The Existential Threat to Western Elite Privilege

Are our leaders truly protecting us, as they claim, from a dark and looming Islamic menace? Must all else be sacrificed on the altar of securing the nation against terror today just as it was sacrificed on the altar of securing the nation against the communist menace during the long Cold War? Somehow, it all seems a bit too familiar and a bit too convenient.

A threat obviously does exist: a tiny number of individuals have become convinced that a battle to the death is the only way to achieve justice for the Islamic world. Exacerbating this situation, the violent and unsympathetic nature of the Western response has greatly enhanced this splinter faction’s influence. Nonetheless, the West has had all the time in the world to amend its approach to the Muslim world in order to make room in the global political system for their existence and their hopes and their grievances. Choose your favorites from among the innumerable symbols of the West’s response: Grozniy, Jenin, Lebanon, Gaza, Fallujah, Abu Ghraib, Guantanamo. None of these was a legitimate, much less rational or even self-serving, response to bin Laden’s terrorist challenge, much less to a very much justified Islamic political critique. The West has insisted in the rudest and clumsiest fashion that it will contemplate no such thing as making room for an independent Islamic political force.

For those old enough to recall, it feels all too familiar. History does not repeat: it is simply not credible that exactly the same menace requiring exactly the same response is required in two successive historical periods, with not a moment’s peace separating the two. It is far more likely that the identity exists in the minds of those who, by their power, set the rules of the game.

Alain Badiou has just summarized this from the French perspective:

Honte aux gouvernements successifs, qui ont tous rivalisé sur les thèmes conjoints de la sécurité et du "problème immigré", pour que ne soit pas trop visible qu'ils servaient avant tout les intérêts de l'oligarchie économique ! [ Alain Badiou, “Le racisme des intellectuals,” Le Monde 5/5/12.]

"Shame on successive regimes which have all competed with each using the intertwined themes of security and the "immigration problem, so as to thinly veil their service above all to the interests of the economic oligarchy." Yes, there is an existential threat: an existential threat to elite privilege; the elite knows it, and the elite is defending itself.

Mutual Transparency Needed to End the U.S.-Iran Dispute

The Western-Iranian nuclear road-show, for it hardly seems to merit the term “negotiations,” continues in Iran’s backyard. Tehran and Washington may insist on slapping each other in the face at every opportunity, but the region has changed greatly with the demise of Iran’s bitter enemy Saddam and the rise of Shi’i rule in Iraq.

Judging from public reports, Iran is absolutely correct to complain of a lack of balance in the Western negotiating stance. The Nuclear Non-Proliferation Treaty is the West's treaty, its rules for managing nuclear technology, yet the West is violating its own treaty by demanding that Iran sign unique terms not provided for by that treaty. Worse, the West is doing so without recognizing the rogue status of Israel, which has a massive stockpile of nuclear weapons by all accounts yet refuses to sign the treaty. Finally, Iran will need very clear guarantees of what it will receive if it accepts the special constraints the U.S. is trying to impose. At what point will the U.S. stop trying regime change? At what point will the U.S. stop publicly condemning it? At what point will the U.S. grant it diplomatic recognition? At what point will all economic warfare against Iran be terminated? And those are just the negative issues on which the U.S. must concede completely. Beyond that come positive moves - security guarantees, trade, coordination on Afghanistan and Iraq, anti-drug cooperation, negotiation over rules for sharing the Persian Gulf.


Western apologists for the West’s hardline stance are, judging from public reports, correct that Iran is not making a sincere effort in the talks either. According to Tehran Times [5/23/12], Iran “offered a five-point package of proposals verbally on nuclear and non-nuclear issues during the negotiations.” The issue is far too serious to be approached with such unprofessionalism. Both sides have clear grievances. Iran’s behavior gives the impression that it is playing for time and hiding plans for a nuclear breakout, while the West is demanding discriminatory concessions while evidently pretending to ignore Iran’s many legitimate reasons for dissatisfaction. Any number of miscalculations could lead to consequences harmful to the world as a whole. This is no time for casual verbal offers that cannot be pinned down for serious discussion in a context of hypocritical public propaganda campaigns.


Such tactics merely empower extremists on both sides. Washington should realize that Iran has thus far behaved with moderation; if the West continues to provoke it, Iran could do much more to make life unpleasant. Iran’s foreign policy is markedly moderate in comparison to that of the U.S. or Israel: it invades no one, it has no nuclear weapons and thus is certainly not threatening to use them, it has no foreign bases. Iran should realize that the extremists on the Western side that it so likes to sneer at have their fingers on nuclear triggers. The two sides are playing a fool’s game. Neither side seems to have any confidence in the willingness of the other to negotiate seriously, setting up a negative-sum dynamic in which both sides are losing. 


It is bad enough when politicians play a zero-sum game in which they reject compromises that allow each side to benefit and instead demand solutions that leave the adversary punished, humiliated, and vowing revenge. But when politicians play a negative-sum game, in which both sides are harmed, one has a perfect picture of unprofessionalism. The politicians of course have their reasons. Obama fears Republican electoral exploitation of any demonstration that he is thinking rather than flexing his muscles like a true cowboy. Given the even more vicious nature of Iranian politics, Ahmadinejad, already on the defensive for numerous domestic reasons, may fear for his life if he makes too many concessions. So both societies risk proxy wars, economic sabotage, terrorism (by Mossad, by the MEK, or perhaps by Iran), and even nuclear attack (by Israel) that would float a cloud of fallout (literally and figuratively) across the globe. The two sides are indeed playing a fool’s game.


No one expects the West to make all its concessions on day one, but it must offer some recognition of 1) Iran's legal rights, 2) Israel's nuclear rogue status, 3) and exactly what Iran would get for accepting any part of the highly discriminatory rules the U.S. wishes to impose on Iran. So far, the West gives no appearance of intending to negotiate anything other than Iran's surrender. That ain't happening; it is a recipe for disaster. Moreover, if it somehow did occur, it would only set the stage for a more serious subsequent crisis: Israeli extremists would be emboldened and all Iranians would be infuriated. 


As for negotiating a genuine solution, the Western position is still not even close to the starting gate. If the Obama Administration has any clear idea at all of what would constitute a “solution” to the U.S.-Iranian dispute, it is keeping that idea very, very close to its chest, and that is a tragedy, because what the world needs now is transparency: Iranian nuclear transparency and American transparency on a vision of how a genuine U.S.-Iranian détente might be made to work.

Legislating Morality

Who says you can't legislate morality? We not only do it but cannot, in our complex system, do anything else. The question is: what kind of morality do we legislate?

Government colors every facet of economic life. The frontiersman in us may scream, "Leave me alone," but government cannot avoid picking winners and losers. Society speaks through government. The alternative is rule of the jungle - individuals alone. When individuals try to work collectively, maybe they can occasionally rally for a boycott or riot, but mostly they speak through that collective organization we call "government." Government does something or not and either way sends a clear signal. Individuals then make choices in response. Every day we legislate to set options, which impact behavior, and which eventually tends to alter attitudes: utterly arbitrary and perhaps completely irrational, unjust, unfair, biased norms are created and eventually taken for granted as we forget their arbitrary beginnings.

Consider one of the most basic economic decisions that the U.S. government has made: a special very low capital gains tax. If you bake bread or catch criminals or teach our kids or smelt steel or manage a hospital, you pay a tax rate that is some rather substantial percent of your earned income. But if you get your money without earning it, i.e., just by sitting around and watching the value of your property or stocks or the value of your bets derived from whatever other thing you are betting on rise, then you are awarded a privileged and very low tax rate (made even lower by anti-worker Bush), which of course is called the capital gains rate on unearned income. It is called unearned because it is: you don't do anything but watch your investment's value change as the result of some independent process that luckily for you happens to be occurring. It is called "capital" gains because your gains are a function of capital--i.e., money--movements rather than physical or mental movements, which would be called "work."

Graph from Wikipedia.

One could call the government attitude back in the 1970s, when the capital gains tax rate was at 35%, "neutral"--the government more or less avoided punishing or rewarding either of the two alternative means of gaining income (working for it or gambling for it). By (infamously) the time of the U.S. invasion of Iraq, the elitist, anti-worker regime of Bush and Cheney had warped the government's attitude into a clear pro-gambling stance, heavily penalizing those still clueless enough (including this author) to be working for a living. Although the moral superiority of labor over capital had been recognized in U.S. politics at least as far back as Abraham Lincoln, who--though no economist--had a very clear sense of justice and pointed out that labor should be held in higher regard than capital since labor had to come first (with capital as the result of someone's hard work), in Washington, a pro-capital, anti-labor bias has long plagued U.S. society.

Thus, the government has made a fundamental value judgement: working to build up the nation (whatever physical or mental, blue-collar or white-collar work you care to do) is punished; gambling with money (most often not even your own money!) is rewarded. Any normally rational person (i.e., a person who chooses to maximize his own personal profit rather than sacrifice personally for the greater good of society) will thus conclude that he should become a financial manipulator. Worse, since the government rewards gambling with other people's money just as much as gambling with one's own, why would any rational person choose to risk his own money, when he can get the same reward for putting his neighbor at risk instead. So naturally, people flock to large-scale gambling with other people's money. And amazingly, even after the 2008 Recession clarified the idiocy of designing a society for the purpose of maximizing financial manipulations rather than investment in real work or actually doing real work, nothing has changed. Citizens who choose to work for a living are still punished and those who gamble with other people's money are still rewarded.

CBO via Mother Jones

All this has absolutely nothing to do with the size of government. It has to do with the choices that government makes. Financially, the U.S. today probably has the most extreme government of any major country on earth: i.e., the government that legally enforces the most pro-gambling, anti-work rules of any major government. Note that I did not say "the most pro-business." This bias in favor of financial manipulations has nothing to do with being pro-business. The business of making steal is punished just as much as the work of being a steelmaker is punished. The business of building hospitals is punished just as much as the work of being a surgeon is punished. Only businesses such as  J.P.Morgan and Bank of America and Goldman Sachs, i.e., businesses that make their money primarily from gambling with other people's money by making idiotic bets that X will change in value (the direction matters not a whit as long as you guess correctly), are rewarded. All businesses and individuals who actually do something, create something, build something are punished.

So there is no surprise that manufacturing is declining and infrastructure is decaying and schools don't teach as much as they used to. Who wants to repair bridges when the government penalizes you by confiscating an extra 15 - 25 cents out of every dollar you earn, in comparison with its treatment of financial manipulators?

There is no surprise that the JP Morgans are the richest and just about the largest companies in the land, that they are gaining the power to rule, and that politicians will take your tax dollars to provide them as much welfare as they may need. It is no surprise that their employees' salaries are the highest or that their CEO's are the richest. Well, to be correct, there is a class of business that is even richer - pure, 100% hedge funds, and that too is only logical, for they do nothing but gamble. After all, JP Morgan and Bank of America still do offer bank accounts to individuals, a distraction that may gain them further government benefits but still amounts to a distraction from their real line of business, so the real rich are not the Jamie Dimons at $25M or so per year but the several hedge fund managers at the top who each pocket a cool billion or so per year. When your annual income is $1B, that 15% tax rate makes a difference!

The decline of everything except finance is neither illogical nor "chance" nor surprising. Our system works as designed--for the benefit of financial manipulators.

Inexpedient Government

If "that government is best which governs least," the absence of transparency on the part of officials is the best clue that the government needs to be slapped down.

Government is inexpedient, but since we are far from prepared to manage without it, let's try to direct its awesome power at the target of achieving the common good.

I heartily accept the motto, “That government is best which governs least”; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe—“That government is best which governs not at all”; and when men are prepared for it, that will be the kind of government which they will have. Government is at best but an expedient; but most governments are usually, and all governments are sometimes, inexpedient.  ["True Conservatism" in Historical and Literary Lessons 5/20/12.]

Thoreau merits careful consideration: we can agree with him that were we wise enough to conserve our values through our joint actions day by day, then perhaps small government would be best. Until that nirvana on earth be attained by society, however, Thoreau's counsel is best accepted as true only in theory. In practice, a wiser rendition would be, "That government is best which governs to the minimum required for the common good."


Problems, of course, rear their ugly heads before the words leave my fingertips. Given a government so powerful that it can defeat an enemy intent on conquest, how can we prevent the officials of such government from intimidating us as individual citizens? Given a government so powerful that it can break up a financial monstrosity that manipulates trillions of dollars in secret bets, how can we prevent the officials of that government from accepting a few billion in spare change in return for pretending they cannot see the monster?

Thanks to Juan Cole, Informed Comment. 

Transparency.    Politicians have a pretty good idea whether or not what they are doing is appropriate: if they have expertise in nothing else, politicians certainly have expertise in detecting opportunities to conduct the public business for their personal advantage. When an official hides information, it is almost never for national security reasons, almost always to conceal behavior that the official knows full well was inappropriate. In a democracy, the public interest is rarely served by concealing the behavior or true reasons behind the behavior of officials. There are of course exceptions, perhaps the main one being a situation where a weak state under the threat of attack defends itself by pretending to be more powerful than it is. For a secure state, however, "national security" is a claim designed to protect the guilty far more often than to protect the public. Lack of transparency by officials constitutes prima fascie evidence of guilt and serves as society's alarm bell.

Government has justification for existing to the degree that it functions on behalf of society and with the permission of society. It is just so much nonsense to accuse the government of "being too big" or "interfering too much" without finishing the thought. If the government overwhelms healthy social activities, it is too big; if it fails to regulate socially harmful private interests, it is too small. The self-serving nature of many complaints accusing government of being "too big" would be quickly revealed if the critics were forced to complete their thoughts. 

Wall St. CEO: "Government is too big; it is preventing me from making billions without paying any taxes!"

Big Oil Executive: "Government is too big; it is preventing me from poisoning the air I don't own to pad my pocket!"

Racist: "Government is too big; it is subsidizing the education of minorities!"

Rich man: "Government is too big; it is offering health care to sick people who aren't even rich!"

We may agree with Thoreau that in principle, small government or no government would be best...once humans are ready for such liberty. In the meantime, what matters is not size but quality, and transparency is the essence of good governance.  It is not the size of the government but its transparency that indicates the citizenry needs to take disciplinary action.

Liberty, Slavery, and Class War

Liberty is both reciprocal and relative, not individual or absolute. Otherwise, it just means "my liberty, and your slavery."

Slavery is the power to compel. In the long and bumbling struggle of Americans for liberty, the physical bondage called slavery has been more clearly condemned than the more subtle but equally effective financial bondage of a rich elite, in part because the dial of financial bondage is far more sensitive (in modern parlance, "trickle down"), in part because the dial of financial bondage has been spun with far more skill, and in part because financial slavery is not easy to define, whereas physical slavery is. In the event, physical bondage was prohibited after a war that nearly destroyed the nation, while the level of financial bondage waxes and wanes with the alertness of the citizenry.


In the 21st century, carefully distracted and manipulated by culture wars, bribed by cheap Chinese consumer junk, scared by the marvelously useful specter of terror, and beguiled by a breathtakingly bold stream of elitist propaganda nonsense, American citizens are not very alert at all. Hence, the super-rich elite has been steadily spinning the dial on the financial slavery machine in the direction of transferring the marvelous wealth of American society into their own hands. It is no longer necessary to debate the idiocy of trickle down, for trickle down has been transformed into squeeze dry.

The world has never had a good definition of the word liberty, and the American people, just now, are much in want of one. We all declare for Liberty; but in using the same word we do not all mean the same thing. With some the word liberty may mean for each man to do as he pleases with himself, and the product of his labor; while with others the same word may mean for some men to do as they please with other men, and the product of other men’s labor. Here are two, not only different, but incompatable [sic] things, called by the same name–liberty. And it follows that each of the things is, by the respective parties, called by two different and incompatable [sic] names–liberty and tyranny.” [Abraham Lincoln, Speech to the Sanitary Commission, April 1864, as quoted in Ronald C. White, Jr., "Lincoln and the Rhetoric of Freedom," in Harold Holzer and Sara Vaugn Gabbard, eds., Lincoln and Freedom (Carbondale, Ill.: Southern Illinois UP, 2007, 139.)]

What in the language of abolition does not equally apply to the struggle against financial slavery?

When American families use the word "liberty," they are not referring to granting monster banks the liberty to engage in mortgage fraud or bet against their own clients or demand welfare to compensate them for their gambling losses. When billionaires use the word "liberty," they are referring to all this and more...to the right to buy elections by pitting their billions against the savings of normal voters in a "free" contest of "one dollar, one vote." The billionaires are referring to the right to tell the politicians they have bought to pass laws for their private convenience, laws that break unions, drive down wages, and push virtually everyone into subservience. The billionaires are referring to laws that allow them to destroy the environment that is our common heritage in order to enrich themselves even as they impoverish the rest of us.


When the average American uses the word "liberty," that word means "government  of the people, by the people, and for the people." When billionaires and their lackey politicians use the word "liberty," it means something incompatible: it means  "class war." And the billionaires are winning.

Does Europe Exist?

Europeans need to decide whether or not Europe exists. If it does, the rich need to act accordingly.

If Europe exists or wants to exist in the future, if there is a community of like-minded people who care about each other and want to stick together, then the fortunate need to help the unfortunate. This remark by former European Central Bank Executive Board Member Lorenzo Bini Smaghi is typical of Europe's problem:

Ireland has made huge progress over the last year. It is really a pity what is happening in Greece is spoiling all this. Without the Greek events, I think Ireland would be able to come back to the markets. [Bloomberg 5/18/12.]

Well, of course, without those who are in trouble, those who are not would be better off. What is the point of such churlishness? The point, clearly, is that "we" are out for ourselves and could care less about our neighbors. And there are currently more than a few rich Germans who think exactly the same thing about Ireland.

Domino theories usually don't hold much water, but the idea that eliminating Greece will only pull the plug on Spain...and Ireland is hard to dismiss. It is beginning to appear that the only Europe that exists is the old one that brought us a century of fascism and war. Is there a European community or are there just rich and everyone else?

It seems unimaginable for Europeans to turn their backs on the society that gave democracy to the West, but if the Acropolis no longer means anything, if the various little nationalities over there don't want to be Europeans working together in the face of adversity, here's an option: all the Mediterranean societies can walk away from the EEC, leaving it to the cold-hearted Germans who apparently are now quite happy to discover that they won WWII after all. It is not clear what that would accomplish in economic terms since Spain, Portugal, Italy, and Greece all face the same economic challenge, but at least they might have empathy for each other. And I perceive certain gentlemen standing in the shadows with welcoming smiles on their faces. Erdogan, Gul, and Davutoglu today constitute the most innovative decision-making team in the neighborhood. Could they lead a Mediterranean common market to a better tomorrow?

U.S. Economic System: Vote Progressive or Vote Elitist

Our government is indeed, as alleged, bad; all Americans, elitist or progressive, can agree on that, and it is bad because we keep electing officials who follow the money. If we the voters do not punish them for favoring the rich, why wouldn’t they?

Communities

When a community starts to salami slice itself, where does it end?

Regulating Yourself

The presence of J.P. Morgan's Dimon on the New York Fed board symbolizes the continuing fraud of a financial system in which police are magically unnecessary because the perps ensure their own honesty.

Support Democracy: Act One. Wisconsin

There probably is not a single person left in the U.S. who is not complaining about our government, but complaining merely puts a smirk on the faces of the Dimons, Kochs, Cheneys, Blankfeins. Either take action to support democracy or they win.

Real Radicalism

You think the Greek left is "radical?" Think again.

Discussing Austerity Sincerely

"Austerity" is a deadly serious concept that needs to be discussed sincerely, not used as a propaganda club by ambitious politicians.

Recognizing Class War

After a generation of subtle class war by the rich, a new pattern is emerging in the West: popular anger.

Austerity for the Rich

Austerity is a valuable skill; all men, not to mention, all societies, should know how to bite that bullet when unavoidable. But it is not a casual endeavor. If you believe in austerity, practice it.

Big Capital Makes the Case for Socialism

J.P. Morgan and Bank of America just this week illustrated again the need for big, socialist government.

Sometimes government should be small, to allow individual creativity, and sometimes big, to achieve victory over society's enemies. In just the last few days, two behemoths of capitalism--J.P. Morgan and Bank of America--have made the case, unintentionally, for government not just big but socialist. J.P. Morgan admitted that it was up to all the old Wall St. tricks that created the Financial Crisis of 2008 that stole homes out from under millions of Americans and left millions of others unemployed. Bank of America arrogantly refused stockholders' calls for it to investigate itself to detect fraudulent foreclosure behavior. A well brought up five-year-old knows enough to think critically about his or her own behavior.

Everyone is of course now having fun at Jamie Dimon's expense, not that he can't afford it with his repulsive $25M a year salary, unfortunately eclipsing Bank of America's sneering attitude toward both stockholders and customers, which may cause even more harm to U.S. society. Unfortunately, the critical rhetoric focuses on the obvious but superficial calls for regulation.

Regulation of the out-of-control financial piracy of Big Capital is a perhaps useful band-aid that may stem the loss of financial blood while we move the U.S. financial system to the hospital, but what the patient needs is either major surgery or to be put out of its misery. Americans need to have a real national debate about the terms of this restructuring but must take care to avoid wasting time; four years have already been wasted, and Romney clearly feels no embarrassment in defending the system that brought us the Financial Crisis, suggesting that he at least feels that enough Americans can be hoodwinked once again to get him into the
White House.

There is perhaps no harm in immediately instituting some obvious regulations:

• no bank should be permitted to gamble with its own money;
• derivatives should be regulated with total transparency if not banned entirely; 
• the revolving door between financial institution management and government positions that facilitates capitalist pirates writing laws to cheat the American people should be slammed shut.

Beyond regulations, new laws would help.

• Punishments should be made up close and personal for all officials of financial institutions that take government bailouts. All income beyond minimum wage levels obtained (one hardly dares say "earned") for, say, the five years leading up to any receipt of government welfare or bailouts should be forfeited.
• The tax code should immediately be reformed to ensure that income tax levels for workers are always lower than capital gains. It is a fundamental moral point that earned income should be taxed less harshly than unearned income: there is a reason it's called "unearned," folks!

But all this is just band-aids. The real issue that Americans should be discussing in this election year is how to put the American people back in the driver's seat and put Big Finance in its place. Our individualist capitalism system may work great on Main Street, but on Wall Street it has become too big to tolerate. In a word, then, to what degree does the U.S. now need to replace capitalism with socialism?

Capitalism or Socialism?

Arguing over “capitalism or socialism, small government or big government” serves only to confuse voters; indeed, that is often the point: when the rich advocate “small” government, they almost always mean “small” for someone else. The banquet of a good lifestyle requires both the salt of capitalism and the pepper of socialism, big government when it helps society, small government otherwise.

The issue we face is deciding when government should be big, when it should be “small,” to what degree the economic system should be capitalist or socialist.  Given an environment of strict regulation and a well educated citizenry, capitalism in certain sectors of the economy can facilitate rapid development by replacing tedious and inefficient government oversight with self-organized popular creativity. But fraud is inherent in a system that allows some to become grossly more powerful than others, as 99% of us have learned to our sorrow since 2007.

Moreover, even the rich would not like pure capitalism. Who wants to pay a toll on every single road? The West had such a system once – in the Middle Ages, where local noblemen and other robbers interrupted trade and travel to line their pockets. Who, except a dictator, would want a capitalist Internet charging a fee every time you surfed or sent an email? Who would want to buy the air they breathe from a local vendor?

Does that last example sound idiotic? Corporations are already trying to steal the planet’s drinking water and then sell it back to the thirsty. This particular abuse of the commons (drinking water, like air, being a “common” good that should be shared by all) provoked a revolution in Bolivia and a bit of a revolt in Atlanta as well. As extremist fans of extreme capitalism undermine government’s power to regulate while corporations take advantage by polluting the air we breathe, the temptation to buy clean, bottled air can only increase. A better way to go for all breathers (even rich ones) would obviously be to defend the commons by keeping the air clean.

Other examples of situations where capitalism seems pretty clearly inappropriate are legion. Extreme capitalism is not even appropriate in that capital of capitalism, Wall Street – it leads to fraud, distortions of fundamentals, and the chaos that requires emergency Big Government of the most extreme type. Even the purest and richest of pure capitalists, it seems, cannot function efficiently without oversight; just ask the boys at AIG and Lehman.

Education provides another example of an area where small government and unrestrained capitalism (in this case, turning education into a private business) risks real harm to the common good. Conservatives love to advocate private schools, but would they appreciate having to send their kids to a private socialist or Salafi school? Once society grants private schools the right to exist, where is the line to be drawn?

Health care is a second misleading example of conservative knee-jerk hostility to government leading to outcomes harmful to themselves as well as everyone else. Why would anyone want a capitalist health care system, with doctors focused on profit rather than helping the sick? Who wants medicine prescribed on the basis of the profit it returns to the doctor rather than the health value for the patient? On the other hand, Big Government-Big Pharma corruption widespread in government-run health care is equally pernicious. Any system can be abused, but the very purpose of capitalist health care is to make money, and the easiest way to do that is to treat only the affluent and to ignore…the sick! The purpose of socialist health care, in contrast, is for society to decide on some minimum level of health care and then provide it to all. The real argument should center not on the size of government involvement in health care but whether the government role protects the public or acts as a cover for Big Pharma greed.

Morally, there is no contest. Socialist principles are indistinguishable from the Declaration of Independence’s call for government “of the people, by the people, and for the people.”

In practice, the issue is less clear-cut. Even the richest corporate leaders want some socialism: Big Oil happily takes billions in U.S. welfare every year; Big Pharma designs the health care system to maximize profits rather than health care quality; Big Finance warps the U.S. tax code to its private benefit. No billionaire wants pure capitalism.

On the other hand, there is no doubt that social regimes can become both oppressive and inefficient. Moreover, many examples of situations where socialism (i.e., ownership by society) is inappropriate also exist. Public (i.e., socialized) libraries are great as long as the government’s role is restricted to funding and depoliticizing, but who would want the government to decide which books we could read? Public management of the Internet is crucial to its contribution to society, but who would want the government to censor their emails? Government inspectors are critical to a safe food supply, but who would want the government setting their dinner menu?

And then there’s the little matter of physical security. Who wants private armies? The West had that system once, too. It was called feudalism. On the other hand, a state that controls all means of force is an invitation to dictatorship. One possible compromise is to have both central and local powers, with the central government having only those powers explicitly awarded to it. But ultimately security for society must rest on strong government combined with the rule of law, transparency, and popular vigilance…not private enterprise.

It matters little to the victim whether oppression comes at the hands of a corporation or a regime. And yet, a fundamental distinction exists between the worst socialist regime and the worst capitalist system: at least under socialism, the people always have the option of voting. (If a socialist system removes the right to vote or, as in the USSR, rigs the vote, then the system has turned into something else – call it a dictatorship or communism or whatever you want; it is no longer “socialism;” it is no longer rule for society but rule for the rulers.) In a system with a weak regime and powerful, unrestrained corporations, the people have no defense at all. Such a system has surely never existed in modern human history, for the corporations would immediately demand and receive special privileges and transform the system into a Big Government Corporate Welfare System, essentially fascism without brutality, and, indeed, that is precisely the goal of the class war launched by the super-rich in the U.S. Under a Big Government for Corporations system, the people would have no recourse but armed revolt, which would surely provoke a corporate crackdown and the transformation of the system into full-blown fascism.

The problem in the U.S. today is essentially Big Government that works for Big Capital rather than Society and does so in an atmosphere of unadulterated corporate piracy. There is a fundamental distinction between the corporations of the 1950s that provided lifetime careers at good salaries while they made America rich and the banks that run mortgage mills to make a quick buck off high fees with the intention of selling the mortgage fast enough to avoid responsibility for what happens to the deluded new owner. The rich seem to recognize no common interest between themselves and the society that protects them from foreign aggression or domestic street crime, that paves the roads their limousines use, that buys the product they produce (if, indeed, they still produce anything). Government is indeed “big” and uses its power to hand out corporate welfare on the basis of the size of the corporation rather than the utility of the service that corporation provides to society.

Life is too complicated to be regulated at every point, and people are too vulnerable to be left on their own in a world of enormous institutions. It’s not a matter of capitalism vs. socialism. Rather, the challenge is to balance freedom for individual creativity against the common need for protection. Capitalism with a heavy dose of socialism in sectors critical to the common good works in a strong democracy, enabling economic efficiency to be combined with popular oversight. “Strong democracy,” however, implies the acceptance by all of a social contract that puts government in the hands “of the people.” Room exists for powerful private interests as long as the economic pie is expanding faster than the rate at which power and wealth flow to the most powerful private elements. To the degree that those private power centers seek profit at the expense of the common good, capitalist tendencies need to be curtailed in favor of socialist tendencies; put differently, government power needs to be enhanced for the express purpose of protecting the commons (be it air, water, civil rights, freedom of education, protection against police brutality, clean food, or reliable health care) against abuse by those powerful private interests.

Today in the U.S., conservatives are correct that government is too big: too big when it allows corporate fraud to go unpunished, too big when it allows war profiteers to make billions, too big when it gives welfare to wealthy oil corporations, too big when the police suppress protests against corporate crime). When government tries to regulate and finds itself too weak to control corruption or corporate abuse, then the government is too small. The problem is not the size of the government but in whose interests the government functions. 


_______________
Here we go again -

• Dimon admits Morgan Stanley behavior "egregious:" Wall St. financial firms have become the enemy of American society
• Senator Carl Levin: "The enormous loss JP Morgan announced today is just the latest evidence that what banks call 'hedges' are often risky bets that so-called 'too big to fail' banks have no business making. Today’s announcement is a stark reminder of the need for regulators to establish tough, effective standards to implement the Merkley-Levin language to protect taxpayers from having to cover such high-risk bets."
• Simon Johnson - "fatal flaw in Federal Reserve thinking"
• Memo to Senate Banking Committee: "Banks would not be allowed to conduct broker-dealer activities, make markets in derivatives or securities, trade securities or derivatives for either their own account or customers, or sponsor hedge or private equity funds."
• Paul Volker, 5/9/12 in Senate testimony: "The expectation that taxpayers will help absorb potential losses can only reassure creditors that risks will be minimized and help induce risk-taking on the assumption that losses will be socialized"

Twenty-First Century Class War

The economic ship of the West is dead in the water because the wind of social egalitarianism that has blown strong since the New Deal and victory over fascism has been replaced by a new class war by the uber-rich.

The uber-rich of the extreme right has decided to abandon the New Deal compromise and launch a class war against the 99%. This is not ideological hot air. Protection of rich financial criminals, bailouts of fraudulent corporations, planetary environmental poisoning, the intentional promotion of bubbles, the exploitation of natural and political disasters to further enrich the rich, and direct attacks against democracy to suppress public criticism that might "embarrass" the rich constitute the 21st century weapons of choice for class warfare. Wealth should be built on a rich society, not the zero-sum game of the rich stealing from the poor. This paragraph is a huge accusation of unpatriotic behavior and deserves extremely careful analysis, which is indeed being done by numerous specialists and protest groups, but perhaps a few points are worth spelling out here:

Oil-Poisoned Turtle, Courtesy of BP, an "Innocent Corporate Person"

• when an oil corporation is allowed to walk away free after poisoning a significant portion of the world's best fishing territory, endangering the livelihood of thousands of fishermen and wrecking the very genetic foundation of life itself, the economy has been undermined in a way that, for those of us alive today, effectively amounts to permanent damage: we can never be that rich again;
• when gambling with other people's money and doing so under false pretenses becomes not just a fraudulent fad but the primary path to self-enrichment, society is little more than a junkie seeking his next high;

Torturing the Unindicted, Courtesy of the Neo-Cons

• when an imperial project to shore up superpower control over other societies that aspire to independence, not to mention grabbing their resources, goes to the extreme of destroying their whole society, the whole world has been impoverished;

• when a country behaves with such viciousness, it harms itself, a conclusion all the more true when that country is a democracy that aspires to lead the world by example;
• when government oppresses free speech to protect fraudulent corporations from being publicly criticized.

Such is class war in the 21st century.


If you still think that "fraud," i.e., criminal behavior, is too strong a term for the broad behavior over the last decade of the financial elite of the U.S. on Wall St. and in the home mortgage industry or if you do not think Washington is complicit in this fraud, consider this:

Fraud does not even make Geithner’s list of contributing factors to financial crises.  The U.S. has experienced three recent financial crises – the S&L debacle (which is the subject of this first installment), the Enron era frauds, and the ongoing crisis.  Accounting control fraud is the leading cause of each of the crises.  “Control fraud” is the term white-collar criminologists use to refer to frauds in which the person controlling a seemingly legitimate entity uses it as a “weapon” to defraud.  Accounting is the “weapon of choice” for elite financial frauds.  Control frauds cause greater financial losses than all other forms of property crime – combined. [William Black on New Economic Perspectives.]

The latest case in point is the effort by Bank of America to resist stockholder demands that it review its own foreclosure practices! 

The New York City pension funds and 9 other institutional investors are urging Bank of America to conduct a thorough review of its foreclosure practices and report the results to shareholders. BofA has been plagued by widespread allegations of fraud in the foreclosure process, with a report from the Inspector General at the Department of Housing and Urban Development finding that the bank's management was involved in the improper foreclosure practices. BofA management opposes the shareholder resolution that would require a review of foreclosure practices. [Huffington Post 5/9/12.]

Demanding that BOA officials be jailed might, indeed, meet with resistance on the part of those officials, but why would they resist calls for them to conduct their own internal reviews...unless they were already well aware they had plenty to hide? 


The key to solving the problem is for Americans to realize that war abroad and theft at home are two sides of the same class war coin. Socially conscious domestic policy  (policy designed to care for the 99%) does not fit well with a foreign policy based on force. Such a combination would constitute a self-contradictory combination. To put it simply, leaders of imperialist campaigns see citizens as cannon fodder, not those they serve. Moreover, force (more specifically, the American way of high-tech war) is expensive.


Were the uber-rich (e.g., Romney, the Koch brothers, Mozillo, the CEO's of the horde of war profiteer corporations like Halliburton, and the officials of Big Oil) to pay their fair share for their privileges, enormous strides toward bringing America back could be made. There is much to be done - creating a world-class solar industry, cleaning up New Orleans...


Unfortunately, the Obama Administration remains stuck in essentially a neo-con foreign policy of playing a zero-sum game of U.S. supremacy at the expense of justice for Muslim societies and a "neo-liberal" (i.e., very conservative, exploitative) domestic policy of protecting billionaires at the expense of society.

Stupid Brutes!

"Stupid brutes?!?" How dare she call them that?

French Socialism Offers Hope of a Better World

Can socialist victory in France and Greece turn the tide of post-Reagan elite piracy back toward Western social consciousness?

Fear, Honor, Interests

If Washington were willing to recognize that Iranians have fear of nuclear powers who threaten them, want to be treated with honor, and have the same set of interests that all other countries have, then Washington would be well on the way toward devising a successful policy toward Iran.

Israeli Apartheid in the Spotlight

The struggle against discrimination continues, just changing venue as time passes.

Voting for the National Interest...and Yours

Unless you happen to be a multi-millionaire living only for today and with your money carefully hidden off-shore, understanding the "national" interest is easy; it is the same as yours.

Our National Interest

“National interest” justifies every crime in the book, right? Well, not exactly. You and I, and our neighbors are the nation, and if the latest scheme hurts all of us, then whatever the billionaire or the politician wants is not in the national interest.