Squibs®

America towards cooperativism

2012-01-29T18:58:00.004-05:00

Book Review of America Beyond Capitalism by Gar Alperovitz

If I were to propose a way to put the United States, and the rest of the world, on a path towards a sustainable economy and a liveable, humane, and vibrant society, I would begin like this: First, I would nationalize the media, revising the constitution to institute the media as a democratically-controlled, de jure fourth branch of government. I'd then turn to the nationalization of the banks, energy companies, and all other natural monopolies, creating a democratic governing structure for nationalized industries equally responsive to their workers and the public at large. Then I'd cut the military by 80% or so, re-purposing "defense" companies with government contracts to build a sustainable energy infrastructure, and a sustainable agriculture system. Maybe then I'd focus on democratizing university governing structures while increasing funding both to eliminate tuition fees and to equip them to produce far more graduates with advanced degrees to form the core of a massive increase in adult education nation- and worldwide. Oh, and then there's the matter of instituting maximum work weeks and work-sharing requirements, to both increase free time and eliminate unemployment.

Unfortunately, taking a flight of fancy such as this soon puts one in the position of a Wiley E. Coyote, pausing and looking down to realize that he has left the ground beneath him a while ago, and is now hundreds of meters above the floor of a canyon. As one plummets down, reality becomes clear: the next presidential election will be between a Mormon private equity capitalist and a milquetoast reformer with the daring of an ostrich and a big crush on financiers. There. Is. No. Hope.

But then comes a book written by someone with over half a century's worth of experience with social change, to say: "those who say that nothing can be done because reactionaries control everything simply do not recall or do not know how impossible the world felt before the 'unexpected' explosions of the 1960s." Well - that is me. "Those who tell me the opposition to change, now, is so great that nothing can be done would do well to read just a bit about what it was like before the civil rights movement was a movement." Touché! OK, old man - whaddya got?

For one, he's no googly-eyed optimist, ignorant of just how fucked we currently are: "[c]ontributing to both the relative and absolute trends during much of the final quarter of the twentieth century was the fact that hourly wages of the bottom 60 percent did not rise as fast as inflation - with the result that the real income each person earned, hour by hour, was actually lower in 1995 than in 1973. For very large numbers of Americans, the only reason total family income rose - very modestly - was that people worked longer hours and/or spouses (mainly wives) went to work in increasing numbers. ... [M]any would have been better off if the economy had simply stood still at the 1973 level."

Check. But what to do about it?

That's coming. But first, Alperovitz demonstrates that the recognition that our economy is structured in an absolutely insane way is not exclusive to the Left. In fact, some of the most interesting parts of the book lay out the thoughts of older conservative economists and political theorists, which demonstrate that many of the core values of the Left may be shared more broadly than one might think. For instance:

"The 'Chicago school' conservative economist Henry C. Simons analyzed the underlying logic of [concentrated corporate] power and came to the conclusion that 'regulatory strategies' involved the worst of all solutions. Even public ownership was better, he felt - even from the perspective of free-market economic theory. At least it provided for public disclosure of information and open oversight. The state, Simons proposed, 'should face the necessity of actually taking over, owning, and managing directly ... industries in which it is impossible to maintain effectively competitive conditions.' Likely candidates included railroads, 'utilities, oil extraction, life insurance, etc.' For similar reasons Simons suggested that it might make sense for metropolitan governments to 'acquire much or most of the land in their areas.'"

Sure hasn't hurt Singapore.

But this is just one of the interesting asides in the book. The heart of the book is a revealing, surprising, and heartening description of how much progress has already been made, under the radar, in a staggering variety of cooperative, municipal and employee-owned enterprises. To provide just one example:

"In general, ESOPs [employee stock ownership plan-having companies] have been found to be as productive or more productive than comparable non-ESOP firms. Annual sales growth, on average, is also greater in ESOP than in non-ESOP firms. When ESOPs are structured to include greater participation, however, the advantages of worker ownership increase substantially. Studies [...] all confirm that combining worker ownership with employee participation commonly produces greater productivity gains, in some cases over 50 percent."

And this is just one example of hundreds that Alperovitz provides of a country experiencing the development of a substantial cooperative sector within an otherwise dog-eat-dog capitalist economy. As opposed to my flight of revolutionary fancy above, Alperovitz's vision is a piecemeal, ground-up process of continual development and improvement. His idea, it seems, is that the cooperative sector can grow to such an extent that its existence, and viability, will become apparent on a national level. And, when the next economic crash comes (just give the financial sector a little more time), the idea of cooperativism will be prominent enough that it will form the paradigm the federal government will have to turn to in reforming and rebuilding the economy.

Those who live in glass cult compounds shouldn't throw stones

2012-01-12T23:49:00.002-05:00

The Fantastical Crackpot Cult of Ron Paul by Bob Cesca

Yes, his economic ideas are pure crackpot. And yes, if he could actually implement them, they would cause an economic collapse in this country. (Around the world, I'm not so sure; I tend to think that even though much of the rest of the world has been ideologically colonized by Unitedstatesian theoclassical economics, they can't be that dumb.)

But could his libertard ideas actually be implemented? It is, after all, Congress that holds the power of the purse. And roll back the Civil Rights Act? Sure thing, right after Paul unilaterally renames the country, The Federated States of Ayn Rand. Certainly, Congress will comply.

But the biggest problem I have with Bob's article is when he writes: "The reality is that our political system has remained relatively intact for 224 years because most people, despite their gretzing, are actually comfortable with the continuity it provides. If voters were as militantly anti-system as they claim to be in anecdotal conversations, they would elect more incumbents [sic] and fringy third-party challengers."
- This is so idiotic it pains me to read it. Elsewhere, Bob uses the word "meme" in his writing, but apparently he understands the concept only as deeply as marketers do. Bob, let me explain: information is physical - information outside of a physical substrate does not exist. Hence political information must be delivered; and a mix of logistics and epidemiology governs its spread. Voters make their decisions based on what they know. What they know is based largely on what they see, hear and read through the largest media outlets. That's why voters elect more incumbents, and don't elect fringy third-party challengers. Not because the voters occupy some kind of intellectual Mount Olympus, from which they can perfectly see all potential candidates and all sides of all issues, and judiciously choose between them. If that were so, the entire commercial media would collapse overnight, as its marketing and advertising base realizes that it is actually totally ineffective and a colossal waste of money. And campaign fundraising would be entirely unnecessary.

Finally, as for Bob's claim that Paul isn't as anti-war as his statements would lead one to believe: hey, quite possibly. Though the few thousand bucks in campaign donations from employees of defense contractors that Bob cites isn't convincing evidence. I'd take my chances with Paul, and only for the militarism issue - which, incidentally, is the one aspect of his platform that he would as Commander-in-Chief actually have direct control over, and wouldn't have to fight with a less-loopy-on-economic-issues Congress.

After all, why not? I held my nose and supported Obama over McCain. And yes, maybe I will get burned again... after all, to paraphrase Bob, "[p]eople who are devoted to Barack Obama appear to be more interested in the fantastical, fictitious idea of President Barack Obama than the realistic manifestation of President Barack Obama."

Debt Is When Math and Violence Pervert a Promise

2011-08-18T00:19:00.000-04:00

Book Review of Debt: The First 5,000 Years by David Graeber

Debt: The First 5,000 Years is precisely what its title suggests: a wide-ranging exploration of the recorded history of debt. Which may sound a bit abstract, until one remembers that it was debt that nearly destroyed the entire global economy we all inhabit a few years ago. And it may sound a bit impersonal, until one remembers that personal debt is at historic levels. Actually, what it may seem is morose, depressing. What would be the value of such an exploration? What insights might it lead to?

Well, it might lead to "that great embarrassing fact that haunts all attempts to represent the market at the highest form of human freedom: that historically, impersonal, commercial markets originate in theft. [...] Who was the first man to look at a house full of objects and to immediately assess them only in terms of what he could trade them in for in the market likely to have been? Surely, he can only have been a thief. Burglars, marauding soldiers, then perhaps debt collectors, were the first to see the world this way. It was only in the hands of soldiers, fresh from looting towns and cities, that chunks of gold or silver - melted down, in most cases, from some heirloom treasure, that like the Kashmiri gods, or Aztec breastplates, or Babylonian women's ankle bracelets, was both a work of art and a little compendium of history - could become simple, uniform bits of currency, with no history, valuable precisely for their lack of history, because they could be accepted anywhere, no questions asked. And it continues to be true. Any system that reduces the world to numbers can only be held in place by weapons, whether these are swords and clubs, or nowadays, 'smart bombs' from unmanned drones."

In this book, Graeber reveals the way in which the ancient concept of "obligation" was piggybacked upon by the modern capitalist idea of "debt". That is, it reveals how a very ancient concept with deep cultural and psychological roots, which is intertwined with our sense of morality, has mutated into a very different, fundamentally different modern concept. The ancient concept is "obligation", the sense that we owe everything to our community, without which our lives would be completely impossible; and specifically, the sense that we are obligated to be generous to those who have been (or would in the future be) generous to us. The modern concept is "debt", which exists in forms of varying similarity to the ancient concept: from the very obligation-esque loan from a friend or family member, to the multi-billion dollar junk bond or derivative instrument. Personal, one-to-one, community feelings of obligation and mutual support were transmuted in and appropriated by our modern capitalist system, a system which is a total mismatch to the environment in which such feelings first arose and evolved.

In my estimation, there is a significant degree of similarity between Graeber's anthropological project and the mission of evolutionary psychology. In evolutionary psychology, attempts (of wildly varying success) are made to show how the several-hundred-thousand years during which homo sapiens evolved as hunter-gatherers in the savannas of Africa shaped our psychology. Evolutionary psychology explains phenomena like our taste for salty, sweet and fatty foods: in the environment our species evolved in, salt, sugar and fat were hard to come by, and their presence in a food source in the African savannas would indicate that it was nutrient-rich and healthy; hence, part of the reason for today's widespread consumption of junk foods that are nutrient-poor and unhealthy.

With that being said, this book makes no claim that the concept of debt is genetically hard-wired into our species. What it does explain, however, is that the concept of debt is at least as old as recorded history. This is important for two reasons. First, it strongly suggests that the modern incarnation of debt can only be fully understood by looking at its roots; which, being roots, must still comprise a significant portion of the whole. Second, it exposes as a myth the "history" of money that is a cornerstone of economics today. (By "economics", I mean only the dominant paradigm within economics today, the neoclassical school, which I refer to as "theoclassical economics" for its similarities to fundamentalist religion.)

Before I get into the mythology of economics, a bit of history: before Adam Smith, the reigning paradigm in economics was the theory that each nation should strive to export more than it imported, enriching itself from inflows of precious metals as it progressively improved its technology and productivity. Adam Smith and other laissez faire economists led an overthrow of that paradigm, at least within England, leading to a new paradigm of free trade (now called "classical") economics: the belief that by minimizing governmental interference in the realm of economic activity, the most economically advanced nation, England, would maximize its power and wealth. This belief was proselytized, with varying degrees of success (more in Portugal, less in Germany and the United States), by a key modification: that free trade would benefit all nations, not just the most economically advanced. Karl Marx then came along and postulated that the next logical step from classical economics would be socialism, because the way capitalism under classical economics worked would inexorably lead to the overthrow of capitalists and the birth of a worker-led global economy. For obvious reasons, this idea was anathema to those who profited from the contemporary economic system, and it did not take long for economics to retreat from the intellectual lineage that Marx had corrupted with his contribution. The neoclassical school was born in this retreat, which attempted to resituate the classical economics of Adam Smith within a realm of simplified mathematical models of the economy on a microscopic scale. Rather than examining national and global economics, neoclassical economists zoomed in to the individual level, assuming that self-interested rationality governed all choices, and then made national and global policy prescriptions based on their unscientific models of how individuals made economic choices. Their models suggested that the aggregate of individual economic choices would result in the best outcomes for all, if only governments would allow individuals to choose freely. The policy prescriptions of neoclassical economics gave immediate benefit to already rich individuals and the already technologically advanced countries, while promising deferred benefits to the poor and developing nations. (Their policy prescriptions were rejected by the governments of successful developers like the United States and Germany during their periods of development.)

The Great Depression was nothing less than a mindfuck to the then-dominant neoclassical paradigm. According to the neoclassical economists, it should not have happened, or at least it should not have lasted for as long as it did. What should have occurred, according to the orthodox view, was a corrective period during which wages would drop to the level at which capitalists would be willing to begin investing and hiring en masse, and then the whole economy would begin growing again. That did not happen. Instead, what finally ended the worldwide depression was massive government spending, creating credit upon sovereign debt, for the war. These real-world events powerfully shook the economics academy into breaking from neoclassical orthodoxy, at least a bit, towards a view of the economy as needing government intervention to fix serious, inherent flaws.

Fast forward a few decades, and the neoclassical paradigm has arisen again like a zombie. And along with it, Adam Smith's mythology of the origins of human economy.

A Graeber explains, Adam Smith claimed that human economies were first based on barter; then, someone decided to introduce coins to make things simpler; then governments decided to take over the currency business, issuing their own currencies and regularly screwing things up by spending too much and causing inflation. Since this core myth still survives, it is easy to see how the contemporary debate over deficit spending assumes that governments which issue their own currencies are nonetheless subject to the same kinds of budgetary constraints that keep individuals from spending beyond their means.

Yet, a myth is a myth. Governments which issue their own currencies are not strictly subject to the same constraints. To begin to understand why, we must begin by replacing myth with history.

"[O]ur standard account of monetary history is precisely backwards. We did not begin with barter, discover money, and then eventually develop credit systems. It happened precisely the other way around. What we now call virtual money came first. Coins came much later, and their use spread only unevenly, never completely replacing credit systems. Barter, in turn, appears to be largely a kind of accidental byproduct of the use of coinage or paper money: historically, it has mainly been what people who are used to cash transactions do when for one reason or another they have no access to currency."

Credit (and the flip side of the coin, debt) did not arise only after coinage; it has existed in countless forms since (and doubtlessly before) the beginning of recorded history. Most likely the first form in which it existed was in what Marx called primitive communism: the interdependence of hunter-gatherer tribes, each member of which would both expect to help and be expected to help everyone else in the group. This is undoubtedly the first form of credit and debt to emerge. It is just another way of conceptualizing the sort of altruism that characterizes our species, and which gave early evolutionary theorists such a headache ("how could it be that there is so much altruism in our species, when our evolution is supposed to be governed by survival of the fittest? Shouldn't those who betray the altruists for their own benefit out-compete, and eventually completely replace, them?"). This sort of in-group altruism is pithily summarized by an anecdote from the Greenland Inuit, one of whom was thanked profusely by a hungry Danish writer who had been given a gift of walrus meat by one hunter:

"Up in our country we are human!" said the hunter. "And since we are human we help each other. We don't like to hear anybody say thanks for that. What I get today you may get tomorrow. Up here we say that by gifts one makes slaves and by whips one makes dogs."

Or, by whips one trains dogs, and by gifts one trains slaves. In other words, in this hunter-gatherer society, each member was expected to behave altruistically to everyone, without expectation of recompense in any form. A gift for which one expects thanks or repayment is a form of debt; and debt creates slaves.

So first, a form of reciprocal assistance emerged. Then, as human groups grew larger and more divorced from their kin-group beginnings, the ties that bound kin groups together evolved to support a much larger superstructure. A sense of altruism emerged within homo sapiens which formed a key role in supporting kin group bonds. These bonds were the basis that allowed early humans to organize into tribes, in which each member would work for the benefit of the other members, even though fairly extensive interbreeding with other tribes would have minimized the actual genetic relationship between members. But how could this happen? Altruism itself, even when practiced solely within families, was extremely difficult for early evolutionary theorists to explain. After all, would not the most ruthless, back-stabbing individuals out-compete and out-breed their more altruistic kin, leading to a race of selfish individualists who would never sacrifice an eyelash for anyone?

But as evolutionary biologist Robert Trivers showed, it is perfectly reasonable that altruism within kin groups would have evolved. After all, self-sacrifice for those who share a healthy percentage of one's own genes can very well increase the longevity of those very genes. That much is clear. That much fits within the umbrella of natural selection. But what could account for much larger groups of humans, who share far less genetic similarity, cooperating among each other as if they shared a substantial percentage of genes? That, it would seem, cannot be explained by genetic evolution on its own. It would seem, rather, that ideas whose existence was predicated upon kin-group solidarity themselves evolved, and provided the basis upon which much larger, non-kin-group organizations could develop. The evolution of ideas is something we are all very familiar with, even if we rarely systematically examine the process - we are familiar with the evolution of baseball from the basis of cricket, the evolution of rock 'n' roll from the blues, the evolution of World of Warcraft from Pong, and so on. In much the same way, altruism within artificial groups (like 'my people', 'my nation') could not evolve without the ideas that grew inside the minds of those who had evolved to behave altruistically to members of natural, genetic kin groups.

And central among the ideas that grew along with the formation of kin groups must have been the idea of debt. Only, back when it first emerged, "debt" probably looked nothing like our modern conception of the idea. When it first emerged, "debt" would have been more like our modern conception of "obligation", in the same way that we feel like we "owe", "are obliged to", or "should" provide care to our parents and relatives, who cared for us in our youth. This ancient form of "debt" can very easily be understood as the cornerstone of a bond that allowed large-scale cooperation to evolve in the first place: it is as if to say, "everyone in my group will help me, therefore I will help everyone else in my group because I owe them one."

The evolution from ancient to modern conceptions of debt did not occur seamlessly. Or painlessly. As modern ideas of debt emerged from their ancient counterparts, traditional social relations were torn apart. For instance, as horribly patriarchal as many early societies were, and as much control husbands were given over their wives:

"[a] Mesopotamian husband couldn't sell his wife [...]. Or, normally he couldn't. Still, everything changed the moment he took out a loan. Since if he did, it was perfectly legal - as we've seen - to use his wife and children as surety, and if he was unable to pay, they could then be taken away as debt pawns in exactly the same way that he could lose his slaves, sheep, and goats. What this also meant was that honor and credit became, effectively, the same thing: at least for a poor man, one's creditworthiness was precisely one's command over one's household, and (the flip side, as it were) relations of domestic authority, relations that in principle meant ones of care and protection, became property rights that could indeed be bought and sold."

The first human societies would disallow the selling of one's wife or children as if they were handicrafts in a marketplace. One may be obligated to provide for the larger community as a condition for membership, but one would never have to pledge one's family members as slaves in exchange for any benefit the community might give. But the more newly-evolved concept of debt did allow a man to offer his wife or children as collateral for a loan - not quite the same as a simple sale, but potentially having the exact same effect. In the first human social environments, to someone who helped you in a material way you would only feel the obligation to continue to be willing to help that person out - but as time went by, and social organizations grew much larger and evolved conceptions of "debt", you would feel a sense of obligation much more specific and temporal, tied to a particular item and lasting for a specific period of time. This new concept of social obligation as "debt" also, as slavery shows, could be profoundly inhuman.

As markets developed and societies grew larger, and it became impossible to know each and every member of one's in-group, obligation-as-debt came to completely destroy social bonds for the unluckiest. A farmer forced to take out a loan and unable to pay it back due to drought or an unfavorable market might be forced into slavery, or to sell his family members into slavery. (In fact, in ancient Greece it was an aristocratic rebellion against these terrible outcomes of the marketplace that led women to be veiled and shut up in the house, to keep them from the market-infected values of the public sphere.) Hence, when it first emerged as an impersonal market mechanism, "debt" was feared due to its sinister ability to exile people from their communities and rob them of their freedom:

"As everywhere in the ancient world, to be 'free' meant, first and foremost, not to be a slave. Since slavery means above all the annihilation of social ties and the ability to form them, freedom meant the capacity to make and maintain moral commitments to others. The English word 'free,' for instance, is derived from a German root meaning 'friend,' since to be free meant to be able to make friends, to keep promises, to live within a community of equals. This is why freed slaves in Rome became citizens: to be free, by definition, meant to be anchored in a civic community, with all the rights and responsibilities that this entailed."

Interestingly, around 600 AD, human nature began to rebel against this most drastic consequence of the concept of "debt", and all around the world, "over the course of centuries, amidst much unrest and confusion, chattel slavery largely ceased to exist." Although the intellectual justification for slavery as the natural consequence of unpaid debts remained in place, it inspired such revulsion in people that it was extinguished in most parts of the world. Or, elaborate new theories were invented to justify its re-adoption: "[i]t is one of the great ironies of history that modern racism - probably the single greatest evil of our last two centuries - had to be invented largely because Europeans continued to refuse to listen to the arguments of the intellectuals and jurists and did not accept that anyone they believed to be a full and equal human being could ever be justifiably enslaved."

So just what is this concept of debt, this mutation of an original sense of mutual obligation within the small societies in which we as a species spent most of our time evolving?

"A debt ... is just an exchange that has not yet been brought to completion. [...] It follows that debt is strictly a creature of reciprocity and has little to do with other sorts of morality [...] Debt is a very specific thing, and it arises from very specific situations. It first requires a relationship between two people who do not consider each other fundamentally different sorts of being, who are at least potential equals, who are equals in those ways that are really important, and who are not currently in a state of equality... This is what makes situations of effectively unpayable debt so difficult and so painful. Since creditor and debtor are ultimately equals, if the debtor cannot do what it takes to restore himself to equality, there is obviously something wrong with her; it must be her fault. [...] This connection becomes clear if we look at the etymology of common words for 'debt' in European languages. Many are synonyms for 'fault,' 'sin,' or 'guilt;' just as a criminal owes a debt to society, a debtor is always a sort of criminal."

Or, to be more accurate, is considered to be a sort of criminal. Someone who shirked one's obligations to a traditional, small human society might do so in the form of murdering a community member, or hoarding community resources, among other things; and this would make one a criminal. But as the modern concept of debt emerged, it piggybacked upon the idea of transgressions against the community and came to be considered nearly criminal in its own right. This is a glaring error. The modern concept of debt only emerged once societies had grown large enough to create faceless, impersonal marketplaces; and the sense of obligation, from which debt arose, is at home only in small societies whose members would each have had a personal relationship with every other member. In a large, impersonal marketplace, having a personal relationship with everyone else is an impossibility; hence, it makes no sense to apply the morality of small societies to it. To do so is to commit a category error. And yet today, we still apply our ancient sense of morality to the new, fundamentally inapplicable concept of debt, 'putting new wine in old wineskins' as Jesus would say.

This misapplication has innumerable and fascinating implications for modern society. As just one example:

"Consider the custom, in American society, of constantly saying 'please' and 'thank you.' To do so is often treated as basic morality: we are constantly chiding children for forgetting to do it, just as the moral guardians of our society - teachers and ministers, for instance - do to everybody else. We often assume the habit is universal, but as the Inuit hunter made clear, it is not. Like so many of our everyday courtesies, it is a kind of democratization of what was once a habit of feudal deference: the insistence on treating absolutely everyone the way that one used only to have to treat a lord or similar hierarchical superior. [...] In English, 'thank you' derives from 'think,' it originally meant, 'I will remember what you did for me' [...] but in other languages (the Portuguese obrigado is a good example) the standard term follows the form of the English 'much obliged' - it actually does mean 'I am in your debt.' The French merci is even more graphic: it derives from 'mercy,' as in begging for mercy; by saying it you are symbolically placing yourself in your benefactor's power - since a debtor is, after all, a criminal."

...

So, now that we know to be wary of our conception of debt because is founded upon and partially composed of radically different ideas that make sense only in an entirely different sort of small-scale, primitive communist society, what else must we reexamine?

As it happens, the answer is: the entire structure of our contemporary world economy. And this reexamination must start from the beginning.

Traditional small-scale human societies, judging from the still-extant ones today that anthropologists have been able to study, had forms of currency. But these currencies were fundamentally different from the currency used today. They may have been rare feathers, or shells, or copper wires; but what differentiates them from a dollar or peso is that they were not redeemable for anything. Rather, they played a very limited and specific social role, such as making up for social transgressions, or paying for a rite of passage. But they were not "money" in the modern sense, something that can be used to trade for just about anything one might need or desire, from food to clothes to shelter. A form of modern money emerged as tokens of debt between individuals. Merchants with a reputation for paying debts might issue unmistakeable tokens of debt, say in the form of a chip or a notched wooden stick. The recipient of this IOU then might, rather than hold on to it and wait for the merchant debtor to redeem it, trade it for something else to someone who similarly trusted that the merchant would honor the debt instrument.

This, for obvious reasons, was only a very limited form of money. Few would accept as payment a wooden stick that was claimed to be redeemable for actual goods by an unknown merchant thousands of miles away. The birth of modern money required a midwife. A very powerful midwife, as it happened: governments, and their desire to wage war.

"Say a king wishes to support a standing army of fifty thousand men. Under ancient or medieval conditions, feeding such a force was an enormous problem - unless they were on the march, one would need to employ almost as many men and animals just to locate, acquire, and transport the necessary provisions. On the other hand, if one simply hands out coins to the soldiers and then demands that every family in the kingdom was obliged to pay one of those coins back to you, one would, in one blow, turn one's entire national economy into a vast machine for the provisioning of soldiers, since now every family, in order to get their hands on the coins, must find some way to contribute to the general effort to provide soldiers with things they want. Markets are brought into existence as a side effect."

So, while 'soldiers win battles, but logistics win wars,' government-issued money makes logistics possible in the first place. Hence, power-hungry kings soon latched on to the idea of issuing their own currencies, to create markets that would make military logistics much easier.

It is useful here to explain, in extremely simplified form, the difference between Modern (formerly known as Chartalist) Monetary Theory, and the outdated, conventional monetary theory. The outdated theory begins with Adam Smith's mythology about currency first being the spontaneous invention of private actors in a free marketplace choosing to use precious metals as a way of simplifying and facilitating trade. From this falsehood flows the idea that since governments forced their way into the realm of currency by issuing their own money, they must be kept in check just as would the most powerful merchant in a market who made himself the sole issuer of currency. After all, the temptation is too great on the part of the sovereign to use his money-creation powers to satisfy his own greed, destroying the value of the currency and the markets which depend on it in the process; so the smaller players need to band together to heap restrictions on governments to keep them from creating too much new money. This irrational and unspoken prejudice informs much of conventional monetary theory, horribly afraid as it is of inflation, and willing to countenance much unemployment and many unmet societal needs in order to keep it at bay. Better that governments spend less even if it leaves people suffering in unemployment, rather than employing them and possibly creating inflation that might rile investors.

Modern Monetary Theory (MMT), on the other hand, correctly locates the origin of money as the creation of the state. This is the conclusion all serious investigation has arrived at, even though it remains at the furthest reaches of mainstream Western economics today. John Maynard Keynes' "conclusion, which he set forth at the very beginning of his Treatise on Money, his most famous work, was more or less the only conclusion one could come to if one started not from first principles, but from a careful examination of the historical record: that the lunatic fringe was, essentially, right. Whatever its earliest origins, for the last four thousand years, money has been effectively a creature of the state." As the creature of the state, states have a great deal of freedom in its use. For instance, on the topic of spending, MMT holds that governments that issue their own currency are under no intrinsic limit; they can, and should, spend sufficiently to provide full employment to the population. The bugaboo of runaway inflation is one that governments need not be as terrified of as they currently are. As one of MMT's leading proponents, Bill Mitchell, puts it: "[a]ny spending that pushes nominal aggregate demand (spending) more quickly than the growth in real capacity will be inflation. That is the risk in all spending. There is nothing special about government spending in this regard. So, yes, under certain circumstances, government deficits could be inflationary but that begs the question as to why a prudent government would want to expand its deficit beyond full employment." In other words, government spending can cause inflation, but only under the same conditions that private spending can cause inflation: when there is too much money chasing too few goods and services. When natural, environmental, technological or human resources are left unused (which they by definition are whenever there is high unemployment), government spending can bring them into use by the economy. When such resources are fully tapped, further credit creation by the government or by private banks to allow more spending on tapped resources will lead to inflation.

This is a view diametrically opposed to the conventional monetary theory, with its basis in a myth about what money and credit are, in essence. But back to history:

"Chinese monetary theory was always chartalist. This was partly just an effect of size: the empire and its internal market were so huge that foreign trade was never especially important; therefore, those running the government were well aware that they could turn pretty much anything into money, simply by insisting that taxes be paid in that form."

This is interesting beyond the mere observation that the Chinese had stumbled upon the reality of modern money long before Western economists. It also points to a deeper challenge to our standard ideas about economics:

"[W]e're used to assuming that capitalism and markets are the same thing, but, as the great French historian Fernand Braudel pointed out, in many ways they could equally well be conceived as opposites. While markets are ways of exchanging goods through the medium of money - historically, ways for those with a surplus of grain to acquire candles and vice versa [...] - capitalism is first and foremost the art of using money to get more money [...]. Normally, the easiest way to do this is by establishing some kind of formal or de facto monopoly. For this reason, capitalists, whether merchant princes, financiers, or industrialists, invariably try to ally themselves with political authorities to limit the freedom of the market, so as to make it easier for them to do so. From this perspective, China was for most of its history the ultimate anti-capitalist market state. Unlike later European princes, Chinese rulers systematically refused to team up with would-be Chinese capitalists (who always existed). Instead, like their officials, they saw them as destructive parasites - though, unlike the usurers, ones whose fundamentally selfish and antisocial motivations could still be put to use in certain ways."

Not only is capitalism not particularly cozy with free markets, it is not terribly fond of freedom itself. "It is the secret scandal of capitalism that at no point has it been organized primarily around free labor." From the conquest of the Americas, to debt peonage, African slavery, indentured servitude, coolies, forced labor and the like, the history of capitalism betrays a tension with freedom bordering on open conflict. "This is a scandal not just because the system occasionally goes haywire, [...] but because it plays havoc with our most cherished assumptions about what capitalism really is - particularly that, in its basic nature, capitalism has something to do with freedom."

Above all, what Debt: The First 5,000 Years does brilliantly is dispelling illusions and revealing the folly in some of our foundational, yet largely unexamined, ideas. Nowhere is this more apparent than when Graeber shifts his gaze to contemporary political economic discourse about debt:

"[T]here is something profoundly deceptive going on here. All these moral dramas start from the assumption that personal debt is ultimately a matter of self-indulgence, a sin against one's loved ones - and therefore, that redemption must necessarily be a matter of purging and restoration of ascetic self-denial. What's being shunted out of sight here is first of all the fact that everyone is now in debt (U.S. household debt is now estimated at on average 130 percent of income), and that very little of this debt was accrued by those determined to find money to bet on the horses or toss away on fripperies. Insofar as it was borrowed for what economists like to call discretionary spending, it was mainly to be given to children, to share with friends, or otherwise to be able to build and maintain relations with other human beings that are based on something other than sheer material calculation. One must go into debt to achieve a life that goes in any way beyond sheer survival. [...] The chief cause of bankruptcy in America is catastrophic illness; most borrowing is simply a matter of survival (if one does not have a car, one cannot work); and increasingly, simply being able to go to college now almost necessarily means debt peonage for at least half one's subsequent working life. Still, it is useful to point out that for real human beings survival is rarely enough. Nor should it be."

...

Debt ends with a concrete proposal which is worth quoting at length:

"[W]e are long overdue for some kind of Biblical-style Jubilee: one that would affect both international debt and consumer debt. It would be salutary not just because it would relieve so much genuine human suffering, but also because it would be our way of reminding ourselves that money is not ineffable, that paying one's debts is not the essence of morality, that all these things are human arrangements and that if democracy is to mean anything, it is the ability to all agree to arrange things in a different way. It is significant, I think, that since Hammurabi, great imperial states have invariably resisted this kind of politics. Athens and Rome established the paradigm: even when confronted with continual debt crises, they insisted on legislating around the edges, softening the impact, eliminating obvious abuses like debt slavery, using the spoils of empire to throw all sorts of extra benefits at their poorer citizens (who, after all, provided the rank and file of their armies), so as to keep them more or less afloat - but all in such a way as never to allow a challenge to the principle of debt itself. The governing class of the United States seems to have taken a remarkably similar approach: eliminating the worst abuses (e.g., debtors' prisons), using the fruits of empire to provide subsidies, visible and otherwise, to the bulk of the population; in more recent years, manipulating currency rates to flood the country with cheap goods from China, but never allowing anyone to question the sacred principle that we must all pay our debts.
At this point, however, the principle has been exposed as a flagrant lie. As it turns out, we don't 'all' have to pay our debts. Only some of us do. Nothing would be more important than to wipe the slate clean for everyone, mark a break with our accustomed morality, and start again.
What is a debt, anyway? A debt is just the perversion of a promise. It is a promise corrupted by both math and violence. If freedom (real freedom) is the ability to make friends, then it is also, necessarily, the ability to make real promises. What sorts of promises might genuinely free men and women make to one another? At this point we can't even say. It's more a question of how we can get to a place that will allow us to find out. And the first step in that journey, in turn, is to accept that in the largest scheme of things, just as no one has the right to tell us our true value, no one has the right to tell us what we truly owe."

Karl Marx is to blame for our economic problems - Book Review of Trade, Development and Foreign Debt by Michael Hudson

2011-03-02T00:37:00.015-05:00

Those who regularly read my writings (both of you) will think this a very strange stance for me to take. Yet it is entirely true: the current woeful state of the world economy can be traced back to Karl Marx. This is because the predominance of neoclassical economics in the academy - and, from there, its dominance in public policy circles in the world's rich countries - originated as a reaction to Marx. Marx stained classical economics by powerfully arguing that capitalism would inevitably evolve into socialism. Hence, the entire edifice of classical economics was abandoned, and the neoclassical (also known as "theoclassical" for the nearly religious fervor its adherents have for it, even in the face of mountains of contrary evidence) school was born. As Hudson puts it, "[s]o inextricably had Marx identified the evolution of capitalism with the emergence of socialist institutions that the minds of orthodox economists snapped shut." Marx had taken the dominant contemporary economics of Adam Smith and David Ricardo, and so convincingly argued that the inevitable end result of the capitalist world system they described was socialism, that subsequent economists (or at least those derided by Marx as "sycophants of capital") were forced to retreat to a fantasy realm constructed entirely of mathematical models that only purportedly described the real world.

"The use to which Marx put Ricardo’s labor theory of value rendered it anathema [...]. An alternative body of economics was developed, a theory of marginal psychological utility rather than focusing on production functions and active government policy. […] According to laissez faire ideology a country’s first objective should be to maximize consumer utility at any given moment of time, as evaluated by current (rather than potential) market prices. There was no concept of losses suffered through trade, such as mineral depletion or forgone opportunities to develop. … [Neoclassical economists] down to the present day ignored the widening of international productivity differentials." Marx scared later economists both into the clouds and into a microscope, so to speak. By focusing on individual preferences on the micro scale, and on an aggregate of hypothetical individual preferences on the macro scale, economists abandoned protectionism's pragmatic focus on how to develop a national economy's productive potential. The result was an abandonment of earlier theories that actually dealt with the effect of trade policy on technological development, and explained how differential development between countries would allow those in the lead to grow exponentially faster than those without a productivity edge. Replacing these realistic theories were quasi-religious theories that posited, a priori, natural endowments that determined what were supposedly the most profitable economic endeavors for any given country - as if Britain had been endowed at some point with cutting-edge steel-making technology, while Ireland had been endowed (by God?) with great soil for growing potatoes.

Part of the blame for economics' flight into vested-interest-serving, fanciful irrelevance belongs on the shoulders of Thomas Malthus. Other than the authors of holy books, it would be hard to find find an author whose ideas have been more soundly trounced by a trip through the gauntlet of reality, while at the same time being widely believed to be true. (Freud and Ayn Rand might come in a close second.) Since he published his theories about the essential character of economics being determined to a large extent by the exponential growth of population and the linear growth of agricultural production, the world has seen - in the rich countries at least - a marked reduction in population growth and a nearly exponential growth in agricultural production. In other words, nearly the exact opposite of what Malthus predicted. Malthusian armchair theorizing could be what inspired neoclassical economists to assume diminishing returns in all industrial enterprises, as if the world were inherently as fatalist as one deficient product of the Victorian age believed it to be. Hudson goes beyond affinity to Malthus' delusions to explain how this devolution in economic theory occurred:

"The reason for assuming diminishing returns was not because this characterized economic reality. Rather, it was logically necessary to ‘close’ heuristic economic models so as to mathematically determine a single optimum mix of labor, capital and land for each commodity and an optimum specialization of production for each country. The new academic vogue of scientific economics was to translate arguments into mathematical terms, in ways that suggested neat equilibrium solutions to each hypothetical problem.
The real world was in no such equilibrium. …[Early economists] perceived that as England gained a world monopoly position by virtue of its self-reinforcing head start, economies of scale and financial efficiency, less active government diplomacy was needed - as long as other countries refrained from subsidizing their own industrial development. (A few gunboats often were all that was needed, not formal imperialism.)

The industrial and agricultural revolutions implied government policies to coordinate the training and education of labor and other infrastructure spending. But free traders excluded the analysis and consequences of increasing returns from the realm of international economics, and from that of domestic economics as well. Its dynamics were beyond the ability of simple arithmetic formulas to handle, at a time when mathematical treatment of subject matter had become the very symbol of scientific method. Increasing returns implied a plethora of choices in an explosive world, not a single stable solution in an entropic world. It implied a focus on change, not preservation of the status quo. It suggested inherent tendencies toward monopolization of production, both for nations enjoying a head start and within each country. […]

Despite these realities, free traders claimed an unwarranted generality for their conclusions by limiting the number of factors considered in describing economic development. Stripping economics of its classical political, social and technological concerns, they narrowed economic methodology[...] The assertion that free trade results in an optimum development policy for all countries, irrespective of their level of development and productivity differences, can be defended only by dropping the technological, historical and institutional aspects of trade theory.”

And to paraphrase (as Hudson does, in a slightly different form) R. L. Nettleship, “...the most fatally unpractical thing in the world is to go on using methods which take every factor into account except the one upon which the whole result ultimately depends.”

But economics' break with reality was not a development initiated by Marx. Throughout its history, economics has been particularly susceptible to corruption by political developments. For instance, in pushing for laissez faire against the protectionist/mercantilist orthodoxy of the time, Adam Smith was producing an economic theory that would be opportunistically championed by those segments of the British economy that would benefit from them. And this pressure - whether consciously or unconsciously - led him to avoid addressing the most cogent points of his economist opponents:

“... realism was not the objective of free traders. [Adam] Smith and his followers were not merely being naive in ignoring the mercantilist points. Their abandonment of the most sophisticated mercantilist analysis served politically to avoid discussion of assumptions that would produce protectionist rather than free-trade policy conclusions for poorer countries. For the past two centuries, free traders have shied away from introducing productivity analysis or realistic capital-transfer theorizing into their discussions, or acknowledging international movements of skilled and unskilled labor and capital. … The growing inequality among nations … suggested that if poor countries refrained from protecting and actively steering their economic development, they would suffer a growing dependency and consequent loss of economic options - exactly what has happened in practice. To avoid coming to this conclusion, free-trade theory ever since has narrowed its scope to become a caricature of global reality."

At a certain stage in a country's economic development, protectionism becomes outmoded. Once a country's means of economic production are advanced enough, it benefits that country more to advance a global economic regime of free trade, so its more advanced, more cheaply produced products can compete with other countries' less advanced, more expensive products without any foreign state intervention aimed at leveling the playing field. Latter day advocates of free trade did not arrive at their position from adherence to a sense of cosmopolitanism; rather, they advocated free trade out of a sense of nationalism, out of a belief that global adoption of free trade policies would benefit their own country disproportionately. This may come as a shock to many a self-styled adherent of Adam Smith's ideas today; so too nearly a century ago. Hudson quotes John Shield Nicholson writing in 1918: “...the present-day Free Trader will find in his Adam Smith a series of shocks and surprises. Instead of being cosmopolitan, Adam Smith was intensely nationalist, or rather Imperialist.”

Supporting the idea that the "free trade" orthodoxy that supplanted mercantilism in England was motivated by nationalist concerns was the fact that the "free trade" policies implemented by the British empire did not undermine its profitability. Rather the opposite. By freeing up funds that might otherwise be spent on the military, "free trade" policies allowed for even greater profitability for the private sector, hence greater national economic power. Replacing direct military force, "free market" forces were employed to garner the same benefit from Britain's colonies:

“Under freer market relations, trade was conducted along basically the same lines of specialization that the old colonial systems had brought into being. Market forces induced citizens in the liberated colonies to produce the foodstuffs and materials they had been led to produce under England’s trade and navigation acts. The legacy of colonial regulations, in conjunction with the sparsely populated condition of Europe’s white colonies and the squalid plantation organization of its colored colonies, had nurtured a specialization of world labor and dependency that henceforth was maintained by market incentives alone. The New World, Africa and Asia became thriving agricultural or mining regions rather than industrial rivals to Europe - until the United States adopted protectionist policies after its Civil War.”

The United States' turn toward protectionism is covered in greater detail in Hudson's America's Protectionist Takeoff, 1815-1914. Just like Britian's adoption of "free trade", the United States' adoption of protectionist policies was due to nationalistic concerns. And just as today's Unitedstatesian economists are ignorant of their country's protectionist economists and the protectionist policies they advocated (successfully, to the great benefit of the U.S. in the mid to late 19th century and early 20th), Britain too fell victim to the same sort of directed amnesia. "The nationalistic ideal of British free trade, like that of earlier mercantilism, held that strong economies would grow stronger while poor countries would become more dependent. […] This is the kind of admission - almost a secret knowledge - that subsequent free traders have been eager to forget.” Likewise, today's neoclassical (or theoclassical) economists have either been quite eager to forget the successes of the United States' early protectionism, or have never learned about it in the first place.

But back to Britain's transition from mercantilism and protectionism to laissez faire. Hudson explains how parliamentary debates were won by the free traders through their use of nationalist and imperialist arguments that a global free trade regime would benefit Britain above all. But after the free traders had won in the British Parliament, there was still the rest of the world to convince. And arguments based on English superiority were not likely to win many adherents outside of the British Isles. So the free traders argued instead that each country had been endowed (again, presumably by God) with certain unique advantages, or "factor proportions", that should be exploited to their fullest by focusing exclusively on producing them. In David Ricardo's words, whatever a given country has a "comparative advantage" in producing should be produced to the exclusion of everything else. Then, the products in which a given country has a comparative should then be traded within an international free market for all other needed products. Therefore, if Cuba "just so happened" to be better at producing sugar than England was, Cuba should focus entirely on sugar production, and trade its sugar for everything else it might want or need. After all, its "factor proportions" were better suited to sugar production, because it had good soil, a warm climate, and no steel industry (and a colonial history that turned it into a sugar producer). But factor proportions are not endowed by the Almighty. They are the result of geographical accident in the case of climate and soil, and the result of conscious human planning, and government intervention, in the case of industry. Hudson strikes at the core of factor proportion nonsense with a sliver of biting wit: “[t]he system of European land grants in the North and South American (and later African) colonies established local oligarchies that sponsored a centralized economic and political dirigisme in the context of latifundia/microfundia systems which still persist today. When the Native Americans refused to submit to the plantations system and its personal servitude, armed appropriation of their land drastically reduced their ‘factor proportions.’” Elsewhere, in revealing Ricardo's theory of comparative advantage to be seriously deficient due to its ignorance of history and politics, Hudson quips: “England prohibited India from rivaling the mother country in any commodity that its own producers desired to export. But gunboats do not appear in Ricardian trade theory."

In two sentences each, Hudson strips the arguments of the free traders bare. Factor proportions, or that which countries have a comparative advantage in producing, have been determined not only by geography, but by political, economic, cultural and military history. In other words, "natural endowments" are far from natural. South Korea has a comparative advantage in producing kimchi thanks to a cultural endowment, but it has a comparative advantage in shipbuilding thanks to the "endowments" of heavy state intervention in the economy, a history of economic aid and military protection from the United States, and its location near a number of Communist countries during the Cold War. Which are not "endowments" at all.

Such real-world considerations were not for the early free-traders, however. Once they had won over the British Parliament, their goalposts were shifted from convincing nationals of a country at the vanguard of economic and technological development, to convincing nationals of the rest of the world's countries, which were economic stragglers. Therefore, they made an amnesiac turn away from their country's own history of economic development, towards an abstract realm of reasoning with little basis in actual historical experience, to which they gave the euphemism "economic science." In this fantasy realm, ideas, theories and mathematical models ruled supreme, towering above the hoi polloi of actual history and pragmatism.

“Having established free trade at home over the course of a century, England’s strategic problem became one of how to export laissez faire ideology as a means to deter foreign protectionism and thereby keep foreign markets open to English industrial exports. The last thing called for in this ideological initiative was to repeat the arguments that had won over England’s own Parliament, namely that free trade would uniquely benefit England as the leading industrial power at the expense of poorer economies. Henceforth free trade was supposed to make countries more equal and, in the process, to increase the resources of all trading ‘partners.’ But once hitherto protectionist countries opt for free trade, it usually is to close off advantageous lines of investment for less developed countries.”

For instance, the free traders denigrated the use of tariffs - which Britain had used to its great advantage when its industries were still infants - by creating mathematical constructs in which tariffs were simply excess costs that consumers had to pay. By this logic, the tariffs that Britain had levied against foreign textiles while its textile industry was in its infancy only served to impoverish British consumers while doing absolutely nothing else. Not expanding the domestic market for British textile manufacturers, or financing infrastructure built by the British state. "By treating tariffs as a pure cost borne by the nation’s consumers, the free trade model of comparative costs has nothing to say about social utility as such, dismissing it as an ‘externality,’ that is, of little importance to private-sector balance sheets. Tariff revenues are treated as if the money simply was extinguished, not to finance internal improvements and related economic infrastructure.” As it happened - in the real world, if not in theoclassical economists' fantasies - tariffs proved quite effective in protecting infant industries in countries that are now rich, and in financing infrastructural improvements that facilitated economic development.

To be fair, yesterday's theoclassical economists were not wrong only about tariffs. They were wrong about many other things besides. For instance, they thought that rising labor costs - in other words, higher wages for the masses of a country's workers that would allow them a higher standard of living - would destroy competitiveness. (The more things change, the more they stay the same.) English theoclassical economists of the late 19th century preached that countries needed to keep their wages low, or else they would be destroyed by competition from poorer countries. In opposition to this idea, American protectionists argued that well-paid labor would always beat out what they called "pauper labor". This was because well-paid labor was well-educated, highly-skilled labor, of the sort that could operate the most sophisticated labor-saving machinery of the day. So well-paid labor could actually out-compete pauper labor because the unit cost of the products made by the former would be, despite higher labor costs, lower than the products made by pauper labor, which would be unable to operate high-tech machinery. Hudson quotes the late 19th-century Unitedstatesian economist Francis Amasa Walker: “In the contests of industry the civilized, organized, disciplined and highly-equipped nations may safely entertain much the same contempt for barbarous antagonists as in the contests of war.” And as history would have it, Walker was right: countries with well-paid, highly-trained and educated labor out-competed those countries whose "factor proportions" or "natural endowments" included uneducated, easily-exploited pauper labor.

But there is method to the theoclassical economists' madness. Political expediency favors the economic theory that serves to further enrich wealthy countries, at the expense of all others:

“...the breadth and scope [of mainstream economics] widens as we look further back in time. Early observers perceived with remarkable clarity the political context and positive feedback character of England’s industrial head start, as did subsequent protectionists in America and continental Europe in mapping out their own long-term national strategy. From the outset, English mercantilism and subsequent protectionism, traced the positive feedback and obsolescence processes that shape market relations, and extended the analysis of trade and development into the political and social sphere. Most of these perceptions were voiced by men well placed in the political leadership of their times.
The subsequent narrowing of scope - away from long-term development to short-term market analysis, away from the monetary and financial context of trade to a ‘barter’ theory, and away from a government policy-oriented focus to one of laissez faire - has been politically dictated by the success of England, the United States and subsequent lead nations in achieving dominant intellectual as well as economic status. It seems ironic that the more successful a nation becomes, the narrower and more short-term tends to be the scope of its international economic theorizing - almost as if it would pull up the policy ladder behind it. The aim is to impose a superficial trade theory and financial austerity on the less developed periphery, treating their resources as ‘endowments’ dealt out by nature rather than fostered actively by national policy.”

Economic power has been exerted most clearly in the field of economics itself. It is not only the case that economists departments in most of the world are completely dominated by the theoclassical paradigm; in addition to this, in the few departments to offer a course in economic history, economic history is severely censored:

“Free-trade histories of international economics reflect the degree to which manipulating the history of ideas may become a ploy to maintain the status quo. As George Orwell observed, whoever controls the past controls the present, and hence the future. The history of international trade and financial theory has fallen prey to the censorial spirit of free-trade ideology blocking knowledge of the development of rival theories. Protectionism for its part has relied more on political lobbying than on academic theorizing, leaving the field of international economics as a preserve for laissez faire advocates who brand alternative views as lying outside the subject matter of the discipline they have narrowly re-defined.
… A large part of the problem stems from trying to make economics a ‘natural science,’ treating society in much the same way one might view physical nature. We must beware of writers who use the term ‘nature’ (as in natural endowments) as a code word for the status quo. To follow nature has meant to acquiesce in the existing division of labor between lead nations and poor countries. This commitment to defend the status quo has led free-trade theory to treat international trade in isolation from finance, technology, demography, ecology, politics and the military dimension.”

This isolation allows theoclassical economists to advocate policies that inhibit broad-based economic growth that would benefit the masses, and only serve to further enrich the already rich. It is no accident that the greatest economic success story of the past half-century, China, has achieved its success by ignoring the theoclassical economic orthodoxy, and following a state-directed economic policy. Nor is it an accident that most of the rest of the world, when following policies advocated by theoclassical economists, has seen a widening of the wealth gap and continued pain for the growing ranks of the poor. “Whenever we find so great a degree of unreality to characterize a theory that backs an economic doctrine and its applied models, we should suspect special interests to be at work. It hardly is surprising that the ideology of today’s global orthodoxy reflects the self-interest of the industrial creditor nations.”

This helps to explain how an economic theory that recently led the world to the brink of global economic collapse is still placed on a pedestal. Although its models and predictions are demonstrably - manifestly - wrong, it nonetheless serves the interests of the world's powerful. Hence, its staying power. “If insanity is doing the same thing over and over again in the expectation of a different result, then neoliberal trade theorists are at best useful lunatics for international predators. The usual term is ‘useful idiots,’ but it takes great intelligence to persist in wrong-headed, counter-productive policies in the face of consistent failure. The problem is learned ignorance, which typically goes hand in hand with an almost religious faith in ideological labels. ‘Nothing is so passionate as a vested interest disguised as an intellectual conviction,’ explained the main character in Sean O’Casey’s play The White Plague.”

Hudson concludes his book with a summary which should be tattooed on the foreheads of all graduate students in economics: “All economies are planned, and all markets are structured. The key to understanding their dynamics is to ask who is doing the planning and structuring, and in whose interest countries will place decision-making. Will it be in the hands of elected officials with a clear empirical knowledge of reality to guide their national economic laws, or in those of academics serving special interests as they turn theories of international trade, lending and debt into a disinformation system?”

Guide to the Perfect Latin American Idiots' "Guide to the Perfect Latin American Idiot"

2011-02-24T11:35:00.017-05:00

            To begin, I would like to apologize for what follows. Below I have strayed from the beliefs of my elders who, what with the experience differential between us, should know better than me. I am sorry. I am not sorry for contradicting them and calling them fools of the very worst sort, at once destructive, well-meaning, oblivious and self-righteous. I am sorry – that they should know better than me, but do not.
            On the one hand, it is difficult to hate the perfect Latin American idiot authors of Guide to the Perfect Latin American Idiot. They are so adorably idealistic that one almost wants to pat them on the back and cheer them on with a harmless cliche like "if you apply yourself, you can achieve anything." Yeah! Let's build this perfect society of freedom for entrepreneurs, free of monopolies, parasites, and inept government bureaucracy! Let's roll!

            This becomes very difficult, however, when one contemplates just what their ideology is (not that they would recognize that their beliefs constitute an ideology - to them it is pure science - but that is a trademark hallucination of the ideologist). Not that it is reprehensible on its face; on the contrary, it is quite attractive when understood superficially (as the authors do). As they understand it, their ideology is not the same as that of the traditional Latin American right. They do not support military dictatorships, they support democracy. They do not support massive, monopolistic corporations whose cozy relationship to the state guarantees them protection from what can be a very unkind market. They do not support large military budgets, repression of political dissent, or human rights abuses. Well, depending on how you define “human rights”.
            But they reserve their most potent venom for those on the left who believe that the unfettered capitalist marketplace is not the ideal organizational structure for a society's economy. Because they are heartless cheerleaders of wealth and power, and secret despisers of the poor and weak? Because they are greedy taskmasters of the same mind as the Japanese finance magistrate who likened peasants to sesame seeds: the harder you crush them, the more they produce? Heavens no! The authors are enlightened liberals, and the human right to a basic standard of living is as dear to their hearts as the right to run a business. The thing is, they are simply more enlightened than the Latin American "idiots" they write about. They, unlike their benighted counterparts on the left, understand the science of neoclassical economics. They know that, however pure and laudable be the intentions of social reformers who seek to use non-market mechanisms to uplift the poor from their heartbreaking plight, their methods are doomed to failure. Oh sure, for a few years their methods might produce the illusion of poverty reduction, but one need only wait long enough to see the foolish, bleeding heart lefties' - sorry, idiots' - programs fall apart, leaving the poor in an even worse situation than before.
            You see, thanks to their education in neoclassical economics, the authors know that an unfettered capitalist market produces more wealth than any other system. It may shower immense wealth on a tiny fraction of the population, but the trickle emanating from that fraction upon the lower orders is still greater than they would be able to expect under any alternate system. And once you start messing with that system, say with progressive taxation to redistribute wealth to the poor, or environmental regulations that increase the cost of doing business by eliminating profitable externalities, you introduce "distortions" into the capitalist marketplace that create "inefficiencies" in the system. The unfettered capitalist system, the authors understand, is perfect. It is less an economic system than a set of natural laws. And messing with these laws, even with the most blameless of intentions, would produce the same result as messing with the laws of physics - say, by increasing the strength of gravity to compensate for the oppression it faces from the bullying of the electromagnetic force or the orders-of-magnitude-more-powerful "weak" nuclear force. It might make us feel good at first to buck nature to improve the lot of gravity. Now gravity can raise its head high in the presence of electromagnetism, and it makes our workouts that much harder, and more fitness-enhancing. But in the end, our well-intentioned intervention will throw the whole universe out of equilibrium, and we very well may end up in the singularity of a black hole as a result of our good deed.
            The idealistic authors believe that the world's poor are poor only because they have not been allowed to experience capitalism fully enough. The traditional rightist's preoccupation with "races" and racial hierarchies are not for them. They have full faith that the poorest African or Indian tribe can produce savvy small business owners and visionary CEOs, if only given the chance. That is, if only they lived in a country without government regulation of the economy. Namibians could very well be the world's next up-and-comers, if only they would take a flamethrower to their law books, and a bulldozer to their bureaucracies. Sadly, however, it takes above average intelligence to be able to grasp the truth and wisdom of this prescription, and there are always monopolists, government bureaucrats and leftist idiots lying about, plotting to crush the poor by impeding the emancipatory arrival of neoliberalism.
            What makes the authors so adorable is their indomitable idealism, and their refusal to be corrupted by the actually existing world with its messy history and impure economies. To them, the definition of the ideal economy is that which belongs to rich countries. These ideal economies - the rich countries' economies - are the same thing as the neoliberal ideal. It is a trivial detail if the countries that are now rich have not actually followed the authors' neoliberal economic prescriptions - what is important is that countries that are now rich can be associated (arbitrarily, and without reference to reality, by the authors) with neoliberalism. It does not crush the authors' idealism that today's rich countries did not follow neoliberal prescriptions to become rich; even the fact that today the rich countries do not fastidiously follow neoliberal prescriptions cannot defeat the authors' devotion to their ideal world. A world which does not exist.
            The authors have much in common with those socialists (that is, "idiots") who believe in a pure, unalloyed socialism that exists only in the ether, because it has never actually been implemented. One can hear this type explaining what socialism really is; how it is democratic, egalitarian, and does not allow for either totalitarianism, environmental degradation, or a bureaucratic elite. Likewise, you can hear the authors explain what neoliberal capitalism really is: not a system of economic organization but the absence of such, where individuals are free to do what they will, resulting in the flourishing of entrepreneurship, the withering of stifling bureaucracy, the creation of untold wealth and the elimination of poverty. But whereas the aforementioned socialists will happily criticize nominally socialist countries like China and Cuba, expounding on the many ways in which they do not practice real socialism, the authors seem incapable of criticizing their beloved nominally-neoliberal capitalist countries for their myriad ways in which they fall short of the neoliberal ideal.
            But what makes the authors truly irresistible is their style. They write in a fun, irreverent, almost snarky (but not quite - not enough sarcasm) style that reads like a rare issue of The Economist, one in which its writers stray from their own "style" guide and demonstrate creativity. Granted, they sometimes let loose a stinker. But for every overdone flop, like "Didn't they teach us that the poor shall inherit the Kingdom of God and tell us, with spectacular metaphors of humpback ruminants and metal rods, of the almost impossible prospect of the rich setting foot in Paradise?", there are two or three "the Peruvians, ancient courtiers of the Incas and the viceroyals, also declared [Simón Bolivar] dictator, adding - just in case - the very finite adjective 'for life' to this designation." Their cause, the rescuscitation of liberal economics after it was buried at the hands of the Great Depression and Keynes, is a deeply conservative one. So the overall impression these skilled writers give is of Voltaire defending the Catholic Church against heretical free-thinkers. But more than being conservative, their cause is fatally discredited and doomed to oblivion. Neoliberalism has pushed itself sharply off the cliff towards its final destination: to be a historical laughingstock, an anachronism which, like Creationism, will have children of future generations scratching their heads at just how previous generations could possibly have been that stupid. As Max Planck would recognize, neoliberalism will not be replaced by something less bogus in the minds of its devotees - more likely it will die with them. What is certain is that the economic orthodoxy the next generation imbibes will be quite different from neoliberalism. So the overall effect of reading 1996's neoliberal triumphalist Guide to the Perfect Latin American Idiot in 2009 is that of watching a sharp-witted comedian tear through a crowd, humiliating the easy targets in the audience. Oblivious to the fact that some prankster has cut out the backside of his trousers, and the audience's laughter owes less to his jokes, and more to his ass sagging out the back of his pants.

Before we begin

Here is a slightly modified excerpt of Mario Vargas Llosa's introduction to the Guide to the Perfect Latin American Idiot:

The idiocy pervading this guide is not congenital, nor a cerebral or spiritual phenomenon. This type of idiot arouses affection and sympathy or, even worse, commiseration, but not anger or criticism. At times he even inspires secret envy; there is something that resembles purity and innocence in those simpletons of nature and in their spontaneous idiocy. This idiocy documented in these pages exists not just in Latin America – it runs like quicksilver and spreads its roots everywhere. False, and conveniently so, it has consciously been spread within and then from the academy, those accepting it doing so out of laziness, ethical sluggishness and social opportunism. It is ideological and political but above all frivolous, because it reveals an abdication of the ability to think for oneself, to compare the words with the facts they claim to describe, to question the lemming-like acceptance of conventional wisdom that replaces thoughts. This idiocy is devoted to the prevailing trend; always carried away by the popular tide, it worships fantasies and is defined by laughable oversimplifications. (xiv)

Therefore, I have decided that the authors of the Guide to the Perfect Latin American Idiot would be better described as dreamers than idiots. “Idiot” is no longer used as a word to describe someone afflicted with a mental handicap, but rather as a mere insult, like “asshole”, “dickhead” or other epithets that anthropomorphize erogenous zones.

Defining Our Terms

It is rightly considered wise to learn from one's mistakes. In this instance, however, we can learn from our dreamers' mistakes – namely, a failure to define their terms. Our dreamers have good reason for failing to define their terms: because doing so would fatally undermine their arguments.
For instance, our dreamers refer to themselves as economic "liberals". But this is incorrect. Adam Smith was an economic liberal. Yes, like our dreamers this liberal did believe - selectively oblivious to the rabidly[1] protectionist economic polices that were intrinsic to England's economic and technological attainments - that the path to development was that of free trade. (Ironically,
Adam Smith's government job post-publication of Wealth of Nations was as Commissioner of Customs and the Salt Duties – an ideological mismatch as keen as the Pope becoming the CEO of Hustler Magazine, Inc.) But Adam Smith's idea of free trade was of an entirely different sort than that of our modern dreamers. Smith was not a proponent of laissez faire, because he was intelligent, or simply observant, enough to know that free markets leave many essential goods and services unprovided. Like schools and infrastructure. He also did not think that the naked pursuit of individual self-interest is the infallible foundation of a good society. He went to great lengths – providing some fifty examples in the Wealth of Nations – to show how self-interest could undermine societal interest. He was supremely critical of efforts by powerful interests to use government to advance their self-aggrandizing economic aims.

And this, more than anything else, describes the economies of today's successful – in dreamer terminology, “liberal” – states. What else do the governments of the United States, the European Union, Japan, Korea, China, etc. do, but attempt to advance the economic interests of their most powerful constituencies? The United States' government will rail on and on about the evils of protectionism, but when it comes to farm subsidies, principles take a back seat to the agribusiness lobby. Japan's government might be a member in good standing at the World Trade Organization, but its keiretsu like Toyota owe their contemporary competitiveness to state solicitousness and support during their infancy. European governments talk a good game about free trade, but Airbus would be just a bus company if exposed without nanny state support to the harsh winds of the free market.

Classical liberalism, epitomized by economists like Smith, argued for a maximal role in societal decision-making for capitalist markets – but properly functioning, competitive capitalist markets. True liberals are less like Lawrence Summers and more like Ron Paul. They believe that society is best run when every societal need is either provided by competing small enterprises, or by government stepping into a gap caused by excessive risk or lack of profit-making opportunities. In sharp contrast to our dreamers, Adam Smith was anti-corporate to an extent that would shock our modern sense of economic propriety. He saw the primitive corporations of his day as little more than conspiratorial cabals, and famously wrote that “[p]eople of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”[2] The corporation, which even our dreamers know, when awake, is the dominant entity in the world's economic activity. So when our dreamers call themselves liberal – while not raising a whimper of protest against the routine and predictably anti-competitive activities of the modern corporation – they are revealing their ignorance of the very words they use.

A more apt word to describe their position on economics is neoliberal. Neoliberalism, like its name would suggest, is a variation on liberalism. While liberalism can trace its origins much farther back, neoliberalism arose in the late 19^th century in reaction to the criticisms of capitalism made by economists like Karl Marx. While Adam Smith criticized the form of capitalism that existed in his day for its failure to live up to his ideal form of capitalism, Marx criticized the capitalism of his day for its inherent, unavoidable inability not only to live up to Smith's ideal, but also to live up to any truly desirable final state of economic organization. Neoliberals reacted to this vein of criticism by enshrining ever higher an impossible ideal where the state plays a purely supervisory, referee role to ensure that market forces are unhindered and allowed to perform their beneficial work. They had to entrench themselves ever further into this ideology, buttressing their position with the pseudoscience of Social Darwinism, as the United States and Europe began to interfere more and more with capitalist markets during the Progressive Era. Neoliberals were finally relegated to the lunatic fringe after the Great Depression, during which neoliberal ideologues would rant as if on a Hyde Park soapbox about how the depression was caused by government polices that simply did not conform enough to the economic ideology such governments had largely been following. Meanwhile Keynesianism, which advocated a much greater role for the state in alleviating the deficiencies of free market capitalism, gained predominance in intellectual and policy circles around the world.

Yet due to a number of factors – primary among them the costs of the war against Vietnam, the “guns and butter” war and social-spending policy with progressively less progressive taxation in the United States, global overproduction and the lack of effective demand in the Third World leading to a pervasive economic stagnation in the 1970s – neoliberalism made a comeback. Armed with a religious belief in the saving power of free, unregulated markets, and financed by business interests who saw them as brilliant prophets and evangelists at best, and useful idiots at worst, neoliberal economists gained complete predominance in both the academy and governments around the world. Neoliberalism has been implemented in its extreme, or pure, form in a number of countries: for instance, Chile in the 1970s, Russia in the 1990s, and Iraq in the 2000s. Neoliberal policies have been implemented to a lesser extent throughout the world since the 1980s; to a great extent in Argentina in the 1990s, to a lesser extent in France today.

So despite their desire to be considered “liberals”, the intellectual descendants of economists like Adam Smith (who would have considered them impossibly stupid), our dreamers are neoliberals. Yet despite the international ascendance of neoliberalism and its implementation (from partial to complete) in most of the world's countries, our Latin American dreamers are angry and disappointed. Like the (very few) members of the Revolutionary Communist Party USA, our dreamers see a world full of only nominally neoliberal capitalist countries – and the rest are corrupted and impure for their failure to sufficiently implement the one, true dogma. For them, only rich or rapidly growing economies are properly neoliberal (again, remember, the dreamers would prefer their proprietary and inapt use of the word “liberal”).
Other crimes against language our neoliberal dreamers innocently commit occur when they discuss socialism and Gross Domestic Product (GDP). Socialism, as properly understood, is any variety of systems wherein the means of production – factories, intellectual capital, productive technology, business organizations, etc. – are controlled by the community as a whole. Such a definition can cause some of the same problems as the definition of neoliberalism (which is a form of capitalism wherein governments play a very limited role as referee and security guard in society's economic organization, and allow unregulated business activity to distribute wealth). That is, both are ideals, and the real world rarely allows for the instantiation of ideals. So one will rarely hit the mark squarely when describing one state as “socialist” and another as “neoliberal capitalist”.

Neoliberalism is based on the school of economics known as neoclassical economics, which is predominant to such an extent that to say that one studied “economics” in university is to say that one studied neoclasisical economics. Neoclassical economics (the school of economics) is to neoliberalism (the economic policy prescriptions) what the classical economics of Adam Smith is to economic liberalism. Neoclassical economics, by the way, is in 2009 a bankrupt school of thought. Based on complex mathematical models that rely on simplifying assumptions which completely undermine any pretense of real-world applicability, neoclassical economics is on its way out. It was the dominant paradigm that, fatally, utterly failed to predict the worldwide financial collapse and depression of the late 2000s. In the present and even more so in the future, well-read and intelligent people simply reject the claim neoclassical economics makes to explain real-world economic activity. Sure, there will still be people who keep the neoclassical faith – tenured professors prominent among them – but there are also intellectuals (of a sort) who believe and will continue to believe in the tenets of other faiths, like Hinduism. However, those who believe in the tenets of neoclassical economics will inevitably be lead to the fringe of intellectual culture. Shamans who perform rain dances still exist in the modern world, but they have forever lost the widespread prestige they once enjoyed.

In their use of such terms, our dreamers seem to have all the skill in aiming as Dick Cheney on a group quail hunt. For instance they clearly consider countries like Japan and South Korea to be neoliberal capitalist. And to some extent, today one could almost get away with labeling them such. But our dreamers consider them to have been good pupils of neoliberalism back when they were developing into rich countries from relatively backward starting points. For any serious – neigh, any halfway competent – student of the two countries' respective histories of economic development, this belief is on par with the belief in a 10,000-year-old universe. Japan and South Korea both made extensive use of state planning, state support and state subsidies in order to grow their infant industries from inauspicious beginnings, to their current status as internationally-competitive and even world-leading. Such “trade distortions” as Japan and South Korea made extensive use of are anathema to neoliberalism. For the true neoliberal, Japan should have stuck to their areas of competitive advantage back at the end of the 19^th century, producing many pretty woodblock prints and samurai swords for foreign home decorators. Likewise, South Korea in the 1950s[3] should have stuck to producing simple textiles and kimchi for export. Luckily for them, neither the Japanese nor the South Korean governments were foolish enough to implement neoliberal doctrine during their periods of economic catch-up. Or else there would hardly have been much catching up to have been done. Although then surely Western economists would have been able to travel to Tokyo and eat an inexpensive sushi dinner at the dozen or so restaurants catering to the tiny Japanese elite and wealthy foreigners, or to Seoul for budget sex tourism.
Likewise our dreamers most evidently do not know much about what “GDP” means. For them, GDP, like its three-letter word counterpart “God”, is the Be All and End All. If a country has a high GDP, it is good. If a country has a low GDP, it is bad. It is good when countries make their GDP bigger year after year, and it is bad when countries fail to grow their GDP at a fast enough clip. Like a favorable God, a favorable GDP will provide for you. A favorable GDP will ensure a good society, with a healthy, educated, satisfied and sated population.

This is the religious view. In reality, GDP means a nation's total consumer, investment and government spending, plus net exports (the total value of exports minus the total value of imports). GDP was created by economist Simon Kuznets during the Great Depression in a report to Congress that concluded with the following qualification: “The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.” Kuznets was not heeded in subsequent years, as dreamers all over the world took GDP to be the measurement of national welfare. For neoclassical economists who believe in the mythical homo economicus – the rational, self-interested consumer each one of us is believed to be (in stark contradiction to all available evidence from psychology) – GDP is a perfect measurement of national welfare. Since every economic choice a consumer makes is an expression of that consumer's free will (unimpeded by such trivialities as “not starving” in the decision to take a sweatshop job or not), the composite of such choices is a society's expression of collective free will. So a high GDP means that a society's individuals have a high degree of free will, being able to make their wills manifest to a great extent. A low GDP then means that a society's individuals either have an unusually high preference for leisure (or digging through trash heaps for sustenance), or they are having some difficulty getting what they want.

Of course, back in the realm of reality GDP means no such thing. Not only is government expenditure on weapons (in the U.S., roughly half of discretionary government spending) rarely the expression of a society's individuals' free will, but there are myriad instances of economic activity measured in the calculation of GDP that are contrary to a society's interests – or, if you prefer, the interests of the individuals comprising that society. Having a road system prone to traffic jams contributes to a high GDP if it means that many cars are being produced and bought, accidents are happening that require expenditure on repairs, and government must spend more than otherwise necessary on road repairs. Having poor overall health contributes to a high GDP, especially in tandem with a bloated, costly and inefficient healthcare system, if it means that people are forced (there is not so much free will when it comes to the choice between life and death) to spend more money on doctors' services and medicines, and government must spend more than otherwise necessary on hospitals, medicines and equipment. Having widespread drug or gambling addiction contributes to a high GDP if it means that people are purchasing lots of drugs or blowing vast amounts in a nation's casinos, and government must spend more than otherwise necessary on drug treatment, prisons and police. Having a polluted environment and depleted stock of natural resources is a common concomitant of a high GDP, because it means that industries have enjoyed higher profits from lower costs of pollution control, and mining enterprises have “produced” raw materials that can be consumed domestically and exported to contribute to GDP's net export component.

A woman buying one $1000 pair of Jimmy Choos contributes 40 times as much to GDP as a woman buying a $25 pair of children's shoes. A man spending $5000 on a night with a sex worker contributes 50 times as much to GDP as a man spending $100 on a child's weekly music lessons..A family whose members each night separately consume fast food meals, movies, video games and other individual forms of entertainment out of the home, and drive back alone in their own separate cars, is very good for GDP. A family whose members eat together at home, perhaps entertaining themselves with conversation, walks in the neighborhood or sports in the yard, is not very good for GDP.

For our dreamers, to look towards GDP as the definitive measure of national health is not a mistake. Except when it is. See, our dreamers love to create tenuous connections between higher GDP and the implementation of some degree of neoliberalism for the sake of justifying and lionizing the latter. But sometimes GDP figures are to be ignored. Like, for instance, when they show that the developing world's economies did significantly better as measured by GDP during the non-neoliberal period of the 1950s and '60s as compared to the neoliberal period of the 1980s and '90s.[4] In inconvenient cases, correlations of economic policies and performance are irrelevant to our dreamers.

At any rate, when our dreamers point to GDP as the sole indication of a country's economic health, they are being quite foolish. They have a love of numbers which blinds them to Mark Twain's observation (ranking in ascending order of evil “lies, damned lies, and statistics”) that statistics can often be deceiving, and are often used deceitfully. But their love of the imagined purity of statistics, as we will see, is not absolute, or consistent, and in the end its hypocrisy saves it from fanaticism.

How to dream – our how dreamers think

Our dreamers – and here I do not refer only to the authors, but to many intellectuals around the world – have joined hands and united, in a manner of speaking (to the serenading of Bono) under the flag of human freedom: which is neoliberalism (or what the authors mistakenly call “liberalism”) in its pure state. Not – and here let us borrow a coin from the lexicon of the author's idiots – not “really-existing” neoliberal capitalism. To the dreamer, the theory of neoliberal capitalism has reached perfection. And having achieved such an elevated state, it has tragically overshot the feeble efforts of fallen man to actually implement it.

Now, there are many countries considered by the average person, or the “idiot”, to form a part of the global economy. This global economy is considered by the same “idiots” – and the masses they have brainwashed by means of their low-circulation newspapers and academic publications – to be “capitalist”. But these buffoons are speaking only of “really-existing” capitalist countries, and “really existing” capitalist countries are messy, dirty hybrids bred by the unfortunate meeting of neoliberalism and the real world.

A lot of the world's foolish economists, the ones unintelligent enough to join the rest of the dreamer-idealists in theory-paradise, would call many developing countries with basket case economies “capitalist”, even neoliberal. But our dreamers know that this is a mistake. It would be improper to call a developing country “capitalist”, if it is not rich. That is because the most efficient way to produce wealth is to implement capitalism, which is to say, to implement neoliberal economic policies. So, by definition, a capitalist country that has implemented neoliberalism either boasts a rapidly growing GDP, or is already rich.

The unintelligent economists, the ones outside the biggest herd, make a mistake in calling many poor countries “capitalist” just because the vast majority of economic activity is carried out by privately owned enterprises and people are paid with salaries for their labor, which forms a part of the production processes of these enterprises, and so on. This is because it is only once your economic policies are neoliberal are you a proper capitalist country. Which is to say, a successful country. Unsuccessful countries with all the polices and economic organization affiliated with neoliberal capitalism can not, by definition, really be examples of capitalism. Properly speaking.

By the simple operation of logic, neoliberal economic policies work best because they make countries rich; and some countries are rich because they have implemented neoliberal economic theory. Or rather, to the extent that they have implemented neoliberal theory.

You may be thinking, “but can our dreamers really be so pure? Might not they sully themselves with considerations historical, geographical or geopolitical? Perhaps sometimes they question whether their theory truly is the golden independent variable, the one upon which a society's well-being exclusively relies? Naysayers, cynics and defamers would be disproved, however, if they only knew. Far from engaging in lewd acts like “sociology” (a word which terrifyingly sounds like “socialism”), our dreamers stay true to the religious precept that, In the End, It All Evens Out. This is a doctrine that sanitizes the realm of the economic from infectants that might skew results in directions other than purely economic considerations would suggest. Minor things like “culture” and “human psychology” can therefore be tossed aside by In the End, It All Evens Out. This, in fact, is a prerequisite for the preparation of that which fills tabernacles in economics departments, and private intellectuals' shrines, across the globe: the model. Like the devotional figurines of the past, the mathematical model is to be revered as the temporal portal through which we interact with the realm of neoliberal theory. There, our models are to be untainted by contact with culture, human psychology and other contaminants.

Strict censorship is duly imposed by our dreamers on a wide swath of considerations under the doctrine of “assumptions”. “Assumptions” can be found towards the beginning of any neoclassical economic text: assuming that this facet of human behavior a can be reduced to equation v, and assuming that this other facet of human behavior b can be reduced to equation w, then so long as this other facet of human behavior c can be reduced to equation x, it follows that in the presence of complex human behavior d reduced to equation y, doomed-to-be-messily-implemented economic policy e will surely result in economic outcome z.

“Get thee behind me, Satan,” they say to the dual obscenity of “geography” and “history”, when faced with the temptation of, say, Singapore. No, when faced with a Singapore, for instance, our dreamers stolidly refuse to have any illicit intellectual intercourse with tawdry details like Singapore's birth (birth! See, we are talking about sex – dirty!) as a trading settlement within the British colonial economic system. (Britain was a rich and successful country during the time of its empire, which is to say that it was a shining exemplar of liberal capitalism – which can in turn be proven by demonstrating that it was rich.) The new creation was a result of a certain indecent interaction between a government monopoly (those socialist heathens!), the British East India Company, and a certain unelected leader the locals called a “sultan“. (“Unelected leaders” are bad because they are not part of the neoliberal package – capitalism works best, the dreamers dream, under a democratic system of government.) Why, it is downright indecent to consider how Singapore was born as the result of a deal made between a government monopoly and a sultan – therefore, neoliberal dreamers do not consider it relevant. Neither is Singapore's initial development as an a value-added entrepôt stop along established British trade routes. The fact that Singapore's first economic development occurred under the direction and investment of Britain's state capitalist monopolies does not neatly fit in neoclasisical economic models – therefore the doctrine of assumptions neatly removes it. So too, Singapore's strategic location during World War II, and the consequent military spending it experienced benefits from – benefits, that is, of a strictly economic nature. No, for the dreamer Singapore's success derives from the fact that its post-war leader Lee Kuan Yew decided to re-orient Singapore's economy to serve international markets. (It would be a blasphemy to suggest that what Lee Kuan Yew did was to merely re-orient Singapore's already globalized economy to serve international markets rather than the British empire.) This reorientation was in reality achieved by allowing government monopolies to dominate certain markets, like real estate, although the dreamer's view of this is occluded by clouds, and he sees only low tax rates, predictable law enforcement, and a dearth of restrictions on economic enterprise.

Our dreamers are too pure to engage in dirty, corrupt, corporeal intercourse with such tawdry subjects as comparative economic history. Unless it is undertaken in the style of a hagiography, praising a historically successful economy for its cherry-picked points of similitude with the neoliberal ideal. Neoliberal dreamers of course do not realize this – why after all reflect on earth, with your head in the clouds? - because, as do the dreamer-authors of the Guide, they have a narrative that suits them well. Their narrative explains all currently rich countries as having arrived at their wealth through the more-or-less pure application of neoliberal policies; and the belief that the mathematical models of neoclassical economics embody a timeless, universal truth that anyway renders in-depth study of economic history a meaningless distraction.

Of course, examples from recent history can be very embarrassing, indeed scandalous to the neoliberal dreamer. For instance, a very pure form of neoliberal policies was recently imposed upon Iraq – and little over a decade before upon Russia – and the results were catastrophic to an extent unequaled by just about any other set of economic policies imaginable. But that is only at the far end of the spectrum – neoliberal policies implemented by Argentina and East Asian countries in the 1990s resulted in economic results far less spectacular, while still catastrophic. But this hardly fazes the dreamer, because by definition an economically unsuccessful country simply could not possibly have instantiated neoliberal capitalism. An economic failure must have failed to correctly implement neoliberalism. Otherwise, there is a mysterious force at work. For instance, there were years of communist indoctrination in the case of Russia, inter-ethnic hatreds in the case of Iraq, and, most strangely, a phenomenon known as “crony capitalism” in East Asia – so named, one would guess, because personal and family relationships play no appreciable role in the workings of Western capitalism?

Similarly embarrassing, though coming from the opposite direction, are high rates of economic growth in non-capitalist, or non-neoliberal capitalist economies. Our dreamers react by admitting that it is true that some states have seen stretches of economic success while rejecting the truth of neoliberalism – but this is not sustainable in the long run, and sooner or later some primordial economic forces (restrained in neoliberal economies, perhaps, by the order provided by neoclassical mathematical models) will destroy them. Our dreamers thereby bypass any potential difficulties the astronomic growth rates in the Soviet Union and China after their revolutions might cause, or the fact that up until the 1980s, North Koreans enjoyed a higher standard of living than South Koreans.[5] The downfall of the Soviet Union, and North Korea's economic disintegration, have little to do with political realities, and everything to do with their meeting a final reckoning over their failure to implement neoliberalism.

This exclusive focus on economic ideology to the exclusion of facts, and the reality they comprise, causes all sorts of absurdities to be overlooked by our dreamers. For instance, one might find it hilarious in its ripe hypocrisy that Vargas Llosa and his dreamer friends excoriate Latin American strongmen (caudillos) while implicitly – though truly and innocently (in the sense of "ignorantly") – lionize men of the exact same stripe in Korea. Of course, the real reason for this should be obvious: Korean caudillos like Syngman Rhee and Park Chung Hee achieved greater economic success than the Latin American variety our dreamers hate. Our dreamers fail to recognize a major distinction (with a difference) between the Latin American and Korean caudillos: the latter faced a geopolitical climate most propitious for their version of state-directed capitalism (oops, wrong word; because they were successful in achieving their economic aims, the dreamers would say "liberal capitalism"). The countries ruled by the Latin American caudillos never served as lonely outposts for the capitalist world system on a continent home to the two largest and most powerful communist countries of the day. The Latin American caudillos did not enjoy massive economic aid and military purchases from the United States, nor were their state-supported industries given preferential access to the U.S. market. But in all their vulgarity and violence to opposition – the traits our dreamers criticize in Latin American caudillos – the Korean variants were damn near carbon-copies. Not to unduly praise him or insult our dreamers, but they have succumbed to the same intellectual malaise the economist Jeffrey Sachs has since repented of: obliviousness to geography, history, and politics.
So to conclude, our dreamers' command of their terms is not so strong. Do not, therefore, make the mistaken assumption that they know what they are writing about. Particularly when they recommend the implementation of neoliberal economic policies, which they will assure you inevitably lead to economic growth that ends up benefiting all members of society. Of course, for that to happen, you might have to wait for the long run – in which, the despised though-I-doubt-extensively-read-among-our-dreamers Keynes would remind us, we are all dead. So the dreamers' economic ideology is essentially this: you'll have pie in the sky when you die (that's no lie).

The Idiot's Bible's treatment of "The Idiot's Bible"/The Book Dreamers call “The Idiot's Bible”

The lady I would like to introduce as la deficientissima (literally, “the most deficient one”), Mary Anastasia O'Grady of the Wall Street Journal, recommended The Guide in an editorial in 2009. Yes, in 2009. (My need for repetition here to convey the requisite amount of confidence in this date, if not already understood, will become apparent later.) In her editorial, she wrote about Venezuelan president Hugo Chavez giving a copy of Eduardo Galeano's Open Veins of Latin America to United States' president Barack Obama. In her anachronistic, Ayn Rand-worshiping brain, she thought this a particularly bad choice. Galeano's book is an example of dangerous economic thinking, and in her impoverished opinion, Plinio Apuleyo Mendoza, Carlos Alberto Montaner and Alvaro Vargas Llosa's book, Guide to the Perfect Latin American Idiot, would have been a much better choice. O'Grady reasoned – or approximated reason – that the Guide corrects the foolishly unorthodox economics of Open Veins with a hearty dose of neoliberalism. Because O'Grady vomited such vitriol over Open Veins, I decided to read it – and, for comic relief, I also read our long-named dreamers book the Guide. (My choice was a good one – I attracted many puzzled looks from New York City subway riders over the spontaneous bouts of laughter the Guide inspired.)

If our dreamers hate Eduardo Galeano's book Open Veins of Latin America for one reason, it is because of what they must view as Galeano's obsession with history. As good students of neoclassical economics, dreamers have no need for economic history – for them, history ended with the development in the late 1800s of neoclassical economics. After the truth of their ideology had been revealed, many things simply no longer merited examination. Economic history is one of these things that, in our dreamers' hazy vision, has been done away with by their theories. Since neoclassical economics is the distillation of all economic truth, the only value economic history has is to show the success of historical economies to the extent that they followed neoliberal policies, and the failure of historical economies to the extent that they failed to do so.

But Galeano's view of economic history is not so neat. His book chronicles the economic development of Latin America as colonies first of Spain and Portugal, and then as neocolonies of Britain and the United States. To the properly instructed neoliberal dreamer, this is not only anathema, it is impossible. All that exists for the dreamer is a mass of individuals freely choosing that which, in their unerring judgment, best serves their interests. In Galeano's account, however, the only individuals freely choosing anything are those endowed with some measure of sovereign power during the colonial period, and those endowed with sovereign and/or economic power in the neocolonial period. The rest are, like slaves, obliged under pain of death by sword to work for their master, or like the modern poor, obliged under pain of death by starvation to work for their employer.

What is worse, Galeano does not weave his impossible narrative by reference to mathematical models reinforced by assumptions about human behavior. No, he weaves his narrative using threads of actual historical examples of economic enterprises, and then asks his readers to fill in the narrative garment with parallel threads supplied by the imagination. The result of this terrible maneuver creates the impression that what is operating is not, at its base, a mass of free individuals choosing what suits them to the extent that a market-manipulating government does not stymy them. Instead, it portrays a mass of individuals with little control over their own economic lives, and a small minority who skew the system in their favor. Galeano's Latin America is controlled by a small minority who profit from an economic system which benefits primarily the powerful countries – whether feudal Spain and Portugal during the colonial period, or Britain and the United States during the neocolonial period. Latin America's minerals and other natural resources are extracted by extremely exploited labor for export to the rich countries where they are processed by relatively less exploited, more highly skilled labor into the final products that only decently-paid laborers can afford.

This is not to say that our dreamers do not know what economic history is. That would be insulting. They know what economic history is, and they have an adorable view of it – as whatever supports their presuppositions. As a prime and recurring example, our dreamers make reference to the Asian Tiger economies of Japan, South Korea and Taiwan. But what they refer to are not the Japan, South Korea or Taiwan of history – they refer only to the imagined histories of these countries. Here it is necessary to call to mind the dreamers' special, proprietary definition of a successful economy: one which implements neoliberal economic policies. (And its corollary: neoliberal economies are successful economies.) Our dreamers write that “[i]f the Latin American idiot would study how some previously destitute nations succeeded in placing themselves at the economic forefront, instead of complaining about something that is as inevitable as it is advantageous, he would see that no one stopped Japan, South Korea, or Taiwan from becoming economic empires.” (p. 29) This a revealing comment – it reveals the ignorance (shall we say, innocence) of our dreamers, who should enroll themselves in the same remedial economic history class they recommend for the “idiots”.

Looming large in the dreamers' minds is the example of Japan, which until late “was a medieval kingdom, a close, isolated theocracy, not seen by Western eyes until […] 1853, and a country that had not experienced the first or even the second industrial revolution.” Yet by 1905 “Japan was already an economic power” - why? With an explanation so cheerily naive as to prompt instant cheek-pinching and forehead-kissing, our dreamers explain that Japan was one of a select group of “countries that seriously want[ed] to advance”, and that there was no “someone or something [that] tr[ied] to impede them from doing so.” Aha! The secret of economic development, revealed: serious desire. “Countries” must “seriously want” to advance, and so long as they are not impeded by a someone or something – an “atrocity”, our dreamers assure us, that “has never been seen in the contemporary world” – they will attain the height of economic development.

Of course, back in the real world, “serious desire” is insignificant, and Japan developed by copying, with well-suited adaptations, the way in which European powers developed. Behind the conservative-sounding Meiji Restoration lay a revolution that replaced Japanese feudalism with state-led capitalism. Japanese capitalists were led, nurtured, protected and taught by the state, Japanese cities were developed at the expense of the rural peasantry through high taxation (remember the Japanese finance minister who likened peasants to sesame seeds, in that they are both more productive when crushed hard?), feudal privileges were eliminated, social relations restructured, raw materials were sought from militarily weaker countries at beneficial terms at the point of a gun, and the military was strengthened both to defend Japan against Western imperialism and to develop an imperialism of its own.

So our dreamers inadvertently sap the very foundations they are seeking to build. They sleepwalk over the edge of a cliff – and this is not the only instance. Their ignorance of the economic history of Japan may be stunning, but hardly so in comparison to their ignorance of the economic policies used during the various periods of early development of their other favorite countries, whether the late-developers like South Korea, Taiwan and Singapore, or the early-developing countries of Europe.

Our dreamers hate Galeano for his dogged insistence in looking to historical lessons rather than mathematical models designed by politically conservative economists. But, concerned with the draw his arguments might have among those who believe history to be a source of valuable lessons, they attempt to undermine his arguments using the tried and tested technique of the straw man. Two of the straw men our dreamers create to beat Galeano in effigy are: that governments create wealth through taxation, and that wealth, once expropriated through unequal power relations, invariably remains with its expropriator. Galeano, at least in Open Veins, never embraces such absurd positions. So when our dreamers write the following series of rhetorical questions, they are not attacking Galeano's arguments, and they are not blindly swatting at a pinata – they are beating up a straw man:

Is it seriously possible to say that the exploitation of the colonies by voracious mother countries explains the underdevelopment of some at the expense of others after what was experienced in the last centuries? What is the current status of Spain or Portugal, two of the modern world's most tenacious imperial patrias? At the dawn of the twentieth century (which is closer to the colonial period than to today), weren't Buenos Aires and Sao Paulo wealthier than Madrid and Lisbon? Haven't Spain and Portugal fared much better without their colonies than with them?” (p. 28)

None other than a straw man could believe that wealth, once attained, must necessarily remain where it is for perpetuity. Spain and Portugal obliterated the previously existing economies of Latin America and replaced them with a system designed first to export natural wealth, and second to pay for luxuries from Europe. There is no law of physics, however, which states that natural wealth, in the form of gold, silver, sugar, guano and the like, must confer a lasting economic benefit upon its recipient. A powerful minority in Portugal and Spain were indeed showered by wealth drained from Latin America, but they did not use this wealth to build the industrial foundations for future national wealth once they transitioned from feudal monarchy to capitalist democracy. Instead, an opulent minority in Portugal and Spain frittered away their wealth on conspicuous consumption and war (which is but another form of conspicuous consumption for the sufficiently powerful). Hence the relative wealth of Buenos Aires and Madrid in 1900 is irrelevant, and the economic performance of Portugal after Brazil's independence is an independent variable. That colonial Spain and Portugal were profligate wastrels that were soon dispossessed of the wealth they violently expropriated from Latin America, does not mean they never expropriated wealth from Latin America. “No your honor, I can prove I didn't mug this man, because I have nothing left after gambling away his money!”

Galeano, in his colloquial style, writes that “[t]he division of labor among nations is that some specialize in winning and others in losing.” This is another way of stating that the rich nations specialize in high value-added economic activity, like high-tech manufacturing and software development, while the poor nations' economies are characterized by low value-added activity, like mineral extraction and low-tech manufacturing. But this rather obvious statement of fact cannot scale our dreamers' ideological firewall. They ask rhetorically, “if the evil American plan is to keep other countries specializing in 'losing,' then why did it join with Mexico and Canada in the North American Free Trade Agreement (NAFTA), whose stated goal is for all three nations to profit?” [emphasis added] (p. 23). Why, you fools – the stated goal of NAFTA is for all three nations concerned to profit! What further inquiry is needed? For these neoliberal dreamers, apparently, a statement of good intentions is the beginning and end of critical inquiry – so for them, one would imagine, imperial Japan engaged in a selfless quest to save Asia from Western imperialism during World War II, and more recently, the United States under George W. Bush merely attempted to protect its vulnerable cities from the towering threat of Iraqi weapons of mass destruction.

Elsewhere, Galeano's criticism of the peculiar form of Latin American industrialization, “comfortably coexisting with the latifundia”, centered in a select few “privileged poles of development” like Sao Paulo, Buenos Aires and Mexico City, and progressively needing less and less labor as technology advances, runs into opposition from our dreamers. Actually, it is not Galeano's criticism that runs into opposition, but rather a straw man simulacrum of his criticism. Our dreamers write, “[s]o, the solution to Latin America's problem cannot be industrialization, given that [Luddite] Galeano […] believes that industrialization is harmful.” Of course, Galeano believes nothing of the sort. He believes, rather, that the peculiar form of Latin American industrialization is harmful, the form which exists solely to exploit cheap labor or export raw materials – the form in which only a small minority reaps any appreciable benefit. And yet again here, our dreamers drink a poisoned glass of rice wine to toast their ideological follies, making reference to the economies of South Korea and Taiwan. They argue that had their straw man version of Galeano's beliefs – namely, that industrialization is bad – held sway in mid-twentieth century South Korea and Taiwan, that neither would have developed in the successful way they did. This is a trivial truth, tantamount to me stating that had I stopped drinking liquids a few years ago, I would presently not be as well hydrated as I currently am. But so too, if South Korea and Taiwan had followed our dreamers' advice and implemented neoliberal policies, foregoing protectionist measures to develop high value-added industries like steel and electronics in the face of superior international competition, then our dreamers' beloved Asian Tigers would look a lot more like Latin American Llamas.[6]

Our dreamers' chapter on Open Veins of Latin America ends, appropriately, with a swipe at the suicide rate of Cuba and its decidedly un-neoliberal economy (which, one is left to wonder, is to blame for the suicide rate?). Strange, this causal connection our dreamers imply, given that Cuba has had Latin America's highest per capita suicide rate since the 19^th century. (Journal of Third World Studies, Spring 2007, Michael R. Hall, review of To Die in Cuba: Suicide and Society by Pérez, Louis A, Jr.) Stranger still the focus on “the sweaty and overworked buttocks of its poor Tropicana mulatto women.” This is our (wet?) dreamers' way of referring to sex work in Cuba, which to them is inordinately widespread and, naturally, due to Cuba's rejection of neoliberal economic policies. This suggested causal connection between the rejection of neoliberalism and the proliferation of sex work is odd, considering that the sex industry has long been a draw for wealthy foreigners to the island. (Sun, sex, and gold Edited by Kamala Kempadoo p. 12) But, I suppose it is impossible to argue against, given that Cuba's capitalist neighbors, like the Domincan Republic, Jamaica and Puerto Rico, simply do not have prostitution, let alone sex tourism.

Guide to the aptly though unintentionally named, inadvertently confessional Guide to the Perfect Latin American Idiot

While our dreamer-authors give no evidence of having read past page 18 of Open Veins of Latin America – the chapter dealing with the book having ended there – I will go through the Guide to its end. This is not to accuse, or set myself above our dreamer-authors. For them, reading Open Veins must have been an extremely scandalous experience, dealing as it does with graphic depictions of actual economic history and empirical investigation. Which, for the neoliberal, is a most distasteful thing to do. Like modern-day popes, who can write entire encyclicals about sexuality and its meaning but never debase themselves by actually delving into sex, neoliberals stay pure in the realm of theoretical abstraction, and make reference to empirical reality only when and to the extent they must to (always inadequately) buttress their ideology. Our dreamers attack Open Veins with surgical gloves and a light touch, much like one would imagine Pope John Paul II attacking Madonna's Sex by reading the introduction and extrapolating from it all of the grave errors that were surely committed in subsequent pages.

On page 38, following page 36 on which our dreamer-authors disgard their straw man arguments against Open Veins to pick up straw man arguments against unidentified opponents, lumped together under the term “idiots”, our dreamers write:

Simple logic should suffice to invalidate the statement that our poverty is the wealth of the rich, since it's obvious that if wealth is created and not something that already exists, one country's prosperity is not the result of another's wealth being stolen.

In essence, our dreamers must believe that the natural state of the world sans neoliberal capitalism is pure stagnation. In this imagined natural state, there must not be creation of anything lasting, nothing that could be called wealth. Otherwise, it is hard to understand what our dreamers mean by their use of the word “logic”. (Might it be the logic of fantasy, whatever that might mean?) Otherwise, our dreamers would seem to be prevented from realizing that the production of wealth is one thing, and its distribution another entirely. Most likely, our dreamers actually believe their straw man version of Galeano's argument: that economic relationships are “zero sum games”. Zero sum games are those in which there can be only one winner and the rest losers. Non-zero sum games are those in which there can be only winners; in other words, mutually-beneficial relationships. Occluded from our dreamers' binary vision is the possibility that while both parties in an economic relationship may benefit from it, another possibility – and in fact, very common occurrence – is that economic relationships often benefit both parties, but unequally; even vastly so.

The real world does not take kindly to this particular dream. In the real world, Britain's museums would not be filled with half as much wealth were it not for the relative poverty of the museums of their former colonial possessions and imperial subjects. Anyone who is awake understands that the production of this art occurred in one country, and its distribution resulted in it residing in another country. This, of course, is just one very simple anecdotal example, but others abound. The (very nice) clothes I am wearing as I write this are a form of wealth. And while they now form a microscopic fraction of the wealth in the very rich country I live in, they were made in two very poor countries. Out of the amount of money I paid for them, only a small amount made it to the people who produced them: those who both worked in, managed and directed the factories that made my clothes. This amount was sufficient only to aid the directors of these factories in being relatively wealthy, and to allow the workers in these factories to eke out a subsistence existence. The rest of the money I paid for them went to pay marketers, middlemen and retailers in my own very rich country. So if you look at the natural state of the world sans our present economic system as one of pure stagnation, then the factory workers would be making absolutely nothing – presumably they would be starving to death in a lush jungle or on a beach somewhere. But if you look at the natural state of the human world as one of wealth-producing activity under varying economic systems, then the system that produced my clothes is arbitrary and could be replaced by any number of alternatives. Once looked at in this way – the manner of a realist – it is clear that the production process that resulted in me having nice clothes to wear as I write could have distributed the lion's share of this produced wealth in one (very rich) country.

If services (which constitute three-fourths of today's U.S. economy) do not use raw materials from Latin America or anywhere else, how, without using magic, could those services be the result of the plundering of our natural resources?

Magic is unnecessary. Raw materials are. Since our dreamers are ensconced in the clouds, they cannot see how the viability of a service-dominated economy might be tied to its ability to purchase raw materials on the cheap. But let us depart the holy of holies for a moment to glance again at the real world. On the average day, the Unitedstatesian service worker wakes up, drinks a cup of coffee grown by poor Colombians, changes into clothes made by poor Chinese and Malaysians (though carries a made-in-the-USA purse made by poor Samoans) with underwear made by poor Salvadorans and Jamaicans, and drives to work in car manufactured by poor Mexicans, made of metals mined by poor South Americans, powered by oil drilled by poor Iraqis or Russians, and arrives at an office built by poor Central American undocumented immigrants, to work on a computer manufactured using minerals mined by poor Africans. To produce a service does not require natural resources, plundered or otherwise, as direct inputs. But to produce a service requires food, clothing, transportation, infrastructure, energy, buildings and technology – and these require natural resources. And they are all the cheaper if those natural resources are plundered, stolen, attained through crooked dealing or simply as the result of uneven bargaining power. And when you are getting wealthy by producing services of such dubious human utility as the iFart Mobile software application, it really helps when all of your production costs are as low as possible. Even when that means preventing too much wealth going to the lowly producer of the raw materials that form the foundation of so much higher-level economic activity.

If the United States' annual $6 trillion economy is eight times greater than the three major Latin American economies combined (the “giants” Brazil, Mexico, and Argentina), in order for the aforementioned premise to be true, it would have to be shown that at some time these three economies jointly, for example, produced eight times more than they do today, and, when added together, the giant three's production reached a number similar to $6 trillion.

This is a very strange contention. It is very possible, accurate even, to say that the United States' economy is as wealthy as it is due to a history of exploitative (or extremely favorable, if you like) relationships with Brazil, Mexico, Argentina and any number of Latin American, Asian or African countries. For instance, towards the end of the 19^th century, while Brazil was producing rubber and selling it to the United States and other economically powerful countries, its rubber workers – if they were lucky enough to survive the journey to the Amazon – were eking out a bare subsistence. Only Brazilian owners within the rubber and transportation industries were accumulating capital, and this capital was not used to develop high value added industry to be protected from competition for a period by the Brazilian government. The Brazilian government, primarily representing as all governments do its most wealthy constituents, had at that time implemented an economic policy that would benefit the owners of low value added industries. High value added industries, like heavy manufacturing, did not dominate Brazil's economy at that time, unlike the United States'. The U.S. economy around the turn of the century was dominated by heavy industry, and had a government that was very solicitous of it. Unlike Brazil, at the height of this particular economic relationship, the U.S. government had instituted a broad range of tariffs and subsidies to help along the growth of domestic, high value added industry. While Brazil's economy was dominated by the low value added raw material export sector, the U.S. grew on the back of heavy industrial growth and raw materials whose cost represented a small fraction of the market value of manufactured goods. Had Brazil and other raw materials producers banded together in the manner of the conspiratorial business groupings Adam Smith had inveighed against, and which actually had very effective influence upon the U.S. government, things may have been different. (At the time, this was highly improbable, as much of the world's economy was actually under British imperial control, and a union of raw materials producers would be broken before one even tried to come into existence.) Clearly, in this – and many other, if a dreamer may be persuaded to delve into a little economic history – examples, a more powerful economic partner wrested the lion's share of the benefits from the relationship. That this relationship could not possibly be predominant within the international economy is an all-engulfing blind spot in our dreamers' sightless vision. Here, our dreamers' conception of economic reality is so dreamily simplistic that it becomes hard to understand.

Unless imposed by nakedly brutal military conquest, economic relationships between two countries are rarely of the zero sum sort. That is, there is most often a reciprocal benefit in the economic relationships between countries. Yet rarely are these benefits equally apportioned. As a rule, the more powerful country or group of countries tend to extract most of the immediate and long-term benefits of any particular economic relationship with a less powerful country or group of countries. The “idiots” our dreamers rail against also conceive of a world wherein economic relationships are non-zero sum; unlike our dreamers, however, the “idiots” do not believe that non-zero sum economic relationships always benefit both parties equally. “Idiots” seem better positioned than dreamers to notice the commonsense fact that real-world power relationships can influence the distribution of wealth created by a particular economic relationship.

At the end of their argument, our dreamers crystallize their absurd belief that economic relationships are not zero sum game (which no one disputes) but rather are non-zero sum game where both parties benefit equally:

Ah, but it does not! The “exploitation concept” rests rather on the idea that wealth is first made, then distributed – and most often unequally. Coincidentally, this is the view that best accords with economic history. The economic history of reality, not the economic history of cherry-picking attempts to correlate periods of economic growth with periods of (mostly nominal) adherence to neoliberal ideals.

In the same paragraph on page 39, our dreamers introduce an entirely novel, uniquely absurd and largely implicit theory. They argue that the sum of the economic benefits derived from the relationships between Latin American countries and the United States and Europe were of equal or greater utility to Latin America. From the horses' mouths (or asses, perhaps):

One could argue that this is not a fair comparison since the United States did not exactly steal everything that it produces but rather it pocketed the necessary resources and then built its own wealth from them. But this argument would invalidate the entire premise that our poverty is due to the exploitation that made us victims, since the exploitation concept rests completely on the idea that wealth is not made but distributed. If it does not [already] exist, it is created, and if it is created, no country's wealth is another's poverty. Even the worst colonial government from the Renaissance era until today has brought the victim country tools of knowledge or technology, providing them some development (at least economically if not politically or intellectually). What would Latin America's economy be today in comparison to wealthy countries if we had not had contact with “the white man's” economies? It's hard to believe that the combined production of Mexico, Brazil, and Argentina would be only eight times less than that of the United States. Peruvians will probably continue patting themselves on the back for the agricultural virtues of the terraced hillsides, a noteworthy invention of the pre-Columbian period but not exactly the forerunner of, for example, the steam or internal-combustion engine (to mention just two rather antiquated capitalist inventions.

Here, our dreamers rather amusingly – yet with a straight face – compare an economic invention of the 19^th century (the steam engine) with an economic invention of the 15^th century (terraced farming). They do so, to prove that the inventiveness of a Britain flush with wealth ill begotten from their empire in the 19^th century is superior to what the Incas would have been at the time had they existed, that is, had they not been destroyed by the Spanish in the 16^th century to turn Peru into a European gold mine. In their preposterous vision, economies stagnate unless they are neoliberal capitalist; therefore, by whatever magic Peruvians used to develop terraced farming in the 15^th century, from then on they certainly would have been inhibited from developing and implementing new technologies. Thank God (or Columbus) they were introduced to the white man's economies, eh?

Not so fast. If capable of developing terraced farming in the 15^th century, Peru's economy would surely have been capable of incorporating developments from other societies. That is, if their interactions with other societies allowed them, besides continued existence, some freedom in developing themselves as they wished. Much like one of our dreamers favorite countries, Japan (granted, they are infatuated only with a fantasy version of Japan), Peru could have had a rude first encounter with Europe. But Japan was never invaded, its population never reduced by murder, overwork and disease to a mere 7% of what it had been prior to its encounter with Portuguese traders. Perhaps, if Peru had instead experienced Japan's first encounter with Europeans, they would have been able to keep living, maybe – or maybe not – modifying their society to adapt to European inventions. (Certainly they would have had to, since all of Europe's inventions of note at the time were military, and the early Peruvians would have needed to adopt them at the very least to defend themselves from European barbarians.) Perhaps some hundreds of years later they, like Japan, would have been forced to sign unequal trade deals with more developed foreign countries (today, these are referred to as “free trade agreements”). Unfortunately for the Peruvians, however, they first encountered Europe at the tip of Spanish swords – and Spain at the time had not yet advanced even to that stage of idiocy when “free trade” supremacy is preached. But our dreamers do not sully themselves with such historical iniquities. If it is a part of reality that one cannot, even by making disfiguring assumptions, fit into a mathematical model, then it is impure and not deserving of attention.

p. 52 – the depths/heights of the dream – criticizing 1935-55 capitalism for not improving the lives of the poor because it was not neoliberal enough

63 – more on why latin american governments have fucked up by being insufficiently capitalist, and believes them to be socialist due to state intervention in the economy. p. 64-5 criticisms sound a lot like Korea when developing...

p. 67 – statement of dreamers' principles: a version of capitalism that does not exist. Distinction between dreamers and “the recalcitrant conservatism of times past”.

p.68 - “idiots'” hatred of capitalism stems from old religious inhibitions against greed. As if the neoliberal creed isn't religious. Refer to Economics as Religion.

p. 73 – attempted argument that Asian Tigers did not use government intervention and planning to get rich. But it runs into the stupidity. Like “Naturally, the judicial framework and guarantee of order and security required for productive activity are the state's obligations. [Why only these? Divine revelation?] We liberals [sic] have never questioned its essential functions, such as administering justice, maintaining the basic legal order, and protecting citizens. Among us Latin Americans, though, the state carries out these functions in such an inept way because it is embroiled in jobs that are better handled by the private sector.” The tigers on the other hand supposedly had governments that played the mere role of referee to the market...

p. 60 – really dumb metaphor: “Politically speaking, anti-imperialism is the most profitable way of making love” - and obliviousness to the fact that anti-Americans were killed en masse, not smothered by largesse.

p. 62 – laughable claim that the U.S. never sent in the Marines just over an expropriation – there were higher motives involved? - and Cuba is an example. Because technically, the Bay of Pigs was CIA not USMC.

p. 78 – stupendously stupid claim that “Except for the British revolution of 1688 and the American revolution at the end of the eighteenth century, there's not a single case of a revolution that has achieved anything good.” How about the Chinese revolution of 1949? I would presume that a doubling of life expectancy would be considered by most to be a good thing, to say nothing of removing China from under the thumb of foreign powers, or industrializing the country in a fraction of the time it took European countries. How about the Italian Risorgimento? How about the innumerable revolutions that freed populations throughout the planet from direct colonial domination? As if others were needed, this is one more instance of the disconnect between our dreamers and humanity. History tells us through innumerable examples that human beings are often willing to die for the opportunity to get up from their knees and stand.

p. 89 – Roberto D'Aubuisson St. in El Salvador was “capable of fiercely confronting leftist rhetoric”. This is about “Blowtorch Bob” - so-called for his favorite method of torture – killer of Oscar Romero.

p. 97 – Cuba's economy was grand prior to the revolution - “import capacity” is the measurement chosen

98 – good line about “genital nationalism”, marred by inaccuracies about prostitution prior to the revolution, i.e., that it was nonexistent.

p. 99 – increase of Cuban ownership of sugar plantations not a sign of economic growth if the sole importer is the U.S.

p. 100-1 – economic embargo is not harmful to Cuba? 101, yes Cuba can lift the embargo, if it gives up its revolution – so what?

p. 104 – Cuba should be compared to similarly developed Latin American countries at the time of its revolution. (Puerto Rico was not a “country”)

p. 110 – As if the ability to buy a Mercedes is not as structural in Venezuela as in Cuba. Just a different structure

p. 168 – bemoaning the poverty of the majority of Cubans relative to European tourists to Cuba. Still waiting to hear the same salvo leveled against Latin America's capitalist countries. (The really-existing capitalist countries – we know of course that only Chile, perhaps, is close enough to our dreamer's ideal to be considered capitalist by them.)

p. 169 – berates Cuba for the abuse received by a pro-democracy poet: forced to swallow her papers while State Security officers shouted “I hope your mouth bleeds, damn it, I hope it bleeds!” If true – and I see no reason to disbelieve Ms. Cruz Varela's testimony without further investigation – this is a disgusting abuse of power. But one must admit that this is treatment is a paradise compared to the abuses committed under Chile's white night of neoliberalism, Pinochet. No “henchmen” was inserting spiders and rats into Ms. Cruz Varela's vagina, raping and impregnating her and then torturing and beating her to the point of miscarriage – unlike Lux de las Nieves Ayress Moreno in our dreamers' beloved Chile. Is this is the worst our dreamers can point to as evidence of Cuba's perfidy and human rights abuses undertaken in crushing internal dissent? Our dreamers cite migration flows as the most telling evidence of a country's quality of life. Had Cuban and Chilean dissidents been given the opportunity to migrate to be a dissident in either Chile or Cuba, respectively, this peculiar migration would flow in only one direction: towards the totalitarian monster state, Cuba. I am pretty sure that I'd rather be forced to eat pieces of paper than be raped and tortured.

p. 172 – our dreamers frenziedly contest an “idiot” writer's claim that Amnesty International officially reported the existence of only 300 political prisoners in Cuba. Surely, they all but shout from the printed page, the number of political prisoners in Cuba is far from this modest.

This bores me. As of January 29^th, 2007, Amnesty International's web site reports “at least 67 prisoners of conscience” in Cuba. This is compared to violently anti-communist Colombia's 2.7 million internal refugees, and 3,000 political murders since the dubious demobilization of Columbia's right wing paramilitaries in 2003.until 2007. One can, and many others have, exhaustively detailed the enormous disparity between Cuba's state crimes and abuses and those of the anti-communist states of Latin America. This picking the speck out of one's communist neighbor's eye while ignoring the plank in one's own capitalist eye is the fancy of a dreamer that does not merit serious consideration.

p.113 – attacks liberation theology – an easy target insofar as its religious content is concerned. But the dreamers sloppily equate the violence of guerillas and the oligarchies, and the hardships faced by the campesinos due to the conditions caused by both.

p. 114 – makes out the narrative that the Church hierarchy nurtured and supported the liberation theologists – which conflicts with my narrative of the highest levels of the Church hierarchy (Ratzinger, JPII) fighting liberation theology to the point of withdrawing the Vatican's diplomatic support where that may have saved the lives of religious – not to mention thousands in the laity – in the movement. But both narratives can coexist; though to most, I would imagine, the latter narrative would have pride of place given that liberation theology and its allied movements were ultimately unsuccessful. Also there's a stupid bit here about Jesuits' buying weaponry being in contradiction to their vow of poverty; even if true, they would have been buying guns, not gold; pistols, not prostitutes.

116 – Claims the “fantastic”, “juggernaut” “propaganda machine of the left” was “capable of ending the free Western world from within”; and calls the assassination of Oscar Romero “one of the most counterproductive barbarities committed by the anti-communists”. See, our dreamers are not allied with the death squads – they denounce their violence's counterproductivity!

118 – amid one good line - “when God and the Devil are invoked to judge politics the likely outcome is a bonfire” - there is some stupidity about capitalism being a radical negation of slave-based economies. Eric Williams' Capitalism and Slavery explains well how slave-based economies crucially contributed to the development of capitalism – which, he argues, at a certain stage is incompatible with slavery as an inefficient, less profitable system of organizing the labor market – by creating the capital foundation upon which more advanced capitalist economies could build upon. Also this page contains a condemnation of liberation theology for assigning the category “evil” to the poverty inherent in Latin American capitalist systems...

p. 119 ...which continues with an argument that the proper villain would be socialism over capitalism. The dreamers of course deny that Latin America has ever tasted capitalism (since Latin America has not become wealthy, or successful, by our dreamers' proprietary definition they cannot be capitalist). Rather, what Latin America has experienced has been nationalization (an act, not a system), mercantilism, nationalism and other “derivatives” of what our dreamers call socialism, To be charitable, is this highly nonstandard usage. And, in an absurdly mistaken semantic hissyfit, claim that their opponents are creating a caricature of capitalism by assigning to it the characteristics of real world economies, which were and are integrated into the international economic system. The system that only a vanishingly small minority of people would deny would be best characterized as capitalist. But for our dreamers, capitalism has not been tried and found wanting; it has been found difficult, and left untried. Latin American capitalism, to them, is unborn – so they can write: “On hearing that capitalism is condemned to Hades, God, who usually doesn't sentence the unborn to Hell [true, he generally waits until the kid is around ten before doing that – Ed.], must be frowning.” Strange, however, that they consider capitalism to be merely “society's way of spontaneously organizing itself” (p. 118). Should not they then be the supreme revolutionaries, advocating anarchy to allow Latin American societies the freedom to spontaneously organize themselves into the default state of economic nature: their dreamy, pie-in-the-sky conception of capitalism?

Then they go on to make the strange case that Christianity is incompatible with sharp criticism of the wealthy – in their wide reading, they must have somehow skipped The New Testament. Rather our dreamers argue that capitalism is the most virtuous and charitable system yet devised – oops, rather, yet spontaneously self-organized – because it places an inherent premium on trust. Trust in the functioning of courts and the sanctity of contracts. Really rarefied stuff, this. Indeed, our dreamers reveal a belief in a capitalist equivalent of liberation theology (oppression theology?): “Capitalistic egoism promotes such teamwork that it appears to be the fellowship preached about in the Bible.” Ah, the invisible hand – with the stigmata

p. 121 – criticizing liberation theology because in its desire to see poverty eliminated, our dreamers sense an abandonment of the Gospels' exaltation of the poor. Our dreamers confusedly explain this desire to see poverty eliminated as hypocrisy in the face of the Church's role – more aspirational than actual – as “an institutional exaltation of poverty, [with] its ethical foundations a defense for material nakedness”. That is one impression of the Church I, for one, did not come away with after spending time in the material splendor that is Vatican City.

p. 123 – an ecstatic ode to capitalism – again the spontaneous self-organization, that cannot but emerge if only governments would consent to rather than suffocate it. Misses by a mile the indispensable role governments have played in the development of capitalism.

p. 139 – adopts the completely discredited story that the democratically elected Arbenz government was a puppet of the Soviets which might, in a few years, invade the vulnerable United States a la Red Dawn, the 1984 propaganda film. Actually, this is the same as the CIA's official interpretation (and if you cannot trust the CIA, who can you trust?). But hey, if they are willing to believe the mathematical fantasies of neoclassical economists, who is to say it is any less sound to believe CIA public relations?

p. 163 – a charge of hypocrisy based on a laughably inapt equation between European leftists' refusal to push for the Communist Party being the only legal party in their countries, and their lack of protest over post-revolutionary poor countries' clampdowns on competing, capitalist political parties.

p. 167 – again denying that Latin American countries could be called capitalist. Regardless of their pervasive integration into a global economy that would be hard to describe without using the word “capitalist”, our dreamers' pure theory has simply not been implemented. Of course it has not; the developing position of Latin America within the global capitalist economy, and the internal dynamics of its own countries' economies, have denied it the propitious circumstances that allowed its northern neighbor to develop closer to the dreamers' capitalist ideal.

Here, the dreamers betray the influence the Peruvian intellectual José Carlos Mariátegui has had on them. In his highly influential Seven Interpretive Essays on Peruvian Reality, Mariátegui gave a thorough exposition of how Peru's – and many other Latin American countries had a similar experience – lack of capitalist development doomed it to playing catch-up with the United States. He argued that what condemned Peru to stagnation was its history as a feudal, parasitic colonial economy lacking a bourgeoisie to guide and push for its evolution into a fully capitalist country. Meanwhile, the United States had evolved into a standard-bearer of capitalism, allowing it to develop as successful capitalist countries do by plying their cultivated strengths against other countries' relative weaknesses for gain. Mariátegui gives the example of land: in Peru, land was granted in the first instance from the monarch's decree, and was further distributed and circulated as a currency for political favors. On the other hand, in the United States land was freely bought and sold, and, once it had been taken from the Indians, the land went to the tiller, in a sense: those who improved the land (“improved” in the European sense only, of course) would own it, and royal decrees had no say whatsoever.

p. 175 – concise compilation of their dreamy precepts: “the government isn't the one that creates wealth but individuals; that a country's wealth is made or can be made by savings, effort, national and foreign investments, creating, developing, and proliferating companies within the framework of a market economy; that state-run and private monopolies are the source of abuse and that free competition is the best way to regulate them and protect the consumer; that excessive regulations, foreign exchange controls, import and export controls, tariff barriers, and subsidies generate corruption and illegitimate privileges.”

p. 176 – Excellent way perhaps of finishing this all up: “But ideology, like religion, thrives on dogmas of faith. It's an intellectual dispensation, a way of explaining the world and society with comfortable theoretical suppositions, but not subjecting them to tests. When one questions this dogma, however, (which serves as the basis for an entire code of interpretation that has until now been irremovable as well as the foundation for everything that this code has planned for an individual's destiny of a group or party) the response is virulent; just like, by the way, what happened when Galileo revealed that the Earth was round and that it circled the Sun. Burn the heretics at the stake!”

Oh how difficult the life of a neoliberal intellectual in Latin America! While economists and policy makers in the region had not only imbibed but implemented neoliberalism at the time our dreamer-authors wrote the Guide, apparently the intellectuals entertaining themselves on the cocktail circuit made our dreamers' nightlives a bit unpleasant perhaps.

p. 177 – superficial description of Peronism in Argentina used to malign government intervention in the economy (what our dreamers would call “socialism” or economic nationalism). Also criticism of Nicaragua's economic catastrophe of the 1980s – pinned, of course, on the implementation of “the social state” which “financially ruin[ed] Nicaragua” – without any reference to the proxy war waged upon Nicaragua by the United States with the help of Honduras and Iran.

p. 178 – lampooning the idea that in many economies, far more luxury goods are produced than basic necessities, relative to the level of need. To lampoon this idea, our dreamers ask if critics in rich economies – in this case Spain – have any shortage of basic necessities. Of course they do not. Our dreamers draw from this trivial truth that since rich countries have both luxury goods and basic necessities in abundance, that the countries of Latin America must not have an overabundance of luxury goods relative to basic necessities. I am not entirely sure how our dreamers make this leap – but I am quite certain that they do not make it to the other side. Perhaps they are unfamiliar with the difference between the concepts of demand and effective demand. Demand refers, as one would presume, to people clamoring for something or other. Effective demand, on the other hand, refers to people being able to purchase that which they desire. In the absence of an ability to purchase, one would merely be demanding - or ineffectively clamoring for.

p. 182 – spiel about neoliberalism never having been tried in Latin America, so it is unfair for its critics to point to its alleged failures in Latin America. Also bit about Chile's privatized pension system: back in 1996 things looked good – and looked even better in “the long run”. But nowadays, Chile's privatized pension system is in a crisis never predicted by neoliberal witch doctors, and Chileans are yearning for a return to the “bad old days” of socialized pensions. Our dreamers also insist that Chileans had a “choice” between privatized and socialized pensions, and that only 10% chose to stick with the antiquated, “inefficient” public system However, starting in 1983, the privatized pension system was made mandatory for everyone entering the workforce.[7] When a properly neoliberal – if fascist – state forces the switch to private pensions, this is considered a choice by those whose eyes are tightly closed.

p. 198 – argues – somehow – that the United States, from “the height of the Great Depression” and “thirty years” hence, was a properly neoliberal state. That is, it was an economically successful state, so to our dreamers, it must therefore have implemented neoliberal policies – and the reality be damned. To the informed, or simply the non-deluded, the U.S. was nothing of the sort during this period. In fact, from 1934 to 1964 (the period our dreamers refer to), the United States underwent the most radical economic transformation of its history. As the Pulitzer Prize-winning Harvard historian Alfred Chandler wrote:

The mobilization of the war economy brought corporation managers to Washington to carry out one of the most complex pieces of economic planning in history [that dirty word!]. That experience lessened ideological [ideological! Only socialists are ideological!] anxieties about the government's role in stabilizing the economy. Then the fear of postwar recession and consequent return of mass unemployment brought support for legislation to commit the federal government to maintaining full employment and aggregate demand. While a few managers and businessmen favored such legislation, most continued to oppose what they considered government interference in the processes of business. The Employment Act of 1946 passed only through the concerted efforts of liberal and labor groups. By the 1950s, however, businessmen in general and professional managers in particular had begun to see the benefits of a government commitment to maintaining aggregate demand. They supported the efforts of both Democratic and Republican administrations during the recessions of 1949, 1957, and 1960 to provide stability through fiscal policies involving the building of highways and shifting defense contracts.

p. 203 – our dreamers equate Cuba with Taiwan in the year 1959. Taiwan's success must of course be due to its adherence to neoliberal polices (to which, in reality, it adhered like oil and water), and Cuba's failure to develop an economy similar to Taiwan's is attributed solely to its decision to withdraw from the U.S.-dominated capitalist world system.

p. 208 – Another passage that can more accurately be transformed to condemn our dreamers: “There unquestionably exists something that Galeano hates with even greater intensity than the gringos or the multinationals or liberalism: truth, common sense, and freedom. He cannot stand them. He doesn't believe in them. He has no respect for them. His only and strongest allegiance is to feed uninformed Latin Americans errors and nonsense until her perfects the legendary ideological stupidity that he has made famous.”

Real-world Neoliberalism?

To borrow a clever phrase from our dreamers, neoliberalism-preaching wealthy governments are not exactly “obsessive cultivators of congruency between words and actions.” (p. 147)

Ideas do not just get implemented by fiat. “Human mind, presto change-o” does not work They must spread like a trees' roots through soil, incorporating every last square inch of dirt into a field of interaction between the organisms comprising what we conceptualize as “tree” and “soil”.

In the end, the sum of our dreamers' arguments elaborate on John Stuart Mill's otherwise accurate maxim that “although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative.” Now we know how it is that smart people can take up conservative positions: because their heads are in the clouds, their eyes are closed, and their economic arguments are the products of feverish, if well-meaning, dreams.

[1] And when I say "rabidly", I mean, for instance, that England had a law that provided for a jail sentence for those skilled workers who left England to start a competing business in another country.

[2] Smith went on to write: “It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.“ In other words, Smith was firmly against modern corporate law, and the structure of modern capitalist economies. Which, not only facilitates the assembly of “people of the same trade”, but renders such (daily) assembly and coordination necessary to remain economically viable.

[3] As a typical example of how difficult history is to grasp for a dreamer, see this description of North and South Korea in the 1950s on p. 40: “At the end of the Korean conflict, South Korea was left stripped of all industry, since this was all in North Korea.” Really? Someone should have told General Curtis LeMay that he left all of the Korean peninsula's industry standing in the North – he seemed pretty emphatic when he explained, in retirement, that “we burned down every town in North Korea”. Back in reality, North Korea had been devastated by the war in 1950s, and certainly enjoyed no industrial advantage over the South that was not given them by Soviet aid and their own tenacious rebuilding efforts.

[4] Ha-Joon Chang

[5] Korea's Place in the Sun, Bruce Cumings

[6] It is embarrassing how much our dreamers' argument rests on their make-believe, imagined history of the East Asian Tigers. They write on p. 40: “it's becoming quite boring always citing the tigers, but what else can we do?” Exactly nothing.

[7] p. 43, http://www.safp.cl/573/articles-3523_chapter3.pdf

Confederacy of economic dunces

2010-12-14T17:16:00.003-05:00

Inside Job

I particularly liked the fact that the filmmakers touched on the intellectual underpinnings of the crisis, in the Accountability section. Being frustrated at the sorry state of the economics discipline has been a hobby of mine for years, and while delving into it was outside the scope of the film, it was important that the filmmakers noted the connection between financial interests and the economic school of thought that gets funded in universities. The result is that the only worthwhile economics faculty in the country is at the University of Missouri-Kansas City, and every other economics department is fully in the grip of the neoclassical school. (The Post-Autistic Economics movement started in France, and so I hope that Europe is a little better.) This academic support of powerful economic interests goes back a while - the neoclassical school itself, from what I understand, broke away from the classical school because the classical school had taken a sharp turn to the left with Marx... and so the economists he called "sycophants of capital" turned toward focusing exclusively on mathematical abstractions about the economy and away from real world observation and analysis. (These mathematical abstractions all tended to show how swimmingly everything in capitalism went without government interference.) Anyhow, fast forward a hundred years and the tenuous relationship between economics and the actual economy has allowed a situation where politicians from Reagan to Obama can (in good faith, no doubt) listen to economic advisers who tell them (in good faith, no doubt) to adopt policies that will benefit only the very richest while impoverishing the rest. It's an infuriatingly frustrating situation - it's like if Freudian theory was the dominant paradigm in psychology, and whenever you went to see a psychologist s/he would tell you that all of your problems stem from Oedipal and Electra complexes and penis envy and whatever other creative rubbish came out of one man's imagination. Thankfully, the movie was pretty funny at times, and the absurdity of the whole situation does at least allow for a lot of humor, like this video making fun of the ridiculousness of (neoclassical) economic theory:

If only the Nazis had believed in theoclassical economics...

2010-12-07T23:10:00.000-05:00

The Economic History of Germany

I love how deftly the authors avoid the conclusion that the heavy-government-intervention economic policies of the Nazis actually did achieve impressive results (viewed from a purely economic perspective, of course). Like with this Zen shit: "Often the apparent successes of such economies are just illusions. Outsiders who do not know how such economies really work are often fooled by these illusions." Yeah, the "outsiders who do not know how such economies really work" - comprising the entire European continent plus Russia - were pretty fucking fooled by the illusory successes of the German military, fueled as it was by the German economy, which of course was successful only in an illusory sense. If only Europeans and Russians during the war could have had the Zen consciousness of this article's author, they could have realized that the German war machine hadn't in fact decimated their homelands, because it was based on an illiberal economic system which can only ever boast of "illusory" successes.

Also, I love the fantasy-economic determinism of the author - as if the only independent variable on economic success is whether or not a liberal economic system is in place. So after the war, "near-famine" conditions were "[t]he net result" of government interference in the economy. (Or 'government molestation of the sacrosanct free market', to put it in terms more in keeping with the spirit of theoclassical economics.) Externalities - like the utter devastation of the country by years of carpet bombing, or the deaths of millions upon millions of citizens - are irrelevant. Hahahahahahaha!

FOL

2010-12-03T23:24:00.000-05:00

Unemployment rate rises to 9.8 percent by Ben White

Fuck Our Lives. Of course, it's 9.8 percent measured the way we measure it now, after many rounds of statistical gerrymandering to lower the figure. If we measured unemployment the way it was measured thirty years ago, it would be double what it is now. Worst of all, the "ideas" this stat evokes in what passes for political discourse in the U.S. do not include actual job-creating programs.

I had always wondered how people could have been so retarded as to, say, worship a man as a living god, or engage in public ceremonies of self-flagellation... but this is helping me understand that human stupidity should never be underestimated. Thanks, Darrell Issa, for teaching me a lesson.

Modified Onion article: this time, for women

2010-10-20T15:43:00.000-04:00

Study: Men Always Answer Their Phones Unless They're Having Great Sex With Someone Else

Researchers say this is what is happening 100 percent of the time when men don't answer their phones.

BLOOMINGTON, IN—A new study released Monday by sociologists at Indiana University found that men will always answer their telephones unless mind-blowing sex with a woman other than the caller prevents them from doing so.

The findings were consistent across all demographic groups in a sampling of 500 males between the ages of 18 to 35, which included men who were romantically involved with the caller but had requested some time apart to clear their heads, as well as men who had dated the caller briefly but assumed it was understood by both parties that the relationship had not worked out.

"No matter who they were, or what their perceived or actual relationship with the female caller was, men who failed to pick up the phone were statistically all but certain to be deep in the throes of coital passion with one or more sultry, feminine lovers at the time of the call," researcher Patrick Berger said. "In addition, a vast majority of the male participants we observed had seemingly forgotten all about the relationship they once had with the caller, and were, in fact, completely consumed by the sexual gratification they were currently receiving."

"A type of gratification they would hesitate to even call 'sex,' since it was so much more intense and transcendent than any kind of sex they had experienced before," Berger added.

The study revealed that 80 percent of the time, men who declined to answer their phones were, at that very moment, being sexually pleasured by a woman superior to the caller in terms of looks, sexual technique, and stamina. Researchers also found that a majority of men picked up the phone, examined the caller ID, and told their female lover "It's nobody" before continuing with sexual intercourse.

In another 15 percent of cases, male research subjects had just journeyed to a land of pure sexual delight with another woman and were, at the time the phone rang, smoking a cigarette while letting their fingertips graze over the unusually tight vagina that had just brought them to, on average, four orgasms. The remaining 5 percent of non-answerers consisted of men who were stimulating their own genitals, either while talking on the phone to another woman, instant-messaging another woman, or simply imagining another woman who had sexually rocked their world on a recent occasion.

"It's true that in a negligible number of cases, men did not answer because their cell battery had legitimately died," Berger said. "But in each instance, they had either failed to charge their phone because they'd spent the night in someone else's apartment, or had used up their battery's power sending powerfully erotic fantasies to another woman."

The study emphasized that while men who failed to answer the phone were almost unquestionably with someone else enjoying the most volcanic sensual escapade they'd ever had, there was also the possibility that they were busy gazing deeply into another woman's eyes, knowing and feeling a type of love they had never known or felt before.

"In many cases, during the time of the call, the man was spending the afternoon with the woman at that museum he's always wanted to visit, afterward watching the sunset from the deck of the woman's boat," said social psychologist Michael Corbin, a coauthor of the study. "In each case, the man didn't want a ringtone ruining a moment of true spiritual connection with the first woman he had ever really, truly loved with all his heart."

"Sex, however, always occurred subsequently," Corbin added.

According to the researchers, the findings of this latest study are fully consistent with their previous behavioral investigations.

"Our prior research has already demonstrated that any communication between men and their old high school girlfriends will result in sexual relations and that a guys' night out invariably leads to sexual contact with multiple women met in bars," Corbin said. "We won't be surprised if instances of men getting a drink after work with that cool, funny female coworker they're always talking about yield similar results."

The study also concluded that 99 percent of men who pick up the phone quickly and enthusiastically do so because they are expecting a call from another woman.

2010-09-22T11:49:00.000-04:00

In addition to the core argument you laid out that government provides the skeleton for all economic activity, without which all of Ayn Rands' value-creating, rapist supermen would be useless puddles of muscle and entrails, there is also a historical argument. As if it needed to be made. But since the marketplace of ideas in this country seems to be overstocked with shoddy merchandise, here goes:

So, yes, without contract enforcement by the government, transaction costs on just about every deal would be so immense (think: hiring one's own private enforcement squad) as to snuff out all economic activity.

In addition to this, the business climate in this country that has allowed thousands of people to amass fortunes has been a product of government since the country's inception. One could start with the government's massive, let's say, appropriation of real estate, which provided a whole lotta Lebensraum for future John Galts to lay train tracks on. (Oops, bad choice of examples - the railroads weren't built by rugged capitalist individualists on their own, but through government subsidy, eminent domain, and trusts.) Or one could start with the protectionist policies the United States government enacted in the 19th century to protect and nurture its infant industries, which eventually grew to be internationally competitive, indeed dominant, providing cheap inputs and fat-walleted employees (customers) to other businesses.

Or one could do the proper American thing: forget history entirely, and limit one's scope to the present. In the present, government diplomacy twists arms to open country after country to U.S. products, allowing U.S. businesses to make more money (and preventing other countries from following the policies that countries from Britain to Korea used to become wealthy). Government subsidies keep agribusiness from collapsing under the pressure of cheaper food imports from countries with lower labor costs. Government regulation props up consumer confidence in the safety and quality of products in the marketplace, again lowering transaction costs. Government immigration policy keeps professions like medicine free from being completely overrun by millions of foreign professionals willing to work for far less than what domestic professionals currently enjoy behind a protectionist wall. Government environmental controls keep the commons and its wealth from being destroyed by individual self-interest. Government currency creation and maintenance prevents the deflation and economic contraction that would result from a precious metal-based system of exchange, and the inflation and busts that would result from competing currencies issued by private banks. Etc.

If you want to go somewhere where none of your wealth will be unjustly taxed by government, go to an uninhabited island to do your value-creating.

Sexual politics

2010-06-16T00:02:00.000-04:00

Sexual Harassment in the Federal Workplace Revisited: Influences on Sexual Harassment by Gender by Robert A. Jackson and Meredith A. Newman

The underlying problem is a lack of democratic control in workplaces. If I start my own company, and I get enough business to hire a couple of female employees, I will have a great deal of power over them. If I have no regard for morality, I can torment them to the extent that losing their job is worse. In other words, if they fear losing their jobs - and in this economy, and without an economic social safety net or family financial support, they would certainly be afraid of losing their jobs - then they will put up with whatever seems less bad than the prospect of being homeless.

It's as simple as that. Of course, there are many moral people who want to avoid causing people pain. If such a person became a dictator, they would make a fine dictator. Obviously, in the formal political context, we know that some people would make fine dictators, but nonetheless are against dictators simply because of the catastrophe a bad dictator would be. So we democratize power.

In the economic realm, our society has not yet evolved to the realization that economic power must similarly be democratized. We made a big step when we realized that dictators or kings were a bad idea, and that our formal political structures should be democratized. One day, if we don't kill ourselves first, I hope we will realize that economic power needs to be democratized as well.

In a Koons' Age

2010-05-19T10:46:00.000-04:00

It's been years since I was first introduced to Jeff Koons'... (word choice, word choice...) work, through this brilliant cartoon. If you haven't heard of Koons, lucky you: I can think of no better introduction.

German banker bailout

2010-05-12T20:01:00.000-04:00

Euro-Bankers Demand of Greece: The wealthy won’t pay their taxes, so labor must do so, by Michael Hudson

Wondering just what is going on with the economy in Europe, with what is called "the Greek bailout"? Why not turn to the same witch-doctor economists whose massively wealth-destroying failure to warn about the present crisis hasn't yet convinced them to put down the magic eight ball and stop making predictions and explaining economic events through the lens of their thoroughly discredited ideology? If that interests you, turn on the TV or open a newspaper. If you want to read analysis by one of the rare economists who did predict the current mess, check this out.

Like wealth on white

2010-05-10T08:17:00.000-04:00

Why some countries are poor and some rich - a non-Eurocentric view by Deniz Kellecioglu

Such an excellent paper, on why lighter skin color is closely correlated with greater economic wealth across the globe, between and within countries. Since the consensus in biology is that human concepts of "race" have no validity as biological categories but only as social constructs, this stark finding cannot be based on inherent "racial" superiority or inferiority. If you can't answer the question of why some countries are poor and some are rich, then you should read this article.

"...the lightest[-skinned] human ethnic group have [sic] about 1,6 times more GDP per capita than the second lightest group, six times more than the third group, and almost 12 times more than the fourth group. Put differently, the darkest ethnicities have only nine percent of the GDP levels of the lightest ones. This confirms the indication that there is a substantial orderly connection between nuances of morphological traits and economic levels in the world today."

Politics as fiesta de los toros: misdirected rage

2010-04-26T10:44:00.003-04:00

(Click on image for larger version)

Thirty-two kilos times hundreds of millions

2010-04-16T16:58:00.001-04:00

Thirty-two kilos by Ivonne Thein

Just like how the highest-paid professionals in the first world work similar hours to third world laborers, there's a cynical sort of poetic justice to how first world beauty standards are similar to the body types of those among the roughly 100,000 in the third world who die every day from lack of food.

Book Review: Tragedy and Hope by Carroll Quigley

2010-04-01T22:24:00.005-04:00

Let me start this review of Tragedy and Hope by explaining how I am only two degrees of intellectual separation from Glenn Beck. (I figure: you're probably not going to read to the end of this anyway, so why string you along for any longer than the first sentence anyway?) Glenn Beck is a devotee of W. Cleon Skousen, whose very funny The Naked Capitalist (despite the name, it's funny only unintentionally) was a sort of mad Cliff's Notes version of Carroll Quigley's Tragedy and Hope. Therefore, because I rather enjoyed Tragedy and Hope, only the John Bircher-er W. Cleon Skousen separates me from Glenn Beck.

With that behind us, let's get started with a profound exploration of the most important issues of our age. Although Tragedy and Hope was written in 1966, so the light it has to shed on our future is faint (and probably energy inefficient), it does reveal a great deal about our present. By that, I do not mean anything regarding conspiracy theory. Tragedy and Hope does cover conspiracy theory (and by that, I mean conspiracy of the sort which is proved daily in courts of law during conspiracy trials, not that which in American English is a pejorative meant to elicit snickers from the enlightened orthodox at benighted ~~heretics~~ conspiracy theorists), but that did not interest me much. Quigley's description of networks of English and American Anglophile bankers and industrialists in the first half of the twentieth century may be accurate; but to me, largely uninteresting. I already believe that human beings have a tendency to organize together to achieve common interests, and that the most powerful human beings are likely to be a good deal more successful at such endeavors than the average Rotary club or machinists' union. But this, I would think, would be of interest to very few - aside from anarchist groups who might like to know the names (and addresses) of those comprising the networks of the powerful so as to bring about their downfall, accompanied by the spontaneous birth of an entirely new form of unorganized society that will somehow be immune from the predations of local power fetishists. Right.

But there are many aspects to Quigley's Tragedy and Hope - he does a fair amount of rambling in this 1300+ page book that he dictated to his wife (fancy that!) - and some are more worth the read than others. High on my list is Quigley's contention that so many of the Latin American wealthy are insufferable pricks because their culture was so influenced by the Arabs (p. 1115-1119). And that portion of his book which Americans have been conditioned to call "conspiracy theory" and ignore are actually fairly interesting. There is his naming of the New Republic as a Wall Street-financed outlet for left-wing steam (p. 938) - I always thought there was something intrinsically disordered about that magazine - and his description of intellectual buffoonery in the military being the cause of much suffering during World War I ("[The First World War] presents an extraordinary discrepancy between the facts of modern warfare and the ideas on military tactics which dominated the minds of men, especially the minds of military men"). And then there is his very frank and confident tone throughout: he may be a bit overconfident when painting the ebb and flow of thousands of years of human history in broad strokes (the first two chapters, "Western Civilization in its World Setting" and "Western Civilization to 1914"), but when revealing networks of the most powerful economic forces in society, his frank and confident tone strikes a pleasing note of: this is how it is, I think we should be open about it. Entirely absent from his exposition is the moralizing hysteria of the John Bircher-ers, hilariously screaming that global networks of powerful bankers are dragging us towards communism, or even any paranoid, low-self-confidence leftism moaning that everything that has ever happened was planned by someone evil, rich, well-connected - and omnipotent.

So I'll be done with Quigley's descriptions of how the world's most influential networks are those which comprise the world's wealthiest and most politically connected. On to the interesting stuff: the dismal science!

Quigley's 1966 perspective on economics has probably never been anywhere near as interesting as it is right now. While his theories about powerful Anglophile networks probably did cause some consternation back when he wrote them, his writings on matters economic must have seemed unremarkable. Yet today, in an age when we have reverted in many economic respects to the early 1930s, his 1966 perspective on economics is more trenchant than most everything that will be written this year.

Let me take a moment to clarify things: by economics, I do not want you to understand "economics", the witch doctory that passes for a science in universities throughout the English-speaking world (at least). It is widely known that economists are a peculiarly boring sort: intellectually, they produce nothing but masturbation with all the purpose and vigor of a sixteen-year-old Catholic schoolboy. They create theories out of outdated (yet to the layman impossibly complex) mathematics that not only have no relation to the real world, but when actually implemented in the real world they invariably fuck it up.

Rather, I mean real economics: that which hundreds of thousands of college students across the planet seek to learn, but mistakenly take "economics" classes instead. Economics: the understanding of how humans organize themselves to produce things. This is what Quigley excels at. His analysis bears an indelible imprint from his age, and from those who experienced the worldwide economic collapse caused by the implementation of neoclassical economic ideas - and learned from it. Absent from his analysis are prescriptions derived from mathematical models of fantasy realms. He instead looks around the real world (sans, egads, mathematical models!) and draws conclusions from those economic systems that worked; "worked" in the sense that they produced more things, employed more people, and provided a better material life for those within the system. (Here one can find a glaring shortcoming in Quigley's analysis: no conception of how one system's wealth can be generated through expropriation of another.)

At times Quigley even seems something like a capitalist Marx, sharing the latter's morality and desire for a better life for the world's people, but believing that it was his preferred form of capitalism rather than communism that could carry humanity forward to a better existence. And his preferred form of capitalism is what Glenn Beck would call socialism (or communism, or fascism, or sadomasochism, or whatever Beck is shouting these days). With good reason, Quigley believed that the financial concepts of "pure" capitalism did not describe inescapable realities, nor circumscribe the limitations of human economic organization. Why would he, given that the mid-twentieth century's greatest economic successes were those that spurned orthodox economics and chose to organize human and natural resources along what-were-then-unconventional lines?

For instance: war. In World War II, the most successful economies were those that ignored the bleating of financiers and their economic witch doctors (also known as "economists"). Nazi Germany's unorthodox economic policy, and that of the Soviet Union and the United States, proved to be the most effective. Quigley blames Britain's and France's attachment to the conventional economic wisdom of their day for their unimpressive performance in arming to match Germany. Even during World War I, Quigley has nothing but derision for those we today call The Masters of the Universe: "The outbreak of war in 1914 showed these financial capitalists at their worst, narrow in outlook, ignorant, and selfish, while proclaiming, as usual, their total devotion to the social good. They generally agreed that the war could not go on for more than six to ten months because of the "limited financial resources" of the belligerents (by which they meant gold reserves). This idea reveals the fundamental misunderstanding of the nature and role of money on the part of the very persons who were reputed to be experts on the subject. Wars, as events have proved since, are not fought with gold or even with money, but by the proper organization of real resources."

One could say much the same about any other economic endeavor besides war. For instance: industrialization, as events have proved since Quigley's time, is not achieved by following orthodox economic prescriptions, but by the proper organization of real resources. Just ask South Korea, or China, or Japan, or the USSR.

But back to the narrative: Quigley wrote this book during the age of what he called the "pluralistic economy" and what others have called "monopoly capitalism" (not for Quigley - his definition of monopoly capitalism excludes the extent of state intervention that began in the U.S. during World War II): a capitalist economic system where large corporations dominate, and these are controlled by managers and technocrats who are recruited on a meritocratic basis. Corporate power is checked in turn by organized labor, financial interests, farmers, consumers, and most powerful of all, government. Sound like the economic system we are in presently? Nope.

What's the difference? The Great Depression dealt a serious blow to the power of financiers, and World War II proved that the contemporary financial orthodoxy was bunk. This hastened “the eclipse of the bankers, who [were] largely reduced in status from the masters to the servants of the economic system. This [was] brought about by [a] new concern with real economic factors instead of with financial counters, as previously." However, after Quigley's death there was a resurgence of financial capitalism, and financiers ascended once again to the commanding heights of the economy. This passage might sound more familiar: "The growth of financial capitalism made possible a centralization of world economic control and a use of this power for the direct benefit of financiers and the indirect injury of all other economic groups." Yet this is what Quigley wrote about the world economy circa the first few decades of the twentieth century – funny how history repeats itself.

Thankfully, not all of the stupidities of that period of history have reappeared. Gone, now, are the gold standards around the world which restricted money supply to a level far less than productive potential would allow, leading to a crushing deflationary depression that roiled the global economy. The Great Depression would ensnare all of the countries in the center of the global economy, but countries escaped it depending on how quickly they abandoned economic orthodoxy.

Quigley explains that it took World War II and its vast, successful deployment of economic and human resources to convince France, Britain, and the United States “that economic stagnation and underemployment of resources were not necessary and could be avoided if the financial system were subordinated to the economic system.” In Germany, however, “this was not necessary, since the Nazis had already made this discovery in the 1930's." The Nazi government had reduced “financial considerations to a point where they played no role in economic or political decisions. When decisions were made, on other grounds, money was provided, through completely unorthodox methods of finance, to carry them out. In France and England, on the other hand, orthodox financial principles, especially balanced budgets and stable exchange rates, played a major role in all decisions and was one of the chief reasons why these countries did not mobilize” in time to stop the Nazi war machine from laying waste to much of the continent.

Turns out, Quigley was being a bit premature in saying that this lesson had been learned. Or, if he was correct, it has certainly since been unlearned. Today, a dominant, if not the predominant narrative among Unitedstatesian intellectuals is that FDR's New Deal did not cure the Great Depression, but World War II did. This core of the narrative is correct. However, this narrative does not explain the cure to have been due to massive government spending leading to the employment of unused resources, but rather due to some inherent but unexplained aspect of war spending not shared by other forms of government spending.

Quigley's narrative is much more convincing. He explains that the New Deal did not make a clean break from the economic orthodoxy of prior decades which had caused the Great Depression. Roosevelt's “administration treated the symptoms rather than the causes of the depression and, while spending unorthodoxly to treat these symptoms, did so with money borrowed from the banks in the accepted fashion. The New Deal allowed the bankers to create the money, borrowed it from the banks, and spent it. This meant that the New Deal ran up the national debt to the credit of the banks, and spent money in such a limited fashion that no drastic re-employment of idle resources was possible.” Roosevelt's failure was to recognize that orthodox theories about the nature of money and its role in economic organization had been made outdated by the exponential rise in productive potential brought to society by the development of science and technology. The contemporary orthodoxy, with its reification of financial constructs and the attribution to them of powers they did not possess and laws they did not follow, had been helpful in earlier, simpler eras. But the system it advocated could not keep the money supply up with the increased ability of the economy to produce more wealth.

This orthodoxy was dealt another crippling blow after the 1937 rollback of New Deal spending sent the U.S. economy into a sharp tailspin. The idea behind the New Deal was that the economy was fundamentally sound, but just need a bit of a jump start in the form of limited government spending to replenish temporarily-depleted demand. But after the “jump start” spending stopped, and the economy froze in cardiac arrest, the Roosevelt administration “had to resume its treatment of symptoms but now without hope that the spending program could ever be ended, a hopeless prospect since the administration lacked the knowledge of how to reform the system or even how to escape from borrowing bank credit with its mounting public debt, and the administration lacked the courage to adopt the really large-scale spending necessary to give full employment of resources. The administration was saved from this impasse by the need for the rearmament program followed by the war.”

Quigley's conception of capitalist economic reality is worth discussing and quoting at length. He views the basic cycle of a capitalist economy as follows: “(a) purchasing power creates demand for goods; (b) demand for goods creates confidence in the minds of investors; (c) confidence creates new investment; and (d) new investment creates purchasing power, which then creates demand, and so on.” Conservatives tend to focus on point (c) in this cycle, and complain that high taxes on the wealthy undermine confidence and the incentive to invest, while liberals focus on point (a) and the need for the purchasing power of the poor to be increased through wealth transfers from the rich. Both views, Quigley argues, are misconceived to the extent that they are blind to the fact that they are points within a cycle, and are not the beginning or core of any economic problem. The problem is with the cycle in toto, because it is prone to falling into a “deflationary gap”, which Quigley defines as the result of “purchasing power [being] inadequate because of an excess of savings over investment.” Why does purchasing power become inadequate? Quigley explains that “the savings of a community are largely made by the richer persons in it, and savings increase out of all proportion as incomes rise. On the other hand, the incomes of the poor class are devoted primarily to expenditures for consumption. Thus, if it is correct that there is an increasing disparity in the distribution of the national income of a country, there will be a tendency for savings to rise and consumer purchasing power to decline relative to each other. If this is so, there will be an increasing reluctance on the part of the controllers of savings to invest their savings in new capital equipment, since the existing decline of purchasing power will make it increasingly difficult to sell the products of the existing capital equipment and highly unlikely that the products of any new capital equipment could be sold more easily.”

An increasing disparity in the distribution of national income is certainly what the United States and other countries have faced over the past decades, and the end result of this phenomenon has been, in general outlines, what Quigley described. The wild card has been the the financier's reconquest of the commanding heights of the economy, the financialization of the U.S. economy: the diversion of capital from productive investment to financial products. Income distribution in the United States has been concentrating at the top of pyramid for the past few decades, and with a lack of profitable investment options in the real economy, that concentrated wealth sought fantastic growth in the financial sector, which is nearly to say, in fantasy. Once the fantasy was realized for what it was, fictitious wealth evaporated and the economy went into shock.

Yet today in the United States, the Great Recession is being met with the same tepid half-measures – caused by a refusal to break from the contemporary economic orthodoxy – as the Great Depression was. After just a meager economic stimulus that featured no massive programs of direct job creation, economic witch doctors are already warning of overspending, unpayable debt and possible government default. These concepts do not exist in Quigley's narrative, because they had already been fatally discredited by the Great Depression and the thoroughly unorthodox economic strategies that had successfully cured it.

Perhaps the existence of the Soviet Union made it easier to see certain economic truths then than it is now. According to Quigley's account in Tragedy and Hope, good economics is not scrupulousness in adhering to the dictates of this or that economic theory, but rather ensuring that real resources are used productively, and not idled or wasted – however that is accomplished. The discrepancy between the U.S. and Soviet economies brought into contrast the fact that “the meaning of the word 'costs' and the limitations on ability to mobilize economic resources are entirely different in our system from the Soviet system and most others. In the Soviet economy 'costs' are real costs, measurable in terms of the allotment of scarce resources that could have been used otherwise. In the American system 'costs' are fiscal or financial limitations that have little connection with the use of scarce resources or even with the use of available (and therefore not scarce) resources. The reason for this is that in the American economy, the fiscal or financial limit is lower than the limit established by real resources and, therefore, since the financial limits act as the restraint on our economic activities, we do not get to the point where our activities encounter the restraints imposed by the limits of real resources (except rarely and briefly in terms of technically trained manpower, which is our most limited resource).” In our current economic situation, this is our tragedy. Financial phantasms we take for real economic limits cripple our productive potential, keeping sustainable agriculture, infrastructure and energy systems from being built, while the strange pair of unemployment and overwork ravage families and destroy individuals.

The primary economic problem we face today is ideological. We lack economic ideas and intellectual tools that appropriately describe modern economic reality and potential. If Quigley were alive today, he would likely summarize our current predicament like this: “Briefly, the international and the domestic economic systems [have] developed to a point where the customary methods of thought and procedure in regard to them [are now] obsolete." Let us hope it does not take the successes of another Nazi state to move us past these stifling economic anachronisms.

Mao and Hayek: BFFs?

2010-02-15T13:11:00.008-05:00

"[T]he ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas."
- John Maynard Keynes

Friedrich Hayek is probably the most influential economist of the 20th century. However, when his magnum opus, The Road to Serfdom, appeared in 1944 it was relegated to the fringe of respectable opinion. At the time, neoclassical economics was spurned for being unable to predict, or cure, the worldwide depression of the '30s. Economic planning – the bete noire of neoclassical economists – had demonstrated its potential in improving peoples' lives, from Japan to the Soviet Union to Germany to Britain to the United States. The future seemed to be one of an ever-greater role for government intervention in the economy, and an eternal sleep for laissez faire.

Neoclassical economics has since enjoyed a resurgence (much to the detriment of the world), and it would be hard to overemphasize Hayek's role in it. His anti-collectivist economic philosophy became and still is – in bastard form – the foundation of conservative and libertarian thought in the United States. Even the 'other' most influential economist of the 20th century, Milton Friedman, was an acolyte of Hayek's.

In fact, Hayek's influence spanned the world, reaching into post-revolution China and being adopted by Li Yining, an unorthodox economist who was interested in ways of making the Soviet economic model more flexible. Li became inspired by Hayek, and was pushed in a radical, capitalist direction by the rough treatment he received during the Cultural Revolution. Li is now one of China's most prestigious economists, known as “Mr. Stock Market” for his role in seeing through the creation of China's first post-revolution stock markets.

Although economists like Yi see the Cultural Revolution as an unmitigated economic and social disaster, Dongping Han's The Unknown Cultural Revolution provides a case study tending to show the opposite. Han's narrative of the Cultural Revolution is contrary not only to the dominant Western view, but also the seemingly official view of the Chinese Communist Party. The reason for this odd congruence of opinion, in the view of Han and others (like Minqui Li and Mobo Gao), is that the historically antagonistic West views all such revolutions unfavorably, and the Chinese Communist Party is today dominated by Mao's enemies and their intellectual heirs: precisely the targets Mao had in mind when initiating the Cultural Revolution.

What's strange is that the economic and political philosophy implicitly embraced by Han, and the philosophy explicitly propounded by Hayek, both share much in common while having much to inform the other.

...

Hayek is an apologist for classical liberalism, and how he defines liberalism is key to an understanding of his arguments. He defines liberalism as freedom, broadly speaking, but its most important aspect is “industrial freedom”, which he believes “opened the path to the free use of new knowledge” which before had been blocked by the “beliefs of the great majority on what was right and proper.” In The Road to Serfdom, Hayek's foray into economic history is maddeningly simple and short, and he conflates the development of philosophical, scientific and technological ideas with the development of liberal economics. Hayek knows that a truly liberal economy never actually existed during the 19th century, but it was a beginning that despite its infancy and at best partial implementation, should be credited with the material progress the Western world experienced during that time. One of many problems with this attribution of credit is his ignorance of the role the non-European world played in unwillingly enriching the former.

Hayek writes about liberalism in much the same way others do about capitalism; however, Hayek is writing about economic and political theory, not economic history. While in his actual usage, Hayek's “liberalism” and capitalism are coterminous, Hayek artfully evaded criticism of his theory by writing only about liberalism, an idea or ideology, instead of capitalism, an actually-existing economic system. Of course, an idea is much harder to criticize than its implementation. For instance, Hayek credited liberalism rather than capitalism with the rising standard of living Europe experienced around the Industrial Revolution: “[a]nd while the rising standard soon led to the discovery of very dark spots in society, spots which men were no longer willing to tolerate, there was probably no class that did not substantially benefit from the general advance.” If Hayek were writing about capitalism, this argument would seem a bit sophistic, since although standards of living improved on average, it would be impossible to argue that people occupying new classes and occupations, like the industrial wage-worker, enjoyed a better life than those in economic situations that no longer existed, such as the peasant with access to common land. Furthermore, there were many classes outside of Europe whose dark spots got only darker due to the “rising standard” enjoyed in Europe.

Hayek's conception of liberalism has competition as its core, which he defines as such: “parties in the market should be free to sell and buy at any price at which they can find a partner to the transaction and [...] anybody should be free to produce, sell, and buy anything that may be produced or sold at all,” without government, oligopoly or union interference.

And while Hayek hereby impliedly revealed himself as an advocate of a competitive market in child pornography whose members are free to hire the services of contract killers, he was not even half as daft as his latter day followers. He was not an ideologue with a pathological aversion to government. He also wrote that “[t]o prohibit the use of certain poisonous substances or to require special precautions in their use, to limit working hours or to require certain sanitary arrangements, is fully compatible with the preservation of competition. The only question here is whether in the particular instance the advantages gained are greater than the social costs which they impose. Nor is the preservation of competition incompatible with an extensive system of social services...” Try running that line by a modern-day self-styled follower of Hayek.

Hayek was also cognizant of the evils of what are today called externalities: the imposition of costs upon the surrounding society by profit-seeking players in the market. “There are, finally, undoubted fields where no legal arrangements can create the main condition on which the usefulness of the system of competition and private property depends: namely, that the owner benefits from all the useful services rendered by his property and suffers for all the damages caused to others by its use. […] In all these instances [where] there is a divergence between the items which enter into private calculation and those which affect social welfare; and, whenever this divergence becomes important, some method other than competition may have to be found to supply the services in question.” Why, that's enough to drive a tea-bagging libertarian nuts! Not for Hayek the deification of free markets preferred by his intellectual descendants, the theoclassical economists; unlike people such as Alan Greenspan, who disastrously believed the competitive market to be self-correcting, Hayek (perhaps due to his closer proximity to the Great Depression) knew that free markets were no panacea. For Hayek, government intervention into the economy was necessary as a matter of fundamental political and economic principle. Instead of the fervent market-fellating engaged in by his modern admirers and self-styled followers, what motivated Hayek was a true passion for freedom. However, his was a blinkered freedom blind to the tyranny of non-governmental power.

...

Mao was driven by a similar passion for freedom, but of a different sort – freedom from want, injustice and exploitation – that was blinkered by a blindness to the potential tyranny of governmental power. He seems to have believed, perhaps only initially, that the purity of government officials' revolutionary ideals would prevent government from approaching tyranny. When the first decade and a half of revolutionary government revealed either the falsity of this belief, the impurity of government officials' ideals, or both, Mao initiated the Cultural Revolution. Its goal was to realize the goals of the revolution by empowering the common people against the government. Mao was concerned that “capitalist roaders” – those who wanted China to take the capitalist road – were close to taking control of the government. He was also worried that government officials were corrupt, unaccountable to the peasantry, and had betrayed the peasant base of the revolution by appropriating the kind of power and privilege that pre-revolution officials had enjoyed – and that this lack of morality in itself was evidence that they wanted China to take the capitalist road.

The Cultural Revolution was an anti-government movement. Mao initiated it by end-running the state apparatus, appealing to the Chinese people directly and asking for their allegiance to a set of ideas: radically egalitarian ideas that ran counter to those prevalent within the bureaucracy. Ideas and traditions die hard, and people often overestimate the power of a revolution to give a country a fresh start. Rather, as in the Chinese case, the revolution successfully overthrew the previous government, but was unable to wipe clean centuries of societal and institutional culture. Former Red Army revolutionaries had taken up comfortable positions in the government, and carried themselves as if their wartime exploits had earned them a more comfortable, commanding life, just as generation upon generation of government officials had enjoyed throughout Chinese history. Furthermore, at the top of society, former business owners who had supported the Communists out of nationalistic motives were working to push China towards the path of capitalist development so as to make the journey more advantageous for themselves. Hence by appealing directly to the people to embrace revolutionary ideals, and by stamping civil disobedience with his own official seal of approval, Mao gave common people the courage and justification to rebel against corrupt or incompetent government officials.*

This is where the similarities between Mao and Hayek begin to appear. Hayek believed that an economic system like post-revolutionary China's would inevitably lead to the formation of unaccountable government cliques who would become the society's elite, hoarding goods for themselves and dooming the populace to a life of shackled penury. There is much in this analysis that Mao would have agreed with; except for the “inevitably” bit. Mao would likely have taken a more Critical Realist stance, identifying that economic system as tending to lead to, or allow, the formation of an unaccountable, exploitative government elite. However, this tendency can be effectively countered by structuring government in such a way as to make officials directly accountable to the people. This is precisely what the Cultural Revolution – in a necessarily hasty, unplanned and messy way – did. In Han's study of Jimo county during the Cultural Revolution demonstrates that the revolutionary devolution of economic control to common people radically undermined entrenched government power, unleashed the creativity and freedom of the people, and resulted in economic and social progress that continues to form part of the backbone of China today.

Hayek's economic reductionist philosophy was blind to factors such as history, culture, and the myriad possibilities of government structure. (No, Friedrich, political evolution did not stop with the United States' Constitution.) While Hayek believed that only “liberty” and “industrial freedom” could guarantee political democracy – in the sense of political power, equally shared by one and all – Han's book provides an illustration that democratic economic control can be just as effective. That is, instead of guarding the economic freedom of individuals, which includes the freedom to control others, it is possible to guarantee political democracy – Hayek's “liberty” – by creating a structure of economic control shared in equally by each citizen. Hayek's concept of economic freedom allows individuals to amass economic power and to lord it over the less powerful**; Mao's idea of spreading economic control to the people as a whole (as against officialdom) likewise allows individuals economic freedom – but only no more than one's neighbor has. In this way, Hayek's love of negative liberty – the freedom to be free of restriction and coercion (at least at the hands of a government, if not at the hands of an individual employer) – can be seen to be reconcilable with positive liberty, or freedom from want, hunger, domination and the like.

*Of course, not all of those damaged by the Cultural Revolution were corrupt or incompetent; unavoidably, many innocent people were denounced, harassed, beaten, unfairly lost their positions of authority, etc. But it is hard to disagree with the analysis of conservative historian Thomas Babington Macaulay: "We deplore the outrages which accompany revolutions. But the more violent the outrage, the more assured we feel that a revolution was necessary. The violence of these outrages will always be proportioned to the ferocity and ignorance of the people; and the ferocity and ignorance of the people will be proportioned by the oppression and degradation under which they have been accustomed to live."

**Here again Hayek was far less ideologically lobotomized than his self-styled followers. Hayek recognized that state intervention was required to overcome the tendency within capitalism towards concentration of economic power, hence opportunity, which was the cornerstone of his ideological justification of capitalism. He wrote that there is “much that could be done to improve the opportunities of choice open to the people. Here as elsewhere the state can do a great deal to help the spreading of knowledge and information and to assist mobility.” Also, “in a system of free enterprise chances are not equal, since such a system is necessarily based on private property and (though perhaps not with the same necessity) on inheritance, with the differences in opportunity which these create. There is , indeed, a strong case for reducing this inequality of opportunity as far as congenital differences permit...” Also, “some voluntary labor service on military lines might well be the best form for the state to provide the certainty of an opportunity for work and a minimum income for all.”

Patents on toliet paper

2010-02-12T07:34:00.000-05:00

Drug Makers Decry Indian Patent Law by Geeta Anand

Hahaha, great article, love this quote: "The U.S. would grant a patent to a piece of toliet paper". Sorry silly Indian, that's "anal-area feces-removal and cleaning technological device, new and improved, now with sparkles" to you! Check out the comments section: some dumbfuck Unitedstatesian chick suggests that India is poor due in part to its lack of intellectual property laws (I'm not kidding)...

Court Jester Supreme

2010-01-21T13:14:00.001-05:00

Court decision opens floodgates for corporate political spending by Kenneth P. Vogel

Reason #5,784 why Antonin Scalia's highest and best purpose would be beautifying a flower garden by serving as its fertilizer: He's a fucking moron, in a powerful position.
Evidence: his concurring opinion in Citizens United v. Federal Election Commission.

Supreme Court Jester Antonin Scalia: "it is far from clear that by the end of the 18th century corporations were despised. If so, how came there to be so many of them?"
Anyone capable of accessing a minimum of functioning brain cells: "There are four million pedophiles in the United States according to the Justice Department. I would not presume to speak for Scalia, but in general child molesters are quite despised. 'How came there to be so many of them'? Really? That's the best rhetoric you can come up with? Scalia, I'd call you 'shit-for-brains' if I weren't so certain that an earthworm's excrement has more functioning neuronal connections than you."

Supreme dumbfuck Scalia, his very next sentence: "The dissent’s statement that there were few business corporations during the eighteenth century—'only a few hundred during all of the 18th century'—is misleading."
Any entity with greater intelligence than a rock: "I'll quote your subsequent sentence, Scalia: 'There were approximately 335 charters issued to business corporations in the United States by the end of the 18th century.' So what exactly is misleading about saying that 'only a few hundred [corporations existed] during all of the 18th century' when, as you say, '[t]here were approximately 335 charters issued to business corporations in the United States by the end of the 18th century'? See, on earth, 'a few hundred' is an accurate, not a misleading, way to convey '335'. What is misleading is dropping the dissent's use of the word 'hundred', leaving only the word 'few' to modify 'corporations' when you paraphrase their proposition at the beginning of your first sentence - making it seem like they meant to imply that there were 'few business corporations', rather than 'a few hundred', in the U.S. by the end of the 18th century. You loathsome weasel."

Cheney's buddy Antonin Scalia: "To be sure, in 1791 (as now) corporations could pursue only the objectives set forth in their charters; but the dissent provides no evidence that their speech in the pursuit of those objectives could be censored. [...] Instead of taking this straightforward approach to determining the Amendment’s meaning, the dissent [demonstrates that the Framers didn't like corporations]."
Any animate or inanimate object other than Scalia: "Providing evidence that the Framers intended that corporations' 'speech' in the pursuit of political objectives - i.e., propaganda - could be censored is hardly a 'straightforward' approach. It would be an utterly nonsensical approach, given that the few hundred - that is 335 to you, Scalia - corporations that existed at any point in time during the 18th century in the United States did not engage in propaganda. You had might as well ask one to prove that the Framers intended the First Amendment to allow censorship of email spam. Why? Because propaganda is a 20th century creation, born out of new media like mass-circulation newspapers and radio (then television), exploited with the use of developments in psychology. Also, the extension of constitutional protections like those contained in the First Amendment to corporate "persons" was a 19th century bit of judicial activism on behalf of the railroads - nothing the Framers would have dreamt of, so much as contemplated. Therefore, the dissent's approach is the only reasonable approach possible: discerning the Framers' opinion of corporations so as to extrapolate as accurately as possible how they would have wanted the First Amendment to be interpreted in light of 20th century developments. Scalia, can you provide any evidence that your conception wasn't the result of Satan (assuming the form of the man listed on your birth certificate) sodomizing a mentally retarded goat (transformed by Satan into the woman listed on your birth certificate)?"

Incredible !ndia

2009-12-10T00:52:00.000-05:00

Limiting emissions

2009-12-09T17:39:00.003-05:00

Grophenhagen Conference - Prostitutes Offer Free Climate Summit Sex

"Copenhagen Mayor Ritt Bjerregaard sent postcards saying 'Be sustainable - don't buy sex' to city hotels warning summit guests not to patronize Danish sex workers during the upcoming conference. Now, the prostitutes have struck back, offering free sex to anyone who produces one of the warnings."

Um really? What exactly is sustainable about not buying sex? Certainly one could sustain the non-purchase of anything indefinitely - but this warning actually implied that buying sex is unsustainable. Well yes, if you run out of money, it is. But in environmental terms, buying sex is a fuckload more sustainable than traveling around the world for a fucking climate conference.

Copyrightwingnuts

2009-12-08T23:32:00.003-05:00

Update: Judge affirms $675k verdict in RIAA music piracy case by Jaikumar Vijayan

Today, musicians and the music-listening public need the recording industry the same way fish need bicycles. The recording industry was socially beneficial back when music had to be stored on big physical doodads that had to be shipped on trucks, displayed in stores, then marketed (then heavily, then more heavily) to stand out from the competition. Today, all of that is bunk. Superfluous. A drain on societal resources. There is no societal justification for the existence of the recording industry - why, so I can learn about the latest album from Smiley Syrup? The only recording of hers I would want to know about I can discover without the help of the recording industry, simply by googling her name along with the words "sex tape".

In fact, the continued existence of the recording industry is not only completely unnecessary, it is actually pernicious. Beyond committing the metaphorical equivalent of chopping kids' hands off for stealing gum - not to mention completely shafting artists in their division of revenues - the recording industry tends to lower our collective cultural product to the level of the lowest common denominator: look at the artists (and I use that word lightly) the industry promotes, which crowd out of the public consciousness artists with talent (but which may require more than an iota of thoughtful attention to appreciate). An undeniably better system would provide public financing for artists, just enough to allow those with great talent (or just a pretty face and a decent voice) to get their recordings out via the internet, where they can then make boatloads from live shows - which is where recording artists make the majority of their money from anyway.

On a legal level, one must be truly deluded to be oblivious to the true nature of law: a non-violent (at least overtly) means for the powerful to exert control over society. Now I wrote that in a way that may evince my disgust at this reality, but the same could be written to produce the opposite effect, like the conservative Thomas Macaulay formulation here: "What are laws but the expressions of the opinion of some class which has power over the rest of the community? By what was the world ever governed but by the opinion of some person or persons? By what else can it ever be governed?"

OK Tom, got your point, but the problem is that the ideals that define our society and give us meaning do not include "let's be governed by a powerful class of persons" - in fact, our ideals are sharply antithetical to such a vulgar basis for the law. Instead, our ideals demand that the laws that govern us emanate from us, collectively; again, sovereignty of the people is the opposite of sovereignty of some people. As the collective "we" is clearly not the provenance of the copyright "laws" that were used to hand down this preposterous judgment, the judgment is illegitimate in a fundamental sense.

Oh yeah and the recording industry might not have lost a dime even if that kid shared those songs with 50 million people. Those songs were bits of information, not manufactured goods. If I stole a manufactured good from a store, that's one less manufactured good that can be sold; but if I download a song, I haven't reduced the total stock of that song by anything - stores will have just as many copies of Jason Timberlake's latest album after I download it and put it on every computer and electronic device of mine. To actually prove damages in a justice system worth the name, the recording industry would have to prove that all downloaders of those songs would have bought the songs if it were not for the defendant sharing them for free. I don't know if my point needs any more elaboration, but I sure as fuck wouldn't buy a Jason Timberlake album.

Proof of intelligent life on the planet

2009-12-04T18:40:00.000-05:00

Frontline: The Women's Kingdom - In China, how free can a woman be? by Xiaoli Zhou

Here's one of the world's matriarchies that didn't get wiped out by a barbarian patriarchal society: "'Why would you want the marriage license to handcuff yourself?' a blunt-spoken Mosuo woman named Cha Cuo asks Zhou. For Mosuo women, it is not an idle question. In their matriarchal society, they do not marry. They practice what they call 'walking marriage' in which a woman may invite a man into her hut to spend a 'sweet night,' but he must leave by daybreak. If a pregnancy results from this union, the child will be raised by the woman and her family."

While men are widely considered to be more "unfaithful" than women, and so people think that monogamy favors women because they are more naturally monogamous, this is totally wrong. Women have adapted to the imposition of monogamy, which on a biological level is just a way for men to monopolize a woman for breeding purposes. Biologically speaking, while eggs are precious, even the best sperm is cheap. Therefore, sexual monogamy only makes biological sense for men because they have an acute evolutionary interest in monopolizing their partner's sexuality, and makes no biological sense for women who can get just as much (purely biological) reproductive benefit from a "faithful" man as from an "unfaithful" man. Monogamy evolved to benefit men by giving them social sanction to dominate female sexuality - this is clear by looking around the world and seeing that women are disproportionately and more harshly punished for breaking the monogamy taboo...

Straw man and a cowardly lion

2009-12-03T10:07:00.001-05:00

Why Kennedy Said No to Vietnam Combat Troops by William Pfaff

One of the straw men arguments Obama beat up on in his recent speech at West Point was that "Afghanistan is another Vietnam". Well of course it isn't. For one, Vietnam has much better weather. Obama pointed out that unlike in Vietnam, 1) in Afghanistan the U.S. has a coalition of 40-odd countries involved (I'm at pains to understand the relevance of this to a determination of the wisdom of carrying on this war - it seems rather like contrasting the two countries' weather patterns), 2) the insurgency is unpopular (sure, if by "unpopular" you mean that only 44% of Afghans have no sympathy for the various insurgent groups, while 22% have "a lot of" and 34% have "a little" sympathy; but then, so too is Karzai's government unpopular), and 3) the U.S. was attacked from (notice the preposition usage here: "from" rather than "by") Afghanistan (partially, yes; but the U.S. was just as much if not more attacked from Florida and Germany - besides: so fucking what? A political bombing was carried out in the U.S. in the 70s by a bunch of Chilean thugs, and no one suggested bombing Chile).

Three much more apposite points of similarity between the wars against Vietnam and Afghanistan are: 1) a domestic insurgency fighting to take back their homeland from yet another foreign occupier; 2) the U.S. propping up a corrupt government; 3) the U.S. government invoking a domino effect theory to justify the war.

He may be a murderer, but at least he's hypocritical

2009-12-01T01:06:00.003-05:00

New chapter in U.S.-India relations by Teresa Albano

Here is a real knee-slapper from Indian Prime Minister Manhoman Singh: "There are other things more important than GDP growth, Singh said - 'respect for human rights and multi-cultural rights. There are several dimensions of human freedom that aren't shown in GDP.'"

Singh, banking on the ignorance of his audience (good bet, by the way), tried to evade the obvious fact that any accurate comparison between India and China would be invidious in China's favor, by trumpeting India's wholly undeserved reputation for respecting "human rights" and "multi-cultural rights" and implying that China does not follow India's example.

Yeah, Manmohan, you are right. China does not follow India's example on human rights because China doesn't wage three simultaneous dirty wars against its own population in Kashmir, the Northeast, and the so-called "Red Corridor", resulting in thousands of deaths by violence every year. Not to mention the frequent pogroms in India led or collaborated in by government officials, against Muslims or Christians or Sikhs or potentially any non-right-wing-Hindu group. Maybe Manhoman should ask the 1-2 thousand Gujarati Muslims who in 2002 were... oh wait, they're dead, no one can ask them anything! Good thing there are 150,000 refugees of the pogrom, who could be asked to testify to the Indian state's respect for multi-cultural and human rights.

And that is only counting deaths by overt, fascist gang or military violence (aided by lovely laws that allow Indian state thugs to kill those merely suspected of "criminal" activity). Millions of people starve to death every year in "Shining" India (oh boy, do skeletons shimmer!)... though surely India's "respect" for human and multicultural rights is a great consolation to the starving dead and dying.

Unlike in China, where the disrespectful Chinese government forces its people - first by not killing them with bullets and bombs, and then by ensuring that they have food to eat - to face indignity over the course of a long life. The bastards! You tell 'em, Manhoman!

Private equity explained

2009-11-12T12:08:00.000-05:00

Private equity (PE) is like when you own a family business: all the equity (ownership) is private, that is, the business is owned by your family and not by thousands of investors on a public stock market. But because your chain-making factory or whatever is so small, you probably wouldn't refer to your family as a private equity group, unless you have delusions of grandeur.

Now let's say that your chains become insanely successful, and you have to open another factory, and another; and still you can't meet demand. People all over the country are dying to buy your chains. You want to expand further by building a a few megafactories and tripling marketing expenditures to establish yourselves as the premier chain manufacturer in the country and the world - because you are all almost entirely empty as human beings. After all, you've been working like dogs for years without any time for personal development, so you have confused yourselves into thinking that accumulating money is the point of life. But you don't have the cash for such a huge expansion, nor the expertise to run such a mammoth enterprise even if you had the cash.

So that's where a boatload of lawyers and bankers come in, to take the company public. Whereas now your family owns 100% of a relatively modest Chains Inc., after the Initial Public Offering of stock - when gamblers buy pieces of ownership in your company from you (while giving a generous cut to the lawyers and bankers involved of course) - you will own only 40% of the company, but you will have tons and tons of cash from all of the gamblers who bought your stock. Now you can loan some of that money to Chains Inc., and raise additional money from many willing banks using your newly-issued stock as collateral. With this pile of cash you can afford a massive expansion of Chains, and some experienced managers to run it. Now you've got enough money to make sure 50 of your great-grandchildren live like kings and queens.

But is that enough?

Not for your kids, one of whom went to business school, graduated, and went to work for KKR - the trailblazers of PE - to make enough money to pay for his coke and pedophilia habits. But this kid is making it to the big leagues of pedophilia - trips to Thailand just aren't cutting it anymore - and needs to have billionaire money to buy protection from society and its annoying "laws". This kid learned the PE ropes, and decides to use some of his inheritance to strike it out on his own by founding a new private equity group, and using it to by his family's company.

Chain Inc. stock is trading at $25 a share, and with 20 million shares on the market, is worth $500 million. The kid's got $35 million of his own money he can invest, so how is he going to buy the company, get his net worth up to the billionaire level to escape society's annoying attempts to keep kids out of his bed? The magic of PE, that's how.

He goes back to his boatload of lawyers and bankers, and says he wants to mount a takeover challenge for Chains Inc.: a $500 million company that he's going to try to take over with only $35 million in his pocket. Worse yet for him, once word got out that there's a takeover of Chains Inc. planned, speculators pushed the stock price up to $30 a share as they anticipated a rise in its value. Now he will need 20 times the money he has now, because he'll need to pay a premium on all those shares to get their present owners to sell. He needs to shoot for $35 a share - or $700 million for the whole damn company. So the bankers get to selling "junk" or "high-yield" bonds to finance the other $665 million dollars needed. These bonds are IOUs in the company's name - not the kid's - that pay very high rates of interest to compensate for the high risk involved (remember the company was valued at only $500 million before, and that's as an operating enterprise - if it gets forced into bankruptcy, then damn, when you chop the company up it might be worth only 3 or 4 hundred mil... and then the junk bond investors would be taking a bath.)

So, with a $35 mil payment of his own, and $665 mil in other people's money, the kid buys all the shares of Chains Inc., and takes the company private. Now he's a dictator with supreme control over the enterprise. Don't like how he's running the company? Get another fucking job. There isn't one out there? Then eat grass!

But damn, these junk bond IOU payments are fucking expensive, what with their 10-15% interest and all! The revenue stream ain't gonna pay for that. Well, that's where the kid's expensive business school education comes in. He breaks the union contract, lets the fuckers go on strike, and hires scabs. All the while he's shopping for buyers for his American factories, and looking to source all production in Vietnam. Once he sells the factories, he's got plenty of cash to pay the junk bonds with their high rates of interest, and maybe pay some of them back early. He doesn't need to actually buy the Vietnamese factories, he just pays them (very little) to make the chains. The formal costs of production are very low because most of them are borne (in the form of externalities) by the workers in Vietnam who get paid only a fraction of the value they add to production, and by those who live in the areas that suffer environmental degradation due to the mining of the metals and minerals that go into chain production, the factory production processes that create wastes and emissions, and the emissions required to ship the chains to rich markets in the U.S. and Europe.

Now all Chains Inc. actually owns is a management structure and intellectual property: brand, trademarks, patents, etc. The marketing is done on Madison Ave, and sales and logistics are handled in a relatively small office. Now the kid owns the entirety of Chains Inc., whose value other investors now estimate at over a billion, since he's cut so much "fat" from the company: non-slave-wage workers, and physical plant that's noncompetitively located in high-wage, no-slavery-allowed USA. With 100% ownership of Chains, Inc., the kid's a billionaire and can afford to be friends with enough politicians all over the country, and pay the media enough money in advertising, that no one wants to ask him too many questions about his collection of little shoes, and the little mounds of dirt scattered around his enormous backyard.

There you have it: private equity!

Genocide: India Shining

2009-10-28T16:58:00.000-04:00

Listening To Grasshoppers by Arundhati Roy

I've cobbled together something from this essay, as well as from another unrelated interview... I think it works as a preview to Roy's position on the Indian civil war:

"While our economists number-crunch and boast about the growth rate, a million people — human scavengers — earn their living carrying several kilos of other people’s shit on their heads every day. And if they didn’t carry shit on their heads they would starve to death. Some fucking superpower, this.
...
The poor, the so-called poor, have only one choice: to resist or to succumb. [Bollywood star Amitabh] Bachchan is right: they are crossing over, quietly, while the world’s not looking. Not to where he thinks, but across another ravine, to another side. The side of armed struggle. From there they look back at the ... Tsars of Development and mimic their regretful slogan: ‘There Is No Alternative.’

They have watched the great Gandhian people’s movements being reduced and humiliated, floundering in the quagmire of court cases, hunger strikes and counter-hunger strikes. Perhaps these many million Constraining Ghosts of the Past wonder what advice Gandhi would have given the Indians of the Americas, the slaves of Africa, the Tasmanians, the Herero, the Hottentots, the Armenians, the Jews of Germany, the Muslims of Gujarat. Perhaps they wonder how they can go on hunger strike when they’re already starving. How they can boycott foreign goods when they have no money to buy any goods. How they can refuse to pay taxes when they have no earnings.
...
Of course it’s horrible that ... policemen [are] killed. But they’re as much the victims of government policy as anybody else. For the government and the corporations they’re just cannon fodder — there’s plenty more where they came from. Crocodile tears will be shed, prim TV anchors will hector us for a while and then more supplies of fodder will be arranged. For the Maoist guerrillas, the police and spos they killed were the armed personnel of the Indian State, the main, hands-on perpetrators of repression, torture, custodial killings, false encounters. They’re not innocent civilians — if such a thing exists — by any stretch of imagination."

Schooling a teabagger

2009-09-14T11:42:00.011-04:00

Robert Reich Public Option Video

Robert Reich speaks directly on what the 'public option' is and why it is so important to health care reform.

How is a public option, which takes money in the form of taxes, and then gives it away in the form of bureaucratic health care, not socialism?

Oh -- and does it matter that a federal health care plan is unconstitutional?

I understand the fear, but aren't our soldiers given a public healthcare that comes from our taxes? Aren't our fire and police departments paid for out of our taxes? Would you decry these institutions and call them socialism?

If not, then why would you deprive me, a citizen of this country, the ability to have heathcare (which I can't afford...)?

Doesn't it say "do unto others as you would have them do unto you?" Then why allow people to die because big business (not big government) choses who will live and who will die? Every person in this country has the right to live, and a corporation choosing who will get heathcare and who will not (either thru financial realities, or preexisting conditions) is not just. We live in a free country, and our healthcare should be a right, not a luxury.

Wow J! I wish I had restraint like that ;)

nicely said!

You're not deprived from having healthcare -- you're just deprived from forcing others to pay for your healthcare.

Who made health care a right? Is food a right? Is the internet a right? When did it become a right to steal the bread of the laborer? Where does it say that in the constitution? Who defines who has what rights? If the majority decides on a "right," does their decree supersede the rights of the individual? If the majority decides that we should have the "right" to live in this country without hearing speech we don't like, can we then silence the minority?

Freedom means the right to own your own property and the bread you yourself make, and the right to choose what doctor and what procedures you want -- not have them dictated to you by some idiot bureaucrat.

We should also abolish police departments so people who can afford private security aren't forced to pay for the safety of everyone else. And the department of transportation, so people who don't drive aren't forced to pay for roads. And I'm pretty sure your high school diploma isn't valid, because people who sent their kids to private school were forced to pay for it.

"Owning" your own property means bupkis without a government with courts and police to enforce your property claims. And why do you have a "right" to the bread you yourself make? That makes perfect sense in a hunter-gatherer community, but in a large, complex civilization, you don't make bread. You might put flour and water and yeast together and put it in an oven, but the flour, water, yeast, oven, energy, etc., were "made" by thousands of other people. You have a claim to the bread you "make" because of a social contract that binds all of the thousands of joint producers together, and sets the terms of exchange.

Your underlying philosophical premises are absurd, which is why the arguments you build upon them are so easy to tear apart with a reductio ad absurdum - which is what C just did. The problem is, you arbitrarily (and implicitly) pick some random things and say the costs for these should be shared by society - and demand that the costs for other random things should be borne by individuals as they choose.

Ultimately, you are stuck with this ridicule-worthy point of view because it is the best thing the marketing and public relations people working for the "health care" industry could come up with. You now believe it, because they have successfully spread it throughout the portion of the population susceptible to conservative-sounding ideas. Unless you actually own a significant amount of wealth in the "health care" industry, and so benefit from the status quo, you are essentially being skull-fucked by the profiteers of our anachronistic, anarchic system.

It's just as easy to call you absurd. You're on the fringe -- you're a statist -- you apparently believe in a totalitarian utopia. Why don't you move to France where you don't have to work to keep your job? You apparently believe that the government owns our property. When I buy my bread, no one is forcing them to provide it to me. I'm giving them something in return. The market place is all about the free will. The government is all about controlling what you get or what your options are. You're the one who apparently believes in a primitive feudal economy, where we are all servants to our leaders who protect and provide for us.

Yes, we need the police and courts to defend property rights. But they should only need to enforce laws which are fair, just, and equitable, and respect the individual rights of people as defined by the constitution. But you don't believe in that apparently. You believe in tyranny -- as sold to you by the power-hungry state-run media we have today.

I would move to France but for their protectionist immigration laws that, just like in the U.S., keep wages artificially high by preventing a free market in labor from equalizing wages across the world.

By the way, I didn't just call you absurd - I went to lengths to demonstrate that your position is absurd. On a couple of levels. It's absurd on its face, but it's doubly absurd - assuming you aren't an heir to an insurance company fortune - because it conflicts with your interests while corresponding to the interests of the few who profit from our dysfunctional "system".

I'm still trying to figure out the role of government here. It's the government's responsibility to tell people who they can and can't marry, but not to provide an option to heal the sick and injured among its citizens, do I have that right?

By the way, I didn't state any of my beliefs, I only demonstrated why the beliefs you stated are ridiculous. You attempted to guess at my beliefs, and failed with near perfection.

You haven't really argued your point at all. You don't say anything to me that demonstrates that it's in my interest to go to the government for my health care instead of an insurance plan that I choose and pay for.

Right now I can go see whatever doctor I want, and my privately funded insurance plan will pay for it, as long as I've met my deductible. Do you honestly believe the government "insurance plan" will provide that for me?

I agree that we should allow more legal immigration into this country.

This plan is also unconstitutional, because it violates the whole concept layed out there that the federal government is only allowed to be involved in certain activities, such as national defense and managing the mint.

Not going to get into the constitution, except to say that we shouldn't treat it like the Koran: divine revelation that got it right the first time and doesn't need to be changed. Or the Bible.

I'm not arguing my point because I haven't the time or interest. Suffice it to say that if you educated yourself about how civilized countries arrange their health care systems, you'd understand why a public health care system is in your interest. That is, assuming you aren't in the top 5-10% of wealth holders. If that were the case, naturally, you are better off in a system where the masses are abused for the benefit of a few. If you get off on that kind of system, by the way, you would love India.

"Enlightenment is the emergence of a person from self-inflicted immaturity. Immaturity is the incapacity to use one's understanding without another's guidance. This immaturity is self-inflicted if it is caused not by a feeble understanding, but by lack of resolution and courage. Dare to know! Have the courage to use your own understanding!" - Immanuel Kant, An Answer to the Question: What is Enlightenment? (1784)

If you're calling me immature -- you're a hypocrite! You're the one who is such a baby, such a child -- that you as an able adult want other people to be forced to take care of you. You apparently want a nanny state where all of your needs are guaranteed. What's next after universal healthcare? Universal food? Then I suppose you'll want me to feed you your food as well as be forced to give you a physical?? (At gunpoint, because if I don't pay my taxes I get arrested). It sounds like you're pretty wussy if you're not even grown up enough to want to rely on your own abilities to take care of yourself.

I'm showing the uncomfortable parallel between Kant's definition of immaturity and your thinking. Although a major difference is that you lack knowledge - for instance, about the public health care systems of every other industrialized country on the planet - not necessarily courage.

For the record, I don't think health care is either a right or a privilege. Rather, it is a good that we as a society could provide for everyone. It is well within the realm of possibility, and I strongly believe we should provide it. Likewise, I strongly believe we should provide the good of universal education. We could of course do without a public school system, and let those who can afford it pay for their own kids to go to a private school. This would leave millions of children uneducated however, through no fault of their own.

Public education and public health both have huge positive externalities or spillover benefits; who wouldn't want to live in a country with educated and healthy people, rather than a country with a large uneducated population with no health care?

At any rate, as young, healthy males, you and I have no problem providing for ourselves. But I have enough foresight to want a safety net in case I lose my health, job and the insurance attached to it (or the income needed to pay for an independent plan); I have enough compassion to want the same for everyone, including those not as able-bodied or otherwise fortunate as myself; and I have enough knowledge about the world to understand that universal, public health care systems work much better than the present anarchic, archaic "system" you are implicitly if not explicitly defending thanks to the "health care" industry's many well-spent public relations dollars.

I have enough charity to give a large percentage of my income to help those who are in need in such situation. It's not charity to be forced to provide the care through taxation. I feel good after I perform a voluntary act of charity and good about myself, but I hate tax day. If it's so wonderful to be forced to give welfare or healthcare through the government, why isn't tax a happy day like it is when you do a charitble [sic] act?

In other words, I feel like for every dollar the government forcibly takes from me for public welfare, it takes away another opportunity for me feel good by voluntarily giving it someone in need, like someone who has cancer and needs help paying the hospital bills.

If the U.K. style health care system is wonderful, why do the poor (those that can't afford the black market), still wait and die in queues there waiting for life saving treatments?

Again, your ignorance is painfully obvious: the UK has better health outcomes than we do - this despite a shitty cuisine and weather. Not to mention a greater fondness for binge drinking and petty violence.

And your generosity is commendable, if not your motives. Personally, I would not want to be handed charity from someone I know in a time of need - I'd rather that which you consider charity be rather part of standard social services to which I am entitled, and for which I paid my taxes for. If you have ever been the recipient of charity, you would know that the giver's good feelings come at the expense of the recipient's pride.

And tax day for me isn't happy, because I know that over 50% of the discretionary budget of this country is devoted to killing.

Yes -- there is a certain natural human desire to provide for ones self.

I am aware that some other countries have better longevity and infant mortality rates than the U.S. You naively assume ignorance simply because I haven't pointed out every fact you happen to know or believe you know about the European system. These statistics may be because people here are free to make their own choices about whether they want an annual checkup and whether they want to pay for it. Even if tyranny result in better longevity, I would rather die a year or two earlier and be free than to live my whole life under healthcare (national socialist or Nazi) tyranny. The quality of my life matters as well as the quantity. I'm happier in our system than I would be in the U.K. I relish my power as a consumer to decide my own fate. You have the same power to decide yours, yet you seek to deprive all of us of basic human rights, the right to keep that which we earn and not have it stolen from us.

"There is a fundamental difference between healthcare and defense. Healthcare can be efficiently provided for voluntarily by society (rather than the government), defense cannot. Defense is ineffective without central command and control. Healthcare thrives without central control.

The primary role of the government is to protect our rights from being usurped by others, not to "provide" for us. The writings of the founding fathers seem quite clear on this. Rights are given by God, not by the government. Life and liberty are God-given rights, because left alone, we would have life and liberty. Healthcare is not a God-given right, because it requires the service of others. If healthcare was a basic right ensured by the constitution, why did it take more than 200 years to recognize it as such?

Yes, society has an obligation to care for the poor and provide healthcare. Government has no such obligation. Two separate things IMO."

That last quote was by my friend J. He just put it on another link.

Maybe people don't see the doctor voluntarily as much as they should, or exercise as much as they should like they are trying to force people in the U.K. But once a person is sick, I believe we do a much better job. Compare these prostate cancer 5 year survival rates:

U.S. -- near 100%
http://info.cancerresearchuk.org/cancerstats/types/prostate/survival/

U.K. -- much lower, even though they should presumably have access to the same technology and you insinuated that they are somehow more civilized than we are in Europe:

http://info.cancerresearchuk.org/cancerstats/types/prostate/survival/

So your saying that your motives in forcing others to pay for your healthcare are more noble than my motives in wanting to freely give to those in need? If so -- that doesn't make any sense to me.

The defense budget is not devoted to killing. It is devoted to the prevention of the killing of Americans, and to some extent the killing of others as we come to the defense of other free societies. Also -- it prevents killing because nobody wants to go head to head with us anymore, so they don't even try. Casualties today are at incredibly low on both sides of the war compared to what they were when our military was more comparable to the rest of the worlds. But, if you don't believe in defending a free society against those who would inflict tyranny on us, I could see why you would be in favor of weakening our military.

The military only makes up about 21% of the U.S. budget. Twice as much is engaged in unconstitutional programs started by FDR and Lyndon Johnson.

If you don't like the constitution as written, you should seek to change it first through the democratic process.

well, friends... i'm glad to see that a little facebook post can garnish some truly agitated discussion.

May I throw a bit of civility into this discussion-- because while both of you do remain on the outermost fray of your respective sides, these fundamentalist thoughts (and name calling) aren't going to help us solve the larger crises of our time-- namely budget problems (which, N, is inexcusably linked to our heathcare problems... and our defense budget).

There is absolutely nothing UNCONSTITUTIONAL about helping your fellow man-- this is right to Life, Liberty, and Justice as I understand it-- and I hope you both agree on that. The 21st century presents us with a challenging question of how to supply that, because of the damaging nature of a capitalism that runs well over the common man in search of another buck.

While N, you may be the most altruistic human on the planet and give throughly to the arts, sciences etc., but I highly doubt that whatever money you have/make is enough to supply for those truly in need (namely those who are either forced out of work by the bureaucrats who decided to tax the poor and give to the rich, as the last administration was so fond of doing, or those forced under due to illness).

To say that it is unconstitutional is to be ungodly in your definition... and I suspect that is something you don't want to be. The debate we are having IS the change we seek thru the democratic process, and as Obama said-- if you present a better idea, he will listen (much to the chagrin of many people on the lef. In the first decade of the 21st century, it's actually one of the few times the democratic process seems to be moving forward (albeit slowly and irrationally, as we are pushed to petty insults (read: this thread) or in congress (read a Joe Wilson (R; s carolina)).

I encourage the debate to continue, but don't allow the entrenched thoughts cloud the real challenge of what we need to accomplish-- real reform that allows for every human being to live by those glorious words-- with Life, Liberty, and Justice for all.

Depends on what spectrum you are looking at - if you were looking at an international spectrum of political opinion, I'm smack in the center, while N would be off the charts to the right. Even conservatives in Britain don't dream of abandoning their system of socialized medicine. (Socialized medicine is where the government operates the major part of the health care system, while single-payer systems are where the government is the sole insurer and purchaser of medical services, but the providers tend to be privately owned.)

Then again, looking at an international spectrum of opinion, the U.S. is quite the hermit kingdom, home to quacks and wackos of all kinds. Our "left", if exemplified by the New York Times, would be center-right (politically) from an international perspective.

Minus the qualifiers - which I would point out were added by every single belligerent country over the past millennium at least, so you can guess at how valid they are (hint: probably not very) - you were forced by reality to concede that the military portion of the budget is for killing; allow reality to force you to concede the correct percentage as well: http://tinyurl.com/llpc44 ... CDI's figures exclude trust fund spending, as the US government used to do back before 1964, when to evade criticism of its war spending Johnson watered down the official budget with a little good ol' American accounting ingenuity.

By the way, merely asserting something does not constitute an effective argument. Stating that the military should be provided by society as a whole through its government, but health care should not - because one asserts it is done effectively through the market (it is not: http://tinyurl.com/6xnebm ) - is of equal validity to my claim that I am the world's greatest basketball player.

Still more absurd is your desperate attempt to provide an evidentiary basis for your assertion by cherry-picking one disease the health outcomes of which are better in the U.S. than Britain. Analogy: I am the greatest basketball player in the world, because I have won many games in the U.S., and in Israel. (Actually, my analogy is inapt insofar as I provided two examples to your one.) Read this report, or skip to page 155 at least: http://tinyurl.com/yrsbb8

J -- I would be interested in getting your reaction to this article (I'm not trying to convince you of anything):

http://online.wsj.com/article/SB10001424052970203440104574402591116901498.html

Full disclosure -- I like Jews and how bright they generally seem to be, and I think we should help defend Israel and allow it to use a united Jerusalem as their capital.

I guess we have a fundamental difference of opinion about what this country is about: I believe it should be a beacon of freedom, and capitalism is one manifestation of that. You seem to believe that this freedom is oppressive. I don't see how me buying private health insurance oppresses or how my insurance company oppresses anyone else. They are not forcing anyone into their plan, nor should they be forced to insure you if they don't want to. Likewise, Doctors should not lose their freedom to treat whom they will.

Better to ask why some Jews (like Podhoretz) are reactionaries... I'd surmise that century after century of being at the bottom end of European societies' (not to mention the U.S.) totem poles being ostracized, excluded and hated, shaped Jewish thought such that it tended to focus on and champion the rights of the underdog, the poor, weak, oppressed. Hence the long tradition and prominence of social justice among Jewish intellectuals. Like that Jewish guy... what's his name... Jesus. Whom you purportedly follow, right? The guy that railed against the rich whenever he had a chance...

There is freedom to, and freedom from. Being relatively well off, you cherish the freedom to do or not do as you wish. Most people in this world, however, would love to have the freedom from hunger, sickness, homelessness, exploitation, etc. that you already enjoy, and don't give a damn about the freedom to own a printing press, freedom to choose which insurance to buy at $5,000 a year, freedom to drive a Hummer - freedoms which are completely illusory, even if formally granted - for the vast, vast majority of people on this earth.

So you're saying that the money I've rightly earned through hard work was somehow gotten at the expense of others? How does me earning money somehow impede the freedom of others?

It might seem incomprehensible to you now, but it won't after reading a book by Immanuel Wallerstein or others on world systems theory (like Introduction to World Systems Theory by Wallerstein), or the history of the world economy - particularly on the continuity of exploitation from colonial times to the present. Check out Open Veins of Latin America by Eduardo Galeano and Michael Hudson's Super Imperialism. The former is really impassioned and easily readable, the latter is drier (written by an economist who worked for Chase and now consults for governments... yawn) but the subject matter is fascinating.

I'm not interested in what they theorized on the macro level. I want you to tell me how I am exploiting others by working hard and having control over the fruits of my labor?

That's a bit difficult for me to explain, and for you to understand. Like explaining how the lighting in a movie was really well done, starting from how electrons were emitted from the excited atoms comprising the filament in one of the bulbs used to illuminate one of the scenes in the movie...

But here's a sample. And I'll again encourage you to check out the books I recommended for a macro understanding.

You work at a job making considerably more money than a free market would dictate, thanks to the protectionist immigration laws the U.S. government has in place. If you are a doctor, you are protected from reams of Indian and South American doctors who would otherwise move here in droves to take advantage of our higher wages, eventually driving them down as the increased demand in their countries drives wages there up, finally reaching an international level that is much lower than the current level in the (highly protected) U.S. Same goes for just about any job, not just high skill or low skill professions.

With your inflated paycheck, you can now buy any number of goods imported from other countries. And not only is your paycheck inflated, but the value of the currency your paycheck is denominated in is inflated as well. Ever since the first Bretton Woods agreements, and owing to the destruction of the rest of the industrialized world during WWII, the U.S. dollar has been the word's key currency, in which most commodities are traded and most savings are denominated. After the U.S. reneged on its promise to freely convert $35 for an ounce of gold due to the budgetary strain of the war on Vietnam, the dollar became a fiat currency. Today, despite recurring and ever increasing trade and budget deficits, the value of the dollar hasn't plummeted - contrary to what orthodox economic theory would predict, and to what would happen to any other country's currency if that country followed the same "irresponsible" fiscal and trade policies.

Due to a number of factors, among them path dependence, China's export-led development strategy, U.S. military hegemony, and the oil-for-debt deal made between the U.S. and Saudi Arabia in the 70s, your inflated paycheck contains inflated dollars, so when you buy a clock made in China the purchase is doubly unfair already, from the get-go. You are trading a miniscule amount of your labor for a relatively substantial amount of labor from a man or woman in China. The trade is already distorted by immigration laws that prevent the international equalization of wages, and by the overvaluation of the US dollar.

But, you say, the Chinese factory worker, or the Indonesian sweatshop worker, or the Mexican peasant, etc., I buy my clock, pants, or oranges from is free to refuse to enter into this deal with me. Yes - but "free" in a sense so meaningless as to be absurd. Free to engage in this deal, or starve to death, along with his/her family. But you say, Nick Kristoff from the NYT says that sweatshop jobs are better than nothing for the workers so employed, so we shouldn't disparage them?

Yes, but Nick is ignorant of the economic history - apologies, another macro concept - that puts peasants in the position of having to choose an empty stomach or a sweatshop, a history that begins with colonial powers forcing peasants off of their land, making subsistence farming impossible (though it had been quite possible, in fact the norm for most of the period of human civilization), and creating a large surplus army of landless laborers that can be exploited for either plantation monoculture or urban factory work. A process that operates even today.

Hence by getting your inflated paycheck, denominated in inflated dollars, and using that money to buy goods from other countries, you are in effect exchanging an unfairly small amount of your labor for an unfairly large amount of others' labor. A trade which would never be made between you and anyone free to set their own terms, or even free to reject such an unfair trade.

Fin.

Ok. I agree that the U.S. labor market is protectionist, and I would be in favor of opening the borders to vastly expanded legal immigration. I think the real reason people view immigration as a bad thing is because of welfare, so to do so we would need to reduce welfare. The Roman Empire had the same problem -- at first immigration was viewed as a good thing -- but then it became a bad thing with free bread and circuses, until this anti-"barbarian" stance eventually overthrew the empire.

You don't address the fact that protectionist labor or import policies drive up consumer prices incredibly in this country -- my so-called inflated paycheck won't by as many goods or services in this country as it would in others.

I think that I would still prosper in such an environment, but my guess would be that you would still view me as somehow exploiting others and that my prosperity would be found at the expense of others.

Your propensity for insulting my intelligence because I have different political views than you is foolish, especially considering that you probably have no clue what my academic qualifications are. If you want to be a persuasive writer, start by not insulting your audience.

So -- I wonder what you think is the difference between an "exploited" worker, and a non-exploited worker? Just because one person has a higher than average income, how is not exploited if he believes his long hours are not fairly compensated? Maybe this higher-paid worker feels that he is forced to work instead of not working so that his large family and those he helps via charity don't starve.

I could argue just as easily that those receiving social security or medicare payments out of my paycheck are exploiting me and my hard work, except I have a gun to my head, and the worker in a supposed sweatshop does not.

Yes -- the sweatshop worker has to work to survive, but don't we all. If they don't like their job and want a better one, why don't they start another business -- become the employer themselves? With microloan charities, such an enterprise is definitely possible. Maybe it's because their government, through onerous regulations and taxes, makes it very difficult to start and run a business in their country. It seems to me that these so-called sweatshops are usually located in societies which have less economic freedom, more regulation, higher taxes, and are often undemocratic.

That's why we should help such countries, encourage them to have more freedom so that they can be free to lift themselves out of poverty. I would also contribute to charities which help teach such entreprenurial skills to people.

Access to freedom (and by extension capitalism) helps people orders of magnitude more than any form of government dole could ever do.

Like I said, read the books. Like I said, it is difficult to explain from a micro perspective what are better viewed as macro phenomena. I have little idea of your intelligence, but copious evidence of the insufficiency of your knowledge. Two separate things, my friend. If you memorized the phone books in every county in this country, I'd consider you the most intelligent person of whom I'm aware - and a complete fucking moron, if the contents of those books were all the knowledge you had.

Likewise if you memorized the holy books of every religion ever - or the complete works of the Chicago school neoclassical economists. Who have clearly influenced you.

I don't care one whit about your "academic qualifications". You need to educate yourself out of the black hole you are in, with such utterly foolish thoughts as 'economic freedom allows countries to lift themselves out of poverty'.

Believing that might have excusable - although still bacterium-level stupid - ten years ago, back when "academically qualified" people across the world were treating Tom Friedman's Flathead book and the ideas therein like Holy Writ, but today it is clear to everyone with open eyes connecting to a functioning brain that neoliberalism is terribly, horribly wrong. To continue to espouse ideas so paleolithic is pathological.

And before you think that my vitriol is out of place, or I'm being cynical, or mean, and my vehemence is out of all proportion to the topic at hand, know this: neoliberalism has been implemented throughout the world on a scale unprecedented for any other economic ideology. The results have not been completely tallied. We know that 2 million people died prematurely in Russia after its transition to neoliberalism; we know that growth rates in Africa and Latin America since the 1980s, when neoliberalism first began to be implemented, have been significantly lower than in the decades immediately prior - while in Asia, led by non-neoliberal China and the Tigers, growth rates have not suffered.

Most tellingly, perhaps, we know that around 30,000 children - just children - die every single day (want to guess how many died just as I have been writing?) from malnutrition and hunger. We also know that there is no shortage of food on the planet. Ergo, 30,000 children die every day because of the distribution and allotment of goods, that is, the economy, that is, our system of economic organization - a system which, looked at on a worldwide basis, can only be described as neoliberal capitalist. So think about that when your feelings get hurt because you feel that I am insulting your intelligence.

And what really tickles me is that the only time you can get yourself to agree with me is when I use the magic word "protectionist", which, as every educated person has been taught - in accordance with neoliberal ideology - means "bad". Or perhaps the Orwellian "not good" would be more appropriate.

You obviously don't want to have a rational debate if you assume that you're smarter or more knowledgeable if you agree with your political views. It seems arrogant and foolish to me.

Maybe you aspire to be in the communist upper class where you get to be the effective wealthy in your country that gets to decide how everyone else's wealth is redistributed. If so, I can understand why you would want to live in such a system. Otherwise, I can't believe you would aspire to live in the squalor of the common man in communist Russia where you have to wait in line for your daily bread because you're not allowed to trade and barter like you can in a free country.

If that is your utopia, I hope you go somewhere else to try it. I hope you go oppress some other people, because we don't want it in our free country. And if so -- if you're an enemy of freedom -- then so be it. We will fight and win, because this is America, the greatest country to ever be created, and its freedoms deserve to be protected, defended, so that we can live our lives as we see fit instead of under the thumbs of tyrants like you.

I hope you, Obama, and everyone else in the liberal wing of politics fails at what they are doing, because they are studying and seeking to destroy our freedom, to live, work, prosper, worship, and rear our families as we see fit.

You would have your government be your family that you can depend on -- well I prefer my family, and to depend on them when I need help -- they're a lot nicer than some dolt of a government bureaucrat or communist dictator could ever be.

If it comes down to it -- if it comes to war with those that seek to destroy our freedom to live as we live, then so be it. But we will win, if our cause is just, and if we repent and serve God.

God always supports and defends the cause of freedom, if the people will repent and serve Him, and I believe He will uphold us if it comes down to fighting tyrants like you.

You are out of your bleeding mind. Not only because you believe in an invisible, omnipotent man in the sky who will send those of his children who displease him to be burned and tortured and stabbed and flayed and choked for all eternity - and who loves us infinitely - but because you think I am a wannabe tyrant. Which is somewhat crazy to begin with, given that I have evinced zero desire to dominate and control, and much empathy with my fellow humans.

But what makes it pure batshit bonkers is that your belief arises from the fact that you seem to think that neoliberal or laissez faire capitalism is at one end of a political spectrum, and iron-fisted Stalinism is at the other. I can think of no other reason for you imagining me to be a wannabe tyrant.

Like libertarians - who are just poorly-read anarchists - you seem to think that a world dominated by un-elected businessmen - who, in the absence of governmental control would inevitably create monopoly after monopoly - would be the epitome of freedom.

I, on the other hand, want to see democracy strengthened, and democratic control extended, beyond merely certain government offices to the economy as a whole. I despise tyrannies, such as constitute every single business in the world in which workers have no say over the direction of the enterprise of which they are a part. You, however, are blind to the power of the unelected, illegitimate, unrepresentative neo-feudal lords who control groups of producers and tools we call corporations.

You are immature, according to Kant's definition, for failing to take the initiative to question your society's conventions - and this explains your blindness to that which should make you indignant - in this case, economic tyrannies - given your professed commitment to freedom.

You would forcibly take my money from me to do what you think you would do best with it against my will. That is the same type tyranny that the revolutionaries fought against. Because you would glut yourself and others on my labor, and seek authority over me to force me to live my life how you see fit -- that makes you an aspiring tyrant in my mind.

And about God -- and the belief in Him being crazy -- you have no evidence that he does not exist. You cannot prove his non-existence through your intellectual arguments. You can only assert your belief in His nonexistence.

And I do not believe in oppressing other religions though force -- and neither does God. That is why He loves and supports freedom.

In terms of tyranny -- the difference between me and you -- is that I believe the misuse of force by the government to force benevolence on people is tyranny, whereas you seem to believe that people voluntarily (without force) coming together to run a company is force. And you seek to prove that that voluntary enterprise is forced through your macroeconomics nonsense arguments. You are a communist, it seems, and therefore you would seek to oppress others. Communism is forced and tyrannical, capitalism is evidence of freedom.

To pick just one example of your poor reasoning would admittedly be arbitrary and incomplete, but I'll do it anyway: it is nearly impossible to prove a negative. Why don't you prove that the last pair of shoes I wore are in fact omnipotent and omniscient, and are invisibly orbiting the moon, from where they control all events on the planet?

That's the point of this important site: http://glennbeckrapedandmurderedayounggirlin1990.com/ After all, Glenn Beck has yet to disprove these serious allegations...

And one more example of pervasive, flawed reasoning: you merely assert, when the burden upon you is to prove, or disprove.

To me there is plenty of proof that there is a God -- the ordered universe and the elegance of life and it's systems, including that of evolutionary biology. But the strongest came when I simply prayed to God to ask Him if a book written about Him was true, and I got my answer. You can do the same if you want, but it does take effort.

To me -- it's a question of innocent until proven guilty -- whether it's Glenn Beck or accusing God of not existing.

You can find out now or after you're dead, when it is too late to act in this life on that knowledge.

I do want to express that I think you're either lying or deceiving yourself when you say that you want to do good by promoting socialism / communism. You see -- you don't want to do good to your fellow man; you want to force me and others to do good to our fellow man.

And there's a tremendous difference between doing good and forcing others to do good. It is the difference between good and evil, God's plan versus Satan's plan, charity versus tyranny.

Let me say this again -- you don't want to do good in promoting socialism -- you want to force others to do good.

More assertion, when proof is required. That is fitting for someone who believes in a religion - which are, after all, the biggest bundle of proof-less assertions known to man.

Hey, since you seem to know more than I do about the inner states of my mind, can I just send you to the psychologist when I need therapy?

BTW, you might want to check out Acts 4 and 5. If you really believe in the tenets of Christianity, and the Bible, you should repent of your capitalist-loving ways, you whited sepulcher, lest God cast you into the fire meant for Satan and his helpers.

I can't believe this shit - I'm more Christian than you are, and I'm an atheist!

The united order, or law of consecration, as taught in the Bible, had nothing to do with the government, or force. It was a community of Saints VOLUNTARILY giving of their means according to their means, and receiving according to their needs.

Nowhere does Christ teach that we need force in order to be charitable.

About your inner state of mind -- are you then asserting that it is right to try to force someone else to do good? Or do you believe that we should only be allowed to judge whether someone's actions are good or even based only on their inner state of mind, and not on the actions themselves?

What happened to the "I don't want to force anyone to do anything statement?"

I'm just pointing something out from a book you put a lot of credence in: that the early Christians lived as communists. And that the Bible explains that your god struck dead Ananias (and his wife I think) for lying about some private property so that they could keep it and not share it all with the commune.

In fact, communism is the only form of economic organization the Bible endorses.

Again -- no one was forced to join the united order, and Ananias and his wife were stuck down for lying, not for refusing to join the commune.

There were millions of people all around the early Christians that they did not attempt to force in any way to join the united order.

It seems like we keep coming back to the same issue -- you want to force people to do something, but I want people to be free from such tyranny.

We keep coming back to you attributing to me beliefs which I do not hold. As I stated before, the difference between us is my preference for greater democracy - democracy that does not stop at, or is not restricted to, voting for political candidates. Whereas you, calling upon your spurious conception of freedom, want to limit democracy to its present boundaries in this country (the only country with which you evince much awareness).

Perhaps you could re-read our discussion, and attempt to finally answer how you are not being hopelessly confused at best and hypocritical at worstfor seeking to "force" me and others to pay for police and fire services for all, for instance, while inveighing against me for wanting to "force" you and others to pay for medical services for all.

Do you deny that state welfare restricts freedom in any way?

Just as much as state police, state departments of transportation, state food and drug administrations, state postal services, etc., etc., etc., restrict your freedom.

So you're saying that because the government restricts freedom in other ways such as by having police (which are actually supposed to protect people's rights), then that justifies restricting people's freedom even more.

At least you've acknowledged that state welfare does lessen individual freedom.

It lessons negative freedom, while adding to positive freedom. I.e., it lessons our freedom to do whatever the hell we want, while adding to our freedom to be free from violence (police), free from ignorance of ourselves and others (schools), free from poor or nonexistent roads - that is, the freedom to travel (DOT), free from products that can kill or maim us (FTC), free from monopolies - the existence of which would be a result of negative freedom (DOJ - Antitrust division), etc., etc., etc., down the line through the whole alphabet soup of government agencies you and I are compelled to pay for, yet which you offer not a word of protest against. And why? Because you implicitly recognize that the diminution of negative freedom they cause is more than made up for by the increase in positive freedom they occasion.

Schooling

2009-09-04T14:10:00.002-04:00

Students Borrow More Than Ever for College by Anne Marie Chaker

"The new numbers highlight how debt has become commonplace in paying for higher education. Today, two-thirds of college students borrow to pay for college, and their average debt load is $23,186 by the time they graduate, according to an analysis of the government's National Postsecondary Student Aid Study, conducted by financial-aid expert Mark Kantrowitz. Only a dozen years earlier, according to the study, 58% of students borrowed to pay for college, and the average amount borrowed was $13,172.

The ripple effects for today's heavily indebted young people are becoming palpable. A growing body of research suggests that tough loan payments are affecting major life decisions by recent graduates, forcing them to put off traditional milestones—from buying a first home to even marriage and having children.

Also, the rising levels of borrowing may ironically be contributing to the accelerating cost of college, say some college-finance experts."

I love how myopic Unitedstatesians blather on and on about non-issues, and avoid the solutions staring them in the face. For instance, ever considered why civilized countries don't have a problem with their young people being saddled with unconscionable amounts of debt for their irresponsible decision to get an education? Think about that one.

Moving on, while many reactionaries' brains flirt with exploding under the unfamiliar strain of original thought, the solution for now is to restore bankruptcy protections to student loans. This will make irresponsible lenders (who like their friends in the subprime mortgage industry sold their dud loans to be packaged into securities and sold to old people's pension funds) learn an important lesson about personal responsibility.

Meanwhile, the borrowers themselves will be chastened with the stigma of bankruptcy and bad credit for years to come - just like any small business owner would be if s/he borrowed money to finance a business expansion that turned sour.

Student debtors need to unite to lobby the government, just like their creditors have done with such amazing success, with Democrats and Republicans alike. Join Student Loan Justice or a similar organization, and let's bring this country's education policy one step away from the edge of total disaster.

PAUL TURKE REPLIED: "[R]eactionaries' brains flirt with exploding under unfamiliar strain of original thought . . ." Witty and nice prose. You should write a novel and pay back your own loans. As for original thoughts, don't be too haughty. The self-righteous whining and begging of intellectually pudgy academics hardly counts as such.

JOSEPHUS P. FRANKS: Shall I provide the address to which to send the advance check?

OMG, OMG, you just used an ad hominem attack!

I may be pudgy, but not intellectually so. Want to discuss the actual solution here, that is, adopting a system similar to those that keep students in civilized countries out of unpayable levels of debt?

RICK STAVELY REPLIED: Blah, blah, blah. Sell the book and the PAC to someone that agrees with you.

Where on the web site is the answer to "Who pays for it when the borrowers don't?" Can I skip paying my taxes and get that forgiven too?

JOSEPHUS P. FRANKS: (laughs) This is more entertaining than I thought it would be. Silly Rick, I don't want to pay for these loans through my taxes any more than I want to pay for them with my paycheck. I don't want you to pay them either. I want the investors in the private loan companies to pay through the loss of their foolish investment. Just like the fools who invested in Countrywide or Enron, I want Sallie Mae's investors to reap the fruit of their thoughtless decision.

Which is precisely what would happen if standard bankruptcy protections were returned to student loans (they were removed by Clinton in '98). The lenders who lent people $60k a year to attend NYU, Brown and the like would get a well-deserved dose of market discipline - as would the borrowers who would be forced into bankruptcy.

This is hardly a liberal/conservative issue. The two poles of this discussion are the rational on one end, and the uninformed on the other.

TOM HELLER REPLIED: "Can I skip paying my taxes and get that forgiven too?"

No, but you CAN declare bankruptcy.

Don't underestimate Josephus' intellectual firepower, Rick.

RICK STAVELY REPLIED: I see. What about the direct student loans the government wrote, or the federal guarantees attached to the student loans written by the banks? How do we deal with those?

JOSEPHUS P. FRANKS: I'd like to renege on the guarantees; because this system was so stupid to begin with I'd want to jettison it as quickly as possible. But our courts wouldn't like that idea too much.

Federal loans tend to be less problematic for borrowers due to the greater deferment/forbearance options, but for many these palliatives just don't work: the underlying problem is that it is pure insanity to saddle college graduates with tens of thousands of dollars in debt. We need to begin immediately a transition to a European higher education funding model. If you are smart enough, you can go to college, and taxpayers will foot the bill. (And happily - I want to live in a country with well-educated people, not so much in a country with lots of subsidized corn producers or military contractor-gougers.) Costs are kept down because the "buyer" in this transaction has all the power in the world. And if the citizenry dislikes how the "buyer" is acting, e.g., being too cheap or too profligate, the citizenry can elect a buyer more to its liking.

And for people who can't test into colleges, but really want to go - let them turn to the private sector for an education and funding. But caveat emptor will be in full effect.

RICK STAVELY REPLIED: O.K., I'll play along, but I have a few more questions:

(1) How exactly does that arragement solve the problems of people like those in this article, given that we agree the federal guarantees can't be ignored? Either the students or the taxpayers must deal with those existing balances, don't they?

(2) Given that we are in the U.S., not Europe or starting with a blank sheet of paper, how do you sell this program to all the parents with kids that are less than stellar students, but who must pay taxes to support state universities and "smarter kids" going to school, particularly those at the lower end of the income spectrum that will inevitably end up financing a "rich kid" going to college at no cost? (I see we agree that going to college is a privilege, not a right.)

(3) How will this strategy fit within the framework of affirmative action and other rules designed to base opportunities on the color of one's skin, age and / or gender rather than purely on ability and potential?

JOSEPHUS P. FRANKS: 1) First the mess must be cleaned up. Borrowers facing undue financial strain from their student loans should renegotiate their debt with their lenders, and be given some federal muscle to sway the banks. (The federal muscle needs to be present to avoid the same problems we've seen with mortgage renegotiation, where recalcitrant banks refuse to work with homeowners to reduce principal, interest and term to make the loan sustainable.) Taxpayers will have to foot some of the bill, but - excluding immigrants for whom this would be a real travesty - they comprised the citizenry that sat by and watched as our higher education system span out of control. So I have little pity for them. (I'd say "us", but I'm young. And have paid attention to this death spiral.)

2) Part and parcel of the European system is progressive taxation, and our adoption of a similar system should - must -retain this. So poor families will pay very little to educate rich kids, while rich families will pay proportionately much more to educate their and others' kids.
By the way, I think going to college is neither privilege (in the sense that word is normally used) nor right. It is something that can be (is possible to be) made available to everyone within our society, if we choose to make that a priority, and take collective action to see it through. I, personally, would want to see that happen, as education is a public good with wonderful, positive and multiplying externalities. But we'd probably have to cut back a bit on our $1 trillion a year military budget, and then we might be invaded and occupied by a Mexican-Cuban-Honduran alliance.

3) Affirmative action on the basis of "race" - I'm unaware of age or gender-based AA - is an attempt to make up for what are largely class disparities. Since "race" correlates pretty closely with class, it is used as a stand-in. But the college level is the wrong time to apply AA, except as a temporary expedient - where "affirmative action" is needed is at the level of wealth disparities that from birth underdevelop young minds.

CINDY FORD REPLIED: EU and UK Uni's are in trouble, they have been ratcheting up the student's portion of payment significantly in the last few years. Lots of backlash and lots of focus on what the students are actually paying for (ie what does the uni have to offer, esp considering the UK system where you teach yourself everything, talk to Prof 1x a month, and then sit for a big test).

JOSEPHUS P. FRANKS: Cindy, true they are in trouble by their own standards - but nothing compared to the tsunami hitting the U.S. The ratcheting up of tuition you mention is correct, but is caused by the triumph of neoliberal ideology in Europe. Given its spectacular failure, as implemented in the global economy over the past few decades, neoliberalism should be on its way out. Like Milton Friedman said, it takes a crisis to hit, and then we pull another economic ideology off the shelf of available ideas...

I'm not familiar with this criticism of the British system - I have friends whose experiences with it led them to think it's brilliant - but for every anecdotal criticism of the British system, I could give you two or three of the US system. I'd only be interested in aggregate data where system-wide comparisons are concerned.

TOM HELLER REPLIED: 2 thumbs up

RICK STAVELY REPLIED: But I would have to declare every year, wouldn't I? How long do you think that could go on?

I stand corrected... we don't agree on much.

First off, despite your earlier post (and laughter), you are now saying you DO want me to pay for some of the debt held by existing students. We'll just have to agree to disagree on that point because I don't want to pay for them.

Secondly, despite socialist / democratic party claims otherwise, we do have a progressive income tax system in this country now, where the top 5% of taxpayers pay 60% of the taxes and 50% of the people pay virtually no income taxes. Despite this progressive system, I think you are unrealistic if you think it would be politically acceptable in this country for kids from families making $100K or more to get a free pass unless they clealry earned it with scholarships because they are among the top of the top performers.

You should run your AA theory by Rev. Al Sharpton. I can hear him now...

As for the proposition overall, I simply do not agree that higher education funding by taxpayers is necessary or desirable in any way.

TOM HELLER REPLIED: Rick -

As to "the math" of 3:1 ratios of out-of-state to in-state tuition, I'd venture you won't find any hard substantiation behind that ratio (and it certainly won't be found in state or university budgets.) That ratio likely just came to pass in one state ("let's only charge our kids/families one-third of 'the cost') and other states emulated it. Politics demanded some differentiation -- and that's been the story ever since.

Besides, if there were truly 'science' behind tuition levels, you'd see far more differentiation in tuition depending on one's chosen major, not a student's in-state status. With flat-rate 'one-size-fits-all' tuitions, the business, engineering and pre-professional programs are likely subsidized by the art history and sociology programs. Shouldn't tuition levels roughly equilibrate the "ROIs" (relative values) of these different courses of study? Wouldn't that happen in a real market?

PAUL TURKE REPLIED: OMG, OMG, you've asserted twice that my country is uncivilized, an ad hominem attack. That aside, I'd like to hear your solution. As many in this forum have already stated, college costs have risen dramatically because of easy access to government sponsored student loans. If you've been in academia, as I have, you'll know that the number one product of universities is an ever growing administration. Administrators and their assistants and assistant's assistants, and so on, ad infinitum, feed off the loans to students which are, in effect, a tax on the rest of us. But, on the other hand, there are worse ways to waste tax dollars. So how do you civilized people solve the problem? Please don't tell me you make education free by having government pay for it, because there is no such thing as free--at least not when the service or good being provided requires someone else to work hard. So, as I see it, this discussion is all about shifting the cost to others, and in spite of the many self-serving and self-righteous rationalizations that I've read, above, the fairest and most honest system I can think of is one in which people take responsibility for themselves. You are right, though, liberty (and libertarianism) is a bit uncivilized--and we like it that way!

JOSEPHUS P. FRANKS: Thanks Paul, for providing an example of why I wrote the "OMG-ad hominem" bit. Because for some reason, right wingers seem incapable of using the term correctly. No, a slight against a country would not qualify as an ad hominem attack, which is an attack against an individual's character or personal trait meant to distract from the discussion of issues at hand. For instance, if I were to call you an "intellectually pudgy academic" right now, that would be an ad hominem attack.

By an extremely restrictive definition, nothing is "free" - even air isn't free, because it's composition is the result of millions of years of planetary evolution during which trillions of organisms paid its cost. Certainly free will is an illusion if you use a very strict definition for free will. But in normal, everyday usage, we consider our police services or our public schools to be free. We believe it when we buy one pizza or bottle of vitamins and get another for "free". Now if you wanted to use a very strict definition of free, as "without any cost whatsoever in any form", then neither our police, public schools, and buy-one-get-one-free deals would properly be considered "free". Likewise, if we use the everyday definition of "free", health care that is paid for on the basis of progressive taxation would be considered "free health care".

And the bit about "shifting the cost to others", in the health care context particularly, is absurd. Health care is all about shifting cost to a large number of people in order to reduce the risk of a massive cost borne by any one person. But here, as I get the closest I'll come to an ad hominem attack, I despair of ever convincing you. If you consider yourself a "libertarian", then you are essentially a poorly-read anarchist. Like anarchists, you dislike large concentrations of power, but unlike anarchists, you lack the intellectual consistency to dislike large concentrations of power when they are not draped with the flag of some nation or other.

That being said, I too wonder why administrators breed like rabbits in the U.S. system. Do you know various European systems well enough to explain how they do a better job at avoiding this fate?

From the Guild Practitioner

2009-08-26T11:57:00.005-04:00

ANTHONY D. TAIBI “LEFT” IS NOT ANOTHER WORD FOR “HIP”
______________________
Anthony Taibi is an attorney in Raleigh, North Carolina. He can be reached at anthonytaibi@
gmail.com. This article (c) copyright 1997 by Anthony D. Taibi, all rights reserved

Meet the new boss: same as the old boss.
—The Who

It cannot be seriously disputed that the greatest threats to the lives and communities of ordinary people derive from structural changes in the economy. The globalization of finance and production, new technologies in communications and information, and new methods in the organization of work are producing vast changes in society that will redound to the detriment of most non-elite people, both in America and in the world. Politics that is not concerned with how the economy functions and changes can do little to make real improvements in the lives of working and poor people. Despite this reality, an awful lot of what is called “the left” has had little to say about political economy for about twenty-five years, choosing instead to concern itself with largely cultural, racial and sexual matters.

This is really strange. In the past what defined the left was its stand on economic issues, and although many left institutions were hospitable to cultural and sexual non-conformists, many others were not, and the avant garde could be found across the political spectrum. What differentiated the old left from the old right was economics and its control—not sex, drugs and Rock ’n Roll.

As the century draws to a close, however, free market economic ideology is transcendent across the conventional political spectrum, and it is largely in the realm of socio-cultural ideologies that what we call the “left” and the “right” do battle. I believe that the headline-grabbing conflicts in contemporary American politics should be understood not in terms of left vs. right, but rather in terms of how the aspirations of people who identify with those conventionally denominated groupings are linked to the conflicts between the old elites of the regional, manufacturing economy and the new elites of the emerging global information age. Or, as Tom Frank puts it: “The culture war is a contest largely fought out between square corporate ideologues and
hip corporate ideologues.”

How did this happen? As the drama and passion of the labor struggles of the 1930s faded, desegregation became the focus of social justice activism. This shift had profound consequences for left thought: progress in the arena of the struggle for racial justice seemed to underscore the fading utility of old-style class analysis, which saw the oppression of African Americans only as the most visible indicator of class-based oppression. In both theory and practice, racial justice at that time was better served by the new civil rights liberalism than it was by leftist dreams of some millennial class struggle.

The shift in consciousness and strategies adopted by the civil rights leadership, however, also had the effect of narrowing the scope of the movement’s social critique in exchange for more immediate results: the manifest contradiction between the promise of the American creed of equality and the reality of Jim Crow was resolved with the new liberal paradigms of meritocratic individualism, institutional universalism, and minority rights.

In addition, since the sixties, other forms of oppression, such as those based on gender and sexual orientation, have seemed better explained by civil rights analysis than through older radical left modes of thought, reinforcing the dominance of liberalism and enlarging its constituency. Although much good was accomplished through civil rights, certain aspects
of the liberal worldview that indeed were liberatory at one time are precisely the crucial determinants of both liberalism’s failure and of conservatism’s recent emergence as the new dominant paradigm. Specifically, the following two implicit aspects of the liberal worldview account for both its widespread adoption in the past and for its more recent widespread rejection: first, liberalism’s focus on individual choice, expression, and achievement, and its concomitant lack of attention to structural economic analysis; and, second, liberalism’s promotion of rights that vest in individuals, and corresponding antagonism toward local self-determination, the institutions of civil society, religion, and the family.

As to the first of these, liberalism’s focus on individual choice, expression, and achievement tends to support institutional arrangements that are remarkably consistent with laissez faire economics by rendering opaque the role of class and structural economic power in determining both individual opportunity and the context in which individual choices are made. In its defense of individual lifestyle choices and market outcomes, as long as they are based solely on merit, liberalism is indistinguishable from laissez faire and conflicts with any higher aspirations of social uplift.

The second difficulty with the liberal paradigm is that policies which sought to liberate individuals from stifling, parochial, status-based power resulted in the weakening of the authority of the church, family, and other institutions of civil society, and the assumption of their roles by the institutions of the bureaucratic and professional class, both public and private. Liberalism’s aspect as the liberator of the individual from stifling social structures widened its constituency during the post-war boom because many who were indeed unhappy with parochial social norms were not economically oppressed.

The liberal coalition accordingly expanded to include all of those who wanted the freedom to be cosmopolitan. Today, however, fewer people are looking for cultural liberation and more people are looking for something to hold on to, often finding meaning in family, community, and religion.
Conservatism’s allure at this moment lies in the fact that people need to be connected as much as they need to be free.

In the emergent conservative paradigm, liberal policy responses to identity politics are often framed in terms of their economic effects, and usually found wanting on those terms. This in part explains how conservatives can plausibly argue that liberals are the elites, in spite of liberal protestations that they speak for the oppressed. Conservatives argue that they are the ones who care about the social and economic issues that will ultimately be of real help to the poor. Many conservatives argue that economic growth is the fair and, in the long run, only sustainable social program (i.e., way to help the poor), and that only through laissez faire will economic growth be achieved. Liberal programs, conservatives argue, are nothing more than vehicles by which an elite keeps itself employed in the “helping” professions, as policy elites, educators, health professionals, non-profit organization workers, government bureaucrats and the like. Such liberal professionals, conservatives argue, buy political support by subsidizing social deviance, particularly that social deviance exhibited by the inner city poor.

What most conservatives fail to see, of course, is that their neoclassical economic program has done more to undermine community and civil society than the “nanny” state of the social engineering left ever did. Significantly, we are already seeing tensions within the conservative movement between its commitment to laissez faire economics and the growing recognition that laissez faire driven policies are anything but conservative for culture, religion, the family and community life. In the last presidential election Pat Buchanan often sounded like the only candidate who did not believe that what was good for the rich was necessarily good for the poor. It seems the only way for a socialist presidential candidate to get noticed is to be a National Socialist. Threatened by the appeal of Buchanan’s economic populism, liberal and conservative elites alike simply demonized not only Buchanan, but also his proletarian white supporters.

The economic problem at the heart of the liberal paradigm is that no matter how many social programs we save or expand, no matter how sensitive we all become, and no matter how many glass ceilings are shattered, there are and will continue to be not nearly enough of the sorts of managerial, professional, and technical jobs that liberals focus upon, while economic and cultural changes are eroding the foundations of working class life. Popular culture and the dominant myths of the article-writing class to the contrary notwithstanding, most folks are and will continue to be lower middle class. The optimistic vision of America as the land of upper middle class jobs is false. It is a myth that allows policymakers to ignore the quality of working poor and lower middle class life by holding out the hope that everyone can aspire to be an upper middle class professional. They cannot.

Moreover, conventional success requires people to be driven, selfish, individualistic and manipulative—hardly the moral qualities which the left ought to promote, even indirectly. Incredibly, some continue to suggest that as women, people of color and other members of traditionally excluded groups enter the halls of power, establishment institutions will become kinder and gentler: Margaret Thatcher and Clarence Thomas belie that crazy idea. Thus, for both practical and ethical reasons we must shift our concern from people who want to break through the glass ceiling and instead worry about the folks who clean up broken glass. In other words, we must focus less on social mobility and the diversification of the ruling class, and devote our attention to how to improve the lives of ordinary folk where they are. In their own ways,
grassroots community organizations, whether self consciously “liberal” or “conservative” or “religious” are trying to do just that.

Perhaps it is possible for grassroots working class leftists and grassroots working class conservatives to forge a new politics that joins together global structural economic analysis with a decentralized cooperative vision. This new politics would respect the enduring traditions and systems of meaning that emerge from specific groups of people living and working in particular places, while respecting America’s cosmopolitan diversity. Creating such a coalition is a worthwhile endeavor, in spite of the dangers. The coalitions that comprise our current political spectrum are radically unstable. The Left-liberal-Democratic coalition is an unholy alliance of largely upscale “lifestyle” libertarians and labor union liberals, together with increasingly marginalized African Americans. No less fractured, the Republican-conservative coalition is an unholy alliance of globalist business libertarians and social conservatives.

That so-called “vital center” advocated by President Clinton and others unites rich folks from across the political spectrum to better oppress working folks from across the political spectrum. This brand of “bi-partisanship”—and its parallel form of “internationalism”—must be strenuously resisted. The Wall Street–Hollywood, bi-coastal libertarian elite is interested in
unencumbered sex and the exploitation of “multicultural” global markets, workers and symbols: these people will never give more than lip service and charity to economic justice. On the other hand, I know that many on the left doubt whether our Christian, working class neighbors can learn to be more socially tolerant. As difficult as that might be, it is a hell of a lot more likely than millionaire liberals supporting socialism. And whatever bad one can say about the Promisekeepers, their brand of “racial reconciliation” seems more authentic than a lot of the self-congratulatory bourgeois multiculturalism that goes on in “progressive” social spaces. A new majority coalition must include Reagan Democrats: ordinary, boring, middle class heterosexual Christian white guys.

Every social movement must pick its battles and determine which issues to emphasize and which to soft pedal. The Left could not be doing a better job of alienating ordinary folk if that were our chosen ambition. Instead of focusing on those issues which appeal to ordinary folks—as the left-Democrat coalition did from Roosevelt to Kennedy—we focus on those issues which trouble them. Then we further infuriate them by using undemocratic means like the courts to ensure that they cannot respond.

The Left needs to get off its high horse and stop demonizing social conservatives, and start figuring out how to proselytize them instead. I think that the current boycotts of the Walt Disney Corporation may present just such an opportunity. The Southern Baptist Convention has begun a boycott of Disney because its members object to Disney giving domestic partnership benefits to its relatively well off salaried employees. Many leftists are also boycotting Disney because of the company’s use of sweatshop contractors in Haiti and elsewhere. The use of sweatshop contractors in the Third World has devastated the American textile industry, an industry largely concentrated in the rural South. And the dominant religion among displaced Southern white textile workers is Southern Baptist. Some of the Baptist boycotters would undoubtedly join in the leftist boycott if we would only ask them.

In addition to the joining of boycotts based on very different underlying politics, Marxist theorists and Christian conservatives share more than they know in their understandings of how Disney is destroying children’s imaginations in order to turn them into consumers. We ought to join conservatives in condemning the degradation of culture into entertainment, but promote recognition that these problems are more the product of capitalism than they are of liberal permissiveness.

As the square old 1950s national industrial capitalist elite dies off and is replaced by the hip multicultural global postmodern capitalist elite it will perhaps become more clear that cultural liberation is no help for structural economic oppression. The capitalist elite has always turned liberatory impulses opposed to established authority and culture to its own advantage.

Thus, we must ask of leftist intellectuals: Which side are you on? Do you stand on your class interest as lawyers, teachers, policy analysts, and journalists. Or do you stand with the working class. And if “left” is not just another word for “hip” then we better learn to broaden our cultural horizons to include those we would revile as narrow.

Book revew: The Corrections

2009-06-03T14:28:00.004-04:00

The Corrections by Jonathan Franzen

I have the feeling that if I loved novels, I would have loved this book. I really liked it though.

Here are some of my favorite parts, insights into:

Depression: "A lack of desire to spend money becomes a symptom of disease that requires expensive medication. Which medication then destroys the libido, in other words destroys the appetite for the one pleasure in life that's free, which means the person has to spend even more money on compensatory pleasures. The very definition of mental 'health' is the ability to participate in the consumer economy. When you buy into therapy, you're losing the battle with a commercialized, medicalized, totalitarian modernity right this instant."

The stupidity and rapacity of the investor class, that is, the world's ruling class: "Gitanas had created a satiric Web page offering DEMOCRACY FOR PROFIT: BUY A PIECE OF EUROPEAN HISTORY... Visitors to the site were invited to send cash to the erstwhile VIPPPAKJRIINPB17 - 'one of Lithuania's most venerable political parties,' the 'cornerstone' of the country's governing coalition for 'three of the last seven years,' the leading vote-getter in the April 1993 general election, and now a 'Western-leaning pro-business party' reorganized as the 'Free Market Party Company.' Gitanas's Web site promised that, as soon as the Free Market Party Company had bought enough votes to win a national election, its foreign investors would not only become 'equity shareholders' in Lithuania Incorporated (a 'for-profit nation state') but would also be rewarded, in proportion to the size of their investment, with personalized memorials to their 'heroic contribution' to the 'market liberation' of the country. By sending just $100, for example, an American investor could have a street in Vilnius ('no less than two hundred meters in length') named after him; for $5,000 the Free Market Party Company would hang a portrait of the investor ('minimum size 60 cm x 80 cm; includes ornate gilt frame') in the Gallery of National Heroes at the historic Slapeliai House; for $25,000 the investor would be awarded perpetual title to an eponymous town 'of no fewer than 5,000 souls' and be granted a 'modern, hygienic form of droit du seigneur' that met 'most of' the guidelines established by the Third International Conference on Human Rights."

Rationalizations: "She reasoned that if the problem in the dining room was her responsibility then she was horrendously derelict in not resolving it, and a loving mother could never be so derelict, and she was a loving mother, so the responsibility must not have been hers.

The travails of seduction: "For the next two hours D mainly paid attention to her hand, which she'd laid on the sofa cushion within easy reach of R's. The hand wasn't comfortable there, it wanted to be retracted, but she didn't want to give up hard-won territory."

Book review: Sex Matters

2009-04-29T22:47:00.004-04:00

Sex Matters by Osho

Interesting collection of speeches or essays themed around Osho's interpretation of the meaning of sex, and how most human societies and religions have twisted and mutilated it to our detriment.

"It is sexual energy that transforms into love. But everyone is against it, is inimical to it. Your so-called good people are against it. And this opposition has not allowed the seed even to sprout. It has destroyed the palace of love at its foundation, on the very first step. The coal never becomes a diamond because the acceptance that is needed for its evolution, for its process of transformation, is out of the question."

Put in another way - and there is a lot of repetition in this book - "[a]ll life, all expression, all flowering is basically sex energy. And it is against this sex energy that religions and cultures are pouring poison into the minds of human beings. They are trying to engage human beings in a fight against it. They have entangled people in this battle against their own basic energy, so they have become wretched, pathetic, devoid of love, false, nobodies."

But the danger of the suppression of sex is not, in Osho's view, limited to the disastrous consequence of the suppression and inhibition of love. The suppression of sex also means the promotion of violence, an inverse relationship that has also been noted by anthropologists studying cultures with different attitudes towards sex and violence. "Restrained people are very dangerous because a live volcano boils inside them, and only outwardly are they rigid and full of control. Please remember, anything that is controlled requires so much effort and energy that the restraint cannot be maintained the whole time. You will have to relax sometime; you will have to rest sometime. ... If it needs effort, it will also need rest. And so, the more self-controlled a saint is, the more dangerous he is - because the need to relax this restraint will come. In twenty-four hours of self-control, one will have to relax for an hour or two, and during this period there will be such an upsurge of suppressed 'sins' that he will find himself in the midst of hell."

"This is the reason the animal in us erupts at the slightest opportunity. At the time of the India and Pakistan partition, we saw how the animal lurks beneath the clothing of human beings. We came to know what the people who pray in the mosques and recite the Gita in the temples are capable of. They can loot, they can slaughter, they can rape, they can do anything. The very people who were always seen praying in the temples and mosques were now seen raping in the streets. What happened to them? ...Our life energy has only one natural but animal outlet, and that outlet is sex. Closing that channel creates problems."

But what is most important to Osho about sex is that it is the first experience humans ever had with meditation - itself the key to a peaceful, content life. "[M]an had his first glimpses of awakening, of meditation, in moments of lovemaking - nowhere else. It was only in moments of lovemaking that human beings realized for the first time that so much bliss is possible. Those who meditated on this truth, those who reflected deeply on the phenomenon of sex, of lovemaking, saw that in moments of lovemaking, at the climax, the mind becomes empty of thoughts. For a moment all thoughts disappear. And this emptiness of the mind, this disappearance of thoughts, brings a showering of blessings. They discovered the secret."

In Chan/Son/Thien/Zen Buddhism, the goal is a state of meditation-induced "no-mind", where the mind's chatter is quiet and one experiences experience without distraction. Osho's point is that during orgasm too, all the mind's chatter disappears and one experiences no-mind - only without the trouble of sitting uncomfortably for hours on end.

Sex brings with it the two most important features of religious experience: egolessness and timelessness. "[I]n the moment of orgasm the ego vanishes and egolessness emerges. For a moment there is no ego; for a moment, no trace even of 'I am.' ... In the experience of enlightenment, there is no time at all. It is beyond time. There is no past, no future; there is only the present. This is the second thing that happens in the experience of sex - there is no past, no future; time also vanishes for a moment."

With such an easy, simple and immensely pleasurable means of attaining religious enlightenment at hand, it is clear to see why religions would be violently jealous. After all, it is they that are supposed to hold the key to enlightenment; their rites that offer transcendence; their donation boxes through which paradise is to be achieved. Therefore, it is unsurprising that religions tend to be anti-sex, trapping its so-called "proper" exercise within the cage of marriage; in a species for whom polygamy, not monogamy, is natural (or so all evidence points to).

"Religions are against sex because down the centuries they have come to know that sex is the most enjoyable thing for man, so they poison his joy. Once you poison his joy and you put this idea in his mind that something is wrong in sex - it is sin - then he will never be able to enjoy it, and if he cannot enjoy it, then his energies will start moving in other directions. He will become more ambitious. ... Ambition is sex energy diverted, and the society diverts you. You ask, 'Why are all the religions against sex?' They are against sex because that is the only way to make you unhappy, guilty, afraid. Once you are afraid, you can be manipulated. Remember this fundamental rule: Make a person afraid if you want to dominate him." This is a not an unfamiliar lesson to Unitedstatesians during the "War on Terror," Germans and Japanese during World War II, Chileans during Pinochet's rule, etc., etc.

The way that religions have forced sexuality into the domain of morality - which every culture in the world has recognized to be exhausted by the principle of "treat others as you would like them to treat you" - has been a tremendous tragedy. "[T]he very combination of sex and morality has poisoned the whole past of morality. Morality became so much sex-oriented that it lost all other dimensions, which are far more important. Sex should not really be so much of a concern for moral thinking. ... But sex and morality became almost synonymous in the past; sex became overpowering, overwhelming. So whenever you say somebody is immoral you simply mean that something is wrong with his sexual life. And when you say somebody is a very moral person, all that you mean is that he follows the rules of sexuality laid down by the society in which he lives. Morality became one-dimensional; it has not been good. ... [Sexuality] should not be a concern of the society at all. Unless somebody interferes in somebody else's life - imposes himself, forces somebody, is violent, violates somebody's life, then only should society come in. Otherwise there is no problem; it should not be any concern at all."

The imposition of a regime of monogamy has been poisonous to humanity because "[w]e have created a monogamous mind, not loving. That's why there are so many wars, so much cruelty, so much violence, in many, many names - religion, politics, ideology. Any nonsense will do as long as you find something to be violent about. And then see how people become sharp: their eyes look brilliant when there is war, when everyone is just freed from the taboo against killing. Then you can kill anybody. So you feel more joy when you kill somebody - you never feel joy when you love someone. ... Why? Our capacity to love has atrophied. A child is capable of loving anyone. A child is born to love the whole world, a child is born to love everything, a child is born to love the whole universe... if a person loves many people, then there is no reason to marry someone only because of love, because he can love many people without marriage, so there is no reason. We have forced everyone to go into marriage because of love. Because you cannot love outside it, so we have unnecessarily forced love and marriage to be together. Marriage is for deeper things - for intimacy, for a communion, to do something that cannot be done alone, that can be done together, that needs a togetherness, a deep togetherness."

"Sex has nothing to do with jealousy, anger, and possessiveness. But man's mind has been conditioned in such a way by the vested interests that they have exploited the very source of his life energy - sex - to fulfill their own interests. For example, man is naturally polygamous, and by man I don't mean only men but women too. Human beings are polygamous, but all the societies have forced monogamy. Now that creates the trouble. ... If society were run by intelligent people - not by people who want to exploit you, but by people who want to fulfill your nature to its uttermost capacity - there would be no jealousy. The wife would understand that once in a while the husband needs some other woman, 'just the way I need some other man.' ... What is wrong if you play tennis with one partner today, another partner another day? Is there any jealousy? There is no question of jealousy. And it is nothing more than tennis - two energies meeting and merging. And after the pill, the basic argument of all the religions is completely outdated."

"When there is no jealousy there is no anger, and all the qualities that I speak of will come automatically. A woman who gives you freedom, a man who never tries to possess you - you are allowed to move in the world according to your own wishes - do you think friendship will not arise between these two persons? A man giving freedom to the wife, a wife giving freedom tot he husband - there is bound to be great friendship, great intimacy. ... But the societies of the past never wanted this to happen. They wanted people to remain bored: tie one woman to one man forever, and you have started a pilgrimage to the ultimate boredom. These bored people, suffering, cannot revolt. ... [T]he vested interests don't want you to be intelligent, to be rich in experience, to reach to the climax of your potential, because that is dangerous to them. You can remain slaves only if you are poor in experience and intelligence. You can remain slaves only if you are a henpecked husband. ... And you have been kept poor psychologically, spiritually, physically, so that a few people can become presidents, prime ministers, kings and queens, a few people can become popes, or Ayatollah Khomeini. Just for a few people the whole of humanity is sacrificed!"

As comedian Bill Hicks observed about a society in which all are raised to love each other, sexually if desired, sans distinctions and separations and without regard to people having what amount to sexual property interests in each other: "Now if that's not a danger to society! I mean, how are we gonna keep building nuclear weapons, you know what I mean? What's gonna happen to the arms industry once we realize that we're all one? It's gonna fuck up the economy!" Osho makes much the same point: "If society is allowed total freedom about joy, nobody will be destructive. People who can love beautifully are never destructive. And people who can love beautifully and have the joy of life will not be competitive either. These are the problems. ... Now this whole society depends on one thing, and that is sex repression. Otherwise the economy will be destroyed, sabotaged. War will disappear and with it the whole war machinery; politics will become meaningless and the politician will no longer be important. Money will not have value if people are allowed to love. Because they are not allowed to love, money becomes the substitute, money becomes their love. So there is a subtle strategy. Sex has to be repressed, otherwise this whole structure of the society will fall immediately."

And what a loss that would be!

Book review: Why I Am Not a Hindu

2009-03-19T00:08:00.007-04:00

"Why I Am Not a Hindu" by Kancha Ilaiah

"Hinduism has never been a humane philosophy. It is the most brutal religious school that the history of religions has witnessed. The Dalitbahujan castes of India are the living evidence of its brutality."

The author, Kancha Ilaiah, is a "Dalitbahujan", a group which includes India's lower castes like farmers and the "untouchables". Ilaiah (sounds like "Isaiah") refuses to lump Dalitbahujans in with Hindus: "What do we, the lower [castes, or Dalitbahujans], have to do with Hinduism ...? [The Dalitbahujans of India] have never heard the word 'Hindu' - not as a word, nor as the name of a culture, nor as the name of a religion in our early childhood days. We heard about the Turukoollu (Muslims), we heard about Kirastaanapoollu (Christians), we heard about Baapanoollu (Brahmins) [the priestly caste] and Koomatoollu (Baniyas) [the merchant class] spoken of as people who were different from us. Among these four categories, the most different were the [Brahmins and the Baniyas]. There are at least some aspects of life common to us and the [Muslims and Christians]. We all eat meat, we all touch each other. With the [Muslims], we shared several other cultural relations. We both celebrated the Peerila festival. Many [Muslims] came with us to the fields. The only people with whom we had no relations, whatsoever, were the [Brahmins and Baniyas]. But today we are suddenly being told that we have a common religious and cultural relationship with the [Brahmins and Baniyas]. This is not merely surprising; it is shocking."

So begins Ilaiah's broadside against Hinduism and "Hindutva" or Hindu-ness, the ideology of the Hindu right. In the book, he argues that Hinduism, with its focus on upper caste gods, values, and culture, is a patriarchal and fascist religion and worldview. Furthermore, Hinduism should be considered the sole preserve of the upper castes - despite efforts by the Hindu right to draw the Dalitbahujan masses into the Hindu fold (in a subservient position of course) to increase their numbers and gain unity and strength in the fight against Muslims and Christians. Ilaiah identifies the Hindus as the ancestors of the Aryan tribes who were supposed to have invaded the subcontinent from the north a few thousand years ago, and the Dalitbahujans as the ancestors of the indigenous peoples of the subcontinent prior to the Aryan invasion. (He even attempts to explain Hindu sexism by proffering literary evidence tending to show how "all women, including Brahmin women, were treated in the same demeaning way because they were seen to share the same genealogical origins... because most of the ancient Aryan invaders were men and they must have married the native Sudra-Dravid women. They must have had sex with such women and must have treated them as the equivalent to Sudra slaves.")

Ilaiah explains that India today is in the sad state it is in owing to Hinduism and Hindus - meaning, again, the upper castes - which are still the ruling elites in India. During British occupation upper caste Indians were made into a comprador class: a segment of an occupied society that receives benefits and rewards from the occupier in return for collaboration. By the time India gained independence from Britain, "an all-India 'upper' caste elite - the new bhadralok (the 'upper' caste combine) - was ready to take over the whole range of post-colonial political institutions... each institution was made the preserve of the 'upper' caste forces, with Brahmins being in the lead in many of [them]." Even the anti-colonial, nationalist movements were hegemonized by the Brahmins and their upper caste allies, a process which was made possible "because the British colonialists themselves saw a possibility of manipulation of institutions, parties and organizations if they remained in the hands of the so-called upper castes... Consciously or unconsciously, the British themselves helped to construct a 'brahminical meritocracy' that came to power in post-Independence India."

"In post-colonial India, in the name of Congress [Party] democratic rule, the Hindus came to power both at Delhi and at the provincial headquarters. Parliamentary democracy in essence became brahminical democracy. Within no time the colonial bureaucracy was transformed into a brahminical bureaucracy. The same brahminical forces transformed themselves to suit an emerging global capitalism. They recast their Sanskritized life-style to anglicized life-styles, reshaping themselves, to live a semi-capitalist (and at the same time brahminical) life. Their anglicization did not undermine their casteized authoritarianism. All apex power centres in the country were brahminized and the power of the bureaucracy greatly extended. Because of their anglicization quite a few of them were integrated into the global techno-economic market. Such top brahminical elites were basically unconcerned with the development of the rural economy because it would result in changing the conditions of the Dalitbahujan masses and thus new social forces might emerge. Thus the anglicized brahminical class also became an anti-development social force."

Even the Indian Communist Party did not escape upper caste domination. "Notionally the Communist leadership was trying to portray itself as an integral part of the masses and to stress that it was no different from the people. But in reality the Dalitbahujan masses remained distinctly different in three ways: (i) the Communist leadership came from the 'upper' caste - mainly from Brahmins; (ii) they remained Hindu in day-to-day life-styles; and (iii) by and large the masses were economically poor but the leaders came from relatively wealthy backgrounds. The masses came from Dalitbahujan castes, and these castes never found an equal place in the leadership structures. Even in states like Andrhra Pradesh and Kerala, where non-Brahmin movements were strong enough to influence the society, the pattern held good... All over the country, the Brahmin population has become leaders in all spheres of socio-political life. They never remained part of the masses. Thus even the Communist movement started functioning in two separate camps - the 'upper' caste leader camp and the Dalitbahujan cadre camp."

"What Hinduism has done is that through manipulative hierarchization, even in the socialist era, it has retained its hegemony over the managerial posts in the urban centres. In every industry the working masses are Dalitbahujans whose notions of life and work are non-Hinduistic [that is, they value labor and practical knowledge over leisure and religious knowledge], whereas, the entrepreneurs and managers of the factories - the directors, supervisors, engineers - are Brahmin, Baniya or Neo-Kshatriya [the warrior caste]. As a result, there is a total cultural divide between the managerial class and the working class. If some factory workers starve or if workers get injured or die because of an accident, the managers do not feel for them because there is no social relationship between them. They are separated not only by class but also by caste. Thus the worker's suffering or death is seen as that of the Other." Hence India's putrid wealth divide: divisions were first cut into society by caste, and now have been cemented by class.

...

As an interesting aside, Ilaiah argues that the "persistent theory that human beings are by nature, selfish or iniquitous or the scope for selfishness is removed only when inequality is reduced (as was done in some of the former socialist systems) and its obverse: the theory that human systems do not survive if inequalities are totally removed, both these theories can be disproved by any systematic study of Dalitwaadas [Dalitbahujan communities], where there is no negative cut-throat competition and no withdrawing into lethargy."

Book review: The Rise of China and the Demise of the World Capitalist Economy

2009-02-01T23:31:00.007-05:00

I had hoped this would be a hopeful book somehow laying out a convincing argument that China's rise will eclipse the disintegrating international capitalist economy and usher in a new world order focused on meeting human needs in an environmentally sustainable manner. Sadly, that is not this book's argument.

...

"Chinese socialism was the historical product of a great revolution, which was based on the broad mobilization and support of the workers and peasants comprising the great majority of the population. As a result, it would necessarily reflect the interests and aspirations of ordinary working people. On the other hand, China remained a part of the capitalist world-economy, and was under constant and instance pressure of military and economic competition against other big powers. To mobilize resources for capital accumulation, surplus product had to be extracted from the workers and peasants and concentrated in the hands of the state. This in turn created opportunities for the bureaucratic and technocratic elites to make use of their control over the surplus product to advance their individual power and interests rather than the collective interest of the working people. This was the basic historical contradiction that confronted Chinese socialism as well as other socialist states in the twentieth century."

The author, Minqi Li, was a member of the student dissident movement of the 80s in China. He describes the milieu during which he studied neoclassical economics at Beijing University: "The 1980s was a decade of political and intellectual excitement in China. Despite some half-hearted official restrictions, large sections of the Chinese intelligentsia were politically active and were able to push for successive waves of the so-called 'emancipation of ideas' (jiefang sixiang). The intellectual critique of the already existing Chinese socialism at first took place largely within a Marxist discourse. Dissident intellectuals called for more democracy without questioning the legitimacy of the Chinese Revolution or the economic institutions of socialism.

After 1985, however, economic reform moved increasingly in the direction of the free market. Corruption increased and many among the bureaucratic elites became the earliest big capitalists. Meanwhile, among the intellectuals, there was a sharp turn to the right... The politically active intellectuals no longer borrowed discourse from Marxism. Instead, western classical liberalism and neoliberal economics, as represented by Friedrich Hayek and Milton Friedman, had become the new, fashionable ideology."

A turn towards neoliberalism had, by the 1980s, been made possible by decades of Maoist development policy, which had developed "the necessary industrial and technological infrastructure [allowing China to] become a major player in the global capitalist economy." Li does a good job explaining the capitalist world-system, according to Immanuel Wallerstein's formulation, with its separation into core, semi-peripheral and peripheral states. The international division of labor has core states, like the U.S. and Japan, performing cutting-edge production requiring massive investment and organization, and which offer the greatest profit margins; the semi-peripheral states, like South Korea and most recently China, performing second-generation production that was cutting edge decades ago but which still offer substantial profits; and the peripheral states, like Angola and Bangladesh, which perform low value-added production like raw material exports and low-tech manufacturing.

Li argues that China's move from peripheral to semi-peripheral status (as China now produces all sorts of high- and low-tech products for the core states) signals trouble for the capitalist world-system: "the current 'rise of China' as well as the 'rise of India,' could be the signal that the capitalist world-economy is calling upon its last strategic reserves (such as China, India, the remaining resources, and the remaining space for pollution) to make one more attempt to jump-start global accumulation... The current global development is likely to suggest that several secular trends, which result from the inherent laws of motion of the existing world-system, are now reaching their historical limits."

Why? Because the capitalist world-system relies on strategic reserves of labor that can be called upon when existing labor forces begin to successfully fight for higher wages. Since the system needs high profit margins to reproduce itself via investment, and since high wages put pressure on profit margins, the capitalist world-system needs countries like China and India to turn to for their cheap labor forces once wage costs, or lack of effective demand (in other words, low wages that reduce a market's buying power) begin to threaten profitability. But the very process of exploiting labor in China - building factories and creating an urban working class, moving China from peripheral to semi-peripheral status - threatens to undermine the ability to exploit such labor in the future. Li explains: "To the extent that the non-core states have lower levels of proletarianization, workers tend to be less educated, less effectively organized, and under constant pressure to compete against a large rural reserve army [of laborers]. The workers in these states, therefore, tend to have much lower bargaining power and receive significantly lower real wages. The low real wages in the periphery and semi-periphery make it possible for the world surplus value to be concentrated in the core and help to keep down system-wide wage costs. However, in the long run, the development of the capitalist world-economy has been associated with the progressive urbanization of the labor force. After some initial disorientation, urbanized workers have invariably struggled for higher degrees of organization and extension of their economic, social and political rights. Their struggles have led to growing degrees of proletarianization within the capitalist world economy." (emphasis added)

This spells trouble for the world-system, since as production costs increase in China as workers successfully fight for higher wages, there will be few alternative states for producers to turn to for cheap, educated labor and efficient infrastructure. Also, China's ever-increasing contribution to environmental degradation threatens to undermine the world economy through destruction of the natural environment of which it is a part.

Li's analysis of economic - and, more depressingly, ecological trends - leads to the following conclusion: "With the decline of the US hegemony (reflected by its ever-declining ability and willingness to pursue the system's long-term, common interest), no other state is in a position to replace the US and provide effective leadership for the system. China and every other potential hegemonic candidate all suffer from insurmountable contradictions and weaknesses. None has the ability to offer 'system-level solutions' to 'system-level problems.' Either the existing world-system has exhausted its historical space for potential new leadership and therefore is doomed to systemic disintegration, or the new leadership will have to assume the form of an alliance of multiple continent-sized states, which will then become a world-government and therefore bring the existing world-system to an end.

The capitalist world-economy rests upon the ceaseless expansion of material production and consumption, which is fundamentally incompatible with the requirements of ecological sustainability. Depletion of material resources and pollution of the earth's ecological system have now risen to the point that the ecological system is on the verge of collapse and the future survival of humanity and human civilization is at stake.

To summarize, multiple economic, social, geopolitical, and ecological forces are now converging towards the final demise of the existing world-system, that is, the capitalist world economy."

What comes next could be a rational world-system of production geared towards first fulfilling human needs, then wants, in an ecologically-sustainable manner. But while the current system's demise is assured, there is no guarantee of the character of its replacement, and, at this point, very little likelihood it will resemble the description above.