Sunday, 29 May 2011

SPIEGEL-STYLE JOURNALISM AND FINANCIAL SPECULATORS

It is perfectly understandable that mainstream media must depend on advertisements for its operations, just as it is perfectly understandable that the role of media in an open society is to report and analyze news stories from any ideological and political perspective it wishes. What is not so clear is the role of mainstream new organizations in publishing stories that lack journalistic integrity because the author has not cross-referenced the story, and has deliberately published something knowing in advance that it would yield profit to a certain group of speculators.

On 6 May 2011, Spiegel Online published a sensational story claiming that according to German government sources Greece was considering leaving the Eurozone. It is true that the scenario of Greece leaving the eurozone is part of unofficial discussions in case that it fails to carry out the IMF-EU-imposed austerity measures, but it is also true that there has never been such discussion at any official level whether by the Eurogroup, the European Central Bank, or any official entity representing the EU. This much we know because EU officials rushed to categorically deny there was any truth to the Spiegel story.

That some German official mentioned the possible scenario of Greece leaving the eurozone was all that Spiegel had, but it presented that piece of gossip-style scenario as serious news, prompting a temporary drop in the euro and allowing certain speculators to make a great deal of money. Now Spiegel has gone one step further. Before waiting for the IMF-EU report on Greece scheduled to receive the fifth tranche in August,  Spiegel has come out arguing that the findings are that Greece does not meet the criteria to receive the installment. IMF and Greek government categorically stated that there is no final report and that the work is ongoing to determine the fate of the fifth tranche. That the IMF disputes the Spiegel story about Greece missing its targets as patently false raises the question about Spiegel.

Spiegel has done some good journalistic reporting on Greece. One of the best stories was on the manner that Goldman Sachs helped Greece cover up its true deficit with a 'derivatives deal' that circumvented EU rules. One can understand that Spiegel may be overly anxious to publish unsubstantiated stories that are in tune with the German government position, or with the position of many Germans who believe that their taxes are helping to bailout Greece, or with speculators who need exactly the kind of stories Spiegel publishes to make quick profits.

Greece has a serious public debt problem, with debt-to-GDP ratio of 153% or roughly half-a-trillion dollars that cannot possibly be serviced from market sources as it will grow to 200% at the current rate. It is also true that Holland, Finland and Germany are reluctant to provide more money unless Greece adheres closely to stiffer austerity and privatization measures. Of course what the politicians in Holland, Finland and Germany do not reveal to their tax payers is that by bailing out Greece, they are only transferring capital to private banks. EU money never reaches Greece, for it goes to service the public debt held by banks.

Given that Spiegel has now published a number of stories that turned out to be unsubstantiated and denied as having basis on facts by official entities like the IMF, ECB and Eurogroup, why does it continue on this course? One answer could be that its readers want to reinforce a preconceived notion they entertain about Greece's role in the eurozone; another reason is that Spiegel itself become the object of press stories for having published an unsubstantiated story; another is that it has 'minimalist' journalistic standards, and a rumor is sufficient to print a story; another is that is what the German government wants printed; another is that it helps financial speculators.

Saturday, 28 May 2011

STRUCTURAL UNEMPLOYMENT & AUSTERITY

For decades in  the US, structural unemployment of under 5% was considered acceptable from a political, economic and social perspectives. That is now a thing of the past, as structural unemployment for the duration is expected around 7%, and something near or above that for Europe. There is about 5% gap between the official unemployment rate - both in EU and US - and the actual rate that is always higher as measured by labor unions or other independent entities that count not just those receiving unemployment benefits and/or seeking work, but those who are qualified to work, want work, but cannot find it.

If we add to the non-official structural the seasonal and temporary workers, which hovers around 19% in the US, the combined rate of unemployed and underemployed is about one-third of the workforce. The unemployment issue is one that concerns governments, largely because in our time it is accompanied by declining living standards, as well as dim prospects for upward mobility for young people. This combination is a prescription for social unrest.
 
On 13 September 2010, at a meeting that the International Labor Organization (ILO) co-sponsored, IMF managing director Dominique Strauss-Khan warned that the global recession since 2008 has created “a wasteland of unemployment that is likely to leave scars on society for years to come, unless action is taken to address the jobs crisis.” Spanish Premier Zapatero added that “The crisis of unemployment is the worst one facing the world right now.” Given that the US and EU are facing “official unemployment” of 10%, the heads of state gathered in Oslo agreed with IMF and ILO leaders about the problem.

Absent from the Olso meeting was self-criticism. For its part, the IMF failed to mention that the monetarist policy recommendations the Fund has been making to all its members, whether they are receiving stabilization loans like Greece and other Eastern European countries or not, have exacerbated unemployment, shrunk the middle class, and made upward mobility a dream for the new generation of college graduates. Nor was there shortage of hypocritical rhetoric by heads of state like Greece’s Papandreou, who said: “We need to humanize this global economy”– this comment from a politician who has done everything the IMF, EU central bank and finance capital demanded to accommodate and strengthen finance capital that caused the crisis while dehumanizing the economy and creating much higher unemployment as a result.

In January 2010, I wrote a brief essay arguing that the world economy will actually perform much better than the IMF was claiming in December 2009. I added, such growth will be limited to corporate profits amid a jobless-growth economy that will not recover until 2011. I further noted that rising unemployment, wage stagnation, cuts in social benefits and social security will undermine the middle class and workers. The consequences will indeed be intense labor (urban and rural) and student unrest in 2010, as it becomes clear that governments will demand that the lower classes will pay for the banks’ bailout.

In January 2010 when I was making these predictions, I never imagined that the IMF, whose policies are designed to strengthen finance capital and the core within the capitalist world system, would participate in a conference where it is sounding the alarm about a lost generation of unemployed folks, a generation that includes not just unskilled workers but highly educated people with several degrees and no job prospects. Guardian of capital, the IMF realizes that the strength of a pluralistic society on which capitalism rests for the Western World must have a strong middle class.

On several occasions I have written that the global recession will seriously undermine the middle class and consequently the liberal bourgeois social order. The Oslo meeting took place to send a message both to governments and private sector about that specter hanging over the capitalist Western World today. “If you lose your job,” Strauss-Kahn added, “you are more likely to suffer from health problems, or even die younger. If you lose your job, your children are likely to do worse in school. If you lose your job, you are less likely to have faith in public institutions and democracy.”

Considering that the IMF, central banks, private banks, and multinational corporations have demanded that governments force workers and the middle class to pay for the crisis of 2008-2011, and considering that more squeezing of labor the middle class is coming this fall and winter in most advanced capitalist countries and especially in less developed, the IMF is doing the right thing both from a PR and symbolic perspectives to warn markets and states that something must be done. But what is this panacea? The ILO and IMF will work together, and with them member governments, to promote “employment-creating growth,” no matter how wonderful yet nebulous that sounds.

The reality is that the financial and political elites are in panic mode because of what is coming ahead not just in “basket-case” countries like Greece (leader of the PIGS and remaining on the list of most corrupt countries on the planet), but in the UK, France, and US. Of course, there is always the possibility that “employment-creating growth” could come out of more defense spending that has not suffered cuts amid major trimming of the welfare state and downward pressures on wages and salaries.

The US hopes to sell $60 billion worth of arms to the Saudis. Why do the Saudis need to make such a monumental weapons purchase is a mystery, unless it is to help the US economy for it will mean jobs for US arms manufacturers. France and Germany are no different from the US in so far as they too have been pushing weapons sales around the world. Russia and China of course are on the same road.

A member of the EU parliament recently exposed the hypocrisy of EU politicians, who on the one hand insisted that Greece adopt austerity measures last winter, but this past August, the negotiations for major weapons sales by France and Germany to Greece went ahead. Those of us who have researched stabilization and development loans know that such loans are linked to contracts from creditor countries, and that includes weapons purchases.

The sad reality about all of this is that intelligent people who should know better shrug their shoulders and ask: what choice does government have but to make cuts in the bloated social welfare state and get rid of surplus public employees; what choice but to strengthen finance capital and weaken the bloated public sector; what choice but to agree to IMF-style austerity measures–whether it is receiving stabilization loans or not–and agree to link major contracts for arms purchases? What choice indeed but to remain apathetic in the face of adversity that even the IMF acknowledges undermines the bourgeois social order?

GRASS ROOTS REVOLUTION: THE BEGINNING OF HISTORY

A new era of grass roots revolution has dawned! This is not a repeat of the 1960s 'political-cultural revolution'  of protests by middle class youth that had a bright future and protested against the materialistic and hypocritical conservative values of the 1950s generation. In the 1990s, apologists of capitalism and liberal democracy argued that the fall of the Soviet bloc marked the 'end of history'. Today Europe is encountering the beginning of history. 
The under-40s generation is indignant because it has grown up with institutions serving the political and business elites while bankrupting the future of the youth and potentially of the next generation as well. This is not about 'generation X', about cynicism, about neo-nihilism; this is about institutions that reflect social injustice at the expense of the broader social classes, and for the benefit of the small minority composed of  the business and political elites.
The beginning of history is spreading throughout Europe and it transcends established political parties whose goal is to serve the narrow agendas that perpetuate the privileged social class. On 29 May 2011, all major European cities will have mass demonstrations like those of Spain's Puerta del Sol. This is a grass roots movement that has an international impact on ordinary people of disparate ideological and political backgrounds. As a movement it has its own powerful dynamic, but it can only be useful to society if it is organized in order to change the status quo, as the Spanish manifesto of the 'indignant' protesters demands.
MANIFESTO
"We are ordinary people. We are like you: people, who get up every morning to study, work or find a job, people who have family and friends. People, who work hard every day to provide a better future for those around us. Some of us consider ourselves progressive, others conservative. Some of us are believers, some not. Some of us have clearly defined ideologies, others are apolitical, but we are all concerned and angry about the political, economic, and social outlook which we see around us: corruption among politicians, businessmen, bankers, leaving us helpless, without a voice. This situation has become normal, a daily suffering, without hope. But if we join forces, we can change it. It’s time to change things, time to build a better society together. Therefore, we strongly argue that:


  • The priorities of any advanced society must be equality, progress, solidarity, freedom of culture, sustainability and development, welfare and people’s happiness.
  • These are inalienable truths that we should abide by in our society: the right to housing, employment, culture, health, education, political participation, free personal development, and consumer rights for a healthy and happy life.
  • The current status of our government and economic system does not take care of these rights, and in many ways is an obstacle to human progress.
  • Democracy belongs to the people (demos = people, kr├ítos = government) which means that government is made of every one of us. However, in Spain most of the political class does not even listen to us. Politicians should be bringing our voice to the institutions, facilitating the political participation of citizens through direct channels that provide the greatest benefit to the wider society, not to get rich and prosper at our expense, attending only to the dictatorship of major economic powers and holding them in power through a bipartidism headed by the immovable acronym PP & PSOE.
  • Lust for power and its accumulation in only a few; create inequality, tension and injustice, which leads to violence, which we reject. The obsolete and unnatural economic model fuels the social machinery in a growing spiral that consumes itself by enriching a few and sends into poverty the rest. Until the collapse.
  • The will and purpose of the current system is the accumulation of money, not regarding efficiency and the welfare of society. Wasting resources, destroying the planet, creating unemployment and unhappy consumers.
  • Citizens are the gears of a machine designed to enrich a minority which does not regard our needs. We are anonymous, but without us none of this would exist, because we move the world.
  • If as a society we learn to not trust our future to an abstract economy, which never returns benefits for the most, we can eliminate the abuse that we are all suffering.
  • We need an ethical revolution. Instead of placing money above human beings, we shall put it back to our service. We are people, not products. I am not a product of what I buy, why I buy and who I buy from.
For all of the above, I am outraged.
I think I can change it.
I think I can help.
I know that together we can.I think I can help.

I know that together we can.
http://www.democraciarealya.es/?page_id=814

WARFARE AND LIBERAL DEMOCRACY

On 1 February 2005, Gen. James Mattis addressed the Armed Forces Communications and Electronics Association in San Diego and provided his view of war in Afghanistan:
Actually, it’s a lot of fun to fight. You know, it’s a hell of a hoot… It’s fun to shoot some people. I’ll be right upfront with you, I like brawling… You go into Afghanistan, you got guys who slap women around for five years because they didn’t wear a veil. You know, guys like that ain’t got no manhood left anyway. So it’s a hell of a lot of fun to shoot them.
The audience applauded, but the US Council on American-Islamic Relations replied that: "We do not need generals who treat the grim business of war as a sporting event. These disturbing remarks are indicative of an apparent indifference to the value of human life." Because the general's remarks are indicative of the mainstream in the Judeo-Christian West and not at all the exception to the rule, the deeper question is to what degree has militarism integrated into the culture is now an acceptable part of Western democracy, such as it is. 


If Gen. Mattis acted in the name of liberal democracy that he obviously serves, how can anyone accuse him of employing “undemocratic” language while exercising his duty to boost troop morale as part of a NATO mission to bring liberalism to Afghanistan–at gunpoint, of course, and for the duration? I understand that it is difficult to defend general Mattis’s morale-boosting speech, so we must figure out in the name of our ideological convictions and perhaps our self-interest to explain how the General is really a servant of Western liberalism.

Liberalism triumphed over Soviet-style Communism, aspects of liberalism American-style have spread all over the world with the triumph of globalization (the current recession notwithstanding); liberal democracy seems to satisfy what the middle class in Western nations desire, perhaps since the French Revolution that popularized bourgeois liberalism. However, from Locke, its ideological founder, to Mill and down to present-day Western intellectuals, politicians, and ordinary citizens clinging to this ideology, liberalism as an ideology provides the “socio-politically acceptable” shield behind which rests the reality of how it translates in society.

Liberalism is not social democracy and it does not entail social justice at home or abroad. On the contrary, liberalism is predicated and thrives on inequality at all levels–social, political, economic, and geographic. History has demonstrated that Western liberals conveniently employ the ideology to justify immoral and unjust acts, especially in foreign affairs when dealing with non-white societies, and domestically when dealing with minorities, women and the poor. Liberalism in foreign policy and military operations often masks the ugly reality of imperialism, racism, and militarism.

Nazis used the “I was following orders” defense, but they did not invent that line of defense nor were they the last to employ it as we have seen in many cases of US covert and overt military operations since the Spanish-American War. The exact same pretext was used from Vietnam to Iraq by people operating under the “liberal” regime and policy label, therefore, the immoral acts are justified because God is on the side of liberals.

Liberals want to separate liberalism from authoritarianism, and that is appropriate. But we must not lose track that just as deeds through history define authoritarians, so must be the case with liberals. Every undergraduate who has enrolled in a Western Civ course knows that European and American liberals have made policy decisions that have resulted in mass destruction, territorial occupation, exploitation by violent and other means, and above all the struggle for global hegemony–all in the name of liberalism!

GLOBAL CULTURE OF IMAGE

The culture of image is not an invention of the post-Vietnam generation, but has much deeper roots in the age of materialism. From cities like Las Vegas to theme parks like Disney World, from TV soap operas and “reality shows” to virtual reality games on the Internet, modern society is increasingly moving toward “simulation” experiences as a substitute of “natural” experiences.

The world of simulation experience is created by the market economy (especially big business globally) because it sells products and services, by political establishments because it sells ideologies operating within the same political economy (from Socialist to right-wing ideologies) and generically promote the same policies with different nuances designed to sustain the market economy of consumerism rooted in the narcissistic “simulation-experience-world”; a world that can best function with hollow and superficial people in charge of leadership positions to promote such culture.

Daniel Boorstin’s A Guide to Pseudo-Events in America (1961) argued that: “America was living in an ‘age of contrivance,’ in which illusions and fabrications had become a dominant force in society. Public life is filled with ‘pseudo-events’–staged and scripted events that were a kind of counterfeit version of actual happenings. Just as there were now counterfeit events, so there were also counterfeit people–celebrities–whose identities were being staged and scripted, to create illusions that often had no relationship to any underlying reality.”

Of course, the critique applied to the US as the world’s center of the market economy could just as easily apply to most modern societies today, even the ones that sociologists label “traditional” like Muslim Turkey and Dubai or Hindu/ Buddhist/Muslim India, which are in fact moving in that direction as Western materialism superimposes its culture of simulation over religious-based traditions that go back centuries and are rooted in spiritual transcendence instead of simulation transcendence; or “hyperreality” (the world of the absolute fake) as Umberto Eco labeled it.

As traits of success, hollowness and superficiality over substance are not only confided to the domain of politics today whether it is with right-wing Tea Party Republican Sarah Palin, French (Gucci) Socialists, or British (parading reformers) Liberals. From business management to college administrations that have assumed the business management model in terms of modality, structure, salaries and of course PR and appearance, the hollow/superficial personality, at least the projection of that non-threatening image to put it in Machiavellian terms, is a catalyst to success; assuming of course all other prerequisite qualifications are fulfilled in theory (on paper).

Hollowness and superficiality have deep historical roots and reflect societal values and institutional structures that create and replicate such personality archetypes destined to float to the top largely by the incredible lightness of being, a level inoffensive and thus acceptable to the establishment which then projects it as socially acceptable and morally superior. The “hollow and superficial” archetype of course is hardly unintelligent. On the contrary, within the “simulation realm,” the individual is crafty and knows how to manipulate the system that gave her/him birth.

Sarah Palin is hollow and superficial only to her critics judging her from their criteria, not from the perspective of her “Tea Party” popular base to which she very cleverly appeals in person and through the media. Mass media/entertainment, especially commercial television–and now the web–promotes hollowness and superficiality because they sell products and services, and they are more interested in the intellectually lazy consumer rather than the Kantian notion of individuals “thinking for themselves.”

One could very argue that there is no reality other than image. Therefore, hollowness and superficiality over substance reflects reality human beings create for themselves to cope with life in all its phases from euphoric to tragic. Indeed, with the exception of mathematics that the mind has created and we reach through pure reason that transcend cultural and geographic boundaries, all other scientific theories and models are based on perception (the individual’s personal universe), not “reality of the world.”

Jean-Paul Sartre (The Psychology of Imagination), Michel Foucault (Madness & Civilization), Georg Simmel (The Metropolis & Mental Life), R. D. Laing (The Divided Self) and Ernest Schactel (Metamorphosis) have addressed the dichotomy of real v. false self that modern industrial (bouregois) society creates. In varying degrees, all of them analyzed the hypocrisy of established science clinging to “objectivity” when in fact analysis is socially based (determined).

Genuine or real (natural) experiences are repressed by the fantasy world of material civilization, while false experiences based on what the advertising industry, the politician, the teacher, the preacher, all molded by the same social structure promoting material civilization, wants the person to believe about herself/himself are real. As possessions gain in value, the individual is increasingly objectified and reduced in value and can only raise her/his human worth through the acquisition of more possessions or endeavors that have wealth accumulation (invariably associated with power, prestige, honor, etc.) as the ultimate goal.

A professional person’s success is measured not by the qualitative contributions to the field as a goal because the qualitative contributions are quantified and become tangible only by wealth attached to the accomplishment. And because the person’s reputation rests on that tangible ultimate goal of accumulation, in the age of mass advertising, commercialism of everything from religion to personal tragedies for sale to magazines, TV, radio, Internet, etc., the image-geared society compels the “mass professional” to spend enormous energy on image cultivation rather than substance.

Not just the web, through which people have “virtual relationships” as a substitute for personal contact, but technology in general operating under the bourgeois social order has alienated the individual and promoted “simulation experience.” In a plastic surgery narcissistic world that values image, people seek transcendence through simulation experience at the expense of their own humanity deeply buried beneath the abysmal rubble of the hedonistic culture of unreality.

Rapidly effacing traditional cultures and anthropocentric value systems around the world through globalization, the image-based culture is best suited for all humanity in its complex needs from material to spiritual and intellectual because this is what the consumer-based values of capitalism promote. In reality, this simply serves a small percentage constituting the elites while the remaining wallow in the vicariousness of simulation illusions?

THE END OF THE 'CREDIT MIDDLE CLASS'

In all economic contracting cycles throughout finance capitalism’s history, labor (blue-collar skilled to unskilled, agricultural day laborers to small farmers, and white collar, clerical to professionals and mid-management) ultimately pays the price for dislocation. The middle class, as the media and governments define it today to include a very broad range from upper working class to highly paid professionals, experiences downward pressure toward “proletarization” status instead of upward mobility as it envisions its destiny. Very clear in the 1930s, this phenomenon is taking place today amid the current crisis not only because people are losing jobs, homes, retirement savings, etc., but because the future looks bleak for them and their children.

Besides part-time and contract work, blue-collar and white-collar workers are asked to accept pay cuts, reduced benefits, reduced work schedules, flexible working conditions, all of which will be accompanied by the expectation of retiring at a later age. Where are the blue collar, white collar, and the recently “proletariatized” middle class headed and will they emerge stronger than they did during the Great Depression, helped immensely by the war, or will the middle class society lapse into chronic decline?

There is a fundamental question of whether the “middle class” was on sound footing, or artificially created by a deficit-spending system now in crisis. On paper, the combination of low labor values in the Third World that allowed for higher incomes in the advanced countries and the postwar credit economy accounted for the quantitative and qualitative growth of the middle class in core countries. A large percentage of the population in the West, Japan, Taiwan, South Korea experienced upward mobility in the past 40 years, but a large percentage of the middle class mobility was because of the credit economy. The “wealth effect” was a mirage because the middle class lived on credit and hoped values in everything from their incomes to homes and securities would continue to rise.

The current crisis has exposed the bourgeois facade of endless progress and revealed that a large percentage of the middle class was really working for the banks–all along, the proletariatization of the middle class was taking place serving both an economic and political purpose. The US Congressional Budget Office estimates that in the next three years there will be a $2.9 trillion gap between productive capacity and actual output; in short, more than 300% the amount that congress approved as part of Obama’s stimulus package.

Such a gap will mean that the state must decide if the top 10% of income earners bare the brunt of the cost, or if the middle class and workers will have to endure lower living standards. Because capital accumulation on a world scale can take place by the more thorough exploitation of labor, the state will support financial elites’ efforts to squeeze out the maximum from middle class and workers short of precipitating social upheaval and political instability. Arbiter of social relations through control of the fiscal system, the state will largely determine how weak the working class and middle class will be for society to function without paying the price of radicalization and violence.

Hovering around 20% in the US and rising as it is throughout the world, chronic poverty will remain a permanent legacy of the current recession. “Third World-type” conditions already exist within the advanced capitalist countries–families in the American Deep South and northern inner cities subsist on a couple hundred dollars per month and rely on food stamps to feed themselves. Conditions for the bottom 20% of the population are not that much better in the EU where the prospects for recovery are not as bright as in US, and even less so for Japan.

If finance capitalism is to survive with the inevitable wealth concentration within the top 10%, there must necessarily be downward income pressure on the middle class and workers. Generating greater surplus than the market can absorb will keep the capitalist economy in a limited-growth mode for at least a decade, unless the state absorbs the surplus and spends it for social development instead of defense.

Because the effective demand is limited by the earning power of workers and middle class in the post-credit crisis of the early 21st century, and the sharply reduced personal wealth (drop in real estate values, private pensions, and stock portfolios) the illusory middle class “wealth effect” will remain low and accumulated surplus capital high, thus keeping the world economy under limited growth prospects for a long time.

Of course, China with a strong state structure and dynamic economy is the exception and of course, we must science and technology innovation take into account, as well as the degree to which the state will intervene to limit capital accumulation by the financial elites. But given existing conditions in the advanced capitalist countries, what impact will they have on the social order? Because there are multiple institutional means that condition people toward conformity, most people exercise self-restraint toward the status quo as they are convinced that there may be rewards in such behavior and punishment for social dissidence.

There is also the cultural difference in every society–for example, in western countries historically the individual assumes responsibility for success or failure and thus internalizes what is in essence an outward or objective phenomenon like job loss. The internalization process entails that the individual feels guilty and may act against himself or loved ones, instead of criticizing or striking out at the system. Naturally, the mass media, schools, religion, business, and the state inculcate such thinking into the minds of the individual who blames himself as a failure, not realizing that the financial and political elites that control institutions have failed.


Accountant John Smith in Denver lost his life’s savings in the stock market, he cannot find work, his wife divorced him, and it is all his fault because he has failed to receive the requisite training to conform to the “new market conditions.” People permit their lives to be conditioned and ruled, and sometimes often ruined by man-made systems that the entitlement-minded financial and political elites have forged to retain their privileged status.

The individual has been conditioned to equate man-made systems with natural disasters like earthquakes or floods. Part of this thinking is a testament to the resounding success of a ubiquitous “birth-to-death” PR campaigns that have convinced people to accept capitalism as “natural,” a premise that both Adam Smith and Thomas Malthus shared. Once people accept that premise, and they aspire to upward mobility possible only within the system, they never even consider working class consciousness for to do so is to demean their own self-image the credit economy makes possible and to lack ambition for individual (bourgeois) success.

How many ads are there online, in newspapers, etc., about “assistant manager” in everything from office clerical positions to fast food jobs, when in reality those are low-paying jobs veiled by a bourgeois “status title” people appreciate more than income? After all, the “real worth” of the individual was “creditworthiness” bundled as part of net worth, thereby giving the illusion to a large percentage of people that they were part of capitalism’s success.

Class-consciousness is the enemy of the financial and political elites that constantly inculcate the idea that “all of us must work together and sacrifice” for the greater good, when in fact the “greater good” is largely the domain of the elites. As proletarization of the middle class become more apparent, the current global crisis will evolve into a middle class crisis of alienation, stratification, and erratic class/status identity.

Additionally, there will be the increasingly prohibitive costs of higher education, especially graduate school that will be out of reach for a larger percentage of people in the next decade and possibly the next half century. At the same time, there will be fewer positions available for the college-educated population that will have to be highly mobile not only within its own country but internationally and must accept jobs unrelated to their college degree–a phenomenon that has been growing in the past decade.

Although society will become increasingly polarized and likely to remain so because of capital accumulation in a credit-tight environment, the cyber-eco-bourgeoisie will co-opt and thus de-radicalize a segment of the recently created “proletariatized” middle class and working class aspiring to upward mobility and lifestyle. More realistic and self-aware than the “credit bourgeoisie” of the past half century, the cyber-eco-bourgeoisie of the 21st century will also be useful to the political and financial elites in promoting corporatism whether that is in the US, Japan, or EU.

ENDEMIC CORRUPTION IN COLLEGE ADMINISTRATION

When I started college in Chicago in 1970, university and college administrators were professors with solid credentials and strong commitment to teaching and scholarship in the Liberal Arts tradition intended to help the student toward self-discovery, to cultivate her/his creative potential, and to become a productive member of society which included securing a career.

University/college bureaucracy was limited, salary differentials between administration and faculty were not that great, there were very few part-time faculty, a “democratic” and in some cases “collective” process through faculty senate was respected, and there was no faculty-administration dichotomy. By the time I left higher education and the US in 2005, the picture had changed completely.

The bureaucracy and administration salaries had become bloated, part-time exploded (and of course exploited), administrators were not rooted in scholarship but had evolved into “professional administrator-business managers,” the model of college administration was based on a management-labor dialectic with the faculty senate invariably the enemy of the administration, tuition and taxpayer costs skyrocketing while the quality especially at the undergraduate level declining.

Then there were the publicized cases of abuse and corruption and not those that involved college athletics, about which so much has been written. The problem went beyond sports corruption. Those of us who worked in higher education had heard of or knew about abuse and corruption in our own campuses and in others from colleagues, but we could not prove anything or we felt that we could do nothing about it even when we had circumstantial evidence.

Who is at fault? Complacent and otherwise lazy faculty that teaches a few hours a week, placates students with grade inflation and has not published since the last promotion, resents broad and non-rigged mechanisms of accountability, and seeks to secure an administrative position because she/he is no longer effective in the classroom and too “out-of-it” to conduct research?

Perhaps it is the fault of the business community for demanding and securing increasingly inordinate influence in higher education, molding it because of funding that comes from the private sector and of course because it is the place where graduates will be seeking work. Is it the fault of politicians who want a certain type to fulfill an agenda (must have a woman, must have a minority, must have a Liberal, must have a pro-business, must have a going-along type college leader)?

Or is it the fault of society that is moving toward a culture of image without substance that is responsible for administrators who reflect the shallowness of our modern materialistic world? The following is but a small sample of cases regarding abuses and corruption. “New Jersey’s Stevens Institute of Technology is the latest in the long line of education corruption scandals. The state attorney general is suing the school and its president, Harold J. Raveche, on accusation of plundering the school’s endowment and receiving nearly $2 million in illegal low-interest loans for vacation homes. Over the course of a decade (1990s), the board of trustees at Stevens increased Dr. Raveche’s salary to $1.1 million–which earned him a higher salary than the presidents of Harvard, MIT, and Princeton. Stevens reportedly used multiple sets of books to conceal its rapidly deteriorating financial condition. Click here to find out which other college presidents make more than $1 million per year.”
http://www.top-colleges.com/blog/2009/12/22/stevens-institute-of-technology-corruption/

The average salary for academic staff is five to ten times lower than that of college presidents, and if all the perks are considered it is 15-20 times lower. In 2002 The Chronicle of Higher Education reported that the $500,000 annual salary for college presidents or chancellors was no longer an exclusive club, but rather widespread in America. The business of top college administrators is so lucrative that head hunters are paid large fees to find such people, and all at the expense of the taxpayers, donors, and of course tuition-paying students.

The question of course in a market economy is one of value a president/chancellor may be offering. Are colleges and universities adding value to the quality of education because of administrators paid salaries historically reserved for CEOs? One of the major criticisms in articles and books about abuse and corruption in higher education concerns the rule by committee for political ends, often to placate the board made up of businesspeople and politicians, and in some cases “stacked” by the university presidents or college chancellors.

The lack of solid academic credentials and the use of the position to secure a position with private sector or enter government adds nothing to the institution that pays the price for the luxury of high-paying administration. Again the question is one of value to higher education as a result of college administrators who are more businesspeople running a corporation than academics. Another key issue that goes hand in hand with the skyrocketing salaries of top administrators is the skyrocketing bureaucratization of college administration whose purpose is to create a very strong administration at the cost of quality classroom teaching.

The larger the bureaucracy the larger the part-time and contract academic staff. Faculty in their quest to have fewer administrative tasks invariably contributed to the bloated bureaucracy, just as faculty in their quest to be satisfied as long as they received their inflation-adjusted salary raises permitted the abuse and corruption of administration. Controlling the budget and using it within guidelines as well as the manipulation of guidelines–top administrators going on domestic and international destinations for pleasure and justifying it as “college-related” adds considerably to the cost for taxpayers and students.

When the economy is growing and the university or college is growing, faculty are receiving their salary raises, their grants, and sabbatical, there is no noise. But when crisis hits and budgets tighten, then the rats come out of their hiding places. Conservatives always point to faculty as the source of the problem in higher education, and it is true that faculty share in the responsibility for so much ranging from lack of enthusiasm for their profession to abuse of the system by not fulfilling their teaching and research obligations. Higher education is the key to progress and far too important to allow it to the whims of what I recently analyzed as “the culture of image and pseudo-events” prevailing in contemporary society, especially in the US, but more broadly in the West.

While the US has the best graduate schools in the world along with the best talent in academic staff, while there are extraordinary universities and colleges that are beyond abuse and corruption, and while even in universities and colleges that have fallen victims to abuse and corruption at the top there are significant accomplishments by individual researchers and teachers, the question is institutional that concerns primarily the schools not in the top 50 list, where mostly the children of the financial and political elites attend.

At a time that conservatives and elements of the business community want to perpetuate education’s “commodification,” the “mass consumer of education” who cannot attend the top 50 colleges and universities, and the general taxpayer need to decide what they want out of higher education, how they want it to serve society’s needs that go beyond careerism that has dominated Western culture since Reagan, and segments of Eastern culture in the last decade?

CONSENT THEORY AND THE GLOBAL RECESSION

Classical Liberal (Lockean) political theory maintains that individual consent ought to determine politics and policies. “Wherever, therefore, any number of men so unite into one society as to quit every one his executive power of the law of Nature, and to resign it to the public, there and there only is a political or civil society.”

John Locke, Second Treatise on Civil Government. However, the reality is that T. Hobbes’s Leviathan that Locke rejected lives inside competing interest groups among the elites (including the 17th century, when Locke represented mercantile interests) that have played a catalytic role in shaping policy in modern pluralistic societies governed by varieties of Liberal-type constitutions. Though policy-formation is the presumed domain of competing interest groups whether politically organized like the Whig faction in Locke’s time, or modern-day corporate lobbies, consent-theory is more easily justified and implemented during times of national emergencies or crises than during “normal times.”

Having built a national consensus during the Great Depression for economic reasons, the US continued to expand the consensus to include the entire Western Hemisphere under bilateral and multilateral agreements. These culminated in redefining the Pan-American system during the war, and then globalized during the Cold War when besides NATO, OAS and SEATO, IFIs were also established to complete the triumph of Pax Americana.

The dynamics of the Cold War necessarily resulted in domestic national consensus not only in pluralistic societies like the US at the helm of the world-capitalist system, but also in Communist nations and in the non-aligned bloc. Therefore, the Cold War as the point of origin for policy-formation and consent-theory entailed that the state forged consensus among competing interest groups under a neo-corporatist model that would presumably serve not only the political and financial elites, but the military establishment, intelligentsia, farmers, and labor unions whose cooperation was crucial for policy-formation against the “common external enemy.”

Nor is this to be confused with the military-industrial complex that was only one byproduct of conformist policy-formation. After the Communist bloc collapsed and China became thoroughly integrated into the world capitalist system, the institutionalized co-optation of the disparate interest groups needed to remain intact. This is not because there was a “common external enemy”–of course one had to be created as catalyst to interest-group co-optation–but because consent-theory assumptions were obviated by the changing structure of the political economies around the world and the neo-liberal globalization trend.

The interdependent world economic structure as the basis of consent-theory and as a reality cannot change systemically as Russia, China, Brazil, India, and even some EU leaders wish. However, economic nationalism–from the political left and to the ideological right–and varieties of Socialism will challenge and try to replace classical Liberalism and the American-centered world system as the ideological foundation on which political economy and international security rest. This means new international division of labor, redefinition of the terms of trade and investment that do not disadvantage the Third World and new “North-South” hemisphere relationship that allows for a more equitable redistribution of wealth–all of it used as leverage by those wishing to further dilute Pax Americana.

Depending on its severity, the current economic dislocation will force political and financial elites along with the intelligentsia to re-examine the “consent-theory” paradigm with the US as the leader. They must seek alternatives that would ensure policy-formation does not drift toward the lower classes or to the Third World whose conformity and co-optation must be guaranteed to prevent any change either in the social order or the international order.

The unfolding civil disobedience combined with labor and middle class protests throughout the world will continue to challenge consent-theory that the political and financial elites are interested in preserving. Assuming that the forthcoming G-20 meeting (April 2009) will result in consensus and assuming the Chinese prediction about national recovery by June 2009 is correct, it may be possible that by early-to-mid-2010 the US will be coming out of recession as the FED is now predicting.

The EU will realize real growth much later than previously expected (the latest IMF report is very pessimistic about Europe) and gradually Japan and the rest of the world will follow the EU. Such scenario depends largely on what policies the G-20 will adopt to better-regulate the crippled economy for the duration. The middle class and workers will lag far behind in the recovery process, as will the Third World–regrettably, there are no AIG-type bonuses for the middle class and workers whose consent must be manipulated back toward support of the elites.

In short, the lower the social strata the slower the recovery; similarly the less the country is developed the slower and more painfully it will emerge from this crisis. The crisis will exacerbate societal polarization that manifests itself in increased social protests, xenophobia, ethnocentrism, racism, chauvinism, etc. Whether it is to the extreme right or left, going to the roots of society in times of crisis will be a normal response on the part of the masses; that is where a large segment of the population feels a sense of belonging and safety, not in institutions that failed them.

The global recession of 2008-present has intensified the “revolutionary” impulse to alter the social and political structure as well as a minority counter-revolutionary impulse to retain the social structure by an authoritarian movement, regime, or authoritarian policies adopted by otherwise liberal-bourgeois regimes. The dialectic between the two impulses will entail the biggest challenge to the political elites in pluralistic societies since the Great Depression.

Jean-Jacques Rousseau argued the repressive conditions imposed by a minority over the majority necessitate force morally and socially justified. If that is the case, then we can expect in the next decade more voices of leftist dissent and reactionary outcries to maintain the status quo by force. The current crisis has diluted if not obviated policy-formation and consent-theory, as we knew it under Pax Americana throughout the Cold War and in the post-Cold era of the global anti-terrorism campaign on which foreign policy of many states are based; with all its intended and incidental domestic policy-formation consequences.

To counter the inevitable challenge that pluralistic societies will be facing, the political and financial elites will have to deliver on the promise that after the crisis there will continue to be “ever-rising living standards” within the existing stratified social and international order. Such promises of what Kenneth Boulding, Beyond Economics (1968) called “cowboy economics” rooted in arrogance of financial power buttressed and protected by the political elites will not be sufficient to convince people who lost homes and businesses, jobs and careers, savings and retirement nest eggs, and their lifestyle turned upside down.

Given that the political and financial elites have always manufactured consent, consent-theory is their domain to define and implement to preserve and advance their privileged position. Crises, however, bring out in otherwise docile-conformist citizens tendencies that range from reactionary to revolutionary, from cynicism to “apocalyptic nihilism,” which is what most people act on and understand by the term (as opposed to anarchist or existential).

Besides resorting to more austere laws to “contain” dissidence as it arises with greater socioeconomic problems, the state along with the media, think tanks, and anyone with access and influence to public opinion will have to argue that any alternative to systemic transformation of the social and political order nationally and internationally will entail the demise of civilization as we know it.

Friday, 27 May 2011

LESSONS NOT LEARNED FROM THE GLOBAL RECESSION

History shows that deeply entrenched institutional interests prevent society from making progress and avoiding mistakes of the past that range from economic to military crises. In that respect, George Santayana was right that history repeats itself ( "Those who cannot remember the past are condemned to repeat it"). The lesson from the Vietnam War was to do it with lower overall cost (financial, military and political) next time. Four years later, indications are that the financial elites have learned nothing from the recent economic crisis, other than to concentrate capital at any social and political cost and circumvent legal hurdles for the financial and political elites.

When the Vietnam War ended an entire industry of scholars, journalists, politicians, and military officers engaged in the debate of “lessons” so as not to repeat the “mistakes” of the past. Naturally, the “lessons of Vietnam” ranged from embracing neo-isolationist to giving the military a free hand to do its job next time it invades a Third World country.

The “Rockefeller Managerialists” that Jimmy Carter brought to his cabinet ran foreign policy from the perspective that the Vietnam War had weakened the US economy and that imperialism does not have to assume the form of militarism to achieve the goal of global economic integration. Within a few years after the fall of Saigon, Vietnam was integrated into the world capitalist system, thus vindicating the “Managerialists,” but also proving in the long-term the US won the Vietnam War.

However, the right-wing manufactured image of a weak America (politically, economically, and militarily) persisted after the Nicaraguan and Iranian revolutions, at a time that Japan and Europe were also posing a challenge to the US economy. Of course, there were immense profits to be made by reverting to “Containment Militarism” (Keynesian Militarism), initially the ideology responsible for US involvement in Vietnam.

When Reagan came to office he brought with him the “Containment Militarists” to conduct foreign and defense policy and the neo-liberals for fiscal, economic and trade policy. The ultimate goal was to strengthen defense and accelerate the nuclear arms race with the USSR. To help fund exorbitant defense spending, the Reagan militarists and neo-liberals had to weaken the welfare state and strengthen the corporate welfare regime.

Despite mini-economic recessions of the 1980 and 1990s, the neo-liberal ideology accompanied by globalization took hold and spread around the world, emboldened of course with Communism’s downfall.
The deep recession of 2008-2010 exposed the myth that Keynesian Militarism and corporate welfare could be sustained by an overstretched credit economy, especially given the growing parasitic nature of finance capitalism.

At the outset of the current global economic crisis, many politicians, journalists, and analysts of all types began to question neo-liberalism and Keynesian Militarism as implemented in Iraq and Afghanistan. The combination of parasitic finance capitalism that led to the real estate crisis after Lehman Brothers went belly up, Hedge Funds scandals and other scams, as well as immense US defense spending led to a global crisis.

Naturally, finance capitalism resting on “debt and scam” was not confined to the US, but was indeed a global phenomenon. American-Style capitalism, consumerist culture, globalization, and neo-liberal ideology were popular with the political and financial elites. The economic crisis, however, forced the G-20 to inject capital equivalent to one-third of their GDP to save finance capitalism. To justify the massive transfer of capital from the general taxpayer to finance capital, governments promised that the lesson learned was tighter regulation.

The banks took the money and consolidated their positions, but almost immediately refused to accept regulatory requirements of “rationalizing the system” to avert another deep recession in the future. Why should a bank executive whose compensation is 500 times higher than the average worker’s suffer the indignity of bonus cuts and stock options? Having stabilized the banking system in the first phase, the state turned to stabilizing the economy by asking working and middle-class taxpayers to suffer higher unemployment and lower living standards.

The credit economy is over-stretched globally and that means investment speculation and scams in a number of areas from currency to government bonds; also the phase the world is currently experiencing. In the first week of May 2010, EU leaders strongly condemned bond and currency speculation for destabilizing the European economy. In an interview for Russian TV, Obama agreed that indeed monetary instability in the EU, undermined by bond and currency speculators, does not serve US interests. If one looks at the policies of the US and EU leaders today, the result is that they are endorsing the every practices that they condemned while the recession was in its severest phase.

Because the euro is the reserve currency representing the most powerful economic bloc in the world, monetary instability does not serve the interests of any country other than speculators. Precisely because the credit system is strained owing to the 2008-2010 crisis when both governments and private sector are chasing limited credit, the G-20 have agreed that economic recovery cannot take hold in the absence of monetary stability with the state as guarantor. This means that the average taxpayer will foot the bill for the shortcomings of welfare capitalism.

Toward that end, the EU’s ECOFIN, on 9 May 2010 announced stabilization fund of 600 billion euros initially to ensure eurozone monetary stability and to help members whose bonds are targets for market speculation, a process that seriously impedes economic growth. Not only is Southern Europe the weak link ot the EU that drags down the euro, with Greece leading the “PIIGS,” (Portugal, Ireland, Italy, Greece and Spain), but there is concern that other countries may be overextended, despite their banks profiting from government bond speculation.

Against such a reality, Germany softened its stance on monetarist orthodoxy for eurozone members, as long as they followed fiscal austerity that transferred massive wealth from the middle and lower classes and from the periphery to the core. As long as the economic crisis is lingering, the state will be guiding finance capitalism away from its own predatory, self-destructive, and manipulative “Invisible Hand.” What will the political elites do to check the role of the financial elites once the economy assumes a steady growth mode later in the decade? Finance capitalism has its own internal dynamics driven solely by accumulation. Anything short of institutional structures to counterbalance finance capitalism’s predatory orientation will lead to cyclical crises that will have a detrimental impact on the social structure and political landscape.

Have the political elites learned the lessons of “neo-liberalism gone madly crooked,” or are they likely to repeat the mistakes of the past, as was the case with those claiming they learned the lessons of Vietnam?
Corporate elites fund political campaigns. Corporate elites also have the advantage of lobbying. Corporate elites enjoy the weight of status in a system that prays on their altar. The assumption that neo-liberal measures are the solution to economic growth, social and political stability is the lesson deeply ingrained in society.

This mode of thinking is not just in Goldman-Sachs executives who have a profit motive to see the world in such distorted light, but regrettably in people who lost their money in this latest crisis. This lesson never learned will most definitely lead to far greater disasters in the future and bring society closer to social discontinuity.

Thursday, 26 May 2011

THE STATE AND CAPITALISM

Role of the state:
The existing international political economy operating under various trends in monetary, fiscal, trade and economic policy in general is that the nation-state is an agent of capital and as such its function is to maintain the privileged social order that benefits at the expense of the majority of the population. From Adam Smith and David Ricardo the theory of a free market economy is predicated on the nation-state surrendering 'national' sovereignty to the international division of labor where the strongest competitors would have the advantage. Naturally, under such a system the state is promoting international capitalism that is far more powerful than the state. Unlike feudal regimes that enjoyed political and economic power, the state and thus the political class as it has evolved in the early 21st century is weaker than the interests that control the economy. That the political economy has become equated with 'democracy' is a great tribute to the vast institutional structure that the state and private sector have established to convince the majority of the people that therein rests the legitimacy of the social contract.

Public and Private Sector Scandals:
A nation-state is not a private corporation and to make the comparison in a Libertarian manner is to deliberately obfuscate the obviousness of the nation-state's role in society v. that of a private corporation. Scandals involving corporations invariably involve the private interest of specific players, invariably officers of the corporation defrauding the company (investors) or third parties at the expense of the stockholder and/or third parties, and in the process breaking the law. That the legal structure is designed to sustain and further the interests of the propertied class is itself undemocratic if not scandalous and indicative that bourgeois government is nothing less than the servant of capital at the expense of the rest of the population. In short, the societal order is itself a scandal on a mega scale, so why would the public be surprised at specific scandals of both the public and private sectors intended to further the elites that the system serves?

Accountability:
Who pays for the damages that the private corporation creates for itself? In some cases the stockholders and customers of the corporation, in others, as was the case in the 2008-2011 global recession where the state bailed out finance capitalism, the taxpayers pay to keep the decadent and inherently unequal system afloat. Scandals involving nation-states are carried out for the benefit of individual politicians, bureaucrats, and/or third parties in the private sector, all with the intent to defraud the taxpayers for the benefit of individuals in the public or private sector. Who pays for scandals in the public sector? The general taxpayer.

The issue of 'who pays' has been in the public debate in the last four years throughout the world and it is one that continues. Who pays for the global recession, or more specifically for Lehman Brothers, Goldman Sachs, AIG, etc.? Is it  the taxpayers equated with the nation that pay because there is 'collective responsibility' only when it comes to paying the costs of capitalism in its contracting cycles, or is it those who committed the crimes and benefited from them? But what if the system itself is criminal? The Irish people protesting against austerity have asked this question, the American people faced with unemployment and loss of their homes have asked this question.

It is in the interest of apologists/propagandists of capitalism to shift the debate from the privileged political and financial elites that enjoy the power and commit the crimes to the nation as a whole as responsible for the crimes of the political and financial elites. But is the issue one of 'national responsibility' for the costs of political and corporate scandals or for cyclical economic crises? Why should a retiree on fixed income or a worker in Cleveland pay for the bailout of the American corporate system that is manipulated constantly and backed by the state to benefit the financial elites? The vast majority of the people, workers and middle class are part of the nation-state, but they have done nothing wrong. That government places the burden on them for a decadent corporate welfare system is proof the nation-state operates with a democratic facade when in essence it is exercising authoritarian economic and social policies.

SCIENCE AND GOD: HAWKING'S VIEW

How many times must man create and then kill God? First Nietzsche declares God dead, and now Stephen Hawking, one of the most brilliant minds in theoretical physics, is arguing that the laws of the universe are responsible for the creation of the universe. In my view, it is indeed great that he changed his mind from his earlier position.

The larger question of God’s existence, however, is whether it makes any difference in the way today’s scientists, unlike social scientists, theologians and philosophers, will conduct their studies knowing that a prominent physicist denies God’s existence in his forthcoming book The Grand Design. Since the publication of that book, he has injected the concept of 'nothingness after death' to shock all the billions who believe in afterlife.

Does this mean man must now accept that the self-creating universe gave birth to irrational beings who disagree about creation and must accept responsibility for their actions individually and collectively? And what about the fact that most of the people on the planet are rooted in religion and theism and without this they are floating in deep space like burnt-out asteroids? And what of mainstream institutions that superficially or substantively accept theism and count on man’s acceptance of belief in the absolute and on the masses’ acceptance of the illusion of a Supreme Being?

How dreadfully irresponsible of Professor Hawking to deprive humankind of precious illusions that predate civilization! Naturally, his revelation would have meant something entirely different for society in the age of the Holy Inquisition, even in the Age of Reason. But other than Oprah-style media designed to sell a bourgeois lifestyle along with products for today’s “smart consumer,” does it mean anything either for theists or atheists?

Ontological arguments for God’s existence–everything from the teleological and causation arguments to motion and design arguments on which there is no shortage of scholarly philosophical and theological literature, will not be impacted no matter what any theoretical physicist proclaims. As for the believers, the things that matter include but are not limited to a religious experience and/or revelation, religious ethics, free will vs. determinism, and above all, the eternal question of life after death. Although throughout history scientific discoveries gave philosophy foundation and direction, it is guaranteed that Hawking will not have any impact today.

As man’s greatest, most necessary creation used for both good and evil, religion and theism have little to do with science and much more with human nature–both human biology and psychology–as well as with institutions, especially politics and business which have always managed to co-opt religion and use it for amassing power, profit and glory. From ancient times to the present man exploits, subjugates and kills in the the name of a personal deity universalized. No human invention comes close to religion and theism for fostering order and at times chaos and mass destruction in society. Religious faith may actually help patients recover quicker when they are ill and they may live longer–at least this is what some studies indicate.

As for my personal taste, priests may serve a more useful role than psychologists, or least as equally good and bad. Because religion and theism reflect human nature, because they are the ultimate tools of control and exploitation of the masses by elites, their existence is guaranteed until the end of the species, no matter the theoretical physics arguments or empirical studies suggesting the absence of God behind The Grand Design.

THEISM AND THE ELITES

Religion is a very personal matter that warrants sincere respect, but respect free of hypocrisy and public grandstanding. Indeed religion is probably the most sensitive area of debate and one reason that even scientists regardless of their personal positions tend to be very circumspect about making public statements regarding matters of faith.

In previous postings, I have stated my position regarding “astro-physics atheism” that Professor Hawking discovered recently. That issue aside, I wish to make two points in reply to David Gress’s response of 4 September. First, the idea that religions have not been co-opted and used by elites to their benefit is contrary any rudimentary study of the history of major institutionalized religions throughout history from ancient times to the present.

This is evident in theocratic societies of the Orient as well as hierocracies of the West, a point that Max Weber argued. In theocratic societies of the ancient or Medieval times, the will of the ruler and religious dogma were one. In the hierocracy model of the West there was the dialectic between church and state and the symbiotic relationship of mutual benefit for the religious and political as well as social elites.

In Asia or Europe, theocracy or hierocracy model, religion as a catalyst to co-optation was equally significant.
The second point I would like to make concerns rulers and adherence to religious dogma of pacifism. I may be wrong, but in my study of history I discovered only one major ruler–Ashoka of the Maurya dynasty who ruled India in the 3rd century BCE–in the history of the world who embraced religion and abandoned his blood-thirsty craving for war and destruction. In my teaching days, I used Ashoka as an example of “the exception to the rule” as far as major rulers are concerned. I know of no Christian, Jewish, Muslim, or Confucian ruler who has based his/her reign on religious ethics rooted in pacifism and acted on such a body of ethics as Ashoka, who embraced Buddhism and dedicated his life to spreading its influence.

The Han Dynasty may be pointed to as an exceptionally enlightened, but it lived and declined by the sword as the Roman Empire. As successor to the Roman West, Charlemagne Christianized the Barbarians, but with sword in hand and he put to death tens of thousands in the name of his God! He did so much to strengthen Christendom (an extension of his rule), but with the sword, no matter his proclaimed love of St. Augustine’s writings.

The Muslims combined their remarkable conquests with the spreading of Islam East and West, but always with sword at hand. From the rise of Islam and Charlemagne to modern-day religious politicians East and West, all invariably embrace religious ethics and dogma to justify unjust and exploitative policies that have no relationship to pacifism, justice or religious egalitarianism. Would the self-appointed defenders of institutionalized religion and secular leaders who pay lip service to Christianity to win popular approval tolerate a Jesus today with the exact same messages as the young radical rabbi delivered 2000 years ago?

Bertrand Russell’s Why I am not a Christian, although written more than 80 years ago, is still applicable today. In brief, he argues that religion is based on fear and “Fear is the parent of cruelty, and therefore it is no wonder cruelty and religion have gone hand in hand.” Despite Russell, Jean-Paul Sartre, and many others, Marxists and non-Marxists alike, who argue that human beings must be free of the imaginary support and stand on their own, the two fundamental questions remain whether the majority of people will ever be ready to stand on their own, and be free of the psychological (perhaps bio-psychological) support that religion offers. And how likely is it that rulers and elites of the modern era will embrace enlightenment like Ashoka and rule in kingdoms of virtue instead of injustice and exploitation in varying forms?

THE "UPS AND DOWNS" OF MILITARY POWER

We do not live in the worlds of Alexander the Great, Attila the Hun, or Charlemagne when military expansion entailed economic prosperity through military conquest and direct looting and thus political might for the duration of military supremacy. There is a school of thought among Roman historians, whose thesis is that the decline and fall of Rome was caused primarily by internal decay, especially economic in the consuming Latin-speaking West, while the commercial Eastern half of the empire (Byzantium) survived.

Similarly, the path to military and political power contributed to the downfall of the mighty European empires whose existence rested on war and occupation, as there is a direct correlation between long-term defense spending and economic decline. After WWII Japan and Germany, with very low defense expenditures, quickly became the strongest economies in their respective continents and trailed the US that helped re-industrialize them and subsidized their defense.

By contrast, the USSR, which was a political and military power, spent itself out of existence as it sacrificed its civilian economy for an outward-looking defense sector. Who knows how the history of the USSR would have evolved if it focused on inward-oriented economic growth and development, instead of extraordinarily costly military and political power beyond its borders? And what affords today’s Russia more leverage domestically and internationally, the gas and oil pipelines or its nuclear weapons?

After the Nixon visit, China, transitioning to global capitalist integration and currently spending 10 times less on defense than the US, is a serious contender for the preeminent economic and political position at some point later in this century. After the demise of their empires, Great Britain and France continued to devote considerable resources on defense as members of the nuclear club and continued their ambitions for continental and overseas preponderate influence.

But the political and military influence of either France or UK on a world scale is minor in the absence of the US behind them. And is India a rising power because it has nuclear weapons and presumably deterrence, or because its economy has been strengthened in the past two decades? Also part of the nuclear club, Israel, which has a military-based if not a war economy, enjoys regional power status at the expense of its own population, but it status is largely owed to the US as a devoted ally in every respect.

The US became a great power with global military and political influence because it first established the foundations for global economic preeminence in the 19th century and took advantage of its preeminent role in the 1940s when it established an international system that would serve American interests for the coming decades. More than ever a country’s political and military power today rests on its economic strength, assuming of course that economic resources are prudently managed with ongoing investments in education, health, science, technology, and creative endeavors that enrich society as a whole instead of enriching a small class of the privileged few absorbing most capital.

Power comes in many forms from intellectual and aesthetic to raw animal strength that is very direct and invariably appreciated by the masses as popular culture of most societies throughout history have shown. But perhaps the question should not be about the nature of power as Niccolo Machiavelli and Thomas Hobbes assumed without questioning the benefits/harm of power on their subjects and on people beyond the borders of the country exerting power.

If we compare a country whose government has wielded inordinate power domestically or internationally, against a country where government is more focused on best serving the welfare of its subjects and less interested in power for the sake of glory, etc., the latter would be a more harmonious and constructive society than the former. Yet, human nature is such, perhaps conditioned by the aphrodisiac-power-based culture, that most people would probably rather live in the society where government exercises power in all forms at the expense of the majority.

WOMEN AND ISLAM

On 9 December 2010 a Sudanese woman was the victim of 40 lashes by a police officer in execution of his duties. Her crime was wearing pants inside the traditional long dress covering the pants. An audience of male observers were laughing while the woman was crying in a public display of how Sharia Law is enforced.

Such lashings are daily occurrences and designed to teach women to "behave" in accordance with Sharia law, which means dressing properly, behaving properly, speaking properly, and of course more serious punishment reserved for adultery or running a brothel. The Sudanese judiciary is investigating the incident that dramatizes the medieval treatment of women.

This incident has sparked a great deal of revulsion around the world as it should have. The question is why focus on this case and not the larger issue of the rights of women in all "traditional" societies, Islamic or not, pro-West and not, suffering under barbaric treatment in the name of tradition, religion, and archaic laws?
This is a complex topic that cannot be covered in a few lines. There are a couple of thousand books dealing with women and Islam, and many thousands of articles, mostly written by westerners or western-educated Muslims living in the west.

There is the core issue of course of the degree to which Sharia law reflects the Quran, which was very progressive toward women for its time, far more humane than anything the Eastern of Western Christians had in the Middle Ages. To the degree that the law reflects Hadith, (sayings of the Prophet) collections of writings from 8th and 9th century dealing mostly with legal aspects of the faith, there is substantial criticism by critics of the treatment of women in Islamic countries.

Simone de Beauvoir's The Second Sex in my view remains the classic study in understanding gender relations in a historical context and against the background of a given culture (in its broadest possible context that includes religion) and class system. While the entire world should express in every method possible outrage at barbaric treatment of women in traditional societies, it is also important to consider cultural relativism.

It is not possible to apply the same criteria of gender relations in contemporary Sweden and Norway as in contemporary Afghanistan and Sudan. Islamic feminism may not be acceptable as "real feminism" to Western feminists, but it is a form of feminism suitable for the cultural settings of Muslim countries and a step toward humane treatment of women.

The totality of traditions, institutions, and social structure of the countries in comparison are very different, not merely the domain of gender relations. The sense of social harmony and social justice in Islamic countries is not the same as it is in the secular West that has undergone Renaissance, Scientific Revolution and Enlightenment, intellectual revolutions that helped societies make the great leap forward from religious-based traditionalism rooted in patriarchy to secularism that only recently permitted human rights to include assertion of female identity. After all, Europeans under traditionalist religious-based cultures tortured and killed hundreds of thousands of women not only as part of the witchcraft craze, but also as infants to avoid the burden of dowry and in pursuit of male heirs to carry on the patriarchical tradition.

While the legal system can change rapidly to permit for humane treatment of women in traditional societies, cultural and social changes are hardly something that can change overnight. It is also true that the treatment of women in Islamic societies has been used by the West to stigmatize countries with which the West has an antagonistic relationship in this epoch of terrorism that the West identifies with Islam. The treatment of women in a friendly Muslim country like Saudi Arabia is almost never an issue. By contrast, the same incident is front and center in western governments and press if the Muslim country, let us say Iran, is overtly anti-Western.

The antagonistic US (and European) antagonistic relationship with Muslim countries since the collapse of the Communist bloc makes it very difficult for the West to preach to Islamic nations rights of women as an integral part of human rights. Nevertheless, it is difficult to defend the extraordinarily harsh treatment of women in a number of Islamic countries that rigidly apply Sharia law largely for political and cultural reasons than as an observance to religious tradition.

To watch a young lady beaten in public, crying as she seems in horrible pain, humiliated by lashings and to simply not feel disgust at the absurdity of the barbarian legal system that permits such treatment of a human being is inhuman. While solutions for a society's unjust institutions cannot be imposed from the outside, in the age of instant communications networks that link the entire world, it is difficult to hide the inhuman treatment of women justified by laws devised in the 8th and 9th century.

Finally, there is something disturbing when the world expresses outrage about a Chinese dissident who receives the Nobel Peace Prize and he is the subject of so much public sympathy, while countless of women daily, some victims of brutal legal practices others of human trafficking receive very little sympathy and then only when it is politically advantageous to the West to do so.

Raising the awareness level of women's rights on a global scale is a first step. The United Nations, NGOs and private organizations have the proper role to advocate for women than any government, least of all any Western government currently at war with Islamic nations. There are many such organizations and they are easily accessible on the web, always seeking public support in any manner that it can be offered.

NARCOTICS and DEPENDENT CAPITALISM IN AFRICA

The most significant challenge of Africa in the next few decades will be to transform itself from a largely informal and semi-legal “dependent outward-oriented” economy to a legitimate inward-looking one that is integrated intra-continentally under a model that is comparable to that of the EU and develops more equitable terms of trade with developed countries.

To achieve that goal Africa would need more than NGOs and UN intervention that only targets emergency areas, and more than regional integration that the World Bank has been advocating and without success by its own admission. The G-20, currently pre-occupied with planning to lift the world economy from the current mini-depression, could and must deal with Africa, especially now that the US has a president whose roots are African.

As a first step, the G-20 should agree to transform Africa’s public foreign debt into a UN/World Bank sustainable-development-continental-integration fund designed to foster an economic model that is inward-oriented–serving the needs of the indigenous population, instead of outward-looking (mass producing primary export products) catering to EU, US, and Asian markets.

Though more than 200 organizations have been formed in the past 60 years in order to promote regional integration as a way of helping with sustainable development in Africa, such efforts have failed to extricate the continent out of cyclical debt crises and endemic poverty. This is largely due to internal political causes, though not exclusively. A new centralized Africa super-fund administered by UN/World Bank offices would be a beginning toward easing the continent’s problems.

Foreign investment in Africa, under terms no developed country would permit, must also be regulated. Otherwise the drain of natural resource wealth will continue with Africa earning the lowest labor values on the planet. To attract foreign capital investment, African countries have to provide local financing under government-guaranteed loans and very generous terms that include profit repatriation, liberal terms on the environment, and minimal labor protection. The process of de-capitalization amid the current crisis only increases the problems with the informal economy that is a mere extension of the overall outward-oriented dependent economy and a colonial remnant that gives rise to illegal activities.

East Africa around the Gulf of Aden is already the pirate center of the world, and this in addition to the weapons trade. Everything from illegal handicraft items to diamonds and gold are illegally traded. West Africa is slowly transforming itself into the new world center for South American narco-traffickers. Guinea, Mauritania, Guinea Bissau, Ghana, Benin, Sierra Leone, and Senegal are among the most significant intermediary narco-traffic countries linked to the Colombia-Venezuela coca trade.

In 2002 West Africa authorities confiscated a mere 95 kilos of coca, while in 2007 the number rose to 6.4 tons. It is estimated that more than 50 tons of coca goes through West Africa, with an estimated wholesale value of $2 billion. The low risk of transporting by planes and ships along West Africa waters and through African countries vs. the high risk of transporting through the Caribbean makes transport more lucrative, especially given Africa’s proximity to the end users–the Europeans.

Drug use and trafficking has increased substantially not only in Europe, but in the former Soviet bloc and especially Russia where oligarchs of varying types are the real power behind the regime that gave birth to them. During the “just say No!” campaign of the Reagan era the US had the highest per capita use–US population was around 4% but consumed 40% of the world’s illegal drugs–and this is not to say that a legal pill-for-everything panacea in the US is not at its root a cultural trait.

Today, however, both UK and Spain surpass the US in per capita use of cocaine, and both countries along with Portugal and France are the major destinations for coca that comes from Latin America through West Africa. Wholesale drug traffic requires cooperation of key officials, corrupt shipping companies, and of course banks.

It is cheaper and easier to bribe everyone from policemen to military officials, all the way up to govt. ministers and entire political parties in poor African countries than other parts of the world. But considering that multinational corporations from Shell Oil to Siemens have a long history of bribing African officials as they do non-Africans, narcotics traffickers’ mode of operation is no different than that of “legitimate” businesses. And if the opportunity presents itself to make a living why is “dirty money” any less valuable than “clean money,” the latter of which seems to be less than $500 a year for most Africans?

Judging on the basis of postwar recessions when per capita income has dropped as much as 50%, this means that in this current crisis Africa will not only suffer greater impoverishment than the rest of the world, but its economic problems will cause more ethnic and tribal conflict, more epidemics, more intra- and inter-continental emigration, and more political turmoil than any developed nation can expect. Such a climate is ideal for more piracy, more weapons and narcotics transfer, more human trafficking, and all of it part of the colonial and neo-colonial legacy of outward oriented economy benefiting the developed countries.

My guess is that although Brazil is a major player in the G-20 and former President Lula had made some noise about the role of “lesser players” (Brazil, Russia, India and China - BRIC nations), deliberately merciless neglect not only for Africa but for the Third World is inevitable because it is advantageous for the advanced countries as well as the semi-developed ones that have an intermediary (comprador) role.

Though the continent is in need of debt-relief and development assistance for the short-term, the solution for the people of Africa is inside the continent. Uniting and organizing to end racist neo-colonial exploitation whether in the form of the formal economy based on mineral and agricultural exports or in the informal economy that includes narcotics is the only solution for Africans. Working toward sustainable development can only come from indigenous movements that first change the externally-dependent political regimes and then undertake to change the social order that would engender economic growth under an inward-oriented model.

Given the deep historical tribal and ethnic antagonisms in Africa for which westerners are partly to blame, and the even stronger western neo-colonial foundation the prospects of any of this taking place in the forthcoming decades is highly unlikely. Africa will remain the continent of contradictions with the world’s poorest people, but some of the world’s richest natural resources.

Wednesday, 25 May 2011

GREEK BONDS & THE EUROPEAN CENTRAL BANK

Greece would 'drag everyone down' if it defaults on its sovereign debt, and that is what the European Central Bank (ECB), among others, argues. However, there are many different views in the EU about what is best, because there is no such thing as 'best', considering that no matter what some social group would be hurt no matter what policy is followed. Of course Greece cooked the books, but this was with the complicity of Goldman Sachs and with the knowledge of the ECB and other EU institutions. 

Bloomberg news services filed a law suit against the ECB to open the books on Greece, so that the world can find out what was the role of Goldman Sachs, to what degree did the EU officials and ECB know of what Greece was doing, to what degree was the US pushing from behind the scenes to have Greece join the Eurozone. While it has been illegal for EU governments to use derivatives as a means of showing the debt is much lower than it actually is, it is up to member states to have an open and transparent method.

The ECB refused Bloomeberg's request. A few insiders argue that if the ECB and EU open their confidential papers on Greece, what the world will discover is that other countries also were in a similar situation as Greece, and that the decision to let them join the Eurozone was political not economic. This is a tragedy of collective responsibility on the part of European officials.

The question everyone asks "will Greece default?" There are a number of fund managers in the US and EU that have enormous amounts of money riding on this very issue, and it is their right under the rules of capitalism to risk their capital to make money on the possibility of a default. European banks (German 19 billion, French 15 billion euros) are carrying about 50 billion euros worth of Greek debt, and Greek banks another 50 billion.

This is paper that they can only hold, because the prospect of default is too great for others to buy it even at low prices - the 10-year bond selling at a 50% discount. European banks holding Greek debt would not have a problem passing the periodic stress tests, but as time passes, the Greek debt picture deteriorates and the prospect of restructuring or default increases. In two-and-a-half years, 90 billion euro of Greek bonds will mature and that is roughly one third of Greece's GDP, which EU and IMF will have to fund in order to pay the bondholders.

Because the ECB also holds bonds, as does the Greek central bank, insurance companies, and pension funds (more than 170 billion euros), it is in their interest to avoid default or restructuring that would mean recapitalizing Greece. The amount would depend on how much public property is privatized, how far the austerity measures go, how the economy performs.


I believe that absolutely no one knows the answer to the question of default, because at any time major players - ECB, IMF, Germany, France, others - can step in to stop what may appear as the inevitable. That the numbers simply do not add up (there is no way that Greece can service the debt that could easily go to 200% of GDP within the next two years) is a realistic prospect.  But what scenario will play out is a guessing game for those wishing to play with the bond market. The consequences for the euro will be negative. 

Even more ominous is what this means for Ireland, Portugal, Spain, and perhaps even  Belgium and Italy. On 25 May, the OECD announced that: "Even if the governments (Ireland, Greece and Portugal) are more or less on track to meet their fiscal targets, their fiscal positions would not be sustainable if market interest rates were to remain for long at their current level."

The pessimism stems from the reality that economic indicators (higher inflation than it should be for nations under austerity, higher debt-to-GDP ratio, higher unemployment, lower productivity) do not look good for the Eurozone periphery and will not improve in the inter-mediate future. It will simply be very difficult for Greece and the other periphery countries to float bonds in the open market as long as such conditions exist, and that spells no light at the end of the tunnel at this point - May 2011.

That the ECB opts for a wait and see attitude as it has strongly indicated, is indicative that it wants to make sure the austerity measures go as far as they can politically, before there is a decision about the next step (s). That step (s) could be anything from the pragmatic option of more loans and restructuring to the more unlikely scenario of transition Greece out of the eurozone. 

Political events in Greece could decide the fate of the public debt long before the ECB, IMF, EU, central banks and private banks. Inspired by Spain's Puerta del Sol protests in Madrid, Greeks not belonging to any political party have organized similar protests against the political and business establishment. The other player in the mix could be China. Holding the largest reserves in the world, China is in the position to buy bailout bonds in the EU market. It has just made such announcement with regard to Portugal, thereby taking off the pressure from the EU, ECB and of course helping to strengthen the euro that helps China's exports to the Eurozone.