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.

The Upside-Down Economy

The idea that the financial markets are the essential force that drives economic growth and progress, has dominated political thinking for too long. The financial markets and their agents have dominated politics and the Congress over recent decades more than ever before. After all, it took several decades for the financial elite to accomplish the complete abandonment of the controls instituted to prohibit the financial market excesses that caused the Great Depression. We are at greater risk today of an even bigger crash than 1929.

The U.S. and world economies are stumbling on the precipice of part II of the “Great Recession” of 2008. The global integration of financial markets and institutions put the entire world at risk and none of it has any democratic foundation. It is all happening against the will of the people and in opposition to the public interest. The massive contraction of the middle class and the swelling of the ranks of the poor are now undeniable. The so called “recovery” has been all about the financial elites and the stock market. Corporations are awash in cash. Those who lost jobs that had a livable wage can now only find minimal-wage jobs and must work at least two to pay rent. The real economy falters and the financial markets are built on quicksand.

The Disappearing Real Economy

The economy is upside down because real economic activity – the production and exchange of goods and services needed by the people in their everyday lives – no longer drives the global economic system. The most powerful economic force in the world today consists of the actions of multinational corporations attempting to continually grow consumption by reducing the costs of growing production. International “free trade” is in effect the removal of production from the nation – outsourcing.

To minimize cost and maximize output, capital is moved to poor nations with the least labor costs and environmental controls. Economic “globalization” allows U.S. corporations to import cheap goods for our increasingly poor workers to buy at Wal-Mart with credit cards. That, of course, reduces the availability of production jobs here by exploiting the destitute elsewhere. While capital is easily mobile globally, labor is relatively immobile. The globalization of capital drives wages down so that U.S. citizens can only buy cheap imported goods.

Continuing down the ruinous path of the Wall Street financial elite is supported by a lot of political rationalization. The fact that work, pay, production, and consumption are what any real human economy is actually about, is simply ignored. On the one hand, we are told that capital must be free to find its “highest and best use.” That will enable the capitalists – falsely characterized as “the job creators” – to invest in new technology and production, thereby improving employment. Well, how has that worked out? The new technologies have mostly reduced the need for skilled labor in the U.S. The free international movement of capital – they call it “free trade” – has increased demand for unskilled cheap labor abroad. Who benefits? The wealthy investors in “globalization.” Who suffers? Workers everywhere suffer the loss of control over their lives and the inability to earn a living wage.

Feed the Rich, Starve the Poor

The myth that the super rich somehow need a tax break pervades the political discourse even though wealthy corporations and individuals pay less in taxes than ever. The delusion is that such public largess economically favoring the already rich would allow them to invest in the real economy. The “news” media – owned by the same mega-corporations that feed the super-rich – go along with that fiction even in the face of several decades of decline of American work, pay, production, and consumption.

All the while, the rich continue to get richer, paying less and less taxes, by controlling politics and indebting the nation. Both the U.S. Congress and the President are elected by having access to massive political funding by so-called “political action committees” (PACs). Legislation is actually written by the biggest financial lobbyists in the Congress – the lobbyists for the financial elite that is enriched by the “globalized” economy. Worldwide corporate theft, subsidized by the U.S. government, is a scam of unparalleled proportion.

Simply put, in a real economy it is income from employment that drives economic health. Employment provides individuals and families with incomes to buy the necessities and niceties of life. It is employment that produces goods and services people need. The income from employment allows consumption to drive production. Financial speculation among the super-rich has distorted the real economy by “financializing” it and ruined all that.

That is why the economy is so upside-down today. Financial speculation drives investment in cheap overseas production, leading to domestic poverty and declining ability to buy what is produced elsewhere. It is all driven by the greed of the financial elite, not by any national economic policy. Big investment banks’ speculating in abstract financial instruments – derivatives and the like – are allowed to create phantom money by depleting the real economy in the form of consumer and government debt.

In a real economy the Big Banks would be invested in actual productive activity. But because of outsourcing, underemployment, and low wages, workers cannot afford goods produced domestically as cheap goods from abroad flood the shelves of the big-box stores. At the same time, the propaganda of marketing and advertising encourage more and more consumption of less and less meaningful products. Low wages force reliance on consumer credit, increasing indebtedness to the corporations controlled by the financial elite. It is an upside-down economy.

Growing suppression of public education and critical thinking facilitates the manipulation of consumer behavior. People keep trying to buy whatever represents the imagery of the consumer culture that dominates their experience. “Affluenza” afflicts some of the few who experience new wealth. But the pervasive desire for the trappings of affluence – driven by pervasive marketing propaganda – drives consumer behavior, leaving little room for “free will” in economic behavior. Mass media images dominate consumer as well as political thought. Cultural images of “the good life” all involve increased unthinking consumption of corporate products.

Converging Crises and Catastrophic Collapse

In the present context, certain fundamental factors are at work. The vast accumulation of “phantom wealth” by the Big Banks via the “bailout” has encouraged further speculation and facilitated more economic concentration. The easy availability of cheap loans to corporations already awash in cash has not resulted in their investing in the domestic economy. All that cash and cheap credit is used for mergers and acquisitions, which further concentrate corporate wealth. A stock market booms while the main-street economy remains stagnant with vast numbers of workers unemployed or underemployed. Stock market growth is without foundation in the real economy. It has little basis in actual economic value, its growth is speculative, and is at increasing risk of collapse.

After the greatest financial heist of the public treasury ever, we must ask why such vast accumulated wealth has no benefit to the real economy. Overextended consumers can no longer rely on home equity and credit cards to make up for those decades of stagnant to regressive wages. It becomes clear that another few hundred million more dollars in the coffers of billionaires will not be invested in domestic production for the suppressed consumer demand for necessities that results from stagnant domestic employment and over-indebtedness.

It is not as if this is all happening in the abstract. Real world allocation of capital has planetary consequences. The distortions of mass production induced by extractive capital are global in scope. With a world population of over seven billion people and the drive to emulate Western patterns of consumption, the carrying capacity of the planet’s ecologies is already exceeded. Whatever one’s interpretation of the world’s economic system and imagined alternatives, the convergence of overproduction, consumer culture, overpopulation, looming crises of food production, resource wars, and climate chaos, all foreshadow a catastrophic collapse of existing economic and social systems. Only a massive human effort to reorganize the way we live on this planet can avoid human tragedy on a scale as yet mostly unimagined.

The National Debt and Deficit Scam

Ever wonder why the richest nation in the world, the U.S., has become a “debtor nation”?  Oh, but they’ve already told you.  It’s those politicians, especially the ‘liberal’ ones who just spend too much.  You know, those “tax and spend” liberals.  Well, I’m no apologist for the liberals.  I agree with Chris Hedges that the liberal class of politicos is essentially dead.  They still talk some about their concerns for the “middle class” and “working people,” but their actions reflect the same servility to the rich and powerful as do the ‘conservative’ — the misuse of that term is a whole other story — Republicans who have been cutting taxes on the rich and shifting the costs of plutocracy to the poor for decades.  So, we sure have a clue as to why we are in so much debt.

The Banksters’ Coup

The history of money and banking is far more interesting than any economics course on the topic.  It is long and complicated, but the essence of how current economies have become debt-based can be condensed to some key elements in the struggle between the public purposes of money and credit, and money-lenders’ efforts to control the issuing of money and renting that money for profit.  A nice summary of the key historical events can be read in Ellen Brown’s latest book, The Public Bank Solution: From Austerity to Prosperity.  In that book she also explains effectively why we — both people and government — are all in such debt, but need not be.

The international private banking cartel was started with the Bank of England around the time of the American Revolution.  Ultimately, the Federal Reserve was formed in the U.S. as a private banking cartel, owned by its member private banks.  The Federal Reserve Act of 1913 was passed under great pressure from the major private banks in the U.S.  It ceded sovereign authority for creating money to the Big Banks we know so well today.  That raises important questions that are rarely discussed in public.  What is money if not a public utility for making the exchange of goods and services effective?  Why should a public utility be controlled by a private cartel?

Money, Sovereignty, and the Public Interest

Numerous examples of public banking throughout history demonstrate that for achieving public purposes, public banks are more effective than private banks.  But rather than argue the details of why — Ellen Brown’s book does that quite well — let’s look at purpose and principle.  Banks are a necessary part of any economy.  An economy is a crucial component of any operating society.  The public has an inherent interest in banks being operated to serve public purposes, primarily the management of the creation and circulation of money as the means for making economic exchange work and facilitating public projects.

Money is a public good; indeed, it is a public service.  Contrary to the mythology foisted on the people, the value of money exists in its movement.  Furthermore, it is a process, not a thing — its value is in what it represents, not what it is [paper, wooden tallies, gold, etc.].  And what it represents is credit.  Stored in a vault it means nothing… except in the illusions of whoever controls the vault.  Banking has become the epitome of the illusory game of acquisition of wealth.  From the perspective of the citizen, however, the circulation of money is the means by which the people are able to sustain themselves over time.  If “we the people” are sovereign, then why is not the monetary system owned by the public?  But on to the main point.

The Debt and Deficit Scam

Simply put, because it gave up its sovereignty over the creation of money to the private banking cartel, the government borrows money from the Federal Reserve (central bank), which it created and gave the power to create money.  Where does the Fed get the money it loans to the government?  Why, out of thin air of course!  An entry is made on an electronic ledger and money is created and loaned to the very entity — the government — that allowed that ledger [of the private banking cartel] to exist.  A federal debt is created.  How counter-productive — stupid — is that?  The only interest this proess serves is that of the concentration of wealth in the hands of the banksters.

Well, it’s very productive for the banksters.  After all, its free money to be lent out and for interest to be collected upon.  Wow!  We could all use some of that kind of deal.  Free money to loan out and make more money on.  Now, project that process into the whole economy and think of the result.

The underlying absurdity is that by structuring debt in that way, it can never be repaid.  Only by continuing to expand the economy to allow more loans can the principle and interest on existing loans continue to be paid.  With the recent financial collapse due to uncontrolled speculative manipulation of mortgage lending, the system was exposed for the Ponzi scheme that it is.

Is There a Way Out?

The Banksters are just too powerful to stop directly.  The financial elite virtually runs the federal government.  But, as they said in the 1960s, “What if they gave a war and nobody came?”  Several lines of action are possible.  The Bank of North Dakota — the only public bank in the nation — is a model of what states might accomplish.  But municipal and county owned banks can also be formed.  Local movements for local public banking are developing.  Meanwhile, take your money out of those Big Banks and put it into your local credit union.  Divestiture worked to stop apartheid in South Africa.  It is starting to work to turn around the carbon economy.  It can be a big part of the great transformation of banking from a private extractive industry to a set of public institutions serving the public interest.

Why a Return to Progressive Taxation is necessary…and Right

The accelerating concentration of income and wealth in the upper 1% of the upper 1% of the population and the failure of the “growth” economy to serve the population that supports it, are not only moral questions of fairness. The distribution of income and wealth are also important elements of the health of the economy itself. Between 30% and 75% of aggregate income in the past 30 years has gone to the top 10% and most of that has gone to the top 1%. After the “great recession” of 2008, almost all of new income went to the top of the top 1%. If this trend continues, the circulation of money and therefore the health of the economy will stagnate even further.

It is fortunate that French economist Thomas Piketty’s new book, Capital in the 21st Century, is making such an international splash. Piketty raises fundamental questions about the economy that most economists, in their pandering to the power elites, have avoided ever since crowning Adam Smith patron saint of mainstream economics.

What classical economics, as practiced throughout the industrial era, has ignored is the inherent tendency of capital to concentrate among the wealthiest individuals and corporations, unless mitigated by social policies that assure the broader circulation of money throughout the economy.  It’s really quite simple. The economic power of those who control the most wealth and income gives them advantages that enable them to accumulate wealth at increasing rates, to the disadvantage of everyone else in the economy.  Without economic regulations that dampen the special advantages of wealth, such as the progressive income tax that once benefited the economy, extreme disparities in income and wealth cause all sorts of problems.

The evidence of that destructive process is grossly obvious in the current economies of the industrial nations, especially in the United States. That is exactly what happened before the Great Depression of the 1930s, causing economic collapse due to excessive concentration of wealth among the richest class in America. Yes, class, that concept so long banned from discussion in the U.S. Forget the fancy academic analyses of socioeconomic class and status in social relations. It’s simply a matter of an inevitable distortion of the distribution of wealth and circulation of money when the tendency for concentration is not tempered by some kind of social policy designed to limit concentration by re-balancing the circulation of money in the economy. Such policies were enacted in the 1930s, but, under pressure from the most privileged, have been abandoned, allowing further distortion of income and wealth.

The concentration of wealth and income was moderated when we had a progressive income tax system. The simplest and most practical approach to staving off plutocracy (rule by the wealthiest members of society) and reducing damage to the economy that results from unfettered accumulation of wealth, is to return to a progressive system of taxation of income and the return of the tax on inheritance. There is simply no economic reason, let alone moral justification, for allowing the economy to spin out of control and fail to serve the public interest in order to allow the wealthiest members of society to become that much wealthier, simply because they already have excessive economic power.

At the same time, the obsession with reducing the federal debt by further cutting expenditures that support the general population, such as social security, medical insurance coverage, and public education, serves no earthly purpose other than to make the rich richer. The biggest con of all these days is the one that characterizes the ‘rentier’ class – those who merely make money on the value of the wealth they have already accumulated – is that their income and wealth ought to be protected from taxation because they are the “job creators.” They are no such thing, and their excessive income is of benefit to nobody, not even themselves – you can only spend so much before reaching absurd redundancy.  But the quest for power knows no bounds.

Restoring the progressive income tax would be fit medicine to help restore the health of an economy suffering from the cancerous growth of the ‘cells’ of the richest class of Americans and the corporations they control. The federal revenue gained thereby could be applied not only to the national debt, but to investing the desperately needed transformation of the fossil-fuel driven economy to a carbon neutral economy in order to minimize the damage of climate disruption. After all, it is the 1% and their fossil fuel related investments that have driven us to the brink of climate catastrophe.

Bottom line: an economy is not an economy of the whole society without consistently adequate circulation of money throughout the population.  It is both immoral and foolish to continue on the path of accelerating concentration of wealth to the detriment of the entire society. Privilege and wealth will not disappear with progressive taxation. Look at the post WW-II 1940s and 1950s, when the marginal tax rate on income above $200,000 — the tax rate on the part of income above the first $200,000 earned, and there were 23 brackets below that with progressively lower rates — was 91%; adjusted for inflation, that would be the rate for income above $2.41 million today. We should have such a healthy economy today!

What It Will Take: Living in a World We Made But Never Expected to See, Part II

The reality we face in the coming decades involves three integrated crises: 1) the consolidation of the corporate state driven by the debt-based endless corporate-growth economy, which increasingly damages populations by isolating them from economic resources and destroys the environment we all need, in service to short-term profit and political power; 2) accelerating resource depletion which makes the conventional economic model of debt-based economic growth and expanding populations unsustainable; and 3) accelerating climate disruption caused by unrelenting carbon emissions resulting from (1) and (2).  Unlimited economic growth is an illusion that is ultimately self-terminating.  Our current path poses the utmost threat ever to human survival, making it the greatest imaginable challenge to an outlook of hopeful realism.  If you recognize the existential threat facing us, how can you not be a hopeless pessimist?  If you deny the existential threat facing us, you must be a foolish optimist.  Both those options are useless.

Any solution requires both hope and realism.  We must face necessary massive transformations in the ways we live on the planet if hope is to be sustained.  We must sustain a huge dose of hope in order to take the drastic challenging actions necessary for survival.  Most discussions that recognize the threat look for solutions that assume continuing on some “green” path of the consumer culture we have come to view as “normal.”  That will not work.  However, the Great Transformation that is now inevitable – though its outcome is unpredictable – need not require a Luddite approach that would simply destroy manufacturing technology.  Instead, we must recognize that human technology has gone off in a direction of “creative destruction” and must be re-directed and transformed into a new human-scale enterprise.  But that’s just one piece of the puzzle.  It is not hard to come up with a list of imperative economic and technological changes, all of which involve freeing ourselves from fossil-fuel dependency.  Here are just a few major items for such a list:

  • Convert electricity production from coal and gas to wind and solar.
  • Convert the hugely wasteful long-distance electricity transmission grid to interconnected local-community solar/wind electrical smart grids.
  • Reduce much of capital-intensive production to labor-intensive production.
  • Convert transportation from petroleum based to electricity based propulsion.
  • Break up the Big Banks; re-institute the Glass-Steagall wall between commercial banking and investment (casino) banking, and while were at it, have the Federal Reserve re-sell all those casino junk bonds back to the Big Banks at the price paid; that will re-direct the Bad Debt back to where it belongs; then resolve those bloated unnecessary institutions and let those gamblers take the losses they earned.
  • Establish State and local banks as public institutions in service to public needs.
  • Limit international trade to products and materials that are not capable of being produced in the receiving nation; convert all shipping to non-fossil-fuel propulsion systems.
  • Etc., etc., etc.

Obviously, this list could be extended considerably, and much detail would have to be worked out.  But you get the idea: massive transformation of international, national, and local-regional economies in line with the energy requirements of stabilizing the biosphere to achieve stable local and planetary ecological systems.  Well, that was easy.  But wait.  How can these things be accomplished?  Conventional political processes are controlled by the very corporations that continue to resist such changes in order to grab as much short-term profits as they can before being forced to change.  But if we wait for the force of nature to stop the insanity, then it will be too late to stop the acceleration of climate disruption beyond the limits of human habitation on the planet.  Many corporations see the climate writing on the wall, but they are compelled by their own internal logic to grab all they can before the end of the era of endless growth.

The only answer left is popular resistance, and that is a long shot because the popular culture is largely controlled by the corporate media that promotes only its own short-term interests, and we will have to change the way we live rather quickly to make enough difference.  Yet, people are not nearly as stupid as politicians and CEOs think they are.  We know we are in crisis, but most just don’t know what to do personally and most still believe that we can somehow have a “green” economy and still consume all that stuff the corporations are selling us.  The most important result of the Occupy Movement – and the Arab Spring as well, for that matter – is that it really scared the political-economic power elites.  Occupy has dispersed, but many local actions based on similar principles are occurring.  History shows that the power of numbers can overcome the power of elites.  No guarantees; we have so much to do and so little time.  In Part III of this essay I will discuss the sources of hope in this sea of harsh reality.

Last Hours, Last Hope, Last Reality Check.

Last Hours is a scary video that presents the raw scientific facts of the impact of global warming reaching the tipping point where warming is accelerated by massive release of  methane from the arctic tundra and below the sea beds, because it is melted from its frozen solid state.  The result is an unstoppable positive feedback loop that will raise planetary temperatures 6-10 degrees, resulting in a massive extinction as devastating to life on the planet as the Permian mass extinction of 250 million years ago, which left only 5% of life on earth.  We are rapidly reaching that tipping point, as our politicians, media and financial elites babble about protecting the economy that only they benefit from anyway, but not for long.  They are lemmings; will we joint them or find another path?  Watch it.

Why Is Social Security So Insecure?

We all know that politics is rife with deceit of the public and deception of the self.  Claims as to the reasons a senator or congressman supports or opposes a bill or a policy are often merely “cover stories” hiding the widespread real reason the politicians vote the way they do – money.  The conflation of the financial status of Social Security with the problems of the national debt and the annual fiscal deficit of the U.S. is a case in point.  Much money is at stake, but rarely is the real issue directly faced.

Social Security is not part of the federal budget.  It is a self-funding program that provides very modest old-age and other benefits to those who have contributed to it during their working lives, and to certain dependants.  As they try to cut back benefits and destroy Social Security, politicians make disingenuous claims that they want to “protect the integrity” of Social Security.  They know that most Americans like the program and want it to survive.  In an economic environment where almost all private pension systems have been plundered by the corporations that administered them for the employees who contributed to them over entire careers only to lose it all at retirement, Social Security has become the de facto fall-back retirement system, despite it’s poverty level “benefits.”

Powerful forces, such as the national financial elite and extreme anti-government political ideologues, bent on destroying Social Security (and Medicare/Medicaid too, of course) don’t always have the same motivations.  The financial elite wants Social Security funds diverted into “private retirement savings accounts” to be managed by, you guessed it, their very own stock market brokerage firms.  What a windfall of commissions and fees that would be for the most powerful economic class!  And what a high-risk future for retirees!

But the growing insecurity of Social Security is a serious political problem simply because the corporate and financial elites and their congressional agents want it to be.  There is just too much money to be made for them to leave it alone.  Several simple changes in the system designed to compensate for both class injustices in the contributions of wealthy high-income employees versus average workers, and for generational changes in the demographics of employment and aging could easily be made without major problems of implementation.  However, those who would profit – either politically or financially – by the privatization/destruction of Social Security, carefully avoid the easy solutions to any long-term cash flow problems because they either want to take over the huge money flow involved or because they are politically opposed to any government social program that assists those in need.  The first group could be called the “Jackals of Wall Street” while the second group consists of extreme right-wing ideologues who oppose government no matter what.

But what’s the real issue?  Simply put, Social Security was originally conceived as an insurance program, meant to help those elders whose employment failed to afford them an adequate pension or life savings, to see them through after they could no longer work.  But with the corporate plunder of pension systems, Social Security became the default retirement system for most American workers.  Now, with the reduction of the vast majority of the middle class to near-poverty or poverty status, with personal life-savings virtually impossible for many to accumulate, and pension systems no more, Social Security is very often the last defense against homelessness and destitution.  If the Social Security payroll tax were applied to all personal income, including the millions of dollars in “executive compensation” in its many forms such as salaries, stock options, “incentive pay,” and bonuses of top CEOs, the fund would be sufficient to support the small “benefits” far into the foreseeable future for those who need it.

So, the real issue is whether the American people will tolerate the plunder of the Social Security system as they did corporate pensions, or whether they will demand that what was intended as a social insurance scheme actually be implemented as such.  That’s where the tricky language often applied to the Social Security debate needs to be overcome.  Insurance works on the basis of every “insured” person contributing and those who suffer losses collecting the benefits.  Simply put, if Social Security were actually implemented as a social insurance program rather than as a last-ditch inadequate retirement system –  and certainly not as a privatized “retirement savings account”  subject to the whims of the stock market – several principles would have to be invoked in order to make it work quite effectively.  They are:

  •  All personal income must be subject to the Social Security Payroll Tax.  Who has ever gotten fire insurance without paying the premium?  Why should high income earners not pay the premium on all their income?
  • Social Security benefits would be dispensed on the basis of need.  Who has ever collected on her/his fire insurance when there was no fire?   Why should wealthy retirees collect benefits from an insurance scheme designed to protect against the lack of income or loss of wealth in old age?
  • If one were so lucky as to have benefited from a prosperous pension system, then any Social Security benefit would be adjusted down on that basis.  And a formerly wealthy man who lost his fortune (stocks, bonds, dividends, buyouts, bonuses, “incentive pay”), would also draw the maximum Social Security benefit.  What’s wrong with that?
  • The net effect of the system should be that everyone could retire with assurance that they can live in at least modest comfort in their final years without fear of economic and social deprivation.

In an economic and social environment where so much income and wealth has been redistributed from the middle and lower classes of workers to the very top 0.1% of privileged Americans, only some form of re-redistribution can at this point re-establish a semblance of balance to the economy and stability to the society.  A real social security system would still be little more than a small compensation to those who have lost the most over their working lives to the insatiable greed of the financial elite.