Archive for August, 2007

>Prelude to an Attack on Iran

2007/08/31 1 comment

>by Robert Baer

Time (August 18 2007)

Reports that the Bush Administration will put Iran’s Islamic Revolutionary Guard Corps on the terrorism list can be read in one of two ways: it’s either more bluster or, ominously, a wind-up for a strike on Iran. Officials I talk to in Washington vote for a hit on the IRGC, maybe within the next six months. And they think that as long as we have bombers and missiles in the air, we will hit Iran’s nuclear facilities. An awe and shock campaign, lite, if you will. But frankly they’re guessing; after Iraq the White House trusts no one, especially the bureaucracy.

As with Saddam and his imagined WMD, the Administration’s case against the IRGC is circumstantial. The US military suspects but cannot prove that the IRGC is the main supplier of sophisticated improvised explosive devices to insurgents killing our forces in Iraq and Afghanistan. The most sophisticated version, explosive formed projectiles or shape charges, are capable of penetrating the armor of an Abrams tank, disabling the tank and killing the crew.

A former CIA explosives expert who still works in Iraq told me: “The Iranians are making them. End of story.” His argument is only a state is capable of manufacturing the EFP’s, which involves a complicated annealing process. Incidentally, he also is convinced the IRGC is helping Iraqi Shi’a militias sight in their mortars on the Green Zone. “The way they’re dropping them in, in neat grids, tells me all I need to know that the Shi’a are getting help. And there’s no doubt it’s Iranian, the IRGC’s”, he said.

A second part of the Administration’s case against the IRGC is that the IRGC has had a long, established history of killing Americans, starting with the attack on the Marines in Beirut in 1983. And that’s not to mention it was the IRGC that backed Hizballah in its thirty-four day war against Israel last year. The feeling in the Administration is that we should have taken care of the IRGC a long, long time ago.

Strengthening the Administration’s case for a strike on Iran, there’s a belief among neo-cons that the IRGC is the one obstacle to a democratic and friendly Iran. They believe that if we were to get rid of the IRGC, the clerics would fall, and our thirty-years war with Iran over. It’s another neo-con delusion, but still it informs White House thinking.

And what do we do if just the opposite happens – a strike on Iran unifies Iranians behind the regime? An Administration official told me it’s not even a consideration. “IRGC IED’s are a casus belli for this Administration. There will be an attack on Iran.”


Robert Baer, a former CIA field officer assigned to the Middle East, is’s intelligence columnist and the author of See No Evil (Three Rivers Press, 2003) and, most recently, the novel Blow the House Down (Three Rivers Press, 2007).,8599,1654188,00.html

Bill Totten

Categories: Uncategorized

>From Think Tanks to Battle Tanks

>“The Quest to Impose a Single World Market Has Casualties Now in the Millions”

by Naomi Klein

Democracy Now (August 16 2007)

AMY GOODMAN: The State Department is coming under criticism this week for refusing to allow a prominent South African social scientist to enter the country. Adam Habib was scheduled to speak at the annual meeting of the American Sociological Association in New York this past weekend, but the government refused to give him a visa.

Ironically, the theme of this year’s sociology conference was “Is Another World Possible?” At the conference, the ASA planned a series of sessions to assess the potential for progressive social change both in the US and in the world and to invite a serious discussion of “economic globalization” and its consequences.

One of the most highly anticipated sessions was to feature Jeffrey Sachs, an internationally known economist and a former special advisor to UN Secretary General Kofi Annan, versus Naomi Klein, the Canadian journalist and author. But shortly before the ASA conference opened, Sachs pulled out. Unclear if it was related to the fact that Naomi Klein takes him on in her forthcoming book, The Shock Doctrine: The Rise of Disaster Capitalism (Metropolitan, 2007). The theme of her talk was “Lost Worlds”. This is Naomi Klein.

NAOMI KLEIN: As we think about reaching this other possible world, I want to be very clear that I don’t believe the problem is a lack of ideas. I think we’re swimming in ideas: universal healthcare; living wages; cooperatives; participatory democracy; public services that are accountable to the people who use them; food, medicine and shelter as a human right. These aren’t new ideas. They’re enshrined in the UN Charter. And I think most of us still believe in them.

I don’t think our problem is money, lack of resources to act on these basic ideas. Now, at the risk of being accused of economic populism, I would just point out that in this city, the employees of Goldman Sachs received more than $16 billion in Christmas bonuses last year, and ExxonMobil earned $40 billion in annual profits, a world record. It seems to me that there’s clearly enough money sloshing around to pay for our modest dreams. We can tax the polluters and the casino capitalists to pay for alternative energy development and a global social safety net. We don’t lack ideas. Neither are we short on cash.

And unlike Jeffrey Sachs, I actually don’t believe that what is lacking is political will at the highest levels, cooperation between world leaders. I don’t think that if we could just present our elites with the right graphs and PowerPoint presentations – no offense – that we would finally convince them to make poverty history. I don’t believe that. I don’t believe we could do it, even if that PowerPoint presentation was being delivered Angelina Jolie wearing a (Product) Red TM Gap tank top and carrying a (Product) Red cell phone. Even if she had a (Product) Red iPhone, I still don’t think they would listen. That’s because elites don’t make justice because we ask them to nicely and appealingly. They do it when the alternative to justice is worse. And that is what happened all those years ago when the income gap began to close. That was the motivation behind the New Deal and the Marshall Plan. Communism spreading around the world, that was the fear. Capitalism needed to embellish itself. It needed to soften its edges. It was in a competition. So ideas aren’t the problem, and money is not the problem, and I don’t think political will is ever the problem.

The real problem, I want to argue today, is confidence, our confidence, the confidence of people who gather at events like this under the banner of building another world, a kinder more sustainable world. I think we lack the strength of our convictions, the guts to back up our ideas with enough muscle to scare our elites. We are missing movement power. That’s what we’re missing. “The best lacked all convictions”, Yeats wrote, “while the worst are full of passionate intensity”. Think about it. Do you want to tackle climate change as much as Dick Cheney wants Kazakhstan’s oil? Do you? Do you want universal healthcare as much as Paris Hilton wants to be the next new face of Estee Lauder? If not, why not? What is wrong with us? Where is our passionate intensity?

What is at the root of our crisis of confidence? What drains us of our conviction at crucial moments when we are tested? At the root, I think it’s the notion that we have accepted, which is that our ideas have already been tried and found wanting. Part of what keeps us from building the alternatives that we deserve and long for and that the world needs so desperately, like a healthcare system that doesn’t sicken us when we see it portrayed on film, like the ability to rebuild New Orleans without treating a massive human tragedy like an opportunity for rapid profit-making for politically connected contractors, the right to have bridges that don’t collapse and subways that don’t flood when it rains. I think that what lies at the root of that lack of confidence is that we’re told over and over again that progressive ideas have already been tried and failed. We hear it so much that we accepted it. So our alternatives are posed tentatively, almost apologetically. “Is another world possible?” we ask.

This idea of our intellectual and ideological failure is the dominant narrative of our time. It’s embedded in all the catchphrases that we’ve been referring to. “There is no alternative”, said Thatcher. “History has ended”, said Fukuyama. The Washington Consensus: the thinking has already been done, the consensus is there. Now, the premise of all these proclamations was that capitalism, extreme capitalism, was conquering every corner of the globe because all other ideas had proven themselves disastrous. The only thing worse than capitalism, we were told, was the alternative.

Now, it’s worth remembering when these pronouncements were being made that what was failing was not Scandinavian social democracy, which was thriving, or a Canadian-style welfare state, which has produced the highest standard of living by UN measures in the world, or at least it did before my government started embracing some of these ideas. It wasn’t the so-called Asian miracle that had been discredited, which in the ’80s and ’90s built the Asian “tiger” economies in South Korea and Malaysia using a combination of trade protections to nurture and develop national industry, even when that meant keeping American products out and preventing foreign ownership, as well as maintaining government control over key assets, like water and electricity. These policies did not create explosive growth concentrated at the very top, as we see today. But record levels of profit and a rapidly expanding middle class, that is what has been attacked in these past thirty years.

What was failing and collapsing when history was declared over was something very specific in 1989, when Francis Fukyama made that famous declaration, and when the Washington Consensus was declared, also in 1989. What was collapsing was centralized state communism, authoritarian, anti-democratic, repressive. Something very specific was collapsing, and it was a moment of tremendous flux.

And it was in that moment of flux and disorientation that several very savvy people, many of them in this country, seized on that moment to declare victory not only against communism, but against all ideas but their own. Now, this was the Fukuyama chutzpah, when he actually said – and it seems so strange to read it now – in his famous 1989 speech, that the significance of that moment was not that we were reaching an end of ideology, as some were suggesting, or a convergence between capitalism and socialism, as Gorbachev was suggesting, it was not that ideology had ended, but that history as such had ended. He argued that deregulated markets in the economic sphere combined with liberal democracy in the political sphere represented the endpoint of mankind’s ideological evolution and the final form of human government.

Now, what was interesting and never quite stated in this formulation was that you basically had two streams: you had democracy, which you can use to vote for your leaders, and then you had a single economic model. Now, the catch was that you couldn’t use your vote, you couldn’t use your democracy to reshape your economy, because all of the economic decisions had already been decided. There was only – it was the final endpoint of ideological evolution. So you could have democracy, but you couldn’t use it to change the basics of life, you couldn’t use it to change the economy. This moment was held up as a celebration of victory for democracy, but that idea, that democracy cannot affect the economy, is and remains the single most anti-democratic idea of our time.

Now, I was drawn to the slogan that was chosen for this year’s ASA gathering, because I think, as many of you know and have read in the program, it comes from the World Social Forum. And I was at the first World Social Forum six-and-a-half years ago – more than six-and-a-half years ago in January 2001 in Porto Alegre, Brazil. I was one of only a handful of North Americans who attended. And we gathered under that same slogan, but I think it’s significant and interesting that it wasn’t posed as a question back then. There was a proud exclamation mark at the end of the sentence: “Another world is possible!”

I wrote a feature article for The Nation when I came back from Brazil, trying to explain to readers in the US – the event wasn’t covered at all in this country, although it was covered very heavily in the international press – what it felt like to be there with 10,000 other people. And a lot of people were saying that they felt like we were making history. And what I wrote was that what it really felt like was the end of the end of history. That’s what it felt like to be in that room. It was this powerful gust of wind that you could suddenly breathe more deeply. You were free to imagine. Our minds were unleashed.

And it wasn’t just Porto Alegre, because Porto Alegre was the culmination of these types of spontaneous – often spontaneous uprisings that were happening around the world whenever world leaders were gathering to advance the so-called Washington Consensus, whether it was in Seattle at the WTO meeting in 1999, whether it was the IMF/World Bank meetings a few years later in Washington, then in Genoa during the G8. And, of course, the Zapatistas and the MST in Brazil were at the forefront.

And the theme in Porto Alegre was democracy. That was the – it was about redefining democracy to include the economy: deep democracy, participatory democracy. And it was a challenge to this idea that these two streams could not intersect. The right to land as a form of democracy, the right to biodiversity, to independent media. But what was most extraordinary about Porto Alegre was that – you know, certainly there were some politicians there, there were some big NGOs there, but the people who were at the podiums, who were shaping the discussion, were the people who were the casualties of this economic model, who were themselves discarded, made landless, forced to occupy pieces of land, chop down fences and plant food and make decisions democratically.

So, you know, Jeffery Sachs talks about these model villages that he’s building in Africa. And many of them, you know, are making tremendous progress. But I can’t help thinking back to these field trips that we made in Porto Alegre to MST villages, where it was the people themselves, the landless people themselves, who were showing us their own model villages and were asking for our solidarity. And I think as sociologists, you understand this key distinction, that it was the actors who were the protagonists of their history, and that was what was historic. It was breaking the charity model in a very real way.

Now, I look at where we are now, six-and-a-half years later, and it does feel that we have moved backwards in many areas. Talk of fixing the world has become an astonishingly elite affair. Davos – now, Porto Alegre was in rebellion against the Davos Summit every year in January. This was the anti-Davos. Davos has been re-legitimized, and now solving the world’s problems appears to be a matter between CEOs and super-celebrities. And the idea that we don’t need to challenge these mass disparities, what we need is sort of noblesse oblige on a mass scale, that is very different than what we were talking about in Porto Alegre those years ago.

Now, we know what closed that window of possibility, that freedom that opened up in 2001, and it was September 11th in this country. And the window didn’t close everywhere, but it did close, at least temporarily, in North America, that sense of possibility, that putting these issues and the people affected by these policies at the center of the political debate. Now, the shock of those attacks, I think we can see with some hindsight, was harnessed by leaders in this country and their allies around the world to abruptly end the discussion of global justice that was exploding around the world. There was a door that had opened, and it was suddenly slammed shut. We heard that phrase again and again: 9/11 changes everything. And one of the first things we were told that it had changed was that trade, privatization, labor rates, all the things we were fighting for just so recently no longer mattered. It was Year Zero. Wipe the slate clean. And it was another one of these rebooting history moments. History was apparently starting all over again from scratch, and nothing we knew before mattered. It was all relegated to pre-9/11 thinking.

Now, the Bush administration justified this by saying that all that mattered was security and the war on terror. And in Canada, we were told that – by the US ambassador – that security trumps trade. That became the new slogan, that before 9/11 it was economic priorities that drove the US administration, but post-9/11 the only thing that mattered was security. So talk of economic justice, corporate greed, the loss of the public sphere, the talk of Porto Alegre, was suddenly retro, so 2001.

Now, the irony that we can now see is that, while denying the importance of this economic project, the Bush administration used the dislocation of 9/11 to pursue the very same pre-9/11 radical capitalist project, now with a furious vengeance, under the cover of war and natural disasters. So forget negotiating trade deals at the World Trade Organization. When the US invaded Iraq, Bush sent in Paul Bremer to seize new markets on the battlefields of his preemptive war. He didn’t have to negotiate with anyone. He just rewrote the country’s entire economic architecture in one swoop. But, of course, if you said that the war had anything to do with economics, you were dismissed as nai”ve. It was, of course, about security, about liberating Iraqis from Saddam.

AMY GOODMAN: Journalist Naomi Klein. We’ll be back with her speech in a minute.


AMY GOODMAN: We return to journalist Naomi Klein.

NAOMI KLEIN: Meanwhile, at home the administration quickly moved to exploit the shock that gripped the nation to push through a radical vision of hollow government, in which everything from waging wars to reconstructing from those wars to disaster response became an entirely for-profit venture. This was a bold evolution of market logic. Rather than the ’90s approach of selling off existing public companies, like water and electricity, the Bush team was creating a whole new framework for its actions. That framework was and is the war on terror, which was built to be private, privately managed from the start. The Bush administration played the role of a kind of a venture capitalist for the startup security companies, and they created an economic boom on par with the dotcom boom of the 1990s. But we didn’t talk about it, because we were too busy talking about security.

Now, this feat required a kind of two-stage process, which was using 9/11, of course, to radically increase the surveillance and security powers of the state, concentrated in the executive branch, but at the same time to take those powers and outsource them to a web of private companies, whether Blackwater, Boeing, AT&T, Halliburton, Bechtel, the Carlyle Group. Now, in the ’80s, the goal of privatization – and in the ’90s – was devouring the appendages of the state. But what was happening now is it was the core that was being devoured, because what is more central to the very definition of a state of a government than security and disaster response? Now, this is one of the great ironies of the war on terror, is that it proved such an effective weapon to furthering the corporate agenda precisely because it denied that it has, and continues to deny that it has, a corporate agenda at all.

Now, it had another benefit, too, which was the ability to pay anyone who opposed this system as aligned with potential terrorists and so on. So our movement, which was already facing extreme repression before 9/11, was put on notice as traitorous. Looking back, it’s clear that the shock, the disorientation caused by the attacks, was used to reassert this economic agenda, to reassert that consensus that never really was. The window that was opened at the end of the ’90s in the movement known as the anti-globalization movement, but which was always a pro-democracy movement, was slammed shut, at least in North America. And it was terror that slammed it shut. The alternatives started to disappear.

Now, I want to use the rest of my time just to say that this was not the first time, that this – if we look back at the past thirty-five years, we see this slamming of the door on alternatives just as they are emerging repeating again and again. Many of you were here for the opening address from Ricardo Lagos, the former president of Chile, who talked about another September 11th, which was another one of those moments, a far more significant one, when a very important democratic alternative, the real third way, not Tony Blair’s third way, but the real third way between totalitarian communism and extreme capitalism was being forged in Chile. And that was the great threat.

And we know that now through all of the declassified documents. There’s a really revealing one: a correspondence between Henry Kissinger and Nixon, in which Kissinger says very bluntly that the problem with Allende’s election is not what they were saying publicly, which was that he was aligned with the Soviets, that he was only pretending to be democratic, but that he was really going to impose a totalitarian system in Chile. That was the spin at the time. What he actually wrote was, “The example of a successful elected Marxist government in Chile would surely have an impact on – and even precedent value for – other parts of the world … The imitative spread of similar phenomena elsewhere would in turn significantly affect the world balance and our own position in it”. So that alternative, that other world, had to be blasted out of the way, and extreme violence was used in order to accomplish that.

Now, this kind of preemptive attack on our democratic alternatives, the persistent dream of a third way, of a real third way, has come up again and again. And this is what I discuss at length in the book, but I want to mention a couple of examples – unless I’m totally out of time? OK – examples of moments where there was a similar sense of effervescent possibility of being able to breathe more and dream more fully.

One of them was in Poland in 1989. June 4th was the day of the historic elections in Poland that elected Solidarity as the new government. They hadn’t had elections there in decades. And this was the event that really set off the domino – what’s now referred to as the domino effect in Eastern Bloc countries – and ultimately resulting in the breaking apart of the Soviet Union. But it’s worth remembering what it actually looked like in June of 1989. In Poland, people didn’t think that history was over, because they had just elected Solidarity as their government. They thought that history was just beginning and that they were finally going to be able to implement what the movement, which was a labor movement, had always seen as the third way, the third way not taken. Now, Solidarity’s vision was not a rejection of socialism. They said that they were calling for “real socialism”, as socialists often do, and it was a rejection of the Communist party. They were everything that the party was not: dispersed where it was centralized, democratic where it was authoritarian, participatory where it was bureaucratic. And Solidarity had ten million members, which gave them the power to completely shut down the state.

So when people went to the polls and elected a Solidarity government, what were they voting for? What did they think they were voting for? Did they think that they were voting to become a free market economy on the model that Francis Fukuyama was talking about? No, they didn’t. They thought they were voting for the labor party that they had helped to build.

And I just want to read you a short passage from Solidarity’s economic program, which was passed democratically in 1981. They said, “The socialized enterprise should be the basic organizational unit in the economy. It should be controlled by the workers’ council representing the collective” and should be operated – cooperatively run by a director appointed through competition, recalled by the council, workers’ cooperatives. So the idea was to get the party out of control of the economy, to decentralize it and have the people who were doing the work actually control their workplaces. And they believed that they could make them more sustainable.

Now, did they get the chance to try that, to act on that vision of a worker cooperative economy as the centerpiece of the economy, to have democratic elections but still have socialism? Did they get that chance when they voted for Solidarity? No, they didn’t. What they got was an inherited debt, and they were told that the only way that they would get any relief from that debt and any aid is if they followed a very radical shock therapy program. Now, I would be remiss if I didn’t point out that the person who prescribed that shock therapy program was Jeffery Sachs. And I – no, I say that because I really had hoped that we could debate these different worlds, because there are differences, there are real differences that we must not smooth over.

Now, in 2006, forty percent of young workers in Poland were unemployed, forty percent, last year. That’s twice the EU average. And Poland is often held up as a great success story of transition. In 1989, fifteen percent of the Poland’s population was living below the poverty line. In 2003, 59% of Poles had fallen below the line. That’s that opening of that gap. That’s what these economic policies do. And then, we can say we’re very, very worried about the people at the bottom, let’s bring them up, but let’s be clear about what we’re talking about. These jarring levels of inequality and economic exclusion are now feeding a resurgence of chauvinism, racism, anti-Semitism, misogyny, rampant homophobia in Poland. And I think we can see, actually, that it’s inevitable that this would be the case, because they tried communism, they tried capitalism, they tried democratic socialism, but they got shock therapy instead. After you’ve tried all that, there really isn’t a whole lot left but fascism. It’s dangerous to suppress democratic alternatives when people invest their dreams in them. It’s risky business.

Another one of these powerful dreams was Tiananmen Square, and it’s a sort of a very sad fluke of history that on the same day that Solidarity won those historic elections and that dream was betrayed, what they voted for was betrayed, tanks rolled in Tiananmen Square, and that was the day of the massacre: June 4 1989. It was another bloody end to a moment of effervescent possibility.

Now, the way those protests were always reported on in the West was that students in Beijing just wanted to live like in the United States. And they, you know, put a goddess to democracy that looked a lot like the Statue of Liberty. So it was reported on CNN as just kind of pro-American-style democracy protests.

But in recent years, an alternative analysis of those events has emerged. And what we’re starting to hear from what’s being called China’s New Left, and people like Wang Hui, who’s a wonderful academic, is that this was a vast oversimplification of what was driving the pro-democracy movement in 1989 in China. What was driving it was that the government of Deng Xiaoping was radically restructuring the economy along with the lines that had been prescribed by Milton Friedman – economic shock therapy – and people were seeing their quality of life devalued. Workers were losing their rights. And they were taking to the streets and demanding democratic control over the economic transition.

So democracy wasn’t an abstract idea. It wasn’t just “We want to vote”. It was, “We want to control this transition. We want to have a say in it”. It was a direct challenge to the Fukuyama formulation, which, by the way, was made that same year: the idea that you would have these two streams and that they wouldn’t intersect.

I just want to read one other thing, which is another one of these paths not taken, because we know how that one ended in Tiananmen Square: that dream was crushed. Another historic moment of possibility, when we look back on our recent history, was 1994, when the ANC government won landslide elections in South Africa. That was a victory for people power. That was one of the most hopeful days that I can remember.

I think we should remember what South Africans thought they were voting for in those historic elections. You know, it was just portrayed as something very simple: it was an end to apartheid. But what did an end to apartheid mean to South Africans? And we can get an answer from that actually from Nelson Mandela, who wrote a little note two weeks before he was released from prison. And he wrote this note because there was a growing concern that he had been in prison so long that he had forgotten the promise of liberation, which was not just to have elections, but to change the economy of the country and redistribute the wealth. And Mandela was under so much pressure that he had to release this very short statement just to clarify this point. And what he said was, “The nationalization of the mines, banks and monopoly industry is the policy of the ANC and a change or modification of our views in this regard is inconceivable in our situation. State control of certain sectors of the economy is unavoidable.” And this was a reiteration of South Africa’s Freedom Charter, which is the platform of the ANC, which calls for the national wealth of South Africa, the heritage of the country, to be restored for the people, the mineral wealth and so on.

Now, I say this because this was one of those worlds that wasn’t chosen, one of those paths that wasn’t chosen. And I spent the past four years pulling these stolen and betrayed alternatives out of the dustbin of our recent history, because I think it matters. I think it matters that we had ideas all along, that there were always alternatives to the free market. And we need to retell our own history and understand that history, and we have to have all the shocks and all the losses, the loss of lives, in that story, because history didn’t end. There were alternatives. They were chosen, and then they were stolen. They were stolen by military coups. They were stolen by massacres. They stolen by trickery, by deception. They were stolen by terror.

We who say we believe in this other world need to know that we are not losers. We did not lose the battle of ideas. We were not outsmarted, and we were not out-argued. We lost because we were crushed. Sometimes we were crushed by army tanks, and sometimes we were crushed by think tanks. And by think tanks, I mean the people who are paid to think by the makers of tanks. Now, most effective we have seen is when the army tanks and the think tanks team up. The quest to impose a single world market has casualties now in the millions, from Chile then to Iraq today. These blueprints for another world were crushed and disappeared because they are popular and because, when tried, they work. They’re popular because they have the power to give millions of people lives with dignity, with the basics guaranteed. They are dangerous because they put real limits on the rich, who respond accordingly. Understanding this history, understanding that we never lost the battle of ideas, that we only lost a series of dirty wars, is key to building the confidence that we lack, to igniting the passionate intensity that we need.

AMY GOODMAN: Naomi Klein, author of the forthcoming book, The Shock Doctrine: The Rise of Disaster Capitalism (Metropolitan, 2007).

Bill Totten

Categories: Uncategorized

>Bush versus I F Stone … and Eisenhower

>by John Nichols

The Nation (August 22 2007)

Something tells me that President Bush did not write the speech he gave today to the Veterans of Foreign Wars convention in Kansas City. For one thing, it was relatively coherent. For another thing, it was steeped in historical references that, while taken out of context and run through the ideological wringer of the neo-conservative spin machine, displayed a historical breadth not frequently associated with the most intellectually-disengaged president since Andrew Johnson.

But the one section of the speech that made me absolutely certain that Bush had nothing to do with its preparation was its attack on journalist I F Stone.

Stretching hard to compare the current quagmire in Iraq with the Korean conflict of more than half a century ago – as part of a new PR campaign designed to build support for maintaining a long-term US military presence in the Middle East, Bush told the veterans, “After the North Koreans crossed the 38th Parallel in 1950, President Harry Truman came to the defense of the South – and found himself attacked from all sides. From the left, I F Stone wrote a book suggesting that the South Koreans were the real aggressors and that we had entered the war on a false pretext. From the right, Republicans vacillated. Initially, the leader of the Republican Party in the Senate endorsed Harry Truman’s action, saying, ‘I welcome the indication of a more definite policy’ – he went on to say, ‘I strongly hope that having adopted it, the President may maintain it intact’, then later said ‘it was a mistake originally to go into Korea because it meant a land war’.”

Anyone who seriously believes that George Bush is familiar with the writings of I F Stone and the long and complicated history of how the US military found itself encamped on the Korean Peninsula will surely be among that dwindling percentage of Americans that is convinced weapons of mass destruction were found in Iraq.

For the record, the book by Stone to which Bush referred today, The Hidden History of the Korean War, 1950-1951: A Nonconformist History of Our Times (Little, Brown & Company, 1952), was a provocative text written during the course of the Korean conflict. It featured a dramatically broader critique of Truman’s approach to the war than the one Bush mentioned Tuesday; in addition to what would eventually be recognized as groundbreaking exposes of military misdeeds, it referenced a wide variety of concerns expressed by prominent figures on the left and right of the American political spectrum at the time. While reasonable people might debate Stone’s interpretations of specific details regarding US foreign policy – and even friendly critics have suggested he was too easily swayed by Soviet criticisms of South Korea’s motivations and actions at the war’s beginning – the veteran journalist was hardly staking out radical turf when he asserted that the US dispatched troops to Korea under dubious circumstances.

As Robin Andersen, a professor of Communication and Media Studies at Fordham University who authored an exceptional book, A Century of Media, a Century of War (Peter Lang, 2006), has noted, “There exists today little collective memory of the Korean War, a conflict in which General Douglas MacArthur extended centralized control over the press, denied access and instituted blanket censorship. Reports that did come out of Korea were awash in jingoism. I F Stone was often a lone voice of reason”.

Battling General Douglas MacArthur’s extreme censorship of war news, Stone exposed the horrors of the Korean conflict, particularly the killing of innocent civilians with napalm with what the journalist – who would eventually receive a prestigious George Polk Award for his investigative work – appropriately described as “a complete indifference to noncombatants”.

The man who would become something of a journalistic icon for his reporting on US wrongdoing in Vietnam and elsewhere as the editor of I F Stone’s Weekly was especially concerned about how the his country got into what would come to be referred to as “Truman’s War”.

It bothered Stone that the Korean war was, like the current conflict in Iraq, entered into without a proper declaration of war by Congress.

As Nebraska Congressman Howard Buffett – an old-right Republican who was Warren’s father – explained, “Truman entered that war by his own act”.

Instead of going to Congress and asking for a formal declaration of war, the president gamed the system by claiming that US participation in the United Nations required him to send American boys to again die in Asia not five years after World War II had finished. As Buffett explained, “On June 25 1950, the UN Security Council demanded a cease-fire and called on members to render every assistance to the United Nations in the execution of this resolution. Nothing was said about entering the conflict … But at twelve o’clock noon, on June 27, President Truman ordered United States air and sea units to give the Korean Government troops cover and support. That order put our military forces into the Korean civil war on the side of the South Koreans. At 10:45 that evening, eleven hours later, the Security Council requested members of the UN to supply the Republic of Korea with sufficient military assistance to repel invasion.”

So it was that Buffett determined that, “Truman entered that war by his own act, and not because of a United Nations decision”.

Like Stone, Buffett argued, based on the classified Congressional testimony of Admiral Roscoe Henry Hillenkoetter, the third director of the post-WWII US Central Intelligence Group (CIG), and the first director of the Central Intelligence Agency, that South Korea had initiated the shooting war in Korea. History would raise serious questions about this assessment, but it would never challenge the fundamental wisdom of those who argued that Truman was wrong to send US troops to die in an undeclared and unfocused war – and that Truman misguided approach would negatively influence the presidents who followed him.

Stone, Buffett and others on the left and right believed more in the Constitution’s system of checks and balances than in partisan games or ideological positioning. They wanted wars declared. They wanted Congress to share with the president responsibility for directing foreign policy, especially when it involved military endeavors abroad. And they wanted an honest discourse about where the US committed its troops – and why. Denouncing the Truman doctrine – which Bush seemed to be reasserting with his VFW speech – Buffett said, “Even if it were desirable, America is not strong enough to police the world by military force. If that attempt is made, the blessings of liberty will be replaced by coercion and tyranny at home.”

As the Korean conflict degenerated into the disaster that it became, Stone and Buffett found allies – on the right, on the left, and ultimately in the political middle.

“My conclusion”, wrote Ohio Senator Robert Taft as he prepared a campaign for the 1952 Republican presidential nomination, “is that in the case of Korea, where a war was already under way, we had no right to send troops to a nation, with whom we had no treaty, to defend it against attack by another nation, no matter how unprincipled that aggression might be, unless the whole matter was submitted to Congress and a declaration of war or some other direct authority obtained”.

Taft did not become the GOP nominee. General Dwight D Eisenhower, the former Supreme Commander of the Allied forces in Europe and a decidely more moderate political figure, was given the task. Eisenhower ran on a promise that he would go to Korea personally with the purpose of ending what had become an extremely unpopular war.

Eisenhower did just that, traveling to Korea before he was even sworn in as president. By the following summer, with his support and encouragement, a rough peace was achieved. Unfortunately, more than half a century later, the US continues to spend billions of dollars annually to maintain a massive military presence in the region.

Bush did not criticize Eisenhower in his speech to the VFW, presumably because he is no more familiar with the 34th president than he is with I F Stone. But if he does actually develop an interest in the period of history he referenced today, the current president might be intrigued by two of his predecessor’s statements from the era.

“When people speak to you about a preventive war, you tell them to go and fight it. After my experience, I have come to hate war … War settles nothing”, explained the old military man.

Eisenhower rejected the argument that keeping up the fight in Korea was necessary to protecting America, and he counseled that a permanent commitment to fighting abroad would – as his fellow Republican Howard Buffett had earlier suggested – cost America dearly.

“Every gun that is made, every warship launched, every rocket fired signifies in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed”, Eisenhower declared in the spring of 1953, as he was dialing down the Korea conflict. “This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children … This is not a way of life at all in any true sense. Under the clouds of war, it is humanity hanging on a cross of iron.”


John Nichols’ new book is The Genius of Impeachment: The Founders’ Cure for Royalism (New Press, 2006). Rolling Stone’s Tim Dickinson hails it as a “nervy, acerbic, passionately argued history-cum-polemic [that] combines a rich examination of the parliamentary roots and past use of the ‘heroic medicine’ that is impeachment with a call for Democratic leaders to ‘reclaim and reuse the most vital tool handed to us by the founders for the defense of our most basic liberties'”.

Bill Totten

Categories: Uncategorized

>America and Rome

>by John Michael Greer

The Archdruid Report (August 13 2007)

Druid perspectives on nature, culture, and the future of industrial society

I don’t usually post outside my usual once-a-week schedule, and it’s even less common for me to post something that amounts to a link to something in the media, but for this, I’ll make an exception. The Comptroller General of the US, David Walker, has just made a public statement comparing current US policies to those that caused the fall of the Roman Empire. What’s more, he’s right. Have a look at the article here.

Learn from the fall of Rome, US warned

by Jeremy Grant in Washington

Financial Times (August 14 2007)

The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned.

David Walker, comptroller general of the US, issued the unusually downbeat assessment of his country’s future in a report that lays out what he called “chilling long-term simulations”.

These include “dramatic” tax rises, slashed government services and the large-scale dumping by foreign governments of holdings of US debt.

Drawing parallels with the end of the Roman empire, Mr Walker warned there were “striking similarities” between America’s current situation and the factors that brought down Rome, including “declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government”.

“Sound familiar?” Mr Walker said. “In my view, it’s time to learn from history and take steps to ensure the American Republic is the first to stand the test of time.”

Mr Walker’s views carry weight because he is a non-partisan figure in charge of the Government Accountability Office, often described as the investigative arm of the US Congress.

While most of its studies are commissioned by legislators, about ten per cent – such as the one containing his latest warnings – are initiated by the comptroller general himself.

In an interview with the Financial Times, Mr Walker said he had mentioned some of the issues before but now wanted to “turn up the volume”. Some of them were too sensitive for others in government to “have their name associated with”.

“I’m trying to sound an alarm and issue a wake-up call”, he said. “As comptroller general I’ve got an ability to look longer-range and take on issues that others may be hesitant, and in many cases may not be in a position, to take on.

“One of the concerns is obviously we are a great country but we face major sustainability challenges that we are not taking seriously enough”, said Mr Walker, who was appointed during the Clinton administration to the post, which carries a fifteen-year term.

The fiscal imbalance meant the US was “on a path toward an explosion of debt”.

“With the looming retirement of baby boomers, spiralling healthcare costs, plummeting savings rates and increasing reliance on foreign lenders, we face unprecedented fiscal risks”, said Mr Walker, a former senior executive at PwC auditing firm.

Current US policy on education, energy, the environment, immigration and Iraq also was on an “unsustainable path”.

“Our very prosperity is placing greater demands on our physical infrastructure. Billions of dollars will be needed to modernise everything from highways and airports to water and sewage systems. The recent bridge collapse in Minneapolis was a sobering wake-up call.”

Mr Walker said he would offer to brief the would-be presidential candidates next spring.

“They need to make fiscal responsibility and inter-generational equity one of their top priorities. If they do, I think we have a chance to turn this around but if they don’t, I think the risk of a serious crisis rises considerably.”

Copyright (c) The Financial Times Limited 2007

“FT” and “Financial Times” are trademarks of the Financial Times.


We now return to our regularly scheduled program of bread and circuses …

Bill Totten

Categories: Uncategorized

>Scrabbling Around For Plan B

>by John Michael Greer

The Archdruid Report (August 15 2007)

Druid perspectives on nature, culture, and the future of industrial society

Those of my readers who have been paying attention to the financial news over the last couple of weeks may have noticed a certain weakening of the ebullient smile Wall Street likes to paste on the world. Pundits and financiers who were announcing vast profits and crowing over new stock market records a month ago are adopting a noticeably different style as they try to explain why many billions of dollars invested in hedge funds and the like aren’t there any more. The baroque financial architecture of yet another economic new era has turned out to consist mostly of bubbles rather less tiny than the ones that Don Ho used to sing about, and the results, to put things charitably, have not been good.

The carnage began with mortgage companies, not so long ago the darlings of the financial press. Eighty-odd of them have imploded in the last few months as they discovered that if you loan money to people who can’t pay it back – who’d have thought? – they can’t pay it back. Next it was the turn of hedge funds that speculated in mortgage debt, with two Bear Sterns funds leading the rush to insolvency. In the last few days, problems have surfaced in the commercial paper market, as it turned out that several firms in that end of the financial industry also have a good deal of dubious mortgage debt on their books, and in quant funds -funds that speculate in stocks using computer programs – that got slammed to the mat when the stock market didn’t behave the way their models said it would.

Meanwhile, other sectors of the credit market are looking nervously over their shoulders at their own equivalents of what the mortgage industry has uncharitably but accurately termed “toxic waste” – huge volumes of loans made with little attention to their prospects for repayment, and then offloaded onto buyers around the world whose greed for an extra percentage point of interest kept them from noticing that gamblers don’t always win their bets. Short term credit tightened up so drastically last week that central banks around the world had to dump more than $200 billion into financial markets to stave off a credit panic. Where this is going is anyone’s guess, but at this point the chance of a serious recession is hard to dismiss.

All this is interesting enough in its own right. As J K Galbraith pointed out in his wry classic The Great Crash 1929 (1955) – required reading for anybody interested in the vagaries of economics, not to mention the funniest work of serious economic history ever written – economic panics offer an unequaled glimpse at the gaping chasm between expectation and reality that opens up when people think they can get something for nothing. It also has real implications for the future of industrial society, since resources flushed down the ratholes of subprime mortgages, speculative hedge funds, and the like will not be available to deal with the pressing needs of an oil-dependent civilization slowly discovering that it’s already on the far side of Hubbert’s peak. All these are relevant, but the spectacle of empty air opening up beneath yesterday’s speculative boom also does a fine job of pointing out one of the most pervasive bad habits of contemporary thought.

The subprime mortgage mess is a good place to start. For many years it’s been customary in the banking industry to justify giving mortgages to people who wouldn’t normally qualify for a home loan by charging them a higher interest rate than usual. The extra income from the interest compensated the bank for the losses from those borrowers who defaulted on their loans. So far, so good, but this extra fillip of interest attracted money from outside the banking industry, and banks found that they could package mortgages into “collateralized debt obligations” – CDOs, for short – and sell them for cash, offloading risk while pocketing the proceeds of the sales.

In a time of record low interest rates, the return on subprime CDOs looked good, so long as you didn’t think too hard about the risk of default. Banks soon figured out how to hide that risk even further by slicing up packages of mortgages into multiple “tranches” that, at least on paper, had different levels of risk. The process was pushed further along when companies bought tranches of different CDOs and reassembled them into new CDOs, with their own multiple tranches, which could then be bought and reassembled ad infinitum.

Beneath all these bells and whistles, though, was the same pool of mortgage loans to people who couldn’t qualify for an ordinary mortgage – a pool that became increasingly risky as profits from the CDO market lured banks and mortgage companies into handing out mortgages with less and less attention to the borrowers’ ability to pay. The bottom of the barrel was reached with what were called NINJA loans – no income, no job or assets – which combined a hefty interest rate on paper with a fair certainty that not one cent of the interest or principal would ever be repaid.

In effect, the idea of risk had evaporated from the minds of the speculators. It’s understandable that banks and mortgage companies would stop worrying about risk once they learned to package their mortgages and sell them to other people. It’s less understandable that people who wanted to buy houses, to live in or (more and more often as the boom went on) to sell at a profit in a few months, lost track of the fact that if things went wrong they could be left with debts far beyond their ability to pay. It’s still less understandable that investors around the world would lose track of the fact that a high interest rate that never gets paid isn’t actually worth anything at all.

Still, the same myopia has appeared on cue in every previous speculative frenzy, too. Purchasers of subprime toxic waste can now join the long line of self-deluded gulls that reaches from the people in 1999 who bought stock in fly-by-night dotcom firms, all the way back to the people in 17th century Holland who spent hundreds of guilders buying single tulip bulbs on the assumption that they’d be able to sell them for even more in a few weeks. It’s an affliction endemic to market capitalism throughout its history, but it became pandemic in the last years of the 20th century and remains so today – and not just in the world of economic speculation.

It’s worth suggesting, in fact, that blindness to risk has become one of the most widespread mental habits in contemporary society. Plenty of examples could be cited, but one discussed many times in this blog – peak oil – belongs high on the list. All through the controversies about how much petroleum the world still has, how rapidly it’s being depleted, and whether or not it can be replaced by some other set of energy resources, one constant theme has been the refusal of most people outside the extreme “doomer” end of the peak community to notice that industrial civilization could end up in deep trouble if things go badly.

Those who argue that the world still contains ample supplies of oil that just haven’t been found yet, like those who insist that innovation will take care of the problem by pulling some currently unknown technological rabbit out of a hat just in time, tend to respond to such questions as “but what if you’re wrong?” in the same tone of irritated superiority as a Wall Street financier might have done a few months ago if asked what would happen if subprime defaults got out of hand. There’s an oddly incantatory quality to this nothing-can-go-wrong rhetoric, as though it will all work out fine just as long as everybody agrees it will.

As the long and sordid history of economic crises shows all too well, though, optimism is not always justified, and things that seem too good to be true generally are. Right now the world economy is reeling and shuddering because a great many otherwise intelligent people jumped to the conclusion that nothing could go wrong with a new set of moneymaking schemes that promised something for nothing. The similarities between this bit of delusion and the even more widespread faith that humanity can pump infinite amounts of cheap energy out of a finite planet leaves me wondering if the exponential expansion of industrial society over the last two centuries or so might be seen, in a certain sense, as the biggest speculative bubble of them all.

Speculative bubbles, after all, always launch themselves from a basis of fact. It was true in the 1990s that huge new fortunes were made on the Internet, and investments in computer firms during those years paid off spectacularly. It was true earlier in the present decade that a lot of Americans wanted homes of their own, and low interest rates and abundant capital from overseas made it possible for that desire to be met. Equally, it was true that the exploitation of coal, oil, and natural gas by way of an ever more sophisticated suite of technologies enabled the industrial societies of the West to enjoy the great-grandmother of all economic booms.

Just as every speculative binge eventually trips itself up on its own excessive optimism, in turn, industrial society ignored the well-timed warnings of oncoming resource depletion in the 1970s. The small but steady declines in oil production that have taken place over the last two years, despite sky-high oil prices and a flurry of well-drilling that has driven rig costs to record levels, may just turn out to be the equivalent of the rising default rates in subprime mortgages that started today’s economic landslide on its way. At the moment, industrial civilization is poised somewhere in the same period of eerie calm between the beginning of decline and the arrival of panic that comes late in the history of every speculative binge. In the example now unwinding around us, that period of calm ended a few weeks ago when Bear Sterns admitted that two of its billion-dollar hedge funds were no longer worth a cent. What will end the equivalent period in the trajectory of our civilization is still anybody’s guess, and it may still be years in the future.

Whenever it comes, though, the central problem that will have to be faced then is the same problem that banks, mortgage companies, and the global economy are having to face right now. By ignoring the reality of risk, the money managers of the last few years left themselves with very few options once the economic situation changed in a way they hadn’t anticipated. In the same way, by ignoring the possibility that we may be running out of cheap abundant energy, modern industrial civilization could well be backing itself into a corner. Without preparations in place, or even a sense of what the options might be, we could all find ourselves desperately scrabbling around for a Plan B when the illusion of endless energy supplies pops around us like a bubble – speculative or otherwise.

Bill Totten

Categories: Uncategorized

>Yes, there’s every reason to worry

>By the standards of the second half of the 20th century, we are in the midst of a panic as serious as any which preceded it

by Alex Brummer

New Statesman (August 27 2007)

One has come to think of the Frankfurt-based European Central Bank as a master of inaction, looking upon distressed financial institutions with lofty disdain. So it has been astonishing to see how the burgher bankers of Frankfurt have weighed into the money markets with literally hundreds of billions of euros in assistance.

The ECB has not been alone. In New York the Federal Reserve has also been hyperactive, swamping the markets with cash in a titanic effort to prevent short-term interest rates from rising. From Sydney to Tokyo, there has been similar behaviour. The only notable exception to this generous behaviour has been the Bank of England – which, for a central bank that prides itself on being a good global citizen, is curious.

What the other central banks have been doing is following the classic advice to monetary authorities when faced with a financial crisis: you make sure that the capital markets do not dry up, by supplying them with pots of cash to ensure that interest rates do not soar. The fear is that if they climb too far the banks will stop lending to their business customers, consumers will be unable to obtain credit or mortgages, output will plummet and the jobless rate will soar.

By the standards of the second half of the 20th century, we are in the middle of a panic every bit as serious as, if not worse than, those that preceded it. These include the 1987 stock market crash, the bursting of the Japanese bubble in 1991 and the east Asian crisis of 1997, followed by implosion of the Russian rouble in August 1998 and the collapse and $3.6 billion rescue of Long-Term Capital Management, a US hedge fund, a month later.

In the past decade there has been a credit explosion unmatched in human history. In Britain, at the personal level, it is to be seen in the GBP 1.3 trillion overhang of credit and mortgage debt. That is why shares in some of our biggest mortgage suppliers have come under such selling pressure. The global debt mountain is many times bigger than this, with GBP 500 billion raised for corporate buyouts alone. In addition there is a little-understood world – of unregulated, highly geared hedge funds – where the scale of potential loss is unknown.

The gross unfairness in all this is that whereas the domestic consumer has no choice but to keep debt payments up to date, or face insolvency or repossession, the big financial institutions are regarded in many countries as too big to fail. The flood of money placed by the central banks in the money markets is intended to give them time to unwind transactions with the minimum of pain. The likelihood is that the federal government will eventually bail out America’s mortgage lenders by propping up semi-official lenders such as Fannie Mae.

Amid all this frenzied activity, the Bank of England has so far trodden a very different path. Under the governorship of Mervyn King, it has developed a framework for assisting financial institutions that seeks to avoid rewarding those hedge funds and banks that have acted foolishly. Instead of flooding the London wholesale markets with cash, it is being miserly. It has told the 57 or so banks that have registered with it that they can indeed borrow extra money – but only at a crippling rate of one per cent above the current bank rate of 5.75 per cent. In other words, those banks that have behaved foolishly will pay penal rates.

King has made clear that he does not believe in “no-cost” bailouts for the financial sinners, arguing that this creates what is known in financial circles as “moral hazard”: if you make life easier for those banks that have lent to badly run hedge funds, or put their cash into poorly designed private equity buyouts, you encourage others to take the same ridiculous risks. It was this thinking that for years stopped the Group of Seven richest countries from forgiving the debts of Africa’s poorest nations. That was until they recognised that it was the people of Africa who were starving, not the government officials in armoured Mercedes.

This is the flaw in the Bank of England’s approach. By refusing to acknowledge the building difficulties in Britain’s money markets, it risks punishing ordinary borrowers, investors and depositors, rather than the financial institutions that have failed to behave responsibly.

So far, the Old Lady of Threadneedle Street’s tough love has not caused fundamental problems. This is partly because our big international banks, such as Barclays and HSBC, have access to ECB, Fed and other central bank money through their foreign subsidiaries. Nevertheless, its policy has provoked cries of anguish from some players in the London money market.

The betting must be that, should push come to shove – and an international rescue operation for a major institution be mounted – the King will find it hard to remain on the sidelines.


Alex Brummer is City editor of the Daily Mail

Bill Totten

Categories: Uncategorized

>How Did We Get Into This Mess?

>Many of our current crises are the long-term results of a meeting which took place sixty years ago

by George Monbiot

Published in the Guardian (August 28 2007)

For the first time, the United Kingdom’s consumer debt now exceeds our gross national product: a new report shows that we owe GBP 1.35 trillion {1}. Inspectors in the United States have discovered that 77,000 road bridges are in the same perilous state as the one which collapsed into the Mississippi {2}. Two years after Hurricane Katrina struck, 120,000 people from New Orleans are still living in trailer homes and temporary lodgings {3}. As runaway climate change approaches, governments refuse to take the necessary action. Booming inequality threatens to create the most divided societies the world has seen since before the first world war. Now a financial crisis caused by unregulated lending could turf hundreds of thousands out of their homes and trigger a cascade of economic troubles.

These problems appear unrelated, but they all have something in common. They arise in large part from a meeting that took place sixty years ago in a Swiss spa resort. It laid the foundations for a philosophy of government that is responsible for many, perhaps most, of our contemporary crises.

When the Mont Pelerin Society first met, in 1947, its political project did not have a name. But it knew where it was going. The society’s founder, Friedrich von Hayek, remarked that the battle for ideas would take a least a generation to win, but he knew that his intellectual army would attract powerful backers. Its philosophy, which later came to be known as neoliberalism, accorded with the interests of the ultra-rich, so the ultra-rich would promote it.

Neoliberalism claims that we are best served by maximum market freedom and minimum intervention by the state. The role of government should be confined to creating and defending markets, protecting private property and defending the realm. All other functions are better discharged by private enterprise, which will be prompted by the profit motive to supply essential services. By this means, enterprise is liberated, rational decisions are made and citizens are freed from the dehumanising hand of the state.

This, at any rate, is the theory. But as David Harvey proposes in his book A Brief History of Neoliberalism, wherever the neoliberal programme has been implemented, it has caused a massive shift of wealth not just to the top one percent, but to the top tenth of the top one per cent {4}. In the United States, for example, the upper 0.1% has already regained the position it held at the beginning of the 1920s {5}. The conditions that neoliberalism demands in order to free human beings from the slavery of state – minimal taxes, the dismantling of public services and social security, deregulation, the breaking of the unions – just happen to be the conditions required to make the elite even richer, while leaving everyone else to sink or swim.

So the question is this. Given that the crises I have listed are predictable effects of the dismantling of public services and the deregulation of business and financial markets, given that it damages the interests of nearly everyone, how has neoliberalism come to dominate public life?

Richard Nixon was once forced to concede that “we are all Keynesians now”: even the Republicans supported the interventionist doctrines of John Maynard Keynes. But we are all neoliberals now. Mrs Thatcher kept telling us that “there is no alternative”, and by implementing her programmes, Clinton, Blair, Brown and the other leaders of what were once progressive parties appear to prove her right.

The first great advantage the neoliberals possessed was an unceasing fountain of money. American oligarchs and their foundations – Coors, Olin, Scaife, Pew and others – have poured hundreds of millions into setting up thinktanks, founding business schools and transforming university economics departments into bastions of almost totalitarian neoliberal thinking. The Heritage Foundation, the Hoover Institute, the American Enterprise Institute and many others in the US, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute in the UK were all established to promote this project. Their purpose was to develop the ideas and the language which would mask the real intent of the programme – the restoration of the power of the elite – and package it as a proposal for the betterment of humankind.

Their project was assisted by ideas which arose in a very different quarter. The revolutionary movements of 1968 also sought greater individual liberties, and many of the soixante-huitards saw the state as their oppressor. As Harvey shows, the neoliberals coopted their language and ideas. Some of the anarchists I know still voice notions almost identical to those of the neoliberals: the intent is different, but the consequences very similar.

Hayek’s disciples were also able to make use of economic crises. One of their first experiments took place in New York City, which was hit by budgetary disaster in 1975. Its bankers demanded that the city follow their prescriptions: massive cuts in public services, the smashing of the unions, public subsidies for business {6}. In the United Kingdom, stagflation, strikes and budgetary breakdown allowed Margaret Thatcher, whose ideas were framed by her neoliberal adviser Keith Joseph, to come to the rescue. Her programme worked, but created a new set of crises.

If these opportunities were insufficient, the neoliberals and their backers would use bribery or force. In the US the Democrats were neutered by new laws on campaign finance. To compete successfully with the Republicans, they would have to give big business what it wanted. The first neoliberal programme of all was implemented in Chile following Pinochet’s coup, with the backing of the US government and economists taught by Milton Friedman, one of the founding members of the Mont Pelerin Society. Drumming up support for the project was a simple matter: if you disagreed, you got shot. The International Monetary Fund and the World Bank used their power over developing nations to demand the same policies.

But the most powerful promoter of this programme was the media. Most of it is owned by multi-millionaires who use it to project the ideas that support their interests. Those which threaten their plans are either ignored or ridiculed. It is through the newspapers and television channels that the socially destructive ideas of a small group of extremists have come to look like common sense. The corporations’ tame thinkers sell the project by reframing our political language (for an account of how this happens, see George Lakoff’s book, Don’t Think of an Elephant! {7}). Nowadays I hear even my progressive friends using terms like wealth creators, tax relief, big government, consumer democracy, red tape, compensation culture, job seekers and benefit cheats. These terms, all deliberately invented or promoted by neoliberals, have become so commonplace that they now seem almost neutral.

Neoliberalism, if unchecked, will catalyse crisis after crisis, all of which can be solved only by the means it forbids: greater intervention on the part of the state. In confronting it, we must recognise that we will never be able to mobilise the resources its exponents have been given. But as the disasters they have caused develop, the public will need ever less persuading that it has been misled.


1. Larry Elliott, 23rd August 2007. Consumers’ debt overtakes gross domestic product. The Guardian.

2. Ed Pilkington, 24th August 2007. Guano theory in bridge collapse. The Guardian.

3. Anthony Lane, 27th August 2007. New Orleans: A National Humiliation. The New Statesman.

4. David Harvey, 2005. A Brief History of Neoliberalism. Oxford University Press.

5. See the graph on page 17 of Harvey’s book.

6. David Harvey, ibid.

7. George Lakoff, 2004. Don’t Think of an Elephant: Know Your Values and Frame the Debate. Chelsea Green.

Copyright (c) 2006

Bill Totten

Categories: Uncategorized