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Recommended: Michael Hudson: America’s Deceptive 2012 Fiscal Cliff, Part II

7:00 am in Uncategorized by szielinski

Wage Slavery plus debt peonage — these are the fates awaiting the ‘better off’ members of the 99%, Alan Simpson’s “lesser people.” The ‘worst off’ shall continue to find themselves existing on city streets, squatting in vacant land and buildings, suffering one of the many prisons which pockmark the body politic or dying from untreated illnesses. These fates — wage slavery, debt peonage and social outcast — should not be considered accidents of history. They have obvious systemic causes. The economist Michael Hudson explains in the second of a four-part series:

Today’s economic warfare is not the kind waged a century ago between labor and its industrial employers. Finance has moved to capture the economy at large, industry and mining, public infrastructure (via privatization) and now even the educational system. (At over $1 trillion, U.S. student loan debt came to exceed credit-card debt in 2012.) The weapon in this financial warfare is no larger military force. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers.

Workers have become so deeply indebted on their home mortgages, credit cards and other bank debt that they fear to strike or even to complain about working conditions. Losing work means missing payments on their monthly bills, enabling banks to jack up interest rates to levels that used to be deemed usurious. So debt peonage and unemployment loom on top of the wage slavery that was the main focus of class warfare a century ago. And to cap matters, credit-card bank lobbyists have rewritten the bankruptcy laws to curtail debtor rights, and the referees appointed to adjudicate disputes brought by debtors and consumers are subject to veto from the banks and businesses that are mainly responsible for inflicting injury.

The aim of financial warfare is not merely to acquire land, natural resources and key infrastructure rents as in military warfare; it is to centralize creditor control over society. In contrast to the promise of democratic reform nurturing a middle class a century ago, we are witnessing a regression to a world of special privilege in which one must inherit wealth in order to avoid debt and job dependency.

What is truly astonishing about this situation is the nature of contemporary finance capital. In essence, it is functionless. It does not exist to generate capital for investment in the real economy. It does not provide safe storage for pension funds, insurance monies, personal savings, etc. It does not even provide the common investor with rational investment programs. Rather, finance capital today is just a system specific mechanism (or, better, set of mechanisms) which extracts massive quantities of wealth from the world. Profit taking — that is its sole purpose. Moreover, it is omnivorous and perpetually famished. It cannot be satiated. Its appetites thus put everyone at risk. It lacks a home, a national identity. It cares not for people, their cultures, societies and well-being. It is everywhere and nowhere.

It is, in a word, the vampire about which so many Americans fantasize.

Kudos are in order

10:26 am in Uncategorized by szielinski

Glenn Greenwald and Salon.com deserve our admiration for reporting on a vicious man [Frank VanderSloot (hagiography can about the man can be found here)] and the company he leads (Melaleuca), “…a pyramid selling organization, built along the lines of Herbalife and Amway,” according to Forbes.com. We should express our admiration for Greenwald and Salon because VanderSloot and his company promote politically and socially reactionary policies as well as defend their capacity to do so by harassing their critics with frivolous and potentially expensive lawsuits. By critically reporting about VanderSloot and Melaleuca, the nature of Melaleuca’s business, VanderSloot’s politics and these frivolous lawsuits, Greenwald and Salon publicly threw down the gauntlet, daring VanderSloot to bring a lawsuit against him and Salon.com.

VanderSloot is a Mormon, an anti-gay activist and the national finance co-chair of Mitt Romney’s 2012 presidential campaign. Accordingly, Romney ought to be pestered with questions about VanderSloot’s politics and dubious legal tactics until he gives a sensible defense of them. Is this the kind of man Romney wants on his side? The voters ought to know the answer to this question.

What’s wrong with this thought?

12:10 pm in Uncategorized by szielinski

In a widely read and much discussed article, Elizabeth Drew wrote:

Cesare Bogia

Someday people will look back and wonder, What were they thinking? Why, in the midst of a stalled recovery, with the economy fragile and job creation slowing to a trickle, did the nation’s leaders decide that the thing to do —in order to raise the debt limit, normally a routine matter — was to spend less money, making job creation all the more difficult? Many experts on the economy believe that the President has it backward: that focusing on growth and jobs is more urgent in the near term than cutting the deficit, even if such expenditures require borrowing. But that would go against Obama’s new self-portrait as a fiscally responsible centrist.

First, let us consider the point which Drew got right: America’s political situation is now in such a low state and likely produce a bizarre outcome with respect to the “debt limit” and “budget priorities” conflicts that future Americans — along with others around the world — will find it difficult if not impossible to understand and explain what happened in the summer of 2011. It is telling that a routine matter like increasing the debt limit triggered a budget conflict. This fact strongly suggests that Washington was waiting for the occasion to run wildly into this risky future.

Let us turn to what is wrong with her thinking. Obama is not a fiscally responsible centrist. The broadly construed reasons for making this judgment: He’s not fiscally responsible and he’s not a centrist. How might one reasonably call Obama a fiscally responsible politician when he has already refused to use the 14th Amendment and Coin Seigniorage options to manage the debt limit political problem? With this double refusal Obama has publicly embraced Federal debt default as an acceptable political risk for him and the country he governs. Now, to my mind, befuddled as it is by leftwing thinking, defaulting on the nation’s debts is as obvious a case of fiscal irresponsibility as one could imagine. Promising to do so if pushed is no improvement at all. So, Obama is not a fiscally responsible president.

Furthermore, how might anyone consider Obama a centrist when he has embraced a reactionary political economics? Choosing to throw millions into poverty is always a politically reaction path. And this is the path Obama has put his name on. Perhaps this Democratic President does sit between the far rightists and the moderates and leftists in his own party. But that fact, assuming its veracity for the sake of the argument, only reveals the vacuity of the term, “centrist.” Even though he might be a centrist in this sense of the word, Obama would remain a reactionary in the substantive sense of that word, albeit a reactionary who sits between the farther rightists and the undifferentiated mass sitting to his left. There is little that is tempered, rational, pragmatic and thus moderate about this President’s politics. He fights for the programs he believes to be best.

Drew’s dubious Obama interpretation may originate in her belief about Obama’s ‘right turn’:

The question arises, aside from Obama’s chronically allowing the Republicans to define the agenda and even the terminology (the pejorative word “Obamacare” is now even used by news broadcasters), why did he so definitively place himself on the side of the deficit reducers at a time when growth and job creation were by far the country’s most urgent needs?

It all goes back to the “shellacking” Obama took in the 2010 elections. The President’s political advisers studied the numbers and concluded that the voters wanted the government to spend less. This was an arguable interpretation. Nevertheless, the political advisers believed that elections are decided by middle-of-the-road independent voters, and this group became the target for determining the policies of the next two years.

That explains a lot about the course the President has been taking this year. The political team’s reading of these voters was that to them, a dollar spent by government to create a job is a dollar wasted. The only thing that carries weight with such swing voters, they decided — in another arguable proposition — is cutting spending. Moreover, like Democrats — and very unlike Republicans — these voters do not consider “compromise” a dirty word.

Pace, Drew, it is a matter of public fact that Obama wanted to cut Social Security and other entitlements since the early days of his administration, and his desires were reported to be such at the time. Knowing this about Obama’s intentions, I would argue that the President is not a weakling or a deal-maker willing to bridge two extremes; rather, he is a Machiavellian virtuoso who has used the Congressional Republicans as his stalking horse. As Michael Hudson observes, “Obama has come to bury Social Security, Medicare and Medicaid, not to save but kill them.” The reality of the moment shows that, “The President and his men simply support terrible policies.” And it is because of his masterful statecraft that the President now sits in just the place he wants to be — holding an axe over the neck of America’s New Deal liberalism. The fall of this axe will be Obama’s radical change we can believe in.

From Hoovervilles to Bush Bayous to Obamaland

3:10 pm in Uncategorized by szielinski

A Hooverville

A Bush Bayou (Sacramento, CA)

The Obamaland to come with a damaged social security office

Report: Obama goes all in (updated)

4:21 pm in Uncategorized by szielinski

Reuters now reports that Obama directly told his Republican foes:

I have reached the point where I say enough,” Obama said, according to the [Republican] aide. “Would Ronald Reagan be sitting here? I’ve reached my limit. This may bring my presidency down, but I will not yield on this.”

When someone prefers (political) death to capitulation, her opponent can also choose death or can capitulate.

If only he was on the side of the “lesser people.”

Update

Martin Wolf assesses here the stakes present in the current situation:

These are dangerous times. The US may be on the verge of making among the biggest and least-necessary financial mistakes in world history. The eurozone might be on the verge of a fiscal cum financial crisis that destroys not just the solvency of important countries but even the currency union and, at worst, much of the European project. These times require wisdom and courage among those in charge of our affairs. In the US, utopians of the right are seeking to smash the state that emerged from the 1930s and the second world war. In Europe, politicians are dealing with the legacy of a utopian project which requires a degree of solidarity that their peoples do not feel. How will these clashes between utopia and reality end? In late August, when I return from my break, we may know at least some of the answers.

Wolf’s stated position would commit him to identifying the maximalist Obama as a Right Utopian!

Capital’s iron fist

1:38 pm in Uncategorized by szielinski

After reading the transcript of Obama’s 7.11.2011 Press Conference, I would normally feel the need to say something snarky about lesser-evil voting and the ‘pragmatic attitude’ which motivates the left to throw its lot in with the Democratic Party. But there is no reason to do that now. Obama has shown himself to be such a tool that only those leftwingers who refuse to see something so plain and obvious as him would continue to support him and his party.

I suppose we can be grateful for one thing. The Democratic Party, thanks to Obama’s brutal economic project, can no longer pretend to be the party for the rest of us. It today stands tall as capital’s naked iron fist. The Republicans should stand in awe of what Obama is now proposing.

I heard a sound of exasperation over the bleating of the sheep and the growls of the wolves

2:02 pm in Uncategorized by szielinski

With America’s recent and dismal unemployment report in his hand, Marshall Auerback, a heterodox economist, was prompted to exclaim:

The collective embrace of fiscal austerity has gone beyond perverse. It’s as if Josef Mengele was reborn as an economist, working on some weird new social experiment to inflict the maximum amount of damage on the maximum amount of people. It’s a sick variation on that old joke:

Patient: “Doctor, it hurts when I do this.”

Doctor: “Then keep doing it.”

Famine in Africa

Famine in Africa

I believe Auerback wrote this bit of gallows humor because the deficit hysterics, market fundamentalists and con artists now holding decisive political and economic influence and power care not one bit about the misery their preferred policies will generate when implemented. And it is easy to see why a professional economist like Auerback would feel as he does when the powerful in the world appear willing to piously affirm economic orthodoxy while the republic and its political economy burn to the ground. Indeed, our elite seem to want to intensify and expand the destruction.

I, for one, wonder whether these influential and powerful men and women are just stupid and do not know what they are doing or whether they will intentionally destroy the lives of so many people, doing so just because they who have a lot will also get much more.

If I were to place a wager on these alternatives, I would choose the second option. I would feel secure when placing my bet because neoliberalism in practice has already laid waste to much of the planet. Its prescriptions have been revealed to be worthless when formed into a developmental program or a program for economic growth. They produce individual and collective suffering around the world. Who amongst the influential and powerful could now claim to be unaware of this historical failure? Anyone? Today these prescriptions are just nostrums used by a group of class warriors. They indicate an elite preference to take more of the stuff in the world when that stuff is there to be taken. And it is unfortunate that they now inform the program President Obama and his GOP stalking horse want to impose on the United States.

I cross-posted this article to All Tied Up and Nowhere to Go

Well, I’ll be God Damned

6:17 pm in Uncategorized by szielinski

H.R. 2411 (July 6, 2011), the Reduce America’s Debt Now Act of 2011, wants “To provide for an employee election on Form W-4 to have amounts deducted and withheld from wages to be used to reduce the public debt.”

There is a word for this kind of thing: Chutzpah.

What is even more galling is the requirement that the generous patriot who donates a part (or all!) of her income to reduce the Federal deficit will still need to pay taxes on the money she donated to the Federal government!

The Secretary shall include on such certificates a reasonably conspicuous statement that any amounts deducted and withheld from wages under subsection (a) are not deductible as charitable contributions for Federal income tax purposes.

Simon Black offers the following assessment of this legislation:

There are so many things utterly wrong with his piece of legislation, it’s hard to know where to begin other than by saying that such intellectual and philosophical perversion is only capable of springing from unprincipled sociopaths whose sole capability is the destruction of value.

Only the best for America

I cross-posted this article to All Tied Up and Nowhere to Go

President Obama wants to respect Constitutional limits

6:56 pm in Uncategorized by szielinski

After Barack Obama’s meeting today with Republican leaders — during which they discussed the pain they would spread around the country and when they also agreed that they could live with the pain they will cause if they go through with their plans — it was left to Treasury Secretary Geithner to whip up Congressional support for the latest austerity budget. In this matter, the New York Times reports:

Mr. Geithner appeared to be playing a role not unlike that of Ben Bernanke, the chairman of the Federal Reserve, who warned lawmakers in the fall of 2008 that unless Congress voted to bail out the banking system, the credit crisis threatened to plunge the United States into a depression. Stunned by Mr. Bernanke’s dire depiction, the lawmakers undertook measures that were until then unthinkable.

Lest his warnings go unheeded,

…Mr. Geithner told the lawmakers the White House did not believe it had the authority, under the Constitution, to continue issuing debt if it reached the debt ceiling. Nobody in the room disputed Mr. Geithner’s bleak assessment, the officials said.

Naturally, this President, a man of principle and a Constitutional scholar, would not want to exceed the authority given to his office by the Constitution. Never would he choose a path marked by political excess and legal impropriety. He would not act unconstitutionally even though his acting thusly would spare so many Americans the pain the emerging austerity budget will inflict upon them. It is just not in his nature. He will not flinch when forced by circumstances to look deeply into the abyss; nor would he refuse to throw the “lesser people” into this nothingness when Constitutional duty demands that he do so. He, like President Kennedy, would ask the “lesser people” what they can do for their country. The Constitution, as we have been told, is sacred and enduring, the Demos, on the other hand, is profane and transient.

Way too much is just enough for them

Labor has friends in the Democratic Party

7:25 am in Uncategorized by szielinski

While discussing an Andrew Cuomo presidential bid and Cuomo’s “unexpected” support for New York’s Gay Marriage Law, David Weigel recalled:

New York Union Rallies 2011

…a conversation [he] had last week with a Democratic statewide elected from the Midwest. He asked me what I thought of Cuomo as a candidate in 2016; I said Cuomo would face real problems from labor unions, compared to some other Democratic hopefuls, given the deals he’s been cutting in New York — salary freezes, carve-outs for some unions and not others, etc. This Democrat told me that he liked Cuomo for exactly that reason, and that the Democratic party, going from here, couldn’t rely on unions and promise them everything they wanted.

This was a little jarring to hear. Around the same time, Joe Biden was telling Teamsters to stick with Democrats because when Republicans won in the states, they were tearing up all the contracts and gains unions had made. How many Democrats think that’s not tenable anymore? If there’s some way to fund the Democratic Party at current levels with union activism replaced by donations from grateful gay donors… no, I don’t think the math adds up. But there are certainly some Democrats thinking about this.

It does not surprise me that the elite of Democratic Party wants to break completely with labor. The labor movement in general and the unions more specifically actually have real economic demands they want met, demands which the New Democrats would not want to take up as party goals. The actions of the Obama administration have made it very clear that the Democratic Party today does not wish to annoy finance capital, to reduce the costs of empire, to reach a full-employment economy that realizes a living-wage for anyone who wants to work and to provide the social goods required to reduce the risks giving with living in the United States. The Democrat Party has not been the party of labor, and has not been such for decades. It refused this role long ago because it does not want to represent the interests of labor in general and the labor movement in particular within the various governments of the United States. It is not a or especially the party of the lower classes. The Obama administration takes the now conventional position that affirming the supply side of the economy provides the proper and realistic path to sustainable economic growth. Because it has this stance, the Democratic Party does engage in class war; it, along with the Republican Party wages class war on the “lesser people” in the United States.

Who, then, are the friends of labor in the Democratic Party? I’d expect to find them sweeping the floors, filing documents, moving furniture, etc. at Party headquarters.

This article was cross-posted to All Tied Up and Nowhere to Go

Update

David Sirota makes a similar point at Salon.com, providing his argument with greater depth than I did in mine.