societies
in which monarchs retain legitimacy. Yet, modernization ultimately undermines the informational
equilibria on which such dictators rely. As education and information spread to broader segments
of the population, it becomes harder to control how this informed elite communicates with the
masses. This may be a key mechanism explaining the long-noted tendency for richer countries to
open up politically.
References
Esarey, A (2005), "Cornering the market: state strategies for controlling China's commercial
media", Asian Perspective 29(4): 37-83.
Gandhi, J (2008), Political Institutions under Dictatorship, New York: Cambridge University
Press.
Levitsky, S, and L A Way (2010), Competitive authoritarianism: hybrid regimes after the
cold war, New York: Cambridge University Press.
McMillan, J, and P Zoido (2004), "How to subvert democracy: Montesinos in Peru", Journal
of Economic Perspectives 18(4): 69-92.
Rodan, G (1998), "The Internet and political control in Singapore", Political Science Quarterly
113(1): 63-89.
Roht-Arriaza, N (2005), The Pinochet Effect: Transnational Justice in the Age of Human
Rights, Philadelphia: University of Pennsylvania Press.
Peter K. said...
"A final implication is that regimes that focus on censorship and propaganda may boost relative
spending on these as the economy crashes."
Instead of military Keynesianism, it's "police state" Keynesianism.
More social spending coupled with more social control.
ilsm said...
The corporation runs the governors.....
"Investor State Dispute Settlement" is a new twist where the actions of government, like investor
"losses" from shuttering frackers would be compensated by a standing unelected nor appointed by
the locals "board" filled with corporate cronies to take sovereignty from governments when foreign
investors are denied pillaging "rights".
"Investor State Dispute Settlement" is why you should oppose TPP fast track.
The kleptocarcy is well advanced in the US!
GeorgeK said...
..."This helps to explain why some clearly inept authoritarian leaders nevertheless hold on
to power – and even popularity – for extended periods (cf. Hugo Chavez"...
Guess your definition of authoritarian leaders depends on who's Ox is being gored. If you were
wealthy or upper middle class Chavez was a failure, if you were poor or indigenous he was a savior.
..."Chávez maintains that unlike other global financial organizations, the Bank of the South
will be managed and funded by the countries of the region with the intention of funding social
and economic development without any political conditions on that funding.[262] The project is
endorsed by Nobel Prize–winning, former World Bank economist Joseph Stiglitz, who said: "One of
the advantages of having a Bank of the South is that it would reflect the perspectives of those
in the south," and that "It is a good thing to have competition in most markets, including the
market for development lending."[263]"...
Guess nobody told Stiglitz about Chavez's authoritarian incompetence.
Julio said in reply to anne...
Seems clear enough to me. Consider "freedom of the press": the US needs to only be mildly
interventionist, since moneyed interests will own the megaphones and censor their own workers;
and since the one-sidedness of information is no threat to the regime.
But in a government attempting left-wing reforms, and where the government is less stable, there
is less room for the government to accept the unanimity and hostility of the press; it may need
to intervene more strongly to defend itself. Take e.g. Ecuador where Correa has been accused of
suppressing press liberties along these very lines.
anne said in reply to Julio...
Seems clear enough to me. Consider "freedom of the press": the US needs to only be mildly interventionist,
since moneyed interests will own the megaphones and censor their own workers; and since the one-sidedness
of information is no threat to the regime....
[ Thinking further, I realize that the United States is wildly aggressive with governments
of countries considered strategic and does not hesitate to use media in those countries when our
"needs" do not seem met. I am thinking even of the effort to keep allied governments, even the
UK, France and Germany, from agreeing to become members of the Asian Infrastructure Investment
Bank that China has begun. ]
Peter K. said in reply to GeorgeK...
"Guess your definition of authoritarian leaders depends on who's Ox is being gored."
This is how I see it. There are no objective standards.
Lefties criticize Obama for going after whistle blowers. Snowden is treated as a hero. Then
guys like Paine and Kervack defend the behaviro of a Putin or Chavez because the U.S. doesn't
like them.
Peter K. said in reply to Peter K....
I think a lot of the older left is stuck in a Cold War mind set.
Opposing America is good because you're opposing multinational capitalism. So they'll provide
rhetorical support to any nutjob who opposes the West no matter how badly he mistreats his people.
Peter K. said in reply to Peter K....
It's the flipside to the Dick Cheney-Security State rationalizations of torture and police
state tactics like warrantless surveillence.
It's okay if we do it, because they're trying to destroy us.
The ends justify the means.
hyperpolarizer said in reply to Peter K....
I am the older left (born right after WW II). I grew up with the cold war, but -- despite its
poisonous legacy (particularly the linking of the domestic labor movement to international communism)--
I have assuredly left it behind.
In light of the New American Police State, post 9-11, it is clear to me that the United
States has undergone a coup d'etat.
Roger Gathmann said in reply to anne...
Defending Chavez doesn't seem like a bad thing to do. So, Peter K., do you defend, say, Uribe?
Let's see - amended constitution so he could run again - Chavez, check, Uribe check. Associated with
paramilitaries, Uribe, check, Chavez, demi-check. Loved by the US, Uribe, check, Chavez, non-check.
Funny how chavez figures in these things, and Uribe doesn't. https://www.citizen.org/documents/TalkingPointsApril08.pdf
Peter K. said in reply to Roger Gathmann...
I never said a thing about Uribe. I said there should be single standards across the board
for Uribe, America, Chavez, Putin, China, etc...
Roger Gathmann said in reply to Peter K....
Right. Double standard. That is what I am talking about. The double standard that allows US
tax dollars to go into supporting a right wing dictator like Uribe. I don't have to piss off.
You can piss off. I doubt you will. I certainly won't. It is adolescent gestures like that which
make me wonder about your age.
Are you going to slam the door next and saY I hate you I hate you I hate you?
You need to get a little pillow that you can mash. Maybe with a hello kitty sewed on it.
Nietil said in reply to Roger Gathmann...
I don't see how any of these criteria has anything to do with being an autocrat.
Autocracy is an answer to the question of the source of legitimacy (democratic, autocratic,
or theocratic). It has nothing to do with either the definition of the sovereign space (feudal,
racial or national) or with the number of people running the said government (anarchy, monarchy,
oligarchy).
The UK for example was a national and democratic monarchy for a long, long time. Now it's more
of a national and democratic oligarchy. And it can still change in the future.
DrDick said in reply to Peter K....
I really do not think that is at all accurate. While there are certainly some like that, it
is far from the majority. Most of us back Chavez, Morales, or Correa for the policies they
have followed in their own countries to the benefit of the great masses of the poor and their
refusal to put the interests of international capital ahead of their people.
Much of that support is also conditional and qualified, for reasons that have been mentioned
here. All evaluations of current leaders is conditioned by both past history in the country and
region, as well as the available alternatives. By those standards, all of the men I mentioned
look pretty good, if far from perfect.
How Modern Dictators Survive: Cooptation, Censorship, Propaganda, and Repression
By Sergei Guriev and Daniel Treisman
We develop an informational theory of dictatorship. Dictators survive not because of their
use of force or ideology but because they convince the public--rightly or wrongly--that they are
competent. Citizens do not observe the dictator's type but infer it from signals inherent in their
living standards, state propaganda, and messages sent by an informed elite via independent media.
If citizens conclude the dictator is incompetent, they overthrow him in a revolution. The dictator
can invest in making convincing state propaganda, censoring independent media, co-opting the elite,
or equipping police to repress attempted uprisings -- but he must finance such spending with taxes
that depress the public's living standards. We show that incompetent dictators can survive as
long as economic shocks are not too large. Moreover, their reputations for competence may grow
over time. Censorship and co-optation of the elite are substitutes, but both are complements of
propaganda. Repression of protests is a substitute for all the other techniques. In some equilibria
the ruler uses propaganda and co-opts the elite; in others, propaganda is combined with censorship.
The multiplicity of equilibria emerges due to coordination failure among members of the elite.
We show that repression is used against ordinary citizens only as a last resort when the opportunities
to survive through co-optation, censorship, and propaganda are exhausted. In the equilibrium with
censorship, difficult economic times prompt higher relative spending on censorship and propaganda.
The results illuminate tradeoffs faced by various recent dictatorships.
[ This is the discussion paper, which I find more coherent than the summary essay. ]
JayR said...
Wow quite a few countries, maybe even the US with Obama's war on whistle blowers, could fit
this articles definition if the authors actually though more about it.
Roger Gathmann said in reply to Peter K....
Yes, the people of Greece can vote to leave the Eurozone, just like the people of Crimea can
vote to leave the Ukraine, or the people of Kosovo could vote to leave Serbia. There are many
ways, though, of looking at soft dictatorship. I think the EU bureaucrats have been busy inventing
new ones, with new and ever more onerous chains. To say Greece can vote to leave the EU is like
saying the merchant can always defy the mafioso, or the moneylender. It isn't that easy.
Neoliberal college is not about education. It is about getting wealthy a head start to enforce
and strengthen separation between the elite and the rest. Other can only complain... But
that e fact is the many large companies invite for interview for open positions only of Ivy
Leagues graduates. Other do not need to apply. So it is mostly about "Class A" and "Class B"
citizens. Talent and hard work can buy buy a ticket for vertical mobility (see some stories below),
but that was true in any society. Actually mobility in the USA is below average, despite MSM
non-stop brainwashing of the USA citizens about "the land of opportunities", the "American Dream",
etc. And exorbitant salaries of University brass is a norm now. you can't change that
without changing the neoliberal system as a whole. they are no longer bound by academic ethics. Like
Wall Streeters, want to get the most of the life, no matter by what means (the
end justifies the means mentality). They are masters of the universe. Others (aka suckers) can
go to hell.
Notable quotes:
"... Dealing with swiftly mounting student loan debt has been a focus of candidates vying for the White House in 2016. Democratic hopeful Bernie Sanders has vowed to make tuition free at public universities and colleges, and has pledged to cut interest rates for student loans. ..."
"... I can see having a low, federally-subsidized interest rate on these loans....which I seem to recall having on some of my loans, but anyone wanting anything for free can take a hike, IMHO. ..."
"... Ever visit a university in a country that has free college education for its' citizens? It's pretty austere. These kids need to think past the clever sound bytes and really consider the effect of what they are asking for. ..."
"... What really needs to be addressed is the skyrocketing cost of college education PERIOD! At the rate it's going up pretty soon only the children of billionaires will be able to afford to go to college. ..."
"... College tuition cannot be allowed to just continue to escalate. ..."
"... If a high school grad can't explain in detail how much cash is needed, and how spending all that cash and time for education is going to provide a positive return on investment, he or she should not be going to college. This should be near the top of things that teens learn in high school. ..."
"... I get really cynical about all graduates claiming they had no idea how much their loans were going to cost them. ..."
"... If you didn't bother to read your loan docs before signing, or research likely monthly payments for your loan, that's your fault! ..."
"... College costs went up far faster than inflation, often because colleges built fancy sports and living facilities...because they figured out these same millennials pick colleges based on those things. ..."
"... The standard tours take students through fancy facilities that have nothing to do with quality of education. Add declining teaching loads that have decreased from 12 class hours to 3 class hours per week for a professor in the past 25 years and the rise in overhead for non-academic administration overhead positions like chief diversity and inclusion officer and you have expensive college. ..."
"... These 'loans' are now almost all, Pell Grant underwritten. Cannot Bankrupt on, co-signers and students can lose their Social Security money if defaulting. 1.5 trillion$ of these loans have been packaged, like Home Loans, derivative. What happens to peoples retirement accounts when their Funds have investments in them, what happens to the Primary Dealers when the derivatives bubble bursts? ..."
"... Where it is free, but only to the select, the performers, most American Students would not qualify in other countries for advanced Ed. ..."
Students held rallies on college campuses across the United States on Thursday to protest
ballooning student loan debt for higher education and rally for tuition-free public colleges and
a minimum wage hike for campus workers.
The demonstrations, dubbed the Million Student March, were planned just two days after thousands
of fast-food workers took to the streets in a nationwide day of action pushing for a $15-an-hour
minimum wage and union rights for the industry.
About 50 students from Boston-area colleges gathered at Northeastern University carrying signs
that read "Degrees not receipts" and "Is this a school or a corporation?"
"The student debt crisis is awful. Change starts when people demand it in the street. Not in the
White House," said Elan Axelbank, 20, a third year student at Northeastern, who said he was a
co-founder of the national action.
... ... ...
"I want to graduate without debt," said Ashley Allison, a 22-year-old student at Boston's
Bunker Hill Community College, at the Northeastern rally. "Community college has been kind to me,
but if I want to go on, I have to take on debt."
Dealing with swiftly mounting student loan debt has been a focus of candidates vying for the
White House in 2016. Democratic hopeful Bernie Sanders has vowed to make tuition free at public
universities and colleges, and has pledged to cut interest rates for student loans.
... ... ...
Andrew Jackson
Free taxpayer supported public education means more college administrators earning $200,000
or more, more faculty earning $100,000 or more working 8 months a year and more $300
textbooks. Higher education costs are a direct correlation to Federal Student Loans subsiding
college bureaucracies, exorbitant salaries for college administrators and faculty.
terrance
What fantasy world do these people live in. There is nothing for free and if you borrow
tens of thousands of dollars you can't expect later that someone else will pick up your tab.
Pucker up bucky, it is your responsibility.
Furthermore, a lot of this money didn't go to education. I have read where people went back
to school so they could borrow money to pay their rent, or even their car payments. As for 15
dollars an hour to sling burgers, grow up.
sjc
Having been out of college for a few years, I am curious. I went to a State University.
Tuition was high, I had to take loans, I drove a cheap 10 yr old vehicle, but it didn't kill
me. My total debt was about the price of a decent new car back then.
Today, the average student loan debt after graduation is just under $30,000. Around the
price of a new car. And these kids are trying to tell us that this is too much of a burden???
Look around any campus these days, and you will see lots of $30,000 cars in the parking lots.
I can see having a low, federally-subsidized interest rate on these loans....which I
seem to recall having on some of my loans, but anyone wanting anything for free can take a
hike, IMHO.
Meed
Careful what you wish for, kiddies. It's simple math and simple economics (things I learned
in school while studying instead of protesting). Every university has a maximum number of
students it can support, based on the number and capacity of dorms, classrooms, faculty, etc.
The tuition rates have always closely matched the amount of easily-accessed loans available
- the easier the access to loans, the higher tuition is. The simple reason is that the
universities raise tuition rates to manage the demand for their limited resources, and can
always raise rates when there is more demand than there are openings for incoming students.
Thanks to the windfall from that high tuition, today's universities have student unions,
recreation facilities, gyms, pools, and lots of amenities to attract students. Imagine what
they will offer when they can't jack up the tuition. Ever visit a university in a country
that has "free" college education for its' citizens? It's pretty austere. These kids need to
think past the clever sound bytes and really consider the effect of what they are asking for.
matthew
Oddly enough, a majority of these students attend colleges who has sport teams sponsored by
Nike, Under Armour, Adidas, or Reebok. So, should theses companies atop providing the uniforms
and equipment free of charge and donate the money to make more scholarships available? Then
the student athletes can purchase their own gear on their own dime. Where one group attains,
another must lose. Let this be debated on college campuses and watch the students divide
themselves. We will find out what is most important to them.
JB
What really needs to be addressed is the skyrocketing cost of college education PERIOD!
At the rate it's going up pretty soon only the children of billionaires will be able to afford
to go to college.
Some junk yard dog investigative journalist needs to dig into the rising cost of college
education and identify the cause. Once the cause are understood then something can be done to
make college more affordable. College tuition cannot be allowed to just continue to
escalate.
just sayin'
Seriously how do we let our children out of high school without enough information to
decide if going to college is actually a good investment? If a high school grad can't
explain in detail how much cash is needed, and how spending all that cash and time for
education is going to provide a positive return on investment, he or she should not be going
to college. This should be near the top of things that teens learn in high school.
pcs
I get really cynical about all graduates claiming they had no idea how much their loans
were going to cost them. I mean, they had enough math skills to be accepted, then
graduate, from college. If you didn't bother to read your loan docs before signing, or
research likely monthly payments for your loan, that's your fault!
E
College costs went up far faster than inflation, often because colleges built fancy
sports and living facilities...because they figured out these same millennials pick colleges
based on those things. If you tour colleges, and I toured many in the past few years with
my kids, you don't see a classroom or lab unless you ask.
The standard tours take students through fancy facilities that have nothing to do with
quality of education. Add declining teaching loads that have decreased from 12 class hours to
3 class hours per week for a professor in the past 25 years and the rise in overhead for
non-academic administration overhead positions like "chief diversity and inclusion officer"
and you have expensive college.
If students want a cheap education, go to the junior college for general ed classes then
transfer to a four-year school. It is not glamorous but it yields a quality education without
a fortune in debt.
Rich
Getting an education is obviously the biggest scam in history!!!! Look at who controls
education. Look at all the Universities presidents last names then you will know what they
are. I can't say it here on Yahoo because they will take my comments out for speaking the
truth. These presidents make millions of $$$$$ a year off of students and parents who are
slaves and work hard to pay those tuitions. Not only that but look at the owners last names of
the Loan
50 CAL
Universities are money munching machines with no regard for how the students will repay the
loans. Universities annually raise tuition rates(much of which is unnecessary) with no regard
of how these young minds full of mush are going to repay the crushing debt, nor do they care.
Locally one university just opened a 15 million dollar athletic center, which brings up the
question, why did they need this? With that kind of cash to throw around, what wasn't at least
some used to keep tuitions affordable?
Mike D
These 'loans' are now almost all, Pell Grant underwritten. Cannot Bankrupt on,
co-signers and students can lose their Social Security money if defaulting. 1.5 trillion$ of
these loans have been packaged, like Home Loans, derivative.
What happens to peoples retirement accounts when their Funds have investments in them, what
happens to the Primary Dealers when the derivatives bubble bursts?
How are these loans to be made 'free' if existing loans bear interest? If the student of
'free education' defaults, doesn't graduate, will he owe money-will his parent, or will the
'free school' simply become a dumping ground for the youth without direction, simply housed in
college's dorm rooms?
Lots of questions and two things to keep in mind, the Banks and Teaching institutes love the
idea of 'free', the students are believing there might be a free ride.. ignoring schools and
Banks don't, won't and never do anything for free.
This is not going to turn out well for consumers. Sure, Household payments of Education may
drop, but the Institution of Education cannot keep even its slim success rate it has now. I
don't know how educators managed to turn education into a purely self gratifying industry,
giving anything to purchasers they wished for that Education loan, but never ever ever, has
underwriting by the Central improved the quality of business. Complete underwriting of the
important system of education at the Fed level will be a disaster.
There will be almost zero accountability for institutes and students, we will have a more
expensive system that turns out the worst grads.
Don't try believing that other countries abilities with free Ed can be duplicated here..
not without serious socialism, a condition where qualifying for Ed advancement is determined
by the Central.
Where it is free, but only to the select, the performers, most American Students would
not qualify in other countries for advanced Ed. Blanket quals are almost a condition
here, American Students are in for a serious surprise. They will not be so able to buy/loan
their way to college and have to excel to get into college.
The joke is on the American student.
Jim
i was one of seven children- i worked my way through four years of undergrad and three
years of grad school with my parents only being able to pay health insurance and car
insurance- i worked shelving books, busing tables, delivering pizzas and for the last five
years as a parimutuel clerk at dog and horsetracks- i never got to go on spring break, do a
semester at sea or take classes in europe- i graduated debt free from public universities-
have no sympathy for a bunch of whiny brats who have to drive better cars than their
professors and believe they are entitled to special treatment- get a job and quit acting like
a bunch of welfare queens who feel they deserve entitlements
Linda
My son is in college. Because grandpa saved his money over the years, he volunteered to pay
for college costs. We hope to continue the tradition with our grandchildren and carefully save
our money as well. We don't live high or purchase new. He will graduate zero dollars in debt.
My son's college roommate comes from a very wealthy family. They own a plane - two houses -
dad works on Wall Street - mom is a Doctor. He has to pay for his own education and gets loans
for everything. His parents simply don't have the cash to pay for his education.
It's priorities people! If something is worth it, you'll make it happen.
"... Ahmed Chalabi, an Iraqi politician accused of providing false information that led to the United States toppling longtime dictator Saddam Hussein in the 2003 invasion, died on Tuesday of a heart attack, state television and two parliamentarians said. ..."
"... "The neo-cons wanted to make a case for war and he [Chalabi] was somebody who is willing to provide them with information that would help their cause," Ali Khedery, who was the longest continuously-serving American official in Iraq in the years following the 2003 U.S.-led invasion, told Al Arabiya News. ..."
Ahmed Chalabi, an Iraqi politician accused of providing false information that led to the
United States toppling longtime dictator Saddam Hussein in the 2003 invasion, died on Tuesday of
a heart attack, state television and two parliamentarians said.
Attendants found the controversial lawmaker, 71, dead in bed in his Baghdad home, according to
parliament official Haitham al-Jabouri.
... ... ...
During his heyday, the smooth-talking Chalabi was widely seen as the man who helped push the
U.S. and its main ally Britain into invading Iraq in 2003, with information that Saddam's
government had weapons of mass destruction, claims that were eventually discredited.
... ... ...
Chalabi had also said Saddam - known for his secularist Baathist ideology - had ties with
al-Qaeda.
After Saddam's fall by U.S.-led coalition forces, Chalabi returned from exile in Britain and the
United States. Despite having been considered as a potential candidate for the powerful post of
prime minister in the immediate aftermath of Saddam's 24-year reign, the politician never managed
to rise to the top of Iraq's stormy, sectarian-driven political landscape.
His eventual fallout with his former American allies also hurt his chances of becoming an Iraqi
leader.
"The neo-cons wanted to make a case for war and he [Chalabi] was somebody who is willing to
provide them with information that would help their cause," Ali Khedery, who was the longest
continuously-serving American official in Iraq in the years following the 2003 U.S.-led invasion,
told Al Arabiya News.
"... The President, as commander in chief, shapes US foreign policy: indeed, in our post-constitutional era, now that Congress has abdicated its responsibility, he has the de facto power to single-handedly take us into war. Which is why, paraphrasing Trotsky , you may not be interested in politics, but politics is certainly interested in you. ..."
"... PAUL: … How is it conservative to add a trillion dollars in military expenditures? You can not be a conservative if youre going to keep promoting new programs that youre not going to pay for. ..."
"... Here, in one dramatic encounter, were two worldviews colliding: the older conservative vision embodied by Rand Paul, which puts domestic issues like fiscal solvency first, and the internationalist stance taken by what used to be called Rockefeller Republicans , and now goes under the neoconservative rubric, which puts the maintenance and expansion of Americas overseas empire – dubbed world leadership by Rubios doppelganger, Jeb Bush – over and above any concerns over budgetary common sense. ..."
"... Rubios proposed military budget – $696 billion – represents a $35 billion increase over what the Pentagon is requesting ..."
"... Pauls too-clever-by-half legislative maneuvering may have effectively exposed Rubio – and Sen. Tom Cotton, Marcos co-pilot on this flight into fiscal profligacy – as the faux-conservative that he is, but it evaded the broader question attached to the issue of military spending: what are we going to do with all that shiny-new military hardware? Send more weapons to Ukraine? Outfit an expeditionary force to re-invade Iraq and venture into Syria? This brings to mind Madeleine Albrights infamous remark directed at Gen. Colin Powell: Whats the point of having this superb military youre always talking about if we cant use it? ..."
"... Speaking of Trumpian hot air: Paul showed up The Donald for the ignorant blowhard he is by pointing out, after another of Trumps jeremiads aimed at the Yellow Peril, that China is not a party to the trade deal, which is aimed at deflecting Beijing. That was another shining moment for Paul, who successfully juxtaposed his superior knowledge to Trumps babbling. ..."
"... If Putin wants to go and knock the hell out of ISIS, I am all for it, one-hundred percent, and I cant understand how anybody would be against it. ..."
"... Trump, for all his contradictions, gives voice to the isolationist populism that Rubio and his neocon confederates despise, and which is implanted so deeply in the American consciousness. Why us? Why are we paying everybodys bills? Why are we fighting everybody elses wars? Its a bad deal! ..."
"... This is why the neocons hate Trumps guts even more than they hate Paul. The former, after all, is the frontrunner. What the War Party fears is that Trumps contradictory mixture of bluster – bigger, better, stronger! – and complaints that our allies are taking advantage of us means a victory for the dreaded isolationists at the polls. ..."
"... its election season, the one time – short of when were about to invade yet another country – when the American people are engaged with the foreign policy issues of the day. And what we are seeing is a rising tide of disgust with our policy of global intervention – in a confused inchoate sense, in the case of Trump, and in a focused, self-conscious, occasionally eloquent and yet still slightly confused and inconsistent way in the case of Sen. Paul. Either way, the real voice of the American heartland is being heard. ..."
"... Trump has rocked the boat and raised some issues and viewpoints that none of the other bought and paid for candidates would ever have raised. Has he changed the national discussion on these issues? At least he woken some people up. ..."
"... The sentence of We relied on the stupidity of the American voter resonates. ..."
"... What you did, was you fell for the oldest press trick in the book. Its called: out of context . Thats is where they play back only a segment of what someone says, only a part of what they want you to hear, so you will draw the wrong conclusion. What Trump said {had you listened to ALL of what he said} was that he was going to TAKE ISILS OIL. Oil is the largest source of revenue for them {then comes the CIA money}. If you were to remove their oil revenues from them, they would be seriously hurting for cash to fund their machine. I dont have a problem with that. ..."
"... The thing about understanding the attack on The Donald is understanding what he is NOT. Namely he is not CFR connected ..."
"... The attacks on Trump have been relentless yet he is still maintaining his position in the polls. ..."
"... The goal is to have a CFR candidate in both the GOP and Dem fold. Although Hillary is not a CFR member ostensibly Slick Willie has been for more than 20 years and his Administration was rife with them...Hello Rubin and Glass Steagal!!..as is Chelsea... a newly elected member. ..."
"... [American exceptionalism] is a reaction to the inability of people to understand global complexity or important issues like American energy dependency. Therefore, they search for simplistic sources of comfort and clarity. And the people that they are now selecting to be, so to speak, the spokespersons of their anxieties are, in most cases, stunningly ignorant. ..."
"... Yes, I have also seen the new golden boy regaled in the media. Lets see where he goes. I wonder if anyone represents the American people any better than the corrupt piece of dried up persimmon that is Hillary? ..."
"... With JEB polling in single digits and hopelessly befuddled, Rubio is the Great Hispanic Hope of the establishment Republocrats. He is being well-pimped, is all. Paul is clearly more intelligent, more articulate, and more well-informed; Trump is more forceful and popular (but independent!). Neither suits an establishment that wants to hold the reins behind the throne. ..."
Most Americans don't think much about politics, let alone foreign policy issues, as they go about
their daily lives. It's not that they don't care: it's just that the daily grind doesn't permit most
people outside of Washington, D.C. the luxury of contemplating the fate of nations with any regularity.
There is one exception, however, and that is during election season, and specifically – when it comes
to foreign policy – every four years, when the race for the White House begins to heat up. The
President, as commander in chief, shapes US foreign policy: indeed, in our post-constitutional era,
now that Congress has abdicated its responsibility, he has the de facto power to single-handedly
take us into war. Which is why,
paraphrasing Trotsky, you may not be interested in politics, but politics is certainly interested
in you.
The most recent episode of the continuing GOP reality show, otherwise known as the presidential
debates, certainly gave us a glimpse of what we are in for if the candidates on that stage actually
make it into the Oval Office – and, folks, it wasn't pretty, for the most part. But there were plenty
of bright spots.
This was supposed to have been a debate about economics, but in the Age of Empire there is no
real division between economic and foreign policy issues. That was brought home by the
collision between Marco Rubio and Rand Paul about half way through the debate when Rubio touted
his child tax credit program as being "pro-family." A newly-aggressive and articulate Rand
Paul jumped in with this:
"Is it conservative to have $1 trillion in transfer payments – a new welfare program that's
a refundable tax credit? Add that to Marco's plan for $1 trillion in new military spending, and
you get something that looks, to me, not very conservative."
Rubio's blow-dried exterior seemed to fray momentarily, as he gave his "it's for the children"
reply:
"But if you invest it in your children, in the future of America and strengthening your
family, we're not going to recognize that in our tax code? The family is the most important institution
in society. And, yes…
"PAUL: Nevertheless, it's not very conservative, Marco."
Stung to the quick, Rubio played what he thought was his trump card:
"I know that Rand is a committed isolationist. I'm not. I believe the world is a stronger
and a better place, when the United States is the strongest military power in the world.
"PAUL: Yeah, but, Marco! … How is it conservative … to add a trillion-dollar expenditure
for the federal government that you're not paying for?
"RUBIO: Because…
"PAUL: … How is it conservative to add a trillion dollars in military expenditures? You
can not be a conservative if you're going to keep promoting new programs that you're not going
to pay for.
(APPLAUSE)"
Here, in one dramatic encounter, were two worldviews colliding: the older conservative vision
embodied by Rand Paul, which puts domestic issues like fiscal solvency first, and the "internationalist"
stance taken by what used to be called
Rockefeller Republicans,
and now goes under the neoconservative rubric, which puts the maintenance and expansion of America's
overseas empire – dubbed "world
leadership" by Rubio's doppelganger, Jeb Bush – over and above any concerns over budgetary common
sense.
Rubio then descended into waving the bloody shirt and evoking Trump's favorite bogeyman – the
Yellow Peril – to justify his budget-busting:
"We can't even have an economy if we're not safe. There are radical jihadists in the Middle
East beheading people and crucifying Christians. A radical Shia cleric in Iran trying to get a
nuclear weapon, the Chinese taking over the South China Sea…"
If the presence of the Islamic State in the Middle East precludes us from having an economy, then
those doing their Christmas shopping
early this year don't seem to be aware of it. As for the Iranians and their alleged quest for
nuclear weapons, IAEA inspectors
are at this
very moment verifying
the complete absence of such an effort – although Sen. Paul, who
stupidly opposed the Iran deal, is in
no position to point this out. As for the fate of the South China Sea – if we could take a poll,
I wonder how many Americans would rather have their budget out of balance in order to keep the Chinese
from constructing artificial islands a few miles off their own coastline. My guess: not many.
Playing the "isolationist" card got Rubio nowhere: I doubt if a third of the television audience
even knows what that term is supposed to mean. It may resonate in Washington, but out in the heartland
it carries little if any weight with people more concerned about their shrinking bank accounts than
the possibility that the South China Sea might fall to … the Chinese.
Ted Cruz underscored his sleaziness (and, incidentally, his entire election strategy) by jumping
in and claiming the "middle ground" between Rubio's fulsome internationalism and Paul's call to rein
in our extravagant military budget – by siding with Rubio. We can do what Rubio wants to do – radically
increase military expenditures – but first, he averred, we have to cut sugar subsidies so we can
afford it. This was an attack on Rubio's
enthusiasm
for sugar subsidies, without which, avers the Senator from the state that
produces the most sugar, "we lose the capacity to produce our own food, at which point we're
at the mercy of a foreign country for food security." Yes, there's a jihadist-Iranian-Chinese conspiracy
to deprive America of its sweet tooth – but not if President Rubio can stop it!
Cruz is a master at prodding the weaknesses of his opponents, but his math is way off: sugar subsidies
have cost us some $15 billion since 2008. Rubio's proposed military budget –
$696 billion – represents a $35 billion increase over what the
Pentagon is requesting. Cutting sugar subsidies – an unlikely prospect, especially given
the support of Republicans of Rubio's ilk for the program – won't pay for it.
However, if we want to go deeper into those weeds, Sen. Paul also
endorses the $696 billion figure, but touts the fact that his proposal comes with
cuts that will supposedly pay for the hike. This is something all those military contractors
can live with, and so everybody's happy, at least on the Republican side of the aisle, and yet the
likelihood of cutting $21 billion from "international affairs," never mind $20 billion from social
services, is unlikely to garner enough support from his own party – let alone the Democrats – to
get through Congress. So it's just more of Washington's kabuki theater: all symbolism,
no action.
Paul's too-clever-by-half legislative maneuvering may have effectively exposed Rubio – and
Sen. Tom Cotton, Marco's co-pilot on this flight into fiscal profligacy – as the faux-conservative
that he is, but it evaded the broader question attached to the issue of military spending: what are
we going to do with all that shiny-new military hardware? Send more weapons to Ukraine? Outfit an
expeditionary force to re-invade Iraq and venture into Syria? This brings to mind Madeleine Albright's
infamous remark
directed at Gen. Colin Powell: "What's the point of having this superb military you're always talking
about if we can't use it?"
In this way, Paul undermines his own case against global intervention – and even his own eloquent
argument, advanced in answer to Rubio's contention that increasing the military budget would make
us "safer":
"I do not think we are any safer from bankruptcy court. As we go further, and further into
debt, we become less, and less safe. This is the most important thing we're going to talk about
tonight. Can you be a conservative, and be liberal on military spending? Can you be for unlimited
military spending, and say, Oh, I'm going to make the country safe? No, we need a safe country,
but, you know, we spend more on our military than the next ten countries combined."
I have to say Sen. Paul shone at this debate. His arguments were clear, consistent, and made with
calm forcefulness. He distinguished himself from the pack, including Trump, who said "I agree with
Marco, I agree with Ted," and went on to mouth his usual "bigger, better, stronger" hyperbole that
amounted to so much hot hair air.
Speaking of Trumpian hot air: Paul showed up The Donald for the ignorant blowhard he is by
pointing out, after another of Trump's jeremiads aimed at the Yellow Peril, that China is not a party
to the trade deal, which is aimed at deflecting Beijing. That was another shining moment for Paul,
who successfully juxtaposed his superior knowledge to Trump's babbling.
This obsession with China's allegedly malign influence extended to the next round, when foreign
policy was again the focus. In answer to a question about whether he supports President Obama's plan
to send Special Operations forces to Syria, Ben Carson said yes, because Russia is going to make
it "their base," oh, and by the way: "You know, the Chinese are there, as well as the Russians."
Unless he's talking about
these guys, Carson intel seems a bit off.
Jeb Bush gave the usual boilerplate, delivered in his preferred monotone, contradicting himself
when he endorsed a no-fly zone over Syria and then attacked Hillary Clinton for not offering "leadership"
– when she endorsed the idea practically
in unison with him. Bush added his usual incoherence to the mix by averring that somehow not
intervening more in the region "will have a huge impact on our economy" – but of course the last
time we intervened it had a
$2 trillion-plus impact in terms of costs, and that's a conservative estimate.
Oddly characterizing Russia's air strikes on the Islamic State as "aggression" – do our air strikes
count as aggression? – the clueless Marie Bartiromo asked Trump what he intends to do about it. Trump
evaded the question for a few minutes, going on about North Korea, Iran, and of course the Yellow
Peril, finally coming out with a great line that not even the newly-noninterventionist Sen. Paul
had the gumption to muster:
"If Putin wants to go and knock the hell out of ISIS, I am all for it, one-hundred percent,
and I can't understand how anybody would be against it."
Bush butted in with "But they aren't doing that," which is the Obama administration's
demonstrably inaccurate
line, and Trump made short work of him with the now
undeniable fact that the Islamic State blew up a Russian passenger jet with over 200 people on
it. "He [Putin] cannot be in love with these people," countered Trump. "He's going in, and we can
go in, and everybody should go in. As far as the Ukraine is concerned, we have a group of people,
and a group of countries, including Germany – tremendous economic behemoth – why are we always doing
the work?"
Why indeed.
Trump, for all his contradictions, gives voice to the "isolationist" populism that Rubio and
his neocon confederates despise, and which is implanted so deeply in the American consciousness.
Why us? Why are we paying everybody's bills? Why are we fighting everybody else's wars? It's a bad
deal!
This is why the neocons hate Trump's guts even more than they hate Paul. The former, after
all, is the frontrunner. What the War Party fears is that Trump's contradictory mixture of bluster
– "bigger, better, stronger!" – and complaints that our allies are taking advantage of us means a
victory for the dreaded "isolationists" at the polls.
As for Carly Fiorina and John Kasich: they merely served as a Greek chorus to the exhortations
of Rubio and Bush to take on Putin, Assad, Iran, China, and (in Trump's case) North Korea. They left
out Venezuela only because they ran out of time, and breath. Fiorina and Kasich were mirror images
of each other in their studied belligerence: both are aspiring vice-presidential running mates for
whatever Establishment candidate takes the prize.
Yes, it's election season, the one time – short of when we're about to invade yet another
country – when the American people are engaged with the foreign policy issues of the day. And what
we are seeing is a rising tide of disgust with our policy of global intervention – in a confused
inchoate sense, in the case of Trump, and in a focused, self-conscious, occasionally eloquent and
yet still slightly confused and inconsistent way in the case of Sen. Paul. Either way, the real voice
of the American heartland is being heard.
Bumpo
Im not so sure. If you see it in context with Trump's other message to make Mexico pay for
the border fence. If you take the Iraq war on the face of it - that is, we came in to rescue them
from Saddam Hussein - then taking their oil in payment is only "fair". It's hard to tell if he
is playing a game, or actually believes the US company line, though. I think he isn't letting
on. At least I hope so. And that goes double for his "Support" of Israel.
Joe Trader
@greenskeeper we get it, you get butt-hurt extremely easily
The thing about Donald Trump and oil - is that a few years ago, he said all that Saudi Arabia
had to do was start pumping oil, and down it would go to $25. Guess what sweet cheeks - His prediction
is coming true and the presidency could really use a guy like him who knows what he's doing.
MalteseFalcon
Say what you like about Trump. 'He is a baffoon or a blowhard'. 'He can't be elected president'.
But Trump has rocked the boat and raised some issues and viewpoints that none of the other
bought and paid for 'candidates' would ever have raised. Has he changed the national discussion
on these issues? At least he woken some people up.
illyia
oh.my.gawd. a rational adult series of comments on zero hedge: There is hopium for the world,
after all.
Just must say: Raimondo is an incredibly good writer. Very enjoyable to read. I am sure that's
why he's still around. He make a clear, concise argument, presents his case with humor and irony
and usually covers every angle.
I wonder about people like him, who think things out so well... versus, say, the bloviator
and chief?
P.S. don't blame me, i did not vote for either of them...
Oracle of Kypseli
The sentence of "We relied on the stupidity of the American voter" resonates.
TheObsoleteMan
What you did, was you fell for the oldest press trick in the book. It's called: "out of
context". That's is where they play back only a segment of what someone says, only a part of what
they want you to hear, so you will draw the wrong conclusion. What Trump said {had you listened
to ALL of what he said} was that he was going to TAKE ISIL'S OIL. Oil is the largest source of
revenue for them {then comes the CIA money}. If you were to remove their oil revenues from them,
they would be seriously hurting for cash to fund their machine. I don't have a problem with that.
The attacks on Trump have been relentless yet he is still maintaining his position in the
polls.
I expected a take out on Ben Carson, his next closest competitor to move up a CFR-aligned Globalist
like Shrubio or Cruz given their fall-back JEBPNAC is tanking so bad...but not this early. They
must be getting desperate...so desperate they are considering Romney?!
If it becomes 'Reagan/Bush Redux' again with Trump/Cruz, I hope The Donald has enough sense
to say NO! or, if elected, be very vigilant knowing you are Reagan and you have the GHW Bush equivalent
standing there to replace you...and we know how that unfolded early in Reagan's first term...NOT
GOOD
EDIT: The goal is to have a CFR candidate in both the GOP and Dem fold. Although Hillary
is not a CFR member ostensibly Slick Willie has been for more than 20 years and his Administration
was rife with them...Hello Rubin and Glass Steagal!!..as is Chelsea... a newly elected member.
The point is Justin seems to believe the Iranians have no intention of building a nuclear bomb
ever. I've read a lot of this guy's writing ever since he first came out on his own website and
when he wrote for AsiaTimesOnline. He's always had the opinion that the Iranians are not building
a nuclear bomb and have no intention to do so. He spews the same talking points about how they've
never attacked anyone in over two hundred years.
Well that's because previously they were under the control of the Ottoman empire and that didn't
break up until after WW1. I think he's got a blind spot in this regard. You can't tell me that
even the Japanese aren't secretly building nuclear weapons since China is becoming militarily
aggressive. And, stop being a prick. Your micro-aggressing against my safe place LTER and I'm
gonna have to report you for "hurtful" speech.
20 years plus of this accusation. Cia and dia both said no mil program.
If you have evidence summon it. Offering your suspicion as evidence is fucking absurd.
And if the israelis werent hell bent on taking the rest of palestine and brutalizing the natives
(which, by and large, they actually are) that would sure wet some of the anti isrsel powder.
But no / they want lebensraum and years of war for expansion and regional total hegemony.
Thrn they can ethnically cleanse the historical inhabitants while everyones busy watching white
european christisns kill each other, and muslims, as isis keeps not attacking israel or even isrseli
interests.
Youre not dumb, you just reached conclusions that are very weakened of not refuted by evidence
you wont even consider.
If you examine the policy detail Trump has provided, there is more substance there than any
of the others. Add to that he has a long record of successful management, which none of the others
have.
You don't manage successfully without self control. The persona he presents in politics at
present may give the impression of a lack of self control, yet that persona and the policies which
are/were verboten to the political class have quickly taken him to the top of the pack and kept
him there.
If you apply to Trump the saying "judge people by what they do, not what they say", his achievements
out of politics and now in politics show he is a more capable person than any of the others and
that he is successful at what he sets out to do.
As the economy for most Americans continues to worsen, which is baked in the cake, who is going
to look to the public a more credible person to turn it around, Clinton? Trump? one of the others?
The answer is pretty obvious.
European American
"I cannot take Trump seriously."
It's not about Trump as President, a year from now. Who knows if he'll even be in the picture
by then. It's ALL about Trump, RIGHT NOW. He's exposing the underbelly of a vile, hideous Z-creature
that we, here at ZH have seen for some time, but the masses, those who haven't connected enought
dots, yet, are getting a glimpse of something that has been foreign in politics, up until now.
Everytime Trump is interviewed, or tweets or stands at the debates, another round is shot over
the bow, or beak, of the monster creature that has been sucking the life out of humanity for decades,
centuries, eons. As long as he's standing and he can pull it off, that is what this phenomenon
is all about...one day at a time....shedding light where the stench of darkness has been breeding
corruption for the last millenium.
MASTER OF UNIVERSE
Neocons hate because their collective ethos is that of a single misanthrope that crafted their
existence in the first place. In brief, neocons are fascist narrow minded automatons not really
capable of a level of consciousness that would enable them to think critically, and independently,
of the clique orthodoxy that guides their myopic thinking, or lack thereof. Neocons have no history
aside from Corporatism, and Fascism.
Escrava Isaura
American Decline: Causes and Consequences
Grand Area (after WW-2) to be under US control: Western Hemisphere, the Far East, the former
British empire - including the crucial Middle East oil reserves - and as much of Eurasia as possible,
or at the very least its core industrial regions in Western Europe and the southern European states.
The latter were regarded as essential for ensuring control of Middle East energy resources.
It means: Africa resources go to Europe. Asia resources go to Japan. South America resources
go to US.
Now (2019) the Conundrum: Where will China get the resources needed for its survival? And Russia
is not Africa.
"[American exceptionalism] is a reaction to the inability of people to understand global
complexity or important issues like American energy dependency. Therefore, they search for simplistic
sources of comfort and clarity. And the people that they are now selecting to be, so to speak,
the spokespersons of their anxieties are, in most cases, stunningly ignorant." ? Zbigniew
Brzezinski
Bazza McKenzie
Through either ignorance or malice the author repeats Rand Paul's statement about Trump's comments
re China and the TPP.
Trump explicitly said the TPP provides a back door opportunity for China, thus noting he understands
China is not an initial signatory to TPP.
The backdoor opportunity occurs in 2 ways. The ability for TPP to expand its signatory countries
without going back to the legislatures of existing signatory countries AND the fact that products
claiming to be made in TPP countries and eligible for TPP arrangements don't have to be wholly
made in those countries, or perhaps even mainly made in those countries. China will certainly
be taking advantage of that.
The fact that Paul does not apparently understand these points, despite being a Senator, displays
an unfortunate ignorance unless of course he was just attempting to score a political point despite
knowing it to be false.
Paul at least made his comment in the heat of the moment in a debate. Raimondo has had plenty
of time to get the facts right but does not. How much of the rest of his screed is garbage?
socalbeach
I got the impression Trump thought China was part of the trade deal from this quote:
"Yes. Well, the currency manipulation they don't discuss in the agreement, which is a
disaster. If you look at the way China and India and almost everybody takes advantage of the
United States - China in particular, because they're so good. It's the number-one abuser of
this country. And if you look at the way they take advantage, it's through currency manipulation.
It's not even discussed in the almost 6,000-page agreement. It's not even discussed."
If China isn't part of the agreement, then what difference does it make whether or not currency
manipulation is discussed? Your answer is that Trump meant they could be added to the agreement
later, as in this previous quote of his:
"The TPP is horrible deal. It is a deal that is going to lead to nothing but trouble.
It's a deal that was designed for China to come in, as they always do, through the back door
and totally take advantage of everyone."
If that's the case, Trump didn't explain himself well in this instance.
Neocons should not be used as a synonym for 'militarist.'
That subset was absolutely a Jewish-Zionist movement originating at the U of Chicago whether
you know the history or not. Its also obvious just verboden to discuss. Not because its false,
but because its true.
Neocons aren't conservative - they are zioglobalists with primary concern for Israel.
There are several groups of militarists in the deep state, but the Israel Firster faction is
predominant.
Fucking obviously.
Arthur
Gee I guess we should back Iran and Isis. Must be some great jewish conspiricy that keeps you
impovrished, that or maybe you are just a moron.
Johnny Horscaulk
Idiot, the us, and israel ARE backing isis. Go back to watching fox news - this is all way
over your willingness to spend time reading about. You clearly have an internet connection - but
you utter palpable nonsense.
OldPhart
Arthur
When/where I grew up I'd never met a jew. I think there was one black family in the two hundred
fifty square miles of the town, population 2,200 in 1976. I knew jackshit other than they were
greased by nazis back in WWII.
Moved out of the desert to Orlando, Flawed?-Duh. Met a lot of regular jews. Good people, best
man's dad and mom had tattoo'd numbers on thier arms. To me, their just regular people that have
some other sort of religion that christianity is an offshoot from.
What I've learned is that Zionism is lead by a relative few of the jewish faith, many regular
jews resent it as an abomination of jewish faith. Zionists are the self-selected political elite
and are in no way keepers of the jewish faith. They are the equivalent, in Israel, to the CFR
here. Oddly, they also comprise many of the CFR seats HERE.
Zionists do not represent the jews any more than Jamie Diamond, Blythe Masters, Warren Buffet,
or Bill Gates represent ordinary Americans. Somehow, over time, Zionists came to wield massive
influence within our government and corporate institutions.
Those are the simple facts that I have been able to glean from piles of research that are massively
biased in both directions.
It's not a jewish conspiracy that keeps many impoverished, it's the Zionists that keep many
impoverished, at war, divided, ignorant, and given bread and circuses. Not jews.
Perhaps you should spend a few years doing a little independent research of your own before
belittling something you obviously have no clue about.
Johnny Horscaulk
That rhetorical ballet aside, Israel has far far too much influence on us policy, and that
is so because of wildly disproportionate Jewish... As such... Political, financial, media, etc
power. And they - AS A GROUP -act in their in-group interests even when resulting policy is not
in this country's interest - demanding, with 50 million Scoffield JudeoChristians that Israels
interests be of utmost value...
And heres the kicker - as defined by an Israel under likud and shas, parties so odious they
make golden dawn look leftist, yet get no msm criticism for being so.
Its never 'all' any group - but Israels influence is excessive and deleterious, and that is
due to jewish power and influence, with the xian zios giving the votes. Framed this way, it isnt
'Zionism' - it is simply a powerful minority with deep loyalty to a tiny foreign state warping
us policy - and media coverage.
MEFOBILLS
Arthur,
Iran is formerly Persia, and its people are predominantly Shia. Shia's are considered apostates
by Sunni's. Isis is Sunni. Sunnis get their funding via the Petrodollar system.
Persians changed their name to Iran to let northern Europeans know they were Aryans. Persians
are not Arabs.
Neo-Con's are Jewish and they have fellow travelers who are non jewish. Many of their fellow
travelers are Sayanim or Zionist Christians. So, Neo-Con ideology is no longer specifically Jewish,
but it certainly has Jewish antecedents.
Your comment is full of illogic, is misinformed, and then you have the laughable temerity to
call out someone else as a moron.
I Write Code
The only place "neocons" still exist is at ZH. Whatever Wikipedia says about it, the term had
virtually no currency in the US before 2001, and had pretty much ceased to have any influence
by about 2005.
Is Rubio sounding like an interventionist? Yes. Does he really know what he's talking about?
Unclear. Is Trump sounding like a non-interventionist? Yes. Does he really know what he's talking
about? Almost certainly not. Trump is the non-interventionist who wants to bomb the shit out of
ISIS.
Rand didn't do anything to embarass himself at the latest debate, but he also didn't stand
out enough to make up for many past errors. Give him a few years, maybe he'll grow up or something.
But the harder question is, what *should* the US do about stuff? Should we cowboy on alone,
or pull back because none of the other kids want to help us. Can't we make common cause with Russia
and France at this point? I mean instead of Iran and Turkey? The biggest problem is of course
Obama - whatever various national interests at this point, nobody in the world thinks they can
trust Nobel boy as far as they can spit a rat. Would anyone want to trust Rubio or Trump? Would
you?
Johnny Horscaulk
Nonsense - read this for background beginning with the philosopher Strauss. It has a fixed
meaning that was subjected to semantic drift in the media. It came to be conflated with 'militarist'
and the conservative thing was a misnomer they were communists who wanted to use American power
for israel.
After listening to the press for the last week, I have come to a conclusion concerning Mr.
Bush: The party big wigs have decided he can not win and are distancing their support for him.
Their new golden boy? Marco Rubio. The press in the last week has barely mentioned Bush, but
every breath has been about "the young Latino". "He's rising in the polls".
I wish I had a dollar for every time I heard that on radio and the TV. They also had him on
Meet The Press last Sunday. Just thought I'd mention it. I can't stand Rubio. When he ran for
Senate down here a few years ago, he road to Washington on the Tea Party's back. As soon as he
got there, he did what all good politicians do: Dumped their platform and forgot all about them.
Scumbag.
neilhorn
Yes, I have also seen the new "golden boy" regaled in the media. Let's see where he goes.
I wonder if anyone represents the American people any better than the corrupt piece of dried up
persimmon that is Hillary?
Raymond_K._Hessel
Trump picks cruz as veep, offends moderate and lefty independents and latinos on the immigration
stuff, kisses Likuds ass (2 million right wing batshit jews out of 8 million israeli voters in
asia dominate us foreign policy via nutty, aipac, adl, jinsa, conf of pres, etc etc etc)
And he loses to hillary. The gop can not win this election. Sorry - but admit the direness
of our situation - shitty candidates all and one of the very worst and most essentially disingenuous-
will win because women and minorities and lefties outnumber right leaning white males.
This is super obviously the political situation.
So - how do we 'prepare' for hillary? She is more wars, more printing, more wall st, more israel
just like everyone but sanders who is nonetheless a crazy person and arch statist though I respect
his at least not being a hyperinterventionist mic cocksucker.
But fucking hillary clinton gets in.
What does it mean apart from the same old thing?
Red team blue team same thing on wars, banks, and bending the knee to batshit psycho bibi.
cherry picker
I don't think Americans are really ready for Bill to be the First Man, do you? I don't think
Americans think about that aspect of Hillary becoming Pres.
Personally, I hope she doesn't get in. There are many other women that are capable who could
fit the bill, if the US is bound and determined to have a female president.
"indeed, in our post-constitutional era, now that Congress has abdicated its responsibility,
he has the de facto power to single-handedly take us into war. Which is why,
paraphrasing Trotsky, you may not be interested in politics, but politics is certainly interested
in you."
The post-constitutional era is the present time. Congress is stifled by politics while the
rest of us only desire that the rights of the people are protected. The President has never been
granted the right to take our nation to war. Other presidents have usurped that power and taken
the power to themseves. Johnson, Nixon, Reagan, Bush, Clinton, Bush, and Obama have all taken
on the right to kill anyone who defied the right of the presidency. However, when the people ever
abrogated their right to wage war it was only in response to a police state being established
that threatened those who opposed the power of the established authority. Congress, the representatives
of the people, has the right to declare war. Congress is also obligated to represent the people
who elected them. When will we find a representative who has the backbone to stop the suicidal
tendencies of the structures of power?
Captain Obvious.
Don't set store by any politician. They were all sent as a group to suck Israeli dick. Yes,
dear Donald too. They will tell you what they think you want to hear.
Raymond_K._Hessel
Ivanka converted to judaism and all - was that for the grooms parents or genuine? Or a dynastic
thing?
Wahooo
Another hit piece today in Barrons:
"Donald Trump is trying hard to look presidential these days. Too bad he's using Herbert
Hoover as a role model. Hoover, of course, is best remembered as having been president during
the stock market crash of 1929 that presaged the Great Depression. What helped turn a normal
recession into a global economic disaster was the spread of protectionism, starting with the
Smoot-Hawley tariff, which resulted in retaliation even before Hoover signed the bill in 1930."
If I recall my history, in 1927 amidst what everyone knew was already bubble stock market,
the Fed dropped rates substantially. This was done against the protests of President Coolidge,
his secretary of treasury, and many other politicians and business tycoons at the time. It ushered
in a stock market bubble of massive proportions and the coming bust. Protectionism had little
to do with it.
Faeriedust
Right. The "protectionism" meme is a piece of corporate persiflage that's been duly trotted
out every time someone suggests even SLIGHTLY protecting our decimated economy. According to Wiki:
"the general view is that while it had negative results, the Smoot-Hawley Tariff was not one of
the main causes of the Great Depression because foreign trade was only a small sector of the U.S.
economy."
Faeriedust
Well, what REALLY caused the Depression were the bills from WWI. Every nation in Europe had
spent years of GNP on the War through debt, all the debts were due, and nobody could afford to
pay them. So they loaded the whole pile on Germany, and then screamed when Germany literally could
NOT make its payments, and then played extend-and-pretend for a decade. Which eventually caused
the Credit-Anstallt collapse, and then everything finally fell like a house of cards.
Very like today, but the current run of bills were run up by pure financial frivolity and corruption.
Although one could say that fighting a war that killed 1/4 of all European males of fighting age
was an exercise in frivolity and corruption on the part of Europe's senile ruling elites. Nobody
was willing to divide a shrinking pie equitably; they all thought it would be better to try grabbing
The Whole Thing. Rather like world powers today, again.
CAPT DRAKE
educated, responsible position in a fortune 200company, and yes, will be voting for trump.
why? sick to death of the existing elites, and the way they run things. a trump vote is a protest
vote. a protest against the neocons and all their types that have caused so much misery around
the world.
NoWayJose
If Trump is the Republucan nominee, you can bet that he will point out a lot of things Hillary
has done. You know several others in the field will say nothing bad about Hillary. (A la Romney).
Not sure why Rubio still has support - Rand clobbered him on spending, including his new entitlement,
and add Rubio's position on amnesty.
Faeriedust
With JEB polling in single digits and hopelessly befuddled, Rubio is the Great Hispanic
Hope of the establishment Republocrats. He is being well-pimped, is all. Paul is clearly more
intelligent, more articulate, and more well-informed; Trump is more forceful and popular (but
independent!). Neither suits an establishment that wants to hold the reins behind the throne.
thesoothsayer
The Military Industrial Complex became entrenched after Eisenhower left office and they murdered
Kennedy. Since then, they have taken over. We cover the world to spread our seeds and enrich our
corporations. Our government does not protect the people, it protects the corporations, wall street.
That is the reality.
"... model one under which the efficient markets hypothesis is correct-and that's a model where there are a number of critical assumptions: one is rationality (we rule out behavioral aspects like bandwagons, excessive optimism and so on); second, we rule out externalities and agency problems ..."
"... to liberalize as many markets as possible and to make regulation as light as possible. In the run-up to the financial crisis, if you'd looked at the steady increase in house prices or the growth of the shadow banking system from the perspective of the efficient markets hypothesis, they wouldn't have bothered you at all. You'd tell a story about how wonderful financial liberalization and innovation are-so many people, who didn't have access before to mortgages, were now able to afford houses; here was a supreme example of free markets providing social benefits. ..."
"... But if you took the same [set of] facts, and applied the kind of models that people who had been looking at sovereign debt crises in emerging markets had been developing-boom and bust cycles, behavioral biases, agency problems, externalities, too-big-to-fail problems-if you applied those tools to the same facts, you'd get a very different kind of story. ..."
"... "efficient markets hypothesis": ..."
"... tendency in the policy world to liberalise as many markets as possible and to make regulation as light as possible ..."
Q. You give a couple of examples in the book of the way theoretical errors can lead to policy
errors. The first example you give concerns the "efficient markets hypothesis". What role did
an overestimation of the scope and explanatory power of that hypothesis play in the run-up to
the global financial crisis of 2007-08?
A. If we take as our central model one under which
the efficient markets hypothesis is correct-and that's a model where there are a number of critical
assumptions: one is rationality (we rule out behavioral aspects like bandwagons, excessive optimism
and so on); second, we rule out externalities and agency problems-there's a natural tendency
in the policy world to liberalize as many markets as possible and to make regulation as light
as possible. In the run-up to the financial crisis, if you'd looked at the steady increase in
house prices or the growth of the shadow banking system from the perspective of the efficient
markets hypothesis, they wouldn't have bothered you at all. You'd tell a story about how wonderful
financial liberalization and innovation are-so many people, who didn't have access before to mortgages,
were now able to afford houses; here was a supreme example of free markets providing social benefits.
But if you took the same [set of] facts, and applied the kind of models that people who
had been looking at sovereign debt crises in emerging markets had been developing-boom and bust
cycles, behavioral biases, agency problems, externalities, too-big-to-fail problems-if you applied
those tools to the same facts, you'd get a very different kind of story. I wish we'd put
greater weight on stories of the second kind rather than the first. We'd have been better off
if we'd done so.
djb said...
"efficient markets hypothesis": magical thinking
Jerry Brown said...
I can't get that link to open. Dani Rodrik says "there is a natural tendency in the policy
world to liberalise as many markets as possible and to make regulation as light as possible".
Is that in general? Or is that a part of the efficient market hypothesis?
"... There's a certain fetishism that comes along with the use of math. And that shows up in two ways: one is that arguments which are relatively straightforward, that can be put in a directly literary form, we feel we have mathematise them. Sometimes, there's undue mathematisation or formalisation. We get so enamoured of the math that the mathematical structure of models becomes an object of analysis. And that's one of the problems with economic theory-that it often becomes applied mathematics, where the point is the mathematical properties of the models. And so it becomes more and more peripheral to what economics should be about, which is to look at social phenomena. But there's a much better appreciation today of the role and also the limits of math in economics than there was 30 years ago. ..."
"... it has squeezed out the space for mindless, abstract theorising or modelling for the sake of modelling. ..."
"... Models are stylised abstractions that lay bare the relationship between cause and effect. I liken [models] to lab experiments. When you conduct an experiment in a lab, you're trying to isolate the thing you're looking at. ..."
"... As long as we don't forget that [the model we're using] is a model, not the model. An immediate implication of what I just said, of the way I defined the usefulness of the model, is that the model captures only one of many different causal effects. And it's going to be most useful when we apply it to a real world setting where, in some sense, that causal effect is the dominant one. But [we should not] forget that there will be other settings where other causal effects or other models are more relevant. ..."
"... model one under which the efficient markets hypothesis is correct-and that's a model where there are a number of critical assumptions: one is rationality (we rule out behavioural aspects like bandwagons, excessive optimism and so on); second, we rule out externalities and agency problems-there's a natural tendency in the policy world to liberalise as many markets as possible and to make regulation as light as possible. In the run-up to the financial crisis, if you'd looked at the steady increase in house prices or the growth of the shadow banking system from the perspective of the efficient markets hypothesis, they wouldn't have bothered you at all. You'd tell a story about how wonderful financial liberalisation and innovation are-so many people, who didn't have access before to mortgages, were now able to afford houses; here was a supreme example of free markets providing social benefits. ..."
The economist Dani Rodrik, a professor at Harvard, recently spent a couple of years at Princeton's
Institute for Advanced Study. In his new book, "Economics
Rules: Why Economics Works, When it Fails, and How to Tell the Difference," he recalls just what
a "mind-stretching experience" that sojourn was. He found that many of the visitors to the Institute's
School of Social Sciences, prominent academics from other disciplines, harboured a deep "suspicion
toward economists." Those visitors seemed to believe, he writes, that "economists either stated the
obvious or greatly overreached by applying simple frameworks to complex social phenomena." It felt,
Rodrik says, as if economists were being cast as the "idiots savants of social science: good with
math and statistics, but not much use otherwise."
Part of the problem, Rodrik thinks, is
"misinformation" about what it is economists do, exactly. "Economics Rules" is in part, therefore,
an attempt to set the record straight-and to rebut some fairly widespread criticisms of economics
in the process. But it's also aimed at his colleagues in the economics profession, who he thinks
have made a sorry fist of "presenting their science to the world." When I spoke to him on the phone
from the United States this week, I asked about that assumption he'd encountered at Princeton-that
economists are "good with math and statistics" and not much else.
DR: Often we take it [mathematics] too far. There's a certain fetishism that
comes along with the use of math. And that shows up in two ways: one is that arguments which are
relatively straightforward, that can be put in a directly literary form, we feel we have mathematise
them. Sometimes, there's undue mathematisation or formalisation. We get so enamoured of the math
that the mathematical structure of models becomes an object of analysis. And that's one of the problems
with economic theory-that it often becomes applied mathematics, where the point is the mathematical
properties of the models. And so it becomes more and more peripheral to what economics should be
about, which is to look at social phenomena. But there's a much better appreciation today of the
role and also the limits of math in economics than there was 30 years ago.
JD: Right. You say in the book that one of the most significant developments
in economics over the past three decades or so has been the increasingly widespread use of empirical
methods.
Yes, that has definitely been a [sign of] great progress and has forced us to be much more grounded.
And it has squeezed out the space for mindless, abstract theorising or modelling for the sake
of modelling. But there's a tendency in parts of the profession [today] to believe that if you're
just doing empirical work, then you can do away with theory or with thinking about the models that
lie behind the particular empirical application. The point that is important to realise-and I'm not
sure if I make this sufficiently strongly in the book itself-is that it's impossible to interpret
any empirical evidence without either an implicit or, better still, an explicit model behind it.
So every time we make a causal assertion about the real world using data we are implicitly using
a model.
The idea of the economic model is one of the central concepts in the book. Where
does the explanatory power of economic models come from?
Models are stylised abstractions that lay bare the relationship between cause and effect.
I liken [models] to lab experiments. When you conduct an experiment in a lab, you're trying to isolate
the thing you're looking at.
You draw an interesting comparison between models and fables. You say that models, like
fables, leave out or abstract from certain aspects of the world as it is. And that, in your view,
is a strength, a feature, as you put it, rather than a bug.
As long as we don't forget that [the model we're using] is a model, not the
model. An immediate implication of what I just said, of the way I defined the usefulness of the model,
is that the model captures only one of many different causal effects. And it's going to be most useful
when we apply it to a real world setting where, in some sense, that causal effect is the dominant
one. But [we should not] forget that there will be other settings where other causal effects or other
models are more relevant.
A charge often made against economics, and which you try to rebut in the book, is that
many of its assumptions, particularly about the rationality of economic actors, are unrealistic.
To what extent does behavioural economics, which injects the insights of psychology into formal economic
modelling, take that kind of criticism for granted? Or, to put it another way, does behavioural economics
overturn or invalidate what you call the "garden-variety perfectly competitive market model"?
Yes, but it's only the latest a stream of models that have all had the effect of overturning the
central implication of the perfectly competitive model. We've known since the 19th century that a
market with a few firms would not produce the efficiency consequences of the perfectly competitive
model. Then, of course, in the 1970s there was the imperfect competition revolution, where it turns
out that, in the presence of asymmetric information, all kinds of consequences follow. So the behavioural
revolution isn't new in the sense of generating results that overturn the basic implications of the
perfectly competitive model. It's new in that it directly removes an assumption that had been at
the core of neoclassical theorising-the notion of individual rationality.
There's a tendency now to interpret the behavioural models as implying that we can now forget
about "rational man," that we can forget about all these optimising frameworks. And again I think
that's wrong. There are going to be settings in which the behavioural model provides important insights.
But it would be wrong to discard models in which rational behaviour plays an important role. The
trick is to know when to apply a behavioural approach and when to apply a rational approach.
You have a chapter entitled "When Economists Go Wrong" in which you argue that economists'
biggest mistake concerns the claims they often make for the general validity of certain assumptions
and models. The danger, in other words, is that of confusing a model with the model.
Right. In policy, that's where we fall on our faces repeatedly. When we are called on for policy
advice our biggest mistake is not drawing the links between the critical assumptions of a model and
the real world context with the same kind of rigour and systematic thinking that we exercise when
we're operating within a model.
You give a couple of examples in the book of the way theoretical errors can lead to policy
errors. The first example you give concerns the "efficient markets hypothesis". What role did an
overestimation of the scope and explanatory power of that hypothesis play in the run-up to the global
financial crisis of 2007-08?
If we take as our central model one under which the efficient markets hypothesis is correct-and
that's a model where there are a number of critical assumptions: one is rationality (we rule out
behavioural aspects like bandwagons, excessive optimism and so on); second, we rule out externalities
and agency problems-there's a natural tendency in the policy world to liberalise as many markets
as possible and to make regulation as light as possible. In the run-up to the financial crisis, if
you'd looked at the steady increase in house prices or the growth of the shadow banking system from
the perspective of the efficient markets hypothesis, they wouldn't have bothered you at all. You'd
tell a story about how wonderful financial liberalisation and innovation are-so many people, who
didn't have access before to mortgages, were now able to afford houses; here was a supreme example
of free markets providing social benefits.
But if you took the same [set of] facts, and applied the kind of models that people who had been
looking at sovereign debt crises in emerging markets had been developing-boom and bust cycles, behavioural
biases, agency problems, externalities, too-big-to-fail problems-if you applied those tools to the
same facts, you'd get a very different kind of story. I wish we'd put greater weight on stories of
the second kind rather than the first. We'd have been better off if we'd done so.
You also have a chapter on "Economics and Its Critics". To what extent does your point
about economists' tendency to overestimate the scope and power of their models neutralise some fairly
common criticisms of the discipline made by non-economists? Your point being, as I understand it,
that the problem is not so much with the models themselves as with economists' expectations of what
those models will yield.
What I'm claiming is that if economists were actually truer to their discipline and were to project
their discipline to the rest of the world as a collection of models, to a large extent it would help
neutralise the criticism that economists are [wedded to] one model in particular. You don't get a
reputation as a successful researcher by demonstrating that Adam Smith was right! You get a reputation
by showing that there are very circumstances in which he might have been wrong. But this richness,
this willingness to countenance non-free-market outcomes, is somehow rarely revealed to the outside
world.
Dani Rodrik's "Economics Rules: Why Economics Works, When It Fails, And How to Tell the Difference"
is published by Oxford University Press (£16.99)
"... STUDY: During the past three years, members of the Standard Poor's 500 Index have spent more than $1.5 trillion buying back stock ... US companies issued stock equal to $1.2 trillion last year. All told the new issues in 2014 exceeded share buybacks ... The conclusion is that what looks like buybacks are actually thinly veiled management-compensation plans. ..."
"... Looser monetary policy increases the value of existing assets but reduces the return on assets. So the impact it has on inequality is to increase it in the short run, but in the long run the first order* impact is zero. ..."
"... I doubt that trickle down, starve the beast, supply-side, sound money fantasies are really economics at all. They look now more like the supportive myths of a new, much more hierarchical social order. As such, they should be seen as modern equivalents of the Divine Right royal myth of the Ancien Regime, or even the claim of Dark Age warlords to be descendants of Woden. ..."
"Ben Bernanke, the Federal Reserve chairman when the QE programs were first launched, claimed
that asset purchases would have a "wealth effect": by the Fed purchasing bonds in such large amounts,
bond prices would rise, yields would fall, and investors would shift into riskier securities,
driving up the price of corporate shares and stock markets. Everyone would feel richer, businesses
would invest and consumers would spend more. This seems much like the theory of "trickle-down"
fiscal policy: that tax cuts for those with high incomes would be invested, thereby leading to
the hiring of additional workers and spreading the benefits to the rest of the economy. But like
the Bush administration's tax cuts, the Fed's monetary trickle-down has not worked so well. The
Fed's lending and asset purchase programs have effectively propped up Wall Street interests -- big
banks and financial markets -- but they have also neglected the needs of Main Street, including the
small community banks, small and moderate sized and family-owned businesses, unemployed and underemployed
workers, and state and local governments."
https://www.dissentmagazine.org/article/who-runs-federal-reserve-2008-crash
What's amazing: 'liberals' can see trickle down when it comes to tax cuts but not in monetary
policy. They march in lock step with Wall Street when it comes to monetary policy...which has
barely trickled down at all after seven years.
STUDY: "During the past three years, members of the Standard & Poor's 500 Index have spent
more than $1.5 trillion buying back stock ... US companies issued stock equal to $1.2 trillion
last year. All told the new issues in 2014 exceeded share buybacks ... The conclusion is that
what looks like buybacks are actually thinly veiled management-compensation plans."
It's apparently impossible for most to understand this ... but the most accurate way to describe
the first order distributional impact of looser monetary policy would be to say:
Looser monetary policy increases the value of existing assets but reduces the return on assets.
So the impact it has on inequality is to increase it in the short run, but in the long run the
first order* impact is zero.
*Of course, second order impacts are important here. But if we're counting those, we should probably
keep in mind the dynamics of the given situation, and the fact that workers in no way benefit
from letting the economy slide into depression.
Peter K. said...
WSJ:
"It's also notable that nearly all of the GOP candidates identify the Federal Reserve's post-crisis
monetary policy as a source of rising inequality "
I find it hard to believe that the Wall Street Journal or the GOP candidates actually think rising
inequality is a bad thing.
gordon said...
I doubt that "trickle down, starve the beast, supply-side, sound money fantasies" are really
economics at all. They look now more like the supportive myths of a new, much more hierarchical
social order. As such, they should be seen as modern equivalents of the Divine Right royal myth
of the Ancien Regime, or even the claim of Dark Age warlords to be descendants of Woden.
It's that time of year.... when the bank-that-does-God's-work chooses who to bless with mass
affluence. This year 425 Goldman Sachs' employees were annointed "Managing Directors" which
according to Emolumnet.com means an average annual comp of approximately $1 million.
"... I agree. Excellent point on the frack log, but at some point with the reduced rate of drilling the frack log will dwindle. Let's take the Bakken where we have the best numbers, Enno estimates around 800 DUC wells (rough guess from memory), to make things simple let's assume no more wells are drilled because prices are so low. If 80 wells per month are completed the DUCs are gone in July 2016. Now the no wells drilled is probably not realistic. If 40 wells per month are drilled (though at these oil prices I still don't understand why) the 800 DUCs would last for 20 months rather than only 10 months, so your story makes sense at least for the Bakken. ..."
"... One thing to be careful with the fracklog, is that not all of these will be good wells. ..."
"... I agree that high cost will be likely to reduce demand. The optimistic forecasts assume there will be low cost supply judging by the price scenarios. For AEO 2013 Brent remains under $110/b (2013$) until 2031 and only reaches $141/b (2013$) in 2040. ..."
"... "Debt repayments will increase for the rest of the decade, with $72 billion maturing this year, about $85 billion in 2016 and $129 billion in 2017, according to BMI Research. About $550 billion in bonds and loans are due for repayment over the next five years. ..."
"... U.S. drillers account for 20 percent of the debt due in 2015, ..."
"Mr Falih, who is also health minister, forecast the market would come into balance in the new
year, and then demand would start to suck up inventories and storage on oil tankers. "Hopefully,
however, there will be enough investment to meet the needs beyond 2017."
Other officials also estimated that it would probably take one to two years for the market to
clear up the oil market glut, allowing prices to recover towards $70-$80 a barrel."
"Non-OPEC supply is expected to fall in 2016, only one year after
the deep cuts in investment," he said.
"Beyond 2016, the fall in non-OPEC supply is likely to accelerate, as the cancellation
and postponement of projects will start feeding into future supplies, and the impact of previous
record investments on oil output starts to fade away."
I thought just about everyone was expecting a rebound in production by 2017?
The EIA. IEA. OPEC and most others expect non-OPEC production, excluding the U.S.
and Canada to decline in 2016 and the next few years due to the decline in investments and postponement
/ canceling of new projects.
Production in Canada is still projected to continue to grow, but at a much slower rate than previously
expected.
Finally, U.S. C+C production is expected to rebound in the second half of 2016 due to slightly
higher oil prices ($55-57/bbl WTI). Also, U.S. NGL production proved much more resilient, than
C+C, despite very low NGL prices.
Non-OPEC ex U.S. and Canada total liquids supply (mb/d) Source: EIA STEO October 2015
Thanks. I don't think oil prices at $56/b is enough to increase the drilling in the LTO
plays to the extent that output will increase, it may stop the decline and result in a plateau, it's
hard to know.
On the "liquids" forecast, the NGL is not adjusted for energy content as it should be, each barrel
of NGL has only 70% of the energy content of an average C+C barrel and the every 10 barrels of NGL
should be counted as 7 barrels so that the liquids are reported in barrels of oil equivalent (or
better yet report the output in gigajoules (1E9) or exajoules(1E18)). The same conversion should
be done for ethanol as well.
Note that not only the EIA, but also the IEA, OPEC, energy consultancies and investment
banks are projecting a recovery in US oil production in the later part of next year.
That said, I agree with you that $56 WTI projected by the EIA may not be sufficient to trigger
a fast rebound in drilling activity.
However there is also a backlog of drilled but uncompleted wells that could be completed and put
into operation with slightly higher oil prices.
Most shale companies have announced further cuts in investment budgets in 2016, so I think it is
difficult to expect significant growth in the U.S. onshore oil production in 2H16.
If and when oil prices reach $65-70/bbl, I think LTO may start to recover (probably in 2017 ?).
I think that annual growth rates will never reach 1mb/d+ seen in 2012-14, but 0.5 mb/d annual average
growth is quite possible for several years with oil prices exceeding $70.
I agree. Excellent point on the frack log, but at some point with the reduced rate of
drilling the frack log will dwindle. Let's take the Bakken where we have the best numbers, Enno estimates
around 800 DUC wells (rough guess from memory), to make things simple let's assume no more wells
are drilled because prices are so low. If 80 wells per month are completed the DUCs are gone in July
2016. Now the no wells drilled is probably not realistic. If 40 wells per month are drilled (though
at these oil prices I still don't understand why) the 800 DUCs would last for 20 months rather than
only 10 months, so your story makes sense at least for the Bakken.
I have no idea what the frack log looks like for the Eagle Ford. If its similar to the Bakken
and they complete 130 new wells per month, with about 61 oil rigs currently turning in the EF they
can drill 80 wells per month, so they would need 50 wells each month from the frack log. If there
are 800 DUCs, then that would last for 16 months.
The economics are better in the Eagle Ford because the wells are cheaper and transport costs are
lower, but the EUR of the wells is also lower (230 kb vs 336 kb), the well profile has a thinner
tail than the Bakken wells. I am not too confident about the EIA's DPR predictions for the Eagle
Ford, output will decrease, but perhaps they(EIA) assume the frack log is zero and that only 75 new
wells will be added to the Eagle Ford each month. If my guess of 150 new wells per month on average
from Sept to Dec 2015 is correct, then decline from August to Dec 204 will only be about 100 kb/d
and 255 kb/d from March to Dec 2015 (155 kb/d from March to August 2015).
One thing to be careful with the fracklog, is that not all of these will be good wells.
It is fair enough that companies like EOG will have some good DUCs, (should there be a "k" in that?)
in their fracklogs. But as the fracklog is worked through, I am sure there will be a some very ugly
DUCklings, that nobody wants to admit to. How many fall into this category, will be anybodies guess, but not all DUC, will turn out to be beautiful
swans?
On the predictions of the EIA and IEA, they also expect total oil supply to be quite
high in 2040. For example the EIA in their International Energy Outlook reference case they have C+C output
at 99 Mb/d in 2040.
Their short term forecasts are probably better than that, but my expectation for 2040 C+C output
is 62 Mb/d (which many believe is seriously optimistic, though you have never expressed an opinion
as far as I remember).
So I take many of these forecasts with a grain of salt, they are often more optimistic than me,
others are far more pessimistic, the middle ground is sometimes more realistic.
You said above that estimated URR of all global C+C (ex oil sands in Canada and Venezuela)
is 2500 Gb. And about 1250 Gb of C+C had been produced at the end of 2014. So the remaining resources
are 1250 Gb.
BP estimates total global proved oil reserves as of 2014 at 1700 Gb, or 1313 excluding Canadian
oil sands and Venezuela's extra heavy oil. Their estimate in 2000 was 1301 Gb and 1126 Gb. Hence,
despite cumulative production of 419 Gb in 2001-2014, proved reserves increased by 187 Gb, or 400
Gb including oil sands and Venezuela's Orinoco oil. Note that BP's estimate is for proved (not P+P)
reserves, but it includes C+C+NGLs. My very rough guess is that NGLs account for between 5% and 10%
of the total.
You may be skeptical about BP's estimates, but the fact is that proved reserves or 2P resources
are not a constant number; they are increasing due to new discoveries and technological advances.
BTW, the EIA's estimate of global C+C production increasing from 79 mb/d in 2014 to 99 mb/d in
2040 implies a cumulative output of 836 Gb, about 2/3 of your estimate of remaining 2P resources
of C+C or BP's estimate of the current proved reserves. Given future discoveries and improvements
in technology, I think that further growth of global oil production to about 100 mb/d by 2040 should
not be constrained by resource scarcity.
What can really make the EIA's and IEA's estimates too optimistic is not the depleting resource
base, but the high cost of future supply, political factors and/or lower than expected demand.
You are quite optimistic. Note that I add 300 Gb to the 2500 Gb Hubbert Linearization estimate to account for reserve growth
and discoveries.
The oil reserves reported in the BP Statistical review are 1312 Gb. Jean Laherrere estimates that
about 300 Gb of OPEC reserves are "political" to keep quotas at appropriate levels with respect to
"true" reserve levels. So the actual 2P reserves are likely to be 1010 Gb. Some of the cumulative
C+C output is extra heavy oil so the cumulative C+C-XH output is 1240 Gb so we have a total cumulative
discovery (cumulative output plus 2P reserves) of 2250 Gb through 2014.
My medium scenario with a URR of 2800 Gb of C+C-XH plus 600 Gb of XH oil (3400 Gb total C+C) assumes
550 Gb of discoveries plus reserve growth.
What do you expect for a URR for C+C?
Keep in mind that at some point oil prices rise to a level that substitutes for much of present
oil use will become competitive, so oil prices above $175/b (in 2015$) are unlikely to be sustained
in my view.
In a wider format below I will present a scenario with what extraction rates would be needed for
my medium scenario to reach 99 Mb/d in 2040.
I agree that high cost will be likely to reduce demand. The optimistic forecasts assume
there will be low cost supply judging by the price scenarios. For AEO 2013 Brent remains under $110/b
(2013$) until 2031 and only reaches $141/b (2013$) in 2040.
Depleting resources will raise production cost to more than these prices and demand will be reduced
due to high oil prices. There will be an interaction between depletion and the economics of supply and demand. It will
be depletion that raises costs, which will raise prices and reduce demand.
"Debt repayments will increase for the rest of the decade, with $72 billion maturing this year,
about $85 billion in 2016 and $129 billion in 2017, according to BMI Research. About $550 billion
in bonds and loans are due for repayment over the next five years.
U.S. drillers account for 20 percent of the debt due in 2015, Chinese companies rank second with
12 percent and U.K. producers represent 9 percent."
[These are just the bonds that have yields higher than 10%]
[Its very unlikely that prices will recover in time to save many of the drillers, and even if
prices recover, even $75 oil will not help since they need $90 to break even to service the debt.
Also not sure who is going to buy maturing debt so it can be rolled over. Even if prices slowly recover,
there is likely to be fewer people willing to loan money drillers.]
It's not just the oil. The oil is convenient to point at because the US can pretend that
they got SA to cause the drop in order to stick it to Russia. Makes the US look really smug.
Meanwhile the truth is, copper down, zinc down, iron ore down, you name it down.
Baltic Dry almost crashing, soft commodities gone to hell. I guess SA can also influence
these markets as well.
"... Looking at the recent moves in exchange rates based on a simple switch in expectation of whether or not the Fed would raise rates in December or wait one or two meetings its seems obvious that the markets are not very good at anticipation. So I would not put much money on the ability of the markets to anticipate the trajectory and endpoint of raising rates - or the ability of anybody to guess where the exchange rates will go next. ..."
"... The drop in hours worked data in the productivity report is very confusing. ..."
"... I think lower oil prices has lead to a stronger consumption boost than initially thought. ..."
Have U.S. financial market stress indicators worsened substantially?
Has the U.S. labor market returned to normal?
What will the headline inflation rate be once the effects of the oil price shock dissipate?
Will the U.S. dollar continue to gain value against rival currencies?
I would add:
Will wage gains translate into inflation (or something along those lines)?
Anything else?
sanjait said in reply to Anonymous...
Markets move based on expectations of both economic fundamentals and the Fed's reaction
function. So both can create surprises.
In this case, a relatively stronger than expected US economy could push the dollar up quite a
bit. The central bank would be expected to dampen but not eliminate this effect, even without
changing their perceived reaction function.
DeDude said in reply to Anonymous... , November 10, 2015 at 02:35 PM
Looking at the recent moves in exchange rates based on a simple switch in expectation
of whether or not the Fed would raise rates in December or wait one or two meetings its seems
obvious that the markets are not very good at anticipation. So I would not put much money on
the ability of the markets to anticipate the trajectory and endpoint of raising rates - or the
ability of anybody to guess where the exchange rates will go next.
What we can say is that the strengthening of the US$ that has happened recently will hurt the
economy - whether it will hurt enough to slow the Fed is anybodies guess. Whether those
guesses have already been baked into the exchange rates is impossible to predict.
Bert Schlitz said...
On Angry Bear, there is a post about 3rd quarter hours and Spencer's remark:
"The drop in hours worked data in the productivity report is very confusing.
The employment shows several measures of hours worked and they increased in the third
quarter from 0.5% to 1,08 for aggregate weekly payrolls.
Something is really change.
The productivity report also had unit labor cost rising more than prices,
This implies falling profits, what the S&P 500 shows."
Basically wages accelerated rapidly in the 3rd quarter. The BLS didn't start catching up to it
until October. My guess the hours drop and employment picks up trying to hold down costs.
However, this will probably only level off things off for a few quarters, which would be good
enough to profits catch back up until the labor market becomes so tight, they simply have no
choice but to raise prices and hours worked surge again. Classic mid-cycle behavior (which
Lambert should have noticed).
This is what triggered the 3rd quarter selloff and inventory correction. That foreign stuff
was for show. I think lower oil prices has lead to a stronger consumption boost than
initially thought.
am said...
Clicked on this link for the answers but it is 34 blank pages, so i'll go for:
1. No, they'll just devalue when need be to soften the landing. I think they will do another
one before the end of the year.
2. No idea.
3. Near it if you believe the Atlanta Fed. They have a detailed analysis on their blog.
4. 2.2 if you believe the St Louis Fed, end of December for the oil price decline washout from
the system. So inflation will creep up by the end of the year.
5. Yes and more so if they raise the rate.
6. No. because it will just be oil led not wages (see 4).
Anything else: the weather with apologies to PeterK.
anne said...
I am really having increasing trouble understanding, how is it that having a Democratic
President means making sure appointments from the State or Defense Department to the Federal
Reserve are highly conservative and even Republican. Republicans will not even need to elect a
President to have conservatives strewn about the government:
"... do not just own shares in American banks, they own mainly voting shares. It these financial companies that exercise the real control over the US banking system. ..."
Financial holding companies
like the Vanguard Group, State Street Corporation, FMR (Fidelity), BlackRock, Northern Trust, Capital
World Investors, Massachusetts Financial Services, Price (T. Rowe) Associates Inc., Dodge & Cox Inc.,
Invesco Ltd., Franklin Resources, Inc., АХА, Capital Group Companies, Pacific Investment Management
Co. (PIMCO) and several others do not just own shares in American banks, they own mainly voting
shares. It these financial companies that exercise the real control over the US banking system.
Some analysts believe that
just four financial companies make up the main body of shareholders of Wall Street banks. The other
shareholder companies either do not fall into the key shareholder category, or they are controlled
by the same 'big four' either directly or through a chain of intermediaries. Table 4 provides a summary
of the main shareholders of the leading US banks.
Table 4.
Leading institutional shareholders of the
main US banks
Name of shareholder company
Controlled assets, valuation (trillions of dollars; date
of evaluation in brackets)
Number of employees
Vanguard Group
3 (autumn 2014)
12,000
State Street Corporation
2.35 (mid-2013)
29,500
FMR (Fidelity)
4.9 (April 2014)
41,000
Black Rock
4.57 (end of 2013)
11,400
Evaluations of the amount
of assets under the control of financial companies that are shareholders of the main US banks are
rather arbitrary and are revised periodically. In some cases, the evaluations only include the companies'
main assets, while in others they also include assets that have been transferred over to the companies'
control. In any event, the size of their controlled assets is impressive. In the autumn of 2013,
the Industrial and Commercial Bank of China (ICBC) was at the top of the list of the world's banks
ranked by asset size with assets totaling $3.1 trillion. At that point in time, the Bank of America
had the most assets in the US banking system ($2.1 trillion). Just behind were US banks like Citigroup
($1.9 trillion) and Wells Fargo ($1.5 trillion).
"... But the standard explanation, as well as the standard debate, overlooks the increasing concentration of political power in a corporate and financial elite that has been able to influence the rules by which the economy runs ..."
"... This means that the fracture in politics will move from left to right to the anti-establishment versus establishment. ..."
"... In most cases, international agreements are negotiated by elites that have more in common with each other than with working people in the countries that they represent. ..."
"... when we negotiate economic agreements with these poorer countries, we are negotiating with people from the same class. That is, people whose interests are like ours – on the side of capital ..."
"... Accordingly, the fundamental purpose of the neo-liberal polices of the past 20 years has been to discipline labor in order to free capital from having to bargain with workers over the gains from rising productivity. ..."
"... Moreover, unregulated globalization in one stroke puts government's domestic policies decisively on the side of capital. In an economy that is growing based on its domestic market, rising wages help everyone because they increase purchasing power and consumer demand – which is the major driver of economic growth in a modern economy. But in an economy whose growth depends on foreign markets, rising domestic wages are a problem, because they add to the burden of competing internationally. ..."
"... Both the international financial institutions and the WTO have powers to enforce protection of investors' rights among nations, the former through the denial of financing, the latter through trade sanctions. But the institution charged with protecting workers' rights – the International Labor Organization (ILO) – has no enforcement power. ..."
But the standard explanation, as well as the standard debate, overlooks the increasing concentration
of political power in a corporate and financial elite that has been able to influence the rules by
which the economy runs. ...
Dan Kervick said...
"This means that the fracture in politics will move from left to right to the anti-establishment
versus establishment."
I think this is probably right, but the established parties are doing their best to prevent
it. Each of them has an interest in continuing to divide people along various cultural, religious
and ethnic identity lines in order to prevent them from achieving any kind of effective solidarity
along class lines.
Anyway, I fear we may be headed toward a turbulent and very unpleasant future.
Kenneth D said...
"Rethinking the Global Political Economy" By Jeff Faux April 24, 2002
In most cases, international agreements are negotiated by elites that have more in common with
each other than with working people in the countries that they represent. As a retired U.S. State
Department official put it to me bluntly a few years ago, "What you don't understand," he said,
"is that when we negotiate economic agreements with these poorer countries, we are negotiating
with people from the same class. That is, people whose interests are like ours – on the side of
capital."
Accordingly, the fundamental purpose of the neo-liberal polices of the past 20 years has
been to discipline labor in order to free capital from having to bargain with workers over the
gains from rising productivity.
But labor is typically at a disadvantage because it usually bargains under conditions of excess
supply of unemployed workers. Moreover, the forced liberalization of finance and trade provides
enormous bargaining leverage to capital, because it can now threaten to leave the economy altogether.
Moreover, unregulated globalization in one stroke puts government's domestic policies decisively
on the side of capital. In an economy that is growing based on its domestic market, rising wages
help everyone because they increase purchasing power and consumer demand – which is the major
driver of economic growth in a modern economy. But in an economy whose growth depends on foreign
markets, rising domestic wages are a problem, because they add to the burden of competing internationally.
Both the international financial institutions and the WTO have powers to enforce protection
of investors' rights among nations, the former through the denial of financing, the latter through
trade sanctions. But the institution charged with protecting workers' rights – the International
Labor Organization (ILO) – has no enforcement power.
"... Organizational culture and behavior is a critical factor in the success of any business. The intense emphasis most American businesses place on numbers to the exclusion of almost any other consideration is a major contributor to the vast amount of corporate control fraud we have witnessed in the past decade or so. ..."
"... One of the fundamental tenets of Reaganism/Libertarianism is that "The Ends Justify the Means." The financial sector is not the only institution in our civilization that is failing due to this mind-set. The best form of regulation is simply holding up a mirror to a firm or agency and asking questions such as, "In this organization, when is it OK to lie?" ..."
Fascinating research. Thanks for posting this, Yves.
Organizational culture and behavior is a critical factor in the success of any business.
The intense emphasis most American businesses place on numbers to the exclusion of almost any
other consideration is a major contributor to the vast amount of corporate control fraud we
have witnessed in the past decade or so.
Unfortunately, I don't see any of these executive psychopaths putting themselves through the
self-assessment that is one of the necessary steps mentioned in the study. At least, not
voluntarily.
Sluggeaux, November 7, 2015 at 11:39 am
Important.
One of the fundamental tenets of Reaganism/Libertarianism is that "The Ends Justify the
Means." The financial sector is not the only institution in our civilization that is failing
due to this mind-set. The best form of regulation is simply holding up a mirror to a firm or
agency and asking questions such as, "In this organization, when is it OK to lie?"
"... Is economics, as some assert, little more than a means of dressing up ideological arguments in scientific clothing? ..."
"... This certainly happens, especially among economists connected to politically driven think tanks – places like the Heritage Foundation come to mind. Economists who work for businesses also have a tendency to present evidence more like a lawyer advocating a particular position than a scientist trying to find out how the economy really works. ..."
"... No - we dont allow MDs to prescribe or treat on the basis of theory alone. Its unethical for any professional practitioner to give advice that is not supported by compelling evidence demonstrating that the advise is both safe and effective - First, do no harm. ..."
"... To a man, professional economists shill for the view that they are morally free to treat real economies and real people as their personal lab rats. As a group, economists are an ethically challenged bunch in this respect, and probably in other respects too. ..."
"... The rich plutocrats have a major stake in advocating very specific narratives, so they will throw large sums behind those narratives (and the fight against anything conflicting with them). ..."
"... What sort of opinions are economists allowed to have if they want tenure, want to be published in the major journals or want to make a living? ..."
"... Keynes concluded that government direction was necessary for a viable economy. Keynes interpreters in the US buried that idea, and thus became very important economists - guys like Paul Samuelson. The first ( and only) US book to faithfully represent Keynes ideas faded away soon after publication: http://news.stanford.edu/pr/93/931011Arc3112.html ..."
"... It is impossible to talk about economics without making essentially ideological distinctions. Private property and wage labor are not natural categories. Their adequacy as human practices therefore needs to be either defended or criticized. To simply take them as given is an ideological waffle that begs THE question. ..."
"... Economists thus SHOULD have, acknowledge and fully disclose their ideological biases. When evaluating evidence they should make every effort to set aside and overcome their biases. And they need to stay humble about how Sisyphean, incongruous and incomplete their attempts at objectivity are. ..."
"... And so - though we proceed slowly because of our ideologies, we might not proceed at all without them. - Joseph Schumpeter ..."
Do Economists Promote Ideology as Science?: Which is more important in determining the policy
positions of economists, ideology or evidence? Is economics, as some assert, little more than
a means of dressing up ideological arguments in scientific clothing?
This certainly happens, especially among economists connected to politically driven think tanks
– places like the Heritage Foundation come to mind. Economists who work for businesses also have
a tendency to present evidence more like a lawyer advocating a particular position than a scientist
trying to find out how the economy really works.
But what about academic economists who are supposed
to be searching for the truth no matter the political implications? Can we detect the same degree
of bias in their research and policy positions? ...
rayward said...
Thoma's assessment seems fair enough. I'd make the point that, for some academic economists, no
amount of evidence is sufficient to overcome their bias. "Where's the proof" is the refrain one hears
often. And then there's the question: what is evidence? The availability of lots of data is often
used to "prove" this or that theory, even when the "proof" is contrary to the historical evidence
one can see with her own eyes. Data used as obfuscation rather than clarification. I appreciate that
one historical event following another historical event does not prove causation, but what's better
proof than history.
RogerFox said...
"Shouldn't theory be a guide when the empirical evidence is unconvincing one way or the other?"
No - we don't allow MDs to prescribe or treat on the basis of theory alone. It's unethical for
any professional practitioner to give advice that is not supported by compelling evidence demonstrating
that the advise is both safe and effective - 'First, do no harm.'
To a man, professional economists shill for the view that they are morally free to treat real
economies and real people as their personal lab rats. As a group, economists are an ethically challenged
bunch in this respect, and probably in other respects too.
DeDude said...
Economics as a science is mainly hurt by two things.
The rich plutocrats have a major stake in advocating very specific narratives, so they will
throw large sums behind those narratives (and the fight against anything conflicting with them).
Economics does not have anything resembling the double blind placebo controlled trials that
help medicine fight off the narratives of those with money and power.
RGC said...
What sort of opinions are economists allowed to have if they want tenure, want to be published
in the major journals or want to make a living?
Keynes concluded that government direction was necessary for a viable economy. Keynes' "interpreters"
in the US buried that idea, and thus became very important economists - guys like Paul Samuelson.
The first ( and only) US book to faithfully represent Keynes' ideas faded away soon after publication: http://news.stanford.edu/pr/93/931011Arc3112.html
pete said...
I did not know there was a debate. Krugman summed it all up in Peddling Prosperity. Folks know
who pays the rent, and opine accordingly.
Syaloch said...
I think problems arise when economists are called upon by politicians or the media to give expert
advice.
Within the sciences, "We don't know the answer to that" is a perfectly acceptable response, and
in scientific fields where the stakes are low that response is generally accepted by the public as
well. "What is dark matter made of?" "We don't know yet, but we're working on it." But in politics,
where the stakes are higher, not having a definitive answer is viewed as a sign of weakness. How
often do you hear a politician responding to a "gotcha" question admit that they don't know the answer
rather than trying to BS their way through?
Given the timeliness of news coverage the media prefer to consult experts who offer definitive
answers, especially given their preference for pro/con type interviews which require experts on both
sides of an issue. Economists who are put on the spot this way feel pressured to ditch the error
bars and give unambiguous answers, even answers based purely on theory with little to no empirical
backing, and the more often they do this the more often they're invited back.
It is impossible to talk about economics without making essentially ideological distinctions.
Private property and wage labor are not "natural" categories. Their adequacy as human practices therefore
needs to be either defended or criticized. To simply take them "as given" is an ideological waffle
that begs THE question.
Economists thus SHOULD have, acknowledge and fully disclose their ideological biases. When evaluating
evidence they should make every effort to set aside and overcome their biases. And they need to stay
humble about how Sisyphean, incongruous and incomplete their attempts at objectivity are.
Let's not forget that "The End of Ideology" was a polemical tract aimed at designating the ideology
of the managers and symbol manipulators "above" and beyond ideology. Similarly, Marx's brilliant
critique of ideology degenerated into polemic as its practitioners adopted the mantle of "science."
The End of Ideology: On the Exhaustion of Political Ideas in the Fifties is a collection of essays
published in 1960 by Daniel Bell, who described himself as a "socialist in economics, a liberal in
politics, and a conservative in culture". He suggests that the older, grand-humanistic ideologies
derived from the nineteenth and early twentieth centuries had been exhausted, and that new, more
parochial ideologies would soon arise. He argues that political ideology has become irrelevant among
"sensible" people, and that the polity of the future would be driven by piecemeal technological adjustments
of the extant system.
A very big question! Like "what is the meaning of life?" At least a semester-long upper division
seminar course. ;-)
In a nutshell (to put it crudely), Marx labelled as ideologists a cohort of
German followers of Hegel's philosophy who envisioned historical progress as the result of the progressive
refinement of intellectual ideas. Marx argued instead that historical change resulted from struggle
between social classes over the material conditions of life, fundamental to which was the transformation
of nature through human intervention into means of subsistence.
Marx labelled as ideologists a cohort of German followers of Hegel's philosophy who envisioned historical
progress as the result of the progressive refinement of intellectual ideas. Marx argued instead that
historical change resulted from struggle between social classes over the material conditions of life,
fundamental to which was the transformation of nature through human intervention into means of subsistence.
[ What a superb introductory or summary explanation. I could not be more impressed or grateful. ]
Well said. I would add "markets" to that list of relatively recent cultural constructs that needs
greater scrutiny.
Chuck said...
"And so - though we proceed slowly because of our ideologies, we might not proceed at all without
them."
- Joseph Schumpeter, "Science and Ideology," The American Economic Review 39:2 (March 1949), at 359 http://www.jstor.org/stable/1812737
Many guys are not driven by ideology, rather than evidence. The problem with this article is that
we cannot compare with other professions and say "economists are more/less prone to promote ideology
than the average".
DrDick said in reply to Ignacio...
All human endeavors are shaped by "ideology" in many different ways. What is important is to be aware
of and explicit about their influences on our thought and action.
RC AKA Darryl, Ron said in reply to RC AKA
Darryl, Ron...
If there are two sides to an argument that radically disagree then it is possible that both sides
may be ideology, but both sides cannot be science. Only the correct argument can be science. Of course
ideology is a bit too kind of a word since the incorrect argument is actually just a con game by
people out to lay claim on greater unearned wealth.
ken melvin said...
Economists seem content with trying to figure out how to make 'it' work. Far better, I think, to
try and figure out how it should be.
It was philosophers such as Hume, Locke, Marx, Smith, Rawls, ... who asked the right questions. Laws
and economics come down to us according to how we think about such things; they change when we change
the way we think. Seems we're in a bit of a philosophical dry patch, here. Someday, we will have
to develop a better economic system, might be now. Likewise, there are laws rooted in antiquity that
were wrong then and are wrong still.
RC AKA Darryl, Ron said in reply to ken melvin...
Exactly! They all know what they are doing. Some of them are just trying to do the wrong thing.
Arne said...
"Ideology certainly influences which questions academic researchers believe are the most important,
but there is nothing wrong with that."
No "experiment" in economics comes with the degree of control
that experiments in physical sciences take for granted, so there is tremendous room for ideology
to come into the discussion of whether a data set really represents the conditions the model is supposed
to consider. Since reviewing another economist's study entails asking questions those questions...
DrDick said in reply to Arne...
Please describe the "experimentation" which takes place in astronomy and geology. Ideologies also
play important roles in experimental sciences, such as biology (for which we have a lot of evidence.
Yves here. Tax is a major way to create incentives. New York City increased taxes dramatically
on cigarettes, and has tough sanctions for trying to smuggle meaningful amounts of lower-taxed smokes
in. Rates of smoking did indeed fall as intended.
Thus the debate about whether corporations should pay more taxes is not "naive" as the plutocrats
would have you believe; in fact, they wouldn't be making such a big deal over it if it were. In the
1950s, a much larger percentage of total tax collections fell on corporations than individuals. And
the political message was clear: the capitalist classes needed to bear a fair share of the total
tax burden. Similarly, what has been the result of the preservation of a loophole that allows the
labor of hedge fund and private equity fund employees to be taxed at preferential capital gains rates?
A flood of "talent" into those professions at the expense of productive enterprise.
And the result of having lower taxes on companies has been a record-high corporate profit share
of GDP, with none of the supposed benefits of giving businesses a break. Contrary to their PR, large
companies have been net saving, which means liquidating, since the early 2000s. The trend has become
more obvious in recent years as companies have borrowed money to buy back their own stock.
In the past year, scandal after scandal has exposed companies using loopholes in the tax system
to avoid taxation. Now more than ever, it is becoming clear that citizens around the world are paying
a high price for the crisis in the global tax system, and the discussion about multinational corporations
and their tax tricks remains at the top of the agenda. There is also a growing awareness that the
world's poorest countries are even harder impacted than the richest countries. In effect, the poorest
countries are paying the price for a global tax system they did not create.
A large number of the scandals that emerged over the past year have strong links to the EU and its
Member States. Many eyes have therefore turned to the EU leaders, who claim that the problem is being
solved and the public need not worry. But what is really going on? What is the role of the EU in
the unjust global tax system, and are EU leaders really solving the problem?
This
report – the third
in a series of reports – scrutinises the role of the EU in the global tax crisis, analyses developments
and suggests concrete solutions. It is written by civil society organisations (CSOs) in 14 countries
across the EU. Experts in each CSO have examined their national governments' commitments and actions
in terms of combating tax dodging and ensuring transparency.
Each country is directly compared with its fellow EU Member States on four critical issues: the fairness
of their tax treaties with developing countries; their willingness to put an end to anonymous shell
companies and trusts; their support for increasing the transparency of economic activities and tax
payments of multinational corporations; and their attitude towards letting the poorest countries
have a seat at the table when global tax standards are negotiated. For the first time, this report
not only rates the performance of EU Member States, but also turns the spotlight on the European
Commission and Parliament too.
This report covers national policies and governments' positions
on existing and upcoming EU level laws, as well as global reform proposals.
Overall, the report finds that:
• Although tweaks have been made and some loopholes have been closed, the complex and dysfunctional
EU system of corporate tax rulings, treaties, letterbox companies and special corporate tax regimes
still remains in place. On some matters, such as the controversial patent boxes, the damaging
policies seem to be spreading in Europe. Defence mechanisms against 'harmful tax practices' that
have been introduced by governments, only seem partially effective and are not available to most
developing countries. They are also undermined by a strong political commitment to continue so-called
'tax competition' between governments trying to attract multinational corporations with lucrative
tax reduction opportunities – also known as the 'race to the bottom on corporate taxation'. The
result is an EU tax system that still allows a wide range of options for tax dodging by multinational
corporations.
• On the question of what multinational corporations pay in taxes and where they
do business, EU citizens, parliamentarians and journalists are still left in the dark, as are
developing countries. The political promises to introduce 'transparency' turned out to mean that
tax administrations in developed countries, through cumbersome and highly secretive processes,
will exchange information about multinational corporations that the public is not allowed to see.
On a more positive note, some light is now being shed on the question of who actually owns the
companies operating in our societies, as more and more countries introduce public or partially
public registers of beneficial owners. Unfortunately, this positive development is being somewhat
challenged by the emergence of new types of mechanisms to conceal ownership, such as new types
of trusts.
• Leaked information has become the key source of public information about tax dodging by multinational
corporations. But it comes at a high price for the people involved, as whistleblowers and even
a journalist who revealed tax dodging by multinational corporations are now being prosecuted and
could face years in prison. The stories of these 'Tax Justice Heroes' are a harsh illustration
of the wider social cost of the secretive and opaque corporate tax system that currently prevails.
• More than 100 developing countries still remain excluded from decision-making processes when
global tax standards and rules are being decided. In 2015, developing countries made the fight
for global tax democracy their key battle during the Financing for Development conference (FfD)
in Addis Ababa. But the EU took a hard line against this demand and played a key role in blocking
the proposal for a truly global tax body.
Not one single EU Member State challenged this approach and, as a result, decision-making on global
tax standards and rules remains within a closed 'club of rich countries'.
A direct comparison of
the 15 EU countries covered in this report finds that:
France, once a leader in the demand for public access to information about what multinational
corporations pay in tax, is no longer pushing the demand for corporate transparency. Contrary
to the promises of creating 'transparency', a growing number of EU countries are now proposing
strict confidentiality to conceal what multinational corporations pay in taxes.
Denmark and Slovenia are playing a leading role when it comes to transparency around the true owners
of companies. They have not only announced that they are introducing public registers of company
ownership, but have also decided to restrict, or in the case of Slovenia, avoided the temptation
of introducing, opaque structures such as trusts, which can offer alternative options for hiding
ownership. However, a number of EU countries, including in particular Luxembourg and Germany,
still offer a diverse menu of options for concealing ownership and laundering money.
Among the
15 countries covered in this report, Spain remains by far the most aggressive tax treaty negotiator,
and has managed to lower developing country tax rates by an average 5.4 percentage points through
its tax treaties with developing countries.
The UK and France played the leading role in blocking developing countries' demand for a seat at
the table when global tax standards and rules are being decided.
To read a summary of the report,
please click here.
Class Actions vs. Individual Prosecutions
Jed S. Rakoff NOVEMBER 19, 2015 NYRB
Entrepreneurial Litigation: Its Rise, Fall, and Future
by John C. Coffee Jr.
Harvard University Press, 307 pp., $45.00
"... They assume infinite growth of resources and opportunities for profits, income and wealth. Ad infinitum. Though rich and brilliant, American capitalists have a childlike, irrational conviction that they can indefinitely produce, mine, grow, fish, dump and extract resources from the planet's limited supply, without ever paying a steep price or planning for the day the planet's resources are exhausted. Hence their bizarre opposition to all carbon pollution-taxation and regulation. ..."
"... Stiglitz warns that today's zombies all have a definite conservative bias on political issues. Economic courses taught at Harvard, for example, use a textbook written by a former member of President Bush's Council of Economic Advisors that pushes "a particular ideological view that markets work perfectly." ..."
"... Today the "Atlas Shrugged" ideology of Ayn Rand is the core of Frankenstein economics, having replaced Adam Smith's original capitalism. It is now in a war to the death with liberalism. This extremism is now the conventional wisdom of conservative politicians: "When I say 'capitalism,' I mean a pure, uncontrolled, unregulated laissez-faire capitalism." It is "the only system that can make freedom, individuality, and the pursuit of values possible." Compromise is impossible. ..."
"... Today Rand's ideology is not only deeply embedded in conservative economic thought, it has emerged as a conspiracy of a Super Rich elite and the political right, in a dangerous spiral repetition of the historical patterns Acemoglu and Robinson warn we are closing the door to America's future, setting up the collapse of our economy and our nation's failure. ..."
Halloween once was the family favorite across America, loads of fun. But this year, it seems zombies,
ghouls, vampires all de-materializing, draining all the bloody spirit out of Halloween. America's
Frankenstein economy is in line with Daron Acemoglu and James Robinson predictions in "Why Nations
Fail: The Origins of Power, Prosperity, and Poverty": Nations grow. Wealth concentrates at the top.
The elite manipulate to protect their wealth. They close doors that got them to the top. Economies
collapse. Nations fail.
This Halloween that same pattern is accelerating across America as wealth rapidly concentrates
at the top, GDP growth keeps declining. This time, however, the door is also closing on entrenched
zombie capitalists as the inequality gap widens. They are losing the battle to control government,
threatening insiders, setting up revolutions. Here are seven signs of this classic pattern:
1. Frankenstein economics is a mausoleum for trickle-down capitalism
This theory that policies that help the rich get richer will "ultimately help everybody," has
been with us a long time. Foreign Policy says it was coined by the great urban philosopher Will Rogers
when he commented on Herbert Hoover's 1928 tax cuts: "The money was all appropriated for the top
in the hopes that it would trickle down to the needy," but the president didn't "know that money
trickles up."
Since the presidency of Ronald Reagan, zombie capitalists have turned trickle-up into a flood.
Forbes Global Billionaires list rocketed from 322 in 2000 to 1,826 in 2015. By 2099 Credit Suisse
predicts 11 trillionaires. But for the rest of the world, capitalism is a cancer: A billion live
on less than two dollars a day. And as global population explodes to 10 billion by 2050, the widening
inequality gap will trigger revolutions, pandemics, starvation, an overheated planet. Trillionaires?
Or GDP below 1% by 2099?
2. Frankenstein economy is now America's new Invisible Hand
Adam Smith was a moral philosopher, believed the Invisible Hand of a divine power would act to
the benefit of all. Unfortunately, today's capitalists took away control of the Invisible Hand, transformed
it into a blood-sucking vampire, into "mutant capitalism" as Jack Bogle calls it, an egocentric materialism
with no moral compass that justifies America's obsession with celebrity power and personal wealth.
Nobel Economist Joseph Stiglitz warned of this new "Frankenstein economy" mythology. Lacking any
scientific proof of their own ideologies, insiders use computer technology, math and physics to justify
their ideological biases, dismissing the economic impact of climate change, research on the predictably
irrational, often evil behavior of all humans.
As a result, today's capitalists often become climate deniers, ignore social issues, focusing
instead on justifying the self-serving behavior of billionaires maximizing profits, accumulating
massive wealth, dangerously widening the inequality gap. They pretend their myth-based economy works,
even as they drain our GDP's soul of blood.
3. Frankenstein capitalism is trapped in a Myth of Perpetual Growth
Capitalism's Frankenstein economics is failing America: by relying on its core Myth of Perpetual
Growth. They assume infinite growth of resources and opportunities for profits, income and wealth.
Ad infinitum. Though rich and brilliant, American capitalists have a childlike, irrational conviction
that they can indefinitely produce, mine, grow, fish, dump and extract resources from the planet's
limited supply, without ever paying a steep price or planning for the day the planet's resources
are exhausted. Hence their bizarre opposition to all carbon pollution-taxation and regulation.
4. Frankenstein capitalists have short-term-thinking brains
Wall Street bankers, corporate insiders, and other capitalists tend to focus on today's stock
prices, quarterly earnings, annual bonuses. Most of these Frankenstein capitalists are alpha-males,
aggressive short-term thinkers, says Jeremy Grantham, while America's next generation needs new leaders
for 2050 with a "historical perspective." But unfortunately our leaders have grown into "an army
of left-brained immediate doers" which "guarantees" they "will always to miss" the next big one.
5. Frankenstein capitalism has a conservative GOP political bias
Stiglitz warns that today's zombies all have a definite conservative bias on political issues.
Economic courses taught at Harvard, for example, use a textbook written by a former member of President
Bush's Council of Economic Advisors that pushes "a particular ideological view that markets work
perfectly."
Moreover, they tend to see environmental issues as liberal myths, and back GOP politicians committed
to climate-science denialism. And yet, politically biased economic theories, whether conservative
or liberal, are dangerous to America's future. Future leaders need to be flexible, open to compromise,
making decisions on broader public policies, not, for example, locked on some rigid version of Adam
Smith's theories. Time to bury that corpse.
6. Frankenstein capitalism is accelerating disasters, famine, pandemics
Flash forward: The planet is incapable of feeding the 10 billion people projected on Earth by
2050, warns Jeremy Grantham, whose firm manages over $120 billion. And yet, most economists today
work for banks and businesses that ignore demographics, except as a source of consumer marketing
data, trapped in a self-destructive climate-science-denial bubble.
Snap out of it, reread "The Shock Doctrine: The Rise of Disaster Capitalism." See why this kind
of thinking will require a disaster of epic proportions, a World War III, worldwide famine or global
pandemic to shock the Frankenstein capitalist mind-set, awaken their conscience, revive the original
moral core of Adam Smith's economic soul.
7. Frankenstein economy trapped between uncompromising ideologies
Today the "Atlas Shrugged" ideology of Ayn Rand is the core of Frankenstein economics, having
replaced Adam Smith's original capitalism. It is now in a war to the death with liberalism. This
extremism is now the conventional wisdom of conservative politicians: "When I say 'capitalism,' I
mean a pure, uncontrolled, unregulated laissez-faire capitalism." It is "the only system that can
make freedom, individuality, and the pursuit of values possible." Compromise is impossible.
Today Rand's ideology is not only deeply embedded in conservative economic thought, it has
emerged as a conspiracy of a Super Rich elite and the political right, in a dangerous spiral repetition
of the historical patterns Acemoglu and Robinson warn we are closing the door to America's future,
setting up the collapse of our economy and our nation's failure.
Happy Halloween, the good news is that this war will soon come to a predictably irrational end:
By the 2020 presidential election when Clinton is reelected. By then the GOP will have been looking
at 16 long years out of the presidency.
Plus by 2020, the grim realities of global warming will force Big Oil and the worldwide fossil-fuel
industry to wake up and accept the need for controlling global warming. And finally, that will break
the conspiracy trapping GOP politicians like Donald Trump, Sen. Ted Cruz, Sen. Marco Rubio, and even
Sen. James Inhofe in the mythic greed of climate-science denialism.
Now isn't that a truly scary thought for Frankenstein capitalists on this wonderful Happy Halloween?
Paul B. Farrell is a MarketWatch columnist based in San Luis Obispo, Calif. Follow him on Twitter
@MKTWFarrell.
"... Lehman was engaging in blatant misreporting, treating these "repos" (in which a bank still shows them on its balance sheet as sold with the obligation to repurchase) as sales ..."
"... "It also emerges that the NY Fed, and thus Timothy Geithner, were at a minimum massively derelict in the performance of their duties, and may well be culpable in aiding and abetting Lehman in accounting fraud and Sarbox violations…." ..."
"... Although I hope the bank's newly appointed CEO is able to implement measures to rectify these problems, if DB "goes Lehman", I suspect it will occur much as Lehman did: quite suddenly. ..."
"... The 5% "fee" referred to in the fourth paragraph of the FT excerpt above is not the interest rate charged on the loan but instead is the over-collateralization amount provided by Lehman in exchange for a short-term cash loan. A normal repo loan is over-collateralized at perhaps 2%. Lehman's and its outside auditors Ernst Young's 'genius' was in discovering some language in 2001 or so in the then recently amended FAS 157 accounting guidance (all such guidance has been revised and renumbered in the meantime) which suggested indirectly that if the rate of over-collateralization was bumped up enough, you could pretend you sold the collateral instead of pledging it as collateral. So instead of pledging the normal 102% of the loan amount in collateral, Lehman asked lenders to please take more than that: 105%, hence "Repo 105." ..."
"... Most of Lehman's lenders wouldn't touch the scam because it was so obvious, but a few non-U.S. banks were happy to oblige Lehman. One was Deutsche Bank, to the tune of many billions of dollars over the years. Not that that had anything to do with ex-Deutsche General Counsel for the Americas Rob Khuzami's decision, once he became Obama's Enforcement Head at the SEC beginning in 2009, to give Lehman, EY, Deutsche and the other lenders a pass on all that. ..."
"... In no way did the drafters of the accounting guidance ever say, here's a way to scam the market, have at it. But then again those drafters are a committee of CPAs from all the big firms and elsewhere, including several from EY. So who knows how deliberate the set up was. ..."
"... Deutsche Bank has hugely profited from the end of the Deutschland AG at which head it once was. Thanks to chancellour Schroeder and his finance minister Eichle (the successor after Lafontaine was kicked who went on to found the left party) Deutsche and the other big German banks got to sell their industry portfolios without paying a penny of tax. It is common knowledge among industry watchers that this money ended up as bonuses for the "masters of the universe" at the Anglo-Saxon part of the bank which basically took over the whole bank. First invisibly and then all to visible when Jain became CEO. German industry is now owned by Blackrock and the like. Homi soit qui mal y pense ..."
"... Geithner's amorality and dereliction of duty has been apparent since his testimony in Starr v USA. Somehow these big names are protected by the supine media. ..."
"... Couldn't the NY State Superintendent of Financial Services pull Deutsche's U.S. Banking License? I thought this is what Ben Lawsky was intimating in this (nearly) one year old interview on Bloomberg, in which he (hints at?) the pulling of Deutsche's license, even though he was not at the time talking about Repo 105 ..."
Lehman was engaging in blatant misreporting, treating these "repos" (in which a bank still
shows them on its balance sheet as sold with the obligation to repurchase) as sales
Thank you for writing this bit. All the explanations I've read of Repo 105 seemed to be missing
the step where liabilities were actually reduced – because what's the difference between an asset
and an obligation/contract to buy said asset in X hours time?
So I'm glad a more financially astute mind than mind wrote down what I'd suspected, that real
liabilities weren't actually reduced by Repo 105 and it's just window dressing to fool the regulators.
I'd hazard that it actually makes the situation worse, because it's pretty expensive window dressing
and that's real cash that has to head out the door once a quarter.
tawal
Turning all the brokerages into bank holding companies, where now they all have a calendar
year end and can't temporarily hide their trash on each other's books, but can all hide it on
the Fed's unaudited balance sheet.
Why isn't Deutsche Bank doing this too, and are UBS, Barclays and HSBC the next to fail?
fresno dan
"It also emerges that the NY Fed, and thus Timothy Geithner, were at a minimum massively derelict
in the performance of their duties, and may well be culpable in aiding and abetting Lehman in
accounting fraud and Sarbox violations…."
Upon finding this out, tire squeal, sirens wail, lights flash, and grim faced men rush to take
into custody little Timmy Geithner and serve warrants a the New York FED….
LOL – of course not. Most government officials, of BOTH parties, would say Timmy Geithner and
his ilk performed fantastically…. After all, he worked hard to prop it up…. If you remove the corruption, the double and self dealing,
price fixing, fraud, ad infinitum, and how could the system continue as constituted? And the people
at the top of the system thinks it works very well indeed.
Chauncey Gardiner
This issue is unsurprising to me. Many signs over the past couple years of deeply troubling
matters at this TBTF: CEO resignations, NY Fed criticisms of systems and financial reporting (as
Yves pointed out), participation in market manipulations, billions in writedowns, suicide death
of bank's regulatory lawyer, massive derivatives exposures, central bank calls for increased capital,
etc.
Although I hope the bank's newly appointed CEO is able to implement measures to rectify these
problems, if DB "goes Lehman", I suspect it will occur much as Lehman did: quite suddenly.
Recalling Ernest Hemingway in "The Sun Also Rises": "How did you go bankrupt?" Bill asked. "Two ways," Mike said. "Gradually and then suddenly."
JustAnObserver
Deutche Bank = Germany's RBS (Royal Bank of Scotland) ?
All the Eurozone's nightmares since 2010 have been down to a desperate attempt to postpone
DB's "Minsky Moment" ?
I did see a report that DB is withdrawing from a number of countries but Wall Street wasn't
on that list. Interestingly the list includes all the Scandinavian countries as well as the usual
suspects – Mexico, Turkey, Saudi, etc.
Oliver Budde
The 5% "fee" referred to in the fourth paragraph of the FT excerpt above is not the interest
rate charged on the loan but instead is the over-collateralization amount provided by Lehman in
exchange for a short-term cash loan. A normal repo loan is over-collateralized at perhaps 2%.
Lehman's and its outside auditors Ernst & Young's 'genius' was in discovering some language in
2001 or so in the then recently amended FAS 157 accounting guidance (all such guidance has been
revised and renumbered in the meantime) which suggested indirectly that if the rate of over-collateralization
was bumped up enough, you could pretend you sold the collateral instead of pledging it as collateral.
So instead of pledging the normal 102% of the loan amount in collateral, Lehman asked lenders
to please take more than that: 105%, hence "Repo 105."
Most of Lehman's lenders wouldn't touch the scam because it was so obvious, but a few non-U.S.
banks were happy to oblige Lehman. One was Deutsche Bank, to the tune of many billions of dollars
over the years. Not that that had anything to do with ex-Deutsche General Counsel for the Americas
Rob Khuzami's decision, once he became Obama's Enforcement Head at the SEC beginning in 2009,
to give Lehman, EY, Deutsche and the other lenders a pass on all that.
The few banks who did dare to help out Lehman of course charged higher than market rates for
those loans, even though they held an extra 3% in collateral, which was always made up of high
quality Treasury bonds and the like. Those lenders charged more anyway, because they knew what
Lehman was up to and knew they could wring out some extra cash in exchange for 'aiding' Lehman
in its needs. Lehman gladly paid the higher interest.
In no way did the drafters of the accounting guidance ever say, here's a way to scam the market,
have at it. But then again those drafters are a committee of CPAs from all the big firms and elsewhere,
including several from EY. So who knows how deliberate the set up was.
The scam began in 2001 or so and while it may not have been what blew up Lehman in 2008, it
did importantly mislead a lot of people in 2007 and 2008, when its use was ramped up dramatically.
And it put extra bonus money into the Lehman executives' pockets, year in and year out. No wonder
others seek to emulate it.
Tom
Deutsche Bank has hugely profited from the end of the Deutschland AG at which head it once
was. Thanks to chancellour Schroeder and his finance minister Eichle (the successor after Lafontaine
was kicked who went on to found the left party) Deutsche and the other big German banks got to
sell their industry portfolios without paying a penny of tax. It is common knowledge among industry
watchers that this money ended up as bonuses for the "masters of the universe" at the Anglo-Saxon
part of the bank which basically took over the whole bank. First invisibly and then all to visible
when Jain became CEO. German industry is now owned by Blackrock and the like. Homi soit qui mal
y pense
RBHoughton
Geithner's amorality and dereliction of duty has been apparent since his testimony in Starr
v USA. Somehow these big names are protected by the supine media.
Thank Heavens for NC – one of the most important of a handful of sites that fearlessly report.
Fingers crossed we can build a new media industry around this nexus of quality.
Pearl
Yves,
Couldn't the NY State Superintendent of Financial Services pull Deutsche's U.S. Banking License? I thought this is what Ben Lawsky was intimating in this (nearly) one year old interview on
Bloomberg, in which he (hints at?) the pulling of Deutsche's license, even though he was not at
the time talking about Repo 105:
If enough folks became vocal (enough) about the issue–couldn't we make a difference this time?
("We," as in ordinary housewives from Roswell, GA and humble bloggers such as the illustrious
Yves Smith?".) ;-)
I think you are waaaay more famous than you think you are, Yves. Indeed, you are universally
one of the most well-respected and straight-shooting authors/academics/authorities on such subjects.
And I think Mr. Lawsky would take your call or reply to an email if written by you.
I spoke with his staff (yes, me–a housewife from Roswell, GA) when he was at DFS during my
"Ocwiteration Perseveration" days of yore, and his staff was unusually generous with their time
and they seemed genuinely appreciative to get info and feedback from just regular folks.
I think Mr. Lawsky himself would be thrilled to hear from someone like you. And I think the two of you would be an extremely formidable team.
I just don't want to give up on this. It's too important. At the very least, I will forward
to him this post of yours.
"... The Theory of Distributional Coalitions Mancur Olson's theory of distributional coalitions holds that, as societies establish themselves, group interests become more identifiable, and subsets of the society organize in an effort to secure these interests. ..."
"... This exclusivity factor is of special importance in the way these rent-seeking (or special-interest) groups operate, since, unlike highly-encompassing organizations, exclusive organizations do not have an incentive to increase the productivity of the society. This is due to the disproportion between the sizes of the exclusive organization and the population. To use Olson's idiom, such organizations are in a position either to make larger the pie the society produces or to obtain larger slices for their members. ..."
"... That is still the case even when the organization's cost to the society is significantly more than the benefits it seeks for its members. Such behavior is not at all unexpected of exclusive organizations, since it is the very policy of exclusion itself that enables the group to distribute more to its members.In that respect, disproportional allocation of resources goes hand in hand with barriers to entry into the favored areas of the special-interest group. ..."
"... The genesis of the Turkish deep state is traceable to the Committee of Union and Progress (CUP, ttihad ve Terakki Cemiyeti ), a secret society founded in Istanbul in 1889 by a group of medical students who had a passion for reform in the Ottoman Empire.3 The CUP organized so extensively that, in less than two decades, it became a revolutionary political organization with branches inside and outside the Ottoman Empire.4 Within the organization existed numerous factions, and the body of membership was ethnically and even ideologically diverse. ..."
"... The CUP used the Fedaiin to have its political opponents assassinated, among other things, and later on, employed the Special Organization in the mass killings of the Ottoman- Armenians in 1915.8 The CUP disbanded in 1918, a year that also marked the beginning of the dissolution of the Ottoman Empire after World War I. ..."
"... "Unionism" ( ttihatç l k ) has persisted in the political culture of Turkey, and has manifested itself primarily in (1) ultranationalism, (2) military involvement/ intervention in politics, and (3) justification of extrajudicial activities and violence in the name of the fatherland ( vatan ). ..."
"... Of particular importance among these clandestine operations were those by the Gendarmarie Intelligence and Counter-terror Unit (J TEM, Jandarma stihbarat ve Terörle Mücadele ), which is allegedly responsible for thousands of extrajudicial executions and assassinations of PKK sympathizers and supporters. ..."
This paper argues that Mancur Olson's theory of distributional coalitions largely explains this
network's raison d'être. The paper first outlines the main tenets of the theory, and then examines the historical roots
of the Turkish deep state, as well as the paradigm shift its exposure caused in the public opinion. The network's
exclusive character,
impacts on the workings of the Turkish society, and finally
efforts to sustain its dominating influence, which is manifested especially in its attempts
to reverse the country's democratization process,
demonstrate that the emergence, influence, and the incentives of the Turkish deep state confirm
the fundamental assumptions of Olson's theory.
The Theory of Distributional Coalitions Mancur Olson's theory of distributional coalitions
holds that, as societies establish themselves, group interests become more identifiable, and subsets
of the society organize in an effort to secure these interests. Since these interests are best served by coordinated action, institutions emerge. Yet, such institutions tend to be exclusive by nature, and pursue only the interests of their
own members, who account to a very small minority.
This exclusivity factor is of special importance in the way these rent-seeking (or special-interest)
groups operate, since, unlike highly-encompassing organizations, exclusive organizations do not have
an incentive to increase the productivity of the society. This is due to the disproportion between the sizes of the exclusive organization and the population. To use Olson's idiom, such organizations are in a position either to make larger the pie the society
produces or to obtain larger slices for their members.
"Our intuition tells us," Olson says, "that the first method will rarely be chosen."2 Because,
on the one hand, it is very costly to increase the productivity of society as a whole, and on the
other, even if this is achieved, the The Rise and Decline of the Turkish "Deep State": The Ergenekon
Case 101 members of the minuscule organization will accordingly reap only a minuscule portion of
the benefits.
Therefore, exclusive groups aim to present their own interests as being the interests of their
constituencies, and to use all of their organizational power for collective action in that direction.
That is still the case even when the organization's cost to the society is significantly more
than the benefits it seeks for its members. Such behavior is not at all unexpected of exclusive organizations, since it is the very policy
of exclusion itself that enables the group to distribute more to its members.In that respect, disproportional allocation of resources goes hand in hand with barriers to entry
into the favored areas of the special-interest group.
Yet the existence of barriers to entry further damages the society by reducing the economic growth.
When coupled with the interferences of the special-interest groups with the possibilities of change
in the existing state of affairs, the level of the reduction in economic growth can be large.
In order to achieve their goals, special-interest groups engage in lobbying activities and collusion
– both of which, by creating special provisions and exceptions, further increase not only inefficiency
but also (1) the complexity of regulation, (2) the scope of government, and (3) the complexity of
understandings.
The Formation and the Evolution of the Turkish Deep State The genesis of the Turkish deep
state is traceable to the Committee of Union and Progress (CUP, İttihad ve Terakki Cemiyeti),
a secret society founded in Istanbul in 1889 by a group of medical students who had a passion for
reform in the Ottoman Empire.3 The CUP organized so extensively that, in less than two decades, it
became a revolutionary political organization with branches inside and outside the Ottoman Empire.4
Within the organization existed numerous factions, and the body of membership was ethnically and
even ideologically diverse.
Yet it was the commonly-shared goal of changing the regime rather than conformity that bound the
members together, and they successfully achieved that goal with the Young Turk Revolution of 1908,
which restored the Constitution of 1876 (Kanun-ı Esasi) that restricted the powers of the
Sultan, and made the Ottoman Empire a constitutional monarchy again after 32 years of absolutism.
The genesis of the Turkish deep state is traceable to the Committee of Union and Progress, a secret
society founded in Istanbul in 1889 by a group of medical students who had a passion for reform in
the Ottoman Empire SERDAR KAYA 102 What makes the CUP extraordinary as a case is that it never fully
transformed into a genuine political party even after the revolution it brought about.
Instead, it continued to operate as the secret committee it always was.5 Back then, in reference
to this fact, some of the critics of the CUP had coined the phrase "invisible people" (rical-i
gayb).6 In the end, this code of conduct rendered the committee as a clandestine force that exerted
influence by informal means in order to change the course of affairs the way it saw fit.
The reflections of that proclivity are traceable in many of the major occurrences of the time.
In what is today commonly referred to as the coup of 1913, for example, a group of CUP operatives
broke into the Sublime Porte as the Cabinet was in session, murdered the minister of defense and
two prominent government officials, and forced the Grand Vizier, the head of the Cabinet, to resign
immediately.
The coup of 1913 is also important in that it set a precedent in the country for military interventions
and ultimatums, the latest of which occurred on April 27, 2007.
A second example to the code of conduct of the CUP may be the clandestine activities of the Special
Organization7 (Teşkilat-ı Mahsusa).
Although the CUP established the Special Organization in 1913, ten months after the coup of 1913,
it was in fact the continuation of the Fedaiin, the secret organization the CUP established in 1905
– that is, before the Young Turk Revolution of 1908.
The CUP used the Fedaiin to have its political opponents assassinated, among other things, and
later on, employed the Special Organization in the mass killings of the Ottoman- Armenians in 1915.8
The CUP disbanded in 1918, a year that also marked the beginning of the dissolution of the Ottoman
Empire after World War I.
However, many of its members as well as the political culture it created survived within the Republic
of Turkey.
To this day, "Unionism" (İttihatçılık) has persisted in the political culture of Turkey,
and has manifested itself primarily in (1) ultranationalism, (2) military involvement/ intervention
in politics, and (3) justification of extrajudicial activities and violence in the name of the fatherland
(vatan).
Nevertheless, different aspects of this political culture have gained primacy in different periods,
and with the influence of the changes in the domestic and international conjuncture, it more or less
evolved. For example, during the One Party Era (1925-45), the influence of interwarperiod fascism further
radicalized the nationalist ideology of the ruling cadre. Then, in the 1960s, variations of the same Unionist background found expression The Rise and
Decline of the Turkish "Deep State": The Ergenekon Case 103 in the rightist and leftist political
movements, which, unsurprisingly, entered into violent conflict in the 1970s.
In the mid-1980s, the Kurdish question reemerged with the terrorist activities of the Kurdistan
Workers' Party (PKK), the separatist guerilla group, which became a source of instability in the
southeast region of the country, and in so doing, provided a new fertile ground for the clandestine
operations of the Turkish deep state.
Of particular importance among these clandestine operations were those by the Gendarmarie Intelligence
and Counter-terror Unit (JİTEM, Jandarma İstihbarat ve Terörle Mücadele), which is allegedly
responsible for thousands of extrajudicial executions and assassinations of PKK sympathizers and
supporters.
Yet the same decade also marked the time period in which Turkey opened its borders and started
to integrate with the rest of the world. As a result, after the 1980s, new social, political and economic perspectives started to emerge. However, this new West that Turkey came to closer contact with during and after the 1980s was
fundamentally different from the West of the interwar period in that the former was democratic, and
the latter fascist.
The increasing interaction with the West did not instantly trigger the demands for democratization
in the country. It was the Susurluk scandal and a combination of other events that occurred approximately a decade
later that started to dramatically shift the prevalant paradigms. On the one hand, these experiences created a more profound societal cognizance of questioning
authority, and on the other, in line with these experiences, people came to attach new meanings to
the nature of the state-society relations in Turkey in a manner which provided a more convenient
ground for the democratization process in the country.
Apparently, these paradigm shifts also coincided with the developments since the Helsinki European
Council of 1999, where the European Union (EU) formally referred to Turkey as a candidate and thus
invigorated the country's accession process.
"... 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. ..."
"... 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 ..."
"... 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." ..."
"... The Deep State does not consist of the entire government. 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. All these agencies are coordinated by the Executive Office of the President via the National Security Council. Certain key areas of the judiciary belong to the Deep State, such as the Foreign Intelligence Surveillance Court, whose actions are mysterious even to most members of Congress. ..."
"... The Party is Over: How Republicans Went Crazy, Democrats Became Useless, and the Middle Class Got Shafted , appeared in paperback on August 27, 2013. ..."
"... "These men, largely private, were functioning on a level different from the foreign policy of the United States, and years later when New York Times reporter Neil Sheehan read through the entire documentary history of the war, that history known as the Pentagon Papers, he would come away with one impression above all, which was that the government of the United States was not what he had thought it was; it was as if there were an inner U.S. government, what he called 'a centralized state, far more powerful than anything else, for whom the enemy is not simply the Communists but everything else, its own press, its own judiciary, its own Congress, foreign and friendly governments – all these are potentially antagonistic. ..."
"... The IMF/World Bank scam was working for a while. It doesn't work any more: South American countries simply reject it. And the US has no power to muscle South American countries any more; I'm not quite sure how they managed to become immune to US military intervention, but they have. They have had about 200 years of trial and error in figuring out how. ..."
"... Just before the Civil War, we saw the same dynamic: most of the country was completely disillusioned about the "slavocracy", as they called the corrupt US government dominated by slaveholders. This led to the election of Lincoln, the destruction of the Whig Party, and finally, the Civil War. ..."
Rome lived upon its principal till ruin stared it in the face. Industry is the only true source
of wealth, and there was no industry in Rome. By day the Ostia road was crowded with carts and muleteers,
carrying to the great city the silks and spices of the East, the marble of Asia Minor, the timber
of the Atlas, the grain of Africa and Egypt; and the carts brought out nothing but loads of dung.
That was their return cargo.
– The Martyrdom of Man by Winwood Reade (1871)
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.
[1]
During the last five years, the news media has been flooded with pundits decrying the broken politics
of Washington. The conventional wisdom has it that partisan gridlock and dysfunction have become
the new normal. That is certainly the case, and I have been among the harshest critics of this development.
But it is also imperative to acknowledge the limits of this critique as it applies to the American
governmental system. On one level, the critique is self-evident: In the domain that the public can
see, Congress is hopelessly deadlocked in the worst manner since the 1850s, the violently rancorous
decade preceding the Civil War.
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…
As I wrote in
The Party is Over, the present objective of congressional Republicans is to render the
executive branch powerless, at least until a Republican president is elected (a goal that voter suppression
laws in GOP-controlled states
are clearly intended to accomplish). President Obama cannot enact his domestic policies and budgets:
Because of incessant GOP filibustering, not only could he not fill the large number of vacancies
in the federal judiciary, he could not even get his most innocuous presidential appointees into office.
Democrats controlling the Senate have responded by weakening the filibuster of nominations, but Republicans
are sure to react with other parliamentary delaying tactics. This strategy amounts to congressional
nullification of executive branch powers by a party that controls a majority in only one house of
Congress.
Despite this apparent impotence, President Obama can liquidate American citizens without due processes,
detain prisoners indefinitely without charge, conduct dragnet surveillance on the American people
without judicial warrant and engage in unprecedented - at least since the McCarthy era - witch hunts
against federal employees (the so-called "Insider Threat Program"). Within the United States, this
power is characterized by massive displays of intimidating force by
militarized federal, state and local
law enforcement. Abroad, President Obama can start wars at will and engage in virtually any other
activity whatsoever without so much as a by-your-leave from Congress, such as arranging the
forced landing of a plane carrying a sovereign head of state over foreign territory. Despite
the habitual cant of congressional Republicans about executive overreach by Obama, the would-be dictator,
we have until recently heard very little from them about these actions - with the minor exception
of comments from gadfly Senator Rand Paul of Kentucky. Democrats, save a few mavericks such as Ron
Wyden of Oregon, are not unduly troubled, either - even to the extent of
permitting seemingly perjured congressional testimony under oath by executive branch officials
on the subject of illegal surveillance.
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 exposé 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.
[2]
How did I come to write an analysis of the Deep State, and why am I equipped to write it? As a
congressional staff member for 28 years specializing in national security and possessing a top secret
security clearance, I was at least on the fringes of the world I am describing, if neither totally
in it by virtue of full membership nor of it by psychological disposition. But, like virtually every
employed person, I became, to some extent, assimilated into the culture of the institution I worked
for, and only by slow degrees, starting before the invasion of Iraq, did I begin fundamentally to
question the reasons of state that motivate the people who are, to quote George W. Bush, "the deciders."
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.
The Deep State does not consist of the entire government. 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. All these agencies are coordinated
by the Executive Office of the President via the National Security Council. Certain key areas of
the judiciary belong to the Deep State, such as the Foreign Intelligence Surveillance Court, whose
actions are mysterious even to most members of Congress. Also included are a handful of vital federal
trial courts, such as the Eastern District of Virginia and the Southern District of Manhattan, where
sensitive proceedings in national security cases are conducted. The final government component (and
possibly last in precedence among the formal branches of government established by the Constitution)
is a kind of rump Congress consisting of the congressional leadership and some (but not all) of the
members of the defense and intelligence committees. The rest of Congress, normally so fractious and
partisan, is mostly only intermittently aware of the Deep State and when required usually submits
to a few well-chosen words from the State's emissaries.
I saw this submissiveness on many occasions. One memorable incident was passage of the
Foreign Intelligence
Surveillance Amendments Act of 2008. This legislation retroactively legalized the Bush administration's
illegal and unconstitutional surveillance first revealed by The New York Times in 2005 and
indemnified the telecommunications companies for their cooperation in these acts. The bill passed
easily: All that was required was the invocation of the word "terrorism" and most members of Congress
responded like iron filings obeying a magnet. One who responded in that fashion was Senator Barack
Obama, soon to be coronated as the presidential nominee at the Democratic National Convention in
Denver. He had already won the most delegates by campaigning to the left of his main opponent, Hillary
Clinton, on the excesses of the global war on terror and the erosion of constitutional liberties.
As the indemnification vote showed, the Deep State does not consist only of government agencies.
What is euphemistically called "private enterprise" is an integral part of its operations. In a special
series in The Washington Post called "Top
Secret America," Dana Priest and William K. Arkin described the scope of the privatized Deep
State and the degree to which it has metastasized after the September 11 attacks. There are now 854,000
contract personnel with top-secret clearances - a number greater than that of top-secret-cleared
civilian employees of the government. While they work throughout the country and the world, their
heavy concentration in and around the Washington suburbs is unmistakable: Since 9/11, 33 facilities
for top-secret intelligence have been built or are under construction. Combined, they occupy the
floor space of almost three Pentagons - about 17 million square feet. Seventy percent of the intelligence
community's budget goes to paying contracts. And the membrane between government and industry is
highly permeable: The Director of National Intelligence,
James R. Clapper, is
a former executive of Booz Allen Hamilton, one of the government's largest intelligence contractors.
His predecessor as director,
Admiral Mike McConnell, is the current vice chairman of the same company; Booz Allen is 99 percent
dependent on government business. These contractors now set the political and social tone of Washington,
just as they are increasingly setting the direction of the country, but they are doing it quietly,
their doings unrecorded in the Congressional Record or the Federal Register, and
are rarely subject to congressional hearings.
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 the
Belfer 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.
[4]
Petraeus and most of the avatars of the Deep State - the White House advisers who urged Obama
not to impose compensation limits on Wall Street CEOs, the contractor-connected think tank experts
who besought us to "stay the course" in Iraq, the economic gurus who perpetually demonstrate that
globalization and deregulation are a blessing that makes us all better off in the long run - are
careful to pretend that they have no ideology. Their preferred pose is that of the politically neutral
technocrat offering well considered advice based on profound expertise. That is nonsense. They are
deeply dyed in the hue of the official ideology of the governing class, an ideology that is neither
specifically Democrat nor Republican. Domestically, whatever they might privately believe about essentially
diversionary social issues such as abortion or gay marriage, they almost invariably believe in the
"Washington Consensus": financialization, outsourcing, privatization, deregulation and the commodifying
of labor. Internationally, they espouse 21st-century "American Exceptionalism": the right and duty
of the United States to meddle in every region of the world with coercive diplomacy and boots on
the ground and to ignore
painfully won international
norms of civilized behavior.
To paraphrase what Sir John Harrington said more than 400 years ago about treason, now that the
ideology of the Deep State has prospered, none dare call it ideology.
[5] That
is why describing torture with the word "torture" on broadcast television is treated less as political
heresy than as an inexcusable lapse of Washington etiquette: Like smoking a cigarette on camera,
these days it is simply "not done."
After Edward Snowden's revelations about the extent and depth of surveillance by the National
Security Agency, it has become publicly evident that Silicon Valley is a vital node of the Deep State
as well. Unlike military and intelligence contractors, Silicon Valley overwhelmingly sells to the
private market, but its business is so important to the government that a strange relationship has
emerged. While the government could simply dragoon the high technology companies to do the NSA's
bidding, it would prefer cooperation with so important an engine of the nation's economy, perhaps
with an implied quid pro quo. Perhaps this explains the extraordinary indulgence the government
shows the Valley in intellectual property matters. If an American "jailbreaks" his smartphone (i.e.,
modifies it so that it can use a service provider other than the one dictated by the manufacturer),
he could receive
a fine
of up to $500,000 and several years in prison; so much for a citizen's vaunted property rights
to what he purchases. The libertarian pose of the Silicon Valley moguls, so carefully cultivated
in their public relations, has always been a sham. Silicon Valley has long been tracking for commercial
purposes the activities of every person who uses an electronic device, so it is hardly surprising
that the Deep State should emulate the Valley and do the same for its own purposes. Nor is it surprising
that it should conscript the Valley's assistance.
Still, despite the essential roles of lower Manhattan and Silicon Valley, the center of gravity
of the Deep State is firmly situated in and around the Beltway. The Deep State's physical expansion
and consolidation around the Beltway would seem to make a mockery of the frequent pronouncement that
governance in Washington is dysfunctional and broken. That the secret and unaccountable Deep State
floats freely above the gridlock between both ends of Pennsylvania Avenue is the paradox of American
government in the 21st century: drone strikes, data mining, secret prisons and
Panopticon-like
control on the one hand; and on the other, the ordinary, visible parliamentary institutions of
self-government declining to the status of a banana republic amid the gradual collapse of public
infrastructure.
The results of this contradiction are not abstract, as a tour of the rotting, decaying, bankrupt
cities of the American Midwest will attest. It is not even confined to those parts of the country
left behind by a Washington Consensus that decreed the financialization and deindustrialization of
the economy in the interests of efficiency and shareholder value. This paradox is evident even within
the Beltway itself, the richest metropolitan area in the nation. Although demographers and urban
researchers invariably count Washington as a "world city," that is not always evident to those who
live there. Virtually every time there is a severe summer thunderstorm, tens - or even hundreds -
of thousands of residents
lose power, often for many days. There are occasional water restrictions over wide areas because
water mains, poorly constructed and inadequately maintained,
have burst.
[6] The
Washington metropolitan area considers it a Herculean task just to build a rail link to its international
airport - with luck it may be completed by 2018.
It is as if Hadrian's Wall was still fully manned and the fortifications along the border with
Germania were never stronger, even as the city of Rome disintegrates from within and the life-sustaining
aqueducts leading down from the hills begin to crumble. The governing classes of the Deep State may
continue to deceive themselves with their dreams of Zeus-like omnipotence, but others do not. A
2013 Pew Poll that interviewed 38,000 people around the world found that in 23 of 39 countries
surveyed, a plurality of respondents said they believed China already had or would in the future
replace the United States as the world's top economic power.
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." "Living upon its principal," in this case, means that the Deep
State has been extracting value from the American people in vampire-like fashion.
We are faced with two disagreeable implications. First, that the Deep State is so heavily entrenched,
so well protected by surveillance, firepower, money and its ability to co-opt resistance that it
is almost impervious to change. Second, that just as in so many previous empires, the Deep State
is populated with those whose instinctive reaction to the failure of their policies is to double
down on those very policies in the future. Iraq was a failure briefly camouflaged by the wholly propagandistic
success of the so-called surge; this legerdemain allowed for the surge in Afghanistan, which equally
came to naught. Undeterred by that failure, the functionaries of the Deep State plunged into Libya;
the smoking rubble of the Benghazi consulate, rather than discouraging further misadventure, seemed
merely to incite the itch to bomb Syria. Will the Deep State ride on the back of the American people
from failure to failure until the country itself, despite its huge reserves of human and material
capital, is slowly exhausted? The dusty road of empire is strewn with the bones of former great powers
that exhausted themselves in like manner.
But, there are signs of resistance to the Deep State and its demands. In the aftermath of the Snowden
revelations,
the House narrowly failed to pass an amendment that would have defunded the NSA's warrantless
collection of data from US persons. Shortly thereafter, the president, advocating yet another military
intervention in the Middle East, this time in Syria, met with such overwhelming congressional skepticism
that he changed the subject by grasping at a diplomatic lifeline thrown to him by Vladimir Putin.
[7]
Has the visible, constitutional state, the one envisaged by Madison and the other Founders, finally
begun to reassert itself against the claims and usurpations of the Deep State? To some extent, perhaps.
The unfolding revelations of the scope of the NSA's warrantless surveillance have become so egregious
that even institutional apologists such as Senator Dianne Feinstein have begun to backpedal - if
only rhetorically - from their knee-jerk defense of the agency. As more people begin to waken from
the fearful and suggestible state that 9/11 created in their minds, it is possible that the Deep
State's
decade-old tactic of crying "terrorism!" every time it faces resistance is no longer eliciting
the same Pavlovian response of meek obedience. And the American people, possibly even their legislators,
are growing tired
of endless quagmires in the Middle East.
But there is another more structural reason the Deep State may have peaked in the extent of its
dominance. While it seems to float above the constitutional state, its essentially parasitic, extractive
nature means that it is still tethered to the formal proceedings of governance. The Deep State thrives
when there is tolerable functionality in the day-to-day operations of the federal government. 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.
But when one house of Congress is taken over by tea party
Wahhabites, life for the ruling
class becomes more trying.
If there is anything the Deep State requires it is silent, uninterrupted cash flow and the confidence
that things will go on as they have in the past. It is even willing to tolerate a degree of gridlock:
Partisan mud wrestling over cultural issues may be a useful distraction from its agenda. But recent
congressional antics involving sequestration, the government shutdown and the threat of default over
the debt ceiling extension have been disrupting that equilibrium. And an extreme gridlock dynamic
has developed between the two parties such that continuing some level of sequestration is politically
the least bad option for both parties, albeit for different reasons. As much as many Republicans
might want to give budget relief to the organs of national security, they cannot fully reverse sequestration
without the Democrats demanding revenue increases. And Democrats wanting to spend more on domestic
discretionary programs cannot void sequestration on either domestic or defense programs without Republicans
insisting on entitlement cuts.
So, for the foreseeable future, the Deep State must restrain its appetite for taxpayer dollars.
Limited deals may soften sequestration, but agency requests will not likely be fully funded anytime
soon. Even Wall Street's rentier operations have been affected: After helping finance the tea party
to advance its own plutocratic ambitions, America's Big Money is now regretting the Frankenstein's
monster it has created. Like children playing with dynamite, the tea party and its compulsion to
drive the nation into credit default has alarmed the grown-ups commanding the heights of capital;
the latter are now telling the politicians they thought they had hired
to knock it off.
The House vote to defund the NSA's illegal surveillance programs was equally illustrative of the
disruptive nature of the tea party insurgency. Civil liberties Democrats alone would never have come
so close to victory; tea party stalwart Justin Amash (R-MI),
who has also upset the business community for his debt-limit fundamentalism, was the lead Republican
sponsor of the NSA amendment, and most of the Republicans who voted with him were aligned with the
tea party.
The final factor is Silicon Valley. Owing to secrecy and obfuscation, it is hard to know how much
of the NSA's relationship with the Valley is based on voluntary cooperation, how much is legal compulsion
through FISA warrants and how much is a matter of the NSA surreptitiously breaking into technology
companies' systems. Given the Valley's public relations requirement to mollify its customers who
have privacy concerns, it is difficult to take the tech firms' libertarian protestations about government
compromise of their systems at face value, especially since they engage in similar activity against
their own customers for commercial purposes. That said, evidence is accumulating that Silicon Valley
is losing billions in overseas business from companies, individuals and governments that want
to maintain privacy. For high tech entrepreneurs, the cash nexus is ultimately more compelling than
the Deep State's demand for patriotic cooperation. Even legal compulsion can be combatted: Unlike
the individual citizen, tech firms have deep pockets and batteries of lawyers with which to fight
government diktat.
This pushback has gone so far that on January 17, President Obama announced revisions to the NSA's
data collection programs, including withdrawing the agency's custody of a domestic telephone record
database, expanding requirements for judicial warrants and ceasing to spy on (undefined) "friendly
foreign leaders." Critics have denounced the changes as a
cosmetic public relations move, but they are still significant in that the clamor has gotten
so loud that the president feels the political need to address it.
The outcome of all these developments is uncertain. The Deep State, based on the twin pillars
of national security imperative and corporate hegemony, has until recently seemed unshakable and
the latest events may only be a temporary perturbation in its trajectory. But history has a way of
toppling the altars of the mighty. While the two great materialist and determinist ideologies of
the twentieth century, Marxism and the Washington Consensus, successively decreed that the dictatorship
of the proletariat and the dictatorship of the market were inevitable, the future is actually indeterminate.
It may be that deep economic and social currents create the framework of history, but those currents
can be channeled, eddied, or even reversed by circumstance, chance and human agency. We have only
to reflect upon defunct glacial despotisms such as the USSR or East Germany to realize that nothing
is forever.
Throughout history, state systems with outsized pretensions to power have reacted to their environments
in two ways. The first strategy, reflecting the ossification of its ruling elites, consists of repeating
that nothing is wrong, that the status quo reflects the nation's unique good fortune in being favored
by God and that those calling for change are merely subversive troublemakers. As the French ancien
régime, the Romanov dynasty and the Habsburg emperors discovered, the strategy works splendidly for
a while, particularly if one has a talent for dismissing unpleasant facts. The final results, however,
are likely to be thoroughly disappointing.
The second strategy is one embraced to varying degrees
and with differing goals, by figures of such contrasting personalities as Mustafa Kemal Atatürk,
Franklin D. Roosevelt, Charles de Gaulle and Deng Xiaoping. They were certainly not revolutionaries
by temperament; if anything, their natures were conservative. But they understood that the political
cultures in which they lived were fossilized and incapable of adapting to the times. In their drive
to reform and modernize the political systems they inherited, their first obstacles to overcome were
the outworn myths that encrusted the thinking of the elites of their time.
As the United States confronts its future after experiencing two failed wars, a precarious economy
and $17 trillion in accumulated debt, the national punditry has split into two camps. The first,
the declinists, sees a broken, dysfunctional political system incapable of reform and an economy
soon to be overtaken by China. The second, the reformers, offers a profusion of nostrums to turn
the nation around: public financing of elections to sever the artery of money between the corporate
components of the Deep State and financially dependent elected officials, government "insourcing"
to reverse the tide of outsourcing of government functions and the conflicts of interest that it
creates, a tax policy that values human labor over financial manipulation and a trade policy that
favors exporting manufactured goods over exporting investment capital.
Mike Lofgren on the Deep State Hiding in Plain Sight
All of that is necessary, but not sufficient. The Snowden revelations (the impact of which have been
surprisingly strong), the derailed drive for military intervention in Syria and a fractious Congress,
whose dysfunction has begun to be a serious inconvenience to the Deep State, show that there is now
a deep but as yet inchoate hunger for change. What America lacks is a figure with the serene self-confidence
to tell us that the twin idols of national security and corporate power are outworn dogmas that have
nothing more to offer us. Thus disenthralled, the people themselves will unravel the Deep State with
surprising speed.
[1] The term "Deep State" was coined in Turkey and is said to be a system composed of high-level
elements within the intelligence services, military, security, judiciary and organized crime. In
British author John le Carré's latest novel, A Delicate Truth, a character describes the
Deep State as "… the ever-expanding circle of non-governmental insiders from banking, industry and
commerce who were cleared for highly classified information denied to large swathes of Whitehall
and Westminster." I use the term to mean a hybrid association of elements of government and
parts of top-level finance and industry that is effectively able to govern the United States without
reference to the consent of the governed as expressed through the formal political process.
[2] Twenty-five years ago, the sociologist
Robert Nisbet described
this phenomenon as "the attribute of No Fault…. Presidents, secretaries and generals and admirals
in America seemingly subscribe to the doctrine that no fault ever attaches to policy and operations.
This No Fault conviction prevents them from taking too seriously such notorious foul-ups as Desert
One, Grenada, Lebanon and now the Persian Gulf." To his list we might add 9/11, Iraq, Afghanistan
and Libya.
[3] The attitude of many members of Congress towards Wall Street was
memorably expressed by Rep. Spencer Bachus (R-AL), the incoming chairman of the House Financial
Services Committee, in 2010: "In Washington, the view is that the banks are to be regulated, and
my view is that Washington and the regulators are there to serve the banks."
[4] Beginning in 1988, every US president has been a graduate of Harvard or Yale. Beginning in 2000,
every losing presidential candidate has been a Harvard or Yale graduate, with the exception of John
McCain in 2008.
[5] In recent months, the American public has seen a vivid example of a Deep State operative marketing
his ideology under the banner of pragmatism. Former Secretary of Defense Robert M. Gates - a one-time
career CIA officer and
deeply political Bush family retainer - has camouflaged his retrospective defense of military
escalations that have brought us nothing but casualties and fiscal grief as the straight-from-the-shoulder
memoir from a plain-spoken son of Kansas who disdains Washington and its politicians.
[6] Meanwhile, the US government took the lead in restoring Baghdad's sewer system
at a cost
of $7 billion.
[7] Obama's abrupt about-face suggests he may have been skeptical of military intervention in Syria
all along, but only dropped that policy once Congress and Putin gave him the running room to do so.
In 2009, he went ahead with the Afghanistan "surge" partly because General Petraeus'
public relations campaign and back-channel lobbying on the Hill for implementation of his pet
military strategy pre-empted other options. These incidents raise the disturbing question of how
much the democratically elected president - or any president - sets the policy of the national security
state and how much the policy is set for him by the professional operatives of that state who engineer
faits accomplis that force his hand.
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Another attribute of the "Deep State" is that is highly nepotistic. Entry into it relies on
connections rather than skill. Many positions within it exist simply to provide suitably lucrative
work for the children of the ruling class.
Nisswapaddy
Lofgren has certainly provided a good overview of the situation, although what he postulates
is by no means original thinking. However, it is particularly heartening to have this analysis
come from a fellow who could easily have sold his soul like David Petraeus, to name just one
in an endless line of the well connected who have cashed in. Yet I believe our situation is more
dire than even Lofgren suggests. As the philosopher John Ralston Saul characterized it, we have
undergone a coup d'etat in slow motion and now live, not in a constitutional democracy but 'Democracy
Inc.' (described in detail in a book by the same name by Prof. Sheldon Wolin). LIke Lofgren,
neither of these thinkers sees some carefully contrived conspiracy at work. It is merely the
inevitable result of following a rigid ideology that allows unfettered corporate capitalism to
have its way unopposed and essentially unregulated. Now that massive corporation have taken control
of all the levers of power (as Lofgren summarizes above) it will be very, very difficult for
'the people' to take them back. Remember what Upton Sinclair observed over 100 years ago:
"It is difficult to get a man to understand something when his salary depends upon him NOT
understanding it."
I give you men like Dave Petraeus, or Jamie Dimon or (fill in the blank) who are subject to
this 'lack of understanding'. They are not co-conspirators, at least not in any active, conscious
sense. However, the corporations they work for, whose only function is to maximize profits for
the benefit of their shareholders and investors and to 'externalize' any and all costs and expenses
possible, are, by definition, sociopaths. And those corporations, run by men and women simply
doing their jobs and going home to a loving family, also have a 'lack of understanding'. When
the corporation you work for has only reason for being, to make a profit 'come heck or high water',
and that corporation and hundreds of others with the she mission, control the executive, congress,
the judiciary and their regulators (who are now required to call the corporations they supposedly
regulate "their customers" ) it doesn't take much imagination to see how we got where we are.
Nor how it is that corporations get what they need, the rest of us be dammed. In short, the 'deep
state' Lofgren shines a light on is much deeper than he indicates. And it will take more than
spats between large corporations to bring it to an end.
William Jacoby
Good essay but everybody should know this by now. In the next elections, in which good candidates
will by definition not be viable because they won't be bankrolled by the Deep State, we must
use the alternative media to coalesce around a few non-negotiable demands. Things like prosecuting
Clapper for lying, immediate prohibition of the intelligence community's revolving door, nationalization
of companies like Booz Allen, creation of public banks as suggested by Ellen Brown and nationalization
of banks too big to fail, a student loan debt strike, and a constitutional amendment overturning
Citizens United. Failure to grant these demands must be met with withdrawal from the two-party
system; go Green or go Libertarian, whichever you prefer, but put a monkey wrench in the system.
Keep using the alternative media, defend them from the Deep State, educate yourself, network
with the growing numbers of people who are onto the Deep State, or the National Security State,
or whatever you want to call it. But get over talking about how the Constitution is in danger;
it's dead, and if there's anything you liked about it, you'll have to bring it back from the
graveyard. Take action, and support others who do.
cross1242
Unfortunately, I don't see anything changing the Deep State or the government in Washington
until there is some kind of revolution. That revolution might be bloodless but nothing guarantees
that. If the Deep State ultimately feels threatened, it will defend itself with all the national
security forces at its command.
Yes. An example. Paper granted PhD's are "promised" suitably lucrative work in academia. So
it's not just corporate.
Time for you to read Foucault's Discipline and Punish and all the rest of his work. Include Virilio, Baudrillard and the rest of Continental Philosophy. Lofgren is just catching up with
a long way to go. Check out Zizek.
Kibik
Look up "Bohemian Club" too.
Peter Michaelson
The fact that an invisible government of elites is in charge of our democracy is entirely
predictable. This political arrangement simply depicts the state of our psychological development.
We have a "Deep State" within our unconscious mind. Our thoughts, desires, aspirations, and beliefs
are all under the influence of this inner "Deep State." Through our ego we're each like a puppet
prince, thinking we're in charge of the show. Both liberals and conservatives have too much invested
in self-image and are afraid of facing what amounts to an inner tyranny. We're too egotistical
and narcissistic; we don't want to be humbled by inner truth. We've produced superficial psychologies
(behavioral, positive, cognitive, etc.) that refuse to face the inner reality. We'll have real
democracy in America and the world when we establish inner democracy. It can be done, and it
needs to be done soon. Start by tossing out all the so-called "scientific psychology" that academic
psychologists are pedaling. Go back to Freud and understand what he's really saying, that we'll
go on generating suffering and self-defeat until we become more conscious of our inner conflicts,
psychological defenses, and entanglements in negative emotions.
Anonymous
As has been mentioned the greatest power is the people. Without the cooperation of the people
none of the pathological behavior described would be possible. The West Coast Strike of 1934
is an example of what can be done. A major way that the 1% control the 99% is through debt. That
control could actually be reversed. What would happen if only 10% of the 99% decided to no longer
to pay their debts? A movement like that could rapidly escalate once people realize that there
is no system that could cope with massive non payment of debt.
What would happen if the pilots, truck drivers, rail workers and dock workers decided to strike?
or the telecommunication workers? All or any of those could be implemented peacefully. No need
to hit the streets. Just stay home and contribute nothing to the deep state. Imagine how long
it could survive the massive non cooperation of the 99%. There is a multitude of possibilities.
Charles Shaver
'How can I thank thee [Bill Moyers], let me count the ways…' and now, too, Mike Lofgren. For
some time I've been thinking that vastly superior aliens from deep space might be holding the
U.S. Government hostage and causing all of the recent illegal, immoral, unconstitutional and
just plain stupid national self-destruction. What a relief to learn it is only too-typical low
IQ humanity that is responsible. Seriously, now, that which gives me the audacity and courage
to comment on these things about which I personally know so little, is my lay acquired understanding
of the basics. To me, in early 2014, these are mere, obvious, matters of the hierarchy of law,
relevant laws and violations thereof.
Ignoring most of the basics and my personal lack of qualifications, suffice it to say for
now that above and beyond the laws of man are those self-evident in nature. Insightfully, since
August of 1975, I have observed not only do the higher laws apply to both machine and man but
the U.S. Constitution is imbedded with them, intentionally or not. So, to finally get to the
point, when Mike Lofgren says 'Groupthink' I think of The Universal Law of Order: "Whenever two
or more individuals unite to form an organization the survival of the organization becomes paramount
to the survival of the individual." and how the Constitution was ignored again. When someone
says 'there's nothing I can do' I think of The Third Rule of Human Behavior: "Self-determination
shall prevail." and how the Constitution was ignored again. Deep space, or 'Deep State,' it 'don't
look good' for us when a vast majority keeps enabling a selfish minority to impose rule. Now,
it will probably take a paradigm shift to fix what's broke but, fortunately, naturally, 'shift
happens.'
http://leisureguy.wordpress.com Leisureguy
Magnificent article-greatly extends the range of my awareness, since I was just starting to
get a glimpse of this.
It should definitely be noted in the article that Senator Barack Obama pledged and promised
that he would vote against telecom immunity and then he voted in favor of it. That did not auger
well, albeit accurately.
http://leisureguy.wordpress.com Leisureguy
This is why bloody revolutions happen: the course of last resort would certainly be violence,
which hurts everyone. Elections were supposed to allow an orderly way to bring about change without
violence, but once that mechanism is jammed and will no longer respond, violence is lapping at
our heels.
http://leisureguy.wordpress.com Leisureguy
I have the same feeling. We thought we had a mechanism that would enable us to respond to
the need for revolutionary change in an orderly way, but that mechanism has been deliberately
broken. That is very, very bad.
Although one must allow that much of this is driven by our deep nature: social animals acting
as social animals do, with all sorts of social-driven instincts and responses. Biology is destiny?
rleighton27
I am not part of the hallelujah chorus greeting this article. Some, if not most of it, smacks
of the apologia of a professional bureaucrat who suddenly has found a conscience. Also, his claim
that President Obama was itching to start a war in Syria, but was only held back from doing so
by "overwhelming Congressional skepticism"…as if that wasn't a daily occurrence to be dealt with
from day one of his tenure. I am convinced that it was part of his strategy from the outset…to
rattle sabres loudly enough to frighten a bellicose Putin, who knew his own military prowess
was hampered by an ill-trained and poorly equipped manpower pool, into making his lapdog Assad
stop playing nasty with his population–and it worked. I agree with much of the article's commentary
about the "boys in the back room" who, in fact, have commandeered the running of the country
out of the hands of elected officials, but condemn it's tone of "it really doesn't matter who's
in charge." It does matter. Articles of this type just encourage voter apathy, and that plays
into the schematic laid out by the Powell Memorandum for the usurping of Democracy, placing it
into the hands of the ALEC/Koch consortium of Plutocratic traitors.
http://leisureguy.wordpress.com Leisureguy
This helps me understand why such an intensive effort is underway to destroy our educational
system and the low value we seem to place on education. I'm thinking of privatization, charter
schools, constant pressure to pay public money to religious schools, defunding of higher education,
closures of departments of humanities and non-applied science and art-that sort of thing. And
now I get it: the last thing the corporate state wants is people "wasting" time and effort on
a bunch of abstract principles and reasoning and critical thinking, especially since it just
causes trouble in the workplace and makes people question orders. Better to do away with that:
turn the focus to what will make the most money, and your problem's solved. And then you can
cut costs-always the imperative-by closing departments that seem to create the most troublemakers.
Two birds, one stone.
Bob Baldock
Peter Dale Scott articulated this first, and has it deeper and darker. Check his website.
Anonymous
As I read the final sentence,
"What America lacks is a figure with the serene self-confidence to tell us that the twin idols
of national security and corporate power are outworn dogmas that have nothing more to offer us.
Thus disenthralled, the people themselves will unravel the Deep State with surprising speed."
I remembered the demise of individuals who fit "figure with serene self-confidence"…..
John F. Kennedy
Martin Luther King
Robert Kennedy
Malcolm X
Paul Wellstone
Joan Harris
It's been awhile since I have had anyone refer to Freud. Never mind the "new age" psychology.
Defenses have always been the problem. In a perfect world we would all live consciously and greed
and prejudices would give way to peace and harmony. In the meantime we must address all the ills,
if for no other reason then to prevent us from becoming complacent. I shall retain a little healthy
cynicism until the world is healthy.
I. Spoke Umbra
Let's be clear about what the "group-think" means when speaking about the NSA:
As someone who was once in the bowels of the NSA beast, I observed a number of disturbing
traits permeate every nook and cranny of the operation. If those traits were applied to an individual,
they would be considered a very serious characterological disorder, perhaps warranting hospitalization:
The groupthink scenario in that place is as toxic as it can get for a human enterprise. It
is a clear and present danger to the security of Democracy as we know it.
Pamela Zuppo
This was no stroke of genius, this was Greenspan, Reagan, and the Bush clan. The better term
for contemporary capitalism is "disaster capitalism" as coined by Naomi Klein. The big question
is what are we to do about this? Do what Kiev has done? Due to "group think", or brain-washing
of the masses who have lost their own control via their televisions, it seems the zombies outnumber
the enlightened. It's clear to me something must be done.
SufferinSuccotash,Pivoting
Randolph "War is the Health of the State" Bourne is also worth a read. Not to mention Jack
London's The Iron Heel. These All-American doods had the National Security-Oligarchy State pretty
much nailed down a century ago. Why people concerned with our current predicament skip over these
Progressive Era radicals in favor of Continental Philosophy (which reminds me of a skimpy breakfast)
is beyond me. I've been watching the emancipatory elements in this country floundering around
for the past four decades now and it's pretty depressing, especially the seemingly chronic inability
to connect with the USA's radical past. No historical knowledge=no sense of history=no political
judgement=the Bad Guys keep on winning.
Ukrainians are my favorite people at the moment and you can bet that their sense of history is
pretty sharp.
This concludes this Sunday morning rant.
Joseph Brant
It is commendable to preserve hope among reformers, but hopes do not solve problems.
While security agencies can serve democracy when better regulated, the failure to regulate
is the result of failed democratic institutions which have not themselves been "vulnerable to
a vigilant public." The dark state invisible power corrupts invisibly, but gold is the invisible
power which had already corrupted the visible institutions.
We need more than a "self-confident figure" to tell us that "national security and corporate
power are outworn dogmas" so that "the people themselves will unravel the Deep State." The "deep…hunger
for change" was deeper in 2008 when so easily destroyed by its self-confident Obama by simply
not mentioning what "outworn dogmas" he would change. The hawkish Hillary is not about to "unravel
the Deep State" and mere self-confidence will not finance campaigns or buy media support to do
more than split the vote of reformers. The media and elections must first be freed of gold, and
the people cannot do that without free media and free elections.
While history is full of surprises, the succession of cold-war fearmongering by global war
upon diffuse "terrorist" backlash and political opposition to half-witted right wing imperialism
does not suggest a passing reaction, nor that any lesson was learned from three generations of
failed military adventures with no relationship to the declared national principles. The cancerous
dark state has grown in proportion to the failure of right wing foreign policy, the failure of
its own rationales. It is the triumphant institution of right wing tyranny as the immune sovereign
over a failed democracy.
Democracy may make further ultimate progress in China than in the US, or may survive only
in micropowers of no interest to the right wing. But we must have faith in the power of the people,
or we lose hope and take no action.
Barbara Mullin
I call it vulture capitalism.
jrdel
Since the People of United States overthrew British ruling class government of our country
and after the revolution, through wise government, and luck we got out from under the thumb of
any rulers whether clerics, nobility, landlords, businessmen, political dictators, banks, etc.
etc. these forces have been working to reestablish their control over our lives and by gradual
steps have done so. Great Americans turned back the tide here and there for a while, Jackson
ended the national bank, T. Roosevelt broke up monopoly corporations, F. Roosevelt supported
efforts for economic democracy, etc.
but the enemies of liberty never rest and always find new ways to undermine it.
So every few generations the People are faced with another fight if they are to keep their liberties.
This time the odds look particularly bad, Enemies stronger, richer, more devious, more insidious,
more corrupt; the People weaker, more divided, confused, distracted. What the hell do we do?
Voting just doesn't do much. Big money floods the media with their point of view. The People,
relatively poorer than ever; don't have enough money to reply.
Petitions, reforms, protests, revolution? All impractical, or impossible (imagine a revolution
in the streets against the power of the U.S. military.) The days when we can grab our muskets
and go out and make a revolution have long gone folks.
I think humanity will have to wait for another age, and another nation to see real liberty and
real democracy in control of the world again.
SufferinSuccotash,Pivoting
Given that back in his day "merchants" were often interchangeable with "bankers" Smith certainly
scored a bulls-eye with that one. The perfect Horrible Example in the 1770s was the East India
Company, which couldn't govern Bengal without trashing its economy and couldn't keep off the
financial rocks either. Eventually the British government put the Company on a shorter leash
and still later the Company lost its monopoly over East Indian trade. But one short-term measure
to bail out the Company was to give it a monopoly over selling tea to the dumb colonists over
in America. Oops. That was a real "tea party", not some bogus affair staged by geezers in funny
hats.
SufferinSuccotash,Pivoting
Of course. I spent quite a few years rationalizing and pretending that Everything Was Pretty
Much OK In These Here United States myself. The problem with being a history teacher–at least
in this case–is that the past, which as William Faulkner famously said wasn't only not dead but
not even past, can catch up with you. This country is paying and will continue to pay pretty
heavily for decades of folly which anyone with a sense of history could have predicted at least
40 years ago.
joanne
We have had millenia to "cage the beast", tame the beast, train, heal, and/or defang the beast.
Predatory behavior is mediated, never extinguished. The Deep State is both institutionalized
predation and paradoxically, a grotesque attempt to protect itself from itself.
Anonymous
The ideology is hinted at throughout the article. Capitalism; The premise that money is a
form of commodity and the winner is whomever has the most. Unfortunately money is a contract
and while such notional promises seemingly can be manufactured to infinity, through the creation
of the other side of the ledger, debt, their underlaying value is dependent on the increasingly
precarious solvency of those taking on that debt. It is what is referred to in hindsight as a
bubble. If you want to see the future of the US in about fifty years, it will likely be in the
states and regions.
J Timothy
The US military-intelligence-industrial aparatus is filled with loyal American patriots who
love this country and have sworn to uphold the US Constitution.
Unfortunately, they don't seem to understand that the system is extremely expensive and is impoverishing
the middle class of America. We have nine air craft carrier groups while the next closest military
has just two. Air craft carriers are incredibly expensive.
In my opinion, the next revalation to hit the mainstream media will be that SOME of the covert,
clandestine, black budget projects have been financed via securities fraud. They've done it before.
Arms for hostages, Hmong drug running in Vietnam, etc, are examples of this. Catherine Austin
Fitts has also made a great point that HUD, of all agencies, has funded some black budget procurements.
Clearly, either the CIA or the NSA are at the center of the cabal. So, what is the justification
for all of this secracy? What is soooo important that the adult eagle scout christians of America
can't tell us? What could it be? Terrorism? Russians? Soverign citizens? Shoe bombers?
Here is where i will lose most people over 50 years old. IN MY OPINION, a the core of the
military industrial aparatus and its wall street enablers is a desperate race to achieve near
technological parity with….(pregnant pause) (dramatic pause) other entities, species, e.t. collectives,
etc, who are visiting sol 3 (earth). This effort is extremely expensive and involves spending
trillions of dollars covertly to build spacecraft and weapons systems based on both advanced
human originated technology and also technology from the reverse engineering of recovered alien
vehicles.
Many people belive that securities fraud funds this effort. It sounds crazy, but, YES, building
trillion dollar weapon systems and spaceships is at the core of the secrecy cult. Nothing else
makes sense. What else could possibly require siphoning trillions out of the US economy? Many
many authors are written on the subject and it is most definitely NOT a joke. Yes, Bill, lets
ask the awkward questions.
Is there a secret space program funded via securities fraud? Have we received help from ET
visitors?
One man who asked the awkward question was Congressman Steve Schiff of New Mexico. He asked
the Congressional General Accounting Office to inquire about the alleged Roswell alien craft
recovery. He got the USAF to give us a third story – (first was a disc, second a weather baloon
and third was project mogul) This all took place in the mid 90's.
He was only about 50 yrs old when he caught agressive skin cancer. He resigned from congress
and was dead soon after. He was 51.
aTomsLife
I disagree that Mr. Lofren's article provokes apathy. It sheds light on the duopoly that is
the two-party system and encourages voters to seek an alternative, namely a more libertarian,
decentralized form of government.
"Overwhelming Congressional skepticism" to Syria included party-line Democrats as well: Unlike
the usual D vs. R bickering, it was D's and R's forced to contradict the military industrial
complex. It was a powerful moment.
Syria proved the American people - and perhaps only the American people - are capable of muzzling
the Deep State. The only reason we didn't intervene there was because constituencies throughout
the country stood united, not because of potential international condemnation. The irony of Putin's
victory is that he achieved it because he had the backing of the American people. He morphed
into our de-facto representative.
Even for the plutocrats, Putin represented the the lesser of two evils. It would have been
a catastrophic loss of face to have to admit that D.C. remains beholden to the American people
when, united, we're unwilling to follow the script.
Until there's meaningful campaign finance reform, "it really doesn't matter who's in charge."
That's the simple truth. But it's a reason to become more engaged in politics, not less.
J Timothy
One of the problems with dealing with the intelligence services is that they have people embeded
within the media to get their point of view across. So, when Moyers talks about asking "Awkward
Questions" he underestimates how difficult this is.
Ed Bernays and Walter Lippman were the gentleman geniuses who showed us that marketing and
propaganda could be used to manage public opinion without limits.
Yes, lets ask the awkward questions. What is so important to the military-industrial-complex
that it needs to siphon, literally, trillions of dollars out of the US economy?
One man asked an awkward question. His name was Congressman Steve Schiff. After he asked his
question, he died of agressive skin cancer. He was 51 years old. Sure. It cold have been coincidence.
But he was the only one asking awkward questions at the time and he was the only one who got
agressive skin cancer. Meanwhile, the CIA's top spooks like George HW Bush and Kissinger are
still alive into their 90's. Go figure.
http://daybrown.org Dale H. (Day) Brown
Mother Nature bats last. When we look at the list of empires crashed because bad weather ruined
crops, we see it includes all of them. People will put up with appalling corruption- until they
are hungry. The Deep State has not picked up on the risk of unusual weather on agriculture, altho
the price of crop insurance rose dramatically. Agribusiness will do fine with govt checks, but
people cant eat insurance.
Part of the problem is that ag policy is set to reduce the cost of the hobby operations of
politicians, like Bush's ranch, but failing to support the backbone of American agriculture,
the family farm. The average age of farmers now is over 60, and because of land speculation by
friends of elected representatives, the next generation cant afford to buy farms. The result
is land owned by absent aristocracy and worked by men whose only interest is their immediate
benefit and not the condition of land to be inherited by sons.
Another of the many reasons we need a Gnu Party not run by lawyers.
Thomas Milligan
Can't blame you for feeling ripped off. You have been. We all have been, except for those
in the very top income brackets. Lofgren does a pretty good job of detailing the forces that
have perpetrated the heist. I've come to call it The Money; it includes the actors Lofgren details,
plus billionaire types like the Koch brothers and Richard Mellon Scaife, plus the mainstream
media (even much of PBS, unfortunately), which has become the Ministry of Propaganda for The
Money. All Is Well. The USA Is Number 1. The Government Is Keeping Us Safe from Terrorism. Buy
More Stuff. Whistleblowers Are Traitors. The Economy Is Recovering. Buy More Stuff. If Things
Aren't Getting Better for You It's Because You're a Loser. So Buy More Stuff.
Don't romanticize the '50's too much. The discontent that exploded in the 60's was just under
the surface even then. To the extent that it was "better" then it was because the prosperity
of the nation *was* more broadly shared. A single "breadwinner" (usually Dad) could feed a family,
with enough left over to save for old age, and Mom was available to nurture the kids. Do you
know *any* families for whom that could be true today? And the mainstream media was populated
by actual journalists rather than mouthpieces for The Money who look good in suits and understand
what their owners want said. Bill Moyers, obviously, is an exception to this rule. One of the
few.
I'm surprised you're not angry. You have every reason to be.
Thomas Milligan
Mr. Lofgren does a pretty good job of detailing the forces that have perpetrated the sad parody
of self-government into which our nation has devolved, but he left out a couple. I've come to
calling the whole thing "The Money." It includes the actors Lofgren details, plus billionaire
types like Scaife and the Koch brothers, plus the mainstream media (even much of PBS, unfortunately),
which has become the Ministry of Propaganda for The Money and the so-called "Washington Consensus."
Where once we had journalists, now we have (with the almost-sole exception of Bill Moyers) pretty
people who look good in suits and like to be on TV, reading the scripts they're given.
Anonymous
Well, that's rather a 'rose colored glasses' view of the Tea Party given their current platform
position. While I agree there are some redeeming qualities – not because I deem them to be but
because they do contribute to the discussion – But, by-n-large the solutions offered by the Tea
Party platform will only serve to weaken any hopes of salvaging the Democracy. One such example
is this meme that 'all Govt. is bad' which only someone disingenuous would suggest does not prominently
inhabit the TP. Another would be the position on so called 'entitlements'. Yet another would
be the Tea Party backing of the likes of Ted Cruz or Rand Paul who adopt a position on health
care that is antithetical toward a robust Democracy. (And spare me the notion that private enterprise
provides better health care etc. – it's simply untrue and there's no evidence to support these
fictions.).
One has to examine a few things about the Tea Party – It is quite clear why individuals such
as the Koch brothers have gone to great lengths to fund the Tea Party because it is the entrenched
Plutocrats and Corporate elite who benefit the most from a weakened Govt. Many TP members see
their quality of life eroding and have chosen to go after the wrong entity why? Well, those reasons
are numerous – for some it is fear, for others racism, others an inability to grasp the weight
of their decisions, etc. and Irrespective of their reasons the actions of the party, quite ironically,
will only strengthen the grasp of the very problems you wish to suggest they will address. While
a nice sentiment to feel the Tea Party could work with others the reality is much different.
Anonymous
Wow, how do you create such a canvas of revisionist history? I also found it quite tragic
that you espouse 'we need to stop this R vs L' dichotomy but you make every effort to assault
the left – exclusively. While that would be with merit if it were true (indeed both parties have
played a role in where we now sit) it becomes quite another matter when viewed against, oh idk,
the backdrop of reality. A.) Historically it is regulation that keeps corporate interests in
check and deregulation promotes the 'crony capitalism' you mention. It's hysterical to assume
the inverse. B.) Progressive policies have, again in reality, led to the greatest moments of
growth and prosperity in this country. I"m sorry you don't believe those facts. And, why didn't
you mention the inequality gap on steroids since Reagan? or the Bush tax cuts that benefitted
the richest Americans? Or the subsidization of big pharma. and big oil? Both parties have no
interest in representing people without money and every incentive not to. But, don't prattle
on this nonsense about the dangers of progressivism. it's ill-thought and smells of ideological
belief hungering to trump facts and history; it smells.
Anonymous
It is quite disheartening and the road forward most uncertain. I'm fairly confident those
you allude to will not act from a position of reason and evidence that is fact based. I cannot,
for the life of me, imagine circumstances in which those guided by fantasy, belief, and hate
(one or all) will shift ideological positions and address the problems that inhabit this country
by the corporate state. Individuals like Ted Cruz, Jamie Dimon (more subtly), the Koch brothers
are gifted in their cunning ability to take advantage of these, what Thom Hartmann calls 'low
information voters' – I've little reason for optimism and plenty of evidence for pessimism without
hope.
Anonymous
After reading this all I can say God help us. I think I can speak for millions of Americans
who grew up in a different country. We use to believe that hard work, play by the rules and everything
would work out for the Middleclass American. All could share in the American dream. Those beliefs
are not what I hear anymore. Apathy and fear are rampant..I fear for the country my children
with inherit.
fenway67
yeah, i don't think that is his main point. it's the corporations and the banks that have
infiltrated and that is the fault of both sides of the aisle. The author notes that the bipartisan
divide is mostly noise obscuring the bigger picture.
fenway67
i am hopeful that firstlook.org will be a source of honest journalism. Scahill, Poitras, Greenwald
and Taibbi are real journalists working toward finding the truth.
Anonymous
Wars forced us into debt slavery to the Big banks that financed them, thus we are slaved to
the NWO BANKS and corporations Federal Reserve Banks buys and owns most of our debt, they are
international now We are controlled by the bankers and the secret NWO financial network running
the governments of the world. Everything trickles down from these taskmasters. Follow the money
and everything is controlled by where it leads. Globalization, one financial system running the
world into their vision of one world government controlled by their big money. They been ruling
us for a long time now. CAMPAIGN FINANCE REFORM would fix us election process and would scare
them knowing they can't put their bag men in office anymore.
Anonymous
So you believe the blame for big government lies only with the liberals? Give me a break.
Here are just four Presidents who expanded Government. They are named Nixon, Ford, Reagan, and
Bush. Flaming liberals to you I would assume.
John Gregor
Looking forward to odering some of those books. Have read all Foucault's books. The author
wrote quite a nice essay about contemporay American politics. Our majot export seems to be Dollars,
like manure they have some value, but I imagine alot of the people who are getting them are not
entirely happy
Anonymous
I saw Mike on c-span Sunday and enjoyed his comments, and now reading this piece I have trouble
with a GOP former congressional analysis troubled about how the govt is working or not working
beginning in 2009.
As with many of former GOP legislators or analysts never do they dig deeper into the underlying
problems that cause the congress to not work. Mentioning the Deep State reminds me of Washington
Post investigation exposing the 2nd govt in DC. It's where all the retired legislators or lost
elections legislators, the congressional staff, the retired military generals go. They pop up
in media (tv, radio, newspapers) spewing out a talking point for their respective 2nd govt think
tank in DC. C-span is a major platform that they use, and 99% of them promote some corporation
dealing with the 1st govt.
Too bad we don't see the name tags of the corporations they represent. Now that we have citizens
united we're back into the age of the Robber Barons.
Andrew Kloak
This insightful essay shows that Silicon Valley is not be what it claims to be. Neither is
Wall Street or the massive build-up of federal government power around Washington, D.C.
The article also alludes to the notion that these companies in Silicon Valley are waking and
trying to resist Deep State regime. California can't save American society. We are only 12% of
the entire population. Plus, they don't want to, they have to answer to shareholders. Profit
is the highest good for companies and government. They want influence and money.
All this is like marionette theatre. James Clapper from the NSA used misdirection when reporters
started to zero-in on the scale of the deception and breach of trust last Fall. Enormous change
is just ahead but not without enormous turmoil. People intuitively know that national security
and corporate power are worn out dogmas.
There is an urgency to all this. Many of these people in these positions of power have no
soul. It doesn't have to be this way, it just is. I think they want it this bad because they
profit and garner influence when it is this ineffectual.
The biggest changes are within anyway. We have to go deeper in ourselves. That shift in consciousness
is already underway. The confluence of forces will sweep away these external constructs. The
hidden factors not discussed in the article are the unconscious forces (emotion). Once people
are more aware of the light and darkness in themselves things will open up. There is dynamic
tension (a good thing) in each person. Self-awareness, integrity and connection to others will
change everything.
This article makes interesting connections to something that is hidden in plain sight. It will change.
richard anderson
I have been giving the political system another chance since Vietnam. Each time we have an
election I hear some good things. But when these people are in office they change. When Ralph
Nader ran for office he was kept out by various means and not allowed to debate. The system is
rigged. This talk of voting for the right person is not going to cut it. With the problems this
deep and the protection that has been set up to keep this system in place there is NOT a way
to change it. In other words voting will not work. Something more is needed. Demonstrations don't
work either. Just look at how long the Vietnam war was protested and when Bush stumped for invasion
of Iraq. They didn't care. Resistance may be the answer.
Anonymous
Rothschild family made their banking trillions beginning from financing Napoleon's wars up
until now. Their family owns media houses, governments, etc and their influence knows no bounds.
You will never see their family listed on Forbes richest people lists because they own the media
and do not want to see their names or advertise their wealth. The Bankers truly own the world
and War debt was the fastest way to do it.
Anonymous
lol. good comment and link.
I will be interested in seeing what First Look does, but I really don't trust the bazillionaire
who is starting it up – or at least his motives. Once a plutocrat, always a plutocrat. I predict
it will start like Arianna Huffington's HuffPo, initially game changing and valuable, then slowly
just another click generating tabloid profit machine with a bubble like mentality forced on contributers,
moderators and commentors alike. Time will tell.
Ellie
We have all this information, but nothing ever comes of it! No one goes to jail The laws are
changed to help the criminals . We still have a two party system which is a joke. Unless people
are hungry and cold and willing to die for a cause nothing is going to change in this country.
J.G. Sandom
We have become almost as much a plutocracy as our former Cold War nemesis, Russia. Tech, Big
Oil and Wall Street oligarchs, combined with the military-industrial complex (which Eisenhower
tried to warn us against) collude (in spirit, if not in actual boardrooms) to keep the people's
power in check via libertarian deregulation, union-busting, Citizens United (and other activist
SCOTUS rulings), privatization of the Intelligence Community (IC), the opiate of digital media
that pushes the idolatry of money & all things celebrity to distract us, and our collective fear
of terrorism (hence our perpetual war footing). This is what my forthcoming novel, 404, is all
about-not just how IP tech is invading our lives, but how this invasion is a metaphor for the
larger invasion. (HAL2, in my book, IS what Mike Lofgren calls the Deep State.) Wake up, America!
Our country is being stolen from us in plain sight. Thank you Bill Moyers, and thank you Mike
Lofgren for helping to alert the American public. You are 21st century Paul Reveres! Al Qaeda
is less of a threat to America because of some future possible terrorist threat, and more because
the collective American fear it engenders helps the Deep State sink its claws more effectively
into our national flesh.
Anonymous
What rings clear is we now have a non-elected government operating outside our constitutional
government and is purposely gridlocked. Our government and judicial system have been hijacked
and steps must be taken to remove Big Hidden money that is controlling our constitutional government.
Great interview Bill, thanks as always!
Jack Wolf
Mike forgot something. There is a simple fact that rules the deep state, the reformists, and
the declinests, whether they accept it or not: Natural Law. Abrupt climate change can not be
controlled now. To suggest that any of these groups are in control or have the ability to make
substantial change belies what is really going on. From now on, all these groups can only react
and as far as I can tell, today will be the best day of the rest of our lives. It's all downhill
from here and there is irreversible.
Thomas Milligan
Oh, I know about those guys and I love what they do. The trouble is, somehow *their* work
doesn't, as a rule, get picked up, amplified and developed in the mass media the way, say "Watergate"
was back when we had real journalists. Meanwhile every load of BS that comes out of the Heritage
Foundation, Cato et. al. somehow becomes received wisdom. I'm also a bit concerned that by going
off on their own they're setting themselves up to be marginalized and ignored. Trees may fall,
but very few people will hear them.
Thomas Milligan
Somehow your response above… to *my* response… to your original post… got posted under a *separate*
post I offered… scroll down far enough, you'll find your original post & my response.
Can't blame you for wanting to shield your children. The thing is, you can't, neither from
the anger nor from global climate change. I have grandchildren and grieve when I look at them
for the world they're apparently going to inhabit.
One last thing: it's possible… theoretically at least… to have anger without hatred. Anger
at what's been done can be a spur to action… and effective action could be taken while still
treating the perpetrators with the compassion we know all sentient beings deserve. I'm not sure
*I* could manage it because truth to tell I'm not a very good Christian… or Buddhist either…
but it's at least theoretically possible.
Thomas Milligan
Good point about our old nemesis, The Evil Empire.
I always found it ironic that as the Soviet Union was collapsing, the United States was moving
toward one-party rule. You can write the Nov. 5 headline right now: "Republocrats Win Yet Again!"
fenway67
Agreed, the MSM has a vested interest in having their product on the shelf at eye-level and
it's hard for the little guy to buy space in this market. I'll be doing my part by re-posting
and tweeting important stories that they cover and I just hope the quality will get them noticed.
I'm sure the smear campaign against them will begin soon.
fenway67
I wasn't aware of his motives beyond providing a platform for real journalists. What have
you heard? I am hopeful that the high quality work of the people he has hired so far will keep
it in the same company as the Moyers people.
Kenneth Killiany
This is an issue that concerns me greatly actually. Both sides have adopted policies that
have fed it. I find it interesting that you mention Allen Drury, who was my uncle. Al was a dogged
reporter, uncovering, in his day, the Manhattan Project, which he did not report on because of
World War II. Should he have? He never doubted his judgment. However, he was very concerned about
how the State just grew and operated on its won. You can see mentions of it in ADVISE AND CONSENT
and MARK COFFIN, where he discusses the whole public-private daisy chain and how irresponsible
it is. It's true, you can't get drama out of it, but he mentions it, but in PENTAGON, he wrote
a whole book about a bureaucracy can be diverted from what it is meant to do by concerns for
its own prerogatives. A&C and MARK COFFIN have just been re-released, and PENTAGON will follow
next year. This kind of reporting in your article is the kind he admired and it is a great service.
freelance-writer
A.k.a.:Ukraine 2014. Though there are many factors and stake-holders at work in the Ukraine
issue, it behooves the citizenry of all western nations tainted by the same `deep-state' tyranny
to bear witness. It will take bricks against bullets to resolve this global crisis once and for
ever.
Mary Brown
The only terrorists we have to face in the USA are our own government and the ones that government
is purposely importing to continue their reign of fear. Problem is a large part of America is
now well armed and a terrorist would die rather quickly long before any government police forces
arrives.
Len
Most of us frogs are in a pot of water that is getting hotter and hotter and we don't feel
it. As quoted from this essay "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". Replace "a functionary of the state"
with "we the people".
This essay was terrific.
Anonymous
I am worried that the boiling pot will lead to the elimination of Social Security. For years
now politicians been saying it will end to each generation. When it does, a very high percentage
of Americans will be at poverty level. I don't want to be living in American cities when that
happens, crime and robberies will be common place.
Anonymous
Yes, this is not a new development… The funny thing is that Bill Moyers' Iran-Contra era expose
entitled "The Secret Government" actually covers this subject better than the piece we are commenting
on. And iirc, he interviews Peter Dale Scott about the CIA in that report…
Anonymous
There is a world of difference between bailouts and nationalization. I cannot begin to quantify
the folly of calling this system "Marxist" when the party on the left of the two party system
has moved so far to the right as to make Eisenhower seem like Trotsky by comparison.
Anonymous
For Gods sake, not this again. What Banking family who made the bulk of their fortune from
War debt and being worth $500 Trillion dollars are you referring to? Everybody is afraid to print
anything on these influential banking members. Their influence in this world has no bounds. As
we all know Bankers always protect their money and are devising new ways to make more money.
If you naively think that Bankers in this world are Godly benevolent people, you better look
around the state of the world again and formulate a revised opinion. but there you go, I got
my opinion and you have yours and we will respectfully leave it as that. Thanks for your comment!
Anonymous
Last time I looked capitalism is buying and bought our election process. In fact, in the past
the main focus of our government has been on business priorities and concerns. Doesn't look anything
as Marxism to me.
Jimmy Solomon
I read this article and watched your interview. Both are most enlightened. What happened,
however, on the eleventh day of the ninth month thirteen years ago was clearly a result of this
deep state and it is too bad you won't recognize this glaring example of the corruption of which
you write.
Anonymous
"the party on the left of the two party system"
There is little or no difference between the two faces of the party of state power. They use
different words, and then enact the same policies.
Politics is about power, nothing more. There is no "left" or "right", only power.
Antonio Germano
Again, what filibusters? You have provided no examples. Except for the (unfortunately) pathetic
attempts of Cruz, Paul and Lee to derail Obamacare and the recent debt ceiling/government shutdown
(I wish) affair, where has there been any effective Republican opposition to any of Obama's agenda? You are typical of the person who blames one side for our problems, when it's both sides (i.e.,
the government) that is the problem. Both sides are playing their respective constituencies like
a Stradivarius. get over your obsession with partisanship and see the real issue – the whole
system is corrupt and needs to be abolished. Your pining for 'majority rules' is a recipe for tyranny. The filibuster rules were put into
place to prevent temporary majorities from steam-rolling temporary minorities. I think it should
be even harder to pass laws, not easier, so mischief is avoided. I repeat – the State is the enemy of us all. get over blaming one side or the other. You are
being played.
Anonymous
amazing that such a powerful article was written. too bad its several years too late, and
ever so slightly off the mark. you need to let go of the rhetoric of bipartisanship. the DNC
and GOP establishments are both operating on the same basic policies. while they offer crumbs
to their bases, they are both pushing the agenda of the deep state.they are both to blame, and
until people declare that both have no clothes, the powers behind the curtain will continue to
rule.
Anonymous
Thanks, well said.
There's also the "Shallow State" of American campaign consultants like David Axelrod and Mark
Penn who make big money in places like Ukraine and Georgia because the locals assume they wield
influence over their clients in Washington. If American foreign policy became less aggressive,
foreigners wouldn't pay them so much money:
"F]inancialization, outsourcing, privatization, deregulation and the commodifying of labor." Yes, "commodifying of labor" thanks to Teddyquiddick pushing the 1965 Hart-Cellers act that began
the importation of million Third World unskilled laborers per year, thanks also to the Deep State
paralyzing all efforts of us, the People, to force our so-called "representatives" to close,
fortify, and defend our borders – to stop the massive flow of scores of millions of illegal immigrants.
Immigration has done more to stagnate and reduce Americans' wages and to destroy what had been
our historically unprecedented middle class affluence and economic-political power. Objective One for those of us who would dismantle the Deep State and restore our democracy is
obvious: Stop All Immigration. Accomplish this by these measures: one, end birthright citizenship
(and thus also end birth tourism); two, abolish State Department power to import refugees and
government funding of NGO's that "resettle" refugees; deport all illegal aliens; impose massive,
draconian fines on employers that hire illegal alien labor. Why are these measures Objective
One? Simple: when we allow our Dear Rulers to displace and dispossess us on our own soil, we
forfeit – we surrender – our power to control our representatives and their appointees and their
wealth transfer from ourselves to foreigners.
Mil
This is just a small list. But it at least provides some of the examples you are asking to
see.
This is not a revelation. Noam Chomsky has been pointing this out clearly for the past 40
years… There a couple public documents that might help explain to the educated class exactly
what has been going in the U.S. for the past 40 years… The Powell Memo written by Lewis Powell
in 71 and the Crisis of Democracy a document publicly published by the Trilateral Commission
in the mid 70's these are both damning omissions by powerful groups that control both the business
world and governments at all levels of governance. These two documents that we know about are
internal look at the dogma of the ruling class.. Neo Liberalism is the term they used but it
sure aint new and it sure aint liberal. It just another way for the ruling class to re-institute
Feudalism.
Anonymous
What you say is essentially true. Fascism by definition is the merger of corporations and
the military. Another amusing quote: "A capitalist will sell you the rope you hang him with."
Vladimir Ilyich Lenin
These Deep State proponents will succeed in fully displaying their stupidity when the global
environment collapses under the weight and consequence of their actions and humanity becomes
extinct. In the meantime, they will be having fun and braying like jackasses as they descend
into the abyss.
Anonymous
What about the level of organization required to create the Trilateral Commission and its
formal takeover of the US executive branch when Carter took office? The majority of the cabinet
(all but one) were Trilateralists in the newly created group of only 300 worldwide members. Trilateralists
were placed in high level international corporate and political positions and this paradigm holds
today. Scholars Antony Sutton and Patrick Wood wrote extensively on this international power
dynamic with its influence now extending to every part of the globe. It was Trilateralist Larry
Summers, former US Secretary of Treasury and Goldman Sachs executive, who was sent to Russia
when it's economy imploded to advise Putin on how to privatize the Russian peoples' state owned
assets leading the to rise of eight powerful oligarchs with internationalist sensibilities, a
very deliberate centralization of capital and a means to control Russian political power players.
From the beginning of the transfer of the US manufacturing sector to China, it became Brzezinski's
model Technocracy, Brzezinski being the a founder of the Trilateralists, Carter's National Security
Adviser, and author of The Grand Chessboard. (reference: Patrick Wood's augustforecast.com) These
actions and the concomitant level of organization goes beyond the Deep State model.
Anonymous
.. if there were no abuses by the IRS, then why did IRS official Lois Lerner plead the fifth
? If my boss asked me to explain possible abuses of power at my job and I pleaded the fifth,
my new office would be on the curb.
Anonymous
The meetings happen in Rancho Mirage and other places for Koch Brothers, and ALEC, etc. They
are the ones paying the Pols and they definitely meet and plan conspiracies to disenfranchise
voters. And, William Pepper wrote a book that reveals the conspiracies within those security
agencies that control pols. It is great the Lofgren is talking about the Deep State. But, to
deny the conspiracies within it is naive. The crashing of the Obama garden party by Robert Gates
associates is a case in point. The Supreme Court ultimately is the last point of call to stop
this Deep State within all the branches. They have judicial oversight, and they are not using
it.
scratphd
The great swamp philosopher Pogo got it right. "I have meet the enemy and he is us." A complacent America.
Christanne
Lofgren: What America lacks is a figure with the serene self-confidence to tell
us that the twin idols of national security and corporate power are
outworn dogmas that have nothing more to offer us. Thus disenthralled,
the people themselves will unravel the Deep State with surprising speed.
This essay echoes Ivan Illich's "Tools for Convivality," which, although written in the '70s
is even more applicable today. This is not new. Lofgren is an important wedge to cauterize the
deep state and dispell delusions of unending "progress." However, I don't see any evidence for
his assertion that the people themselves will unravel the Deep State. What we've done so far
is just buy a new toy, both literally and figuratively, even when so many of us are going hungry.
Anonymous
Excellent essay. A very good (semi-) insider's look at happenings within the Beltway. However,
my instinct tells me that the real nexus of power doesn't lie there, but that the Deep State
operatives are allowed to continue their game-playing at public expense in order to serve a larger
agenda–the ultimate bankrupting of the US and the ushering in of a new world order which has
been in the making for centuries by the real powers-that-be. Uber-conspiratorial? Maybe, but
I just can't shake the feeling.
The One
There is no doubt that the great american experiment has ended in ruin. There is hope on the
horizon though. Due to technological progression and its rapid increase in power, the very fabric
of society will change. Our social and economic models must change radically due to technological
improvements. There is no end in sight to the technological pace we have been blazing at, and
if there is an end it seems to be distant. The tremendous benefits of creative AI and the automation
of white and blue collar workers must be built into a new social and economic model in which
the benefits are distributed evenly and equally among the peoples of planet earth. Even now,
if we used our technology wisely, we could unshackle large swaths of the labor markets with automated
robots.
The current state of unimaginable corruption which is inflicting the world, not just the US,
is a dying last grasp for air as the oligarchies face a new powerful threat, the connection of
all things. The internet has the power to upend these corrupt power structures which lie at the
heart of society, and thus at the heart of every human life on this planet. Our current economic
model is not situated in reality. I can't say if the market will be up or down tomorrow, but
what I know for certain is that earth is 196.9 million square miles. Which is a finite space.
Not a good place for an economic model which requires economic expansion for survival. The labor
markets will be greatly dis-stressed due to technological displacement. The current scientific
revolution is unlike any that has ever happened on the surface of this planet. Even highly skilled
workers such as surgeons have the capacity to be replaced by highly advanced robots specializing
in surgery. People will see awaken to the fact that this "annoying high unemployment" is actually
the new normal and will only get worse. This REQUIRES a new economic model.
If a business refused to integrate their business with the latest automation technology, a
rival that had enough foresight to not oversee this would drive his competitor out of business.
Then, in our current economic model, that rival that just won the market would reap all the rewards.
BUT, it will also be in the best interest of that company, if in some new economic manner, a
portion of those profits would go into a general citizens fund which would provide all humans
with a basic income. This type of model will be absolutely necessary due to mass unemployment.
This leaves the motive for profit intact which also leads a motive for innovation, creation,
and competition that humans need. With scarcity gone, and universal income for all, the future
will look very very bright for our young human species. The seas of interstellar space beckon.
Anonymous
"…another thing" – yup – if they changed the rule so they could get what they claimed was
their agenda passed, the Reps might have been able to do the same – however the Reps could do
that anyway themselves if they regained power –
In any case, what does that say about a Party that would refuse to advance a decent agenda
just so the other party couldn't advance its own at another date – in essence, cutting off our
noses to spite the Reps face – they could have done what they knew we sent them there to do,
and they refused, hiding behind rules they could have changed – more and more folks are waking
up …
ISTM it oughta be obvious by now that this "struggle" between the Reps and the Dems isn't
about principle or ideology and it certainly isn't about representing us – it is about who gets
to be in charge of handing out the perks and who gets the perks – those in power are the ones
who get both ….
Charles Shaver
Nice to keep learning of a plethora of ambiguous symptoms but, short of too costly general
strikes or domestic insurrection, only voting proved corrupt politicians of both major parties
out of high office every other November will eventually restore legal functionality to the U.S.
Government. So, vote in every general election and vote against those who stray. 'How to know'
one might ask? Simply vote 'out with the old; in with the new,' every time, until we have the
kind of America the Founders prescribed in the Preamble to the U.S. Constitution.
Anonymous
It only depends on your definition of "the US." Yes, a panel of CEOs famously declined Ralph
Nader's invitation to join him in the Pledge of Allegiance, but in the State Department memo
that outlined the policy of containment of the USSR, George Kennan said the vast wealth disparity
between the US and the rest of the world must be maintained, while civil rights and democracy
could be neglected.
By then, the post-World War One idealists who'd joined calls for socialism and one-world government,
to prevent another such catastrophe, had seen things differently once Russia turned Eastrrn Europe
into a barricade against further invasions from the West. They could not bring themselves to
reb against their banker fathers, but they still believed in a one-world government – it would
simply be the government of the United States. The entire world would be brought into the economc
system we ran, no matter what citizens and their elected governments wanted.
During the Cold War, NATO was used to bring European intelligence agencies and militaries
under domnance by the CIA and the Pentagon. Putting ordnance, money and men in place to resist
a Soviet takeover made perfect sense, but it operated in peacetime to keep left-wingers out of
Continental governments. We overthrew an Italian government, for example. Not by ourselves, of
course: the secret "stay-behind" troops were nitorious right-wing fanatics, who could be trusted
to carry out their missions regardless of law, Constitutionality or morality. False-flag shootings
and bombings in public squares and supermarkets killed many innocent civilians and were blamed
on leftist radical groups which had been thoroughly penetrated already anyway. This was to win
public support for stricter security policies and, perhaps, punish citizens for voting in liberal-to-left
governments. This was admitted in the Italian parliament by the Prime Minister in 1990. Operation
GLADIO, as it was called, involved every NATO country. Investigations were promised, but were
aborted or came to mothing.
This is what Putin knows will happen if Ukraine joins NATO, for instance, so don't expect
him to take it lying down. He operates a Russian version.
In the US, a group of Wall Street financiers discussed literally overthrowing FDR in order
to end the New Deal regulatory state, but didn't get past the talking stage. The Senate held
hearings but J. Edgar Hoover declined to investigate becayse "no crime was committed." This is
the same FBI director who opened pressure dossiers on citizens who carried protest signs or wrote
letters to newspapers or the government opposing our war policies, and tried to get Martin Luthed
King to commit suicide.
Note the secrecy surrounding current trade-agreement negotiations, and accompanying high security.
This dates back to the fiaco of the world trade talks in Seattle some years ago, when street
protests neatly brought them to a halt. An Italian citizen was killed during protests against
trade talks in Genoa yeats later.
Anonymous
This was a superb essay–one I have been awaiting for years. One minor addition: there is another
non DOD component to the aforementioned group, which is DOE. Admittedly, it's rather easy to forget about them–but one should not. Ever.
Anonymous
But I really wonder if voting is a sufficient tool for the citizenry to tell the government
what it thinks. Elections are not very frequent, they are deeply manipulated by complex "strategists" (look at
the connection between the now-slowly-debunked gay marriage referenda and the re-election of
Bush Jr). Though I find it tedious and at times inefficient I wouldn't mind being part of a citizenry like
France that literally shuts the country down until the government says "uncle".
Anonymous
I believe the fourth estate and the way the US government interacts with it have a lot to
do with the opacity of the veil I find floating between myself and whatever happens inside the
beltway.
The US government keeps journalists begging for the tiniest crumbs. No one is willing to leak
anything for fear of being caught.
When I asked a friend in the diplomatic corps what was the most striking about his stint in
DC he said the depth at which government officials changed with each new administration compared
to other countries. DC's moving business is booming beyond anything imaginable. This is also
a tidy way to keep a tight grip on "messaging" – a skill each administration seems to get better
and better at.
There is a reason wikileaks has emerged and parody has replaced the stale format of the evening
news.
Charles Shaver
Voting is still an effective tool. Unfortunately, statistically, a majority of manipulated
voters will only dirty their hands to install and re-install soluble Democrats and Republicans
when seeking water tight integrity; insane, by Einstein's definition. Now is well past the best
time to make some real repairs but, perhaps, not yet too late to save a sinking ship. And, shutting
the engine down won't plug the leaks.
Pat Kittle
We Americans are already plenty overcrowded, but Israel lobby billionaires want open borders
and they've paid big bucks to both Republicans & Democrats. So open borders and endless population
growth it is, ecological sustainability be damned.
And don't give me that "anti-Semitic" hooey, I'm just stating facts.
Zuckerberg, Bloomberg, Soros, Gelbaum, Adelson, etc., etc., Israel lobby, all of them.
No serious discussion of the "deep state" would ignore that elephant in the living room.
Anonymous
This is not a valid critique. The Deep State serves organized wealth and works to further
increase inequality and social stratification. Thus the Deep State represents entrenched right-wing
power. It is a matter of state capture. Both parties support this consensus and are thus supremely
conservative. The same goes for the media which is owned by these same centers of organized wealth.
Matt P.
It's not a matter of keeping one's mouth shut, but actions speak louder than words. Being
angry and contentious all the time is not the same as being productive about the issues you believe
in. Whenever I see an inequality in the street, on the subway, or at a party I react. I stand
up for the person, I intervene and get involved. The rest of the time I do keep my mouth shut
because there's nothing to say. It doesn't help anyone to spread unhappiness around. In fact
it drains your energy so you're not ready or as effective for the next opportunity.
Sean Kurnow
I get a laugh at people who yell, whine and complain about politicians and party politics….It's
like yelling at a ventriloquist dummy instead of the person controlling it. America became a
plutocracy in 1913 when the Federal Reserve was created. Since then, we all know that special
interest groups control almost every aspect of government policy.
Anonymous
I will assume you simply did not understand what I wrote or what 'slouching' wrote – ironic
eh? Lets remove Thom Hartmann from the equation, as it seems to be where you flew off the rails…what
then is your defense of the idiots we allude to?
Anonymous
I well understand the argument about brainwashing – have heard it a gazillion times ….
The "idiots" you refer to – who are these folk? And while the corp media was brainwashing them, what were the rest of us doing? Sitting on
our hands?
Bill Wesley
well for once I have no comment, its not required in that the writer has made the case with
expert precision, I find no flaws, no omissions, no theory or dogma obstructing the writers view.
Its nice to see such well presented intellectual compitance, it allows me to feel relief, I can
take a break since others are seen to be on the ball
FroboseTF
Charles: Voting used to be an effective tool. Unfortunately with the advent of "Electronic Voting Machines"
which must be "Programmed", and leave no paper trail to allow a recount; I fear that if the truth
be known our elections are probably rigged on a regular basis to reflect the will of those in
actual power now.
I believe it was Joseph Stalin who said "It's not who casts the votes that's important. It's
who counts them.
Anonymous
Actually, it was a Mossad (Israeli Intel)/US Intel op. US organized it and funded the Al Qaeda
end of it via Paki intel officer General Mahmoud Ahmed, while the Mossad prepped the US targets
and ran the anthrax mail op. I'm not sure that Mossad didn't dream it up in the first place,
but, whatever the details, Al Qaeda was definitely just a bit player in the op with the real
culprits being our own fearless leaders.
Reuben_the_Red
Winner-takes-all elections (as opposed to proportional representation) and the Electoral College
are inherently undemocratic and present the illusion of voter participation without the danger
of undue voter influence.
Reuben_the_Red
Excellent discussion of the intersection of money, power, and early 21st century technology
in the US today. Food for thought, especially paired with Moyer's recent documentary about ALEC.
One caveat: Paragraph 21 starts out saying, "the Deep State is so heavily entrenched, so well
protected by surveillance, firepower, money and its ability to co-opt resistance that it is almost impervious to change," but in paragraph 22, "there are signs of resistance to the
Deep State and its demands." Paragraph 21 has already made the case that resistance is irrelevant
and impotent in the face of the Deep State apparatus, power/wealth reserves, and democracy-subverting
methodology. And that's probably true. There may be no way to actually extricate the Deep State
from The Superficial State.
We are left in the final few paragraphs with a series of reasons that the Deep State might
reverse course voluntarily, or unravel of its own accord, but in the end what we really need
is "a figure with the serene self-confidence to tell us that the twin idols of national security and corporate power are outworn dogmas that have nothing more to offer us": in other words, some kind of charismatic,
messianic Jesus-person, to save us from ourselves. I don't object to the author trying to end
with a hopeful note of optimism, but how would this person reach us with that message? Are there
not already a host of people who have been saying exactly that for decades, from Noam Chomsky
to Angela Davis, from Daniel Quinn to Arundhati Roy, from Mark Twain to John Lennon? Have we
not managed to ignore and disregard a notable and widely-published list of people trying to tell
us that national security and corporate power are outworn dogmas that do nothing to elevate humanity
nor the human condition?
"Thus disenthralled, the people themselves will unravel the Deep State with surprising speed." It seems clear that
we will be forever enthralled with our credit scores and our televised sporting events and other
televised virtual realities until the government of the US actually collapses due to a variety
of currently known and unknown factors (economic, ecological, etc). And that's not gonna be pretty
either. And even then there is the further possibility that in such an event of complete destabilization
(not unthinkable, has happened throughout history, around the world), the Deep State could become
simply The State.
Reuben_the_Red
Agreed. Presumably there is no incentive in the Deep State to undermine the omnipotence of
the Deep State.
There are ways to increase voter participation (non-participation fines and penalties as I
understand Australians are subject to; make voting day a federal holiday or even better a three-day
weekend; give the right to vote back to felons and inmates alike; etc.) but wouldn't we still
be left to choose between Tweedledum and Tweedledee?
Charles Shaver
I haven't voted for Tweedledee or Tweedledum for President since Ronald Reagan and, since
learning of Gramm-Leach-Bliley in 2012, I don't vote for either for Congress. I'd rather take
a chance on a third, fourth or fifth party unknown, a blank ballot or a write-in candidate than
on another known destroyer from one of the two major parties. Participation alone is not enough;
it has to be informed participation, referenced against the clear, plain and simple language
of the U.S. Constitution. So, how do we get the word out?
Reuben_the_Red
It would have been a very different election in 2012 if the Republican establishment and the
corporate media machine had not colluded to rig the primaries so that Mitt Romney was the nominee,
and not the one that the majority of voting Republicans wanted, Ron Paul, who ran on a platform
that ironically appealed to many leftists, because of his insistence that foreign military interventions
and US global military incursions cease immediately.
It's possible that the realistic threat of a viable third party candidate on the outer fringe
of the left or the right could be enough to force that respective party to yield to those fringe
demands, incorporating those demands into a mainstream platform, more or less like the Tea Party
did with the Republican party in recent years, threatening to take their votes elsewhere.
At the same time, more Americans voted for left wing platforms than right wing platforms in
2000, but due to the winner-takes-all elections, we didn't get a government that was 5% Nader,
45% Gore, 45% Bush, majority leftist reflecting the vote. We got 100% Bush. We got corporate
welfare, tax cuts for the uber wealthy which did not result in higher employment, we got two
decade-long unprovoked foreign wars riddled with war crimes, and we got persistent recession.
Some of these things, if not all of them, would not and could not have happened under a Nader/Gore-led
government. The Deep State expanded massively with the Bush/Cheney administration's complicity.
I wish that it was worthwhile to vote for third-party candidates, but we can expect them to receive
no media coverage, few votes overall despite the possibly broad appeal of their platform, and
in the end it would be irrelevant because of the Electoral College. If I live in Oregon and vote
for Romney my vote is thrown away as surely as if I live in Utah and vote for Obama.
In answer to your question, how do we get the word out, I think the only answer is media ownership.
Our lives are more consumed by media today than ever before in the history of the world, and
all of the media is concentrated in fewer hands, with more consensus among those few hands, than
ever before.
Charles Shaver
It would be a very different election every time, and nation, if the majority would simply
quit believing in the now defunct two-party system, corporate owned media and an extremist capitalist
system that values the gains of the uber wealthy over the lives and limbs of workers and the
poor. It's okay to question the status quo, ignore corporate media, do independent research,
vote totally independent of family tradition and elect questionable strangers (as opposed to
proved bipartisan failures) to defund the Deep State. Need a little more direction? Review the
Preamble to the U.S. Constitution. It pretty well sums it all up in rather clear, plain and simple
English, if you keep in mind that not just millionaires, billionaires and multi-national corporations
(allegedly) are 'people.' Good conversation.
jeffries
Mike Lofgren wrote the essay. Bill Moyers was allowed to interview him. PBS has its hands
tied by the "deep state" too. If you doubt this talk ask PBS why they pulled the plug on the
Koch Brothers expose.
jeffries
The "deep state," like a parasite, will continue until its host is dead. My guess is they
are in a state of panic-their host is on life support. The party is over- the rest of the world
has had enough of the U.S. The petro dollar has been broken. The dollar will be dethroned as
the world reserve currency and the torch will be passed to China no later than 2018. The players
of the "deep state" will not be able to infiltrate and latch onto this new host and so they will
fight to the death, more accurately our sons and daughters death, to keep the U.S. in its position.
Resist war is all we can do and not buy into the steady stream of propaganda that will be bombarding
us at every turn.
Hatha Sunahara
I haven't read all 328 comments so far, but I just wonder if anybody has picked up on the
reason the deep state has developed. I think it's development stems from the evolution of the
United States from a Republic into an Empire. No empire can exist with restrictions on its power
like those put on the United States by the Constitution. So, instead of discarding the Constitution,
the United States was subsumed into an 'extra-constitutional government'. Of course, nobody bothered
to tell the people of the United States that their power had been usurped by a lawless Imperial
overlord. Responsibility for that egregious oversight can be laid to the mainstream media, which
is owned by the owners of the extra-constitutional government. These are the global media corporations.
If you view politics this way, it explains a lot of things. Empire relies on it's military
power and the acceptance of its money. Anyone who does not accept the empire's money generates
hostility from the empire. The empire wages war without any declaration of war. The extra constitutional
government allows that. The empire cannot tolerate privacy because that would allow people to
plot against the empire without interference. So the empire puts everyone under surveillance.
The empire cannot tolerate resistance or disobedience, so it develops a police state to instil
fear and obedience in people. There are many many more examples of how empire rules America and
usurps the US government–which exists for the people of the United States. Americans, and the
people of the other countries in the world understand this viscerally, but are unable to express
this in coherent thought because their language has been corrupted by the forces of empire. Mike
Lofgren doesn't make this connection because iit violates the rules of political correctness.
Everyone's career is tied to strict adherence to political correctness, and
Anonymous
And many of the voters have been brainwashed by the 5 or 6 corporations that control the media.
Fear entertainment.
Anonymous
After I read Top Secret America I came to the conclusion that since 9/11 Homeland Security
has become so incredibly humongous and so political it will keep growing until the US is bankrupt.
The was the goal of Benladen. Europe did not fall for it be we did.
Anonymous
Some contemporary books Blackwater, Bloodmoney, and especially Confessions if a Economic Hit
Man. Also Top Secret America.
Charles Shaver
I think a better name for 'Homeland Security' is 'elitist money addict insecurity.' And, it
and treasonous corporate media propaganda will keep growing until we as an injured people finally
'Just say NO!' to the 'perpetraitors.' Thanks for commenting, above and below.
Anonymous
There is a small very readable book written by John Perkins named Confessions of an Economic
hit Man. This is the way the Corporatocracy has used the IMF and World Bank to take over the
assets of less developed countries. And if their leaders do not agree to go along well then read
what happens to them.
Anonymous
In many states felons are legally allowed to vote if they have served their sentences. And
if they moved to Florida their vote was legal. But Jeb Bush broke the law and did not allow their
vote to count in the Bush/Gore election. The Republicans also paid a fortune to a company named
Choice Point to scrub the polls. They also did this in the latest election for Governor. How
can they get away with these tactics? The tactics that are being used in North Carolina lately
are extremely difficult to counteract.
Anonymous
Funny (not ha ha) when I try to tell friends what is going on within Homeland Security (the
redundancy, the extreme size of it and the number of government and private buildings all around
the Washington suburbs) they respond by stating that they approve of all this. Homeland security
is so political that this state if affairs will be sucking up our tax dollars forever.
Neil Kitson
"These men, largely private, were
functioning on a level different from the foreign policy of the United
States, and years later when New York Times reporter
Neil Sheehan read through the entire documentary history of the war,
that history known as the Pentagon Papers, he would come away with one
impression above all, which was that the government of the United States
was not what he had thought it was; it was as if there were an inner
U.S. government, what he called 'a centralized state, far more powerful
than anything else, for whom the enemy is not simply the Communists but
everything else, its own press, its own judiciary, its own Congress,
foreign and friendly governments – all these are potentially
antagonistic.
It had survived and perpetuated itself,' Sheehan
continued, 'often using the issue of anti-Communism as a weapon against
the other branches of government and the press, and finally, it does not
function necessarily for the benefit of the Republic but rather for its
own ends, its own perpetuation; it has its own codes which are quite
different from public codes.
Secrecy was a way of protecting itself, not
so much from threats by foreign governments but from detection from its
own population on charges of its own competence and wisdom.' Each
succeeding Administration, Sheehan noted, was careful, once in office,
not to expose the weaknesses of its predecessor. After all, essentially
the same people were running the governments, they had continuity to
each other, and each succeeding Administration found itself faced with
virtually the same enemies.
Thus the national security apparatus kept
its continuity, and every outgoing President tended to rally to the side
of the incumbent President.
"Out of this of course came a willingness to use covert operations; it was a
necessity of the times, to match the Communists, and what your own
population and your own Congress did not know was not particularly
important; it was almost better if they did not know…"
David Halberstam The Best and The Brightest
Charles Shaver
Very typically, you appear to be better informed and better read on some aspects of our failed
and failing nation-state than I. Admittedly, I don't have all the answers. Briefly, though, respective
of all you cite, I find the vast majority of Americans just don't want to be burdened any more
with good citizenship (e.g., election statistics). Most recently, another symptom of the underlying
problem was highlighted when the billionaire owner of a mere commercial (as opposed to 'professional')
basketball team in a society that tolerates abject poverty and illegal war was severely chastised
and sanctioned for only elitist, racist remarks. Summarily, let me say that my America took a
big turn for the worse when the 'Pied Piper' was bribed to play the National Anthem. Nope, not
'ha ha' funny, at all. And, I don't know whether to dread or rejoice the day when the coerced
laughter finally ends, and the music dies.
Anonymous
During the 2nd Bush administration I started to notice all the books listed in the Washington
Post book section about his administration. After awhile I thought maybe I should start reading.
The first page turner was one by Bob Woodward about the lead up to the Iraq war. It showed me
that we were not getting truth from the media so I kept on reading books. First about Iraq-Fiasco,
The man who got is into the war Amad Chalabi, Blackwater, Bloodmoney and many others. I keep
telling people to read more but they choose not to. They are either working too hard or if retired
playing too hard. They just want to be spoon fed and are addicted to outrage entertainment. I
continued my reading on economics, finance, climate change and understand much more than I did
before. Keynes vs Hyeck explains the history of the two economic theories. Also how the shift
to the right happened during The Reagan and Thatcher administrations. Age of Greed explains how
a few very greedy men influenced congress to repeal laws and pass laws in their favor. Tim Flannerys
book The Weather Makers explains Climate change. And there are too many books written on income
disparity and the danger to democracy. What is happening is out of control and a nightmare. I
don't think people understand that when a government service for the commons is privatized it
becomes a corporation with lobbyists that influence Congress and that we taxpayers must pay their
employees at a much higher rate. Like the army contractors, prisons and so on. People do not
put on their thinking caps. Sorry for the rant.
Charles Shaver
Interesting, impressive; different paths, one destination; better a rant than a sell-out or
surrender. Beware of putting too much faith in the opinions of others, myself included. We all
are products of our past and there is a natural tendency for the adult progeny to emulate the
parent; the student to mimic the teacher; the reader to quote the author. I find the U.S. Constitution
is the best source of information about how America should function but I don't hear or see much
of that from any of the so-called 'experts.' If electrical engineers treated Ohm's Law like authors,
bankers, government, lawyers and the 'people' treat the U.S. Constitution, you'd be reading this
in script on parchment by candlelight, if at all. And, don't let me discourage you; where I fail
you may succeed. Let reason prevail. Thanks for the stimulating conversation.
Anonymous
Yes we all have the tendency to read whatever validates our worldview. I read Gretchen Morgensterns
book named Reckless Endangerment about Fannie Mae. Saw her talk on Cspan book channel. Needed
to get to the bottom of that mess. Jim Johnson was and still is a very shady character. It is
strange however that the Republicans reduced the entire 2008 recession down to two sound bites
Fannie Mae and the CRA (I think that is the acrynom) for the program to stop the redlining. No
one knows anything about the history and purpose of Fannie Mae and it's original purpose until
Johnson got his hands on it. If one has critical thinking one can sift out the truth. I just
cannot believe that people will believe a sound bite without any hesitation.
Charles Shaver
Been 'deep thinking' a lot more about the Deep State but, without yesterday's lost credentials
or celebrity (good or bad), there's not much I can presently do. One clever sound-bite might
do the trick but none I've composed and tried so far have caught on. Still, probably, is tomorrow.
Anonymous
I actually thought of a really good sound bite and communicated it to the White House. No
one took me up on it. Wish I could remember what it was. If you have any you could try. But they
are not very confrontational.
Charles Shaver
I liked candidate Obama's words but never voted for him, because he already belonged to one
of two already proved dysfunctional major political parties. Writing the Obama White House and
even getting a few generic replies while watching him fail the office, too, I do not regret 'wasting'
my vote on a 'green' third party candidate. After rereading The Anatomy of the Deep State, today,
I'm sure I could read more and probably phrase things better but am still confident in my decades
of working-class experience-based conclusions and suggestions.
sorval
"Land of the Free, Home of the Brave"
has become
Land of the "Free", Home of the "Brave".
johnnyomaha
Privatization of the US constitution to serve the elite…..
http://www.rrstevens.net/ Robert Stevens
… OR is it "Land of the Greed, Home of the Knave" -- Let's sing it all together before the next Football Game and Circus: ♫ "o'er the Land of the
Greed …" ♫
Anonymous
Where's the who, what, when, where, and why? Collected everyday simple observations will awaken
one to the existence of a higher controlling entity. No more problem identification or descriptions,
thank you very much. We need 1) facts and 2) solutions.
unheilig
Lofgren gives both. Did you read the article? Confirmation is easy enough too: all you need
is a browser and a few hours searching off-off-lamestream information sources.
Jocelyn Hawley
To both dn7904 and Charles Shaver, I read your back and forth discussion and realize that
I so crave that type of intelligent, informed and aware discussion within my interactions in
my daily life, but none can really exist. Most people are so concerned with the outcomes of the
game, or fantasy football, or the latest t.v. series, and how on earth to pay rent and other
minutia. The little bit of news comes from prime time networks like Fox, NBC and CNN and they
think they know what is happening in the world, but don't actually want to know what is really
happening. The trick to an article like this one, is not yet how we change the problem, but how
we get people to notice, be aware and to care. That is the real question and the first- most
prominent problem to be solved.
Anonymous
I think there are more creative ways for the citizenry to communicate their discontent than
to wait four years for the next highly-funded election. I remember being in an international conference and the minister of Health from a major developed
country came on stage just days after making a very unpopular move. One person stood up and simply
turned her back on the Minister, then another, then a dozen, then the whole auditorium of major
players in the scientific community. It made headlines. I resent the fact that a movement like MoveOn now just asks me for money like all the other PAC's.
They used to send out flyers and have photos posted of people all over the country holding the
same flyer. What comes to mind is that we remain the developed country in which the fewest people take vacation.
How can we possibly stop and think about creative democracy? Ironically the revolutionary thought
that was the spark that set off the flames of this country came from the leisure class who had
plenty of time to think and write about things like freedom and liberty.
Charles Shaver
Thank you for prodding me to do some additional 'Deep Thinking.' The harm is done. Thanks
to the apathetic and/or ignorant majority of a voting minority, the balance of power in the U.S.
has now been transferred from the left hand of organized crime to the right hand, for the next
two years. At least the majority is consistent in its failure to self-govern by voting, and voting
wisely.
While (if) still allowed, voting wisely is the only reasonable solution. Creative protesting
(e.g., 'occupy' them, pass out flyers, shout them down, turn your back or throw them a shoe)
means nothing when the final vote is counted to determine who actually makes and enforces the
rules. Not omniscient or perfect, either, I'm open to suggestions but with very little to work
with after several decades of too-typical abuse, betrayal, exploitation and oppression, served
in the pseudonyms of loyalty, patriotism, sacrifice and service. If mere reasoning worked then
Bill Moyers and 'company' would have already solved most of the major problems. Don't let me
discourage you, though, keep on with your own deep thinking.
John Schoneboom
Two flaws jump out at me from this otherwise rather good and useful article. The first is
that Mr. Lofgren implies that the Deep State is mainly a Republican thing. In the picture he
paints, it's the Republicans who want to pay the national security state, while the poor hapless
Democrats just want to increase social spending. Similarly, he makes excuses for Obama in footnote
7. (Presidents are surely mostly puppets, but Obama's 2008 FISA vote as Senator betrays his own
predilections well enough.) At best, this is the farcical veneer of Deep State Theatre. I suspect
Mr. Lofgren knows better and didn't mean to imply otherwise.
Secondly, government shutdowns and budgetary problems may be an inconvenience to the Deep
State, but no accounting of the Deep State is complete without figuring in off-the-books revenue
from the global drug trade. International partnerships and oil interests also help diversify
the income stream nicely. There are many billions feeding this thing that have nothing to do
with the US budget.
It's also somewhat criminal not to name-check Peter Dale Scott in this subject area. But I'm
nitpicking. I'll not bother criticizing the piece for not addressing Deep State ties with terrorism,
that kettle of fish deserves its own barrel. Like I said, nice piece, useful, well done, thank
you.
Douglas Harris
does no one see there is a reason for the immense defense spending as America becomes #2 in
world economy and the dollar might be replaced as the reserve currency? The Chinese own enough treasury paper to close the American economy, alone or with several willing
partners. BUT…America even as a declining economic dictator will still have the arms to maintain
world control…
Anonymous
I had no real a-ha moment reading this well written piece. Nothing jumped out at me as something
foreign or unknown. Instead, I had the sense of deja vu, the kind of deja vu I'd rather not have.
All these things have been known if the consumer of this good piece has been paying attention
to the not-mainline press. What is so exciting about this is the writer put all the information
in one place and drew out the connections that weren't always so obvious. Though Mr. Lofgren
paints a somewhat plausible picture of how this State may rather suddenly crumble, I'm a bit
dubious.
What seems missing are the global links among many of these actors especially the oligarchs
reach and connection to many things terrorism. What I'm saying is that I'm not terribly optimistic
that a leader will come along who is sufficiently unbeholden to the state and who can remain
un-co-opted and call this state for what it is thus raising our fellow Americans sustained interest
and desire to see through the mess it will take to overthrow this Deep State.. In any case, thanks
so much for such a thoughtful and creepy picture.
Anonymous
None of this is news. A President who cared could smash the Deep State in, probably, nine
months. The key lockhold the Deep State has at the moment is on the nomination process, which
is used to filter out any Presidents, and most Congressional nominees, who show signs of independent
thought. They've been doing this since Reagan (Carter was the last President with independent
thought; Reagan was ideal, being an actor with Alzheimer's and so not thinking much at all.)
There are two ways this can play out: either they lose their lockhold on the nomination process,
or the entire system is discredited and we get a revolution.
The Deep State is actually very fragile due to their fundamental incompetence. But they're
quite capable of wrecking our existing system, at which point there will be an opening for a
Caesar or a Napoleon or a Lenin who *is* competent. That is the true danger moment. The worst
scenario is revolving-door coups, such as Mexico suffered for decades in the 18th and 19th century.
Anonymous
The American Empire is, however, in decline phase. You can identify that by the inability
to conquer territory and the slow loss of territory from the edges. The peak of the American
Empire was actually in the late 19th century… A collapsing empire follows a weird trajectory. Many comparisons have been made to the Roman
Empire. That worked out poorly.
Anonymous
You could also read the much older "War is A Racket" by Smedley Butler.
The IMF/World Bank scam was working for a while. It doesn't work any more: South American
countries simply reject it. And the US has no power to muscle South American countries any more;
I'm not quite sure how they managed to become immune to US military intervention, but they have.
They have had about 200 years of trial and error in figuring out how.
Now, the rest of the world just needs to copy the South American model and the US IMF/World
Bank scam becomes untenable.
Anonymous
Proportional representation is critical, but I haven't figured out how to get anyone to pay
attention to it. Even at the local level, where the deep state has no traction because it's paying
no attention.
Anonymous
Thankfully the fight against electronic voting machines is already pretty strong. This is
something people understand viscerally and this is a key plank for whatever party is going to
dethrone the Rs & Ds. Basically, if electronic "voting" machines are delegitimized (as they should
be), this means people will actually fight for their paper ballots…
Anonymous
I think you're wrong about how most Americans will react. The levels of disillusionment are
very, very high now and you can measure them in polls.
Just before the Civil War, we saw the same dynamic: most of the country was completely disillusioned
about the "slavocracy", as they called the corrupt US government dominated by slaveholders. This
led to the election of Lincoln, the destruction of the Whig Party, and finally, the Civil War.
This is the sort of situation we have now. The Deep State can't win; it will be smashed as
Americans unite behind a Lincoln-like figure. The only questions are when this will happen, and
more importantly *what comes next*. Things are wide open after that happens: Sun Yat-Sen led
(unfortunately) to Mao.
jeffries
Well it will be interesting how the Greece situation plays out. It seems strange we don't
hear much or read much in main stream media about it. They are challenging the status quo. At
first the banks gave them until the 28th and then cut it to 10 days. It would be in everyone's
best interest if this was the beginning of the end for the EU. Diffused power is the best power.
If the EU fails we won't be pressured into a union with Canada and Mexico. I think that was the
plan of the global deep state. Aggregate nations into regions and then larger regions and then
it would not be such a jump to global government.
Anonymous
"….. Americans sustained interest…." Lack of interest is the real killer of all empires.
America's "Madisonian institutions," namely, the Congress, the presidency, and the courts have
been supplanted by a "Trumanite network" of bureaucrats who make up the permanent national security
state. National security policymaking has been removed from public view and largely insulated
from law and politics.
Notable quotes:
"... national security policy is determined largely by "the several hundred managers of the military, intelligence, diplomatic, and law enforcement agencies who are responsible for protecting the nation and who have come to operate largely immune from constitutional and electoral restraints." The president, congress and the courts play largely a symbolic role in national security policy ..."
"... You can read a Harvard National Security Journal article that outlines Glennon's argument at this link: http://harvardnsj.org/wp-content/uploads/2014/01/Glennon-Final.pdf . The paper is not an especially easy read, but I found it to be well researched and – for me – persuasive. ..."
"... National Security and Double Government ..."
"... "Glennon shows how the underlying national security bureaucracy in Washington – what might be called the deep state – ensures that presidents and their successors act on the world stage like Tweedledee and Tweedledum." ..."
"... "In our faux democracy, those we elect to govern serve largely ornamental purposes, while those who actually wield power, especially in the realm of national security, do so chiefly with an eye toward preserving their status and prerogatives. Read this incisive and richly documented book, and you'll understand why." ..."
"... U.S. national security policy is in fact conducted by a shadow government of bureaucrats and a supporting network of think tanks, media insiders, and ambitious policy wonks. ..."
"... "is that the United States government has enduring institutional interests that carry over from administration to administration and almost always dictate the position the government takes." ..."
"... And now IMO the DEEP STATE is about to DEEP SIX the Career military in the US as it organizes violence and the SURVEILLANCE STATE outside the ARMED FORCES. ..."
"... My short answer is that Government of the people, by the people, and for the people [the Lincoln formulation] probably expired with the dead of Hiroshima and Nagasaki! ..."
"... I think we could make as much of the supine legislature that lends weight to Glennon's argument as he does the "permanent" executive agency security apparatus. If they're to be properly responsive to public will, executive agencies need better written laws. ..."
His answer: national security policy is determined largely by "the several hundred managers of
the military, intelligence, diplomatic, and law enforcement agencies who are responsible for protecting
the nation and who have come to operate largely immune from constitutional and electoral restraints." The president, congress and the courts play largely a symbolic role in national security policy, Glennon claims.
You can read a Harvard National Security Journal article that outlines Glennon's argument at this
link:
http://harvardnsj.org/wp-content/uploads/2014/01/Glennon-Final.pdf.
The paper is not an especially easy read, but I found it to be well researched and – for me
– persuasive.
His book adds more analysis to the argument, using (from Graham Allison's
Essence of Decision) the rational actor model, the government politics model, and the organizational
behavior model. Glennon extends that framework by discussing culture, networks, and the myth of alternative
competing hypotheses. The book is richer, in my opinion. But the core of Glennon's position
is in the paper.
In National Security and Double Government, Michael Glennon examines the continuity
in U.S. national security policy from the Bush administration to the Obama administration. Glennon
explains the lack of change by pointing to the enervation of America's "Madisonian institutions,"
namely, the Congress, the presidency, and the courts. In Glennon's view, these institutions have
been supplanted by a "Trumanite network" of bureaucrats who make up the permanent national security
state. National security policymaking has been removed from public view and largely insulated
from law and politics. Glennon warns that leaving security policy in the hands of the Trumanite
network threatens Americans' liberties and the republican form of government.
Some blurb reviews:
"If constitutional government is to endure in the United States, Americans must confront the
fundamental challenges presented by this chilling analysis of the national security state." Bruce Ackerman
"Glennon shows how the underlying national security bureaucracy in Washington – what might
be called the deep state – ensures that presidents and their successors act on the world stage
like Tweedledee and Tweedledum." John J. Mearsheimer
"National Security and Double Government is brilliant, deep, sad, and vastly learned
across multiple fields–a work of Weberian power and stature. It deserves to be read and discussed.
The book raises philosophical questions in the public sphere in a way not seen at least since
Fukuyama's end of history." David A. Westbrook
"In our faux democracy, those we elect to govern serve largely ornamental purposes, while
those who actually wield power, especially in the realm of national security, do so chiefly with
an eye toward preserving their status and prerogatives. Read this incisive and richly documented
book, and you'll understand why."Andrew J. Bacevich
"…Michael Glennon provides a compelling argument that America's national security policy is
growing outside the bounds of existing government institutions. This is at once a constitutional
challenge, but is also a case study in how national security can change government institutions,
create new ones, and, in effect, stand-up a parallel state…." Vali Nasr
"Instead of being responsive to citizens or subject to effective checks and balances,
U.S. national security policy is in fact conducted by a shadow government of bureaucrats and a
supporting network of think tanks, media insiders, and ambitious policy wonks. Presidents
may come and go, but the permanent national security establishment inevitably defeats their efforts
to chart a new course…."Stephen M. Walt, Robert and Renee Belfer
I've spoken to three people I consider to be members of the "shadow national security state."
One person said Glennon's argument is nothing new. The second told me he's got it exactly right.
The third said it's even worse.
and imo only the nuclear priesthood rivals the deep state but not exactly part of it yet its
original source!
like the mayan priests only those in it know how accurate this book is in its analysis!
and a congress marches on in complete ignorance!
Mike Mealer, January 21, 2015 @ 7:48 pm
Great article. Read it a few months ago. I didn't know whether I should feel more secure or
afraid. Looking the items I highlighted and a few standout.
"The dirty little secret here," a former associate counsel in the Bush White House, Brad Berenson,
explained, "is that the United States government has enduring institutional interests that
carry over from administration to administration and almost always dictate the position the government
takes."178 P34
Its cohesion notwithstanding, the Trumanite network is curiously amorphous. It has no leader.
It is not monolithic. It has no formal structure. P32
The maintenance of Trumanite autonomy has depended upon two conditions. The first is that the
Madisonian institutions appear to be in charge of the nation's security. The second is that the
Madisonian institutions not actually be in charge. P34
Public opinion is, accordingly, a flimsy check on the Trumanites; it is a manipulable tool
of power enhancement. It is therefore rarely possible for any occupant of the Oval Office to prevail
against strong, unified Trumanite opposition, for the same reasons that members of Congress and
the judiciary cannot; a non-expert president, like a non-expert senator and a non-expert judge,
is intimidated by expert Trumanites and does not want to place himself (or a colleague or a potential
political successor) at risk by looking weak and gambling that the Trumanites are mistaken. So
presidents wisely "choose" to go along. P70
John Comiskey, January 22, 2015 @ 7:14 am
Civic Education 101
Glennon laments as did Justice Souter, the pervasive civic ignorance of the citizenry. Democracy requires an informed and engaged citizenry. The recent and ongoing debates about the role the police in society raise similar question
and doubts about our social contract and governance for the 21st century.
Where to from here?
A national conversation about civics and K-12 civic education.
What is the proper role of citizens in society?
What is the proper role of our polity?
Again interesting thread and comments. The use of the term "Trumanite" is unfortunate and totally
inaccurate IMO! Truman reluctantly signed the National Security Act of 1947 to resolve the documented
failures of Jointness between the Army and Navy in WWII [the Secretary of War and the Secretary
of the Navy--Stimson and King]! Truman was personally opposed to the establishment of the CIA
for many good reasons.
What is the real failure is the creation of the Nuclear Priesthood which largely failed to
guard its secrets from other Nation-States and individuals and the warping into the DEEP STATE
[the better term than DOUBLR GOVERTNMENT]!
And now IMO the DEEP STATE is about to DEEP SIX the Career military in the US as it organizes
violence and the SURVEILLANCE STATE outside the ARMED FORCES.
A close study of the overturning of the ALIEN AND SEDITION Acts of 1798 which destroyed chances
for a second term for John Adams and created the first real Presidential Election in the USA,
the Presidential Election of 1800, which brought into officer Jefferson, but almost brought Aaron
Burr to real power.
Study of James Madison so-called VIRGINIA RESOLUTION opposing the ASA is fully warranted. Too
bad John Yoo did not know this history.
I need to mention that I did read the article and listened to the Cato Institute Panel.
The Panel presentations might lead one to argue that Double or nothing or the DEEP STATE what
difference does it make past, present, or future?
My short answer is that Government of the people, by the people, and for the people [the
Lincoln formulation] probably expired with the dead of Hiroshima and Nagasaki! Perhaps not
but until argued and proven otherwise that is my conclusion! Perhaps wrong and hoping so!
Jack, January 24, 2015 @ 2:47 pm
A fascinating and needful argument, though I think we could make as much of the supine
legislature that lends weight to Glennon's argument as he does the "permanent" executive agency
security apparatus. If they're to be properly responsive to public will, executive agencies need
better written laws.
The Critical Infrastructure Protection Act or CIPA, which passed the house in 2014, would,
"require the Assistant Secretary of the National Protection and Programs Directorate to: (1) include
in national planning scenarios the threat of electromagnetic pulse (EMP) events…" (emphasis
mine). The national planning scenarios were rescinded in 2011, making CIPA either a very easy
or very hard law to execute.
Likewise, the Biggert-Waters flood insurance reform act of 2012 altered regulatory definitions
for "substantial damage" and "substantial improvement" by misunderstanding the way field damage
assessments are performed under the National Flood Insurance Program.
Which means, I suppose, that we need more able legislators…which may be unlikely if more Americans
don't know Publius from Curly.
"... The difficulty we have in the economics profession, I fear, is a great deal of herd instinct and concern about what others may say. And when the Fed runs their policy pennants up the flagpole, only someone truly secure in their thinking, or forsworn to some strong ideological interpretation of reality or bias if we are truly honest, dare not salute it. ..."
"... But it makes the point which I have made over and again, that all of the economic models are faulty and merely a caricature of reality. And therefore policy ought not to be dictated by models, but by policy objectives and a strong bias to results, rather than the dictates of process or methods. In this FDR had it exactly right. If we find something does not stimulate the broader economy or effect the desired policy objective, like tax cuts for the rich, using that approach over and over again is certainly not going to be effective. ..."
"... Economics are a form of social and political science. And with the political and social process corrupted by big money, what can we expect from would be philosopher kings. ..."
"... The interconnectedness of the global system with its massive and underregulated TBTF Banks, the widespread and often fraudulent mispricing of risk, all make cause for a financial system to be fragile. In this thinking Nassim Taleb is far ahead of the common economic thought as a real systems thinker. The Fed is not a systemic thinking organization because they are owned by the financial status quo, and real systemic reform rarely comes from within. ..."
"... So Mr. Baker, rather than looking for the bubble, lets say we have a fragile system still disordered and mispricing risk, with a few very large banks engaging in reckless speculation, mispricing risk for short term profits, manipulating markets, and distorting the processes designed to maintain a balance in the economy. Rather than hold out for a new bubble as your criterion, perhaps we may also consider that the patient is still on full life support after the last bubble and crisis. Why do we need to find a new source of malady when the old one is still having its way? ..."
"... A new crisis does not have to happen. This is the vain comfort in these sorts of black swan events, being hard to predict. But they can be more likely given the right conditions, and I fear little will be done about this one until even those who are quite personally comfortable with things as they are begin to feel the pain, ..."
"... neither Irwin nor anyone else has even identified a serious candidate. Until someone can at least give us their candidate bubble, we need not take the financial crisis story seriously. ..."
"... If we take this collapse story off the table, then we need to reframe the negative scenario. It is not a sudden plunge in output, but rather a period of slow growth and weak job creation. This seems like a much more plausible story... ..."
I like Dean Baker quite well, and often link to his columns.
On most things we are pretty much on the same page.
And to his credit he was one of the few 'mainstream'
economists to actually see the housing bubble developing, and call it out. Some may claim to have
done so, and can even cite a sentence or two where they may have mentioned it, like Paul Krugman
for example. But very few spoke about doing something about it while it was in progress. The
Fed was aware according to their own minutes, and ignored it.
The difficulty we have in the economics profession, I fear, is a great deal of herd instinct and
concern about what others may say. And when the Fed runs their policy pennants up the flagpole, only
someone truly secure in their thinking, or forsworn to some strong ideological interpretation of
reality or bias if we are truly honest, dare not salute it.
Am
I such a person? Do I actually see a fragile financial system that is still corrupt and highly levered,
grossly mispricing risks? Or am I just seeing things the way in which I wish to see them?
That difficulty arises because economics is no science. It involves judgment and principles,
and weighs the facts far too heavily based upon 'reputation' and 'status.' And of course I have none
of those and wish none.
But it makes the point which I have made over and again, that all of the economic models are faulty
and merely a caricature of reality. And therefore policy ought not to be dictated by models,
but by policy objectives and a strong bias to results, rather than the dictates of process or methods.
In this FDR had it exactly right. If we find something does not stimulate the broader economy
or effect the desired policy objective, like tax cuts for the rich, using that approach over and
over again is certainly not going to be effective.
Economics are a form of social and political science. And with the political and social
process corrupted by big money, what can we expect from would be 'philosopher kings.'
The housing bubble was no 'cause' of the latest financial crisis. More properly it was the tinder
and the trigger event. The S&L crisis was just as great, if not greater. Why then did it not bring
the global financial system to its knees?
The interconnectedness of the global system with its massive and underregulated TBTF Banks, the
widespread and often fraudulent mispricing of risk, all make cause for a financial system to be 'fragile.'
In this thinking Nassim Taleb is far ahead of the common economic thought as a real 'systems thinker.'
The Fed is not a systemic thinking organization because they are owned by the financial status quo,
and real systemic reform rarely comes from within.
I see the same fragility which existed from 1999 to 2008 still in the system, only grown larger,
global, and more profoundly influencing the political processes.
The only question is what 'trigger event' might set it spinning, and how great of a magnitude
will it have to be in order to do so. The more fragile the system, the less that is required to knock
it off its underpinnings.
And a crisis is not a binary event. There is the 'trigger' and the dawning perception of risks,
and the initial responses of the political, social, and regulatory powers.
There is no point in debating this, because the regulators and powerful groups like the Fed are
caught in a credibility trap, which prevents them from seeing things as they are, and saying so.
So Mr. Baker, rather than looking for the bubble, let's say we have a fragile system still disordered
and mispricing risk, with a few very large banks engaging in reckless speculation, mispricing risk
for short term profits, manipulating markets, and distorting the processes designed to maintain a
balance in the economy. Rather than hold out for a 'new bubble' as your criterion, perhaps we may also consider that the
patient is still on full life support after the last bubble and crisis. Why do we need to find
a new source of malady when the old one is still having its way?
I think if one exercises clear and open judgement, they can see that we have stirred up the same
pot of witches brew that has made the system fragile and vulnerable to an exogenous shock, and has
kept it so.
A new crisis does not have to happen. This is the vain comfort in these sorts of 'black swan'
events, being hard to predict. But they can be more likely given the right conditions, and
I fear little will be done about this one until even those who are quite personally comfortable with
things as they are begin to feel the pain,
The problem is not a 'bubble.' The problem is pervasive corruption, fraud, and lack of meaningful
reform. The 'candidate' is the financial system itself, with its outsized hedge funds and the
TBTF Banks with their serial crime sprees and accommodative regulators in particular.
And if one cannot see that in this rotten system with its brazenly narrow rewarding of a select
few with the bulk of new income, then there is little more that can be said.
Neil Irwin, a writer for the NYT Upshot section, had
an interesting debate with himself about the likely future course of the economy. He got the
picture mostly right in my view, with a few important qualifications.
"First, his negative scenario
is another recession and possibly a financial crisis. I know a lot of folks are saying this stuff,
but it's frankly a little silly. The basis of the last financial crisis was a massive amount of
debt issued against a hugely over-valued asset (housing). A financial crisis that actually rocks
the economy needs this sort of basis.
If a lot of people are speculating in the stock of Uber or other wonder companies, and reality
wipes them out, this is just a story of some speculators being wiped out. It is not going to shake
the economy as a whole. (San Francisco's economy could take a serious hit.)
Anyhow, financial crises don't just happen, there has to be a real basis for them. To me the
housing bubble was pretty obvious given the unprecedented and unexplained run-up in prices in
the largest market in the world. Perhaps there is another bubble out there like this, but neither
Irwin nor anyone else has even identified a serious candidate. Until someone can at least
give us their candidate bubble, we need not take the financial crisis story seriously.
If we take this collapse story off the table, then we need to reframe the negative scenario.
It is not a sudden plunge in output, but rather a period of slow growth and weak job creation.
This seems like a much more plausible story...
Anyhow, a story of slow job growth and ongoing wage stagnation would look like a pretty bad
story to most of the country. It may not be as dramatic as a financial crisis that brings the
world banking system to its knees, but it is far more likely and therefore something that we should
be very worried about."
"... The cast of characters includes President George W. Bush; L. Paul "Jerry" Bremer, the first
civilian administrator of postwar Iraq; Douglas Feith, Bush's undersecretary of defense for policy;
Paul Wolfowitz, Bush's deputy secretary of defense; I. Lewis "Scooter" Libby, chief of staff to Vice
President Richard B. Cheney (and Cheney's proxy in these events); Walter Slocombe, who had been President
Clinton's undersecretary of defense for policy, and as such was Feith's predecessor; Richard Perle,
who was chairman of Bush's defense policy board; and General Jay Garner, whom Bremer replaced as the
leader of postwar Iraq. ..."
"... Regarding the de-Baathification order, both Bremer and Feith have written their own accounts
of the week leading up to it, and the slight discrepancy between their recollections is revealing in
what it tells us about Bremer-and consequently about Wolfowitz and Libby for having selected him. At
first blush, Bremer and Feith's justifications for the policy appear to dovetail, each comparing postwar
Iraq to postwar Nazi Germany. Bremer explains in a retrospective Washington Post op-ed, "What We Got
Right in Iraq," that "Hussein modeled his regime after Adolf Hitler's, which controlled the German people
with two main instruments: the Nazi Party and the Reich's security services. We had no choice but to
rid Iraq of the country's equivalent organizations." For his part, Feith goes a step further, reasoning
in his memoir War and Decision that the case for de-Baathification was even stronger because "The Nazis,
after all, had run Germany for a dozen years; the Baathists had tyrannized Iraq for more than thirty."
..."
"... Simply put, Bremer was tempted by headline-grabbing policies. He was unlikely to question any
action that offered opportunities to make bold gestures, which made him easy to influence. Indeed, another
quality of Bremer's professional persona that conspicuously emerges from accounts of the period is his
unwillingness to think for himself. ..."
"... What's even more surprising is how Bremer doesn't hide his intellectual dependence on Slocombe.
..."
"... Slocombe that "Although a Democrat, he has maintained good relations with Wolfowitz and is
described by some as a 'Democratic hawk,'" a remark that once again places Wolfowitz in close proximity
to Bremer and the disbanding order. ..."
In May 2003, in the wake of the Iraq War and the ousting of Saddam Hussein, events took place
that set the stage for the current chaos in the Middle East. Yet even most well-informed Americans
are unaware of how policies implemented by mid-level bureaucrats during the Bush administration unwittingly
unleashed forces that would ultimately lead to the juggernaut of the Islamic State.
The lesson is that it appears all too easy for outsiders working with relatively low-level appointees
to hijack the policy process. The Bay of Pigs invasion and Iran-Contra affair are familiar instances,
but the Iraq experience offers an even better illustration-not least because its consequences have
been even more disastrous.
The cast of characters includes President George W. Bush; L. Paul "Jerry" Bremer, the first
civilian administrator of postwar Iraq; Douglas Feith, Bush's undersecretary of defense for policy;
Paul Wolfowitz, Bush's deputy secretary of defense; I. Lewis "Scooter" Libby, chief of staff to Vice
President Richard B. Cheney (and Cheney's proxy in these events); Walter Slocombe, who had been President
Clinton's undersecretary of defense for policy, and as such was Feith's predecessor; Richard Perle,
who was chairman of Bush's defense policy board; and General Jay Garner, whom Bremer replaced as
the leader of postwar Iraq.
On May 9, 2003, President Bush appointed Bremer to the top civilian post in Iraq. A career diplomat
who was recruited for this job by Wolfowitz and Libby, despite the fact that he had minimal experience
of the region and didn't speak Arabic, Bremer arrived in Baghdad on May 12 to take charge of the
Coalition Provisional Authority, or CPA. In his first two weeks at his post, Bremer issued two orders
that would turn out to be momentous. Enacted on May 16, CPA Order Number 1 "de-Baathified" the Iraqi
government; on May 23, CPA Order Number 2 disbanded the Iraqi army. In short, Baath party members
were barred from participation in Iraq's new government and Saddam Hussein's soldiers lost their
jobs, taking their weapons with them.
The results of these policies become clear as we learn about the leadership of ISIS. The Washington
Post, for example, reported in April that "almost all of the leaders of the Islamic State are
former Iraqi officers." In June, the New York Times identified a man "believed to be the head
of the Islamic State's military council," Fadel al-Hayali, as "a former lieutenant colonel in the
Iraqi military intelligence agency of President Saddam Hussein." Criticism of de-Baathification and
the disbanding of Iraq's army has been fierce, and the contribution these policies made to fueling
extremism was recognized even before the advent of the Islamic State. The New York Times reported
in 2007:
The dismantling of the Iraqi Army in the aftermath of the American invasion is now widely regarded
as a mistake that stoked rebellion among hundreds of thousands of former Iraqi soldiers and made
it more difficult to reduce sectarian bloodshed and attacks by insurgents.
This year the Washington Post summed up reactions to both orders when it cited a former
Iraqi general who asked bluntly, "When they dismantled the army, what did they expect those men to
do?" He explained that "they didn't de-Baathify people's minds, they just took away their jobs."
Writing about the disbanding policy in his memoir, Decision Points, George W. Bush acknowledges
the harmful results: "Thousands of armed men had just been told they were not wanted. Instead of
signing up for the new military, many joined the insurgency."
... ... ...
In his memoir, Bremer names the officials who approached him for his CPA job. He recounts telling
his wife that:
I had been contacted by Scooter Libby, Vice President Dick Cheney's chief of staff, and by
Paul Wolfowitz, deputy secretary of defense. The Pentagon's original civil administration in 'post-hostility'
Iraq-the Office of Reconstruction and Humanitarian Assistance, ORHA-lacked expertise in high-level
diplomatic negotiations and politics. … I had the requisite skills and experience for that position.
Regarding the de-Baathification order, both Bremer and Feith have written their own accounts
of the week leading up to it, and the slight discrepancy between their recollections is revealing
in what it tells us about Bremer-and consequently about Wolfowitz and Libby for having selected him.
At first blush, Bremer and Feith's justifications for the policy appear to dovetail, each comparing
postwar Iraq to postwar Nazi Germany. Bremer explains in a retrospective Washington Post op-ed,
"What We Got Right in Iraq," that "Hussein modeled his regime after Adolf Hitler's, which controlled
the German people with two main instruments: the Nazi Party and the Reich's security services. We
had no choice but to rid Iraq of the country's equivalent organizations." For his part, Feith goes
a step further, reasoning in his memoir War and Decision that the case for de-Baathification
was even stronger because "The Nazis, after all, had run Germany for a dozen years; the Baathists
had tyrannized Iraq for more than thirty."
Regarding the order itself, Bremer writes,
The day before I left for Iraq in May, Undersecretary of Defense Douglas J. Feith presented
me with a draft law that would purge top Baathists from the Iraqi government and told me that
he planned to issue it immediately. Recognizing how important this step was, I asked Feith to
hold off, among other reasons, so I could discuss it with Iraqi leaders and CPA advisers. A week
later, after careful consideration, I issued this 'de-Baathification' decree, as drafted by the
Pentagon.
In contrast, Feith recalls that Bremer asked him to wait because "Bremer had thoughts of his own
on the subject, he said, and wanted to consider the de-Baathification policy carefully. As the new
CPA head, he thought he should announce and implement the policy himself."
The notion that he "carefully" considered the policy in his first week on the job, during which
he also travelled halfway around the globe, is highly questionable. Incidentally, Bremer's oxymoronic
statement-"a week later, after careful consideration"-mirrors a similar formulation of Wolfowitz's
about the disbanding order. Speaking to the Washington Post in November 2003, he said that
forming a new Iraqi army is "what we're trying to do at warp speed-but with careful vetting of the
people we're bringing on."
Simply put, Bremer was tempted by headline-grabbing policies. He was unlikely to question
any action that offered opportunities to make bold gestures, which made him easy to influence. Indeed,
another quality of Bremer's professional persona that conspicuously emerges from accounts of the
period is his unwillingness to think for himself. His memoir shows that he was eager to put
Jay Garner in his place from the moment he arrived in Iraq, yet he was unable to defend himself on
his own when challenged by Garner, who-according to Bob Woodward in his book State of Denial:
Bush at War, Part III-was "stunned" by the disbanding order. Woodward claims that when Garner
confronted Bremer about it, "Bremer, looking surprised, asked Garner to go see Walter B. Slocombe."
What's even more surprising is how Bremer doesn't hide his intellectual dependence on Slocombe.
He writes in his memoir:
To help untangle these problems, I was fortunate to have Walt Slocombe as Senior Adviser for
defense and security affairs. A brilliant former Rhodes Scholar from Princeton and a Harvard-educated
attorney, Walt had worked for Democratic administrations for decades on high-level strategic and
arms control issues.
In May 2003, the Washington Post noted of Slocombe that "Although a Democrat, he has
maintained good relations with Wolfowitz and is described by some as a 'Democratic hawk,'" a remark
that once again places Wolfowitz in close proximity to Bremer and the disbanding order. Sure
enough, in November 2003 the Washington Post reported:
The demobilization decision appears to have originated largely with Walter B. Slocombe, a former
undersecretary of defense appointed to oversee Iraqi security forces. He believed strongly in
the need to disband the army and felt that vanquished soldiers should not expect to be paid a
continuing salary. He said he developed the policy in discussions with Bremer, Feith and Deputy
Defense Secretary Paul D. Wolfowitz. 'This is not something that was dreamed up by somebody at
the last minute and done at the insistence of the people in Baghdad. It was discussed,' Slocombe
said. 'The critical point was that nobody argued that we shouldn't do this.'
Given that the president agreed to preserve the Iraqi army in the NSC meeting on March 12, Slocombe's
statement is evidence of a major policy inconsistency. In that meeting, Feith, at the request of
Donald Rumsfeld, gave a PowerPoint presentation prepared by Garner about keeping the Iraqi army;
in his own memoir, Feith writes, "No one at that National Security Council meeting in early March
spoke against the recommendation, and the President approved Garner's plan." But this is not what
happened. What happened instead was the reversal of Garner's plan, which Feith attributes to Slocombe
and Bremer:
Bremer and Slocombe argued that it would better serve U.S. interests to create an entirely
new Iraqi army: Sometimes it is easier to build something new than to refurbish a complex and
badly designed structure. In any event, Bremer and Slocombe reasoned, calling the old army back
might not succeed-but the attempt could cause grave political problems.
Over time, both Bremer and Slocombe have gone so far as to deny that the policies had any tangible
effects. Bremer claimed in the Washington Post that "Virtually all the old Baathist ministers
had fled before the decree was issued" and that "When the draftees saw which way the war was going,
they deserted and, like their officers, went back home." Likewise Slocombe stated in a PBS interview,
"We didn't disband the army. The army disbanded itself. … What we did do was to formally dissolve
all of the institutions of Saddam's security system. The intelligence, his military, his party structure,
his information and propaganda structure were formally disbanded and the property turned over to
the Coalition Provisional Authority."
Thus, according to Bremer and Slocombe's accounts, neither de-Baathification nor disbanding the
army achieved anything that hadn't already happened. When coupled with Bremer's assertion of "careful
consideration in one week" and Wolfowitz's claim of "careful vetting at warp speed," Bremer and Slocombe's
notion of "doing something that had already been done" creates a strong impression that they are
hiding something or trying to finesse history with wordplay. Perhaps Washington Post journalist
Rajiv Chandrasekaran provides the best possible explanation for this confusion in his book Imperial
Life in the Emerald City, when he writes, "Despite the leaflets instructing them to go home,
Slocombe had expected Iraqi soldiers to stay in their garrisons. Now he figured that calling them
back would cause even more problems." Chandrasekaran adds, "As far as Slocombe and Feith were concerned,
the Iraqi army had dissolved itself; formalizing the dissolution wouldn't contradict Bush's directive."
This suggests that Slocombe and Feith were communicating and that Slocombe was fully aware of the
policy the president had agreed to in the NSC meeting on March 12, yet he chose to disregard it.
♦♦♦
Following the disastrous decisions of May 2003, the blame game has been rife among neoconservative
policymakers. One of those who have expended the most energy dodging culpability is, predictably,
Bremer. In early 2007, he testified before the House Oversight and Government Reform Committee, and
the Washington Post reported: "Bremer proved unexpectedly agile at shifting blame: to administration
planners ('The planning before the war was inadequate'), his superiors in the Bush administration
('We never had sufficient support'), and the Iraqi people ('The country was in chaos-socially, politically
and economically')."
Bremer also wrote in May 2007 in the Washington Post, "I've grown weary of being a punching
bag over these decisions-particularly from critics who've never spent time in Iraq, don't understand
its complexities and can't explain what we should have done differently." (This declaration is ironic,
given Bremer's noted inability to justify the disbanding policy to General Garner.) On September
4, 2007, the New YorkTimes reported that Bremer had given the paper exculpatory letters
supposedly proving that George W. Bush confirmed the disbanding order. But the Times concluded,
"the letters do not show that [Bush] approved the order or even knew much about it. Mr. Bremer referred
only fleetingly to his plan midway through his three-page letter and offered no details." Moreover,
thepaper characterized Bremer's correspondence with Bush as "striking in its almost nonchalant
reference to a major decision that a number of American military officials in Iraq strongly opposed."
Defending himself on this point, Bremer claimed, "the policy was carefully considered by top civilian
and military members of the American government." And six months later Bremer told the paper, "It
was not my responsibility to do inter-agency coordination."
Feith and Slocombe have been similarly evasive when discussing President Bush's awareness of the
policies. The Los Angeles Times noted that "Feith was deeply involved in the decision-making
process at the time, working closely with Bush and Bremer," yet "Feith said he could not comment
about how involved the president was in the decision to change policy and dissolve the army. 'I don't
know all the details of who talked to who about that,' he said." For his part, Slocombe told PBS's
"Frontline,"
What happens in Washington in terms of how the [decisions are made]-'Go ahead and do this,
do that; don't do that, do this, even though you don't want to do it'-that's an internal Washington
coordination problem about which I know little. One of the interesting things about the job from
my point of view-all my other government experience basically had been in the Washington end,
with the interagencies process and setting the priorities-at the other end we got output. And
how the process worked in Washington I actually know very little about, because the channel was
from the president to Rumsfeld to Bremer.
It's a challenge to parse Slocombe's various statements. Here, in the space of two sentences,
he claims both that his government experience has mostly been in Washington and that he doesn't know
how Washington works. As mentioned earlier, he had previously told the Washington Post that
the disbanding order was not "done at the insistence of the people in Baghdad"-in other words, the
decision was made in Washington. The inconsistency of his accounts from year to year, and even in
the same interview, adds to an aura of concealment.
This further illustrates the disconnect between what was decided by the NSC in Washington in March
and by the CPA in Iraq in May. In his memoir, Feith notes that although he supported the disbanding
policy, "the decision became associated with a number of unnecessary problems, including the apparent
lack of interagency review."
... ... ...
John Hay is a former executive branch official under Republican administrations.
Sheldon S. Wolin, died on Oct 21, 2015 at the age of 93...
"... Probably of the best ways to understand Wolin's democratic political
theory is to read Wendy Brown's recent important critique of neoliberalism as a
political and ethical project, rather than simply as an economic policy that has
failed in the ways that David Kotz lays bare. ..."
Notable quotes:
"... Wolin read things differently. First, he noticed the subtle dig at Lorenzo and rulers more generally: standing on the summit, they could only see one side of the art of rule. To truly understand the art of rule, however, one had to see it from both perspectives: that of the ruler and that of the ruled. And who could see both perspectives? The theorist, like the landscape artist who painted from the vantage of the valley and the peaks. ..."
"... Seemingly a humble plea from a humble servant, the dedicatory letter is in fact a brazen elevation of the letter writer, the theorist, over the ruler, the prince. By attending to the metaphor, Wolin found a deeper statement about the relationship between the political theorist and the political actor. ..."
"... the political art is to see things from multiple positions and places, to adopt the vantage of one, then the other, to see (and draw) the whole as a composite of perspectives. ..."
"... Wolin's hope was always in "democracy," and what might get us there changed between his writings. In his later essays on democracy in ancient Greece, he mentions an institution, a "form," that was able to house democracy, although only briefly. Yet, also in his later essays and books, he seems to claim that democracy cannot be housed in any institution because the patterns they create end up excluding, ritualizing, and taming the indeterminable becoming of political life. More importantly, in the context in which we live, he emphasized that political institutions can be studied and thus manipulated by those with the power to do so: think how the venues for inclusion and private property rights that are solidified in the American constitution make way for lobbyists, news media corporations, super PACs, etc., to cement the power of specific interests at everyone else's expense. ..."
"... Probably of the best ways to understand Wolin's democratic political theory is to read Wendy Brown's recent important critique of neoliberalism as a political and ethical project, rather than simply as an economic policy that has failed in the ways that David Kotz lays bare. ..."
In the last five years or so,
we've seen the exit of an entire generation of scholars: David Montgomery, Carl
Schorske, Peter Gay, Marshall Berman. This was the generation that taught me,
sometimes literally. But Wolin's death hits me hardest.
I took two courses with him as an undergraduate: Modern Political Theory
(Machiavelli to Smith) and Radical Political Thought (Paine to Foucault). The
first in my freshman year, the second in my sophomore year. I would have taken
more, but Wolin retired the following year. Those courses set me on my way.
I would never have become a political theorist were it not for him.
There will be many texts and appreciations in the days and months to come.
Wolin taught generations of students, many of whom are now leaders of the field,
and their students are now teaching other students. At CUNY, we're always swimming
in his seas: Robyn Marasco, at Hunter, was the student of Wendy Brown and Nick
Xenos, both of whom were students of Wolin. John Wallach, also at Hunter, and
Uday Mehta, at the Graduate Center, were both students of Wolin. There's probably
no more powerful a demonstration of Wolin's vision of political theory as a
tradition of continuity and innovation, as a transmission across time, than
these students of students of students.
While many of these texts and appreciations will focus, and rightly so, on
the political side of Wolin-as mentor and participant and commentator on the
student movements of the 1960s, particularly at Berkeley; as leader of the divestment
movement at Princeton in the 1970s and 1980s; as searching public critic of
technocratic liberalism, market conservatism, and American imperialism, in the
pages of the
New York Review of Books and his wondrous though short-lived journal
democracy ; as a theorist
of radical or "fugitive" democracy-I want to focus here on the way he did political
theory. Less the substance (though I'll come to that at the end) than the style.
The first thing to note about Wolin's approach is how literary it was. It's
hard to see this in some of his texts, but it was on full display in his lectures.
I don't know if Wolin was at all trained in New Criticism-I seem to recall him
citing I.A. Richards's Practical Criticism somewhere-but he read like
a New Critic. The opening paragraph or page of every text was the site of an
extended exploration and explication, as if the key to all of the Second
Discourse was to be found in that arresting image of the statue of Glaucus
which Rousseau mentions at the outset.
Chekhov has a line somewhere about how if you put a gun on the wall in the
first act, you damn well better make sure it goes off in the second. Wolin paid
attention to those guns, especially when they didn't go off. He was endlessly
curious about a theorist's metaphors, asides, slips, and allusions, and mined
them to great effect. Long before we were reading de Man and Derrida, he was
reading like them. But without all the fuss. He just did it.
One moment I remember in particular. In his lecture on The Prince,
Wolin stopped and stayed with the dedicatory letter to Lorenzo de' Medici that
precedes the text. These two paragraphs in particular:
I hope it will not be thought presumptuous for someone of humble and lowly
status to dare to discuss the behavior of rulers and to make recommendations
regarding policy. Just as those who paint landscapes set up their easels
down in the valley in order to portray the nature of the mountains and the
peaks, and climb up into the mountains in order to draw the valleys, similarly
in order to properly understand the behavior of the lower classes one needs
to be a ruler, and in order to properly understand the behavior of rulers
one needs to be a member of the lower classes.
I therefore beg your Magnificence
to accept this little gift in the spirit in which it is sent….And if your
Magnificence, high up at the summit as you are, should occasionally glance
down into these deep valleys, you will see I have to put up with the unrelenting
malevolence of undeserved ill fortune.
Most readers, if they pay attention at all, focus on that last sentence, where
Machiavelli lands, making the passage little more than an extended case of special
pleading: cast out of office (Machiavelli had been an adviser to the Florentine
republic) after the Medicis came to power in 1512, arrested and tortured, and
then exiled to his country estate, Machiavelli wanted nothing so much as to
be of use to the men who had ruined him.
Wolin read things differently. First, he noticed the subtle dig at Lorenzo
and rulers more generally: standing on the summit, they could only see one side
of the art of rule. To truly understand the art of rule, however, one had to
see it from both perspectives: that of the ruler and that of the ruled. And
who could see both perspectives? The theorist, like the landscape artist who
painted from the vantage of the valley and the peaks.
Seemingly a humble plea
from a humble servant, the dedicatory letter is in fact a brazen elevation of
the letter writer, the theorist, over the ruler, the prince. By attending to
the metaphor, Wolin found a deeper statement about the relationship between
the political theorist and the political actor.
But then Wolin stepped back even further, asking us to think about that notion
of perspective embedded in Machiavelli's metaphor. Most theorists ask us to
look upon the political world sub specie aeternitatis. To properly see
things as they are, they ascend or exit to the view from nowhere. Plato leaves
the cave, Rousseau (an imperfect example here, I know) is locked outside the
gates of Geneva, Rawls removes himself to the original position, to a place
where there are no positions. Machiavelli, said Wolin, takes a different tack:
the political art is to see things from multiple positions and places, to
adopt the vantage of one, then the other, to see (and draw) the whole as a composite
of perspectives. Perspectivalism is the fancy word for this, and it's usually
traced to Nietzsche (who, perhaps not coincidentally, in his notebooks described
Machiavelli's teaching as "perfection in politics.") But Wolin identified it
with Machiavelli-and as a result, incidentally, came up with a far more interesting
reading of the incommensurability of views in Machiavelli than that which we
find in Isaiah Berlin's famous essay on Machiavelli.
I remember Wolin doing something similar when we read The Wealth of Nations.
He asked what it meant for a political text to open with men making pins in
a factory, what it means to make these the leading figures in a political drama.
He even might have compared it to the opening of The Prince, asking us
to focus on the literary characters that people the one text versus the other.
I can't remember what conclusions he drew from that question, but it was a kind
of reading that I was not used to. And that many theorists and philosophers,
focused as they are on the formal logic and propositions of an argument, don't
really do.
The second thing to note about Wolin as a reader is his historicism. Historicism
today, at least in political theory, is primarily identified with Quentin Skinner
and his contextualist method. Political theorists, it's said, are not in a dialogue
across the ages. They are instead local, situated political actors, engaging
in a series of moves and counter-moves that are structured by the rules of the
game they happen to be playing. That game is the political discourse of the
day. Its players are the lesser and greater polemicists and pamphleteers of
an argument. To understand what Machiavelli, Hobbes, or Locke is doing when
he writes a text, you have to read the hundreds if not thousands of local interlocutors
he is responding to. Pace the claims of many readers, the Second Treatise
is not a response to Hobbes, who was dead by the time Locke started to write
it. Political theory, like politics itself, is a situated enterprise. To understand
it historically, we have to disaggregate it into a series of local, often disconnected
enterprises. That's what it means to recover the pastness of the past.
(Though Skinner in his more recent work has suggested that Hobbes may
be directly responding to Machiavelli. That very notion-that a theorist
could be reaching across a century, not to mention a continent, in writing
a text-is a great no-no among Skinner's followers, which is why some of
them seem so scandalized by it, as I discovered at a seminar last year.
Hell hath no fury like an acolyte scorned.)
Wolin was called by a similar historical impulse as Skinner. He too sought
to recover the discrete languages of the past, the situatedness of theory and
action. But Wolin's historicism was different. Without resorting to those thousands
of interlocutors, he managed to contrive a much more radical and bracing sense
of the past than most contextualists (it should be said that Skinner himself
actually manages to do this with great aplomb), in part because he remains loyal
to a notion of movement across time, of a dialogue across the ages.
There are so many instances of this sensibility at work in Politics and
Vision, Wolin's greatest book, but one in particular stands out for me.
It comes early on, in the third chapter, where he's discussing the move of political
theory from ancient Greece to ancient Rome.
Already, you're invited into a historicist frame. Wolin was a big one for
the specificity of theory's location in time and space. What effect did it have
that political theory arises in the context of the polis, the city-state;
moves to an empire radiating out of Rome; resides (and lives a covert life)
for hundreds of years in the Church; and suddenly revives in the form of the
modern nation-state? At each step, Wolin was attentive to how the location in
time and space alters the vocabulary, the questions, the categories of theoretical
inquiry.
Wolin opens his discussion of the move from the Greek city-state to the Roman
empire with a quote from Tacitus, where Tiberius contrasts the austere virtue
of the early days of Rome with the decadence of the imperium, and ascribes the
shift to the fact that originally "we are all members of one city. Not even
afterwards had we the same temptations, while our dominion was confined to Italy."
For Wolin, the passage is filled with intimation: the suspicion that our
understanding of politics is inescapably tied to the experience of the ancient
city-state, with its "civic intimacy" and "nervous intensity" and "compelling
urgency," such that any alteration of that "spatial dimension" becomes a sign
of political dilution and loss.
The essential questions raised by these political thinkers were: how far
could the boundaries of political space be extended, how much dilution by
numbers could the notion of citizen-participant withstand, how minor need
be the "public" aspect of decisions before the political association ceased
to be political?
Setting aside what might be seen as an implicit normative claim underlying these
questions-this relentlessly local and immediatist understanding of the "political"
would dog Wolin's work on radical democracy for years, though I don't think
we need to accept that understanding in order to see the power of the historicism
at play here-what he was pointing to was how significant an effect it was to
be confronted, physically, concretely, by such a vast tract of land as that
which was contained by Rome, and to attempt to conduct politics on that new
terrain.
For Wolin, the vastness of the imperium helped make sense of the
extended and elaborated codexes of law, administration, and jurisprudence that
entered the theoretical canon with Rome, but even more interesting, the newfound
attention to symbols and personae.
In large entities like…the Roman Empire, the methods of generating loyalties
and a sense of personal identification were necessarily different from those
associated with the Greek idea of citizenship. Where loyalty had earlier
come from a sense of common involvement, it was now to be centered in a
common reverence for power personified. The person of the ruler served as
the terminus of loyalties, the common center linking the scattered parts
of the empire. This was accomplished by transforming monarchy into a cult
of and surrounding it with an elaborate system of signs, symbols, and worship.
These developments suggest an existing need to bring authority and subject
closer by suffusing the relationship with a religious warmth. In this connection,
the use of symbolism was particularly important, because it showed how valuable
symbols can be in bridging vast distances. They serve to evoke the presence
of authority despite the physical reality being far removed….
…The "visual
politics" of an earlier age, when men could see and feel the forms of public
action and make meaningful comparisons with their own experience, was giving
way to "abstract politics," politics from a distance…
This shift from the visually immediate to the distant and the abstract-one can
see it in Machiavelli's claim that in politics, no one knows who you are but
how you appear; in Hobbes's notion of the Leviathan-would be a recurring theme
in Wolin's analysis, even a lament. (As Bonnie Honig pointed out to me in an
email, Wolin was the master of the in-between: he was at his best when he understood
how political beings are located in these in-between modes. He was especially
attuned to this in-between-ness when the in-between was temporal. When it became
spatial, he tended to be more of a catastrophist, seeing the move from one space
to another, or one mode of space to another, as absolute, the portent or picture
of a complete loss.)
But if we can step outside the lamentation, we can see in it a stunning reminder
of the situatedness and historical specificity of theory. Not in the formal
polemical arguments of the Romans or the Greeks (though there's plenty of that
in Wolin, too). But in these deeper idioms and unspoken grammars, in the almost
unnoticed backgrounds of space and time (his discussion of the effect of introducing
the category of an afterlife, of eternal time, on Christian thought is equally
resonant), in the guns that don't go off in the second act.
And, again, the only reason Wolin can notice them is that he's willing to
do what the contextualists say you can't do: reach across time, force thinkers
who never knew each other (maybe never even heard of each other) into a conversation.
That is the way we can get at the specificity of their language, through comparison
and confrontation. That is the way we can understand the ruptures of historical
experience. With the exception of Nietzsche and Hegel, maybe Lukács (those passages
on the effect of the changing mode of warfare in The Historical Novel
are pretty incredible), I can't think of a single theorist who understood this,
who did this, so well.
The last thing to note about Wolin's approach is how interested he was in
translation. Not the translation from French to German or ancient Greek to English,
but the translation of one language of politics into another. While Wolin is
often, and justly, associated with the claim that we have lost the language
of politics-again, in the style of a lament-what was always more interesting
about his approach was how attuned he was to ways in which a political vocabulary
or idiom gets translated in a new setting.
We've already seen a little of this in his account of the transposition of
political concepts from the city-state of Greece to the imperium of Rome, but
the most exciting moment, for me, occurs when Wolin turns to the rise of Christianity
and its impact on political thought. Where most commentators, says Wolin, treat
the political dimensions and elements of Christianity solely in those moments
when the religion is forced to confront the polity, Wolin takes a different
tack:
The significance of Christian thought for the Western political tradition
lies not so much in what it had to say about the political order, but primarily
in what it had to say about the religious order. The attempt of Christians
to understand their own group life provided a new and sorely needed source
of ideas for Western political thought.
What follows is an attempt to reconstruct the politicalness of the early and
later Christians' ideas of membership in the Church, of schism and heresy, of
priesthood and papacy, and so on. It's as if the entirety of the ancient political
canon had been sublimated into a religious idiom and context; the task of reading
was to recover the modes of that sublimation and to see what remained from the
ancients and what was lost.
Sublimation is also the word Wolin uses when he reaches the nineteenth century
and looks at the rise of "organization" as the central element of contemporary
political life. In the last chapter of the book (in the first edition), Wolin
takes us from Saint-Simon to Lenin to Elton Mayo and Peter Drucker, and sees
in each of these writers and moments of theorizing, an attempt to escape from
politics. Again in a declensionist mode, Wolin sets his sights on the ascendance
of economistic modes of thinking. His clear target is the modern corporation
and the managerialist discourse of human relations. These are political languages,
practices and institutions; they are the result of centuries of displacement
from ancient Greece to the modern nation-state. Yet they evade their politicalness
or fail to understand it.
What's interesting to me about this last chapter is how much it may have
missed in its conflation of the economic with the organization and the corporation.
Of course, it makes sense that it did. Wolin wrote Politics and Vision
in 1960, on the heels of a decade that had seen the publication of such titles
as The Hidden Persuaders, The Organization Man, White Collar,
and the like. It was the age of the corporation and middle management; naturally,
that was Wolin's endpoint, which shouldn't in any way diminish just how surprising
and innovative it was for him to write a history of the Western political canon
that ends with Peter Drucker!
But what it missed, I think, was the very insight that powered his earlier
chapters on the Christians: not that the political vocabulary was lost or eclipsed,
but that it got transposed into a new key. For that, to my mind, is how we should
be reading thinkers like Schumpeter, Hayek, Coase, Mises, Friedman, even Jevons
and Ricardo. Little in the way Wolin dealt with economistic modes of thinking
could prepare us for
the ferocity of the political assault that economics was about to visit upon
us. But that ill-preparedness was baked into the lament for the lost language
of politics.
Politics, even the Grosse Politik of Nietzsche's imaginings-which
lurks, in a quieter, more quotidian vein, in the background of Wolin's writing-never
really goes away. It just assumes, as Wolin was the first to teach us, a new
key. Always in-between.
LFC 10.24.15 at 1:26 am
from the OP: This shift from the visually immediate to the distant and the abstract-one
can see it in Machiavelli's claim that in politics, no one knows who you
are but how you appear; in Hobbes's notion of the Leviathan-would be a recurring
theme in Wolin's analysis
Interesting. That Machiavelli line ("everyone
sees how you appear, few touch what you are") could be read that way. More
obviously, it's about "the discerning few" (as the editors of one edition
of The Prince say in a footnote) versus the gullible many.
Anyway, v. nice post.
Tyler Schuenemann 10.24.15 at 8:57 am
@James Schmidt: Wolin wrote two articles on Arendt, one of which was on
her approach to history and reading of Marx, if I remember correctly. The
other article attacks her notion of the political, and so you might enjoy
it: "Hannah Arendt: Democracy and the Political" (1983). There he argues
that her notion of the political excludes concepts like friendship and economic
inequality that are, for him, essential to the political.
I think Arendt and Wolin both have a great deal in common in their emphasis
on experience as a source of the political, as opposed to an institutional
form. I think this comes out strongest if you look at Arendt's Preface to
Between Past and Future, and Wolin's various invocations of "demontic moments,"
"fugitive democracy," and "the political," in his later works.
Regarding hopes, it's important to ask, "hope for what?" because they
didn't have the same ends in mind. I think Arendt comes down on the side
of a republic, and thus put her hope in elites guided by proper institutions
and principles, thus creating a safe home for change and participation.
(Though I can already hear the retorts on Arendt's radicalism as I write!)
But my impression is that these statements were ideas that she was pitching
in the moment, and that they changed throughout her life.
Wolin's hope was always in "democracy," and what might get us there
changed between his writings. In his later essays on democracy in ancient
Greece, he mentions an institution, a "form," that was able to house democracy,
although only briefly. Yet, also in his later essays and books, he seems
to claim that democracy cannot be housed in any institution because the
patterns they create end up excluding, ritualizing, and taming the indeterminable
becoming of political life. More importantly, in the context in which we
live, he emphasized that political institutions can be studied and thus
manipulated by those with the power to do so: think how the venues for inclusion
and private property rights that are solidified in the American constitution
make way for lobbyists, news media corporations, super PACs, etc., to cement
the power of specific interests at everyone else's expense.
A reoccurring hope that I think that you can find in Wolin's work
is the ability of the demos to rediscover itself, and learn how to wield
power through a process of political education. He drew from Tocqueville
and Dewey on this, seeing the potential of collective activity outside of
official institutions. This included what we normally think of as the radical
politics of street demonstrations, but also, in Democracy Inc. he interestingly
cites the civic coordination of aid in the aftermath of Hurricane Katrina.
To Wolin, all this "fugitive" activity allows people to learn how to wield
power together. This might sound Arendtian again, and in some ways it is.
But Wolin wanted to keep the ends radically open, while also finding a way
for the demos to wield power over collective life. The seduction to then
appeal to some institution for this level of coordination and governance
over such a large commons is at tension with his suspicion of formalizing
power. (On this last point, see Nick Xenos' "Momentary Democracy.") Thus
I don't think it's a coincidence that we find chapter 3 of Politics and
Vision so relevant to today. The sheer scale of today's polis is immense
and abstract. How can we comprehend and participate in such a behemoth?
Wolin tries to answer this more directly in his essay "Agitated Times,"
but his answer is hedged and tellingly in tension with his earlier attacks
on constitutions.
Rakesh Bhandari 10.24.15 at 10:56 pm
Two Wolin essays for which I don't have the cites and which I read long
ago come to mind:
A brilliant interpretation of Weber's Protestant Work Ethic as an
exploration of nihilism.
A re-reading of Locke as a theorist of revolution. I think it was
in democracy.
magari 10.25.15 at 10:22 am
Agreed, although Cicero originates the concern over appearance and public
perception (see De Officiis), with Machiavelli reworking/inverting Cicero's
argument. Indeed, Cicero's treatment of perception and appearances precisely
originates in the desire to be politically effective in a large, extended
republic. In a polis, social relations are so intimate that one merely needs
to attend to one's inner character. Such intimacy means one is transparent,
everyone knows the 'real' you. In imperial Rome, this was not case. Cicero
argues that being virtuous was necessary but insufficient, you must project
virtuousity to others as they may only have a shallow understanding of who
you are.
Rakesh Bhandari 10.26.15 at 2:53 pm
Probably of the best ways to understand Wolin's democratic political
theory is to read Wendy Brown's recent important critique of neoliberalism
as a political and ethical project, rather than simply as an economic policy
that has failed in the ways that David Kotz lays bare.
I can't think about Berkeley political theory and Machiavelli without
thinking about Hanna Pitkin's Fortune is a Woman, which I read thirty years
ago. I think that autonomy was one of the central ideas–autonomy as both
a psychological achievement and a social result of politics. I'll have to
find my copy somewhere. Schaar and Jacobson were great teachers too.
GK 10.26.15 at 7:17 pm
Thank you for writing that, Corey.
On Wolin's influence on his students, from an essay by (my teacher) Wilson
Carey McWilliams: "Wolin was my first teacher of political theory, and there
is no way to disentangle my thinking from his; at every reading of Wolin's
work, I am shocked to discover how many of my best ideas have made their
way into his writing."
"... In classic totalitarianism, thinking here now about the Nazis and the fascists, and also even
about the communists, the economy is viewed as a tool which the powers that be manipulate and utilize
in accordance with what they conceive to be the political requirements of ruling. And they will take
whatever steps are needed in the economy in order to ensure the long-run sustainability of the political
order. In other words, the sort of arrows of political power flow from top to bottom. ..."
"... in inverted totalitarianism, the imagery is that of a populace which is enshrined as the leadership
group but which in fact doesnt rule, but which is turned upside down in the sense that the people are
enshrined at the top but dont rule. And minority rule is usually treated as something to be abhorred
but is in fact what we have. ..."
"... I think Webers critique of capitalism is even broader. I think he views it as quintessentially
destructive not only of democracy, but also, of course, of the sort of feudal aristocratic system which
had preceded it. Capitalism is destructive because it has to eliminate the kind of custom / m re z/,
political values, even institutions that present any kind of credible threat to the autonomy of the
economy. And its that -- thats where the battle lies. Capitalism wants an autonomous economy. They want
a political order subservient to the needs of the economy. And their notion of an economy, while its
broadly based in the sense of a capitalism in which there can be relatively free entrance and property
is relatively widely dispersed its also a capitalism which, in the last analysis, is [as] elitist as
any aristocratic system ever was. ..."
"... I think the system that was consciously and deliberately constructed by the founders who framed
the Constitution -- that democracy was the enemy. ..."
"... the framers of the Constitution understood very well that this would mean -- would at least
-- would jeopardize the ruling groups that they thought were absolutely necessary to any kind of a civilized
order. And by ruling groups , they meant not only those who were better educated, but those who were
propertied, because they regarded property as a sign of talent and of ability, so that it wasnt just
wealth as such, but rather a constellation of virtues as well as wealth that entitled capitalists to
rule. And they felt that this was in the best interests of the country. ..."
"... in Politics and Vision , as in Democracy Inc. , you talk about the framing of what Dwight Macdonald
will call the psychosis of permanent war, this constant battle against communism, as giving capital
the tools by which they could destroy those democratic institutions, traditions, and values that were
in place. How did that happen? What was the process? ..."
"... I think it happened because of the way that the Cold War was framed. That is, it was framed
as not only a war between communism and capitalism, but also a war of which the subtext was that communism
was, after all, an ideology that favored ordinary people. Now, it got perverted, theres no question
about that, by Lenin and by Stalin and into something very, very different. ..."
"... the plight of ordinary people under the forms of economic organization that had become prominent,
the plight of the common people had become desperate. There was no Social Security. There were no wage
guarantees. There was no union organization. ..."
"... They were powerless. And the ruling groups, the capitalist groups, were very conscious of what
they had and what was needed to keep it going. And thats why figures like Alexander Hamilton are so
important, because they understood this, they understood it from the beginning, that what capitalism
required in the way not only of so-called free enterprise -- but remember, Hamilton believed very, very
strongly in the kind of camaraderie between capitalism and strong central government, that strong central
government was not the enemy of capitalism, but rather its tool, and that what had to be constantly
kind of revitalized was that kind of relationship, because it was always being threatened by populist
democracy, which wanted to break that link and cause government to be returned to some kind of responsive
relationship to the people. ..."
"... the governing groups manage to create a Cold War that was really so total in its spread that
it was hard to mount a critical opposition or to take a more detached view of our relationship to the
Soviet Union and just what kind of problem it created. And it also had the effect, of course, of skewing
the way we looked at domestic discontents, domestic inequalities, and so on, because it was always easy
to tar them with the brush of communism, so that the communism was just more than a regime. It was also
a kind of total depiction of what was the threat to -- and complete opposite to our own form of society,
our old form of economy and government. ..."
"... that ideological clash, therefore any restriction of capitalism which was defined in opposition
to communism as a kind of democratic good, if you want to use that word, was lifted in the name of the
battle against communism, that it became capitalism that was juxtaposed to communism rather than democracy,
and therefore this empowered capital, in a very pernicious way, to dismantle democratic institutions
in the name of the war on communism. ..."
"... the notion that you first had to, so to speak, unleash the great potential capitalism had for
improving everybodys economical lot and the kind of constraints that had been developed not only by
the New Deal, but by progressive movements throughout the 19th century and early 20th century in the
United States, where it had been increasingly understood that while American economic institutions were
a good thing, so to speak, and needed to be nurtured and developed, they also posed a threat. They posed
a threat because they tended to result in concentrations of power, concentrations of economic power
that quickly translated themselves into political influence because of the inevitably porous nature
of democratic representation and elections and rule, so that the difficultys been there for a long time,
been recognized for a long time, but we go through these periods of sleepwalking where we have to relearn
lessons that have been known almost since the birth of the republic, or at least since the birth of
Jeffersonian democracy, that capitalism has its virtues, but it has to be carefully, carefully watched,
observed, and often controlled. ..."
Chris Hedges, whose column is published Mondays on Truthdig, spent nearly two
decades as a foreign correspondent in Central America, the Middle East, Africa and the Balkans. He
has reported from more than 50 countries and has worked for The Christian Science Monitor, National
Public Radio, The Dallas Morning News and The New York Times, for which he was a foreign correspondent
for 15 years. He has written nine books, including "Empire of Illusion: The End of Literacy and the
Triumph of Spectacle" (2009), "I Don't Believe in Atheists" (2008) and the best-selling "American
Fascists: The Christian Right and the War on America" (2008). His book "War Is a Force That Gives
Us Meaning" (2003) was a finalist for the National Book Critics Circle Award for Nonfiction.
CHRIS HEDGES, PULITZER PRIZE-WINNING JOURNALIST: Hi. I'm Chris Hedges. And we are here in Salem,
Oregon, interviewing Dr. Sheldon Wolin, who taught politics for many years at Berkeley and, later,
Princeton. He is the author of several seminal works on political philosophy, including Politics
and Vision and Democracy Inc.. And we are going to be asking him today about the state
of American democracy, political participation, and what he calls inverted totalitarianism.
So let's begin with this concept of inverted totalitarianism, which has antecedents. And in your
great work Politics and Vision, you reach back all the way to the Greeks, up through the present
age, to talk about the evolution of political philosophy. What do you mean by it?
SHELDON WOLIN, PROF. POLITICS EMERITUS, PRINCETON: Well, I mean by it that in the inverted idea,
it's the idea that democracy has been, in effect, turned upside down. It's supposed to be a government
by the people and for the people and all the rest of the sort of rhetoric we're used to, but it's
become now so patently an organized form of government dominated by groups which are only vaguely,
if at all, responsible or even responsive to popular needs and popular demands. But at the same time,
it retains a kind of pattern of democracy, because we still have elections, they're still relatively
free in any conventional sense. We have a relatively free media. But what's missing from it is a
kind of crucial continuous opposition which has a coherent position, and is not just saying, no,
no, no but has got an alternative, and above all has got an ongoing critique of what's wrong and
what needs to be remedied.
HEDGES: You juxtapose inverted totalitarianism to classical totalitarianism -- fascism, communism
-- and you say that there are very kind of distinct differences between these two types of totalitarianism.
What are those differences?
WOLIN: Well, certainly one is the -- in classic totalitarianism the fundamental principle is the
leadership principle and the notion that the masses exist not as citizenry but as a means of support
which can be rallied and mustered almost at will by the dominant powers. That's the classical one.
And the contemporary one is one in which the rule by the people is enshrined as a sort of popular
message about what we are, but which in fact is not really true to the facts of political life in
this day and age.
HEDGES: Well, you talk about how in classical totalitarian regimes, politics trumps economics,
but in inverted totalitarianism it's the reverse.
WOLIN: That's right. Yeah. In classic totalitarianism, thinking here now about the Nazis and
the fascists, and also even about the communists, the economy is viewed as a tool which the powers
that be manipulate and utilize in accordance with what they conceive to be the political requirements
of ruling. And they will take whatever steps are needed in the economy in order to ensure the long-run
sustainability of the political order. In other words, the sort of arrows of political power flow
from top to bottom.
Now, in inverted totalitarianism, the imagery is that of a populace which is enshrined as
the leadership group but which in fact doesn't rule, but which is turned upside down in the sense
that the people are enshrined at the top but don't rule. And minority rule is usually treated as
something to be abhorred but is in fact what we have.
And it's the problem has to do, I think, with the historical relationship between political orders
and economic orders. And democracy, I think, from the beginning never quite managed to make the kind
of case for an economic order that would sustain and help to develop democracy rather than being
a kind of constant threat to the egalitarianism and popular rule that democracy stands for.
HEDGES: In your book Politics and Vision, you quote figures like Max Weber who talk about
capitalism as in fact being a destructive force to democracy.
WOLIN: Well, I think Weber's critique of capitalism is even broader. I think he views it as
quintessentially destructive not only of democracy, but also, of course, of the sort of feudal aristocratic
system which had preceded it. Capitalism is destructive because it has to eliminate the kind of custom
/ˈmɔːreɪz/, political values, even institutions that present any kind of credible threat to the autonomy
of the economy. And it's that -- that's where the battle lies. Capitalism wants an autonomous economy.
They want a political order subservient to the needs of the economy. And their notion of an economy,
while it's broadly based in the sense of a capitalism in which there can be relatively free entrance
and property is relatively widely dispersed it's also a capitalism which, in the last analysis, is
[as] elitist as any aristocratic system ever was.
HEDGES: You talk in the book about about how it was essentially the engine of the Cold War, juxtaposing
a supposedly socialist Soviet Union, although like many writers, including Chomsky, I think you would
argue that Leninism was not a socialist movement. Adam Ulam talks about it as a counterrevolution,
Chomsky as a right-wing deviation. But nevertheless, that juxtaposition of the Cold War essentially
freed corporate capitalism in the name of the struggle against communism to deform American democracy.
And also I just want to make it clear that you are very aware, especially in Politics and Vision,
of the hesitancy on the part of our founding fathers to actually permit direct democracy. So we're
not in this moment idealizing the system that was put in place. But maybe you could talk a little
bit about that.
WOLIN: Well, I think that's true. I think the system that was consciously and deliberately
constructed by the founders who framed the Constitution -- that democracy was the enemy. And
that was rooted in historical realities. Many of the colonial governments had a very strong popular
element that became increasingly prominent as the colonies moved towards rebellion. And rebellion
meant not only resisting British rule, but also involved the growth of popular institutions and their
hegemony in the colonies, as well as in the nation as a whole, so that the original impulses to the
Constitution came in large measure from this democratizing movement. But the framers of the Constitution
understood very well that this would mean -- would at least -- would jeopardize the ruling groups
that they thought were absolutely necessary to any kind of a civilized order. And by "ruling groups",
they meant not only those who were better educated, but those who were propertied, because they regarded
property as a sign of talent and of ability, so that it wasn't just wealth as such, but rather a
constellation of virtues as well as wealth that entitled capitalists to rule. And they felt that
this was in the best interests of the country.
And you must remember at this time that the people, so-called, were not well-educated and in many
ways were feeling their way towards defining their own role in the political system. And above all,
they were preoccupied, as people always have been, with making a living, with surviving. And those
were difficult times, as most times are, so that politics for them could only be an occasional activity,
and so that there would always be an uneasy relationship between a democracy that was often quiescent
and a form of rule which was constantly trying to reduce, as far as possible, Democratic influence
in order to permit those who were qualified to govern the country in the best interests of the country.
HEDGES: And, of course, when we talk about property, we must include slaveholders.
WOLIN: Indeed. Indeed. Although, of course, there was, in the beginning, a tension between the
northern colonies and the southern colonies.
HEDGES: This fear of direct democracy is kind of epitomized by Thomas Paine, --
WOLIN: Yeah. Yeah.
HEDGES: -- who was very useful in fomenting revolutionary consciousness, but essentially turned
into a pariah once the Revolution was over and the native aristocracy sought to limit the power of
participatory democracy.
WOLIN: Yeah, I think that's true. I think it's too bad Paine didn't have at his disposal Lenin's
phrase "permanent revolution", because I think that's what he felt, not in the sense of violence,
violence, violence, but in the sense of a kind of conscious participatory element that was very strong,
that would have to be continuous, and that it couldn't just be episodic, so that there was always
a tension between what he thought to be democratic vitality and the sort of ordered, structured,
election-related, term-related kind of political system that the framers had in mind.
HEDGES: So let's look at the Cold War, because in Politics and Vision, as in Democracy
Inc., you talk about the framing of what Dwight Macdonald will call the psychosis of permanent
war, this constant battle against communism, as giving capital the tools by which they could destroy
those democratic institutions, traditions, and values that were in place. How did that happen? What
was the process?
WOLIN: Well, I think it happened because of the way that the Cold War was framed. That is,
it was framed as not only a war between communism and capitalism, but also a war of which the subtext
was that communism was, after all, an ideology that favored ordinary people. Now, it got perverted,
there's no question about that, by Lenin and by Stalin and into something very, very different.
But in the Cold War, I think what was lost in the struggle was the ability to see that there was
some kind of justification and historical reality for the appearance of communism, that it wasn't
just a freak and it wasn't just a kind of mindless dictatorship, but that the plight of ordinary
people under the forms of economic organization that had become prominent, the plight of the common
people had become desperate. There was no Social Security. There were no wage guarantees. There was
no union organization.
HEDGES: So it's just like today.
WOLIN: Yeah. They were powerless. And the ruling groups, the capitalist groups, were very
conscious of what they had and what was needed to keep it going. And that's why figures like Alexander
Hamilton are so important, because they understood this, they understood it from the beginning, that
what capitalism required in the way not only of so-called free enterprise -- but remember, Hamilton
believed very, very strongly in the kind of camaraderie between capitalism and strong central government,
that strong central government was not the enemy of capitalism, but rather its tool, and that what
had to be constantly kind of revitalized was that kind of relationship, because it was always being
threatened by populist democracy, which wanted to break that link and cause government to be returned
to some kind of responsive relationship to the people.
HEDGES: And the Cold War. So the Cold War arises. And this becomes the kind of moment by which
capital, and especially corporate capital, can dismantle the New Deal and free itself from any kind
of regulation and constraint to deform and destroy American democracy. Can you talk about that process,
what happened during that period?
WOLIN: Well, I think the first thing to be said about it is the success with which the governing
groups manage to create a Cold War that was really so total in its spread that it was hard to mount
a critical opposition or to take a more detached view of our relationship to the Soviet Union and
just what kind of problem it created. And it also had the effect, of course, of skewing the way we
looked at domestic discontents, domestic inequalities, and so on, because it was always easy to tar
them with the brush of communism, so that the communism was just more than a regime. It was also
a kind of total depiction of what was the threat to -- and complete opposite to our own form of society,
our old form of economy and government.
HEDGES: And in Politics and Vision, you talk about because of that ideological clash,
therefore any restriction of capitalism which was defined in opposition to communism as a kind of
democratic good, if you want to use that word, was lifted in the name of the battle against communism,
that it became capitalism that was juxtaposed to communism rather than democracy, and therefore this
empowered capital, in a very pernicious way, to dismantle democratic institutions in the name of
the war on communism.
WOLIN: Oh, I think there's no question about that, the notion that you first had to, so to
speak, unleash the great potential capitalism had for improving everybody's economical lot and the
kind of constraints that had been developed not only by the New Deal, but by progressive movements
throughout the 19th century and early 20th century in the United States, where it had been increasingly
understood that while American economic institutions were a good thing, so to speak, and needed to
be nurtured and developed, they also posed a threat. They posed a threat because they tended to result
in concentrations of power, concentrations of economic power that quickly translated themselves into
political influence because of the inevitably porous nature of democratic representation and elections
and rule, so that the difficulty's been there for a long time, been recognized for a long time, but
we go through these periods of sleepwalking where we have to relearn lessons that have been known
almost since the birth of the republic, or at least since the birth of Jeffersonian democracy, that
capitalism has its virtues, but it has to be carefully, carefully watched, observed, and often controlled.
HEDGES: Thank you. Please join us for part two later on with our interview with Professor Sheldon
Wolin.
Sheldon Wolin RIP...
This is part 2 of 8 of his interview with Chris Hedges made a year before his death...
In this (probably most important part of the whole series) Wolin traces emergence of neoliberalism to 1934... He argues that it was the
allergic reaction of corporate America to the New
Deal.
Notable quotes:
"... it showed, to some degree at least, that it was possible to get a progressive administration, that Roosevelt, whatever his failings and shortcomings, had shown that with sufficient popular support, you could manage to make some kind of dent in the kind of political privileges that existed in the country and help to benefit the economic plight of most people. ..."
"... from 1932, say, on--was not only a period of New Deal ferment; it was also a period of reactionary ferment, and that one mustnt forget such things as the Liberty League ..."
"... so, essentially theyre building antidemocratic institutions to burrow themselves into what we would consider the fundamental institutions of an open society--universities, the press, political parties. Would that be correct? ..."
"... Yeah, that would be largely correct, yes. They did realize that those institutions were porous and that they lent themselves to an influence of money and the influence of the kind of people who had big money. And so they waged a counter campaign. And the result was, I think, a sort of permanent change, especially in the Republican Party ..."
"... hose parallel developments that involved such sophisticated public relations powers and political party organizations that were round-the-year operations, that with a conscious ideological slant and an appeal to donors who wanted to support that kind of slant, so that politics--while all of those elements had been present, to be sure, for a long time, they achieved a certain organizational strength and longevity that I think was unique to that period. ..."
"... strong democracy can do what its name implies. In the pursuit of popular ends, it develops inevitably powerful institutions to promote those ends. And very often they lend themselves to being taken over and utilized, that--for example, that popular means of communication and news information and so on can become very easily propaganda means for corporate capitalism, which understands that if you gain control of newspapers, radio, television, that youre in a position to really shape the political atmosphere. ..."
"... You write in Democracy Incorporated that you dont believe we have any authentic democratic institutions left. ..."
"... That may be a bit of an overstatement, but I think--in terms of effective democratic institutions, I dont think we do. I think theres potential. I think theres potential in movements towards self-government, movements towards economic independence, and movements towards educational reform, and so on, that have the seeds for change. But I think that its very difficult now, given the way the media is controlled and the way political parties are organized and controlled, its very difficult to get a foothold in politics in such a way that you can translate it into electoral reforms, electoral victories, and legislation, and so on. Its a very, very complex, difficult, demanding process. And as Ive said before, democracys great trouble is its episodic. ..."
"... You talk about how democratic institutions which have essentially surrendered themselves to corporate power have pushed politics, if we define politics as that which is concerned with the common good and with accepting the risks, the benefits, and the sacrifices evenly across the society, that essentially that has pushed political life, to some extent, underground, outside of the traditional political institutions. ..."
"... because most American--most political science departments have become in effect social science departments and much more addicted to seeking out quantitative projects that lend themselves to apparent scientific certainty and are less attuned--in fact, I think, even, I would say, apprehensive--about appearing to be supportive of popular causes. Its just not in the grain anymore. And the more that academic positions become precarious, as they have become, with tenure becoming more and more a rarity ..."
"... that becomes a problem in terms of finding people willing to take a certain risk, with the understanding that while theyre taking a risk, it wont be so fatal to their life chances. ..."
"... They dont have much, if any, time for politics. So were in a really difficult situation, where the requirements of democracy are such that theyre being undermined by the realities of a kind of economy and society that weve developed. ..."
CHRIS HEDGES, PULITZER-PRIZE WINNING JOURNALIST: Welcome back to part two of our discussion of the
state of American democracy and the rise of corporate capitalism, inverted totalitarianism, with
Professor Sheldon Wolin.
Professor Wolin, we were talking about the freeing of corporate capital, because of the Cold War,
from internal democratic restraints. And that freeing saw corporate capital really make war against
participatory democracy, democratic institutions. Can you describe a little bit what the process
was, how they began to hollow out those institutions and weaken them?
SHELDON WOLIN, PROF. EMERITUS POLITICS, PRINCETON: Well, I think you really have to start with
the political parties themselves.
The Republicans, of course, have never had much of an appetite for popular participation. The
Democrats have had a checkered history of it. Sometimes very sympathetic, and other times indifferent.
But during the '60s, and really even during the '50s as well, movement toward democracy began to
take shape with the realization of the kind of voter restrictions, the most elephant elementary kind
of restrictions on democracy, prevalent especially, of course, in the South, and especially involving
the disfranchisement of African-American voters, so that that kind of development--and, of course,
the attempt on the part of Freedom Riders and others to go into the South and try to help African-Americans
organize politically and to defend their rights--created a kind of political context, I think, probably
which had never existed before, in which there were fundamental arguments about franchise, election,
disenfranchisement, race, and a range of related issues that simply called for a kind of debate that,
as I say, had scarcely been raised for decades. And it meant that a certain generation, or a couple
of generations, had had a political exposure that was truly unprecedented in recent American history,
not only the Freedom Riders who went down, but practically every campus in the country was affected
by it, and not only because various faculty and students went to Alabama and elsewhere, but because
it became a standard topic of conversation, to learn how the movement was doing, what kind of obstacles
were being met, and what we could do, and there were marches and marches and marches, so that it
was a political experience that was, I think, as I've said, unprecedented in terms of its intensity
and in terms of the huge number of citizens being involved of a younger age.
HEDGES: And yet, when we look back at the nine 1930s, what I think marked the so-called New Left
was that it was not coupled with labor.
WOLIN: No, it wasn't. No, it wasn't. The '30s were kind of a peculiar thing. I mean, it shouldn't
be simply dismissed, because it did have lasting influence, because it showed, to some degree at
least, that it was possible to get a progressive administration, that Roosevelt, whatever his failings
and shortcomings, had shown that with sufficient popular support, you could manage to make some kind
of dent in the kind of political privileges that existed in the country and help to benefit the economic
plight of most people. And he did make serious attempts. It, of course, ran into all kinds of problems,
but that's the nature of politics. But I don't think it can be underestimated, the extent to which
the New Deal influence spread throughout the society. I think it had an extraordinary effect, long-run
effect in terms of igniting ideas about popular participation and its possibilities.
HEDGES: And yet it was really a response to the breakdown of capitalism.
WOLIN: It certainly was. I mean, it had its limitations.
But I think there's a very real question about how far the country was prepared to go at that
time. It's important to remember that the early '30s--meaning by that from 1932, say, on--was not
only a period of New Deal ferment; it was also a period of reactionary ferment, and that one mustn't
forget such things as the Liberty League, and also, and above all, Father Coughlin, who was an extraordinary
figure, someone who began as a defender of the New Deal and ended up as a bitter anti-Semite and
had to be disowned--or at least throttled--by his own church, he had become so extreme.
But there were a lot of things percolating in those years, and on both sides, because, I've said,
the New Deal and the liberal resurgence also would cause the reaction that I think led to a kind
of permanent--I want to say permanent conservative realization that it had to develop a kind of standing
set of its own institutions and foundations and fund-raising activities all the year round, not just
to wait for elections, but to become a kind of permanent force, conscious conservative force in American
politics from the ground up.
HEDGES: And that started when, would you say?
WOLIN: I would say it started with the reaction to the New Deal, which would mean in about 1934.
HEDGES: And so, essentially they're building antidemocratic institutions to burrow themselves
into what we would consider the fundamental institutions of an open society--universities, the press,
political parties. Would that be correct?
WOLIN: Yeah, that would be largely correct, yes. They did realize that those institutions were
porous and that they lent themselves to an influence of money and the influence of the kind of people
who had big money. And so they waged a counter campaign. And the result was, I think, a sort of permanent
change, especially in the Republican Party, because remember, the Republican Party was not a reactionary
party in the early '30s, and even as late as the 1936 election with Alf Landon, who was very much
a moderate--and he only won Maine and Vermont, but still he was significant--and that Wendell Wilkie
was a power in the party until at least 1940, had a very important liberal wing. So it took a while
for the evolution of the Republican Party to becoming the kind of staunch and continuous opponent
of New Deal legislation with leaders who by and large were committed to rolling it back and to introducing
conservative reforms in education and economic structure and social security systems and so on.
HEDGES: We'd spoken earlier about what you term inverted totalitarianism. When did that process
begin? Would we signal the beginning of that process with those reactionary forces in the 1930s?
Is that when it started?
WOLIN: I think in the broad view it would start back then. I think it didn't gain full steam until
you had those parallel developments that involved such sophisticated public relations powers and
political party organizations that were round-the-year operations, that with a conscious ideological
slant and an appeal to donors who wanted to support that kind of slant, so that politics--while all
of those elements had been present, to be sure, for a long time, they achieved a certain organizational
strength and longevity that I think was unique to that period.
And one has to remember that the '30s was a very troubled political period, because not only of
the New Deal and the controversies it raised, and not only because of the reactionary elements at
home, but Europe was clearly heading toward some uncertain future with Hitler and Mussolini, and
then the specter of Stalin, so that it was a very, very worrisome, nervous period that had a lot
to be nervous about.
HEDGES: Do you have a theory as to why Europe went one way and America went another?
WOLIN: Well, I'm sure there are lots of reasons. One that I would emphasize is the failure of
governments in that country to be able to capture and mobilize and sustain popular support while
introducing structural, economic, and social changes that would meet the kinds of growing needs of
a large urban and industrialized population. I think that was the failure.
HEDGES: You talk in--I think it's in Politics and Vision--about how fascism arose out of
Weimar, which was essentially a weak democracy. And yet you argue, inverted totalitarianism, certainly
a species of totalitarianism, can often be the product of a strong democracy.
WOLIN: It can, in the sense that that strong democracy can do what its name implies. In the pursuit
of popular ends, it develops inevitably powerful institutions to promote those ends. And very often
they lend themselves to being taken over and utilized, that--for example, that popular means of communication
and news information and so on can become very easily propaganda means for corporate capitalism,
which understands that if you gain control of newspapers, radio, television, that you're in a position
to really shape the political atmosphere.
HEDGES: You write in Democracy Incorporated that you don't believe we have any authentic
democratic institutions left.
WOLIN: I don't. That may be a bit of an overstatement, but I think--in terms of effective democratic
institutions, I don't think we do. I think there's potential. I think there's potential in movements
towards self-government, movements towards economic independence, and movements towards educational
reform, and so on, that have the seeds for change. But I think that it's very difficult now, given
the way the media is controlled and the way political parties are organized and controlled, it's
very difficult to get a foothold in politics in such a way that you can translate it into electoral
reforms, electoral victories, and legislation, and so on. It's a very, very complex, difficult, demanding
process. And as I've said before, democracy's great trouble is it's episodic.
HEDGES: Right.
WOLIN: And that just makes it easier for those who can hire other people to keep a sustained pressure
on government to go the other way.
HEDGES: You talk about how democratic institutions which have essentially surrendered themselves
to corporate power have pushed politics, if we define politics as that which is concerned with the
common good and with accepting the risks, the benefits, and the sacrifices evenly across the society,
that essentially that has pushed political life, to some extent, underground, outside of the traditional
political institutions.
WOLIN: I certainly think that there's something to be said for that, because I think if you look
strictly at our political parties and the national political processes, you get a picture of a society
which seems to be moribund in terms of popular democracy. But if you look at what happens locally
and even in statewide situations, there's still a lot of vitality out there, and people still feel
that they have a right to complain, to agitate, to promote causes that would benefit them. And this
still remains, I think, a strong element in it.
But I do think we're facing a period in which economic uncertainty is such that, particularly
for younger people, in the sense that we don't really know anymore, with any degree of high certainty,
how to prepare young people for a constantly changing economy, so that young people, in a certain
sense, who are the sort of stuff of later political movements and political support systems, that
young people are in a very real way puzzled and, I think, confused, and sort of don't know where
to go, and are being propelled in certain directions that don't really add up to their long-run benefit.
And it starts with, I think, the secondary education, and it continues in college. The plight of
liberal arts education is just extraordinary today. It's so much on the defensive and so much on
the ropes that it's hard to see what, if any, place it'll have in the future.
HEDGES: It's hard to see you in most politics departments at American universities today. It was
probably a lonely position even when you--.
WOLIN: Oh, yeah, because most American--most political science departments have become in effect
social science departments and much more addicted to seeking out quantitative projects that lend
themselves to apparent scientific certainty and are less attuned--in fact, I think, even, I would
say, apprehensive--about appearing to be supportive of popular causes. It's just not in the grain
anymore. And the more that academic positions become precarious, as they have become, with tenure
becoming more and more a rarity--.
HEDGES: Thirty-five percent now of positions are actually tenured.
WOLIN: Yeah, I would believe it. I would believe it. I mean, and that becomes a problem in terms
of finding people willing to take a certain risk, with the understanding that while they're taking
a risk, it won't be so fatal to their life chances. But I'm afraid it is now. And it doesn't bode
well, because it seems to me, in a left-handed sort of way, it encourages the kind of professionalization
of politics that results in the kind of political parties and political system that we've been warned
about from the year one.
HEDGES: And a political passivity, which you say--you talk about classical totalitarian regimes
mobilize the masses, whereas in inverted totalitarianism, the goal is to render the masses politically
passive. And you use Hobbes to describe that. Can you speak a little bit about that?
WOLIN: Well, Hobbes is interesting because he writes in the so-called social contract tradition,
and that had been a tradition which grew up in the late 16th and 17th century. The social contract
position had furthered the notion that a political society and its governance should be the result
of an agreement, of an agreement by the people as to what sort of government they wanted and what
sort of role they wanted to play for themselves in such a government. And the social contract was
an agreement they made with each other that they would create such a system and that they would support
it, but they would reserve the right to oppose it, even rebel against it, if it proceeded to work
contrary to the designs of the original contract, so that that became the sort of medium by which
democratic ideas were carried through the 17th century and into much of the 18th century, including
the American colonies and the arguments over the American Constitution as well--and especially, I
should add, in the arguments about state constitutions and government.
HEDGES: And that fostering of political passivity, you have said in your work, is caused by what
you were speaking about earlier, the economic insecurity, the precariousness of the position, which
I think you go back to Hobbes as citing as one of the kind of fundamental controlling elements to
shut down any real political activity.
WOLIN: Yes, I believe that very strongly. I think if you go back way to the Athenian democracy,
one of the things you notice about it is that it paid citizens to participate. In other words, they
would be relieved from a certain amount of economic insecurity in order to engage actively in politics.
Well, when we get to our times and modern times, that kind of guarantee doesn't exist in any form
whatsoever. We barely can manage to have an election day that isn't where we suspend work and other
obligations to give citizens an opportunity to vote. They have to cram a vote into a busy, normal
day, so that the relationship between economic structures and institutions and political institutions
of democracy are just really in tension now, in which the requirements of the one are being undercut
by the operations of the other. And I don't see any easy solution to it, because the forces that
control the economy control to a large extent public opinion, modes of publication, and so on, and
make it very difficult to mount counter-views.
HEDGES: Well, in fact, to engage in real participatory democracy or political activity is to put
yourself in a more precarious position vis-à-vis your work, your status within the society.
WOLIN: There's no question about it. And that's true of, I think, virtually every activity. It's
now certainly frowned upon in academic work, and certainly in public education it's frowned on. And
there's no effort made to really make it a bit easier for people to participate. And the intensity
that economic survival requires today leaves most people exhausted. There's--and understandably.
They don't have much, if any, time for politics. So we're in a really difficult situation, where
the requirements of democracy are such that they're being undermined by the realities of a kind of
economy and society that we've developed.
HEDGES: Which you point out Hobbes foresaw.
WOLIN: He did. He did indeed. And his solution was you surrender your political rights. Yeah.
HEDGES: Thank you.
Stay tuned for part three with our discussion with Professor Sheldon Wolin.
Sheldon Wolin RIP...
This is part 2 of 8 of his interview with Chris Hedges made a year before his death...
Notable quotes:
"... n all totalitarian societies theres a vast disconnect between rhetoric and reality, which, of course, would characterize inverted totalitarianism as a species of totalitarianism. ..."
"... I think Id probably qualify that, because Id qualify it in the sense that when you look at Naziism and fascism, they were pretty upfront about a lot of things -- leadership principle, racist principles -- and they made no secret that they wanted to dominate the world, so that I think there was a certain kind of aggressive openness in those regimes that I think isnt true of our contemporary situation. ..."
"... And we have, as superpower, exactly replicated in many ways this call for constant global domination and expansion that was part of what you would describe as classical totalitarianism. And that -- youre right, in that the notion of superpower is that its global and that that constant global expansion, which is twinned with the engine of corporate capitalism, is something that you say has diminished the reality of the nation-state itself -- somehow the nation-state becomes insignificant in the great game of superpower global empire -- and that that has consequences both economically and politically. ..."
"... I think one of the important tendencies of our time -- I would say not tendencies, but trends -- is that sovereign governments based on so-called liberal democracy have discovered that the only way they can survive is by giving up a large dose of their sovereignty, by setting up European Unions, various trade pacts, and other sort of regional alliances that place constraints on their power, which they ordinarily would proclaim as natural to having any nation at all, and so that that kind of development, I think, is fraught with all kinds of implications, not the least of [them] being not only whether -- what kind of actors we have now in the case of nation-states, but what the future of social reform is, when the vehicle of that reform has now been sort of transmuted into a system where its lost a degree of autonomy and, hence, its capacity to create the reforms or promote the reforms that people in social movements had wanted the nation-state to do. ..."
"... And part of that surrender has been the impoverishment of the working class with the flight of manufacturing. And I think its in Politics and Vision you talk about how the war that is made by the inverted totalitarian system against the welfare state never publicly accepts the reality that it was the system that caused the impoverishment, that those who are impoverished are somehow to blame for their own predicament. And this, of course, is part of the skill of the public relations industry, the mask of corporate power, which you write is really dominated by personalities, political personalities that we pick. And that has had, I think (I dont know if you would agree), a kind of -- a very effective -- it has been a very effective way by which the poor and the working class have internalized their own repression and in many ways become disempowered, because I think that that message is one that even at a street level many people have ingested. ..."
"... The problem of how to get a foothold by Democratic forces in the kind of society we have is so problematic now that its very hard to envision it would take place. And the ubiquity of the present economic system is so profound (and its accompanied by this apparent denial of its own reality) that it becomes very hard to find a defender of it who doesnt want to claim in the end that hes really on your side. ..."
"... when a underdeveloped part of the world, as theyre called, becomes developed by capitalism -- it just transforms everything, from social relations to not only economic relations, but prospects in society for various classes and so on. No, its a mighty, mighty force. And the problem it always creates is trying to get a handle on it, partly because its so omnipresent, its so much a part of what were used to, that we cant recognize what were used to as a threat. And thats part of the paradox. ..."
"... I think theyre conservative on sort of one side of their face, as it were, because I think theyre always willing to radically change, lets say, social legislation thats in existence to defend people, ordinary people. I think theyre very selective about what they want to preserve and what they want to either undermine or completely eliminate. ..."
"... Thats, of course, the kind of way that the political system presents itself in kind of an interesting way. That is, you get this combination of conservative and liberal in the party system. I mean, the Republicans stand for pretty much the preservation of the status quo, and the Democrats have as their historical function a kind of mild, modest, moderate reformism thats going to deal with some of the excesses without challenging very often the basic system, so that it kind of strikes a wonderful balance between preservation and criticism. The criticism -- because the preservation element is so strong, criticism becomes always constructive, in the sense that it presumes the continued operation of the present system and its main elements. ..."
"... Yeah, political debate has become either so rhetorically excessive as to be beside the point, or else to be so shy of taking on the basic problems. But again youre back in the kind of chasing-the-tail problem. The mechanisms, i.e. political parties, that we have that are supposed to organize and express discontent are, of course, precisely the organs that require the money that only the dominant groups possess. I mean, long ago there were theories or proposals being floated to set up public financing. But public financing, even as it was conceived then, was so miniscule that you couldnt possibly even support a kind of lively political debate in a modest way. ..."
CHRIS HEDGES, PULITZER PRIZE-WINNING JOURNALIST: Welcome back to part three of our discussion with
Professor Sheldon Wolin.
You talk in both of your books, Politics and Vision and Democracy Incorporated,
about superpower, which you call the true face of inverted totalitarianism. What is superpower?
How do you describe it?
SHELDON WOLIN, PROF. EMERITUS POLITICS, PRINCETON: Well, I think it's important to grasp that
superpower includes as one of its two main elements the modern economy. And the modern economy,
with its foundations in not only economic activity but scientific research, is always a dynamic economy
and always constantly seeking to expand, to get new markets, to be able to produce new goods, and
so on. So the superpower's dynamism becomes a kind of counterpart to the character of the modern
economy, which has become so dominant that it defines the political forms.
I mean, the first person to really recognize this -- which we always are embarrassed to say -- was
Karl Marx, who did understand that economic forms shape political forms, that economic forms are
the way people make a living, they're the way goods and services are produced, and they determine
the nature of society, so that any kind of government which is responsive to society is going to
reflect that kind of structure and in itself be undemocratic, be elitist in a fundamental sense,
and have consumers as citizens.
HEDGES: And Marx would also argue that it also defines ideology.
WOLIN: It does. It does define ideology. Marx was really the first to see that ideology had become
a kind of -- although there are antecedents, had become a kind of preconceived package of ideas and
centered around the notion of control, that it represented something new in the world because you
now had the resources to disseminate it, to impose it, and to generally make certain that a society
became, so to speak, educated in precisely the kind of ideas you wanted them to be educated in. And
that became all the more important when societies entered the stage of relatively advanced capitalism,
where the emphasis was upon work, getting a job, keeping your job, holding it in insecure times.
And when you've got that kind of situation, everybody wants to put their political beliefs on hold.
They don't want to have to agonize over them while they're agonizing over the search for work or
worrying about the insecurity of their position. They're understandably preoccupied with survival.
And at that point, democracy becomes at best a luxury and at worst simply an afterthought, so that
its future becomes very seriously compromised, I think.
HEDGES: And when the ruling ideology is determined by capitalism -- corporate capitalism; you're
right -- we have an upending of traditional democratic values, because capitalist values are about
expansion, exploitation, profit, the cult of the self, and you stop even asking questions that can
bring you into democratic or participatory democracy.
WOLIN: I think that's true to an extent. But I would amend that to say that once the kind of supremacy
of the capitalist regime becomes assured, and where it's evident to everyone that it's not got a
real alternative in confronting it, that I think its genius is it sees that a certain relaxation
is not only possible, but even desirable, because it gives the impression that the regime is being
supported by public debate and supported by people who were arguing with other people, who were allowed
to speak their minds, and so on. And I think it's when you reach that stage -- as I think we have
-- that
the problematic relationship between capitalism and democracy become more and more acute.
HEDGES: And yet we don't have anyone within the mainstream who questions either superpower or
capitalism.
WOLIN: No, they don't. And I don't think it's -- it may be a question of weakness, but I think
-- the
problem is really, I think, more sort of quixotic. That is, capitalism -- unlike earlier forms of economic
organization, capitalism thrives on change. It presents itself as the dynamic form of society, with
new inventions, new discoveries, new forms of wealth, so that it doesn't appear like the old regime
-- as
sort of an encrusted old fogey type of society. And I think that makes a great deal of difference,
because in a certain sense you almost get roles reversed. That is, in the old regime, the dominant
powers, aristocracy and so on, want to keep the lid on, and the insurgent democracy, the liberalizing
powers, wanted to take the lid off.
But now I think you get it -- as I say, I think you get it kind of reversed, that democracy, it
now wants -- in its form of being sort of the public philosophy, now wants to keep the lid on and becomes,
I think, increasingly less -- more adverse to examining in a -- through self-examination, and becomes
increasingly, I would say, even intolerant of views which question its own assumptions, and above
all question its consequences, because I think that's where the real issues lie is not so much with
the assumptions of democracy but with the consequences and trying to figure out how we've managed
to get a political system that preaches equality and an economic system which thrives on inequality
and produces inequality as a matter of course.
HEDGES: Well, in all totalitarian societies there's a vast disconnect between rhetoric and reality,
which, of course, would characterize inverted totalitarianism as a species of totalitarianism.
WOLIN: Well, I guess that's true. I think I'd probably qualify that, because I'd qualify it in
the sense that when you look at Naziism and fascism, they were pretty upfront about a lot of things
-- leadership
principle, racist principles -- and they made no secret that they wanted to dominate the world, so
that I think there was a certain kind of aggressive openness in those regimes that I think isn't
true of our contemporary situation.
HEDGES: And yet in the same time, in those regimes, I mean, you look at Stalin's constitution
as a document, it was very liberal, --
WOLIN: Sure.
HEDGES: -- it protected human rights and free speech. And so on the one hand -- at least in terms
of civil liberties. And we have, as superpower, exactly replicated in many ways this call for constant
global domination and expansion that was part of what you would describe as classical totalitarianism.
And that -- you're right, in that the notion of superpower is that it's global and that that constant
global expansion, which is twinned with the engine of corporate capitalism, is something that you
say has diminished the reality of the nation-state itself -- somehow the nation-state becomes insignificant
in the great game of superpower global empire -- and that that has consequences both economically and
politically.
WOLIN: Well, I think it does. I think one has to treat the matter carefully, because a lot of
the vestiges of the nation-states still are, obviously, in existence. But I think one of the important
tendencies of our time -- I would say not tendencies, but trends -- is that sovereign governments based
on so-called liberal democracy have discovered that the only way they can survive is by giving up
a large dose of their sovereignty, by setting up European Unions, various trade pacts, and other
sort of regional alliances that place constraints on their power, which they ordinarily would proclaim
as natural to having any nation at all, and so that that kind of development, I think, is fraught
with all kinds of implications, not the least of [them] being not only whether -- what kind of actors
we have now in the case of nation-states, but what the future of social reform is, when the vehicle
of that reform has now been sort of transmuted into a system where it's lost a degree of autonomy
and, hence, its capacity to create the reforms or promote the reforms that people in social movements
had wanted the nation-state to do.
HEDGES: And part of that surrender has been the impoverishment of the working class with the flight
of manufacturing. And I think it's in Politics and Vision you talk about how the war that
is made by the inverted totalitarian system against the welfare state never publicly accepts the
reality that it was the system that caused the impoverishment, that those who are impoverished are
somehow to blame for their own predicament. And this, of course, is part of the skill of the public
relations industry, the mask of corporate power, which you write is really dominated by personalities,
political personalities that we pick. And that has had, I think (I don't know if you would agree),
a kind of -- a very effective -- it has been a very effective way by which the poor and the working class
have internalized their own repression and in many ways become disempowered, because I think that
that message is one that even at a street level many people have ingested.
WOLIN: Yeah. I think you're right about that. The problem of how to get a foothold by Democratic
forces in the kind of society we have is so problematic now that it's very hard to envision it would
take place. And the ubiquity of the present economic system is so profound (and it's accompanied
by this apparent denial of its own reality) that it becomes very hard to find a defender of it who
doesn't want to claim in the end that he's really on your side.
Yeah, it's a very paradoxical situation. And I don't know. I mean, I think we all have to take
a deep breath and try to start from scratch again in thinking about where we are, how we get there,
and what kind of immediate steps we might take in order to alter the course that I think we're on,
which really creates societies which, when you spell out what's happening, nobody really wants, or
at least not ordinary people want. It's a very strange situation where -- and I think, you know, not
least among them is, I think, the factor that you suggested, which is the kind of evaporation of
leisure time and the opportunities to use that for political education, as well as kind of moral
refreshment. But, yeah, it's a really totally unprecedented situation where you've got affluence,
opportunity, and so on, and you have these kinds of frustrations, injustices, and really very diminished
life prospects.
HEDGES: You agree, I think, with Karl Marx that unfettered, unregulated corporate capitalism is
a revolutionary force.
WOLIN: Oh, indeed. I think it's been demonstrated even beyond his wildest dreams that it
-- yeah,
you're just -- you just have to see what happens when a underdeveloped part of the world, as they're
called, becomes developed by capitalism -- it just transforms everything, from social relations to
not only economic relations, but prospects in society for various classes and so on. No, it's a mighty,
mighty force. And the problem it always creates is trying to get a handle on it, partly because it's
so omnipresent, it's so much a part of what we're used to, that we can't recognize what we're used
to as a threat. And that's part of the paradox.
HEDGES: You take issue with this or, you know, point out that in fact it is a revolutionary force.
And yet it is somehow, as a political and economic position, the domain of people as self-identified
conservatives.
WOLIN: Yeah, it is. I think they're conservative on sort of one side of their face, as it were,
because I think they're always willing to radically change, let's say, social legislation that's
in existence to defend people, ordinary people. I think they're very selective about what they want
to preserve and what they want to either undermine or completely eliminate.
That's, of course, the kind of way that the political system presents itself in kind of an interesting
way. That is, you get this combination of conservative and liberal in the party system. I mean, the
Republicans stand for pretty much the preservation of the status quo, and the Democrats have as their
historical function a kind of mild, modest, moderate reformism that's going to deal with some of
the excesses without challenging very often the basic system, so that it kind of strikes a wonderful
balance between preservation and criticism. The criticism -- because the preservation element is so
strong, criticism becomes always constructive, in the sense that it presumes the continued operation
of the present system and its main elements.
HEDGES: Of both corporate capitalism and superpower.
WOLIN: Absolutely.
HEDGES: And yet you say that at this point, political debate has really devolved into what you
call nonsubstantial issues, issues that don't really mean anything if we talk about politics as centered
around the common good.
WOLIN: Yeah, political debate has become either so rhetorically excessive as to be beside the
point, or else to be so shy of taking on the basic problems. But again you're back in the kind of
chasing-the-tail problem. The mechanisms, i.e. political parties, that we have that are supposed
to organize and express discontent are, of course, precisely the organs that require the money that
only the dominant groups possess. I mean, long ago there were theories or proposals being floated
to set up public financing. But public financing, even as it was conceived then, was so miniscule
that you couldn't possibly even support a kind of lively political debate in a modest way.
You know, politics has become such an expensive thing that I think really the only way to describe
it realistically is to talk about it as a political economy or an economic kind of political economy.
It's got those -- those two are inextricable elements now in the business of the national or state
governments, too.
HEDGES: And yet I think you could argue that even the Democratic Party under Clinton and under
Obama, while it continues to use the rhetoric of that kind of feel-your-pain language, which has
been part of the Democratic establishment, has only furthered the agenda of superpower, of corporate
capitalism, and, of course, the rise of the security and surveillance state by which all of us are
kept in check.
WOLIN: Yeah, I think that's true, because the reformers have simply hesitated -- really, really
hesitated -- to undertake any kind of a focus upon political reform.
HEDGES: Haven't the reformers been bought off, in essence?
WOLIN: I think it's the no-no subject. I don't think it even has to be bought off anymore. I think
that it is such a kind of third rail that nobody wants to touch it, because I think there is a real
in-built fear that if you mess with those kind of so-called fundamental structures, you're going
to bring down the house. And that includes messing with them even by constitutional, legal means,
that it's so fragile, so delicate, so this that and the other thing that inhibit all kinds of efforts
at reforming it. As the phrase used to go, it's a machine that goes of itself -- so they think.
HEDGES: Thank you.
Stay tuned for part four, coming up, of our interview with Professor Sheldon Wolin.
"... I was 19. And the other members of our crew, there was only one who was about 23 or 24. So we were all extremely inexperienced and impressionable, and we were flying these giant bombers and going into combat not knowing anything about what it meant except, you know, in sort of formal lectures, which we might have had. So the experience was always quite traumatic in a lot of ways. Some of it didnt register until much later, but for some of them, some of the people I knew, it registered very soon, and we had quite a few psychological casualties of men, boys, who just couldnt take it anymore, just couldnt stand the strain of getting up at five in the morning and proceeding to get into these aircraft and go and getting shot at for a while and coming back to rest for another day. ..."
"... Many of the academics at these institutions during the war had served in positions of some authority in Washington, had certainly integrated themselves into the war effort. And I wondered if you thought this was a kind of turning point in terms of academia fusing itself, the way business had, with the military, you know, intellectually, in terms of serving the ends of superpower? ..."
"... I found some of the early years at Harvard, experience with faculty, to be very unnerving in a lot of ways. ..."
"... Some of them, like -- I dont know whether you knew Merle Fainsod or not, but Merle was chairman of the department. But he was a wonderful person, and he had been in Washington during the war with one of the agencies controlling prices and wages. But he was -- he never threw his weight around or tried to rely on Washington experience as the answer to all lectures. He was a very good man and a very, very serious academic. ..."
"... But others, like Bill Elliott, as I say, were just so infatuated with their own self-importance that I learned absolutely nothing from them in class, and I dont think any of the other students did. They never came prepared. They always would kind of talk off the top of their head. And more often than not, it would be autobiographical. And it just was a very disheartening kind of experience. ..."
"... I remember when I first came to Harvard, at graduate school, there was a man who taught the history of political theory named Charles McIlwain. And McIlwain was of the old school. He was a very careful, very erudite scholar with very few if any axes to grind. And I, unfortunately, didnt come to Harvard till his very last year there, but I did manage to sit in on some of his lectures. ..."
"... he was succeeded by another man, Carl Friedrich, who was so infatuated with himself and his self-importance and his role in the postwar constitutions that were written for the German states, the provinces, that he could hardly bother teaching you the subject matter and was much more concerned that you shared his experiences and the kind of role he had played in the postwar world. And I have never seen such a parade of academic egos in my life as that moment, when so many of them were clearly so marked by the Washington experience. ..."
"... it is not the role of the intellectual to formulate policy, to adjust the system, but to stand back with a kind of integrity and critique it. But you had that combination of the fusion of academia with Washington, carried forward in the 60s under Kennedy and others, coupled with the anticommunism. And I wondered whether you thought that that was a kind of radical break or a destructive force within academia when set against the prewar -- . ..."
"... I mean, [Staughton Lynd], one of our great historians, pushed out of Yale for going on a peace delegation to Hanoi during the war, blacklisted, gets a law degree -- hes still working on behalf of, at this point, prisoners and workers in Youngstown, Ohio. ..."
CHRIS HEDGES, PULITZER-PRIZE WINNING JOURNALIST: Welcome back to part five of our interview with
Professor Sheldon Wolin, who taught politics for many years at Berkeley and later Princeton. He is
the author of several seminal works on political philosophy, including Politics and Vision
and Democracy Incorporated.
I wanted to ask about the nature of superpower, and particularly the role of the military in superpower.
And I thought I'd begin by asking, because the military is something you have personal experience
with, your own -- you were a pilot of a B-24. Were these flying fortresses? Was that -- ? That's what
they were.
SHELDON WOLIN, PROF. EMERITUS POLITICS, PRINCETON: [crosstalk] bombardier and a navigator was
what I was.
HEDGES: A bombardier and a navigator. And in the South Pacific?
WOLIN: Yes.
HEDGES: And you flew how many combat -- ?
WOLIN: Fifty-one.
HEDGES: Fifty-one missions. And what was -- from when to when, and what were you targeting?
WOLIN: Well, our group started from Guadalcanal when the Americans took it over, finally. And
what we were, essentially, was the air force to support MacArthur. And MacArthur's strategy was to
proceed island by island, taking them back from the Japanese and getting closer and closer to Japan
proper. And we were the support group for that, which meant softening up the Japanese island holdings
prior to invasion. And then the other unfortunate mission we had was to chase the Japanese Navy,
which proved disastrous, because -- .
HEDGES: Isn't that a novel use of --
WOLIN: Oh, it was a terrible -- .
HEDGES: -- aren't those, like, about as maneuverable as a tank in the air?
WOLIN: It was terrible. And we received awful losses from that, because these big lumbering aircraft,
particularly flying low trying to hit the Japanese Navy -- and we lost countless people in it, countless.
So we spent that. And we were going from island to island, making our way eventually to the Philippines
itself.
And then I left at that point. I had finished my missions. And the Air Force was at that point
preparing for the invasion of Japan, which, of course, didn't actually take place.
HEDGES: Where were you when the bombs were dropped on Hiroshima and Nagasaki?
WOLIN: I was on a road to Miami Beach to visit -- I had my wife, and we were going to visit my mother.
HEDGES: Did you at the time recognize the significance of that?
WOLIN: I didn't, I don't think. We quickly learned something about it, because there were some
people I was associated with who knew some of the men involved in the development of it, and they
used to tell me things about Oppenheimer and the others that -- especially, of course, you became aware
of this when Oppenheimer ran into his own trouble with the Un-American Activities people.
HEDGES: Well, and this is because he turned on the nuclear program after --
WOLIN: Right, yes, he did.
HEDGES: -- producing the weaponry.
WOLIN: Yes, he did. Yeah.
HEDGES: What, from your own experience, because you write about the military and you write about
superpower -- but your own experience in the military, what did you learn from that? What did -- it wasn't
theoretical for you. You were in war. You were in the giant bureaucracy of the military itself.
WOLIN: Well, you must remember the cardinal fact, which is we were all so young. I was 19. And
the other members of our crew, there was only one who was about 23 or 24. So we were all extremely
inexperienced and impressionable, and we were flying these giant bombers and going into combat not
knowing anything about what it meant except, you know, in sort of formal lectures, which we might
have had. So the experience was always quite traumatic in a lot of ways. Some of it didn't register
until much later, but for some of them, some of the people I knew, it registered very soon, and we
had quite a few psychological casualties of men, boys, who just couldn't take it anymore, just couldn't
stand the strain of getting up at five in the morning and proceeding to get into these aircraft and
go and getting shot at for a while and coming back to rest for another day.
It was a difficult time. It was very difficult time. And I think the fact that saved us was that
we were so young, we didn't know what was going on, basically. And I think there was a lot of coming
to grips with it later in the lives of most of us, that we began to appreciate and realize what we
had been through. And that didn't help terribly much, but it did allow you in some sense to come
to grips with what it had meant, especially the kind of suppressed memories you had of bad incidents
that happened.
HEDGES: How did it affect you? Did you walk way differently both emotionally and intellectually,
do you think, from the war?
WOLIN: Yeah, I think -- as I look back, I think I went through a period of being very inward-looking.
And the other thing to be remembered is the pace of things from the moment you got out. In my
case, I had to go back to undergraduate school to finish my degree, so I was back for a year. Then
you jump right into graduate training. And graduate education was at that point so overwhelmed by
numbers that everything was kind of compressed and brief, and not terribly much time to digest things,
and then you were scouting for a job, so that one had the impression that the pressure that had been
building up in the war and in the war service just kept on going, and that you never really had a
chance to relax, because now you were faced with tenure and the problems of tenure and the problems
of publication and teaching, so that it exacted a toll. There's no question about it. We never really
managed to relax, because we -- I suppose we did relax a bit when we finally got tenure, but even then
it was very competitive, because the password was publication. And so you were constantly
pressured to write and write and write.
HEDGES: And you did.
WOLIN: Yeah, you did. But I think I was fortunate enough to enjoy it, actually, enjoy the writing.
But for a lot of my colleagues, they would manage it, but it exacted a price. It's hard to explain
to people how difficult it is to write when one simply has to write when it simply has to be forced
in a lot of ways.
HEDGES: Well, see, the difference is you are a writer. I mean, you're quite a good writer, which
is not common among academics.
WOLIN: Yeah, I had always enjoyed writing, from the time I was grammar school to the time I went
to college. I enjoyed it very much. But some of my colleagues, who loved the subject matter and were
good teachers, just couldn't write. And it was tragic, because they had a lot to give, and they couldn't
get tenure because they hadn't passed this particular bar.
HEDGES: Well, and you also had -- so you were at Harvard in the 1950s, and this was when the
academy was being purged, --
WOLIN: Oh, yeah.
HEDGES: -- Staughton Lynd, you may know, driven out of Yale, you know Chandler Davis, I mean, a
long list of great, great scholars and academics who were targeted from outside and within the academy
and pushed out. And this was something that coincided with the development of your own formation
as an intellectual and as a writer. And I wondered how that experience also affected you, because
you held fast to a very kind of radical critique of -- .
WOLIN: Well, I mean, I had a very peculiar experience when I get hired at Berkeley, because I
didn't realize when I went there that the position I was taking was one occupied by a man who refused
to take the loyalty oath. And I didn't know that at the time. And so when I did learn it, of course,
I felt kind of guilty about the whole thing. Yeah, he lost the job. He quit.
And it was -- in one sense, you know, you sort of said to yourself, well, I don't have to worry
about the loyalty oath, 'cause I've taken it in the military many, many times, so that it's nothing
new to me. But later on you began to think about it more and realize that maybe there was a larger
issue there than you thought, because it meant that you were accepting a certain orthodoxy from the
outset and that you weren't quite as free as notions of academic freedom suggested you were. And
it was a kind of rude awakening for a lot of us, I think, because we also were carrying the wartime
propaganda about we represent the forces of freedom and open society and all the rest of it. And
then to find ourselves really kind of cramped for expression in that very tense kind of postwar Cold
War war period, it was not a pleasant time. I didn't enjoy those years of teaching. It settled down
later, but didn't settle down for much, because we then had the fracas of the '60s, too, which was
very disturbing and upsetting to all the academic routines.
HEDGES: How much damage do you think those purges, triggered by the McCarthy era in the early
'50s, did to the academy?
WOLIN: I think it did a lot to people, but often in ways they weren't quite aware of. It had a
definite chastening and deadening effect on academic inquiry and political expression. And what happened
was, I think, the worst part of it, was that once that got into the air, it became normal. You accepted
those things really unconsciously.
HEDGES: When you say "those things", what are you talking about?
WOLIN: You're talking about how far you question government policies, how far you question dominant
values, what you said about the economy, and things of that sort. And the problem was that you faced
the students with a far less critical attitude than you should have had, and it took a long while,
I think, to kind of disentangle yourself from that kind of coverage which the loyalty of the period
gave to people. And since academic jobs then were scarce, you always kind of swallowed whatever you
had to swallow to get a job. So you may have been a radical in graduate school or undergraduate school,
but you knew that you couldn't carry that torch as a prospective faculty member.
HEDGES: I talked to Larry Hamm, who at Princeton organized the anti-apartheid movement. This would
have been in the '70s. And he said of roughly 500 Princeton faculty, there were only three or four,
yourself included, who joined those demonstrations.
WOLIN: Yeah, that's true. It was -- . Yeah, we paid a price. I think the most humiliating episode
for me was when some of the undergraduates were protesting Princeton investment in South Africa and
they wanted to present their case to the alumni. And the alumni had a meeting, and the kids were
supposed to present it. And at the last minute, the kid that was leading the group got a little cold
feet, and he said, would you come in with me? And I should have said no, but I didn't. So I went
in with him. And I've never been jeered quite so roundly by the alumni sitting there waiting to be
talked to by the students about investment in South Africa. Some of them called me 50-year-old sophomores
and that kind of thing. It was a difficult experience. But the students did well. They held their
own.
HEDGES: It was one of the largest -- at Princeton, surprisingly, one of the largest student --
well, largely 'cause of Larry, who's a remarkable organizer and very charismatic and deep
integrity and --
WOLIN: Yes, he was.
HEDGES: -- and still doing it in Newark today.
I wondered whether that experience says something about the University, about its cowardice and,
I guess, let's say, the faculty in particular.
WOLIN: Oh, I think it did. I think all those events of the '60s on, on through the '70s, did.
It's hard to realize at the outset of the [incompr.] particularly I'm speaking from my experience
at Berkeley. It's really hard to recognize the moment when the faculty suddenly realized that they
were a kind of corporate body that could stand up against the regents and take a stand when they
thought there was interference with academic freedom, as there tended to be with the regents. They
did kind of mess around with curriculum and tried to influence faculty hiring and so on. It was a
very, very grim chapter. But the effect of it was to make you very, very much on guard against the
rule of the graduated students and their influence in the university, because at Princeton you had,
like at very few other places, lots of concentrated money, and the university were dependent on that
to a large extent, so that the alumni had a kind of position that I didn't experience anywhere else
in terms of their prominence and, I think, the informal influence that they exercise over a lot of
matters that they had no business dealing with. It was an education in alumni relations, the like
of which I never had anyplace else.
HEDGES: When you came back from the war, you went to Oberlin, and then you went to Harvard.
WOLIN: Yeah.
HEDGES: Many of the academics at these institutions during the war had served in positions of
some authority in Washington, had certainly integrated themselves into the war effort. And I wondered
if you thought this was a kind of turning point in terms of academia fusing itself, the way business
had, with the military, you know, intellectually, in terms of serving the ends of superpower?
WOLIN: Well, I think it certainly had some influence, in the sense that I guess one of the things
that struck me at Harvard, in terms of going to seminars where the professor had been active in Washington
during the war, was the -- I mean, they were always interesting because of inside stories, but they
were also really quite uncritical of anything that they either were doing or the government was doing
during this period. In other words, there was no detachment, because they were so, in a certain sense,
carried away by their own experience and their kind of self-assumption about their importance and
so on that it -- I found some of the early years at Harvard, experience with faculty, to be very unnerving
in a lot of ways.
Now, it isn't true of all of them. Some of them, like -- I don't know whether you knew Merle Fainsod
or not, but Merle was chairman of the department. But he was a wonderful person, and he had been
in Washington during the war with one of the agencies controlling prices and wages. But he was -- he
never threw his weight around or tried to rely on Washington experience as the answer to all lectures.
He was a very good man and a very, very serious academic.
But others, like Bill Elliott, as I say, were just so infatuated with their own self-importance
that I learned absolutely nothing from them in class, and I don't think any of the other students
did. They never came prepared. They always would kind of talk off the top of their head. And more
often than not, it would be autobiographical. And it just was a very disheartening kind of experience.
I remember when I first came to Harvard, at graduate school, there was a man who taught the history
of political theory named Charles McIlwain. And McIlwain was of the old school. He was a very careful,
very erudite scholar with very few if any axes to grind. And I, unfortunately, didn't come to Harvard
till his very last year there, but I did manage to sit in on some of his lectures.
Well, he was succeeded by another man, Carl Friedrich, who was so infatuated with himself and
his self-importance and his role in the postwar constitutions that were written for the German states,
the provinces, that he could hardly bother teaching you the subject matter and was much more concerned
that you shared his experiences and the kind of role he had played in the postwar world. And I have
never seen such a parade of academic egos in my life as that moment, when so many of them were clearly
so marked by the Washington experience.
HEDGES: I'm wondering if that isn't an important rupture for academia, going back to Julien Benda's
Treason of the Intellectuals, where he writes about how it is not the role of the intellectual
to formulate policy, to adjust the system, but to stand back with a kind of integrity and critique
it. But you had that combination of the fusion of academia with Washington, carried forward in the
'60s under Kennedy and others, coupled with the anticommunism. And I wondered whether you thought
that that was a kind of radical break or a destructive force within academia when set against the
prewar -- .
WOLIN: Well, yes, it certainly cast a kind of set of constraints, many of which you didn't really
recognize till later, about what you could teach and how you would teach and what you wouldn't teach.
And its influence was really simply very great, because people -- it's not so much what they said as
what they didn't inquire into.
HEDGES: Well, and also it's who's let into the club.
WOLIN: Yeah. Oh, yes. Yes, indeed. Yes, indeed.
HEDGES: I mean, [Staughton Lynd], one of our great historians, pushed out of Yale for going on
a peace delegation to Hanoi during the war, blacklisted, gets a law degree -- he's still working on
behalf of, at this point, prisoners and workers in Youngstown, Ohio.
Please join me for part six of my interview with Professor Sheldon Wolin (thank you) later on.
Sheldon Wolin RIP...
This is part 6 of 8 of his interview with Chris Hedges made a year before his death...
Notable quotes:
"... And its very different from the sort of imperialism of the 18th or 19th centuries, where resources always had a limit and that territorial and other expansion was severely restricted by it. But now expansionism is accompanied by an ability to impose cultural norms, as well as political norms, on populations that did not have them. And that has made a tremendous difference in the effect of the imperial reach, because it means that its becoming easier to have it rationalized not only at home, but also abroad. And the differences, I think, are just very, very profound between the kind of expansionism of the contemporary state, like America, and those in the 18th and 19th centuries. ..."
"... superpower creates a bureaucracy which operates in secret, virtually. ..."
"... And I think that is something that we have seen transferred back, that youre no longer allowed to peer into the internal mechanisms of power. And the Obama administration has been quite harsh in terms of going after those few whistleblowers, people within the systems of power who have reached out through the press--Edward Snowden would be an example--to allow the public to see the workings of power, misusing the Espionage Act, which was really the equivalent, I think, of our foreign secrets act, to shut down this kind of lens into how power works. ..."
"... And I think whats frightening is the way not only the public has been fragmented, but the way that these fragments are manipulated to be turned one against the other. ..."
"... The ability of the fragmentation strategy is really quite astounding, and its that weve got such sophisticated means now of targeting and of fashioning messages for specific audiences and insulating those messages from other audiences that its a new chapter. Its clearly a new chapter. And I think that its fraught with all kinds of dangerous possibilities for any kind of theory of democracy which requires, I think, some kind of notion of a public sufficiently united to express a will and a preference of what it needs and what it wants. But if youre constantly being divided and subdivided, thats an illusion now, that there is a public. ..."
"... the ruling groups can now operate on the assumption that they dont need the traditional notion of something called a public in the broad sense of a coherent whole, that they now have the tools to deal with the very disparities and differences that they have themselves helped to create, so that its a game in which you manage to undermine the cohesiveness which publics require if they are to be politically effective, and you undermined that. And at the same time, you create these different distinct groups that inevitably find themselves in tension or at odds or in competition with other groups, so that it becomes more of a melee than it does become a way of fashioning majorities. ..."
CHRIS HEDGES, PULITZER-PRIZE WINNING JOURNALIST: Welcome to part six of my interview with Professor
Sheldon Wolin, who taught politics for many years at Berkeley and later Princeton. He is the author
of several seminal works on political philosophy, including Politics and Vision and Democracy
Incorporated.
We were talking about superpower, the way it had corrupted academia, especially in the wake of
World War II, the increasing integration of academics into the power system itself. And I wanted
to talk a little bit about the nature of superpower, which you describe as essentially the face of
inverted totalitarianism. You say that with superpower, power is always projected outwards, which
is a fundamental characteristic that Hannah Arendt ascribes to fascism of totalitarianism fascism
and that the inability--and she juxtaposes Nazi Germany with countries like Hungary, so that the
nature of fascism in a country like Hungary is diluted because they don't have that ability to keep
pushing power outwards. We, of course, in our system of inverted totalitarianism, have been constantly
expanding--hundreds of bases around the world; we virtually at this point occupy most of the Middle
East. And I spent seven years in the Middle East, and to come back to America and have Americans
wonder why we are detested is absolutely mystifying, because the facts on the ground, the direct
occupation of two countries, the proxy wars that are carried out--Somalia, Pakistan, Yemen--have
engendered ISIS and resurrected al-Qaeda and other jihadist movements in a way that is completely
understandable and rational from their perspective. So I wondered if you could talk about what that
quality of constantly projecting power outward does to the nation and to democracy itself.
SHELDON WOLIN, PROF. EMERITUS POLITICS, PRINCETON: Well, I think in some respects it's pretty
apparent what it does in terms of governing institutions. That is, it obviously enhances their power
and it increases their scope, and at the same time renders them less and less responsible, even though
we've kept the outward framework of elections and criticism and all the free press, etc. But the
power is there, and it is--thanks particularly to contemporary technology, it is power that's kind
of endlessly expandable.
And it's very different from the sort of imperialism of the 18th or 19th centuries, where
resources always had a limit and that territorial and other expansion was severely restricted by
it. But now expansionism is accompanied by an ability to impose cultural norms, as well as political
norms, on populations that did not have them. And that has made a tremendous difference in the effect
of the imperial reach, because it means that it's becoming easier to have it rationalized not only
at home, but also abroad. And the differences, I think, are just very, very profound between the
kind of expansionism of the contemporary state, like America, and those in the 18th and 19th centuries.
HEDGES: What are the consequences? You talk in Politics and Vision about--you mentioned
Thucydides and Thucydides raising up the figure of Pericles, who warned the Athenian demos that expansion,
constant expansion, would ultimately destroy Athenian democracy by in essence bringing back the mechanisms
for control, the harsh, violence mechanisms of control of empire, back into Athens itself. And that,
of course, is what we have done, from the use of drones to militarizing police forces, to the security
and surveillance state. What are the consequences, the physical consequences of superpower?
WOLIN: You mean particularly upon the population?
HEDGES: Right. Upon us.
WOLIN: Yeah. Well, I think what it does is create an enormous chasm between the sort of pictures
we have of or are given of what our system is in high school, grammar school, even college, and the
reality of where we are. I think it's that disjunction that seems to me so kind of perilous, because
it means that much of our education is not about the world, our world that we actually live in, but
about a world that we idealize and idealize our place in it. That makes it very difficult, I think,
for Americans to take a true measure of what their leaders are doing, because it's always cast in
a kind of mode that seems so reassuring and seems so self-confirming of the value of American values
for the whole world.
And I think that that problem is such that you don't really have a critical attitude in the best
sense of the word. I don't mean that the public is never disgruntled or the public is never out of
sorts; I'm talking about a critical attitude which really is dealing with things as they are and
not with a simple negativism, but is trying to make sense out of where we are and how we've gotten
to be where we are. But it requires, I think, a level of political education that we simply haven't
begun to explore.
And I think it's become more difficult to kind of get it across to the public, because there's
no longer what Dewey and others called the public. The public is now so fragmented and so almost
comatose in so many ways that it becomes very difficult to reach them. And there are so many intermediaries
of entertainment and diversion and so on that the political message, even when it's presented, which
it is, rarely, as some kind of public-spirited set of ideals, just gets lost.
It's a very, very perilous period, I think, because I think the net effect of it is to render
the political powers more independent even while they proclaim their democratic basis.
HEDGES: And, of course, superpower creates a bureaucracy which operates in secret, virtually.And I think that is something that we have seen transferred back, that you're no longer allowed
to peer into the internal mechanisms of power. And the Obama administration has been quite harsh
in terms of going after those few whistleblowers, people within the systems of power who have reached
out through the press--Edward Snowden would be an example--to allow the public to see the workings
of power, misusing the Espionage Act, which was really the equivalent, I think, of our foreign secrets
act, to shut down this kind of lens into how power works. And that is, I think, the disease
of superpower itself that has now been brought back, would you say?
WOLIN: Yeah, I think that's substantially correct. The difficulty is really so enormous now in
trying to educate a public to awareness of what is happening when there are so many countervailing
methods of conditioning and informing that public that are quite concerned to prevent exactly that.
And I think it's very much a question of whether the whole idea of a public isn't in such jeopardy
that it isn't really faced with a certain kind of antiquarian significance, and nothing more, because
the public has, I think, ceased to be a kind of entity that's self-conscious about itself--I mean
when everybody may vote and we say the public has expressed itself. And that in one sense, in a quantitative
sense, is true. But the real question is: did they, when they asserted themselves or voted in a certain
way, were they thinking of themselves as a public, as performing a public act, a political act of
a citizen? Or were they expressing resentments or hopes or frustrations more or less of a private
character? And I think that it's that kind of a quandary we're in today. And, again, it makes it
very difficult to see where the democracy is heading with that kind of level of public knowledge
and public political sophistication.
HEDGES: Well, the public is encouraged through the ethos of capitalism to express their interests.
And I think it's in Politics and Vision that you speak about how that fragmentation of the
public is by design, that people are broken down according to their (quote-unquote) interests, not
as a citizen within a democracy, but as a particular group that seeks to acquire certain rights,
power, economic advantages. And that fragmentation, which is assiduously cultivated--opinion polls
become a way to do that, although, of course, modern public relations do it and campaigns do it,
that rather than speak to a public in a presidential campaign, you target quite consciously--these
public relations mechanisms within the campaigns will target these fragments to keep them fragmented.
WOLIN: Yeah, I think that's true, and I think that's a very significant development, where they--I
mean, the notion of a public had always assumed a kind of cohesive character and some kind of a set
of commonalities that justified describing it as a public. But I think that that day has long since
gone, because of precisely what you describe, and that is the fragmentation of it, deliberate fragmentation
of it, and the skill with which you can slice and dice the public into smaller fragments that can
be appealed to, while holding that fragment in relative isolation from what's happening to the other
fragments or to the society as a whole. Yeah, you can target now in a way that you couldn't before.
Before, you had a blunt instrument called public opinion, and you assumed it, yet you shaped it as
you shape some kind of amorphous mass into a whole. But that's not it anymore. It's far more sophisticated,
far much more aware of lines of distinction that set one public against another, and that you had
to be careful not to ruin your own case by antagonizing one public that you needed for your cause,
so that it's become a highly, highly sophisticated operation that has no counterpart, I don't think,
in our previous political history.
HEDGES: It makes Walter Lippman look benign.
WOLIN: Yeah, it certainly does. Yeah. I mean, his public is still a coherent whole, even if it's
a little crazy.
HEDGES: And I think what's frightening is the way not only the public has been fragmented,
but the way that these fragments are manipulated to be turned one against the other. So, for
instance, corporate capitalism strips workers of benefits and job protection, pensions, medical plans,
and then very skillfully uses that diminished fragment to turn against public sector workers, such
as teachers, who still have those benefits. So the question doesn't become, why doesn't everyone
have those benefits; the question becomes, to that fragment which is being manipulated by forces
of propaganda and public relations, you don't have it, and therefore they shouldn't have it.
WOLIN: They shouldn't have it. Yeah.
HEDGES: And I think that's example of what you are speaking about.
WOLIN: Yeah, I think that's accurate. The ability of the fragmentation strategy is really
quite astounding, and it's that we've got such sophisticated means now of targeting and of fashioning
messages for specific audiences and insulating those messages from other audiences that it's a new
chapter. It's clearly a new chapter. And I think that it's fraught with all kinds of dangerous possibilities
for any kind of theory of democracy which requires, I think, some kind of notion of a public sufficiently
united to express a will and a preference of what it needs and what it wants. But if you're constantly
being divided and subdivided, that's an illusion now, that there is a public.
And the amazing thing, it seems to me, is that the ruling groups can now operate on the assumption
that they don't need the traditional notion of something called a public in the broad sense of a
coherent whole, that they now have the tools to deal with the very disparities and differences that
they have themselves helped to create, so that it's a game in which you manage to undermine the cohesiveness
which publics require if they are to be politically effective, and you undermined that. And at the
same time, you create these different distinct groups that inevitably find themselves in tension
or at odds or in competition with other groups, so that it becomes more of a melee than it does become
a way of fashioning majorities.
HEDGES: And this was quite conscious, the destruction of the public.
WOLIN: Oh, absolutely. Absolutely. I mean, again it's that theme we've talked about. They're capable
of doing it now, that is, of dealing with fragmented publics who aren't aware of their ties to those
fragments but are--everybody feels sort of part of a group that has no particular alliance with another
group.
HEDGES: And the cultivation by the dominant forces of that sense of victimhood of your group.
WOLIN: Yeah.
HEDGES: And that victimhood is caused by another fragment.
WOLIN: Yeah.
HEDGES: I mean, that, of course, characterizes the right wing.
WOLIN: Yeah. Yeah.
HEDGES: The reason for our economic decline and our social decline is because of undocumented
workers, or because of liberals, or because of homosexuals or whatever.
WOLIN: Yeah. No, that's a time-honored strategy of really not only divide and conquer; subdivide
and subdivide and conquer.
HEDGES: They were good students of Hobbes, I guess.
Sheldon Wolin RIP...
This is part 7 of 8 of his interview with Chris Hedges made a year before his death...
Notable quotes:
"... Tocqueville discovered -- I mean, he didnt invent the notion, but he discovered this significance of viable local self-government. And he insisted that a democracy, if it were to avoid the pitfall of becoming a mass democracy, would have to zealously protect and nurture these smaller groupings, whether they be municipalities, religious groupings, or economic groupings of one kind or another, but that these were the major forces for offsetting the drive of modern power towards concentration and control, so that that was the basic struggle for him was between these two forces. ..."
"... I think that the common thread I think we both share (if I can put it that way pretentiously): that we share the notion that the problem is centralized power. And that centralized power has assumed, because of scientific and technological developments, has assumed a quality of menace that it simply didnt have before. ..."
"... Its the ability to shape and direct society in a fashion thats much more of a lockstep thing than was ever conceived by Tocqueville. ..."
"... it is at the same time the tragedy of Marx, because he both understood the Lenin point of view, but he also understood the point of view of more participatory kind of institutions. And I think he never managed to overcome that, because he thought that revolution required mass movements, mass organization, and that once you got there, you didnt know what to do with it after the revolution, except sustain it in certain institutions, and that the problems of participation and the kind of experience Marx wanted people to get in running government and running economic institutions was becoming increasingly more difficult. ..."
"... what Lenin grasped is that the goal was to seize those centers of power, destroy the Soviets, destroy autonomous power, and in essence harness that system which you talk about, that complex system, to his own ends. ..."
"... I mean, not just take it over, but refashion it in a way that was harmonious with this kind of central regime he wanted. In other words, you didnt just take over local institutions and local parties and so on and so forth, which had their own histories and ideologies and practices, but you reshape them, and you reshape them in accordance with a centralized power system that Lenin, I think, very unfortunately led towards uniformity, because I think he saw or thought he saw that uniformity was also a key to exercising power in a way that could change a whole society, a way that you could not do it if you kept recognizing differences, tolerating them, even encouraging them. ..."
"... the only people that Lenin finally admired deeply were quite successful capitalists, because they had accomplished in the capitalist world what he was seeking to accomplish in that uniformity and that complete hierarchical, repressive, and unforgiving system that in many ways just became a form of state capitalism. ..."
"... during all the time I was there and doing Democracy , I never had one colleague come up to me and either say something positive or even negative about it. Just absolute silence. ..."
"... Well, I saw a need for it because I thought a couple of things. I thought political theory had to justify itself not just as an historical discipline that dealt with the critical examination of idea systems, but also that political theory had a role to play in helping to fashion public policies and governmental directions, and above all civic education, in a way that would further what I thought to be the goals of a more democratic, more egalitarian, more educated society. ..."
"... My problem with The Nation , I thought, was that it was -- I hate to appear this way, but I didnt think its intellectual level was very high. And that mattered because its arch enemy, The New Republic , whatever you may think about its politics, managed to attract intellects of a pretty high order. ..."
"... I mean, we have to keep realizing how difficult it is to get ideas into the public arena now for any significant audience. Its becoming more and more a matter of a few outlets. And if you should for one reason or another become persona non grata with any of those outlets, then your goose is cooked, theres no other way to go, so that theres a kind of, I think, hidden sort of force. I dont want to call it censorship. Thats too strong. But theres a kind of hidden force that kind of makes you think twice about how far you want to go in pushing a particular point that is at odds with either the existing notions of the powers that be or the existing notions of the opposition. ..."
CHRIS HEDGES, PULITZER-PRIZE WINNING JOURNALIST: Welcome to part seven of my interview with Dr. Sheldon
Wolin, who taught politics for many years at Berkeley and later Princeton. He is the author of several
seminal works on political philosophy, including Politics and Vision, Democracy Incorporated,
and a book on Tocqueville.
And it's Tocqueville who I think expresses this notion of participatory democracy that you embrace.
And I wondered if you could explain what that means and set it against what you call, I think, manufactured
democracy.
SHELDON WOLIN, PROF. EMERITUS POLITICS, PRINCETON: Well, Tocqueville discovered -- I mean, he didn't
invent the notion, but he discovered this significance of viable local self-government. And he insisted
that a democracy, if it were to avoid the pitfall of becoming a mass democracy, would have to zealously
protect and nurture these smaller groupings, whether they be municipalities, religious groupings,
or economic groupings of one kind or another, but that these were the major forces for offsetting
the drive of modern power towards concentration and control, so that that was the basic struggle
for him was between these two forces. And he saw in the New England town meetings and in the New
England local self-government schemes the answer to how you kept democracy alive -- you kept it alive
locally -- and that the effect of keeping it alive locally was to dilute the significance of majority
rule at the national level.
Tocqueville feared majority rule because he thought it meant uniformity of belief imposed by the
power of the majority. I think he in a certain sense may have overstated that and paid insufficient
attention to the rule of elites. I think that in some of his later writings, especially when they
were concerned with France, in the 1840s -- .
HEDGES: This is Ancien Régime.
WOLIN: Yeah. I think he became aware that there was a problem with that and that the old regime's
system of corporate bodies had to be carefully thought through because they could easily become simply
vested interests, and so that there was a lot of unfinished business in Tocqueville, and I think
it's very important in understanding him that you recognize it.
HEDGES: But I think that his definition of what participatory democracy is is one that you embrace.
WOLIN: Yes, it is. And I think that the common thread I think we both share (if I can put it that
way pretentiously): that we share the notion that the problem is centralized power. And that centralized
power has assumed, because of scientific and technological developments, has assumed a quality of
menace that it simply didn't have before. Before, it was simply the power of a central government
in its army and in its bureaucracy to sort of enforce its will. But now it's much more than that.
It's the ability to shape and direct society in a fashion that's much more of a lockstep thing than
was ever conceived by Tocqueville.
HEDGES: And this was Lenin's genius, in that as a revolutionary, he understood that.
WOLIN: Yes, he did. Yes, he did. And it is at the same time the tragedy of Marx, because he both
understood the Lenin point of view, but he also understood the point of view of more participatory
kind of institutions. And I think he never managed to overcome that, because he thought that revolution
required mass movements, mass organization, and that once you got there, you didn't know what to
do with it after the revolution, except sustain it in certain institutions, and that the problems
of participation and the kind of experience Marx wanted people to get in running government and running
economic institutions was becoming increasingly more difficult.
HEDGES: And what Lenin grasped is that the goal was to seize those centers of power, destroy the
Soviets, destroy autonomous power, and in essence harness that system which you talk about, that
complex system, to his own ends.
WOLIN: Yeah, and to simplify it in doing it, I mean, not just take it over, but refashion it in
a way that was harmonious with this kind of central regime he wanted. In other words, you didn't
just take over local institutions and local parties and so on and so forth, which had their own histories
and ideologies and practices, but you reshape them, and you reshape them in accordance with a centralized
power system that Lenin, I think, very unfortunately led towards uniformity, because I think he saw
or thought he saw that uniformity was also a key to exercising power in a way that could change a
whole society, a way that you could not do it if you kept recognizing differences, tolerating them,
even encouraging them.
HEDGES: Well, he didn't tolerate any differences at all, starting with Bakunin.
WOLIN: No, he didn't. He certainly didn't.
HEDGES: Adam Ulam, in his great book on Lenin, Bolsheviks, said that the only people that
Lenin finally admired deeply were quite successful capitalists, because they had accomplished in
the capitalist world what he was seeking to accomplish in that uniformity and that complete hierarchical,
repressive, and unforgiving system that in many ways just became a form of state capitalism.
WOLIN: Right. Yeah. True enough.
HEDGES: You had published -- I think it was for five years -- this
journal, --
WOLIN: Oh yes.
HEDGES: -- Democracy. I see you have the great historian Arno Mayer contributed to this.
WOLIN: Yes. He was on the editorial [crosstalk]
HEDGES: Oh, he was on -- in 1982, which must have boosted your esteem and popularity at the Politics
Department at Princeton.
WOLIN: Oh, yes. Oh, yes. I remember once when I was up editing that journal, I left a copy of
it on the table in the faculty room, and hoping that somebody would read it and comment. I never
heard a word. And during all the time I was there and doing Democracy, I never had one colleague
come up to me and either say something positive or even negative about it. Just absolute silence.
HEDGES: It was five years that you did it?
WOLIN: Yeah.
HEDGES: And why?
WOLIN: Pardon?
HEDGES: Why? Why did you see the need for this journal?
WOLIN: Well, I saw a need for it because I thought a couple of things. I thought political theory
had to justify itself not just as an historical discipline that dealt with the critical examination
of idea systems, but also that political theory had a role to play in helping to fashion public policies
and governmental directions, and above all civic education, in a way that would further what I thought
to be the goals of a more democratic, more egalitarian, more educated society.
HEDGES: And I assume that's because you saw within the intellectual landscape that that was not
being addressed.
WOLIN: I didn't think it was. I mean, I had respect for the people, especially at The Nation
magazine, which I thought was trying very hard. My problem with The Nation, I thought, was
that it was -- I hate to appear this way, but I didn't think its intellectual level was very high.
And that mattered because its arch enemy, The New Republic, whatever you may think about its
politics, managed to attract intellects of a pretty high order. And that meant that the liberal radical
case was not being presented at its best and that it was mostly a kind of responsive set of reactions
to what the government was doing or what capitalists were doing, but had no coherent idea of what
they really wanted to get to in terms of a just and more equal society.
HEDGES: Were you seeking to do what Dwight Macdonald did with politics?
WOLIN: A bit. I admired his work. I thought he was a real groundbreaker. And I certainly did
learn from him about trying to do something like this. I think he's underappreciated, --
HEDGES: Yeah. No question.
WOLIN: -- very much underappreciated. He was a little quixotic, but he was -- .
HEDGES: You know the great story about him and Trotsky? He was not orthodox in any of his beliefs,
but for a while he was a member of the Trotskyite party. But, of course, he kept writing things that
Trotsky didn't approve of, until a letter came from Mexico from Trotsky, said that everybody has
the right to the stupidity of their own beliefs, but Comrade Macdonald overabuses the privilege,
and he was expelled.
But he did very much what you did, and he attracted the kind of intellectual radical thinkers
-- I
mean, everyone from Orwell to Hannah Arendt to Bettelheim -- who were not being published. And I know
you had written for a while for The New York Review of Books and, with the rise of that neoliberal
embrace of what became corporate capitalism, were essentially dropped from [it], if we want to call
The New York Review of Books the mainstream.
WOLIN: Yeah, it did. It was too bad. I enjoyed that relationship. And it was a long-standing relationship,
where I was a contributor almost from the first edition of the The New York Review of Books.
The -- kind of interesting about my rupture with The New York Review of Books: it came about
-- although
it was probably festering, because I was moving more towards the left, they were moving more towards
the center -- the rupture came when one of the editors' friends in the New York circle of intellectuals
wrote a book on education. And Bob Silver gave it to me to review for The New York Review of Books.
And I thought it was not a very good book, and I thought that it was not even a liberal view of educational
reform, and I said so. And he refused to publish it. Well, what's so interesting is that the author
of that book, about a decade later, publicly disowned the book because she too regarded it as not
really sufficiently advanced or liberal in its viewpoint. But that was ten years later; it didn't
do me any good.
But the relationship was good while it lasted. And I certainly owe Silvers a great debt in giving
me a chance very early to write for a large audience.
HEDGES: When you talk about participatory democracy in an age of superpower, in an age of inverted
totalitarianism, how is that going to now express itself within that superstructure?
WOLIN: Well, I think it will express itself -- I guess the answer I would give is that precisely
it doesn't express itself. I think it's shaped and it's allowed only the outlets that are conceived
to be consonant with the purposes of those in power, so that it's not autonomous anymore in any significant
sense. I mean, we have to keep realizing how difficult it is to get ideas into the public arena now
for any significant audience. It's becoming more and more a matter of a few outlets. And if you should
for one reason or another become persona non grata with any of those outlets, then your goose
is cooked, there's no other way to go, so that there's a kind of, I think, hidden sort of force.
I don't want to call it censorship. That's too strong. But there's a kind of hidden force that kind
of makes you think twice about how far you want to go in pushing a particular point that is at odds
with either the existing notions of the powers that be or the existing notions of the opposition.
HEDGES: Which is called careerism.
WOLIN: It is.
HEDGES: And it's a powerful force.
WOLIN: It is indeed.
HEDGES: Both within the media, within academia. And coming from the New York Times culture,
you learn not so much how to lie; you learn what not to say, what not to address, what questions
not to ask.
WOLIN: Yeah, I'm sure that's true. I'm sure it's true. I used to get a taste of it at Democracy,
even, when I was editing it, that there were certain taboo matters.
HEDGES: Did you look at the Occupy movement as a form of participatory democracy?
WOLIN: I did to an extent, yeah. I think it had certain healthy significance. I think it was kind
of under -- I hate to sound this way, but I thought it was under-intellectualized in the sense that
it didn't express, seemed quite unable to express its own fundamental beliefs in a kind of coherent
way that could really grab the country's attention. I think it was very strong on tactics and actions
of that kind, and kind of weak in terms of its ability, as I say, to formulate in some kind of broad-based
way its own system of beliefs.
HEDGES: But it was at least a place, a physical place in which -- .
WOLIN: Oh, no question about it. I think it's been grossly underestimated in terms of its importance.
And the trouble is, when it doesn't get recognized for its importance, it gradually loses that importance,
because people forget about it. And it's too bad. I mean, memories are so short these days anyway.
But the way it sort of disappears and seems to leave no noticeable mark is a really tragic aspect
of our politics today, because people sacrificed, they were thinking, and they were trying to achieve
a laudable end. And they were ridiculed and abused and so on, and above all, forgotten.
HEDGES: And the state physically eradicated their encampments.
WOLIN: Yeah, it did. Now, it's a bad chapter, and I hope someday somebody writes it as a cautionary
tale.
HEDGES: Has true participatory democracy become, in the age of inverted totalitarianism, subversion
in the eyes of the state?
WOLIN: I'm not sure it's quite reached that point, because I think the powers that be view it
as harmless, and they're smart enough to know that if something's harmless, there's no point in sort
of making a pariah out of it, so that I think they're capitalizing on the sort of short attention
span that people, especially people working, have for politics, and that it would soon go away and
run its course, and that if they could contain it, they wouldn't have to really repress it, that
it would gradually sort of shrivel up and disappear, so that I think it's been a deliberate tactic
not to continuously engage the democracy movement intellectually, because that's a way of perpetuating
its importance. Instead, you surround it with silence, and hoping (and, in the modern age, with good
reason) that memories will be short.
HEDGES: And you use cliches in the mass media to demonize it and belittle it.
WOLIN: Indeed. Indeed.
HEDGES: Thank you very much.
Stay tuned for our final segment with Prof. Wolin, on revolution, coming up. Thanks.
Sheldon Wolin RIP...
This is part 8 of 8 of his interview with Chris Hedges made a year before his death...
Notable quotes:
"... I covered the fall of East Germany, where in the fall of 1989, Eric Honecker, who had been in power for 19 years as the dictator, sent down an elite paratroop division to Leipzig, because at that point they had 70,000 people massing in the streets. And when that paratroop division refused to fire on the crowd, the whole apparatus of the Stasi state crumbled almost at such a dizzying speed, none of us could keep track of it, and Honecker was out of power within a week. ..."
CHRIS HEDGES, PULITZER-PRIZE WINNING JOURNALIST: Welcome to our interview with Professor Sheldon
Wolin, our final segment, where we are going to talk about revolution.
When you have a system of totalitarianism, in this case inverted totalitarianism, when you have
effectively fragmented and destroyed the notion of the public, when you have institutions that define
themselves as democratic and yet have abandoned civic virtue and the common good and in fact harnessed
their authority and their power to the interests of corporations, which is about creating a neo-feudalism,
a security and surveillance state, enriching a small, global oligarchic elite, perpetuating demilitarization
of the society and superpower itself, which defines itself through military prowess, is that a point
at which we should begin to discuss revolution?
SHELDON WOLIN, PROF. EMERITUS POLITICS, PRINCETON: I think it is, but I think the proper emphasis
should be on discussing it carefully, that is to say, I mean by carefully not timidly, but
carefully in the sense that we would really have to be breaking new ground. And I think it's because
of the nature of the forces we've been talking about that constitute a challenge, I think, the like
of which hasn't happened before, and that we've got to be very sure, because of the interlocked character
of modern society, that we don't act prematurely and don't do more damage than are really justifiable,
so that I think revolution is one of those words that I'm not so sure we shouldn't find a synonym
that would capture its idea of significant, even radical change, but which somehow manages, I think,
to discard the physical notions of overthrow and violence that inevitably it evokes in the modern
consciousness. And I don't have a solution to that, but I think that that's required. I think the
idea of revolution simply carries too much baggage, and the result of that is you're forced to fight
all sorts of rearguard actions to say what you didn't mean because of the overtones and implications
that revolution seems to have to the modern ear. So I think we do have to start striving for a new
kind of vocabulary that would help us express what we mean by radical change without simply
seeming to tie ourselves to the kind of previous notions of revolution.
I think the contemporary condition--as I'm sure Marx would have been the first to acknowledge--is
quite without precedent in terms of the concentration of capitalist power and of the relationship
between capitalism and the state. It's always been there. But now we're talking about aggregates
of power the like of which the world has never seen, and a world that we have now come to see is
in the throes of being integrated by those powers.
So I think we really have to know when we're being trapped by our own language and need to at
crucial points hold up that language for scrutiny and say, maybe it needs to be rethought in a different
direction or needs to be modified in a serious way, so that we're really making contact with what
the world actually is.
HEDGES: And yet, in the archaic sense of the word, it's about a cycle. Revolution is about coming
back--
WOLIN: Yeah.
HEDGES: --in this sense, coming back to participatory democracy that we've lost.
WOLIN: Yeah.
HEDGES: And the popular notion of revolution, which you correctly point out does not bear much
resemblance to the historical reality of revolutions, in the sense that most revolutions, although
violence are certainly part of it, most revolutions are finally nonviolent, in the sense that you
have the armed forces, in the case of the Cossacks going to Petrograd, in the case of in the Paris
commune, where the national army refuses to -- turns in their arms and creates the commune in 1871
in Paris, even in contemporary situations, such as the downfall of the Shah in Iran in 1979 and the
army refuses to fight, it is about converting intellectually, morally, ethically, those within the
power structure who realize its decay, its corruption, its repression and no longer are willing to
sacrifice for it.
WOLIN: Well, I guess I'm not quite certain. I'm not quite certain in the sense that I think your
formulation would rely more than I would on trying to persuade the powers that be and the structure
to change course or modify their behavior and modify their beliefs, and I don't think that's possible.
Or if it's possible, it's not possible on a large scale. There might be deviants and rebels who would.
But I really think it's--I mean, to have the form that I think would really justify calling it
revolution, I think it has to be generated and shaped outside the power structure, and I think
because what you're trying to do is to enlist and educate groups and individuals who have not had
a political education or experience of much of any kind, and so that your task is compounded. For
those who think the basic problem is just seize power, you're still confronted by that in that formula
with a population that's basically unchanged, and that you then face the kind of cruel choices of
forcing them to change so that they can support your structure, so that the real, I think, really
difficult challenge is to accompany the attempt to gain power with an equally strong emphasis on
public education that makes it, so to speak, a potentially responsible repository of that power.
HEDGES: Now, I would totally agree that it has to be formed outside of power, but I'm wondering
whether once you can create a revolutionary ideology and a force that contests power--one of the
secrets to revolutionary successes is that that message, which is what Václav Havel would call "living
in truth", that message, once it penetrates the lower levels of power--and I'm thinking of, like,
the police or the case--those foot soldiers that are tasked with protecting an elite that they may
very well view is venal--whether that can create or in revolutionary society creates enough paralysis
within the structures of power that you can bring it down. And I covered the fall of East Germany,
where in the fall of 1989, Eric Honecker, who had been in power for 19 years as the dictator, sent
down an elite paratroop division to Leipzig, because at that point they had 70,000 people massing
in the streets. And when that paratroop division refused to fire on the crowd, the whole apparatus
of the Stasi state crumbled almost at such a dizzying speed, none of us could keep track of it, and
Honecker was out of power within a week. So I'm asking whether that--I think you're right, of
course, that all of those revolutionary forces have to be formed outside of the structures of power,
but whether finally in some sense appealing, if you want to call it, to the conscience of those at
the low level, though people who are like the Cossacks, who come in and are told to quell the bread
riots, and instead fraternize with the crowds, whether that is, in your eyes, a kind of fundamental
moment by which a power elite can be removed.
WOLIN: I think there's something very much to be said for that. And, of course, one wants to avoid
apocalyptic notions. But I think what we're dealing with is the ability of democrats (small d)
to sustain the kind of political education in such a way that you concentrate upon those lower echelons
of power and get them to think differently about their role. It's a very touchy subject, because
it leaves you open to accusations of promoting disloyalty among the police, say, or among the army
or what have you. And in a sense that's true. But I think that nonetheless, without trying to, so
to speak, baldly subvert the role of those powers in society, it is possible to reach them and to
create a climate where they themselves have to come to grips with it. And I think that's a task that's
arduous, and it's difficult, and it's even a little dangerous in our present age.
HEDGES: Would you--if you look at those revolutionary philosophers--and we could perhaps even
include Plato--they always talk about the creation of an elite, what Lenin would call a revolutionary
vanguard, Machiavelli would call his republican conspirators, Calvin would call his saints. Do you
see that as a fundamental component of revolution?
WOLIN: To some extent I do. I would want to, of course, naturally, avoid words like elite,
but I do think, given the way that ordinary people become exhausted by the simple task of living,
working, and trying to sustain families and neighborhoods in a way that just takes all of their energy,
I do think it calls for some kind of group, or class, you could even call them, who would undertake
the kind of continuous political work of educating, criticizing, trying to bring pressure to bear,
and working towards a revamping of political institutions. And I don't mean to imply that there should
be a disconnect between that group and ordinary people. I do think it requires that you recognize
that such a group is necessary, in that the second task is to make sure that there are open lines
of communication, of contact, of meetings between leaders and the people, such that there's never
a sense of estrangement or alienation, such that leading groups feel they're free to pursue the good
as they see it and for the good of the masses who do not.
HEDGES: Do you worry about Bakunin's critique of the Bolsheviks, that power is the problem, and
that once these people, who may be very well intentioned--Trotsky would be an example: pre-revolutionary
Trotsky, postrevolutionary Trotsky, at least in his writings, was very democratic; once in power,
he was Lenin's iron fist. And I wonder whether Bakunin's not right that power's the problem, in that
sense, and creating an elite is a very dangerous move, or a vanguard or whatever.
WOLIN: Yeah, I think it is. And I think that our situation's somewhat different from what Trotsky
and the others faced, in the sense that there are openings in our system of governance and of public
discourse that do provide an opportunity, if you're willing to work hard enough, to get dissident
voices out into the public realm, so that the need for force, violence, and so on, it seems to me,
is simply unnecessary, that as long as we have constitutional guarantees that still mean something
and that we have free forms of communication that still mean something, I think that we're obligated
to play by those rules, because they do allow us to disseminate the kind of message we want to disseminate,
and that the need to sort of circumvent them or in some sense subvert them, it seems to me, is self-defeating.
HEDGES: And yet climate change has created a narrowing window of opportunity if we are going to
survive as a species. An unfettered, unregulated corporate capitalism, which commodifies everything,
from human beings to the natural world--and this comes out of Marx--without any kind of constraints--and
it has no self-imposed limits--it will exploit those forces until exhaustion or collapse. And we
are now seeing the ecosystem itself teetering on collapse.
WOLIN: Yeah. No, it's true. But I don't really see any other solution than to really put your
chips where an enlightened public would take a stand. And I think the problem, to some extent, is
that there are enlightened publics in this country, but there's no concerted general movement which
can profess to represent a large body of opinion that's opposed to these kind of developments you've
just described.
And I think it's the--there's a certain lack of organization, not in the sense of following previous
prescriptions of organization, but of trying to find methods whereby power, ordinary people and their
power, can be brought to bear in ways that will deter and dissuade those who are in a position to
influence these decisions, because time, as we all know, is running out, and that if we continue
along the same course, I'm afraid the result is not simply going to be environmental disaster; it's
also going to, I think, feed the--in an unhealthy way, it will feed an outcry for really forceful
government, and not in a necessarily democratic way.
HEDGES: And yet, if we don't respond, it is in essence collective suicide.
WOLIN: It is. It is indeed.
HEDGES: Now, Weber has a very bleak view in the age of bureaucracy. And he actually talks about
the banishment of mystery. And as a former theologian, that is really the banishment of the sacred:
nothing has an intrinsic value; everything only has a monetary value. Weber, like Rawls, is scathing
about allowing a capitalist class to even ever assume power. And Weber writes in Politics as a
Vocation, which you cite in Politics and Vision, that the very figure that he holds up
as a political hero, who resembles the classical hero, is some way--and holds on to civic virtue,
can never overcome what the Greeks would call fourtoúna, and that finally you live in a world
where you have the necessary passion of those who would carry the common good within them thrown
up against this massive monolith, this impersonal monolith of bureaucracy. And I wonder if--and because
that is the reality, a reality that in many ways Weber discovered--and he, like--I think if you go
back to classical writers like Augustine, would argue--and you know Weber better than I--but would
argue that in some sense--or at least my reading of it is that in some sense he's calling for those
of us who care about the common good and civic virtue to stand up in the face of a very bleak reality.
And, again, Augustine would do this while saying that in the end you can never create the kingdom
of God, the city of man, city of God, and yet it finally becomes just a moral imperative. Whether
you can actually succeed or not succeed (I don't know if that's a fair characterization of Weber)
is not really the question. The question is: how do you retain your own moral integrity in the face
of these horrifically destructive forces? And in some ways the question is not: can we succeed? And
reading Weber, I think in some ways he would say you probably can't, but that you must resist anyway.
HEDGES: I think that's a fair reading of him. I think that for Weber, the truly important civic
virtues were just exactly the ones that would assert themselves at a time when basic institutional
values were at stake and human values were at stake, and that you don't win, or you win rarely, and
if you win, it's often for a very short time, and that that's why politics is a vocation for Weber.
It's not an occasional undertaking that we assume every two years or every four years when there's
an election; it's a constant occupation and preoccupation. And the problem, as Weber saw it, was
to understand it not as a partisan kind of education in the politicians or political party sense,
but as in the broad understanding of what political life should be and what is required to make it
sustainable, and so that he's calling for a certain kind of understanding that's very different from
what we think about when we associate political understanding with how do you vote or what party
do you support or what cause do you support. Weber's asking us to step back and say what kind of
political order and the values associated with it that it promotes are we willing to really give
a lot for, including sacrifice. And I think that it's that distinction between the temporary and
the transient and what's truly of more enduring significance that sets Weber off against the group
he hated, the relativists.
HEDGES: He's calling us to a life of meaning.
WOLIN: Yeah. Yeah.
HEDGES: Which you have exemplified.
WOLIN: Yeah.
HEDGES: Well, thank you very much, Professor Wolin.
WOLIN: My pleasure.
HEDGES: It's been a tremendous honor. You're--have had a tremendous influence on myself and many
other--Cornel West and many, many others, and not only because of the power of your intellect, but
the power of your integrity.
WOLIN: Well, thank you. I've enjoyed it very much.
Sheldon Wolin RIP -- Wolin's
Politics and Vision, which
remains to this day the single best book on Western political theory
Notable quotes:
"... In classic totalitarianism, thinking here now about the Nazis and the fascists, and also even
about the communists, the economy is viewed as a tool which the powers that be manipulate and utilize
in accordance with what they conceive to be the political requirements of ruling. ..."
"... Now, in inverted totalitarianism, the imagery is that of a populace which is enshrined as the
leadership group but which in fact doesn't rule, but which is turned upside down in the sense that the
people are enshrined at the top but don't rule. ..."
"... democracy, I think, from the beginning never quite managed to make the kind of case for an
economic order that would sustain and help to develop democracy rather than being a kind of constant
threat to the egalitarianism and popular rule that democracy stands for. ..."
"... Capitalism is destructive because it has to eliminate the kind of custom, mores, political
values, even institutions that present any kind of credible threat to the autonomy of the economy. And
it's that–that's where the battle lies. Capitalism wants an autonomous economy. They want a political
order subservient to the needs of the economy. ..."
I was a freshman at Princeton. It was the fall of 1985. I signed up to take a course called "Modern
Political Theory." It was scheduled for Mondays and Wednesdays at 9 am. I had no idea what I was
doing. I stumbled into class, and there was a man with white hair and a trim white beard, lecturing
on Machiavelli. I was transfixed.
There was just one problem: I was-still am-most definitely not a morning person. Even though the
lectures were riveting, I had to fight my tendency to fall asleep. Even worse, I had to fight my
tendency to sleep in.
So I started-- drinking coffee. I'd show up for class fully caffeinated. And proceeded to work
my way through the canon-Machiavelli, Hobbes, Locke, Rousseau, along with some texts you don't often
get in intro theory courses (the Putney Debates, Montesquieu's Persian Letters, and for a
last hurrah: Adam Smith's Wealth of Nations)-under the guidance of one of the great readers
of the twentieth century.
More than anything else, that's what Sheldon Wolin was: a reader of texts. He approached The
Prince as if it were a novel, identifying its narrative voice, analyzing the literary construction
of the characters who populated the text (new prince, customary prince, centaur, the people), examining
the structural tensions in the narrative (How does a Machiavellian adviser advise a non-Machiavellian
prince?), and so on. It was exhilarating.
And then after class I'd head straight for Firestone Library; read whatever we were reading that
week in class; follow along, chapter by chapter, with Wolin's Politics and Vision,which remains to this day the single best book on Western political theory that I know of
(even though lots of the texts we were talking about in class don't appear there, or appear there
with very different interpretations from the ones Wolin was offering in class: the man never
stood still, intellectually); and get my second cup of coffee.
This is all a long wind-up to the fact that this morning, my friend Antonio Vazquez-Arroyo, sent
me a
two-part interview that
Chris Hedges conducted with Wolin, who's living out in Salem, Oregon now. From his Wikipedia
page, I gather that Wolin's 92. He looks exactly the same as he did in 1985. And sounds the same.
Though it seems from the video as if he may now be losing his sight. Which is devastating when I
think about the opening passages of Politics and Vision, about how vision is so critical to
the political theorist and the practice of theoria.
Anyway, here he is, talking to Hedges about his thesis of "inverted totalitarianism":
In classic totalitarianism, thinking here now about the Nazis and the fascists, and also
even about the communists, the economy is viewed as a tool which the powers that be manipulate
and utilize in accordance with what they conceive to be the political requirements of ruling.
And they will take whatever steps are needed in the economy in order to ensure the long-run sustainability
of the political order. In other words, the sort of arrows of political power flow from top to
bottom.
Now, in inverted totalitarianism, the imagery is that of a populace which is enshrined
as the leadership group but which in fact doesn't rule, but which is turned upside down in the
sense that the people are enshrined at the top but don't rule. And minority rule is usually
treated as something to be abhorred but is in fact what we have. And it's the problem has to do,
I think, with the historical relationship between political orders and economic orders. And
democracy, I think, from the beginning never quite managed to make the kind of case for an
economic order that would sustain and help to develop democracy rather than being a kind of constant
threat to the egalitarianism and popular rule that democracy stands for.
… ... ...
Capitalism is destructive because it has to eliminate the kind of custom, mores, political
values, even institutions that present any kind of credible threat to the autonomy of the economy.
And it's that–that's where the battle lies. Capitalism wants an autonomous economy. They want
a political order subservient to the needs of the economy. And their notion of an economy,
while it's broadly based in the sense of a capitalism in which there can be relatively free entrance
and property is relatively widely dispersed it's also a capitalism which, in the last analysis,
is [as] elitist as any aristocratic system ever was.
Have a listen and a watch. Part 1 and then Part 2.
Pt 1-8 Hedges & Wolin Can Capitalism and Democracy Coexist
Two days ago
we reported
that the saga of Rohit Bansal, Goldman's "leaker" at the Fed is coming to a close
with the announcement of a criminal case filed against Goldman's deep throat who had previously spent
7 years at the NY Fed, and was about to spend some time in prison, and who had been providing Goldman
with confidential information sourced from his contact at the NY Fed for months, as a result of which
Goldman would be charged a penalty.
Moments ago the NY DFS announced that the best connected hedge fund in the world would pay $50
million to the New York State Department of Financial Services and "accept a three-year voluntary
abstention from accepting new consulting engagements that require the Department to authorize the
disclosure of confidential information under New York Banking Law"
Goldman Sachs would also admit that a Goldman employee engaged in the criminal theft of Department
confidential supervisory information; Goldman Sachs management failed to effectively supervise its
employee to prevent this theft from occurring; and Goldman failed to implement and maintain adequate
policies and procedures relating to post-employment restrictions for former government employees.
Below are the unbelievable, details of just how Goldman was getting material information from
the NY Fed, from the FDS:
Violation of Post-employment Restrictions
On July 21, 2014, an individual began work at Goldman, Sachs & Co. as an Associate in the Financial
Institutions Group ("FIG") of the Investment Banking Division ("IBD"). The Associate reported to
a Managing Director and a Partner at Goldman.
Prior to his employment at Goldman, from approximately August 2007 to March 2014, the Associate
was a bank examiner at the U.S. Federal Reserve Bank of New York ("the New York Fed").
His
most recent position at the New York Fed was as the Central Point of Contact ("CPC") – the primary
supervisory contact for a particular financial institution – for an entity regulated by the Department
(the "Regulated Entity").
In March 2014, the Associate was required to resign from his position at the New York Fed for,
among other reasons, taking his work blackberry overseas without obtaining prior authorization to
do so and for attempting to falsify records to make it look like he had obtained such authorization,
and for engaging in unauthorized communications with the Federal Reserve Board.
The Associate was hired in large part for the regulatory experience and knowledge he had gained
while working at the New York Fed. Prior to hiring him, the Partner and other senior personnel interviewed
and called the Associate several times, and the Partner took him out to lunch and dinner.
Prior to starting at Goldman, in May 2014, the Associate informed the Partner of potential restrictions
on his work, due to his previous employment at the New York Fed, and specifically as the CPC for
the Regulated Entity. The Partner advised the Associate to consult the New York Fed to obtain clarification
regarding any applicable restrictions.
Accordingly, the Associate inquired with the New York Fed Ethics Office and was given a "Notice
of Post-Employment Restriction," which he completed and signed with respect to his supervisory work
for the Regulated Entity. The Associate provided this form to Goldman. This Notice of Post-Employment
Restriction read that the Associate was prohibited "from knowingly accepting compensation as an employee,
officer, director, or consultant from [the Regulated Entity]" until February 1, 2015.
On May 14, 2014, the Associate forwarded this notice of restriction to the Partner, the Managing
Director, and an attorney in Goldman's Legal Department. In his email, the Associate also included
guidance from the New York Fed, stating, in short, that a person falls under the post-employment
restriction if that person "directly works on matters for, or on behalf of," the relevant financial
institution.
Despite receiving this notice and guidance,
Goldman placed the Associate on Regulated Entity matters from the outset of his employment.
As further detailed below, the Associate also schemed to steal confidential regulatory and government
documents related to that same Regulated Entity in advising that client.
Unauthorized Possession and Dissemination of Confidential Information
During his employment at Goldman, the Associate
wrongfully obtained confidential information, including approximately 35 documents, on approximately
20 occasions, from a former co-worker at the New York Fed (the "New York Fed Employee").
These documents constituted confidential regulatory or supervisory information – many marked as "internal,"
"restricted," or "confidential" – belonging to the Department, the New York Fed or the Federal Deposit
Insurance Corporation (the "FDIC"). The Associate's main conduit for receiving information
from the New York Fed was his former coworker, the New York Fed Employee, who has since been terminated
for this conduct. While still employed at the New York Fed, the New York Fed Employee would
email documents to the Associate's personal email address, and the Associate would subsequently forward
those emails to his own Goldman work email address.
On numerous occasions, the Associate provided this confidential information to various
senior personnel at Goldman, including the Partner and the Managing Director, as well as a Vice President
and another associate who perform quantitative analysis for Goldman. In several instances
where the Associate forwarded confidential information to other Goldman personnel, the Associate
wrote in the body of the email that the documents were highly confidential or directed the recipients,
"Please don't distribute." At least nine documents that the Associate provided to Goldman constituted
confidential supervisory information under New York Banking Law § 36(10). Pursuant to the statute,
such confidential supervisory information shall not be disclosed unless authorized by the Department.
The documents included draft and final versions of memoranda regarding and examinations of the Regulated
Entity, as well as correspondence related to those examinations.
At least 17 confidential documents that the Associate had improperly received from the
New York Fed – seven of which constituted confidential supervisory information under New York Banking
Law § 36(10) – were found in hard copy on the desk of the Managing Director. Additional
hard copy documents were found on the desks of the Vice President and the other associate, including
at least one document constituting confidential supervisory information under New York Banking Law
§ 36(10).
On August 18, 2014, the Associate shared three documents pertaining to enterprise risk management
with the Managing Director, writing, "Below is the ERM request list, work program and assessment
framework we used for ERM targets. Again this is highly confidential as its not public and has not
been issued a[s] guidance yet. Not sure where it is at anymore due to internal politics. I worked
on this framework and guidance within the context of a system working group with the Fed system.
We ran several pilots to test it was well. Please don't distribute." The Managing Director replied,
"I won't. Will review on plane tomorrow to DC." The documents were marked as "Internal-FR" or "Restricted-FR."
Part of Goldman's work for the Regulated Entity included advisory services with respect to a potential
transaction. A certain component of the Regulated Entity's examination rating was relevant to the
transaction. The Regulated Entity's examinations were conducted jointly by the FDIC, DFS and the
New York Fed. As described below, the Associate used confidential information regarding the Regulated
Entity's examination rating – obtained both from his prior employment at the New York Fed and from
his contacts there – and conveyed this information to the Managing Director, who then conveyed the
information to the Regulated Entity on September 23, 2014, in advance of it being conveyed by the
regulators.
On August 16, 2014, the Associate emailed the Managing Director regarding the regulators' perspective
on the Regulated Entity's forthcoming examination rating, writing "You need to speak to [the CEO
of the Regulated Entity] about scheduling a meeting with all 3 agencies ASAP. He needs to meet with
them and display and discuss all the improvements and corrections they have made during the last
examination cycle."
On September 23, 2014, the Associate attended the birthday dinner of the New York Fed
Employee at Peter Luger Steakhouse, along with several other New York Fed employees. Immediately
after the dinner, the Associate emailed the Managing Director, divulging confidential information
concerning the Regulated Entity, specifically, the relevant component of the upcoming examination
rating. The Associate wrote, "…the exit meeting is tomorrow and looks like no [change]
to the [relevant] rating. I heard there won't be any split rating… [The Regulated Entity] should
have listened to you with the advice…hopefully [the CEO] will now know you didn't have phony info."
In this email, the Associate also provided advice to relay to the Regulated Entity's management,
stating that they should "keep their cool, not get defensive and not say too much unless the regulators
have a blatant fact wrong" as it "will go off better for them in the long run. Believe it or not
the regulator's [sic] look for reaction and level of mgmt respectiveness [sic] during these exit
meetings." The Managing Director replied "Let's discuss . . . I'm seeing [the CEO of the
Regulated Entity] tmw afternoon alone."
Later that night, the Associate followed up with another email to the Managing Director, writing,
"I feel awful not being there to wrap up 2013. I would have been able to pull all this through. I
was a real advocate for all the work they have done." He also offered to join a meeting with the
CEO of the Regulated Entity if the Managing Director wanted.
On September 26, 2014, Goldman had an internal call regarding the calculation of certain asset
ratios, during which there was disagreement over the appropriate method. During the call,
the Associate circulated an internal New York Fed document – which the Associate had recently obtained
from the New York Fed Employee – relating to the calculation, to the call participants, writing,
"Pls keep confidential?" Following the group call, the Partner called the Associate to discuss
the document, including where he had obtained it, and the Associate told him that he had obtained
it from the New York Fed. The Partner then called the Global Head of IBD Compliance to report the
matter and forwarded the document.
Compliance Failures, Failure to Supervise and Violation of Internal Policies
After receiving notice of the Associate's prohibition on working on matters for the Regulated
Entity, Goldman, including the Partner and the Legal Department, failed to take any steps to screen
the Associate from such prohibited work. Instead, Goldman affirmatively placed the Associate
on matters for the Regulated Entity beginning on his first day, and added the Associate to the official
Goldman database as a member of the Regulated Entity "Team" – a team led by the Partner.
Goldman failed to provide training to personnel regarding what constituted confidential supervisory
information and how it should be safeguarded. While Goldman policies provided that confidential information
received from clients should only be shared on a "need to know" basis, Goldman did not distinguish
between this broader category of confidential information and the type of confidential supervisory
information belonging to a regulator or other government agency, which is protected by law, such
as confidential supervisory information under New York Banking Law § 36(10). Indeed, Goldman policies
failed to adequately address Department confidential supervisory information.
As noted above, the Associate also violated Goldman's internal policy on "Use of Materials from
Previous Employers," which states that work that personnel have done for previous employers, and
confidential information gained while working there, should not be brought into Goldman or used or
disclosed to others at Goldman without the express permission of the previous employer.
* * *
The Managing Director is safe, as are all other Goldman employees: nobody aside for Bansal who
was merely trying to impress his superiors, has anything to worry about.
Anyone else found to have obtained at least "35 confidential documents" from the Fed on at least
"20 occassions" would be sent straight to jail with a prison sentence anywhere between several decades
and life.
Goldman's punishment? 0.6% of its 2014 Net Income.
Duc888
How could this happen? Seriously. Aren't the FED and GS separate entities?
Oh, wait.....
LetThemEatRand
The fact that these documents were sent via email only tells me how widespread this is.
Most of these guys are probably smart enough to put a paper copy in their briefcase and
deliver it to Goldman the old fashioned way bankers do things (over drinks and coke at a strip
bar).
But when "everyone is doing it," a guy may get careless and start using email, figuring
what the fuck.
Urban Redneck
Did Goldman's Marketing Department write that release for their FRBNY subsidiary??? They
deserve the $50 million fine for being an embarrassment to scheming bankers everywhere. This
is a company that has destroyed companies, entire economies, and countless (not so little)
investors by placing their own financial interests above their clients and regularly using
inside information and access to do so. Then Goldman is "caught" when they turn themselves in
(not that they had a lot of choice given the amateur hour performance) for actually "helping"
one of their clients (for once)... This whole thing stinks, in more ways than one.
Sudden Debt
What a joke!!!
GS and JPM ARE THE FED!!!
and that "fine"... THAT'S THEIR DONUT BUDGET!!
J J Pettigrew
Bagels....please!
Elliott Eldrich
"Feel sorry for the poor schmuck, cuffed and heading to a sallyport, to be booked,
and serve 6 months in jail, for stealing a carton of ciggs..."
Little crimes are punished with great fervor, while the biggest criminals get their wrists
slapped. This is outrageous, and I just have to ask how much more we are supposed to bear
before breaking?
Lord Ariok
I Love my Country and Hate Our Government. But If our government isn't "Gangster" well
believe it there will be another "Government" that is even more "Gangster" then ours to take
the number 1 spot in the Syndicate. The way I see it if we have to do this in order to compete
with China's Level of Corruption. Damn Chinese Efficiency. ~ Lord Ariok
venturen
they have Bill Dudley...they were worried that this underling would do something. Heck
Goldman gives the orders not the other way around
Bay of Pigs
The William Dudley is the main man at the FED (and the BIS), not Yellin or Fischer.
"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. Prior to joining Goldman
Sachs in 1986, he was a vice president at the former Morgan Guaranty Trust Company. Mr. Dudley
was an economist at the Federal Reserve Board from 1981 to 1983.
In 2012, Mr. Dudley was appointed chairman of the Committee on the Global Financial System of
the Bank for International Settlements (BIS). Previously, Mr. Dudley served as chairman of the
former Committee on Payment and Settlement Systems of the BIS from 2009 to 2012. He is a
member of the board of directors of the BIS and chairman of the Economic Club of New York."
"... if you look at what is supporting equity prices - how much of that support is coming
from real economic activity versus from using stock buybacks, using cash on balance sheet
for stock buybacks, or mergers and acquisitions, to reduced competition in the marketplace.
These
are the sort of stories that if there were a small increase in interest rates, you would
temper some of that frothiness.
Eliminating the incentive to engage in that kind of activity seems
to me to be a good idea... There would be a proportion of the population that would have
less capital gains - but they've been enjoying very big capital gains, and it is a narrow
segment of the population."
"... There is a lot that is positive about China's transformation. However, it is quite telling that many of China's new rich cant get their money out of the country quickly enough. ..."
"... It isn't so much a case of whether the UK will become a province, I suspect the whole world will. China is close to the GDP of the USA and will overtake it in about 18 months, with GDP per head only about $8k. If Chinese GDP per head even doubles, it's economy will at least double, and that isn't taking into account population growth. China's economy has already grown by about 1000% since 2002. ..."
"... China is a very fascinating place with a very fascinating history... But this misguided sinophilia is exasperating. Half the time the Chinese government doesn't even know what it's doing. ..."
"... If you talk to Chinese people in private most of them take a pretty dim view of the invasion of Iraq and western interventionist foreign policy in general. Their government, however, don't put out grand press releases about it because that's not the way the Chinese do foreign diplomacy. ..."
"... Gunboat diplomacy, opium wars, putting down mutinies in India and elsewhere, black hole of Calcutta,thrashing the native language out of the Maori and Aborigines-forcing them to speak English, World War One and World War Two, suez, the Falklands. ..."
"... They will have to reject US inspired economic voodoo if they are to ever prosper again. There is little to no chance of a federal state. The cultural, language and political differences are insurmountable. ..."
"... Stopped reading at that point, author is obviously a neoliberal rent-a-mouth. If it's rights against interests there's nothing to balance, to suggest otherwise is agenda setting. ..."
"... The public opinion in France should remember about Frances' real place in the world, and mind its own business avoiding poking its long nose in other peoples' affaires. ..."
"... Bonapartism is an old French mental disorder. ..."
"... I didn't say the US completely controlled Europe, I just said that the US can bend Europe to its will in certain circumstances. For example it currently forces European banks to disclose customer information to the US Treasury and it is trying to get European countries to agree to allow US border control in European airports, so that the US can question UK citizens in London. ..."
"... i want to see a chinese century, at least the chinese wont invade other countries with the excuse of democracy or human rights ..."
"... LOL European democracy was born in Greece which is now under the full control of ECB and IMF The EU is a silly clown at the US court What are you talking about? ..."
"... To be fair to the Chinese, at least they're not evangelical about spreading their 'Authoritarianism with Chinese Characteristics' now are they? In fact, it's quite the opposite with their non-interference mantra. ..."
"... The rise of China is largely a good thing for Europe. The US will not hesitate to use its power to bend Europe to its will where necessary (and who can blame it, all countries do this when they can) and the cultural and political diversity of Europe means the EU is unlikely to rival the US or China anytime soon. But the rise of China allows Europe to play one great power off against the other to resist bullying and extract concessions from one or both. ..."
"... You can have democracy with a long memory see periods before 1970's (neoliberalisation requires a small memory). ..."
"... If Europe continues to have a long term strategy the 'long-term' has not started yet. It is currently in the process of internal devaluation and the morons in charge happily attack labor conditions which weakens spending which further degrades potential GDP increases hidden unemployment and stagnation. Germany did this first and now continues to leverage the small head start it got during the 90's for doing so. ..."
"... It has nothing to do with that reasoning. It was always predicted the West will self destruct. Inventing Globalisation and then closed down places of work for its citizen and export them la, la lands benefiting very few people, the beneficiaries who end up sending their monies to tax havens un-taxed and sponsoring some selected people to power to do their biding was always self defeating. ..."
"... We gave China our jobs and cheap technologies that have taken us centuries to develop in of getting cheap goods. As a result China did not have to pass through the phases we passed through in our early industrial age when Machines were more expensive than humans before the reverse. ..."
"... Who speaks for Europe? No-one is the answer. It is the single largest economy on the plant. Biggest exporter on the planet. Arguably the richest middle class on the planet; combined, possibly the biggest defense budget on the planet, and all this with a central government driving foreign policy, defense, economic strategy, monetary policy, nor any of the other institutions of a Federal State. China knows this, the Americans know this; and Europe keeps getting treated as the "child" on the international scene. It's too bad, because Europe, as a whole, has many wonderful positives to contribute to the world. ..."
The problem is how do you define civilization? The urban centres were in the Middle East, and
long pre-date China. 6,000 years ago, the world's largest towns and cities were in the Balkans
- the Tripolye-Cucuteni culture. Because of the conventions of nomenclature, they don't count
as a civilization. This raises the question, when does a culture become a civilization? There
are certainly well attested archaeological cultures in China going back a long way, but there
are equally ancient cultures in Europe. Should we then say that Europe has 4,000 or 5,000 or more
years of civilization?
Good records for Chinese history go back about 3,000 years. Anything before that becomes archaeological
rather than historical, based on artifacts rather than records. References to different dynasties
don't help - there are no records comparable to Near Eastern king lists, or the Sumerian or Hittite
royal archives. China set up the Three Kingdoms Project to try to find the 'missing' 2,000 years
of Chinese history - i.e. the history that they claim to have, but have no direct evidence. They
didn't find it.
Adetheshades 23 Oct 2015 22:52
There is a lot that is positive about China's transformation. However, it is quite telling
that many of China's new rich cant get their money out of the country quickly enough.
They
obviously know more than the average Guardian reader, and apparently don't feel their cash
is safe. This causes problems of its own, when they start splashing this cash in the UK property
market, causing further price escalation if any were needed.
There isn't much we can do about the size and wealth of China.
It isn't so much a case of whether the UK will become a province, I suspect the whole world will.
China is close to the GDP of the USA and will overtake it in about 18 months, with GDP per head
only about $8k. If Chinese GDP per head even doubles, it's economy will at least double, and that
isn't taking into account population growth. China's economy has already grown by about 1000%
since 2002.
At what point will we drop French from the school curriculum in favour of Mandarin is the question.
To say Beijings influence is growing is a lovely little piece of understatement.
Adamnuisance 23 Oct 2015 21:22
China is a very fascinating place with a very fascinating history... But this misguided sinophilia
is exasperating. Half the time the Chinese government doesn't even know what it's doing.
Being
passive aggressive and claiming to be 'unique' are their real specialties. I have little doubt
that China will become even more powerful with time... I just hope their backwards politics improves
with their economy.
Thruns 23 Oct 2015 20:44
The first long game was Mao's coup.
The second long game was the great leap forward.
The third long game was the cultural revolution.
The fourth long game was to adopt the west's capitalism and sell the west its own technology.
At last the "communist" Chinese seem to have found a winner.
tufsoft Maharaja -> Brovinda Singh 23 Oct 2015 20:30
If you talk to Chinese people in private most of them take a pretty dim view of the invasion
of Iraq and western interventionist foreign policy in general. Their government, however, don't
put out grand press releases about it because that's not the way the Chinese do foreign diplomacy.
nothell -> Laurence Johnson 23 Oct 2015 20:16
Your comment about the British Empire must be tongue in cheek.
Gunboat diplomacy, opium wars, putting down mutinies in India and elsewhere, black hole of
Calcutta,thrashing the native language out of the Maori and Aborigines-forcing them to speak English,
World War One and World War Two, suez, the Falklands.
Anything but peaceful and anything but fair. Europe had the past, let Asia have the future.
slightlynumb -> theoldmanfromusa 23 Oct 2015 20:10
They will have to reject US inspired economic voodoo if they are to ever prosper again. There
is little to no chance of a federal state. The cultural, language and political differences are
insurmountable.
Rasengruen 23 Oct 2015 20:05
All of this presents well-known dilemmas for Europeans, such as how to balance human rights
and economic interests.
Stopped reading at that point, author is obviously a neoliberal rent-a-mouth. If it's rights
against interests there's nothing to balance, to suggest otherwise is agenda setting.
philby87 23 Oct 2015 18:50
public opinion in France, which had been shocked by an outbreak of violent repression
in Tibet
The public opinion in France should remember about Frances' real place in the world, and
mind its own business avoiding poking its long nose in other peoples' affaires. A good example
is Japan which is twice larger than France, but never lectures its neighbors about what they should
and shouldn't do. Bonapartism is an old French mental disorder.
skepticaleye -> midaregami 23 Oct 2015 18:04
The Yue state was populated mostly by the members of the Yue people who were not Han. The South
China wasn't completely sinicized well into the second millennium CE. Yunnan wasn't incorporated
into China until the Mongols conquered Dali in the 13th century, and the Ming dynasty eradicated
the Mongols' resistance there in the 14th century.
PeterBederell -> Daniel S 23 Oct 2015 17:54
I didn't say the US completely controlled Europe, I just said that the US can bend Europe to
its will in certain circumstances. For example it currently forces European banks to disclose
customer information to the US Treasury and it is trying to get European countries to agree to
allow US border control in European airports, so that the US can question UK citizens in London.
Europe often has to agree to these indignities because it needs access to the US market and to
keep the US sweet. But with a strong China, it can use the threat of following China in some way
the US doesn't like as a bargaining chip, like joining China's Development Bank, which put the
US in a huff recently.
Chriswr -> AdamStrange 23 Oct 2015 17:54
What we in the West call human rights are creations of the Enlightenment and only about 300 years old. As a modern Westerner I am, of course, a big supporter of them. But let's not pretend they are part of some age-old tradition.
sor2007 -> impartial12 23 Oct 2015 17:48
i want to see a chinese century, at least the chinese wont invade other countries with the excuse of democracy or human rights
ApfelD 23 Oct 2015 17:42
China can rightly point out that it was already a civilisation 4,000 years ago – well ahead of Europe – and it uses that historical depth to indicate it will never take lessons on democracy.
LOL
European democracy was born in Greece which is now under the full control of ECB and IMF
The EU is a silly clown at the US court
What are you talking about?
HoolyK BabylonianSheDevil03 23 Oct 2015 17:34
To be fair to the Chinese, at least they're not evangelical about spreading their
'Authoritarianism with Chinese Characteristics' now are they? In fact, it's quite the opposite
with their non-interference mantra. When the Chinese see the following:
1. the West preaches democracy and human rights
2. is evangelical about it and spreads it by hook or crook into the Middle East
3. this causes regimes to be changed and instability to spread
4. the chaos causes a massive refugee crisis, washing these poor huddled masses onto the
shores of Europe
5. the human rights preached by the West demands that the the refugees receive help
6. the native population is slowly being displaced
7. native population is further screwed, with austerity, financial crisis and now said Syrian
refugees
8. Fascist and Nazis parties are elected into office, civil strife ensues
Now, what do you think the Chinese, who ABHOR chaos, think about democracy and human rights
??
PeterBederell 23 Oct 2015 16:47
The rise of China is largely a good thing for Europe. The US will not hesitate to use
its power to bend Europe to its will where necessary (and who can blame it, all countries do
this when they can) and the cultural and political diversity of Europe means the EU is
unlikely to rival the US or China anytime soon. But the rise of China allows Europe to play
one great power off against the other to resist bullying and extract concessions from one or
both.
HoolyK -> AdamStrange 23 Oct 2015 16:30
Anatolia is inhabited by Turks from Central Asia who settled in the 11th century,
Iraq/Syria was overrun by Muslims in the 7th century. China is still Han Chinese, as it was
5000 years ago.
'human rights' really? then do you support the human rights of tens of thousands of refugees
from Syria to settle in Britain and Europe then? I ask this awkward question only because I
know the Chinese will ask ....
dev_null 23 Oct 2015 16:23
China deploys a long-term strategy in part because it has a very long memory, and in
part because its ruling elite needn't bother too much about electoral constraints.
The two are not mutially exclusive. You can have democracy with a long memory see
periods before 1970's (neoliberalisation requires a small memory).
China's longest 'strategy' was to leverage its currency artificially lower than it should be
in order to net export so many manufactured goods. Nothing else.
If Europe continues to have a long term strategy the 'long-term' has not started yet. It
is currently in the process of internal devaluation and the morons in charge happily attack
labor conditions which weakens spending which further degrades potential GDP increases hidden
unemployment and stagnation. Germany did this first and now continues to leverage the small
head start it got during the 90's for doing so.
Eurozone = Dystopia
China can rightly point out that it was already a civilisation 4,000 years ago – well
ahead of Europe
No sorry europe contained many advanced cultures going back just as far. This is
incompetent journalism. China was not 'china' it was many kingdoms and cultures 4000 years
ago, as was Europe at the time. Fallacy of decomposition.
MeandYou -> weka69 23 Oct 2015 16:11
It has nothing to do with that reasoning. It was always predicted the West will self
destruct. Inventing Globalisation and then closed down places of work for its citizen and
export them la, la lands benefiting very few people, the beneficiaries who end up sending
their monies to tax havens un-taxed and sponsoring some selected people to power to do their
biding was always self defeating.
We gave China our jobs and cheap technologies that have taken us centuries to develop
in of getting cheap goods. As a result China did not have to pass through the phases we passed
through in our early industrial age when Machines were more expensive than humans before the
reverse. We gave China all in a plate hence the speed neck speed China has risen. The
Consumerism society the political class created they were stupid enough to forget people still
need money to buy cheap goods. Consumerism does not run on empty purse.
wintpu 23 Oct 2015 15:57
You are preaching a China Containment strategy:
[1] This is racist viciousness, colonial mentality, or white supremacist conspiracy, believing
that containment is your moral right. You seem to be wallowing still in the stiff upper lipped
notions that you are the betters versus the east. Colonialism is over and still you cling to
the notion that the EU should get together and try to destroy China's social system because it
is different from yours. Your records on human rights, governance and effectiveness are all
droopy examples to be object lessons rather than role models for emulation by developing
countries. Your opium war denials [simply by not mentioning it] give you very little high
ground to hector China and the Chinese people.
[2] Recent Behavior. Putting aside your opium war robbery, your behavior in the run up to 1997
Hong Kong hand back shows your greedy sneakiness. Chris Patten infamously tried to throw a
monkey wrench into an agreed-upon process by trying to steal the Hong Kong treasury, then
planting the seeds of British wannabees. You passed a special law to deny the 1.36 million
Hong Kong residents who had become British Citizens was one of the most shameful racist acts
of your colonial record. Cameron is now bending over backwards post haste in order to
side-step the long long memory of the Chinese people.
[3] Crying about getting other EU nations to do aiding and abetting of your vendetta against a
rising China? Trying to reduce and contain China does you no good. So it is a simple case of
mendacity. But you forget that the Germans have already gone to China honestly and co-operated
since the time of Helmut Kohl and the CPC has not forgotten their loyal friends. Today most
CPC leaders drive Audis. There is no turning Germany away from their key position in
Chinatrade to become enemies of China because of your self-serving wishes. Even now, France
has jumped in on the nuclear niche to present you with a package you cannot refuse.
samohio 23 Oct 2015 15:51
Who speaks for Europe? No-one is the answer. It is the single largest economy on the
plant. Biggest exporter on the planet. Arguably the richest middle class on the planet;
combined, possibly the biggest defense budget on the planet, and all this with a central
government driving foreign policy, defense, economic strategy, monetary policy, nor any of the
other institutions of a Federal State. China knows this, the Americans know this; and Europe
keeps getting treated as the "child" on the international scene. It's too bad, because Europe,
as a whole, has many wonderful positives to contribute to the world.
"... There is a lot that is positive about China's transformation. However, it is quite telling that many of China's new rich cant get their money out of the country quickly enough. ..."
"... It isn't so much a case of whether the UK will become a province, I suspect the whole world will. China is close to the GDP of the USA and will overtake it in about 18 months, with GDP per head only about $8k. If Chinese GDP per head even doubles, it's economy will at least double, and that isn't taking into account population growth. China's economy has already grown by about 1000% since 2002. ..."
"... China is a very fascinating place with a very fascinating history... But this misguided sinophilia is exasperating. Half the time the Chinese government doesn't even know what it's doing. ..."
"... If you talk to Chinese people in private most of them take a pretty dim view of the invasion of Iraq and western interventionist foreign policy in general. Their government, however, don't put out grand press releases about it because that's not the way the Chinese do foreign diplomacy. ..."
"... Gunboat diplomacy, opium wars, putting down mutinies in India and elsewhere, black hole of Calcutta,thrashing the native language out of the Maori and Aborigines-forcing them to speak English, World War One and World War Two, suez, the Falklands. ..."
"... They will have to reject US inspired economic voodoo if they are to ever prosper again. There is little to no chance of a federal state. The cultural, language and political differences are insurmountable. ..."
"... Stopped reading at that point, author is obviously a neoliberal rent-a-mouth. If it's rights against interests there's nothing to balance, to suggest otherwise is agenda setting. ..."
"... The public opinion in France should remember about Frances' real place in the world, and mind its own business avoiding poking its long nose in other peoples' affaires. ..."
"... Bonapartism is an old French mental disorder. ..."
"... I didn't say the US completely controlled Europe, I just said that the US can bend Europe to its will in certain circumstances. For example it currently forces European banks to disclose customer information to the US Treasury and it is trying to get European countries to agree to allow US border control in European airports, so that the US can question UK citizens in London. ..."
"... i want to see a chinese century, at least the chinese wont invade other countries with the excuse of democracy or human rights ..."
"... LOL European democracy was born in Greece which is now under the full control of ECB and IMF The EU is a silly clown at the US court What are you talking about? ..."
"... To be fair to the Chinese, at least they're not evangelical about spreading their 'Authoritarianism with Chinese Characteristics' now are they? In fact, it's quite the opposite with their non-interference mantra. ..."
"... The rise of China is largely a good thing for Europe. The US will not hesitate to use its power to bend Europe to its will where necessary (and who can blame it, all countries do this when they can) and the cultural and political diversity of Europe means the EU is unlikely to rival the US or China anytime soon. But the rise of China allows Europe to play one great power off against the other to resist bullying and extract concessions from one or both. ..."
"... You can have democracy with a long memory see periods before 1970's (neoliberalisation requires a small memory). ..."
"... If Europe continues to have a long term strategy the 'long-term' has not started yet. It is currently in the process of internal devaluation and the morons in charge happily attack labor conditions which weakens spending which further degrades potential GDP increases hidden unemployment and stagnation. Germany did this first and now continues to leverage the small head start it got during the 90's for doing so. ..."
"... It has nothing to do with that reasoning. It was always predicted the West will self destruct. Inventing Globalisation and then closed down places of work for its citizen and export them la, la lands benefiting very few people, the beneficiaries who end up sending their monies to tax havens un-taxed and sponsoring some selected people to power to do their biding was always self defeating. ..."
"... We gave China our jobs and cheap technologies that have taken us centuries to develop in of getting cheap goods. As a result China did not have to pass through the phases we passed through in our early industrial age when Machines were more expensive than humans before the reverse. ..."
"... Who speaks for Europe? No-one is the answer. It is the single largest economy on the plant. Biggest exporter on the planet. Arguably the richest middle class on the planet; combined, possibly the biggest defense budget on the planet, and all this with a central government driving foreign policy, defense, economic strategy, monetary policy, nor any of the other institutions of a Federal State. China knows this, the Americans know this; and Europe keeps getting treated as the "child" on the international scene. It's too bad, because Europe, as a whole, has many wonderful positives to contribute to the world. ..."
The problem is how do you define civilization? The urban centres were in the Middle East, and
long pre-date China. 6,000 years ago, the world's largest towns and cities were in the Balkans
- the Tripolye-Cucuteni culture. Because of the conventions of nomenclature, they don't count
as a civilization. This raises the question, when does a culture become a civilization? There
are certainly well attested archaeological cultures in China going back a long way, but there
are equally ancient cultures in Europe. Should we then say that Europe has 4,000 or 5,000 or more
years of civilization?
Good records for Chinese history go back about 3,000 years. Anything before that becomes archaeological
rather than historical, based on artifacts rather than records. References to different dynasties
don't help - there are no records comparable to Near Eastern king lists, or the Sumerian or Hittite
royal archives. China set up the Three Kingdoms Project to try to find the 'missing' 2,000 years
of Chinese history - i.e. the history that they claim to have, but have no direct evidence. They
didn't find it.
Adetheshades 23 Oct 2015 22:52
There is a lot that is positive about China's transformation. However, it is quite telling
that many of China's new rich cant get their money out of the country quickly enough.
They
obviously know more than the average Guardian reader, and apparently don't feel their cash
is safe. This causes problems of its own, when they start splashing this cash in the UK property
market, causing further price escalation if any were needed.
There isn't much we can do about the size and wealth of China.
It isn't so much a case of whether the UK will become a province, I suspect the whole world will.
China is close to the GDP of the USA and will overtake it in about 18 months, with GDP per head
only about $8k. If Chinese GDP per head even doubles, it's economy will at least double, and that
isn't taking into account population growth. China's economy has already grown by about 1000%
since 2002.
At what point will we drop French from the school curriculum in favour of Mandarin is the question.
To say Beijings influence is growing is a lovely little piece of understatement.
Adamnuisance 23 Oct 2015 21:22
China is a very fascinating place with a very fascinating history... But this misguided sinophilia
is exasperating. Half the time the Chinese government doesn't even know what it's doing.
Being
passive aggressive and claiming to be 'unique' are their real specialties. I have little doubt
that China will become even more powerful with time... I just hope their backwards politics improves
with their economy.
Thruns 23 Oct 2015 20:44
The first long game was Mao's coup.
The second long game was the great leap forward.
The third long game was the cultural revolution.
The fourth long game was to adopt the west's capitalism and sell the west its own technology.
At last the "communist" Chinese seem to have found a winner.
tufsoft Maharaja -> Brovinda Singh 23 Oct 2015 20:30
If you talk to Chinese people in private most of them take a pretty dim view of the invasion
of Iraq and western interventionist foreign policy in general. Their government, however, don't
put out grand press releases about it because that's not the way the Chinese do foreign diplomacy.
nothell -> Laurence Johnson 23 Oct 2015 20:16
Your comment about the British Empire must be tongue in cheek.
Gunboat diplomacy, opium wars, putting down mutinies in India and elsewhere, black hole of
Calcutta,thrashing the native language out of the Maori and Aborigines-forcing them to speak English,
World War One and World War Two, suez, the Falklands.
Anything but peaceful and anything but fair. Europe had the past, let Asia have the future.
slightlynumb -> theoldmanfromusa 23 Oct 2015 20:10
They will have to reject US inspired economic voodoo if they are to ever prosper again. There
is little to no chance of a federal state. The cultural, language and political differences are
insurmountable.
Rasengruen 23 Oct 2015 20:05
All of this presents well-known dilemmas for Europeans, such as how to balance human rights
and economic interests.
Stopped reading at that point, author is obviously a neoliberal rent-a-mouth. If it's rights
against interests there's nothing to balance, to suggest otherwise is agenda setting.
philby87 23 Oct 2015 18:50
public opinion in France, which had been shocked by an outbreak of violent repression
in Tibet
The public opinion in France should remember about Frances' real place in the world, and
mind its own business avoiding poking its long nose in other peoples' affaires. A good example
is Japan which is twice larger than France, but never lectures its neighbors about what they should
and shouldn't do. Bonapartism is an old French mental disorder.
skepticaleye -> midaregami 23 Oct 2015 18:04
The Yue state was populated mostly by the members of the Yue people who were not Han. The South
China wasn't completely sinicized well into the second millennium CE. Yunnan wasn't incorporated
into China until the Mongols conquered Dali in the 13th century, and the Ming dynasty eradicated
the Mongols' resistance there in the 14th century.
PeterBederell -> Daniel S 23 Oct 2015 17:54
I didn't say the US completely controlled Europe, I just said that the US can bend Europe to
its will in certain circumstances. For example it currently forces European banks to disclose
customer information to the US Treasury and it is trying to get European countries to agree to
allow US border control in European airports, so that the US can question UK citizens in London.
Europe often has to agree to these indignities because it needs access to the US market and to
keep the US sweet. But with a strong China, it can use the threat of following China in some way
the US doesn't like as a bargaining chip, like joining China's Development Bank, which put the
US in a huff recently.
Chriswr -> AdamStrange 23 Oct 2015 17:54
What we in the West call human rights are creations of the Enlightenment and only about 300 years old. As a modern Westerner I am, of course, a big supporter of them. But let's not pretend they are part of some age-old tradition.
sor2007 -> impartial12 23 Oct 2015 17:48
i want to see a chinese century, at least the chinese wont invade other countries with the excuse of democracy or human rights
ApfelD 23 Oct 2015 17:42
China can rightly point out that it was already a civilisation 4,000 years ago – well ahead of Europe – and it uses that historical depth to indicate it will never take lessons on democracy.
LOL
European democracy was born in Greece which is now under the full control of ECB and IMF
The EU is a silly clown at the US court
What are you talking about?
HoolyK BabylonianSheDevil03 23 Oct 2015 17:34
To be fair to the Chinese, at least they're not evangelical about spreading their
'Authoritarianism with Chinese Characteristics' now are they? In fact, it's quite the opposite
with their non-interference mantra. When the Chinese see the following:
1. the West preaches democracy and human rights
2. is evangelical about it and spreads it by hook or crook into the Middle East
3. this causes regimes to be changed and instability to spread
4. the chaos causes a massive refugee crisis, washing these poor huddled masses onto the
shores of Europe
5. the human rights preached by the West demands that the the refugees receive help
6. the native population is slowly being displaced
7. native population is further screwed, with austerity, financial crisis and now said Syrian
refugees
8. Fascist and Nazis parties are elected into office, civil strife ensues
Now, what do you think the Chinese, who ABHOR chaos, think about democracy and human rights
??
PeterBederell 23 Oct 2015 16:47
The rise of China is largely a good thing for Europe. The US will not hesitate to use
its power to bend Europe to its will where necessary (and who can blame it, all countries do
this when they can) and the cultural and political diversity of Europe means the EU is
unlikely to rival the US or China anytime soon. But the rise of China allows Europe to play
one great power off against the other to resist bullying and extract concessions from one or
both.
HoolyK -> AdamStrange 23 Oct 2015 16:30
Anatolia is inhabited by Turks from Central Asia who settled in the 11th century,
Iraq/Syria was overrun by Muslims in the 7th century. China is still Han Chinese, as it was
5000 years ago.
'human rights' really? then do you support the human rights of tens of thousands of refugees
from Syria to settle in Britain and Europe then? I ask this awkward question only because I
know the Chinese will ask ....
dev_null 23 Oct 2015 16:23
China deploys a long-term strategy in part because it has a very long memory, and in
part because its ruling elite needn't bother too much about electoral constraints.
The two are not mutially exclusive. You can have democracy with a long memory see
periods before 1970's (neoliberalisation requires a small memory).
China's longest 'strategy' was to leverage its currency artificially lower than it should be
in order to net export so many manufactured goods. Nothing else.
If Europe continues to have a long term strategy the 'long-term' has not started yet. It
is currently in the process of internal devaluation and the morons in charge happily attack
labor conditions which weakens spending which further degrades potential GDP increases hidden
unemployment and stagnation. Germany did this first and now continues to leverage the small
head start it got during the 90's for doing so.
Eurozone = Dystopia
China can rightly point out that it was already a civilisation 4,000 years ago – well
ahead of Europe
No sorry europe contained many advanced cultures going back just as far. This is
incompetent journalism. China was not 'china' it was many kingdoms and cultures 4000 years
ago, as was Europe at the time. Fallacy of decomposition.
MeandYou -> weka69 23 Oct 2015 16:11
It has nothing to do with that reasoning. It was always predicted the West will self
destruct. Inventing Globalisation and then closed down places of work for its citizen and
export them la, la lands benefiting very few people, the beneficiaries who end up sending
their monies to tax havens un-taxed and sponsoring some selected people to power to do their
biding was always self defeating.
We gave China our jobs and cheap technologies that have taken us centuries to develop
in of getting cheap goods. As a result China did not have to pass through the phases we passed
through in our early industrial age when Machines were more expensive than humans before the
reverse. We gave China all in a plate hence the speed neck speed China has risen. The
Consumerism society the political class created they were stupid enough to forget people still
need money to buy cheap goods. Consumerism does not run on empty purse.
wintpu 23 Oct 2015 15:57
You are preaching a China Containment strategy:
[1] This is racist viciousness, colonial mentality, or white supremacist conspiracy, believing
that containment is your moral right. You seem to be wallowing still in the stiff upper lipped
notions that you are the betters versus the east. Colonialism is over and still you cling to
the notion that the EU should get together and try to destroy China's social system because it
is different from yours. Your records on human rights, governance and effectiveness are all
droopy examples to be object lessons rather than role models for emulation by developing
countries. Your opium war denials [simply by not mentioning it] give you very little high
ground to hector China and the Chinese people.
[2] Recent Behavior. Putting aside your opium war robbery, your behavior in the run up to 1997
Hong Kong hand back shows your greedy sneakiness. Chris Patten infamously tried to throw a
monkey wrench into an agreed-upon process by trying to steal the Hong Kong treasury, then
planting the seeds of British wannabees. You passed a special law to deny the 1.36 million
Hong Kong residents who had become British Citizens was one of the most shameful racist acts
of your colonial record. Cameron is now bending over backwards post haste in order to
side-step the long long memory of the Chinese people.
[3] Crying about getting other EU nations to do aiding and abetting of your vendetta against a
rising China? Trying to reduce and contain China does you no good. So it is a simple case of
mendacity. But you forget that the Germans have already gone to China honestly and co-operated
since the time of Helmut Kohl and the CPC has not forgotten their loyal friends. Today most
CPC leaders drive Audis. There is no turning Germany away from their key position in
Chinatrade to become enemies of China because of your self-serving wishes. Even now, France
has jumped in on the nuclear niche to present you with a package you cannot refuse.
samohio 23 Oct 2015 15:51
Who speaks for Europe? No-one is the answer. It is the single largest economy on the
plant. Biggest exporter on the planet. Arguably the richest middle class on the planet;
combined, possibly the biggest defense budget on the planet, and all this with a central
government driving foreign policy, defense, economic strategy, monetary policy, nor any of the
other institutions of a Federal State. China knows this, the Americans know this; and Europe
keeps getting treated as the "child" on the international scene. It's too bad, because Europe,
as a whole, has many wonderful positives to contribute to the world.
"... Talbot focusses extensively on James Jesus Angleton, the shadowy counterintelligence figure at the heart of the domestic assassinations of the 1960s, and examines the inner-workings of Dulles' ambitious (and dastardly) plot to consolidate and control global political power. "The Devil's Chessboard" is a startling and revelatory masterwork. In terms of easy-to-access assassination research, this book is second only to James Douglass' "JFK and the Unspeakable." In terms of biographies of Dulles and Angleton, two of history's most infamous figures, this work is second to none. ..."
"... A heretofore unanswered question about the JFK assassination is what was Allen Dulles was doing between the time he was fired by JFK as Director of the CIA in 1961 until the moment of the assassination on November 22, 1963. A related question is how was it conceivable for Dulles to have been appointed to the Warren Commission that eventually produced the conclusions that are still accepted by mainstream historians and the media? Talbot's intensive research helps to shed on light on those questions by tracing the arc of development of the career of Allen Dulles as a high-powered attorney at the center of the elitist East Coast establishment, his shocking collaboration with the Nazis while working in the OSS, and his career in clandestine activities at the CIA ..."
"... Talbots research probes not merely the activities of Dulles as Director of the CIA, but explores the broader context of his function over three decades as a power broker, whose efforts were directed not against hostile governments but against his own. ..."
"... the more recent book on Dulles covers the broader scope of how the American government was transformed into the national security state in the years following World War II. Talbots goal in preparing this book is to demonstrate the urgency of coming to terms with our past and how it is essential that we continue to fight for the right to own our history. (p. xii) An excellent place to begin that quest is to own this book. ..."
A Groundbreaking Resource, Second Only to "JFK and the Unspeakable"
A tremendous resource of breathtaking depth and clarity. Talbot builds on the now decades-old
body of research - initiated by investigative reporters Tom Mangold ("Cold Warrior") and David
Wise ("Molehunt"), and largely developed by assassination researchers James DiEugenio and Lisa
Pease ("The Assassinations") - and adds groundbreaking new information.
Talbot focusses extensively on James Jesus Angleton, the shadowy counterintelligence figure
at the heart of the domestic assassinations of the 1960s, and examines the inner-workings of Dulles'
ambitious (and dastardly) plot to consolidate and control global political power. "The Devil's
Chessboard" is a startling and revelatory masterwork. In terms of easy-to-access assassination
research, this book is second only to James Douglass' "JFK and the Unspeakable." In terms of biographies
of Dulles and Angleton, two of history's most infamous figures, this work is second to none.
Note: Be wary of one-star reviews for this book. Some trace back to commissioned-review services,
the same services that give five-star reviews to shady/suspicious health and beauty products.
Go figure.
To read this magnificent book by David Talbot is to understand how the JFK assassination occurred
and how the truth was concealed by officialdom in the Warren Report. Unlike his brother, John
Foster Dulles, the younger Allen Welsh Dulles rarely makes it into American history textbooks.
In this extremely detailed study, the singular importance of Allen Dulles is demonstrated as being
central to a watershed period in the American Century.
First and foremost, "The Devil's Chessboard" is a beautifully written and meticulously researched
volume. Talbot drew upon archives at Princeton University, where the Allen Dulles papers are housed.
He also conducted research in other archives across the country. The documentary work is buttressed
and amplified by interviews with the surviving daughter of Dulles, as well as interviews with
the children of Dulles' colleagues and over 150 officials from the Kennedy administration. Nearly
forty pages of notes serve to document the author's sources.
One of the most revealing moments about Allen Dulles was when he was ten years old and spending
time at the family's lake home in upstate New York. After his five-year-old sister fell into the
lake and was drifting away from him, Allen stood stock still, "strangely impassive. The boy just
stood on the dock and watched as his little sister drifted away." (p. 19) Fortunately, the child
was rescued by the mother. The behavior of young Allen is representative of a lifelong predilection
for observing the imponderables of life as an insider while looking to others to "risk their skins."
For this little boy, the world was already forming into a chessboard with pawns to manipulate
for his self-serving needs. Talbot describes Dulles' rogue actions in allowing Nazi war criminals
to avoid prosecution at the Nuremberg Trials in these chilling words: "Even in the life-and-death
throes of wartime espionage, Dulles seemed untouched by the intense human drama swirling around
him." (p. 120)
In one of the most riveting moments of the book, Talbot describes an interchange between Dulles
and researcher David Lifton at a colloquium on the JFK assassination at the campus of UCLA in
1965. Lifton came prepared to challenge Dulles on major deficiencies of the Warren Report. By
the end of the evening, the students attending the session were more interested in Lifton's findings
than Dulles' unsuccessful attempts to deflect the tough questions. In retrospect, Lifton apparently
claimed that he "was in the presence of 'evil' that night." (p. 591)
A heretofore unanswered question about the JFK assassination is what was Allen Dulles was
doing between the time he was fired by JFK as Director of the CIA in 1961 until the moment of
the assassination on November 22, 1963. A related question is how was it conceivable for Dulles
to have been appointed to the Warren Commission that eventually produced the conclusions that
are still accepted by mainstream historians and the media? Talbot's intensive research helps to
shed on light on those questions by tracing the arc of development of the career of Allen Dulles
as a high-powered attorney at the center of the elitist East Coast establishment, his shocking
collaboration with the Nazis while working in the OSS, and his career in clandestine activities
at the CIA
Talbot's research probes not merely the activities of Dulles as Director of the CIA, but explores
the broader context of his function over three decades as a power broker, whose "efforts were
directed not against hostile governments but against his own." (p. 3) Talbot cites revelations
from the Columbia University sociology professor C. Wright Mills about the secret government of
Allen Dulles, which was comprised of a "power elite" and based on the anti-Constitutional premise
of "organized irresponsibility."
In many ways, "The Devil's Chessboard" is a companion volume to Talbot's essential study "Brothers,"
which focuses on the relationship of John and Robert Kennedy, the assassination of JFK, and the
aftereffects on RFK. But the more recent book on Dulles covers the broader scope of how the American
government was transformed into the national security state in the years following World War II.
Talbot's goal in preparing this book is to demonstrate the urgency of coming to terms with our
past and how "it is essential that we continue to fight for the right to own our history." (p.
xii) An excellent place to begin that quest is to own this book.
FTM (Jerry Robinson): Alright, well, joining me on the program today is
Stephen Kinzer. He is an
award-winning foreign correspondent who has worked in more than 50 countries. He has been a
New York Times Bureau Chief in Istanbul, Berlin, and Nicaragua. He's the author of many books,
including the best-selling book
All the Shah's Men: An American
Coup and the Roots of Middle East Terror.
He's also a professor of international relations at Boston University. My guest today is Stephen
Kinzer. Stephen, thank you so much for joining me on
Follow the Money Weekly Radio.
KINZER (Stephen Kinzer): Great to be with you.
FTM: I am looking at your book right now-at the Preface to the 2008 edition: "The Folly
of Attacking Iran." And I would say, Stephen, that many of the people who are listening to
the program today are…I don't want to assume that they're not familiar with the 1953 event, but I
want to assume that perhaps they don't know as much about it as perhaps maybe they should.
And especially now, as we take a look at the news cycle, we see that Iran is all over the news: talk
about invasion; talk about stopping the nuclear program (whether it's even occurring or not is a
debate). But the issue at hand right now is, "Should we invade Iran for the benefit of our foreign
policy, for the benefit of our security interests?" And you have written a book here that really
peels back the layers about this entire question. Why don't you begin by sharing with our audience
why you wrote this book and why this topic is important to you?
KINZER: In the first place, you're right that that
2008 edition of the book,
which was the new edition, contains this Foreword, "The Folly of Attacking Iran. Now, in the last
couple of years, I've been looking at that new edition and thinking, "Boy, that's kind of out of
date now." That was at the end of the Bush Administration when we were being really hyped up that
Iran was a mortal threat to the rest of the world, but now that introduction is really kind of outdated.
Boy, was I wrong! You're absolutely right that Iran has now emerged as the Number One foreign
policy issue in this presidential campaign, as candidates flail around for foreign policy issues
to beat each other over the head with, Iran really seems to rise to the top of the list. We
are in a situation now where we're looking for a demon in the world. I think this is not just
an American impulse, but in many countries, it's almost thought that if you don't have an enemy in
the world, you should try to find one. It's a way to unite your population and give people
a sense of common purpose.
So, you look around the world and pick some country that you want to turn into your enemy and
inflate into a terrible, mortal threat to your own security. Iran seems to be filling that
role right now. It's an odd situation, because in a sense, the world looks very different from
Iran's point of view than it does from here. Iran has four countries in the immediate neighborhood
that are armed with nuclear weapons. That's India, Pakistan, Russia, and Israel. Iran
also has two countries on its borders that have been invaded and occupied by the United States: that
is, Iraq and Afghanistan. So the idea that Iran might be a little unsure as to its defense
and wants to make sure that it can build whatever it needs to protect itself doesn't seem so strange
when you're sitting in Iran. But even more interesting than all that, when you're looking at
differences between the way the world looks when you see it from the United States and the way it
looks when you see it from Iran has to do with history.
Whenever I travel in the world, particularly when I travel to a country that I'm not familiar
with, I like to ask myself one question: and that is, "How did this country get this way? So, why
is this country rich and powerful?" Or, "Why is this country poor and miserable?" When I was
traveling in Iran and getting to know Iran for the first time, I came to realize that there's a huge
gap between what Iran should be based on its culture and history and size and the education
of its people, and what it is. This is a country that has thousands of years
of history. It was the first empire in history-the Persian Empire. It has produced a huge amount
of culture over many centuries. Its people are highly educated. Nonetheless, it's isolated
from the world; poor; unhappy. And I've always wondered on my first trips there why this was.
What happened? And as I began to read more, and talk to Iranians, people told me, "We used
to have a democracy here. But you Americans came over here and destroyed it. And ever
since then, we've been spiraling down." So I decided, "I gotta find out what really happened.
I need to find a book about what happened to Iranian democracy." And then I looked around and
found there was no such book.
KINZER: I finally decided that if I was going to read that book, I was going to have
to write it myself. And that's how
All the Shah's Men
came about.
FTM: Well, I would imagine that many in the listening audience would immediately
take issue with some of the things that you've stated, and I want to hit those directly head-on.
You state in your book some of the reasons why to attack Iran, at least, some of the reasons that
are stated.
Number One: Iran wants to become a nuclear power, and that should not be allowed. Iran poses
a threat to Israel. Iran sits at the heart of the emerging Shiite Crescent which threatens
to destabilize the Middle East. Iran supports radical groups on nearby countries. Iran
helps kill American soldiers in Iraq. Iran has ordered terror attacks in foreign countries.
Iran's people are oppressed and need Americans to liberate them.
So there's a plethora of ideas as to why American invasion, or some other type of invasion into
Iran would possibly be beneficial, not only to our security interests, but also to Iran's state of
health so to speak, and bringing them liberty. So you made a good case against it. What do
you say to those who say, "You're crazy, Stephen. We need to go over there; we cannot allow
them to have a nuclear weapon.
KINZER: In the first place, we don't have any evidence that Iran is building a nuclear
weapon; in fact, the International Atomic Energy Agency has made clear that it has never seen any
such evidence, and those inspectors are all over those plants, the uranium is under seal, the seals
are under constant video surveillance. It's not as urgent a problem as we're making it out
to be.
Nonetheless, I would add a kind of larger perspective, and it's this. When you look at a
map of the Middle East, one thing jumps right out at you and it is that Iran is the big country right
in the middle. It's not possible to imagine a stable Middle East without including Iran. It's
a little bit comparable to the situation that we faced after the end of World War II when there was
tremendous anger at Germany for very good reasons.
There was a great move afoot (in fact, we actually followed this policy for a few months) to crush
Germany. We were going to slice Germany into pieces, then we were going to forbid it from ever
building another factory or industrial plant again. Fortunately, cooler minds prevailed.
And we decided to take the opposite tactic. And that was to realize that this country, Germany, had
been stirring up trouble in Europe for a hundred years or more, and that the way to prevent that
cycle from continuing was not to isolate Germany and kick it and push it into a corner, but to integrate
Germany into Europe, and to make it a provider of security rather than a consumer of security. That's
what we need to do with Iran. Iran needs to be given a place at the table that's commensurate
with its size, and its tradition, and its history, and its regional role.
Now, the United States doesn't want to do that because when Iran is at that table, it's not going
to be saying things that are pro-American. It has an agenda that's different than ours. So
we don't want it at the table. We want to crush Iran. It sounds like a tempting option,
and in fact, if you could wave a wand and make the regime in Iran go away and make Iran be wonderfully
friendly to the United States, I'd be all for that. But bombing Iran is likely to produce the
opposite result.
First of all, one thing that really surprises me when I'm in Iran is how unbelievably pro-American
the people of Iran are. I'm gonna go out on a limb and say that there's no country in the world
where the population is so pro-American as in Iran. I have been stopped on the streets by people
who are practically shrieking when they find out I'm American and tell me how much they love the
United States. You don't even get that in Canada! If we're smart, we're gonna realize
that this is the Middle Eastern country with the most pro-American population. And this pro-American
sentiment in Iran is a huge strategic asset for us going forward. If we liquidate that asset
by bombing Iran, we will be greatly undermining our own strategic power. And this is a pattern
we've been following in that part of the world for a long time.
The war in Iraq greatly eroded American strategic power. It had the opposite effect that
we thought it would have. And this is the real object lesson that we need to keep in mind.
When we intervene in countries, we have enough power to achieve our short-term goal, but then we
go away; our attention goes to other places. And the resentment and the anger festers and burns
in the hearts and minds and souls of people in these countries, and ultimately, we wind up with backlash
that we never anticipated and we can't control. In this rush now in these last months to demonize
Iran and set the groundwork for an attack on Iran, we are doing something that Americans, and maybe
all human beings do too often, and that is: we think about the short term; we never think about the
long-term effects of our interventions.
FTM: You open the book with a quote, a quintessential quote, which is kind of common for
a book, and it's by President Harry Truman: "There is nothing new in the world except the history
you do not know." And I would probably say that most of us are obviously familiar with the
history of September 11th, 2001, and I would go even further and perhaps say that we are
familiar with the 1979 Iranian Revolution, and people may remember those days back in the Carter
years. But your book goes back to 1953.
In the Preface of your book, you state that the 1953 intervention by the United States into Iran
may be seen as a decisive turning point in the 20th Century history from our perspective
today. Now I don't know how many people in our listening audience know what happened in 1953.
What event are you referring to, and why is it important to what's happening today?
KINZER: For most Americans, the history of U.S.-Iran relations begins and ends with
the Hostage Crisis. That's all we know, and we know that everything went bad since then.
But Iranians don't think that way. For them, the Hostage Crisis is just one of a number of
incidents that have happened over the past 50 years. For them, the key moment in the history
of U.S.-Iran relations came in 1953. This is an episode that completely defines Iranian history
and the Iran-United States relationship. Yet, many people in the United States are not even aware
this happened.
Very briefly, this is the story (and I tell it in much more detail in my book): In the period
after World War II, Iranian democracy, which had come about at the beginning of the 20th
Century through a revolution against a corrupt monarchy, really began to take form. It took on a
reality. You had elections; competing parties; parliament. This was something that had
not been seen in any Muslim country. So, Iran was truly in the vanguard of democracy.
But, because Iran was a democracy, it elected a leader who represented the public will-not the will
of outside powers. In Iran, there was one obsession. Iran is sitting, as we know, on an ocean
of oil. But all through the 1920's and '30's and '40's, that oil was completely controlled
by one British company.
The entire standard of living in Britain all during that period was based on oil from Iran, since
Britain has no oil or any colonies that have any oil. Meanwhile, people in Iran were living
in some of the most miserable conditions of anyone in the world. Once they had a democracy,
they elected a leader, Mohammad Mosaddegh, who, as prime minister, proceeded to pass a bill in congress
in which Iran nationalized its oil industry. This sent the British into a panic. They
tried all kinds of things to crush Mosaddegh. Finally, when he closed their embassy and chased
out all their diplomats, including all the secret agents who were trying to overthrow him, the British
decided, "We're going to ask the Americans to do this for us." So, Churchill asked President
Truman to "do this for us. Please go over to Iran and overthrow this guy who took away our
oil company. And Truman said, "No." But then, a few years later, when Dwight Eisenhower
became president, and John Foster Dulles became Secretary of State, and his brother, Allen Dulles,
became Director of the CIA, things changed.
The United States decided that we would work with the British to overthrow Mosaddegh -mainly because
he was challenging the fundamentals of corporate globablism, the principle that international companies
should be allowed to function all over the world according to conditions that they considered fair.
Mosaddegh was saying, "No, we are going to determine the conditions under which foreign companies
can function in our country." As a result, the United States sent a team CIA agents into Iran.
They went to work in the basement of the American Embassy. They threw Iran into total chaos,
and that chaos finally resulted in the overthrow of the Mosaddegh government. That put the
Shah back on his peacock throne; he ruled with increasing oppression for 25 years; his repressive
rule produced the explosion of the late 1970's, what we call "The Islamic Revolution"; that brought
the power, this clique of fanatically anti-American mullahs who are in power now. So, when you do
what they call in the CIA "walking back the cat," when you walk back the cat, that is, to see what
happened before, and before, and before, you come to realize that the American role in crushing Iranian
democracy in 1953 was not only the defining event in the history of U.S.-Iran relations, but it set
Iran in the Middle East into turmoil from which it has never recovered.
FTM: In 1953, in the book you point out that democracy was beginning to take root
there.
KINZER: It's a remarkable story. This, as I said, is something that had never happened
in a Muslim country before. Iran is a remarkable country; very different from the other countries
in the Middle East. And I'm not sure that people in the United States realize this. Most
of the countries in the Middle East are what you might call "fake countries." They're made-up
countries that were invented by some British or French diplomat drawing lines on a map at some men's
club after World War I.
Iran is not a fake country by any means. It has lived for thousands of years within more
or less the same boundaries, with more or less the same language, and the same kind of population.
It's a country with a deep, rich culture and very strong sense of itself. We are treating Iran
as if it's Honduras or Barundi or some little place where we can just go and kick sand in people's
face and they'll do whatever we want. Iran is not a country like that. And, given its
size, and its location, you see that that region will never be stable as long as Iran is angry and
ostracized. The only way to stabilize that part of the world is to build a security architecture
in which Iran has a place.
The world needs a big security concession from Iran. The world also needs big security concessions
from Israel. But countries only make security concessions when they feel safe. Therefore,
it should be in interest of those who want stability in the Middle East to try to help every country
in the region feel safe. But our goal in the Middle East isn't really stability; it's "stability
under our rule…under our dominance." And we realize that when Iran emerges as a strong, proud,
independent, democratic country, it's not gonna be so friendly to the United States. So I think there
is some feeling that "we prefer it this way" being poor and isolated and unhappy.
FTM: I was looking at a map the other day of the Middle East, just noticing the U.S. military
bases in the Middle East, and Iran, if you look at it very objectively, and take a look at the Middle
East military base map, you'll discover that Iran is completely surrounded. And as you mentioned,
there are four other nations in their general vicinity that have nuclear weapons, and it seems as
if pretty much the only way to keep the United States away from your country if you aren't playing
by their rules is to have a nuclear weapon. So logically, it does seem to make sense that the
Iranians are perhaps seeking a nuclear weapon, but what you point out here again in your book is
that the program, to have a nuclear program, was first proposed by the United States to Iran back
in the 1970's.
KINZER: We thought it was a great idea for Iran to have a nuclear program-when it was run
by a regime that was responsive to Washington. Now that it's a different kind of regime, we
don't like this idea. You're absolutely right about the lessons that Iran has drawn about the
value of having a nuclear weapon, or the ability to make a nuclear weapon, based on what's happened
in the world.
Why did the United States attack Iraq, but not attack North Korea? I think it's quite obvious:
if North Korea didn't have a nuclear weapon, we would have crushed them already; and if Sadaam
did have a nuclear weapon, we probably never would have invaded that country.
An even more vivid example is
Libya.
We managed to persuade
Gaddafi
to give up his nuclear program; as soon as he did that, we came in and killed him. I think
that the Iranians are acutely aware of this. They would like, if I'm gonna guess, to have the
ability to put together a nuclear deterrent, a nuclear weapon-something like Japan has. Japan
has something that is in the nuclear business called a "screwdriver weapon." They're not allowed
to have nuclear weapons, but they have the pieces and the parts around, so that in a matter of weeks,
they could probably put one together. Now, we hear a lot about how the Israelis are terrified
that as soon as Iran gets a nuclear weapon, it's gonna bomb Israel. But, in fact, as people
in the Israeli security establishment have made clear, none of them really believe that. They
fear the Iranian nuclear weapon for a couple of other reasons.
One is, that as Israel well-knows, when you have a nuclear weapon, you don't need to use it. It
gives you a certain power; a certain authority. You can intimidate people around you. And second,
of course, if there's another nuclear power in that region, it's going to set off perhaps another
nuclear race, and other countries like Turkey or Saudi Arabia or Egypt would want to have nuclear
weapons, too. But when the Iranians look around, I think the first country they see (and I've
heard this from a number of Iranians) is Pakistan. Pakistan is a far more volatile and far
more dangerous country than Iran. We have serious Taliban/al-Qaeda types not only running around
in Pakistan, but doing so under the egious of the government and they have a prospective to take
over that government! This is not going to happen in Iran. Pakistan is far more volatile,
yet the United States thought that is was fine that Pakistan should have a nuclear weapon. I'm against
all countries having nuclear weapons.
I'd like to see all countries that have them abandon them, and I don't want any more countries
to get them. But that's a dream world. The fact is, the most that we can do by attacking
Iran (as our own Defense Secretary has said) is to postpone the day when Iran has a nuclear weapon,
and in the process, make them a lot angrier. The way to reduce this danger is to build a security
system in the Middle East where people don't feel the need to be threatening each other. But
that requires dialogue, and dialogue requires compromise, and the United States is not ready to compromise
with Iran.
FTM: Interesting. And that's where I want to take this in conclusion: What
does that look like? Because obviously, the goal of your book here is to see some sort of peace
reached. I mean, no one wants to see war. But the Middle East obviously is just an issue
that has been debated for a long time. There are all kinds of
geopolitical reasons for being involved in the Middle East-namely, oil. But predominantly, as
we look at all of this, the question really boils down to this: What are we going to do? If
we don't bomb Iran, then how do we prevent them from potentially becoming an explosive nation in
that region? You say "security system" over there and also "dialogue." If you were President,
what would you do? How do you start that process?
KINZER: The first place, we have never really tried serious diplomatic overtures
to Iran. We've got some of our most senior retired diplomats in the United States now who are
chafing at the bit to be sent to Iran. People like Thomas Pickering, who was George Bush's
ambassador to the United Nations and ambassador to Moscow, and William Lords, another titan of 20th
Century diplomacy. These are people who are itching to go to Iran and see what they can do.
We have not even asked Iran the fundamental question, "What would it take from us for you to do what
we would like you to do with your nuclear program?"
Forget about deciding whether we want to do it or not; we don't even know what the quid pro quo
would be! So, we need first to get into a mindset where we're willing to have a real dialogue
on an equal basis with Iran. We are not at that point. We feel that any dialogue with
them is only going to legitimize their position in the Middle East and is going to make them feel
that they're a powerful country, because we will be making concessions to them-that's what you do
when you have negotiated solutions. But the fact is, Iran already is a powerful country. It
doesn't need us to legitimize it. We need to understand that in dealing with Iran, we're not
going to get everything we want. And we are going to have to concede Iran a measure of power
in that region that's commensurate with its size, and its history, and its location. We're
not even at that point yet. I think that's the first step. We have to make a psychological
transition to realize that we're not going to be able to dictate to Iran if we want to reach a peaceful
settlement. We're going to have to compromise. We're going to have to accept some things
that Iran wants in order to get things that we want. Before we even get to the point of figuring
out what those would be, we need to get over that psychological, political, diplomatic hurdle. And
we haven't done that yet.
FTM: My guest today has been Stephen Kinzer. He's the author of the book
All the Shah's Men.
Very enlightening stuff; very illuminating. Stephen, if the folks would like to learn more
about you and your work, how can they do so?
KINZER: I've got a website: stephenkinzer.com.
My books are all available on that mass website that I don't want to advertise that it's named after
a giant river in South America.
FTM: (laughter)
KINZER: But if you want to support your local independent bookstore, I'm sure it
would be happy to order All the Shah's Men for you or any of my other books.
FTM: Very good, Stephen. Thank you so much for coming on our program today, Stephen.
"... Of course, the Cato Institute, Heritage, and Team Republican economists are proud that their
opinions are bought and paid for. ..."
"... Most (all?) academic types are keenly aware of the importance of grantsmanship as a basic
skill. Knowing the appropriate funding sources and, in some cases, the interests and biases of
funding sources, is stock in trade. Scientific research has become so capital intensive that large
grants from government and large foundations are necessary to carry it out. For the most part,
the biases of the granting institutions are known and discounted. ..."
Is Money Corrupting Research?: The integrity of research and expert opinions in Washington
came into question last week, prompting the resignation of Robert Litan ... from his position
as a nonresident fellow at the Brookings Institution.
Senator Elizabeth Warren raised the issue
of a conflict of interest in Mr. Litan's testimony before a Senate committee... Senator Warren
was herself criticized by
economists and
pundits, on the left and right. ... But at stake is the integrity of the research process
and the trust the nation puts in experts, who advise governments and testify in Congress. Our
opinions shape government policy and judicial decisions. Even when we are paid to testify...,
integrity is expected from us. ...
Yet it is disingenuous for anybody (especially an economist) to believe that reputational incentives
do not matter. Had the conclusions not pleased the Capital Group, it would probably have found
a more compliant expert. And the reputation of not being "cooperative" would have haunted Mr.
Litan's career as a consultant. ...
Reputational ... concerns do not work as well with sealed expert-witness testimony or paid-for
policy papers that circulate only in small policy groups. ... A scarier possibility is that reputational
incentives do not work because the practice of bending an opinion for money is so widespread as
to be the norm. ...
He goes on to suggest some steps to strengthen the reputational incentive.
pgl said in reply to Larry...
"Businesses sometimes finance policy research much as advocacy groups or other interests
do," the economists wrote. "A reader can question the source of the financing on all sides,
but ultimately the quality of the work and the integrity of the author are paramount." They
praised Litan's quality and integrity as having been "impeccable over a career of four decades."
The fact of the matter is that funding comes from all sorts of places. One should always disclose
the sourcing of funding and then let one's writings stand scrutiny.
Of course, the Cato Institute, Heritage, and Team Republican economists are proud that their
"opinions" are bought and paid for.
Brookings fellow resigns after Senator Warren accuses him of conflicts
By SARAH N. LYNCH - Reuters
WASHINGTON
A prominent Brookings Institution fellow resigned on Tuesday, after Massachusetts Senator Elizabeth
Warren accused him of failing to fully disclose industry funding tied to a study that criticized
the U.S. Labor Department's plan to regulate brokerages.
The resignation of Robert Litan came just one day after Warren, a Democrat, sent Brookings'
president a letter demanding to know more about the think tank's policies on financial conflicts
and details about the communications between Litan and Capital Group, an investment firm that
funded his research paper.
"He has acknowledged that he made a mistake in not following Brookings regulations designed
to uphold the independence of the institution," Brookings President Strobe Talbott said in a statement
provided to Reuters.
Warren's concerns center a study that Litan and researcher Hal Singer jointly conducted which
examined a controversial plan by the Labor Department to try and rein in conflicts posed by brokers
who offer retirement advice.
The proposal has garnered fierce opposition from Wall Street, and Litan's study concluded that
the plan could harm consumers.
Litan testified about the study's findings in a July hearing before a U.S. Senate panel, in
which he represented himself as a fellow at Brookings.
The study was conducted by Litan and Singer in their capacity as staffers for Economists, Inc.,
a consulting firm.
Although his testimony and his study did disclose that Capital Group provided funding, Warren
said that she later learned this was not the full story.
In a series of follow-up questions Warren sent to Litan after the hearing, she said he disclosed
that Capital Group also provided feedback and editorial comments on a draft.
This, she said, ran counter to his claim at the hearing that he and Singer were "solely responsible"
for the study's conclusions.
In addition, he disclosed that Capital Group had paid Economists Inc $85,000 for the study,
and his share was $38,800.
In her letter to Brookings, Warren said the lack of disclosure raises "significant questions
about the impartiality of the study and its conclusions."
Litan, a former top official in the Clinton administration, did not respond to an email seeking
comment.
He is a well-known economics expert in Washington who has authored or co-authored over 25 books.
"We greatly appreciate all the good work Bob has done for Brookings over the 40-plus years
he has been connected to this institution," Talbott said.
According to Reuters, he failed to disclose his relationships
when presenting his report and when testifying, and seems to have lied:
"Although his testimony and his study did disclose that Capital Group provided funding, Warren
said that she later learned this was not the full story.
"In a series of follow-up questions Warren sent to Litan after the hearing, she said he disclosed
that Capital Group also provided feedback and editorial comments on a draft.
"This, she said, ran counter to his claim at the hearing that he and Singer were "solely responsible"
for the study's conclusions."
Can I edit anything you write and claim as solely your own work? I want to have my point of
view endorsed by a much larger group of writers, and the best way is for me to fix their writings.
It was not Litan being paid that was the problem, but the fact he claimed the words written
for him were his own as an "independent" authority.
Second Best said...
Money corrupts research as sure as the Pope is Catholic...
This is the actual paper of the model, but do not be afraid. Here are the highlights:
" HANDY is a 4-variable thought-experiment model for interaction of humans and nature.
The focus is on predicting long-term behavior rather than short-term forecasting.
Carrying Capacity is developed as a practical measure for forecasting collapses.
A sustainable steady state is shown to be possible in different types of societies.
But over-exploitation of either Labor or Nature results in a societal collapse."
There are equations. And graphs. The concluding paragraph of the abstract:
"The measure "Carrying Capacity" is developed and its estimation is shown to be a practical
means for early detection of a collapse. Mechanisms leading to two types of collapses are discussed.
The new dynamics of this model can also reproduce the irreversible collapses found in history.
Collapse can be avoided, and population can reach a steady state at maximum carrying capacity
if the rate of depletion of nature is reduced to a sustainable level and if resources are distributed
equitably."
This made the press about a year and a half ago, was commented on, but has since been ignored.
Google "Handy Model" for popular presentations and critiques.
You decide whether it should continue to be ignored, given the remarkable progress the world
has made towards remedying inequality, conserving resources, and controlling population growth.
(That's sarcasm.)
reason said...
There is another solution to this issue. Financing should never be direct to the researcher.
That way there is a funding body (say a university) that decides who researches what, and the
funding is channeled through them (through a public application process). If a firm is really
interested in disinterested research, no problem.
If it wants to control the research, they have a problem. Of course the whole funding body
could be corrupted but if there is a public review process that can be minimised.
cm said in reply to reason...
It is more subtle than asking for or implying a preference for specific results. Regardless
how the funding is distributed, except perhaps by lottery, there is the issue of "repeat business"
or expert shopping (cherry-picking research organizations that are known to fall in a particular
camp).
Then there is the issue of fads - even in relatively apolitical tech science, funding and research
flocks to certain hot topics, as people hunt for funding by trying to tie their proposal to the
current hot topics. But then this is perhaps more a consequence of an already corrupted funding
process that only supports R&D that conforms to current preconceived notions and business interests.
bakho said...
Money supports bias.
RC AKA Darryl, Ron said...
Money is power. Power corrupts.
mrrunangun said...
Most (all?) academic types are keenly aware of the importance of grantsmanship as a basic
skill. Knowing the appropriate funding sources and, in some cases, the interests and biases of
funding sources, is stock in trade. Scientific research has become so capital intensive that large
grants from government and large foundations are necessary to carry it out. For the most part,
the biases of the granting institutions are known and discounted.
Even in science, when research into a controversial area has been ambiguous enough for sustained
disagreement, it is common to find that a given research shop's work consistently comes down on
one side of the controversy and another shop's work consistently on the opposing side of the controversy.
In such cases, only people who follow the research in the area closely are likely to be aware
of this. Usually time and technical improvements in measuring equipment puts controversies to
rest, but the time is often measured in years. In these cases, the biases come from the leaders
of the research shops rather than the grantors.
There are politics among granting institutions as well. These are less often political biases
and more often they are of a personal nature, and since the people on a granting committee are
necessarily expert in the field that the grantee will be working in, they will often be personally
acquainted with the grant applicants. Not uncommonly, former students of the members of the committee.
Economics and long range climate science are necessarily model-based. Their short-term predictions
are often proven wrong which casts doubt on the reliability of their long-term predictions. As
a result, there may be legitimate differences of opinion as to the applicability of a particular
model to a particular situation.
In the case of Mr Litan, the fact that he acknowledged that his study was funded by Capital
and that he was testifying on behalf of the industry announce his bias.
GeorgeK said...
Tainted research is the norm in most industries, research dollar come from corporations that
expect their interest to be served. Currently Monsanto emails show how heavy handed this pay for
research problem has become. ...""Professors/researchers/scientists have a big white hat in this
debate and support in their states, from politicians to producers," Bill Mashek, a vice president
at Ketchum, a public relations firm hired by the biotechnology industry, said in an email to a
University of Florida professor. "Keep it up!"...
The antidote to this kind of crap is the public funded University with tenured professors and
sufficient resources (endowed Chairs) to conduct research without need to go out and get external
funding for a study. As the public funding is reduced in order to give tax cuts to the rich plutocrats
such truly independent research become more rare -and the plutocrats increasingly manage to own
the facts.
Alan Kirman is a great economist. Amazingly clear exposition of complex subjects.
Notable quotes:
"... I think what happened was on the one hand people became obsessed with proving
there was some sort of socially satisfactory situation that corresponded to markets in equilibrium,
and on the other hand, there was a lot of effort made, right up to the 1950s, to try to show
that a market or an economy would converge on that. But we gave up on that in the 70s when there
were results that showed that essentially we couldnt prove it. So the theoreticians gave up but
the underlying economic content and all of the ideology behind it has just kept going. We are
in a strange situation where on the one hand we say we should leave markets to themselves because
if they operate correctly and we get to an equilibrium this will be a socially satisfactory state.
..."
"... Nowadays, you hear all the
time about how neoliberal ideology and thought is invading European countries and is undoing forms
of governance that are actually working quite well. I work a lot in Norway and Scandinavia and
there you hear all the time that Nordic model works and at the same time it is being corrupted
by the neoliberal ideology, which is being spread in some sort of cancerous fashion. Please comment
on that-Current neoliberalism. What justifies it? Is it spreading? Is that a good thing or a bad
thing? Anything you would like to say on that topic. ..."
"... The idea that anything even close to laissez faire ever exisited is silly ..."
"... Laissez faire has never existed; it is code for when the govt allows the rich to trample
the poor, and the govt actively sides with the rich ..."
"... Too often, efficiency is modeled too simply, failing to capture important benefits. You
may make widgets with fewer workers and more unemployed but at the loss of workforce training,
most of which is on the job. ..."
"... You can reduce unit labor costs, which usually means reducing wages. But that has all sorts
of consequences, which are not perceived. ..."
"... If industry is freed by reducing their investment in human capital, replacement investment
in human capital must come from elsewhere in higher taxes on business to pay for training that
may be less effective. Else workforce quality declines and becomes a drag on overall economic
efficiency. ..."
AK: I think the basic story that really interests us is
that with the Enlightenment and with people like Adam Smith and David Hume, people had this idea
that somehow intrinsically people should be left to their own devices and this would lead society
to a state that was satisfactory in some sense for everybody, with some limits of course–law and
order and so on. That's the idea that is underlying our whole social and philosophical position
ever since. ... I think what happened was on the one hand people became obsessed with proving
there was some sort of socially satisfactory situation that corresponded to markets in equilibrium,
and on the other hand, there was a lot of effort made, right up to the 1950's, to try to show
that a market or an economy would converge on that. But we gave up on that in the 70's when there
were results that showed that essentially we couldn't prove it. So the theoreticians gave up but
the underlying economic content and all of the ideology behind it has just kept going. We are
in a strange situation where on the one hand we say we should leave markets to themselves because
if they operate correctly and we get to an equilibrium this will be a socially satisfactory state.
On the other hand, since we can't show that it gets there, we talk about economies that are
in equilibrium but that's a contradiction because the invisible hand suggests that there is a
mechanism that gets us there. And that's what we're lacking–a mechanism. ...
DSW: ...This has been a wonderful conversation, by the way. Nowadays, you hear all the
time about how neoliberal ideology and thought is invading European countries and is undoing forms
of governance that are actually working quite well. I work a lot in Norway and Scandinavia and
there you hear all the time that Nordic model works and at the same time it is being corrupted
by the neoliberal ideology, which is being spread in some sort of cancerous fashion. Please comment
on that-Current neoliberalism. What justifies it? Is it spreading? Is that a good thing or a bad
thing? Anything you would like to say on that topic.
AK: I think that one obsession that economists have is with efficiency. We're always, always,
worrying about efficiency. People like to say that this is efficient or not efficient. The argument
is, we know that if you free up markets you get a more efficient allocation of resources. That
obsession with efficiency has led us to say that we must remove some of these restraints and restrictions
and this sort of social aid that is built into the Scandinavian model. I think that's without
thinking carefully about the consequences. ...
I think what has happened is, because of this mythology about totally free markets being efficient,
we push for that all the time and in so doing, we started to do things like-for example, we hear
all the time that we have to reform labor markets in Europe. Why do we want to reform them? Because
then they'll be more competitive. You can reduce unit labor costs, which usually means reducing
wages. But that has all sorts of consequences, which are not perceived. In model that is more
complex, that sort of arrangement wouldn't necessarily be one that in your terms would be selected
for. When you do that, you make many people temporary workers. You have complete ease in hiring
and firing so that people are shifting jobs all the time. When they do that, we know that employers
then invest nothing in their human capital. ... We're reducing the overall human capital in society
by having an arrangement like that. ... Again, the idea that people who are out of work have chosen
to be out of work and by giving them a social cushion you induce them to be out of work-that simply
doesn't fit with the facts. I think that all the ramification of these measures-the side effects
and external effects-all of that gets left out and we have this very simple framework that says
"to be competitive, you just have to free everything up." That's what undermining the European
system. European and Scandinavian systems work pretty well. ... The last remark I would make is
that to say "you've got to get rid of all those rules and regulations you have"-in general, those
rules and regulations are there for a reason. Again, to use an evolutionary argument, they didn't
just appear, they got selected for. We put them in place because there was some problem, so just
to remove them without thinking about why they are there doesn't make a lot of sense. ...
DSW: There's no invisible hand to save the day.
AK: (laughs). Joe Stiglitz used to say that we also need a visible hand. The visible hand is
sometimes pretty useful. For example in the financial sector I think you really need a visible
hand and not an invisible hand. ...
e abrams said...
The idea that anything even close to laissez faire ever exisited is silly
at all stages, the gov't actively intervened in the economy; eg, look at the rules for labor
unions....
Laissez faire has never existed; it is code for when the gov't allows the rich to trample
the poor, and the gov't actively sides with the rich
bakho said...
I enjoyed the interview with Kirman. Thanks for posting.
Too often, efficiency is modeled too simply, failing to capture important benefits. You
may make widgets with fewer workers and more unemployed but at the loss of workforce training,
most of which is on the job. This is important:
You can reduce unit labor costs, which usually means reducing wages. But that has all sorts
of consequences, which are not perceived. In model that is more complex, that sort of arrangement
wouldn't necessarily be one that in your terms would be selected for. When ... you make many people
temporary workers.... so that people are shifting jobs all the time. ..employers then invest nothing
in their human capital. ... We're reducing the overall human capital in society .. If you're working
for ... all your lifetime, they probably invest quite a lot in you. ... it is a much more stable
arrangement. .. the ramification of these measures-the side effects and external effects... gets
left out and we have this very simple framework that says "to be competitive, you just have to
free everything up."
If industry is freed by reducing their investment in human capital, replacement investment
in human capital must come from elsewhere in higher taxes on business to pay for training that
may be less effective. Else workforce quality declines and becomes a drag on overall economic
efficiency.
"... That's the idea that is underlying our whole social and philosophical position ever since.
Economics is trying to run along side that. Initially the idea was to let everybody do what they want
and this would somehow self-organize. But nobody said what the mechanism was that would do the self-organization.
John Stewart Mill advanced the same position. He had the idea that people had to be given, as far as
their role would permit, the possibility of doing their own thing, and this would be in the interests
of everybody. And gradually we came up against this difficulty that we couldn't show economically, in
a market for example, how we would ever get to such a position. I think what happened was on the one
hand people became obsessed with proving there was some sort of socially satisfactory situation that
corresponded to markets in equilibrium, and on the other hand, there was a lot of effort made, right
up to the 1950's, to try to show that a market or an economy would converge on that. But we gave up
on that in the 70's when there were results that showed that essentially we couldn't prove it. So the
theoreticians gave up but the underlying economic content and all of the ideology behind it has just
kept going. We are in a strange situation where on the one hand we say we should leave markets to themselves
because if they operate correctly and we get to an equilibrium this will be a socially satisfactory
state. On the other hand, since we can't show that it gets there, we talk about economies that are in
equilibrium but that's a contradiction because the invisible hand suggests that there is a mechanism
that gets us there. And that's what we're lacking–a mechanism. Is that clear more or less? ..."
"... Theory of Moral Sentiments ..."
"... Nowadays, if you take a very primitive version of the invisible hand, people say something
like "greed is good". Somehow, if everyone is greedy and tries to serve their own interest, it will
get to a good position socially. Adam Smith didn't have that view at all. He had the view that people
have other things in mind. For example he said that one of the strongest motivations men have is to
be seen to be a good citizen and therefore would do things that would appear to other people to be good.
If you have motivations like that then you can be altruistic and you're not behaving like the strict
Homo economicus ..."
"... Walras wasn't someone who pushed hard for laissez faire, but he started to build the weapons
for trying to understand whether all markets could get into equilibrium. He wasn't so interested, himself,
on whether the equilibrium was good for society; in other words, Adam Smith's original position. I would
say that Walras was more a person who was worried about the very existence of equilibrium and he tried
desperately at various points to show how we might get there. I don't think he was arguing in favor
of laissez faire. I wouldn't regard Walras as being strictly in that tradition. ..."
"... Pareto was concerned about the idea of the invisible hand himself. He said: "Look, what I want
to show you is that the competitive equilibrium is a social optimum. He was the person to define what
we now call a Pareto optimum, a situation in which you cannot make one person better off without making
somebody else worse off-which is a pretty weak criterion, but still is a criterion for some sort of
social efficiency. He was interested in the relationship between the two, so he brought us back on track
to what I interpret as the invisible hand. Then, we can make a huge jump it you want to the first theorem
of welfare of economics. That, mistakenly, is often referred to as the invisible hand theorem. But it
is nothing about the invisible hand. It just says that if you are in a competitive equilibrium, then
that will be a Pareto optimum, in the sense that I have just mentioned. You couldn't make someone better
off without making someone else worse off. That's all it says. It does not say that if you leave a society
alone it will get there, but thousands of people have interpreted it in that way. ..."
"... He had a different position from Walras company and he wasn't very consistent in his views.
According to Hayek, Walras said that nobody influences prices but take prices as given, and then somebody,
not specified, adjusts them until they get to equilibrium. There is some mechanism out there. ..."
"... The Road to Serfdom ..."
"... He believed that people with little information of their own, like ants, would somehow collectively
get it right. It was a very different view of the world than Walras. ..."
"... he was a pioneer in two respects. First of all, he grasped the idea of self-organizing and
decentralized processes-that the intelligence is in the system, not in any individual, and secondly
cultural group selection, that the reason economic systems were like this is because of some past history
of better systems replacing worse systems. The wisdom of the system was the product of cultural group
selection, as we would put it today, and that we shouldn't question its wisdom by tampering with it.
Is that a fair thing to say? ..."
"... Yes, that's a fair thing to say and I think it is what Hayek believed. He didn't actually show
how it would happen but you're absolutely right-I think that's what he believed and he thought tampering
with this system would make it less perfect and work less well, so just leave it alone. I don't think
he had in mind, strictly speaking, group-level selection, but that's clearly his idea. A system that
works well will eventually come to outstrip other systems. That's why he was advising Thatcher. ..."
"... He was much less naïve than Friedman. Friedman has a primitive natural selection argument that
if firms aren't doing better than other firms they'll go bust and just die. That's a summary of Friedman's
evolutionary argument! But Hayek is much more sophisticated-you're absolutely right. ..."
"... Friedman and Hayek didn't see eye to eye at all, as I understand it. Hayek was actually very
concerned that Friedman and other mathematical economists took over the Mont Pelerin Society, if I understand
it correctly, but now let's put Friedman on center stage, and also the society as a whole and the creation
of all the think tanks, which caused the society to become politically influential. ..."
"... "Greed is Good" sounds so simplistic, but what all of this seems to do is to provide some moral
justification for individuals or corporations to pursue their own interests with a clear conscience.
It's a moral justification for "Greed is Good", despite all of the complexities and all of the mathematics-that's
what it seems to come down to. Am I wrong about that? ..."
"... Macroeconomic models are still all about equilibria, don't worry about how we got them, and
their nice efficient properties, and so forth. They are nothing to do with distribution and nothing
to do with disequilibrium. Two big strands of thought-Keynes and all the people who work on disequilibrium-they're
just out of it. We're still working as if underlying all of this, greed-we don't want to call it greed,
but something like greed-is good. ..."
"... Nowadays, you hear all the time about how neoliberal ideology and thought is invading European
countries and is undoing forms of governance that are actually working quite well. I work a lot in Norway
and Scandinavia and there you hear all the time that Nordic model works and at the same time it is being
corrupted by the neoliberal ideology, which is being spread in some sort of cancerous fashion. Please
comment on that-Current neoliberalism. ..."
"... We're always, always, worrying about efficiency. People like to say that this is efficient
or not efficient. The argument is, we know that if you free up markets you get a more efficient allocation
of resources. That obsession with efficiency has led us to say that we must remove some of these restraints
and restrictions and this sort of social aid that is built into the Scandinavian model. I think that's
without thinking carefully about the consequences. ..."
"... just to make my position clear, the idea of no regulations is absurd. For a system that is
basically well adapted to its environment, then most of its regulations are there for a reason, as you
say, but one of the things that everyone needs to know about evolution is that a lot of junk accumulates.
There is junk DNA and there is junk regulations. Not every regulation has a purpose just because it's
there, and when it comes to adapting to the future, that's a matter of new regulations and picking the
right one out of many that are wrong. The question would be, how do you create smart regulations? Knowing
that you need regulations, how do you create smart ones? That's our challenge and the challenge of someone
who appreciates complexity, as you do. How would you respond to that? ..."
What you always wanted to know about the "let it be" philosophy
I'll bet money that Alan Kirman
is the only economist with animated ants running around his email signature. Highly regarded by mainstream
economists, he is also a critic of equilibrium theory and proponent of new economic thinking that
takes complex systems theory into account. It was my privilege to work with Alan and Germany's Ernst
Strungmann Forum to organize a conference titled "Complexity
and Evolution: A New Synthesis for Economics" that was held in February 2015 and will result
in a volume published by the MIT press in 2016.
After the conference was over, I sought Alan out
to help me understand the complex history of laissez faire, the "let it be" philosophy that underlies
mainstream economic theory and public policy.
DSW: I'm so happy to talk with you about the concept of laissez faire, all the way back
to its origin, which as I understand it is during the Enlightenment. Then we can bring it up to date
with some of its formalized versions in economic theory. Tell me what you know about the early history
of laissez faire.
AK: I think the basic story that really interests us is that with the Enlightenment and
with people like Adam Smith and David Hume, people had this idea that somehow intrinsically people
should be left to their own devices and this would lead society to a state that was satisfactory
in some sense for everybody, with some limits of course–law and order and so on. That's the idea
that is underlying our whole social and philosophical position ever since. Economics is trying to
run along side that. Initially the idea was to let everybody do what they want and this would somehow
self-organize. But nobody said what the mechanism was that would do the self-organization. John Stewart
Mill advanced the same position. He had the idea that people had to be given, as far as their role
would permit, the possibility of doing their own thing, and this would be in the interests of everybody.
And gradually we came up against this difficulty that we couldn't show economically, in a market
for example, how we would ever get to such a position. I think what happened was on the one hand
people became obsessed with proving there was some sort of socially satisfactory situation that corresponded
to markets in equilibrium, and on the other hand, there was a lot of effort made, right up to the
1950's, to try to show that a market or an economy would converge on that. But we gave up on that
in the 70's when there were results that showed that essentially we couldn't prove it. So the theoreticians
gave up but the underlying economic content and all of the ideology behind it has just kept going.
We are in a strange situation where on the one hand we say we should leave markets to themselves
because if they operate correctly and we get to an equilibrium this will be a socially satisfactory
state. On the other hand, since we can't show that it gets there, we talk about economies that are
in equilibrium but that's a contradiction because the invisible hand suggests that there is a mechanism
that gets us there. And that's what we're lacking–a mechanism. Is that clear more or less?
DSW: Yes, but it was very fast! I want to pull us back to the early times and make a couple
of observations. First of all, that the first thinking about laissez faire came at a time when government
was monarchy and absolutist rule. The whole struggle of the Enlightenment, to have a more egalitarian
and inclusive society, was part of this. Am I right about that?
AK: Absolutely right. There was a social and philosophical revolution, precisely because
of that. Men were trying to liberate themselves from a very hierarchical and monarchical organization.
And economics tried to go along with that. There were good reasons and I think that even now there
is no reason to say that there is anything wrong with the liberal position. On the other hand, what
we can't show is that there is anything that would enable a liberal approach like that to get things
under control. So you're right. It was a reaction to very autocratic systems that led the whole of
the laissez faire and liberal position to develop.
DSW: Right. So laissez faire made a lot of sense against the background of monarchy and
controlling church and so on. Now I know that Adam Smith invoked the invisible hand metaphor only
three times in the entire corpus of his work and it is said that his first book on moral sentiments
is much more nuanced than the popular notion of the invisible hand. Could you speak a little more
on Adam Smith? On the one hand he's an advocate of laissez faire but on the other hand he is very
nuanced in both of his books but especially in his Theory of Moral Sentiments. What do you
have to say about that?
AK: Right. Adam Smith was fully cognizant of the fact that man is motivated by many things.
Nowadays, if you take a very primitive version of the invisible hand, people say something like
"greed is good". Somehow, if everyone is greedy and tries to serve their own interest, it will get
to a good position socially. Adam Smith didn't have that view at all. He had the view that people
have other things in mind. For example he said that one of the strongest motivations men have is
to be seen to be a good citizen and therefore would do things that would appear to other people to
be good. If you have motivations like that then you can be altruistic and you're not behaving like
the strict Homo economicus. Adam Smith didn't take the strong position that people left
entirely to their own selfish devices will make things OK. He had the view that man is much more
complicated and governed by his emotions. He talks a lot about sympathy, which we would now call
empathy.
DSW: That's great! Now let's talk about Walras and what his ambitions were to come up with
the first mathematical justification for laissez faire, as I understand it.
AK: Actually, Walras himself didn't talk so much about laissez faire. He at that time had
a very simple idea, that the amount of goods that people wanted to supply at a given price would
be the amount that people would want to buy; i.e, demand at that price, so if those two were equal
then that was the equilibrium price. Then he said that if we have many markets, how can we be sure
that they will simultaneously be cleared, because after all if you raise the price in one market
then that will effect the price in other markets. If you raise the price of bananas then the price
of oranges will be effected, and so forth. He said "my problem is to solve the market clearing for
all goods", but he was not so interested in the underlying philosophical context. Walras wasn't
someone who pushed hard for laissez faire, but he started to build the weapons for trying to understand
whether all markets could get into equilibrium. He wasn't so interested, himself, on whether the
equilibrium was good for society; in other words, Adam Smith's original position. I would say that
Walras was more a person who was worried about the very existence of equilibrium and he tried desperately
at various points to show how we might get there. I don't think he was arguing in favor of laissez
faire. I wouldn't regard Walras as being strictly in that tradition.
DSW: OK, that's new for me. So what about the rise of so-called neoclassical economics.
At what point did it become toward demonstrating what I understand is the first fundamental theorem
of economics-laissez faire leads to the common good and that being justified by some mathematical
apparatus. Where does that come from, if not from Walras?
AK: We missed a very important step, which is [Vilfredo] Pareto. Pareto was concerned
about the idea of the invisible hand himself. He said: "Look, what I want to show you is that the
competitive equilibrium is a social optimum. He was the person to define what we now call a Pareto
optimum, a situation in which you cannot make one person better off without making somebody else
worse off-which is a pretty weak criterion, but still is a criterion for some sort of social efficiency.
He was interested in the relationship between the two, so he brought us back on track to what I interpret
as the invisible hand. Then, we can make a huge jump it you want to the first theorem of welfare
of economics. That, mistakenly, is often referred to as the invisible hand theorem. But it is nothing
about the invisible hand. It just says that if you are in a competitive equilibrium, then that will
be a Pareto optimum, in the sense that I have just mentioned. You couldn't make someone better off
without making someone else worse off. That's all it says. It does not say that if you leave a society
alone it will get there, but thousands of people have interpreted it in that way.
DSW: OK. So where do we go from here? Tell me a little about agency theory, which is also
something that seems to imply, if I understand it, that the only responsibility of corporations is
to maximize their profits. The economy will work well if that's their only obligation.
AK: That's not exactly a sideline but a development where people are worrying about firms
in addition to individuals. When you are just dealing with individuals in a simple economy, when
they are exchanging goods there is no problem. When you get firms in there you need to ask "What's
the objectives of these firms?" The objective, the argument is, is if they maximize profit then they
are maximizing their shareholders' benefits and so therefore we get to the idea of increasing the
welfare of society as a whole. But there is a huge leap there, because we haven't specified closely
in our models who owns these firms and how ownership is transferred between these people. So I think
there is a fuzzy area there, which is not completely included in the theory.
DSW: Please give me a thumbnail history of the Mont Pelerin Society and the role it played
in advancing economic theory and policy. So this would be Hayek, Friedman and all that.
AK: The great hero of that society was Hayek. He had a different position from Walras
& company and he wasn't very consistent in his views. According to Hayek, Walras said that nobody
influences prices but take prices as given, and then somebody, not specified, adjusts them until
they get to equilibrium. There is some mechanism out there. That was Walras. Hayek said "Not
at all!" He said - actually he was a horrid man.
DSW: Wait a minute! Why was he a horrid man? You can't just glide over that!
AK: The reason I say that is-he had very clever ideas-but he was extremely bigoted, he
was racist. There is a wonderful interview with him that you can find on You Tube, where he says
(imitating Hayek's accent) "I am not a racist! People accuse me of being a racist. Now it's true
that some of the Indian students at the London School of Economics behave in a very nasty way, typical
of Indian people…" and he carries on like this. So that's one reason he is horrid. A second thing
is that if you don't believe he is horrid, David, I will send you his book The Road to Serfdom,
which said that if there is any planning going on in the economy, it will inevitably lead you to
a fascist situation. When he produced that book it had a big success, particularly in the United
States, and what is more, he authorized a comic book version of it, which is absolutely dreadful.
One Nobel Prize winner, [Ronald] Coase, said "you are carrying on so much against central planning,
you forget that a large part of our economy is actually governed by centrally planned institutions,
i.e., big firms, and these big firms are doing exactly what you say they can't do. Hayek shrugged
that off, but what he did in his book was say that if any planning goes on then eventually you are
all going to wind up in a fascist state where you'll be shot if you don't do what you're told to
do. At the end of the book there is some poor guy who's being shot because he wants to be a carpenter
or a plumber, or something like that. It's terrible! And the irony of the whole situation is that
comic book was issued and financed by General Motors, and GM of course is one of those corporations
that Hayek didn't see were centrally planned institutions. That's way I say that Hayek was a dreadful
person.
Hayek's idea was, there is no way that people could know what was going on and could know what
the prices of goods are. Everyone has a little piece of information of their own, and in acting upon
it, this news gets out into the market. So, for example I buy something such as a share, and you
say "Oh, Kirman bought a share, so something must be going on there, based on information that he
had that I didn't have", and so forth. Hayek's idea was that this mechanism-people watching each
other and getting information from their acts, would lead you to the equilibrium that would be a
socially optimal state. But again, he never specified closely what the mechanism was. He has little
examples, such as one about shortage of tin and how people would adjust, but never really specified
the mechanism. He believed that people with little information of their own, like ants, would
somehow collectively get it right. It was a very different view of the world than Walras.
DSW: So he was a pioneer in two respects. First of all, he grasped the idea of self-organizing
and decentralized processes-that the intelligence is in the system, not in any individual, and secondly
cultural group selection, that the reason economic systems were like this is because of some past
history of better systems replacing worse systems. The wisdom of the system was the product of cultural
group selection, as we would put it today, and that we shouldn't question its wisdom by tampering
with it. Is that a fair thing to say?
AK: Yes, that's a fair thing to say and I think it is what Hayek believed. He didn't
actually show how it would happen but you're absolutely right-I think that's what he believed and
he thought tampering with this system would make it less perfect and work less well, so just leave
it alone. I don't think he had in mind, strictly speaking, group-level selection, but that's clearly
his idea. A system that works well will eventually come to outstrip other systems. That's why he
was advising Thatcher. Just trust the markets and let things go. Get rid of the unions, and
so forth. So it's clearly he had in mind that interfering with that system would just lead you to
a worse social situation. He was much less naïve than Friedman. Friedman has a primitive natural
selection argument that if firms aren't doing better than other firms they'll go bust and just die.
That's a summary of Friedman's evolutionary argument! But Hayek is much more sophisticated-you're
absolutely right.
DSW: I think Hayek was explicit about cultural group selection, and Friedman-I've paid
quite a bit of attention to his 1953 article on positive economics, in which he makes a very naïve
evolutionary argument. Friedman and Hayek didn't see eye to eye at all, as I understand it. Hayek
was actually very concerned that Friedman and other mathematical economists took over the Mont Pelerin
Society, if I understand it correctly, but now let's put Friedman on center stage, and also the society
as a whole and the creation of all the think tanks, which caused the society to become politically
influential.
AK: Yes, I think that it coincided very nicely with conservative ideology and people who
had really strongly liberal-not in the Mills sense (you have to make this distinction particularly
in the United States where these words have different meanings), but really completely free market
leave-everybody-to-their own-thing libertarian point of view. Those people found it a wonderful place
to gather and reinforce themselves. And Hayek was a strong member of that. Another was Gary Becker,
but I don't know how directly. Becker had the economics of everything-divorce, whatever. You'd have
these simple arguments, but not necessarily selection arguments, often some sort of justification
in terms of a superior arrangement. The marginal utility of the woman getting divorced just has to
equal the marginal utility of not getting divorced and that would be the price of getting divorced,
and that sort of stuff. Adam Smith would have rolled over in this grave because he believed emotions
played a strong role in all of this and the emotions that you have during divorce don't tie into
these strict calculations.
DSW: This is a tailor-made ideology for powerful interests, powerful people and corporations
who simply do want to have their way. Is that a false statement to make?
AK: No, I think that's absolutely right. They can benefit from using that argument to advance
their own ends. As someone once said, if you think of saying to firms, we're going to diminish their
taxes, no firm in its right mind would argue with that. Even though they might think deep down that
there are other things that could be done for society. There are some things which are part of this
philosophy which is perfect for firms and powerful interest groups. You're absolutely right. And
so they lobby for this all the time, pushing for these positions that are in fact in their own interest.
DSW: So, at the end of the day, "Greed is Good" sounds so simplistic, but what all
of this seems to do is to provide some moral justification for individuals or corporations to pursue
their own interests with a clear conscience. It's a moral justification for "Greed is Good", despite
all of the complexities and all of the mathematics-that's what it seems to come down to. Am I wrong
about that?
AK: I think you're absolutely right. What's interesting is that if you look at various
economic situations, like today the first thing that people tell you about the Greeks is that they
are horrid ideological people. But the people on the other side have an equally strong ideology,
which is being justified by the sort of economic models that we are building. Remember that even
though we had this discussion about how this became a real difficulty in theoretical economics, in
macroeconomics they simply carried on as if these theoretical difficulties hadn't happened. Macroeconomic
models are still all about equilibria, don't worry about how we got them, and their nice efficient
properties, and so forth. They are nothing to do with distribution and nothing to do with disequilibrium.
Two big strands of thought-Keynes and all the people who work on disequilibrium-they're just out
of it. We're still working as if underlying all of this, greed-we don't want to call it greed, but
something like greed-is good.
DSW: Could I ask about Ayn Rand and what role she played, if any? On the one hand she was
not an economist, she was just a philosopher and novelist. On the other hand, she is right up there
in the pantheon of free market deities alone with Smith, Hayek and Friedman. Do you ever think about
Ayn Rand. Does any economist think about Ayn Rand?
AK: That's an example of my narrowness that I never read Ayn Rand, I just read about her.
I think it would be unfair now to make any comments about that because I'd be as uninformed as some
people who talk about Adam Smith. What I should do at some point is read some of her work, because
she is constantly being cited on both sides as a dark bad figure or as a heroine in the pantheon
as you said, with Hayek and everybody else. I just admit my ignorance and I don't know if Rand had
a serious position on her own or whether she is being cited as a more popular and easily accessible
figure.
DSW: Fine! I'd like to wrap this up with two questions. This has been a wonderful conversation,
by the way. Nowadays, you hear all the time about how neoliberal ideology and thought is invading
European countries and is undoing forms of governance that are actually working quite well. I work
a lot in Norway and Scandinavia and there you hear all the time that Nordic model works and at the
same time it is being corrupted by the neoliberal ideology, which is being spread in some sort of
cancerous fashion. Please comment on that-Current neoliberalism. What justifies it? Is it spreading?
Is that a good thing or a bad thing? Anything you would like to say on that topic.
AK: I think that one obsession that economists have is with efficiency. We're always,
always, worrying about efficiency. People like to say that this is efficient or not efficient. The
argument is, we know that if you free up markets you get a more efficient allocation of resources.
That obsession with efficiency has led us to say that we must remove some of these restraints and
restrictions and this sort of social aid that is built into the Scandinavian model. I think that's
without thinking carefully about the consequences. Let me tell you my favorite and probably
not very funny story about how economists are obsessed with efficiency. There were three people playing
golf; a priest, a psychoanalyst, and an economist. The got very upset because the guy in front was
playing extremely slowly and he had a caddy to help him. So these guys get very upset and they start
to shout and say "Come on, can we play through please! You can't waste all of our afternoon!" They
sent the priest up to find out what was going on and he came back absolutely crestfallen and said
"You know why that poor guy is laying so slowly? It's because he's blind. I'm so upset because every
Sunday I'm preaching to people to be nice to others." He turns to his psychoanalyst friend and say's
"Joe, what do you think?" Joe says "I have these guys on my coach every week. I'm trying to help
them live with this problem and here I am screaming at this guy. It's horrible!" Then they turn to
the economist and say "Fred, what do you think?" Fred says "I think that this situation is totally
inefficient. This guy should play at night!" As you can see, this is a very different attitude to
how the world works.
I think what has happened is, because of this mythology about totally free markets being efficient,
we push for that all the time and in so doing, we started to do things like-for example, we hear
all the time that we have to reform labor markets in Europe. Why do we want to reform them? Because
then they'll be more competitive. You can reduce unit labor costs, which usually means reducing wages.
But that has all sorts of consequences, which are not perceived. In model that is more complex, that
sort of arrangement wouldn't necessarily be one that in your terms would be selected for. When you
do that, you make many people temporary workers. You have complete ease in hiring and firing so that
people are shifting jobs all the time. When they do that, we know that employers then invest nothing
in their human capital. When you have a guy who may disappear tomorrow-and we have a lot of these
temporary agencies now in Europe–which send you people when you need them and take away people when
you don't. Employers don't spend anything on human capital. We're reducing the overall human capital
in society by having an arrangement like that. If you're working for Toyota, Toyota knows pretty
much that you'll be working all your lifetime, so they probably invest quite a lot in you. They make
you work hard for that, but nevertheless it is a much more stable arrangement. Again, the idea that
people who are out of work have chosen to be out of work and by giving them a social cushion you
induce them to be out of work-that simply doesn't fit with the facts. I think that all the ramification
of these measures-the side effects and external effects-all of that gets left out and we have this
very simple framework that says "to be competitive, you just have to free everything up." That's
what undermining the European system. European and Scandinavian systems work pretty well. Unemployment
is not that high in the Scandinavian system. It may be a little bit less efficient but it may also
be a society where people are a little bit more at ease with themselves, than they are in a society
where they are constantly worrying about what will happen to them next. The last remark I would make
is that to say "you've got to get rid of all those rules and regulations you have"-in general, those
rules and regulations are there for a reason. Again, to use an evolutionary argument, they didn't
just appear, they got selected for. We put them in place because there was some problem, so just
to remove them without thinking about why they are there doesn't make a lot of sense.
DSW: Right, but at the same time, a regulation is a like a mutation: for every one that's
beneficial there are a hundred that are deleterious. So…
AK: You are an American, deep at heart! You believe that all these regulations are dreadful.
Think of regulations about not allowing people to work too near a chain saw that's going full blast,
or not being allowed to work with asbestos and so forth. Those rules, I think, have a reason to be
there.
DSW: Well of course, but just to make my position clear, the idea of no regulations
is absurd. For a system that is basically well adapted to its environment, then most of its regulations
are there for a reason, as you say, but one of the things that everyone needs to know about evolution
is that a lot of junk accumulates. There is junk DNA and there is junk regulations. Not every regulation
has a purpose just because it's there, and when it comes to adapting to the future, that's a matter
of new regulations and picking the right one out of many that are wrong. The question would be, how
do you create smart regulations? Knowing that you need regulations, how do you create smart ones?
That's our challenge and the challenge of someone who appreciates complexity, as you do. How would
you respond to that?
AK: I think you're absolutely right. It's absolutely clear that as these regulations accumulate,
they weren't developed in harmony with each other, so you often get even contradictory regulations.
Every now and then, simplifying them is hugely beneficial. But that doesn't mean getting rid of regulations
in general. It means somehow managing to choose between them, and that's not necessarily a natural
process. For example, in France when I arrived here it used to take about a day and a half to make
my tax return. Now it takes around about 20 minutes, because some sensible guy realized that you
could simplify this whole thing and you could put a lot of stuff already into the form which they
have received. They have a lot of information from your employer and so forth. They've simplified
it to a point where it takes me about 20 minutes a year to do my tax return. It used to take a huge
amount of time.
DSW: Nice!
AK: What's interesting is that you have some intelligent person saying "let's look at this
and see if we can't make these rules much simpler, and they did. I have conflicting views, like you.
These things are usually there for a reason, so you shouldn't just throw them away, but how do you
select between them. I don't think that they necessarily select themselves out.
DSW: I would amend what you said. You said that some intelligent person figured out how
to make the tax system work better in France. Probably not just a single intelligent person. Probably
it was an intelligent process, which included intelligent people, but I think that gets us back to
the idea that we need systemic processes to evaluate and select so that we become adaptable systems.
But that will be systemic thing, not a smart individual.
AK: You're absolutely right. I shouldn't have said smart individual because what surely
happened was that there was a lot of pressure on the people who handle all of these things, and gradually
together they realized that this situation was becoming one where their work was becoming almost
impossible to achieve in the time available. So there was some collective pressure that led them
to form committees and things that thought about this and got it together. So it was a natural process
of a system, but it wasn't the rules themselves that selected themselves out, as it were. It was
the collectivity that evolved in that way to make it simpler.
DSW: There's no invisible hand to save the day.
AK: (laughs). Joe Stiglitz used to say that we also need a visible hand. The visible hand
is sometimes pretty useful. For example in the financial sector I think you really need a visible
hand and not an invisible hand.
DSW. That's great and a perfect way to end. I'm so happy to have had this conversation,
Alan, and to be working with you at the conference we just staged and into the future.
AK: A pleasure. Always good to talk with you.
Alan Kirman is professor emeritus of Economics at the University of Aix-Marseille III
and at the Ecole des Hautes Etudes en Sciences Sociales and is a member of the Institut Universitaire
de France. His Ph.D. is from Princeton and he has been professor of economics at Johns Hopkins University,
the Universite Libre de Bruxelles, Warwick University, and the European University Institute in Florence,
Italy. He was elected a fellow of the Econometric Society and of the European Economic Association
and was awarded the Humboldt Prize in Germany. He is member of the Institute for Advanced Study in
Princeton. He has published 150 articles in international scientific journals. He also is the author
and editor of twelve books, most recently
Complex Economics: Individual and Collective Rationality, which was published by Routledge in
July 2010.
"... In 1959, noted American
economist Moses Abramovitz cautioned that "we must be highly skeptical of the view that long-term
changes in the rate of growth of welfare can be gauged even roughly from changes in the rate of growth
of output." ..."
"... In 2009, a commission of leading economists convened by President Nicolas Sarkozy of France and
chaired by Nobel laureate Joseph Stiglitz reported on the inadequacies of GDP. They noted well-known
issues such as the fact that GDP does not capture changes in the quality of the products (think of
mobile phones over the past 20 years) or the value of unpaid labor (caring for an elderly parent
in the home). The commission also cited evidence that GDP growth does not always correlate with increases
in measures of well-being such as health or self-reported happiness, and concluded that growing GDP
can have deleterious effects on the environment. ..."
"... Our issue isn't with GDP per se. As the English say, "It does what it says on the tin"-it measures
economic activity or output. Rather, our issue is with the nature of that activity itself. Our question
is whether the activities of our economy that are counted in GDP are truly enhancing the prosperity
of our society. ..."
"... Robert Shiller
of Yale University, who ironically shared this year's Nobel with Fama, showed in the early 1980s
that stock market prices did not always reflect fundamental value, and sometimes big gaps could open
up between the two. ..."
"... And therein lies the difference between a poor society and a prosperous one. It isn't the amount
of money that a society has in circulation, whether dollars, euros, beads, or wampum. Rather, it
is the availability of the things that create well-being-like antibiotics, air conditioning, safe
food, the ability to travel, and even frivolous things like video games. It is the availability of
these "solutions" to human problems-things that make life better on a relative basis-that makes us
prosperous. ..."
"... This is why prosperity in human societies can't be properly understood by just looking at monetary
measures of income or wealth. Prosperity in a society is the accumulation of solutions to human problems. ..."
The most basic measure we have of economic growth is gross domestic product. GDP was developed from
the work in the 1930s of the American economist Simon Kuznets and it became the standard way to measure
economic output following the 1944 Bretton Woods conference. But from the beginning, Kuznets and
other economists highlighted that GDP was not a measure of prosperity. In 1959, noted American
economist Moses Abramovitz cautioned that "we must be highly skeptical of the view that long-term
changes in the rate of growth of welfare can be gauged even roughly from changes in the rate of growth
of output."
In 2009, a commission of leading economists convened by President Nicolas Sarkozy of France and
chaired by Nobel laureate Joseph Stiglitz reported on the inadequacies of GDP. They noted well-known
issues such as the fact that GDP does not capture changes in the quality of the products (think of
mobile phones over the past 20 years) or the value of unpaid labor (caring for an elderly parent
in the home). The commission also cited evidence that GDP growth does not always correlate with increases
in measures of well-being such as health or self-reported happiness, and concluded that growing GDP
can have deleterious effects on the environment. Some countries have experimented with other
metrics to augment GDP, such as Bhutan's "gross national happiness index."
Our issue isn't with GDP per se. As the English say, "It does what it says on the tin"-it measures
economic activity or output. Rather, our issue is with the nature of that activity itself. Our question
is whether the activities of our economy that are counted in GDP are truly enhancing the prosperity
of our society.
Since the field's beginnings, economists have been concerned with why one thing has more value than
another, and what conditions lead to greater prosperity-or social welfare, as economists call it.
Adam Smith's famous diamond-water paradox showed that quite often the market price of a thing does
not always reflect intuitive notions of its intrinsic value-diamonds, with little intrinsic value,
are typically far more expensive than water, which is essential for life. This is of course where
markets come into play-in most places, water is more abundant than diamonds, and so the law of supply
and demand determines that water is cheaper.
After lots of debate about the nature of economic value in the nineteenth and early twentieth
centuries, economists considered the issue largely settled by the mid-twentieth century. The great
French economist Gerard Debreu argued in his 1959 Theory of Value that if markets are competitive
and people are rational and have good information, then markets will automatically sort everything
out, ensuring that prices reflect supply and demand and allocate everything in such a way that everyone's
welfare is maximized, and that no one can be made better off without making someone else worse off.
In essence, the market price of something reflects a collective judgment of the value of that thing.
The idea of intrinsic value was always problematic because it was inherently relative and hard to
observe or measure. But market prices are cold hard facts. If market prices provide a collective
societal judgment of value and allocate goods to their most efficient and welfare-maximizing uses,
then we no longer have to worry about squishy ideas like intrinsic value; we just need to look at
the price of something to know its value.
Debreu was apolitical about his theory-in fact, he saw it as an exercise in abstract mathematics
and repeatedly warned about over-interpreting its applicability to real-world economies. However,
his work, as well as related work in that era by figures such as Kenneth Arrow and Paul Samuelson,
laid the foundations for economists such as Milton Friedman and Robert Lucas, who provided a devastating
critique of Keynesianism in the 1960s and '70s, and recent Nobel laureate Eugene Fama, who pioneered
the theory of efficient markets in finance in the 1970s and '80s. According to the neoclassical theory
that emerged from this era, if markets are efficient and thus "welfare-maximizing," then it follows
that we should minimize any distortions that move society away from this optimal state, whether it
is companies engaging in monopolistic behavior, unions interfering with labor markets, or governments
creating distortions through taxes and regulation.
These ideas became the intellectual touchstone of a resurgent conservative movement in the 1980s
and led to a wave of financial market deregulation that continued through the 1990s up until the
crash of 2008. Under this logic, if financial markets are the most competitive and efficient markets
in the world, then they should be minimally regulated. And innovations like complex derivatives must
be valuable, not just to the bankers earning big fees from creating them, but to those buying them
and to society as a whole. Any interference will reduce the efficiency of the market and reduce the
welfare of society. Likewise the enormous pay packets of the hedge-fund managers trading those derivatives
must reflect the value they are adding to society - they are making the market more efficient. In
efficient markets, if someone is willing to pay for something, it must be valuable. Price and value
are effectively the same thing.
Even before the crash, some economists were beginning to question these ideas. Robert Shiller
of Yale University, who ironically shared this year's Nobel with Fama, showed in the early 1980s
that stock market prices did not always reflect fundamental value, and sometimes big gaps could open
up between the two. Likewise, behavioral economists like Daniel Kahneman began showing that
real people didn't behave in the hyper-rational way that Debreu's theory assumed. Other researchers
in the 1980s and '90s, even Debreu's famous co-author Arrow, began to question the whole notion of
the economy naturally moving to a resting point or "equilibrium" where everyone's welfare is optimized.
An emerging twenty-first century view of the economy is that it is a dynamic, constantly evolving,
highly complex system-more like an ecosystem than a machine. In such a system, markets may be highly
innovative and effective, but they can sometimes be far from efficient. And likewise, people may
be clever, but they can sometimes be far from rational. So if markets are not always efficient and
people are not always rational, then the twentieth century mantra that price equals value may not
be right either. If this is the case, then what do terms like value, wealth, growth, and prosperity
mean?
Prosperity Isn't Money, It's Solutions
In every society, some people are better off than others. Discerning the differences is simple. When
someone has more money than most other people, we call him wealthy. But an important distinction
must be drawn between this kind of relative wealth and the societal wealth that we term "prosperity."
What it takes to make a society prosperous is far more complex than what it takes to make one individual
better off than another.
Most of us intuitively believe that the more money people have in a society, the more prosperous
that society must be. America's average household disposable income in 2010 was $38,001 versus $28,194
for Canada; therefore America is more prosperous than Canada.
But the idea that prosperity is simply "having money" can be easily disproved with a simple thought
experiment. (This thought experiment and other elements of this section are adapted from Eric Beinhocker's
The Origin of Wealth, Harvard Business School Press, 2006.) Imagine you had the $38,001 income of
a typical American but lived in a village among the Yanomami people, an isolated hunter-gatherer
tribe deep in the Brazilian rainforest. You'd easily be the richest Yanomamian (they don't use money
but anthropologists estimate their standard of living at the equivalent of about $90 per year). But
you'd still feel a lot poorer than the average American. Even after you'd fixed up your mud hut,
bought the best clay pots in the village, and eaten the finest Yanomami cuisine, all of your riches
still wouldn't get you antibiotics, air conditioning, or a comfy bed. And yet, even the poorest American
typically has access to these crucial elements of well-being.
And therein lies the difference between a poor society and a prosperous one. It isn't the amount
of money that a society has in circulation, whether dollars, euros, beads, or wampum. Rather, it
is the availability of the things that create well-being-like antibiotics, air conditioning, safe
food, the ability to travel, and even frivolous things like video games. It is the availability of
these "solutions" to human problems-things that make life better on a relative basis-that makes us
prosperous.
This is why prosperity in human societies can't be properly understood by just looking at monetary
measures of income or wealth. Prosperity in a society is the accumulation of solutions to human problems.
These solutions run from the prosaic, like a crunchier potato chip, to the profound, like cures for
deadly diseases. Ultimately, the measure of a society's wealth is the range of human problems that
it has found a way to solve and how available it has made those solutions to its citizens. Every
item in the huge retail stores that Americans shop in can be thought of as a solution to a different
kind of problem-how to eat, clothe ourselves, make our homes more comfortable, get around, entertain
ourselves, and so on. The more and better solutions available to us, the more prosperity we have.
The long arc of human progress can be thought of as an accumulation of such solutions, embodied in
the products and services of the economy. The Yanomami economy, typical of our hunter-gatherer ancestors
15,000 years ago, has a variety of products and services measured in the hundreds or thousands at
most. The variety of modern America's economy can be measured in the tens or even hundreds of billions.
Measured in dollars, Americans are more than 500 times richer than the Yanomami. Measured in access
to products and services that provide solutions to human problems, we are hundreds of millions of
times more prosperous.
"... This is Naked Capitalism fundraising week. 329 donors have already invested in our efforts to
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via our Tip Jar , which shows how to give via
check, credit card, debit card, or PayPal. Read about
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what
we've accomplished in the last year , and
our second target , funding for travel to conferences and in connection with original reporting. ..."
"... These companies – according to JPMorgan analysts cited by
Bloomberg – have incurred $119 billion in interest expense over the 12 months through
the second quarter. The most ever. ..."
"... last thing ..."
"... As recently as 2012, companies were refinancing at interest rates that were 0.83 percentage
point cheaper than the rates on the debt they were replacing, JPMorgan analysts said. That gap
narrowed to 0.26 percentage point last year, even without a rise in interest rates, because the
average coupon on newly issued debt increased. ..."
"... "Increasingly alarming" is what Goldman's credit strategists led by Lotfi Karoui called this deterioration
of corporate balance sheets. And it will get worse as yields edge up and as corporate revenues and
earnings sink deeper into the mire of the slowing global economy. ..."
"... But it isn't working anymore. Bloomberg found that since May, shares of companies that have
plowed the most into share buybacks have fallen even further than the S P 500. Wal-Mart is a prime
example. Turns out, once financial engineering fails, all bets are off. Read…
The Chilling Thing Wal-Mart Said about Financial Engineering ..."
"... It spelled out in Micheal Hudson's – Killing the Host. Economics and investment banking
wraps itself in the persona as the engine of growth when, in fact, it is the engine of dis-employment,
stagnate wages, declining manufacturing, inflated property prices which raise the cost of food
production and everything else including forcing a majority to spend more of their income on
debt service leaving less for anything beyond subsistence living. ..."
"... "trillions are wasted and misdirected into useless financial "engineering" as
opposed to real world engineering" ..."
"... I read yesterday that less than 6% of Bank financing is now going to real tangible
assets – the balance goes in various forms to intangible goodwill ..."
"... Tony Soprano called it a "bust up" – take over a business and use the brand to skim the
profits, buy goods and services and roll them out the backdoor and declare BK and then buy it
back for pennies on the dollar. ..."
"... 35 years ago, I spent a day at Ngorongoro Crater in Tanzania with a driver in a rover by
myself watching the Hyenas take down a sick Buffalo culling him out in a gang, working the
animal for hours, as he shuffled along until he fell and ten….. finally ate him in a ferocious
climax. The most fascinating part of the entire trip. ..."
"... Now there is a big fat tax deductible expense, and down the road, "value" is created
when companies are bought for the tax carry forward losses. Win, win win. ..."
"... Is a company that eliminates thousands of jobs via automation or outsourcing worthy of the
public's credit? ..."
This is Naked Capitalism fundraising week. 329 donors have already invested in our efforts to
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via our Tip Jar, which shows how to give via
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our second target, funding for travel to conferences and in connection with original reporting.
Yves here. As anyone who has been in finance know, leverage amplifies gains and losses. Big company
execs, apparently embracing the "IBG/YBG" ("I'll Be Gone, You'll Be Gone") school of management,
apparently believed they could beat the day of reckoning that would come of relying on stock buybacks
to keep EPS rising, regardless of the underlying health of the enterprise. But even in an era of
super-cheap credit, investors expect higher interest rates for more levered businesses, which is
what you get when you keep borrowing to prop up per-share earnings. As Richter explains, the chickens
are starting to come home to roost.
Companies with investment-grade credit ratings – the cream-of-the-crop "high-grade" corporate
borrowers – have gorged on borrowed money at super-low interest rates over the past few years, as
monetary policies put investors into trance. And interest on that mountain of debt, which grew another
4% in the second quarter, is now eating their earnings like never before.
These companies – according to JPMorgan analysts cited by
Bloomberg – have incurred $119 billion in interest expense over the 12 months through
the second quarter. The most ever. With impeccable timing: for S&P 500 companies,
revenues have been in a recession all year, and the last thing companies need
now is higher expenses.
Risks are piling up too: according to Bloomberg, companies' ability pay these interest expenses,
as measured by the interest coverage ratio, dropped to the lowest level since 2009.
Companies also have to refinance that debt when it comes due. If they can't, they'll end up going
through what their beaten-down brethren in the energy and mining sectors are undergoing right now:
reshuffling assets and debts, some of it in bankruptcy court.
But high-grade borrowers can always borrow – as long as they remain "high-grade." And for years,
they were on the gravy train riding toward ever lower interest rates: they could replace old higher-interest
debt with new lower-interest debt. But now the bonanza is ending. Bloomberg:
As recently as 2012, companies were refinancing at interest rates that were 0.83 percentage
point cheaper than the rates on the debt they were replacing, JPMorgan analysts said. That gap
narrowed to 0.26 percentage point last year, even without a rise in interest rates, because the
average coupon on newly issued debt increased.
And the benefits of refinancing at lower rates are dwindling further:
Companies saved a mere 0.21 percentage point in the second quarter on refinancings as investors
demanded average yields of 3.12 percent to own high-grade corporate debt – about half a percentage
point more than the post-crisis low in May 2013.
That was in the second quarter. Since then, conditions have worsened. Moody's Aaa Corporate Bond
Yield index, which tracks the highest-rated borrowers, was at 3.29% in early February. In July last
year, it was even lower for a few moments. So refinancing old debt at these super-low interest rates
was a deal. But last week, the index was over 4%. It currently sits at 3.93%. And the benefits of
refinancing at ever lower yields are disappearing fast.
What's left is a record amount of debt, generating a record amount of interest expense, even at
these still very low yields.
"Increasingly alarming" is what Goldman's credit strategists led by Lotfi Karoui called this deterioration
of corporate balance sheets. And it will get worse as yields edge up and as corporate revenues and
earnings sink deeper into the mire of the slowing global economy.
But these are the cream of the credit crop. At the other end of the spectrum – which the JPMorgan
analysts (probably holding their nose) did not address – are the junk-rated masses of over-indebted
corporate America. For deep-junk CCC-rated borrowers, replacing old debt with new debt has suddenly
gotten to be much more expensive or even impossible, as yields have shot up from the low last June
of around 8% to around 14% these days:
Yields have risen not because of the Fed's policies – ZIRP is still in place – but because investors
are coming out of their trance and are opening their eyes and are finally demanding higher returns
to take on these risks. Even high-grade borrowers are feeling the long-dormant urge by investors
to be once again compensated for risk, at least a tiny bit.
If the global economy slows down further and if revenues and earnings get dragged down with it,
all of which are now part of the scenario, these highly leveraged balance sheets will further pressure
already iffy earnings, and investors will get even colder feet, in a hail of credit down-grades,
and demand even more compensation for taking on these risks. It starts a vicious circle, even
in high-grade debt.
Alas, much of the debt wasn't invested in productive assets that would generate income and make
it easier to service the debt. Instead, companies plowed this money into dizzying amounts of share
repurchases designed to prop up the company's stock and nothing else, and they plowed it into grandiose
mergers and acquisitions, and into other worthy financial engineering projects.
Now the money is gone. The debt remains. And the interest has to be paid. It's the hangover after
a long party. And even Wall Street is starting to fret, according to Bloomberg:
The borrowing has gotten so aggressive that for the first time in about five years, equity
fund managers who said they'd prefer companies use cash flow to improve their balance sheets outnumbered
those who said they'd rather have it returned to shareholders, according to a survey by Bank of
America Merrill Lynch.
But it's still not sinking in. Companies are still announcing share buybacks
with breath-taking amounts, even as revenues and earnings are stuck in a quagmire. They want to prop
up their shares in one last desperate effort. In the past, this sort of financial engineering worked.
Every year since 2007, companies that bought back their own shares aggressively saw their shares
outperform the S&P 500 index.
But it isn't working anymore. Bloomberg found that since May, shares of companies that have
plowed the most into share buybacks have fallen even further than the S&P 500. Wal-Mart is a prime
example. Turns out, once financial engineering fails, all bets are off. Read…
The Chilling Thing Wal-Mart Said about Financial Engineering
Wolf Richter is a San Francisco based executive, entrepreneur, start up specialist,
and author, with extensive international work experience. Originally published at
Wolf Street.
TomDority, October 16, 2015 at 8:01 am
One wonders where all that "investment" goes…pretty much into the CEO's pockets and
investors pockets because banks do not create money by investing in real legitimate capital
formation or producing anything tangible…..i
It spelled out in Micheal Hudson's – Killing the Host. Economics and investment banking
wraps itself in the persona as the engine of growth when, in fact, it is the engine of dis-employment,
stagnate wages, declining manufacturing, inflated property prices which raise the cost of food
production and everything else including forcing a majority to spend more of their income on
debt service leaving less for anything beyond subsistence living.
These trillions are wasted and misdirected into useless financial "engineering" as opposed
to real world engineering….at the expense of a habitable peaceful planet. Soon, I hope, this
dislocation will be corrected. As I have said before, a good start would be to tax that which
is harmful (unearned income and rent seeking) and de-tax that which is helpful – real capital
formation, infrastructure and maintenance of a habitable planet and the absolutely necessary
biodiversity that sustains us.
david, October 16, 2015 at 8:57 am
"trillions are wasted and misdirected into useless financial "engineering" as
opposed to real world engineering"
I read yesterday that less than 6% of Bank financing is now going to real tangible
assets – the balance goes in various forms to intangible goodwill
this is not "useless" from the standpoint of those who direct this game.
Tony Soprano called it a "bust up" – take over a business and use the brand to skim the
profits, buy goods and services and roll them out the backdoor and declare BK and then buy it
back for pennies on the dollar.
the money is used for dividends and buybacks all that money is accumulated by the LBO firms
and management to maneuver the situation / process to the point of the bust up – this time
they are all going simultaneously for the exit even the most high end S&P firm – the HY prices
are deteriorating quickly beyond energy related as % LTV goes higher – before 82′ the LTV of
Fortune Cos. was way below 20% – 35% was considered max –
the same characters / groups will be formed to get to 51% to buy and control the bonds at
20-30% on the dollar in BK and take the assets.
35 years ago, I spent a day at Ngorongoro Crater in Tanzania with a driver in a rover by
myself watching the Hyenas take down a sick Buffalo culling him out in a gang, working the
animal for hours, as he shuffled along until he fell and ten….. finally ate him in a ferocious
climax. The most fascinating part of the entire trip.
USA, USA, USA !
cnchal, October 16, 2015 at 9:38 am
. . .Now the money is gone. The debt remains. And the interest has to be paid,. . .
Now there is a big fat tax deductible expense, and down the road, "value" is created
when companies are bought for the tax carry forward losses. Win, win win.
Just Ice, October 16, 2015 at 10:53 am
"Companies with investment-grade credit ratings …"
With government-subsidized private credit creation, the whole concept of "creditworthiness"
is suspect. Example, is Smith-Wesson "credit-worthy" to many Progressives? Yet, it's their
credit, as part of the public, that would be extended should S&W take out a bank loan.
Is a company that eliminates thousands of jobs via automation or outsourcing worthy of the
public's credit?
By Philip Arestis Professor and Director of Research at the Cambridge Centre for Economic &
Public Policy and Senior Fellow in the Department of Land Economy at the University of Cambridge,
UK, and Professor of Economics at the University of the Basque Country and Malcolm Sawyer, Professor
of Economics, University of Leeds. Originally published at
Triple Crisis
Has the financial sector become too large, absorbing too many resources, and enhancing instabilities?
A look at the recent evidence on the relationship between the size of the financial sector and growth.
There has been a long history of the idea that a developing financial sector (emphasis on banks
and stock markets) fosters economic growth. Going back to the work of authors such as Schumpeter,
Robinson, and more recently, McKinnon, etc., there have been debates on financial liberalisation
and the related issue of whether what was relevant to financial liberalisation, namely financial
development, "caused" economic development, or whether economic development led to a greater demand
for financial services and thereby financial development.
The general thrust of the empirical evidence collected over a number of decades suggested that
there was indeed a positive relationship between the size and scale of the financial sector (often
measured by the size of the banking system as reflected in ratio of bank deposits to GDP, and the
size of the stock market capitalisation) and the pace of economic growth. Indeed, there have
been discussion on whether the banking sector or the stock market capitalisation is a more influential
factor on economic growth. The empirical evidence drew on time series, cross section, and panel
econometric investigations. To even briefly summarise the empirical evidence on all these aspects
is not possible here. In addition, the question of the direction of causation still remains an unresolved
issue.
The processes of financialisation over the past few decades have involved the growing economic,
political and social importance of the financial sector. In size terms, the financial sector has
generally grown rapidly in most countries, whether viewed in terms of the size of bank deposits,
stock market valuations, or more significantly in the growth of financial products, securitisation,
and derivatives as well as trading volume in them. This growth of the financial sector uses resources,
often of highly trained personnel, and inevitably raises the question of whether those resources
are being put to good use. This is well summarised by Vanguard Group founder John Bogle, who suggests,
"The job of finance is to provide capital to companies. We do it to the tune of $250 billion a year
in IPOs and secondary offerings. What else do we do? We encourage investors to trade about $32 trillion
a year. So the way I calculate it, 99% of what we do in this industry is people trading with one
another, with a gain only to the middleman. It's a waste of resources" (MarketWatch, Aug. 1
2015).
Financial liberalisation and de-regulation were promoted as ways of releasing the power of the
financial sector, promoting development of financial markets and financial deepening. The claims
were often made by the mainstream that financial liberalisation had removed "financial repression"
and stimulated growth. Yet, financial liberalisation in a country often led to banking and financial
crises, many times with devastating effects on employment and living standards. Financial crises
have become much more frequent since the 1970s in comparison with the "golden age" of the 1950s and
1960s. The international financial crisis of 2007/2008 and the subsequent Great Recession were the
recent and spectacular crises (though the scale of previous crises such as the East Asian ones of
1997 should not be overlooked). The larger scale of the financial sector in the industrialised countries
has been accompanied (even before 2007) with somewhat lower growth than hitherto. As the quote above
suggests there has not been an upsurge of savings and investment, and indeed many would suggest that
the processes of financialisation dampen the pressures to invest, particularly in research and development.
Has the financial sector become too large, absorbing too many resources, and enhancing instabilities?
An interesting recent development has been a spate of research papers coming from international
organisations and many others, which have pointed in the direction that indeed the financial sector
in industrialised countries have become too big-at least when viewed in terms of its impact on economic
growth. (See Sawyer, "Financialisation, financial structures, economic performance and employment,"
FESSUD Working Paper Series No. 93, for a broad survey on finance and economic performance.) These
studies rely on econometric (time series) estimation and hence cover the past few decades-which suggests
that their findings are not in any way generated by the financial crisis of 2007/2008 and the Great
Recession that followed.
A Bank of International Settlements study concluded that "the complex real effects of financial
development and come to two important conclusions. First, financial sector size has an inverted U-shaped
effect on productivity growth. That is, there comes a point where further enlargement of the financial
system can reduce real growth. Second, financial sector growth is found to be a drag on productivity
growth." Cournède, Denk,and Hoeller (2015) state that "finance is a vital ingredient for economic
growth, but there can also be too much of it." Sahay, et al. (2015) find a positive relationship
between financial development (as measured by their "comprehensive index") and growth, but "the marginal
returns to growth from further financial development diminish at high levels of financial development―that
is, there is a significant, bell-shaped, relationship between financial development and growth. A
similar non-linear relationship arises for economic stability. The effects of financial development
on growth and stability show that there are tradeoffs, since at some point the costs outweigh the
benefits."
There are many reasons for thinking that the financial sector has become too large. Its growth
in recent decades has not been associated with facilitating savings and encouraging investment. It
has absorbed valuable resources which are largely engaged in the trading in casino-like activities.
The lax systems of regulation have made financial crises more likely. Indeed, and following the international
financial crisis of 2007/2008 and the great recession a number of proposals have been put forward
to avoid similar crises. To this day, nonetheless, the implementation of these proposals is very
slow indeed (see, also, Arestis, "Main and Contributory Causes of the Recent Financial Crisis and
Economic Policy Implications," for more details).
Now that Michael Hudson's Killing the Host has been available for a while, one suspects
a Picketty-like effect with folks "discovering" that Taibbi's Giant Vampire Squid characterization
of Goldman-Sachs (one of many) wasn't funny.
blert, October 9, 2015 at 5:24 pm
It's a squid that squirts RED INK - onto everyone else.
susan the other, October 9, 2015 at 11:03 am
This is a great and readable essay. Sure sounds like Minsky. And even Larry Summers when he
advocates for more bubbles. And Wolfgang Schaeuble said repeatedly that "we are overbanked." We
just don't know how to do it any other way. When everything crashes it's too late to regulate.
Unless Larry knows a clever way to regulate bubbles.
JTMcPhee, October 10, 2015 at 8:40 am
The Banksters' refrain:
"Don't regulate you,
Don't regulate me!
Regulate that guy over behind that tree…"
MY scam is systemically important!
Just Ice, October 10, 2015 at 3:34 pm
"We just don't know how to do it any other way. " STO
Yet there is another way, an equitable way :) Dr. Michael Hudson himself says that industry
should be financed with equity, not debt.
Leonard, October 10, 2015 at 3:53 pm
Susan
There is way to manage bubbles before they get out of control. This article explains how. Go to
wp.me/WQA-1E
ben, October 9, 2015 at 11:17 am
Wasted resources are way higher than the Vanguard example. They misdirect resources especially
into land and issue new money as debt.
RepubAnon, October 10, 2015 at 11:29 pm
They think that they make their living by "ripping the eyes out of the muppets" – so they're
opposed to regulations which would protect the muppets' eyes.
I look at the financial industry as sort of like sugar for the economy – the right amount is
good for you, but too much will kill you.
Just Ice, October 9, 2015 at 12:35 pm
"The lax systems of regulation have made financial crises more likely."
Actually, it's the near unlimited ability of the banks to create deposits ("loans create deposits"
but also debts) that causes large scale financial crises. And what is the source of this absurd
ability of the banks? ans: government privileges including deposit insurance instead of a Postal
Savings Service or equivalent and a fiat (the publics' money) lender of last resort.
Besides, regulations typically do not address the fundamental injustice of government subsidized
banks – extending the publics' credit to private interests.
There is something very wrong about money creation from loans. I'm not arguing that
this is incorrect, I'm looking at money creation being a burden on the citizenry. I cannot see
how this will end well, because of the asymmetric nature, money creation only benefits the banks,
of the burden of money creation.
"There is something very wrong about money creation from loans."
More precisely, there is something very wrong about being driven into debt by government-subsidized
private credit creation. Source of the rat race? Look no further.
It's the bank-money vs. government money situation. The hysteria over "The Deficit (gasp)"
insures that none of us have cash and must borrow to live. The bankers won.
"It's the bank-money vs. government money situation." zapster
More precisely, who gets to create the government's money since it is taxation* that drives
the value of fiat. But it's an absurd situation since obviously the government ALONE should create
fiat, not a central bank for the benefit of banks and other private interests, especially the
wealthy.
As for the private sector, let it create its own money solutions and my bet is that we'll have
a much more equitable (pun intended) society as a result.
The problem then is taxation. How does one tax someone's income in Bitcoins, for example? How
does one preclude tax evasion? Unavoidable taxes such as land taxes (except for a homestead exemption)
are one possibility.
*As well as the need to pay the interest on the debt the government subsidized banking cartel
drives us into.
*Sigh*. The government alone does control the money supply in a fiat currency issuer. The government
hasn't bothered to do so actively because the only time it DID try doing that (under Reagan and
Thatcher) they found out, contra Friedman, that money supply growth bore no relationship to any
macroeconomic variable. Monetarism was a failed experiment.
Scroll down to "The Idea of Interest". This author posits that back in the (ancient, herding)
day, people lent cattle. I lend you my cow, your bull impregnates her, and I get a part of the
calf.
What the author probably didn't understand, but is known to those of us interested in the history
of metallurgy, is that there was a belief that metals 'grew' - after all, plants grew from the
ground, vines grew from the ground, trees and bushes also grew from the ground. It was not a great
stretch to suppose that metals also grew within the ground, and back in those ancient days they
expected the same kind of 'growth' from metals that happened with agricultural products.
Perhaps if I ever get to retire, I can read Hudson's entire work, and possibly he covers this
topic. But I do think that it is time for the rest of us to rethink the nature of money - particularly
in an emerging digital era.
Thanks for that link. Here is a little nugget that relates to today.
The legal limit on interest rates for loans of silver was 20% over much of Dumuzi-gamil's
life, but Marc Van De Mieroop demonstrates how Dumuzi-gamil and other lenders got around such
strictures - they simply charged the legal limit for shorter and shorter term loans!
Curiously, while mathematics during this era was extraordinarily advanced, the government
failed to understand, or at least effectively regulate the close link between time
and money.
Sound familiar. It's more like the banksters regulate government.
As for compound interest, it seems to be the most diabolical human invention yet, as it infers
exponential growth without limits.
Here is Keynes
discussing compound interest in his speech "Economic Possibilities for our Grandchildren" (1930)
From the earliest times of which we have record – back say to two thousand years before
Christ – down to the beginning of the eighteenth century, there was no very great change in
the standard of life of the average man living in the civilized centres of the earth. Ups and
downs certainly. Visitations of plague, famine, and war. Golden intervals. But no progressive,
violent change. Some periods perhaps 50 per cent better than others – at the utmost 100 per
cent better – in the four thousand years which ended (say) in A.D. 1700.
This slow rate of progress, or lack of progress, was due to two reasons – to the remarkable
absence of important technical improvements and to the failure of capital to accumulate.
The absence of important technical inventions between the prehistoric age and comparatively
modern times is truly remarkable. Almost everything which really matters and which the world
possessed at the commencement of the modern age was already known to man at the dawn of history.
Language, fire, the same domestic animals which we have today, wheat, barley, the vine and
the olive, the plough, the wheel, the oar, the sail, leather, linen and cloth, bricks and pots,
gold and silver, copper, tin, and lead – and iron was added to the list before 1000 B.C. –
banking, statecraft, mathematics, astronomy, and religion. There is no record
of when we first possessed these things.
At some epoch before the dawn of history – perhaps even in one of the comfortable intervals
before the last ice age – there must have been an era of progress and invention comparable
to that in which we live today. But through the greater part of recorded history there was
nothing of the kind.
The modern age opened, I think, with the accumulation of capital which began in the
sixteenth century. I believe – for reasons with which I must not encumber the present
argument – that this was initially due to the rise of prices, and the profits to which that
led, which resulted from the treasure of gold and silver which Spain brought from the New World
into the Old. From that time until today the power of accumulation by compound interest,
which seems to have been sleeping for many generations, was reborn and renewed its strength.
And the power of compound interest over two hundred years is such as to stagger the imagination.
Let me give in illustration of this a sum which I have worked out. The value of Great Britain's
foreign investments today is estimated at about £4,000 million. This yields us an income at
the rate of about 6 1/2 per cent. Half of this we bring home and enjoy; the other half, namely,
3 1/2 per cent, we leave to accumulate abroad at compound interest. Something of this sort
has now been going on for about 250 years.
For I trace the beginnings of British foreign investment to the treasure which Drake
stole from Spain in 1580. In that year he returned to England bringing with him the
prodigious spoils of the Golden Hind. Queen Elizabeth was a considerable shareholder in the
syndicate which had financed the expedition. Out of her share she paid off the whole of England's
foreign debt, balanced her budget, and found herself with about £40,000 in hand. This she invested
in the Levant Company – which prospered. Out of the profits of the Levant Company, the East
India Company was founded; and the profits of this great enterprise were the foundation of
England's subsequent foreign investment. Now it happens that £40,000 accumulating at
3 1/2 per cent compound interest approximately corresponds to the actual volume of England's
foreign investments at various dates, and would actually amount today to the total of £4,000
million which I have already quoted as being what our foreign investments now are.
Thus, every £1 which Drake brought home in 1580 has now become £100,000. Such
is the power of compound interest !
From the sixteenth century, with a cumulative crescendo after the eighteenth, the great
age of science and technical inventions began, which since the beginning of the nineteenth
century has been in full flood – coal, steam, electricity, petrol, steel, rubber, cotton, the
chemical industries, automatic machinery and the methods of mass production, wireless, printing,
Newton, Darwin, and Einstein, and thousands of other things and men too famous and familiar
to catalogue.
What is the result? In spite of an enormous growth in the population of the world, which
it has been necessary to equip with houses and machines, the average standard of life in Europe
and the United States has been raised, I think, about fourfold. The growth
of capital has been on a scale which is far beyond a hundred-fold of what
any previous age had known. And from now on we need not expect so great an increase of population.
This reminds me of the huge fortunes growing at compound interest today.
From Wikipedia: It had an endowment of US$42.3 billion as of 24 November 2014.
If this were to grow at a compound interest rate of 7.2% annually, it would double every ten
years, and in one hundred years would be $43 trillion dollars and in two hundred years $44,354
trillion or $44.354 quadrillion. It's as if Bill and Warren are playing a practical joke on the
world, as their compound interest monster swallows every available dollar.
I wonder what a loaf of bread will cost in two hundred years?
Top heavy might be the marginally better angle to take here. Although I recently left the state
(N Texas, Dallas), Texas banks are being merged or acquired left and right. On some occasions
it is necessary if very small institutions are unable to compete, unable to meet a decent ROE
bogey (6.0% ROE is sorta low), or just unable to fend off progress.
Other occasions the larger regional and national banks can just win on scale.
I have long thought about the banking system as a beating heart. Of course it needs fuel, like
the rest of the body, but when a heart gets larger and larger, and contains more and more blood,
and uses more and more fuel, the rest of the body never fares well.
"Surging bank profits" is never a headline that makes me happy.
The real question is: why was it that the "creation of wealth" had to turn
to the financial sector. IMHO it's because the productive sector is lesser and lesser able
to produce surplus value. So that free capital istn't attracted to it. Of course in the financial
sector there isn't any value created at all.
" IMHO it's because the productive sector is lesser and lesser able to produce surplus
value. "
Yes, because of unjust wealth distribution; the host has finally been exhausted. With meta-materials,
nano-technology, genetic engineering, better catalysts, etc. and with practical nuclear fusion
on the horizon (because of new superconducting materials) mankind has probably never been on the
verge of creating so much value as now but can't because of lack of effective demand, not for
junk but for such things as proper medical and dental care while the wealthy have more than they
know what to do with.
Decades of 'political – solvency' insurance has permitted 'the blob' to overwhelm all.
&&&
If all of society played Poker … would anything be produced ? THAT'S the aspect that has
metastasized. It's not proper to term it the 'financial sector' - gambling// speculation emporium…
now you're talking. When the government chronically intervenes to bail out highly sophisticated
fools…. Jon Corzine is the result. - And he's not even the target of law enforcement !!!!
Financial liberalisation and de-regulation were promoted as ways of releasing the power
of the financial sector, promoting development of financial markets and financial deepening.
"... The biggest lie is money and the notion that issuers of fiat currencies, sovereign
governments, are like households and need to balance deficit spending by borrowing the
shortfall in tax revenues. ..."
As an economist who was taught at the Australian National University in the 1980s, I know,
now, that the profession has more in common with PolSci than it has to do with math. Yet, we
had all those demand and supply graphs, ISLM, Phillips curves and so on. Very mathy, we even
did Economic Stats, Accounting and Comp Sci just to round off the notion that Economic
theories were like, say Physics, full of 'laws' that were immutable.
Non economists, most of the rest of you, I hope, can only imagine what it feels like to
know that much of what you read and thought about during those years of study was complete
crap as the syllabus failed to account for fraud, corruption, how money and debt works in
reality etc….
The biggest lie is money and the notion that issuers of fiat currencies, sovereign
governments, are like households and need to balance deficit spending by borrowing the
shortfall in tax revenues.
Hopefully, the new thinkers in the profession like Steve, can continue to spread their
message
Knute Rife, October 13, 2015 at 12:05 am
When I was an undergrad, I took macro and micro in very classical courses. It didn't take
long to see the "math" on the board was more conjuring than calculating. In law school I took
Law and Economics from an econ prof. There were about three of us in the class who had any
decent math. The prof's "calculations" had us constantly looking at one another. One day she
finally hit the limit. We pointed out to her that she had the central fraction reversed. She
stood back and said (I kid you not), "Oh well, it doesn't matter." I turned down the sound on
economic "calculations" in general after that.
Furzy Mouse, October 12, 2015 at 12:42 pm
Keen's talk….cannot read the subtitles….the screen is too small, even when I go to YouTube…
Have you tried your browser's zoom function? This is often CTRL-Plus. CTRL-Minus reduces
the size, and CTRL-Zero restores the default size.
low_integer, October 12, 2015 at 2:00 pm
If you put your cursor on the bottom right corner of the video and click, the video will
expand into full screen. It is one of the options in the bar that is only visible when your
cursor is at the bottom of the video area, from which you can also turn the subtitles on and
off. Also, press escape to exit full screen mode. Hope that makes sense
Brzezinski's claim that "Russia must work with, not against, the US in Syria" is false. The fact
of the matter is that "the US must work with, not against Russia in Syria," as Russia controls the
situation, is in accordance with international law, and is doing the right thing.
Washington's position is that only Washington decides and that Washington intends to unleash yet
more chaos on the world in the hope that it reaches Russia.
Several commentators, such as Mike Whitney and Stephen Lendman, have concluded, correctly, that
there is nothing that Washington can do about Russian actions against the Islamic State. The
neoconservatives' plan for a UN no-fly zone over Syria in order to push out the Russians is a pipedream.
No such resolution will come out of the UN. Indeed, the Russians have already established a de facto
no-fly zone.
Putin, without issuing any verbal threats or engaging in any name-calling, has decisively shifted
the power balance, and the world knows it.
... ... ...
worbsid
It is completely impossible for Obama to admit he is wrong. Note the 60 Min interview.
Mini-Me
Wondering which host the neocons will attach themselves to after having sucked the US dry.
A parasite should never kill its host.
A Lunatic
Following advice from the likes of Brzezinski is a large part of the problem......
BarnacleBill
I've posted this before, but... we can't ask the question too often: Who sold ISIS all those
Toyotas? ISIS didn't buy them themselves out of some Texas showroom, custom-built for desert warfare!
Right?
I must admit this certainly seems like a wild BEAST in action. Wreakless, seemingly unpredictable
causing mass chaos in its wake
Chad_the_short_...
Why don't they want to hit israel? I thought all muslims wanted a piece of Israel.
Macon Richardson
Do you really have to ask?
Reaper
ISIS are the nutured harpies of Barack, McCain and the neo-cons, which inflict death and mayhem
upon their targets. ISIS's evil is Barack's, McCain's and the neo-con" projected evil.
War crimes text (Geneva Convention): "To this end, the following acts are and shall remain prohibited
at any time and in any place whatsoever with respect to the above-mentioned persons:
a)violence to life and person, in particular murder of all kinds, mutilation, cruel treatment
and torture;
Anyone making these bullshit comments about ISIS being the USA's extra-military arm (or Israel's)
has obviously NEVER BEEN IN THE MILITARY. Ditto any of the alphabet covert services.
ISIS is the enemy, period. They cleverly arose in a vacuum, and disperse at the first sign of
military opposition that has its shit together.
Yeah, go out there and tell some US special ops his buddy's death, maybe at the hands of ISIS,
was his own govt's doing.
Go do it you insulated fucks...I dare you. And see what happens. First rule in clandestine warfare;
don't shit in your own mess tent.
SgtShaftoe
I was in the military, enlisted and officer corps. I lost a few of good friends from my
unit in Iraq II. ISIS is absolutely a creation of CIA/DoD (at a distance, like planting seeds
and watering them), just as so many other tragedies have the blood squarely on the hands of the
same. I've seen it with my own eyes. Sorry dude, you're fucking wrong. When military people
see shit they shouldn't have seen, they're either brought in, or they accidentally fall out of
the sky. That's just the way it is.
Winston Smith 2009
"ISIS is the enemy, period."
Absolutely.
"They cleverly arose in a vacuum"
And what created that vacuum? The lack of the only thing, apparently, that can keep these religious
fanatics absolutely infesting that area of the world in line: a dictator. Who foolishly removed
the dictator in Iraq? These ignorant, arrogant assholes:
-----
In his book, "The End of Iraq: How American Incompetence Created A War Without End," Former Ambassador
to Croatia Peter Galbraith, the son of the late economist John Kenneth Galbraith, claims that
American leadership knew very little about the nature of Iraqi society and the problems it would
face after the overthrow of Saddam Hussein.
A year after his "Axis of Evil" speech before the U.S. Congress, President Bush met with three
Iraqi Americans, one of whom became postwar Iraq's first representative to the United States.
The three described what they thought would be the political situation after the fall of Saddam
Hussein. During their conversation with the President, Galbraith claims, it became apparent to
them that Bush was unfamiliar with the distinction between Sunnis and Shiites.
Galbraith reports that the three of them spent some time explaining to Bush that there are two
different sects in Islam--to which the President allegedly responded, "I thought the Iraqis were
Muslims!"
"From the president and the vice president down through the neoconservatives at the Pentagon,
there was a belief that Iraq was a blank slate on which the United States could impose its vision
of a pluralistic democratic society," said Galbraith. "The arrogance came in the form of a belief
that this could be accomplished with minimal effort and planning by the United States and that
it was not important to know something about Iraq."
-----
"Yeah, go out there and tell some US special ops his buddy's death, maybe at the hands of ISIS,
was his own govt's doing."
Only indirectly, but the astoundingly arrogant stupidity at the highest levels of his government
unnecessarily caused the conditions that led to it. It was and is their absolutely clueless meddling
that is the problem.
And don't get the idea that I'm a pacifist. Far from it. Geopolitical gaming including the use
of military force has been and always will be the way the world works. There's nothing I or anyone
else can do or ever will be able to do about that. Since that is the case, I want the "coaches"
of my "team" to be smart. They aren't.
I would agree it is in bad taste to go tell someone who is active military that they are fighting
an enemy their own govt created.
But
When something is hard to say, a lot of times its just the truth.
Now if the people listening aren't open minded to the possibility, well . . . there exists
the potential to get decked in the face by a marine.
Also, ISIS is not a direct branch of U.S. forces, its a group the U.S. funded, created to perpetuate
a war so that the U.S. can spill into borders outside of current combat zones .... the scenario
is sorta like well ..."O I know we attacked Iraq, but there is this new boogieman and he is called
Isis and BTW hes living in your garage so I have to invade your land now... "and so on and on
new invasion one after the other into new areas all blamed on the spread of isis ISIS IS HERE,
WE NEED TO INVADE, ISIS IS THERE WE NEED TO INVADE,
ISIS IS EVERYWHERE ALL YOUR BASE ARE BELONG TO U.S.
Thats probably what the strategy was, and it failed horribly when Russia exposed the hypocrisy
when it directly decided to engage and terminate the ISIS group , it revealed that the U.S. has
no intention of squelching ISIS, and now you have proof that the U.S. govt is just para-dropping
weapons in random locations all around the middle east..... they dont even care who gets the weapons,
they just want a bunch of pissed off people armed to the teeth . . .
The greatest hypocrisy of all is the fact that while the U.S. govt is dropping weapons all
over the place (its a weapons free-for-all bonanza ) right now, they are pushing Gun Control and
Confiscation here at home....
What does that say about your govt? when it is actively caught red handed arming terrorists,
while pushing gun confiscation domestically ??? lol its not that far of a stretch to connect the
dots... cmon
SuperRay
Salah you sure are righteous. Like you've been in the deep shit. Maybe we should call you four
leaf instead. What do you think?
Bullshitting a soldier who's risking his life for what he thinks is a noble cause, is unconscionable.
You're saying - trust your leaders, they know best. I say, what planet on you on, you fucking
moron? The neocon assholes who are guiding, or mis-guiding, policy in the middle east should be
lined up and shot for treason. Why is Russia destroying ISIS at blistering speed? Because they
want to destroy it. We could've done the same thing, but is we destroyed ISIS and 'won' the battle
against terrorism, the defense contractors might not make tons of money this year. We always need
an enemy. Get It? We've always been at war with Eurasia? There's no money for the Pentagon without
war, so we have to always have an enemy. Duh
datura
I feel awful that Russia is now almost alone in this enormous fight:-(....We in the West won't
help them. It feels like WWII again and Russians will have to bear the grunt alone again. Westerners
don't seem to change. We are practically good for nothing cowards. Sorry to say, but it is so.
And we even dare to judge them in any way??? We dare to judge their leader or their level of democracy?
It just makes me sick.
These is how Russian ladies, who fought in WWII, looked like. These seemingly fragile creatures...more
valiant than Western men at those times.
https://www.youtube.com/watch?v=kraFEWO7Z44
Dre4dwolf
They aren't alone, the U.S. is leaving care packages full of weapons and supplies all over
the middle east for Russia to discover. Its like an easter egg hunt, except there is no easter
because your in a Muslim shit-hole, and.... there are no bunnies, just pissed of Jihadis who want
to shoot you.
Better find the eggs before they do.
Mike Masr
And the US regime change in Ukraine resurrected Frankensteins' monster Nazism!
One week ago, when summarizing the current state of play in Syria,
we said that for Obama, "this is shaping up to be the most spectacular US foreign policy
debacle since Vietnam." Yesterday, in tacit confirmation of this assessment, the Obama administration
threw in the towel on one of the most contentious programs it has implemented in "fighting ISIS",
when the Defense Department announced it was abandoning the goal of a U.S.-trained Syrian force.
But this, so far, partial admission of failure only takes care of one part of Obama's problem: there
is the question of the "other" rebels supported by the US, those who are not part of the officially-disclosed
public program with the fake goal of fighting ISIS; we are talking, of course, about the nearly 10,000
CIA-supported "other rebels", or technically mercenaries, whose only task is to take down Assad.
The same "rebels" whose fate the
AP profiles today when it writes that the CIA began a covert operation in 2013 to arm,
fund and train a moderate opposition to Assad. Over that time, the CIA has trained an estimated
10,000 fighters, although the number still fighting with so-called moderate forces is unclear.
The effort was separate from the one run by the military, which trained militants willing
to promise to take on IS exclusively. That program was widely considered a failure, and
on Friday, the Defense Department announced it was abandoning the goal of a U.S.-trained Syrian
force, instead opting to equip established groups to fight IS.
It is this effort, too, that in the span of just one month Vladimir Putin has managed to render
utterly useless, as it is officially "off the books" and thus the US can't formally support these
thousands of "rebel-fighters" whose only real task was to repeat the "success" of Ukraine and overthrow
Syria's legitimate president: something which runs counter to the US image of a dignified democracy
not still resorting to 1960s tactics of government overthrow. That, and coupled with Russia and Iran
set to take strategic control of Syria in the coming months, the US simply has no toehold any more
in the critical mid-eastern nation.
And so another sad chapter in the CIA's book of failed government overthrows comes to a close,
leaving the "rebels" that the CIA had supported for years, to fend for themselves.
CIA-backed rebels in Syria, who had begun to put serious pressure on President Bashar Assad's
forces, are now under Russian bombardment with little prospect of rescue by their American
patrons, U.S. officials say.
Over the past week, Russia has directed parts of its air campaign against U.S.-funded groups
and other moderate opposition in a concerted effort to weaken them, the officials say.
The Obama administration has few options to defend those it had secretly armed and trained.
The Russians "know their targets, and they have a sophisticated capacity to understand the
battlefield situation," said Rep. Mike Pompeo, R-Kan., who serves on the House Intelligence Committee
and was careful not to confirm a classified program. "They are bombing in locations that are not
connected to the Islamic State" group.
... ... ..
Incidentally, this is just the beginning. Now that the U.S. has begun its pivot out
of the middle-east, handing it over to Putin as Russia's latest sphere of influence
on a silver platter, there will be staggering consequences for middle-east geopolitics. In out preview
of things to come last week, we concluded by laying these out; we will do the same again:
The US, in conjunction with Saudi Arabia and Qatar, attempted to train and support Sunni extremists
to overthrow the Assad regime. Some of those Sunni extremists ended up going crazy and declaring
a Medeival caliphate putting the Pentagon and Langley in the hilarious position of being forced
to classify al-Qaeda as "moderate." The situation spun out of control leading to hundreds
of thousands of civilian deaths and when Washington finally decided to try and find real "moderates"
to help contain the Frankenstein monster the CIA had created in ISIS (there were of course numerous
other CIA efforts to arm and train anti-Assad fighters, see below for the fate of the most "successful"
of those groups), the effort ended up being a complete embarrassment that culminated with the
admission that only "four or five" remained and just days after that admission, those "four or
five" were car jacked by al-Qaeda in what was perhaps the most under-reported piece of foreign
policy comedy in history.
Meanwhile, Iran sensed an epic opportunity to capitalize on Washington's incompetence. Tehran
then sent its most powerful general to Russia where a pitch was made to upend the Mid-East balance
of power. The Kremlin loved the idea because after all, Moscow is stinging from Western economic
sanctions and Vladimir Putin is keen on showing the West that, in the wake of the controversy
surrounding the annexation of Crimea and the conflict in eastern Ukraine, Russia isn't set to
back down. Thanks to the fact that the US chose extremists as its weapon of choice in Syria,
Russia gets to frame its involvement as a "war on terror" and thanks to Russia's involvement,
Iran gets to safely broadcast its military support for Assad just weeks after the nuclear deal
was struck. Now, Russian airstrikes have debilitated the only group of CIA-backed fighters that
had actually proven to be somewhat effective and Iran and Hezbollah are preparing a massive ground
invasion under cover of Russian air support. Worse still, the entire on-the-ground effort is being
coordinated by the Iranian general who is public enemy number one in Western intelligence circles
and he's effectively operating at the behest of Putin, the man that Western media paints as the
most dangerous person on the planet.
As incompetent as the US has proven to be throughout the entire debacle, it's still
difficult to imagine that Washington, Riyadh, London, Doha, and Jerusalem are going to take this
laying down and on that note, we close with our assessment from Thursday: "If Russia
ends up bolstering Iran's position in Syria (by expanding Hezbollah's influence and capabilities)
and if the Russian air force effectively takes control of Iraq thus allowing Iran to exert a greater
influence over the government in Baghdad, the fragile balance of power that has existed in the
region will be turned on its head and in the event this plays out, one should not expect
Washington, Riyadh, Jerusalem, and London to simply go gentle into that good night."
Which is not to say that the latest US failure to overthrow a mid-east government was a total
failure. As Joshua Landis, a Syria expert at the University of Oklahoma says "probably 60 to
80 percent of the arms that America shoveled in have gone to al-Qaida and its affiliates."
Which is at least great news for the military-industrial complex. It means more "terrorist
attacks" on U.S. "friends and allies", and perhaps even on U.S. soil - all courtesy of the US government
supplying the weapons - are imminent.
BlueViolet
It's not a fiasco. It's a success. AlQaeda/ISIS created by Israel and financed by US.
Stackers
Never forget the first chapter of this story happened in 2011 Benghazi Libya when the Turkey
brokered arms deal went bad, Obama admin abandoned them and one CIA op posing as an ambasador
and his security detail were killed.
This thing has been a shit show from day one and involves scandal after scandal
The Indelicate ...
Video: Israeli forces open fire on Palestinian demonstrators in Gaza killing seven
There is no such thing as 10,000 CIA 'rebels' - that's only their on-line name.
There is a 10,000-man CIA assassination team or better still - mafia hit squad - in Syria.
They're not rebels, they're not terrorists, they're not even mercs. They are paid criminal assassins,
nothing more. My country hired them, so my country is guilty of racketeering and assassination.
There are no degrees of separation here - the U.S. is directly responsible. Since the acts were
perpetrated by people who are also violating the Constitution of the U.S., they are criminals
and traitors.
We should do something about them... right after this season of Keeping Up With The Kardashians.
WTFRLY
White House still ignores murder of American reporter Serena Shim who filmed western aid to
ISIS February 27, 2015
1 year almost since her death. Today would have been her 30th birthday.
SWRichmond
You and I (and perhaps others) wonder how 10,000 "moderate rebels" were vetted before being
trained and equipped. I am guessing an interview with some commander-wannabee, who said "yes I
am a moderate" and then CIA said "awesome, here's $500,000,000.00 and a boatload of sophisticated
weapons. Go hire and train some more moderates." Or maybe CIA just asked McCain and took his word
for it.
...but few believe the U.S. can protect its secret rebel allies
Some secret...
This kind of shit is what you get when the deep state breathes its own fumes.
Lore
Exactly. American hands are drenched in blood. It's not enough just to withdraw from Syria
and leave a bunch of mercs and "assets" to burn, and it's not enough to go after the individuals
behind specific atrocities like 911, the bombing of the hospital, or the weddings, or Abu Ghraib,
or Benghazi, or, or... Nothing will be fixed or resolved until those responsible for drafting,
approving and implementing the pathological policy behind all the loss of life over the past decade
are prosecuted and brought to justice. Unless and until that happens, America has abandoned its
moral foundation and is doomed as a nation. It's just a practical observation.
geno-econ
Neocons went a step too far with their marauder agenda in Ukraine and Syria. Now they
have been silenced by Putin with a show of force exposing US weakness. Both Bush and Obama
showed weakness in not controllling Neocon influence in Wash. and is now reflectrd in political
party turmoil. EU should rejoice because US policy in Syria caused refugee problem which
will subside with end of civil war in Syria. Kiev government now also realizes US will not support
real confrontation with Russia and Russia will not give up Crimea. Neocon experiment in achieving
growth through regime change has been a total failure and huge drain on US economy.
greenskeeper carl
I agree 100%. What I'm dreading is listening to all the republitards in the next debate trying
to one up each other on the war mongering. The problem with 'let Russia have it' is that it will
be talked about by the right as though that's a bad thing. It will be spun as an Obama fuck uo(which
it is) not because of the simple fact that it was never any of our business in the first place.
To them, EVERYTHING is our business, and they will be spending the next few weeks talking tough
about how they will stand up to Putin.
RockyRacoon
You got it right, Carl. If they want to see Russia get its butt kicked, give them Syria, and
Afghanistan, and Iraq and all the other crappy countries that the U. S. has managed to destabilize.
Wish the Russians luck in putting that all back together. Better yet, encourage them to annex
the whole shootin' match into the Russian alliance!
Hey, wait.... could this have been the long term plan all along? Hmmm.... Maybe them thar neocons
are smarter than they look. Nah, never mind.
sp0rkovite
The article implies the CIA "lost" Syria. When did it ever "win" it? Total political propaganda.
datura
There are some risks, yes, dead Iranian general, perhaps soon some dead Russian soldiers.
But unlike the USA, Iran is fighting for its existence here. They know if Syria falls, they could
be next. As for Russia, it is very similar. As one expert said: "When the USA looks at Syria,
they see pipelines, profit from weapons, money and power." But the first thing Putin sees, when
looking at Syria, is Chechnya. Syria is very close to Russia, but very far from the USA. And that
is a huge difference.
For example, yesterday, some ISIS fighters were arrested in Chechnya. Luckily, FSB discovered
them before they could do some harm. Not even talking about those ISIS fighters, who came to Ukraine,
to fight against the pro-Russian rebels!!! You can see, how close and how important is this to
Russia and why Russia cannot give up here and has to go to all the extremes. Including the parked
nuclear submarine near Syria.
I could say to the US lunatics: you shouldn't have kept poking the bear. You shouldn't
have supported terrorists in Chechnya. You should have left Ukraine to Russia. As Putin said very
clearly in Valdai: "Russia does not intend to take an active role in thwarting those who are still
attempting to construct their New World Order-until their efforts start to impinge on Russia's
key interests. Russia would prefer to stand by and watch them give themselves as many lumps as
their poor heads can take. But those who manage to drag Russia into this process, through disregard
for her interests, will be taught the true meaning of pain."
House of Saud better be careful, because once Syria is taken care of, they will pay dearly
for arming ISIS. If Russia wins in the ME Qatar and SA are up for regime change and the US cannot
stop it.
Neil Patrick Harris
no no no. It's a about Israel seizing legal authority to drill for oil and nat gas in the Golan
Heights/Southern Syria. The plan was to arm ISIS, help ISIS defeat Assad, let ISIS be terrible
ISIS who will then threaten Israel, giving the Israelis a perfect excuse to invade Syria, defeat
ISIS and look like a hero, then build a pipeline through Turkey, right in to Europe.
But thankfully Putin cockblocked those racist Zionists, and he is going to get all the oil
and gas for himself. Poor ol' Bibi gets nothing. Checkmate.
Freddie
http://www.moonofalabama.org/
Moon of Alabama web site is saying the See Eye Aye and Pentagram are not giving up. If
anything, they plan on ramping it up. How many more civilians do they want to kill? Sickening.
Given our military spending I think we actually could win an all-out war. We have enough nukes
to glass the planet a dozen times after all.
However, bullies don't want to fight with someone who could actually fight back, and who could
change the wars from this abstract thing that "creates jobs" and only hurts a few Americans (10k
Americans = 0.003% of the population), to something that people actually might not want.
viahj
if this is framed as an Obama failure in foreign policy (it will) in the upcoming US political
Presidential selection, the candidates will all be falling over themselves to come to the aide
of our "ME Allies" to restore order. there will be a push to re-escalate US involvement in the
ME especially with the pressure of Israel over their owned US politicians. a US retreat in the
short term while fortunate for the American people, will not stand. the warmongers will be posturing
themselves as to which will be the loudest in calling for re-engagement.
Hillary Clinton is competing for the nomination of a party whose progressive base thinks, with considerable
justification, that her husband is to blame for letting Wall Street run amok-and that Barack Obama,
under whom she served, did too little to rein in the bankers who torpedoed the global economy. On
top of that, she faces a competitor who says what the people actually think: that the system is rigged,
that big banks should be restrained, and that people should go to jail.
So she has no choice but
to try to appear tough on Wall Street-but she has to do that without simply jettisoning twenty-five
years of "New Democrat" friendliness to business and without alienating the financial industry donors
she is counting on. So the "plan"
she announced yesterday has two messages. On the one hand, she wants to show that she has the right
approach to taming Wall Street. Unfortunately, it's just more of the same: another two dozen or so
regulatory tweaks, mainly of the arcane variety, that will produce more of the massive, loophole-ridden
rules that Dodd-Frank gave us.
Or, that could be the point. Her second message is a promise to the financial industry that, instead
of real structural reforms, she will continue the technocratic incrementalism of the Geithner era-which
has left the megabanks more or less the way they were on the eve of the financial crisis. Maybe,
for her base, that's a feature, not a bug.
William K. Black, author of The Best Way to Rob a Bank is to Own One,…http://billmoyers.com/guest/william-k-black/
He developed the concept of "control fraud"-frauds in which the CEO or head of state uses the
entity as a "weapon,"
Faith in an Unregulated Free Market? Don't Fall for It: Perhaps
the most widely admired of all the economic theories taught in our
universities is the notion that an unregulated competitive economy
is optimal for everyone. ...
The problem is that these ideas are flawed. Along with George A.
Akerlof ... I have used behavioral economics to plumb the soundness
of these notions. ...
Don't get us wrong: George and I are certainly free-market
advocates. In fact, I have argued for years that we need more such
markets, like futures markets for
single-family home
prices or occupational incomes, or markets that would enable us
to trade claims on gross domestic product. I've written about these
things in this column.
But, at the same time, we both believe that standard economic
theory is typically overenthusiastic about unregulated free
markets. It usually ignores the fact that, given normal human
weaknesses, an unregulated competitive economy will inevitably
spawn an immense amount of manipulation and deception. ...
Current economic theory does recognize that if there is an
"externality" - say, a business polluting the air in the course of
producing the goods it sells - the outcome won't be optimal, and
most economists would agree that in such cases we need government
intervention.
But the problem of market-incentivized professional manipulation
and deception is fundamental, not an externality...
david said...
"But the problem of market-incentivized professional
manipulation and deception is fundamental, not an externality..."
Glad to see Shiller pushing this line.
But that's true of loads of what gets called externality --
that's the trouble with the term, it presumes some idyllic
unregulated market with just a few troubling side effects to
regulate away. The markets are made so that certain actors gain
rewards and others bear costs, fundamentally. Externality suggests
tweaks, but to go back to the Stavins bit from a few days ago, we
need to be thinking structure and power.
JohnH said...
An unregulated free market is a recipe for oligopoly and
monopoly, the very antithesis of a free market.
pgl said in reply to JohnH...
"The problem of market-incentivized professional manipulation
and deception is fundamental, not an externality" goes well beyond
anti-trust concerns."
Paul Mathis said...
Unregulated Free Markets Never Existed
Nearly 4,000 years ago the Babylonian King Hammurabi carved onto a
large stone a code of laws regulating contracts: the wages to be
paid to an ox driver or a surgeon, the liability of a builder for a
house that collapses, property that is damaged while left in the
care of another, etc. – Wikipedia.
Governments have been regulating and enforcing contracts ever
since because no economy can function without such regulation and
enforcement. And whenever government regulation is absent,
businesses collude to fix prices, divide up markets and drive out
competitors thereby nullifying any illusion of "free market"
competition.
GeorgeNYC said...
Just ask any "free market" advocate if they believe that the
stock market is a good example of their vision for a "free market".
They will invariably say "yes" as the stock market is the cathedral
of religious capitalism.
Point out to them that the "stock market" is actually one of the
most highly regulated "markets" with strict disclosure requirements
(enforced by the government) and insider trading prohibitions (also
enforced by the government), to name but a few, without which much
of our faith in the "market" would be completely eliminated (and
whose weak enforcement invariably lead to concerns about fraud). Of
course, there are also a huge number of "private" regulations that
ultimately have the force of the government behind them in that
they allow for exchanges to "self-regulate".
Most people do not understand that force is required to maintain
the type of transparency needed to allow the proper information
flow necessary to actually have a market work with true efficiency.
"Free" is a complete misnomer. "Open" would probably be better term
although that does not really fully capture the requirements.
likbez said in reply to GeorgeNYC...
That's brilliant: "the stock market is the cathedral of
religious capitalism".
The term "free market" became symbol of faith for neoliberalism and
obtained distinct religious overtones. Because neoliberalism is in
reality a secular religion. That's why neoliberalism is often
called casino capitalism.
And at the same time it is powerful instrument of propaganda of
neoliberalism, a very skillful deception that masks what is in
practice the advocacy of the law of jungle.
Advocates of "free market" (note that they never use the term
"fair market") are lavishly paid by Wall Street for one specific
purpose: first to restore and now to maintain the absolute
dominance of financial oligarchy which now successfully positioned
itself above the law. Kind of return to feudalism on a new level.
Bud Meyers said...
Great posts on this topic:
Free Markets are Fraudulent Markets (by Eric L. Prentis)
How the Financial Elite Con Us into Wanting the Wrong Thing
Competitive or self-regulating
market economies promote dynamic creative destruction and rebirth-led by people's needs, wants and
desires, thus properly directing economic progress. Historically, competitive market economies are
a relatively new economic system, and while very productive, they are not self-sustaining, are unstable
and require significant state support and regulation to function properly.
Nevertheless, self-regulating market economies are superior to other political-economic systems-such
as dictatorial fascism or autocratic communism-however, the state can mismanage them.
History of Market Economies
Market economies are nonexistent during primitive times, and even during feudal times, markets
trade local goods and remain small, with no tendency to grow. External foreign markets carry only
specialty items-such as spices, salted fish and wine. Foreign trade does not begin in feudal societies,
between individuals, but is only sanctioned by civic leaders-between whole communities.
During feudal times, markets for local community goods do not mix with markets for goods that
come from afar. Local and external foreign markets differ in size, origin and function-are strictly
segregated, and neither market is permitted to enter the countryside.
Feudal society transitions into the mercantile society of the 16th to late 18th
centuries, where the state monopolizes the economic system, for the state's benefit. Colonies are
forbidden to trade with other countries, and workers' wages are restricted. However, mercantilism
proves divisive; fostering imperialism, colonialism and many wars between the Great Powers. Market
economies have yet to arrive, and would not do so until after 1790.
During the Industrial Revolution, production processes transition from hand crafting methods that
supply only the local community, into mechanized manufacturing; thereby vastly increasing production,
driving down costs and increasing wealth. The source of a person's income is now the result of product
sales to far-off, unknown customers. Private business entrepreneurs are the driving force pushing
the state to institute the market economy, thereby protecting the sale of their goods in far-off
lands.
Unfortunately, in practice, market economies result in corporate monopolies. Corporations may
use a product dumping predatory pricing strategy, by charging less than their cost to produce, in
a specific market, in order to drive weaker, smaller competitors out of business, and then significantly
raise prices at a later date, in order to gouge the consumer. If the monopoly is in a vital economic
area and the company institutes monopoly pricing to overcharge the consumer, only the state has the
power to protect the market economy from monopolistic inefficiencies and break up the offending company;
thus reinstituting competitive pricing. As a result, government regulations and market economies
develop simultaneously.
Laws & Regulations Are Necessary
Leaving business a free hand, especially when dealing with far off customers, leads to misrepresentations,
shoddy practices and fraud. The food industry is an example.
Upton Sinclair writes The Jungle (1906), exposing the disgusting unsanitary conditions
in the Chicago meatpacking industry, during the early 20th century. Public uproar prompts
President Theodore Roosevelt to pass the Pure Food and Drug Act of 1906 and the Meat Inspection Act.
Roosevelt says that government laws and regulations are the only way to restrain the arrogant and
selfish greed of the capitalist system.
Shocking examples of food fraud in 2013 highlight the need for enforcing government regulations.
Inspectors uncover corporations selling horse meat as beef, and routinely mislabeling about 40% of
the fish served in U.S. restaurants. Cheap rockfish and tilapia are substituted and sold as
expensive snapper, and restaurateurs frequently switch escolar for white tuna, causing diners to
suffer indigestion.
Over 70% of the tilapia sold in the U.S. is imported from Asia, and only 2% is inspected by the
Food and Drug Administration. Much of this Asian farm raised tilapia is "filthy fish," where pesticides
and manure run off into the tilapia raising ponds, causing infections. Or the tilapia is raised in
polluted Asian rivers. Americans are impairing their health by unknowingly eating filthy Asian tilapia,
fraudulently substituted in U.S. restaurants for the healthy fish ordered.
Other fraudulently mislabeled foods include sausage, organic foods, energy drinks, milk and eggs.
Without sanitary food preparation standards, set and fairly enforced by the government-Americans
will soon return to naively eating rat droppings-so, unknown to them, CEOs can meet Wall Street earnings
expectations.
Departments of Weights and Measures (DWMs) at the state and federal level develop "uniform laws,
regulations and methods of practice" that impact about 50% of U.S. GDP-to ensure there is equity
between buyers and sellers in commercial transactions.
Because gasoline stations routinely pumped less gas then charged for, DWMs now ensure the accuracy
of gasoline pumps, octane levels, labeling and restricting water in gasoline. Butchers used to add
lead weights to the chest cavity of the poultry sold, prior to weighing, then noiselessly dumped
the weights out into an unseen padded draw before the bird was held up for the customer's inspection,
thereby swindling their trusting patrons.
Without the state to step in to punish fraudulent wrongdoers, dishonest business practices would
be widespread. Consumer trust, in everyday market transactions, is paramount for market economies
to function effectively and efficiently-making government regulations vitally important.
Without regulation and transparency, bad businesses drive out good businesses, following Gresham's
Law. The economic system then atrophies, with a loss of trust in the marketplace.
What is lost is not just the money on an inferior product or service, in the short run, but more
importantly, the bad businesses may use their outsized profits to buy political protection and start
changing laws, to make new laws favorable only for them-thereby damaging the market economy and reducing
the state's economic growth and welfare.
Competitive Market Economies
An economic market system capable of directing the whole of economic life, without out-side help
or interference, is called self-regulating. Once the self-regulating or competitive market economy
is designed and implemented by the state, to give all participants an equal opportunity for success,
the self-regulating market is to be let alone by the state and allowed to function according to laws
and regulations, without after-the-fact government intrusions-regardless of the expected consequences.
Those in Western societies are told that competitive market economies, which have self-regulated
prices for land, labor and money, set solely by the market, are normal, and that human beings develop
market economies on their own, without help from the state, which is the proof of human progress.
Also, that market institutions will arise naturally and spontaneously, if only persons are left alone
to pursue their economic interests, free from government control. This is incorrect.
Throughout most of human history, self-regulating markets are unnatural and exceptional. Human
beings are forced into the self-regulating market economy, by the state. Look at the following false
competitive market economy assumptions.
We are told people naturally bartered goods. Actually, human beings, down through history, have
no predilection to barter. Social anthropology says that assuming tribal and feudal men and women
bartered are rationalist constructs, with no basis in fact. Market economies are the result of often
violent government directives, implemented for society's eventual improvement.
The assumption is man is a trader by nature, and that any different human behavior is an artificial
economic construct. By not interfering in human behavior, markets will spring up spontaneously. Social
anthropology disproves this.
Neoliberal Economic Theory
Originally, neoliberal economic theory means, "free enterprise, competitive markets, the priority
of the market price setting mechanism, and a strong and impartial state-to ensure it all functions
properly."
The Mont Pelerin Society, led by Dr. Milton Friedman, supports Hayek's economic theories, based
on "free market" ideology and help change neoliberal economic theory by rejecting government regulation-calling
it inefficient. In addition, financial economists at the University of Chicago School of Business
promote the efficient market hypothesis or theory (EMT), supporting the Mont Pelerin Society's conjecture.
Thus, the primacy of deregulated or "free markets" becomes mainstream within academe in the 1970s.
Large corporations then use "free market fundamentalism" to their advantage, by lobbying the U.S.
Congress to pass legislation beneficial to them.
Some think that "free markets" are a matter of degree, and the practical issues of implementation
are paramount. This is incorrect, and will not resolve the current "free market fundamentalism" debate.
Instead, the real issue is semantics. Notice how quickly those with a political
agenda change the debate from "competitive markets," which require state regulations and are highly
productive-to "free markets," which result in fraudulent marketplace behavior, crony capitalism and
weak economic growth.
Using the term "free markets" is an Orwellian ruse, designed to change the focus in the public's
mind from, "those in authority have to do better" to "those in authority know best, therefore, let
them have their way."
Today, neoliberal economic dogma promotes "free market fundamentalism" of reducing the size of
government through the privatization of government services, deregulation and globalization. Privatization
professes to reduce the state's authority over the economy, but state money is used by private companies
to lobby legislators, to change laws, which will increase the government's demand for these same
private corporation services. Privatization of government services by corporations does not promote
the common good, only corporations' private profits.
Neoliberal "free market" economists have doubled down on the failed liberal economic theory, with
the ongoing 2008 credit crisis as the result.
Free Markets Are Impractical
"Free markets" are free from state intervention, i.e., unfettered capitalism. Those who understand
how markets function realize this is an impractical view-simply a rhetorical device-using the popular
word "freedom" to mask its real purpose.
"Free markets" are a fantasy, far outside the realm of practicality, used by wealthy international
corporations to bully governments and labor, to get their way. The reality is a competitive market
economy requires powerful complex opposing interests, mediated by government, to produce an efficient
and effective economy that supplies the most to the many, which includes the common good.
Free Market Fundamentalism Leads To Economic Disaster
Nowhere is "free market fundamentalism" more highly trumpeted by neoliberal economists than in
the financial markets. The foundation of neoliberalism is, "a deregulated financial sector will regulate
itself efficiently, making better use of capital, thus ushering in a new age of prosperity."
Tragically, the massive deregulation of the financial markets during the Clinton and Bush presidencies,
results in the ongoing 2008 credit crisis-which the U.S. Government Accountability Office reports
has cost the U.S. economy about $13 trillion dollars in lost GDP output.
"Free market" apologists ingenuously explain the 2008 credit crisis is not caused by "free markets,"
but because government regulations are not loose enough. All "free market" failures are dismissed
by the financial elite, because of cognitive dissonance. Bankers and neoliberal economists want to
believe in what is making them richer and more important. This is the same logic used by those in
charge in the USSR, when communism failed, "it wasn't being applied purely enough."
Free Market Ideology in Practice
"Free market," ideology, as practiced today, is the opposite of what is stated.
Instead, governments step in to save insolvent banks and large international corporations, when they
make bankrupting mistakes, and give the bill to the taxpayer. This transforms the difficult but manageable
ongoing 2008 credit crisis, into a much larger and dangerous sovereign bankruptcy crisis, with potentially
calamitous political consequences.
"Free markets" usher in unfettered capitalism, unleashing the "law of the jungle" and a "dog-eat-dog
world" that fosters fraud and corruption. Human beings, no matter their station in life, cannot be
trusted to always do the right thing, especially in a competitive situation. Doing away with laws
or regulations so those in power know it is impossible to be caught or penalized does not stop them
from acting improperly. Only criminal punishment and public disgrace accomplish that.
The resulting "free market" business jungle includes monopolies, coercion, fraud, theft, parasitism,
crony cabals and racketeering. Ironically, unfettered "free markets" are not free, but increase injustice,
making the economic system inefficient. Only government laws and regulations can keep markets competitive.
The EMT Supporting Free Markets Is Wrong
New scientific evidence on the efficient market hypothesis or theory (EMT), shows University of
Chicago School of Business researchers ask the wrong questions, use erroneous data and an incorrect
research method to analyze the data, and then jump to false conclusions, based on half-truths-please
read further in my journal articles:
link,link and
link.
The EMT and "free market fundamentalism" are false gods.
Conclusion
Markets are not efficient, based on the data. Consequently, "free markets" have no theoretical
foundation. Therefore, reject the incorrect theory of "free market fundamentalism" It is impractical
and dangerous, leading us into the ongoing 2008 credit crisis.
Competitive market economies only function properly by having fair laws and regulations, set up
and impartially enforced, by a strong state. Dr. Robert M. Solow, 1987 Nobel Prize Winner in Economics
and MIT Institute Professor Emeritus says, "The switch to talk about "free" markets diverts attention
from these deficiencies and suggests that any attempts at corrective regulation are instead limitations
on freedom."
Neoliberal" free market fundamentalists" in business use "free market" ideology as a negotiation
ploy. Do not succumb to this ruse. The U.S. requires "competitive markets for economic growth," not
"free markets for fraud."
"... Putin is trying to put an end to a doctrine that has caused 25 years of Bushist Crusader
mayhem. Will he succeed is another question. ..."
"... But having got the ball rolling is a tipping moment and Humpty Dumpty of NWO is now a
broken toy of a bygone age, especially as its created the destruction of Pax Americana's main
hold on the world : Oil duopoly and monetary hegemony all gone down the shute in debt
debasement folly. ..."
"... Just as the first Iraqi war was seminal in the fall of the Soviet Union IMHO when the
world (and particularly the Soviet military analysts) were able to see the overwhelming
technical superiority of the US smart weapons and the ease with with the US disposed of
Saddam's huge standing army (breaking the illusion that the Soviet Union was a superpower on
the par with the US), the move into Syria by Russia by the invitation of the legal government
of Syria is in my opinion just as historic and seminal, the bell weather for a major
sea-change in the the power structure of the world. ..."
"... the MSF hospital in Kunduz fiasco in
juxtaposition with the well planned Russian strikes against ISIS (which the US supposedly has
been attacking for 13 months), raises the question: if you needed someone to protect you, do
you trust the Russian military or the US military? ..."
"... The above question is a fatal doubt intruding into the all powerful US paradigm - if
the Saudis and other important players (Germany!) start to question US power and cozy up to
the Russians, the US petrodollar is done for, and with it US dollar as WRC - the US as a
nation will start an inevitable slide into third world status if that occurs. Imagine what
happens for example if the US has to pay its military budget from actual assets or savings
rather than just print dollars it needs to buy the hugely expensive F35 or send billions to
Israel... ..."
"... The
most rabid neocons may push the US into a poorly thought out confrontation, and get us all
killed in the worst case. ..."
"... What has Putin proved? That the US desires not to destroy ISIL, but to
empower ISIL. When has Assad ever attacked the US? Never. ..."
"... Everything the US government says is a lie. Everything the government's Ministry of
Truth's media reports is a lie. With every lie the sheeple to emote for government. Barack is
evil incarnate. The US is a tool of neo-cons and the exceptional American fools. Evil
succeeds, when the American sheeple follow. ..."
"... Don't praise the day before the sunset. Imho, the more accurate statement would be:
Putin has challenged the Wolfowitz doctrine. ..."
"... The neocons are not defeated until the truth about 9-11 if widely accepted, or, more
properly, that which is untrue is widely rejected. it is their achilles' heel. The crime is
too great, too evil and too poorly done to be explained away or ignored. once a growing
majority of the nation sees through this lie (and the fraction is already larger than many
imagine), new things become possible. this is not yesterday's news. There is no statute of
limitations on treason or murder. The day will be won mind by mind. do your part. ..."
In 1991, [powerful neocon and Iraq war architect Paul Wolfowitz] was the Undersecretary of
Defense for Policy – the number 3 position at the Pentagon. And I had gone to see him when I was
a 1-Star General commanding the National Training Center.
***
And I said, "Mr. Secretary, you must be pretty happy with the performance of the troops in
Desert Storm."
And he said: "Yeah, but not really, because the truth is we should have gotten rid of Saddam
Hussein, and we didn't … But one thing we did learn [from the Persian Gulf War] is that
we can use our military in the region – in the Middle East – and the Soviets won't stop us.
And we've got about 5 or 10 years to clean up those old Soviet client regimes – Syria,
Iran, Iraq – before the next great superpower comes on to challenge us."
Crocodile
Putin has put an end to the Wolfowitz doctrine - end
Then Putin has found a cure for psychopathy; unlikely.
As you know, October is "Pink" month, the month they remind women of the deadly disease brought
on women in which the big corporations are raping in billions and they would/will NEVER give you
the cure, for their is no profit in a cure. Stupid is as stupid does.
Pinkwasher: (pink'-wah-sher) noun. A company or organization that claims to care about
breast cancer by promoting a pink ribbon product, but at the same time produces, manufactures
and/or sells products that are linked to the disease.
Here are the results of those efforts: http://www.cdc.gov/cancer/breast/statistics/trends.htm
(NONE from the disease perspective)
Minburi
This shit is from 2007? Wow... Just Wow!! It's only gotten worse since then!
Why is nothing being done?
Crocodile
The rich are getting richer and the middle class is being dismantled and you say "why is nothing
being done?"
Johnny_Dangerously
So is the Greater Israel thing just a wild conspiracy theory? Along with the 3rd temple and
"cleansing" the rest of Palestine?
Because I'd bet you my life savings that it is not a conspiracy theory as to Netanyahu and his
ilk in Likud.
shutterbug
the USA people have some cleaning up to do, starting in the White House, every governmental
agency and after that probably other federal departments...
BUT have you ever seen Walking Dead clean something up???
Icelandicsaga.....
Wolfowitz type thinking is spin off of Angl American establishment that grew out of Brtish
empire/banking/trade ..some say reverts back to East India Trade cartel..but recent history, read
for free online insider chronicler Georgetown U. Professor Carrol Quigley, who lays it out in
Tragedy and Hope.http://www.amazon.com/Tragedy-Hope-History-World-Time/dp/094500110X........
of his uotes: It is this power structure which the Radical Right in the United States has been
attacking for years in the belief that they are attacking the Communists.
Thus, the use of fiat money is more justifiable in financing a depression than in financing
a war.
By the winter of 1945-1946, the Russian peoples were being warned of the dangers from the West.
In post Cold War guys like Harvards Samuel Huntington...discussed Anglo..American hegemony
in Clash of Civilizations. Another who laid out the post Cold War game
plan ..Francis Fukuyama in his The End of History. pentagon adviser Thomas Barnett laid out the
countries to be taken sown in The Pentagons New Map. The guy is a wack job, but pentagon took
him seriously.
Followed by PNAC..Project for a New American Century?..guys like Wolfowitz, Kagan, Kristol,
Cheney et al first proposed invading Iraq a second time. But the genesis for fucked up US policy
on steroids, was fall of Soviet Union. That is when elite, shadow govt and banking class from
IMF TO World Bank to BIS came into their own. I recall this invade and bring democracy and KFC
capitalism began in major policy journals in 1992..just about same time HW BUSH gave his ""new
world order" speech at UN. It has been FUBAR evrr since.
Given what ""economic advisers" from US like Jeffrey Sachs, Larry Summers, Jonathan Hays caused
in early days of new Russia, I do not blame them if they hate our guts. We have created chaos
and destruction from Balkans ""war" to Ukraine ..Iraq..Libya..Syria. we have
turned into a rabid stupid uncontrollable beast. Wolfowitz and his ilk were midwives. Enclosed
pertinent links that may be helpful.
Yoshihiro Francis Fukuyama (born October 27, 1952) is an American political scientist, political
economist, and author. Fukuyama is known for his book The End of History and the Last Man (1992),
which argued that the worldwide spread of liberal democracies and free market capitalism of the
West and its lifestyle may signal the end point of humanity's sociocultural evolution and become
the final form of human government. However, his subsequent book Trust: Social Virtues and Creation
of Prosperity (1995) modified his earlier position to acknowledge that culture cannot be cleanly
separated from economics. Fukuyama is also associated with the rise of the neoconservative movement,[2]
from which he has since distanced himself.[3]
Fukuyama has been a Senior Fellow at the Center on Democracy,
Looking around I found out that Russia depends on Western companies for oil field eqpt. The
war is causing it to defer projects.
On top of that Russia needs to balance its economy with more consumer manufacturing. The war
is deferring some of that that.
War steals from the future. And then there is this bit of news. Propaganda or reality? Or a
set up for a false flag attack?
FBI has foiled four plots by gangs to sell nuclear material to ISIS: Authorities working with
federal agency stop criminals with Russian connections selling to terrorists
The cost of this bombing campaign against ISIS is costing Russia, there is no hiding from this
fact, but the cost is also being burdened by Syria and Iran. Secondly, the Military Industrial
Complex(MIC) does not have total control Iran, Syria and most importantly Russia, like it does
over the U.S government. IE; The Russians have flown to date less than 100 sorties and have significantly
downgraded ISIS, to the point western governments and media have been bitching about the loss
of innocent civilian life(translated; U.S, U.K and allied special forces are being killed
by Russian bombs). Conversely the U.S air-force have officially flown over 1800
sorties in an attempt to downgrade ISIS and have been unsuccessfu to datel. 1800 sorties and a
lot of bombing achieving nothing, is a great payout for the MIC.
So an obvious question must be asked. The Russians have flown and bombed just 4% compared to
the U.S air-force and have downgraded ISIS. Are the Yanks vastly inferior and incompetent than
the Russians? And if the answer is no, then the only logical conclusion must be the Americans
never really targeted ISIS and we the public are being fed a pack of lies and propaganda.
falak pema
Well said.
Putin is trying to put an end to a doctrine that has caused 25 years of Bushist Crusader
mayhem. Will he succeed is another question.
But having got the ball rolling is a tipping moment and Humpty Dumpty of NWO is now a
broken toy of a bygone age, especially as its created the destruction of Pax Americana's main
hold on the world : Oil duopoly and monetary hegemony all gone down the shute in debt
debasement folly.
Dear Henry's legacy to the Trilateral world now looking like Petrodollar's metamorphosis into
Humpty Dumpty.
But where it leads to is a debatable question.
Quo Vadis.
flapdoodle
The *really* big problem with the US Deep State is the following:
1) The US Dollar as World Reserve Currency is based on, well, the fact that it is the WRC. The
"faith" the rest of the world invests in the Dollar is only backed by momentum - and the
perceived preeminence of the US armed forces.
2) Just as the first Iraqi war was seminal in the fall of the Soviet Union IMHO when the
world (and particularly the Soviet military analysts) were able to see the overwhelming
technical superiority of the US smart weapons and the ease with with the US disposed of
Saddam's huge standing army (breaking the illusion that the Soviet Union was a superpower on
the par with the US), the move into Syria by Russia by the invitation of the legal government
of Syria is in my opinion just as historic and seminal, the bell weather for a major
sea-change in the the power structure of the world.
3) Russia in Syria has, at least in its first appearances, greatly neutralized ISIS, which was
touted as a huge almost invincible juggernaut, putting on a clinic of technical prowess and
coordination almost comparable to the US effort in Iraq 1.
4) The paradigm of the all powerful US military has taken a big hit, if not by its lack of
technical superiority (the F35 fiasco does not inspire confidence in US technical capability),
but by its intentions, will, and competence. the MSF hospital in Kunduz fiasco in
juxtaposition with the well planned Russian strikes against ISIS (which the US supposedly has
been attacking for 13 months), raises the question: if you needed someone to protect you, do
you trust the Russian military or the US military?
5) The above question is a fatal doubt intruding into the all powerful US paradigm - if
the Saudis and other important players (Germany!) start to question US power and cozy up to
the Russians, the US petrodollar is done for, and with it US dollar as WRC - the US as a
nation will start an inevitable slide into third world status if that occurs. Imagine what
happens for example if the US has to pay its military budget from actual assets or savings
rather than just print dollars it needs to buy the hugely expensive F35 or send billions to
Israel...
6) What gives pause are what the US might do about what has just happened in Syria. The
most rabid neocons may push the US into a poorly thought out confrontation, and get us all
killed in the worst case.
7) Whatever response the US tries will not change the death of the US Dollar as WRC. The only
question is how soon it will be cast aside (and my gut tells me it will be relatively soon,
regardless of how "oversubscribed" dollar denominated debt is to the actual number of dollars
in circulation)
GMadScientist
Fuck off. Neocons can own their fucking mistake until the end of time. It was stupid. You
did it (and elected the fucker TWICE!). So get the fuck over it.
falak pema
You are missing the point : Its PAX AMERICANA's mess; but it was the Wolfowitz doctrine of
the BUSHES (father and son Incorporated along with Cheney) that started it.
Boy King is just a mouthpiece (reluctant now but gung-ho in Libya) of that same imperial game.
History is a bitch and you can't play King Canute with it !
NuYawkFrankie
re Putin Ends Wolfowitz Doctrine
Now we should do our part, and put an end - a permanent end -to Mastermind War-Criminal
"Rat Face" Wolfowitz; then the demonic KAGAN KLAN.
The other NeoCON warmongers can be rounded-up shortly thereafter trying to board flights to
Tel Aviv, Israel
dreadnaught
Seen on a wall in a bus station: "Kill a NeoCON for Christ"
WTFUD
Long time GW! Nice watching all dem US made Saudi bought weapons go up in smoke. Now that's
what i call Change you can believe in. Go Vlad, some US base collateral damage in Baghdad
would be equally welcome.
The Plan to keep Russia busy with Ukraine mischief is another multi-billion farce gone up in
smoke.
Really nice watching the EU erupt in a burden of refugees, none of which was ear-marked in the
austerity budgets of the poodle-piss vassal states.
Cat-Al-Loan-iA here i come, right back where we started from . . .
Reaper
Evil is power. What has Putin proved? That the US desires not to destroy ISIL, but to
empower ISIL. When has Assad ever attacked the US? Never.
Everything the US government says is a lie. Everything the government's Ministry of
Truth's media reports is a lie. With every lie the sheeple to emote for government. Barack is
evil incarnate. The US is a tool of neo-cons and the exceptional American fools. Evil
succeeds, when the American sheeple follow.
bunnyswanson
You leave out the most important detail. STATE CAPTURE
Share the insults with the nation who has trained our cops in methods used against
Palestinians, beating the crap out of everyone who shows the least bit of hesitation to obey
their orders.
Okeefe = Full page of videos explaining ISRAEL EXPANSION PROJECT Greater Israel.
Dead politicians, dead journalists and many dead business people, all strangely similar yet
some nobody from nowhere is sent to prison, with wide eyed drugged look.
ISRAEL is the source of the evil so fucking remember that prickface.
The source of the evil is not Israel, at least not the political entity known as Israel in
the Middle East. The source of the evil is something far deeper, a Power of Darkness that
exists somewhere else, a Power that created this modern state of Israel in the first place. In
my opinion, that power of darkness, the truly evil "Israel", occupies the City of London,
otherwise known as the Jewish Vatican, the counterpoint in this world to the other square mile
that matters, the Holy See.
That's where the problems for the US and the Middle East have their beginning, middle and
end. Solve that problem and America and the Middle East will both wake up to a bright new
future.
Luther van Theses
"Soviet client regimes?" Didn't it ever occur to this dummy they are countries in their own
right, people live there, you can't just take their countries away from them?
Bismarck said 'God has a special providence for fools, drunks, and the United States of
America.' We must be in good shape considering we've had fools like Wolfowitz and drunks like
G.W Bush running the country.
opport.knocks
Let's not give too much credit to Paul Wolfowitz, and his "doctrine". It was just a
restatement of Halford MacKinder's "Heatland Theory" and Zbigniew Brzezinski's "The Grand
Chessboard"
Decent article....i.e. better than aveage for veteranstoday. IMHO.
Ol' Zbigniew sez that he USA should "disarm" Russian forces in Syria.
Guess the US Police will have to use some flash-bangs on the Russkies, and shoot their dogs,
too.
fleur de lis
Brzezh has been a psycho for a long time, and has harbored a seething hatred for the
Russians that still spews poison to this day. He pushed the idiots in DC to support the serial
killer Pol Pot who murdered more than a million Cambodians, and that was a long time ago. He
was sly enough to get the Chinese to do the direct support. Still crazy after all these years.
The Cambodians were fightng with the Vietnamese who were allied with the Russians, so that was
reason enough for him regardless of all the Cambodian deaths.. The Western powers had no good
reason to be mixed up in Asia except as blood sport.
Jorgen
"Putin has put an end to the Wolfowitz doctrine."
Don't praise the day before the sunset. Imho, the more accurate statement would be:
Putin has challenged the Wolfowitz doctrine.
jeff montanye
The neocons are not defeated until the truth about 9-11 if widely accepted, or, more
properly, that which is untrue is widely rejected. it is their achilles' heel. The crime is
too great, too evil and too poorly done to be explained away or ignored. once a growing
majority of the nation sees through this lie (and the fraction is already larger than many
imagine), new things become possible. this is not yesterday's news. There is no statute of
limitations on treason or murder. The day will be won mind by mind. do your part.
Here are some examples of people in senior government position who have Israeli
citizenship. Will America ever wake up and end this idiocy, which was brought about in 1967 by
a Supreme Court decision guided by Justice Abe Fortas, a prominent Jewish American. If some
these names are not familiar, google them for a real surprise, or follow this link:
Jonathan Jay Pollard
Michael Mukasey
Michael Chertoff
Richard Perle\
Paul Wolfowitz
Lawrence (Larry) Franklin
Douglas Feith
Edward Luttwak.
Henry Kissinger
Dov Zakheim
Kenneth Adelman
I. Lewis "Scooter" Libby
Robert Satloff
Elliott Abrams
Marc Grossman
Richard Haass
Robert Zoellick
Ari Fleischer
James Schlesinger
David Frum
Joshua Bolten
John Bolton
David Wurmser
Eliot Cohen
Mel Sembler
Steve Goldsmith
Adam Goldman
Joseph Gildenhorn
Christopher Gersten
Mark Weinberger
Samuel Bodman
Bonnie Cohen
Ruth Davis
Daniel Kurtzer
Cliff Sobel
Stuart Bernstein
Nancy Brinker
Frank Lavin
Ron Weiser
Mel Sembler
Martin Silverstein
Lincoln Bloomfield
Jay Lefkowitz
Ken Melman
Brad Blakeman
Beginning to see the problem?
OldPhart
Here's a full taste of Wolfowitz as he was interviewed by some metro-sexual I've never
heard of...
One True Measure of Stagnation: Not in the Labor Force
This is a stark depiction of underlying stagnation: paid work is not being created as population
expands.
Heroic efforts are being made to cloak the stagnation of the U.S. economy. One
of these is to shift the unemployed work force from the negative-sounding jobless category
to the benign-sounding Not in the Labor Force (NILF) category.
But re-labeling stagnation does not magically transform a stagnant economy. To
get a sense of long-term stagnation, let's look at the data going back 38 years, to 1977.
I've selected data from three representative eras:
The 20-year period from 1977 to 1997, as this encompasses a variety of macro-economic conditions:
five years of stagflation and two back-to-back recessions (1977 - 1982), strong growth from 1983
to 1990, a mild recession in 1991, and growth from 1993 to 1997.
The period of broad-based expansion from 1982 to 2000
The period 2000 to 2015, an era characterized by bubbles, post-bubble crises and low-growth
"recovery"
In all cases, I list the Not in Labor Force (NILF) data and the population of the U.S.
1977-01-01: 61.491 million NILF population 220 million
1997-01-01 67.968 million NILF population 272 million
Population rose 52 million 23.6%
NILF rose 6.477 million 10.5%
1982-07-01 59.838 million NILF (start of boom) population 232 million
2000-07-01 68.880 million NILF (end of boom) population 282 million
Population rose 50 million 22.4%
NILF rose 9.042 million 15.1%
2000-07-01 68.880 million NILF population 282 million
2015-09-01 94.718 million NILF ("recovery") population 322 million
Population rose 40 million 14.2%
NILF rose 25.838 million 37.5%
Notice how population growth was 23.6% 1977-1997 while growth of NILF was a mere 10.5%
As the population grew, job growth kept NILF to a low rate of expansion. While the population soared
by 52 million, only 6.5 million people were added to NILF.
In the golden era of 1982 - 2000, population rose 22.4% while NILF expanded by 15%. Job growth
was still strong enough to limit NILF expansion. The population grew by 50 million while NILF expanded
by 9 million.
But by the present era, Not in the Labor Force expanded by 37.5% while population
grew by only 14.2%. This chart shows the difference between the two eras: those Not in the
Labor Force soared by an unprecedented 26 million people--a staggering 15.6% of the nation's work
force of 166 million. (Roughly 140 million people have some sort of employment or self-employment,
though millions of these earn less than $10,000 a year, so classifying them as "employed" is a bit
of a stretch).
This is a stark depiction of underlying stagnation: paid work is not being created
as population expands. Those lacking paid work are not just impoverished; they lose the skills and
will to work, a loss to the nation in more than economic vitality.
As Naked Capitalism's Yves Smith notes,Wilkerson describes the path of empires in
decline and shows how the US is following the classic trajectory. He contends that the US needs
to make a transition to being one of many powers and focus more on strategies of international cooperation.
The video is full of rich historical detail and terrific, if sobering, nuggets, such as:
"History tells us we're probably finished.
The rest of of the world is awakening to the fact that the United States is 1) strategically
inept and 2) not the power it used to be. And that the trend is to increase that."
Wilkerson includes in his talk not just the way that the US projects power abroad, but internal
symptoms of decline, such as concentration of wealth and power, corruption and the disproportionate
role of financial interests.
Wilkerson also says the odds of rapid collapse of the US as an empire is much greater is generally
recognized. He also includes the issues of climate change and resource constraints, and points
out how perverse it is that the Department of Defense is the agency that is taking climate change
most seriously. He says that the worst cases scenario projected by scientists is that the world will
have enough arable land to support 400 million people.
Further key excerpts include:
"Empires at the end concentrate on military force as the be all and end all of power… at
the end they use more mercenary based forces than citizen based forces"
"Empires at the end…go ethically and morally bankrupt… they end up with bankers and financiers
running the empire, sound familiar?"
"So they [empires] will go out for example, when an attack occurs on them by barbarians that
kills 3000 of their citizens, mostly because of their negligence, they will go out and kill 300,000
people and spend 3 trillion dollars in order to counter that threat to the status quo. They will
then proceed throughout the world to exacerbate that threat by their own actions, sound familiar?…This
is what they [empires] do particularly when they are getting ready to collapse"
"This is what empires in decline do, they can't even in govern themselves"
Quoting a Chinese man who was a democrat, then a communist (under Mao) then, when he became
disenchanted, a poet and writer…"You can sit around a table and talk about politics, about social
issues, about anything and you can have a reasonable discussion with a reasonable person. But
start talking about the mal-distribution of wealth and you better get your gun" …."that's where
we are, in Europe and the United States".
Crud.. looking at the Roman Empire, and Revolutionary France, you do not need to be a Phd
in economics (theory, not science) or political science (?) er, NO.. theory.. to figure out
where this is heading.
Oh regional Indian
It's pretty clear that the Empire dream is crumbling.
Which does not bode well for people on the INSIDE of the empires gates.
Perhaps more true for the west in general right now and to a lesser or greater extent,
cultures world-wide that have been brought to their knees by the false (Jewish/Zio inspired
and funded) libertarianism of freedom via sex drugs and rock and roll.....it's time to go
inwards.
The next 4-5 years are going to be shocking hard in the west as everything you were brought up
to believe in shows it's true, tattered colours of specious beginnings, ugly/lost individuals
(Sanger, Kinsey, Steinem, Leary, Greatful Dead etc. etc. to name but a few) and a funding hand
that showed it's biases early but a populace with their eyes on the TV, hands on their (or
someone else's gentalia), beer and bad food...too far gone to rise in any manner of protest at
all...
America is definitely sliding down a deep dark hole...
Did I read "Colin Powell"? The same Colin Powell who sold his country down the river into
one of the most costly bloodiest wars in American history with a bareface lie about
non-existent WMDs and a phantom threat from a cave-dwelling desert country of camel jocks?
THAT Colin Powell?
omniversling
"Chief of Staff for Colin Powell"...was it Wilko who prepped the vial of ANNNNTTHHHRRAAX
for Powel to present to the world via the UN PROVING the WMD case for bombing Iraq back to the
stoneage?
TAALR Swift
Nothing wrong with reading Machiavelli, but you're better off watching this YT 11 minute
clip from a former CIA agent:
Great article. However while it exposes the cycle of power centralisation that leads to
empires growing and collapsing it does not propose what needs to be done to stop this cycle
occurring. This can be done by teaching the public to think critically, having a
constitution that you stick to and decentralising power so different arms keep each other from
becoming too powerful. Imagine if the NSA reported to the public and was tasked with ensuring
politicians were not bribed and that businesses did not try to influence politics? In business
the formula is decentralise power, treat people with respect and weed out the
narcissists...and then enjoy large profits: This works wih nations and empires as well....why
not try it.
Urban Redneck
The military and civil unrest threats due of climate change are not BS. What is BS are the
contortions (both distortions and outright lies) and that the brass knob jockeys at the
Pentagram will perform to receive moar funding for reducing competition for potentially much
more scarce resources.
The larger threat isn't actually rising temperatures, but rather falling temperatures and
changes in average precipitation. A single freeze in Florida can decimate citrus production, a
wetter or drier than "Goldilocks" year can wreak havoc on production of various grains, and
that is all without the .gov idiocy that is the People's Republic of Draughtifornia.
On a one-year timeline the weather costs are bad enough, but on a slightly longer climate
timeline... not even the EBT equipped North American Land Whale has enough stored fat to wait
out new McFodder if production has to migrated to follow climate change, which for some
perennials (e.g the trees necessary for the all-American apple pie) means much more than a one
year wait for first harvest.
So anyway... reducing competition... assuming you are a major power grand poobah (instead of a
neo-Ethiopian Arab Spring despot), you can invade someone else to steal their food, invade
someone else to reduce your domestic demand for food, or you can FEMA camp the useless eaters
and put them on la diète noir, (if you can't afford Zyklon B, and the infrastructure to
properly deploy it). Regardless, this is Military Planning 101 level stuff.
AMPALANCE
Industrial farming it destroying top soil on a massive scale, we reached peak production
years ago. Combine that with a decrease in biodiversity from unconstrianed Trojan Horse GMO's,
and the prospect of a catastrophic food shock is very real. Don't forget peak Phosphorus is
expected to be reached around 2030, and depleated in 50 to 100 years, it true would prove
devastating for humanity.
Motasaurus
Reached peak production years ago?
Pleasr do explain then how all food crops have increased yield every year while reducing the
amount of both land and fertilisers used to do so.
We're no-where near peak production, and the higher the atmospheric CO2 content climbs, and
the milder the winters we have (from a warming atmosphere), the more food we will be able to
produce. We're not even half way to the optimal atmospheric CO2 levels of 1000ppm for food
crop growth yet.
techpreist
Here's a fun graphic from the journal Nature (Science and Nature being the two most
prestigious journals in modern science):
By mainstream academia's own numbers, industrial farming (the primary cause of nitrogen
pollution is a far bigger problem than official global warming. But you never hear a peep
about it because the main cause of this type of pollution is a combination of 1) subsidies and
2) GMOs which require much higher N input to get the growth that's possible from genetic
modification. Since the solution is less control over farming, they have no problem driving
the Earth off a cliff.
junction
Wilkerson has the freedom to travel and talk because he receives a fairly large military
pension. What neither Wilkerson or any other critic of the current rulers of the United Staes
will say is that the United States has no economic future anymore. The Wall Street looters
have pillaged the country, first stealing the assets of corporate pension funds and now
finishing off their brigandage by stealing all the future tax income of this country through
the criminal use of derivatives. America is now a country with poisoned water supplies
(fluoridation which causes heart disease), poisoned food (glyphosates and antbiotic
contamination) and a poisoned electoral system where the top 0.1% chooses the winners.
The super-rich have their bolt holes outside the USA because they don't want to be around
when this country, now a near Nazi state complete with death squads and Nazi People's
Court-type hanging judges and prosecutors, completes its transformation by setting up
concentration camps.
pachanguero
This asshole is part of the problem. Fuck him and his bullshit Glow-Ball warming scam. He
should be in jail for the Iraq War along with Obama and Bush.
TheObsoleteMan
What do you expect from him, he is a CFR member and a CIA/NSA asset. No one ever retires
from the CIA, you just aren't assigned projects and you are pensioned, but the only way you
ever leave the CIA is in a box. He is not an American, he is a globalist. You have to be, or
your not allowed into the CFR.
Dark Daze
Here's a fucking news flash for you Einstein. Your 'team' as you so quaintly put it has
spent the last 250 years murdering, bombing, assassinating and fucking over 3/4's of the
planet. Originally, just after the revolution, there was a period of say 20 years (just as
Jefferson suggested) where the citizenry of the US was peacful and productive. Then, not long
after the death of the last of the original Father's of the Revolution, the psychopaths
arrived (General Hull at Fort Detroit) and started their crap with an attempted invasion of
Canada (1812-14). That didn't work out so well, so you went south and fought with the Spanish,
the Mexicans, every country in central and south america, declaring that the US had a god
given right to control the entire area of North and South America (the Monroe doctrine). On
the way you made sure you wiped out virtually every 'dirty injun' you could find, burned a few
dozen 'witches' at the stake, invaded China and brought the opium/heroin trade to America (the
Connecticut Yankees in their Clipper ships) and generally forced yourselves on an unwilling
world. There are only two western democracies that have never engaged in empire, Australia and
Canada. All the rest, the UK, the Netherlands, Portugal, Spain, Italy, Turkey, Greece, the
Macedonians (greeks), France, Denmark, Norway, Austria, Hungary have all tried and failed at
establishing empires, killing millions along the way. I read your Constitution a few years
back (probably one of the most enlightened documents ever created), and I seem to remember a
passage about 'not becoming entangled in foreign intrigues'. Too bad you didn't take that to
heart. They left you a clear, easy to understand, definitive document on how to live and you
fucking destroyed it, and yourselves in the process.
The rest of the history is available to anybody that cares to investigate, which means not
very many Americans, who prefer to remain conveniently ignorant of your bloody history.
in4mayshun
News flash for YOU...All significant Governments throughout history have killed lots of
people to remain in power. And FYI, Canada and Australia don't matter cause they're really
just extensions of Europe, as they follow in lockstep.
The Old Man
Refernce France: 1790 through 1816. Sorry. But paper doesn't work unless you feed it war.
When war is always an option, society fails in the common place. Reinvent society. I mean you
got iPhones and all this crap. How hard is it to think this through?
Lyman54
Australia and Canada were just proxy extensions of the British Empire. Canadians served in
the Napoleonic wars, Crimea, the Boer War, WW-1, WW-2 and Korea. It wasn't until Korea that
the media would actually call Canadian troops Canadians.
Socratic Dog
Aussie eh. While I don't dispute anything you say, I have to suggest the Aussie government
is even worse in that it slavishly follows the US lead in fucking EVERYTHING, including
killing and maiming women and children in their millions in places far from its shores. I saw
a couple of days ago in the SMH (once-great local rag) that Australia is waiting for US
direction on how to respond to the Russian "provocation" in Syria. They're ready to go to war
with russia to protect, err, not exactly sure what they're ready to protect, but it must be
important. Israel maybe? Australia has become a pathetic lap dog, starting with Vietnam. And
just like the USSA, the people support the government position in most anything.
conscious being
Mossad did 9-11. Terrerists come in a lot of shapes and sizes.
Memedada
Both Mr. Banzai and rbg81 are displaying a surprising (this forum taken into account) lack
of insight into the power-structures of the US empire.
I thought it was obvious to all – who pays attention – that the 'electorate' (especially the
president) are mere pawns of a hidden (not that well hidden) power-elite. The people actually
ruling US are not named in MSM (the 0,01 % - and no, that's not anyone on the Forbes list).
That US have a 'colored president' does not make any difference – his masters are the same.
Second: US have no real elections. An election requires an informed and educated population.
US has the opposite. The medias are controlled by the 0,01%, the public education system have
been eroded and made into an extension of the 0,01%'s propaganda-machine and there's no
independent think tanks and/or institutions that can help the population get informed (the
absolute majority of think tanks and research institutions in US are founded and funded by and
for the 0.01%). Moreover, since you got 'Diebold' it doesn't matter – the votes are counted
the way the 0,01% wants them to be counted.
Third: communist in what way? What's your definition of communism? If he – I don't listen to
him – actually said anything that could be interpreted as communist it doesn't count (he
speaks nothing but BS – distractions). What political actions has he taken that you would
consider 'communist'?
+ who don't despise USA for what it has become today? US deserves nothing but contempt –
and until there's a real revolt/revolution the US population deserves the same contempt.
IridiumRebel
My wife, who has been involved with Doctors Without Borders albeit briefly, asked about the
errant strike that killed 19+. I stated what happened. After she gasped, I went on to say that
our current leadership and trajectory as a nation has to be purposeful in its fuckery and
stupidity. It's willful. They HAVE to be making these stupid decisions on purpose. There is no
other possible answer. No way they could be making these decisions and think they will do
anything but make us weaker and less trusted if it's even possible.
AmericanFUPAcabra
The GPS coordinates for that hospital had been given to the US months in advance. They knew
it was there (probably helped build it with your money) In fact when the first bombs started
falling phone calls were made to the US and NATO that they were hitting the wrong place- and
guess what? The air strikes kept coming down for 30 minutes.
You can go on Youtube and watch Robert Ford (john negroponte's protege) making the news
circuits lately blaming the people in the hospital for not having an evacuation plan. THEY DO
NOT FUCKING CARE ABOUT CIVILIAN CASUALTIES. It has nothing to do with fucking up. A handful of
Kissinger quotes come to mind.
Dark Daze
Well, it is very coincidental that less than 24 hours after 'the taliban' shot down a cargo
plane carrying 'contractors' (CIA?), the hospital was bombed. There is more to this story than
we know. Regardless, it still shows basially one thing which is that governments everywhere
are out of control.
delacroix
a fuckup would be if they bombed the opium wharehouse.
"...No way they could be making these decisions and think they will do anything but make us
weaker and less trusted if it's even possible..."
It would be most unhelpful to think of the actions of any branch of the U.S. government or
military today as being in the interests of the people they serve. You can be certain that
psychopaths running the U.S. (many groups with overlapping, occasionally competing but
generally complementary interests) are in TOTAL control, and the organizations have morphed to
serve ONLY psychopathic leaders, not normal ones. Arguing about which specific group of
psychopaths is at the top of the heap or what their motivations are is also totally
meaningless - it just doesn't matter. THAT isn't the problem.
The real problem is that the machinery of all of these government organizations has been
fundamentally changed to serve only psychopathic leaders. They can no longer accomodate a
'normal' leader in any sense of the word. Replacing the heads of every one of these
organizations today wouldn't work - the organizations themselves would reject a 'normal'
person in charge and would oppose them at every turn or simply drive them out. It's well past
the point of just getting 'the right' leaders in place.
The U.S. is on psychopath auto-pilot. There are no personal consequences for 'bad' decisions
by those in charge of our government organizations. The leaders are making the exact same kind
of decisions that every other failing empire has made during its decline since forever.
Perceptions of strength/weakness or trust/distrust are immaterial to the psychopaths in
charge, as long as everybody seems to obey them. They're in a desperate scramble to maintain
their OWN illusion of control before things go full-retard - they could care less what anyone
else thinks of them or their decisions today.
o r c k
Agree, but just imagine living in most European Countries and knowing that the end of your
ancient culture is only a few decades away due to the psychopathy of your "leaders".
Being surrounded by a warlike, mean-spirited and superstitious clan of early humans and NO way
out whatsoever.
The Processes and Logic of The Deep State - Professor Peter Dale Scott
Unusually, just a single speaker this week: one two hour interview with the doyen of deep
political research, Canadian Professor Peter Dale Scott. He provides not only a lot of details
of the evolution of the post WW2 deep state in the USA, but also sketches out its guiding
principles, some of the deeper patterns which allow one to understand the superficially
confusing and contradictory actions of the US deep state.
Colin Powell has been treated as a great man for doing what? Semi-admitting that he knew we
had it all wrong and everybody in power was (is) a war criminal?
In my opinion he is worse than all of the rest, because he had the platform and could have
single handidly prevented this whole mess and exposed so many falshoods. Instead he did
exactly what he knew was wrong. If he were a patriot and such a great man, he wouldn't have
done what he did.
tool
WTF happen to him. Did he disappear into obscurity because of the extreme shame he felt for
presenting that huge steaming pile of horse shit to the UN in front of the world .
I'm guessing not because people like that don't feel remorse or shame. They just get paid and
live happily ever after!
conscious being
Colin proved himself to be a useful tool when he was brought in as the black face to do his
part in covering up The Mai Lai Massacre in VietNam. His career took off after that.
"... I was surprised how well the BBC political correspondent and ex-Tory
Party student Nick Robinson came out in his economic reporting compared to the woeful stuff that
those BBC correspondents claiming some sort of economic expertise faired. ..."
"... they are all of the neo-liberal religion; group-thinkers ..."
When I reread my collection of BBC articles for the period 2008-15, some of which I have reposted
on this blog in the past, I was surprised how well the BBC political correspondent and ex-Tory
Party student Nick Robinson came out in his economic reporting compared to the woeful stuff that
those BBC correspondents claiming some sort of economic expertise faired.
Since 2008, Robert Peston, Stephanie Flanders, Hugh Pym, and Andrew Neil have had terrible economic
crises, and it must be more than just governmental pressure that has produced such concentrated
ineptitude.
Alas, they are all of the neo-liberal religion; group-thinkers. Peston has never understood the
difference between a currency issuing government and a currency using non-government sector. Hence,
government financial accounts are totally different to a households financial accounts.
They all think that the government has to tax and/or borrow "money", before it has any to spend.
Never stopping to think where the people it taxed or borrowed from, got such "money" in the first
place.
Politicians and the IFS peddle the same myth. Liars and fakers the lot of them. Stick with the
accountants.
"... The EU cannot do anything about Ukraine Right Sector radicals and its other nutters in the Mafia. ..."
"... But the Donbas situation is more mixed, however, even before the trouble in 2014, what I DID encounter in Kiev in particular (not so much Galycnya) was a regard of the SE UA citizens as second-class citizens, as well as attitudes that could be accurately be described as quasi-facist, ..."
"... I wonder why you call Western airstrikes "tactical". The coalition launched >7,000 military aircraft sorties in over a year, apparently carefully "missing" ISIS targets, killing on average ~0.4 terrorist per sortie and freeing up as much as 15 square kilometers of territory from ISIS. As you can easily imagine, a lot of people made huge amounts of money in the process. So we should call this a resounding success, on par with $10 billion no-bid Halliburton contract in Iraq. Wouldn't you agree? ..."
"... Does it really matter if they have ? We know the West has been involved so it would be pretty much par for the course if Russia was involved. The main thing is Ukraine becomes a peaceful nation for the benefit of its citizens, not for the benefit of either the West or Russia. ..."
Dear, you refer to "one blonde said!". On some vague feelings, assumptions... Enough speculation about Crimea, please! Let's
stick to facts! Crimea 80% of the population - Russian. Not only Pro-Russian, and ethnic Russians. Russia does not need were the
little green men of Crimea! But for drunk and scared of the Ukrainian military in the Crimea, for the Wahhabis, who through the
streets went to the cars with black flags for Ukrainian neo-Nazis, importing explosives and suitable for shooting on the streets,
probably Yes. Crimea was similar to the Autonomous Republic, until authonomy has destroyed by abandoning the Constitution. It
was abolished by the President! Crimea held a referendum for secession from Ukraine long before the coup in Ukrainein 2014 .
Note that the Americans tried to seize Crimea under the guise of NATO exercises! Was absolutely illegal attempt to build an
American military base in Crimea for the U.S. Navy landed the Marines on may 26, 2006, of which the citizens of Crimea dishonorably
discharged. And during the state coup in Ukraine in the Black Sea suddenly a us warship.
In Debaltsevo the Ukrainian neo-Nazis fought with men that were deprived of the government, the President, sovereignty, language,
external management is introduced, destroyed the economy. Take away the right to life. Whose wives, parents and children every
day are killed by shells from anti-aircraft weapons in schools, hospitals, shops, bus stops, fill up with planes of white phosphorus,
the water is shut off and the light stopped issuing wages and pensions, imposed humanitarian blockade.
To fight with desperate men, defending their home, or engage in rape and looting among the civilian population, where the majority
of the elderly, women, children - different things.
Sarah7 -> Sarah7 3 Oct 2015 19:58
One more thing:
Actually, the first photograph accompanying this piece by Shaun Walker shows Poroshenko looking particularly angry and miserable
-- if looks could kill, Merkel would be in big trouble!
That said, in the same photo, Putin appears calm, sanguine, and in a very 'positive mood' compared to his counterparts. Go
figure.
Sarah7 3 Oct 2015 19:49
Moscow and Kiev in 'positive mood' over talks to end east Ukraine conflict
If you look at the photographs that accompany the following piece, Poroshenko does not appear to be in a 'positive mood'
over the recent meeting of the Normandy Four, and Merkel looks like she is going to spit nails. Perhaps this explains their
dour faces:
German Chancellor Angela Merkel for the first time publically accepted the fact that Crimea doesn't belong to Ukraine and
that the peninsula will stay as part of Russia, Alexei Pushkov, head of the Foreign Affairs Committee of the Russian Duma,
said on his Twitter account, according to Gazeta.ru. (Emphasis added)
"Important: After a meeting in Paris, Merkel for the first time admitted that Crimea won't return to Ukraine. That means
the crisis is only about the east of the country," Pushkov wrote. (Emphasis added)
The Normandy Four talks on Ukraine reconciliation concluded in Paris on Friday.
The leaders of the Normandy Quartet countries managed to agree on the procedure of the withdrawal of heavy weapons in eastern
Ukraine, German Chancellor Angela Merkel said Friday.
"We were able to agree on the withdrawal of heavy weapons," Merkel said following the Normandy Four talks in Paris. "There
is hope for progress. We are moving toward each other."
On the whole, the results of Friday's Normandy Four talks in Paris set a positive tone, Angela Merkel said, adding that
she was satisfied with what the participants achieved during the meeting.
The Normandy Four are planning to meet for a followup in November, presumably to keep Poroshenko in compliance and moving head
with the implementation of Minsk II.
PS -- It was the evil Putin wot done it!
HollyOldDog -> Laurence Johnson 3 Oct 2015 18:55
The EU cannot do anything about Ukraine Right Sector radicals and its other nutters in the Mafia. This mess is for
Ukraine alone to sort out and Mikheil Saakashvilli is not the man for the job - his corruption runs far to deep for any action
that is more than cosmetic.
BMWAlbert -> Елена Соловьева 3 Oct 2015 18:38
IDK the number of Russian nationals in the Donbas forces, something between 1-10K as a rough guess, these are not formal formations
(some are organized at the battalion level as all-Russian units, just an observation from the Russian language news coverage of
the closing of Debaltsevo earlier this year, e.g. so called "Khan" battalion, this is just televised news, but there must be more
than one such unit, hence the estimate-there are enough weapons captures from UAF in the earlier battles also to arm a small army
in Donbas, but this does not rule-out direct supplies (I would imagine something low-key and NOT the big white convoys), this
would be the natural minimal level of support I would infer/expect in this case and seems a fair inference. I am not replicating
mindless statements from ATO leaders, and remember that Rada twice tried
Crimea was an autonomous region in UA and with rights to hold a referendum under the early 2014 UA Constitution and an earlier
legal attempt in 1993 was surprised, also that RU had large forces already legally stationed in Crimea/Krim according to the Kharkov
treaty and that in some cases, civic authority, Sebastopol by the RU naval command being a case in point-a continuation of old
practices. My sense from personal friends is that among the young, and old generally, the pro-RU sentiment in Krim is strong (incl.
one girl with whom I have lost contact, who works there in what is now RU, due to current conditions).
But the Donbas situation is more mixed, however, even before the trouble in 2014, what I DID encounter in Kiev in particular
(not so much Galycnya) was a regard of the SE UA citizens as second-class citizens, as well as attitudes that could be accurately
be described as quasi-facist, this includes well-educated people, ibcl. in one case (a blonde) the desire to 'exterminate'
the Russians-but I would not count the opinions in Donbas as only those enduring the bombardments, there are also many refugees,
many in RU itself of course, whose opinions vary from those expressed sometimes here with all due respect, so yes it is complicated.
HollyOldDog -> William Snowden 3 Oct 2015 18:13
Putin wants Ukraine to succeed but the only way it can do this is for the Ukrainian citizens to take over its government and
boot out the Self-serving Oligarchs. The Oligarchs have their place in Ukraine but that is to stay out from forming Government
decisions and confine their endeavors to modernizing and improving the infrastructure of Ukraine Industrial base which would improve
the finance and conditions for all of Ukrainian citizens. It's going to be a difficult road but Russia and the EU can help, though
clinging on to the influences of the USA would surely be a retrograde step.
Елена Соловьева -> BMWAlbert 3 Oct 2015 18:07
What's so complicated? The war is real or not! Evidence of finding the 200 000 Russian soldiers in Lugansk and Donbass, or
have or not! Crimea after the collapse of the USSR was a disputed territory, which Ukraine annexed unilaterally, without considering
the opinion of the Russian Federation and, more IMPORTANTLY, against the wishes of the citizens of the Crimean Republic, which,
actually, was constitutional and presidential, while Ukraine did not destroy this status! It is Ukraine annexed the Crimean Republic,
and the Russian city Sevastopol, which is in the Republic even geographically not part of, Mr. specialist on Ukraine! Demarcation
implies the absence of territorial disputes. And, by the way! Another monstrous stupidity of your media! Poor Ukraine after the
coup d'état, followed by the external management of the country by the EU and the US are terrorized by the evil Russian, because
it is weak and has no nuclear weapons because of the Treaty of non-aggression from the Russian Federation? Really? Ukraine did
not pay its portion of external debt of the USSR and the Russian Empire, therefore, is not the successor,and cannot claim to nuclear
power status! Ukraine is a priori not have a right to this weapon, because it was not the owner initially, as the successor! The
coup in Kiev was held under the slogan "Cut all Russians!", which in Ukraine 2 years ago, it was a few million, and that is what
they are doing throughout the Ukraine, especially in Eastern Ukraine and was planning to do in Crimea. The burning of people in
Odessa - a vivid example.
Beckow -> Bart Looren de Jong 3 Oct 2015 17:11
You cannot survey people in the middle of a civil conflict on how much they like or dislike what is described as the "enemy".
It simply cannot be done, the numbers are meaningless.
Look at Ukraine's economy and you will see the future of this conflict. The living standards are down so low that all else
will become meaningless - people actually care about their incomes and living standard.
Your slogans about "illegal", "privileged sphere" are not what any of this is about, they are not what people in Ukraine think
about or what matters to them. But if you insist on slogans, there is one simple answer: Kosovo. West bombed Serbia, killing about
a thousand civilians, to force Albanian separation in Kosovo. All talk about "international law" is kind of meaningless after
that.
Informed17 -> Laurence Johnson 3 Oct 2015 15:53
I wonder why you call Western airstrikes "tactical". The coalition launched >7,000 military aircraft sorties in over a
year, apparently carefully "missing" ISIS targets, killing on average ~0.4 terrorist per sortie and freeing up as much as 15 square
kilometers of territory from ISIS. As you can easily imagine, a lot of people made huge amounts of money in the process. So we
should call this a resounding success, on par with $10 billion no-bid Halliburton contract in Iraq. Wouldn't you agree?
Manolo Torres -> Bart Looren de Jong 3 Oct 2015 15:49
I have condemned the actions of the Russian government in chechnya many times, if you are going to speak about anyones hypocrisy,
you should at least know with whom are you talking.
Manolo Torres
9 Sep 2014 09:42
0 Recommend
Look, I already replied, I wasn´t careful with my question. Of course the Russians have committed many abuses, namely the war
in Chechnya. I also explained the differences between that war and the wars by US/NATO that have simply no justification on
grounds of self defense.
My concern with human life was shown by my condemnation of every violent act: the massacre in Odessa, the airstrikes and shelling
that killed thousands in Ukraine, the war in Iraq and Syria, the war in Chechnya or the neo-nazi movement inside Russia (as
we were discussing yesterday before you started shouting and got overwhelmed by the numbers I showed you).
As for the Ukrainians I don´t you are as stupid as to blame Putin for the Ukrainian governments shelling of residential areas.
And perhaps you know that there is an investigation for MH17.
i am not like you Rob, I am not a fanatic and I only make judgements when I think I know the facts. You are just shouting and
looking every time more ridiculous.
A good start for you would be to say that you stand corrected for the Amnesty report. Do it, I have done it, feels good.
Can I do anything else for you?
Laurence Johnson -> gimmeshoes 3 Oct 2015 14:15
Poroshenko is in a bit of a legal quagmire as his government has not at any stage controlled the entire nation and its borders
at any time. His current claim on Eastern Ukraine in legal terms is more a wish list than a legal document of fact.
His only path is partition to legalise his government to govern what they have today, or to negotiate the handing over of East
Ukraine to his governments control in order that he can legitimately govern the entire nation and its borders. An invasion of
East Ukraine is probably not going to work legally, or on a more practical basis.
Informed17 -> Worried9876 3 Oct 2015 14:10
This is too categorical. Chocolate man wants anything that allows him to keep cashing in on his "president" title. The only
thing that's unacceptable to him is if his masters try to prevent his thievery. Then he is likely to become angry and unpredictable.
Might even remember about Ukraine, although that's highly unlikely.
elias_ 3 Oct 2015 14:04
Looks to me like Putin wins. Crimea in the bag, the eastern regions stay in Ukraine with enough clout to prevent nato membership
and keep the nazis at bay. And stupid EU and US get to pay the bill for reconstruction. The sanctions hurt all sides but are forcing
much needed reforms in his country, he may even become a net exporter of food products instead of importing from the eu. He gets
a refund for the Mistrals and makes the poodle French look untrustworthy. Oh well, serves the sneaky bastards right (you know
who i mean "fuxx the eu").
Laurence Johnson -> Alexzero 3 Oct 2015 14:03
Does it really matter if they have ? We know the West has been involved so it would be pretty much par for the course if
Russia was involved. The main thing is Ukraine becomes a peaceful nation for the benefit of its citizens, not for the benefit
of either the West or Russia.
In the Tragedy of American Diplomacy, William Appleman Williams illustrates how America
fails to honor its own principles when it approaches foreign policy. America believes in
self-determination and the right to develop its own brand of democracy. Unfortunately, no
other nation is afforded the luxury of self discovery. Other nations must conform to America's
vision of democracy or face the terror of America?s military might. This, to Williams, is the
tragedy.
Cuba is his first case. America wanted Cuba to adhere to American visions which meant
wealth for the sugar planters and their American backers. When Cuba sought its own course and
threw off a repressive regime, America objected. The rift has existed ever since as no
American administration will ever acknowledge Cuba's right to govern its own affairs so long
as Castro is in power.
Williams then systematically follows the years from 1898 through 1961 and paints a similar
picture. It does not take the reader long to get the idea and carry the argument beyond
Williams' parameters and show that everything from Grenada to Lebanon to Afghanistan to Iraq
can be shown in the same light. American puppet governments are not granting freedom and
democracy to their constituents as much as they are part of a ruling class dominated by the
business interests that exploit their workforce and deny requests for reform until the entire
population is ripe for rebellion (remember the Shah of Iran). One wonders if the Saudi
government is the next great western ally to fall victim to a popular revolt of Muslim
fundamentalists.
Williams is a master of detail and works his arguments creatively in an entertaining
fashion. Neoconservatives of today will have the same objections as their predecessors from
the 1950s in acknowledging Williams as a valid author. But Williams makes a strong case and if
more people were exposed to his writing, our country might even find a way to avoid the same
pitfalls. A Saudi revolution would disrupt oil markets and jeopardize world economies. Perhaps
if some thought is put into policy such a scenario is avoidable and preventable. If people
are willing to give Williams a chance American foreign policy might eventually reflect a
broader American vision rather than the interests of a few.
Karun Mukherji, April 8, 2006
Erudite, splendidly crafted, fine piece of scholarhip
Williams book explores paradoxical nature of US Foreign Policy.
Firstly author refutes orthodox view that accidental, inadvertent turn of events transformed
America into a global power. Williams has argued market forces unleashed by private free
enterprise economy dictated the growth of American power; it has also molded country's foreign
policy and continues to do so. To comprehend this fully one has to understand the intricacies
of Capitalism.
It goes without saying that Capitalism carries within it the seed of self destruction.
Late 19th century American economy was convulsed by frequent bouts of economic depression
which led to wide spread social unrest. Home markets saturated with goods which people find
difficult to absorb as they had only limited purchasing power. 'Frontier' had close down and
country's leading intellectuals [William Jackson Turner ,Brooke Adams, Alfred Thayer Mahan]
frantically called for overseas expansion avert an impending economic doom
Thus economic considerations compelled successive American Presidents [Grover Clevland,
William Mckinley, Thedore Roosevelt, Woodrow Wilson] to remake the world in America's image.
Unfortunately this policy boomeranged because Afro ,Asian, Latin American world refused to
share American view.
Iniquitous, unfair trade practised by US helped Washington to enrich in detriment to
welfare of latter economies. This was closely followed by American tendency to externalise
evil. It posits the view that other nations have a stake in America's continued, prosperous
existence. This preposterous notion, according to the author, has been the starting point
America's troubles. Actually problem lay in fundamental nature of capitalist economy. Attempts
to reverse this trend triggered counter revolutionary wars in Asia, Latin America. The above
feature forms essence of this book; this idea continues to permeate the book.
Williams provide fresh interpretation on the onset of Cold War. He holds Truman administration
accountable for the coming of iron curtain in Eastern Europe. Firstly in immediate postwar
years US taking advantage of its economic might tried to extend its 'open door' policy into
Eastern Europe. Further exploiting atomic monopoly the President tried to reverse political
order which emerged in areas under Soviet control.
We may pause here try to establish reasons behind America's post war hostility toward
Soviet Union. Unlike Britain which during the days of the empire could invest and dominate
worldwide, America upon the end of World War II inherited a divided world.
Soviet economy with its emphasis on industrial self sufficiency apart from shutting the
door US investment was in the process of curtailing imports substantially. With the success of
Communist revolution 1/3rd of world's population had wrenched free from capitalist sphere
influence. With so much production capacity lying idle, US by the end of World War II was
haunted by a spectre of another depression. Challenge before America -- challenges her still-wheather
market will shrink.
Marshall plan leading to massive post war reconstruction Western Europe must be seen from this
angle. Rebuilding war-ravaged economies stimulated economic growth in US. Thus in my opinion
Marshall plan must not be construed as a manifestation of American altruism; it was motivated
by economic self interest.
Author's stress upon market forces dictating the American destiny broadly agrees with Marxian
interpretation of History. Perhaps this was reason why Williams was dubbed Marxist, Stalinist
by conservative, liberal elite of his country. This book deserves to be read by those who
believe current anti American sentiment sweeping the world stems from sheer envy for American
prosperity.
Tim, December 31, 2009
Creates a clear path through 20th century American history
The fact that this book has become a classic is hardly debatable. Williams' examination of
American foreign policy is now in its fourth printing with this 50th anniversary edition. The
book takes a detailed look at "The Open Door Policy" which evolved out The Open Door Notes of
the late 19th century. It shows that, for better or worse, American Capitalism had to find
and constantly expand into foreign markets in order for there to be freedom and prosperity at
home.
Williams argues that not only American leaders but the general population internalized this
belief so deeply that it was considered the very basis of morality in the world. Any other way
of looking at society was believed to be simply wrong, and in fact, evil. Williams undoubtedly
knew that this way of looking at Capitalism, and the world at large, coincided directly with
the predictions of Marx concerning Capitalism's globalization. The Policy of the Open Door can
be used to explain the objectives of every foreign military excursion we have undertaken since
the end of the 1800's.
It continues to this day in our oil-hungry drive for control of the nations in the Middle
East and South Asia. It creates real and imagined enemies that have accounted for the build up
of America's military might over the years. Overall I found this examination of American
foreign policy to be quite satisfactory and rational in explaining the successes and failures
of American actions over the years. Where I would criticize Williams is in his
characterization of America's leaders having a truly benevolent anti-colonial attitude towards
the lesser nations in which America invested and set up "trade".
Williams argued repeatedly, and the commentators in the 50th anniversary edition did as
well, that the government really believed they were benefiting mankind as a whole by not only
exporting America's goods, but American values, and that the only "Tragedy" was the failure of
these policies. I think it a bit uncritical to state this unequivocally. To argue that
American leaders (both government and civilian) did NOT know that they were exploiting nations
and purposely directing the trade to benefit Americans regardless of the effect on foreigners
is quite bold. I believe that the greed of Americans and the drive that is inherent in
Capitalistic countries meant that these leaders knew EXACTLY what they were doing, and that
they had little true regard for the welfare of nations.
Our failure to see that there is more than one way for societies to organize themselves is
certainly a problem of ignorance in American culture, and Williams is right to argue that
blaming America's leaders becomes a scapegoat. Americans need to change themselves first and
realize the error of their ways...that it will cause destruction at home and abroad...before
we will see any change in leadership and our destructive policies.
However, the American empire is really not that different than others in history. The
drive for power becomes all consuming, and ultimately leads to disregard for humanity...unless
that humanity happens to be at the top of the American food chain.
"... Translator's note: I like satire: just change a few words, and this could be your
newspaper, or some pages in the Congressional Record. Satire actually helps one realize what is
going on. ..."
Translator's note: I like satire: just change a few words, and this could be your
newspaper, or some pages in the Congressional Record. Satire actually helps one realize what is
going on.
The Federal government of Germany wants to supply weapons to insurgents in the US.
"The red line has been crossed!" With these words, a visibly frayed Foreign Minister Steinmeier
appeared this morning before the press. "With the murder of yet another black activist, the Obama
regime once again shows its ugly head!". Background: On August 09, the totally unarmed black
civil rights activists Michael Brown was shot by police. Now on August 19, another black activist
in St. Louis, not far from Ferguson, has been shot in cold blood by white policemen.
"The world can not continue to stand idly by," Steinmeier stressed at the press conference.
"Here are peaceful human rights activists protesting against heavily armed police in a profoundly
racist apartheid regime."
Therefore, the point now been reached, "in which Germany, too, must take responsibility for
the oppressed peoples of the world," said Steinmeier.
As several media have unanimously reported, the government is now considering supplying arms
to the rebels.
Next comes consideration what to supply in support of the rebels in Ferguson: protective
vests, helmets, and night vision devices, and light infantry weapons?
Many MPs in the government coalition feel this does not go far enough. Given that the police
and National Guard are geared up with weapons of war like an army, several CDU MPs are calling
for supplying the rebels with heavier munitions. "We are currently discussing the proposals," an
unnamed deputy is quoted. "We cannot rule out that the weapons may end up falling into the wrong
hands."
In view of these events in the US, Defence Minister Ursula von der Leyen will not rule out the
use of Bundeswehr soldiers. However, out of sensitivity and respect for the local activists "only
colored members of the Bundeswehr would participate in such a mission."
In a note seeking to "explain" why the US labor participation rate just crashed to a nearly 40
year low earlier today as another half a million Americans decided to exit the labor force bringing
the total to 94.6 million people...
... ... ...
...
this is
what the Atlanta Fed has to say about the most dramatic aberration to the US labor force in history:
"Generally speaking, people in the 25–54 age group are the most likely to participate in the labor
market. These so-called prime-age individuals are less likely to be making retirement decisions
than older individuals and less likely to be enrolled in schooling or training than younger individuals."
This is actually spot on; it is also the only thing the Atlanta Fed does get right in its entire
taxpayer-funded "analysis."
However, as the chart below shows, when it comes to participation rates within the age
cohort, while the 25-54 group should be stable and/or rising to indicate economic strength
while the 55-69 participation rate dropping due to so-called accelerated retirement of baby booners,
we see precisely the opposite. The Fed, to its credit, admits this: "participation among the prime-age
group declined considerably between 2008 and 2013."
Yeah see what happens! Great idea! Remove the only thing keeping this country in one piece!
Let's not close corporate tax loopholes and handouts, egregious MIC spending or in any
significant way stop financial crime. Before we address those trifling concerns which amount
to many trillions, let's cut TANF and SNAP benefits to recipients who statistically are mostly
CHILDREN. I for one hate having cities that aren't on fire and have been pining for LA Riots
times one hundred thousand. Yes let's not address elites crimes first let's crack down on
single moms and children. We wouldn't want to do anything to address Jamie Dimon, Lloyd
Blankfein and Hank Paulson's crimes. Let's go after the real power brokers who got us here,
children in poverty. And by doing so let's unleash days of rage and an American Spring.
Absolute genius!!!!
cynicalskeptic
Sadly that is exactly what will happen when the merde hits the fan. The poor and starving
WILL riot in the streets - as they have throughout history when they lose all hope. Clearly
TPTB know this - and know time is running out. They are preparing - militarized police and an
obsession with monitoring the population, repressing ANY discontent (like Occupy Wall Street).
Things are as bad as they were in 1932 - government money is the only thing preventing 'Hoovervilles'
and obvious signs of what has happened - minimal payments to keep people from taking to the
streets. Yes, some people do abuse these programs and the abuse of things like disability is
increasing as people run out of options, but the root cause of all this is the LACK OF JOBS.
Our political leaders - following the wishes of corporate leaders - have embraced 'free trade'
- sending American jobs overseas - and bringing in cheap labor (illegal at the low skill end
and H1B's at the high skill end), all in a never ending effort to find the cheapest possible
labor costs. Some goods may be cheaper but that means little if people are unemployed and
cannot afford to buy anything. A toaster from China may cost less but who cares when you can't
afford the bread to put in it?
Perimetr
Fed to the unemployed:
"Let them eat cake"
And remember what happened to the French aristocrats . . .
ZerOhead
DEA might be hiring... they are looking into possibly replacing their workers who are
failing drug tests.
Congratulations to Russia and Iran to standing up [to neocons strategy], I hope their strategy
will work.
Why can Saudi-Arabia with the approval of the western powers bomb a foreign country, Jemen,
without Jemen having attacked Saudi? Of course Saudi claims they do it at the request of the president
Hadi of Jemen who fled to Saudi. If that is accepted by western powers, then how would those western
powers have reacted if Russia would have attacked and bombed the Ukraine, at the request of the
democratically elected president Yanukovich who fled to Russia?
I think the house of Saud is setting itself up for real bad long-term Karma or, if you prefer,
the Saudis create a lot of enemies for themselves by destroying the people and their neighboring
country of Jemen. Reminds me of why Americans are often times not liked in many parts of the world.
Americans often claim that Assad is a Tyrant, a Murderer and a Dictator and that's why he must
go. Why does the US not call the House of Saud by the same names and try to overthrow them? I
guess because the House of Saud is an obedient servant of the US, and Assad is cooperating with
a different power - Russia.
The western mainstream media treats the Saudi atrocities in Jemen as a sideshow, while blowing
up the story about Assad and demonizing him. What's the alternative to Assad?
Let's see how other countries, Iraq and Libya, with worse Tyrants - Saddam Hussein and Ghaddafi
have "developed", thanks to western intervention.
In addition, the US is always talking about the evil Iranians, and how they took American hostages
back in 1979. You don't hear much about the fact that the US staged a coup in 1953, deposed the
democratically elected president Mossadegh and installed the Shah, who, just like the House of
Saud became a servant for US interests. After the Iranians were finally able to get rid of the
Shah who had been in power for over 25 years they understandably did not have much love left for
the US. The pendulum went to the other side.
If you look at all these facts in context, it's easy to see the hypocrisy of the US and it's western
"allies".
Lost My Shorts
It sounds like -- we are covertly supporing ISIS while pretending to attack them, and getting
huffy because Putin is really attacking them. Or wandering around like a headless chicken. Or
just wasting money. Not sure.
Crash Overide
"Remind me ... WTF are we doing in Syria ?!"
Trying to profit from destruction and keep control on the US civilian population through fear
of boogeyman terrorists.
Just remember, when they fail abroad, they will start chaos at home.
...Vladimir Putin in his U.N. address summarized his indictment of a U.S. foreign
policy that has produced a series of disasters in the Middle East that we did not need the Russian
leader to describe for us.
Fourteen years after we invaded Afghanistan, Afghan troops are once again fighting Taliban forces
for control of Kunduz. Only 10,000 U.S. troops still in that ravaged country prevent the Taliban's
triumphal return to power.
A dozen years after George W. Bush invaded Iraq, ISIS occupies its second city, Mosul, controls
its largest province, Anbar, and holds Anbar's capital, Ramadi, as Baghdad turns away from us - to
Tehran. The cost to Iraqis of their "liberation"? A hundred thousand dead, half a million widows and fatherless
children, millions gone from the country and, still, unending war.
How has Libya fared since we "liberated" that land? A failed state, it is torn apart by a civil
war between an Islamist "Libya Dawn" in Tripoli and a Tobruk regime backed by Egypt's dictator.
Then there is Yemen. Since March, when Houthi rebels chased a Saudi sock puppet from power, Riyadh,
backed by U.S. ordinance and intel, has been bombing that poorest of nations in the Arab world. Five thousand are dead and 25,000 wounded since March. And as the 25 million Yemeni depend on
imports for food, which have been largely cut off, what is happening is described by one U.N. official
as a "humanitarian catastrophe." "Yemen after five months looks like Syria after five years," said the international head of the
Red Cross on his return. On Monday, the wedding party of a Houthi fighter was struck by air-launched missiles with 130
guests dead. Did we help to produce that?
What does Putin see as the ideological root of these disasters?
"After the end of the Cold War, a single center of domination emerged in the world, and then those
who found themselves at the top of the pyramid were tempted to think they were strong and exceptional,
they knew better."
Then, adopting policies "based on self-conceit and belief in one's exceptionality and impunity,"
this "single center of domination," the United States, began to export "so-called democratic" revolutions.
How did it all turn out? Says Putin:
"An aggressive foreign interference has resulted in a brazen destruction of national institutions.
… Instead of the triumph of democracy and progress, we got violence, poverty and social disaster. Nobody cares a bit about human rights, including the right to life."
Is Putin wrong in his depiction of what happened to the Middle East after we plunged in? Or does
his summary of what American interventions have wrought echo the warnings made against them for years
by American dissenters?
Putin concept of "state sovereignty" is this: "We are all different, and we should respect that.
No one has to conform to a single development model that someone has once and for all recognized
as the right one." The Soviet Union tried that way, said Putin, and failed. Now the Americans are trying the same
thing, and they will reach the same end.
Unlike most U.N. speeches, Putin's merits study. For he not only identifies the U.S. mindset that
helped to produce the new world disorder, he identifies a primary cause of the emerging second Cold
War.
To Putin, the West's exploitation of its Cold War victory to move NATO onto Russia's doorstep
caused the visceral Russian recoil. The U.S.-backed coup in Ukraine that overthrew the elected pro-Russian
government led straight to the violent reaction in the pro-Russian Donbas.
What Putin seems to be saying to us is this: If America's elites continue to assert their right to intervene in the internal affairs of nations,
to make them conform to a U.S. ideal of what is a good society and legitimate government, then we
are headed for endless conflict. And, one day, this will inevitably result in war, as more and more
nations resist America's moral imperialism.
Nations have a right to be themselves, Putin is saying. They have the right to reflect in their institutions their own histories, beliefs, values and
traditions, even if that results in what Americans regard as illiberal democracies or authoritarian
capitalism or even Muslim theocracies.
There was a time, not so long ago, when Americans had no problem with this, when Americans accepted
a diversity of regimes abroad. Indeed, a belief in nonintervention abroad was once the very cornerstone
of American foreign policy.
Wednesday and Thursday, Putin's forces in Syria bombed the camps of U.S.-backed rebels seeking
to overthrow Assad. Putin is sending a signal: Russia is willing to ride the escalator up to a collision
with the United States to prevent us and our Sunni Arab and Turkish allies from dumping over Assad,
which could bring ISIS to power in Damascus.
Perhaps it is time to climb down off our ideological high horse and start respecting the vital
interests of other sovereign nations, even as we protect and defend our own.
Patrick J. Buchanan is the author of the new book "The Greatest Comeback: How Richard Nixon
Rose From Defeat to Create the New Majority." To find out more about Patrick Buchanan and read features
by other Creators writers and cartoonists, visit the Creators Web page at
www.creators.com.
At fist I thought that Twaddleradar, member since
Aug 9, 2015A is a new NATObot. It it looks like he is a regular Russophob... Still amazingly prolific spamming the whole discussion.
It's definitly not enough for him to state his point of view and voice objection. Such commenting incontinence is very disruptive in
Web forums.
Notable quotes:
"... WHERE IS THE EVIDENCE!?!? After 2 weeks in syria you have loads of satellite pictures of the Russian base/troops, but after a year + in Ukraine all your evidence is taken from social media posts? Good thing more and more people are refusing to swallow your daily dose of bullshit. ..."
"... The pretense that this was a Russian invasion is exactly that, a pretense. ..."
"... Something tells that it's easy to say but hard to implement. Far right powers in Ukraine would resist such a law very much. ..."
Russia has denied military involvement in the conflict despite overwhelming evidence to the contrary.
This old chestnut again... Evidence please of this sweeping claim?
No mention of Putin drafting the Minsk agreement, this is what happened. Then presenting it as a road map for a resolution
to the Ukrainian Civil war? As I recall it was Merkell and Holland who rushed to Moscow in February to meet with Putin and thrash
out a solution which was then presented to Poroshenko.
As the USA is now in an election cycle and with the Syrian War on Isis takes centre stage with Russian involvement, it looks
like the their sock puppet, Petro Poroshenko has been hung out to dry. Finally being told to get back in his box... for now, probably
as no more funds via the IMF will be directed into this proxi-conflict if it continues (well they were breaking their own rules
giving Ukraine money when it's at war with itself).
Finally, this made me smile...
It has been a busy diplomatic week for Putin, who has not been a frequent guest in western capitals over the past year
Actually Putin has had a very busy diplomatic year building international partnerships across Asia and the BRIC's, Trade agreements
with China and Saudi Arabian investment into Russia. The Silk Route project and much more. It seems to me some of the Graun's
journalists should get out more, like Putin has been doing!
PrinceEdward -> Twaddleradar 2 Oct 2015 21:12
Meanwhile every Ukrainian male is so full of patriotism, there is no need for a 5 draft rounds in Ukraine because they're flooding
with so many volunteers, they turn them away. Stories of parents paying $1000 to get their kids out of the draft, or countless
thousands of 20-something Ukrainians running away to Russia and Poland to get student visas, is just propaganda.
MrJohnsonJr 2 Oct 2015 21:07
Ukraine has a fucking nerve to require a diplomatic effort to have it explained to them what a murderous losers the turned
out to be and that another of their "revolutions" brought nothing but a major waste of human life and EU and Russian taxpayer
money.
KriticalThinkingUK 2 Oct 2015 20:39
Its great isnt it what can be achieved when Russia, Germany, France and Ukraine get together for serious negotiations. Just
like in Minsk 1 and 2 when the same group first established peace in Ukraine, behind the backs of the USA and UK who were pointedly
not invited to those talks either.
What is the key to this progress? Simple. Dont invite the rightwing cold war loonies to attend. Keep them out at all costs.
That is to say exclude from all talks USA, UK, NATO, Poland and the rest of the crazy warmongers who have worked so hard to encourage
conflict.
If these negotiations are successful expect further progress over the next decade in other spheres between Germany and Russia.
In fact objectively by all measures it is in the long term interests, both economic and political, for these two major European
powers to co-operate as natural trading partners....the US warmongers worst nightmare!
Interesting times................
Mazuka 2 Oct 2015 20:35
" Russia has denied military involvement in the conflict despite overwhelming evidence to the contrary."
WHERE IS THE EVIDENCE!?!? After 2 weeks in syria you have loads of satellite pictures of the Russian base/troops, but after
a year + in Ukraine all your evidence is taken from social media posts? Good thing more and more people are refusing to swallow
your daily dose of bullshit.
NotYetGivenUp -> HHeLiBe 2 Oct 2015 19:18
You confuse Crimea, which voted for secession after Russian forces ensured Kiev military didn't engae in anti-secessionist
reprisals (as stated by Putin), with East Ukraine, in which Kiev generals admitted they were fighting Donbass forces, not Russian
forces.
The pretense that this was a Russian invasion is exactly that, a pretense. But any honest appraisal of the facts on
the ground, through observation of events as they happened, show that the rejection of the Kievan coup was by the people of Donbass,
and is a popular rejection, not the nonsense Russian invasion peddled by the media in the west.
Mr Russian 2 Oct 2015 19:13
The compromise plan would involve the Ukrainian parliament passing a law stating these elections were indeed legal, but
they would be organised by the rebels.
Something tells that it's easy to say but hard to implement. Far right powers in Ukraine would resist such a law very much.
"... Not only were far fewer jobs added
than we expected, the jobs added were low wage, part-time jobs … such as bartenders and restaurant waitstaff. ..."
Bartenders And Wait Staff Dominate Jobs Added, Manufacturing Jobs Decline (Fed's Fischer
See No Bubbles)
The September jobs report was nothing short of disastrous. Not only were far fewer jobs added
than we expected, the jobs added were low wage, part-time jobs … such as bartenders and restaurant waitstaff.
Even worse, higher paying manufacturing jobs declined.
'Leaving the EU ".is not in the interests of the US" '
That's my vote decided then, bye EU.
MikeSivier 2 Oct 2015 22:18
Why does The Guardian, along with the other news media, insist on giving credibility to this
disreputable individual by continuing to publish his words?
He has been caught lying so many times that it is frankly irresponsible to repeat anything he
says - without a disclaimer - and expect to keep your own reputation intact.
dreamer06 2 Oct 2015 22:12
Btw, Guardian, why aren't you reporting on the story about the clashes between migrants of
an Islamic faith and Christians in the refugee camps in Germany, and that Germanys Senior Police
Chief, Jörg Radek, has said refugees now needed to be separated by religion because of the tensions.
By all means show the positive things happening there, but hide the dark side.
BlueBeard 2 Oct 2015 21:43
There are lies, damned lies and Iain Duncan Smith.
JonathanPacker 2 Oct 2015 21:48
On the other hand when I see a photo like that (I would never let the Grauniad photographer
take one of me!) it looks like the Austro-Hungarian Empire, and I know it can't last.
Encouraging.
valdez 2 Oct 2015 21:41
It's a sad indictment of the state of democracy, that someone widely regarded as a cretin,
even his own party, can sustain a very senior position for this long.
Allseeingguy 2 Oct 2015 21:10
I know about 500 people have made this joke already but... ...I too want Iain Duncan-Smith
to be hit head on by an out of control bulldozer.
Hopefully while he was in a factory on a photo-op, and the bulldozer was under the control
of someone who was only in that job due to workfare and couldn't reach the brake pedal due to
their disability. His last words would be "You're not fit to work" to which the disabled bulldozer
driver would reply "ATOS said I am" to a round of applause from his colleagues.
That's how much I dislike IDS, I imagine things like that upon reading things like this.
lolbayfcp 2 Oct 2015 21:01
He must think we're barmy.
Schengen is about the free movement of citizens of EU countries. Border checks are still allowed
if the host country wants to implement them. I've been checked at every border driving from Sweden
to the UK sometimes.
The free movement of labour is about citizens of EU nations.
Refugees won't be making EU capitals rethink their belief in free movement of labour or 'reform'.
It'll make some capitals that don't want muslims & aren't taking any anyway say some things a
little turd like IDS will take for support & spin despite it being meaningless for the issues
that Cameron has sought reform on that pre-date this crisis & those capitals are still 100% behind.
Jeebus....they are just such 'not clever people' & they treat us as such too but he's talking
rubbish like he ALWAYS does
PollyAnthus 2 Oct 2015 20:50
Ian Duncan Smith is an "out of control" narcissistic psycho whose policies are killing, poor,
vulnerable and disabled people. Why is this person who obviously should not be allowed anywhere
near a government post in high office being featured in this newspaper? The man is dangerous and
his views extreme.
ProbablyafakeID 2 Oct 2015 20:40
Surely a crisis in part brought about by this governments and the previous governments support
of bombing places like Libya.... Or other middle eastern countries...
It's a vile man who knowingly does wrong.... Such a man is IDS.
This government is a threat to peace, economic stability, international security and very much
your family (unless you have a couple of million in the bank of course)
Education is not the only cause of inequality, but it's part of the problem:
Are
American schools making inequality worse?, American Educational Research Association: The
answer appears to be yes. Schooling plays a surprisingly large role in short-changing the nation's
most economically disadvantaged students of critical math skills, according to a
study published today in Educational Researcher, a peer-reviewed journal of the American Educational
Research Association.
Findings from the study indicate that unequal access to rigorous mathematics
content is widening the gap in performance on a prominent international math literacy test between
low- and high-income students, not only in the United States but in countries worldwide.
Using data from the 2012..., researchers from Michigan State University and OECD confirmed
not only that low-income students are more likely to be exposed to weaker math content in schools,
but also that a substantial share of the gap in math performance between economically advantaged
and disadvantaged students is related to those curricular inequalities. ...
"Our findings support previous research by showing that affluent students are consistently
provided with greater opportunity to learn more rigorous content, and that students who are exposed
to higher-level math have a better ability to apply it to addressing real-world situations of
contemporary adult life, such as calculating interest, discounts, and estimating the required
amount of carpeting for a room," said Schmidt, a University Distinguished Professor of Statistics
and Education at Michigan State University. "But now we know just how important content inequality
is in contributing to performance gaps between privileged and underprivileged students."
In the United States, over one-third of the social class-related gap in student performance
on the math literacy test was associated with unequal access to rigorous content. The other two-thirds
was associated directly with students' family and community background. ...
"Because of differences in content exposure for low- and high-income students in this country,
the rich are getting richer and the poor are getting poorer," said Schmidt. "The belief that schools
are the great equalizer, helping students overcome the inequalities of poverty, is a myth."
Burroughs, a senior research associate at Michigan State University, noted that the findings
have major implications for school officials, given that content exposure is far more subject
to school policies than are broader socioeconomic conditions.
Anonymous -> Anonymous...
do you think schools in China/India have funding on the level you are implicitly arguing for?
As Eva Maskovich is showing in NYC - it takes better teachers, not more money.
pgl -> Anonymous...
I live in NYC
"According to Success Academy Charter Schools founder and President Eva Moskowitz".
Ah yes - the charter school crowd. As in Mayor Bloomberg's push for privatizing our public
education system. They have a lot of really dishonest ads attacking our new mayor. So you are
with these privatization freaks? Go figure!
Anonymous -> kthomas...
I am an Asian immigrant who came to the US to pursue the American dream. My education allowed
me to run circles around most students at the university. I ended up with triple major and a post
grad degree. So, go ahead. call the rigorous schooling horrifying all you want. It is silly to
raise kids in an ultra sheltered environment. The jobs are going to go where qualified highly
productive people who want less money are. Then they will have to face reality anyway. We can
sit here and argue about it all we want. The truth is that kids in Asia can do the job I started
with sitting there better for a fraction of the cost here. And this is a job requiring advanced
degrees.
Anonymous -> Anonymous...
And you can add Eastern Europe to Asia. The competition is going to degrade our standard of
living as it has whether we like it or not.
DrDick -> Anonymous...
Sorry, but this is pure BS. We are talking about the presence of AP, foreign language, and
advanced math classes. Having new textbooks and enough textbooks for all students, class sizes,
laboratory equipment for science classes, and building maintenance, among many other very significant
differences.
yes. they spend on things that count. instead of hockey rinks and olympics standard gyms for
toddlers.
DrDick -> Anonymous...
None of which are characteristic of public schools. Have you ever even visited reality? Charter
schools suck up a much greater share of available public resources and further starve the schools
serving the poor and minorities, as happened in Chicago. Unlike you, I believe in fact based decision
making.
" The new school year has been marred for many students all over the country by severe budget
cuts, shuttered schools, and decimated staff. Philadelphia, where students went back to school
Monday, is seeing some of the most extreme effects of these budget cuts.
Nine thousand students will attend 53 different schools today than they did last fall after
24 were closed down. Class sizes have ballooned in many schools, with parents reporting as many
as 48 students in one classroom. Meanwhile, the district laid off 3,859 employees over the summer.
A new policy also eliminates guidance counselors from schools with fewer than 600 students,
which is about 60 percent of Philadelphia schools. Now one counselor will be responsible for five
or six schools at once. Arts and sports programs have also been sacrificed.
Philly's new barebones regime was implemented after Gov. Tom Corbett (R) and the Republican-dominated
legislature cut $961 million from the basic education budget, or 12 percent overall. Federal stimulus
funds cushioned schools from state cuts for a couple of years, but they are now dwindling.
The district is struggling to fill a $304 million deficit. In order to open schools on time,
the state gave an extra $2 million in funding and the city borrowed $50 million. Corbett is also
withholding a $45 million state grant until teachers unions agree to concessions of about $133
million in a new labor pact. The district plans to sell 31 shuttered school properties. "
"All Australian private schools receive some commonwealth government funding. So they are technically
all "Charter" schools although the term is not used in Australia."
Charter schools are precisely what Milton Friedman recommended. He has the integrity to call
this privatization. Anonymous does not. Funded by taxpayers but these schools are for profit entities.
Anonymous - have the courage to admit your agenda next time.
ilsm -> pgl...
Charter schools are like privatized arsenals, all cost cutting, profit and no performance.
US privatized the arsenals starting after WW I when a lot of "qui tammers" got to send arms
to the Brits.
How long before the charter industry complex has enough unwarranted influence to ruin education?
djb -> Anonymous...
the charter schools cherry pick the best students and they don't deal with problem kids
this I known, they do poorly especially in new York city
as pgl said it is the fact that schools are fund locally that is the problem
to use a favorite right wing phrase
public education is an "unfunded mandate"
it should be paid for by the federal government
then all the mostly right wing politician could use property tax for divide and conquer politics
and funding can go where it is needed
djb -> djb...
then all the mostly right wing politician could NO LONGER use property tax for divide and conquer
politics
DrDick -> pgl...
I think this is the primary issue. The schools in my hometown of 30K, national headquarters
for Phillips Petroleum with a major research facility at the time, were excellent and most students
went to college. Elsewhere in Oklahoma, students from similar sized towns were barely literate
when they graduated. The primary reliance on local funding guarantees perpetuation of inequalities
and the failure of the poor. This is exacerbated in larger communities by differential funding
and resources allocated to schools within the district. When I lived in Chicago, Lincoln Park
High School, in an affluent neighborhood, had world class programs. Meanwhile, schools on the
predominately black west side and south side were literally falling apart with peeling lead paint
and asbestos insulation falling on the students (along with occasional pieces of the cielings).
The best thing about the ninety-minute meeting between the US President Barack Obama and his Russian
counterpart Vladimir Putin in New York on Monday was that they agreed there was not going to be any
recourse to rhetoric. Putin, accordingly, handled the media himself and the White House refrained
from releasing the customary readout.
A senior US official said the talks were "productive" and he calmed down the American media, explaining
"this was not a situation where either one of them [Obama or Putin] was seeking to score points".
Putin's interaction with the Russian media conveyed the impression that he too was satisfied with
the outcome of the meeting.
The Russian Foreign Minister Sergey Lavrov had previously met US Secretary of State John Kerry and
handed over to him a 'flow chart' on the implementation of the Minsk agreements on Ukraine. Indeed,
Putin also used an interview with Charlie Rose at CBS to speak without diplomatese on the Kremlin
thinking regarding Syria and Ukraine.
In remarks to Russian media, Putin described his talks with Obama as "very useful and what is particularly
pleasant, it was very sincere". He struck a positive tone, saying the American side explained their
position "quite clearly" and "indeed, surprising as it may seem, we have many coinciding points and
opinions".
Putin acknowledged the differences, but refused to be drawn into them – except on the central issue
that the air strikes in Syria by the US-led coalition are incompatible with international law.
... ... ...
Obama could not have agreed with the line of Russian thinking on strengthening "al-Assad's army"
– at least, not yet openly. But an increasingly wider audience in the West has learnt to live with
that thought. Putin simply drew satisfaction for the moment that despite differences, "we have agreed
to work together".
However, a senior US official maintained separately that the two sides fundamentally disagreed on
the role that President Bashar al-Assad will play in resolving the civil conflict in Syria. The official
explained that while Moscow sees Assad as a bulwark against the extremists, the Americans see him
as continuing to fan the flames of a sectarian conflict in Syria.
Of course, Putin insists that the future of al-Assad is not for outsiders to propose but is the
exclusive business of Syrian citizens. The principle is unquestionable. The US faces an acute dilemma
here insofar as in a democratic election, Assad's re-election as president still remains a strong
possibility, since secular-minded Syrians cutting across religious sects or ethnic divides would
still see him as the best bet against an extremist takeover.
... ... ...
The discussions relating to Syria and the Islamic State apparently marginalized the Ukraine crisis,
but tensions are not so acute on that front lately. Putin hinted that the US is now putting its
weight behind the Normandy Format (comprising the leaderships of Germany, France, Russia and Ukraine),
allowing it to spearhead the conflict resolution in Ukraine. A Normandy Format summit meeting is
due to take place Friday in Paris.
In his Orwellian September 28, 2015 speech to the United Nations, President Obama said that if
democracy had existed in Syria, there never would have been a revolt against Assad. By that, he meant
ISIL. Where there is democracy, he said, there is no violence of revolution.
This was his threat to promote revolution, coups and violence against any country not deemed a
"democracy." In making this hardly veiled threat, he redefined the word in the international political
vocabulary. Democracy is the CIA's overthrow of Mossedegh in Iran to install the Shah. Democracy
is the overthrow of Afghanistan's secular government by the Taliban against Russia. Democracy is
the Ukrainian coup behind Yats and Poroshenko. Democracy is Pinochet. It is "our bastards," as Lyndon
Johnson said with regard to the Latin American dictators installed by U.S. foreign policy.
A century ago the word "democracy" referred to a nation whose policies were formed by elected
representatives. Ever since ancient Athens, democracy was contrasted to oligarchy and aristocracy.
But since the Cold War and its aftermath, that is not how U.S. politicians have used the term. When
an American president uses the word "democracy," he means a pro-American country following U.S. neoliberal
policies. No matter if a country is a military dictatorship or the government was brought in by a
coup (euphemized as a Color Revolution) as in Georgia or Ukraine. A "democratic" government has been
re-defined simply as one supporting the Washington Consensus, NATO and the IMF. It is a government
that shifts policy-making out of the hands of elected representatives to an "independent" central
bank, whose policies are dictated by the oligarchy centered in Wall Street, the City of London and
Frankfurt.
Given this American re-definition of the political vocabulary, when President Obama says that
such countries will not suffer coups, violent revolution or terrorism, he means that countries safely
within the U.S. diplomatic orbit will be free of destabilization sponsored by the U.S. State Department,
Defense Department and Treasury. Countries whose voters democratically elect a government or regime
that acts independently (or even that simply seeks the power to act independently of U.S. directives)
will be destabilized, Syria style, Ukraine style or Chile style under General Pinochet. As Henry
Kissinger said, just because a country votes in communists doesn't mean that we have to accept it.
It is the style of "color revolutions" sponsored by the National Endowment for Democracy.
In his United Nations reply, Russian President Putin warned against the "export of democratic
revolution," meaning by the United States in support of its local factotums. ISIL is armed with U.S.
weapons and its soldiers were trained by U.S. armed forces. In case there was any doubt, President
Obama reiterated before the United Nations that until Syrian President Assad was removed in favor
of one more submissive to U.S. oil and military policy, Assad was the major enemy, not ISIL.
"It is impossible to tolerate the present situation any longer," President Putin responded. Likewise
in Ukraine. "What I believe is absolutely unacceptable,"
he said in his CBS interview on 60 Minutes, "is the resolution of internal political issues in
the former USSR Republics, through "color revolutions," through coup d'états, through unconstitutional
removal of power. That is totally unacceptable. Our partners in the United States have supported
those who ousted Yanukovych. … We know who and where, when, who exactly met with someone and worked
with those who ousted Yanukovych, how they were supported, how much they were paid, how they were
trained, where, in which countries, and who those instructors were. We know everything."
Where does this leave U.S.-Russian relations? I hoped for a moment that perhaps Obama's harsh
anti-Russian talk was to provide protective coloration for an agreement with Putin in their 5 o'clock
meeting. Speak one way so as to enable oneself to act in another has always been his modus operandi,
as it is for many politicians. But Obama remains in the hands of the neocons.
Where will this lead? There are many ways to think outside the box. What if Putin proposes to
air-lift or ship Syrian refugees – up to a third of the population – to Europe, landing them in Holland
and England, obliged under the Shengen rules to accept them?
Or what if he brings the best computer specialists and other skilled labor for which Syria is
renowned to Russia, supplementing the flood of immigration from "democratic" Ukraine?
What if the joint plans announced on Sunday between Iraq, Iran, Syria and Russia to jointly fight
ISIS – a coalition that US/NATO has refrained from joining – comes up against U.S. troops or even
the main funder of ISIL, Saudi Arabia?
The game is out of America's hands now. All it is able to do is wield the threat of "democracy"
as a weapon of coups to turn recalcitrant countries into Libyas, Iraqs and Syrias.
"We know who and where, when, who exactly met with someone and worked with those who
ousted Yanukovich, how they were supported, how much they were paid, how they were trained,
where, in which countries, and who those instructors were. We know everything."
That sounds like a pretty clear threat to the Democratic front runner for the Presidency to
come to terms, or else. While it is good to see someone threatening accountability, it would be
nice if it didn't have to come from Russia.
No doubt, but I was kind of hoping that the progressive caucuses might make more of a fuss
than they did over our "the king is dead, long live the king", foreign policy. That is, after
all, what got many of them elected. It never ceases to amaze me how fast candidates become coopted
by the establishment once elected.
Synoia, September 29, 2015 at 2:03 pm
The establishment has files on them. Hudson's piece reads as a prelude to war.
Nick, September 29, 2015 at 10:38 am
This post is nothing but tinfoil-hattery. I can assure you, the US is shedding no tears for
the pain Russia is about to inflict on itself by putting Russian boots on the ground in Damascus.
OIFVet, September 29, 2015 at 11:10 am
Did a latter-day Charlie Wilson tell you that? I have no doubt that the stuck-in-the-past
meatheads in DC have a wet dream over just such a scenario. I also have no doubt that Russia (as
well as China and Iran) have no intention of falling into such a trap. The ongoing peeling-off
of Euro/NATO lemmings is as clear indication as any that the US will end up either backing off
or try to go it alone. The latter is a recipe for disaster, as even Obama realizes. So right now
it's all posturing for domestic consumption, behind the scenes things are a bit different as certain
recent incidents would seem to indicate. But hey, we can dream the Russophobic/Slavophobic dreams,
amiright?
lylo, September 29, 2015 at 12:05 pm
Yeah, my reading too.
I also have to point out how ironic it is that a country stuck in several unresolved conflicts
that continue to drain resources and produce instability years later is hoping that, somehow,
their opponents get suckered into a quagmire in a country they are already stuck in.
So, sure, I guess that's what they're hoping for. Makes about as much sense as anything else
they've come up with recently (including direct confrontation with Russia just to enrich a few
ME and corporate pals.)
And "tinfoil hattery" is generally used as things not accepted and proven. Which part of this
isn't proven? US toppling democracies and installing dictators who we then call democratic? That
we have less pull on the international stage than anytime in our lives? That the other bloc has
a serious advantage in this conflict, and going forward? These are all facts…
washunate, September 30, 2015 at 12:10 pm
Give Nick a little credit now; there is a shred of cleverness to the comment(!). He's trying
to plant a big lie inside of the framing – namely, that the rise of IS is a legitimate rebellion
within Syria.
When of course the truth is the opposite. It's IS that is the foreign invader; Russian boots
on the ground would be working with the recognized government, not against it. Indeed, the comparison
might inadvertently be quite apt. Syria looks more and more like a marker on the road from Pax
Americana to a multipolar world. Just like the Soviet-Afghan war was a marker on the road from
the Cold War to Pax Americana.
Perhaps another incident is a better comparison. Maybe Syria is our Suez moment.
Tinfoil-hattery, interesting choice of words. So who's conspiracy are you talking about?
As to your assurance; well it would be a bit more convincing if you were to unveil your identity
so that I know who speaks for all of us (US)...
readerOfTeaLeaves, September 29, 2015 at 2:32 pm
Oh, crikey Nick.
What codswaddle!
As near as I can tell, the US Foreign Policy establishment is driven by think tanks that
are funded by oil companies, Saudis, Israelis, and others for whom 'putting America first' means
covering their own asses and letting the US military (and well-compensated military contractors)
do all the heavy lifting.
As if that weren't bad enough, we also have the R2Pers ("responsibility to protect"), whose
hypocrisy could gag a maggot - the R2Pers seem to think it is urgent to solve every other nation's
(and corporations) problems - indeed, so very urgent that kids from Iowa, Arkansas, Louisiana,
Idaho, etc should all be sent into harm's way in distant lands, whose languages the R2Pers don't
happen to speak, whose histories the R2Pers are ignorant about, and whose cultural nuances are
unknown to the R2Pers.
IOW, Washington DC appears to be awash in egoism and careerism.
I think that Russians have managed to figure that out.
washunate, September 30, 2015 at 11:54 am
I find it rather amusing that this is the best the Democratic establishment can throw at posts
pointing out the idiocy of imperialism. How the Obots have fallen.
steelhead23, September 29, 2015 at 10:56 am
It isn't just the lies and abject stupidity that keeps the U.S. constantly at war, it is our
alliances with repressive dictators, like the Kingdom of Saudi Arabia that is leading the U.S.
toward confrontation with civilization, and Russia. Not so much a leader, the U.S. has become
the militant vassal of KSA. The undying irony is that it was wealthy Saudis who started the most
recent mess on 9/11/01. This will not end until the U.S. turns its back on the KSA.
Sufferin' Succotash, September 29, 2015 at 11:15 am
Russia has always maintained that the Ukrainian revolution was CIA-backed if not -instigated.
It's a shrewd move given the US's track record with regime change. No one will ever be sure if
the new Ukrainian government is entirely legitimate or not.
What really gets terrifying is when you take a step back and realize that the 1800s imperialist
regime never really changed. When you start talking about "superpower" or "regional power" you
are no longer talking about power in the military or economic sense. These countries regularly
meddle in, if not directly control, the politics in other countries. It honestly does not matter
to the United States or Russia or any other country what your government chooses to do as long
as it does what the other country wants.
NotTimothyGeithner, September 29, 2015 at 11:48 am
The Kiev rump failed to meet constitutional standards for impeachment even with the threats
of the mob, and with elections just three or four months away in September following the Maidan
event, there was no practical reason for a forceful removal of the government. Third party or
not, the Kiev rump government has the same legality as the Confederacy. The "separatists" and
the Crimeans saw their country dissolved by a mob, not an election with a regularly scheduled
one on the horizon. The Ukraine was not a case where they would be waiting four years under a
tyrant. If they had made it to September with electioneering issues, then the situation would
be different, but as the current cabal didn't do that, they are akin to Jefferson Davis just with
a better hand.
Americans as celebrators of the Declaration of Independence should note it is not legitimate
to change established governing customs because your side might lose there has to be a litany
of grievances with no possibility of redress. By Mr. Jefferson's standards, this country should
have nothing to do with the Kiev government until the concerns of the separatists have been addressed.
Unfortunately the use of law doesn't exist in this country.
Eureka Springs, September 29, 2015 at 11:11 am
Obamacrats rhetoric and behavior (policy) are both reminiscent and escalation of Bushco in
so many ways.
Wasn't it Bush Jr. who said something along the line of "Democracies don't attack each other"?
NotTimothyGeithner, September 29, 2015 at 12:03 pm
It's just the old Democratic peace theory. It's utter garbage. I'm sure 43 said it because
he repeated the last thing he heard anyway. World War I is pitched as a battle between old world
tyrannical such as Germany (with universal male suffrage for its power base) versus shining beacons
of democracy such as the UK and France which weren't quite democracies yet. Hitler sort of won
a national election. Churchill was selected in a secret meeting when Chamberlain had to step down.
So where is the democratic line? It's always been subjective test.
Of course, all governments rule by the consent of the governed.
JerseyJeffersonian, September 29, 2015 at 5:37 pm
Actually, Leander, the vaunted "independence" of the central banks of the US, Great Britain,
and Deutschland is largely a fiction. And this very fiction has the effect of hyper-empowering
both the financial sector and the oligarchs with whom the financial sector exists in a symbiotic
relationship; in point of fact, these "independent" central banks are largely mere creatures of
the financial sector and the symbiont oligarchs. The carefully cultivated appearance of independence
is a sham under whose cover the truth about how central bank policies cater slavishly to the interests
of the financial sector and oligarchs remains unrecognized.
Careerist movement back and forth between the central banks and the financial sector (along
with the academic and think tank communities in which neo-liberalism reigns supreme as the only
accepted school of economics) facilitates the group-think that culminates in the intellectual
capture of the "independent" central banks. Nothing could be further from the truth.
Welcome to Naked Capitalism; our hosts provide us with a rich spread of knowledge and analysis,
rather as Col. Lang does at his blog, Sic Semper Tyrannis, at which I have also read your posts.
MaroonBulldog, September 29, 2015 at 11:13 pm
In United States administrative law, the word "independent" has an interesting meaning: it
refers to an executive regulatory agency that is "independent of the president," in the sense
that the president cannot easily remove the head of the agency. The Fed is independent in this
sense: the president cannot easily fire Chair Yellen or any other member of the Fed's board of
governors.
An agency can be "independent" in this sense and still completely captured by the industry
it purports to regulate.
Yves Smith, September 30, 2015 at 3:42 am
*Sigh*
The Fed is NOT owned by banks.
Banks hold shares of non-voting preferred stock in regional Feds. The Board of Governors, which
approves the hiring of all regional Fed presidents, is most assuredly part of the Federal government.
The regional Feds are more like a nasty public-private partnership with a bad governance structure
(as in the regional Fed boards on which banks have some, and I stress some, director seats, cannot
hire or fire ANYONE at a regional Fed, they do not approve budgets or other policy actions. Their
role is strictly advisory, although the regional Feds, being more than a little captured cognitively,
give that advice a fair bit of weight.
To give an idea how much power those banks you incorrectly deem to be owners have: Congress
is looking at passing a bill to cut the dividends of the all but small banks how hold shares in
the Fed by 75%. Pray tell, can Congress tell a private company to cut its dividends?
TedWa, September 30, 2015 at 10:21 am
Hi Yves : I don't see any Fed "independence" in action and haven't for quite some time.
Max, September 29, 2015 at 11:40 am
Ah yes, the notoriously secular and definitely legitimate PDPA government of Afghanistan 'overthrown'
by the US. Is that a joke? Has Michael Hudson ever read a book about the Afghan civil war, a highly
complex, decade-plus asymmetrical conflict with constantly shifting actors and allegiances? Reducing
it to a narrative about US imperialism is intellectually dishonest on its own (there is no evidence
that the US ever provided material support to the Taliban – everything from HRW to internal US
documents to the academic consensus to journalistic accounts such as Ahmed Rashid's Taliban (2001?)
contradicts that claim), nevermind that the Khalqi-Parcham government was a Soviet puppet government
and an imperial construct in its own right. Check out any works by Barnett Rubin (U Nebraska?)
or Thomas Barfield (B.U.)
The Mujahideen debacle (Which is both a separable and conjoined issue to the rise of the Taliban
depending on time frame) was a result of poor US oversight of Pakistan, an internal US policy
failure (no accountability or human intelligence on the ground) and of course intimately tied
to the USSR's campaign of genocide in Afghanistan. Yes, the CIA gave the ISI $2-3bil in loose
change to funnel into the Mujahideen (which were not united in any meaningful sense at any point
in time, and frequently factionalized over pork-barrel / ethnic / tribal issues), however, the
US policy at the time was hands-off with regard to how that money was spent, and if you read Peter
Tomsen's book about his time as HW's special envoy it becomes quite clear that the blinders were
on in Washington with regard to what was actually happening there on the ground.
I understand that the Russophilia on this blog runs strongly but the inhumane destruction visited
upon the Afghan people by the USSR's geopolitics is and was sickening, imperialistic and functionally
a genocide. How am I supposed to take any of this polemic seriously when the author can't even
be bothered to read about a conflict? This is a prime example of ideology driving discourse. There
are plenty of fair-game examples to call out the US's short-sighted and globally destructive foreign
policy. I do not see the point in allowing ideology to cover for misinformation and misrepresentation
of historical facts – that's the playbook of neoliberal hustlers.
Faroukh Bulsara, September 29, 2015 at 2:53 pm
"…the notoriously secular and definitely legitimate PDPA government of Afghanistan 'overthrown'
by the US. Is that a joke?"
Umm, Max buddy, where in this article did Hudson say such a thing? Right, he didn't. But thanks
for the Afghan history lesson anyway.
Max, September 29, 2015 at 3:13 pm
"Democracy is the overthrow of Afghanistan's secular government by the Taliban against Russia."
It's right there in the opening paragraph, and the accusation is rather explicit.
juliania, September 29, 2015 at 8:53 pm
That's an awkward sentence to be sure, Max – I puzzled over that one myself. I'm more in favor
of this extract from Putin's speech at the UN:
". . .We should all remember the lessons of the past. For example, we remember examples from
our Soviet past, when the Soviet Union exported social experiments, pushing for changes in other
countries for ideological reasons, and this often led to tragic consequences and caused degradation
instead of progress. . ."
Sort of 'puts paid' to trying to equate the Russian Federation with the Soviet Union, doesn't
it?
OIFVet, September 29, 2015 at 3:15 pm
Is that the same HRW that can't find evidence of Kiev purposefully targeting and
killing civilians? The same HRW that has never said a thing about the US support for murderous
regimes in Latin America? Or about US war crimes? Yeah OK, I will take their word on how
Afghanistan went down, over the US' proven track record of destroying any and all left-leaning
Third World governments from 1950 onward.
Max, September 29, 2015 at 3:38 pm
Attack one of my sources, fine – the others still exist in far greater numbers. Barnett
Rubin is my favorite, his book "Blood on the Doorstep" is excellent.
Is everything part of the US capitalist plot or is there some verifiable source that you
will accept without dismissing out of hand? You didn't even attempt to read the source.
The Afghan government was left leaning in the sense that it was more socially progressive
than the population living outside of Kabul, all 80% of the country that the government did
not control in fact; and their authoritarian approach to instituting gender equality and
abolishing Islam had a disastrous effect on the government's popularity and tribal credit,
which was and is necessary to gain the support of the rural population. Other than that it was
your typical post-Stalinist tankie failed experiment in land redistribution and Party
education apparatus that only served to create a new class of insular elites &
alienating/disenfranchising the majority of the population while hamstringing developmental
progress made by actual Afghans in the decades before the Soviets (and eventually Pakistan and
the US) got their hands in the pot.
OIFVet, September 29, 2015 at 3:55 pm
IOW, the Soviets and the US were like peas in a pod. Funny that the "accomplishments" cited
by Empire apologists also used to include gender equality and the creation of insular elites.
So what's your point, that the Soviets tried to prop-up their flunkies by force? Pot calling
the kettle black, much like 0bama's speech yesterday. And HRW has often acted in concert with
the US to cover up its crimes while hypocritically calling out those who weren't "our
sonzofbiatches."
likbez, September 30, 2015 at 9:23 pm
The Afghan government was left leaning in the sense that it was more socially
progressive than the population living outside of Kabul, all 80% of the country that the
government did not control in fact; and their authoritarian approach to instituting gender
equality and abolishing Islam had a disastrous effect on the government's popularity and
tribal credit, which was and is necessary to gain the support of the rural population.
Other than that it was your typical post-Stalinist tankie failed experiment in land
redistribution and Party education apparatus that only served to create a new class of
insular elites & alienating/disenfranchising the majority of the population while
hamstringing developmental progress made by actual Afghans in the decades before the
Soviets (and eventually Pakistan and the US) got their hands in the pot.
That's plain vanilla propaganda. Or more charitably you are oversimplifying the issue and
try to embellish the USA behavior. Which was a horrible crime. Soviets were not that
simplistic and attempts to abolish Islam were not supported by Soviets. They tried to create a
secular country that's right but with Islam as a dominant religion.
And how many years Afghan government survived after the USSR dissolved and financial and
technical aid disappeared. You need to shred your post and eat it with borsch. It's a shame.
fajensen, September 30, 2015 at 5:35 am
Ah, but: "A man is known by the company he keeps".
Whatever Putin is besides, he is *not* a friend, ally and global protector of Saudi Arabic
Wahhabism!
With friends like that, it is clear o everyone else that you people are circling pretty close
to the drain already and we non-USA-nian un-people prefer to not be sucked into your decline via
TTIP et cetera.
Michael Hudson, September 29, 2015 at 11:17 pm
Max, your comment does not make sense.
All I can say is that this blog is NOT Russiaphilia. That's name calling. It is not Russiaphilia
to note the effect of U.S. foreign policy on bolstering the most right-wing fundamentalist Islamic
groups, Latin American right-wing kleptocracies or other dictatorships.
Whatever Soviet oppression was in Afghanistan, it did not back religious extremism. Just the
opposite.
OIFVet, September 29, 2015 at 11:38 pm
Nick was probably one of those who screamed about cheese-eating surrender monkeys while stuffing
themselves with supersized freedom fries orders.
September 29, 2015 at 3:47 pm
Ahem. Egypt. Egypt had a brief democracy.
Iran had a very real and true democracy (1955) but it was wiped out by the US.
Lot's of countries actually have democratic elections but when the people elect someone the US
disapproves of, that democracy has to go and is ALWAYS replaced by a dictatorship.
Obama's a corrupt idiot. Syria is a mess only because the US made it that way, NOT because Assad
is a meanie.
Reply ↓
cwaltz
September 30, 2015 at 2:50 am
It's possible that Assad is a meanie AND that Syria is a mess because as usual we half assed support
people who are just as horrible as him. It isn't like Saddam wasn't our great friend before we declared
him horrible, terrible awful leader.
Reply ↓
OpenThePodBayDoorsHAL, September 29, 2015 at 5:39 pm
The words in their respective UN speeches were very clear. Obomba: "I believe that what is
true for America is true for virtually all mature democracies". Putin: "No one is obliged to conform
to a single development model that is considered by someone else as the right one".
Ask yourself which statement the Founding Fathers of the U.S. would agree with. Yankee go home.
bh2, September 29, 2015 at 10:40 pm
"Hope and change", baby! The long arc of history bends toward despotism.
Knute Rife, September 29, 2015 at 11:25 pm
This has been a favorite US tactic since the Marines hit Tripoli (anti-piracy myths notwithstanding),
took off with the Spanish-American War, went through the roof when the Latin American interventions
started in earnest in the 20s, and became our peculiar and cherished institution with the Cold
War. Obama is just continuing the tradition.
cwaltz , September 30, 2015 at 2:37 am
I'll give him this- it's as close to being transparent on our foreign policy as I've seen any
of his predecessors come.
At least, he's admitting that our end game has always been first and foremost about our
own interests. Now if he'll only admit that THIS is why the world really hates us. Being selfish
and protecting only your own interests at the cost of others is never going to be a winning plan
to encourage people to like you or trust you(particularly when you collude behind closed doors
to carry out those interests.)
*Sigh* We're America. We set the bar low when it comes to caring about how others wish
to govern themselves, our only criteria is that your leader always consider US interests first(nevermind
that they aren't actually a US leader and should be putting their own inhabitants first.)
"... Exactly what was engineered, the oligarchs of the US Neoliberal Empire will now be able to
pick up "emerging market" assets for pennies on the dollar increase their already vast holdings and
secure Neoliberalism - or more correctly Neo-feudalism in fancy dress. ..."
"... We have seen the Neoliberals do this kind of empire building for the last 30 years first the
Savings and Loan "crisis" in the 1990s which transferred over 300 billion in middle class assets into
the hands of the Bass brothers and a few other oligarchs including the Cargill family at the time the
largest transfer of wealth in peace time. ..."
"... The Great Neoliberal Empire of the Exceptionals has a big big appetite which will not be satisfied
until the own the entire planet and rather than 4 billion people living on $2 a day it will be 7.3 billion.
The Neoliberal world view [is one] of a few thousand oligarchs and Bangladesh as the rest of the world.
..."
"The International Monetary Fund (IMF) has issued a double warning over higher US interest
rates, which it said could trigger a wave of emerging
market corporate defaults"
Exactly what was engineered, the oligarchs of the US Neoliberal Empire will now be able
to pick up "emerging market" assets for pennies on the dollar increase their already vast holdings
and secure Neoliberalism - or more correctly Neo-feudalism in fancy dress.
We have seen the Neoliberals do this kind of empire building for the last 30 years first
the Savings and Loan "crisis" in the 1990s which transferred over 300 billion in middle class
assets into the hands of the Bass brothers and a few other oligarchs including the Cargill family
at the time the largest transfer of wealth in peace time. Then a few more small transfers
and the the big "crisis" of 2007-8 which is ongoing and where close to a trillion in assets were
consolidated in the hands of oligarchs.
First load on the debt with money created out of thin air by banks, then foreclose after the
phony "bubble" bursts. Then walk away Scott free with the assets.
The Great Neoliberal Empire of the Exceptionals has a big big appetite which will not be
satisfied until the own the entire planet and rather than 4 billion people living on $2 a day
it will be 7.3 billion. The Neoliberal world view [is one] of a few thousand oligarchs and Bangladesh
as the rest of the world.
"... There is no and never has been "economics". Only political economy. That means that
neoliberal "Flat Earth Theories" will be enforced, by force if necessary. ..."
"... Blanchard is a pro system guy. A maintainer not a disrupter. When he lauds the thousand
schools cacophony, it's simply to spread caution about government macro engineering ..."
...IMF Survey: In pushing the envelope, you also hosted three major Rethinking Macroeconomics
conferences. What were the key insights and what are the key concerns on the macroeconomic front?
Blanchard:
Let me start with the obvious answer: That mainstream macroeconomics had
taken the financial system for granted. The typical macro treatment of finance was a set of arbitrage
equations, under the assumption that we did not need to look at who was doing what on Wall Street.
That turned out to be badly wrong.
But let me give you a few less obvious answers:
The financial crisis raises a potentially existential crisis for macroeconomics. Practical
macro is based on the assumption that there are fairly stable aggregate relations, so we do not
need to keep track of each individual, firm, or financial institution-that we do not need to understand
the details of the micro plumbing. We have learned that the plumbing, especially the financial
plumbing, matters: the same aggregates can hide serious macro problems. How do we do macro then?
As a result of the crisis, a hundred intellectual flowers are blooming. Some are very old flowers:
Hyman Minsky's financial instability hypothesis. Kaldorian models of growth and inequality. Some
propositions that would have been considered anathema in the past are being proposed by "serious"
economists: For example, monetary financing of the fiscal deficit. Some fundamental assumptions
are being challenged, for example the clean separation between cycles and trends: Hysteresis is
making a comeback. Some of the econometric tools, based on a vision of the world as being stationary
around a trend, are being challenged. This is all for the best.
Finally, there is a clear swing of the pendulum away from markets towards government intervention,
be it macro prudential tools, capital controls, etc. Most macroeconomists are now solidly in a
second best world. But this shift is happening with a twist-that is, with much skepticism about
the efficiency of government intervention. ...
pgl said...
"That mainstream macroeconomics had taken the financial system for granted. The typical macro
treatment of finance was a set of arbitrage equations, under the assumption that we did not need
to look at who was doing what on Wall Street. That turned out to be badly wrong."
Ah yes - the Efficient Markets Hypothesis (EMH). Nice academic theory but Wall Street exists
because they are deviations from EMH. And the scale of operations there - even the slightest deviation
can generate huge profits for them. And when the rest of us are not careful - huge costs to the
rest of the world.
It is not that these deviations are not known and how to address the downsides of them are
that complicated. What is complicated is making sure Congress and not and paid for by the Wall
Street crowd. Dodd-Frank was a nice start. It is a same that our expert on everything - Rusty
- has joined in the chorus to get rid of Dodd-Frank.
RC AKA Darryl, Ron said in reply to djb...
"now its getting spooky"
[Welcome to my world. I have always been ahead of trend, but usually
by several decades rather than just a few hours :<)
I would venture that you don't know the half of it yet. Let me elucidate.]
"...Olivier Blanchard will step down as Economic Counsellor and Director of the IMF's Research
Department at the end of September.
He will join the Peterson Institute for International Economics in October as the first C.
Fred Bergsten senior fellow, a post named for the founder of the influential 35-year-old, Washington-based
think tank..."
[Now tell me how that you can imagine anyone to be more mainstream status quo establishment
than that in the general spectrum of academic research and study economics? The plot thickens.
Like I said earlier today, we have been solidly in a Second Best world practically since FDR died
from the perspective of economics as a socio-political discipline exercised for the common good
in any manner discernible by the wage class.
The social expression of our anxiety and grief post-2008 is being played out in compartmentalized
parallel tracts organized by socio-economic class. We are experiencing denial, anger, bargaining,
depression and acceptance all at once now. Since the crisis was caused by the conservative agenda
of financial innovation and deregulation then they are expressing most of the denial. People that
lost their jobs and homes are expressing much of the anger, but a threatened white male population
deeply invested in the emotional capital of white supremacy and chauvinism is even louder in their
anger (and they are having a Tea Party to get to know each other and celebrate being white men).
Elites are doing the bargaining because they really don't want to lose establishment control to
populists. Folk that still don't have a job or a home are expressing the depression. Finally most
people that do have a home and a job that do not fall into any of the other groups are expressing
the acceptance.
Me? I recently got laid off, but was lucky enough having just turned 66 that with six years
service credit taken from my severance benefits added to my pension plus what little I had in
457 and 401 plans then I could retire and still pay my bills including four more years of mortgage
and HELOC payments. So, I am a bit cash strapped presently but have time to work on some projects.
I have been waiting to get the establishment on the ropes for nearly fifty years. So, I am not
healing from grief. I have been released and am looking for an opportunity to get the establishment
on its intellectual ropes.
I thought it was getting spooky when I first began to learn about mainstream economic thought
regarding capital gains windfalls, corporate mergers, and financial "innovation" in the mid-sixties.
For the first time in my life I am beginning to see a tiny glimmer of it starting to get real.]
JohnH said...
"Mainstream macroeconomics had taken the financial system for granted."
It's actually worse than that. Mainstream macroeconomics willfully ignores the impact of
rising asset prices on inequality, democracy, and power dynamics between the 1% and the rest.
Cui bono from their willful negligence? The powerful and wealthy, of course!
Amateur said...
I'm a fan of Olivier.
The leaders of the IMF were in a unique position to see new insights into our macro problems
because they are largely caused by the globalization of capital flows and labor.
I think he's getting there, but I suspect the old frameworks are still going to be an
impediment to mainstream economic thinking.
I'm glad to hear there are more people that we might be aware of that are rethinking macro in
this context.
Dan Kervick said...
"The plumbing matters."
Yes, that's it. I hope that is the main lesson the economics profession takes away from the
current crisis. It would be nice if we get a new generation of practitioners who think a bit
more like engineers and technicians, and less like mathematical physicists.
Paul Mathis
"Some propositions that would have been considered anathema in the past are being
proposed by "serious" economists: For example, monetary financing of the fiscal deficit."
Wasn't Keynes a "serious" economist? Monetary financing of the fiscal deficit was his idea
80 years ago. Today's economists are just getting the message.
likbez said...
There is no and never has been "economics". Only political economy. That means that
neoliberal "Flat Earth Theories" will be enforced, by force if necessary.
greg said...
Pathetic half measures. No need to question any of the fundamental assumptions underlying
the whole sorry mess, eh? Like what is money, really? Or: How does the production of the
various sectors actually combine to create value in the whole economy?
Matt Young said...
Macroeconomists are not up to speed? How long has this been going on? Ever since the
Kanosian dandy from England. Sick, sick and fraudulent science.
RC AKA Darryl, Ron said in reply to djb...
That is a good start. You just need to get the context switch straight and then you may
find yourself in an epiphany (metaphorically speaking). Likbez up thread touches another live
wire, but lacks faith in democratic alternatives. Shocking!
Larry said...
No mention of the end of the ZLB? Of NGDP targeting? Of the missing trade-off between
inflation and unemployment? Of the abject failures of governments/CBs to respond to the crisis
and restore normal times? Of new levers such as reverse repos, QE and IoER? Maybe the excerpt
was ill-chosen...
Davis X. Machina said in reply to Larry...
"Of the abject failures of governments/CBs to respond to the crisis and restore
normal times?"
"Normal" for whom, and at whose expense?
Squint just right, and this *is* normal.
Paine said...
Blanchard is a pro system guy. A maintainer not a disrupter. When he lauds the thousand
schools cacophony, it's simply to spread caution about government macro engineering
We've recently learned doing the right sorts of interventions but too cautiously.
Works more like " Let the markets correct themselves "
We need to isolate those who try by various means to minimize state intervention
Mark--The passage "As Paul Krugman points out" links not to PK, but to a Brad Plummer Vox
article. I assume that you wanted to link to PK's column in this AM's NYT.
BTW, you may want to point to this Jeb! Tweet:
http://bit.ly/1gVFixr I think that he may have set a record for the total number of
horribly bad policy positions that one can advocate in 140 characters or less.
...and apparently the buzz in the automotive world is that "everyone" was doing it...
Anybody who thinks Mr. Cook and Apple can't disrupt the automobile industry clearly isn't paying
attention to the automobile industry. It seems designed more by cads than CAD. Smart elegant design?
The auto industry is retrogressive: low hanging fruit. The whole damn kit: from CEOs to Dealers
to Mechanics you can't trust. It's a moral atrocity.
Apple can and will seize the wheel and make a ton of money doing so...
As Paul Krugman points out, the scandal makes a nice counterpoint with Jeb Bush's latest "anti-regulation"
rant.
Of course there are many others. And of course there are also many cases of over-regulation. But
you don't win an argument for smart regulation unless you have plenty of examples to draw from.
I suspect Mrs. Clinton will be well-armed that way come the big time debates with Jeb!
Brett
Fisher's reaction is so typical for many economic libertarians that I've met. They can't
really dismiss environmental problems altogether, so instead they diminish and minimize - "Oh,
it's just some marginal emissions/a small amount of forest land/a little pollution into the
river! What's the harm? And do you really want to hurt an important company that employs
thousands over it over a little bit of dirty air?"
Jarndyce
Mark is too easy on both VW and GM in this paragraph:
"That's not as bad as an ordinary murder, where the killer picks out a specific
victim, because being personally singled out to be killed is somehow worse than being a
random victim. But in both the GM case and the VW case, people wound up dead (or injured,
or sick) through the choice of someone else. In the GM case, the company's culpability was
mostly passive: it made a design or manufacturing mistake and then didn't disclose it or
act promptly or adequately to fix it. What VW did was much worse: the 'defeat software'
wasn't a defect, but a deliberate decision to break the law with the predictable
consequence of killing hundreds of people, at least twice as many as died of GM's
malfeasance. I don't think you need to live in Marin County to find that objectionable."
The pertinent question is whether VW or GM knew that people would die as a result of their
actions. If they did, then they are as culpable as an ordinary murderer, despite not having
picked out a specific victim or having acted "passively" in deciding not to disclose their
mistake. They are comparable to a person who randomly fires a machine gun in a crowd.
David T
One of the ICCT engineers who uncovered this seems to be telling every news shop that will
listen that people should be checking other automakers for the same problem. VW's behavior is
so appalling and frankly stupid (destroy a company to sell a few diesels? It's not even their
biggest product line) that it's hard to understand what they could have possibly been
thinking. The general amorality of corporate culture may be part of it. But I wonder if there
was a bit of "everybody else is doing it" going on here too. (BMW must be pretty happy that
their car passed.)
Keith_Humphreys
Perfect movie reference(The
Third Man, 1949). The sociopathic black marketeer
Harry Lime is played by Orson Welles and his moral American friend Holly Martins by Joseph
Cotten. As they ride in a Ferris wheel far above the people of Vienna, this exchange occurs:
Martins: Have you ever seen any of your victims?
Harry: You know, I never feel comfortable on these sort of things. Victims? Don't
be melodramatic. [gestures to people far below] Tell me. Would you really feel any pity if
one of those dots stopped moving forever? If I offered you twenty thousand pounds for every
dot that stopped, would you really, old man, tell me to keep my money, or would you
calculate how many dots you could afford to spare? Free of income tax, old man. Free of
income tax - the only way you can save money nowadays.
Ok. This may be an extremely stupid question, but how do we know that this was illegal?
Many regulations of this type in the electronics/telecommunications field are overspecified
and everybody knows the tests (and they cheat in similar fashions if not so explicitly and in
such wholesale fashion). If the regulation was written to state that an engine will pass the
following test then that's what would be built. Unless there was an explicit prohibition in
switching modes or a requirement that the test mode be comparable to driving mode then the
engineers may have just seen it as a game. So I'm not defending the amorality of this, but the
question of conspiracy is harder to prove if it may not be illegal except under the EPA's
theory. And if it wasn't obviously illegal, then what is the moral obligation of the worker to
trade-off their livelihood for exposing the fraud.
Ukraine is no longer the top priority for American diplomats. They are understandably absorbed
with selling the Iran nuclear deal to a reluctant Congress. But, if Russian Foreign Minister
Sergey Lavrov is to be believed, there are a number of senior officials who have also been
sending signals to Russia suggesting that President Obama wants to turn a page and improve his
frosty relations with President Vladimir Putin. "We are already getting such signals from the
Americans," Lavrov said, "though for now not very clear." Would Russia be open to better
relations? Russia, responded the foreign minister, would "consider constructively" any such
possibility.
... ... ...
Though Russia is not the Soviet Union, it still remains the boss of Eastern Europe. When it
sneezes, as we have learned, Ukraine can catch a bad cold. These days, everything in and around
Ukraine seems to be in
what one journalist called "managed instability." Putin can bring the crisis closer to a
possible solution or he can widen the war. Or, more simply, he can "freeze" it. The key question
is: What does Putin have in mind? What are his plans, assuming that he has plans, and is not
winging the crisis day by day?
... ... ...
With respect to Ukraine, Putin's position is hardly ideal, but it is still manageable. He now
owns Crimea and controls two rebellious provinces in the southeast Donbas region. He knows
Ukraine faces the possibility of economic collapse, even though it has made some progress. The
more it slips toward the abyss, the better his chances, he thinks, of keeping Ukraine out of the
Western orbit, which has always been one of his principal goals. Putin has the assets to throw
Ukraine into further chaos at any time.
Marvin Kalb is a nonresident senior fellow with the Foreign Policy program at Brookings,
and senior advisor at the Pulitzer Center on Crisis Reporting. He focuses on the impact of media
on public policy and politics, and is also an expert in national security, with a focus on U.S.
relations with Russia, Europe and the Middle East. His new book, scheduled for September 2015
publication, is Imperial Gamble: Putin, Ukraine and the New Cold War (Brookings Institution
Press, 2015).
"... "Prime Minister Arseniy Yatsenyuk, President Petro Poroshenko's chief of staff Borys Lozhkin
and an ally of Interior Minister Arsen Avakov have been targeted by investigators and whistleblowers
in Ukraine and abroad this week." ..."
Yeah, we're going to need a stronger Barcalounger. One with more width between the arms, too.
"Prime Minister Arseniy Yatsenyuk, President Petro Poroshenko's chief of staff Borys Lozhkin
and an ally of Interior Minister Arsen Avakov have been targeted by investigators and whistleblowers
in Ukraine and abroad this week."
I like that boy, Oleg Sukhov. I don't agree with his political views, but I have to say, of all the
"journalists" on KyivPost staff, he is maybe the only one who looks and smells like an actual journalist.
He is a good muck-raker, and I think he has a future, even after Ukraine goes down the tubes.
"... The European Union's dream of building "a ring of friends" from the Caucasus to the Sahara
has turned into a nightmare as conflicts beyond its borders send refugees teeming into Europe.
..."
"... Ian Bond, a former British ambassador now at the Centre for European Reform, called the current
policy a "mess of inconsistency and wishful thinking". .. ..."
"... "In contrast to the success of its eastward enlargement drive that
transformed former communist countries into thriving market
democracies, the European Neighbourhood Policy launched in
2003 has been a spectacular flop…" ..."
The European Union's dream of building "a ring of friends" from the Caucasus to the Sahara
has turned into a nightmare as conflicts beyond its borders send refugees teeming into Europe.
In contrast to the success of its eastward enlargement drive that transformed former communist
countries into thriving market democracies, the European Neighbourhood Policy launched in 2003 has
been a spectacular flop…
…The failure to stabilise or democratise the EU's surroundings was partly due to forces beyond
Brussels' control: Russian resentment over the collapse of the Soviet Union, as well as political
and sectarian strife in the Middle East.
Five of the six Eastern Partnership countries – Ukraine, Moldova, Georgia, Armenia and Azerbaijan
– are weakened by unresolved "frozen conflicts" in which Moscow has a hand. The sixth, Belarus, is
so authoritarian that it is subject to EU sanctions and has eschewed the offer of a free trade deal.
EU officials now acknowledge that the framework designed to engage and transform the bloc's neighbours
was flawed from the outset due to a mixture of arrogance and naivety.
"The idea was to have a ring of friends who would integrate with us but not become EU members.
That was rather patronizing, with the European Union telling everyone what to do because we believed
they wanted to be like us," said Christian Danielsson, head of the European Commission department
for neighborhood policy and enlargement.
…Now the EU neighborhood policy is undergoing a fundamental rethink, with a more modest, flexible
and differentiated approach due to be unveiled on Nov. 17.
Whether it will prove more effective remains to be seen.
Ian Bond, a former British ambassador now at the Centre for European Reform, called the current
policy a "mess of inconsistency and wishful thinking". ..
…EU officials talk of the need for a new realism, putting the pursuit of common interests with
partners ahead of lecturing them on human rights and democracy.
But the European Parliament and member states such as Germany and the Nordic countries will be
loath to soft-pedal promoting such values….
…Michael Leigh, a senior adviser at the German Marshall Fund think-tank and former head of
the EU's enlargement department, said Brussels had responded to the 2011 Arab Spring uprisings by
offering a "top-heavy, long, cumbersome, demanding" DCFTA process rather than swift but limited market
access. …
####
Wise after the fact as usual. Too late mofos. For Stollenberg, its not the clever clever strategy
being wrong, its always Russia. F/wit. I'm still waiting for van Rompuy to admit he has blood on
his hands for the Ukraine.
What they allude to but don't make a point of is that they wholly dismissed Russia from their
calculations as if it was just going to become the EU's cuddly toy, a larger version of Serbia. No
mention either that Russia is 'part of the solution' and cooperation with Russia is essential.
It looks like some have got past anger and denial and have moved on to bargaining & depression.
"In contrast to the success of its eastward enlargement drive that
transformed former communist countries into thriving market
democracies, the European Neighbourhood Policy launched in
2003 has been a spectacular flop…"
Umm…say what?? I thought we
had already looked at the Baltics as examples, and determined their
populations peaked just before the dissolution of the Soviet Union and
their subsequent snatching by NATO, at which point they commenced a
slide which was the mirror image of their ascent. Why are citizens
fleeing a thriving market democracy?
I agree with your analysis – too late. However, the recent article
linked which revealed Europe was just covering itself when it
pretended to oppose the Gulf War has added another layer of cynicism
to my hide, and I don't interpret this as the scales falling from
anyone's eyes at all. They're not wiser, simply acknowledging that a
ploy to get their own way did not work out as planned. There's no
remorse, at all. They'll just try something else.
I particularly loved the line,
"The failure to stabilise or
democratise the EU's surroundings was partly due to forces beyond
Brussels' control: Russian resentment over the collapse of the Soviet
Union, as well as political and sectarian strife in the Middle East."
I see. So the angst of Russians missing Stalin wafted in the air over
the borders of Europe's neighbors, and caused them to make irrational
decisions and, against all common sense, to bite the soft pink
European hand extended to them? Let me ask another – is there to be no
limit of silliness and self-pity beyond which Europe will not go?
"... A political society endures when it seeks, as a vocation, to satisfy common needs by stimulating the growth of all its members, especially those in situations of greater vulnerability or risk. ..."
"... All of us are quite aware of, and deeply worried by, the disturbing social and political situation of the world today. Our world is increasingly a place of violent conflict, hatred and brutal atrocities, committed even in the name of God and of religion. ..."
"... We are asked to summon the courage and the intelligence to resolve today's many geopolitical and economic crises. Even in the developed world, the effects of unjust structures and actions are all too apparent. ..."
"... If politics must truly be at the service of the human person, it follows that it cannot be a slave to the economy and finance. ..."
"... At the risk of oversimplifying, we might say that we live in a culture which pressures young people not to start a family, because they lack possibilities for the future. Yet this same culture presents others with so many options that they too are dissuaded from starting a family ..."
Each son or daughter of a given country has a mission, a personal and social responsibility. Your
own responsibility as members of Congress is to enable this country, by your legislative activity,
to grow as a nation. You are the face of its people, their representatives. You are called to defend
and preserve the dignity of your fellow citizens in the tireless and demanding pursuit of the common
good, for this is the chief aim of all politics. A political society endures when it seeks, as
a vocation, to satisfy common needs by stimulating the growth of all its members, especially those
in situations of greater vulnerability or risk. Legislative activity is always based on care
for the people. To this you have been invited, called and convened by those who elected you.
... ... ...
All of us are quite aware of, and deeply worried by, the disturbing social and political situation
of the world today. Our world is increasingly a place of violent conflict, hatred and brutal atrocities,
committed even in the name of God and of religion. We know that no religion is immune from forms
of individual delusion or ideological extremism. This means that we must be especially attentive
to every type of fundamentalism, whether religious or of any other kind. A delicate balance is required
to combat violence perpetrated in the name of a religion, an ideology or an economic system, while
also safeguarding religious freedom, intellectual freedom and individual freedoms. But there is another
temptation which we must especially guard against: the simplistic reductionism which sees only good
or evil; or, if you will, the righteous and sinners. The contemporary world, with its open wounds
which affect so many of our brothers and sisters, demands that we confront every form of polarization
which would divide it into these two camps. We know that in the attempt to be freed of the enemy
without, we can be tempted to feed the enemy within. To imitate the hatred and violence of tyrants
and murderers is the best way to take their place. That is something which you, as a people, reject.
...We are asked to summon the courage and the intelligence to resolve today's many geopolitical
and economic crises. Even in the developed world, the effects of unjust structures and actions are
all too apparent. Our efforts must aim at restoring hope, righting wrongs, maintaining commitments
and thus promoting the well-being of individuals and of peoples. We must move forward together, as
one, in a renewed spirit of fraternity and solidarity, cooperating generously for the common good.
The challenges facing us today call for a renewal of that spirit of cooperation, which has accomplished
so much good throughout the history of the United States. The complexity, the gravity and the urgency
of these challenges demand that we pool our resources and talents, and resolve to support one another,
with respect for our differences and our convictions of conscience.
In this land, the various religious denominations have greatly contributed to building and strengthening
society. It is important that today, as in the past, the voice of faith continue to be heard, for
it is a voice of fraternity and love, which tries to bring out the best in each person and in each
society. Such cooperation is a powerful resource in the battle to eliminate new global forms of slavery,
born of grave injustices which can be overcome only through new policies and new forms of social
consensus.
...If politics must truly be at the service of the human person, it follows that it cannot
be a slave to the economy and finance. Politics is, instead, an expression of our compelling
need to live as one, in order to build as one the greatest common good: that of a community which
sacrifices particular interests in order to share, in justice and peace, its goods, its interests,
its social life. I do not underestimate the difficulty that this involves, but I encourage you in
this effort.
... ... ...
The fight against poverty and hunger must be fought constantly and on many fronts, especially
in its causes. I know that many Americans today, as in the past, are working to deal with this problem.
It goes without saying that part of this great effort is the creation and distribution of wealth.
The right use of natural resources, the proper application of technology and the harnessing of the
spirit of enterprise are essential elements of an economy which seeks to be modern, inclusive and
sustainable. "Business is a noble vocation, directed to producing wealth and improving the world.
It can be a fruitful source of prosperity for the area in which it operates, especially if it sees
the creation of jobs as an essential part of its service to the common good" (Laudato Si', 129).
This common good also includes the earth, a central theme of the encyclical which I recently wrote
in order to "enter into dialogue with all people about our common home" (ibid., 3). "We need a conversation
which includes everyone, since the environmental challenge we are undergoing, and its human roots,
concern and affect us all" (ibid., 14).
In Laudato Si', I call for a courageous and responsible effort to "redirect our steps" (ibid.,
61), and to avert the most serious effects of the environmental deterioration caused by human activity.
I am convinced that we can make a difference and I have no doubt that the United States – and this
Congress – have an important role to play. Now is the time for courageous actions and strategies,
aimed at implementing a "culture of care" (ibid., 231) and "an integrated approach to combating poverty,
restoring dignity to the excluded, and at the same time protecting nature" (ibid., 139). "We have
the freedom needed to limit and direct technology" (ibid., 112); "to devise intelligent ways of .
. . developing and limiting our power" (ibid., 78); and to put technology "at the service of another
type of progress, one which is healthier, more human, more social, more integral" (ibid., 112). In
this regard, I am confident that America's outstanding academic and research institutions can make
a vital contribution in the years ahead.
... ... ...
...At the risk of oversimplifying, we might say that we live in a culture which pressures
young people not to start a family, because they lack possibilities for the future. Yet this same
culture presents others with so many options that they too are dissuaded from starting a family.
"... A political society endures when it seeks, as a vocation, to satisfy common needs by stimulating the growth of all its members, especially those in situations of greater vulnerability or risk. ..."
"... All of us are quite aware of, and deeply worried by, the disturbing social and political situation of the world today. Our world is increasingly a place of violent conflict, hatred and brutal atrocities, committed even in the name of God and of religion. ..."
"... We are asked to summon the courage and the intelligence to resolve today's many geopolitical and economic crises. Even in the developed world, the effects of unjust structures and actions are all too apparent. ..."
"... If politics must truly be at the service of the human person, it follows that it cannot be a slave to the economy and finance. ..."
"... At the risk of oversimplifying, we might say that we live in a culture which pressures young people not to start a family, because they lack possibilities for the future. Yet this same culture presents others with so many options that they too are dissuaded from starting a family ..."
Each son or daughter of a given country has a mission, a personal and social responsibility. Your
own responsibility as members of Congress is to enable this country, by your legislative activity,
to grow as a nation. You are the face of its people, their representatives. You are called to defend
and preserve the dignity of your fellow citizens in the tireless and demanding pursuit of the common
good, for this is the chief aim of all politics. A political society endures when it seeks, as
a vocation, to satisfy common needs by stimulating the growth of all its members, especially those
in situations of greater vulnerability or risk. Legislative activity is always based on care
for the people. To this you have been invited, called and convened by those who elected you.
... ... ...
All of us are quite aware of, and deeply worried by, the disturbing social and political situation
of the world today. Our world is increasingly a place of violent conflict, hatred and brutal atrocities,
committed even in the name of God and of religion. We know that no religion is immune from forms
of individual delusion or ideological extremism. This means that we must be especially attentive
to every type of fundamentalism, whether religious or of any other kind. A delicate balance is required
to combat violence perpetrated in the name of a religion, an ideology or an economic system, while
also safeguarding religious freedom, intellectual freedom and individual freedoms. But there is another
temptation which we must especially guard against: the simplistic reductionism which sees only good
or evil; or, if you will, the righteous and sinners. The contemporary world, with its open wounds
which affect so many of our brothers and sisters, demands that we confront every form of polarization
which would divide it into these two camps. We know that in the attempt to be freed of the enemy
without, we can be tempted to feed the enemy within. To imitate the hatred and violence of tyrants
and murderers is the best way to take their place. That is something which you, as a people, reject.
...We are asked to summon the courage and the intelligence to resolve today's many geopolitical
and economic crises. Even in the developed world, the effects of unjust structures and actions are
all too apparent. Our efforts must aim at restoring hope, righting wrongs, maintaining commitments
and thus promoting the well-being of individuals and of peoples. We must move forward together, as
one, in a renewed spirit of fraternity and solidarity, cooperating generously for the common good.
The challenges facing us today call for a renewal of that spirit of cooperation, which has accomplished
so much good throughout the history of the United States. The complexity, the gravity and the urgency
of these challenges demand that we pool our resources and talents, and resolve to support one another,
with respect for our differences and our convictions of conscience.
In this land, the various religious denominations have greatly contributed to building and strengthening
society. It is important that today, as in the past, the voice of faith continue to be heard, for
it is a voice of fraternity and love, which tries to bring out the best in each person and in each
society. Such cooperation is a powerful resource in the battle to eliminate new global forms of slavery,
born of grave injustices which can be overcome only through new policies and new forms of social
consensus.
...If politics must truly be at the service of the human person, it follows that it cannot
be a slave to the economy and finance. Politics is, instead, an expression of our compelling
need to live as one, in order to build as one the greatest common good: that of a community which
sacrifices particular interests in order to share, in justice and peace, its goods, its interests,
its social life. I do not underestimate the difficulty that this involves, but I encourage you in
this effort.
... ... ...
The fight against poverty and hunger must be fought constantly and on many fronts, especially
in its causes. I know that many Americans today, as in the past, are working to deal with this problem.
It goes without saying that part of this great effort is the creation and distribution of wealth.
The right use of natural resources, the proper application of technology and the harnessing of the
spirit of enterprise are essential elements of an economy which seeks to be modern, inclusive and
sustainable. "Business is a noble vocation, directed to producing wealth and improving the world.
It can be a fruitful source of prosperity for the area in which it operates, especially if it sees
the creation of jobs as an essential part of its service to the common good" (Laudato Si', 129).
This common good also includes the earth, a central theme of the encyclical which I recently wrote
in order to "enter into dialogue with all people about our common home" (ibid., 3). "We need a conversation
which includes everyone, since the environmental challenge we are undergoing, and its human roots,
concern and affect us all" (ibid., 14).
In Laudato Si', I call for a courageous and responsible effort to "redirect our steps" (ibid.,
61), and to avert the most serious effects of the environmental deterioration caused by human activity.
I am convinced that we can make a difference and I have no doubt that the United States – and this
Congress – have an important role to play. Now is the time for courageous actions and strategies,
aimed at implementing a "culture of care" (ibid., 231) and "an integrated approach to combating poverty,
restoring dignity to the excluded, and at the same time protecting nature" (ibid., 139). "We have
the freedom needed to limit and direct technology" (ibid., 112); "to devise intelligent ways of .
. . developing and limiting our power" (ibid., 78); and to put technology "at the service of another
type of progress, one which is healthier, more human, more social, more integral" (ibid., 112). In
this regard, I am confident that America's outstanding academic and research institutions can make
a vital contribution in the years ahead.
... ... ...
...At the risk of oversimplifying, we might say that we live in a culture which pressures
young people not to start a family, because they lack possibilities for the future. Yet this same
culture presents others with so many options that they too are dissuaded from starting a family.
People in debt are slaves to their employees. That's how neoliberalism works.
"... Regarding Thatcher's scheme of encouraging people to take on too much debt to buy
houses even as her govt undermined wages; Reagan and co did the same in the US.
20-30-year-olds were encouraged to spend more for housing, and banks encouraged to lend more
for housing than the traditional lending formula allowed, because (they were told) incomes for
the young would only keep rising, just as their parents incomes had kept rising. The young
were told they could pre-pay for their inevitable future prosperity by taking on too much
debt. At the same time Reagan and co were undermining wages for most workers.
And not only is Benn's speech refreshingly direct, it's inspiring to see how energetic he was
at the age of 83. And I agree with him on the importance of anger and hope. Anger is depicted as
a very bad emotion to have, at least here in America, and the resulting self-censorship stifles dissent.
"An MP is the only job where you have 70,000 employers, and only one employee."
"It's the same each time with progress. First they ignore you, then they say you're mad, then
dangerous, then there's a pause and then you can't find anyone who disagrees with you."
"The Marxist analysis has got nothing to do with what happened in Stalin's Russia: it's like
blaming Jesus Christ for the Inquisition in Spain."
"I'm not frightened about death. I don't know why, but I just feel that at a certain moment
your switch is switched off, and that's it. And you can't do anything about it."
"Making mistakes is part of life. The only things I would feel ashamed of would be if I had
said things I hadn't believed in order to get on. Some politicians do do that."
"I've got four lovely children, ten lovely grandchildren, and I left parliament to devote more
time to politics, and I think that what is really going on in Britain is a growing sense of alienation.
People don't feel anyone listens to them."
"If one meets a powerful person - Rupert Murdoch, perhaps, or Joe Stalin or Hitler - one can
ask five questions: what power do you have; where did you get it; in whose interests do you exercise
it; to whom are you accountable; and, how can we get rid of you? Anyone who cannot answer the
last of those questions does not live in a democratic system."
Copyright Disclaimer Under Section 107 of the Copyright Act 1976, allowance is made for
"fair use" for purposes such as criticism, comment, news reporting, teaching, scholarship, and
research. Fair use is a use permitted by copyright statute that might otherwise be infringing.
Non-profit, educational or personal use tips the balance in favor of fair use.
Aneurin Bevan, primary founder of the NHS, during speech at the Manchester Labour rally 4 July
1948 –
'…no amount of cajolery, and no attempts at ethical or social seduction, can eradicate from
my heart a deep burning hatred for the Tory Party …. So far as I am concerned they are lower than
vermin. They condemned millions of first-class people to semi-starvation.
'Now the Tories are pouring out money into propaganda of all sorts and are hoping by this organised
sustained mass suggestion to eradicate from our minds all memory of what we went through. But,
I warn you, young men and women, do not listen to what they are saying now … I warn you they have
not changed, or if they have they are slightly worse than they were.'
Amazing talk–clear, powerful, direct, and well-grounded in Benn's many years of personal experience.
His perspective on Thatcher's policies is eye-opening, and his perspective on British politics
in general.
Does anyone know what event he spoke at, and when? The link doesn't say.
I call the self-censorship "American positivism" which is a great play by the elite. The
poor, in the face of overwhelming evidence, somehow try to "be positive". They also censor
others who complain.
It's an amazing system.
Synoia, September 26, 2015 at 9:58 am
Your so called "self-censorship" is driven by the press, in their role of propaganda
distribution.
As in: The lying liars, lied again.
Synoia, September 26, 2015 at 9:55 am
What Benn does not address was the tremendous amount of Labor (Worker) strife in the 50s,
60s and 70s, and the cause of the strife.
I will quote a socialist song, the Red Flag:
The Working Class can kiss my arse
I've got the foreman's job at last
Enterprises get the Unions they deserve. If the management is toxic, so is the worker
sentiment.
My experience in graduating and going to work for a major Bank in the UK, was such a
revelation I never again worked for British management.
No only do the working people need unions, the working people need to believe the management
care about both the customers and the workers in an enterprise. Contempt for both customers
and workers become a cancer on society, and is, in my opinion a hallmark of our large
enterprise who serve citizens.
Management needs to be answerable to its employees, because employees have more invested,
their lives, that shareholders. Money is liquid, livelihood, employment, is not.
Examples: Walmart, large Banks, BP, Volkswagen, Centralized Government….
As a side note, Benn's comments on spending are completely in harmony with the monetary part
of MMT, but not with its treatment of trade, tariffs and local production, which are complete
nonsense.
flora, September 26, 2015 at 12:14 pm
"Every single generation has to fight the same battles again and again and again. There's
no final victory and no final defeat. And therefore, a little bit of history may help." -Benn
Thanks for this post.
flora, September 26, 2015 at 2:12 pm
Regarding Thatcher's scheme of encouraging people to take on too much debt to buy
houses even as her govt undermined wages; Reagan and co did the same in the US.
20-30-year-olds were encouraged to spend more for housing, and banks encouraged to lend more
for housing than the traditional lending formula allowed, because (they were told) incomes for
the young would only keep rising, just as their parents incomes had kept rising. The young
were told they could pre-pay for their inevitable future prosperity by taking on too much
debt. At the same time Reagan and co were undermining wages for most workers.
Now 20-30-year-olds are being told that they can pre-pay for their inevitable future
prosperity by taking on too much debt for college educations. It's the same con.
skippy, September 26, 2015 at 4:28 pm
Did someone say Thatcher and Reagan – ???????????
Liberation Theologies, Postmodernity and the Americas
By David Batstone, Eduardo Mendieta, Lois Ann Lorentzen, Dwight N. Hopkins
"In 1985 David Stockman. who came from a fundamentalist back-ground, resigned from his
position as chief of budget for Regan's government and he published a book entitled "the
Triumph of Politics. He reproached Reagan for having been a traitor to the clean model of
neoliberalism and for having favored populism. Stockmans.s book develops a neoliberally
positioned academic theology, that does not denounce utopias, but presents neoliberalism as
the only efficient and realistic means to realized them. It attacks the socialist "utopias" in
order to reclaim them in favor of the attempted neoliberal realism. according to Stockman, it
is not the utopia that threatens, but the false utopia against which he contrasts his "realist
utopia of neoliberalism."
Michel Camdessus, Secretary General of the IMF, echoes the transformed theology of the
empire grounding it in certain key theses of liberation theology. In a conference on March 27,
1992 he directed the National Congress of French Christian Impresarios in Lille Mid discussion
he summaries his central theological theses:
Surely the Kingdom is a place: these new Heavens and this new earth of which we are
called to enter one day, a sublime promise; but the Kingdom is in some way geographical,
the Reign is History, a history in which we are the actors, one which is in process and
that is close to us since Jesus came into human history. The Reign is what happens when God
is King and we recognize Him as such, and we make possible the extension, spreading of this
reign, like a spot of oil, impregnating, renewing and unifying human realities. Let Thy
Kingdom come…." – read on
Page – 38, 39, 40
Skippy…. this is why some stare at walls…. better option…
Paul Tioxon, September 26, 2015 at 1:42 pm
Benn said that just as in war, we should in peace time do whatever is necessary for our
economic well being. This is an echo of the great public intellectual William James, whose
famously pronounced that we need the moral equivalent of war in politics to serve the public
interest to eradicate social problems and create widespread prosperity. Jimmy Carter repeated
this phrase, the moral equivalent of war, in trying to marshal the energy of society to snap
out of the 1970s stagflation and national malaise.
From The Moral Equivalent of War:
"I spoke of the "moral equivalent" of war. So far, war has been the only force that can
discipline a whole community, and until and equivalent discipline is organized, I believe that
war must have its way. But I have no serious doubt that the ordinary prides and shames of
social man, once developed to a certain intensity, are capable of organizing such a moral
equivalent as I have sketched, or some other just as effective for preserving manliness of
type. It is but a question of time, of skillful propogandism, and of opinion-making men
seizing historic opportunities."
Every generation must fight it's own battles. Another politician held the same view:
"God forbid we should ever be twenty years without such a rebellion.
The people cannot be all, and always, well informed. The part which is wrong will be
discontented, in proportion to the importance of the facts they misconceive. If they remain
quiet under such misconceptions, it is lethargy, the forerunner of death to the public
liberty. …
And what country can preserve its liberties, if its rulers are not warned from time to
time, that this people preserve the spirit of resistance? Let them take arms. The remedy is
to set them right as to the facts, pardon and pacify them. What signify a few lives lost in
a century or two? The tree of liberty must be refreshed from time to time, with the blood
of patriots and tyrants.
The word "Fascist" as with the terms "Socialist" and "Communist" are thrown around a lot by
people who have no idea what they mean. If you want to know what those terms really mean, find
someone who was in some branch of military counterintelligence, the CIA, the security section of
the State Department, Defense Intelligence, or in the FBI.
In all those areas, the first day of basic training involves comparative forms of government. You
can't spot a Communist if you don't know what a Communist is. You can't tell the difference
between a Communist and a Fascist unless you know the difference in the two systems. It is
Intelligence, and more specifically, Counterintelligence 101.
So, let's go right to Fascism. A Fascist is one who believes in a corporatist society. In other
words, it is a political philosophy embodying very strong central government, with the authority
to move in decisive steps to accomplish goals. It would be characterized by a unity of purpose,
with more or less all the levels of the hierarchy in unison, starting at the top and working
down. It is a top-down government involving an alliance of industry, military, media and a
political party.
Because Fascism has been associated with the 1930s German Nazis, the Italian Fascists under
Mussolini and the Falangists, under the Spanish Dictator, Francisco Franco, the term "Fascist"
has taken on a sinister meaning. Not fewer than 10 million direct deaths resulting from the rule
of these three may have something to do with it. On the other hand, philosophies don't kill
people; people kill people.
It is interesting to note that at least two of the three Parties had origins as Socialist and
morphed into strong, Right Wing, authoritarian rules as a result largely of expediency. It is
also interesting to note that all three were not only intimately connected to the largest
industrial corporations, but as soon as possible with the military leadership. While Fascism as a
political philosophy is not innately evil, given the results, it is worth noting how things
turned out.
Both the German and the Italian Fascist parties were also both revolutionary and conservative at
the same time. Both Adolph Hitler and Benito Mussolini were aggressive, anarchic leaders. Both
served time in jail. Both served in the enlisted ranks with the military in war. Both used that
experience to organize mobs of thugs to agitate against an established government, not for a more
democratic regime, but for a more authoritarian one. You can begin to see some similarities with
contemporary political activities.
As soon as they took power, which they did partially through gangs and mobs, intimidation and
demonstrations and-in Mussolini's case an outright coup-they allied themselves with the biggest
corporations and the military general staff. In addition, even before taking complete power, they
began to wrest control of the media away from other political parties, and to use it for their
own propaganda.
Once they had control of the radio and newspapers, which were then the prominent sources of
information, they could begin to broadcast their messages. Hitler's "Big Lie" basically blamed
rampant inflation and lack of jobs on the Jews. He blamed all their economic ills on the
restraint of Germany by other nations and the presumed taking over of German lands (which they
themselves had only won through aggressive wars.)
But let's for a minute assume that we know nothing about Fascism except that it exists. We have a
group, here in America that believes in a corporatist political philosophy. What would that look
like? If it were a true Fascist organization, they would ally themselves with big corporations,
like the health care industry, oil and mining, pharmaceuticals, media corporations and the
military-industrial complex.
They would try to control the message, particularly in radio and television. They would become as
closely allied with the top military brass as possible, offering them a seat at the table in the
running of the economy. Retired Generals would be assured of positions involved with military
hardware and strategic planning.
And what about the people? In a fascist system, the whole idea is to have an efficient method of
getting things done. If you want to build an "autobahn" you simply tell the transportation
minister to get started. You control everything at every level. It will go faster because it is
for the good of all the people, so no one will have the right to object or interfere. It is,
Fascists would say, about efficiency, getting things done for the people.
Defense is about protecting the people. You attack other countries so that they cannot attack
you. You start wars (Iraq) to prevent dangerous men from attacking you. It makes sense. Military
efficiency in a Fascist state means that if the top guy (President or Dictator) wants to be
absolutely certain that no other country is superior, he can build up the military industry and
the military at any pace or at any cost.
In a Fascist state the idea is to have one set of rules, coming from the top down. No one votes
as an individual, only as a part of the group that is assigned a task. It is corporate,
total-totalitarian. So, if you decide that a national health care program is not right for the
country, you all vote against it in a totally militaristic way. Everyone salutes and follows the
lead from the top down. The only problem is when you do not have a strong leader.
The Democrats, for example, want to farm decisions out to others, let the opposition have their
input. It slows the process. A Fascist health care program would be one decided upon by the
President, discussed and worked out with the corporations, mandated to his staffs and enacted
without any discussion or public debate in a matter of a few months.
In a Fascist state, policy is largely being written through a cooperative effort with the
industries involved, in this case the health care industry. The slow, ragged, messy and
Democratic process involved with our current health care reform process would never happen under
a Fascist government. Whatever the decision, there would be no appeal. If a million or fifty
million were left out, because, let's say, that the President needed more money for war machines
that would be the decision- with no question or appeal.
So, if you want efficiency, you not only should you look to the Republicans, but you may have no
choice. The Republicans, remember, have the complete support of Fox News, the Fox television
Network, the Wall Street Journal, the New York Post, and any number of television stations around
the country, plus somewhere between 600 and 1600 radio stations on which literally 9 out of 10
commentators are paid by those network owners to be Conservative (Neoconservative Republican.)
They have expanded to very large numbers of web site bases, delivering whatever type of
information they want, truth, lies, anything in between… accusations without proof…Socialist,
Communist, government takeover of this or that…no need to be truthful. It is all propaganda.
Just as Herr Goebbels and Mussolini did in the 1930s-and except in the Communist counties and a
few Latin American dictatorships there hasn't been anything to speak of similar to this in the
Western advanced societies since then-the unchallenged message of the Right Wing goes out. The
radio commentators today get their message from the top, from the Republican Party. Fox News
Channel internal memos have shown that they literally decide what policies the Republican Party
wished to champion, and then they attack rather than merely delivering the news.
So do we need to be civil about it-about these lies? Is it important to challenge people, like
these Right Wing commentators who tell you that your current health care is sufficient? It is
good for corporations, for health care insurance companies. But is it good for you not to be sure
you can get health insurance? So if they tell you that something is a government takeover and it
is not, so you vote against health care or you respond to a poll in a way that is against your
own best interests…do you need to be civil about being lied to? You shouldn't be lied to by
media. You need the truth, the facts, to make decisions.
It is a pretty simple answer. Should you be civil to people who lie to you and urge you to buy
something that turns out to hurt you, or your family, or cause you to lose your job, or kill your
sister, brother, neighbor? If I lie to you and say it is safe to swim across the channel and you
are attacked by sharks that I knew were there…should you not care? This is what is happening,
right now…today. In the consumer products market, we call that fraud and companies can be
criminally liable.
So let's describe what a Fascist government or a political party attempting to introduce a
Fascist government would look like and see if either or any of our political parties fits that
description:
Allies with big corporations, planning strategy together, interchangeable.
Works to have control of the political process at all levels, starting with the top down.
Does not cooperate with and actually tries to undermine other political parties.
Uses mobs and demonstrations, and attempts to make individuals working in other parties afraid of
violent reactions.
Advocates ownership of weapons as a fear factor to intimidate others. (Wayne La Pierre…"the
people with the guns make the rules.")
Decides what is best for all citizens based on what corporations want.
Uses "big lie" propaganda technique, of top-down distributed propaganda message for each issue.
Allies with military on most issues, with ultra-aggressive military posture.
Total control of the political process is the ultimate goal.
If any of this seems familiar to you, then you see something "Fascist" in the current political
process. Of course, one thing that wasn't mentioned. Fascists always need someone to stigmatize.
In Germany, it was the Jews. In Italy it was the Socialists. In Spain it was the Communists. It
seems clear that, in this country it is the Democrats.
The Neocons are out of power, but they are unrelenting in their efforts to control as much of the
political discourse as possible, no matter how damaging to society. They bring mobs and riff-raff
out, some with guns, trying to scare the average citizen. They send messages out over radio with
lunatic commentators, some who are not even allowed to visit other countries because of their
hate speech…yet we tolerate it.
We even allow asininely preposterous lies from a possibly psychotic television commentator…to be
used to stoke the race-hatred of many tea party members, and thugs against a distinguished
African-American President who won 54% of the vote, the largest since Ronald Reagan and who also
won the Nobel Peace Prize.
The case is pretty clear. The Neoconservative Republicans are headed for Fascism if they are not
there already. The latest round of insults, threats, lies, window breakings all contribute to the
evidence. Sooner or later this totalitarian attitude will either be denounced or will have
serious responses. One thing is sure, with the problems facing our country, we cannot afford the
kind of anarchist attacks as were exhibited in the bombing of a Federal building in Oklahoma City
or the flying of an aircraft into a building housing an IRS office.
This radical, violent, arrogant Fascist attitude has to stop. The first step in preventing this
kind of political outcome is to identify and react to Fascism when it appears. Neoconservative
Republicanism is Fascism. Republicans must return to sanity or be treated as a very dangerous and
radical political party.
Not much. Neocons don't dress up in silly uniforms, neo fascists probably do and
practice funny salutes when they think no-one is looking.
Joaquin B · 8 years ago
neocons are the new conservatives of the Cheney/Bush/Karl Rove school. These people
bleeds the country of its resources in corporate welfare. In other words, they would give
all sorts of money and incentives to corporations such as Halliburton and big oil companies
at our expenses. They would like to impose a fascist system like thee ones of the early
20th century in Italy and Germany and it is been tried at this time in China..
Neofascists are those who would like the early 20th century geopolitical model. I would
think that the Chinese government edges on this type of model. The Chinese call themselves
communist yet they have a pseudo-free enterprise system with no democracy and total
repression.
Lucky for the American people, we have waken up just in time to undo the damage done to
our country from our once prestigious Republican Party.
Paranormal I · 8 years ago
The difference is that neoconservatism uses the language of democracy and freedom while
neofascism openly admit they want the opposite. Otherwise they are quite similar. Including
the fact that originally, they came from the Left from which they converted to rightwing
politics.
"... The $3.5 trillion of QE, six years of 0% interest rates for Wall Street (why are credit card
interest rates still 13%?), and $8 trillion of deficit spending by the Federal government have provided
the outward appearance of economic recovery, as the standard of living for most Americans has declined
significantly. ..."
The housing market peaked in 2005 and proceeded to crash over the next five years, with existing
home sales falling 50%, new home sales falling 75%, and national home prices falling 30%. A funny
thing happened after the peak. Wall Street banks accelerated the issuance of subprime mortgages to
hyper-speed. The executives of these banks knew housing had peaked, but insatiable greed consumed
them as they purposely doled out billions in no-doc liar loans as a necessary ingredient in their
CDOs of mass destruction.
The millions in upfront fees, along with their lack of conscience in
bribing Moody's and S&P to get AAA ratings on toxic waste, while selling the derivatives to clients
and shorting them at the same time, in order to enrich executives with multi-million dollar compensation
packages, overrode any thoughts of risk management, consequences, or the impact on homeowners,
investors, or taxpayers. The housing boom began as a natural reaction to the Federal Reserve suppressing
interest rates to, at the time, ridiculously low levels from 2001 through 2004 (child's play compared
to the last six years).
... ... ...
Greenspan created the atmosphere for the greatest mal-investment in world history. As he
raised rates from 2004 through 2006, the titans of finance on Wall Street should have scaled back
their risk taking and prepared for the inevitable bursting of the bubble. Instead, they were blinded
by unadulterated greed, as the legitimate home buyer pool dried up, and they purposely peddled "exotic"
mortgages to dupes who weren't capable of making the first payment. This is what happens at the end
of Fed induced bubbles. Irrationality, insanity, recklessness, delusion, and willful disregard for
reason, common sense, historical data and truth lead to tremendous pain, suffering, and financial
losses.
Once the Wall Street machine runs out of people with the financial means to purchase a home
or buy a new vehicle, they turn their sights on peddling their debt products to financially illiterate
dupes. There is a good reason people with credit scores below 620 are classified as sub-prime.
Scores this low result from missing multiple payments on credit cards and loans, having multiple
collection items or judgments and potentially having a very recent bankruptcy or foreclosure. They
have low paying jobs or no job at all. They do not have the financial means to repay a large loan.
Giving them a loan to purchase a $250,000 home or a $30,000 automobile will not improve their lives.
They are being set up for a fall by the crooked bankers making these loans. Heads they win, tails
the dupe gets kicked out of that nice house onto the street and has those nice wheels repossessed
in the middle of the night.
The subprime debacle that blew up the world in 2008 was created by the Federal Reserve, working
on behalf of their Wall Street owners. When interest rates are set by central planners well below
levels which would be set by the free market, based on risk and return, it creates bubbles, mal-investment,
and ultimately financial system disaster. Did the Fed, Wall Street, politicians, and people learn
their lesson? No. Because we bailed them out with our tax dollars and have silently stood by
while they have issued $10 trillion of additional debt to solve a debt problem. The deformation of
our financial system accelerates by the day.
The $3.5 trillion of QE, six years of 0% interest rates for Wall Street (why are credit card
interest rates still 13%?), and $8 trillion of deficit spending by the Federal government have provided
the outward appearance of economic recovery, as the standard of living for most Americans has declined
significantly.With real median household income still 6.5% BELOW 2007 levels, 7.3% BELOW
2000 levels, and about equal to 1989 levels, the only way the ruling class could manufacture a fake
recovery is by ramping up the printing presses and reigniting a housing bubble and an auto bubble.
They even threw in a student loan bubble for good measure.
... ... ...
The entire engineered "housing recovery" has had a suspicious smell to it all along. The true
bottom occurred in 2009 with an annual rate of 4 million existing home sales. An artificial bottom
of 3.5 million occurred in 2010 after the expiration of the Keynesian first time home buyer credit
that lured more dupes into the market. The current rate of 5.31 million is at 2007 crash levels and
on par with 2001 recession levels. With mortgage rates at record low levels for five years, this
is all we got?
What really smells is the number of actual mortgage originations that have supposedly driven this
35% increase in existing home sales. If existing home sales are at 2007 levels, how could mortgage
purchase applications be 55% below 2007 levels? If existing home sales are up 35% from the 2009/2010
lows, how could mortgage purchase applications be flat since 2010?
New home sales are up 80% from the 2010 lows, but before you get as excited as a CNBC bimbo over
the "surging" new home sales, understand that new home sales are still 60% BELOW the 2005 high and
25% below the 1990 through 2000 average. So, in total, there are 1.5 million more annual home sales
today than at the bottom in 2010. But mortgage originations haven't budged. That's quite a conundrum.
As you can also see, the median price for a new home far exceeds the bubble highs of 2005. A critical
thinking individual might wonder how new home sales could be down 60% from 2005, while home prices
are 15% higher than they were in 2005. Don't the laws of supply and demand work anymore? The identical
trend can be seen in the existing homes sales market. The median price for existing home sales of
$228,700 is an all-time high, exceeding the 2005 bubble levels. Again, sales are down 30% since 2005.
I wonder who is responsible for this warped chain of events?
AlaricBalth
This FRED chart I have posted, which corresponds with the effective Fed Funds Rate chart in
the article, will show exactly what a daunting problem the the US and the Federal Reserve is being
forced to deal with. I have overlaid the Labor Force Participation Rate with M2 Velocity of Money,
each beginning in 1960. M2 velocity refers to how fast money passes from one holder to the next.
The labor force participation rate is a measure of the share of Americans at least 16 years old
who are either employed or actively looking for work. If money demand is high, it could be a sign
of a robust economy, with the usual corresponding inflationary pressure.
As you can see, each peaked around 1997-98 and have been in slow decline ever since. Unless
the Fed has a plan to increase the LFPR, people are not going to be spending money they just do
not have.
Demographically, this is not going to happen. Baby boomers will still be retiring at a rate
of 10,000 per day and manufacturing is never coming back to the US until we are a third world
country with a cheap labor force.
This is not an issue that can be fixed by political promises. So no matter which political
party is in control, this will not be repaired with platitudes. This is a structural macro-economic
phenomenon which is caused by demographics and poor long term fiscal planning.
Elizabeth Warren Video, Late Night with Steven Colbert, 23 Sept 2015.
Defends Dodd-Frank and gave stats to prove the value of CFPB formed, like 650,000 complaints
handled, and many changes forced on corporations.
Edit: Looks like CBS didn't release the segment of Elizabeth Warren only, so you have to go
through whole show or just the 2:00 minute segment that only shows her saying she is not running
for President.
Apparently I don't have the computer configured to play it anyway.
FreedomGuy
I do not think Wall Street and your local bankers or mortgage brokers are the bad guys here.
Frankly, they look at the rules and try to make a living in the mortgage business. They are not
angels but neither are they demons and I do not think they purposely write bad business.
I think the Wizard of Evil behind the curtain is first and last the government including a
GSE like the Fed. They set this stuff up. You know you can load up Freddie and Fannie with smelly
stuff and off-load risk. They hold rates near historic lows so people can buy more.
This drives prices and all the flipping crap and related stuff I hate.
I am in the middle of this. Being an avid reader of ZH I have become a proper pessimist. I
did a cash-out refi and am paying off virtually all other loans...or more properly moving them
to the tax deductible home loan. I was going to rent and move north because of work but after
lots of research, breathtaking price increases and a few other cautions I decided to sit it out.
I am going to see what the economic terrain looks like in 6 months or more.
The thing is you have to play the game as it is, today, not as you think it should be.
marts321
Don't hate the player, hate the game.
TeethVillage88s
Check out the growth of Holding companies.
Financial Business; Credit Market Instruments; Liability, Level 2015:Q1: 14,104.57 Billions of Dollars (+ see more) Quarterly, End of Period, Not Seasonally Adjusted, TCMDODFS,
Holding Companies; Credit Market Instruments; Liability, Level 2015:Q1: 1,380.52 Billions of Dollars (+ see more) Quarterly, End of Period, Not Seasonally Adjusted, CBBHCTCMDODFS, https://research.stlouisfed.org/fred2/series/CBBHCTCMDODFS
U.S.-Chartered Depository Institutions; Credit Market Instruments; Liability, Level 2015:Q1: 669.90 Billions of Dollars (+ see more) Quarterly, End of Period, Not Seasonally Adjusted, CBTCMDODFS,
Now, we know that in 2007 the Biggest Wall Street banks wanted access to Deposits in the USA.
So maybe I don't have the date, could have been planned from Lehman Request date to become a Deposit
Bank while an Investment Bank.
So today we have Holding Companies that are allowed to have Deposits while doing commercial
and investment work and proprietary trading... and now are 30% Bigger after all the Bailouts and
transfer of Taxpayer and Retirement Funds to them.
Holding Companies have Doubled Liability since 3QTR 2007
Wow
TeethVillage88s
Too Bad we don't have Honest Brokers in DOJ, FBI, SEC, FINRA, FTC, GAO, CBO, FED, Treasury,
OCC, FSOC, BCFP, CFTC, FDIC, FHFA, SIPC
I'm not sure how you can isolate or focus your condemnation or fault.
- Private & Public Pensions, Retirement Funds, Deposit Insurance, The Fact that our Wall Street
Banks are Borg connecting to AI Technology,... and Complexity is increasing at an Exponential
Rate meaning Risk is Exponential as well
- Big Concern -- pay outs for Pension Benefit Guaranty Corporation (federal Trust Fund), 1999
= $1.23 Billion, 2000 = $1.35 Billion, 2001 =$1.37 Billion. Okay, but today 2010 = $5.59 B, 2011
= $5.89 B, 2012 = $5.86 B, 2013 = $5.89 B. There is a continual need to supplement Pensions. 2010
PBGC's deficit increased 4.5 percent to $23 billion (Liabilities beyond assets)
- Federal direct student loan program 1999 = $52 Billion, INCREASED to 2013 = $675 Billion.
(Risky)
- 2013 Total FDIC Trust Fund in Treasuries = $36.9 Billion + $18 billion in the DIF (Risky)
- 2013 Total National Credit Union Trust in Treasuries = $11.2 Billion
Edit: This applies, $8.16 Trillion in US Deposits
Total Savings Deposits at all Depository Institutions 2015-09-07: 8,164.3 Billions of Dollars (+ see more) Weekly, Ending Monday, Not Seasonally Adjusted, WSAVNS, https://research.stlouisfed.org/fred2/series/WSAVNS
To all hysterical critics of the FED, what do you suggest they do instead? The rich can do
nothing, sit it out, the poor meanwhile will starve and die (and probably riot before they die).
The poor need jobs. Now almost at any cost, because those jobs are few and far in between as
we are competing with China. So they do ZIRP, NIRP whatever, something, anything to at least marginally
force the rich to spend. For, if people do not spend there will be even less jobs…and less tax
revenue collected for the government to run and distribute around… and it all starts going downhill.
The FED is just trying to keep the system at the higher spending point. It does not seem to
work very well, but the next option is a direct confiscation and redistribution of assets (to
keep those poor jobless souls content). Nobody gives a f* about inequality until it becomes a
riot-provoking problem itself. Ugly as it is there is actually logic in what the FED is doing.
Batman11
The globalists rush to take the profits in the good times but run and hide in the bad.
Where is the profit in sorting out the bad times? In the bad times national institutions, Governments and Central Banks, get left to sort out
the mess loading the costs onto national tax payers.
When things go wrong nationalism rises as each nation is left to fend for itself. We should know how it works by now, this isn't the first time.
1920s/2000s - high inequality, high banker pay, low regulation, low taxes for the wealthy,
robber barons (CEOs), reckless bankers, globalisation phase
1929/2008 - Wall Street crash
1930s/2010s - Global recession, currency wars, rising nationalism and extremism
1940s/? - Global war
We are nearly there with the Middle East on fire and the two nuclear super-powers at each other's
throats.
Maybe next time we will know better, third time lucky.
mianne
Cherry picker, I agree with you : " All our government up here has to do is get out of
NATO, disband our version of the CIA, divorce Homeland Security, duty and tax all imports to
the hilt, keep our water, electricity and natural resources to ourselves and manufacture our
own products... Then you can have all the wars you want in the middle east and we will watch
it on television without worrying about whether to be part of the murder brigade or not."
But as for ourselves, as governed by the totalitarian EU whose representatives are non elected
by people, but were chosen by the international finance tycoons ( our elected presidents
deprived of any power by the supranational non elected entity, US- OTAN driven European
Union), we are just powerless slaves .
However we won the referendum ( 52 % ) against the content of the Maastricht-Lisbon
European Constitution, but they do not take it into account, submitting us to the ignominious
treaty . Democracy ?
"... That is brilliant - so Turing Pharmaceuticals is a classical - wait for it - parasitic infection! ..."
"... The point is we should be trying
to make our regulation more intelligent (making it encourage not discourage innovation - cheaper
and easier to police - less subject to regulatory capture etc.). ..."
Item: The former president of a peanut company has been
sentenced to 28 years in prison for knowingly shipping tainted products that later killed
nine people and sickened 700.
Item: Rights to a drug used to treat parasitic infections were acquired by
Turing Pharmaceuticals, which specializes not in developing new drugs but in buying existing
drugs and jacking up their prices. In this case, the price went from $13.50 a tablet to $750.
...
There are, it turns out, people in the corporate world who will do whatever it takes, including
fraud that kills people, in order to make a buck. And we need effective regulation to police that
kind of bad behavior... But we knew that, right?
Well, we used to know it... But ... an important part of America's political class has declared
war on even the most obviously necessary regulations. ...
A case in point: This week Jeb Bush, who has an uncanny talent for bad timing, chose to publish
an op-ed article in The Wall Street Journal denouncing the Obama administration for issuing
"a flood of creativity-crushing and job-killing rules." Never mind his
misuse of cherry-picked statistics, or the fact that private-sector employment
has grown much faster under President Obama's "job killing" policies than it did under Mr.
Bush's brother's administration. ...
The thing is, Mr. Bush isn't wrong to suggest that there has been a move back toward more regulation
under Mr. Obama, a move that will probably continue if a Democrat wins next year. After all, Hillary
Clinton released a plan to limit drug prices at the same time Mr. Bush was unleashing his anti-regulation
diatribe.
But the regulatory rebound is taking place for a reason. Maybe we had too much regulation in
the 1970s, but we've now spent 35 years trusting business to do the right thing with minimal oversight
- and it hasn't worked.
So what has been happening lately is an attempt to redress that imbalance, to replace knee-jerk
opposition to regulation with the judicious use of regulation where there is good reason to believe
that businesses might act in destructive ways. Will we see this effort continue? Next year's election
will tell.
reason
"Item: Rights to a drug used to treat parasitic infections were acquired by Turing Pharmaceuticals,
which specializes not in developing new drugs but in buying existing drugs and jacking up their
prices. In this case, the price went from $13.50 a tablet to $750. ..."
That is brilliant - so Turing Pharmaceuticals is a classical - wait for it - parasitic infection!
reason
"So what has been happening lately is an attempt to redress that imbalance, to replace knee-jerk
opposition to regulation with the judicious use of regulation where there is good reason to believe
that businesses might act in destructive ways. Will we see this effort continue? Next year's election
will tell."
Personally, I don't think this is really addressing the key point. You can't actually avoid regulation
(the alternative to public regulation - as pushed by say Milton Friedman - ends up being private
regulation - which is just as subject to regulatory capture). The point is we should be trying
to make our regulation more intelligent (making it encourage not discourage innovation - cheaper
and easier to police - less subject to regulatory capture etc.). The policy discussions about
this a difficult enough with good faith - but bad faith politics makes this impossible. We need
to throw the Gingrich revolution in the dustbin as soon as possible.
The point is we should be trying to make our regulation more intelligent (making it encourage
not discourage innovation - cheaper and easier to police - less subject to regulatory capture etc.
"... So what has been happening lately is an attempt to redress that imbalance, to replace knee-jerk
opposition to regulation with the judicious use of regulation where there is good reason to believe
that businesses might act in destructive ways. Will we see this effort continue? Next year's election
will tell. ..."
"... That is brilliant - so Turing Pharmaceuticals is a classical - wait for it - parasitic infection! ..."
"... The point is we should be trying
to make our regulation more intelligent (making it encourage not discourage innovation - cheaper
and easier to police - less subject to regulatory capture etc.). ..."
"... The reality is that, in the absence of
effective regulation with substantial penalties, all of the incentives are to lie, cheat, and
steal. In consequence, it really is the norm, if only in more minor ways than the ones that
make the headlines. Wage theft, fraud, knowingly selling defective merchandise, and many other
abuses are clearly rampant. This is exactly why markets cannot exist in the absence of
effective government regulation to provide trust. ..."
"... Economic idealists have popularized the notion that the world can work without much
regulations because their models tell them so. Unless they are behavioral economists, they
often fail to include fraud, scams & information asymmetry into their models. This produces
garbage like efficient markets that only exist in an idealistic dream world. The real world
markets are filled with fraud, scams and disreputable agents. Failure to account for bad
behavior is the bane of many a model. ..."
"... But I love Obama because he has created a wonderland of money for lawyers and consultants,
a river of chocolate and honey to make Willy Wonka jealous. Go Barry go! ..."
Item: The former president of a peanut company has been
sentenced to 28 years in prison for knowingly shipping tainted products that later killed
nine people and sickened 700.
Item: Rights to a drug used to treat parasitic infections were acquired by
Turing Pharmaceuticals, which specializes not in developing new drugs but in buying existing
drugs and jacking up their prices. In this case, the price went from $13.50 a tablet to $750.
...
There are, it turns out, people in the corporate world who will do whatever it takes, including
fraud that kills people, in order to make a buck. And we need effective regulation to police that
kind of bad behavior... But we knew that, right?
Well, we used to know it... But ... an important part of America's political class has declared
war on even the most obviously necessary regulations. ...
A case in point: This week Jeb Bush, who has an uncanny talent for bad timing, chose to publish
an op-ed article in The Wall Street Journal denouncing the Obama administration for issuing
"a flood of creativity-crushing and job-killing rules." Never mind his
misuse of cherry-picked statistics, or the fact that private-sector employment
has grown much faster under President Obama's "job killing" policies than it did under Mr.
Bush's brother's administration. ...
The thing is, Mr. Bush isn't wrong to suggest that there has been a move back toward more regulation
under Mr. Obama, a move that will probably continue if a Democrat wins next year. After all, Hillary
Clinton released a plan to limit drug prices at the same time Mr. Bush was unleashing his anti-regulation
diatribe.
But the regulatory rebound is taking place for a reason. Maybe we had too much regulation in
the 1970s, but we've now spent 35 years trusting business to do the right thing with minimal oversight
- and it hasn't worked.
So what has been happening lately is an attempt to redress that imbalance, to replace knee-jerk
opposition to regulation with the judicious use of regulation where there is good reason to believe
that businesses might act in destructive ways. Will we see this effort continue? Next year's election
will tell.
reason
"Item: Rights to a drug used to treat parasitic infections were acquired by Turing Pharmaceuticals,
which specializes not in developing new drugs but in buying existing drugs and jacking up their
prices. In this case, the price went from $13.50 a tablet to $750. ..."
That is brilliant - so Turing Pharmaceuticals is a classical - wait for it - parasitic infection!
reason
"So what has been happening lately is an attempt to redress that imbalance, to replace knee-jerk
opposition to regulation with the judicious use of regulation where there is good reason to believe
that businesses might act in destructive ways. Will we see this effort continue? Next year's election
will tell."
Personally, I don't think this is really addressing the key point. You can't actually avoid regulation
(the alternative to public regulation - as pushed by say Milton Friedman - ends up being private
regulation - which is just as subject to regulatory capture). The point is we should be trying
to make our regulation more intelligent (making it encourage not discourage innovation - cheaper
and easier to police - less subject to regulatory capture etc.). The policy discussions about
this a difficult enough with good faith - but bad faith politics makes this impossible. We need
to throw the Gingrich revolution in the dustbin as soon as possible.
RC AKA Darryl, Ron said in reply to reason...
YEP!
What politicians can get away with is an artifact of the limited toolset that the electorate
has to express its informed will. We need a well educated democracy and the democratic part of
that requires Constitutional electoral reforms (e.g., gerrymandering, campaign finance). A bit
of the educational aspect of a voting actually democratic republic would naturally work itself
out with a more engaged and empowered electorate participating ACTIVELY.
With the system as it is then it takes a shock wave through the electorate for them to throw
the bums out, but there is no follow through. There is a failsafe reaction function, but no
more than that except on specific social issues that get overwhelming support where
politicians can move with the electoral majority at zero cost while reactionary politicians
can triangulate and pander some votes from the minority opinion of those too old or set in
their ways to participate in the social sea change.
ilsm said in reply to RC AKA Darryl, Ron...
The threat is "faith voters", dogma developed by billionaires' propaganda to plunder the
world.
DrDick said in reply to reason...
Krugman is far too kind to the businessmen. The reality is that, in the absence of
effective regulation with substantial penalties, all of the incentives are to lie, cheat, and
steal. In consequence, it really is the norm, if only in more minor ways than the ones that
make the headlines. Wage theft, fraud, knowingly selling defective merchandise, and many other
abuses are clearly rampant. This is exactly why markets cannot exist in the absence of
effective government regulation to provide trust.
DeDude said in reply to reason...
Exactly; what we need is a detailed debate on each specific regulation. What it intends to
accomplish, whether that could be accomplished in a less burdensome way, and whether the
accomplishment is sufficient to justify the burden. However, that is not something that can
happen in the 15 second soundbite that appears to be the attention span of the average voter.
Lee A. Arnold said in reply to Second Best...
Second Best: "Markets work if allowed to self regulate."
No. Never happened, except in local instances. For self-regulation you need proper prices,
and for proper prices you need proper supply and demand.
For proper supply you need perfect competition, so there must be numerous competitors entering
the same market, and this requires, among other things, almost no intellectual protection.
For proper demand, you need perfectly informed consumers, and this is not only impossible, but
it is getting far far worse, because the complexity of the world is increasing.
The problem with state regulation is that it also falls prey to the same objections, although
at a slower rate. We use votes not prices, but the same imperfection of information and lack
of flexibility causes problems with the voting system.
When you combine this problem with the increase in inequality (which was masked temporarily by
World War II and the subsequent spurt of blue-collar jobs productivity), we are headed into an
accelerated amelioration of the market system by greater public ownership.
RC AKA Darryl, Ron said in reply to Lee A. Arnold...
"Peanut butter does not kill people, people kill people."
[If you can read a opening sentence like that and not recognize it as satirical parody, then
you might want to look around to find the sense of humor that you lost. When the will of the
people is no more than a euphemism for dollar democracy then parody, satire, sarcasm, and a
healthy dose of cynicism are called for.]
JF said in reply to RC AKA Darryl, Ron..
Lee A Arnold - Think Jonathan Swift and his piece about the way to reduce subsidies for the
orphaned poor infants, it is to reduce their number so we feel good about the fact that we
help the few poor infants left alive.
I reacted a few times to Second Best's comments before I recognized the satire.
But I also have used his comments as a way to bring out the more logical, real-world of facts
and rationality - so commentary helps either way. I suppose that serves 2nd Best's interests
too.
JF said in reply to JF...
I believe the Jonathan Swift recommendations are the preferred republican-party approach to
Social Security too. Really need fewer claimants, that will solve the accounting problems.
RC AKA Darryl, Ron said in reply to Second Best...
"Peanut butter does not kill people, people kill people. Car emissions do not kill people
... high drug prices do not kill people ... people do."
[This is an economics blog. You cannot be that "subtle (???)" and expect people to recognize
your satire. Maybe there is a humorous math equation that economists can understand. I guess
economics graduate school is so boring that most people lose all sense of humor. I am glad
that Krugman has kept his.]
Richard H. Serlin said...
"Then there's for-profit education, an industry wracked by fraud - because it's very hard
for students to assess what they're getting - that leaves all too many young Americans with
heavy debt burdens and no real prospect of better jobs. But Mr. Bush denounces attempts at a
cleanup."
And worse, wasting their incredibly valuable and rare young years, quite possibly their only
chance before age and children make it extremely hard, not getting an education. Such a big
thing. You don't do it when you're young, with the power and freedom and lack of dependents of
youth, the opportunity may easily be gone forever. Such a brutal cost these predators and
their Republican allies extract.
RC AKA Darryl, Ron said in reply to Richard H. Serlin...
One cause of increased tuition is the reduction of state and federal appropriations to state
colleges, causing the institutions to shift the cost over to students in the form of higher
tuition. State support for public colleges and universities has fallen by about 26 percent per
full-time student since the early 1990s.[10] In 2011, for the first time, American public
universities took in more revenue from tuition than state funding.[9][11] Critics say the
shift from state support to tuition represents an effective privatization of public higher
education.[11][12] About 80 percent of American college students attend public institutions...
bakho said...
Economics Professors of the "free market" bent for years have indoctrinated youth with the
misguided notion that "regulations are bad" and market methods, no matter how RubeGoldberg,
are always better. " You don't need to regulate pollution, just put a tax on it," as an
example. Even cap and trade would not work without stiff emissions regulations.
Economic idealists have popularized the notion that the world can work without much
regulations because their models tell them so. Unless they are behavioral economists, they
often fail to include fraud, scams & information asymmetry into their models. This produces
garbage like efficient markets that only exist in an idealistic dream world. The real world
markets are filled with fraud, scams and disreputable agents. Failure to account for bad
behavior is the bane of many a model.
ilsm said in reply to bakho...
Sanctity of the "market"......
I got a jar of this snake oil here too!
The market they sell is the one that runs in Honduras
Tom aka Rusty said...
A couple of random observations:
Last time I looked about 150 Dodd-Frank regs had not been written yet, some of the key ACA
regs are three years late.
Obama-ites have written some of the most complex, convoluted regs of the past 40 years, the
health EMR regs have practically guaranteed a windfall for IT companies and a failure for EMR/EHR.
No mention of the Obama-Holder "too big to prosecute doctrine."
The new overtime regs will likely be in the "driving thumb tacks with a sledge hammer" mode.
But I love Obama because he has created a wonderland of money for lawyers and consultants,
a river of chocolate and honey to make Willy Wonka jealous. Go Barry go!
pgl said in reply to kthomas...
Rusty wants us to believe he is the only one who understands health care so he is a
persistent critic of ObamaCare. But now he wants to pretend he's the expert on financial
markets too? Seriously? Dodd-Frank is complicated only because the Jamie Dimons of the world
milk every opportunity to game financial markets. If Rusty thinks letting Jamie Dimon evade
any financial market regulation is a good idea - he is the most clue person ever.
DrDick said in reply to pgl...
He was just trying to do us a favor and demonstrate exactly what is meant by "knee-jerk
opposition to regulation ."
JF said in reply to Tom aka Rusty...
Have you ever looked at the multi-party derived hedging instruments in play now - they can
hardly get more complex, and indeed most didn't understand them when they were made, and these
are still complex now.
So I have to say, that the 'marketplace' makes Krugman's point about complexity. It comes from
humans cunningly doing stuff that serves their interests at the time as they see it. Not
always wisdom at work here.
But it is complex, and so regulation of such complexity, if the generally applicable rules
seek some fairness (classes of people are usually affected differently) and stands a test of
due process too - the regulations will also need to be complex. The complexity came first, the
regulations come afterwards (after society learns of the stupidity the hard way).
Railing about this is a form of misleading sophistry, a rhetorical device to reverse the
causality.
We can think with more foresight and regulate before the stupid complexity arises, but it does
take a rational policy making environment for this exploration, discussion and policy-making
to occur with good foresight - I am waiting for the new Congress in 2017.
If the Warren-Sanders people have any influence then, we may see a whole lot less complex
financial system (it's a riot when you think how the Efficient Market Hypothesis, a
theoretical justification for the marketplace's range of instruments in fact led to more
complexity, less real efficiency and effectiveness, and ossification of the system when it
needed to be resilient but stable as a well-behaved system can be).
We will probably be better off after the 2017 debates. After all, this community of actors are
only intermediaries on behalf of real productive outcomes truly needed by society - right,
they are just intermediaries? How much inter-mediation does the economy need?
david s said...
The Obama Administration has been friendlier to corporate America than W's was.
While it was Ronald Reagan and his Republican Party that called for deregulation not much
was done until Alan Greenspan, then Chairman of the Federal Reserve, gave federal deregulation
his blessing in speeches from NY to Aspen to California in which he said "the market" will
reign in excesses and regulate itself b/c of competition acting egregiously would create.
Oopsie, Old Alan got it ALL WRONG again!
I thought a little history would help in this thread.
likbez said...
My impression is that regulation always reflects the needs of who is in power today. One
the key ingredients of political power is the ability to push the laws that benefit particular
constituent. And to block laws that don't.
If we assume that financial oligarchy is in power today, then it is clear that there can be no
effective regulation of financial services and by extension regulation of derivatives. And if
on the wave of public indignation such regulation is adopted, it will be gradually watered
down and then eliminated down the road.
And you can always hire people who will justify your point of view.
In this sense neither Milton Friedman nor Greenspan were independent players. They sold
themselves for money and were promoted into positions they have for specific purpose. I am not
sure the either of them believed the crap they speak or wrote.
It is under state capitalism that TBTF can't exists. Under neoliberalism they rule the country,
so the question about cutting their political power of dismantling them is simply naive. Nobody give
political power without a fight.
"... Today, with governments which are nothing but literally the junior partners (of Big Business)
in government-by-crime-syndicate, these laws might as well no longer exist, as they are practically
never enforced. Indeed, an entity must be a political/economic pariah, or simply lacking "connections"
if it is unable to sneak some merger or take-over past our totally compliant governments, and their
fast-asleep "regulators". ..."
"... There could never be an economic system, or economic argument where "too big to fail" could
ever be a rational/legitimate policy. Put another way, no level of short-term economic harm or
shock could possibly equal the long-term harm (and insanity) of institutionalized blackmail
– which is all that "too big to fail" ever was/is. You must protect us, no matter what we do,
no matter what the cost. Utter insanity. Utter criminality. ..."
"... An oligopoly is where a small group of companies dominate/control an entire market or sector.
Here it is important to understand that oligopolies are every bit as "evil" as monopolies (in
every way), but the oligopoly puts a happy-face on this evil. Oligopolies represent pretend
competition. ..."
"... But such corporate extortion via oligopolies/monopolies is certainly not confined to the banking
sector. The Oligarchs engage in such extortion (against corrupt governments which require absolutely
no arm-twisting) in virtually every sector of our economies, but generally in not quite as extreme
a form as what is perpetrated by the Big Banks. ..."
"... Read Schumpeter beginning to end. He recognized the evolution of increasingly
larger-scale, boom-and-bust "capitalism" from free-enterprise, entrepreneurial capitalism to
industrial capitalism and eventually to various forms of state-capitalism, corporate-statism,
or quasi-fascism we have today, or what I refer to as militarist-imperialist, rentier-socialist,
or Anglo-American corporate-state. ..."
Today, with governments which are nothing but literally the junior partners (of Big Business)
in government-by-crime-syndicate, these laws might as well no longer exist, as they are practically
never enforced. Indeed, an entity must be a political/economic pariah, or simply lacking "connections"
if it is unable to sneak some merger or take-over past our totally compliant governments, and their
fast-asleep "regulators".
Today we have corporate monoliths which are literally orders of magnitude larger than any
remotely "optimal" size, with the ultimate and most-obvious examples being those hideously bloated
financial behemoths which we now know as "the Big Banks". How ridiculously too-big have the Big Banks
gotten?
Even the most-ardent admirer of the Big Banks in the entire media world, Bloomberg, couldn't stop
itself from openly salivating about how much "profit" could be had, just by beginning to chop-down
the financial fraud-factory which we know as JPMorgan Chase & Co.:
JPMorgan Chase & Co, the biggest U.S. bank by assets, would be worth 30 percent more if broken
into its four business segments, an unlikely scenario, an analyst at Stifel Financial Corp.'s KBW
unit said.
Note that there is not one word in the article indicating that there couldn't be a lot more
profit to be made, by then smashing those pieces into much smaller pieces still. This article
simply pointed to the instant profit of 30% which would be available just by beginning to
chop-down this obscenely large behemoth, and in the simplest manner possible.
Why would "smaller" be much more valuable, in our forward-looking markets, in the case of smashing
JPMorgan down-to-size (or at least beginning that process)? Obviously a major portion of that profit
quotient would have to be derived from greater efficiency. Smaller is better.
However, pointing out that even the greatest admirer/biggest cheerleader of the Big Banks has
observed how we would all be better off if the Big Banks were smaller is only a start. We
then come to the heinous propaganda which the cheerleaders (including Bloomberg) have dubbed "too
big to fail".
This is a very simple subject. "Too big to fail" is a pseudo-concept which is entirely antithetical
to any economic system which even pretends to adhere to the principles of "free markets".
Free markets demand that insolvent entities fail, it is the only way for such free markets to heal,
when weakened by the misallocation of assets (such as in the case of insolvent enterprises). No business,
or group of businesses could ever be "too big to fail".
There could never be an economic system, or economic argument where "too big to fail" could
ever be a rational/legitimate policy. Put another way, no level of short-term economic harm or
shock could possibly equal the long-term harm (and insanity) of institutionalized blackmail
– which is all that "too big to fail" ever was/is. You must protect us, no matter what we do,
no matter what the cost. Utter insanity. Utter criminality.
Understand that our own, corrupt governments embarked upon this criminal insanity long after the
equally criminalized government of Japan already proved that too-big-to-fail was a failed policy.
Not only could there never be an argument in favor of this criminality, our governments knew it
would fail before they ever rubber-stamped this systemic corruption.
But all of these arguments against the insanity of perverting and skewing our economies in favor
of Big Business, and against Small Business pale into insignificance compared to the principal condemnation
of too-Big Business: the economic "cannibals" known as monopolies and oligopolies.
For readers unfamiliar with these terms because the Corporate media and charlatan economists try
to pretend that these words don't exist, a brief refresher is in order. As most readers know, a monopoly
is where a single enterprise effectively controls an entire market or sector. While a "monopoly"
may be desirable when playing a board-game, in the real world these parasitic entities do nothing
but blood-suck, from any/every economy they are able to "corner".
However, the majority of people, even today, are at least partially familiar with the evils of
monopolies, thus the ultra-wealthy Oligarchs rarely attempt to perpetrate their systemic theft via
these corporate fronts. Instead, they perpetrate most of their organized crime via oligopolies.
An oligopoly is where a small group of companies dominate/control an entire market or sector.
Here it is important to understand that oligopolies are every bit as "evil" as monopolies (in
every way), but the oligopoly puts a happy-face on this evil. Oligopolies represent pretend
competition.
These corporate fronts cooperate as closely as possible in systemically plundering economies.
How do monopolies/oligopolies rob from us? The "old-fashioned" way for these blood-suckers to do
so was via simple price-gouging. When you have complete control over a sector/market, you can
charge any price you want.
However, not surprisingly, the Little People tend to notice when the Oligarchs use their corporate
fronts to engage in simple price-gouging. They actually begin to notice the general evil which oligopolies/monopolies
represent, and that is "bad for business" (i.e. crime).
Instead, the Oligarch Thieves of the 21st century engage in their robbery-by-corporation in a
different, more sophisticated/less-visible manner: via corporate welfare. What other crime can monopolies
and oligopolies perpetrate, with overwhelming success? Naked extortion.
As previously explained; "too-big-to-fail" (and now even "too big to jail") is nothing but the
most-obvious and most-despicable form of corporate extortion (or simply economic terrorism): give
us all the money we want, or we'll blow up the financial sector. Small banks could never perpetrate
such a crime (terrorism).
But such corporate extortion via oligopolies/monopolies is certainly not confined to the banking
sector. The Oligarchs engage in such extortion (against corrupt governments which require absolutely
no arm-twisting) in virtually every sector of our economies, but generally in not quite as extreme
a form as what is perpetrated by the Big Banks.
Typically, the extortion which precedes even more Corporate welfare, occurs in this form: give
us everything we want, or we will close our factory/business, and you will (temporarily)
lose those jobs. Here we don't need to imagine this in the hypothetical, as we have a particularly
blatant example of such Corporate extortion/welfare, courtesy of U.S. Steel:
U.S. Steel Canada Inc. is threatening to cease operations in Canada by the end of the year
if an Ontario Superior Court judge rejects its request to stop paying municipal taxes, halt payments into pension funds, and
cut off health care and other benefits to 20,000 retirees
and their dependents. [emphasis mine]
... ... ...
kanoli
Like most of Jeff Nielson's rants, this one is nonsensical. If small business hires more
people to produce the same product or service as a big business, they cannot do so at the same
or lower price unless they are paying a lower wage.
The problem with big business isn't that it is big - it is their tendency to lobby government
for regulations that stifle small business competitors.
If politicians were not for sale, it wouldn't matter whether a business is big or small.
Neither would have undue influence on the law.
The problem is regulatory democracy where all laws are constantly subject to fiddling by an
elected legislature.
Element
In practice a balanced mix of all sized businesses are necessary in a planetary
civilization that trades products globally. Getting the mix 'right' and not having big
business get away with preventing competition, or of govt throttling to skim and micro-control
is most of the deleterious effect on business, and on human beings in general.
Unfortunately humans have been trained to like Logos, and to buy 'wants' accordingly.
iDroned on a bit,
2c
newnormaleconomics
Read Schumpeter beginning to end. He recognized the evolution of increasingly
larger-scale, boom-and-bust "capitalism" from free-enterprise, entrepreneurial capitalism to
industrial capitalism and eventually to various forms of state-capitalism, corporate-statism,
or quasi-fascism we have today, or what I refer to as militarist-imperialist, rentier-socialist,
or Anglo-American corporate-state.
The current state of the evolution of "capitalism" is its advanced, late-stage,
financialized, globalized phase.
With Peak Oil, population overshoot, unprecedented debt to wages and GDP, Limits to Growth,
climate change, a record low for labor share, decelerating productivity, OBSCENE wealth and
income inequality, and increasing geopolitical tensions, growth of real GDP per capita is
done, which means that growth of profits, investment, and capital formation/accumulation is
done, which in turn means "capitalism" is done.
"... A Glencore spokesperson said: "Regardless of the business environment, Glencore is helping fulfil
global demand by getting the commodities that are needed to the places that need them most." ..."
"This is the best recovery in all recorded history." Lambert
Is GS preparing to Sacrifice the next Lehman (at zh find it yourselves') short list: It goes without saying that courtesy of HFTs and China's hard landing, a 5% drop in commodities could
happen overnight.
So if one is so inclined, and puts on the conspiracy theory hat mentioned at the beginning of
this post, Goldman may have just laid out the strawman for the next mega bailout which goes roughly
as follows:
** Commodity prices drop another 5% ** The rating agencies get a tap on their shoulder and downgrade Glencore to Junk. ** Waterfall cascade of margin and collateral calls promptly liquidates Glencore's trading desk and
depletes the company's cash, leaving trillions of derivative contracts in limbo. Always remember:
the strongest collateral chain is only as strong as its weakest conterparty. If a counterparty liquidates,
net exposure becomes gross, and suddenly everyone starts wondering where all those "physical" commodities
are. ** Contagion spreads as self-reinforcing commodities collapse launches deflationary shock wave around
the globe. ** Fed and global central banks are called in to come up with a "more powerful" form of stimulus ** The money paradrop scenario proposed by Citigroup yesterday, becomes reality
Too far-fetched? Perhaps. But keep an eye out for a Glencore downgrade from Investment Grade.
If that happens, it may be a good time to quietly get out of Dodge for the time being. Just in case. ********************************************** i did a 4th course on Hunger
http://marketwatch666.blogspot.com/2012/11/hunger-4th-course.html
(scroll down to bold red, can't miss the Glen history that we WILL NOW BE BACKSTOPPING) A Glencore spokesperson said: "Regardless of the business environment, Glencore is helping fulfil
global demand by getting the commodities that are needed to the places that need them most."
" If a counterparty liquidates, net exposure becomes gross,"
This is the really, really important concept. Whenever someone mentions our $600 Trillion in global
derivatives, Wall Street pipes up and says that is NOMINAL. It NETS out to ZERO (minus fees).
But yeah if the chain breaks, it is really two halves, $300 Trillion a piece. Which I think someone
recently estimated is 1.5 times the dollar value of the planet. (just the $300T half) Which has me
wondering where the regulators went to accounting school. But I never took accounting, so maybe it's
me that's mixed up.
The only thing I'd point out is our sophisticated financiers always say don't wait for the rating
agency downgrade – because they are always last to make a move.
Other than that, sounds about right.
Other thing I remember in 2008 was Goldman increased broker margin requirements maybe a month
or two before Lehman.
" ...As a neoliberal technocrat, Brad DeLong naturally thinks of bankers as rational specimens
of homo oeconomicus. Alas, bankers (like everyone in a real economy) does not act rationally in the
way DeLong expects."
" ...A banker observes that in the last epochal economic crash, the government bailed out all
the biggest banks and refused to prosecute any bankers for fraud. The banker therefore rationally calculates
that fraud represents an excellent business model, since it socializes all the risk of running a bank
and privatizes all the profit. Moreover, since the government refuses to send bankers to prison for
fraud, there's no social risk as well as no economic risk."
Well, I'm just a medical sociologist, so what do I know, but my bank essentially pays zero interest
on deposits and charges 4.5% interest on mortgages. So they seem to be in a perfectly good place
as far as I can tell.
Beat me to it. My savings interest rate is 0.1%. The bank's (actually a credit union) current
30-year mortgage rate is 4.125%, inflation right now is 0.2%. (so in real world terms I'm losing
money daily on my "savings").
By my admittedly non-R-programmed mere fingermath calculations
they're making 412.5- 3=409.5 basis points on those loans, comfortably above their 300 point bar.
They may not be maximizing their profits, but they're making them, and playing safe to boot.
And so long as the 0.01% have a stranglehold on profits and wages, inflation isn't going anywhere,
except, of course, for yachts and Picassos.
Of course so long as the 0.01% have that stranglehold, not much of anything is going anywhere.
To the extent that commercial bankers are able to exploit their very special access to the Federal
Reserve, they are most certainly rentiers. At least if I am understanding that term correctly.
`Brad, I don't think you get that a lot these people are not rational. These are people who think
that as soon as inflation starts up then the entire bill of treasuries that the Fed has will come
due.
They actually do believe in Glenn Beck and the rest of the psychos. A man that I knew who owns
several million ft^2 of timber that got rid of it because he thought inflation was coming. He
liquidated everything he had and I haven't seen him since.
These people are probably not the majority of their clients but they are definitely the LOUDEST.
They certainly are part of the rentier class. They didn't used to be, and they shouldn't be, but
iron and gold they are today.
Banks make their money on fees; the interest rate spreads are
a mere bagatelle. This is a consequence of deregulation more than it's a consequence of electronic
transaction technologies.
It's pretty darn near the power to tax; banks get a cut of the entire economy because they
get at least a couple percent every time money changes hands. (Look at Square's pitch to merchants
-- a consistent two-point-something percent rate for clearing credit card transactions. The bank
version goes up to 10%.)
As long as that's true, the zero lower bound is annoying, but it doesn't really affect profitability.
Profitability is guaranteed by the existence of an economy.
And I note that it purely doesn't matter what the fees are as long as the banks don't significantly
vary among themselves as to what the fees should be.
That is, there isn't a market for commercial
banking services. There's an ostensibly informal cartel.
I'm with you guys. This article makes no sense. What loans (of any kind really) is he seeing banks
make at <3%? Even a 5/1 ARM (with points) is over 3% and most loans are fixed rate anyway.
Well I'm not very sure that commercial banks are intermediaries. Not anymore. They have a far
bigger role in the financial landscape: money creation. There's no intermediation involved here,
just leveraged money creation on the basis of the fractional reserve.
That's a huge role, one that private off-bank lenders cannot do.
"The Federal Open Market Committee (FOMC) judges that inflation at the rate of 2 percent
(as measured by the annual change in the price index for personal consumption expenditures,
or PCE) is most consistent over the longer run with the Federal Reserve's mandate for price
stability and maximum employment. Over time, a higher inflation rate would reduce the public's
ability to make accurate longer-term economic and financial decisions. On the other hand, a
lower inflation rate would be associated with an elevated probability of falling into deflation,
which means prices and perhaps wages, on average, are falling--a phenomenon associated with
very weak economic conditions. Having at least a small level of inflation makes it less likely
that the economy will experience harmful deflation if economic conditions weaken. The FOMC
implements monetary policy to help maintain an inflation rate of 2 percent over the medium
term. "
Here's Stanley Fisher:
"It is important to keep inflation low enough so that people need not pay it any attention. At
2 percent annual inflation, a dollar loses half its value in about 36 years; at 4 percent inflation
it takes about 18 years. When you start getting up to 4 percent inflation you begin to see signs
of indexation coming back and a whole host of the inefficiencies and distortions. A 4 percent
target a mistake."
"And commercial banks really do not want to sock their depositors with unexpected fees"
BWAHAHAHAAHAHA!
Wow Brad that is a good joke there! Of course banks use unexpected fees. Lock in with a bank
is real. do you want to go and change your autopay every month? Banks compete for deposits on
rates and "free" checking and then hit customers after lock in.
Two percent inflation might work if fiscal stimulus would reliably fill the output gap during
steep recessions. Fiscal policy has proved unreliable and prone to making matters worse with austerity
policy.
Current policy seems to be driven by failed models and misinformation.
Should the Fed make policy based on ideal fiscal policy? or the ugly reality of misguided fiscal
policy?
What are the odds of a candidate from the Clown Car stepping into the driver's seat for fiscal
policy?
From Money, Banking and Financial Markets. By Laurence Ball
Inflation and the Savings and Loan
Crisis
In the early 1960s* U.S. inflation rates averaged less than 2 percent per year. This situation
appeared stable, so people expected low inflation to continue in the future. However, inflation
rose rapidly in the lace 1960s and 1970s. Because actual inflation over this period was higher
than expected, ex post real interest rates were lower than ex ante rates. In real terms, lenders
received less from borrowers than they expected to receive when they made the loans.
Losses to lenders were greatest for long-term loans, especially home mortgage. In 1965, the
nominal interest rate on 30-year mortgage was less than 6 percent. This rate was locked in until
1995. Because inflation was expected to be less than 2 percent, the ex ante real interest rate
was positive. However, the inflation rate averaged 7.8 percent over the 1970s, implying negative
ex post rates.
Negative real interest rates on mortgages were a great deal for homeowners. But they caused
large losses for banks that specialized in mortgages, such as savings and loan associations. These
losses were one reason for the so-called S&L crisis of the 1980s, when many savings and loans
went bankrupt.
The preceding case study illustrates a general point: uncertainty about inflation makes it
risky to borrow or lend money. This is true for bank loans, and also when firms borrow by issuing
bonds. In both cases, borrowers and lenders agree on a nominal interest rate but gamble on the
ex post real rate. Borrowers win the gamble if inflation is higher than expected, and lenders
win if inflation is lower than expected.
Can borrowers and lenders avoid this gamble? One tool for reducing risk is inflation-indexed
bonds. This type of bond guarantees a fixed ex post real interest rate. Unlike a traditional bond,
it does not specify a nominal interest rate when it is issued. Instead, the nominal rate adjusts
for inflation over the life of the bond, eliminating uncertainty about the real rate."
After a decade of telling the markets that the interest rate would be 2%, the Fed does not
want to change to a 4% target. ARMs and a move to 15 year largely solved the mortgage problem.
However if the Fed wants tight control of the inflation rate, they can't do much about the unemployment
rate unless fiscal policy cooperates. Fiscal policy has been not only uncooperative but in many
cases in opposition to monetary policy.
If you have assets or non-fixed income, or if you're projecting returns from a capital investment,
a slow and steady rise in the number that expresses the value means people can behave as though
they expect larger numbers in the future. Expecting numbers that will grow, they're more likely
to spend today's money on consumption goods and capital assets like houses, and more likely to
make capital investments because they can project that the number used for today's investment
will breed numbers that grow over whatever period they're planning for. Because people use nominal
figures for almost everything in ordinary life, not real inflation-adjusted values, this tends
to work.
About 15 or so years ago the Guardian had an economic columnist, Will something iirc (Will
Self? don't really remember at this point), who explained this very well. Its prime virtue is
that it works in a modern economy to make people feel better and act in ways that add to measurable
GDP. It's a utilitarian, not a moral, view.
Inflation requires wage inflation meaning both wages and prices go up.
Deflation means downward pressure on sticky wages and sticky prices. Sticky wages mean that wages,
do not deflate, instead, reduction in hours worked and increase in unemployment result. Sticky
occur as businesses cannot sell below cost of production for long: price deflation leads to business
failure. You want your economy managed so that relative wages and prices reset in the non-sticky
direction: upward. This avoids recessions, high unemployment and broad business failure.
Inflation must be high enough that an economic shock can be absorbed by upward relative price
reset. Inflation - deflation is a continuum. All economists agree deflation should be avoided
for obvious reasons. A rate of inflation that is too low is only marginally less bad than deflation.
An economic policy designed to trick the middle class into over spending and under saving (by
confusing nominal and real gains) is a recipe for long run disaster.
To some extent since 2007 we have been reaping the consequences of that policy as carried out
since 1980.
I'm in private business. In my world overall wages and prices are adjustable downward at a rate
of at least two percent a year. High cost employees retire or rotate out to other jobs. Companies
with high cost structures re-organize or go bankrupt and are replaced by companies with lower
cost structures. There is enough natural churn in the market that downward stickiness is at worst
a short term phenomenon. We are 8 years into this downturn. Downward stickiness is not the problem.
To believe that downward sticky wages are so big a problem as to justify inflation you have
to believe that there are a material number of workers who are materially over-paid at the moment
and whose real wages should be cut but who do not have the bargaining power to protect themselves
from inflation.
sorry I should have added: If you believe in downward sticky wages then you should be able to
identify the groups of workers whose real wages should be cut and could effectively be cut through
inflation.
As a neoliberal technocrat, Brad DeLong naturally thinks of bankers as rational specimens
of homo oeconomicus. Alas, bankers (like everyone in a real economy) does not act rationally in
the way DeLong expects.
Bankers act perfectly rationally, but in ways DeLong and Krugman
et al. do not expect. A banker observes that in the last epochal economic crash, the government
bailed out all the biggest banks and refused to prosecute any bankers for fraud. The banker therefore
rationally calculates that fraud represents an excellent business model, since it socializes all
the risk of running a bank and privatizes all the profit. Moreover, since the government refuses
to send bankers to prison for fraud, there's no social risk as well as no economic risk.
Consequently your typical banker finds it much more profitable to engage in control fraud today
rather than the old boring business of making sensible loans at low interest to customers who
are likely to pay the money back. Identifying good credit risks in a depressed economy takes a
lot of work, and the result even if successful is low profits -- a squeezed profit margin of circa
300 basis points or less, as DeLong points out. But why settle for a measley 0.3% or 0.2% or less
profit, when you can make 20% or 30% or 60% profit with no economic risk and no real risk of being
indicted?
The way you make 20% or 30% or 60% as banker in 2015, obviously, is to buy up large numbers
of foreclosed liar-loan houses and apartment buildings and then rent them out. Since most people
can't afford a home today because they're got rotten credit and are burdened down with debt from
the financial crash, rents are inflated in 2015. The bankers then aggregate speculative financial
instruments based on these inflated rents and the inflated valuations of the homes and apartment
buildings they've bought, and issue those speculative financial instruments as investment vehicles
to a gullible public and other financial institutions desperate for decent returns on their investment
capital. These bogus junk-quality financial instruments made up of shares in aggregated foreclosed
properties generate income which is then used to buy more overvalued foreclosed properties which
can be rented out in inflated prices, which then generate more bogus securities which then generate
more income...and so on. In short, you get a vicious cycle and a real estate bubble 2.0, but this
time based on buying and renting out foreclosed properties with money borrowed from investors
based on fraudulent securities. As opposed to real estate bubble 1.0 -- which was based on buying
and selling mortgages for newly-built homes with money borrow from investors based on fraudulent
securities like CDOs etc.
Bankers in 2015 are behaving perfectly rationally and they understand with pellucid clarity
the interests of their class. They simply are doing so in ways that neoliberal technocrats like
Brad DeLong can't fathom, because bankers in 2015 are continuing the very profitable control fraud
of real estate bubble 1.0...but by slightly different means (renting foreclosed properties, rather
then mortgaging newly built properties). The bankers correctly deduce that there is no financial
or criminal penalty for this kind of control fraud, since neither Bush nor Obama showed the slightest
interest in prosecuting bankers for their role in robosigning fraud in real estate bubble 1.0.
And when the whole ponzi scheme goes bust this time, the government will step in and bail the
banks out. In the meantime, the bankers are making bank (all puns intended) on all those fees
and that sweet, sweet income stream generated from all those fake liar-loaned forelosed properties
being rented out.
So why wouldn't a banker choose to make 20% or 40% or 60% by spewing out liar-loan investment
instruments based on foreclosed overvalued properties that are supposedly going to rise in value
limitlessly while the rents increase every year without bound? Why would a banker ever settle
for a mere 300 basis points return?
Brad DeLong, like so many neoliberal economists, is book-smart, but not street-smart when it comes
to these matters.
Graydon: I'm sorry, you're wrong. Banks make their money off of the spread, loans, and markets.
Fees are a negligible amount of income.
Brad:
One: banks are long duration/fixed income assets. Most mortgages are fixed rate mortgages. What
happens to the value of a fixed rate loan when inflation or interest rates move up? What about
mortgage production?
Two: bank executives are rich. There's no reason personally for them to cheer for inflation.
That said, yes, an upward sloping yield curve is a commercial banker's best friend.
In any case, I haven't seen much sentiment about rates one way or the other. Commercial banks,
from what I've see, are fairly subdued about rates. The increase in regulation is another matter.
So, the business world has no problem with deflation because, even though there's a consistent
and ongoing squeeze between what's paid at the front end for something and what can be realized
at sale time later as the secular nominal price level falls, the difference can always be made
up by cutting labor costs?
I'm having trouble understanding what the desired state is: deflation, or neither deflation
nor inflation but neutrality? If neutrality is the target, we know how to dampen inflation-- by
raising interest rates the requisite amount. In times of deflation, how do we move out of that
toward neutrality without mirror-image negative interest rates that make people pay to hold cash?
Isn't there an asymmetry? What happens then?
"... 1.TiSA would "lock in" the privatization of services – even in cases where private service delivery has failed – meaning governments can never return water, energy, health, education or other services to public hands. ..."
"... 2.TiSA would restrict signatory governments' right to regulate stronger standards in the public's interest. For example, it will affect environmental regulations, licensing of health facilities and laboratories, waste disposal centres, power plants, school and university accreditation and broadcast licenses. ..."
"... 3.TiSA would limit the ability of governments to regulate the financial services industry, at a time when the global economy is still struggling to recover from a crisis caused primarily by financial deregulation. More specifically, if signed the trade agreement would: ..."
"... 4. TiSA would ban any restrictions on cross-border information flows and localization requirements for ICT service providers. A provision proposed by US negotiators would rule out any conditions for the transfer of personal data to third countries that are currently in place in EU data protection law. In other words, multinational corporations will have carte blanche to pry into just about every facet of the working and personal lives of the inhabitants of roughly a quarter of the world's 200-or-so nations. ..."
"... 5. Finally, TiSA, together with its sister treaties TPP and TTIP, would establish a new global enclosure system, one that seeks to impose on all 52 signatory governments a rigid framework of international corporate law designed to exclusively protect the interests of corporations, relieving them of financial risk and social and environmental responsibility. In short, it would hammer the final nail in the already bedraggled coffin of national sovereignty. ..."
"... So, not to be snarky or anything but when does the invasion of Uruguay begin. ..."
"... In the US, corporations largely have replaced government since WWII or so, or at least pretend to offer the services that a government might provide. ..."
"... Neoliberalism that we have now as a dominant social system is a flavor of corporatism. If so, it is corporations which now represent the most politically powerful actors. They literally rule the country. And it is they who select the president, most congressmen and Senators. Try to ask yourself a question: to what political force Barak "change we can believe in" Obama serves. ..."
"... "And the banks - hard to believe in a time when we're facing a banking crisis that many of the banks created - are still the most powerful lobby on Capitol Hill. And they frankly own the place" ..."
"... This is such a huge, huge, vital issue. Privatisation of public assets has to rank as one of the highest crimes at the government level. It is treason, perhaps the only crime for which i wouldn't object capital punishment. ..."
"... What's more, we now have some 40 years of data showing that privatisation doesn't work. surely, we can organise and successfully argue that privatisation has never worked for any country any time. There needs to be an intellectual assault on privatisation discrediting it forever. ..."
Often referred to as the Switzerland of South America, Uruguay is long accustomed to doing things
its own way. It was the first nation in Latin America to establish a welfare state. It also has an
unusually large middle class for the region and unlike its giant neighbors to the north and west,
Brazil and Argentina, is largely free of serious income inequality.
Two years ago, during José Mujica's presidency, Uruguay became the first nation to legalize marijuana
in Latin America, a continent that is being ripped apart by drug trafficking and its associated violence
and corruption of state institutions.
Now Uruguay has done something that no other semi-aligned nation on this planet has dared to do:
it has rejected the advances of the global corporatocracy.
The Treaty That Must Not Be Named
Earlier this month Uruguay's government decided to end its participation in the secret negotiations
of the Trade in Services Agreement (TISA). After months of intense pressure led by unions and other
grassroots movements that culminated in a national general strike on the issue – the first of its
kind around the globe – the Uruguayan President Tabare Vazquez bowed to public opinion and left the
US-led trade agreement.
Despite – or more likely because of – its symbolic importance, Uruguay's historic decision has
been met by a wall of silence. Beyond the country's borders, mainstream media has refused to cover
the story.
This is hardly a surprise given that the global public is not supposed to even know about TiSA's
existence, despite – or again because of – the fact that it's arguably the most important of the
new generation of global trade agreements. According to WikiLeaks, it "is the largest component of
the United States' strategic 'trade' treaty triumvirate," which also includes the Trans Pacific Partnership
(TPP) and the TransAtlantic Trade and Investment Pact (TTIP).
TiSA involves more countries than TTIP and TPP combined: The United States and all 28 members
of the European Union, Australia, Canada, Chile, Colombia, Costa Rica, Hong Kong, Iceland, Israel,
Japan, Liechtenstein, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, South Korea,
Switzerland, Taiwan and Turkey.
Together, these 52 nations form the charmingly named "Really Good Friends of Services" group,
which represents almost 70% of all trade in services worldwide. Until its government's recent u-turn
Uruguay was supposed to be the 53rd Good Friend of Services.
TiSA Trailer
TiSA has spent the last two years taking shape behind the hermetically sealed doors of highly
secure locations around the world. According to the agreement's provisional text, the document is
supposed to remain confidential and concealed from public view for at least five years after being
signed. Even the World Trade Organization has been sidelined from negotiations.
But thanks to whistle blowing sites like WikiLeaks, the Associated Whistleblowing Press and Filtrala,
crucial details have seeped to the surface. Here's a brief outline of what is known to date (for
more specifics click
here,
here and
here):
1.TiSA would "lock in" the privatization of services – even in cases where private service
delivery has failed – meaning governments can never return water, energy, health, education or other
services to public hands.
2.TiSA would restrict signatory governments' right to regulate stronger standards in the public's
interest. For example, it will affect environmental regulations, licensing of health facilities and
laboratories, waste disposal centres, power plants, school and university accreditation and broadcast
licenses.
3.TiSA would limit the ability of governments to regulate the financial services industry,
at a time when the global economy is still struggling to recover from a crisis caused primarily by
financial deregulation. More specifically, if signed the trade agreement would:
Restrict the ability of governments to place limits on the trading of derivative contracts
- the largely unregulated weapons of mass financial destruction that helped trigger the 2007-08
Global Financial Crisis.
Bar new financial regulations that do not conform to deregulatory rules. Signatory governments
will essentially agree not to apply new financial policy measures which in any way contradict
the agreement's emphasis on deregulatory measures.
Prohibit national governments from using capital controls to prevent or mitigate financial
crises. The leaked texts prohibit restrictions on financial inflows – used to prevent rapid currency
appreciation, asset bubbles and other macroeconomic problems – and financial outflows, used to
prevent sudden capital flight in times of crisis.
Require acceptance of financial products not yet invented. Despite the pivotal role that new,
complex financial products played in the Financial Crisis, TISA would require governments to allow
all new financial products and services, including ones not yet invented, to be sold within their
territories.
4. TiSA would ban any restrictions on cross-border information flows and localization requirements
for ICT service providers. A provision proposed by US negotiators would rule out any conditions for
the transfer of personal data to third countries that are currently in place in EU data protection
law. In other words, multinational corporations will have carte blanche to pry into just about every
facet of the working and personal lives of the inhabitants of roughly a quarter of the world's 200-or-so
nations.
As I wrote in
LEAKED: Secret Negotiations to Let Big Brother Go Global, if TiSA is signed in its current form
– and we will not know exactly what that form is until at least five years down the line – our personal
data will be freely bought and sold on the open market place without our knowledge; companies and
governments will be able to store it for as long as they desire and use it for just about any purpose.
5. Finally, TiSA, together with its sister treaties TPP and TTIP, would establish a new global
enclosure system, one that seeks to impose on all 52 signatory governments a rigid framework of international
corporate law designed to exclusively protect the interests of corporations, relieving them of financial
risk and social and environmental responsibility. In short, it would hammer the final nail in the
already bedraggled coffin of national sovereignty.
A Dangerous Precedent
Given its small size (population: 3.4 million) and limited geopolitical or geo-economic clout,
Uruguay's withdrawal from TiSA is unlikely to upset the treaty's advancement. The governments of
the major trading nations will continue their talks behind closed doors and away from the prying
eyes of the people they are supposed to represent. The U.S. Congress has already agreed to grant
the Obama administration fast-track approval on trade agreements like TiSA while the European Commission
can be expected to do whatever the corporatocracy demands.
However, as the technology writer Glyn Moody
notes, Uruguay's defection – like the people of Iceland's refusal to assume all the debts of
its rogue banks – possesses a tremendous symbolic importance:
It says that, yes, it is possible to withdraw from global negotiations, and that the apparently
irreversible trade deal ratchet can actually be turned back. It sets an important precedent that
other nations with growing doubts about TISA – or perhaps TPP – can look to and maybe even follow.
Naturally, the representatives of Uruguay's largest corporations would agree to disagree. The
government's move was one of its biggest mistakes of recent years,
according to Gabriel Oddone, an analyst with the financial consultancy firm CPA Ferrere. It was
based on a "superficial discussion of the treaty's implications."
What Oddone conveniently fails to mention is that Uruguay is the only nation on the planet that
has had any kind of public discussion, superficial or not, about TiSA and its potentially game-changing
implications. Perhaps it's time that changed.
So, not to be snarky or anything but when does the invasion of Uruguay begin. Wondering:
don't they want to pay $750.00 per pill for what cost $13.85 the day before? Aren't they interested
in predatory capitalism? What is going on down there?
Jim Haygood, September 23, 2015 at 12:17 pm
Most symbolic is that the eighth round of multilateral trade negotiations under GATT (now WTO)
kicked off in Punta del Este, Uruguay in Sep. 1986.
It went into effect in 1995, and is still known as the Uruguay Round.
susan the other, September 23, 2015 at 1:21 pm
And will international corporations issue their own fiat; pass their own laws; and prosecute
their own genocide? Contrary to their group hallucinations, corporations cannot replace government.
And clearly, somebody forgot to tell them that capitalism, corporatism, cannot survive without
growth. The only growth they will achieve is raiding other corporations. They are more powerless
and vulnerable than they ever want to admit.
hunkerdown, September 23, 2015 at 8:13 pm
And will international corporations issue their own fiat; pass their own laws; and
prosecute their own genocide?
Sure. There's prior art. Company scrip, substance "abuse" policies, and Bhopal (for a bit
different definition of "prosecute").
In the US, corporations largely have replaced government since WWII or so, or at least
pretend to offer the services that a government might provide.
likbez, September 24, 2015 at 10:54 pm
They are more powerless and vulnerable than they ever want to admit.
You are dreaming. Neoliberalism that we have now as a dominant social system is a flavor
of corporatism. If so, it is corporations which now represent the most politically powerful
actors. They literally rule the country. And it is they who select the president, most congressmen
and Senators. Try to ask yourself a question: to what political force Barak "change we can
believe in" Obama serves.
As Sen. Dick Durbin (D-Ill.) aptly noted:
"And the banks - hard to believe in a time when we're facing a banking crisis that
many of the banks created - are still the most powerful lobby on Capitol Hill. And they
frankly own the place"
gordon, September 23, 2015 at 9:03 pm
The TISA has a history. It's really just a continuation of the MAI treaty which the OECD failed
to conclude back in the 1990s.
What I don't get is why all those countries want to sign up to these agreements. I can see
what is in it for the US elites, but how does it help these smaller countries?
likbez, September 24, 2015 at 10:43 pm
Elites of those small countries are now transnational. So in a way they represent the fifth
column of globalization. That explains their position: own profit stands before interests of
the country.
vidimi, September 24, 2015 at 4:19 am
This is such a huge, huge, vital issue. Privatisation of public assets has to rank as one
of the highest crimes at the government level. It is treason, perhaps the only crime for which
i wouldn't object capital punishment.
What's more, we now have some 40 years of data showing that privatisation doesn't work.
surely, we can organise and successfully argue that privatisation has never worked for any country
any time. There needs to be an intellectual assault on privatisation discrediting it forever.
Paul Marshall, chairman of London-based hedge fund Marshall Wace, in the FT:
Central banks have made the rich richer: Labour's new shadow chancellor has got at least one
thing right. ... Quantitative easing ... has bailed out bonus-happy banks and made the rich richer.
...
It is no surprise that the left is angry about this, nor that they are looking for other
versions of QE that do not so directly benefit bankers and the rich. Instead of increasing the
money supply by buying sovereign bonds from banks, central banks could spread the love evenly
by depositing extra money in every person's bank account..., it might have been fairer.
Mr McDonnell and Jeremy Corbyn, the new Labour leader, advocate a second approach: targeting
QE at infrastructure projects. The central bank would buy bonds direct from the Treasury on the
understanding that the funds would be used to improve housing and transport infrastructure. ...
QE had clear wealth effects, which could have been offset by fiscal measures. All political
parties should acknowledge this. So should those of us who want free markets to retain their legitimacy.
The ongoing oligarch theft labeled an "economic recovery" by pundits, politicians and mainstream
media alike, is one of the largest frauds I've witnessed in my life. The reality of the situation
is finally starting to hit home, and the proof is now undeniable.
Families' savings not where they should be: That's one part of the problem. But Mills sees
something else in the recovery that's more disturbing. The number of households tapping alternative
financial services are on the rise, meaning that Americans are turning to non-bank lenders for
credit: payday loans, refund-anticipation loans, pawnshops, and rent-to-own services.
According to the Urban Institute report, the number of households that used alternative
credit products increased 7 percent between 2011 and 2013. And the kind of household seeking alternative
financing is changing, too.
It's not the case that every one of these middle- and upper-class households turned to pawnshops
and payday lenders because they got whomped by an unexpected bill from a mechanic or a dentist.
"People who are in these [non-bank] situations are not using these forms of credit to simply overcome
an emergency, but are using them for basic living experiences," Mills says.
Of course, it's not just "alternative financial services." Increasingly desperate American citizens
are also tapping whatever retirement savings they may have, including taking the 10% tax penalty
for the privilege of doing so. In fact, 30 million Americans have done just that in the past year
alone, in the midst of what is supposed to be a "recovery."
With the effects of the financial crisis still lingering, 30 million Americans in the last
12 months tapped retirement savings to pay for an unexpected expense, new research shows.
This undercuts financial security and underscores the need for every household to maintain an
emergency fund.
Boomers were most likely to take a premature withdrawal as well as incur a
tax
penalty, according to a
survey from Bankrate.com. Some 26% of those ages 50-64 say their financial situation has
deteriorated, and 17% used their 401(k) plan and other retirement savings to pay for an emergency
expense.
Two-thirds of Americans agree that the effects of the financial crisis are still being felt
in the way they live, work, save and spend, according to a
report from Allianz Life Insurance Co. One in five can be called a post-crash skeptic-a person
that experienced at least six different kinds of financial setback during the recession, like
a job loss or loss of home value, and feel their financial future is in peril.
So now we know what has kept meager spending afloat during this pitiful "recovery." A combination
of "alternative loans" and a bleeding of retirement accounts. The transformation of the public
into a horde of broke debt serfs is almost complete.
Don't forget to send your thank you card to you know who:
This week, Eric has an in depth conversation with economist Michael Hudson, author of the new
book
Killing
the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy. Eric and Prof.
Hudson discuss the evolution of finance capital from its humble parasitical beginnings to the comprehensive
global network of economic tapeworms and barnacles that it is today. They examine neoliberal terrorism,
how debt is used as a weapon, and the disastrous effects of the financialization of the real economy.
Hudson outlines the relationship between the parasites and their bloodsucking policies of austerity,
providing insight using the example of Latvia, where he witnessed first hand the smash-and-grab nature
of such prescriptions. Plus, Eric and Michael touch on Obama as Wall Street errand boy, the importance
of left economic organizing, and much much more.
Musical interlude from the exciting new band
GospelbeacH, and intro
and outtro from David Vest.
I was fascinated that Bear Stearns was the first to go
as Bear was the only large company that failed to respond
to the Fed's calls when LTCM almost brough down the house
in 1998.
the greatest control fraud in history, the 2008 seizure of the u.s. government's financial/regulatory
apparatus by wall street's banks and trading houses to recapitalize themselves and avoid prosecution
for their enormous crimes, is tremendously evil. it will never be prosecuted or its errors
corrected until the psychopaths at the head of our society are neutralized.
only 9-11 can do this. it is the crime that is clear-cut, unambiguously wrong, provable,
without a statute of limitations (treason/murder/kidnapping), sufficiently inflammatory (very
important) and really comprehensive in its list of perps, especially after the fact (the editors
of the new york times don't actually have to go to jail; just most people have to think they should).
"If a counterparty liquidates, net exposure becomes gross [emphasis added
by me], and suddenly everyone starts wondering where all those "physical" commodities are."
For those who may not quite grasp this, it means all your "hedging" against falling prices
is null and void and you are left with full-in-the-face long exposure PLUS entities dealing in
the physical commodity can suddenly be looking down a long tunnel of "failure to timely deliver"
on contracts they've signed.
But, then again, 2016 is the last year for a lame duck president... traditionally a very good
year to "clean house" and get the government to bail you out.
(ANTIMEDIA)United Kingdom - Jeremy Corbyn delivered his uncompromising stance on
Western warmongering from the back of a London taxi last week. As the cab raced
through the streets of the capital, the new Labour leader revealed his vision for
an ethical foreign policy in his
17-minute interview with Middle East Eye.
Asked how he would deal with ISIS, the anti-war campaigner was uncompromising.
"ISIS didn't come from nowhere, they've got a lot of money that's come from
somewhere. They have a huge supply of arms that have come from somewhere and they
are, not in total but in part, a creation of western interventions in the region,"
he said.
According to Corbyn, he would deal with the terror group by economically
isolating its members. He says he would attempt to unite other groups in the
region and stressed the importance of supporting autonomy for Kurdish groups. On
the rise of ISIS, he pointed to the vast amount of arms that Britain sells,
particularly to Saudi Arabia, declaring they must have ended up somewhere and are
now being used.
Corbyn was vehemently opposed to the 2013 Parliamentary vote on military
intervention in Syria and remains adamant that bombing the country now would
create more mayhem. He told Middle East Eye it would be very unclear who the
alliances would be with.
On the region in general, he referred to Israel and Palestine as a massive
issue. Unlike his British counterparts, he expressed grave concern at the illegal
Israeli settlements, military occupation of the West Bank, and lack of
reconstruction in Gaza.
Praising the recent agreement with Iran, he said he wished it had included the
issue of human rights, and when asked if he would have invited Egyptian leader
Abdel al-Sisi to the U.K., he was clear:
"No, I would not, because of my concerns over the use of the death penalty
in Egypt, the treatment of people who were part of the former government, and the
continued imprisonment of President Morsi." He went on to clarify that his
statement wasn't passing judgement on different parties, but on the meaning of
democracy.
On Britain's relationship with Saudi Arabia, Corbyn expressed concern on what
he referred to as a "huge number of issues," naming the treatment of women,
the frequent use of the death penalty - including public beheadings - and the
treatment of migrant workers.
At a recent Parliamentary debate, Corbyn raised the question of whether British
arms sales to Saudi Arabia are more important than genuine concerns about human
rights. Most of us already know the answer to this question.
"We need to be a constant irritant on human rights," he said.
Asked how Britain can make itself safer, both at home and abroad, Corbyn was
frank:
"We make ourselves safer by not being part of U.S. foreign policy at every
single turn.Andwe become a force for human rights rather than
military intervention."
Asked why he has such good judgement compared with other MPs, Corbyn admitted
that he reads a lot, travels a lot, and learns from people wherever he goes. "The issue is the ability to listen to people,"
he said.
Describing what an ethical foreign policy under a Corbyn-lead British
government would look like, he said, "My basis would be that I want to see the
protection and preservation of human rights around the world, deal with issues of
global hunger and global inequality, and the environmental disaster that is facing
this planet."
He added, "I think that should be the basis rather than what it is at the
moment which seems to be to see what the White House wants, and how we can deliver
it for them."
"... 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.
"... If aggressive US policy in the Middle East – for
example in Iraq – results in the creation of terrorist organizations like al-Qaeda in Iraq, is pointing
out the unintended consequences of bad policy blaming America? Is it "blaming America" to point out
that blowback – like we saw on 9/11 – can be the result of unwise US foreign policy actions like
stationing US troops in Saudi Arabia? ..."
"... the current refugee crisis is largely caused by bad
US foreign policy actions. The US government decides on regime change for a particular country –
in this case, Syria – destabilizes the government, causes social chaos, and destroys the economy,
and we are supposed to be surprised that so many people are desperate to leave? Is pointing this
out blaming America, or is it blaming that part of the US government that makes such foolish policies? ..."
"... they never explain
why the troops were removed from Iraq: the US demanded complete immunity for troops and contractors
and the Iraqi government refused. ..."
"... As soon as the US stopped
paying the Sunnis not to attack the Iraqi government, they started attacking the Iraqi government.
Why? Because the US attack on Iraq led to a government that was closely allied to Iran and the Sunnis
could not live with that! ..."
"... The same is true with US regime change policy toward Syria. How many Syrians
were streaming out of Syria before US support for Islamist rebels there made the country unlivable?
..."
"... I don't blame America. I am America, you are America. I don't blame you. I blame bad policy.
I blame the interventionists. I blame the neoconservatives who preach this stuff, who believe
in it like a religion - that they have to promote American goodness even if you have to bomb and
kill people. ..."
"... In short, I don't blame America; I blame neocons. ..."
Is the current refugee crisis gripping the European Union "all America's fault"? That is how my critique
of US foreign policy was characterized in a recent interview on the Fox Business Channel. I do not
blame the host for making this claim, but I think it is important to clarify the point.
It has
become common to discount any criticism of US foreign policy as "blaming America first." It is a
convenient way of avoiding a real discussion. If aggressive US policy in the Middle East – for
example in Iraq – results in the creation of terrorist organizations like al-Qaeda in Iraq, is pointing
out the unintended consequences of bad policy blaming America? Is it "blaming America" to point out
that blowback – like we saw on 9/11 – can be the result of unwise US foreign policy actions like
stationing US troops in Saudi Arabia?
In the Fox interview I pointed out that the current refugee crisis is largely caused by bad
US foreign policy actions. The US government decides on regime change for a particular country –
in this case, Syria – destabilizes the government, causes social chaos, and destroys the economy,
and we are supposed to be surprised that so many people are desperate to leave? Is pointing this
out blaming America, or is it blaming that part of the US government that makes such foolish policies?
Accusing those who criticize US foreign policy of "blaming America" is pretty selective, however.
Such accusations are never leveled at those who criticize a US pullback. For example, most neocons
argue that the current crisis in Iraq is all Obama's fault for pulling US troops out of the country.
Are they "blaming America first" for the mess? No one ever says that. Just like they never explain
why the troops were removed from Iraq: the US demanded complete immunity for troops and contractors
and the Iraqi government refused.
Iraq was not a stable country when the US withdrew its troops anyway. As soon as the US stopped
paying the Sunnis not to attack the Iraqi government, they started attacking the Iraqi government.
Why? Because the US attack on Iraq led to a government that was closely allied to Iran and the Sunnis
could not live with that! It was not the US withdrawal from Iraq that created the current instability
but the invasion. The same is true with US regime change policy toward Syria. How many Syrians
were streaming out of Syria before US support for Islamist rebels there made the country unlivable?
Is pointing out this consequence of bad US policy also blaming America first?
Last year I was asked by another Fox program whether I was not "blaming America" when I criticized
the increasingly confrontational US stand toward Russia. Here's how I put it then:
I don't blame America. I am America, you are America. I don't blame you. I blame bad policy.
I blame the interventionists. I blame the neoconservatives who preach this stuff, who believe
in it like a religion - that they have to promote American goodness even if you have to bomb and
kill people.
"... The German chancellor Merkel tried to gain some points with her neoliberal friends and with
big companies and donors by suddenly opening the border for "refugees" of all kinds, even for those
who come from safe countries. These migrants would help to further depress German wages which, after
years of zero growth, slowly started to increase again. ..."
"... While Merkel was lauded by
all
kinds of Anglo-american neoliberal outlets, from the
Economist over FT and
Newsweek to the
Washington Post the backlash in Germany was brewing. ..."
"... Despite a major campaign of pro-migrant propaganda in Merkel friendly media the German population
in general is furious with her stunt. ..."
"... So the brave new world is coming to you also? The brave new world of depressed wages and benefits
for the working classes. ..."
"... Poor Mr. Schäuble must give "earth and water" to the German oligarchs. He must organize a new
Treuhand for the whole Europe to sell-off public property, he must completely dissolve labor rights,
bring down pensions and wages, destroy the social state. ..."
"... These refugees mean workers and jobs. Or how do you think their houses will be built,
or where will the doctors come from to treat them and the teachers to teach them, the shops that will
feed them. ..."
"... Would be the planed PR con of ' aren't we nice to the most needy refugees', that being used
as a duel use purpose with that appeal to her real constituency in the elite and corporates with refugees
as wage slaves depressing wages. ..."
"... And when times are bad enough. the far-right actually gains and keeps power till they run a
bloody muck. Nazis and Fascism is what these freaks are risking again. ..."
"... Of course, this is all made possible because the US isn't a country anymore, it is now a corporation.
The same is true for the EU. The EU isn't a union of nations anymore, it is now a collection of corporations.
..."
"... Yes, The brave new CORPORATE world is coming to us all. Humanity be damned, profits uber alles.
Workers of the globe, lube up, and bend over. ..."
"... This migrants crisis should be seen as a fantastic opportunity to all corporatists and neolibs.
Companies need cheap labor. This is an open bar to them! ..."
"... This is really another unmasking of the EU. It is run by Germany. ..."
"... I think German industry is angry at the Russia sanctions and has been pressuring for 'new workers',
in the sense of being able to set conditions, choose candidates from a larger pool, and almost certainly,
pay less, have more control over workers. ..."
"... The makers of Western policy and the media are one and the same. Mass media now so consolidated,
it's a corporate/state entity. ..."
"... The origin of totalitarianism : Part two, Imperialism : Chapter 9, Decline of the nation-state;
end of the rights of man, p. 269 ..."
"... Nazi Conspiracy and Aggression ..."
"... I have real sympathy for the Syrian refugees coming from the concentration camps in Turkey.
These are mostly younger, middle-class, educated Syrians with small children who either lost their homes
or couldn't tolerate the risk of violence to them and their families. ..."
"... it's better lavrov speaks openly on what everyone with half a brain is thinking here..
that isis is a mercenary group paid to be where it is ought to come as no surprise.. that the usa hopes
to use them to overthrow assad - they have openly stated this. ..."
"... When refugees still managed to get into Europe in large numbers heading for Germany where they
had relatives and knew that there were jobs there was not much German politicians could legally do except
stop Schengen that makes it easy to go anywhere once you have crossed the European borders - which is
happening now getting refugees stranded in the fields. ..."
"... with the influx of probably millions of cheap labour, the big cats may bring back the industries
from china , yes now the western Europe may be able to compete with them. ..."
The German chancellor Merkel tried to gain some points with her neoliberal friends and with
big companies and donors by suddenly opening the border for "refugees" of all kinds, even for those
who come from safe countries. These migrants would help to further depress German wages which, after
years of zero growth, slowly started to increase again.
But neither she nor her allies ever prepared the German public for a sudden influx of several
hundred thousand foreigners. Changes in immigration policy were
sneaked in without any public discussion. Suddenly 800,000 foreign people are expected to arrive
this years and many more over the next years. People who neither speak German nor readily fit into
the national cultural and social-economic environment. Most of these do not come out of immediate
dangers but from safe countries.
There will be over time a huge backlash against European politicians who, like
Merkel, practically invite more migrants. Wages are stagnant or falling in Europe and unemployment
is still much too high. The last thing people in Europe want right now is more competition in
the labor market. Parties on the extreme right will profit from this while the center right will
lose support.
Despite a major campaign of pro-migrant propaganda in Merkel friendly media the German population
in general is furious with her stunt. The backlash comes
from all sides but
especially from her own conservative party. Additionally many European leaders point out that
Merkel, who insistent on sticking to the letter of law in the case of Greece, is now openly breaking
European laws and agreements.
... ... ...
ben | Sep 13, 2015 12:39:05 PM | 3
So the brave new world is coming to you also? The brave new world of depressed wages and
benefits for the working classes. Corporate Germany is drooling at the prospect of that happening.
Good luck b.
nmb | Sep 13, 2015 12:57:08 PM | 4
... poor Mr. Schäuble, who recently surpassed Mrs. Merkel in popularity in Germany, is under
extreme pressure, mostly by the German capital, to "restructure" the eurozone through the Greek
experiment. The German oligarchy is now in a cruel competition mostly with the US companies to
hyper-automate production. It sends continuous signals that human labor will be unnecessary for
its big companies and presses the German leadership to finish the experiment in Greece.
Poor Mr. Schäuble must give "earth and water" to the German oligarchs. He must organize
a new Treuhand for the whole Europe to sell-off public property, he must completely dissolve labor
rights, bring down pensions and wages, destroy the social state. He must end quickly with
Greece and pass all the "Greek achievements" to the whole eurozone.
I live in Germany in a village near the Austria border. Our village is broke: too much debt.
The people in Germany are taxed to death with over a 50 percent tax rate. In addition, the Euro
took a lot of buying power away from us. And Germans are fleeing many areas to get away from the
Ghettos of migrants that have come before.
The propaganda machine in running 24/7 about how great these migrants are for Germany. Unfortunately
in this case, the propaganda is not working. For example, my son's school teacher tried to set
an example by being nice to a local black migrant by saying a few kind words only to be told –
F*ck you lady. In any case, if you have eyes you can see migrants are a burden.
It is a fact that Migrants get everything for free. They are not allowed to work for the first
year and are given free health care, dental, accommodations, etc. In addition, the police do not
like to bother them, so unless it is really bad, they just get away with it.
So, how do you expect to pay for all of this? Where is the money going to come from? And did
I mention that no one in our village supports the idea of have more migrants. In my opinion, this
is a case of going too far. The politicians have now lost the population and they are back-tracking.
b. you are an economic analphabet. These refugees mean workers and jobs. Or
how do you think their houses will be built, or where will the doctors come from to treat them
and the teachers to teach them, the shops that will feed them. And how do you think German
industry will survive with a shrinking aging work force, or old age pensioners homes and hospitals
keep functioning.
It happened before. Germany had some 2.6 million "guest workers" in the 1950's and 60's. Most
of them aren't counted as immigration nowadays as they have become European - Greek, Spanish,
Portuguese and Italian. But recruitment was done in Turkey and North Africa, too.
RE: Peter B. | Sep 13, 2015 4:12:54 PM | 11
You have to be very rich to pay 50 per cent tax. I cannot say I sympathize. German countryside
is quite empty, lots of room for refugees. They don't seem to want to go there though but to the
cities. Like Germans, really.
Bavaria has experience with refugees since World War II. To quote a Bavarian from one of the
- formerly incestuous - valleys: We did not like them but they were good for us.
But yes, it is beginning to feel like the end of Shengen and the end of Europe as we knew it.
And yes, stupid German politicians seem to be surprised by the global effect of twitter and facebook.
I thought the back up plan by Merkel and her despicable likes like mentioned by b and above;
Would be the planed PR con of ' aren't we nice to the most needy refugees', that being
used as a duel use purpose with that appeal to her real constituency in the elite and corporates
with refugees as wage slaves depressing wages. Then with the final back up plan would be
targeting those refugees she invited in - for hate speech against, demonisation and scape-goating
those innocent refugees, for economic problems caused by her and the right-wingers in their economic
class war.
like b mentioned; that runs the risk of the far-right racists gaining more popularity and power.
But haven't we seen that before. Political centrists planning to scapegoat innocence, but then
being out hate-mongered by the far-right.
And when times are bad enough. the far-right actually gains and keeps power till they run
a bloody muck. Nazis and Fascism is what these freaks are risking again. Or does Merkel think
she will fit in nicely with the possible future for Germany ?
The migrant crisis would be worrisome if it did not benefit corporate elites in the Western
countries. It is exactly the same reason as why the same countries are outsourcing all work to
the third-world countries: short term gain for a long term pain. The pain from the migrant crisis
is felt by ordinary people and the state in the long term.
This is why racism is rising in Western countries – those who lose jobs or have to compete
for a home with a 12-member immigrant family hate immigrants the most. The elites, corporate or
otherwise, are quite comfortable with immigration, they never go to the economically challenged
and immigrant areas anyway, such crime does not reach them. Also, most Western countries have
many a lawyer working on behalf of the illegal immigrants and against the society because it is
so lucrative.
The flip side is, of course, that it is often the policies of the Western governments and pillaging
by Western companies which causes disasters in the places where illegal immigrants come from.
How high the anti-immigration Wall needs to be when you push a country such as Libya or Syria
into a 30-year civil war?
Of course, this is all made possible because the US isn't a country anymore, it is now
a corporation. The same is true for the EU. The EU isn't a union of nations anymore, it is now
a collection of corporations.
ben | Sep 13, 2015 8:10:01 PM | 21
Cynthia @ 17: "Of course, this is all made possible because the US isn't a country anymore,
it is now a corporation. The same is true for the EU. The EU isn't a union of nations anymore,
it is now a collection of corporations."
Yes, The brave new CORPORATE world is coming to us all. Humanity be damned, profits uber
alles. Workers of the globe, lube up, and bend over.
This migrants crisis should be seen as a fantastic opportunity to all corporatists and
neolibs. Companies need cheap labor. This is an open bar to them! What a great way to force
Europe into the New World Order? Putting people in front of the fait accompli has always been
the best recipe to success. Who cares about culture and civilization? We are consumers before
anything, aren't we?
This is really another unmasking of the EU. It is run by Germany. Merkel on her own
bat decides the Dublin accords don't apply. Just like that! Then a week or more later Juncker
stands in front of the EU Parliament and makes some proposal about quotas or what not and nobody
says anything (except I suppose Farage and those who don't want the migrants.) Schengen is by-passed
or overridden or transformed on her say so. (The part that seems to be holding is that non-signatories
can't be forced to participate.) I strongly disaproved of both those accords (and the whole mismanagement
of the migrant issue from day one) but just having Merkel run amok like that is utterly scandalous,
and very disquieting. The whole media-hype (pro and soon contra) with the usual doctored pictures
and crowd scenes etc. was totally disgusting. This is not going to end well. Incompetence, extend
and pretend, shove the problem away leading to a 'crisis' which is handled with appeals to emotion
and so on…bad news.
I don't believe this was some US or Anglo-Zionist or whatever plot to harm Europe. (Unintended
/ uncared about consequences perhaps.) This is a purely internal EU affair. I think German
industry is angry at the Russia sanctions and has been pressuring for 'new workers', in the sense
of being able to set conditions, choose candidates from a larger pool, and almost certainly, pay
less, have more control over workers. That may happen in part. But that is just one angle.
(see tom above and somebody as well.)
I hate to even go here but there's a lot of public money to be made by contractors in this
refugee crisis. With the media blitz, countries, corps and individuals will be pouring money into
refugee funds. Look at these two articles w/ US coming onto refugee scene just as Europe shuts
the gates:
MoonofA calls Merkel's actions a "stunt" above. I sadly agree. In the headlines here in the
US, I noticed the alliteration "Generous Germany" in more than a handful of articles. Google confirms
it has been used thousands of times. It conveniently counters the immense damage to Germany and
Merkel's image that occurred after they fricasseed Greece on the world stage which while it may
have made some northern Europeans happy, the rest of the world felt a very different emotion,
despite the propaganda.
The migrant crisis is part of the amateurism of the international community in collaboration
with a scoop and drama oriented media.
The migrants move out of Turkey was long predictable. If anyone had read the Turkish law on
'refugees', they would know that Turkey does not recognize people coming from a middle eastern
country as a "refugee". Therefore these people DO NOT get a UNHCR refugee card. Countries that
welcome refugees request that card. Therefore people stuck in Turkey have no other way than to
move to a country where they will be recognized as a valid 'refugee'.
So it was obvious that after realizing the war in Syria was endless, masses of wannabe refugees
rushed out of Turkey to Europe.
It was obvious right from the start that Syria was no Libya, no Tunisia and no Egypt. Yet the
amateur Western politicians rushed in prediction and the media went wild with youtubes, analysis,
dramas..
4 years later, both the western politicians and the media turned out to be wrong. Yet, they
are so arrogant that they would never admit and continue and obsolete discourse to perpetuate
their stupid predictions.
The media have become the drivers of the Western policy. They are not elected, have no legitimacy,
no accountability and yet they leade for the good and the bad.
"It may appear to be the interest of the rulers, and the rich of a state, to force population
[ed. note: force = rapidly increase, as via an excessive rate of immigration], and thereby lower
the price of labour, and consequently the expense of fleets and armies, and the cost of manufactures
for foreign sale; but every attempt of the kind should be carefully watched and strenuously resisted
by the friends of the poor, particularly when it comes under the deceitful guise of benevolence…"
T.R. Malthus, "An Essay on the Principle of Population", 1798
... There are forces that want to estrange people from their homeland, and to dissolve national
identities altogether. Obama and other criminals are trying to make Syrians a people without
a nation. A people without a nation suffer the worst humiliation. Look at what happened to
the Palestinian people. One day, it could happen to you. ...
Hannah Arendt :
The origin of totalitarianism : Part two, Imperialism : Chapter 9, Decline of the nation-state;
end of the rights of man, p. 269
With the emergence of the minorities in Eastern and Southern Europe and with the stateless
people driven into Central and Western Europe, a completely new element of disintegration was
introduced into postwar Europe. Denationalization became a powerful weapon of totalitarian
politics, and the constitutional inability of European nation-states to guarantee human rights
to those who had lost nationally guaranteed rights, made it possible for the persecuting governments
to impose their standard of values even upon their opponents. Those whom the persecutor had
singled out as scum of the earth - Jews, Trotskyites, etc. - actually were received as scum
of the earth everywhere; those whom persecution had called undesirable became the indésirables
of Europe. The official SS newspaper, the Schwarze Korps, stated explicitly in 1938 that if
the world was not yet convinced that the Jews were the scum of the earth, it soon would be
when unidentifiable beggars, without nationality, without money, and without passports crossed
their frontiers.[2] And it is true that this kind of factual propaganda worked better than
Goebbels' rhetoric, not only because it established the Jews as scum of the earth, but also
because the incredible plight of an ever-growing group of innocent people was like a practical
demonstration of the totalitarian movements' cynical claims that no such thing as inalienable
human rights existed and that the affirmations of the democracies to the contrary were mere
prejudice, hypocrisy, and cowardice in the face of the cruel majesty of a new world. The very
phrase "human rights" became for all concerned - victims, persecutors, and onlookers alike
- the evidence of hopeless idealism or fumbling feeble-minded hypocrisy.
[2] The early persecution
of German Jews by the Nazis must be considered as an attempt to spread antisemitism among
"those peoples who are friendlily disposed to Jews, above all the Western democracies"
rather than as an effort to get rid of the Jews. A circular letter from the Ministry of Foreign
Affairs to all German authorities abroad shortly after the November pogroms of 1938, stated:
"The emigration movement of only about 100,000 Jews has already sufficed to awaken the interest
of many countries in the Jewish danger ... Germany is very interested in maintaining the
dispersal of Jewry ... the influx of Jews in all parts of the world invokes the opposition
of the native population and thereby forms the best propaganda for the German Jewish policy
... The poorer and therefore more burdensome the immigrating Jew is to the country absorbing
him, the stronger the country will react."
See Nazi Conspiracy and Aggression, Washington, 1946, published by the U. S. Government,
VI, 87 ff.
Plus ça change, plus c'est la même chose ... This time it's Obama's handlers copying the NAZIs,
last time it was the NAZIs copying the US' genocide of North American indigenes.
I have real sympathy for the Syrian refugees coming from the concentration camps in Turkey.
These are mostly younger, middle-class, educated Syrians with small children who either lost their
homes or couldn't tolerate the risk of violence to them and their families.
That image stands in stark contrast to some of the odd footage coming out of Hungary about
refugees refusing food and water, trashing camps and threatening Hungarian aid workers. These
were obviously refugees and presumably muslim, but didn't seem like the Syrians leaving Turkish
camps. Who were these people?
Fort Russ just published an article entitled,
Afghan-Kosovo Mafia Migrant Smuggling Ring and More Refugee Chaos in Macedonia. A highly recommended
read for anyone like me confused about the supposed 'Syrian Refugee' problem. It's much more complex
than it appears and explains Europeans reports of the general demeanor of some of the refugee
groups. This will not end well for anybody.
It seems that the refugee 'crisis' in the EU is playing right into Putin's hands. (It is not
a US plot!). The Putin coalition is gingerly taking shape. On Syria.
Germany is ready to ally with Putin. Russia Insider.
Hollande has changed his mind. (From a newspaper yest.) Now he is sugggesting that he won't
bomb there will only be reconnaissance flights. Or some such. After being seemingly keen to bomb
Syria to smithereens.
Cameron announced before Corbyn was elected that he would then (when it happened) be cautious
or 'withholding' (I forget the precise words and posted the link before) about bombing Syria (Corbyn
is against.) But see here, RT:
In fact Cameron's communicated position is not clear. It is imprecise.
Lavrov has come right out and said that the US knows ISIS positions but refuses to bomb. Which
is extremely pointed of him. For a man who carefully measures his words. Fort Russ.
Noirette @ # 67 Yes I was a bit Swift intake of breath when I read that on Fort
Russ. No, it's definitely not like him to be so, well, blunt is it? With this, we also have the
arguments in the Iraqi Parliament about US & UK planes dropping arms & supplies to ISIS as in
landing and unloading,(Totally separate from the parachute drops to the Kurds or Shite Militias
or Iraqi Army that seem to end up in ISIS hands most of the time), Israel treating wounded militants
and being al Qaeda's Air Force, with all this there should be enough now for a big exposee of
it in the MSM. . . . . . . . and waiting . . . . . . . still waiting ( ͝° ͜ʖ͡°)
@74 noirette.. as always, thanks for your input and reasoned thoughts on these topics.. thanks
for the data @66 as well..
it's better lavrov speaks openly on what everyone with half a brain is thinking here..
that isis is a mercenary group paid to be where it is ought to come as no surprise.. that the
usa hopes to use them to overthrow assad - they have openly stated this.. the only thing
the usa hasn't done is said they're contributing to the funding of isis, or turning a blind eye
when there cohorts saudi arabia and etc. are... it's just another mercenary group called isis
getting approval to help along the western agenda here - much like blackwater, but they could
state that openly with iraq - not so here..
if anyone thinks isis are the one's the usa or their western buddies are going after here -
if you believe that - make as well make a constant diet of wow posts then...
It has got nothing to do with German guilt. Nowadays you can't be seen letting children drown
in the Mediterranean or getting starved in Hungary without people disliking you.
So European politicians first tried to throw up their hands with tears in their eyes whilst making
sure the ships in the Mediterranean are military and not humanitarian.
When refugees still managed to get into Europe in large numbers heading for Germany where
they had relatives and knew that there were jobs there was not much German politicians could legally
do except stop Schengen that makes it easy to go anywhere once you have crossed the European borders
- which is happening now getting refugees stranded in the fields. They cannot legally send
the refugees back to Syria, Iraq or Afghanistan. Neither can they send refugees back to Turkey.
They might be able to do that after a lengthy legal process, but not now. In this situation European
politicians have no choice - they cannot revert to racism as their populations are pretty mixed
already, it would tear the whole European fabric apart, and, in the case of export driven Germany,
it would destroy their global brand.
The truth is that Turkey has a land bridge to Europe and there is a perfectly safe ferry from
Turkey to the Greek islands which is closed for refugees. The other truth is that Germany has
been pressuring countries on the periphery to close their borders and keep the refugees who still
made it. There is no reason for countries on the periphery to agree to something as disadvantageous
to them as the Dublin
regulation but that their negotiation position was very week.
It could be that Germany overdid the pressure and forgot about the reciprocity. As I understand
the situation now German politicians threaten more or less openly to "stop paying" for Europe
which is hilarious as the "paying" is based on an export surplus other European countries pay
for with a deficit.
duth | Sep 18, 2015 2:14:53 PM | 89
yes indeed very soon, with the influx of probably millions of cheap labour, the big
cats may bring back the industries from china , yes now the western Europe may be able to compete
with them. I think this must all be part of their big plan and i think it wont work though
due to the people demanding higher standards of living.
"... A troika of the military, Wall Street and spooks run the land of the free. ..."
"... 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. ..."
"... it has always been about saving the banks at the expense of the people. the people are the
real lenders of last resort only the money is usually taken and not to be paid back ..."
"... So it seems the Fed finds itself in a self-imposed conundrum here: make a policy error
and raise into a slowdown, don't raise and openly recognize growth is slowing. Which brings me
back to my previous point: since 2008, no new market highs have been achieved without central
bank stimulus. ..."
"... "The Federal Reserve is not currently forecasting a recession." – Ben Bernanke (January 2008)
..."
That is nothing new. That has been the official policy for a few decades.
A troika of the military, Wall Street and spooks run the land of the free.
Who cares about Main Street except pandering politicians before elections?
Who rules America?
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.
This guy is fucking clueless. Anybody who thinks higher rates will help main street is delusional.
I'm sure that higher rates will help the Fed meet its 2% inflation target. Right. I think there
was a Fed Chairman who proved what higher rates do to inflation and economic activity. Yes, I
believe his name was Paul Volcker.
As for the 5.1% UE rate. Anybody who believes that is the real UE is clueless and has never even
heard of the LFPR. We have an LFPR that was last seen in the 1970s but we are supposed to believe
clowns like St. Cyr when he says the UE is really 5.1%
Yup, higher rates will have the average consumer stampeding through bank doors to borrow money
to buy homes, cars, appliances, everythng they couldn't afford to buy with rates at zero. Yeah,
right.
besnook
it has always been about saving the banks at the expense of the people. the people are the
real lenders of last resort only the money is usually taken and not to be paid back.
austerity economics is a great euphemism for depression.
Try making up for a past mistake and make another? That's playing from behind, if you
will, and it's not out of the question if you know the Fed's history:
Not a single post-war recession has been predicted by the Fed a year in advance,
according to former U.S. Treasury Secretary Lawrence Summers; and
Neither of the last three recessions were recognized until they were already under
way.
Incompetent or ulterior motives for policy?
Regardless, here we are with expectations ramped up for a rate hike, as the rest of the world
is easing.
What's notable for investors is that since the 2008 crash, we have not been able to
achieve new market highs without central bank stimulus. Full stop.
But it's only a quarter point…
According to a study released by McKinsey Global Institute in February of this year,
global debt has increased by $57 trillion USD since 2008. With such an enormous amount liquidity
in the system (M1 money supply near lifetime highs) financial markets are increasingly becoming
nothing more than a currency game; and the currency game is a relative one. I print, you print,
they print, but who's printing more and where is capital flowing in and out of? Within this context,
a quarter-point rate hike would be much more than simply symbolic.
As we have seen since late 2012, the rise in the U.S. dollar has had major implications
on global markets, whether it be currencies, commodities or interest rates. A rate hike would
equate to further USD strength and will accelerate the deflationary spiral we have witnessed over
the past few years. Raising rates into a slowdown could also place the U.S. firmly on a path to
recession in 2016.
Conversely, no rate increase does not meet the expectations set by the Fed and will
re-inflate commodities in the immediate term. Arguably, it pulls forward the possibility of QE4
as well.
So it seems the Fed finds itself in a self-imposed conundrum here: make a policy error
and raise into a slowdown, don't raise and openly recognize growth is slowing. Which brings me
back to my previous point: since 2008, no new market highs have been achieved without central
bank stimulus.
As always, government remains the No. 1 risk to financial markets, and I will change
my views as the facts change.
"The Federal Reserve is not currently forecasting a recession." – Ben Bernanke (January 2008)
"...Of course I know that the United States of America is not Turkey. But there are lessons to
be learned from its example of how a democracy can be subverted by particular interests hiding behind
the mask of patriotism."
It has frequently been alleged that the modern Turkish Republic operates on two levels. It has a
parliamentary democracy complete with a constitution and regular elections, but there also
exists a secret government that has been referred to as the
"deep state," in Turkish "Derin Devlet."
The concept of "deep state" has recently
become fashionable to a certain
extent, particularly to explain the persistence of traditional political alignments when confronted
by the recent revolutions in parts of the Middle East and Eastern Europe. For those who
believe in the existence of the deep state, there are a number of institutional as well as extralegal
relationships that might suggest its presence.
Some believe that this deep state arose out of a secret NATO operation called "Gladio,"
which created an infrastructure for so-called "stay behind operations" if Western Europe were to
be overrun by the Soviet Union and its allies. There is a certain logic to that assumption,
as a deep state has to be organized around a center of official and publicly accepted power, which
means it normally includes senior officials of the police and intelligence services as well as the
military. For the police and intelligence agencies, the propensity to operate in secret is a sine
qua non for the deep state, as it provides cover for the maintenance of relationships that under
other circumstances would be considered suspect or even illegal.
In Turkey, the notion that there has to be an outside force restraining dissent from political
norms was, until recently, even given a legal fig leaf through the
Constitution of
1982, which granted to the military's National Security Council authority to intervene in developing
political situations to "protect" the state. There have, in fact, been four military coups
in Turkey. But deep state goes far beyond those overt interventions. It has been claimed that deep
state activities in Turkey are frequently conducted through connivance with politicians who provide
cover for the activity, with corporate interests and with criminal groups who can operate across
borders and help in the mundane tasks of political corruption, including drug trafficking and money
laundering.
A number of senior Turkish politicians have spoken openly of the existence of the deep
state. Prime Minister Bulent Ecevit tried to learn more about the organization and, for
his pains, endured an assassination attempt in 1977. Tansu Ciller
eulogized "those who died for the state and
those who killed for the state," referring to the assassinations of communists and Kurds. There have
been several significant exposures of Turkish deep state activities, most notably an automobile accident
in 1996 in Susurluk that killed the Deputy Chief of the Istanbul Police and the leader of the
Grey Wolves extreme right
wing nationalist group. A member of parliament was also in the car and a fake passport was discovered,
tying together a criminal group that had operated death squads with a senior security official and
an elected member of the legislature. A subsequent investigation determined that the police had been
using the criminals to support their operations against leftist groups and other dissidents. Deep
state operatives have also been linked to assassinations of a judge, Kurds, leftists, potential state
witnesses, and an Armenian journalist. They have also bombed a Kurdish bookstore and the offices
of a leading newspaper.
As all governments-sometimes for good reasons-engage in concealment of their more questionable
activities, or even resort to out and out deception, one must ask how the deep state differs.
While an elected government might sometimes engage in activity that is legally questionable,
there is normally some plausible pretext employed to cover up or explain the act.
But for players in the deep state, there is no accountability and no legal limit. Everything
is based on self-interest, justified through an assertion of patriotism and the national interest.
In Turkey, there is a belief amongst senior officials who consider themselves to be parts of the
status in statu that they are guardians of the constitution and the true interests of the nation.
In their own minds, they are thereby not bound by the normal rules. Engagement in criminal activity
is fine as long as it is done to protect the Turkish people and to covertly address errors made by
the citizenry, which can easily be led astray by political fads and charismatic leaders. When things
go too far in a certain direction, the deep state steps in to correct course.
And deep state players are to be rewarded for their patriotism. They
benefit materially from the criminal activity that they engage in, including protecting
Turkey's role as a conduit for drugs heading to Europe from Central Asia, but more recently involving
the movement of weapons and people to and from Syria. This has meant collaborating with groups
like ISIS, enabling
militants to ignore borders and sell their stolen archeological artifacts while also negotiating
deals for the oil from the fields in the areas that they occupy. All the transactions include a large
cut for the deep state.
If all this sounds familiar to an American reader, it should, and given some local idiosyncrasies,
it invites the question whether the United States of America has its own deep state.
First of all, one should note that for the deep state to be effective, it must be intimately
associated with the development or pre-existence of a national security state. There must
also be a perception that the nation is in peril, justifying extraordinary measures undertaken by
brave patriots to preserve life and property of the citizenry. Those measures are generically conservative
in nature, intended to protect the status quo with the implication that change is dangerous.
Those requirements certainly prevail in post 9/11 America, and also feed the other essential component
of the deep state: that the intervening should work secretly or at least under the radar. Consider
for a moment how Washington operates. There is gridlock in Congress and the legislature opposes
nearly everything that the White House supports. Nevertheless, certain things happen seemingly without
any discussion: Banks are bailed out and corporate interests are protected by law. Huge
multi-year defense contracts are approved. Citizens are assassinated by drones, the public is routinely
surveilled, people are imprisoned without be charged, military action against "rogue" regimes is
authorized, and whistleblowers are punished with prison. The war crimes committed by U.S. troops
and contractors on far-flung battlefields, as well as torture and rendition, are rarely investigated
and punishment of any kind is rare. America, the warlike predatory capitalist, might be considered
a virtual definition of deep state.
One critic describes
deep state as driven by the "Washington Consensus," a subset of the "American exceptionalism" meme.
It is plausible to consider it a post-World War II creation, the end result of the "military industrial
complex" that Dwight Eisenhower warned about, but some believe its infrastructure was actually put
in place through the passage of the Federal Reserve Act prior to the First World War. Several years
after signing the bill, Woodrow Wilson reportedly
lamented,
"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."
In truth America's deep state is, not unlike Turkey's, a hybrid creature that operates
along a New York to Washington axis. Where the Turks engage in criminal activity to fund
themselves, the Washington elite instead turns to banksters, lobbyists, and defense contractors,
operating much more in the open and, ostensibly, legally. U.S.-style deep state includes all the
obvious parties, both public and private, who benefit from the status quo: including key players
in the police and intelligence agencies, the military, the treasury and justice departments, and
the judiciary. It is structured to materially reward those who play along with the charade, and the
glue to accomplish that ultimately comes from Wall Street. "Financial services" might well be considered
the epicenter of the entire process. Even though government is needed to implement desired policies,
the banksters comprise the truly essential element, capable of providing genuine rewards for compliance.
As corporate interests increasingly own the media, little dissent comes from the Fourth Estate as
the process plays out, while many of the proliferating Washington think tanks that provide deep state
"intellectual" credibility are similarly funded by defense contractors.
The cross fertilization that is essential to making the system work takes place through
the famous revolving door whereby senior government officials enter the private sector at a high
level. In some cases the door revolves a number of times, with officials leaving government
before returning to an even more elevated position. Along the way, those select individuals are protected,
promoted, and groomed for bigger things. And bigger things do occur that justify the considerable
costs, to include 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.
America's deep state is completely corrupt: it exists to sell out the public interest,
and includes both major political parties as well as government officials. Politicians like
the Clintons who leave the White House "broke" and accumulate $100 million in a few years exemplify
how it rewards. A bloated Pentagon churns out hundreds of unneeded flag officers who receive munificent
pensions and benefits for the rest of their lives. And no one is punished, ever. Disgraced former
general and CIA Director David Petraeus is now a partner at the KKR private equity firm, even though
he knows nothing about financial services. More recently, former Acting CIA Director Michael Morell
has become a Senior Counselor at Beacon Global Strategies. Both are being rewarded for their loyalty
to the system and for providing current access to their replacements in government.
What makes the deep state so successful? It wins no matter who is in power, by
creating bipartisan-supported money pits within the system. Monetizing the completely unnecessary
and hideously expensive global war on terror benefits the senior government officials, beltway industries,
and financial services that feed off it. Because it is essential to keep the money flowing, the deep
state persists in promoting policies that make no sense, to include the unwinnable wars currently
enjoying marquee status in Iraq/Syria and Afghanistan. The deep state knows that a fearful public
will buy its product and does not even have to make much of an effort to sell it.
Of course I know that the United States of America is not Turkey. But there are
lessons to be learned from its example of how a democracy can be subverted by particular interests
hiding behind the mask of patriotism. Ordinary Americans frequently ask why politicians and
government officials appear to be so obtuse, rarely recognizing what is actually occurring in the
country. That is partly due to the fact that the political class lives in a bubble of its own creation,
but it might also be because many of America's leaders actually accept that there is an unelected,
unappointed, and unaccountable presence within the system that actually manages what is taking place
behind the scenes. That would be the American deep state.
rehypothecator
"It is difficult to get a man to understand something, when his salary depends on his not understanding
it." - Upton Sinclair
Martian Moon
https://www.youtube.com/watch?v=n3xgjxJwedA
Latest on 911 by James Corbett
Educate yourself
All Risk No Reward
This is all you need to know to prove, beyond all doubt, that the official pile driving narrative
is false.
The reality is that anyone can OBSERVE that the top of the building DID NOT DO WHAT A CUE BALL
DOES EVERY SINGLE TIME IT HITS ANOTHER BILLIARD BALL - the top of the building did not decelerate.
It did not decelerate because IT DID NOT HIT THE LOWER SECTION OF THE BUILDING. For if it had
hit the lower section of the building, IT WOULD HAVE DECELERATED.
The official story never addressed this point. They wisely stopped their investigation at the
initiation of collapse. That was no accident.
AitT - Sir Isaac Newton Weighs in on the World Trade Center North Tower Collapse Official Narrative
Now, some people will attack either me or this factual, observable, and repeatable information
based on their programmed "crimestop" response...
crimestop - Orwell's definition: "The faculty of stopping short, as though by instinct, at the
threshold of any dangerous thought. It includes the power of not grasping analogies, of failing
to perceive logical errors, of misunderstanding the simplest arguments if they are inimical to
Ingsoc, and of being bored or repelled by any train of thought which is capable of leading in
a heretical direction. In short....protective stupidity."
But what nobody will do - because they can't do it - is to explain a physics based scenario
where the top of the building hit a structurally solid lower section of the building WITHOUT DECELERATING.
There are NO CONTRADICTIONS in reality. One leading blogger claimed he had done lots of research
that showed the official story was correct.
But what he didn't do before he stopped the conversation (smart subconsciousness!) was to explain
how the top of the building could have hit a structurally sound lower section of the building
without experiencing marginal deceleration.
This is the video that needs to replace all the complex theories that are too easily dismissed
by the masses.
No, make the masses exclaim the physics equivalent of 2+2=5 in order to continue believing in
the Debt-Money Monopolist false narratives engineered to damage ordinary people across the globe.
NeoLuddite
Elections are just advance auctions of stolen goods.
junction
"Deep State" operatives killed Michael Hastings and Philip Marshall. Whether Paul Walker was
also killed by the "Murder, Inc." - type agents of the "Deep State," to make flaming car crashes
look normal, is an open question. When Tennessee Department of Motor Vehicles (DMV)employee Katherine
Smith died in a flaming car crash in 2002, her death was called a murder (still unsolved) because
a Tennessee state trooper driving behind her saw her car explode into flames before going off
the road.
Smith was the DMV employee who sold driver's licenses to Arabs, licenses they used to identify
themselves when they did work on the sprinkler systems at the World Trade Center before 9/11.
Sprinkler systems which all did not work on 9/11, even though they were ruggedized after the
1993 WTC truck bombing.
And who can forget the California policeman, on a 100% disability pension, who turned up in
Orlando, Florida as the FBI agent who murdered a martial arts associate of Boston Bomber Tamerlan
Tsarnaev. The guy murdered had just undergone knee surgery and could only walk with a cane, yet
he supposedly lunged at this crooked FBI agent, illegally collecting a disabilty pension tax free
of some $60,000 a year.
The initial report from the agent said this guy had a sword cane but that report was false.
doctor10
Politics is merely the entertainment wing of the MIC/Anglo-American Central Banking junta.
Has been since November 23rd 1963. Reagan required a 22 cal message to that effect after he thought
he'd been elected President.
kliguy38
Of course I know that the United States of America is not Turkey. But there are lessons
to be learned from its example of how a democracy can be subverted by particular interests
hiding behind the mask of patriotism.
no of course its not Turkey......its a hundred times worse
Ms No
Turkey's deep state is our deep state with some local players. This is going global, I thought
everybody knew that. Turkey has been a vassal for the Ziocons as long as anyone can remember and
they are one of many. Most of our presidents seem to prefer the term The New World Order. It's
funny how people snicker about that term but I didn't catch a grin off of any of our presidents
going back to Bush I snickering about it when they mention it in their State of the Union addresses
and this current clown is not an exception.
It's quite real and not at all funny. People need to take a look around they have even spelled
it out for you. What do these guys have to do send us our own eulogies? Lets just hope that while
everybody else is trying to figure this out that we don't end up getting too familiar with our
torture state.
Majestic12
"America is in deep shit as are all governments run by central banks neo-Keynesian fascist
economic policy."
I got you on the "deep shit" and "run by central banks", but lost you on "Keynesian Fascist economic
policy".
ZH is full of half truths and obfuscation.
I do not agree with much of Keynes, but most here support Von Mises (the Rockefeller Foundation
product) and the London School of Economics.
These "institutions" are profoundly contradictory, corrupt and were born of the 00001%.
At least Keynes decried relying soley on monetary policy and "supply side" economics.
Most here have only known "supply side" (Reagan and after), so they have nothing to compare it
to.
Listen to boomers talk of the 60s and 70s...there were always jobs, it didn't take 2 earners,
it didn't take a degree, everyone took vacation, and the "information" deluge ended at 11:00pm
until the next morning.
And, you really didn't have to lock your doors, unless you lived in urban Chicago, NY, LA any
other huge metropolis.
So, it was all "Keynes"'s fault?
Keynes, who promoted "demand-side" and "fiscal policy"...really? Fascist?
Remember, there are 94 Million people out of the work force...but the poulation is 100 million
more than in 1977, and the dollar was worth 70% more.
Why the Clintons & Obama are both CIA No-doubt-about-it.
2nd Big Question: why was the CIA rushed into existence (bill signed in an airplane at end of
National Airport by Truman) 45 days after the crash at Roswell?
Freddie
David Rockefeller as a young man was an OSS officer in WW2. Mi6 is the Red Shield.
They are just instruments of terror used by the elites,
Majestic12
"2nd Big Question: why was the CIA rushed into existence 45 days after the crash at Roswell?"
I am glad you asked.....the CIA's involvement was temporary.
The NSA (who now administers the black space program) began as the Armed Forces Security Agency,
just 2 years later in 1949.
... ... ...
unitwar
Bill Moyers? I wonder why he doesn't report on those Bilderberg meetings he attends? He reports
what he is told to report. Everything he does is a limited hangout.
Usurious
the french called the guillotine the national razor.........just sayin...
The Deep State runs everything in America since at least Nov 22, 1963. Kennedy promised
to shatter the CIA into a thousand pieces and scatter it to the winds. Instead, the CIA
shattered his brains into a thousand pieces.
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.
Go to Rulers of Evil, pg. 170. Start reading from Adam
Weishaupt. Now you know the purpose of the creation of the
United States of America ..
Ms No
I think Hitler was right about one thing, most people cannot see the big lie, it just seems
to complex to them and thus ludicrous. Just look at a small portion of a military you have
cores, divisions, brigades, betallions, generals, colonals, companies, Air Force, Navy,
Special Forces, intelligence, espionage, propaganda depts, indoctrination depts, etc, all
under one umbrella of centralized control.
Is it really that hard to believe that a organized self serving entity who has had plenty of
time and very little opposition can grow to a gargantuan empire that nearly global in scale?
Two good reads among at least a hunderd that prove otherwise Sibel Edmonds and Tales of an
Economic Hit Man.
tumblemore
"most people cannot see the big lie, it just seems to complex to them"
I think it's more to do with not being sociopaths.
People tend to think other people are like them so say the average person can only tell
level 6/10 lies before they feel ashamed then they have a hard time believing other people can
tell level 10/10 lies. They couldn't do it themselves so it's hard for them to imagine other
people being that shameless - hence the bigger and more shameless the lie the more likely it
is to be believed.
Only part-sociopaths can see it.
Ms No
There maybe an element of that occuring because a psychopath can identify another path
immediately which would lead one to believe they may be able to identify their activities as
well but over all there is something else going on.
There most certainly is something different about people who can go against the grain and
challenge common propaganda but it isn't a lack of empathy. Some people are more resistant to
indoctrination and we really don't know why. We do know that there has been a large amount of
research on and use of subliminal technology and trauma disassociation. I would hazard a guess
that there has been a ton of research on this subject that we will probably never see.
tumblemore
The thing about the deep state idea is generally they exist to keep the members in power
*and* keep the state in question strong in the long-term so that power is worth something.
What's odd about the US deep state is it doesn't seem to care about the long term at all
and seems only really interested in selling America piece by piece.
For example from their behavior it's pretty blatant now that lobbyists have bought the
GOP's foreign policy position but the dark side of that is it probably means every other
aspect of policy is for sale also.
It's like the US deep state is living off the capital rather than the interest.
"On 9/11/2001, America received its new
Pearl Harbor"…to strike fear into the hearts of Americans and
pave the way for the perpetrators' profitable and
soul-destroying global "war on terror"... Enough is enough!
"There are at least 8.5 trillion reasons to investigate the
money trail of 9/11" and to end the perversion of law that has
bolstered the power of those who hold the reins in Washington,
DC, and use the law, perverted, as a weapon for every kind of
global control and personal greed!
"Forget for one moment everything you've been told
about September 11, 2001. 9/11 was a crime. And as with
any crime, there is one overriding imperative that detectives
must follow to identify the perpetrators: follow the money. This
is an investigation of the 9/11 money trail."
Engagement in criminal activity is fine as long as it is done to protect the Turkish
people...
I call bullshit on this one. More like engagement in criminal activity is fine as long as
it is done to preserve/enhance the Turkish government's power.
ddsoffice
Ja, diese ist eine gutte fragge. Aber, es ist wie die 'Jetzt Neue Deutschland' uber alles
vielleicht seit WWI! (Yes, this is a good topic. But, it is like the 'New Germany Now' perhaps
since WWI!)
(laughing now that I still remember some of my high school German lessons over 25 years ago.)
Eine Gutte Fragge. (A good topic)
Sehr Gut. (Very good)
Jetz Deuschtland ober alles. (Now Germany over all)
krage_man
There are various terms for this - deep state, elite, etc.
But ultimately, current political system so-called democracy is far from original definition
of democracy. And I dont mean that original "greek" democracy is the better one.
This is a feature of modern democracy to pretend to be old-fashioned peoples democracy. This
is to make sure people do feel their power to elect (ans they have it to a degree)
This is a feature of modern democracy to have 2-3 alternative parties. Each is more attractive
to a certain human personality category. This way each can find something to associate with
and be associated against. This means satisfaction of citizens with having a choice even
though the choice is created for them based on 2-3 major types of their personalities.
All 2-3 parties are really backed by this deep state or elite institution which manages all
things behand the curtain. For instance, foreign policy basixally ghe same no matter which
party has power.
Political elected officcials do not really manage the affairs, they commmunicate but the final
decisions are not theirs but come deep from the state departments which are receiving
instructions from deep state.
Elected president is supervised by a vise president with direct access to deep state. He would
take state affairs in his hands if the president is not cooperaring or incapacited ( could be
related)
Deep state controls 95% of mass media via proxy corporations. A special mass-media department
of the deep state issues directives to the editors of mainstream TV/news media. This
department coordinates with other depaetments like one managing foreign affairs linked or even
located in official state department. One may notice a delay when a certain major events take
place and mass media delays reporting by 24-48 hours while waiting for the right spin of the
reporting to the nation.
Latitude25
Interesting that Turkey is mentioned. When I was in college my room mate was a Turkish guy
who was definitely from the .001%, second richest family in Turkey. He said that turkey has
100s of years of experience keeping the masses occupied with one war or another and that the
economy could not run without it. He also liked chasing the most beautiful blondes he could
find and with his money he sure found them.
Burticus
"The few who understand the system will either be so interested in its profits or be so
dependent upon its favours that there will be no opposition from that class, while on the
other hand, the great body of people, mentally incapable of comprehending the tremendous
advantage that capital derives from the system, will bear its burdens without complaint, and
perhaps without even suspecting that the system is inimical to their interests." - Rothschild
Brothers of London
withglee
Ordinary Americans frequently ask why politicians and government officials appear to be so
obtuse, rarely recognizing what is actually occurring in the country.
Ordinary Americans are clueless ... witness less than 8% know anything about WTC7.
That notwithstanding, government officials "appear" to be obtuse to what is going on in the
country because they "are" obtuse. At the Federal level, at best, a representative speaks for
500,000 people. He can't know those people and they can't know him.
Our system is a "fake" representative democracy. What we get is what we should expect from
such a charade.
ISEEIT
"Deep State America"?
FRAUD is the singular truth. Deception, corruption.
"Rational actor" absent philosophically (and with increasing clarity, empirically via what
little remains of classical scientific method)..a once socially respected 'norm' of ethics.
Morality has become hostage to maniacal narcissism. World "leaders" are simply apparatchiks of
the now fully globalized machinations of failing souls.
History is repeating itself.
All indications are that death is just fine. Inevitable...
It's just the dying part that causes pain.
NuYawkFrankie
re In truth America's deep state (...) operates along a New York to Washington axis.
In an even bigger truth America's deep state (...) operates along a New York to Washington
to TEL AVIV axis
- FIXED
Atomizer
Time to go to bed Zero Hedge family. Mrs. Atomizer is getting cranky for me to shut off the
computer. I wanted to leave you with a Friday night boost of laughter. turn up the volume. See
you bitchez in the morning!
"...Many of the
conditions under which free trade between nations is guaranteed to be desirable are unlikely to
hold in practice." . "...All conservative economics is faith based (along with everything else they believe). Delusional
is another good descriptor." . "...Fair trade might actually be a good thing, but that is not what "Free trade" generally means.
Mostly it means freedom for capital, chains for labor, and devastation for the environment."
Dani Rodrik:
Trade within versus between nations: ...economics does not offer unconditional policy prescriptions.
Every graduate student learns that depending on the background specifications, any policy
x can be good or bad. A minimum wage can lower or raise employment (depending on whether
employers have monopsony power); a natural resource discovery can raise or lower growth (depending
on the likelihood of the Dutch disease); fiscal consolidation can expand or contract output (depending
on the respective strengths of expectational versus Keynesian effects). And yes, the dictum that
free trade benefits a nation depends on a
long list of qualifying conditions.
So the proper response to the question "is free trade good?" is, as always, "it depends." When
an economist says "I support free trade" s/he must mean that s/he judges the circumstances under
which free trade would not be desirable to be very rare or unlikely to obtain in the context at
hand.
Many of the
conditions under which free trade between nations is guaranteed to be desirable are unlikely
to hold in practice. Market imperfections, returns to scale, macro imbalances, absence of
first-best policy instruments are ubiquitous in the real world, particularly in the developing
world on which I spend most of my time. This does not guarantee that import restrictions will
be necessarily desirable. There are many ways in which governments can screw up, even when they
mean well. But it does mean that a knee-jerk free trader response is faith-based rather than science-based.
...
[He goes on to answer a question about differential support for trade within nations versus trade
between nations.]
"economics does not offer unconditional policy prescriptions. Every graduate student learns
that depending on the background specifications, any policy x can be good or bad."
Thank you Dani! This statement holds in general but in particular on the issue of free trade.
I've loved his old post where he admitted he had to endure a class taught by William Kristol and
Kristol gave this brilliant man only a C.
DrDick
All conservative economics is faith based (along with everything else they believe). Delusional
is another good descriptor.
DrDick -> Paine ...
Fair trade might actually be a good thing, but that is not what "Free trade" generally
means. Mostly it means freedom for capital, chains for labor, and devastation for the environment.
Stubborn1:
About the fact that economists do not offer unconditional policy prescriptions, especially
when it comes to free trade and "the dictum that free trade benefits a nation depends on a long
list of qualifying conditions". One thing I have to strenuously say about that: BULLSHALONEY!
All I heard in my econ classes were the benefits of free trade. EVERYONE drank the kool aid!
I even had a prof who had worked in the Council of Economic Advisors and his role was to review
trade policies. He told us flat out he would ALWAYS ALWAYS ALWAYS support any and all free trade
agreements that came up, without ANY regard to damage done to domestic firms and/or workers. Paul
Krugman wrote one of our text books which, like many econ textbooks at the time, had WHOLE chapters
dedicated to debunking free trade myths! Now you are going to tell me that economists never take
a stand on a policy position as being good or bad?! ARE YOU KIDDING?
Pgl I have seen you post and have agreed with you many times, but not on this one, hell no!
MacAuley -> Stubborn1...
You are so right, Stubborn1. I have taken at least six international econ courses, and in every
case the prof was strongly in favor of "free trade", usually the more the merrier. Last year,
as a refresher I took an internet Int'l Econ course at "Marginal Revolution University", which
was surprisingly good except for the relentless free-trade propaganda.
Kenneth said...
Friday, May 15th, 2015, "Details of President Barack Obama's proposed trade deal, the Trans
Pacific Partnership, have been kept secret, and the deal itself is kept in a locked room guarded
by men with guns, with members of Congress having to schedule an appointment and jump through
hoops just to actually read the massive proposed treaty.
Let me tell you what you have to do to read this agreement. Follow this: You can only take a few
of your staffers who happen to have a security clearance, because - God knows why - this is secure.
This is classified. It's nothing to do with defense," said Boxer.
Boxer then described how she was forced to turn over her cell phone and was prevented from even
taking notes while looking over the 800-plus page trade treaty.
"So I go down with my staff that I could get to go with me, and as soon as I get there, the guard
says to me, 'Hand over your electronics. Okay. I give over my electronics. Then the guard says,
'You can't take notes.' I said, 'I cannot take notes?'" said Boxer.
Some have taken to calling the TPP treaty "Obamatrade," in reference to the secretive nature in
which Obamacare was written and how then-House Majority Leader Nancy Pelosi infamously claimed,
"We have to pass it to find out what's in it."
At the heart of the TPP is something referred to as a "living agreement provision," which means
the treaty can be amended or changed at any time after it is ratified, without congressional approval,
essentially handing over U.S. sovereignty and subjugating U.S. businesses and workers to international
laws, according to CNS News.
While this treaty is being promoted as being about FREE TRADE, it is really just a massive corporatist
agreement that gives increased authority to major international corporations, which will hurt
both American labor unions and small businesses.
Conservatives need to look past the pleasant sounding platitudes put forward by the Establishment
Republicans who are supporting this massive secret deal that only benefits major international
corporations, and (gulp) team up with socialists like Sen. Elizabeth Warren to kill this deal,
which will only hurt America in the long run.
'At the heart of the TPP is something referred to as a "living agreement provision," which
means the treaty can be amended or changed at any time after it is ratified, without congressional
approval, essentially handing over U.S. sovereignty and subjugating U.S. businesses and workers
to international laws, according to CNS News.'
---
what's new, this is SOP in the U.S., don't bother to read the fine print, it's out of date before
the ink is dry, like hospitals that don't accept same day payment on site, then submit individual
bills showing up months later from every damn person within 50 ft of the patient and refuse to
confirm if there's more
and Scott Walker is busting up unions with right to work laws so labor can have the same power
under a 'living agreement' as hospitals to charge for services provided.
MacAuley -> Kenneth...
Kenneth,
It's not accurate to call TPP "Obamatrade" since the concept was developed and fleshed out in
2007 and 2008 under the Bush Administration. Most of the work was managed at the SES level, since
the Bush Administration was pretty lame-duck by then and most of the political appointees were
looking for jobs. But the Bush Administration at the cabinet level gave approval for the exploratory
discussions and conceptual analysis of a TPP.
By the time Obama arrived in 2009 there was a coherent TPP initiative ready for the Obama Administration
to consider. I doubt that Obama had heard of TPP before he came to Washington, but it wasn't long
before the Obama Administration decided to go forward with it.
Paine said...
Dani is a source of wisdom and shrewdness
A combo rarely combined in one head
"...A remarkably sound analysis by Graham Fuller on Russia and Syria:
http://grahamefuller.com/the-russians-are-coming/
Despite his CIA pedigree and the Tsarnaev connection, Fuller has moments of lucidity occasionally –
he published a book in the 1990s arguing that Iran under the ayatollahs was nowhere near as
totalitarian as the Western groupthink suggested, and in some ways outpaced Israel,
'the-only-democracy-in-the-midlle-east', in terms of societal openness."
"...The overthrow of Asad seemed a simple task in 2011 as the Arab Spring sparked early uprisings
against him. The US readily supported that goal, as did Turkey along with Saudi Arabia and others.
As the Asad regime began to demonstrate serious signs of resilience, however, the US and Turkey stepped
up support to nominally moderate and secular armed opposition against Damascus, thereby extending
the brutal civil war."
"...For similar reasons Iran's long-time open challenge against American ability act with
impunity in the Middle East has always constituted a deep source of American strategic anger-viscerally
surpassing the more Israel-driven nuclear issue."
"...In my view, the fall of Asad will not bring peace but will instead guarantee deadly massive
long-term civil conflict in Syria among contending successors in which radical jihadi forces are
likely to predominate-unless the west commits major ground forces to impose and supervise a peace.
We've been there once before in the Iraq scenario. A replay of Iraq surely is not what the West wants."
"...What Russia will not accept in the Middle East is another unilateral US (or "NATO") fait
accompli in "regime change" that does not carry full UN support. (China's interests are identical
to Russia's in most respects here.)"
"...It is essential that the US not extend its new Cold War with Russia into the Middle East
where shared interests are fairly broad - unless one rejects that very supposition on ideological grounds.
The same goes for Iran."
Washington has been wrapped in confusion and indecision
for years now in trying to sort out just what its real objectives are in Syria. Its obsessive, and
ultimately failed goal of denying Iran influence in the Middle East has notably receded with Obama's
admirable success in reaching a deal with Iran on the nuclear issue and gradual normalization of
Iran's place in the world.
But while the Israel lobby and its Republican allies failed to block Obama's painstaking
work in reaching that agreement, they now seem determined to hobble its implementation in any way
possible. This is utterly self-defeating: unable to block Iran's re-emergence they seem determined
to deny themselves any of the key payoffs of the agreement-the chance to work with Iran selectively
on several important common strategic goals: the isolation and defeat of ISIS, a settlement in Syria
that denies a jihadi takeover, the rollback of sectarianism as a driving force in the region, a peaceful
settlement in Iran's neighbor Afghanistan, and the freeing up of energy/pipeline options across Asia.
But let's address this Syrian issue. There's a new development here-stepped up Russian
involvement-that poses new challenge to the American neocon strategic vision. So here is where Washington
needs to sort out what it really wants in Syria. Is the main goal still to erode Iranian influence
in the region by taking out Iran's ally in Damascus? Or does it want to check Russian influence in
the Middle East wherever possible in order to maintain America's (fast becoming illusory) dominant
influence? These two goals had seemed to weigh more heavily in Washington's calculus than Syrian
domestic considerations. In other words, Asad is a proxy target.
There are two major countries in the world at this point capable of exerting serious influence
over Damascus-Russia and Iran. Not surprisingly, they possess that influence precisely because they
both enjoy long-time good ties with Damascus; Asad obviously is far more likely to listen to tested
allies than heed the plans of enemies dedicated to his overthrow.
The overthrow of Asad seemed a simple task in 2011 as the Arab Spring sparked early uprisings
against him. The US readily supported that goal, as did Turkey along with Saudi Arabia and others.
As the Asad regime began to demonstrate serious signs of resilience, however, the US and Turkey stepped
up support to nominally moderate and secular armed opposition against Damascus, thereby extending
the brutal civil war.
That calculus began to change when radical jihadi groups linked either to al-Qaeda or
to ISIS (the "Islamic State") began to overshadow moderate opposition forces. As ruthless as Asad
had been in crushing domestic opposition, it became clear that any likely successor government would
almost surely be dominated by such radical jihadi forces-who simply fight more effectively than the
West's preferred moderate and secular groups who never got their act together.
Enter Russia. Moscow had already intervened swiftly and effectively in 2013 to head off
a planned US airstrike on Damascus to take out chemical weapons by convincing Damascus to freely
yield up its chemical weapons; the plan actually succeeded. This event helped overcome at least Obama's
earlier reluctance to recognize the potential benefits of Russian influence in the Middle East to
positively serve broader western interests in the region as well.
Russia is of course no late-comer to the region: Russian tsars long acted as the protector
of Eastern Orthodox Christians in the Middle East in the nineteenth century; the Russians had been
diplomatic players in the geopolitical game in the region long before the creation of the Soviet
Union. During the West's Cold War with the Soviet Union the two camps often strategically supported
opposite sides of regional conflicts: Moscow supported revolutionary Arab dictators while the West
supported pro-western dictators. Russia has had dominant military influence in Syria for over five
decades through weapons sales, diplomatic support, and its naval base in Tartus.
With the collapse of the USSR in 1991 Russian influence in the area sharply declined for
the first time as the new Russia sorted itself out. America then began declaring itself the "world's
sole superpower," allegedly now free to shape the world strategically as it saw fit. And the significant
neoconservative and liberal interventionist factions in Washington still nourish the same mentality
today-predicated on the belief that the US can continue to maintain primacy around the world-economic,
military, and diplomatic. In this sense, any acknowledgment of Russian influence in the Middle East
(or elsewhere) represents an affront, even "a threat" to US dominance and prestige.
For similar reasons Iran's long-time open challenge against American ability act with
impunity in the Middle East has always constituted a deep source of American strategic anger-viscerally
surpassing the more Israel-driven nuclear issue.
Today the combination of Russia and Iran (whose interests do not fully coincide either)
exert major influence over the weakening Asad regime.
If we are truly concerned about ISIS we must recognize that restoration of a modicum
of peace in Syria and Iraq are essentialprerequisites to the ultimate elimination
of ISIS that feeds off of the chaos.
Russia appears now to be unilaterally introducing new military forces, stepped up weapons
deliveries, and possibly including limited troop numbers into Syria specifically to back the Asad
regime's staying power. Washington appears dismayed at this turn of events, and has yet to make up
its mind whether it would rather get rid of Asad, or get rid of ISIS. It is folly to think that both
goals can be achieved militarily.
In my view, the fall of Asad will not bring peace but will instead guarantee deadly massive
long-term civil conflict in Syria among contending successors in which radical jihadi forces are
likely to predominate-unless the west commits major ground forces to impose and supervise a peace.
We've been there once before in the Iraq scenario. A replay of Iraq surely is not what the West wants.
So just how much of a "threat" is an enhanced Russian military presence in Syria? It is
simplistic to view this as some zero-sum game in which any Russian gain is an American loss. The
West lived with a Soviet naval base in Syria for many decades; meanwhile the US itself has dozens
of military bases in the Middle East. (To many observers, these may indeed represent part of the
problem.)
Even were Syria to become completely subservient to Russia, US general interests in the
region would not seriously suffer (unless one considers maintenance of unchallenged unilateral power
to be the main US interest there. I don't.) The West has lived with such a Syrian regime before.
Russia, with its large and restive Muslim population and especially Chechens, is more fearful of
jihadi Islam than is even the US. If Russia were to end up putting combat troops on the ground against
ISIS (unlikely) it would represent a net gain for the West. Russia is far less hated by populations
in the Middle East than is the US (although Moscow is quite hated by many Muslims of the
former Soviet Union.) Russia is likely to be able to undertake military operations against jihadis
from bases within Syria. Indeed, it will certainly shore up Damascus militarily-rather than allowing
Syria to collapse into warring jihadi factions.
What Russia will not accept in the Middle East is another unilateral US (or "NATO") fait
accompli in "regime change" that does not carry full UN support. (China's interests are identical
to Russia's in most respects here.)
We are entering a new era in which the US is increasingly no longer able to call the shots
in shaping the international order. Surely it is in the (enlightened) self-interest of the US to
see an end to the conflict in Syria with all its cross-border sectarian viciousness in Iraq. Russia
is probably better positioned than any other world player to exert influence over Asad. The US should
be able to comfortably live even with a Russian-dominated Syria if it can bring an end to the conflict-especially
when Washington meanwhile is allied with virtually every one of Syria's neighbors. (How long Asad
himself stays would be subject to negotiation; his personal presence is not essential to 'Alawi power
in Syria.)
What can Russia do to the West from its long-term dominant position in Syria? Take Syria's
(virtually non-existent) oil? Draw on the wealth of this impoverished country? Increase arms sales
to the region (no match for US arms sales)? Threaten Israel? Russia already has close ties with Israel
and probably up to a quarter of Israel's population are Russian Jews.
Bottom line: Washington does not have the luxury of playing dog in the manger in "managing"
the Middle East, especially after two decades or more of massive and destructive policy failure on
virtually all fronts.
It is essential that the US not extend its new Cold War with Russia into the Middle East
where shared interests are fairly broad-unless one rejects that very supposition on ideological grounds.
The same goes for Iran.
We have to start someplace.
Graham E. Fuller is a former senior CIA official, author of numerous books on the
Muslim World; his latest book is "Breaking Faith: A novel of espionage and an American's crisis of
conscience in Pakistan." (Amazon, Kindle) grahamefuller.com
I would summarize the Keynesian view in terms of four points:
1. Economies sometimes produce much less than they could, and employ many fewer workers than
they should, because there just isn't enough spending. Such episodes can happen for a variety
of reasons; the question is how to respond.
2. There are normally forces that tend to push the economy back toward full employment. But
they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary
period of pain.
3. It is often possible to drastically shorten this period of pain and greatly reduce the human
and financial losses by "printing money", using the central bank's power of currency creation
to push interest rates down.
4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close
to zero. In that case temporary deficit spending can provide a useful boost. And conversely,
fiscal austerity in a depressed economy imposes large economic losses.
Is this a complicated, convoluted doctrine? ...
But strange things happen in the minds of critics. Again and again we see the following bogus
claims about what Keynesians believe:
B1: Any economic recovery, no matter how slow and how delayed,
proves
Keynesian economics wrong. See [2] above for why that's illiterate.
B2: Keynesians believe that printing money solves all problems. See [3]: printing money can
solve one specific problem, an economy operating far below capacity. Nobody said that it can
conjure up higher productivity, or cure the common cold.
B3: Keynesians always favor deficit spending, under all conditions. See [4]: The case for fiscal
stimulus is quite restrictive, requiring both a depressed economy and severe limits to monetary
policy. That just happens to be the world we've been living in lately.
I have no illusions that saying this obvious stuff will stop the usual suspects from engaging
in the usual bogosity. But maybe this will help others respond when they do.
I would add:
5. Keynesian are not opposed to supply-side, growth enhancing policy. They types of taxes that
are imposed matters, entrepreneurial activity should be encouraged, and so on. But these arguments
should not be used as cover for redistribution of income to the wealthy through tax cuts and other
means, or as a means of arguing for cuts to important social service programs. Not should they
be used only to support tax cuts. Infrastructure spending is important for growth, an educated,
healthy workforce is more productive, etc., etc. Economic growth is about much more than tax cuts
for wealthy political donors.
On the other side, I would have added a point to B3:
B3a: Keynesians do not favor large government. They believe that deficits should be used to stimulate
the economy in severe recessions (when monetary policy alone is not enough), but they also believe
that the deficits should be paid for during good times (shave the peaks to fill the troughs and
stabilize the path of GDP and employment). We haven't been very good at the pay for it during
good times part, but Democrats can hardly be blamed for that (see tax cuts for the wealthy for
openers).
Anything else, e.g. perhaps something like "Keynesians do not believe that helping people in need
undermines their desire to work"?
LOL! Almost. You really think that growth can continue forever and ever in a biosphere with
finite resources?
Tell us another fairytale and good luck with that!
But yes, let the truly insolvent fucks and worthless fucks go to the guillotine already!
Bro of the Sorrowful
using metrics in economics and applying mathamatical formulas to quantify all aspects of
the economy has been a major and far reaching disaster. none worse, perhaps with the exception
of unemployment and inflation, than the totally fraudulent metric "GDP". youll notice in von
mises' magnum opus human action that there is not a single formula.
were it not for the measurement of the ambiguous "GDP", we would not be so concerned with
growth.
pods
We sure as hell would be concerned with growth.
Expansion is what is required by our monetary system.
That is why inflation of 2% is "stable prices" and everyone and their mother talks about
growth.
Fraction reserve currency requires expansion (exponential) to function.
No growth=no currency system.
That is why sustainability is a no go right out of the gate.
pods
Bro of the Sorrowful Figure's picture
i was speaking more of an ideal world in which we would be operating under a sound monetary
system. my problem with using economic metrics for everything is that it takes the focus off
of real problems and gives huge power to the international banking cartel by allowing them to
manipulate the numbers without end. we start from a false monetary system, then apply a metric
system based on false logic to justify that monetary system, while also making those metrics
esoteric enough that the average person simply stops paying attention or freezes up when such
metrics are mentioned. that way the economy can be absolute shit, with obvious signs to anyone
with eyes, and yet your average person will still say, well GDP is up and unemployment is down
so things must be good.
Harry Balzak
Are you implying that reality exists without accounting?
A self-selected group of former top military officers, CIA insiders and think-tankers,
declared Tuesday in Washington that a seven-month review of the deadly 2012 terrorist attack has
determined that [Gaddafi offered to abdicate as leader of Libya.]
'Gaddafi wasn't a good guy, but he was being marginalized,' [Retired Rear Admiral Chuck ] Kubic
recalled. 'Gaddafi actually offered to abdicate' shortly after the beginning of a 2011
rebellion.
'But the U.S. ignored his calls for a truce,' the commission wrote, ultimately
backing the horse that would later help kill a U.S. ambassador.
Kubic said that the effort at truce talks fell apart when the White House declined
to let the Pentagon pursue it seriously.
'We had a leader who had won the Nobel Peace Prize,' Kubic said, 'but
who was unwilling to give peace a chance for 72 hours.'
"I have been contacted by an intermediary in Libya who has indicated that President
Muammar Gadhafi is willing to negotiate an end to the conflict under conditions
which would seem to favor Administration policy," [former U.S. Congressman Dennis] Kucinich wrote
on Aug. 24.
***
Mrs. Clinton ordered a general within the Pentagon to refuse to take a call with
Gadhafi's son Seif and other high-level members within the regime, to help negotiate a resolution,
the secret recordings reveal.
A day later, on March 18, Gadhafi called for a cease-fire, another action the administration
dismissed.
***
"Everything I am getting from the State Department is that they do not care about being part
of this. Secretary Clinton does not want to negotiate at all," the Pentagon intelligence
asset told Seif Gadhafi and his adviser on the recordings.
Communication was so torn between the Libyan regime and the State Department that they had
no point of contact within the department to even communicate whether they were willing to accept
the U.N.'s mandates, former Libyan officials said.
***
"The decision to invade [Libya] had already been made, so everything coming out of the State
Department at that time was to reinforce that decision," the official explained, speaking only
on the condition of anonymity for fear of retribution.
***
"The Libyans would stop all combat operations and withdraw all military forces to the outskirts
of the cities and assume a defensive posture. Then to insure the credibility with the international
community, the Libyans would accept recipients from the African Union to make sure the truce was
honored," Mr. Kubic said, describing the offers.
"[Gadhafi] came back and said he was willing to step down and permit a transition government,
but he had two conditions," Mr. Kubic said. "First was to insure there was a military force left
over after he left Libya capable to go after al Qaeda. Secondly, he wanted to have the sanctions
against him and his family and those loyal to him lifted and free passage. At that point in time,
everybody thought that was reasonable."
But not the State Department.
Gen. Ham was ordered to stand down two days after the negotiation began, Mr. Kubic said. The
orders were given at the behest of the State Department, according to those familiar with the
plan in the Pentagon. Gen. Ham declined to comment when questioned by The Times.
"If their goal was to get Gadhafi out of power, then why not give a 72-hour truce a try?" Mr.
Kubic asked. "It wasn't enough to get him out of power; they wanted him dead."
Similarly, Saddam Hussein allegedly offered to let weapons inspectors in the country
and to hold new elections. As the Guardian
reported
in 2003:
In the few weeks before its fall, Iraq's Ba'athist regime made a series of increasingly desperate
peace offers to Washington, promising to hold elections and even to allow US
troops to search for banned weapons. But the advances were all rejected by the Bush administration,
according to intermediaries involved in the talks.
"Fearing defeat, Saddam was prepared to go peacefully in return for £500million ($1billion)".
"The extraordinary offer was revealed yesterday in a transcript of talks in February 2003 between
George Bush and the then Spanish Prime Minister Jose Maria Aznar at the President's Texas ranch."
"The White House refused to comment on the report last night. But, if verified, it is certain
to raise questions in Washington and London over whether the costly four-year war could
have been averted."
According to the tapes, Bush told Aznar that whether Saddam was still in Iraq or not, "We'll be
in Baghdad by the end of March." See also
this and this.
Susan Lindauer (after reading an earlier version of this essay by Washington's Blog)
wrote:
That's absolutely true about Saddam's frantic officers to retire to a Villa in Tikrit before
the invasion. Except he never demanded $1 BILLION (or $500 MILLION). He only asked for a private
brigade of the Iraqi National Guard, which he compared to President Clinton's Secret Service detail
for life throughout retirement. I know that for a fact, because I myself was the back
channel to the Iraqi Embassy at the U.N. in New York, who carried the message to Washington
AND the United Nations General Assembly and Security Council. Kofi Annan was very much aware of
it. So was Spain's President Asnar. Those historical details were redacted from the history books
when George Bush ordered my arrest on the Patriot Act as an "Iraqi Agent"– a political farce with
no supporting evidence, except my passionate anti-war activism and urgent warnings that War in
Iraq would uncover no WMDs, would fire up a violent and bloody counter-insurgency, and would result
in Iran's rise as a regional power. In 2007, the Senate Intelligence Committee hailed my warnings
in Jan. 2003 (as the Chief Human Intelligence covering Iraq at the U.N.) to be one of the only
bright spots in Pre-War Intelligence. Nevertheless, in 2005 and again in 2008, I was declared
"incompetent to stand trial," and threatened with "indefinite detention up to 10 years" on Carswell
Air Force Base, in order to protect the cover up of Iraqi Pre-War Intelligence.
(The New York Times has covered Lindauer at least 5 times, including
here and
here.)
On October 14, 2001, the Taliban offered to hand over Osama bin Laden to a neutral country if
the US halted bombing if the Taliban were given evidence of Bin Laden's involvement in 9/11.
Returning to the White House after a weekend at Camp David, the president said the bombing
would not stop, unless the ruling Taliban "turn [bin Laden] over, turn his cohorts over, turn
any hostages they hold over." He added, "There's no need to discuss innocence or guilt. We know
he's guilty" …
Afghanistan's deputy prime minister, Haji Abdul Kabir, told reporters that the Taliban would
require evidence that Bin Laden was behind the September 11 terrorist attacks in the US.
"If the Taliban is given evidence that Osama bin Laden is involved" and the bombing campaign
stopped, "we would be ready to hand him over to a third country", Mr Kabir added.
However, as the Guardian subsequently
pointed
out:
A senior Taliban minister has offered a last-minute deal to hand over Osama bin Laden
during a secret visit to Islamabad, senior sources in Pakistan told the Guardian last night.
For the first time, the Taliban offered to hand over Bin Laden for trial in a country other
than the US without asking to see evidence first in return for a halt to the
bombing, a source close to Pakistan's military leadership said.
Russia proposed more than three years ago that Syria's president, Bashar al-Assad, could step
down as part of a peace deal, according to a senior negotiator involved in back-channel discussions
at the time.
Former Finnish president and Nobel peace prize laureate Martti Ahtisaari said western powers
failed to seize on the proposal. Since it was made, in 2012, tens of thousands of people have
been killed and millions uprooted, causing the world's gravest refugee crisis since the second
world war.
Ahtisaari held talks with envoys from the five permanent members of the UN security council
in February 2012. He said that during those discussions, the Russian ambassador, Vitaly Churkin,
laid out a three-point plan, which included a proposal for Assad to cede power at some point after
peace talks had started between the regime and the opposition.
But he said that the US, Britain and France were so convinced that the Syrian dictator
was about to fall, they ignored the proposal.
***
"There was no question because I went back and asked him a second time," he said, noting that
Churkin had just returned from a trip to Moscow and there seemed little doubt he was raising the
proposal on behalf of the Kremlin.
Ahtisaari said he passed on the message to the American, British and French missions at the
UN, but he said: "Nothing happened because I think all these, and many others, were convinced
that Assad would be thrown out of office in a few weeks so there was no need to do anything."
As Syria slides toward civil war, Russia is signaling that it no longer views President Bashar
al-Assad's position as tenable and is working with the U.S. to seek an orderly transition.
***
After meeting with French President Francois Hollande, among the most adamant of Western leaders
demanding Assad's departure, Putin said Russia was not invested in Assad staying.
***
"We aren't for Assad or for his opponents," Putin told reporters in Paris on June 1. "We want
to achieve a situation in which violence ends and a full-scale civil war is avoided."
And yet, as with Gaddaffi, Saddam Hussein and Bin Laden, the U.S. turned down the offer and has
instead prosecuted war. See
this and
this.
Postscript: An offer by Russia for Assad to leave is not the same as an offer by Assad himself.
However, because the Syrian government would have long ago fallen without Russia's help, the distinction
is not really that meaningful.
What the USSA is doing is pure evil. At least Germany had a logical reason for aggressions.
The treaty of Versailles unfairly took German lands. Germany wanted them back. It wasn't till
Poland resisted that Germany let loose.
The USSA destroys leaders seeking a truce and does so in the name of peace. Then it rams its
immoral, family destroying sterilizing geo-political socio economic system down traditional pious
soverigns throats.
This is far from a new phenomena, we did the same against Spain until we took the Philippines,
Wilson and House were against a settlement of the then still European War until the US had shed
its blood on European soil, which clearly would have resulted in a pre-hostilities border settlement
and maintained political structures instead of unconditional surrender.
All the blood, misery and human carnage that could have been subsequently avoided had
we just stuck to the principles of the nations founders.
But capital requires war, war for profits, war to cull excess supply of capital, war
to rebuild and war to dominate.
Power and money forged with American myth has been a potent mixture that directly and
indirectly has murdered 100's of millions of innocent lives. And we are to destroy the cultural
heritage of nations because one boy died on the beaches escaping a war that we initiated and fostered?
yellowsub
"War is Peace", why do you think they didn't negotiate?
Admiral Kubic is a good friend of mine. I was in Libya and Afghanistan with him. He is one
of the smartest, bravest men that I have ever met.
In fact a quick story about him. We were both working on a project at the US Embassy in Kabul
in 2011. I had just landed in the morning and as soon as I got to the Embassy, a group of Taliban
started lobbing rocket towards the Embassy. Anyhow, it was a 24 hour ordeal but Kubic was the
only person that I saw that grabbed an AK from a Ghurka guard (btw Ghurkas are cowards!), and
rushed towards the attackers! Most people, including security personell were running away from
the fire. Not Kubic: he was charging the Taliban! Never seen anything like it in my life!
I also have personal knowledge of what he has said in this article. ALL TRUE!
Fleet Admiral Chester W. Nimitz, Commander in Chief of the Pacific Fleet stated in a public
address given at the Washington Monument on October 5, 1945:
The Japanese had, in fact, already sued for peace before the atomic age was announced to
the world with the destruction of Hiroshima and before the Russian entry into the war. (See
p. 329, Chapter 26) . . . [Nimitz also stated: "The atomic bomb played no decisive part, from
a purely military standpoint, in the defeat of Japan. . . ."]
somewhat different than the widely accepted official narrative.
SUNKNIGHT2010
Saddam Hussein switched from using the US dollar to the euro in selling Iraqi oil. The same
with Libya, they were friends with the USA until plans were established to set up a currency (Dinar)
backed by gold .for the USA's economy to survive, it MUST maintain world currency reserve status --
ANYTHING that threatens this position WILL be neutralized, irregardless of what it takes --
When Iraq started selling oil using the euro, Saddam Hussein signed his death warrant, as did
Libya -- The true reason for all this conflict is to maintain & support the US dollar & economy,
namely all the wealthy of Wall Street & Washington DC .
But for some weird reason ALOT of people here seem to think Israel is responsible for everything
bad that has or will ever happen !
Sad how in 2015 , people are still so racist -- How far humanity has advanced in technology
but how primitive an foolish the human race still is in MANY ways !
Reaper
There is glory in military victories. Exceptional trained sheeple die for that glory. Does
the sheeple's god reward them for their stupidity? Do the gods praise as exceptional those whom
they'll destroy?
11b40
Wall Street controls Washington.
Who controls Wall Street?
(if you don't know, I'm sure someone here could help you find out)
Motasaurus
London controls Wall Street. And Riyadh. And Tel-Aviv. Not England, London. And the Bankers
who control that city, control the world.
Why is the West reporting this NOW? It is a negotiating ploy. They know they have lost. Now
they are trying to see if this old offer could still be put on the table.
silverer
No, the US leadership is a bunch of sore losers. That's what US voters wanted, prayed for,
hoped for, and then mandated with an election. US leaders can't admit defeat, so next is probably
a nuclear escalation, because they've convinced themselves that they have dug their protection
deep enough into a number of mountains at taxpayer expense so that they will win and then survive.
In Russia, they built billions of dollars worth of fallout shelters over the last 20 years
for the ordinary Russian. Every citizen in Moscow is within three minutes of a fallout shelter.
The Russian leadership knows the US leadership better than the US voters do. In the US, they haven't
built anything at all to protect the general population, and apparently consider everyone expendable.
This way, if the US calls it all wrong and totally screws it up, they won't have to answer
to anyone who voted for them when they walk out of their fallout shelters a year after it's all
over.
OpTwoMistic
Do not confuse America with its leadership.
Motasaurus
So long as the leadership remains in power and not dangling by their necks from the White House
balcony, America and the leadership are the same.
SmittyinLA
The US didn't want an election, Kaddaffi would have won, he was loved by his people, Libyans
wouldn't vote for their own liquidation, Libya had the highest living standards in Africa, Libyan
citizenship was a valuable commodity -- like US citizenship.
Libya was looted in an international war crime.
To Hell In A Handbasket
Looted is the understatement of the year.
The narrative by the MSM was Gaddaffi is a dictator and the people need freedom and democracy.
What the MSM ommitted was a background history of the country, Libya's achievments under Gaddaffi
vs the total plunder of Libya under our puppet leader King Idris(who was overthrown by Gaddaffi),
who were the Libyian National Transitional Council (NTC), what was the price of French(NATO) intervention
for the treasonous (NTC)? (Mining rights to 35% of Libya's hydro carbons)
On 3 April a letter was sent by Libya's National Transitional Council (NTC) to a coalition
partner, Qatari Emir Sheikh Hamad bin Khalifa Al Thani, which mentioned that France would take
"35 percent of crude oil...in exchange for its total and permanent support" of the NTC. France's
Liberation daily reported on Thursday that it had a copy of the letter, which stated that the
NTC's Information Minister Mahmoud Shammam, would negotiate the deal with France. In 2010 France
was the second purchaser of Libyan oil after Italy, with over 15 percent of its "oil" imported
from Tripoli.
But that's not all as we must apply logic. Who was the first country to recognise the NTC?
Which was the only country Gaddaffi broke off diplomatic ties? Which country was the first to
bomb? The answer is France, to all 3 of those questions, but there is more the MSM avoided talking
about and the biggest mystery is WHERE IS LIBYA'S 148 METRIC TONNS OF GOLD? Western leaders are
not interested in peace, but in conquest and plunder for their paymasters.. Even the doubters
who believed in freedom and humanitarian intervention, had to sit up, pause and think, when the
NTC before they had even reached Trippoli and was losing the ground offensive, created their own
central bank that was recognised by the NATO coalition inside of 2 days.. Case closed.
OpenThePodBayDoorHAL
Gaddafi had loaned Unicredito multiple billions in 2009 and they didn't feel like paying it
back. Follow the money.
Bankster Kibble
We don't trust elections in our client states. When the Iraqis had their first election after
the fall of Saddam, they elected some mullah we didn't like so we made them hold another election.
"Do it again until you do it right!"
rsnoble
There's no profit in peace. Or not nearly as much I should say. A little dribble just won't
cut it, steal the whole fucking enchilada at once. Get to test weapons. Get to play with cool
toys like drones. See people get blown to pieces for the sick-minded. Move closer to world domination,
etc. All ideas of crazy people. The only problem is, since this is human nature, if the US wasn't
doing it or preventing others, would others step in with the same crazy ass plan? I would venture
to guess yes.
GRDguy
Whatever is of benefit to peaceful citizens is not profitable to the financial sociopaths.
Hence, fighting increases. Your real enemy hides in financial institutions, surrounded by minions
and voracious lawyers.
Do you think the white collar crime of Wall Steet and the Federal Reserve is bad ?
For more crimes against humanity go to
www.firecrusade.com and see Free Document
page and click link A Crime Against Humanity
The very gov agencies that are supposed to be protecting the public from dangers of fire and
hazardous products, CPSC and NFPA as well as the non gov testing facility UL which often tests
products on the governments behalf, have been covering up a deadly conspiracy to commit fraud
that has resulted in the deaths of 10's of 1000's and horrible, often times, disfiguring injuries
of 100's of 1000's of unsuspecting consumers over last 5 decades.
These agencies have all been in the back pocket of ionized alarm manufactures for over 50 years
, which was exposed back in 1976 by a Fire Protection Engineer, Richard Patton. Mr. Patton revealed
that the government funded Dunes Test which tested smoke alarms, was not only rigged so ionized
alarms would pass the smoldering smoke stage of test but the data was falsified so that ionized
detectors could keep the UL stamp of approval, while the superior, safer and more reliable heat
detector technologies were deliberately set up to fail the tests.
With each day that passes and the CSPC fails to make a mandatory recall of ion alarms , many
more victims will either be killed and or suffer serious injuries as the ionized alarm manufactures
flooded the market with ion alarms and it is estimated that over 90% of all homes and habitable
structures have these deadly devices, providing the public with a false sense of security.
Buyer beware -- These deaths and injuries have been and are preventable, as the safer more reliable
photoelectric / heat smoke alarms have been available for over 40 years. The ion manufactures
are fully aware of the problem and have been sued multiple times and paid $10's of millions in
damages and the UL has been sued as well. Manufactures, in one lawsuit back in 2001 were ordered
to provide disclosure on ion alarm packaging which ended up being a watered down disclosure /
recommendation to use both photoelectric and ionized alarms. Being ion alarms are less expensive
and majority of consumers do not read fine print on packaging which omits the actual dangers /
death / injury factors, consumers assume a smoke detector is a smoke detector, and most people
still opt to buy the less expensive and dangerous ion alarms.
Most everyone you know is at risk and should be made aware of these deadly devices as the government
agencies will continue to cover up the fraud from the public until such a time a civil lawsuit
and verdict is reached to force CPSC to execute a mandatory recall which could take several years.
Please post this message on your facebook and twitter sites and forward to as many others as possible.
More information and 60 minutes segment / news videos that have covered this issue can be found
on www.smokealarmwarning.org
nor should we forget the US-led attack on Yugoslavia, in complete violation of the UN charter,
a devastating bombing campaign destroying the civilian infrastructure, done with the hypocritical
alleged motive to prevent "human rights violations".
In that case, Yugoslavia's refusal to accept a non-negotiable ultimatum to surrender sovereignty
of its territory (Kosovo) to the Mafia-run KLA was falsely depicted as Yugoslavia's refusal to
negotiate.
Now Turkey destabilises Western Europe by funnelling refugees into the EU in an invasion force.
Germany takes in 1,000,000 in 2015 which exceeds its own birth rate. Won't be long before Europe
disintegrates into civil war and regional conflicts like so much of its history. Soon the US will
have created global chaos and it will not be able to restore order anywhere because it dare not
put "boots on the ground" and it will need 4-5 million soldiers to restore order the way things
are going.
When the Ukrainian refugees start towards Western Europe it should be clear the EU has destroyed
peace in Europe for generations
When will the American people demand that Cheney, Bush Hillary and Obama face justice for war
crimes committed against humanity. Hopefully in 2016 Americans remember the crimes these people
have committed and vote for somehing with not such a past.
Are you Dreaming Amigo? Los Gringos will Never admit what they Refuse to Believe! Bush and
Cheney will go to their graves as Heroes in their eyes! Otherwise Intelligent Peoples Refuse to
Entertain what They Consider to be "Treasonous" Notions. I have Three Brother-in-Laws that work
in Govt Related Fields. I get along with them all just fine now that I have learned what Topics
to Avoid in Conversation!
With the discovery of oil in Libya in 1959, a very poor desert
country became a very rich little western protectorate.
US and European companies had huge stakes in the extremely
lucrative petroleum and banking sectors, but these were soon nationalized
by Gaddafi. Thus Libya overnightjoined
the list of US 'enemy' or 'rogue' states that sought autonomy and self-determination
outside the expanding sphere of western Empire. Further cementing western hatred of the new regime,
Libya played a leading role of the 1973 oil embargo against
the US and maintained cooperative relations with the Soviet Union.
Gaddafi also reportedly channeled early oil wealth into national
free health care and education.
Life in Libya with Leader Gaddafi:
1. Electricity for household use is
free,
2. interest-free loans
3. during the study, government give to every student
2 300 dolars/month
4. receives the average salary for this profession
if you do not find a job after graduation,
5. the state has paid for to work in the profession,
6. every unemployed person receives
social assistance 15,000 $/year,
7. for marriage state pays first apartment or
house (150m2),
8. buying cars at factory prices,
9. LIBYA not owe anyone a cent,
10. free higher education abroad,
11. 25% of highly educated,
12. 40 loaves of bread costs $ 0.15,
13. water in the middle of the desert, drinking water,
14. 8 dinars per liter of oil (0.08 EUR),
15. 6% poor people,
16. for each infant, the couple received
$ 5,000 for their needs.
Dick Cheney, Donald Rumsfeld, Karl Rove, Paul Wolfowitz, Bill Kristol, and Condoleeza Rice
among many others all need to spend a better portion of their earthly existence in an 8x8 cell
watching the rest of us enjoying their sudden departure.
What's that? The UK and their US and NATO puppets weren't at all interested in peaceful solutions
to the middle-east conflicts? It's almost exactly like the way Israel targetted assasinations
against the moderate Palistinian politicians for the express purpose of making the radicals powerful,
meaning that no peace would be possible.
One would think that the aim has been to kill as many people as possible, and not regime change
at all.
Yes that and in many of these countries in the end its all about the physical gold they hold,
a new leader doesn't matter we need to go there kill whoever and take their shit.
Saddam had lots and lots of gold, I think Ghadaffi had more.
Many of these places we end up going had loads of gold all of which now belongs to us aka the
west aka the bankers aka the tribe. So in the end maybe we are all doing gods work just by being
part of that system.
Jesus College, Cambridge hosted, once more, the world's leading Symposium on Economic Crime,
and over 500 distinguished speakers and panelists drawn from the widest possible international fora,
gathered to make presentations to the many hundreds of delegates and attendees.
What became very quickly clear this year was the general sense of deep disgust and repugnance
that was demonstrated towards the global banking industry.
I can say with some degree of certainty now that a very large number of academics, law
enforcement agencies, and financial compliance consultants are now joined, as one, in their total
condemnation of significant elements of the global banking sector for their organised criminal activities.
Many banks are widely identified now as nothing more than enterprise criminal organisations,
who engage in widespread criminal practice and dishonest conduct as a matter of course and deliberate
commercial policy.
My prediction is that bankers will be jailed in the next economic/financial crisis. Lots and lots
of bankers.
It may seem to many that those working within this profession will remain above the law indefinitely
in light of the lack of any accountability whatsoever since the collapse of 2008. It may seem that way,
but extrapolating this trend into the future is to ignore a monumentally changed political environment
around the world. From the ascendancy of Donald Trump and Bernie Sanders here in the U.S., to Jeremy
Corbyn becoming Labour leader in the UK, big changes are certainly afoot.
I have become convinced of this change for a little while now, but we won't really see evidence of
it until the next collapse. However, something I read earlier today really brought the point home for
me. Rowan Bosworth-Davies recently attended the 33rd Cambridge International Symposium on Economic Crime
and provided us with some notes in an excellent piece titled,
The Banking Criminals Exposed. Here are a few excerpts:
Jesus College, Cambridge hosted, once more, the world's leading Symposium on Economic Crime,
and over 500 distinguished speakers and panelists drawn from the widest possible international fora,
gathered to make presentations to the many hundreds of delegates and attendees.
This Symposium has indeed become an icon among other international gatherings of its knd and
over the years, it has proved to be highly influential in the driving and development of international
policy aimed at combating international financial and economic crime.
What became very quickly clear this year was the general sense of deep disgust and repugnance
that was demonstrated towards the global banking industry.
I can say with some degree of certainty now that a very large number of academics, law enforcement
agencies, and financial compliance consultants are now joined, as one, in their total condemnation
of significant elements of the global banking sector for their organised criminal activities.
Many banks are widely identified now as nothing more than enterprise criminal organisations,
who engage in widespread criminal practice and dishonest conduct as a matter of course and deliberate
commercial policy.
Speaker after speaker addressed the implications of the scandalous level of PPI fraud, whose
repayment and compensation schedules now run into billions of pounds.
Some speakers struggled with the definition of such activity as 'Mis-selling' and needed to
be advised that what they were describing was an institutionalized level of organised financial crimes
involving fraud, false accounting, forgery and other offenses involving acts of misrepresentation
and deceit.
One of the side issues which came out of this and other debates, was the general and
genuine sense of bewilderment that management in these institutions concerned, (and very few banks
and financial houses have escaped censure for this dishonest practice) have walked away from this
orgy of criminal antics, completely unscathed. The protestations from management that these
dishonest acts were carried out by a few rogue elements, holds no water and cannot be justified.
In the end, I sat there, open-mouthed while evidence against the same old usual scum-bag financial
institutions, was unrolled, and a lengthy list of agencies, all apparently dedicated to dealing with
fraud and financial crime, lamely sought to explain why they were powerless to help these victims.
This was followed by a lengthy list of names of major law firms, and Big 5 accounting firms
who were willing to join with these pariah banks to bring complex and expensive legal actions against
these victims, bankrupting them, forcing them from their homes, repossessing properties they had
worked for years to create, while all the time, the regulators and the other agencies, including
to my shame and regret, certain spineless police forces, stood by and sought to justify their inaction.
At one stage, we were shown how banks ritually and deliberately take transcripts of telephone
calls made between complainants and the bank, and deliberately and systematically go through these
conversations, re-editing them and reproducing them in a format which is much more favourable to
the bank.
For the first time, I found routine agreement among delegates that the banking industry had
become synonymous with organised crime. Many otherwise more conservative attendees expressed their
grave concern and their repugnance at the way in which so many of our most famous banking names were
now behaving. It is becoming very much harder to believe that the banks will be able to rely on the
routine support they have traditionally enjoyed from most ordinary members of the public.
The election of Jeremy Corbyn to the leadership of the labour Party means that banking
crime and financial fraud will now become an electoral issue.
But now, the new Labour leadership will focus the attention of the electorate on the relationship
between the Tory party and their very crooked friends in the City, and the degree of protection that
the Square Mile gangsters and their Consiglieri, their Capos, and their Godfathers will become much
more identifiable. Bank crime will now become much more identifiable as a City practice and their friends
in the Tories will be seen as being primary beneficiaries.
Things are moving in the direction of justice. At a glacial place for sure, but moving
they are.
pot_and_kettle
When they're swinging from lamp posts lining Broadway and Water St, *then * I'd call it progress.
Til then, same old same old...
11b40
There were over 1,000 felony prosecutions that came out of the Savings & Loan fiasco in the 80's,
with a 90% conviction rate.
But, to your point, these were not the big Wall Street Bankers. Mostly just your local common banker
thief and his cronies, with a few politicians thrown in for good measure. No big fish were prosecuted
during the Depression era, either.
vincent
A reminder of how JPM saved its own ass in 2008. Worth bookmarking....
Dream on, Mike. Just who will jail the banksters? They own the governments of USA, Canada, and
Western Europe. Not a chance in my lifetime.
GCT
Politicians and the judicial branch are in the banks pockets. I will believe it when I see it
to be honest. I have yet to see real bankers or for that matter politicians go to jail. As long as
the big fines are paid nothing will change. Must be nice to create money from nothing to pay these
fines and fucking your customers over at the same time.
Fahque Imuhnutjahb
Wishful thinking. If any justice is to be meted out then the "little people" will have to take
it upon themselves.
And by little people I mean the plebes, not dwarves; but the dwarves are welcome to help, unless
of course
some of them are little bankers, then they're not welcome, but the rest are. Glad we got that cleared
up.
It will be interesting to see if Corbyn's leadership victory in the UK presages
a Sanders victory in our own 2016 Presidential primary. Despite projecting American politics
onto British politics throughout this piece, I have no idea! Working in favor of this view: Political
structures where
tiny oligarchies rule, and voters matter only when they want what oligarchs want, seems almost
universal world-wide. So, if you want a majority of the votes, run against the oligarchy, and if
you want to split or tame the oligarchy, make that majority a super-majority, with cadres ready to
do more than vote. Sanders seems to take this view, as does Corbyn. How that will play out globally,
nation by nation, state by state, and precinct by precinct, I have no idea, and a
Trump can tap into class resentment just as well as a Sanders.[3] We live in interesting times.
Where's the similar juxtaposition for Sanders? Sanders needs to ramp up the class conflict
meme right now. This kind of 'counter culture' identity politics takes time to be established.
Sanders might not realize yet how powerful a message he has available to him. I do hope Sanders
has some campaign aparatchiks over in England learning Corbyns' methods.
For those who aren't aware, a central plank of Corbyn's campaign is economic. He wants to set
up a an investment bank, funded by quantitative easing. This policy is being referred to as "people's
quantitative easing".
It's been developed in part by a UK accountant called Richard Murphy, whose weblog you can
read here:
As far as I can tell, this would be have a very similar effect to Keynesian stimulus.
The way it's being sold is that QE was used to bail out the British banks following 2008. Of
course, the 2008 QE was OK with the Conservatives, and with old New Labour. So, why not use the
same mechanism again, but instead of giving the cash to the banks, use it to set up an Investment
Bank which will fund infrastructure.
[I]t's very unlikely to fly with either the parliamentary Labour party, the wider Labour
party membership, or the UK public
Then the real question is what happens at the constituency party level. Refuseniks may go on
and on about how the sky is falling and they'll never be in power again, but if Corbyn supporters,
who seem to represent a real ground swell, can exercise their voice at the constituency level
to make clear that if the Blairites stick to their neoliberal [non]principles then they will likely
face deselection (just like with primary challenges here in the US), then the mostly careerists
among the "modernizers" will see that at least appearing to support Corbyn's platform will be
in their own best interests. After all, wouldn't that be, I dunno, democratic?
However, it's likely that everyone involved will want to avoid a repeat of the damaging Labour
party split which happened in the 1980s.
The analogy to the 1980s is flawed though. During the 1980s, the UK Labour party was already
very left wing, and was facing an unexpected and highly effective attack from the Thatcher government.
For example, no-one thought that Thatcher would shut down UK industry and fritter away North Sea
oil income in order to silence her opponents, but that's exactly what she did. It's about this
time that the Labour party splintered, and would eventually be taken over by Tony Blair.
Fast forward to 2015, and the UK Labour party is controlled by neoliberals. But the grassroots
support has remained to the left of the leadership. Until now, there hasn't been a chance for
the grassroots to do anything about the way the party is run. Due to hubris, or complacency, Corbyn
was added to the ballot. Yesterday he took leadership of the party.
As a result, a lot of Labour MPs seem confused. They're basically squeezed between the party
leadership, and the party membership. For example, 15,500 people have joined the Labour party
since yesterday. Normally, you'd expect MPs to be delighted to have a very popular new leader,
and grassroots membership increasing rapidly. But, for some reason, several MPs are viewing it
as a disaster.
What might count in Corbyn's favour is that he was a Labour MP in the 1980s. He thus saw first
hand what happened when the party split then. Furthermore, the tactics likely to be employed by
the Cameron government are now very well understood (they're basically a continuation of the Thatcher
policies). So, it seems unlikely that events will rerun in the same way they did 30 years ago.
m-ga,
September 13, 2015 at 2:13 pm
The Conservatives are in power until 2020. So, assuming Corbyn can hold the Labour party together,
he has five years to make his case. There may be finance-led attacks on the UK following 2020 if
Corbyn actually gets elected.
Two things might happen before then, though. Firstly, Corbyn might not stick around. In one scenario,
he is thrown out in a coup by another faction of the Labour party. In another, he leaves voluntarily,
on the basis that another party member would be better than him going into the election campaign.
This second scenario isn't too unlikely in my opinion – Corbyn seems more interested in the success
of his policies than the success of himself personally. He is also 66, and would be 70 by the 2020
campaign.
I suppose it depends if there's anyone who would carry the policies forward. The group
of Labour MPs who fully support him is very small – maybe 15 or less. That's could change, though,
if there is appetite among the wider public for Corbyn's policies. Unfortunately, MPs exploiting
such opportunities are likely to be more interested in power than anything else. So, a chosen successor
would most likely come from the handful who already support him.
The other thing which might happen is another major financial shock – be it for the UK, Europe, or
a global event similar to those in 2008 or 2000. The Conservatives have a wafer-thin UK majority.
If they recommend bailing out the financial system again, or if their (unjustified) reputation for
economic competence collapses, the public outcry could mean the Conservatives don't survive.
If that
happened, and if Corbynomics (i.e. the green quantitative easing) had been established as an alternative
in the minds of the UK public, then Corbynomics might become the preferred route. There would be
a lot of screaming from the banks.
Abbott loaded up Turnbull with a poisoned chalice. Seriously, infrastructure of the NBN's scale
was never going to be straightforward, with Telstra's hard ass obstructionism thrown in..Still,
the pollies wanted to politicise it, and Rupert's self-interested media style never gave them
any choice.
When you step back, political vanity, fear of Rupert, and individualist ambition ruined the Libs
on two really important issues in the ETS and the NBN. If they'd had the wit to be bipartisan
both would be non-issues that would have fed a lot of positives back into their own interests
and the community. But they chose to see short-termist wedge opportunity and failed to see Rupert's
and his mates self-interest was whipping them. Outfoxed by Fox, so to speak.
I doubt whether they will have the self-awareness to rue their binding to the IPA and Murdoch,
but they ought to. Maybe in a decade. The malignant interest of old men's corporate internal power
struggles has screwed the Libs out of so many options.
Cdaler77 14 Sep 2015 20:35
Turnbull just needs to be "not Abbott".
Be consultative with his colleagues AND the Australian people.
Abbott was constantly at war with both. That's no way to be a Prime Minister.
Stop being under the thumb of Murdoch and Stokes, and simply refuse to go on any shock jock's
TV or radio shows. Tell Bolt, Hadley, Jones and all the others to just get stuffed.
The way Scott Morrison sucks up to Ray Hadley is simply sickening and unbecoming of a Minister
of the Government. He should stop it now.
Just never, ever, treat the Australian people with the contempt that Abbott has shown us over
the years. That he (Abbott) has gone is one of the best things that has happened. Now hopefully
we can all settle down and put the toxic era of Rudd/Gillard/Rudd/Abbott behind us.
I say this as a Labor supporter. I know it may mean Labor doesn't win the next election, but I'm
so relieved Abbott is gone. He was a very dangerous man for our country in these troubled times.
Hopefully now cooler heads will prevail on both sides.
ukchange68 14 Sep 2015 20:14
Abbott gone - tick
Cameron - work in progress
Obama - work in progress
Getting there...............
JemFinch1 BSchwartz 14 Sep 2015 20:11
He is a truculent, spoiled, entitled child. Yes, his speech will have to be written for him,
but he is the goose who has to deliver it, and no doubt he will stuff that up too.
Good riddance to bad rubbish.
I know the Libs are still in power, but maybe now we can actually have some intelligent debate,
some thought out policies, and Labor will have to lift their game - Tones won't be kicking any
more home goals.
darthseditious1969 -> smudge10 14 Sep 2015 20:06
I get a distinct impression that Turnbull holds Murdoch in contempt. Which might be a good
thing.
BSchwartz 14 Sep 2015 19:49
No one likes losing. But it is expected that you rock up, thank your supporters, reflect on
your achievements, and either which the victor all the best or to rot in hell.
Abbott's failure to appear after losing the ballot reminds us of why his leadership failed.
He was an adrenaline junky, always aggressive, never reflective, never gracious.
He also was a hopeless thinker, unable to react to changing circumstance, never able to speak
in more than soundbites.
Someone will have written a speech for him overnight. He is incapable. History will not be
kind.
long_memory 14 Sep 2015 19:11
Great that Australia's experiment of having a Abbott fascist government has come to an end.
"Dr. Lawrence Britt has examined the fascist regimes of Hitler (Germany), Mussolini (Italy), Franco
(Spain), Suharto (Indonesia) and several Latin American regimes. Britt found 14 defining characteristics
common to each:
1. Powerful and Continuing Nationalism - Fascist regimes tend to make constant use of patriotic
mottos, slogans, symbols, songs, and other paraphernalia. Flags are seen everywhere, as are flag
symbols on clothing and in public displays.
2. Disdain for the Recognition of Human Rights - Because of fear of enemies and the need for security,
the people in fascist regimes are persuaded that human rights can be ignored in certain cases
because of "need." The people tend to look the other way or even approve of torture, summary executions,
assassinations, long incarcerations of prisoners, etc.
3. Identification of Enemies/Scapegoats as a Unifying Cause - The people are rallied into a unifying
patriotic frenzy over the need to eliminate a perceived common threat or foe: racial , ethnic
or religious minorities; liberals; communists; socialists, terrorists, etc.
4. Supremacy of the Military - Even when there are widespread domestic problems, the military
is given a disproportionate amount of government funding, and the domestic agenda is neglected.
Soldiers and military service are glamorized.
5. Rampant Sexism - The governments of fascist nations tend to be almost exclusively male-dominated.
Under fascist regimes, traditional gender roles are made more rigid. Divorce, abortion and homosexuality
are suppressed and the state is represented as the ultimate guardian of the family institution.
6. Controlled Mass Media - Sometimes to media is directly controlled by the government, but in
other cases, the media is indirectly controlled by government regulation, or sympathetic media
spokespeople and executives. Censorship, especially in war time, is very common.
7. Obsession with National Security - Fear is used as a motivational tool by the government over
the masses.
8. Religion and Government are Intertwined - Governments in fascist nations tend to use the most
common religion in the nation as a tool to manipulate public opinion. Religious rhetoric and terminology
is common from government leaders, even when the major tenets of the religion are diametrically
opposed to the government's policies or actions. 9. Corporate Power is Protected - The industrial
and business aristocracy of a fascist nation often are the ones who put the government leaders
into power, creating a mutually beneficial business/government relationship and power elite.
10. Labor Power is Suppressed - Because the organizing power of labor is the only real threat
to a fascist government, labor unions are either eliminated entirely, or are severely suppressed.
11. Disdain for Intellectuals and the Arts - Fascist nations tend to promote and tolerate open
hostility to higher education, and academia. It is not uncommon for professors and other academics
to be censored or even arrested. Free expression in the arts and letters is openly attacked.
12. Obsession with Crime and Punishment - Under fascist regimes, the police are given almost limitless
power to enforce laws. The people are often willing to overlook police abuses and even forego
civil liberties in the name of patriotism. There is often a national police force with virtually
unlimited power in fascist nations.
13. Rampant Cronyism and Corruption - Fascist regimes almost always are governed by groups of
friends and associates who appoint each other to government positions and use governmental power
and authority to protect their friends from accountability. It is not uncommon in fascist regimes
for national resources and even treasures to be appropriated or even outright stolen by government
leaders.
14. Fraudulent Elections - Sometimes elections in fascist nations are a complete sham. Other times
elections are manipulated by smear campaigns against or even assassination of opposition candidates,
use of legislation to control voting numbers or political district boundaries, and manipulation
of the media. Fascist nations also typically use their judiciaries to manipulate or control elections." http://www.rense.com/general37/fascism.htm
thegarlicfarmer 14 Sep 2015 19:02
There will be short-lived honeymoon - then this elitist self interested man will be shown to
what he is - same as Abbott in that he will serve his masters - the wealthy, multi-nationals et
al. He has no regard to the common man/woman as he does not understand them. He has no moral compass
- as long as he has power then all is ok. Supposedly a knowledgeable man on the NBN - look what
has happened to that under his watch! Remember his foray as leader before? How we forget so quickly!
He allowed a lowly public servant to hoodwink him - so that is the type of Prime Minister we have.
HE HAS NO INTEREST BUT IN HIMSELF. Where oh where are the leaders who will take this great country
forward - there is none in any of the political elite that play in Canberra these day? It will
not happen in my lifetime but I live in hope that the generation y etc. will take the baton and
run with it.
Can Malcolm get some reality into the Global Warming issue before it becomes an absolute disaster,
positive feedbacks are kicking in
Philip Emery 14 Sep 2015 18:42
Turnbull is to be commended on flushing the toilet and getting rid of the big turd wallowing
in the bottom of the bowl. Now it is to be hoped he scrapes the encrusted shit of the sides and
actually has a go at governing. And Malcolm remember you're there to govern, not rule.
Warren Peece 14 Sep 2015 18:28
I hereby christen Abbott: Two Turd (as in 2/3) Tony, he did manage 2 of a possible 3 years,
after all.
Friarbird 14 Sep 2015 18:18
Abbott was a museum exhibit, a blundering politician from an earlier age and narrow culture.
He would have been quite at home in the clerical fascist regimes of Europe in the 1920's-40's,
in which obedience to authority was counted the primary virtue.
Sitting at the knee of the prominent Catholic reactionary, BA Santamaria, he absorbed the 'values'
of these regimes. They never left him. Consequently, he had real difficulty adapting to the democratic
Westminster System and appeared baffled when it raised obstacles in his path. Government, it seemed,
should act as a Prime Minister directs. He seemed to have little patience or understanding of
the separation of powers doctrine and often sought to circumvent it, sometimes by ignoring it
altogether, or by ludicrous 'captain's picks' which exhibited his often risible rash judgement.
He had little imagination and lacked even the trademark fancy footwork associated with politicians--picking
up and using the ideas of others. Significantly, his most striking 'success' was the dismantling
of Labor's work. No politician of 'calibre' would wish to be thus remembered. Australia is well
shot of him.
RalphFilthy 14 Sep 2015 18:16
F**k you Abbott.
Goodbye.
Some departing amusement (safe for work - not safe for conservatives)
"The worst prime minister in Australian political history"
That is how he will be remembered. This is a very harsh, damning label (he is human and this course
of events is enough to rock anyone) but his policies, his lies and his actions have led him to
the inevitable.
Saltyandthepretz markdeux 14 Sep 2015 17:55
This last act of hiding seals Abbott's fate as the worst Prime Minister in the history of Australian
politics. He wanted to be known as the "infrastructure Prime Minister" but words and actions can
be two completely different things, thus he will be remembered as the "incompetent Prime Minister".
Bearmuchly OnceWasAus 14 Sep 2015 17:55
"not Americas bitches which the LNP have become"...............
Not disagreeing with the sentiment, however...........
a. The ALP seem no less beholden to US foreign policy
b. We've moved beyond National boundaries/nation states
........Murdoch represents global corporatisation, they know no boundaries, the world is their
play pen and sovereign Govt's. , when not in their pockets, just get in the way.
dipole 14 Sep 2015 17:43
I'm conflicted.
Tony Abbott is, without doubt, the worst Australian PM in living memory.
Being as thick as two bricks, he was completely out of his depth.
So showing this anti-science climate change denier the door is a good thing.
But I was also looking forward to the complete trouncing the LNP were going to get at the next
election. With Abbott as PM, he would have become the first one term PM in a very long time.
Now Labor have to fight for the next election.
Which is also a very good thing.
Turnbull needs to state publically that climate change is real, and we have an obligation to combat
it. He needs to state that he is pro-science, and pro-alternative energy. He needs to remove the
priests from the nations schools. And he needs to fix the NBN, so we have something worth using.
That will prove he is nothing like Abbott.
Simon Thompson Penfisher 14 Sep 2015 17:42
I am sure that someone will be able to point out the flaws in this suggestion, but here we
go. The problem I see with representational government is that we elect the people whose lies
we believe the most (or whose lies we'd like to believe the most).
Whilst ever we delegate responsibility for decision-making to professional liars we will forever
be complaining that we elected A, promised to do B, only to end up with legislation C. The Swiss
have a form of government which includes a plebiscite where the public vote directly on the issues.
I can see the first problem (in California) which is when the public votes for BOTH no increase
in revenue / no increase in taxes AND an increase in expenditure. Maybe any expenditure has to
include in the bill where the revenue is raised from? Meantime, our representational system of
democracy which I consider CORPOCRACY (the best government that money can buy) will continue to
plague us with paid-off pollies whose main job, as I said elsewhere is to get re-elected. Job
#1 get elected. Job #2 get re-elected. Job #3 get to form government .. rinse and repeat. We can
all see how the piper calls the tune and the biggest campaign donors and lobbyists get the government
policy they want. Would plebiscites be able to be made to work in Australia? Would it deliver
a better form of government?
Raymond Hall 14 Sep 2015 17:42
The miserable coward that Abbott has always been was on show last night. No show. From the
most divisive, bullying and mean man ever to grace the position of PM, Abbott has thankfully been
shown the door. Turnbull will be an improvement. How much an improvement only time will tell.
But the real essence is that the LNP are damaged beyond repair, and only when the far right neo-cons
fade away, will they ever be a real force again.
Anthony Forsyth 14 Sep 2015 17:38
Bye bye, Tone. A gutless ideologue who bullied his way to a job that was far beyond his ability.
You won't be missed.
Mr Turbull no doubt believes this signals the end of the neo-cons and ushers in a glorious era
for neoliberalism again. Can't imagine how he will govern his conservative apparatchiks from the
centre.
The world is moving toward a new era with a new kind of socialism at the forefront. Corbyn elected
as leader of the Labour Party in the UK, Sanders gaining traction in the U.S.
Expect Australia to be 5 steps behind yet again.
WitlessNall 14 Sep 2015 17:09
Can someone please tell Rupert Murdoch Australia isn't his little kingdom anymore?
Yeah you better remember that ScoMo next time you want to remind us what a puppet you are ...
markdeux 14 Sep 2015 17:08
Where was Abbott last night. A gutless mean spirited low life who did not have the courage
to face the cameras after being dumped by some of his party. How long before the neo's are out
to destroy Mal?
Rudd's actions after being dumped will look like a kiddies party compared to what is going to
happen. Bets are on that Cory the enlightened one will be the first thug to attack. This is going
to be fun.
Falcopilot Marleyman 14 Sep 2015 16:54
I always TRY to look on peoples best sides, but unfortunately the facts back you up all the
way, so I reluctantly concur with your assessment!
Abbott was a truly sad excuse for a humane being, and I always think of his party as the "mean
and nasty party"!
Abbott's legacy is not going to look in the history books at all, he is/was a dismal failure,
not unlike Bush V2.0 and that real weirdo Blair!
What is it that enables all the sociopaths/weirdo's/damaged people to get into power?
The politician's job description seems to attract a lot of the "wrong type of people", not unlike
flies and maggots to a bad smell.
I am very hopeful that Malcolm CAN successfully polish that turd, because the political "system"
does not work very with only one viable party/choice!
I think both parties need regular major shake ups to smarten them up and make them hungry, and
to top them becoming ever more disfunctional.
GiveMyCountryBack 14 Sep 2015 16:38
Will Dumb-Dumb even go to work today? It might all be a bit too much for the petal.
Looking forward to when the Labor address a question to the PM, Malcontent, that reference Ten
Flags. Good times.
GiveMyCountryBack BobRafto 14 Sep 2015 16:36
Yep. They need to start hammering him on this stuff. He came out and said 'you can vote for
me, I'm not Dumb-Dumb', but hasn't demonstrated any desire for different policies.
He's fucked. The party hate him. Heaps of their rabid voter base hate him. People generally
dislike 'wankers' and there's no doubt that the slick delivery of Malcontent will leave people
with the impression that he is just that.
Just another smug merchant banker. Treat him accordingly.
dga1948 14 Sep 2015 16:32
He may be a Turd rolled in glitter but remember comrade, you can't polish a Turd and this Turd
has demonstrated on more occasions then I can remember that he is prepared to abandon any principle
in pursuit of power.
Marleyman 14 Sep 2015 16:23
Good riddance to Abbott a true turd amongst a big steaming pile. He was a nasty vile ideological
religious zealot driven by fear prejudice and backward dark aged thinking. Can Turnbull polish
this turd ? I doubt it..the grassroots fascists remain behind the scenes spreading their stupid
philosophy
blarneybanana scott_skelton 14 Sep 2015 16:09
I'm NOT a Labor supporter, and he exceeded our wildest imaginings.
Picking a fight with CHina, Russia and Indonesia SIMULTANEOUSLY?! That's the kind of things that
books are plotted around.
Attacking a wheelchair bound war hero? (well, tried to)
blarneybanana gudzwabofer 14 Sep 2015 16:04
Yes, and no. Putin is judo, and I know thru personal and rather brutal experience they don't
hand those things out in cornflakes packets. I'm pretty sure Tony might have started things by
a bit of wall punching and wheelchair kicking, but it would have ended with Vlad making a suppository
out of the red togs.
The suppository of all Tony's wisdom?
blarneybanana 14 Sep 2015 15:19
Somehow, I doubt he will physically threaten a major world leader (who could perfectly well
defend himself by strangling TA with his own budgie smugglers), pick an unwinnable series of fights
with our major trading partners, or TRY TO ATTACK A WAR HERO IN A WHEEL CHAIR
OldTrombone 14 Sep 2015 14:26
It wasn't Abbott who made the mistakes - it was the Australian voters who made the massive
mistake.
Everyone but everyone KNEW Abbott was like this, and they knew he was going to do what he did.
They didn't "hold their nose" to vote for him, they held their testes! WRONG!
Mike Scrafton RJHanley 14 Sep 2015 13:53
Well that's politics. Did you expect anything better?
There are no politicians who can lie straight in bed and who get into Cabinet.
Hypocrisy and compromised principles , deceit and deception, are the qualities that get you into
the Ministry - undeserved self regard, hubris and a messiah complex are what gets you into the
PM's job. They are all the same. I hope you're not disappointed!
Abbott lied about a great many things. Sadly Abbott wasn't a psycho but just ill equipped for
a job he didn't understand. Also he wasn't an outlier on the bell curve of politicians.
However from this point on it is what Turnbull does as PM that's important. I don't really care
what he believes only the policies he enacts or if he's sincere when he fixes the country. I just
hope he does!
They all lie about where there loyalties lie, and I think most of the electorate expect that,
and accept it.
What the electorate will not accept is a leader who tells you what he will absolutely not do,
and then announce within a matter of weeks that circumstances have changed, and he now will do
it.
Not to mention all the other broken promises, and lies.
To pledge allegiance to a party leader is just politics. To make pledges to the electorate only
to backpedal on most of them, falls into another category altogether, and it creates within the
electorate a mistrust and anger that cannot be satiated by anything other than failure and humiliation.
Mr Abbot reaped what he sewed.
TheCorporateClass -> Letschat 14 Sep 2015 13:39
Like most bullies, Abbott is a coward. Yes, and in spades!
I hope his party is grateful.
They bloody well better be, or they will burn to ashes within a year.
Any chance that ALL those 100 Liberals could put ALL OF Australia's people first, for just a year?
BilltheDill SENTINEL48 14 Sep 2015 13:36
Indeed, he has been Tony Abbott, but he has also made many mistakes, most of which stem from
not holding his word and being a man of truth.
To put it bluntly, he lied to the Australian people on too many occasions, and about too many
important matters. That was his political mistake. The rest of it is just his personality.
SENTINEL48 14 Sep 2015 13:14
Tony Abbott didn't make mistakes . He was just Tony Abbott .
scott_skelton BaldwinP 14 Sep 2015 13:12
We all knew that Abbott was a wingnut, but TBH I've been surprised by the depth of his incompetence,
and I'm a Labor supporter.
Letschat 14 Sep 2015 12:13
Like most bullies, Abbott is a coward. Of course he hasn't fronted the media. He is absolutely
no loss to politics in this country. We can only hope that they take the Abbott game book and
flush it down the toilet where it belongs. He can take his destructive fascist tactics with him
as he walks out the door and we slam it shut behind him.
There is no question that Malcolm Turnbull understands what the electorate is so bloody angry
about. Now the party has to deliver. Whether they can or will remains to be seen. Their is more
wrong with the current government that the incompetent leadership. They have a problem of culture
with shameless rorting lying and corrupt practice.Turnbull has certainly set himself a challenge.
I hope his party is grateful.
Talwyn224 14 Sep 2015 11:04
The worst prime minister in Australian political history thus far has been shown the door and
not a moment too soon.
An epitaph:
Tony Abbott - Promoted beyond the level of his incompetence
Neocon Diehl has the audacity to use WashPost editorial page to attacks Secretary of State John
Kerry. Promoting what is essentially Nuland's jingoistic policies... so despite
blunder after blunder neocons are not yet done. . "...Diehl seems to think that the US has or should have a free hand to do what it wants
wherever and whenever it wants, and gets all twitchy when he discovers that the 'end of history'
hasn't arrived just yet. He forgets that Russia was in Crimea and Syria long before the US showed up
with its solutions in hand." . "...Or best idea yet -- Send these WaPo neocons (Diehl and Hiatt) packing. "
Over the summer, while Washington was preoccupied with the
Iran nuclear deal, U.S. and European diplomats quietly leaned on the democratically elected,
pro-Western Ukrainian government of Petro Poroshenko. In Sochi, Kerry had offered
full-throated U.S.
support for the implementation of an accord known as
Minsk 2 - a deal hastily brokered by Germany and France in February, at a moment when regular
Russian troops were cutting the Ukrainian army to ribbons. The bargain is a terrible one for
Kiev: It stipulates that Ukraine must adopt a constitutional reform granting extraordinary powers
to the Russian-occupied regions, and that the reforms must satisfy Moscow's proxies. That gives
Putin a de facto veto over Ukraine's governing structure.
Dryly 41
First, the instability in the Middle East is a direct result of the disaster caused the
Bush II-Cheney administration's war against Iraq to fine Weapons of Mass Destruction. There
were none. Any normal person would conclude that it would have been much cheaper and saner to
have let the United Nations Monitoring and Verification Inspection Commission inspectors
continue their inspections and find there were no WMD than to start a Pre-emptive War. Jackson
is not a normal person as he supported the Bush II-Cheney war.
Second, Bush II-Cheney administration's war against Iraq at a time Iraq posed no military
threat to the U.S. or any other nation did enormous damage to the standing, stature and
prestige of the United States of America. How can the United States argue that it is fine for
the us to invade the sovereign nation of Iraq if we want to but Russia cannot invade Ukraine?
Stranger9
Putin is extremely articulate on the subject of international ethics and law. Sure, he's
corrupt as the day is long, but he seems to believe in certain basic Judeo-Christian-based
tenets of international conduct. The West seems tied to Islamic jihad tenets, so the United
States and its allies don't believe in the most basic rules. Thus, the moral high ground goes
to Putin.
Whizdom
Diehl wants us to tie up our military assets trying to take down Hezbollah and Iran, while
China is free to consolidate in the South China Sea
Whizdom
Iran is unlikely to be a Russian client, but strategic cooperation is likely.
Diehl and the Neocons over reached in trying to pry Ukraine out of Russians orbit before the
time was right, and also massive fail in Syria A naive and stupid strategy.
Luke W
Putin has a right to conduct a foreign policy without the permission of the United States.
American statecraft and military performance in the region as been abysmal and is the font
for much of the chaos now evident in Iraq and Syria thus, its credibility is in tatters.
Russia can certainly do no worse than what we have accomplish.
Livin_in_MD
Please, let us do all we can to entangle Russia into Syria's civil war. Let them bleed
slowly their national treasure and the blood of their soliders. Let it become their NEXT
Afghanistan. And while they're at it, please allow them to incite Muslims across the Middle
East because they are helping the Butcher Assad.
You don't think they're Muslims in Russia who would like to strike back at Putin for this?
Obama, playing the long game, is going to give just enough rope to let the Russians hang
themselves.
Whizdom
Let Russia be the magnet for Islamic terror instead of us? That's a concept.
Whizdom
Russia just wants its naval base and its hand on the valves of new Friendship pipeline that
will cross Syria from Iran's Pars fields. Putin doesn't care if it Is Assad or some other
stooge.
mike-sey
Who is in whose face depends on which side of the border one sits. Diehl seems to think
that the US has or should have a free hand to do what it wants wherever and whenever it wants,
and gets all twitchy when he discovers that the 'end of history' hasn't arrived just yet. He
forgets that Russia was in Crimea and Syria long before the US showed up with its solutions in
hand.
Stranger9
"Putin is meddling in the Middle East out of desperation because his bid for Ukraine has
failed."
Putin's "bid for Ukraine"? His bid is not for all of Ukraine, as this statement implies; it is
to keep Crimea within the orbit of Russia, since the great majority of its denizens are
Russian by choice, history and culture. The word "Crimea" is not once mentioned.
Then there's this: "Putin has an agenda as clear as it is noxious. He wants to block any
attempt by the West and its allies to engineer the removal of Bashar al-Assad ..."
Noxious? What's noxious is the West's and Israel's unfounded claim on Assad's regime.
danram
It take a real Putin boot-licker to defend Bashir Assad. Congratulations.
And if Putin is only concerned with Crimea, then why are his forces in southeastern Ukraine?
Oh yeah, that's right ... They really aren't. Got it.
Stranger9
An international code of conduct must be maintained. It cannot be broken by engineering
coups and installing unelected leaders, as was done in Ukraine. The same applies In Syria. You
simply cannot take over a sovereign country simply because you can. There are rules that even
the U.S. -- "exceptional" though it claims to be -- must abide by.
MyCountry2
Syria will [be] Russia's second Afghanistan.
Whizdom
Do we get to arm the Islamists again?
IWH_rus
Why? did you stop it already? When?
jack406
Where's Reagan when we need him?
Didn't he build Al Quaida?
Michael DeStefano
We can dress Yatsenyuk up like Osama. His days in Ukraine are numbered anyway and he's
about the right height. Not quite as handsome but the beard will cover most of that.
-shiloh-
The flood of refugees into Europe will continue until somebody stops the source of the
flood. Does anybody really care who's fingers are in the dike? The only way to end the refugee
crisis is to end the civil war(s) and insurgencies in the region. A cooperative effort among
Europe, Russia, and Iran with the assistance of the US is preferable to the status quo. Ports,
pipelines, and political ideologies are incidental issues.
Whizdom
So Russia and Iran are moving to crush ISIS and restore stability in Syria, which will ease
the refugee crisis. And Diehl is unhappy? Syria has been a client of Russia's for a half
century. Ending that relationship is a neocon goal, but does it even make sense now? Worth the
price?
Forest Webb
What's the big deal? the editor makes this sound if this is some brilliant strategy on the
part of Putin. If the Russians want to throw away their sons in the Mid-east quagmire let
them.
It's a complicated stew and Putin has easier choices in the arena than the U.S. For Putin he
simply supports Assad.
For the U.S. we want Assad out, so we cannot support him. We cannot support ISIL, half or the
other opposition is supported by al Qaeda, the Kurds would just as soon fight the Turks our
erstwhile Nato ally rather than fight the Assad regime. A complicated messy stew, we should
try to keep our spoons out of.
Let Putin send his Russian boys to Syria, and let's count how many weeks pass before the
terrorists take the war to Russian soil.
Michael Cook
Putin won in Ukraine. He has the Crimea back and has secured an overland gas pipeline
corridor from Mother Russia to the peninsula, which was his objective. All it really cost him
was dozens of scoldings from Obama.
Obama already scolds and threatens Vladimir Putin about Syria. The problem is that Moscow is
absolutely right---if someone does not step in and rescue Syria RIGHT NOW the country will
fall to ISIS before the end of the year. Assad's forces are exhausted.
Iran, of course, besides Russia is Bashar al Assad's other ally. The interesting point about
that is that neither Russia nor Iran had much money available to make war.
Until last week. Now that Obama is freeing up frozen Iranian funds ($50-150 Billion!) suddenly
the militant mullahs in Tehran have plenty of money for war making.
Can anyone smell a win-win for Putin? He gets to be the only leader of a major nation around
to have the guts and intelligence to realize that allowing Syria to fall to ISIS would be a
global catastrophe of the first magnitude. Better yet, Putin gets to sell lots and lots of
Russian weapons, which helps his own struggling economy! Has Putin studied "The Art of the
Deal?"
SELL weapons for cash money! Courtesy of Obama! Now that is worth putting up with more of
these tiresome tongue-lashings that POTUS likes to dole out when he is clueless about what is
going on. Since Obama is clueless all the time, Putin just has to put up with the noise.
Michael DeStefano
Putin's objective was to secure a gas pipeline corridor across the Kerch Strait?
So he could what, erect one of those ancient Greek fire breathing dragon flame throwers on the
Crimean coast?
Not everything's about gas, Mr. Cook.
Ethernum
Russian airstrike in Syria won't perform better than the US (with a more advanced
technology) against the Islamic state.
Can Putin engage a ground assault in Syria with regular/irregular troops the way he did in
Ukraine ?
He can try but the result won't be the same, there's some wealthy countries supporting the
Islamic State and they will provide them a lot of money, weapons and soldiers coming from
everywhere to beat the Russian army, Putin will be unable to veto this support to the Islamic
state, and it will restart what the US army experienced in Iraq, with permanent IED and
kamikazes, while there will be no target for planes and drones....
IWH_rus
How many countries should be invaded and ravaged before USA became appeased?
simon7382
Nice try, no cigar....The US invasion of Iraq was a grave mistake, BUT it does not justify
Putin's naked aggression in Georgia, in Ukraine or now in Syria in any way.
IWH_rus
Iraq is all you know about? Right now you involved in seven wars. And you never stop to
invade all the last century. With all your history USA have only 21 year of peace, all the
time invading, conquering, overthrowing legal governments to replace it with puppets. As it
YOU made in Georgia, and Ukraine, and try to in Syria.
r2rnot
Putin is like a shark in the water, detecting blood around him. With the appeasers in our
current administration, he has nothing to be worried about. He knows that Obama will do
nothing but fire more drones and try to find some targets for bombs, as long is no non-combat
person is in the area.
Michael DeStefano
If Putin's like a shark in water, McCain and Nudelman were like hyenas going after
Ukraine's carcass,
SG2118
Refugees from Syria are a welcome relief to the Assad regime. It's hundreds of thousands of
people who they need no longer worry about. Good riddance is Assad's feeling on the matter.
Same holds for those from Iraq and Afghanistan. Rebels and those opposed to the government are
leaving in droves and the regime couldn't be happier.
Russian troops in Syria? Russian warplanes and drones? They're going to be busom-buddies with
the Iranian Quds Force which has been there for years, alongside Hezbollah fighters who are
there to ensure the supply lines from Teheran remain open and aid, money and weapons continue
to flow into the Bekaa Valley.
The Fall of Assad would be a cataclysm to Iranian hopes and dreams for the Middle East. They
will not give up without a serious fight. Russia is there now, like in Vietnam 50 years ago,
to "advise" and "train" local "militias" to "resist aggression".
choppy1
And if Putin's plan is to make himself look significant by "confronting" the U.S., he has
succeeded, at least with Jackson Diehl. The question isn't whether Russia is pushing the U.S.
around, it's whether U.S. national interests are involved. The U.S. has lived with the Assad
regime for 45 years. Is it really so crucial that we get rid of it now? Ukraine is hardly a
linchpin of Europe. Sure, it would be nice if it were free and western. But it has historic
ties to Russia, is more important to Russia than to us, and has not shown laser-like focus on
becoming a serious western democracy. Meanwhile Putin presides over an economy that's
shrinking 5% a year, with a population that's also shrinking. And he made the choice to keep
power for himself and his cronies rather than modernize. No matter what he does abroad, Russia
itself is on a decline that he will only exacerbate. He's dangerous, not because he's strong,
but because he's weak. We should not let his actions fool us into losing sight of where our
core interests lie.
IWH_rus
While world sleeps, Putin moves stars with his finger, to disrupt NATO's operations and
disturb dreams.
Greyhounds
Right. Because NATO is operating in Syria?
IWH_rus
NATO is a theatre of one actor. And this multifaced actor is operating in Syria, arming
terrorists.
RealChoices
If anything, Russian aid to Assad should be encouraged. We may find Assad too repulsive to
aid, but given a choice between Assad and ISIS, he is definitely the lesser of two evils. It's
time to dispense with a notion of a "moderate pro-Western rebel force", it was always wishful
thinking.
Greyhounds
There's this little thing called "human rights" and another little thing called "the Leahy
Ammendment" that prevent us from providing aid to terrorists like Assad or even giving a nod
to Putin to do so.
Michael DeStefano
But you seem to be all hunky dory with Poroshenko and our Saudi and Israeli allies bombing
civilians into oblivion. Funny how that 'human rights' business pops up and down on demand.
Slava Besser
So Assad is a terrorist, but Poroshenko is allowed to bomb Donetsk at willSmile Saudi
Arabia is allowed to bomb Yemen with cluster munitions we provide because they don't like the
revolution there, but Russia should not provide aid to Donetsk despite the fact that people
that came to power in Ukraine illegally and are blatantly anti-Russian are using air-force,
tanks and artillery against civilian population that happens to have pro-Russian views?
Michael Cook
Spot On! Assad's forces are exhausted and extremely weak. If Russia doesn't come in and
save the day, Syria will fall to ISIS with all the slaughter of minorities and hate crimes
against archeology that entails.
I can't believe that the Obama administration is playing this like it is more important to
uphold fictional political straw men than to actually stop ISIS from scoring their most
important strategic victory ever!
SG2118
Iran is deeply involved in propping up Assad. It is through Syria that Iranian supplies
reach their proxy lap-dog Hezbollah. Without that vital lifeline open, Hezbollah is cut off
from their patron, and cannot be used against Iranian enemies (i.e. Israel). The Iranian Quds
Force is in Syria now doing front-line fighting. Hezbollah too is deeply engaged. Without that
level of aid, Assad's control would shrink dramatically, if not topple over altogether.
SG2118
News of the day. Iranian special forces moved into Syria to help Russians. Source - Israeli
intelligence.
Slava Besser
I'm a Jew, are you implying that it is better for Israel if ISIS comes to power in Syria?
nativeson7
I would respectfully suggest that Russia's participation in the Ukrainian and Syrian
conflicts are different means to accomplish the identical objective, the undermining, if not
outright dismemberment, of the EU and NATO.
While the Ukrainian gambit failed, taking the Russian economy with it, the "Syrian play"
shows far more promise in its early stages and at the very least is likely to erode the
unanimous support required for an extension of the EU's economic sanctions against Russia.
Merkel's misguided response to the initial flood of Syrian refugees has transformed the
matter into an existential crisis in the minds of many Europeans and "right wing" parties
throughout the continent.
There has been a notably unified and pronounced response from the Slavic Eastern European
states in particular. Slovakia has declared it will accept only Christian refugees, Hungary
has erected a fence along its southern border with Serbia and Bulgaria has done the same along
its border with Turkey. Poland has agreed to take only 2000 Christian refugees rather than the
12,000 requested by the EU and in the Baltics protests have arisen over projected Syrian
resettlement figures numbered in the hundreds.
Russia's military support will not only breathe new life into the Assad regime it will assure
a continuing flood of migrants from Syria, into Europe, which will serve as a catalyst to
create a "Pan-Slavic Europe" with a political, religious and cultural unity that could well
transcend Eastern Europeans view of themselves as "European".
Michael DeStefano
Jeez, what a nefarious plot. Flood Europe with immigrants until it bursts at the seams. I
knew that Putin was no good. What a Svengali-Machiavelli hybrid.
Why just today I heard on Meet the Press that they're all running from Assad and really upset
that he's just being really mean with ISIS and not letting them distribute food and chocolates
to the masses.
IWH_rus
Look at the map of "Arab spring". These lands make a belt from Atlantica to Indian Ocean,
blocking Eurasia from Africa. It is clearly the geopolitical project of the power, which wins
situation, while EU, Russia, China loose. Who is greatest and faithfull supporter of chaos in
Middle East? USA.
Assad is unimportant. No matter who rule there, Syria is the target. If you destroy Syria -
lots of military staff and arms will be left abandoned, and go to search new destiny. How ISIS
was created? Jobless soldiers, cheap weapons. That's the target. Putin, Assad, just a
decorations. You are blind, if unable to see it, or you do it consciously, as the autor of
article. He is not as stupid, as try hard to look.
Michael DeStefano
Well it looks like, if Russia is 'pivoting' to Syria, then Germany has just decided to
pivot with them. They didn't exactly call our approach feckless and wrongheaded but I suspect
they may have had something along those lines in mind.
Germany surprisingly left the alliance formed together with the United States which intended
to block Russia's entry into the Syrian conflict.
Minister of Defence Ursula von der Leyen told Der Spiegel that she welcomed president Putin's
intentions of joining the fight against the extremist organization "Islamic State". It would
be a matter of mutual interests, she said.
A speaker of the Ministry of Foreign Affairs added, Germany would welcome additional efforts
of Russia in the fight against IS. Foreign Minister Frank-Walter Steinmeier even announced the
starting of a joint venture between him, Russian foreign minister Lavrov and their French
colleague Laurent Fabius with the aim of bringing the Syrian civil war to an end. Lavrov and
Fabius are expected to arrive in Berlin this Saturday.
moore_te
BIll Maher said it this weekend: There are five million troops in the Gulf States vs some
30,000 ISIS fighters... Where are they? Why don't the ME nations take in any refugees? (Of
course, who would want to live in any of them given a choice?)
Taking out Saddam and Gaddafi worked so well, so of course we need to repeat the procedure in
Syria!
Forget about the assurances we gave Russia that the West would leave a buffer between it and
Russia. So what if we renege on our agreements, it's all for a good cause, right? After all,
look how Bush stood up to them in Georgia. (He didn't.)
Or best idea yet -- Send these WaPo neocons (Diehl and Hiatt) packing.
Whizdom
There is a Syria peace deal in the works. naturally, NeoCons are gonna hate it. I wonder if
Syria will get the Golan Heights back.
Chortling_Heel
It is always a pleasure to receive the NeanderCon musings and misdirection of Jackson Diehl.
Rootin' Tootin' Putin and his hand puppet, Bashar al-Assad, are trying to run out the clock
before their nations implode even further --- taking each down with them.
"...Here is the thing, it has always suited the Tories and the right for millions of people
to not bother voting because the two parties look and sound 'just the same'... Now
that Corbyn actually is the leader of the opposition to the Tories, millions of young and other people
who never bother to vote because ''they're all the same'', will start to realise that isn't true anymore. "
"...It is wrong to say that Corbyn's victory alienates the establishment. The establishment had
alientaed themselves from a large number of people who felt themselves disenfranchised and cheated.
The establishment were so alientaed they did not realise they were alientaed. Corbyn's victory has only
highlighted it. I hope they have enough humility to realise it."
"...The triangulating managerialism of the Blair/Clinton era (Thatcherism/Reaganism with a human
face?) relied on the seeming stability of neoliberalism to discourage any deviation of its voting base
from what was defined by the socioeconomic elite as the center. Voters were considered passive molecules
whose sole purpose was to be heated up sufficiently during elections so that they would reach the polls
and make the inevitably correct selection. The core principles of neoliberalism would not be touched,
however the plebs were allowed to fight over the crumbs."
"...For a counter analysis, it helps to recap recent history under our neolib, rapidly devolving
to paleolib regime: we now live in a country where elected governments surrendered an entire industrial
base so that it could become a dodgy offshore banking center; who, in a 'privatization' frenzy, inadvertently
sold its power grid to the French state; engaged in a murderous and illegitimate war that propelled
unbounded worldwide terrorism; let its criminal finance centre off the hook after it helped cripple
the global economy; then we re-elected David Cameron, unleashed George Osborne and now some fancy Boris
Johnson with Nigel Farrage still hanging around. We have become, in effect, Bullingdonia. It is our
present reality and it is scarier than anything Corbyn has proposed. And I haven't even mentioned Brooks,
Coulson or Murdoch.
Many of the blighted citizenry of this country have had enough and have set their sights very sharply
on the long con of which the Tories, Blairites and the Paleolib British media including the Guardian
are leading proponents. The key operative factors being, of course, debt, debt slavery, and bondage
to the bank.
Labour had been colonized and neutralized by the regime. As the 'nicer tories' they bought a one
way ticket to oblivion with a short ascent at the beginning. And talking about 'aspiration': people
are finally getting that there is no hope at all in voting for the landlord or his pussy, so they're
not voting. Time to give 'em something exciting, some hope for the great well of non-voters among Generation
Screwed, who have been conned into accepting debt slavery and submission. This view holds particularly
among poleaxed interns stewing in their hovels without the n"
"...If we are lucky this may be the beginning of the end for TINA -- "There is No Alternative".
This mantra, the core slogan of the Thatcher era, was intended to inculcate in the electorate that neoconservatism
was the only viable economic and social strategy. Its been astoundingly successful -- despite it being
based on tenuous, unproven, theory (Hayek) and having been shown to cause economic disaster wherever
it was implemented (South America, for example) the notion of TINA was constantly pushed because it
made people money -- economies could die, people would live in misery but the elites coined it big time.
Its been obvious to anyone with even a vaguely functioning brain that something's wrong. Unfortunately
daring to even think of alternatives gets a gut reaction from many born of being fed propaganda from
birth -- witness the snide remarks about Trots or commissars, the hints of 'security risks' and so on.
This won't stop; prepare for a full on assault (although "Red Jeremy" doesn't roll off the tongue quite
as well as "Red Ken" so I'll wait to see how the tabloids handle him)."
"... There is a desperate need for an alternative voice to the neo-liberal consensus (ie. Capitalism
Unchained) "
"...The neoliberals are as wily as Stalin and incredibly cunning. "
"...And here we have the nub of the matter, the way that the NeoLiberals who infiltrated the
Labour party just assumed that the core vote would continue supporting them as they had nowhere else
to go... wrong, wrong, wrong!"
But then little of this is really about Corbyn. He is less the product
of a movement than the conduit for a moment that has parallels across the western world. After almost
a decade and a half of war, crisis and austerity, leftwing social democrats in all their various
national guises are enjoying a revival as they seek to challenge the neo-liberal consensus. In the
US, the self-described "democratic socialist" Bernie Sanders is outpolling Hillary Clinton for the
Democratic nomination in key states. Podemos in Spain, Syriza in Greece and Die Linke in Germany
are all posing significant challenges to mainstream centre-left parties.
... ... ...
From the moment it was clear that assumption was flawed, the political
and media class shifted from disbelief to derision to panic, apparently unaware that his growing
support was as much a repudiation of them as an embrace of him. Former Labour leaders and mainstream
commentators belittled his supporters as immature, deluded, self-indulgent and unrealistic, only
to express surprise when they could not win them over. As such this reckoning was a long time coming.
For the past couple of decades the Labour leadership has looked upon the various nascent social movements
that have emerged – against war, austerity, tuition fees, racism and inequality – with at best indifference
and at times contempt. They saw its participants, many of whom were or had been committed Labour
voters, not as potential allies but constant irritants.
The slew of resignations from the party's frontbench after the result
was announced and apocalyptic warnings from former ministers about the fate of the party under a
Corbyn leadership illustrate that this attitude hasn't changed. The party has spoken; its old leaders
would do well to listen but for now seem intent on covering their ears. They won't win it back with
snark and petulance. But they can make their claims about unelectability a self-fulfilling prophecy
by refusing to accept Corbyn's legitimacy as party leader.
Not only is Corbyn not being granted a honeymoon, relatives are determined to have a brawl at the
wedding.
Nonetheless, the question of whether Corbyn is electable is a crucial one to which there are many
views but no definitive answers. We are in uncharted waters and it's unlikely to be plain sailing.
May revealed that the British electoral landscape is both fractured and wildly volatile. What works
in London and Scotland may not work in middle England and the south-east. To some extent Corbyn's
success depends on how he performs as leader and the degree to which his supporters can make their
enthusiasm contagious.
It is a big risk. In the early 80s when Tony Benn made his bid for the deputy leadership, there was
a huge trade union movement and peace movement to buttress him if he won. Corbyn inherits a parliamentary
party in revolt and a determined but as yet unorganised band of followers. Clearly many believed
it was a risk worth taking. In the words of the American socialist Eugene Debs: "It is better to
vote for what you want and not get it than to vote for what you don't want and get it."
SqueakEMouse -> darylrevok 14 Sep 2015 02:45
' right-wing rodents ' That says all that one needs to know of your attitude and beliefs. Your
contempt for real people with real concerns and real aspirations. Well it's a democracy sonny
and you wont get the votes by abusing everybody who objects to your dictatorial fantasy world
being put into practice. If you cannot even SEEK to persuade then you have no hope at all. Wake
up and smell the coffee of reality.
bob1648 14 Sep 2015 02:42
Absolutely agree.
Scotland voted for the same ideals as JC and whilst the Blairites are busy throwing their toys
out the pram he can count on 56 very savvy MPs more than willing to back him in Westminster.
UncertainTrumpet 14 Sep 2015 02:42
Here is the thing, it has always suited the Tories and the right for millions of people
to not bother voting because the two parties look and sound 'just the same'.
We've all heard people say that politicians are all the same and only in it for themselves, some
of us have probably thought that ourselves.
So, the Tories and the right confidently started out sneering and making jokes about how Corbyn
was a dreamer.
That isn't true anymore now, though.
Now that Corbyn actually is the leader of the opposition to the Tories, millions of young and
other people who never bother to vote because ''they're all the same'', will start to realise
that isn't true anymore.
They'll see the difference between the two main parties is real now.
The Tories are for the rich, despite their 'party of working people' rhetoric; they've always
had the back of privilege, they've always framed their politics to appeal to personal selfishness.
And New Labour sounded just the same.
The Tories aren't scared of Corbyn, but they're more than a little concerned the rest of us voters
/ non-voters will start listening to him.
They don't like that thought, because they know they only got into power on a slender majority.
Corbyn as leader and more people listening to him could well nudge them out of their complacent
comfort zone.
Tiranoaguirre 14 Sep 2015 02:36
Some people just want someone to represent their social frustration and inadequacy, their pent-up
envy at not being gifted a piece of the pie they don't deserve, and their inferiority complex
that's grinding the axe. And they don't care if they have to destroy the UK to do it. The left
is just another version of Salomon's disputed baby and the robber mother who, having snuffed out
her own, wants somebody else's.
Giuliano Marcangelo -> Sal2011 14 Sep 2015 02:33
Corbin offers hope, hope of a better future for the youth of this country. Corbin offers hope,
hope of a future where we are led by politicians with integrity, rather than politicians who formulate
policy for their multi national company paymaster so. Corbin offers hope of DEMOCRACY, where our
elected parliament act according to the wishes of the populace and not to those of press barons
and big businesses.
Wake up and smell the coffee....the rules are being re-written and a peaceful revolution is
evolving...the establishment are worried, hence the mud slinging against Jeremy Corbyn by the
British Press, the establishment and the Tories, mud slinging against a man who cannot win a General
Election .....why bother if he is so unelectable?
SqueakEMouse -> murielbelcher 14 Sep 2015 02:32
But the majority are after MORE freedom not less in case you hadn't noticed. Blair's mantra
of 'Education, education, education' spoke to a broad range of people who wanted better education
and opportunites for their families. He largely failed to deliver on the promise but the yearning
is still there in case you hadn't noticed.
People want a health service that serves THEM, not the people who run it. That is the reform
that people wanted. The old system is a black hole for finance and failing to deliver. Sticking
your fingers in your ears and shouting 'la la la' wont change it.
Going back to an era when it could be pretended that there were no problems and everything
was peachy is not going to attract the votes of people who can see for themselves that the old
system failed them. You are putting ideology over practicality and results.
JonathanLamb -> trp981 14 Sep 2015 02:29
"The configuration of socioeconomic forces at present warrants the metaphoric borrowing
of such natural science concepts as criticality, bifurcation, and nonlinearity to describe the
situation. A cascading series of cracks are beginning to appear in the illusion of the steady-state
equilibrium of the world, fracturing the end-of-history narrative that the neoliberal order had
been energetically maintaining for the past three decades."
Is that you Russell?
bevrev 14 Sep 2015 02:24
Clearly, you can't win a General Election until you win the leadership one. The poor percentages
of the other three candidates show clearly it is they, not Corbyn, who can't win a General Election.
The fact that Corbyn has overwhelming grassroot support, but weak parliamentary support shows
how out of touch the political class really is. For too long, the nation has endured their vulgar
sense of entitlement and arrogance. The people are responding because at long last, they have
someone who is speaking for them. The volume of voices ranged against him shows how many establishment
figures are lined up against the people. They are truly worried. They should be.
Jeffrey Cox 14 Sep 2015 02:21
This from "Monty Python and the Holy Grail" captures the parliamentary Labour Party and Guardian/Independent
establishment response to Corbyn's victory
King Arthur played by We the People. Black Knight played by the Labour establishment:
King Arthur: Now stand aside, worthy adversary.
Black Knight: 'Tis but a scratch.
King Arthur: A scratch? Your arm's off.
Black Knight: No it isn't.
King Arthur: What's that, then?
Black Knight: I've had worse.
King Arthur: You liar.
londonzak -> HenryC 14 Sep 2015 02:21
Just like Thatcher welcomed Pinochet for dinner and had tea with apartheid South African leaders.
Guilt by association is such a lightweight argument.
ID3945937 14 Sep 2015 02:12
My wife and I contradict this idea that it is only the young, inexperienced and naive who are
joining the Labour Party. We are both 67 and have both just joined the Labour Party for the very
first time, on the strength of Jeremy Corbyn's victory. We figure that his leadership is going
to be made very difficult by the Blairite rump and our appalling right-wing press and he needs
all the support he can get. We hope that Jeremy will offer the opportunity for socialists to re-capture
the intellectual and moral high ground on taxation, the role of the state, equality, health, justice
and so on, against this rapaciously destructive and ideological Tory government, who would like
to take Britain back to the 19th century. Yes, he is a risk, yes, he needs to sharpen up some
of his policies, yes, his leadership qualities are untested -- but he is the best political hope
that radicals and socialists of all colours and persuasions have at the present time.
Socialistoldfashion 14 Sep 2015 02:10
It is wrong to say that Corbyn's victory alienates the establishment.
The establishment had alientaed themselves from a large number of people who felt themselves disenfranchised
and cheated. The establishment were so alientaed they did not realise they were alientaed. Corbyn's
victory has only highlighted it. I hope they have enough humility to realise it.
trp981 14 Sep 2015 02:04
"But then little of this is really about Corbyn. He is less the product of a movement
than the conduit for a moment that has parallels across the western world."
The configuration of socioeconomic forces at present warrants the metaphoric borrowing of such
natural science concepts as criticality, bifurcation, and nonlinearity to describe the situation.
A cascading series of cracks are beginning to appear in the illusion of the steady-state equilibrium
of the world, fracturing the end-of-history narrative that the neoliberal order had been energetically
maintaining for the past three decades. The this-can't-go-on-but-this-will-go-on state of affairs
seems to be sputtering and not going on as smoothly as before. Corbyn, Bernie Sanders, Syriza,
etc., are the fissures through which the pent-up and inchoate frustrations of various social forces
are finding an outlet to the surface.
Whether or not Corbyn succeeds in addressing the concerns of those who voted for him, his victory
is another milestone in a correlated sequence of occurrences. Beginning with the financial crash
of 2008, we see an increasing frequency of events that challenge the unstable neoliberal order.
The Occupy movement, Syriza, Podemos, etc., are a chain of events that form a portion of a possible
trajectory of the future. There is no guarantee that this trajectory will come to pass, leading
to some sort of structural change, although the more these events occur, the greater the probability
of the latter.
"In this and many other respects, his strengths were accentuated by the weakness of his
leadership opponents. With their varying degrees of milquetoast managerialism, they were not
only barely distinguishable from each other but had platforms that were forgettable even when
they were decipherable."
The triangulating managerialism of the Blair/Clinton era (Thatcherism/Reaganism with a
human face?) relied on the seeming stability of neoliberalism to discourage any deviation of its
voting base from what was defined by the socioeconomic elite as the center. Voters were considered
passive molecules whose sole purpose was to be heated up sufficiently during elections so that
they would reach the polls and make the inevitably correct selection. The core principles of neoliberalism
would not be touched, however the plebs were allowed to fight over the crumbs.
To use a quantitative scale, the choice offered to the voters was between a zero-to-slightly-positive
socially liberal neoliberalism, and a negative socially conservative neoliberalism. Put another
way, economically the choice was between nothing and worse-than-nothing. The previous predictability
of the voting patterns, however, is dissipating as the stability of the equilibrium state decreases,
resulting in the amplification of the smallest disturbances. The expression of shock at the election
of Corbyn is a manifestation of the increasing nonlinearity/volatility of the balance of forces.
Voter dissatisfactions that could easily be contained and damped out in the past are becoming
more pronounced and harder to contain and manage.
The increasing instability of the neoliberal order implies the shifting of the ground beneath
it. The previous givenness of the passive citizenry is becoming less so, and critical junctures
might approach fast and unforeseeably. There are multiple possible trajectories of the future
derived from various combinations of social forces, some entailing dramatic changes in unpredictable
ways.
Greatbearlake 14 Sep 2015 01:59
For a counter analysis, it helps to recap recent history under our neolib, rapidly devolving
to paleolib regime: we now live in a country where elected governments surrendered an entire industrial
base so that it could become a dodgy offshore banking center; who, in a 'privatization' frenzy,
inadvertently sold its power grid to the French state; engaged in a murderous and illegitimate
war that propelled unbounded worldwide terrorism; let its criminal finance centre off the hook
after it helped cripple the global economy; then we re-elected David Cameron, unleashed George
Osborne and now some fancy Boris Johnson with Nigel Farrage still hanging around. We have become,
in effect, Bullingdonia. It is our present reality and it is scarier than anything Corbyn has
proposed. And I haven't even mentioned Brooks, Coulson or Murdoch.
Many of the blighted citizenry of this country have had enough and have set their sights very
sharply on the long con of which the Tories, Blairites and the Paleolib British media including
the Guardian are leading proponents. The key operative factors being, of course, debt, debt slavery,
and bondage to the bank.
Labour had been colonized and neutralized by the regime. As the 'nicer tories' they bought
a one way ticket to oblivion with a short ascent at the beginning. And talking about 'aspiration':
people are finally getting that there is no hope at all in voting for the landlord or his pussy,
so they're not voting. Time to give 'em something exciting, some hope for the great well of non-voters
among Generation Screwed, who have been conned into accepting debt slavery and submission. This
view holds particularly among poleaxed interns stewing in their hovels without the necessary school
connections, drowning in education debt and thinking about emigrating, the tried and true solution
for Brits, as well as other huddled masses.
They will represent the battleground for hearts and minds in the next election. Forget about the
mythical labourites who went Tory; they're long gone and best forgotten. Labour must now cut a
path that counters the three big lies that have led to debt slavery for most of the population,
the long con that has delivered us into the thorny hands of the City and the Tory: that 'emancipation'
is achieved through consumption; 'freedom' through individual 'free agency' of work; that there
is 'heroism' in entrepreneurial risk. It is time to counter these cons with a platform of energy
and identity based on national productivity not servitude. Framed well and executed effectively,
the message is about getting off your knees and sticking their self serving austerity.
There is a large, emergent audience for this. They are Corbyn people. The upside of inequality
is that it offers numerical advantage.
Clerkenwellman 14 Sep 2015 01:49
We have a new situation. A Tory government with a thin majority, an economy likely to have
peaked by the end of the parliament, a programme of continuing enhanced poverty for the poor and
EU uncertainty for the rich and a moral and economic challenge as Syria empties of its people
- along with other places. These are challenges that a new Opposition, perhaps with overt support
from the SNP, can bring the government to the court of public opinion. On the Defence front, Trident
will still solve none of our problems, other than by being scrapped. The UK projection of military
force into the mid-east or elsewhere will continue to cost money and lives and will continue to
make little difference to our security. Israel will continue to bomb children in Gaza in the name
of defence but now will be called out on this. No doubt Corbyn and Benn will aim to talk to our
enemies as well as our friends - a wise move.
this is all going to be interesting and should challenge the oily and complacent Cameron and his
smug friend Osborne.
martinusher 14 Sep 2015 01:26
If we are lucky this may be the beginning of the end for TINA -- "There is No Alternative".
This mantra, the core slogan of the Thatcher era, was intended to inculcate in the electorate
that neoconservatism was the only viable economic and social strategy. Its been astoundingly successful
-- despite it being based on tenuous, unproven, theory (Hayek) and having been shown to cause
economic disaster wherever it was implemented (South America, for example) the notion of TINA
was constantly pushed because it made people money -- economies could die, people would live in
misery but the elites coined it big time.
Its been obvious to anyone with even a vaguely functioning brain that something's wrong. Unfortunately
daring to even think of alternatives gets a gut reaction from many born of being fed propaganda
from birth -- witness the snide remarks about Trots or commissars, the hints of 'security risks'
and so on. This won't stop; prepare for a full on assault (although "Red Jeremy" doesn't roll
off the tongue quite as well as "Red Ken" so I'll wait to see how the tabloids handle him).
... cpp4ever 14 Sep 2015 01:07
The old Blairite leadership of the Labour party lost spectacularly and to my mind one of the biggest
reasons was the choice to abstain from voting against Tory cuts. That was surely the last straw
for many, and must count as a classic example of how to spectacularly shoot yourself in the foot,
if not actually blow it clean off, and to mix the metaphors stuff it into your mouth! It's not
a certainity, but the dominance of the neoliberal concensus, austerity, and trickle up economics
is beginning to find real and growing opposition across Europe and in many ways that has reinvorigorated
what was becoming dull, same old, say mould, politics! Now I find that refreshing and in many
ways it's been long overdue.
Thanks Gary Younge for an enjoyable article that may well have caught on to a larger zeitgeist
taking hold in many parts of the world.
Jessica Roth 14 Sep 2015 00:51
Former Labour leaders and mainstream commentators belittled his supporters as immature,
deluded, self-indulgent and unrealistic, only to express surprise when they could not win them
over.
So true. Between the "heart transplant" lecture and the "alternate reality" one, it's a miracle
Tony Blair didn't pump Corbyn's total up to 70%, never mind the actual 59.5.
Thanks for all the help, Tony! Now go rest up in Qatar; you've got a trip to the Hague coming
in a few years' time, and a nice suntan may impress the judges. You never know.
R. Ben Madison BlackAntAssociates 14 Sep 2015 00:41
> The laissez faire looked to Hitler's economic model with wonder prior to the war,
break the unions, suppress wages, a shared political and corporate hierarchy milking the profits
and socialising debt
Until the war, things were actually pretty good for the German working class under Hitler (as
much as it pains me to say so). Their economic policy was more about buying worker loyalty by
giving them health care, paid vacations and cheap private cars -- not machine-gunning them all
against the wall.
Wayfarer2 14 Sep 2015 00:14
The establishment has worked extremely hard on marginalising itself. It has been pretty successful
at it.
Sparingpartner 14 Sep 2015 00:06
'the Labour leadership has looked upon the various nascent social movements that have
emerged – against war, austerity, tuition fees, racism and inequality – with at best indifference
and at times contempt. They saw its participants, many of whom were or had been committed Labour
voters, not as potential allies but constant irritants.'
There must be a sense that there is something equivalent happening in Australia.
Abbott's Neo-cons have tried to perpetrate the same old swindle and have their shit tails caught
in the machinery. The ambulance transporting the patient has broken down on the way to the
hospital. Sirens are wailing and frantic paramedics are giving CPR but no one can seem to get
a pulse - radical surgery is the only prognosis but as yet no one has invent the operational
procedure.
At last there appears to be a recognition that the scam of corralling the centre of politics
(5%-6%) and marginalising the rest so that the machine can work it's 'magic' on those few that
decide elections has found expression in some Western Democracies.
In the words of the American socialist Eugene Debs: "It is better to vote for what you want
and not get it than to vote for what you don't want and get it."
Love that line...
Michael Cameron 13 Sep 2015 23:42
Zoe is spot on. Though Yvette Cooper belatedly showed some green shoots, it was thralldom to
an imaginary centre and faith in 'preference accomodation', that ultimately did for the other
candidates. Sure, they had the odd interesting idea, but nothing like the all-enveloping narrative
of Blair.
Strip the good from Blairism and you're left with the totalizing power and its slippery essence,
which is to say, Cameronism; what Blair achieved with a charismatic, zeitgiesty response to propitious
circumstance, Cameron has emulated by augmenting Blair's mastery of spin and message. But as we
saw from the outpouring of pent-up Conservative glee which greeted Osborne's cuts prospectus,
the Tories never forget what they stand for. A moment like Labour's welfare bill disaster for
them is unimaginable. Encroaching on our territory with their 'living wage', far from being a
badly managed misstep, was a deft political masterstroke of re-branding.
Without Corbyn Labour had an uninspiring reheat of the 'third way' - already battered into submission
by Cameronism - and a party with a limp oven-gloved grasp of their own fundamentals. In other
words, the very worst of both worlds. At least Corbyn can authentically propound those parts of
Labour's vision which are non-optional (opposed to taking money out of the pockets of cleaners
and checkout workers to give to the already mega rich) and without which they have sunk into absurdity
and farce.
Take the lens of the welfare bill fiasco. Imagine Liz Kendall had become leader, had for 5 years
gone along with the Tories on many similar issues, and somehow conjured a Labour victory in 2015.
After years of Labour-endorsed Tory butchery, think of the entropic change in what counts as 'centre'
and what passes for realistic. Think of the long road back in convincing the electorate that 'acceptable'
is really 'extreme' - exactly the problem Labour faces now. Having spent barely 6 months of the
last 5 years arguing with any conviction, they're hollowed-out and entirely void of confidence.
Yet no universal law exists which states the public must buy the Conservative axioms i.e. the
drain of downright fecklessness, the necessary evil of all-knowing free markets, the benevolence
of exponential rewards. But when was the last time Tory fundamental values were under focus?
Corbyn won't concede ground on these issues. Yet all things considered - and despite the Blairite
view - staunch opposition to the most scything ideological cuts stands a better chance of tempering
the Tories than meekly tracking their every move. Remarkably, the Tories are already rumoured
to be making plans to recapitulate those old arguments about markets and privatisation and ready
win them anew. But the idea of attempting to shape the political narrative with your own values
is as as instructive as it is antithetical to New Labour 2.0. On the backfoot, out in the open,
debating policy, is exactly where we want the Conservatives. Engaging them on the big questions
such as how much market freedom is a good thing, arguments which we know are there to be won.
On austerity, the economy, the NHS and much more, Corbyn will not only represent Labour but credible
progressive policy. At the same time, we can continue to work out collaboratively the problems
and deficiencies in his manifesto. 1)Let's face it, immigration must be debated with an open mind.
If vast numbers of people are opposed to its rate, we need to find creative ways of telling our
story while keeping the option of leaving Europe on the table. 2)Despite the cynicism of the recent
co-ordinated Tory attacks on Corbyn's 'threat' to international security - many in the Labour
party feel Corbyn is wrong on nuclear disarmment and NATO. 3)Acknowledging his bid was initially
conceived as a catalyst, I don't think he even JC pretends to have all the fresh ideas we need
for the future - hence his desire for a more democratic running of the party.
Personally these aren't showstoppers because like Zoe, I also couldn't care less if Jeremy can
win a general election. Lacking a vision within the party that embraces the future, remembers
the past and addresses the huge structural reshaping of society, a Labour victory in its current
state is as likely as Corbyn winning an election if it were held tomorrow. For one thing, Ed Miliband
was arguably a more convincing leader than all four candidates yet couldn't get through to the
electorate. Absent a ready-made improvement, it makes sense to go back to basics.
My own ideal scenario would be for Corbyn to continue to inspire a grassroots movement, re-establish
much of what we're about, withstand the inevitable smears with a winning dignity, and hand over
to a more realistic successor on defence and brimming with the innovative solutions of the future.
But this first stage of renewal is vital. Five years is aeons in politics. This is a reality which
seems to have escaped those monopolisers of the stuff, New Labour.
BlackIncal 13 Sep 2015 23:22
People are waking up to the fact that the corporate parties only work for the very rich and
the corporations. Austerity is only in the interest of the very rich and the corporations. The
main stream media pundits work for and on behalf of the very rich and the corporations and thus
are all in a huff that the public had the temerity to choose somebody they do not approve of.
It is good to read at least on article were the author shows an understanding of the anger which
is growing.
I am as one with the late great George Carlin, it is to late to really do anything to save us
from the disaster which is fast approaching. But, it is gratifying that people are slowly waking
up to the total mess which our system has turned into. The great gift that humanity was handed
and the unfettered greed which is destroying us is at last being fought by a leader of a mainstream
party. I hope Jeremy Corbyn understands that the system is no longer fixable but must be torn
down and replaced.
Jeremy Smith 13 Sep 2015 23:19
The political class is still in denial about the fact that we stand at the turn of the tide.
We have Corbyn in the UK and Sanders in the US; we have a Pope thats progressive on both economic
and social issues; we have the Greens out-polling Labor, our alleged Opposition, in many seats
across Australia, and the whole of Tasmania.
Neoliberalism is increasingly called out as incoherent swill that only exists because it financially
benefits those with the power to replace it.
historyonix 13 Sep 2015 23:02
A couple of things here I guess…
1) The MPs who have deserted Labour, and the people who did actually vote for them, because they
think this will make them unelectable in the next GE have to realise they made Labour unelectable
in the last two elections… unless of course you want to highlight the political powerhouse that
is Scottish Labour… oh, hang on… ripped to pieces in their own heartlands you say?
2) They have to realise that many people are now at absolute saturation point with the established
Political 'class', staggering from petty finger-pointing shambles, to snide meaningless PMQTs,
to have tripped face long into narcissistic self-parody. If it wasn't for the total and systemic
deconstruction of the UK, they would hardly serve a purpose at all.
Jerome Fryer BlackAntAssociates 13 Sep 2015 22:39
the mainstream is either centre-right or right, wherever you look. The shift in global
politics since the mid 70's has been right all the way.
Only because the political systems have been captured by narrow right-wing interests. If there
is no 'left' alternative to vote for then people don't vote -- voter turnout in the UK and USA
has been pretty dismal since the 1950s when this process of moving all available choices constantly
to the political right began.
It will be interesting to see if a genuine Labour party -- rather than 'Tory light' -- can draw
out the people abstaining from the present system because they know it is a mockery of democracy.
lulubells nick kelly 13 Sep 2015 22:03
Your arguments are valid. There were excesses by unions who wanted to transform an England
which still held on to its class system and thereby enforced the poverty of the working class.
But it's a different world now and there is a middle ground where unions ensure their members
are paid decently, etc., without holding the economy to ransom. Union power is a pendulum reflecting
the inequality of society. BTW the income divide all over the Western world is greater than ever
since Thatcherism was adopted by other democracies. The privatisation of public assets and stripping
of union power are the most obvious consequences. This has facilitated the rise of the multinationals
which have adopted the strategy of establishing (and moving) their factories in the disadvantaged
country which will accept the lowest wages and living conditions. Read the book on this topic
by the last British governor of Hong Kong. Now employees are more and more hired for a fixed term
contract, can't get a mortgage to buy a house or plan their lives. It is a huge social disaster,
eg wage 'slaves' in Japanese corporations. And contributes in no small way to young peoples' decisions
worldwide not to have children when they have no security, with a flow-on effect being the ageing
of the nation.
murielbelcher axehoO 13 Sep 2015 22:01
It is reflective of the toxic Tories' aim to "frame" and "fix" Corbyn and get the mud to stick
so they can keep throwing it at him, just as they did with Ed M
We need to frame the Tories as inimical to national economic security and duty of care with their
asset stripping and bargain basement fire sales of the nation's resources and commonwealth, all
to the benefit of their plutocratic billionaire mates
Amazing the similarity of language used in the Tories' "tweets" and statements - it was so blatantly
deliberate and sinister in its insistence and drum beat
Unfortunately Corbyn needs to set up an Alistair Campbell style rebuttal unit and fast. Use Blairite
political tactics; as you eschew Blairite policies.
centerline 13 Sep 2015 22:00
Worth reading the Pilger article on Whitlam to see what the future may hold for Corbyn
At last a non-hysterical analysis from someone who distinguishes himself from the right-wing
sycophants that call themselves Guardian journalists.
Lesm 13 Sep 2015 22:14
It is interesting to note that the Labour and Tory parties have made a very significant, but
stupid assumption. They believe that Neo-Liberalism is an order of God and not just another economic
fad. Their idea is that it will go on forever as the natural order of things. Young people have
a different idea and they are taking control of Labour and re-shaping it for the Twenty-First
Century. I say terrific!!!!!.
toomanycyrils shedexile 13 Sep 2015 21:38
The poster is suggesting you're not working class, probably because you can afford to pay higher
taxes.
I actually kind of agree with you, but many in your position won't. And the working class can't
afford higher taxes. So the only solution is to tax the very rich. George Harrison had something
to say about that back in 1966. It seems the only recourse really is to force corporations to
pay their tax, which I believe is a lovely idea fraught with serious problems.
There has to be willing from within the elite for things to change. Any chance of that has been
made more remote by the election of Corbyn, not because of his ideas but because of his character.
It really is a great shame that he didn't face somebody a bit more potent than either Burnham,
Cooper or Kendall.
Peter M murielbelcher 13 Sep 2015 21:38
Whilst I agree that the neo-liberal agenda was in it's fledgling stages, I do think capitalism
was a more popular ideology in the early 80s than socialism, obviously not everywhere but on the
whole. You've mentioned a few there, such as the 1980 Housing Act, but let's not forget things
such as the loss of nearly 2m manufacturing jobs before 1983. Don't get me wrong, Thatcherism
got much worse post-1983. I think it was Thatcher's decision to sacrifice the jobs of millions
for the sake of reducing inflation, as well as the Falklands factor, that made people, to some
extent, more open to capitalism.
axehoO murielbelcher 13 Sep 2015 21:36
I agree, there are a whole number of ways that Conservative policy can be seen as a threat
to the safety and well-being of the UK population.
The strategy concocted by the government was to immediately hit Corbyn after the Labour leadership
election with a coordinated series of slurs by ministers, aided and abetted by the BBC and the
right-wing press, that he is effectively an enemy to the nation. This is precisely the kind of
hyperbolic rhetoric used the world over by dictatorships to imprison and usually kill their political
enemies. Chile under pinochet is a prime example. Here's a quote echoing Cameron's choice of words:
Still, no woman was safe during the Pinochet era. If she were suspected of anti-regime activities
on her own or if she were the relative or lover of a man suspected of such activities, she
was branded by officials as a threat to national security and thus a potential object of rape
torture.
Cynthia Enloe 2000
This is the language now endorsed by the Conservative government to describe its political
opponents.
marxmarv thingtwo 13 Sep 2015 21:26
The media have to play their role of aspiring professionals worried about their precious fyootchers.
There need to be more working-class voices -- real ones, not the neoliberal lapdogs the Western
press and every other corporate institution can't help but manufacture.
easye Golub2 13 Sep 2015 20:59
This attitude is exactly why there is a burgeoning grassroots movement of which Corbyn is but
one of its most important leaders. New Labour treated its heartland with contempt, a bit like
if Sunderland decided it was no longer interested in its traditional fanbase and would seek to
get supporters from Newcastle United. Things are about to be shaken up. If Corbyn exposes Cameron's
alleged funding of ISIS, the Tories mismanagement of the economy £1.56 trillion in debt, as the
UK is, that Trident is useless except for lining the pockets of the arms industry, exposes the
lies that led us to war in Iraq and Afghanistan, and defends the poor and vulnerable from the
naked hatred of this government towards them, then your illusions about Cameron will be shattered.
For Cameron, it will be like the emperor's new clothes and you'll see his bollocks
Peter M danubemonster 13 Sep 2015 20:26
I think context also comes into play when you consider the 1983 election. Socialism was simply
a message, on the back of a growing globalisation and embracing of neo-liberalism, that people
were not listening to. Instead, privatisation and capitalism were the ideologies that garnered
widespread support. I think it's taken us until the recession and current period of austerity,
as a society, to realise the flaws of capitalism and the need for socialist, anti-austerity measures.
For Corbyn, it'll be a much easier fight than Foot had when trying to convince a nation of people,
wrongly embracing the New Right following the Winter of Discontent, to vote for socialism.
axehoO 13 Sep 2015 19:46
For the past couple of decades the Labour leadership has looked upon the various nascent
social movements that have emerged – against war, austerity, tuition fees, racism and inequality
– with at best indifference and at times contempt.
Great observation. Since the miner's strike, Labour has tended to distance itself from grassroots
movements in the UK, but since the rise and fall of Blair, it's been much closer to disdain. John
Hariss's video yesterday captured one of the party delegates leaving the building after the vote
and remarking contemptuously about the 'distance from reality' of the Labour supporters celebrating
Corbyn's win. Invert that comment and you explain why Labour has been drifting into irrelevance.
Vespasianite 13 Sep 2015 19:40
This is just an incredible turn of events, just when you loose faith in the ability of the
people of the UK to show interest and put up a fight against the hijacking of their political
parties they manage to do something that is truly good for democracy. I voted UKIP last time just
to annoy the establishment. I really don't agree with much of Corbyn's convictions but without
doubt this is going to be good for the politics of this country. However before you can distribute
prosperity you have to generate it, that has always been Socialism's biggest flaw. If he manages
to convince he can be trusted to deliver that then his chances of really being in a position of
power will be within his grasp.
foryousure 13 Sep 2015 19:08
Good article. Politics had become the property of the 'sound bite' media professional with
a set of rules, learned doing that politics degree, that define everything and without which governance
impossible. Think we have all had enough as Corbyn's landslide shows.
bemusedbyitall ImaNoyed 13 Sep 2015 19:06
The sad part in Australia is that, like BLiarism in the UK, the current ALP, with its devout
neoliberal acolytes running the show, now stands as the Alternative Liberal Party. There is absolutely
no difference betwixt them and the Nat-Libs.
Who will bring the ALP back to being social democrats - No need - The Greens will rise up and
take over fortunately
ID8729015 13 Sep 2015 18:07
"milquetoast managerialism, they were not only barely distinguishable from each other but had
platforms that were forgettable even when they were decipherable."
Gary, you are brilliant
Drewv TheSpaceBetween 13 Sep 2015 17:17
You are using the term exclusively in its most narrow sense, as in, the people alienated from
all of society, who are on the margins of life as such, who are outcasts in the most literal and
tangible sense.
But it is eminently possible to be 'alienated' in many other and different senses, and therefore,
for alienation to be present on many different levels. It is possible for people to be alienated
from the political class which rules them; for workers to be alienated from the economic system;
for voters to be alienated from those whom they elect; for the lower classes to be alienated from
the upper ones; and so on.
Ikonoclast 13 Sep 2015 16:51
Cameron, what a fukcin embarrassment you are...
The Labour Party is now a threat to our national security, our economic security and
your family's security.
CDNBobOrr 13 Sep 2015 16:42
"" In the words of the American socialist Eugene Debs: "It is better to vote for what you want
and not get it than to vote for what you don't want and get it."""
... ... ...
mickconley -> jonnyoyster 13 Sep 2015 16:12
Even though I suspect we might come from different ends of the political spectrum, I think
some of what you're saying here is true and it's refreshing to see it expressed without the usual
smug post-election needling of many rightwingers on this site! You've definitely identified some
of the problems that Corbyn's going to have to solve. I totally agree that the reaction of New
Labour movement is going to be key. But I would challenge two main things about your post.
Firstly, I think your characterisation of people on the Left is a bit patronising and based on
stereotype. I could equally hold forth on the type of voter the Right attracts (don't tempt me!)
based on my own prejudices, but I don't think that would be particularly helpful. There may be
some truth in the stereotypes on both sides among the dyed-in-the-wool, but I also think that
the last election showed us that there is a huge number of voters in play who aren't particularly
wedded to either concept of Left or Right.
That brings me on to my second point - what makes you so confident that Labour won't win back
UKIP voters? Again, my sense is that although there is a hard core of extreme rightwingers who
strongly support the ideas, there are a lot of people at the last election who felt angry and
disenfranchised, and saw Farage as a 'plain dealer' - who liked the way he spoke rather than necessarily
what he said. I think Corbyn could capitalise on this and win back a significant number, despite
the fact that what he's actually saying is the polar opposite to UKIP.
Remember, Cameron's majority is tiny. The press have been peddling the myth of a wonderful
Tory success story, but the truth is it's smaller than Major's was in '92, and look how that ended.
Interesting times ahead, certainly!
foralltime 13 Sep 2015 16:09
An insightful article, Gary. This is a flowing movement rejecting the neoliberal consensus.
socialistnotnulabour xlocus 13 Sep 2015 16:03
Corbyn supporters were given the name Corbynistas by those who opposed him and it was to try
and paint Corbyn and his supporters as far left who want to overthrow the government.
They throw abuse and lie about Corbyn and his supporters and then try to play the victim when
they get a bit of abuse back at them.
Legionary13 13 Sep 2015 15:50
A yes for Corbyn was effectively a yes for "austerity is a needlessly harmful fraud" so I am
very happy to see that this simple fact is recognised. Our current government is unusually destructive
and the more voices explaining that this is by choice (rather than forced on us) the better.
Can Corbyn succeed? He will be opposed by Murdoch/Mail/Telegraph, all organisations that have
been practising their lying.
Humans for Corbyn!
beadmaker MrHee 13 Sep 2015 15:47
This is where I am torn. There is a desperate need for an alternative voice to the neo-liberal
consensus (ie. Capitalism Unchained) but Mass Immigration is a main plank of unchaining capitalism
and at least the right is allowed to verbalise this (even though nothing is allowed to hinder
it) whereas the left seems to be hidebound to support it, with any contention deemed racist. To
quote another CIF poster: Please understand that many many people understand that immigration
is a symptom of the bigger problem of out of control global corporate capitalism. But immigration
just makes it worse.
(ie. they don't blame immigrants /or refuges personally for making understandable choices to try
to make a better life for themselves and their family but en masse they are major weapon in the
Right's armoury to make the minimum wage the de facto wage rate for lower skilled employment,
and as long as the costs can be socialised onto PAYE and SME taxpayers all is well for business.
The Left, in useful idiot mode seems to want to help business keep stockpiling bullets and can't
see they are shooting themselves in the foot with this.
BeTrueForAll SteB1 13 Sep 2015 15:28
"....what the establishment really fears is the public getting behind the mood."
Well said!
A great many people are now beginning to see behind the mask and recognise that lying behind Hayekian
and Friedmanite Neoliberalism is an age old reality of sociopathic or narcissistic alpha apes
seeking domination irrespective of the damage they cause to others.
Jeremy Corbyn has helped give voice to that recognition. Even if he fails others will take his
place and seek to reverse this now obvious and grotesque domination.
NotYetGivenUp dowland 13 Sep 2015 15:23
I've seen that interview, and his answer was as straight as a die. When asked to condemn IRA
atrocities, he refused to distinguish between IRA atrocities (bad) and British Army atrocities
(good?), rather he condemned all atrocities, and thus did answer the question, more fully than
a simple, and simplistic, yes or no. By contextualising, Corbyn refused to be pinned by a false
dichotomy. His frustration was with the interviewer for framing his question with bias, namely
demanding condemnation of IRA actions without conceding there were two guilty parties in this
violence. The media's refusal to engage with criticism of the British Army is increasingly disturbing.
Jeremy Corbyn is not party to this charade.
That bears no comparison with Howard's refusal to answer whether he had interfered directly in
the prison service, outside his remit.
happytolive 13 Sep 2015 15:13
The fight against the Tories has just started, especially now the Tories are on their own mourning
their loss of their brother New Labour. The Tories however will continue to fight back not only
directly but also through their "agents" in the party. The future is uncertain, how can it be
when even the first serious clash has not yet happened? The trade union bill is a test for Corbyn
and his supporters and a defining factor for all those who are not happy with the turn Labour
has made. I strongly believe that Corbyn's strong point is not in Parliament but outside in the
street and in united action with the unions. Without that nothing for the good is achievable.
sallyo57 MorrisOx 13 Sep 2015 15:05
The UK is the sixth-biggest economy in the world and for all its iniquities is still growing.
This economy is built on sand. Private, and public, debt is spiralling out of control with interest
rates about to rise. Hold on to your hat...
LegLeg LondonLungs 13 Sep 2015 15:04
Spitting venom? The Tories have barely started work on doing Corbyn over. Have you any idea
how much shit the Tories are going to be able to dig up over Corbyn's 32 year career? How many
terrorists/anti-semites/gay-bashers he's probably sat next to (unawares) over the decades? The
Tories are not daft enough to play all their cards at the outset. It is already clear that the
Tories won't treat Corbyn as a joke and ignore him. They intend to treat him and his proposals
with deadly seriousness, so that come 2020, the choice between the Tories and JC is a real one.
CynicalSOB 13 Sep 2015 15:03
Smug closet Tories really are out in force on here tonight. They sound like the other 3 candidates
looked on Saturday - bemused and really not sure what to say apart from the same old Torygraph/Daily
Heil soundbites...
SteB1 13 Sep 2015 14:57
I think this is some of the best analysis and description of the situation I've seen.
It has energised the alienated and alienated the establishment. The rebels are now the
leaders; those who once urged loyalty are now in rebellion. Four months after losing an election,
a significant section of Labour's base is excited about politics for the first time in almost
a generation while another is in despair.
This is not only very accurate but a great bit of succinct prose.
But then little of this is really about Corbyn. He is less the product of a movement
than the conduit for a moment that has parallels across the western world.
This is the point many are missing. Especially the Blairites and self-styled "moderates". They
mistakenly think that if they could just defeat Corbyn with some cheap trick, or undermine him
once his leadership is underway, that somehow they will re-seize control of the Labour Party.
They won't because of the consensus demanding change, who would want an equally radical replacement,
and not a Blairite.
From the moment it was clear that assumption was flawed, the political and media class
shifted from disbelief to derision to panic, apparently unaware that his growing support was
as much a repudiation of them as an embrace of him. Former Labour leaders and mainstream commentators
belittled his supporters as immature, deluded, self-indulgent and unrealistic, only to express
surprise when they could not win them over.
This is it. The establishment media commentariat who like to believe they know best were left
looking clueless, and with feet of clay. Suddenly they look very feeble and fallible, and their
knowingness is revealed as hollow bluster.
Nonetheless, the question of whether Corbyn is electable is a crucial one to which there
are many views but no definitive answers. We are in uncharted waters and it's unlikely to be
plain sailing.
This is it, we really are in uncharted waters. There are so many points where it could go in
different directions, and those making predictions are kidding themselves. There's no doubt that
the establishment is going to fight back tooth and nail. They really fear losing control. Jeremy
Corbyn himself has proven himself to be incorruptible, and not an establishment man. The old tricks
to make someone compromise their principles will be predictable. However, what the establishment
really fears is the public getting behind the mood.
It may be that far from being unelectable, that there could be a bandwagon of support for Jeremy
Corbyn. Remember, in a very astute way, Jeremy Corbyn says he wants to appeal to those who don't
vote. These are the people who feel politicians don't represent them, and it is not a homeground
for many potential Tories. If anyone was to tap into this body that doesn't vote, it could mean
there is no need to win over potential Tories.
But then we don't know what power the establishment will have with their dirty tricks, as they
have a stranglehold on the media.
To me this is the key point about successful change. It depends on the ability to reach the
public whilst bypassing the media. It depends on how much traction smearing Jeremy Corbyn has.
It could backfire on the media and the establishment if they just preach to the converted as they
have been doing in the last couple of months, and their play becomes too transparent to the public.
Of course the media and establishment may succeed with their smears and character assassination.
Although I think they will find it harder with Jeremy Corbyn, because he is so open and honest
about what he stands for. It will be hard to imply he has a hidden agenda.
CommieWealth 13 Sep 2015 14:53
They won't win it back with snark and petulance. But they can make their claims about
unelectability a self-fulfilling prophecy by refusing to accept Corbyn's legitimacy as party
leader.
This writeup has a similar perfume to Zoe WIlliams's contribution, criticism out of the wood
work, and emulating btl insight of the last few months. Belated catchup, but still welcome, and
of course, expressed with far greater eloquence. I haven't followed Gary Younge's articles very
closely over the past year, so correct me if I am wrong, but I just wish you CIF were less craven
and more courageous when it counts. It feels all too often, as readers, "we told you so".
teaandchocolate CyrusA 13 Sep 2015 14:41
I don't want to be hard on the guardian or the observer. I think they have to present lots
of different points of view but I think even they held their breath. Monbiot wrote a very powerful
piece last week. Everyone is cautious. We've been let down so many times over the last 30+ years.
The neoliberals are as wily as Stalin and incredibly cunning.
I have faith in the guardian to vex and thrill me in equal measure. I'd rather that than the dribbling
preachings to the converted that is the telegraph and the daily mail.
johnhump 13 Sep 2015 14:23
Tory light or Blairism were never right. That is for those who want to conserve and protect
status quos. Nor is this about Corbyn, it is about opposition to elitism and unfettered neo con
economics. Now what is important is that the thinking has started and has legitimacy.
McNairoplane 13 Sep 2015 14:21
This was a heroic move by Labour Party members, and they have returned to their more liberal
roots and hopefully will squash the comfortable Westminster Bubble!
I find it disgusting that knowing their party members have voted for him, so many of the elected
Westminster MPs want to turn their back on him, rather than support him.
It is this very reason that they lost the election.
They have locally lost contact with the electorate.
CyrusA teaandchocolate 13 Sep 2015 14:19
So the question remains... why did the Gruan not give Gary a platform earlier?
Backing the horse after it has crossed the finishing line is really pathetic.
Groan editorial team need to reconnect with the 500,000 people who cared enough and hoped enough
to bother registering.
simbasdad Brobat 13 Sep 2015 14:17
I think the Labour Grandees are worried that their gravy train has just hit the buffers, they
were probably looking forward to at least a nice post ministerial income( Hewitt, Reid etc) a
stop pretending I was ever a Socialist seat in the Lords (Prescott, Primorolo etc) or the Jackpot
riches of Blair, Mandelson or the Kinnocks. Of course, they're upset, their pension plans are
disappearing.
haakonsen1975 13 Sep 2015 14:14
This is the first article that I have read and in general agree with and don't find condescending
in term
But (there always is a but) I will like to point out that I am not my father nor am I anything
but a product of my parents, but what happened in the 80s is not the same as in 2015s it is going
to be different so hence the reason for change. If we were to transport the 2015 experience of
politics' into the 1980s what would have happened - 3rd world war perhaps??
The electorate is not what it was then, now is it. We are not the American's although our government
would love us to be - we would be so easy to manage.
Why not let us be let us form our own opinion, we are fully informed as to what we want to happen
in the future. When you tell us about the 80s - many of the electorate was not born then - but
do remember history is written by the victor of that time so - history lessons should be directed
to the history classes in school or Universities - not to drive a Political debate nor to tell
people that they are mistaken in their views - views are created through experience - not the
other way around.
The people of the UK have experienced a bad time and has had enough already and they want hope
as part of the future - not the usual garbage served up on a TORY blue plate.
KriticalThinkingUK Barbara Saunders 13 Sep 2015 14:07
Good points Barbara. Europe would not be facing a refugee crisis if the neo-cons hadn't unilaterally
unleashed their bombs on all those countries in the middle east...it has to stop...jaw jaw ...not
war war...
SeenItAlready 13 Sep 2015 13:57
Short of perhaps a speeding ticket, they didn't appear to have a single conviction between
them
That's pretty funny, and also rather accurate
Finally we have an article in The Guardian that expresses the situation as it actually is
For the past couple of decades the Labour leadership has looked upon the various nascent
social movements that have emerged – against war, austerity, tuition fees, racism and inequality
– with at best indifference and at times contempt. They saw its participants, many of whom
were or had been committed Labour voters, not as potential allies but constant irritants
And here we have the nub of the matter, the way that the NeoLiberals who infiltrated the
Labour party just assumed that the core vote would continue supporting them as they had nowhere
else to go... wrong, wrong, wrong!
thewash 13 Sep 2015 13:42
It beggars belief that so many politicians and commentators still do not recognise the magnitude
of what has happened in this Labour leader election.
Corbyn a a result of his inclusion and the opportunity it has given him to voice his political
views is the touchstone for this movement for change, which has been building up since 2003, (when
Blair went to war), when the real nature of Labour's shift towards neo-liberalism emerged and
voices opposed began to speak and slowly to be heard.
Politics in the UK will never be the same again. Corbyn and Labour have a little over 4 years
to establish a new and better way of confronting national issues and to devise better ways of
dealing with them than have been offered by any of the parties including Labour itself.
francoisP 13 Sep 2015 13:40
The real issue is whether he can energise those who voted for him and the non voting young
into getting into active politics .There is obviously an appetite there.
The nu labour grandees fail to grasp this and having a hissy fit makes them look even more out
of touch.
Blunkett whinging about protest in the Mail of all places.. As one of their columnists is wont
to say " you couldn't make it up"
snickid 13 Sep 2015 13:39
What no New Labour / Blairite seems able to admit is the simple truth. New Labour - in the
shape of Burnham, Cooper, Kendall - lost the Labour leadership election because New Labour was
crap:
* Afghanistan war
* Iraq war (and if Blair had had his way, a few more wars besides)
* Financial scandals, from ads for fags (Bernie Ecclestone) to cash for honours (Michael Levy)
- and load more in between
* PFI
* Bankerised economics
* 2008 crash (and Britain with its bloated deregulated banking sector was central to this)
* Ever-rising wealth gap between rich and poor (minimum wage notwithstanding)
- and much, much more besides.
Brobat 13 Sep 2015 13:37
Gary's 9 words speak volumes - they perfectly summarise the entire British political history
of the past eighteen years
Corbyn victory energises the alienated and alienates the establishment
the Righties of the Labour Party say Corbyn will make Labour unelectable; gosh that is one
hell of a trip they're trying to lay on us 'cos what they offer is a kind cheapo supermarket version
of the Tory credo, who in their right mind is gonna vote for such a cheapo piece of crap? Righty
Labour is unelectable.
Unless the Labour Righties can come up with any fresh alternatives, they should join the Tories
Treflesg 13 Sep 2015 13:31
There are three things I welcome about Corbyn winning:
-he is not a spin master, so, as he will be saying what he actually thinks, he will make
it possible for Cameron to do the same, Cameron already does at times but under the until recent
heavy spin attack culture from Labour always had to master that side of himself. I welcome
that we will have a PM and Opposition Leader who both let each other say what they actually
think, rather than what a focus group and pre-determined script said.
-he went to private school so hopefully the whole Tory Toff thing will now fade as it wont
really work for Labour if their own leader went to private school and grew up in a manor house
as well.
-by being from the Labour left he will counteract some of the attraction of the SNP in
Scotland, and most of the attraction of Leanne Wood in the Welsh valleys.
That having been said, I absolutely don't welcome:
-having a leader of the opposition who is on record siding with Argentina and Spain and
the republicans against the UK about the Falklands, Gibraltar and Northern Ireland.
-having a Labour party that wont now threaten the Tories at the next election. Whilst I
like Cameron, I certainly don't want an easy Tory win, they need to work hard to keep the centre
ground.
Sydsnot 13 Sep 2015 13:25
Corbyn is already achieving what he was elected to do. The party was never going to change
just drifting along, it now has to now re invent itself, Corbyn is the catalyst, he won't last
long but Labour will never be the same again.
NietzscheanCat 13 Sep 2015 13:23
The Labour party is ours, now. We saw that it belonged to you, and we took it. We took what
was yours. We took it from your trembling, clutching hands. And now it's ours.
Tories, we've got you in sight now. Are you afraid? You should be. You are about to witness the
Left on attack mode. Our vengeance will hit you like a freight train, and you will be powerless
against the onslaught of the left.
You're damned right we're a threat to your security.
Russia does not have as much to answer for as the foreign powers arming the insurgents including
ISIS. The UK and US have far more Syrian blood on their hands than Russia. Arming insurgents in
another member of the UN is a grave violation of international law. The loss of life is far higher
because of the countries supplying the insurgents. All insurgencies burn out fairly quickly in
the absence of support from outside powers. The US and its allies have kept the carnage going
for years for their own political ends as irrational as those may be.
It is an entire modus operandi. Before Open Societies there were other foundations funded by other
people, some of which still continue to operate. It is neo-colonialism to serve corporate interests.
Wearing false masks of altruism and good intent to stir up trouble in other countries in order
to change their structure to fit your ends. George is just particularly active at this time because
he has his hand up the butt of a number of incumbents in pivotal positions of power.
Makes
me laugh when I see articles going on about how George seems to be prescient about what to invest
in. Prescient my ass! You don't need prescience when you are orchestrating events into existence.
But, you know, most of us are too dumb to see what is going on, or too self interested if we do.
No other country comes even close to Russia in expansionist wars in the last two decades.
You sure not very well informed about last two decades, the destruction of any stability in
the middle east have certainly happened in this time frame and absolutely dwarfs anything that
Putin has done in terms of bloodshed and international instability.
And before you get started on whataboutism: While the neocon warmongers in USA are a quite
despicable breed, they have not been in power for eigth years,.
You are so wrong about neocons, they are very much in power, since US policy in the middle
east and Ukraine for that matter have not change one bit, it is just became limited by the public
waking up to the disaster that it was / is (you clearly do not belong to the informed part of
the electorate).
But more importantly: the "My neighbour kills people, so it's ok for me to it too to kill
people is a morally indefensible position. Mr. Putin is helping a butcher slaughter innocent
civilians on a massive scale.
Again you view civil war in Syria out of context of the neocon plan for destruction of the
number of secular Muslim states, and this is simply intellectually dishonest.
I know the nationalistic propaganda and endless lies you're being fed in Russia,
Your assumption that I'm somehow exposed to Russian propaganda is silly, since my exposure
to it is limited to my Ukrainian wife (from very west of Ukraine by the way) , and my Ukrainian
dentist who is from Kiev, and they all tired of blaming Putin for the complete clasterfuck that
euromaidan turned out to be, most people my wife talked to on her latest visit disgusted with
the current regime of Poroshenko.
Remember when Russia destroyed Iraq, igniting all manner of sectarian conflict in the region,
and armed the people they claim to be fighting now in Syria some sadly perpetual motion like cycle
of violence?
That sounds really bad, if you put the word "Russia" there, doesn't it? Good thing it was done
by Western powers with good intentions.
No Putinbot. I'm right on target. As I said, Russian forces are not hindered by the same
Rules of Engagement as NATO forces would be as recently demonstrated by the complete destruction
of the Eastern Ukrainian city of Donetsk by Russian troops and their separatist proxy forces
You are welcome to visit and find for yourself who is responsible for destruction of Ukrainian
city of Donetsk.
You will find that you was lied to, and used like an idiot by your favorite news sources. (Faux
news I'm sure).
This is why, as Mr Putin heads for the UN general assembly in New York later this month,
efforts to adopt a resolution banning the use of barrel bombs must stay focused. Russia will
undoubtedly veto such a text, but that would at least expose its complicity.
Why limit itself to just barrel bombs, why leave cluster bombs out of it?
You are clearly flying ahead of your own shit airman.
Russians are not bombing anything yet,
presence of Russian air force and especially anti-aircraft units will most likely there to force
NATO to open lines of communications to avoid direct clashes.
And we all know about your " Rules of Engagement" since pacification of Fallujah and beyond.
The *shock and awe* alone was an indiscriminate bombing of the city of 4 million with not a single
designated military target in it, exactly as Hiroshima and Nagasaki by the way.
Had Russia not defended Assad the rulers of Syria today would be ISIS.
Now there are conspiracy theorists that would tell us ISIS was funded by the US to fight Assad.
Irrespective of the truth, clearly Russia is the good guy in all of this and should be supported
by the West.
I would've though that we have a lot to answer for. Assad, Saddam etc are very clearly a much
better option in that region than any of the alternatives. It's been a major mistake of western
foreign policy to proselytize liberal democracy and human rights to a people whom see these values
as completely alien to them, as much as medieval Europeans would have. Middle east is yet to go
through Renaissance, not to mention enlightenment and scientific revolution. They are simply 800
years behind us in terms of social development, and therefore same rules do not apply.
There is a pragmatic argument that the bloodshed will only end when one side wins - and nobody
civilised wants ISIS or the other Islamists to win, and the secular opposition are simply too
weak and divided to ever win and and enforce the rule of law. Assad may not be a democrat (he
is an autocratic secular Arab republican) but before the war the regime was broadly tolerant of
all religious and ethnic groups, as long as they did not challenge state authority. The threatened
Christian population of Syria now say that they are only safe where the regime is in control.
Just as the West formed an unsavoury alliance with the brutal Soviet regime to defeat Naziism,
perhaps it is time for such realpolitik with Syria. The alternative is to attack or undermine
Assad, and let ISIS win, and accept there will be a genocide or cleansing of Syrian Christians
and Shia/Alawites and other non-Sunnis, with another wave of refugees, leaving Syria as a de-facto
'pure' Islamist state.
I have stated the same fact repeatedly. Churchill loathed Communism and the Soviet regime but
decided to back Stalin as much as he could against Hitler. Assad is a sort of Stalin but he's
better than ISIS.
Assad doesn't round up Christians and just chop their heads off for no reason . The West encouraged
the Arab spring - just leave the Arabs alone to kill themselves which they have done very successfully
for centuries.
Some sort of deal will be and will have to be done some day with Putin .
The Guardian needs to get a mature and informed policy.
When you make comments about other countries getting their ambassadors out of the US it corresponds
to the wishes of many nations that the US gets its CIA, and military out of their countries.
As well as getting creative with your history you are now inventing things that I have said
and positions that I have taken... I am not a "leftie" I have not said anything in support of
North Korea but ll you this; you haven't provided any counterargument for the list of countries
that was bombed by the US since 1945.
You argue from the heart. I know that you 'believe' the US to be the 'exceptional' nation just
as the Germans in the 30's were told that they were above all others... but your arguments are
coming from the heart and not the head. This is why you are arguing with almost everybody on this
forum. You want us to agree with you but you can offer no counter arguments so you revert to the
distant past and then to calling us commies, lefties or whatever.
Truth is that since 1945 the US has bombed over 50 countries, executed leaders throughout the
world, particularly in latin america and it has killed over 4 million in Vietnam in Cambodia and
a million in Iraq. Oh... and where were those weapons of mass destruction? or the link between
Saddam and 9/11?
Even you know that they were invented fantasies. Maybe your 9/11 story is a fairy tale? If you
want to wake up you can.. but turn off Sean Hannity.
Unless we actually want ISIS to extend their vile and terrifying rule to the Mediterranean, the
only way to end this bloodbath is for the West to form an alliance with Russia and Assad.
Attacking Assad would be the moral and strategic equivalent of the allies bombing the Soviet
Union during the Second World War.
It is the kind of thinking reflected in this editorial that has caused the deaths of two hundred
thousand Syrians and created a nation of refugees. The Guardian has a lot to answer for.
Mr Kerry reckoned without the Russians being fully awake and alert and ready to save innocent
lives. After Kerry's slip-of-the-tongue Mr Putin was quick to help arrange the destruction of
the Syrian chemical weapons. End result - the Russians save countless thousands of lives, of Syrian
civilians and regular soldiers.
Sadly, like dogs to their own vomit, we can expect the US to return
to its aim of destroying al-Assad and allowing the beheaders free rein in his country, no matter
what the government says or does. And the Guardian defends this.
Why do Kosovans still have asylum status in many European countries? why is it not recognized
by many countries including Greece and Spain? What was the religion of the majority of that "country"
at the turn of the last century and what is it now? who is one of the biggest employers? see below;
Its a generational thing. Right after WW2, many of the elite had just that epiphany that unless they have the common people behind them, they are toast. But now they are dead or dying, and their grandkids are basically once more thinking that they can go it alone. This because they have not had the required experiences that help develop the wisdom.
What Marx saw long ago, we can see today, and without relegating ourselves to his analysis, come to our own conclusions. Contradictions, summed up well by Lincoln as a house divided against itself cannot stand is just as true today. Millions of guns to protect the citizenry from tyranny have only resulted in a 1/4 million murders and 5 times as many shootings since Jan 1, 2000, some placing people in wheel chairs and other crippling gunshot afflictions, and more and more institutionalized state oppression, economic exploitation and miserable lives propped up in an alcoholic haze until the liver or brain gives out. We have more food than we know what to do with so we throw away almost as much as we eat. And we have eaten ourselves into morbid obesity, diabetes and heart disease. The contradictions abound from the kitchen table to the kitchen cabinet of the White House where there seems to be nothing passed so freely as bad advice.
The Welfare State arose from the sacrifices of the population in giving their sweat, blood and tears to defend their nation during war, to be rewarded for their sacrifices, rewards which were demands for power sharing and more in the paycheck, more benefits and more time to enjoy the life spent in a more prosperous world. It seems to me that Obamacare is not simply in death spiral all of its own making, but even more so, because it is the best attempt capitalism can produce in an America that is the most capitalist of societies down to the marrow its bones. Little competition from the Church or the social relations between nobles and subjects set for in the laws that were disestablished to free markets for commodification and money making. Money making enterprises structured the laws from slavery, to the voting franchise with little from the state to cushion any of the hardships of life in America.
Health care is the largest industry we have. It is approaching 20% of the GNP. I remember the great national freak out in the late 1970s when congress realized it was approaching 10%. Nothing seems to be stopping the costs from spiraling upward and onward. No risk of deflation here where nothing is spared to save a life, operate on some poor little afflicted child, or buy a piece of equipment the size of an office building that shoots a proton beam at cancer, one cancer cell at a time.
When Obama Care becomes a clear burden to even the democrats who can point to it now as some sort of accomplishment, and it is an accomplishment for the people who finally get to see a doctor, get into a hospital, get that operation or diagnosis that saves their lives, when even those accomplishments number in the millions, it will be part of a health care industry for which $Trillions of dollars can no longer be justified or even funded. As that financial collapse approaches, it would be better for politicians to declare the defeat of a program better rolled into one universal single payer system currently operating as Medicare, than try to reform, shore up or the old tried and true public lie, get rid of its waste and corruption.
Declare victory with Medicare as the solution and put everyone into it. The only paper work left should be each person's medical history with diagnosis and healing as the happy ending to the story.
There is a fundamental error in perception in the Western world that is so pervasive that people can't even see it. As a most basic component of a healthy society people need to be able to survive at a local community level without outside support. Only after that is taken care of should people concern themselves with luxuries, inter-community and international relations.
Welfare–not to mention other government services–can appear to have positive impacts if one only looks at their effects in isolation, however I think there is a devastating and pernicious impact on people's ability to form community bonds and have local resilience with things like welfare.
Also, let's also not forget that Americans consume far more of the earth's precious resources than any other group in the world. Welfare etc are social services that can only be funded through the world-wide looting operation of the American empire. Do these recipients of empire benefits have a moral right to share in the loot of empire? Perhaps instead of domestic welfare it would be more ethical for the American empire to provide social benefits for the indigenous peoples who are forced from their lands to work like slaves for the empire's benefit. Although admittedly if the American empire used it's loot for the benefit of the foreign peoples whose lives it destroyed then there'd probably be nothing left to spread around to the military, or to pacify and police the domestic population. So I suppose that's not a serious proposal.
Welfare etc are social services that can only be funded through the world-wide looting operation of the American empire
This is obviously not true. Unless every social democratic country in the world is considered as a piece of the American empire. And even then, I would argue that we can easily afford a generous welfare state with a small shift in priorities away from (globally destabilizing) defense spending to social productive spending on human development.
Obvious to who? America lavishes so much money on its military not only because of corruption, but also because it has the world reserve currency and is a guarantor of the safety of international shipping. These facts are inextricably linked to the America's status as the world hegemon. The empire provides order and structure, and enforces the extraction of resources from the periphery to the center. The bread and circuses are inextricably linked to the empire's military activities and trying to tease them apart will only lead to collapse of the entire system sooner than it will otherwise happen.
"Social Democratic"–now that's an interesting phrase. Did you know that Syria is a democracy, and was an extremely prosperous and well-education nation prior to 2011?
Here's a telling paragraph from the Wikipedia article about Syria:
[Dec 27, 2015] The Sneaky Way Austerity Got Sold to the Public Like Snake Oil
Notable quotes:
"... When children don't get good educations, the production of knowledge falls into private control. Power gets consolidated. The official theoretical frameworks that benefit the most powerful get locked in. ..."
"... Not only were the politicians worried about votes but also the welfare state was a way to head off a left wing revolution. ..."
"... the change began in 1976 with the election of Rockefeller-funded Jimmy Carter, who immediately launched an austerity program. Support for Keynesian economics was further eroded by the 70's stagflation which we now know was caused by Mid East oil but at the time the "left" were like deer in the headlights, with no clue what to do. ..."
"... The final nail in the coffin was the fall of the Berlin Wall and the collapse of the USSR, discrediting communism. After that, "there was no alternative" to corporate capitalism. Or more accurately, the left was slow to formulate an alternative and to this day is still struggling with an alternative as we have observed with Syriza. It's not enough to oppose austerity, you have to have a constructive plan to fix things. ..."
[Dec 24, 2015] Obama s foreign policy goals get a boost from plunging oil prices
Notable quotes:
"... At a time of tension for U.S. international relations, cheap oil has dovetailed with some of the Obama administration's foreign policy goals: pressuring Russian President Vladimir Putin, undermining the popularity of Venezuelan President Nicolás Maduro and tempering the prospects for Iranian oil revenue. At the same time, it is pouring cash into the hands of consumers, boosting tepid economic recoveries in Europe, Japan and the United States. ..."
[Dec 24, 2015] The Fed Has Created A Monster And Just Made A Dangerous Mistake, Stephen Roach Warns
[Dec 24, 2015] A big hint about why so many people support Donald Trump might come from Germany
An interesting and plausible hypothesis: Trump as a candidate who answers voters frustration with neoliberalism.
Notable quotes:
"... The data suggest theres some kind of connection. According to polls, whites with a high school degree or less disproportionately favor Trump. These are the same people who have seen their economic opportunities decline the most in recent years. This group also disproportionately favors tough restrictions on immigration. ..."
"... A new study released this week showed that in Germany, the economic frustrations of trade nudged many people into becoming right-wing extremists over the past two decades - throwing their support behind the country's neo-Nazi parties. ..."
"... Still, these far-right parties have consistently earned a percentage point or two of the German national vote. And the economists found that they have been particularly popular with people who have been negatively impacted by trade. ..."
"... using German data on elections, employment, and commerce, they showed that places where trade caused the most pain also had the largest increases in support for far-right parties. Over the past 20 years, Germanys exports and imports have both skyrocketed, first thanks to the fall of the Iron Curtain, then due to Chinas rise as a major manufacturer. ..."
"... Workers whose industries were hurt by trade were were more likely to say they would start voting for one of the extreme right parties. Even workers whose own industries were unaffected by trade were more likely to support a neo-Nazi political party if they lived in a region hurt by trade. ..."
"... Christian Dippel, one of the authors of the study, says it's also important to look at the context in each country. The neo-Nazi parties happen to be the voice of anti-globalization in Germany. But in Spain, for instance, these views are the trademark of Podemos, a far-left party "known for its rants against globalization and the tyranny of markets," according to Foreign Affairs. ..."
"... The larger lesson, Dippel says, is that globalization creates a class of angry voters who will reward whoever can tap into their frustrations. These are usually extremist parties, because the mainstream tends to recognize the overall benefits of trade. "When the mainstream parties are all, in a loose sense, pro-globalization, there's room for fringe groups to latch onto this anti-globalization sentiment and profit from it," he says. ..."
"... Author has shown that in America, recent trends in trade have hurt low-wage workers the most. With his co-authors David Dorn, Gordon Hanson and Jae Song, he published a widely-cited 2014 paper measuring the negative impacts of manufacturing imports from China, America's largest trading partner. Most of those ill-effects - like unemployment and lower earnings - were borne by the workers with the lowest wages. ..."
"... "Immigration always seems to be the most tangible evidence of the impingement of others on your economic turf," Author adds. ..."
"... "In Germany, these three things get bundled up in these far-right platforms in a way that's very difficult to unpack," he says. "It could be that you're bundling these ideas together for a reason. It could be that you're bundling together what's really happening with an idea that's more tangible, that you could sell more easily to angry voters." ..."
[Dec 24, 2015] Obama's foreign policy goals get a boost from plunging oil prices
Notable quotes:
"... At a time of tension for U.S. international relations, cheap oil has dovetailed with some of the Obama administration's foreign policy goals: pressuring Russian President Vladimir Putin, undermining the popularity of Venezuelan President Nicolás Maduro and tempering the prospects for Iranian oil revenue. At the same time, it is pouring cash into the hands of consumers, boosting tepid economic recoveries in Europe, Japan and the United States. ..."
[Dec 23, 2015] The Big Short Every American Should See This Movie
Notable quotes:
"... Enjoyed the movie, but in typical Hollywood fashion, the role of the Federal Reserve and government in pushing housing down to those unable to afford it was not even mentioned once. ..."
[Dec 23, 2015] The Neocons - Masters of Chaos
Notable quotes:
"... It's now clear that if Obama had ordered a major bombing campaign against Assad's military in early September 2013, he might have opened the gates of Damascus to a hellish victory by al-Qaeda-affiliated extremists or the even more brutal Islamic State, since these terrorist groups have emerged as the only effective fighters against Assad. ..."
"... By late September 2013, the disappointed neocons were acting out their anger by taking aim at Putin. They recognized that a particular vulnerability for the Russian president was Ukraine and the possibility that it could be pulled out of Russia's sphere of influence and into the West's orbit. ..."
"... But Gershman added that Ukraine was really only an interim step to an even bigger prize, the removal of the strong-willed and independent-minded Putin, who, Gershman added, "may find himself on the losing end not just in the near abroad [i.e. Ukraine] but within Russia itself." In other words, the new neocon hope was for "regime change" in Kiev and Moscow. [See Consortiumnews.com's " Neocons' Ukraine/Syria/Iran Gambit. "] ..."
"... Putin also had sidetracked that possible war with Iran by helping to forge an interim agreement constraining but not eliminating Iran's nuclear program. So, he became the latest target of neocon demonization, a process in which the New York Times and the Washington Post eagerly took the lead. ..."
"... As the political violence in Kiev escalated – with the uprising's muscle supplied by neo-Nazi militias from western Ukraine – neocons within the Obama administration discussed how to "midwife" a coup against Yanukovych. Central to this planning was Victoria Nuland, who had been promoted to assistant secretary of state for European affairs and was urging on the protesters, even passing out cookies to protesters at Kiev's Maidan square. ..."
"... When the coup went down on Feb. 22 – spearheaded by neo-Nazi militias who seized government buildings and forced Yanukovych and his officials to flee for their lives – the U.S. State Department quickly deemed the new regime "legitimate" and the mainstream U.S. media dutifully stepped up the demonization of Yanukovych and Putin. ..."
"... Although Putin's position had been in support of Ukraine's status quo – i.e., retaining the elected president and the country's constitutional process – the crisis was pitched to the American people as a case of "Russian aggression" with dire comparisons made between Putin and Hitler, especially after ethnic Russians in the east and south resisted the coup regime in Kiev and Crimea seceded to rejoin Russia. ..."
"... Pressured by the Obama administration, the EU agreed to sanction Russia for its "aggression," touching off a tit-for-tat trade war with Moscow which reduced Europe's sale of farming and manufacturing goods to Russia and threatened to disrupt Russia's natural gas supplies to Europe. ..."
"... While the most serious consequences were to Ukraine's economy which went into freefall because of the civil war, some of Europe's most endangered economies in the south also were hit hard by the lost trade with Russia. Europe began to stagger toward the third dip in a triple-dip recession with European markets experiencing major stock sell-offs. ..."
[Dec 21, 2015] Weak president, neoliberal Obama and housing bubble
Notable quotes:
"... The relationship between low interest rates and bubbles has nothing to do with the above. Low interest rates RAISE asset prices. Through the magic of low discount rates, the future earnings and cash flows are worth a lot higher today. This is why Bernanke cut rates and kept them low. Raising asset prices and the resultant higher net worth was supposed to lead to higher spending today. But outsized returns also attracts speculation. what is so difficult to understand? John Williams of SF Fed has shown how positive returns in asset markets raises the speculators expected returns. when this dynamic gets out of control, it is a bubble. ..."
"... That is exactly the point. Expected returns in stocks have nothing to do with earnings growth. http://www.frbsf.org/our-district/press/presidents-speeches/williams-speeches/2013/september/asset-price-bubbles-tomorrow-yesterday-never-today/ ..."
"... You think a rise in stock prices created by a fall in the cost of capital is a bubble. ..."
"... keeping the risk free rate at zero for 7 years is not a change in fundamentals. and if it is and it rises leading to a large fall in equity prices, you will be the first one crying uncle. so why put the economy through this? ..."
"... Rising stock prices allow corporations to raise debt, because the stock is put up as collateral. This makes funding easier, but it doesnt favor any particular purpose of the funding. It could be to buy back stock, for example. Said buy back can raise the stock price even more, which in turn can pay off the borrowing. Didnt cost a dime. ..."
"... It always seem to me that right wing economists credit businessmen with superhuman foresight and sophistication, except when it comes to the actions of the Fed and then something addles their brains and they become completely stupid. As I once put, it seems investors cant understand what the Fed is doing, even though they tell you. ..."
"... Thats it exactly. Markets are efficient, unless the government does anything, and then markets lose their minds and its the governments fault. ..."
"... Here is how they evaluate models: Good model; one that reaches the right good conclusions. Bad model; one that ends up saying stuff nobody should believe in. ..."
"... Obama could have at least made the investigations a high priority...but he let Holder, a Wall Street attorney, consign them to the lowest. ..."
"... Democrats filibuster-proof majority consisted of 58 Democrats and two independents who caucused with them. Only an inept President and Senate majority leader could have failed to take advantage of such a majority to implement significant parts of the party platform. ..."
"... Gullible folks like pgl and his coterie believe what these Democrats say and waste our time defending their neoliberal behavior. ..."
[Dec 21, 2015] Monetalism is dead but remains of monetarist thinking are still lingering
Notable quotes:
"... Summers is right that bubbles are usually accompanied by some kind of financial euphoria. ..."
"... There will be massive pushback because so many have wasted many years and resources building mathematically elegant but fatally flawed models that do not make accurate predictions on even represent the fundamentals of any economy. ..."
[Dec 20, 2015] Paul Krugman: The Big Short, Housing Bubbles and Retold Lies
Notable quotes:
"... I get the feeling that if doing a film review of The Force Awakens , most economists would be rooting for the Empire to win - after all the empire will bring free trade within its borders, like the EU. ..."
"... In market fundamentalist world, markets dont fail. They can only be failed. Though its still not clear how they think a little bit of government incentive for loans to low income borrowers caused the entire financial sector to lose its mind wrt CDOs. ..."
"... The distribution of the use of credit between pure financial speculation and productive investment is not a function of interest rates, but of things like bank culture, bank regulation and macro-economic and technological prospects. ..."
"... ....Supervising regulators need to look carefully at the ratio of credit used for financial trading compared to credit used for what weve called real-economy matters. They should adjust the level of monitoring based on this view while they also inform policy makers including those in the legislature. ..."
"... except that a significant chunk of institutional investors have sticky nominal targets for return thanks to the politics of return expectation setting (true for pension fund and endowments) -- low interest rates do encourage chasing phantoms or looking to extract some rents, for those subject to that kind of pressure ..."
"... The relationship between low interest rates and bubbles has nothing to do with the above. Low interest rates RAISE asset prices. Through the magic of low discount rates, the future earnings and cash flows are worth a lot higher today. This is why Bernanke cut rates and kept them low. Raising asset prices and the resultant higher net worth was supposed to lead to higher spending today. But outsized returns also attracts speculation. what is so difficult to understand? John Williams of SF Fed has shown how positive returns in asset markets raises the speculators expected returns. when this dynamic gets out of control, it is a bubble. ..."
"... Yes, indeed. And who do we have to blame for that? Obama and Holder, of course. They made the investigation of mortgage securities fraud DOJs lowest priority. Krugmans Democratic proclivities prevent him from stating the obvious. ..."
"... Fact is, Obama has intentionally been a lame duck ever since he took office. He was even clueless on how to capitalize on a filibuster-proof majority in the midst of an economic crisis...which brings us to Trump. Many are so desperate for leadership after Obamas hollow presidency that theyll even support a racist demagogue to avoid another empty White House. ..."
"... Yes you are correct. From 2001 into 2008 when all of the liar and ninja loans were being made, not one government official stepped forward to investigate the possibility of fraud, the predatory lending, the misrepresentation of loans taking place, the loans with teaser rates which later ballooned, the packing of loans with deceptive fees, the illegal kick backs, etc. Not one. To make matters worst, the administration from 2001-2008 aligned itself with the banks along with the maestro hisself Greenspan. ..."
"... When state AGs took on the burden of investigating the flagrant violations, the administration moves to block them saying they had no jurisdiction to do so. It did this through the OCC issuing rules preventing the states from prosecuting the banks. Besides blocking any investigation, the OCC failed in its mission to audit the banks for which it was by law to do. ..."
[Dec 19, 2015] The Enduring Relevance of "Manias, Panics, and Crashes"
Notable quotes:
"... Manias, Panics, and Crashes ..."
"... The New International Money Game ..."
"... Manias, Panics and Crashes ..."
"... Why Minsky Matters ..."
"... Manias, Panics and Crashes ..."
"... Manias, Panics and Crashes ..."
[Dec 19, 2015] The Washington Post's Non-Political Fed Looks a Lot Like Wall Street's Fed
Notable quotes:
"... Any serious discussion of Fed policy would note that the banking industry appears to have a grossly disproportionate say in the country's monetary policy. ..."
[Dec 18, 2015] The Upward Redistribution of Income: Are Rents the Story?
Looks like growth of financial sector represents direct threat to the society
Notable quotes:
"... Perhaps the financialization of the economy and rising inequality leads to a corruption of the political process which leads to monetary, currency and fiscal policy such that labor markets are loose and inflation is low. ..."
"... Growth of the non-financial-sector == growth in productivity ..."
"... In complex subject matters, even the most competent person joining a company has to become familiar with the details of the products, the industry niche, the processes and professional/personal relationships in the company or industry, etc. All these are not really teachable and require between months and years in the job. This represents a significant sunk cost. Sometimes (actually rather often) experience within the niche/industry is in a degree portable between companies, but some company still had to employ enough people to build this experience, and it cannot be readily bought by bringing in however competent freshers. ..."
[Dec 18, 2015] How low can oil prices go? Opec and El Niño take a bite out of crudes cost
Oil is a valuable chemical resource that is now wasted because of low prices... "The obvious follow-up question is, how long will the sane people of the world continue to allow so much fossil-fuel combustion to continue? An exercise for readers."
Notable quotes:
"... Iran wont flood the market in 2016. Right now Iran is losing production. It takes time to reverse decline and make a difference. ..."
"... Those who predict very low prices dont understand the industry (I do). The low price environment reduces capital investment, which has to be there just to keep production flat (the decline is 3 to 5 million barrels of oil per day per year). At this time capacity is dropping everywhere except for a few select countries. The USA is losing capacity, and will never again reach this years peak unless prices double. Other countries are hopeless. From Norway to Indonesia to Colombia to Nigeria and Azerbaijan, peak oil has already taken place. ..."
"... If oil prices remain very low until 2025 itll either be because you are right or because the world went to hell. ..."
"... But Im with Carambaman - prices will go up again. Demand is and will still be there. The excess output will eventually end, and the prices stabilises. And then move up again. ..."
"... Time to examine the real question: how long can the Saudis maintain their current production rates? Theyre currently producing more than 10 Mbarrels/day, but lets take the latter figure as a lower bound. They apparently have (per US consulate via WikiLeaks--time for a followup?) at least 260 Gbarrels (though it seems no one outside Saudi really knows). You do the math: 260 Gbarrels / (10 Mbarrels/day) = 26 kdays ~= 70 years. @ 15 Mbarrels/day - 47.5 years. @ 20 Mbarrels/day - 35 years. ..."
"... The obvious follow-up question is, how long will the sane people of the world continue to allow so much fossil-fuel combustion to continue? An exercise for readers. ..."
"... Saudi Arabia, a US ally, using oil production and pricing to crush US oil shale industry? Did I read that correctly? ..."
"... Yeah, but I suspect it was *written* incorrectly. Im betting the Saudis real target is the Russians. ..."
"... In 1975 dollars, thats $8.31 / bbl (with a cumulative inflation factor of 342% over 40 years), or $.45 / gal for gas (assuming a current price of $2.00 / gal). ..."
"... I spent 30 years in the oil industry and experienced many cycles. When it is up people cannot believe it will go down and when it is down people cannot believe it will go up. It is all a matter of time ..."
[Dec 17, 2015] Neocon Influence on Angela Merkel
[Dec 17, 2015] Why Merkel betrays Europe and Germany
Note that the quality of translation from German of this article is low.
Notable quotes:
"... Frankfurter Allgemeine Zeitung ..."
"... Bild and Die Welt ..."
"... In 2003, Chancellor Gerhard Schröder opposed the Anglo-American intervention in Ira q. Angela Merkel then published a courageous article in the Washington Post ..."
"... As Stanley Payne, the famous American historian said about Spain (or any western democracy) that now politicians are not elected but chosen by apparatus, agencies and visible hands of the markets ..."
"... Merkel is publicly supported by Friede Springer , widow of West German press baron, Axel Springer , whos publishing conglomerate, the Springer Group secretly received around $7 million from the CIA in the early 1950s. ..."
"... She is counseled by Jeffrey Gedmin. Gedmin is a regular columnist in Die Welt , a publication of the Springer Group. After becoming administrator of the Council of the Community of Democracies and director of the Aspen Institute in Berlin in 2001, Gedmin devoted himself exclusively to Merkel . Gedmin was too involved in the infamous Project for a New American Century (PNAC) and wrote the chapter on Europe in the neocon programme. He argued that the European Union should remain under NATO authority and that this would only be possible by discouraging European calls for emancipation . ..."
"... In a few years, Merkel has destroyed European solidarity, annihilated the German nuclear power plants (an old American obsession too), impoverished Germans and their once efficient Rheinisch and solitary economy, backed the mad dog American diplomacy and created along with an irresponsible American administration (irresponsible because America will never win this kind of conflict) a dangerous crisis against Russia than can end on a war or a scandalous European partition. ..."
[Dec 14, 2015] Marine Le Pen is not alone, and that is a real problem for the EU
European nationalism is an allergic reaction to neoliberalism. Guardian does not mention Ukraine and Baltic states. also far right nationalist goverment with Baltic states imposing "Baltic version of apartheid" to Russian speaking minority.
[Dec 13, 2015] Deregulation of exotic financial instruments like derivatives and credit-default swaps and corruption of Congress and government
Notable quotes:
"... Can you list all of the pro- or anti- Wall Street reforms and actions Bill Clinton performed as President including nominating Alan Greenspan as head regulator? Cutting the capital gains tax? Are you aware of Greenspans record? ..."
"... Its actually pro-neoliberalism crowd vs anti-neoliberalism crowd. In no way anti-neoliberalism commenters here view this is a character melodrama, although psychologically Hillary probably does has certain problems as her reaction to the death of Gadhafi attests. The key problem with anti-neoliberalism crowd is the question What is a realistic alternative? Thats where differences and policy debate starts. ..."
"... Events do not occur in isolation. GLBA increased TBTF in AIG and Citi. TBTF forced TARP. GLBA greased the skids for CFMA. Democrats gained majority, but not filibuster proof, caught between Iraq and a hard place following their votes for TARP and a broader understanding of their participation in the unanimous consent passage of the CFMA, over objection by Senators James Inhofe (R-OK) and Paul Wellstone (D-MN). ..."
"... It certainly fits the kind of herd mentality that I always saw in corporate Amerika until I retired. The William Greider article posted by RGC was very consistent in its account by John Reed with the details of one or two books written about AIG back in 2009 or so. I dont have time to hunt them up now. Besides, no one would read them anyway. ..."
"... GS was one of several actions taken by the New Deal. That it wasnt sufficient by itself doesnt equate to it wasnt beneficial. ..."
"... "Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," said then-Treasury Secretary Lawrence Summers. "This historic legislation will better enable American companies to compete in the new economy." ..."
"... The repeal of Glass Steagal was a landmark victory in deregulation that greased the skids for the passage of CFMA once Democrats had been further demoralized by the SCOTUS decision on Bush-v-Gore. The first vote on GLBA was split along party lines, but passed because Republicans had majority and Clinton was willing to sign which was clear from the waiver that had been granted to illegal Citi merger with Travelers. Both Citi and AIG mergers contributed to too big to fail. The CFMA was the nail in the coffin that probably would have never gotten off the ground if Democrats had held the line on the GLBA. Glass-Steagal was insufficient as a regulatory system to prevent the 2008 mortgage crisis, but it was giant as an icon of New Deal financial system reform. Its loss institutionalized too big to fail ..."
"... Gramm Leach Biley was a mistake. But it was not the only failure of US regulatory policies towards financial institutions nor the most important. ..."
"... It was more symbolic caving in on financial regulation than a specific technical failure except for making too big to fail worse at Citi and AIG. It marked a sea change of thinking about financial regulation. Nothing mattered any more, including the CFMA just a little over one year later. Deregulation of derivatives trading mandated by the CFMA was a colossal failure and it is not bizarre to believe that GLBA precipitated the consensus on financial deregulation enough that after the demoralizing defeat of Democrats in Bush-v-Gore then there was no New Deal spirit of financial regulation left. Social development is not just a series of unconnected events. It is carried on a tide of change. A falling tide grounds all boats. ..."
"... We had a financial dereg craze back in the late 1970s and early 1980s which led to the S L disaster. One would have thought we would have learned from that. But then came the dereg craziness 20 years later. And this disaster was much worse. ..."
"... This brings us to Lawrence Summers, the former Treasury Secretary of the United States and at the time right hand man to then Treasury Security Robert Rubin. Mr. Summers was widely credited with implementation of the aggressive tactics used to remove Ms. Born from her office, tactics that multiple sources describe as showing an old world bias against women piercing the glass ceiling. ..."
"... According to numerous published reports, Mr. Summers was involved in. silencing those who questioned the opaque derivative product's design. ..."
"... The Tax Policy Center estimated that a 0.1 percent tax on stock trades, scaled with lower taxes on other assets, would raise $50 billion a year in tax revenue. The implied reduction in trading revenue was even larger. Senator Sanders has proposed a tax of 0.5 percent on equities (also with a scaled tax on other assets). This would lead to an even larger reduction in revenue for the financial industry. ..."
"... Great to see Bakers acknowledgement that an updated Glass-Steagall is just one component of the progressive wings plan to rein in Wall Street, not the sum total of it. Besides, if Wall Street types dont think restoring Glass-Steagall will have any meaningful effects, why do they expend so much energy to disparage it? Methinks they doth protest too much. ..."
"... Yes thats a good way to look it. Wall Street gave the Democrats and Clinton a lot of campaign cash so that they would dismantle Glass-Steagall. ..."
"... Slippery slope. Ya gotta find me a business of any type that does not protest any kind of regulation on their business. ..."
"... Yeah, but usually because of all the bad things they say will happen because of the regulation. The question is, what do they think of Clintons plan? Ive heard surprisingly little about that, and what I have heard is along these lines: http://money.cnn.com/2015/10/08/investing/hillary-clinton-wall-street-plan/ ..."
"... Hillary Clinton unveiled her big plan to curb the worst of Wall Streets excesses on Thursday. The reaction from the banking community was a shrug, if not relief. ..."
"... Iceland's government is considering a revolutionary monetary proposal – removing the power of commercial banks to create money and handing it to the central bank. The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled "A better monetary system for Iceland". ..."
[Dec 12, 2015] Guyenot Who are the Neocons
Notable quotes:
"... The American Neocons are Zionists (Their goal is expanding political / military power. Initially this is focused on the state of Israel.) ..."
"... Obviously , if Zionism is synonymous with patriotism in Israel, it cannot be an acceptable label in American politics, where it would mean loyalty to a foreign power. This is why the neoconservatives do not represent themselves as Zionists on the American scene. Yet they do not hide it all together either. ..."
"... He points out dual-citizen (Israel / USA) members and self proclaimed Zionists throughout cabinet level positions in the US government, international banking and controlling the US military. In private writings and occasionally in public, Neocons admit that America's war policies are actually Israel's war goals. (Examples provided.) ..."
"... American Jewish Committee ..."
"... Contemporary Jewish Record ..."
"... If there is an intellectual movement in America to whose invention Jews can lay sole claim, neoconservatism is it. It's a thought one imagines most American Jews, overwhelmingly liberal, will find horrifying . And yet it is a fact that as a political philosophy, neoconservatism was born among the children of Jewish immigrants and is now largely the intellectual domain of those immigrants' grandchildren ..."
"... Goyenot traces the Neocon's origins through its influential writers and thinkers. Highest on the list is Leo Strauss. (Neocons are sometimes called "the Straussians.") Leo Strauss is a great admirer of Machiavelli with his utter contempt for restraining moral principles making him "uniquely effective," and, "the ideal patriot." He gushes over Machiavelli praising the intrepidity of his thought, the grandeur of his vision, and the graceful subtlety of his speech. ..."
"... believes that Truth is harmful to the common man and the social order and should be reserved for superior minds. ..."
"... nations derive their strength from their myths , which are necessary for government and governance. ..."
"... national myths have no necessary relationship with historical reality: they are socio-cultural constructions that the State has a duty to disseminate . ..."
"... to be effective, any national myth must be based on a clear distinction between good and evil ; it derives its cohesive strength from the hatred of an enemy nation. ..."
"... deception is the norm in political life ..."
"... Office of Special Plans ..."
"... The Zionist/Neocons are piggy-backing onto, or utilizing, the religious myths of both the Jewish and Christian world to consolidate power. This is brilliant Machiavellian strategy. ..."
"... the "chosen people" myth (God likes us best, we are better than you) ..."
"... the Holy Land myth (one area of real estate is more holy than another) ..."
"... General Wesley Clark testified on numerous occasions before the cameras, that one month after September 11th, 2001 a general from the Pentagon showed him a memo from neoconservative strategists "that describes how we're gonna take out seven countries in five years, starting with Iraq, and then Syria, Lebanon, Libya, Somalia and Sudan and finishing off with Iran". ..."
"... Among them are brilliant strategists ..."
"... They operate unrestrained by the most basic moral principles upon which civilization is founded. They are undisturbed by compassion for the suffering of others. ..."
"... They use consciously and skillfully use deception and "myth-making" to shape policy ..."
"... They have infiltrated the highest levels of banking, US military, NATO and US government. ..."
[Dec 11, 2015] Why Its Tricky for Fed Officials to Talk Politically
"There is no reason for central banks to have the kind of independence that judicial institutions have. Justice may be blind and above politics, but money and banking are not." Economic and politics are like Siamese twins (which actually . If somebody trying to separate them it is a clear sign that the guy is either neoliberal propagandists or outright crook.
Notable quotes:
"... I think FED chairman is the second most powerful political position in the USA after the POTUS. Or may be in some respects it is even the first ;-) So it is quintessentially high-power political position masked with the smokescreen of purely economic (like many other things are camouflaged under neoliberalism.) ..."
"... I think that is a hidden principle behind attacks on FED chair. A neoliberal principle that the state should not intrude into economics and limit itself to the police, security, defense, law enforcement and few other related to this functions. So their point that she overextended her mandate is an objection based on principle. Which can be violated only if it is used to uphold neoliberalism, as Greenspan did during his career many times. ..."
"... This kind of debate seems to be a by-product of the contemporary obsession with having an independent central bank, run according to the fantasy that there is such a thing as a neutral or apolitical way to conduct monetary policy. ..."
"... A number of commenters and authors have recently pointed out that inequality may not just be an unrelated phenomenon to monetary policy, but actually, in part at least, a byproduct of it. ..."
"... The theory is that the Fed in the Great Moderation age has been so keen to stave off even the possibility of inflation that it chokes down the vigor of recoveries before they get to the part where median wages start rising quickly. The result is that wages get ratcheted down with the economic cycle, falling during recessions and never fully recovering during the recoveries. ..."
"... Two Things: (i) The Fed should be open and honest about monetary policy. No one wants to return to the Greenspan days. (ii) Brad Delong is a neoliberal hack. ..."
"... As to why risk a political backlash in the piece, the short answer is: to invoke the debate on whether politics or fact (science) is going to dominate. Because they can't both. See: Romer. Let's have this out once and for all. ..."
[Dec 10, 2015] Special Report Buybacks enrich the bosses even when business sags
Notable quotes:
"... Most publicly traded U.S. companies reward top managers for hitting performance targets, meant to tie the interests of managers and shareholders together. At many big companies, those interests are deemed to be best aligned by linking executive performance to earnings per share, along with measures derived from the company's stock price. ..."
"... But these metrics may not be solely a reflection of a company's operating performance. They can be, and often are, influenced through stock repurchases. In addition to cutting the number of a company's shares outstanding, and thus lifting EPS, buybacks also increase demand for the shares, usually providing a lift to the share price, which affects other performance markers. ..."
"... Pay for performance as it is often structured creates "very troublesome, problematic incentives that can potentially drive very short-term thinking." ..."
"... As reported in the first article in this series, share buybacks by U.S. non-financial companies reached a record $520 billion in the most recent reporting year. A Reuters analysis of 3,300 non-financial companies found that together, buybacks and dividends have surpassed total capital expenditures and are more than double research and development spending. ..."
"... "There's been an over-focus on buybacks and raising EPS to hit share option targets, and we know that those are concentrated in the hands of the few, and that the few is in the top 1 percent," said James Montier, a member of the asset allocation team at global investment firm GMO in London, which manages more than $100 billion in assets. ..."
"... The introduction of performance targets has been a driver of surging executive pay, helping to widen the gap between the richest in America and the rest of the country. Median CEO pay among companies in the S P 500 increased to a record $10.3 million last year, up from $8.6 million in 2010, according to data firm Equilar. ..."
"... At those levels, CEOs last year were paid 303 times what workers in their industries earned, compared with a ratio of 59 times in 1989, according to the Economic Policy Institute, a Washington-based nonprofit. ..."
[Dec 07, 2015] The key prerequisite of casino capitalism is corruption of regulators
[Dec 07, 2015] Hillary Clinton How I'd Rein In Wall Street
[Dec 07, 2015] Academic Nightmares Where Everybody Majors in Money
The key idea of neoliberal university if to view students as customers and the degree as a product to sell.
Notable quotes:
"... The university of North Carolina at Chapel Hill now faces one year of probation from the Southern Association of Colleges and Schools Commission on Colleges as a result of a report that documents " widespread and long-lasting academic fraud at the university ." ..."
"... Students are increasingly perceived as customers ..."
"... the "product" the university is selling as a degree rather than an education, so it does seem counter productive to risk losing a customer for something so insignificant as failing to go to class. ..."
"... Today's college students may be ignorant, but they aren't stupid. They take the measure of an institution pretty quickly. They can smell hypocrisy, and if they have to pay tens of thousands of dollars a year for the dubious privilege of uninterrupted olfactory assault, they'll very likely develop the moral equivalent of olfactory fatigue. ..."
[Dec 06, 2015] CIA personnel and assets had the strongest motives to murder Kennedy
[Dec 06, 2015] Beware Economics 101 -- this is a neoclassical junk
Notable quotes:
"... "The problem for early would - be neoclassical macroeconomists was that, strictly speaking, there was no microeconomic model of macroeconomics when they began their campaign. So they developed a neoclassical macro model from the foundation of the neoclassical growth model developed by Nobel laureate Robert Solow (Solow 1956) and Trevor Swan (Swan 2002). They interpreted the equilibrium growth path of the economy as being determined by the consumption and leisure preferences of a representative consumer, and explained deviations from equilibrium – which the rest of us know as the business cycle – by unpredictable 'shocks' to technology and consumer preferences. ..."
"... This resulted in a model of the macroeconomy as consisting of a single consumer, who lives for ever, consuming the output of the economy. Which is a single good produced in a single firm, which he owns and in which he is the only employee, which pays him both profits equivalent to the marginal product of capital and a wage equivalent to the marginal product of labor. To which he decides how much labor to supply by solving a utility function that maximizes his utility over an infinite time horizon, which he rationally expects and therefore correctly predicts. ..."
"... Paul Krugman is a quintessential neoclassical economist. Neoclassical economists threw the notion that economics should deal with empirical or factual reality overboard quite some time ago. ..."
"... Economists often invoke a strange argument by Milton Friedman that states that models do not have to have realistic assumptions to be acceptable - giving them license to produce severely defective mathematical representations of reality. ..."
"... Economists as a rule do not deny that their assumptions about human nature are highly unrealistic, but instead claim, following Friedman (1962, 1982), that the absence of realism does not diminish the value of their theory because it "works," in the sense that it generates valid predictions…. ..."
"... Most important, philosophers of science have almost universally rejected Friedman's position (Boland, 1979). It is very widely agreed that the purpose of a theory is to explain. Otherwise, [predictions] are unable to foretell under what conditions they will continue to hold or fail. ..."
"... With the advent of the Great Financial Crisis, which began in 2007 and continues to this day, the neoclassical models did fail. And they failed in the most spectacular way. ..."
"... Nevertheless, for those like Krugman who are in love with orthodox economic theory, when facts don't conform to theory, so much worse for the facts. ..."
"... It should be added that not everyone who rejects the orthodox, neoclassical theory of exogenous money creation and its "available funds" theory of banking, as Keen calls it, believes that debt matters. ..."
"... A very good example of this is the MMT school, which even though it rejects the orthodox theory of money creation, nevertheless discounts the importance of debt, or at least public debt. ..."
"... The distinction between private debt and public debt, however, is not a clear one. We all saw, for instance, the ease with which private debt was converted into public debt in the cases of Ireland and Spain in the wake of the GFC. ..."
"... The piece that VK posted by Keen was essentially a rejection of the macroeconomic theory that was formulated to replace Keynesian theory. ..."
"... The debate between these two economists on the role of banking and specifically the creation of credit is of fundamental importance in understanding the shortcomings of orthodox economic thinking – and why it was so ill-equipped to handle, let alone predict, the crash of 2008. ..."
"... However, because he has such an important platform, it matters more to many monetary economists (including the editor of this series) that he appears to lack a proper understanding of the nature of credit, and the role of banks in the economy. ..."
"... So yes debt is a big problem with a poorly regulated banking industry (financial industry really because of shadow banking). ..."
[Dec 04, 2015] German Financialization and the Eurozone Crisis
Notable quotes:
"... Bundenstalt für Finanzdienstleistungsaufsicht ..."
[Dec 04, 2015] Congressional Aid to Multinationals Avoiding Taxes
[Dec 04, 2015] The Neoconservative Movement is Trotskyism
"... Kristol argues in his book The Neoconservative Persuasion that those Jewish intellectuals did not forsake their heritage (revolutionary ideology) when they gave up Communism and other revolutionary movements, but had to make some changes in their thinking. America is filled with such former Trotskyists who unleashed an unprecedented foreign policy that led to the collapse of the American economy. ..."
"... Noted Australian economist John Quiggin declares in his recent work Zombie Economics that "Ideas are long lived, often outliving their originators and taking new and different forms. Some ideas live on because they are useful. Others die and are forgotten. But even when they have proved themselves wrong and dangerous, ideas are very hard to kill. Even after the evidence seems to have killed them, they keep on coming back. ..."
"... These ideas are neither alive nor dead; rather…they are undead, or zombie, ideas." Bolshevism or Trotskyism is one of those zombie ideas that keeps coming back in different forms. It has ideologically reincarnated in the political disputations of the neoconservative movement. ..."
"... As soon as the Israel Lobby came along, as soon as the neoconservative movement began to shape U.S. foreign policy, as soon as Israel began to dictate to the U.S. what ought to be done in the Middle East, America was universally hated by the Muslim world. ..."
"... In that sense, the neoconservative movement as a political and intellectual movement represents a fifth column in the United States in that it subtly and deceptively seeks to undermine what the Founding Fathers have stood for and replace it with what the Founding Fathers would have considered horrible foreign policies-policies which have contributed to the demise of the respect America once had. ..."
"... For example, when two top AIPAC officials-Steven Rosen and Keith Weissman-were caught passing classified documents from the Pentagon to Israel, Gabriel Schoenfeld defended them. ..."
"... Israel has been spying on the United States for years using various Israeli or Jewish individuals, including key Jewish neoconservative figures such as Paul Wolfowitz and Douglas Feith, who were under investigation for passing classified documents to Israel. ..."
[Dec 03, 2015] MOOCs and similar approaches to online learning can exacerbate rather than reduce disparities in educational outcomes related to socioeconomic status
[Dec 03, 2015] On That Video Where Some Egyptians Allegedly Say Obama Is Insane And On Drugs And Should Be Removed From Office
[Dec 02, 2015] When it comes to Wall Street buying our democracy you just need to follow the money
Notable quotes:
"... Let's compare donations from people who work at Bank of America, JP Morgan Chase, Morgan Stanley, Wells Fargo, Citigroup and Goldman Sachs to Hillary Clinton and Bernie Sanders. Hillary Clinton, has received $495,503.60 from people who work on Wall Street Bernie Sanders, has received only $17,107.72. Hillary Clinton may have Wall Street, ..."
"... The false promise of meritocracy was most disappointing. It basically said that meritocracy is hard to do, but never evaluates whether it is the right thing to do. Hint - it isn't enough. We need to worry about (relative) equality of outcome not just (relative) equality of opportunity. An equal chance to starve is still an equal chance. ..."
"... Making economies games is how you continued rigged distribution apparatus. Question all "rules"! ..."
[Dec 02, 2015] An introduction to the geography of student debt
Notable quotes:
"... ...It might seem counterintuitive that lack of access to credit results in delinquency-seemingly a problem of "too much debt." But in fact, lack of access to credit and delinquency are two sides of the same coin. Nearly everyone needs access to credit markets to meet basic economic needs, and if they can't get loans through competitive, transparent financial networks, poor people are more likely to be subjected to exploitative credit arrangements in the form of very high rates and other onerous terms and penalties, including on student loans. That disadvantage interacts with and is magnified by their lack of labor market opportunities. The result is exactly what we see across time and space: high delinquency rates for those with the least access to credit markets. ..."
[Dec 02, 2015] The False Promise of Meritocracy
[Dec 02, 2015] Wolf Richter: Financially Engineered Stocks Drag Down S P 500
All this neoliberal talk about "maximizing shareholder value" is designed to hide a redistribution mechanism of wealth up. Which is the essence of neoliberalism. It's all about executive pay. "Shareholder value" is nothing then a ruse for getting outsize bonuses but top execs. Stock buybacks is a form of asset-stripping, similar to one practiced by buyout sharks, but practiced by internal management team. Who cares if the company will be destroyed if you have a golden parachute ?
Notable quotes:
"... By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street . ..."
"... IBM has blown $125 billion on buybacks since 2005, more than the $111 billion it invested in capital expenditures and R D. It's staggering under its debt, while revenues have been declining for 14 quarters in a row. It cut its workforce by 55,000 people since 2012. ..."
"... Big-pharma icon Pfizer plowed $139 billion into buybacks and dividends in the past decade, compared to $82 billion in R D and $18 billion in capital spending. 3M spent $48 billion on buybacks and dividends, and $30 billion on R D and capital expenditures. They're all doing it. ..."
"... Nearly 60% of the 3,297 publicly traded non-financial US companies Reuters analyzed have engaged in share buybacks since 2010. Last year, the money spent on buybacks and dividends exceeded net income for the first time in a non-recession period. ..."
"... This year, for the 613 companies that have reported earnings for fiscal 2015, share buybacks hit a record $520 billion. They also paid $365 billion in dividends, for a total of $885 billion, against their combined net income of $847 billion. ..."
"... Buybacks and dividends amount to 113% of capital spending among companies that have repurchased shares since 2010, up from 60% in 2000 and from 38% in 1990. Corporate investment is normally a big driver in a recovery. Not this time! Hence the lousy recovery. ..."
"... Financial engineering takes precedence over actual engineering in the minds of CEOs and CFOs. A company buying its own shares creates additional demand for those shares. It's supposed to drive up the share price. The hoopla surrounding buyback announcements drives up prices too. Buybacks also reduce the number of outstanding shares, thus increase the earnings per share, even when net income is declining. ..."
"... But when companies load up on debt to fund buybacks while slashing investment in productive activities and innovation, it has consequences for revenues down the road. And now that magic trick to increase shareholder value has become a toxic mix. Shares of buyback queens are getting hammered. ..."
"... Me thinks Wolf is slightly barking up the wrong tree here. What needs to be looked at is how buy backs affect executive pay. "Shareholder value" is more often than not a ruse? ..."
"... Interesting that you mention ruse, relating to "buy-backs"…from my POV, it seems like they've legalized insider trading or engineered (a) loophole(s). ..."
"... On a somewhat related perspective on subterfuge. The language of "affordability" has proven to be insidiously clever. Not only does it reinforce and perpetuate the myth of "deserts", but camouflages the means of embezzling the means of distribution. Isn't distribution, really, the only rational purpose of finance, i.e., as a means of distribution as opposed to a means of embezzlement? ..."
"... buybacks *can* be asset-stripping and often are, but unless you tie capital allocation decisions closer to investment in the business such that they're mutually exclusive, this is specious and a reach. No one invests if they can't see the return. It would be just as easy to say that they're buying back stock because revenue is slipping and they have no other investment opportunities. ..."
"... Perhaps an analysis of the monopolistic positions of so many American businesses that allow them the wherewithal to underinvest and still buy back huge amounts of stock? If we had a more competitive economy, companies would have less ability to underinvest. Ultimately, I think buybacks are more a result than a cause of dysfunction, but certainly not always bad. ..."
"... One aspect that Reuters piece mentions, but glosses over with a single paragraph buried in the middle, is the fact that for many companies there are no ( or few) reasons to spend money in other ways. If capex/r d doesn't give you much return, why not buy out the shareholders who are least interested in holding your stock? ..."
"... Dumping money into R D is always risky, although different industries have different levels, and the "do it in-house" risk must be weighed against the costs of buying up companies with "proven" technologies. Thus, R D cash is hidden inside M A. M A is up 2-3 years in a row. ..."
[Dec 02, 2015] Larry Summers and the Subversion of Economics
Notable quotes:
"... As a rising economist at Harvard and at the World Bank, Summers argued for privatization and deregulation in many domains, including finance. Later, as deputy secretary of the treasury and then treasury secretary in the Clinton administration, he implemented those policies. Summers oversaw passage of the Gramm-Leach-Bliley Act, which repealed Glass-Steagall, permitted the previously illegal merger that created Citigroup, and allowed further consolidation in the financial sector. He also successfully fought attempts by Brooksley Born, chair of the Commodity Futures Trading Commission in the Clinton administration, to regulate the financial derivatives that would cause so much damage in the housing bubble and the 2008 economic crisis. He then oversaw passage of the Commodity Futures Modernization Act, which banned all regulation of derivatives, including exempting them from state antigambling laws. ..."
"... Over the past decade, Summers continued to advocate financial deregulation, both as president of Harvard and as a University Professor after being forced out of the presidency. During this time, Summers became wealthy through consulting and speaking engagements with financial firms. Between 2001 and his entry into the Obama administration, he made more than $20-million from the financial-services industry. (His 2009 federal financial-disclosure form listed his net worth as $17-million to $39-million.) ..."
"... In 2005, at the annual Jackson Hole, Wyo., conference of the worlds leading central bankers, the chief economist of the International Monetary Fund, Raghuram Rajan, presented a brilliant paper that constituted the first prominent warning of the coming crisis. Rajan pointed out that the structure of financial-sector compensation, in combination with complex financial products, gave bankers huge cash incentives to take risks with other peoples money, while imposing no penalties for any subsequent losses. Rajan warned that this bonus culture rewarded bankers for actions that could destroy their own institutions, or even the entire system, and that this could generate a full-blown financial crisis and a catastrophic meltdown. When Rajan finished speaking, Summers rose up from the audience and attacked him, calling him a Luddite, dismissing his concerns, and warning that increased regulation would reduce the productivity of the financial sector. (Ben Bernanke, Tim Geithner, and Alan Greenspan were also in the audience.) ..."
"... Over the past 30 years, the economics profession-in economics departments, and in business, public policy, and law schools-has become so compromised by conflicts of interest that it now functions almost as a support group for financial services and other industries whose profits depend heavily on government policy. The route to the 2008 financial crisis, and the economic problems that still plague us, runs straight through the economics discipline. And its due not just to ideology; its also about straightforward, old-fashioned money. ..."
"... Prominent academic economists (and sometimes also professors of law and public policy) are paid by companies and interest groups to testify before Congress, to write papers, to give speeches, to participate in conferences, to serve on boards of directors, to write briefs in regulatory proceedings, to defend companies in antitrust cases, and, of course, to lobby. This is now, literally, a billion-dollar industry. The Law and Economics Consulting Group, started 22 years ago by professors at the University of California at Berkeley (David Teece in the business school, Thomas Jorde in the law school, and the economists Richard Gilbert and Gordon Rausser), is now a $300-million publicly held company. Others specializing in the sale (or rental) of academic expertise include Competition Policy (now Compass Lexecon), started by Richard Gilbert and Daniel Rubinfeld, both of whom served as chief economist of the Justice Departments Antitrust Division in the Clinton administration; the Analysis Group; and Charles River Associates. ..."
"... I think it is interesting that Summers led the financial deregulation efforts of the Clinton administration and then made a bundle on Wall Street. I think that should be taken into account when evaluating his discussions of economics. ..."
"... It is difficult to get a man to understand something when his salary depends upon his not understanding it. ..."
[Dec 01, 2015] US Intervention Before And After
[Dec 01, 2015] The New Supply-Side Economics
[Nov 30, 2015] Is Balanced Growth Really the Answer
Notable quotes:
"... I can only add, that our economic system already redistributes income upward to capital and management, whose contribution to productivity is far below what they are paid. ..."
"... That's the idea of neoliberal transformation of society that happened since 80th or even earlier. Like John Kenneth Galbraith noted "Trickle-down theory is the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows" ..."
"... "The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil." John Kenneth Galbraith, The Great Crash of 1929 ..."
"... Just as was the case with his work on financial instability, Hyman Minsky's analysis of the problems of poverty and inequality in a capitalist economy, as well as his understanding of the political dysfunctions that would result from treating these problems in the wrong way, were prophetic. See this piece by Minksy's student L. Randall Wray, especially Section 2: http://www.levyinstitute.org/pubs/wp_515.pdf ..."
"... it is unjust to tell the poor that they must change before they will be entitled to work-whether it is their skills set or their character that is the barrier to work... Minsky always argued that it is preferable to "take workers as they are," providing jobs tailored to the characteristics of workers, rather than trying to tailor workers to the jobs available before they are allowed to work ..."
"... Further, NIT (and other welfare programs) would create a dependent class, which is not conducive to social cohesion (Minsky 1968). Most importantly, Minsky argued that any antipoverty program must be consistent with the underlying behavioral rules of a capitalist economy (Minsky no date, 1968, 1975a). One of those rules is that earned income is in some sense deserved. ..."
"... This misreads the politics. People who are disconnected from the job market very easily get disconnected from the political process. They don't vote. ..."
"... The problem in thinking here is the equilibrium paradigm. Equilibrium NEVER exists. If there is a glut the price falls below the marginal cost/revenue point, if the seller is desperate enough it falls to zero! Ignoring disequilibrium dynamics means this obvious (it should be obvious) point is simply ignored. The assumption of general equilibrium leads to the assumption of marginal productivity driving wages. You are not worth what you produce, you are worth precisely what somewhat else would accept to do your job. ..."
"... Never say never. There some stationary points at which equilibrium probably exists for a short period of time. But as the whole system has positive feedback loop built-in and is unstable by definition. So you are right in a sense that disequilibrium is the "normal" state of such a system and equilibrium is an exception. ..."
"... And the problem is more growth, is more growth is a trick we cannot always do in a finite resource technologically sophisticated world. (At least not growth as it is currently seen.) We need to start thinking in much longer term time scales. Saying that we have enough oil for 30 years, is not optimistic - it is an imminent crisis - or do we want our grandchildren to see the end of the world? ..."
[Nov 30, 2015] Secular stagnation and the financial sector
Notable quotes:
"... Surely the answer is "risk transfer" ..."
"... Is what you're saying here is that, by extending a lot of credit, the financial sector allowed households to maintain consumption in the face of a permanent decline in income (at least relative to expectation)? That's an important part of the story, I agree. ..."
"... the FIRE sector in particular, are parasitic on the economy. ..."
"... Perhaps financialization isn't so much a thing-in-itself as the mechanism through which wealth concentrates in periods of slow growth? ..."
"... As in the official theory of efficient markets, the financial sector is actually earning its keep by allocating capital to the most productive investments, and by spreading and managing risk. I don't see how anyone can argue this with a straight face in the light of the last 20 years of bubbles and busts." ..."
"... Did Cuba, Venezuela, Argentina and North Korea do better than the financialized economies of the world? Did the hand of the State in Russia, China and other countries secure better outcomes than the global financial sector in countries that allowed it to operate (albeit with heavy regulation)? ..."
"... The financial system can engage in usury, lending money with no connection to productive investment, by simply creating a parasitic claim on income. There are straightforward ways of doing this: credit cards with high rates of interest or payday lending. There are slightly more complicated approaches: insurance that by design doesn't pay off for the nominal beneficiary. ..."
"... "The biggest economic policy decision of the last thirty years has been the decision to de-socialise a lot of previously socially insured risks and transfer them back to the household sector (in their various capacities as workers, homeowners and consumers of healthcare). The financial sector was obviously the conduit for this policy decision." ..."
"... My feeling (based on nothing but intuition) is that the answer is (d). The government is a tool of moneyed interests. I know, it sounds awfully libertarian, but it is what it is. And I can't foresee any non-catastrophic end to it. ..."