“The Super Bowl Of Disasters”: Disaster Capitalists Profiting From Crisis In Post-Earthquake Haiti

US taxpayers are underwriting sweatshop expansion in Haiti. Here, textile workers protest for better rights and working conditions. Photo: Ansel Herz.

Oldspeak:”Many a corporation, lobbyist, and consultant has seen Haiti’s losses as their gain, leveraging humanitarianism for profit. Plenty of the $1.1 billion in disaster aid has gone not to desperate Haitians but to inside-the-Beltway contractors. Often the very same corporations have wrested financial and political gain from the wars in Iraq and Afghanistan, the countries hit by the 2004 tsunami in the Indian Ocean, the Gulf Coast after Hurricane Katrina, New Orleans after the ensuing flood of 2005, and lots of other places.” Disaster capitalism is being practiced all around the world. Review the 4 steps of the Disaster Capitalism and Cycle and consider the implications.  Haiti is at step 2.  The United States is at step 3.

The Disaster Capitalism Cycle

1. The shock of war, torture, disaster, or political upheaval distracts or deconstructs the popular identity, precluding or minimizing protest against free market reform and privatisation, which are usually unwanted by the masses.

2. First World interests, multinational capitalist firms, and a cooperative and corrupt elite benefit the most from these changes, while for the general population wages drop, the cost of living increases, and social services like welfare and healthcare decrease.

3. The privatisation of important sectors, from mining to healthcare to homeland security, takes away citizen power and control over policy making in these areas, as the government limits its own power through the free market legislation and de-regulation. It becomes difficult to undo these reforms.

4. A feedback loop of international scale emerges, the wealthy and powerful becoming more so. Certain sectors and private hands have an interest in maintaining instability, as they learn to profit more and more from war and disaster – as the cycle returns to step 1.

By Deepa Panchang, Beverly Bell and Tory Field, Other Worlds Are Possible:

As Americans were gearing up for last week’s Super Bowl championship, Haiti’s president Michel Martelly was on a plane to the World Economic Forum to recruit players interested in what one businessman dubbed “the Super Bowl of Disasters” – Haiti’s devastating 2010 earthquake.[1] The Irish-owned cell phone company Digicel footed his trip there, and hosted a regional business tour complete with a gala ball before his return to a country still reeling from crisis conditions in housing, jobs, and basic rights.[2]

Haiti’s status as prime-time jostling space for prospective investors is not new. Many a corporation, lobbyist, and consultant has seen Haiti’s losses as their gain, leveraging humanitarianism for profit. Plenty of the $1.1 billion in disaster aid has gone not to desperate Haitians but to inside-the-Beltway contractors. Often the very same corporations have wrested financial and political gain from the wars in Iraq and Afghanistan, the countries hit by the 2004 tsunami in the Indian Ocean, the Gulf Coast after Hurricane Katrina, New Orleans after the ensuing flood of 2005, and lots of other places. The same deals have been cut over Haiti in the past, too, particularly during periods of political instability.

The earthquake has provided a fresh wave of opportunity. In the first year after the earthquake, the US government awarded more than 1,500 contracts worth $267 million. All went to US firms except 20, worth $4.3 million, which went to Haitian businesses.[3] Among the American corporations that received contracts, we’ve seen everything: many millions going to companies that had had previous contracts cancelled for bad practices, that had paid out as much as eight-figure settlements for violence happening under their watch, that had been investigated by Congress for gaming the system, or that had been the subject of federal reports accusing wastage of funds.[4] We’ve seen corporate executives and members of Congress going through a revolving door and leveraging both sides for contracts. We’ve seen public funds given without any competition or transparency, quite a few to friends of the Clintons and other well-placed insiders.

Local labor and production, which are critical elements in economic recovery, have been trumped for American business profits. According to federal procurement data, among contracts which provide products (as opposed to services), 77% were for products manufactured in the US. They don’t list which, if any, of the remaining 23% involve any Haitian materials or labor.[5]

Two months after the earthquake, companies gathered in a luxury hotel in Miami for a “Haiti Summit” to discuss post-earthquake contracting possibilities. The meeting was sponsored by the International Peace Operations Association (IPOA), but these were no peaceniks. Their members are predominantly private mercenary companies that enforce ‘security’ in war and disaster zones for the US government because, unlike elected entities, they can completely avoid public scrutiny and accountability. They included such companies as Triple Canopy, which took over Blackwater’s contract in Iraq.[6] One of the corporate representatives at the Summit described the outlook: “Their infrastructure is pretty much destroyed, communications are destroyed, there’s a lot of opportunities there for companies, particularly US countries [sic] because of the close proximity.”[7] The Summit was apparently worthwhile, as US government paid out more than $10 million to the industry for “guard services,” and almost $20,000 for riot shields and suits.[8]

Below are a few examples of post-earthquake contracts and grants, selected to show just some of the problems at play. They offer a small glimpse into a much larger, secretive world of disaster deals. We’re grateful to our investigative journalist colleagues who, alongside us, have kept heavy on the scent of these corporations and brought buried information to light.

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“American corporations and their stakeholders must understand how helping Haiti over the long term also helps them,” said the non-profit CHF International in its March 2010 board report. “By contributing to Haiti’s reconstruction in a lasting, meaningful way, companies will be helping to build a new, more vibrant Caribbean market for their own goods and services.”[9]

CHF’s involvement demonstrates how even non-profits can drive development that props up American business interests on the backs of poor Haitians. What CHF refers to as “helping Haiti” has meant using US tax dollars to underwrite textile sweatshops, making it easier and more profitable to score the cheapest source of labor in the hemisphere. In 2006, USAID gave CHF a $104 million, 4-year contract to help “existing industries to increase their capacity, efficiency and reach new markets,” primarily through the export textile industry. The money subsidized CHF’s creation of infrastructure such as roads around industrial areas and training of factory workers on skills such as “how to work in a formal work environment.”[10] Bolstered by additional USAID funding, this project continued after the earthquake.

CHF’s post-earthquake USAID contract, for $20.9 million, went to clean-up projects, including cash-for-work.[11] Cash-for-work meant camp residents engaging in hired-hand projects such as digging drainage ditches and clearing debris, for a period of a few weeks. The scheme has come under fire by camp residents and human rights groups, with even a USAID evaluation raising some serious critiques.[12] The jobs are unpredictable, workers have said, and while the short duration can palliate personal crisis for the moment, the program quickly returns the worker’s family to its desperate state. Those hired are paid officially at the unlivable minimum daily wage of 200 gourdes, or US$5, though unofficially they often earn less. A Haiti Grassroots Watch exposé found, furthermore, that cash-for-work hiring is often based on corruption, with many workers having to pay a ‘kickback,’ negotiate sex (in the case of women) for a job, or affiliate with political parties or candidates.[13] USAID also noted that cash-for-work programs it funded increased risks of “serious and avoidable” accidents on the job “by failing to develop and enforce consistent workplace safety rules and accident procedures.”[14]

CHF’s projects, based on factory jobs and cash-for-work, have given neither livable incomes to employees nor offered development opportunities to the nation. Meanwhile, CHF has gained humanitarian clout and an influx of funding, and its garment industry partners sit happily with the perks.

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Using tried-and-true strategies of political manipulation, some corporations have been able to edge their way into post-earthquake contracts despite histories of fraud and corruption.

AshBritt Environmental, for instance, has a record of disaster response elsewhere that spells trouble for Haiti. The company had received $900 million in contracts for Hurricane Katrina clean-up, after hiring lobbyists formerly involved in state government.[15] An MSNBC investigation later brought to light complaints by local contractors, a mayor, and local legislators that the company’s work was too slow, that it overcharged, and that it was not hiring local contractors.[16] The extent of “layer cake” contracting was so extreme that in one case, AshBritt was paid $23 per cubic yard of debris removed but subcontracted through three middleman companies so that the company that actually removed the rubble received $3 per cubic yard.[17]) Even a 2006 federal report accused the company of wasting money in this subcontractor layering after Katrina.[18]

Given its experience, AshBritt wasted no time unleashing its skills in lobbying and political pressure to get in on the Haiti game. Early in 2010, the company paid $90,000 to a lobbying firm to pressure the government for Haiti contracts, according to disclosure records described in the press.[19] In a prime instance of revolving door between public and private sectors, one of the lobbyists working on the case was the former chief of staff for Senator John Kerry.[20] Kerry, in turn, was the senator who co-sponsored the legislation for Haiti relief funding.

With influential people circulating between the givers and receivers of funds, AshBritt was confident enough about future contracts that it spent an initial $25 million setting up for anticipated operations in Haiti with a soccer field-sized base camp and services to house future project managers.[21] In July 2010, AshBritt won a $500,000 US government contract for debris removal, the first of what the company anticipated would be many contracts to come their way.[22] Continuing the revolving door trend, another lobbyist for the firm was the former USAID Mission Director in Iraq, Lewis Lucke, who was paid $30,000 per month to help win contracts via a partnership venture AshBritt set up.[23] Lucke claimed he “played an integral role” in obtaining three contracts for the company, including $10 million from the World Bank and about $10 million more from the Haitian government (one of the first major government contracts for debris removal).[24] As of this writing, not even the company’s website contains an update on what work it has or has not completed in Haiti.

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Like AshBritt, CH2M Hill, a large engineering and construction firm, should have raised warning signals as a company to be hired on the taxpayer dollar. A government database that monitors federal contracts reveals a track record of corruption, listing nine instances of misconduct for the company since 1995.[25] In one case, the company was paid $4.1 million for a contract in Iraq though no work was actually completed. [26] On the Gulf Coast, a US government investigation of $45 million paid to CH2M and the three other companies in no-bid contracts for Katrina response was declared wasteful spending. [27] CH2M was also accused in a congressional investigation in 1992 of misusing money during its cleanup of toxic waste sites in the U.S. More than two million dollars of this contract were allegedly used for “unallowable and questionable costs,” such as $11,379 for a Christmas party and $2750 for specialty chocolates.[28] The company is listed in the top 50 of U.S.-based contractors and has been a major player in wartime contracting in Iraq and Afghanistan.[29]

The track record was nothing that some strategic lobbying efforts couldn’t mitigate, however. The lobbyist who headed up CH2M Hill’s efforts to win contracts in Haiti was Larry LaRocco, a former congressman from Idaho who now runs his own lobbying firm.[30] And unsurprisingly, the company spent half a million dollars in political contributions in 2010. [31] Thus equipped with politicians in its pocket, CH2M was well-positioned to compete in the latest contract game. It received its first post-earthquake contract just days after the disaster, and was given a joint contract with KBR Global Service (itself notorious due to its Iraq and Afghanistan activities) for facilities operations support at the end of 2010.[32]

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In the case of a few other contracts that we know to be operating in Haiti, we’ve spent hour after hour on the scent. We’ve scoured internet resources, news articles, and company websites to track companies we know received post-earthquake contracts in Haiti. Nothing. Not even a mention, sometimes, in the 100-plus-page 2010 annual reports.

What we have been unable to uncover is at least as alarming as what we have learned about some of the firms receiving millions from the US government, and what they have done with those millions. We wonder whether the US government has had any more knowledge or oversight of the corporate actions than have the corporation’s investors. As for the American people, they have no way to know how their money has been spent or what has been done in their names. The lack of transparency has also given a green light to profiteers to neglect standards, quality, and honesty.

There is one group for whom the secrecy, foul play, taking of power that should never be taken, giving away of what should never be given away, matters most of all: Haitians, the ones whose country is being treated like a Monopoly game. They alone will have to live with the long-term outcome of what foreign companies build, demolish, restructure, or steal in their country.

Copyleft Other Worlds. You may reprint this article in whole or in part.  Please credit any text or original research you use to Deepa Panchang, Beverly Bell, and Tory Field, Other Worlds.

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[1] Mike Clary, “Broward Rivals Battle for Work in Post-Quake Haiti,” Sun-Sentinel.com, July 14, 2010.
[2] Paul Cullen, “Attracting trade now focus for Haiti’s president,” The Irish Times, http://www.irishtimes.com/newspaper/world/2012/0130/1224310943929.html
[3] Alex Dupuy, “One Year after the Earthquake, Foreign Help is Actually Hurting Haiti,” Washington Post, January 7, 2011.
[4] Emma Perez-Trevino, “Beating Death Lawsuit Ends in Settlement,” The Brownsville Herald online, January 7, 2010, http://www.brownsvilleherald.com/articles/rosa-107144-settlement-beating…. Martha Brannigan and Jacqueline Charles, “U.S. Firms Want Part in Haiti Cleanup,” Miami Herald, February 9, 2010.
[5] “Haiti Earthquake Report,” Federal Procurement Data System, data updated as of 9/15/2011, https://www.fpds.gov/downloads/top_requests/Haiti_Earthquake_Report.xls.
[6] See, for example, Jeremy Scahill, Blackwater: The Rise of the World’s Most Powerful Mercenary Army (New York: Nation Books, 2007); Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism (New York: Picador, 2007); Jeremy Scahill, “US Mercenaries Set Sights on Haiti,” TheNation.com, February 1, 2010; and Anthony Fenton, “Private Contractors ‘Like Vultures Coming to Grab the Loot,” IPSNews.net, February 19, 2010.
[7] “Al Jazeera Reports on the Haiti ‘Summit’ for Private Contractors,” YouTube video, 3:32, Al Jazeera reporting, posted by “WebofDem,” May 6, 2010, http://youtu.be/kkNCdy0GXyc.
[8] “Haiti Earthquake Report,” Federal Procurement Data System, data updated as of 9/15/2011, https://www.fpds.gov/downloads/top_requests/Haiti_Earthquake_Report.xls.
[9] Jane Madden, “Corporations Must Consider Haiti’s Long Term Needs,” Philanthropy News Digest online, March 10, 2010, http://foundationcenter.org/pnd/commentary/co_item.jhtml?id=287300002.
[10] “New USAID-Funded Haiti Apparel Center to Provide Training to Thousands of Haitians in the Garment Industry,” press release by USAID, August 11, 2010, http://www.usaid.gov/press/releases/2010/pr100811_1.html.
[11] USAID, Haiti Earthquake: Fact Sheet #48, April 2, 2010,
http://www.usaid.gov/our_work/humanitarian_assistance/disaster_assistance/countries/haiti/template/fs_sr/fy2010/haiti_eq_fs48_04-02-2010.pdf.
[12]Center for Economic and Policy Research, “USAID/OTI’s Politicized, Problematic, Cash-for-Work Programs,” December 21, 2010, http://www.cepr.net/index.php/blogs/cepr-blog/usaidotis-politicized-problematic-cash-for-work-programs; Antèn Ouvriye, Submission to the United Nations Universal Periodic Review: Labor Rights (Transnational Legal Clinic, University of Pennsylvania Law School, 2011), http://ijdh.org/archives/17948; and Office of Inspector General, Audit of USAID’s Cash-for-Work Activities in Haiti (San Salvador: September 24, 2010), www.usaid.gov/oig/public/fy10rpts/1-521-10-009-p.pdf.
[13] Haiti Grassroots Watch, “Is Cash-for-work Working?”, http://www.ayitikaleje.org/Dossier2Story2. Haiti Grassroots Watch, “Cash for Work – At What Cost,” http://www.ayitikaleje.org/haiti-grassroots-watch-engli/2011/7/18/cash-for-work-at-what-cost.html.
[14] Office of Inspector General, Audit of USAID’s Cash-for-Work Activities in Haiti, September 24, 2010, www.usaid.gov/oig/public/fy10rpts/1-521-10-009-p.pdf.
[15] Jordon Flaherty, “One year after Haiti earthquake, corporations profit while people suffer,” Monthly Review Magazine, January 12, 2010. “It’s who you know,” CorpWatch, August 16th, 2006, http://www.corpwatch.org/article.php?id=14008
[16] Mike Brunker, “Dust flies over Katrina’s debris,” MSNBC, January 29, 20006, http://risingfromruin.msnbc.com/2006/01/fighting_over_t.html
[17] Rita King, “Layers and Layers,” CorpWatch, August 16, 2006, http://www.corpwatch.org/article.php?id=14011.
[18] Martha Brannigan and Jacqueline Charles, “U.S. Firms Want Part in Haiti Cleanup,” Miami Herald, February 9, 2010.
[19] Kevin Bogardus, “Haiti’s recovery aided by U.S. lobbyists,” The Hill, October 11, 2010.
[20] Ibid.
[21] Ben Fox, “Masters of disaster: Foreign firms set up shop in Haiti and wait for construction boom,” Associated Press, June 7, 2010.
[22] Mike Clary, “Broward rivals battle for work in post-quake Haiti,” Sun Sentinel, July 14, 2010, http://articles.sun-sentinel.com/2010-07-14/news/fl-haiti-recovery-rivals-20100714_1_ashbritt-post-earthquake-haiti-debris.
[23] Ben Fox, “Ex-US official sues contractor in Haiti for fees,” Associated Press, December 31, 2010.
[24] Mark Weisbrot, “Haiti and the international aid scam,” The Guardian, April 22, 2011, http://www.guardian.co.uk/commentisfree/cifamerica/2011/apr/22/haiti-aid.
[25] Project on Government Oversight, http://www.contractormisconduct.org/
[26] Matt Kelley, “Canceled Iraq contracts cost U.S. $600 million,” USA Today, November, 17, 2008.
[27] Center for Economic and Policy Research, “Impatient to Profit from Disaster,” October 14, 2010, http://www.cepr.net/index.php/blogs/relief-and-reconstruction-watch/impatient-to-profit-from-disaster
[28] Keith Schneider, “Company Accused of Bilking U.S. on Waste Sites,” New York Times, March 20,1992.
[29] Top 400 Contractors Sourcebook cited on http://newsroom.ch2mhill.com/pr/ch2m/industry-rankings.aspx. Statement of Mr. Fred M. Brune, President, Government Facilities and Infrastructure Business Group, CH2M Hill Constructors, Inc. before the Commission on Wartime Contracting in Iraq and Afghanistan, July 26, 2010, www.wartimecontracting.gov/…/hearing2010-07-26_testimony_Brune_(CH2M%20Hill).pdf.
[30] Kevin Bogardus, “Haiti’s recovery aided by U.S. lobbyists,” The Hill, October 11, 2010. http://thehill.com/business-a-lobbying/123565-haitis-recovery-aided-by-lobbyists
[31] CH2M Hill Expenditures, Center for Responsive Politics, http://www.opensecrets.org/pacs/expenditures.php?cycle=2010&cmte=C00143305
[32] “Haiti Earthquake Report,” Federal Procurement Data System, data updated as of 9/15/2011, https://www.fpds.gov/downloads/top_requests/Haiti_Earthquake_Report.xls.

Using Debt To Crush Democracy: How Financiers Are Waging Economic Warfare Against Nations

Oldspeak:”Everything is version of something else”. The eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history. Financial oligarchy has happened before. Many times throughout history. This recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies and crushing national self-determination” As they have in the past.  It will be interesting to see if an aristocracy is coming in our future. Highly recommend reading John Perkins’ “Confessions Of An Economic Hit Man” to understand what is going on.

By Michael Hudson @ Michael Hudson’s Blog:

Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.

Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by canceling the debts and redistributing property or taking its usufruct for the state.

Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans. As James Steuart explained in 1767, royal borrowings remained private affairs rather than truly public debts [1]. For a sovereign’s debts to become binding upon the entire nation, elected representatives had to enact the taxes to pay their interest charges.

By giving taxpayers this voice in government, the Dutch and British democracies provided creditors with much safer claims for payment than did kings and princes whose debts died with them. But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs.

This is turning international finance into a new mode of warfare. Its objective is the same as military conquest in times past: to appropriate land and mineral resources, communal infrastructure and extract tribute. In response, democracies are demanding referendums over whether to pay creditors by selling off the public domain and raising taxes to impose unemployment, falling wages and economic depression. The alternative is to write down debts or even annul them, and to re-assert regulatory control over the financial sector.

Near Eastern rulers proclaimed Clean Slates to preserve economic balance
Charging interest on advances of goods or money was not originally intended to polarize economies. First administered early in the third millennium BC as a contractual arrangement by Sumer’s temples and palaces with merchants and entrepreneurs who typically worked in the royal bureaucracy, interest at 20% (doubling the principal in five years) was supposed to approximate a fair share of the returns from long-distance trade or leasing land and other public assets such as workshops, boats and ale houses.

As the practice was privatized by royal collectors of user fees and rents, “divine kingship” protected agrarian debtors. Hammurabi’s laws (c. 1750 BC) cancelled their debts in times of flood or drought. All the rulers of his Babylonian dynasty began their first full year on the throne by cancelling agrarian debts so as to clear out payment arrears by proclaiming a clean slate. Bondservants, land or crop rights and other pledges were returned to the debtors to “restore order” in an idealized “original” condition of balance. This practice survived in the Jubilee Year of Mosaic Law in Leviticus 25.

The logic was clear enough. Ancient societies needed to field armies to defend their land, and this required liberating indebted citizens from bondage. Hammurabi’s laws protected charioteers and other fighters from being reduced to debt bondage, and blocked creditors from taking the crops of tenants on royal and other public lands and on communal land that owed manpower and military service to the palace.

In Egypt, the pharaoh Bakenranef (c. 720-715 BC, “Bocchoris” in Greek) proclaimed a debt amnesty and abolished debt-servitude when faced with a military threat from Ethiopia. According to Diodorus of Sicily (I, 79, writing in 40-30 BC), he ruled that if a debtor contested the claim, the debt was nullified if the creditor could not back up his claim by producing a written contract. (It seems that creditors always have been prone to exaggerate the balances due.) The pharaoh reasoned that “the bodies of citizens should belong to the state, to the end that it might avail itself of the services which its citizens owed it, in times of both war and peace. For he felt that it would be absurd for a soldier … to be haled to prison by his creditor for an unpaid loan, and that the greed of private citizens should in this way endanger the safety of all.”

The fact that the main Near Eastern creditors were the palace, temples and their collectors made it politically easy to cancel the debts. It always is easy to annul debts owed to oneself. Even Roman emperors burned the tax records to prevent a crisis. But it was much harder to cancel debts owed to private creditors as the practice of charging interest spread westward to Mediterranean chiefdoms after about 750 BC. Instead of enabling families to bridge gaps between income and outgo, debt became the major lever of land expropriation, polarizing communities between creditor oligarchies and indebted clients. In Judah, the prophet Isaiah (5:8-9) decried foreclosing creditors who “add house to house and join field to field till no space is left and you live alone in the land.”

Creditor power and stable growth rarely have gone together. Most personal debts in this classical period were the product of small amounts of money lent to individuals living on the edge of subsistence and who could not make ends meet. Forfeiture of land and assets – and personal liberty – forced debtors into bondage that became irreversible. By the 7th century BC, “tyrants” (popular leaders) emerged to overthrow the aristocracies in Corinth and other wealthy Greek cities, gaining support by canceling the debts. In a less tyrannical manner, Solon founded the Athenian democracy in 594 BC by banning debt bondage.

But oligarchies re-emerged and called in Rome when Sparta’s kings Agis, Cleomenes and their successor Nabis sought to cancel debts late in the third century BC. They were killed and their supporters driven out. It has been a political constant of history since antiquity that creditor interests opposed both popular democracy and royal power able to limit the financial conquest of society – a conquest aimed at attaching interest-bearing debt claims for payment on as much of the economic surplus as possible.

When the Gracchi brothers and their followers tried to reform the credit laws in 133 BC, the dominant Senatorial class acted with violence, killing them and inaugurating a century of Social War, resolved by the ascension of Augustus as emperor in 29 BC.

Rome’s creditor oligarchy wins the Social War, enserfs the population and brings on a Dark Age
Matters were more bloody abroad. Aristotle did not mention empire building as part of his political schema, but foreign conquest always has been a major factor in imposing debts, and war debts have been the major cause of public debt in modern times. Antiquity’s harshest debt levy was by Rome, whose creditors spread out to plague Asia Minor, its most prosperous province. The rule of law all but disappeared when the publican creditor “knights” arrived. Mithridates of Pontus led three popular revolts, and local populations in Ephesus and other cities rose up and killed a reported 80,000 Romans in 88 BC. The Roman army retaliated, and Sulla imposed war tribute of 20,000 talents in 84 BC. Charges for back interest multiplied this sum six-fold by 70 BC.

Among Rome’s leading historians, Livy, Plutarch and Diodorus blamed the fall of the Republic on creditor intransigence in waging the century-long Social War marked by political murder from 133 to 29 BC. Populist leaders sought to gain a following by advocating debt cancellations (e.g., the Catiline conspiracy in 63-62 BC). They were killed. By the second century AD about a quarter of the population was reduced to bondage. By the fifth century Rome’s economy collapsed, stripped of money. Subsistence life reverted to the countryside as a Dark Age descended.

Creditors find a legalistic reason to support parliamentary democracy
When banking recovered after the Crusades looted Byzantium and infused silver and gold to review Western European commerce, Christian opposition to charging interest was overcome by the combination of prestigious lenders (the Knights Templars and Hospitallers providing credit during the Crusades) and their major clients – kings, at first to pay the Church and increasingly to wage war. But royal debts went bad when kings died. The Bardi and Peruzzi went bankrupt in 1345 when Edward III repudiated his war debts. Banking families lost more on loans to the Habsburg and Bourbon despots on the thrones of Spain, Austria and France.
  
Matters changed with the Dutch democracy, seeking to win and secure its liberty from Habsburg Spain. The fact that their parliament was to contract permanent public debts on behalf of the state enabled the Low Countries to raise loans to employ mercenaries in an epoch when money and credit were the sinews of war. Access to credit “was accordingly their most powerful weapon in the struggle for their freedom,” notes Ehrenberg: “Anyone who gave credit to a prince knew that the repayment of the debt depended only on his debtor’s capacity and will to pay. The case was very different for the cities, which had power as overlords, but were also corporations, associations of individuals held in common bond. According to the generally accepted law each individual burgher was liable for the debts of the city both with his person and his property.”[2]

The financial achievement of parliamentary government was thus to establish debts that were not merely the personal obligations of princes, but were truly public and binding regardless of who occupied the throne. This is why the first two democratic nations, the Netherlands and Britain after its 1688 revolution, developed the most active capital markets and proceeded to become leading military powers. What is ironic is that it was the need for war financing that promoted democracy, forming a symbiotic trinity between war making, credit and parliamentary democracy in an epoch when money was still the sinews of war.

At this time “the legal position of the King qua borrower was obscure, and it was still doubtful whether his creditors had any remedy against him in case of default.”[3] The more despotic Spain, Austria and France became, the greater the difficulty they found in financing their military adventures. By the end of the eighteenth century Austria was left “without credit, and consequently without much debt” the least credit-worthy and worst armed country in Europe (as Steuart 1767:373 noted), fully dependent on British subsidies and loan guarantees by the time of the Napoleonic Wars.

Finance accommodates itself to democracy, but then pushes for oligarchy
While the nineteenth century’s democratic reforms reduced the power of landed aristocracies to control parliaments, bankers moved flexibly to achieve a symbiotic relationship with nearly every form of government. In France, followers of Saint-Simon promoted the idea of banks acting like mutual funds, extending credit against equity shares in profit. The German state made an alliance with large banking and heavy industry. Marx wrote optimistically about how socialism would make finance productive rather than parasitic. In the United States, regulation of public utilities went hand in hand with guaranteed returns. In China, Sun-Yat-Sen wrote in 1922: “I intend to make all the national industries of China into a Great Trust owned by the Chinese people, and financed with international capital for mutual benefit.”[4]

World War I saw the United States replace Britain as the major creditor nation, and by the end of World War II it had cornered some 80 percent of the world’s monetary gold. Its diplomats shaped the IMF and World Bank along creditor-oriented lines that financed trade dependency, mainly on the United States. Loans to finance trade and payments deficits were subject to “conditionalities” that shifted economic planning to client oligarchies and military dictatorships. The democratic response to resulting austerity plans squeezing out debt service was unable to go much beyond “IMF riots,” until Argentina rejected its foreign debt.

A similar creditor-oriented austerity is now being imposed on Europe by the European Central Bank (ECB) and EU bureaucracy. Ostensibly social democratic governments have been directed to save the banks rather than reviving economic growth and employment. Losses on bad bank loans and speculations are taken onto the public balance sheet while scaling back public spending and even selling off infrastructure. The response of taxpayers stuck with the resulting debt has been to mount popular protests starting in Iceland and Latvia in January 2009, and more widespread demonstrations in Greece and Spain this autumn to protest their governments’ refusal to hold referendums on these fateful bailouts of foreign bondholders.

Shifting planning away from elected public representatives to bankers
Every economy is planned. This traditionally has been the function of government. Relinquishing this role under the slogan of “free markets” leaves it in the hands of banks. Yet the planning privilege of credit creation and allocation turns out to be even more centralized than that of elected public officials. And to make matters worse, the financial time frame is short-term hit-and-run, ending up as asset stripping. By seeking their own gains, the banks tend to destroy the economy. The surplus ends up being consumed by interest and other financial charges, leaving no revenue for new capital investment or basic social spending.

This is why relinquishing policy control to a creditor class rarely has gone together with economic growth and rising living standards. The tendency for debts to grow faster than the population’s ability to pay has been a basic constant throughout all recorded history. Debts mount up exponentially, absorbing the surplus and reducing much of the population to the equivalent of debt peonage. To restore economic balance, antiquity’s cry for debt cancellation sought what the Bronze Age Near East achieved by royal fiat: to cancel the overgrowth of debts.

In more modern times, democracies have urged a strong state to tax rentier income and wealth, and when called for, to write down debts. This is done most readily when the state itself creates money and credit. It is done least easily when banks translate their gains into political power. When banks are permitted to be self-regulating and given veto power over government regulators, the economy is distorted to permit creditors to indulge in the speculative gambles and outright fraud that have marked the past decade. The fall of the Roman Empire demonstrates what happens when creditor demands are unchecked. Under these conditions the alternative to government planning and regulation of the financial sector becomes a road to debt peonage.

Finance vs. government; oligarchy vs. democracy
Democracy involves subordinating financial dynamics to serve economic balance and growth – and taxing rentier income or keeping basic monopolies in the public domain. Untaxing or privatizing property income “frees” it to be pledged to the banks, to be capitalized into larger loans. Financed by debt leveraging, asset-price inflation increases rentier wealth while indebting the economy at large. The economy shrinks, falling into negative equity.

The financial sector has gained sufficient influence to use such emergencies as an opportunity to convince governments that that the economy will collapse they it do not “save the banks.” In practice this means consolidating their control over policy, which they use in ways that further polarize economies. The basic model is what occurred in ancient Rome, moving from democracy to oligarchy. In fact, giving priority to bankers and leaving economic planning to be dictated by the EU, ECB and IMF threatens to strip the nation-state of the power to coin or print money and levy taxes.

The resulting conflict is pitting financial interests against national self-determination. The idea of an independent central bank being “the hallmark of democracy” is a euphemism for relinquishing the most important policy decision – the ability to create money and credit – to the financial sector. Rather than leaving the policy choice to popular referendums, the rescue of banks organized by the EU and ECB now represents the largest category of rising national debt. The private bank debts taken onto government balance sheets in Ireland and Greece have been turned into taxpayer obligations. The same is true for America’s $13 trillion added since September 2008 (including $5.3 trillion in Fannie Mae and Freddie Mac bad mortgages taken onto the government’s balance sheet, and $2 trillion of Federal Reserve “cash-for-trash” swaps).

This is being dictated by financial proxies euphemized as technocrats. Designated by creditor lobbyists, their role is to calculate just how much unemployment and depression is needed to squeeze out a surplus to pay creditors for debts now on the books. What makes this calculation self-defeating is the fact that economic shrinkage – debt deflation – makes the debt burden even more unpayable.

Neither banks nor public authorities (or mainstream academics, for that matter) calculated the economy’s realistic ability to pay – that is, to pay without shrinking the economy. Through their media and think tanks, they have convinced populations that the way to get rich most rapidly is to borrow money to buy real estate, stocks and bonds rising in price – being inflated by bank credit – and to reverse the past century’s progressive taxation of wealth.

To put matters bluntly, the result has been junk economics. Its aim is to disable public checks and balances, shifting planning power into the hands of high finance on the claim that this is more efficient than public regulation. Government planning and taxation is accused of being “the road to serfdom,” as if “free markets” controlled by bankers given leeway to act recklessly is not planned by special interests in ways that are oligarchic, not democratic. Governments are told to pay bailout debts taken on not to defend countries in military warfare as in times past, but to benefit the wealthiest layer of the population by shifting its losses onto taxpayers.

The failure to take the wishes of voters into consideration leaves the resulting national debts on shaky ground politically and even legally. Debts imposed by fiat, by governments or foreign financial agencies in the face of strong popular opposition may be as tenuous as those of the Habsburgs and other despots in past epochs. Lacking popular validation, they may die with the regime that contracted them. New governments may act democratically to subordinate the banking and financial sector to serve the economy, not the other way around.

At the very least, they may seek to pay by re-introducing progressive taxation of wealth and income, shifting the fiscal burden onto rentier wealth and property. Re-regulation of banking and providing a public option for credit and banking services would renew the social democratic program that seemed well underway a century ago.

Iceland and Argentina are most recent examples, but one may look back to the moratorium on Inter-Ally arms debts and German reparations in 1931.A basic mathematical as well as political principle is at work: Debts that can’t be paid, won’t be.

Footnotes:

[1] James Steuart, Principles of Political Oeconomy (1767), p. 353.

[2] Richard Ehrenberg, Capital and Finance in the Age of the Renaissance (1928):44f., 33.

[3] Charles Wilson, England’s Apprenticeship: 1603-1763 (London: 1965):89.

[4] Sun Yat-Sen, The International Development of China (1922):231ff.

 

Michael Hudson, a former Wall Street Journal reporter, is a staff writer at the Center for Public Integrity (http://www.publicintegrity.org), a nonprofit journalist organization. He is the author of “THE MONSTER: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America – And Spawned a Global Crisis” (2010, Times Books)

© 2011 Michael Hudson’s blog All rights reserved.
View this story online at: http://www.alternet.org/story/153338/

 

High Stakes Testing In Public Schools: Who’s Cheating Whom?

Oldspeak:”Corporate school privatizers feign disgust with teachers that cheat standardized tests. But Big Business theft of  public education is by far the greater sin. High stakes testing was designed as a Trojan Horse for a corporate educational takeover, but packaged as a public good. This is the substance of education “reform” in the Age of Obama. The real cheats are those that pushed high stakes testing under the false pretexts of reform, when the actual goal was union busting and privatization” -Glen Ford. Rather than deal with the entrenched, institutionalized, centuries old social and structural problems which are driving many of the problems we see today with public education (poverty, inequality, racism, “banking system of eduction“), many “reformers” would rather privatize the system, automate it via ‘standardized testing’ and turn it into a perpetual revenue stream, with little regard for actual effective learning. Churning out widgets to plug into private corporations who in turn “sponsor” education “reform” and further increase their profits. A self perpetuating meat-grinder, with children being the meat.  A less educated, less competent, less critically thinking society of all-consuming “happiness machines” with no love of learning. Who see education as a means to an end (more education = more money = more consumption = more prescribed ‘happiness’) not as means of personal growth and development.  Sucesssive generations will be less and less equipped to critiscize and question the system which is failing them. Alas yet again, in then end, ‘We the People’ loseand the corporatocracy wins. “Freedom Is Slavery”

By Glen Ford @ Black Agenda Report:

The school privatizers now headquartered in the Obama administration are all pitching a morality fit over teachers that cheat by altering answers on standardized tests. Corporate privatizers, of course, have no real sense of morality beyond profit and loss: their own profit, and to hell with those that lose. But, when attacking institutions so historically revered as public education and the teaching profession, one must play dirty. You’ve got to get them on a morals charge.

The assault on public schools began with the blanket assertion that teachers – or, more precisely, teachers unions – are out for themselves; that they are sinfully selfish. Strange words, from the lips of corporate executives and free marketeers who preach that the highest virtues are revealed in the cutthroat corridors of commerce. Then again, pots and kettles are always calling everybody else black.

So, they slimed the teachers as the root of all that ails public education, teachers whose moral deficits could be corrected by rigorous competition regulated by standardized testing of students. If the students failed the tests, then the teachers would fail and be discharged, and the schools they worked in would also fail, and be replaced by privatized charters. High stakes testing was designed as a Trojan Horse for a corporate educational takeover, but packaged as a public good. Bad teachers and bad schools would come to a well-deserved bad end.

This morality play was always based on a lie. The standardized tests were bombs, designed to explode the public schools and the teaching profession. Everyone involved knew that inner city kids would fail the tests in huge numbers, setting the infernal machine in motion for the closing of schools and the wholesale firing of teachers. In their place would be recruited a new workforce that would either view teaching as a temporary job or cut every other teacher’s throat in order to stay – neither of which redounds to the benefit of students or anyone else but the bosses. This is the substance of education “reform” in the Age of Obama.

Faced with extinction of their jobs and their very profession, and with a teacher’s learned certainty that many of their students would be pushed into marginality by the testing juggernaut, teachers turned to cheating the test. They have been caught and shamed and may face prosecution in Atlanta and Philadelphia and elsewhere, but cheating the test surely occurs in virtually every inner city. I don’t think it’s cheating, in a moral sense, at all. The cheats are those that pushed high stakes testing under the false pretexts of reform, when the actual goal was union busting and privatization. Teachers are fighting for their lives, and all of us would cheat death, if we could.

The school privatizers are determined, not just to bust the teachers unions, but to remake teachers as corporate citizens. A schools superintendent in New Jersey said part of the difficulty for teachers under the new order is that they “are more concerned about relationships than about achieving more than one another.” When he gives teachers awards, he says, they won’t display them because “they don’t want to outshine one another.” His teachers would rather collaborate and cooperate to achieve a common goal. And that’s why they’ve got to change, or go.

© 2011 Black Agenda Report

Back Agenda Report executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.

 

Chomsky: Public Education Under Massive Corporate Assault — What’s Next?

Oldspeak: “Converting schools and universities into facilities that produce commodities for the job market, privatizing them, slashing their budgets — do we really want this future? People who are in a debt trap have very few options. That is true of social control generally. In a corporate-run culture, the traditional ideal of free and independent thought may be given lip service, but other values tend to rank higher. Defending authentic (academic) institutional freedom is no small task. However, it is not hopeless by any means.” -Noam Chomsky Unfortunately  ”The era of affordable four-year public universities heavily subsidized by the state may be over.” When access to free, high quality, education is eliminated and is replaced with pay for the privilege corporate controlled education democracy dies. “Ignorance is Strength”

By Noam Chomsky @ Alter Net:

The following is a partial transcript of a recent speech delivered by Noam Chomsky at the University of Toronto at Scarborough on the rapid privatization process of public higher education in the United States.

A couple of months ago, I went to Mexico to give talks at the National University in Mexico, UNAM. It’s quite an impressive university — hundreds of thousands of students, high-quality and engaged students, excellent faculty. It’s free. And the city — Mexico City — actually, the government ten years ago did try to add a little tuition, but there was a national student strike, and the government backed off. And, in fact, there’s still an administrative building on campus that is still occupied by students and used as a center for activism throughout the city. There’s also, in the city itself, another university, which is not only free but has open admissions. It has compensatory options for those who need them. I was there, too; it’s also quite an impressive level, students, faculty, and so on. That’s Mexico, a poor country.

Right after that I happened to go to California, maybe the richest place in the world. I was giving talks at the universities there. In California, the main universities — Berkeley and UCLA — they’re essentially Ivy League private universities — colossal tuition, tens of thousands of dollars, huge endowment. General assumption is they are pretty soon going to be privatized, and the rest of the system will be, which was a very good system — best public system in the world — that’s probably going to be reduced to technical training or something like that. The privatization, of course, means privatization for the rich [and a] lower level of mostly technical training for the rest. And that is happening across the country. Next year, for the first time ever, the California system, which was a really great system, best anywhere, is getting more funding from tuition than from the state of California. And that is happening across the country. In most states, tuition covers more than half of the college budget. It’s also most of the public research universities. Pretty soon only the community colleges — you know, the lowest level of the system — will be state-financed in any serious sense. And even they’re under attack. And analysts generally agree, I’m quoting, “The era of affordable four-year public universities heavily subsidized by the state may be over.”

Now that’s one important way to implement the policy of indoctrination of the young. People who are in a debt trap have very few options. Now that is true of social control generally; that is also a regular feature of international policy — those of you who study the IMF and the World Bank and others are well aware. As the Mexico-California example illustrates, the reasons for conscious destruction of the greatest public education system in the world are not economic. Economist Doug Henwood points out that it would be quite easy to make higher education completely free. In the U.S., it accounts for less than 2 percent of gross domestic product. The personal share of about 1 percent of gross domestic product is a third of the income of the richest 10,000 households. That’s the same as three months of Pentagon spending. It’s less than four months of wasted administrative costs of the privatized healthcare system, which is an international scandal.

It’s about twice the per capita cost of comparable countries, has some of the worst outcomes, and in fact it’s the basis for the famous deficit. If the U.S. had the same kind of healthcare system as other industrial countries, not only would there be no deficit, but there would be a surplus. However, to introduce these facts into an electoral campaign would be suicidally insane, Henwood points out. Now he’s correct. In a democracy where elections are essentially bought by concentrations of private capital, it doesn’t matter what the public wants. The public has actually been in favor of that for a long of time, but they are irrelevant in a properly run democracy.

We should recall that the great growth period in the economy — the U.S. economy — was in the several decades after WWII, commonly called the “Golden Age” by economists. It was substantially fueled by affordable public education and by university research. Affordable public education includes the GI Bill, which provided free education for veterans — and remember, that was a much poorer country than today. Extremely low tuition was found even at private colleges. Actually, I went to an Ivy League college, and it cost $100 a year; that’s more now, but it’s not that high, it’s not 30 or 40,000, you know?

What about university-based research? Well, as I mentioned, that is the core of the modern high-tech economy. That includes computers, the Internet — in fact, the whole IT revolution — and a whole lot more. The dismantling of this system since the 1970s is among the many moves toward a very sharply two-tiered society, a very narrow concentration of wealth and stagnation for most everyone else. It also has direct economic consequences. Take, say, California. What they are doing to the public education system is going to undermine the economy that relies on a skilled work force and creative innovation, Silicon Valley and so on. Well, apart from the enormous human cost of depriving most people of decent educational opportunities, these policies undermine the U.S. competitive capacity. That’s very harmful to the mass of the population, but it doesn’t matter to the tiny percent of concentrated wealth and power. In fact, in the years since the Pell Memorandum, we’ve entered into a new stage in state capitalism in which the future just doesn’t amount to much. Profit comes increasingly from financial manipulations. The corporate policies are geared toward the short-term profit, and that reduces the concern for loyalty to a firm over a longer stretch. We’ll talk about this more tomorrow, but right now let me talk about the consequences for education, which are quite significant.

Suppose, as is increasingly happening not only in the United States, incidentally, that universities are not funded by the state, meaning the general community. So how are the universities going to survive? Universities are parasitic institutions; they don’t produce commodities for profit, thankfully. They may one of these days. The funding issue raises many troubling questions, which would not arise if fostering independent thought and inquiry were regarded as a public good, having intrinsic value. That’s the traditional ideal of the universities, although there are major efforts to change that. Take Britain. According to the British press, the Arts and Humanities Research Council was just ordered to spend a significant amount of funding on the prime minister’s vision for the country. His so-called “Big Society,” which means big corporate profits, and the rest look out for themselves. The government produced what they call a clarification of the famous Haldane Principle. That’s the century-old principle that barred such government intrusion into academic research. If this stands, which I think is kind of hard to believe, but if it stands, the hand of Big Brother will rest quite heavily on inquiry and innovation in the arts and humanities as the masters of mankind follow the advice of the Pell Memorandum. Of course, defending academic freedom in ways that would receive nods of approval from Those-Who-Must-Not-Be-Named, borrowing my grandchildren’s rhetoric. Cameron’s Britain is seeking to take the lead on the assault on public education. The rest of the Western world is not very far behind. In some ways the U.S. is ahead.

More generally, in a corporate-run culture, the traditional ideal of free and independent thought may be given lip service, but other values tend to rank higher. Defending authentic institutional freedom is no small task. However, it is not hopeless by any means. I’ll talk about the case I know best, at my own university. It is a very striking case, because of the nature of its funding. Technically, it’s a private university, but it has vast state funding, overwhelming, particularly since the Second World War. When I adjoined the faculty over 55 years ago, there were military labs. Since then, they’ve been technically severed. The academic programs, too, at that time, the 1950s, were almost entirely funded by the Pentagon. Under student pressure in the time of troubles, the 1960s, there were protests about this and calls for investigation. A faculty-student commission was formed in 1969 to investigate the matter. I was a member, thanks to student pressure. The commission was interesting. It found that despite the funding source, the Pentagon, almost the entire academic program, there was no military-related work on campus, except in the sense that virtually anything can have some military application. Actually, there was an exception to this, the political science department, [which] was deeply engaged in the Vietnam War under the guise of peace research. Since that time, Pentagon funding has been declining, and funding from health-related state institutions — National Institute of Health and so on — that’s been increasing. There’s a reason for that. It’s reflecting changes in the economy.

In the 1950s and 1960s the cutting edge of the economy was electronics-based. The Pentagon was a natural way to steal money from the taxpayers, making them think they’re being protected from the Russians or somebody, and to direct it to eventual corporate profits. That was done very effectively. It includes computers, the Internet, the IT revolution. In fact most of the modern economy comes from that. In more recent years, the economy is becoming more biology based. Therefore state funding is shifting. Fifty years ago, if you looked around MIT, you found small electronics startups from the faculty. They were drawing on Pentagon funding for research, and if they were successful, they were bought up by major corporations. Those of you who know something about the high-tech economy will know that that’s the famous Route 128. That was 50 years ago. Now, if you go around the campus, the startups are biology based, and the same process continues. The genetic engineering, biotechnology, pharmaceuticals and the big buildings going up are Novartis and so on. That’s the way the so-called free enterprise economy works. There’s also been a shift to more short-term applied work. The Pentagon and the National Institutes of Health are concerned with the long-term future of the advanced economy. In contrast to a business firm, it typically wants something that it can use — it can use and not its competitors, and tomorrow. I don’t actually know of a careful study, but it seems pretty clear that the shift toward corporate funding is leading towards more short-term applied research and less exploration of what might turn out to be interesting and important down the road.

Another consequence of corporate funding is more secrecy. This surprises a lot of people, but during the period of Pentagon funding, there was no secrecy. There was also no security on campus. You may remember this. You walk into the Pentagon-funded labs 24 hours a day, and no cards to stick into things and so on. No secrecy; it was all entirely open. There is secrecy today. A corporation can’t compel secrecy, but they can make it very clear that you’re not going to get your contract renewed if your work leaks to others. That has happened. In fact, it’s lead to some scandals, some big enough to appear on the front page of the Wall Street Journal.

Outside funding has other effects on the university, unless it’s free and unconstrained, observing the Haldane Principle. Indeed, it has been true to a significant degree by funding from the Pentagon and the other national institutions. However, any kind of outside funding [has effects], even keeping to the Haldane Principle, supposing it establishes a teaching or research facility. That kind of automatically shifts the balance of academic activity, and that can threaten the independence and integrity of the institution. And in the case of corporate funding, quite severely.

Corporatization can have considerable influence in other ways. Corporate managers have a duty. They have to focus on profit making and seeking to convert as much of life as possible into commodities. It’s not because they’re bad people; it’s their task. Under Anglo-American law, it’s their legal obligation as well. There’s a lot to say about this topic, but one element of it concerns the universities and much else. One particular consequence is the focus on what’s called efficiency. It’s an interesting concept. It’s not strictly an economic concept. It has crucial ideological dimensions. If a business reduces personnel, it might become more efficient by standard measures with lower costs. Typically, that shifts the burden to the public, a very familiar phenomenon we see all the time. Costs to the public are not counted, and they’re colossal. That’s a choice that’s not based on economic theory. That’s based on an ideological decision, which applies directly to the “business models,” as they’re called, of the universities. Increasing class-size or employing cheap temporary labor, say graduate students instead of full-time faculty, may look good on a university budget, but there are significant costs. They’re transferred and not measured. They’re transferred to students and to the society generally as the quality of education, the quality of instruction is lowered.

There’s, furthermore, no way to measure the human and social costs of converting schools and universities into facilities that produce commodities for the job market, abandoning the traditional ideal of the universities. Creating creative and independent thought and inquiry, challenging perceived beliefs, exploring new horizons and forgetting external constraints. That’s an ideal that’s no doubt been flawed in practice, but to the extent that it’s realized is a good measure of the level of civilization achieved.

That idea is being challenged very openly by Adam Smith’s Principal Architects of Policy in the State Corporate Complex, the direct attack on the Haldane Principle in Britain. That’s an extreme case; in fact so extreme I assume it may be beaten back. There are less blatant examples. Many of them are just inherent in the reliance on outside funding, state or private. These are two sources that are not easy to distinguish given the control of the state by private interest. So what’s the right reaction to outside funding that threatens the ideal of a free university? Well one choice is just to reject it in principle, in which case the university would go down the tubes. It’s a parasitic institution. Another choice is just to recognize it as a fact of life that when I’m at work, I have to walk past the Lockheed Martin Lecture Hall, and I have to look out my office window at the Koch building, which is named after the multibillionaires who are the major funders of the Tea Party and a leading force in ongoing campaigns to wipe out the remnants of the labor movement and to institute a kind-of corporate tyranny.

Now, if that outside funding seeks to [influence] teaching, research and other activities, then there’s a strong argument that it should simply be resisted or rejected outright no matter what the costs. Such influences are not inevitable, and that’s worth bearing in mind.

U.S. Debt Crisis Being Used To Implement Shock Doctrine To Steal More Money From The American People To Give To The Richest 1%

Oldspeak: “As a progressive, I am absolutely TERRIFIED that President Obama, quoted RONALD REAGAN last night. That tells you all you need to know about how far to the right this man has moved in his thinking. While he tried to sell his deficit reduction proposal as “balanced” and a “fairly shared burden”, The details he didn’t “want to bore you with” are these: Public assets and lands (some oil and gas rich) would be sold to private entities, and potential government revenue will be lost to the private sector. A ‘tax holiday’ would be provided to corporations to continue to internalize their off-shored profits in the form of bonuses. The corporate tax rate will be reduced from 35% to a range of 23-29%. Loopholes which taxes income on wealth (stock and bond returns) at a lower rate than income on work (salaries and wages) will not be closed. That insures that the richest Americans pay a lower rate of taxes than their chauffeurs.”It will cut retirement deductions, the mortgage deduction and the tax benefits for employer-based health care. This is likely to hurt middle-class homeowners, and workers whose employers provide decent health care. It will add to unemployment in the short term, increase Gilded Age inequality, leave seniors more vulnerable, and shackle any possibility of rebuilding America. It puts the burden of deficit reduction on the elderly, the poor and the vulnerable, endangers jobs and growth.” -Robert Borosage. World Bank/IMF style austerity measures have come home to roost. Bottom line, the rich continue ‘winning’ and you continue to get fucked.”

By Washington’s Blog:

I noted in 2008:

The powers-that-be have used the “Shock Doctrine” to pass anti-American, fascist legislation while the public was in a state of shock.

This applies to economic shocks, as well as physical attacks like 9/11.

Indeed, right now, Paulson and Bernanke are using the shock doctrine to try to ram through legislation that would help out the fat cats at the expense of taxpayers, and give the government control over the free market.

But there is some resistance. For example, Senator Leahy and the New York Times are questioning Paulson’s use of shock and awe:

• Senator Leahy said ”If we learned anything from 9/11, the biggest mistake is to pass anything they ask for just because it’s an emergency”

• The New York Times wrote:
  

  “The rescue is being sold as a must-have emergency measure by an administration with a controversial record when it comes to asking Congress for special authority in time of duress.”
  ***

  Mr. Paulson has argued that the powers he seeks are necessary to chase away the wolf howling at the door: a potentially swift shredding of the American financial system. That would be catastrophic for everyone, he argues, not only banks, but also ordinary Americans who depend on their finances to buy homes and cars, and to pay for college.

  Some are suspicious of Mr. Paulson’s characterizations, finding in his warnings and demands for extraordinary powers a parallel with the way the Bush administration gained authority for the war in Iraq. Then, the White House suggested that mushroom clouds could accompany Congress’s failure to act. This time, it is financial Armageddon supposedly on the doorstep.

  “This is scare tactics to try to do something that’s in the private but not the public interest,” said Allan Meltzer, a former economic adviser to President Reagan, and an expert on monetary policy at the Carnegie Mellon Tepper School of Business. “It’s terrible.”

The Tarp bailouts were passed using apocalyptic – and false – threats. For example, as I’ve previously reported: 

The New York Times wrote last year:

In retrospect, Congress felt bullied by Mr. Paulson last year. Many of them fervently believed they should not prop up the banks that had led us to this crisis — yet they were pushed by Mr. Paulson and Mr. Bernanke into passing the $700 billion TARP, which was then used to bail out those very banks.

Indeed, Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if Tarp wasn’t passed. That is especially interesting given that the financial crisis had actually been going on for a long time, but – instead of dealing with it – Paulson and the rest of the crew tried to cover it up and pretend it was “contained”, and that it was obvious to world leaders months earlier that it was not a liquidity crisis, but a solvency crisis (and see this).

Bait And Switch

The Tarp Inspector General has said that Paulson misrepresented the big banks’ health in the run-up to passage of TARP. This is no small matter, as the American public would have not been very excited about giving money to insolvent institutions.

And Paulson himself has said:

During the two weeks that Congress considered the [Tarp] legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets—our initial focus—would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks.

So Paulson knew “by the time the bill was signed” that it wouldn’t be used for its advertised purpose – disposing of toxic assets – and would instead be used to give money directly to the big banks?Senator McCain also says that Paulson pulled a bait-and-switch:

Sen. John McCain of Arizona … says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown.

“Obviously, that didn’t happen,” McCain said in a meeting Thursday withThe Republic‘s Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. “They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors. . . . What they figured was that if they stabilized Wall Street – I guess it was trickle-down economics – that therefore Main Street would be fine.”

Even the New York Times called Paulson a liar in 2008:

“First [Paulson’s Department of Treasury] says it has to have $700 billion to buy back toxic mortgage-backed securities. Then, as Mr. Paulson divulged to The Times this week, it turns out that even before the bill passed the House, he told his staff to start drawing up a plan for capital injections. Fearing Congress’s reaction, he didn’t tell the Hill about his change of heart.

Now, he’s shifted gears again, and is directing Treasury to use the money to force bank acquisitions. Sneaking in the tax break isn’t exactly confidence-inspiring, either.”

What tax breaks is the Times talking about? The article explains:

A new tax break [pushed by Treasury], worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: “It couldn’t be clearer if they had taken out an ad.”

Indeed, all of the other “emergency” economic and monetary measures – like quantitative easing – didn’t help the American people, but just helped the richest 1%. And most of the bailout and “easy” money went to foreign banks (and see this, this and this).

The Same Thing Is Happening With the Debt Ceiling

The same thing is now happening with the debt ceiling debate.

We know that the productive actions which would reduce the debt and fix the economy arenot being discussed. See this, this, this, this, this and this.

What is being discussed would just steal more money from the American people and give it to the richest 1%. For example, Congress is planning on selling off “unused federal property”. Selling off and privatizing public assets and resources is a core tactic in shock doctrine schemes.

As Matt Taibbi shows, another tax holiday for big corporations is one of the main focuses of discussion in D.C.

MSN Money reports: 

The plan proposes three [tax brackets] (we now have six) and would lower the top rate — and the corporate tax rate — from 35% to a range of 23% to 29%. That would be great news for rich folks. ”That could provide a windfall for wealthy taxpayers because the 35% tax bracket currently applies to taxable income above $379,150,” said The Associated Press.

 There are numerous other giveaways to the biggest fatcats, which will be paid for by slashing social security and otherwise fleecing the elderly.

Robert Borsage notes that the proposed debt agreement:

Would add to unemployment in the short term, increase Gilded Age inequality, leave seniors more vulnerable, and shackle any possibility of rebuilding America. It puts the burden of deficit reduction on the elderly, the poor and the vulnerable, endangers jobs and growth, and lards even more tax breaks on the rich.

The Nation writes:

The [proposed debt ceiling agreement] proposal shafts those who have already borne so much of the burden of the financial crisis and its fallout—lost pensions, lost homes, lost wealth—while the very people who brought the economy to its knees through their recklessness make out like banksters and bandits. In fact, at a time of inequality akin to that of the Gilded Age, the top marginal tax rate would be lowered—lowered!—to 23 to 29 percent, while there would be massive cuts in Social Security, Medicare and Medicaid.Dean Baker, co-director of the Center for Economic and Policy Research (CEPR),notes that JP Morgan CEO Jamie Dimon and Goldman Sachs CEO Lloyd Blankfein would save approximately $2 million to $3 million on their tax bills. But in twenty years, a 90-year-old living on a Social Security income of $15,000 would lose more than $1,200 a year in benefits.

How’s that a “bargain” for this nation and who exactly finds it “grand”?

All along, the alternatives that reflect the popular idea of shared sacrifice have been marginalized—by the political establishment (and, tragically, the Democratic leadership) and the corporate media.

***

This is not about left and right. This is about right and wrong. And that’s something the political and media establishment just don’t seem to get. 

And Senator Sanders points out today that there is no shared sacrifice by the top 1%, but that the government may take from the poor and middle class in numerous ways for years to come:

There will be major cuts in Social Security … Medicare … Medicaid and other health care programs … education … nutrition program[s] … environmental protection.
***
There are very, very clear provisions making sure that we are going to make massive cuts in programs for working families, for the elderly, for the children. Those cuts are written in black and white. What about the revenue? Well, it’s kind of vague. The projection is that we would rise over a 10-year period $100 billion in revenue. Where is that going to come? Is it necessarily going to come from the wealthiest people in this economy? Is it going to come from large corporations who are enjoying huge tax breaks? That is not clear at all. I want middle-class families to understand that when we talk about increased revenues, do you know where that comes from? It may come from cutbacks in the home mortgage interest deduction program, which is so very important to millions and millions of families. It may mean that if you have a health care program today, that health care program may be taxed. That’s a way to raise revenue. It may be that there will be increased taxes on your retirement programs, your I.R.A.’s, your 401(k)’s.

 Note: As usual, it’s not liberal-versus-conservative, but the top 1% versus the rest of the country, and you versus the giant corporations. See this, this, this, this, this, this, this, this, this, this and this.

And – no – the top 1% are not using the money to create more jobs. It’s being used for prostitutes and other hanky panky.

U.S. Debt Political Theater Diverts Attention While Americans’ Wealth Is Stolen

Oldspeak:“There is a massive transfer of wealth from the American people to the hands of a few and it’s going on right now as America’s eyes are misdirected to the political theater of these histrionic debt negotiations, threats to shut down the government, and willingness to make the most vulnerable Americans pay dearly for debts they did not create”-Dennis Kucinich

By Dennis Kucinich @ Common Dreams:

The rancorous debate over the debt belies a fundamental truth of our economy — that it is run for the few at the expense of the many, that our entire government has been turned into a machine which takes the wealth of a mass of Americans and accelerates it into the hands of the few. Let me give you some examples.

Take war. War takes the money from the American people and puts it into the hands of arms manufacturers, war profiteers, and private armies. The war in Iraq, based on lies: $3 trillion will be the cost of that war. The war in Afghanistan; based on a misreading of history; half a trillion dollars in expenses already. The war against Libya will be $1 billion by September.

Fifty percent of our discretionary spending goes for the Pentagon. A massive transfer of wealth into the hands of a few while the American people lack sufficient jobs, health care, housing, retirement security.

Our energy policies take the wealth from the American people and put it into the hands of the oil companies. We could be looking at $150 a barrel for oil in the near future.

Our environmental policy takes the wealth of the people — clean air, clean water — and puts it in the hands of the polluters. It’s a transfer of wealth, not only from the present but from future generations as our environment is ruined.

Insurance companies, what do they do? They take the wealth from the American people in terms of what they charge people for health insurance and they put it into the hands of the few.

We have to realize what this country’s economy has become. Our monetary policy, through the Federal Reserve Act of 1913, privatized the money supply, gathers the wealth, puts it in the hands of the few while the Federal Reserve can create money out of nothing, give it to banks to park at the Fed while our small businesses are starving for capital.

Mark my words — Wall Street cashes in whether we have a default or not. And the same type of thinking that created billions in bailouts for Wall Street and more than $1 trillion in giveaways by the Federal Reserve today leaves 26 million Americans either underemployed or unemployed. And nine out of ten Americans over the age of 65 are facing cuts in their Social Security in order to pay for a debt which grew from tax cuts for the rich and for endless wars.

There is a massive transfer of wealth from the American people to the hands of a few and it’s going on right now as America’s eyes are misdirected to the political theater of these histrionic debt negotiations, threats to shut down the government, and willingness to make the most Americans pay dearly for debts they did not create.

These are symptoms of a government which has lost its way, and they are a challenge to the legitimacy of the two-party system.

Dennis Kucinich is US Congressman from Ohio and a former presidential candidate in the United States.

Trickle-Down Cruelty And The Politics Of Austerity

In Philadelphia, budget cuts have led to fire departments closing on a daily rotating basis, delaying response time. (Photo: Sam Blackman)

Oldspeak:”Austerity porn functions within the current political climate to promote deficits in order to return the United States to the Gilded Age policies of the 1920s. What should be clear is that the politics of austerity is not about rethinking priorities to benefit the public good. Instead, it has become part of a discourse of shame, one that has little to do with using indignation to imagine a better world. On the contrary, shame is now used to wage a war on the poor rather than poverty, on young people rather than those economic and political forces that undermine their future and on those considered other rather than on the underlying structures and ideologies of various forms of state and individual racism.” Henry A. Giroux The fear-mongering being propagated 24-7 on your corporate news networks is designed to prepare the population for the in progress implementation of shock doctrine based “Austeriy Measures” and “Structural Adjustment Policies” which facilitate privatization of all things public to the great benefit of the Financial-Industrial Complex, and a complete full functioning corptalitarian state. For their invaluable help in selling the U.S. out from under its people, the corptalitarian elites, ensure continued control by spending untold millions  for their minions in politricks with (thanks to Citizens United vs. F.E.C.) reelection campaigns and other rarely disclosed perks and advantages.

 

By Henry A. Giroux @ Truthout:

There is a certain irony in the fact that the party of debt has now become a flock of austerity hawks. This is the same Republican Party that gave us two wars, an increase in military spending and whopping loss of tax revenues due to tax breaks for mega-rich corporations and the wealthy Americans. Nobel Prize-winning economist Paul Krugman raises the question of what happened to the federal government budget surplus of 2000 and insists that the answer is, “three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.”(1) All told, President George W. Bush added $4 trillion to the national debt – and there was no debate about raising the debt ceiling at that time, which was raised seven times.(2) What is often missed in these discussions is that deficits have always been the objectives of hard right-wing Republicans and some equally conservative democrats who see them as an excuse for cutting social benefits and generating massive amounts of inequality that benefit the rich.(3) Michael Tomasky further legitimizes this claim with the charge that “the Republican Party cares nothing about the public debt. In fact, it wants more … It is the party of debt. It is the party of deficits. It is the party of recession. It is the party of unemployment. It is the party of inequality. And it is the party of middle-class stagnation and slippage…. They scream about crisis because what they desire is to use the crisis as an excuse to do things to this country that the hard right has wanted to do for 30 years.”(4) What Tomasky leaves out is that the current crop of right-wing Republicans controlling the shots in Washington and various states appear to revel in “a deep urge to inflict pain.”(5) How else to explain that during recent debt negotiations between leaders of both parties, the Republican leadership walked out as soon as the Democrats suggested the need to talk about not only cutting programs that benefit the poor, but also limiting tax breaks for corporate jets, hedge-fund managers, the obscenely wealthy and corporations.

According to the children of Ayn Rand, Milton Friedman and Ronald Reagan, “free-market economics,” individual interests and needs trumped social needs; brilliant individuals were more qualified to run government and largely blossomed within institutions committed to making money; freedom was largely defined as freedom from regulation; and any government that passed policies to provide social protections, regulate corporations, or lessen inequality were either grossly authoritarian or unwise. In this scenario, especially under the administration of Ronald Reagan, government was declared the enemy and the market was turned into a form of casino capitalism as a series of policies were inaugurated in which there was a sustained assault on the working and middle classes through “the busting of unions, the export of millions of decent-paying jobs and the transfer of enormous wealth to the already rich. The tax rates for the wealthiest were slashed about in half. Greed was incentivized.”(6) Accordingly, the ideologues of casino capitalism believed that as the rich and corporations paid less taxes and inequality was left unchecked, society as a whole would benefit, wealth would trickle down. Of course, what has actually happened in the last decade with the unchecked, Wild West, Bush-type casino capitalism is that wages for workers have stagnated; the top 1 percent of the population has gotten fabulously wealthy; health care has deteriorated for the vast majority of the population; schools have been turned into test centers; the nation’s infrastructure has been allowed to rot; and, more recently, millions of people have lost their jobs, homes, and hope. Moreover, two-thirds of US corporations paid no taxes. For example, Bank of America has not paid any taxes for the last two years.(7) At the same time, increases in inequality in the United States dwarf the rest of the world, while increases in executive pay undercuts any claim we might have on democracy.

The working and middle classes have been condemned to a new form of neoliberal tyranny “in which there can be only one kind of value, market value; one kind of success, profit; one kind of existence, commodities; and one kind of social relationship, markets.”(8) The global recession has intensified the war on the American public, as professionals and politicians who make up a global business class now displace democracy with the call for austerity and, in doing so, produce a hidden order of politics in which the “demand for the people’s austerity hides processes of the uneven distribution of risk and vulnerability.”(9) Under the guise of austerity, politically motivated attacks are now being waged on young people, low-skilled workers, the poor, African-Americans and the elderly. On the other hand, austerity measures against the rich are almost nonexistent. Richard D. Wolff provides the details in looking at what he calls “some alternative ‘reasonable’ kinds of austerity.” He writes:

Serious efforts to collect income taxes from US-based multinational corporations, especially those who use internal pricing mechanisms to escape US taxation, would generate vast new federal revenues. The same applies to wealthy individuals. The US has no federal property tax on holdings of stocks, bonds and cash accounts (states and localities levy no such property taxes either). If the federal government levied a 1 per cent tax on assets between $100,000 to 499,000 and 1.5 per cent on assets above $500,000, that would raise much new federal revenue (everyone’s first $100,000 could be exempted just as the existing US income tax exempts the first few thousands of dollars of individual incomes). Exiting the Iraq and Afghanistan disasters would do likewise. Ending tax exemptions for super-rich private educational institutions (Harvard, Yale, etc.) and for religious institutions (church-goers would then need to pay the costs of their churches) would be among the many other such alternative “reasonable” austerity measures. Comparable alternatives apply – and are being struggled over – in other countries.(10)

One side effect of this blatant, if not corrupt mode of austerity is what I call the politics of trickle-down cruelty. This is evident in policies in which austerity-based cuts are used to reward corporations and billionaires with tax breaks, while simultaneously exploiting the budget crisis in order to eliminate protections provided by the welfare state. The resulting reductions in state spending have drastically cut many basic social services so as to endanger the lives of many young people and others at the margins of society structured in massive financial inequality. For example, in Philadelphia “fire departments have been closed on a daily rotating basis” delaying response time. One unfortunate and possibly preventable consequence occurred “when two children were pulled from a burning row home too little too late…. Mike Kane of the Philadelphia Firefighters Union Local 22 said there was no way to tell whether the children would have lived had the fire station been open, but if not for the brownouts, ‘maybe them kids would have had a shot.’”(11) In Arizona, Gov. Jan Brewer signed a bill that effectively denied health care to over 47,000 low-income children.(12) More recently, a 59-year-old man in Gastonia, North Carolina, robbed a bank for $1 so he could get health care in America. He handed the teller a note asking for only a dollar and medical attention. He sat in a chair in the bank waiting for the police to arrive. As he pointed out to the press, he had lost his job of 17 years as a Coca Cola deliveryman and ended up taking a part-time position in a convenience store. But the work was backbreaking, compounded by the fact that he had arthritis, carpal tunnel syndrome and a painful lump on his chest. With no health insurance, he decided that his best option was to rob a bank and get health care in prison.(13) We also hear about the return of debtors’ prisons, which were abolished in the US in the 19th century. The Minneapolis Star Tribune reports that “people are routinely being thrown in jail for failing to pay debts” and that in some cases “people stay in jail until they raise minimum payment. In January [2010] a judge sentenced a Kenney, Ill., man to ‘indefinite incarceration’ until he came up with $300 toward a lumber yard debt.”(14) Joy Uhlmeyer, a 57-year-old patient care advocate spent 16 hours in jail because she missed a court hearing over a credit card debt.(15) Surely, it is hard to miss the irony of putting someone in jail for not paying a small debt while, as Matt Taibbi has pointed out, law enforcement under the Obama regime has not convicted a “single executive who ran the companies that cooked up and cashed in on the phony financial boom – and industry wide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities – has ever been convicted.”(16) These financial crooks hid billions from investors and ripped off the American people so as to cause untold suffering and hardship. And, yet, law enforcement does not consider them liable for the crimes they committed, and the Obama administration rewards them with a weak regulatory laws and an open season on obscene bonuses. Such stories serve as flashpoints about a society. And as Zygmunt Bauman points out, even though they may tell us little about deeper causal connections, they “prod the imagination. And sound an alert. They appeal to the conscience as well as to survival instincts…. [They also show] that the ideal that one can ‘do it alone’ is a fatal mistake which defies the purpose of self-concern and self-care.”(17)

All of these examples point to the collateral damage invoked by a casino capitalism that now takes austerity as its clarion call to gut social protections and weaken the rights of labor and unions. Moreover, austerity in this instance is designed to reward the fabulously wealthy while imposing in some cases poverty, suffering and severe hardship on those marginalized by race, disability and class. For many people, these examples I have noted above suggest that the writing is on the wall regarding their future and the message is dark indeed. Complaints by right-wing politicians and conservative pundits about the growing federal deficit and their call for a harsh politics of austerity are both hypocritical and disingenuous. Hypocritical, given their support for massive tax breaks for the rich, and disingenuous, given their blatantly transparent goal of implementing a market-based agenda that imposes the burden of decreased government services and benefits on the backs of the poor, young people, the unemployed, the working class and middle-class individuals and families. As Wolff’s quote suggested above, in this transparent scenario, austerity measures apply to the poor, but not to the rich, who continue to thrive under polices that produce government bailouts, support deficit-producing wars, tax breaks for the wealthy and deregulation policies that benefit powerful corporations. The conservative and right-wing politicians and policy wonks calling for shared sacrifices made in the name of balancing budgets have no interest in promoting justice, equality and the public good. Their policies maximize self-interest, support a culture of organized irresponsibility, and expand the pathologies of inequality, military spending and poverty. Austerity porn functions within the current political climate to promote deficits in order to return the United States to the Gilded Age policies of the 1920s.(18)

This conservative assault is not just about the enactment of reactionary government policies, it is also about the proliferation of a culture of cruelty whose collateral damage is harsh and brutalizing, especially for young people, the unemployed, the elderly, the poor, and a number of other individuals and groups now bearing the burden of worst economic recession since the 1920s. Cruelty in this instance is not meant to simply reference the character flaws of the rich or to appeal to a form of left moralism, but to register the effects especially since the 1970s of how the institutions of capital, wealth and power merge not only to generate vast modes of inequality, but also to inflict immense amounts of pain and suffering upon the lives of the poor, working people, the middle class, the elderly, immigrants and young people.(19) What should be clear is that the politics of austerity is not about rethinking priorities to benefit the public good. Instead, it has become part of a discourse of shame, one that has little to do with using indignation to imagine a better world. On the contrary, shame is now used to wage a war on the poor rather than poverty, on young people rather than those economic and political forces that undermine their future and on those considered other rather than on the underlying structures and ideologies of various forms of state and individual racism.

As the welfare state is dismantled, it is being replaced by the harsh realities of the punishing state, as social problems are increasingly criminalized and social protections are either eliminated or fatally weakened. The harsh values of this new social order can be seen in the increasing incarceration of young people, the modeling of public schools after prisons, harsh anti-immigration laws and state policies that bail out investment bankers but leave the middle and working classes in a state of poverty, despair and insecurity. For poor youth of color and adults, the prison-industrial complex is particularly lethal. Michelle Alexander has pointed out that there are more African-American men under the control of the criminal justice system than were enslaved in 1850 and that, because of the war on drugs, four out of five black youth in some communities can expect to be either in prison or “caught up in the criminal justice system at some point in their lives.”(20) In states such as Georgia, Alabama and South Carolina, new immigration laws “make it impossible for people without papers to live without fear. They give new powers to local police untrained in immigration law. They force businesses to purge work forces and schools to check students’ immigration status. And they greatly increase the danger of unreasonable searches, false arrests, racial profiling, and other abuses, not just against immigrants, but anyone who may look like some officer’s idea of an illegal immigrant…. The laws also make it illegal to give a ride to the undocumented, so a son could land in jail for driving his mother to the supermarket, or a church volunteer for ferrying families to a soup kitchen.”(21) The Obama administration fares no better on punishing immigrants. In fact, its stance on immigration suggests something about its own misplaced priorities in that it refuses to prosecute Wall Street crooks and CIA thugs who tortured men, women and children in Iraq. And, yet, “it has used its criminal justice system and law enforcement apparatus to deport 393,000 people, at a cost of $5 billion.”(22) White-collar crooks produce global financial havoc because of their crooked deals and go scot-free while illegal immigrants looking for work that most Americans will not perform are put in jail.

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The trickle-down cruelty of the anti-tax, anti-public and anti-government extremists is on full display in Minnesota where Republicans have refused Gov. Mark Dayton’s call for a tax on “the 7,700 Minnesotans who make more than $1 million a year” in order to raise revenue to address the state’s budget deficit. Rather than tax the rich, Republican legislators have called for slashing “billions from … education, health care and safety programs” and, in order to get their way, have literally shut down state government.(23) The result is that 22,000 workers have been laid off, child care subsidies have dried up and essential services for the poor have been suspended, all so taxes on the rich will not be raised. The mean-spirited Gov. of New Jersey, Chris Christie, has followed the same playbook and has used his veto to eliminate $1.3 billion in spending, most of it for schools, Medicaid and aid to cities. But he also cut much smaller items favored by Democrats, like programs to help abused children and provide legal aid to the poor.

The culture of cruelty, illegal legalities and political illiteracy can also be seen in the practice of socialism for the rich. This is a practice in which government supports for the poor, unemployed, sick and elderly are derided because they either contribute to an increase in the growing deficit or they undermine the market-driven notion of individual responsibility. And yet, the same critics defend without irony government support for the ultra-wealthy, the bankers, the permanent war economy, or any number of subsidies for corporations as essential to the life of the nation, which is simply an argument that benefits the rich and powerful and legitimizes the deregulated Wild West of casino capitalism. As public services are eliminated, health insurance cut for over a million kids and teachers and public workers are laid off, corporate profits have soared and Wall Street executives are having a bonus year. The average worker in the United States made $39,000 in 2010 and got a 0.5 percent pay increase, which amounted to $40,100. According to The New York Times, “the median pay for top executives at 200 big companies last year was $10.8 million. That works out to a 23 percent gain from 2009.”(24)

The moral obscenity that characterizes such salaries becomes clear at a time when 14 million people are looking for work, millions are losing their homes and thousands of families are trying to survive on food stamps. How can any society that calls itself democratic and egalitarian justify salaries that are so grotesquely high that it is difficult to imagine how such wealth can be spent? For example, how can anyone justify paying CEOs such as Philippe P. Dauman, the head of Viacom, $85 million in 2010? Or for that matter, the $32.9 million paid to Michael White of DirecTV?(25) The hidden order of politics and culture of cruelty comes into play when it is revealed that Mark G. Parker, the CEO of Nike, got $13.1 million in 2010 and cut 1,750 jobs, while Peter L. Lynch, the CEO of Winn-Dixie, got $5.3 million and cut 2000 jobs. One of the worst offenders is Michael Duke, the CEO of Wal-Mart, who got $18.7 million in pay in 2010 while eliminating 13,000 jobs.(26) Even more alarming is that some of these bonuses paid to risk-taking bankers were paid for, in part, with taxpayer’s money. For example, Benjamin M. Friedman writing in The New York Review of Books claims that this is precisely what happened in the case of the bonuses paid to Citigroup’s executives. He writes:

Despite the destruction of so much of the stockholders’ value and notwithstanding the enormous taxpayer assistance, Citi’s management announced in the spring of 2009 that it was paying out $5.3 billion on bonuses for 2008, including payments of more than $5 million apiece to forty-four employees of the bank. Because of the $45 billion investment of AARP and TIP money, by 2009 the US government was Citigroups’s largest shareowner. Hence the issue these lavish bonuses raised was not merely a private firm’s right to set its employees’ compensation. What Citi’s management was giving away was, in significant part, the taxpayers’ money. Yet the Obama administration voiced no objection, at least not publicly.(27)

What is daunting about all of these figures beyond being partly subsidized by taxpayer money and the human costs in hardship and suffering is that executive pay raises not only deepen inequality in the United States, lay off workers in order to deepen the pockets of rich CEOs, but they also concentrate enormous amounts of political, economic and social power in the hands of a few individuals and corporations. In the end, such practices contribute to massive amounts of suffering on the part of millions of Americans; they corrupt politics and they undermine the promise of a viable democracy. Frank Rich expands this critique in arguing, “As good times roar back for corporate America, it’s bad enough that CEOs are collectively sitting on some $1.9 trillion? America’s total expenditure on the Iraq and Afghanistan wars over a decade has been $1.3 trillion. But what’s most galling is how many of these executives are sore winners, crying all the way to palm each while raking in record profits and paying some of the lowest tax rates over the past 50 years.”(28)

Of course, this form of economic Darwinism is not enforced simply through the use of a government in the hands of right-wing corporate extremists, a conservative Supreme Court or reliance upon the police and other repressive apparatuses; it is also endlessly reproduced through the cultural apparatuses of the new and old media, public and higher education, as well as through the thousands of messages and narratives we are exposed to daily in multiple commercial spheres. In this discourse, the economic order is either sanctioned by God or exists simply as an extension of nature. In other words, the tyranny and suffering that is produced through the neoliberal theater of cruelty is coded as unquestionable, as unmovable as an urban skyscraper. Long-term investments are now replaced by short-term gains and profits, while at the same time, compassion is viewed as a weakness and democratic public values are scorned because they subordinate market considerations to the common good. Morality in this instance becomes painless, stripped of any obligations to the other. As the language of privatization, deregulation and commodification replaces the discourse of the public good, all things public, including public schools, libraries and public services, are viewed either as a drain on the market or as a pathology. In addition, inequality in wealth and income expands, spreading like a toxin through everyday life, poisoning democracy and relegating more and more individuals to a growing army of disposable human waste.(29)
But there is more at stake than an increase in the hard currency of human suffering and the theater of trickle-down cruelty; there are also disturbing signs that US society is moving toward an authoritarian state largely controlled by corporations and a grotesquely irresponsible financial elite.(30) A market-driven society is not synonymous with democracy and the privileges of the rich and the corporate elite do more to crush democracy than uplift society as a whole. Any society that allows the market to constitute the axis and framing mechanisms for all social interactions has not just lost its sense of morality and responsibility; it is given up its claim on any vestige of a democratic future. Market fundamentalism along with its structure of extreme inequality and machinery of cruelty has proven to be a death sentence on democracy. The time has come to not only demystify the authoritarianism inherent in casino capitalism and the political and institutions that mimic its policies, practices and values, but to rethink not only what a real democracy might look like, but also what it will take to actually organize to make it happen.

Footnotes:

1. Paul Krugman, “The Unwisdom of Elites,” The New York Times, (May 8, 2011) p. A23, online here.

2. Paul Krugman, “To the Limit,” The New York Times (June 30, 2011), online here.

3. James Crotty, “High Deficits were the Objective of Right Economics,” The Real News, (May 10, 2011), online here.

4. Michael Tomasky, “Why The GOP Loves the Debt,” The Daily Beast (July 1, 2011), online here.

5. Paul Krugman, “The Urge to Purge,” New York Times (June 27, 2011), onlinehere.

6. Robert Parry, “If Ayn Rand and the Free Market fetishists were Right, We’d be Living in the Golden Age – Does This Look Like the Golden Age to You?” Alternet (June 28, 2011), online here.

7. Allison Kilkenny, “2/3 of US Corporations Pay Zero Federal Taxes,” AlterNet (March 27, 2011), online here.

8. Lawrence Grossberg, “Caught in the Crossfire: Kids, Politics and America’s Future” (Boulder, CO: Paradigm Publishers, 2005), 264.

9. Gesa Helms, Marina Vishmidt and Lauren Berlant, “Affect and the Politics of Austerity: An Interview Exchange with Lauren Berlant,” Variant 39/40, Winter 2010, online here.

10. Richard D. Wolff, “Austerity: Why and for Whom?” In These Times, (July 15, 2010), online here.

11. Rania Khalek, “Death by Budget Cut: Why Conservatives and Some Dems Have Blood on Their Hands,” AlterNet (June 13, 2011), online here.

12. Ibid.

13. Diane Turbyfill, “Bank Robber Planned Crime and Punishment,” Gaston Gazette (June 16, 2011).

14. Chris Serres and Glenn Howatt, “In Jail for Being in Debt,” StarTribune.com (June 9, 2010), online here.

15. Ibid.

16. Matt Taibbi, “Why Isn’t Wall Street in Jail?” Rolling Stone (February 16, 2011). Online here.

17. Zygmunt Bauman, “Collateral Damage: Social Inequalities in a Global Age” (Cambridge, Polity Press, 20110), p. 39.

18. James Crotty, “High Deficits were the Objective of Right Economics,” The Real News, (May 10, 2011), online here.

19. This issue is taken up in great detail in Zygmunt Bauman, “Collateral Damage: Social Inequalities n a Global Age” (London: Polity Press, 2011).

20. Cited in Dick Price, “More Black Men Now in Prison System Then Were Enslaved,” LA Progressive, (March 31, 2011), online here. See also Michelle Alexander, “The New Jim Crow: Mass Incarceration in the Age of Colorblindness” (New York: New Press, 2010).

21. Editorial, “It Gets Even Worse,” The New York Times (July 3, 2011), p. A16.

22. Matt Taibbi, “Why Isn’t Wall Street in Jail?” Rolling Stone (February 16, 2011), online here.

23. Editorial, “Antitax Extremism in Minnesota,” The New York Times (July 6, 2011), p. A18.

24. Pradnya Joshi, “We knew They Got Raises. But This?” The New York Times (July 2, 2011), p. BU1

25. Ibid.

26. Josh Harkinson, “10 CEOs Who Got Rich by Squeezing Workers,” MotherJones (May 12, 2011), online here.

27. Benjamin M. Friedman, “Cassandra Among the Banksters,” The New York Review of Books (June 23, 201), online here.

28. Frank Rich, “Obama’s Original Sin,” New York (July 3, 2011), online here.

29. On the pernicious effects of inequality in US society, see Tony Judt, “Ill Fares the Land” (New York: Penguin Press, 2010). Also see, Göran Therborn, “The Killing Fields of Inequality,” Open Democracy, April 6, 2009, online here.

30. There are too many books on this issue to cite. Some of the more notable are Sheldon S. Wolin, “Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism” (Princeton, NJ: Princeton University Press, 2008); Henry A. Giroux, “Against the Terror of Neoliberalism” (Boulder, CO: Paradigm Publishers, 2008); Chris Hedges, “Death of the Liberal Class” (Toronto: Knopf Canada, 2010); and Jacob S. Hacker and Paul Pierson, “Winner-Take-All Politics” (New York: Simon and Schuster, 2010).

 

 

Paving The Road To A Hungrier, Unhealthier, And Less-Educated Nation

Oldspeak:” More Change I Can’t Believe In. ‘Austerity Meaures’ ” have come home too roost. The same harsh and counter-productive cuts to education, social programs, public sector institutions/services/workers/jobs, we’ve seen undertaken in foreign countries via “Structural Adjustment Programs” implemented by U.S. backed “lending institutions” like the IMF, The World Bank, and USAID, that usually hit the poorest and most vulnerable the hardest, are being proposed by politricians right here in the U.S. of A. When President Obama starts proposing cuts to community organizing in poor neighborhoods, it tells you all you need to know. The rich matter most, the poor and everyone in between matter least. Witness the sad fact that income inequality in America is at Great Depression Era levels. The number children living in poverty is at an all time high. if it’s true that “A nation’s greatness is measured by how it treats its weakest members.” , America’s greatness doesn’t amount to very much atal. Meanwhile, the financial-military-industrial complex is doing just GRAND!

By Deborah Weinstein @ Other Words:

The number of poor children had already grown by 2.1 million in 2009 over pre-recession levels, with continuing high joblessness among parents raising concerns that poverty will continue to worsen for some time. Since kids who spend more than half their childhood in poverty earn on average 39 percent less than median income as adults, we can expect lasting costs that will hurt the nation’s future economic growth.

And yet, a majority of House lawmakers want to narrow the deficit by making things worse for today’s kids.

If House Budget Committee Chairman Paul Ryan’s proposal takes effect, or the even more extreme House Republican Study Committee’s budget plan prevails, the nation’s economic future will inevitably get bleaker. Those proposals would reduce the food assistance, medical care, and education available to poor children. When children don’t get adequate nutrition, research shows that they are more likely to suffer illnesses and hospitalizations. Poor health can trigger developmental problems that take a toll on school performance.

The House passed Ryan’s proposal in April along party lines. Not one Democrat supported it and all but four Republicans voted in favor of it. In the Senate, five Republicans joined every member of the chamber’s Democratic majority in rejecting it.

The House budget, best known for Ryan’s proposal to radically change and mostly privatize Medicare, would also reduce spending on food stamps by 20 percent over the next decade. If such a deep cut were implemented through caseload reductions, it would mean 8 million fewer people receiving food stamps, according to the Center on Budget and Policy Priorities. If instead the cuts took effect by reducing the amount of assistance each family receives, a family of four would lose $147 a month.

Since about half of food stamp recipients are children, such cuts would hurt the chances that those kids will graduate from high school or college, increasing the likelihood of lifelong poverty. The Republican Study Committee’s cuts are far deeper. They would cut food stamps in half over 10 years.

These proposals would have similarly harsh impacts on medical care. The House budget cuts, if implemented solely by reducing eligibility, would deny Medicaid to nearly half the people who rely on it now, according to the Kaiser Family Foundation. More likely, there would be some combination of denying people altogether and reducing the care or increasing the costs for those who remain eligible. Either way, the impact would be severe. Again, the Republican Study Committee proposal would inflict even deeper cuts. That proposal calls for halving Medicaid spending by 2021.

How would these plans handle education spending? They’d cut it. We know that the House budget would cut education by nearly one-fifth next year and by a quarter by the end of the decade, with 1.7 million fewer low-income college students qualifying for Pell Grant scholarships. U.S. military spending, which nearly totals the combined military expenditures of every other nation on earth, wouldn’t be cut at all. The Republican Study Committee doesn’t spell out most of its education cuts, but it would cut all appropriations except for military spending by about 70 percent by 2021. Education funding would be slashed from preschool through college.

The GOP deficit reduction plans rely solely on massive domestic spending cuts that would heap more trouble on the recession generation’s already grim prospects. That’s counterproductive. Slower economic growth will cut tax revenue and make it harder to nix the government’s persistent budget deficit problem. Balanced-budget amendments and other proposals to place drastic limits on total federal spending would result in cuts at least as deep as the Ryan and Republican Study Committee budget plans.

There’s a better way. We can take a more responsible and effective approach that would gradually narrow the deficit and spare the programs that low-income Americans rely on through a combination of fair revenue increases and spending cuts that don’t exempt the military. Otherwise, we’ll wind up denying opportunities for a middle-class life to millions of our children.

Deborah Weinstein is the executive director of the Coalition on Human Needs, an alliance of national organizations working together to promote public policies that address the needs of low-income and other vulnerable populations. www.chn.org

For Sale: The Desperate States Of America

Oldspeak:” The U.S. economy is being restructured in a way that will largely benefit wealthy elites and be detrimental to the rest. Everything public: Government, Schools, Prisons, Energy, Services, Parks, Lands, Housing Health Care, etc. if the free-market ideologues in government have their way, is to be privatized. The usual result of  privatization: significant increases in costs to customers; reduction in quality of and access to service. When dealing with organizations whose prime directives are to Internalize and maximize ever-increasing profit while externalizing and minimizing as much cost as possible this is the only logical outcome. We’ve seen it played out time and time again in the gutting of America. “The core tenets of free market fundamentalism —  privatization, deregulation, and cuts to government services — has laid the foundation for the economic breakdown we are witnessing today.  And this recession-induced breakdown is being used by professional disaster capitalists to warrant more privatization, deregulation, and cuts to government services until there is nothing left.  It is clear that the continued auctioning off of pieces of the state to large corporations will result in a total loss of democratic control to the disaster capitalists who are profiting immensely from their orchestrated crisis.” -Rania Khalek.  Meanwhile, the “Defense” budget continues to grow. Why is our “civilization” predicated on “owning” everything, hoarding “wealth” and “power”? Why are a few deranged people, Bohemian Grove Members willing to sacrifice our entire planet for their own personal gain?

By Rania Khalek @ Common Dreams: 

While we have been frantically playing defense against relentless assaults on multiple fronts, from anti-union legislation to draconian anti-choice laws to the attempted privatization of Medicare, the selling off of public assets to the private sector has received little attention.

As states face a budget shortfall of $125 billion dollars for fiscal year 2012, leaders are searching for creative ways to fill budget gaps, while refusing to consider the one legitimate solution: forcing tax-dodging corporations and the rich to pay their fair share in taxes.  Rather than upset the moneyed interests who bought their seats in office, politicians of all stripes prefer to cut pensions, close schools, slash child nutrition programs, and most importantly privatize, privatize, privatize!

In 2008, Chicago Mayor Richard Daley auctioned off the city’s 36,000 parking meters to a Morgan-Stanley lead partnership, for a lump sum of $1.15 billion.  According to Bloomberg, Chicago drivers will pay Morgan Stanley at least $11.6 billion to park at city meters over the next 75 years, 10 times what the system was sold for.  The Mayor used millions from the deal to help balance the budget, but since then, Morgan Stanley has raised parking fees 42%.  It now plans on stuffing more cars into fewer metered spaces by getting rid of marking lines, raising the number of metered slots and expanding the hours that require fees.  Chicago gave up billions of dollars in revenue for a short-term fix and now, if the city faces another fiscal crisis, it will be left with an asset that generates revenue for Morgan Stanley.  Despite the controversy in Chicago, the Associated Press reports that New York is exploring private options for its parking spaces as well.

Meanwhile, Rep. Dennis Ross (R-FL), a member of the Tea Party Caucus, has suggested that one way to help close the nation’s budget deficit is to “start liquidating” public lands in Utah by privatizing large parts of the state, 70 percent of which is owned by the federal government.  Soon after, Utah Governor Gary Herbert hopped on board, agreeing that Ross’s idea was ”worth exploring.”  He even went so far as to claim that the land would be better in private hands because private owners maintained Indian artifacts and burial grounds better.  Apparently his position is quite popular, since it has been embraced by Senators Mike Lee (R-UT) and John McCain (R-AZ), who proposed a bill which would sell off land in Utah and other western states.

The most insidious privatization scheme so far this year was in Wisconsin, the center of the state budget battles.  A provision in Republican Governor Scott Walker’s budget repair bill would have empowered politicians to sell any state-owned heating, cooling, or power plant, including those located in prisons and the University of Wisconsin campuses, to anyone for any price at any time, without public approval or a call for bids.  Although the provision was ultimately removed from the budget bill just before it passed, it is expected to be taken up again later this year.

In an effort to offset an $8 billion budget deficit, Ohio Republican Governor John Kasich has proposed privatizing five prisons, a sale expected to bring in an estimated $200 million.  Florida’s GOP-controlled Legislature is set to require the state to privatize prisons in South Florida, home to one-fifth of the statewide inmate population of 101,000.  Louisiana Republican Governor Bobby Jindal plans to sell three state prisons to private operators.  Similar bills have sprung up in other states, nevermind that evidence showing that private prisons actually save any money is seriously lacking.

In more desperate and bizarre attempts to fill in budget gaps the City Council in Naperville, IL is considering giving corporations exclusive rights to plaster their logos on city property.  One proposed municipal sponsorship deal would allow Kentucky Fried Chicken to repair potholes in exchange for stamping the fresh asphalt with the chicken chain’s logo.

It would be foolish to assume that the push for privatization is isolated to the GOP or the states.  The “liberal” Obama administration has proposed legislation that would establish a presidentially appointed, seven-member Civilian Property Realignment Board, tasked with evaluating excess federal properties.  The surplus includes 12,000 buildings, pieces of land and other property nationwide that the federal government wants to get rid of.

According to McClatchy, the White House claims it would see savings of as much as $15 billion by no longer having to maintain or pay for utilities at some of the underused or unused facilities.  The government in 2009 reported spending $134 million to maintain buildings that have been declared excess.  It costs an estimated $1.3 billion a year to maintain federal buildings that aren’t yet declared surplus but that go underused.  However, it remains unclear if and how this strategy would result in a significant enough amount of savings to make a dent in a trillion dollar deficit.

Ironically, the list includes land where the dorms in Daniel Boone National Forest are located, which once served as a camp for workers from the Civilian Conservation Corps, a Great Depression work program.  Rather than invest in jobs programs to put the unemployed back to work like FDR did during the Great Depression — an idea that the Obama administration has all but abandoned — the President has instead chosen the path of austerity and privatization, tactics that have historically been detrimental to society.

It’s no secret that corporate behemoths, backed by their free-market think tanks and foundations have long dreamed of privatizing everything public.  Thus far, they have been largely successful in hollowing out the defense department by outsourcing computer, intelligence, and even combat operations to for-profit companies like Lockheed Martin, Halliburton, and Blackwater, to name a few.  We now know that this was done intentionally, strategically planned by the likes of Donald Rumsfeld and Dick Cheney, who profited magnificently as a result.  The terrorist attacks on 9-11 presented the Bush administration with the opportunity to accelerate the outsourcing of war.

In the Shock Doctrine, Naomi Klein thoroughly documents how wealthy elites often use times of crisis and chaos to impose unpopular policies that restructure economies and political systems to further advance their interests.  She calls these orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities, “disaster capitalism.”

While catastrophic events, such as natural disasters or terrorist attacks, are difficult to predict, economic disasters are not.  With this in mind, it’s difficult to deny that the economic crisis has been somewhat manufactured to serve as a pretext for draconian cuts into social programs that the corporate state has long been eyeing.  On it’s face, this theory seems conspiratorial, however a brief review of recent history demonstrates a trend of intentional crisis generation.

Paul Krugman understood this concept in 2003, during the implementation of the Bush era tax cuts for the wealthy, when he wrote the following:

“the gimmicks used to make an $800-billion-plus tax cut carry an official price tag of only $320 billion are a joke, yet the cost without the gimmicks is so large that the nation can’t possibly afford it while keeping its other promises.

But then maybe that’s the point. The Financial Times suggests that ”more extreme Republicans” actually want a fiscal train wreck: ”Proposing to slash federal spending, particularly on social programs, is a tricky electoral proposition, but a fiscal crisis offers the tantalizing prospect of forcing such cuts through the back door.”

It’s no secret that right-wing ideologues want to abolish programs Americans take for granted. But not long ago, to suggest that the Bush administration’s policies might actually be driven by those ideologues — that the administration was deliberately setting the country up for a fiscal crisis in which popular social programs could be sharply cut — was to be accused of spouting conspiracy theories.”

As the free-market ideologues in government continue to neglect America’s aging infrastructure while making deep cuts into education funding and borrowing upwards of a trillion dollars for two failed wars, they reaffirm the perception that the government is inefficient and incapable of providing what they believe private enterprise can do better.

The fact of the matter is that those now shrieking about big government debts and deficits have spent the last decade maximizing government spending with unaffordable wars, financial deregulation, and tax cuts for the wealthy, which they knew would cost trillions of dollars.  Today, the consequences of their actions, which they were warned about, are the ploy these very same people are using to justifythe accelerated demise of welfare programs, and the incremental destruction of the meager social safety net that guarantees Americans won’t starve in their old age.

The core tenets of free market fundamentalism —  privatization, deregulation, and cuts to government services — has laid the foundation for the economic breakdown we are witnessing today.  And this recession-induced breakdown is being used by professional disaster capitalists to warrant more privatization, deregulation, and cuts to government services until there is nothing left.  It is clear that the continued auctioning off of pieces of the state to large corporations will result in a total loss of democratic control to the disaster capitalists who are profiting immensely from their orchestrated crisis.

Rania Khalek is a young, progressive activist with a passionate dedication to social justice. Check out her blog Missing Pieces or follow her on twitter @Rania_ak. You can contact her at raniakhalek@gmail.com.

Chomsky: Is The World Too Big to Fail? The Contours Of Global Order

Oldspeak: Chomsky, with a brilliant explication of the “Grand Area” doctrine, that has guided U.S. foreign policy under every U.S. President since the end of WWII.  ’The U.S.  is to dominate the Western hemisphere, the Far East, and the former British empire, with its Middle East energy resources… Grand Area goals extended to as much of Eurasia as possible, at least its economic core in Western Europe. Within the Grand Area, the U.S. would maintain “unquestioned power,” with “military and economic supremacy,” while ensuring the “limitation of any exercise of sovereignty” by states that might interfere with its global designs.’ -Noam Chomsky. Careful observation of world events since WWII would show that implementation of this doctrine has been achieved with a large degree of success, and in this context, ostensibly odd and otherwise irrational foreign policy decisions make perfect sense. It remains to be seen how long the U.S. will be capable of maintaining its gargantuan global empire at the expense of the planet & billions living in poverty and despair on it.

By Noam Chomsky @ TomDispatch:

The democracy uprising in the Arab world has been a spectacular display of courage, dedication, and commitment by popular forces — coinciding, fortuitously, with a remarkable uprising of tens of thousands in support of working people and democracy in Madison, Wisconsin, and other U.S. cities. If the trajectories of revolt in Cairo and Madison intersected, however, they were headed in opposite directions: in Cairo toward gaining elementary rights denied by the dictatorship, in Madison towards defending rights that had been won in long and hard struggles and are now under severe attack.

Each is a microcosm of tendencies in global society, following varied courses. There are sure to be far-reaching consequences of what is taking place both in the decaying industrial heartland of the richest and most powerful country in human history, and in what President Dwight Eisenhower called “the most strategically important area in the world” — “a stupendous source of strategic power” and “probably the richest economic prize in the world in the field of foreign investment,” in the words of the State Department in the 1940s, a prize that the U.S. intended to keep for itself and its allies in the unfolding New World Order of that day.

Despite all the changes since, there is every reason to suppose that today’s policy-makers basically adhere to the judgment of President Franklin Delano Roosevelt’s influential advisor A.A. Berle that control of the incomparable energy reserves of the Middle East would yield “substantial control of the world.” And correspondingly, that loss of control would threaten the project of global dominance that was clearly articulated during World War II, and that has been sustained in the face of major changes in world order since that day.

From the outset of the war in 1939, Washington anticipated that it would end with the U.S. in a position of overwhelming power. High-level State Department officials and foreign policy specialists met through the wartime years to lay out plans for the postwar world. They delineated a “Grand Area” that the U.S. was to dominate, including the Western hemisphere, the Far East, and the former British empire, with its Middle East energy resources. As Russia began to grind down Nazi armies after Stalingrad, Grand Area goals extended to as much of Eurasia as possible, at least its economic core in Western Europe. Within the Grand Area, the U.S. would maintain “unquestioned power,” with “military and economic supremacy,” while ensuring the “limitation of any exercise of sovereignty” by states that might interfere with its global designs. The careful wartime plans were soon implemented.

It was always recognized that Europe might choose to follow an independent course. NATO was partially intended to counter this threat. As soon as the official pretext for NATO dissolved in 1989, NATO was expanded to the East in violation of verbal pledges to Soviet leader Mikhail Gorbachev. It has since become a U.S.-run intervention force, with far-ranging scope, spelled out by NATO Secretary-General Jaap de Hoop Scheffer, who informed a NATO conference that “NATO troops have to guard pipelines that transport oil and gas that is directed for the West,” and more generally to protect sea routes used by tankers and other “crucial infrastructure” of the energy system.

Grand Area doctrines clearly license military intervention at will. That conclusion was articulated clearly by the Clinton administration, which declared that the U.S. has the right to use military force to ensure “uninhibited access to key markets, energy supplies, and strategic resources,” and must maintain huge military forces “forward deployed” in Europe and Asia “in order to shape people’s opinions about us” and “to shape events that will affect our livelihood and our security.”

The same principles governed the invasion of Iraq. As the U.S. failure to impose its will in Iraq was becoming unmistakable, the actual goals of the invasion could no longer be concealed behind pretty rhetoric. In November 2007, the White House issued a Declaration of Principles demanding that U.S. forces must remain indefinitely in Iraq and committing Iraq to privilege American investors. Two months later, President Bush informed Congress that he would reject legislation that might limit the permanent stationing of U.S. Armed Forces in Iraq or “United States control of the oil resources of Iraq” — demands that the U.S. had to abandon shortly after in the face of Iraqi resistance.

In Tunisia and Egypt, the recent popular uprisings have won impressive victories, but as the Carnegie Endowment reported, while names have changed, the regimes remain: “A change in ruling elites and system of governance is still a distant goal.” The report discusses internal barriers to democracy, but ignores the external ones, which as always are significant.

The U.S. and its Western allies are sure to do whatever they can to prevent authentic democracy in the Arab world. To understand why, it is only necessary to look at the studies of Arab opinion conducted by U.S. polling agencies. Though barely reported, they are certainly known to planners. They reveal that by overwhelming majorities, Arabs regard the U.S. and Israel as the major threats they face: the U.S. is so regarded by 90% of Egyptians, in the region generally by over 75%. Some Arabs regard Iran as a threat: 10%. Opposition to U.S. policy is so strong that a majority believes that security would be improved if Iran had nuclear weapons — in Egypt, 80%. Other figures are similar. If public opinion were to influence policy, the U.S. not only would not control the region, but would be expelled from it, along with its allies, undermining fundamental principles of global dominance.

The Invisible Hand of Power

Support for democracy is the province of ideologists and propagandists. In the real world, elite dislike of democracy is the norm. The evidence is overwhelming that democracy is supported insofar as it contributes to social and economic objectives, a conclusion reluctantly conceded by the more serious scholarship.

Elite contempt for democracy was revealed dramatically in the reaction to the WikiLeaks exposures. Those that received most attention, with euphoric commentary, were cables reporting that Arabs support the U.S. stand on Iran. The reference was to the ruling dictators. The attitudes of the public were unmentioned. The guiding principle was articulated clearly by Carnegie Endowment Middle East specialist Marwan Muasher, formerly a high official of the Jordanian government: “There is nothing wrong, everything is under control.” In short, if the dictators support us, what else could matter?

The Muasher doctrine is rational and venerable. To mention just one case that is highly relevant today, in internal discussion in 1958, president Eisenhower expressed concern about “the campaign of hatred” against us in the Arab world, not by governments, but by the people. The National Security Council (NSC) explained that there is a perception in the Arab world that the U.S. supports dictatorships and blocks democracy and development so as to ensure control over the resources of the region. Furthermore, the perception is basically accurate, the NSC concluded, and that is what we should be doing, relying on the Muasher doctrine. Pentagon studies conducted after 9/11 confirmed that the same holds today.

It is normal for the victors to consign history to the trash can, and for victims to take it seriously. Perhaps a few brief observations on this important matter may be useful. Today is not the first occasion when Egypt and the U.S. are facing similar problems, and moving in opposite directions. That was also true in the early nineteenth century.

Economic historians have argued that Egypt was well-placed to undertake rapid economic development at the same time that the U.S. was. Both had rich agriculture, including cotton, the fuel of the early industrial revolution — though unlike Egypt, the U.S. had to develop cotton production and a work force by conquest, extermination, and slavery, with consequences that are evident right now in the reservations for the survivors and the prisons that have rapidly expanded since the Reagan years to house the superfluous population left by deindustrialization.

One fundamental difference was that the U.S. had gained independence and was therefore free to ignore the prescriptions of economic theory, delivered at the time by Adam Smith in terms rather like those preached to developing societies today. Smith urged the liberated colonies to produce primary products for export and to import superior British manufactures, and certainly not to attempt to monopolize crucial goods, particularly cotton. Any other path, Smith warned, “would retard instead of accelerating the further increase in the value of their annual produce, and would obstruct instead of promoting the progress of their country towards real wealth and greatness.”

Having gained their independence, the colonies were free to ignore his advice and to follow England’s course of independent state-guided development, with high tariffs to protect industry from British exports, first textiles, later steel and others, and to adopt numerous other devices to accelerate industrial development. The independent Republic also sought to gain a monopoly of cotton so as to “place all other nations at our feet,” particularly the British enemy, as the Jacksonian presidents announced when conquering Texas and half of Mexico.

For Egypt, a comparable course was barred by British power. Lord Palmerston declared that “no ideas of fairness [toward Egypt] ought to stand in the way of such great and paramount interests” of Britain as preserving its economic and political hegemony, expressing his “hate” for the “ignorant barbarian” Muhammed Ali who dared to seek an independent course, and deploying Britain’s fleet and financial power to terminate Egypt’s quest for independence and economic development.

After World War II, when the U.S. displaced Britain as global hegemon, Washington adopted the same stand, making it clear that the U.S. would provide no aid to Egypt unless it adhered to the standard rules for the weak — which the U.S. continued to violate, imposing high tariffs to bar Egyptian cotton and causing a debilitating dollar shortage. The usual interpretation of market principles.

It is small wonder that the “campaign of hatred” against the U.S. that concerned Eisenhower was based on the recognition that the U.S. supports dictators and blocks democracy and development, as do its allies.

In Adam Smith’s defense, it should be added that he recognized what would happen if Britain followed the rules of sound economics, now called “neoliberalism.” He warned that if British manufacturers, merchants, and investors turned abroad, they might profit but England would suffer. But he felt that they would be guided by a home bias, so as if by an invisible hand England would be spared the ravages of economic rationality.

The passage is hard to miss. It is the one occurrence of the famous phrase “invisible hand” in The Wealth of Nations. The other leading founder of classical economics, David Ricardo, drew similar conclusions, hoping that home bias would lead men of property to “be satisfied with the low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations,” feelings that, he added, “I should be sorry to see weakened.” Their predictions aside, the instincts of the classical economists were sound.

The Iranian and Chinese “Threats”

The democracy uprising in the Arab world is sometimes compared to Eastern Europe in 1989, but on dubious grounds. In 1989, the democracy uprising was tolerated by the Russians, and supported by western power in accord with standard doctrine: it plainly conformed to economic and strategic objectives, and was therefore a noble achievement, greatly honored, unlike the struggles at the same time “to defend the people’s fundamental human rights” in Central America, in the words of the assassinated Archbishop of El Salvador, one of the hundreds of thousands of victims of the military forces armed and trained by Washington. There was no Gorbachev in the West throughout these horrendous years, and there is none today. And Western power remains hostile to democracy in the Arab world for good reasons.

Grand Area doctrines continue to apply to contemporary crises and confrontations. In Western policy-making circles and political commentary the Iranian threat is considered to pose the greatest danger to world order and hence must be the primary focus of U.S. foreign policy, with Europe trailing along politely.

What exactly is the Iranian threat? An authoritative answer is provided by the Pentagon and U.S. intelligence. Reporting on global security last year, they make it clear that the threat is not military. Iran’s military spending is “relatively low compared to the rest of the region,” they conclude. Its military doctrine is strictly “defensive, designed to slow an invasion and force a diplomatic solution to hostilities.” Iran has only “a limited capability to project force beyond its borders.” With regard to the nuclear option, “Iran’s nuclear program and its willingness to keep open the possibility of developing nuclear weapons is a central part of its deterrent strategy.” All quotes.

The brutal clerical regime is doubtless a threat to its own people, though it hardly outranks U.S. allies in that regard. But the threat lies elsewhere, and is ominous indeed. One element is Iran’s potential deterrent capacity, an illegitimate exercise of sovereignty that might interfere with U.S. freedom of action in the region. It is glaringly obvious why Iran would seek a deterrent capacity; a look at the military bases and nuclear forces in the region suffices to explain.

Seven years ago, Israeli military historian Martin van Creveld wrote that “The world has witnessed how the United States attacked Iraq for, as it turned out, no reason at all. Had the Iranians not tried to build nuclear weapons, they would be crazy,” particularly when they are under constant threat of attack in violation of the UN Charter. Whether they are doing so remains an open question, but perhaps so.

But Iran’s threat goes beyond deterrence. It is also seeking to expand its influence in neighboring countries, the Pentagon and U.S. intelligence emphasize, and in this way to “destabilize” the region (in the technical terms of foreign policy discourse). The U.S. invasion and military occupation of Iran’s neighbors is “stabilization.” Iran’s efforts to extend its influence to them are “destabilization,” hence plainly illegitimate.

Such usage is routine. Thus the prominent foreign policy analyst James Chace was properly using the term “stability” in its technical sense when he explained that in order to achieve “stability” in Chile it was necessary to “destabilize” the country (by overthrowing the elected government of Salvador Allende and installing the dictatorship of General Augusto Pinochet). Other concerns about Iran are equally interesting to explore, but perhaps this is enough to reveal the guiding principles and their status in imperial culture.  As Franklin Delano Roosevelt’s planners emphasized at the dawn of the contemporary world system, the U.S. cannot tolerate “any exercise of sovereignty” that interferes with its global designs.

The U.S. and Europe are united in punishing Iran for its threat to stability, but it is useful to recall how isolated they are. The nonaligned countries have vigorously supported Iran’s right to enrich uranium. In the region, Arab public opinion even strongly favors Iranian nuclear weapons. The major regional power, Turkey, voted against the latest U.S.-initiated sanctions motion in the Security Council, along with Brazil, the most admired country of the South. Their disobedience led to sharp censure, not for the first time: Turkey had been bitterly condemned in 2003 when the government followed the will of 95% of the population and refused to participate in the invasion of Iraq, thus demonstrating its weak grasp of democracy, western-style.

After its Security Council misdeed last year, Turkey was warned by Obama’s top diplomat on European affairs, Philip Gordon, that it must “demonstrate its commitment to partnership with the West.” A scholar with the Council on Foreign Relations asked, “How do we keep the Turks in their lane?” — following orders like good democrats. Brazil’s Lula was admonished in a New York Times headline that his effort with Turkey to provide a solution to the uranium enrichment issue outside of the framework of U.S. power was a “Spot on Brazilian Leader’s Legacy.” In brief, do what we say, or else.

An interesting sidelight, effectively suppressed, is that the Iran-Turkey-Brazil deal was approved in advance by Obama, presumably on the assumption that it would fail, providing an ideological weapon against Iran. When it succeeded, the approval turned to censure, and Washington rammed through a Security Council resolution so weak that China readily signed — and is now chastised for living up to the letter of the resolution but not Washington’s unilateral directives — in the current issue of Foreign Affairs, for example.

While the U.S. can tolerate Turkish disobedience, though with dismay, China is harder to ignore. The press warns that “China’s investors and traders are now filling a vacuum in Iran as businesses from many other nations, especially in Europe, pull out,” and in particular, is expanding its dominant role in Iran’s energy industries. Washington is reacting with a touch of desperation. The State Department warned China that if it wants to be accepted in the international community — a technical term referring to the U.S. and whoever happens to agree with it — then it must not “skirt and evade international responsibilities, [which] are clear”: namely, follow U.S. orders. China is unlikely to be impressed.

There is also much concern about the growing Chinese military threat. A recent Pentagon study warned that China’s military budget is approaching “one-fifth of what the Pentagon spent to operate and carry out the wars in Iraq and Afghanistan,” a fraction of the U.S. military budget, of course. China’s expansion of military forces might “deny the ability of American warships to operate in international waters off its coast,” the New York Times added.

Off the coast of China, that is; it has yet to be proposed that the U.S. should eliminate military forces that deny the Caribbean to Chinese warships. China’s lack of understanding of rules of international civility is illustrated further by its objections to plans for the advanced nuclear-powered aircraft carrier George Washington to join naval exercises a few miles off China’s coast, with alleged capacity to strike Beijing.

In contrast, the West understands that such U.S. operations are all undertaken to defend stability and its own security. The liberal New Republic expresses its concern that “China sent ten warships through international waters just off the Japanese island of Okinawa.” That is indeed a provocation — unlike the fact, unmentioned, that Washington has converted the island into a major military base in defiance of vehement protests by the people of Okinawa. That is not a provocation, on the standard principle that we own the world.

Deep-seated imperial doctrine aside, there is good reason for China’s neighbors to be concerned about its growing military and commercial power. And though Arab opinion supports an Iranian nuclear weapons program, we certainly should not do so. The foreign policy literature is full of proposals as to how to counter the threat. One obvious way is rarely discussed: work to establish a nuclear-weapons-free zone (NWFZ) in the region. The issue arose (again) at the Non-Proliferation Treaty (NPT) conference at United Nations headquarters last May. Egypt, as chair of the 118 nations of the Non-Aligned Movement, called for negotiations on a Middle East NWFZ, as had been agreed by the West, including the U.S., at the 1995 review conference on the NPT.

International support is so overwhelming that Obama formally agreed. It is a fine idea, Washington informed the conference, but not now. Furthermore, the U.S. made clear that Israel must be exempted: no proposal can call for Israel’s nuclear program to be placed under the auspices of the International Atomic Energy Agency or for the release of information about “Israeli nuclear facilities and activities.” So much for this method of dealing with the Iranian nuclear threat.

Privatizing the Planet

While Grand Area doctrine still prevails, the capacity to implement it has declined. The peak of U.S. power was after World War II, when it had literally half the world’s wealth. But that naturally declined, as other industrial economies recovered from the devastation of the war and decolonization took its agonizing course. By the early 1970s, the U.S. share of global wealth had declined to about 25%, and the industrial world had become tripolar: North America, Europe, and East Asia (then Japan-based).

There was also a sharp change in the U.S. economy in the 1970s, towards financialization and export of production. A variety of factors converged to create a vicious cycle of radical concentration of wealth, primarily in the top fraction of 1% of the population — mostly CEOs, hedge-fund managers, and the like. That leads to the concentration of political power, hence state policies to increase economic concentration: fiscal policies, rules of corporate governance, deregulation, and much more. Meanwhile the costs of electoral campaigns skyrocketed, driving the parties into the pockets of concentrated capital, increasingly financial: the Republicans reflexively, the Democrats — by now what used to be moderate Republicans — not far behind.

Elections have become a charade, run by the public relations industry. After his 2008 victory, Obama won an award from the industry for the best marketing campaign of the year. Executives were euphoric. In the business press they explained that they had been marketing candidates like other commodities since Ronald Reagan, but 2008 was their greatest achievement and would change the style in corporate boardrooms. The 2012 election is expected to cost $2 billion, mostly in corporate funding. Small wonder that Obama is selecting business leaders for top positions. The public is angry and frustrated, but as long as the Muasher principle prevails, that doesn’t matter.

While wealth and power have narrowly concentrated, for most of the population real incomes have stagnated and people have been getting by with increased work hours, debt, and asset inflation, regularly destroyed by the financial crises that began as the regulatory apparatus was dismantled starting in the 1980s.

None of this is problematic for the very wealthy, who benefit from a government insurance policy called “too big to fail.” The banks and investment firms can make risky transactions, with rich rewards, and when the system inevitably crashes, they can run to the nanny state for a taxpayer bailout, clutching their copies of Friedrich Hayek and Milton Friedman.

That has been the regular process since the Reagan years, each crisis more extreme than the last — for the public population, that is. Right now, real unemployment is at Depression levels for much of the population, while Goldman Sachs, one of the main architects of the current crisis, is richer than ever. It has just quietly announced $17.5 billion in compensation for last year, with CEO Lloyd Blankfein receiving a $12.6 million bonus while his base salary more than triples.

It wouldn’t do to focus attention on such facts as these. Accordingly, propaganda must seek to blame others, in the past few months, public sector workers, their fat salaries, exorbitant pensions, and so on: all fantasy, on the model of Reaganite imagery of black mothers being driven in their limousines to pick up welfare checks — and other models that need not be mentioned. We all must tighten our belts; almost all, that is.

Teachers are a particularly good target, as part of the deliberate effort to destroy the public education system from kindergarten through the universities by privatization — again, good for the wealthy, but a disaster for the population, as well as the long-term health of the economy, but that is one of the externalities that is put to the side insofar as market principles prevail.

Another fine target, always, is immigrants. That has been true throughout U.S. history, even more so at times of economic crisis, exacerbated now by a sense that our country is being taken away from us: the white population will soon become a minority. One can understand the anger of aggrieved individuals, but the cruelty of the policy is shocking.

Who are the immigrants targeted? In Eastern Massachusetts, where I live, many are Mayans fleeing genocide in the Guatemalan highlands carried out by Reagan’s favorite killers. Others are Mexican victims of Clinton’s NAFTA, one of those rare government agreements that managed to harm working people in all three of the participating countries. As NAFTA was rammed through Congress over popular objection in 1994, Clinton also initiated the militarization of the U.S.-Mexican border, previously fairly open. It was understood that Mexican campesinos cannot compete with highly subsidized U.S. agribusiness, and that Mexican businesses would not survive competition with U.S. multinationals, which must be granted “national treatment” under the mislabeled free trade agreements, a privilege granted only to corporate persons, not those of flesh and blood. Not surprisingly, these measures led to a flood of desperate refugees, and to rising anti-immigrant hysteria by the victims of state-corporate policies at home.

Much the same appears to be happening in Europe, where racism is probably more rampant than in the U.S. One can only watch with wonder as Italy complains about the flow of refugees from Libya, the scene of the first post-World War I genocide, in the now-liberated East, at the hands of Italy’s Fascist government. Or when France, still today the main protector of the brutal dictatorships in its former colonies, manages to overlook its hideous atrocities in Africa, while French President Nicolas Sarkozy warns grimly of the “flood of immigrants” and Marine Le Pen objects that he is doing nothing to prevent it. I need not mention Belgium, which may win the prize for what Adam Smith called “the savage injustice of the Europeans.”

The rise of neo-fascist parties in much of Europe would be a frightening phenomenon even if we were not to recall what happened on the continent in the recent past. Just imagine the reaction if Jews were being expelled from France to misery and oppression, and then witness the non-reaction when that is happening to Roma, also victims of the Holocaust and Europe’s most brutalized population.

In Hungary, the neo-fascist party Jobbik gained 17% of the vote in national elections, perhaps unsurprising when three-quarters of the population feels that they are worse off than under Communist rule. We might be relieved that in Austria the ultra-right Jörg Haider won only 10% of the vote in 2008 — were it not for the fact that the new Freedom Party, outflanking him from the far right, won more than 17%. It is chilling to recall that, in 1928, the Nazis won less than 3% of the vote in Germany.

In England the British National Party and the English Defence League, on the ultra-racist right, are major forces. (What is happening in Holland you know all too well.) In Germany, Thilo Sarrazin’s lament that immigrants are destroying the country was a runaway best-seller, while Chancellor Angela Merkel, though condemning the book, declared that multiculturalism had “utterly failed”: the Turks imported to do the dirty work in Germany are failing to become blond and blue-eyed, true Aryans.

Those with a sense of irony may recall that Benjamin Franklin, one of the leading figures of the Enlightenment, warned that the newly liberated colonies should be wary of allowing Germans to immigrate, because they were too swarthy; Swedes as well. Into the twentieth century, ludicrous myths of Anglo-Saxon purity were common in the U.S., including among presidents and other leading figures. Racism in the literary culture has been a rank obscenity; far worse in practice, needless to say. It is much easier to eradicate polio than this horrifying plague, which regularly becomes more virulent in times of economic distress.

I do not want to end without mentioning another externality that is dismissed in market systems: the fate of the species. Systemic risk in the financial system can be remedied by the taxpayer, but no one will come to the rescue if the environment is destroyed. That it must be destroyed is close to an institutional imperative. Business leaders who are conducting propaganda campaigns to convince the population that anthropogenic global warming is a liberal hoax understand full well how grave is the threat, but they must maximize short-term profit and market share. If they don’t, someone else will.

This vicious cycle could well turn out to be lethal. To see how grave the danger is, simply have a look at the new Congress in the U.S., propelled into power by business funding and propaganda. Almost all are climate deniers. They have already begun to cut funding for measures that might mitigate environmental catastrophe. Worse, some are true believers; for example, the new head of a subcommittee on the environment who explained that global warming cannot be a problem because God promised Noah that there will not be another flood.

If such things were happening in some small and remote country, we might laugh. Not when they are happening in the richest and most powerful country in the world. And before we laugh, we might also bear in mind that the current economic crisis is traceable in no small measure to the fanatic faith in such dogmas as the efficient market hypothesis, and in general to what Nobel laureate Joseph Stiglitz, 15 years ago, called the “religion” that markets know best — which prevented the central bank and the economics profession from taking notice of an $8 trillion housing bubble that had no basis at all in economic fundamentals, and that devastated the economy when it burst.

All of this, and much more, can proceed as long as the Muashar doctrine prevails. As long as the general population is passive, apathetic, diverted to consumerism or hatred of the vulnerable, then the powerful can do as they please, and those who survive will be left to contemplate the outcome.

Noam Chomsky is Institute Professor emeritus in the MIT Department of Linguistics and Philosophy. He is the author of numerous best-selling political works. His latest books are a new edition of Power and Terror, The Essential Chomsky (edited by Anthony Arnove), a collection of his writings on politics and on language from the 1950s to the present, Gaza in Crisis, with Ilan Pappé, and Hopes and Prospects, also available as an audiobook. This piece is adapted from a talk given in Amsterdam in March.

Copyright 2011 Noam Chomsky