Saturday, October 29, 2011

The 30 Year War Against The American Dream: Henry Schoenberger

Henry Schoenberger, the author of How We Got Swindled By Wall Street Godfathers, Greed and Financial Darwinism, subtitled The 30 Year War Against The American Dream, points out that the OWS protests simply display the plethora of anger around in the USA. The level of poverty is now at its highest level ever—the poor are angry. The successful elderly planning on retirement after a lifetime of hard work are being hit—elderly retirers are angry. Young entrepreneurs, the foundation of our future economy, and those in their prime, whose enterprise should be creating new jobs to give a living to ordinary folk and a first step to the young—even many of those are angry.

Capitalism, as an economic philosophy, is only 200 years old, based as it is on the book by Adam Smith (1723-1790), the title of which is always given now as The Wealth of Nations, published in 1776. The United States declared its independence that same year.

Since then, the abuse and misuse of Capitalism has paralleled the use and abuse of Democracy.
Henry Schoenberger

Smith is often presented by right wing libertarians, Republicans, neoliberals, and assorted conservatives as the model entrepreneurial hero. Yet, he first held the chair of logic at Glasgow University, and then in 1752 became its chair of moral philosophy. So he was really one of those timeserving wasters lolling around a university with students and living off someone else's hard earned income! That, at least is how the right wing regard university teachers and research workers.

In 1759, he wrote the Theory of Moral Sentiments about the standards of conduct that hold society together, explaining how benevolent human motives and activities lead to a society beneficial for all, and thereafter a virtuous circle. Adam Smith had a lifelong interest in the value of morality for the public good. In his book, The Wealth of Nations, he expressed a belief that allowing the entrepreneur to pursue his own interest essentially unfettered would lead to the betterment of all because it would lead to the better use of resources, including time. He never imagined that his theories could be so distorted by the ultra rich cornering one particular resource to the detriment of most of the rest of us—money!

Darwin published his book on the Origin of Species 85 years after The Wealth of Nations, and, although most Protestant pastors in the USA and their theologians who run the Republican Party cannot now abide the thought of evolution, for the first century of so they loved it. The survival of the fittest was a perfect expression of capitalism. So Darwin's theory applied even within human society. It was not restricted only to the wild.

This extension of Darwinism into society was dubbed “Social Darwinism”. It even made it respectable for the protestant churches to abandon Christianity—Christ blessed the poor and damned the rich—but now Social Darwinism made it clear, they thought, that God meant the rich were blessed and the poor were damned! It was a creed that was soon attacked by social scientists, and began to fall into disrepute. Reaganomics and deregulation revived it.

We all need to know a little about economic theories to understand the fallacious arguments advanced today for unfettered greed. For thirty years after WWII, the rate of growth of the incomes of rich and poor were broadly the same. John Maynard Keynes, before the War had shown how economies can be controlled by regulation, such as using taxation to slow down growth when the economy was overheating, and feeding back into feeble economies some of the tax take to boost spending during recessions. It worked wonderfully well.

Controlling self interest worked for decades in the aftermath of the Great Depression. The top tax bracket went up to 90% and still the ultra rich survived, but so did our middle class and our society was not demoralized. There was enough concern on both sides of the aisle to pass Civil Rights legislation and CEOs did not earn more than 40 times the average wage in their industry.
Henry Schoenberger

Interestingly, it was a closer match to Adam Smith's teaching than libertarian capitalists like to admit. Smith knew that regulation was sometimes necessary, and did not pretend otherwise. He believed that once the boundaries were suitably set, and the operators accepted them, then they would work to better themselves and society as a whole through the so called “invisible hand”. The trouble is, when things work well, smug, greedy people always want to try their luck at extending the conditions to their advantage.

That is what Reagan in the USA and Thatcher in the UK tried in the 1980s. In what was imagined as an economic “Big Bang”, a bonfire of the regulations was arranged on both sides of the Atlantic, neoliberalism became the watchword, and Social Darwinism was born again. Survival of the fittest became survival of the richest. In the last thirty years, the workers and even some middle class have lost income, the better off middle classes have maintained theirs, and the rich have multiplied their riches several fold!

In 1776, Adam Smith could not have seen that unregulated Wall Street financiers enjoying tariff free transfer of money anywhere in the world could manipulate markets and the rewards they had from them to the advantage of themselves as a new Brahman class in the supposedly classless western societies. Greed became endemic. Like the living dead they sucked the economic life blood—money—from the middle and working classes. The insatiable greed and selfishness of the rich has killed millions and millions of jobs, people's savings, their livelihoods and increasingly their lives, quite contrary to the ideas of the capitalists' holy book, The Wealth of Nations, by their innocent prophet, Adam Smith. Henry Schoenberger sums up:

Wall Street is a problem because for 30 years it has practiced innovative financial investment at the expense of our economy. Wall Street has turned away from real investment based on innovation for capital formation to create jobs to benefit our economy. Wall Street Trojan megabanks are a major part of the problem.

Government ought not to be the problem because it is the role of government to regulate, to ensure that the balance of society and its economy are right. Our governments neither guard the public good nor the public. The politicians lack all morality themselves, themselves infected with the zombie infection endemic among the rich and aspirants to riches, with the taste for more and more blood, salivating at the thought of more victims, us, and more dollars, ours.

Schoenberger points out that Goldman has inveigled the government at the highest level for three decades. The OWS movement should demand the removal of any Wall Street executive from any important government post, and equally that government servants should be banned from transferring their allegiance to Wall Street until 10 years after leaving government. Consulting and “Atlantic Bridge” style “charities” and think tanks should be illegal as soon as they get near to government in any direct way, or even indirectly, if the influence can amount to bribery, or any similar illegal approach. That applies too to lobbying, nothing more than approved bribery.

High Street deposit banks must be severed from the high risk investment banks. Bonuses should be illegal. As compensation they must be treated as pay and seriously taxed. Taxes must reflect the reality that 1 percent has 40 percent, so that taxation is at least fair by percentage, and preferably progressive, so that richer people should pay a higher percentage. If a rich man faced with a 60% tax rate gets a rise of $1 million, are we seriously to believe he would refuse to work rather than receive $400,000 after tax.

Schoenberger concludes it “is the time for a movement to kick out all members of congress who vote against jobs! And stop wall street godfathers from taking advantage of the 99% who do not practice unbridled greed!”

Sunday, October 23, 2011

A Systemic Concentration of Power and Wealth

In 1906, an Economist named Vilfredo Pareto discovered that around 20 per cent of the population in his native Italy controlled around 80 per cent of the land. This observation has come to be known as Pareto’s Principle. He also found that, while ratios of wealth and control varied in detail from country to country, the broad distribution is always the same—wealth, regardless of human effort, tends to accumulate. That accumulation is also called wealth condensation, by analogy with the condensation of a gas. The popular expression is “money makes money”.

Now the New Scientist reports on a study of 43,000 transnational corporations and the share ownership which connected them. The Swiss Institute of Technology in Zurich used for the study a 2007 Orbis database of 37 million companies and investors spanning the globe.

A core of companies, mostly banks, has excessive power over the global economy. 1,318 companies with intertwined ownership structures, representing 20 per cent of global operating revenues, were on average connected to 20 other companies. This group of 1,318 controls most of the largest blue chip and manufacturing firms—the real economy—taking in 60 per cent of global revenues from goods and services. This group included a “super entity” of 147 companies that controls 40 per cent of the network’s wealth, several of the top 25 of which have familiar names:

  1. Bank of America Corporation
  2. Morgan Stanley
  3. Goldman Sachs Group Inc
  4. Merrill Lynch & Co Inc
  5. JP Morgan Chase & Co…

The 147 of the surveyed companies controlling 40 per cent of the network have condensed—concentrated—a vast level of wealth into their coffers, just as Pareto would have predicted.

Saturday, October 22, 2011

Forbes’ CEO Readership must Rethink OWS

“Will I be the next Gaddafi?”, is the sort of question that some corporate CEOs are beginning to wonder, according to Forbes’s Dov Seidman. The Arab Spring followed by the invasion of Libya, and the murder of the Libyan despot by rebels, and the movement now to protest all over the world against corporate greed and the demolition of society as a consequence has forced the question on to executives convinced until now that they could do no wrong because greed was the modern motivator.

CEOs of a multinational companies are worried that employees or consumers will organize against them, grab their ill-gotten gains and throw their corpses into a ditch.

Seidman points out that OWS demonstrators are demanding freedom from the current system. Employees that join the movement want less slave driving and more made of their creativity and collaborative spirit at work. The protesters have initiated an overdue discussion ignored by business and political leaders for too long. The protesters’ conversation may touch upon issues of fairness and justice, but it is fundamentally about freedom. They do not want a free ride, but the freedom to pursue a meaningful life and build a sustainable career. Our current economic system does not provide that freedom.

The world is hyper-connected and interdependent, so that instability is no longer localized. We rise and fall together. A banker anywhere can lose his company billions of dollars, force the resignation of his CEO and send shock waves throughout global finance. A vegetable market trader in Egypt can trigger the fall of Mubarak, which in turn offers the US and Nato an excuse to unseat Gaddafi to deny China access to Libyan oil, and dole it out to the allies on behalf of the über rich. General dissatisfaction can become specific. If a company mistreats a customer, a wave of protest might sweep him out of his office, or close down the corporation.

Employees are beginning to reject hierarchical structures, control processes, and performance based rewards and punishments. Seidman cites The HOW Report, commissioned by his own company and reported in The Economist, which show self governing organizations get more of what they want and less of what they don’t want. They:

  1. yield five times more innovation
  2. have three times the employee loyalty
  3. give nine times the customer satisfaction
  4. perform significantly better financially
  5. are more likely to expose unethical conduct

than normal top down corporations. The command structures of the Industrial Age are no longer effective. People work to eat, that is obvious, but it has also been known for a century that, given that they will be paid adequately, people want to feel part of a communal effort to do something to be proud of. If money is the only incentive for work, then any employee will move for a better paycheck. If price is the only reason for a purchase, in hard times, they will go for the cheapest. Once consumers feel the pinch, business will fall into depression, so the intelligent CEO must favour fairness in society.

Unemployment is high and must be solved, but many of the OWS protesters have jobs. They are people, though, who see what too many CEOs do not, that corporate and class greed will wreck their own jobs and careers. Already many recent college graduates cannot find suitable employment for their ambitions, and to pay the cost of their education. The cornering of much of the money supply and stashing it in emerging economies by the 1% of über rich and the banks that manage their wealth, leaves too little in circulation here, forcing cuts in jobs and prices, cuts that eventually will sorely affect us all.

The banks must write off much of the debt they have imposed on the world, so that ordinary consumers will feel able to consume again. The über rich will take the hit, but they can afford it, and by so doing the values of their stocks have a chance of remaining buoyant, ensuring the recovery of upper class wealth in the longer term. Failure to do it leads to the Gaddafi scenario of rebellion, bloodshed and carnage, which the fascism state can only stop for a while, never for long, as modern dictatorships prove.

Wednesday, October 19, 2011

Arab Spring? Bring on a Bleak Winter for Rich Kleptomaniacs

The western media portray the political uprisings in the Middle East as motivated and led by technology savvy young people. Glen Rangwala, a lecturer in the Department of Politics and International Studies (POLIS), says that people in Arab countries have different reasons for supporting it.

POLIS has conducted surveys with pollsters, YouGov, of popular opinion across 18 Arab countries throughout 2011. The poll uses a mix of internet polling and “door to door” questioning. Political priorities ranged widely across the region:

  1. the aspiration for civic equality—Bahrain
  2. the freedoms of speech and of association—Syria—but barely at all in other Arab countries
  3. personal security—Tunisia and Egypt
  4. declining personal incomes—Yemen
  5. anticipated increases in personal incomes—most Arab countries
  6. concern over unemployment—countries still free of protests.

What is interesting about this list is that it applies to us Westerners just as much as it does to the Arabs. All of them will be of concern to someone or another of the OWS protesters, and some of them to Tea Partiers in the USA. If anything this rather gash survey serves to show that we are all interested in the same things—social justice.

Rangwala says the uprisings were not unified in their aims, being caused by different grievances and involving different types of people with distinct political aspirations:

What appears to unite them is the very idea of the Arab Spring, within which supporters, activists and even opponents of political reform contextualise the protests they see in their own countries. If people identify their national protest movements with the broader region wide phenomenon of the Arab Spring, the perceived success of a civic uprising in one country will reinforce the estimations of the likelihood of similar achievements at home.

The same thing seems true of the remarkable spread of the protests beginning with OWS. What is needed now is a Western Winter in which we shall freeze the nuts off the one percent of über rich fat cats with all our assets, crush and scatter them to the winds, leaving them impoverished, squealing and wishing they’d had more compassion when they had control. Of course, it is not just the assets we want returning, the control of our destiny is much more important.

Frances Fox Piven at OWS

Should the Poor be allowed to Die, or the Rich?

Al Dahler, a retired Air Force veteran highlights in the Virginia Newsleader the latest propaganda of Republican bloodsuckers. According to Robert J Samuelson writing in the Washington Post, America’s budget deficit is the fault of elderly Americans, people who are too greedy—they depend on social security and medicare to keep themselves alive. The Wall Street bailout had nothing to do with it. Irresponsible tax cuts for the 1 percent of Americans, who are already so well off they haven’t a clue what to do with their money, are also innocent of blame. The US permanent war economy, that has gotten worse since Bush and Cheney held the reins of power, naturally has no role at all in wasting the country’s wealth. The fault, according to the unspeakably selfish US right wing, rests with the poor and old folk, who should recognize they taking up some of the wealth that the rich could salivate over counting it again.

The poor have always been at fault. The conservative gospel is that the poor, the unemployed, the people unable to afford health insurance and the handicapped are scroungers, refusing to work to better themselves as all Americans should. Did they, the greedy rich? Some may have done but most have inherited wealth left to them by their enterprising fathers, grandfathers and even more distant ancestors. Far from money trickling down, the rich employ clever managers, not being clever enough themselves, to accumulate more money in exchange for a share of it called bonuses.

These rich billionaires have nothing in common with any of the remaining 99 percent of the population, but they fool those with aspirations to riches, many of the middle classes, and those unable to see that they are dupes of the rich, encouraged in their American Dreams, but with zero chance of ever realizing them. The Republican lie is that everyone is responsible for themself only and their immediate family, having no responsibility for anyone unable to work because they are elderly, sick or simply unable to get a job in the face of millions of unemployed better able and qualified than themselves.

These conservatives, so fond of boasting of their godliness, would have joined the crowds demanding the crucifixion of their “Lord” Jesus Christ, had they been there at the time. After all, this Jesus wandered around with a gang of ex-workers, ex-fishermen, ex-tax collectors and even ex-prostitutes, and, although described as the son of a carpenter, he never seemed to have built anything of wood himself. Moreover, he repeatedly backed the poor against the rich, so was obviously in the opposite camp from the parasites who drain us of our our fair share of the national product.

They have just enough religion to make them hate, but not enough to make them love others.
Jonathan Swift, paraphrased

If the Christian God were incarnated today, he would be organizing and addressing the OWS demonstrations, and once the state decides to clamp down on the occupiers of Wall Street, he as a leader would have had his death sentence again.

Veteran Dahler noticed that the sentiments of president F D Roosevelt were closer to those of Jesus than the odious hypocrites calling themselves Republicans. He said:

The test of progress is not whether we add more to the abundance of those who have much. It is whether we provide enough for those who have little?

It is as plain as day that for the last thirty years the US has ceased to progress, and has instead slid backwards. Republican candidates, trapped by the hypocritical piety of the religious right, have to deny the validity of the theory of evolution, because these so-called Christians have decided that their God is so feeble He cannot bear it. Yet despite it they do believe in evolution applied to society. It is wrong that the cleverest and most ruthless ape should eventually have human brains, but it is right that the cleverest and most ruthless entrepreneurs should have all the wealth—give or take a percent or two. They call this application of “nature red in tooth and claw” to society “Social Darwinism”.

Society exists to protect each of us from the hazards of living separately in the wild. Being together allowed us to use our intelligence and our new found ability to respect each other and cooperate together to do remarkable things like building civilization. It required us to be concerned with others in our society even when they were not coping too well. Without assistance from us, they would have seen no sense in remaining with us, and our ur-band of mutuality would have soon fallen apart.

That is what these Republicans are advocating now. They have no concern for the poor and those unable to cope with pressures that most of the wealthy 1 percent could never imagine experiencing day in and day out. Jesus Christ ordered Christians to help the poor or be damned. But now Republicans cry in outrage that elderly people should have medical care as a reward for having contributed to society all their lives. They say they owe them nothing. Their idea of society owes them nothing. They have outlived their welcome and should do the decent thing and die! If they do not, then they will be charged large premiums to cover their health insurance, and as they will not be able to afford such expenditure, they will die in any case through being deprived of care. Limited health care leads to shorter lifespans, relieving the pressure on the social security system, and leaving more money for the rich to stash away.

President Obama and Secretary of State Clinton are fond of encouraging people in countries whose regimes they do not like, mainly because they assert their right to what is their own, to riot and even rebel, as in the case of Libya, to establish their basic human rights. Well, we have human rights too, and if Arabs have a right to rebel and kill their former leaders, H G Wells must have been correct to say that we have the same right. Wells, author of War of the Worlds, was a mild mannered man but wrote in despair, towards the end of his life, that we shall get nowhere in bringing about a fairer world until the rich were swinging from the lamp posts. Indeed, if it is a necessity in Libya, then why should it not be a necessity in the US? The fact is that revolution is one way societies end when they become too unjust. The greedy 1 percent of the USA are inviting their own destruction.

They could pay off much of the national debt themselves if they wanted to avoid it!

Monday, October 17, 2011

“I Am Not Moving.” The Shameful Hypocrisy of our Leaders

A brilliant little film which brings out the hypocrisy of our leaders when it comes to issues of rights.


Drag and copy this code, then paste it into your own page:

<object width="370" height="277"><param name="movie" value=""></param><embed src="" type="application/x-shockwave-flash" allowfullscreen="true" width="370" height="277" /></object>

Change the width and height to suit your own dimensions.

Friday, October 14, 2011

Tuesday, October 4, 2011

The Great Hunger: Lessons Today of the Irish Famine 1845-1850

The Irish potato crop failed in 1845, 1846, 1848 and 1849, less than two present day lifetimes ago. A mysterious blight, now known as Phytophthora infestans, destroyed the potato harvest. The rural Irish poor, mainly subsistence farmers renting small plots of ground, were reliant on the potato as their staple food. The result was a dreadful famine in the United Kingdom—the Act of Union of 1801 had made Ireland part of the UK, then the most economically advanced place in the world. Huge numbers faced starvation, and 1 million Irish did die in “An Gorta Mór”, “The Great Hunger”.

Millions more fled the country, with the population of Ireland dwindling from around 9 million in 1845 to 6.1 million in 1851. The tide of emigration continued to swell long after the harvest failures—in 1866 Ireland’s population was roughly equivalent to its 1801 figure of 5.5 million. In comparative terms, the Great Irish Famine was one of the worst demographic tragedies of the nineteenth century and possibly the worst famine in recorded history when judged in terms of the mortality rate.

In Human Encumbrances: Political Violence and the Great Irish Famine, Dr David Nally, a Cambridge University academic, examines the political, economic and social context of the Irish Famine—throwing up disturbing parallels between what happened in the 1840s and what is happening in Africa today. From contemporary material, Nally drew out the perceptions that shaped political decision making and directly affected the lives of millions of poor Irish families. Such decisions are as relevant today as they were then, centering on the ethics of free markets and government aid.

Nally’s book takes its title from a pamphlet written by the controversial English MP, George Poulett Scrope (1797-1876). In a scathing critique of British policies in Ireland, Poulett Scrope claimed that the Irish were being treated as mere “human encumbrances” to the long march of progress and agricultural development that was European modernity. Poverty was deserved coming from idleness, lack of intelligence, and improvidence, so Irish smallholders were eminently expendable to the English, and their way of life was backward, immoral and needed to be urgently reformed.

Contemporary reports noted distinctions at every level, between ruler and ruled, the “deserving” and “undeserving”, the indolent and the industrious. Even the food of the Irish peasants was seen in moral terms. The Irish were feckless and slothful, so ate potatoes, whereas the thrifty and hard working English ate wheat. Nally comments:

In terms of perceptions, not much has changed since the nineteenth century. Dominant economic institutions like the World Bank still consider poverty in the Global South in much the same way as the Victorians judged the Irish—the natives are fundamentally incapable of autonomous development and, in certain situations, corrective measures will be needed to stimulate social reform and promote agricultural development.

This tendency to “blame the victim”, as it has been described, allows rulers and élites to ignore the deeper injustices that expose populations to calamities—making disasters like famine more likely to occur in the first place—and to leave untouched the political and economic arrangements from which they clearly benefit. You could say that we are blinded by an ideology of poverty that the Victorians bequeathed to us.

A key phrase in Nally’s book is “structural violence”—describing how institutional arrangements can make entire communities vulnerable to famine, and at the same time impede reforms that build local resiliencies. For Nally, the current emphasis on increasing food production through market integration and technological fixes, ignores the well established fact that there is enough food to feed the world’s present population—recent estimates suggest that there is 20 per cent more food than the world needs. The relationship between food supply and starvation has long been a contentious issue, and the Irish Famine is no exception. Contemporary accounts describe ships carrying relief from England passing ships sailing out of Ireland with cargos of wheat and beef to be sold for prices out of reach to the starving population. Nally observes:

In an analogous way, Africa, a land synonymous with disease and starvation, is a major supplier of raw materials—including diamonds, gold, oil, timber, food and biofuels—that underpin the affluence of Western societies. The current focus on food availability and supply effectively masks how resources are unevenly distributed and consumed.

Famines not only destroy lives but whole ways of life. The culture and language of the Irish people were victims of the Famine. In 1800, half of the population spoke Irish, in 1900, it was 14 per cent. Rural social relations were disrupted, and, in particular, an ethic of mutual care that characterised the Irish way of life before the Famine. After the Great Hunger, Hugh Dorian, an Irishman, described his native Donegal as a place “where friendship was forgotten and men lived as if they dreaded one another”. Such descriptions stand in contrast to accounts of middle class farmers, and some English and Scottish settlers, who gained land and power by dispossession of the smallholders. Nally continues:

Famines leave behind a tense landscape of “winners” and “losers”. We ought to be honest about the fact that life and death decisions are woven into the texture of economic relations. Hunger persists because its presence serves an important function in the global economy—scarcity and abundance, privilege and suffering, are in fact mutually constituted.

To tackle global hunger we must therefore address the legal and institutional structures that directly restrict certain people’s ability to subsist. The reason that this is not done is because these same structures guarantee the high standard of living that many of us have become accustomed to.

As several observers of the Irish Famine recognised, hunger is not a natural disaster—it is a human induced problem that demands political solutions. Effective solutions require joined up thinking:

At present, the problem of “food insecurity”—to adopt the modern, sanitised term for widespread starvation—is generally conceptualised as a scientific and technical matter—geneticists and plant scientists will engineer harvests that produce more efficient, more abundant crops that are more tolerant of climatic stress, more resistant to attacks by pathogens, and so on. This, we are told, will be the basis for ending global hunger. While the physical sciences do have an important role to play, it is wishful thinking to believe that hunger can be avoided by simply turbocharging nature—that we can, if you like, engineer our way out of scarcity.

The food activist and writer Frances Moore Lappé maintains that the real scarcity we face is one of democracy, not food. Nally insists that there is an important truth to that statement, which is routinely ignored:

One is reminded of the French writer Guy de Maupassant who apparently used to take his daily lunch at the Eiffel Tower because it was the only place in Paris where he did not have to look at the imposing structure. We are behaving a bit like Maupassant—we can continue to enjoy “lunch as normal” as long as we maintain the fiction that hides us from the ugly truth that is otherwise staring us in the face.

Images from: