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Brainwashed by the cult of the super-rich by Priyamvada Gopal

Cult of super-rich is an integral part of neoliberalism
December 25, 2013 | The Guardian

Followers, in thrall to Harrods and Downton Abbey, repeat the mantra that the greed of a few means prosperity for all. 'We are invited to deceive ourselves into believing we are playing for the same stakes while worshipping the same ideals, a process labelled ­'aspiration'

Last week, Tory MP Esther McVey, Iain Duncan Smith's deputy, insisted it was "right" that half a million Britons be dependent on food banks in "tough times". Around the same time, the motor racing heiress Tamara Ecclestone totted up a champagne bill of £30,000 in one evening. A rich teenager in Texas has just got away with probation for drunkenly running over and killing four people because his lawyers argued successfully that he suffered from "affluenza", which rendered him unable to handle a car responsibly. What we've been realising for some time now is that, for all the team sport rhetoric, only two sides are really at play in Britain and beyond: Team Super-Rich and Team Everyone Else.

The rich are not merely different: they've become a cult which drafts us as members. We are invited to deceive ourselves into believing we are playing for the same stakes while worshipping the same ideals, a process labelled "aspiration". Reaching its zenith at this time of year, our participation in cult rituals – buy, consume, accumulate beyond need – helps mute our criticism and diffuse anger at systemic exploitation. That's why we buy into the notion that a £20 Zara necklace worn by the Duchess of Cambridge on a designer gown costing thousands of pounds is evidence that she is like us. We hear that the monarch begrudges police officers who guard her family and her palaces a handful of cashew nuts and interpret it as eccentricity rather than an apt metaphor for the Dickensian meanness of spirit that underlies the selective concentration of wealth. The adulation of royalty is not a harmless anachronism; it is calculated totem worship that only entrenches the bizarre notion that some people are rich simply because they are more deserving but somehow they are still just like us.

Cults rely on spectacles of opulence intended to stoke an obsessive veneration for riches. The Rich Kids of Instagram who showed us what the "unapologetically uber-rich" can do because they have "more money than you" will find further fame in a novel and a reality show. Beyond the sumptuous lifestyle spreads in glossies or the gift-strewn shop windows at Harrods and Selfridges, and Gwyneth Paltrow's Goop website, shows like Downton Abbey keep us in thrall to the idea of moolah, mansions and autocratic power. They help us forget that wealthy British landowners, including the Queen, get millions of pounds in farming subsidies while the rest of us take back to the modest homes, which we probably don't own, lower salaries and slashed pensions. Transfixed by courtroom dramas involving people who can spend a small family's living income on flower arrangements, we don't ask why inherited wealth is rewarded by more revenue but tough manual labour or care work by low wages.

Cue the predictable charge of "class envy" or what Boris Johnson dismisses as "bashing or moaning or preaching or bitching". Issued by its high priests, this brand of condemnation is integral to the cult of the rich. We must repeat the mantra that the greed of a few means prosperity for all. Those who stick to writ and offer humble thanks to the acquisitive are contradictorily assured by mansion-dwellers that money does not buy happiness and that electric blankets can replace central heating. Enter "austerity chic" wherein celebrity footballers are hailed for the odd Poundland foray, millionaire property pundits teach us how to "make do" with handmade home projects and celebrity chefs demonstrate how to "save" on ingredients – after we've purchased their money-spinning books, of course.

Cultish thinking means that the stupendously rich who throw small slivers of their fortunes at charity, or merely grace lavish fundraisers – like Prince William's Winter Whites gala for the homeless at his taxpayer-funded Kensington Palace home – with their presence, become instant saints. The poor and the less well-off, subject to austerity and exploitation, their "excesses" constantly policed and criminalised, are turned into objects of patronage, grateful canvasses against which the generosity of wealth can be stirringly displayed. The cult of the rich propounds the idea that vast economic inequalities are both natural and just: the winner who takes most is, like any cult hero, just more intelligent and deserving, even when inherited affluence gives them a head start.

We are mildly baffled rather than galvanised into righteous indignation when told that the rich are being persecuted – bullied for taxes and lynched for bonuses. The demonising of the poor is the flip side of the cult of the rich or, as a friend puts it, together they comprise the yin and yang of maintaining a dismal status quo. It is time to change it through reality checks, not reality shows.

kingcreosote

Let them eat cake is as profound these days as it ever was,money makes people into hideous reptiles.

rooster29

GrapeLeaves

"So money doesn't provide happiness."

Maybe, but what it does do is increase the number of choices you can choose from, which, if done wisely, can lead to happiness. If that doesn't work, money allows you to try something else.

rooster29

but what it does do is increase the number of choices you can choose from, which, if done wisely, can lead to happiness. If that doesn't work, money allows you to try something else.

While that is not specifically about the subject of this article - because this article is about the obscenely rich and the effects of that obscenity on the rest of us in society - it is correct about how enough money to sustain one's essentials and also leave room to chase one's goals and use one's talents to better themselves and, hopefully, others. Being freed up to use your time to achieve something other than maintain food and shelter is not asking or expecting too much out of this life.

The obscenely wealthy, and how society has given itself over to same, is destroying the world and most who live in it. That is not an exaggeration.

Machiavelli10

There's the ultra-rich, the pretty rich, the sort-of rich, the "rich for a few years", the well-off, the comfortable, the doing well but dependent on a salary and a few good bonus years, the "lower-rich" class, the upper middle class, the middle class, the lower middle class, the upper lower class, the middle lower class, the lower class, the poor, and the absolutely poor.

Who in this list is a "cult" once you look honestly at the numerous gradations? It is much too "cheap and easy" to use the self-centered greed and undeserved wealth of the Ecclestone daughter whose father bestowed incredible a billion dollars without taste or responsibility, or the useless and classless Paris Hilton as the norm for "fixing" the ills of society through taxation. The problem is that people pushing an agenda on either side do not bother to understand the complexity of the situation and instead continually pose it as a 1% v. the 99% as a political ploy and attempt to gain votes through class warfare. But intuitively most people know it isn't as simple as that. This is why there hasn't been any real tax reform. It also leaves out the issue of whether for some the "cult of the poor" is also a device being used as leverage against others in an effort to obtain votes. It is a mixture of cynicism, stupidity and venality pretty much on all sides.

epidavros -> Machiavelli10

But this tiny percentage is indeed the issue. We have an economy constructed on the notion that people are both creators and consumers of goods and service, with the market mediating the process. But we now have a situation with over 80% of the income in the hands of some 1% of the population - the model is broken, because the creators of wealth (workers) cannot be consumers because the income needed to consume flow to a tiny minority disproportionately. The 99% do not matter in this equation whatever their income - even if they are quite well off - because collectively they do not have enough income to balance the equation.

RobspierreRules

The adulation of royalty is not a harmless anachronism; it is calculated totem worship that only entrenches the bizarre notion that some people are rich simply because they are more deserving but somehow they are still just like us.

Damn! I wish I had written that!

Emmm

This is an excellent, thoughtful and pretty darn accurate analysis of the parasites that run the show.

Changing things though is a Herculean task, and there aren't any of those on the horizon. If Jesus couldn't tame the bankers...

kristinekochanski

Good article Priyamvada. It's bizarre reading posters who turn up to defend the rich, as if we live in a meritocracy & all you need to do is work hard to become one of them. What utter bullshit & how sad that so many are members of the cult.

Even here in Scotland where it is not as popular to be a right wing cult, there are huge issues regarding land ownership & how it was stolen from the poor as they had no lawyers.

Onwards & upwards the fight goes on.

fourfoldvision

Ostentation in the public display of private wealth is part of the strategy of co-optation, and it goes back to Adam Smith's "necessary illusion" of the pursuit of happiness -- of a "happiness" to be realised in futurity by envy and by emulating the rich. It's the donkey and carrot approach that drives the economy forward.

The strategy of co-optation relies, of course, upon envy. First get rid of the envy, then the necromancy of co-optation is ineffective, and the ostentatious displays of private wealth will look like pure folly.

DasInternaut

The super-rich are, and always have been, able to look after themselves. They don't need government to help them accumulate more wealth. In fact, I'd argue that neoliberalism has made them feckless in this endeavour. Making the cult realise this, is hard work, since the cults of wealth and celebrity have long walked hand in hand.

marshwren -> DasInternaut

The super-rich are, and always have been, able to look after themselves.

I seriously doubt that, if what is meant by 'looking after oneself' is hiring flunkies to do all the work -- investment brokers, accountants, tax lawyers, etc. Hell, of these privileged types wouldn't know how to mow their own lawns, change a vacuum cleaner bag, replace a fuse in a circuit breaker, etc. This is particularly true of inherited wealth.

And then there's this:

http://www.learnvest.com/2012/03/when-it-comes-to-social-skills-the-rich-are-poor/http://www.learnvest.com/2012/03/when-it-comes-to-social-skills-the-rich-are-poor/

londonhongkong

Inherited wealth is wrong. Earned wealth is not.

Coolhandluke77

Reaching its zenith at this time of year, our participation in cult rituals – buy, consume, accumulate beyond need

Newsflash: the automaton plebs don't quite see it your way.

Meltingman

What's this "Class envy" you bullshit about ? You're pretending its what tory toffs are saying to the working class, but this petty load of rubbish is just a squabble between the same class. The "Left" of the Guardian are exactly as privileged, as moneyed, as snobby, as privately schooled as the toffs they're squabbling with. The only "Envy" is between themselves.

The most offensive assertion is the Guardian toffs (all on big money; all using the Guardian's perk to send their kids to private schools) is that they "speak for" and "Represent" the working class-a people they know bugger all about save what they got from their Harrovian sociology text books.

Be honest for once; its upper crust totally middle class and well off you that envy's those of your same class , and the only thing you're "ashamed" of is that they flaunt their money, where as you think it should be unostentatious so as you can make believe you're working class and won't loose your cash to those revolutionaries you pretend to be one of should the big day come..

fourfoldvision -> Meltingman

Nothing to do with any of this, of course. The vices of greed, ostentatiousness, envy, etc don't originate in left ideology, but in Christianity, Buddhism, Islam etc.

I think you are very confused.

fourfoldvision -> Meltingman

While we are on the subject, might as well clarify a few things,

The secular political ideologies of the modern era -- liberalism, conservatism, socialism, anarchism -- weren't simply pulled out of a hat. They began life as theological controversies during the Reformation period, and they are principally four because each took its source of inspiration from one or another of the four Gospels.

Socialism pre-existed Marx, and was a Christian movement. Marx simply tried to make it "scientific". Liberals and conservatives were originally called "libertines" or "primitivists" depending on their theological orientation and attitudes toward ecclesiastical authority. The anarchists began as monastic orders -- the Dulcinians and the Brethren of the Free Spirit.

The secular ideologies were so anxious to appear "rational", that they simply censored out their religious origins and ancestry.

paulxx

This is an excellent article, Priyamvada Gopal. It shows far more insight than we usually get at the Guardian. In essence it is about ideology.

" We are invited to deceive ourselves into believing we are playing for the same stakes while worshipping the same ideals, a process labelled "aspiration".

This is akin to one of the points Marx makes in "The Communist Manifesto" which is that the generally-held ideology, in every society, is that of the Ruling Class.

All ruling classes have been a minority in society and one of the most important ways they maintain their control over the majority is by getting the majority to mistakenly think that what is best for the minority is also best for the majority. You can call it "education" or "brainwashing" or "The Free Press" but it amounts to the same thing.

So the capitalist ruling class promote the notions that the Ruling Class are in charge because they work harder than the rest of us and they are cleverer than the rest of us and hence their privileged position in society is justified.

This brainwashing of all of us (and yes, I include even us marxists in this) is ok and works just fine as long as society is stable, however it looses its effectiveness in times of economic change, and the one thing that epitomises capitalism is the economic cycle, or boom-and-slump. Then the ruling-class's ideology/brainwashing comes under severe strain. Revolutionary change becomes possible.

Up until 2007 bourgeois economists were trying to tell us that the days of boom-and-bust were over. (I expect Francis Fukuyama is still hiding under his desk).

However it is clear that the normal state of today's monopoly capitalism is one of slumps. All the ideological nonsense of capitalism is being challenged all over the world, not only by marxists, but by an ever growing body of people not normally involved in politics.

Capitalist ideology is in the dock and looking very guilty.

2014 is probably going to be a very turbulent year politically.

Seasons Greetings! to all the marxists, socialists, communists and lefties of every description out there.

paul

ID256911

This is a fine article, and although I agree entirely with the sentiments, this "them and us" dichotomy is not unique to monarchies. In Ireland, which purports to be a Republic, something similar exists and there is the same deference to wealth and adulation to those who have "made it", regardless of who was trampled upon in the process. "Earned wealth" can be equally dubious. Is someone like Mike Ashley, champion of the zero hours contract, and peddling sweatshop produced goods cheaper than his competitors to be lauded?

citizenJA

Is someone like Mike Ashley, champion of the zero hours contract, and peddling sweatshop produced goods cheaper than his competitors to be lauded?

No.

25YearsinBusiness

I like the basis of this article, a fair and meritocratic society needs to remove the ability of individuals and businesses or institutions to create personal biases.

Scrap all private schooling, make inheritance tax 100% over £10,000, scrap all inheritance of titles, peerages and other institutional advantages, remove the ability of individuals or companies to avoid or evade tax on sales or earnings. Then after those who can't succeed without unfair support leave we can build a society to be proud of.

Walrave -> 25YearsinBusiness

While inheritance is an important point and tax avoidance too, the illusion of the "anyone can make it if they try hard enough" attitude will remain. It's an economic fact linked to the nature of money in our economies that very few people can be super rich. They should be regarded as lottery winners of a sort, whether "self made" or not, not as examples of successful living to be aspired towards. Rather than revolution as some are calling for, transparency may be the antidote here (combined with effective and appropriate taxation). Transparency can transform governments away from corruption, let's see what it can do for wealth distribution.

[Dec 28, 2013] WHAT WONDERFUL CHRISTMAS GIFTS FOR THE POOR

How to stick it to the poor: A congressional strategy
By Samantha Paige Rosen
14 hours ago
The Week

Well, it's certainly been an eventful year.

The 113th Congress has stuck it to the poor at pretty much every opportunity. In fact, if you take all their past and future plans into account, it looks like they have accomplished that rare feat: To close in on enacting an overarching, radical agenda without control of the Senate or the presidency. How did they do it? Probably by escaping scrutiny through a piecemeal approach to legislation, a president who is willing to meet them halfway, and one diabolic word: Sequester.

Let's drill down into each piece:

1. Kick 'em to the curb
Congress will basically start kicking poor people out of their homes early next year. The idea is, if you can't pay for your home without government assistance, you don't deserve to live in one. In this spirit, budget cuts due to sequestration will take rental assistance vouchers away from 140,000 low-income families by the beginning of next year, making housing more expensive as agencies raise costs to offset the budget cuts. All in all, about three million disabled seniors and families will be affected. The savings? $2 billion, which is pretty much what the government shutdown cost in back-pay to federal workers.

If you're lucky enough to keep your home, don't expect to heat it. Sequester cuts to the Low Income Home Energy Assistance Program (LIHEAP) meant that 300,000 low-income families in 2013 were denied government support for energy costs.

2. Take the food out of their mouths. Literally.

The recent reduction in Supplemental Nutrition Assistance Program (SNAP) benefits has affected more than 47 million Americans and is the largest wholesale cut in the program since Congress passed the first Food Stamps Act in 1964.

The cuts to Food Stamps were implemented on November 1. Yet, Congress won't let the program rest there - House Republicans are pushing to take $39 billion from SNAP over the next decade. If their plan succeeds, the Congressional Budget Office estimates that 3.8 million low-income individuals would lose their benefits in 2014 with 2.8 million more getting kicked off the program each year. SNAP is one of the three most effective anti-poverty programs the government has, keeping four million people out of poverty last year alone. So the initial and further cuts make a lot of sense - if you despise the poor.

And don't worry, other cuts to food programs ensure both the oldest and youngest amongst us won't be spared. Cuts to Meals on Wheels will cost poor seniors four to 18 million meals next year. Meanwhile, the Women, Infants, and Children program (WIC), which provides health care referrals and nutrition to poor pregnant and postpartum women and children up to age five, has grappled with $500 million in cuts this year and faces even deeper ones next. Fair's fair, though.

3. Dim their kids' future

There's nothing that will make our economic future brighter than under-educating our children, right? That's why, again as a result of sequestration, Head Start literally had to kick preschoolers out of their classrooms this March and removed 57,000 children from the program this September (70,000 kids total are will be affected). If this weren't enough, more than half of public schools have fired personnel due to the ominous cuts - and Representative Jim Jordan (R-Ohio) said sequestration "has been one of the good things that has happened." Given that 40 percent of children who don't receive early childhood education are more likely to become a parent as a teenager, 25 percent are more likely to drop out of school, and 70 percent are more likely to be arrested for a violent crime, this is definitely the definition of a "good thing."

4. Erase the roadmap for employment

The United States has one of the stingiest unemployment programs in the developed world and it is getting even stingier. People who have been out of work for 27 weeks or more - 40 percent of the unemployed - have already begun and will continue to lose a large portion of their benefits between January and March. Eight percent of this year's sequestration cuts are coming from unemployment insurance. The logic here is that the program discourages people from looking for work, so why fund something that just makes the unemployed lazier? The evidence, however, proves that government assistance fuels the job searches of these 4.4 million Americans. Yet by the end of December, about 1.3 million will lose their extended jobless benefits if Congress doesn't renew the program. And cuts to the Temporary Assistance for Needy Families program (TANF, or welfare) means there will be even less of safety net to fall back on.

5. Make 'em work till they drop

President Obama put Social Security cuts in his budget for fiscal year 2014, and Republicans are thrilled. Switching to a new formula called Chained CPI would lead to benefit cuts of $230 billion dollars in the next ten years. Apparently, it's Social Security that's driving up the debt, as Speaker of the House John Boehner (R-Ohio) has said. The irony here, according to The New York Times' Paul Krugman, is that while debt can indirectly make us poor if deficits drive up interest rates and discourage productive investment (they haven't), investment is low because the economy is so weak, partly from cutbacks in public spending and investment - the cuts, such as this one, that supposedly protect Americans from a future of excessive debt. Democratic Senators Elizabeth Warren (Mass.) and Tom Harkin (Iowa) have been fighting an uphill battle to boost Social Security benefits. But carry on, Congress. What you're doing really makes sense here.

In just a few short decades, we've gone from LBJ's Great Society, where many of these ideas originated, to this Congress' attacks on the poor. According to the Census Bureau, safety net programs keep tens of millions of Americans out of poverty each year. But that's just not the federal government's priority anymore. This Congress' message: It's every man for himself

[Dec 27, 2013] 'What Obama Left Out of His Inequality Speech Regulation'

Economist's View

Thought I'd highlight this piece from today's links:

What Obama Left Out of His Inequality Speech: Regulation, by Thomas McGarity, Commentary, NY Times: President Obama's speech on inequality last Wednesday was important in several respects. He identified the threat to economic stability, social cohesion and democratic legitimacy posed by soaring inequality of income and wealth. He put to rest the myths that inequality is mostly a problem afflicting poor minorities, that expanding the economy and reducing inequality are conflicting goals, and that the government cannot do much about the matter.
Mr. Obama also outlined several principles to expand opportunity: strengthening economic productivity and competitiveness; improving education, from prekindergarten to college access to vocational training; empowering workers through collective bargaining and antidiscrimination laws and a higher minimum wage; targeting aid at the communities hardest hit by economic change and the Great Recession; and repairing the social safety net.
But there's a crucial dimension the president left out: the revival, since the mid-1970s, of the laissez-faire ideology that prevailed in the Gilded Age, roughly the 1870s through the 1910s. It's no coincidence that this laissez-faire revival - an all-out assault on government regulation - has unfolded over the very period in which inequality has soared to levels not seen since the Gilded Age. ...[continue]...

See here for more.

DeDude:

The increased inequality and revival of laissez-faire are just two sides of the same coin. When the rich plutocrats get more power they reduce restrictions on themselves and take as big a piece of the cake as they possibly can. This all started with a rich sociopath creating Fox news and using Big Boob Blondes to brainwash the sheeple into thinking that it was in their personal inters to let the rich take a bigger piece of the pie (cause somehow by magic that would make the pie bigger).

Jesse:

"It is too bad that so many are distracted, if not ensnared, in the well-crafted emotionalism and stage play of left vs. right puppet show which is put forward in the headlines, while the looting of the nation by its ruling class proceeds almost unimpeded to almost everyone's detriment, except for an obscenely fortunate few."

Robert Reich: JP Morgan and the Corruption of America

http://jessescrossroadscafe.blogspot.com/2013/12/reich-jp-morgan-and-corruption-of.html

kievite:

Deregulation is just one aspect of neoliberalism. And if we view deregulation though the prism of neoliberal ideology, I think international aspect of neoliberalism is very important and, unfortunately was neglected in the article. Also internally growth of neoliberal ideology parallels the growth of the national security state. In this sense the cornerstone events for deregulation were Truman's national security doctrine, JFK assassination, the collapse of the USSR and 9/11.

I don't think that the rise of neoliberalism was just a reaction of rich on "too strict" regulation of New Deal. This view can be called "the theory of revenge of financial elite." IMHO roots are deeper as neoliberalism is also an instrument of the US foreign policy and as such the main blow hit foreign nations, and only as a blowback the USA society ;-)

In the USA, while deregulation wave did exist since Reagan (or Carter) and did enormous damage, not all elements of neoliberal doctrine were implemented. For example growing external debt might be viewed as a semi-official policy of exploiting the status of the dollar as the world reserve currency to the bitter end ("After us deluge"), neoliberal theories be damned.

So while right-wing think tanks played an important role (especially turncoat Trotskyites in those tanks, such as James Burnham and Irving Kristol), fish rots from the head: it was the USA government, and first of all foreign policy establishment, that pushed neoliberal agenda as an export product for foreign nations.

BTW both Democratic and Republican administrations pushed it on foreign nations equally effectively. With democrats often doing the most dirty job (Clinton's economic rape of Russia is one well-documented example). Actually from 1990 till now neoliberalism is the cornerstone of the US foreign policy, viewed by other countries as super-aggressive, imperial ideology, displacing Marxism and National socialism.

On the other hand the internal "implementation" of neoliberalism might also be forced by the law of diminishing returns due to monopolization of most US industries, which hit the USA in 70th and coincided with the first oil crisis of 1973.

At this point the "profit sharing" with the US workers that the latter temporary enjoyed from, say 1941 to 1973 became impractical. In other words there was no longer enough sweets for all children. That's when corrupt hired-guns from Chicago school like Friedman became so valuable. Friedman's "Capitalism and Freedom" (1962) is essentially the manifest of neoliberalism.

Also in 70th it became clear the USSR became a stagnant society that represent little, if any threat to the USA ("paper tiger" as our Chinese friends aptly noted). So the US hands were freed. That weakening of the USSR position probably indirectly led to Chile coup d'état of 1973, the year neoliberalism became official US foreign policy.

And in 1991 the main obstacle for enforcing neoliberal agenda on other nations -- the existence of the USSR -- disappeared. At this point Neoliberal ideology was enshrined as the economic orthodoxy and IMF became the tool for "shock therapy" of unsuspecting nations. This neocolonial approach based on pushing foreign load (which can't be repaid due to natural backflow of money to Western banks by corrupt government officials) and then dictating draconian condition (structural adjustments) for refinancing them. Conditions that open the country like a can for the US (and other Western) multinationals (aka "Washington Consensus".). That's an interesting way to exploit corruption in the third world, while officially fighting it.

Larry:

The interesting part is where policies that lead to greater equality diverge from those that grow the economy. McGarity's claim that "Obama put paid to" such a possibility is probably better phrased as "Obama denied".

He listed "economic productivity and competitiveness; improving education, from prekindergarten to college access to vocational training; empowering workers through collective bargaining and antidiscrimination laws and a higher minimum wage; targeting aid at the communities hardest hit by economic change and the Great Recession; and repairing the social safety net"

All those items save productivity and K-12/higher education/training are about slicing the pie regardless of how they impact its size. It's a profound retreat from his earlier, albeit episodic, focus on "jobs, jobs, jobs".

If he plays it right, it may help his popularity. Do the math. There are a lot more people with jobs who'd like a raise than there are those who would like to get a job in the first place. If he can convince workers that his policies will produce higher incomes, everyone can forget about the unemployed and live happily ever after.

The only policy that will directly (rather than indirectly by e.g., fixing monetary policy) increase both jobs and incomes is wage subsidies. While they have troubles of their own, they maintain the incentive to work and the incentive to hire at costs a tiny fraction of the 00s of thousands per job that came from O's stimulus plan. A subsidy of say $2.50/hr for every incremental hour over the prior year would push incomes up and create jobs as well.

Other than that, he should stick to running his drones.

There is already sufficient regulation that the government can force any private actor to do anything it wants. E.g., see the JPM settlement last month or the nonsense about Reagan landing slots and the AA/USAIR merger. Our "limited" government is effectively limited only by what the media rather than Constitution will allow. The rest is just full employment for lobbyists, lawyers and accountants. They gotta eat just like you and me, so there you are.

kievite:

> The interesting part is where policies that lead to
> greater equality diverge from those that grow the
> economy.

Good point. I would add that sometimes internal policies can become hostage to foreign policy agenda that benefits only multinationals.

> There is already sufficient regulation that the
> government can force any private actor to do
> anything it wants.

Another good point. So absence of regulation is not sufficient condition for deregulation. You need also the absence of will to regulate as a pre-condition. Putting cronies in regulatory agencies as Bush II did was essentially a stealth deregulation without changing any laws.

> Our "limited" government is effectively limited
> only by what the media rather than Constitution
> will allow.

It goes without saying. That's the part of the elite control. That's how saving of financial industry was sold to the nation.

Also returning to the inequality issue, nowhere in MSM you can read that people working in WalMart (many of them single mothers) actually are living not in the USA, but in some third world country with hunger at the end of the month as a common problem.

So the problem (and this is a complex problem) exists but the government is off the hook and can safely ignore it. WalMart workers interests have no representation in MSM and never will unless riots occure.

Larry:

You don't think Dems put cronies in reg agencies? Have you looked at NLRB lately? Fannie Mae? OCR? The whole point is that cronyism is the inevitable consequence of the intrusive state. Why do you think DC became the richest neighborhood in the country during the Obama years.

While single mothers do work in low-wage jobs, so do lots of others. It's up to the women to decide when to have kids, but is it incumbent on the rest of the country to, e.g., pay higher prices and higher taxes because of the choices those women make? The rapid decline in the teenage pregnancy rate in recent years shows that women exercise autonomy in these matters. Further, we have enormous numbers of social programs to help them out. But never mind. Let's give them more free stuff to help them along.

kievite:

Larry,

> You don't think Dems put cronies in reg agencies?

Do you really think there is a big difference between Repugs and Dems?

Obama actually is to the right of Teddy Roosevelt, Eisenhower and Nixon, is not he?

Looks to me like one party with two wings, much like CPSU in the USSR.

> Let's give them more free stuff to help them along.

OK, let's assume those women are either reckless or stupid. But why children need to suffer? Also why military budget should have higher priority then those children?

We don't punish reckless (and criminal) AIG executives with their outsize bonuses after bailout, do we?

So this is a much more complex issue that you are trying to imply. And fixation of punishment does not help...

mrrunangun:

Deregulation has been a big problem in areas of the economy where the beneficiaries of changes in the law purchased the deregulatory changes from the people who controlled the federal government. In most other areas of the economy federal regulation has become ever more extensive and intrusive. In education, health, manufacturing, extractives, exim, regulatory squeeze has gotten tighter over the same period that the SEC and the Fed turned a blind eye to violations of what laws remained to potentially restrain the financial sector. It is the financial sector which purchased laissez faire for itself while the regulatory federal anaconda squeezed everybody else tighter and tighter.

Rusty:

Logically, regulations benefit those that have a hand in creating them - politicians and lobbyists who represent entrenched business interests. Certainly politicians will try with at least lip service towards some equitable aim in the public interest, but they must work with the entrenched interests to achieves anything and to maintain power.

So it makes sense that often regulations serve entrenched interests and thereby increase inequality.

[Dec 06, 2013] Two Nations, Under Mammon by Patrick J. Deneen

October 2, 2013 | theamericanconservative.com

William Galston has written an important column in the Wall Street Journal, devoted to an assessment of Tyler Cowen's new book, Average Is Over. The book tells of a coming(?) nation of two economic classes, the meritocratic elite and an increasingly poor, even third-world economic class of underemployed who gather in large ghetto areas (e.g., Texas) with poor public services but plentiful distractions (think: internet porn, 24/7/365 football, and soon-to-be legalized marijuana delivered by e-joints).

Aficionados of science fiction know that Kurt Vonnegut predicted this world already in 1952, with the publication of his first novel, Player Piano. There he describes with chilling accuracy this world ever-more coming into view-one divided between a meritocratic class with all the right degrees (even the secretaries will have Ph.D.s in a credential-inflated future) and the "Reeks-and-Wrecks," who a visiting dignitary from the Middle East insists on calling "Takaru"-"slaves."

We should be unsurprised, as Galston seems to be-shocked, shocked!-that this world comes ever more clearly into view. Indeed, as domestic policy advisor for President Clinton, Galston assisted in the expansion of this social and economic arrangement, participating in one of the most libertarian administrations the world has ever seen. According to Cowen, "technology" is displacing middle-class workers into either a shrinking class of "winners" or a growing class of "losers," but assuredly, part of that "technology" is a regime of free-trade agreements and a host of other government incentives that have supported the infrastructure of globalization and worker replacement.

This inconvenient fact makes Galston's closing paragraph a real howler: "Whether by accident or design, Mr. Cowen's book represents a fundamental challenge. To government-hating, market-worshiping conservatives, it poses a question: If this is the consequence of your creed, are you prepared to endorse it? To liberals and progressives: What are you going to do about it? And to all of us: Is this a country you would want to live in?"

It is altogether risible that Galston, or anyone, thinks there is any significant difference between Republicans and Democrats in this regard. One need only look at the widening chasm of income inequality under Obama who-as a candidate running for his first presidential primary-dispatched Austan Goolsbee to Canada directly after pretending to be a populist for rust belt voters in the 2008 Michigan primary, to assure the Canadians that he would do nothing to touch NAFTA.

The fact is that this project was readily discernible to the likes of Vonnegut in 1952 and Michael Young (author of The Rise of the Meritocracy) in 1958, and national and international elites have been busy constructing this world ever since, regardless of political label. The Right laments the decline of "family values" as it supports economic policies that support this arrangement (even as it has garnered votes from those displaced by an increasingly rapacious economy, attracted to its message of traditional values. Notably, many of these voters simply stayed home during the last election, rightly perceiving that neither of the major candidate was in their corner.). The Left laments the income gap, and proposes various forms of social welfare that will cushion the blow, all the while even more enthusiastically constructing the meritocratic society and populating government and leading thinkeries with Ivy League "winners." These button-down hipsters increasingly accumulate in a select number of urban echo-chambers described most recently by Charles Murray, where they lament the rise of a growing underclass while sipping $7 lattes. These social policies are purportedly to be supported by a tax base of theoretical future citizens that are not being born, a logical outcome of an aggressively expanding and government-subsidized sexual revolution, contracepting, gay marriage, and abortion culture advanced by the very same Left.

I would add two additional observations to Galston's justified worry about the future of the Republic. First, it has never failed to strike me that it is libertarians (perhaps of a certain stripe) that advance an "inevitability" thesis. Cowen, according to Galston, argues that "resistance is futile."

There's nothing we can do, says Mr. Cowen, to avert a future in which 10% to 15% of Americans enjoy fantastically wealthy and interesting lives while the rest slog along without hope of a better life, tranquilized by free Internet and canned beans.

This echoes similar arguments, advanced by libertarian Lee Silver in his book Remaking Eden, that a post-humanist future of biotechnologically enhanced humanoid creatures will come to pass, whether we wish it or not. Similarly, he predicts a future not only of two classes, but of two races: unenhanced humans who become a servant class to their enhanced overlords, and increasingly "perfected" humans who, as their mastery of human biology becomes ever-more complete, even begin to entertain the notion that the God that was once imagined by the underclass is none other than the creature staring back at them in the mirror.

Thus, a philosophy that places in the forefront a theory of human liberty arrives at the conclusion that certain historical, technological, and economic forces are inevitable, and it is futile to resist them. One might bother to ask the Amish if this is true, but they didn't go to Harvard. Clearly, they don't value human freedom, since they are not on the historical merry-go-round to inevitable human liberty-and degradation.

The second point worth asking is whether, in some deeper way, this increasingly discernible "future" is in any way related to current government and civic dysfunction. We are, of course, all prone to explain contemporary debates in terms of electoral strategy and personality dysfunction. But if, in fact, we are in the midst of a re-definition of the basic nature of the American polity-from a republic to a banana republic-then we should not be surprised to witness some inevitable political disruptions, dislocations, and even wild and undisciplined opposition to the unfolding arrangement. While the Tea Party receives unending scorn from the chattering classes, forgotten in the mist of time (well, in the course of only five years) is that the anger of this uprising was fomented by the not-unsubstantiated suspicion that there was a deep collusion between government and economic elites in the nation (and beyond) that existed to assure that their growing take would be sustained by policies and even government fiat. This fact, often hidden from plain view by political coverage worthy of ESPN, was exposed in 2008 to ordinary Americans who "played by the rules," and suddenly plainly saw that their betters had brought their casino to the brink of catastrophe but that access to the levers of power and wealth assured a soft landing, while ordinary citizens were increasingly stripped naked and exposed in a ravaged landscape.

Five years later, with economic disparities growing and social mobility shrinking, the elites regard these voices as unwashed rubes, while cheering for the brief but wholly confined movement of "Occupy Wall Street" that succeeded in-nothing. The Tea Party and Occupy Wall Street have been wholly shorn of a language and tradition by which they could properly protest the current arrangements. Such a tradition would be found in democratic populism, stressing decentralized political and economic arrangements in which policies and national priorities are first and foremost oriented toward the dignity of self-government, not get-rich-quick schemes in which the winners win and the losers move to Texas. But instead we debate whether government or corporations are to blame, while our betters increase their take and enjoy the show.

Lost amid all the discussion of Pope Francis's many recent statements is the following remark that he offered in the interview with Eugenio Scalfari in La Republicca:

Personally I think so-called unrestrained liberalism only makes the strong stronger and the weak weaker and excludes the most excluded. We need great freedom, no discrimination, no demagoguery and a lot of love. We need rules of conduct and also, if necessary, direct intervention from the state to correct the more intolerable inequalities.

"Liberals" may celebrate the Pope as a liberal, but he is a deep critic of liberalism in its bipartisan form, a set of arrangements by which the State supports the growing strength of the strong and bribery of the weak, in the form of social welfare that poorly substitutes for care of the community, and unceasing entertainment.

Galston is correct to raise alarm bells about this "inevitable" future. But there is currently no major figure in the public sphere that sees with any clarity the deep collusion of the all key players in its construction. So we continue down a road that will give rise to two nations, the winners wringing their hands all the way to the bank, the losers narcotized on a steady diet of cheap and deforming delights.

[Dec 06, 2013] The end of the end of the world by Joe Weisenthal

Nov 27, 2013 | www.businessinsider.com

Japanese investment bank Nomura is out with a big global economic outlook for 2014. The title is "The End Of The End Of The World." The theme is that as 2013 comes to a close, the age of crisis is well and truly over. There are still lingering issues of course, but the really huge themes that have dominated the past several years are gone, and concerns over systemic risk will no longer be high on investors minds.

Strategist Michael Kurtz and Co. write:

There wasn't any memo, but FYI the Global Financial Crisis is over. Not that clocks have simply rewound to 2006, but: the US property market has been recovering for no less than 20 months, the US household balance sheet is largely repaired, the renminbi is stronger and the US-China current account imbalance vastly reduced, China is grasping the nettle of structural reform, European core-vs-periphery cost differentials have substantially narrowed, and Europe is growing again.

Looking forward, we thus see 2014 as a year in which macrosystemic risks will not dominate equity performance – unfinished QE 'taper' business notwithstanding – but equally as a result, a year in which returns will not be spirited along by 'risk compression' and multiple expansion either. Rather, global stocks in 2014 will stand or fall in large part simply on whether they deliver earnings. The good news is, 2014 should serve up a reasonably robust growth platform for global corporate earnings: Our economists expect global nominal GDP growth to rise to 7.0% next year from 2013's 6.1% - leaving our strategy preferences inclined toward cyclical- and reflation-sensitive sectors. But the acceleration will be unevenly skewed toward the Developed Market economies, while Emerging Market growth plateaus and China's growth further moderates (to 6.9% in real terms).

Looking toward 2014, we believe much of the 'deep value' argument for stocks has now played out as the Global Equity Risk Premium has fallen to just 0.4 standard deviations currently vs. its late-2011 high of 2.2 standard deviations. With this, global equities have outperformed the aggregate global bond index since mid-2012 by a sizeable 45% over the same time period.

From here, equities will increasingly require more of a growth rationale for upside, rather than the macro-risk compression of 2012-13. The fact is, after fairly undramatic passages (by 2010-12 standards) of such episodes this year as the Cyprus banking failure and October's US fiscal standoff, very few developments from here are likely to rise to the level of true systemic contagion threats. But this also begs the question where the superlative earnings growth will be found.

[Dec 06, 2013] The Ends of Capitalism by Rob Urie

November 17, 2013 | CounterPunch

The illusion of prosperity in some evidence in the mid-2000s courtesy of the monetization of the preponderance of U.S. housing equity-the collective savings of home 'owners,' to fund purchases of wide screen televisions, 3rd, 4th and 5th automobiles and new porch furniture, had shown its foundations in mass delusion.

On Wall Street the gig was up-the financial 'system' was in full collapse from the weight of its own 'bounty' and only had left its brethren in financial 'innovation' to plunder. The economic 'efficiencies' of thirty years of pirate capitalism had shown themselves in the pockets and bank accounts of America's few hundred richest families and in its residual, the smoldering ruins of an economy that had once made things, for better and / or for worse, as well as in the emergent 'micro' economy of the formerly employed trading piece work and stock tips on the Internet to keep the foreclosure wolves at bay.

Western economists view the sequential crises of 1990, 2000 and 2008 as unrelated events to be 'solved' through reactive responses-through Keynesian stimulus or with 'more' capitalism. However, within each subsequent economic 'recovery' the political economy of catastrophe grows. The evidence of social dysfunction-radically skewed income distribution, the increasingly sharp divide between those on the 'inside' and 'outside' of political economy, political incapacitation and a collective inability to solve even the most basic social problems, is but the detritus of the thread that carries these crises through 'normal' times. In the terms of those moving comfortably along in the motorcade there are 'recessions' and 'recoveries,' life's facts whose average may impact 'the people' differently, but only through the secular god of capitalism's discriminating hands. The 'driven by' wave to themselves, to their 'embodiment' that 'could have been them' under some alternate order of the universe. If 'success' and 'failure' are their own 'proof' of the efficacy of capitalism as god's hand in human affairs then so is its attendant social dysfunction-if the rich are busy 'making money' and the poor are their own 'proof' of their inability to be 'successful' then what conceivably could be the point of political reconciliation?

In choosing to 'save' the 'system' he so willingly entered, Mr. Obama, like those before him, chose the sides inherent in that system. The government money used under Mr. Obama's direction to buy Wall Street's garbage 'assets' was / is unified in its 'moneyness' with that needed to salve the lot of the 'driven by,' those dispossessed by birth, race, gender or more general circumstance-economic class. To paraphrase the cliché-'if you teach a man to borrow he eats for a day, if you give the bank the money to lend to the man he eats for a day and repays the borrowed money for a lifetime.'

Alternatively, and following from that theoretician of 'system' John Maynard Keynes, if you give people the money they need to eat and live indoors they spend it and the system of capitalism survives. Given the choice-banks or their 'customers,' what system exactly, precisely was it that Mr. Obama saved by choosing the banks?

In either case the system of capitalism would be 'saved.' To pretend for a moment that the question hasn't already been answered, why choose bankers, the 'embedded,' over 'the people,' those whose hopes and aspirations Messrs. Bush and Obama so readily 'embodied?'

The system to be so regularly saved is that of the perfectly ordered universe-every man, woman and child in his or her god-determined 'place.' How does one know their proper place? Which side of the motorcade are you on?

Rob Urie is an artist and political economist in New York. His book Zen Economics will be published by CounterPunch / AK Press in Spring 2014.

[Nov 11, 2013] Debt and deficit as shock therapy by Ismael Hossein-zadeh

Nov 6, 2013 | Asia Times

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.

When Naomi Klein published her ground-breaking book The Shock Doctrine (2007), which compellingly demonstrated how neoliberal policy makers take advantage of overwhelming crisis times to privatize public property and carry out austerity programs, most economists and media pundits scoffed at her arguments as overstating her case. Real world economic developments have since strongly reinforced her views.

Using the unnerving 2008 financial crash, the ensuing long recession and the recurring specter of debt default, the financial oligarchy and their proxies in the governments of core capitalist countries have embarked on an unprecedented economic coup d'état against the people, the ravages of which include extensive privatization of the public sector, systematic application of neoliberal austerity economics and radical redistribution of resources from the bottom to the top. Despite the truly historical and paradigm-shifting importance of these ominous developments, their discussion remains altogether outside the discourse of mainstream economics.

The fact that neoliberal economists and politicians have been cheering these brutal assaults on social safety-net programs should not be surprising. What is regrettable, however, is the liberal/Keynesian economists' and politicians' glaring misdiagnosis of the plague of austerity economics: it is all the "right-wing" Republicans' or Tea Partiers' fault, we are told; the Obama administration and the Democratic Party establishment, including the labor bureaucracy, have no part or responsibility in the relentless drive to austerity economics and privatization of public property.

Keynesian and other liberal economists and politicians routinely blame the abandonment of the New Deal and/or Social-Democratic economics exclusively on Ronald Reagan's supply-side economics, on neoliberal ideology or on economists at the University of Chicago. Indeed, they characterize the 2008 financial collapse, the ensuing long recession and the recurring debt/budgetary turmoil on "bad" policies of "neoliberal capitalism," not on class policies of capitalism per se. [1]

Evidence shows, however, that the transition from Keynesian to neoliberal economics stems from much deeper roots or dynamics than pure ideology [2]; that neoliberal austerity policies are class, not "bad," policies [3]; that the transition started long before Reagan arrived in the White House; and that neoliberal austerity policies have been pursued as vigorously (though less openly and more stealthily) by the Democratic administrations of Bill Clinton and Barack Obama as their Republican counterparts. [4]

Indeed, it could be argued that, due to his uniquely misleading status or station in the socio-political structure of the United States, and equally unique Orwellian characteristics or personality, Obama has served the interests of the powerful financial oligarchy much better or more effectively than any Republican president could do, or has done - including Ronald Reagan. By the same token, he has more skillfully hoodwinked the public and harmed their interests, both in terms of economics and individual/constitutional rights, than any of his predecessors.

Ronald Reagan did not make any bones about the fact that he championed the cause of neoliberal supply-side economics. This meant that opponents of his economic agenda knew where he stood, and could craft their own strategies accordingly.

By contrast, Obama publicly portrays himself as a liberal opponent of neoliberal austerity policies (as he frequently bemoans the escalating economic inequality and occasionally sheds crocodile tears over the plight of the unemployed and economically hard-pressed), while in practice he is a major team player in the debt "crisis" game of charade, designed as a shock therapy scheme in the escalation of austerity economics. [5]

No president or major policy maker before Obama ever dared to touch the hitherto untouchable (and still self-financing) Social Security and Medicare trust funds. He was the first to dare to make these bedrock social programs subject to austerity cuts, as reflected, for example, in his proposed federal budget plan for fiscal year 2014, initially released in April 2013. Commenting on this unprecedented inclusion of entitlements in the social programs to be cut, Christian Science Monitor wrote (on April 9, 2013): "President Obama's new budget proposal ... is a sign that Washington's attitude toward entitlement reform is slowly shifting, with prospects for changes to Social Security and Medicare becoming increasingly likely."

Obama has since turned that "likelihood" of undermining Social Security and Medicare into reality. He did so by taking the first steps in turning the budget crisis that led to government shutdown in the first half of October into negotiations over entitlement cuts. In an interview on the second day of the shutdown (October 3rd), he called for eliminating "unnecessary" social programs and discussing cuts in "long-term entitlement spending". [6]

Five days later on October 5th, Obama repeated his support for cutting Social Security and Medicare in a press conference, reassuring congressional Republicans of his willingness to agree to these cuts (as well as to cuts in corporate tax rates from 35% to 28%) if the Republicans voted to increase the government's debt limit: "If anybody doubts my sincerity about that, I've put forward proposals in my budget to reform entitlement programs for the long haul and reform our tax code in a way that would ... lower rates for corporations". [7]

Only then, that is, only after Obama agreed to collaborate with the Republicans on ways to cut both the entitlements and corporate tax rates, the Republican budget negotiators agreed to the higher budget ceiling and the reopening of the government. The consensus bill that ended the government shutdown extends the automatic across-the-board "sequester" cuts that began last March into the current year. This means that "the budget negotiations in the coming weeks will take as their starting point the $1 trillion in cuts over the next eight years mandated by the sequestration process". [8]

And so, once again, the great compromiser gave in, and gave away - all at the expense of his (unquestioning) supporters.

To prepare the public for the long-awaited attack on Social Security, Medicare and other socially vital programs, the bipartisan ruling establishment has in recent years invented a very useful hobgoblin to scare the people into submission: occasional budget/debt crises and the specter or the actual pain of government shutdown. As Sheldon Richman recently pointed out:

"Wherever we look, there are hobgoblins. The latest is … DEFAULT. Oooooo.

Apparently the threats of international terror and China rising aren't enough to keep us alarmed and eager for the tether. These things do tend to wear thin with time. But good old default can be taken off the shelf every now and then. It works like a charm every time.

No, no, not default! Anything but default!". [9]

Economic policy makers in the White House and the Congress have invoked the debt/deficit hobgoblin at least three times in less than two years: the 2011 debt-ceiling panic, the 2012 "fiscal cliff" and, more recently, the 2013 debt-ceiling/government shutdown crisis - all designed to frighten the people into accepting the slashing of vital social programs. Interestingly, when Wall Street speculators needed trillions of dollars to be bailed out, or as the Fed routinely showers these gamblers with nearly interest-free money through the so-called quantitative easing, debt hobgoblins were/are nowhere to be seen!

The outcome of the latest (2013) "debt crisis management," which led to the 16-day government shutdown (October 1-16), confirmed the view that the "crisis" was essentially bogus. Following the pattern of the 2010, 2011 and 2012 budget/debt negotiations, the bipartisan policy makers kept the phony crisis alive by simply pushing its "resolution" several months back to early 2014. In other words, they did not bury the hobgoblin; they simply shelved it for a while to be taken off when it is needed to, once again, frighten the people into accepting additional austerity cuts - including Social Security and Medicare.

The outcome of the budget "crisis" also highlighted the fact that, behind the apparent bipartisan gridlock and mutual denunciations, there is a "fundamental consensus between these parties for destroying all of the social gains won by the working class over the course of the twentieth century". [10] To the extent there were disagreements, they were mainly over the tone, the temp, the magnitude, the tactics, and the means, not the end. At the heart of all the (largely contrived) bipartisan bickering was how best to escalate, justify or camouflage the brutal cuts in the vitally necessary social spending.

The left/liberal supporters of Obama, who bemoan his being "pressured" or "coerced" by the Tea Party Republicans into right-wing compromises, should look past his liberal/populist posturing. Evidence shows that, contrary to Barack Obama's claims, his presidential campaigns were heavily financed by the Wall Street financial titans and their influential lobbyists. Large Wall Street contributions began pouring into his campaign only after he was thoroughly vetted by powerful Wall Street interests, through rigorous Q & A sessions by the financial oligarchy, and was deemed to be their "ideal" candidate for presidency. [11]

Obama's unquestioning followers should also note that, to the extent that he is being "pressured" by his political opponents into compromises/concessions, he has no one to blame but himself: while the Republican Party systematically mobilizes its social base through offshoots like Tea Partiers, Obama tends to deceive, demobilize and disarm his base of supporters. Instead of mobilizing and encouraging his much wider base of supporters (whose more numerous voices could easily drown the shrill voices of Tea Partiers) to political action, he frequently pleads with them to "be patient," and "keep hope alive."

As Andre Damon and Barry Grey have keenly observed, "There was not a single mass organization that denounced the [government] shutdown or opposed it. The trade unions are completely allied with the Obama administration and support its policies of austerity and war". [12]

Obama's supporters also need to open their eyes to the fact that, as I have shown in an earlier essay, [13] Obama harbors ideological affinities that are more in tune with Ronald Reagan than with FDR. This is clearly revealed in his book, The Audacity of Hope, where he shows his disdain for

"...those who still champion the old time religion, defending every New Deal and Great Society program from Republican encroachment, achieving ratings of 100% from the liberal interest groups. But these efforts seem exhausted…bereft of energy and new ideas needed to address the changing circumstances of globalization". [14]

(Her own shortcomings aside, Hillary Clinton was right when, in her bid for the White House against Obama, she pointed out that Obama's economic philosophy was inspired largely by Reagan' supply-side economics. However, because the Wall Street and/or the ruling establishment had already decided that Obama was the preferred choice for the White House, the corporate media let Clinton's comment pass without dwelling much on the reasons behind it; which could readily be examined by simply browsing through his own book.)

The repeated claim that the entitlements are the main drag on the federal budget is false - for at least three reasons. To begin with, the assertion that the large number of retiring baby-boomers is a major culprit in budgetary shortfalls is bogus because while it is true that baby-boomers are retiring in larger than usual numbers they do not come from another planet; before retiring, they also worked and contributed to the entitlement trust fund in larger than usual numbers. This means that, over time, the outflow and inflow of baby-boomers' funds into the entitlement trust fund must necessarily even each other out.

Second, even assuming that this claim is valid, the "problem" can easily be fixed (for many years to come) by simply raising the ceiling of taxable income for Social Security from the current level of $113,700 to a slightly higher level, let's say, $140,000.

Third, the bipartisan policy makers' hue and cry about the alleged budget/debt crisis is also false because if it were true, they would not shy away from facing the real culprits for the crisis: the uncontrollable and escalating health care cost, the equally uncontrollable and escalating military/war/security cost, the massive transfer of private/Wall Street debt to public debt in response to the 2008 financial crash, and the considerable drop since the early 1980s in the revenue side of the government budget, which is the result of the drastic overhaul of the taxation system in favor of the wealthy.

A major scheme of the financial oligarchy and their bagmen in the government to substitute the New Deal with neoliberal economics has (since the early 1980s) been to deliberately create budget deficits in order to justify cuts in social spending. This sinister feat has often been accomplished through a combination of tax cuts for the wealthy and spending hikes for military/wars/security programs.

David Stockman, President Reagan's budget director and one of the main architects of his supply-side tax cuts, confirmed the Reagan administration's policy of simultaneously raising military spending and cutting taxes on the wealthy in order to force cuts in non-military public spending: "My aim had always been to force down the size of the domestic welfare state to the point where it could be adequately funded with the revenues after the tax cut". [15] That insidious policy of intentionally creating budget deficits in order to force neoliberal austerity cuts on vital social needs has continued to this day - under both Republican and Democratic administrations.

Although the bipartisan tactics of austerity cuts are subtle and obfuscating, they can be illustrated with the help of a few simple (hypothetical) numbers: first (and behind the scenes), the two sides agree on cutting non-military public spending by, let's say, $100 billion. To reach this goal, Republicans would ask for a $200 billion cut, for example.

The Obama administration/Democratic Party, pretending to represent the poor and working families, would vehemently object that this is too much ... and that all they can offer is $50 billion, again for example. Next, the Republican negotiators would come up with their own counter-offer of, let's say, $150 billion. Then come months of fake haggling and passionate speeches in defense of their positions ... until they meet eventually half way between $50 billion and $150 billion, which has been their hidden goal ($100 billion) from the beginning.

This is, of course, an overly simplified hypothetical example. But it captures, in broad outlines, the essence of the political game that the Republican and Democratic parties - increasingly both representing big finance/big business - play on the American people. All the while the duplicitous corporate media plays along with this political charade in order to confuse the public by creating the impression that there are no alternatives to austerity cuts, and that all the bipartisan public bickering over debt/budgetary issues vividly represents "democracy in action."

The atmosphere of panic and anxiety surrounding the debt/deficit negotiations is fabricated because the central claim behind the feigned crisis that "there is no money" for jobs, education, health care, Social Security, Medicare, housing, pensions and the like is a lie. Generous subsidies to major Wall Street players since the 2008 market crash has lifted financial markets to new highs, as evinced by the Dow Jones Industrial Average's new bubble above the 15000 mark.

The massive cuts in employment, wages and benefits, as well as in social spending, have resulted in an enormous transfer of economic resources from the bottom up. The wealthiest 1% of Americans now own more than 40% of the entire country's wealth; while the bottom 80% own only 7%. Likewise, the richest 1% now takes home 24% of the country's total income, compared to only 9% four decades ago. [16]

This means that there really is no need for the brutal austerity cuts as there really is no shortage of financial resources. The purported lack of resources is due to the fact that they are concentrated largely in the deep coffers of the financial oligarchy.

Ismael Hossein-zadeh is Professor Emeritus of Economics, Drake University, Des Moines, Iowa. He is the author of The Political Economy of U.S. Militarism (Palgrave-Macmillan 2007) and Soviet Non-capitalist Development: The Case of Nasser's Egypt (Praeger Publishers 1989). His latest book, Beyond Mainstream Explanations of the Financial Crisis: Parasitic Finance Capital, will be forthcoming from Routledge Books.

[Oct 20, 2013] Polarization

"What would we call such a society? A banana republic"
October 19, 2013 | Economist's View
Comments on this post from Dan Little?:

Polarization: Suppose a country had come to the brink of financial catastrophe because the two parties in its legislature were unable to find compromises in the public interest. Suppose further that the discourse in that country had evolved towards a highly toxic and hateful stream of anathemas by one party against the other. And suppose that one party projects an unprecedented amount of vitriol and hatred towards the leader of the other party, the president of the country. How would we describe this state of affairs? And what hypotheses might we consider to explain how this state of affairs came to be?

First, description. This seems like a society on the brink of political breakdown. It is riven by hard hatreds, with almost no strands of civility and shared values to hold it together. One side portrays the other in extreme terms, with few voices that insist on the basic decency of the other party. (There is one maverick voice, perhaps, who breaks ranks with the extremists of his party, and who expresses a decent respect for his political foes. He is accused of being too soft -- perhaps a secret ally of the opposition.)

Here is how the point is put in a recent piece in the Washington Post:

Today there is a New Confederacy, an insurgent political force that has captured the Republican Party and is taking up where the Old Confederacy left off in its efforts to bring down the federal government. (link)
EMichael -> Alex Blaze...

Ever read Kevin Phillips on the topic?

You are right though, it is certainly not just the South(but they got an awful lot more control there) and all Republicans are not racist.

But all racists are Republicans.

ken melvin:

We're talking about a group of people who hated Lincoln for 100 yrs and still chant 'the south will rise again'. These are the original 'my way or the highway' lot. Why? Whence these beliefs, behavior? And, how are they passed along from generation to generation? Was the suspension of reason part and parcel rationalizing slavery. Was it a wired part of their Scot/Irish roots?

The west? Much of the now west was confederate during the Civil War and, later, states like Arizona saw many southerners resettle within their pre-statehood boundaries. Here too, the attitude persists.

Over the years, my friendships with various members of the Sioux tribe have led me to wonder if traditions aren't often passed along at grandmother's knee. Is something similar going on with the cracker/t-party types of today? If the psyche is formed by 5 yrs old, what process is being employed to transfer this value set? Is it merely emulation common to children. Do they see and hear what it is that they are supposed to believe and come
to believe? Is there a conscious effort on the part of southern parents to instill these 'values' in their offspring?

Religion? How much a role does fundamental religion and its associated disdain for science and religion play a role?

anne:

http://www.nytimes.com/2013/10/19/books/ebony-and-ivy-about-how-slavery-helped-universities-grow.html

October 18, 2013

Dirty Antebellum Secrets in Ivory Towers
By JENNIFER SCHUESSLER

In "Ebony and Ivy," an M.I.T. historian looks at the role of slavery in the growth of America's earliest universities.

Perplexed:

The missing piece to this "puzzle" has a name & a long history, its called Anarchism, and it appears as a "strange, unfamiliar ideology" to those who are unfamiliar with this history (as in world history as opposed to "American History").

-"freedom to pursue life's goals without state interference"

This is the foundation of the "Anarchists Movement." We have renamed it here on the island to hide the origins. The Americanized version is called "Libertarianism" but those who actually study history might well recognize it and know that Anarchism and Democracy cannot coexist; its a paradox, a choice must be made. Most Americans are virtually clueless about the differences and somehow believe its possible to govern & not govern simultaneously. It would indeed be a first if it ever worked.

The "freedom" Anarchists speak of is freedom from you, the majority, governing them, "the free." Freedom is just a catch-all so everyone can have a conversation using their own definitions while no-one really knows what's really being said by the other participants. We can all agree on "loving freedom" without ever realizing what's actually be said, proposed, and accomplished.

Since so few Americans have ever learned the history, they tend to "blur" together very different definitions (and meanings) of anarchism and anarchists, and fail to discern how these differing definitions impede the understanding of what the Anarchists were, and are, really about (see here, the distinctions are highly relevant http://www.merriam-webster.com/dictionary/anarchy). The Anarchists are really not about "anarchy" in the sense of 1b ("b : a state of lawlessness or political disorder due to the absence of governmental authority"), or 2b ("b : absence of order : disorder (http://www.merriam-webster.com/dictionary/disorder) http://www.merriam-webster.com/dictionary/utopian) society of individuals who enjoy complete freedom without government). These are the distinctions that make Anarchism incompatible with democracy. Democracy is a form of rule, a form of government. Anarchists deny that its helpful, or necessary, to have a "governing body." They believe that any attempts to govern are destructive to society. In their "utopian society" of "free individuals," there would be no need for a small "minority" of people to govern (any of this sounding familiar Randians?) To Anarchists (or Libertarians or whatever other label you choose), "liberty" means "liberty from "authority," from "being governed," from you, the majority, "governing," or "restricting in any way" their "freedoms." So democracy (rule by the majority) is entirely incompatible with Anarchy ("denial of any authority or established order"), and its also incompatible with "we are all in this together" and that some "authority" should intervene to prevent unjust results. In an Anarchistic utopia, unjust results don't happen, and "free individuals" will mobilize and come to the aid of victims of disease or disasters without any "authority" intervening to see that it gets done. This is what gets mixed into the "Randian cool-aid."

Bakunin laid it all out before Ayn Rand was even born; its not even very long ago, but Americans are so insular they refuse to even read it so they can maintain their illusion and continue to believe that it was "invented" here, see: http://dwardmac.pitzer.edu/Anarchist_Archives/bakunin/stateless.html And read this for a quick summary of some of the "flavors" of Russian Anarchism (from the Black Banner (Chernoye Znamya) group to the non-violent, non-resistant Tolstoyism:

http://dwardmac.pitzer.edu/Anarchist_Archives/worldwidemovements/anarchisminrussia.html

While Ayn Rand might provide some entertaining fiction, if you really want to understand the Paul Ryan's, Eric Cantor's, Ron & Rand Paul's, and Mitch McConnell's of the world, you need to understand Bakunin, Tolstoy, Znamya, Kropotkin, Proudhon, Malatesta and Reclus et.al. Do you really think Greenspan's "shock" when he discovered that financial markets really do need to be regulated was a result of his extensive training in economics? And if you want to understand either McConnell's legislative strategy or Paul Ryan's budget calculations, you need to understand Machiavelli as well.

Under the ruse of the "Randian" philosophy, Anarchism in the U.S. has already had much greater political success and impact than it ever did in Russia. "Shrinking government," "drowning the government," and "starving the beast" are all Anarchist objectives. Greenspan was the chairman of the FED, McConnell, Ryan, Cantor, and both Pauls are elected members of Congress, Mitt Romney came dangerously close to being elected President. Isn't it about time we at least brought this out into the open so Americans can decide if what they really want is Anarchism? Would Americans really be voting for "Tea Party Conservatives" if they understood that they were voting for Anarchism INSTEAD of Democracy? Maybe it should be a conscious choice instead of a deception? Our ability to govern democratically has been brought to a practical standstill; is it just a coincidence that this is the primary objective of Anarchists? If you believe that, you don't understand what you're up against.

Its actually more than a bit amazing just how a ruse like this can go on for so long when there is so much written about it and published (already translated into the English language).

Ultimately its Loser liberalism at its finest. Everyone runs and hides when the Anarchists shout "socialist" even though the definition doesn't fit, but they can't even identify an Anarchist when they're standing right in front of them shouting "socialist" whenever they try to govern democratically.

DrDick -> John Cummings...

Yeah, anarchism and libertarianism are where the left wing and right wing meet in the lunatic fringe. While there are a number of similarities there are also equally important differences.

Roger Gathman -> Perplexed...

The anarchists were ever into cooperatives. I don't see this as being a very big issue for tea party types, who don't, for instance, want to pull down corporations. Anarchists of course took corporations and absentee ownership as the hallmark of baleful statelike power, power guaranteed by the state.

On the other hand, I do look at the dots and think savings and loans, the most enduring anarchist-like institution we have. And I think that many of those people who hate the government (and I, too, hate it) are the descendents of people who did understand cooperatives and did build savings and loans. There's a muddy echo of that in the anti-Wall street bailout theme that sometimes crops up among them.

Fred. C. Dobbs:

This is more of an Existential Issue for Republicans than for the USA, I think/hope.

They will not Go Gentle Into that Good Night. What'd you expect?

Peter K. -> Fred. C. Dobbs...

Yes after they lose in 2014 and 2016, the careerists will think "wtf?" and the nervous breakdown will begin in earnest.

Joe Smith:

" ... in the GOP's astonishingly hateful reaction to Clinton. Most people now seem to forget the insane, toxic atmosphere ..."

And a Republican judiciary became complicit in attempts to cripple the Clinton presidency.

EMichael -> Joe Smith...

Don't forget, Democrats give things to those people.

You don't have to be black to be hated and despised, it just makes it easier.

cj150:

There is not polarization nor shared fault, it comes down to a group of fanatical extremists who are not able to win in the free democratic play and want to impose their "vision of the world" by force and the blackmail.

Main Street Muse -> EMichael...

Let's see if Typepad lets these words fly. Here's a quote from the NY Times story:

"The words [Lee Atwater] uses are not ones I would normally use in this blog, or anywhere in the opinion pages of the Times, but the quotes require them. [what follows are transcripts from the Lee Atwater interview - i.e. Lee Atwater's words as transcribed by the NYTimes]:

'You start in 1954 by saying 'Nigger, nigger, nigger.' By 1968 you can't say 'Nigger.' That hurts you. It backfires. So you say stuff like forced busing, states rights and all that stuff and you get so abstract. Now you talk about cutting taxes and these things you're talking about are totally economic things and a byproduct of them is, blacks get hurt worse than whites. And subconsciously maybe that's part of it. I'm not saying that. But I'm saying that if it is getting that abstract and that coded, we are doing away with the racial problem one way or the other. Obviously sitting around saying we want to cut taxes and we want this, is a lot more abstract than even the busing thing and a hell of a lot more abstract than nigger nigger. So anyway you look at it, race is coming on the back burner.'"

Thus spoke Lee Atwater in 1981 when Reagan was rising...

Tom in MN:

I can't help but think that had Romney run in 2008, he could have run on his MA health care plan and had he won, implemented it without these attacks from the right. In addition, there would have been fiscal stimulus with no regard for the debt to get any GOP president reelected in 2012.

I still don't like calling it Obamacare based on the posters of him as a witch doctor on which it first appeared.

Concluding it's racially motivated sadly seems to be the only explanation that fits.

bakho:

President Clinton was treated the same way, or perhaps worse than Obama. Racism does not explain it that well. A sense of entitlement does and a fear that changing demographics will change culture for the worse.

The TeaParty has plenty of racists, but they are a coalition including libertarians and others who want less bureaucracy and special interest entitlements. They feel entitled to the government benefits that THEY receive but dismiss benefits that OTHERS receive as unearned. Many of these people live in low tax no service areas. They pay taxes, on property and income, but they don't get benefits. This is the product of years of the GOP cutting taxes for the wealthy, shifting the tax burden to the Middle Class and slashing benefits. The Malefactors of Great Wealth have been steadily eroding benefits to the point where too few get them to win support (in many areas).

The program of cutting government benefits and shifting tax burden from the wealthy to the Middle Class has been the main program of the GOP since the 1960s. It is finally producing the anti-government, anti-tax revolt the Malefactors have desired. The only problem is that the Malefactors are dependent on the Government for much of their wealth.

DrDick -> bakho...

I agree that it is not just about racism, but race has a lot to do with it. There is a reason why the the GOP has been running on the Southern Strategy since Nixon. There is also a reason for the current geography of party affiliation. Clinton was also seen as strongly aligned with African Americans (some people called him America's "first black President").

Dan Kervick:

Well, as long as we are indulging invidious tropes, let's trot out the old "stab in the back" one, shall we?

These old ethnic, regional and paranoid strains are nothing new, but they are intensified by economic stresses. Forty years of neoliberal economics - a creed that, sadly, has been warmly embraced by Democratic policy elites and their Wall Street backers - has helped to hollow out the US middle class, create obscene Gilded Age inequality, commercialize all human relationships, promote financialization and money-class exploitation of honest work, divided people along cultural and class lines, and given us a new philistine culture that is nasty, insecure, corrupt, shallow and cruel.

Even now, neoliberals continue to plow forward post-2008 as though nothing has happened, proposing little as a positive agenda beyond artificial asset value inflation via financial sector monetary injections and supply side giveaways to corporate rent-seekers, while working with billionaires like Pete Peterson to extend plutocratic stagnation. They are able to succeed in holding onto the center because they are so obsequiously obliging to all of the stakeholders in the existing rot. No wonder millions and millions of America feel like a hopeful future is slipping away from them.

kievite -> Dan Kervick...

Dan,

==== quote ===
These old ethnic, regional and paranoid strains are nothing new, but they are intensified by economic stresses. Forty years of neoliberal economics - a creed that, sadly, has been warmly embraced by Democratic policy elites and their Wall Street backers - has helped to hollow out the US middle class, create obscene Gilded Age inequality, commercialize all human relationships, promote financialization and money-class exploitation of honest work, divided people along cultural and class lines, and given us a new philistine culture that is nasty, insecure, corrupt, shallow and cruel.
=== end of quote ===
That's a real insight. I also think that economic stress is the major driver of Tea Party. The country experiences the same intensification of "old ethnic, regional and paranoid strains" that happened in Weimar Germany.

It will be interesting to see how early adopters of national-socialist ideas (predominantly small business owners) correlate with Tea Party membership (also predominantly small business owners). Although neoliberalism corrupted Tea Party program the similarity of demands is difficult to ignore: http://www.teaparty.org/about-us/

1. Illegal aliens are here illegally.
2. Pro-domestic employment is indispensable.
3. A strong military is essential.
4. Special interests must be eliminated.
5. Gun ownership is sacred.
6. Government must be downsized.
7. The national budget must be balanced.
8. Deficit spending must end.
9. Bailout and stimulus plans are illegal.
10. Reducing personal income taxes is a must.
11. Reducing business income taxes is mandatory.
12. Political offices must be available to average citizens.
13. Intrusive government must be stopped.
14. English as our core language is required.
15. Traditional family values are encouraged.

Compare with https://en.wikipedia.org/wiki/National_Socialist_Program :

==== quote ====

16.We demand the creation of a healthy middle class and its conservation, immediate communalization of the great warehouses and their being leased at low cost to small firms, the utmost consideration of all small firms in contracts with the State, county or municipality.

and from Austrian program:

. . the German National Socialist Workers' Party is not a party exclusively for labourers; it stands for the interests of every decent and honest enterprise. It is a liberal (freiheitlich) and strictly folkic (volkisch) party fighting against all reactionary efforts, clerical, feudal, and capitalistic privileges; but, before all, against the increasing influence of the Jewish commercial mentality which encroaches on public life. . . .

== end of quote ===

I think that there is an anti Wall Street component in the program of Tea Party too.

Juan H.:

'' How would we describe this state of affairs? And what hypotheses might we consider to explain how this state of affairs came to be?'

Without having read comments [but intend to] --

A quasi civil war based on rise - and tensions - between//within interest groups [vertical] rather than classes [horizontal] plus poorly organized Leftist organizations which are rarely arm and arm with rank and file workers much less militarizing. The variety and number of interest groups may be the primary deterrent to a pre-revolutionary condition even as political legitimacy has been deteriorating.

Changer in form of organization from national and international to multinational to trans-national, which has also been a change in form of trade and employment - and, we can day, expansion of an urban peasantry.

So we hear about growth, naturally when the contrary has been the case for many decades -

''Post World War II economic history can be thought of as evolving within two
distinct political-economic regimes. The high growth Golden Age was based on socially or politically 'embedded' domestic markets, government responsibility for aggregate demand growth, and state control over cross-border economic activity. It lasted until the early 1970s, to be replaced, after a decade of turbulence, by the Neoliberal Regime, built on deregulation, liberalization, privatization, and ever-tighter global integration...

Unfortunately, Neoliberalism's promised benefits have yet to materialize, at least not for the majority of the world's people. Global income growth has slowed, productivity growth has deteriorated, real wage growth has declined, inequality has risen in most countries, the less developed nations outside East Asia have fallen even further behind the advanced, and average unemployment is higher.

Real global GDP growth averaged 4.9% a year in the Golden Age years from 1950 through 1973, but dropped to 3.4% annually in the unstable period between 1974 and 1979.

Dissatisfied with the instability, inflation, low profits and falling financial asset prices of the 1970s, advanced country elites pushed hard for a switch to a more business friendly political-economic system; global Neoliberalism was the result.

World GDP growth averaged 3.3% a year in the early Neoliberal period of the 1980s, then slowed dramatically to 2.3% from 1990-99 as Neoliberalism strengthened, making the 1990s by far the slowest growth decade of the post war era.2''

Structural Contradictions of the Global Neoliberal Regime
James Crotty

kievite -> Juan H....

Juan,

=== quote ===
Unfortunately, Neoliberalism's promised benefits have yet to materialize, at least not for the majority of the world's people. Global income growth has slowed, productivity growth has deteriorated, real wage growth has declined, inequality has risen in most countries, the less developed nations outside East Asia have fallen even further behind the advanced, and average unemployment is higher.
=== end of quote ==

That the real economic base of the rise of Tea Party in the USA. Predominantly white, the USA middle class is falling behind, and, especially in lower, less educated, middle class, you can almost physically feel the huge level of rage. And readiness to support an extremist agenda. That what drives the Tea Party.

The end of capitalism as we know it by Phillip Blond

March 23, 2008 | The Independent

The Western world is in an economic crisis similar in scale to the oil shock of 1973. What we are seeing is nothing less than the unravelling of neo-liberalism – the dominant economic and ideological model of the last 30 years.

The disintegration of Anglo-Saxon-inspired markets has come about largely because of the confluence of two tendencies of the "free market": speculation and monopoly capitalism. Contrary to received opinion, free markets – unless subject to civil regulation, asset distribution and persistent intervention – always tend to monopoly.

Similarly, there is nothing inherently efficient about free markets – they do not of themselves promote sound investment or wise management. Rather, when markets are conceived wholly in terms of price and return, and when asset wealth and the leverage that this provides becomes as concentrated as it was in the 19th century (which is a scenario we are approaching), then markets encourage nothing other than gambling masking itself as sound investment.

For example, before 1973 the ratio of investment to speculative capital was 9:1; since 1973, these proportions have reversed. So huge have the numbers, leverage and derivative instruments become that their value now far exceeds the total economic value of the planet. For instance, in 2003 the value of all derivative trading was $85 trillion, while the size of the world economy was only $49 trillion.

These ratios have risen with the latest estimates that the value of all traded paper instruments exceeds the underlying value of the assets on which they are written by 3:1. The fact that these assets may themselves be devaluing by up to 50 per cent (US housing values have declined by 25 per cent in two years) means that the overall ratio of global paper value to its leveraged base may indeed double.

This average global figure itself masks even more extreme levels of leverage. The Carlyle Group de-faulted on $16.6bn (£8.4bn) of debt last week. The private equity firm had been speculating assiduously on its AAA-rated mortgage base – by some estimates, at the end of its life, Carlyle's loan-to-value ratio and hedge exposure was at 36:1. There are, of course, many other private equity firms in a similar position.

This incalculable level of speculation is abetted by the huge concentration of wealth that has occurred since 1973. Why? Because if markets tend to monopoly then smaller groups of people control larger amounts of assets. The latest figures demonstrate this admirably: the richest 10 per cent of the UK population increased their share of the nation's marketable wealth (excluding housing) from 57 per cent in 1976 to 71 per cent in 2003. Over the same period, the speculative capital that could be deployed or invested by the bottom 50 per cent of the British population fell from 12 per cent to just 1 per cent. Indeed, the wealthiest 1 per cent of the population, on current government figures, now control more than a third of all the marketable wealth – and this ignores the vast sums held in offshore tax havens.

The New Economics Foundation has shown that global growth has not aided the poor. In the 1980s, for every $100 of world growth, the poorest 20 per cent received $2.20; by 2001, they received only 60 cents. Clearly neo-liberal growth disproportionately benefits the rich and further impoverishes the poor.

Real wage increases in the top 13 countries of the Organisation for Economic Cooperation and Development (OECD) have been below the rate of inflation since about 1970 – a situation compounded in Britain as the measure of inflation massively underestimates the real cost of living.

Thus wage earners – rather than asset owners – have faced a 35-year downward pressure on their standard of living. Indeed, the golden age for the salaried worker, as a share of GDP, was between 1945 and 1973 – and not this vaunted age of liberalisation.

The trouble is that nobody in power recognises this crisis for what it is – an asset insolvency crisis brought about by massive debt leverage.

Neo-liberals are still reacting as if the emergency was one of liquidity. They are wrong. Governments should bail out not banks and speculators but the customers who now have every reason to fear for the future.

[Sep 04, 2013] Laissez-faire is, was and always will be a lie

"As Reinhold Niebuhr was quick to point out, what laissez-faire is in practice is laissez-faire for the rich and powerful and a boot to the neck for everybody else."
August 26, 2010

DownSouth

August 26, 2010 at 9:42 am

I agree but with a few changes and additions.

The true progression was Capitalism 1.0 (the classical era of laissez-faire), Capitalism 2.0 (the Depression and the rise of government intervention by and for the people) and Capitalism 3.0 (the stagflation of the 1970s and the rise of government intervention by and for the oligarchs).

I find it amazing that both Kaletsky and Das fail to grasp the simple truth that, as you put it, "Bailout America is a command economy."

There are command economies that are democratic and serve the interests of the people (Capitalism 2.0). And then there are command economies that are not democratic and serve the interests of the oligarchs (Capitalism 1.0 and Capitalism 3.0).

Laissez-faire is, was and always will be a lie. As Reinhold Niebuhr was quick to point out, what laissez-faire is in practice is laissez-faire for the rich and powerful and a boot to the neck for everybody else. It is a command economy, but commanded by and for the oligarchs. For a little review of what laissez-faire really is, I recommend a reading of the chapters entitled "III. The Big Red Scare" and "VII. Coolidge Prosperity" from Frederick Lewis Allen's book Only Yesterday. It recounts the history of the 1920s, or the era of Capitalism 1.0. What we have is an environment where business and finance operate with impunity, juxtaposed with the concomitant demonization and harsh oppression of labor.

Here's how Lewis sums up the mood that pervaded the 1920s:

"America," wrote Katharine Fullerton Gerould in Harper's Magazine as late as 1922 "is no longer a free country, in the old sense; and liberty is, increasingly, a mere rhetorical figure. . . .

No thinking citizen, I venture to say, can express in freedom more than a part of his honest convictions. I do not of course refer to convictions that are frankly criminal.

I do mean that everywhere, on every hand, free speech is choked off in one direction or another. The only way in which an American citizen who is really interested in all the social and political problems of his country can preserve any freedom of expression, is to choose the mob that is most sympathetic to him, and abide under the shadow of that mob."

Sentiments such as these were expressed so frequently and so vehemently in later years that it is astonishing to recall that in 1922 it required some temerity to put them in print. When Mrs. Gerould's article was published, hundreds of letters poured into the Harper's office and into her house-letters denouncing her in scurrilous terms as subversive and a Bolshevist, letters rejoicing that at last some one had stood up and told the truth. To such a point had the country been carried by the shoutings of the super-patriots.

To sum up, what really transpired is this:

Capitalism 1.0 → Capitalism 2.0 → Capitalism 1.0 

There is no progress here, only atavism.

Siggy
August 26, 2010 at 12:27 pm

Will the last atavist please turn on the lights when they leave?

Full marks for the synopsis: Capitalism 1.0 → Capitalism 2.0 → Capitalism 1.0 is the progression.

Nicely done without too many citations, impressive.

Mickey Marzick in Akron, Ohio
August 26, 2010 at 2:47 pm

Then Capitalism 2.0 – by and for the people – is an aberration, the product of a set of unique historical circumstances.

Say it ain't so…

Doug Terpstra

August 26, 2010 at 4:32 pm

Thanks, Attempter.

I too was puzzled by the Socialism 'charge', tossed out as an immaculate given, like Saddam-al Qaeda, Iraq-911, to be accepted unchallenged and ill-defined.

'Socialism' has thus been widely Orwellized with malice and forethought … to obfuscate the current reality of corporate welfare and fascism.

As you write,

"There is nothing remotely 'socialist' about ANY of this. … If you don't have public ownership, you don't have socialism, by definition. Period. What we have here is a command economy where private rent extractions are maintained. That's called neoliberalism, corporatism, and is the economic aspect of fascism."

It's puzzling that Das even bothered to wade through Kaletsky's apparently vapid and conflicted work. Kaletsky sounds like a tweaker: all we need is someone more expert like himself to twist knobs and pull levers for better results - just an upgrade, a new release, not a new system. He's like a lot of economists: supposedly expert at counting, polishing, and distributing golden eggs, but utterly clueless about the care and feeding of geese.

And it's most strange for capitalist apologist to be so furious with Hank for doing one single thing right, ONE-the bankruptcy of Lehman-allowing one theoretical principle of free market capitalism to actually apply in the real rigged-market world.

Kaletsky must have been among that tiny group of bondholders who actually got a buzzcut when the market collapsed, instead of workers and taxpayers.

Richard Kline
August 26, 2010 at 6:21 am

Kaletsky has spent his career as an economic journalist on the British side of the pond, and from that geographic location his phasing of 'capitalism' may make a certain amount of sense.

His '3.0′ includes the Big Bang and the ball-breaking of industrial labor in Britain which assuredly changed the political economy there signally.

And in the present economic rupture, Britain's government seems to have much more forcefully advanced a 'new rulebook' for the financial system within its own borders, so a '4.0′ phase is at least plausible.

From other global perspectives, though, Kaletsky's phasing looks wan, indistinct, or just not on.

The US has done nothing remotely like a 4.0 'new rulebook' change, and it's not clear that the EU outside of Britain has even settled upon a joint regulatory program, let alone what such a program might look like.

Additionally, not having read Kaletsky's thesis, I can't say, either, whether he in any significant way considers the relationship of East Asia in general and China in particular in relation to his proposed phasing structure. The 'Asian model' of market capitalism-heavy government intervention behind a nominally market economy with big money and big government symbiotically joined-strikes me as a far more important and significant permutation of 'capitalism' than either of Kaletsky's putative '3.0′ and '4.0′ phases.

It is quite possibly the case that the structure of developed economies in most nations in, say, three generations, will look far more like 'Asian model' structures than occidental 'robber baron model' or 'social partnership model' structures, the two significant alignments in the European-dominated portions of the globe since the inception of bureaucratically administered nation-states with industrial economic bases of importance; say, since 1800. [I'm not presenting any comprehensive analysis here, just making, y'know, sweeping observations.]

In short, I don't place much weight in Kaletsky's phases as outlined in this summary, though perhaps there's more support in his actual text. If there is even a credible 3.0 in Western capitalism, I can't think of it; certainly there doesn't appear anything in view of a change coming out of the present storm and sorrow.

And regarding Schumpeter, all of these neo-liberal, free market apologists love to quote the 'creative destruction' without really giving his theoretical oeuvre significant attention - because that 'creative destruction' suits their own purposes, not because they use it as Schumpeter did. Those present purposes? Well, sweeping aside labor bargaining or environmental legal hard limits or government long range planning or community involvement or even informed participation; yeah, all _that_ destruction is part of the creation that concentrators of great [personal] wealth are eager to get on with. If your particular modest, prosperous business happens to get lodged slow-footed beneath their chariot wheels, that must prove that you're not creative enough so the faults on you.

Joseph Schumpeter actually had a far reaching thesis of many dimensions on how states of order in industrial capitalism changed. It's been a couple of decades since I read it in detail, so I don't want to start spouting, but there are at least two important aspects which all fo thse destructive creators don't get around to including in their analysis.

The reason Schumpeter posited destruction occurred was principally due to the saturation of economic regimes, typically technological regimes. Such regimes reached their optimal utility and penetration in an economy, staled, then declined or were simply overrun by 'innovations,' particularly technological innovations. (To my recollection, Schumpeter also considered the possibility that _social_ structural regimes optimized and then were similarly eroded by the new; certainly, Schumpeter's basic argument could be so extended.)

Secondly, as a separate and surely broader analysis of industrial capitalism, Schumpeter argued for profoundly cyclical actions of long duration within its activity. He did not believe, contra Keynes, that government intervention would overcome such cyclical action but argued instead that we should, well, _get on with it_ letting that destruction be brief and the new prosperity be speedy. Or so he had it.

But all these present creative destructors, never manage to bring either Schumpeterian cyclicality nor the actual inherent senescene of existing regimes affect their judgments. I'll bet a dollar to a dime we don't see much of either of these issues in Kaletsky's synthesis.

Well, Schumpeter could have been wrong on the last two points but right on some kind of 'creative destruction' driven by something else entirely-but what does the idea really mean, then? I don't think Schumpeter was wrong, however, on any of the three points (not that I agree with many things in his thought, nor necessarily with how exactly he framed these issues, either).

So rather than read Kaletsky, I would urge those interested to instead read Schumpeter; he's worth the time. His 1939 text was, if I recall, _Economic Cycles_, though he summarized much of his though in several later papers into the 1950s, if one cares to look.

Go to the source, and form your own opinion. Sez I.

Patrick
August 26, 2010 at 6:58 am

Anatole knows where his bread is buttered. By blaming the entire mess on Paulson and Bush by default, he's guaranteed some good sales.

Progressive Ed
August 26, 2010 at 3:25 pm

Here's a link to a nice essay on corporatism in America that gives a somewhat different point of view than those expressed in the article and comments: http://www.americanthinker.com/2009/05/corporatism_comes_to_america.html

[Aug 19, 2013] Introducing Government Finance Quasi-Capitalism by Doug Noland

With households highly leveraged and the private sector unable to expand Credit sufficiently to power our structurally deficient economic structure, Credit expansion/inflation it is left to the federal government and the Federal Reserve.

Aug 17, 2013 | Safehaven.com

I'll posit that evolution to a consumption and services-based economic structure is an evolution to Credit gluttony. With households highly leveraged and the private sector unable to expand Credit sufficiently to power our structurally deficient economic structure, Credit expansion/inflation it is left to the federal government and the Federal Reserve.

This backdrop has spurred massive Federal deficits, zero interest rates, and unprecedented central bank monetization. Washington policies spur further wealth redistribution and, I would argue, wealth destruction. I'm going to call the new "Minsky Stage" - "Government Finance Quasi-Capitalism" (GFQC).

The government now essentially determines market yields throughout the entire Credit system. The government now basically insures system mortgage Credit and sets mortgage borrowing costs. Massive federal deficits and low Fed-dictated borrowing costs sustain inflated corporate earnings and cash-flows. The Fed has come to believe it is within its mandate to inflate securities and asset prices. It has crushed returns on saving instruments. Amazingly, the Fed believes it is within its mandate to dictate that savers flee the safety of deposits and other "money" for the risk markets.

"Government Finance Quasi-Capitalism" exacerbates fragilities. It fosters ongoing Credit excesses including a historic expansion of non-productive government debt. GFQC and the resulting flow of finance exacerbate imbalances and economic maladjustment. Accordingly, resulting financial and economic fragilities ensure an even bigger role for Washington in the real economy and for the Federal Reserve in the financial markets.

With securities markets near record highs, it has become popular to refer to "enlightened" policymaking. As a student of monetary history, I see the seductive workings of the monetary inflation expedient. And once commenced, it always assumes increasing control.

The expansion of government finance ensures dependency on fiscal deficits and central bank "money printing." Inflating securities prices, highly speculative and distorted financial markets, and economic maladjustment ensure ongoing fragilities.

"Government Finance Quasi-Capitalism" ensures the over-issuance of mispriced finance, the misallocation of resources and a resulting deficient real economy. The widening gulf between weak fundamentals and monetary inflation-induced market Bubbles creates a highly unstable, uncertain and precarious backdrop.

All seem to ensure only greater government intrusion, control and stagnation.

And I'll conclude, as I often do, by stating that I hope my analysis is flawed.

[Jul 12, 2013] More On the German Gold Situation Some Light from Deutschland and Canada

Jesse's Café Américain
Journalist Lars Schall was kind enough to forward this excerpt from one of his articles that is printed below.

I think it 'frames up' the situation with regard to the repatriation of Germany's gold from the US very nicely.

How sovereign is Germany relative to the US? Indeed how sovereign are a number of the western nations vis-à-vis the Anglo-American establishment? The recent search for the elusive Snowden cast some light on the issue of sovereignty.

And as a corollary, how complacent and compliant are the western people to the Banks? Have the Banks quietly assumed the role of government, without proper accountability to the people?

And secondly, what exactly is the problem with the gold? Is it there or gone? And if it is there, is it already spoken for, in the manner of modern banking rehypothecation? And if so, why?

Jeff Nielson casts some light on that subject of central bank leasing in his recent article here. It is finely reasoned. Short selling is legal, but like many legal things it can become illegal if it is done with an intent to manipulate prices, even with the blessing of entities who, through their association with a sovereign, hold themselves to be above the law and public accountability.

This is the excerpt of Herr Schall's interview. You may make up your own mind as events unfold, but it does seem to parse the subject quite nicely.

Lars Schall: In January this year, the Deutsche Bundesbank announced that it wants to repatriate some of its gold holdings at the NY Fed and all of its gold from the Banque de France. Do you consider it a bit strange that apparently it will take seven years to bring roughly 300 tons of gold from New York City to Frankfurt and five years to bring roughly 370 tons from Paris to Frankfurt? Moreover, the Bundesbank will leave a huge amount of its gold in New York City and London to have in the event of a currency crisis "the ability to exchange gold for foreign currency […] within a short space of time." Does this argument convince you?

Norbert Haering: The specifics of the plan for partial repatriation of gold seem to be designed to quash the public discussion about gold storage abroad. For many years to come, the Bundesbank will be able to answer these calls by saying: we are already working on it. And that will work well as a communication strategy. But the truth of the matter is that there is no good reason to store your national gold treasure abroad. The issue and the way in which the Bundesbank got itself tangled up in conflicting statements and justifications during these discussions makes one suspicious that either there is a problem with the gold or that Germany might not be as sovereign a state as we like to think. I do not know which one is true.

Lars Schall, Money Lies Disguise Banking Truths: An Interview with Norbert Haering


I find the refusal of the Federal Reserve to release the national gold of Germany for repatriation for seven years to be one of the most remarkable of recent developments in the world of money. And it is all the more remarkable in that so few are willing to even ask the most fundamental of questions regarding the custodial integrity of the bankers.

It is truly the dog that did not bark.

Stand and deliver. Either the bullion, or the truth.

School of Assassins Guns, Greed, and Globalization by Jack Nelson-Pallmeyer, Roy Bourgeois

Amazon.com

A Customer

SOA/WHISC- not an issue of the past December 20, 2001

Jack Neslon-Pallmeyer's new book, School of Assassins: Guns Greed and Globalization, brings the history and development of the School of the Americas, including its recent name change to The Western Hemisphere Institute for Security Cooperation, into perspective along with the developments of the global and national economies and militaries.

In a time when the role of the SOA/WHISC is being seriously and persistently challenged, the name change and other cosmetic alterations represent a need to continue to build and strengthen the thoughtfulness and articulation of the movement and voices that are calling for the school's closure. This book ties together many of the critical issues at play in the debate over the SOA/WHISC and puts it in the context of the role it has in the world today, as well as how it has developed and changed with the changing world and economy in which we all live. One of the key points stressed in this book is that the SOA/WHISC's role has never been stagnant or unaltered, but rather that it has and continues to change along with the goals of the United States foreign policy. The purpose and role that the SOA/WHISC fulfilled at its inception is not the same as the purpose it is serving today. The US foreign policy, beginning around the time the SOA was opened in Panama, has evolved throughout different stages, each trying to maintain a different balance between military and economic strategies and tactics to enforce and implement its goals:

  1. Beginning in a period of major military domination, the SOA was created at a time when military repression and power was the main way of enforcing and achieving the US foreign policy goals.
  2. However, economic tools and leverage, such as those achieved by the International Monetary Fund and The World Bank, began to gain momentum and strength as efficient ways of implementing foreign policy. The second stage of US foreign policy was thus a balance between the growing use of economic leverage and the lessening of the need for military repression.
  3. During the third stage that the SOA/WHISC functioned in, economic power implemented through the afore mentioned institutions and their programs (such as Structural Adjustment Programs), took the front line in US foreign policy. The decreasing role of the need for military and violent repression in this stage had a great impact. It threatened and concerned those in the military to seek ways to maintain the immense budget and importance of the military at a time when it was not really being used or was as necessary.
  4. This "military industrial complex" is another key issues at stake in Nelson-Pallmeyer's book, and plays a large role in the remilitarization that characterizes the fourth stage of US foreign policy. The SOA/WHISC's role in the present day is greatly founded on this remilitarization as an important tool in order to achieve the goals and stability desired by the US foreign policy.

The new name given to the SOA represents a face lift, as many refer to it, which attempts to make the goals of the SOA/WHISC seem worthy of the absurd amount of money the US government budget allots the military.

Nelson-Pallmeyer makes a point that the

" `any means necessary' foreign policy is possible when advocates are convinced that the means they employ, whether the torturer's hand or the banker's rules, are justified because they promote the common good or protect particular interests they represent" (98).

Changing the name of the SOA to WHISC, along with the other cosmetic curriculum changes, is attempting to do just this; to create a new image of the school that is one promoting `security cooperation' and human rights. As this book states, however, these changes do not represent any sense of remorse, accountability, or separation from the past policies and deeds that a truly new institution would need to be based on.

The impact of corporate-led globalization is another key issue in The School of Assassins: Guns Greed and Globalization; and likewise, is a factor that plays into the remilitarization that characterizes stage four of US foreign policy. Although globalization, as stated by Nelson-Pallmeyer, is a reality, corporate-led globalization is not inevitable and is furthermore, undesirable. Corporate-led globalization undermines democracy, aggravates problems rooted in inequality, and is altogether destabilizing. This destabilization in turn becomes a reason for remilitarization, and a problem to be handled through military repression rather than systematic, economic, and global changes. Corporate-led globalization is not the beneficial development or progress that the myths make it out to be.

Finally, the debate and struggle around the SOA/WHISC is but a glimpse at the greater picture, the tip of an immense iceberg. Nelson-Pallmeyer states that "the SOA is a window through which US foreign policy can be seen clearly" (xvii). The struggle and movement to close the SOA/WHISC is also fighting against many of the greater issues at stake in our foreign policy and international involvement and is only one of many battles to be fought. Closure of the SOA/WHISC will not appease or end the movement, just allow it to move on to the next battle. Many of the aspects of the US foreign policy that break down the false image of the benevolent superpower are brought in to focus through connections and impacts on the SOA/WHISC. The SOA/WHISC is like a case study of the many components and factors of US foreign policy and its goals. In exposing oneself to the SOA/WHISC debate, history, and struggle, it is inevitable to come to some greater understanding of the US's involvement and true goals in its foreign policy and international affairs. This book is atriculate, thought provoking, and worth reading.

[Jun 06, 2013] The Great Persuasion: Reinventing Free Markets Since the Depression

economistsview.typepad.com

The end of an era?:

Persuasion, Great and Intimate, by David Warsh: ...The Great Persuasion: Reinventing Free Markets Since the Depression by Angus Burgin, of Johns Hopkins University ... is the latest of a lengthening shelf of books by intellectual historians that seek to explain the election of Ronald Reagan in 1980 in terms of the influence of ideas or money or both. To most of those writing the narrative of American politics in the 1970s, the enthusiasm for markets and reduced government that accompanied "the Reagan revolution" (or, earlier, the deregulation of transportation, under Jimmy Carter, or finance, under Richard Nixon and Gerald Ford), seemed to come out of nowhere. They were expecting, per Keynes and Schumpeter, "the end of laissez-faire."
Burgin's argument is that a group of market advocates formed in the late 1930s, around a discussion of Walter Lippmann's The Good Society, then took flight after World War II as the Mont Pelerin Society, and subsequently influenced the evolution of postwar economic and political thought. That thought isn't new, but Burgin's is the by far the best account of the organization's history. The MPS was the brainchild of Austrian economist and social philosopher Friedrich von Hayek, then in the process of relocating from London to Chicago. He intended the organization to be "something halfway between a scholarly association and a political society. "Thirty nine persons attended its first meeting, in April 1947, at a mountain hotel near Vevey, Switzerland, on the north shore of Lake Geneva, not far from Lausanne.
Among them were economists (Hayek, Lionel Robbins, Maurice Allais, Fritz Machlup, Ludwig von Mises, Frank Knight, Milton Friedman, George Stigler, Aaron Director); philosophers (Karl Popper, Michael Polanyi, Bertrand de Jouvenal); journalists (Henry Hazlitt, John Davenport); and activists (Leonard Read and representatives of the Volker Fund, the Kansas City, Mo., foundation that bankrolled the Americans' participation) – a regular Who's Who of young men (only one woman, British historian Veronica Wedgewood, was included). They would become influential theorists of the turn towards markets.
Burgin, a historian, shows that from the beginning the group comprised two factions, European traditionalists and American upstarts. The Europeans were concerned with the difficulty of reconciling capitalism with social traditions that had evolved over the centuries. The Americans were not. Eventually, Burgin writes, Milton Friedman got the upper hand and brought in "a more strident version" of market fundamentalism. His predecessors' work, Burgin writes, had been "ingrained with a sense of caution at the knife's edge of catastrophe. Friedman's was infused with Cold War dualisms…. Friedman's philosophical models brooked no concessions to communism, and the America of his time found a ready audience for a philosophy that did not allow itself to be measured in degrees."
For all his fascination with Friedman, Burgin does not pay much attention to developments in economics itself. Robert Solow, of the Massachusetts Institute of Technology, has written that Burgin tends to endow the MPS with more significance than it ever really has, whether within the economics profession or in the world at large." And surely Burgin stints the debates that gave rise to the Mont Pelerin Society. He doesn't mention the "calculation debate" about the technical possibility of planning that had preoccupied the Austrians economists since Germany's surprisingly successful administration of its national economy during World War I; nor the controversy over the New Deal's National Industrial Recovery Act of 1933, which was the background for the Lippmann book; nor the various crises of peacetime planning that were unfolding in Europe as the group first met.
Moreover, as a historian of ideas, Burgin ignores various more purely experiential means of persuasion by which faith in markets was renewed in the 1960s,'70s and '80s. There was the success of Toyota, for example, in improving standards of automotive quality. Then, too, the Cultural Revolution in China and the Prague Spring of 1968 had powerful effects on views of political economy, in both East and West; so did the US war in Vietnam. Populism, meaning the durable sectional rivalries within the US itself (Midwest vs. the Coasts, South vs. North) played a role as well. So did rivalries between the United States and Europe.
For my money, Burgin's real find (apparently for his, too, since his book ends with an account of it) is a 1988 essay by Milton and Rose Friedman (his economist wife and collaborator) tucked away in a Hoover Institution volume, Thinking About America: The United States in the 1990s. In "The Tide in the Affairs of Men," they discerned a tendency of powerful social movements to begin as works of opinion, spread eventually to the conduct of policy, then generate (often) their own reversal, only to be succeeded by another tide.

The Friedmans discerned three such movements in the past 250 years – a laissez-faire or Adam Smith tide, beginning in 1776 and lasting until around 1883 in Britain and the United States (with policy lagging: 1820-1900 in Britain, 1840-1930 in the US); a Welfare State or Fabian tide, beginning around 1883 and lasting until 1950 in Britain and 1970 in the US (policy tide 1900-1978 in Britain, 1930-1980 in the US); and a resurgence of free markets or Hayek tide, beginning around 1950 in Britain and 1980 in the US, whose opinion phase was "approaching middle age" and whose policy phase twenty-five years ago was "still in its infancy."

This is standard cycle theory, familiar to readers of Ralph Waldo Emerson, Henry Adams, Arthur Schlesinger Sr. and Jr, Albert Hirschman and a host of others, unexceptional except insofar as it portends, even in the Friedmans' view, not exactly the end of laissez-faire, but the beginning of some new tide of emphasis on the social.

Burgin doesn't make much of it except to note that, at the height of the financial crisis, in the autumn of 2008,

"commentators on both sides of the political aisle declared that a long era in American political history was drawing to a close."

...

Lafayette:

HAYEKISM

Interesting exposure on the development of Hayekism in Europe.

I maintain nonetheless that there is very little residual belief in his tenets ... in Europe. In the US, otoh, there remains a residual belief in "laissez-faire Free Markets". One can see that clearly in the movement towards Market Consolidation that has occurred in cars, in commercial aircraft, in banking …. etc., etc., etc. ad nauseam.

Free to do what?, I ask. To consolidate as companies go chasing one another down the Learning Curve. Tantamount to the integration of markets into oligopolies practicing tacit price-fixing. What is so "free" about that development.

Free Markets effectively demonstrate the existence of two factors: *The ability for new entrants to the market to have no-barrier and rather facile access, and *The plethora of market actors such that real competition exists and not just three or four or five companies that, having oligopolized the market, sit back and count their revenues/profits ... laughing all the way to the bank.

Some will think that the Internet is the latest example of Free Markets and how they liberate competition for the greater benefit of the Consumer. I don't see the Internet, in terms of consumer markets, at all in the same manner.

The eponymous Amazon is the typical example, where Market Hegemony is the practice. There is no viable alternative to Amazon in France, though there are at least 4 other such outlets (all retailers, one a copy-cat eBay).

If you want a "price", you go to Amazon to see if it has the article. Likely it will, then you look at price-bot sites for the same product elsewhere. It is rare that anyone is cheaper than Amazon (shipping included). It is current that they align with the Amazon price.

Meaning, Amazon sets the price. How is that a competitive market? It isn't. Rather, it is "Sleeping Beauty and the four dwarfs".

Another such example is the "natural monopoly" (legalism) that was initiated and developed in PC Operating Systems by Microsoft. There was no effective competition to MS-DOS and then Windows. Even though, by all accounts, Apple is a more rigorous operating system. The other real alternative at the time, DR's CP/M, simply lost an equitable battle with MS-DOS and eclipsed itself. And Apple remained an "also ran". Many markets behave in this manner, and when they do, there is not much one can do about either "natural monopolies" or "oligopolies" that evolve.

So what is a nation to do about oligopolies that develop to oversized entities that simply sit on entire markets and milk them like cash-cows? Zat Iz Ze Kwestchun …

MY POINT?

Hayek was a product of his times. His times were pre-WW2 when world trade went to hell in a handbasket because during the interwar period countries employed heavily tariff barriers to protect their own industries. This arcane protection led to a stifling of international trade.

There are remnants of that philosophy that exist today. The Right in France often calls for the state to protect its "National Champions", which are large companies, often lacking in innovation who stagnate their product/service offering. The French automobile industry is a prime example.

Which is reduced to two national producers and a bunch of comparative dwarfs in niche markets (for instance the German VW, Merc and Audi lines). Followed by the orientals (Toyota, Hyundai, Kia who are presently taking major market shares).

Protecting National Champions in the automobile industry certainly will certainly impress the Socialist Unions - because the higher salaries cause French cars to be much cheaper than those coming from the Far East.

So, what is a country to do? Install a tariff barrier against the presumptuous foreign interlopers? That is the same thinking that brought Hitler to power and started WW2?

And I'd love dearly to hear what Hayek would say about that motion today, some eighty years later ...

Hayek: {We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a programme which seems neither a mere defence of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical and which does not confine itself to what appears today as politically possible…Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this has rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide.

Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in power of ideas which was the mark of liberalism at its best, the battle is not lost.}

Liberalism promotes the prevalence of individual spirit, invention, effort and risk-taking. It provides the foundation of the individual and his/her effort to better themselves.

But liberalism largely forgets that to do so one needs a balanced Market Economy - where, on the one side, is Individual Effort to produce goods/services and on the other a Collective Effort to buy those goods/services. And both sides benefit equitably, though not equally, in the mechanism.

We, the laborers, are on both sides of the equation. To produce goods/services we contribute our labor and to buy them we employ the monetary return in exchange for our labor.

Consumption is and always will be that Collective Effort that also must benefit from equitable markets (for goods/services and our labor) in which to thrive and flourish.

Which individuals do you know made their riches on a deserted island alone and by themselves ... ?

The Blorch -> Lafayette...

I think that in a Democracy politicians compete with other politicians for office. Obvious enough but now consider that holding office allows the politician to do favors for the groups of lobbyists who contributed to the campaign. So, really politicians compete to do favors for the donors.

At the same time a politician helps the donors, the favors he dispenses may come at the expense of the general welfare of the people. For example, allowing monopolies and price gauging in household internet delivery by the cable companies. Or, say, allowing the insurance industry to write a health care bill.

So a politician in a democracy must juggle keeping two balls in the air. He/she must administer to a declining general welfare while continuing to please their donors.

Moving on from the juggling metaphor, it is efficient for the politician to kill two birds with one stone: a twofor, if you will. In this scenario, the clever politician promotes a policy that is pleasing to many but really, only benefits the few donors that fund the campaigns.

Take the housing debacle, for example. Many were pleased to get a mortgages and refies. A few benefited in the end and these few were naturally amply represented by lobbyists.

Second Best:

Milton Friedman once said there is a fundamental conflict between economic freedom and political freedom, that the freedom of the latter to suppress the former will always prevail and therefore must be restrained with eternal vigilance

It did turn out that way, but in reverse order of what he meant. The economic freedom he had in mind in terms of maximum economic welfare for all was actually suppressed for maximum welfare for the few.

All those foxes guarding the henhouses just couldn't stand up to the onslaught of corporate lobbyists.

Zoniedude:

If the original question is the "Reagan revolution" the answer is much simpler. The United States Supreme Court decisions on one man one vote destroyed the typical political control of local corporations in the states. This forced a national political coalition of corporations that was enunciated by the Powell Memorandum to the U.S. Chamber of Commerce to coordinate this coalition. The Powell Memorandum emphasized the growing threat of democratic social movements such as the autosafety efforts of Ralph Nader and the environmental movement.

The Republican "Southern Strategy" reflected this national corporate effort to channel political funds to low population states where they could overwhelm local efforts. Ronald Reagan was dominantly a creation of the Powell Memorandum efforts, he became a national spokesman for this pro-corporate movement and then implemented the "Southern Strategy".

The creation of a national corporate economic coalition funding local political activity fell under the influence of the international rise of multinational corporations which sought to elude political restraints imposed by rising democratic movements such as environmental and consumer safety laws. That, in turn, created the need to reinterpret "Laissez Faire" to mean a pro-corporate deregulation. And, of course, the reinterpretation of Hayek et al in this vein.

Thus the simple answer is that the underlying effort is a thin political skin over the multinational corporate effort to eliminate legal restrictions on their ability to operate on the basis of profits unconstrained by concerns about workers and environmental issues.

Darryl FKA Ron:

In "The Tide in the Affairs of Men," they discerned a tendency of powerful social movements to begin as works of opinion, spread eventually to the conduct of policy, then generate (often) their own reversal, only to be succeeded by another tide.

[Please let's not conflate market economics as a powerful social movement such as civil rights. The conflicted views of Joe Schumpeter regarding capitalism as valiant entrepeneurs innovating juxtaposed against the efficiency of innovation by monopoly seeking uber corporations somehow interlocking into a creative destruction that in the end would evolve into a system of capitalism so evil that it would be overthrown is the dream, or nightmare, that we are living. For Schumpeter it was both the dream and the nightmare. That's what conflicted means. The thoughts of the economic elite never changed. They needed no new idea. They were just trying to get the old one back in motion. The policy shift from this idea started as soon as FDR lay cold and dead and its first major victory was the tax reform of 1954, which was a clever act of tax the rich stealth by Republicans to rescind the dividends tax credit making the return to capital via capital gains incentive the transformational force in enterprise. Democrats took over Congress after 1954, but who were they to go against raising taxes on the rich if that is what Republicans wanted? It looked great while growth potential was unbound by virtually limitless resources and rapid population growth. But it facilitated the consolidation of corporate enterprises large enough to rule every aspect of public life that they deemed useful. Then every kind of incremental deregulation and liberlization of finance and assurance for the value of currency for capital's muscle would follow. ]

kievite

The shift toward neoliberalism occurred in the 1970s because businesses and the super-rich began a process of political self-organization in the early 1970s that enabled them to pool their wealth and influence to achieve dominant political power and to capture administration.

Money pouring into lobbying firms, political campaigns, and ideological think tanks created the organizational muscle which mimics the Bolsheviks organizational muscle. And Repugs got a bunch of Trotskyite turncoats such as James Burnham, who knew the political technology of bolshevism from the first hands, were probably helpful in polishing this edifice. All that gave the Republicans a formidable institutional advantage since 1980s.

Carter and Clinton sold Democratic Party to the same forces.

This rise of special interests politics has been at the expense of the middle class. In this sense already in 1994 the USA became very unhealthy society although the crisis of 200 was still six years ahead. Collapse of the USSR and subsequent looting of the territory by Clinton administration slowed down this process, but now it's by-and-large over (with the USA failing to prevent reelection of Putin) and "latin-americanization" of the USA is again in full force.

There are no sizable countervailing forces on the horizon, although the level of public debt might be an implicit limiting factor for neoliberalism. It will be interesting to see how and by what political forces neoliberal regime in the USA ends. Some people suggest that the USA might eventually disintegrate along the lines of Civil War alliances. I think much depends how "peak oil" crisis unfolds. And will the wars with terrorism continue to give the USA elite the required level of the national unity and meaning. Rise of separatist movements in Texas, Alaska and other states is pretty indicative here.

[Jun 05, 2013] Utopia by Stephen Eric Bronner

Logos

Utopia is usually considered a dirty word. The concept has been too often been employed to justify the worst totalitarian terror and justify passivity in the face of actual political issues. Rarely is utopia understood as a regulative ideal that resists translation into practice yet remains necessary to guide any genuine attempt at liberation. It instead conjures up images of demagogues, dreamers, fanatics, apocalypse, gullibility, and – perhaps above all - what Samuel Butler, the great Victorian satirist, called "erehwon" (or "nowhere" spelled backwards). But this is only part of the story. Utopia has an anthropological appeal, especially for the lowly and the insulted, and Ernst Bloch was surely right when he noted in Heritage of Our Times (1935) that "man does not live by bread alone – especially when he doesn't have any." Most civilizations have their unique ideals of a heavenly or secular paradise from which, given a cosmopolitan outlook, every other civilization can learn.

... ... ...

Utopia is inherently unfinished: the society or regime that views itself as utopian, or even firmly on the path to utopia, is dystopian by definition. That is because history does not move in linear fashion. Progress in one realm of society can occur while regression takes place in another. Extraordinary scientific breakthroughs, for example, have accompanied the rise of religious fundamentalism; cultural liberation has flourished since the 1960s while economic equality has increased. There is no uniform and prefabricated teleological process leading humanity to a happy end. Unresolved conflicts, or what Bloch termed "non-synchronous contradictions," are often carried over from one epoch to the next. Clearly, for example, racism and sexism and religious prejudices are pre-capitalist in character but play an important role in capitalist society-and, potentially beyond. Tensions exist not only between the whole and its dynamic parts but between the parts themselves. To conceptualize utopia in a serious manner thus calls for both recognizing the critical and liberating inheritance of the past –while overcoming its limitations.

Non-stop expansion

Edited Google translation from Russian
Evrasia

Today, March 6, the 68th U.S. Secretary of State John Kerry completes first overseas tour. The list of the countries he visited, beginning on February 24, is impressive: the UK, Germany, France, Italy, Turkey, Egypt, Saudi Arabia, United Arab Emirates and Qatar.

Some experts heard in the statements that the new head of U.S. diplomacy systematically made throughout his journey, an attempt to remedy the situation, into which Hillary Clinton plunged the U.S. foreign policy - raffling feathers of the U.S. opponents and alienating allies. Once again they are talking that, at least for now, the U.S. expansionist pressure eased somewhat. There are opinions that Barack Obama will give us a chance to take a breath. Never mind that the first time "reset" did not work. There are even opinions that now Obama is starting to build a new foreign policy framework. And even that the time is not far off, when America will be forced to abandon its expansionist plans.

Americans are constantly finding new and new ways, new approaches and apply tremendous pressure as soon as existing technology of keeping vassals under control start failing and cease to work. That include tough scenarios that we have seen Afghanistan or Iraq.

Indeed, the American foreign expansion slowed somewhat, and pressure from the U.S. to other countries weakened - for objective reasons. However, the crisis faced by the American elite, the crisis of promotion of their interests, their values, like any crisis, even on a global scale - was never a reason for the Americans to retreat. The emergence of such difficulties for persistent, bend on world domination elite, with is the type of elite that the US has, the elite which relentlessly try to increase their sphere of influence, can not be something that will knock them out of the saddle, demoralizing and/or cause to abandon their plans.

This situation can develop into to separate paths. First, the current crisis for American expansion will create some kind of immunity among the American elite, meaning that they adapt to this crisis, amend exposed the weaknesses, strengthen them and will continue to move toward their goal of word domination, but using other methods, and other technologies.

What we have, in principle, and have seen in recent years. Americans take any technology to promote their interests, for example, the technology of "color" revolutions, deploy it once, twice, three times ... and then a fourth, and fifth. But on the sixth time it begins to falter as states and nations are beginning to resist the technology by solving its nature, and better understanding its meaning, its consequences. At this point they immediately abandon it, or postpone until better times. But at this very moment they adopt a different, alternative technological model, which they begin to implement immediately.

American intellectuals pursue non-stop development of new technologies of subduing and controlling other nations by manipulation of social processes, contradictions in the societies, and, in fact, by working with elites of those societies. History of selection of such technologies can be traced for the last several decades. We still remember how in the Soviet period, they used economic leverage to get a foot in those States, which tried to rely more on the Soviet bloc. This, incidentally, is fine details was described by former U.S. political consultant John Perkins in his book "Confessions of an Economic Hit Man." But when this technology has ceased to operate, has exhausted its possibilities, they moved on to the "color revolutions" technology developed by Gene Sharp. When the "color revolutions" technology begun to fail, they moved on to the theory of controlled chaos by Steven Mann, which is implemented today in the Middle East. And on the other approach is in the pipeline.

Americans are constantly finding new and new ways, new approaches and apply tremendous pressure as soon as existing technology of keeping vassals under control start failing and cease to work. That include tough scenarios that we have seen Afghanistan or Iraq.

Therefore it is naive to argue that stopping or slowing U.S. expansion due to economic crisis will cause them to abandon their idea of ​​global domination. Especially, taking into account that the historically expansionist policy of the United States can't be changes by election of the next U.S. president, no matter what are his own views and approaches. He is only a nominal representative of the entrenched for the last two centuries American elite, a hired manager, recruited by the powers that be.

But there is another scenario - a situation in which the number of failures, errors and blunders will increase, and the errors can became self-reproducible. In this case a single failure will entail two new additional failures, which in their turn will cause another four, and so on. This is what is called a systemic crisis, which can be eliminated only by the change of the elite.

Church Must Help the Poorest, Not Dissect Theology, Pope Says

"The world was going through not just an economic crisis but a crisis of values."
NYTimes.com

Pope Francis shared personal moments with 200,000 people on Saturday, telling them he sometimes nods off while praying at the end of a long day and that it "breaks my heart" that the death of a homeless person is not news.

Francis, who has made straight talk and simplicity a hallmark of his papacy, made his unscripted comments in answers to questions by four people at a huge international gathering of Catholic associations in St. Peter's Square.

But he outdid himself in passionately discussing everything from the memory of his grandmother to his decision to become a priest, from political corruption to his worries about a Church that too often closes in on itself instead of looking outward.

"If we step outside of ourselves, we will find poverty," he said, repeating his call for Catholics to do more to seek out those on the fringes of society who need help the most," he said from the steps of St. Peter's Basilica

"Today, and it breaks my heart to say it, finding a homeless person who has died of cold, is not news. Today, the news is scandals, that is news, but the many children who don't have food - that's not news. This is grave. We can't rest easy while things are this way."

The crowd, most of whom are already involved in charity work, interrupted him often with applause.

"We cannot become starched Christians, too polite, who speak of theology calmly over tea. We have to become courageous Christians and seek out those (who need help most)," he said.

To laughter from the crowd, he described how he prays each day before an altar before going to bed.

"Sometimes I doze off, the fatigue of the day makes you fall asleep, but he (God) understands," he said.

CRISIS OF VALUES

Francis, the former Cardinal Jorge Bergoglio of Buenos Aires, said the world was going through not just an economic crisis but a crisis of values.

"This is happening today. If investments in banks fall, it is a tragedy and people say 'what are we going to do?' but if people die of hunger, have nothing to eat or suffer from poor health, that's nothing. This is our crisis today. A Church that is poor and for the poor has to fight this mentality," he said.

Many in the crowd planned to stay in the square overnight to pray and prepare for Francis' Mass on Sunday, when the Catholic Church marks Pentecost, the day it teaches that the Holy Spirit descended upon the apostles.

On Saturday morning, Francis met German Chancellor Angela Merkel and discussed Europe's economic crisis.

Apparently responding to his criticism of a heartless "dictatorship of the economy" earlier in the week, Merkel, who is up for re-election in September, later called for stronger regulation of financial markets.

On Thursday, Francis appealed in a speech for world financial reform, saying the global economic crisis had made life worse for millions in rich and poor countries.

[May 18, 2013] Sheila Krumholz and Danielle Brian on How Money Rules Washington

May 18, 2013 | naked capitalism
masaccio

I agree that we have a political class, one devoted exclusively to the protection of the interests of the feral rich and the corporations they own and control. In the same way, the two political parties serve as window dressing for the similarity of purpose.

We don't govern ourselves now, if we ever did. We simply select a uniform to vote for, no differently than we pick a sports team to root for.

allcoppedout

Very interesting post. After years researching and teaching research methods I come up dry on tools to make the analysis effective. We have known for 2500 years that equally powerful arguments can be made from many perspectives or frames of reference and got nowhere outside science on decisions between 'paradigms'. Structuralist analysis would no doubt throw up royal routes through schools, universities and management training, along with networked, family connections. Jane Marceau is one of many who have written on this theme of the making of business elites and the political class. Literature is legion and already tells us a lot on how the system developed and perpetuates itself through an ideology of meritocracy. My preference is to wonder why we have to deal through this scumbag system at all. There clearly are many alternatives and the dominant system spends much of its time strangling them at birth. The most obvious alternative would be transparent money and qualification and lot systems with salary caps. I'd like to see analysis build the alternatives and probe why we have none. I'm pretty sure that just replacing people by sortition probably won't work without transparent money – and that we need to do something about privacy in considering anything like this. Salary caps might seem to chase off the 'best' – but what do we really know about who the best are and what motivates them?

We don't really get to see the competing scenarios on how our politics and economic system might work. Most haven't realised yet that we have no democracy and economics is detached from any relation to structure. It's obvious even basic data don't get through to people – as in people not realising how unequal their societies are and what this inequality within societies does to us. We've had lots of posing with Gramsci, Foucault and postmodern text-engines. Do we really need Nietzsche or any philosophy to teach us to recognise what's myth and ideology? We end up grounding our epistemology in a profound denial of – er – epistemology! I'd go with trying to establish the scenario of what a modern society would be – as Latour said we are profoundly non-modern. One could build back to what we need to do to achieve this. And should we not try to break the mold of the solus ipse now we have the technology to work more easily together? What account of ignorance and apathy should we work with including our own Idol of the theatre?

Will any effort we make be beaten to the punch by mobs in the street? After all, the intellectual effort has left most of us jaded and protecting our own sinecures. Radical politics in the UK is UKIP! What have we done to make our ideas so unappealing?

banger

Most healthy people, despite the 24/7 propaganda to the contrary are not mainly motivated by money when their basic needs are met. The quest for riches is perverse and anti-social and ought to be seen that way. People, when allowed to express their true nature, are cooperative, creative and want to avoid stress and conflict. Parties are what healthy people really love not the stupid Scrooge McDuck quest for money.

The fact we as a society honor money-making in itself corrupts our civil society. We need to stop that and ask the followers of the philosophy of selfishness if any of their assertions are backed by social science or neuro-science. Because there is absolutely no basis for the fundamental driver of current conservative philosophy which is not in the least bit "conservative" in the Burkean sense because it devalue society and social mores.

John Jones

Banger if people are like that then would it not be possible to ban money in politics eventually?

I would like to believe that there is altruistic people out there that could serve as politicians without lobby group money etc and make decisions based on scholarly methods, facts, truth and the common good.

I agree with what you say though. Just my ignorant 2 cents.

Andrew Watts

Nope, it doesn't matter. In days past there was individuals like Daniel Webster who cashed checks from such praiseworthy institutions like the second Bank of the United States during his political tenure. Webster was a stalwart defender of the central bank from it's enemies during his time in Congress. Even in his capacity as a private citizen Webster represented bank interests and strengthened the hand of the federal government relative to the states in legal cases that furthered monopolistic private interests. One of which has a bit of relevance in the present day; McCulloch v. Maryland. This particular legal battle made it to the Supreme Court where it effectively buried the capacity of a state to ban banks not chartered in the state. It also legalized the federal government's ability to charter a central bank.

That didn't matter at the time though. Those groups that Webster panhandled for couldn't stop a political coalition comprised of slave owners and western farmers (Free-Soilers) from destroying the second Bank of the United States. Ushering an era of Jacksonian democracy that was diametrically opposed to government by and for the elite.

Gee, wern't all our esteemed representatives who opposed the bank bailouts mostly from western and southern states? History…. something, something. Har, har!

allcoppedout

I watch UK coverage more or less doing what Lambert has here. Most of our television reporters are vapid and all prevent any real argument. RT and Al Jazeera now provide most of the best news in the UK, though bias of other kinds shows up there. Tedious conversation or discourse analysis is not the answer – we need something in real time. But even if we could put Lambert on screen in a live critique box … Some of our reporters are pretty bright, so we might look at the psychology-sociology of how they sell out so easily. There's plenty of work to look at here and it extends into how bright people manage to be so stupid in banks.

banger

I know something about mainstream journalists and their culture. Mainstream journalists, like politicians, are mentored, vetted and groomed at places like Columbia by senior editors and journalists who take an interest in promising students and guide them in their careers. American journalism is very much a community and the mores, attitudes and political stances they take in their reporting is carefully monitored by their editors.

If you want to work for a prestigious news outlet you have to be "responsible" and cultivate your sources and avoid putting your editor in the embarrassing position of being chewed out by an official or a tycoon on an unnamed beach in New England or a Washington dinner party. American journalists today are political functionaries who must be careful of what they say and write at all time because there are many people who want their jobs. If you break the rules, at least in Washington, you are socially shunned and you will never work anywhere in the mainstream.

The most telling example of this is when Christian Parenti offended the dean of Washington hack journalists, Jim Lehrer, by reporting, early in the Iraq occupation, something to the effect that people in Iraq were concerned by corruption with American contractors. By simply passing on what everyone knew and what was, in fact, the case he was castigated by Lehrer who said he'd never be on his show again.

Stories and political positions are worked out politically in Washington–the actual "truth" is not considered. Now, they will tell you just the opposite that they are are "objective" and this is self-deception. Some journalists are, thankfully, cynical but most, in my experience are true believers in their exalted position that Walter Lippman prepared for them.

Today, much journalistic content actually comes from PR firms (just a little trade secret) but that's another story and is a development of the last decade. Also true (yes, I had an inside seat) is that PR firms (surprise) hire young people to blog at all kinds of places to spread disinformation throughout the most trafficked blogs but that too is another story.

clarence swinney

BARNEY FRANKS SPEAKS " Every time a group would come in my office for more money for housing, elderly, I would say you forget one thing. You forgot to say Raise taxes and Cut the out of control military." So much truth. Three things will ruin our fiscal condition. Military, Medicare and Interest. All three can be reduced. We can pay down debt. We must tax wealth. We can cut Medicare and military. We are in peace time why keep loading $$$ on the Pentagon where they now own almost one third of our Total budget when you add in Energy Dept. and Veterans. We must do better. Two things brought down empires. Internationalism and Debt.

Mary Bess

The legal sanctioning of their own criminal behavior is certainly the goal of the Banksters and the Pete Petersons of the world and their work is nearly complete. Whistleblowers are jailed for telling the truth and Banksters are rewarded for stealing. The moral universe turned on its head.

I saw the latest film version of Les Misérables a few days ago. It looked so familiar. Poor Jean Valjean, having redeemed himself as he approaches death, still views himself a criminal, having internalized the views of his oppressors. Valjean's mind is totally colonized. I sat next to a Romney supporter (or Obama, it wouldn't matter), who was crying her eyes out.

Europe's depression deepens

May 16, 2013 | naked capitalism
Paul:

Unfortunately Italy's woes go hand-in-hand with a rentier class who has busied itself building a fine mess of an Extractive Economy (obligatory reference to "Why Nations Fail"). Italy's best talent has been forced to emigrate elsewhere, and that trend isn't stopping. A crying shame, really.

Middle Seaman

A crucial question is whether the oligarchic system, including the US, will collapse or whether an insurrection will stop the rich from the ongoing destruction by returning control to a sane really free market. OWS established that the seeds for the insurrection were planted. Will OWS version 2 be strong enough, Western world Arab Spring, to prevail?

Working Class Nero

What is happening is that US-led neoliberal globalization is affecting a levelling move towards convergence between the wealthy First World and the less well of Second and Third World. This is a long term trend dating back at least thirty years. Both in social structure (a wealthy elite vs. a mass of disempowered peasants) and in relative standard of living - the wealth First World countries are getting poorer while some Third and Second World countries are getting slightly richer. Now if order to accomplish this, the elite First Worlders were lowering their own standard of living, that may be seen as a good thing. But no, the elite First Worlders have elected their bottom 60% to take the hit in their bid at global redistribution of wealth.

The antidote to neoliberal globalization is nationalism. And you do see nationalist movements arising in many European countries. The complication is that domestically, one needs a more leftist outlook in terms of distribution of income. But beyond the nation's borders, one needs to have a more traditionally right wing attitude and to accept that some nations will be rich and others poor. That doesn't mean one should colonize or oppress those other nations, but a well organized and productive nation should not be ashamed of the fact that it has a higher standard of living than other nations. And the only way to protect against the levelling tendencies of globalization is through strong, well-conceived borders on issues of trade, currency, and immigration.

But in Europe things are further confused by the ambivalence of the EU towards US-led neoliberal globalization. On the one hand the EU could be a "nationalist" entity; it could create strong borders against unfair trade and uninvited immigrants and be a large enough market to hold its own on the global scale. This is what the US / UK fear most and spend huge amounts of effort trying to avoid. On the other hand the EU can be a simple tool of US-led globalization to destroy the prosperity of its citizens in a do-gooder attempt at global levelling. Lately it is this latter tendency that one sees coming out of Brussels. For example this is how concern troll Peter Sutherland of BOTH Goldman Sachs and BP explains it:

The EU should "do its best to undermine" the "homogeneity" of its member states, the UN's special representative for migration has said.

Peter Sutherland told peers the future prosperity of many EU states depended on them becoming multicultural.

Mr Sutherland, who is non-executive chairman of Goldman Sachs International and a former chairman of oil giant BP, heads the Global Forum on Migration and Development, which brings together representatives of 160 nations to share policy ideas.

He told the House of Lords committee migration was a "crucial dynamic for economic growth" in some EU nations "however difficult it may be to explain this to the citizens of those states".

So as Europe reacts against such machinations, we will see the rise of particularist nationalism which is going to eventually force the EU to take a side. If the UKIP continue to rise and are able to get Britain out of the EU (let us pray they do, although the US will never allow it) then there is a chance that the EU could adopt a "nationalist" strong borders policy. If not then the EU will crumble as the various local nationalists start winning power.

In the US things are slightly different. There are a few paleoconservative groups that have a "citizens" approach but most right wing groupings in the US are hopelessly infected with the disease of Libertarianism which translates into open borders and "free" trade as well as a bunch of other stupid stuff. OWS, being a more left leaning group, did not manage to become a much of a force due to certain limitations. In order to "occupy" something it meant militants had to be on site most of the time which meant the movement was closed to most people with jobs or families. Worse it was often just a restatement of liberal priorities, it never was able to clearly articulate a message against outsource of jobs and the massive insourcing of low-skill labor. The partial exception I know if is in Oakland (people from NoCal just happen to be more clued in…) they did get it right and marched to the Port and tried to shut it down. I never saw anything about OWS being anything but for more mass third world immigration. For example an amendment to the latest "Amnesty" bill tried to limit to the number of new "American Dreamers" to 33 million per decade. This was voted down so we will likely get something like 50 million per decade. Given the already low participation rate for labor, is it really a good idea to add 100 million more mostly low-skilled people to the US in the next 20 years? No one from OWS or any right wing libertarian organization will be against this. Even environmentalists refuse to speak out about the Environmental Impact of so many new American Dreams. Only paleoconservatives are against it but there are not so numerous and many of them are compromised on other subjects.

In Europe, the taboos are breaking down and more and more people are recognizing that a strong U-turn is required against neoliberal globalization. The left offers some good theory on the subject but not much in the way of on the ground political movements, so it's to the right people turn. But the right in Europe sometimes are taking - at least in their rhetoric - a working class perspective on things (for example, Marine Le Pen in France). In the US, where globalization is the new nationalism, both the left and right are united in support of globalization and only very small groups exist to fight against it. The only way for these groups to grow and become effective is if people of both a left and right leaning perspective join together. But given the partisan heat in the US this is a tall order to fill.

http://www.bbc.co.uk/news/uk-politics-18519395

banger

Nice comment. Indeed, in the U.S. at least the only chance to make positive change has to come from some kind of alliance between left and right–I think that most of the major political differences among young people, for example are cultural and those cultural, racial and regional differences are ruthlessly exploited by propaganda outlets by which I mean every single major outlet from Fox to Comedy Central. All these outlets should be ignored as honest presenters of the news except Colbert can still be funny.

I find that young people in the South who favor conservative politics have a lot more in common with young people in the north even if they have different tastes in music. Both groups are much more skeptical of authority and the mainstream media than their parents and grandparents–so there is hope.

Cynthia

The power that the banks and financial institutions have obtained means they can frequently dictate policy to the government. In this new form of inverted totalitarianism, it will be interesting to see if this much power and influence in one sector of civil society will cause even more social unrest. Given what we have seen in Cyprus, Spain and Greece, my guess is yes.

The Dork of Cork.

Thanks for posting the obvious dark undercurrent within the plan. A certain section of the Hibernian / Anglo / Dutch elite are some of the darkest forces on the planet. These self same forces conspired to turn Ireland into some sort of sick gigantic ranch in the 16th & 17th century.

The chaos on the shop floor of a typical Irish factory in the early /mid noughties was something to behold. Almost unlimited profits were to be had from the extraction of labour value. Given the astounding lack of wages & labour remittances relative to productivity domestic credit was produced to capture value……..malinvestment followed.

I often imagined Mr Sutherland sucking the marrow from the bones of dumb Irishmen back them – which he was.

The absence of even a doomed captain rock like rebellion in Ireland is mainly a result of a lack of cohesion and deliberate policies of social atomization beginning in the 1960s under state television

Now that a estimated 25%~ of new mothers is of a non national extraction the pillage can continue without agrarian style interruption.

As in the 1980s ………..get rid of the cohesive coal mine community and the rest will follow.

It has moved on from lowly meat factory type operations to the once "protected sectors" – working its way up until all value is destroyed via extraction.

http://www.independent.ie/regionals/newrossstandard/news/appeal-made-to-protestors-at-great-island-27514517.html

Thor's Hammer

Working Class & others Your analysis of the politics of class domination is spot on, as are the comments from others that followed.

What is missing is a recognition of the underlying background conditions.

Capitalism is a system of exploitation wherein power is invariably accumulated by a small group of owners of the means of production. They then use that economic power to achieve domination over the mechanisms of the state and means of violence and use this power to further their enrichment. Thus capitalism evolves into kleptocracy as a natural course of development unless countervailing events, social movements,or revolutions prevent it.

However, capitalism grows not just by exploiting the surplus value of labor, but by exploiting the natural capital of the earth. And the natural laws of physics pay no attention to politics or economics.

The industrial civilization that capitalism has built, and the productive output that allows seven billion people to live on a planet where only one billion lived formerly has only one real currency. Not gold, not the dollar- only energy derived from fossil fuels. And that energy source is finite. No amount of hopium and delusion can change that fact. Most of the noise around the energy sources of industrial civilization is just that– sometimes a few gigajoules of energy are freed up by new technologies or changes in the cost of extraction, but that doesn't change the finite nature of the energy base of our civilization and only shifts the time frame by milliseconds of geological time.

We have built that civilization upon the free ride of cheap fossil fuel energy, and that era has come to an end. The peak production of the most concentrated and transportable form, oil, has already passed. And the same will be true of coal and natural gas in a future measured in only decades or at most a generation or two. Not only have fossil fuel energy extraction costs reached a point where they limit future growth, but the ability of the planet to absorb the bi-products of burning them for energy has been exceeded, perhaps irreversibly.

This is the underlying background in which the class struggles of the present and future will take place. Banksters and oligarchs are behaving as if they are competing in a zero sum game- which is in fact the case unless radical redistribution of human priorities were to somehow take place. Which of course would require the elimination of their power over the economy and ideology as a pre-condition.

banger

There is no possibility of an OWS 2 movement in the U.S. The trend is away from coming together and more towards everyone for themselves so to speak. More specifically, the trend is to have a circle of friends and family (or not) and focus on their needs.

Another Gordon

That is a lot like the traditional Chinese approach where the extended family is the only basis for social security AND, very often, physical security. It's a sensible response to the lack of the Rule of Law. Basically, the US is becoming more like China in its dark years – a preserve of clashing warlords (read oligarchs and bankers) unrestrained by law or decency.

mmckinl

Unfortunately the author doesn't get it … Austerity is all by design to save the banksters while eviscerating public services. So far the governments have done a masterful job of implementing just that program. A few protests and riots but nothing too threatening.

The EU will see a shrinking economy for years to come. Between resource depletion and climate destruction only those countries with slave wages and lax environmental protections will manage to grow and slowly … Growth for the EU, US and Japan is now a relic.

What needs to happen is planning for a sustainable economy that can't rely on "growth". Only with Public Banking can the financial sector survive the years and years ahead of de-growth in the developed world. Don't let them fool you, this is all about protecting the plutocracy at any cost.

skippy

Its like watching plutocracy surf that big antonymous wave of electrons of price, seeing who can stay standing up the longest, as it washes over the globe.

Skippy… and these – are not – zen surfers… this is the winner takes all… comp of all comps… the last wave thingy…

Walter Map

'What needs to happen is planning for a sustainable economy that can't rely on "growth".'

Precisely.

Won't happen, though, at least not anytime soon. It contradicts the greed goals of the terminally rapacious, and their control, for the time being, is total.

banger

Well, I don't see why you say the author doesn't get it–DE is just reporting on recession in Europe that seems likely to get worse. Other than that you make a lot of sense.

I believe we will stumble towards developing new solutions to the extent we can deconstruct the mainstream narrative that exists, at this point in history, largely to deceive us. Great ideas, techniques, technologies are out there just waiting to be used that would allow us to bypass the robber-barons from collecting tolls each time we sneeze. Task number one is to deconstruct the narrative then we can get to work. The tragedy is that people think there are no solutions and that this system is all that is possible.

mmckinl

The author is calling for growth … Groth is largely over for the developed world … Japan, EU and the US.

Resource depletion and climate destruction have already stagnated growth. It will only get worse.

Yes there will be periods of growth … after severe downturns that once again collapse prices and wages.

The picture is of a roller coaster ride descending with intermittent rises followed by rinse and repeat.

banger

Well I'm for growth–growth in the direction of actually trying to realistically solve our collective problems. This activity is what I would call growth.

HotFlash

I think this is an apt analysis. I believie that one of the (many) factors inhibiting recovery is our clinging to the GDP metric. Anybody got a better metric? GINI is not a lot better, but until the scoring method gets better, we will be working for bad goals. Which means we will never be able to win for losing.

A better metric, PLEASE!

Doug Terpstra

Agreed. Once again, the unstated premise is that the obvious consequences of austerity are purely unintended; that spreadsheet errors were entirely inadvertent; that kleptocrats are well-meaning really, just mistaken; that Obama is not Machiavellian, merely a tragically-inept negotiator who only becomes aware of his administration's crimes when he first sees them on CNN.

If only these shortsighted supply-siders could be encouraged to see the light, just a few more years of compelling proofs about the epic failures of free-theft pacts and global war and then maybe our basically-sound system of rigged-market cannibalism could be reformed and set back on the straight-and-narrow path of unbridled growth.

Those who can't or won't recognize the malicious greed and powerlust driving disaster capitalism are really obscuring compounding the problem with inappropriate fixes. The system doesn't need pruning; it needs to be uprooted and replaced.

Cynthia

The trouble is, many people see that much of the "austerity" checklist is also the playbook of those who would impose a form of corporate feudalism.

The "austerity" measures tend to gut the middle class. The poor will remain poor, and the benefits accrue to the rich.

By the time any benefits might "trickle down" to the middle class, there won't be a middle class, because they'll all be poor. Those who have benefited the most from the current fiasco will benefit again, and those who are paying the price will pay the biggest price. It's only "austerity" for those who have gone along and upheld their end of the social bargain.

Whether or not you agree with that assessment, that's how a growing number of people worldwide see it. And that's why there's growing resistance. Perhaps an "austerity" that didn't target the middle class, and affected all levels of society equally relative to their means would be less unpopular.

banger

I really don't believe Obama is inept at all. He's the administrator of an extremely diverse multi-polar, multi-agenda ship of state that is not even remotely unified. I've repeated many times that the President is not the power in Washington -– he's one actor among many–his function is administrative, ceremonial, and, mainly, he's a power-broker dealing with a lot of very, very heavy hitters who don't f–k around.

The Dork of Cork.

A interesting Irish economic paper by John Fitzgerald

http://www.esri.ie/UserFiles/publications/RN20130102.pdf

The Effect of Redomiciled Plcs on GNP and the Irish Balance of Payments

But like all such papers it does have political consequences.

"There is also a corresponding implied adjustment needed in the official current account figures, as shown in Table 2. This would imply that, instead of having a current account surplus of around 6.1 per cent of GNP in 2012, the underlying surplus was closer to 0.6 per cent of GNP. When these undistributed profits or retained earnings are taken into account, it makes a big difference to the headline numbers for Ireland for 2012. A current account surplus of close to 6 per cent of GNP would imply that there was 4 | Quarterly Economic Commentary – Spring 2013 considerable scope for domestic demand to increase in the future, once deleveraging ends. However, if the true figure is closer to 0.6 per cent of GNP the scope for such an increase in domestic demand in coming years is more limited."

This is a very narrow way of looking at things.

We live in a world without final settlement.

Global rent flows into London and other financial capitals…… The people with claims on so called sov debt, now private utilities & other more sophisticated methods of extraction burn real resources at others expense.

Under a national free floating currency domestic demand should be a domestic affair and nothing else.

The level of capture by global rentier forces is truly astounding.

banger

May 16, 2013 at 7:58 am

Indeed, I think the first thing all people have to do is to understand that the current system is morphing into new form of feudalism. The systems that rules us are being gamed systematically by an international oligarchy that is becoming indistinguishable from organized crime. This class is international in scope and loyalty -– oligarchs have loyalty to their families, tribe/clan and to their peers not to their countries of origin.

In American it is understandable that most people don't get it though it's beginning to dawn on more people–but in Europe which is not as insular as the U.S., I don't understand why the people seem largely clueless about what is going on internationally. Europe has more real democracy than we do in the U.S. where we have a captive corporate media and two fake political parties with two right-wings.

Paul W

Banger, you captured our problem perfectly with your opening line: "the first thing all people have to do is understand"

The majority do not want to understand. Even after it will be too late they'll still be in a state of denial.

banger

I don't think people want to be ignorant -– I think that people are overloaded with having to deal with too much information and a mind-control regime engineered to weaken us intellectually, morally and spiritually so that we can be a food source for the oligarchs. Our shamanic class is centered in the advertising, PR, media and entertainment industries who profit directly from our weaknesses. If we can create counter-spells people will open up an flower.

NotTimothyGeithner

"I don't think people want to be ignorant–"

I think you hit the nail on the head, or at least the majority don't want to be ignorant. Its the undeserving elite who are the problem.

I used to be involved in Democratic politics, but there was a Repubican state Senator where I use to live who was conservative. He is a doltish believer. I'm confident there is no hidden malice. He had a few heavily African-American precincts who would give him votes or at least not vote against him. These were places where having a Republican sticker would mark it for being stolen. What happened? The answer was the Republican elected went or had his staffer go to every community meeting. The Democratic candidate was too busy worrying women not being allowed at Augusta and avoiding poor neighborhoods like the plague. The voters of these precincts more or less kept saying, "here is a candidate who we disagree with but respects us enough to come out and pretend he likes us, and here is a candidate affiliated with Team D who we never see and wants everyone to know how conservative they are."

The local Democratic elite would whine and complain about turnout, but if you suggested, they do something other than look for pats on the head from important state Democrats they would whine even more about voters being idiots. I think the voters in those precincts were making the best decision they could make with the digestible information available to them.

David Archer

Banger writes:

"Our shamanic class is centered in the advertising, PR, media and entertainment industries who profit directly from our weaknesses. If we can create counter-spells people will open up an flower."

Yes. One of my constant themes, much more elegantly stated by Banger. Though it's hard to blame them (us) when poverty is a very real alternative, the range of the sell out by our creative class – for crumbs or fortunes – can break one's heart.

This aspect of the over-all picture definitely needs more focus and attention, especially the notion of "real world" artistic or financial counter-spells to help bring on the flowering of our collective humanity.

The Dork of Cork.

A simple explanation why Irish Youth unemployment is not at Greek or Spanish levels.

One of the reasons why Irish youth unemployment is lower then in Spain is that the birth rate in Ireland reached new lows in the early ,mid 1990s The domestic Irish women were having less kids back then.

http://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=PEA01&PLanguage=0

Just type in under one year , all sexes and all years. The estimated number of kids under one year reached a low of 48.2 thousand in 1995 rather then the current 70+ thousand. The 1995 group are now leaving school.

This current high birth rate is chiefly a result of external workers which came into the country during the boom – these are generally workers in the 20s to 30s age group …….prime child bearing years.

Now type in the 15 to 19 group (all ages and years)

This Irish age group is back down to 1972 -73 levels.

Please note that these numbers may seem small but of course in % terms these are the biggest rise and fall seen in euro area birth rates by a wide margin.

Aussie F

In Europe we're witnessing the slow destruction of all humane and civilised values for the sake of a discredited economic theory and a handful of gambling banksters.

It's a major problem for everybody, because without wishing to ignore Europe's history of atrocities and colonialism, in recent decades it's slowly evolved into one of the most civilised places in the world, enjoying some major advances in social justice, social equality, and human rights.

Now neoliberal orthodoxy reigns supreme, and another alternative to ruthless, corporate supremacy and unending war is being destroyed, closing down hope for millions.

The Dork of Cork.

On France "The structure of its economy at present is based on internal consumption which requires external capital."

Yes – Greek ,Spanish etc etc capital rations

"What is the credible plan to make the transition from this model to one of export-led growth in an environment of non-floating currency and while major trading partners are all trying the same trick."

I don't think thats the plan now.(at least in France) A country exports so as to afford car inputs. No cars and therefore no need to export. More wine is simply consumed.

People need to ask where is the Greek capital ration going and why build such overcapacity in French public transport ?

http://www.sudouest.fr/2013/05/15/des-trains-a-l-heurela-pau-canfranc-dans-les-tetes-1054104-4321.php

Just 420 people a day use this line which was relayed in 2010….. 420 people they wish to extend the line south by 20 km to a few villages of 1000~ people.

Why ?

banger

Since you ask "why" of course I don't know the particular situation or the byzantine deals that underlie public spending in France but I can guess. Public morality and a sense of cohesion is gradually disappearing in Europe and that was easily predictable in a culture that is based on nationalism and cultural chauvinism.

Multiculturalism does not sit well in Europe -– they've done a great job in integrating other nationalities and radically different cultures, but it just weakens cultural bonds and, in my view, increases corruption and the power of organized crime as a major factor in society.

Europeans like Americans are losing faith in their institutions.

The Dork of Cork.

@Banger

Unlike the Irish anti State, the French state never does anything without a purpose. These investments have massive overcapacity for the moment.

I think they are preparing for a time when oil will simply not be available in quantity.

The experience of Norway during the war points to the possible direction of things.

"The fuel shortage during World War II made trolleybuses extremely popular, since Norway had an abundance of cheap electricity.[2] After the war the construction of the 4.1-km line 5 started, and in 1950 tramline 3 was replaced with the new trolleybus line 5. By that time, five gasolene buses had been converted, giving a headway of 10 minutes. A year later, three more buses were bought from Strømmens Værksted and the headway was reduced to 7.5 minutes. The line was popular, and traffic increased. In 1954 the conversion of tramline 2 to trolleybus started, and in 1957 the 6.5-km line 2 opened with 18 new buses. The ridership reached its peak in 1959 with more than ten million passengers per year on the two routes. In 1960 the sale of cars in Norway was deregulated, resulting in fewer public transport riders"

At the end of the day Cattle need to be shipped to market as the current breds can't walk very far.

http://www.youtube.com/watch?v=kDZCvFehkf8

Its the car or food.

banger

Thanks, good answer–I suppose I'm jaded since in the U.S. where I live corruption is very deep and ubiquitous. I lived half of my working life working in Washington DC and know how the system has radically degenerated.

The Dork of Cork.

Corruption is alive and well in Paris.

They have turned the euro periphery into Imperial markets & now a negative energy hinterland.

Walter Map

Why? Because it costs a lot of money, so lots of money is spent. All money spent contributes to GDP, and if you spend enough money, GDP rises and the economy is 'growing'.

If the EU would simply print up $50 trillion or so and piss it away, GDP would go through the roof and everybody would be happy.

Economics is easy.

The Dork of Cork.

@Walter

I advise you to look at the history of French transport systems.

They closed down the last of the rural branch lines in France in 1980……. The year of external $ hyperinflation.

They are now opening a couple of these lines and relaying the stuff in disrepair.

http://www.youtube.com/watch?v=rJ_Jx34gJJE

allcoppedout

Spot on Walter – I'll map out the necessary pub crawl and have the get out of jail free cards printed for those who get out of hand – though one has to consider whether these economic units would contribute more to GDP in the CJS and prison system.

The Dork of Cork.

Yee guys don't understand the post Great war & certainly the post second war European economy.

Its entire physical foundation orbits the car.

Ireland is perhaps the most extreme example of this external input economy.

It has probably more roads per person then any other country on earth.

If you refer to British balance of payments data ……its income from the rest of the world reached a peak at Q1 2008 at I think £18 billion + Much of this was from Irish operations of its Scottish banks. Income from the rest of the world is now normally only a couple of billion a quarter.

Income from the rest of the world was got through running oil mindlessly through sectors of the economy so as to get a return. Now the UK has decided to chose real goods over income.

This means activity in conduit / Imperial markets nose dives.

Walter Map

The rentier class is doing just fine, so it's really just a PR problem, and not an economic one. The people who matter aren't suffering, and the people who are suffering don't matter.

And since it's really just a PR problem, all that's really needed is to fudge the data a bit more to provide the appearance of economic recovery, as is done in the U.S.: fix the data around the policy, make your own reality, and all that. Having the recovery official, however phony, makes it possible to say, with a straight face, that the impoverished have only themselves to blame, there's nothing the government can do, and nothing the government should do, except rest on its laurels and get reelected.

Problem solved. See how easy it is?

The fact is, even if the rentier class wasn't on a permanent world-wide pillage and all national economies were doing well, it still wouldn't be possible to maintain flush times indefinitely. The present conventional economic paradigm of infinite growth in a finite world simply isn't sustainable and sooner or later, and with much gnashing of teeth, it will be replaced, once global ecological collapse forces global economic collapse. Ugly doesn't cover it: try weird ugly, so ugly and so weird you can't even get your head around it. The petri dish of human civilization is already way past full, and such populations always and inevitably have massive rebalancing events. Always.

Deal with it.

Terry Mock

Walter, unfortunately, you are correct when you say, "The present conventional economic paradigm of infinite growth in a finite world simply isn't sustainable and sooner or later, and with much gnashing of teeth, it will be replaced…"

As far as your advice to "Deal with it", here you go:

The Beginning of the Sustainable World http://www.triplepundit.com/2013/01/budding-model-sustainable-community/

allcoppedout

Good stuff Terry – but can we do the sustainable in a manner such that big oil and rentier class thieves will just wither away simply by us ignoring them? I wish it were so.

JeremyGrimm

Growth - no growth - sustainable growth -- why can't we have growth in culture and growth in knowledge? The GDP includes some factors to count these things doesn't it? Why is growth always discussed in terms of material goods? How about a growth in leisure and recreation? I strongly favor growth in the areas I've mentioned and doubt that they will greatly impact the usage of petroleum. Why do discussions of growth seem so tied to material goods? Material goods are only a small part of the well-being of most (I hope!) people living in the United States and Europe.

allcoppedout

A quick scan of Lambert, rather more time with excellent comments and the esoteric delights of Norwegian bus timetables. The idea of being given money and forced to drink until we drop sums economics up to a T. It's the sort of policy UKIP will adopt. Not quite as radical as Raving Looney's 'sell Britain to the Arabs and dole the money out on a per capita basis' -I did vote for that one. I'm struck that austerity-pisspooronomics is well described by the very fact we are in here 'chatting'. I was even over at Zerohedge for a few minutes reading some drivel on the UN being crap (true) and Mcdonalds marvelous (lunacy). Sad puppies like us who are motivated to work to spend time here rather than rushing off to India to eat curried Mcdonalds are the cause of the depression.

We probably need to sack Wall Street and the City because our democracies don't work. The choice is really between economics and democracy. We shut a dormitory for homeless people in Salford last week – clear need, no other provision, not much money needed. Google and Amazon dodge tax. Economics is the means tax dodging corporations use to hide the links to murder. It produces a high street of so little interest to me I'm here! A politics so dull I don't vote. Products so dull and vile I don't want them.

What we need is something that would have allowed the ordinary sailors on both sides of the Armada to embrace and fight the real enemy (Brits actually enlisted to avoid almost certain death from disease or starvation on not being paid). What we get is 'big oil', TBTF banks and the chance to eat burger "beef" grown on genocide-cleared land, lamb (China) made from rat – all while wearing clothes made by slave labour in buildings falling down around the workers.

Maybe what decent economists should focus on is the abolition of economics as the divine right of kings? If we were sane we'd all be occupying. One has to think we are too scared – but what of and how do they do it to us?

[May 01, 2013] The Real Story Behind Executive Pay

If such a neocon rag as FP admit the problem it's a really severe problem that no longer can be ignored...
Foreign Affairs

As the share of income taken home by top earners in the United States has risen over the past few decades, so, too, has popular concern about economic inequality -- something the Occupy Wall Street movement loudly reminded Americans about in 2011. Much of the outrage has centered on the compensation of the United States' top corporate executives, who are said to be taking home ever-fatter paychecks, while the incomes of lower-level employees have stagnated. "American workers are having to make do with less," an AFL-CIO official complained to The New York Times last year, "while C.E.O.s have never had it better." (Europeans have also gotten worked up over these issues, with the EU proposing rules that would cap bankers' bonuses.)

Part of the problem, allegedly, is that the corporate boards that determine CEOs' pay packages have severed the link between salary and achievement. Lucian Bebchuk and Jesse Fried, authors of the 2004 book Pay Without Performance, conclude that "flawed compensation arrangements have not been limited to a small number of 'bad apples'; they have been widespread, persistent, and systemic." Mihir Desai of Harvard Business School has claimed that skewed incentives for executives have fueled "the twin crises of modern American capitalism: repeated governance failures . . . and rising income inequality."

Economists such as these argue that although CEOs are in theory beholden to the boards that hire and fire them, often the reverse is true, with directors striking sweetheart deals to stay in the good graces of powerful executives.

[Apr 29, 2013] Reinventing Bretton Woods Global Finance In Transition - Currency Wars - Exorbitant Privilege

Apr 25, 2013 | Jesse's Café Américain

As you may recall, Bretton Woods was the name of the conference, taken from its location, that set up the post World War II international currency arrangement with the US dollar as the reserve currency of the world. It was based on a dollar convertible in gold.

When Nixon arbitrarily shut the 'gold window' in 1971 the world entered a reserve currency system of purely fiat dollars, often called Bretton Woods II.

There are a number of theories that suggest that such a system is not sustainable, for many of the same reasons that the euro is not sustainable.

And as some have remarked, the control of a currency by a small group of men operating in private is an exorbitant privilege.

But putting that aside, the BRICs in particular are not happy with the existing arrangement which has been slowly falling apart for some time as the Federal Reserve imposes its domestic needs and policy on what is intended to be the rest of the world's currency. It finds itself in much the same position as is Germany in the EU.

I have addressed this many times before, suggesting that the eventual outcome may be a reconstituted SDR-like instrument based upon a broader basket of currencies and the inclusion of gold and perhaps silver as well.

The Anglo-American banking cartel are fighting this at every turn, because as we know to control the world's currency brings remarkable power. I suspect quite of bit of the hysterical antagonism against gold and silver is tied up in this. And an ardent desire to 'cover up' some of their past shenanigans. Germany should put pictures of its gold on milk cartons.

It is possible that they will thwart the objectives of this effort and most likely this conference. And what will happen then is a continuing fragmentation of the world into regional trading zones and spheres of influence.

This may be used as a reason to propose a one world government, that will be similar in composition to the European Union and controlled by a few elite politicians and their bureaucrats.

We are eyewitness to one of the great events of economic history, and if anything it is remarkable how few economists and politicians understand what is happening. They are firmly embedded in their theory, and too often are willfully blind.

Let us free markets from regulation, the Banks from restraint of law, and the money creation process from the bindings of oversight and transparency, and we will reach new pinnacles of prosperity.

I find that a well educated layman with a grounding in history and the practical side of finance and business has a better understanding of what is going on than the great bulk of theoreticians whose models are heading quickly towards the dustbin. I just read a strikingly good letter from my friend Hugo Salinas-Price, that proposes a basic model for regulating international trade.

And I told him it would get nowhere, even though it was probably directionally correct, and about as good a start as many I have seen. The status quo and their hounds would rise up against it, because they are not ready to accept change.

They will produce many weighty and learned papers that 'prove' that it is wrong. And they will twist and torture the data to serve their ends no matter what the data may actually say. The Rogoff-Reinhart scandal is not an outlier in what is a generally disgraced profession. But these are signs of the times, where there is little downside and enormous profits for deceit in the obsessive pursuit of money and power, at least for the exorbitantly privileged.

Money is power, and those who love power above all seek to control any and all changes to its structure, for their own ends.

[Apr 28, 2013] Money lies disguise banking truths By Lars Schall

"The attempts by central banks to restart the economy are almost entirely based on re-inflating asset markets. This means, the level of debt in the economy is not reduced. It might be that the ultimate crisis is only pushed back this way."
Asia Times

Norbert Haering studied economics at the German universities of Heidelberg and Saarbruecken, receiving a doctorate from the latter in 1994. He then worked, inter alia, at the Commerzbank and the German edition of Financial Times. Since 2002 he has been a correspondent for monetary policy, financial markets and economics at Das Handelsblatt, the leading German business newspaper. He is the co-founder and director of the World Economics Association and editor of the ''World Economic Review''. His five books include Economics 2.0: What the Best Minds in Economics Can Teach You About Business and Life (Palgrave Macmillan, 2009, co-authored with Olaf Storbeck), and Economists and the Powerful: Convenient Theories, Distorted Facts, Ample Rewards (Anthem Press, 2012, co-authored with Niall Douglas).

Lars Schall: Dr Haering, recently you have attended the fourth annual conference of the Institute for New Economic Thinking (INET) that was held in Hong Kong. Has it been worthwhile for you to have been there?

Norbert Haering: It was of course a great honor to have a whole session at such an important meeting dedicated to the subject of my book. I presented in a session called ''Economics and the Powerful'' with Keynes-biographer Lord Robert Skidelsky and Steve Keen. We had a very interesting and lively discussion. On top of that, I benefited in my function as an officer of the World Economics Association: Hong Kong was a very good place to explore possibilities to co-operate with INET and other institutions which share our goals, like the Fung Global Institute for example. And of course, Hong Kong is a great place to visit.

LS: What's the intention of the World Economics Association, which emerged from the Post-Autistic Economic movement?

NH: Our ultimate goal is to replace the intellectual mono-culture that currently rules economics by something which we call complementary pluralism. We want different theories to be accepted as different and complementary ways of looking at the social and economic reality. That is where physics has arrived. Think of quantum physics and relativity theory. They are hardly compatible, but they are both respected theories and they explain different aspects of nature very successfully. There is no good reason why economics should not achieve something similar.

LS: More personally, what drives you in general in your work as a journalist and book author?

NH: I am a political person and economics is a very important political science. A lot of politics is done by misinforming people about economics and pretending that it is an objective, apolitical science. That bugs me.

LS: Why do you focus in your work often on the phenomenon of power?

NH: I like to ask questions that others do not ask, like: Who is it good for? And this questions often points to the powerful groups who can shape the discourse. They have successfully imposed a taboo on discussing power and the powerful in economics. I like to break taboos.

LS: One simple question: What is power?

NH: I don't like to spend a lot of time on defining and classifying the many sorts of power that there are. A definition that would encompass them all would become very abstract and boring. Just like you do not need to define sex to understand it, you do not need to define power. In our book, we deal with the power to abuse informational advantage, the power to charge customers more than it costs you to produce, the power to create money out of nothing, the power to change the institutional setting to your advantage, the power of the corporate elite to set their own pay and the power of rating agencies to issue self-fulfilling prophecies and several more.

LS: Has power played a role in the build-up of the financial crisis?

NH: Definitely. It was absolutely crucial. Banks and credit rating agencies used their power conferred from informational advantage and from the trust in their judgement to create the conditions for the crisis. But the most pernicious abuse of power was the power of banks to create money by pushing credit into the housing market. Too much bank-created money and debt was what made the crisis so catastrophic and so hard to deal with.

LS: Why is the power factor for the most part in economics completely ignored?

NH: The powerful need to legitimize their power. If they can't, the next best thing is to have it become invisible. That is what economists are doing for them. They pretend that workers always have a next best alternative to their current job, which is almost as good. Thus, no power for the employer. They pretend that something close to perfect competition is the norm. Thus, no market-power of companies. They claim that money is not important. They compare it to a veil over what is going on in the real economy. Thus, the institutions that make money and control the flow of money have no power.

LS: It is noticeable that you have no problems to identify yourself in public as a "conspiracy theorist''. Is it sometimes inevitable to be a "conspiracy theorist" when it comes to the analysis of power in the world?

NH: I have to admit that I enjoy flirting with the term because it is one of these taboos used to shut critics down. In truth of the fact, there are no conspiracy theories in our book Economists and the Powerful. The Bilderberg group is not even mentioned. It is all about incentives for economists to conform with the interests of the elites, which do not need active conspiracies do their trick over time.

LS: On the top of the hierarchy of power in the world stands the financial industry with a commanding lead. Why is that the case? Or, to put it differently, what's the historical source of the power enjoyed by the financiers?

NH: Money is power goes the saying. Money is crucial for survival and often in too short supply. If that happens to you, those who control it can impose conditions before they lend you some. That is how big financiers and bankers got important privileges from the monarchy already in the middle ages. A government that did not have enough money, would lose its wars. Thus, bankers like the Rothschild, the Medici and the Fugger became key players in politics.

Starting with Alexander Hamilton and probably not ending with Hank Paulson and Jack Lew, it was a matter of routine in the US that Wall Street bankers would obtain the office of Treasury Secretary. It is no wonder at all under these conditions that a financial system was designed over time which suits bankers very well and gives them great power.

LS: You've published recently a paper, ''The veil of deception over money: how central bankers and textbooks distort the nature of banking and central banking''. Ultimately, you're arguing in it that there are some clearly specified interests at work that intend that as few people as possible understand our financial system. Why? Maybe because it is in the end a special kind of Ponzi scheme?

NH: Yes, you could call it a Ponzi scheme. Banks give the people and companies who take credit from them deposit money, which everybody uses to pay bills and taxes as if it was as good as cash. The extra money fuels the economy and increases the demand for loans. Money is created ever faster. But, just as in a Ponzi-scheme, as soon as not enough suckers are found any more to further increase the speed at which money and debt are created, the system breaks down, and we have a crisis. Then everybody learns that bank deposits are not as good as cash because banks could only exchange a fraction of these deposits for cash. Just think of Cyprus.

LS: Please explain how money is actually created in our modern money system, starting with central banks.

NH: It does not start with central banks. That's just what we are led to believe. We are supposed to think that central banks start and control the process. There have been systems entirely without a central bank. It starts with a bank giving me 100,000 euro as a mortgage loan, for me to buy a house. The bank clerk does a few keystrokes, creates an account for me and puts a deposit of 100,000 euro on it. This is new money.

The central bank comes in only later to make sure that the deposits created by individual banks get distributed evenly through the system. The central bank also requires a so called minimum reserve in the form of cash or deposits at the central bank. The banks have to borrow these reserves from the central bank. But the central bank will always provide the loans that the banking system needs. Otherwise it would cause a liquidity crisis.

LS: And what's wrong with that, as far as you are concerned?

NH: There are a number of things wrong with that. The government gives a valuable privilege to the banks by declaring the deposits they create effectively legal tender. You can pay your taxes with deposit money that banks have created. Everybody is required to accept these deposits for payment. The banks make a lot of money creating money out of nothing. This is a profit that I think the government should get.

Taxes could be a lot lower if the government did not give away this very valuable privilege for free. And, what might be even worse, commercial banks have a tendency to blow up debt bubbles, which later burst and cause financial crisis.

LS: In your paper you draw special attention to remarks by Jens Weidmann, the current president of the Deutsche Bundesbank, and Otmar Issing, the former chief economist of the European Central Bank (ECB). Why so?

NH: I use these remarks to show that central bankers give us a distorted account of the nature of money and of the role of commercial banks and central banks. They wrongly make it seem as if central banks had a monopoly to create money and as if central banks had always been agents of general well-being. In reality, a number of them were originally created as private banks and until today there is a strong element of lobbying for and protecting commercial banks.

LS: So what has to be said from your point of view about the famous ''independence'' of central banks that we always here about?

NH: Even Adam Posner admitted in Hong Kong that it is usually in places which have a large financial system that the calls for independence of central banks from the government are heard first and the loudest. Independence form the government goes along with the prohibition to finance government debt, and this means that banks get most of the benefit from money creation.

LS: This year will see the 100th anniversary of arguably the most influential among the central banks of the world, the US Federal Reserve. What is your judgment in general on this peculiar entity?

NH: For one, they have been hiding for a long time the fact that the regional Feds who are in charge of supervising the banks are controlled by these banks. People like Jamie Dimon of JP Morgan, who sit on the Board of the New York Fed, are effectively controlling themselves. If the interest of the banking community and of the country are in synch, the Fed often works very well. They did a much better job in dealing with the financial crisis than the ECB. If and as far as the interests of Wall Street are conflicting with the interests of Main Street, the Fed will know on which side their bread is buttered.

LS: With regards to one group of bank costumers, the savers, there's something only a very few people really know about - if I bring my money to the banks in order to have a bank deposit, I am a creditor of the banks, even though I do not want to lend them money. Can you elaborate on this, please?

NH: This is the core of the problem of our financial system, that we do not have a save payment system, which is independent from the solvency of banks. This is the reason why we always have to save the big banks if they screw up. If they go under, our payment system goes under and people lose their money. The money that people hold in accounts in order to pay their bills should be treated differently from money they want to invest.

If you just want to use the services of the banks to pay your bill in a convenient way, you should not have to give the bank a credit. The money should remain in your possession, just like money you have in a money market fund or in stocks remains yours. If that was the case, we would not have to save all the banks any more, and they could not create too much money any more.

LS: A little, but growing number of people is advocating a return to the classic gold standard. Would a return to the classic gold standard change anything on the banking problem as you see it?

NH: Not fundamentally. The gold standard reins in the amount of money the central bank can create, but not the amount of money that commercial banks can create on top of that. It might make a debt bubble a little less likely, because banks know they cannot be bailed out as easily any more. But if a crisis happens, it will be really disastrous, if the central bank is constrained by a gold standard. We have seen this in the Great Depression.

LS: So what are the real alternatives according to your analysis? What needs to be done?

NH: The key is to limit banks' ability to create money and to pour too much new money into asset markets, like the stock market and the housing market. There are various ways to do this. Richard Werner, a banking professor at the University of Southampton, argues for credit guidance. He says central banks should limit the growth of bank credit going to consumers and into asset markets, while encouraging credit for productive investments.

This credit guidance was an important element in the industrialization of countries like Japan, South Korea, Taiwan and Germany after World War II, and still is in China. Another approach is the Chicago-plan or 100%-money, which was promoted by Henry Simons and Irving Fisher among others. Currently International Monetary Fund economist Michael Kumhof is creating quite a stir with this proposal. It is being discussed a lot these days.

LS: How does 100%-money work?

NH: It would mean that banks have to have all their deposits covered by their own deposits at the central bank. They could not create deposits any more, but could only intermediate money which the central banks have created. The central banks would have to create a lot more money of course, which would mean that governments would receive much higher central bank profits.

LS: What sorts of resistance against fundamental reforms and new directions can be expected coming from interested parties?

NH: The right to create legal tender out of nothing is almost as good as the ability to make gold out of sand. Bankers will fight teeth and claw to preserve that privilege. They will continue to try and portray those who argue for fundamental reform as crazy weirdos, who do not understand money and economics.

LS: How do you interpret the beginning renaissance of gold in the international monetary / financial system in general? What reasons do you see for it?

NH: Gold is fundamentally different from paper money and bank deposit money in that its quantity cannot be increased at lib. It differs also, because it does not have debt as its counterpart. Banks have eroded the trust in deposit money by the money and debt bubbles that they have blown up. Gold looks attractive in such a situation.

LS: In January this year, the Deutsche Bundesbank announced that it wants to repatriate some of its gold holdings at the NY Fed and all of its gold from the Banque de France. Do you consider it a bit strange that apparently it will take seven years to bring roughly 300 tons of gold from New York City to Frankfurt and five years to bring roughly 370 tons from Paris to Frankfurt? Moreover, the Bundesbank will leave a huge amount of its gold in New York City and London to have in the event of a currency crisis ''the ability to exchange gold for foreign currency […] within a short space of time.'' Does this argument convince you?

NH: The specifics of the plan for partial repatriation of gold seem to be designed to quash the public discussion about gold storage abroad. For many years to come, the Bundesbank will be able to answer these calls by saying: we are already working on it. And that will work well as a communication strategy. But the truth of the matter is that there is no good reason to store your national gold treasure abroad. The issue and the way in which the Bundesbank got itself tangled up in conflicting statements and justifications during these discussions makes one suspicious that either there is a problem with the gold or that Germany might not be as sovereign a state as we like to think. I do not know which one is true.

LS: Let's speculate for a second. With what kind of thoughts do you think does the leadership of China and Russia - two big gold buyers - observe this German gold story?

NH: My guess is that they do not have any of their gold in New York. If they did, they would probably consider taking it home now.

LS: Is it the right thing for the BRICS nations [Brazil, Russia, India, China and South Africa] to do to launch their own development bank to rival the IMF and the World Bank?

NH: This is a good development for the BRICS as well as for potential customers of their development bank. It will mean that IMF and World Bank will have a harder time to impose their market ideology and their creditor-friendly policies on any country in trouble.

LS: Are trade imbalances the crux of the euro crisis?

NH: Trade imbalances are the main problem of the European currency union. Germany has a huge surplus. This means that Germany continues to give new credit to the other countries, who get deeper and deeper in debt. Without Germany accepting a trade deficit, it is impossible for the other countries to ever pay down this debt. It would require having strongly increasing wages in Germany for a while, in order to increase domestic demand and at the same time help other countries to regain competitiveness. Germany seems unwilling to countenance this option.

LS: Why do the politicians of the EU and the main protagonists in mainstream media say on a constant basis: ''We're rescuing the Greeks, we're rescuing the Spaniards, et cetera,'' when in reality the EU is rescuing private banks (predominantly German and French ones)? Can't this be communicated in an honest way with the supposed sovereign in a democracy, the people?

NH: Influential groups are influential because they get their own messages and views across. The financial sector is very influential. It has managed to distort the thinking of media people, economists and policy makers alike.

LS: If you were calling the shots, how would you solve the euro crisis? And do you think a real solution is desirable right now seen from a standpoint of the financial and political elites in euroland?

NH: I would order the central bank to end the acute crisis by doing similar things to what the Federal Reserve has been doing, perhaps more focused on pumping money into the real economy, rather than into the asset markets. Then I would give people the choice of either ratifying a new European Treaty, which would envisage a fiscal union among other things, or go back to national currencies in a harmonious way.

I suspect a new treaty would be rejected. What I see instead as the plan pursued by the elites is to keep the crisis going to force reforms in the direction of fiscal union, without materially involving the parliaments or the people. This is highly undemocratic.

LS: What are currently your biggest concerns when it comes to the world economy?

NH: The attempts by central banks to restart the economy are almost entirely based on re-inflating asset markets. This means, the level of debt in the economy is not reduced. It might be that the ultimate crisis is only pushed back this way.

LS: Thank you very much for taking your time, Dr Haering.

Lars Schall is a German financial journalist.

[Apr 28, 2013] The Biggest Price-Fixing Scandal Ever

Rolling Stone

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion-dollar settlements for anti-competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti-competitive scheme, detailed in Rolling Stone last year, to rig municipal-debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price-fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly competitive veneer of Wall Street culture.

Why? Because Libor already affects the prices of interest-rate swaps, making this a manipulation-on-manipulation situation. If the allegations prove to be right, that will mean that swap customers have been paying for two different layers of price-fixing corruption. If you can imagine paying 20 bucks for a crappy PB&J because some evil cabal of agribusiness companies colluded to fix the prices of both peanuts and peanut butter, you come close to grasping the lunacy of financial markets where both interest rates and interest-rate swaps are being manipulated at the same time, often by the same banks.

"It's a double conspiracy," says an amazed Michael Greenberger, a former director of the trading and markets division at the Commodity Futures Trading Commission and now a professor at the University of Maryland. "It's the height of criminality."

[Apr 28, 2013] The Scam Wall Street Learned From the Mafia

Rolling Stone

Contracting corruption has been around since the construction of the Appian Way. The difference here is the almost unimaginable scope of the crime – and the fact that it's mobsters from Wall Street who are getting in on the action. Until recently, such activity has traditionally been the almost­exclusive domain of the Mafia. "When I think of bid rigging, I think of the convergence of organized crime and the government," says Eliot Spitzer, who prosecuted two bid-rigging cases in his career as a New York prosecutor, one involving garbage collection, the other a Garment District case involving the Gambino family. The Mafia moved into bid rigging, he says, because it observed over time that monopolizing public contracts offers a far more lucrative business model than leg­breaking. "Organized crime learned their lessons from John D. Rockefeller," Spitzer explains. "It's much more efficient to control a market and boost the price 10 percent than it is to run a loan-sharking business on the street, where you actually have to use a baseball bat and collect every week."

What Spitzer saw was gangsters moving in the direction of big business. When I ask him if he is surprised by the current bid-rigging case, which looks more like big business moving in the direction of gangsters, he laughs. "The urge to become a monopolist," he says, "is as old as capitalism."

[Apr 28, 2013] The Making of Global Capitalism

Amazon.com

Hans G. Despain (Longmeadow, MA) October 7, 2012

Powerful Political Economy

Panitch and Gindin argue that market economies have never existed independent of nation states. The state was necessary for the genesis of capitalism, and the state was, and still is, necessary for its historical development and continuous reproduction. Nonetheless, Panitch and Gindin argue there is significant autonomy, or historical "differentiation," between the economy and the nation state. There are economic structural tendencies manifest from the logic of capital and the functioning of the market-system. At the same time nation states can affect these structural tendencies in remarkable ways.

In this sense, there has never been "separation" between capitalist reproduction/development and the state, but there is "differentiation" which has radically significant effects. There is a symbiotic relationship between the state and capitalistic reproduction/development.

This is a book of economic history. But is also a book of economic theory. The economic history is rich and interesting, aimed at explaining the historical emergence of global financial capitalism. While the history Panitch and Gindin offer is rich and interesting, the theory is still richer and even more intriguing.

Their history is primarily aimed, (1) at explaining the emergence of the "informal American empire" (what makes this empire "informal" is the hegemony is accomplished primarily through economic strategy, policy, and diplomacy; and less through military might and political coercion) and (2) demonstrating the historical shifting relationship (from decade to decade since the World War I) between workers, business, finance, and the state.

Their theoretical concern is threefold; (1) offer a theoretical explanation of the crisis of 2007-8; (2) offer guidance toward the direction the future the "informal American empire" has for guiding the economies of world; and (3) to understand the "informal American empire" as a set of beliefs, doctrine, and ideology of how to organize modern societies (workers, business, finance and the state) and the global order (both political [e.g. UN, NATO, etc.] and economical [World Bank, IMF, WTO) for the (ideological) common good.

Although Panitch and Gindin accept that capitalistic development is uneven and unstable, it is crucial to their thesis that each crisis is unique depending upon the particular relationships and alliances forged between workers, business, finance, and the state. In this sense, the crisis of 2007-8 is necessarily unique and the solutions or economic fiscal policies necessary for recovery necessarily different from previous crises.

The highlights of their economic global history include that there have been four! major historical global crises, the long depression in the 1870, the Great depression of 1930, the Great recession of 1970s, and the Great financial crisis of 2007-09.

According to Pantich and Gindin, the 1970s is an economic watershed moment which separates "two Golden ages" of American capitalism. The first Golden Age is from 1947 - 1973; the Great recession and various political crises ensue (1973 - 1983), there is a reconfiguration of both the organization of society (workers, business, finance, and state; along with the role of the IMF, World Bank, and global trade); then the second Golden Age from 1983 - 2007.

It may be quite strange to many readers to call 1983 - 2007 a Golden Age. But in fact when looking at the economic data of the period it was quite literally a Golden Age, with millions of Americans and Global financiers and business leaders becoming impressively wealthy. Moreover, the levels of production (GDP) and productivity during the second Golden Age generally outperform the levels of production and productivity during the first Golden Age. Nonetheless the distribution of this wealth is radically narrow and concentrated within primarily finance, while political power concentrated toward "free-trade" orientated states, and away from workers and industrial production. Moreover, Pantich and Gindin maintain that workers are generally weaker during the second Golden Age, finance is strengthen and trumps over production processes, which is more or less conventional wisdom of this period of modern history. Less conventional is their thesis that the state, in particular the American domestic fiscal state and global "informal American empire," greatly strengthened post-1973-83 crisis.

It is not clear the direction the post-2007-09 crisis will take the global economy and American capitalism. What is clear is that the symbiotic relationship between workers, business, finance, and the state, and the global order (U.S. Treasury, IMF, World Bank, WTO, UN) is once again shifting. Pantich and Gindin's book offers to the reader a far clearer picture of what is at stake and who are the main institutional actors in the historical drama and capitalistic tragedy we call modern human history.

Thatcher – Sorry You've Lost Your Job by Michael Hudson

JAY: So what's your take on Margaret Thatcher's place in history?

HUDSON: Her legacy wasn't what she started out to do. She's most famous for privatizing British industry, starting with British Telecom and introducing what she called "labor capitalism,"a term that she borrowed from her fellow free-market autocrat, General Pinochet in Chile.

When she became prime minister in 1979, most of the Conservative Party was against privatization. This was not part of the program she ran on. When I was in England, I saw the proposals by various Conservative Party members that were put to her, and it took about half a year for her to be convinced that privatization would help in her fairly simple objective. She wanted to break the labor unions, thinking then that would help the working class evolve into the middle class. She believed that fighting unions would help raise the working class into the middle class – as if unionized labor and governments that protected labor's interest were responsible for the fact that one had to wait many months to get a telephone fixed. (One BT repairman once came to a London apartment I was staying in, and told me, "I can't fix this phone. It's broken!")

Fighting unionization was supposed to lead to lower wages, and thus cut costs and re-industrialize England. What her fight achieved, of course, was the opposite. So she's going to go down in history as a compendium of internal contradictions par excellence.

Britain's labor unions were strongest in the large public utilities. The largest tangible capital investments in England – and every other country – were in this public infrastructure: the roads, real estate, bus lines, railroad and communications systems. Mrs. Thatcher believed the anti-government "free market"guff that if government regulation and planning were dismantled, the magic of the marketplace would raise productivity. Prices would decline.

There was no suspicion that privatized companies would simply keep the productivity gains as a financial surplus, to be paid in the form of exorbitant executive salaries, interest to bondholders and dividends to stockholders, creating capital gains for stockholders – who turned out to be the 1%, not the 99%.

The way in which she privatized British companies took the form of the biggest giveaway in England history. Privatization didn't have to happen in quite this way. But her blind spot led her to leave bankers in control of the program – and she gave them whatever terms they asked for, with the sky being the limit. (That is indeed what they asked for – and found no government official trying to bargain them back down to "economic"rates. That, to Mrs. Thatcher, would have been government "interference"leading on the slippery slope to fascism, Hayek-style.)

So economic planning was centralized in the City of London, the nation's financial district. Mrs. Thatcher presided over the giveaways in England that were the counterpart of the great American railway giveaways after the Civil War in this country. She started by privatizing British Telecom, then the bus lines and water, all on credit. This created a vast new market for British investment banks, first in underwriting, then in reaping first-day and first-week capital gains, and soon in lending at interest to buyers who saw public utilities as potential rent-extracting rights to place tollbooths throughout the entire British economy. So Mrs. Thatcher's "free market"became a market free for predatory rent-seekers creating the largest set of special privileges since the Crown Corporations from1600 through 1720 – the commercial trading monopolies granted to royal favorites. So she was the prototype for Boris Yeltsin in Russia.

The problem facing Mrs. Thatcher, of course, was how to get voters to support privatization. After all, it was against what most voters believed, and even against what most of her own party believed. Former Prime Minister Harold Macmillan likened privatization to selling off the family silver. But she saw it as balancing the British budget until North Sea oil came online. And her ideological cover story – which she actually seems so stupid to have honestly believed – was that the private buyers would raise productivity, and reduce prices in keeping with these productivity gains. The concept of unearned income or economic rent was absent from her vocabulary. It was if her upbringing had given her a surgical lobotomy – which made her so powerful a useful idiot to Britain's predatory financial class. When her obituary writers speak of her "decisiveness,"they mean her tunnel vision and absence of reflection.

Her insistence that it was possible for the working class to rise into the upper class was indeed personified by one family, the Gloags. Bus driver Gloag spent about £12,000 to buy a small bus line, which ultimately became Stagecoach. Bus lines weren't making much money, but the company did have the bus terminal in the center of London. So what seemed to be a transport deal turned out to be a real estate killing on the land's site value. The Gloags sold the bus terminal for a huge amount of money, which they spent on buying up other bus lines.

They "raised productivity"in a way that led the government to accuse the company of monopoly practices, abusing the monopoly it acquired over the transport system by raising the prices and the cost of British transportation. Unfortunately for most of Londoners, they now had to go outside the central city to catch a bus. Time schedules were scaled back, and service declined. But it made the bus driver's daughter the richest lady in England next to the Queen. And to Mrs. Thatcher, productivity increased, because much less labor was employed to operate the transport service.

Neoliberalism

Wikipedia, the free encyclopedia

Opponents of neoliberalism commonly argue these following points:

Critics sometimes refer to neoliberalism as the "American Model," and make the claim that it promotes low wages and high inequality.[100] According to the economists Howell and Diallo (2007), neoliberal policies have contributed to a U.S. economy in which 30% of workers earn low wages (less than two-thirds the median wage for full-time workers), and 35% of the labor force is underemployed; only 40% of the working-age population in the U.S. is adequately employed. The Center for Economic Policy Research's (CEPR) Dean Baker (2006) argued that the driving force behind rising inequality in the U.S. has been a series of deliberate, neoliberal policy choices including anti-inflationary bias, anti-unionism, and profiteering in the health industry.[101] However, countries have applied neoliberal policies at varying levels of intensity; for example, the OECD (Organisation for Economic Cooperation and Development) has calculated that only 6% of Swedish workers are beset with wages it considers low, and that Swedish wages are overall lower due to their lack of neoliberal policies[102] John Schmitt and Ben Zipperer (2006) of the CEPR have analyzed the effects of intensive Anglo-American neoliberal policies in comparison to continental European neoliberalism, concluding "The U.S. economic and social model is associated with substantial levels of social exclusion, including high levels of income inequality, high relative and absolute poverty rates, poor and unequal educational outcomes, poor health outcomes, and high rates of crime and incarceration. At the same time, the available evidence provides little support for the view that U.S.-style labor-market flexibility dramatically improves labor-market outcomes. Despite popular prejudices to the contrary, the U.S. economy consistently affords a lower level of economic mobility than all the continental European countries for which data is available."[103]

Notable critics of neoliberalism in theory or practice include economists Joseph Stiglitz, Amartya Sen, and Robert Pollin,[104] linguist Noam Chomsky,[105] geographer David Harvey,[106] and the alter-globalization movement in general, including groups such as ATTAC. Critics of neoliberalism argue that not only is neoliberalism's critique of socialism (as unfreedom) wrong, but neoliberalism cannot deliver the liberty that is supposed to be one of its strong points. Daniel Brook's "The Trap" (2007), Robert Frank's "Falling Behind" (2007), Robert Chernomas and Ian Hudson's "Social Murder" (2007), and Richard G. Wilkinson's "The Impact of Inequality" (2005) all claim high inequality is spurred by neoliberal policies and produces profound political, social, economic, health, and environmental constraints and problems. The economists and policy analysts at the Canadian Centre for Policy Alternatives (CCPA) offer inequality-reducing social democratic policy alternatives to neoliberal policies.

Santa Cruz History of Consciousness professor Angela Davis and Princeton sociologist Bruce Western have claimed that the high rate (compared to Europe) of incarceration in the U.S. – specifically 1 in 37 American adults is in the prison system – heavily promoted by the Clinton administration, is the neoliberal U.S. policy tool for keeping unemployment statistics low, while stimulating economic growth through the maintenance of a contemporary slave population and the promotion of prison construction and "militarized policing."[107] The Clinton Administration also embraced neoliberalism by pursuing international trade agreements that would benefit the corporate sector globally (normalization of trade with China for example). Domestically, Clinton fostered such neoliberal reforms as the corporate takeover of health care in the form of the HMO, the reduction of welfare subsidies, and the implementation of "Workfare".[108]

Neoliberal policies advanced by supranational organizations have come under criticism, from both socialist and libertarian writers, for advancing a corporatist agenda. Rajesh Makwana, on the left, writes that "the World Bank and IMF, are major exponents of the neoliberal agenda" advancing corporate interests.[109] Sheldon Richman, editor of the libertarian journal The Freeman, also sees the IMF imposing "corporatist-flavored 'neoliberalism' on the troubled countries of the world." The policies of spending cuts coupled with tax increases give "real market reform a bad name and set back the cause of genuine liberalism." Paternalistic supranational bureaucrats foster "long-term dependency, perpetual indebtedness, moral hazard, and politicization, while discrediting market reform and forestalling revolutionary liberal change."[110] Free market economist Richard M. Salsman goes further and argues the IMF "is a destructive, crisis-generating global welfare agency that should be abolished."[111] "In return for bailouts, countries must enact such measures as new taxes, high interest rates, nationalizations, deportations, and price controls." Writing in Forbes, E. D. Kain sees the IMF as "paving the way for international corporations entrance into various developing nations" and creating dependency.[112] He quotes Donald J. Boudreaux on the need to abolish the IMF.

The shock of the neoliberal

Thatcher RIP. She managed not to outlive the doctrine neoliberalism...
By now, the phrase "too big to fail"is a household term for arrogant financial institutions. But it also describes the neoliberal economic paradigm that has fuelled that arrogance for decades: the unwavering faith in laissez-faire and the devotion to deregulation. Since the 1970s, such thinking has swayed policymakers on both sides of the Atlantic and on both sides of the political aisle. Ronald Reagan's famous proclamation that "government is not the solution to our problem; government is the problem"has been accepted in much of Westminster and Washington, even by many liberal politicians.

Hijacking America How the Secular and Religious Right Changed What Americans Think by Susan George

Amazon.com
George Bush leaves the White House in January 2009 and the United States goes back to "normal", right? Wrong, argues Susan George in this fascinating, thorough and often chilling account of the decades-long transformation of American society and political culture. Using the four "Ms" - money, media, marketing, management -- but above all with a keen sense of mission, the American secular and religious right has made its "long march through the institutions" and changed the way Americans think.

As the left went about its business in blissful ignorance, convinced that its policies, programmes and projects spoke for themselves and would always prevail; the right's well-oiled machine of foundations, lobbies, think-tanks, publications, political cadres, lawyers and activist organizations slowly and strategically took over. A broad alliance of neo-liberals, neo-conservatives and the religious right successfully manufactured a new common sense, assaulted Enlightenment values and targeted the top of society where culture is created and legitimized, because they knew that ideas have consequences - and not just in the United States.

Reviews

Right way to power in US Tribune, 11 September 2008

"The forces that have been 'hijacking America,' lucidly exposed in this well-informed and searching study, are doubtless powerful as well as ominous. Their influence is not confined to the United States. Unless they are contained and reversed, prospects are not bright for a decent and civilized world."

- Noam Chomsky

"A powerful, shocking and extremely important book. In a gripping investigation, Susan George uncovers the central problem with the US state and shows us how to confront it."

- George Monbiot

To order go to www.polity.co.uk

Introduction
1. Culture in Chains: How the Secular and Religious Right Captured America
2. Manufacturing Common Sense or Cultural Hegemony for Beginners
3. Foreign Affairs
The American Religious Right and Its Long March through the Institutions
4. Extinguishing the Enlightenment: The Assault on Knowledge
5. Lobbies, Corridors and Seats of Power
Conclusion
Why Undertake This Book?
Bibliography

[Apr 05, 2013] Neoliberalism Neoconservatism Without a Smirk by Thomas H. Naylor

February 16, 2010 | Second Vermont Republic

It has become increasingly obvious that the only difference between Barack Obama and George W. Bush is that the famous Bush smirk has been replaced by the Obama smile. The neoconservatism of Dick Cheney, Paul Wolfowitz, and Bill O'Reilly has given way to the neoliberalism of Bill Clinton, Timothy Geithner, Bernie Sanders, and Chris Matthews. The differences between neoliberalism and neoconservatism are similar to the differences between Coke and Pepsi, virtually nil.

Neoconservatism is best defined by its foreign policy agenda which includes full spectrum dominance, imperial overstretch, nuclear primacy, the right of pre-emptive strike, and unconditional support for the State of Israel. Although neoliberals are much less bellicose in their rhetoric than their neoconservative counterparts, they passively acquiesce to the neocon foreign policy paradigm. They do little or nothing to end the wars with Iraq and Afghanistan as well as the annihilation of Palestine carried out by our close ally Israel. Obama's Nobel Peace Prize acceptance speech in Oslo was little short of a global call to arms couched in the language of the doctrine of "just war." Although neocons make it abundantly clear that they are military hawks, most neoliberals are closet hawks as well.

Consider the case of Vermont Senator Bernie Sanders, the darling of the Left, who pretends to be a socialist, which he is not. Not only does Sanders support all military appropriation bills and military aid to Israel, but he is currently promoting the opening of a satellite facility of the Sandia Corporation in Vermont. The Sandia Corporation, a subsidiary of Lockheed Martin Company, develops, creates, maintains, and evaluates nuclear weapons systems. Sandia's roots go back to the Manhattan Project in World War II. Just what peace loving Vermonters need, a nuclear weapons manufacturer located in their own backyard.

Both neolibs and neocons are apologists for globalization and are steeped in the ideology that bigger, faster, and more high-tech make better. In their heart of hearts neolibs and neocons know that only the federal government can solve all of our problems, failing to realize that the federal government is the problem. Both embrace corporate socialism, socialism for the rich, and the social welfare state while pretending to be opposed to publicly financed social welfare. It's all about people of the lie.

Neoliberals pretend to be concerned about inequities in the distribution of income and wealth. Neoconservatives make it abundantly clear that they couldn't care less.

Both neolibs and neocons are authoritarian statists each with their own definition of political correctness. Politically correct neolibs are expected to be pro-abortion, pro-gay-lesbian, pro-affirmative action, pro-Israel, pro-gun control, anti-clerical, pro-big government, and pro-American Empire. Anyone who does not conform to this litany or who associates with those who do not, is at risk of being attacked by a left wing truth squad such as the Southern Poverty Law Center and accused of the likes of homophobia, racism, anti-semitism, religious fundamentalism, or even hate crimes. Politically correct neocons are more likely to be pro-life, anti-gay-lesbian, anti-affirmative action, pro-Israel, anti-gun control, pro-clerical, pro-big government, and pro-Empire. Both are vehemently opposed to secession.

Above all, what neoliberals and neoconservatives have in common is that they are technofascists. Benito Mussolini defined fascism as "the merger of state and corporate power." Technofascism is the melding of corporate, state, military, and technological power by a handful of political elites which enables them to manipulate and control the population through the use of money, markets, media and the Internet.

Neoliberals and neoconservatives alike march to the beat of the same drummer – the largest, wealthiest, most powerful, most materialistic, most racist, most militaristic, most violent empire of all time.

Ultimately the differences between neoliberalism and neoconservatism are purely cosmetic. You may either have your technofascism with a smirk or you can have it with a smile.

The new liberal imperialism

Democratic Underground

As someone familiar with the skullduggery that buttressed the British Empire I take the neo-liberal's professed altruism with giant pinch of salt. If there are failed states persisting in the 21st century we can look no further than the gangsterism that drives Anglo/American foreign policy. It was the United Kingdom that bolstered the Muslim Brotherhood and reactionary Wahhabism in order to thwart Nasser's attempt to modernize the Middle East and foster Arab nationalism. And it was our own beloved Jimmy Carter who armed the mujahedeen to undermine the Soviets ushering in the destruction of Somalia and Afghanistan and the rise of the Taliban.

If we as progressives are to have a say in what our governments are doing we need to clearly understand the game as it is now being played. Ultimately it is we, the people, who will bear the brunt of their failures. Contrast the "make believe" that Cooper outlines in his article with the way an insider describes the actual thrust of the "neocons" agenda:

"We were driven by greed rather than any desire to make life better. ...the new elite had made up their minds to attempt to rule the planet... close fraternity of men moved between corporate boards and government positions."

"often results were a system that resembles medieval feudal societies"

- John Perkins, from "Confession of a Hit Man"

The notion that preemptive war and crony capitalism can lead to postmodern global stability is a load of bull. But then the drivers of this policy are making a fortune. Far be it from me to say that for our modern day "neo" robber barons, the "War on Terror" has been anything but a "catastrophic success."

10. There are movements taking place. Unfortunately mostly in places like Australia, New Zealand and Singapore and on a more limited scale in India and eastern Africa. There are discussions in the U.S. but so far left to academia. Here's an example of planning to "modernize" more cost efficiently while advancing local autonomy and democracy: http://nga.alga.asn.au/generalAssembly/2004/ngaBusiness... omega minimo, Jul-30-05 07:55 PM
12. These are creative solutions

In the States, we have communities and local governments held hostage by the agendas and the coffers of the dreaded Developers! Our local council members are owned by the fat cats and do their bidding. Cities starved for dwindling state and federal funds turning to the new Big Brother, corporate sponsorship!

We have a local shop that sells imports from around the globe. The owner visits and forms relationships with the artists who make his goods. He promotes fair trade and educates through the fantastic offerings in his beautiful shop.

This helps in the "connect the dots" point above-- it helps people understand better where things come from, as well as the fact that someone actually made the object with their hands.

Many beautiful items are made out ot discards, things Americans think are waste and MAYBE recycle.

Thanks for the link.

National Agenda

Principles of local democracy

1. Local government is the expression of Australia's commitment to community democracy.

2. The rights of citizens to the democratic pursuit of community values through elected local government must be protected in the Australian Constitution. State Constitution Acts must also entrench the existence and status of local government, and such provisions should be altered only by referendum.

3. Local government seeks constitutional recognition in the Australian constitution.

4. Local government calls for the immediate establishment of a national Constitutional Convention to specifically consider constitutional recognition of local government and review the efficiency, effectiveness and responsibilities of the three spheres of government.
......
7. A broad competence power must be granted to all local government authorities in Australia so that those authorities may respond to the needs of their communities in the most appropriate manner. There must be no limits imposed by other governments on the performance of local government's legitimate activities.
....
10. Restructuring of local government - owned utilities such as water and sewerage undertakings should also occur only with the concurrence of the councils concerned.
....
14. Local government supports efforts to ensure gender equity and will continue to pursue the implementation of the National Framework for Women in Local Government (2001).

15. The role of local government must be given full recognition in campaigns and educational programs aimed at increasing community understanding of the Australian system of government

bloom
11. All of these words like "liberal" and "progressive can get really messed up - with people using them different ways.

You get some people being proud they are liberals because they are altruistic and idealistic.

Others because they think it means people can do whatever they want.

Some others because they believe in "classical liberalism" or "neo-liberalism" - in more of an economic imperialistic sense.

Seems like the DLC and Rush Limbaugh are against the altruistic, idealistic type of liberal. They are for themselves doing whatever they want and for - ends for themselves justifies the means - the effects on others.

DU tends to get a mix of altruistic and idealistic & "do whatever they want liberals" with a few DLC neo-liberals thrown in.

It is difficult for me to distinguish between a neo-liberal and a Rush Limbaugh type of liberal basher. Maybe the neo-liberals are nicer about their bashing. The DLC are just going to politely "distance themselves".

----

"Critics of neoliberalism associate it with globalization, and with the rise of multinational corporations, as well as monetary and fiscal austerity at the expense of social programs.'''

Anti-globalization advocates are the most vociferous opponents of neoliberalism, particularly its implementation as "free capital flows" but not free labor flows. They argue that neoliberal policies encourage a "race to the bottom" as capital flows to the lowest environmental and labor standards, and is merely updated "beggar thy neighbor" imperialism, dating back 200 years. In this they are in fundamental agreement with many of neoliberalism's supporters who argue that neoliberalism represents an updated version of classical liberalism."

http://en.wikipedia.org/wiki/Neoliberalism

[Apr 04, 2013] Zombie Economists and Why Financial Genius is After the Fall

Zero Hedge

Shizzmoney

The main problem with NeoLiberals during their Reign of Terror is the fact they REFUSE, absolutely REFUSE, to admit their wrong.

When The Markets, and or Society, eventually implode due to their pumping of erroneous facts which justified corporate looting of governments around the globe (including ours).....only then will assholes like Krugman, Hubbard, and Delong actually realize they are morons whose economical theories resulted in thousands of deaths, lifetimes of misery, and a collective insult of intelligence of citizens, everywhere.

Not too long ago, I asked Nobel Prize laureate Joseph Stiglitz how many economists he'd met who still adhered to the Chicago School approach, otherwise known as Neoliberal economics, that was proven to be severely flawed by the recent economic crash.

"About 60 percent," said Stiglitz.

"Why is that?"I asked.

"For the most simple human reason of all,"Stiglitz told me. "People don't like to admit that they're wrong."

[Apr 03, 2013] Beyond neoliberalism by Nicolas Pons-Vignon

June 1, 2010 | Global Labour Column

For the generation that came of age in the 1990s, the belief in the labour movement's ability to inspire progressive change collapsed soon after the Berlin Wall. Not unlike the Wall, this belief had been seriously shaken during the 1970s and 1980s, which saw the rise of neoliberalism from Chile to the United Kingdom and, thanks to the Washington-based international financial institutions, to much of the developing world. Jan Breman (1995), in a biting analysis of the triumphant World Bank's World Development Report on "Workers in an integrating world", notes that the Bank saw "drastic restructuring in the balance of power in favour of capital"as a necessary condition for both economic growth and poverty reduction. Written at the height of the Washington Consensus, the report represented an arrogant dismissal of workers as political actors. Only if they would keep quiet, letting the invisible hand of the market decide how many shillings (3, maybe) to put in their pockets, would their lives improve.

While some economists and politicians were genuinely convinced that neoclassical economic theory could offer an alternative to the previous dominant Keynesian paradigm, it has since appeared that, behind the market fundamentalism justified "scientifically"by economists (such as those of the Public Choice School) eager to show that governments and unions were predatory self-interested agents, lay the formidable enterprise of shifting the balance of forces in society towards private business and particularly capital holders. As Harvey (2006) points out, far from being a technical choice over allocative efficiency, neoliberalism is first and foremost a political enterprise aimed at restoring the power of capital. It does so in two ways: first by shifting economic resources back to owners of capital, and second by weakening the capacity of organized labour to resist policy changes in the workplace or in public policy.

At odds with the professed neutrality of neoclassical economics, neoliberal policies have actively promoted the interests of large (often Western, in developing countries) companies by extending the realm where they could invest (through privatization and liberalization) and the conditions under which they were able to do so (repatriation of profits, low taxation and regulation)1. Such measures have been accompanied by the systematic undermining of labour's capacity to constitute itself as a political force that could challenge these policies, as exemplified by the aggressive behaviour of Margaret Thatcher's Government towards the miners' strikes of the 1980s in the United Kingdom. The victory of the Conservatives in this country paved the way for far-reaching deregulation of the labour market, which resulted in widespread precariousness for working people. This not only made life harder but also undermined the strength of unions, since the number of workers employed in permanent contracts started dropping rapidly. In light of these facts, it remains a puzzling reality that in most developed countries critical views did not catch the imagination of people and that majorities repeatedly voted for minority interests. The result of these policies has thus been a massive skewing of income towards the very rich, with remarkably little resistance in the process. The extent of this growing inequality in the United States can be strikingly observed in the long-term evolution of the income share of the top 1 per cent (figure 1)2.

Figure 1: United States: Income share of the top 1 per cent, 1913–2006

Notes: [1] = including realized capital gains; and [2] = excluding capital gains. Three-year moving averages.
Source: Palma, 2009.

For many years, neoliberal policies have undermined the living conditions of workers, from Chile to the United States and Africa, and with a possibly greater impact than anywhere else in former communist countries. The current crisis confirms what many heterodox economists have been arguing for many years, namely that neoliberal policies are not only bad for workers, but also for growth and development. Amsden (2010) thus points out the paradox of their continued dominance in the face of a proven inability to generate higher growth than the policies they replaced: per capita growth performances have been superior in the period 1950–80 than in the period 1980–2000 everywhere but in South Asia and in the United States. In the latter, as has been discussed above, growing inequality has meant that growth has disproportionately benefited the richest, with the "bottom 90 per cent"of earners in the United States having actually experienced stagnation between 1971 and 2005 (Palma, 2009). Moreover, China and India, two countries which seem to be steadily emerging despite the crisis, have adopted development policies markedly different from those recommended by the Washington Consensus, even if their labour policies have been more aligned with it. And the current economic crisis offers convincing evidence that the growth path of the leading neoliberal countries was premised on very shaky foundations.

Depleted growth, stagnating income for workers and their families in many countries, and at the same time a massive enrichment of the wealthiest, in particular capital owners in the West: the outcome of neoliberal policies is such that its continued dominance can indeed be astonishing. The collapse of the Soviet bloc and the deep disillusion with state-managed planned economies has certainly played an important part in the difficulties experienced by the labour movement to resist and propose an alternative to neoliberal globalization. This was particularly clear in the case of South Africa, where the fall of the apartheid regime, achieved largely through worker mobilization, took place in an environment where the international and internal pressures to follow the neoliberal trend proved too strong to resist for the new leadership.

Despite several crises related to burst "bubbles"of over-valued assets, it is only with the current crisis that a consensus – claiming unlikely allies such as Alan Greenspan – is emerging to argue that the entire finance-driven system of accumulation is in need of regulatory reform. However, while growing numbers recognize its deep flaws, many still favour superficial changes in line with Guiseppe Tomasi di Lampedusa's ultimate advice for the continuity of power in a time of crisis: "everything must change so that everything can stay the same".

While finance has been a locus of incredible accumulation over the last 25 years, it must be emphasized that this cannot be reduced to harmless speculation. At the core of finance, of its inflated assets and their over-inflated derivatives, lies the way in which neoliberal capitalism has been able to supplement the loss of demand linked to the depleted incomes of working people by trapping them in ownership of expensive yet worthless homes (or other goods) through credit. Indeed, it is thanks to credit that demand levels have been maintained for so many years; the fact that this credit growth was entirely linked to self-fulfilling fantasies regarding asset values signals an irrationality which ridicules the claims to science often heard in mainstream economics departments. Moreover, the hardships many average informal and formal workers and their families are suffering in the crisis has shed a particularly crude light on the readiness of states to invest hitherto unavailable billions of dollars in bailouts, which have often not even been used to re-assert control over the banking system.

This book and the Global Labour Column hope to make an important and engaged contribution to the public debate on some of the issues discussed above, but also to stimulate an exchange of ideas contributing to the rebuilding of the union movement. Moving towards more inclusive and more equal societies requires stronger unions and a broad-based movement for change. The column offers a unique meeting point to progressive academics, from universities, trade unions and international organizations, and activists and trade union leaders. The title of the book – Don't waste the crisis – is meant to emphasize that, if one good thing can come out of this crisis, it is to reopen debate on the direction of economic policy and on how people are employed. Now that the claim that worker-adverse policies were "good for growth"has been dismissed, it is essential to join forces for a new economic dispensation, which will ensure economic development with decent job opportunities. It is time to question the central policies of neoliberalism and their assumptions, such as the "requirement"for the state and social security systems to spend less. Union members are among the first victims of state spending cuts. Challenging such policies requires economic strategies and political mobilization that are focused on quality jobs, fair wages, comprehensive public services, political as well as industrial democracy and long-term social and environmental sustainability, rather than on the narrow interests of a financially affluent minority. But it is also time to discuss, honestly and in a constructive manner, the shortcomings of trade unions when they have sometimes failed to defend the weakest workers; and to propose ways in which unions can be inclusive and at the forefront of social and economic progress.
1 Harvey (ibid.) shows how the very first series of measures adopted by Paul Bremer in Iraq in 2003 all revolved around the opening of the Iraqi economy to US corporate investment, while "[t]he right to unionize and strike … were strictly circumscribed"(p. 10). One can appreciate the sense of priorities that inhabited the US Government in the immediate aftermath of a war waged in the name of freedom, when much of the country's critical infrastructure had been destroyed by bombs.
2 Gabriel Palma, the source of this graph, argues that neo-liberalism is the art of achieving such "redistribution"in a democracy.

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Nicolas Pons-Vignon is the editor of the Global labour Column and a Senior Research Fellow with the Corporate Strategy and Industrial Development (CSID) research programme, University of the Witwatersrand, South Africa. He is also the founder and director of the African Programme for Rethinking Development Economics (APORDE).

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