Political Pathology Trumps Political Democracy, or not?

Granted, the media frenzy over “The Donald,” as if he were some sort of political “outsider” riding in on a white horse to save the American people from all those “politicians” running for president, is rather astounding. Crass is in with the mass media. It is hard to find any genuine political process in all the hoopla or in the sniping among the vast array of Republican candidates for the nomination. The Democratic National Committee’s attempt to anoint Hillary as their candidate while snubbing the only candidate of either party – Bernie Sanders – who presents himself as representing actual policy positions is certainly quieter. But it is no less anti-democratic, if less blatantly demagogic, than the likes of a Ted Cruz or a Jeb Bush, or any other member of the GOP Clown Car.

Most fascinating to anyone interested in the process by which the corporate and financial elites control the political processes in the U.S.A., is the relative media attention allocated to Sanders versus Trump. The best the media can do in that regard is to compare the two as “outsiders” appealing to the vast frustration of voters with “establishment politics.” While it is said that Trump is widely despised in New York, it is hard for me to visualize the self-proclaimed billionaire real estate developer as an “outsider.”

Broken Democracy, or Is That Oligarchy Behind the Curtain?

It is also widely acknowledged that “Washington is broken.” Yet, is it really? To be “broken” implies that something was supposed to work in a certain way but due to some problem it does not work properly and needs to be “fixed.” I would suggest that the national political system is not broken; it is working exactly as it is intended by its elites. That is the problem.

Paul Cienfuegos, a regional leader of the Community Rights movement, argues that our nation “more and more resembles a corporate oligarchy.”[1] Sheldon Wolin characterizes our illusory democracy as actually being an “inverted totalitarian” system that maintains the formal trappings of democracy while a corporate-state elite controls the economy and political process.[2] Chris Hedges proclaimed the Death of the Liberal Class, saying that while liberalism once provided the controls over the excesses of corporate capitalism, only the rhetoric remains.[3] Kim Phillips-Fein documents the decades long crusade by business against the New Deal that ultimately destroyed any serious political mitigation of the social damage caused by laissez faire capitalism.[4] These authors have each identified key elements of the pseudo-democracy that has in fact become a plutocracy.

Business won the struggle Phillips-Fein describes; liberalism had provided partial management of capitalism in the public interest, but it was destroyed. Only the rhetorical claims of liberalism serving the public interest remain, as Hedges points out, mostly in the abstractions of the platform and pontifications of Democratic Party politicians. The rest is finance capital managing politics and the economy in its own interests. Legal restrictions on speculation of investment bankers using depositors’ money had restrained finance capital until the elimination of all post-Great-Depression protections. Those restrictions are gone now.

The final blow was begun by Robert Rubin, Bill Clinton’s Treasury Secretary, and completed by the rest of the Goldman Sachs crowd, rotating through the Executive Branch revolving door from Wall Street to the president’s cabinet and back to Wall Street. Every regime since Clinton has allowed the economy to be directed by Wall Street executives such as George Schultz and Timothy Geithner in the sole interests of the Big Banks and investment houses.  That, of course, resulted in the financial crash of 2008. And now the Democratic National Committee wants to hand us Clinton II?

Avoiding Catastrophic Destabilization

The deeper problem is that these political-economic developments have accelerated the most destructive tendencies of extractive predatory capital. The planet and its peoples have been plundered at accelerated rates for over two hundred years, but especially over the last half-century. The result is climate destabilization, accompanied by accelerated species extinctions that are synergistically destabilizing local and regional ecosystems around the world. The warming of the planet already results in extreme weather conditions, but will soon also entail consequent massive food-crop failures, mass regional starvation, mass migration, water and other resource wars, and the likely collapse of the global economy. Meanwhile, the charade of political democracy shields the corporate path to human extinction.

Paul Cienfuegos argues that the national complex of legal and regulatory systems is rigged in favor of allowing the corporate destruction of the planet to continue. He suggests that the only way to avoid catastrophic climate destabilization is for local communities to resist. They must pass and enforce local laws that prohibit corporate destructive practices in their towns and counties, even though such laws may violate presumptive state or federal jurisdiction. The democratic rights of communities to protect the health and safety of their citizens must be asserted. That just might be the only way that the affirmation of political democracy can trump political pathology and protect the planet.
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[1] Paul Cienfuegos, “Local Governance,” talk given in Minneapolis, MN, 23 Feb 2015. Transcript from Alternative Radio. http://www.alternativeradio.org/
[2] Sheldon Wolin, Democracy, Inc.: Managed Democracy and the Spector of Inverted Totalitarianism. Princeton, NJ: Princeton University Press, 2008.
[3]Chris Hedges, Death of the Liberal Class. New York: Nation Books, 2010.
[4] Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal. New York: Norton, 2009.

Making Money and Losing It

Ever wonder why you just can’t “get ahead”? Well, it’s all part of the larger scheme of things. Oh, I know, some folks do get ahead in one way or another and to one extent or another. But only the very few – the less than one percent – really make money and keep it or even accumulate enough wealth to leave a sizable inheritance to their children. The number of Americans literally living from hand to mouth has grown astoundingly high, especially since the ascendancy of the new financial elites with the deregulation of financial markets. To understand it all we have to step outside of our ordinary ways of thinking about money, value, and our lives.

In a moral economy, things would be different. But that’s not where we live. Our economic system has devolved from open competition of individual entrepreneurs in wide open environments, to a closed system of centralized economic growth in denial of limits. The perpetual-growth economy is controlled by giant investment banks and hedge funds and runs on debt-based money. That means money is created by debt itself.

On first thought that doesn’t make much sense; money is supposed to represent value, not debt. But that is not how it has been set up ever since the private central banks were given control, indeed ownership, of the creation of money. Instead, money is a product of the strange relationship between the nation and its private bankers. The Federal Reserve System was established as the “lender of last resort.” in 1913. This was meant in part to respond to fiscal crises such as the financial panic of 1907. The other part was a quiet takeover of the money system by the big private investment banks.

Making Money by Indebting a Nation
Some argue that the creation of the Fed as an independent agency was in fact a takeover of the function of a national central bank by the private bankers of the time. That view has significant historical validity. Though chartered by the U.S. Congress, the Federal Reserve System consists of twelve tax-exempt regional Federal Reserve Banks organized and operated as private corporations. Most importantly, the Fed was given control over the creation and lending of money.

Absurd as it sounds – and ever so costly –the national currency is not created by the Treasury. The Treasury only acts as a printing shop for the Fed. In effect, the Fed is a private banking cartel that lends to the government and to member banks the money it creates by generating public debt. So, to conduct its operations, the government has to “borrow” money from the Fed, which sells Federal Notes and Bonds to represent that debt. The U.S. Treasury can only offset that debt by collection of income taxes and other revenue. A lot of technicalities in this process obscure the basic fact that the right of the nation to produce its own money was high jacked by the biggest banks – “members” of the Fed – back in 1913. That has cost us all dearly ever since.

The Federal Reserve issues Federal Reserve Notes and Bonds. These draw interest for the buyer and charge the government, in whose name the Fed issues these debt instruments. So, the money the government ‘spends’ is owed to those institutions which ‘buy’ from the Fed the bonds and notes that signify the debt. One might say that the Fed is a “free rider” middleman. This process indebts the government – that is, the people – for all the currency, whether paper or electronic, that the Fed issues as part of its monetary policy.

Perpetuating Public and Personal Debt for Fun and Profit
The government becomes indebted in its turn to the ‘creditor’ institution or nation that bought the bond, for its face value plus any interest that accrues over time. The Fed is owned by its member private Big Banks, which have a sweet deal we’d all love to get a piece of but never will. The Fed issues credit to the Big Banks, say a billion dollars, and the Big Banks in turn loan out many multiples of the billions it ‘borrows’ from the Fed. Since the crash of 2008, the deal has been especially sweet, since the Fed charges a near zero interest rate. The Big Banks get to charge market rates for multiples of the funds borrowed for next to nothing. Huge profits beget huge bonuses for bank executives, not to reward some kind of executive performance, but for their just ‘being there.’

We should all be so lucky. But we are not. The average person, small business, or even not-so-well connected corporation has to borrow from the institutions run by the financial elite – the Big Banks – in order to initiate a major project of whatever kind. That borrowing had to be paid back with interest, so that whatever is done with the money has to “earn” more money than was borrowed in order to pay back the loan. That is often not easy. Just paying a mortgage seems to take forever. Even at a “reasonable” interest rate for a thirty year mortgage, most folks “pay back” more than double what we originally borrowed.

But in any case, what most people don’t understand is that the result of all this is that more money is always owed than is “out there.” If every loan requires repayment plus interest, where does the interest come from? Well, from “profit” or from wages, if the borrower is lucky. But that profit or wage comes from money already in circulation; that money in circulation was also created as debt. So, the only way for all money owed to be paid back is for more debt to be created, releasing more dollars into the money supply, paying off prior debt.

Reaching the End Game
Sound like a Ponzy scheme? If it does, that means you are paying attention. It is essentially no different than a Ponzy scheme. The whole house of cards stands on a perpetual expansion of debt that enables previous debt to be paid and the system to continue. That is only one of the reasons why the debt based economics of endless growth cannot ultimately be sustained. Debt cannot be expanded indefinitely.

There is another reason the debt-based growth economy cannot continue indefinitely. As with any exponential scheme of expansion, the limits of its environment eventually constrain it from continuing. That is where we are today with reference to “capitalism as we know it” and the material limits of the planet earth.

If you know anything about population growth, you recognize that a seemingly small percentage rate of growth after a few generations results in a very large number of people. From our current world population of around seven billion, growing at a moderate rate, we will soon have a population that by anyone’s measure cannot be sustained on one planet. One additional fact is important. A relatively small proportion of world population participates in the industrial growth economy but everyone else – of course – wants to. That is why more and more people everywhere find it increasingly difficult to “get ahead.” The game is almost over; it has reached its limits. Current world financial instabilities are symptoms. Economies with social purpose must replace mindless growth for the purpose of concentrating wealth in fewer and fewer hands.

Another way is possible and necessary. Money is inherently a public good. It is an inherent right of the nation itself to maintain sovereignty over its monetary system. The central banking system should be nationalized and subjected to public policy rather than be driven by private profit for financial elites in opposition to the public interest. Then, money could be based on credit, properly invested in the public interest, and thereby eliminate most of the false public debt it has caused by having been privatized.