Archive for the ‘Capitalism’ Category

State Capitalism on Behalf of Militarism

June 28, 2015

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From flickr.com/photos/79854445@N06/13892793691/: Boeing Wake of Destruction
Boeing Wake of Destruction
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There is much debate on what the nature of the Soviet Union’s economy actually was. It is agreed by many that it wasn’t in reality a true socialist or even a communist system. Some, like Seymour Melman and Jack Matlock, argue that it was something closer to a state-run capitalist system with a vanguard political party controlling it.

What is hard to argue with is the fact that what constituted a huge part of the Soviet economy in terms of input of resources — and, ironically, what it has had in common with the U.S. economy — was a sprawling and wasteful military-industrial complex guaranteed by the state to enable an arms race.

The Military-Industrial Complex in the United States

In 1864, President Lincoln expressed profound concern over the rise of corporations resulting from the Civil War and what it portended for the political and economic future of the country.

Advancement in industrialization led to more mechanized and phenomenally more destructive warfare in the 20th century, with the outcomes increasingly dependent upon material production and technology.

In World War I, military officers still played a critical role in the decisions to wage war which were based on previous strategies that were soon rendered outmoded due to a lack of technological expertise and inability to manage the more complicated industrial economics crucial to sustaining modern warfare. Thus, for expediency, government allowed responsibility for the war economy to be transferred from the Army to private industrialists who controlled the terms of war organization and procurement through the War Industries Board (WIB), a body comprised primarily of corporate executives and bankers.

Once this arrangement was established it was difficult to put the proverbial genie back in the bottle. Many of the major anti-competitive trusts running the war economy through the WIB had long desired a relationship with the state that would facilitate public subsidy of their interests. The war effort had proven a convenient means to this end.

 

Between 1918 and 1941, formal patronage was fostered between the War Department and Big Business for the first time outside the context of an actual war. Drawing on the WIB model, the War Production Board instituted favorable tax and profit standards for major industrialists who again dictated policies within their own economic sectors during World War II, usurping substantial decision-making from state actors.

Since 1945, the power, reach and ambition of multinational corporations have expanded, including encroachment into areas traditionally considered part of the public interest and outside of its domain.

More sophisticated, diversified and structured than historical mercenaries, Private Military Firms (PMF’s) have proliferated since the collapse of the Cold War. These companies have participated in conflicts from the civil war in Sierra Leone to the Balkans conflict. They played an increasing role in the Iraq war, with Blackwater (now Academi) being the most controversial with the September 2007 killing of 17 civilians and the wounding of 20 more in Nisour Square in Baghdad. Just prior to those killings, a high level manager of the company reportedly issued a death threat to a State Department official who was in Iraq investigating the company’s practices.

A 2014 report issued by Remote Control Project in Britain found that the US Special Operations Command is outsourcing sensitive activities like flying drones, target acquisition oversight, communications, prisoner interrogations, translation of captured material and information management. The report raises concerns due to the challenges that remote warfare has in terms of accountability and oversight. The concern is compounded by the fact that the Obama administration has not decreased war and militarism but has increasingly reorganized it to be under the auspices of covert and special operations with a presence in nearly 70 percent of the world’s nations at 134, up from around 60 nations at the end of the Bush II era. Funding for the Special Operations Command has risen from $2.3 billion in 2001 to a total of $10.4 billion in 2013.

In an investigative report on Obama’s covert-special ops policy, Nick Turse detailed the administration’s militaristic foreign policy:

 

Although elected in 2008 by many who saw him as an antiwar candidate, President Obama has proved to be a decidedly hawkish commander-in-chief. While the Obama administration oversaw a US withdrawal from Iraq (negotiated by his predecessor), as well as a drawdown of US forces in Afghanistan (after a major military surge in that country), the president has presided over a ramping up of the US military presence in Africa, a reinvigoration of efforts in Latin America, and tough talk about a rebalancing or “pivot to Asia”. The White House has also overseen an exponential expansion of America’s drone war. While President Bush launched 51 such strikes, President Obama has presided over 330. Last year, alone, the US also engaged in combat operations in Afghanistan, Libya, Pakistan, Somalia and Yemen. Recent revelations from National Security Agency whistleblower Edward Snowden have [also] demonstrated the tremendous breadth and global reach of US electronic surveillance during the Obama years.
An article in The Daily Beast revealed that many employees of these contractors expect new opportunities with Obama’s long-term plan to fight ISIS in Iraq and Syria without “boots on the ground” by following his established pattern of using covert players to obscure the extent of U.S. involvement: “One U.S. military contractor working in Iraq who asked not to be named said, ‘I can tell you the contractor-expat community is abuzz thinking this will lead to more work. We expect a much larger footprint than he is showing right now.'”
Then there are the more mundane support services for both overt and covert military operations provided by firms like KBR which provide ice delivery, trash disposal and portable toilet maintenance, among other services. These contractors and their sub-contractors, like Najilaa Catering Services International, have often performed poorly or committed outright fraud. But that usually doesn’t stop them from continuing to procure contracts with the US government.

Najilaa, for instance, had been under fire for non-payment of bills and fraud in both Iraq and Kuwait prior to being signed on to provide food preparation services to USAID in Iraq in February of 2010. KBR has been plagued with continuing allegations of overcharging and poor service for more than 10 years. In 2011, KBR was hit with an $85 million verdict for exposing members of the Oregon Army National Guard to toxic chemicals while serving in Iraq.

This kind of fraud and waste, however, is not unique to these relatively small players. It is indeed rampant among the top 5 defense contractors: Lockheed Martin, Boeing, Northrup Grumann, General Dynamics, and Raytheon, with 3 of these 5 also occupying the top slots in federal contractor misconduct.

According to the Project on Government Oversight (POGO), Lockheed Martin has more contracts with the federal government than any other company. It also has the most misconduct violations, ranging from age discrimination to contract fraud and unfair business practices, totaling over $600 million in fines, penalties and settlements.

A June 2011 POGO press release states that Boeing overcharged the Army millions in spare helicopter parts, such as $1,678.61 “for a plastic roller assembly that could have been purchased for $7.71 internally from the Department of Defense’s own supplies.” Boeing is ranked second in instances of contractor misconduct.

These kinds of antics have no effect on these companies’ status as government contractors. The fact that the top 5 defense contractors named above were among the top 6 defense industry contributors to federal political candidates and parties in the 2014 election cycle undoubtedly plays a major role.

Furthermore, this kind of waste has been largely built into the system of Pentagon contracting over the years in the form of cost-plus practices in the negotiation process. As the late Seymour Melman, an analyst who specialized in the workings of the military-industrial complex, detailed in his writings, the practice of cost-plus or cost-maximizing defense contracts, in which an agreed upon profit margin was simply added on to the previous cost of producing the product or service, had cropped up during WWII and was institutionalized during Robert McNamara’s tenure as Defense Secretary during the Vietnam War. Not only did this practice result in increasingly inflated price tags for the tax payer, it also discouraged quality control and increases in productivity, and encouraged labor unions in the affected industries to partner with management to the detriment of their own interests. Moreover, the practice bled over into other sectors of the government, such as health care contracts, and even into the private sector.

This cost-maximization, combined with the frequency of no bidding and the companies’ generous campaign contributions, makes these kinds of problems all too pervasive and easy to predict.

When more and more private corporations have entered the market with a profit motive in favor of military conflict, incentives to overcharge taxpayers built into the system, and legalized bribery that passes for campaign financing, what are the chances for a conversion from a war economy to a peaceful, civilian economy as the end of the Cold War provided an opportunity for?

A Formula for Economic Conversion

“Whatever else you can do with a tank, you can’t eat it, wear it, live in it or travel in it. And whatever else you can do with a nuclear-powered submarine or with a military helicopter, you can’t produce anything with it.” — Seymour Melman

Melman’s proposals for economic conversion were predicated upon a partnership between management and labor. For practical reasons, the workers needed to be part of the planning due to their intimate knowledge of the parts, tools and machinery involved in current production and its potential utility in manufacturing civilian goods and determining which ones would have the most successful possible outcome for conversion. Members of corporate management, who were typically far removed from the daily workings on the floor, would often make conversion plans on paper — if left to their own devices — that were unworkable when put into practice. Initial attempts at conversion in the Soviet Union failed due to this very problem.

 

The most comprehensive legislative bill proposed in 1988 to implement such a plan was one sponsored by Ted Weiss and called for the establishment of Alternative Use Committees, comprised of an equal number of representatives from management and labor. The committees would have been tasked with preparing “a complete technical economic plan for the use of the people and facilities following termination of work for the Pentagon.”

The legislation would have also mandated occupational retraining for engineers and managers who were veterans of Pentagon work for 10 years or longer. This was to ensure proper training for cost-minimizing instead of the entrenched practice of cost-maximizing fostered in the defense industry. The conversion program would have been overseen by the Commerce Department to encourage all levels of government to prepare their budgets accordingly in support of conversion.

This bill (HR 103) was the culmination of meetings that then-House Speaker Jim Wright had convened of congress members committed to the conversion opportunities that the end of the Cold War provided.

In the weeks following the bill’s historic introduction, however, a smear campaign against Speaker Wright was initiated — led by Newt Gingrich, who’s district just happened to be home to the headquarters of Lockheed Martin — based on trumped up charges of financial misconduct, forcing Wright’s resignation.

With the bill’s most powerful shepherd effectively eliminated, the legislation died quietly.

 

What Failure of the Peace Dividend Meant for the US

As the end of the Cold War beckoned in the late 1980s and, along with it, the potential for redirection of resources to improve the living standards of communities across America, Melman noted that 50 percent of the discretionary federal budget at that time went to the Pentagon. The percentage projected for the 2015 budget was 54 percent. Meanwhile, 3 percent is allotted to “international affairs” — meaning that some portion of that 3 percent goes to diplomacy, which speaks volumes about our leaders’ priorities and approach to international relations

What all that investment into militarism ultimately translates into is investment not made into the infrastructure for American citizens and their day-to-day needs. To illustrate this point, Melman also discussed the state of American domestic infrastructure by 1990 and how it had suffered from the diversion of resources into the MIC:

Instead of seizing the opportunity provided by the end of the Cold War and investing in the improvement of Americans’ lives, we have continued to feed the same amounts or more into the voracious military economy with our domestic infrastructure in worse shape than ever. The American Society of Civil Engineers Infrastructure Report Card for the US in 2013 was a D+; meanwhile, the New York Times just reported that the federal government will be investing as much as $1 trillion in modernizing our nuclear weapons arsenal over the next 30 years, using the confrontation with Russia over Ukraine as partial justification.

The early stages of another negative trend was observed by Melman with respect to the deindustrialization of the American economy whereby the nation gradually loses the ability to produce essential goods and to repair the basic infrastructure needed to create and repair those essential goods. For example, he described how the US was becoming dependent upon foreign production of basic machinery and tools that were no longer made in the US. This deindustrialization leads to loss of living wage jobs and loss of national independence and self-sufficiency in important areas of the economy. That trend has accelerated in the twenty-four years since and all of the social consequences one would likely expect are visible all around Americans, with the exception of the most wealthy and insulated.

One of the more pernicious consequences of this deindustrialization is that the lack of living wage jobs that used to be available to those with little or no post-secondary education drives more youth into the professional military as they seek a stable income and educational opportunities, reinforcing the militarist feedback loop.

One of the strangest blind spots that the American oligarchy seems to have is what their own system has in common with some of the failed aspects of the Soviet Union and that they somehow think they will avoid the same fate.

Note: This article is an expansion on issues relating to the military-industrial-complex that were discussed in Chapter 1 of Ukraine: Zbig’s Grand Chessboard & How the West Was Checkmated.

 

http://natyliesbaldwin.com/

Natylie Baldwin is co-author of Ukraine: Zbig’s Grand Chessboard & How the West Was Checkmated, available from Tayen Lane Publishing. Her fiction and nonfiction have appeared in various publications including Sun Monthly, Dissident Voice, (more…)

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Give ‘Em Hell, Bernie

April 30, 2015

Sen. Bernie Sanders. (photo: Win McNamee/Getty)
Sen. Bernie Sanders. (photo: Win McNamee/Getty)

By Matt Taibbi, Rolling Stone

29 April 15

 

any years ago I pitched a magazine editor on a story about Bernie Sanders, then a congressman from Vermont, who’d agreed to something extraordinary – he agreed to let me, a reporter, stick next to him without restrictions over the course of a month in congress.

“People need to know how this place works. It’s absurd,” he’d said. (Bernie often uses the word absurd, his Brooklyn roots coming through in his pronunciation – ob-zert.)

Bernie wasn’t quite so famous at the time and the editor scratched his head. “Bernie Sanders,” he said. “That’s the one who cares, right?”

“Right, that’s the guy,” I said.

I got the go-ahead and the resulting story was a wild journey through the tortuous bureaucratic maze of our national legislature. I didn’t write this at the time, but I was struck every day by what a strange and interesting figure Sanders was.

Many of the battles he brought me along to witness, he lost. And no normal politician would be comfortable with the optics of bringing a Rolling Stone reporter to a Rules Committee hearing.

But Sanders genuinely, sincerely, does not care about optics. He is the rarest of Washington animals, a completely honest person. If he’s motivated by anything other than a desire to use his influence to protect people who can’t protect themselves, I’ve never seen it. Bernie Sanders is the kind of person who goes to bed at night thinking about how to increase the heating-oil aid program for the poor.

This is why his entrance into the 2016 presidential race is a great thing and not a mere footnote to the inevitable coronation of Hillary Clinton as the Democratic nominee. If the press is smart enough to grasp it, his entrance into the race makes for a profound storyline that could force all of us to ask some very uncomfortable questions.

Here’s the thing: Sanders is a politician whose power base is derived almost entirely from the people of the state of Vermont, where he is personally known to a surprisingly enormous percentage of voters.

His chief opponents in the race to the White House, meanwhile, derive their power primarily from corporate and financial interests. That doesn’t make them bad people or even bad candidates necessarily, but it’s a fact that the Beltway-media cognoscenti who decide these things make access to money the primary factor in determining whether or not a presidential aspirant is “viable” or “credible.” Here’s how the Wall Street Journal put it intheir story about Sanders (emphasis mine):

It is unclear how much money Mr. Sanders expects to raise, or what he thinks he needs to run a credible race. Mr. Sanders raised about $7 million for his last re-election in Vermont, a small state. Sums needed to run nationally are far larger.

The Washington/national press has trained all of us to worry about these questions of financing on behalf of candidates even at such an early stage of a race as this.

In this manner we’re conditioned to believe that the candidate who has the early assent of a handful of executives on Wall Street and in

Hollywood

and Silicon Valley is the “serious” politician, while the one who is merely the favorite of large numbers of human beings is an irritating novelty act whose only possible goal could be to cut into the numbers of the real players.

Sanders offers an implicit challenge to the current system of national electoral politics. With rare exceptions, campaign season is a time when the backroom favorites of financial interests are marketed to the population. Weighed down by highly regressive policy intentions, these candidates need huge laboratories of focus groups and image consultants to guide them as they grope around for a few lines they can use to sell themselves to regular working people.

Sanders on the other hand has no constituency among the monied crowd. “Billionaires do not flock to my campaign,” he quipped. So what his race is about is the reverse of the usual process: he’ll be marketing the interests of regular people to the gatekeeping Washington press, in the hope that they will give his ideas a fair shot.

It’s a little-known fact, but we reporters could successfully sell Sanders or Elizabeth Warren or any other populist candidate as a serious contender for the White House if we wanted to. Hell, we told Americans it was okay to vote for George Bush, a man who moves his lips when he reads.

But the lapdog mentality is deeply ingrained and most Beltway scribes prefer to wait for a signal from above before they agree to take anyone not sitting atop a mountain of cash seriously.

Thus this whole question of “seriousness” – which will dominate coverage of the Sanders campaign – should really be read as a profound indictment of our political system, which is now so openly an oligarchy that any politician who doesn’t have the blessing of the bosses is marginalized before he or she steps into the ring.

I remember the first time I was sold on Bernie Sanders as a politician. He was in his congressional office and he was ranting about the fact that many of the manufacturing and financial companies who asked him and other members of congress for tax breaks and aid were also in the business of moving American jobs overseas to places like China.

Sanders spent years trying to drum up support for a simple measure that would force any company that came to Washington asking for handouts to promise they wouldn’t turn around and ship jobs to China or India.

That didn’t seem like a lot to ask, but his fellow members treated him like he was asking for a repeal of the free enterprise system. This issue drove Sanders crazy. Again showing his Brooklyn roots, Bernie gets genuinely mad about these things. While some pols are kept up at night worrying about the future profitability of gazillionaire banks, Sanders seethes over the many obvious wrongs that get smoothed over and covered up at his place of work.

That saltiness, I’m almost sure of it, is what drove him into this race. He just can’t sit by and watch the things that go on, go on. That’s not who he is.

When I first met Bernie Sanders, I’d just spent over a decade living in formerly communist Russia. The word “socialist” therefore had highly negative connotations for me, to the point where I didn’t even like to say it out loud.

But Bernie Sanders is not Bukharin or Trotsky. His concept of “Democratic Socialism” as I’ve come to understand it over the years is that an elected government should occasionally step in and offer an objection or two toward our progress to undisguised oligarchy. Or, as in the case of not giving tax breaks to companies who move factories overseas, our government should at least not finance the disappearance of the middle class.

Maybe that does qualify as radical and unserious politics in our day and age. If that’s the case, we should at least admit how much trouble we’re in.

Congratulations, Bernie. Good luck and give ’em hell.

The Social Costs Of Capitalism Are Destroying Earth’s Ability To Support Life

March 30, 2015
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I admire David Ray Griffin for his wide-ranging intelligence, his research skills, and for his courage. Dr. Griffin is not afraid to take on the controversial topics. He gave us 10 books on 9/11, and anyone who has read half of one of them knows that the official story is a lie.

Now Griffin has taken on global warming and the CO2 crisis. His book has just been published by Clarity Press, a publisher that seeks out truth-telling authors. Griffin’s book is a hefty 424 pages plus 77 pages of footnotes documenting the information that he presents. Unprecedented: Can Civilization Survive The CO2 Crisis? is no screed. The book is a carefully researched document.

Readers often ask me to write about global warming, chemtrails, vaccines, and other subjects beyond my competence. However, I can see that Griffin has made a huge investment in researching climate change. His book provides a thorough account under one cover.

Griffin concludes that civilization itself is at stake. His evaluation of the evidence is that humans have about three decades to get CO2 emissions under control, and he sees hope in the agreement between Obama and Chinese president Xi Jinping that was announced on November 11, 2014.

Griffin argues that instead of rushing to their own destruction like lemmings, the human race must accept the moral challenge of abolishing the fossil-fuel economy. He makes the case that clean energy permits most of modern society’s way of life to continue without the threat posed by ever rising emissions.

Nuclear energy is not among clean energy sources — just look at the ongoing radiation pollution from Fukushima. Griffin is correct in the way he has framed the issue. It is a moral challenge.

Clearly the climate is changing, whether caused by CO2 emissions or some other cause. Every day brings more reports of perils associated with climate change. See for example, here and here.

The planet is being polluted with many forms of wastes.

Our foods are also polluted. On one hand our food is polluted with herbicides and on the other hand by antibiotics. And then we have hormones and pesticides. The World Health Organization has concluded that the glyphosate in Monsanto’s Roundup, a herbicide widely sprayed on GMO food crops, is a likely causes of cancer in humans and animals.

Glyphosate, which is also believed to be exterminating honey bees and Monarch butterflies, is now present in 75 percent of air and rain samples. Some time ago I reported on a microbiologist who wrote to the US Secretary of Agriculture about extensive findings by independent scientists that glyphosate has serious adverse effects on animal life and on animal and human fertility and on the ability of soil to produce nutrition in food crops. The scientist pointed out that the US government’s clearance of glyphosate rested entirely on the industry’s own studies of its safety and that these “studies” are not substantiated by independent scientists. He pointed out that not only are the studies done by scientists employed by Monsanto, but also many agricultural science university faculties are dependent on research funds from the chemical industry and thereby do not have an independent voice.

(On a French TV show a Monsanto representative claimed Roundup was safe enough to drink, but turned down the offer from the show’s host to demonstrate by drinking a glass by exclaiming “I’m not stupid!”

Martha Rosenberg writing in CounterPunch reports that 70 percent of all antibiotics are fed to livestock because it produces weight gain and saves money on feed costs. Ninety-three percent of doctors are concerned about the meat industry’s excessive use of antibiotics, and independent scientists have definite evidence that the growing resistance of bacteria to antibiotics is due to the use of antibiotics as animal feed.

Scientists at the University of Iowa found Methicillin-resistant Staphylococcus aureus in 70 percent of farmed hogs. A Consumer Reports investigation found that US meat, regardless of the meat’s source, is full of “pathogens, commensals, and antibiotic resistant bacteria.” Pork tested contained five resistant bacteria strains.

The Food and Drug Administration, severely weakened by Republicans, cannot stand up to Big Meat. Rosenberg reports that “when the FDA tried in 2008 to ban farm use of cephalosporins (antibiotics like Cefzil and Keflex) because they are needed for pneumonia, strep throat, and other serious human conditions, the egg, chicken, turkey, milk, pork, and cattle industries and the animal Health Institute stormed Capital Hill.”

Congress responded to the campaign donations, not to the health and safety of the American people. The Animal Health Institute consists of the drug companies who make profits selling 70 percent of their production to meat, egg, and milk producers. The members of the “health” institute are Abbott, Bayer Healthcare, Elanco/Lilly, Merck, Boehringer, Ingelheim Vetmedica, Novartis, etc.

In other words, profits come far ahead of public health. As the drug companies have more or less stopped the development of new antibiotics, the protection antibiotics provide against infections is rapidly fading.

The horror goes on. During a time of severe drought in the western US, with California reportedly left with one year’s supply of water, the fossil-fuel fracking industry is polluting the remaining surface and ground water.

All of these activities — use of antibiotics as animal feed, use of GMO herbicides, fracking — are profitable because they impose huge external costs on the environment and on third parties who are not participants in the profits gleaned by externalizing the costs of production. And this brings us back to Griffin’s important book.

Griffin makes the point that the external cost imposed on the climate by fossil-fuel use is the source of the life-threatening crisis that humanity confronts. Capitalists make money by exploiting labor and by externalizing the costs of the wastes produced by the productive process by imposing the wastes on the environment. It is the short-term time horizon of production organized by selfish private interests focused on quarterly profits that is destroying the livability of the earth.

Almost every economist on earth will rise up in opposition to that true statement, because they are brainwashed in the neoliberal ideology that masquerades as economic science, but in fact is nothing but an apology for capitalist exploitation of labor and the earth.

I happened to be one of Ronald Coase’s graduate students the year he published his famous article on “The Problem of Social Cost” (external costs) for which, together with his article, “The Theory of the Firm,” he was awarded the Nobel Prize in Economics. In theory, externalities can be internalized into the process of production so that the producer bears all the costs if all inputs and waste products are subject to property rights. But no one owns the atmosphere, the oceans, the rivers and streams. They remain “common property” and thus are dumping grounds for waste disposal.

 

Governments, despite pressure from corporations, have realized that pollution is a problem, and governments have imposed some regulation. The regulation raises some costs to corporations, but the regulation is insufficient to halt very much of the externalization of the cost of production. In economic terms, this is the crisis that David Ray Griffin presents to us.

Capitalism’s pursuit of profit is destroying life on earth.

 

http://www.paulcraigroberts.org/

Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente’s Trends Journal. He has had numerous university appointments. His book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available here. His latest book, How America Was Lost, has just been released and can be ordered here.

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Bill McKibben: Capitalism and the Climate Justice Movement

March 20, 2015

Bill McKibben. (photo: 350.org)
Bill McKibben. (photo: 350.org)

By Trish Kahle, Jacobin Magazine

19 March 15

 

ill McKibben has been a force in environmental politics for more than thirty years and authored fifteen books. In 2008, he helped found 350.org, an international organization dedicated to building a movement “that reflects the scale of the climate crisis.”

In the years since, the scale of that crisis has only become more apparent — the rate of climate change is accelerating at a pace not seen for at least a millennium, and the inequalities of its impact, from the scramble for water in Brazil to the oil refinery strike over safety in the United States, are constantly display.

In reaction, larger sections of the movement have explicitly adopted the climate justice framework — a framework that recognizes the different ways in which people experience climate are organized along lines of social, structural oppression: racism, sexism, transphobia, colonialism, and class exploitation.

Examining these intersections, as well as living through the worst economic crisis in living memory, has forced the movement to again confront the role of capitalism and state power in driving social oppression, economic injustice, and ecological devastation.

While the debate over analysis and strategy is far from settled, the climate justice movement has won concrete victories, and its ranks have swelled. President Obama recently vetoed a bill greenlighting the Keystone XL pipeline (though it may re-emerge after State Department review). Hundreds of thousands marched for climate justice in New York City this past fall. And fossil fuel divestment campaigns are growing on college campuses around the world.

Yet with the window to bring the earth into a “safe zone” shrinking by the day, these discussions are only becoming more pressing.

McKibben’s has long been one of the most visible contributors to that debate. In his 2010 book Eaarth: Making a Life on a Tough New Planet, McKibben asks what it will take to adapt, politically and socially, to a world drastically altered by climate change. His proposals are people-centered and focus on breaking the power of the fossil fuel companies.

But he’s also partial to decentralization, which should raise red flags: we can’t hope to subdue the most centralized, highly organized institutions of capital with diffused power. Additionally, McKibben doesn’t advance a critique of capitalism, whose very logic has demanded exponential increases in the use of fossil fuels.

It’s true that the fossil fuel industry has an unsurpassed capacity to destroy the planet. But it’s also true that fossil fuels are a social force, a class project: “no piece of coal or drop of oil has yet turned itself into fuel,” Andreas Malmnotes. That is, the large-scale consumption of fossil fuels, and in turn, the power of the fossil fuel industry, is a product of capitalist production — not the other way around.

Despite the criticisms ecosocialists might have of McKibben, his work has been crucial in the struggle to halt capitalism’s assault on the planet. I spoke to McKibben on the state of the climate justice movement, the intersections between climate justice and other movements, and why he recently supported the first nationwide strike of oil refinery workers since 1980. The interview has been condensed and edited for clarity.


What do you see as the primary obstacle to action on climate change?

The financial might — and consequent political power — of the fossil fuel industry.

What, in your experience, has been the driving force behind new activists becoming involved with the climate justice movement?

I think all kinds of people want to be engaged in the climate fight, but the biggest deterrent is the sense that we’re too small to actually do anything about such a large crisis. And that’s true — each one of us is too small. So that’s why many of us have built a movement to  let people feel, in their solidarity, powerful enough to matter. And not just to feel that way — to really matter.

Can you speak about the role of disasters — like the recent refinery explosion, train derailments, etc. — and the role they play in driving people toward activism, or at least help change people’s ideas about what needs to be done?

I think above all the steady pull of “natural” disasters — floods, droughts, and so on — has woken people to the peril of our present course. And yes, we have constant reminders of the other ways in which fossil fuels are unsafe.

Why did you think it was important to stand with workers in an industry that is actively seeking to expand onshore oil production in the United States at a moment of climate crisis?

Because they’re also making people work in unsafe conditions. They’re treating their employees with almost the same cavalier highhandedness they treat the planet.

I think all of us have a responsibility to try and make our workplaces help the planet, not hurt it. And it’s incredibly exciting to be working with lots of labor groups doing just that. The various transit unions, for instance, whose drivers and mechanics are among the greenest workers out there; the nurses who end their shifts and then step forward to fight fracking because they know what pollution does to lungs.

Moving from workers to students, we’ve seen in the first six weeks of 2015 some important steps forward on the fossil fuel divestment campaigns on college campuses, particularly the success of the divestment campaign at the New School. Can you speak a bit about why the divestment campaigns are important? What’s the next step for student organizers once they’ve won divestment from university administration, or to put it another way, what’s the next target after divestment?

Divestment campaigns are one front of many in this fight, but they help a lot because they begin the process of politically bankrupting the fossil fuel industry. They’ve been the key vehicle to spread the understanding that these are rogue companies, with far more carbon in their reserves than scientists think we can burn. It’s already spread far beyond colleges — churches, towns, states, pension funds are all caught up in this struggle now.

What steps do you think climate justice activists should take to ensure that the legacies and ongoing realities of colonization and marginalization are not only addressed in terms of climate justice, but also in terms of political sovereignty and economic rights?

I think we should work with great leaders like Idle No More on all kinds of fights. I think that the emergence of indigenous leadership on environmental questions has been the most important advance in recent years in our fight, and I imagine they have a good deal to say on a number of other important issues as well.

Continuing on that theme, what connections do you see for activists to link the climate justice movement to the struggles against social oppression, in particular the Black Lives Matter movement?

I was really glad to see climate activists go down to Ferguson to help; I think one of my greatest partners in the last few years has been the Rev. Lennox Yearwood of the Hip Hop Caucus, and I’m convinced he’s right when he says these issues are linked as being about, above all, power.

What kind of obstacles prevent public engagement with scientific research? What obligations do scientists have, if any, to engage in climate politics beyond their own research?

In a rational world, Jim Hansen would not have to regularly end up in handcuffs. We would long since have heeded the scientific alarm and gotten to work. But in the real world, I fear scientists have the same civic duty as the rest of us: after hours and on weekends it’s time to join together in real protest.

Can we really use blockades and divestment as a mechanism to buy time while the price of renewables comes down in the market? Can that approach work quickly enough given the extreme limits of our time frame? What about the people before profit/ecology before economy models of climate activism?

I think we can freeze the growth of the fossil fuel industry long enough for renewables to take the lead in this race — the price of solar panels has fallen enormously in the last few years, and it will continue to plummet. Whether it happens fast enough to outpace the warming of the planet is an open question, but in any event putting people (and every other living thing) before the profit of the fossil fuel industry is key.

What is your opinion of “degrowth” as outlined in Naomi Klein’s new book, This Changes Everything: Capitalism Versus the Climate? Can it account for the socioeconomic and international disparities in development which have left some areas hyper-industrialized and others completely neglected?

Some places are clearly underdeveloped, and others are probably overdeveloped. In a just world we would concentrate our efforts at most things, including the spread of renewable energy, in the poorest places (which have, of course, done the least to cause climate change).

As exciting as the pipeline blockades, Idle No More movement, and growing demonstrations against inaction on climate change have been, they are clearly inadequate to the scale of the task at hand. We have only a short window in which to avert the most disastrous effects of climate change. What do you think it’s going to take to, at the very least, put us in a “safe zone”?

I think it’s going to take a bigger movement. And I would not downplay Idle No More and pipeline blockades as merely “exciting.” They’re beginning to put the fossil fuel industry on the defensive. Every month we slow down their expansion is another month for renewable energy to get cheaper and more ubiquitous. Time is not on their side. It’s not clear it’s on our side either, though, since the momentum of physics is large. Hence the need to make change quickly!

Although he vetoed the KXL pipeline for now, Obama has announced plans to expand offshore oil drilling, even as the ongoing damage from the 2011 BP Deepwater Horizon spill has come back into public focus, with a report that more than 5 million gallons of oil remain in the Gulf. After more than six years of what can be — at best — called equivocating, can climate justice activists still rely on pressuring the Democrats? Is it time for environmental activists to throw their weight behind a third party?

I think offshore drilling is a bad idea. And someone wiser than me is going to have to figure out about electoral politics. We build movements to try and change the zeitgeist; from that will flow, one way or another, political change. Or so I hope, but I’ve been disappointed before.

If we succeed in blocking the KXL pipeline, where should environmental activists turn their focus next?

We’ve long since turned from KXL to focus as well on a hundred other fights: coal ports in the Northwest, fracking in California and Europe, huge coal mines in Australia paid for by Indian billionaires, endless divestment fights, big pushes to support renewables. We’re active in every country but North Korea; the press has a relentless focus on KXL for reasons I don’t fully understand, but for us this is a fight with many, many fronts.

Finally, let’s return to Klein’s book. What do you make of her central contention: that capitalism is on a collision course with the climate? How central do you think the debate around capitalism should be to the future of the environmental movement?

The fossil fuel industry is the richest industry on earth. It’s the most centralized too, producing vast amounts of wealth and political power. If we can replace it with renewable energy, we’ll not only cut the carbon in the atmosphere, we’ll do our share to rebalancing the insanely lopsided social structure of our planet. Or so I hope.

 

Naomi Klein: ‘The Economic System We Have Created Also Created Global Warming’

February 28, 2015
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Best selling author/activist Naomi Klein. (photo: Anya Chibis/Guardian UK)
Best selling author/activist Naomi Klein. (photo: Anya Chibis/Guardian UK)

By Klaus Brinkbaumer, Der Spiegel

28 February 15

 

PIEGEL: Ms. Klein, why aren’t people able to stop climate change?

Klein: Bad luck. Bad timing. Many unfortunate coincidences.

SPIEGEL: The wrong catastrophe at the wrong moment?

Klein: The worst possible moment. The connection between greenhouse gases and global warming has been a mainstream political issue for humanity since 1988. It was precisely the time that the Berlin Wall fell and Francis Fukuyama declared the “End of History,” the victory of Western capitalism. Canada and the US signed the first free-trade agreement, which became the prototype for the rest of the world.

SPIEGEL: So you’re saying that a new era of consumption and energy use began precisely at the moment when sustainability and restraint would have been more appropriate?

Klein: Exactly. And it was at precisely this moment that we were also being told that there was no longer any such thing as social responsibility and collective action, that we should leave everything to the market. We privatized our railways and the energy grid, the WTO and the IMF locked in an unregulated capitalism. Unfortunately, this led to an explosion in emissions.

SPIEGEL: You’re an activist, and you’ve blamed capitalism for all kinds of things over the years. Now you’re blaming it for climate change too?

Klein: That’s no reason for irony. The numbers tell the story. During the 1990s, emissions went up by 1 percent per year. Starting in 2000, they started to go up by an average of 3.4 percent. The American Dream was exported globally and consumer goods that we thought of as essential to meet our needs expanded rapidly. We started seeing ourselves exclusively as consumers. When shopping as a way of life is exported to every corner of the globe, that requires energy. A lot of energy.

SPIEGEL: Let’s go back to our first question: Why have people been unable to stop this development?

Klein: We have systematically given away the tools. Regulations of any kind are now scorned. Governments no longer create tough rules that limit oil companies and other corporations. This crisis fell into our laps in a disastrous way at the worst possible moment. Now we’re out of time. Where we are right now is a do-or-die moment. If we don’t act as a species, our future is in peril. We need to cut emissions radically.

SPIEGEL: Let’s go back to another question: Are you not misappropriating the issue of climate change for use in your critique of capitalism?

Klein: No. The economic system that we have created has also created global warming. I didn’t make this up. The system is broken, income inequality is too great and the lack of restraint on the part of the energy companies is disastrous.

SPIEGEL: Your son Toma is two-and-a-half years old. What kind of world will he be living in when he graduates from high school in 2030?

Klein: That is what is being decided right now. I see signs that it could be a radically different world from the one we have today — and that change could either be quite positive or extremely negative. In any case, it’s already certain that it will at least in part be a worse world. We’re going to experience global warming and far more natural disasters, that much is certain. But we still have time to prevent truly catastrophic warming. We also have time to change our economic system so that it does not become more brutal and merciless as it deals with climate change.

SPIEGEL: What can be done to improve the situation?

Klein: We have to make some decisions now about what values are important to us and how we really want to live. And of course it makes a difference if temperatures only rise by 2 degrees or if they rise by 4 or 5 degrees or more. It’s still possible for us humans to make the right decisions.

SPIEGEL: Twenty-six years have passed since the Intergovernmental Panel on Climate Change was founded in 1988. We have known at least since then that CO2 emissions from the burning of oil and coal is responsible for climate change. Yet little has been done to address the problem. Haven’t we already failed?

Klein: I view the situation differently given the enormous price we will have to pay. As long as we have the slightest chance of success or to minimize the damage, we have to continue to fight.

SPIEGEL: Several years ago, the international community set a target of limiting global warming to 2 degrees Celsius. Do you still consider that to be achievable?

Klein: Well, it’s still a physical possibility. We would have to immediately reduce global emissions by 6 percent a year. The wealthier countries would have to carry a greater burden, meaning the United States and Europe would have to be cutting emissions by around 8 to 10 percent a year. Immediately. It’s not impossible. It is just profoundly politically unrealistic under our current system.

SPIEGEL: You are saying our societies aren’t capable of doing so?

Klein: Yes. We need a dramatic change both in policy and ideology, because there is a fundamental difference between what the scientists are telling us we need to do and our current political reality. We can’t change the physical reality, so we must change the political reality.

SPIEGEL: Is a society focused on economic growth at all capable of fighting climate change successfully?

Klein: No. An economic model based on indiscriminate growth inevitably leads to greater consumption and to greater CO2 emissions. There can and must be growth in the future in many low carbon parts of the economy: in green technologies, in public transportation, in all the care-giving professions, in the arts and of course in education. Right now, the core of our gross domestic product is comprised of just consumption, imports and exports. We need to make cuts there. Anything else would be self-deception.

SPIEGEL: The International Monetary Fund makes the opposite claim. It says that economic growth and climate protection are not mutually exclusive.

Klein: They’re not looking at the same numbers as I am. The first problem is that at all these climate conferences, everyone acts as if we will arrive at our goal through self-commitments and voluntary obligations. No one tells the oil companies that, in the end, they are really going to have to give up. The second problem is that these oil companies are going to fight like hell to protect what they don’t want to lose.

SPIEGEL: You seriously want to eliminate the free market in order to save the climate?

Klein: I am not talking about eliminating markets, but we need much more strategy, steering and planning and a very different balance. The system in which we live is overly obsessed with growth — it’s one that sees all growth as good. But there are kinds of growth that are clearly not good. It’s clear to me that my position is in direct conflict with neo-liberalism. Is it true that in Germany, although you have accelerated the shift to renewables, coal consumption is actually increasing?

SPIEGEL: That was true from 2009 to 2013.

Klein: To me that is an expression of this reluctance to decide on what is necessary. Germany is not going to meet its emissions targets in the coming years either.

SPIEGEL: Is the Obama presidency the worst thing that could have happened to the climate?

Klein: In a way. Not because Obama is worse than a Republican. He’s not. But because these eight years were the biggest wasted opportunity of our lives. The right factors came together in a truly historic convergence: awareness, urgency, the mood, his political majority, the failure of the Big Three US automakers and even the possibility of addressing the failed unregulated financial world and climate change at the same time. But when he came to office, he didn’t have the courage to do it. We will not win this battle unless we are willing to talk about why Obama viewed the fact that he had control over the banks and auto companies as more of a burden than as an opportunity. He was a prisoner of the system. He didn’t want to change it.

SPIEGEL: The US and China finally agreed on an initial climate deal in 2014.

Klein: Which is, of course, a good thing. But anything in the deal that could become painful won’t come into effect until Obama is out of office. Still, what has changed is that Obama said: “Our citizens are marching. We can’t ignore that.” The mass movements are important; they are having an impact. But to push our leaders to where they need to go, they need to grow even stronger.

SPIEGEL: What should their goal be?

Klein: Over the past 20 years, the extreme right, the complete freedom of oil companies and the freedom of the super wealthy 1 percent of society have become the political standard. We need to shift America’s political center from the right fringe back to where it belongs, the real center.

SPIEGEL: Ms. Klein, that’s nonsense, because it’s illusory. You’re thinking far too broadly. If you want to first eliminate capitalism before coming up with a plan to save the climate, you know yourself that this won’t happen.

Klein: Look, if you want to get depressed, there are plenty of reasons to do so. But you’re still wrong, because the fact is that focusing on supposedly achievable incremental changes light carbon trading and changing light bulbs has failed miserably. Part of that is because in most countries, the environmental movement remained elite, technocratic and supposedly politically neutral for two-and-a-half decades. We are seeing the result of this today: It has taken us in the wrong direction. Emissions are rising and climate change is here. Second, in the US, all the major legal and social transformations of the last 150 years were a consequence of mass social movements, be they for women, against slavery or for civil rights. We need this strength again, and quickly, because the cause of climate change is the political and economic system itself. The approach that you have is too technocratic and small.

SPIEGEL: If you attempt to solve a specific problem by overturning the entire societal order, you won’t solve it. That’s a utopian fantasy.

Klein: Not if societal order is the root of the problem. Viewed from another perspective, we’re literally swimming in examples of small solutions: There are green technologies, local laws, bilateral treaties and CO2 taxation. Why don’t we have all that at a global level?

SPIEGEL: You’re saying that all the small steps — green technologies and CO2 taxation and the eco-behavior of individuals — are meaningless?

Klein: No. We should all do what we can, of course. But we can’t delude ourselves that it’s enough. What I’m saying is that the small steps will remain too small if they don’t become a mass movement. We need an economic and political transformation, one based on stronger communities, sustainable jobs, greater regulation and a departure from this obsession with growth. That’s the good news. We have a real opportunity to solve many problems at once.

SPIEGEL: You don’t appear to be counting on the collective reason of politicians and entrepreneurs.

Klein: Because the system can’t think. The system rewards short-term gain, meaning quick profits. Take Michael Bloomberg, for example …

SPIEGEL: … the businessman and former New York City mayor …

Klein: … who understood the depths of the climate crisis as a politician. As a businessman, however, he chooses to invest in a fund that specializes in oil and gas assets. If a person like Bloomberg cannot resist the temptation, then you can assume that the system’s self-preservation capacity isn’t that great.

SPIEGEL: A particularly unsettling chapter in your book is about Richard Branson, CEO of the Virgin Group.

Klein: Yes. I wouldn’t have expected it.

SPIEGEL: Branson has sought to portray himself as a man who wants to save the climate. It all started after an encounter with Al Gore.

Klein: And in 2006, he pledged at an event hosted by the Clinton Global Initiative that he would invest $3 billion in research into green technologies. At the time, I thought it was truly a sensational contribution. I didn’t think, oh, you cynical bastard.

SPIEGEL: But Branson was really just staging it and only a fraction of that money was ever spent.

Klein: He may well have been sincere at the time, but yes, only a fraction was spent.

SPIEGEL: Since 2006, Branson has added 160 new airplanes to his numerous airlines and increased his emissions by 40 percent.

Klein: Yes.

SPIEGEL: What is there to learn from this story?

Klein: That we need to question the symbolism and gestures made by Hollywood stars and the super rich. We cannot confuse them with a scientifically sound plan to reduce emissions.

SPIEGEL: In America and Australia, a lot of money is spent on efforts to deny climate change. Why?

Klein: It’s different from Europe. It’s an anger that is similar to that held by those who oppose abortion and gun control. It’s not only that they are protecting a way of life they don’t want to change. It’s that they understand that climate change challenges their core anti-government, free-market belief system. So they have to deny it to protect their very identity. That’s why there’s this intensity gap: Liberals want to take a little bit of action on climate protection. But at the same time, these liberals also have a number of other issues that are higher on their agenda. But we have to understand that the hardcore conservative climate change deniers will do everything in their power to prevent action.

SPIEGEL: With pseudo-scientific studies and disinformation?

Klein: With all of that, of course.

SPIEGEL: Does that explain why you are connecting all of these issues — the environment, equity, public health and labor issues — that are popular on the left? Is it out of purely strategic considerations?

Klein: The issues are connected, and we also need to connect them in the debate. There is only one way that you can win a battle against a small group of people who stand to lose a lot: You need to start a mass movement that includes all the people who have a lot to gain. The deniers can only be defeated if you are just as passionate as them, but also when you are superior in numbers. Because the truth is that they really are very few.

SPIEGEL: Why don’t you believe that technology has the potential to save us?

Klein: There has been tremendous progress in the storage of renewable energies, for instance, and in solar efficiency. But climate change? I, in any case, don’t have enough faith to say, “We’ll come up with some invention at some point, so let’s just drop all other efforts.” That would be insane.

SPIEGEL: People like Bill Gates view things differently.

Klein: And I find their technology fetish naïve. In recent years, we’ve witnessed some really big failures where some of the smartest guys in the room screwed up on a massive scale, be it with the derivatives that triggered the financial crisis or the oil catastrophe off the coast of New Orleans. Mostly, we as people break things and we don’t know how to fix them afterwards. Right now, it’s our planet that we’re breaking.

SPIEGEL: Listening to you, one might get the impression that the climate crisis is a gender issue.

Klein: Why would you say that?

SPIEGEL: Bill Gates says we need to keep moving forward and come up with new inventions to get the problem, and ultimately our complicated Earth, under control. You on the other hand are saying: Stop, no, we have to adapt ourselves to this planet and become softer. The US oil companies are run by men. And you, as a critical woman, are described as hysterical. It’s not an absurd thought, is it?

Klein: No. The entire industrialization was about power or whether it would be man or nature that would dominate Earth. It is difficult for some men to admit that we don’t have everything under control; that we have amassed all this CO2 over the centuries and that Earth is now telling us: Well, you’re just a guest in my house.

SPIEGEL: A guest of Mother Earth?

Klein: That’s too cheesy. But you’re still right. The oil industry is a male-dominated world, a lot like high finance. It’s very macho. The American and Australian idea of “discovering” an endless country and that endless resources can be extracted is a narrative of domination, one that traditionally casts nature as a weak, prone woman. And the idea of being in a relationship of interdependence with the rest of the natural world was seen as weak. That’s why it is doubly difficult for alpha men to concede that they have been wrong.

SPIEGEL: There’s one issue in the book that you seem to steer clear of. Although you revile the companies, you never say that your readers, who are customers of these companies, are also culpable. You also remain silent about the price that individual readers will have to pay for climate protection.

Klein: Oh, I think that most people would be happy to pay for it. They know that climate protection requires reasonable behavior: less driving, less flying and less consumption. They would be happy to use renewable energies if they were offered them.

SPIEGEL: But the idea isn’t big enough, right?

Klein: (laughs) Exactly. The green movement spent decades educating people that they should compost their garbage, that they should recycle and that they should ride their bikes. But look at what has happened to the climate during these decades.

SPIEGEL: Is the lifestyle you lead climate-friendly?

Klein: Not enough. I bike, I use transit, I try to give speeches by Skype, I share a hybrid car and I cut my flying to about one-tenth of what it was before I started this project. My sin is taking taxis, and since the book came out, I’ve been flying too much. But I also don’t think that only people who are perfectly green and live CO2-free should be allowed to talk about this issue. If that were the case, then nobody would be able to say anything at all.

SPIEGEL: Ms. Klein, we thank you for this interview.

 

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One in Three Germans Say Capitalism to Blame for Poverty, Hunger

February 26, 2015

Woman during anti-capitalism protests in Germany with euro on her face. (photo: photos50.blogspot.com)
Woman during anti-capitalism protests in Germany with euro on her face. (photo: photos50.blogspot.com)

By Reuters

26 February 15

 

early a third of Germans believe that capitalism is the cause of poverty and hunger and a majority think true democracy is not possible under that economic system, according to a survey published on Tuesday by the Emnid polling institute for Berlin’s Free University.

The poll of 1,400 people found that 59 percent of Germans in the formerly communist east consider communist and socialist ideals a good idea for society. In western Germany, 37 percent said they considered communist and socialist ideals to be good.

The radical Left party in Germany remains strong in the formerly communist East, a quarter century after the Berlin Wall fell, paving the way for German unification in 1990.

The survey found that more than 60 percent of Germans believe there is no genuine democracy in their country because industry has too much political influence and that the voice of the voters plays only a subordinate role.

Davos and the crisis of internatiional capitalism

February 5, 2015
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From flickr.com/photos/70981241@N00/16154727648/: Helipad Stilli Davos - WEF 2015
Helipad Stilli Davos – WEF 2015
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It’s Wednesday, Jan. 21, first day of the annual meeting of the World Economic Forum (WEF) at the posh mile-high ski resort in Davos, Switzerland. 1500 executives of the world’s largest corporations have descended from the sky on private jets to network with each other and 40 heads of state. They can also mix with specially invited celebrities, academics and NGO representatives.Klaus Schwab, the WEF’s Founder and Executive Chairman, wants the capitalist elite to assemble and talk about pressing global issues affecting the well-being of humanity world-wide. Speakers and seminars will address such issues as climate change, political instability and economic inequality, problems affecting multinational corporations operating around the globe.

To get solutions to such giant problems, Schwab believes, you need to engage the real powers of this world–multinational corporations rather than governments whose interests are limited by national borders. As he puts it , “The sovereign state has become obsolete… [we need] a ‘global issue alliance.'” Real power in the capitalist world order rests with multinational corporations, 37 of which have revenues that place them in the top 100 economies .

For the most part, the 63 nations in the top 100 list are oligarchies dominated by politically active billionaires whose fortunes are tied up with multinational corporations. The United States and China, the two biggest economies, demonstrate the political flexibility of capitalist oligarchy.

In an interview with Bloomberg News at Davos, prominent economist Nouriel Roubini had this to say about American ‘democracy': “In the US we have a system of legalized corruption if you think about it. K Street and the lobbying affect legislation with the money they give the politician. . . . So it’s not a true democracy, it’s a plutocracy.” He should have added that politicians are subservient because they depend on the super-rich to fund their election campaigns.

At the other end of the capitalist spectrum, China’s Communist Party dispenses with the trappings of Western democracy. As John Chan of the World Socialist Web Site reported : “The corporate empires now controlled by leading figures in the “communist party” are as big, if not bigger, than those appropriated by their Stalinist counterparts in Russia after the dissolution of the former Soviet Union in 1991.” As the Shanghai Daily boastedlast year, the number of billionaires in the world grew by 28% to 1867, and “The US and China headed the list, with 481 and 358 dollar billionaires respectively.”

The capitalist nobility at Davos will hear from Winnie Byanyima, Oxfam International Executive Director, that the global 1% are likely to control more than half of the world’s total wealth in 2016. Moreover, “The 80 wealthiest people in the world altogether own $1.9 trillion, [Oxfam’s] report found, nearly the same amount shared by the 3.5 billion people who occupy the bottom half of the world’s income scale” ( NYT 1/19/15 ). Will the very people whose political activity has brought about extreme inequality want to do something to reverse this dangerous trend?

At the Conference On Inclusive Capitalism in London last May, Christine Lagarde, director of the International Monetary Fund, put this question to the super-rich audience: “Is ‘inclusive capitalism’ an oxymoron?” Capitalism, she said, will not survive unless it brings “rewards for all within a market economy.”

The alternative, Lagarde suggested, is the fulfilment of Marx’s prediction that capitalism “carried the seeds of its own destruction, the accumulation of capital in the hands of a few, mostly focused on the accumulation of profits, leading to major conflicts, and cyclical crises.”

Lagarde’s tone was cautiously optimistic about restoring the legitimacy of capitalism. She answered her own question by saying that a more sustainable, democratic and inclusive capitalism “is not an oxymoron, [but] it is not intuitive either.” There is no guarantee that the rising tide of capital will lift anything except yachts.

South Africa is a vivid illustration of the overwhelming power of international capital. Nelson Mandela’s televised release from prison on Feb. 11, 1990 inspired the whole world. After 27 years of imprisonment by the Apartheid regime in South Africa, he walked between admiring throngs, with clenched fist upraised, seemingly unbowed and uncompromising.

However, after attending the 1992 WEF in Davos, he told his party, the African National Congress, that it must abandon its goal of nationalizing big industries in order to afford programs that would relieve the crushing poverty of black South Africans under Apartheid. He had learned at Davos that nationalization would drive away the capital needed to run the economy.

During his presidency (1994-99), Mandela’s business-friendly policies attracted vast amounts of outside capital, and the South African economy has been since then the fastest growing in Africa. But it is the very opposite of what Christine Lagarde meant by “inclusive.”

As Jim Irvin, leader of South Africa’s largest union, said in 2013: “There is still a war between capital and labour. Nothing has changed. During the struggle, workers fought for a living wage, but the apartheid wage gap is still there.”

Optimism, anyone?

 

I’m a retired philosophy professor at Centre College. I also am a regular columnist for our local paper, The Danville Advocate-Messenger, as well as the Lexington Herald-Leader. My last book was Posthumanity-Thinking Philosophically about the Future (more…)

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Can Capitalism Save Itself?

January 29, 2015

Lady de Rothschild hosted the ‘Conference on Inclusive Capitalism’ in London last year. (Photo: Rex)

Today’s pop quiz involves oxymorons, those often amusing contradictory two-word expressions like jumbo shrimp, amicable divorce and Fox News. Okay, which of the following oxymorons have gained favor within the higher ranks of finance and politics: a.) Moderated democracy b.) Humanitarian intervention c.) Benevolent despot d.) Inclusive capitalism e.) Compassionate conservatism. If you guessed d.) Inclusive capitalism, you’re correct.

Sadly, the laugh out loud, beyond satire nature of this new buzz phrase is totally lost on those disseminating it with a straight face. This was the case last May when 250 of the world’s titans of finance and business attended a by-invitation-only summit on “Inclusive Capitalism,” held appropriately at an 800 year-old castle in London, England. The attendees represented $30 trillion in assets, fully one-third of the world’s total investable assets.

Hosted by Rothschild banking dynasty heiress, Lady Lynn Foester de Rothschild, the movers and shakers heard keynotes from International Monetary Fund Chief Christine Legard, former U.S. President Bill Clinton, former Harvard President and U.S. Treasury Secretary Larry Summers and His Royal Highness Prince Charles.

Lady Rothschild voiced the gathering’s purpose by stating that “…it is really dangerous for business when business is viewed as one society’s problems. And that is where we are today.” Paul Polman, Univeler’s CEO, worried about “the capitalist threat to capitalism,” while conference Alan Mendoza openly fretted that “…we felt such was public disgust with the system, there was a very real danger that politicians could seek to remedy the situation by legislating capitalism out of business.”

The participants were spooked by a thoroughly disillusioned public that has lost confidence in capitalism. When combined with people’s rampant distrust of government – seen the coddler of corrupt bankers – elite squirming is well-founded. Further, many people believe that because government only responds to lobbyists from the financial sector, it’s now an open question whether capitalism and democracy are compatible. Dr. Nafeez Ahmed,writing in Britain’s Guardian newspaper, detected “an undercurrent of elite fear” about how several decades of capitalist indifference towards most of the world population might play out.

For well documented reasons, ordinary working people have lost faith in capitalism’s implicit promise of upward mobility and sharing in the prosperity and benefits of society’s advance. By contrast, we learn from Oxfam’s recent report that the 80 richest people (85 last year) on the planet — 0.000001 percent of the global population — now have a collective net worth of $1.9 trillion. Their wealth, which doubled between 2009 and 2014, is equal to that shared by 3.5 billion people at the bottom of the world’s income scale. For perspective, the average wealth per head among the 80 individuals is $23.7 billion compared to $540 for the bottom 3.5 billion people. (Parenthetically, 571 of the world’s 1,645 billionaires are citizens of the United States).

How will this play out? According to Ahmed, the London Summit “represented less a meaningful shift of direction than a barely transparent effort to rehabilitate a parasitic economic system on the brink of facing a global disaster.” For the most part Inclusive Capitalism is a carefully calibrated PR gambit in the service of self-preservation. The ruling groups must convey the image of a chastened system now intent on “including” those previously left out. We’ll be hearing more about financial regulation, profit-sharing, curbing CEO pay, helping the “middle class” and various Neo-New Deal (minus the Deal) bromides.

The challenge for panicky plutocrats and their wholly-owned politicians is to convince the 99.0% that capitalism is the answer, not the problem. And they must accomplish this cosmetic fine-tuning without endangering profits and wealth accumulation. To expect the uber-rich to voluntarily alter the system’s fundamentals is to entertain a perilous naiveté.

My take is that barring significant public agitation from below, a system in which government is merely an appendage of our corporate overloads is not outside the realm of capitalist responses. Calling that system neofascism will offend some readers so for now let’s label it a hybrid American totalitarianism. Hopefully that’s another oxymoron.

Gary Olson, Ph.D. Is chair of the Political Science Department at Moravian College in Bethlehem, PA. Contact: olsong@moravian.edu

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Trickle-Down Was Nothing More Than the Politics of Helping the Rich and Powerful Get Richer and More Powerful

January 22, 2015

Senator Elizabeth Warren. (photo: Getty Images)
Senator Elizabeth Warren. (photo: Getty Images)

By Elizabeth Warren, Reader Supported News

21 January 15

 

oday, United States Senator Elizabeth Warren spoke at the AFL-CIO National Summit on Raising Wages. The text of Senator Warren’s remarks as prepared for delivery follows, and a PDF copy of her remarks is available here:

Good morning, and thank you MaryBe for the introduction, and for your work with the North Carolina AFL-CIO. Your efforts make a real difference for our families.

I want to start by thanking Rich Trumka and Damon Silvers for your leadership on economic issues, for your good counsel, and, for a long time now, your friendship. I also want to give special thanks to my good friends from the Massachusetts AFL-CIO who are here today, Steve Tolman and Lou Mandarini.

I love being with my labor friends, and I’m especially glad to join you today for the AFL’s first-ever National Summit on Wages. You follow in the best tradition of the American labor movement for more than a century-always fighting for working people, both union and non-union. Today you’ve spotlighted an economic issue that is central to understanding what’s happening to people all over this country.

I recently read an article in Politico called “Everything is Awesome.” The article detailed the good news about the economy: 5% GDP growth in the third quarter of 2014, unemployment under 6%, a new all-time high for the Dow, low inflation.(i)

Despite the headline, the author recognized that not everything is awesome, but his point has been repeated several times: On many different statistical measures, the economy has improved and is continuing to improve. I think the President and his team deserve credit for the steps they’ve taken to get us here. In particular, job growth is a big deal, and we celebrate it.

I’ve spent most of my career studying what’s happening to America’s middle class, and I know that these four widely-cited statistics give an important snapshot of the success of the overall economy. But the overall picture doesn’t tell us much about what’s happening at ground level to tens of millions of Americans. Despite these cheery numbers, America’s middle class is in deep trouble.

Think about it this way: The stock market is soaring, and that’s great if you have a pension or money in a mutual fund. But if you and your husband or wife are both working full time, with kids in school, and you are among the half or so of all Americans who don’t have any money in stocks,(ii) how does a booming stock market help you?

Corporate profits(iii) and GDP are up. But if you work at Walmart, and you are paid so little that you still need food stamps to put groceries on the table, what does more money in stockholders’ pockets and an uptick in GDP do for you?

Unemployment numbers are dropping. But if you’ve got a part-time job and still can’t find full-time work — or if you’ve just given up because you can’t find a good job to replace the one you had — you are counted as part of that drop in unemployment,(iv) but how much is your economic situation improving?

Inflation rates are still low. But if you are young and starting out life with tens of thousands of dollars in student loan debt locked into high interest rates by Congress, unable to find a good job or save to buy a house, how are you benefiting from low inflation?

A lot of broad national economic statistics say our economy is getting better, and it is true that the economy overall is recovering from the terrible crash of 2008. But there have been deep structural changes in this economy, changes that have gone on for more than thirty years, changes that have cut out hard-working, middle class families from sharing in this overall growth.

It wasn’t always this way.

Coming out of the Great Depression, America built a middle class unlike anything seen on earth. From the 1930s to the late 1970s, as GDP went up, wages went up pretty much across the board. In fact, 90% of all workers-everyone outside the top 10%-got about 70% of all the new income growth.(v) Sure, the richest 10% gobbled up more than their share-they got 30%. But overall, as the economic pie got bigger, pretty much everyone was getting a little more. In other words, as our country got richer, our families got richer. And as our families got richer, our country got richer. That was how this country built a great middle class.

But then things changed.

By 1980, wages had flattened out, while expenses kept going up. The squeeze was terrible. In the early 2000s, families were spending twice as much, adjusted for inflation, on mortgages as they had a generation earlier. They spent more on health insurance, and more to send their kids to college. Mom and dad both went to work, but that meant new expenses like childcare, higher taxes, and the costs of a second car. All over the country, people tightened their belts where they could, but it still hasn’t been enough to save them. Families have gone deep into debt to pay for college, to cover serious medical problems, or just to stay afloat a while longer.(vi) And today’s young adults may be the first generation in American history to end up, as a group, with less than their parents.(vii)

Remember how up until 1980, 90% of all people-middle class, working people, poor people-got about 70% of all the new income that was created in the economy and the top 10% took the rest? Since 1980, guess how much of the growth in income the 90% got? Nothing. None. Zero. In fact, it’s worse than that. The average family not in the top 10% makes less money than a generation ago.(viii) So who got the increase in income over the last 32 years? 100% of it went to the top ten percent. All of the new money earned in this economy over the past generation-all that growth in the GDP-went to the top.(ix) All of it.

That is a huge structural change. When I look at the data here – and this includes years of research I conducted myself – I see evidence everywhere about the pounding that working people are taking. Instead of building an economy for all Americans, for the past generation this country has grown an economy that works for some Americans. For tens of millions of working families who are the backbone of this country, this economy isn’t working. These families are working harder than ever, but they can’t get ahead. Opportunity is slipping away. Many feel like the game is rigged against them – and they are right. The game is rigged against them.

Since the 1980s, too many of the people running this country have followed one form or another of supply side – or trickle down – economic theory. Many in Washington still support it. When all the varnish is removed, trickle-down just means helping the biggest corporations and the richest people in this country, and claiming that those big corporations and rich people could be counted to create an economy that would work for everyone else.

Trickle-down was popular with big corporations and their lobbyists, but it never really made much sense. George Bush Sr. called it voodoo economics.(x) He was right, and let’s call it out for what it is: Trickle-down was nothing more than the politics of helping the rich-and-powerful get richer and more powerful, and it cut the legs out from under America’s middle class.

Trickle-down policies are pretty simple. First, fire the cops-not the cops on Main Street, but the cops on Wall Street. Pretty much the whole Republican Party – and, if we’re going to be honest, too many Democrats – talked about the evils of “big government” and called for deregulation. It sounded good, but it was really about tying the hands of regulators and turning loose big banks and giant international corporations to do whatever they wanted to do-turning them loose to rig the markets and reduce competition, to outsource more jobs, to load up on more risks and hide behind taxpayer guarantees, to sell more mortgages and credit cards that cheated people. In short, to do whatever juiced short term profits even if it came at the expense of working families.

Trickle down was also about cutting taxes for those at the top. Cut them when times are good, cut them when times are bad. And when that meant there was less money for road repairs, less money for medical research, and less money for schools and that our government would need to squeeze kids on student loans, then so be it. And look at the results: The top 10% got ALL the growth in income over the past 30 years-ALL of it-and the economy stopped working for everyone else.

The trickle-down experiment that began in the Reagan years failed America’s middle class. Sure, the rich are doing great. Giant corporations are doing great. Lobbyists are doing great. But we need an economy where everyone else who works hard gets a shot at doing great!

The world has changed beneath the feet of America’s working families. Powerful forces like globalization and technology are creating seismic shifts that are disrupting our economy, altering employment patterns, and putting new stresses on old structures. Those changes could create new opportunities-or they could sweep away the last vestiges of economic security for 90% of American workers. Those changes demand new and different economic policies from our federal government. But too many politicians have looked the other way. Instead of running government to expand opportunity for 90% of Americans and to shore up security in an increasingly uncertain world, instead of re-thinking economic policy to deal with tough new realities, for more than 30 years, Washington has far too often advanced policies that hammer America’s middle class even harder.

Look at the choices Washington has made, the choices that have left America’s middle class in a deep hole:

  • the choice to leash up the financial cops,
  • the choice in a recession to bail out the biggest banks with no strings attached while families suffered,
  • the choice to starve our schools and burden our kids with billions of dollars of student loan debt while cutting taxes for billionaires,
  • the choice to spend your tax dollars to subsidize Big Oil instead of putting that money into rebuilding our roads and bridges and power grids,
  • the choice to look the other way when employers quit paying overtime, reclassified workers as independent contractors and just plain old stole people’s wages,
  • the choice to sign trade pacts and tax deals that let subsidized manufacturers around the globe sell here in America while good American jobs get shipped overseas.

For more than thirty years, too many politicians in Washington have made deliberate choices that favored those with money and power. And the consequence is that instead of an economy that works well for everyone, America now has an economy that works well for about 10% of the people.

It wasn’t always this way, and it doesn’t have to be this way. We can make new choices – different choices – choices that put working people first, choices that aim toward a better future for our children, choices that reflect our deepest values as Americans.

One way to make change is to talk honestly and directly about work, about how we value the work that people do every day. We need to talk about what we believe:

  • We believe that no one should work full time and still live in poverty – and that means raising the minimum wage.
  • We believe workers have a right to come together, to bargain together and to rebuild America’s middle class.
  • We believe in enforcing labor laws, so that workers get overtime pay and pensions that are fully funded.
  • We believe in equal pay for equal work.
  • We believe that after a lifetime of work, people are entitled to retire with dignity, and that means protecting Social Security, Medicare, and pensions.

We also need a hard conversation about how we create jobs here in America. We need to talk about how to build a future. So let’s say what we believe:

  • We believe in making investments – in roads and bridges and power grids, in education, in research – investments that create good jobs in the short run and help us build new opportunities over the long run.
  • And we believe in paying for them-not with magical accounting scams that pretend to cut taxes and raise revenue, but with real, honest-to-goodness changes that make sure that we pay-and corporations pay-a fair share to build a future for all of us.
  • We believe in trade policies and tax codes that will strengthen our economy, raise our living standards, and create American jobs – and we will never give up on those three words: Made in America.

And one more point. If we’re ever going to un-rig the system, then we need to make some important political changes. And here’s where we start:

  • We know that democracy doesn’t work when congressmen and regulators bow down to Wall Street’s political power – and that means it’s time to break up the Wall Street banks and remind politicians that they don’t work for the big banks, they work for US!

Changes like this aren’t easy. But we know they are possible. We know they are possible because we have seen David beat Goliath before. We have seen lobbyists lose. We’ve seen it all through our history. We saw it when we created the new Consumer Financial Protection Bureau, when we passed health care reform. We saw it when President Obama took important steps to try and reform our immigration system through executive order just weeks ago. Change is difficult, but it is possible.

This is personal for me. When I was 12, my big brothers were all off in the military. My mother was 50 years old, a stay at home mom. My daddy had a heart attack, and it turned our little family upside down. The bills piled up. We lost the family station wagon, and we nearly lost our home. I remember the day my mother, scared to death and crying the whole time, pulled her best dress out of the closet, put on her high heels and walked to the Sears to get a minimum wage job. Unlike today, a minimum wage job back then paid enough to support a family of three. That minimum wage job saved our home-and saved our family.

My daddy ended up as a maintenance man, and my mom kept working at Sears. I made it through a commuter college that cost $50 a semester and I ended up in the United States Senate. Sure, I worked hard, but I grew up in an America that invested in kids like me, an America that built opportunities for kids to compete in a changing world, an America where a janitor’s kid could become a United States Senator. I believe in that America.

I believe in an America that builds opportunities. An America that ensures that all hardworking men and women earn good wages. An America that once again grows a strong, vibrant middle class.

I believe in that America, and I will fight for that America! And if we fight-side-by-side-I know we will build that America again.


Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.

 

Republicans and Wall Street Say, ‘To Hell With Protecting the Public!’

January 22, 2015

Posted: 01/20/2015 11:22 am EST Updated: 01/20/2015 5:59 pm EST

Since December, Congress has twice passed measures to weaken regulations in the Dodd-Frank financial law that are intended to reduce the risk of another financial meltdown.

In the last election cycle, Wall Street banks and financial interests spent over $1.2 billion on lobbying and campaign contributions, according toAmericans for Financial Reform. Their spending strategy appears to be working. Just this week, the House passed further legislation that would delay by two years some key provisions of Dodd-Frank.

“[Banks] want to be able to do things their way, and that’s very dangerous,” MIT economist Simon Johnson tells me.

“‘Here we go again’ — I think that’s exactly the motto, or the bumper sticker, for this Congress. It’s crazy, it’s unconscionable, but that is the reality.”

Lawmakers are pinning these provisions to Dodd-Frank onto bigger must-pass bills like spending measures that the president doesn’t dare veto.

Bill Moyers: The safeguards that Congress is tearing down, even as we speak, were put in place after the financial disaster of 2008 to prevent another one like it from happening. Why do you think the Republicans are trying to sabotage them?

Simon Johnson: It’s mostly the lobby, specifically a few very large banks that don’t like those restrictions on their activities. They want to be able to take more risk. They’re not worried of course about how that could negatively impact the rest of us, and they’ve persuaded the Republicans to help them in that quest.

Moyers: Are they putting depositors and taxpayers at risk?

Johnson: Yes, absolutely. That’s the core of the reforms: Try and make sure — and it’s hard — that part of the financial system is safe; that depositors are safe; that the taxpayers, as the ultimate backstop for deposits, are safe; and of course, try and make sure that you don’t have a huge crisis that affects the broader economy with millions of people being thrown out of work. That’s the goal. And JPMorgan, Chase, Citigroup, Bank of America and Wells Fargo don’t like that. They want to be able to do things their way, and that’s very dangerous.

Moyers: Aren’t these the same banks that nearly broke the economy in 2008 and helped to destroy millions of jobs and households?

Johnson: They were at the center of what happened. Citigroup, for example, went spectacularly wrong. Parts of Bank of America were in big trouble. In 2008 and 2009, JPMorgan Chase was relatively okay, but they’ve gotten themselves into lots of trouble subsequently, with big trading losses, the so-called London Whale problem, and by fixing interest rates, and accusations of fixing exchange rates and other kinds of market manipulation. So all of these very big financial institutions are potential trouble.

Moyers: But we put these rules in place to reduce the risk of their reckless gambling with our money, and here we go again, it seems.

Johnson: “Here we go again” — I think that’s exactly the motto, or the bumper sticker, for this Congress. It’s crazy, it’s unconscionable, but that is the reality.

Moyers: What do you make of the fact that the tea party opposed those bank bailouts back in 2008 when George W. Bush was pushing for them, and the tea party helped Republicans win control of Congress last fall, and here the tea party is silent as their party turns into Wall Street’s puppet?

Johnson: I’ve always been puzzled and frustrated by this. When I talk to people on the right, more libertarian people, people who don’t like government, intellectuals, they get this. They would be able to participate in this conversation with you and me, and we’d be getting on just fine. The problem is when you get to the political right, they don’t want to get involved. They don’t want to touch this. They don’t even want to talk about it. It has exactly the irony that you just put your finger on, which is that people on the right who rose up against government bailouts –and with some justification — are now supporting the repeal of some of the safeguards that were put in place to prevent any such bailouts in the future. It doesn’t make sense, but that’s the political reality.

Moyers: In my research, I couldn’t find any evidence that Republican candidates, or Democrats for that matter, asked voters last November if they wanted to let the wolves of Wall Street loose again. Do you remember any indication that there was a mandate in the election to turn the country over to the big banks again?

Johnson: I’m assuming that certainly no one made that proposal. What’s interesting is how few candidates, including on the left, mention the threat of Wall Street or mention these dangers. Sen. Elizabeth Warren, who wasn’t up for election in November but did a lot of campaigning for other people, is one of the very few leading national-level politicians who talks about this. She says, “It’s the Wall Street problems that gave us the massive crisis, the deep recession, the budget problems and the austerity. So first and foremost, make sure that Wall Street can’t do it again.” But it’s really interesting how few politicians are willing to explain that the deregulation of Wall Street led to the 2008 financial crisis, which caused the budget to worsen and austerity to take center stage.

Moyers: Why?

Johnson: I don’t know. I think it’s the lobby and the political contributions. A lot of money flows from the big banks into the House Financial Services Committee, for example, and more broadly. But when I talk to community bankers — and I want to emphasize this — they are absolutely on the same side.

Moyers: And by community bankers, you mean?

Johnson: The Independent Community Bankers of America (ICBA).

Moyers: But these are not the big banks, right?

Johnson: No, they’re small town banks. They lend to the real economy. The ICBA represents 6,500 community banks. They don’t do derivatives trading and other kinds of crazy stuff. But they got hammered in the financial crisis and they’ve struggled in the recession and in the low-interest rate environment. They really fear and are very articulate against the “too big to fail” crowd.

Moyers: The first target right now in Congress is the Volcker rule, and the Republicans, and some Democrats who are joining in, or at least are compliant, they say they’re only making technical corrections to the Volcker rule. Do you believe them?

Johnson: Absolutely not. That’s just a smokescreen. We should remind everyone that the first thing they wanted they already got, the repeal of Section 716, which pushed derivatives away from the insured bank part of their financial empires. They got that in December.

Moyers: They tacked it onto the omnibus spending bill, and Obama and Jamie Dimon lobbied for Congress to vote for it.

Johnson: Yes, but only one of those gentlemen, President Obama, had to sign the legislation that made it go through. Previously, the White House had pushed back and said, “No, we’re not doing Dodd-Frank repeal through this sneaky spending bill business.” But in December, they dropped that. So now the lobbyists are exploring all possible ways they can take this forward, including “technical fixes” to Dodd-Frank that are not technical fixes. They are undermining the substance, reducing the effectiveness and putting more pressure on the regulators not to do their jobs. It’s back to business as usual, pre-2008.

Moyers: As you indicate, their strategy is to pin these provisions on bigger bills that the president doesn’t dare veto. So they get an unpopular result in an undemocratic way. What does that tell you?

Johnson: I think it tells you that democracy is basically broken. But on a slightly more optimistic note, I would say that when and if the White House fights, it can win. For example, the White House has steadfastly refused to allow amendments to the Affordable Care Act to be snuck through on spending bills, and they will hold the line on that, and the Republicans know that the White House will fight them publicly every inch of the way. Ultimately they’ll win that debate because they’ll say, “Look, you want to shut down the government to make these crazy changes to a program that’s working, the Affordable Care Act?” Republicans are not going to win that. But Dodd-Frank is different because on Dodd-Frank, the administration signaled in December that the store is open and they’re willing to give things away, or sell them relatively cheaply. They’ve created a very target-rich environment for the Republicans and for the lobby.

Moyers: I know you’re not an insider in the White House, but you’re read widely in Washington. What’s your understanding of why the president in effect said the shop is open?

Johnson: I think that he’s been poorly advised on this for a long time. I think that the people around him have a very generous view of these big Wall Street players and think somehow that the country — and the economy — needs the “too big to fail” crowd, with their fundamentally anti-social behavior. I think they’re wrong. There’s a Wall Street view of the world — and I’m paraphrasing Elizabeth Warren here — which has taken over and dominated the Treasury for a long time. That remains a problem and that remains a real weakness of this administration.

Moyers: What’s the Main Street view of the world that collides with this?

Johnson: The Main Street view is exactly the community banking view of the world, which is we have families and businesses. They need credit, they need financing, and we serve as an intermediate between savings and responsible borrowers. It has some risks, but they’re manageable, and we’ve had a system for a long time that generated growth and created opportunities for most Americans without blowing up in our faces. But we gave that up in the 1990s and we’re still living with the consequences. Why anyone would want to go back to the crazy casino dominating the real economy is beyond me and it’s beyond my community banker friends.

Moyers: We should remind our younger readers that in the 1990s, Democrats were wholly complicit in what you just described as changing the rules, regulations and the laws to benefit Wall Street. So you’ve got both parties against Main Street in effect, don’t you?

Johnson: Since the 1990s there’s been a bipartisan consensus. The Clinton Treasury, Alan Greenspan, a Republican at the Federal Reserve, and both Republicans and Democrats in the Congress agreed that deregulation of finance was fine and allowing big finance to become even bigger was a good idea. So the question now is: Who has backed away from that and who is willing to acknowledge that was a mistake? The answer is some Democrats — not enough — and very, very few Republicans. But still, some Republicans do and I think they should get credit for that.

Moyers: I’ve read that depositors and taxpayers could be liable for trillions of dollars in oil derivative losses as a result of falling oil prices and the repeal of 716 of the Dodd-Frank provision that passed in December. Could we be liable?

Johnson: I don’t want to sound like a doom-monger, but I think the basic answer is we have no clue. These very large banks — they’re big trading houses really, taking speculative positions on a daily and hourly basis and betting the whole shop sometimes — we don’t know what their exposure is to movements in oil prices. They’re very opaque; they do not have good disclosure. I think even the regulators don’t fully understand the exposure of these banks to complex derivatives. That’s something we saw with what happened with housing prices and the derivatives based on that in 2008. I suspect something like that could happen with oil and with other commodity prices. There is a big exposure and any financial disaster can have a massive effect on the real economy. That’s where you get the trillion-dollar losses in GDP and incomes and millions of jobs lost. I’m worried about that. I’m worried about lots of things around finance…

Moyers: What else worries you?

Johnson: Europe. I don’t think it’s good to sound panic-stricken at every turn of events, but we have not done a good job of insulating ourselves from the risks that are going to be generated by the European banking system as we move forward, and we have to see the world much more in those defensive terms than we did in previous decades.

Moyers: Who’s standing up for the public?

Johnson: A few people, and I think they’re the heroes. Sen. Elizabeth Warren from Massachusetts is the most prominent, but there’s also Sharrod Brown from Ohio, Jeff Merkley from Oregon and David Vitter, a Republican from Louisiana. The Independent Community Bankers of America, they deserve a lot more by way of kudos from the public. Perhaps they’re not as high-profile as some lobby groups but they’re absolutely speaking truth to authority on these issues. There’s a list and it’s a list of sensible people. It’s a longer list than it was in the 1990s when very few people stood against the consensus for deregulation. But it’s a group that’s not yet powerful enough and we’ll see — I think the big issue, really, is the presidential election — which way do the Democrats decide to go on this issue and which way do the Republicans go, although I think that’s a bit more predictable. And then who wins in the big competition for narratives and ideas in 2016.

Moyers: But if that’s the case, it leaves the public vulnerable because Bill Clinton was president in the 1990s when Glass-Steagall was repealed, and George W. Bush was president in aughts of this century when the economy collapsed. Democrats passed Dodd-Frank, but it’s now being weakened. The election doesn’t seem to decide how Wall Street is treated in Washington. Wall Street always seems to have the upper hand.

Johnson: That is true and has been true in the past. President Obama campaigned on the promise of changing things and not so much has changed on this dimension. I think, though, that it depends on who’s running, what that person believes and what they are really going to do when they get in. So whether Elizabeth Warren runs is one question. If Hillary Clinton is the lead candidate and wins the nomination, who are her advisers? Who does she listen to? Does she go back with Robert Rubin, who was treasury secretary in the 1990s, who is still, as far as we know, largely persuaded that big is beautiful in finance? Or does she go with some different advisers and perhaps a perspective that’s closer to that of Elizabeth Warren? I think the Democratic primary is, right now, the real primary.

Moyers: How so?

Johnson: I think this is when the battle for ideas is being fought. I think the arguments about the substance on the Democratic side are absolutely now, and by the time you reach the formal nominating process, it’s going to be a bit late. So ask me again in three months or in six months, and I think we’ll have a clearer answer for whether 2016 could be decisive or whether it will be, as you just suggested, potentially business as usual irrespective of who wins.

Moyers: Does Elizabeth Warren have an obligation to run in order to get her argument into the warp and woof of the Democratic race, just as the tea party folks ran and got their arguments embraced by the Republican Party? Doesn’t she have an obligation to get into the debate, into the campaign and try to champion, give people an option to the establishment candidates?

Johnson: I think she is in that conversation. She does have an ability to mobilize people and an ability to bring pressure and I think, although it’s not for me to say whether or not she has an obligation. But I think she believes and is passionate about wanting to really move the needle and change the world on these important dimensions. It’s up to her to decide how best to do that, and I for one am not going to second guess her on that. I’m going to be supportive every inch of the way, because honestly, we have nobody else. We have a few other people who are great, but Elizabeth Warren is by far our best hope for meaningful change on any of these dimensions.

Moyers: In the meantime, what can people who are concerned — Main Street people, people who do see what you see, what we see — what can people do to be more effective against the big bankers who are controlling our Congress today?

Johnson: Express your views. Write your congressman, email them and make phone calls. There’s a Progressive Change Coalition project called The Big Ideas Project. You can find ways through that organization to tell them and others what your views are in terms of the priorities for the country. You’ve got to speak out and you’ve got to find ways to be polite, be articulate, be forceful and be persuasive.

This post was previously published on BillMoyers.com.


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