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?
The citizens of the U.S. are shortchanging themselves by allowing the super-rich to define taboos in order to prevent society from considering fundamental reforms that might preserve our democracy, enhance our security, and improve our lives…at the expense of constraining the ability of the super-rich to amass more wealth. Continue reading
Romney has accused Obama of campaigning on “hatred.” Now that he has brought up that particular topic… Continue reading
Rising government acceptance of corporate corruption, intensifying corporate control over politics, rising preference in Washingtonfor a foreign policy based on force rather than diplomacy, and accentuation of class divisions with rising inequality in the U.S.constitute a shift in direction away from the post-WWII growth of the middle class and democracy. The decline in the prospects of the average American have been so slow that most seem unconscious of the change, but in the space of one generation, the American Dream has been transformed into the American Illusion.
Return from the Dead of a Class Society. The post-WWII rise of the American middle class to the point where Americans broadly felt that they lived in a middle-class (i.e., a class-free) society has now clearly been reversed and is well documented by the Congressional Budget Office. With home-ownership under attack by corrupt banks, jobs increasingly part-time, contracts being broken by both corporations and governments, unions weakened almost to the point of irrelevance, wages declining, pensions a dream of the past, and a massive new class of unemployed people simply written off as superfluous even as a new super-class of billionaire financial manipulators arises, there can no longer be any doubt that the U.S. is evolving backwards into a new class society that Marx would have no trouble recognizing.
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.
The super-rich have launched a class war against the people of the U.S., a war that, for most of our politically naive population, was revealed only with the Financial Crisis of 2008, yet the super-rich continue to gain ground. An extraordinarily clear statement describing how this class war against America is being fought was given in testimony before Congress on July 10, 2012 by Dennis Kelleher, President and CEO of Better Markets, Inc. His statement is invaluable in outlining concisely what occurred and forecasting in detail the likely consequences of a continued failure of Washington to start representing the interests of, not corporations and the super-rich, but the American people. Every word is worth reading. What follows is just the outline.
Customers, credit and credit markets, job creators, businesses, investors and
consumers – all of Main Street and much of America, for that matter – have been devastated by a terrible economy that is a direct the result of the financial collapse and economic crisis that began in 2007, reached a peak in 2008-2009 and continues to this day. Indeed, it was the worst financial collapse since the Stock Market Crash of 1929 and it is the worst economy since the Great Depression of the 1930s.
While many played a role in the recent collapse and crisis, Wall Street is at the top of the list of those responsible because it caused that collapse and crisis by the reckless and irresponsible creation and distribution of toxic and often worthless securities, among their many other actions.
Unfortunately, Wall Street, many of the major financial industry participants, and their trade groups and other allies deny or minimize their role in the financial collapse and the economic crisis. Moreover, they are trying to obscure and conceal the cost of the collapse and crisis. Perhaps most importantly, they are also engaged in a comprehensive misinformation campaign that attempts to refocus the public debate away from the crisis and Wall Street’s role in creating it to the new financial reform law and the rules being put in place to prevent
another crisis and protect the American people, taxpayers, Treasury and economy.
Thus, before the “impact” of the Dodd-Frank financial reform law–more properly
understood as the Wall Street re-regulation law – on customers, credit and job creators can be properly considered, a thorough discussion of the Wall Street-created financial collapse and economic crisis that gave rise to that law must come first. After all, it would be impossible to evaluate the impact of a law without the context and an understanding of why the law exists, what the law was intended to do and how it was designed to do it.
Wall Street was able to cause the collapse and crisis largely because it used its
economic power to gain political, academic, media and other power that enabled it to tear down the many laws, rules and regulations put in place during the Great Depression of the 1930s to protect the American people from Wall Street’s recklessness and greed. It must be remembered that, after those laws, rules and regulations were put in place, our country did not have a financial or economic crisis on that scale for more than 70 years.
It must also be remembered that, even with all those many laws, rules and regulations– a truly unprecedented degree of government regulation of Wall Street and the U.S. capital markets – our country prospered; we built the largest and most broad-based middle class in the history of the world; and Wall Street, our financial industry, our nonfinancial businesses and our economy all thrived.
By 2000, virtually all of those protections were torn down and Wall Street was not just de-regulated, but almost entirely un-regulated. The results are clear: after 70 years of regulation that protected the American people, our financial system and our economy, it took just 7 years for Wall Street’s unregulated investment, trading and other activities to cause what almost became a second Great Depression.
Those actions by Wall Street required the U.S. government to spend, lend, guarantee, pledge, assume, or otherwise use trillions of dollars to save Wall Street from itself and to prevent the crisis from becoming even worse. While they may deny it, every single major bank and all of the other too big to fail financial institutions would have collapsed into bankruptcy but for the actions of the U.S. government and the taxpayer dollars used to bail them out and put them back on the road to profitability. Thus, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bank of America, AIG, Citigroup and the others are only
in business today because they were all bailed out by the U.S. government and the American taxpayer.
But, those bailouts were only part of the costs of that crisis. The economic wreckage caused by Wall Street’s actions has touched every corner of our country: high and persistent unemployment and under-employment, historically high foreclosures and underwater homeowners, slow-to-no economic growth, business failures, untold wealth destruction, widespread and growing poverty, and so many other costs continue to mount, including, increasingly, a loss of belief in the American Dream.
Just one measure of these costs reveals how deep and overwhelming the crisis has been and continues to be on our country: the Federal Reserve Board recently released a study that shows that the net worth of the median family declined 38.8% in just three years, from 2007-2010, wiping out more than $7 trillion in wealth – almost two decades of crisis. [Dennis Kelleher in testimony before Congress.]
That is what class war in America looks like.
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.
Whether the bankers who so crippled the American economy end up being punished for their irresponsibility or not, the harm they caused is worsening, not improving, and we are setting ourselves up for a real collapse the next time around. Perhaps the key battle won by those of the super-rich who survived 2008 was the decision by Washington to “save the system” by saving the bankers at the expense of throwing away the victimized homeowners, leaving unanswered the question, “Why would bankers holding millions of mortgages want all that property in foreclosure and rotting away?”
|[Details on Class War Page]|
It will be up to the courts (if democracy wins) or historians (if the banks win) to judge whether the officials in charge of the largest financial institutions in the U.S. have, over the last decade, been criminals or just idiots. The fact is they accepted millions of dollars of mortgages so risky that it trashed the whole financial system. The job of bankers is, at its core, to assess risk, and they failed to do their jobs. Then Washington rewarded the…criminals? idiots?…well, let’s be polite and just call them the “perps”…while turning its back on the victims.
One of the most egregious examples is the corporate socialist scheme of loaning Government funds at below market rates to the banks while denying such loans to homeowners facing foreclosure. (Remember the obvious: saving those homeowners meant saving the homes…which were owned by the banks! Helping corporations may not help any actual human except the CEO; helping people helps everyone…and every corporation.) Apparently, Jamie Dimon and his very small circle of good buddies at Goldman Sachs, Citibank, Bank of America, and Wells Fargo, etc. [for the list of culprits, see The Warmonger Report] felt that they could not compete on equal terms (i.e., paying equal rates for loans) with the average American homeowner. No socialism for individuals! No Sir! That would be un-American. If a man can’t pay his mortgage, then he deserves to sleep in the gutter. But a banker earning $25M a year, well, now, anyone can see, that’s a different thing altogether. You don’t expect Jamie Dimon to play on a level playing field with the likes of you, do ya? Huh, do yah?
The evidence of this closely guarded secret policy of corporate socialism has been emerging slowly:
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates….
Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year. [Bloomberg 11/28/11]
At a time when small businesses could not get affordable loans to create jobs, the Fed was providing trillions in secret loans to some of the largest banks and corporations in America that were well represented on the boards of the Federal Reserve Banks. [As quoted by Abby Ziment, “Naming Names: Jamie Dimon Is Not Alone,” in Common Dreams 6/15/12].
If “that government is best which governs least,” the absence of transparency on the part of officials is the best clue that the government needs to be slapped down.
Government is inexpedient, but since we are far from prepared to manage without it, let’s try to direct its awesome power at the target of achieving the common good.
I heartily accept the motto, “That government is best which governs least”; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe—“That government is best which governs not at all”; and when men are prepared for it, that will be the kind of government which they will have. Government is at best but an expedient; but most governments are usually, and all governments are sometimes, inexpedient. [“True Conservatism” in Historical and Literary Lessons 5/20/12.]
Thoreau merits careful consideration: we can agree with him that were we wise enough to conserve our values through our joint actions day by day, then perhaps small government would be best. Until that nirvana on earth be attained by society, however, Thoreau’s counsel is best accepted as true only in theory. In practice, a wiser rendition would be, “That government is best which governs to the minimum required for the common good.”
Problems, of course, rear their ugly heads before the words leave my fingertips. Given a government so powerful that it can defeat an enemy intent on conquest, how can we prevent the officials of such government from intimidating us as individual citizens? Given a government so powerful that it can break up a financial monstrosity that manipulates trillions of dollars in secret bets, how can we prevent the officials of that government from accepting a few billion in spare change in return for pretending they cannot see the monster?
|Thanks to Juan Cole, Informed Comment.|
Transparency. Politicians have a pretty good idea whether or not what they are doing is appropriate: if they have expertise in nothing else, politicians certainly have expertise in detecting opportunities to conduct the public business for their personal advantage. When an official hides information, it is almost never for national security reasons, almost always to conceal behavior that the official knows full well was inappropriate. In a democracy, the public interest is rarely served by concealing the behavior or true reasons behind the behavior of officials. There are of course exceptions, perhaps the main one being a situation where a weak state under the threat of attack defends itself by pretending to be more powerful than it is. For a secure state, however, “national security” is a claim designed to protect the guilty far more often than to protect the public. Lack of transparency by officials constitutes prima fascie evidence of guilt and serves as society’s alarm bell.
Government has justification for existing to the degree that it functions on behalf of society and with the permission of society. It is just so much nonsense to accuse the government of “being too big” or “interfering too much” without finishing the thought. If the government overwhelms healthy social activities, it is too big; if it fails to regulate socially harmful private interests, it is too small. The self-serving nature of many complaints accusing government of being “too big” would be quickly revealed if the critics were forced to complete their thoughts.
Wall St. CEO: “Government is too big; it is preventing me from making billions without paying any taxes!”
Big Oil Executive: “Government is too big; it is preventing me from poisoning the air I don’t own to pad my pocket!”
Racist: “Government is too big; it is subsidizing the education of minorities!”
Rich man: “Government is too big; it is offering health care to sick people who aren’t even rich!”
We may agree with Thoreau that in principle, small government or no government would be best…once humans are ready for such liberty. In the meantime, what matters is not size but quality, and transparency is the essence of good governance. It is not the size of the government but its transparency that indicates the citizenry needs to take disciplinary action.