What Everyone Should Know

Its hard to be humble, but its nice to be right.  My inbox pinged this morning with an article from Mark Weisbrot, co-director of the Centre for Economic and Policy Research, entitled What Everyone Should Know About the "Debt Crisis" in the US.  Mark is a PhD in economics, and CEPR is a well respected organization in the field of public policy. So when he writes that the whole thing was a sham, I like to get it on record. Here's his article in full:  

Since the U.S. “Debt Crisis” has been a big international story for the last few weeks, it is worth clarifying what is real and what is not. First, the U.S. government does not have a “debt crisis.”  The U.S. government is paying net interest of just 1.4 percent of GDP on its public debt -- this is not much by any historical or international comparison.   The relatively large annual deficit at present (9.3 percent of GDP) is overwhelmingly the result of the recession and weak recovery.  The long-term deficit projections are driven by health care costs in the private sector.   These spill over into public spending because the U.S. government pays for almost half of health care spending, at a rate that is twice as high as other developed countries -- and rising fast.

There was never any chance that the U.S. would actually default on its debt.  The whole “crisis” was manufactured from the beginning, with Republicans in the House of Representatives using a technicality to win unpopular spending cuts that they could not win at the ballot box. It worked: they got an agreement that promises large spending cuts without any tax increases on America’s rich or super-rich, who have vastly increased their share of the national income over the past three decades. 

The right won because President Obama chose to collaborate with them, also seeking to take advantage of the manufactured “crisis” to implement cuts that offended and hurt the people who voted for him. Of course he also wanted to increase taxes on the rich, but because he had accepted the legitimacy of the Republicans’ extortion, he lost that too.

The worst damage from this “weapon of mass distraction” -- and President Obama’s capitulation to it -- is that the policy debate in the United States has been sharply altered.  The phony “debt crisis” is seen as the main problem;  and even more absurdly, a cause of the economy’s weakness.   The U.S. economy barely grew in the first half of this year, and we have 25 million people unemployed, involuntarily working part time, or having dropped out of the labor force.  We are more than one-third of the way into a “lost decade,” and the shift of the policy debate toward deficit reduction will increase the probability that we will experience the whole thing.

If President Obama loses both houses of Congress and/or the presidency in the next election, it will be the result of a weak economy and high unemployment, and because he let his opponents not only sabotage the economy -- which they are all too happy to do -- but also to redefine the economic debate so that the president and his party will get blamed for the mess.

So the next time someone complains that most of South America is governed by left-populist presidents who fight too much with their countries’ traditional elite, remember there are worse kinds of leadership: the kind that commit political suicide for the sake of “bipartisanship.”

Stay with Corporate Constraint for a few moments more and read the post immediately below, Another Manufactured Crisis, for my companion piece on this victory for the monied class, delivered by the Democratic candidate for change, Barack Obama.

Update.  I'll not continue to pile it on, because there is so much commentary on this latest turn, but do go to this great interview in TheRealNewsNetwork today of Jeff Cohen that supports the notion that Obama has delivered to his key constituency.  Within this 18 minute video, you will find much of the back-story to the corporatist agenda in America...and, finally, click on this link to Chris Floyd's Empire Burlesque to read a more eloquent commentary.

By David.

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Your musical accompaniment for the day:  Truth be Told, by Tal Wilkenfeld, from Transformation.  This wonderful female bass guitarist gained wide notoriety for her work with Jeff Beck.  Enjoy.

Another Manufactured Crisis

It has been made clear by many experts, at many sites, for many days, that the issue of the debt ceiling is a complete sham.  It is another political sleight-of-hand -- a misdirection designed to hold your attention here, while they pilfer your wallet there.  The debt ceiling issue need not have been bound up with deficit reductions -- this is the misdirection, where a manufactured crisis was heroically solved by delivering up an austerity package that could never have been won otherwise.  This again proves the Rahm Emanuel dictum that "you never want a serious crisis to go to waste" -- even if you have to make one up yourself.

Matt Taibbi of RollingStone summed up the outcome quite nicely in his most recent blog when he said: "Is it possible that by surrendering at the 11th hour and signing off on a deal that presages deep cuts in spending for the middle class, but avoids tax increases for the rich, Obama is doing exactly what was expected of him?"

I'll answer loudly in the affirmative.  Obama did not get the best he could under difficult circumstances -- he did deliver exactly what was expected of him. 

Obama has made it clear through his actions and his words that it was always his intention to deliver policies well to the right of centre.  There is not a progressive bone in his body.  And, despite the evidence that has been mounting from the day he took office, this fact continues to astonish his supporters.  It is time to acknowledge the awful truth, Barack Obama came to the Presidency as the manchurian candidate for Corporate America.

The deal is bad for everyone who is struggling in America and, as I demonstrated in my last post, Wealth and Democracy, that includes millions of people.  And, as Paul Krugman said in a New York Times column, it's a bad deal for the American economy.

What prompted Obama to tie deficit reduction to the fake crisis over the debt ceiling?  Most point the finger (middle) at the Tea Party.  It is true that this group of home-schooled zealots came to Washington on the so-called populist wave of the 2010 midterm elections.  Set aside for a moment that these people know absolutely nothing about economics; they also refuse to listen to anyone who does -- their most salient political attribute is that they believe what they believe because they believe it, and therefor they know what they know because they know it.  But this faux populist movement is really a creature of corporate America, and so under the guise of a no-tax reform movement, in the aftermath of the biggest transfer of wealth to Wall Street in history, and in the midst of a financial and economic crisis that may yet push us all into another Great Depression, these people have managed to legislate a reduction in spending and continued tax cuts for the rich.  It is an unprecedented victory for the elite in this escalating class war.

Obama's Deficit Focus

But again I return to the question: what prompted Obama to tie deficit reduction to the fake crisis over the debt ceiling?  Go back to last year's G20 conference in Toronto and you find in the summit Declaration the following: "The advanced economies have committed to fiscal plans that will at least halve deficits by 2013."  At the time of the G20 Declaration, the general consensus among serious economists was exactly the opposite -- that increased employment and wages were the critical need. This remains true today (see the paper from the PERI Institute, Austerity is Not a Solution). 

How, then, has "austerity" become the order of the day in the midst of the worst economic crisis since the Great Depression?  According to Robert Pollin, in an interview with TheRealNewsNetwork, the financial imbalances of the 2008 financial crisis (a real one, by the way) have not yet been solved, and this has been seized upon by Big Business to affect the kind of "serious crisis" that Rahm Emanuel says allows you to do things you couldn't otherwise get done, like gutting America's social programs.

In support of the points outlined above, the excellent analysis by Dean Baker provides real insight:

"The United States is currently running extraordinarily large budget deficits. The size of the annual deficit peaked at 10 percent of GDP in 2009, but it is still running at close to 9.0 percent of GDP in 2011. The reason for the large deficits is almost entirely the downturn caused by the collapse of the housing bubble [emphasis added]. This can be easily seen by looking at the projections for these years from the beginning of 2008, before government agencies recognized the housing bubble and understood the impact that its collapse would have on the economy.

At the beginning of 2008 the Congressional Budget Office (CBO), the country’s most respected official forecasting agency, projected that the budget deficit in 2009 would be just 1.4 percent of GDP. The reason that the deficit exploded from 1.4 percent of GDP to 10.0 percent had nothing to do with wild new spending programs or excessive tax cuts. This enormous increase in the size of the deficit was entirely the result of the fallout from the housing bubble. 

Remarkably, both Republicans in Congress and President Obama have sought to conceal this simple reality [emphasis added].  The Republicans like to tell a story of out-of-control government spending. This is supposed to be a long-standing problem (in spite of the fact that Republicans have mostly controlled the government for the last two decades) that requires a major overhaul of the budget and the budgetary process.  They are now pushing, as they have in the past, for a constitutional amendment requiring a balanced budget.

It might be expected that President Obama would be anxious to correct the misconception about the budget, but this would not fit his agenda either.  President Obama is relying on substantial campaign contributions from the business community to finance his re-election campaign.  Many business people are anxious to see the major government social programs (Social Security, Medicare, and Medicaid) rolled back.  They see the crisis created around the raising of the debt ceiling as a unique opportunity to accomplish this goal. [Rahm was right!]

In order to advance their agenda, President Obama also has an interest in promoting the idea of the deficit as being a chronic problem.  Plus, it gives him an opportunity to blame the deficit on the fiscal choices of his predecessor, President Bush.  Therefore, in his address to the country on July 25, he told the public that as a result of President Bush’s tax cuts, his wars, and his Medicare prescription drug benefit, the deficit was on a track to be more than $1 trillion in 2009.

This is more than five times as large as the actual figure projected by CBO.  However, President Obama’s distortion preserved the idea of the deficit as a chronic problem, while also getting in an attack on the Republicans.  It also allows him to avoid talking about the housing bubble. This is a topic that he seems anxious to avoid, since many large contributors to his re-election and to the Democratic Party profited enormously from the bubble.

The claim that the deficit is a chronic problem and not primarily the result of a severe cyclical downturn also opens the door for cuts to the country’s major social welfare programs.  These cuts are hugely unpopular.  All three major programs enjoy overwhelming support among people in all demographic groups, including conservative Republicans.  There is no way that an ambitious politician would ever suggest major cuts to these programs apart from a crisis.

In this respect, the crisis over the debt ceiling is the answer to the prayers of many people in the business community.  They desperately want to roll back the size of the country’s welfare state, but they know that there is almost no political support for this position.  The crisis over the debt ceiling gives them an opportunity to impose cutbacks in the welfare state by getting the leadership of both political parties to sign on to the deal, leaving the opponents of cuts with no plausible political options.

To advance this agenda they will do everything in their power to advance the perception of crisis.  This includes having the bond-rating agencies threaten to downgrade U.S. debt if there is not an agreement on major cuts to the welfare state.

In principle, the bond-rating agencies are only supposed to assess the likelihood that debt will be repaid. However, they showed an extraordinary willingness to allow profit to affect their ratings when they gave investment-grade ratings to hundreds of billions of dollars of mortgage-backed securities during the housing bubble.  Given their track record, there is every reason in the world to assume that the bond-rating agencies would use downgrades or the threat of downgrades for political purposes.

This means that the battle over the debt ceiling is an elaborate charade [emphasis added] that is threatening the country’s most important social welfare programs.  There is no real issue of the country’s creditworthiness or its ability to finance its debt and deficits any time in the foreseeable future.  Rather, this is about the business community in general, and the finance sector in particular, taking advantage of a crisis that they themselves created to scale back the country’s social welfare system. They may well succeed."
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We await the creation of the Congressional Super Committee, and the next shoe to drop in this ongoing charade.  And then we may see the kind of unrest and protest that has recently taken hold in Israel.


Update.  Austerity is a concept that has risen to global consciousness over the last several years, increasingly so in the last few months.  And it has come to the full attention of the public in North America in the last few weeks with the US debt "crisis".  The drive to austerity has been engineered by the monied interests as a protection of their position.  A recent interview with Rob Johnson of the Roosevelt Institute provides some of the history -- and suggests some potential outcomes -- of the new austerity regime.  And it gives another perspective as to why Obama so easily betrayed the Democratic faithful.
   
By David.
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Your musical accompaniment for the day:  Mozart, Requiem in D Minor, K626; Staatskapelle Dresden, Leipzig Radio Chorus.  Enjoy. 

Wealth and Democracy

"As the twenty-first century gets underway, the imbalance of wealth and democracy in the United States is unsustainable, at least by traditional yardsticks.  Market theology and unelected leadership have been displacing politics and elections.  Either democracy must be renewed, with politics brought back to life, or wealth is likely to cement a new and less democratic regime -- plutocracy by some other name."

This passage concludes Kevin Phillips' book Wealth and Democracy. Although it was written in 2002 -- a decade has passed and Bush has given way to Obama -- these observations are equally (and painfully) valid today.  Indeed, as many have argued, the situation is now much worse.  

As he documents in his book, immense personal wealth in the hands of the few has fatally corrupted the democratic process in America.

And, to be clear, this is more than a domestic US problem -- it matters to some of us living elsewhere in the world.  But, before we consider the international externalities, first a brief snapshot of how wealth is distributed in the United States, and a look at how the wealthiest few will ensure that their dominance finally becomes institutionalized.

Follow the Money  

Look for the source of wealth for the very richest Americans, and you will find the name of a large and successful corporation.  This is obvious enough -- yes, corporations are the source of rich peoples' wealth.  Got it.  So what.

The "so what" is that the elite have used their immense wealth and power, gained through their corporate entities, to game the system to ensure they continue to get an ever-increasing share.  It is the corporation that delivers the great wealth used by the elite to purchase the political process, which in turn furthers the interests of the corporation -- an infinite loop, leading to the plutocracy (or worse) of which Phillips so presciently warns.

The richest 1% 

America is awash in cash -- at least at the very top.  

The largest corporations report record-breaking profits, and their presiding CEOs receive record-breaking bonuses.  CEO compensation, including stock options and other benefits, has risen to as much as 500 times that of the average worker.  In the period from 1980 to 2006 the richest 1% of Americans tripled their after-tax percentage of the nation’s total income, while the bottom 90% saw their share drop more than 20%.  Between 2002 and 2006 an incredible three quarters of all the economy’s growth was captured by the top 1%.  And a 2009 report showed that the explosion of wealth for the 400 richest Americans brought their total combined wealth to $1.57 trillion, which is more than the combined net worth of 50% of the entire US population -- to emphasize the point, just 400 Americans have more wealth than 155 million (!) of their countrymen, combined!  

A growing literature shows in ever-starker terms that the rich are doing very well, indeed -- and that same literature shows they are doing so at the expense of the "other half". 

The struggling majority  

The pain is acute for a growing majority of Americans:

 - America has the highest poverty rate in the industrialized world.  Over 50 million Americans rely on food stamps, and as many as 50% of US children will do so at some point.  In 2009, one out of five US households didn’t have enough money to buy food and, in households with children, this number rose to 24%, as the hunger rate among US citizens has now reached an all-time high.

 - The Republican furor over Obamacare conveniently ignores the fact that Big Pharma, Insurance and the medical operators are flourishing at the expense of the general population.  Of the 1.4 million bankruptcies reported in 2009, medical bankruptcies were responsible for more than 60% of them, and over 75% of these were filed by people who have healthcare insurance.  Although America has the most expensive healthcare system in the world, and even though its citizens pay twice as much as any other country, the quality of care ranks only 37th in the world.

 - Since the economic crisis began, Americans have lost more than $5 trillion from their pensions and savings, and $13 trillion in the value of their homes.  Older workers have lost an average of 25% of their 401Ks, and personal debt has risen from 65% of income in 1980, to 125% today.  Over five million families have already lost their homes, and it is expected that by 2014 a total of 13 million will have lost theirs -- as it is, 25% of current mortgages are underwater.  Statistics show that there are over 3 million homeless Americans and, of that group, the fastest growing segment is single parents with children.

 - But prison is, at least, one place where more Americans are finding a home.  With an inmate population of 2.3 million people, the US warehouses more people than any other nation in the world.  The incarceration rate of 700 per 100,000 citizens far exceeds that of China (at 110 per 100,000), France (at 80 per 100,000) and Saudi Arabia (at 45 per 100,000).  And the prison industry represents a thriving -- and increasingly, corporatized -- growth sector.  A report titled Incarceration Nation revealed that “a new prison opens every week somewhere in America."

 - The US government understates the national unemployment rate, and has done so for many years.  The most recently publicized number for June -- 9.3% -- is highly deceptive.  Known as the U3 rate, it excludes those who have given up, the so-called "discouraged workers", as well as those part-time workers seeking full-time employment.  By this reckoning, the real unemployment rate -- known as U6 -- is over 20% for June.  But the government must hide the real numbers, since it has sanctioned the rush to off-shore American jobs by multi-national corporations, and the "hollowing-out" of American industry.  As Phillips wrote "some managements hoped to no longer process or manufacture anything in the United States, but merely to import and distribute goods, much like the ill-fated Enron transformation from producing company to financial trader."

 - And, most recently, the Pew Research Center reports that the median wealth of white households is 20 times that of black households, and 18 times that for Hispanic households.  This newly released information from the 2009 census also revealed that between 2005 and 2009 the inflation-adjusted median wealth in white households fell by 16%, compared to a 53% drop for Hispanic households, and a 66% drop for black households.

The disparity between rich and poor in America could hardly be more stark -- the ultra-wealthy with their enablers and courtiers, and the millions struggling in a system beyond their control and comprehension.  But, for the elite, the disparity can be widened, the limit has not yet been reached; this is a quest that demands the unassailable, unyielding and unrepentant devotion and belief of its corporatist adherents.  This is where Phillips' imbalance of wealth meets his democratic deficit, where market theology and unelected leadership vanquish participatory democracy.

The Gilded Age, then and now

It was Mark Twain in 1873 who coined the term, "Gilded Age".  And one of the first of his contemporaries to draw the line connecting excessive personal wealth with the power of the corporation and the flagrant corruption in politics was James B. Weaver, when he declared in 1880 that the nation's founders had imagined a system in which "the wealth of the country should diffuse itself among the people according to natural and beneficent laws.  They did not contemplate these corporations that are as real entities as are individuals."  

And so began the tensions between populist and corporatist forces in American politics that have raged, ebbed and flowed to the present day.

The populist messaging has remained remarkably consistent down through the years.  Theodore Roosevelt famously said, "There is absolutely nothing to be said for government by a plutocracy, for government by men very powerful in certain lines and gifted with a money touch, but with ideals which in their essence are merely those of so many glorified pawnbrokers."  Fast-forward to the near-present and in 1996 Senator Bill Bradley elaborates further, "Money not only determines who is elected, it determines who runs for office.  Congressmen will listen to the 900,000 who donate to their campaigns ahead of the 259,600,000 who don't."  And then, as Democratic presidential candidate in 2000, he described the corruption of the 1990s as "a story Americans have heard before.  Its the story of the late 19th century, the era of the spoils system and recurrent scandals, when politics became hostage to the money power of Wall Street financiers, railroads and industrialists, when each senator was virtually the property of whatever magnate had engineered his appointment."

Candidate McCain, in the Republican primaries of the same year, showed common cause when he too identified the monied influence in political life, "we know what the influence of this big money is on the legislative process and how its taken the government away from the American people and given it to the special interests...in 1907, Theodore Roosevelt, the great reformer, was able to get corporate contributions to American political campaigns outlawed, because the robber barons had taken over American politics."

The concentration of wealth, both then and now, was and is aided by the corruption of politics on the one hand and the general suasion of the of market idolatry and economic Darwinism on the other.  As Phillips notes, "No other nation has matched the United States for the overall centrality of private corporations (including banks) in its economic growth and political life." 

And today, the tensions between populist and corporatist forces have been played out, and corporatism is again (and perhaps finally) ascendent -- against all that was first imagined for America, markets have been turned into the vehicle for human governance.        

Unelected is Unaccountable  

The quiet gains and carefully implemented infrastructure of the right wing over the past 30 years are now coming to full fruition.  The much publicized success of the Brothers Koch in subverting the general welfare merely continues a long and distinguished tradition of right-wing patrons.  A network of think-tanks and journals, foundations, lobby groups, legislative councils and advisory groups have prepared the ground for one final assault.  And, with the Citizens United case, the Supreme Court justices, themselves unelected and unaccountable, have opened the door to untold sums for the final purchase of America's democracy. 

The largest transfer of wealth in the history of the world has set in place the final conditions necessary for the conservative transformation of government.  As the 2012 election cycle approaches, the wealthiest Americans will bring to bear the full weight of their own unelected and unaccountable power to seal the deal, in what will be the most expensive election in history.  And it doesn't matter who "wins"; as Chris Hedges has said, "the war is over, and they won".  And yet, it seems completely incomprehensible that so many could be delivered into penury while so few live at the very edge of imagined privilege. 

When victory does come, the unelected will be prominent in sharing the spoils -- the wealthy, the corporations, the PACs of all description, the Chamber of Commerce, the foreign interests, the think-tanks and pundits and lobbyists.  Even the Tea Party, a so-called populist movement, now vaingloriously holding the line in Congress against any taxation, is really a creation of corporate power that provides cover and misdirection as the monied interests affect their real agenda -- more useful idiots.  They are all the 21st century equivalent of TR's glorified pawnbrokers.  

And so too, hidden in plain view, are the politicians themselves.  It may be stretching the point, but they are perhaps as unelected as they are unaccountable.  Using Bradley's definition, incumbents who are bought and sold so openly can hardly be considered truly elected; and they have certainly ceased to reflect the will of their constituents, unless it is in the service of their major contributors.  Incumbents know that corporate funding and a fierce market theology are the keys to re-election, and this certainty allows them to ignore public sentiment.  It explains how lawmakers consistently refuse to acknowledge the will of the people, including their desire to see increased taxation of the rich and corporations, the protection of Medicare and Medicade, and a significant curb on military spending.

As Rob Johnson of The Roosevelt Institute said in a recent interview, "The politics of the United States in this crisis period does not represent the people -- it represents a very narrow segment of the population who does the fund-raising."

The Ripples Beyond America 

In his book Phillips likened US corporations to "latter-day English-speaking conquistadors".  And it is true, American economic growth was greatly facilitated by the intimate linkages between the business class and foreign policy -- global economic domination by America is based on these conquistadors (and the war machine to back them up; see Randolph Bourne's War is the Health of the State, and Smedley Butler's War is a Racket for some historical flavor).  This highly successful partnership traces an arc from the days of the United Fruit Company to the oil and mining concessions in Iraq and Afghanistan today -- indeed, almost every US foreign policy initiative can now be understood in terms of the benefits it delivers to American multi-national corporations.  This lesson is not lost on others. 

Political aspiration is cut from the same human cloth the world over.  While perhaps not the smartest bunch, politicians are generally well attuned to what works, and they will emulate the most proven path to acquiring and maintaining power.  Conservative Prime Minister Stephen Harper, for example, wants Canada to play a greater role in the world -- he has a vision.  Accordingly, he has sought to portray a more muscular foreign policy, even as he goes about the business of "selling" Canada.  He has linked foreign policy and business as part of a broader and harmonized international economic strategy, as was demonstrated by the G-20 Toronto Summit Declaration of last year.  At that meeting, the participating heads of state (lead by the US and Canada) committed as a unified group to reduce their deficits in half by 2013, and to stabilize government debt-to-GDP by 2016.  The austerity measures needed to meet these targets are playing out this very day in the US Congress in the debt ceiling/budget reduction trade-offs that Obama is trying to orchestrate; such austerity programs are clearly linked to a broader palate of corporatist policies that already favor the wealthy at the expense of the poor. 

So, here's the real worry about where corporatist democracies are headed -- as inequality mounts, as the wealthy solidify their control over government, and as an unelected elite inflicts more and more pain on the unrepresented majority, a last remaining avenue for real reform is all but lost -- it seems the state has developed a concerted strategy to eliminate public protest and dissent.

Public protest, as an important catalyst for social change, is fast disappearing.  Since 9/11, governments around the world (at the insistence of America) have committed enormous resources to their internal security services.  No country can hope to duplicate the massive US security infrastructure, but most emulate it as best they can.  We are soothed and assured that these are investments needed to counter the jihadists (!) in our midst.  But they also serve (by happy coincidence) as very useful platforms for coordinated response to domestic demonstration (showing the wisdom of Rahm Emanuel's dictum "you never want a serious crisis to go to waste", and the prescience of Naomi Klein's thesis in The Shock Doctrine).  In fact, this harmonized and highly integrated approach to quelling public protest is now regularly applied.

Let us turn to one recent example.  At the G20 conference in Toronto last year more than 1000 people were arrested outside while the attendees inside institutionalized the "urgent" need for austerity.  Many of the protesters were held without charge, only to be released after several days, with no recourse for the violation of their rights.  The government of Canada invoked "unlawful assembly" as justification for its actions.  It was clear that police and military planning had begun months in advance of the protests; the enforcement activities were coordinated across jurisdictions, agencies and geographic boundaries.  The police action had a chilling affect on those who participated -- it was intended to do so, it was intended to undercut mass protest.  The Ontario Ombudsman called this sordid affair "the most massive compromise of human rights in the history of Canada".  

Ralph Nadar recently asked, "What could start a popular resurgence in this country against the abuses of concentrated, avaricious corporatism?"  It seems government understands that austerity and economic hardship presents the most likely spark to protest, and has prepared accordingly. 

If it can happen in Canada, in this modest and generally amiable place, it can happen anywhere. 

In concluding Wealth and Democracy, Kevin Phillips warned that market theology and unelected leadership have lead to an imbalance in politics and elections in America.  It is an imbalance that -- if not soon corrected -- will shatter the last illusion of democracy.  And an America that openly frees itself from even this modest constraint validates the model that endangers us all.

Update.  Toward the end of this piece, I referred to the worry that the state has developed a concerted strategy to eliminate dissent and public protest.  The example to which I referred was the G20 Conference held in Toronto last year.  I would urge you to access more on this bit of constitutional over-reach by the Canadian government -- go to the "Videos" page of this blog, where you will find a large number of links in Item 4, all drawn from the RealNewsNetwork site and all relating to the enforcement activities that went well beyond what is allowed by the Canadian Constitution. 

By David.

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Your musical accompaniment for the day:  Bitches Brew, Miles Davis.  Enjoy.

Easier to Attack the Weak

I am re-reading Kevin Phillips' book Wealth and Democracy, revisiting some important points on the rise of the ultra-rich and their collective impact on democracy.  The book is an excellent study on how wealth has been driven by corporations in America, and how that wealth has taken over the legislative process -- and subverting democracy. 

The book ends by warning that the final domination by monied interests in America is at hand, and that such an outcome will lead to a system that is worse than plutocracy (he only hints at fascism, so I'll make that final leap).

And just last week I read a report by the Conference Board of Canada indicates that here we are becoming a nation of greater inequality. Although it's the subject of a much longer post, it is more and more evident that Stephen Harper's government has our country moving in a similar direction.

And, as I continue to trawl my favorite online sites, I came upon an interview with Rob Johnson of the Roosevelt Institute.  Several of the issues discussed in this segment touched on the writing that I will soon post so, to whet your appetite, I would encourage you to watch the interview on RealNewsNetwork here.

What I found interesting, if not more than a little disturbing, was how Obama recently met with conservative politicians and pundits (at George Will's house, no less) and assured them that he intended to tackle the entitlement issue.  Johnson said that Obama is not really a Democrat (and, as I was taken in by the euphoria, I find myself in total agreement) -- he was only in the state senate for a few years, and he really hasn't lived the Democratic vision.  He talks a good game, as we've seen, but he really sees himself as the Triangulator-in-Chief.  He acts the great negotiator and, in the process, has given much too much away to the Republicans.

As Johnson says, Obama will take from those who are not represented, since he can't take from the rich and the connected.  Democracy at work.

By David.

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Your musical accompaniment for the day:  Pack My Jack, by JJ Cale, from Shades.  Enjoy.

The View From Canada

It's not all about America.  Well, not all the time.

The Brits are front and center with this wonderful and riveting drama over News Corp (which I said I wasn't going to write about anymore, dammit!), which is all-consuming in the UK media.  And that same story is fascinating American readers, mainly because it has stirred concerns about the potential hacking of some of the 9/11 victims' phones -- although, I'm stumped as to why those same Americans so easily accept the industrial-level data mining, through phone and email surveillance, to which their government subjects them every day.  Here in Canada, today's Globe and Mail (self-proclaimed as Canada's National Newspaper) is bursting with news and commentary on the Murdock scandal, from the front page to the business section -- only the sports pages are spared, not that there's much of a sports section in the Globe, anyway.

Still, surveying the situation from up here in the Great White North, if its not all about America, it comes awfully close.

After the Murdock story, the debt ceiling issue dominates coverage in the US, just as it gets its share of commentary pretty much everywhere else, including Canada.  Congress is locked in a battle against an August 2nd deadline over if, and how much, to raise the limit on government borrowing beyond the existing $14.3 trillion (!) cap.  The Republicans oppose any increase that is not accompanied by severe reductions in the deficit, reductions they've targeted at the expense of programs such as Medicare and Medicade, designed to help those most in need.  And, as usual, most everyone expects Obama and the Democrats to cave.  There's perhaps some small irony in the fact that the administration of George W. Bush had no difficulty raising the debt ceiling 7 times, accompanied as these increases were by massive reductions in the tax "burden" for the wealthy.  Of course, and as always, no reduction to the $650 billion budget for America's war machine will ever be contemplated, where the potential for savings is enormous, like the return of forces from such hotspots as Germany, Japan and Korea -- or, and here's a thought, the scaling back of the criminal aggression in Afghanistan, Pakistan and Libya (Canada was a willing player in Afghanistan and continues to participate in Libya, though, I'm not sure, in either case, why).   

Compounding the situation, and against all that is rational, virtually every Republican in Congress, including those running for the presidency, has signed an "oath" that they will not raise taxes in any form, including the simple closing of loopholes for corporations or wealthy individuals.  Even the American Chamber of Commerce has warned against the risk of default arising from this bit of gamesmanship, and recently both Moody's and Standard and Poors have indicated that they may downgrade America's credit rating over the impasse on the debt ceiling.  

This game is being played out against the backdrop of the coming 2012 election cycle and reelection strategies of the two parties, where $billions are now being funneled into the campaigns by unelected corporate interests (and so the purchase of the democratic process continues).  All the while, unemployment rises and home foreclosures continue.  Default by the US treasury will have an uncertain but likely disastrous impact on the world's financial system so, in this case, it is all about America.   

And beyond the US borders, the IMF warns that potentially destructive and unpredictable contagion risks spreading to the global economy if Europe's leaders don't quickly contain the euro debt crisis.  As our Globe and Mail reported today, "The crisis is no longer just about Greece, as investors punish Italy and Spain...Irish and Portuguese government bonds were downgraded to junk status last week by major rating agencies, virtually freezing them out of the debt markets."  Recall, if you will, that the initial crisis began in Greece, where the government ran aground on the dubious strategies proposed and enacted by Goldman Sachs (oops, another American connection).  

Back home for a moment.  In a column by Jeffery Simpson in today's Globe, we learn from the Conference Board of Canada that we are becoming a more unequal society.  Like the trends in the US and Britain, the richest group of Canadians saw their income rise at a disproportionate rate relative to everyone else.  Using the Gini coefficient, which tracks inequality on a scale of 0 to 1 (where 0 represents a world of total equality) The Conference Board ranks Canada 12 among 17 comparable countries.  As Simpson reports "Canada's Gini score is 0.32, slightly worse than Australia and Germany, and far behind Denmark, Sweden, Finland and Norway.  The United States and Britain, two countries against which Canada measures itself, are the worst performers - that is, the most unequal societies of the 17."  Proof, perhaps, that Prime Minister Stephen Harper's grand vision for our country is firmly taking hold.  

But in the end, with all the intrigue and delight over the News Corp scandal, given all the brinkmanship and drama over the potential of default by the US, and the news that Canada is becoming less and less equal, just like the US and Britain, we learn that 11 million of our fellow human beings in the Horn of Africa are facing death from starvation in the worst regional drought in 60 years.  

So, happily, its not about America all the time.

By David.

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Your musical accompaniment for the day: Tom Sawyer, Rush.  A Canadian rock band like no other.  Enjoy.

ALEC is the Real Front Page Story

Amid the breathless, minute-by-minute reporting of a certain media mogul's unfolding troubles, there is a story of far greater importance, one that has been totally ignored by the corporate media.

Look to the major print and television outlets and you will see the coverage dominated by News Corp and the debt ceiling negotiations.  You will not find a single reference to the subjugation of the democratic process by the American Legislative Exchange Council.  ALEC provides pre-packaged legislative templates for right-wing politicians.  Think of it as Legislation for Dummies.

In her very well written article for Truthout, Allison Kilkenny writes: "Thanks to the work from the Center for Media and Democracy and investigative journalists like Beau Hodai, we now know that ALEC, a front group for major corporations, the Koch brothers and right-wing lobbying groups, actively disseminated model bills promoting its agenda to state leaders."

The Truthout story goes on to note that "ALEC creates plausible deniability for state legislators by claiming it's not lobbying, of course, but merely making friendly suggestions and, in turn, the legislators ultimately reap the rewards of being extra nice to ALEC's corporate clients."

And at The Nation, John Nichols provides more excellent coverage.  His recent article begins with the following passage:
“Never has the time been so right,” Louisiana State Representative Noble Ellington told conservative legislators gathered in Washington to plan the radical remaking of policies in the states. It was one month after the 2010 midterm elections. Republicans had grabbed 680 legislative seats and secured a power trifecta -- control of both legislative chambers and the governorship -- in twenty-one states. Ellington was speaking for hundreds of attendees at a “States and Nation Policy Summit,” featuring GOP stars like Texas Governor Rick Perry, former House Speaker Newt Gingrich and House Majority Leader Eric Cantor. Convened by the American Legislative Exchange Council (ALEC) --“the nation’s largest, non-partisan, individual public-private membership association of state legislators,” as the spin-savvy group describes itself -- the meeting did not intend to draw up an agenda for the upcoming legislative session. That had already been done by ALEC’s elite task forces of lawmakers and corporate representatives. The new legislators were there to grab their weapons: carefully crafted model bills seeking to impose a one-size-fits-all agenda on the states.

Finally, you can see in a video from The Ed Show on MSNBC additional material on ALEC.  In the interview with John Nichols of The Nation and Lisa Graves of the Center for Media and Democracy, we learn that the strategy of putting legislators and corporations together in common cause goes back almost 40 years.  We also learn that corporations pay an annual fee of between $7 and $25 thousand to participate in this one-stop marketplace with law makers.

And for that investment, ALEC has generated an enormous return. Corporations and legislators meet to vote on proposed laws before they are sent up to the legislatures, and this arrangement has produced over 500 anti-labor laws of the type seen in Wisconsin and elsewhere. According to the interview on The Ed Show, ALEC was at the fore-front of the highly successful fight against healthcare reform, and particularly against the public option.

And so, whereas News Corp provides us a symptom of our malady, the ALEC story points more accurately to the root cause -- and that is, "money and power in the service of money and power".

It is clear that they are different by degree, but they are two of the many examples of unelected power in our system that are both unrepresentative and unaccountable.

Update #1.  After posting this commentary, I found Ralph Nadar's article on the Supreme Court and its abuse of (unelected) power.  Go to Nadar.org for this must-read on the dominance of unelected, unrepresentative and unaccountable power.

Update #2.  Its Tuesday the 19th and still the top stories in the mainstream media are the debt ceiling negotiations and News Corp. Same is true here in Canada, with much fretting about potential default in the US.  Even in the online sites and blogs, there is more fascination with Murdock than could ever be warranted.  Don't waste your time on this theatre -- go instead to Nadar's site for and read his latest commentary on the Supreme Court.

By David.

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Your musical accompaniment for the day: JS Bach, Brandenburg Concerto No. 2 in F, BWV 1047; English Concert & Trevor Pinnock.  Enjoy.

No More News Corp.

The clear and stated focus of Corporate Constraint is "money and power in the service of money and power".   The commentary I've made these last few days on the furor over the business practices and corporate culture of Rupert Murdock's media empire is consistent with my blog's primary focus -- he is the embodiment of all this site holds harmful to the world.  His is the epitome of the dangerous corporate culture that disregards all externalities in pursuit of the maxim to maximize.

In short, for the Corporate Constraint blogsite, this story is a gift!

And it's a gift that keeps on giving.  I came upon some interesting comments today from Conrad Black, another disgraced media baron, convicted of fraud (and a Canadian, don't you know, although he renounced his citizenship); he had this to say about Rupert Murdock:

"Mr. Murdock has no loyalty to anyone or anything except his company.  He has difficulty keeping friendships; rarely keeps his word for long; is an exploiter of the discomfort of others; and has betrayed every political leader who ever helped him in any country, except Ronald Reagan and perhaps Tony Blair."

You know you've hit rock bottom when a convicted white collar felon like Conrad Black calls you out.

There will be much more written in the days to come, some directly pertinent to the unfolding story, and some novel asides and commentary.  It seems clear, though, that the arc of this story will have a profoundly negative impact on the Murdocks and News Corp.
At this point, going into the weekend, the following provides the most recent developments for News Corp;

 - Rebekah Brooks has resigned, finally, as has Les Hinton, publisher of the Wall Street Journal

 - Rupert Murdock has apologized to the Dowler family

 - The Murdocks have agreed to face a Commons committee meeting next week

 - Share prices for News Corp continue to drop, and the losses are in the $billions

 - The FBI has opened an investigation into allegations that News Corp sought phone records of 9/11 victims.     

I don't intend to allocate much more of this site's space to details of the unfolding story; it has gained huge notoriety around the world, and so it won't benefit from any more commentary from me.

But the Murdock story remains very important for Corporate Constraint. Because the brand recognition surrounding this story is so strong, it provides an extremely powerful springboard from which I will launch more interesting inquiries into such issues as the concentration of ownership in the media, and the degree to which unelected political power drives critical events.

So, as the title of this post says, there will be no more of News Corp., just as I hope News Corp. will be no more.

By David.

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Your musical accompaniment for the day: "I Robot" and "I Wouldn't Want to be Like You", from I Robot (expanded edition), The Alan Parsons Project.  Enjoy.