Michael Hudson asks: “In light of the enormous productivity gains since the end of World War II – and especially since 1980 – why isn’t everyone rich and enjoying the leisure economy that was promised?”
The answer (per Hudson) is painfully obvious, but bears repeating (ad infinitum):
What was applauded as a post-industrial economy has turned into a financialized economy. The reason you have to work so much harder than before, even when wages rise, is to carry your debt overhead. You’re unable to buy the goods you produce because you need to pay your bankers. And the only way that you can barely maintain your living standards is to borrow even more. This means having to pay back even more in years to come.
That is the Eurozone plan in a nutshell for its economic future. It is a financial plan that is replacing industrial capitalism – with finance capitalism.
Industrial capitalism was based on increasing production and expanding markets. Industrialists were supposed to use their profits to build more factories, buy more machinery and hire more labor. But this is not what happens under finance capitalism. Banks lend out their receipt of interest, fees and penalties (which now yield credit card companies as much as interest) in new loans.
The problem is that income used to pay debts cannot simultaneously be used to buy the goods and services that labor produces. So when wages and living standards do not rise, how are producers to sell – unless they find new markets abroad? The gains have been siphoned off by finance. And the financial dynamic ends up in austerity.
And to make matters worse, it is not the fat that is cut. The fat is the financial sector. What is cut is the bone: the industrial sector. So when writers refer to a post-industrial economy led by the banks, they imply deindustrialization. And for you it means unemployment and lower wages.
As they say, read the whole damn thing.
(Image: jesse.millan, Flickr)
[T]he real issue isn’t bonuses. It’s your compensation, period. It’s the fact that, after doing your very best to wreck the world economy, you regard yourselves as entitled to levels of compensation that people who actually make things can only fantasize about. The bonus part is just the icing on the cake.Oddly, though, the idea that bonuses have something to do with performance isn’t limited to us outsiders. The WSJ article also contains this gem:
“Under the forthcoming rules, bonuses could come to no more than one-third of the total annual compensation paid to employees covered by the restrictions. Some compensation experts view the bonus limits as a mistake that turns the notion of pay for performance on its head, despite Wall Street’s culpability for the recession and credit crisis.”Oh noes! We can’t have the notion of pay for performance turned on its head! Not on Wall Street!
As someone who thinks that levels of compensation in the US are absurdly unequal, and that this is bad for the country, it’s tempting to say: oh, go ahead, you idiots. Keep your sense of entitlement to other people’s money. Make people come after you with pikes and tumbrils. See if I care.
The thing is, I don’t think that rage normally leads to good policy. (Though, as I’ve said before, I really believe that it would help a lot with moral hazard if people found the experience of having the government bail out their firms profoundly unpleasant.) And I’m sure that my inner policy wonk will shortly regain control. Still, at the moment, it’s awfully tempting. I think of people I’ve known who have worked hard all their lives for not very much money, only to be completely bankrupted by unforeseen medical catastrophes, and I imagine these people being asked to support investment bankers in the style to which they have become accustomed, and fury feels like exactly the right response.”
Here’s hoping Hil’s inner policy wonk doesn’t regain control any time soon — she definitely needs to include the phrase “pikes and tumbrils” in more posts.
h/t Sarah (who has a must-read piece over at GC on growing public fury with AIG –GO!!!)
Chapter 3: States of Shock: The Bloody Birth of the Counter-revolution
I think those programs were absolutely essential to the success we enjoyed of being able to collect the intelligence that let us defeat all further attempts to launch attacks against the United States since 9/11. I think that’s a great success story. …
Infamous Chilean despot General Augusto Pinochet died in December of 2006. His passing came one month after Milton Friedman, the man whose faithful acolytes, as Naomi Klein outlines in Chapter 3 of The Shock Doctrine, helped lay the ideological groundwork for the bloody counter-revolution undertaken by Pinochet and his right-wing brethren. (For the grim details, see Trend over at Alterdestiny).
As Klein notes:
For the first year and a half, Pinochet faithfully followed the Chicago rules: he privatized some, though not all, state-owned companies (including several banks); he allowed cutting-edge new forms of speculative finance; he flung open the borders to foreign imports, tearing down the barriers that had long protected Chilean manufacturers; and he cut government spending by 10 percent — except the military, which received a significant increase. He also elimiated price controls–a radical move in a country that had been regulating the cost of necessities such as bread and cooking oil for decades.
But, as Klein further notes, despite assurances from the Chicago Boys that these radical ‘market reforms’ would (somehow) spur a decrease in inflation, inflation in Chile jumped to 375 percent in 1974, “the highest rate in the world and almost twice the top level under [former president Salvadore] Allende.” Sensing a shift among both the public and, most disturbingly, Chile’s business elite, the Chicago Boys “decided to call in the big guns,” enlisting Friedman himself to use his “rock star” presence to sell economic shock-therapy by sheer force of will.
And it worked:
In his letter of response, Chile’s supreme chief expressed “my highest and most respectful regard for you,” assuring Friedman that “the plan is being fully applied at the present time.” Immediately after Friedman’s visit, Pinochet fired his economic minister and handed the job to Sergio de Castro, whom he later promoted to finance minister. De Castro stacked the government with his fellow Chicago Boys, appointing one of them to head the central bank.
Freed of the naysayers, Pinochet and de Castro got to work stripping away the welfare state to arrive at their pure capitalist utopia. In 1975, they cut public spending by 27 percent in one blow–and they kept cutting until, by 1980, it was half of what it had been under Allende.
Elsewhere, in Brazil and Argentina, other right-wing juntas perfected the Chilean model, waging a dirty war on those whose left-wing ideological leanings were in opposition to the wave of corporatist economic and social reform underway within the nations of the Southern Cone. But behind the counter-revolutionary action in Central and South America lurked a covert American presence, one that provided both training and materiel to the military arbiters of radical neoliberal ‘reform’ under the dubious auspices of Operation Condor. According to Klein, as part of the infamous program “the intelligence agencies of the Southern Cone shared information about “subversives”–aided by a state-of-the-art computer system provided by Washington–and then gave each other’s agents safe passage to carry out cross-border kidnappings and torture, a system eerily resembling the CIA’s “extraordinary rendition” network today”.
The justification for the dirty work was the same then as it is now: a war on ‘terror’, in which it was deemed necessary to sometimes skirt the boundaries of human rights and dignity in order to serve a higher purpose. Whether that purpose was the spread of ‘freedom’ and ‘democracy’ or neoliberal doctrine is, of course at the heart of both Klein’s book and this series. Regardless, as Klein notes, the parallels between what occurred in the 1970s and 80s and the post-9/11 era are striking.
Sarah outlines these parallels in further detail:
Warrantless wiretapping certainly isn’t mass disappearances of citizens, but it is a tool that keeps everyone in fear that they are next. It suppresses dissent and keeps people in fear for their basic safety, while around them their economic safety net is dismantled. America hadn’t undergone enough of a shock to allow, for instance, Social Security privatization, but in Chile and the other Friedmanite regimes, torture and repression left people unable to fight back.
In a NY Times op-ed (adapted from a lengthy essay published in the New York Review of Books), Mark Danner shows in stark detail just how far the Bush administration was willing to go in order to fight its contemporary “war for freedom and against tyranny”, as Argentinian Junta leader Admiral Massara at the time justified his nation’s embrace of the dark side:
Shortly after Abu Zubaydah was captured, C.I.A. officers briefed the National Security Council’s principals committee, including Vice President Dick Cheney, the national security adviser, Condoleezza Rice, and Attorney General John Ashcroft, in detail on the interrogation plans for the prisoner. As the interrogations proceeded, so did the briefings, with George Tenet, the C.I.A. director, bringing to senior officials almost daily reports of the techniques applied.
At the time, the spring and summer of 2002, Justice Department officials, led by John Yoo, were working on a memorandum, now known informally as “the torture memo,” which claimed that for an “alternative procedure” to be considered torture, and thus illegal, it would have to cause pain of the sort “that would be associated with serious physical injury so severe that death, organ failure, or permanent damage resulting in a loss of significant body function will likely result.” The memo was approved in August 2002, thus serving as a legal “green light” for interrogators to apply the most aggressive techniques to Abu Zubaydah:
“I was taken out of my cell and one of the interrogators wrapped a towel around my neck; they then used it to swing me around and smash me repeatedly against the hard walls of the room.”
The prisoner was then put in a coffin-like black box, about 4 feet by 3 feet and 6 feet high, “for what I think was about one and a half to two hours.” He added: The box was totally black on the inside as well as the outside…. They put a cloth or cover over the outside of the box to cut out the light and restrict my air supply. It was difficult to breathe. When I was let out of the box I saw that one of the walls of the room had been covered with plywood sheeting. From now on it was against this wall that I was then smashed with the towel around my neck. I think that the plywood was put there to provide some absorption of the impact of my body. The interrogators realized that smashing me against the hard wall would probably quickly result in physical injury.”
After this beating, Abu Zubaydah was placed in a small box approximately three feet tall. “They placed a cloth or cover over the box to cut out all light and restrict my air supply. As it was not high enough even to sit upright, I had to crouch down. It was very difficult because of my wounds. The stress on my legs held in this position meant my wounds both in the leg and stomach became very painful. I think this occurred about three months after my last operation. It was always cold in the room, but when the cover was placed over the box it made it hot and sweaty inside. The wound on my leg began to open and started to bleed. I don’t know how long I remained in the small box; I think I may have slept or maybe fainted.
“I was then dragged from the small box, unable to walk properly, and put on what looked like a hospital bed, and strapped down very tightly with belts. A black cloth was then placed over my face and the interrogators used a mineral water bottle to pour water on the cloth so that I could not breathe. After a few minutes the cloth was removed and the bed was rotated into an upright position. The pressure of the straps on my wounds was very painful. I vomited.
“The bed was then again lowered to horizontal position and the same torture carried out again with the black cloth over my face and water poured on from a bottle. On this occasion my head was in a more backward, downwards position and the water was poured on for a longer time. I struggled against the straps, trying to breathe, but it was hopeless.”
After being placed again in the tall box, Abu Zubaydah “was then taken out and again a towel was wrapped around my neck and I was smashed into the wall with the plywood covering and repeatedly slapped in the face by the same two interrogators as before.
“I was then made to sit on the floor with a black hood over my head until the next session of torture began. The room was always kept very cold. This went on for approximately one week.”
The use of torture deprives the society whose laws have been so egregiously violated of the possibility of rendering justice. Torture destroys justice. Torture in effect relinquishes this sacred right in exchange for speculative benefits whose value is, at the least, much disputed.
As I write, it is impossible to know definitively what benefits — in intelligence, in national security, in disrupting Al Qaeda — the president’s approval of use of an “alternative set of procedures” might have brought to the United States. Only a thorough investigation, which we are now promised, much belatedly, by the Senate Intelligence Committee, can determine that.
What we can say with certainty, in the wake of the Red Cross report, is that the United States tortured prisoners and that the Bush administration, including the president himself, explicitly and aggressively denied that fact. We can also say that the decision to torture, in a political war with militant Islam, harmed American interests by destroying the democratic and Constitutional reputation of the United States, undermining its liberal sympathizers in the Muslim world and helping materially in the recruitment of young Muslims to the extremist cause. By deciding to torture, we freely chose to embrace the caricature they had made of us. The consequences of this choice, legal, political and moral, now confront us. Time and elections are not enough to make them go away.
Klein estimates that the number of individuals tortured in the Southern Cone during the 70s and 80s was “probably somewhere between 100,000 and 150,000, tens of thousands of them killed.” Though the numbers of so-called ‘enemy combatants’ who faced torture in CIA black sites represent a mere fraction in comparison, the willingness to throw away stated values in the name of a greater goal is borne of the same moral limbo, where ends justify all means, no matter what. And, as Sarah noted, even though the numbers are far from comparable, the effect remains the same: keep the populace “in fear for their basic safety, while around them their economic safety net is dismantled.”
Tomorrow: Chapter 4: Cleaning the Slate: Terror Does its Work
Jim Hightower has never let his pitchfork grow dull, as he shows in this merciless skewering of the latest idiotic bleat from token NY Times conservative columnist Bobo Brooks:
There is a fury in the countryside toward these plutocratic purse-snatchers who are being allowed to keep their exalted executive positions, draw fat paychecks and get trillions of dollars in bailout money from common taxpayers. People don’t merely resent them, they yearn for the legalization of tar-and-feathering!
Yet, Brooks and his political brethren are now bemoaning the plight of the plutocrats, assailing the “redistributionists” who talk of spreading America’s wealth. In his column, Brooks cried out for a conservative vision of “a nation in which we’re all in it together – in which burdens are shared broadly, rather than simply inflicted on a small minority.”
Do we look like we have suckerwrappers around our heads? Where were these tender-hearted champions of sharing throughout the last 30 years, when that same “small minority” was absolutely giddy with redistributionist fervor – redistributing upward, that is?
With the full support of their political hirelings from both parties, this minority created tax dodges, trade scams, corporate subsidies, deregulation fantasies, financial hustles, de-unionization schemes, bankruptcy loopholes and other mechanisms that turned government into a redistributionist bulldozer, shoving wealth from the workaday majority into their own pockets.
Brooks might have missed this 30-year class war, but most folks have been right in the thick of it and are not the least bit squeamish about supporting a national effort to right those wrongs. After all, even a dog knows the difference between being stumbled over – and being kicked.
If only Hightower’s fellow populist Texican rabble-rouser Molly Ivins was still among the living; we need her brilliantly pointed insight now more than ever to help puncture bloated elite windbags like Bobo.
Related: Ok, I can kinda sorta grok fiddling as Rome goes up in flames. But dancing on tables at brunch while sipping on $2,500 ($2,500!) jeroboams of champagne–in the middle of the afternoon? Un-fucking-believable.
h/t Erik Loomis
The most recent edition of openDemocracy’s 50/50 quarterly features an interview with Dr. Yakin Erturk, the United Nations Special Rapporteur on Violence against Women, on how the global economic crisis is affecting women. Dr. Erturk also notes the import of ‘political economy’ in the pursuit of women’s rights, especially during a time of financial upheaval.
We refer to human rights as if they were confined to civil and political rights; this is also reflected in the twin covenants which have divided rights into civil and political on the one hand, and economic and social on the other. The latter is generally seen as inspirational and the first one as the real thing. But we know from women’s lives that unless we have a holistic approach to women’s rights, whereby women can achieve economic independence or are at least empowered socially and politically, the rights they may read about in books do not reach them. So my final report to the council this year is taking up this challenge: I have argued that underneath the surface of many of the things that we talk about as being cultural, there is a solid, material basis which feeds certain concrete interests and relationships; and that unless we dig down into that base we are talking at a very abstract level. Culture can take on a life of its own, so that we assume that that is the reality, when half the time nobody really understands its true impact.
We are all cultural beings: it is very hard to attack cultures. What I wanted to do in my culture report was to connect this to a more profound analysis of concrete interests, real power – hence political economy. Particularly in the neo-liberal era, it is political economy which is creating new challenges for women’s rights, while at the same time, of course, creating some new opportunities.
As they say, read the whole damn thing.
Uncle Steve is looking onward and upward:
Faced with complaints he wasn’t doing enough to soothe a nervous nation, Harper offered a detailed, if unemotional, dissertation on the economy.
“For Canada, this crisis does offer opportunity,” Harper told more than 400 people at a joint gathering of the Brampton and Mississauga boards of trade.
“Ultimately, it is an opportunity to position ourselves so that when the economic recovery comes, we’re among the first to catch the wave.”
The Prime Minister said that the government, though projecting a budget deficit for the next few years, is in the best financial shape of all G7 governments.
Harper noted that while Canada’s economy shrank at a 3.4 per cent annualized rate in the fourth quarter of 2008, it was half the decline experienced by the United States and Europe, and only a quarter of the devastating drop in Japan.
He said Canada’s stable banking system, low debt, low inflation rate and skilled workforce puts the country in a position of “significant comparative strength” to ride out the downturn.
“I say to you, as business people, as community builders, as citizens, if there ever was a time to put away that legendary Canadian modesty, it is now,” Harper said to applause.
Alas, the facts (yeah, those pesky things) belie Harper’s feigned deadpan optimism:
The parliamentary budget officer says the Canadian economy is doing even worse than published figures would suggest.
Kevin Page says in a new assessment of the economy that last quarter’s 3.4 per cent contraction in gross domestic product doesn’t begin to reflect how far Canada’s performance has fallen.
He says an even better indicator is gross domestic income, which measures Canadians’ purchasing power, and that shows a plunge of 15.3 per cent in the fourth quarter over the previous three months.
Oh, and about that 3.4 per cent figure so heartily humped by the PM?
The report says even the often-cited GDP figures which finds the U.S. economy shrinking by 6.2 per cent in the fourth quarter compared to Canada’s 3.4 per cent are misleading.
Those are annualized figures, Page notes, adding that compared to a year ago, Canada’s GDP is down 0.7 per cent and the U.S. by 0.8 per cent, almost identical records.
Don’t opportunistically and immodestly grab your surfboards just yet, kids — the wave of economic recovery is likely to crash long before it crests.
Related: Michael Ignatieff: The Harvey Dent of Canadian politics.
Via Memeorandum, some of the other progressive bloggers highlighting McHenry’s statement seem to be primarily concerned with how the Dem0cratic leadership in Congress can use the GOP’s apparent lack of ‘discipline’ to partisan advantage. Yeah, um, so what does the obstruction uber alles strategy mean for the economic health of the fucking nation and world, to ordinary people worried about the future?
We’re talking 4.4 million US jobs lost since the recession began (with more losses almost guaranteed to occur), further bank failures, potential state government bankruptcies. And yet it’s still all about scoring points and the perpetual fucking horse race?
This isn’t a fucking game; this is class warfare, kids.
Sharpen the goddamn fucking pitchforks.
Greg Sargent notes that House Taliban lieutenant Rep. Patrick McHenry has finally given voice to the blatantly obvious motivation driving the GOP obstruction uber alles strategy:
McHenry’s description is buried in this new article from National Journal (sub. only):
“We will lose on legislation. But we will win the message war every day, and every week, until November 2010,” said Rep. Patrick McHenry, R-N.C., an outspoken conservative who has participated on the GOP message teams. “Our goal is to bring down approval numbers for [Speaker Nancy] Pelosi and for House Democrats. That will take repetition. This is a marathon, not a sprint.”
McHenry’s spokesperson, Brock McCleary, tells me his boss is standing by the quote.
Of course McHenry is standing by the quote. The leaderless GOP insurgency has nothing left in its depleted arsenal except recycled guerrilla tactics, the ideological equivalent of roadside IEDs. They are literally betting the House on the efficacy of this strategy.
And, as D-Day notes, the asymmetrical campaign goes beyond mere electoral gain:
Over the long term, all [Congressional Republicans] are doing is chipping away at the notion that government can perform its core function, demonizing the activities of the Congress, evoking mistrust in elected officials, and poisoning the whole notion of federal spending. That’s their REAL project.
So here’s the picture that scares me: It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up. Mr. Obama finally concedes that a bigger stimulus is needed.
But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts. And as a result, the recession rages on, unchecked.
Bottom line is this: The GOP is perfectly willing to sacrifice the economic solvency of the United States–of the entire fucking world–simply to gain a few seats in 2010–and, in the process, will do whatever it takes to guarantee the fulfilment of its by-now tired contention that public investment never, ever works.
Frank Schaeffer is absolutely correct:
[T]he Republican Party has become the party of obstruction at just the time when all Americans should be pulling together for the good of our country. Instead, Republicans are today’s fifth column sabotaging American renewal.
Sharpen the pitchforks.
Yep, it’s that time of the month again, kids:
U.S. employers axed 651,000 jobs in February, pushing the unemployment rate to its highest in 25 years, as companies buckled under the strain of a recession that is showing no signs of ending, according to a government report.
The Labor Department on Friday said the unemployment rate surged to 8.1 percent in February, the highest level since December 1983. That was above market forecasts for a rise to 7.9 from January’s 7.6 percent.
Oh, and about the figures for December and January:
January’s job cuts were revised to show a steep decline of 655,000, while December’s payrolls losses were adjusted to 681,000, the deepest since October 1949. Since the start of the recession in December 2007, the economy has purged 4.4 million jobs, with more than half occurring in the last 4 months.
Y’know, at this point, I might as well just do up a template for posts on the monthly US job figures report. The latest numbers always seem to be the highest in umpteen years, with a swift recovery less likely than the possibility of Keith Olbermann STFUing about Rush Limbaugh any time soon. (Dude? Seriously? STFU about Rush Limbaugh. The obsession has going beyond grudgewank, beyond drama-humping, to fucking pathological. You need help–a 12 step program of recovery, to quote the best RNC chair EVA.)
The greatest irony of the Thatcher crusade is that its economics pulled against its ethics. I doubt if the idealised abstinent, puritanical, self-respecting Grantham of her imagination ever existed in the real world. It certainly didn’t exist in her Britain. As a quick reading of the Communist Manifesto would have warned her, free-market capitalism is, of its very essence, subversive. It is restless, heaving, masterless, wonderfully dynamic and creative, but, in itself, utterly amoral. The hot breath of the cash nexus dissolves the ties of faith, community, family and tradition. And, as Friedrich von Hayek pointed out more vigorously than any critic of the free market, entrepreneurial success has nothing to do with merit or fairness. It is about satisfying wants and even at times about creating or manufacturing them; and the wants are as likely to be bad as good. The speculative frenzies and spectacular frauds that have studded its history are of its essence, too: among the forces that drive it, greed, credulity and the herd instinct loom much larger than the rationality that most economists celebrate.
- David Marquand, The warrior woman