Setting aside the “transitory inflation” parlor game for a moment, let’s look at what happens when critical parts are unavailable for whatever reason, for example, they’re on back order or indefinite back order, i.e. the supplier has no visibility on when the parts will be available.
If the part that blew out is 0.1% of the entire machine, and the other 99.9% still works perfectly, the entire machine is still dead in the water without that critical component. That is a pretty good definition of systemic vulnerability and fragility, a fragility that becomes much, much worse if there are two or three components which are on indefinite back order.
This is the problem with shipping much of your supply chain overseas: you create extreme systemic vulnerability and fragility even as you rake in big profits from reducing costs. Speaking of costs, let’s look at the costs of having a large, costly, complex mechanism sitting idle in a non-functioning state due to some broken element for which there is no substitute available. Whatever productive capacity the mechanism, process, etc. had is now stuck at zero.
Buying a new replacement is extremely costly, and that’s not always available for all the same reasons that parts and components aren’t available. Finding someone to fabricate a new component is not easy due to the wholesale transfer of manufacturing moxie and capability overseas.
You might be able to find someone to weld a replacement strut, but try finding someone to fab a new bicycle derailleur or better yet, a multilayer semiconductor chip. What about 3-D fabrication? Doesn’t that solve this problem? If the part can be “printed,” yes, but there are limits on what can be 3-D fabbed. You can’t 3-D fab a complex thermostat or controller, for example. You can’t 3-D fab a rubber gasket, either, or a great many other bits of petrochemical-based manufacturing.
Scarcities are not limited to parts and components; skilled people can be scarce, too. For example, there is a limited supply of ICU doctors and nurses. The training required to work in an ICU is specialized and experiential; throwing someone with minimal training in is not a substitution that’s going to work. You can’t order an ICU staff from China or print one digitally the way the Federal Reserve creates currency out of thin air. It takes many years to train the staff to function at a high level in ICU.
A great many such labor scarcities exist for skilled workers who cannot be replaced except by someone with the same training and years of experience. This is one reason ICUs can break down: there is no replacement staff available, and no way to “print more.”
It turns out there’s also a scarcity of people willing to do the dirty-work jobs America needs done for wages that haven’t kept up with inflation. As I have explained here, the $1.65 minimum wage I earned in 1970, if factored for real-world inflation, is around $18 per hour, and arguably closer to $20 per hour.
The solution is to raise the pay to levels that attract workers, but then this requires raising prices on the good and services to the point that customers can no longer afford them.
But wait, can’t we automate all work and deliver full-gee-whiz free-money, no-work communism to everyone? I invite everyone who reckons this is in the realm of the do-able to design, program and manufacture an automated robot that can trundle out to the laundry room, pop open a broken clothes dryer, diagnose the problem, manage to find a new controller board, fit it correctly and properly reconnect all the little wiring bits, close it up, test it, lift the dryer back on the washing machine and do all that for the relatively modest cost of a human repairperson. When you accomplish fabricating and programming that robot to do all the work without instruction or oversight, by all means let us all know how much it cost to design, program and manufacture, what the payback of the development and manufacturing process will cost amortized over the (short) life of the robot and how reliable it is in the real world.
The point is, fantasies are nice but reality is far more demanding.
There can also be scarcities of competence. There may be replacements who claim competence, but when reality intrudes on the shuck-and-jive, their competence was illusory, and the net result is the entire institution can be described by President G.W. Bush’s memorable phrase, this sucker’s going down.
There can also be scarcities of institutional infrastructure and capacity. Once the institution, enterprise, state agency, etc. has been stripmined of redundancy, institutional memory and competence, then the first scarcity that cannot be replaced is the first domino that topples all the other dominoes of systemic vulnerability and fragility.
The Federal Reserve can print trillions of dollars and the federal government can borrow and blow trillions of dollars, but neither can print or borrow supply chains, scarce skills, institutional depth or competence. That nice shiny new semiconductor fab you reckon will resolve the chip shortage? You can print the billions of dollars needed in an instant, but the machinery, expertise and time can’t be conjured quite so easily. That fab is years away from completion no matter how many freshly conjured dollars you throw into the air.
When Critical Parts Are On “Indefinite Back Order,” the Machine Grinds to a Halt: that’s the U.S. economy in a nutshell.
A great many essential components in America are on indefinite back order, including the lifestyle of endless globally sourced goodies at low, low prices. That lifestyle is out of stock and cannot be replaced with financialization fakery.
Hey, Federal Reserve, can you conjure up a non-corrupt financial system, a domestic supply chain, and an economy of open competition, transparency, accountability and competence? If not, you are even more worthless than we feared.
Global corporations are colonising India’s retail space through e-commerce and destroying small-scale physical retail and millions of livelihoods.
Walmart entered into India in 2016 with a US$3.3 billion take-over of the online retail start-up Jet.com. This was followed in 2018 with a US$16 billion take-over of India’s largest online retail platform, Flipkart. Today, Walmart and Amazon control almost two thirds of India’s digital retail sector.
Amazon and Walmart have a record of using predatory pricing, deep discounts and other unfair business practices to attract customers to their online platforms. A couple of years ago, those two companies generated sales of over US$3 billion in just six days during Diwali. India’s small retailers reacted by calling for a boycott of online shopping.
If you want to know the eventual fate of India’s local markets and small retailers, look no further than what US Treasury Secretary Steven Mnuchin said in 2019. He stated that Amazon had “destroyed the retail industry across the United States.”
AMAZON’S CORPORATE PRACTICES
In the US, an investigation by the House Judiciary Committee concluded that Amazon exerts monopoly power over many small- and medium-size businesses. It called for breaking up the company and regulating its online marketplace to ensure that sellers are treated fairly.
Amazon has spied on sellers and appropriated data about their sales, costs and suppliers. It has then used this information to create its own competing versions of their products, often giving its versions superior placement in the search results on its platform.
The Institute for Local Self-Reliance (ILSR) published a revealing document on Amazon in June 2021 that discussed these issues. It also notes that Amazon has been caught using its venture capital fund to invest in start-ups only to steal their ideas and create rival products and services.
Moreover, Amazon’s dominance allows it to function as a gatekeeper: retailers and brands must sell on its site to reach much of the online market and changes to Amazon’s search algorithms or selling terms can cause their sales to evaporate overnight.
Amazon also makes it hard for sellers to reduce their dependence on its platform by making their brand identity almost invisible to shoppers and preventing them from building relationships with their customers. The company strictly limits contact between sellers and customers.
According to the ILSR, Amazon compels sellers to buy its warehousing and shipping services, even though many would get a better deal from other providers, and it blocks independent businesses from offering lower prices on other sites. The company also routinely suspends sellers’ accounts and seizes inventories and cash balances.
The Joint Action Committee against Foreign Retail and E-commerce (JACAFRE) was formed to resist the entry of foreign corporations like Walmart and Amazon into India’s e-commerce market. Its members represent more than 100 national groups, including major trade, workers’ and farmers’ organisations.
JACAFRE issued a statement in 2018 on Walmart’s acquisition of Flipkart, arguing that it undermines India’s economic and digital sovereignty and the livelihoods of millions in India. The committee said the deal would lead to Walmart and Amazon dominating India’s e-retail sector. It would also allow them to own India’s key consumer and other economic data, making them the country’s digital overlords, joining the ranks of Google and Facebook.
In January 2021, JACAFRE published an open letter saying that the three new farm laws, passed by parliament in September 2020, centre on enabling and facilitating the unregulated corporatisation of agriculture value chains. This will effectively make farmers and small traders of agricultural produce become subservient to the interests of a few agrifood and e-commerce giants or will eradicate them completely.
Although there was strong resistance to Walmart entering India with its physical stores, online and offline worlds are now merged: e-commerce companies not only control data about consumption but also control data on production and logistics. Through this control, e-commerce platforms can shape much of the physical economy.
What we are witnessing is the deliberate eradication of markets in favour of monopolistic platforms.
BEZOS NOT WELCOME
Amazon’s move into India encapsulates the unfair fight for space between local and global markets. There is a relative handful of multi-billionaires who own the corporations and platforms. And there are the interests of hundreds of millions of vendors and various small-scale enterprises who are regarded by these rich individuals as mere collateral damage to be displaced in their quest for ever-greater profit.
Thanks to the helping hand of various COVID-related lockdowns, which devastated small businesses, the wealth of the world’s billionaires increased by $3.9tn (trillion) between 18 March and 31 December 2020.
In September 2020, Jeff Bezos, Amazon’s executive chairman, could have paid all 876,000 Amazon employees a $105,000 bonus and still be as wealthy as he was before COVID. Jeff Bezos – his fortune constructed on unprincipled methods that have been well documented in recent years – increased his net wealth by $78.2bn during this period.
Bezos’s plan is clear: the plunder of India and the eradication of millions of small traders and retailers and neighbourhood mom and pop shops.
This is a man with few scruples. After returning from a brief flight to space in July, in a rocket built by his private space company, Bezos said during a news conference:
I also want to thank every Amazon employee and every Amazon customer because you guys paid for all of this.”
In response, US congresswoman Nydia Velazquez wrote on Twitter:
While Jeff Bezos is all over the news for paying to go to space, let’s not forget the reality he has created here on Earth.”
Little wonder that when Bezos visited India in January 2020, he was hardly welcomed with open arms.
Bezos praised India on Twitter by posting:
Dynamism. Energy. Democracy. #IndianCentury.”
The ruling party’s top man in the BJP foreign affairs department hit back with:
Please tell this to your employees in Washington DC. Otherwise, your charm offensive is likely to be waste of time and money.”
A fitting response, albeit perplexing given the current administration’s proposed sanctioning of the foreign takeover of the economy, not least by the unscrupulous interests that will benefit from the recent farm legislation.
Bezos landed in India on the back of the country’s antitrust regulator initiating a formal investigation of Amazon and with small store owners demonstrating in the streets. The Confederation of All India Traders (CAIT) announced that members of its affiliate bodies across the country would stage sit-ins and public rallies in 300 cities in protest.
In a letter to PM Modi, prior to the visit of Bezos, the secretary of the CAIT, General Praveen Khandelwal, claimed that Amazon, like Walmart-owned Flipkart, was an “economic terrorist” due to its predatory pricing that “compelled the closure of thousands of small traders.”
In 2020, Delhi Vyapar Mahasangh (DVM) filed a complaint against Amazon and Flipkart alleging that they favoured certain sellers over others on their platforms by offering them discounted fees and preferential listing. The DVM lobbies to promote the interests of small traders. It also raised concerns about Amazon and Flipkart entering into tie-ups with mobile phone manufacturers to sell phones exclusively on their platforms.
It was argued by DVM that this was anti-competitive behaviour as smaller traders could not purchase and sell these devices. Concerns were also raised over the flash sales and deep discounts offered by e-commerce companies, which could not be matched by small traders.
The CAIT estimates that in 2019 upwards of 50,000 mobile phone retailers were forced out of business by large e-commerce firms.
Amazon’s internal documents, as revealed by Reuters, indicated that Amazon had an indirect ownership stake in a handful of sellers who made up most of the sales on its Indian platform. This is an issue because in India Amazon and Flipkart are legally allowed to function only as neutral platforms that facilitate transactions between third-party sellers and buyers for a fee.
UNDER INVESTIGATION
The upshot is that India’s Supreme Court recently ruled that Amazon must face investigation by the Competition Commission of India (CCI) for alleged anti-competitive business practices. The CCI said it would probe the deep discounts, preferential listings and exclusionary tactics that Amazon and Flipkart are alleged to have used to destroy competition.
However, there are powerful forces that have been sitting on their hands as these companies have been running amok.
In August 2021, the CAIT attacked the NITI Aayog (the influential policy commission think tank of the Government of India) for interfering in e-commerce rules proposed by the Consumer Affairs Ministry.
The CAIT said that the think tank clearly seems to be under the pressure and influence of the foreign e-commerce giants.
The president of CAIT, BC Bhartia, stated that it is deeply shocking to see such a callous and indifferent attitude of the NITI Aayog whch have remained a silent spectator for so many years when:
…the foreign e-commerce giants have circumvented every rule of the FDI policy and blatantly violated and destroyed the retail and e-commerce landscape of the country but have suddenly decided to open their mouth at a time when the proposed e-commerce rules will potentially end the malpractices of the e-commerce companies.”
Of course, money talks and buys influence. In addition to tens of billions of US dollars invested in India by Walmart and Amazon, Facebook invested US$5.5 billion last year in Mukesh Ambani’s Jio Platforms (e-commerce retail). Google has also invested US$4.5 billion.
Since the early 1990s, when India opened up to neoliberal economics, the country has become increasingly dependent on inflows of foreign capital. Policies are being governed by the drive to attract and retain foreign investment and maintain ‘market confidence’ by ceding to the demands of international capital which ride roughshod over democratic principles and the needs of hundreds of millions of ordinary people. ‘Foreign direct investment’ has thus become the holy grail of the Modi-led administration and the NITI Aayog.
The CAIT has urged the Consumer Affairs Ministry to implement the draft consumer protection e-commerce rules at the earliest as they are in the best interest of the consumers as well as the traders of the country.
Meanwhile, the CCI probably will complete its investigation within two months.
Liberte-Egalite-Fraternite: under Macron’s pass sanitaire guillotine?
For the few of us who are students of history, and its aficionado travelers, meaning those who muse and wonder, at times, about how significant figures of the past would view our often dire predicament, it is rather obvious that, for example, the founding fathers of the French Revolution such as Danton, Mirabeau, St Just, and Robespierre would be shocked and angry by what has recently happened to their Republic. Even France’s last great statesman General de Gaulle, if alive today, would have likely been deeply enraged by the state of affairs in a country he loved and fought for with his heart and soul.
In the era of President Emmanuel Macron, who is merely a cynical actor, figurehead, and France’s public relation person in chief passing for a statesman, but who truly is a loyal servant of global corporatism, our revolution’s founders, as well as the subsequent republics’ principles, like the one of the Fifth Republic of de Gaulle, have been insulted, slapped in the face, and assaulted by some sort of insidious and limp dictatorship, under the cover of a health crisis. A complex authoritarian strategy using the pretense of shielding French citizens, often against their will, in this new lucrative conceptual war.
This war on a virus is even more advantageous than the previous conceptual one: the war on terror. In General Macron’s war, syringes are the weapons delivery system of choice, needles like billions of little worker bees at the ready to jab you for an invitation to control freedom, and a moderate slice of happiness: the joy once you have obtained the FrenchCOVID pass Sanitaire to go to museums, movie theaters, inside restaurants, and avoid wearing masks outdoor.
French citizens should be aware that the very motto of our dear Republic, Liberte-Egalite-Fraternite is under the assault of king Ubu Macron and could, without a strong popular resistance, be decapitated by the cold blade of Macron’s virtual guillotine. In a form of dictatorial grab of power for the benefit of big biotech and big pharmaceutical companies. Macron’s pernicious pass sanitaire, just approved by France Assemblee Nationale, is a power grab by global corporate imperialism. Of course, all of it done with a wink, a tan and a smile! All of it done for the greater good of ungrateful “Gaullois refractaire” French citizens, in the continuity of the pesky Gilets Jaunes. Science lover poseur Macron, an enlightened modern day Julius Cesar, is bent on defeating obscurantism armed only with syringes to deliver his brand of salvation thru vaccines. Those who have been in the forefront of the street protest in France to resist this hybrid neoliberal dictatorship personified by Macron are the still active Gilets Jaunes.
From war on terror to war on virus: maximum profit for big tech & pharma
Forget about the good old so-called war-on-terror, fading slightly since its start in September 2001 but still a nice little threat in the background, big enough to keep the military-industrial complex flush with cash. A new conceptual global war was needed: the global war on COVID virus came at the right time. This one is even more promising, as it potentially concern the entire world population or 7.5 billion people. The COVID war has also been an easy sell for the general population, as it can be viewed as a war of necessity with humans “all in it together.” It can also provide an astronomical stream of revenue by making vaccination mandatory. In terms of profit from pandemics, vaccine companies have not been the only beneficiaries of this COVID gold rush.
Big tech companies have racked up billions of dollars at a furious pace since March 2020 and the various restrictive measures of lock-downs and curfews. The likes of Amazon, Zoom and streaming media have handsomely benefited from the imposed partial move to a virtual world. As matter of fact, worldwide stock markets have become junkies to this trend: addicted to the war on COVID benefits.
Needless to say, this vast stream of income is also potentially endless because of the virus mutation into different variants. One loses track of this Greek alphabet catalogue. It was Alpha first or the English variant, then Beta or the Brazilian one, more contagious than the rhythm of Samba, and now it is the Delta variant originally called Indian mutation. As the virus mutates, as they all do, it could potentially take us all the way to Omega, the last letter of the Greek alphabet. The side effect of the Delta variant’s rapid spread has been to allow Macron, and soon many others, head-of-states or figureheads, to tighten back the screw on fundamental liberties.
Rule by decree, states of emergency, arbitrary measures, absurd,or not, are a form of abuse of power that neoliberals like Macron are really enjoying. It is an insidious form of dictatorship under a benevolent disguise of the enlightened rulers forcing their citizenry’s behavior. In France a law is about to pass, in parliament, to make vaccine for healthcare workers across board mandatory. If they do not comply by September 15, 2021, they will be fired. In the case of France, this should be viewed as a prelude to mandatory vaccination for the entire population.
Killing personal freedom and liberties
In France, government controlled mainstream media, critiques rightly calling the Macron administration’s sweeping COVID policies a “dictature sanitaire” or healthcare dictatorship have been labeled conspiracy theorists. This is pure disinformation, as what defines a dictatorship, semantically speaking, is a government, elected or not, forcing policies on its citizens. It is done under the premise that it is an action for the benefit of the common good, but nonetheless it is the exercise of authoritarian power on a population.
Through the COVID-19 pandemics, governments have learned that, if fearandparanoia were prevalent enough, and they run a lot of polls in their respective population, any dictatorial measures could be implemented without risking much social turmoil. A great majority of people did, and would likely comply again to other lock-downs, wearing masks outdoors, curfews, but without much protest. Now the final frontier is mandatory vaccination from 12 years-old on, which will give you some sort of health passport. If approved. this pass would give people the right to live almost free. This new type of passport, given to you as a reward to your obedience, will give you access to a mythical promised land often called by Macron “the return of the happy days!”
COVID fear mongering: subterfuge to hide climate collapse threat
There is no doubt, for any rational minds, that contesting the reality of the COVID pandemic is pure conspiracy theory. More than that, it is full blown lunacy! There are two radical anti-vaxers thought processes here: firstly, deny the existence of the pandemic entirely; secondly, which might be even more disturbing, an unshakable belief that the virus was man made, and released on purpose by the like of Fauci, Bill Gates, and a hand full of mad scientists. And, of course, here’s the icing on the cake: they’re all acting on behalf of a cabal of globalist pedophiles. These are the kinds of conspiracy theories that currently get you banned on social media.
As much as they are colorfully insane, this type of COVID-19 conspiracy theory denials are not, in essence, any worse than climate change crisis denial. The difference being that your average run of the mill climate change denier won’t get banned on social media. The nature of the capitalist global corporatism system, where neoliberals like Macron are leading figures, is not to create a crisis from scratch, which is either an impossible or very challenging task, but instead to take advantage of crisis either to further general policy goals, or in most cases benefit punctually from them like an opportunistic predator. This predatory aspect is after all the very nature of capitalism.
Besides the numerous advantages that Macron, his political colleagues and their patrons from the billionaire class have found in the COVID crisis, as explained above, not only huge financial gains for pharmaceutical companies, but also for tech companies involved in this sort of forced quantum leap to the virtual world. In brief, this has been a chance to brutally shock the global economy. Not to make it more equal or sustainable, but quite exactly the opposite: COVID has been an opportunity to concentrate wealth even more in fewer hands with a net result of more social inequality.
Because in today’s press one story is always used to hide another, the pandemic has been also a blessed opportunity to hide, not the proverbial 800-pound gorilla in the room, but instead the 10,000-ton Godzilla wrecking the planet: Godzilla, in this case, being the growing certainty of an upcoming global climate collapse.
Of the “Liberte-Egalite-Fraternite” motto of the French revolution, all the great values have been trampled and gutted. With lock-downs, curfews, mandatory masks and vaccine, Liberte is now gone. In the era of Macron, a former investment banker, nobody can talk about Egalite in a country which is on its way to become almost as unequal as the United States; and last but not least, how could anyone see any Fraternite left? The community sense of brotherhood died quite sometime ago in France. There is no brotherhood left, no deep sense of connection within the nation, we are not “all in this together”.
In reality, there is only all of us, common men and women worldwide, against the billionaire class that controls the levers of the global corporate imperialist machines, with their political servant facilitators acting as heads of state. The specific names within the political class are of little significance, since they represent the identical interests. It’s a bit like the names given to the COVID variants. The Delta variant, portrayed as the top threat right now, started more modestly as India’s mutation. Who knows, perhaps in some billionaire class circles, Emmanuel Macron is just called factor X, LV or MANU.
The truth is America has lost its way if commoners pay a rate of 40% but its billionaires pay next to nothing.
As with everything else in polarized America, billionaires proclaiming space tourism is the next big thing for humanity neatly divides opinion into two camps: those who laud the initiative, hard work and innovations of the billionaires as examples of the American Can-Do Dream, and those who wished the billionaire space tourists had taken a one-way flight to a distant orbit of blissful silence.
Setting aside that bitter divide, let’s explore another divide: how our two-tier tax system enables billionaires to become billionaires while the rest of us get poorer. Whenever I discuss the taxes of the non-billionaire self-employed, armies of apologists leap to the defense of the status quo with various quibbles: the 0.9% Medicare surcharge only kicks in above $200,000, the cap on Social Security taxes is $142,800, and so on.
Setting aside the quibbles–and recall the tax code with regulatory notes is thousands of pages–let’s deal with the real issue, which is that billionaires and their corporations pay a thin slice of taxes as a percentage of total income/gains if they pay any at all, while self-employed and small business pay extraordinarily high tax rates.
To all the quibblers: please add the 15.3% Social Security/Medicare tax rate (self-employed / sole proprietors pay both the employee and employer share of this tax) to the federal tax rate of 24% for income above $85,520. It’s 39.3%.
Just how hard would it be to conclude that everyone earning more than $142,000 should pay at least the same rate the rest of us pay? Aren’t we demonstrating all those same laudable traits of the billionaires, just on a smaller scale? Why should we pay 40% and the billionaires pay essentially zero?
Gee, do you reckon paying no taxes might help folks become richer? Garsh, nobody ever asked that question before. And do you reckon paying 40% of your income might make you poorer over time? Golly gee, how come the talking heads worshiping the billionaires never ask these questions?
Since Social Security and Medicare/Medicaid are the bedrock of America’s social safety net, why shouldn’t billionaires pay to support these programs? Well, why not? Just how lame do the excuses have to be to be recognized as laughably self-serving?
Here’s the trick billionaires use to evade taxes. There are countless ways for the super-wealthy to evade taxes–funnel earnings through an Irish post office box, buy a tax break in Washington DC, slide the money into one of dozens of global tax havens, and so on.
But a simple one is to report no income and live large off borrowed money. As the billions of dollars in capital gains pile up as the billionaire’s stock holdings soar (thanks, Federal Reserve, for the free trillions; awful swell of you to give us all that free money), there’s no income generated until the billionaire sells some shares. No sale, no income. Just pay yourself $1 a year in salary, borrow against your billions at super-low rates of interest, and voila, you’re tax-free while you build your super-yacht, buy your private island, and so on.
Just as a thought experiment, suppose the first $50,000 in earnings for everyone were tax-free, and a 40% tax rate was collected on all income above $1 million, both earned and unearned (capital gains), not when the gains were realized in a sale but at the end of every tax year, whether the shares that rose in value were sold or not.
So Billionaire Space Tourist reaped $10 billion in capital gains from the appreciation of stocks held, then the Billionaire pays 40% of those gains: $4 billion. There is a way to not pay any taxes on capital gains–have your portfolio lose value. No gains, no taxes. And to close all the loopholes, the tax rate is on all assets and income connected in any way, shape or form with the U.S. First they pay the U.S. taxes, then if they want to pay other nations’ taxes as well, be my guest. But the 40% is due and payable regardless of any other conditions.
You don’t like it, then stop selling any products in the U.S. or holding any assets in the U.S. Why should billionaires get to set up immensely profitable monopolies, quasi-monopolies, cartels and corporations in the U.S. but pay near-zero in taxes? Why should billionaires be free to profit from America’s economy but pay nothing to support its citizenry?
What precisely is the logic of reducing taxes on the wealthiest few to near-zero? If there is no logic, then we’re left with corruption: America is a moral cesspool.
The truth is America has lost its way if commoners pay a rate of 40% but its billionaires pay next to nothing. Please note Karma and Divine Retribution are not controlled by the billionaire’s lackeys and apparatchiks in the Federal Reserve. The pendulum of exploitation has reached its extreme, and the reversal to the opposite extreme is underway.
Maintaining the illusion of confidence, permanence and stability serves the interests of those benefiting from the bubbles and those who prefer the safety of the herd, even as the herd thunders toward the precipice.
The misconception that collapse is an all or nothing phenomenon is common: Either the system rights itself with a bit of money-printing and rah-rah or it collapses into post-industrial ruin and gangs are battling over the last stash of canned beans.
Neither scenario considers the fragility and resilience of the socio-economic system as a whole. It is both far more fragile than the believers in the permanence of the waste is growth model grasp and more resilient than the complete collapse prognosticators grasp.
The recent relatively mild logjams in global supply chains of essentials are mere glimpses of precariously fragile delivery-supply systems. These can be understood as bottlenecks that only insiders see, or as unstable nodes through which all the economy’s connections run. Put another way, the economy’s as a network appears decentralized and robust, but this illusion vanishes when we consider how the entire economy rests on a few unstable nodes.
One such node is the delivery of gasoline and fuels. It’s such an efficient and reliable system that 99.9% of us take it for granted: there will always be plenty of gasoline at every station, the tanks of jet fuel will always be topped off, and so on.
The 0.1% know that this system, once disrupted, would knock over dominoes all through the economy.
Hyper-efficiency and hyper-globalization has reduced the number of producers of essentials to the point that disruptions cannot be overcome with redundant sources. We see this everywhere in the global economy: a handful of plants and companies (sometimes a single source of essential components) process or manufacture essential components in much larger systems.
This is how you end up with thousands of newly manufactured vehicles parked in lots awaiting one critical part that is in short supply.
Another key weakness is the entire system’s reliance on debt, leverage and speculation. Few seem to understand that physical production and delivery systems can grind to a halt for financial reasons–for example, lines of credit being pulled, a counterparty to some arcane commodity swap goes under, taking the presumably solvent corporation down with it, and so on.
The more debt that’s been piled up, the greater the instability of the entire system. Risk always appears low until the system destabilizes, and then all the hedges fail and risk breaks out, flooding through the entire financial system.
Leverage is great fun on the way up, as it magnifies gains. Since the Federal Reserve implicitly guarantees that “buy the dip” will generate massive gains, why not ramp up leverage ten-fold to maximize those Fed-guaranteed gains?
Leverage is less fun on the way down. When the underlying collateral has shrunk to 20% of the leveraged bets being made, a 21% decline in the asset wipes out all the collateral holding up the palace of leveraged debt.
The Fed can print money but it can’t create collateral, nor can it make insolvent entities solvent. All the Fed can do is increase the debt and leverage, which is not the solution, it’s the problem.
Speculation is also inherently unstable, as the euphoric herd, once startled, turns in panic and stampeded in fear. Markets which appeared liquid–i.e., sellers could count on someone buying as many millions of shares as they desired to sell–become illiquid, as buyers vanish like mist in Death Valley. With buyers gone, prices plummet to levels the herd reckoned “impossible” just days before.
The Fed’s entire strategy in the 21st century has been to inflate asset bubbles that generate the illusion of wealth–the so-called wealth effect which is presumed to inspire voracious borrowing and spending.
Unfortunately for the Fed, most of the gains flowed to the top 0.1%, and an economy based on a handful of billionaires buying super-yachts and spaceships is a line of dominoes awaiting the inevitable “accident.” So there are two systemic problems with relying on asset bubbles to generate “wealth”: 1) since 90% of the assets are owned by a thin slice of the populace, bubbles increase destabilizing inequality, and 2) bubbles are intrinsically unstable. So the U.S. economy, dependent on the Fed for the “juice” of monetary stimulus, is now dependent on incredibly unstable bubbles in assets, debt and leverage, bubbles which have generated extremes of wealth/income inequality that are destabilizing the social and political orders.
As the three charts below illustrate, the fragility and instability are well hidden until it’s too late: bubbles, debt, leverage, budgets and revenues can only click higher because the system breaks down if there is any sustained decline (the rising wedge model of breakdown). Once the subsystems fail, there’s no putting the eggshell back together.
The second chart depicts how buffers thin beneath the surface, masking the systemic fragility. The loss of redundancy, the decay of maintenance, the loss of experienced workers–all of these are hidden from public view until the system breaks down.
The third chart tracks the S-curve of expansion, confidence, complacency, delusion and collapse followed by human systems, from nations to empires to corporations: as the buffers thin and the rising wedge reaches an apex of vulnerability, the leadership evinces a delusional confidence in the permanence and stability of increasingly fragile, unstable systems.
Maintaining the illusion of confidence, permanence and stability serves the interests of those benefiting from the bubbles and those who prefer the safety of the herd, even as the herd thunders toward the precipice.
This is how breakdowns in apparently stable subsystems triggers the fall of dominoes throughout the larger system, leading to a collapse that was widely viewed as “impossible.” Such is the power of complacency and delusion.
In the Soviet Union, everybody was aware that the media was controlled by the state. But in a corporate state like the U.S., a veneer of independence is still maintained, although trust in the media has been plummeting for years.
The Washington Post’s glaring conflicts of interest have of late once again been the subject of scrutiny online, thanks to a new article denouncing a supposed attempt to “soak” billionaires in taxes. Written by star columnist Megan McArdle — who previously argued that Walmart’s wages are too high, that there is nothing wrong with Google’s monopoly, and that the Grenfell Fire was a price worth paying for cheaper buildings — the article claimed that Americans have such class envy that the government would “destroy [billionaires’] fortunes so that the rest of us don’t have to look at them.” Notably, the Post chose to illustrate it with a picture of its owner, Jeff Bezos, making it seem as if it was directly defending his power and wealth, something they have been accusedof onmorethanoneoccasion.
There was considerable speculation online as to whether Bezos himself wrote the piece, so blatantly in his interest it was. Unfortunately, this sort of speculation has raged ever since the Amazon CEO bought the newspaper in 2013 for $250 million.
Being owned by the world’s richest individual does not mean that TheWashington Post and its employees are rolling in dough themselves. Far from it: Bezos’ revolution at the newspaper, which has led to both increased pageviews and company value, has been largely based on simply squeezing workers harder than before. In an interview with the Columbia Journalism Review, management acknowledged that Post reporters are pushed to produce almost four times as many stories as their peers at The New York Times. Furthermore, the Post writes and rewrites the same story but from slightly different angles and with different headlines in order to generate more clicks, and thus more revenue. Thanks to new technology, reporters’ every keystroke is monitored and they are under constant pressure from management not to fall behind. The technique of constant surveillance is not unlike what hyper-exploited Amazon warehouse workers who wear GPS devices or Fitbit watches have to endure.
Bezos is currently worth a shade under $200 billion, with his wealth nearly doubling since the beginning of the coronavirus pandemic in 2020. With such a fortune to protect, the obvious solution is to acquire media outlets to control the narrative in the face of rising public disenchantment with rampaging inequality. Omar Ocampo, a researcher for the Program on Inequality and the Common Good at the Institute for Policy Studies, said that this is a common tactic among the super wealthy. “Billionaire ownership of major news outlets is but another tool the billionaire class deploys for the purpose of wealth defense. It gives them the power to set the terms of the agenda and influence public opinion in their favor,” Ocampo told MintPress.
But Bezos is far from the only senior figure with questionable connections. The company’s CEO, Frederick Ryan, was a senior member of the Reagan White House, rising to become the 40th president’s assistant and later the chairman of the Ronald Reagan Presidential Foundation. He later became CEO of Politico. In the Post’s announcement of the hiring move, they themselves noted that among Ryan’s biggest achievements at their rival outlet was “helping the news organization win a lucrative advertising deal with Goldman Sachs and host presidential debates before the 2008 and 2012 Republican primaries.”
Another neoconservative in a key position is Editorial Page Editor Fred Hiatt. Under Hiatt’s tenure, anti-establishment columnists like Dan Froomkin were let go and warmongers like the late Charles Krauthammer, Paul Wolfowitz, and David Ignatius moved in. “After being so wrong on such a huge story as the invasion of Iraq, hawkish ideologue Fred Hiatt should have been terminated as editorial page editor,” Jeff Cohen, former Professor of Journalism at Ithaca College and founder of media watchdog group Fairness and Accuracy in Reporting, told MintPress, adding:
In a decent media system, someone who has been so inaccurate on so many issues as Hiatt would not be in a powerful media position two decades later. Powerful voices in U.S. media often argue that society should be a ‘meritocracy’ — with advancement based on ability or achievement. Hiatt proves that the U.S. corporate media system is just the opposite — a ‘kakistocracy’ — where the unqualified and unprincipled rise to the top.”
Other highly questionable hires include Jerusalem correspondent Ruth Eglash, who spent seven years putting out content that was often indistinguishable from Israeli government propaganda. At the time of her hire, activists highlighted the conflicts of interest she had, given her husband’s job as a PR rep for the country. In November 2020, Eglash quit the Post to become chief of communications for the Israeli ambassador to the United States and United Nations. “My experiences as a journalist have afforded me a great instinct of how to better tell Israel’s unique story,” she said, adding “a strong U.S.-Israel relationship and showcasing Israel’s successes to the world has [sic] always been a passion of mine.”
At the center of the news cosmos
The Washington Post is among the most powerful, influential, and widely-read media outlets in the United States. Its position as the dominant newspaper in the nation’s capital reinforces its place as a thought-leading, agenda-setting publication. Whatever appears in the Post will likely be in the rest of the nation’s media, so authoritative is its reputation.
There are no more important pages than its editorial section, where its board comes together to lay out the collective wisdom of its most senior journalists and editors. Through its editorial page, the senior staff lay out the newspaper’s line to others and broadcast what they see as the correct position on the most pressing issues of the day. Hence, editorials are essentially instructions to their well-heeled and influential readers in D.C. and around the country on what to think about any given subject.
This is particularly troublesome as, despite the fact the newspaper presents itself as a defender of liberty and a champion of the people (its tagline is “Democracy Dies in Darkness”), the editorial board has represented the interests of the powerful over ordinary Americans on issue after issue. The following editorials are examples of this in action.
Could we be any more pro-war?
The Post’s editorial board has generally been extremely supportive of whatever conflicts the U.S. has started, and has consistently warned against ending the violence. In a 2015 editorial entitled “Drone strikes are bad; no drone strikes would be worse,” it balked at the idea of stopping the highly controversial bombing campaigns throughout the Middle East and North Africa. By that time, President Barack Obama was bombing seven countries simultaneously. Nevertheless, the Post argued that drones had successfully defeated Al-Qaeda and that the use of drone strikes “shouldn’t be up for review.”
In recent times, the rising newspaper of record has also been a driver of increased hostilities with China, describing Beijing’s military’s moves in the South China Sea as “provocations” against the U.S., spreadingrumors about the COVID-19 virus’s origin, and demanding American companies like Apple “resist China’s tyranny” and begin to relocate their production facilities elsewhere to punish the Chinese government.
On Latin America too, the editorial board has proven to be extremely hawkish. It immediately endorsed a U.S.-backed far-right coup in Bolivia in 2019, insisting that “there could be little doubt who was ultimately responsible for the chaos: newly resigned President Evo Morales.” The Post condemned him for refusing to “cooperate” with “Bolivia’s more responsible leaders,” who were organizing his overthrow, and chastised him for using the word “coup” for what was going on. Morales, they concluded, was a victim of his own “insatiable appetite for power” and his inability to “accept that a majority of Bolivians wanted him to leave office.”
In 2002, the paper also supported a coup against Hugo Chavez, falsely claiming the Venezuelan president had ordered the shooting of thousands of demonstrators and absurdly asserting that “there’s been no suggestion that the United States had anything to do with [it].
The WaPo editorial board’s less than subtle take on drone warfare
In more recent times, it has demanded more action to unseat Chavez’s successor, Nicolas Maduro, including supporting U.S. sanctions that have now killed over 100,000 people, according to a United Nations rapporteur. The Post’s justification in 2017 was that Maduro was on the verge of carrying out his own “coup,” “abolish[ing] the opposition-controlled legislature, cancel[ing] future elections and establish[ing] a regime resembling that of Cuba’s” — none of which has happened. In its efforts to oust the democratically-elected leader, the Post even aligned itself with Donald Trump and endorsed far-right coup leader Juan Guaidó as “Venezuela’s legitimate president,” a position some polls have suggested as little as 3% of Venezuelans hold.
The editorial board has expressed its desire to see regime change in leftist-controlled Nicaragua, too. President Daniel Ortega, it claims, is “taking a sledgehammer” to opposition against him, while it also demands that the U.S., which has done nothing but offer “mild verbal opposition” to his rule, do more. What happened to the U.S. of the 1980s, “which spent so much money and political capital to promote democracy in Nicaragua?” they ask sadly.
In reality, of course, the U.S. is currently trying to strangle Nicaragua’s economy through sanctions. And in the 1980s, Washington’s “democracy promotion” agenda included the funding, training and arming of fascist death squads who wrought havoc across Central America, killing hundreds of thousands in genocides from which the area may never recover. The architects of the violence were found guilty in U.S. courts, while the Reagan administration was tried and convicted by the International Court of Justice on 15 counts that amount to international terrorism. That the Post’s editorial board remembers that history as “promoting democracy” is particularly worrisome.
Fake news, fake newspapers
The Washington Post was the key supporter of fake news detection system “PropOrNot,” which was almostimmediatelyexposed as a fake operation itself, forcing the newspaper to publicly distance itself from its own reporting. Yet it was the Post itself that perpetuated the most notorious and damaging fake news story of the 21st century: the Iraqi weapons of mass destruction hoax and Saddam Hussein’s fictional links to al-Qaeda.
In a highly influential editorial entitled “Irrefutable” the Post wrote that, after watching Secretary of State Colin Powell’s speech at the United Nations, “it is hard to imagine how anyone could doubt that Iraq possesses weapons of mass destruction… And [Powell] offered a powerful new case that Saddam Hussein’s regime is cooperating with a branch of the al-Qaeda organization that is trying to acquire chemical weapons and stage attacks in Europe.”
“No page was more crucial in propelling the disastrous U.S. invasion of Iraq than the Post‘s editorial page — which beat the drums for war in a couple dozen editorials in the six months leading up to the invasion,” Cohen told MintPress, adding:
The Post’s op-ed page was almost as cartoonishly wrong on Iraq, offering little dissent or corrective to the editorial page’s jingoism — especially in that pivotal media moment following Colin Powell’s error-filled U.N. speech. While the editorial page offered up its ‘Irrefutable’ verdict, the op-ed page’s liberal voice offered an embarrassing column, headlined ‘I’m Persuaded’.”
The Post played a major role in manufacturing consent for the deadliest war since Vietnam, publishing 27 editorials in support of an invasion. As with PropOrNot, it backtracked long after the dust had settled, apologizing for its role in amping the public up to accept that war. Yet to this day it continues to push for others.
Surveillance state champion
Despite telling its readers that “Democracy Dies in Darkness,” The Washington Post certainly has a negative opinion about those individuals who work to shine a light on illegal government activities. In 2016, its editorial board demanded “no pardon for Edward Snowden,” condemning his backers like filmmaker Oliver Stone and expressing outrage that Snowden had revealed that the U.S. was spying on Russia and carrying out cyberattacks against China. In its long denunciation, it insisted that the NSA’s massive surveillance operation against the American public resulted in “no specific harm, actual or attempted.” As such, the editorial board made history by becoming the first newspaper ever to call for the imprisonment of its own source, on whose back and information it won a Pulitzer Prize.
If Snowden was not worthy of defending, then it is no surprise that the Post’s editorial team expressed their delight when Julian Assange was dragged out of the Ecuadorian Embassy in London, declaring it a “victory for the rule of law.” “Julian Assange is not a free-press hero. And he is long overdue for personal accountability,” they wrote, spreading baseless conspiracy theories that the Australian publisher worked with Russia to hack American democracy.
The Ecuadorian government of Rafael Correa, which offered asylum to the Western dissidents, also came under fire. In 2013, the Post (falsely) labeled Correa an “autocrat” and “the hemisphere’s preeminent anti-U.S. demagogue.” They also directly threatened him, writing that, “If Mr. Correa welcomes Mr. Snowden, there will be an easy way to demonstrate that Yanqui-baiting has its price.”
Of course, the Post is now intimately linked with the national security state after Amazon signed a number of deals to provide intelligence and computing services to several three-letter agencies. In 2020, the Bezos-owned Amazon Web Services signed a new deal with the CIA worth tens of billions of dollars.
The editorial board has also gone up to bat for Immigration and Customs Enforcement (ICE) multiple times, insisting that it is “the wrong target for outrage,” presenting the agency as key in the battle against art theft and nuclear proliferation. “Abolishing ICE is not a serious policy proposal,” the board wrote in 2018, despite the fact that the U.S. survived without the agency perfectly well until its creation in 2003.
Attacking any pro-people policy
The Washington Post has aggressively attempted to beat back any new political movements challenging the establishment. Chief among them has been the one around Bernie Sanders, for whom the newspaper has reserved a special ire. In 2016, it famously ran 16 negative stories on Sanders in the space of 16 hours and has used its fact-checking page to relentlessly undermine him, sometimes to bizarre effect.
“Bernie Sanders keeps saying his average donation is $27, but his own numbers contradict that,” read the headline of one article, which detailed how his average donation was actually $27.89, not $27. It also gave his statement that six men (one of whom is Bezos) hold as much wealth as the bottom half of the world’s population “three Pinocchios” — the designation just below the most egregious lie. This was because, they argued, billionaires’ wealth is tied up in stocks, not money itself, and most people own essentially nothing. Why this disproved his assertion they did not explain. Going undisclosed is that both Bezos and the Post’s chief fact-checker Glen Kessler, who is the scion of a fossil fuel baron, would stand to lose a fortune if Sanders were elected.
In 2020, the Post was no less hostile to Sanders, publishing an editorial headlined “We should pay more attention to the Democrats who pay attention to reality,” which stated that “Mr. Sanders promises unlimited free stuff to everyone; other candidates propose smarter, more targeted approaches.”
The Post’s higher-ups have been careful to oppose virtually every piece of progressive or pro-people policy proposals. Chief among them has been healthcare. The United States is alone in the developed world in not offering some kind of universal healthcare to its population. Its privatized system is multiple times more expensive than that of comparable countries and has the worst outcomes in the West. Yet the board has consistently scare-mongered its readers, claiming “Single-payer health care would have an astonishingly high price tag,” and attacking Medicare-For-All proponents running for office. “Why go to the trouble of running for president to promote ideas that can’t work?” it asked rhetorically, before going on to insist that moving towards a healthcare system like that of Canada, Japan or Western Europe does not meet a “baseline degree of factual plausibility.”
On education, it has been just as regressive. “There are consequences to making college free,” it warned readers. Chief among these would be that private universities would make less money, which, apparently should be a major concern. “Forgiving student loans the wrong way will only worsen inequality,” ran the headline of another editorial, in which the board pretended to be ultra-left elite-hating radicals, arguing that we should not make college free because Ivy League graduates would benefit the most (around one-third of the Post’s editorial team attended an Ivy League school). It also feigned a far-left position on charter schools, pretending that essentially privatizing schools and handing them over to businesses to run would solve racial inequality in America, and that anyone who opposed them (like teachers’ unions) was no progressive.
Perhaps the most blatant conflict of interest the Post has displayed is in their committed opposition to a wealth tax. “Elizabeth Warren wants a ‘wealth tax.’ It might backfire,” they wrote, making a series of bizarre and illogical arguments against the plan, such as immigrants will stop wanting to come to the U.S. if such a tax is imposed (the threshold for paying a wealth tax is $50 million). Five months later, the board reaffirmed their position: “A wealth tax isn’t the best way to tax the rich,” they wrote, claiming that rich people “can afford the best accountants and lawyers,” and so taxing them is presumably impossible.
Of course, the Post’s owner, Jeff Bezos, has every reason to go all out to prevent a wealth tax gaining traction. A CNBCstudy calculated that Bezos would be forced to pay $5.7 billion annually if Warren’s tax plans came to fruition.
The Post has also taken a firm stand against serious regulation of monopolies, decrying a supposed “antitrust onslaught” against Google, spearheaded by simplistic “break-them-up” rhetoric from dishonest actors. In 2016, it also lambasted Sanders for his “oversimplified,” “crowd-pleasing” demagoguery on Wall Street regulation, insisting that there has actually been widespread reform of the financial sector since 2008, making another crash unlikely.
Unsurprisingly for an outlet owned by a poverty-wage employer, the Post has also consistently opposed a national $15 minimum wage. In March, it categorically stated that “[a] $15 minimum wage won’t happen” and Democrats should stop trying to make it happen. Instead, they advised, they should “practice the art of the possible.” This, the board explained, meant falling in line behind Arkansas arch-Republican Senator Tom Cotton to support his proposals for a creeping state-by-state rise to $10.
On the climate, too, the Post has pushed extremely regressive positions, opposing a Green New Deal outright and suggesting the atmosphere be turned into a giant free market where polluters can trade credits and speculate. “The left’s opposition to a carbon tax shows there’s something deeply wrong with the left,” they wrote. They also endorsed the highly controversial process of fracking. Seeing as the Post’s editorial board is littered with former employees of the notorious climate-change denyingWall Street Journal, its stance is perhaps not surprising.
On COVID, the Post has consistentlyopposedteachers’ unions calls to keep schools closed, as well as standing against $2,000 checks. A universal payout is a “bad idea” they stated, but one “whose time has come because of politics, not economics.” So committed was the editorial team’s opposition to the idea of helping the poor that it presented Republican Majority Leader Mitch McConnell as a voice of sanity in Washington.
This does not mean that the Post was against direct payments to all people. In fact, all Post employees received a $2,021 bonus from management in January as a gesture of appreciation for their work during the pandemic. Two grand for me, not for thee.
Junk-food news
The point of a fourth estate is that it is supposed to shine a light on the powerful and hold them to account. But when corporate media are largely owned and sponsored by the super wealthy themselves, the claim that this is what they do is increasingly hard to maintain. In the Soviet Union, everybody was aware that the media was controlled by the state. But in a corporate state like the U.S., a veneer of independence is still maintained, although trust in the media has been plummeting for years.
While The Washington Post presents itself as an adversarial publication standing up to power, the fact that its senior staff constantly comes to such a hardline neoliberal elitist consensus on so many issues shows how little ideological diversity there is among its staff. Democracy dies at The Washington Post editorial board.
There is a new, mega-rich global elite consisting of a small number of billionaires and multibillionaires. Many of them made their money in the technology sector. Others play financial markets or inherit fortunes. They are wealthier and more powerful than some entire nation-states.
The British Ministry of Defence (MoD) says:
“Whilst there have always been differences between the wealthier, better educated and the less privileged, these differences appear likely to widen in the coming decades.”
The mega-rich deliberately order the world in ways that guarantee their wealth by institutionalising inequality. Occasionally, this is admitted. In 1997, a book published by the Royal Institute for International Affairs in the UK acknowledged:
“The present international order may not be the best of all possible worlds, but for one of the ‘fat cats of the West’ enjoying a privileged position in an international society that is structured and organised in ways which perpetuate those privileges, there are good reasons for not pursuing radical change.”
This is also true of internal policymaking. The third richest man in the world, Warren Buffett (worth over $80bn), confirmed this: “There’s been class warfare for the last 20 years, and my class has won.” This echoes his statement in 2006, just prior to the global financial crisis: “There’s class warfare all right… but it’s my class, the rich class, that’s making war, and we’re winning.” Around the same time, the liquidity firm Citigroup circulated an investor memo, stating: “Society and governments need to be amenable to disproportionately allow/encourage the few to retain that fatter profit share.” More recently, the UK MoD admitted: “In the coming decades, the very highest earners will almost certainly remain rich, entrenching the power of a small elite. Vested interests could reduce the prospect of economic reforms that would benefit the poorest.”
Consider the enormous concentration of wealth and power that results from this imbalance.
Ever-Increasing Power
Global and national inequality is staggering and getting worse. By 2011, a mere 147 – mainly US and European – corporations owned and controlled 40% of world trade and investment. Just four corporations influence the profitability and power of these 147: McGraw-Hill, which owns Standard & Poor’s ratings agency; Northwestern Mutual, owner of the indexer Russell Investments; the CME Group, which owns 90% of the Dow Jones market index; and Barclay’s bond fund index. Evaluative decisions by analysts at these firms affect the wealth and performance of each of the 147 giants.
That’s corporate wealth concentration. But what about wealth concentration among individuals?
There are 7.7 billion people in the world. Of those, just 2,153 are billionaires. According to Forbes, their combined wealth totals $8.7 trillion. The list of billionaires reflects where power is most concentrated: in the US. While China and Europe’s number of billionaires declined in the previous 12 months, the US and Brazil gained billionaires. The US is home to 607 billionaires or 0.000001% of the population. It is worth noting that President Donald Trump was a billionaire before he came to power. Trump has cut taxes for his fellow billionaires. As an indication of continued wealth concentration, consider the wealth disparity among the billionaire class itself. He Xiangjian, founder of the Midea Group, is the joint-50th richest person, worth over $19.8bn. Jeff Bezos, by comparison, the founder of Amazon, is the richest man in the world, worth over $131bn – more than six times He Xiangjian.
Part of the problem has been the US-led imposition of an economic dogma called “neoliberalism” (which is neither new nor liberal) on much of the rest of the world.
1) Financialisation, i.e., allowing investors to make money from money as opposed to tangible things;
2) Deregulating financial services;
3) Taking out government insurance policies so that working people bail out financial institutions;
4) Cutting taxes for the wealthy;
5) Privatising public services to reduce social mobility;
6) Imposing austerity to make markets more attractive to investors.
Neoliberalism has cut taxes for the super-rich, enabling them to hold onto their wealth at the expense of others. According to Oxfam, the average rate of personal income tax for the wealthy was 62% in 1970. In 2013, it was 38%. In the UK, the poorest 10% pay a higher proportion of their income in taxes than the richest 10%. Global GDP, i.e., how much money there is in the world, is $80 trillion. But, of this, $7.6 trillion is untaxed. In the decade since the financial crisis, the number of billionaires doubled. This reveals that the system rewards greed. In 2017, 43 people owned as much wealth as half the world’s poorest. In 2018, the number was 26.
To put all this into perspective, Jeff Bezos owns as much wealth as the poorest fifty countries. When it comes to more ‘developed’ nations, Bezos’s wealth equals the entire GDP of Hungary. Consider how Bezos makes his money. Amazon is a corporation that primarily advertises and delivers products. The innovation, design, and investment in and of those products is the work of others. Amazon treats “workers like robots” by spying on them, discouraging unions, offering insecure contracts, and encouraging long hours. Amazon is also notorious for paying little or no corporation tax. Amazon is an online retailer. The Internet was developed by the US Defense Department in the 1960s as ARPANET, with public money. The satellites that enable online transactions are first and foremost military hardware. Not only did Amazon take advantage of state-funded innovation, but it also rewards government investors by selling the CIA cloud technology and the Pentagon artificial intelligence.
Bezos is far from being the only one. Bill Gates’s Microsoft and the late Steve Jobs’s Apple, which became the first trillion-dollar company, also enjoy low taxes, technologies developed with government grants, and procurement contracts.
Consider also the immoral activities of other hi-tech nouvelle méga riche. Without making it clear to users, Facebook founder Mark Zuckerberg (worth $66bn) has made his money by selling personal data to insurers and advertisers. Scientists have used Facebook in social media experiments without the knowledge or consent of users in an effort to see how memes affect mood.
Other mega-rich, including the hedge fund manager Robert Mercer of Renaissance Technologies, used Facebook to market political candidates. Other tech billionaires include Google founders Larry Page and Sergey Brin. Google technology was funded by the CIA’s venture capital firm In-Q-Tel. Also relying on technologies developed by the Pentagon with workers’ tax dollars, the company cooperates with the National Security Agency to spy on citizens and it has even enabled US assassination programmes.
Consequences
How do the billionaires get away with it, and what are the social and political consequences? The examples below are from the US, but it should be noted that the US exports its mega-wealth model.
A study by Martin Gilens and Benjamin I. Page on plutocracy (government by the rich) notes that the rich buy political parties. Politicians draft and/or vote for laws that help the rich. The authors analysed 1,779 policy issues in the US and conclude that “average citizens and mass-based interest groups have little or no independent influence.” Unlike the public, “economic elites and organised groups representing business interests have substantial independent impacts on US government policy.” Other research into wealth inequality in the US finds that “[c]ertain policies, such as the decreased support for unions and tax cuts favouring the relatively well-off and corporations, have benefitted a small minority of the population at the expense of the majority and have thus contributed to widening income inequality.”
At the turn of the last century, 9% of American families owned 71% of the nation’s wealth. The elite of the day included familiar names: John D. Rockefeller (oil), J.P. Morgan (banking), W. Averell Harriman (industry), and so on. Things balanced out after the Second World War, with the majority of Americans becoming middle class. Gradually, state controls over the economy were removed, and the situation reverted to the inequality of bygone centuries.
Since the 1970s, the US middle class has been shrinking. Until recently, the middle classes of Asia grew, precisely because strong Asian economies (notably China, South Korea, and Singapore) either retained some state controls or refused to adopt the US neoliberal model.
Alan B. Krueger, a labour economist and key Obama advisor, explains that, “since the 1970s income has grown more for families at the top of the income distribution than in the middle, and it has shrunk for those at the bottom.” Between 1979 and 2007, the top 1% ((multi)millionaires and (multi)billionaires) enjoyed a 278% increase in their after-tax incomes. But 60% of Americans saw their incomes rise by just 40%, which when adjusted for rising living costs means stagnation. Krueger notes that during that period, $1.1 trillion of annual income was moved to the top 1%. “Put another way, the increase in the share of income going to the top 1% over this period exceeds the total amount of income that the entire bottom 40 percent of households receives.”
The exportation of this model means that Australia, Britain, and Canada became what the billionaire-dollar liquidity firm Citigroup calls “plutonomies,” economies in which the rich drive luxury goods markets such as jewellery, fashion, cruises, and sports cars: hence the recent entry of celebrity Kylie Jenner into the billionaire class. The Citigroup document also notes that in plutonomies the top 1% owns 40% as much wealth as the bottom 95%. No matter where you live, you can’t escape the institutional structures that create inequality.
The US military exists, in part, to maintain the unjust status quo. Yet, it acknowledges the dangers of dominance: “A global populace that is increasingly attuned and sensitive to disparities in economic resources and the diffusion of social influence,” thanks in part to the very technologies that enrich the rich, “will lead to further challenges to the status quo and lead to system rattling events,” like Brexit or the Yellow Vest protestors in France.
The mega-rich and international think tanks and forums they sponsor are beginning to reluctantly accept that their status quo political puppets might get voted out of office and give way to so-called far-left or far-right parties unless they address wealth inequality.
New Paradigms of Control
The question, then, is how to deal with the restless and disaffected majority while not radically altering the system and taking away the privileges of the elite. In 1961, US President John F Kennedy said: “If a free society cannot help the many who are poor, it cannot save the few who are rich.” In the 1980s, World Economic Forum founder Klaus Schwab said: “Economic globalisation has entered a critical phase. A mounting backlash against its effects… is threatening a very disruptive impact on economic activity and social stability in many countries… This can easily turn into revolt.” More recently, he said: “Today, we face a backlash against that system and the elites who are considered to be its unilateral beneficiaries.” Likewise, the billionaire Johann Rupert of Cartier jewellery (one of the many luxury services driving plutonomies) said: “We are destroying the middle classes at this stage and it will affect us.” Similarly, the British MoD discusses “[m]anagement of societal inequalities,” as opposed to the elimination of social inequality.
Many of the new elites make people redundant by automating the workplace. While Amazon still relies on human shelf-stackers and delivery drivers, it uses an increasing number of physical robots to stack shelves and algorithmic robots to assist online customers. Likewise, Facebook and Google’s content filters rely on heavy automation. This is creating precarious employment conditions. According to the Washington Post (which is owned by Bezos): “…the modern emerging workforce of tech, urbanised professionals, and ‘gig economy’ labourers all represent an entirely new political demographic.” Politicians then “focus more on education, research and entrepreneurship, and less on regulations and the priorities of labour unions.”
But there are many problems. For one thing, the financial services economy, which markets everything, has made “education” a form of unsustainable debt. The quality of US education is notoriously low by world standards, and many young people are “overqualified” for menial jobs, like delivering for Uber or stacking shelves in Amazon warehouses. The UK MoD acknowledges that, “Freelance work is… often low-paid, lacking the benefits and security of formal employment and, therefore, the growth of the gig economy could increase inequality.”
The crisis of what to do with a young, indebted, restless population automated out of steady work by – and competing with – algorithms and physical robots has been considered for at least 50 years.
Traditionally, ‘education’ meant brainwashing children to work in menial jobs for life in adulthood. But as the economy changes and employment becomes less stable, new methods of ‘education’ for re-skilling adults are required. In the late 1960s, future political advisor Zbigniew Brzezinski authored a book in which he advocated for lifelong learning as a way of re-skilling an aging population that finds its employment opportunities diminished, as small-to-medium-sized businesses get overtaken by tech giants. Around the same time, the British Labour Party (when it was a real labour party) introduced the Open University with the aim of providing lifelong learning. Likewise, in the 1980s, futurist Alvin Toffler envisaged an “electronic village” in which flexible working hours and lifelong learning would be required in a hi-tech economy.
To keep the poor from rioting while trapping them in a system that works for those who design it, today’s multibillionaire elites help to privatise public services and education by offering scholarships and infrastructure investments. In doing so, they train poor people to work for their system by developing others’ technology skills while hiding their own taxable wealth in charity foundations.
Howard G. Buffett is the son of Warren. While enjoying largely tax-free wealth that further impoverishes the global poor, the Buffetts, via Howard’s foundation, invest in dams and irrigation in the poorest nations of Africa. Bezos’s foundation awards scholarships for STEM courses (Science, Technology, Engineering, Mathematics). Zuckerberg’s foundation seeks “to find new ways to leverage technology, community-driven solutions, and collaboration to accelerate progress in Science, Education, and within our Justice & Opportunity work.”
Conclusion
By using free online services, we have allowed ourselves to be the products that tech giants sell to advertisers. By not organising to raise taxes on the mega-wealthy, we have underfunded our public services. By not keeping an eye on who’s funding what, we’ve allowed our political parties to hoover up donations from elites. By failing to understand the economy, we’ve allowed a new normal of instability and political uncertainty to flourish to the advantage of asset managers and hedge fund investors. As the US pursues global domination, this model will continue to be exported. It’s time to wake up.
We are currently seeing an acceleration of the corporate consolidation of the entire global agrifood chain. The high-tech/data conglomerates, including Amazon, Microsoft, Facebook and Google, have joined traditional agribusiness giants, such as Corteva, Bayer, Cargill and Syngenta, in a quest to impose a certain type of agriculture and food production on the world.
Of course, those involved in this portray what they are doing as some kind of humanitarian endeavour – saving the planet with ‘climate-friendly solutions’, helping farmers or feeding the world. This is how many of them probably do genuinely regard their role inside their corporate echo chamber. But what they are really doing is repackaging the dispossessive strategies of imperialism as ‘feeding the world’.
FAILED GREEN REVOLUTION
Since the Green Revolution, US agribusiness and financial institutions like the World Bank and the International Monetary Fund have sought to hook farmers and nation states on corporate seeds and proprietary inputs as well as loans to construct the type of agri infrastructure that chemical-intensive farming requires.
Monsanto-Bayer and other agribusiness concerns have since the 1990s been attempting to further consolidate their grip on global agriculture and farmers’ corporate dependency with the rollout of genetically engineered seeds, commonly known as GMOs (genetically modified organisms).
In the 1980s, the chemical corporations started to look at genetic engineering and patenting of seed as new sources of super profits. They took farmers varieties from the public gene banks, tinkered with the seed through conventional breeding or genetic engineering, and took patents.”
Shiva talks about the Green Revolution and seed colonialism and the pirating of farmers seeds and knowledge. She says that 768,576 accessions of seeds were taken from farmers in Mexico alone:
…taking the farmers seeds that embodies their creativity and knowledge of breeding. The ‘civilising mission’ of Seed Colonisation is the declaration that farmers are ‘primitive’ and the varieties they have bred are ‘primitive’, ‘inferior’, ‘low yielding’ and have to be ‘substituted’ and ‘replaced’ with superior seeds from a superior race of breeders, so called ‘modern varieties’ and ‘improved varieties’ bred for chemicals.”
It is now clear that the Green Revolution has been a failure in terms of its devastating environmental impacts, the undermining of highly productive traditional low-input agriculture and its sound ecological footing, the displacement of rural populations and the adverse impacts on village communities, nutrition, health and regional food security.
Aside from various studies that have reported on the health impacts of chemical-dependent crops (Dr Rosemary Mason’s many reports on this can be accessed on the academia.edu website), ‘New Histories of the Green Revolution’ (2019) debunks the claim that the Green Revolution boosted productivity; ‘The Violence of the Green Revolution’ (1991) details (among other things) the impact on rural communities; Bhaskar Save’s open letter to Indian officials in 2006 discusses the ecological devastation of the Green Revolution and in a 2019 paper in the Journal of Experimental Biology and Agricultural Sciences, Parvez et al note that native wheat varieties in India have higher nutrition content than the Green Revolution varieties (many such crop varieties were side-lined in favour of corporate seeds that were of lower nutritional value).
These are just a brief selection of peer-reviewed and ‘grey’ literature which detail the adverse impacts of the Green Revolution.
GMO VALUE CAPTURE
As for GM crops, often described as Green Revolution 2.0, these too have failed to deliver on the promises made and, like the 1.0 version, have often had devastating consequences.
The arguments for and against GMOs are well documented, but one paper worth noting appeared in the journal Current Science in 2018. Along with PC Kesavan, MS Swaminathan – regarded as the father of the Green Revolution in India – argued against introducing GM crops to India and cited various studies about the failings of the GMO project.
Regardless, the industry and its well-funded lobbyists and bought career scientists continue to spin the line that GM crops are a marvellous success and that the world needs even more of them to avoid a global food shortage. GM crops are required to feed the world is a well-worn industry slogan trotted out at every available opportunity. Just like the claim of GM crops being a tremendous success, this too is based on a myth.
There is no global shortage of food. Even under any plausible future population scenario, there will be no shortage as evidenced by scientist Dr Jonathan Latham in his recent paper ‘The Myth of a Food Crisis’.
However, new gene drive and gene editing techniques have now been developed and the industry is seeking the unregulated commercial release of products that are based on these methods.
It does not want plants, animals and micro-organisms created with gene-editing to be subject to safety checks, monitoring or consumer labelling. This is concerning given the real dangers that these techniques pose.
Many peer-reviewed research papers now call into question industry claims about the ‘precision’, safety and benefits of gene-edited organisms and can be accessed on the GMWatch.org website.
It really is a case of old wine in new bottles.
And this is not lost on a coalition of 162 civil society, farmers and business organisations which has called on Vice-President of the European Commission Frans Timmermans to ensure that new genetic engineering techniques continue to be regulated in accordance with existing EU GMO standards.
The coalition argues that these new techniques can cause a range of unwanted genetic modifications that can result in the production of novel toxins or allergens or in the transfer of antibiotic resistance genes. The open letter adds that even intended modifications can result in traits which could raise food safety, environmental or animal welfare concerns.
The European Court of Justice ruled in 2018 that organisms obtained with new genetic modification techniques must be regulated under the EU’s existing GMO laws. However, there has been intense lobbying from the agriculture biotech industry to weaken the legislation, aided by the Gates Foundation.
The coalition states that various scientific publications show that new techniques of genetic modification allow developers to make significant genetic changes, which can be very different from those that happen in nature.
In addition to these concerns, a new paper from Chinese scientists, ‘Herbicide Resistance: Another Hot Agronomic Trait for Plant Genome Editing’, says that, in spite of claims from GMO promoters that gene editing will be climate-friendly and reduce pesticide use, what we can expect is just more of the same – GM herbicide-tolerant crops and increased herbicide use.
The industry wants its new techniques to be unregulated, thereby making gene-edited GMOs faster to develop, more profitable and hidden from consumers when purchasing items in stores. At the same time, the costly herbicide treadmill will be reinforced for farmers.
None of this is meant to imply that new technology is bad in itself. The issue is who owns and controls the technology and what are the underlying intentions. By dodging regulation as well as avoiding economic, social, environmental and health impact assessments, it is clear that the industry is first and foremost motivated by value capture and profit and contempt for democratic accountability.
This is patently clear if we look at the rollout of Bt cotton in India which served the bottom line of Monsanto but brought dependency, distress and no durable agronomic benefits for many of India’s small and marginal farmers. Prof A P Gutierrez argues that Bt cotton has effectively placed these farmers in a corporate noose.
Monsanto sucked hundreds of millions of dollars in profit from these cotton farmers, while industry-funded scientists are always keen to push the mantra that rolling out Bt cotton in India uplifted their conditions.
Those who promote this narrative remain wilfully ignorant of the challenges (documented in the 2019 book by Andrew Flachs – ‘Cultivating Knowledge: Biotechnology, Sustainability and the Human Cost of Cotton Capitalism in India‘) these farmers face in terms of financial distress, increasing pest resistance, dependency on unregulated seed markets, the eradication of environmental learning, the loss of control over their productive means and the biotech-chemical treadmill they are trapped on (this last point is precisely what the industry intended).
When assessing the possible impacts of GMO agriculture, it was with good reason that, in their 2018 paper, Swaminathan and Kesavan called for:
able economists who are familiar with and will prioritise rural livelihoods and the interests of resource-poor small and marginal farmers rather than serve corporate interests and their profits”.
WHAT CAN BE DONE?
Whether through all aspects of data control (soil quality, consumer preferences, weather, etc), e-commerce monopolies, corporate land ownership, seed biopiracy and patenting, synthetic food or the eradication of the public sector’s role in ensuring food security and national food sovereignty (as we could see in India with new farm legislation), Bill Gates and his corporate cronies seek to gain full control over the global food system.
Smallholder peasant farming is to be eradicated as the big-tech giants and agribusiness impose lab-grown food, GM seeds, genetically engineered soil microbes, data harvesting tools and drones and other ‘disruptive’ technologies.
We could see farmerless industrial-scale farms being manned by driverless machines, monitored by drones and doused with chemicals to produce commodity crops from patented GM seeds for industrial ‘biomatter’ to be processed and constituted into something resembling food.
The displacement of a food-producing peasantry (and the subsequent destruction of rural communities and local food security) was something the Gates Foundation once called for and cynically termed “land mobility”.
Technocratic meddling has already destroyed or undermined agrarian ecosystems that draw on centuries of traditional knowledge and are increasingly recognised as valid approaches to secure food security, as outlined in Food Security and Traditional Knowledge in India in the Journal of South Asian Studies, for instance.
The report outlines two different futures. If Gates and the global mega-corporations have their way, we will see the entire food system being controlled by data platforms, private equity firms and e-commerce giants, putting the food security (and livelihoods) of billions at the mercy of AI-controlled farming systems.
The other scenario involves civil society and social movements – grassroots organisations, international NGOs, farmers’ and fishers’ groups, cooperatives and unions – collaborating more closely to transform financial flows, governance structures and food systems from the ground up.
The report’s lead author, Pat Mooney, says that agribusiness has a very simple message: the cascading environmental crisis can be resolved by powerful new genomic and information technologies that can only be developed if governments unleash the entrepreneurial genius, deep pockets and risk-taking spirit of the most powerful corporations.
Mooney notes that we have had similar messages based on emerging technology for decades but the technologies either did not show up or fell flat and the only thing that grew were the corporations.
He says:
In return for trillions of dollars in direct and indirect subsidies, the agribusiness model would centralise food production around a handful of untested technologies that would lead to the forced exodus of at least a billion people from hundreds of millions of farms. Agribusiness is gambling on other people’s food security.”
Although Mooney argues that new genuinely successful alternatives like agroecology are frequently suppressed by the industries they imperil, he states that civil society has a remarkable track record in fighting back, not least in developing healthy and equitable agroecological production systems, building short (community-based) supply chains and restructuring and democratising governance systems.
As stated in the report, the thrust of any ’Long Food Movement’ strategy is that short-termism is not an option: civil society groups need to place multiple objectives and actions on a 25-year roadmap and not make trade-offs along the way – especially when faced with the neoliberal-totalitarianism of Gates et al who will seek to derail anything or anyone regarded as a threat to their aims.
The report ‘A Long Food Movement: Transforming Food Systems by 2045’ can be accessed here.
After the Crash 