Rule by a corporate elite requires war, corruption, and a cowed populace; democracy requires an educated population loudly demanding transparent, responsive government. Make no mistake: this is war. Guess who is winning?
An elite culture of hostility toward the people is rising in the U.S. This elite is not just a plutocracy but, increasingly, an insecure and vengeful plutocracy that views popular participation in the democratic process, at home or abroad, as the primary enemy. This paranoid elite mindset is laying the foundations for dictatorship.
From the Patriot Act, Abu Ghraib, Guantanamo pre-trial torture, wars for profit, destroying the careers of honest Federal officials who oppose contract fraud, and drone attacks on unidentified civilians to bailouts of billionaires and “stay out of jail” cards for Wall St. CEOs despite prima facie evidence of fraudulent behavior to the vicious pre-trial torture of individual Americans guilty of embarrassing top officials, we are witnessing the rise of an elite culture based on self-defense against the people. The members of the elite who buy into this culture all agree that it is in their common private interest to treat the people as the enemy. Whether the president or Wall St. banker or arms corporation CEO happens to label himself Republican. Democrat, or apolitical businessman is becoming increasingly irrelevant: the elite is adopting a garrison state perspective that labels all debate, all independent thought as proof of treachery.
This culture of dictatorship rests on a foundation of private wealth used for public power: a few CEOs from the arenas of finance, energy, and war profiteering who specialize in transferring social wealth into their own hands for subsequent transfer to their political lackeys. Once bought and paid, the political lackeys pass the laws required for the protection of the CEOs’ wealth transfer scam. Do independent commissions write the implementing rules governing how Wall St. is regulated? No, bureaucrats supported by representatives from Wall St. write those critical implementing rules. Do independent commissions decide if NSA should be permitted to engage in domestic spying? No, a highly secretive internal government body does. Class war by the rich, immunity from prosecution for the powerful, and secrecy are the legs on which dictatorship stands.
We may differ on which politician is most guilty, we may differ on whether or not any specific official personally desires to institute a dictatorship. Regardless of the answer, the rise of this defensive, anti-popular elite culture is promoting the consolidation of a single elite committed to its own perpetuation and determined to fight to the death against popular participation in the democratic process. Just as dictatorship has a critical core, so does democracy. The legs of democracy are transparency and public accountability. Transparency does not mean the transparency of what you do in your bedroom or write in your emails but what officials do in their offices. Unlike officials who seem suddenly, in our post-9/11 world, to have become addicted to pre-trial torture, for citizens in a democracy, “public accountability” means bringing the powerful to court to defend themselves. [Why do I feel it necessary to spell out something so obvious?!? Did we not all learn this in high school?]
The dynamic powering the transfer from democracy to dictatorship is, in a word, that “power corrupts.” The more power is acquired via ill-gotten and hidden pathways, the harder those abusing power will try to cover up, until they reach the point where they can only protect their personal careers by outright dictatorship…by which point they may well have the power to do so. Whatever lies in the hearts of our current officials, sooner or later this mindset of hostility toward the public (first, the public in a few Muslim states and now only a few years later also the American public) will be exploited by a leader to build what we will all recognize as a dictatorship…unless we change the elite culture of hostility.
On the other hand…
Bipartisan senatorial critique of NSA domestic spying by Leahy, Udall, Frankin, Grassley supports transparency in government.
Today, the Judiciary Committee will scrutinize government surveillance programs conducted under the Foreign Intelligence Surveillance Act, or FISA. In the years since September 11th, Congress has repeatedly expanded the scope of FISA, and given the Government sweeping new powers to collect information on law-abiding Americans – and we must carefully consider now whether those laws have gone too far.
Last month, many Americans learned for the first time that one of these authorities – Section 215 of the USA PATRIOT Act – has for years been secretly interpreted to authorize the collection of Americans’ phone records on an unprecedented scale….
In the wake of these leaks, the President said that this is an opportunity to have an open and thoughtful debate about these issues. I welcome that statement, because this is a debate that several of us on this Committee have been trying to have for years. And if we are going to have the debate that the President called for, the executive branch must be a full partner. We need straightforward answers and I am concerned that we are not getting them….
Just recently, the Director of National Intelligence acknowledged that he provided false testimony about the NSA surveillance programs during a Senate hearing in March….
The patience and trust of the American people is starting to wear thin….
The Government is already collecting data on millions of innocent Americans on a daily basis, based on a secret legal interpretation of a statute that does not on its face appear to authorize this type of bulk collection. What will be next? And when is enough, enough?
Congress must carefully consider the powerful surveillance tools that we grant to the Government, and ensure that there is stringent oversight, accountability, and transparency.
Congressional coalition opposes domestic spying –
A stunning bipartisan group of 205 Congressmen voted to slap down the Administration and the Republican House leadership over NSA domestic spying. Advocates of continued nearly unrestrained domestic spying against citizens not accused of any crimes won a narrow victory that cannot but awaken them to the on-going national outrage over the domestic spying scandal by Intel agencies that have traditionally been barred from domestic activities. The Amash-Conyers bill represents a significant response to the post-9/11 trend, symbolized by the grossly mis-named “Patriot Act” toward abuses of power by an Imperial Presidency that shows little concern for Constitutional guarantees of civil liberties. We should all be grateful to Manning for sacrificing his life in the name of real patriotism.
Crisis threatens Peru, with presumed populist Humala taking a corporatist stand. Rhetoric is hardening on both sides, and no one appears able to define the struggle between the rural poor and international gold mining interests in a positive-sum manner.
This delightful video shows the natural beauty of the Cajamarca region.
Since taking office a year ago, Humala has introduced a minimum monthly pension for the elderly poor and grants for students while augmenting programs for infants and families in poverty. He said the number of the people enrolled in some of the programs would double during his term. Humala’s approval rating fell to a fresh low of 40 percent this month, according to pollster Ipsos, after a crackdown on protesters opposed to Newmont Mining’s $5 billion Conga project in the northern region of Cajamarca that killed five people this month. [Reuters7/28/12.]
Humala’s Theoretical Error: Screwing the Lid on Tight Makes the Pot Boil Over
As a man of the people, Humala must know better, but once in office, he began to think he was, if not above the law, at least above the people. He has, as a result, discovered that top-down decision-making imposed upon the people, without gaining their buy-in generates exactly the chaos leaders want to avoid. By failing to show that residents would benefit from a new gold mine in their backyard, by failing to ensure that they would retain clean water, and most importantly of all by avoiding the short-term inefficiencies of democratic decision-making, he has provoked a deepening national crisis reminiscent of the decade-old Cochabamba water war against Bechtel Corporation and a Bolivian leader who made the same mistake…and turned Evo Morales into a national hero. More, he has thereby contracted a severe case of instability plus long-term counter-productivity, weakening himself both domestically and internationally while undermining his policy of befriending international mining corporations to boost Peru’s economic prospects. Political processes are not linear: what works for a day may be the cause of failure by the weekend.
Humala had to play a two-level game (to simplify his reality), dealing with the international gold mining corporation and dealing with his countrymen. On the foreign policy side, he negotiated; in terms of domestic governance, he attempted a centralized decision-making process…thus landing, for this policy, solidly in the tricky blue arena where behavior toward domestic partners clashes with behavior toward international partners. Playing tough guy in the red arena of force might make a leader feared; playing nice guy in the green arena of conciliation might win a leader moral stature. Playing in the internally inconsistent blue arena makes a leader look like a push-over to foreigners and like a sell-out to those who voted for him.
U.S. society remains, despite war and recession, sufficiently comfortable and deluded so that it refuses to face up to the harm it is suffering from allowing its pro-business/anti-people system to continue to exist. It is not necessary to eliminate business, which is a useful tool, but when that tool is transformed by a misguided elite into an idol existing not to benefit society but for its own sake, then the fundamental shape and values of society are warped, and the tool becomes a weapon employed by rich CEOs to plunder the wealth of everyone else. The solution is to create institutions that serve, not exploit.
The campaign by the super-rich to profit by stealing from the poor and using the funds for financial manipulations (rather than investment in productive enterprises) is the worst of all possible worlds for the long-term economic health of the country. Wisconsin Governor Walker’s union-busting campaign and the Supreme Court’s replacement of “one man, one vote” with “one dollar, one vote” are symptomatic. Whatever his sins, at least Stalin did concentrate funds on industrial growth; Wall St. today is worse – using the funds it takes from society for leveraged gambling that destroys lives quite as effectively as Stalin did but without building anything in return. The Obama Administration has wasted four years carefully refusing to face the need to punish financial crime, so the behavior that caused the Financial Crisis of 2008 remains unchanged, as illustrated by the libor scandal and mess at Morgan. As for the millions who lost jobs and homes, they are being defined as “superfluous,” like the Neo-Liberal victims of Pinochet and the Argentine junta’s “dirty war.” More precisely, if the populations of Chile and Argentina were suppressed with tanks and torture by a capitalist elite while the U.S. population faces little worse than mass unemployment combined with bank-plotted and court-supported foreclosures, in a capital-first, people-second society, that preferential treatment is no more than a momentary privilege for the oppressed. Either the U.S. population must demand a new system that puts people first or Chile’s past will be our future.
In the U.S., as is now commonly observed, we do indeed face a major economic challenge, but that challenge is not the cause of our troubles; it is the result. The cause, i.e., the real challenge facing the U.S., is socio-political: the social contract we call the New Deal essentially allowed the super-rich to remain super-rich as long as they accepted sufficient controls (regulation) so that the pie would continue to grow and the rest of society would also get steadily larger pieces. The class war is the decision by the super-rich over the last generation to break that agreement and ignore the size of the pie (long-term economic growth) in order to focus on increasing the size of their pieces by seizing slices from the vastly smaller but more numerous pieces in the hands of everyone else (short-term consumption of the seed corn). Roubini’s enumeration of our economic problems focuses only on second-order effects caused by our first-order socio-political challenge: we are under attack by the super-rich.
Like matches in the hands of a two-year-old, a corporation in the hands of a CEO whose primary value is self-enrichment is a dangerous misuse of a good tool. Wall St. would have burned the house down if its financial conflagration had not been doused by a flood of cash from the poor taxpayers it was fleecing. Corporations, whether financial firms or oil companies, constitute far too powerful a tool to be allowed to exist without the strictest oversight and the firmest sanctions for corruption. In practice, neither of those two forms of “social security” will function in the absence of a solid bolt locking the revolving door. We need a value system that makes it crystal clear that corporations may be useful institutions that society may choose to permit, but that they have no inherent moral or legal “right” to exist any more than a road or a red light or a sewer system has a “right” to exist. Sewer systems are not people; sewer systems are tools. Society constructs and uses sewer systems and red lights and, if it is wise, corporations to the degree that they appear to constitute the best tools available at the moment to achieve social goals. It should be perfectly clear that I am describing a fundamentally restructured political and economic system, with a fundamentally distinct moral foundation in comparison with that currently in place in the U.S.
To put it briefly, economics and politics can be structured for capital (profit) or social well-being. In practice, the two are obviously not mutually exclusive: economic crumbs may trickle down to the masses and a decent, moral, caring society can–given tight regulation, harsh punishment for financial corruption, and firm oversight by an educated population–permit a degree of individual wealth. (Despite a half century of vigorous effort in that direction, it is now clear that the U.S. population lacks both the level of education and the will to exercise sufficient oversight to create such a society.)
To the degree that capital accumulation is preferred over creating a good society, then that is exactly what will happen. Over the last decade, Wall St. has become a marvelous machine for short-term capital accumulation (except for those, like Lehman, that Wall St.’s political lackeys decide to sacrifice). The only problem is that society is being sacrificed. Wall St. need not be, but in its hubris has defined itself to be, the enemy of society.
When a politician claims to be “pro-business,” it means “anti-worker.” Do you work? If so, why would you vote for a politician who opposes your welfare? “Pro-business” means:
- supporting millionaire CEOs;
- using government to slant the bargaining table to the advantage of corporations rather than employees;
- defending corporate profits overseas at the expense of the welfare of the societies they may be either serving or pillaging (incidental details of business tactics and no concern of American voters).
It follows that if you design a government to support CEOs who become wealthy, you are unlikely to jail those CEOs when they defraud their workers or stockholders or customers. Most corporations, unlike the famously far-sighted Henry Ford, focus on hiring low-cost labor rather than stimulating the growth of a wealthy customer base, so the politicians they support financially will be those who break unions and give away the nation’s resources. When the corporations decide that setting up shop overseas is more profitable than breaking unions at home, they do not do so in order to help the new host country develop its economy but to bled that economy dry for corporate profit; a pro-business regime in Washington will assist that pillage rather than helping a friendly country to become a well-to-do and stable democracy. If people are superfluous in the eyes of corporate leaders, why not countries?
American voters need to understand a couple fundamental things about all this. First, there is nothing “American” or “un-American” about any of these policy choices. After the 1980s S&L scandal, hundreds of corporate criminals were jailed in a pro-society policy (under Reagan!!). After the 2008 financial scandal, essentially no high-level corporate criminal suspects were even brought into court and given the opportunity to clear their names, in a pro-millionaire policy (under Obama).
Second, a “pro-business” policy is a logical (if selfish) and coherent program with very real and serious consequences for every citizen…everywhere. A given corporation may choose to focus domestically or internationally. If popular demands for reining in particularly egregious corruption, say murdering too many foreigners or giving dirty drinking water or defective armored vehicles to “our boys in uniform,” makes things a little hot for a corporation and it decides to change its name or move its headquarters overseas, that is simply a tactical decision. If a corporation wants domestic natural resources badly enough to buy an election, that is another tactical decision. Corporate patriotism is a contradiction in terms. Corporations are in no sense people; they do not have feelings. Corporations are organizations, and as we know them today, they are organizations designed to serve their leaders and only their leaders. Whatever else they do is only a momentary tactical step in pursuit of service to their corporate officers or in response to force majeure from government or an otherwise organized public. None of this should surprise anyone. Millionaires and wanna-be millionaires do not form corporations to help society or support democracy; they form corporations for wealth and power.
It follows, then, that it is impossible to be “pro-business” and “pro-society” simultaneously. A government that supports the emergence of a healthy society will no doubt see the emergence of healthy businesses, but a government that is “pro-business” is necessarily “anti-society.” If the emphasis is on helping millionaires, everyone else will be harmed. Being “pro-business” inevitably means slicing the pie so that CEOs get bigger pieces by making everyone else’s pieces smaller. Being “pro-society” means slicing the pie evenly, which forces businesses to bake a bigger pie in order to get a bigger piece. Baking a bigger pie means developing the economy and creating a comfortable, secure society…which is a society composed of individuals who are good customers, thus producing profitable businesses over the long term, and that is why corrupt corporate leaders who defraud mortgage-holders or stock owners or employees or customers to become millionaires are, over the long term, the enemies of capitalism.
Everybody obviously includes businessmen; they can and should get a bigger slice right along with all their neighbors–as long as they are compelled to design their businesses to serve society rather than pillage it–but never, ever first because once a corporate leader gains the advantage of a bigger slice up front, he will inevitably let some crumbs trickle down…not to the people but to the politicians he wants to buy, and they will inevitably smile as they nibble. That leads to what I trust is an obvious reinforcing feedback loop that undermines the welfare of the population and transforms democracy into rule by the elite with elections as gladiatorial games.
Washington is run by and for rich businessmen. When politicians brag about being “pro-business,” they really mean favoring rich executives, not the millions of workers who form the productive core of business. From this attitude flows an essentially predatory foreign policy; what we should all have learned from the Financial Crisis of 2008 and the reaction of Washington (under both major parties) to that crisis is that a business-friendly elite of the rich will, in the end, have the same attitude toward the people of U.S. society as it does toward the struggling poor everywhere else.
In 1992 Noam Chomsky, perhaps the most brilliant living U.S. world affairs thinker, in What Uncle Sam Really Wants, offered the key to understanding the Financial Crisis of 2008. Back in 1992, Chomsky was thinking about U.S. foreign policy. Unfortunately for Americans, what Washington does to other societies paves the way for how the U.S. elite treats the American people. According to Chomsky:
According to US intelligence, the Soviet Union poured about 80 billion dollars into Eastern Europe in the 1970s. The situation has been quite different in Latin America. Between 1982 and 1987, about $150 billion were transferred from Latin America to the West. The New York Times cites estimates that “hidden transactions” (including drug money, illegal profits, etc.) might be in the $700 billion range….
In a global economy designed for the interests and needs of international corporations and finance, and sectors that serve them, most people become superfluous. They will be cast aside if the institutional structures of power and privilege function without popular challenge or control. [Noam Chomsky, How the World Works (Soft Skull Press, 2011), 54-55.]
Later, Chomsky explains the idea of superfluous people as follows:
Since they’re superfluous for wealth production (meaning profit production), and since the basic ideology is that a person’s human rights depend on what they can get for themselves in the market system, they have no human value. [154.]
Virtually no U.S. citizen cared that Washington viewed the people of Copper Country…ah, Chile, or Brazil or Argentina or Nicaragua as superfluous. If U.S. citizens thought about the citizens of Latin states at all, they certainly did not see their neighbors’ lack of democracy or lack of economic security as in any way predictive of the future that U.S. citizens might soon face. Even when the rampage of Wall St. and mortgage firms through the U.S. population came to light and the Washington elite promptly covered the billionaires’ losses by handing over trillions of tax dollars, virtually no one made the connection between the attitude of the U.S. ruling elite toward Third World societies and its attitude toward the 99% at home. Yet, when you think about it, how can a ruling class that puts a Pinochet in power or destroys a society battling to free itself from a banana company-backed thugocracy (Nicaragua, El Salvador, Guatemala) logically be expected to refrain from robbing the poor at home?
Educated Americans (a small minority) in the 1990s knew that the global economy was “designed for the interests and needs of international corporations and finance.” They also calculated that they would personally benefit forever from this situation. Then, the super-rich decided to rip off American homeowners and Washington responded by bailing out its business friends, ignoring whatever crimes they might have committed along the way, and leaving an odd ten million U.S. citizens unemployed. As the brave survivors of Chile, Argentina, and Nicaragua will understand all too well, these 10 million U.S. citizens have become the latest superfluous group. Perhaps a few more U.S. citizens are now educated in how the world works. The demonstrations by tens of thousands of Wisconsinites against Republican union-breakers last winter and the Occupy Movement offer supportive evidence. On the other hand, Republicans retained the governorship of Wisconsin and the real alternative to continued pro-business, anti-people rule by the rich–the Green Party–remains virtually invisible to the average voter.
The Financial Crisis of 2008 and Washington’s response to it show that an elite that will provoke wars, launch coups, overthrow democracies, and impoverish populations around the globe to enrich itself will, sooner or later, treat the U.S. population exactly the same. The lesson of 2008, one cannot but conclude, has yet to be learned by the 99%. But despair not! They will have further opportunities to open their eyes.
First, as is the case with many things in life, with finance you can have too much of a good thing. That is, at low levels, a larger financial system goes hand in
hand with higher productivity growth. But there comes a point – one that many advanced economies passed long ago – where more banking and more credit are associated with lower growth.
Our second result comes from looking at the impact of growth in the financial system – measured as growth in either employment or value added – on real productivity growth. Here we find evidence that is unambiguous: faster growth in finance is bad for aggregate real growth.
Former financial regulator William Black:…our agency, in the savings and loan crisis, made over 10,000 criminal referrals to the FBI. That same agency, in this crisis, made zero criminal referrals. If you don’t get people pointing the way and pointing to the top of the organization, you don’t get effective prosecutions. So, in the peak of the savings and loan crisis, we had a thousand FBI agents. This crisis has losses 70 times larger than the savings and loan crisis. And the savings and loan crisis, when it happened, was considered the largest financial scandal in U.S. history. So we’re now 70 times worse. And as recently as 2007, we had 120 FBI agents—one-eighth as many FBI agents for a crisis 70 times larger. And they looked not at the big folks, but almost exclusively at the little folks. [William Black on Dangerous Intersection.]
“Radical” is defined as anything that threatens the privileges of the rich. “Violence” is applied only to violence by the poor, never to violence by the rich. As for moderation, that would be an approach designed to preserve the livelihood that our society is accustomed to, would it not? Is it not self-evident that policies supporting the lives of all are moderate, while policies that steal from society for the benefit of some small group are…extremist?
Once our definitions are made logical, we can begin defending our values. How? Send Jamie Dimon to Hollywood to play the bad guy in a cops-and-robbers flic. Consummate actor that he is, he’d be a star. Then, appoint Elizabeth Warren to dismantle that great casino called J.P. Morgan and replace it with a thousand small-town banks that…do banking.
J.P. Morgan and Bank of America just this week illustrated again the need for big, socialist government.
Sometimes government should be small, to allow individual creativity, and sometimes big, to achieve victory over society’s enemies. In just the last few days, two behemoths of capitalism–J.P. Morgan and Bank of America–have made the case, unintentionally, for government not just big but socialist. J.P. Morgan admitted that it was up to all the old Wall St. tricks that created the Financial Crisis of 2008 that stole homes out from under millions of Americans and left millions of others unemployed. Bank of America arrogantly refused stockholders’ calls for it to investigate itself to detect fraudulent foreclosure behavior. A well brought up five-year-old knows enough to think critically about his or her own behavior.
Everyone is of course now having fun at Jamie Dimon’s expense, not that he can’t afford it with his repulsive $25M a year salary, unfortunately eclipsing Bank of America’s sneering attitude toward both stockholders and customers, which may cause even more harm to U.S. society. Unfortunately, the critical rhetoric focuses on the obvious but superficial calls for regulation.
Regulation of the out-of-control financial piracy of Big Capital is a perhaps useful band-aid that may stem the loss of financial blood while we move the U.S. financial system to the hospital, but what the patient needs is either major surgery or to be put out of its misery. Americans need to have a real national debate about the terms of this restructuring but must take care to avoid wasting time; four years have already been wasted, and Romney clearly feels no embarrassment in defending the system that brought us the Financial Crisis, suggesting that he at least feels that enough Americans can be hoodwinked once again to get him into the
There is perhaps no harm in immediately instituting some obvious regulations:
- no bank should be permitted to gamble with its own money;
- derivatives should be regulated with total transparency if not banned entirely;
- the revolving door between financial institution management and government positions that facilitates capitalist pirates writing laws to cheat the American people should be slammed shut.
Beyond regulations, new laws would help.
- Punishments should be made up close and personal for all officials of financial institutions that take government bailouts. All income beyond minimum wage levels obtained (one hardly dares say “earned”) for, say, the five years leading up to any receipt of government welfare or bailouts should be forfeited.
- The tax code should immediately be reformed to ensure that income tax levels for workers are always lower than capital gains. It is a fundamental moral point that earned income should be taxed less harshly than unearned income: there is a reason it’s called “unearned,” folks!
Arguing over “capitalism or socialism, small government or big government” serves only to confuse voters; indeed, that is often the point: when the rich advocate “small” government, they almost always mean “small” for someone else. The banquet of a good lifestyle requires both the salt of capitalism and the pepper of socialism, big government when it helps society, small government otherwise.
Here we go again –
- Dimon admits Morgan Stanley behavior “egregious:” Wall St. financial firms have become the enemy of American society
- Senator Carl Levin: “The enormous loss JP Morgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making. Today’s announcement is a stark reminder of the need for regulators to establish tough, effective standards to implement the Merkley-Levin language to protect taxpayers from having to cover such high-risk bets.”
- Simon Johnson – “fatal flaw in Federal Reserve thinking“
- Memo to Senate Banking Committee: “Banks would not be allowed to conduct broker-dealer activities, make markets in derivatives or securities, trade securities or derivatives for either their own account or customers, or sponsor hedge or private equity funds.”
- Paul Volker, 5/9/12 in Senate testimony: “The expectation that taxpayers will help absorb potential losses can only reassure creditors that risks will be minimized and help induce risk-taking on the assumption that losses will be socialized“