Category Archives: Financial Crisis

Dismantling A Society: How Empires Feed Off the Republic

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By RS Anthion

Source: CounterPunch

“It is patently ridiculous for the United Nations to examine poverty in America.”

-Nikki Haley (1)

Nikki Haley released a ferocious rebuke of a UN report detailing poverty in the United States. As if she could will away or dismiss its findings simply by how angry she denounced it. The life expectancy in the United States sits at 78.6 years (2) whilst Cubans can expect to live to 79.5 according to the World Health Organisation(3). Cuba is of course a country that has been economically embargoed by the United States for over half a century. Nikki Haleys ferocious retort comes amid a United Nations report examining poverty in the United States. 40 million Americans live in poverty, 18.5 million americans live in extreme poverty and 5.3million live in “third world conditions of absolute poverty” (4).

“The Special Rapporteur wasted the UN’s time and resources, deflecting attention from the world’s worst human rights abusers and focusing instead on the wealthiest and freestcountry in the world.”

-Nikki Haley.

It probably needs repeating that the United States imprisons more people (both total and as a percentage of their population) than anywhere else on the planet. Americans are 5 percent of the population whilst having 25 percent of the worlds prisoners. This doublespeak has become the norm. The US ambassador can say straight faced the US is the “freest country in the world” whilst having the highest percentage of its population in prison. Significantly higher than Russia, China or Iran.(7)

This is a myth of American empire, that freedom only exists in the United States. And if freedom exists elsewhere then the US is the “freest”.

The UN report does indeed paint a bleak picture for the average man or woman in the US and it’s no surprise that Nikki Haley has reacted with such venom at this UN report.

Because this strikes at the heart of one of the other ‘myths of American empire’. That each successive generation will live better than the previous one which fuelled the idea of ‘American exceptionalism’. That their form of government and ideology was something to be celebrated and even lifted up as the ‘messianic nation’ (ie. exported across the globe). But the precise definition of a nation in decline is when the generation after you lives worse than the previous generation. So the US ruling elite, a ruling class that has been doing victory laps since Reagan in removing workers rights/protections and labour laws, is caught in a dichotomy. A contradiction where they still try to propagandise their population into the messianic nation worthy of justifying imperialism (“bringing democracy” or “humanitarian intervention”) whilst the working class of the United States slips further into poverty.

“The United States is a land of stark contrasts. It is one of the world’s wealthiest societies, a global leader in many areas, and a land of unsurpassed technological and other forms of innovation. Its corporations are global trendsetters, its civil society is vibrant and sophisticated and its higher education system leads the world. But its immense wealth and expertise stand in shocking contrast with the conditions in which vast numbers of its citizens live. About 40 million live in poverty, 18.5 million in extreme poverty, and 5.3 million live in Third World conditions of absolute poverty.4 It has the highest youth poverty rate in the Organization for Economic Cooperation and Development (OECD), and the highest infant mortality rates among comparable OECD States. Its citizens live shorter and sicker lives compared to those living in all other rich democracies, eradicable tropical diseases are increasingly prevalent, and it has the world’s highest incarceration rate, one of the lowest levels of voter registrations in among OECD countries and

the highest obesity levels in the developed world. 5. The United States has the highest rate of income inequality among Western countries.5 The $1.5 trillion in tax cuts in December 2017 overwhelmingly benefited the wealthy and worsened inequality. The consequences of neglecting poverty and promoting inequality are clear. The United States has one of the highest poverty and inequality levels among the OECD countries, and the Stanford Center on Inequality and Poverty ranks it 18th out of 21 wealthy countries in terms of labour markets, poverty rates, safety nets, wealth inequality and economic mobility. But in 2018 the United States had over 25 per cent of the world’s 2,208 billionaires. 6 There is thus a dramatic contrast between the immense wealth of the few and the squalor and deprivation in which vast numbers of Americans exist. For almost five decades the overall policy response has been neglectful at best, but the policies pursued over the past year seem deliberately designed to remove basic protections from the poorest, punish those who are not in employment and make even basic health care into a privilege to be earned rather than a right of citizenship. 6. The visit of the Special Rapporteur coincided with the dramatic change of direction in relevant United States policies. The new policies: (a) provide unprecedentedly high tax breaks and financial windfalls to the very wealthy and the largest corporations; (b) pay for these partly by reducing welfare benefits for the poor; © undertake a radical programme of financial, environmental, health and safety deregulation that eliminates protections mainly benefiting the middle classes and the poor; (d) seek to add over 20 million poor and middle class persons to the ranks of those without health insurance; (e) restrict eligibility for many welfare benefits while increasing the obstacles required to be overcome by those eligible; (f) dramatically increase spending on defence, while rejecting requested improvements in key veterans’ benefits; (g) do not provide adequate additional funding to address an opioid crisis that is decimating parts of the country; and (h) make no effort to tackle the structural racism that keeps a large percentage of non-Whites 7 in poverty and near poverty”

Ultimately the empire “feeds off the republic” (to quote Michael Parenti). So when the US has spent an estimated either $3.6 trillion (based on a Brown University study) or $5.6 trillion (according to the associated press) on war in Afghanistan, Iraq, Pakistan and Syria(5). This money isn’t plucked from thin air. US tax payers have to pay that back and is the source of Americans increased poverty. The $2 trillion discrepancy between the associated press and the Brown university study is testament to the open corruption in military contracts. The money has been funnelled through so many private contractors looking to milk the tax payers for all their worth there’s a 2 trillion margin of error when estimating what has actually been spent.

Eisenhowers A Chance For Peace speech in 1953 seems more relevant than ever.

“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.
This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter with a half-million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. . . . This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.”

The United States is currently at war with 7 different nations (Iraq, Syria, Afghanistan, Pakistan, Yemen, Somalia and Libya) all the while leaving it’s citizens to the ravages of the free market: whether that’s the burgeoning opiod crisis, the children drinking lead contaminated water or the 40 million Americans in poverty.

Alexander Zinoviev berating Gorbachev and Yeltsin on TV in 1990. His errily prophetic vision of Russia came true. When capitalism was restored to Russia under Yeltsin in the 90s Russia experienced what economists would later call the “Russian Cross” whereby the death rate shot up and the birth rate slowed to a crawl (creating a cross on a graph). The return of capitalism meant a death spiral of every social ill; alcoholism, domestic abuse, drug abuse and homelessness. The return of orthodox Christianity to fill the power void. The wholesale sell off of public services that had once been owned by the collective people to the fortune 500.

The brilliant thinker and Soviet dissident who later came to regret being a tool for western interest spoke in a brilliantly prophetic interview in 1999 in which he asserted the end of communism in the east meant the end of democracy in the west. That the glue for any kind of pluralism in media/politics etc. came from the united front against communism to the east. Since the fall of communism he asserts a kind of democratic totalitarianism has arisen. And who can argue it hasn’t? Voter turnout is worse each year as people realise no party in a First Past the Post system will represent their interests. Princeton University long released a peer review paper that the United States is an oligarchy. That the average person in the US has little to no effect on the policies and laws that are ratified by the courts. That’s perhaps why 54 percent of citizens in democracies believe their voice doesn’t have an impact on political decisions, and 64 percent think their government doesn’t act in their interest.

“Q: Don’t you think that people can have their own opinions, and that they can vote and thus express themselves?

ANSWER. First of all, even now people don’t vote that often, and they will vote even less in the future. With regard to public opinion in the West it is shaped by the media. Suffice it to recall the universal approval of the war in Kosovo. Remember the Spanish war! Volunteers from all over the world traveled to that country to fight on one side or the other. Remember the war in Vietnam. But these days, people are so well shepherded that they react only the way that the purveyors of propaganda want them to.

Q: So, the role of Gorbachev was not positive?

A: I look at things from a slightly different angle. Contrary to common belief, Soviet communism did not collapse because of internal reasons. Its collapse is certainly the greatest victory in the history of the West. An unheard of victory which, let me say it again, can establish a unitary power monopoly on a planetary scale. The end of communism also signalized the end of democracy. The modern epoch is not only post-communist, it is also post-democratic! Today we are witnessing the establishment of democratic totalitarianism, or, if you will, totalitarian democracy.

Q: Does not it all sound a little absurd?

A: Not at all. Democracy requires pluralism and pluralism implies an existence of at least two more or less equal forces which oppose each other and at the same time influence each other. During the Cold War there was world democracy, global pluralism, with two opposing systems: capitalist and communist, plus other countries with an amorphous system which belonged to neither. Soviet totalitarianism was sensitive to Western criticism. In turn, the Soviet Union influenced the West, in particular through the latter’s own communist parties. Today we live in a world dominated by one single force, one ideology and one pro-globalization party. All of this together began to take shape during the Cold War, when superstructures gradually appeared in various forms: commercial, banking, political and media organizations. Despite their different fields of activity, what they had in common was essentially their transnational scope. With the collapse of communism they began to rule the world. Thus, Western countries ended up in the dominant position, but at the same time they are now in a subordinate position as they gradually lose their sovereignty to what I call the supra-society. The planet-wide supra-society consists of commercial and non-commercial organizations whose influence extends far beyond individual states. Like other countries, the Western countries are subordinated to these supranational structures. This is despite the fact that the sovereignty of states was also an integral part of pluralism and hence of democracy on a global scale. Today’s ruling supra-power suppresses sovereign states. The European integration unfolding in front of our very eyes is also leading to the disappearance of pluralism within this new conglomerate in favor of supranational power.

Q: But do not you think that France and Germany remain democracies?

A: Western countries got to know true democracy during the Cold War. Political parties had genuine ideological differences and different political programs. The media also differed from each other. All this had an impact on the lives of ordinary people contributing to the growth of their wealth. Now this has come to an end. A democratic and prosperous capitalism with socially oriented laws and job security was in many ways thanks to a fear of communism. After the fall of communism in Eastern Europe, a massive attack on the social rights of citizens was launched in the West. Today the socialists who are in power in most European countries are pursuing policies of dismantling the social security system, destroying everything that was socialist in the capitalist countries. There is no longer a political force in the West capable of protecting ordinary citizens. The existence of political parties is a mere formality. They will differ less and less as time goes on. The war in the Balkans was anything but democratic. Nevertheless, the war was perpetrated by the socialists who historically have been against these kinds of ventures. Environmentalists, who are in power in some countries, welcomed the environmental catastrophe caused by the NATO bombings. They even dared to claim that bombs containing depleted uranium are not dangerous for the environment, even though soldiers loading them wear special protective overalls. Thus, democracy is gradually disappearing from the social structure of the West. Totalitarianism is spreading everywhere because the supranational structure imposes its laws on individual states. This undemocratic superstructure gives orders, imposes sanctions, organizes embargos, drops bombs, causes hunger. Even Clinton obeys it. Financial totalitarianism has subjugated political power. Emotions and compassion are alien to cold financial totalitarianism. Compared with financial dictatorship, political dictatorship is humane. Resistance was possible inside the most brutal dictatorships. Rebellion against banks is impossible.

Q: What about a revolution?

A: Democratic totalitarianism and financial dictatorship rule out the possibility of social revolution.

Q: Why?

A: Because they combine omnipotent military power with a financial stranglehold. All revolutions received support from outside. From now on this is impossible because there are no sovereign states, nor will there be. Moreover, at the lowest level the working class has been replaced with the unemployed class. What do the unemployed want? Jobs. Therefore, they are in a less advantageous position than the working class of the past.

Q: Would it be correct to say that the intensifying radicalization in the West will leads to its own destruction?

A: Nazism was destroyed during total war. The Soviet system was young and strong. It would have continued to thrive, had it not been destroyed by outside forces. Social systems do not destroy themselves. They can only be destroyed by an external force. It’s like a ball rolling on a surface: only the presence of an external obstacle could break its movement. I can prove it like a theorem. Today, we are dominated by a country with enormous economic and military superiority. The new emerging world order is drawn to unipolarity. If the supranational government manages to achieve this by eliminating all external enemies, then a unified social system can survive until the end of time. Only a person can die from their illness. But a group of people, even a small group, would try to survive through reproduction. Now imagine a social system comprising billions of people! Its capacity to anticipate and prevent self-destructive phenomena will be limitless. In the foreseeable future, the process of erasing differences across the world cannot be stopped, since democratic totalitarianism is the last phase of the development of Western society, which began with the Renaissance.” (6)

In a world where capitalist-liberalism is disintegrating right before our eyes; where ‘human rights’ are justified in bombing the poorest people on earth, that “humanitarian intervention” is used straight faced by world leaders and their sycophantic media cheerleaders in the mainstream media and a world where most of humanity only has debt peonage and decreased living standards to look forward to.

It certainly does look like humanity has been nailed to an iron cross.

The world is in desperate need of a liberating ideology, in which true media and political pluralism can thrive instead of the circus currently on offer. One where we’re not in thrall to capital or beholden to the fortune 500 who rule every aspect of our lives.

Notes.

(1) http://thehill.com/policy/international/un-treaties/393659-nikki-haley-ridiculous-for-un-to-analyze-poverty-in-america

(2) https://edition.cnn.com/2017/12/21/health/us-life-expectancy-study/index.html?no-st=1529923969

(3) http://www.who.int/countries/cub/en/

(4) United Nations Generaly Assembly, 4 May 2018 http://undocs.org/A/HRC/38/33/ADD.1

(5) http://www.newsweek.com/trump-says-us-spent-7-trillion-middle-east-mistake-iraq-cost-88-billion-804215

(6) https://russia-insider.com/en/history/russian-thinker-1999the-end-communism-russai-signalized-end-democracy-west-alexander

(7)https://www.washingtonpost.com/news/fact-checker/wp/2015/07/07/yes-u-s-locks-people-up-at-a-higher-rate-than-any-other-country/?utm_term=.ab39c81fabff

Another Reason Young Americans Don’t Revolt Against Being Screwed

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By Bruce E. Levine

Source: CounterPunch

“8 Reasons Young Americans Don’t Fight Back: How the US Crushed Youth Resistance” was originally published in 2011, then republished on several Internet sites, and has become one of my most viewed articles. The eight reasons include: student-loan debt; various pacifying effects of standard schooling; the psychopathologizing and medicating of noncompliance; surveillance; television; and fundamentalist religion and fundamentalist consumerism. Over the last seven years, many young people have told me that they appreciate that article, but they have urged me to detail a hugely important pacifying source which I had not included.

First, to be clear, not all young people are completely broken. The general state of acquiescence by young people was recently interrupted by their short-lived burst of dissent in the form of large rallies for gun control, in reaction to fears of being murdered in their classrooms. But that was an exception to the general rule of resignation to eating shit.

A longer period of dissent occurred during Occupy, in which many young people protested against their financial subjugation by the 1%. However, one lesson that young people learned from Occupy is that their rulers only pay lip service to democracy—and so mere dissent has little impact. Young people today are correct to recognize the impotence of mere dissent if it is unaccompanied by a withdrawal of cooperation with the ruling class’s capacity to turn a profit. But because young people have been broken in so many ways, decreasing numbers of them have the individual strength, class consciousness, and group cohesiveness that is required to move beyond dissent to the kind of constructive disobedience (for example, a labor strike) that can create greater justice for them.

It’s not that young people in the United States are ignorant of the reality that they are being financially screwed; they know they have been screwed, they expect to be screwed even worse, and most of them passively accept this reality.

Young people are not ignorant of their increasingly crippling student-loan debt. At last look, 70% of college students graduate with significant debt; the average student-loan debt at $37,172, and the average monthly payment at $393 (and this doesn’t include their credit card debt). Add this to the reality that many young people with student-loan debt never even graduate college; and even among those who do graduate, many of them find only low-paying jobs.

The majority of young people feel so beaten down that they have also passively accepted that they will get screwed out of Social Security benefits. A 2015 Gallup poll asked “Do you think the Social Security system will be able to pay you a benefit when you retire?” Among those 18 to 29 years of age, 64% said no. Yet, most are resigned to having money deducted from their paychecks for benefits that they believe they will never receive.

Since my 2011 article was published, many millennials have informed me that they are being broken by something that I hadn’t originally included: the Internet, which many of them tell me is the most important aspect of their lives. From these young people, I have learned how the Internet creates fears, lowers self-esteem, and divides them—all of which weakens their capacity to resist injustices.

Fear is a great way to break people, and the Internet—similar to other areas that I had previously detailed—creates fear. Facebook, Twitter, Instagram, Tumblr, Snapchat, and other so-called “social media” create the fear of permanent shame and shunning. Millennials repeatedly see how a single error in judgment on social media will not be forgotten and can haunt forever—and destroy lives. While many young students voice concern about a shooting in their school, my experience is that they are more viscerally terrified of something being posted on social media by them or about them that can damage their attractiveness to their peers or to future employers. For young people, denial over their life being ruined on social media is impossible—most never unplug from it.

The Internet heightens a fear-based consciousness. People have different private fears and, as George Orwell detailed, their greatest fears can be exploited to break them. For many young people, their greatest fear is being “doxxed”—having private information about them published on the Internet so as to hurt them. For other young people, their greatest fear is “FoMo”—the fear of missing out—which is intensified on social media where they are constantly bombarded with images of others doing “cool” stuff. One young woman recently told me, “You don’t know how crazy we are. I saw a party on Instagram that looked really cool, and I had FoMo over it, even though I know the guy who posted it always makes parties look cooler than they really are.”

Many young people tell me that the constant barrage of their peers’ self-promotions on social media makes them feel inferior; and low self-esteem—like fear—debilitates the strength to resist. One young man recently explained to me that millennials are always aware of their “digital selves” which can be measured in metrics such as “likes”; and that comparing themselves to others routinely results in low self-esteem. Of course, some young people do attempt rebellion, but effective rebellion, they tell me, requires completely extricating from social media, which would be an extremely radical action.

Not only does the Internet create fear and low self-esteem but also divides, which of course allows the 1% to more easily conquer the 99%. The Gilded Age robber barron Jay Gould reportedly bragged, “I can hire one half of the working class to kill the other half.” Millenials have educated me on the various divides among the 99% that have been created and perpetuated on the Internet.

Every millennial young man tells be about the Internet war between “social justice warriors” and “red pillers.” Young people who care about justice for historically oppressed groups (such as women, people of color, and LGBT folks) are mocked as social justice warriors by those who call themselves red pillers who feel that, today, white males are the oppressed group. In an Internet world absent of face-to-face contact, there is only mutual venom. Absent is a mutual grasping that each side is in the 99%, that each side cares about injustice, and that the financial hell for all of them has been created by the 1%—not by each other.

Screen addiction subverts the in-person contact necessary for face-to-face dialogue and solidarity, and the Internet is even more addictive than television, as young people are virtually never away from their smart phones, laptops, or other screens. Walk into any coffee shop, and you’ll often see many young people in close proximity with one another but locked into their own screens and not looking at each other.

Several of my millennial young male informants tell me that they are afraid to risk face-to-face contact, afraid to be seen as violating a woman’s privacy, afraid to be viewed as a creep. I joked with one young guy, “Are you afraid that if you walk over to some pretty young woman in a coffee shop and tell her that you like her shoes, then you’ll be accused of ‘rape-staring’ and have your life ruined on the Internet, and end up being falsely labeled all over the Internet as a sex offender?” The young man laughed and said, “I know that you are exaggerating, but that’s the kind of shit that many of us millennial guys think about, as we have become pathetic.”

Having young men and young women in the 99% being afraid of one another may be even more of a coup for the 1% than their historical successes at getting ethnic and racial groups to hate one another. With this fear and hate among the 99%, it is impossible to have the solidarity and strength necessary to effectively revolt in an organized way against the 1%.

The Internet technology need not necessarily be a pacifying force as, for example, the Internet was effectively utilized during the Arab spring to foment rebellion and organize resistance. Similarly, some of the other pacifying forces that I originally detailed need not be pacifying. Teachers could inspire resistance against illegitimate authorities rather than indoctrinate compliance to any and all authorities. And my fellow mental health professionals could embrace liberation psychology rather than pathologize and medicate rebellion.

My experience is that young people, in general, are becoming increasingly pained and weakened by multiple oppressive forces, and older people who give a damn about them can help. The 1% will always attempt to seize powerful technologies and institutions to pacify all of us—especially young people. To manage these technologies and institutions, the 1% needs technocrats, administrators, and guards; thus, what would help is what Howard Zinn called a “revolt of the guards.” However, if technicians, teachers, mental health professionals, and other guards never even admit to ourselves our societal role—as guards who maintain the status quo—then we guards will never consider a revolt. Many older people are guards, and they can choose to revolt and help young people gain the strength necessary to resist injustices.

 

Bruce E. Levine, a practicing clinical psychologist often at odds with the mainstream of his profession, writes and speaks about how society, culture, politics and psychology intersect. His most recent book is Resisting Illegitimate Authority: A Thinking Person’s Guide to Being an Anti-Authoritarian―Strategies, Tools, and Models(AK Press, September, 2018). His Web site is brucelevine.net

The U.S. Economy In Two Words: Asymmetric Gains

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By Charles Hugh Smith

Source: Of Two Minds

The Status Quo is in trouble if the bottom 95% wake up to the asymmetric gains that are the only possible output of our hyper-financialized economy.

The core dynamic of the U.S. economy in this era is asymmetric gains: the gains in income, wealth and power are increasingly concentrated in the top slice of the economy and society, while the income, wealth and power of the majority stagnate or decline.

The Status Quo must paper over this widening gulf with threadbare narratives that no longer match reality: for example, we’re an ownership society. We sure are: the vast majority of the nation’s productive assets are owned by the top 5%.

The U.S. economy has changed, but the transformation is largely invisible to the average participant and conventional economist. The previous iteration of the economy expired in the 1970s, an era of stagflation (stagnant growth and rising inflation that eroded the purchasing power of most households), higher energy costs and increasing global competition, an era in which the “external costs” of industrial-scale pollution finally came home to roost and the early stages of digital technologies began impacting human labor.

Stocks and bonds were destroyed in the 1970s. Investing capital in industrial production no longer generated outsized profits.

The 1980s ushered in a New Economy based on financial magic: the outsized profits flowed to those with access to credit and the tools of financialization: buying assets with borrowed money, selling the assets off in the global marketplace and reaping enormous gains by producing no goods or services.

We now inhabit a hyper-financialized economy in which the only way to get ahead is to speculate. For the middle class, this means speculating in housing: if you hit the jackpot and your house soars in value, then leverage this new wealth into the cash needed to buy a second property–or extract the equity to fund a more luxe lifestyle.

Entrepreneurs seek to generate “value” only as a means of cashing out via an initial public offering or selling their company to a global corporation. The “value” sought now is the perception of value–the magic of future promise that boosts valuations into the millions, or better yet, billions.

How many entrepreneurs are looking forward to owning their company ten years hence? Very few, as “the long haul” has no value in a hyper-financialized economy. If you don’t cash out in six months, your Big Idea might be worthless, leapfrogged by some other Big Idea.

In a hyper-financialized economy, hype is the most valuable skill. Those who can raise $100 million in capital for a fancy juicer win, as do those who sell the Big Idea to global corporations desperate not to miss out on the Next Big Thing.

In a hyper-financialized economy, future income is pulled into the present and monetized to benefit the top dogs. We borrow from the future to fund the inefficiencies of today. It’s a great system, and the Status Quo has the answer to everything: the government can never go broke because all it has to do is print more money.

What a swell idea. Isn’t that what Venezuela has done for the past decade? And how did that work for them? If you think that destroying the purchasing power of “money” is a winner, then by all means, go on believing that the government can never go broke because all it has to do is print more money.

Here’s my favorite chart of asymmetric gains. The vast majority of the gains reaped since the 2008-09 Global Financial Meltdown have flowed to the top .1%. This is not a bug, it is a feature of hyper-financialization. Indeed, it is the only possible output of the current system.

Meanwhile, the bottom 95% live in an economy where wages go nowhere and costs are soaring. The financial media cheers when wages (supposedly) rise by 2%, but nobody dares measure the impact of rising costs in services such as healthcare and higher education.

The Status Quo is in trouble if the bottom 95% wake up to the asymmetric gains that are the only possible output of our hyper-financialized economy. Hype and propaganda are the key tools of the present era, as these are required to disconnect perception from reality. How long the disconnect will last is anyone’s guess, but when the two reconnect, all that is solid now will melt into thin air.

 

Why America is the World’s First Poor Rich Country

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Or, How American Collapse is Made of a New Kind of Poverty

By Umair Haque

Source: Eudaimonia

Consider the following statistics. The average American can’t scrape together $500 for an emergency. A third of Americans can’t afford food, shelter, and healthcare. Healthcare for a family now costs $28k — about half of median income, which is $60k.

By themselves, of course, statistics say little. But together these facts speak volumes. The story they are beginning to tell is this.

America, it seems, is becoming something like the world’s first poor rich country. And that is the elephant in the room we aren’t quite grasping. After all, authoritarianism and extremism don’t arise in prosperous societies — but in troubled ones, which are growing impoverished, like America is today. What do I mean by all that?

Let’s begin with what I don’t mean. I don’t mean absolute poverty. Americans are not living on a few dollars a day, by and large, like people in, for example, Somalia or Bangladesh. America’s median income is still that of a rich country, around $50k, depending on how it’s counted. Nor do I really mean relative poverty — people living below median income. While that’s a growing problem in America, because the middle class is imploding, that is not really the true problem these numbers hint at, either.

America appears to be pioneering a new kind of poverty altogether. One for which we do not yet have a name. It is something like living at the knife’s edge, constantly being on the brink of ruin, one small step away from catastrophe and disaster, ever at the risk of falling through the cracks. It has two components — massive inflation for the basics of life, coupled with crushing, asymmetrical risk. I’ll come to what those mean shortly.

The average American has a relatively high income, that of a person in a nominally rich country. Only his income does not go very far. Most of it is eaten up by attempting to afford the basics of life. We’ve already seen how steep healthcare costs are. But then there is education. There is transport. There is interest and rent. There is media and communications. There is childcare and elderly care. All these things reduce the average American to constantly living right at the edge of ruin — one paycheck away from penury, one emergency away from losing it all.

But this isn’t true for America’s peers. In Europe, Canada, and even Australia, society invests in all these things — and the costs of basic necessities societies don’t provide are regulated. For example, I pay $50 dollars for broadband and TV in London — but $200 for the same thing in New York — yet in London, I get vastly more and better media for my money (even including, yes, American junk like Ancient Aliens). That’s regulation at work. And when basic goods like healthcare or elderly care or education are provided and managed at a social scale, that is when they are cheapest, and often of the best quality, too. Hence, healthcare costs far less in London, Paris, or Geneva — and life expectancy is longer, too.

So if you are earning $50k in America, it is a very different thing than earning $50k in France, Germany, or Sweden — in America, you must pay steeply for the basics of life, for basic necessities. Thus, incomes stretch much further in other countries, which enjoy a vastly higher quality of life, even though people there earn roughly the same amount, because they pay vastly less for basic necessities. Americans are rich, but only nominally — their money doesn’t buy nearly as much as their peers does, where it matters and counts most, for the basics of life.

What happens when societies don’t understand all the above? Well, a strange thing has happened to the American economy. While it’s true that things like TVs and Playstations have gotten cheaper, the costs of the basics of life have skyrocketed. All the things that really elevate people’s quality of life — healthcare, finance, education, transport, housing, and so on — have come to consume such a large share of the average household’s income that they have little left to save, invest, or spend on anything else. And what’s worse, while the basics of life have seen massive inflation, wages and incomes (not to mention savings and benefits and safety nets and opportunities) for most have stagnated. The result is an economy — and a society — that’s collapsing.

Yet all that is the straightforward effect of giving, for example, hedge funds control over drugs, or speculators control over housing, healthcare, and education — they will of course maximize profits, whereas investing in these things socially, or at least regulating them, minimizes real costs, and maximizes accessibility, affordability, and quality.

So the average American, who is left high and dry, must borrow, borrow, borrow, just to maintain a decent quality of life — because handing capitalism control of the basics of life has caused massive, skyrocketing inflation in necessities, while flatlining his income. Healthcare didn’t used to cost half of median income even a decade ago, after all — but now it does. So what happens when, in a decade or two, healthcare costs all of median income? How can an economy — let alone a society — function that way?

Well, what happens if the average American steps over the line? Misses a mortgage payment, gets ill and is unable to pay a few bills on time, can’t pay the costs of healthcare? Then they are punished severely and mercilessly. Their “credit rating” (note how banks and hedge funds don’t have them) is ruined. They can easily find themselves out on the street, without finance, without a second chance, without access to any kind of redress or support . And then they are rejected, shunned, and ostracized. They might not have an address anymore — so who will hire them? They are no longer a part of society — they have fallen through the cracks, and finding one’s way back is often next to impossible. Asymmetrical risk — corporations and lobbies and banks bear no risk at all, precisely because the average American bears them all now.

So Americans aren’t just absolutely or relatively poor, but poor in a new way entirely. First, the basics of life exploded in price, to the point that they are now unaffordable for many, maybe most, households. Second, Americans bear the risks of paying those unaffordable costs to an extreme degree, bearing the risks that institutions should, and so those risks are now ruinously high. A bank or hedge fund or corporation might go bankrupt, and liquidate its assets, and its owners stay rich — but if an American’s credit rating is ruined, loses his job, cannot pay his bills, or even if he declares bankruptcy, he falls through the cracks, hounded, embattled, institutionally black-marked. He finds himself outside society, with little way to get back in. Little wonder then that Americans work so much harder than anywhere else — they are always one step away from losing it all, from genuine ruin, but their peers in truly rich countries aren’t.

Marx probably would have called this immiseration. Neo-Marxist theorists call it precarity. And while there’s truth in both those ideas and perspectives, I think they miss three vital points.

We don’t see America as a poor country, but we should begin to. Americans live fairly abysmal lives — short, lonely, unhappy, full of work and stress and despair, compared to their peers. That is because they cannot afford better ones — predatory capitalism coupled with total economic mismanagement of social investments has made the basics of life ruinously unaffordable. In this way, it’s effectively a poor country — yes, there’s a tiny number of ultra-rich, but they are outliers now, off the map of the normal. Because it’s not just any kind of poverty, yesterday’s poverty, or even poverty as we are used to thinking about it.

America is pioneering a new kind of poverty. The kind of poverty that’s developed in America isn’t just bizarre and gruesome — it’s novel and unseen. It isn’t something that we understand well, economists, intellectuals, thinkers, because we have no good framework to think about it. It’s not absolute poverty like Somalia, and it’s not just relative poverty, like in gilded banana republics. It’s a uniquely American creation. It’s extreme capitalism meets Social Darwinism by way of rugged self-reliance crossed with puritanical cruelty.

The kind of poverty America’s pioneering today isn’t absolute, or even relative , but something more like perfectly tuned poverty, strategic poverty, basic poverty— nominally well-off people whose money doesn’t go far enough to make them actually live well, constantly living at the edge of ruin, and thus forced to choke down their bitter anger and serve the very systems which oppress and subjugate with more and more indignity and fear and servility by the year.

America’s still an innovator today. Unfortunately, what it’s innovating now is a new kind of poverty. Yet poverty is poverty. What happens in societies where poverty is growing? Authoritarianism rises, as people lose faith in democracy, which can’t seem to offer them working social contracts. Authoritarian soon enough becomes fascism — “this country, this land, its harvest — it is only for the true volk!”, the cry goes up, when there is not enough to go around. And the rest of the dark and grim story of the fall into the abyss you should know well enough by now. It ends in words we do not say.

Still, history, laughing, has told this tale to us many times. And it is telling it to tomorrow, again, in the tale of American collapse.

Neo-Liberalism and the Retreat of Democracy

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By David Schultz

Source: CounterPunch

Democracy across the world is under siege. This according to the latest Freedom House report documenting that for 2017, “democracy faced its most serous crisis in decades” as seventy-one countries experienced declines in freedom or fair government, including the United States, and only thirty-five an improvement. This was the twelfth consecutive year of decline in democracy world-wide.

The question is why? Why has confidence in democracy retreated? Freedom House does not provide an answer, but there is a reason. It is democracy’s marriage to neo-liberal capitalism has fostered the conditions leading to its own undoing, similar to the way Karl Marx once described in the Communist Manifesto the “gravedigger thesis” (What the Bourgeoisie therefore produces, above all, are its own grave diggers”) where capitalism would produce the conditions that would undermine its own existence.

From the 1960s until the early 1990s democracy was in the upswing internationally. African de-colonization produced initially popularly elected governments. In South America the demise of strongmen led to a wave of democratic regimes. And the fall of the Berlin Wall in 1989 and the break up of the USSR in 1991 produced the dismantling of communist authoritarian or totalitarian governments that made it possible for Francis Fukuyama to proclaim that democracy had won and emerged as the last grand global political meta-narrative.

Yet several problems upset this rosy picture. Most prominently, it was the marriage of these new emerging democracies with free market capitalism and the victory of neo-liberalism. Internationally as post-colonial and post-communist countries emerged, international organizations such as the World Bank and the IMF forced them to adopt market reforms, often pushing them into what was then called “shock therapy.” Shock therapy involved rapid privatization of state owned enterprises and rapid dismantling of welfare states. This shock therapy was often accompanied by significant corruption as a few rich oligarchs emerged who came to own these newly privatized state enterprises.

Simultaneously, emerging democracies were rapidly pushed into what sociologist Immanuel Wallerstein would call the world-capitalist system. This system turned politically to right in the 1970s and 1980s as Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States pushed neo-liberalism or market fundamentalism as an alternative to the Keynesian welfare state that had dominated the west since the 1930s. It was adopted both for ideological reasons and because of what political economist James O’Connor would call the fiscal crisis of the state tht affect economics across the world in the 1970s. This was a crisis of declining profit among private businesses and therefore declining revenue for states to fund welfare programs. Something had to give, and it was the welfare state.

Neo-liberalism is a political economic theory of the state committed to the laissez-faire market fundamentalism ideology that traces back to Adam Smith and David Ricardo. It includes a belief in comparative advantage, a minimalist state, and market freedom, and is, as articulated in the 1990s and 2000s, driven by finance capital. At the state level, neo-liberalism defines a theory of public administration. If neo-liberalism includes a commitment to market fundamentalism, then that also means that it is dedicated to a politics of limited government. This includes privatization, deregulation, and a scaling back of many traditional functions that capitalist and communist states had performed since at least World War II. But neo-liberalism as a theory transcends the state, providing also an international economic theory committed to free trade and globalism.

This emergence of neo-liberalism in the 1970s and its linkage to democracy is central to the crisis affecting the latter. As neo-liberalism retrenched the welfare state and pushed globalism it was accompanied by a dramatic increase in economic inequality in the world, as Thomas Piketty has pointed out. This occurred in the US and much of the western world. But it also impacted newly emerging democracies in Africa, Eastern Europe, and South America. Pressures for shock therapy market reforms, austerity, and open borders meant export of jobs to other countries, dismantling of social safety nets, and other economic pressures placed on governments and ruling parties.

Politically voters turned on globalism and free trade. This happened here with Trump voters in 2016, but also in Brexit in the UK. But many voters also blamed immigrants for the loss of jobs or social unrest in places ranging from France, to Italy, to Hungary. The increasing economic gap between rich and poor and, more importantly, the erosion of the economic conditions of the working class soured them on democracy. This paved the way for the emergence of strongmen as political leaders, the rise of far-right nationalist parties, and disenchantment with democracy and democratic structures to deliver the economic goods.

What we see today then in terms of the decline in support for democracy across the world is a product of its marriage to neo-liberalism. Capitalism and democracy always had an uneasy co-existence, but the neo-liberal democracy variant demonstrates the powerful contradictions in them. Either their linkage is producing outright rejection of democracy or a populist, rightist version that is merely democracy in form but not in substance.

USA in a Debt Trap Death Spiral

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By F. William Engdahl

Source: New Eastern Outlook

The US economy and its financial structures have never recovered from the great financial meltdown of 2008 despite the passage of ten years. Little discussion has been given to the fact that the Republican Congress last year abandoned the process of mandatory budget cuts or automatic sequestration that had been voted in a feeble attempt to rein in the dramatic rise in US government debt. That was merely an added factor in what soon will be recognized as a classic debt trap. What is now looming over not just the US economy but also the global financial system is a crisis that could spell the end of the post-1944 dollar system.

First some basic background. When President Nixon, on advice of Paul Volcker, then at US Treasury, announced on August 15, 1971 the unilateral end of the Bretton Woods gold-dollar system, to replace it with a floating dollar, Washington economists and Wall Street bankers realized that the unique role of the US dollar as leading reserve currency held by all central banks and the currency for world commodity and other trade, especially oil, gave them something that appeared to be a gift from monetary heaven.

So long as the world needed US dollars, Washington could run government deficits without end. Foreign central banks, especially the Bank of Japan in the 1980’s and since the turn of the century, the Peoples’ Bank of China, would have little choice but to reinvest their surplus trade dollar earnings in interest-bearing AAA-rated US Treasury securities. This perverse dollar system allowed Washington to finance its wars in faraway places like Afghanistan or Iraq with other peoples’ money. During the Administration of George W. Bush, when Washington’s annual budget deficit exceeded annually one trillion dollars, Vice President Dick Cheney cynically quipped, “debt doesn’t matter; Reagan proved that.” Up to a point that appeared so. Now we are getting dangerously near to that “point” where debt does matter.

Federal Debt Rise

There are generally speaking three major divisions of debt measured in the US economy: Federal debt of Washington, corporate debt and private household debt. Today, owing in large part to ten years of historic low interest rates following the largest financial crisis in history–the 2007-2008 sub-prime crisis that became a global systemic crisis after September 2008–all three sectors have borrowed as if there was no tomorrow because of the near-zero Federal Reserve interest rates and their various Quantitative Easings. Nothing so radical can last forever.

Since the financial crisis erupted in 2008 US Federal debt has more than doubled from $10 trillion to over $21 trillion today. Yet conditions were made manageable by a Federal Reserve emergency policy that dealt with the financial and banking crisis by buying almost $500 billion annually of that debt. Much of the remainder was bought by China, Japan and even Russia and Saudi Arabia. Further debt levels were restrained by the bipartisan spending caps established in the Budget Control Act of 2011 that had kept recent deficits partially in check.

Now conditions of future US Federal debt and deficit growth are pre-programmed for systemic crisis over the next several years.

‘Trumponomics’ Disaster

The economics of the Trump Tax Cuts Act of 2017, signed in December, dramatically cut certain taxes on business corporations from 35% to 21%, but did not offset that with revenue increases elsewhere. The promise is that cheaper taxes will spur economic growth. This is a myth under present economic conditions and overall public and private debt burdens. Instead, the new tax law, assuming ideal economic conditions, will decrease expected revenues by a total of $1 trillion over the next 10 years. If the economy goes into severe recession, highly likely, tax revenues will plunge and the deficits will explode even more.

What the new Trump tax cut act will do is dramatically increase the size of the US annual budget deficit. The Congressional Budget Office estimates that as early as Fiscal Year 2019 the annual deficit that must be financed by debt will reach $1 trillion. Then the Treasury Borrowing Advisory Committee expects government debt issues of $ 955 billion for FY2018, compared with $ 519 billion in FY 2017. Then for FY 2019 and 2020 the deficit will exceed $1 trillion. By 2028, ten years from now, under mild economic assumptions, the size of the USA Federal debt will rise to an untenable $34 trillion from roughly $21 trillion today, and the deficit in 2028 will exceed $1.5 trillion. And this year 2018 alone, with historically low interest rates the cost of interest only on the total Federal debt will reach $500 billion.

Zombie borrowers…time bombs

Now after almost a decade of unprecedented low interest rates to bail out Wall Street and create new asset inflation in stocks, bonds and housing, the Fed is in the early stages of what some call QT or Quantitative Tightening. Interest rates are rising and have been for the past year, so far very gradually as the Fed is being cautious. The Fed however is continuing to raise rates, and now the Fed Funds stands at 1.75% after nearly ten years at effectively zero. Were they to stop now it would signal a market panic that the Fed knew something far worse than they say.

Because never in its history has the Federal Reserve indulged in such a monetary experiment with so low rates so long, the effects of reversing are going to be as well unprecedented. At the onset of the 2008 financial crisis the Fed rates were around 5%. That is what the Fed is aiming at to return to “normal.” However, with rising interest rates, the lowest credit sector, so-called non-investment grade or “junk bonds” face domino style defaults.

Moody’s Credit Rating has just issued a warning that, barring some sort of miracle, as US interest rates rise, and they are, as much as 22% of US corporations that are being kept alive borrowing at historically low interest, not only in shale oil but in construction and utilities, so-called “zombie” corporations, will face an avalanche of mass defaults on their debt. Moody’s writes that, “low interest rates and investor appetite for yield has pushed companies into issuing mounds of debt that offer comparatively low levels of protection for investors.” The Moody’s report goes on to state some alarming numbers: since 2009, the level of global non-financial junk-rated companies has soared by 58%, representing $3.7 trillion in outstanding debt, the highest ever. Some 40%, or $2 trillion, are rated B1 or lower. Since 2009, US corporate debt has increased by 49%, hitting a record total of $8.8 trillion. Much of that debt has been used to fund stock repurchases by the companies to boost their stock price, the main reason for the unprecedented Wall Street stock market bubble.

Fully 75% of federal spending is economically non-productive including military, debt service, social security. Unlike during the 1930s Great Depression when levels of Federal debt were almost nil, today the debt is 105% of GDP and rising. Spending on national economic infrastructure including the Tennessee Valley Authority and a network of federally-build dams and other infrastructure resulted in the great economic boom of the 1950s. Spending $1.5 trillion on a dysfunctional F-35 all-purpose fighter jet program won’t do it.

Into this precarious situation Washington is doing its very best to antagonize the very countries that it needs to finance these deficits and buy the US debt—China, Russia and even Japan. As financial investors demand more interest to invest in US debt, the higher rates will trigger the default avalanche Moody’s warns. This is the real backdrop to the dangerous US foreign policy actions of the recent period. No one in Washington seems to care and that’s the alarming fact.

The Coming Collapse

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By Chris Hedges

Source: Occupy.com

The Trump administration did not rise, prima facie, like Venus on a half shell from the sea. Donald Trump is the result of a long process of political, cultural and social decay. He is a product of our failed democracy. The longer we perpetuate the fiction that we live in a functioning democracy, that Trump and the political mutations around him are somehow an aberrant deviation that can be vanquished in the next election, the more we will hurtle toward tyranny. The problem is not Trump. It is a political system, dominated by corporate power and the mandarins of the two major political parties, in which we don’t count. We will wrest back political control by dismantling the corporate state, and this means massive and sustained civil disobedience, like that demonstrated by teachers around the country this year. If we do not stand up we will enter a new dark age.

The Democratic Party, which helped build our system of inverted totalitarianism, is once again held up by many on the left as the savior. Yet the party steadfastly refuses to address the social inequality that led to the election of Trump and the insurgency by Bernie Sanders. It is deaf, dumb and blind to the very real economic suffering that plagues over half the country. It will not fight to pay workers a living wage. It will not defy the pharmaceutical and insurance industries to provide Medicare for all. It will not curb the voracious appetite of the military that is disemboweling the country and promoting the prosecution of futile and costly foreign wars.

It will not restore our lost civil liberties, including the right to privacy, freedom from government surveillance, and due process. It will not get corporate and dark money out of politics. It will not demilitarize our police and reform a prison system that has 25 percent of the world’s prisoners although the United States has only 5 percent of the world’s population. It plays to the margins, especially in election seasons, refusing to address substantive political and social problems and instead focusing on narrow cultural issues like gay rights, abortion and gun control in our peculiar species of anti-politics.

This is a doomed tactic, but one that is understandable. The leadership of the party, the Clintons, Nancy Pelosi, Chuck Schumer, Tom Perez, are creations of corporate America. In an open and democratic political process, one not dominated by party elites and corporate money, these people would not hold political power. They know this. They would rather implode the entire system than give up their positions of privilege. And that, I fear, is what will happen. The idea that the Democratic Party is in any way a bulwark against despotism defies the last three decades of its political activity. It is the guarantor of despotism.

Trump has tapped into the hatred that huge segments of the American public have for a political and economic system that has betrayed them. He may be inept, degenerate, dishonest and a narcissist, but he adeptly ridicules the system they despise. His cruel and demeaning taunts directed at government agencies, laws and the established elites resonate with people for whom these agencies, laws and elites have become hostile forces. And for many who see no shift in the political landscape to alleviate their suffering, Trump’s cruelty and invective are at least cathartic.

Trump, like all despots, has no ethical core. He chooses his allies and appointees based on their personal loyalty and fawning obsequiousness to him. He will sell anyone out. He is corrupt, amassing money for himself—he made $40 million from his Washington, D.C., hotel alone last year—and his corporate allies. He is dismantling government institutions that once provided some regulation and oversight. He is an enemy of the open society. This makes him dangerous. His turbocharged assault on the last vestiges of democratic institutions and norms means there will soon be nothing, even in name, to protect us from corporate totalitarianism.

But the warnings from the architects of our failed democracy against creeping fascism, Madeleine Albright among them, are risible. They show how disconnected the elites have become from the zeitgeist. None of these elites have credibility. They built the edifice of lies, deceit and corporate pillage that made Trump possible. And the more Trump demeans these elites, and the more they cry out like Cassandras, the more he salvages his disastrous presidency and enables the kleptocrats pillaging the country as it swiftly disintegrates.

The press is one of the principal pillars of Trump’s despotism. It chatters endlessly like 18th-century courtiers at the court of Versailles about the foibles of the monarch while the peasants lack bread. It drones on and on and on about empty topics such as Russian meddling and a payoff to a porn actress that have nothing to do with the daily hell that, for many, defines life in America. It refuses to critique or investigate the abuses by corporate power, which has destroyed our democracy and economy and orchestrated the largest transfer of wealth upward in American history.

The corporate press is a decayed relic that, in exchange for money and access, committed cultural suicide. And when Trump attacks it over “fake news,” he expresses, once again, the deep hatred of all those the press ignores. The press worships the idol of Mammon as slavishly as Trump does. It loves the reality-show presidency. The press, especially the cable news shows, keeps the lights on and the cameras rolling so viewers will be glued to a 21st-century version of “The Cabinet of Dr. Caligari.” It is good for ratings. It is good for profits. But it accelerates the decline.

All this will soon be compounded by financial collapse. Wall Street banks have been handed $16 trillion in bailouts and other subsidies by the Federal Reserve and Congress at nearly zero percent interest since the 2008 financial collapse. They have used this money, as well as the money saved through the huge tax cuts imposed last year, to buy back their own stock, raising the compensation and bonuses of their managers and thrusting the society deeper into untenable debt peonage. Sheldon Adelson’s casino operations alone got a $670 million tax break under the 2017 legislation. The ratio of CEO to worker pay now averages 339 to 1, with the highest gap approaching 5,000 to 1.

This circular use of money to make and hoard money is what Karl Marx called “fictitious capital.” The steady increase in public debt, corporate debt, credit card debt and student loan debt will ultimately lead, as Nomi Prins writes, to “a tipping point—when money coming in to furnish that debt, or available to borrow, simply won’t cover the interest payments. Then debt bubbles will pop, beginning with higher yielding bonds.”

An economy reliant on debt for its growth causes our interest rate to jump to 28 percent when we are late on a credit card payment. It is why our wages are stagnant or have declined in real terms—if we earned a sustainable income we would not have to borrow money to survive. It is why a university education, houses, medical bills and utilities cost so much. The system is designed so we can never free ourselves from debt.

However, the next financial crash, as Prins points out in her book “Collusion: How Central Bankers Rigged the World,” won’t be like the last one. This is because, as she says, “there is no Plan B.” Interest rates can’t go any lower. There has been no growth in the real economy. The next time, there will be no way out. Once the economy crashes and the rage across the country explodes into a firestorm, the political freaks will appear, ones that will make Trump look sagacious and benign.

And so, to quote Vladimir Lenin, what must be done?

We must invest our energy in building parallel, popular institutions to protect ourselves and to pit power against power. These parallel institutions, including unions, community development organizations, local currencies, alternative political parties and food cooperatives, will have to be constructed town by town. The elites in a time of distress will retreat to their gated compounds and leave us to fend for ourselves. Basic services, from garbage collection to public transportation, food distribution and health care, will collapse. Massive unemployment and underemployment, triggering social unrest, will be dealt with not through government job creation but the brutality of militarized police and a complete suspension of civil liberties.

Critics of the system, already pushed to the margins, will be silenced and attacked as enemies of the state. The last vestiges of labor unions will be targeted for abolition, a process that will soon be accelerated given the expected ruling in a case before the Supreme Court that will cripple the ability of public-sector unions to represent workers. The dollar will stop being the world’s reserve currency, causing a steep devaluation. Banks will close. Global warming will extract heavier and heavier costs, especially on the coastal populations, farming and the infrastructure, costs that the depleted state will be unable to address. The corporate press, like the ruling elites, will go from burlesque to absurdism, its rhetoric so patently fictitious it will, as in all totalitarian states, be unmoored from reality. The media outlets will all sound as fatuous as Trump. And, to quote W.H. Auden, “the little children will die in the streets.”

As a foreign correspondent I covered collapsed societies, including the former Yugoslavia. It is impossible for any doomed population to grasp how fragile the decayed financial, social and political system is on the eve of implosion. All the harbingers of collapse are visible: crumbling infrastructure; chronic underemployment and unemployment; the indiscriminate use of lethal force by police; political paralysis and stagnation; an economy built on the scaffolding of debt; nihilistic mass shootings in schools, universities, workplaces, malls, concert venues and movie theaters; opioid overdoses that kill some 64,000 people a year; an epidemic of suicides; unsustainable military expansion; gambling as a desperate tool of economic development and government revenue; the capture of power by a tiny, corrupt clique; censorship; the physical diminishing of public institutions ranging from schools and libraries to courts and medical facilities; the incessant bombardment by electronic hallucinations to divert us from the depressing sight that has become America and keep us trapped in illusions. We suffer the usual pathologies of impending death. I would be happy to be wrong. But I have seen this before. I know the warning signs. All I can say is get ready.

Assets of world’s “high net wealth” millionaires surged to $70 trillion in 2017

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By Barry Grey

Source: WSWS.org

The concentration of the planet’s wealth in the hands of a narrow financial elite is growing by leaps and bounds. A new report published Tuesday reveals that the wealth of the world’s 18.1 million “high net worth individuals”—those having investable assets of $1 million or more—shot up by 10.6 percent last year to top $70 trillion for the first time ever.

The “World Wealth Report 2018,” issued by the consulting firm Capgemini, revealed that the combined wealth of the world’s millionaires rose for the sixth consecutive year in 2017 to reach $70.2 trillion. It is on target to surpass $100 trillion by 2025.

Capgemini defines a high net wealth individual (HNWI) as someone with assets above $1 million, excluding his or her primary residence, collectibles, consumables and consumer durables. This defines a wealthy elite that owns more than $1 million in stocks, bonds, real estate or other investments.

The number of HNWIs grew almost 10 percent, or 1.6 million. The United States, Japan, Germany and China are the four largest markets for millionaires, accounting for 61 percent of the world’s HNWIs. The US tops the list with 5.3 million HNWIs, a 10 percent increase from 2016.

However, the Asia-Pacific region has most of these millionaires overall and accounted for the bulk of the increase in both the number of HNWIs (74.9 percent of the total) and the rise in their global wealth (68.8 percent). Economic inequality appears to be rising faster in this region than any other. Japan saw a 9 percent increase in HNWI millionaires, China an 11 percent rise and India a stunning 20 percent increase.

The financial oligarchy itself resides within what the report calls “ultra-high net wealth individuals,” those with $30 million or more in investable assets. They comprise only 1 percent of HNWIs, or 174,000 individuals, but they account for a vastly disproportionate share of the overall wealth of HNWI millionaires, as well as the increase in HNWI wealth. These ultra-HNWIs own some 35 percent of total NHWI wealth. In 2017, their ranks grew by 11.2 percent and their wealth by 12 percent, reaching $24.5 trillion.

The main factor driving the rapid enrichment of the financial aristocracy is the record rise in stock prices. “High net worth individuals around the world enjoyed investment returns above 20 percent for the second year in a row,” Anirban Bose, head of Capgemini’s financial services global strategic business unit, wrote in the report’s preface. The report noted that global market capitalization grew 21.8 percent in 2017.

The stock market has served as the primary mechanism for central banks and governments around the world to increase the wealth of the financial oligarchy, which dominates the world economy and all of the official institutions of society and dictates the policies of governments. For decades, the central banks, led by the US Federal Reserve, working in tandem with governments of the nominal “left” no less than the right, have deliberately engineered a vast transfer of wealth from the working class to the ruling elite by pursuing policies designed to pump up the financial markets.

These polices have been intensified since the 2008 financial crash. The Fed and the US government, first under Bush and then Obama, responded to the Wall Street meltdown by enacting measures to ensure that the oligarchs recouped all of their losses and were able to exploit the crisis to further enrich themselves. In addition to bailing out the banks and hedge funds with trillions of dollars in tax-payer money, they provided virtually free credit to Wall Street by means of near-zero interest rates and used “quantitative easing”—a euphemism for money-printing—to offload the banks’ bad loans onto the Fed’s balance sheet.

From the low-point of the post-crash recession in March 2009 to the present, US stock prices have risen four-fold, stoking a similar stock bonanza internationally.

This stock market boom and the entire process of social plunder have depended on the suppression of working class opposition and a savage attack on workers’ living standards by means of austerity and wage-cutting. The throttling of the class struggle has been contracted out to the trade unions, the industrial police agencies of the ruling class.

One of the most significant findings in the Capgemini report is that the total financial wealth of the world’s HNWIs more than doubled between 2008 and 2017, rising from $32.8 trillion to $70.2 trillion. This same period has seen, in the world inhabited by the vast majority of humans, a growth of poverty, hunger, homelessness, disease and, in the United States, a decline in life expectancy, a surge in infant and maternal mortality, and record rates of suicide and drug addiction.

This attack has continued and intensified under Trump, as well as governments in Europe, Latin America and Asia. Just last week the Federal Reserve raised interest rates and announced a tightening of monetary policy in response to the growth of workers’ strikes and protests. The oligarchy is petrified that lower unemployment and a tight labor market will encourage a militant wages movement that would undercut the entire basis of the stock market surge. It is moving to slow the economy and drive up unemployment.

To place the wealth of the world’s multi-millionaires and billionaires in perspective, the total of $24.5 trillion owned by “ultra-high net wealth individuals” is almost one-fifth of the world gross domestic product of $135 trillion.

$24.5 trillion is more than the GDP of the United States. It is more than the combined GDPs of the next three countries—China, Japan and Germany.

Just the global increase in ultra-HNWI wealth in 2017, $2.6 trillion, is larger than the GDPs of countries such as Italy, Brazil, Canada and Russia.

What could this money be used for were it not squandered to satisfy the demands of the rich and the super-rich for mansions, private jets and yachts? To give an example, the United Nations estimates it would cost $30 billion a year to eradicate world hunger. That means the money currently controlled by the world’s ultra-HNWIs could eliminate world hunger for 817 years.

The “World Wealth Report 2018” is only the latest in a wave of studies documenting the ever tightening grip of a tiny financial oligarchy and its ultra-wealthy periphery over the world’s resources. Wealth concentration on such a scale makes it impossible to seriously address a single social issue. The staggering diversion of resources into private wealth accumulation by the financial oligarchy starves society of the resources it needs to deal with the most basic problems.

The working class has no choice but to confront head-on the problem of economic inequality. The financial elite enforces its social interests through the wholesale buying of political parties and politicians, making democracy under capitalism nothing but a hollow shell. Any attempt within the framework of the profit system to carry out a modest reallocation of resources to ensure that all people had the basic rudiments of nutrition, health care and education would provoke a furious response from the oligarchy, which has at its disposal not only the courts, politicians and mass media, but, even more decisively, the police and the army.

When social reform becomes impossible, social revolution becomes inevitable. There is no avoiding the conclusion that it is necessary to expropriate the wealth of the financial oligarchs.