Another path for the future

(For previous posts about the oligarchy, see here.)

If an economic calamity is to be averted in the US, it will require a popular revolt against the power of the oligarchy because the political leadership is not going to do take action against it.

The Democratic Party is unlikely to be the leader of a mass movement for change because its base is far too quick to capitulate to its party leadership. The party’s base seems to be always bewildered as to why their party does not follow through on its promises but as Glenn Greenwald points out, it is absurd for progressives to be puzzled by Obama’s willingness, even eagerness, to capitulate to his seeming political opponents, because it they who are enabling this very behavior. It is worth quoting him at length.

Why, angry progressives seem to be asking, would Obama ignore the views of his so-called “progressive base” while seeking to please those who are his political adversaries?

But it’s perfectly rational for Obama to do exactly that. There’s a fundamental distinction between progressives and groups that wield actual power in Washington: namely, the latter are willing (by definition) to use their resources and energies to punish politicians who do not accommodate their views, while the former unconditionally support the Democratic Party and their leaders no matter what they do. The groups which Obama cares about pleasing — Wall Street, corporate interests, conservative Democrats, the establishment media, independent voters — all have one thing in common: they will support only those politicians who advance their agenda, but will vigorously oppose those who do not. Similarly, the GOP began caring about the Tea Party only once that movement proved it will bring down GOP incumbents even if it means losing a few elections to Democrats.

That is exactly what progressives will never do. They do the opposite; they proudly announce: we’ll probably be angry a lot, and we’ll be over here doing a lot complaining, but don’t worry: no matter what, when you need us to stay in power (or to acquire it), we’re going to be there to give you our full and cheering support. That is the message conveyed over and over again by progressives, no more so than when much of the House Progressive Caucus vowed that they would never, ever support a health care bill that had no robust public option, only to turn around at the end and abandon that vow by dutifully voting for Obama’s public-option-free health care bill. That’s just a microcosm of what happens in the more general sense: progressives constantly object when their values and priorities are trampled upon, only to make clear that they will not only vote for, but work hard on behalf of and give their money to, the Democratic Party when election time comes around.

I’m not arguing here with that decision. Progressives who do this will tell you that this unconditional Party support is necessary and justifiable because no matter how bad Democrats are, the GOP is worse. That’s a different debate. The point here is that — whether justified or not — telling politicians that you will do everything possible to work for their re-election no matter how much they scorn you, ignore your political priorities, and trample on your political values is a guaranteed ticket to irrelevance and impotence. Any self-interested, rational politician — meaning one motivated by a desire to maintain power rather than by ideology or principle — will ignore those who behave this way every time and instead care only about those whose support is conditional. And they’re well-advised to do exactly that.

It is probably the case that a lack of enthusiasm on the part of the Democratic base contributed to the Democrats’ defeat in the 2010 midterm election. But what Obama cares about is getting re-elected in 2012, and he knows full well that come March or April of that year — if not earlier — most of the progressives who are now continuously complaining about him will be at the front of the line waving their Obama banners, pulling out their checkbooks and whipping into line anyone who is not similarly supportive. By contrast, corporate institutions and Wall Street tycoons will pour their money into Obama’s defeat if he does not show them the proper level of deference and accommodate their policy demands, but will support him (as they did in 2008) if he pleases them. Resource disparities between those factions are significant, but it’s also due in part to their own choices that Wall Street is empowered, and progressives are irrelevant.

This is why the oligarchy is most successful in its attempts at squeezing the poor and the working and middle classes when Democrats are in power.

It is for this reason that I see the Republican Party’s base in the tea party, for all its manifest faults, as more likely to create the conditions for change than the Democratic Party’s base. The latter is still stuck in a passive mode that puts their faith in a leader. Some of them still see Obama as that savior while others are getting disillusioned and are seeking a new hero. Their desperate need for a noble standard bearer who will fight their battles for them is something that saps their energies. In the words of Galileo (put into his mouth by playwright Bertolt Brecht in his Life of Galileo), “Unhappy is the land that needs a hero.”

At least the Republican base is wary and suspicious of their leadership. At least they realize that political leaders should fear them and that it is up to them to be vocal and active in putting pressure on them. Their growing suspicion that they are being manipulated by their political leadership at least provides some hope for a re-awakening and organizing.

What progressives need to do is develop a common agenda with those who are also disaffected with the power of the oligarchy. This will require a different attitude towards the Tea Party, paleo-conservatives, and libertarians. Rather than wholesale rejection of those groups, we should seek to form alliances on those issues that we can agree upon, and there are surprisingly many.

Next: A possible common agenda

The US as a destabilizing threat to the transglobal oligarchy

(For previous posts about the oligarchy, see here.)

The main threat to the transglobal oligarchy does not come from those countries that we normally think of as being unstable but from the US, because of the rapacity of the financial sector of the US economy that, like a swarm of locusts, is consuming everything in sight in satiating its greed, leaving the rest of the economy and the country bare. And their enablers are both the Republican and Democratic parties.

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How Monica Lewinsky saved Social Security

(For previous posts about the oligarchy, see here.)

I have repeatedly said that progressives have to be most on the alert when Democrats are in power. It is under Democratic administrations that the oligarchy tries to achieve major goals because the party’s base, ever-vigilant to guard against encroachments when Republicans hold power, falls asleep when their own party is at the helm. We see Obama doing things in the name of national security that would have evoked howls of protest if Bush had done them. We see Obama treating Wall Street with a generosity that would be loudly protested if a Republican did it.

The big prize for the oligarchy is, of course, Social Security. The privatization of Social Security has been a long-cherished dream of Wall Street anxious to get their hands on that trillion-dollar account. In general, Republicans have been thwarted when they tried to do it. George W. Bush tried to privatize it in his second term but was beaten back and gave up on it. The Democratic Party has long been seen as the defenders of Social Security, which is why the oligarchy sees it as a better agent for achieving its goals.

It is not well known that Bill Clinton also secretly set in motion attempts to privatize (they use the euphemism ‘reform’ or ‘save’) Social Security, following his successful move to gut welfare programs for the poor. These secret plans were well advanced and getting down to the level of fine-tuning details in preparation for a public announcement. But as Robin Blackburn explains in this 2004 article, he was thwarted, not by the party’s base, but by the Monica Lewinsky scandal which forced him to appease his base in order to save his political skin.

We have this on the authority of high-ranking members of the Clinton Treasury who gathered in Harvard in the summer of 2001 to mull over the lessons of the 1990s. At that conclave it was revealed that on Clinton’s orders a top secret White House working party had been established to study in detail the basis for a bipartisan policy on Social Security that would splice individual accounts into the program. Such was the delicacy of this exercise that meetings of the group were flagged under the innocent rubric “Special Issues” on the White House agenda.

In the mid-1990s pessimism about the future of Social Security was rife in seminars, conferences, op-eds and learned papers by which elite consensus is fashioned. The media lent an eager ear to charlatanry from outfits like the Third Millennium, which ventriloquized a supposed consensus amongst youth that the program would not be there for them when they came to retire – and that consequently their best bet was to take their FICA payments and put them in a private share account in soar-away Wall Street.

Third Millennium was, of course, a front for the privatization lobby. But it did tap into a vein of public anxiety and skepticism concerning Social Security finances and, with the stock market soaring upward, its Wall Street connections were an asset not a liability.

But in 1998 the Lewinsky scandal burst upon the President, and as the months sped by and impeachment swelled from a remote specter to a looming reality, Clinton’s polls told him that his only hope was to nourish the widespread popular dislike for the hoity-toity elites intoning Clinton’s death warrant.

In an instant Clinton spun on the dime and became Social Security’s mighty champion, coining the slogan “Save Social Security First”.

In his 1999 State of the Union address Clinton seized the initiative from the privatizers with a bold new plan that gave substance to the “Save Social Security First” slogan. He proposed that 62 per cent of the budget surplus should be used to build up the Social Security trust fund. He promised to veto any attempt to divert Social Security funds to other uses, and he urged that 15 per cent of the trust fund should be invested in the stock market, not by individuals but by the Social Security Administration.

The first part of the plan to privatize Social Security, which has long been in evidence, is to soften up the public by persuading all people that the system is in dire crisis, and especially the young, that they are being ripped off because Social Security will not be there for them when they retire. This is a lie. There is no long-term problem with Social Security that cannot be fixed with minor tinkering within the system. This graph of the Social Security trustees projections of future financial status (as a percentage of GDP) shows that there are no runaway costs in Social Security in the foreseeable future and the gap between revenue and outlays can be easily closed. Furthermore, the current surplus in the trust fund (well over three trillion dollars) that has been built up over the years can be used to fund the deficit in the current account at least over the next two or three decades without any changes at all in the system.

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The economic minds behind Clinton’s moves were Larry Summers and Gene Sperling, both of whom are now close Obama advisors. There is no doubt in my mind that Barack Obama also wants to raid Social Security in some way to benefit the oligarchy, to do what Clinton and Bush could not. His reduction of the payroll tax contribution and his adoption of the alarmist rhetoric about the need to ‘fix’ Social Security has laid the groundwork for meddling with it. You can be sure that his economic team is already working on it. The real question is when he will reveal the details of what he has in mind, whether he will keep his plans secret for longer or whether he will reveal at least part of it in this year’s State of the Union speech to be given this evening.

The cautious thing to do would be for Obama to wait until his second term, like Clinton and Bush, so that he does not have to worry about any negative impact on his re-election chances. But Obama seems to have an arrogant confidence about his ability to get his followers to rally behind him whatever he does, and he may well think that he can tackle Social Security now and escape unscathed.

And he will unless people protest loud and long. Monica Lewinsky played her part. Now it is up to the rest of us to save Social Security.

Recent cracks in the oligarchy

(For previous posts about the oligarchy, see here.)

I wrote earlier about how cracks appeared in the oligarchy during the late stages of the Vietnam war. In that case, the oligarchy split between those businesses for whom the war remained a good thing because their businesses directly benefited from the war effort, and those for whom it was a bad thing because the people and resources that might have benefited them were being drained away to service a war that seemed to have no end. In the current situation, while the pressures due to an over-extended military are still there, the split in the oligarchy is more likely to occur between the financial sector and the manufacturing/agricultural sector because the financial sector is increasingly being seen as a parasite that produces little of value but instead becomes bloated by sucking the blood out of the productive sectors of the economy, all with the active collusion of the government. These cracks in the oligarchy are being widened by its out-of-control rapacity, as sectors within it seek to advance at the expense of others. This intraoligarchic competition to see who can enrich themselves the most will likely less to its own downfall.
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The nature of oligarchic power

One of the famous sayings of Chairman Mao in his Little Red Book was that “Political power grows out of the barrel of a gun.”

That saying still holds true. The US oligarchy has disproportionate influence within the transglobal oligarchy because it has the military strength of the US behind it. This is why we can expect to see China develop its military strength over time, as it must if it is to have ambitions of becoming either the world’s premier power or at least on a par with the US, as all indications suggest that they want to be, despite their denials. But military power can only be sustained over an extended period if there is a sound economic base. Otherwise, one can have a collapse from within, as was the case with the former Soviet Union.

The recent announcement by the US Defense Secretary that he would recommend extremely modest cuts in Pentagon spending suggested to me that there was a growing realization that the over-extended US military was sapping the economic strength of the US. But the subsequent revelation by the Chinese government of test flights of their own new stealth fighters will undoubtedly give ammunition to the US military-industrial lobby with which to pressure its Congressional supporters to not only reverse the cutbacks but to even increase military spending, even though weapons analysts say that the Chinese fighters are quite inferior to current US counterparts and the Chinese are nowhere near matching the US militarily.

Although I am by no means a military strategist, the timing of the Chinese announcement made me wonder if they are playing a deep game, trying to nudge the US into wasting more money on unproductive weapons systems and military adventures at the expense of broader economic development, all as a means of weakening the US economy. In other words, their military strategy is really an economic one. This is, after all, not an original idea. The US used the arms race and lured the Soviet Union into Afghanistan in order to force them into military expenditures that they could not sustain. That too was economic warfare, disguised as a military strategy. Mikhail Gorbachev extricated them from that morass and although some Russian nationalists blame him for the break up of the Soviet Union and its fall from superpower status, future generations may well hail him as the person who saved Russia from the total economic disaster that might have ensued from trying to hold on to an over-extended empire.

So while the visible source of power is military and is overt, the real source of power is economic and the way that the oligarchy wields that power is subtle. And because the modern oligarchy is transglobal in nature and not particularly beholden to the welfare of any particular nation state, their interests need not be in synchrony with the needs of the people in any given country. All of us are cogs in a machine, replaceable and expendable.

Membership in the oligarchy is not formal but arrived at after one gives the appropriate cues that one is suitable, similar to the way it is decided to whom to extend an invitation to join the membership of exclusive country clubs. How they work is also similar to the way that a lot of business decisions are made privately on golf courses, in country clubs, and at cocktail parties.

In a must read article published last year, Simon Johnson, the former chief economist with the IMF and thus someone with impeccable establishment credentials, refers to what has happened in the US as a ‘quiet coup’ in which the oligarchy, especially the financial sector, has captured the government. He details how an advanced oligarchy operates and how it wields power.

Of course, the U.S. is unique. And just as we have the world’s most advanced economy, military, and technology, we also have its most advanced oligarchy.

In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a sideshow today, Jack Abramoff notwithstanding.

Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world. (My italics)

One channel of influence was, of course, the flow of individuals between Wall Street and Washington. Robert Rubin, once the co-chairman of Goldman Sachs, served in Washington as Treasury secretary under Clinton, and later became chairman of Citigroup’s executive committee. Henry Paulson, CEO of Goldman Sachs during the long boom, became Treasury secretary under George W. Bush. John Snow, Paulson’s predecessor, left to become chairman of Cerberus Capital Management, a large private-equity firm that also counts Dan Quayle among its executives. Alan Greenspan, after leaving the Federal Reserve, became a consultant to Pimco, perhaps the biggest player in international bond markets.

These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. It has become something of a tradition for Goldman Sachs employees to go into public service after they leave the firm. The flow of Goldman alumni—including Jon Corzine, now the governor of New Jersey, along with Rubin and Paulson—not only placed people with Wall Street’s worldview in the halls of power; it also helped create an image of Goldman (inside the Beltway, at least) as an institution that was itself almost a form of public service.

Is it any wonder that when it comes to advancing the interests of Goldman Sachs and the related financial sector, the government and media do so reflexively? When you have such a system in place, you don’t need a formal hierarchy or structure or agenda to achieve your ends. It happens ‘naturally’.

Next: Recent cracks in the oligarchic structure.

Who makes up the oligarchy?

Commenter Jeff, in response to an earlier post, posed the question: Who or what constitutes the oligarchy and when did they come into being? Another commenter to that same post, named simply G, asked: What needs to be done to change things? I’ll address the first question here and keep the next for a subsequent post.

There are occasional attempts to portray the oligarchy as some secretive group of unidentified individuals such as the Masons or the Illuminati (or the Inebriati), meeting in secret with passwords and the like. They are not because that is not how things work. The modern transglobal oligarchy consists of figures in the government and private sector working largely in the open. They meet regularly at big public functions where a substantial time is spent in open meetings. But these gatherings also allow for private meetings such as dinners and parties and other social events where the spotlight is off and where a lot of the consensus is built up.
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When cracks appear in the oligarchic system

Knowledge seeks to be free.

While oligarchic suppression of unauthorized messages can be very thorough, it can never be complete. There will always be people who have a strong urge to know the truth and disseminate it and they will find ways to do so. We have seen in the past that even under tightly-controlled state media systems, an underground press and radio and other low-cost news systems such as pamphlets and wall posters emerge to provide an outlet for those who challenge the system.

In relatively open societies in the US, the challenge for non-oligarchic alternative voices is both harder and easier. It is easier because there is (usually) no overt suppression of other voices by direct censorship. Instead the focus is on marginalizing them, by making them seem extreme so that these voices do not reach a mass audience.

It is harder because the seeming openness of the system makes it harder for ordinary people to see the control of the oligarchy and thus less likely to see the need for alternative views. I am sure that many people in the US think that we are exposed to the full range of news and opinions on TV, in newspapers, and in magazines because we have Fox News and MSNBC, the Wall Street Journal and the New York Times, the National Review and The Nation.

People tend to be not aware of what they are missing. It takes a great deal of media and political sophistication to be aware of what you are not hearing. A good example is Noam Chomsky. He is well known worldwide as an important political analyst and public intellectual and yet you will never see him anymore in the US mainstream media. To read his work or hear him, you will have to actively seek him out or read alternative media on a regular basis. The same is true for a whole host of people. If you do not appear in the major media venues, you and your views may as well not exist. The non-stop cacophony of voices that surround us in the media serves the purpose of creating that non-awareness. In fact, a good way to become better informed is to not watch TV or read the mainstream press but read only the headlines and the bare bones facts of a story and start just thinking for yourself about what it means.

This is why the internet has been so unsettling for the oligarchy. It lowered the cost of admission to the media club to almost zero and so one has had an explosion of voices, most of whom are free to say what they want. The government does not have to worry about the New York Times or CNN ‘going rogue’ because their dependence on advertisers and stockholders is sufficient to keep them in check and to even support government efforts to suppress dissenting voices.

The internet’s openness was tolerable as long as those new voices were scattered and diffuse and uncoordinated, each commanding just a small audience. But the emergence of outfits like WikiLeaks that are able to command widespread attention has really thrown a wrench into the media propaganda model which is why we should expect to see attempts to ‘regulate’ the internet to prevent ‘irresponsible’ (translation: anti-oligarchic) voices form gaining a foothold or by making the cost of business higher by governments using their vast resources to take legal action against smaller entities, thus driving up their costs and putting them out of business.

The WikiLeaks episode has opened a window on the oligarchic structure in the US. The US media likes to portray itself as independent of, and even adversarial to, the government. But when a true challenge to the government emerged, they quickly reverted to their true role of government ally. For example, see how the US media has disowned WikiLeaks and refused to fight or even speak out on their free speech rights, leaving it up to international media to call upon them to protect the First Amendment. It is the US media that fights the idea that WikiLeaks is a journalistic enterprise just like them and thus deserving of all First Amendment protections.

It is important to understand that this abandonment of WikiLeaks is not due to normal business competition. They are not doing this because of business reasons, because they fear that their subscribers and advertisers will shift away from them to WIkiLeaks because the latter is not that kind of operation and does not present that kind of danger. After all, they are giving away their information free to the mainstream media. Those mainstream media organizations that are distancing themselves from WikiLeaks are clearly doing this for ideological reasons, because they are opposed to what WikiLeaks represents which is a source of information that is outside oligarchic control. They act this way because the US media is part of the oligarchy and thus unconsciously picks up the cues that tell it what to do. The US government does not need to do anything. What better propaganda system is there?

WikiLeaks poses a challenge to the oligarchy because even those journalists that have passed through the filters and risen within the system realize that at some basic level, attempts to shut down WikiLeaks is wrong and this is creating cracks in the system. We need to widen those cracks by driving home the message that this is an important First Amendment issue and that what WikiLeaks does is no different from what Bob Woodward does except that he serves the interests of the oligarchy and WikiLeaks does not.

Next: Who makes up the oligarchy and what can we do about it?

The media as a model of how a modern oligarchy operates

A well-functioning oligarchic system usually operates smoothly and largely openly and without a hierarchical structure. It achieves its goals by setting up filters that weed out those who do not support its agenda and rarely requires overt intervention to achieve its goals.

I discussed earlier how the major filter was the high cost of entry in the modern media world that meant only rich people or organizations could create a big megaphone for their views. Only someone like Rupert Murdoch, for example, could create a new major network like Fox News. The high cost of entry came into being over a century ago and was a result of market forces and technological advances and the adoption of a business plan that depended largely on advertising for revenues.
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A model for how the oligarchy works

To understand who constitutes the new national and transglobal oligarchies and how they work, it is helpful to examine a subsystem of the oligarchy that has been studied extensively and provides a good model or template for understanding it. One fact that quickly emerges is that the best propaganda systems are those that operate seemingly transparently.

Those countries that have tightly controlled state media have a much less effective propaganda system than countries like the US. Not only are people in those countries aware that the media is a propaganda organ, which makes them skeptical of what it says, there is always the danger that somebody in the media is going to blurt out things that contradict the party line.
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