This site may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in an effort to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. we believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law.

In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml

If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

FAIR USE NOTICE FAIR USE NOTICE: This page may contain copyrighted material the use of which has not been specifically authorized by the copyright owner. This website distributes this material without profit to those who have expressed a prior interest in receiving the included information for scientific, research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107.

Read more at: http://www.etupdates.com/fair-use-notice/#.UpzWQRL3l5M | ET. Updates
FAIR USE NOTICE FAIR USE NOTICE: This page may contain copyrighted material the use of which has not been specifically authorized by the copyright owner. This website distributes this material without profit to those who have expressed a prior interest in receiving the included information for scientific, research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107.

Read more at: http://www.etupdates.com/fair-use-notice/#.UpzWQRL3l5M | ET. Updates

All Blogs licensed under Creative Commons Attribution 3.0

Monday, January 31, 2011

Obamanomics is Clearly the Escalation of Reaganomics


Obamanomics: Escalation of Reaganomics


President Reagan did not make any bones about his intention to reverse the New Deal economics when he set out to promote the Neoliberal economics. Likewise, President George W. Bush did not conceal his agenda of aggressive, unilateral militarism abroad and curtailment of civil liberties at home.

There is a major similarity and a key difference between these two presidents, on the one hand, and President Obama, on the other. The similarity lies in the fact that, like his predecessor, President Obama faithfully, and indeed vigorously, carries out both the Neoliberal and militaristic policies he inherited. The difference is that while Reagan and Bush were, more or less, truthful to their constituents, President Obama is not: while catering to the powerful interests vested in finance and military capitals, he pretends to be an agent of “change” and a source of “hope” for the masses.

There has been a wide-ranging consensus that the excessive financial/economic deregulations that started in the late 1970s and early 1980s played a critical role in both the financial bubble that imploded in 2007-2008 and the continuing persistence of the chronic recession, especially in the labor and housing markets.

Prior to his recent U-turn on the regulation-deregulation issue, President Obama shared this near unanimous view of the destructive role of the excessive deregulation of the past several decades and, indeed, strongly supported the need to bolster regulation: "It's time to get serious about regulatory oversight," Mr. Obama argued as the Democratic nominee for President; and again, “…this crisis has reminded us that without a watchful eye, the market can spin out of control,” as he stated in his inaugural speech.

Expressions of such pro-regulation sentiments were part of his earlier promises of “hope” and “change” in a new direction. Back then, that is, before showing his Neoliberal hand, the majority of the American people believed him—the middle, lower-middle, poor and working people who were tired of three decades of steady losses of economic security were desperately willing to believe a charismatic leader who peddled hope and change in their favor.

Recently, however, the president seems to have had a change of heart, or perhaps an epiphany, regarding the regulation-deregulation debate: he now argues that protracted recession and persistent high levels of unemployment are not due to excessive deregulation but to overregulation! Accordingly, he issued an executive order on 18 January 2011 that requires a comprehensive review of all existing government regulations. On the same day, the president wrote an op-ed piece for the Wall Street Journal in which he argued that the executive order was necessary in order “to remove outdated regulations that stifle job creation and make our economy less competitive.” The president further argued that “Sometimes, those [regulatory] rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs. . . . As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs.”

Stripped from its Orwellian language, this “cost-benefit” approach to health, safety and environmental standards is clearly the familiar Neoliberal rhetoric that is designed to help big business and their lobbies that have been working feverishly to stifle the widespread pro-regulation voices that have grown louder since the 2007-08 financial melt-down.

Indeed, the president’s recent agenda of further deregulation has already born fruits for big business. The Wall Street Journal reported on 20 January 2011:

“A day after President Barack Obama ordered the government to get rid of burdensome rules, two federal agencies backed down from proposals that had drawn jeers from businesses. . . . The Labor Department said it was withdrawing a proposal on noise in the workplace that could have forced manufacturers to install noise-reducing equipment. And the Food and Drug Administration retreated from plans to tighten rules on medical-device approvals, postponing a proposal that would have given the FDA power to order additional post-market studies of devices. . . . Industry leaders praised the moves, while consumer advocates expressed disappointment. . . . ‘This is a very positive step forward,’ said Bill Hawkins, chief executive of medical-devices heavyweight Medtronic Inc.”

How is the president’s sharp turnaround on the regulation-deregulation debate to be explained? What “outdated deregulation” is he talking about? How could deregulation, which is widely believed to have been the problem, also be the solution? Why this sudden U-turn?

The change in the president’s view from the need for regulation to that of further deregulation can be explained on a number of planes.

On a narrow, personal and (perhaps) simplistic level, it can be argued that the president’s about-face on the issue of deregulation should not really be surprising; the turnaround represents quintessential Obama: spineless and/or unscrupulous, if you are a critic of the president; pragmatic and/or complex, if you are an apologist or defender of him.

There are also, of course, re-election considerations here. And here it seems that the president’s team is pinning his chances for re-election on big business and big media; confident that once he is able to win their hearts and minds, they will, in turn, be able to manipulate the public to vote for him—just as they did in the 2008 election.

On a deeper (but still personal) level, that is, on a philosophical or ideological level, it can be argued that the president has always been a Neoliberal thinker, albeit a stealth Neoliberal, who is coming out of the closet, so to speak, carefully and gradually. Evidence of his being ideologically more a partisan of Neoliberal than New Deal economics is overwhelming (see, for example, Pam Martin and Alan Nasser).

It is necessary to point out that although the stealth Neoliberal president has been taking baby steps out of the closet, he would always stay by the entrance: as long as there is no popular anger or pressure against his Neoliberal policies, he would stay on the outside; at the first signs of a threatening pressure from the grassroots, however, he would crawl back inside the closet, and begin preaching populism or uttering ineffectual, benign corporate-bashing rhetoric. This is his mission and his political forte – a master demagogue. And this is why the politico-economic establishment promoted him to presidency as they found him the most serviceable presidential candidate. None of his presidential rivals could have served the tycoons of the finance world and the kings of Wall Street as well as he has.

On a more fundamental level, President Obama’s reversal of his view from the need for rigorous regulation to the need for further deregulation, and his economic policies in general, show that while the politics and personalities of a president ought not be ignored, presidential economic policies cannot be explained by purely personality issues such as a failure of nerve, conviction, or ideas. The more crucial determinants of national economic policies are often submerged: the balance of social forces and the dominant economic interests that shape such policies from behind the scene. Stabilization, restructuring or regulatory policies are often subtle products of the outcome of the class struggle.

Thus, when the balance of social forces is tilted in favor of the rich and powerful, crisis-management economic policies would be crafted at the expense of the working people and other grassroots. In other words, as long as the costly consequences of the brutal Neoliberal restructuring policies (in terms of job losses, economic insecurity, and environmental degradation) are tolerated, business and government leaders, Republican or Democrat, would not hesitate to put into effect draconian measures to restore conditions of capitalist profitability at the expense of the impoverishment of the public.

On the other hand, when crisis periods give rise to severe resistance from the people to cuts in social spending, such crisis-management policy measures could also benefit the public. A comparison/contrast of policy responses to major economic crises in the United States clearly supports this point. Economic historians have identified four major economic crises in the past 150 years or so: The First Great Depression (1873-97), The Second Great Depression (1929-37), the long recession of 1973-83 (also known as the stagflation of the 1970s), and the current long recession that started in 2007-08.

Since there was no compelling grassroots pressure in response to either the First Great Depression of 1873-97 or the long recession of the 1970s, crisis management policies in both instances were decisively of the Neoliberal, supply-side type: suppression of trade unions and curtailment of wages and benefits; promotion of mergers, concentrated industries and big business; extensive deregulations and generous corporate welfare plans; in short, huge transfers of income from labor to capital. Likewise, a glaring lack of grassroots resistance in the face of the current long recession has allowed the ruling kleptocracy (both in the US and beyond) to adopt similarly brutal austerity policies that are gradually reviving financial/corporate profitability at the expense of the poor and working people.

By contrast, in response to the Great Depression of the 1930s workers and other popular forces achieved employment and income security as a result of a sustained pressure from "below."

The contrast between these two entirely different types of restructuring strategies shows that, as Mark Vorpahl, a union steward, recently put it,Working people and the unemployed cannot rely on the politicians to get the change we need. We can only rely on our own collective strength. That is, we need to organize and mobilize as a united, massive, powerful force that cannot be ignored by those more intent to do Wall Street's bidding.” Only the threat of revolution can force people-friendly reform on the ruling kleptocracy.

Ismael Hossein-zadeh, author of The Political Economy of U.S. Militarism (Palgrave-Macmillan 2007), teaches economics at Drake University, Des Moines, Iowa.

Ismael Hossein-Zadeh is a frequent contributor to Global Research. Global Research Articles by Ismael Hossein-Zadeh

There's No Such Thing as a Free Market



Bloomsbury Press / By Ha-Joon Chang

Author Ha-Joon Chang dismisses the idea that any capitalist market is free and questions whether it can ever really be fair.

Editor's Note: Many books have tackled the great recession of 2008, the second worst economic crisis in history, after the depression. But I doubt there is one book, written in response to the current economic crisis, that is as fun or easy to read as Ha-Joon Chang's 23 Things They Don't Tell you About Capitalism. I'd never heard of this Korean economist, probably because he lives in England and teaches at Cambridge, but he is well known in economic circles, and well respected.

It is no secret that the American society is dominated by the super rich, held for hostage by the banks, dominated in the Nation's Capital by the tens of thousands of lobbyists and their big bucks, as the Republican party and their corporate Tea Partyists provide cover for giant theft of many billions of wealth for the very rich, with of course the cooperation of the Democrats who supported the extension of the Bush tax cuts for the very wealthy (Check out Rachel Maddow's op-ed, which explains why Dwight Eisenhower, who taxed the rich to balance the budget, which be a radical in today's political reality). In this very discouraging environment it is hard to imagine scenarios where normal folks, every day voters, the non-rich, who are not represented by lobbyists, can have much influence.

On top of that, making change even harder, is an enormously effective propaganda system that perpetuates inaccurate and often destructive myths about virtually every element of capitalism and the US and global economy. And top economic officials in the Obama administration and leading mainstream economists often perpetuate these myths, and the corporate media marches along side repeating them like the gospel.

So, as far as I am concerned there never can be too much truth-telling to attempt to pull away the curtain of propaganda and disinformation that shrouds our economic thinking and actions. I am not under the illusion that the facts will set us free. As research has shown, when people connect their opinions to a set of values or leaders, they will not be open to changing their mind, and presentation of contrary "facts," may make them dig in more clinging their their misinformation. But when it comes to the economy, the propaganda system has been so pervasive, and supported by conventional wisdom that people who need to know better, buy into it, and yes that includes liberals and progressives who have a kind of inertia of the mind of their own. It is hard to change one's sense of things.

AlterNet's Economics editor Joshua Holland made a nice contribution to this public education effort this Fall with his book: The Fifteen Biggest Lies about the Economy Now we have the funny, and sharp Chang. What follows is chapter one of his book: "There is No Such Thing as a Free Market." Other chapters are quite revealing such as: " The Washing Machine Has Changed the World More than the Internet;" "More Education, in Itself, Is Not Going to Make a Country Richer;" "The U.S. Does Not Have the Highest Living Standard in the World;" "Companies Should Not Be Run in the Interest of their Owners."

Chan's main point is the recent economic disaster wasn't by accident, that active government can promote economic dynamism, that tax cuts for the rich simply redistribute wealth upward, and that we will continue on the path to economic disaster,with no end in sight, unless the collective wisdom, goes in a different direction. -- AlterNet Executive Editor Don Hazen

The following is an excerpt from 23 Things They Don’t Tell You About Capitalism (Copyright © 2011) by Ha-Joon Chang. Reprinted with the permission of Bloomsbury Press.

Thing 1: There is no such thing as a free market

What they tell you

Markets need to be free. When the government interferes to dictate what market participants can or cannot do, resources cannot flow to their most efficient use. If people cannot do the things that they find most profitable, they lose the incentive to invest and innovate. Thus, if the government puts a cap on house rents, landlords lose the incentive to maintain their properties or build new ones. Or, if the government restricts the kinds of financial products that can be sold, two contracting parties that may both have benefited from innovative transactions that fulfill their idiosyncratic needs cannot reap the potential gains of free contract. People must be left "free to choose," as the title of free-market visionary Milton Friedman’s famous book goes.

What they don’t tell you

The free market doesn’t exist. Every market has some rules and boundaries that restrict freedom of choice. A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them. How "free" a market is cannot be objectively defined. It is a political definition. The usual claim by free-market economists that they are trying to defend the market from politically motivated interference by the government is false. Government is always involved and those free-marketeers are as politically motivated as anyone. Overcoming the myth that there is such a thing as an objectively defined "free market" is the first step towards understanding capitalism.

Labor ought to be free

In 1819 new legislation to regulate child labor, the Cotton Factories Regulation Act, was tabled in the British Parliament. The proposed regulation was incredibly "light touch" by modern standards. It would ban the employment of young children – that is, those under the age of nine. Older children (aged between ten and sixteen) would still be allowed to work, but with their working hours restricted to twelve per day (yes, they were really going soft on those kids). The new rules applied only to cotton factories, which were recognized to be exceptionally hazardous to workers’ health.

The proposal caused huge controversy. Opponents saw it as undermining the sanctity of freedom of contract and thus destroying the very foundation of the free market. In debating this legislation, some members of the House of Lords objected to it on the grounds that "labor ought to be free." Their argument said: the children want (and need) to work, and the factory owners want to employ them; what is the problem?

Today, even the most ardent free-market proponents in Britain or other rich countries would not think of bringing child labor back as part of the market liberalization package that they so want. However, until the late 19th or the early 20th century, when the first serious child labor regulations were introduced in Europe and North America, many respectable people judged child labour regulation to be against the principles of the free market.

Thus seen, the "freedom" of a market is, like beauty, in the eyes of the beholder. If you believe that the right of children not to have to work is more important than the right of factory owners to be able to hire whoever they find most profitable, you will not see a ban on child labor as an infringement on the freedom of the labor market. If you believe the opposite, you will see an "unfree" market, shackled by a misguided government regulation.

We don’t have to go back two centuries to see regulations we take for granted (and accept as the "ambient noise" within the free market) that were seriously challenged as undermining the free market, when first introduced. When environmental regulations (e.g., regulations on car and factory emissions) appeared a few decades ago, they were opposed by many as serious infringements on our freedom to choose. Their opponents asked: if people want to drive in more polluting cars or if factories find more polluting production methods more profitable, why should the government prevent them from making such choices? Today, most people accept these regulations as "natural." They believe that actions that harm others, however unintentionally (such as pollution), need to be restricted. They also understand that it is sensible to make careful use of our energy resources, when many of them are non-renewable. They may believe that reducing human impact on climate change makes sense too.

If the same market can be perceived to have varying degrees of freedom by different people, there is really no objective way to define how free that market is. In other words, the free market is an illusion. If some markets look free, it is only because we so totally accept the regulations that are propping them up that they become invisible.

Piano wires and kungfu masters

Like many people, as a child I was fascinated by all those gravity-defying kung fu masters in Hong Kong movies. Like many kids, I suspect, I was bitterly disappointed when I learned that those masters were actually hanging on piano wires.

The free market is a bit like that. We accept the legitimacy of certain regulations so totally that we don’t see them. More carefully examined, markets are revealed to be propped up by rules – and many of them.

To begin with, there is a huge range of restrictions on what can be traded; and not just bans on "obvious" things such as narcotic drugs or human organs. Electoral votes, government jobs and legal decisions are not for sale, at least openly, in modern economies, although they were in most countries in the past.

University places may not usually be sold, although in some nations money can buy them – either through (illegally) paying the selectors or (legally) donating money to the university. Many countries ban trading in firearms or alcohol. Usually medicines have to be explicitly licensed by the government, upon the proof of their safety, before they can be marketed. All these regulations are potentially controversial – just as the ban on selling human beings (the slave trade) was one and a half centuries ago.

There are also restrictions on who can participate in markets. Child labor regulation now bans the entry of children into the labor market. Licenses are required for professions that have significant impacts on human life, such as medical doctors or lawyers (which may sometimes be issued by professional associations rather than by the government). Many countries allow only companies with more than a certain amount of capital to set up banks. Even the stock market, whose underregulation has been a cause of the 2008 global recession, has regulations on who can trade. You can’t just turn up in the New York Stock Exchange (NYSE) with a bag of shares and sell them. Companies must fulfill listing requirements, meeting stringent auditing standards over a certain number of years, before they can offer their shares for trading. Trading of shares is only conducted by licensed brokers and traders.

Conditions of trade are specified too. One of the things that surprised me when I first moved to Britain in the mid-1980s was that one could demand a full refund for a product one didn’t like, even if it wasn’t faulty. At the time, you just couldn’t do that in Korea, except in the most exclusive department stores. In Britain, the consumer’s right to change her mind was considered more important than the right of the seller to avoid the cost involved in returning unwanted (yet functional) products to the manufacturer. There are many other rules regulating various aspects of the exchange process: product liability, failure in delivery, loan default, and so on. In many countries, there are also necessary permissions for the location of sales outlets – such as restrictions on street-vending or zoning laws that ban commercial activities in residential areas.

Then there are price regulations. I am not talking here just about those highly visible phenomena such as rent controls or minimum wages that free-market economists love to hate.

Wages in rich countries are determined more by immigration control than anything else, including any minimum wage legislation. How is the immigration maximum determined? Not by the "free" labor market, which, if left alone, will end up replacing 80–90 per cent of native workers with cheaper, and often more productive, immigrants. Immigration is largely settled by politics. So, if you have any residual doubt about the massive role that the government plays in the economy’s free market, then pause to reflect that all our wages are, at root, politically determined.

Following the 2008 financial crisis, the prices of loans (if you can get one or if you already have a variable rate loan) have become a lot lower in many countries thanks to the continuous slashing of interest rates. Was that because suddenly people didn’t want loans and the banks needed to lower their prices to shift them? No, it was the result of political decisions to boost demand by cutting interest rates. Even in normal times, interest rates are set in most countries by the central bank, which means that political considerations creep in. In other words, interest rates are also determined by politics.

If wages and interest rates are (to a significant extent) politically determined, then all the other prices are politically determined, as they affect all other prices.

Is free trade fair?

We see a regulation when we don’t endorse the moral values behind it. The 19th-century high-tariff restriction on free trade by the U.S. federal government outraged slave-owners, who at the same time saw nothing wrong with trading people in a free market. To those who believed that people can be owned, banning trade in slaves was objectionable in the same way as restricting trade in manufactured goods. Korean shopkeepers of the 1980s would probably have thought the requirement for "unconditional return" to be an unfairly burdensome government regulation restricting market freedom.

This clash of values also lies behind the contemporary debate on free trade vs. fair trade. Many Americans believe that China is engaged in international trade that may be free but is not fair. In their view, by paying workers unacceptably low wages and making them work in inhumane conditions, China competes unfairly. The Chinese, in turn, can riposte that it is unacceptable that rich countries, while advocating free trade, try to impose artificial barriers to China’s exports by attempting to restrict the import of "sweatshop" products. They find it unjust to be prevented from exploiting the only resource they have in greatest abundance – cheap labor.

Of course, the difficulty here is that there is no objective way to define "unacceptably low wages" or "inhumane working conditions." With the huge international gaps that exist in the level of economic development and living standards, it is natural that what is a starvation wage in the U.S. is a handsome wage in China (the average being 10 per cent that of the U.S.) and a fortune in India (the average being 2 per cent that of the U.S.) Indeed, most fair-trade-minded Americans would not have bought things made by their own grandfathers, who worked extremely long hours under inhumane conditions. Until the beginning of the twentieth century, the average work week in the U.S. was around 60 hours. At the time (in 1905, to be more precise), it was a country in which the Supreme Court declared unconstitutional a New York state law limiting the working days of bakers to 10 hours, on the grounds that it "deprived the baker of the liberty of working as long as he wished."

Thus seen, the debate about fair trade is essentially about moral values and political decisions, and not economics in the usual sense. Even though it is about an economic issue, it is not something economists with their technical tool kits are particularly well equipped to rule on.

All this does not mean that we need to take a relativist position and fail to criticize anyone because anything goes. We can (and I do) have a view on the acceptability of prevailing labour standards in China (or any other country, for that matter) and try to do something about it, without believing that those who have a different view are wrong in some absolute sense. Even though China cannot afford American wages or Swedish working conditions, it certainly can improve the wages and the working conditions of its workers. Indeed, many Chinese don’t accept the prevailing conditions and demand tougher regulations. But economic theory (at least free-market economics) cannot tell us what the ‘right’ wages and working conditions should be in China.

I don’t think we are in France any more

In July 2008, with the country’s financial system in meltdown, the US government poured $200 billion into Fannie Mae and Freddie Mac, the mortgage lenders, and nationalized them. On witnessing this, the Republican Senator Jim Bunning of Kentucky famously denounced the action as something that could only happen in a "socialist" country like France.

France was bad enough, but on 19 September 2008, Senator Bunning’s beloved country was turned into the Evil Empire itself by his own party leader. According to the plan announced that day by President George W. Bush and subsequently named TARP (Troubled Asset Relief Program), the U.S. government was to use at least $700 billion of taxpayers’ money to buy up the "toxic assets" choking up the financial system.

President Bush, however, did not see things quite that way. He argued that, rather than being "socialist" the plan was simply a continuation of the American system of free enterprise, which "rests on the conviction that the federal government should interfere in the market place only when necessary." Only that, in his view, nationalizing a huge chunk of the financial sector was just one of those necessary things.

Mr. Bush’s statement is, of course, an ultimate example of political double-speak – one of the biggest state interventions in human history is dressed up as another workaday market process. However, through these words Mr. Bush exposed the flimsy foundation on which the myth of the free market stands. As the statement so clearly reveals, what is a necessary state intervention consistent with free-market capitalism is really a matter of opinion. There is no scientifically defined boundary for free market.

If there is nothing sacred about any particular market boundaries that happen to exist, an attempt to change them is as legitimate as the attempt to defend them. Indeed, the history of capitalism has been a constant struggle over the boundaries of the market.

A lot of the things that are outside the market today have been removed by political decision, rather than the market process itself – human beings, government jobs, electoral votes, legal decisions, university places or uncertified medicines. There are still attempts to buy at least some of these things illegally (bribing government officials, judges or voters) or legally (using expensive lawyers to win a lawsuit, donations to political parties, etc.), but, even though there have been movements in both directions, the trend has been towards less marketization.

For goods that are still traded, more regulations have been introduced over time. Compared even to a few decades ago, now we have much more stringent regulations on who can produce what (e.g., certificates for organic or fair-trade producers), how they can be produced (e.g., restrictions on pollution or carbon emissions), and how they can be sold (e.g., rules on product labelling and on refunds).

Furthermore, reflecting its political nature, the process of re-drawing the boundaries of the market has sometimes been marked by violent conflicts. The Americans fought a civil war over free trade in slaves (although free trade in goods – or the tariffs issue – was also an important issue). The British government fought the Opium War against China to realize a free trade in opium. Regulations on free market in child labour were implemented only because of the struggles by social reformers, as I discussed earlier. Making free markets in government jobs or votes illegal has been met with stiff resistance by political parties who bought votes and dished out government jobs to reward loyalists. These practices came to an end only through a combination of political activism, electoral reforms and changes in the rules regarding government hiring.

Recognizing that the boundaries of the market are ambiguous and cannot be determined in an objective way lets us realize that economics is not a science like physics or chemistry, but a political exercise. Free-market economists may want you to believe that the correct boundaries of the market can be scientifically determined, but this is incorrect. If the boundaries of what you are studying cannot be scientifically determined, what you are doing is not a science.

Thus seen, opposing a new regulation is saying that the status quo, however unjust from some people’s point of view, should not be changed. Saying that an existing regulation should be abolished is saying that the domain of the market should be expanded, which means that those who have money should be given more power in that area, as the market is run on one-dollar-one-vote principle.

So, when free-market economists say that a certain regulation should not be introduced because it would restrict the "freedom" of a certain market, they are merely expressing a political opinion that they reject the rights that are to be defended by the proposed law. Their ideological cloak is to pretend that their politics is not really political, but rather is an objective economic truth, while other people’s politics is political. However, they are as politically motivated as their opponents.

Breaking away from the illusion of market objectivity is the first step toward understanding capitalism.

Support AlterNet by purchasing your copy of 23 Things They Don't Tell You About Capitalism through our partner, Powell's, an independent bookstore.

Ha-Joon Chang teaches in the faculty of economics at the University of Cambridge. His books include "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism" and "Kicking Away the Ladder."

Sunday, January 30, 2011

The Egyptian Revolution Threatens an American-imposed Order of Arabophobia and False Choices

War Room

Why is America so afraid?

The Egyptian revolution threatens an American-imposed order of Arabophobia and false choices

Why is America so afraid?

This originally appeared at MondoWeiss

I'm as thrilled as anyone by what I see in the Cairo streets, but when I turn on American television I see only grim faces. Robert Gibbs looked frightened during his delayed press briefing yesterday afternoon; he didn't know what to say. Obama's comments last night were equivocal and opaque: I'm with Mubarak, for now. This is his 9/11 -- the day Arabs blindsided a president.

I thought this is what he wanted for the Arab world: democracy! But the market dropped, and the cable shows are filled with mistrust of the Arab street. Our talking heads can't stop talking about the Islamists. Chris Matthews cried out against the Muslim Brotherhood and shouted, Who is our guy here? -- as if the U.S. can play a hand on the streets. While his guest Marc Ginsberg, a former ambassador to Morocco whose work seems to be dedicated to finding the few good Arabs out there, said that forces outside Egypt are funding the revolt -- a grotesque statement, given the homegrown flavor of everything we have seen in the streets; and when Matthews pressed him, Ginsberg said, Hamas... Iran.

Matthews's other interpreter was Howard Fineman. Why aren't there more Arab-Americans on U.S. television? I give PBS credit for gathering Mary-Jane Deeb and Samer Shehata (along with the inevitable Steven Cook of CFR) to speak of the real political demands of the protesters (and not galloping Islamism!)-- but when CNN aired Mona Eltahawy saying that the protesters are not violent, the moderator stomped on her and said, what about those burning vehicles?

As if eastern Europe changed without similar destruction.

So racism against Arabs is shutting down the American mind once again. And all my friends must turn to Al Jazeera English to get the soul of the story: that these events are electrifying to Arabs everywhere, a heroic mobilization. And not only to Arabs. When ElBaradei says, I salute the youth for overturning a pharaonic power, lovers of human freedom everywhere must be thrilled. We are seeing a dictator dissolve before our eyes. These are the events we cherished in history books; let us embrace the Egyptian movement.

Why is America so afraid?

Because we are seeing a giant leap in Arab power, in which the people of the largest Arab nation demand that they be allowed to fulfill their potential. This change portends a huge shift in the balance of power in the region. For the U.S. has played only a negative role in the Egyptian advance, supplying the teargas, and it seems inevitable that Egypt will cease to be a client state to the U.S. And thereby threaten the order of the last 30 years.

Whatever government replaces the current one in Egypt, it will not serve American interests, which have been largely defined by Israel, the American-Israeli "imperium," as Helena Cobban put it. Since the 1970s (as Joel Beinin shows here), Egypt has been the lynchpin of a US strategy of supporting Israel. The special relationship with Israel has steered our foreign policy, encouraged the destruction and occupation of Iraq, and even fed American Islamophobia. Key to preserving this order has been our ironclad support for the Arab dictatorships in Jordan, Egypt, Tunisia and elsewhere-- by providing the policy with a "moderate Arab" seal. Hey Egypt was a bulwark against the Islamists, and Egypt was crucial to the peace process, as all the correspondents tell us on American TV.

The danger to America and Israel is that the Egyptian revolution will destroy this false choice of secular dictator-or-crazy Islamists by showing that Arabs are smart articulate people who can handle real democracy if they get to make it themselves. And when they get it, they are likely to strip the mask off the peace process. On Al Jazeera English, there is much talk about the Palestinians. One commentator said that the "humiliation" of the Palestinians is feeding the Egyptian revolt. (I will never forget how Egyptian construction workers put down their tools to stand and applaud the Code Pink buses as we left El Arish for Gaza in June 2009.) And in his beautiful statement calling on Mubarak to serve his country by leaving, ElBaradei said that a government that heeds the people's will would turn soon to the Palestinian issue.

This is the great fear, in Israel and in Washington, too: that revolution in Egypt will reveal the despotism of the existing order for the Palestinian people, who have seen their rights and properties and security and water taken from them during the peace process that Egypt has helped sustain.

The grimness on the faces of American Establishment figures reflects the greatest threat to authority, the crumbling of an existing order. Support for Israel has defined order in this region for decades and steered our support for dictators. Ever since Truman defied the State Department in 1947-48, we have been committed to maintaining a Jewish state in the Middle East despite local opposition. This has required great American expenditure, and probably cost Bobby Kennedy his life, but it has been an order. That order has required lip service to Arab democracy, but hey, Mubarak is better than those Islamists.

Now that true Arab democracy is finally coming on stage, that moral structure falls apart. I say morals, because support for Israel has always had a moral rationale. The American establishment felt good about our support for Israel because it seemed like the right thing: We had helped to solve the age-old Jewish Question of Europe. We had ended Jewish persecution. Israel was the answer to Never again! If you doubt that this is the moral calculus of our policy, step into the Center for Jewish History in New York this month. There must be four or five exhibits that touch on Jewish persecution in the Middle East and Europe. The destruction of Italian Jews. The destruction of Berlin businesses that provided the finest linens, photography, interiors... The persecution of Moroccan Jews. It never ends, along with an exhibit dedicated to the "miracle" of Israel's creation with American Jewish support.

Thus the Jewish community has hunkered down in an anachronistic identity-- secure in the completely-contradictory knowledge that the American power structure will support Israel.

All this is changing in Egypt. An Arab liberation story is forcing itself into world consciousness. "The vast, vast majority of protesters are peaceful people, mostly middle class, and they are showing great solidarity. People are still defending the Egyptian Museum," Issandr El-Amrani reports, inspiringly. There is bound to be great suffering in Egypt, we pray for a smooth transition, but if the Egyptians are only left to handle their own affairs, who doubts that the polity that will emerge from this chaos will be more responsive to human rights, and will strike a blow against the fetters of anti-Arab racism that have chained the American mind.

Philip Weiss is the co-editor of " The Goldstone Report: The Legacy of the Landmark Investigation of the Gaza Conflict ."

Egypt's Pharaohs-- Ancient & Today: Mubarak's Military Mindset & His Allies Here & Elsewhere

This story is not just an antiquarian tale. It is an archetypal vision of what happens, again and again, when top-down tyranny becomes addicted to its own power, at first unwilling and then unable to change.

We saw again these past weeks how profound the story is -- first in Tunisia and then in Egypt.

January 30, 2011 at 13:37:16

Egypt's Pharaohs-- Ancient & Today: Mubarak's Military Mindset & His Allies Here & Elsewhere

By Rob Kall (about the author)


Every year at Passover, Jews recall the story of an ancient Egyptian ruler who oppressed his people and was overthrown by God, the People, and the Earth itself.

Flickr image by Shelby PDX

This story is not just an antiquarian tale. It is an archetypal vision of what happens, again and again, when top-down tyranny becomes addicted to its own power, at first unwilling and then unable to change.

We saw again these past weeks how profound the story is -- first in Tunisia and then in Egypt.

During the past week, we have seen hundreds of thousands of Egyptians face down their own modern Pharaoh-- dictatorial, repressive, and corrupt. We have seen crowds kiss the police and soldiers sent to control them, we have seen minimal violence and maximum resistance from the revolutionaries even when they are beaten, jailed, tortured, killed.

In Israel and Jordan, Saudi Arabia and Yemen, even in America, other governments are worrying or even quaking in their military boots.

Why? Because these other governments gambled that repression would work forever. Now they are frightened by the near-collapse of tyranny. An Israeli government that got addicted to military control of the Palestinian people made allies with an Egyptian government that did the same to its own people. And the US government did the same with them both, funneling huge amounts of military aid to both governments and then even huger amounts of its own blood and treasure into military control of Iraq and Afghanistan.

The result: 18 wasted years. Since 1993, when the Oslo Agreement was signed on the White House lawn, Israeli governments have refused to face up to what would have made peace while the making was possible, refused to affirm and negotiate the emergence of an independent Palestine alongside Israel, refused even to discuss the proposal from the Arab League for a regional peace treaty on condition that a free Palestine join other Arab states in making peace with Israel and being made peace with by Israel.

Of course the Israeli government had Palestinian allies in their rejection. The best allies of hawks on one side of any barricade are hawks on the other side. Terrorist murders of Israeli civilians certainly plucked on the hypersensitive nerve of Jewish fear. Most Israeli governments during these years rejected the notion that the way to end terrorism was to negotiate a peace with Palestinian and Arab leaders. Instead, they boasted that "separation" -- the Fence/Wall that tracked not the 1967 borders but swallowed huge chunks of Palestinian land; the unilateral withdrawal from Gaza; the blockade against Gaza -- all this, they said, would end terrorism. But "separation" led not to peace but to the self-destructive wars against Lebanon in 2006 and Gaza in 2009.

"Separation" and military force were not the only conceivable response to terrorism. The bravest and wisest Israelis and Palestinians were those who joined in the "Circle of Bereaved Families" to insist that the killing of their own children by "the other side" made peace crucial, not impossible.

Nor was fear the only possible response. Yitzhak Rabin again and again insisted in every city, town, and kibbutz, that Israelis were no longer victims, no longer helpless, and could afford the practicality of making peace through the Oslo Agreement. But the Jewish terrorist who murdered Rabin left behind Israeli politicians too stupid or too cowardly to carry forward Rabin's late-blooming message or his policy.

Indeed, the "Palestine Papers" published by Al Jazeera show that for the last 10 years, the Palestinian Authority was in fact ready to make deep concessions to win peace, and it was the Israeli government -- supported by the US government -"that rejected them.

It is true that the Oslo agreement and the Arab League peace plan would have made a deal with top-down governments throughout the region. But by freeing Palestine, it would have taken that issue off the table. When uprisings came -" as they now have -" Israelis and their supporters would not have had to fear that the uprisings would create new governments much more hostile to Israelis who are still occupying the West Bank, blockading and bombing Gaza, and destroying Palestinian homes in East Jerusalem.

And the new Uprising societies would not have seen America as the arsenal of their tyrants if America had actually used its clout to insist on a regional peace settlement that included peace for both Israel and Palestine, had stayed out of Iraq, had decided against Predator bombings in Pakistan, had pressed Mubarak to end corruption and coercion. (Not just in words: with reductions in military aid, for example.)

We who enjoy many aspects of Israeli society and culture (try reading David Grossman, for example) and admired what used to be the vibrancy of Israeli democracy and is still a democracy-for-Jews, though a democracy wounded, coughing blood with every shout of protest -- we live in agony over the 18 wasted years.

There might still be time to redress the short-sightedness of those years. Maybe the Israeli and US governments are not utterly addicted to the coercive use of military power. Maybe the Obama Administration can rescue the courageous words of its early days and turn them into courageous deeds for an over-all Middle East regional peace.

But they are not likely to do so unless sizeable numbers of American Jews, Christians, and Muslims can band together in strong support of the people of Egypt, strong support for an emergency regional peace conference insisting on peace among Israel, Palestine, all Arab governments, and Iran as well.


It is the end of the Exodus story that makes possible the living and telling of its beginnings. The biblical stories of Pharaoh, the plagues, the Exodus, the Red Sea -- those stories hang on how a disorderly band of runaway slaves began to shape a new kind of community at Sinai and in the Wilderness. Today we face the same imperative: Shape a new planetary community, or slave and die under new planetary Pharaohs imposing on us new planetary plagues.

Rabbi Phyllis Berman and I have just finished a book of searching examination of the wisdom of that story. (Freedom Journeys: The Tale of Exodus and Wilderness Across Millennia, by Jewish Lights Publishing -- available February 25. )

Our book applies the ancient wisdom to today, on a global scale. Today we face Pharaohs. Big Oil, Big Coal, the Military-Corporate Complex, and Big Banking are chief among those pharaohs, bringing plagues upon the Earth and all humanity. It is clear that after a certain point, these Pharaohs become so addicted to their own power that only their utter ruin -" and that of their society --can undo it.

But it is also true that these "Pharaohs" have many opportunities to turn their path around. And that the people have many opportunities to make the turning happen.

It is up to us and the God Who is YyyyHhhhWwwwHhhh, the Breath of Life Who breathes and speaks in every language, every culture, every life-form, every era, Who calls us to courage and compassion.

Our official political system is paralyzed. Creative direct action -" people power in the tradition of Harriet Tubman, Sojourner Truth, Gandhi, the Flint Michigan auto sit-down strikes of 1937, the sit-in movement of 1960, King, Mandela -- is not paralyzed. Indeed, Tunisia showed us that one spark can free the imagination into utterly unexpected action.

Time to light our nonviolent sparks. Which one will illuminate the world, we cannot know in advance. But we do know that if we refuse to light the sparks, we will be condemned to live -" and die -- in darkness.


Rabbi Arthur Waskow, Ph. D., founded (in 1983) and directs The Shalom Center , a prophetic voice in Jewish, multireligious, and American life that brings Jewish and other spiritual thought and practice to bear on seeking peace, pursuing justice, (more...)

The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.

Saturday, January 29, 2011

Inside the White House's Egypt Scramble

The Daily Beast
Exclusive: Inside the White House's Egypt Scramble
By John Barry
As protests erupted in Egypt, Washington struggled desperately to find the right response to the crisis. From officials' initial buoyant optimism and behind-the-scenes diplomatic maneuvers to the swift judgment call that Egyptian President Hosni Mubarak's speech required President Obama's response, John Barry reports on the administration's decision-making during the gathering storm.

The daily beast:
read this skip that

Inside the White House's Egypt Scramble

by John Barry Info

As protests erupted in Egypt, Washington struggled desperately to find the right response to the crisis. John Barry reports on the administration’s decision-making. Plus, full coverage of the Egypt revolt.

For three days straight, as the Cairo crisis gathered momentum, they had hardly left their desks. Now, huddled in the big office of their boss—one of the administration policy-makers trying to calibrate the U.S. response to the unfolding drama—the advisers watched Egyptian President Hosni Mubarak’s first statement. Two television sets were running, one showing CNN and the other a satellite feed from Al Jazeera. Someone had popped popcorn in a microwave. In the old days, their boss reflected, he would have ordered in pizza, but since 9/11 the ever-expanding security precautions had shut down deliveries of take-out.

Gallery: Demonstrations in Egypt

Article - Egypt Protests GAL LAUNCH

Victoria Hazou / AP Photo

The mood was buoyant, as revealed by interviews with several officials involved in the ongoing administration debate that provide at least a preliminary glimpse of their concerns as Egypt spiraled toward chaos.

Had there been an office pool, the boss thought, the favored bet would have been that Mubarak was about to “do an LBJ” and repeat what President Lyndon Johnson did in 1968 in the face of a wave of protests: announce he would not stand in the upcoming presidential election. Certainly, Mubarak’s departure would present the U.S. with a new set of daunting challenges, but at least it would quiet the Egyptian streets and buy some time for mediation.

But as the Egyptian president spoke—a couple of the Arabic speakers in the room providing translation—the optimism died. Mubarak announced he was dismissing his government; he talked of reforms. But he also made clear his determination to stay on. There were groans, shaking of heads. This wasn’t going to be enough to halt the tumult in half of Egypt’s cities, and, more disconcertingly, Mubarak’s assertion that the demonstrations were “part of a bigger plot to shake the stability” of Egypt sounded ominous. The Egyptian president had called out the Army on Friday; now his speech sounded as if he was preparing to use it. President Obama’s Middle East advisers believed that if Egyptian security forces opened fire on demonstrators, the country would likely explode. As Mubarak ended his address, someone in the room voiced the thought on everyone’s mind: “Well, what do we do now?”

In the White House, that judgment was swiftly made. Mubarak’s speech was a climactic moment: It was time for President Obama to act.

There were groans, shaking of heads. This wasn’t going to be enough to halt the tumult in half of Egypt’s cities, and, more disconcertingly, Mubarak’s assertion that the demonstrations were “part of a bigger plot to shake the stability” of Egypt sounded ominous.

Throughout the week, as the crisis gathered storm in Egypt, the administration had otherwise been slow to react, seemingly always one step behind events. This was partly because neither the U.S. intelligence community nor diplomats on the ground foresaw how swiftly the protests in Egypt would gather momentum—even if everyone realized that virtually the entire Arab world is a tinder box of pent-up frustration, with despotic regimes unable to meet the needs of, especially, their youth. As Secretary of State Hillary Clinton herself put it last month, in a speech in Doha that now seems uncannily prescient, Arab leaders would face growing unrest, extremism, and even rebellion unless they reformed “corrupt institutions and a stagnant political order.” It was the starkest warning ever delivered by a senior American official, and a message brought home a few days later when Tunisia erupted in revolt.

Yet, when it came to Egypt, the tone was different, and as the protests in Cairo gathered momentum, Clinton’s initial public comments were a mixture of fact and hopeful fiction. “Our assessment is that the Egyptian government is stable and is looking for ways to respond to the legitimate needs and interests of the Egyptian people,” she said, an assessment that didn’t take long to be overtaken by events.

Whether Mubarak indeed was committed to responding to “the legitimate needs and interests of the Egyptian people” remained an open question. Clinton’s statement, however, had been carefully calibrated, coming after the first round of what proved to be an exhausting week of discussions by President Obama and his top officials.

From the start, according to sources privy to the discussions, talks revolved around two objectives: how to cajole Mubarak to respond to the demonstrations, while, at the same time, not saying anything publicly that could be taken as American approval of the forcible overthrow of Arab regimes. But as the demonstrations grew in intensity, that balance became increasingly fraught. The demonstrators were, after all, demanding human and political rights to which the United States is committed, but which Mubarak showed no sign of granting.

After much discussion, it was decided that President Obama would not try to speak directly to Mubarak. According to an informed source, the assessment was that president-to-president intervention should be held in reserve as a last recourse. Besides, any exchange with Mubarak would require Obama to say whether he supported Mubarak’s continued rule. And the president was in a bind: He couldn’t bluntly say no. On the other hand, Egyptian authorities would instantly broadcast any expression of support as proof that Washington was backing Mubarak’s hold on power. (Shown this article for review, the White House said: "There's nothing we'd comment on here at the moment.")

So the administration tried to reach Mubarak by other means. The Cairo embassy reached out to his advisers. Other Arab leaders were enlisted. Across the region, the events in Cairo were viewed with mounting concern by other governments. The longer their television screens were filled with those scenes of protest, the likelier they were to trigger comparable uprisings in other capitals. The administration’s message was clear: for your own sake, persuade Mubarak he has to quell the revolt by offering concessions.

By Thursday, though, the Cairo embassy was reporting that Mubarak was mobilizing the Army. Everyone knew that Friday, the Muslim day of prayer, would see the biggest demonstrations yet. Mubarak’s mobilization of the military could only mean that he was set on suppression. There was a real risk of bloodshed—and the judgment both of analysts in Washington and of Arab leaders in other capitals was that killings on any scale could ignite a firestorm—not only in Egypt but across the region.

Taking advantage of a pre-arranged Q&A session on YouTube, Obama warned: “The government has to be careful about not resorting to violence.” Mubarak, he said, needed to be “moving ahead on reform—political reform, economic reform”.

Whether Obama’s warning influenced Mubarak’s actions is unclear. The Army did roll into the streets of Cairo and other cities on Friday. But it did not shoot; and, on Friday evening, Mubarak appeared on television for the first time in the crisis.

Meanwhile at the Pentagon, a high-powered delegation of Egyptian military leaders, including the armed forces Chief of Staff Lt. Gen. Sami Hafez Enan, cut short a scheduled week-long visit after only a few hours, departing instead for the airport. Their Pentagon hosts wished them well, with careful expressions of hope that a peaceful resolution of the crisis in Egypt would permit the continuation of the U.S. military’s long-standing relationship with Egypt’s armed forces. (Since the U.S. funds the Egyptian military to the tune of $1.3 billion a year, the message was clear.)

Administration officials suspect—or, at any rate, hope—that Obama’s blunt declaration forced Mubarak’s hand, prompting the Egyptian president to address his nation. What Mubarak offered in his televised speech, however, was “too little, too late,” as someone at that popcorn-eating gathering said. There was no prospect, Obama’s advisers believed, that Mubarak’s vague promises of reform would pacify the streets.

At a meeting on Friday afternoon, Obama and his top officials, including Clinton, Vice President Joe Biden, and National Security Adviser Tom Donilon among them, concluded that the time had come for Obama to talk directly to Mubarak. And Mubarak’s address to the Egyptian people had given Obama the opening he wanted. The White House organized the call.

It was an intervention that dramatically—and publicly—escalated the American involvement in the Egyptian crisis. In an address from the White House, Obama outlined what he had told Mubarak, putting the administration unequivocally behind the demonstrators’ demands. “The people of Egypt have rights that are universal,” Obama said in his speech. “And the United States will stand up for them everywhere.” The president also warned both sides against violence but his message was clear: “When President Mubarak addressed the Egyptian people tonight, he pledged a better democracy and greater economic opportunity. I just spoke to him after his speech, and I told him he has a responsibility to give meaning to those words, to take concrete steps and actions that deliver on that promise.” And, said Obama, “we are committed to working with the Egyptian government and the Egyptian people—all quarters—to achieve” those goals.

It was a breath-taking pledge, with Obama coming close to making the U.S. the guarantor that Mubarak will act. In Egypt, his reference to “all quarters” will be taken to suggest that the U.S. will even reach out to the Muslim Brotherhood, an unprecedented step.

In the last week, the administration has come a long way.

John Barry joined Newsweek's Washington bureau as national security correspondent in July 1985. He has reported extensively on American intervention in Afghanistan, Kosovo, Haiti, Bosnia, Iraq and Somalia and efforts for peace in the Middle East. In 2002, he co-wrote "The War Crimes of Afghanistan" (8/26/02 cover) which won a National Headliner Award and was a finalist in the ASME National Magazine Awards for public service and a finalist in the SPJ Deadline Club Award for investigative reporting.

Like The Daily Beast on Facebook and follow us on Twitter for updates all day long.

For inquiries, please contact The Daily Beast at editorial@thedailybeast.com.

Where is America's Breaking Point?

January 29, 2011 at 08:37:43

Where is America's Breaking Point?

By lila york (about the author)


<p>Your browser does not support iframes.</p>

March against Iraq War by Lila York

"Unemployment is high. Average income is low and declining, making it impossible for a man to marry and support a family. Anger with rampant corruption in government is palpable and longstanding. One percent of the population lives in the lap of luxury that ordinary people can only dream of. The richest one percent is totally ignorant of the real problems of ordinary citizens. GDP is roughly 5% but the majority of the people have seen no benefit from that. When the president travels in his limousine the roads are cleared in front of him, so he has no notion of how bad the traffic problems are. Elections here are fixed and essentially a joke, as opposition parties cannot run in any effective sense. The people have been accused of lethargy and apathy, and a willingness to tolerate a loss of civil liberties. But everybody has a breaking point. The people are fed up. They have had enough."

That was Ben Wedeman, CNN's longtime Mid-East reporter speaking from Egypt last night. But that could have been Amy Goodman reporting from a march on Washington. As Hillary Clinton urged tolerance for protesters from the Egyptian government I wondered what she would say to the world if 200 million Americans took to the streets to protest government corruption, rigged elections, an absurd wealth distribution, and declining wages in America.

Where is America's breaking point? In a country where both parties in a two-party system are equally beholden to corporate money, where are the opposition leaders? When do Americans demand real elections - elections where there is no money involved and all potential candidates are funded by taxpayer dollars?

Americans are now placed in the absurd position of needing to organize a constitutional convention in order to overturn a politicized ruling by a corrupt supreme court; of needing to prove in every state that a corporation is not a human being. The apathy of Americans is equally palpable - as Congress and the courts behave as though they are enslaved by corporations and ignore the will of the American people most of the time. As Hank Paulsen was in the process of blackmailing Congress into a trillion dollar bailout for his banker cronies, every American adult with a pulse called his representative and screamed "NO". Congressmen reported on the floor of the House that calls and emails were 99% against a bailout. Congressional Democrats buckled to their banker masters and ignored us. And how did Americans protest being ignored? They turned control of the House of Representatives over to the Republicans - whose initial volley was to outlaw public funding for presidential elections. Next on their agenda: outlawing abortion and ending Social Security and Medicare.

Our progressive opposition groups are fragmented and issue-based, as could be expected in a nation so huge and diverse. What is needed is a mechanism for binding progressive groups together to fight - literally - for a new regime: For publicly-funded elections and an end to gerrymandering that would give us some hope of a representative government. What is needed is genuine progressive leadership.

Lila York is a choreographer and activist. She has traded the markets since 1990.

The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.

Thursday, January 27, 2011

The State of the Union: Not a Time for Saccharin and Gimmicks

Dissident Voice: a radical newsletter in the struggle for peace and social justice

The State of the Union: Not a Time for Saccharin and Gimmicks

Members of the corporate political duopoly switched seats and sat next to each other making it even harder to tell the corporate welfare party from the crony capitalist party. Sadly, the spokespersons for both failed to learn the lessons of history and as a result the American economy will continue to falter with U.S. militarism continuing to expand.

Listening to the saccharin rhetoric of President Obama one would think the nation’s economy was flourishing and the military was winning wars. The truth, that the economy is still in collapse and the military is stuck in war quagmires all piling up record debt, was hard to see through his veil of words.

Debt, the bi-partisan duopoly mistaken priority, was the problem the president acknowledged offering two McCain campaign promises – no more earmarks which make up less than 1% of the federal budget; and a partial budget freeze, excluding national security. When McCain proposed a freeze during the campaign Obama mocked it saying a “spending freeze is a hatchet, and we do need a scalpel.” Gimmicks, not solutions

In fact, the economy continues to be in crisis with high levels of unemployment, record foreclosures and record poverty. The best lesson for how to get out of the economic mess of today comes from the depression. It is important to look at the facts rather than the myths. The pre-WWII New Deal era from 1933-1940, even if you include the recession of 1937-38, saw the single biggest drop in the unemployment rate in U.S. history. According to the census, the unemployment rate in 1933 was 24.7% by 1940 unemployment had dropped to 14.5%. This was accomplished by massive federal spending focused on job creation.

Obama came into an economic crisis and wasted the opportunity by re-enforcing concentrated corporatism rather than challenging it, investing in Wall Street rather than creating jobs, re-enforcing insurance-dominated health care and failing to face up to uncontrolled spending for the military industrial complex. From last night’s speech, we can expect more of the same and a floundering economy as a result.

But the Republicans were even more out of touch with the lessons of history and the needs of the day. A second economic downturn officially began in May 1937 when FDR responded to deficit hawks and slashed spending programs to balance the budget. These premature spending cuts caused another severe recession. Cutting government spending brought unemployment back up to 19% in 1938 from 14% in 1937. The recession ended after 13 months in June 1938 when FDR reversed course restarting economic growth. By the time of the attack on Pearl Harbor in December 1941, the unemployment rate was down to 9.7%

Even more absurd are calls to cutback Social Security and Medicare. These areas of spending have their own lines of funding from payroll taxes and therefore do not affect the deficit. They need small changes to continue to make them self-supporting, but they have been self-supporting for decades prior to this recession. Breaking this contract with Americans, making the elderly poorer and unable to spend, is no way to stimulate the economy.

Neither the crony capitalist nor corporate welfare party are facing up to the cuts needed in the largest area of discretionary spending, the military. Obama has created record DoD budgets, record intelligence budgets and record arms sales. Those who profit from weapons and war have done well in the Obama economy. The cuts being talked about by outgoing Secretary Gates are a miniscule fraction of what is needed.

Unlike the era of FDR, war will not get the economy moving. The U.S. has been engaged in the longest war in our history in Afghanistan, still has tens of thousands of troops and mercenaries in Iraq and is expanding the war in Pakistan. Wars are not creating the kind of WW II war economy as the methods of war have changed. At a cost of $1 million borrowed dollars per troop per year in Afghanistan the war is a drain on the economy not a stimulus.

Spending on military certainly creates jobs, just not many compared to other spending or tax cuts. Spending $1 billion on the military creates 8,555 jobs while spending the same amount on mass transit would create 19,795 and on education 17,687. Even spending on tax cuts, not a great form of stimulus, is more efficient than the military, creating 10,779 jobs. Health care and infrastructure spending create about 12,800 jobs. The U.S. needs WWII in reverse, a rapid switch from a military-dominated economy to a civilian-dominated economy.

There are some signs of recovery finally, but there are also signs of frailty. At best the economy will recover hesitantly, but another collapse is also possible. The failure to heed the lessons of history increases the chances of the economy faltering rather than growing, and with that the debt will grow as well. This is not a time for sacchrin and gimmicks. It is time to face reality and institute paradigm shifting change. It is time for a democratized economy that benefits all of us and to end an economy designed for concentrated corporate interests that benefit few.

Kevin Zeese is executive director of Voters for Peace. Read other articles by Kevin, or visit Kevin's website.

This article was posted on Thursday, January 27th, 2011 at 8:00am and is filed under Afghanistan, Capitalism, Corporate Globalization, Democrats, Iraq, Military/Militarism, Pakistan.

Why Am I So Negative? (and Other FAQs)

Dissident Voice: a radical newsletter in the struggle for peace and social justice

Why Are You So Negative? (and Other FAQs)

FAQ: Why are you attacking me for my way of life?

MZ: That’s easy. Our way of life is really a “way of death” and is directly responsible for the current global crises I write about. We also might want to agree to save the word “attack” for, say, those living under the US taxpayer-funded predator drones, cruise missiles, and depleted uranium shells. Let’s save it for countless victims of child abuse. Let’s save “attack” to describe the reality of one rape every 46 seconds in America. Okay?

FAQ: Why don’t you offer any step-by-step solutions?

MZ: Way too many people imply that unless a critic expounds a specific strategy for change, his/her opinion is worthless. This remarkably unsophisticated reaction misses the essential role critical analysis plays in a society where problems—and their causes—are so cleverly disguised. When discussing the future, the first step is often an identification and demystification of the past and present.

Besides, what value would my “solutions” hold while we are still in the midst of myriad global crises? I like to imagine that if we began detaching ourselves from a system designed to destroy us (and all life) and began dismantling that system, we’d create a space in which we could recognize paths and options currently invisible to us.

FAQ: Why do you always focus on the negative?

MZ: Becoming an activist can be an incredibly positive experience: creating community, inspiring change, feeling empowered. While most humans choose instead to use their meager time chasing money, collecting possessions, and obsessing over pop culture, the activist sees a bigger picture, a longer view, a deeper connection. However, being an effective activist also requires us to tear off the blinders and become acutely aware of how our way of life has devastated the planet.

More importantly, what does the term “negative” mean in this context anyway?

If you went to a doctor, would you deem him/her negative for talking about how high your cholesterol levels are instead of, say, focusing on your excellent fingernail health? If you brought your car in for a tune-up, do you want the mechanic to compliment you for keeping your tire pressure at the right level but stay away from a negative topic like defective brakes? Of course not…

Why, then, do so many humans shut down when confronted with the realities of our current social, economic, and environmental crises? Why is analysis that presents a dose of reality smugly dismissed as “negative”? Don’t you want to know what’s going on and how you can help address it beyond minor lifestyle changes and the petty conflicts of party politics? Why not save your knee-jerk “negative” retort for those who directly or indirectly support the corporate-sponsored rape of our planet?

News Flash: It’s not “negativity” that’s the issue here, folks. It’s denial.

Antonio Gramsci wrote, “I’m a pessimist because of intelligence, but an optimist because of will.” I can think of no better mantra for activism. Don’t shy away from learning the ugly realities of industrial civilization but never let these brutal truths prevent you from taking urgent action and believing you can create change and save lives—human and non-human lives. It’s a delicate balance, but our ability to walk this fine line could literally make all the difference in the world. We need a planet brimming with pessimistic optimists

FAQ: Why aren’t you marching in lockstep with me? You suck.

MZ: Of course, no one phrases this question quite so bluntly but it’s astonishing to me how often a fellow human can be virtually in synch with my perception/lifestyle/worldview but choose instead to angrily dwell upon the issues on which we differ. Purity is not a realistic or productive goal.

FAQ: Since you seem to think you have all the answers, exactly what should we do?

MZ: This is the most disingenuous FAQ of all. You know exactly what needs to be done. If you walked into a room and saw a man attacking someone you loved, would you ask an obscure writer like me what you should do? Would you write a letter to Congress, sign a petition, hold a candlelight vigil, vote for a Democrat… or would beat the attacker’s ass from one end of the room to the other?

And for the record, I definitely do not think I have all the answers, but I sometimes feel I have more questions than most.

Mickey Z. is probably the only person on the planet to have appeared in both a karate flick with Billy "Tae Bo" Blanks and a political book with Howard Zinn. He is the author of 9 books—most recently Self Defense for Radicals and his second novel, Dear Vito—and can be found on the Web. Read other articles by Mickey.

This article was posted on Thursday, January 27th, 2011 at 8:01am and is filed under Activism, Environment, Global Warming.

Sunday, January 23, 2011

Food Speculation: 'People Die from Hunger While Banks Make a Killing on Food'

Breaking News & Views for the Progressive Community

Food Speculation: 'People Die from Hunger While Banks Make a Killing on Food'

It's not just bad harvests and climate change – it's also speculators that are behind record prices. And it's the planet's poorest who pay

by John Vidal

Just under three years ago, people in the village of Gumbi in western Malawi went unexpectedly hungry. Not like Europeans do if they miss a meal or two, but that deep, gnawing hunger that prevents sleep and dulls the senses when there has been no food for weeks.

[(Illustration: Katie Edwards)](Illustration: Katie Edwards)
Oddly, there had been no drought, the usual cause of malnutrition and hunger in southern Africa, and there was plenty of food in the markets. For no obvious reason the price of staple foods such as maize and rice nearly doubled in a few months. Unusually, too, there was no evidence that the local merchants were hoarding food. It was the same story in 100 other developing countries. There were food riots in more than 20 countries and governments had to ban food exports and subsidise staples heavily.

The explanation offered by the UN and food experts was that a "perfect storm" of natural and human factors had combined to hyper-inflate prices. US farmers, UN agencies said, had taken millions of acres of land out of production to grow biofuels for vehicles, oil and fertiliser prices had risen steeply, the Chinese were shifting to meat-eating from a vegetarian diet, and climate-change linked droughts were affecting major crop-growing areas. The UN said that an extra 75m people became malnourished because of the price rises.

But a new theory is emerging among traders and economists. The same banks, hedge funds and financiers whose speculation on the global money markets caused the sub-prime mortgage crisis are thought to be causing food prices to yo-yo and inflate. The charge against them is that by taking advantage of the deregulation of global commodity markets they are making billions from speculating on food and causing misery around the world.

As food prices soar again to beyond 2008 levels, it becomes clear that everyone is now being affected. Food prices are now rising by up to 10% a year in Britain and Europe. What is more, says the UN, prices can be expected to rise at least 40% in the next decade.

There has always been modest, even welcome, speculation in food prices and it traditionally worked like this. Farmer X protected himself against climatic or other risks by "hedging", or agreeing to sell his crop in advance of the harvest to Trader Y. This guaranteed him a price, and allowed him to plan ahead and invest further, and it allowed Trader Y to profit, too. In a bad year, Farmer X got a good return but in a good year Trader Y did better.

When this process of "hedging" was tightly regulated, it worked well enough. The price of real food on the real world market was still set by the real forces of supply and demand.

But all that changed in the mid-1990s. Then, following heavy lobbying by banks, hedge funds and free market politicians in the US and Britain, the regulations on commodity markets were steadily abolished. Contracts to buy and sell foods were turned into "derivatives" that could be bought and sold among traders who had nothing to do with agriculture. In effect a new, unreal market in "food speculation" was born. Cocoa, fruit juices, sugar, staples, meat and coffee are all now global commodities, along with oil, gold and metals. Then in 2006 came the US sub-prime disaster and banks and traders stampeded to move billions of dollars in pension funds and equities into safe commodities, and especially foods.

"We first became aware of this [food speculation] in 2006. It didn't seem like a big factor then. But in 2007/8 it really spiked up," said Mike Masters, fund manager at Masters Capital Management, who testified to the US Senate in 2008 that speculation was driving up global food prices. "When you looked at the flows there was strong evidence. I know a lot of traders and they confirmed what was happening. Most of the business is now speculation – I would say 70-80%."

Masters says the markets are now heavily distorted by investment banks: "Let's say news comes about bad crops and rain somewhere. Normally the price would rise about $1 [a bushel]. [But] when you have a 70-80% speculative market it goes up $2-3 to account for the extra costs. It adds to the volatility. It will end badly as all Wall Street fads do. It's going to blow up."

The speculative food market is truly vast, agrees Hilda Ochoa-Brillembourg, president of the Strategic Investment Group in New York. She estimates speculative demand for commodity futures has increased since 2008 by 40-80% in agricultural futures.

But the speculation is not just in staple foods. Last year, London hedge fund Armajaro bought 240,000 tonnes, or more than 7%, of the world's stocks of cocoa beans, helping to drive chocolate to its highest price in 33 years. Meanwhile, the price of coffee shot up 20% in just three days as a direct result of hedge funds betting on the price of coffee falling.

Olivier de Schutter, UN rapporteur on the right to food, is in no doubt that speculators are behind the surging prices. "Prices of wheat, maize and rice have increased very significantly but this is not linked to low stock levels or harvests, but rather to traders reacting to information and speculating on the markets," he says.

"People die from hunger while the banks make a killing from betting on food," says Deborah Doane, director of the World Development Movement in London.

The UN Food and Agriculture Organisation remains diplomatically non-committal,saying, in June, that: "Apart from actual changes in supply and demand of some commodities, the upward swing might also have been amplified by speculation in organised future markets."

The UN is backed by Ann Berg, one of the world's most experienced futures traders. She argues that differentiating between commodities futures markets and commodity-related investments in agriculture is impossible.

"There is no way of knowing exactly [what is happening]. We had the housing bubble and the credit default. The commodities market is another lucrative playing field [where] traders take a fee. It's a sensitive issue. [Some] countries buy direct from the markets. As a friend of mine says: 'What for a poor man is a crust, for a rich man is a securitised asset class.'"