"In a time of universal deceit telling the truth is a revolutionary act." -George Orwell

Posts Tagged ‘Free Market Economy’

Lords of Disorder: Billions For Wall Street, Sacrifice For Everyone Else

In Uncategorized on March 7, 2013 at 5:38 pm

Lloyd C. Blankfein.Oldspeak:”“This bank is anti-fragile, we actually benefit from downturns.”-Jamie Dimon of JPMorgan ChaseThe term “antifragile” was coined by maverick financier & analyst Nassim Taleb, whose book of the same name is subtitled “Things That Gain From Disorder.” That’s a good description of JPMorgan Chase and the nation’s other megabanks… These institutions are designed to prey off economic misery. They suppress genuine market forces in order to thrive, and they couldn’t do it without our ongoing help. The Treasury Department and the Federal Reserve are making it happen.” –Richard Eskow. One look no further than how Mr. Dimon and his sociopathic corporation  profits off the misery of the poverty stricken by administering food stamp benefits to see his demented thought in practice. “A catastrophe for you and I usually presents an opportunity for the Titans of capital. And the grievous economic crisis affecting so many American families is no exception — big business has found a number of ways to profit, directly, from Main Street’s economic pain. Like vultures descending on a rotting corpse, they’ve come up with a variety of innovative methods to pull the last scraps of meat off the bones of America’s middle-class” –Joshua Holland. It’s very clear if one chooses to look. The corprocratic controllers of our political class and economic systems, profit from disorder, downturns, and catastrophes. Money is being redirected  from the people and real economy via austerity programs to prop up and sustain these failed, morally and spiritually bankrupt enterprises.  Knowing this, how logical is it to conclude that obviously deleterious political and economic policies that have us hurtling toward economic and ecological catastrophe will be changed to benefit the people? Not very. The problem is systemic. The systems around which we organize our societies must be fundamentally changed. All the nibbling around the edges that passes for sound policy is largely illusory.If we hope to survive as civilization we can no longer allow merchants of death and disorder who dominate the Military-Financial-Political Industrial Complex to reign as Lords of Disorder.”

By Richard Eskow @ The Campaign For Americas Future:

The President’s “sequester” offer slashes non-defense spending by $830 billion over the next ten years. That happens to be the precise amount we’re implicitly giving Wall Street’s biggest banks over the same time period.

We’re collecting nothing from the big banks in return for our generosity.  Instead we’re demanding sacrifice from the elderly, the disabled, the poor, the young, the middle class – pretty much everybody, in fact, who isn’t “too big to fail.”

That’s injustice on a medieval scale, served up with a medieval caste-privilege flavor. The only difference is that nowadays injustices are presented with spreadsheets and PowerPoints, rather than with scrolls and trumpets and kingly proclamations.

And remember: The White House represents the liberal side of these negotiations.

The Grandees

The $83 billion ‘subsidy’ for America’s ten biggest banks first appeared in an editorial from Bloomberg News – which, as the creation of New York’s billionaire mayor Michael Bloomberg, is hardly a lefty outfit.  That editorial drew upon sound economic analyses to estimate the value of the US government’s implicit promise to bail these banks out.

Then it showed that, without that advantage, these banks would not be making a profit at all.

That means that all of those banks’ CEOs, men (they’re all men) who preen and strut before the cameras and lecture Washington on its profligacy, would not only have lost their jobs and fortunes in 2008 because of their incompetence – they would probably lose their jobs again today.

Tell that to Jamie Dimon of JPMorgan Chase, or Lloyd Blankfein of Goldman Sachs, both of whom have told us it’s imperative that we cut social programs for the elderly and disabled to “save our economy.” The elderly and disabled have paid for those programs – just as they paid to rescue Jamie Dimon and Lloyd Blankfein, and just as they implicitly continue to pay for that rescue today.

Dimon, Blankfein and their peers are like the grandees of imperial Spain and Portugal. They’ve been given great wealth and great power over others, not through native ability but by the largesse of the Throne.

Lords of Disorder

Just yesterday, in a rare burst of candor, Dimon said this to investors on a quarterly earnings call: “This bank is anti-fragile, we actually benefit from downturns.”

It’s true, of course. Other corporations – in fact, everybody else – has to survive or fail in real-world conditions. But Dimon and his peers are wrapped in a protective force field which was created by the people, of the people, and for … well, for Dimon and his peers.

The term “antifragile” was coined by maverick financier and analyst Nassim Taleb, whose book of the same name is subtitled “Things That Gain From Disorder.” That’s a good description of JPMorgan Chase and the nation’s other megabanks.

Arbitraging Failure

Dimon’s comment was another way of saying that his bank, and everything it represents, is The Shock Doctrine made manifest. The nation’s megabanks are arbitraging their own failures, and the economic crises that flow from those failures.

These institutions are designed to prey off economic misery. They suppress genuine market forces in order to thrive, and they couldn’t do it without our ongoing help. The Treasury Department and the Federal Reserve are making it happen.

We who have made these banks “antifragile” have crowned their leaders our Lords of Disorder.

Once Dimon told reporters that he explained to his seven-year-old daughter what a financial crisis is – “something that happens … every five to seven years,” which “we need to do a better job” managing.

Thanks to fat political contributions, Dimon manages them well. So do his peers. Misery is the business model. And by Dimon’s reckoning another shock’s coming any day now.

Money For Nothing

Bloomberg’s use of the word ‘subsidy’ in this instance can be slightly misleading. Public institutions don’t issue $83 billion in checks to Wall Street’s biggest banks every year. But they didn’t let them fail as they should have – through an orderly liquidation – after they created the crisis of 2008 through fraud and chicanery. Instead it allowed them to prosper from it, creating that $83 billion implicit guarantee.

As we detailed in 2011, the TARP program didn’t “make money,” either. Banks received a free and easy trillion-plus dollars from our public institution, on terms that amounted to a gift worth tens of billions, and possibly hundreds of billions.

That gift prevented them from failing. In private enterprise, this kind of rescue is only given in return for part ownership or other financial concessions. But our government asked for nothing of the kind.

Unpaid Debts

Breaking up the big banks would have protected the public from more harm at their hands. That didn’t happen.

Government institutions could have imposed a financial transaction tax, whose revenue could be used to repair the harm the banks caused while at the same time discouraging runaway gambling.  They still could.

They could have imposed fees on the largest banks to offset the $83 billion per year advantage we’ve given them. They still could.

But they haven’t. This one-sided giveaway is the equivalent of an $83 billion gift for Wall Street each and every year.

Cut and Paste

$83 billion per year: Our current budget debate is framed in ten-year cycles, which means that’s $830 billion in Sequester Speak.  You’d think our deficit-obsessed capital would be trying to collect that very reasonable amount from Wall Street. Instead the White House is proposing $130 billion in Social Security cuts, $400 in Medicare reductions, $200 billion in “non-health mandatory savings,” and $100 billion in non-defense discretionary cuts.

That adds up to exactly $830 billion.

No doubt there is genuine waste that could be cut. But $830 billion, or some portion of it, could be used to grow our economy and brings tens of millions of Americans out of the ongoing recession that is their daily reality, even as the Lords of Disorder continue to prosper. It could be used for educating our young people and helping them find work, for reducing the escalating number of people in poverty, for addressing our crumbling infrastructure, for giving people decent jobs.

It’s going to Wall Street instead.

Trillion-Dollar Tribute

The right word for that is tribute. As in, “a payment by one ruler or nation to another in acknowledgment of submission …” or “an excessive tax, rental, or tariff imposed by a government, sovereign, lord, or landlord … an exorbitant charge levied by a person or group having the power of coercion.” (Courtesy Merriam-Webster)

In this case the tribute is made possible, not by military occupation, but by the hijacking of our political process by the corrupting force of corporate contributions.

The fruits of that victory are rich: Bank profits are at near-record highs. Most of the country is still struggling to dig out from the wreckage they created but, as Demos’ Policy Shop puts it, “for the banks it’s 2006 all over again.”

On Bended Knee

“Millions for defense,” they said in John Adams’ day, “but not one cent for tribute.”

Today we’re paying for both. That doesn’t leave much for the elderly, the disabled, the impoverished, the children, or anybody else who doesn’t “benefit from disorder.” Nobody’s fighting for them in this budget battle.

That leaves the public with a clear choice: Demand solutions that are more just and democratic – or submit willingly to the Lords of Disorder.

World’s Faith in “Free Market” Capitalism, Hard Work, Eroding. As Global Financial Crisis Continues, Pervasive Gloom About World Economy: Survey

In Uncategorized on July 13, 2012 at 3:35 pm

Oldspeak:”The world is getting wise to the hustle that is Free Market, casino capitalism. Money is being pumped into military spending, “Too Big To Fail” Banks and other multinational corporations.  Everyone else gets “Austerity Measures” Billions of  ordinary people work soul crushing jobs for slave wages their whole lives to barely survive.  Something has to change. This monetary system is unsustainable and breeds corruption, greed, and economic violence.”

By Common Dreams:

The financial crisis that has bred unemployment, austerity, and economic pain across the global for nearly fives years is also battering the reputation of the system many believe to be its main cause: “free market” capitalism.

According to a new global poll by Pew Research, only half or fewer — in 11 of 21 nations surveyed — now agree with the statement that people are better off in a “free market” economy than in some other kind.

In nine of the 16 countries for which there is trend data since 2007, before the financial crisis began, support for capitalism is down, with the greatest declines in Italy (down 23 percentage points) and Spain (down 20 points).

Support for capitalism is greatest in Brazil, China, Germany and the U.S, says the report. The biggest skeptics of the free market are in Mexico and Japan.

The survey found only four countries in which a majority of people were happy with and optimistic about the economic situation: China (83 percent), Germany (73 percent), Brazil (65 percent) and Turkey (57 percent). The Chinese are a particular exception to most of the questioning on economic optimism with Pew observing that, overall, the people of China — which runs a single party, state-controlled economy — “have been positive about their economy for the past decade.”

The survey also showed that the prolonged global economic slump has depressed the public mood about their national economies. In only four of 21 countries surveyed does a majority say their economy is doing well.

Anger at government was shared in most countries, but banks and financial institutions were frequently – in Spain (78%), France (74%) and Germany (74%) – seen as the culprit behind the poor performance of national economies. And in two instances – France and Spain – significantly more of the public blamed the banks than blamed the government.

Read the full poll results here.

Nearly $2 Trillion Purloined From U.S. Workers in 2009

In Uncategorized on July 12, 2011 at 5:54 pm

Oldspeak:”The U.S. ranks 39th in the world in income inequality, behind such Economic Juggernauts as Uzbekistan, Pakistan, Afghanistan, Iran, Kenya, Armenia, Vietnam and Yemen. Understand that this massive transfer of wealth from workers to managers and owners via ‘bonuses, bloated salaries, elephantine stock options, padded consulting fees, outsized compensation to boards of directors, sumptuous conferences, palatial offices complete with original artwork, retinues of superfluous “support” staff, hunting lodges, private corporate dining rooms, regal retirement agreements, and so on—defy exact categorization.’ And has been happening steadily over the past 30 years. It has directly contributed to the withering of the middle class and the extreme concentration of wealth in the hands of the top  .01% of the population at levels not seen since the great depression/glided age. The signs are all there, the danger is clearly ahead. We’ve seen what happens under these extreme economic conditions, yet our elected officials have lead feet on the accelerator, plunging the U.S. Economy toward the cliff. Why? How can so many supposedly educated people lack such basic common sense and appreciation of past history? Makes you wonder if they all know something we don’t.”

Richard D. Wolf: When Capitalism Hits The Fan:

By James M. Cypher @ Dollars and Sense:

In 2009, stock owners, bankers, brokers, hedge-fund wizards, highly paid corporate executives, corporations, and mid-ranking managers pocketed—as either income, benefits, or perks such as corporate jets—an estimated $1.91 trillion that 40 years ago would have collectively gone to non-supervisory and production workers in the form of higher wages and benefits. These are the 88 million workers in the private sector who are closely tied to production processes and/or are not responsible for the supervision, planning, or direction of other workers.

From the end of World War II until the early 1970s, the benefits of economic growth were broadly shared by those in all income categories: workers received increases in compensation (wages plus benefits) that essentially matched the rise in their productivity. Neoclassical economist John Bates Clark (1847-1938) first formulated what he termed the “natural law” of income distribution which “assigns to everyone what he has specifically created.” That is, if markets are not “obstructed,” pay levels should be “equal [to] that part of the product of industry which is traceable to labor itself.” As productivity increased, Clark argued, wages would rise at an equal rate.

The idea that compensation increases should equal increases in average labor productivity per worker as a matter of national wage policy, or a wage norm, is traceable to the President’s Council of Economic Advisors under the Eisenhower and Kennedy administrations. This macroeconomic approach was anchored in the fact that if compensation rises in step with productivity growth, then both unit labor costs and capital’s versus labor’s share of national income will remain constant. This “Keynesian Consensus” never questioned the fairness of the initial capital/labor split, but it at least offered workers a share of the fruits of future economic growth.

As the figure below shows, both Clark’s idea of a “natural law” of distribution and Keynesian national wage policy have ceased to function since the onset of the neoliberal/supply-side era beginning in the early 1970s. From 1972 through 2009, “usable” productivity—that part of productivity growth that is available for raising wages and living standards—increased by 55.5%. Meanwhile, real average hourly pay fell by almost 10% (excluding benefits). As a group, workers responded by increasing their labor-force participation rate. To make the calculation consistent over time, employment is adjusted to a constant participation rate set at the 1972 level. Had compensation matched “usable” productivity growth, the (adjusted) 84 million non-supervisory and production workers in 2009 would have received roughly $1.91 trillion more in wages and benefits. That is, 13.5% of the nation’s Gross Domestic Product in 2009 was transferred from non-supervisory workers to capitalists (and managers) via the gap of 44.4% that had opened up between compensation and “usable”productivity since 1972.

As expected, neoclassical (or mainstream) economists offer tortured justifications for the new status quo. The erstwhile dauphin of neoclassical economics, Harvard economist Gregory Mankiw agrees with Clark’s formulation. But he says that even though “productivity has accelerated, workers have become accustomed to the slow rate of wage growth since the 1970s.” Why “accustomed”? Well, believe it or not, neoclassical economists claim that today’s workers suffer from “low wage aspirations.” Mankiw equates the wage that workers aspire to with the wage they consider fair. So, according to this very strange formulation, workers consider that they are getting a fair shake today, even though their compensation increases lag behind their productivity increases. Yet a few decades earlier, they considered it fair (as did Clark and Mankiw) for compensation growth to keep up with productivity increases.

Some economists simply deny that any change has occurred. Noted neoclassical conjurer Martin Feldstein believes that the “productivity-compensation gap” is merely a matter of bad measurement: by dropping the Consumer Price Index as the appropriate yardstick, Feldstein alchemically transforms the way wages are adjusted for inflation. His soothing Panglossian recalibration raises workers’ “real” income; et voilà!—the productivity-compensation gap all but disappears.

Leaving aside such statistical prestidigitation, a vast upward transfer of income is evident. That transfer is directly related to the rupture of the so-called “Treaty of Detroit”—an understanding between capital and labor, pounded out during the Truman administration, wherein employers accepted the idea that compensation could grow at the rate that productivity increased. In 1953 union strength was at its high point; 32.5% of the US labor force was unionized. With the profit squeeze of the early 1970s and the onset of Reaganism, unionization rates began to fall—to 27% in 1979, then to 19% in 1984. By 2010 the rate was down to 11.9% (and only 6.9% in the private sector). Off-shoring, outsourcing, vigorous (and often illegal) corporate tactics to stop unionization drives, and an overall political climate of hostility to free and fair union elections have deprived workers of the countervailing power they once held. The result is that without unions struggling to divide the economic pie, non-supervisory and production workers (78% of the private-sector workforce) have been deprived of a minimal level of economic distributive justice.

The upward redistribution has remained as hidden as possible. The forms it has taken—as bonuses, bloated salaries, elephantine stock options, padded consulting fees, outsized compensation to boards of directors, sumptuous conferences, palatial offices complete with original artwork, retinues of superfluous “support” staff, hunting lodges, private corporate dining rooms, regal retirement agreements, and so on—defy exact categorization. Some would appear as profit, some as interest, some as dividends, realized capital gains, gigantic pension programs, retained earnings, or owners’ income, with the remainder deeply buried as “costs of doing business.”

In the final analysis, the $1.91 trillion figure is only an approximation, designed to make more concrete a concept that has lacked an important quantitative dimension. Of course, had compensation increases matched “usable” productivity increases, workers would have paid taxes on the wage portion of their compensation, leaving them with much less than the $1.91 trillion in their pockets. Meanwhile, as these funds are shifted over to capital (and management salaries), federal, state, and local taxes are paid on the portion which appears as declared income. This results in a considerable drop in the net after-tax transfer amount actually pocketed by capital through their appropriation of the productivity increases of non-supervisory workers. Even so, their haul remains a staggering—even astonishing—sum.

Trickle-Down Cruelty And The Politics Of Austerity

In Uncategorized on July 11, 2011 at 3:38 pm

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.


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).