Monday, 16 January 2017

DIVIDED AMERICA: Root Causes and the Road Ahead



US Culture Clashes and the Return to “Clash of Civilizations” Theory

Based on the bourgeois ideals and value system of the Enlightenment, Western open societies are culturally pluralistic but have limits in social cohesion owing to the hierarchical structure created by the political economy of capitalism. Symptomatic of the market economy, social differentiation and exclusion are a permanent fixture regardless of what the social contract promises about social integration. Founded as a colony of immigrants who conquered the lands of North America and used Africans as slave labor, America carries the legacy of contradictions from the Age of the Enlightenment promising egalitarianism and integration but in practice institutionalizing social exclusion and differentiation that precludes social cohesion. These contradictions become intense in periods of economic expansion or contraction when fissures are exposed on the surface of the social structure because socially excluded groups strive to integrate into the mainstream and demand its reform. Such societal fissures undermining social cohesion are more evident in American society in the second decade of the 21st century than they have been since the 1960s.

According to post-presidential election polls in 2016, America is more divided than at any time in post-WWII era, a reality that filters down from the political, corporate media and financial elites to ordinary people as skeptical about the legitimacy of their institutions as the elites. Republicans supporting the populist rightwing President Donald Trump have revived “Clash of Civilizations” (Samuel Huntington’s work, 1996) as a core value in US foreign policy in order to distract from the widening social divisions and presumably forge greater unification under a common foreign enemy. This theory as Republicans interpret it has broad ramifications for immigration policy, race and ethnic/religious relations and issues related to multiculturalism in an open society whose financial elites view the population as the consuming public than citizen with constitutional rights.

The US is a divided society amidst its own socioeconomic and political polarization reflected in clash of cultures shaped in part by a changing demography and shrinking middle class. While Trump Republicans are looking to “Clash of Civilization” as a means of projecting strength and rallying popular support for the flag, their Democrat opponents are trying their best to revive the Cold War US-Russian confrontation as a catalyst to appeasing the militarist and corporate elites while unifying their divided popular base. Both strategies are manifestations of a bankrupt political system that perpetuates divisions and foments more domestic culture clashes and is dumbfounded about how to deal with the contradictions of social exclusion and differentiation that has become intensified under neoliberal policies in a climate of globalization.

If people link their identity to culture and religion, according to those espousing the “Clash of Civilization” theory intended to explain the post-Cold root causes of future global conflict, then logic dictates that the same holds true for people of different cultures, religions, ethnicities, races, and ideologies inside the US. Considering the multicultural nature of the US demographic map and the dominant culture and institutions under the control of the descendants of European immigrants, culture clashes are just as inevitable when the country fails to deliver what people perceive as the social contract, namely the American Dream and keeping the nation strong in relationship to the rest of the world as Manifest Destiny promised when European immigrants created God’s “New Israel” in North America. http://nationalhumanitiescenter.org/tserve/nineteen/nkeyinfo/mandestiny.htm

To maintain political consensus among the disparate political, military, economic and socio-cultural elites “Clash of Civilizations” makes as much sense for Trump Republicans as the anti-Russia campaign does for Democrats. This is especially so in light of a Trump return to a Reagan-style ‘rightwing revolution’, particularly with regard to fiscal policy as the Republicans will be transferring even more wealth from the bottom 90% of the population to the top 10% by trimming social programs and raising the cost of government by contracting out more public services at a higher cost and less efficiency than if government kept control. http://www.politico.eu/article/will-donald-trump-follow-in-ronald-reagans-footsteps-elections-victory-republican/

While trying to expand their popular base, Republicans and the conservative media promote culture clashes as a means of mobilizing popular support among largely religious and cultural conservatives. This is especially in the white community that feels besieged in the age of globalization which has entailed de-industrialization and downward wage pressure; a phenomenon that has resulted in greater social exclusion from a group that identifies itself as representative of national values. Democrats and their supporters in the media also promote division largely by remaining focused on identity politics rather than restoring America’s eroding middle class and working class living standards. Culture clashes manifest themselves in congress and state legislatures over all sorts of issues, some with very broad significance such as health care others linked to narrow identity politics and lifestyle issues; all indicative of social exclusion from an institutional mainstream that claims its foundation are rooted in inclusion.

There are cultural, ideological, political divisions so deep among disparate groups that one encounters two very different Americas when traveling from San Francisco, California to Jackson, Mississippi. The concept of America as an open society may very well apply to major cities, especially coastal and urban upper Midwest, but it is a stretch for much of the rest of the country. The media, political and institutional endeavors to suppress class consciousness and opt for identity politics and culture clashes only points to cracks in solidarity among the working class and middle class against the elites lining up behind the two major parties. Because social exclusion and differentiation assumes different socio-cultural forms in different parts of the country, the political elites are able to divide the population against itself and undermine class solidarity of socially excluded groups.  http://www.cultureclashes.org/book/8-conflicts/

Public opinion polls in 2012 indicated that 69% if Americans viewed their nations divided, while that number jumped to 77%-80% right after the November general election in 2016. Just as significant, they indicate dissatisfaction with the way their society functions and see their prospects becoming worse not better. These same people do not see the forging of consensus any time soon, and fully expect deeper divisions, thus reflecting recognition of social exclusion and differentiation. A reflection of deep divisions, public opinion polls a few days before inauguration range from 37% to 44% approval rating for Trump, a historic low since such polls were conducted in 1992. As disturbing as such low numbers may be given that they are below those of the outgoing president’s, an even greater concern is that they will only decline going forward once congress implements policies resulting in lower integration and greater exclusion. http://www.gallup.com/poll/197828/record-high-americans-perceive-nation-divided.aspx; http://www.trueactivist.com/trumps-approval-rating-plummets-to-historic-low-just-days-before-inauguration

This does not mean that non-urban, southern and Plains States America is any more racist, xenophobic, Islamophobic, sexist and less tolerant of non-natives than their counterparts in Russia, France, or Germany where there is a rise of ultra-rightwing political movements not much different than the populist wing of the Republican Party. Social exclusion and differentiation exists in all capitalist societies, some like the Scandinavian less, others, like Russia more. The demographic structure of US is changing and the realization of that incontrovertible fact has many whites reacting with anger amid eroding living standards and the economic pie so unevenly divided.

Naturally, an apologist of the status quo could argue that the US is hardly the world’s most divided nation, considering there are developing nations immersed in civil wars or under authoritarian regimes that maintain the status quo by police methods. Apologists of the status quo point to developing nations as authoritarian and to the US remaining a defender of human rights and civil rights, despite a record of government practices that indicate otherwise. Apologists of the status quo refuse to accept that developed Western nations are experiencing the rise of extreme rightwing political parties challenging the neoliberal centrist and conservative ruling elites. This ‘revolution’ from the extreme right will result in even deeper divisions across the entire Western World as societies claiming the legacy of 18th century Enlightenment ideals of John Locke’s liberalism and  Jean-Jacques Rousseau’s social democracy are evolving from liberal capitalism to an authoritarian neoliberal capitalist model. (Ian Bruff, “The Rise of Authoritarian Neoliberalism”, Rethinking Marxism, Vol. 26, Issue 1, 2014)

American Divisions in Historical Perspective

American colonists and immigrants were bound by the common goal to seek a better material life and enjoy freedom from religious persecution. However, these freedoms never translated equally for all ethnic groups and social classes in a country founded as a colony of the British Empire to advance its imperial economic and geopolitical interests. Indicative of the lack of social cohesion and political consensus among the colonists, when the War of Independence was declared, Americans were hardly as united behind the independence movement. Interested in national self-determination, largely wealthy white colonists led the revolution at a time that the colonies had slavery as an entrenched institution. Representing the landowning and commercial class, the Founding Fathers drafted a constitution declaring all men are created equal but in practice social differentiation and exclusion prevailed.

The chasm between what is declared in the Constitution about equality, freedom, and the pursuit of happiness and the reality in practice is at the heart of America’s historical divisions. The famous July 1852 speech “What, to the Slave, is the Fourth of July?” by Frederick Douglas reveals the deep divisions in American society that has relevance to this day. “The existence of slavery in this country brands your republicanism as a sham, your humanity as a base pretence, and your Christianity as a lie. It destroys your moral power abroad; it corrupts your politicians at home. … it breeds insolence; it promotes vice; it shelters crime; it is a curse to the earth that supports it; and yet, you cling to it, as if it were the sheet anchor of all your hopes.”

Historical divisions and culture clashes stem from the gap between the political principles of equality and justice for all, and the reality of wealthy predominantly Anglo-Saxon protestant elites that owned most of the wealth and enjoyed institutional privileges from education to elected office. Institutional obstacles to progress for the lower classes, women, and minorities were overcome throughout the Republic’s history by peoples’ attraction to the promise of the constitution about equality and the pursuit of happiness for all, and by the prospect of integration into the institutional mainstream where the elites enjoyed society’s privileges. As long as the economy expanded and the social structure evolved to permit working people to move into the lower middle class and their children to secure education and create a better life, people conformed to the hegemonic culture and subordinated socio-cultural differences to the system that rewarded them at least in the domain of religious freedom and the promise for a better life.

Despite massive economic expansion as a result of the Westward expansion, industrialization (187-1900), and imperialist expansion in the form of the Spanish-American War (1898), society remained at war with itself through the struggles of workers to unionize, women and immigrants to achieve equality of opportunity as their Western European white male counterparts, and blacks fighting to end institutionalized racism that is a permanent feature of America at war with itself. Unlike ethnically and culturally homogenous societies, America as a nation of immigrants that conquered the natives is at war with itself because its only common value system is the immigrant dream of wealth and cultural freedom. Deeply imbedded in the consciousness of the people are Manifest Destiny and the dream of greatness, even if by association.

It is not only the case that 71% of Americans are Christians, but that there is a longstanding tradition of linking politics to Christian doctrine (America as God’s country with a mandate from Divine Providence). This has been the case from its early history to the present and it has been an integral part of the social contract that the elites have used to forge consensus and conformity among the masses. (Nicole Guetin, Religious Ideology and American Politics, 2009) Although the same phenomenon is less evident in urban-suburban areas and Coastal and upper Mid-Western areas where secularism and a more cosmopolitan culture prevail, the concept of expansion and America’s greatness mandated by divine providence is an unspoken underlying assumption. The degree to which political and financial elites can rely on religious leaders to help engender sociopolitical conformity and mitigate systemic divisions is an open question, although Christendom has been the catalyst to sociopolitical conformity for many centuries.

The merging of pseudo-science and religion, Social Darwinism and creationism in American history has helped to maintain sociopolitical conformity to the institutional mainstream from the 19th century to the present. As a nation that took the concept of competition more seriously than Adam Smith, Americans found it easy to merge Social Darwinism that assumed human progress rested on competition which is found in nature. It is indeed remarkable that no less than twenty-four states enacted ‘sterilization eugenics legislation’ between 1911 and 1930 intended to “weed out” the mentally ill and criminals, and the American Eugenics Society advocated laws to limit inter-racial marriages.

While Social Darwinism was popular among certain segments of society rejecting the concept of social cohesion and integration for all people as the US Constitution promises, creationism reinforced social exclusion and differentiation. With deep historical roots in culture clashes, creationist beliefs remain prominent just below the surface with a substantial percentage of Americans. In 2014, 42% of Americans believed in the creationist view of human origins, down 2% from 1982 when Reagan and the Moral Majority were contributing to the culture clash against those they demonized as humanist liberals. According to various public opinion polls, 13-28% of Americans responded that God was not involved in the creation of human beings and that evolution was responsible for life as we know it, while 51% accept the Bible as the word of God. By contrast, 69% of Britons believe in Darwin’s theory of evolution, and 61% of Canadians. The striking differences are a manifestation of far greater social cohesion in the neighboring nation to the north also a former colony with not such a strikingly different historical experience. http://www.slate.com/articles/health_and_science/human_nature/2014/12/creationism_poll_how_many_americans_believe_the_bible_is_literal_inerrant.html

A society steeped in the psychology of realizing it potential of greatness as Divine Providence mandated necessarily finds itself at odds its own disparate elites vying for influence and control to determine the nation’s destiny and preserve their privileges, while socially excluded groups struggle for integration. Advocates of the Enlightenment secular ideology as the foundation of modern society clashing with the more conservative ad religious-oriented groups associating secularism with the privileged elites have been a permanent fixture in society. Clashes become more evident in times of glaring contradictions of economic expansion but contracting living standards. While social cohesion and integration is important to the political and financial elites in order to maintain stability in the political economy and social order, the same system produced greater social exclusion and differentiation.

De-legitimizing of the Political System

In a fierce power struggle, the Democrat Party and Republican Party elites have been delegitimizing each other in the eyes of the public. Political de-legitimization was evident ever since Barak Obama became the first black president. Although many conservatives viewed Obama’s election as the end of white political monopoly of the executive branch of government, there was hardly any change in social integration and social exclusion under an administration that faithfully served the same elites as all its predecessors. In the 2016 primary season, Trump accused his Republican opponents and Democrat nominee Hillary Clinton of serving Wall Street for a price. Trump de-legitimized all others except himself because they were conduits of social exclusion. During the presidential election season, the increased journalistic interest regarding the division of American society assumed added dimensions largely because of the surprised election of Trump, now enjoying a Republican majority in the Senate and House of Representatives, as well as in most state governments and in the judicial branch.

Skepticism about legitimacy continued when the Democrats did everything they could to link Trump’s election to alleged Russian hacking, one of the major distraction issues regardless of whether Russians were involved or not. This does not even take into account social media “fake news” and mainstream media intense propaganda campaigns reflecting and promoting the culture clash among disparate groups. America’s war against itself became more intense when Trump compared the practices of US intelligence and media organizations to those of Nazi Germany in reaction to alleged Russian video tape of Trump in a compromising situation. Ironically, the so-called ‘Nazi’ practices were attributed to the Obama-Clinton Democrats who have the institutional power to undermine the Republicans and persisted on the Russian hacking theme without ever providing evidence.

By comparing the US to the Third Reich, Trump expressed the deep divisions among the political elites while lending legitimacy to the criticism of America usually reserved for leftist critics arguing that the US has been sliding down the road of authoritarianism. If Noam Chomsky, for example, leveled the same criticism as Trump, it would have no significance beyond a small circle of those who follow Chomsky. When Trump compared his country to the Hitler’s Third Reich, it afforded legitimacy to critics’ arguments that indeed the US has authoritarian aspects, while preaching democracy to the world. Moreover, it revealed the depths of division in America that goes beyond politics and into the nature of the country’s institutions failing both in social cohesion and political consensus.

By refusing to accept Trump as a legitimate president, perhaps because he lost the popular vote or because of email leaks through WIKILEAKS via Russia as a possible source, black Civil Rights leader and Georgia Congressman John Lewis contributed to de-legitimizing the new president in the eyes of the world. As a symbolic representative of the black community, Lewis was affirming that social exclusion and differentiation cannot be legitimized by a president who lost in the popular vote. 
Behind the de-legitimization efforts, the media, social, academic, and financial elites naturally take sides, as do many ordinary people who watch and wonder if these clashes entail that the politics of consensus are a thing of the past and polarization the new reality. According to a Pew Research study, the partisanship and animosity between Republicans and Democrats has never been greater than in the 2016 presidential race. Each side sees the other as closed-minded, immoral, dishonest, unintelligent, and lazy, thus lacking trust in the other’s ability to represent the social contract and lead the country.

To distract from the internal clash, the Democrats keep focusing on Russia, with their European Union allies doing likewise as the latter fear Trump may be less committed to the world order as they inherited it since the demise of the Soviet Bloc. Keeping with favorite theme of racism and xenophobia, Republicans focus on the “Clash of Civilizations” thesis as a means to distract from Russia and placate the domestic elites and rally popular support behind the flag. Neither “Clash of Civilizations” with Muslims as a target nor Russia with the evil Vladimir Putin and the corrupt oligarchs is enough to quell the culture clash; and neither is a credible substitute for addressing income inequality, lack of social justice and growing social exclusion and differentiation.

America at war with itself is unlikely to change toward the kind of consensus that existed in the early Cold War from Truman to Kennedy when the US was the undisputed superpower and upward social mobility kept the population hopeful about achieving the American Dream, at least for their children. In a world where power is shifting from the West to East Asia with a resurgent Russia despite Western containment policies and sanctions, the American elites are scrambling to preserve and expand their privileges while forging some kind of political consensus that will enable them to maintain the status quo. Against such efforts comes the reality that eight individuals, including Bill Gates, Warren Buffet, Jeff Bezos, Mark Zuckerberg, Larry Ellison and Michael Bloomberg, all Americans, own as much wealth as half of the world’s population of 3.6 billion.

The Nature of Division and Polarization in the US

The topic of culture clashes has been analyzed by hundreds of books and articles dealing with the deep divisions in American society. These are multifaceted divisions rooted in identity politics and class struggle politics of the last two centuries. However, the rise of social exclusion and differentiation is more evident today than at any time since the anti-war movement of the 1960s. From the Civil War to the Civil Rights Movement to the controversial election of 2000 and the equally contentious election of 2016, more scholarly works and journal articles have been devoted to growing rift in American society and what it entails. According to one poll at the beginning of 2016, 56% of Americans believed that their children would be worse off than they were. Another poll indicated that 81% were worse off in 2016 than in 2005. By contrast, only 20% are worse off in Sweden for the same time frame, indicative of income stagnation amid massive capital concentration. While these statistics clearly illustrate a policy intended toward greater social integration in Sweden, the exact opposite is the case for the US.  Money.cnn.com/2016/01/28/news/economy/Donald-trump-bernie-sanders-us-economy/; https://mishtalk.com/2016/08/07/mckinsey-study-shows-81-of-us-worse-off-than-in-2005-france-63-italy-97/

Polarization extends beyond the domain of income gap, encompassing geographic, racial, ethnic, religious, gender, and cultural issues and finding expression in the political parties and factions within factions of two major parties. Current polarized conditions are due to a general decline of the middle class and living standards among the working class at a time that identity politics - cultural, religious, racial, ethnic, and gender-based issues – is a necessary tool of the elites to prevent systemic institutional changes and maintain political consensus.

More resistant to the well-established bipartisan cooperation on key issues, including foreign policy consensus, armies of journalists, consultants, analysts, lobbyists, and academics promote the divisions of the political and socioeconomic elites. If the energy sector has vested interests in US-Russia cooperation, while the auto industry has vested interests in NAFTA, and high tech in East Asia, it is understandable that the respective corporate lobbies, journalists, consultants, think tanks, and of course politicians would disagree about foreign policy consensus. Not only is US economic power reflected in its corporate structure at a time of national economic decline, especially when taking into account that debt as percentage of GDP stands at 105 and rising, but the nature of the US economy in comparison to that of Asia speaks volumes about its dim prospects and continued socioeconomic and cultural polarization. https://fred.stlouisfed.org/series/GFDEGDQ188S

Whereas China is strengthening its infrastructure and that of countries where it invests from Asia and Africa to Latin America, it also has sound domestic foundations in the primary and secondary sectors of its economy. While China has created the Asian Infrastructure Investment Bank involved in nine major projects in 2016 and planning many more in the future, the US was busy trying to forge trading blocs in order to exclude China while securing better terms of trade and higher profits for multinational corporations, as the Trans-Pacific Partnership illustrates, assuming it is ever implemented.  http://www.forbes.com/sites/sarahsu/2017/01/14/how-chinas-asian-infrastructure-investment-bank-fared-its-first-year/#7acaad81f4d1; http://www.globalpolicyjournal.com/blog/14/06/2016/trans-pacific-partnership-against-and-prospects

Unlike China, the US relies heavily on the service sector, largely speculative and parasitic, along with the defense industry that is even more parasitic than the financial sector. For 2016, US GDP grtowth was 1.6% while China's was 6.7%, US industrial production nearly flat at zero, while China's at +6.2 reflecting GDP grrowth; US current account balance in 2016 was -2.6% of GDP, while China's was +2.3%. (The Economist, January 14-17 2017 issue)

One could argue that high tech, especially robotics and biotech are pioneering areas with a great deal of growth since the 1990s and good prospects for the US economy. While many of those operations are at home they are hardly exempt from globalization. That US companies are keeping at least $2.5 trillion overseas and refusing to repatriate it under the current tax rate speaks volumes of their lack of commitment to economic nationalism. This is one reason that high tech corporations backed globalization advocated by Clinton.

Despite Trump’s tariff threats which are an admission of inability to compete by trade rule the US established, the outward trend of US capital and production will continue because of low labor costs and market share competition. One reason that the Trump administration is viewing globalization with skepticism and downplaying the World Economic Forum at Davos, Switzerland in January 2017 where globalists gather very year is because globalization favors the US less than China, Japan and other nations. For the first time ever, China will dominate the Davos conference a historically a Western-dominated affair.

Whereas China is a producing country enjoying a trade surplus, the US is a consumption-driven economy with a balance of payments deficit and rapidly rising public debt financed in part by the artificial value of the dollar as a reserve currency still widely used around the world for transactions such as oil trade. Reflationary economics, combined with infrastructural and defense spending intended to stimulate GDP growth will work short term but add to the national debt, a prospect that will result in even greater socioeconomic inequality and greater sociopolitical and cultural polarization.

Because countries producing about one-third of the world’s output have pegged their currencies in dollars, and 39% of the world’s debt is in dollars, the greenback has value much higher than any other hard currency. With its large productive capacity in all sectors of its economy and a large domestic consumer market, the US will remain economically strong. The question is for how long would the dollar continue to enjoy such a preeminent role; what happens when other reserve currencies become more competitive, and how long can the system sustain its viability under the weight of massive defense spending combined with a corporate welfare state. This inevitable development will further weaken the middle class and workers who feel increasingly marginalized but are confused about who is exactly to blame and how to fix the dysfunctional system.

Trump’s inane slogan “Make America Great Again” by waving the magic wand  of economic nationalism and flirtation with neo-isolationism reflect the realization of decline and a highly symbolic approach to stop the inevitable decline that enriches US-based multinational corporations at the expense of the socially excluded segments of society that make up the majority. His insistence that companies selling products in the US must manufacture them domestically is a tacit recognition of the corporate sector profiting to the detriment of the weakened middle class and workers. However, asking powerful multinational corporations to cooperate with economic nationalist policies without massive tax incentives, corporate subsidies, and a much more relaxed regulatory regime is unrealistic. While the president could follow some variation of a statist model, Wall Street and congress will never allow any deviation from neoliberal policies, and Trump has demonstrated his interest is to enrich his family and supporters.

Caught between policy contradictions and the realities of capitalism, the middle class and workers will pay the price because the government cannot find the money, unless it raises the national debt and slashes entitlements, for both the corporate welfare state and relaxed regulatory regime while maintaining a commitment to defense build up, higher living standards and protecting the environment. Just as the governor of Michigan opted for corporate givebacks at the expense of providing lead-contaminated water for Flint, the federal government will face similar choices and it will opt for corporate tax breaks, corporate subsidies, and privatization schemes that transfer income from the public sector to the private.

The growing absence of political consensus and the intense competition of the elites to influence policy has swept away the masses and divided them politically, ideologically, culturally, geographically and demographically and unable to grasp why there must be perpetual social exclusion and differentiation if the economy is expanding as evidenced by the GDP and stock market. Amid this political-ideological-cultural war in which America is engaged, it is ironic that establishment Democrats are not fighting their opponents from a leftist position associated with FDR’s New Deal social safety net across the board with a strong central government role in the economy, but cling to identity politics – gay rights, environmentalists, blacks, Hispanics, women, etc. Trying to out-Republican Rockefeller Republicans who have more in common with the Cold War anti-Russia neoliberal Democrats than they do with the populist extreme right wing illustrates the bankruptcy of the Democrat Party as a realistic vehicle to social integration.

Is Secession a Possibility? In case of Secession, what would be its impact on the dollar and trade?

By 2016, the majority of Americans were angry and dissatisfied with their government led by a neoliberal Cold War Democrat President Obama whose actions did not match his rhetoric when it came to social justice and economic opportunity for all. Two weeks before the presidential election of 2016, a survey indicated that the nation was sharply divided on nearly everything from race relations to health care. The majority of people, 20% more than in 2012, believed the country was headed in the wrong direction and blamed the establishment Democrats and Republicans.

Polarization was evident when considering evangelical Protestants who associated America’s glory with the Eisenhower administration, an era when institutionalized racism was legal and witch hunts against dissidents entailed absolute conformity in a country that called itself a democracy and castigated totalitarian Russia. Many populist conservatives that voted Trump are not bothered if their president violates the constitution and goes above the law to crush all enemies foreign and domestic, from ISIS in Iraq to illegal aliens and Black Lives Matter in the inner cities. In short, if authoritarianism is what it takes for social integration, then so be it, as far as the populist right wing is concerned. That populist conservatives lump together jihadists, illegal aliens, and minority activists speaks volumes of deep-seated cultural, political and institutional racism.

Beyond the obvious socioeconomic divisions that tend to be much more evident in southern states and rural areas, coastal states are enjoying higher living standards than the rest of the country and are culturally very different from most states except the larger Midwestern and even some large southern cities. The “Red-state” (Republican) vs. “Blue-state” (Democrat) divide transcends class and reflects more of a cultural and ideological chasm that reflects historic societal conditioning. Although it is true that the social, cultural, religious, financial, and political elites have shaped the ideological/cultural chasm largely to suppress class solidarity which poses a threat to capitalism, this divide is deeply rooted in American history layered with the experiences of the dominant white Western European culture as hegemonic subordinating all others.

As a political tool of rallying support behind the flag, shifting blame to external enemies has limited staying power, although the US did very well using Communism for half a century to achieve a domestic and international political consensus. Although large segments of the population feel excluded by the institutional structure, indoctrination has them convinced that enemies du jour are to blame, whether they are Russian and WIKILEAKS hackers, illegal immigrants, Muslims, the Chinese, etc. According to Pew Research public opinion data, the US did not become divided in 2016 as a result of the general election. The divisions in fact predate 9/11 and become sharper with the ideological/political gap widening as the income gap widened after the great recession of 2008. The decline in living standards follows a corresponding rise in the phenomenon of culture clashes and various socially excluded and differentiated groups seeking integration by different political means.  https://www.quora.com/How-and-why-has-the-United-States-become-so-divided-politically-and-socially

Considering the US progressive tradition was limited to the trade union movement from the late 19trh century until the Great Depression but thoroughly co-opted, and considering the women’s movement along with all other identity politics issues were also co-opted by the Democrat Party, there is no historical tradition of an effective progressive grassroots movement that takes under its umbrella all socially excluded and differentiated groups.  Given this reality people turn to the right when a populist extreme right wing demagogue like Trump comes along and promises to restore the American Dream, although in practice will deliver more wealth concentration that will lead to even lower social integration levels than what he inherited.

Is Secession a Good Idea? Would liberal California or conservative Texas be better off as breakaway Republics?

Considering the polarizing societal conditions, one could imagine how perpetual division, even secession may enter the public discourse. Secession is a deep-seated fear or wish on the part of some Americans who see that country geographically, ideologically, politically, racially, ethnically and culturally divided. It is true that southern states do not reflect the values or lifestyles of the coastal states. It is equally true that the smaller less populated southern states enjoy as many votes in the senate as the larger coastal states, thus determining the national agenda for the majority of the population. Does such a system reflect the will of the people, the social contract, or is it simply a reflection of states’ rights mentality that had relevance during the pre-Civil War slave era?

Secession was tried in the 1860s and failed miserably despite the considerable confidence of the southern elites who believed that their interests were better served by closer integration with England than the northern states. The secession movement that resulted in the Civil War suggests that secession is beyond the realm of possibility. Of course, people understand politics on the basis of their educational level, their family and local influences, their religious and ideological-political leanings, as well as cultural conditioning.

Rural Mississippi populist Republicans who link their identity to the Christian faith view New York Democrats as leftist atheists interested in destroying cherished southern traditions and values. In such case, the individual subordinates material self interest to religious faith and culture, as Samuel Huntington argued in “Clash of Civilizations” referring to a Middle East-West conflict rather than a domestic culture clash. Conservatives are spending billions of dollars every year trying to convince the masses to disregard their material self interests and focus on religion, cherished traditions, and loyalty to the nation, even if that means that every year their living standards decline and their prospects and those of their children for social integration diminish. 

Conclusions

Not just the mass anti-Trump-inauguration demonstrations estimated at more than 200,000 people, but the media wars, social media and mainstream media ‘fake news’, the political elites’ wars, the struggle for the country’s direction either toward a more authoritarian course or a liberal bourgeois based on pluralism, all provide a glimpse of a polarized society where social integration is the presumptive theoretical goal but exclusion and differentiation are realities. Although dialogue about the issues concerning the lives of the middle class and working people raises conflict in a capitalist society, the question is to what degree and how do the bourgeois political parties deal with social integration to achieve political consensus.

Under an imaginary scenario of secession, the cultural elites and some people on either side of the cultural divide would be happy if they were not bound by the federal government pursuing an ideological and political agenda with which they disagree sharply. Clearly, there is an ideological, political and cultural chasm between Texas and California, at so many levels, despite similarities especially in the larger cities of both states. It is also the case that while in many southern and rural areas there is convergence of religious dogma and conservative political ideology.

States have a great deal in common and would not give up the safety and security of the federal umbrella which makes possible US global reach partly because it has military bases around the world, military alliances, and the strong dollar as a reserve currency that is overvalued to the benefit of those holding it. Unless their privileges are taken from them by force as has been the case in revolutions, financial elites always manage to protect, preserve and expand their interests by backing the political status quo even if they have to reform it with a more progressive agenda, or support authoritarian policies, whichever side manages to forge a better popular consensus. 

The reality of the well-integrated economy with global ties takes precedent over all other issues. California and Texas have economies largely in the primary sector of production but also in banking and high tech. This means that they need markets beyond their state borders and beyond US borders. Not just the costs of running an independent nation-state with sovereign currency, trade and investment policy that is in line with international organizations such as the WTO, World Bank, IMF, but also the reality of a mobile work force would complicate matters and make the breakaway states less competitive.

In the end, the political, ideological and cultural benefits would be so minor to the breakaway states, and economic costs so high that they would rejoin the union even if they were given the freedom to form their own nation. There is strength in unity and weakness in division. However, human beings are indeed irrational and material interests are not their only motivating factor in political choices. Indoctrinated by “Manifest Destiny” ideology and the American Dream of achieving greatness again even by association with the nation-state, people will sacrifice self-interest as they perceive it so they may satisfy their illusions such as identity with the militarily strong nation.

One possible scenario for the future of the US amid rapidly changing demographics is that it may resemble some aspects of post-Mandela South Africa. South African blacks have entered the political arena and government bureaucracy, they enjoy political rights and in theory equal protection under the law, but the economy and the entire institutional structure is designed to serve the white capitalist minority. As much as the US criticizes Russia for its authoritarianism and crony capitalism, is it that far off and is it not moving in that direction rather than the direction of the Scandinavian countries? 

As the trend of massive wealth concentration under a corporate welfare state continues to erode the middle class and working class, the struggle against the tide of domestic and global history will keep America at war with itself and tilt it even more toward the road of authoritarianism and militarism after the next inevitable deep recession. Because popular expression of discontent lacks class solidarity owing to cultural divisions and identity politics in America, political leadership will not be under the umbrella of a leftist or even a center-left movement. America’s future is an even more authoritarian regime with roots at the local and state levels financed by wealthy individuals like the Koch brothers among other likeminded billionaires, finding expression at the federal level with populist demagogues like Trump.

Saturday, 7 January 2017

RUSSIA: ENEMY OF WESTERN DEMOCRACY?


There is a great deal of continuity in Russian history from the reign of Peter the Great until the present. There was clear discontinuity during the Bolshevik Revolution and the brief period when V. I. Lenin was in power, but then the USSR reverted to some very traditional practices in domestic and especially foreign affairs. Just as Tsars Peter the Great and Catherine the Great endeavored to modernize the country economically in order to strengthen it militarily so it would be competitive with Western Europe, so did 20th century Soviet leaders use economic modernization as a means of military strength rather than pursuing greater social justice.
Naturally, the system collapsed under its own weight because it became corrupt and inefficient serving the few in the party bureaucracy to the detriment of the many. 

When Mikhail Gorbachev realized that another modernization attempt entailed scrapping the old Soviet system and its very expensive foreign policy of supporting satellites (spheres of influence), he unleashed a new era of an oligarchic crony capitalist system that the West welcomed as a triumph over the ashes of Communism. Because Russia does not have the tradition of Western European Enlightenment era bourgeois liberal tradition, its political economy was merely another layer upon others already there with more similarities of the Tsarist and Soviet past than with liberal-bourgeois democratic West.

In foreign affairs, Tsarist Russia had been on the defensive throughout the 19th century largely because Western Europe, especially Great Britain and France, had a policy of contained as manifested in the Crimean War (1854-56). At the same time, Tsarist Russia was financially beholden to Western banks and it was as economically dependent on and exploited by the West as Latin America by the US. The Bolshevik Revolution in 1917 and the Putin nationalist-authoritarian regime of the early 21st century represent an attempt to assert greater Russian autonomy and lessen dependence on the West while claiming the traditional spheres of influence around their borders. The obstacle to such goals by the Kremlin has been Western imperialist policy as much under the Tsars and Soviet era as in the 21st century under the authoritarian—nationalist capitalist political economy.

Against the historical record of the Russian Empire and the USSR, one can easily understand contemporary Russian foreign policy, especially if we consider that the breakup of the Soviet bloc and ensuing NATO expansion has entailed a much weakened Russian Federation. In the geopolitical arena where Moscow feels the greatest pressure, the policy of encirclement by the US and its European partners is at the core of the renewed East-West confrontation, rather than Russia annexing Crimea (March 2014) and using its role as protector of the ethnic Russian minority in the Ukraine since 2013.  

Russia has taken advantage of the relative decline of the US as a superpower at a time that China has been rising as the world’s preeminent economic power invariably siding with Russia not just to preserve the balance of power in Eurasia but also in the Middle East. If China had been on the side on the US and NATO on foreign policy issues impacting everything from the Israeli-Palestinian conflict to Iran and Syria, then Russia would have been substantially weakened in its efforts to insist on preserving or even expanding its historic spheres of influence in Eurasia and the Middle East. The shifting global balance of power from the West to East Asia has actually created power vacuum that Moscow filled, taking advantage of the incalculable contradictions in US foreign policy – in general opposing jihadists, while selectively and indirectly supporting them as in the cases of Libya, Yemen and Syria. These contradictions that entail instability do not serve Chinese interests as the government in Beijing has made abundantly clear as it seeks stability around the world to expand its economic empire. China is hardly interested in strengthening Russia, but only using it as a counterweight of the imperialist West that seeks to destabilize because it sees this course of action as its only option to retain its global supremacy.

Taking advantage of the global destabilizing role of the US and its contradictory foreign policy, Russia took limited risks both with regard to Ukraine and Syria to assert itself as a regional power with rights to spheres of influence. This is at the core of the renewed Russian-American renewed confrontation and the propaganda by both sides over cyber wars. According to US intelligence services, in 2016 Russia without question broke into US Democrat Party computers and manipulated the American people when it came to choosing between presidential candidates in 2016. Although it WIKILEAKS released hacked emails during the last three months of the presidential campaign of 2016, and although Julian Assange denied securing information from the Russians, the US maintained that the source was Russia. For its part, the Kremlin asked for proof that it is behind the hacking, although it hardly concealed its enthusiasm for the defeat of the Democrat Party in the presidential and congressional elections.

Russia’s role in Syria where the US was eliminated as a player in the negotiations of cease-fire and post-civil war plans could be one reason for the Obama administration insisting that the Kremlin was responsible for hacking which no one seriously believes changed the outcome of the presidential or congressional races. After all, the idea that an unemployed auto worker in Ohio voted for the Republican candidate because of Kremlin influence is too absurd to defend even for the most enthusiastic apologist of the renewed Cold War.
Another reason that Russia made a convenient target was the challenge of Obama and the Clintons for control of the Democratic National Committee against those supporting Senator Bernie Sanders fighting for the party’s future. It could also be a naked attempt to weaken the incoming Trump administration that has individuals with close financial ties to Russia and seems more interested in targeting China as the new enemy than Russia. It is also the case that US is so institutionally immersed in anti-Russia propaganda going back to the Wilson administration (Bolshevik Revolution of 1917) that Russia always makes such an easy target. After all, China can only be alienated up to a point because of the immense US dependence on Beijing to buy government bonds and trade.

Moreover, the world economy’s fate is just as dependent, if not more so, on China than on the US. Finally, Russia makes a convenient distraction because of the reality of decline not just in the economy but of the middle class and democracy in a country that preaches freedom and democracy to the rest of the world. If Russia is blamed for all of America’s problems, then there is no need to look at home for root causes for the twilight of bourgeois democracy. Whereas Trump wants to blame jihadists, Mexican illegal workers, China’s supposedly unfair trade practices, and globalization that takes jobs out of the US, the Democrats and establishment Republicans see Russia as a weaker and easier target to demonize.

Did Russia manipulate “American democracy”? On the one hand, there was Trump the billionaire authoritarian charlatan who uses TWITTER obsessively even before taking office just to make his views known on everything from refusal to de-link himself from his business interests to the need for more nuclear weapons and engaging in trade war with China. On the other hand, there was Clinton the Cold War Democrat with a long documented history of corruption and questionable ties to Wall Street and wealthy foreign businesses and governments. She made it clear that she would become president on behalf of ‘identity politics’ rather than class-based politics that Bernie Sanders pursued. No “basket of deplorable” working class stiffs who lack the education and refinement to vote for a Wall Street neoliberal like her need bother voting because the Republican populist Messiah had hypnotized them with promises of making America great again.

Amid such stellar ‘democratic’ choices, both candidates chosen and backed by the elites, the voters were asked to choose between a traditional Cold War neoliberal and an authoritarian populist promising even more tax breaks for the wealthy and more deregulation. Neither candidate was committed to social justice, equality and civil rights. Instead, they debated lifestyle issues as though they are the core concerns of the majority chasing the increasingly costly American Dream. They also debated the role of Russian computer hacking as catalytic to the electoral process, with Trump casting doubt on the legitimacy of the intelligence services as non-political entities, while some Republicans and all Democrats castigating the Kremlin for hacking into US computers.

The Obama administration, the media and well paid analysts became anxious to drive across the point that American democratic society is in sharp contrast to Russian society where authoritarian politics and crony capitalism prevail. Unlike authoritarian crony-capitalist Russia, democratic US has never meddled in foreign elections; it has never tried to overthrow governments using the armed forces, CIA counterinsurgency operations, or any other means ranging from US multinational corporations and US government spending funds to help elect a favorite candidates. Nor has the US ever engaged in foreign surveillance through the NSA and CIA with the intention of manipulation foreign elections. In this oasis of democracy, the aggressive Russian bear, reverting to its previous Communist tactics, dared to disturb the political harmony by pointing out the occasional wart on the otherwise refined façade of the US.

To convince the American people and the world that Russia is the arch enemy of the entire world because it breaks into computers of other countries, in sharp contrast with the non-interference policy of the US that has never dreamed of lowering itself to such practices, various unnamed US intelligence agencies provided news organizations, including the Washington Post, with evidence that Russia hacked the Burlington Electric Company’s main computer which controls the power grid. Of course, the company in Vermont denied that was the case, announcing that a laptop was infected but it was not linked to a mainframe.

At least the corporate media did its duty reporting the information as the government passed on to protect citizens from the Russian menace, even if that information lacked any basis in truth. If there were those still unconvinced of Russia engaging in an act of war by revealing Clinton campaign chair John Podesta’s emails among others, then the US government, corporate media and corporate sponsors have made available well paid analysts, journalists, and “experts” to convince the entire world that they are all in danger of manipulation by Russia. A number of European countries preemptively announced that they too could be targets. In order for world to keep its focus on Russia, here are just some of the activities the US has planned.

1.       24/7 News and analysis coverage of “America Held Hostage by Russian Hackers”. Although hard evidence cannot be provided because it is simply too sensitive and will compromise sources, it is the duty of every God-fearing American or citizen of any Western nation to accept everything government and corporate media dish out without requiring empirical proof just as you require no proof that God exists.

2.      There will be special TV and radio programs of how “The Russians did it and Must be Punished for it”. This special coverage will be repeated ad-nauseam to convince skeptics and Trump supporters that Russia, not the backing of the elements of the corporate media (FOX NEWS), billionaires, and populists frustrated with the establishment elected Trump. We know this to be an incontrovertible fact and we must punish the Commie Russians with more sanctions until there is nothing left to sanction including their fine caviar and vodka.

3.      TV movie of the week and perhaps a series to follow called “Armageddon: The Showdown with Russia”. This will allow the viewer to realize that the reason for lower middle class and working class living standards has nothing to do with the political economy resulting in capital concentration. No, the real enemy is Russia and that’s why the minimum wage in Omaha is not rising, that’s why housing is unaffordable for about one-third of the population, that’s why college debt is $1.3 trillion, that’s why credit card debt is at $850 billion and auto loans $1.4 trillion. It’s all Russian hacking to blame and it is your patriotic duty to accept it.

4.      A Sondheim Broadway musical production of: “It’s Springtime for Trump and Putin: Hackers Can’t Fool the CIA and NSA!” If you enjoyed Mel Brooks’ “It’s Springtime for Hitler”, you will simply be enthralled by the Putin-Trump love story with the CIA and NSA just one step behind them singing melodious medleys for Hilary and Obama in “E Flat minor”, as the most comfortable note to sing in for the minority political party.

5.      “Russian Hackers Must be Destroyed Now!” video game now available with a new app for either your cell phone or laptop. If you enjoy such wonderful games as “Full Spectrum Warrior” “Destroy the World” and others some used to train soldiers, we have a great one that will keep you and the whole family entrained while wanting to kill every Russian until they admit they did the hacking.

6.      Merchandizing of everything from costumes to bumper stickers reading “Russia did it and we Know it” now available on AMAZON and other online retailers. By displaying this merchandise, you have the opportunity to let your friends, neighbors, and co-workers know how you really feel about that Commie Russia enemy of ours hiding behind Wikileaks, another Commie front organization pretending to do honest journalistic work. Remember part of the proceeds will go to fund the good deeds of the Democratic National Convention against rebel types like Bernie Sanders and the defunct New Deal wing of the party.

7.       “Anti-Russia Hacking Parades and County Fairs” soon coming to your town or near you. These parades will be featuring not just Cold War Democrats and Republicans but a media circus sponsored by your friendly defense contractor whose patriotism can only be measured by cost overruns for the latest fighter jets. Soon there will be anti-Russian hacking parades at county fairs so people can enjoy shooting a full size doll of Putin while enjoying a corn dog and a Bud. For every successful hit of the Putin doll, the Cold War Democrats and Republicans will score another point with the public proving they are there to protect you from our eternal enemy.

8.      Comic strips to run in all major newspapers and magazines entitled: “Do your Duty and Report Russian Hackers Near You.” Now the whole family can join in the fun by reporting to the FBI any neighbor or co-worker that doubts Russian hacking, or even a friend or relative that has just become a bit too annoying. This is the chance for all patriotic Americans to prove they are not US intelligence skeptics that is tantamount to being Russian internet trolls.

9.      For skeptics who insist on hard evidence, CNN and other corporate media giants will make available a video game entitled “Can We Trust the Russians?” This entertaining video game approximates how Russian hacking was actually carried out in the world of virtual reality. Without revealing the identity of any US operatives conducting their own covert operations against “The Enemy”, this video game will convince you once and for all it was our eternal Cold War enemy behind all the calamities that have befallen upon us, including the lead poisoning in Flint Michigan.

10.  In light of the US insistence that the Kremlin deliberately hacked into US Democratic Party and Podesta’s computers with the aim of undermining American democracy, the US government is announcing the creation of a new agency: “Anti-Russia and anti-Wikileaks Hacking Intelligence Network; aka  Putin and Assange Are Undermining our Perfect Society by pointing out our imperfections.” The agency will track our enemies foreign and domestic, and God only knows there are a lot of them. If anyone does not believe us, then Homeland Security will declare them traitors of democracy to be blacklisted and in extreme cases face deportation regardless of their citizenship status. 

There are fundamental policy considerations at work that go to the heart of America’s inability to live without demonizing its former Cold War rival. There are ideological, political, geopolitical, economic, cultural and institutional issues involved that demand a continued Russian-American confrontation. Even if there is amelioration of US-Russian relations by the Trump administration, in order to weaken or slow down China’s global ascendancy, the US will find it difficult to let go of its Cold War rival. In a future essay, I will analyze the highly politicized intelligence both rooted in fact and manufactured. 

There are obvious benefits to the financial and political elites for perpetuating the Cold War paradigm with Russia as the new old enemy and intelligence is only one dimension of this very complex issue. Unless the US decides what limits it needs to place on its own global reach and what perimeters it and its allies must place on Russian spheres of influence, the absurdity of the current policy will continue. Finally, the ultimate absurdity about the very serious issue of cyberspace security is that the US illegally hacking into computers and cell phones of its own citizens in violation of the Constitution (Fourth Amendment) is acceptable in the name of national security, while foreign entities - governments such as Russia and private such as WIKILEAKS- exposing corruption within the DNC is an act of war that must be punished by the most servere means possible! Moreover, US hacking and surveillance of foreign governments, political parties and espionage of foreign businesses and organizations is as acceptable as surveillance of US citizens in the name of Exceptionalism.

Friday, 9 December 2016

THE EUROPEAN UNION’S FUTURE: BEYOND ITALY’S REFERENDUM



Introduction: Is the EU Integration Model Viable?

Alessandro di Battista, deputy of Italy’s Five Star Movement that helped to defeat the government’s Constitutional reform proposal in December 2016, has hinted that voters decide a possible exit from the euro-zone during the next election for prime minister. This may or may not take place, but Italy remains a possible candidate for exiting the euro. This hardly comes as a surprise after the referendum revealed a decidedly anti-EU sentiment amid the banking crisis and economic stagnation the country is suffering.
Is the EU on the eve of disintegrating, or can it survive without the United Kingdom and Italy with other countries to follow? Does it really make much difference if it dissolves, considering that countries will forge bilateral and multilateral trade, investment, environmental and other agreements? Is the current EU integration model viable for all its members or merely for Germany enjoying economic hegemony over the euro-zone?

Shortly after the deep recession that started with the subprime mortgage bubble in the US in 2008 that eventually spread around the world, the EU began to transform in significant ways. Just about everyone was so focused on the immediacy of the recession that there was no focus on the transformation of the integration model. The integration model under which the EU was founded changed to reflect the sharp division between the hegemonic core members led by Germany and France vs. the weaker periphery ones in Southern and Eastern Europe. Largely because the financial sector needed to absorb capital otherwise going to the middle classes and workers, the state became the conduit for altering the integration model by using the common currency, EU rules on GDP-to-debt ratio as a means of limiting public spending, loans and subsidies, all as leverage to enforce neoliberal policies and preserve the hard currency. The result was middle class living standards began to decline along with the prospects for upward social mobility as reflected in high youth unemployment, including college graduates, as the Organization for Economic Cooperation and Development (OECD) noted. https://data.oecd.org/unemp/youth-unemployment-rate.htm

Founded on the inter-dependent integration model, the EU led by Germany adopted the patron-client model once the great recession began to impact the banks requiring massive capital injections. Intended to raise GDP and living standards in the periphery countries that joined the euro-zone, the inter-dependent integration model was replaced with the patron-client model on which NAFTA and other US-dominated Inter-American trading blocs are based. The goal was for the hegemonic country to capture greater market share under low tariffs and low asset values ranging from labor costs to raw materials.

Under the aegis of Germany, the EU adopted the patron-client model in order to remain competitive on a world scale by transferring capital from the periphery to the core through austerity measures as well as neoliberal policies. These measures entailed the considerable downsizing of the public sector that sold public assets to corporations, lower wages and benefits, deregulated market in everything from pharmacies to transportation, lower taxes and loopholes for big business while small businesses found it more difficult to compete because their taxes and costs of doing business were higher.

Because it imposed on its members budgetary deficit restraints as part of the neoliberal economic course, the EU forced its members to eliminate the state as an agent of stimulating growth in the periphery countries. There are many ironies in all this, but I will only mention two as glaring examples. First, privatizing public utilities and selling them off while eliminating public service jobs was self-serving for the core countries where the private companies were based.

Interestingly enough, France, for example, that had tried privatizing water, had such a bad experience that it reverted back to public control, given the issue was both of cost and health. Second, behind the change in the integration model and neoliberal policies were some of the most corrupt banks in the world, including Deutsche Bank which is still waiting to find out the amount of fine imposed by the US Justice Department - originally $14 billion, but still in negotiations for a reduction. These multinational corporations driving policy not just in the EU but across the world and backed by the IMF and World Bank brought immense pressure on the periphery to adopt austerity measures that further wrecked fragile economies and made them more vulnerable to foreign economic dominance.

The illegal and fraudulent practices of banks included not only deceptive practices in residential mortgages and fixing rates, but money laundering, tax avoidance and terrorism financing, all of which the EU Commission has admitted drained capital from state treasuries and undermined the economies. The “Panama Papers” of the law firm Mossack-Fonseca revealed that major banks including many in the EU were deeply involved in illegal activities including transferring funds into offshore companies where money is hidden from tax authority. People are well aware that tax evasion by the wealthy entails that the tax burden falls disproportionately on the middle and lower classes. The EU, member governments, and the financial elites expected the average citizen to bail out the banks in the aftermath of the recession in 2008, never raising the option of fair and shared sacrifice.

Concurrent with the change in integration models was the very clear and sharp decline in the social welfare state and rise in corporate welfare and neoliberal policies that transferred income from small businesses and professionals that make up the middle class. Governments also launched an assault on labor unions and workers with the goal of exacting concessions on wages and benefits, diluting collective bargaining and strike laws, and imposing longer working hours. The argument was that workers were to blame for the recession because they enjoy generous wages and benefits. By embracing anti-labor and anti-middle class policies, governments of conservative, centrist, and Socialist parties across Europe began to lose credibility that the social contract at the national and regional levels was working for the benefit of all people. For their part, the EU, member governments and its apologist argued that downsizing the social welfare state and lowering living standards from the broader working and middle classes was necessary to remain competitive with East Asia where wages were low.

Globalization under neo-liberal policies resulted in a sociopolitical reaction across Europe and polarized the electorate looking for alternatives to the mainstream parties. However, the ultra right wing was far more serious in opposing the EU than the non-Communist left running on reformist platform but invariably co-opted by the neoliberal establishment. Italy’s referendum defeated by both the reformist left and the extreme right was the latest example of voters rejecting the government’s anti-labor neoliberal corporate welfare policies intended to concentrate capital in the name of ‘saving the ailing banks’ while calling it ‘reform’ as though it is beneficial for the majority of the people.

Italy’s Referendum and its Symbolic Significance for the EU

On 4 December 2016, Italian voters dealt a major symbolic blow to neoliberal-corporate welfare policies that the EU has been imposing across the continent since the start of the great recession in 2008.  Voters rejected Prime Minister Mateo Renzi’s proposals for a stronger executive and a weaker legislative branch intended to push through neoliberal and austerity reforms that large banks and corporations demanded at the expense of smaller businesses, the middle class, and workers whose living standards have been on a steady decline since 1994 and accelerated after 2009. In 2006, Prime Minister Silvio Berlusconi tried a similar reform of the constitution of 1948 but he did not have any better luck than Renzi ten years later. The goal was a stronger executive to pass legislation that would benefit big capital within the EU.

With the decline of the middle class came lower living standards for workers and higher poverty rates, with more young educated Italians leaving their country for a better job; a process that will accelerate in the coming years regardless of whether Italy stays or leaves the EU. Italy is the Euro-zone’s fourth largest economy and the world’s eighth largest in nominal GDP along with Brazil. Interestingly enough, like Brazil, Italy has major structural problems. Its rising public debt is at 133% of GDP, but without the large informal economy estimated at $233 billion in 2014, debt to GDP ratio is closer to 150%. This is accompanied by unemployment of 11.6 percent, or three times higher than Germany’s but half of what Greece and Spain. Unlike Greece which has no industrial sector of any consequence and relies heavily on imports while suffering from unsustainable public debt and high chronic unemployment and underemployment, Italy has a solid industrial sector that offers some hope for its massive public debt problem and banking crisis.

To address both the public debt and banking crisis, Renzi, backed by finance and corporate capitalists as well as the entire weight of the EU establishment, proposed a corporate welfare scheme to transfer income from the middle and lower echelons of society to the banks and corporations. This was intended to keep the banks under private control by injecting public funds, rather than nationalize them. The prime candidate for nationalization is Banca Monte dei Paschi that has failed stress tests and it has considerable international links that could have consequences for the entire banking industry in Europe. Recapitalization and ridding itself of bad loans required more time than the ECB was willing to permit the bank to raise an estimated at 5 billion euros.

That the ECB rejected Monte Paschi request for state bailout just a five days after the referendum meant inevitable losses for shareholders and bondholders as well as Italian taxpayers. Of course the prospect for some EU assistance remained a possibility because of the domino effect fear across the EU. Against this background, if the US Justice Department imposes a heavy fine ($14 billion) on Deutsche Bank it would mean the only way to save that bank would be for the German government to bail it out and that would then set off another round of crises across the EU.

The political attempt to resolve Italy’s banking crisis suffered a temporary setback because the anti-austerity, anti-EU Five Star Movement opposed Renzi’s proposals along with the nationalist right wing xenophobic ‘Lega Nord’ (Northern League). For different reasons, all political parties opposed Renzi’s constitutional reform proposal, but it was the populists of the left and the right claiming victory over the neoliberals who represent international finance capital and the multinational corporations in Italy and in Europe. It should be kept in mind that former prime minister and billionaire Silvio Berlusconi, who in 2006 tried the same constitutional reform tactic as Renzi, sided with the Lega Nord against Renzi. This illustrates that not all Italian capitalists favored existing EU policies and the integration model, just as not all British capitalists favored remaining in the EU that they perceived as German-dominated.

Renzi announced his resignation because it was a clear defeat of his policies and a resounding rejection of the disastrous road that southern Europe has been following under the aegis of EU and IMF since 2010. Nevertheless, in the days after the vote, EU stock markets rose sharply and the euro did not lose its value as a reserve currency as the neoliberals had been warning to scare voters into supporting Renzi’s policies. Short-term stock market speculation aside, the reality of Italy’s GDP growth close to zero, youth unemployment at 40% right behind Spain and Greece, and an economy about the same size as in 2000 hardly speaks well for Italy’s progress under the aegis of the EU.

There are many dimensions to the Italian vote. I would like to focus on the following.

1. Why did Renzi call for the referendum? By substantially reducing the size of the senate, it would be easier for the executive to pass ‘austerity and neoliberal reforms’ through the Chamber of Deputies. The changes would entail hastening the process of tax and labor reform that would in effect weaken labor and transfer income from the broader social classes to the banks and larger corporations. Italian banks carry a disproportionate number of unserviceable loans – roughly one-third of EU’s bad loans for an economy inexorably linked to the rest of the EU and suffering a growing public debt.
Because the investment in Italian banks goes beyond the country’s borders, the banking crisis poses a major risk to financial stability in the EU unless reforms are enacted that would in essence transfer funds to strengthen the banks at the expense of the social welfare state and the working class. The insolvency of the Italian banking system will drag down with it the EU banking system under the ‘contagion syndrome’ that links the EU financial system, unless Germany permits the EU to inject billions to save the banks thus further driving down the value of the euro.

2. Why were public opinion polls wrong as they were in the case of the UK referendum and the US presidential election? By now people across the entire Western World cannot take seriously public opinion polls because in 2016 in three different countries the corporate media has been wrong about election results. First, the case of BREXIT clearly showed that public opinion polls were either manufactured or the polling companies deliberately preselected a targeted audience for their questionnaires, so that they could achieve the desired result and influence the undecided voters to join the fictitious majority. More or less the exact same thing took place in the US, although one could argue that Clinton won the popular vote and still lost the Electoral College.

Italy represents the third case in 2016 where public opinion polls were wrong leaving people to wonder if this was part of a pattern reflecting the interests of corporations backing a certain politician, political party or policy. It is one thing for polls to be off by the typical margin of error (3 to 5%) and another to be completely off the charts as in the case of BREXIT, USA, and Italy. If indeed they conducted honest polling, then one would think that they would be reconsidering the flawed method of research. However, it is hardly coincidence that corporate public opinion polls are not intended to reflect how people will vote but to influence the result. In short, polls have lost credibility as much as the biased corporate media that will go to great lengths to mold public opinion in support of neoliberal and corporate welfare policies as the panacea for the masses.

3. Was the Italian referendum a ‘personal issue’ and ‘insignificant’ as many European officials and corporate CEO’s contended? There were also those who argued that the vote reflected societal shifts within the country about national sovereignty and the EU’s role in hindering growth and development. It was amazing to watch various European TV programs where Italian and European corporate representatives and EU officials argued that the vote meant essentially nothing and ‘reforms’ (anti-labor, neoliberal and corporate welfare) must continue as though the peoples’ vote was a futile exercise. Some argued that Italians did not vote to leave the EU as did their British counterparts in summer 2016.

Others insisted that the vote was meaningless because it was all about personalities, namely Renzi vs. Giuseppe “Beppe” Grillo of the Five Star Movement and Silvio Berlusconi representing the populist right wing. Still others noted that this vote simply meant a more flexible policy toward the Italian banks by the European Central Bank. Some noted that the vote is not as serious because populists on the center left led by Beppe Grillo could never come together with the rightist populists of the Northern League. Therefore, the era of coalition government in Italy simply means a weak state that permits neoliberal and corporate welfare policies to prevail.

4. Did the Italian referendum weaken the EU and the neoliberal and globalization course or was it a brief pause until the establishment political forces with the backing of big capital mobilize for a new strategy of co-opting both the League of the North and the Five Star Movement? Russian politicians hailed the vote in Italy’s referendum as a blow to EU unity, but that may have been wishful thinking because the blow was not to the head of the EU integration model. Nevertheless, no matter how much lipstick and makeup EU apologists of globalization and neoliberal policies try to apply on this little pig, it is still a pig and voters across Europe see it as such. This is the reason that a percentage of them turned to populism on the right or the left, leaving an increasingly weaker centrist arena to become more right wing by embracing xenophobia and racism. In short, this is not just a matter of the banking crisis but a crisis in bourgeois democracy.

5. Do the Italian referendum, the US election of Trump, and UK exodus from the EU indicate a rising tide of right wing populism undermining globalization and neoliberal policies? It is indeed possible that we could see increased support for economic nationalist measures across the EU if the US goes that route as Trump has indicated. However, the structural course of globalization, neoliberal policies and corporate welfare are so deeply grounded in the political economy that it will be very difficult to reverse course. The symbolism of right wing populism is actually more important in so far as periphery EU countries may opt to follow this path that Trump and Putin hail as the new trend. Because the structure of the economy will remain essentially the same in the near term, living standards for workers and middle class will not improve and people will keep moving away from the centrist parties and toward the left or the xenophobic right, a phenomenon not just in Italy but across Europe.  

As long as the EU represented the possibility of higher living standards and a higher quality life, people regarded integration in appositive light. Once the evidence began to show very clearly that the EU was a mechanism for the hegemony of big capital at the expense of the rest of society, the EU’s appeal began to decline. This manifested itself in right wing populism and ultra-nationalism across the continent, especially in Eastern Europe but also in France and Great Britain. Although Communist and non-Communist leftist political parties have expressed adamant opposition to globalization, neoliberal policies, and the patron-client integration model, political momentum rests with the right wing that has been riding the populist wave across Europe.

Imminent Demise or Temporary Setback for the EU?

Contrary to many analysts warning of Italy sending the EU into chaos if it voted against Renzi’s proposed reforms, Italy’s prospects after the vote are about the same after the referendum as before. Considering that the banking crisis of Italy can be dealt within the EU by an injection of both European Central Bank and Italian government capital combined with private and consortium investment, stability is possible although at a heavy cost to taxpayers. Moreover, despite the referendum, neoliberal and corporate welfare policies at the expense of social welfare will continue in Italy as they have in Greece, Spain, Portugal and much of the EU since 2010.

Given the relative absence of inflation in the EU, and the European Central Bank’s projection that inflation will rise from 0.5% in 2016 to just under 2% by the end of the decade, the policy of monetarism (keeping a strong currency by tightly controlling the money supply) has been responsible for capital concentration, low jobs-creation climate, and income redistribution from the middle class and workers to the top ten percent of the wealthiest individuals across Europe. 

Speculation by many academics, journalists, stock market analysts, and politicians that the EU is on its deathbed seems motivated more by ideological and political factors in some instances or trying to influence securities speculation in other cases. In most instances, people simply analyze headlines circulating around the mainstream media. This is not to suggest that the EU is not at its nadir since the Treaty of Rome in 1957, not that the EU is more stable after the Italian referendum than before. However, it is one thing to argue that the EU is indeed suffering a crisis, and it is entirely another matter to underestimate its resiliency because of hasty analysis or because analysts are paid by firms speculating on the euro and/or bonds and stocks, or for ideological and political reasons.

Contrary to alarmist rhetoric from people in different ideological camps, as the world’s wealthiest economic bloc with NATO backing up its political and economic global reach, the EU is not in imminent danger of disintegration. Despite setbacks it suffered in 2016 with the United Kingdom leaving, Italy in serious banking and public debt crisis, and Greece remaining in permanent austerity mode after six years of EU-IMF measures that have only made the economy much worse than it has been at any time in its post-military Junta era (1974-present), the EU can revive assuming Germany and France modify the patron-client model of integration and dilute corporate welfare and neoliberal policies that have wrecked the economies and undermined bourgeois democracy.

BREXIT was indeed a major blow to the regional economic bloc, but the UK was never part of the euro-zone and its economic role will continue with some modest modifications that will result in higher indirect taxes for the consumers. Considering the performance of the stock markets across Europe, including England since BREXIT, the alarmist rhetoric about UK leaving the EU now appears overblown and indeed politically motivated to persuade UK voters to stay. Not just biased media reporting, but biased public opinion polls proved that big capital was determine to go to great lengths in support of maintaining the integrity of the bloc. The barrage of EU threats against Britain were also revealing about the lengths to which big capital and its political backers will go to oppose any model of economic nationalism, even if that model continues with aspects of neoliberal and corporate welfare policies.

The Italian referendum was a major setback for multinational corporations, banks and neoliberal-corporate welfare advocates. However, it is a stretch to argue it signals the beginning of the end for the EU. The doomsday rhetoric about the consequences did not materialize immediately as the pro-EU forces claimed and the European Central Bank as well as central banks of individual member nations is prepared to support the regional bloc with injections of capital.

Because Italy’s banks need time to recapitalize and Moody’s rating agency changed Italy’s outlook from stable to negative, short-term stock and bond speculators influence the entire political landscape about EU’s dim prospects when combined with the reality of a rising anti-EU right wing xenophobic tide across Europe. The current ECB 80 billion euro a month of bond purchases continued until March 2017 and scaled back to 60 billion until December 2017 is intended to stimulate growth in a sluggish regional economy.  Monetary policy is a major tool that keeps the regional bloc viable. Considering the modest GDP growth of the core members of the EU, combined with the stronger than expected revival of China’s economy in the second half of 2016, the world’s largest trading bloc will remain strong but still wobbly in the next five years.

Neither BREXIT nor Italy referendum will bring down the EU, but the glaring contradictions within the regional bloc will. One such contradiction is that members share a common currency and each member government must abide by certain fiscal policy restrictions despite the obvious uneven structure of the region’s economies. It defies rudimentary logic that import-dependent southern and Eastern EU members share the same hard currency as Germany that is a major industrial power on a world scale. This contradiction points to further problems that will only become worse under the current patron-client imperialist model which further strengthens the strongest members at the expense of the weaker ones.

Europe’s ‘periphery economies’ (Southern and Eastern Europe) cannot sustain long-term growth and be regionally or globally competitive under a hard currency, fiscal and trade restraints imposed by the EU intended to continue with neoliberal policies, and an integration model designed to strengthen the strongest members at the expense of the weaker ones. Nevertheless, the large companies and capitalists in the regional economies share common interests with their northwest EU counterparts and they enjoy considerable political influence in their respective countries’ political decision to stay in the EU.

Besides the scenarios under which the EU will dissolve revolve around the inescapable contradictions of the regional bloc, as I noted above, there is also the political decision of the larger members to end the bloc under pressure from national elites advocating greater national control of the economy and society. Unless Germany and France as the largest members and pillars of the bloc since the 1950s decide that it is time to end integration because their national economies would be better off, the EU will continue to exist until the next global recession.

Even if the EU dissolves after domestic and regional political and economic pressures because it will cease to serve the majority of the people, a new integration model of European trade-financial realignment will replace the existing one. Geography cannot change any more for Europe than for the Western Hemisphere. For the near future, there will be some policy modifications at the national level and by EU at the central level in Brussels to accommodate the rising tide of right wing populism and critics from the left demanding to save the social welfare state. It is inevitable that the pro-EU political parties would be able to mobilize support and win elections because they will move closer to the positions of their right wing populist political opponents.

Alarmist rhetoric is in long supply by political element on the extreme right because they espouse nationalism inseparable from xenophobia and racism. They see EU integration compromising their national sovereignty and they use the migration issue as a fear mongering tactic. Encouraged by the rising xenophobia amid the wave of Middle Eastern and North African migrants, Marine Le Pen of the French National Front and other ultra-nationalists across Europe has been riding the wave of anti-EU populism but with limited success as the elections in Austria showed in December 2016. The containment of the far right is partly due to the conservative parties adopting some of the right wing rhetoric and espousing the platform of the far right, especially talking tough about migrants, blaming largely non-white, non-Christian immigrants for all the problems facing the white Christian continent.

The transition from the EU inter-dependent model of integration to a patron-client imperialist model that Germany espouses will eventually precipitate the downfall of the EU from within as the regional bloc is the cause for massive wealth concentration and increased social and geographic inequality. Considering the widening gap between the few wealthy and the increasingly squeezed middle class and workers, there will be more social and political instability forcing people to choose between the populist right wing political camp and the varieties of center-left and left political parties.

There are many positive elements about European society that enrich it and make it unique in the entire world and permit it to make worthy contributions to its citizens and to the world. Those include the absence of capital punishment and respect for human rights, openness to global cultural influences, diversity of newspapers and political parties representing the entire political/ideological spectrum from the far right to the far left, identity with the nation-state and the EU, to mention just a few things that make EU members more democratic than many other advanced nations, including the US where authoritarianism has become mainstream and not just because of Trump who only reflected prevailing trends and took advantage of them to secure election to the presidency.

There are also very dreadful elements of European policies. Those include the expansion of NATO and huge defense budgets in the post-Cold War era intended to carry out direct and covert military campaigns with the US as the senior partner under the pretext of ‘the war on terrorism’. The direct consequence of such militaristic policies have been jihadist attacks on innocent people in European cities, which in turn has entailed a sharp rise in Islamophobia and xenophobia as the platforms of conservative and extreme right wing political parties. These scapegoat issues distract from the core ones that concern the integration model and social order responsible for the downward mobility in Italy and the periphery member nations.

Naturally, the mainstream media and politicians reinforce xenophobia by the manner they cover related issues, thus contributing to public distraction from the core issues. Given the current economic, and sociopolitical trends, Europe will find itself at some point in the not too distant future in the same course toward authoritarianism as the US. In a continent that has experienced Nazism, Fascism, and varieties of authoritarian regimes in the last century the signs are evident that indeed history is not a steady Hegelian line of progress but one of regression that reflects the irrational in human nature.

Saturday, 19 November 2016

SLAVES TO GODS AND DEMONS


SLAVES TO GODS AND DEMONS

           (A Historical Novel)
                 Jon V. Kofas
 
ROS
Sample chapter: "The Curse of Eros"

http://assets.booklocker.com/pdfs/5512s.pdf