An Elite Culture of Hostility


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.

Senator Leahy statement on NSA domestic spying:

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.

Standards of Behavior for Officials

Democracies will never function well until standards of behavior for officials are defined and the officials are held accountable for meeting those standards. Yearning for honest officials may be naive; demanding the public definition of required standards of behavior is not. Far better the implementation of strict standards of behavior for officials than to suffer “a long train of abuses and usurpations” leading to “absolute Despotism.” 

I posed a very rude question on this blog yesterday, but rude or not, democracies need to wrestle with such questions. Today, let’s approach the issue of the quality of governance more gently with another question:

Do democracies need to hold public officials to standards of official behavior?

By “official behavior,” I refer to the acts they take as officials, rather than in their private lives.

Imagine some surely imaginary scenarios, such as a leader who lies to the people about his reasons for launching a war of choice or a general who lies (either to the people or to his commander-in-chief) about how well he is managing his campaign during a war, or a leader who whips up a war fever for some private agenda. These are, by any reasonable moral standard, truly criminal acts, acts that either cause or greatly risk the deaths of thousands. The worst acts of what we are pleased to call “terrorism” ever known pale by comparison with such crimes. Yet, the leaders of democracies are almost never punished for them. Indeed, it is not even clear if they are technically “illegal.”

By what standard would guilt even be proven in court? Suppose a politician makes his career by calling for war, year after year, against some antagonist that never attacks, claiming that a threat nevertheless exists and walks, year after year, smiling to the bank with billions in foreign military aid from a naive patron. Were such deception ever to occur, how would one prove it? He can always claim he really believed there was a threat and that it was precisely the military aid that prevented disaster.

The problem of creating standards of behavior for officials in a democracy is not a simple one. “Let the voters decide” clearly does not work; the voters almost never choose to educate themselves sufficiently to make informed decisions and, indeed, hardly can, given the collusion between parties and by the media, not to mention the fog of classification under which every official act is buried for the protection of the guilty. (And, by the way, I actually do know that some secrets are worth keeping, but these are few and far between, while the secrets to prevent the voters from educating themselves about official guilt are all-pervasive.)

But even the attempt to define standards would at least put officials on notice and perhaps attract public attention to the difference between official claims and reality. We have standards for bank clerks and engineers; why not for the men and women who have their finger on the nuclear button? Just for one (surely imaginary) example, imagine a general conducting a foreign campaign who claims he is making progress when statistics indicate that enemy attacks are increasing. Or imagine a regime that hands billions of dollars of aid to rich financial corporations deemed “too big to fail” without A) accounting publicly for what the welfare recepients do with those taxpayer funds or B) holding the CEO’s of those corporate welfare queens accountable for the actions that led to the need for the welfare in the first place. Might one be able to define a simple standard of behavior such that these acts could be found, in a court of law, to be punishable crimes?

I dare say, one could, and I would further propose that a set of standards be defined and that all officials above a certain grade automatically have their careers reviewed by, say, the Supreme Court before retirement to determine whether or not grounds for referral to the Department of Justice might exist, with both their right to further government office and their pensions withheld pending a decision.

The American Nightmare

When the American Dream becomes defined in terms of money and force rather than values, then it will fade into “The American Nightmare.”

The American Dream, as every American knows, is a gem whose facets are values. We Americans actually don’t spend a lot of time thinking about the American Dream, which is a great misfortune in times like these when it is under direct attack. If we do think about it, the thoughts are typically superficial, with jokes about “American as apple pie,” crass visions of a big suburban house with a greedy SUV out front, or just the brain-dead assumption that we can take the American Dream for granted. Nothing could be further from the truth, as the concerted neo-con attack on the Constitution’s guarantees and the judicial system’s protections for those yet to be convicted reveals. Deep down, though, when you slap an American awake, he can see that it is not about money: it is about values. So for Americans, the elephant in the room this election season as we hurl the thunderbolts of sound bites at each other, is the degree to which American behavior is destroying our values…cracking the translucent, shimmering but oh so delicate facets of that gem called “the American Dream.”

The latest canary in the moral mine of American society is the recent trend among the most irresponsible and unpatriotic of our astoundingly pathetic crop of current power-seekers to spout the pop soundbite about trying to justify torture as “just part of war.” This blatant return to the morality of a Grade B movie about the Dark Ages is ominous enough for those who want to live the American Dream, and these chickens will surely come home to roost, if indeed they are not already doing so in the form of increasingly brutal political and police suppression of democratic activism (not just against the Occupy protesters but also against the teachers and firemen…and, in street clothing, police[!] who protested the right wing attack on union rights and the sanctity of contracts in Madison last winter). It is a lot easier to cheat and brutalize citizens after you have accepted that torturing enemies is suddenly to be considered an “American value.”

Far more ominous is the nasty little twist of the term “all options” into a codeword for A) ignoring all the myriad positive, win-win, cautious, moderate, sympathetic options while B) focusing on the most insane of the zero-sum (and indeed in this case negative-sum, i.e., “lose-lose”) barbarisms at our disposal, namely unprovoked nuclear aggression. I will not further belabor this, or the ultimate affront to American values of a supposed American ally trying to push us into launching such a war. This case is so extreme that it should be obvious to anyone who thinks. Unfortunately, today it seems difficult for a person who thinks to get access to the mass media, but there are a few Congressmen, believe it or not, who are concerned about this ultimate attack on American values. You will not hear their speeches on the evening news, but reading their websites is well worth the few minutes it takes.

Making excuses for torture and nuclear war are egregious examples of the attack by Americans and others on the American values that form the core of the American Dream, but other examples, albeit less obvious, may be almost as serious…and more dangerous to the degree that they go unnoticed. Goldman Sachs provides an example from the central issue of financial policy writ large, i.e., the rules by which the super-rich and the government itself are allowed to employ wealth to manipulate the rest of us.

In the history of Goldman Sachs Money and Power, William  D. Cohan describes how the company evolved over 150 years from a firm dedicated to providing funds to companies needing liquidity to produce into a company that appears to exist only to maximize its own wealth, with no regard either for its clients (against whom it bets) or society. This picture, in other words, shows Goldman evolving from part of the productive economy into a predator destroying the very system from which it profits: from an institution with a long-term view to an institution with a suicidally short-term view.

Whether or not one agrees with the above image of Goldman, it is all too reminiscent of the winner-take-all attitude that exemplifies the whole course of the corruption bubble that created the 2008 Financial Crisis, the winner-take-all wave of empire-building since 9/11, and the broader winner-take-all addiction that has in recent decades infected all of American society to be easily dismissed. Cohan’s book carries the subtitle “How Goldman Sachs Came to Rule the World.” He might have subtitled his expose “How Goldman Sachs Symbolized the Attack on American Values.” But don’t blame Goldman Sachs too much. What Goldman did was just on a larger scale from but morally no different than the Congressman passing a law to make financial fraud legal, the regulator looking the other way, the politician waving the bloody shirt of nuclear war to get elected, or the individual lying about his salary to buy a house on which he knows he cannot make the mortgage payments.

Force Is the Answer

The Washington-Tel Aviv Axis determined by the start of the new century that violence was the answer, regardless of the question. That determination constituted the foundation of U.S. post-9/11 foreign policy. Having “worked” in the sense that it maintained the elites in power and magnificently enriched them, it is only predictable that those same elites would apply their foreign policy answer to domestic policy questions as well. This dynamic I discussed theoretically in September, by which time it was obvious that Washington had no intention of punishing financial crime by the uber-rich but remained very unclear whether or not any Americans had sufficient spine to protest. And now in the last couple days, we have seen the clearest substantive implementation of “force is the answer” to domestic political questions, with a brutal nationwide crackdown characterized by the egregious, virtually celebratory use of force to send a clear message to the rest of the population that government is for the 1% and that democracy will not be tolerated. We elected and reelected politicians who advocated and implemented the policy of force toward foreigners, and now we are getting exactly what we deserve: the pointed end of the spear right in the face. How does it feel, America?

Iranian-Israeli Death Dance

In 2007 a scenario analysis of Iranian-Israeli relations suggested that the two sides would harm themselves by continuing on their confrontational course. That finding is coming true, with the harm now visible in both the domestic and foreign situations of each society. Meanwhile, the bilateral death dance continues…
With Israeli militarists firmly in control of both Israeli and U.S. Mideast policy, the Israeli-Iranian confrontation remains in endless crisis. Neither side is making any effort to create new approaches to any possible resolution so it remains impossible to determine what either side wants, intends, or would settle for. Does Tehran want to dominate the region; does it intend, when able, to take an existential risk to achieve that goal; would it settle for security and inclusion? Does Tel Aviv want to retain its military dominance and permanent suppression of the Palestinian people; does it intend to take an existential risk to maintain that dominance; would it settle for a nuclear but transparent Iran and a two-state solution? Washington will neither offer Tehran a sufficiently sincere compromise nor put sufficient pressure on Tel Aviv to determine the bottom line of either side. The only aspect of the mess that is clear is that the constant tension works to the advantage of the extremists on each side, cementing their hold on power and virtually precluding rational discussion.
The above was true in 2007, when the scenario analysis Iranian-Israeli Confrontation was done; it remains true in late 2011. Yet much has changed. Ankara has staked out rhetorical leadership of a neutral position offering Tehran great potential leverage, an opportunity of which clumsy Tehran hardliners have yet to take advantage. The Arab Spring has weakened Cairos adherence to the pro-Israel camp as well. Meanwhile, Obama has allowed Tel Aviv to obstruct his efforts to turn around U.S. ties with the Muslim world even as the U.S. position in Iraq has continued its downward course. By skillfully and remorselessly undermining Washingtons freedom of movement, Netanyahu has also steadily weakened the value of U.S. support even as he has fractured Israeli society into an increasingly violence-prone and overtly racist majority and a minority increasingly concerned about the long-term survival of Israeli democracy. The result has been to strengthen Irans regional position, weaken Israels regional position, and to enhance the risk of Israeli aggression and of Iranian militarization of its nuclear technology.

Israeli Views of Israel

Ruth Dayan:
We built this country inch by inch, and we lost so many lives. We built public and social institutions, schools, factories. What’s going on today is awful. They’re ruining this country. I am a proud Israeli. I’ve lived through every war, endured every moment of suffering, but I never stopped believing in peace. I lost friends and family members. I’m a peacemaker, but the current Israeli government does not know how to make peace. We move from war to war, and this will never stop. I think Zionism has run its course….

And this continuous expansion of the settlements everywhere—I cannot accept it. I cannot tolerate this deteri oration in the territories and the roadblocks everywhere. And that horrible wall! It’s not right. [Daily Beast 10/30/11.]

Retired Chief of Mossad Meir Dagan:

In his first public appearance since leaving the post in September, Dagan said earlier this month that the possibility a future Israel Air Force attack on Iranian nuclear facilities was “the stupidest thing I have ever heard.”[Haaretz 6/1/11.]

We have to think about what would happen the day after. [Der Spiegel 11/8/11.]

Haaretz Commentator Gideon Levy:

The nuclear powers also ignore the fourth chapter of the treaty for the non-proliferation of nuclear weapons that calls for dismantling them. They are permitted to ignore it. The world lives in peace too with the fact that 189 countries have indeed signed the treaty but that there are four, including Israel, that have not. The world has learned to live with the North Korean and Pakistani bombs even though this is a danger that is no smaller than that which Iran poses….
Israel, which has not signed the treaty, is in the same company as North Korea, Pakistan and India – that is, very dubious company. No one asks why, no one asks for what reason, not in Israel and not in the rest of the world…
There is a great deal of hypocrisy in Israel’s attitude toward the world….
Like Israel, Iran will apparently not heed the words of the world. But does Israel want in any way to resemble Iran?  [Haaretz 11/10/11.]


It is time for another look at the alternative futures of the Iranian-Israeli confrontation.
The 2007 study offered four predictions:

Prediction #1: Co-Evolution. Iran and Israel will co-evolve: without either necessarily perceiving it, they will influence each other, revolve around each other like binary stars, each in its individual orbit but bound to the other by their mutual insistence on making the other a priority, and traveling an unseen path together. Most likely, all the while each will see only its own uniqueness; neither will perceive the increasingly significant points of similarity as their mutual adaptation subjects them to similar pressures. Judging from current trends, each will feed on the other’s hostility to the detriment of both.

Prediction #2: States of Criticality.
Potential states of criticality threatening disaster will occur. They are fundamental danger zones. A wise society will avoid them. As tensions rise and groups organize to push radical agendas, thereby making tensions rise further, it is easy to slide into the unmarked state of criticality where going one step too far leads to some sort of disaster – perhaps a tremor, perhaps the “big one.”

Prediction #3: Tipping Points. Positive feedback loops will bring to the fore dynamics that were previously insignificant, and tipping points will be reached, to general astonishment.

Prediction #4: Adaptation.
Adaptation will occur in unforeseen ways – sometimes at an unexpected location, sometimes after an unexpected delay. However it happens, Israel and Iran they will change, although our perceptions of them may not. The Israel still perceived in some quarters as a plucky pioneering movement of idealists adopted selective assassination of terrorists and then moved beyond that to assassination of opposing political leaders. Iran’s messianic Shi’ite spirit of the early 1980s has evolved into a willingness to cooperate with the U.S. vs. the Taleban in 2001 and support for the U.S.-sponsored regime in occupied Iraq today. Change is predictable; if unseen, the fault almost certainly lies in the eyes of the beholder.

Prediction #1, Co-Evolution, is supported by circumstantial evidence. The bilateral tension occupies an artificially important place in the politics of each state. Domestically, Tehran appears to have cracked down on dissidents with a degree of viciousness unusual even for Iran because of its defensiveness engendered by threats coming from Israel and its obedient superpower sponsor. Meanwhile, Israeli society is sliding steadily toward racist violence, a trend primarily the result of its colonization of the West Bank but one exacerbated by Netanyahus determination to play domestic policies off against policy toward Iran. The result is that Iranian-Israeli tensions are making both the Tehran and the Tel Aviv regimes more hardline than they would otherwise have been, thus exacerbating domestic political problems.
Concerning foreign policy, each state increasingly is finding its options limited by its addiction to extremist rhetoric and genuine security fears resulting from the Iranian-Israeli confrontation. Israeli freedom of thought and maneuver regarding its central predicament of how to deal with Palestinians is severely constrained by tensions with Iran. Iranian freedom of thought and maneuver regarding how to deal with the ring of U.S. military bases along its borders and the instability inherent in Iraqi, Pakistani, and Afghan insurgencies is similarly constrained by tensions with Israel.
In sum, Iran and Israel are co-evolving both domestically and internationally in ways that harm both of them because they have allowed themselves to become so closely linked by bilateral tensions artificially whipped up by their respective political leaders that they cannot find the freedom to focus on other arguably more fundamental and more serious problems. This evolutionary process is making each country less democratic and less secure.
Prediction #2, States of Criticality, isin early November 2011demonstrably true for a sudden state of criticality is exactly where the two states are at the moment, for no obvious reason other than the publication of yet another ambiguous IAEA report that states it cannot prove the negative (that Iran absolutely does not have any nuclear militarization plan in process). On this slim reed balances an explosion of clamor over the idea of launching the worlds first unprovoked nuclear attack.
Prediction #3, Tipping Points, has yet to be substantiated, but the occurrence of one of the predicted states of criticality suggests that the probability of a tipping point is rising.
Prediction #4, Adaptation, is more obvious on the part of the U.S. than the two primary actors. Both ruling parties in the U.S. are now firmly under Israeli influence so extreme as virtually to constitute control regarding U.S. Mideast policy. In reaction to this, however, open discussion of the long-time taboo question of whether or not the U.S.-Israeli alliance might be harming U.S. national security has now struggled into mainstream thinking, with long-term consequences yet to be discerned. In Israel, while the media discuss Israeli policy toward Iran far more profoundly and honestly than U.S. media do, groupthink has taken firm hold at the political level, leaving those Israelis concerned about Netanyahus warmongering with no political representation. Adaptation this is, albeit not in a direction likely to enhance either Israeli security or Israeli democracy. Groupthink is almost never a wise strategic course. Somewhat less visibly perhaps, from the outside, Iran too is adapting, as its domestic politics become increasingly bitter and divided. Indeed, Prediction #4 is essentially a rewording at a different level of analysis (state rather than two-state system) of Prediction #1, since the very meaning of co-evolution is that each state is not only adapting but adapting in tandem with the other.
In sum, the analysis done in 2007 made predictions that amounted to a warning that the two states would each harm themselves by failing to change course, and that warning has proven on target. The respective regimes have only themselves to blame for not heeding the warning; its accuracy supports the methodological argument that scenario analysis constitutes a useful tool for sharpening thinking about complex foreign policy dilemmas.

Do Not Mention the War

Political correctness is a pretense of politeness covering for abuse of power, and the most taboo of all the politically correct taboos is reference to the war that the super-rich and their political lackeys are so successfully fighting against the other 99.9%. Is it really a case of government-corporate collusion to defraud and rob the people? To answer that question, you need to look at the details.

The Department of Defense has admitted that it spent $285 billion on contracts between 2007 and 2009 with corporations “that defrauded the Pentagon during the same period’ [“Release: Pentagon Spent Billions on Contractors that Committed Fraud,” Senator Bernie Sanders’ website 11/7/11].

The preliminary report detailed how the Pentagon spent $270 billion from 2007 to 2009 on 91 contractors involved in civil fraud cases that resulted in judgments of more than $1 million. Another $682 million went to 30 contractors convicted of hard-core criminal fraud in the same three-year period. Billions more went to firms that had been suspended or debarred by the Pentagon for misusing taxpayer dollars.

The record of fraud includes repeated cases of fraud, convictions, and settlements by the three largest military contractors, all of which of course continue doing billions of dollars a year in government business worth vastly more than the penalties they paid. Defrauding the U.S. Government is extremely profitable business even when convicted.

Over the three year period from 2007 to 2009, 30 DOD contractors were convicted of criminal fraud. Despite these criminal convictions, these contractors were awarded $682,141,708 in contracts during the same three year period…

Over the three year period from 2007 to 2009, hundreds of contractors were found to have committed fraud in connection with a DOD contract. This apparently did not affect DOD’s contracting behavior, however. During that same three year period, DOD awarded $285 BILLION in contracts to the same companies!

War profiteering was of course not limited to fraud against Americans. It also continues to occur where the war was fought. Recent release by the petroleum industry watchdog Platform of secret contract renegotiations between British Petroleum and the government of Iraq show that BP succeeded in transferring:

the most significant risks from BP/CNPC to the Iraqi government, making the contracts considerably more attractive to the companies. In all of these changes, it is the Iraqi side that loses out. As a result of the enhanced compensation provisions, the Iraqi government could find itself payingBP/CNPC (and likely other companies) even when it is not earning oil revenues to offset those payments. Meanwhile, the changes undermine the Iraqi ability to ensure that it achieves value for money, and that oil is developed in the national interest. [“From Glass Box to Smoke-Filled Room,” Platform.]

An analysis of the growing disparity between the richest and the rest in the U.S. reaches this conclusion:

A highly complex and largely discrete set of laws and exemptions from laws has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules. [G. William Dornhoff, Who Rules America?]

In a brief, trenchant historical review of the post-1970 war of aggression by the rich against American society, Bill Moyers sums up American democracy:

Our politicians are little more than money launderers in the trafficking of power and policy… [The Nation 11/21/11.]

These are the reality of a system that offers incentives for short-term thinking that attacks the long-term interests of society for elite profit. The super-rich, essentially those with annual incomes in the $25 million range are not rich because they are smart or work hard; that kind of wealth requires a triple fix—1) welfare for the rich, 2) an avoid-jail-free card, 3) endless war—and the fix is in.

The Next 100 Years: Incentives

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Today, incentives are structured in the U.S. to avoid thinking about the crucial challenges we face, so we are busy digging deeper the hole we are standing in.

Mankind faces two fundamental challenges that are external to the political system, i.e., not the result of faulty governance: climate change and population growth. Mankinds response might be bottom-up, as suggested by the Occupy movement; all seven billion of us might slowly accept new cultural priorities. However, the behavior of government will surely have a huge impact, and by far the most influential government is that of the U.S. The U.S. government itself faces two constraints on its ability to rise to meet these challenges: its addiction to global military activism and its support of elite financial exploitation. With the natural leader of global governments thus distracted, an effective governmental response to the two major global challenges seems a long shot.
Washingtons international focus on using military force to spread its influence and its domestic focus on facilitating the enrichment of the super-rich at the expense of everyone else undermine its ability to address the two key external challenges. Focusing on the uncritical enrichment of all the rich rather than, say, allowing the enrichment of those who perform socially useful tasks while punishing those who behave irresponsibly is a critical failing. The choice is not between the wealthy and the poor: there is no obvious reason to assume that equality would lead to resolution of global problems. There is no obvious reason why the incentive of becoming rich in return for making greater contributions to society cannot be a socially responsible approach.
Abetting the mindless enrichment of the few, regardless of their behavior, on the other hand, clearly obstructs effective steps to meet common challenges. Playing the stock market using other peoples money with the assurance of government bailouts for all the rich who lose offers an enticing prospect for the rich that will suck away into meaningless financial contortions funds that could be employed for long-term projects of benefit to all, including projects to redesign society to meet the challenges of climatic and demographic change. A foreign policy that frames international issues in terms of military competition similarly drains away funds while simultaneously exacerbating social problems by destroying infrastructure and provoking refugee flows, to cite just two effects. Both financial exploitation and war are socially destructive forms of behavior that simultaneously drain away government resources and distract government from addressing real problems.
More, they create zero-sum psychological contexts that inhibit cooperation between the two sides. Concerning war, one need only note the difficulty of Israelis and Palestinians cooperating on a mutually beneficial program to share scarce water resources or the difficulty of Washington and the Taliban reaching agreement on a mutually beneficial program to develop Afghanistans economy amidst endless violence. Concerning finance, the lack of Wall St. efforts after the 2008 Financial Crisis it did so much to provoke to take responsibility for the damage it caused to the American public and the rapidity with which efforts to call the uber-rich to account were slandered as class warfare betray the same elite zero-sum perspective.
As Paul Krugman said back in 2009 in answer to his own question about why some bankers suddenly began making vast fortunes just before the 2008 collapse:
It was, we were told, a reward for their creativity for financial innovation. At this point, however, its hard to think of any major recent financial innovations that actually aided society, as opposed to being new, improved ways to blow bubbles, evade regulations and implement de facto Ponzi schemes. [New York Times 4/26/09.]
Krugman goes on to point out that the issue concerned not just the bankers but the whole system, in which the government provided vast amounts of corporate welfare to promote their accumulation of wealth:

Wall Street is no longer, in any real sense, part of the private sector. It’s a ward of the state, every bit as dependent on government aid as recipients of Temporary Assistance for Needy Families, a k a “welfare.”

I’m not just talking about the $600 billion or so already committed under the TARP. There are also the huge credit lines extended by the Federal Reserve; large-scale lending by Federal Home Loan Banks; the taxpayer-financed payoffs of A.I.G. contracts; the vast expansion of F.D.I.C. guarantees; and, more broadly, the implicit backing provided to every financial firm considered too big, or too strategic, to fail.

And, writing in 2009, Krugman of course did not refer to the scandalous bias, reported just recently, built into U.S. tax law permitting many of the richest corporations in the land completely to evade taxes in years when they made billions of dollars of profit.
Yet what has been the performance, three years after the onset of the 2008 Financial Crisis, of Big Finance in thanks for being handed the hard-earned dollars of the 99%, some 20 million of whom are now either officially unemployed, under-employed, or so discouraged they have dropped out of the market? In 2010 Big Finance foreclosed on an all-time record of over 1,000,000 homes. The Republican allies of Big Finance in Congress are advocating that Washington pull back from reforming the fraudulent foreclosure process, and House Majority Leader Eric Cantor (R-VA)who recently called the Occupy Wall St. protesters a mob”—has received hundreds of thousands of dollars in campaign support from Big Finance during 2011. Meanwhile, the acting Comptroller of the Currency John Walsh is telling us that foreclosure reform could take a year, butpending such reformof course the foreclosures conveniently continue [LA Times 9/23/11]. Banks, surprise-surprise, are still fabricating documents to promote foreclosure [America Blog 9/1/11]. As for Wall St. fraud, the possibility of perjury charges against Goldman Sachs CEO Blankfein for 2011 remarks to Congress is emblematic of the attitude of Wall St. [Fierce Finance 4/14/11].
A political focus on the pursuit of short-term military victory that provokes long-term hatred or the accumulation of wealth without concomitant production ofanythingalso has a subtle psychological impact by encouraging short-term thinking. In war, it is hard to get away from the obvious goal of winning the next battle; at the stock market, it is hard to get away from the obvious goal of making profitable short-term investments. To ask a general facing the threat of defeat or an investor facing the threat of financial ruin for a thoughtful assessment of where society will be in a generation is laughable.
Were the general charged instead with guarding a generation-long international effort to construct something or were the trader told his profits would be a function of progress toward some generation-long social goal, those two individuals would have entirely different attitudes toward the future of society. In a word, socially useful thinking and socially productive behavior can be bought. Generals and traders are neither good nor evil: incentives matter.
War and its domestic equivalent, financial exploitation organized by a minority as an institutionalized component of the system, are short-term, zero-sum activities, while the real dangers on mankinds horizon call for century-long programs supported by everyone. U.S. elite priorities do not just miss the target of protecting our future but exacerbate the problems we must address, and the way the system is designedwith incentives for short-term thinking and socially destructive behaviormake it almost impossible to reform those anti-social elite priorities.

The Next 100 Years: Milestones for Success

Many reasons for pessimism about the next 100 years exist, e.g., rising challenges and a poor historical record of human behavior.  Defining milestones indicating that humanity is rising to the occasion may help lead us forward.

Milestones suggesting that humanity is on the road to successfully coping with the challenges of the next 100 years include:

  • movement away from force and toward discussion as the preferred method of solving problems
  • rising emphasis on serious science
  • rising tendency to hold people responsible for their behavior, at least to the degree of demanding carefully reasoned justifications and identification of lessons
  • longer range thinking and planning
  • rising experimentation at local levels rather than top-down, all-eggs-in-one-basket mega-solutions
  • replacing either-or, zero-sum solutions with intermediate, positive-sum solutions

A few indications of such trends do exist. The Occupy Wall St. movement has generated calls for citizens to transfer their savings from huge national banks that play the stock market to local banks. Beyond the formal Occupy Wall St. movement, popular demands for mortgage debt forgiveness matching Washington’s forgiveness of Wall St. bankers is rising:

While Lower Manhattan was being occupied, the New Bottom Line, a coalition of community groups, church folks and other networks, was staging daily clashes with big banks around the country. George Goehl of National People’s Action sees the level of direct action and nonviolent civil disobedience rising rapidly among frustrated people of conscience. [William Grieder, “It’s Time for Debt Forgiveness, American-Style” in The Nation 11/14/11.]

More good news, particularly the defeat of Republican attacks on the right of workers to organize in Ohio, came out of the mid-term election.

So far, however, the overall trend of cultural shifts in the U.S. at least appear to be moving in the wrong direction as measured by every one of the above criteria.

American Decline?

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We have reached a level of political irresponsibility over the past 35 years, and specifically over the past decade, where we can now quite realistically see the possible collapse of the U.S.-centric world order as the U.S. is allowed to decay from within.
The core assumption of the above statement, which introduced The Speech Bernanke Should Have Given, is that the U.S. is in decline. Clearly, no military competitor is even on the horizon, despite the grumbling about China’s launching of a two-decade old ex-Soviet aircraft carrier. The U.S. economy also remains enormous, though the total GNP of 1.3 billion Chinese is now approaching the GNP of 300,000,000 Americans and the two countries are dangerously linked by American reliance on Chinese loans. So, is the U.S. truly in decline?
American decline is more subtle. A traditional, WWII-style frontal clash between the U.S. military and that of any conceivable enemy would surely result in a quick U.S. victory, but such a situation is utterly unlikely. Meanwhile, the enemies the U.S. has faced on the battlefield seem always just beyond American reach. The U.S. has not been able to conquer either the insurgents of Afghanistan or Iraq, failures that suggest a significant decline in the ability of the U.S. to wield its weapons effectively. What matters is not the number of guns and the size of bombs but the degree to which one’s weapons enable one to achieve one’s goals. It is difficult to identify a single national security goal that the U.S. has achieved by force in the last decade: the terrorist campaign against Iraqi civilians that did not even exist when the U.S. invaded not only continues but is intensifying; Taliban influence not only continues but is on the rise in Afghanistan; Hamas seems increasingly secure in Gaza, while Palestine as a whole has seized the initiative in its struggle for freedom from Israeli occupation; Hezbollah is the majority party in the Lebanese government; anti-Western Islamic militants are increasingly influential in Somalia. The U.S. today is brilliantly qualified to win WWII; it is dismally unqualified to resolve issues such as the worldwide Muslim grievances about the way they have been treated by the West. Obama’s response to the Arab Spring, albeit far more realistic than Neo-Con militarism, nevertheless continued to demonstrate a lack of comprehension in Washington of Muslim grievances. To say that the U.S. has impressive weapons is irrelevant; the point is the degree to which the U.S. has the appropriate tools for solving the problems it faces. Unfortunately for Americans, the tools being employed by Washington are increasingly irrelevant to the most serious international challenges facing the U.S. The first way in which the U.S. is in decline is in its declining ability to design the appropriate tools for international conflict resolution.
Force is an extreme expedient; most problems are resolved through less expensive methods, and the best method is to be so trusted and admired that others aspire to follow one’s lead. Unfortunately for the U.S., its behavior over the past decade has eroded its reputation as a moral leader. Iran defies the U.S. with impunity, in great measure because its argument that the U.S.-centric world order should be organized more fairly is beyond dispute. Russia and China seem increasingly to be moving in directions that are not so much in defiance of the U.S. as based on the assumption they do not really need to pay attention to the U.S. Russia, ignoring U.S. military noise, calmly signs contracts building up its hydrocarbon empire. China appears to be operating on a completely different time-scale, not resisting U.S. military moves but, like Russia, ignoring them, while it develops its own economy, gets on its feet militarily, and prepares for a future world in which the U.S. will have either collapsed or mired itself in economic dependence on China’s continuing willingness to support American over-consumption. U.S. allies like Brazil and Turkey, rather than kowtowing to Washington, increasingly see Washington’s behavior as part of the problem and unilaterally assert the right to take leadership roles—not to defeat the U.S. but to fill the gap created by Washington’s incompetence. The little antagonists of the U.S. are neither cowed nor defeated; rather, they seem to learn and adapt faster than the U.S., running circles around the giant. Even those who do exactly what Washington calls upon the world to do (e.g., become democratic) do so on their own, more in spite of Washington than at Washington’s command: what do the millions of activists in the Arab Spring owe to a U.S. that followed or opposed but never led or even kept pace with their movement? Moral leadership gets one influence for free. The second way in which the U.S. is declining is in its evaporating moral leadership.
Military might and moral leadership are tools of foreign policy. Both, over the long term, are linked to the domestic circumstances of a society. A society that is obviously happy, self-confident, just, and productive is the foundation for a state’s military might and simultaneously a model for emulation. Ironically, the conditions that enable a state to maintain a powerful military make that powerful military less important. The world will rush to follow a great society. But the endless political buffoonery in Washington, be it presidents landing jets personally on aircraft carriers or Congressmen tying themselves in knots over debt ceilings, raises eyebrows worldwide and brings wide smiles to the faces of America’s enemies. Far more seriously, all can see the signs of collapse in one facet after another of that marvelous jewel of the imagination, the American Dream: the middle class model of the 1950s with a single breadwinner able to finance a nice suburban life style for his family was replaced in the 1980s by the same lifestyle financed through the fulltime work of two parents (who thus could not but ignore their kids, leaving them to be babysat by drugs) and now in 2011 has become a family with at least one breadwinner unemployed and the friendly neighborhood bank foreclosing and putting them on the street. As for the core of any society’s success in the modern world—the educational system, where every decent U.S. high school student in the 1960s studied a foreign language and took four years of history (pathetically superficial though it may have been), today neither standard is observed; meanwhile, if the universities still teach science at all, the classes are composed mostly of foreign students planning to take their new knowledge back to their own countries, where expertise is far more precious than in a U.S. in denial about the most fundamental issues of modern science (e.g., evolution, global warming, environmental pollution). Meanwhile, highway bridges of the world’s greatest highway system collapse, old dams threaten catastrophic flooding, and nuclear power plants are maintained in service for decades past their planned  service life without being properly maintained. The wild scare talk of politicians about a terrorist bomb notwithstanding, the collapse of the U.S. as world leader is more likely to result from the evaporation of a U.S. city as the result of a nuclear meltdown from a rusty pipe in the cooling system. The third pathway to decline in the U.S. is the degradation of the U.S. physical infrastructure.
An even more insidious problem is the declining faith, for good reason, of the American people in their own institutions. Sneering at Big Government is endemic, though no persuasive argument is ever made indicating what institution could be trusted to replace government. In fact, Big Government does deserve a failing grade – but mostly because it is too small. Regulatory agencies responsible for oversight over Wall Street, the food industry, and corporate pollution of the environment have all fallen grossly short of fulfilling their duties in recent decades. And who respects Big Pharma, Big Finance, or Big Oil? The fourth pathway to U.S. decline is the justified popular loss of faith in American institutions.
But the good news for Americans and all who hope for the reemergence of a morally sound, sympathetic, and realistic American leadership of the world lies at the core of this sad story: the problem with U.S. behavior is self-inflicted and fully within the capability of Americans to overcome. It is precisely because of American military superiority that it should virtually never resort to violence any more extreme than peacekeeping or international police work. Once American society succeeds in recognizing this truth, the door will be open for Americans to elect a government capable of identifying the real challenges facing this country and the rest of the world (for the most serious problems today are almost exclusively common ones) and focusing on devising effective long-term problem-resolution strategies. The War on Terror, at its best, was no more than burning down the house to put out a fire in the bedroom: short-term conflict resolution at its most mindless. Such emergency crisis response sacrificing the long term in the interest of short-term survival is in no way called for: the U.S. has the resources and the time to take the long view and do things right. Such a long-term approach would have several aspects, all obvious, none currently being implemented: most fundamentally, the focusing of national energy and resources on domestic housecleaning, in brief:
                                                 “Empire – No; Jobs – Yes.”                     
Specifically, the refocusing of national energies on the state of domestic society would entail:
  • Using the crisis level of unemployment as an opportunity to rebuild U.S. infrastructure, fixing the dams and bridges and sewage systems and rusting nuclear power plants while employing those looking for work;
  • Launching a national campaign to improve the quality of public education at all levels, A) bringing public science and math education up to world standards so the next generation will have some hope of being able to compete with the tens of thousands of scientists and engineers graduating from Chinese, Japanese, and Indian educational systems and B) funding the revolutionary improvement in social studies, world history, and language studies (particularly regarding the Arab world and China) that will be required to produce a generation of Americans capable of understanding the international political challenges of the 21st century and capable of exercising oversight over the their elected officials;
  • Political reforms to facilitate honest elections open to reform candidates, the recall of corrupt politicians, the strengthening of government regulatory agencies, and the minimization of corporate bribery of Congressmen.
The U.S. is in decline for a multitude of reasons, but not because of a declining population or a shortage of resources or an overwhelmingly powerful enemy or bad luck. The U.S. is defeating itself. The decline will end the day Americans join hands and decide they no longer want to decline.
Joseph Stiglitz and Linda Bilmes, The Three Trillion Dollar War;
Gretchen Morgenson and Joshua Rosner, Reckless Endangerment;
Andrew Ross Sorkin, Too Big To Fail.

Too Big to Fail

Leaders throughout society indulge in the criminal hubris of considering their institutions too big to fail in great measure because society indulges them by failing to hold them responsible for their socially pernicious behavior. It’s not just Wall Street billionaires.
The current, endless recessionperhaps not a recession at all but in fact a retrenchment to Third World Status for the worlds last superpowermay eventually come to be recognized as a blessing in disguiseif society draws the appropriate lessons. Already enough is understood about the human complicity in provoking this needless disaster to make studying the causes of the recession (if that is all it turns out to be) essential reading for anyone interested in the future course of American and, indeed, global capitalist society. The greed soaked in the belief that failure was impossible is a moral tale that applies to foreign policy, health care management, and the way we treat our poisoned environment as much as it does to economics.
Can the recession earn its keep by teaching us to do a more socially responsible job of managing all major social institutions and policy structures?
No lesson is more important than the idiocy of too big to fail. While Bushs Treasury Secretary Hank Paulson (the Goldman Sachs fox guarding the nations financial henhouse) may appear, as the result of his bailout of billionaire buddies, the prime example of everything that is wrong with how the revolving door Wall Street-Washington elite runs the country for its private benefit, even he had evidently realized, before the bailouts back at least as far as June 2008 that too big to fail was a dangerous mirage. Indeed, he reportedly stated in a speech in Russia that:
we must improve the tools at our disposal for facilitating the orderly failure of a large, complex financial institution [Andrew Ross Sorkin, Too Big to Fail (New York: Penguin Books, 2009), 178.]
One could debate whether or not he took his own words seriously when the crunch came, shortly thereafter or whether American society is yet remotely close to digesting the import of those words, but the recession is a textbook case for the importance of doing so.
The recession is not, of course, by any means the only such case, as any good Reaganite or member of al Quaida would no doubt be quick to point out: both groups take credit for bringing down the Soviet superpower, an empire of both sufficiently colossal size and imperfections to match AIG or Bear Sterns or Merrill Lynch any day. Too big to fail in the glazed over eyes of Brezhnev, Chernenko, and Andropov, the sudden, pathetic collapse of the communist empire looks all too much like those of the above-mentioned capitalist empires. Historians can argue over the degree to which Reagans wild spending on Star Wars, bin Ladens Afghan crusade, or internal rot deserves the credit for destroying the USSR. The bottom line is the hubris that leads to the belief that one is too big to fail, which brings us back to the future of a certain society that is characterized by $100 million golden parachutes for CEOs judged to have failed; global-scale environmental catastrophes resulting in great measure from intentional avoidance of known preventive measures; health care designed as a lucrative business for the primary purpose of personal profit; and four-trillion-dollar wars to build political empires (to distinguish them from the previously cited hydrocarbon and health care empires).
If big is goodand to both the US and the old USSR it was so defined, then bigger is better. To that must be added just one little wrinkle that may differentiate the modern world from old empire-building projects (Imperial Russia, Rome, Spains colonization of South America, etc.). Today, on top of hubris, one has moral hazard. Too big to fail amounts to the bosses evading responsibility. Presidents who declare war on false pretenses, oil executives who despoil huge chunks of the earth after cost-cutting on blow-out preventers, financial magnates who gamble with other peoples money leveraged to the max, or heath care executives who refuse to give coverage to poor people precisely because they are sick may occasionally lose their jobs but do so without paying. Indeed, they walk away sneering and rich.
Too big to fail now means too big to be held accountable, and that is the Achilles heel of Western civilization.
Paulson was right on target with his 2008 comment, except that really he should have omitted the word financial. All of society needs tools to facilitate the orderly failure of institutions deemed fatally ill. Consider BPor Libya. As for the worlds last superpower, perhaps the process of developing rules for its failure (something of course totally impossible) would educate American society, provoking us all to figure out ways to deleverage our overstretch and strengthen our social collateral before the bills come due.