The Shredding of the Social Contract (2)

"I see no need to get the wages of (bond) traders down. But the need is to get the cleaning workers' wages down, and to widen the spread between them." - Goldman Sachs economist quoted in 1993, from Steven Solomon: 'The Confidence Game: How Unelected Central Bankers Are Governing the Changed World Economy', Simon & Schuster, 1995, p. 365.

In his recent WSJ piece (Nov. 2, p. A15), investor and former Democratic candidate (FL) Jeff Greene ('We Should Listen to the 99%') bemoaned the plight of the 99%. He bemoaned for example, that 'everywhere I went' in Zucotti Park, all that was heard were tales of woe and fears concerning a future in a world "where 99% of the people seem to be losing opportunity, power and security while 1% are gaining wealth and influence at a rate not seen since the Roaring '20s"

In this sense, Greene is correct about the nature of the fears, and I would also add that they're totally justified. Where he is incorrect, is in assessing the putative solution to the problem:

"In today's global economy, our future depends not on subdivisions and cheap gas but on education and training for people to the skilled trades that still command good wages."

And what pray tell, are these jobs that still command good wages? Well, they were listed on the ABC Evening News some two nights ago: carpenters, electricians, and plumbers. THESE are the jobs that are most likely the ones to be in demand over time, and exist despite the pressures of globalization.

For all other jobs, globalization and outsourcing have ensured it doesn't make a dime's worth of difference what degrees you have or how many. Given a choice between paying an American college-educated person $45,000 starting salary - with benefits tossed in, and an Indian only half that and zero benefits, what do you think the big cheese in a global company is going to do? With no penalties for sending jobs to Indians (i.e. a tax surcharge of 10% on every job dispensed there) that's where the jobs will go, the lowest priced, least regulated markets! This stuff isn't rocket science, and it's thus not surprising that companies like GE and Cisco have dispatched up to four times the jobs -including tech - to oversease markets like Bangalore, than to the U.S. - where they've actually pared jobs.

This is the 'new normal' that Mr. Green seems to opt not to think about.

As for what kids are getting from U.S. colleges, universities, William McGurn in a WSJ article the day before Greene's ('What's Your Kid Getting from College?) noted a New York University study by Richard Arum, conducted into the benefits of "practical majors" - which disclosed that more than a third of seniors leaves their respective campuses with no improvement in critical thinking or analytical thinking skills and worse (also counterintuitively) the "practical" majors chosen (business, education, and communications) proved to be the least productive of gainful employment that also remunerated at a rate whereby college loans could be most expeditiously repaid (e.g. within 10-12 yrs.).

But again, why should this be any kind of mystery to anyone paying attention? That there has been a glut of business majors, and especially MBA people, has been known and circulated for some time. Also the fact that in our pathological "Winner Take All" culture, the only ones who make their marks are either coming out of the Ivy League or are in higher echelon public universities (e.g. Berkeley) with stellar 4.0 averages!

Educational opportunities gone? Also no mystery, given massive state budget cutbacks! Many haven't heard much about it, but states have ditched more than 300,000 teachers in the past 6 months alone, and the job losses stand to get much more severe as penny pinching fever grows - thanks to no tax support. (In a just finished CO election, for Proposition 103 - to slightly raise state taxes by 0.42% to help pay for education- the measure failed by more than 2 to 1.)

Communications? Please! Given the monster mergers of the corporate media giants, who can be surprised at job attrition? Along with the Telecommunications Act of 1996 the drive has been to cut and pare to "become more efficient" even as people have nearly stopped reading newspapers and many magazines - at least in paper versions.

But all of these are just tiny ripples on a much more disturbed sea that promises an ever declining number of jobs not just over years - but decades! We are looking in fact, thanks to globalizaton, at an environment where more people are actually not working than working. This is the trend, and has been as the new global efficiency of markets have been proclaimed from the mountaintops of places like the G20 meetings, central banker fetes, and of course, the OECD meetings - along with the usual suspects (the IMF).

How did this come to be? How did we get here? Well, by a number of mutually reinforcing dynamics that ultimately synergized....then on doing so, cluster-fucked the majority of people on planet Earth! Let me recite a few of the major influences below:

1) The extirpation of the Bretton Woods agreement

Bretton Woods was not perfect by any means but it did preserve human balance within a global trade network, i.e.without sacrifice to private monopoly or multi-national power. This was first recognized by President John F. Kennedy in late 1962 and 1963. Once Bretton Woods was killed, private power as wielded by unchecked multinationals could grow to rival the power of states.

People under the new WTO-GATT-NAFTA etc. hegemony were thereby rendered pawns and serfs to global capital.

So, one could say that within 10 years of JFK's assassination, the global tableaux had been set for eventual market domination of the world. WIth markets now substituting for genuine citizen action and democratic initiative. How better to achieve this than to mutate everyone into a "consumer" or herd animal? (Always re-stated in media reports, as opposed to the term "citizen" which gave the elites headaches. I mean how could a future serf be a citizen?)

2) Massive de-regulation, vastly reduced tax revenues

This likely began in the Reagan years, with the Bank Holding (De-regulation) Act of 1984, which sped the way to speculative excesses resulting in travesties such as the S&L scandal in the late '80s. It also preceded the securitization of U.S. mortgages to make them easier to offload to global speculators - while removing them as liabilities from banks' books. Thus, a million or so mortgages were now compiled into a vehicle known as "collateralized mortgage obligation" and sold off to global investors in bonds. In effect, unless people paid off their mortgages rapidly, they became hostage to spculative markets.

The reduced taxation likely emerged after a certain Neo-liberal elite (probably a cabal of central bankers, politicos, investment firms and financial renegades)decided that from now on the economic commons was on its own, and would no longer be supported via taxation, but by leveraging DEBT. They thereby jacked up the rates on everything from mortgages to credit cards. Meanwhile, the inadequacy of state taxation meant college fiscal support from states would be cut leading to colleges having to increase tuition etc. on their own to compensate for the loss of their tax support.

3) The circulation of "free market" Bullshit by Think tanks and the Media

This helped to instill false consciousness until almost every halfway intelligent American began blabbering about the need for low taxes based on a free market myth that was confabulated in wingnut thinktanks, then fed to the corporo-media to publish in syndicated columns (e.g. by Thoams Sowell, George Will, David Harsanyi and others)

In his book, False Dawn, John Gray documents how the so-called "free market" is a total set of bollocks and codswallop. In America, markets have almost never been free - and even up to a few years ago, other nations (e.g. Canada, Germany, France) were harping on the U.S. for preserving high tariffs for incoming goods from outside markets. As Gray puts it (p. 104):

"American government has never observed a rule of non-interference in economic life"

Hell, even as I write this, medical marijuana dispensaries in California are under threat of being shut down by the over-aggressive feds. This is certainly interference in the state's economic life especially when those dispensaries help defray the red ink in the state's budget by their paid state taxes. But this shit isn''t new. As Gray also remarks regarding Prohibition (ibid.):

"Outside the economic sphere, American government was more invasive of personal liberty in the pursuit of virtue than almost any other modern western country. No other western nation, for example, has attempted the enforcement of Prohibition"

Thus, the claims of laissez-faire going hand in hand with the need for low taxation and "freedom" and "liberty" and being circulated for two decades and more is total horse shit. It is an invention of mainly right wing think tanks and their hacks, in places like the Heritage Foundation, the American Enterprise Isntitute, the Hudson Institute, the Hoover Institute, the CATO Institute and their many offshoots and clones. As Gray puts it (p. 105):

"In this Right wing rendering of the American creed a surreal inversion of history has been quietly accomplished".

And also, way too many have bought into this bullshit!

4) The metastasis of the "free market" myth to the global level

This is above all the basis of the current paradigm for leveraged debt, and rendering all peoples as nothing more than corporate serfs. (And if you don't think the elites don't believe most of us are serfs already or want to make us so, read the quote from the Goldman-Sachs asshole at the top!) Make no mistake these dicks wants us at the bottom and plan to keep us there! As John Gray puts it (ibid.):

"If the authority of American insitutions is universal and the 'free market' is at the heart of them, the reach of the American free market must be global. Free markets are not seen as merely one way of organizing a market economy...they are understood as a dicate of human freedom everywhere."

Indeed, in their Chapter 9 ‘The Rhine Model in Retreat’, the authors of ‘Capitalism vs. Capitalism’ notes that the socially aware Rhine model of capitalism (which too many Americans mistake for "socialism") is being undermined precisely because citizens, governments are allowing American neoliberal idioms and corruption of language to infiltrate their systems without critical inspection. As a result of this insidious cultural and language debasement (p. 169):

"Given their success in so many areas, the Rhine countries should be fairly resistant to outside influences, and more especially to the siren song of the USA and the superficial glitter of its casino economy. Incredibly the reverse is now true.

By allowing their concepts and language to be altered, the Rhine economies are increasingly falling under the spell of American politics, culture and media. America’s seductive powers are such that even all those societies which embody all the virtues of the Rhine model seem to be succumbing to her charms. In other words, they are in grave danger of becoming the latest victims to the neo-American illusion"
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Thus, this Americanized pseudo-free market meme is really out to limit individual financial security for the mass of people - not support or enhance it! The agenda was nicely summarized in the article 'The New World Disorder Evident Here, Abroad', appearing in The Baltimore Sun back in 1997:

"The global economy has been constructed on the premise that government guarantees of security and protection must be avoided at all costs, because they discourage personal initiative. In times of crisis, however, that premise cannot be sustained politically. In times of trouble it is human nature to seek security and protection and to be drawn toward those who promise to provide it. That is how men such as Adolf Hitler, and Vladimir Ilyich Lenin came to power, with disastrous consequences. "

Note that it is precisely this which defines and parameterizes the Neoliberal idiom. THIS is why its Overclass adherents and hacks want to demolish Social Security in the U.S., as well as Medicare, even as they wish to do the same for the National Insurance system in Barbados and its pension system. NO one must have any security, because to have such means that markets are "disabled" and not really Pareto efficient or optimal. Milton Friedman would have a shit fit, and Ayn Rand would ....turn over in her grave.

On the global scale, corporatization is the practical vehicle for the spread of this specious free market fundamentalism. It thereby also assumes the guise of transnational bodies, such as the WTO (World Trade Organization) and the IMF, OECD etc. that are, in fact, vehicles for multi-national corporations to advance their interests. Thus, labor protections – say enacted in small Caribbean nations like Barbados or Trinidad, are challenged as ‘trade impediments’, even as an environmental regulation say in Canada is challenged as a ‘trade obstacle’ by a U.S. company. In this way, a race to the bottom is established, with no one benefiting but multinational corporations.

The trends driven by the mechanism of global capital are easy to see, and no one paying attention can miss them. What they call for is mass unemployment and effective destitution in the more advanced western nations, at least to the level of the poorer nations such as Mexico, the Philippines and India. In this way, an economic global hammer ensures that elite, Overclass rule will prevail even as a number of horrific catastrophes unfold, starting with Peak Oil and extending to climate disasters.

Even now, as I write, new methods of crowd control are being perfected by the defense- law enforcement security establishment, which I will examine in the next instalment in the context of why the elites detest protests like Occupy Wall Street!

How the U.S. Corporatocracy Fits in the Global Scheme

A pertinent question is: 'How does the U.S. Corporatocracy mesh with its global counterpart?' In fact, there are a number of ways.

a) The Federal Reserve Bank is part and parcel of the Unelected Central Bankers worldwide, and shares the same imperatives as its cousins in the Bundesbank, Bank of France, Bank of England and elsewhere.

b) Speculators and high power, high profile investors- such as George Koch and Rupert Murdoch – drive investment capital across borders to gamble in foreign currencies (speculate on them, e.g. the Thai baht) as well as drive worker-restructuring imperatives via ownership of shares in stocks, mutual funds (global funds) etc.

c) Multi-national corporations align with other multi-nationals and employ wage arbitrage and other methods, including the threat of lost capital, unless governments kowtow to their demands, i.e. in terms of gutting protective labor legislation, benefits, or corporate tax assessments (turning them instead into subsidies via corporate welfare).

An even more bothersome element, than any of the preceding, is the increasingly cozy relationship between U.S. government departments, agencies and the elite bastions of finance. Quoting Jerome Levinson, a professor of international law at American University (Mark Matthews, in The Baltimore Sun, p.24A, Dec. 27, 1998):

"U.S. policy and the people who make it are a very ingrown group." And they promote the free movement of capital above all else."

Jagdish Baghwati, a Columbia University economist, writing in the May-June Foreign Affairs magazine (ibid.) cites:

"a definite networking of like-minded luminaries among the powerful institutions - Wall Street, the Treasury Department, the State Department, the IMF and the World Bank most prominent among them."

and:

"This powerful network..is unable to look much beyond the interests of Wall Street, which it equates with the good of the world."

The article continues (ibid.)

"The magazine Institutional Investor tracked the eye-popping Washington -Wall Street traffic in 1996. It reported then that the number of former high level officials ensconced in financial houses had more than doubled since 1974."

Of course, since 1996, it has doubled again!

Returning to Matthews' article, quoting a former U.S. ambassador to Germany (ibid.)

"Former diplomats or people who were in government positions with global responsibility are attractive to any company with a global franchise."

In effect, we see the nexus of the U.S. and global Corporatocracy is facilitated, expedited not only by the intermixing of (central) bankers and business' interests, but with speculators (embodied in Wall Street) and from the halls of government as well. One is left to query to what degree this is, in fact, in the best interests of the majority of people, as opposed to a monied elite.

Certainly, if public officials become de facto 'lobbyists' for Wall Street and its interests, they cannot have the more general interests of their constituents at heart. Indeed, the constituents' interests, including job stability and adequate social safety nets, become subjugated to Wall Street's vastly more narrow agendas.

We've seen in this and previous blogs that the Corporatocracy at large exists worldwide, and is driven by the primary imperative to subjugate the interests and security of the majority of citizens to global capital. The result has been to create a de-humanizing atmosphere in which global capital is awarded an ever larger share of returns from production, and labor ever smaller. This is quickly resulting in a surplus production worldwide, in which there are too few consumers matched to the number and diversity of products produced. Unless this equation is soon altered, the world is looking at a major catastrophe of ecological and human proportions.

Clearly, higher wages, more quality jobs would solve the problem (by virtue of yielding greater purchasing power, lower debt)- but such largesse is not on the radar screen of the world's central banker elite. Instead, they are content to make do with a scheme that disproportionately rewards the speculator over the worker and genuine saver. Not surprisingly, personal -consumer debt continues to spiral out of control in the U.S. though true, some deleveraging has begun, which has shaken Wall Street's elites as much as Occupy Wall Street.

This again bears on reminding people where the real power against the fascist corporate state inheres: it is within the pocket book of each person! Withhold the money, the spending to support GDP and you withhold the life blood of Wall Street and its ravenous wolves, speculators. Meanwhile, playing the consumer game merely ensures higher debt levels and the the creation of only the most menial, service-commercial based jobs, with nothing of quality in sight. Hence, we must move away from consumerist-commercial society if we are ever to arrive at a high work quality culture, based on knowledge and artistic expression for the mass of people - rather than merely a few elites.

Meanwhile, in the rest of the world, enormous market pressures are under way to exact penalties on any remaining nations (such as Germany and Japan) which attempt to preserve social contracts, and enhanced quality of life for the majority of its people. These are now being pressed, from all directions, to "restructure" - which is to say, follow the American path to larger income inequity and loss of benefits, safety nets.

Can anything be done to control the wild global Corporatocracy from its most egregious excesses? Yes, but it requires national-political will- of a sort not witnessed since John F. Kennedy faced down hordes of Wall Street vipers and sharks 35 years ago, possibly losing his life as a result. Some urgent national -level steps that need to be taken:

1. Independently writing off, liquidating debt of poorer nations, e.g. for Haiti, and other nations that have suffered monumental disasters.

2. Imposing transaction taxes on all capital that crosses a national border, whether electronically or other. Impose yearly in situ taxes on all capital parked in a safe haven or country regarded as such. Fifty percent of all collected taxes to be earmarked for national health insurance plans to assist the uninsured, in the U.S..

3. Requiring all banks to have 100% reserves for deposits at all times, to prevent 'pyramid scheme' abominations like the 1997 hedge funds bailout of Long Term Capital Management, and the 2008-09 bailouts of investment banks that played Russian Roulette with investors' money using unregulated credit default swaps. Any bannks that don't cooperate, don't receive FDIC insurance protection. (Volcker rule)

4. Enacting protective labor legislation which shall be permanently immune to all future corporate or other pressures or blandishments. This to be expedited by the ability of workers to pull 401k monies from any corporate-backed mutual funds and place them in a workers' fund instead, as in Germany.

5. Using the United Nations , or similar global legislative body, to enact and decree one single standard for globally regulating labor and capital. (So that capital cannot flee without severe penalty if tries to go to a cheaper labor market, read: greener pastures). If all nations worldwide adhere to the same standards - to protect their people, then capital can have nowhere to flee to whereby it can leverage a race to the bottom.

Until governments cease shirking their responsibilities, and at least enact some of the above, the pace toward global ecological and sociological cataclysm will continue. Whether the Wall Street mavens and their dubious ilk can see it or not, the rest of us must, and need to be prepared for the coming consequences.

Democracy, Civic Space and the Reach of History

Democracy in the genuine sense calls not only for votes, but sound reasons why votes are cast, predicated on understanding the competing interests of commercial society, government (more and more tied to the former – via gutted regulatory functions, legalized corporate bribery and payoffs) and civil society.

The last – or ‘civic space’ – occupies the mid ground between government and the rapacious private sector. In terms of set theoretics, imagine circles for ‘government’ and ‘private sector’ respectively – with large intersection of commonality between them. Civic space or the ‘set of civic society’ lies apart from the influence of these two.

It is neither where we vote (more and more influenced by ad-ism and PR, soundbites) or where we buy and sell. It is rather where neighbors, say in New England, converge for public meetings to decide on the location of a homeless shelter, or neighbors pool resources to care for children of low-income workers. Without any government ‘benediction’ or expectation of commercial sector ‘return on investment’.

The tragedy of the 20th (and now 21st ) century is the tragedy of the civic commons. The gradual erosion of civil society is largely eclipsed by corporate and market interests. Either in pursuit of state (or corporate) power, profits or both. Thus, political influence is purchased via the power of the purse (for example in lobbying) and laws enacted to favor these special interests.

Now the confluence of government –market interests has forced those wishing to live within non-coercive spheres of influence to make a Hobson’s choice: Either to side with state power and ‘commandeering of individual rights’ or private power, and its extirpation of what remains of government and its advocacy for the non-elite segment of the populace (i.e. those unable to purchase political influence).

Choose to be passively serviced (and servile) by a massive bureaucratic state wherein the word citizen has little or no resonance (until it’s election time) or submit to the selfishness and barbaric, radical individualism of the private sector – which extols the Social Darwinist refrain of ‘survival of the fittest’.

But what is needed here is to recognize and appreciate that the erosions of civil society didn’t just suddenly begin in the last few years, or even the last decade. No, the seeds were sown long ago.

As George Santayan once noted: "Those who forget the past are doomed to repeat it".

If we don't understand the past and its influence on our present, it'll make little difference what happens if and when the current 'Neandertals' and reprobates are given the heave-ho. Another set, with perhaps more sophisticated strategies, will just replace them. The people remaining as clueless as ever, since they remain unable to tie current events (i.e. the rise of the global corporate state) to the past.

Thus, the original importance of preserving a global trade network without sacrifice to private monopoly or multi-national power was first recognized by President John F. Kennedy in late 1962 and 1963. He made enormous efforts to stave off incipient private control of the globalization process. As Donald Gibson observes in his must-read monograph(‘Battling Wall Street – The Kennedy Presidency’, Sheridan Square Press, 1994, p. 113):

"John Kennedy declared the 1960s the decade of development. The Alliance for Progress, development aid, low interest loans, nation-to-nation cooperation, and some measure of government planning were some of the ingredients of that policy. Within a few years of Kennedy's death most of this had been abandoned. By the early 1970s, this type of effort and the optimism associated with it had vanished altogether."

The effect was that the task of implementing and governing economic adjustment was assumed by private markets. Power which has grown exponentially since the extripation of the Bretton Woods agreement in 1973. The causal undercurrents and ideology of corporate-state global domination have been well articulated by Gibson, even from before its emergence within ten years of the Kennedy assassination (which many astute observers tie in with financial elite interests) (op. cit. P. 75):

"Kennedy's ideas.. .his view of foreign aid and foreign policy, and his recommendations and actions in a variety of specific areas disrupted or threatened to disrupt an established order. In that established order, in place for most of the century, major government decisions were to serve or at least not disrupt the privately organized hierarchy."

Gibson goes on to point out that the vested interests within this hierarchy were similar to, "if not direct imitations of those of that older British elite rooted in inherited wealth and titles, and organized in the modern world around control of finance and raw materials." (ibid.)

It seems very plausible then, that the slaying of John F. Kennedy set the stage for a global Corporatocracy in which these same elite imperatives would be allowed to subordinate and dominate the interests and welfare of the masses. Imaginary? Take a gander at columnist Jay Bookman's view from his article "New World Disorder - Evident Here and Abroad", in The Baltimore Sun, 1998):

"The global economy has been constructed on the premise that government guarantees of security and protection must be avoided at all costs, because they discourage personal initiative. In times of crisis, however, that premise cannot be sustained politically. In times of trouble it is human nature to seek security and protection and to be drawn toward those who promise to provide it. That is how men such as Adolf Hitler, and Vladimir Ilyich Lenin came to power, with disastrous consequences. "

It is also plausible that JFK's death was crucial to the eventual success of the overall plan. Indeed, Gibson notes that these elite banking and financial interests (ibid.) "would have little tolerance for a president who interfered with their decisions or made their interests secondary to the needs of nations or of people in general."

So, one could say that by the time of JFK's assassination, the global tableaux had been set for eventual market domination of the world. With no other fearless national leaders to stand in the way (the last ones assassinated) the goal of worldwide subjugation of national interests to speculative capital, trans-national corporate control and personal debt could proceed apace. One merely had to await the right constellation of pro-market interests, and this was incepted in the Reagan years - reaching its culmination in the early 1990s via bi-partisan support of "neo-liberalism". A philosophy that Jay Bookman's earlier quotation embodies succinctly.

The plan was long range to be sure, but the elites had always been patient. Now they would exercise that patience and sense of noblesse oblige. Again, the payoff being a world of serfs delivered to them by their own governments. These governments themselves hamstrung by the unequal power of differing accords (i.e. GATT, NAFTA) over which they had little option other than to 'sign on'. Accords which could disembowel labor, its pensions and benefits, and lay waste to all social safety nets to protect the more vulnerable citizens. At the same time reckoning hard-won environmental laws as 'trade impediments' to be challenged in a world trade court (WTO).

How many of our currently voting electorate are aware of even a small subset of the above when they cast ballots? Not one in one hundred I'd wager. And if they aren't, if they're so devoid of historical perspective - all the practical appeals in the world won't make a dime's worth of difference. People will still be electing as venal a bunch (who give themselves automatic $4900/yr. wage increases in the dead of night while millions are jobless) as they already have.

Egotistical, Overclass hypocrites who engage in word play for the benefit of the people who elected them, then turn around and cop to corporate money. While pandering and assisting the same market -fascist imperative that JFK fought, and which probably cost him his life.

The overall imperative of the market being the ultimate abolition of all governmental, national social insurance systems - whether these be Medicare or Social Security in the United States, or the analogous systems in Germany or Barbados. In each case, the particular system to be replaced by a privatized entity able to generate individual debt, corporate profit and further income inequality. (It is very interesting in this regard that the "Bankruptcy Reform Act" was passed by a majority in 2005, while a legal loophole that permitted creation of CDOs and their diffusion through multiple financial products (e.g. SIVs or "structured investment vehicles") was passed the next year. As we know the last has led directly to the current sub-prime meltdown)

The point is that unless people perceive the historical pattern of consolidating corporate power, tied to events 45 years ago, they will be unable to map a future course that preserves any semblance of civil society. Rather, they'll more than likely be swayed and mentally manipulated into conferring ever more power on the commercial-corporate-government nexus. As this mandate becomes ever more entrenched it is inevitable that those without will challenge the ‘haves’ at some point and demand a rightful piece of the pie.

It will by then become intolerable to do without critical health insurance (because it is either denied or too costly) while some rich dilettante (who inherited his millions) tries to decide whether to drive his Rolls, Lexus or Lamborghini to the Country Club.

To go where we want to go, we need to know where we have been. This includes the inherent lessons in political assassinations such as JFK's. If we don't - then like the proverbial Israelites wandering in the desert- we shall never get to the civic 'promised land'.

You can make book on it.