Notes from the Field
by Dmitry Orlov
Club Orlov (February 20 2012)
Guest post by Mark. As I keep saying, being poor takes practice.
Yin Jun
http://3.bp.blogspot.com/-TTRzcux8RK0/T0LQrfiXgyI/AAAAAAAABzs/8rTRDZRQufI/s200/YinJun_Crybaby.jpg
You hear a lot of talk about relocalization and deindustrialization. The pastoral life, the good old days. How romantic! Reality pays you a visit when your pick-axe hits a rock, a chunk hits your face, and you taste your own blood.
Unaware of it at the time, I was a child of privilege, one of five born to a Chairman of Earth and Space Sciences at a State University in New York. We were all expected to be high achievers. I fulfilled the expectation and put in 32 years as an engineer helping the uber-wealthy zip around the skies in personal rocket ships from one golf game to another while chalking it off as business expenses, when all I ever really wanted to do was sit out in the woods and cook some food on a stick over a fire.
In 1994 I acquired a 160 acre tract of land in southeast Kansas, for a price only slightly above chicken feed, as a weekender place to go sit by that fire and decompress from the rat-race. Eighteen years ago the future didn’t look quite so ominous. Reel forward to the present and this full-time back-to-the-land experiment is starting to look like a pretty good idea. Some stark realities become self evident however when you are actually ‘living the life’. Talking about it is easy. Doing it is something altogether different. Here is where I wish to convey a few ‘notes from the field’:
1. You realize after a while it is mostly hard, dirty, repetitive and boring. Mud, blood, shit, sweat, discomfort, disappointment, death. There are rewards, but you have to have a passion for it to endure. People who have grown up ranching already know these things of course, but they don’t have to adapt. They know the life.
2. If you create an artificial abundance of anything, Mother Nature will do her best to return things to the status quo. Plant a large garden and you will have more venison than you can eat. Goats are not native to this region, coyotes are. Eagles, hawks, owls, raccoons, possums, foxes and bobcats are also native here. Chickens are not. They will all eat your chickens, given a chance.
3. If you want to eat meat, you have to kill something. It’s brutal and unpleasant. Blood is blood, you best get used to it. Warm guts smell bad. They smell different, depending on what you just killed, but they all smell bad. The first time you shove an arm elbow deep in warm guts and blood to tear loose some connective tissue, you are hard pressed to not lose your lunch. It begins to get a bit easier when you have a chilled carcass with the hide peeled off, and the pieces you hack off start to look like something you would buy in a grocery store, but the lifeless eyes continue to stare.
4. Intellectual deprivation. This was unexpected. It doesn’t become apparent right away because you’re so damned glad to be away from the crush of humanity and the demolition derby approach to getting around. Land is inexpensive in certain regions for a reason. Living elsewhere is much easier (so far). In this case, the regional economy has been in decline for seventy years. The population has declined nearly eighty percent from its peak, and the brain drain is close to 100%. Most anybody with ambition left long ago, and most youth leave, never to return. It is not hard now to understand why, historically, tribes of one to five haven’t fared well. You need some minimum critical mass of human interaction to be able to survive psychologically, and some degree of specialization and division of labor just to cover all the bases. For those of you considering it, the ‘survivalist bunker’ approach to dealing with the future would be ill advised. Social interaction is not just something nice, it is an imperative.
Not to be too glum, on the upside there is sunshine, fresh air, fresh meat, eggs, milk, cheese, honey, fruits, nuts, vegetables, abundant wildlife and beautiful scenery. You don’t need to ‘go to the gym’ to stay in shape either.
To peer into the future and see nothing beyond an endless re-run of this hard living is enough to put fear and dread in most hearts. I find it increasingly difficult to believe that dispossessed cubicle dwellers will be able to adapt physically or mentally.
In this setting it is not hard to envision the emergence of a tradition where you take each seventh day off from the grunt work and get together with your friends and neighbors just to celebrate the fact you are still breathing. No deities or voodoo required. Then just for fun, throw a big feast every solstice and equinox and invite everybody. Wait … haven’t we been there before?
People tend to think of a ‘land of milk and honey’ as something idyllic and easy. This land of milk and honey is accessible, tangible and real, but it comes with strings attached.
Shining Light on ACTA’s Lack of Transparency
by Glyn Moody
http://www.techdirt.com (February 17 2012)
One of the key problems with ACTA is the lack of transparency during its negotiation. That this is becoming a big issue in Europe is shown by the fact that the European Commission has tried to dispose of the question twice – first in its “Ten myths about ACTA”, which I discussed {1} recently on Techdirt, and now with a page entitled “Transparency of ACTA negotiations” {2}:
This factsheet aims at clarifying the way the European Parliament, civil society and all stakeholders have been informed and involved in the negotiation process.
Note that it insists all stakeholders were “informed and involved”. I’d like to explore that a little.
One important group are the MEPs (Members of the European Parliament), since they are the representatives of the 500 million citizens in the European Union {3}. The Commission spells out exactly how often they communicated with this group of politicians:
During the ACTA negotiations, the European Commission has shared the following documents with the European Parliament (see annex for full list of documents):
7 successive draft texts of the agreement
3 detailed written reports on the negotiation rounds
14 notes and internal working papers
But there’s a problem with those documents, as the Pirate Party MEP Christian Engstrom highlighted {4} in a blog post back in 2010: MEPs weren’t allowed to pass on any information they obtained.
The ACTA negotiators from the Commission came to the European Parliament today, to inform the Parliament about what happened in the last round of negotiations in Luzern.
However, the meeting where the information was to be given was declared “in camera”, that is, closed to the public.
At the meeting, I asked if this meant that there were restrictions on how the information given could be used and spread. At first the Commission seemed unwilling to answer this question with a straight yes or no, but after I had repeated the question a number of times, they finally came out and said that I would not be allowed to spread the information given.
In fact, Engstrom pointed out that the situation was even worse:
According Article 218(10) of the Lisbon Treaty, the Commission has a duty to keep the European Parliament “immediately and fully informed at all stages of the procedure”.
To give oral information in a closed meeting, with no documents at all handed out, hardly qualifies as keeping the Parliament “fully informed”.
It is obvious that the Commission has no intention of living up to its obligations under the Treaty when it comes to informing the Parliament.
That is disgraceful.
So according to an MEP who was theoretically privy to at least some of those drafts, reports and internal working papers supposedly available, the Commission failed even to inform the European Parliament properly. Moreover, what information there was, could not then be passed on to the people the MEPs were representing.
But there was another route for information to be conveyed to them: via non-governmental organizations (NGOs). Here’s the kind of transparency the European Commission says it provided to those groups:
the team of negotiators have invited, met and extensively debriefed NGOs, academia and representatives from political parties such as the Pirate Party during the last four rounds of negotiations in Wellington, Luzern, Washington and Tokyo. These meetings took place on side events during the negotiation sessions. The stakeholders had access to the negotiators’ teams and issues and concerns raised by Civil Society were discussed and explained.
That sounds pretty good, but as Techdirt reported about the last of those meetings, the reality was rather different {5}:
For the past month, negotiators had been telling the NGOs that the meetings were starting September 27th. Then, they suddenly announced that it would actually start September 23rd, and the NGO meeting would be on the 24th. Except, by the time they announced it, it was too late for most representatives to get to Japan in time (many had booked flights for the following week), and the Japanese government refused to change the time of the meeting. Then, finally, when the meeting was held and only two or three NGOs were actually able to make it, it wasn’t so much a “meeting” as it was lunch – and, even then, all the ACTA negotiators sat together, leaving no room for the NGOs.
So, it looks like the only channels of communication that the public had were direct ones. Here’s what happened there according to the European Commission:
Four stakeholders’ meetings – open to all citizens – were organised in Brussels:
23 June 2008
21 April 2009
22 March 2010 and
25 January 2011
That’s it: one opportunity a year for 500 million people somehow to find out everything that had happened with ACTA – based on the five documents that were publicly released, three of which were “speaking points” – and to make their own views heard.
The European Commission is obviously aware that this is a joke, and desperately tries to mitigate its blatant failure to involve ordinary citizens by adding:
During the whole negotiation process, the European Commission has not recruited any consultants, be it from industry or from NGOs or civil society. The European Commission denies having provided any kind of preferential access to information to any group of stakeholders, be it from industry, trade unions or from other stakeholders.
Even if it’s true the EU negotiators didn’t provide such preferential access, that’s irrelevant, because the US side did {6}:
Apart from the participating governments, an advisory committee of large US-based multinational corporations was consulted on the content of the draft treaty, including the Pharmaceutical Research and Manufacturers of America and the International Intellectual Property Alliance (which includes the Business Software Alliance, Motion Picture Association of America, and Recording Industry Association of America). A 2009 Freedom of Information request showed that the following companies also received copies of the draft under a nondisclosure agreement: Google, eBay, Intel, Dell, News Corporation, Sony Pictures, Time Warner, and Verizon.
So the European Commission’s claim that “all stakeholders have been informed and involved in the negotiation process” is true only at the most superficial of levels. Yes, MEPs were told minimal information – but weren’t allowed to pass it on to the people they represent; yes, NGOs were able to sit in the same room as the negotiators for an hour or two – if they managed to overcome the series of obstacles designed to stop them getting there on the right day; yes, members of the public could express their views – but only once a year, by travelling to Brussels at their own expense, and without access to the vast majority of relevant documents.
In reality, the only stakeholders that were truly informed and involved were the copyright industries who were present right from the start. ACTA is simply the implementation of their one-sided demands without any meaningful checks or balances for the benefit of the billion people who will be most affected by it, but who were consistently ignored during its negotiations.
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Links:
{2} http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/12/99
{3} http://en.wikipedia.org/wiki/Demographics_of_the_European_Union
{4} http://christianengstrom.wordpress.com/2010/07/12/acta-negotiators-inform-the-parliament-in-secret/
{5} http://www.techdirt.com/articles/20101002/19304011258/negotiators-get-close-on-acta-and-continue-to-mislead-about-it.shtml
{6} http://en.wikipedia.org/wiki/Anti-Counterfeiting_Trade_Agreement#Leaks.2C_publications_and_consultations
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Glyn Moody’s look at all levels of the enterprise open source stack. The blog will look at the organisations that are embracing open source, old and new alike (start-ups welcome), and the communities of users and developers that have formed around them (or not, as the case may be). Contact Glyn at glyn.moody@gmail.com.
http://www.techdirt.com/articles/20120217/04283717793/shining-light-actas-lack-transparency.shtml
The Doom Loop
On equity and the banking system
by Andrew Haldane
London Review of Books (February 23 2012)
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In 1989, the CEOs of the seven largest banks in the US earned an average of $2.8 million, almost a hundred times the annual income of the average US household. In the same year, the CEOs of the largest four UK banks earned GBP 453,000, fifty times average UK household income. These are striking inequalities. Yet by 2007, at the height of the financial sector boom, CEO pay at the largest US banks had risen nearly tenfold to $26 million, more than five hundred times US household income, while among the UK’s largest banks it had risen by an almost identical factor to reach GBP 4.3 million, 230 times UK household income in that year.
How do we make sense of these salary increases? Easily, in fact. During the go-go years, bank profits reached spectacular highs. Bank shareholders remunerated managers for delivering these riches; CEO pay grew almost exactly in line with shareholder returns. Reality then intervened. The heart-stopping global recession of the last few years was largely induced by financial sector excess. The long-term costs of the crisis are likely comfortably to exceed a year’s global income.
The continuing backlash against banking, as evidenced in popular protests on Wall Street and in the City of London, is a response not just to the fact that the world is poorer, as pre-crisis riches have turned to rags, but to the way these riches were privatised, while the rags are being socialised. This disparity is nothing new. Neither, in the main, is it anyone’s fault. For the most part the financial crisis was not the result of individual wickedness or folly. It is not a story of pantomime villains and village idiots. Instead the crisis reflected a failure of the entire system of financial sector governance.
In the first half of the 19th century, the business of banking was simple. The UK had around five hundred banks and seven hundred building societies. Most of the former operated as unlimited liability partnerships: the owners-cum-managers backed the banks’ losses with every last penny of their own personal wealth. The building societies operated as mutually owned co-operatives, with ownership, control and liability all pooled. Financial sector assets amounted to less than fifty per cent of annual UK GDP.
Banks’ balance sheets were heavily cushioned. Shareholder funds – so-called equity capital – protected depositors from loss and often accounted for as much as half of the balance sheet. Cash, and liquid securities such as government bonds, enabled banks to meet their payment obligations to depositors. They accounted for about a third of banks’ assets. Banking systems maintained broadly similar arrangements across the US and Europe. This relationship between governance and balance sheet was mutually compatible. Owing to unlimited liability, control was exercised by investors whose personal wealth was on the line – a potent incentive to be prudent with depositors’ money. Bank directors – the major shareholders responsible for day to day management – excluded investors who didn’t have sufficiently deep pockets to bear the risk. Shareholders were firmly on the hook, and had a strong incentive, in turn, to make sure that managers didn’t step out of line. Managers monitored shareholders and shareholders managers. In this way, the 19th-century banking model kept risk-taking in check.
The global environment was changing, however. During the first half of the 19th century, rich countries were hungry for capital to finance investment in infrastructure, including railways. As long as capital in banks was restricted to a small number of unlimited liability partners, credit was constricted. But in 1826, the six‑partner restriction on UK banks was lifted, allowing them to operate with an unlimited number of shareholders as joint-stock banks. Ownership and control became legally distinct – a crucial historical shift. Nevertheless, shareholder discipline was still proving an effective brake on risky lending and there was pressure for further liberalisation. One obvious solution was to limit shareholder liability so that their losses were no greater than their initial investment. Once investors’ personal wealth was no longer in jeopardy, bank credit would free up. In the UK, the change came with the Limited Liability Act and Joint Stock Companies Acts of 1855 and 1856.
At first, limited liability status was not taken up enthusiastically by banks: they were reluctant to give up unlimited liability, which they regarded as a badge of prudence. But the collapse of the City of Glasgow bank in 1878, caused by speculative lending and false accounting practices, ended that. Eighty per cent of the bank’s shareholders were made destitute. The opinions of bankers, Parliament and public alike shifted quickly. By 1889, only two unlimited liability British banks remained.
Even then, some of the benefits of unlimited liability were preserved. UK banks moved to a regime of extended liability, whereby shareholders were liable for an additional fixed level of reserve capital in the event of stress or bankruptcy. This made for a deep pool of contingent capital, often amounting to fifty per cent of a bank’s assets. Extended liability was enough to keep bank shareholders and managers on their toes: risk monitoring incentives remained sharp and the appetite for risk blunt. But the balance started to tilt at the beginning of the 20th century. As banks grew in size, the vetting of shareholders became impractical. Then, during the Depression, the need to draw from the contingent capital pool had the effect of heightening panic among UK and US banks, rather than diminishing it. By the end of the 1930s, only six British banks still maintained reserve liability. The governance and balance sheets of banks were, by this time, unrecognisable from those a century earlier. Banks were now controlled by arms-length managers, no longer major shareholders, while ownership was held by a widely dispersed set of shareholders, unvetted and anonymous, their upside pay-offs unlimited but their downside risks now capped by limited liability.
What impact did these changes have on banks’ incentive to take risks? The answer was provided in 1974, around a hundred years after the introduction of limited liability, by the Nobel Prize-winning economist Robert Merton, who showed that the equity of a limited liability company could be valued as if it were a financial option – that is, an instrument which offers rights over the future fruits of the company’s assets. This option has value – in the jargon, it is ‘in the money’ – provided a firm’s assets cover its debts. But the most extraordinary implication of Merton’s framework is that the value of those options can be enhanced by increases in the degree of uncertainty about the value of the bank’s assets. How so? Because while uncertainty increases both upside and downside risks, downside risks are capped by limited liability. For shareholders, the sky is the limit but the floor is always just beneath their feet. To maximise shareholder value, therefore, banks need simply to seek bigger and riskier bets.
The response to these incentives has been entirely predictable. Since 1880, the ratio of UK bank assets to GDP has risen roughly tenfold, and the increase has been particularly steep over the past thirty years, peaking at well over 500 per cent of GDP. The pattern in other developed countries has been similar, if less dramatic. The bets weren’t just bigger, but also riskier. During the 20th century, an alphabet soup of exotic and complex instruments, often known by three-letter acronyms, came to displace simple loans on banks’ balance sheets. These boosted banks’ returns. But if returns are high, risks are never far behind. Returns on bank assets were two and a half times more volatile at the end of the 20th century than at the beginning.
Finance has a further trick up its sleeve, a trick that at a stroke boosts both volatility and returns to the owners of a bank. Leverage, simply put, is borrowing against your capital stake. For example, if borrowing allows a bank to hold assets of 120 against capital of ten, then its leverage is twelve. The beauty of leverage is that it effortlessly multiplies the amount shareholders receive as a return on their assets. Consider a bank that makes a one per cent return on its assets. By allowing leverage (assets relative to equity) of two, shareholders can double their money; with leverage of four, they can quadruple their money. And so on. Banks have been using this device for well over a century. As unlimited liability was phased out, leverage among banks rose from about three or four in the middle of the 19th century to about five or six at its close. Leverage continued its upward march when extended liability was removed, and by the end of the 20th century it was higher than twenty. In 2007, at its high-water mark, bank leverage hit thirty or more.
This strategy translated, by the arithmetical magic of leverage, into higher shareholder returns. Having begun the 20th century in modest single figures, equity returns to banks were, on average, close to twenty per cent by its end. At the height of the boom, bank equity returns touched thirty per cent. Higher leverage accounted for almost all of this. Bank managers no longer had to sweat their assets: they simply had to borrow against them.
The downside of this strategy is now only too clear. With leverage of two (UK banks in 1850), fifty per cent of your assets must go bad before your equity is wiped out and you go bust. But with leverage of twenty (UK banks in 2000), you will go bust if you lose only five per cent of your assets. Over the last hundred years, as returns to banking have increased so too has their volatility, rising by a factor of between six and sevenfold. In the recent financial crisis, UK banks’ shareholder returns fell from twenty-something to below zero in the space of a year.
In principle, market discipline ought to form a natural counterweight to these balance-sheet risks. Debt-holders in a bank, including depositors, ought to worry about shouldering increased risk, and should respond by raising the cost of funds or restricting their quantity, thereby restraining risk-hungry, excess-profit-seeking shareholders. During the 19th century, that theory fitted the facts. Depositor flight and bank runs followed when banks were perceived as fragile. But as the 20th century progressed, evidence of debtors exerting discipline over managers became increasingly patchy. Nowhere was the ineffectiveness of market discipline better illustrated than in the run-up to the recent financial crisis. At the same time as they were leveraging themselves up to the hilt, banks traded in debt markets as though they were riskless. Debtors should act as a brake on risk-taking, but in practice they served as an accelerator. The reason, once again, lies in incentives. When they face a crisis, it is dangerous for banks to have debtors take a hit. To do so may scare the horses, risking a stampede of deposits out of the door. Debtor discipline then has the effect of making a bad situation worse. Extended liability was abolished for just that reason. And the complex debt instruments issued by banks a hundred years later buckled under the same pressure.
In fact, making debtors shoulder the burden of risk in a crisis may have become harder over the past century. The structure of banking has been transformed during that time, in particular by the emergence of financial leviathans considered ‘too big to fail’. At the start of the 20th century, the assets of the UK’s three largest banks accounted for less than ten per cent of GDP. By 2007, that figure had risen above 200 per cent of GDP. When these institutions hit problems, a bad situation can become catastrophic. In this crisis, as in past ones, catastrophe insurance was supplied not by private creditors but by taxpayers. Only they had pockets deep enough to refloat banks with such huge assets. This story has been repeated for the better part of a century and a half; in evolutionary terms, we have had survival not of the fittest but the fattest. I call this phenomenon the ‘doom loop’.
Consider the effects of the too-big-to-fail problem on risk-taking incentives. If banks know they will be bailed out, those holding their debt will be less likely to price the risk of failure for themselves. Debtor discipline will therefore be weakest among those institutions where society would wish it to be strongest. This encourages them to grow larger still: the leverage cycle isn’t merely repeated, but amplified. The doom loop grows larger. The biggest banks effectively benefit from a disguised, and growing, state subsidy. By my estimate, for UK banks this subsidy amounts to tens of billions of pounds per year and has often stretched to hundreds of billions. Few UK government spending departments have budgets this big. For the global banks, the subsidy can reach a trillion dollars – about eight times the annual global development budget.
We have arrived at a situation in which the ownership and control of banks is typically vested in agents representing small slivers of the balance sheet, but operating with socially sub-optimal risk-taking incentives. It is clear who the losers have been in the present crisis. But who are the beneficiaries? Short-term investors for one. More than anyone else, they benefit from a bumpy ride. If their timing is right, short-term investors can win on both the upswings (by buying) and the downswings (by short-selling) in financial prices. Bank shareholding has become increasingly short‑term over recent years. Average holding periods for US and UK banks’ shares fell from around three years in 1998 to around three months by 2008.
Bank managers have benefited too. In joint-stock banking, ownership and control are distinct. That means managers may not always do what their owners wish. They may seek to feather their own nests by making decisions that boost short-term profits and thereby justify an increase in their own pay. Such decisions may also increase banks’ vulnerability to shocks. In an attempt to avoid this problem, shareholders have sought to align managerial incentives with their own. One way of doing that, increasingly popular over the past decade, has been to remunerate managers not in cash but in equity or using equity‑based metrics. This can generate hugely powerful pecuniary incentives for managers to act in the interests of shareholders. At the peak of the boom, the wealth of the average US bank CEO increased by $24 for every $1000 created for shareholders. They earned $1 million for every one per cent rise in the value of their bank. But such equity-based contracts also set up some peculiar risk incentives. In the 19th century, managers monitored shareholders who monitored managers; in the 21st, managers egged on shareholders who egged on managers. The results have been entirely predictable. Before the crisis, the top five equity stakes were held by the CEOs of the following US banks: Lehman Brothers, Bear Stearns, Merrill Lynch, Morgan Stanley and Countrywide. We know how these disaster movies ended.
The evolution of banking as I have described it has satisfied the immediate demands of shareholders and managers, but has short-changed everyone else. There is a compelling case for policy intervention. The best proposals for reform are those which aim to reshape risk-taking incentives on a durable basis. Perhaps the most obvious way to tackle shareholder-led incentive problems is to increase banks’ equity capital base. This directly reduces their leverage and therefore the scale of the risks they can take. And it increases banks’ capacity to absorb losses, reducing the need for taxpayer intervention. Over the past few years, this case has been pushed by regulatory reformers. Under the so‑called Basel III agreements struck in 2010, banks’ minimum equity capital ratios will rise fivefold over the next decade, from two per cent to close to ten per cent of assets for the largest global banks. That is a significant shift. Will it be enough?
Recent academic studies suggest not. A ten per cent capital ratio translates into bank leverage of roughly 25. So even once Basel III is in place, an unexpected loss in a bank’s assets of just four per cent will be enough to render it insolvent. History is full of such unexpected bad news, from wars to shocks in oil prices. Basel III is a good starting point, but may not be the finishing line.
An alternative, more radical approach would be to tackle the problem of bank governance and control. Since the crisis, a number of proposals have been made – increasing board expertise and the power of risk committees, for example. These are steps in the right direction. But one look at the star‑studded cast of non-executive directors on the boards of failed financial institutions is to realise that to wish for better is to wish upon a star.
What else might be done? As at the start of the 20th century, the prevailing ownership and control models in banking were the public limited company and the mutually owned co-operative. Under the first, ownership and control are vested in a small minority of stakeholders, with rights assigned according to weight of portfolio: it is an equity dictatorship model. Under the second, ownership and control are vested in a much wider set of stakeholders, with rights unrelated to weight of portfolio – a stakeholder democracy model. Both have their problems. For the public company, it is risk and profit-seeking by the minority. For the mutual, it is a lack of financial incentive to curb risk, as those with the majority voting rights typically have the smallest financial stakes. But it isn’t difficult to conceive of governance models that combine the best bits of both.
To give one example, voting rights could be extended across a wide group of stakeholders, but weighted by stake. Governance and control would then be distributed across the whole balance sheet, curbing the profit-seeking incentives of the equity minority, while weighting voting rights by size of portfolio to avoid the inertia of mutuality. Bank governance would then be a wealth-weighted democracy, a hybrid of the mutual and joint-stock models. This would seem like a radical departure. But in many respects it would be a return to the incentive-aligned structure of 19th-century banking. Over the past century, the imbalance between those who have garnered the profit from banking and those who have taken on the risk has increased. It isn’t only banks that have gone bankrupt during this crisis. Households, companies and even countries have borne the brunt. Putting equity, social and financial, back into banking is essential if the financial system is to be durably repaired.
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Andrew Haldane is Executive Director for Financial Stability at the Bank of England.
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Volume 34 Number 4 (February 23 2012) Andrew Haldane, “The Doom Loop” (print version), pages 21-22 – 3181 words
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The Decline of American Empire (Part Two)
by Noam Chomsky, TomDispatch.com
Alternet (February 15 2012)
In the years of conscious, self-inflicted decline at home, “losses” continued to mount elsewhere. In the past decade, for the first time in 500 years, South America has taken successful steps to free itself from western domination, another serious loss. The region has moved towards integration, and has begun to address some of the terrible internal problems of societies ruled by mostly Europeanized elites, tiny islands of extreme wealth in a sea of misery. They have also rid themselves of all US military bases and of IMF controls. A newly formed organization, CELAC, includes all countries of the hemisphere apart from the US and Canada. If it actually functions, that would be another step in American decline, in this case in what has always been regarded as “the backyard”.
Even more serious would be the loss of the MENA countries – Middle East/North Africa – which have been regarded by planners since the 1940s as “a stupendous source of strategic power, and one of the greatest material prizes in world history”. Control of MENA energy reserves would yield “substantial control of the world”, in the words of the influential Roosevelt advisor A A Berle.
To be sure, if the projections of a century of US energy independence based on North American energy resources turn out to be realistic, the significance of controlling MENA would decline somewhat, though probably not by much: the main concern has always been control more than access. However, the likely consequences to the planet’s equilibrium are so ominous that discussion may be largely an academic exercise.
The Arab Spring, another development of historic importance, might portend at least a partial “loss” of MENA. The US and its allies have tried hard to prevent that outcome – so far, with considerable success. Their policy towards the popular uprisings has kept closely to the standard guidelines: support the forces most amenable to US influence and control.
Favored dictators are supported as long as they can maintain control (as in the major oil states). When that is no longer possible, then discard them and try to restore the old regime as fully as possible (as in Tunisia and Egypt). The general pattern is familiar: Somoza, Marcos, Duvalier, Mobutu, Suharto, and many others. In one case, Libya, the three traditional imperial powers intervened by force to participate in a rebellion to overthrow a mercurial and unreliable dictator, opening the way, it is expected, to more efficient control over Libya’s rich resources (oil primarily, but also water, of particular interest to French corporations), to a possible base for the US Africa Command (so far restricted to Germany), and to the reversal of growing Chinese penetration. As far as policy goes, there have been few surprises.
Crucially, it is important to reduce the threat of functioning democracy, in which popular opinion will significantly influence policy. That again is routine, and quite understandable. A look at the studies of public opinion undertaken by US polling agencies in the MENA countries easily explains the western fear of authentic democracy, in which public opinion will significantly influence policy.
Israel and the Republican Party
Similar considerations carry over directly to the second major concern addressed in the issue of Foreign Affairs cited in Part One of this piece: the Israel-Palestine conflict. Fear of democracy could hardly be more clearly exhibited than in this case. In January 2006, an election took place in Palestine, pronounced free and fair by international monitors. The instant reaction of the US (and of course Israel), with Europe following along politely, was to impose harsh penalties on Palestinians for voting the wrong way.
That is no innovation. It is quite in accord with the general and unsurprising principle recognized by mainstream scholarship: the US supports democracy if, and only if, the outcomes accord with its strategic and economic objectives, the rueful conclusion of neo-Reaganite Thomas Carothers, the most careful and respected scholarly analyst of “democracy promotion” initiatives.
More broadly, for 35 years the US has led the rejectionist camp on Israel-Palestine, blocking an international consensus calling for a political settlement in terms too well known to require repetition. The western mantra is that Israel seeks negotiations without preconditions, while the Palestinians refuse. The opposite is more accurate. The US and Israel demand strict preconditions, which are, furthermore, designed to ensure that negotiations will lead either to Palestinian capitulation on crucial issues, or nowhere.
The first precondition is that the negotiations must be supervised by Washington, which makes about as much sense as demanding that Iran supervise the negotiation of Sunni-Shia conflicts in Iraq. Serious negotiations would have to be under the auspices of some neutral party, preferably one that commands some international respect, perhaps Brazil. The negotiations would seek to resolve the conflicts between the two antagonists: the US-Israel on one side, most of the world on the other.
The second precondition is that Israel must be free to expand its illegal settlements in the West Bank. Theoretically, the US opposes these actions, but with a very light tap on the wrist, while continuing to provide economic, diplomatic, and military support. When the US does have some limited objections, it very easily bars the actions, as in the case of the E-1 project linking Greater Jerusalem to the town of Ma’aleh Adumim, virtually bisecting the West Bank, a very high priority for Israeli planners (across the spectrum), but raising some objections in Washington, so that Israel has had to resort to devious measures to chip away at the project.
The pretense of opposition reached the level of farce last February when Obama vetoed a Security Council resolution calling for implementation of official US policy (also adding the uncontroversial observation that the settlements themselves are illegal, quite apart from expansion). Since that time there has been little talk about ending settlement expansion, which continues, with studied provocation.
Thus, as Israeli and Palestinian representatives prepared to meet in Jordan in January 2011, Israel announced new construction in Pisgat Ze’ev and Har Homa, West Bank areas that it has declared to be within the greatly expanded area of Jerusalem, annexed, settled, and constructed as Israel’s capital, all in violation of direct Security Council orders. Other moves carry forward the grander design of separating whatever West Bank enclaves will be left to Palestinian administration from the cultural, commercial, political center of Palestinian life in the former Jerusalem.
It is understandable that Palestinian rights should be marginalized in US policy and discourse. Palestinians have no wealth or power. They offer virtually nothing to US policy concerns; in fact, they have negative value, as a nuisance that stirs up “the Arab street”.
Israel, in contrast, is a valuable ally. It is a rich society with a sophisticated, largely militarized high-tech industry. For decades, it has been a highly valued military and strategic ally, particularly since 1967, when it performed a great service to the US and its Saudi ally by destroying the Nasserite “virus”, establishing the “special relationship” with Washington in the form that has persisted since. It is also a growing center for US high-tech investment. In fact, high tech and particularly military industries in the two countries are closely linked.
Apart from such elementary considerations of great power politics as these, there are cultural factors that should not be ignored. Christian Zionism in Britain and the US long preceded Jewish Zionism, and has been a significant elite phenomenon with clear policy implications (including the Balfour Declaration, which drew from it). When General Allenby conquered Jerusalem during World War One, he was hailed in the American press as Richard the Lion-Hearted, who had at last won the Crusades and driven the pagans out of the Holy Land.
The next step was for the Chosen People to return to the land promised to them by the Lord. Articulating a common elite view, President Franklin Roosevelt’s Secretary of the Interior Harold Ickes described Jewish colonization of Palestine as an achievement “without comparison in the history of the human race”. Such attitudes find their place easily within the Providentialist doctrines that have been a strong element in popular and elite culture since the country’s origins: the belief that God has a plan for the world and the US is carrying it forward under divine guidance, as articulated by a long list of leading figures.
Moreover, evangelical Christianity is a major popular force in the US. Further toward the extremes, End Times evangelical Christianity also has enormous popular outreach, invigorated by the establishment of Israel in 1948, revitalized even more by the conquest of the rest of Palestine in 1967 – all signs that End Times and the Second Coming are approaching.
These forces have become particularly significant since the Reagan years, as the Republicans have abandoned the pretense of being a political party in the traditional sense, while devoting themselves in virtual lockstep uniformity to servicing a tiny percentage of the super-rich and the corporate sector. However, the small constituency that is primarily served by the reconstructed party cannot provide votes, so they have to turn elsewhere.
The only choice is to mobilize tendencies that have always been present, though rarely as an organized political force: primarily nativists trembling in fear and hatred, and religious elements that are extremists by international standards but not in the US. One outcome is reverence for alleged Biblical prophecies, hence not only support for Israel and its conquests and expansion, but passionate love for Israel, another core part of the catechism that must be intoned by Republican candidates – with Democrats, again, not too far behind.
These factors aside, it should not be forgotten that the “Anglosphere” – Britain and its offshoots – consists of settler-colonial societies, which rose on the ashes of indigenous populations, suppressed or virtually exterminated. Past practices must have been basically correct, in the US case even ordained by Divine Providence. Accordingly there is often an intuitive sympathy for the children of Israel when they follow a similar course. But primarily, geostrategic and economic interests prevail, and policy is not graven in stone.
The Iranian “Threat” and the Nuclear Issue
Let us turn finally to the third of the leading issues addressed in the establishment journals cited earlier, the “threat of Iran”. Among elites and the political class this is generally taken to be the primary threat to world order – though not among populations. In Europe, polls show that Israel is regarded as the leading threat to peace. In the MENA countries, that status is shared with the US, to the extent that in Egypt, on the eve of the Tahrir Square uprising, eighty percent felt that the region would be more secure if Iran had nuclear weapons. The same polls found that only ten percent regard Iran as a threat – unlike the ruling dictators, who have their own concerns.
In the United States, before the massive propaganda campaigns of the past few years, a majority of the population agreed with most of the world that, as a signatory of the Non-Proliferation Treaty, Iran has a right to carry out uranium enrichment. And even today, a large majority favors peaceful means for dealing with Iran. There is even strong opposition to military engagement if Iran and Israel are at war. Only a quarter regard Iran as an important concern for the US altogether. But it is not unusual for there to be a gap, often a chasm, dividing public opinion and policy.
Why exactly is Iran regarded as such a colossal threat? The question is rarely discussed, but it is not hard to find a serious answer – though not, as usual, in the fevered pronouncements. The most authoritative answer is provided by the Pentagon and the intelligence services in their regular reports to Congress on global security. They report that Iran does not pose a military threat. Its military spending is very low even by the standards of the region, minuscule of course in comparison with the US
Iran has little capacity to deploy force. Its strategic doctrines are defensive, designed to deter invasion long enough for diplomacy to set it. If Iran is developing nuclear weapons capability, they report, that would be part of its deterrence strategy. No serious analyst believes that the ruling clerics are eager to see their country and possessions vaporized, the immediate consequence of their coming even close to initiating a nuclear war. And it is hardly necessary to spell out the reasons why any Iranian leadership would be concerned with deterrence, under existing circumstances.
The regime is doubtless a serious threat to much of its own population – and regrettably, is hardly unique on that score. But the primary threat to the US and Israel is that Iran might deter their free exercise of violence. A further threat is that the Iranians clearly seek to extend their influence to neighboring Iraq and Afghanistan, and beyond as well. Those “illegitimate” acts are called “destabilizing” (or worse). In contrast, forceful imposition of US influence halfway around the world contributes to “stability” and order, in accord with traditional doctrine about who owns the world.
It makes very good sense to try to prevent Iran from joining the nuclear weapons states, including the three that have refused to sign the Non-Proliferation Treaty – Israel, India, and Pakistan, all of which have been assisted in developing nuclear weapons by the US, and are still being assisted by them. It is not impossible to approach that goal by peaceful diplomatic means. One approach, which enjoys overwhelming international support, is to undertake meaningful steps towards establishing a nuclear weapons-free zone in the Middle East, including Iran and Israel (and applying as well to US forces deployed there), better still extending to South Asia.
Support for such efforts is so strong that the Obama administration has been compelled to formally agree, but with reservations: crucially, that Israel’s nuclear program must not be placed under the auspices of the International Atomic Energy Association, and that no state (meaning the US) should be required to release information about “Israeli nuclear facilities and activities, including information pertaining to previous nuclear transfers to Israel”. Obama also accepts Israel’s position that any such proposal must be conditional on a comprehensive peace settlement, which the US and Israel can continue to delay indefinitely.
This survey comes nowhere near being exhaustive, needless to say. Among major topics not addressed is the shift of US military policy towards the Asia-Pacific region, with new additions to the huge military base system underway right now, in Jeju Island off South Korea and Northwest Australia, all elements of the policy of “containment of China”. Closely related is the issue of US bases in Okinawa, bitterly opposed by the population for many years, and a continual crisis in US-Tokyo-Okinawa relations.
Revealing how little fundamental assumptions have changed, US strategic analysts describe the result of China’s military programs as a “classic ‘security dilemma’, whereby military programs and national strategies deemed defensive by their planners are viewed as threatening by the other side”, writes Paul Godwin of the Foreign Policy Research Institute. The security dilemma arises over control of the seas off China’s coasts. The US regards its policies of controlling these waters as “defensive”, while China regards them as threatening; correspondingly, China regards its actions in nearby areas as “defensive” while the US regards them as threatening. No such debate is even imaginable concerning US coastal waters. This “classic security dilemma” makes sense, again, on the assumption that the US has a right to control most of the world, and that US security requires something approaching absolute global control.
While the principles of imperial domination have undergone little change, the capacity to implement them has markedly declined as power has become more broadly distributed in a diversifying world. Consequences are many. It is, however, very important to bear in mind that – unfortunately – none lifts the two dark clouds that hover over all consideration of global order: nuclear war and environmental catastrophe, both literally threatening the decent survival of the species.
Quite the contrary. Both threats are ominous, and increasing.
Links:
The original version of this at http://www.alternet.org/story/154150/ contains many links not included here.
_____
Tom Engelhardt, co-founder of the American Empire Project and the author of The American Way of War: How Bush’s Wars Became Obama’s (2010) as well as The End of Victory Culture (2007), runs the Nation Institute’s TomDispatch.com. His latest book, The United States of Fear (Haymarket Books, 2011), has just been published in November.
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Would You Vote For This Man?
by Mike Whitney
http://www.opednews.com (February 17 2012)
Would you vote for a guy who planned to surround himself with like-minded people who’d run the state like a machine? A man who’d pick fights with big oil, big pharma and Wall Street? A man who’d shrug off divisive issues – like abortion, stem cells and gay marriage – and focus on poverty, jobs, redistribution, and class?
Would you vote for a firebrand, a demagogue, a populist, a leftist tyrant? Who you vote for someone who’d bend the rules to make the country a fairer place for everyone?
http://www.youtube.com/watch?feature=player_embedded&v=hphgHi6FD8k
And, what if he wasn’t perfect? What if he’d had affairs with a number of women, or embezzled a lot of money, or been kicked out of college for cheating on exams? Would you give up on him or vote for him anyway?
Long was called “the Kingfish” because he ran Louisiana like his personal empire. He filled the statehouse with his own people and ran roughshod over the rich families in Baton Rouge. The big money folks hated his guts, and for good reason.
Wouldn’t you like to vote for a guy that was hated by big business, hated by the one percent, hated by Wall Street? Wouldn’t you like the chance to vote for someone who was willing to take them all on; someone who’d promise to re-regulate the system and tax the hell out of every billionaire fatcat in America?
That’s the type of guy Long was. Long supported FDR’s New Deal, but didn’t think the policies went far enough. He wanted a radical redistribution of the country’s wealth which put him at loggerheads with Roosevelt. He said, “Whenever this administration has gone to the left I have voted with it, and whenever it has gone to the right I have voted against it”.
Right on. What politician has the courage to say that today?
FDR was afraid of Long and tried to make it rough on him. He had him investigated by the IRS, but the investigation turned up nothing.
Long was adamantly opposed to the Federal Reserve, foreign wars, and the massive concentration of wealth held by a few billionaire bankers and industrialists.
He called his economic program “Share the Wealth”. The plan was unabashedly socialistic; a progressive program for free college education, social security, health care, veterans benefits, and public works programs. All the things that liberals say they want. When critics accused him of communism, he answered, “Hell no. This plan is the only defense this country’s got against communism.”
Smart guy. He knew that Americans love socialism; they just don’t like the word socialism. It sounds “foreign” to them.
This is from Wikipedia:
Some historians believe that pressure from Long and his organization contributed to Roosevelt’s “turn to the left” in 1935. He enacted the Second New Deal, including the Social Security Act, the Works Progress Administration, the National Labor Relations Board, Aid to Dependent Children, the National Youth Administration, and the Wealth Tax Act of 1935. In private, Roosevelt candidly admitted to trying to “steal Long’s thunder”.
Roosevelt capitalized off Long’s populism, but then tried to destroy him.
Long was assassinated on September 8 1935 at the State Capitol by a lone gunman. He was planning to run for president against Roosevelt. He was 42 years old when he died.
Long has been vilified as a powermonger and a demagogue. He had his shortcomings, but his devotion to working people was never in doubt. He was a tireless fighter for the little guy and he made life miserable for the big shots.
Here’s a clip from a song by Randy Newman called “The Kingfish” that sums it up pretty well:
Who built the highway in Baton Rouge
Who put up the highway and built the schools
Who looks after shitkickers like you
The Kingfish do …
Who took on the Standard Oil men
And whipped their ass,
Just like he promised he’d do?
Ain’t no Standard Oil men gonna run this state,
Gonna be run by little folks like me and you.
We could use a guy like Huey Long today.
_____
Mike is a freelance writer living in Washington state.
http://www.opednews.com/articles/Would-You-Vote-For-This-Ma-by-Mike-Whitney-120217-308.html
ACTA Update VII
by Glyn Moody
ComputerWorld UK (February 21 2012)
One of the widely-recognised problems with ACTA is the lack of transparency surrounding its negotiation. Since I have addressed this issue at length elsewhere {1}, I won’t repeat myself here. But it occurred to me that there is another way of looking at transparency, and that is in terms of consultation. In a sense, it’s the flip side of transparency.
Now, as a result of my increasingly sad habit of wandering around the dusty backstreets of the European Commission’s Web server, I happened upon this home page {2} for what is known as the Secretariat-General, which describes {3} itself as follows:
Our job is to help the European Commission to work smoothly and effectively. We support the whole of the Commission, and in particular the 27 Commissioners, by helping Europe deliver on its promises.
On that home page, there is a link to “Consultation Standards” {4}, something I never knew existed, but which turns out to contain some very interesting statements. This document seems to be the latest word on the subject, since it is the only one linked to on the Secretariat page, and contains the following statement at the start:
The Commission adopted, on 11 December 2002, a communication ‘General principles and minimum standards for consultation of interested parties by the Commission’ COM704. General principles and minimum standards apply from 1 January 2003.
So that suggests that what follows is indeed the official list of principles and minimum standards for consultation of interested parties by the Commission. Now, one concern has to be that these principles are all very well, but that the Commission can just ignore them if it wants. Rather handily, this point is raised within the document itself:
Some of those consulted questioned the Commission’s decision to set consultation standards in the form of a Commission communication (that is, in the form of a policy document) instead of adopting a legally-binding instrument. They argued that this would make the standards toothless and the Commission would be unable to ensure the consistency and coherence of its consultation processes.
Well, yes, I’d probably argue that too. But worry not, the Commission insists:
the fear expressed by some participants in the consultation process that the principles and guidelines could remain a dead letter because of their non-legally binding nature is due to a misunderstanding. It goes without saying that, when the Commission decides to apply the principles and guidelines, its departments have to act accordingly.
Well, that’s good to know. So, let’s take a look at what some of those general principles are.
The Commission is committed to an inclusive approach when developing and implementing EU policies, which means consulting as widely as possible on major policy initiatives.
…
The Commission believes that the processes of administration and policy-making must be visible to the outside world if they are to be understood and have credibility. This is particularly true of the consultation process, which acts as the primary interface with interests in society.
Couldn’t have put it better myself.
On the Minimum Standards front, this is particularly important:
Consultation target groups
When defining the target group(s) in a consultation process, the Commission should ensure that relevant parties have an opportunity to express their opinions.
For consultation to be equitable, the Commission should ensure adequate coverage of the following parties in a consultation process:
those affected by the policy
Again, that’s clearly common sense: everyone affected by a policy should indeed “have an opportunity to express their opinions”.
Of course, it will not have escaped the eagle-eyed reader’s attention that not one of the principles and guidelines adopted by the Commission itself has in fact been followed during the ACTA negotiations – no consultation, no visibility – and hence no credibility.
Now, I’m sure that the European Commission, were it minded to respond to this, would quick as a flash say: ah, yes, but you didn’t spot that the document also states:
For the purpose of this document ‘consultations’ means those processes through which the Commission wishes to trigger input from outside interested parties for the shaping of policy prior to a decision by the Commission.
And since the European Commission doesn’t wish to trigger input from outside interested parties for the shaping of policy prior to a decision by the Commission on the subject of ACTA – it has already made up its mind and doesn’t care what the electorate thinks, thank you very much – then yah, boo, sucks. Well, maybe not in quite those terms, but the spirit is the same.
On the one hand, for the last nine years the European Commission has professed itself eternally wedded to the idea of consultation in order for its policies to be credible. On the other, we have ACTA, which somehow doesn’t require that added ingredient of credibility, but can be negotiated in secret and pushed through without discussion.
The European Commission might produce as many formal reasons as it likes as to why European citizens weren’t asked for their thoughts according to the 2002 general principles and minimum standards for consultation, and I’m sure they’re right – after all they wrote the thing, and will certainly have built in enough get-out clauses to let them do what they want, when they want.
But this misses the point. It’s not about the letter of those documents, but the spirit: it’s about what is just and democratic for the European people. The European Commission seems to think that it’s perfectly fair to commit 500 million citizens to a binding international treaty that imposes a one-sided framework of extremely harsh measures against online copyright infringement, for example, without asking their views; some of us beg to differ. But what do we know? After all, we’re just the mugs who pay the politicians’ salaries.
Links:
{1} http://www.techdirt.com/articles/20120217/04283717793/shining-light-actas-lack-transparency.shtml
{2} http://ec.europa.eu/dgs/secretariat_general/index_en.htm
{3} http://ec.europa.eu/dgs/secretariat_general/what_we_do/index_en.htm
[4] http://ec.europa.eu/civil_society/consultation_standards/index_en.htm
Follow me @glynmoody on Twitter or identi.ca, and on Google+
_____
Glyn Moody’s look at all levels of the enterprise open source stack. The blog will look at the organisations that are embracing open source, old and new alike (start-ups welcome), and the communities of users and developers that have formed around them (or not, as the case may be). Contact Glyn at glyn.moody@gmail.com.
http://blogs.computerworlduk.com/open-enterprise/2012/02/acta-update-vii/index.htm
Plutocracy, Pure and Simple
Now it’s a straight fight with the billionaires and corporations.
by George Monbiot
Published in the Guardian (February 20 2012)
Shocking, fascinating, entirely unsurprising: the leaked documents, if authentic, confirm what we suspected but could not prove. The Heartland Institute, which has helped lead the war against climate science in the United States, is funded among others by tobacco firms, fossil fuel companies and one of the billionaire Koch brothers {1}.
It appears to have followed the script written by a consultant to the Republican party, Frank Luntz, in 2002. “Should the public come to believe that the scientific issues are settled, their views about global warming will change accordingly. Therefore, you need to continue to make the lack of scientific certainty a primary issue in the debate”. {2}
Luntz’s technique was pioneered by the tobacco companies and the creationists: teach the controversy. In other words, insist that the question of whether cigarettes cause lung cancer, natural selection drives evolution or burning fossil fuels causes climate change is still wide open, and that both sides of the “controversy” should be taught in schools and thrashed out in the media.
The leaked documents appear to show that, courtesy of its multi-millionaire donors, the institute has commissioned a global warming curriculum for schools, which teaches that “whether humans are changing the climate is a major scientific controversy” and “whether carbon dioxide is a pollutant is controversial”. {3}.
The institute has claimed that it is “a genuinely independent source of research and commentary” {4} and that “we do not take positions in order to appease or avoid losing support from individual donors” {5}. But the documents, if authentic, reveal that its attacks on climate science have been largely funded by a single anonymous donor and that “we are extinguishing primarily global warming projects in pace with declines in his giving” {6}.
The climate change deniers it funds have made similar claims to independence. For example, last year Fred Singer told a French website, “of course I am not funded by the fossil fuel lobbies. It’s a completely absurd invention.” {7} The documents suggest that the institute, funded among others by the coal company Murray Energy, the oil company Marathon and the former Exxon lobbyist Randy Randol, has been paying him $5000 a month {8}.
Robert Carter has claimed that he “receives no research funding from special interest organisations” {9}. But the documents suggest that Heartland pays him $1,667 a month {10}. Among the speakers at its conferences were two writers for the Telegraph (Christopher Booker and James Delingpole) {11,12}. The Telegraph group should now reveal whether and how much they were paid by the Heartland Institute.
It seems to be as clear an illustration as we have yet seen of the gulf between what such groups call themselves and what they really are. Invariably, organisations arguing for regulations to be removed, top taxes to be reduced and other such billionaire-friendly policies call themselves freemarket or conservative think tanks. But according to David Frum, formerly a fellow at one such group – the American Enterprise Institute – they “increasingly function as public-relations agencies” {13}. The message they send to their employees, he says, is “we don’t pay you to think, we pay you to repeat”.
The profits of polluting or reckless companies and banks and the vast personal fortunes of their beneficiaries are largely dependent on the regulations set by governments. This is why the “think tanks” campaign for small government. If regulations robustly defend the public interest, the profits decline. If they are weak, the profits rise. Billionaires and big business buy influence to insulate themselves from democratic control. It seems to me that the so-called think tanks are an important component of this public relations work.
Their funding, in most cases, is opaque. When I challenged some of the most prominent of such groups in the UK, only one would reveal the identity of its donors. The others refused {14}. Disgracefully, their lack of accountability does not prevent some of them from registering as charities and claiming tax exemption.
The Charity Commission in England and Wales, negligent, asleep at the wheel, is becoming a threat to democracy. These organisations are not trying to restore historic buildings or rescue distressed donkeys. They are seeking to effect political change in highly contentious areas. The minimum requirement for all such groups – whether they are on the left or on the right – is that they should disclose their major sources of income so that we know on whose behalf they speak {15}. The commission is providing cover for multi-millionaires and corporations who are funding undisclosed campaigns to enhance their own wealth under the guise of charity, and obliging the rest of us to pay for it through tax exemptions. If that’s charity, a police siren is music.
The use of so-called think tanks on both sides of the Atlantic seems to me to mirror the use of super political action committees (super PACs) in the US. Since the Supreme Court removed the limits on how much one person could give to a political campaign, the billionaires have achieved almost total control over politics. An article last week on TomDispatch revealed that in 2011 just 196 donors provided nearly eighty per cent of the money raised by super PACs {16}.
The leading Republican candidates have all but abandoned the idea of mobilising popular support. Instead they use the huge funds they raise from billionaires to attack the credibility of their opponents through television ads. Yet more money is channelled through 501c4 groups – tax-exempt bodies supposedly promoting social welfare – which (unlike the super PACs) don’t have to reveal the identity of their donors. TomDispatch notes that “serving as a secret slush fund for billionaires evidently now qualifies as social welfare”. {17}
The money wins. This is why Republicans swept up so many seats in the mid-term elections {18}, and why the surviving Democrats were scarcely distinguishable from their rivals. It is why Obama, for all his promise, appears incapable of governing in the public interest. What can he tell the banks: “do what I say or I won’t take your money any more”? How can he tax the billionaires when they have their hands around his throat? Where your treasure is there will your heart be also {19}.
This is plutocracy pure and simple. The battle for democracy is now a straight fight against the billionaires and corporations reshaping politics to suit their interests. The first task of all democrats must be to demand that any group, of any complexion, seeking to effect political change should reveal its funders.
Some of the research for this column was carried out by Simon Day: www.renouncereverb.com
References:
2. Frank Luntz, 2002. The Environment: a cleaner, safer, healthier America. Straight Talk, pages 131-146. The Luntz Research Companies.
4. http://heartland.org/policy-documents/we-must-get-along-get-along http://heartlandinstitutechicago.wordpress.com/about/
5. http://heartland.org/funding
6. http://www.desmogblog.com/sites/beta.desmogblog.com/files/Binder1%20%282%29.pdf
7. http://www.contrepoints.org/2011/09/04/43947-le-giec-interdit-le-debat-scientifique
9. http://members.iinet.net.au/~glrmc/
11. http://heartland.org/sites/all/modules/custom/heartland_migration/files/pdfs/24901.pdf
12. http://climateconference.heartland.org/james-delingpole/
13. http://nymag.com/news/politics/conservatives-david-frum-2011-11/
14. http://www.monbiot.com/2011/09/12/think-of-a-tank/
15. See http://www.monbiot.com/2011/10/17/show-me-the-money/
16. Ari Berman, 16th February 2012. The .0000063% Election. http://www.tomdispatch.com/archive/175504/
17. As above.
18. “a simple statistic from the 2010 races: of fifty-three competitive House districts where Rove and his compatriots backed Republicans with “independent” expenditures that easily exceeded similar expenditures made on behalf of Democrats – often by more than $1 million per district, according to Public Citizen – Republicans won fifty-one”. http://www.thenation.com/article/165733/after-citizens-united-attack-super-pacs
19. Matthew 6:21.
http://www.monbiot.com/2012/02/20/plutocracy-pure-and-simple/
The Nature of Empire
by John Michael Greer
The Archdruid Report (February 15 2011)
Niall Ferguson is arguably the most uneven of our living historians. His The War of the World (2007) is perhaps the best one-volume survey of the era of global war that began in a flurry of bullets at Sarajevo in 1914; his The Ascent of Money (2009), by contrast, is little more than an exercise in cheerleading for the same misguided economic notions that are setting the stage right now for an explosion that may well rival the one that followed Sarajevo, and the same divergence can be traced straight through his work. Still, Ferguson’s writing makes an excellent starting place for any attempt to make sense of the phenomenon of empire – though this is something of a backhanded compliment, as his misses illuminate the subject at least as well as his hits.
It would be useful if the same thing were true of the other misunderstandings of empire that jostle one another in the collective conversation of our time. Regrettably, that’s anything but the case. In order to make sense of the impact that the fall of America’s empire is going to have on all our lives in the decades ahead, it’s crucial to understand what empires are, what makes them tick – and what makes them collapse. To do that, however, it’s going to be necessary to bundle up a mass of unhelpful assumptions and garbled history, and chuck them into the compost.
We can start with the verbal habit of using empire – or, more exactly, the capitalized abstraction Empire – as what S I Hayakawa used to call a snarl word: a content-free verbal noise that’s used to express feelings of hatred and loathing. The language of politics these days consists largely of snarl words. When people on the leftward end of the political spectrum say “fascist” or “Empire”, for example, these words mean exactly what “socialist” or “liberal” mean to people on the right – that is, they express the emotional state of the speaker rather than anything relevant about the object under discussion. Behind this common habit is the most disturbing trend in contemporary political life, the replacement of ordinary disagreement with seething rage against a demonized Other on whom all the world’s problems can conveniently be blamed.
In too many cases this sort of thinking is taken to frightening extremes. Consider David Korten’s The Great Turning: From Empire to Earth Community (2007), which manages to be both one of the most popular works in the anti-Empire canon and one of the most profoundly antidemocratic tracts in recent memory. Korten’s argument is based on the theory that certain people – quite explicitly, those who share his background and opinions – belong to a higher “developmental stage” than anyone else, and the world’s problems can only be solved if power is taken away from those who have it now and given to the gifted few. If you want thoughtful analysis of the ideas and motivations of the supposedly less evolved people who hold power nowadays, don’t look for it in Korten’s book; what you’ll find instead is an unusually crude version of the standard left-wing caricature of right-wing thinking.
Empire, in Korten’s book, amounts to the whole of the existing order of society, portrayed in the shrill language of apocalyptic rhetoric – unless the gifted few who have “spiritual consciousness” get the power they ought to have, one gathers, all life on Earth is doomed. It’s interesting to note, though, that exactly how the utopian state of Earth Community will deal with the flurry of planetary crises luridly depicted in the first part of The Great Turning is nowhere detailed. The reader who is able to step back and cast a cold eye on the book’s argument may thus be forgiven for thinking that Earth Community is simply Empire with the ruling class Korten prefers, just as the “emerging values consensus” that guides Earth Community can be hard to distinguish from the ideologies that guide Empire, and so on down the list of inevitable parallels.
The need to sidestep this sort of manipulative rhetoric, it seems to me, makes it urgent to get past the habit of using terms like “empire” as snarl words, and recover their actual meaning as descriptions of specific forms of human political, economic, and social interaction. Getting rid of that initial capital letter, arbitrary as it seems, is one step in the right direction. Just as the younger Bush administration was able to disguise a flurry of dubious motives and justify a misguided rush to war by converting the tangled reality of Muslim resentment and radical militancy into the capitalized abstraction of Terror, too many people on the other side of the political spectrum have covered equally dubious motives and justified a range of unproductive actions by converting the tangled realities of influence, authority, and privilege in modern industrial states into the capitalized abstraction of Empire. The so-called Global War on Terror, of course, turned out to be an expensive flop, and much of what passes for “fighting Empire”, though a good deal less costly in blood and money, has not been much more successful.
This post and the ones that follow it, then, will be discussing empire, not Empire, and as soon as we get past some initial questions of definition, they will be discussing specific empires – the one the United States currently maintains, primarily, but also the British empire that preceded it, and a variety of others that cast useful light on its past, its present, and its future. One striking detail, of course, sets today’s American empire apart from most of its predecessors, and that is the curious fact that very few people will publicly admit that America has an empire at all.
This is where Niall Ferguson enters the picture, because he’s one of the notable exceptions. In several books and a flurry of essays, Ferguson has argued that the United States fills exactly the same role in international affairs today that Britain held a century ago, and since nobody then or now finds it especially problematic to talk about the British empire, open discussion of the American empire ought to be an equally straightforward matter. He makes a very solid case that the United States is an imperial power. What makes this all the more interesting is that while most people who talk about American empire these days mean the label as a criticism, Ferguson does not. Quite the contrary, he thinks America’s empire is a good thing, and has publicly urged American politicians to take their imperial role more seriously – in other words, to get out there and lord it over the world in earnest.
Some of what’s behind this quixotic rhetoric is doubtless the spluttering indignation it evokes from liberal pundits – Ferguson has admitted that one of the motives that got him involved in conservative politics in his student days was the fun to be had by baiting the left – but there’s more to his argument than that. He points out that periods when one imperial power dominates any given system of nations tend to be periods of relative peace and stability, while periods that lack such a centralized power tend to be racked by wars and turmoil. It’s a valid point – imperial Britain’s century of world dominion from 1815 to 1914 featured fewer wars in Europe, at least, than any comparable period up to that time, and American dominion since 1945 has imposed even more rigid a peace on that fractious continent – and Ferguson goes on to claim, on the basis of that undoubted fact, that imperial rule is a good thing for everyone involved, ruled as well as rulers.
That last step, though, goes well past what the evidence will support, and a good hard look at the claim will prove revealing. Partly, this shows Ferguson’s tendency – which is of course shared by many of his peers in Britain and the rest of Europe – toward an unthinking Eurocentrism. While Europe was relatively calm between Waterloo and Sarajevo, there were very few years in that interval where the British army wasn’t busy fighting someone somewhere in the world, and the smaller colonial empires other European states acquired by Britain’s permission during those same years were in many cases just as racked with wars. Still, there’s another point that’s even more crucial, which is that peace, stability, and the Victorian British idea of good government for the natives are not necessarily the only goods worth weighing in the balance. By this I don’t mean to bring up such intangibles as freedom and self-determination, though of course they also have a place in any meaningful moral calculus; the issue I have in mind is one of cold hard economics.
A broader view of history may be useful here. The first explorers to venture outwards from Europe into the wider world encountered civilizations that were far wealthier than anything they had known. After returning to Italy from the Far East in 1295, Marco Polo was mocked as “Marco Millions” for an account of China’s vast riches that later travelers found to be largely accurate. When the Portuguese explorer Vasco da Gama made the first European voyage around Africa to India in 1497, he and his crew were stunned by the extraordinary prosperity of the Indian society they encountered. When Hernan Cortes reached the Aztec capitol of Tenochtitlan in 1519, it was easily among the most populous cities on the planet – current estimates range from 200,000 to 300,000 within the city alone, and another million in the urban region surrounding it – as well as one of the richest. A few centuries later, at the zenith of Europe’s age of empire, China, India, and Mexico ranked among the world’s poorest nations, while England, which had been a soggy backwater on the fringes of Europe mostly known for codfish and wool, was one of its richest.
Plenty of reasons have been advanced for this astonishing reversal, but there are times when the obvious explanation is also the correct one, and this is among them. The point can be made even more clearly by noting a detail I’ve brought up here before – the curious fact that the five percent of humanity that live in the United States of America, until quite recently, used around a quarter of the world’s energy and around a third of its raw materials and industrial product. This remarkably disproportionate share of the world’s wealth didn’t come to us because the rest of the world didn’t want such things, or because the United States manufactured some good or provided some service so desirable to the rest of the world that other nations vied with each other to buy it from us. Quite the contrary; we produced very little in America during much of our empire’s most prosperous period, and the rest of the world’s population is by and large just as interested in energy, raw materials, and industrial product as we are.
It’s considered distinctly impolite to suggest that the real reason behind the disparity is related to the fact that the United States has over 500 military bases on other nations’ territory, and spends on its armed forces every year roughly the same amount as the military budgets of every other nation on Earth put together. Here again, though, the obvious explanation is the correct one. Between 1945 and 2008, the United States was the world’s dominant imperial power, filling the same role in the global political system that Britain filled during its own age of empire, and while that imperial arrangement had plenty of benefits, by and large, they flowed in one direction only.
With this in mind, we can move to a meaningful definition of empire. An empire is an arrangement among nations, backed and usually imposed by military force, that extracts wealth from a periphery of subject nations and concentrates it in the imperial core. Put more simply, an empire is a wealth pump, a device to enrich one nation at the expense of others. The mechanism of the pump varies from empire to empire and from age to age; the straightforward exaction of tribute that did the job for ancient Egypt, and had another vogue in the time of imperial Spain, has been replaced in most of the more recent empires by somewhat less blatant though equally effective systems of unbalanced exchange. While the mechanism varies, though, the underlying principle does not.
None of this would have raised any eyebrows at all in a discussion of the mechanics of empire, in America or elsewhere, during the late nineteenth century. Such discussions took place, in the mass media of the time as well as in the corridors of power, and it was widely understood that the point to having an empire was precisely that it made your nation rich. That’s why the United States, after a series of bitter public debates we’ll be discussing a little further on in this series of posts, committed itself to the path of empire in the 1890s, and it’s why every nation in western Europe either had or desperately wanted an overseas empire – even Belgium, for heaven’s sake, had its own little vest pocket empire in Africa, and exploited it ruthlessly.
The near-total domination of the world by European empires in the eighteenth and nineteenth centuries, in conjunction with the popular racism of the time – Kipling’s pompous blather about “the white man’s burden” was embarrassingly typical for its era – has given rise in some circles to the notion that there’s something uniquely European or, more precisely, uniquely white about empire. In reality, of course, the peoples of Europe and the European diaspora were by and large Johnny-come-latelies to the business of empire. Ancient Egypt, as already mentioned, was as creative in this as in so many other of the arts of civilization, and had a thriving empire that extended far south along the Nile and north along the Mediterranean coast.
The great arc of city-states that extended from modern Turkey through the Tigris and Euphrates valleys and the mountains and plateaus further east to the Indus Valley gave rise to dozens of empires at a time when Europe was a patchwork of illiterate tribal societies that still thought bronze was high tech. China had its own ancient and highly successful empire, and half a dozen other east Asian nations copied the Chinese model and pursued their own dreams of imperial expansion and enrichment. Sub-Saharan Africa had at least a dozen great empires, while the Aztecs were only the latest in a long history of Native American empires as splendid and predatory as anything the Old World had to offer. Empire is one of the most common patterns by which nations to relate to one another, and it seems to emerge spontaneously whenever one nation has a sufficient preponderance of power to exploit another. Its emergence sets certain patterns and processes pretty reliably into motion; we’ll be discussing those during the weeks to come.
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In other news, I’m delighted to report that my new book The Blood of the Earth: An Essay on Magic and Peak Oil is now available for preorder from Scarlet Imprint, in two limited editions. (The paperback and e-book editions will be available for preorder a bit later.) Everything’s on track for a release at the upcoming Spring Equinox. Please visit {1} for full details and ordering information!
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End of the World of the Week #9
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Joachim of Fiore was a medieval monk, but in many ways it’s hard to think of a more thoroughly modern figure. He was born somewhere around 1135 in the Italian province of Calabria, worked for the government of the Kingdom of Sicily for a while, then got religion in 1174 and entered the Benedictine order – yes, that’s the twelfth-century equivalent of leaving your corporate job and ending up in a New Age ashram in Sedona. In 1184, while on his way to Rome on monastery business, he stopped at an abbey in Casamari, and that’s where he suddenly metamorphosed from common or garden variety mystic seeker to full-blown medieval guru.
While he was at Casamari, to be precise, he had a series of visions that revealed to him the secret meaning of the Book of Revelations and the entire shape of the world’s history. The short form was that all of time was divided into three parts, which related to the three persons of the Christian trinity. The Age of the Father ran from the creation of the world to the advent of Jesus, and was the age of law; the Age of the Son ran from there to the downfall of Antichrist, which either Joachim or his students – nobody’s quite sure which – expected in the year 1260, and was the age of grace; the final Age of the Holy Spirit, the blissful age of love and liberty, ran from then on until the end of the world. Thus the various cataclysms of the Book of Revelations, in Joachim’s thought, were simply rough patches on the road to paradise on earth.
Joachim’s good news proved to be highly popular, and made him internationally famous. When King Richard the Lionheart was on his way to the Third Crusade, he made time to stop by Joachim’s monastery and ask for a prophecy about the upcoming war with the Saracens; Joachim obligingly did the necessary calculations, and told the king that the Crusade would be a huge success and Jerusalem would be recaptured by the Christians; he was wrong, but that did nothing to dent his reputation. He went to his death in 1202 serenely convinced that the wonderful Age of the Holy Spirit was going to arrive on schedule in not much over half a century. Instead, his views were condemned as heretical by the fourth Lateran Council in 1215, and when 1260 rolled around, nothing out of the ordinary happened at all.
– Story from Apocalypse Not {2}
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John Michael Greer is the Grand Archdruid of the Ancient Order of Druids in America {3} and the author of more than twenty books on a wide range of subjects, including The Long Descent: A User’s Guide to the End of the Industrial Age (2008), The Ecotechnic Future: Exploring a Post-Peak World (2009), and The Wealth of Nature: Economics As If Survival Mattered (2011). He lives in Cumberland, Maryland, an old red brick mill town in the north central Appalachians, with his wife Sara.
If you enjoy reading this blog, you might want to check out Star’s Reach {4}, his blog/novel of the deindustrial future. Set four centuries after the decline and fall of our civilization, it uses the tools of narrative fiction to explore the future our choices today are shaping for our descendants tomorrow.
Links:
{1} www.scarletimprint.com/bloodoftheearth.htm
{2} http://www.vivaeditions.com/book_page.php?book_id=25
{4} http://starsreach.blogspot.com/
http://thearchdruidreport.blogspot.com/2012/02/nature-of-empire.html
There’s No Tomorrow
by Dmitry Orlov
Club Orlov (February 17 2012)
http://cluborlov.blogspot.com/2012/02/theres-no-tomorrow.html
America’s Decline Is Real (Part One) …
… and Increasingly Self-Inflicted
by Noam Chomsky, TomDispatch.com
AlterNet (February 14 2012)
Significant anniversaries are solemnly commemorated – Japan’s attack on the US naval base at Pearl Harbor, for example. Others are ignored, and we can often learn valuable lessons from them about what is likely to lie ahead. Right now, in fact.
At the moment, we are failing to commemorate the fiftieth anniversary of President John F Kennedy’s decision to launch the most destructive and murderous act of aggression of the post-World War Two period: the invasion of South Vietnam, later all of Indochina, leaving millions dead and four countries devastated, with casualties still mounting from the long-term effects of drenching South Vietnam with some of the most lethal carcinogens known, undertaken to destroy ground cover and food crops.
The prime target was South Vietnam. The aggression later spread to the North, then to the remote peasant society of northern Laos, and finally to rural Cambodia, which was bombed at the stunning level of all allied air operations in the Pacific region during World War Two, including the two atom bombs dropped on Hiroshima and Nagasaki. In this, Henry Kissinger’s orders were being carried out – “anything that flies on anything that moves” – a call for genocide that is rare in the historical record. Little of this is remembered. Most was scarcely known beyond narrow circles of activists.
When the invasion was launched fifty years ago, concern was so slight that there were few efforts at justification, hardly more than the president’s impassioned plea that “we are opposed around the world by a monolithic and ruthless conspiracy that relies primarily on covert means for expanding its sphere of influence” and if the conspiracy achieves its ends in Laos and Vietnam, “the gates will be opened wide”.
Elsewhere, he warned further that “the complacent, the self-indulgent, the soft societies are about to be swept away with the debris of history [and] only the strong … can possibly survive”, in this case reflecting on the failure of US aggression and terror to crush Cuban independence.
By the time protest began to mount half a dozen years later, the respected Vietnam specialist and military historian Bernard Fall, no dove, forecast that “Vietnam as a cultural and historic entity … is threatened with extinction … [as] … the countryside literally dies under the blows of the largest military machine ever unleashed on an area of this size”. He was again referring to South Vietnam.
When the war ended eight horrendous years later, mainstream opinion was divided between those who described the war as a “noble cause” that could have been won with more dedication, and at the opposite extreme, the critics, to whom it was “a mistake” that proved too costly. By 1977, President Carter aroused little notice when he explained that we owe Vietnam “no debt” because “the destruction was mutual”.
There are important lessons in all this for today, even apart from another reminder that only the weak and defeated are called to account for their crimes. One lesson is that to understand what is happening we should attend not only to critical events of the real world, often dismissed from history, but also to what leaders and elite opinion believe, however tinged with fantasy. Another lesson is that alongside the flights of fancy concocted to terrify and mobilize the public (and perhaps believed by some who are trapped in their own rhetoric), there is also geostrategic planning based on principles that are rational and stable over long periods because they are rooted in stable institutions and their concerns. That is true in the case of Vietnam as well. I will return to that, only stressing here that the persistent factors in state action are generally well concealed.
The Iraq war is an instructive case. It was marketed to a terrified public on the usual grounds of self-defense against an awesome threat to survival: the “single question”, George W Bush and Tony Blair declared, was whether Saddam Hussein would end his programs of developing weapons of mass destruction. When the single question received the wrong answer, government rhetoric shifted effortlessly to our “yearning for democracy”, and educated opinion duly followed course; all routine.
Later, as the scale of the US defeat in Iraq was becoming difficult to suppress, the government quietly conceded what had been clear all along. In 2007 and 2008, the administration officially announced that a final settlement must grant the US military bases and the right of combat operations, and must privilege US investors in the rich energy system – demands later reluctantly abandoned in the face of Iraqi resistance. And all well kept from the general population.
Gauging American Decline
With such lessons in mind, it is useful to look at what is highlighted in the major journals of policy and opinion today. Let us keep to the most prestigious of the establishment journals, Foreign Affairs. The headline blaring on the cover of the December 2011 issue reads in bold face: “Is America Over?”
The title article calls for “retrenchment” in the “humanitarian missions” abroad that are consuming the country’s wealth, so as to arrest the American decline that is a major theme of international affairs discourse, usually accompanied by the corollary that power is shifting to the East, to China and (maybe) India.
The lead articles are on Israel-Palestine. The first, by two high Israeli officials, is entitled “The Problem is Palestinian Rejection”: the conflict cannot be resolved because Palestinians refuse to recognize Israel as a Jewish state – thereby conforming to standard diplomatic practice: states are recognized, but not privileged sectors within them. The demand is hardly more than a new device to deter the threat of political settlement that would undermine Israel’s expansionist goals.
The opposing position, defended by an American professor, is entitled “The Problem Is the Occupation”. The subtitle reads “How the Occupation is Destroying the Nation”. Which nation? Israel, of course. The paired articles appear under the heading “Israel under Siege”.
The January 2012 issue features yet another call to bomb Iran now, before it is too late. Warning of “the dangers of deterrence”, the author suggests that “skeptics of military action fail to appreciate the true danger that a nuclear-armed Iran would pose to US interests in the Middle East and beyond. And their grim forecasts assume that the cure would be worse than the disease – that is, that the consequences of a US assault on Iran would be as bad as or worse than those of Iran achieving its nuclear ambitions. But that is a faulty assumption. The truth is that a military strike intended to destroy Iran’s nuclear program, if managed carefully, could spare the region and the world a very real threat and dramatically improve the long-term national security of the United States”.
Others argue that the costs would be too high, and at the extremes some even point out that an attack would violate international law – as does the stand of the moderates, who regularly deliver threats of violence, in violation of the UN Charter.
Let us review these dominant concerns in turn.
American decline is real, though the apocalyptic vision reflects the familiar ruling class perception that anything short of total control amounts to total disaster. Despite the piteous laments, the US remains the world dominant power by a large margin, and no competitor is in sight, not only in the military dimension, in which of course the US reigns supreme.
China and India have recorded rapid (though highly inegalitarian) growth, but remain very poor countries, with enormous internal problems not faced by the West. China is the world’s major manufacturing center, but largely as an assembly plant for the advanced industrial powers on its periphery and for western multinationals. That is likely to change over time. Manufacturing regularly provides the basis for innovation, often breakthroughs, as is now sometimes happening in China. One example that has impressed western specialists is China’s takeover of the growing global solar panel market, not on the basis of cheap labor but by coordinated planning and, increasingly, innovation.
But the problems China faces are serious. Some are demographic, reviewed in Science, the leading US science weekly. The study shows that mortality sharply decreased in China during the Maoist years, “mainly a result of economic development and improvements in education and health services, especially the public hygiene movement that resulted in a sharp drop in mortality from infectious diseases”. This progress ended with the initiation of the capitalist reforms thirty years ago, and the death rate has since increased.
Furthermore, China’s recent economic growth has relied substantially on a “demographic bonus”, a very large working-age population. “But the window for harvesting this bonus may close soon”, with a “profound impact on development”: “Excess cheap labor supply, which is one of the major factors driving China’s economic miracle, will no longer be available”.
Demography is only one of many serious problems ahead. For India, the problems are far more severe.
Not all prominent voices foresee American decline. Among international media, there is none more serious and responsible than the London Financial Times. It recently devoted a full page to the optimistic expectation that new technology for extracting North American fossil fuels might allow the US to become energy independent, hence to retain its global hegemony for a century. There is no mention of the kind of world the US would rule in this happy event, but not for lack of evidence.
At about the same time, the International Energy Agency reported that, with rapidly increasing carbon emissions from fossil fuel use, the limit of safety will be reached by 2017 if the world continues on its present course. “The door is closing”, the IEA chief economist said, and very soon it “will be closed forever”.
Shortly before the US Department of Energy reported the most recent carbon dioxide emissions figures, which “jumped by the biggest amount on record” to a level higher than the worst-case scenario anticipated by the International Panel on Climate Change (IPCC). That came as no surprise to many scientists, including the MIT program on climate change, which for years has warned that the IPCC predictions are too conservative.
Such critics of the IPCC predictions receive virtually no public attention, unlike the fringe of denialists who are supported by the corporate sector, along with huge propaganda campaigns that have driven Americans off the international spectrum in dismissal of the threats. Business support also translates directly to political power. Denialism is part of the catechism that must be intoned by Republican candidates in the farcical election campaign now in progress, and in Congress they are powerful enough to abort even efforts to inquire into the effects of global warming, let alone do anything serious about it.
In brief, American decline can perhaps be stemmed if we abandon hope for decent survival, prospects that are all too real given the balance of forces in the world.
“Losing” China and Vietnam
Putting such unpleasant thoughts aside, a close look at American decline shows that China indeed plays a large role, as it has for sixty years. The decline that now elicits such concern is not a recent phenomenon. It traces back to the end of World War Two, when the US had half the world’s wealth and incomparable security and global reach. Planners were naturally well aware of the enormous disparity of power, and intended to keep it that way.
The basic viewpoint was outlined with admirable frankness in a major state paper of 1948 (PPS 23). The author was one of the architects of the New World Order of the day, the chair of the State Department Policy Planning Staff, the respected statesman and scholar George Kennan, a moderate dove within the planning spectrum. He observed that the central policy goal was to maintain the “position of disparity” that separated our enormous wealth from the poverty of others. To achieve that goal, he advised, “We should cease to talk about vague and … unreal objectives such as human rights, the raising of the living standards, and democratization”, and must “deal in straight power concepts”, not “hampered by idealistic slogans” about “altruism and world-benefaction”.
Kennan was referring specifically to Asia, but the observations generalize, with exceptions, for participants in the US-run global system. It was well understood that the “idealistic slogans” were to be displayed prominently when addressing others, including the intellectual classes, who were expected to promulgate them.
The plans that Kennan helped formulate and implement took for granted that the US would control the Western Hemisphere, the Far East, the former British empire (including the incomparable energy resources of the Middle East), and as much of Eurasia as possible, crucially its commercial and industrial centers. These were not unrealistic objectives, given the distribution of power. But decline set in at once.
In 1949, China declared independence, an event known in Western discourse as “the loss of China” – in the US, with bitter recriminations and conflict over who was responsible for that loss. The terminology is revealing. It is only possible to lose something that one owns. The tacit assumption was that the US owned China, by right, along with most of the rest of the world, much as postwar planners assumed.
The “loss of China” was the first major step in “America’s decline”. It had major policy consequences. One was the immediate decision to support France’s effort to reconquer its former colony of Indochina, so that it, too, would not be “lost”.
Indochina itself was not a major concern, despite claims about its rich resources by President Eisenhower and others. Rather, the concern was the “domino theory”, which is often ridiculed when dominoes don’t fall, but remains a leading principle of policy because it is quite rational. To adopt Henry Kissinger’s version, a region that falls out of control can become a “virus” that will “spread contagion”, inducing others to follow the same path.
In the case of Vietnam, the concern was that the virus of independent development might infect Indonesia, which really does have rich resources. And that might lead Japan – the “superdomino” as it was called by the prominent Asia historian John Dower – to “accommodate” to an independent Asia as its technological and industrial center in a system that would escape the reach of US power. That would mean, in effect, that the US had lost the Pacific phase of World War Two, fought to prevent Japan’s attempt to establish such a New Order in Asia.
The way to deal with such a problem is clear: destroy the virus and “inoculate” those who might be infected. In the Vietnam case, the rational choice was to destroy any hope of successful independent development and to impose brutal dictatorships in the surrounding regions. Those tasks were successfully carried out – though history has its own cunning, and something similar to what was feared has since been developing in East Asia, much to Washington’s dismay.
The most important victory of the Indochina wars was in 1965, when a US-backed military coup in Indonesia led by General Suharto carried out massive crimes that were compared by the CIA to those of Hitler, Stalin, and Mao. The “staggering mass slaughter”, as the New York Times described it, was reported accurately across the mainstream, and with unrestrained euphoria.
It was “a gleam of light in Asia”, as the noted liberal commentator James Reston wrote in the Times. The coup ended the threat of democracy by demolishing the mass-based political party of the poor, established a dictatorship that went on to compile one of the worst human rights records in the world, and threw the riches of the country open to western investors. Small wonder that, after many other horrors, including the near-genocidal invasion of East Timor, Suharto was welcomed by the Clinton administration in 1995 as “our kind of guy”.
Years after the great events of 1965, Kennedy-Johnson National Security Adviser McGeorge Bundy reflected that it would have been wise to end the Vietnam war at that time, with the “virus” virtually destroyed and the primary domino solidly in place, buttressed by other US-backed dictatorships throughout the region.
Similar procedures have been routinely followed elsewhere. Kissinger was referring specifically to the threat of socialist democracy in Chile. That threat was ended on another forgotten date, what Latin Americans call “the first 9/11″, which in violence and bitter effects far exceeded the 9/11 commemorated in the West. A vicious dictatorship was imposed in Chile, one part of a plague of brutal repression that spread through Latin America, reaching Central America under Reagan. Viruses have aroused deep concern elsewhere as well, including the Middle East, where the threat of secular nationalism has often concerned British and US planners, inducing them to support radical Islamic fundamentalism to counter it.
The Concentration of Wealth and American Decline
Despite such victories, American decline continued. By 1970, US share of world wealth had dropped to about 25%, roughly where it remains, still colossal but far below the end of World War Two. By then, the industrial world was “tripolar”: US-based North America, German-based Europe, and East Asia, already the most dynamic industrial region, at the time Japan-based, but by now including the former Japanese colonies Taiwan and South Korea, and more recently China.
At about that time, American decline entered a new phase: conscious self-inflicted decline. From the 1970s, there has been a significant change in the US economy, as planners, private and state, shifted it toward financialization and the offshoring of production, driven in part by the declining rate of profit in domestic manufacturing. These decisions initiated a vicious cycle in which wealth became highly concentrated (dramatically so in the top 0.1% of the population), yielding concentration of political power, hence legislation to carry the cycle further: taxation and other fiscal policies, deregulation, changes in the rules of corporate governance allowing huge gains for executives, and so on.
Meanwhile, for the majority, real wages largely stagnated, and people were able to get by only by sharply increased workloads (far beyond Europe), unsustainable debt, and repeated bubbles since the Reagan years, creating paper wealth that inevitably disappeared when they burst (and the perpetrators were bailed out by the taxpayer). In parallel, the political system has been increasingly shredded as both parties are driven deeper into corporate pockets with the escalating cost of elections, the Republicans to the level of farce, the Democrats (now largely the former “moderate Republicans”) not far behind.
A recent study by the Economic Policy Institute, which has been the major source of reputable data on these developments for years, is entitled Failure by Design. The phrase “by design” is accurate. Other choices were certainly possible. And as the study points out, the “failure” is class-based. There is no failure for the designers. Far from it. Rather, the policies are a failure for the large majority, the 99% in the imagery of the Occupy movements – and for the country, which has declined and will continue to do so under these policies.
One factor is the offshoring of manufacturing. As the solar panel example mentioned earlier illustrates, manufacturing capacity provides the basis and stimulus for innovation leading to higher stages of sophistication in production, design, and invention. That, too, is being outsourced, not a problem for the “money mandarins” who increasingly design policy, but a serious problem for working people and the middle classes, and a real disaster for the most oppressed, African Americans, who have never escaped the legacy of slavery and its ugly aftermath, and whose meager wealth virtually disappeared after the collapse of the housing bubble in 2008, setting off the most recent financial crisis, the worst so far.
Links:
The version of this at http://www.alternet.org/story/154133/ contains numerous links not included here.
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Noam Chomsky is Institute Professor emeritus in the MIT Department of Linguistics and Philosophy. He is the author of numerous best-selling political works. His latest books are Making the Future: Occupations, Intervention, Empire, and Resistance (2012), The Essential Chomsky (edited by Anthony Arnove, 2008), a collection of his writings on politics and on language from the 1950s to the present, Gaza in Crisis, with Ilan Pappe (2010), and Hopes and Prospects (2010), also available as an audiobook.
Part Two of Noam Chomsky’s discussion of American decline, “The Imperial Way”, is at http://www.alternet.org/world/154150/noam_chomsky%3A_the_decline_of_american_empire_%28part_2%29/
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Copyright 2012 Noam Chomsky
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