When you live somewhere like Minnesota where winter is a major fact of life, climate change is pretty damn obvious. In fact, even those of us who are VERY concerned about climate change joke that in Minnesota, global warming has been "berry, berry good to us." Shortening our winters by six weeks still leaves us with a LONG winter.
Interestingly, one of the first scientists who predicted climate change as a result of rising CO2 levels was a 19th century Swede named Svante Arrhenius who also thought that a warmer climate would make places like Sweden more comfortable.
I happen to believe the science is pretty settled and straightforward. Nevertheless, there are an astonishing number of folks who have their doubts. Well, it turns out many of those doubts have been bought and paid for by some right-wing Kansas cranks.
Greenpeace Unmasks Koch Industries' Funding of Climate Denial Industry
Brendan DeMelle
Koch Industries has “become a financial kingpin of climate science denial and clean energy opposition,” spending over $48.5 million since 1997 to fund the climate denial machine, according to an extensive report today by Greenpeace.
The Greenpeace report reveals how Koch Industries and the foundations under its control spent far more than even ExxonMobil in recent years to fund industry front groups opposed to clean energy and climate policies. Koch spent over half the total amount -nearly $25 million - funding climate denier groups from 2005 to 2008, a period in which Exxon only spent $8.9 million. more
Climate change revisited
I have no problems accepting the science of climate change. I was convinced by James Hansen of NASA as long ago as 1987. This week, we are expected to get temperatures in the 70°s in MINNESOTA. It isn't even April. We have had no snow in March--our snowiest month--for the first time in recorded history.
In a perfect example of "be careful for what you wish" we used to say around here that Minnesota would be perfect if winter were just six weeks shorter. So now we have our wish--unfortunately this change in climate will probably come with severe drought. Minnesota will NOT be perfect without our lakes and rivers and forests.
And yes, I am sorry this serious subject was hijacked by a lightweight like Al Gore and I think "Cap and Trade" (pdf) is a terrible idea. In this, I am in agreement with Hansen.
Lovelock is the author of the Gaia theory.
James Lovelock: Humans are too stupid to prevent climate change
In his first in-depth interview since the theft of UEA emails, the scientist blames inertia and democracy for lack of action
Leo Hickman
guardian.co.uk, Monday 29 March 2010 13.15 BST
Humans are too stupid to prevent climate change from radically impacting on our lives over the coming decades. This is the stark conclusion of James Lovelock, the globally respected environmental thinker and independent scientist who developed the Gaia theory.
It follows a tumultuous few months in which public opinion on efforts to tackle climate change has been undermined by events such as theclimate scientists' emails leaked from the University of East Anglia (UEA)and the failure of the Copenhagen climate summit.
"I don't think we're yet evolved to the point where we're clever enough to handle a complex a situation as climate change," said Lovelock in his first in-depth interview since the theft of the UEA emails last November. "The inertia of humans is so huge that you can't really do anything meaningful." more
Labels: Environmental awareness, Follies of the Predator Classes, Predator Class Economics
The real economy is still in big trouble
A global economy based on moving a lot of goods around by sea can see its fortunes tumble if the shipping slows down. Well it slowed down, and it doesn't look like it's coming back yet.
German Shipping Faces Wave of Financing Problems
By Beat Balzli and Wolfgang Reuter
As recently as 2008, container ships were transporting record amounts of products across the world's oceans. Now, many German shipping companies are struggling to pay for the vessels they ordered during the boom. Their banks could be in trouble, too.
Major shipowner Bernd Kortüm and his wife were enjoying fresh snow in the Austrian ski resort of Lech last week. "The crisis is almost over," Kortüm, one of Hamburg's richest residents, said calmly, noting that things are beginning to look up for his industry. But the owner of a fleet of 102 container ships was exaggerating mightily.
Less than a year ago, Kortüm and his company, Norddeutsche Vermögen, were on the brink of collapse. Hamburg-based commercial lender HSH Nordbank had previously set aside risk reserves of close to €250 million ($338 million) to cover a credit line in the billions. "Because of the inadequate economic circumstances," the auditors of KPGM wrote, there were "acute risks of default." The lender was even threatening an extraordinary termination of loan agreements. more
Labels: Predator Class Economics, The culture of the North
Containing the banksters
Cracking down on criminals is always harder than it looks. Especially when the criminals own the government, the schools, and the media. Even so, this is worth reading.
Bank Of America Says Its Lehman-Style Bogus Balance Sheet Manipulation Is A-Okay*
Henry Blodget | Mar. 23, 2010
Turns out, Bank of America (BAC) did it, too.
Hempton compared Bank of America's "average quarterly assets" and "end of quarter assets" and found that, in each quarter, billions of dollars of assets conveniently disappeared briefly at the end of the quarter, only to return again at the start of the next one.
Thus, Bank of America interrupted its wild gambling for a few days at the end of the quarter, presented a sober snapshot to its investors, and then went right back to gambling again. Was this illegal?
The Repo men must be stopped
Banking culture is certain to take the world back into crisis again – unless we take co-ordinated international action
John Lanchester
guardian.co.uk, Friday 19 March 2010
Here's a name we haven't been hearing much about in the aftermath of the credit crunch: Sarbanes-Oxley. That was the US Congress's response to the collapse of Enron, a piece of legislation that was intended to be the biggest crackdown ever on dodgy corporate accounting. The law was enacted in 2002, was loudly complained about by Wall Street and, as we can clearly see from the crash, did nothing of value except making institutions pay formal obeisance to rules they thought a waste of time. When it came to protecting the public, the world's biggest crackdown on lax accounting had exactly zero effect.
The scandals keep coming. It is more than 18 months since Lehman Brothers, the US investment bank, imploded, almost taking down the global financial system with it. You might think there wouldn't be much more bad news that could come out of the bank. more
Labels: banksters, fighting back
In some ways, it matters VERY little of Peak Oil is three years or 30 years down the road. The reason is simple--it required over 100 years to build the current infrastructure running on oil so a replacement infrastructure will require at least 50 years to build. Worse, we have a President who claimed this conversion would require $180 billion in federal government spending over 10 years during his acceptance speech in Denver (2008). Since then he has been forced to spend the government's spare change bailing out the crooks on Wall Street and those running the nation's "health care" system. So even that pathetic sum has not been appropriated and spent. It's embarrassing.
Oil reserves 'exaggerated by one third'
The world's oil reserves have been exaggerated by up to a third, according to Sir David King, the Government's former chief scientist, who has warned of shortages and price spikes within years.
By Rowena Mason, City Reporter (Energy)
The scientist and researchers from Oxford University argue that official figures are inflated because member countries of the oil cartel, OPEC, over-reported reserves in the 1980s when competing for global market share.
Their new research argues that estimates of conventional reserves should be downgraded from 1,150bn to 1,350bn barrels to between 850bn and 900bn barrels and claims that demand may outstrip supply as early as 2014. The researchers claim it is an open secret that OPEC is likely to have inflated its reserves, but that the International Energy Agency (IEA), BP, the Energy Information Administration and World Oil do not take this into account in their statistics. more
And Oil Drum's analysis
The growth in OPEC reserves, without any corresponding discoveries, is an issue The Oil Drum has talked about various times. I know I talked about the issue about two years ago, in an article called The Disconnect Between Oil Reserves and Production. This was a graph I showed at that time, of published oil reserves.
Living like grown-ups
This video examines how the Danes grew a thriving economy without increasing their carbon footprint. Sanity is really a nice thing to have!
Labels: Producer Class Solutions, The culture of the North
Great American ideas for monetary reform
No quicker way to get labeled a "nutcase" than to claims democracies should create their own money. The idea that greedy private interests are always superior to democratic control seems especially absurd in this era of bankster criminality.
So here's a list that will assure you you are in GREAT company if you support monetary reform.
Top ten list of Americans for monetary reform: the most important economic policy in US history
AMLA County Nonpartisan Examiner--Carl Herman
The financial crisis in America today could be over almost instantaneously through monetary reform. Monetary reform is a fundamental shift in how America creates money. The shift is from a Robber Baron-era design of banks creating credit to lend to us at interest and ever-increasing debt, to our community (government) creating it for the direct payment of public goods and services. The benefits of monetary reform are conservatively $1 TRILLION every year, the end of the national debt, and full employment.
The power of monetary reform is evident in history. Napoleonic France quickly became the world’s leading economy and Paris its most beautiful city after ten years of violent revolution that killed or drove-off their economic leadership. Nazi Germany overcame tragic-comic hyperinflation to become the model economy during the Great Depression. These nations were in worse economic conditions than America today (economic power needs to be invested in the public good, not for empire). more
Labels: fighting back, Producer Class Solutions
More support for state banks
This time in Florida. Ironically, the folks who fought the creation of the Bank of North Dakota warned that the idea would spread. Well, the spread has been slow, but it is nice to know that there are a FEW folks as bright as the geniuses who created the Non-Partisan League.
Florida political leaders consider state bank: 2% mortgages, 6% credit cards, no state debt costs
PMLA County Nonpartisan Examiner
Carl Herman
Even though this idea is obviously cost-effective with just a few moments’ consideration of the facts, even though the idea of creating money and credit for the public good rather than for bank profit has a rich history of support from many of America’s brightest minds, and even though this is the “secret” to the state with the lowest unemployment in the nation along with a record budget surplus (it’s North Dakota, one of only two solvent states today), the idea of a state-owned bank creating its own credit is a new idea for many Americans.
Florida candidate for Governor, economist Farid Khavari, explains that a state-owned bank should replace for-profit banks to provide substantial public benefits while profiting the state. Two percent mortgages would reduce interest payments by 85%, saving $88,000 per every $100,000 borrowed. The bank would pay 5% interest on deposits, charge 6% interest on credit cards, and 3-4% on commercial and vehicle loans.
State-owned banks could operate under existing international credit-creation standards issued by theBank for International Settlements (BIS) of an 8% capital requirement. The Federal Deposit Insurance Corporation (FDIC) has similar minimal capital requirements, called Tier 1 leverage, currently set at 4% or the ability to lend $25 for every $1 of capital. This is the so-called "stress test" leverage ratio.Prominent economists and critics argue that the stress test was designed by the banks, and in no way any signal of correction from management that caused our economic crisis. more
Heritage Foundation wins - gets its 1994 health care plan made into law
Just how far right has the Overton window been pushed the past two decades?
Let's begin by considering the origins of "Obamacare". It comes from Massachusetts. It was passed early in Gov. Patrick's reign because during the campaign it was already in debate as it was Gov. Mitt Romney's proposal. Now, one might wonder where the conservative, free market, head of Bain Consulting governor might go [to find] a healthcare plan? Well, he got it from the Heritage Foundation. And why did they have such a plan? Well, they developed its broad outlines during the 1993-4 years as the Republican ANSWER to Hillary's effort. So, that is our new federal plan -- it is a warmed over version of the Heritage Plan.
Professor of economics at Middlebury College, Robert E. Prasch, continues (hat tip to James Woolley at The Economic Populist):
Now, I tend to be skeptical of Heritage Foundation health-care plans. For several reasons:
(1) By design, costs are not contained, neither is health care reformed. This means that "affordability" does not come from controlling costs, but by shifting them. Shift to whom? A hallmark of the Heritage/Romney plan is that no change of the distribution of income is to occur with the financing of this plan. NONE. Rather, funding is to be from three sources --- those with supposedly "Cadillac" plans, those who have "opted out' because of the laughably high cost of coverage relative to their own risks, and to the state general fund.
(2), In light of state budget shortfalls, it is no surprise that the latter source is declining quickly, and tens of thousands of Mass residents have ALREADY lost their subsidies (this trend will certainly occur on Capitol Hill over the next several years as 'deficit mania" kicks in). So, get this, as your income declines and your house is repossessed, the cost of your health care rises with higher premiums AND lower subsidies. But, make no mistake, even as the subsidies decline, the mandate will stay -- why should the big companies give up this huge windfall of unchecked access to the wages of the low paid?
(3) I also wish to warn against the 'NPR version' of the story that this bill "gives" health care for those without. Nothing is given, it is a MANDATE. Now, while the original 'vision' of the bill had subsidies, these are fading rapidly. So, now we have a dramatically underfunded mandate. Solving the lack of insurance by mandating the poor to buy it is, to be blunt, Dickensian. Obama himself stated it very well during the campaign "It is like solving homelessness with a mandate that those living on the streets buy a house".
"during the campaign" Yeah, well, the real question now is:
Do you suppose Heritage's idea of health care reform will work out as great as Heritage's idea of financial deregulation did?
Sure am glad
there's no truth to the notion of climate change. Ya, right!
Here in Minnesota, spring has come early (again). Where the flood crest on the Minnesota and Mississippi rivers has traditionally been somewhere around April 5th, this year it was the 22nd of March. And for the first time in my 60 year life, there has been no snow in March. I don't know which is more frightening--the strange weather or the fact that it has now become acceptable to deny that anything has changed.
I have been helping a friend take video of the Minnesota River. This is the result of four days of attempting to show the spring runoff. It was shot near Red Wing (early melt) Chaska, Carver Rapids, Fort Snelling (Minneapolis), and St. Paul. Enjoy this in high-def if you have the computer and the Internet connection to match.
The Basics #2
For those who still are confused where money comes from, the German Central Bank provides some lessons. Of course, my version of this account can be found here.
German Central Bank Admits that Credit is Created Out of Thin Air
Most people think that banks lend solely from their base of deposits. Some also know that with fractional reserve banking, they can loan out many times more than they actually have in reserves.
But very few people - with the exception of those in the banking industry and financial experts - know where credit really comes from.
Germany's central bank - the Deutsche Bundesbank (German for German Federal Bank) - has admitted in writing that banks create credit out of thin air.
As the Bundesbank states in a publication entitled "Money and Monetary Policy" (pages 88-93; translation provided by Google translate, but German speaker and economic writer Festan von Geldern confirmed the basic translation):
4.4 Creation of the banks money
Money is created by "money creation". Both [central banks] and private commercial banks can create money. In the euro monetary system [money creation] arises mainly through the granting of loans, as well as the fact that central banks or commercial banks to buy assets such as gold, foreign currencies, real estate or securities. If the central bank granted a loan from a commercial bank and crediting the amount in the account of the bank at the central bank, created “central bank money.” more
Labels: Money and the economics of the Predators, Political economy
Fraud has long been at the heart of the finance business
But folks, this is ridiculous.
Time for Truth: Three Card Monte is for Suckers
Tuesday, 03/16/2010 - 12:50 pm
by Eliot Spitzer and William Black
Eliot Spitzer and William Black call for an immediate Congressional investigation of Lehman’s accounting deception and the release of relevant emails and internal documents.
In December, we argued the urgent need to make public A.I.G.’s emails and “key internal accounting documents and financial models.” A.I.G.’s schemes were at the center of the economic meltdown. Three months later, a year-long report by court-appointed bank examiner Anton Valukas makes it abundantly clear why such investigations are critical to the recovery of our financial system. Every time someone takes a serious look, a new scandal emerges.
The damning 2,200-page report, released last Friday, examines the reasons behind Lehman’s failure in September 2008. It reveals on and off balance-sheet accounting practices the firm’s managers used to deceive the public about Lehman’s true financial condition. Our investigations have shown for years that accounting is the “weapon of choice” for financial deception. Valukas’s findings reveal how Lehman used $50 billion in “repo” loans to fool investors into thinking that it was on sound financial footing. As our December co-author Frank Partnoy recently explained as part of a major report of the Roosevelt Institute, “Make Markets Be Markets“, such abusive off-balance accounting was and is endemic. It was a major cause of the financial crisis, and it will lead to future crises. more
Labels: banksters, Corruption
The banksters are psychopaths
And this is NOT an exaggeration.
Here's Why Lehman's Accounting Was Completely Bogus -- And Why The Rest Of Wall Street's Still Is
John Hempton | Mar. 21, 2010, 8:54 AM
I agree with Felix Salmon that the former Lehman staffers who defend Repo 105 are psychopaths – certifiably insane. They state (as if this justifies it) that …
The only people who would worry about using an old trick to reduce leverage from 13.9 to 12.1, are “yappers who don’t know anything.”
For those that don’t know Repo 105 was a sale and repurchase agreement by which Lehman parked about 50 billion in assets (presumably assets they did not want to discuss) overnight via a repo transaction so they would not appear on the balance sheet.
By now anyone who does not realize that sort of accounting legerdemain is unacceptable is (a) entirely out of touch with reality and (b) self aggrandizing on a magnificent scale. Both are signs of mental illness. more
On politics and the Minnesota DFL
I was born into the Minnesota Democratic Farmer-Labor Party in more ways than one. If you count back from my July 1949 birthday, you will discover that I was conceived during the elections of 1948. And even though my father was the Lutheran preacher in a tiny outpost of Swedes stuck in overwhelmingly Catholic central Minnesota, both he and my mother were politically very urbane.
Because a small-town preacher and wife are often also front-line social workers, they were fervent supporters of the New Deal programs such as AFDC. But it was more than a political agenda solving some of their problems. My mother's father was a classic Swedish Social Democrat in the Hjalmar Branting mode when he came to Chicago in 1899. When he moved to Minnesota in 1921, it would be to Congressman Charles A. Lindbergh's district. Lindbergh himself was love child of a sex scandal that drove Ola Månsson, one of the founders of the Social Democratic Party of Sweden, to North America and change his name to Lindbergh. So my grandfather supported Lindbergh when he was assembling the Farmer-Labor Party for reasons of politics AND ethnicity. And when she died a few years ago, we discovered that my mother had indeed been sent flowers by Floyd Bjørnstjerne Olson, Minnesota's Swedish / Norwegian-American Farmer-Labor Governor during the darkest days of the Great Depression, because we found the carefully dried remains.
To rob a country, own a bank
More bankster smackdown from Wm Black.
The PERFECT Predator Class story
In case you were wondering what the guys who ran off with the wealth of the Producer Classes are doing with their ill-gotten gains...
You can NOT make this stuff up!
How atom bomb tests could help detect wine fraud
'Bomb pulse' in grapes harvested since atmospheric tests can be dated to within a year
Ian Sample, science correspondent
guardian.co.uk, Sunday 21 March 2010 22.00 GMT
A trace of Bikini atoll could join hints of black cherry and complex citrus notes in the sommelier's lexicon for describing fine wines, research has suggested.
Harmless amounts of radioactive carbon have been found in wines made from grapes harvested since the last atmospheric atomic bomb tests were carried out in the 1960s.
But the "bomb pulse" of radioactive carbon lingering in the alcohol of wines produced since could be a good thing for wine dealers and collectors. more
We've been warned (again)
No matter how you read the signs, Peak Oil is coming soon. Since virtually EVERYTHING that happens in a country like USA is touched in some way by the magic of petroleum power sources, going without oil has become almost unthinkable. Yet, it is a subject that must be addressed--there is literally no way it can be ignored.
And when you look at energy issues, you discover that any meaningful response to the end of the Age of Petroleum will require decades to implement. This is a problem that would have been SO much easier to address in 1980. Instead, we elected a grinning moron for president who dismissed the inescapable problems of our oil requirements with some aw-shucks chuckling.
Notice in the following that NBC is STILL in major denial even if the Kuwaitis are beginning to get it.
Peak oil production predicted for 2014
Kuwati scientists update Hubbert model; findings debatable
By Jeremy Hsu
updated 1:55 p.m. CT, Fri., March. 12, 2010
Predicting the end of oil has proven tricky and often controversial, but Kuwaiti scientists now say that global oil production will peak in 2014.
Their work represents an updated version of the famous Hubbert model, which correctly predicted in 1956 that U.S. oil reserves would peak within 20 years. Many researchers have since tried using the model to predict when worldwide oil production might peak.
Some have said production already peaked. One earlier model by Swedish researchers suggested that oil would peak sometime between 2008 and 2018. And other researchers have argued there are decades to go before oil production goes into irreversible decline. The only thing they all agree on: Oil is a finite and very valuable resource. more
More on New Deal economics
There are those who believe that the economics of prosperity that was put in place by the New Deal economists was just this happy accident. Well, no. It was the culmination of years of social agitation--of farmers debating politics and organizing in thousands of meetings while their kin in industry got murdered by goons for having the temerity to ask for just slightly better working conditions. And as the grandson of one of the earlier members of Minnesota's Farmer-Labor Party, I like to think that without the contributions of the rural intellectuals, the New Deal would have been a whole lot less successful.
How Champions of Neoliberalism are Reversing New Deal Economics
Back to Market Fundamentalism
By ISMAEL HOSSEIN-ZADEH
The “golden” years of the U.S. economy in the immediate post-WW II period, along with the recovery and expansion of the economies of other industrialized countries, afforded the working class of these countries a decent, even middle-class, standard of living. Combined with extensive social safety-net programs such as the New Deal reforms in the U.S. and Social-Democratic reforms in Europe, the economic recovery and high employment rates of that period paved the way for a relatively cooperative relationship between the working and capitalist classes in these countries.
This led many pundits of historical developments to argue that perhaps Karl Marx had underestimated capitalism’s ability to carry out reform and share the fruits of economic progress with the poor and working class, thereby obviating revolution. They pointed to guaranteed employment and labor-management cooperation in a number of industrialized countries such as Germany and Japan as indications of “erroneous” Marxian judgment of the antagonistic capital-labor relationship.
These pundits failed, however, to point out the fact that the New Deal and Social-Democratic reforms that evolved out of the Great Depression and World War II were not courtesy of “benevolent” capitalism, voluntarily bestowed upon the poor and working people. They did not bother to explain that those reforms were, rather, the product of years of struggle by the working class and their allies against the brutalities of the capitalist system—struggle that often entailed great sacrifices, including occasional loss of life. The anti-Depression and anti-war struggles of the 1930s and 1940s compelled the capitalist class to “carry out reform in order to prevent revolution,” to paraphrase President Franklin D. Roosevelt.
The laissez-faire doctrine, which firmly believed in the self-correcting ability of unbridled market mechanism, was the dominant economic principle before to the Great Depression. The financial crash of 1929 and the consequent long Depression shattered this long-held, religious-like belief. The Depression, precipitated largely by predatory loan-pushing and the resulting unsustainable bubble of asset (stock) prices, made living conditions for the overwhelming majority of people extremely difficult. The ensuing economic distress, in turn, precipitated popular unrest. more
I have tried to tell this story too. Here is a video outline I made four years ago. This story must still be told.
Labels: Political economy
More from Ellen Brown
Ellen is a treat. She gets it. Even better, she has come to an awareness of the problems and possibilities offered by the democratic control of banking and money creation without it making her crazy. As someone who has followed monetary debates since childhood, I can say with ample evidence that understanding money without it driving you insane is quite rare.
The Growing Movement for Publicly Owned Banks
We the people have given away our sovereign money-creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. Some states are moving to take that power back.
“Hundreds of job-creating projects are still on hold because Michigan businesses and entrepreneurs cannot get bank financing. We can break the credit crunch and beat Wall Street at their own game by keeping our money right here in Michigan and investing it to retool our economy and create jobs.”
—Lansing Mayor Virg Bernero in The Detroit News March 9, 2010
Michigan, which has an unemployment rate of 14 percent, has been particularly hard hit by the economic downturn. Virg Bernero, mayor of Lansing, the state’s capital, and a leading Democratic candidate for governor, proposes to relieve the state’s economic ills by opening a state-owned bank. He says the bank could protect consumers by making low-interest loans to those most in need, including students and small businesses; it could also help community banks by buying mortgages off their books and working with them to fund development projects.
Bernero joins a growing list of candidates proposing this sensible solution to their states’ fiscal ills. Local economies have collapsed because of the Wall Street credit freeze. To reinvigorate local business, Main Street needs a heavy infusion of credit, and publicly-owned banks could fill that need.
In a recent article for YES! Magazine, I tracked candidates in five states running on a state bank platform and one state (Massachusetts) with a bill pending. Just one month later, there are now three more bills on the rolls—in Washington State, Illinois and Michigan—and two more candidates joining the list of proponents (joining Bernero is Gaelan Brown of Vermont). That brings the total to seven candidates in as many states (Florida, Oregon, Illinois, California, Washington State, Vermont, and Idaho) campaigning for state-owned banks, including three Democrats, two Greens, one Republican, and one Independent. more
Man worries about his family going feral
Because "polite" USA society believes talking about the problems of the long-term unemployed is just something that isn't done, it pretty much disappears off the screens.
So the following letter written to Dimitry Orlov by a recent immigrant from Russia is especially valuable. It gives the perspective of an outsider from a country that has seen the corruptions of naked finance capitalism up close.
I hope you don't mind that this is in Russian. I think that this way I can be more completely honest. I am a relatively recent graduate of one of the many faceless post-Soviet institutions of higher learning, with a degree in philosophy. Last year I moved to the USA and married an American woman.
The question of when the modern capitalist system is going to collapse has interested me since my student years, and I have approached it from various directions: from the commonplace conspiracy theories to the serious works of Oswald Spengler and Noam Chomsky. Unfortunately, I still can't fathom what it is that is keeping this system going.
My wife is a very pleasant woman, but a typical white conservative American. Whenever any political question comes up, she starts ranting about the Constitution and calling herself a libertarian conservative and a constitutionalist. I used to think that she is well-educated and understands what she is talking about. In fact, she is the one who introduced me to the US, and I once believed everything she told me about it. But as I found out later, she understands nothing about politics, and just repeats various bits of populist nonsense spouted by Severin, O'Reilly, Limbaugh and other mass media clowns. Well, I am not going to try to prove to my wife that she is wrong on a subject that I don't quite understand myself. After all, she is a good wife. And so I try to steer clear of any political questions when I am with the family, although I do not always succeed. Perhaps if I had a copy of your book, it would help me explain myself to her better, but our family was one of the first to be flattened by the real estate market collapse. My wife went bankrupt, lost her bank account, house, job and the rest a while before I came here, and so we can't buy anything online.
Unfortunately, I feel the pernicious influence of all this on my own family right here and now. You don't have to be a brilliant visionary to realize that in the current situation all these endless suburbs, built on the North American model, are slowly but surely turning into mass graves for the millions of former members of the middle class. Those that do not turn into mass graves will become nature preserves - stocked with wild animals that were once human. My family is turning feral under my very eyes. Lack of resources has forced us to live according to the Soviet model - three generations under one roof. There are six of us, of which only one works, who is, consequently, exasperated and embittered. The rest of the household is gradually going insane from idleness and boredom. The television is never turned off. The female side of the family has been sucked into social networks and associated toys. Everyone is cultivating their own special psychosis, and periodically turns vicious. In these suburbs, a person without a car is as if without legs, and joblessness does not allow any of us to earn money for gas, and so the house is almost completely isolated from the outside world. The only information that seeps in comes from the lying mass media. And I understand that millions of families throughout America live this way! This is how people turn into "teabaggers," while their children join street gangs. more
Labels: Predator Class Economics
Treasury Secretary Geithner profiled in The Atlantic
There is a very long and very informative profile of Treasury Secretary Tim Geithner on The Atlantic’s website: Inside Man, by Joshua Green.
It is worth reading - in its entirety, and carefully - because it provides much insight into Geithner, what he thinks and believes, and the financial rescue he has saddled us with. But it seemed like every few minutes I wanted to scream. Green completely and utterly fails to adopt, as the measure by which to judge Geithner and his policies, the public good. The closest Green comes is when he discusses the political repercussions of Geithner’s “successful” financial rescue.
The fundamental issue we face today – which Green is apparently in complete ignorance of – is whether or not the banking and financial system shall be operated for the benefit of the nation as a whole, or for only a relatively small clique generally called “Wall Street.” Geithner’s admissions in this regard are breathtaking:
“The basic strategy,” Geithner says, “was to dispel the cloud of uncertainty.” Initially, that didn’t happen. Many people assumed the tests were a pretext for allowing the government to seize weak banks. Others complained that the tests were too mild, and suspected that the whole thing was an excuse to let banks try to grow their way out of trouble—to reprise what Japan did.
To just about everybody’s surprise, though, the plan has appeared to work. The Dow bottomed out last March. But this brought further challenges. The reason that many White House officials viewed the Geithner Plan with asperity was not only because it might fail but also because seeing it through to success could be poisonous. Any strategy that depends on the private sector’s willingness to invest amid chaos must tread cautiously in the market or risk scaring off the very people it seeks to attract. The charge that the White House has coddled Wall Street isn’t just true—it was key to the whole endeavor! The major struggle within the White House last year is often mistakenly assumed to have been over whether (and how) to nationalize ailing banks. But no plan besides Geithner’s was seriously put forward—and the difficulty of seeing that plan through was the basis of the struggle that played out across Obama’s first year.
Yes, you read that correctly: The charge that the White House has coddled Wall Street isn’t just true—it was key to the whole endeavor!
Geithner’s plan was wildly out of sync with the public desire for swift, retributive justice against the banks. Geithner strenuously opposed this way of thinking, which often put him at odds with others in the administration, including Summers. . . .
Geithner became phobic about intervening in the markets in any way that investors could perceive negatively, fighting off White House efforts to impose stringent pay caps on banks receiving federal aid. When Britain’s prime minister, Gordon Brown, advocated a tax on financial transactions to reduce the appeal of purely speculative trading (an idea Summers once favored), Geithner publicly dismissed the notion out of hand. He has exasperated the bailout program’s chief watchdog, Neil Barofsky, by refusing to make all of the banks explain how they use their bailout money. “It’s hard to be on the wrong side of this issue,” Barofsky marveled when I asked him about it. “This is just basic accountability.” Barofsky has become Geithner’s chief tormentor.
It’s all about keeping the markets “feeling good.” And in the absence of democratizing the Federal Reserve system and the financial system, yes, markets are, and will remain, the political master race.
Incredibly, Green allows Geithner to set the terms of reference for the nation’s political debate over Geithner and his policies:
. . . a year into his presidency, the overwhelming criticism of Obama is that he is taking too much control of the economy and spending too much money—which must really sting, because by avoiding nationalization and its colossal costs, he has probably saved an incredible sum. “We’re getting killed from the right and from the left on the basic strategy,” Geithner told me. “The right argues that we unnecessarily socialized the entire financial system. The left says we wasted money on things they’d have rather used to help real people directly. As you might understand, I have no sympathy with either. Neither critique is right. To the right, I would say: ‘No, the strategy we adopted was overwhelmingly designed to try to make sure that private markets came and took us out of this as quickly as possible. That was a conscious choice, a shift in strategy, and a more pro-market approach that will help us deal with our fiscal challenges.’ And to the left, I would say: ‘And that saved the taxpayer hundreds of billions of dollars that you can use to meet the main challenges we face as a country—health care, education, infrastructure, and our long-term deficit.’”
The real argument of the left is not, as Geithner claims, that the bailout “wasted money on things they’d have rather used to help real people,” but that the financial system has become predatory, turning the economy into a zero-sum game in which the rest of society loses while the financial system gains. The reason why we do not have enough money to pay for health care, education, and infrastructure, is exactly because the financial system is looting the nation’s economy.
Moreover, this predatory nature of the financial system has created a massive crime spree: the looting of pension funds and industrial assets by corporate raiders beginning in the 1970s; the fraud that destroyed the entire savings and loan sector in the 1980s; Enron’s fraud and deliberate sabotage of California’s electric power grid in the 1990s; and the securitization of sub-prime mortgages in the 2000s. Geithner does not even deign to discuss this more important critique – that the financial system is fundamentally corrupt (William Black), and predatory (Kevin Phillips, Michael Hudson, William Grieder, James Galbraith). Geithner conveniently ignores this entire fundamental issue – and that Green allows him is shameful. Because it is the enriching of Wall Street that is directly impoverishing all the rest of us. The credit allocation mechanism of society has terribly malfunctioned: instead of our best and brightest physicians and mathematicians helping move society away from its dependence on fossil fuels, they have been helping Wall Street devise ever more complex schemes for grabbing a larger share of society’s wealth. The financial system needs to be radically altered, and this crisis was the best opportunity to do so, but what we got instead was Tim Geithner’s careful consideration of market sensitivities. This is the type of moral failure that dooms entire civilizations to collapse. Geithner is the perfect example of what Jared Diamond writes about when describing elites being unable and unwilling to change and adapt when their society is confronted with economic and ecological obliteration.
Geithner also ignores the derangement of the political system caused by a financial oligarchy able to literally buy the legislation it wants. This is the true importance of Simon Johnson’s criticism of the new financial oligarchy, and Joshua Green has utterly failed to understand this crucial critique - and use it to bludgeon Geithner. How can this cost ever be reckoned – the cost of asphyxiating the spirit of republican democracy?
I know, I promised no more posts on Toyota,
And after Balloon Boy II (Prius Boy?) exposed the hoaxes that have come in the wake of whatever set off this latest round of Jap-bashing, I assume we can go on to more important issues than whatever infinitesimal level of imperfections Toyota has failed to eliminate in their quest for zero-defect production. I mean, even if every one of the accusations against Toyota were true, and it is clear they are not, they would still involve less than 1/100th of 1% of the vehicles they have sold over the years.
New Rule: Only people who have achieved 99.999% perfection in their lives are allowed to criticize Toyota.
To understand how utterly insane this has become, however, we must only look at some of the blogs that have made Toyota-bashing an issue. On one (which will remain nameless because I happen to like the blogger) we even see Toyota condemned because of their use of Kaizen.
Now I happen to think Kaizen is one of the great ideas of human history. Read the linked entry above and judge for yourself. The reasons I think this is a great idea are many but two stand out.
1) Kaizen democratized build quality. Before Toyota refined Kaizen into their manufacturing philosophy, excellence was usually associated with very expensive cars like Rolls or Mercedes. When Toyota got their version of Kaizen rolling, the humble Corolla made the most expensive Mercedes look like junk when it came to manufacturing excellence. It was amazing. It was also no small matter. In a country where transportation has been almost totally privatized, the economics of owning a car become almost inescapable. And car failures can be economically catastrophic for a LOT of people. So building reliable vehicles makes MANY lives a LOT better. Especially when those cars are also the most inexpensive ones a company makes.
2) Kaizen is also important because without this sort of thinking, there can be NO green technologies. Kaizen can actually address a question like, "Is it possible to have zero-waste production?" Because of Kaizen, Japan is one of the world leaders in green technologies. My brother loves his Sanyo solar panels.
What is really sad about something like Kaizen-bashing is that it demonstrates why xenophobia is a real problem. At one point in USA's history--as recently as 1962, it's citizens really were able to thump their chests and crow, "We're #1!" But a LOT has gone wrong since then. In category after category, the USA is now more like 37 (health care.) And the xenophobia that is embedding in the "We're #1" chants is a significant factor in that decline. How?
For example, the folks in Singapore have clearly figured out how to teach their children math. In USA, the overwhelming majority of children do not learn math. The obvious solution would be to start using Singapore's methods and math textbooks--at least on an experimental scale. But to do that, we would have to admit that someone else does something better than we do. So long as "We're #1" is the real religion of the land, this cannot be allowed to happen. So instead we conduct more seminars, hold more conferences, rewrite more textbooks, and fund more studies into the "eternal" question of why our children cannot learn math.
Unfortunately, if we cannot even learn from others on so simple a matter as math instruction, imagine the problems with something as complex as Kaizen. Of course, because Kaizen offered a road to higher profits, there was some interest here in USA and there are stories of small manufacturers who actually figured out how to make it work for them. But for most in USA, Kaizen was at best a blip on their radar and most attempts at trying it out were about as half-hearted as our attempt to convert to the metric system.
I understand there is a real criticism of Kaizen--that behind all the talk of environmental and build-quality excellence, it is just another way of squeezing too much work out of the poor souls on the assembly line. Yet even with the valid issues of worker exploitation, Kaizen's reputation does not suffer. And why is this true? Because Kaizen is a tool. How it is used it up to the culture. Kaizen could also be used to increase the leisure time of the factory worker. In theory, there could be an Amish application of Kaizen. (There are probably some in fact--I just don't know about them.)
In case you haven't seen this
This was FDR nearing the end of World War II (and his life) discussing the economic principles he thought should guide the post-war period. And while many of these ideas were imposed--ironically at gunpoint--on those nations we had defeated, the USA itself would lapse into the reactionary politics of the Cold War. Eventually, these reactionary policies would undo the overwhelming economic advantage USA would have in 1945.
More on the death of the American economy
I am pretty sure that the folks who have a major voice in the operation of the economy have ANY idea how bad things are. The jobs that have been lost in the past years took DECADES to create (if not more). Yet the "conservatives" want us to believe that the economy will recover on its own while the "liberals" seem to think that everything will be fine if we all just learn how to get along better--maybe spend some more money on our worse than useless schools.
The Ruins of Detroit
The Off-Shored Economy
In the 20th century, Detroit, Michigan, symbolized American industrial might. Today it symbolizes the offshored economy.
Detroit’s population has declined by half. A quarter of the city--35 square miles--is desolate with only a few houses still standing on largely abandoned streets. If the local government can get the money from Washington, urban planners are going to shrink the city and establish rural areas or green zones where neighborhoods used to be.
President Obama and economists provide platitudes about recovery. But how does an economy recover when its economic leaders have spent more than a decade moving high productivity, high value-added middle class jobs offshore along with the Gross Domestic Product associated with them? more
The trashing of American industry
This chart, folks, is UGLY!
The 40-Year Hollowing Of American Industry
Joe Weisenthal and Kamelia Angelova | Mar. 15, 2010, 10:58 AM
Good news! This morning the Federal Reserve announced that capacity utilization is ticking back up, a sign our idle factories are starting to hum again.
The bad news: as shown by the blue line, even during boom times, peak capacity utilization continues to trend lower, and has been since the peak in the late 60s.
What's interesting is that capacity utilization and the employment rate used to be tightly correlated, but the employment rate during the last two peaks looked much stronger than what the capacity utilization rate might have predicted.
The last two peaks were also major bubbles (.com and real estate).
Bottom line, if historical trends stay in place, capacity utilization won't even rise to the last level of the last boom. So if we want anything approaching full employment, you better pray for another economy-distorting bubble. source
Labels: Follies of the Predator Classes, Predator Class Economics
Michael Lewis has been a favorite of mine since "Liars' Poker"
Some might object that he lets the banksters off the hook by pointing out how bloody stupid they are. But he HAS a point--for all their brash arrogance, the folks on Wall Street are a bunch of thieves because they lack the talent to do something useful. Try imagining Lehman Brothers mega-crook Dick Fuld designing a wind turbine gear box or something equally difficult and you can understand what Lewis is talking about. (Sorry about the Lipitor ads but this IS CBS)
And even better--Lewis on the Daily Show
Full Episodes Political Humor Health Care Reform
Labels: banksters, Follies of the Predator Classes
It is utterly amazing to what lengths the banksters will go
Actually, when you consider what they are trying to accomplish, it isn't so amazing at all. Infinite growth and infinite greed are simply impossible in a finite biosphere. So like the crazed tinkerer who believes that his perpetual motion machine will soon work, the crazed banksters believe they can all become multi-gazillionaires through force and fraud and nobody will object.
Geithner and Bernanke's Possibly Criminal Roles
Lehman Brothers Scandal Rocks the Fed
By MIKE WHITNEY
After a year-long investigation, court-appointed bank examiner Anton Valukas has produced a deadly 2,200 page report which details the activities that led to the Lehman Brothers bankruptcy. The report is a keg of dynamite. The question now is whether anyone in government has the nerve to light the fuse. Valukas provides powerful evidence that Lehman executives were involved in “balance sheet manipulation” by implementing an arcane accounting procedure called “Repo 105” which masked the bank's true financial condition from investors and regulators.
According to Valukas, Lehman was “Unable to find a United States law firm that would provide it with an opinion letter permitting the true sale accounting treatment" using Repo 105. So, Lehman executives went outside of the country in an effort to enlist the support of a London law firm that would approve the procedure.
It is impossible to overstate the significance of Valugas's findings. The report exposes the opaque but central role of the repo market which provides essential short-term loans for financial institutions. (Lehman used repos to conceal the full extent of its collapse, by dint of the amount of leverage it was using, meaning the pitiful asset anchor tethered to a vast zeppelin of debt) More importantly, it shows the cozy and, very probably criminal relationship between the country's main regulatory bodies and the Wall Street behemoths. The activities of the New York Fed (NYFRB), which at the time was headed by Timothy Geithner, is particularly suspect in this regard. The report should trigger an immediate Congressional investigation, probing the whole affair and most importantly the role of the Fed. more
More on wind
Being a child of the prairie, I am a big fan of windpower. You would be too if you had spent your formative years listening to the wind howl. My most popular YouTube post is footage of a wind turbine being built. But because of my long-term interest in harvesting the power of the wind, I have heard about the all problems--at LEAST twice. Some are frivolous--bird strikes (don't happen with modern designs) aesthetics (you're kidding right, in the land of the strip mall someone really wants to criticize the looks of something as graceful as a wind turbine??)
But wind power also has REAL problems. Intermittence (the wind does not always blow) unreliable technology (gearbox failures are still a headache) and distribution (winds tends to blow the hardest where people choose not to live--hello North Dakota.)
In a series of interviews (list here) Jim Gordon muses about the trials of getting a pretty simple off-shore wind farm built in Massachusetts.
Jim Gordon is a 35-year veteran of the energy business. He founded Energy Management, Inc. (EMI) in 1975, developing energy conservation/pollution control projects and gas-fired electric generation plants.
In 1999, EMI began to work on renewable energy projects.
In this interview with Business Insider CEO Henry Blodget, Jim discusses Cape Wind, a proposed 130-turbine wind farm in Nantucket Sound that has the potential to generate three-quarters of the power needs of Cape Cod - but thus far has generated only controversy.
How do we get grandma to bring the pots and pans?
In the middle of last week, lambert posted at CorrenteWire a brief snippet of a very dramatic and gut wrenching conversation between David Cay Johnston and Chris Hedges, about the likelihood that America is near a tipping point into massive, militant, violent social dissent - but which is coming from the wrong-wing, not the left.
Revolutions occur when young men see the present as worse than the unknown future. We are not there. But it will not take a lot to get there.
I had just begun reading Lawrence Goodwyn's 1978 masterpiece, The Populist Moment: A Short History of the Agrarian Revolt in America. Goodwyn has made a life’s work of studying popular democratic uprisings and social movements, and his Introduction is decidedly pessimistic on the prospect of popular democratic uprisings in advanced industrial societies. I posted a large excerpt from Goodwyn's Introduction. Here’s a smaller cut and paste:
Unfortunately, history does not support the notion that mass protest movements develop because of hard times. Depressed economies or exploitive arrangements of power and privilege may produce lean years or even lean lifetimes for millions of people, but the historical evidence is conclusive that they do not produce mass political insurgency. . . . "The masses" do not rebel in instinctive response to hard times and exploitation because they have been culturally organized by their societies not to rebel. . . . It is clear that the varied methods of social control fashioned in industrial societies have, over time, become sufficiently pervasive and subtle that a gradual erosion of democratic aspirations among whole populations has taken place. . . .
This gradual erosion of democratic aspirations is usually mistaken as apathy, which would-be revolutionaries incessantly bemoan. But it is not apathy; it is, Goodwyn explains, mass resignation at the perceived impossibility of significantly affecting and altering society’s structures of inherited power and privilege. Goodwyn explains that in advanced industrialized countries, both capitalist and socialist, this resignation “has engendered escapist modes of private conduct that focus upon material acquisition.” It is also useful here to recall Thorstein Veblen’s critique of “leisure class culture,” such as professional sports.
In my long quote, I made the observation that Goodwyn wrote this over a decade before the outbreak of massive democratic movements brought down the Iron Curtain, and wondered what Goodwyn has to say about those historic developments. Below, I will give you the answer, having just found a December 1989 presentation Goodwyn gave, when the news headlines brimmed with tidings from Poland, and the newscasts were filled with pictures of Lech Walesa and those unforgettable Solidarnosc banners.
But first I want to point to one comment by quixote, and an accompanying link.
You get violence when the young men are mad. You get revolutions when the grannies start banging on pots in the central square. (Emphasis mine - TW)
The question then, of course, is how do you get the grannies to join you in the central square with their pots and pans? Quixote provides a link to an interesting study on the characteristics of freedom movements that succeeded. Using statistical analysis of the revolutions and uprisings tracked in the Freedom House database from 1973 to 2002, Adrian Karatnycky, senior scholar at Freedom House, and Peter Ackerman, chair of its board of trustees, show that there was lasting democratization in 69% of the revolts that were generally non-violent, but in only 8% of the revolts that included violent uprisings.
I think two things need to be said about the Freedom House study, and its applicability to the United States today. First, Freedom House gives its highest ratings of "free" in all categories to the United States. Yet, increasingly what we feel in the United States is a hardening of corporate power and privilege that, while not openly hostile to the trappings of democratic political processes, has managed to subvert and usurp those processes nonetheless. We are, in other words, facing something quite different than the traditional despotism or tyranny recognized by Freedom House. Here, we are aided by fairleft, who back at the end of January - when the Supreme Court issued its hideous and blasphemous decision that corporations have the same rights to free speech as we humans – pointed us to Sheldon Wolin’s latest book, Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism.
Secondly, what Goodwyn excels at, and which, as noted immediately above, the Freedom House study signally fails to address, is how political structures, processes, aspirations, and beliefs, interact with, affect, and are affected by, economic structures, processes, aspirations, and beliefs. In The Populist Moment: A Short History of the Agrarian Revolt in America. Goodwyn brilliantly summarizes most of the economic tensions in American political history as being the conflict between two views of human nature: humans as competitive beings, and humans as cooperative beings. Judging from the broad sweep of American history, these tensions have played out rather well, giving us the faint structure of a welfare state, while also giving us one of the most dynamic economies in the world. But I think this happy balance has been seriously disturbed since the Reagan Revolution, with the view of humans as competitive beings becoming dangerously dominant.
Moreover, there are many who argue that a “dynamic economy” is simply not environmentally sustainable, though it becomes painfully obvious, upon closer examination, that these people have not adequately explored the question of how we as a species go about feeding, clothing, housing, educating, and caring for eight billion fellow human beings. The most malignant result of this shortcoming is the blanket assertion that the world is overpopulated. But nobody has yet volunteered to name those who are too numerous - or to be counted themselves as those who are too numerous. A more intelligent approach appears to have emerged in Europe, particularly in Germany and the Scandinavian countries, where laws mandate that all products of manufacturing industry must be designed for eventual de-manufacturing and recycling. Not surprisingly, these societies have also put into effect programs of renewable energy and public transportation that put the U.S. to shame. It is also worth noting that large industrial firms in these countries have worker representation in management embedded in their structure, carrying those societies further along toward economic democracy than the United States.
If you accept the fact that sustaining eight billion souls cannot possibly be done without industry, I suggest that you next accept the idea that the problems created by industrialization are best solved by industrialists. You then arrive at a new vantage point from which to understand the underlying historical dynamic that drives most of the environmental problems created by industry. Economists touch on this underlying historical dynamic when they discuss “externalities” -- but they are only touching the dynamic, not fully grasping it. Here, again, we are greatly aided by Veblen, who made a distinction between industry and business: industry creates wealth, while business merely accumulates and manages wealth. Once you understand the point Veblen is making, you can begin to see that the real dynamic driving industry to despoil nature is industry’s obeisance to the dictates of business. Jonathon Larson has fully developed this idea in his 1992 book, Elegant Technology; economic prosperity from an environmental blueprint. Larson recasts Veblen’s “leisure class” as the “predator class,” which most emphatically includes bankers and financiers (the more truthful things we call them are speculators, rentiers, and usurers). On the other side is the "producer class." And the producer class is typically quite willing to redesign its industrial processes to conform with the highest environmental and safety standards, once freed from the constant financial and management demands made by the predator class. Economic neo-liberalism is easily conceived as being distinct from and in direct opposition to sustainable development.
Which brings us back to Goodwyn, who strips away all the fluff, foof, and folderol of American history to show that it all comes down to whether - or not - the financial and banking structures of society will be democratically controlled and operated for the benefit of society, instead of the enrichment of a few.
Democratic Money: A Populist Perspective
with Lawrence Goodwyn and William Greider
Remarks presented on the occasion of the 100th anniversary
of the Populist Sub-Treasury Plan for financial reform
9 December 1989, St. Louis, Missouri
Let me say that in my profession, you get acquainted with error. Historians study error. You might even say we study the continuity of error. It is a very sobering occupation. We discover that it is more consoling to develop a long angle of vision. If you focus just on one generation you may not find enough there to warm the spirit. Better to have four or five hundred years in your gaze and be judiciously selective within that period.
All kidding aside, there are certain rhythms that become clear over the long view. First of all, in all human societies, almost all the people, have deep, substantial grievances. That's rhythm number one.
Rhythm number two is that despite this universal sense of loss and injustice and injury, the number of large-scale social movements that exist in human history is very small. In our country the CIO mobilization of the '30s and the Agrarian movement of the 1890s -- Populism -- were the only movements after the Revolution that achieved genuine scale, if one measures movements by their level of internal organization.
It's possible to say, "my goodness, the history of agriculture in America has been one of a systematic exploitation of people on the land by people who lend them money and by people who sell their products." Can it be that only in the 1890s farmers got together to try to do something? How about the 1870s or the 1840s, or what about 1924 or 1935? Looking back over the history of workers in America, one encounters an absolute agony in the industrial heartland from the end of the Civil War through the Great Depression. Is it only in the 1930s that "workers got mad" and decided to do something about it?
How do we explain the fundamental disjunction in human history between the widespread existence of grievance and the very rare collective assertion that we find? The answer to this is appallingly simple: Large-scale movements happen when they're organized. They happen no other way. And the reason that they're not organized more often -- we have people in the audience whose lives will verify this -- is that large-scale movements are agonizingly difficult to put together. The entire culture of a society is arrayed against the idea of large-scale collective assertion.
The first duty of a revolutionary when he comes to power is to put down his gun -- that is to say, his immediate objective is to proceed with the business of creating a society where he can put his gun down. The first step is to take control of the past and use it to justify the revolution. American history in that sense begins with the Declaration of Independence. There are 32 paragraphs in that document and 29 of them denounce King George III as a tyrant. It is a classic historical justification of a revolution.
We can look back on this and say, "You know, among European monarchs in the eighteenth century, old George was pretty benign. How about the Hohenzollerns? How about the Bourbons?" Well revolutionaries are not in the business of judicious distinctions. In 1776, in the name of the social objectives of the Revolution George III is a tyrant, 29 times a tyrant.
The second duty of a revolutionary is to create a culture in which ideas beyond those of the revolution are impossible to have, a culture in which it becomes difficult for people to imagine structural change. If this condition is not achieved, those who rule need lots of guns and secret police to keep everybody in line. Social space evaporates and society becomes rigid. Of course those in power don't look at it this way; they prefer to name the result "stability."
Rigidity can also be the governing reality in societies without ubiquitous secret police forces, in societies that pride themselves on their flexibility and openness. Future historians will look back and see much more of this rigidity in the societies of the twentieth century than we ourselves can summon the poise to see. They will see enormous systems of centralized bureaucracy atop an economic structure of large-scale production, and they will say, "What a narrow century the twentieth century was. It was the least creative political century of the last three."
Future historians will be able to say that for most of the twentieth century, until around 1990, there were only two ways to think. One was either a communist, whatever that meant, or one was a capitalist, whatever that meant. The highly stratified industrial societies of the twentieth century were characterized by anxiety, deep brooding anxieties that intruded into and suffused the lives of hundreds of millions of people. They wore social masks to conceal their private anxiety. Publicly, people announced that they lived in the best society in the world, that they were "practicing democracy" or "building socialism." But privately they said, "You can't fight city hall . . . the rich get richer and the poor get poorer . . . all politicians sell out," or (with their teeth considerably more grimly set when they said it) "You can't fight the Party . . . the Party gets all the goods . . . the Party's corrupt."
I do not suggest for a minute that the social distinctions between life in a Leninist party state and life in a corporate-dominated state are inconsequential. As a result of long centuries of political struggle culminating in the Revolution of 1776, one has a Bill of Rights that has authentic cultural meaning in the daily lives of the citizenry and the other does not. But it is also necessary to say -- as future historians will be at pains to point out -- that these differences, while vastly important, do not mean that one society has achieved democratic social relations while the other had not. Congratulating ourselves for past achievements is not helpful if such folkways have the practical effect of blinding us to the political implications of the alienation that pervades our daily lives.
Observe what happens if we put aside public pretense and apply serious democratic standards to twentieth century life. Democratic social relations: can we conceptualize a democratic marriage? A democratic workplace? Can we conceptualize a democratic system of money, credit and exchange at the heart of all our material relations, operating not for the benefit of bankers but for the benefit of society?
Judging by the politics of the twentieth century up to now, future historians will have to conclude that these concepts were not politically admissible within the received culture of American democracy. People did not act politically as if they thought they were admissible.
So it's a very narrow century, politically speaking. 112 years ago, a small group of people, not very different from the people in this room, met together. At their first meeting, they had seven people. Despite the fact that they had a number of deep economic anxieties, they had a sense of self and they talked to each other about trying to do something about their lives and their plight. They created what they called the Farmers' Alliance. And in due course they titled it (they were Texans and that introduces certain regional malfunctions) "The Grand State Farmers' Alliance." I think they got the word "grand" in the title because they were so weak.
The opportunity they possessed 112 years ago was that they could talk about the society and the system of finance. There was an existing literature called the Greenback doctrine. But they had a recruiting problem. This is a big kitchen that we're in today, and we're sitting around the kitchen table analyzing American society. We're grumbling about the Republican Party and the Democratic Party and the local institutions that are not functioning.
We could say such things to ourselves as, "Well, there are three institutions in America that house American workers. The Roman Catholic Church, the black church, and the American trade union movement. Those three institutions, plus us, are victimized by structures of hierarchy in the United States that systematically transfer income from the very poorest to the very richest. And the name of this structure is American democracy."
Sitting around the kitchen, we may tell ourselves that these three institutions that house victims are not internally organized to do anything about it. They're not quite sure who stole the goods. It's awesome to say that both major parties stole the goods. It's sobering to think that something called "Wall Street" stole the goods. We wouldn't want to speculate that that great reform institution -- a product of populist agitation but certainly not anything the populists wanted -- the Federal Reserve System now persists as an instrument of stealing the goods. We can't have people who donate money to the Episcopal Church and then pay their taxes and wear proper top hats and coats being part of the structure of stealing the goods.
The reason we don't want to make this indictment is that it's too sweeping. It breaks the paradigm in which we are trained to think. It produces speculations that are not culturally admissible around dinner tables or even kitchen tables. To the extent that we can create a conversation in a room like this and develop a level of candor, of analysis; to the extent that we think there's nothing we can speculate about that would be subversive or unpatriotic; to the extent that we can create intellectual space to be serious about our society -- then two contradictory things occur. Number one, we're enhanced by the sheer authenticity of the conversation. Second, we're depressed by the discovery; if what we know is true, how are we going to persuade those people out there, otherwise known as the Americans, to think seriously about the state of the Republic?
We have a recruiting problem. Here we are in the kitchen, sitting around the table, talking, and out there are the suffering multitudes. What is the connecting link between us? Well, let us go back to 112 years ago. Their situation is perfectly analogous to ours. They looked for a recruiting device and they found one. The collective problem of farmers was lack of access to credit they could afford. They were paying 30, 40, 60, 80 percent -- sounds unbelievable. But you might be paying more for credit today than you know. We may have reached the Biblical level of usury some time ago.
In any case, these co-ops they created were going to try to do for the farmers collectively what they could not do individually: gain access to credit. People joined the Alliance Co-op and the Alliance grew. In a county there would be hundreds of suballiances of 20-50 people each. And each one had a lecturer who would help them analyze the world. And there were 250,000 members in Texas and 140,000 in Kansas and 130,000 in North Carolina. Eventually the Alliance penetrated into 42 states and there were 2 million people who, in effect, developed a new way to think.
Along the way, in their struggle to get large-scale co-ops functioning, they discovered that the banking community in America did not cooperate. They discovered, too, that the problem of the Alliance was the problem of individual farmers: lack of access to credit. One of their number, Charles Macune, felt the pressure of this failure more acutely than anyone else, because as spokesman for the Alliance he had made projections for people -- "Join us, and collectively we'll try to change the way we live." And he was not able to deliver on his promise. He'd tried a thing called the joint note plan and it hadn't worked; again the bankers wouldn't cooperate.
So in the summer of 1889, brooding about the political trap he was in, brooding about the plight of the nation's farmer, brooding about the structure of the American economic system, he came to the Subtreasury Plan -- which doesn't need to be explained in detail here. What needs to be suggested is the Plan's one compelling breakthrough, which is just as logical and humanitarian and democratic now as it was then. He thought you could mobilize the capital assets of the nation in an organized way to put them at the disposal of the nation's people.
That is a democratic conception that is not on the stage of contemporary debate. It is too broad. It is beyond our imagination. That is not on the agenda of the Democratic Party or the Republican Party. In fact, we're in an era where those tiny pieces of the capital assets of the nation that somehow were smuggled to sectors of the society that are not rich are slowly being shipped away. Since 1980, the lowest 20 percent of the American people in income have had a real income drop of 9 percent. And the top 20 percent of the American people in income have had a real income gain of 19 percent. And the top 10 percent of that 20 percent have had a real income gain of 29 percent.
In the last nine years we have witnessed the largest redistribution of income in American history; that is, from the very poorest to the very richest. And there's no institution of large scale in the country that says this central economic fact of our decade should be at the center of public discussion.
Now that's stability. That is the creation of a culture so narrow that no one in the seats of the mighty need tremble because some serious people have gathered in a union hall in St. Louis on a Saturday morning to speculate on the possibilities of a democratic society. They are not nervous on Wall Street this morning. And if they are it's because of their concerns about their own actions, not ours.
There is another society in our time -- what we call "the East," what we sometimes call "actually existing socialism." For about 40 years, since Stalin imposed this system on whole populations, an idea floated around in people's heads over there, in "the East." The idea was, "We will try to create some space where we can talk to each other and affect the world we live in. To do that, we're going to have to combat the leading role of the Party. We're going to have to find some way to get around the fact that all the social space in society is occupied by the Party."
This idea would float around kitchen tables on the Baltic coast in the 1950s and 1960s. And workers in shipyards would say to each other, "We have got to create a trade union independent of the Party." Now that is an unsanctioned idea. And they knew it was frightening even to say it out loud; you'd only say it around the kitchen table, around carefully selected brethren and sistren. And the idea would go away, because it was unsanctioned. But then there would be another horrible accident in the shipyard, another insane adjustment of work routines, and the idea'd come back, simply because it was the only idea that made any sense. "Work organized by the Party is insane, Poland is insane, our social life is insane. We've got to have a union free of the Party."
Over 35 years of self-activity the world has not known about -- any more than the world knew very much about how the Farmers' Alliance organized Populism -- they found out how to do it. And in 1980 they did it. There's a certain logic in history every now and then. The single most experienced organizer in the shipyard in Gdansk, Poland, who spent 12 years organizing and brooding about a union free of the Party, who had gone to jail scores of times in the decade -- learning each time a little bit more about how power worked in his society -- the one single most credentialed worker with other workers based on his own activity, is Lech Walesa. There is every now and then a certain justification in history.
Because that movement existed, even though it was repressed by the government after 15 months, it sent a wave of hope across Eastern Europe. What Solidarnosc combatted, by its simple existence, was mass resignation. This resignation was the dominant political reality in Hungary, Czechoslovakia, East Germany and Poland until the shipyard workers of Gdansk became the nucleus of a mass movement, one of those rare moments in human history when people get back in touch with their own subjectivity. That is to say, they don't lie in public. They say what they mean. And they try hard to say it clearly. They're not trying to make a speech, they're not trying to be an orator. They're trying to be clear, like two people in a marriage struggling not to be political with each other but to be honest. One of those rare democratic moments when reality is projected.
Because Solidarity stayed alive during the years of martial law, and because a man named Brezhnev who put down Solidarity passed off the stage of history and another man named Gorbachev who would not put down Solidarity came on the stage of history, the leading role of the Party this very week is going into the dustbin of history all over Eastern Europe.
What if we were to suggest to the American people that we can't do anything about the homeless, we can't attack the crisis in the cities, we can't do anything about the inability of the children of unionized workers to own a home of their own because America has been sold to foreign creditors, because it's being de-industrialized -- we can't do anything about any of these matters if we don't democratize the financial system in this country? In other words, we can't do anything until we get back to being as advanced as we were in 1889 in this city when the subtreasury system was first introduced.
We can't suggest it because that idea is too much. It's too advanced; it's not properly modest. "Why, you people sound as if you're as crazy as those people in Eastern Europe who want to overturn the leading role of the Party."
But if you have the long-distance view, if you say, "Give ourselves 20 years. Let's see if we can begin the process of educating ourselves and the American people about the idea of a democratic system of money that will save what is left of the American family farm, that will pump life into the cities, that will permit the young to dream that they might own a home of their own, that might somehow begin to chip away at the culture of corruption that is now the norm in public life . . ."
If we can do that, if we can say what we know clearly and endeavor to act quickly and firmly on what we say, then I think we're living a valid political life. We may not change the world. But then again we might. Some Polish shipyard workers offer us an intelligent guide to authentic politics. The choice -- to speak clearly, to act -- is ours alone. As for result, we'll let future historians judge that. Our work is now.
Posted by Tony Wikrent at 8:05 AM 0 comments
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