A Universal Basic Income Is The Bipartisan Solution To Poverty We’ve Been Waiting For

Posted on June 1, 2016 by Reid Mukai

What if the government simply paid everyone enough so that no one was poor? It’s an insane idea that’s gaining an unlikely alliance of supporters.

By Ben Schiller

There’s a simple way to end poverty: the government just gives everyone enough money, so nobody is poor. No ifs, buts, conditions, or tests. Everyone gets the minimum they need to survive, even if they already have plenty.

This, in essence, is “universal minimum income” or “guaranteed basic income”—where, instead of multiple income assistance programs, we have just one: a single payment to all citizens, regardless of background, gender, or race. It’s a policy idea that sounds crazy at first, but actually begins to make sense when you consider some recent trends.

The first is that work isn’t what it used to be. Many people now struggle through a 50-hour week and still don’t have enough to live on. There are many reasons for this—including the heartlessness of employers and the weakness of unions—but it’s a fact. Work no longer pays. The wages of most American workers have stagnated or declined since the 1970s. About 25% of workers (including 40% of those in restaurants and food service) now need public assistance to top up what they earn.

The second: it’s likely to get worse. Robots already do many menial tasks. In the future, they’ll do more sophisticated jobs as well. A study last year from Carl Frey and Michael Osborne at Oxford University found that 47% of jobs are at risk of computerization over the next two decades. That includes positions in transport and logistics, office and administration, sales and construction, and even law, financial services and medicine. Of course, it’s possible that people who lose their jobs will find others. But it’s also feasible we’re approaching an era when there will simply be less to do.

The third is that traditional welfare is both not what it used to be and not very efficient. The value of welfare for families with children is now well below what it was in the 1990s, for example. The move towards means-testing, workfare—which was signed into law by Bill Clinton in 1996—and other forms of conditionality have killed the universal benefit. And not just in the U.S. It’s now rare anywhere in the world that people get a check without having to do something in return. Whatever the rights and wrongs of this, that makes the income assistance system more complicated and expensive to manage. Up to up to 10% of the income assistance budget now goes to administrating its distribution.

For these reasons and others, the idea of a basic income for everyone is becoming increasingly popular. There has been a flurry of reports and papers about it recently, and, unusually, the idea has advocates across the political spectrum.

The libertarian right likes basic income because it hates bureaucracy and thinks people should be responsible for themselves. Rather than giving out food stamps and health care (which are in-kind services), it thinks people should get cash, because cash is fungible and you do what you like with it.

The left likes basic income because it thinks society is unequal and basic income is redistributive. It evens up the playing field for people who haven’t had good opportunities in life by establishing a floor under the poorest. The “precariat” goes from being perpetually insecure to knowing it has something to live on. That, in turn, should raise well-being and produce more productive citizens.

The technology elite, like Netscape’s Marc Andreessen, also likes the idea. “As a VC, I like the fact that a lot of the political establishment is ignoring or dismissing this idea,” Albert Wenger, of Union Square Ventures, told a TED audience recently, “because what we see in startups is that the most powerful innovative ideas are ones truly dismissed by the incumbents.” A minimum income would allow us to “embrace automation rather than be afraid of it” and let more of us participate in the era of “digital abundance,” he says.

The exact details of basic income still need to be worked out, but it might work something like this: Instead of welfare payments, subsidies for health care, and tax credits for the working poor, we would take that money and use it to cover a single payment that would give someone the chance to live reasonably. Switzerland ~~recently held an (unsuccessful)~~ is planning to hold a referendum on a basic income this year, though no date is set. The proposed amount is $2,800 per month.

But would it actually work? The evidence from actual experiments is limited, though it’s more positive than not. A pilot in the 1970s in Manitoba, Canada, showed that a “Mincome” not only ended poverty but also reduced hospital visits and raised high-school completion rates. There seemed to be a community-affirming effect, which showed itself in people making use of free public services more responsibly.

Meanwhile, there were eight “negative income tax” trials in the U.S. in the ’70s, where people received payments and the government clawed back most of it in taxes based on your other income. The results for those trials was more mixed. They reduced poverty, but people also worked slightly less than normal. To some, this is the major drawback of basic income: it could make people lazier than they would otherwise be. That would certainly be a problem, though it’s questionable whether, in the future, there will be as much employment anyway. The age of robots and artificial intelligence seems likely to hollow out many jobs, perhaps changing how we view notions of laziness and productivity altogether.

Experiments outside the U.S. have been more encouraging. One in Namibia cut poverty from 76% to 37%, increased non-subsidized incomes, raised education and health standards, and cut crime levels. Another involving 6,000 people in India paid people $7 month—about a third of subsistence levels. It, too, proved successful.

“The important thing is to create a floor on which people can start building some security. If the economic situation allows, you can gradually increase the income to where it meets subsistence,” says Guy Standing, a professor of development studies at the School of Oriental and African Studies, in London, who was involved with the pilot. “Even that modest amount had incredible effects on people’s savings, economic status, health, in children going to school, in the acquisition of items like school shoes, so people felt in control of their lives. The amount of work people were doing increased as well.”

Given the gridlock in Congress, it’s unlikely we’ll see basic income here for a while. Though the idea has supporters in both left and right-leaning think-tanks, it’s doubtful actual politicians could agree to redesign much of the federal government if they can’t agree on much else. But the idea could take off in poorer countries that have more of a blank slate and suffer from less polarization. Perhaps we’ll re-import the concept one day once the developing world has perfected it?

The Man Who Bought the Clintons: the Political Business of Terry McAuliffe

Posted on May 24, 2016 by Reid Mukai

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(Editor’s note: In light of yesterday’s announcement that Hillary Clinton’s former campaign chairman Terry McAuliffe is being investigated by federal prosecutors for illegal foreign campaign donations made directly to him and through the Clinton Foundation, it’s worth revisiting this article from 10/15 to learn more about his shady history.)

By Jeffrey St. Clair

Source: CounterPunch

In May 1999, the Labor Department brought suit against Jack Moore and John Grau, charging the two men with mismanaging the pension fund for the International Brotherhood of Electrical Workers. Moore was the longtime secretary of the union, while Grau was the vice-president of the National Electrical Contractor’s Association, which was partner in the fund. At issue was a series of sweetheart real estate deals in central Florida, which regulators labeled “imprudent”, and cost the fund money. Moore and Grau eventually settled the case for more than six figures. The union was forced to kick in another $5 million to cover the losses to the pension fund. The person at the center of the scandal, however, made out in the deal very well, indeed. His name: Terry McAuliffe, former head of the DNC, now governor of Virginia.

McAuliffe met Moore in 1988, when both were raising money for the doomed presidential bid of Dick Gephardt. They became close friends, allies in a campaign to redesign the Democratic Party into a more moderate political vessel, along the lines of the pre-Reagan Republicans. Moore controlled the $6 billion IBEW pension fund and had a reputation for investing money in businesses run by friends and political cronies.

So it was that in November 1990, McAuliffe approached Moore and his friend Grau with a proposal for a real estate partnership in central Florida with an investment company called American Capital Management, which McAuliffe owned with his wife Dorothy. The deal involved the purchase of the Woodland Square Shopping Center and five apartment complexes outside Orlando, Florida. It was a lopsided partnership. The pension fund put up $39 million to purchase the property. McAuliffe shelled out $100, yet he and his wife enjoyed 50 percent ownership in the project. He eventually parlayed his $100 investment into a $2.45 million profit.

Fresh from this triumph, McAuliffe approached Moore with a new proposal. He asked Moore to dip into the pension fund one more time for $6 million so that he could purchase a parcel of land south of Orlando called Country Run, which McAuliffe planned to subdivide into 500 single-family homes. Moore obliged and loaned McAuliffe the money. The development soon proved to be a bust. Only half the homes were built and many of them didn’t sell. Years passed, but McAuliffe never bothered to make a single payment to the pension fund on the loan. According to Labor Department records, McAuliffe was in default from December 1992 through October 1997. The managers of the pension fund never demanded payment or called in the loan. The only collateral they had required was the nearly worthless Country Run property itself.

Eventually, McAuliffe found a buyer for the property and repaid the loan. But the aroma of the deals attracted the attention of the Labor Department, which had been looking into the looting of worker pension funds. In May of 1999, the agency brought a suit against Moore and Grau for mismanagement of the fund. Both eventually settled, agreeing to six figure fines, and resigned their positions. The IBEW was compelled to reimburse the pension fund to the tune of five million dollars. The Labor Department didn’t have any authority to go after McAuliffe. That was up to the Clinton Justice Department and they took a pass. He wasn’t sued or otherwise inconvenienced. So a labor fund got looted and Terry McAuliffe got very rich.

This wasn’t the only time McAuliffe steered a labor union toward dangerous legal and financial shoals. In 1996, McAuliffe helped devise a political money-cycling scheme that led to the downfall of several leaders of the Teamster’s Union, including the union’s reform-minded president Ron Carey and his political director William Hamilton. At Hamilton’s trial on corruption charges, Richard Sullivan, the former director of finance for the Democratic National Committee, testified that McAuliffe asked Sullivan and other top DNC fundraisers to approach big Democratic donors who could make a contribution of at least $50,000 to the re-election campaign of Ron Carey, then in a pitched battle with James Hoffa, Jr. Under McAuliffe’s scheme, Sullivan testified, the Teamster’s Union would later recycle that $50,000 back into various Democratic Party accounts. Once again, McAuliffe was never charged with wrongdoing and his lawyer, Richard Ben-Veniste, repeatedly said there’s was nothing illegal in his client’s plan. He lives a charmed life.

* * *

Terry McAuliffe was born in 1957 in Syracuse, New York. His father was a longtime Democratic powerbroker in upper state New York and a top fundraiser for the party. Terry got into politics at a young age. But as anyone can tell there’s not much evidence that he was ever excited about policy issues. The environment, abortion rights, civil rights, peace. These great issues didn’t turn Terry on. Instead, he was entranced by the mechanics of political fundraising, party planning and schmoozing with business elites and Hollywood celebrities.

He made a beeline for the Beltway, attending Catholic University. Through his father’s influence, he got a position as a fundraiser for Jimmy Carter. And then he was off and running, renting his financial services to House and senate races and gubernatorial elections.

In the meantime, McAuliffe managed to earn the obligatory law degree from Georgetown University. Then in 1984, he began to fine-tune his craft under the wing of Tony Coelho, the longtime House whip and master fundraiser from California. At the time, Coelho was heading up the Democratic Congressional Campaign Committee, the main DNC fundraising apparatus for House races.

More than anyone, Coelho laid the foundations for the Democratic Party’s open courting of big business. And Terry McAuliffe, working from the master’s Rolodex, served as Coelho’s chief apprentice, sprinting from one Beltway lobby shop to the next offering prime access to Democratic powerbrokers for political cash, hard and soft money, the new coin of the realm.

The young fundraiser learned an early lesson. No enterprise was off-limits, no matter how tarnished the reputation of the company: weapons-makers, oil companies, chemical manufacturers, banks, sweatshop tycoons. Indeed, McAuliffe made his mark by targeting corporations with festering problems, ranging from liability suits to environmental and worker safety restraints to bothersome federal regulators. The more desperate these enterprises were for political intervention, the more money McAuliffe knew he could seduce into DNC coffers. What about environmental groups? Big labor? The traditional core of the Democratic Party? Not only didn’t their objections (assuming they voiced any) matter, they actually made McAuliffe’s pitch more appealing to the corporadoes. After all, the Republicans didn’t have any sway over these organizations. Triangulation, the backstabbing political playbook of Clintontime, originated as a fundraising gimmick. A very lucrative one.

In the early 90s, really big money began to pour into the DNC. McAuliffe recruited robust donations from Arco and Chevron, Entergy and Enron, Phillip Morris and Monsanto, Boeing and Lockheed, Citibank and Weyerhaeuser. Many of these corporations had all but abandoned the Democrats during the Reagan era. McAuliffe lured them back with promises of favorable treatment by a new generation of anti-regulatory Democrats attuned to the special needs of multinational corporations. This was the mulch bed from which the Clinton presidency took root.

By 1994, Clinton himself had aligned himself to McAuliffe’s magic touch. He tapped him as the chief fundraiser for the 1996 reelection campaign. In this capacity, McAuliffe masterminded some of the more risqué political fundraising operations since the Kennedy era. There were the fundraisers at Buddhist temples in California. There were the notorious coffee klatches, where for a six-figure contribution to the DNC, corporate executives were brought to the White House for some face-time with Bill and Hillary, Al and Tipper, and a retinue of cabinet secretaries, with pen in hand ready to address any nagging problem. McAuliffe also devised the plan to rent out the Lincoln Bedroom to top contributors for slumber parties with the president.

Over the course of the next six years, McAuliffe was personally responsible for raising, largely from corporate sources, more than $300 million for the DNC.

* * *

The scene: the MCI Center in Washington, D.C. The date: May 14, 2000. The Event: “BBQ and Blue Jeans Gala.” It’s Terry McAuliffe’s biggest party yet. A star-studded gathering of DC lobbyists, corporate executives and Hollywood liberals, all in dressed in blue jeans, eating BBQ and listening to the blues and country music. It was also the single biggest fundraiser in history. More than $25 million was raised for the DNC in a single night.

Toward the end of the evening, Al Gore lumbered his way onto the stage and seized the microphone. He directed the spotlight turned on McAuliffe, the real star of the evening. “Terry”, Gore said, “You are the greatest fundraiser in the history of the universe.” The crowd thundered with applause for the man who had just lightened their wallets of several thousands of dollars.

Gore would soon come to rue those fervent words. While most Democrats blamed Katherine Harris or the Supreme Court for the loss of the White House to George W. Bush, McAuliffe pointed the finger at Gore. The fundraiser believed that Gore ran an inept campaign, misspending the precious millions he had worked so diligently to raise. McAuliffe detested the way that Gore distanced himself from the Clintons and refused to allow the president to campaign for him even in key southern states. Even worse from McAuliffe’s perspective, Gore had subtly dissed Clinton on the campaign trail, suggesting that he himself was a man of firmer moral sinew than the embattled president.

When Gore lost, the party fell back into the control of the Clintons and their chief emissary, Terry McAuliffe. The fundraiser swiftly took his revenge out on Gore. In late January, as the moving vans where pulling away from the White House, McAuliffe planned a major send off for the Clintons at Andrews Air Base. All the top Democrats were there; many were invited to give tributes to the first couple in front of the national TV cameras. Al Gore, naturally, expected to give the keynote farewell address. But McAuliffe refused to allow Gore even near a microphone. Gore wasn’t permitted to speak a single word. “McAuliffe didn’t want Gore to speak”, a top aide at the DNC told the Washington Post. “McAuliffe didn’t even want Gore there. The send off was about good memories, success stories. And the VP wasn’t either.”

McAuliffe’s implacable loyalty to Clinton was soon rewarded. Later in 2001, Bill Clinton engineered the ouster of Joe Andrew as head of the DNC and installed McAuliffe, who only months earlier had offered to purchase the Clintons a house in Chappaqua, New York for $1.3 million, as the chief of the party. As the head of the DNC, McAuliffe was now in a position to protect the Clintons’ legacy, reward loyalists, punish party dissidents and select the next presidential nominee.

When Gore began to flirt with the notion of challenging Bush in 2004, McAuliffe went to work to kill off his campaign before it even started. He went straight to Gore’s top political sponsors and advised them to withhold funds from the Gore campaign chest. He was tremendously persuasive, convincing even some of Gore’s most loyal backers, such as financier James Tisch, to deny money to their old friend.

The sabotage of the nascent Gore 2004 campaign was just a run-up for demolition job McAuliffe directed against the unauthorized campaign of Vermont governor Howard Dean. The Dean threat had almost nothing to do with any perceived ideological heresy from the Vermonter. After all Dean was a run-of-the-mill neoliberal who pretty much aped the centrist economic policies of Clinton. The real threat posed by Dean came from his determination to raise millions in campaign contributions outside of the precincts of the DNC. McAuliffe’s control over the party stemmed from his role as the prime dispenser of campaign cash, the elixir necessary to keep political recipients loyal to the party leadership and its policies. Dean showed another way was possible and he had to be put down.

But after the Dean juggernaut was scuttled, McAuliffe reached out a helping hand to the defeated candidate. As usual, the hand proffered money. The Dean campaign was in debt, the legions of Deaniacs seething with rage over the demolition of their hero. McAuliffe offered to help pay off Dean’s debts and set up his new institute, Democracy for America. In return, Dean worked to calm his troops, imploring them not to abandon the party for the independent campaign of Ralph Nader.

* * *

Terry McAuliffe didn’t just use his business contacts to fatten the accounts of the Democratic National Committee; he also deftly exploited them to inflate his own fortune, which now nudges toward nine figures. A similar fruitful intimacy with corporate cronies led to Tony Coelho’s stunning fall from grace, but McAuliffe never looked back. His trajectory has been decidedly prosperous and, to this point, utterly immune to the slumping fortunes of the economy outside the confines of the Beltway. These days McAuliffe says he wants to resurrect the Misery Index, but he’s not acquainted with any of the numbers.

In 1996, McAuliffe met a young corporate tycoon named Gary Winnick, who had once referred to himself as the richest man in Los Angeles. Winnick ran Global Crossing, a fiber-optics company chartered in the tax-friendly haven of Bermuda. At the time McAuliffe met Winnick, Global Crossing was a privately held company, poised to cash in on the deregulation of the telecom industry and the new opportunities in China. In 1997, Winnick offered McAuliffe the opportunity to purchase $100,000 worth of Global Crossing stock.

When Global Crossing shares went public in 1998, the value of the stock soared. Operating with an acute sensitivity to the fluctuations of the market bordering on ESP, McAuliffe sold his shares at the precise moment the stock peaked. McAuliffe told the New York Times he pocketed $18 million in the deal. Within a few months, Global Crossing’s stock collapsed, the company plunged into bankruptcy and more than a third of its workforce were tossed into the ranks of the unemployed.

McAuliffe also served as an on-call DC fixer for Winnick in those optimistic days following the Clinton reelection. In early 1997, McAuliffe set up shop in an office in downtown DC owned by a Winnick company called Pacific Capital Group. According to a boastful McAuliffe, Winnick hired him as a consultant to “help work some deals” with the federal government. “Gary was looking for some political action”, McAuliffe told Worth magazine. “He wanted a stable of people around him with great contacts.”

Few people inside the Beltway enjoyed better contacts than McAuliffe, as Winnick would soon discover. At an appearance in Los Angeles later that year, Bill Clinton lavished on Winnick his personal endorsement. “Gary Winnick has been a friend of mine for some time now and I’m thrilled by the success that Global Crossing has had.”

There’s no evidence that Winnick and Clinton had even met each other before that evening. But the endorsement proved fruitful. It signaled not only Clinton’s faith in the company, but also sent a message to federal agencies that Global Crossing was a firm that they should do business with. It soon paid off. A few months later Global Crossing won a $400 million contract from the Pentagon after repeated prodding from the White House.

After the contract was awarded, McAuliffe arranged for Winnick to play a round of golf with Clinton. Shortly after the afternoon on the links, Winnick donated $1 million to the Clinton presidential library.

Winnick’s joy was short lived, however. In the winter of 2001, the Pentagon rescinded the Global Crossing deal following an investigation by the Inspector General of the Defense Department, which raised questions over how the contract was awarded and Global Crossing’s ability to fulfill its obligations. Later, the company fell into the financial death noted above.

The attack dogs in the Bush White House never really made much of McAuliffe’s ripe ties to Global Crossing. Why? Global Crossing had been almost equally generous to the Bush family.

In 1997, Global Crossing invited former President George H.W. Bush to address company executives in Tokyo, Japan. At the time, Bush’s standard speaking fee was $80,000. The morning after the speech, Bush had breakfast with Winnick. Winnick advised Bush that it would prove much more profitable for the former president to accept payment in Global Crossing stock, then privately held, than cash. Bush agreed. Soon the company went public and the value of Bush’s stock swelled to more than $14 million. Not a bad pay-off for an hour’s speech. To complete the symmetry, one of Winnick’s top executives also serves as a trustee of the G.H.W. Presidential Library Fund.

Winnick tried to cover all of his bases. Yet as with Enron and Tyco, even the most judicious dispensation of money across the political spectrum couldn’t save a company that had been looted from the inside out. Global Crossing went down and so did Winnick. But the politicians who made it all possible remain indemnified from any liability for the carnage, protected by a mutually advantageous non-aggression pact.

Never bite the hands that feed the system.

This essay will appear in “An Orgy of Thieves: Scenes from the Counter-Revolution” coming in 2016 from CounterPunch Books.

Jeffrey St. Clair is editor of CounterPunch. His new book is Killing Trayvons: an Anthology of American Violence (with JoAnn Wypijewski and Kevin Alexander Gray). He can be reached at: sitka@comcast.net.

The U.S. Military Suffers from Affluenza

Posted on May 18, 2016 by Reid Mukai

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Showering the Pentagon with Money and Praise

By William J. Astore

Source: TomDispatch.com

The word “affluenza” is much in vogue. Lately, it’s been linked to a Texas teenager, Ethan Couch, who in 2013 killed four people in a car accident while driving drunk. During the trial, a defense witness argued that Couch should not be held responsible for his destructive acts. His parents had showered him with so much money and praise that he was completely self-centered; he was, in other words, a victim of affluenza, overwhelmed by a sense of entitlement that rendered him incapable of distinguishing right from wrong. Indeed, the judge at his trial sentenced him only to probation, not jail, despite the deaths of those four innocents.

Experts quickly dismissed “affluenza” as a false diagnosis, a form of quackery, and indeed the condition is not recognized by the American Psychiatric Association. Yet the word caught on big time, perhaps because it speaks to something in the human condition, and it got me to thinking. During Ethan Couch’s destructive lifetime, has there been an American institution similarly showered with money and praise that has been responsible for the deaths of innocents and inadequately called to account? Is there one that suffers from the institutional version of affluenza (however fuzzy or imprecise that word may be) so much that it has had immense difficulty shouldering the blame for its failures and wrongdoing?

The answer is hidden in plain sight: the U.S. military. Unlike Couch, however, that military has never faced trial or probation; it hasn’t felt the need to abscond to Mexico or been forcibly returned to the homeland to face the music.

Spoiling the Pentagon

First, a caveat. When I talk about spoiling the Pentagon, I’m not talking about your brother or daughter or best friend who serves honorably. Anyone who’s braving enemy fire while humping mountains in Afghanistan or choking on sand in Iraq is not spoiled.

I’m talking about the U.S. military as an institution. Think of the Pentagon and the top brass; think of Dwight Eisenhower’s military-industrial complex; think of the national security state with all its tentacles of power. Focus on those and maybe you’ll come to agree with my affluenza diagnosis.

Let’s begin with one aspect of that affliction: unbridled praise. In last month’s State of the Union address, President Obama repeated a phrase that’s become standard in American political discourse, as common as asking God to bless America. The U.S. military, he said, is the “finest fighting force in the history of the world.”

Such hyperbole is nothing new. Five years ago, in response to similar presidential statements, I argued that many war-like peoples, including the imperial Roman legions and Genghis Khan’s Mongol horsemen, held far better claims to the “best ever” Warrior Bowl trophy. Nonetheless, the over-the-top claims never cease. Upon being introduced by President Obama as his next nominee for secretary of defense in December 2014, for instance, Ash Carter promptly praised the military he was going to oversee as “the greatest fighting force the world has ever known.” His words echoed those of the president, who had claimed the previous August that it was “the best-led, best-trained, best-equipped military in human history.” Similar hosannas (“the greatest force for human liberation the world has ever known”) had once been sprinkled liberally through George W. Bush’s speeches and comments, as well as those of other politicians since 9/11.

In fact, from the president to all those citizens who feel obliged in a way Americans never have before to “thank” the troops endlessly for their efforts, no other institution has been so universally applauded since 9/11. No one should be shocked then that, in polls, Americans regularly claim to trust the military leadership above any other crew around, including scientists, doctors, ministers, priests, and — no surprise — Congress.

Imagine parents endlessly praising their son as “the smartest, handsomest, most athletically gifted boy since God created Adam.” We’d conclude that they were thoroughly obnoxious, if not a bit unhinged. Yet the military remains just this sort of favored son, the country’s golden child. And to the golden child go the spoils.

Along with unbridled praise, consider the “allowance” the American people regularly offer the Pentagon. If this were an “affluenza” family unit, while mom and dad might be happily driving late-model his and her Audis, the favored son would be driving a spanking new Ferrari. Add up what the federal government spends on “defense,” “homeland security,” “overseas contingency operations” (wars), nuclear weapons, and intelligence and surveillance operations, and the Ferraris that belong to the Pentagon and its national security state pals are vrooming along at more than $750 billion dollars annually, or two-thirds of the government’s discretionary spending. That’s quite an allowance for “our boy”!

To cite a point of comparison, in 2015, federal funding for the departments of education, interior, and transportation maxed out at $95 billion — combined! Not only is the military our favored son by a country mile: it’s our Prodigal Son, and nothing satisfies “him.” He’s still asking for more (and his Republican uncles are clearly ready to turn over to him whatever’s left of the family savings, lock, stock, and barrel).

On the other hand, like any spoiled kid, the Defense Department sees even the most modest suggested cuts in its allowance as a form of betrayal. Witness the whining of both those Pentagon officials and military officerstestifying before Congressional committees and of empathetic committee members themselves. Minimalist cuts to the soaring Pentagon budget are, it seems, defanging the military and recklessly endangering American security vis-a-vis the exaggerated threats of the day: ISIS, China, and Russia. In fact, the real “threat” is clearly that the Pentagon’s congressional “parents” might someday cut down on its privileges and toys, as well as its free rein to do more or less as it pleases.

With respect to those privileges, enormous budgets drive an unimaginably top-heavy bureaucracy at the Pentagon. Since 9/11, Congressional authorizations of three- and four-star generals and admirals have multipliedtwice as fast as their one- and two-star colleagues. Too many generals are chasing too few combat billets, contributing to backstabbing and butt-kissing. Indeed, despite indifferent records in combat, generals wear uniforms bursting with badges and ribbons, resembling the ostentatious displays of former Soviet premiers — or field marshals in the fictional Ruritarian guards.

Meanwhile, the proliferation of brass in turn drives budgets higher. Even with recent modest declines (due to the official end of major combat operations in Iraq and Afghanistan), the U.S. defense budget exceeds the combined military budgets of at least the next seven highest spenders. (President Obama proudly claims that it’s the next eight.) Four of those countries — France, Germany, Great Britain, and Saudi Arabia — are U.S. allies; China and Russia, the only rivals on the list, spend far less than the United States.

With respect to its toys, the military and its enablers in Congress can never get enough or at a high enough price. The most popular of these, at present, is the under-performing new F-35 jet fighter, projected to cost $1.5 trillion (yes, you read that right) over its lifetime, making it the most expensive weapons system in history. Another trillion dollars is projected over the next 30 years for “modernizing” the U.S. nuclear arsenal (this from a president who, as a candidate, spoke of eliminating nuclear weapons). The projected acquisition cost for a new advanced Air Force bomber is already $100 billion (before the cost overruns even begin). The list goes on, but you catch the drift.

A Spoiled Pentagon Means Never Having to Say You’re Sorry

To complete our affluenza diagnosis, let’s add one more factor to boundless praise and a bountiful allowance: a total inability to take responsibility for one’s actions. This is, of course, the most repellent part of the Ethan Couch affluenza defense: the idea that he shouldn’t be held responsible precisely because he was so favored.

Think, then, of the Pentagon and the military as Couch writ large. No matter their mistakes, profligate expenditures, even crimes, neither institution is held accountable for anything.

Consider these facts: Iraq, Afghanistan, and Libya are quagmires. The Islamic State is spreading. Foreign armies, trained and equipped at enormous expense by the U.S. military, continue to evaporate. A hospital, clearly identifiable as such, is destroyed “by accident.” Wedding parties are wiped out “by mistake.” Torture (a war crime) is committed in the field. Detainees are abused. And which senior leaders have been held accountable for any of this in any way? With the notable exception of Brigadier General Janis Karpinskiof Abu Ghraib infamy, not a one.

After lengthy investigations, the Pentagon will occasionally hold accountable a few individuals who pulled the triggers or dropped the bombs or abused the prisoners. Meanwhile, the generals and the top civilians in the Pentagon who made it all possible are immunized from either responsibility or penalty of any sort. This is precisely why Lieutenant Colonel Paul Yingling memorably wrote in 2007 that, in the U.S. military, “a private who loses a rifle suffers far greater consequences than a general who loses a war.” In fact, no matter what that military doesn’t accomplish, no matter how lacking its ultimate performance in the field, it keeps getting more money, resources, praise.

When it comes to such subjects, consider the Republican presidential debate in Iowa on January 28th. Jeb Bush led the rhetorical charge by claiming that President Obama was “gutting” the military. Ted Cruz and Marco Rubio eagerly agreed, insisting that a “dramatically degraded” military had to be rebuilt. All the Republican candidates (Rand Paul excepted) piled on, calling for major increases in defense spending as well as looser “rules of engagement” in the field to empower local commanders to take the fight to the enemy. America’s “warfighters,” more than one candidate claimed, are fighting with one arm tied behind their backs, thanks to knots tightened by government lawyers. The final twist that supposedly tied the military up in a giant knot was, so they claim, applied by that lawyer-in-chief, Barack Obama himself.

Interestingly, there has been no talk of our burgeoning national debt, which former chairman of the Joint Chiefs of Staff Admiral Mike Mullen once identified as the biggest threat facing America. When asked during the debate which specific federal programs he would cut to reduce the deficit, Chris Christie came up with only one, Planned Parenthood, which at $500 million a year is the equivalent of two F-35 jet fighters. (The military wants to buy more than 2,000 of them.)

Throwing yet more money at a spoiled military is precisely the worst thing we as “parents” can do. In this, we should resort to the fiscal wisdom of Army Major General Gerald Sajer, the son of a Pennsylvania coal miner killed in the mines, a Korean War veteran and former Adjutant General of Pennsylvania. When his senior commanders pleaded for more money (during the leaner budget years before 9/11) to accomplish the tasks he had assigned them, General Sajer’s retort was simple: “We’re out of money; now we have to think.”

Accountability Is Everything

It’s high time to force the Pentagon to think. Yet when it comes to our relationship with the military, too many of us have acted like Ethan Couch’s mother. Out of a twisted sense of love or loyalty, she sought to shelter her son from his day of reckoning. But we know better. We know her son has to face the music.

Something similar is true of our relationship to the U.S. military. An institutional report card with so many deficits and failures, a record of deportment that has led to death and mayhem, should not be ignored. The military must be called to account.

How? By cutting its allowance. (That should make the brass sit up and take notice, perhaps even think.) By holding senior leaders accountable for mistakes. And by cutting the easy praise. Our military commanders know that they are not leading the finest fighting force since the dawn of history and it’s time our political leaders and the rest of us acknowledged that as well.

William J. Astore, a retired lieutenant colonel (USAF), is a TomDispatchregular. He blogs at Bracing Views.

Is the US Economy Heading for Recession?

Posted on May 5, 2016 by Reid Mukai

By Jack Rasmus

Source: Global Research

This past week the U.S. government announced the country’s economy rose in the January-March 2016 at a mere 0.5 percent annual growth rate. Since the U.S., unlike other countries, estimates its GDP based on annual rates, that means for the first quarter 2016 the U.S. economy grew by barely 0.1 percent over the previous quarter in late 2015.

Growth this slow indicates the US economy may have “slipped into ‘stall speed’, that is, growth so weak that the economy loses enough momentum and slides into recession”, according to economists at JPMorgan Chase.

Has the U.S. economy therefore come to a halt the past three months? If so, what are the consequences for a global economy already progressively slowing? What will an apparently stagnating US economy mean for Japan, already experiencing its fifth recession since 2008? For Europe, stuck in a long term chronic stagnation? And for emerging market economies, struggling with collapsing commodity prices and currencies, rising unemployment, and long term capital flight trends? Once heralded as the only bright spot in the global economy, the US economy now appears to have joined the slowing global trend.

Some Interesting Trends

Last quarter’s 0.5 percent U.S. GDP may indicate the nation’s economy is even weaker than it appears. The economy of the United States’ recent 0.5 percent growth rate is the latest in a steady declining U.S. GDP growth trend over the past year. In the previous fourth quarter 2015, the US economy grew 1.4 percent, which was down from the preceding quarter’s growth of 2 percent and before that 3.9 percent. So the U.S. economy appears to be slowing rapidly over the past year.

Over an even longer period of more than eight years, since the previous peak growth in late 2007, the U.S. economy has grown by a cumulative total of only 10.1 percent. That’s a paltry annual growth of only 1.2 percent a year on average for the past 8+ years.

But even those figures are overestimated. In 2013, the U.S. redefined the way it estimated GDP, adding categories like R&D expenses and other intangibles that artificially boosted U.S. GDP estimates simply by redefining it. That “economic growth by redefinition” raised GDP by around 0.3 percent annually, and in dollar terms by roughly US$500 billion annually. So the real U.S. GDP may be actually growing by less than 1 percent on average per year since 2007; and during the most recent quarter, January-March 2016, the economy may not have grown at all, but may have stagnated, collapse, and come to a halt.

Behind the Wizard’s Curtain

The media and press like to define recessions as two consecutive quarters of negative GDP growth. Actually, U.S. economists tasked with declaring when a recession has begun or has ended don’t rely totally on GDP estimates, which are notoriously inaccurate and have become increasingly so, given U.S. and other governments’ penchant for changing how they define GDP.

Redefining GDP to boost the appearance of growth is not just a problem in the US in recent years. For example, there are few independent research sources that think China is growing at its officially announced 6.8 percent GDP rate. To note but a couple, both Capital Economics and Lombard Street research estimate that China’s GDP is growing at only around 4-4.5 percent based on close examination of other indicators like electricity usage, power generation, local transport volumes, and so forth. In recent years India officially nearly doubled its GDP overnight by redefining it. So did Nigeria. India bank researchers, whom this writer has talked to, say they have a rule of thumb: take the official government GDP rate and half it and that’s probably close to India’s actual GDP. In Europe, a number of economies, including Britain, which have been desperate to raise their GDP in recent years, now include drug smuggling and prostitution services in their estimates of GDP. How they come up with such estimates and the pricing of such services is, of course, interesting.

Not satisfied with the media-press definition of a recession as two consecutive quarters of negative GDP, US economists at the National Bureau of Economic Research, who are tasked with declaring the beginning and end of a recession, look at various economic indicators — like industrial production, retail sales, exports-import trends, and other sources. A recession may occur in just one quarter; or may require more than two.

Looking at these other indicators for this past January-March 2016 period, the US economy appears even more likely headed for a recession and sooner rather than later.

US industrial production (manufacturing, mining and utilities) declined at an annual rate of -2.2 percent this past quarter, after having declined -3.3 percent the preceding quarter. Industrial production has fallen six of the last seven months. US industrial capacity is now at its lowest point since 2010.

Business investment is another trouble spot. Investment in business structures fell by -10.7 percent and investment in new equipment by -8.6 percent, the latter the biggest drop since the 2007-09 recession. Business inventories rose barely, by the smallest amount in two years, continuing a slowing trend of the past nine months.

And what about consumption, which constitutes about two thirds of the total US economy? US consumer spending has been growing at an average monthly rate of only 0.1 percent. Retail sales, the largest element of consumer spending, has fallen every month on average during the quarter. After having sustained retail sales in previous years, auto sales, a large component of retail sales, declined for the second consecutive quarter during the January-March period. The outlook for U.S. consumer spending recovery is also not too bright. A recent Gallup poll reported that 60 percent of those interviewed indicated the U.S. economy was “getting worse.” Reflecting the poor demand for consumer goods, U.S. consumer prices now hover on the brink of deflation, falling at an average monthly rate of -0.1 percent for the quarter.

Exports are declining, residential housing construction recently plummeted. In other words, not many of the economic indicators that comprise GDP show a promising picture. GDP should probably be even lower than the recently reported 0.5 percent annual and 0.1 percent quarter to quarter growth rates. The U.S. economy has obviously “stalled.” But it’s not the first time. In fact, it’s the fifth time it has since the official end of the last recession in June 2009.

What’s a Relapse?

The performance of the US economy this past January-March, a trend that appears is continuing into April, represents what this writer has called an ‘economic relapse’. A relapse is a collapse of economic growth for a single quarter, to near zero or even negative growth.

The U.S. economy has experienced now five such single quarter relapses since the 2007-09 recession was officially declared over. The economy collapsed to 0.1 percent in early 2011, to 0.2 percent in late 2012, declined again by -2.2 percent in 2014 and collapsed to 0.2 percent in 2015.

Relapses are the consequence of “epic” recessions such as occurred in 2007-09, which are typically characterized by short, shallow recoveries that slip repeatedly into periodic bouts of renewed stagnation. They are the result of near total reliance on central bank monetary policies that are designed to boost stock, bond and other financial markets — and thus the incomes of rich investors — but which fail to generate a sustained real economic recovery. Fiscal policies designed to stimulate consumption and good paying jobs are rejected. That almost perfectly describes U.S. economic policy the past eight years.

Politicians Wearing Rose-Colored Glasses

Despite the facts, U.S. government politicians and Federal Reserve bank officials continue to run around declaring that the U.S. economy is performing well. They like to cite the 200,000 jobs allegedly created in recent months. But a closer examination shows the jobs being created are part time, temp, contract, low paid, no benefit service jobs. Jobs that generate no overall wage increase for the economy and no real income gains for working people.

Young workers 30 years old or less are especially hard hit by this “‘well performing US economy.” A recent study by the Center for American Progress, for example, showed that 30 year old workers earn today the same pay, adjusted for inflation, that 30 year olds earned back in 1984.

Despite all that, President Obama continues to tour the country complaining that he doesn’t get enough credit for bringing the US back from the worst recession since the 1930s depression. He should tell that to the millions of millennial young workers, with low paid crappy service jobs, with no medical insurance, having to live at home with relatives because they can’t afford to rent an apartment, loaded with debt and with no prospects for meaningful change on the horizon. No wonder they’re rallying around Bernie Sanders, who continues to capture 85 percent of their votes in the presidential primaries. Obama (and Hillary) will have a hard time convincing them “all is well” — and an even harder time getting them to vote Democrat in the coming election in November.

Jack Rasmus is author of the recent, 2016 book “Systemic Fragility in the Global Economy,” by Clarity Press, soon translated into a Chinese edition, and the forthcoming June 2016 book, “Looting Greece: The Emerging New

How Do You Know When Your Society Is In The Midst Of Collapse?

Posted on May 4, 2016 by Reid Mukai

By Brandon Smith

Source: Activist Post

As economic turmoil worldwide becomes increasingly apparent, I have been receiving messages from readers expressing some concerns on the public “perception” of collapse. That is to say, there are questions on the average person’s concept of collapse versus the reality of collapse. This is a vital issue that I have discussed briefly in the past, but it deserves a more in-depth analysis.

What is collapse? How do we define it? And, are some of the notions of collapse in the public consciousness completely wrong?

It’s funny, because skeptics opposed to the idea of a U.S. collapse in particular will most often retort with a question they think I cannot or will not answer – “So, Mr. Smith, when specifically is this supposed collapse going to take place? What day and time?”

My response has always been – “We’re in the middle of a collapse right now; you really can’t see it right in front of your sneering face?”

The reason these people are incapable of grasping this kind of answer is in large part due to the popular mainstream conceptions of systemic collapse. These are conceptions that are for the most part delusional and not in line with the facts. The public idea of collapse comes predominantly from Hollywood, and not from personal experience. For the masses (and some preppers, unfortunately), a collapse is an “event” that happens visibly and usually swiftly. You wake up one morning and behold; the television and phones don’t work anymore and zombies are at your doorstep! Yes, it’s childish and cartoonish, but anything less than a Walking Dead/Mad Max scenario and many people act as if all other threats are benign.

This is the driving reason why many Americans are absolutely oblivious to the economic instability that is rampant and blatant within our system the past few months. They might see the same signals that alternative analysts see, but these signals do not register in their brains as dangers.

Look at it this way; say you told a person their whole life that a tiger is a 10-foot tall behemoth with four heads that breathes fire while urinating flesh-rending acid. Say you make movies and TV shows about it and they never have any experience to the contrary. When they finally come across a real tiger, they might try to pet the damn thing instead of running in terror or searching for a means of defense.

To use another vicious animal analogy, when I encounter skeptics with false assumptions of what a collapse actually is, I am often reminded of that woman in Anchorage, Alaska who jumped an enclosure fence at the zoo to get a closer picture of Binky the polar bear. These people have been made so inept when it comes to identifying threats that they will continue arguing with you as the animal takes a football-sized bite out of their meaty thigh.

So what is the root of the problem beyond Hollywood fantasies? Well, the problem is that social and economic collapse is not a singular event, it is a PROCESS. Collapse is a series of events that sometimes span years. Each event increases in volatility over the last event, but as time goes on these events tend to condition the masses. The public develops a normalcy bias towards crisis (like the old “frog in a boiling pot” analogy). They lose all sense of what a healthy system looks like.

It is not uncommon for a society to wade through almost a decade or more of violent decline before finally acknowledging the system is imploding on a fundamental level. It is also not uncommon for societies to endure years of abuse by corrupt governments before either organizing effectively to rebel, or caving in and submitting to totalitarianism.

But how does one recognize a failing system? How does a person know if they are in the middle of a collapse rather than on the “verge” of collapse? Here are some signals I have derived from research of various breakdowns in modern nations and why they indicate we are experiencing collapse right now…

The Criminals Openly Admit To Their Crimes

The surest way to know if your society is in the midst of disintegration is to see if the criminals who created the instability in the first place are openly discussing a collapse scenario or warning that one is imminent.

A year ago, central bankers presented little more than a chorus of recovery propaganda. Today, not so much. The Royal Bank of Scotland is now warning investors to “sell everything” ahead of a “cataclysmic” year in markets.

The Federal Reserve’s Richard Fisher has admitted that the Fed “frontloaded” (manipulated) stock markets into a bubble and that payment is about to come due in the form of severe economic volatility (up to 20% crash in equities).

The Bank for International Settlements, the central bank of central banks, has a track record of warning the public about collapse conditions – right before they happen, leaving little or no time for people to prepare. They have followed their habit by warning in September and December that a Fed rate hike would “shatter” the uneasy calm in markets.

The former Chief Economist of the BIS now says the economy is in worse shape than it was in 2008 and is headed for a larger fall.

What happened between last year and this year and why are these internationalists suddenly so forthcoming about our economic reality? The fact that central bankers are the cause of our current collapse leads me to believe that such admissions are designed to deflect guilt. If they put out a few warnings now, they can then later claim they are prognosticators rather than culprits, and that they were trying to “help us.” Beyond that, the reality is that our situation was just as dire in 2014/2015 as it is today; the difference is that now we are about to enter a new phase in the ongoing collapse, a much more detrimental phase, but still a phase of a breakdown that has been progressing since at least 2008.

The Fundamentals Break Through The Manipulation Barrier

Governments and central banks do not have the capacity to artificially create demand for goods or a supply of well-paying jobs in a crashing economy. What they can do, though, is hide the visible problems in supply and demand with false numbers.

I examined such false economic statistics in great detail last year in a six-part series titled “One Last Look At The Real Economy Before It Implodes.” I will not cover them all again here. I would only point out that recently the fundamentals of supply and demand have begun to break through the deceit of manipulated numbers, and this is a sign that the collapse is about to move from one stage to the next.

With global shipping and trucking freight in steep decline, with retail inventories in stasis and current oil consumption falling to levels not seen since 1997 despite a larger population, the mainstream can no longer deny that consumer demand is crumbling. If demand is falling dramatically, then the financial system is in the middle of falling dramatically; there is simply no way around this truth.

Stocks And Commodities Become Violently Erratic

Let’s be clear, if stock markets represent anything at all, they are merely lagging indicators of economic instability. Stock markets are NOT predictive indicators of anything useful. Therefore, any person who does nothing but track equities each day is going to be completely oblivious to the bigger picture behind the economy until it is too late. They will be so mesmerized by the green numbers and red numbers and lines on minute-to-minute graphs that they will lose all sense of reality.

Violent swings in stocks are a sign of a financial system that is at the middle or end of the collapse process, not the beginning.

It is also important to note that extreme shifts in stocks and commodity values to the upside are just as much a signal of instability as shifts to the downside. For instance, if you witnessed the recent 9% explosion in oil markets and thought to yourself “Ah, the markets are being stabilized again and nothing is different this time…”, then you are an idiot.

Of course, the next day oil markets lost almost all of the gains they made the day before. And this is how markets behave when they are about to die; they expand and implode chaotically each day on nothing more that meaningless news headlines rather than hard data. This heart attack in equities inevitably trends downwards as the weeks and months pass. Keep in mind, equities are down nearly 10% from their recent highs, and oil is down approximately 50% in the past six months. Every time there is a dead cat bounce in stocks skeptics come out of the woodwork to call alternative analysts “doomers”, yet they are nowhere to be found when markets come crashing back down. They are not looking at the overall trend because their short attention spans hinder them. Again, extreme swings in markets, whether up or down, are a sign of progressing collapse.

Deterioration Of Cultural Values, Heritage And Identity

I have written extensively over the years about the Cloward-Piven strategy; a strategy used by collectivists to destabilize social systems by dumping overt numbers of foreign immigrants into the population without demand for integration. This process has been obvious in the U.S. and Europe for quite some time, but only now is it peaking to the point that collapse is seen as an inevitable result by the public. Europe is worse off than the U.S. in this regard as millions upon millions of Muslim immigrants are injected into the EU’s already dying body; immigrants that intend to transplant their culture from their own failed societies rather than adopting the values and principles of the societies that have invited them in.

Natural-born Americans and legal immigrants with aspiration of integration appear to be fighting back against the Cloward-Piven strategy with some success by holding onto traditional American values despite being labeled “barbarians” and “racists.” Illegal immigration, though, is still completely unchecked.

In the EU, the long campaign of cultural Marxism has made natural-born Europeans perhaps the most self-hating people on the planet as well as the most passive and weak. Organized opposition to massive immigration programs in the EU should have taken place years ago. Now it is far too late, and the European system is finishing a social implosion which should have already been obvious to average citizens.

Open Discussion Of Totalitarian Measures

When corrupt leadership moves from quiet totalitarianism to more open totalitarianism, your society is in the FINAL stages of collapse, not the beginning of a collapse. The U.S. in particular has been slowly strangled with subversive legal directives and political policies ever since the so called “War on Terror” began. However, there are now multiple signals of a much deeper and open tyranny in the works.

A few recent examples stand out, including Barack Obama’s insistence that the office of the president has the legal authority to issues executive orders that affect constitutional protections such as the 2^nd Amendment. As many liberty movement activists are aware, there is absolutely no constitutional precedent for the use of executive orders and such powers are not mentioned anywhere in the document. They were simply created out of thin air to be used by the federal government and sometimes state governments to supersede normal checks and balances.

While numerous presidents have issued executive orders, including some that were outright tyrannical, like Franklin Delano Roosevelt’s unconstitutional internment of Japanese Americans into concentration camps, George W. Bush and Barack Obama have been the most subversive in their bypassing of the Constitution. Obama, in particular, has tried to hide the number of executive actions he has taken by issuing hundreds of “presidential memorandums,” which are basically the same dirty play by another name.

These actions have been progressively setting the stage for the removal of checks and balances entirely in the name of crisis management. They are so broad in their nature and vague in their definitions and applications that they could be interpreted by federal authorities to mean just about anything in any given situation.

If executive actions are not scary enough, corrupt politicians are now becoming blunt in their demands for dominance. Two Republican Senators, Mitch McConnel and Lindsay Graham, are calling for unlimited AUMF-style (authorization of use of military force) war powers to be given to the president. Such powers would allow the president to project U.S. military forces anywhere in the world for any reason without review or time limits. This includes the use of military forces on U.S. soil.

The rationale for this is, of course, the threat of ISIS. The same group of terrorists the U.S. government helped to create.

And finally, if you want perhaps the most nonchalant admission of future tyranny in recent days, check out former General Wesley Clark’s call for “disloyal” Americans to be placed in internment camps through the duration of the war on terror, a war that could ostensibly go on forever.

One could argue that all of these measures are meant only to deter “Islamic extremism.” I would point out that government officials could have stemmed that tide at any time by enforcing existing immigration laws, or, by stopping all immigration for a period of years until the problem is handled. Instead, they have allowed open borders to remain, and have even imported potential terrorists while focusing Department of Homeland Security efforts more on evil white guys with guns.

If we accept the violation of the constitutional rights of any group of citizens, if we allow the concept of “thought crime” to become commonplace, then we leave the door open to the violation of our own rights someday. And that is how tyrants trick populations through incremental collapse; by applying despotism to a claimed dangerous minority, then expanding it to everyone else.

America is sitting near the end of the spectrum in terms of economic collapse and in the middle of the spectrum in terms of social collapse. While more violent events are certainly gestating and are likely to be triggered in the near term, we should not overlook the reality that collapse is happening in stages all around us. This process gives us at least some time. All is not lost yet, and the steps we take to organize and prepare today will affect how the collapse process unfolds tomorrow. People who continue to ignore the outright evidence of collapse based on false assumptions of what collapse should look like are only preventing themselves from taking proper action until it is too late. Make no mistake, our system is dying. We cannot allow our false perceptions of this death to cloud the reality of it, or our response to it.

You can read more from Brandon Smith at his site Alt-Market.com. If you would like to support the publishing of articles like the one you have just read, visit our donations page here. We greatly appreciate your patronage. You can contact Brandon Smith at: brandon@alt-market.com

Thomas Frank on How Democrats Went From Being the ‘Party of the People’ to the Party of Rich Elites

Posted on May 3, 2016 by Reid Mukai

Democrats have gone from the party of the New Deal to a party that is defending mass inequality.

By Tobita Chow

Source: In These Times

The Democratic Party was once the party of the New Deal and the ally of organized labor. But by the time of Bill Clinton’s presidency, it had become the enemy of New Deal programs like welfare and Social Security and the champion of free trade deals. What explains this apparent reversal? Thomas Frank—best known for his analysis of the Republican Party base in What’s the Matter with Kansas?—attempts to answer this question in his latest book, Listen Liberal: Or, What Ever Happened to the Party of the People?

According to Frank, popular explanations which blame corporate lobby groups and the growing power of money in politics are insufficient. Frank instead points to a decision by Democratic Party elites in the 1970s to marginalize labor unions and transform from the party of the working class to the party of the professional class. In so doing, the Democratic Party radically changed the way it understood social problems and how to solve them, trading in the principle of solidarity for the principle of competitive individualism and meritocracy. The end result is that the party which created the New Deal and helped create the middle class has now become “the party of mass inequality.” In These Times spoke with Frank recently about the book via telephone.

The book is about how the Democratic Party turned its back on working people and now pursues policies that actually increase inequality. What are the policies or ideological commitments in the Democratic Party that make you think this?

The first piece of evidence is what’s happened since the financial crisis. This is the great story of our time. Inequality has actually gotten worse since then, which is a remarkable thing. This is under a Democratic president who we were assured (or warned) was the most liberal or radical president we would ever see. Yet inequality has gotten worse, and the gains since the financial crisis, since the recovery began, have gone entirely to the top 10 percent of the income distribution.

This is not only because of those evil Republicans, but because Obama played it the way he wanted to. Even when he had a majority in both houses of Congress and could choose whoever he wanted to be in his administration, he consistently made policies that favored the top 10 percent over everybody else. He helped out Wall Street in an enormous way when they were entirely at his mercy.

He could have done anything he wanted with them, in the way that Franklin Roosevelt did in the ‘30s. But he chose not to.

Why is that? This is supposed to be the Democratic Party, the party that’s interested in working people, average Americans. Why would they react to a financial crisis in this way? Once you start digging into this story, it goes very deep. You find that there was a transition in the Democratic Party in the ‘70s, 80’s and ‘90s where they convinced themselves that they needed to abandon working people in order to serve a different constituency: a constituency essentially of white-collar professionals.

That’s the most important group in their coalition. That’s who they won over in the ’70s, ’80s and ’90s. That’s who they serve, and that’s where they draw from. The leaders of the Democratic Party are always from this particular stratum of society.

A lot of progressives that I talk to are pretty familiar with the idea that the Democratic Party is no longer protecting the interests of workers, but it’s pretty common for us to blame it on mainly the power of money in politics. But you start the book in chapter one by arguing there’s actually something much deeper going on. Can you say something about that?

Money in politics is a big part of the story, but social class goes deeper than that. The Democrats have basically made their commitment [to white-collar professionals] already before money and politics became such a big deal. It worked out well for them because of money in politics. So when they chose essentially the top 10 percent of the income distribution as their most important constituents, that is the story of money.

It wasn’t apparent at the time in the ‘70s and ‘80s when they made that choice. But over the years, it has become clear that that was a smart choice in terms of their ability to raise money. Organized labor, of course, is no slouch in terms of money. They have a lot of clout in dollar terms. However, they contribute and contribute to the Democrats and they almost never get their way—they don’t get, say, the Employee Free Choice Act, or Bill Clinton passes NAFTA. They do have a lot of money, but their money doesn’t count.

All of this happened because of the civil war within the Democratic Party. They fought with each other all the time in the ‘70s and the ‘80s. One side hadn’t completely captured the party until Bill Clinton came along in the ‘90s. That was a moment of victory for them.

Bill Clinton’s presidency is what progressives usually cite as the time when things went bad. But there’s a trend that goes back to the ’70s, right?

Historians always cite the ’68 election as the turning point. The party was torn apart by the controversy over the Vietnam war, protesters were in the streets in Chicago and the Democratic candidate Hubert Humphrey went on to lose. Democrats thought this was terrible, and it was. So they set up a commission to reorganize the party, the McGovern Commission.

The McGovern Commission basically set up our modern system of primaries. Before the commission, we didn’t have these long primary contests in state after state after state. Primaries are a good thing, as were most things the McGovern Commission did.

But they also removed organized labor from its structural position of power in the Democratic Party. There was a lot of resentment towards labor during the Vietnam War. A lot of unions took President Johnson’s side on Vietnam. There was also this sense—which I think was correct at the time—that labor was a dinosaur, that it was out of touch and undemocratic and very white.

There were a lot of reasonable objections to organized labor at the time. The problem is, when you get rid of labor in your party, you also get rid of issues that matter to working people. That’s the basic mistake that Democrats made in the ’70s. Of course, labor still is a big part of the Democratic coalition—it gives them their money, it helps out at election time in a huge way. But unions no longer have the presence in party councils that they used to. That disappeared.

One of the most shocking quotes in the book is from Alfred Kahn, an advisor to Jimmy Carter, who said, “I’d love the Teamsters to be worse off. I’d love the automobile workers to be worse off.” He then basically says that unionized workers are exploiting other workers.

Isn’t that amazing? He’s describing a situation in the 1970s. There was all this controversy in the 1970s about labor versus management—this was the last decade where those fights were front and center in our national politics. And he’s coming down squarely on the side of management in those fights.

And remember, Kahn was a very important figure in the Carter administration. The way that he describes unions is incorrect—he’s actually describing professionals. Professionals are a protected class that you can’t do anything about—they’re protected by the laws of every state that dictate who can practice in these fields. It’s funny that he projects that onto organized labor and holds them responsible for the sins of another group.

This is a Democrat in an administration that is actually not very liberal. This is the administration that carried out the first of the big deregulations. This is the administration that had the great big capital gains tax cuts, that carried out the austerity plan that saw the Federal Reserve jack its interest rates sky high. They clubbed the economy to the ground in order to stop “wage inflation,” in which workers, if they have enough power, can keep demanding higher wages. It was incredible.

What’s the content of the ideology of the professional class and how does it hurt working people? What are their guiding principles?

The first commandment of the professional class is the idea of meritocracy, which allows people to think that those on top are there because they deserve to be. With the professional class, it’s always associated with education. They deserve to be there because they worked really hard and went to a good college and to a good graduate school. They’re high achievers. Democrats are really given to credentialism in a way that Republicans aren’t.

If you look at the last few Democratic presidents, Bill Clinton and Obama, and Hillary Clinton as well, their lives are a tale of educational achievement. This is what opened up the doors of the world to them. It’s a party of who people who have gotten where they are by dint of educational accomplishment.

This produces a set of related ideas. When the Democrats, the party of the professionals, look at the economic problems of working-class people, they always see an educational problem, because they look at working class people and say, “Those people didn’t do what I did”: go and get advanced degrees, go to the right college, get the high SAT scores and study STEM or whatever.

There’s another interesting part of this ideology: this endless search for consensus. Washington is a city of professionals with advanced degrees, and Democrats look around them there and say, “We’re all intelligent people. We all went to good schools. We know what the problems are and we know what the answers are, and politics just get in the way.”

This is a very typical way of thinking for the professional class: reaching for consensus, because politics is this ugly thing that you don’t really need. You see this in Obama’s endless efforts to negotiate a grand bargain with Republicans because everybody in Washington knows the answers to the problems—we just have to get together, sit down and make an agreement. The same with Obamacare: He spent so many months trying to get Republicans to sign on, even just one or two, so that he could say it was bipartisan. It was an act of consensus. And the Republicans really played him, because they knew that’s what he’d do.

To go back to your point about education: At one point you quote Arne Duncan, who was Obama’s secretary of education, saying that the only way to end poverty is through education. Why can’t that work?

The big overarching problem of our time is inequality. If you look at historical charts of productivity and wage growth, these two things went hand in hand for decades after World War II, which we think of as a prosperous, middle-class time when even people with a high school degree, blue-collar workers, could lead a middle class life. And then everything went wrong in the 1970s. Productivity continued to go up and wage growth stopped. Wage growth has basically been flat ever since then. But productivity goes up by leaps and bounds all the time. We have all of these wonderful technological advances. Workers are more productive than ever but they haven’t benefited from it. That’s the core problem of inequality.

Now, if the problem was that workers weren’t educated enough, weren’t smart enough, productivity would not be going up. But that productivity line is still going up. So we can see that education is not the issue.

It’s important that people get an education, of course. I spent 25 years of my life getting an education. It’s basic to me. It’s a fundamental human right that people should have the right to pursue whatever they want to the maximum extent of their individual potential. But the idea that this is what is holding them back is simply incorrect as a matter of fact. What’s holding them back is that they don’t have the power to demand higher wages.

If we talk about the problem as one of education rather than power, then the blame goes back to these workers. They just didn’t go out and work hard and do their homework and get a gold star from their teacher. If you take the education explanation for inequality, ultimately you’re blaming the victims themselves.

Unfortunately, that is the Democratic view. That’s why Democrats have essentially become the party of mass inequality. They don’t really have a problem with it.

So really, the solution would have to be solidarity and organized power.

That was an essential point that I try to make in Listen Liberal: that there is no solidarity in a meritocracy. A meritocracy really is every man for himself.

Don’t get me wrong. People at the top of the meritocracy, professionals, obviously have enormous respect for one another. That is the nature of professional meritocracy. They have enormous respect for the people at the top, but they feel very little solidarity for people beneath them who don’t rise in the meritocracy.

Look at the white-collar workplace. If some professional gets fired, the other professionals don’t rally around and go on strike or protest or something like that. They just don’t do that. They feel no solidarity because everything goes back to you and whether or not you’ve made the grade. If somebody gets fired, they must’ve deserved it somehow.

I have my own personal experience. Look at academia over the last 20 years. They’re cranking out these Ph.D.s in the humanities who can’t get jobs on tenure track and instead have to work as adjuncts for very low pay, no benefits. One of the fascinating parts about this is that, with a few exceptions, the people who do have tenure-track jobs and are at the top of their fields, do very little about what’s happened to their colleagues who work as adjuncts. Essentially this is the Uberizing of higher education. The professionals who are in a position of authority have done almost nothing about it. There are academics here and there who feel bad about what’s happened to adjuncts and do say things about it, but by and large, overall, there is no solidarity in that meritocracy. They just don’t care.

Do you think there’s a connection between the fact that the Democratic Party has turned against workers and the rise of Donald Trump?

Yes. Because if you look at the polling, Trump is winning the votes of a lot of people who used to be Democrats. These white, working-class people are his main base of support. As a group, these people were once Democrats all over the country. These are Franklin Roosevelt’s people. These are the people that the Democrats essentially decided to turn their backs on back in the 1970s. They call them the legatees of the New Deal. They were done with these guys, and now look what’s happened—they’ve gone with Donald Trump. That’s frightening and horrifying.

But Trump talks about their issues in a way that they find compelling, especially the trade issue. When he talks about trade, they believe him. Ironically, he’s saying the same things that Hillary Clinton and Bernie Sanders are saying about trade, but for whatever reason people find him more believable on this subject than they do Hillary Clinton.

Do you think that the rise of the Bernie campaign could herald a new era in the history of the Democratic Party?

I hope so. Both Trump and Bernie are turning their respective parties upside down. What Bernie is doing is very impressive. I interviewed him a few years ago and have always admired him. I think he’s a great man. To think that he could beat a Clinton in a Democratic primary anywhere in this country, let alone many primaries, was unthinkable a short time ago. And he’s done it without any Wall Street or big-business backing. That is extraordinary. It shows the kind of desperation that’s out there.

He has shown the way, and whether he gets the nomination or not (he probably won’t), there’ll be another Bernie four years from now. And there’ll also be another Trump. The Republican Party is being turned on its head much more violently than the Democrats. Hillary will probably get the nomination. I live in Washington, D.C., and I spend time around Hillary-style Democrats. They really think that they’ve got this thing in the bag. And I don’t just mean her versus Bernie. I mean the Democratic Party winning the presidency for the rest of our lives. From here to eternity. They can choose whoever they want. They could nominate anybody and they would win. They think they’re in charge.

One of your villains from the ’70s is Frederick Dutton, who wrote a book about how the Democratic Party needed to realign itself. You have a quote from him saying, “Every major realignment in U.S. political history has been accompanied by the coming of a large new group into the electorate.” You’re very critical of how he uses that idea in the ‘70s. But if you look at the newer voters attached to the Bernie campaign, it looks like the Democratic Party is experiencing something like that now.

Yes, in both cases you’re talking about a generational shift. That’s what he meant in 1971. He was talking about the counterculture and the “Now Generation” and the idea that they would come into the electorate and demand a different kind of politics—specifically his kind of politics.

Everybody always sees this new group that’s coming in as supporting what they want. That’s what he thought. I have a certain amount of contempt for that. Many years ago I wrote a book about the counterculture and how it was used for this purpose—specifically by the advertising industry. But Bernie’s doing the same thing. He’s using it for his own purposes.

Millenials’ take on the world is fascinating. Just a few years ago, people thought of them as very different. But now they’re coming out of college with enormous student debt, and they’re discovering that the job market is casualized and Uberized. The work that they do is completely casual. The idea of having a middle-class lifestyle in that situation is completely off the table for them.

Every time I think about these people, it burns me up. It makes me so angry what we’ve done to them as a society. It really gives the lie to Democratic Party platitudes about the world an education will open up for you. That path just doesn’t work anymore. Millenials can see that in their own lives very plainly.

So I’m very excited that they’re pro-Bernie. They really are the future.

Tobita Chow is chair of The People’s Lobby, an independent political organization based in Chicago, and co-author of “The Movement We Need,” a pamphlet on analysis and strategy for the progressive movement. He has been involved in faith-based community organizing on the South Side of Chicago since 2009, and is a leader in the “Moral Mondays Illinois” campaign against state budget cuts. He is an MDiv student at the Lutheran School of Theology at Chicago.

$1,400,000,000,000: Oxfam Exposes the Great Offshore Tax Scam of US Companies

Posted on April 21, 2016 by Reid Mukai

By Andrea Germanos

Source: AntiMedia

Using an “opaque and secretive network” of subsidiaries in tax havens, top American corporations have stashed $1.4 trillion offshore, a new report from Oxfam shows.

With “a range of tricks, tools, and loopholes,” for tax avoidance, the 50 largest U.S. companies, including well-known names like Goldman Sachs, Verizon Communications, Apple, Coca-Cola, IBM, and Chevron, raked in $4 trillion in profits globally between 2008 and 2014, are contributing to inequality, the anti-poverty group said.

The report, Broken at the Top (pdf), states that such tax dodging is one of the “profit-making strategies of many multinational corporations.”

As noted in the report,

From 2008 – 2014 the 50 largest U.S. companies collectively received $27 in federal loans, loan guarantees and bailouts for every $1 they paid in federal taxes.
From 2008 – 2014 these 50 companies spent approximately $2.6 billion on lobbying while receiving nearly $11.2 trillion in federal loans, loan guarantees and bailouts.

Explaining part of their strategy to lower their overall tax rate, the report states: “As a group, U.S. multinationals report that 43 % of their foreign earnings come from five tax haven jurisdictions, yet these countries accounted for only 4 % of the companies’ foreign workforces and just 7 % of their foreign investment.”

Take Bermuda, for example. The report states that U.S. companies reported $80 billion of profits in 2012 in the archipelago—but that’s more than the companies’ reported profits in Japan, China, Germany, and France combined. In other words, it “clearly does not reflect the real economic activity taking place in Bermuda.”

A point highlighted by the report: “We should not lose sight of why tax dodging matters to average people.”

It notes: “Fair tax systems are vital to finance well-functioning and efficient states and to enable governments to fulfill their obligations to uphold citizens’ rights to essential services such as healthcare, education, and social protection for low income families.”

Look no farther than Flint, Michigan—a city facing “falling tax revenues and budget cuts” that took the purported cost-reducing strategies of installing an emergency manager and switching the water system to the Flint River from the Detroit water system, which lead to thousands of children being exposed to lead contamination.

As the report was released in the wake of the Panama Papers, a massive leak that exposed how the world’s rich and powerful use tax havens to hide their wealth, Robbie Silverman, Senior Tax Advisor at Oxfam, said, “Yet again we have evidence of a massive systematic abuse of the global tax system.”

“When corporations don’t pay their fair share of taxes governments are forced to cut back on essential services or levy higher taxes on the rest of us. It’s time governments stopped pandering to big business and started working for the good of their citizens.

“We can’t go on with a situation where the rich and powerful are not paying their fair share of tax, leaving the rest of us to foot the bill. Governments across the globe must come together now to end the era of tax havens,” Silverman said.

The 1 Percent’s Houses Are Getting Bigger and Swankier While Average Americans Struggle To Make Rent

Posted on April 12, 2016 by Reid Mukai

For a view of the inefficiencies of the free market, there’s no clearer view than the U.S. housing market, where there are as many as 29 empty homes for every homeless person.

By Bob Larson

Source: In These Times

Today’s gigantic class cleavages bring to mind Matthew 8:20, where Jesus describes his persecution: “The foxes have holes, and the birds of the air have nests, but the Son of man hath not where to lay his head.” This description could increasingly also apply to the wrong end of our lopsided capitalist society, which shows itself nowhere more clearly than in housing.

The Wall Street Journal has characteristically thorough reporting on the current housing market, in which it observes “a severe shortage of midtier apartments,” meaning those “aimed at the working class.” This “dearth of lower-priced apartments” has driven up rents for lower- and middle-income-earners, with a market segment average of $845 a month—a daunting figure for many of today’s part-timers and even full-timers.

The reason for this “severe shortage” is pure market economics: “Construction costs are generally too high to justify building new complexes for low- and middle-income tenants. …The difference in costs between installing granite countertops and stainless-steel appliances is so slight compared to buying land and installing elevators that economists say developing a luxury apartment and a midtier one comes out roughly the same.” This has meant that “the supply of less expensive apartments…had decreased 1.6% since 2002. Over that time, high-end apartment inventory has increased 31%.” Not surprising, since rents for the higher-income occupants average $1,702. This isn’t exactly a glowing review of capitalism’s alleged ability to meet consumer demand, regardless of income level.

These market dynamics are especially important for today’s generation of young “millennials,” as the business press observes they tend to rent more, “younger Americans either can’t afford to buy a house or don’t want to.” They’re willing to accept small apartment sizes also, and for reasons that reflect the economic realities of the new generation: “They have diminished expectations, less access to financing and a strong desire to stay in cities.” The tendency for normal working families to be squeezed by high rents out of safe neighborhoods, or into tinier spaces, is another example of the invisible hand giving the finger.

Condo or castle?

On the other hand, a convenient place to observe how the other side of the market works is “Mansion,” a weekly section of the elite-oriented Wall Street Journal, which profiles various different playground properties of elite management and the 1%. Like a lot of print and online media that cover housing, it’s part journalism of lifestyle trends and part naked sales pitch. But the window it provides on the day-to-day life of the ruling class is fascinating.

A conspicuous Mansion headline, “Masters of the Universe,” refers to the infamous phrase used to describe Wall Street power-brokers. But this reference is to the incredible scale of high-end master suites, “With square footage that rivals the average American home.”

The features are gobsmacking: “Amenities have included everything from small kitchens to beauty salons and pedicure stations. Some clients have requested private pools just off the master, separate from the home’s main pool.” At another development, private suites have separate “laundry rooms, small gyms or Pilates areas and ‘super closets’ within the master.” These super closets are their own embarrassment of riches: “closets have evolved from utilitarian storage spaces to showpieces modeled after designer stores, with fireplaces, seating areas and separate dressing rooms.” Illustrated with enormous color photos (often software-generated in the small print), you can easily see that several of these condo and mansion designs have bedroom suites that alone exceed the median modern US house size of 2300 square feet.

Elsewhere, the Mansion section observes that in New York City’s always record-setting property market, “At least two new developments in Manhattan are asking $1 million for a single parking spot,” not failing to notice that this is “about four times the cost of an average single-family home in the U.S.” Spaces can be had for less, but these particular concrete patches are associated with units sporting super-high price tags themselves.

A more old-world example comes from the Financial Times, where a recent edition of its high-living Town & Country section profiles a Scottish Duke with a fair-sized castle in the Argyles. The Times is eager to show a self-effacing, status-disregarding picture of the Duke, encouraging us to see the particularly ludicrous institution of Anglo-Scottish aristocracy with Downton Abbey post-status charm. But the local history is more realist: “To the distress of some Inveraray residents, the whole town was moved in the 1770s to give the castle a more secluded setting.”

Today His Grace is most concerned with fending off the increasingly left-leaning Scottish National Party’s proposals to increase the tax on landed estates like his, and split up the great family fortunes—although estates managed through corporations are exempt. But while he hopes to avoid any splitting of his assets, the Duke also confesses he seldom uses his castle’s two-story library: “I’m just not a book person.”

For the urbane London CEO needing a break from city noise, the WSJ Magazine recommends the “Soho Farmhouse,” actually a fantastically expensive members-only rural retreat with a country club, ice rink, horse stable, football field, event barn, boathouse and tennis courts. To ease rich members into their relaxation time, “a hidden camera scans license plates as guests enter the property,” and “guests are handed cocktails as their vehicles are whisked away…guests can specify their height and foot measurements when checking in online to ensure that they are given properly sized bicycles and Wellington boots for their stay.”

Knowing its audience, the magazine mentions an “Added bonus: If guests don’t want to make their own cocktails, they can summon one of two 24-hour roving milk trucks that have been converted into portable bars with bartenders on hand.” Look, no one appreciates the appeal of a roving bar more than me. But 160,000 kids will die from cheaply-treatable diarrhea-related diseases this month, and these fun cash-burning novelties are pretty obscene to African mothers watching their kids die from conditions that could be cured for far less than an executive’s artisan cocktail.

No vacancies, more vagrancies

But the gaping chasm in housing classes is most dramatically seen by comparing the often-mentioned number of empty houses and apartments, relative to the number of homeless citizens living on the streets or shelters around the United States. Real numbers can be looked up—the Census Bureau’s homeownership survey found that in the first quarter of 2015, 17.3 million housing units were vacant, excluding properties only vacant for part of the year. (Notably, the Mansion survey of gigantic master suites notes that these condos and mansions will often “most likely be a second residence for the potential buyer.”)

The number of homeless Americans is of course somewhat harder to pin down, with the Department of Housing and Urban Development in its Annual Homeless Assessment Report for 2014 (the most recent available) finding 578,424 people homeless on a given night. However this HUD number is considered to be at best incomplete, as its “point-in-time” data reporting tends to underestimate the issue. Nonprofits and advocacy groups like the Urban League approach the number in a longer time frame, trying to estimate how many people experience homelessness over the course of a year. The numbers found through this approach are startlingly different, with older research suggesting numbers around 2.3 million, reflecting high turnover among the homeless population.

The most gross calculation from this data would suggest a ratio of 17.3 million year-round vacant units to 2.3 million homeless, or about 7.5 units per homeless individual. Using the HUD’s more conservative “Homelessness measured on a single night” data would give us an even more insane 29 homes or apartments for each homeless person!

Obviously, numbers anything like these point to a hugely irrational economic system, where people, including families with kids, are spending the nights in dangerous shelters or on the streets while millions of empty apartments and houses sit silently still.

This staggering inefficiency of housing markets throws the irrationality of capitalism into stark relief. Much like crumbling bridges and the unemployed construction workforce, the market economy’s failure to bring these economic factors together is pretty damning. Were Christ to return in our capitalist epoch, He’d need to ante up a lot more than the Word to find a place to lay His head—unless He, like other young Americans, had “diminished expectations” for housing.

About the Author

Rob Larson is Professor of Economics at Tacoma Community College in Washington State, and author of Bleakonomics: A Heartwarming Introduction to Financial Catastrophe, the Jobs Crisis and Environmental Destruction. Follow him on Twitter: @ironicprofessor.

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