Transitioning Out of Democracy

I'm trying to remember what Simon Johnson saw as the time to the next financial crisis in a discussion with Bill Moyers two or three years ago (in what might have been one of the last editions of the Bill Moyers Journal before Moyers retired). Certainly, Johnson predicted no more than ten years to the next crisis, but my recollection is that he said something like three to seven years. That's just my recollection, but we can be sure of one thing — Barack Obama, Democrats and Republicans, despite weak public protestations to the contrary, have sent very clear substantive signals. Wall Street and megabank risk-taking, misconduct, and even criminality will be thoroughly underwritten by the United States government and, by extension, a willfully ignorant American populace.

This all fits into what a growing number (including Paul Krugman and Nouriel Roubini . . . I don't know about Messrs. Johnson and Kwak) have described as a large, perhaps the largest, transfer of wealth from labor to capital ever.

My own few is that the phenomenon is even broader than that, encompassing economic and legal, even constitutional, features. A transfer of wealth and economic and political power from the general population to an increasingly rapacious class of American oligarchs is underway. My view unifies developments across the economic and political spectrum:

• the Supreme Court's creeping grant of the status of personhood to corporations,
• the gross disparities in wealth and income (and all concomitant benefits, like health, education, longevity, etc.),
• Bush and Obama attacks on civil liberties (including Habeus Corpus, Posse Comitatus, whistleblower protections, protections for journalists — the few who actually investigate US government misconduct),
• the Democratic-Republican assault economic protections for elderly Americans.
• the effective criminalization of poverty,
• the cultural glorification of the New American Virtues — wealth, fame, good looks, longevity, fashion, etc.

I do not like the "tipping point" terminology, but the trends that accelerated in the Reagan years (having arguably begun in the Carter years) and that have continued through every president since may now have crossed some threshold, an increasingly formal grant of power to a tiny percentage of elite Americans. Any new bailouts will only be part of larger developments.

This Is What Obama, Republicans, and the Oligarchs WANT

Yves Smith directs us to, among others things, a discussion by Kate Pickett. Pickett's presentation notes that the US has more "bads" than most other wealthy, 'modern' countries — across the board. Greater inequalities in longevity, crime, mobility, happiness, education, and on and on.

It is time to stop pretending that this is an accident of other phenomena in the US. Rather, this is what the American elite want.

Americans equate wealth, longevity, "good looks" (in the form of housing, fashion, personal appearance) with virtue. Americans embrace the notion that the wealthier, longer-lived elite are better, innately better, morally better, intellectually better.

Americans embrace an innateness of status that was rejected by Europeans through the French Revolution and numerous other social upheavals.

Worst, Obama, most Democrats, all Republicans, and most important, the Oligarchs (the top 1% or so), want the rest of us to be worse off — in every sense.

This is an explanation that has all the merits attributed under the scientific method. It is simple. It explains what we observe. It has predictive power. Above all, it explains why Obama and others would pursue the policies they do despite overwhelming factual evidence.

Income/Wealth Inequality and Social Stability

The Princeton political scientist Carles Boix argued at at length that one of the things that makes democracy possible is that the better off perceive their privilege to be protected (in some measure) against egalitarian impulses of the less-well-off. In modern industrial democracies like the US, the wealthy enjoy constitutional protections and can also move their wealth elsewhere.

Fine. But two obvious questions arise.

1. Is there a point where inequality provokes a backlash among the less-well-off? The answer in the US for decades has been no. Americans are remarkably, stunningly indifferent to the gross inequalities of the US, hands down the most unequal of all the industrial democracies. The US has one of the lowest social mobility rates in the world, even compared to non-democracies and less-developed nations. It has fares most poorly among its peers on health, longevity, education, happiness — very nearly every index of comparison. (The only country that does roughly as badly is Britain. What a surprise — the nation that has done most to parrot the American example.)

Despite this, as John Kenneth Galbraith long noted (among many others), Americans didn't seem to care.... American exceptionalism. Speaking on The Charlie Rose Show, economist Kenneth Rogoff's comment echoes something I've heard elsewhere: Americans "expect to win the lottery." Americans are generally happy to see others enjoy billions because a remarkable percentage of Americans are deluded into thinking they too will win any day now — this despite the US having a dismal degree of social mobility.

Will this change? Can it change? Can Americans develop a measure of anger? Can they rally the way the French or Greeks have? The way anybody but Americans do?

This brings us to the second question:

2. How are the US government and oligarchs suppressing American egalitarian impulses or protecting themselves against the same? I suggest that the national security apparatus/state that has been developing for years and has accelerated under Obama will be used to contain any American social upheaval — should any develop, which seems unlikely given the level of Americans' apathy and ignorance. Under Obama, domestic spying has grown. Obama has viciously sought to suppress whistleblowers, as Glenn Greenwald has described repeatedly. Moreover, we have an educational system which borders on systematic indoctrination. From grade school through university (especially university) we have a host of institutions that endlessly trumpet the unalloyed glories of both unlimited greed and the infallibility of the American way of doing things. I am frequently astonished by the extent to which extraordinarily well-educated, intelligent people show absolutely no inclination or ability to challenge American orthodoxy.

The writings of H. L. Mencken, John Kenneth Galbraith, Noam Chomsky, Mark Twain, and many others go into this over the length of American history. Today, we have many new voices — Naomi Klein, Glenn Greenwald among them. Yet Americans remain impervious to even the most obvious truths.

The wealthiest and their willing slaves like Obama and Congress (those members who are not among the 1% already, that is) have obvious incentives for pressing the dogma. But why so many Americans prove so indifferent is a mystery.

Obama — Worse than Bush

Secretary of Defense Leon Panetta has made clear that he plans to fight any cuts to the Pentagon budget tooth and nail. We have every reason to believe Obama holds similar, even identical, views. As Glenn Greenwald has noted, this sets up a near-guaranteed gutting of American social programs if the so-called "Super Congress" has any teeth. Republicans will oppose any cuts to defense. Obama has pushed for cuts to social programs already. Now he makes clear his commitment to monstrous military extravagance. Panetta has gone so far as to assert that any possible cuts "would do real damage to our security, our troops and their families, and our military's ability to protect the nation."

The Orwellian doublethink in Panetta and the Pentagon's assertions is something to behold. Note that the Pentagon is also angling for more money on the grounds that there are new security threats in the form of climate change, among other things. This hopelessly expansive, all-encompassing, "everything is a national security issue" thinking will will swell to include economic issues. Indeed, it already has, as seen in much of the hysterical rhetoric about China.

Paul Krugman noted, again, the other day that the US is looking more and more like a banana republic. One of the features of those failed states is massive numbers of citizens working for the military. Going into the military in many of these countries was the equivalent of going into business in western Europe or North America.

Have Democrats settled on the military as the only social program Republicans will support? Or is Obama just as spinelessly militant as Joseph Lieberman and war-hungry Republicans?

The US patted itself on the back over the success of its strategy of forcing the Soviet Union to spend itself into oblivion on 'defense.' On the Soviet invasion of Afghanistan, Zbigniew Brzezinski told Carter, "We have given the Soviets their Vietnam."

The US is now doing the same . . . to itself.

Paul Krugman on America's Lost Decade