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Political Skeptic Bulletin, 2009

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[Dec 22, 2009] From Reagan to Bush to Obama ;-)

[Dec 21, 2009] Brad DeLong's Semi-Daily Journal

Ed Luce: He’s not perfect but Obama deserves at least a B:

By adopting a tone of civility and respect towards those who may often disagree with America, from the mosques of Cairo to the street cafés of old Europe, Mr Obama has cut a lot of ground from under those who always hate America... that is a revolution in global opinion. What Mr Obama will do with it remains to be seen. But it is a promising start....

[Obama] did what was necessary to stave off a global depression.... Pumping hundreds of billions of dollars into institutions that were instrumental in bringing about the crisis offended people’s sense of justice. So too do the obscenely large bonuses Wall Street is now paying out. Posterity may also judge Mr Obama to have squandered this “defining moment in history” to overhaul the contract between Wall Street and America.

Against that, however, it is worth considering what could have gone wrong. During his campaign John McCain argued that the best stimulus would be to cut spending. He also argued that big institutions should be allowed to fail. The first was illiterate. The second reckless....

[H]e did what was necessary to prevent this crash from becoming a disaster. And for that much credit is due (no pun intended). In addition to getting scant acknowledgement for these accomplishments, Mr Obama is taking the blame for trends not of his making....

[M]any of the criticisms aimed at Mr Obama are fair. Of these the most damaging is that he seduced voters into believing he would change the way business is done in Washington. It is the oldest betrayal in the book. You campaign in poetry and govern in prose...

[Dec 16, 2009] Who invented the totalitarian state?

The world has known ruthless, violent, and murderous rulers for centuries. Queen Elizabeth ran a secret service that ruthlessly pursued her enemies in the Catholic underground. Isabella and Ferdinand persecuted and expelled the Jews of Spain. And the French government was perfectly ready to use deadly force against workers and rebels in Paris in 1848 and 1871.

But the totalitarian state was a creation of the twentieth century. The fascist states of Italy, Spain, and Germany as well as the Soviet state seem to have been qualitatively different from even the most repressive of their nineteenth century predecessors. By comparison, Bismarck's Prussia, Napoleon III's France, Czar Alexander's Russia, and Victor Emmanuel's Italy were quaint amateur affairs when it came to organized coercion and mass politics.

The differences are striking -- the apparatus of political prisons, the extensive secret police networks, the purposive use of violent organizations, the ideologies of national and ethnic purity. Most fundamental, though, is the degree and depth of bureaucratic control that the modern totalitarian state achieved. This is what made the modern fascist or soviet state "total" -- an ability to monitor and intimidate civil society down to the street level.

The distinction between the realm of the state and the realm of civil society has been fundamental to political theory. Civil society encompasses the private activities of individuals and their associations, and the realm of the state involves the political apparatus of law, enforcement, and coercion. We can roughly estimate the degree to which the apparatus of the state is able to penetrate down into civil society. And European states prior to the twentieth century were objectively limited in their capacity to rule civil society. This is true for the imperial Chinese state in the nineteenth century as well; it was commonly said that the power of the Emperor ended at the yamen wall (or at the county level). As Mark Allee puts it in Law and Local Society in Late Imperial China: Northern Taiwan in the Nineteenth Century,

The limited effectiveness of yamen runners as police prompted local administrators in Danshui and Xinzhu to search for ways to augment and supplement their runner cadre. In so doing, sub-prefecture and county heads aimed to create more intimate linkages to the people in their jurisdiction and to extend the reach of local government beyond the yamen wall into the countryside. (197)
Weak states have only a limited ability to enforce their will against the mass populations of city and countryside; mechanisms such as tax farming and collective tax liability are therefore called upon in order to secure the resources needed by the central authorities. And the scope of law and the effective enforcement of laws and decrees is limited as well in a weak state. European polities of the nineteenth century were generally weak states; Britain, France, Germany, and Italy had central governments with only limited administrative capacity and limited ability to impose their authority at the local level. But there was a dramatic increase in the beginning of the twentieth century in the administrative capacity of the state and its ability to govern local society. The scope of the political grew much broader, and the domain of civil society -- the relatively safe and insulated zone of individual activity and choice -- grew more limited. The creation of the totalitarian state depended on this radical increase in state power and state coercive capacity.

A striking feature of the totalitarian states of the twentieth century is their aggressiveness and brutality towards all opposition. These fascist states were ruthless and effective in their ability to attack and dismantle oppositional groups -- including communists, labor unions, radical peasants, rent resistance organizations, liberals, and anarchists. Chuck Tilly's discussion of "trust networks" is relevant here; the balance of power between the trust networks of civil society and the central power of the state apparatus shifted profoundly with the advent of the modern dictatorship; Trust and Rule.

One index of the administrative and coercive capacity of the state is the degree to which it is successful in exacting a greater percentage of the national wealth in taxes. Weak states are relatively inefficient at collecting taxes. So careful historical study of systems of taxation is an important contribution to the topic of the power of the state. Isaac Martin, Ajay Mehrotra, and Monica Prasad's The New Fiscal Sociology: Taxation in Comparative and Historical Perspective provides a good exposure to the field of comparative fiscal sociology. With a foreword and article by Charles Tilly, it examines the ways in which states since the early modern period have intensified their ability to collect tax revenues.

One piece of this new capacity was organizational. Fascist states in the 1930s created bureaucracies of surveillance, enforcement, punishment, and killing that went vastly beyond the capacity of nineteenth century state organizations. The organizations of police and army in Italy, Spain, and Germany took major steps forward in size and complexity in the twentieth century. The personnel of the forces of coercion -- police and other armed state forces such as militias -- were few in the early nineteenth century; but by the middle of the twentieth century these numbers had grown exponentially.

Improved communication and transportation were also key to the possibility of the totalitarian state. The telephone and the railroad allowed fascist states to collect information quickly and to move their forces around the cities and countryside efficiently; functionally, this meant that rural groups and ordinary people were no longer buffered from the state by poor roads and rudimentary communication.

Another technological advance that was crucial for the totalitarian state was a substantial improvement in the technology of record keeping and retrieval. James Scott argues that the modern state's imperative to regiment and record its population is fundamental to its capacity to collect taxes and conscript soldiers -- and therefore fundamental to the nature of modern political power (Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed). The technology of organized record keeping improved dramatically in the first several decades of the twentieth century -- thus making the state's goal of closely monitoring its subjects more attainable. (Edwin Black describes the use of IBM punch card systems to manage National Socialist records of Jews and other enemies in IBM and the Holocaust.) So communication, transportation, and record-keeping were crucial to the creation of the totalitarian state.

Of course greater state capacity is not synonymous with totalitarianism. Liberal democratic states too increased their capacity to impose their will at the local level. What distinguished totalitarian regimes was the set of ideological and political goals that fascist states sought to accomplish on the basis of their greater repressive capacity and the cult of violence that each embodied. Other states took some of these sorts of steps forward in the twentieth century; the "reach of the state" increased dramatically in the United States, France, and Britain as well. The administrative functions of the state and the ability to extract revenues through taxation increased exponentially. It would be interesting to compare the total tax percentages in 1860 and 1930 for the United States and France; surely the increase is dramatic. And likewise, the personnel of these states increased dramatically during the same time period as a percentage of population. But this broad increase in state capacity did not lead to repression and dictatorship in these countries.

This topic is historically interesting; much turns on how we explain the power and human tragedies associated with Franco's Spain or Mussolini's Italy. But it is also interesting today when we consider the undisguised efforts of the Iranian state, and its Republican Guard military organization, to dominate the whole of Iranian civil society. Here too we see the use of surveillance, intimidation, mass arrests, forced confessions, and political murder as tactics in the effort to control civil society.

(There is quite a bit of scope for new comparative historical research on this topic. Chuck Tilly has always emphasized these issues in his analysis of the development of the modern state. Michael Mann's findings in The Sources of Social Power, Vol. 2: The Rise of Classes and Nation States, 1760-1914 are certainly relevant as well to this line of thought. But there isn't much empirical detail available at present. Simply attempting to measure the dimensions highlighted here for a number of countries -- scale of tax collections, size of state apparatus, size and complexity of police organizations, and overall state capacity to regulate local society -- requires research that doesn't appear to exist at present. )

[Dec 16, 2009] UnderstandingSociety Koestler's nightmares

Arthur Koestler was an articulate witness of the atrocities of the twentieth century; and much of what he witnessed was terrible. Reading his books gives one an intense and personal vision of fascism, dictatorship, mass murder, starvation, and cruelty on a monstrous scale. As George Orwell wrote of Koestler's books in 1944, "The subject-matter of all of them is similar, and none of them ever escapes for more than a few pages from the atmosphere of nightmare" (link). Koestler worked as a Communist journalist in Berlin in the early 1930s during the rise of the brown shirts; he was the first European journalist to travel through the Ukraine to witness the results of famine in Stalin's war against the Kulaks (Lynne Viola, The War Against the Peasantry, 1927-1930: The Tragedy of the Soviet Countryside); and he observed the Spanish Civil War, where he was arrested after the fall of Malaga, imprisoned, and sentenced to death as a Red. (Here is an earlier post on Koestler.)

These experiences are described in his autobiography, The Invisible Writing, and the narrative of his experiences in Spain is presented in Dialogue With Death. But Koestler's best known book is a novel, Darkness at Noon, which is the story of the final weeks of life of the fictional Soviet revolutionary Rubashov in Stalin's purges of the 1930s and the Moscow show trials. After a life as leader, theorist, and agent in service of the Soviet Union and the Communist Party, Rubashov is arrested for fictitious crimes of conspiracy and betrayal against the State. He is arrested before dawn; it takes him quite a while to find his pince-nez. He is thrown into a Soviet political prison -- it is reminiscent to him of the fascist prisons in which he had suffered beatings and torture years earlier. He is brought to confess to these crimes and others under interrogation by his former comrade-in-arms, Ivanov, and the new Soviet thug, Gletkin. Ivanov is psychologically manipulative; Gletkin is brutal; but both strive to break Rubashov and compel his confession. They are successful; Rubashov confesses to betraying the Revolution; and like Bukharin, he is convicted and summarily shot in the back of the neck. Along the way there is quite a bit of debate about history, the individual, the Party, and the Future of Humanity. The key question of the novel is the puzzle: why did Rubashov confess rather than following the secret advice of the prison barber -- "die in silence!"?

Koestler himself was a committed Communist agent in Berlin in the 1930s; so his descriptions of Rubashov's activities in eastern Europe have the ring of truth -- including Rubashov's betrayals of Richard and Little Loewy in the name of socialism. The novel recreates the Moscow show trials of 1937 with uncanny insight. Rubashov is loosely based on Nikolai Bukharin, one of the intellectual and political leaders of the Russian Revolution. Koestler's novel was written only two years after the trial and execution of these leaders of the Russian Revolution at the hands of Stalin's functionaries. Here is what he says about the central character:

The characters in this book are fictitious. The historical circumstances which determined their actions are real. The life of the man N. S. Rubashov is a synthesis of the lives of a number of men who were victims of the so-called Moscow Trials. Several of them were personally known to the author. This book is dedicated to their memory. Paris, October, 1938-April, 1940
But here is what I find fascinating. Koestler's fictional recreation of the arrest and trial of the top Party officials, in the person of Rubashov, and the background assumptions and rationalizations assumed by the prosecutors and interrogators, is remarkably close to the historical reality. Here is Koestler's description of his own arrest and arrival in a Spanish fascist prison in Malaga:
It is a unique sound. A cell door has no handle, either outside or inside; it cannot be shut except by being slammed to. It is made of massive steel and concrete, about four inches thick, and every time it falls to there is a resounding crash just as though a shot has been fired. But this report dies away without an echo. Prison sounds are echo-less and bleak.

When the door has been slammed behind him for the first time, the prisoner stands in the middle of the cell and looks round. I fancy that everyone must behave in more or less the same way.

First of all he gives a fleeting look round the walls and takes a mental inventory of all the objects in what is now to be his domain:

His next action is invariably to try to pull himself up by the iron bars of the window and look out. He fails, and his suit is covered with white from the plaster on the wall against which he has pressed himself. (Dialogue with Death, 59)
And now turn to Rubashov's first few minutes in Stalin's jail cell:
Rubashov walked up and down in the cell, from the door to the window and back, between bunk, wash-basin and bucket, six and a half steps there, six and a half steps back. At the door he turned to the right, at the window to the left. It was an old prison habit; if one did not change the direction of the turn one rapidly became dizzy. .... Rubashov stood hesitantly in the middle of the cell, then put his pince-nez on again and propped himself at the window. (Darkness at Noon, 14, 18)
Much of the drama of Darkness at Noon is the series of interrogations Rubashov undergoes, and the mental transformation that they bring about in this courageous man to bring him to confess to the most farfetched and unbelievable crimes. The transcripts of Bukharin's prosecution exist; Robert Tucker and Stephen Cohen's THE GREAT PURGE TRIAL provides extensive transcripts of the interrogation of Bukharin and other show trial victims. It is striking to compare the interrogation of Bukharin with the interrogation of Rubashov. Consider this bit of interrogation of Rubashov, beginning with the voice of prosecutor Ivanov:
"To return to more tangible things: you mean, therefore, that 'we' -- namely, Party and State -- no longer represent the interests of the Revolution, of the masses or, if you like, the progress of humanity."
"This time you have grasped it," said Rubashov smiling. Ivanov did not answer his smile.
"When did you develop this opinion?"
"Fairly gradually: during the last few years," said Rubashov.
"Can't you tell me more exactly? One year? Two? Three years?"
"That's a stupid question," said Rubashov. "At what age did you become adult? At seventeen? At eighteen and a half? At nineteen?"
"It's you who are pretending to be stupid," said Ivanov. "Each step in one's spiritual development is the result of definite experiences. If you really want to know: I became a man at seventeen, when I was sent into exile for the first time." (69)
And now a similar moment in the actual transcripts of the interrogation of Bukharin.
Vyshinsky: Allow me to begin the interrogation of the accused Bukharin. Formulate briefly what exactly it is you plead guilty to.
Bukharin: Firstly, to belonging to the counter-revolutionary "Bloc of Rights and Trotskyites."
Vyshinsky: Since what year?
Bukharin: Roughly since 1928. I plead guilty to being one of the outstanding leaders of this "Bloc of Rights and Trotskyites." Consequently I plead guilty to what directly follows from this, the sum total of crimes committed by this counter-revolutionary organization, irrespective of whether or not I knew of, whether or not I took a direct part, in any particular act. Because I am responsible as one of the leaders and not as a cog in this counter-revolutionary organization.
Vyshinsky: What aims were pursued by this counter-revolutionary organization?
Bukharin: This counter-revolutionary organization, to formulate it briefly ...
Vyshinsky: Yes, briefly for the present.
Bukharin: The principal aim it pursued, although, so to speak, it did not fully realize it, and did not dot all the "i's" -- was essentially the aim of restoring capitalist relations in the U.S.S.R. (Tucker, 328)
And now, back to Darkness at Noon and Rubashov; the porter's daughter reads aloud the newspaper account of the last minutes of Rubashov's testimony:
"Asked whether he pleaded guilty, the accused Rubashov answered 'Yes' in a clear voice. To a further question of the Public Prosecutor as to whether the accused had acted as an agent of the counter-revolution, he again answered 'Yes' in a lower voice ...."
Here seems to be Koestler's own explanation of the puzzle of the confessions:
Some were silenced by physical fear, like Hare-lip; some hoped to save their heads; others at least to save their wives or sons from the clutches of the Gletkins. The best of them kept silent in order to do a last service to the Party, by letting themselves be sacrificed as scapegoats -- and, besides, even the best had each an Arlova on his conscience. They were too deeply entangled in their own past, caught in the web they had spun themselves, according to the laws of their own twisted ethics and twisted logic; they were all guilty, although not of those deeds of which they accused themselves. There was no way back for them. Their exit from the stage happened strictly according to the rules of their strange game. The public expected no swan-songs of them. They had to act according to the text-book, and their part was the howling of wolves in the night.... (DN, 105)
Fiction and reality are deeply intertwined here. I don't believe that Koestler had access to transcripts of the show trials at the time he wrote Darkness at Noon in 1940, though he had read accounts of the trials. So the convergence of the fictional Rubashov and the historical Bukharin is remarkable. And the transformation of Koestler's own experiences -- in Communist activism and in fascist prison under sentence of death -- into the fiction of Rubashov is very striking.

The state prosecutor who conducted the show trial of Bukharin was Andrei Vyshinsky. Following his success in the show trials, Vyshinsky became a prominent diplomat under Stalin. And after World War II he served as permanent representative to the United Nations during the period that the Universal Declaration on Human Rights was drafted and adopted. He led the Soviet Bloc nations in abstention from the vote adopting the Universal Declaration on Human Rights. Here is a fragment of the outrageous speech he gave on this occasion:

Human rights could not be conceived outside the State; the very concept of right and law was connected with that of the State. (The Universal Declaration of Human Rights: Origins, Drafting, and Intent, 21-22)
I am drawn to Koestler's writings -- both his fiction and his autobiographical writings -- in part because he provides such a powerful example of an engaged mind attempting to make sense of the history around him. Much of his work is a first-person effort to "understand society" -- to make sense of the social forces and individual behavior that the twentieth century presented. George Orwell is another of my favorites in this aspect of literature, including especially Homage to Catalonia and A Collection of Essays; so it is very interesting to me that Orwell wrote the short essay about Koestler mentioned above. It is also interesting that they were both published in England by Victor Gollancz, along with E. P. Thompson.

Posted by Daniel Little at 10:49 PM

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theopensociety said...

I don't see it to be a puzzle of confession, really. The discussions between Rubashov and his interrogators make it quite clear that Rubashov is guilty of betraying the revolution, and convinces Rubashov it is so.

The logic is clear: The revolution needs the total dedication and conviction of the revolutionaries. Therefore, even doubting that the current path of the revolution is the right one is a betrayal that must be punished by death.

The book thus becomes a very subtle, but finally utterly convincing argument against all forms of undemocratic ideas and fanaticism, as they necessitate that you kill everyone who even doubt them, that is everyone.

[Dec 6, 2009] Will the Right Kill the Republicans Ask the Whigs

November 22nd, 2009

I’m as curious as anyone about the long-term effects of hard-right Republicans on the Republican party. Will their zealotry result in the party’s rupture and collapse?

This led me to look at the two significant national parties from America’s history that have collapsed and disappeared: the Federalists and the Whigs.

The Federalists came apart because they advocated a policy of appeasement and peace with the British during the War of 1812. They actually sent ambassadors to negotiate a peace. In the meantime Andrew Jackson won the Battle of New Orleans, and America won the war. That left the Federalists discredited and embarassed in the electorate’s eyes, and they never recovered.

This seems to have no parallel with the current situation in the Republican party.

The Whigs, on the other hand, might have some very telling lessons to impart. They split over the issue of slavery, and collapsed when they failed to nominate their own incumbent presidential candidate (Millard Fillmore) for re-election in 1852. The anti-slavery faction became the Republican Party (with the notable participation of Abraham Lincoln), while the pro-slavery/laissez faire adherents grouped into splinter parties or defected to their former rivals, the Democrats.

The parallels? There’s no incumbent presidential Republican, of course, but down the food chain we see far-right Republicans garroting prominent incumbent party stalwarts like Senator Lindsey Graham of South Carolina, Governor Charlie Crist of Florida, and New York Assemblywoman Dede Scozzafava (who, after she was savaged and effectively replaced by the ultra-cons, endorsed the Democratic candidate–who proceeded to win).

Will the Republicans go the way of the Whigs? I’m sure not going to predict it. But the pattern’s in place.

Omer Bartov: Hitler's Second Book

Looks like this guy is in the pocket of Likud.
TNR Online: Hitler's Second Book: The Unpublished Sequel to Mein Kampf: Adolf Hitler's so-called second book was not published in his lifetime. Written, as Gerhard Weinberg convincingly speculates, in late June and early July 1928, the book's publication was postponed because Mein Kampf, Hitler's first massive text, was selling very badly and could hardly stand competition with another publication by the same author. Later, after Hitler was appointed chancellor and Mein Kampf became one of the greatest (and allegedly most unread) best-sellers of all times, the second book was apparently seen as disclosing his foreign policy plans too explicitly to allow publication. It was locked away, only to be discovered by Weinberg in 1958. Published in German three years later, the second book came out in a pirated and unreliable English edition in 1962. It is only now that the public can read this text in an authoritative translation, accompanied by extensive and updated notes by Weinberg.

Must we read another ranting book by Hitler? This book is certainly as close to the heart of darkness as a book can be. But it should have been read in its time, and it should be read now. It was an explicit warning to the world of what could be expected from the Führer of what was to become for twelve terrible years the Third Reich. When Hitler wrote it, no one could tell whether his plans and fantasies would ever be transformed into reality. Much of what Hitler put together in this book could already be found in Mein Kampf, if anyone had bothered to read it, and other ideas were expressed unambiguously in his speeches. Yet it was difficult to believe that anyone in his right mind would try to translate such rhetoric into policy. It was generally thought that in power Hitler would be constrained by the realities of diplomacy, the limits of Germany's power, the national interests of the Reich, and the military, economic, and political partners with whom he had to make policy.

Today we know that this was a fatal misunderstanding, rooted more in wishful thinking than in the kind of realism on which contemporary observers prided themselves and expected would eventually keep Hitler, too, in his place. Today we know that Hitler said precisely what he meant to say. We can also note, with the benefit of hindsight, that Hitler was neither insane, nor irrational, nor a fool. Several decades ago A.J.P. Taylor wrote that Hitler may have been mad or criminal as far as his plans and policies for world conquest and genocide were concerned, but in the conduct of his diplomacy in the 1930s he acted very much like everyone else, seizing opportunities and moving gradually toward the goals he had set himself. Reading this second book, I tend to agree. Hitler's rhetoric here is not more empty-headed than that of many of his contemporaries; his use of clichés hardly exceeds what one encountered in the newspapers; his knowledge of history, his psychological observations, his criticism of his rivals, are in many respects typical of his place and time.

But of course Hitler was about much more than this. He was also a pathological mass murderer who caused the death of millions and the destruction of Europe, and so it is important to know that he did precisely what he promised to do. For we still do not seem to have learned a simple crucial lesson that Hitler taught us more definitively than anyone else in history: some people, some regimes, some ideologies, some political programs, and, yes, some religious groups, must be taken at their word. Some people mean what they say, and say what they will do, and do what they said.

Most liberal-minded, optimistic, well-meaning people are loath to believe this. They would rather think that fanaticism is merely an "epiphenomenal" façade for politics, that opinions can be changed, that everyone can be corrected and improved. In many cases, this is true--but not in all cases, and not in the most dangerous ones. There are those who practice what they preach and are proud of it. They view those who act otherwise, who compromise and pull back from ultimate conclusions, as opportunists, as weaklings, as targets to be easily conquered and subdued by their own greater determination, hardness, and ruthlessness. When they say they will kill you, they will kill you--if you do not kill them first.

Reading Hitler's second book is useful, of course, for students of Nazism. But they will have already read it in part or in whole, and nothing that Hitler says here will come to them as much of a surprise. This is a book that should be read, rather, by contemporary journalists, political observers, and all concerned people who have the stomach to recognize evil when they confront it. For one of the most frightening aspects of Hitler's book is not that he said what he said at the time, but that much of what he said can be found today in innumerable places: on Internet sites, propaganda brochures, political speeches, protest placards, academic publications, religious sermons, you name it. As long as it does not have Hitler's name attached to it, this deranged discourse will be ignored or allowed to pass. The voices that express these opinions do not belong to a single political or ideological current, and they are much less easy to distinguish than in the 1930s. They belong to the right and the left, to the religious and the secular, to the West and the East, to the rabble and the leaders, to terrorists and intellectuals, students and peasants, pacifists and militants, expansionists and anti-globalization activists. The diplomacy advocated by Hitler is no longer relevant, but his reason for it, his legitimization of his "worldview," is alive and kicking, and it may still kick us.

II. Hitler never had a particularly complicated ideology. He painted a clear picture of the world, distinguishing between the bad and the good, the sinful and the righteous, the guilty and the innocent, the dirty and the clean, the inferior and the superior. He articulated clear goals, as follows. The Aryan race needs domestic unity and freedom from polluting racial elements, and so it must expand into an undefined and likely limitless "living space" in the East. Germany's most important short-term enemy is France, for historical reasons and because it has become "negroized." Germany's most likely allies are Italy and Britain, with whom the Reich should have no quarrel since they also seek to expand in different directions. The greatest long-term enemy is the United States, not least because it is made up of healthy Aryan stock that has turned its back on the fatherland. The Slav states and the nations to Germany's east are to be taken over. The Slavs, and especially the Poles and Russians, are not worthy of ruling themselves, for whatever is great and worthy in the East was created by German colonizers and rulers. The greatest danger to the world are the Jews, who have taken control of the Soviet Union and are behind all the Marxist parties in Europe, and at the same time are the bosses and the manipulators of international capitalism. The Jews rule the world through a global conspiracy, and it is Germany's duty to destroy them before they subjugate humanity forever.

Hitler made no bones about the direct link between his "analysis" of world history and his plans for Germany's policies. For him, as he wrote,

politics is not just the struggle of a people for its survival as such; rather, for us humans it is the art of the implementation of this struggle.... Politics is always the leader of the struggle for survival--its organizer--and regardless of how it is formally designated, its effectiveness will determine the life or death of a people.... The two concepts of a peace policy or a war policy thus immediately become meaningless. Because the stake that is struggled for through politics is always life....

Promoting economic autarky and opposing the ills of a global capitalistic economy, Hitler was similarly swift in identifying the agents of globalization whose goal it was to "kill the others through peaceful industry," by way of depriving people of the necessary Lebensraum that would ensure their healthy development. The urban centers created by the global industrial economy were "hotbeds of blood-mixing and bastardization, usually ensuring the degeneration of the race and resulting in that purulent herd in which the maggots of the international Jewish community flourish and cause the ultimate decay of the people." For Hitler, the "Jew" was directly identified with anything international, and internationalism was directly associated with the degeneration of the race, with immorality and corruption. Once a people loses its "genetically conditioned cultural expression of the life of its own soul," he wrote, it will "descend into the confusion of international perceptions and the cultural chaos that springs from them. Then the Jew can move in, and not rest until he has completely uprooted and thereby corrupted such a people."

While he strenuously opposed "internationalism" as a Jewish conspiracy to take over the world and to corrupt the nobler races, Hitler saw no limits to his own aspirations for expansion. As he noted, "Wherever our success ends, that will always be the starting point of a new battle." And as Hitler never tired of emphasizing, he was opposed to a policy of returning to the borders of 1914--that is, of revising the Versailles agreement in which the Reich had been "robbed" of its territories. That restitution would hardly suffice. Hitler argues that

the foreign policy of the bourgeois world is in truth always only focused on borders, whereas the National Socialist movement, in contrast, will pursue a policy focused on space. The German bourgeoisie will, with its boldest plans, perhaps attain unification of the German nation, but in reality it usually ends in bungling border adjustments. The National Socialist movement ... knows no Germanization ... but only the expansion of our own people.... The national conception will not be determined by previous patriotic notions of state, but rather by ethnic and racial conceptions....

The German borders of 1914 ... represented something just as unfinished as peoples' borders always are. The division of territory on the earth is always the momentary result of a struggle and an evolution that is in no way finished, but that naturally continues to progress.

So much for the idea of appeasement, of letting Hitler have what he had already declared would never suffice. The racial state that Hitler outlined had certain duties. It could "under absolutely no circumstances annex Poles." It would "have to decide either to isolate these alien racial elements in order to prevent the repeated contamination of one's own people, or it would have to immediately remove them entirely, transferring the land and territory that thus became free to members of one's own ethnic community." Here again we hear Hitler saying quite clearly that he would undertake the kind of demographic re-structuring of Eastern Europe that was indeed managed by Heinrich Himmler after 1939. And whatever might have been the contributions of various German technocrats in the 1930s to molding this policy, as suggested by some historians, Hitler unequivocally and ruthlessly expressed it five years before he became chancellor.

Moreover, Hitler made it clear that in the distant future "the only state that would be able to stand up to North America will be the state that has understood how ... to raise the racial value of its people.... It is, again, the duty of the National Socialist movement to strengthen and prepare our own fatherland to the greatest degree possible for this task." If Hitler did not end up trying to conquer the United States, we now know that he made plans for producing the kinds of aircraft and ships that would have facilitated such aggressive action.

Ultimately, as Hitler saw it, there could have been only one worthwhile goal in World War I, and the same goal would eventually have to guide the conduct of any future war: the conquest of "living space." The "only area in Europe that could be considered for such a territorial policy was Russia." This was also the only kind of war aim that would motivate Germans and justify the sacrifices entailed in accomplishing it:

The only war aim that would have been worthy of these enormous casualties [in World War I] would have been to promise the German troops that so many hundreds of thousands of square kilometers of land would be allotted to the frontline soldiers as property or made available for colonization by Germans.

This is precisely what Hitler did upon the invasion of the Soviet Union in 1941.

The instrument of such a war would be a new German army, and in his second book Hitler outlines how he would use the Weimar Republic's one hundred thousand-man Reichswehr as the framework for the creation of a massive new military machine based on universal conscription. By 1935 Hitler was already well on his way to accomplishing this task, having both purged the SA, which hoped to become an alternative military organization, and declared universal conscription in total defiance of the Versailles Treaty.

But Germany's most pernicious enemies were the Jews and those who had collaborated with them in stabbing the army in the back and bringing about the collapse of the German Empire in November 1918. "No enemy," declared Hitler, "had reviled the German army like the representatives of the November knavery defiled it." Hence, he warned,

Anyone who today wants to act in the name of German honor must first announce the most relentless fight against the intolerable defilers of German honor ... the representatives of the November crime. That collection [of] Marxist, democratic-pacifist, and Centrist traitors that pushed our people into its current state of powerlessness.... I admit most frankly that I could reconcile myself with every one of those old enemies, but that my hate for the traitors in our own ranks is unforgiving and will remain.

These traitors not only brought the old Reich crashing down, they were now plotting to establish a "global economy" and a pan-European movement whose consequences would be "a Jewish-instigated systematic bastardization with lower-quality human material." The reason was obvious:

The Jew particularly welcomes such a concept; in its consistent observance it leads to racial chaos and confusion, to a bastardization and niggerization of civilized humanity, and finally to such a deterioration in its racial value that the Hebrew who keeps himself free from it can gradually rise to be masters [sic] of the world.

Most dangerously, the Jews had taken over Russia. Hitler opposed any "German-Russian understanding ... as long as a government that is preoccupied with the sole effort to transmit the Bolshevist poison to Germany rules in Russia." For "it goes without saying that if such an alliance were to materialize today, its results would be the complete dominance of Judaism in Germany, just as in Russia." Interestingly, while the Jews dominated Russia, they were in Hitler's view not true communists but greedy capitalists. Hence "it is precisely the Jewish press organs of the most noted stock market interests that advocate a German-Russian alliance in Germany. Do people really believe that" these Jewish papers "speak more or less openly for Bolshevist Russia because it is an anticapitalist state?" No, Hitler insisted, this was in fact nothing but a "Jewish-capitalist Bolshevik Russia"--Jewish-controlled capitalism posing as Russian communism.

Hitler did not share the hope that he attributed to nationalist German circles that, if Russia were to be liberated from the Jews and reverted to "nationalist, anticapitalist communism," it might be a good coalition partner for Germany. For Hitler, Germans and Russians constituted "two ethnic souls that have very little in common." The Russian people could never rule themselves, but were rather first under the control of superior "Nordic-German elements" and, following the Revolution, under the Jews who successfully "exterminated the previous foreign upper class ... with the help of the Slavic racial instinct." But as Hitler saw it, this Jewish takeover would eventually serve Germany's objectives, since "the overall tendency of Judaism, which is ultimately only destructive," would in time lead to "the destruction of Jewry." This in turn would facilitate the realization of "the goal of German foreign policy in the one and only place possible: space in the East."

After explaining why the question of the German minority in South Tyrol, which came under Italian rule after World War I, was a minor issue compared with the need to "gain further space and feeding of our people" in the East, Hitler ended his second book with the same pronouncements that concluded the political testament that he dictated before his suicide seventeen years later. For Hitler's entire political career was guided by a single central obsession with "the Jew." Blaming those who criticized his policies toward Italy for ignoring the domestic "syphilitization by Jews and Negroes" of the Fatherland, and for persecuting those Germans who "resist the de-Germanization, niggerization, and Judaization of our people," Hitler finally explained what had always been at the root of all evil and misfortune in the world.

Repeating much of the anti-Semitic verbiage of the previous decades, but giving it a much more threatening tone thanks to his position as a political leader on the verge of becoming a major figure on the world scene, Hitler summarized his views on the Jews in the following manner. First, this was "a people with certain essential particularities that distinguish it from all other peoples living on earth." Second, while Judaism was not a religion but "a real state ... the essence of the Jewish people lacks the productive forces to build and sustain a territorial state." Third, because of this inability, "the existence of the Jew himself ... becomes a parasitic existence within the life of other peoples." Fourth, the "ultimate goal of the Jewish struggle for survival is the enslavement of productively active peoples."

This goal is sought by fighting "for equality and then for superiority" in domestic policies, whereas in foreign policy the Jews will "hurl [other peoples] into wars with one another, and thus gradually--with the help of the power of money and propaganda--become their masters." Ultimately, the Jew seeks "the denationalization and chaotic bastardization of the other peoples, the lowering of the racial level of the highest, and domination over this racial mush through the eradication of these peoples' intelligentsias and their replacement with the members of his own race." Tragically, "Jewish domination always ends with the decline of all culture and ultimately the insanity of the Jew himself. Because he is a parasite on the peoples, and his victory means his own end just as much as the death of his victim." The allies of the Jew are "Freemasonry ... the press ... [and] Marxism." Having accomplished the "economic conquest of Europe," the Jew "begins with securing it politically ... in the form of revolutions" and by "systematically agitating for world war." The victims of Jewish "inhuman torture and barbarity" in Russia "totaled twenty-eight million dead," and meanwhile the Jew "tore away all the ties of orderliness, morality, custom ... and proclaimed ... universal licentiousness." But finally, declares Hitler, an end will be put to all this, for "the National Socialist movement ... has taken up the fight against this execrable crime against humanity."

It is truly astonishing to see how every sin that Hitler ascribed to "the Jew" became part of his own policies as he himself outlined them in his second book and later implemented them: the destruction of entire nations by the elimination of their elites, their mass deportation, and in the case of the Jews, their outright genocide. And it is just as mind-boggling to note that the endless depravity attributed by Hitler to the Jews became the reality of German conduct under his rule, which deprived the Reich of every remnant of moral constraint and finally drove it into an insane storm of self-destruction. What Hitler said would be done to Germany, he did unto others; and he and his people became victims of the nemesis that he prophesied for his enemies. When Hitler wrote his second book, he was staring into a mirror.

III. But those who have followed the current wave of anti-Semitism emanating from the most disparate sources in the last few years may sense that they, too, are staring into a mirror, a distorted mirror of a resurrected past, a mutilated, transplanted, transformed, contorted, monstrous specter whose allegedly exhausted powers seem to be increasing day by day.

Hitler is dead, as Leon Wieseltier rightly proclaimed in these pages. What alarmed Wieseltier was the frequent predilection to view every threat as the ultimate threat, every anti-Semitic harangue as the gateway to another Final Solution. Clearly we are not facing the danger of a second Auschwitz. The hysterics need to remember that Hitler and the Third Reich are history. Germany apologized and paid generous restitution. The Nazis were tried, or they hid, or they metamorphosed into good democrats. The state of Israel was established. The Jews have never been more prosperous and more successful and more safe than they are in the United States. (The same could even be said about the nervous Jews of Western Europe.) The last remnants of communist anti-Semitism vanished with the fall of that "evil empire." Jews in our day have reasons to feel much more secure than their ancestors.

But all is not well, not by a long shot. Criticism of Israeli policies against the Palestinians has long been attached to anti-Americanism, and the United States was said already by the Nazis in World War II to be dominated by the Jews. And criticism of American imperialism is often associated with its support for Israel, allegedly a colonial outpost populated by Jews in the heart of Arab and Islamic civilization. Of course, one should never confuse the legitimate criticism of Israeli policies with what all reasonable people agree is the despicable ideology of anti-Semitism. The policies of the current Israeli government in the territories are indeed contrary to the strategic and moral interests of the Jewish state. So there is every reason in the world to reject attempts to justify objectionable Israeli policies by reference to the Holocaust.

But this does not mean that we should refuse to see the writing on the wall when anti-Israeli sentiments are transformed into blatant and virulent anti-Semitism. This was precisely the argument made in the report "Manifestations of anti-Semitism in the European Union," as submitted by the Center for Research on Anti-Semitism in Berlin to the European Monitoring Center on Racism and Xenophobia, which had originally commissioned it. The monitoring center tried to suppress its own report, because it gave a measure of anti-Semitic violence by Muslims in Europe, and because its definition of anti-Semitism included those who call for the destruction of Israel. And these grim truths were politically incorrect. The Israeli occupation of the West Bank and the Gaza Strip is stupid and destructive, and it should be ended through the creation of a Palestinian state, but those who preach the destruction of the Jewish state should not be allowed to hide behind Sharon's unfortunate policies. It is one thing to support the cause of Palestinian nationhood, and quite another to deny the Jews the right to live in their own state.

What we are witnessing today is a broad front of opinion, spanning the entire spectrum of the political and religious scene, whose criticism of American and Israeli policies, and whose fears and phobias about present conditions, utopian dreams of a better future, and nostalgic fantasies of a mythical past, all converge in a bizarre and increasingly frightening way on a single figure, a single cause: "the Jew." I have long believed that it is pointless, and dishonorable, to debate anti-Semites. Such an exchange of "ideas" only confers legitimacy upon them. But there are times when absurdities become political facts and cannot be ignored. They must, instead, be directly challenged--not by explaining their violent ideas and feelings away, but by putting limits to them through all available means, political, judicial, and, if necessary, by the use of legitimate force. For these are people who mean what they say. If you do not destroy them, they will destroy you. There are precedents for this.

Consider again what Hitler wrote in 1928. Yes, it is insane; but take out the word "race" and replace it, say, with "Zionism" or "American imperialism," and replace the references to the Soviet Union with references to the United States, and suddenly the discourse is not only crazy but also quite common. The "soft core" of this poisonous rhetoric is to be found among some sectors of European and American intellectuals and academics. It tends to identify Israelis as culprits, and Jews as potential Israelis. It is obsessed with the influence of Jews on culture, politics, and economics around the world. The partially successful boycott of Israeli academics in recent years is a case in point, not least because it tends to affect precisely those who number among the most determined and articulate opponents of the current Israeli government's policies. The divestment campaign, calling on American and European universities to desist from any investments in Israel, is another example; this campaign provides cover, and even immunity, for all the regimes around the world that have never recognized academic freedom. The sympathetic understanding expressed in academic settings, and in liberal and left-wing publications, for suicide bombers who blow up innocent civilians in Israel creates a climate of tolerance for murder that is cleverly couched in the righteous language of liberation and justice.

Some allegations of an apparent takeover by Jews, or by Jewish themes, of this or that cultural sphere seem to have nothing to do with Israel. In October 2001, The Chronicle of Higher Education published an article by Mark Anderson, a professor of Germanic languages at Columbia University. Anderson expressed fears about "the way in which American scholars have distorted the study of German culture" by reducing "the canon of German literature to a tiny handful of teachable authors who often have a Jewish background." This "excessive focus on German-Jewish authors," he argued, "relied on the subtext of Jewish suffering." This "has undermined intellectual freedom in American universities" and is "testimony to an ongoing intellectual paralysis that could and should be relieved."

It is not clear from Anderson's argument who is to blame, apart from an ill-defined "pressure from American culture to focus on minority issues, as well as our fascination with Hitler and the Holocaust." It is also somewhat ironic that Anderson himself edited a volume called Hitler's Exiles: Personal Stories of the Flight from Nazi Germany to America, which testifies to his own fascination with this topic, if not to his recognition of its importance. But one cannot help but detect here a clear connection between the alleged over-emphasis on Jewish authors and Jewish themes "identified" by Anderson and its distorting effects both on the study of German literature and on American intellectual freedom. Somehow the focus on Jewish victims seems to have that effect.

Sometimes this sort of intellectual-academic-journalistic obsession with Jews becomes intimately linked with anti-Americanism. Several best-selling books published in France and Germany by academics, politicians, and journalists have "confirmed" the already widespread belief (held by 19 percent of the German population according to a recent poll, and apparently by a majority in many Arab and Islamic countries) that the September 11 attacks on the United States were orchestrated by the CIA and the Mossad, and that the latter warned the Jews working in the World Trade Center not to come to work that day. Indeed, the United States, attacked by Europeans for its support of Israel, has been repeatedly depicted as controlled by the Jews, whose lobbies, financial and electoral levers of power, and key figures in the White House and Pentagon, are manipulating both the American public and world politics.

At the same time Israel has been portrayed as the perpetrator of Nazi-like crimes even as these very same portrayals carry echoes of the Nazi representation of Jews. Thus the European media, especially its more highbrow representatives, were as keen to portray the Israeli operation in Jenin last year as a war crime and a massacre as they were reluctant to admit that they had been fooled by Palestinian propaganda and in turn misinformed their publics about the nature of the operation, greatly inflating the number of Palestinian civilians killed in order to justify its description as a massacre. The Israeli prime minister was depicted in a cartoon published in The Independent in London in the shape of a bloody ogre devouring Palestinian children, his features eerily reminiscent of those popularized by Der Stürmer.

Anyone who has access (that is, anyone on the Internet) to racist, anti-Semitic, and neo-Nazi publications in the United States and elsewhere will find almost precisely the same opinions and depictions. These hateful representations are normally not much remarked upon. But there are some important exceptions. Most striking was the speech made by Martin Hohmann, a parliamentary representative of the Christian Democratic Union (CDU) in the German Bundestag, to an audience of one hundred thirty people, on October 3, 2003. Hohmann argued that one had no right to speak of the Germans as a "people of perpetrators" (Tätervolk) because the Jews--- presumably those making that argument -- were themselves a "people of perpetrators," considering their high representation among the murderous Bolsheviks. This was the first time since the end of Nazism that a member of the Bundestag made an anti-Semitic argument based on the very logic of Hitler's rationalization for war against the Soviet Union. And an elite Bundeswehr general expressed agreement with Hohmann's speech. Under much public pressure, Hohmann was eventually ejected from the parliamentary fraction of the CDU -- but 20 percent of his colleagues opposed his removal. And Hohmann knew, like so many fascists before him who said what he said, what many others were thinking. In a poll recently conducted by the University of Bielefeld, it was found that 70 percent of Germans resent being blamed for the Holocaust, and 25 percent believe that the Jews are trying to make political capital out of their own genocide (and another 30 percent say that there is a measure of truth in this assertion), and three-quarters believe that there are too many foreigners in Germany.

Much more publicity has been given to anti-Israeli protests on American campuses, and these have demonstrated a troubling trend. A group calling itself "New Jersey Solidarity: Activists for the Destruction of Israel" called for an "anti-Israel hate-fest" to be held on the campus of Rutgers University, New Brunswick, in October 2003. The group's website declares itself "opposed to the existence of the apartheid colonial settler state of Israel, as it is based on the racist ideology of Zionism and is an expression of colonialism and imperialism."

Richard McCormick, the president of Rutgers University and a former member of its history department, where I also taught during the 1990s, issued an open letter on the planned meeting. He stated that he found "abhorrent some elements of NJ Solidarity's mission." But he went on to say that "intrinsic to Rutgers' own mission is the free exchange of ideas and discourse on a variety of issues, including those that are controversial. This university must remain a model of debate, dialogue and education ... we encourage our students to express their beliefs and analyze the difficult issues of the day." So some may think that destroying Israel is legitimate and some may think otherwise. Some may think that Israel is an apartheid colonial settler state based on a racist ideology, and some may have a different opinion. There are two sides to the question. Through such a "free exchange of ideas" we will all prosper intellectually. This brings to mind Hannah Arendt's observation, when she visited Germany in 1950, for the first time since she fled the Nazis, that the Germans viewed the extermination of the Jews as a matter of opinion: some said it happened, some said it had not happened. Who could tell? The average German, she wrote, considered this "nihilistic relativism" about the facts as an essential expression of democracy.

Throughout campuses in the United States, students associated with Arab and Islamic organizations, Christian groups, and the left carried flags, banners, and posters that were mostly focused on one theme: the equation between Zionism, or Israel, and Nazism. Banners portrayed a swastika joined by an equal sign to a Star of David and an Israeli flag featuring a swastika instead of a Star of David. Placards issued the call to "End the Holocaust," and proclaimed that "Zionism = racism = ethnic cleansing," and that "Zionism is Ethnic Cleansing," and that "Sharon = Hitler." A particularly ingenious sign asserted: "1943: Warsaw 2002: Jenin." While some summarized their views with the slogan "Zionazis," others warned, "First Jesus Now Arafat."

What makes this virulent anti-Semitism respectable is that it presents itself as anti-Nazism. To accomplish this sinister exculpatory purpose it needs only to declare that Zionism equals Nazism, just as the old canard of a Jewish conspiracy to take over the world is legitimized by its association with American imperialism, capitalism, and globalization. That the vocabulary of this rhetoric is taken directly (whether consciously or not) from Nazi texts is so clear that one wonders why there is such a reluctance to recognize it. In part this is owed to ignorance, which is as rampant today in journalism and political commentary as it always was. In part this is owed to the fact that those who would most readily identify the provenance of these words and ideas are largely liberals, some of whom also happen to be Jewish, and thus are likely to be most harmed, both personally and ideologically, by making this identification. By exposing the anti-Semitic underbelly of this phenomenon, they would expose themselves as Jews and friends of Jews, and would open themselves to the argument that precisely their opposition to this phenomenon is the best proof of Jewish domination in the world.

IV. Which, incidentally, is precisely what Prime Minister Mahathir Mohamad of Malaysia said following the Western protests against his warmly received pronouncement to the Organization of the Islamic Conference in October that the Jews control the world: "The reaction of the world shows that they [the Jews] control the world." Mahathir's speech was genuinely astonishing. This was the first time since World War II that a major head of state made a speech--to no fewer than fifty-seven other heads of state and well over two thousand journalists--whose fundamental argument was that the Jews are to blame for all the ills that have beset Islamic civilization. And not a single person left the room in protest.

For Paul Krugman, writing in The New York Times on October 21, Mahathir's anti-Semitic remarks were both "inexcusable" and "calculated," made by a "cagey politician, who is neither ignorant nor foolish." Krugman did not elaborate on why such remarks are "inexcusable." Instead he preferred to see them as reflecting "how badly things are going for U.S. foreign policy." Mahathir may be "guilty of serious abuses of power," but he is also, said Krugman, "as forward-looking a Muslim leader as we're likely to find." Hence he should be encouraged, not denounced. His anti-Semitism is merely "part of Mr. Mahathir's domestic balancing act."

Progressive modernizer that he is, in other words, Mahathir cannot possibly be stupid enough to believe what he spouts, and because he does not believe it, and uses it merely as a tool for the good cause of modernizing Malaysia and combating the Muslim clerics who oppose the acquisition of knowledge, his anti-Semitism is in some way understandable. This is reminiscent of what many said about Hitler's anti-Semitism in the 1930s: it was inexcusable but calculated, and thus it was ultimately both excusable and in the service of a good cause, the modernization of Germany and its reintegration into the community of nations.

For Krugman, Mahathir's "hateful words" serve only to "cover his domestic flank." They do not tell you anything about his own thinking, but they tell you "more accurately than any poll, just how strong the rising tide of anti-Americanism and anti-Semitism among Muslims in Southeast Asia has become." And what is the cause of this tide? It is America's "war in Iraq and its unconditional support for Ariel Sharon." Just as Mahathir is not anti-Semitic, but merely a good reader of his people's collective mind, so, too, his people are not anti-Semitic, but merely outraged by the same things that outrage Krugman: Ariel Sharon and George W. Bush.

The Malaysian prime minister's speech was both more offensive and more interesting than most commentators (including Krugman) have observed. In many ways it was a restatement of the urge to modernize, and the will to power, and the fantasies of destruction, that characterized fascism. Mahathir proposes to "disprove the perception of Islam as a religion of backwardness and terror." He wants to "restore the honor of Islam and of the Muslims" and "to free their brothers and sisters from the oppression and humiliation from which they suffer today." What sort of action does Mahathir propose? In part, as Krugman pointed out, he was indeed critical of the intellectual and political decline of Islam. He thus insisted that, although according to Islam "we are enjoined ... to acquire knowledge," it was due to "intellectual regression" that "the great Muslim civilization began to falter and wither," causing it to miss entirely the Industrial Revolution. Yet other influences from the West actually subverted Islam, among which he counts "the Western democratic system" that "divided us." Moreover, it was thanks to this democratically induced division that the Europeans "could excise Muslim land to create the state of Israel to solve their Jewish problem." Thus the West both denied the Muslims the means to defend themselves through modern technology and industry and divided them by the introduction of democracy, all with the goal of solving a European "Jewish problem" at the expense of Islamic lands.

This "Jewish problem" is not at all peripheral to Mahathir's argument, a sort of tithe to the masses and the clerics so as to push his program of modernization. It is central to his thinking. Modernization is justified, in his account, by the necessity of destroying the entity that has penetrated the Muslim world and polluted its soul. For, as he says, "we are all oppressed. We are all being humiliated." And thus the numerical and economic strength of Muslims must be complemented by military prowess: "We are now 1.3 billion strong. We have the biggest oil reserve in the world. We have great wealth.... We control 57 out of 180 countries in world. Our votes can make or break international organizations.... [But] we need guns and rockets, bombs and warplanes, tanks and warships for our defense." Hitler used to mock those who were obsessed with obscure Germanic traditions, who were filled with rage at the defeat of 1918 and dreamed up all sorts of harebrained conspiracies in marginal militant fraternities. He wanted to build a powerful modern military. He was, in this way, a modernizer.

Mahathir, for his part, notes that

today we, the whole Muslim ummah are treated with contempt and dishonor.... Our only reaction is to become more and more angry. Angry people cannot think properly. And so we find people reacting irrationally. They launch their own attacks, killing just about anybody ... to vent their anger and frustration.... But the attacks solve nothing. The Muslims simply get more oppressed.... The Muslims will forever be oppressed and dominated by the Europeans and the Jews.... Is there no other way than to ask our young people to blow themselves up and kill people and invite the massacre of more of our own people? This is the voice of the rational politician. This is not an Arab preaching an endless cycle of revenge, but an Asian Muslim calling for patience and calculation. Suicide bombers will never win the war. There must be another way. After all, "1.3 billion Muslims cannot be defeated by a few million Jews." Hence we need "to think, to assess our weaknesses and our strength, to plan, to strategize and then to counter attack.... [To] devise a plan, a strategy that can win us final victory.... It is winning the struggle that is important, not angry retaliation, not revenge." Is this merely a subtle way of calling on Muslims to focus on their own societies rather than waste their energies on the struggle with Israel? Perhaps. But it is just as possible that Mahathir, like so many before him, means what he says. And Mahathir paints the Jewish enemy in colors taken directly from Hitler's diabolical palette:

The enemy will probably welcome these proposals and we will conclude that the promoters are working for the enemy. But think. We are up against a people who think. They survived 2000 years of pogroms not by hitting back, but by thinking. They invented and successfully promoted Socialism, Communism, human rights and democracy so that persecuting them would appear to be wrong, so they may enjoy equal rights with others. With these they have now gained control of the most powerful countries and they, this tiny community, have become a world power. We cannot fight them through brawn alone. We must use our brains also. The Islamists need none of the fancy extenuations offered by certain European and American intellectuals. For they have a direct link with anti-Semitism going all the way back to the Nazis. Mahathir's anti-Semitic pronouncement was not simply triggered by frustration with the lack of development in Islamic countries, or by rage at American and Israeli policies, or by some deep-seated traditional Muslim anti-Semitism. The analysis that he presented reflects, rather, the continuing impact of a relatively new and pernicious phenomenon, whose roots can be traced back to the foundation of the Muslim Brotherhood in Egypt in 1928 and its success in launching Islamism as a mass movement. As the German political scientist Matthias Küntzel has recently shown in his book on "jihad and Jew-hatred", Islamism quickly became a primarily anti-Zionist and anti-Semitic movement that was greatly influenced by European anti-Semitism and directly influenced by Nazism. Indeed, as anti-Semitism lost its impetus as a revolutionary political movement in Europe in the wake of World War II, it was transplanted to the Middle East and from there to other parts of the Muslim world.

This development was responsible for the slaughter of Daniel Pearl in Pakistan, which was explicitly anti-Semitic in its motivation. The reluctance of the Western media to concede that Pearl was not murdered as an American, a journalist, a "spy," or as someone who might have uncovered connections between the Pakistani secret service and Al Qaeda, but first and foremost as a Jew--in what was after all a highly ritualized act of killing recorded on videotape--merely manifests the embarrassment that European and American observers feel upon discovering that one of the dirtiest "secrets" of Christian civilization has been so seamlessly transplanted into the Islamic world. After all, it is more difficult to empathize with the plight of those who are still largely victims of Western economic exploitation if they turn out to be led by murderous bigots flaunting slogans that recall Europe's own genocidal past.

But the most explicit and frightening link between Hitler's anti-Semitism and the contemporary wave of violence, hatred, paranoia, and conspiracy theories can be found, first, in the testimony given by the perpetrators of the September 11 terrorist attacks, and, second, in the official charter of the Palestinian Hamas movement.

As Küntzel writes, citing the Reuters reporter Christian Eggers, during the trial of Mounir el Motassadeq, a core member of the Al Qaeda cell in Hamburg that planned the attacks of September 11, the motivation of the perpetrators was amply documented, but the media have not reported much of what was said at the trial, which took place in Hamburg, Germany, between October 2002 and February 2003. The witness Shahid Nickels, a member of Mohammed Atta's core group, insisted that "Atta's worldview was based on a National Socialist way of thinking. He was convinced that 'the Jews' are determined to achieve world domination. He considered New York City to be the center of world Jewry, which was, in his opinion, Enemy Number One." Nickels said that Atta's group was "convinced that Jews control the American government as well as the media and the economy of the United States... that a world-wide conspiracy of Jews exists... [that] America wants to dominate the world so that Jews can pile up capital."

Similarly, the witness Ahmed Maglad, who participated in the group's meetings, testified that "for us, Israel didn't have any right to exist as a state.... We believed ... the USA ... to be the mother of Israel." And Ralf Götsche, who shared the student dormitory with Motassadeq, testified that the accused had said: "What Hitler did to the Jews was not at all bad," and commented that "Motassadeq's attitude was blatantly anti-Semitic."

There is a history to such statements, which connects the anti-Semitism of Al Qaeda members planning mass murder in Hamburg in the 1990s to the anti-Semitism of Hitler fantasizing about mass murder in Munich in the 1920s. It is not difficult to find. The charter of the Hamas movement, issued in 1988 as the fundamental document of this Palestinian branch of the Muslim Brotherhood, must be read to be believed. It contains, among its fundamentalist Islamic preachings, the most blatant anti-Semitic statements made in a publicly available document since Hitler's own pronouncements. Citing an array of Islamic sources, Hamas promises that "Israel will rise and will remain erect until Islam eliminates it as it had eliminated its predecessors." The Islamic Resistance Movement has "raised the banner of Jihad in the face of the oppressors in order to extricate the country and the people from the [oppressors'] desecration, filth and evil." The Prophet, remember, said that "the time will not come until Muslims will fight the Jews (and kill them); until the Jews hide behind rocks and trees, which will cry: O Muslim! There is a Jew hiding behind me, come on and kill him!" Here there is no talk of compromise or reconciliation. The document states plainly that "the so-called peaceful solutions, and the international conferences to resolve the Palestinian problem, are all contrary to the beliefs of the Islamic Resistance Movement. For renouncing any part of Palestine means renouncing part of the religion.... The initiatives, proposals, and International Conferences are but a waste of time, an exercise in futility."

The opposition expressed by Hamas to any compromise over Palestine is also intimately linked with its view of the Jewish-Zionist enemy. These enemies, according to the charter,

have been scheming for a long time.... They accumulated a huge and influential material wealth ... [which] permitted them to take over control of the world media such as news agencies, the press, publication houses, broadcasting and the like. [They also used this] wealth to stir revolutions in various parts of the globe, in order to fulfill their interests and pick the fruits. They stood behind the French and the Communist Revolutions and behind most of the revolutions we hear about here and there. They also used the money to establish clandestine organizations which are spreading around the world, in order to destroy societies and carry out Zionist interests. Such organizations are: the Freemasons, Rotary Clubs, Lions Clubs, B'nai B'rith and the like. All of them are destructive spying organizations. They also used the money to take over control of the Imperialist states and made them colonize many countries in order to exploit the wealth of those countries and spread their corruption therein ... they stood behind World War I ... and took control of many sources of wealth. They obtained the Balfour Declaration and established the League of Nations in order to rule the world.... They also stood behind World War II, where they collected immense benefits from trading with war materials and prepared for the establishment of their state. They inspired the United Nations and the Security Council ... in order to rule the world.... There was no war that broke out anywhere without their fingerprints on it.... The forces of Imperialism in both the Capitalist West and the Communist East support the enemy with all their might, in material and human terms.... This international Jewish conspiracy to take over the world has also a moral goal. For, as this document goes on to say, the "secret organizations" working for Zionism "strive to demolish societies, to destroy values, to wreck answerableness, to totter virtues and to wipe out Islam." Zionism "stands behind the diffusion of drugs and toxics of all kinds in order to facilitate its control and expansion." To be sure, Hamas has its own expansionist goals, for it plans to control the entire region of the Middle East, promising in turn "safety and security ... for the members of the three religions" as long as they agree to live "under the shadow of Islam." But Hamas "is only hostile to those who are hostile towards it, or stand in its way in order to disturb its moves or to frustrate its efforts" to dominate the region. Meanwhile "Zionist scheming has no end, and after Palestine they will covet expansion from the Nile to the Euphrates.... Their scheme has been laid out in the Protocols of the Elders of Zion, and their present [conduct] is the best proof of what is said there." Hitler could not have put it better.

So Hitler is dead, but there is a Hitlerite quality to the new anti-Semitism, which now legitimizes not only opposition to Zionism but also the resurrection of the myth of Jewish world domination. And those who foolishly think that doing away with Israel, not least in a "one-state solution," would remove anti-Semitism had better look more closely at the language of these enemies. For they--I mean the enemies--insist that the Jews are everywhere, and so they must be uprooted everywhere. Their outpost may be Israel, but their "power center" is in America, and their synagogues and intellectuals are in Germany and France, and their academics are in Russia and Britain. Since they are the cause of all evil and misfortune, the world will be a happier place without them, whether it is dominated by the Aryan Master Race or by the ideological soldiers of the Muslim Brotherhood.

Hitler taught humanity an important lesson. It is that when you see a Nazi, a fascist, a bigot, or an anti-Semite, say what you see. If you want to justify it or excuse it away, describe accurately what it is that you are trying to excuse away. If a British newspaper publishes an anti-Semitic cartoon, call it anti-Semitic. If the attacks on the Twin Towers were animated by anti-Semitic arguments, say so. If a Malaysian prime minister expresses anti-Semitic views, do not try to excuse the inexcusable. If a self-proclaimed liberation organization calls for the extermination of the Jewish state, do not pretend that it is calling for anything else. The absence of clarity is the beginning of complicity.

OMER BARTOV is professor of history at Brown University and the author, most recently, of Germany's War and the Holocaust: Disputed Histories (Cornell University Press).


The Russian people could never rule themselves, but were rather first under the control of superior "Nordic-German elements" and, following the Revolution, under the Jews who successfully "exterminated the previous foreign upper class ... with the help of the Slavic racial instinct." But as Hitler saw it, this Jewish takeover would eventually serve Germany's objectives, since "the overall tendency of Judaism, which is ultimately only destructive," would in time lead to "the destruction of Jewry."

I think it would be valuable to note here that this exactly the same procession that Ayn Rand sees at work in the Soviet Union, except that the Communists are 'leftist parasites', not neccessarily Jews, and the 'Nordic-german elements' have become the 'Producers'. Rand is also essentially eliminationist.

Yes, it is insane; but take out the word "race" and replace it, say, with "Zionism" or "American imperialism," and replace the references to the Soviet Union with references to the United States, and suddenly the discourse is not only crazy but also quite common. The "soft core" of this poisonous rhetoric is to be found among some sectors of European and American intellectuals and academics.

One could also point out here that neo-conservative tracts of the 2002-2003 era that called for a global war on Terrorism suffered the same problem - they claimed to the need to implement the same policies as Al-queda was supposedly aiming for. Likewise, I do believe certain members of the New Republic staff routinely engage in this kind of projection, along with right-wing elements in Israel proper.

Projection: it's not just for breakfast anymore.

Hitler taught humanity an important lesson. It is that when you see a Nazi, a fascist, a bigot, or an anti-Semite, say what you see.

OK! Israelis are behaving like a bunch of low-rent facists, Hamas is desperate and exterminationist in ideology, Al-Queda is basically a crazed and murderous performance theatre group, the Randroids have basically adopted Hitler's (and Rand's!) narcissitic personality disorders as ideology, the base of the Republican party is as crazy as the Germans of the Third Reich because they are convinced of any number of untruths and lies, and the New Republic sucks.

The part about Hitler and his ideology (and his modernist radicalism) is absolutely correct, and pretty damn good.

['The world: it is nutty.']

Maynard Handley

"It is truly astonishing to see how every sin that Hitler ascribed to "the Jew" became part of his own policies as he himself outlined them in his second book and later implemented them:"

Yeah, astonishing. That would never happen in, say, the US.
When the US complains about other countries starting wars without provocation, or torturing people, or kidnapping people in other countries, or crony capitalism, it means every word it says!

And then we get insanity like "The absence of clarity is the beginning of complicity." Jesus, that could have come out the Khmer Rouge handbook.

Honestly, WTF do you find these people? You realize this guy's entire rant has only one purpose: "We must believe what crazy people say, and a crazy man in Iran says he wants to nuke Israel"?

Thorstein Veblen

the author goes a bit overboard: "Throughout campuses in the United States, students ... carried flags, banners, and posters that were mostly focused on one theme: the equation between Zionism, or Israel, and Nazism. Banners portrayed a swastika joined by an equal sign to a Star of David and an Israeli flag featuring a swastika instead of a Star of David. Placards issued the call to "End the Holocaust," and proclaimed that "Zionism = racism = ethnic cleansing," and that "Zionism is Ethnic Cleansing"

Really? All throughout campuses in the US? I've been on many campuses. Never seen any of this. Seems like it would be news if this were happening "all throughout campuses in the US", no? I've never even seen a single Swastika, much less a "Zionism is ethnic cleansing" poster...

The Impact of Stimulus on GDP

volker the viking:

sm_landlord wrote:

My BS meter pegs immediately

at least he didn't say 'unprecedented'


km4 wrote:

Obama believes like Reagan and Bush that deficits don't matter

Oh, Thank God. That means we get another year or two of stimulus before the Challenger blows a gasket.

[Nov 5, 2009] A Black Democratic Fundraiser speaks some truth about Obama by johnwsmart

FEBRUARY 25, 2009 | Salon

My concern is your opinion of Obama. At a very fundamental level, I have no idea on what you base your belief that Obama is "basically honest and intelligent." Knowing the man as I do, including the people he surrounds himself with (and no -I'm not talking about just his spiritual counselors but those people who have nurtured his political career and on whom he relies for advice), I have found him to be a rather deceitful person who, certainly, is smart enough but whose vaunted intelligence is vastly overrated - his judgment even more so. First, to address the claims I've heard so many make that he must be intelligent in light of his graduating from HLS. Believe me - having attended an Ivy League law school myself - I know that such attendance is not a proxy for intelligence. Nor is becoming president of the law review when it is a popularity vote as opposed to merit-based based on assessment of scholarship. (I also am only a few years younger than Obama and am African-American,=2 0so I fully understand that the bar for entering a top law school is higher for people of color - that doesn't make all of us geniuses just by the mere fact that we were there.) Moreover, I haven't found his writing (which has only been about himself) or his post-graduate career to be anything that would lend me to think more highly of his intelligence. Certainly his ability to mimic the cadence and tone of the most compelling African-American speakers of the past while reading remarks written for him by others (and even those heavily lifted from previous speeches by other people), doesn't impress me as indicative of great intellectual ability by itself.

More importantly, I've had the opportunity to meet and talk with Obama in small, intimate settings and gain a better sense of the man than anyone can based on t.v. interviews and his ubiquitous speechifying. (I was for many years active in the Democratic party. I also worked for some years for an investment bank which was a major backer of Obama from the time he ran for the Senate. And, he was eager to spend lots of time with the top bankers of Wall St in small dinner settings in glorious NY penthouses. I was often invited along simply because I was one of the few blacks at my bank they could invite to "color" these dinners.)

My first encounter with him was at the 2004 Democratic Convention when he was being lauded as being one of the next wave of leaders of the party.&n bsp; I, too, was extraordinarily impressed and borderline euphoric then, after hearing his convention speech. He initially struck me as well as a charismatic, brilliant young man, who might just be the chance we were looking for to inject new ways of thinking into our polity. But, when talking with him after the convention speech, I came away thinking he did not have any truly out-of-the-box ideas about the best direction for the country or even how to cure the doldrums of the Democratic party. Time enough, however, I felt then for him to learn, reflect and chart better courses.

Over the next months I then was able to talk with him and hear him talk in various fundraising venues - which is where he spent most of his short time in the Senate before hitting the presidential campaign trail. (The first time post-convention was at George Soros' house). I came away each time a little more uneasy, particularly when it became clear he was going to run for President. He skims the surface of issues and problems. In fact, his remarks, when not prepared come across as vapid. He repeats, like rote, tired democratic tropes. (And frankly many Republican ones. He truly does admire Reagan and not just because Reagan won elections). He seems to have spent little to no time in deep introspection about any particular area of policy. He spent very little time at his actual job in the Senate or doing any substantive work - which was similar to his time in the IL State Senate. (What was little remarked upon when he ran for US Senate or POTUS was what a mess the Chicago district he represented was left when he advanced to the US Senate during a period when even poor districts in the country got at least somewhat better.) He certainly - for someone whose father (like mine) is African and who (as did I) lived overseas for a time - seems to at bottom be relatively incurious about geopolitics. And, he would get a glazed look in his eyes and look about for someone else to move on to when I raised questions about how he would address the looming US financial crisis I could see on the horizon.

All in all, I found him to be a completely conventional politician - interested in his own advancement - with no particular personal vision for the future of this country or the world. And, all this without even the small saving grace of being a policy wonk like either Clinton, Gore or even Biden, etc. This was why his entire campaign rested on the ephemera of "hope and change" which could mean anything one wanted it to mean, along with a list of plagarized policy "positions" taken from other democratic primary candidates. From what I've learned about him, I do not believe he has deep guiding principles and certainly no specific political philosophy or forward-thinking vision for how to right our ship. That is why his actions to date - and I believe this will continue=2 0- have been disappointingly although, to me, not suprisingly conventional and, frankly, in large part a continuation of Bush's policies if not a recreation of Clinton's.

Even more disturbingly, having followed the primary campaign closely and having good friends in both his campaign and Hillary Clinton's, I can also say how shocked I became at the really dishonest tactics he used, from race-baiting to caucus fraud to paying cyber stalkers to terrorize pro-Clinton writers and website owners. But, given the stunts he pulled in IL in the early days of his career that I came to discover in doing due diligence before deciding on my own vote, this really probably shouldn't have shocked me as much as they did.

The one thing that did amaze me, as his campaign unfolded and there were more and more danger signs about his character or lack of it that came to light for anyone who wanted to really look, was why so many people who I respect as clear eyed thinkers, not given at all to buying into conventional wisdom couldn't see this man as he really is. He's not evil and I can't say that he's outright corrupt, but he's not honest. (For goodness sake, the man broke virtually every important promise he made during the primary campaign as soon as it was over, and he's busy continuing this trend now that he's president. Call me crazy, but that doesn't strike me as someone who is "basically honest."). I also do not believe h e has any type of handle on how to effectively govern, particularly not in these times.

The less optimistic view of Treasury’s handling of the crisis By Edward Harrison

The Obama Administration is captured. To understand why it has acted as it has, one doesn’t have to take the view that its efforts to save the banking industry were a deliberate attempt to line bankers’ pockets by transferring money from taxpayers to the banking industry. One need merely read the last post I wrote on this topic.

In their wildly optimistic view, the banking industry is solvent and always has been. All that was needed to ‘solve’ than banking crisis was a lot of liquidity, government backstops and, most importantly, time. This blinkered view sees a looting of taxpayer money to bailout the banking industry as necessary to save banks whose credit is the ‘lifeblood of our economy.’

They are wrong. The banks did not need to bailed out. The banking industry industry needed to made solvent again. There is a big difference between those two sentences (banks versus banking industry and liquidity versus solvency) that goes to the core of the captured and politically damaging world view we have seen on display by the Obama Administration.

Change you can believe in

Think back some 18 months when Senator Obama was in a horse race with Hillary Clinton to see who would go up against John McCain in the Presidential election. If you asked any reasonable individual who had the least experience and the thinnest political resume of the three, he or she would have said Barack Obama. If Americans wanted someone long on inside-the-beltway experience, they would have chosen John McCain – or, at a minimum, Hillary Clinton, not Barack Obama.

So, Barack Obama did not best both Hillary Clinton and John McCain and get to the White House because Americans felt him more qualified for the job. Rather, Americans believed the U.S. was on the wrong path and wanted a qualified person to lead the country who would also change course. They believed that person was Barack Obama.

And when it came to the economy, the presence of two men, Paul Volcker and Warren Buffett, born some 80 years ago, gave one the sense that, despite Barack Obama’s perceived relative youth or inexperience, he had the ablest of wise old men who would be his and our counsel in resolving this crisis.

Bailing out the banks

So when Barack Obama took office, it came as a rude awakening for many that he chose to bail out the too big to fail institutions with little or no strings attached, allowing them to later make record profits and pay record bonuses, while the economy was in a deep slump and ordinary Americans were being bankrupted and losing their jobs and homes at record rates. This was not change you can believe in.

What could or should the Obama Administration have done?

If you had listened to the chatter inside the beltway early this year, you would realize that Obama’s team believed it was not politically feasible to ‘nationalize’ Citigroup or Bank of America and force top executives to resign as was done at RBS, Bradford and Bingley or Northern Rock in the UK. This was a blinkered view which can only be described as captured (if not outright disingenuous). We need look no further than Fannie Mae and Freddie Mac to see that nationalization was an option.

But this is not the kind of solution we needed. What we needed was a solution by the Administration to take prompt corrective action in seizing bankrupt institutions, dismissing management, punishing any misdeeds and setting up a timetable to sell off the institution’s assets. That is change you can believe in.

I laid this out fairly comprehensively in February in my post “America needs a pre-privatization plan.” So I am not going to cover that ground here except to quote the key relevant passage in that post:

To my mind, there are three ways to deal with an insolvent financial institution:

  1. Bankruptcy. Allow the institution to collapse (like Lehman Brothers)
  2. Nationalization. Seize the assets of that institution and nationalize it (like Northern Rock, AIG, or Fannie Mae)
  3. Bailout. Inject capital into the institution in order to allow it breathing room until it can meet capital adequacy levels.

As you can see, governments have tried all three solutions. However, there are vast differences between the three.

The bailout solution is the most ‘anti-free market’ choice and seems to be the favored solution of governments everywhere. It props up organizations, giving them an unfair advantage at the expense of other more prudent institutions. It also acts as a subsidy, which favors domestic institutions over foreign rivals. Bailouts increase moral hazard by rewarding risky and reckless lending practices. And they are often the result of crony capitalism due to the power of the financial services lobby. There are many other problems with bailouts. All around, bailouts are a poor solution.

So what we have here is a case of crony capitalism and kleptocracy, plain and simple – whether by design or not is immaterial. And the American people are on to this. That is why people are resistant to other changes this Administration has put forth.

Don’t let the media’s spin fool you: Washington insiders are on to this too. Politicians in Congress realize that Obama’s bailouts have cost him political capital and they are challenging his policy agenda as a result. This is why the health care bill, which Obama wanted passed before the summer recess, may not see the light of day before year’s end.

Are we home safe?

I would advise the Obama Administration not to run any victory laps about having slayed the beast. The lingering effects of crisis are still there. The Fed’s liquidity is still liquid. Impaired assets are still impaired. And zombie banks are still zombies. As I indicated in my depression piece:

In reality, the problems of high debt levels in the private sector and an undercapitalized financial system are still lurking, waiting for the government to withdraw its economic support to become realized.

Since I covered this ground in that article, I will leave you to read my further thoughts there. What I want to turn to now is the ‘why.’

The Cheney-Rumsfeld replay

Now, I am not writing off Barack Obama’s presidency. I do worry he still could see a recessionary relapse which would cause him to seem more Herbert Hoover than Franklin Roosevelt. But, despite his Nobel Prize, it is much to early to know what his legacy will be.

Nonetheless, I believe he has wasted a lot of political capital and this will make ushering through a meaningful legislative agenda very difficult.

Why did Obama throw it all away?

Here’s my answer: I call it the Cheney-Rumsfeld replay.

When historians look back at the Bush 42 presidency, it will be defined by 9/11 and the wars in Iraq and Afghanistan. While George W. Bush was politically pre-disposed to the Neo-con world view, it was really advice from Dick Cheney and Don Rumsfeld which made Afghanistan and Iraq possible. George W. Bush was famously not well-versed in foreign affairs, having almost never travelled abroad. He was completely dependent on Dick Cheney and Donald Rumsfeld to make foreign policy (although he could have listened more to Colin Powell, his actual Secretary of State; again it goes to predisposition).

So, I see George W. Bush’s presidency as having been defined by foreign policy and the War on Terror and, by extension, on Rumsfeld and Cheney.

Fast-forward to Barack Obama’s presidency and you have an almost identical situation, this time with the economy instead of foreign policy and Tim Geithner and Larry Summers instead of Donald Rumsfeld and Dick Cheney.

But, as with George W. Bush, it goes to pre-disposition. Paul Volcker was a critical member of the Obama 2008 campaign. He also was a key member of Obama’s economic policy team. But, he has been speaking a very discordant message that is not in sync with team Obama. So, as with Bush and his marginalization of Powell, one has to believe Barack Obama has chosen to side with Geithner and Summers over Volcker.

The obvious conclusion, therefore, is that Barack Obama shares the blinkered and captured view of his policy makers and that this is why he has decided to go down this chosen path. And when it comes to Obama’s other ‘change’ decisions on the Guantanamo closure, torture, rendition, state secrets, and health care, the same logic also applies.

Is this change we can believe in? I will leave that for you to decide.

Topics: Banana republic, Banking industry, Guest Post, Regulations and regulators


• Paloma Vita:

November 6, 2009 at 3:21 pm
I really like your article but I wonder about one thing. I thought the bank bailout deal was brokered before Obama took office and that the previous administration put everything in place and simply left it to Obama to implement. Which means he was faced with a fait-accompli. I understood that the stimulus package was his initiative, not the bailouts. Maybe I am confused and would appreciate a clarification.

Kind regards,

Paloma Vita

PS. You have a typo at the beginning of the post. It reads: “…its efforts to save the BAKING industry were…” when it should read “… its efforts to save the BANKING industry were…”

• Edward Harrison:
November 6, 2009 at 3:27 pm
The Obama Administration orchestrated a number of bailouts post-Jan 20: Bank of America and Citigroup, in particular but also GMAC. So their policy is an explicit continuation of the previous administration’s rather than a case of legacy bailouts.

Thanks for pointing out the typo, Paloma. I have fixed it.

• Clay Desjardine:
November 6, 2009 at 3:24 pm
You have absolutely nailed it. And your analogy of Geitner/Summers to Cheney/Rumsfeld makes complete sense. People really need to pay attention to what is happening. The country’s future is being sold out for the benefit of some powerful insiders who are intellectually locked in a world of power plays and corruption.
• yankees:
November 6, 2009 at 3:27 pm
“Is this change we can believe in? I will leave that for you to decide.”

ooh, thanks for the inheritance! i’ve never seen that much choice in all my life!

• john:
November 6, 2009 at 3:36 pm
Change we can believe in has boiled down to this: if you are not already inside the Washington/Wall Street bubble you will soon be broke and unemployed. The bright side of this is that it will free up a lot of formerly productive people to focus on our blighted politics. Obama has offered up for many who have not previously wanted it and probably don’t want it now a career in public service! That’s the way the ball bounces.
• Lavrenti Beria:
November 6, 2009 at 3:47 pm
“Why did Obama throw it all away?”

Here’s my answer. I call it “Obama with ‘For Sale’ sign”.

While I’m not in sympathy with everything in his piece, here’s a decent summary of “change you can believe in” from David Michael Green at CounterPunch today:

• carol:
November 6, 2009 at 6:40 pm
““Why did Obama throw it all away?”
Here’s my answer. I call it “Obama with ‘For Sale’ sign”.”

???? Is that based on anything concrete?

Isn’t it that Obama, very intelligent, but versed in Constitutional Law, really lacked a broad and deep understanding of financial complexities? Had he ever heard of, let alone understood, CDS, other derivatives, global financial connections, overleverage, implications for pension funds, and on and on?
Unfortunately for all of us, he chose to rely on the ‘experts’ instead of on fresh picks with the right, non-captive, diagnosis. And that remains an amazing choice by someone elected on a mantra of hope and change.

◦ Lavrenti Beria:
November 6, 2009 at 8:09 pm
“???? Is that based on anything concrete?”

My dear, carol, there just isn’t anything any more concrete than the sizeable contributions this bird received from financial and other lobbying interests during the campaign. They have helped to assure his receipt of a six figure salary, a wonderful home in the nation’s capitol for his wife and kids and support his self-deception that doing a fair-to-middling Martin Luther King impersonation when giving public speeches amounts to being a great president. And if you’re looking for evidence of the presence of the “For Sale” on his back, look no further than his nauseatingly obsequeous presentation to AIPAC in June of 2008. He may as well have been wearing short shorts, an uptilt bra and standing on a street corner with his John, David Axelpimp. It was outrageous. See for yourself.

So no, it isn’t that “Obama, very intelligent, but versed in Constitutional Law, really lacked a broad and deep understanding of financial complexities.” He knew of only one “financial complexity” that needed understanding: His own. And that one he’s understood both all-too-well and very much at our expense.

■ ndk:
November 6, 2009 at 11:23 pm
And if you’re looking for evidence of the presence of the “For Sale” on his back, look no further than his nauseatingly obsequeous presentation to AIPAC in June of 2008. He may as well have been wearing short shorts, an uptilt bra and standing on a street corner with his John, David Axelpimp. It was outrageous. See for yourself.

Hear, hear — and every policy move he’s made since backing down on settlements has turned this even more obvious. Just when you thought you voted out the neocons, they’re baaaaaa-aaack…

• bobh:
November 6, 2009 at 4:05 pm
I just left the comment below on your earlier post on this subject yesterday, in answer to a comment from Mickey from Akron, who wondered whether it mattered what party the president comes from. My comment addresses your points here as well. I try to give Obama the benefit of the doubt, as possibly just being political, but I think your take is closer to what I really believe. The main point about Obama, and the thing that troubled me about him during the primaries, was that he doesn’t seem to have an ideology. This helped him get elected, but will turn out to be his fatal flaw:


‘So, ultimately, it doesn’t matter whether Democrats or Republicans control the Executive Branch, right?

I’m a Democrat, and watching Barack Obama inherit this mess and take a pass on trying to “change” the scary trajectory of 21st Century American capitalism was painful for me because he was actually in a historical and political position to try to pull off the difficult set of moves that this would entail.

I’m not sure if Obama weighed the politics of the situation and decided his best chance at getting re-elected in 2012 was to try to get another bubble started so he could kick the can down the road, or whether he actually believed (and still believes) he was hiring, in Summers, Rubin, et. al., the best and brightest minds from Cambridge, to tell him how to save the world by bailing out insolvent banks, dead car companies, etc. Either way, I think he made a mistake. When this bubble bursts and another chance comes around for someone else to try to clean up the mess, whoever is in office will be starting from a lower point with less national wealth to work with. I still think that person will need to come from the social-democratic, left-of-center side of things, but I don’t see anyone in the Democratic Party who seems up to it. I wouldn’t have bet on FDR either, however, so I will wait and see if a leader appears. Sadly, I am mostly thinking about what and how drastic my personal strategies will need to be to get my own family through the coming decades. This is hard for Democrats.

• Mickey Akron,Ohio:
November 6, 2009 at 8:29 pm

I can only echo what Stelios Theoharidis has stated. Obama’s hands were tied by Paulson and TARP. From that moment on there were only two options and nationalization wasn’t one of them. It simply wasn’t viable – politically or economically. Already deemed a leftist/socialist by the reactionary right-wing – not all Republicans – outright nationalization would have only confirmed this label. Moreover, as Ed commented on yesterday, this most recent grab for power by the Executive Branch would have been magnified quantitatively and signaled a qualitative change, one which would have antagonized economic elites across the board and wiped out shareholders in the process. In Western Europe where there is sufficient institutional gravitas and historical precedent for nationalization. Neither condition exists in this country. Paulson would have been able to nationalize Lehman Bros easier than any Democrat. It’s similar to why only Richard Nixon could open the door to China. A Democrat would have been excoriated for selling the country out to the Commies! 40 years on and they own us anyways! Who was it that sold US out?

But my point is that there are structural constraints within which Obama must work. The rightward gallop of the past 40 years limits how far to the left he can move before some of his own supporters begin to question his policies yet alone the cacophany from the right! Blue Dog Democrats and Southern Democrats are by and large Republicans-in-drag [RID], especially on economic issues, anyways.

Obama is very aware of these constraints and is trying to maneuver as best he can. The strategy of the right is to defeat/obstruct his efforts to right the economy so as to disillusion the electorate in the hopes of defeating the Democrats both in 2010 and 2012. Then the RBTA – right wing bullet train to Auschwitz – will resume where it left off.

When I voted for Mr. Obama I had no illusions about just how much change he could bring about in 4 years, particularly once TARP had been enacted. The latter was a stroke of genius as it effectively tied his hands… But at least the RBTA has been slowed down. For how long is anyone’s guess. But one lasting consequence of the SUCCESS of supply-side, trickle-down socioeconomic policies over the past 30 years or so has been the creation of the American working class. For better or worse, CLASS is now the dominant fault line in American politics… It will be interesting to see how this plays out as the Democrats are not the party of this working class. Don’t kid yourself.

• Fu:
November 6, 2009 at 4:18 pm
Nationalization. Seize the assets of that institution and nationalize it (like Northern Rock, AIG, or Fannie Mae

Say what, Edward? I don’t know the status of Northern Rock, but AIG and Fannie Mae definitely have not been nationalized. Their assets have not been seized… quite the opposite… they have been gifted assets (money) of the US taxpayer.

• Edward Harrison:
November 6, 2009 at 4:21 pm
I wrote the quote in February. At the time I expected AIG to be dismantled and sold. Your depiction is a more accurate representation of what really occurred.
• Call me naive:
November 6, 2009 at 4:22 pm
Edward, thanks for posts. I have been reading them, along with NC, and a whole host of other Financial Blogs for nearly 2 years now. And while I came into these readings financially literate and economically educated (along with employed), I have nonetheless learned a whole lot more.

I have a number of questions but I’ll limit them to two for now…

1) When/Where/How can we change all this? I'm not talking about letting the existing plans play out, nor am I speaking of completely going against everything the Admin and TPTB suggest, but actually course correction with sensible, logical, holistic changes? Allowing Banks to function normally, business to hire, and Investment companies failing. Call me naive (or more literate) but when I was employed as an Investment advisor for bank and brokerage firms, when speaking to clients, if it wasn’t understood that an INVESTMENT could lose money, well then, I made that clear. When you allow firms (in any field) fail someone comes in and builds a better business (generally) in the same field. And get this, those new companies hired people that lost their jobs from their previous employers reckless behavior. Novel concept.

2) Why has this, along with other issues (energy, environment, auto industry, financing, jobs, etc. etc.,) not been looked from a WIDE ANGLE LENS with a HOLISTIC solution. Why bail out auto makers (but only after they offer a plan (banks no such luck)) and set some ridiculous 35mpg target 7-10 yrs (forgot the number) out? Why try for some cap-n-trade idea with no bidding which will only line the banks pockets? Why just bail out the investment banks, and use some QE to blow another bubble, while implicitly pushing savers into more risky investments and offer then nothing for actual savings (unless you consider 20 bps as something worthwhile)? Why is every answer a tax cut? Why is everything suggesting taxes berated? etc. etc. etc.

– Again, call me naive, but wouldn’t/couldn’t/shouldn’t some thought to a holistic solution be offered along with some GENUINE discussion. Why not come to a solution where we bail out the auto’s to move to a more energy friendly (ie alternative energy) vehicle output. Separate the commercial banks (doesn’t need to be a complete return to Glass-Steagall,) to secure the peoples savings. Assist & force the Investment banks to clean up their acts. Give them a new industry to invest & loan to. Give private investors/small businesses an opportunity to build out the needed fueling systems (another area where banks can loan to.) Get people back to work in modern transportation systems. Force all banks to modify mortgages, but don’t artificially prop up the housing market. Reduce our dependency to foreign oil. And yes, raise taxes on some explicitly, and on all implicitly with a gas tax. Use some of that money to fund these programs and the rest to pay down the debt. If I were to run up a debt with a reduction on income that our government is pursuing, everyone would say I was insane. Its way past the time to say the same for OUR government.

Slightly more than 2 question, but I’ve been holding all this in for a long time. Frankly, when this crisis started to erupt and Obama was looking like an eventual winner, part of me thought that Obama was the man that might actually do something like this. While not the exact idea I offer, but something holistic. Something that truly began to turn the ship in a new direction. Yes, it would taken some time, but this ad hoc behavior certainly hasn’t achieve much in these last 18-24 months.

And I get your capture argument, and the “listening to wrong people” argument, but I can’t help to think that Obama recognizes this isn’t working and he is wasting his political capital. I also remember Obama apologizing for something (can’t remember what specifically) earlier in his presidency, so he has the ability to reevaluate and course correct.

Lastly, I do hope you respond (and Yves if you’d care to offer a reply, I’d love to hear what you think on this or any Holistic solution,) but I am tired of listening the nonsense of the MSM that I know to be wrong thinking or worse lies, and I’m tired of reading about all the errors and ridiculous policy decisions, and all the ad hoc solutions they trot out. At this point I’m much more interested in hearing/reading/discussing solutions and when/where/how we can actually get change.

thanks for your patience in reading this (if you did) :-/

• Call me naive:
November 6, 2009 at 4:37 pm
Failed to point out (but I hope you understood) that my point boils down to putting money behind industries and people, not banks and investment banks. Support new & old industries, nurture them, and allow them to grow, but at the same time force the banks to smarten up and to ensure that they get the concept of ‘you reap what you sow.’ I am a capitalist, so I won’t suggest they can’t make money or that they shouldn’t make/pay themselves too much, but as a capitalist, they need to take the bitter pill when they make unwise decisions. They’ve forgotten that.

It ain’t ment to be this hard. Get people jobs, employed people make money, money pays the bills, whatevers left can be saved and/or spent. wash, rinse, repeat.

◦ john:

November 6, 2009 at 4:51 pm
The sausage factory known as Washington is only capable of hearing extremely well funded ideas, no matter how stupid or counterproductive they turn out to be. Like you I hoped Obama understood this and would be different but it is a cultural problem as vast as the Federal Bureaucracy and I doubt any mortal can at this point resist it on their own.

With the enormous vistas of free time this stellar arrangement appears to be opening up in my present and future I’ve been toying with “GOOOH” a nutty Texas libertarian idea for “non-partisan” party whose goal is to obligate legislators to legislate for their voters rather than donors while kicking out both parties in total in 2010. Quixotic but hopeful, and something to actually do.

• eric:
November 6, 2009 at 4:25 pm
Where does the buck stop? At the desk in the Oval Office.

As Mr. Harrison points out, much of TARP remained to be administered under Obama, not Bush. The “financial reform” that has been proposed by this White House would appear to concentrate the power of regulation in even fewer hands, and turn To Big To Fail into To Bigger To Fail. The fantasy “stress tests” were conducted under Obama.

Obama is up to his neck in whatever is being done now. He owns how the bailouts are conducted, extended, administrated, and watchdogged. He owns the continued attempts to reflate the housing bubble to push TBTF banks back in the black, to the detriment of everyone who wants to buy a new home, but cannot afford the still-high bubble prices. They cannot afford any home at all — without jobs.

He owns the deficits which are driving the currency south and instigating commodities inflation. And the proposed mandates and tax increases that will stifle future business growth.

When history is written by persons several generations down the road, who have some distance from this fiasco, with no connection to today’s Democratic and Republican Parties, which by then will hopefully be extinct, it will be observed that the “H” in Barack H. Obama stands not for “Hussein” but “Hoover.”

• But What do I Know?:
November 6, 2009 at 4:35 pm
This is right on–great comparison between Cheney/Rumsfeld and Summers/Rubin.

I many ways I think Obama has governed like Robert Redford’s character in the Candidate would have–the one that turned to his advisor/wise man after winning the campaign and said “What do I do now?”

• KidHorn:
November 6, 2009 at 4:37 pm
I wanted Obama to beat McCain. I thought the pubs had made such a mess of things, we had to change course.

My right wing family members tried to convince me he had no agenda and no experience. They said he was all show and if you listen to what he says, it’s all a bunch of nothing. I ignored them thinking they are always anti liberal, so they would say this no matter what.

Now, after 10 months or so, I have to think maybe they were right. It seems like Obama’s biggest fault is he’s a lot like dubya. He’s not for change. Sure, he talks about global warming, carbon tax and comprehensive health care, but nothing has really been done or has changed. Maybe McCain would have handled things better.

I think you hit the nail on the head about the financial crisis being illiquid vs insolvent. I remember when the crisis was unfolding and the banks were complaining that their debt was being traded at unrealistically low prices. Here we are a year later and the prices haven’t gone up. I think when the prices have stayed low for this long, you can’t call it a panic any more. The prices are actually what the assets are worth.

• Lavrenti Beria:
November 6, 2009 at 6:18 pm
There were other alternatives beside the Regime candidates in the last election, you know, although they labored under the typical oppression meted-out to third party and independent candidates by the election management apparatus. So it’s not as though you had to consider McCain the only alternative to this cretin. One perhaps better choice would have been to boycott the election, to sit it out – something I’ve done since 1992 – but that requires sufficient maturity to have grown past the illusion that elections in this country mean anything. But what ought to be clear to you in no uncertain terms by this point is that you’re in a one party state where one of its factions simply serves to funnel public outrage into a black hole. And the grasp of this vile octopus just gets tighter and tighter year after year. Look at what they just did in Congress to the UN’s Goldstone report on war crimes during the Israeli aggression against Gaza last January. These maggots are enough to turn your stomach.
• Anonymous:
November 6, 2009 at 4:59 pm
Ed, two thoughts.

1. That the Bush and Obama administrations call this a liquidity crisis rather than a solvency crisis does not mean they actually believe it. It just may be the words they choose, so as to avoid scaring everyone. The truth matters and they should be willing to be blunt, but policy makers certainly tend not to me. I’m not saying we should let them off the hook, but only that I’m not persuaded that we should assume they actually believe the same thing as they are saying. (Call me a cynic if you like.)

2. Likewise, I wonder if Obama truly believes that Geithner and Summers are right and Volcker is wrong, or if, on the other hand, he just finds the G-S advice more do-able politically. Perhaps he thinks he can maximize the chance of passing healthcare if he takes an establishment-friendly tack on finance.

Anyway, great piece. Curious whether you have any comments on 1 and 2.

• The Rage:
November 6, 2009 at 5:02 pm
What did Obama do that made you think he was for some “big” change?

Let me give you a bit of advice: When candidates are elected for their party’s nomination, they usually are selected to where the current plutocracy wants them politically.

The point is, Obama didn’t win elections because of a populist uprising, but because he was one of the boys. Basically between McCain and Obama, they couldn’t lose which is the way they work things. So his policy was similarly enacted. I mean, what did you expect. He pretty much told you all that before the election.

Listen, the financial crisis “for now” is over. It will resurface in coming years but the number is the mystery. 2012? 2015? With all the savings Americans are creating, they will be able to spend enough for a period of time when confidence returns to trigger a recovery, eventually the 00’s the badside of overinflated asset problems will come back as high oil prices, overinflated fiancials, overinflated real estate prices (which will probably still be far less than what we had) but the real economy will keep contracting. Liquidating all the debt at once would have been brutal and threatened the basic American nation itself. So they kicked it down the road, closer to when the “peg” is gone.

The real fact is, the current crisis won’t end to the Asianic peg is gone. That is the “Volcker interest rate surge” comp. The peg is losing more and more value to the US. Eventually, we won’t want it at all. That is when you will get your populist uprising………all manufactured itself. The plutocracy just won’t be ready for it, they will back it. Then the next boom period begins again.

• donna:
November 6, 2009 at 5:12 pm
I think there are a lot of political considerations involved, many of which the public is completely unaware of. Fine and dandy for us to say what needs to be done, but when it comes to pissing off the moneyed class and their powerful interests, Obama may have simply calculated that it was too politically dangerous for him to do so this early in his presidency. My own suspicions are he is very centrist indeed — but what that means is he will move with the true center of American interests. If we want him to make changes, we need to be the opinion generators that will force those changes to happen. Which is EXACTLY what he told us when he was running, and now.

Keep pushing and pulling to get where we need to be.

• donna:
November 6, 2009 at 5:15 pm
In other words, he’s a true leader — leading from behind us and making things work behind the scenes. You want change, let’s demand it from the banks. Move your own money out of the big banks, encourage your friends to as well. Move your businesses out of the big banks as much as possible. Take their money away. The government and the banks will start getting the message, and eventually demand regulation on their own in order to re-establish their reputations. This is how real change works.
• Haigh:
November 6, 2009 at 5:21 pm
Re: Cheney-Rumsfield/Geithner-Summers
Clever analogy but don’t lose sight of the fundamentals.

From the day Obama entered the Senate its been clear that his idea of change is to change big government into bigger government. Faced with the choice of bankruptcy, nationalization, or bailout, the choice most consistent with making big government bigger was bailout. Geithner and Summers are the hand-tools.

In voting for Obama America knew it was voting for bigger government, and now its gotten what it asked for; a package that always includes a weakening economy and a lower standard of living, likely to last a decade.

• Edward Harrison:
November 6, 2009 at 5:30 pm
I’m sorry but that is revisionist rubbish. You may think you’re getting big government with Obama but that is not what the bailouts are about whatsoever. Open your eyes and try to see things objectively instead of using buzzword catch-alls.

The bailouts are about protecting the financial services industry and the people who run it.

◦ Haigh:
November 6, 2009 at 5:40 pm
>The bailouts are about protecting the financial services industry and the people who run it.<

Exactly, the fourth branch of government.

• Froggy:
November 6, 2009 at 5:44 pm
It is simplistic to say 8 years hence that Cheney/Rummy/Halliburton/Blackwater/(insert RW boogeyman here drove an intentionally “Neo-Con” foreign policy for no good reason. In the aftermath of 9/11 (which New Yorkers seem to remember less than the rest of us) we had to fight our enemies abroad in order to preserve the country. That wasn’t an option.

WRT Iraq, Saddam had not only violated 15+ UN Resolutions and had actually gassed Kurds and Iranians, he was acting as if he WAS concealing a WMD program while lining the pockets of the senior reaches of the UN (remember Oil for Food/Kofi Annan, etc?). It turned out that Bush was wrong about two things: 1) WMD and 2) Not introducing a Counter-insurgency strategy in Iraq (or Astan) soon enough. Rumsfeld got bounced for those mistakes.

WRT to TARP, Bush but especially Paulson did that in the midst of not only a quickly evolving economic meltdown, but also a transition to another administration. Bush spent HALF of the TARP only on emergent liquidity in the banking sector as a bandaid until the Messiah could be officially immaculated on Jan 20.

Obama has had nearly a year to react to what happened and yet all he has done is to pass a gigantic pork stimulus bill that has achieved none of its intended goals and to push healthcare while Rome is burning around him. He’s a frickin’ ideologue AND an neophyte. He is captured by the far left.

I have never seen a president outsource policy to Congress the way he has. Effective presidents formulate policy and then solicit support and modification from Congress. He has done nothing on the policy front at all. He is too inexperienced to know what to do so that’s why Geithner/Summers/Pelosi/Reid are running the show.

There is no leadership ability in this man whatsoever. He is an empty, emotionless void that is only concerned with his personal image above all else. This is a truly frightening presidency.

• Edward Harrison:
November 6, 2009 at 5:48 pm

Let’s get this straight. Nowhere have I editorialized the War on Terror. I do have specific thoughts on the issue. However, the point is not to characterize the decision one way or the other – if you read the post you will see this is so. Your comments are misplaced.

The issue is the analogue of Rumsfeld/Cheney in Geithner/Summers and how the Obama Presidency will be defined.

◦ Froggy:
November 6, 2009 at 7:12 pm

“While George W. Bush was politically pre-disposed to the Neo-con world view, it was really advice from Dick Cheney and Don Rumsfeld which made Afghanistan and Iraq possible.”

I’d say you were making some fairly clear editorial comments on the GWOT based on this sentence. Taken at face value your admonitions would cause me to conclude that there was no other nexis for the wars other than advice from Cheney/Rumsfeld. That is a bit hard to swallow especially for a person who fought in the Iraq war like me.

It is quite expedient to make this kind of generalization and a useful literary device, but the facts in evidence placed in the context of the situation and what was known at the time do not bear that out.

It can and will be argued which decisions that were made in the midst of a crisis (9/11 & the meltdown) were wise or not, but let us not forget that they WERE made in a crisis with pressing time constraints and incomplete information. President Obama has not been faced with such constraints and therefore ought not be afforded the slack entitled to a president who was.

Obama has been forced to deal with the consequences of those decisions, but he has had the advantage of time, a fully Democratic Congress, the pick of the world’s greatest talent, and the goodwill of the planet. And yet he has actually managed to take a crisis response in the case of the meltdown and institutionalize to all of our detriment without providing meaningful change.

His problem, aside from a total lack of leadership, is a total misplacement of priorities by ignoring the economic problems that persist from the crisis and now obfuscating key decisions about a war he deemed to be of necessity.

■ Edward Harrison:
November 6, 2009 at 7:21 pm
Read whatever you want into my comments, it doesn’t make it true. When I say:

“While George W. Bush was politically pre-disposed to the Neo-con world view, it was really advice from Dick Cheney and Don Rumsfeld which made Afghanistan and Iraq possible.”

Most people would assume I mean that George Bush was not capable of making the foreign policy decisions on his own given his limited experience. The analogy to Obama-Summers-Geithner being obvious.

Again, you are using my words to make an irrelevant political point.

■ Yves Smith:
November 6, 2009 at 10:23 pm

There is ample evidence that the WMD rationale offered for the Iraq War to the US was largely if not entirely fabricated.

First, the UN weapons inspectors were in Iraq, going through sites in order of priority, and had gotten through a fair number already. Had we let the inspectors do their jobs, we would have known if Saddam had WMD before invading. And when the UN was in, Iraq, like the entire world, was under US satellite surveillance. If he had anything, given the fact that the UN had already examined most of the high priority sites, he would have had to be moving it around on trucks.

Second, even if it had had WMD, Iraq had no delivery capability.

Third, however, the US had already mobilized, it was not going to back down and go through another costly re-mobilization in the fall of 2003, which would have been the right timetable had the weapons inspectors been allowed to complete their task.

Fourth, the argument re Saddam treating his own people badly, while true, is not a cause for invasion. Our stance here is completely expedient. The US has long tolerated similar, if not worse, large scale human rights abuses in our allies and proxies. They also happen to go unreported in the US media.

■ Doug Terpstra:
November 6, 2009 at 11:01 pm
Froggy is clearly inferring things never stated or implied to go off track (and off the rails) on a political rant.

Indeed the WMD lies, the rush to short-circuit meaningful inspections (the Dowing Street Memo) and ever-changing catalog of post-rationalizations for an illegal, aggressive war have been exposed clearly. Even Powell has expressed regret for his unwitting role in that fiasco.

This and Froggy’s insistence on beating a dead horse only exposes another maddening failure of our current charismatic CIC: his decision not to investigate or try war crimes so the whole ugly mess can be aired publically and put to bed before the world. Unless you put perps like Cheney, Rummy, or Thain in cuffs and leg-irons, the crazies will continue their crimes, and their many disciples will never get the message.

• G:

November 6, 2009 at 5:52 pm
In regards to this topic, I think the following is slightly interesting. It purports to be an e-mail correspondence between a Democratic party activist working in investment banking and an unnamed writer (and was initially published in the blog Liberal Rapture). Since the names were redacted, I initially believed that it was a hoax – so I set out to disprove it, but eventually determined that it was a genuine correspondence between this individual and Jim Kunstler (who verified the exchange).

• jake chase:
November 6, 2009 at 6:06 pm
Nice analysis of Obama as big mouth empty suit. Being totally ignorant of finance he had to trust someone and naturally he trusted those whose money had elected him.
The fact that he was more intelligent than Bush (and who isn’t) made a good many intelligent people believe he was more honest. Big mistake. Intelligent folks are careerist too. As for fixing finance, it is hard to fix a swindle when you decide not to punish anybody responsible and make certain none of them loses either prestige or money, and when you compound the crime by enriching them all through the temporary fix which everyone agrees only postpones the problem (and who knows for how long), then you find more than a few otherwise decent people wanting your head on a spike. It is extremely unlikely that the bailout will produce anything but a brief asset bubble, since leverage in OTC derivatives is still at work and all markets are moving in the same direction against the dollar. Maybe next time the guys who made the mess will not be trusted to repair the damage.

November 6, 2009 at 6:11 pm
I was ambivalent on both candidates, but the fact that Paul Volcker was with Obama made me slant that way. Too bad he has been ignored. Great, balanced piece.

• Stelios Theoharidis:
November 6, 2009 at 6:25 pm
Through every single one of his nominations (minus maybe Van Jones) Obama has presented himself to be quite more moderate than he initially represented himself to be. However, I don’t believe Hilary or McCain would have been much different, given the Clinton’s past relations with Summers and Geitner as well as McCain’s relations with Phil Gram, who, by the way, makes them look like altar boys.

Part of the issue of listening to the wrong people is that the wrong people insulate you from others. As you mention, it is well known that Summers and Geitner are insulating Obama from Volker, as Cheney and Rumsfeld previously insulated Bush from Rice and Powell. However, is the tail wagging the dog here or is the dog wagging the tail, I don’t believe you have sufficient evidence presented to make that assessment. Given the current circumstances: war, economic issues, and medicare reform, I believe Obama is overstretched beyond his capacity to make meaningful and informed decisions outside the influence of the cadre of moderates that he selected to support him. And, they were very much selected to appease the individuals that brought him into office, not the public that voted.

It is not simply the Obama Administration that is captured, there is a general capture of the entire beltway and state assemblies. You can see it in the execution of any legislation that has come up in recent history. You should not overestimate the power of the executive versus a generally but not exclusively captured legislative branch. The judicial branch may still be a toss up, that is why you see state and local legal campaigns delivering some results. However, the Supreme Court, will probably continue to make decisions supporting corporate America and the status quo.

It is too easy to drop this on Obama’s lap when it is a manifestation of 20 years of the finance industry, and corporations in general embedding themselves into both academic, political, and popular cultural landscape. Finance is just the tip of the iceberg as far as government capture is concerned. We live in a country where being elected into a position of power means you may have gotten at best 20-25% of eligible voters approval. You become a slave to concentrated interests in the process of getting into public office, and then are confronted with a legion of lobbyists and influence peddlers when you get there.

These issues are structural and entrenched. Believing that a President would stop or even slow down the oncoming locomotive is naive at best. The solutions are really all out there, but almost no one in Washington is listening, and no one will until this pandemic problem of capture is resolved.

• David:
November 6, 2009 at 6:40 pm
Jake “Nice analysis of Obama as big mouth empty suit. Being totally ignorant of finance he had to trust someone and naturally he trusted those whose money had elected ”

Sorry, Obama is doing exactly what he said he would do, “bankrupt the coal companies, Fundementaly change the US, remember to Obama and his chief of staff, this crisis is an opportunity.

• David:
November 6, 2009 at 6:45 pm
In about a one year time frame he may have moved an additional 30% of the GDP into the hands of the goverment.

The man has an agenda, and crisis is his friend, this is classic politics.

• David:
November 6, 2009 at 6:51 pm
The more unemployed, the greater the “need” for goverment protection.

“This and no other is the root from which a tyrant springs; when he first appears he is a protector.” Plato

Yes indeed, classic politics

• mikeVA:
November 6, 2009 at 7:29 pm
We baked these policies in the summer of —-> 2007!

• Michael Fiorillo:
November 6, 2009 at 7:36 pm
Years ago some very Big Men glanced in Obama’s direction and nodded. Since then he has had a magical mystery tour of Harvard Law – where, according to classmates, he could be dependably relied upon to make the most eloquent case for the most conventional position – the University of Chicago (!!!) and brief apprenticeships in public office. A brief glance at his campaign contributors – and recall that he refused public financing of his campaign – show it infested with names from finance. Whether his captivity is by choice or compulsory matters not at all; he is captive to the predations and parasitisms of finance capital.

Despite his eloquence and personal attractiveness, he is largely a marketing phenomenon. It’s small wonder that his own people refer to “brand Obama,” and he himself has written about how he is a blank screen that people project their own subjective desires onto.

As a public school teacher, I see him as far more dangerous than McCain, since he is moving aggressively to privatize the public schools in a way that McCain could not have pulled off.

The ultimate test will be to see what he does about Social Security. He campaigned in favor of doing the right thing to shore up its finances: raising the income ceiling on SS withholding taxes. My guess is that political exigencies, or the self interest of his backers, or both, will lead him to try to privatize that as well, in the name of “fiscal responsibility.” it will be the ultimate “Nixon goes to China” trick.

• craazyman:
November 6, 2009 at 7:53 pm
Good stuff Ed. Very nice summary and overall point of view.
I’m appalled. Really, the depths of cynicism of all this are sort of emotionally traumatizing to my sensitive psyche and anything I can say is redundant to all the articulate and impassioned thoughts here and elsewhere including Lavrenti Beria’s link, which I read. When I saw the Obama Joker image I didn’t think socialist at all but that the jokes on us for electing this “messiah” and believing through a form of poetic faith that we weren’t really watching a movie. But that facial expression on the poster said it all. I’m pretty a-political really, I’m lazy and self-centered and I’d rather drink a beer and spout my nonsense than really do anything. But am astonished the Big O Administration doesn’t see the bankster looting and bonuses with the same moral lens as they’d no doubt see compromising with Jim Crow or bailing out some slave industry — or else the cotton wouldn’t get picked and we can’t have that, can we, And while we’re at it, let’s keep the Lords of the Manors in their plantations because we need their talent and the southern senators won’t go for the rough treatment, like having the Lords move out of the house. And that’s not just due to Obama’s background, but to the national zeitgeist, which in that case is dead-on-appropriate. And Yeah, yeah, that’s a hysterical analogy, I admit. But the willingnes and ability of repulsively familiar technocrats to work the back channel chessboard on this one misses the hunger for moral clarity that got the Big O elected in the first place. Suffering for a cause is noble and inspiring and people would rally to it, but suffering for banker looting under the abstract notion that it’s in “your best interest or the system will crash” presumes so many lacunae where responses might have been mounted as to be a holey mess. Chump Nation, we are. Chump change we’ve gotten. This isn’t going to go well politically for the messiah. By their fruits, ye shall know them. Messiahs are tough acts to live up to. Yes, there’s still time and he might find his legs yet. But as a lifelong bleeding heart liberal-type — when I pay attention anyway to politics, which I try not to. I’d rather watch football and read about weird stuff like multi-dimensional life forms and transitory apparitions, like Bigfoot — I have to say, when the Republicans took New Jersey and booted that Goldman Sachs dude and Virginia, my home state — I said, “Thank God.” And my joy was a shocker to me. At this point, I’d be for a Teddy Roosevelt/Eliot Spitzer ticket. Yeah I know TR is dead, but our current crop of politicoes is so lifeless it could only be an improvement to have even TR’s corpse back in charge to bust the trusts, and make a few more National Parks. And Mr. Spitzer would know how to treat the financial shills, probably. I couldn’t care less about his interludes in Washington. I thought that girl was pretty hot, but I wouldn’t want a long-term relationship with her either, so making it a business deal keeps it all clean and above board. Better that than the banksters and their sleaze, in my book. But I couldn’t afford her, so it’s all a moot point. I can’t afford the banksters either. – Monologus Rex
• gordon:
November 6, 2009 at 8:15 pm
Teddy Roosevelt’s corpse might cause some difficulties, particularly on TV appearances. Interviews might be a bit slow and lack punch. Even now, the smell could be a problem.

A little while ago on another blog, in response to a commenter whose views were much like yours, I offered myself as Podesta for the US, for maybe a couple of years of knocking heads together. My qualifications include still being alive, being a white male, 61 years old, a widower, literate and numerate, having an idea of there really being a thing called the public interest, retired, and Australian. After my little term I would be very happy to return to suburban retirement on the other side of the Pacific. All I would ask would be a modest salary and all found, and a sufficient armed guard. My objective would be good government and the opportunity to get enough cash together to help my son buy a house. That’s it.

A modest offer, but maybe better than the defunct Mr Roosevelt.

• gordon:
November 6, 2009 at 7:58 pm
There is also the sheer career dynamic of the US Presidency. It’s only 8 years at the most. What then? Retirement? Pres. Obama no doubt has a career plan which extends more than 8 years into the future. Unless a real antique is elected, who is obviously at the end of his working life, this will always be a factor in the behaviour of US Presidents.
• DownSouth:
November 6, 2009 at 8:28 pm
For this is a general rule that never fails: a prince who is not wise himself cannot be wisely counseled… An unwise prince, having to consider the advice of several counselors, would never receive concordant opinions, and he would not be able to reconcile them on his own… Therefore I conclude that good advice, no matter where it comes from, ultimately derives from the prudence of the prince, and the prudence of the prince does not derive from good advice.
–Niccolo Machiavelli, The Prince

PBS produced a video concerning the presidency of Lyndon Johnson. Johnson was certainly no saint, but just compare the following episode to how Obama has conducted himself in office. As far as a leader is concerned, there is only one word to describe Obama: Pathetic. PBS also has a program on Franklin Delano Roosevelt which is replete with examples of great leadership. But Obama pales in comparison to some ambiguous character like LBJ, much less someone truly great like FDR:

Rep. James Pickle: But he had enough sensitivity that he knew that all hell was going to break loose if we didn’t do something about it.

Narrator: Civil rights workers laid siege to a segregated society. There were sit-ins at lunch counters, on trains and buses, in hotels and theaters, forcing Johnson to act. When some of Johnson’s aides advised him not to lay the prestige of the presidency on the line, he responded, “What’s it for if it’s not to be laid on the line?”

Roger Wilkins: He said over and over and over again in those days, “I’m going to be the president who finishes what Lincoln began.” He said it over and over again. Well, it was great rhetoric, but you also knew that it was a great reading of history, that if, in fact, he could accomplish that, he’d have belonged up there on Mount Rushmore.

Narrator: A bill to prohibit the segregation of blacks and whites in public facilities had been put before Congress by John Kennedy, but it was stalled. Johnson determined to act.

President Johnson: This bill is going to pass if it takes us all summer and this bill is going to be signed and enacted into law because justice and morality demand it.

Roger Wilkins: All of a sudden, there was a power and a force behind this kind of legislation that we hadn’t seen in the Kennedy time and with that, my view about him began to change.

Narrator: The full force of the Johnson treatment, perfected in the Senate, now became a weapon in the arsenal of the presidency.

James Farmer: He was on the phone with Republican senators and with Southern Democrats and he was bargaining with them. He was telling them about some bridge that they wanted back home or some dam that they wanted. And he would help them with that if they would help him with this and give him this thing that he wanted, that the whole nation wanted and the nation had to have. And he was also reminding them in not-too-subtle tones that if they didn’t support him, he would have ways of getting back at them.
Jack Valenti, Special Assistant to the President: So in those days, we played hardball. My catalogue included a number of Southern congressmen where you had to say — they’d say, “Well now, Jack, there’s no way I can vote for that,” and I’d say, “Well, Mr. Congressman, I know you’ve got this, this and this that you want and I don’t think we’re prepared to deal with you on that unless you’re going to be responding to some of the entreaties from the president.” We let them know that for every negative vote, there would be a price to pay.

Rep. James Pickle: And he kept saying to his Southern friends, “If I can advocate it, as president, you ought to be able to vote for it in your constituency. This may be the best chance we’ll ever have. I think we got to change our way of doing things.” It’s not like a Yankee from New York we got to do this. This was a Southerner saying it ought to be done and that helped. It didn’t help a whole lot because the Southern boys, they knew that they again were going to catch heck for it.

Roger Wilkins: That’s what he got from the Southerners , that, “You’re killing us by loving up the niggers. You’re ripping the party apart here. You’re hurting us.” And Johnson’s answer was, “This is what we’ve got to do and this is what I’m going to do and this is what the Democratic Party is supposed to do.”

Narrator: Once again, the leader of the Southern Democrats, his old friend and mentor, Richard Russell, stood in his way.

Senator Richard Russell: But we are not yet ready to surrender in our opposition to this bill which we feel is a perversion of the American way of life.

Jack Valenti: And he said to Dick Russell, “I want this Civil Rights bill passed and you nor no one else is going to stand in my way.” And I remember Richard Russell said to him, he said, “Well, Mr. President, you may do it, but I’ll tell you what — it’s going to cost you the South and it will cost you an election.”

Narrator: Southern senators prepared to filibuster — to prevent the bill from ever coming to a vote by talking it to death — but Johnson was not to be denied.

Joseph Rauh, Jr.: What the president did was to say, “They can filibuster till hell freezes over, I’m not going to put anything else on that floor,” so the filibuster couldn’t win. And that was Johnson’s great contribution to the Civil Rights bill.

Narrator: The debate paralyzed the Senate for 83 days. It was the longest filibuster in Senate history. And then, the Senate voted to stop the talking. The bill passed. That same evening, at two in the morning, Johnson reached Congressman Jake Pickle, one of only six Southerners to vote in its favor.

Rep. James Pickle: And he says, “No, Jake,” he says, “this is your president.” He said, “I know it’s late and I know where you’ve been.” I said, “Where have I been?” He said, “You’ve been out having a few drinks and trying to forget that vote you cast. You voted for the Civil Rights and you’re trying to forget it.” And I said, “I sure am.” And he said, “Cause you’re going to catch heck, aren’t you?” And I says, “Yes, I’m afraid I will.” He said, “Well, let me tell you — the reason I keep calling is I want you to know that your president is extremely proud of you.” He said, “I had chances to do something like one year as a congressman,” he said, “and I didn’t.” And he said, “I’ve always regretted.” He said, “You did something I thought was basically right and I didn’t want this night to go by until I called on you personally to tell you how proud I am of you.” He said, “I am. Now,” he said, “go to sleep.” Well, of course, I couldn’t — between the vote and that call, it was hard to go to sleep then.

• Doug Terpstra:
November 6, 2009 at 10:23 pm
Thanks, DownSouth. An 83-day honest-to-God, genuine filibuster. Why can’t we have one of those today? It would be so instructive to have wall-to-wall C-Span coverage of that. Why is it the lazy bums in DC get all wobbly and bend over whenever anybody says the word?

Johnson said later that he knew he had split the Democrats and Dixiecrats over Civil Rights and lost the South to Republicans for a generation. He was right, but that generation has finally passed. After LBJ’s sacrifice, if Obama does not now seize his own political moment standing on Johnson’s shoulders, it will be a terrible, historic tragedy.

• Usual Suspect:
November 6, 2009 at 9:22 pm
Great analogy Mr. Harrison. It can be applied to many of our current crisis and reminded me of a post I had read by Arthur Silber.

“Change the terminology as required, shift the focus from foreign to domestic intervention, recognize that the same elites that created this crisis are now instructing us all as to how it should be fixed, and you’re home free.”

• David:
November 6, 2009 at 9:55 pm
Great story about Johnson, civil rights we can be proud of; sadly the welfare state that ensued, directly leading to the destruction of the black family, as well as causing Black crime and incarceration to soar was a disaster, and only made worse by those who pandered to the “we are owed” mentality.

"The Berlin Wall Had to Fall, But Today's World is No Fairer"

"Gorbachev delivered Russia into the hands of a kleptocracy. Now, the U.S. is in the hands of a kleptocracy, as well."

Mikhail Gorbachev says the crisis "was needed to reveal the organic defects of the present model of western development that was imposed on the rest of the world":

The Berlin wall had to fall, but today's world is no fairer, by Mikhail Gorbachev, Comment is Free: Twenty years have passed since the fall of the Berlin wall...

Alas, over the last few decades, the world has not become a fairer place: disparities between the rich and the poor either remained or increased, not only between the north and the developing south but also within developed countries themselves. The social problems in Russia, as in other post-communist countries, are proof that simply abandoning the flawed model of a centralized economy and bureaucratic planning is not enough, and guarantees neither a country's global competitiveness nor respect for the principles of social justice or a dignified standard of living for the population. ...

The real achievement we can celebrate is the fact that the 20th century marked the end of totalitarian ideologies, in particular those that were based on utopian beliefs.

Yet new ideologies are quickly replacing the old ones, both in the east and the west. Many now forget that the fall of the Berlin wall was not the cause of global changes but to a great extent the consequence of deep, popular reform movements that started in the east, and the Soviet Union in particular. After decades of the Bolshevik experiment and the realization that this had led Soviet society down a historical blind alley, a strong impulse for democratic reform evolved in the form of Soviet perestroika, which was also available to the countries of eastern Europe.

But it was soon very clear that western capitalism, too, deprived of its old adversary and imagining itself the undisputed victor and incarnation of global progress, is at risk of leading western society and the rest of the world down another historical blind alley.

Today's global economic crisis was needed to reveal the organic defects of the present model of western development that was imposed on the rest of the world as the only one possible; it also revealed that not only bureaucratic socialism but also ultra-liberal capitalism are in need of profound democratic reform – their own kind of perestroika.

Today, as we sit among the ruins of the old order, we can think of ourselves as active participants in the process of creating a new world. Many truths and postulates once considered indisputable, in both the east and the west, have ceased to be so, including the blind faith in the all-powerful market and, above all, its democratic nature. There was an ingrained belief that the western model of democracy could be spread mechanically to other societies with different historical experience and cultural traditions. In the present situation, even a concept like social progress, which seems to be shared by everyone, needs to be defined, and examined, more precisely.

I don't agree with everything he says (the full essay is much longer), but I think it is true that the market-based development models based upon strict ideological versions of the Washington consensus that were implemented in various places did not work out very well, and this undermined faith in these models. In addition, the economic crisis, along with the success China and other countries have had with different development models, has further undermined the faith that once existed in traditional market-based development strategies.

Bruce Wilder:

Wikipedia reports,

"The term Washington Consensus was initially coined in 1989 by John Williamson to describe a set of ten specific economic policy prescriptions that he considered should constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington, DC-based institutions such as the International Monetary Fund (IMF), World Bank, and the US Treasury Department.

"The consensus included ten broad sets of recommendations:

* Fiscal policy discipline;
* Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;
* Tax reform – broadening the tax base and adopting moderate marginal tax rates;
* Interest rates that are market determined and positive (but moderate) in real terms;
* Competitive exchange rates;
* Trade liberalization – liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;
* Liberalization of inward foreign direct investment;
* Privatization of state enterprises;
* Deregulation – abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudent oversight of financial institutions; and,
* Legal security for property rights.

Bruce Wilder:

I'm not sure why we have to turn to airy fairy philosophy.

The problem with the Washington Consensus was that it was always a self-serving plea from multinational corporations, very thinly disguised as paternalistic do-goodism, served up with all the solemn authority serious people can muster.

The "economics" behind the "Washington Consensus" is nothing more than drapery -- "market fundamentalism" a design knock-off in a much cheaper fabric.


Bingo. It never ceases to amaze me how over-confident are the players that make economic policy. Maybe it's a science in some of the universities , but it's an ideology in the real world.

Bruce Wilder:

jr: "Maybe it's a science in some of the universities , but it's an ideology in the real world."

paine: "i savour its gremlin like con
imagining bred delong back when
rolling for it"

When I was still in college (just before the extinction of the mastodons), I remember a friend from high school, studying at the same university to be an architect, came to me, and asked if I thought he should take a year course in economics, or a year of accounting. He could do only one.

I said, without hesitation: "accounting".

Accounting is a way of thinking about bookkeeping, I said, and economics is a way of thinking about the political economy. You'd think the latter would be so vastly more important that it would be vital. And, economics is important, but, like all complex bodies of thinking and knowledge, it has to be distilled, to be taught.

Accounting is distilled into, and taught as a skill -- you learn it by learning how to make entries in an (imaginary, highly abstract) ledger. In that way, it is a bit like learning to type. And, like typing, you will use it, as a skill, over and over in your in your business life. Fail to learn it now, in the classroom, and you will be doing the equivalent of two-fingered, hunting-and-pecking every time you have to read a financial statement or manage to a budget.

Economics is taught as a morality play. All the important bits are the paradoxes, which show how the economy departs from the fairy tale framework, but you will forget those bits very fast, and you will be left only with the morality play, which is nonsense that you already know from nursery stories.

It was a moment of precocious insight, of which I remain proud. (And, I didn't even have to dress up the story that much.)

It is no accident that the founder of modern economics, Adam Smith, occupied the Chair of Moral Philosophy at Glasgow, and wrote a book, titled, "The Theory of Moral Sentiments". The subsequent application of analytic geometry and calculus to the problems of economics cannot disguise its origins as a theory of moral choice.

The "con" in the Washington Consensus is its appeal to pious earnestness (which is why Brad DeLong would fall for it): those do-as-I-say, not-as-I-do, paternalistic imperatives to virtue ("fiscal policy discipline"; "Redirection of public spending from subsidies ('especially indiscriminate subsidies') [especially!!!] toward broad-based provision of key pro-growth, pro-poor services like primary education"; "legal security for private property") combined with sure knowledge that 90% of the audience doesn't remember much of anything of substance about economics. Economics, as an academic doctrine, is designed to be forgotten in substance.

The more advanced practitioners, in my experience, don't actually remember any more about economics, than their average students of Econ 101. At best, they remember some of the mathematical technique they learned, but, for the substance, what they "remember" is some variation on the morality play framework. And, policy is made by people, with exactly such degenerated understanding. Witness the great many, taken by surprise, by the recent financial meltdown, beginning with Alan Greenspan, confessing to surprise that the Masters of the Universe bore no resemblance to John Galt, after all.

The Nobelist Ronald Coase, who may have coined the term, "transactions costs", wrote of economics, as a theory of choice:

"The preoccupation of economists with the logic of choice . . . has . . . had . . . serious adverse effects on economics, itself. . . . the entities whose decisions economists are engaged in analyzing have not been made the subject of study and in consequence lack any substance. The consumer is not a human being but a consistent set of preferences. The firm [quoting Slater] 'is effectively defined as a cost curve and a demand curve, and the theory is simply the logic of optimal pricing and input combination.' Exchange takes place without any specification of its institutional setting. . . . We have consumers without humanity, firms without organization, and . . . exchange without markets."

Indeed, presented as an abstract theory of choice, the natural entropy of economics is into the simple-minded dictum of "more". Coase, in the same essay from which the above is quoted, concludes, "whatever makes men choose as they do, we must be content with the knowledge that for groups of human beings, in almost all circumstances, a higher (relative) price for anything will lead to a reduction in the amount demanded." Tellingly, Coase is wrong about economic theory in this instance. The analysis of market price, finds that the consequences of a (relative) increase in price must be regarded, a priori, as indeterminant. Analysis just enumerates the possible considerations: income effects, complementarities, substitution, risk, information and signalling, etc. But, Coase is right about economics and is illustrating the truth: economics, lacking the substance of true subject matter knowledge, easily degenerates into simple-minded dicta, even in the hands of its supposedly most sophisticated masters. It's a papier-mâché science in a rain storm.

Bruce Wilder:

Gorbachev delivered Russia into the hands of a kleptocracy. Now, the U.S. is in the hands of a kleptocracy, as well.

Neither kleptocracy feels any constraint of ideology, faces a political opposition organized by ideology or popular interest. Neither faces a threat from an international rival, a response to which might require a degree of social solidarity and cohesion.

The foxes are in the chicken coop, the farmer has died, and Gorbachev is planning a visionary egg-laying.


Bruce Wilder: "Gorbachev delivered Russia into the hands of a kleptocracy"

Not fair: yeltsin did that

Gorby was the merit class simpleton that delivered the russian people inadvertently into the hands of our boy boris

I'm still convinced the so called coup was an intentional farce a cia/kgb joint operation


Bruce Wilder said...

"Gorbachev delivered Russia into the hands of a kleptocracy. Now, the U.S. is in the hands of a kleptocracy, as well."

I believe the Mr. Gorbachev was replaced by a Drunk and then by the former head of the KGB. I'm not sure how Mr. Gorbachev delivered anything, since he was out of power well before the real economic rape began.

Roger said in reply to OrganicGeorge:

One should remember that Gorbachev's end came about from, among other factors, the preservation of the old technology of Chernobyl, and the inability, after that massive accident, to tell the truth about it. In fact, the spirit of lies is carried on by the UN's Atomic energy commission, which likes to minimize the damage done by Chernobyl with cooked Soviet figures.

I think lying about irradiating the skies over Kiev made people lose confidence that perestroika was really a change. On a much lesser level, the disappointment with Obama's odd zigzags towards the right center, and his inability to either punish the old oligarchs on Wall Street or come to grips with the unemployed, homeless, and generally burnt is producing the same sense of disappointed hope. Perhaps I am wrong. I don't see any Chernobyls yet, thought the meltdown of Wall Street and what we have learned about how it was "rescued" has a certain aura of the same massive lying about it.

Bruce Wilder:

Reality Bites: "Of the above, the Washington Consensus was "wrong' only on trade liberalization and liberalization of inward foreign direct investment. . . . In the case of China, the Washington consensus was mostly right on target."

Whoa! I won't even be sarcastic, but that was, simply, not a point of view I actually thought possible, on the facts. (And, I was right.)

It is not what China has done, or failed to do, with regard to what's on the Consensus list, that's critically important, as a marker of China's determination to chart its own course, independent of the advice embodied in the Washington Consensus, or of the "support" of the IMF, World Bank, etc. It is what China did, that is definitely NOT on the Consensus list, which is to finance their own development, including a low-ball renminbi, with massive domestic savings, and to focus in that development on manufacturing -- high-tech, high-capital-intensity, low-labor-intensity manufacturing.

China's policy has involved paying massive tribute to the Corporate Ascendancy, in Japan, the U.S. and Europe. They haven't made anyone among our globalizing business elite mad. But, they kept their own counsel, and their independence. And, their success, like that of Japan before them, makes mockery of the pretensions of Washington's development economists.

Goldilocksisableachblond :

"Mikhail Gorbachev says the crisis "was needed to reveal the organic defects of the present model of western development that was imposed on the rest of the world."

Those defects have been in plain sight for 15 or 20 years , all that was needed was a legitimate economics profession to acknowledge them.

Everyone , right or left , will agree that the current "recovery" is a result of , and dependent on , gov't spending , i.e. new gov't debt. They can plug the numbers into standard economic models and determine , with reasonable accuracy , what growth would have been absent the additional gov't spending. It's also clear that in recent years growth was dependent on consumer debt associated with the housing bubble , i.e. private debt. They could make similar calculations with regard to the effects of private debt growth on GDP growth.

The data on debt and GDP goes back to the 1920s , if not beyond. Any decent economist could recalculate GDP growth for the last 80-90 years , based on some fixed levels of total (public + private) debt.

What would he find ? A dramatic phase change from rapid to slow "real" GDP growth , beginning in the 1970's as implementation of "The Washington Concensus" began.

No need to wait for a crisis to see this , unless you were one of the kleptocrats or their flacks. In that case , the coming fire sale of assets is a perfectly good reason to wait. Then , wash - rinse - repeat , if at all possible.


The fall of "communism" was driven by internal reform movements, but a powerful motivator had been deterioration of the domestic economies, and the resulting impact on the societies. This could be largely explained by elite incompetence and ineffectiveness, but was not independent of global events like the oil shock or Western recessions. The "communist" economies were not coupled with the outside world much, but they were.


Bruce Wilder writes,

"Gorbachev delivered Russia into the hands of a kleptocracy. Now, the U.S. is in the hands of a kleptocracy, as well."

This may explain why Hank Paulson flew to Moscow to dine with Mihail Gorbachev just a few months before the meltdown. Paulie was probably trying to learn a thing or two from Gorby on how to pull off an even bigger heist than his Russian counterparts did several decades back.

Assuming this is so, Goldman Sachs has truly lived up to the name of Government Sachs. And there's certainly no need for fiction when there's reality like this!


gorby is not in the loop cynthia and has not been...ever

he's the greatestiron curtain spawned useful idiot of the entire cold war era.... obviously

a piebald don quixote of the kremlin

but precisely for that reason now useless to the trans nat PTB except as a touring one world for all dribbler

he's like sitting bull in the wild west show

a seriously dimmed show pony


OK, so maybe I'm being too harsh on Gorby. But I don't think anyone can rule out the possibility that Gorby delivered the Drunk who then delivered Russia into the hands of a kleptocracy.

paine said in reply to Cynthia...

you're 100% correct !!!! useful idiots are like that

[Nov 1, 2009] The G.O.P. Stalinists Invade Upstate New York - Readers' Comments -


You're giving way too much importance to anything that will come of next Tuesday's vote in that little upstate NY district, or even the results of the New Jersey and Virginia elections.

The fact is that much of America is having 'buyers remorse' for their votes for Obama. So far he as proved himself a very weak leader both domestically and as the Commander-in-Chief.

A strong. committed leader would be telling his warriors to figure out how to quickly wind down Afghanistan and make preparations to leave, planning only to build schools and hospitals to make up for the death and destruction we've wrought.

A strong leader would be telling his commanders to quickly get out of Iraq.

A strong leader would be closing down Gitmo now.

A strong leader would have insisted on a very strong public option or would have suggested expanding Medicare for all.

And a strong leader would have insisted that every senator and congressperson (and their staffs) would have to be participate in any new healthcare initiatives they thrust on the rest of America like everyone else.

I hope he gets better because what we're seeing from the Republicans is more of the same bigotry, reactionary talk and obstructionism of the past 8 years. We don't need any more of that. And if we get more of them, we can look forward to more casualties of young Americans in wars in places only they can find and against enemies only they can rile up.

Yes we do need a lot more leadership from Obama and I would like to see more columns from you goading him on to the greatness he can achieve for all of us.


The Republican party has been hijacked by the lunatic fringe element that represents rigid, intolerant, and irrational ideology - coupled with deception and paranoia. It's a clear recipe for defeat, a well-deserved one at that.


'Mocking Newt's presumed 2012 presidential ambitions, Michelle Malkin imagined him appointing Al Sharpton as secretary of education and Al Gore as "global warming czar." She's quite the wit.'

This is my takeaway quote from this week's column - it's priceless. No doubt the comments will be chock full of witty remarks from Malkin's army of trolls.

The conservative "movement" has certainly worked itself into lather since Obama took office; if possible, they've taken right-wing vitriol and hysteria to a whole new level.

Conservatives have lost any grasp they may have had on intellectualism. Today's conservative "intellects" consist of people like Malkin, Jonah Goldberg, Ann Coulter, Sarah Palin, Glenn Beck, Rush Limbaugh, etc. People with semi-functioning brains understand that these individuals aren't intellectuals but rather provocateurs that pollute the public debate with half-truths, outright lies, and veiled calls to violence.

You get the government you deserve and apparently the people of NY's 23rd Congressional district deserve Doug Hoffman.


Any national political figures panting to "ditto" a Sarah Palin and Glenn Beck pick for anything other than an ice cream flavor (which, naturally, would be vanilla....very WHITE vanilla) have only themselves to blame if voters question their perspicacity.

The nature of politics requires an ability to make connections and bridge differences even while maintaining one's beliefs and philosophical underpinnings.

It is only the most rigid and ideologically land-locked mindset (or strict religious observance) that demands the kind of knee-jerk absolutism insisted upon by the Beck-Palin demagogues.


When will enough progressive Democrats face the fact "their" party is also corporate owned, as is Obama? With a completely Democratically controlled government, the best health care plan we get is a total sell-out to Big Pharma & the insurance companies. It's time for a party that supports Main St., not Wall Street. Let's have a party that will accept NO corporate owned candidates. That would eliminate all Republicans & the Blue Dog Democrats.


For people like me, who are fiscally conservative, there really is no place to go politically. I simply cannot vote for candidates who stand for hate and intolerance. The Republicans are stupid to shut people out as they do.

There are a lot of people out there like me who just do not have a problem with gay people getting married and and are solidly pro-choice - who believe that government has gotten too big to be user-friendly. I don't thing the goverment should be in the bedroom or the boardroom. I don't want the goverment tangling itself up with religion or values. I don't want them beating me up or checking up on me.

Aren't I a real conservative? It's ironic that I cannot identify myself with the Republican Party these days and there really isn't anything Conservative about them.

Can someone tell me where people like me go these days?

Where exactly do I go politically?


The True Believers are out in force this morning, aren't they? Describe them, and they bray the confirmation that everything you point out about them is true. With angry certitude that -- you just wait -- their warped and wacky and paranoid world view -- you just wait, you commies -- will be seen for the pure, idealistic salvation that they just know, in their boots, that it is.

They just want to save the country, don't you see? Even if it means cramming their stunted and narrow views down everyone's throats. Even if it means killing all the liberals. They're just doing it for our own good. Can't you see? No?

Then you'll have to be eliminated, too.


I have tried to watch Glenn Beck a couple of times, just to see what all the fuss is over, and I've got to say, I see nothing but half truths, outright lies, exaggerations, fear tactics, and paranoid fantasies. He is all about whipping up fear and hate. If Rush, Palin, Glenn Beck, and other talking heads of their ilk speak for the Republican Party, then the Republican Party will be reduced to a political refuge for angry white people in an increasingly brown world. At one point this summer, I believe Mr. Beck was actually promoting rebellion in a time when we all need, as Americans, to pull together and solve the huge problems we face: problems that could destroy not only our country, but our world. I believe that the great majority of Americans want President Obama to succeed and will give him a greater majority in 2010. Then, perhaps, we will tune out these people and start working together, as Americans, not as Democrats or Republicans.


Marginal politics (vitriol at the edge of reason ) is not new in the United States. Radical views have always been in the mix, from Anarchists to straight on bias re Father Coughlin's Christian Front in the 30's. As in Sondheim's Assassins, there is a marketplace for lunacy and this story of Upper New York State should be seen a step in that direction.

It is not a great distance from anger to vengeful action. All that is missing is the detonator. Hard economic times fuel this. Complex issues not amenable to a one noun , one verb solution sustain discontent. Frank Rich is , for all his punch, is being gentile. Remember the German " volk', the discontent from the rural areas of Germany that nurtured National Socialism. Be wary of the fusion of ambition, stupidity and moral preaching. If Newt Gingrich is being cast as the voice of reason, it is only testimony to how close to the cliff edge we are. Rich is right, the Radical Right will likely lose elections but in the losing find rationale for fanaticism. Stop it now. In the land of the Headless Horseman, the Brainless Horseman now appears.

Steve K

...Regardless, people seem so disappointed with our President, and at times so have I been, but really he has been in office for less than a year, and change does not and really should not occur overnight. America is not a place that walks in lockstep, we are a diverse nation, with many diverse needs, and the issue we faced have been created over generations, so it takes time to make change. Take health care - our health care system has been round for decades, and you can't just come in and change it overnight. There are many entrenched interests, etc, it takes time, and thought. And here we sit on the verge of creating a system that will insure many more people, create some sort of public option, and start to move the issue, something that has not been done since medicare was created. That in a year, pretty good. How good will it be, well we'll see but to me it is a movement in the right direction.

People rail about unemployment, and yes it is a problem, but again this was in the making for a decade, and if Obama had not pushed through a stimulus where would unemployment be.

Deficits - created by Bush tax cuts, two wars, etc. They too do not just disappear, again it takes time. So I am willing to be patient-There are no quick fixes.

Finally regarding much of what I read as people talk about small government, low taxes - what does that mean. I am convinced that most people talk about it and have no idea what that means or what the consequences are. It sounds good, and they mimic what they hear (yes I have a poor opinion of many of these people).

So they can have there small government, but I want medicare and social security and unemployment, and public schools, and infrastructure, and police and fire, and emt services, and public hspitals, and public universities, et al, and affordable health care, and equal opportunity, etc.


...the same goes for joblessness. the economy is not recovering for a very simple reason. mr. obama and his hugely wealthy oligarchic friends (mr. obama came not to bury the bush oligarchy, but to entrench it), plus its very wealthy friends in the media, such as the new york times and mr. rich, have made business--both large and small--the enemy.

business people are not going to invest until they are taken off the enemies list and treated for what the are, the benefactors of the nation's wealth. there won't be any money for mr. obama to redistribute until he comes to the understanding that bill clinton did, which is that you have to let business make the money before you can give some of that away to others.


I think the most salient points of this piece were missed by some, which is that the "conservative" (read extremist) candidate is completely unqualified for the office he seeks and doesn't even live in the district he would represent. Then there is the unpleasant little fact that the situation as it stands does not reflect the will of the people of the district, but the bullying done by the likes of national spoilers, Sarah Palin and Dick Armey. While some delusional right wingers might see that as a victory for the GOP as a whole, exactly how does this choice benefit the people who actually live there?

Why the Berlin Wall fell

Recommended Books -

Editor: Laura Miller Wednesday, Oct 14, 2009 01:06 PDT

Stephen Kotkin's fascinating "Uncivil Society" presents a revisionist account of Communism's failure

By Laura Miller

When the Berlin Wall fell 20 years ago this November, it seemed, from the outside, to have simply melted away like the Wicked Witch of the West after a good dousing. Like the witch, the Soviet Union and its Eastern bloc had appeared to be an implacable and wily adversary, an aspect of modern life as inevitable as death and taxes. But Dorothy's astonishment at discovering that a mere pailful of dirty water had foiled her nemesis was nothing compared to that of the average Westerner upon seeing the Wall crumble for, it seemed, no reason at all. Suddenly, television was filled with images of mobs of East Germans dancing on the concrete monolith that, a few weeks earlier, they couldn't even approach without being gunned down. Not a drop of blood had been shed. How did that happen?

Stephen Kotkin, a professor of history at Princeton University and the Woodrow Wilson School, has written (with a contribution from Jan Gross, also a professor of history at Princeton) an account of just that, a version that briskly dispenses with several currently popular theories. "Uncivil Society" reprises arguments in Kotkin's acclaimed 2001 book about the dissolution of the USSR, "Armageddon Averted," but with even more concision. ("Armageddon Averted" was only 300 pages long; the narrative portion of this book clocks in at half that.) The history of the Cold War -- especially on the Soviet side -- often seems a soporific chronicle of dull, gray men in dull, gray suits hammering out dull, gray and largely incomprehensible treaties while dictating production quotas. Kotkin proves that this story, the epochal global event of our time, can be made fascinating when described with vigor, clarity and a cobweb-slicing scorn for cant and obfuscation.

"Uncivil Society" examines the end of Soviet-style socialism in three exemplary bloc states: East Germany, Romania and Poland. Kotkin complains that on this subject most analysts "continue to focus disproportionately, even exclusively, on the 'opposition,' which they fantasize as a 'civil society.'" With the exception of Poland, where the Solidarity movement constituted a real counterpart to the Communist regime, this notion of a valiant resistance who modeled a better order and spearheaded the mass uprisings of 1989 falls, in Kotkin's view, "into the realm of fiction." And, while he credits the West for its "steadfast" containment of the Soviet Union ("whatever the mistakes and excesses"), Kotkin doesn't seem to regard direct Western action as a significant cause of the collapse of the USSR, either. Instead, he views the whole thing as an "implosion"; the Soviet-style establishments ("uncivil societies") simply gave up the ghost -- in some cases even helping the dissolution along.

Why would any group in possession of so much power, enjoying privileges denied to the hoi polloi, willingly surrender? As Kotkin sees it, they were terminally demoralized. The Soviet bloc elites had promised (and, he insists, mostly believed) that Communism would provide a better alternative -- a living, breathing reproach to the ruthlessness of capitalism. Forced to scrape by alongside booming postwar Western economies, the Communist states (particularly East Germany) had their noses rubbed in their failure on a daily basis. Media, from Western propaganda efforts like Voice of America to TV and radio intended for Western European audiences but picked up by audiences behind the Iron Curtain, made the superior consumer goods and political freedoms of the West common knowledge and the subject of much envy and yearning.

To placate their populations and build up their production capacity, the Soviet satellite states wound up borrowing heavily from Western governments, gambling on the success of future exports. But they never managed to make goods that the rest of the world wanted, and had to borrow more cash; Kotkin persuasively argues that the regimes in most of the bloc nations realized they were living on borrowed time by the late 1980s. Mikhail Gorbachev's reform program, a reprise of the "socialism with a human face" promised (then squashed) in the Prague Spring of 1968, turned out to be ideologically and practically impossible. To admit that Soviet-style socialism could be reformed was to allow that it wasn't already the best possible system, confessing to decades of lying and laying the whole apparatus open to revision and revolution while the tempting example of Western-style market economies waited right next door. "Reform amounted to autoliquidation," Kotkin writes.

Above all, the Communist establishments proved incapable of fixing their states because they lacked "initiative, independent judgement and integrity." Their monolithic bureaucracies, where advancement was based on loyalty and obedience to superiors as well as on ideological conformity, eliminated individuals with those qualities. "Incompetence in Communist systems," writes Kotkin, "was therefore structural." Oppressive state security apparatus minimized and marginalized any organized opposition except in Poland, where the Catholic Church provided an encouraging example of an alternative social institution. Yet even Solidarity had not really planned to take over the government, and only ascended (briefly) to power via the Communists' spectacular mismanagement of electoral design.

When the bloc governments began to teeter, Kotkin argues, it was the littlest things that set them off. A pastor in Romania asked 40 elderly parishioners to protest his eviction from his home. Theology students gathered to pray for peace in a Leipzig church. An East German official misspoke at a press conference. These events, tipping points in an ongoing loss of credibility, triggered what Kotkin describes as "political bank runs" on the entire system. In days, spontaneous mass demonstrations filled the streets.

Unlike hard-liners of the past, the rulers of 1989 couldn't count on Soviet tanks and troops to subdue the crowds and provide them with a "Chinese solution" (a reference to the Tiananmen Square massacre of that summer). Gorbachev had made it clear that the USSR would not step in to save their asses as it had in Prague in 1968. But above all, what did the establishment really have to defend? "Many Communists lost interest in preserving their own system," Kotkin writes. "Not all, but a number, of party officials preferred to become an asset-owning bourgeoisie." They could bloody their streets to sustain regimes they already knew to be economically untenable, or (for the few with a shred or two of wherewithal), they could start thinking about how to feather their post-Soviet nests.

In their introduction, Kotkin and Gross concede that this story -- in which the brave and idealistic are largely sidelined and victory comes in the form of the exhausted capitulation of an incompetent villain -- is "depressing." However, it's not, they sardonically note, as "disheartening" as the West's current crisis, in which elites who were supposedly selected to run things via a free-market meritocracy were equally guilty of "spectacular incomprehension, lucrative recklessness and not infrequent fraud ... We can only hope that the market and democracy prove their resiliency and good governance and accountability return." I'm guessing, though, that they won't be holding their breaths.

[Oct 21, 2009] Guest Post: How Did America Fall So Fast?

By George Washington of Washington’s Blog.

In 2000, America was described as the sole remaining superpower – or even the world’s “hyperpower”. Now we’re in real trouble (at the very least, you have to admit that we’re losing power and wealth in comparison with China).

How did it happen so fast?

As everyone knows, the war in Iraq – which will end up costing $3-5 trillion dollars – was launched based upon false justifications. Indeed, the government apparently planned both the Afghanistan war (see this and this) and the Iraq war before 9/11.

And the financial system collapsed last year due to looting and fraud.

How Empires Fall

But Paul Farrel provides a bigger-picture analysis, quoting Jared Diamond and Marc Faber.

Diamond’s book ’s, Collapse: How Societies Choose to Fail or Succeed, studies the collapse of civilizations throughout history, and finds:

Civilizations share a sharp curve of decline. Indeed, a society’s demise may begin only a decade or two after it reaches its peak population, wealth and power…

One of the choices has depended on the courage to practice long-term thinking, and to make bold, courageous, anticipatory decisions at a time when problems have become perceptible but before they reach crisis proportions

And PhD economist Faber states:

How [am I] so sure about this final collapse?

Of all the questions I have about the future, this is the easiest one to answer. Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent … overspends … costly wars … wealth inequity and social tensions increase; and society enters a secular decline.

[Quoting 18th century Scottish historian Alexander Fraser Tytler:] The average life span of the world’s greatest civilizations has been 200 years progressing from “bondage to spiritual faith … to great courage … to liberty … to abundance … to selfishness … to complacency … to apathy … to dependence and … back into bondage”

[Where is America in the cycle?] It is most unlikely that Western societies, and especially the U.S., will be an exception to this typical “society cycle.” … The U.S. is somewhere between the phase where it moves “from complacency to apathy” and “from apathy to dependence.”

In other words, America’s rapid fall is not really that novel after all.

How Consumers, Politicians and Wall Street All Contributed to the Fall

On the individual level, people became “fat and happy”, the abundance led to selfishness (”greed is good”), and then complacency, and then apathy.

Indeed, if you think back about tv and radio ads over the last couple of decades, you can trace the tone of voice of the characters from Gordon Gecko-like, to complacent, to apathetic and know-nothing.

On the political level, there was no courage in the White House or Congress “to practice long-term thinking, and to make bold, courageous, anticipatory decisions”. Of course, the bucket loads of donations from Wall Street didn’t hurt, but there was also a religion of deregulation promoted by Greenspan, Rubin, Gensler and others which preached that the economy was self-stabilizing and self-sustaining. This type of false ideology only can spread during times of abundance and complacency, when an empire is at its peak and people can fool themselves into thinking “the empire has always been prosperous, we’ve solved all of the problems, and we will always prosper” (incidentally, this type of false thinking was also common in the 1920’s, when government and financial leaders said that the “modern banking system” – overseen by the Federal Reserve – had destroyed instability once and for all).

And as for Wall Street, the best possible time to pillage is when your victim is at the peak of wealth. With America in a huge bubble phase of wealth and power, the Wall Street looters sucked out vast sums through fraudulent subprime loans, derivatives and securitization schemes, Ponzi schemes and high frequency trading and dark pools and all of the rest.

Like the mugger who waits until his victim has made a withdrawal from the ATM, the white collar criminals pounced when America’s economy was booming (at least on paper).

Given that the people were in a contented stupor of consumption, and the politicians were flush with cash and feel-good platitudes, the job of the criminals became easier.

A study of the crash of the Roman – or almost any other – empire would show something very similar.

Capitalism A Love Story

naked capitalism

I have a weakness for seeing movies in theaters; the home variety, even with the super large screens, is just not the same. And it has been so long since I have seen a movie that all the trailers looked good to me (well, I must confess I like trailers. The tacky soda and car ads are quite another matter).

Even after allowing for my movie-deprived state, I was impressed with Michael Moore’s “Capitalism: A Love Story.” He argues the Simon Johnson “Silent Coup” thesis, of a takeover by the financial classes, in a way that is accessible and credible, which is no mean feat for a subject matter like finance.

Admittedly, Moore has crafted his own genre of picaresque-shambolic docu-polemic, so if you object to his sthick, you are going to be mundo unhappy. The ritual of Moore shuffling up to shiny corporate headquarters seeking confessions from corporate chieftans, camera crew in tow, only to be rebuffed by security guards, is a tad overdone.

But some of his staples have become more effective over time. For instance, his Flint/auto industry fixation as the poster child for what happened to what was once middle class America has become more powerful over time as once-proud Detroit has collapsed into third world squalor.

I grew up in small towns dominated by manufacturing plants, and I remember that they were prosperous, optimistic, and stable. People who had good jobs at the local mill were not the top of the social order; that was reserved for businessmen and successful professionals, like doctors and lawyers. But they could afford decent homes, creature comforts, vacations, and send their kids to college (not the fanciest, often a state school unless they got a scholarship, but their children could nevertheless hope to do better than their parents). But that had started fading by the 1970s as America’s economic dominance started to slip. Moore clearly is pained at the loss of the America that was (while pointing out it depended on the special circumstances of our post World War II political and manufacturing dominance) and our naivete in trusting in an economic model that has been been turned against the common man.

Movies are well suited to stories or arresting images; they are not the best medium for covering the terrain Moore staked out for his latest effort. He has to punt on some issues that most would concede to be true but it would have been nice for him to prove a bit (for instance, that the US trust in “capitalism” and “free enterprise” are the result of propaganda. That practice could conceivably have been warranted when the antipode was Communism, but they get the same near-religious treatment even after the Red Menace has faded). Similarly, some cynics would no doubt want to hear the histories of the families that Moore showed being evicted. The debate has become polarized; people who lose their homes are cast as either victims or greedy and irresponsible. One of the couples he shows may have been duped; the wife was working, the husband on disability, and the mortgage payments kept escalating. Moore avoids those detail to focus on horrid process of eviction.

While Moore brings some immediacy to the oft-recounted misdeeds of the last few years, he also catalogues faceless, under-the-radar indignities which are more disturbing. It’s bad enough that airline pilots need food stamps and/or second jobs to get by. Creepier is that companies routinely take out life insurance policies on employees, not the key-may type, but on the rank and file, seeing these so-called Dead Peasant policies as a profitable venture (Moore did not give the full details, but the two cases that paid out, one $5 million on a bank manager who had cancer, another $81,000 on an asthmatic Wal-Mart cake decorator, suggests that the companies are playing an information asymmetry game, betting they have a better reading on who is in poor health than the insurer. And their success makes life insurance more costly for those who really need it).

Readers will likely enjoy his treatment of the TARP and its aftermath. Moore provides evidence well known to finance blog readers, such as Goldman penetration of key policy positions, an obligatory Phil Gramm saying something heinous shot, and the role of financial services contributions (he managed to interview the fellow at Countrywide in charge of the “Friends of Angelo” cheap mortgage as bribe program, who sees nothing wrong in what he did). He also makes good use of Bill Black and Elizabeth Warren. Congressmen and women, agitated even now, describe how the process of getting the TARP through despite overwhelming popular opposition was masterfully orchestrated, carefully timed to prey on re-election fears “like an intelligence operation”. The clips are simply damning, and dispel any doubts of who is really in charge in DC.

The film closed with a call to action, more pointed than anything we are likely to get from Obama (the movie takes some pains to depict the hope at the time of his election yet reserves judgment on whether he will deliver). The audience applauded. But the protests Moore cheered as possible harbingers of things to come were small scale, nice symbolism, but thin on follow through. Will anyone really take up the cause?

PS (hat tip George Washington). Bill Moyers has picked up on the silent coup thesis, interviewing Simon Johnson and Ohio Rep. Marcy Kaptur, who was one of Moore’s most pointed sources.

Selected Comments

■ DownSouth:

October 11, 2009 at 11:57 am

I have absolutely zero tolerance for the rhetorical strategies employed by the likes of RebelEconomist and Dan Duncan.

What greatly helped to focus my mind and clarify my position is what I saw happen at the recent meeting of the G-20 in Pittsburgh. The brutal police oppression of the protesters, the nationwide blackout by the MSM of what happened and then the systematic campaign to demonize the protesters with the blanket indictment of “anarchist” signaled to me that the most corrupt of the financiers are now escalating their battle against the American people to a new level.

As this most recent posting on the Pitt students’ webpage indicates, nobody buys into the horse shit being peddled by RebelEconomist and Dan Duncan any more. Those on the bottom rung of the social, cultural and economic ladder are certainly aware of what is happening:

In a comment the other day, I branded RebelEconomist and Dan Duncan neo-fascists. Before the Pittsburgh meeting of the G-20, I think that would have been inappropriate. But after what I saw happen in Pittsburgh—the violence the unholy matrimony of government and the corporate boardroom is prepared to unleash against the American people in order to preserve its privileged position–What else could one call the defenders of the status quo?

• DownSouth:

October 11, 2009 at 10:21 am
What’s wrong with this comment?

After all, it does begin by pointing out something that is undeniably true, and that is that the payday loan add appearing at the bottom of the page does smack of hypocrisy.

But then it immediately devolves into something quite different. For RebelEconomist concludes with this admonishment: “You appear to be benefiting from just the kind of dubious financial activity that you criticise.”

“Benefiting” from “dubious financial activity”? This is where RebelEconomist’s comment takes a hard turn away from truth and degenerates into propaganda.

The use of half-truths, carefully crafted to appeal to prejudice and therefore escape critical examination, was a favorite subject of Proust. In A la rechereche, Mme Verdurin’s campaign to socially destroy Baron de Charlus is a portrayal of one such incident.

Like Oscar Wilde, the Baron de Charlus enjoys playing at social one-upmanship and as a result makes many enemies during his reign over high society. Mme Verdurin is one of the few characters whose ego and social pretensions rival those of the Baron. The rivalry escalates until Mme Verdurin unleashes her plan to discredit Charlus, and the plan works exactly as she hopes.

The plan works because Mme Verdurin is able to wield with great dexterity the politics of homophobia. In order to turn the others against Charlus she invents all manner of falsehoods about him, falsehoods calculated to force him irretrievably into the stereotype of the criminally minded, socially subversive sexual pervert. “Let me tell you,” she tells Brichot:

that I don’t feel at all safe with that kind of person in my house. I happen to know that he’s been involved in all sorts of filthy activities and that the police have him under surveillance… It appears that he’s done some time in prison. Yes, yes, I have it from very informed sources. I’ve also heard from someone who lives on his street that you couldn’t imagine the kinds of criminals he has going and coming at his house… Take my word for it… He’ll be murdered one of these days, as people of his ilk always are. Or maybe it won’t come to that, since he’s in the clutches of this Jupien…who is—I have it, you know, on excellent authority—an ex-convict. It seems that he holds Charlus in his power by means of some frightful letters. I heard it from someone who has seen the letters; he told me, “You would be sick if you saw what they were about.”

Mme Verdurin’s remarks contain just enough truth to be verisimilar and just enough suggestive falsehood to trigger the construction of elaborate fantasies about Charlus. Charlus is, in fact, homosexually inclined; he is, in fact, being followed by blackmailers. But he is not, of course, an ex-convict, and neither is Jupien. Mme Verdurin cleverly bases her assertions about Charlus on precisely the sorts of stereotypes that will make them credible and frightening to the homophobic mind and to Charlus’ social enemies.

And so RebelEconomist engages the same rhetorical strategy as Mme Verdurin. The part about the payday loan ad being hypocritical is indeed true. But the part about Yves benefiting from this blog is, of course, not. And it is the latter part that triggers the construction of elaborate fantasies in the minds of those who already hold a prejudice against Yves’ message. Yves’ work on Naked Capitalism becomes some sort of self-serving enterprise. There is nothing noble or benevolent in her motives. That is the subtext of RebelEconomist’s comment.

■ Vinny G:
October 11, 2009 at 2:12 pm
Great movie review — thank you very much.

Regarding the Google ads, would it be possible to post specific ads, such as ads for readers’ bussinesses? This way the site could be reader-supported. I’d think many readers here have small bussinesses they might like to promote. For instance I have a dental tourism business (taking people from the US and Western Europe to Eastern Europe for affordable dental work), and I would certainly consider advertizing here.

Vinny G.

• dearieme:

October 11, 2009 at 6:27 am
“companies routinely take out life insurance policies … on the rank and file, .. so-called Dead Peasant policies”: bloody hell, American enterprise continues, with its customary moral scruples. But presumably without a Carnegie-like philanthropy?
• Stonedog:
October 11, 2009 at 6:53 am
I went to see it yesterday. While I am not a Michael Moore fan and have steadfastly refused to see most of his other work, this is clearly an important work. There was little there that I didn’t know apart from the information about how little the pilots earn in compensation and the part about the dead peasants insurance.

Though I disagree with Mr. Moore about much politically, I do agree with him on arguably the most important point of his movie: this is not the same country that I grew up in…

• K Ackermann:
October 11, 2009 at 10:55 pm
You might want to see Bowling for Columbine. It’s much more social than political. One of the main themes he hit was the culture of fear in the US. He showed that there is no connection between gun ownership, and gun violence, and wants an explaination for:

Gun Deaths (year unknown)
United States – 11,127
Germany – 381
France – 255
Canada – 165
United Kingdom – 68
Australia – 65
Japan – 39

All the countries allow satanic music, violent movies, violent video games, etc. Taking away all the cliche reasons for gun violence, there is a huge discrepency in gun homocides in the US, and he (and I) would love to know what causes it.

• Mary:
October 11, 2009 at 6:57 am
Just a thought: Had Michael Moore not joined into the “Al Gore is just like the rest of them” and childishly chosen Nader in 2000, thereby helping give America 8 years of George W. Bush, we might not be where we are now.

Many of us understand, by reading you and Simon and others, the what and why of all these troubles, but we’ll pass on the Michael Moore over-simplifications in a movie, remembering that his naivete in 2000 helped create the environment in which it occurred.

Just sayin, and respectfully.

• kevin de bruxelles:
October 11, 2009 at 10:44 am
This comment implies that there is some meaningful difference between the Democrats and Republicans. Surely you realize that this is false and the October bailout should have proven this to you. The only slight difference between parties is that Republicans tend to cater to Big Oil’s concerns whereas Democrats tend to service Wall Street interests. There will be no true political democracy in the United States to speak of until the one party Democratic/Republican stranglehold on power is broken. If you still are in doubt just wait and see what pathetic weakness the Democrats throw at you on health care.

◦ Steve2241:
October 12, 2009 at 2:13 am
I think that electing a black man as president of the United States was an attempt by the electorate to move to a “higher level”, a dream of sorts that that would somehow transcend or rise above the historic democrat/republican polarization afflicting the nation. It now seems apparent that a “racial chnge” was ineffective. I can’t but think that perhaps a woman in the White House might be just the ticket. Beyond that, I don’t know – Donald Duck?
• Lavrenti Beria:
October 11, 2009 at 1:08 pm
“Had Michael Moore not joined into the “Al Gore is just like the rest of them” and childishly chosen Nader in 2000, thereby helping give America 8 years of George W. Bush, we might not be where we are now.”

Now isn’t this the most absurd DNC, system-inspired drivel I’ve seen in some time? What in heavens name did Nader ever owe Al Gore? Al Gore IS George Bush, for God’s sake, and his crowd gave us the very people who initiated the deconstruction of our economy in the 1990s. We wouldn’t have had maggots like Robert Rubin and Larry Summers and Timothy Geither then, and they wouldn’t be back now if the bacteria supporting Gore’s 2000 candidacy were any different than those backing Bush and, today, Obama.

How much time and how much history does it require for some to catch on? Headline: You’re in a one party state, dear, one that creates the insane illusion that its out-of-power element is something more than a blackhole into which public anger is funneled. And you’ve fallen for it. Maybe a couple of years unemployment, a dead son in Afghanistan or a foreclosure might bring you around. Something needs to.

◦ Truthseeker:
October 11, 2009 at 2:09 pm
While some democrats may be willing to crumble to one party style rule, Al Gore, I have to say, is one of the few who definitely doesn’t want to play by those rules . . . which is why he has NOT continued to run. The man has too much integrity to get involved in it. He is NO George Bush. Not only does he have integrity, he also has IQ in the triple digits.
• carol:
October 11, 2009 at 7:09 am
1. “Movie..”

Friends of mine also gave the documentary rave reviews.

I like to call it a documentary instead of a movie or a film, especially after hearing an interview a couple of months ago with a former senior manager at a health insurance company. He described how the health insurance industry had made an attack plan against “Sicko”, a. o. consequently referring to Michael Moore as ‘that Hollywood movie maker’. Hollywood polls negatively with a lot of Americans (wild lifestyles, leftwing artists), and a movie is a movie (fantasy) and not a documentary. So, let’s call it like it is: a documentary.

2. “Creepier is that companies routinely take out life insurance policies on employees,….”

see e.g.

Please note that the insurance fee is tax deductable, whereas the money paid out is not taxed.
The scheme is comparable to naked CDS: in both cases the company does not lose anything (no bonds gone to zero, or no loved one or family breadwinner died), but only profits from the misery of others (bankruptcy, death).

3. “Will anyone really take up the cause?”

* Every consumer pays off his(her) credit card debt, thereby NOT giving their hard earned money in the form of insane interest rates to the bailed-out bonus bankers (Yves, I am not refering to small businesses but to (over)consumers).

* Every person with a savings account at one of the bailed-out banks takes their money AWAY from those banks, and instead opens a deposit at one of the good banks.

Full disclosure: I have no credit card debt and have set-up a savings account at one of the banks with a sustainable banking award.
“Now in their fourth year, the awards recognise banks and other financial institutions that have shown leadership and innovation in integrating social, environmental and corporate governance considerations into their operations.”

The latter refers to no insane bonus culture, and to transparency. In order for those banks to judge whether a potential investment is sustainable or not, they need to be able to analyse all their investments, i.e. these investments have to be transparent products. NO off balance sheet vehicles and special purpose conduits, and NO ABS, CDO, CDO-squared, MBS etc. on their books.

As individuals we are powerless against the Wall Street giants, but collectively we the people are very powerful. How long would this huge wealth transfer from the many (middle class) to the few (bonus bankers) continue if those bonus banks lost say 10% of the deposit?!!
If each and everyone of us take our money out of those banks to the few good ones, and convince at least two of our friends to do the same, we could get a nice pyramid.

The coup succeeds, because we the people let those bonus bankers and their bought congressmen get away with it!!

We do not need pitchforks, nor keyboard revolutionists, we need to take our money out of the bad banks and deposit it at good, transparent banks.

• danm:
October 11, 2009 at 7:35 am
We do not need pitchforks, nor keyboard revolutionists, we need to take our money out of the bad banks and deposit it at good, transparent banks.
First of all, they are ALL full fo CREs.

The Fed will just inject more capital into the dropped ones.

If you want to beat Wall Street, you’ve got to cut your spending to the bare minimum. But one thing you must remember, the French might have gotten rid of royalty with the Revolution but it did not stop many of them from suffering for a while. There is no easy way out.

◦ carol:
October 11, 2009 at 11:04 am
“There is no easy way out.”

Indeed, otherwise is wouldn’t be such a worldwide mess. But what are you suggesting? Not easy, so do nothing and watch Wall Street et al. continue?

When the crisis started to unfold, many have explained that the right thing to do is: take the insolvent, too big to exist banks (bank holdings) over; the shareholders and unsecured bondholders are wiped out; secure bondholders take a hit; clean the balance sheets up; make them smaller.

It has become absolutely clear that the government has been captured by bonus bankers: WashDC will not do the right thing.

So let us force them to do the right thing!

If enough people take their savings out of Citygroup, Bank of America, etc., then the FDIC will have to clean them up.

Just an an example: From today’s link regarding Citygroup hiring Mr Lobbyist nr 1 (from S&L scandal): how do you think Citygroup pays his undoubtedly huge salary (they do not call him a lobbyist, hence his salary and bonus do not have to be disclosed; nice loophole WashDC): could it be from the profits they make of the deposits? EVERYONE who still has a savings account at the too big to exist or otherwise bad banks is coresponsible for the continuation of the mishandling of the crisis.

•“Capitalism: A Love Story” « Café Philos: an internet café:
October 11, 2009 at 9:20 am
[...] October 11, 2009 Early last week, I saw Michael Moore’s new film, Capitalism: A Love Story. There’s an excellent review of the movie at the blog, Naked Capitalism. [...]
• Keenan:
October 11, 2009 at 10:19 am
“Dead peasant” insurance is a yet another government subsidized table game, limited to corporate players, in the casinoized american economy. Place your bets.
• Dave Raithel:
October 11, 2009 at 11:24 pm
I wondered as much. Surely no business does it unless it can take an expense paying the premiums, unless the total return exceeds the premium and taxes paid (on the non-deductible expense)? Accounting-ese probably expresses it more clearly, but that has to be the general construct. So from there, one can quickly get to securitization of life insurance policies – which we’ve already read about the last few weeks. If a corporation had a buyer for the future payoffs on the policies it took out on its employees, wouldn’t that drive demand for insurance? This could lead to a rational choice catastrophe – do I pay for medical insurance on people I’ve insured for life when I need to assure my security purchasers that there’s money in my future dead employees? Where’s Niall Ferguson when I need him?
• bob:
October 11, 2009 at 10:20 am
The NYS AG office could be a good starting point. Getting a candidate who is above reproach and willing to piss a lot of people off is the first part.

The second part would be for everyone to give him/her money to run against the inevitable bank candidate. NYS laws on campaign finance are very weak. Anyone anywhere can give money to them. How about 20 a person? $100? Take it out of a tarp bank if you wish, just get it to the right person.

The subpoena power alone of the AG office in NYS could keep this new person busy for years. Use the NYS AG to get all the info and make it public record, then let others follow on in other states, Delaware and Nevada come to mind.

Think ahead, and don’t make it any harder than it has to be. Placing reform candidates on a different level, and a moral high ground will not work. We need a person who flaunts his support from the people.

How great would it be to see a pol get up and ask for more money in a press conference? Better still, ask for money outside of the state in which he is running. They do it, why can’t we? Putting a moral burden on a supposed reform cause does not help, it only serves the non-reformers.

• Steve2241:
October 11, 2009 at 10:57 am
Yves wrote:
“People who had good jobs at the local mill were not the top of the social order; that was reserved for businessmen and successful professionals,”

People who had good jobs at the local mill were at the top of THEIR social order. No one can be at the top of ALL social orders.

• Harold:
October 11, 2009 at 11:21 am
. He has to punt on some issues that most would concede to be true but it would have been nice for him to prove a bit (for instance, that the US trust in “capitalism” and “free enterprise” are the result of propaganda. That practice could conceivably have been warranted when the antipode was Communism, but they get the same near-religious treatment even after the Red Menace has faded)

Yves, what has communism got to do with a rapacious ‘banker/corporate’ class that feeds itself by the means of capitalism and ‘free enterprise’? I think you present a straw man from the position of a fly caught in the amber of American self delusion. Many now are thinking of a better way that life can be lived than mindlessly in the shadow of the tenacious vampire squid. Think new reserve currency.

• Yves Smith:
October 11, 2009 at 12:30 pm
Moore gives a 50+ year sweep, going back to Roosevelt era, but focusing on post WWII. A fair bit of archival footage. People did believe in capitalism, that was cultivated as the opposite to communism. That banner had been taken up and used quite skillfully by big business as first “free enterprise” and increasingly “free markets”. Look at the debate over health care and financial services reform, the opponents overtly and subtly invoke interfering with
“free markets” as one of the big reasons not to proceed. I am simply pointing out it would have been useful if he could have gone a bit more into this issue.
◦ Tao Jonesing:
October 11, 2009 at 2:15 pm
Yves is 100% correct about the origins of today’s “free market” rhetoric as anti-communism propaganda.

The Libertarian formulation of capitalism as most forcefully articulated by Milton Friedman in “Free to Choose” is and was intended to be the ideological opposite of and counter to communism.

Thatcher and Reagan took Friedman’s message and ran with it (e.g., Thatcher’s “There is no society” speech), and the last thirty years of economic policy have been dominated by Friedman’s fiction that the primary actor in the economy is the individual human being when, in fact, it is the multinational corporation. It’s this disconnect between the rhetoric and reality that has led to the blindspots that have enabled the corruption we’re seeing to flourish.

◦ Vinny G:
October 11, 2009 at 3:44 pm
I agree with your discussion of Communism vs. Capitalism.
As one who grew up behind the Iron Curtain (this assumes the West was in front of it), I think the Communism vs. Capitalism idea was appropriate until the fall of the Berlin Wall. However, after that event American capitalism became redundant and it obviously degenerated into the current plutocracy. Yet, I trust that like all oppresive systems before it, it too shall fall one way or another.

Regarding rural America being duped into maintaining the Communism vs. Capitalism line and even labeling Obama as a communist (when he’s just another run-of-the-mill fascist), perhaps Moore could have spent a few minutes in his otherwise great film educating these rural Americans about the simple fact that the stuff they buy at their local Super-Walmart comes from a Communist country.

Vinny G.

• Josh Fulton:
October 11, 2009 at 11:37 am
50 reasons why Obama should NOT have won the Nobel:

• Mean Mister Mustard:
October 11, 2009 at 11:41 am
Yves, I appreciate your recommendation of the film. I will make a point of seeing it in a theater.

But I have question, well away from that Proust analogy. You mention your small town upbringing and evoke those places as optimistic and stable. But my own sense, admittedly as a ‘costal elite’, is that much of political impetus that drove the U.S. toward its current mess came from those same small town/rural voters. I am speaking of the demagoguery around anti-Communism, the unchecked militarism, the demonization of the urban poor, the rent seeking of the agricultural industry, the boorish anti-education sentiment, the idea of tax cuts and deregulation curring all economic ills, etc. Do you concur? If not where do you see the attitudes and politics of those small town/rural voters is this mess?

• Yves Smith:
October 11, 2009 at 12:34 pm
I think that view is broad brush and verges on prejudiced. In some of the towns I grew up in, particularly in the Upper Midwest, people were better read and better critical thinkers than many professionals I meet in Manhattan. “Rural” and “factory town with good blue collar jobs” are not the same thing, and rural America is also quite diverse (think Bible belt South versus Minnesota-Dakotas, which in the past had tough standards in their public schools).
• DownSouth:
October 11, 2009 at 1:04 pm
Very astute observation.

I don’t know how old Yves is, but the answer to your question might be that the transformation of rural and small-town America into its current state is a fairly recent phenomenon.

If you haven’t already read it, I would highly recommend Kevin Phillips’ American Theocracy, especially Part II entitled “Too Many Preachers.”

Other texts that are highly relevant are Andrew Bacevich’s The New American Militarism: How Americans are Seduced by War, with special emphasis on the chapter entitled “Onward,” and Greg Grandin’s Empire’s Workshop, especially the chapter “Bring it All Back Home: The Politics of the New Imperialism.”

Between these three writers, what emerges is the story of how rural and small-town America was transformed into what you describe. And if they are to be believed, none of it happened by accident.

•The truth about this crisis – and it isn’t pretty! « Learning from Dogs:
October 11, 2009 at 12:05 pm
[...] email from Yves at Naked Capitalism. She has a long review of the latest Michael Moore film, Capitalism: A Love Story. It’s a good review and Yves’ writing is easy on the eye and the brain so it was a [...]
• Jo:
October 11, 2009 at 12:11 pm
Haven’t seen the movie yet. If he is against capitalism, then maybe he should have allowed people to see his movie for free, or perhaps donated the money from ticket sales to charity. Miss an opportunity to drive home a point.
• Tao Jonesing:
October 11, 2009 at 2:21 pm
Being against a particularly rapacious and corrupt form of capitalism does not make one against ALL forms of capitalism.

I have not seen the movie yet, either, but what I’ve heard from Moore tells me that he wants a form of capitalism that promotes our republican form of democracy rather than defeats it.

• Vinny G:
October 11, 2009 at 3:23 pm
On Michael Moore’s site he does say he gives his movie away free in fact. However, I did not see how I could download it.
I too saw it in theater.

Vinny G.

• Dave Raithel:
October 11, 2009 at 11:34 pm
Ah, to turn a phrase from Rob Thomas: This is the noise of one way communism…
•StickWithANose » A Review of Moore’s New Film:
October 11, 2009 at 12:17 pm
[...] critic of the shadow economy and D.C.’s enslavement to it, so I was happy to see her offer a review of Michael Moore’s new film Capitalism: A Love Story. While Moore brings some immediacy to [...]
• ronald:
October 11, 2009 at 12:26 pm
Moore attempts to educate via entertainment the medium most Americans receive their information and point of view. Kinda doubt it changed many points of view but its always fun to watch the countries economic polices portrayed beyond the MSM.
• susan:
October 11, 2009 at 1:55 pm
It truly amazes me that we are still arguing about GOP vs. Democrat, how Nader was a spoiler, why small town America is staunchly Conservative.

How useful to the Financial Overlords, how effectively it distracts us from noticing what’s happening, how completely it shuts down any dissent.

Rather than debate how this happened, when it began and which voters or election propelled it forward, wouldn’t it be more effective to take a long, hard look at what’s happening now and, if you feel it is dangerous to the future of what we used to call our democratic system, speak out against it?

Where can you find out more? Michael Moore’s one way. Jon Stewart, ironically, is another. But I recommend Bill Moyers, who seems to be the only broadcast journalist doing the heavy lifting, investigating what’s behind the fact that there will be no meaningful financial reform, who’s sitting behind the loudest voices against health care reform, and who’s on the other end of the phone when Washington’s policy makers pick up the phone.

Start here but prepare to be outraged.

• PeonInChief:
October 11, 2009 at 4:23 pm
Dear Husband humored me and took me to see it in a local theater yesterday. I too thought that the foreclosure section needed more explication (which Moore has done in his interviews on the movie). In particular, he noted in his interview on Democracy Now that the mortgage brokers had begun their predations by foisting bad mortgages on people whose families had owned their houses for generations. It would have been more effective if he’d explained what the families owned, how they were enticed to take on the mortgage etc.
• Vinny G.:
October 11, 2009 at 7:34 pm

What nobody here seems to mention is that the film also focused part of its attention to interviews with a few Catholic priests and a bishop, all of whom unanimously condemned capitalism to the point of calling it an evil that God shall destroy (Amen to that!).

Nonetheless, my point here is that Michael Moore may be on to something more subtle than meets the eye. I am thinking he may be trying to reach the “evangelical mind” to which some of us may want to credit at least part of the fiascos of the past decade, including these senseless wars, an incompetent two-term president, the dumbing down of the education system, and our current lagging behind the rest of the world in critical scientific areas such as stem cell research. As such, I wonder, is Mr. Moore trying to open the mind’s eyes of the evangelical blind here? Does he think this call to revolution which he seems to embark upon toward the end of his movie cannot be successful unless we also enroll those overdosing on the “opium of the people”?

Incidentally, I saw the movie with a friend who also happens to be an evangelical Christian (and his faith is very real). Although he and I don’t see eye to eye on many things, he did say the movie was an eye opener.

And, by the way, I thought the scene with Jesus refusing to heal the quadriplegic because it was a “preexisting condition” was absolutely hilarious. A real classic! That scene alone was worth the price of the ticket.

Vinny G.

• Bob Goodwin:
October 11, 2009 at 7:54 pm
Come-on Yves!

Michael Moore may make good points, but he is still a cartoon. Think Glenn Beck on the other side. Simon is the genuine article, and is not a mouthpiece for the hard left, but rather a skeptic of the current government.

I can and do read Simon regularly without wincing, and am a solid capitalist. However I find it really hard to watch either Michael Moore or Glenn Beck without quickly feeling manipulated with cheap theatrics.

You should not expect genuine anger about the malfeasance of those in power to morph into a left wing agenda.

• Vinny G.:
October 11, 2009 at 8:27 pm
Yeah, but the “cheap theatrics” are also hilarious. I for one appreciate Michael Moore’s humor. One can only get so many people to pay attention with PBS-style dry documentaries.

This is part art too, you know.

Vinny G.

• Anonymous Jones:
October 12, 2009 at 1:42 am
It’s interesting that you compare Moore to Beck. I actually agree with this comparison in many ways, though I arrive at this conclusion from a diametrically opposed viewpoint.

To me, Moore and Beck seem to genuinely believe in their causes. I am not sure on what evidence you have formed your belief that Moore is a “mouthpiece of the hard left.” To the contrary, there seems to be little hard ideology to either of Beck’s or Moore’s protestations. Many of their views seem populist and humanist to me as opposed to ideological. Just because their acts may be used by those with ideological leanings does not equate to either being a “mouthpiece.”

To be sure, I disagree with Beck’s rantings more often than I think Moore crosses the line, but unlike with O’Reillys of the world, I don’t think their “acts” are cynical cash grabs.

The main differences I see between the two are that (1) Moore makes a concerted effort to wrap his message in humor (regardless of whether any particular viewer finds it funny), (2) Beck seems to contradict himself more often (though I attribute this more to his willingness to show raw emotion than to any reduced intelligence), (3) Beck is supported in a direct financial sense by one of the financial oligarchs, and (4) Beck is part of a very efficient propaganda machine (well, at least one that seems far more efficient than Moore’s).

I am not exactly sure what a “solid capitalist” is, but I think I probably am one by most’s definition. I definitely believe that it is impossible to stop the working of markets; so I think it is mostly futile to try. I’m for pragmatic shaping when possible. Those with capital depend upon a minimum amount of regulation just as much as those without (real and intellectual property protection, both domestically and abroad, being the most critical).

I’m also not exactly sure what is meant by “left wing agenda,” but I don’t think you have to completely disregard Moore’s investigation into the facts because you don’t agree with all his proposed solutions.

• Francois T:
October 11, 2009 at 9:01 pm
“Michael Moore may make good points, but he is still a cartoon.”

Ah! Style versus substance!

Jon Stewart and Stephen Colbert can be cartoons too, sometimes. That doesn’t subtract anything to the seriousness of their message…unless one allows him/herself to get distracted by the style.

• Francois T:
October 11, 2009 at 9:06 pm
The Moyers’s interview with Rep. Kaptur was extremely revealing in one respect: the exchange with Jamie Dimon.

The sheer arrogance displayed by Dimon, and subsequently by JP Morgan is the kind “you can’t just make this stuff up.”

For me, it crystallized the obnoxious feeling I had about banksters that truly believe they own America.

This whole thing will end up very badly for the country.

• K Ackermann:
October 11, 2009 at 11:07 pm
After watching that, I just want to piss all over Dimon. What a piece of scum he is.
• moslof:
October 11, 2009 at 9:31 pm
Thank you for this review. i had an inside source of information about the goings on inside the Augusta National and I can testify that the “Silent Coup” was underway in the early eighties as banks were gobbling anyone with any deposits to speak of and the chiefs would routinely gather in the corner of the clubhouse to fix lending rates while having a few drinks. I am convinced that one of the main reasons they started overpaying all their employees in the last ten years was to get an extra push in inflating the housing bubble.
• Vinny G.:
October 11, 2009 at 9:36 pm
Can anybody say “Oscar”!?

1. Best Director
2. Best Documentary
3. Best Picture
4. Worst Acting
5. Lowest Budget

Wow! That’s five Oscars right there!

Now how ’bout a Nobel Prize too, for good measure?

Vinny G.

• Otto Maddox:
October 12, 2009 at 11:45 am
So what are we going to put in Capitalism’s place without taking away our freedoms? Government by college professors??
• psychohistorian:
October 12, 2009 at 8:17 pm
Thanks for the posting on the movie, Yves and thanks to the commenters as well.

I think Michael was right in attacking the religious backing to the corporatists. The corporatists are/have corrupted religions just like they have corrupted our government.

It is too bad that the Catholic church has no moral high ground to stand on. They would be more effective without their own history of hypocrisy.

In Praise of Partisanship - The Conversation Blog -

What I don’t like, and what nobody likes, is the brain-dead variety we see in Congress where the minority party would rather make a bill worse in the hopes that it would fail than make it better in case it passes. So the Republicans make it impossible for the Democrats to put cost controls in the health care plan by howling “rationing!” And back when the Democrats were in the minority, they made sure that any attempt to contain the cost of entitlements was immediately branded “destruction of Social Security.”

The way you stop that is definitely not by declaring yourself an independent and leaving your party to the hard-core right that brought it to its current disastrous state. It’s by working from within. A conservative independent is just a Republican who’s had his heart broken, David. I think they need you.

Selected Comments

To put an additional spice on this fake exchange; consider we “old” Republicans once had a party with the likes of TeddyR, Eisenhower, Stevenson, Rockefeller, and even Nixon as our leaders!

We had an eastern elitist by name Buckley speaking of our philosophy and railed against the military-industrial complex, nation building, imperial meddling, high taxes, negative balance of trade, and deficits… and we thought religion was none of any ones business!

Now the Democratic party has moved to the Right of that Republican Party and the so-called Republicans are simply crazy, reactionary, religious nuts or equally crazy fascist corporate thugs and apologists.

The Congress is filled with purchased men and women; subservient to their corporate pay masters, the Democrats are a herd of cats when doing anything except their corporate marching orders and the Republicans are generally traitorous sycophants of their corporate masters or the even worse religious racketeering mobsters.

The quaint idea that Congress is representing the “people” to provide for the well-being of the nation and its “people” is long gone; now only power and money for them and their sponsors is a consideration.

— Chaotician


The demographics have changed. The solid south has gone republican. The Rural center states, always aligned with the republicans/consertives have lost sight of the role of government. (except to provide price supports) and have become obstructive. The gerrymandering that allows the same representatives to return to Congress guarantees that change will be slow. The fact that election depends on big money assures that our government is the best that money can buy. All in all the future looks dim

— Grandpa27


My feeling is that the problems that arise from partisanship is that each party has so many positions on so many disparate issues that to identify with the party is to lose track of one’s thoughts on those issues.

As the parties expand their marching orders over so many issues, it becomes less and less possible for thinking people to agree with everything. It’s even less possible as were are theoretically a represtational democracy, as differing regions have differing priorities.

When any politican loses the ability to say, “That’s something I never thought of. Good point!” to a member of an opposing party or even, “I’ve always agreed with that,” because they’re in the opposite party, we’ve lost the benefits of partisanship and moved into sheer stubbornness.

— Dave Atkins


I agree with the sentiment that the US political landscape needs restructuring.

We need to draw out the futility of fear mongering and start using facts and evidence to assert our arguments. There needs to be less gamesmanship and more intellectual exercising to expose our true problems and get moving in the right direction.

Everyone in our nation is so concerned with keeping the status quo because they are worried about losing something more than gaining something else. It takes some risk for large pay-offs and we’ll never get good policy analysis if we don’t actually enact new policies.

I like the tenor of this conversation and I look forward to similar pieces in the future. We need to get past the initial confrontations and move on toward real objectivity in our discussions.

— JRob in NC


I completely agree with the concept of character over ideology. That is why the only presidential candidate I have supported in 20 years was former Senator Bill Bradley. He has been the only candidate with both the brains, experience and character to hold the office.

Pity he was just a stalking horse for Planetary First Citizen Gore.

— Robert Z.


Collins is absolutely correct that we don’t want to become Italy with its fractured and ridiculously impotent political system.

That being said, we do need more than two parties. It’s no secret that many people (myself included) feel that neither party represents their beliefs. That fact makes it very difficult to vote and it also leads to a sort of disenchanted ennui, leaving one feeling that nothing will ever really get better since regardless of which party is in power they will really screw up something that is very important to me.

Launching a successful third party, however, is incredibly difficult in America — no one has ever done it successfully. (And, yes, I know the Green Party, as well as a few other minor parties, exist, but they have an essentially negligible effect on American politics).

— Michael Williams


Wait! Everyone seems to have accepted the notion that radicals of both left and right have taken over the political process. Nonsense! There are no left-wing radicals anywhere in American politics. There is no left at all.

Who, for example, is proposing a single-payer system for healthcare? That would be a proposal of the left — not of the radical left, since it’s the way the entire rest of the civilized world does it, but of the left — and it’s not even on the table.

Who in our government is opposing the war on terror? I don’t mean opposing torture, or unauthorised surveillance, but actually opposing war as foreign policy. No-one. We’re arguing about strategy and tactics; peace, a left-wing policy, is not on the table.

Who is pushing for public financing of election campaigns? For fully funding the National Endowment for the Arts and the Corporation for Public Broadcasting? For a new New Deal in response to the financial crisis? No-one.

The radical right has successfully painted the entire Democratic Party with the Socialist brush, when the fact is that there isn’t a single elected official in this country proposing anything a self-respecting Socialist would even recognize.

Personally, I don’t believe that ideology is even a significant culprit in our political dysfunction. The culprit is self-service — the healthcare proposals currently on the table are wanting not because they are too far left or right, but because they avoid taking on the vested interests to whom our politicians are beholden. Ideology is merely the rationale, the afterthought.

But to the extent that we even have an ideological conversation in American politics, it is between a strident and shameless right, and a feckless center. The left died a generation ago.

— David Berman


Eh–the game is the same almost anywhere you go. I’ve lived in France, the alternative example of several readers. It’s a de facto two-party system: either the Socialists (the center-left) or the RPR (the center right) are the primary party in power, and the other parties on their side of the aisle mostly fall into line, except on certain key issues–just as certain groups within the Dems and GOP do.

The main difference is the leaders of the fringe groups can represent those views in the media without the “responsible” types fretting that fringies will reflect badly on them and trying to hush them up. It’s a venting mechanism for more extreme views, but it has little effect on the real direction of policy and government.

— LC


Discussing the Democrats versus the Republicans is about as relevant and interesting as parsing the differences between Coke and Pepsi, when what we need is some clean, fresh water.

— Roger


In response to #14, remember:

The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.
– F. Scott Fitzgerald

— Tom Z.

Well the Republicons need to get away from being the NO Party. It’s so much easier to sabotage things than to create something that actually works. Just letting things gravitate to keeping the status quo will be a disaster. We now know the agenda of the past 8 years wasn’t working, no matter what problem we’re talking about, so it’s time to give a look at a different way instead of beating our heads against the wall.

A KNOW Nothing Party that ignores facts, science, and the will of the people over the will of the lobbyists has a lot to answer for. How can you have healthcare reform if you don’t allow the administrators to evaluate the effectiveness of treatments?

Boehner with his slick used-car salesmen persona is not to be trusted because he misrepresents Obama’s plans and doesn’t articulate any ideas of his own for reform.

It looks like David is disavowing the right-wing demagogue media blitz when he talks about “his guys”. I applaud him for that. And he didn’t mention William Kristol, the man who gave us Iraq and Sarah Palin.

— Johnny E

The Republicans are in GRAVE danger of being not so much the Party of No as the Party of Know-Nothing. Perfect benchmark: the polling of Sarah Palin and Rush Limbaugh, relative to iconoclastic or moderate Republicans — the kind David Brooks identifies with.

Seems like the Devil’s Embrace that Rove (and before him, Atwater, in a long line stretching back to dear old George Wallace…) cynically pursued — essentially governing by fanning the flames of ignorance, populist resentment, amped up with intolerant, belligerent religiosity — is coming back to bite them in the butt.

But more tragically, it’s biting the whole country in the derriere. Because as history has taught us (or NOT taught us, apparently) again and again and again is that the politics of resentment, negative maneuvering, and scapegoating — while maybe a short-term high for ratings and election — leads to terrible things.

We are ALL Americans. And we are all being polluted by this.

Blame Obama if you want for his politics, but you can’t say that he has played the resentment card. In fact, I can’t believe he manages to not engage the bilious hatred that keeps getting thrown at him from these wacko fringes (the kind that showed up at Palin and even McCain rallies, with bloodlust in their hearts).

My hope is that only the GOP will suffer at the polls from this, see the errors of its ways, and come back as a party with an ideology that’s constructive, humanitarian and hopeful — and not paranoid and borderline fascist, which is where the rank and file of the GOP seems to be heading.

That way lies disaster. And as a Democrat, I take no comfort at all in knowing this.

— Marc in Piermont

[Mar 28, 2009] Letters Comparing the U.S. to Russia and Argentina - Salon

[Mar 11, 2009] Willem Buiter's Maverecon To the victor go the spoils who answers the phone in the US Treasury

March 11, 2009

Nobody home in Washington DC

Since the Obama administration took over on January 20, the US Treasury has effectively been out to lunch. As widely reported (see e.g. this account in the Financial Times), Sir Gus O’Donnell (as cabinet secretary the top UK civil servant) has attacked the “absolute madness’ of the US spoils system, where a new Federal administration replaces the entire top stratum of the civil service with new officials possessing the right political connections and leanings. Quite a few of these top officials need to be confirmed before they can start working. This can take months. Many of the new officials have no political, government or administrative experience and spend most of their first months in office trying to figure out where the washroom is instead of designing and implementing policy.

It is a system designed to produce protracted policy paralysis. Often this does not matter much. It may even be helpful to the greater good at times - “That government is best which governs least.” - but in times of war and deep economic crisis, when the world we thought we knew may be falling apart, it is not a bad idea to have a government that can both think and act. The current US administration neither thinks nor acts much, judging from the results.

The reason Gus O’Donnell made his remarks is that the UK government are busy organising next month’s G20 summit in London, and found that when they ring the US Treasury, either nobody answers the phone or they get put on hold and have to listen to Vivaldi’s Four Seasons for hours on end.

In the UK system, there is a permanent civil service which smoothes the transition from one government to the next. This is also the norm in most other advanced industrial countries today. The permanent professional civil service system also has its flaws - it can become a state within the state, running rings around their supposed political masters (watch Yes Minister or Yes, Prime Minister to get a wonderful and accurate depiction of an out-of-control professional civil service) - but there are ways of minimizing and mitigating the risk of rule by a professional civil service other than the US ’solution’: paralyzing and demoralising the professional civil service.

The price of the US spoils system: the emasculation of US macroecononomic policy making

The price of the US spoils system has been high, if the quality of economic policy making in Washington DC by the Obama administration is anything to go by. The Obama administration’s handling of the financial crisis and the recession-verging-on-depression has been surprisingly fumbling and kak-handed. The economic team should have hit the ground running following a lengthy transition period and the appointment to the top positions of experienced economic policy makers like Tim Geithner, Larry Summers, Peter Orszag and Paul Volcker. But there is little evidence of coherent teamwork. Instead we are treated to repeated examples of the Unfinished Symphony (Geithner) or of A Night at the Improv (Summers).

In the US Treasury, Timothy Geithner has come up with a number of half-baked plans, under the grand umbrella of the Financial Stability Plan of February 10. These plans are not worked out to the point that they can even be evaluated properly, they are not costed properly and, except for the money left from the TARP and the funds approved by the Congress for the US$ 787 bn fiscal stimulus plan, they are not funded.

That the half-worked-out fiscal-financial rescue plans of the US government are not funded is due to a deeper flaw in the US political economy than the spoils system. It reflects the extreme polarisation of American society and of the polity. This may have started as early as the Vietnam War years, accelerated during the Reagan administrations and exploded during the George W. Bush administrations. Almost any departure from the status-quo is subject to de-facto veto from some well-organised and well-funded special interest coalition. During times of war and economic crisis, policy paralysis is costly.

But the fact that the economic plans of the administration are only half worked out is due to the fact that, except for the Treasury Secretary himself, the entire top of the Treasury is vacant. it is even possible that Geithner has to make his own coffee, a task normally delegated to a Deputy Secretary. This is an insane situation that no self-respecting country should allow to continue.

With Geithner under-supported and over-worked, Larry Summers, Director of the National Economic Council, has jumped into the macroeconomic policy fray with gusto, but not, unfortunately, with the benefit and backing of careful analysis. Larry’s understanding of policy-oriented macroeconomics is fully ecompassed by the ‘Keynesian cross’ of introductory macroeconomics textbook fame. We have a recession. The world has a recession. During recessions, firms don’t spend. So households and governments must spend. Part of any national spending boost leaks abroad through imports. The global public good of demand expansion will therefore be under-supplied unless there is international coordination and cooperation. Therefore governments everythwere must cut taxes and/or boost public spending.

I will explain in a future post why the Keynesian cross is a dangerous half-truth, even under depression-economics conditions. Here I will say only that even if two of the necessary conditions for Summers’ Keynesian cross-based policy prescriptions are met - (1) there are widespread idle resources of labour and capital to meet demand and (2) there are sufficient numbers of liquidity-constrained and current-disposable-income constrained households that act as ‘myopic’ current income-constrained, Keynesian consumers - there is still an important and potentially binding financial crowding out constraint on the ability of governments to use expansionary fiscal policy to boost aggregate demand.

In addition to (1) and (2) being met, there must be sufficient ‘fiscal spare capacity’ - confidence and trust in the financial markets and among permanent-income consumers, that the government will raise future taxes or cut future public spending by the same amount, in present discounted value terms, that they want to boost spending or cut taxes today. Without this confidence and trust, financial markets and forward-looking consumers will be spooked by the spectre of unsustainable fiscal deficits. Fear of future monetisation of public debt and deficits, or of future sovereign default will cause nominal and real long-term interest rates to rise. Ultimately, the sovereign will be rationed out of its own debt market. The US government (and the US economy as a whole) will encounter a ’sudden stop’.

These are not tales to frighten the children. I am deeply concerned that, when the US Federal government starts to run Federal budget deficits of 14 percent of GDP or over, the markets will get spooked and will simply refuse to fund the US authorities at any interest rate. Summers’ naive proposal for expansion now, virtue later, is simply not credible given the political economy of the US budget, now and in the foreseeable future.

Of course there are always the printing presses. But these are most effective if their use is unanticipated. Seigniorage or the expected inflation tax are a much more limited source of government revenue that the capital levy on the holders (domestic and foreign) of fixed-interest US-dollar denominated non-index-linked debt that can be inflicted through an unanticipated increase in the rate of inflation - the unexpected inflation tax. So the US Treasury and the other members of the US macropolicy chorus plus the Fed have to simultaneously convince the holders of US Treasury debt that the real value of their investment is safe, and prepare to inflate that real value away if and when the need arises.

Summers’ macroeconomic policy prescriptions have dire ‘tail risks’ associated with them. Effective fiscal expansions are not part of the US policy menu. The spoils system has created the policy vacuum that permits Summers to make such ill-thought-out and dangerous proposals. That alone should be sufficient reason to get rid of the system.

Abolish the spoils system

The spoils system - the manisfestation of government patronage (grants and favours) in the domain of civil service and government agency jobs - is, historically, the ubiquitous system. It was the prevailing system in the UK and all other now-advanced industrial countries before the spread of electoral democracy and accountable government -except the US. For some reason the US has been the only advanced industrial country to get stuck in a time-warp, with a 19th century spoils system at the level of the central government. Not surprisingly, the level of performance the US gets out of its government bureaucracy tends to be more like that found in developing countries and emerging-but-not-yet-emerged market economies, than the level one would expect from one of the world’s oldest and richest democracies.

The solution to the spoils system is simple: abolish it. Cabinet-level positions are for political appointees. All other civil service and government agency positions are filled by members of a non-partisan professional civil service, appointed on the basis of merit, that is, competence and independence. You may also have to start rewarding public service competitively, and not just through a comprehensive health insurance package, if you want to attract high quality men and women into the civil service and to retain them.

Gus O’Donnell may get an F for tact and may even have committed a major diplomatic gaffe. But what is really unforgivable is that he spoke the truth. If your friends are people who point out your weaknesses when these weaknesses threaten to harm you and those around you, Gus O’Donnell is a good friend of America indeed. Truth before tact.

To the victor go the spoils. But the losers in this silly spoils game are the American people and those in the rest of the world who are waiting in vain for thoughtful and decisive American leadership. They are getting neither. And the spoils system is part of the problem.


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