As we all live in our small sphere of daily life, we forget to look at the big picture of what is happening around us. We get tired of the hyperbole and rhetoric being screeched to us from all side of the political spectrum to the point we are numb. We only want to live comfortably, safely and be left alone. Don't ask me to sacrifice, as I don't have anything to sacrifice. I'm tired of helping others, there are so many of them in need, it is overwhelming. We cover our eyes so not to see the suffering around us. That is their problem, you're having hard enough time just keeping up with the cost of living. So we hide and become disengaged in the process.
But now is not the time to disengage in the process. It IS the time to become informed as to what is happening so you will understand, and just maybe change the direction events are moving. If not for yourself, but for the future of your family.
I emplore you to read a book written by Naomi Klien titled The Shock Doctrine, the rise of disaster capitalism. It will better explain much of what I have tried to explain here. It chronicles the implementation of the Milton Friedman's pure capitalism economic model. After you have read this book, then my comments below will become clearer and consistent with her chronicles of Friedman's economic theory. You will also clearly understand what is happening in our current political policy process of late, both at the state level, as well as the national level.
Not reading this book and not understanding the ramifications it is describing, then you are failing your responsibility as an informed citizen to direct our fragile self-governing limited democracy.
In brief the Friedman economic policy is that private enterprise is the best way to govern the people, not by elected officials that represent the people. The reason is that private enterprise operates by autocratic design that allows for quicker reaction to economic cycles and thus greater economic stability. Democracy is the most difficult government model to implement Friedman's policy upon the masses and to continue the governance thereafter. Real or perceived crises' are the best tool to implement this economic model and open great business opportunities in the recovery of whatever disaster occurred. For Friedman an authoritarian government is much easier to implement this economic model. His economic policies have had major impact around the world. He was an economic adviser to Ronald Reagan who started the implementation of his economic ideology and every Republican president and controlled congress has continued implementing his economic policy.
It is critical that you understand our economic history as well our political history. It is too lengthy to cover every detail here, but I have tried to condense some important points so as to give foundation to my argument.
Even in the founding of our nation, it was the wealthy that created this great nation. Fore the most part our economic system was a form of limited free market with wealthy merchants, plantation owners and other major property owners controlling the wealth of the colonies and later our nation. Most of these men came from English aristocracy and had wealth when their families came to the new world.
Fortunately most of our founding fathers were active members of the Free Masons that had a strong belief in enlightenment of knowledge and the idea of a secular democracy combined with an open free market economy. But even with that, they formed a country that gave the wealthy more ultimate political power than the common people. When they created the Constitution after realizing the Articles of Confederacy would not work because it did not address how the central government would govern or a way to collect taxes to pay for this new central government and the war debt it had incurred, they carefully crafted the election process to favor those of wealth.
The constitution establishes that the President would be elected by an electoral college that are made up by delegates selected by each state. Each state would be assigned the number of delegates based on the census population, that included women and slaves and each state could determine how these delegates would be selected. The reason we had the 3/5ths value in the census for slaves, is that the lower fraction equalized the populations of the heavy slave populations in the south to the smaller populations of the north, even though women and slaves could not vote. Some would be selected by the legislature or assembly of a particular state, others by the governor, and some states used the populace vote for the individual delegates that would promise to vote the way the voters wanted.
Today it has become the popular vote that determines the delegates. But since some states have more delegates than others based on population census, a president can be selected by winning the right state combination that give him the required majority number of delegates, but not have won the actual popular vote. The electoral college also gave the ability of the rich and powerful the ability to manipulate the delegates to ensure that a president is selected that is acceptable to them, since all the electoral college operates in secret.
Originally it was only wealthy property owners or merchants who qualified as a delegate to the electoral college. Slowly this has morphed into a more popular vote system and the delegates are ranking members of the political party that won the majority of the popular vote. Some states all the delegates must vote for the presidential candidate of the party that won the majority of the popular vote. Others split the delegates up roughly representing the vote split between the parties as to the percentage that each party received in votes. A system whose day has come to be removed and have a direct popular vote for this office.
Senators were appointed by each state, not elected by the popular vote of the people. Some Senators were appointed by the governor of the state or by the majority party controlling the upper house of the state legislature. This was done for two reasons; one, it gave each state a place at the table in the central government, and two, senators would be selected from the very wealthy and merchants so that their interests were represented in the central government. Much the same as the House of Lords in Great Britain. Later an amendment was passed by the states to allow the populace to vote directly for their senators. This diluted states power in the central governmental and slowly started to allow common politicians to become elected to the revered status of the senate. The house of representative was designed to be the only popular peoples governing body.
Through the 19th century we experienced several economic depressions and recessions. Most economic growth was limited to just a few families who built great economic empires during the industrial revolution. But the greed got too great with a huge disparity between the working poor and these very wealthy families. This again caused another major depression, greater than any other in history and it spread around the world in 1929. During the Great Depression there was a point were the growing anger of the unemployed populace was brewing a potential revolt against these wealthy families and the government. In realizing this potential of an over though of the government and potential bodily harm to themselves, so begrudgingly they went along with most of President Roosevelt's New Deal plan to recover based on Keynesian economics. Roosevelt was able to consolidate greater power to the presidency and congress and less power to the private sector. Milton Friedman even supported this form of economic recovery and supported the New Deal, but he later changed is mind dramatically.
Yes there was a lot of shouting about socialism and being un-American by Republicans and some Democrats. But the alternative was another revolution by the common people. Most of this support by the wealthy was under the assumption it would be temporary and not as extensive as it ended up being. Roosevelt broke up these large entities into smaller units, separated business sectors, and put caps on how large a business entity could become so there would not be a company too big to fail. Government regulation of business was the only way to stabilize from business cycles. Insurance companies were not publicly traded, but mutually owned by the policy owners. Banks could not be stock brokers and also be a retail bank as well. But this did not settle well with businesses and their investors who felt they were being held back from generating great personal wealth and too much wealth was being redirected to the working class.Then came the upsurge in labor unions organizing the working class.
Something had to be done if the wealthy were going to get THEIR country back and take control away from the populace and return it to themselves. During the 1950s and 60s labor unions had grown very large and powerful demanding more of the company's wealth to be shared with the workers. They demanded a 5 day work week and an 8 hour work day, plus overtime for work beyond the 8 hours and a minimum wage. With these wins they realized how powerful they were in the political arena with their organizational skills of getting people in the field to register new voters that would follow the union's lead on who to vote for and also getting these voters to the polls on election day. They also could spend lots of money on campaigns of candidates that support labor unions, which typically leaned Democratic.
In fact it was the combination of the Mofia and labor unions that got John Kennedy elected to the Presidency. Even though he came from a wealthy family, he was a catholic, and business owners and investors did not trust Catholics. They actually did very well through the Kennedy and Johnson years, mainly because Kennedy spent huge sums of tax dollars in his race to the moon and Johnson spend billions on the defense industrial complex during the Viet Nam war. These huge government expenditure into private enterprise was great for the bottom line of most large publicly traded businesses and was easing the prospects of a recession. The middle-class rose by leaps and bounds during this time.
When the political support for the war changed, Johnson had to go, which he did by not accepting the Democratic ticket for re-election. This opened the door for Tricky Dick Nixon to slip in. Paranoid as he was, he did the bidding of the wealthy. The economic policy changes made by the Fed and the Republican controlled congress unfortunately lead to double digit inflation and recession which required price freezes to try to get it under control. He left in disgrace and Gerald Ford assumed the office and failed also to control inflation. Remember the acronym WIN, Whip Inflation Now!
Jimmy Carter was able work with the Fed to get inflation to decline, but the oil producing countries in the middle-east realized the power they had by controlling the flow of oil to the west. They were also angry when Carter got Egypt to recognize Israel as a legitimate nation and signed a peace treaty between them. These Arab nations also knew that oil output was at its peak and they wanted a bigger piece of the energy profits before it was gone. So they nationalized all the oil fields that before were solely owned by mainly American corporations and a couple of European companies and formed OPEC. The great fuel embargo drove cost and inflation back up, throwing us into another recession before we were able to recover from the Nixon induced recession.
And then came the conservatives savior, Ronald Reagan and Milton Friedman as his economic adviser, this is were this story begins. Huge tax cuts and a huge increase in government funding in defense during the arms race with the USSR, all without increasing taxes to pay for it. Reagan borrowed heavily to pay for this build up. He lowered tax rates mainly to the wealthy, so the debt rose 184%.
To understand what has been occurring the past 40 years, you have to place your mind into a board member of a major multi-national corporation in 1978, sitting around the board room table as the analysts and researchers give their presentation regarding the future of the world economy at 10, 25, 50 and 100 years out. You are also a disciple of Milton Friedman's economic model. What are you hearing as a board member?
You are being told that the worlds oil output has reached its peak. Future oil will be more difficult and costly to acquire. Most of that oil is in unstable economic countries that have just nationalized the oil fields. Second, the high growth economies of the United States and Europe are flattening, most middle-class worker have reached a sustainable lifestyle and only technological advancements will move the market upward, but at a much slower rate of growth.
The rebuilding after WWII is mostly completed. The cold war has closed off some growth markets of post war eastern Europe. Consumers have also demanded better quality products that last longer than the designed 3 to 5 year life cycle and want are more reliability, requiring fewer repairs. They also want cheap disposable short life cycle products. What do you do as a company to sustain the growth you demand for both the company and for its share holders?
You have to look for new high yield growth markets. President Nixon opened China to the potential of rapid growth, should the communist government open their markets to western companies. China knows it must enter the world economy in order to create a sustainable economy and bring industrialization to the nation. It can no longer remain isolated and agrarian. The communist leadership hired Milton Friedman to engineer their transition to a capitalistic free-market economy. Western companies started to come with pocket books open to invest huge sums to reach this emerging market. China's new younger leaders saw the opportunities that they could never develop internally with their communistic central economy. So they embarked on changing their economy to an unregulated free-market to compete with the rest of the world. However the lack of regulations allowed piracy of American and European patents and intellectual property. Following the Friedman model, they are resistant in creating regulations to control these abuses. They also had seen the great wealth Japan had created with free-market enterprises and trading with America. They knew they could do the same but retain the authoritarian governance by making sure the people are advancing economically.
The presenters state that the greatest growth market is to develop China into a major economy. This would benefit the company because the vast cheap labor force available there and as this labor force move off the farms and into the factories, they will earn disposable income like they have never had, thus they will want the things that they are making for themselves. They will want to achieve what Americans have achieved. The rush to the middle-class was on.
This in turn creates huge demand for the goods being made, that reduces the cost of manufacturing, so that even in America and Europe, there will be an upsurge in consumer purchases. These cost reductions and lower consumer prices will offset the stagnant wages being paid to American workers. This will also eliminate labor unions as the jobs done in America are moved to China. The net effect of this is lowering the political power the labor unions gave to the Democratic party.
If the corporate community turned their support and money behind Republicans, who have generally represented their interests in Congress, and weaken the Democrats and the Unions, then they could generate huge earnings and transfer capital that is now pent up in the middle-class through home mortgages and other valuable assets like pension funds, 401(k)s, IRAs, etc.
Besides most of these corporations had underfunded the defined pension plans they contracted to provide under the union labor contracts. Most of these contracts required the company to put a sizable amount into the pension fund and the employee contributed some as well. But most companies either borrowed their portion of the fund for capital growth by issuing company stock options instead of actual cash or just never put the money in the fund at all. This was reaching billions of dollars and ballooned to a trillion dollars, that would harm these corporations if they ever had to fully fund these plans. Another reason to bust the labor unions and the contracts they were required to honor.
But they had to also bust the pension funds in a way the lets them off the hook to fund them for current retirees. Similarly they realized that the upcoming baby boomers were going to start to draw on these benefit funds that have been underfunded for decades. They can't just bankrupt the company to get out of them, they had to find a way. They also knew that this large group would demand that government fill in and take over their retirement by using Social Security and Medicare to do it. If government did that, then government would most likely would look at increasing the taxes paid by business to fund these benefits. So the next objective is to eliminate these programs by moving them into the private sector where they can bleed huge profits off the trillions of dollars managed by these funds.
It became clear to them that America's middle-class economy had to be devalued to a point that the masses are in desperate need for products they make. Also that the masses are so large that it will take at least one or two decades to recover to a similar 1960's level of growth.
You also have to know that large corporation are not supporters of democracy. Actually they dislike it because it creates too many changes and unknowns that they can't control. Business want stable governance, with minimal oversight and control. With the cycle of elections we have in America, it is difficult for them to adapt to the changes of administrations and congresses. If they could have one very friendly party control the governance of the country, then it would be much easier to concentrate on making money and competing with each others. Better yet would be to privatize government completely. Karl Rove also a disciple of Milton Friedman along with many neo-conservatives formulated a plan to ensure permanent Republican control of the government through gerrymandering voting districts to lean Republican and create road blocks for Democratic leaning voters can actually vote on election day.
Libertarian conservatives want minimal government, especially federal government. They were the perfect target for these large businesses to team up with to carry the political message that government was the enemy and anti-American.
So these business titans, including the Koch brothers, covertly organized with the very conservative caucus of the Republican party through such organizations as the Federalist Society, Center for Prosperity, The Cato Institute, and took control of the national Chamber of Commerce.They also needed some type of moral cover to their plan. Jerry Farwell's group, The Moral Majority and Pat Roberson's Christian Coalition organizations wanted more political clout. Evangelical religions were the perfect match. Ralph Reed the CEO of the Christian Coalition setup a project around the country to recruit people from evangelical churches to become stealth candidates by preaching Friedman's economic model and how it supports a theocratic government model, but they had to be careful not to expose their extreme positions until the time is right. He was able to get them elected into local governments and school boards, then moving them up to state legislatures and now into the US Congress. As each one move up a notch, he would train a new one to replace that person, stacking the system with loyalists to his religious and economic goals.
Even though these businesses aren't interested in social issues per say, they knew that the devotion these evangelicals would have to keep the narrative off the effects of the plan and on these hotly debated social agenda items would serve them well. Plus these evangelicals are also very greedy people and would like some of the wealth that can be generated. An additional benefit, is these religious groups do not support democracy and desire a theocratic republic. Perfect for the mission of these business entities. The faithful are great followers and don't question authority.
For the past 40 years they have executed their plan. Reagan started bringing in the Moral Majority group and then the Christian Coalition that was then merged with of Jerry Farwell's Moral Majority and run by Ralph Reed, who also teamed up with a secret christian group called the Family into the party to rewrite the party's platform by cramming it full of social issues such as anti-abortion, anti-gay, anti-communist, anti-socialism, anti-ACLU, anti-government positions.
As a refresher, the Family believes that God was not teaching compassion for the weak and poor, but Gods message is to accumulate power and wealth to impose the LAWS of God to the masses. They are the ones instrumental in pushing the death penalty law in Uganda for anyone practicing homosexuality. They also operate a boarding house on C street in Washington DC were Christian elected members of Congress live and pray.
Reagan also went after labor unions with firing the Air Traffic Controllers because of the perceived budget crises he created by lowering taxes on the wealthy and corporations, and then large increases in defense spending, and then removing trade barriers to China and Mexico. Reagan increase the national debt by 184%. He borrowed huge sums with federal bonds, purchased then mainly by American wealthy and pension funds and the newly minted Mutual Funds created by Wall Street.
George Bush I followed after him, this time engaging us into a war without a way to pay for it, so we started issuing more bonds to pay for the war. Bush did realize that the debt was getting too high and he had to raise taxes to ward off a potential collapse that was too early for his corporate overlords to benefit from.
Bill Clinton came along, but was quickly sucked into the money machine that these businesses had created for politicians to be feed from in order to be reelected. These businesses realized how easy it is to buy off politicians and for them to act as their facilitators within the government. For anyone, the money is just too tempting and necessary for any political future. It was no surprise that Clinton became very pro-business and went along with most of what the Republican congress wanted in deregulation and oversight. Yet he was able to balance his annual budget and ended his administration with a surplus. The problem from his administration is that the dot com explosion was building up the middle-class again and that was not acceptable to this coalition of business interests.
They worked very hard given the election law constraints to get George W Bush elected. Their friends in the Supreme Court did their duty and gave the final outcome to Bush. Then the plan was on a fast track.
Everyone knows that one must make use any opportunity that may come along that advances your goal. 9/11 did just that. In the extreme fear that resulted from this attack allowed essentially marshal law to be declared. In retaliation to the 9/11 attacks, George went to war in Afghanistan without any tax increase to pay for it. War is always good business, it opens huge opportunities for private companies to earn huge profits and our economy is based on continuous war activity. Without constant war, the defense industrial complex could not survive, so continual war is a necessity. Then he invaded Iraq, bingo another jackpot for the business sector. After all Rumsfield was a supporter of Milton Friedman's model of privatizing war, which he immediately set out to do by hiring private contractors for as much as he could, including combat troops classified as "security forces."
This also aided in the groups objective of starve the beast. That is to drain the treasury and raise the debt so high that the country is on the verge of bankruptcy. Thus the only way to save the nation from bankruptcy is to eliminate nearly every government service and social program by defunding them to pay off the national debt. This crisis also allows the privatizing of government as modeled after Friedman's economic model.
Today we have the Supreme Court serving their corporate masters by opening the flood gates for the wealthy and corporations to spend whatever they want to influence an election their way. Now it is up to these Tea Party groomed state governors and legislatures to kill the rest of the labor unions, mainly the public employee's unions so they are no longer able to collect dues and spend it on political campaigns for the Democrats.
Daily we are seeing Friedman's model being implemented at the state level. Wisconsin Scott Walker is doing so by declaring a fiscal crises to push is union busting legislation, then he will starve the education system and local governments of need state funds. In turn this will force local governments and school districts to terminate public employees and assumably hire private contractors and private charter schools to fill the need.
After Katrina in New Orleans, the conservative legislature only opened 4 public schools to meet their constitutional requirement and then contracted 31 schools to private charter school companies.
Michigan's governor just announced that he will convert 30% of Detroit's public schools to private charter schools. This is also happening in Illinois, Ohio, and Pennsylvania. If they succeed, more states will follow not only with schools, but every public service government has traditionally provided.
We will continue to see this privatization of our government unless the American people wake up and see how their self governance is slipping away to corporate interests and rise up in revolt.
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