The colonial experience-8: The rise of nationalist feeling

(For previous posts in this series, see here.)

While colonial powers needed to create an educated, elite class to act as surrogates for them and help them rule the country, providing access to that education created its own problems. While some in the educated elite were happy to play the role of junior partner to the colonialists and enjoy the rewards, others became, as a result of this western education, more aware of the political currents that were sweeping the world as a result of the Russian and Chinese revolutions, and the rise of anti-colonialist nationalistic sentiment following World War II.

These people returned from their education abroad to organize trade unions, form political parties, and agitate for independence. Ho Chi Minh in Vietnam returned from France to lead that country’s liberation struggle against the French. English-educated Jawaharlal Nehru and Mahatma Gandhi led similar struggles in India, and Sri Lanka had its own counterparts. All these leaders tended to have socialist leanings, having visions of creating a society that was just and egalitarian and non-racial.

But as we have sadly seen, the centrifugal forces that were unleashed by the divide-and-rule policies in the colonies based on long-standing inter-tribal suspicions were too strong to be overcome and almost all countries succumbed to ethnic clashes following independence. Those leaders in the fight for independence who were non-racial were often swept aside by pandering politicians only too eager to use ethnicity as a wedge to inflame passions and ride to power on racial issues. As a result, India has seen terrible Hindu-Muslim-Sikh violence, Sri Lanka has similar conflicts between Sinhala and Tamil people, and the ethnic violence in African countries are too many and well-known to list.

As a result of these problems exacerbated by the colonial powers, many countries descended into authoritarian rule with ruthless dictators, the worst examples being Mobutu Sese Seko in what was then called Zaire and is now called the Democratic Republic of Congo, Idi Amin in Uganda, and Robert Mugabe in Zimbabwe. These tragic post-independence developments enabled colonial powers like the British to smugly claim that they were the ones who kept the peace between the warring groups, and that thus their presence was beneficial, when in reality, they were the ones who helped fan the existing tensions and suspicions into flames. While the post-independence political leaders of those countries share a huge amount of blame for the degeneration of their countries, the colonists also have blood on their hands.

One bright spot in Africa was Tanzania under its founding president Julius Nyrere. An interesting intermediate case in Asia is Singapore, where an authoritarian leader Lee Kuan Yew kept a tight lid on ethnic divisions and successfully led a program of modernization and industrialization that has made that small country a world leader in commerce and resulted in Singapore having one of the highest standards of living in the world.

So coming back to Jared’s original question about how it could be that he, the only non-Indian in a class that dealt with British colonialism in India, could see the negative aspects of it, it comes down to the depth of one’s understanding of the political history of the colonized countries. Attitudes amongst the people of the former colonies towards the colonial experience depends on, I think, the politics and background of the family from which the person comes.

Most of the students who come to the US are probably like me, the products of a relatively small, urban, English-educated elite, and thus come from the group favored by the colonial powers. There is absolutely no doubt that having the benefit of an English education has opened our minds to a world of knowledge and enabled us to go abroad and experience much more than we would have otherwise. Knowledge of the English language and its associated literature has enabled us to more easily absorb western culture and science, which are both dominant in the world today. There is no question that this particular legacy of the colonial experience has been good for us personally.

Making broad generalizations, those who left the colonial country because of the turmoil that followed independence, tend to think of the pre-independence colonial times as one of peace and prosperity, at least for the urban elite to which they belonged. This is especially likely in the case of ethnic and religious minorities who bore the brunt of the post-independence backlash by the marginalized majority against those whom they perceived as unfair beneficiaries of colonial largesse.

Against that group are those who grew up in households or communities that were more politically aware at a deeper level. I have said that my grandfather’s view of British colonial rule was positive, although he knew that they considered brown-skinned people like him as ultimately inferior. They were sufficiently nice to him and rewarding of his services that overall he thought they treated him well, and that he fared better than he would have at the hands of the majority community.

My father, on the other hand, lived during the time of transition to post-colonial rule, with almost exactly half his life growing up in a British colony and the second half in an independent state. So he grew up with all the privileges of being English educated but at a time when anti-imperialist sentiment was strong and nationalist fervor was high, especially in the universities and amongst what used to be referred to as the intelligentsia. He belonged to both and his political leanings were influenced by that experience. So he did understand the negative aspects of colonial rule while at the same time being a beneficiary of it.

The next generation, mine, is entirely post-colonial and where we stand in relation to our colonial past is also mixed. The more politically aware can see both the long-term benefits as well as the damage that colonialism has done, and we are ambivalent towards it. Others who do not go into it as deeply may have a rather one-sided view depending on their own personal situation and how colonialism affected their own lives. Those who come from families that benefited, the urban English educated class, see it as mostly a good thing while the rest may see it as largely negative.

This series had its genesis the attempt to explain to Jared why it was that the Indian students in his colonialism class seemed to have a positive view of that experience. I suspect that most émigrés are those from the English-educated urban classes, since they are the ones who have access to the means for going abroad and they, I suspect, are the ones who dominated Jared’s class. So this post ends my long-winded answer to his question.

POST SCRIPT: Interesting talk today

Jeff Hawkins will be speaking today (Tuesday, March 31, 2009 from 4:30-5:30) on the topic On Intelligence: What Intelligent Machines Can Learn From the Human Neocortex.
Hawkins is co-founder of two computer companies, Palm and Handspring, and is the architect of many computing products such as the PalmPilot and Treo smartphone, and the author of the book On Intelligence (2004).

The talk will be given in the Wolstein Auditorium on Cornell Road on the campus of Case Western Reserve University. For more details, see here.

Road rants

It is time for another edition of Road Rants where, after going on a road trip where I have time to think of these things, I note the driving practices I see that annoy me and make suggestions for improvement. The previous rants were here, here, and here.

Turning on lights

On the highway several times I came across a sign saying that there was construction ahead and to turn on the headlights. In each case there were about six or seven cars ahead of me, not one of whom bothered to turn on their lights. On the other hand, when there was a sign saying that we were about to enter a tunnel and to turn on the lights, everyone did so, though some only after entering the tunnel.
[Read more…]

The colonial experience-7: Majority-Minority divisions

(For previous posts in this series, see here.)

One of the most depressing features of so many countries that gained independence in the post-colonial age that began with the end of World War II is the inter-ethnic tensions, discrimination, and violence that often occurred.

It must be made clear that tensions between the different ethnic communities were not created by the colonists out of nothing. It is not the case that the different ethnic groups had been living in a harmonious paradise before the arrival of the colonists. The tribal instincts and in-group/out-group thinking that are the bane of existence and the cause of so much violence and hatred all over the world existed long before the appearance of the modern nation state. What the colonial powers did was to take those existing suspicions and animosities and use them as important elements in their divide and rule strategy, thus perpetuating and aggravating them.

The British have a history of using a minority community’s latent suspicions of the majority to woo them as allies against the majority, thus preventing any unified action against the British. They did this in ways large and small. One way they did this in Sri Lanka was to give excessive patronage rewards to the minority Tamil community. For example, the minority Tamil community was far more welcoming concerning the opening of missionary schools and churches, and as a result they ended up learning English in greater numbers and occupying the elite professions and the higher ranks of the administrative and commercial sectors in numbers that far exceeded their proportion in the population.

This had a two-fold benefit for the British. It created a spiral of behavior in which the minority communities felt more grateful to the British and tended to look to them as their protectors from the majority community and to be more ingratiating towards them, and it shifted the resentment of the majority community away from the British and towards the minority, thinking of them as somehow conniving with the British to obtain greater rewards at their expense. As a result of these and similar policies in other colonial countries, the minority communities were the ones most fearful of what would happen to them at the hands of the majority once the colonial power left. After a country gained independence, the lid came off the simmering conflict and often escalated into open-warfare. The roots of the twenty-five year long civil war that has gone on in Sri Lanka, and the insurrection that took place against the government in the 1970s and 1980s, can all be traced to these policies of the British.

Similarly, the Belgians in collusion with the Roman Catholic Church deliberately set about magnifying the extremely minor distinctions between Hutus and Tutsis in Rwanda and favoring the minority Tutsis, thus setting in motion the train of events that led to the horrendous genocide of 1994 in which over 800,000 mostly Tutsis were killed in the space of a few months at the hands of their Hutu neighbors.

One sees this pattern repeated in almost all the former colonies. In fact, it is hard to find a post-colonial country that has not had such problems. Especially in Africa, the colonial powers often created countries that had not existed as single entities before. But rather than drawing boundaries that separated nations according to traditional ethnic boundaries and thus ensuring relatively homogeneous populations, they would draw lines that divided ethnic communities and forced them into political unions with other communities with whom they had traditional animosities. As a result, we have so many brutal ethnic conflicts going on in so many countries. This was a heinous crime committed by colonial powers that is impossible to excuse.

But the British in Sri Lanka also created divisions in other seemingly minor ways. For example, the social clubs that people join and spend evenings with their friends and families are an English institution. They created such clubs in Sri Lanka too, and which had sports teams that competed with each other, and some of these clubs had explicitly ethnic affiliations with names that reflected them: Sinhalese Sports Club, Tamil Union, the Moors (Muslims) Sports Club, and the Burgher Recreation Club (the Burghers were those people whose ancestry included some Portugese, Dutch, or British). The British had their own exclusive clubs, open to whites only.

It seems incredible to me now that Sri Lankans should have tolerated such blatantly ethnicity-based social clubs for so long, even after independence, and taken them for granted. Although the clubs now have memberships that are open to all ethnicities, the very names are offensive. But they still exist and indicate that abhorrence to tribal sentiment and allegiance is not anywhere near as widespread and as strong as it should be.

POST SCRIPT: Americans are willing to pay more in taxes to improve infrastructure

It has long been treated as an article of faith that Americans hate raising taxes for whatever reason. But Republican pollster Frank Luntz finds that this is not true.

Consider this: A near unanimous 94% of Americans are concerned about our nation’s infrastructure. And this concern cuts across all regions of the country and across urban, suburban and rural communities.

Fully 84% of the public wants more money spent by the federal government — and 83% wants more spent by state governments — to improve America’s infrastructure. And here’s the kicker: 81% of Americans are personally prepared to pay 1% more in taxes for the cause. It’s not uncommon for people to say they’d pay more to get more, but when you ask them to respond to a specific amount, support evaporates. (That 74% of normally stingy Republicans are on board for the tax increase is, to me, the most significant finding in the survey.)

The Nigerian 419 scam goes meta

Is there anyone by now who has not heard of the ‘Nigerian 419’ scam or been approached by the people behind it? Hardly a week goes by that I do not receive several of these things in my email (sometimes several in one day). Word must have spread in the confidence trickster world that I look like a real sucker because I used to get these solicitations long before they became well-known as a fraud. Even before the internet I used to regularly get actual letters. But despite their notoriety, even now it appears that there are still people falling for it. In the US alone, it is estimated that about $200 million is conned per year.

The fraud starts with the arrival of a letter or email from someone in another country saying that a vast some of money, running to many millions of dollars, has come into their hands and they are seeking ways to get it out of the country. They have heard that you are a trustworthy, responsible, and discreet person and if you are willing to have your bank account used as a conduit, then you get to keep a third or so of the total.

The letter preys on the greed or desperation of people. It usually is purported to come from an official in a bank or government who has stumbled upon a dormant bank account of a diseased rich person with no heirs, or it is the secret stash of a dead or deposed ruler of a country. Sometimes it comes from a lawyer (these letter writers are seem to think that British lawyers have credibility) who says that he is acting on behalf of a client. Sometimes it comes from the widow or other relative of a former ruler who is now being persecuted by the current regime and is in hiding or in a refugee camp but knows where the money is secretly hidden. Sometimes you are told that you are the winner of a lottery. Sometimes it is from a dying wealthy, religious person, who wants their money to be spent in the service of the poor after they are dead and they have heard that you are a religious person who does good works and they want to support your work.

These letters are an art form in themselves. Douglas Cruickshank writes of the:

almost poetic sweetness (swaddled in lavishly stilted prose excavated from an 18th century protocol handbook) in how the letters begin. “It is with a heart full of hope …” reads one. “Compliments of the season. Grace and peace and love from this part of the Atlantic to you” is how another starts. “Goodday to you, I would here crave your distinguished indulgence” begins a third.” And still another opens, “It is with my profound dignity that I write you.”

My favorite is perhaps this one (the phrasing is less lyrical than the others, but its deep sense of purpose and utmost sincerity can’t be matched):

It is with deep sense of purpose and utmost sincerity that I write this letter to you knowing full well how you will feel as regards to receiving a mail from somebody you have not met or seen before. There is no need to fear, I got your address from a business directory which lends credence to my humble belief. I also assure you of my honesty and trustworthiness.

You’ve no sooner started to read one of these slyly poignant pleas before you’re bathing in the warmth of the author’s lofty intentions, a soothing hot tub bubbling over with reassurance, honesty and trustworthiness.

Whatever the story, you are asked to furnish information, including your bank account number so that the money can be transferred to you. What happens next varies. In the simplest case, they find some way to empty the sucker’s account of whatever money it has. They are the lucky ones.

In other cases, when they hook a sucker, they then say that a minor glitch has occurred and that they need some small amount of money to pay some fees or bribe an official. Once you send the money, you are hooked and you get requests for a little more money to solve another minor problem, etc. all of which are hard to resist, since you have already invested some money. It has sometimes got so bad that people have even traveled to the country to help facilitate the release of the money they’ve been promised and only then discovered that they’ve been had.

There have been people who have had fun reversing the scam. Here is one hilarious story of one such counterscam, though it is better not to have anything to do with the scammers because they are criminals, and just ignore the emails altogether.

Perhaps because the original forms of the scam are now so well known, I recently received a more sophisticated meta-version that exploits the very fact that the original appeals are largely known to be frauds. Here is the email I got last week:

Dearest One,

I am Susan Walter, I am a US citizen, 39years. But I reside and work here in the States, and my home town in the States is Texas. My residential address is as follows. [Street address provided].

I am one of those that executed a contract in Nigeria years ago and they refused to pay me, I had paid over $70,000 trying to get my payment all to no avail. So I decided to travel down to Nigeria with all my contract documents.

And I was directed to meet with Barr Mat Oto, who is the member of CONTRACT AWARD COMMITTEE, and I contacted him and he explained everything to me. He said that those contacting us through emails are fake. Then he took me to the paying bank, which is Oceanic Bank Int., and I am the happiest woman on this earth because I have received my contract funds of 4.2Million USD.

Moreover, Barr Mat Oto showed me the full information of those that have not received their payment; and I saw your contact. This is what you have to do now. You have to contact him direct on this information below;

Name: Barr Mat Oto [Email, phone, and street addresses provided]

You really have to stop your dealing with those contacting you, because they will dry you up until you have nothing to eat. The only money I paid was just $1,200 for IRS, which you know. So you have to take note of that.


Mrs. Susan Walter.

It is really sweet of the now-very-rich Susan Walter to take the trouble to track me down and let me know that I too am the genuine recipient of millions of dollars and to warn me away from all the swindlers out there and point me to the one genuine individual. Unfortunately, what with one thing and another, I am a little busy now and don’t know that I can spare the time to contact Mr. Oto myself.

So here’s my offer. I am willing to share my good fortune with someone who is willing to do all the work to get me my money. I have heard that the readers of this blog are trustworthy, responsible, and discreet persons. If any of you are interested, please tell Mr. Oto that you are my authorized agent and once I get my millions of dollars, I will wire you one third of it. Just give me your bank account number, ok?

The colonial experience-6: Divide and rule

(For previous posts in this series, see here.)

While the colonies were a prime source of revenue for England, they also served as places to send young English men who were seen as black sheep in their well-connected families or as places where the less well-connected could make their fortunes. But the British could never hope, by sheer force of numbers and soldiers, to keep their far-flung empire under their control for a long time. Even the strong and well-organized Roman empire collapsed under this kind of logistical strain, and we see the same thing happening right now with the US trying to maintain its global dominance militarily. It is causing immense stress on its budgets and threatening to bankrupt the country.

In the previous post in this series, I said that one strategy they adopted was to create a class of surrogates who were educated in western ways in language, dress, manners, and mode of life, so that they were sympathetic to the British presence and even saw it as largely a positive thing.
But while that policy could be seen as a fairly benign strategy that even had some positive features, the British also adopted the tried and true strategy of all imperial powers, the cruel and infamous policy of ‘divide and rule’. This required setting up suspicions and antagonisms between groups of local people so that they would not unite against their rulers, but would instead compete against each other for dominance or for favorable treatment from the British. While the British remained, they were able to prevent the simmering animosities they themselves deliberately fomented into breaking out into open conflict, thus creating the façade that they were peacemakers, when in truth they were instigators of dissension.

The British were so successful at both creating this class of surrogates that was sympathetic to their interests and also in sowing ethnic dissension that even to this day there are people in the colonized countries who see the period of British colonization as almost wholly benevolent and that independence saw the beginning of the decline of those countries, with ethnic clashes breaking out, authoritarian governments taking over, widespread corruption, the breakdown of law and order, and failed economies. Zimbabwe is the paradigmatic case of a post-colonial collapse.

While it is true that the departure of the British often did result in such collapses, and the political leaders who replaced the British share much if not most of the blame for the breakdown, the roots of those problems can often be laid at the feet of the British, as a result of policies they deliberately put in place. Where the post-independence rulers can be faulted is in their inability to see the traps set for them and take effective counter-measures. Instead many post-independence leaders cynically exploited the divisions sown by the colonial countries and used ethnic hostilities to gain power, despite the long-term problems and suffering they thus caused.

A few, like Jawaharlal Nehru, the first prime minister of India, and Julius Nyerere, the first prime minister of Tanzania, were intellectuals who could see beyond tribal thinking but they were the exceptions. And even Nehru could not prevent Hindu-Muslim brutality from dividing his country.

As part of their strategy to be able to rule the colonies with the minimum number of residents, the British created two types of divisions: class and ethnicity. To create the former, we saw the careful cultivation of a class of local people who were educated to identify themselves with the British culture and to look down on their own people who were now English-speaking. The residue of that policy exists even today. The English-speaking middle classes think of themselves as somehow superior to those people who are comfortable speaking only in the indigenous languages of Sinhala and Tamil, and who speak English badly or mispronounce words. Such people are referred to disparagingly as ‘gamayas’ (village people), implying that they lack the sophistication of their urban counterparts.

This set up tension between the English-speaking, largely urban, middle classes and the poorer rural people who spoke in the vernacular. The English language became referred to as the ‘kaduwa’ (sword) that divided the people into two. Even as late as when I was in college, the students were categorized as the ‘kults’ or the ‘harayas’. The word kult was (according to local folklore) a corruption of the word kultur, the German word for high culture, and stood for those who could speak English well and adopted western style manners and clothes and tastes in music and films, while the word ‘haraya’ stood for an ordinary person or plebeian.

The economic, social, and political dominance of the kults naturally created resentment amongst the harayas (who were in the numerical majority). The harayas felt that they were being denied access to the higher levels of economic and social life through no fault of their own, merely because of accidents of birth and background. After independence, this resentment boiled over and in Sri Lanka there was a backlash against English in the mid-1950s with politicians pandering to the majority by seeking to abolish English as the language of government and commerce, to limit access to learning it in schools, and adopting a ‘Sinhala Only’ policy, making the majority language the official language of the country. The idea was that then the rural majority that spoke in the vernacular would then have greater access to the higher levels of the professions, business, and society.

This policy was the reverse of the earlier pro-English policies but had long-term disastrous effects. One result was that the minority ethnic Tamil community, which spoke Tamil, felt discriminated against. They saw the Sinhala Only policy as directly targeting them and this, building on long-term suspicions, eventually led to calls for a separate state and the current civil war.

The drive against English also coincided with the increased use of English worldwide as the language of international trade and commerce and science. English was too important to be ignored or suppressed and efforts to do so only resulted in an even smaller elite being able to learn it and thus have access to education abroad or to have access to the knowledge explosion occurring worldwide. So Sri Lanka actually suffered from its anti-English drive, hindering the creation of the kinds of educated people who could take advantage of the science and knowledge explosion. They are now trying to change course and bring English back but two generations of students have gone through the anti-English educational system. That makes it that much harder to now have enough people to provide adequate instruction in English.

So adopting the policy of giving the majority language (which was only spoken in Sri Lanka) pride of place resulted in two long-term negative consequences. It aggravated the suspicions of the minority that the majority community was seeking dominance over them, and it was a step back into insularity at a time when the world was becoming increasingly interdependent and using English as the means of communication and commerce and science.

POST SCRIPT: Media obliviousness

Glenn Greenwald has an excellent post about how the journalists in the mainstream media are completely oblivious to their true relationship to the people they supposedly cover, and why they are baffled at being the targets of Jon Stewart’s and Stephen Colbert’s humor.

Pope Benedict challenges all superstitions other than his own

In a previous post, I said that when religions compete with others for adherents, they do not resort to evidence because no religion can produce any. Hence they have to resort to emotional appeals, scaring people that if they don’t believe in their god, awful things will happen to them, but if they believe, they will be rewarded in the next life or the afterlife, in the form of heaven or other goodies.

So basically, it is a competition that tests which religion has the best combination of fear and bribes to achieve its goal of increasing market share. Christianity, for example, has had a good run by scaring the daylights out of people with awful visions of hell and what happens on judgment day to people who have not accepted Jesus, and then promising a quickie salvation from that awful fate if only they say the magic words “I accept Jesus as my personal Lord and Savior.”

During his recent visit to Africa, Pope Benedict XVI stirred up a controversy by opposing the use of condoms to fight the spread of AIDS, saying that using condoms might make the problem worse. His argument is that the only surefire way to prevent the spread of sexually transmitted diseases is to practice strict monogamy and that condoms might make people think that it is safe to have sex with more than one partner. He did not cite (as far as I know) any medical studies to the effect that condom use resulted in the increased spread of HIV and other diseases.

The Daily Show had some fun with the Pope’s comments.

The Daily Show With Jon Stewart M – Th 11p / 10c
Pope Benedict XVI on the HIV Crisis
Daily Show Full Episodes Important Things w/ Demetri Martin Political Humor

But lost in that controversy is that the Pope tried a new tack in dealing with competition from other religions. Africa (and the developing world in general) is important to the future of the Catholic Church since their numbers in Europe and North America are dwindling. But the church on that continent is facing competition from Islam and evangelical forms of Christianity, such as Pentecostal and other charismatic movements.

In trying to combat this, the Pope tried appealing to reason. He said that he was in Africa to warn of the “growing influence of superstitious forms of religion” (my italics). In Angola, he urged his followers to reach out to those who believe in “witchcraft and spirits”.

When I read that, I was impressed with the sheer brazenness of the Pope’s statements. To imply that Catholicism is not a form of superstition but that other religious beliefs are requires a considerable ability of self-deception. It seems that the Pope has forgotten that proverbial warning addressed to those who live glass houses. After all, in his book The God Delusion (p. 178), Richard Dawkins points out that being a good Catholic involves believing the following:

  • In the time of the ancestors, a man was born to a virgin mother with no biological father being involved.
  • The same fatherless man called out to a friend called Lazarus, who had been dead long enough to stink, and Lazarus came back to life.
  • The fatherless man himself came alive after being dead and buried three days.
  • Forty days later, the fatherless man went to the top of a hill and then disappeared bodily in to the sky.
  • If you murmur thoughts privately in your head, the fatherless man, and his ‘father’ (who is also himself) will hear your thoughts and may act upon them. He is simultaneously able to hear the thoughts of everybody else in the world.
  • If you do something bad, or something good, the same fatherless man sees all, even if nobody else does. You may be rewarded or punished accordingly, including after your death.
  • The fatherless man’s virgin mother never died but ‘ascended’ bodily into heaven.
  • Bread and wine, if blessed by a priest (who must have testicles), ‘become’ the body and blood of the fatherless man.

If all these things do not constitute superstitions, then what does? As I have argued before, so-called mainstream religions act as gateways to more extreme forms of belief because they assert that belief in the supernatural, without any supporting evidence, is rational. Once you concede that, you cannot credibly challenge witchcraft, Satanism, spoon bending, and the like. The Pope would be hard pressed to explain why putting spells on others is a more superstitious practice than praying to god to intervene in the laws of nature.

Saying that he wants to combat superstitious beliefs is an interesting rhetorical development by the Pope but I am not sure it is wise. He may be able to get away with it because people are not likely to ask him why he thinks Pentecostalism is superstition while Catholicism is not. Journalists and other people who interview Popes tend to treat them as if they are to be venerated, rather than as the CEO of a huge, secretive, and lucrative business trying to increase market share and revenues, which is what a Pope really is.

I hope the leaders of the other religions being denigrated as superstitions by the Pope will take umbrage and challenge the Pope to show why his religion is less superstitious than theirs. I would love to see such a public discussion take place among the leaders of the world’s religions. But I fear that all religious leaders know that they all lose by having an open discussion on the relative rationality of their competing faiths. Hence they will bite their tongues, unfortunately.

The Pope should stick to the traditional Catholic claim to superiority that he is #1 because the Bible says that Jesus gave Peter the keys to the kingdom of heaven, and since he is Peter’s heir, by extension the Catholic Church is the way to get to god. That highly dubious claim to divine authority has worked fairly well so far. He should steer clear of talking about the evils of superstitious beliefs.

POST SCRIPT: Avoiding waste

One suspects that an important basis of the Pope’s opposition to condom use is because of the church’s attitude that sex for any reason other than procreation is a bad thing, and so any ‘artificial’ measures taken to prevent the fusing of a sperm with an egg must be rejected.

Monty Python’s Meaning of Life explains that doctrine in song.

The colonial experience-5: Creating loyal surrogates

(For previous posts in this series, see here.)

The British, in my opinion, were much smarter colonial powers than (say) the French or the Belgians. The Belgians were arguably the worst, as can be seen in what they did to the Congo under Emperor Leopold. As is the usual pattern, the colonialists used religion as a pacification tool. “[Leopold] claimed he was doing it to protect the “natives” from Arab slavers, and to open the heart of Africa to Christian missionaries, and Western capitalists.” [Read more…]

The real AIG fraud

There is one thing that I have learned about politics: when the political ruling class is in a big lather about something and screaming loudly for retribution and action, that means the real action is taking place elsewhere, in secret, and that all the fuss is to distract attention from the real scandal. This rule of thumb has never failed me, although sometimes it takes a while to find out what the true story is.

This instinct immediately kicked in when all the ballyhoo began about the $165 million in bonuses being paid to some AIG executives. This is just 0.1% of the money paid out (so far) to AIG and when I saw all the politicians getting into fits of righteous indignation, holding Congressional hearings, calling these executives all kinds of names, demanding the bonus money back, and threatening to use subpoenas and punitive laws to do so, I felt at once that it was all a smokescreen although I did not know what the smoke was covering. But I knew that soon enough, more knowledgeable people would reveal the truth, even though it would not get major coverage in the mainstream media, because the latter is a necessary part of the smoke-generating machine, and dutifully play their role by giving extensive coverage to all the grandstanding, while not investigating the real news.

Some new articles reveal what is actually going on. To understand what they say, you need to know that the term ‘counterparties’ refers to those firms that owned assets of dubious value that AIG had ‘insured’ against loss from their face value. (Note: I have explained before that this was not technically insurance, which is a highly regulated industry, but was essentially an unregulated scheme of private bets.) The taxpayer bailout money to AIG was used to pay off those obligations. But despite using public money and despite the government now owning nearly 80% of its shares, AIG had the nerve to refuse to reveal to the public the names of the companies that it had paid out money to and for what, leading to suspicions that, rather than protecting taxpayer interests, they had deliberately overvalued those assets in order to bail those companies out from their bad decisions. They finally revealed at least the names on Sunday night, a time when companies and governments release bad news hoping the public is not paying attention.

After months of stonewalling, government-controlled American International Group (AIG) finally revealed the names of the counterparties that were funneled $108 billion in taxpayer funds. The largest recipients of AIG bailout funds were European banks, Wall Street firms and, to a lesser degree, municipal governments.

The fundamental concern is that favored firms may have been overpaid for assets using a large chunk of AIG’s $170 billion bailout package. Though it is now known who the counterparties are, AIG refused to itemize what exactly it is each of them brought to the table. As a result, it’s impossible to know if some firms got better deals than others, or if taxpayers got a raw deal all together.

Eliot Spitzer explains in Slate what is going on:

Everybody is rushing to condemn AIG’s bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG’s counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman’s collapse, they feared a systemic failure could be triggered by AIG’s inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG’s trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already. (my italics)

The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.

Spitzer then goes on to ask some very pertinent questions about all the cozy insider dealing between AIG, Goldman Sachs, Paulson, Geithner (who has replaced Paulson as Treasury Secretary), and Benanke. He says that those questions should be asked under oath.

Economist Michael Hudson sheds more light on the deal:

Here’s the problem with all the hoopla over the $135 million in AIG bonuses: This sum is only less than 0.1 per cent – one thousandth – of the $183 BILLION that the U.S. Treasury gave to AIG as a “pass-through” to its counterparties. This sum, over a thousand times the magnitude of the bonuses on which public attention is conveniently being focused by Wall Street promoters, did not stay with AIG. For over six months, the public media and Congressmen have been trying to find out just where this money DID go. Bloomberg brought a lawsuit to find out. Only to be met with a wall of silence.

Until finally, on Sunday night, March 15, the government finally released the details. They were indeed highly embarrassing. The largest recipient turned out to be just what earlier financial reports had rumored: Paulson’s own firm, Goldman Sachs, headed the list. It was owed $13 billion in counterparty claims. Here’s the picture that’s emerging. Last September, Treasury Secretary Paulson, from Goldman Sachs, drew up a terse 3-page memo outlining his bailout proposal. The plan specified that whatever he and other Treasury officials did (thus including his subordinates, also from Goldman Sachs), could not be challenged legally or undone, much less prosecuted. This condition enraged Congress, which rejected the bailout in its first incarnation.

It now looks as if Paulson had good reason to put in a fatal legal clause blocking any clawback of funds given by the Treasury to AIG’s counterparties. This is where public outrage should be focused.

Instead, the leading Congressional shepherds of the bailout legislation – along with Obama, who came out in his final, Friday night presidential debate with McCain strongly in favor of the bailout in Paulson’s awful “short” version – have been highlighting the AIG executives receiving bonuses, not the company’s counterparties.

[What do] Sen. Schumer, Rep. Frank, Pres. Obama and other Wall Street sponsors gain from this public outcry? For starters, it depicts them as hard taskmasters of the banking and financial sector, not its lobbyists scurrying to execute one giveaway after another. So the AIG kerfuffle has muddied the water about where their political loyalties really lie. It enables them to strike a misleading pose – and hence to pose as “honest brokers” next time they dishonestly give away the next few trillion dollars to their major sponsors and campaign contributors.

The uproar about AIG bonuses has effectively distracted attention from the AIG counterparties who received the $183 billion in Treasury giveaways. The “final” sum to be given to its counterparties has been rumored to be $250 billion, do Sen. Schumer, Rep. Frank and Pres. Obama still have a lot more work to do for Wall Street in the coming year or so.

To succeed in this work – while mitigating the public outrage already rising against the bad bailouts – they need to strike precisely the pose that they’re striking now. It is an exercise in deception.

The moral should be: The larger the crocodile tears shed over giving bonuses to AIG individuals (who seem to be largely on the healthy, bona fide insurance side of AIG’s business, not its hedge-fund Ponzi-scheme racket), the more they will distract public attention from the $180 billion giveaway, and the better they can position themselves to give away yet more government money (Treasury bonds and Federal Reserve deposits) to their favorite financial charities.

The money can be recovered. And that’s just what Mr. Schumer, Mr. Frank and others don’t want to see the public discussing. That’s why they’ve diverted attention onto this trivia. It’s the time-honored way to get people not to talk about the big picture and what’s really important.

Barack Obama, Barney Frank, Charles Schumer, and other leaders of both parties are busy grandstanding about the bonuses to hide the fact that they are complete shills for the finance industry and that they have colluded in the outrageous giveaway of huge sums of taxpayer money to the big financial firms, using AIG as the conduit. It is basically a money laundering scheme, to hide the real beneficiaries, the big financial interests that both parties serve.

Our pro-business, one-party government at work, serving the needs of the people they really care about.

POST SCRIPT: Monkey business

Researchers find that some monkeys seem to teach their young children how to floss their teeth. This is remarkable because the ability to consciously teach others how to use tools properly is thought to be a capability that only the human species possesses.

In the name of Galt, go!

Yesterday, I wrote about the predictable opposition of the low-tax/no-tax zealots to the implementation of the sunset clause that will at the end of 2010 revert the tax rates to its 2000 values.

The most bizarre feature of this opposition has been those who are threatening to ‘go Galt’. Apparently they are taking their cue from John Galt, the hero of the Ayn Rand 1957 novel Atlas Shrugged, who inspired all the allegedly talented people, the leaders of business and arts and inventors and scientists, to show their disgust with the government burdening them with regulations and ‘taking’ their money in taxes for society’s benefit, by abandoning their prosperous careers and going on strike, even withdrawing to a remote enclave in Colorado called Galt’s Gulch. By withholding their talents from society, they caused society to crumble, teaching it the harsh lesson that the very gifted and talented must be left unfettered and tax-free so that their ambition is not shackled and their genius can flourish and thus society as a whole benefits.
[Read more…]

Phony tax arguments

I do my own taxes. They are not that complicated and the tax forms and instructions provided by the IRS are pretty clear and straightforward.

Basically, the system for most individuals is that you add up all your income to get your gross income, then subtract all the allowable deductions (personal and dependent deductions, state and local taxes, home mortgage interest, IRA and charitable contributions, etc.) and you are left with what is known as your taxable income. At the very least, a single person in 2008 would be able to claim the standard deduction of $5,450 and one personal exemption of $3,500, meaning that their taxable income would be $8,950 less than their gross income. If they put away another $5,000 in an IRA savings account, their taxable income gets further lowered by that amount and they pay even less in taxes.

In 2008, for a single person, the tax is computed as follows (see page 80):

On the amount of your taxable income that is $8,025 or less, you pay 10% of the amount.
On the amount over $8,025 and less than or equal to $32,550, you pay 15%
On the amount over $32,550 and less than or equal to $78,850, you pay 25%
On the amount over $78,850 and less than or equal to $164,550, you pay 28%
On the amount over $164,550 and less than or equal to $357,700, you pay 33%
On the amount over $357,700, you pay 35%

The size of each income tax bracket is adjusted each year for inflation.

This is what is meant by a progressive tax code, that the percentage of income that is taxed goes up the higher the bracket in which your top income level is. Your marginal tax rate is the percentage that is taxed on that portion of your income in the highest bracket. So the marginal rate for someone earning $50,000 is 25% (meaning that the portion of income over $32,550 is taxed at 25%), while for someone earning $250,000 it is 33%.

Because of this progressive structure, the actual percentage of your gross income that goes as taxes is much less than your marginal rate. For example, a single person who earns a gross income of $50,000 pays less than 11% of their gross income in taxes, even though their marginal rate is 25%, while a single person who earns a gross income $100,000 pays only about 18% of their gross income in taxes (assuming they take the standard and personal and IRA deductions) although their marginal rate is 28%. So when people say that they are ‘in the 25% tax bracket’, they are merely talking about their marginal tax rate, not the effective rate at which their entire income is taxed.

This is an important distinction between marginal and effective rates that some anti-tax advocates like to blur, by suggesting that small increases in marginal rates are a disincentive to earning, and that it makes good economic sense to limit your earnings so that you stay at a lower marginal rate. It is never the case that, by raising your taxable income so that you move into the next higher marginal tax rate, you will lower your after-tax income.

If you were earning $78,850 dollars (and thus your marginal rate was 25%), and by doing a little extra work you earned $1 more and that pushed you into the 28% marginal rate, only that last dollar would be taxed at the 28% rate, with all the other income unaffected. Your take home income would still increase by 72 cents. If you earn more, you get to keep more.

So-called ‘flat tax’ proposals, in which all income is taxed at the same rate, is regressive. The so-called ‘payroll taxes’ such as Social Security and Medicare are regressive taxes since they are flat taxes of 6.2% and 1.45% respectively on all income. In fact, the former is extremely regressive since that tax is not levied on income over an upper limit that is adjusted for inflation (and is $102,000 for 2008), which means that the more you earn over that limit, the lower the percentage of your income that you pay as tax.

The reason that a progressive tax structure is fairer is that poorer people pay a far greater proportion of their total income for basic necessities like food, clothing, shelter, and health care while the rich have far more disposable income to spend on luxuries. You do not want to heavily tax that portion of the income that goes to meet basic needs, hence the lower rate on the lower brackets.

When George W. Bush came into office in 2000, there were five income tax brackets:

On the amount of your taxable income that was $26,250 or less, you paid 15% of the amount.
On the amount over $26,250 and less than or equal to $63,550, you paid 28%
On the amount over $63,550 and less than or equal to $132,600, you paid 31%
On the amount over $132,600and less than or equal to $288,350, you paid 36%
On the amount over $288,350, you paid 39.6%

Even though these taxes were much lower than most years since 1933 (In 1945, the top marginal rate reached a peak of 94%), Bush and the Republicans pushed relentlessly for even lower tax rates, especially the top marginal rates that affected the very wealthy. By 2003, there were six income tax brackets (as now) but the rates for each bracket were reduced to 10%, 15%, 27%, 30%, 35%, and 38%.

Bush and the Republicans pushed for the even lower rates, which resulted in the current situation. All of these cuts largely benefited the wealthy since it lowered their top rates by more. In other words, they made the tax code more regressive. As a result of these tax cuts, a single person in 2008 earning a gross income of $50,000 saw a drop in their taxes of about $1,300 (compared with the 2000 rates) while someone earning $500,000 saw a drop of about $21,000. The loss in revenue due to the tax cuts that largely benefited the rich, coupled with the huge costs of the war in Iraq and Afghanistan, has resulted in the budget surpluses of 1998-2001 becoming deficits from 2002 onwards.

These tax cuts were sold as a temporary measure, and to help passage a sunset provision was added that was due to go into effect at the end of 2010, causing the rates to revert to their 2000 values. But it was entirely predictable that when the time came for the sunset provision to kick in, the tax cut zealots would start misleadingly squealing that we were getting a tax hike, rather than the truth that we were ending something that was meant to be a temporary measure. And we see this happening now.

While I expected this kind of opposition to reverting to the 2000 rates, what took me by surprise was the sudden channeling by some people of their inner Ayn Rand and their plan to oppose the sunset provisions using a bizarre strategy based on, of all things, the plot of her novel Atlas Shrugged.

Next: Ayn Rand and ‘going Galt’.

POST SCRIPT: Civil liberties and internet censorship

Chris Hansen, senior national staff counsel for the ACLU, will be speaking at the Case Western Reserve University Law School Moot Court Room on Thursday, March 19th from 4:30-5:30 on the topic of “Civil Liberties and Internet Censorship.”
The event is free and open to the public. Call 216-472-2220 or go here for more details.