The SPIDERLEGS Conundrum

Thousands @OccupyOakland #J28 Protest, Police respond with Kettling & Tear Gas; 300 Arrested

2012-01-31T09:20:00.002-06:00

January 29, 2012 - theCORPORATIONblog
By Jennifer Slattery

(image via Twitter credited to GlennShootsPeople's Flicker account)

Violent police clashes again rocked the city of Oakland January 28th (#J28) as Occupy Oakland protestors attempted to occupy a vacant building. Their announcement, via a letter to the Mayor referring to the action as Move-In Day, declares their intent to use the building:

“As a social center, convergence center, headquarters, free kitchen, and place of housing for Occupy Oakland. Like so many other people, Occupy Oakland is homeless while buildings remain vacant and unused. For Occupy this is in large part because of yourselves, having evicted us twice from public space that was rightfully ours. For others it is because of the housing bubble, predatory lending, the perpetual crises of capitalism, and far reaching histories of imperialism and systemic violence.”

By the end of a long day of marches and failed occupation attempts, three hundred people, from a crowd that swelled at times to 2,000, were arrested. Much of the corporate media reporting on the start of the violence points the finger squarely at the protestors who are alleged to have begun the violence by pelting officers with rocks, bottles and even Improvised Explosive Devices. The claim that peaceful protestors used IEDs is on it’s face false and inflammatory, as first hand accounts and live streaming video footage of the event seems to show that protestors only threw some debris as a reaction to being pelted with explosive percussion grenades, rubber bullets, and tear gas canisters:

http://www.youtube.com/watch?feature=player_embedded&v=sFaviIoy4rg

Via Occupy Oakland’s twitter feed:
#OccupyOakland #OO OPD claim they ordered us to disperse, after blocking us in & arresting us. Chanting "this is a hostage situation."

"For their first attempt at a kettle, the cops charged the group with police lines from the front and back. They ran towards us aggressively. Us being 1000+ peaceful marching protesters. The group was forced to move up a side street. The police moved quickly to surround the entire area; they formed a line on every street that the side street connected to. Police state status: very efficient. They kettled almost the entire protest in the park near the Fox theater. AFTERWARDS, as in after they surrounded everyone, they declared it to be an unlawful assembly BUT OFFERED NO EXIT ROUTE. Gas was used, could of been tear or smoke gas."

Similar claims that law enforcement "had to deploy gas in order to stop the crowd and people from pelting us with bottles and rocks." after the violentclearing of the original Occupy Oakland camp had to be walked back, because there was no evidence that any such violence by Occupy had occurred:

“Oakland PD's Chief of Staff, Sgt. Chris Bolton conceded that the department was unable, at this time, to substantiate claims made by Jordan that gas was deployed in order to protect law enforcement personnel from violent demonstrators, despite the Chief's unqualified claim that evening that "the deployment of gas was necessary to protect our officers and protect property around the area and to protect injuries to others as well."
Instead, Bolton softened Jordan's initial claim. The sergeant described it as "the Chief's preliminary belief.”

The claims of the Oakland PD are especially hard to swallow after internal emails show that interim police chief Johnson lied to paint Occupy Oakland as a crime problem in order to garner support for their actions:

“In the days leading up to the Nov. 2 march on the Port of Oakland, city leaders warned about the drain on police resources.

When Jordan received an update that crime was actually down 19 percent in the last week of October, he wrote an email to one of Mayor Jean Quan's advisers.

"Not sure how you want to share this good news," he wrote. "It may be counter to our statement that the Occupy movement is negatively impacting crime in Oakland."

Police and the city said Occupy has had an ongoing impact on their ability to respond to crime.
In all of the emails there was not a single one written by Quan.”

Indeed it seems that the Interim Police Chief is not the man to solve the problems plaguing the Oakland Police Department. The Oakland PD is now facing a Federal Receivership in March. While several cities have had to have Federal Monitors installed, this would be the first time in United States history that a department has been completely turned over to Federal control. The Federal Judge ruling in the case expressed his astonishment that the OPD is continuing using controversial and violent tactics in the face of reforms demanded almost a decade ago that still have not been implemented:

"The court remains in disbelief that Defendants have yet - nine years later - to achieve what they themselves agreed was doable in no more than five years," U.S. District Court Judge Thelton Henderson wrote.”

This may be the only way to correct the course of a police department that has long since gone off the rails and has not found the leadership from the Police Chief or the Mayor to make the badly needed reforms. As the San Francisco chronicle noted:

“It's a step away from surrendering responsibility for the city's police to federal management. If the city doesn't clean up its act - which doesn't look likely given all the other crises Oakland now faces - the judge made it clear that receivership will be the next step.”

I lived in Oakland during the time of the Oscar Grant murder and subsequent protests, and personally throw my support behind this action to get the department functioning for the people again. Even in basic everyday interactions, the civility required by the men and women on the force is lacking. This is creating a gap between the police and citizens that endangers all, and the department has had more than enough time to right it's own ship.

Occupiers across the country are mounting solidarity actions today (#J29) to show support for Oakland. The Rise Up Festival announced in the Move in Day letter is confirmed to still be on for today, according to Occupy Oakland’s twitter feed. The group is also asking for supporters to donate as much as they can to the Occupy Oakland bail fund.

Mortgage giant Freddie Mac bet against homeowners

2012-01-31T08:33:00.003-06:00

Holy shit!!!--jef

By Agence France-Presse
Tuesday, January 31, 2012

US-owned mortgage giant Freddie Mac is holding billions of dollars in investments that only pay off if homeowners remain locked into high interest rates, a media investigation has found.

The report by the ProPublica website and National Public Radio on Monday said the mortgage giant began dramatically increasing such bets in 2010 at the same time it was making it more difficult for homeowners to refinance.

It said the trading arm of the firm is in theory “walled off” from its housing finance activities, which by government charter are to be directed at making home loans more accessible.

The Federal Housing Finance Agency (FHFA), which supervises Freddie, said in a statement to ProPublica that it had ordered a halt to such investments — known as “inverse floaters” — in December, following an internal assessment.

The assessment “had “identified concerns regarding the controls, including risk management,” it said in a statement published in full by ProPublica.

The statement said inverse floaters make up $5 billion out of a portfolio of $650 billion, and did not have any impact on its refinance program.

White House spokesman Jay Carney expressed concern about the report during a press conference on Monday.

“We saw those reports and they certainly raise concerns. As you know, this is an independent institution with independent governance, so we don’t make those kinds of decisions. But I believe Treasury is looking into it,” he said.

Freddie Mac and its cousin Fannie Mae were taken over by the government in 2008 to prevent their collapse in the financial crisis.

The crisis was triggered by the collapse of the mortgage-backed securities market, which went belly-up due to the proliferation of bonds tied to dodgy “subprime” loans.

The Biggest Risk to the Economy in 2012, and What’s the Economy For Anyway?

2012-01-31T08:25:00.000-06:00

Tuesday, January 31, 2012 by Robert Reich's Blog
by Robert Reich

Treasury Secretary Tim Geithner, speaking at the World Economic Forum in Davos a few days ago, said the “critical risks” facing the American economy this year were a worsening of Europe’s chronic sovereign debt crisis and a rise in tensions with Iran that could stoke global oil prices.

What about jobs and wages here at home?

As the Commerce Department reported Friday, the U.S. economy grew 2.8 percent between October and December – the fastest pace in 18 months and the first time growth exceeded 2 percent all year. Many bigger American companies have been reporting strong profits in recent months. GE and Lockheed Martin closed the year with record order backlogs.

Yet the percent of working-age Americans in jobs isn’t much different than what it was three years ago. Yes, America now produces more than it did when the recession began. But it does so with 6 million fewer workers.

Average after-tax incomes adjusted for inflation are moving up a bit. (They increased at an annual rate of .8 percent in the last three months of 2011 after falling 1.9 percent in prior three-month period. For all of 2011, incomes fell .1 percent.)

But beware averages. Shaquille O’Neal and I have an average height of six feet. Exclude Mitt Romney’s $20 million last year — along with everyone else securely in the top 1 percent — and the incomes of most Americans are continuing to slip.

Consumer spending picked up slightly in the fourth quarter mainly because consumers drew down their savings. Obviously, this can’t last.

Meanwhile, government is spending less on schools, roads, bridges, parks, defense, and social services. Government spending at all levels dropped at an annual rate of 4.6 percent in the last quarter – and that’s likely to continue.

Some economists worry this drop is a drag on the economy. But it also means fewer public goods available to all Americans regardless of income.

Congress still hasn’t decided whether to renew the temporary payroll tax cut and extend unemployment benefits past February. If it doesn’t, expect another 1 percent slice off GDP growth this year.

Tim Geithner is surely correct that the European debt crisis and Iran pose risks to the American economy in 2012. But they aren’t the biggest risk. The biggest risk is right here at home – that most Americans will continue to languish.

All of which raises a basic question: Who or what is the economy for? Surely not just for a few at the top, and not just big corporations and their CEOs. Nor can the success of the economy be measured by how fast the GDP is growing, or how high the Dow Jones Industrial Average is rising, or whether average incomes are turning upward.

The crisis of American capitalism marks the triumph of consumers and investors over workers and citizens. And since most of us occupy all four roles – even though the lion’s share of consuming and investing is done by the wealthy – the real crisis centers on the increasing efficiency by which all of us as consumers and investors can get great deals, and our declining capacity to be heard as workers and citizens.

Modern technologies allow us to shop in real time, often worldwide, for the lowest prices, highest quality, and best returns. Through the Internet and advanced software we can now get relevant information instantaneously, compare deals, and move our money at the speed of electronic impulses. We can buy goods over the Internet that are delivered right to our homes. Never before in history have consumers and investors been so empowered.

Yet these great deals increasingly come at the expense of our own and our compatriots’ jobs and wages, and widening inequality. The goods we want or the returns we seek can often be produced more efficiently elsewhere around the world by companies offering lower pay, fewer benefits, and inferior working conditions.

They also come at the expense of our Main Streets – the hubs of our communities – when we get the great deals through the Internet or at big-box retailers that scan the world for great deals on our behalf.

Some great deals have devastating environmental consequences. Technology allows us to efficiently buy low-priced items from poor nations with scant environmental standards, sometimes made in factories that spill toxic chemicals into water supplies or pollutants into the air. We shop for great deals in cars that spew carbon into the air and for airline tickets in jet planes that do even worse.

Other great deals offend common decency. We may get a great price or high return because a producer has cut costs by hiring children in South Asia or Africa who work twelve hours a day, seven days a week. Or by subjecting people to death-defying working conditions.

As workers or as citizens most of us would not intentionally choose these outcomes but as seekers after great deals we are indirectly responsible for them. Companies know that if they fail to offer us the best deals we will take our money elsewhere – which we can do with ever-greater speed and efficiency.

The best means of balancing the demands of consumers and investors against those of workers and citizens has been through democratic institutions that shape and constrain markets.

Laws and rules offer some protection for jobs and wages, communities, and the environment. Although such rules are likely to be costly to us as consumers and investors because they stand in the way of the very best deals, they are intended to approximate what we as members of a society are willing to sacrifice for these other values.

But technologies for getting great deals are outpacing the capacities of democratic institutions to counterbalance them. For one thing, national rules intended to protect workers, communities, and the environment typically extend only to a nation’s borders. Yet technologies for getting great deals enable buyers and investors to transcend borders with increasing ease, at the same time making it harder for nations to monitor or regulate such transactions.

For another, goals other than the best deals are less easily achieved within the confines of a single nation. The most obvious example is the environment, whose fragility is worldwide. In addition, corporations now routinely threaten to move jobs and businesses away from places that impose higher costs on them – and therefore, indirectly, on their consumers and investors – to more “business friendly” jurisdictions. The Internet and software have made companies sufficiently nimble to render such threats credible.

But the biggest problem is that corporate money is undermining democratic institutions in the name of better deals for consumers and investors. Campaign contributions, fleets of well-paid corporate lobbyists, and corporate-financed PR campaigns about public issues are overwhelming the capacities of Congress, state legislatures, regulatory agencies, and the courts to reflect the values of workers and citizens.

As a result, consumers and investors are doing increasingly well but job insecurity is on the rise, inequality is widening, communities are becoming less stable, and climate change is worsening. None of this is sustainable over the long term.

Blame global finance and worldwide corporations all you want. But save some blame for the insatiable consumers and investors inhabiting almost every one of us, who are entirely complicit. And blame our inability as workers and citizens to reclaim our democracy.

US Elections: No Matter Who You Vote For, Money Always Wins

2012-01-31T08:14:00.001-06:00

Monday, January 30, 2012 by The Guardian/UK
Dollars play a decisive role in US politics. And more so since the supreme court allowed unlimited campaign contributionsby Gary Younge

Republican presidential debates are not for the faint-hearted. Last week in Jacksonville, Florida, Rick Santorum warned of the "threat of radical Islam growing" in Central and South America. Newt Gingrich advocated sending up to seven flights a day to the moon, where private industry might set up a colony, and reaffirmed his claim that Palestinians were invented in the late 70s. Mitt Romney argued that if you make things tough enough for undocumented people, they will "self-deport".

Given the general state of the Republican party, such comments now attract precious little attention. Truth and facts are but two options among many. The party's base, overrun by birthers, climate change deniers and creationists, floats its warped theories and every now and then one makes it to the top and bobs out into the airwaves.

So the oft-touted notion that these debates have been responsible for shifting the trajectory of this primary race would be worrying if it were true. It is difficult to think of anywhere else in the western world where these debates would have any credibility outside of a fringe party (even if the fringes in Europe are now spreading). Far from indicating America's exceptionalism, it looks more like an awful parody of the stereotypes most outsiders already believed about American politics at its most bizarre. "Those who follow this race daily may have long since lost perspective on how absurd it is," said the German magazine Der Spiegel last week. "Each candidate loves Israel. They all love Ronald Reagan. Each loves his wife, a born first lady, for a number of reasons."

The good news is, with the exception of Perry's demise, the debates have not been pivotal. The bad news is that the truly decisive element has been something even more insidious: money. Lots of it.

This is not new. But since a 2010 supreme court ruling allowing unlimited campaign contributions by corporations and unions, it has become particularly acute. Moreover, the contributors can remain anonymous. The organisations that are taking advantage of this new law are known as Super Pacs. Even at this early stage of the presidential cycle, their potential for framing the race is clear. In the whole of 2008 individuals, parties and other groups spent $168.8m independently on the presidential election. This year on Republican candidates alone, where voting started less than a month ago, the Super Pacs have reportedindependent expenditures of almost $40m. In 2008 election spending doubled compared with 2004. This year industry analysts believe the money spent just on television ads is set to leap by almost 80% compared with four years ago.

Money in American politics was already an elephant in the room. Now the supreme court has given it a laxative, taken away the shovel, and asked us to ignore both the sight and the stench.

The only real restriction is that there should be no co-ordination between the candidate and the Super Pac. In practice, this is little more than a fig leaf. A few weeks ago one of the ads, funded by the Super Pac supporting Gingrich, was slated for its many brazen inaccuracies. At a campaign stop in Orlando, Gingrich told supporters: "I am calling on this Super Pac – I cannot co-ordinate with them and I cannot communicate directly, but I can speak out as a citizen as I'm talking to you – I call on them to either edit out every single mistake or to pull the entire film."

Romney is no less compromised. His former chief campaign fundraiser and political director work for the main Super Pac supporting him, which was set up with the help of a $1m cheque from an ex-business partner. "This legalism of 'no co-ordination' is a filament-thin G-string,"wrote Timothy Egan in the New York Times recently. "Everyone co-ordinates."

Money alone can't guarantee success. Santorum spent around 74 cents a voter in Iowa and narrowly won; Perry spent around $358 per vote and came a distant fourth. Debate performances, policy positions, personal histories and retail politics play a role. But the fact that money is not the sole determinant doesn't mean it's not the key one. Two months ago Gingrich's surge in Iowa was halted after Romney's Super Pac ploughed millions of dollars into campaign ads attacking him. Romney's commanding lead in South Carolina was similarly thwarted when Gingrich's Super Pac injected several million dollars.

This is not a partisan point. Almost two-thirds of Americans believe the government should limit individual contributions – with a majority among Republicans, Democrats and independents. The influence of money at this level corrupts an entire political culture and in no small part explains the depth of cynicism, alienation and mistrust Americans now have for their politicians.

The trend towards oligarchy in the polity is already clear. There are 250 millionaires in Congress. Their median net worth is $891,506, nine times the typical US household. Around 11% are in the nation's top 1%, including 34 Republicans and 23 Democrats. And that's before you get to Romney, whose personal wealth is double that of the last eight presidents combined. All of this would be problematic at the best of times, but in a period of rising inequality it is obscene.

The issue here is not class envy, hating rich people because they are rich, but class interests – cementing the advantages of the privileged over the rest. The problem is not personal, it's systemic. In the current climate, it means a group of wealthy people in business will decide which wealthy people in Congress they would like to tell poor people what they can't have because times are hard. And unless the ruling is overturned there is precious little that can be done about it.

Last week in a Massachusetts Senate race, both the Republican incumbent and his likely Democratic challenger signed a pact agreeing not to use third-party money. The trouble is that the agreement is completely unenforceable. Already at least one pro-Republican group has refused to commit to it.

Downplaying money's central role at this point merely buys into the illusion of participatory democracy, where ideas, character and strategy are paramount, while others are actually buying the candidates and access to power. The result is a charade. Fig leaf, G-string – name the scanty underwear of your choice. The emperor is butt naked. Whoever you vote for, the money gets in.

Acid Cat!

2012-01-31T07:44:00.001-06:00

I saw a cat that looked like this once...

There Is No ‘War on Religion’

2012-01-31T07:29:00.000-06:00

It's true that Christianity is losing some of its appeal among Americans, but that is a religious, not political, matter

By JON MEACHAM | January 30, 2012

Playing on one of the most ancient traditions within Christianity — the fear of persecution — Gingrich has chosen to cast contemporary American life as a duel between light and dark, between believers and secularists, between ordinary Americans and pagan, condescending “elites.” His most common target (and the subject of a long white paper on his website): judges who he claims favor secularists over believers. “The revolutionary idea contained in the Declaration of Independence is that certain fundamental human rights, including the right to life, are gifts from God and cannot be given nor taken away by government,” says newt.org. “Yet, secular radicals are trying to remove ‘our Creator’ — the source of our rights — from public life.”As ever, Newt Gingrich minced no words. “I understand that there’s a war against religion,” Gingrich told the Christian Broadcasting Network’s David Brody last week, “and I am prepared to actually fight back.” In the same conversation, Gingrich claimed that most journalists simply could not understand people of faith given the media’s purported secularism. And so Gingrich’s “war” goes on.

Ah, those “secular radicals.” No doubt there are secular extremists with radical ideas about religion in public life. But here’s what we know for sure: President Obama is not one of them, nor are at least five of the Justices of the Supreme Court, including the Chief Justice, a practicing Roman Catholic. Though Gingrich’s hyperbole may be good primary politics, the problem is that politicizing religion in this way trivializes the honorable tradition of real martyrdom in the service of creating an exaggerated sense of grievance and self-pity among believers.

The more the Republican field talks in such apocalyptic terms, the more likely it seems that the GOP could alienate the independent voters who might be otherwise inclined to turn President Obama out of office in November. A holy war might play well to the Republican base, but the base isn’t exactly a swing bloc.

The “war on religion” tactic is an old one. To use an analogy Gingrich likes — one from World War II — the Pearl Harbor of the culture wars he is trying to perpetuate is the 1962 Supreme Court decision declaring mandatory prayer in public schools to be unconstitutional. Eleven years later, Roe v. Wade created (to belabor the metaphor) a permanent conservative war machine that survives even now.

Yet it is very hard to see how a fair-minded person could agree that there is a war on religion in America. There are, of course, policy questions with important religious elements. There always have been and always will be. What’s remarkable is how well America has tended — and, importantly, still tends — to handle such difficult matters. The power of the American system of republicanism lies in its capacity to allow religious belief to be a competing, not a controlling, factor in American life.

The nonbelieving, not the believing, are the ones who should feel outnumbered. According to Gallup, 78% of American adults identify with some form of Christian religion. Jews make up less than 2%; Muslims form 1%; and 15% say their “religious preference” is “none/atheist/agnostic.” Ninety-five percent of Americans who say they are religious are thus Christians. The President of the United States routinely invokes God’s blessing on the nation. Washington and state and county and city buildings throughout the country use religious imagery. We open our congressional sessions and our inaugurations with prayers; chaplains receive publicly funded salaries. The pagans, therefore, are not exactly at the gates.

Still, in his hyperbolic way, Gingrich is onto something. According to a 2010 Gallup survey, 7 in 10 Americans say religion is losing its influence on American life, which the polling organization says is “one of the highest such responses in Gallup’s 53-year history of asking this question, and significantly higher than in the first half of the past decade.” The percentage of Americans who say they are not affiliated with any specific religious group is growing too.

It is true that traditional Christianity is losing some of its appeal among Americans, but that is a religious, not political, matter. It is worth remembering that the Jeffersonian “wall of separation” between church and state has always been intended to protect the church from the state as much as the state from the church. And evangelism is about winning souls more than it is about winning votes. For many serious believers, that’s the real war. And it’s not the one Gingrich thinks is unfolding.

Directed Energy Weapons Used On American Citizens in Tests

2012-01-29T21:54:00.000-06:00

The Intel Hub
Shepard Ambellas & Joe Joseph
January 29, 2012

Listen to the exclusive podcast that accompanies this article here.

Factions within the U.S. Government’s Military Industrial Complex have been, and indeed are testing Directed Energy Weapons, along with chemical, nuclear and biological agents on the civilian populace.

In fact, U.S. law, approved by Congress, allows chemical and biological testing on the populace. (see PUBLIC LAW 105–85—NOV. 18, 1997 111 STAT. 1915)

The Presidential Commission for the Study of Bioethical Issues is composed of 13 members and was established in November of 2009 by way of Executive Order 13521 which was issued by President Barrack H. Obama.
According to the PCSBI official government website;

“The Presidential Commission for the Study of Bioethical Issues (PCSBI) advises the President on bioethical issues that may emerge from advances in biomedicine and related areas of science and technology.

The Commission works with the goal of identifying and promoting policies and practices that ensure scientific research, health care delivery, and technological innovation are conducted in an ethically responsible manner.”

The documentation provided on the PCBSI website concludes that the commission has engaged in various studies over time, one of which was the Dec 15, 2011 study entitled — Moral Science: Protecting Participants in Human Subjects Research.

The opening statement in Moral Science: Protecting Participants in Human Subjects Research reads like a mad scientists diary stating;

The Presidential Commission for the Study of Bioethical Issues today issued its report concerning federally-sponsored research involving human volunteers, concluding that current rules and regulations provide adequate safeguards to mitigate risk.
In its report, “Moral Science: Protecting Participants in Human Subjects Research,” the Commission also recommended 14 changes to current practices to better protect research subjects, and called on the federal government to improve its tracking of research programs supported with taxpayer dollars.

The statement goes on to openly admit that the U.S. Government spread bio-agents (STD’s) to Guatemalans in the mid 40′s stating;

President Obama requested that the Commission undertake an assessment of research standards following the October 2010 revelation that the U.S. Public Health Service supported unethical research in Guatemala from 1946 to 1948 that involved intentionally exposing thousands of Guatemalans to sexually transmitted diseases without their consent.

The President gave the Bioethics Commission two assignments: to oversee a thorough fact-finding investigation into the specifics of the studies (released September 13, 2011); and to assure that current rules for research participants protect people from harm or unethical treatment, domestically as well as internationally.

The statement goes on to highlight the Key Findings:

In the report’s central finding, the Commission found that the “U.S. system provides substantial protections for the health, rights, and welfare of research subjects.”

Evidence has now been brought to light that over 55,000 human testing projects (with numerous people per project) took place during the year 2010;

In assessing the current regulations that protect human subjects, the Commission learned that there is no central source with information about the overall size, scope, and cost of the government’s research involving human subjects.
The Commission requested information from 18 individual agencies that conduct most federal human subjects research, but discovered that many federal offices could not provide basic data about the research they support.
The Pentagon, for example, required more than seven months to prepare information on specific studies supported by the Department of Defense.

In its report, the Commission found that the federal government supported more than 55,000 projects involving human subjects around the globe in Fiscal Year 2010, mostly in health-related research, but also in other fields such as education, engineering and social science.

The PCSBI sounds great to the average person nearly skimming the surface pages of the government website.

However, a closer look reveals that the commission has possibly been put in place to aid in a massive cover-up of what is really taking place right in front of our eyes on a daily basis, congress has approved it, and apparently it’s legal.

The deliberate poisoning and desicration of humanity through a multi-tiered militarized program commonly referred to as geoengineering or chemtrail operations, and large scale testing of direct energy weapons on the American people is just a small dose of what the diabolic globalists have planned for you and your family.

A massive cover-up achieved by diverting the attention back to older “openly admitted” topics such as the Guatimalan STD’s continues while the powers that be spray the American populace like roaches with toxins — congress is aware of it, and there is even a budget tracing back to the top of the ladder, the President of the United States (POTUS). In essence, it’s one of the oldest tricks in the book.

These aerosol spraying campaigns can be used to modify and control the weather, and aid in advanced manipulation the weather derivatives market through practices utilized by criminally ran corporations such as Enron.

Peter Kirby (The Intel Hub) has covered this in the January 12, 2012 article entitled, The Chemtrail Business

The PCSBI official website gives a brief history of bioethics commissions dating back to the early 70′s stating;

The National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research (1974-78) is generally viewed as the first national bioethics commission.

Established as part of the 1974 National Research Act, the National Commission is best known for the Belmont Report. It identified fundamental principles for research involving human volunteers and was the basis of subsequent federal regulation in this area.

The Presidential Commission for the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research (1978-83), also established by Congress, produced reports on foregoing life-sustaining treatment and access to health care, among other topics.

Its 1981 report Defining Death was the basis of the Uniform Determination of Death Act, a model law that was enacted by most U.S. states.

The Advisory Committee on Human Radiation Experiments (1994-95) was created by President Bill Clinton to investigate human radiation experiments conducted from 1944 -1974 as well as radiation intentionally released into the environment for research purposes. The committee considered the ethical and scientific standards for evaluating these events and provided recommendations aimed at ensuring that similar events could not be repeated.

If thats not enough, check out the Meeting 4 transcript, where a U.S. citizen reports she has been involved in direct energy weapons testing as an unwilling participant.

A transcript excerpt from Meeting 4, Session 10 states;

MS. MARSHALL:
Good afternoon. My name is Connie Marshall. I am a former mayoral candidate from Louisville, Kentucky. I have never been involved in any criminal activity. I found a document in my bank account that said problem with Kentucky government. Check federal government paperwork in file before releasing information to anyone.

I am an eight year victim survivor of assaults by directed energy weapons. The torture I have experienced consists of body overheating, body extremely cold, seizures, heart pain, earaches, itching behind eyes, burning behind eyes, swelling, headaches, involuntary movement of my limbs, exhaustion, speeding and heart racing, hair coming out by the handfuls as if I have had chemotherapy, mind paralysis, being hypnotized or being placed in a trance-type state, being tracked by a drone or satellite, controlled dreams, sleep deprivation, V2K which is voice to skull, projected sound, extreme muscle spasms and extreme muscle cramps; being made to fall down; blue circles around the pupils of my eyes and I am here and you can look at them if you like; low frequency noises in my home; high frequency noises in my home; sexual stimulation.
Numerous electrical appliances in my home are destroyed; four computers, two fax machines, seven telephones, four CD players, VCR, DVD players, the electrical igniter switch on my furnace, washer and dryer, air conditioner.

Also my car radio, CD player and engine were destroyed. I am watched in my home 24 hours a day and followed around everywhere I go, though I do not have a criminal history.

When I ran for Mayor of my town, I was also attacked at debates and forums. My website is www.justiceforallcitizens.com. Thank you. And I would like to leave you with these flyers as well. Thank you.

DR. GUTMANN:
Thank you.

To fall into the mindset and character of the people selected for the committee we must take a closer look at some of the top members connections.

Amy Gutman Chair of the PCSBI stated in a commission meeting;

“Good morning, and I’m Amy Gutmann. I’m president of the University of Pennsylvania and I’m chair of the Presidential Commission for the Study of Bioethical Issues. On behalf of myself and my vice chair, Jim Wagner, who is president of Emory University, I’d like to say welcome to everybody and welcome to day one of our second public meeting.

I’d also like to note the presence of our designated federal officer, our newly appointed commission executive director, Valerie Bonham. Valerie, we’re happy to have you as executive director, not the least because you make this meeting official but you also do many other things to help us move forward.”

Amy goes on to talk about morality;

“I don’t know how many of your experts in synthetic biology are already here and sitting behind me. With all due respect to the extraordinary work now being done in synthetic biology, synthetic biology joins what is likely a never-ending stream of rapidly developing areas of science that raise challenging societal issues.
One of the most important things that your commission could do would be to put forward a general framework for the moral and policy assessment not only of synthetic biology but of emerging technologies more broadly.”

Sadly these militarized weapons are now being tested regularly on American citizens as noted above. It has been openly admitted by Barrack Obama in documents that the U.S. has released weaponized versions of STD’s onto the Guatemalan populace in the 1940′s, showing the character and true colors of the people at the helm of our once great nation.

RECON REQUEST:
If anyone is in the area and can attend and videotape this meeting contact us at: contacts@theintelhub.com

The Presidential Commission for the Study of Bioethical Issues will conduct its eighth meeting in February. At this meeting, the Commission will discuss issues of privacy and access related to human genome sequence data.

The Commission will also be discussing neuroscience and related ethical issues.
DATES:

The meeting will take place February 2, 2012 from 9 a.m. to approximately 5:15 p.m. and on February 3, 2012 from 9 a.m. to approximately 12 p.m. ADDRESSES: Millberry Union, University of California, San Francisco, 500 Parnassus Avenue, San Francisco, CA 94143, (415) 476–2019.

Important Things You Should Know About Privacy and the Supreme Court Ruling on GPS Tracking

2012-01-29T21:38:00.000-06:00

On its face, this represents an important victory against the surveillance state. But this is a narrow ruling that leaves many crucial questions unanswered.

By Scott Lemieux, AlterNet
Posted on January 29, 2012

Antoine Jones was sentenced to life in prison on drug distribution charges. The key evidence against him came from a month’s worth of data collected by a GPS tracker that police had attached to Jones’s car. The GPS, however, was attached without a valid warrant (police had obtained a warrant, but is was expired and for another jurisdiction.) Jones appealed his conviction, arguing that the warrantless GPS tracking violated the Fourth Amendment’s prohibitions against “unreasonable search and seizures.” The government replied that the installation of the GPS did not constitute a “search,” and hence could not have violated Jones’s constitutional rights. The Court of Appeals for the District of Columbia Circuit rejected the government’s argument, however. And earlier this week in United States v. Jones, the Supreme Court unanimously agreed that the police actions constituted a “search” and were subject to the restrictions of Fourth Amendment.

Here are some things you should know about this case and how the Bill of Rights might apply to modern technologies that increase the government’s power to invade private space:

While the Court ruled that Jones had been subject to a “search,” it did not address the question of whether the search was “unreasonable.” Because the search was conducted without a valid warrant, the search was presumptively unconstitutional. But – especially when it comes to cases involving the War On (Some People Who Use Some) Drugs – the Republican-dominated federal courts have been increasingly willing to carve out exceptions for warrantless searches. Until the courts decide this question, we don’t even know if the search of Jones will ultimately be ruled illegal.
Even in cases where a search has been held to be illegal, the Supreme Court has shown a willingness to water down the “exclusionary rule,” which holds that illegally obtained evidence cannot be used in courts. The provides strong incentives for the police to respect constitutional rights, because they cannot profit from illegal behavior; conversely, absent the exclusionary rule police have little incentive to comply with the law (civil remedies for violations of the Fourth Amendment are generally ineffective.) For example, in its infamous 2006 ruling Hudson v. Michigan, the Court ruled that while dangerous “no-knock” searches of homes were illegal, evidence obtained from them was admissible. If the courts rule that the search of Jones was illegal but the evidence can be admitted anyway, it will be a hollow victory for civil liberties indeed, as police will have strong incentives to push the envelope as new surveillance technologies emerge.
Justice Scalia’s majority opinion rested on grounds that actually have little application to new surveillance technologies. According to Scalia, since the GPS installation required trespassing private property, it “would have constituted a “search” within the original meaning of the Fourth Amendment.” While this isn’t necessarily wrong per se, as the concurrences by Justices Alito and Sotomayor point out ruling on this basis says nothing about more crucial questions about how the courts should assess searches that don’t require the direct invasion of physical property. As Justice Alito points out, “the Court’s reasoning largely disregards what is really important (the use of a GPS for the purpose of long-term tracking) and instead attaches great significance to something that most would view as relatively minor.” As a result, the long-term consequences of this decision are unclear.
Justice Alito’s concurrence proposes that rather than focusing on whether a trespass of property has occurred, the Court should focus on whether or not an individual had a “reasonable expectation of privacy” (the standard the Court has generally used since the early 1970s.) Again, there’s nothing wrong with this in and of itself, but in practice these kinds of balancing tests are only as good as the judges applying them. (In theory, the rule that abortion regulations that constitute an “undue burden” are unconstitutional could provide robust protection for reproductive freedom; in practice, it doesn’t.) Alito focuses on the relatively extreme facts of the case (tracking that lasted a month seeking evidence for a non-violent crime), which opens up the possibility that the state will be given wide latitude under this standard.
By far the strongest opinion, then, is Justice Sonia Sotomayor’s concurrence. As she notes, “[a]wareness that the Government may be watching chills associational and expressive freedoms.” Given the rapidly expanding tools that the executive branch has at its disposal to conduct surveillance on citizens, and the general unwillingness of legislatures to restrain intrusive searches, it is crucial that the courts not be behind the curve in applying Fourth Amendment protections. United States v. Jones could be a good first step – but only if the many questions it leaves open are answered in a way that takes the protection of privacy seriously. Justice Sotomayor’s concurrence provides a good road map.

Parasites Lost

2012-01-29T21:31:00.001-06:00

"We're viruses with shoes."~ Bill Hicks

Sunday, January 29, 2012 by Common Dreams

by Doug Harvey

I once asked a Native American if he thought whether North America was in any way in a post-colonial period. His response was, “Have they left yet?” Of the New World republics that came about as a result of colonization, the United States is going to have the hardest time dealing with its past. Recently, we’ve seen a lot of people willing to strut about with their guns and imagine themselves in some pre-pubescent fantasy of John Wayne’s “unbridled individualism.” Some become so deluded as to be willing to use these guns on perceived “enemies.” But this is symptomatic only; it is useful to remember how the actual land of North America came to be claimed by European and Euro-American colonists. More importantly, the causes of these neuroses can be better understood when one realizes what separating people from their resource base means.

For over ninety-nine percent of human history, the earth and its human offspring were united. Humans were unique in the degree to which we could fashion natural products into useful items. With our minds, hands, and intuition we made the stuff of the earth more useful to us. Nothing stood between us and our resources – we were immersed in our environment and what we did to improve our surroundings and make our lives better we ourselves enjoyed. As the Thoreau disciple and wilderness advocate Bradford Angier once pointed out, “The hardest part about roughing it is smoothing it.” We were pretty good at “smoothing it.” Even cave paintings, figurines, Petroglyphs and the like helped people to understand their relationship with the world into which they had emerged. Contrary to the assumptions of the old “Whig” histories, people were generally time-rich – indeed, they could easily make more than they needed. These surplus goods could be traded for others’ surplus goods and the fruits of individuals’ skills could be shared. At some point someone began to think about accumulating these surplus goods. How, the calculating mind asked, might I enjoy these manufactures and the potential wealth they represent without having to engage in this difficult work myself? Many methods were tried with varying degrees of success. But one that did work and continues to work was coercion – physical, political, legal, economic – forcing a wedge between people and their resource base (the land) and make their reunion with it conditional. The condition for this reunion with the “means of production” is a controlling cut of the wealth produced by the interaction of human and other-than-human nature.

This division between people and nature put us on a path many are beginning to question. Besides the sense of alienation being cut off from our natural relationships with the other-than-human world produces, we are separated from our own means of production. Now, instead of using our wits and our hands to mold the stuff of the earth into usefulness, we have to go to the bourgeois “owner” and ask him to buy our labor, since it is often all we have since being deprived of our access to resources. The bourgeoisie figured out that if you usurp the land and resources, you have control of interaction between human and other-than-human – also known as labor power, which is the only real power humans have.

This defense of the relationship between humans and their resources should in no way be construed as a defense of, say, corporate access to the minerals of the Grand Canyon or oil in the Arctic. That is a looting of both nature and labor that I have discussed elsewhere. No, we have come so far down the path of exploitation of both human and other-than-human nature that assumptions and myths regarding the righteousness of this path remain unquestioned from the halls of power to the public discourse.

The surplus of useful goods that was often so abundant in pre-modern communities – under the influence of market-obsession, has acquired an exchange-value separate from its use. The result is “capital,” or surplus-value flowing to the bourgeoisie but which they themselves did not produce. Capital bought and still buys power and influence to entrench this economic system and heavily skew it toward the bourgeoisie – a sort of modern feudalism. A wedge was driven between people and their resources. Having been deracinated – alienated from their resources, homes, families, and livelihood – people had nothing to sell but their labor, and oftentimes the going rate was at starvation levels. In some regions where this deracination is at full throttle, many have chosen suicide over this type of slavery.

In North America, this separation of the land from the indigenous peoples took on an unprecedented scope. While there was certainly plenty of room in North America in 1492, there were still no fewer than five to ten million people who, in most respects, lived off the fat of an abundant land. Then, Europeans and unwilling and unwitting Africans came to the New World. With varying degrees, separating indigenous people from the land became an institution and was developed to the point of becoming a national myth: of course the Indians must be removed in the face of “progress” – removed or exterminated. Cold hard fact that it is we have yet to internalize this as a society; denial or ignorance of this history remains rampant in the U.S.

The denial becomes increasingly difficult as the separation of people from property takes on new dimensions, (if nothing else, the bourgeois class is very creative about accumulating wealth and power). Now, newcomers as well as descendents of the original colonizers – who themselves usurped the land – have found themselves being separated from their resources by a rigged system in which they have no say. Some might call this karma and that may be true, but it is certainly a continuation.

Working people took a stand in the U.S. from the Industrial Revolution to the post-World War II era and created the wealthiest working class in history. It was so successful that this working class took to calling itself the “middle class,” a democratization of the original turf held by the bourgeoisie and characterized by untitled wealth. Many people once again had a say in their relationship between themselves and their tools and resources. They did not go to the so-called “owner” with hat in hand begging to sell their labor, they collectively bargained with him to get a reasonable share of the surplus value they were producing. Some would say these negotiations were a gift to the bourgeoisie from producers who cut them more slack than they deserved. The abandonment of the American working class by the bourgeoisie, by their politicians, and even by their unions, has been nothing short of a betrayal and indeed a form of robbery.

The wealth accumulated by hook or by crook and used to manipulate the economy and political power structure is turned against the people who produced it. The old tried and true strategy of divide and conquer – white and blue collar, black and white skin, English- and Spanish-speaking, male and female, etc., etc., ad nauseum – so far still works. The financialization of the economy has turned Wall Street into a giant Las Vegas, operating – at least in part – independently of actual wealth production – subsidized and insured by taxing those who actually do produce wealth. It must keep moving fast, though, because something is gaining on it. The separation of workers from the wealth they produce; of workers from their resources; of humans from nature, is a contrivance that cannot last.

People are looking for that part of themselves that is connected to everything else. There is a deep cognitive dissonance in the U.S. resulting from a simple historical truth: wealth enjoyed by many American citizens came from resources acquired through systematic conquest and pillage. It makes it particularly hard to defend your resources on moral grounds when they were stolen to begin with. Much easier to deny or invent an alternative narrative.

Parasites often kill their hosts. To the extent that humans have become parasites, of labor and/or the resource base, we act for our own destruction. The short-term thinking institutionalized in this system is an indulgence we can no longer afford. One alternative to the path of exploitation remains vaguely familiar to us: the path of husbandry and cooperation. But alternative paths require introspection, a difficult facing of fears and facts and, finally, understanding what the relationship between humans and the earth means. As people have known for over ninety-nine percent of our history, the earth is literally our mother – our source of life. It is human nature to interact with our environment and treat it with the respect it deserves – as a part of ourselves. We act self-destructively when we assume the exploitative attitude of parasites. As with most problems, the answers are in the mirror, which is why they don’t get solved.

Active duty cop: ‘The war on drugs is a war on people’

2012-01-28T06:27:00.000-06:00

All prohibition does is cost millions of lives and pack the prisons with non-violent offenders who have a problem with their health, not their morality. Drug addiction is a serious and destructive problem--and their solution? Make it worse and even more destructive. It's bad enough people overdose (though, legally prescribed drugs are now the #1 cause of death in the US--alcohol and tobacco--both legal--cause more and worse health problems than all illegal drugs combined; and now, marijuana has been shown to prevent and cure CANCER and reduce and eliminate tumors); by outlawing drugs, they created a thriving and hungry black market that is pitted against law enforcement and results in multiple deaths daily. Drugs are a health issue, not a moral one. As soon as that reality is embraced, our nation's southern borders and our city streets will become safer---people can get the help they need without having to go through the prison system. Prohibition was a failure in the 1920s, and it has been a failure since 1937.--jef

By Stephen C. Webster - RAW Story
Friday, January 27, 2012

Speaking to Raw Story recently, an active duty police officer who asked not to be named threw down the gauntlet over the part of his job he hates most: the drug war.

“I did not get in law enforcement to destroy a person’s future because that person had marijuana or a pill in their pocket,” the officer explained. “Why would you want to destroy that person’s future and cause them great harm because of that? It’s not worth it.”

Like many Americans, the reality of the drug war was was nothing like what he’d been taught to believe in his youth. But statistics like a citizen being arrested for drugs every 19 seconds in 2010, and 1.6 million people incarcerated over drugs in 2009, were nothing compared to what he actually experienced in the front lines of the drug war on America’s users.

But for those officers who put their lives on the line every day to protect the public from dangerous, violent criminals, the drug war isn’t always just another part of the job. For this officer in particular, it’s much more than that: “The war on drugs is a war on people,” he claimed.

“I just didn’t see problems from illegal drug users that I’d been led to believe,” the officer explained. “Most of the calls that we get on drug use, as police, are alcohol related. Alcohol is a serious drug that can be abused, but I just didn’t see the calls on other drugs like I had been led to believe. I didn’t see these drug-crazed people out there doing crazy things… Even growing up before entering law enforcement, I was always led to believe that the drug war was meant to stop all these people from doing crazy things. But on the street, that’s not what you see. That’s a lie.”

In his view, the officer said that the American public would be much better off if the government would “regulate drugs and keep the control out of the hands of the black market criminals.”

“The cartels have been running a serious drug operation in America for decades, and I don’t think most Americans are really aware of it,” he said. “The money comes from the prohibition of drugs. These criminals are making their money because of the prohibition. If you legalize and regulate it, their profits go to zero.”

For more than two decades in law enforcement, he said that he’s carried an immense guilt: his first drug arrest.

“I was in training, on ‘the other side of the tracks,’ for lack of better words, and we pulled a vehicle over,” he explained. “The guy, I think he had a defective taillight or something. He was sober, polite, respectful, no problems, and my training officer said, ‘Oh yeah, he’s gonna have drugs.’ So, I asked if we could search his vehicle and he gave me permission. Within no time, I found a small amount of (hard) drugs, so he was facing a serious charge. The whole time I was thinking, ‘This is not right. This guy’s keeping to himself, not hurting nobody, he’s a peaceful person.’ I instinctively knew this was wrong.

I changed my perspective immediately. This was not the war on drugs that I thought it would be.”

Carrying this guilt for his participation in such a system, he got away from making narcotics arrests and received a transfer to another division. There he worked for years, until one day in 2006. Acting on a whim, he ran a Google search for the peculiar terms, “cops against the drug war,” and rather abruptly found a new calling: an activist group called Law Enforcement Against Prohibition (LEAP). He’s followed their work ever since, and in 2012, the officer finally decided that he too must raise his voice against the drug war.

Today, he’s acquired a unique extra-curricular activity: an anonymous blog served up by LEAP, examining the innards of the drug war from a perspective rarely put on public display. If his superiors knew, he explained, “I would probably be terminated.”

And, he claims, it’s not just him that’s come to some stark, personal conclusions on the drug war: fellow officers are coming around as well — especially those who’ve been doing it for a while.

“I remember a case just here recently when an officer was trying to find marijuana on one guy, and another officer started looking around in this area where there’s actual crime, and he was kind of making fun of him for wasting time,” he said. “There’s plenty of officers that do want to get away from the petty, small drug arrests that distract them from fighting real crime, which is what a lot of them get into law enforcement for individually.”

To read more from the anonymous cop, visit the Law Enforcement Against Prohibition blog.

Highest Gasoline Prices Ever Ahead for Us in 2012

2012-01-28T05:59:00.001-06:00

$5 per gallon this year, kids. The national average will be over $4, but in the bigger cities or in states where gas taxes are higher, $5 a gallon is a given. SUCK!!!!--jef

+++++++++++++++++

Gas pump prices at record high on supply concerns
The Associated Press
Posted Jan 25, 2012

Washington — Americans aren’t likely to find much relief from high prices at the gas pump as they go about paying their post-holiday bills.

Retail gas prices are at their highest levels ever for this time of year despite ample supplies and declining demand. That’s because tension in the Persian Gulf has kept crude oil prices around $100 per barrel for most of the month.

Analysts say oil prices are likely to remain at those levels until there is more clarity about what will happen in the Gulf, where Iran has threatened to close the Strait of Hormuz if the U.S. and other countries impose more sanctions on its nuclear program.

Iranian imports are banned in the U.S., but Iran supplies 2.2 million barrels per day to the rest of the world, mainly Asia and Europe.

Both oil and gasoline futures have moved in a narrow range for most of the month. In addition to the Iranian situation, investors are concerned about the European debt crisis and whether it will impact the global economy.

European Union foreign ministers are expected to discuss possible sanctions against Iran, including an oil embargo, at a Monday meeting.

Many analysts doubt that Iran could set up a blockade without swift military intervention from the U.S., but any supply shortages would cause oil supplies to tighten.

The national average for gasoline was $3.382 per gallon Friday, which was about 17 cents more than it was a month ago and nearly 27 cents more than a year ago, according to AAA, Wright Express and the Oil Price Information Service. Drivers in California, Illinois and parts of the Northeast paid the highest prices while the lowest prices were in the Rocky Mountains and parts of the Midwest.

Gas prices will go up or down based on what happens with Iran, PFGBest analsyt Phil Flynn said. If the situation calms down, retail gas prices could fall from 25 cents to 50 cents a gallon. If the situation intensifies, prices could increase by the same amount.

“It’s that much of a wild card,” Flynn said. “I think it’s a very volatile situation and I think we could go either way.”

High gas prices have been affected in previous years by a stronger economy because consumers have more to spend on filling their tanks. Although the U.S. economy is improving slowly, Flynn said many consumers still have habits that they picked up during the recession — such as watching how much they spend on gas and finding ways to combine trips in the car.

+++++++++++++++++++

Forecast: 2012 Worst Year for Gas Prices
By Susanna Kim - ABC News

To the dismay of drivers across the country, 2011 went down in the record books as having the most expensive gasoline average ever, $3.513 for the year, 72 cents per gallon higher than 2010′s yearly average, according to GasBuddy.

Patrick DeHaan, GasBuddy’s senior petroleum analyst, projects that by Memorial Day, the national average will be between $3.86 to $4.13 per gallon, and that prices in 2012 will come close to or set new all-time highs. If that happens, drivers could spend $200 to $300 more for gas this year.

Inflation adjusted data from the Energy Department’s U.S. Energy Information Administration confirmed that 2011 was a record year. The real annual average for a gallon of regular gas last year hit $3.56, up from $2.90 in 2010, according to the EIA. From its data that begins in 1919, the previous record high was in 1981, at $3.45.

Of course, in 2008 gasoline prices had the longest stretch of $4 or more, but the yearly average was $3.24, according to GasBuddy’s data, which goes back to 2000. In 2008, gas prices slid from October to December 2008 to less than $2 a gallon nationally.
Over the past seven years, according to GasBuddy data, gasoline prices rise an average of 93 cents per gallon from the start of the new year to when they eventually peak the same year, DeHaan said.

“Typically, prices peak in the summer months, or around Memorial Day, as has been the case in 2010 and 2011,” he said.

An increase of 93 cents a gallon could mean average gas prices may rise more than $4 a gallon and could easily approach record highs, he said. In 2004, gas prices had the largest price difference from the new year to their peak, when prices climbed $1.31 per gallon.

If such a gain occurred this year, that would mean the national average could rise to well over $4.25 a gallon, and some areas could see $5 a gallon.

“While that’s not very likely, it does represent a realistic worst case scenario,” he said.

DeHaan said he is traditionally reserved about forecasting oil prices, which hovered above $102 a barrel Thursday. But he said 2012 would almost certainly break all records, in part because of political tension with Iran over its nuclear program.

Iran has threatened to close a key oil passageway, the Strait of Hormuz, in possible retaliation for new economic sanctions from the U.S. and the European Union. Iran holds the world’s fourth-largest proven oil reserves, and the world’s second-largest natural gas reserves, according to the EIA.

Should Iran become more hostile and cause a supply disruption, oil prices could soar to all-time highs and approach $175 to $200 a barrel, DeHaan said.

“Coupled with rising demand as a result of a recovering economy, it won’t be pretty,” DeHaan said. “Either way you look at it, 2012 will be among the worst year ever for gasoline prices.”

Daniel O’Connell, senior energy broker with INTL FCStone Inc., said if the price of crude oil increases 8.2 percent in 2011, the U.S. could see a similar price hike in 2012 as jobs, housing and other economic data improve. O’Connell said overall data points to a volatile market with the same trading ranges as those of 2011.

But “if the Iran situation escalates two fold, all bets are off the table, and we will see a disaster regarding energy prices, that this country is not ready to handle just yet,” O’Connell said.

DeHaan said there was still time to lessen the anticipated impact by changing habits or modes of transportation.
“But if they don’t, I can see the average American spending a few hundred dollars more on gasoline this summer,” he said.

Potential Hazards of Nanotechnology Not Known

2012-01-28T01:42:00.003-06:00

Thursday, January 26, 2012 by Common Dreams

Without research into risks, "the future of safe and sustainable nanotechnology-based materials, products, and processes is uncertain"

Not enough is known about the potential hazards of nanotechnology, and millions of dollars more a year are needed to study the potential health and environmental effects of it, said the National Research Council yesterday.

The panel's findings come from a study sponsored by the EPA.

Reuters reports:

Nanotechnology involves designing and manufacturing materials on the scale of one-billionth of a meter. It is used in areas ranging from stain-resistant clothing and cosmetics to food additives. [...]
"Despite the promise of nanotechnology, without strategic research into emergent risks associated with it -- and a clear understanding of how to manage and avoid potential risks -- the future of safe and sustainable nanotechnology-based materials, products, and processes is uncertain," said the study by a committee of 19 scientists.

The New York Times adds:

The panel called for a four-part research effort focusing on identifying sources of nanomaterial releases, processes that affect exposure and hazards, nanomaterial interactions at subcellular to ecosystem-wide levels and ways to accelerate research progress.

Last month, a coalition of consumer safety and environmental groups sued the FDA over inaction on nanoparticles:

More and more novel nanomaterials are being sold infused into new consumer products every day, while FDA sits idly by.
The lawsuit demands FDA respond to a petition the public interest organizations filed with the agency in 2006, nearly six years ago. The coalition is led by the International Center for Technology Assessment, on behalf of fellow plaintiffs Friends of the Earth, Food and Water Watch, the Center for Environmental Health, the ETC Group and the Institute for Agricultural and Trade Policy.
"Nano means more than tiny; it means materials that have the capacity to be fundamentally different. Yet more and more novel nanomaterials are being sold infused into new consumer products every day, while FDA sits idly by," said George Kimbrell, ICTA Attorney. "The agency's unlawful delay unnecessarily places consumers and the environment at risk."

The eighty-page petition documents the scientific evidence of nanomaterial risks stemming from their unpredictable toxicity and seemingly unlimited mobility. The 2006 petition requested that the FDA take several regulatory actions, including requiring nano-specific product labeling and health and safety testing, and undertaking an analysis of the environmental and health impacts of nanomaterials in products approved by the agency.

"Year after year goes by but we have yet to see the FDA do the bare minimum and require nanosunscreens to be labeled as such. This is a basic consumer right," said Ian Illuminato of Friends of the Earth. "We're well past the 1800s -- nobody likes or should be forced to use mystery chemicals anymore."
"We're well past the 1800s -- nobody likes or should be forced to use mystery chemicals anymore."
"It is unacceptable that the FDA continues to allow unregulated and unlabeled nanomaterials to be used in products consumers use every day," said Wenonah Hauter, executive director of Food & Water Watch. "It is past time for this agency to live up to its mission and protect public health by assessing the health and environmental risks of nanomaterials, and to require labeling so that consumers know where these new materials are being used."

"The scientific consensus is that nanomaterials require specific testing to account for their novel capacities and potential risks. The FDA must do such testing as part of a pre-market safety assessment in a broader regulatory initiative to protect public health," said Steve Suppan of the Institute for Agriculture and Trade Policy.

A 2009 report from Food & Water Watch titled "Unseen Hazards: from Nanotechnology to Nanotoxicity" (pdf) looked at the ubiquity of nanotechnology in the food system:

For a snapshot of nanotechnology in the food system, consider the following:
At the farm, fertilizers and pesticides containing nanoparticles of clay and other materials are touted for their slow-release mechanisms and potency.

Food itself can contain nanoparticles, such as cured meats and sausages, nano-tea, and the wide variety of nutritional supplements containing nanosilver. Research and development is underway to use nano- technology in myriad aspects of food processing.

In the kitchen, we prepare food using kitchenware and cutting boards that employ anti-microbial nanosilver technology, and store food in refrigerators also coated with nanosilver.

When we package food to put in the refrigerator or take with us to work, a large number of food containers and wrappings are incorporating nanotechnologies into their manufacture, even though there is a threat that nanoparticles could actually migrate from the packaging into the food itself.

The report also linked nanoparticles to:

Damage to DNA
Disruption of cellular function and production of reactive oxygen species
Asbestos-like pathogencity
Neurologic problems (such as seizures)
Organ damage, including significant lesions on the liver and kidneys
Destruction of beneficial bacteria in wastewater treatment systems
Stunted root growth in corn, soybeans, carrots, cucumber and cabbage
Gill damage, respiratory problems and oxidative stress in fish

The Campaign for Safe Cosmetics has an overview of sunscreens and cosmetics containing nanoparticles.

America’s Dead Zones: From Dodge City to Durango, Why Does Prosperity Pass So Many Places By?

2012-01-28T01:26:00.000-06:00

Some regions are recovering, while others across America remain in deep decline. How did this happen and what can we do?

By Louis Ferleger , AlterNet
Posted on January 24, 2012

Recent headlines of a brighter economic picture have given many people hope that the economy is not in another free fall. GDP growth did tick upward in the last quarter. But for many communities the picture is enduringly dark, because unemployment rates have lagged far behind the national average for years and will likely continue to do so.

While the President is putting forth a plan to help students pay off their student loans, more and more educated students are unable to find employment. Contrary to popular belief, an educated workforce doesn't really make a difference (areas with many college grads are actually doing worse than areas with fewer) and a diversified economy does not always mean a more thriving economy.

A Place Near You?
There are 216 defined metropolitan (metro) and micropolitan (micro) areas—with populations ranging from 10,000 to 4 million—that have had unemployment rates at least two percentage points higher than the national average for either 20, 10, or 5 years (see tables 1, 2, 3 at the end of this article). These are America’s dead zones. Here employment growth is stagnant or non-existent and high levels of joblessness dominate. Some areas were once prosperous while others have recently experienced economic distress. In these communities paid work is hard to find for those who have not given up looking, and widespread involuntary idleness is the norm.

Poor employment prospects are not related to periods of recession or prosperity; these communities have not had substantial and sustainable increases in employment for lengthy stretches. America’s dead zones can not be described as containing “weak labor markets” because many have had long term unemployment problems that are more than weak and not temporary. Even in zones with only 5 years of high unemployment, the prior years were hardly marked by robust job growth.

These dead zones include both rural and urban areas. Though each area is different, there are some trends. The Northwest dead zones (Oregon, Washington, and Northern California) historically had large numbers of jobs in the timber and fishing industries. Because of overfishing, many coastal communities saw jobs vanish. In addition, when the Spotted Owl was placed on the endangered species list in 1982, it forced the shuttering of many timber yards because of encroachment on newly protected forestland. Along with general overharvesting, the timber industry has been flagging ever since. Many dead zones in the Northwest now rely upon tourism and retirement as their major industries, both of which are seasonal and sensitive to fluctuations in the broader economy.

The Southwest dead zones (Southern California, New Mexico, and Texas) industries historically employed substantial labor forces either working on farms or in trade with Mexico. In both cases, employment tended to rely on the large scale movements of temporary workers. This huge amount of seasonal work has created the highest metropolitan unemployment rates in the US.

Employment in the Deep South has never fully recovered from the decline of the cotton industry and mechanization. Since then southern dead zones have experienced considerable emigration, and many areas have not made progress towards the development of alternative industries.

Dead zones along the Appalachia and Atlantic Coast (Kentucky, West Virginia, North Carolina, and Tennessee) have relied either on coal or timber industries, both of which suffered steep declines in the 1970s and have yet to fully recover.

The Rust Belt’s dead zones were all once dependent on various manufacturing industries, usually but not always in the automotive. The growth of outsourcing and the decline of the American auto industry throughout the 80s and 90s left few other avenues for employment.

The picture is very different in America’s prosperous zones, where unemployment has been at least two percentage points below the national average for at least five years (see table 4 at the end of this article). These communities tend to be less populous than dead zones, and here employment is growing and sustainable. The wide variation in rates of unemployment between prosperous and dead zones is displayed below (click on the image to enlarge):

Most of the nation’s prosperous zones are dominated by one successful industry, such soy farming in Kansas or scientific research in New Mexico, oil and gas in Texas and places where major research institutions and universities exist. Agricultural prosperous zones grow corn, wheat, and soy and, unlike the Southwest, are not totally reliant on migrant labor.

Few prosperous areas are based on broad and diverse industries. Almost all of the areas—both prosperous and dead zones—are or were based on one or another major industry. Tens of millions of Americans live in dead zone areas that have experienced a steady decline in their industrial base and have not developed new sources of employment, while prosperous zones rely heavily on one or two dominant industries to maintain high levels of employment.

The map below presents a visual representation of dead and prosperous zones (click on image to enlarge). It shows, for example, that dead zones have existed in the South dating as far back as two decades. Furthermore, the last five years of data show almost no development of prosperous areas. The unevenness of the current national recovery is starker in dead zones, where unemployment rates have been high for longer periods of time.

Dead zones areas are evenly distributed throughout the entire contiguous US except for the Upper Midwest and New England. Prosperous zones are almost entirely comprised of the Upper Midwest down to Northern Texas and New Mexico. The surprisingly low levels of unemployment in the Upper Midwest can partially be explained by low population levels, and therefore a low supply in the labor market. There is considerable anecdotal evidence suggesting dead zones exist in certain areas of the upper Midwest (Indiana, Ohio, Illinois, Michigan, etc), but the way data is collected in these states makes it hard to identify these areas.

The numbers capture only part of the story. Metro and micro areas are defined as encompassing one or more cities as well as adjoining areas. In some cases, one large city may be lumped together with two smaller communities for the purpose of describing an area; one city’s chronically high unemployment might be masked by the lower figures of its neighboring communities. Thus America’s dead zones are not limited to areas listed in the tables. Other areas, many larger than 600,000, some smaller than 50,000, contain sections (if not whole cities) that could be classified as dead zones and where high unemployment rates are common.

While different methods of gathering government data make it harder to assess the unemployment picture in New England, long-term dead zones exist in former manufacturing and mill towns such as Lawrence and Fall River, MA, Waterbury, New Britain and New Haven, CT, and Providence and Central Falls, RI. These cities have characteristics similar to dead zones. In more and more American cities the lack of opportunities and poor job prospects point to the existence of more areas that have not been, but should be, recognized as emerging dead zones.

Conventional Wisdom Falls Flat
Conventional wisdom suggests that areas of high unemployment would benefit if resident populations had higher education achievement-rates, that is, more college graduates and fewer high school dropouts. While this may be true in certain situations, it is not necessarily the case in either prosperous or dead zones. In fact there is a very weak correlation between low unemployment and educational-attainment rates (defined here as the percentage of the population over 25 with a high school degree or less and the percentage of the population over 25 with a Bachelor’s degree or higher).

There are large numbers of dead zones with a highly educated populace (for example. Hood River OR, Ocean Pines MD, and Santa Cruz CA). On the other hand, there are many prosperous areas with low education rates (Dumas TX, Lexington NE, and Storm Lake IA). Since education is only one factor in determining labor quality, and labor quality itself is only one factor determining where a business will base its operations, this relatively weak correlation should come as no surprise.

If a timber, coal, shipping, or farming area is doing well, employment grows. If any of the industries falter, the labor force shrinks. For the vast majority of industries in dead zone areas, higher education is not necessarily essential. The vast majority of the dead and prosperous areas have jobs which do not, for the most part, require significant levels of higher education for the majority of the labor force.

While newspaper headlines note high unemployment rates in Camden and Newark in New Jersey and Los Angles in California, America’s dead zones remain outside the arena of discussion. Few are aware of the troubling trends that make solving the nation’s unemployment problem more difficult than imaginable.

Restoring recovery and reversing employment trends in America’s dead zones will not be easy and will take time.

Long-term Solutions Needed
Can more jobs be created in dead zone areas? Not if the solutions offered focus only on the short term. Creating employment opportunities that last cannot be accomplished by just increasing federal grant money for infrastructure or raising budgets for tourism advertising (as suggested by the US mayors association report). While these remedies provide temporary employment, a good thing, they don’t deal with the hundreds of communities that have one-dimensional economies. These communities, even after the temporary solution, are still overexposed to fluctuations in the industry they rely on—so when the funds disappear, unemployment spikes once again.

In dead zones, most people are unwilling or unable to move to other areas with better employment prospects even up to a generation after economic decline sets in. Therefore the only effective solution is to bring jobs to these communities by making them more attractive to a diversified number of industries that require workers with various skill levels. (That is, avoid having communities that can be Apple-ized).

We need to think differently about where we live and work. Too often communities across the nation are given blanket treatment as if their problems are interchangeable. But that is not the case. Each metro/micro area has its own particular geography, resources, population characteristics, etc. that make it hard to generalize about solutions to unemployment. Local governments may be best positioned to understand the needs of their respective areas—and, of course, they may need federal and state money to improve education, make long-term infrastructure changes, and offer industries opportunities to expand. But if local governments continue to focus only on short-termism, dead zones will not fade away. What many proposed solutions ignore is how hard it is to imagine a business relocating or expanding operations—creating jobs—in dead zones that they view as deteriorating.

Tables 1 - 4 (click on images to enlarge):

Banks Weren’t Meant to Be Like This

2012-01-28T01:13:00.000-06:00

What Would a “Good” Banking System Look Like?
by MICHAEL HUDSON

In medieval times, wealthy bankers lent to kings and princes as their major customers. But now it is the banks that are needy, relying on governments for funding – capped by the post-2008 bailouts to save them from going bankrupt from their bad private-sector loans and gambles.

Yet the banks now browbeat governments – not by having ready cash but by threatening to go bust and drag the economy down with them if they are not given control of public tax policy, spending and planning. The process has gone furthest in the United States.

Joseph Stiglitz characterizes the Obama administration’s vast transfer of money and pubic debt to the banks as a “privatizing of gains and the socializing of losses. It is a ‘partnership’ in which one partner robs the other.” Prof. Bill Black describes banks as becoming criminogenic and innovating “control fraud.” High finance has corrupted regulatory agencies, falsified account-keeping by “mark to model” trickery, and financed the campaigns of its supporters to disable public oversight. The effect is to leave banks in control of how the economy’s allocates its credit and resources.

If there is any silver lining to today’s debt crisis, it is that the present situation and trends cannot continue. So this is not only an opportunity to restructure banking; we have little choice. The urgent issue is who will control the economy: governments, or the financial sector and monopolies with which it has made an alliance.

Fortunately, it is not necessary to re-invent the wheel. Already a century ago the outlines of a productive industrial banking system were well understood. But recent bank lobbying has been remarkably successful in distracting attention away from classical analyses of how to shape the financial and tax system to best promote economic growth – by public checks on bank privileges.

How banks broke the social compact, promoting their own special interests

People used to know what banks did. Bankers took deposits and lent them out, paying short-term depositors less than they charged for risky or less liquid loans. The risk was borne by bankers, not depositors or the government. But today, bank loans are made increasingly to speculators in recklessly large amounts for quick in-and-out trading. Financial crashes have become deeper and affect a wider swath of the population as debt pyramiding has soared and credit quality plunged into the toxic category of “liars’ loans.”

The first step toward today’s mutual interdependence between high finance and government was for central banks to act as lenders of last resort to mitigate the liquidity crises that periodically resulted from the banks’ privilege of credit creation. In due course governments also provided public deposit insurance, recognizing the need to mobilize and recycle savings into capital investment as the industrial revolution gained momentum. In exchange for this support, they regulated banks as public utilities.

Over time, banks have sought to disable this regulatory oversight, even to the point of decriminalizing fraud. Sponsoring an ideological attack on government, they accuse public bureaucracies of “distorting” free markets (by which they mean markets free for predatory behavior). The financial sector is now making its move to concentrate planning in its own hands.

The problem is that the financial time frame is notoriously short-term and often self-destructive. And inasmuch as the banking system’s product is debt, its business plan tends to be extractive and predatory, leaving economies high-cost. This is why checks and balances are needed, along with regulatory oversight to ensure fair dealing. Dismantling public attempts to steer banking to promote economic growth (rather than merely to make bankers rich) has permitted banks to turn into something nobody anticipated. Their major customers are other financial institutions, insurance and real estate – the FIRE sector, not industrial firms. Debt leveraging by real estate and monopolies, arbitrage speculators, hedge funds and corporate raiders inflates asset prices on credit. The effect of creating “balance sheet wealth” in this way is to load down the “real” production-and-consumption economy with debt and related rentier charges, adding more to the cost of living and doing business than rising productivity reduces production costs.

Since 2008, public bailouts have taken bad loans off the banks’ balance sheet at enormous taxpayer expense – some $13 trillion in the United States, and proportionally higher in Ireland and other economies now being subjected to austerity to pay for “free market” deregulation. Bankers are holding economies hostage, threatening a monetary crash if they do not get more bailouts and nearly free central bank credit, and more mortgage and other loan guarantees for their casino-like game. The resulting “too big to fail” policy means making governments too weak to fight back.

The process that began with central bank support thus has turned into broad government guarantees against bank insolvency. The largest banks have made so many reckless loans that they have become wards of the state. Yet they have become powerful enough to capture lawmakers to act as their facilitators. The popular media and even academic economic theorists have been mobilized to pose as experts in an attempt to convince the public that financial policy is best left to technocrats – of the banks’ own choosing, as if there is no alternative policy but for governments to subsidize a financial free lunch and crown bankers as society’s rulers.

The Bubble Economy and its austerity aftermath could not have occurred without the banking sector’s success in weakening public regulation, capturing national treasuries and even disabling law enforcement. Must governments surrender to this power grab? If not, who should bear the losses run up by a financial system that has become dysfunctional? If taxpayers have to pay, their economy will become high-cost and uncompetitive – and a financial oligarchy will rule.

The present debt quandary

The endgame in times past was to write down bad debts. That meant losses for banks and investors. But today’s debt overhead is being kept in place – shifting bad loans off bank balance sheets to become public debts owed by taxpayers to save banks and their creditors from loss. Governments have given banks newly minted bonds or central bank credit in exchange for junk mortgages and bad gambles – without re-structuring the financial system to create a more stable, less debt-ridden economy. The pretense is that these bailouts will enable banks to lend enough to revive the economy by enough to pay its debts.

Seeing the handwriting on the wall, bankers are taking as much bailout money as they can get, and running, using the money to buy as much tangible property and ownership rights as they can while their lobbyists keep the public subsidy faucet running.

The pretense is that debt-strapped economies can resume business-as-usual growth by borrowing their way out of debt. But a quarter of U.S. real estate already is in negative equity – worth less than the mortgages attached to it – and the property market is still shrinking, so banks are not lending except with public Federal Housing Administration guarantees to cover whatever losses they may suffer. In any event, it already is mathematically impossible to carry today’s debt overhead without imposing austerity, debt deflation and depression.

This is not how banking was supposed to evolve. If governments are to underwrite bank loans, they may as well be doing the lending in the first place – and receiving the gains. Indeed, since 2008 the over-indebted economy’s crash led governments to become the major shareholders of the largest and most troubled banks – Citibank in the United States, Anglo-Irish Bank in Ireland, and Britain’s Royal Bank of Scotland. Yet rather than taking this opportunity to run these banks as public utilities and lower their charges for credit-card services – or most important of all, to stop their lending to speculators and gamblers – governments left these banks operating as part of the “casino capitalism” that has become their business plan.

There is no natural reason for matters to be like this. Relations between banks and government used to be the reverse. In 1307, France’s Philip IV (“The Fair”) set the tone by seizing the Knights Templars’ wealth, arresting them and putting many to death – not on financial charges, but on the accusation of devil-worshipping and satanic sexual practices. In 1344 the Peruzzi bank went broke, followed by the Bardi by making unsecured loans to Edward III of England and other monarchs who died or defaulted. Many subsequent banks had to suffer losses on loans gone bad to real estate or financial speculators.

By contrast, now the U.S., British, Irish and Latvian governments have taken bad bank loans onto their national balance sheets, imposing a heavy burden on taxpayers – while letting bankers cash out with immense wealth. These “cash for trash” swaps have turned the mortgage crisis and general debt collapse into a fiscal problem. Shifting the new public bailout debts onto the non-financial economy threaten to increase the cost of living and doing business. This is the result of the economy’s failure to distinguish productive from unproductive loans and debts. It helps explain why nations now are facing financial austerity and debt peonage instead of the leisure economy promised so eagerly by technological optimists a century ago.

So we are brought back to the question of what the proper role of banks should be. This issue was discussed exhaustively prior to World War I. It is even more urgent today.

How classical economists hoped to modernize banks as agents of industrial capitalism

Britain was the home of the Industrial Revolution, but there was little long-term lending to finance investment in factories or other means of production. British and Dutch merchant banking was to extend short-term credit on the basis of collateral such as real property or sales contracts for merchandise shipped (“receivables”). Buoyed by this trade financing, merchant bankers were successful enough to maintain long-established short-term funding practices. This meant that James Watt and other innovators were obliged to raise investment money from their families and friends rather than from banks.

It was the French and Germans who moved banking into the industrial stage to help their nations catch up. In France, the Saint-Simonians described the need to create an industrial credit system aimed at funding means of production. In effect, the Saint-Simonians proposed to restructure banks along lines akin to a mutual fund. A start was made with the Crédit Mobilier, founded by the Péreire Brothers in 1852. Their aim was to shift the banking and financial system away from debt financing at interest toward equity lending, taking returns in the form of dividends that would rise or decline in keeping with the debtor’s business fortunes. By giving businesses leeway to cut back dividends when sales and profits decline, profit-sharing agreements avoid the problem that interest must be paid willy-nilly. If an interest payment is missed, the debtor may be forced into bankruptcy and creditors can foreclose. It was to avoid this favoritism for creditors regardless of the debtor’s ability to pay that prompted Mohammed to ban interest under Islamic law.

Attracting reformers ranging from socialists to investment bankers, the Saint-Simonians won government backing for their policies under France’s Third Empire. Their approach inspired Marx as well as industrialists in Germany and protectionists in the United States and England. The common denominator of this broad spectrum was recognition that an efficient banking system was needed to finance the industry on which a strong national state and military power depended.

Germany develops an industrial banking system

It was above all in Germany that long-term financing found its expression in the Reichsbank and other large industrial banks as part of the “holy trinity” of banking, industry and government planning under Bismarck’s “state socialism.” German banks made a virtue of necessity. British banks “derived the greater part of their funds from the depositors,” and steered these savings and business deposits into mercantile trade financing. This forced domestic firms to finance most new investment out of their own earnings. By contrast, Germany’s “lack of capital … forced industry to turn to the banks for assistance,” noted the financial historian George Edwards. “A considerable proportion of the funds of the German banks came not from the deposits of customers but from the capital subscribed by the proprietors themselves. As a result, German banks “stressed investment operations and were formed not so much for receiving deposits and granting loans but rather for supplying the investment requirements of industry.”

When the Great War broke out in 1914, Germany’s rapid victories were widely viewed as reflecting the superior efficiency of its financial system. To some observers the war appeared as a struggle between rival forms of financial organization. At issue was not only who would rule Europe, but whether the continent would have laissez faire or a more state-socialist economy.

In 1915, shortly after fighting broke out, the Christian Socialist priest-politician Friedrich Naumann published Mitteleuropa, describing how Germany recognized more than any other nation that industrial technology needed long‑term financing and government support. His book inspired Prof. H. S. Foxwell in England to draw on his arguments in two remarkable essays published in the Economic Journal in September and December 1917: “The Nature of the Industrial Struggle,” and “The Financing of Industry and Trade.” He endorsed Naumann’s contention that “the old individualistic capitalism, of what he calls the English type, is giving way to the new, more impersonal, group form; to the disciplined scientific capitalism he claims as German.”

This was necessarily a group undertaking, with the emerging tripartite integration of industry, banking and government, with finance being “undoubtedly the main cause of the success of modern German enterprise,” Foxwell concluded (p. 514). German bank staffs included industrial experts who were forging industrial policy into a science. And in America, Thorstein Veblen’s The Engineers and the Price System(1921) voiced the new industrial philosophy calling for bankers and government planners to become engineers in shaping credit markets.

Foxwell warned that British steel, automotive, capital equipment and other heavy industry was becoming obsolete largely because its bankers failed to perceive the need to promote equity investment and extend long‑term credit. They based their loan decisions not on the new production and revenue their lending might create, but simply on what collateral they could liquidate in the event of default: inventories of unsold goods, real estate, and money due on bills for goods sold and awaiting payment from customers. And rather than investing in the shares of the companies that their loans supposedly were building up, they paid out most of their earnings as dividends – and urged companies to do the same. This short time horizon forced business to remain liquid rather than having leeway to pursue long‑term strategy.

German banks, by contrast, paid out dividends (and expected such dividends from their clients) at only half the rate of British banks, choosing to retain earnings as capital reserves and invest them largely in the stocks of their industrial clients. Viewing these companies as allies rather than merely as customers from whom to make as large a profit as quickly as possible, German bank officials sat on their boards, and helped expand their business by extending loans to foreign governments on condition that their clients be named the chief suppliers in major public investments. Germany viewed the laws of history as favoring national planning to organize the financing of heavy industry, and gave its bankers a voice in formulating international diplomacy, making them “the principal instrument in the extension of her foreign trade and political power.”

A similar contrast existed in the stock market. British brokers were no more up to the task of financing manufacturing in its early stages than were its banks. The nation had taken an early lead by forming Crown corporations such as the East India Company, the Bank of England and even the South Sea Company. Despite the collapse of the South Sea Bubble in 1720, the run-up of share prices from 1715 to 1720 in these joint-stock monopolies established London’s stock market as a popular investment vehicle, for Dutch and other foreigners as well as for British investors. But the market was dominated by railroads, canals and large public utilities. Industrial firms were not major issuers of stock.

In any case, after earning their commissions on one issue, British stockbrokers were notorious for moving on to the next without much concern for what happened to the investors who had bought the earlier securities. “As soon as he has contrived to get his issue quoted at a premium and his underwriters have unloaded at a profit,” complained Foxwell, “his enterprise ceases. ‘To him,’ as the Times says, ‘a successful flotation is of more importance than a sound venture.’”

Much the same was true in the United States. Its merchant heroes were individualistic traders and political insiders often operating on the edge of the law to gain their fortunes by stock-market manipulation, railroad politicking for land giveaways, and insurance companies, mining and natural resource extraction. America’s wealth-seeking spirit found its epitome in Thomas Edison’s hit-or-miss method of invention, coupled with a high degree of litigiousness to obtain patent and monopoly rights.

In sum, neither British nor American banking or stock markets planned for the future. Their time frame was short, and they preferred rent-extracting projects to industrial innovation. Most banks favored large real estate borrowers, railroads and public utilities whose income streams easily could be forecast. Only after manufacturing companies grew fairly large did they obtain significant bank and stock market credit.

What is remarkable is that this is the tradition of banking and high finance that has emerged victorious throughout the world. The explanation is primarily the military victory of the United States, Britain and their Allies in the Great War and a generation later, in World War II.

The regression toward burdensome unproductive debts after World War I

The development of industrial credit led economists to distinguish between productive and unproductive lending. A productive loan provides borrowers with resources to trade or invest at a profit sufficient to pay back the loan and its interest charge. An unproductive loan must be paid out of income earned elsewhere. Governments must pay war loans out of tax revenues. Consumers must pay loans out of income they earn at a job – or by selling assets. These debt payments divert revenue away from being spent on consumption and investment, so the economy shrinks. This traditionally has led to crises that wipe out debts, above all those that are unproductive.

n the aftermath of World War I the economies of Europe’s victorious and defeated nations alike were dominated by postwar arms and reparations debts. These inter-governmental debts were to pay for weapons (by the Allies when the United States unexpectedly demanded that they pay for the arms they had bought before America’s entry into the war), and for the destruction of property (by the Central Powers), not new means of production. Yet to the extent that they were inter-governmental, these debts were more intractable than debts to private bankers and bondholders. Despite the fact that governments in principle are sovereign and hence can annul debts owed to private creditors, the defeated Central Power governments were in no position to do this.

And among the Allies, Britain led the capitulation to U.S. arms billing, captive to the creditor ideology that “a debt is a debt” and must be paid regardless of what this entails in practice or even whether the debt in fact can be paid. Confronted with America’s demand for payment, the Allies turned to Germany to make them whole. After taking its liquid assets and major natural resources, they insisted that it squeeze out payments by taxing its economy. No attempt was made to calculate just how Germany was to do this – or most important, how it was to convert this domestic revenue (the “budgetary problem”) into hard currency or gold. Despite the fact that banking had focused on international credit and currency transfers since the 12^th century, there was a broad denial of what John Maynard Keynes identified as a foreign exchange transfer problem.

Never before had there been an obligation of such enormous magnitude. Nevertheless, all of Germany’s political parties and government agencies sought to devise ways to tax the economy to raise the sums being demanded. Taxes, however, are levied in a nation’s own currency. The only way to pay the Allies was for the Reichsbank to take this fiscal revenue and throw it onto the foreign exchange markets to obtain the sterling and other hard currency to pay. Britain, France and the other recipients then paid this money on their Inter-Ally debts to the United States.

Adam Smith pointed out that no government ever had paid down its public debt. But creditors always have been reluctant to acknowledge that debtors are unable to pay. Ever since David Ricardo’s lobbying for their perspective in Britain’s Bullion debates, creditors have found it their self-interest to promote a doctrinaire blind spot, insisting that debts of any magnitude can and should be paid. They resist acknowledging a distinction between raising funds domestically (by running a budget surplus) and obtaining the foreign exchange to pay foreign-currency debt. Furthermore, despite the evident fact that austerity cutbacks on consumption and investment can only be extractive, creditor-oriented economists refused to recognize that debts cannot be paid by shrinking the economy. Or that foreign debts and other international payments cannot be paid in domestic currency without lowering the exchange rate.

The more domestic currency Germany sought to convert, the further its exchange rate was driven down against the dollar and other gold-based currencies. This obliged Germans to pay much more for imports. The collapse of the exchange rate was the source of hyperinflation, not an increase in domestic money creation as today’s creditor-sponsored monetarist economists insist. In vain Keynes pointed to the specific structure of Germany’s balance of payments and asked creditors to specify just how many German exports they were willing to take, and to explain how domestic currency could be converted into foreign exchange without collapsing the exchange rate and causing price inflation.

Tragically, Ricardian tunnel vision won Allied government backing. Bertil Ohlin and Jacques Rueff claimed that economies receiving German payments would recycle their inflows to Germany and other debt-paying countries by buying their imports. If income adjustments did not keep exchange rates and prices stable, then Germany’s falling exchange rate would make its exports sufficiently more attractive to enable it to earn the revenue to pay.

This is the logic that the International Monetary Fund followed half a century later in insisting that Third World countries remit foreign earnings and even permit flight capital as well as pay their foreign debts. It is the neoliberal stance now demanding austerity for Greece, Ireland, Italy and other Eurozone economies.

Bank lobbyists claim that the European Central Bank will risk spurring domestic wage and price inflation if it does what central banks were founded to do: finance budget deficits. Europe’s financial institutions are given a monopoly right to perform this electronic task – and to receive interest for what a real central bank could create on its own computer keyboard.

But why it is less inflationary for commercial banks to finance budget deficits than for central banks to do this? The bank lending that has inflated a global financial bubble since the 1980s has left as its legacy a debt overhead that can no more be supported today than Germany was able to carry its reparations debt in the 1920s. Would government credit have so recklessly inflated asset prices?

How debt creation has fueled asset-price inflation since the 1980s

Banking in recent decades has not followed the productive lines that early economic futurists expected. As noted above, instead of financing tangible investment to expand production and innovation, most loans are made against collateral, with interest to be paid out of what borrowers can make elsewhere. Despite being unproductive in the classical sense, it was remunerative for debtors from 1980 until 2008 – not by investing the loan proceeds to expand economic activity, but by riding the wave of asset-price inflation. Mortgage credit enabled borrowers to bid up property prices, drawing speculators and new customers into the market in the expectation that prices would continue to rise. But hothouse credit infusions meant additional debt service, which ended up shrinking the market for goods and services.

Under normal conditions the effect would have been for rents to decline, with property prices following suit, leading to mortgage defaults. But banks postponed the collapse into negative equity by lowering their lending standards, providing enough new credit to keep on inflating prices. This averted a collapse of their speculative mortgage and stock market lending. It was inflationary – but it was inflating asset prices, not commodity prices or wages. Two decades of asset price inflation enabled speculators, homeowners and commercial investors to borrow the interest falling due and still make a capital gain.

This hope for a price gain made winning bidders willing to pay lenders all the current income – making banks the ultimate and major rentierincome recipients. The process of inflating asset prices by easing credit terms and lowering the interest rate was self-feeding. But it also was self-terminating, because raising the multiple by which a given real estate rent or business income can be “capitalized” into bank loans increased the economy’s debt overhead.

Securities markets became part of this problem. Rising stock and bond prices made pension funds pay more to purchase a retirement income – so “pension fund capitalism” was coming undone. So was the industrial economy itself. Instead of raising new equity financing for companies, the stock market became a vehicle for corporate buyouts. Raiders borrowed to buy out stockholders, loading down companies with debt. The most successful looters left them bankrupt shells. And when creditors turned their economic gains from this process into political power to shift the tax burden onto wage earners and industry, this raised the cost of living and doing business – by more than technology was able to lower prices.

The EU rejects central bank money creation, leaving deficit financing to the banks

Article 123 of the Lisbon Treaty forbids the ECB or other central banks to lend to government. But central banks were created specifically – to finance government deficits. The EU has rolled back history to the way things were three hundred years ago, before the Bank of England was created. Reserving the task of credit creation for commercial banks, it leaves governments without a central bank to finance the public spending needed to avert depression and widespread financial collapse.

So the plan has backfired. When “hard money” policy makers limited central bank power, they assumed that public debts would be risk-free. Obliging budget deficits to be financed by private creditors seemed to offer a bonanza: being able to collect interest for creating electronic credit that governments can create themselves. But now, European governments need credit to balance their budget or face default. So banks now want a central bank to create the money to bail them out for the bad loans they have made.

For starters, the ECB’s €489 billion in three-year loans at 1% interest gives banks a free lunch arbitrage opportunity (the “carry trade”) to buy Greek and Spanish bonds yielding a higher rate. The policy of buying government bonds in the open market – after banks first have bought them at a lower issue price – gives the banks a quick and easy trading gain.

How are these giveaways less inflationary than for central banks to directly finance budget deficits and roll over government debts? Is the aim of giving banks easy gains simply to provide them with resources to resume the Bubble Economy lending that led to today’s debt overhead in the first place?

Conclusion

Governments can create new credit electronically on their own computer keyboards as easily as commercial banks can. And unlike banks, their spending is expected to serve a broad social purpose, to be determined democratically. When commercial banks gain policy control over governments and central banks, they tend to support their own remunerative policy of creating asset-inflationary credit – leaving the clean-up costs to be solved by a post-bubble austerity. This makes the debt overhead even harder to pay – indeed, impossible.

So we are brought back to the policy issue of how public money creation to finance budget deficits differs from issuing government bonds for banks to buy. Is not the latter option a convoluted way to finance such deficits – at a needless interest charge? When governments monetize their budget deficits, they do not have to pay bondholders.

I have heard bankers argue that governments need an honest broker to decide whether a loan or public spending policy is responsible. To date their advice has not promoted productive credit. Yet they now are attempting to compensate for the financial crisis by telling debtor governments to sell off property in their public domain. This “solution” relies on the myth that privatization is more efficient and will lower the cost of basic infrastructure services. Yet it involves paying interest to the buyers of rent-extraction rights, higher executive salaries, stock options and other financial fees.

Most cost savings are achieved by shifting to non-unionized labor, and typically end up being paid to the privatizers, their bankers and bondholders, not passed on to the public. And bankers back price deregulation, enabling privatizers to raise access charges. This makes the economy higher cost and hence less competitive – just the opposite of what is promised.

Banking has moved so far away from funding industrial growth and economic development that it now benefits primarily at the economy’s expense in a predator and extractive way, not by making productive loans. This is now the great problem confronting our time. Banks now lend mainly to other financial institutions, hedge funds, corporate raiders, insurance companies and real estate, and engage in their own speculation in foreign currency, interest-rate arbitrage, and computer-driven trading programs. Industrial firms bypass the banking system by financing new capital investment out of their own retained earnings, and meet their liquidity needs by issuing their own commercial paper directly. Yet to keep the bank casino winning, global bankers now want governments not only to bail them out but to enable them to renew their failed business plan – and to keep the present debts in place so that creditors will not have to take a loss.

This wish means that society should lose, and even suffer depression. We are dealing here not only with greed, but with outright antisocial behavior and hostility.

Europe thus has reached a critical point in having to decide whose interest to put first: that of banks, or the “real” economy. History provides a wealth of examples illustrating the dangers of capitulating to bankers, and also for how to restructure banking along more productive lines. The underlying questions are clear enough:

Have banks outlived their historical role, or can they be restructured to finance productive capital investment rather than simply inflate asset prices?
Would a public option provide less costly and better directed credit?
Why not promote economic recovery by writing down debts to reflect the ability to pay, rather than relinquishing more wealth to an increasingly aggressive creditor class?

Solving the Eurozone’s financial problem can be made much easier by the tax reforms that classical economists advocated to complement their financial reforms. To free consumers and employers from taxation, they proposed to levy the burden on the “unearned increment” of land and natural resource rent, monopoly rent and financial privilege. The guiding principle was that property rights in the earth, monopolies and other ownership privileges have no direct cost of production, and hence can be taxed without reducing their supply or raising their price, which is set in the market. Removing the tax deductibility for interest is the other key reform that is needed.

A rent tax holds down housing prices and those of basic infrastructure services, whose untaxed revenue tends to be capitalized into bank loans and paid out in the form of interest charges. Additionally, land and natural resource rents – along with interest – are the easiest to tax, because they are highly visible and their value is easy to assess.

Pressure to narrow existing budget deficits offers a timely opportunity to rationalize the tax systems of Greece and other PIIGS countries in which the wealthy avoid paying their fair share of taxes. The political problem blocking this classical fiscal policy is that it “interferes” with the rent-extracting free lunches that banks seek to lend against. So they act as lobbyists for untaxing real estate and monopolies (and themselves as well). Despite the financial sector’s desire to see governments remain sufficiently solvent to pay bondholders, it has subsidized an enormous public relations apparatus and academic junk economics to oppose the tax policies that can close the fiscal gap in the fairest way.

It is too early to forecast whether banks or governments will emerge victorious from today’s crisis. As economies polarize between debtors and creditors, planning is shifting out of public hands into those of bankers. The easiest way for them to keep this power is to block a true central bank or strong public sector from interfering with their monopoly of credit creation. The counter is for central banks and governments to act as they were intended to, by providing a public option for credit creation.

The Fascinating Scientific Reason Why "Money Doesn't Buy Happiness"

2012-01-26T20:33:00.000-06:00

By David McRaney, You Are Not So Smart
Posted on January 25, 2012

The Misconception: There is nothing better in the world than getting paid to do what you love.

The Truth: Getting paid for doing what you already enjoy will sometimes cause your love for the task to wane because you attribute your motivation as coming from the reward, not your internal feelings.

Money isn’t everything. Money can’t buy happiness. Don’t live someone else’s dream. Figure out what you love and then figure out how to get paid doing it.

Maxims like these often find their way into your social media; they arrive in your electronic mailbox at the ends of dense chains of forwards. They bubble up from the collective sighs of well-paid boredom around the world and get routinely polished for presentation in graduation speeches and church sermons.

Money, fame, and prestige – they dangle just outside your reach it seems, encouraging you to lean farther and farther over the edge, to study longer and longer, to work harder and harder. When someone reminds you that acquiring currency while ignoring all else shouldn’t be your primary goal in life, it feels good. You retweet it. You post it on your wall. You forward it, and then you go back to work.

If only science had something concrete to say about the whole thing, you know? All these living greeting cards dispensing wisdom are great and all, but what about really putting money to the test? Does money buy happiness? In 2010, scientists published the results of a study looking into that very question.

The research by Daniel Kahneman and Angus Deaton, published in the Proceedings of the National Academy of Sciences, analyzed the lives and incomes of nearly half-a-million randomly selected U.S. citizens. They dug through the subjects’ lives searching for indicators of something psychologists call “emotional well being,” a clinical term for how often you feel peaks and valleys like “joy, stress, sadness, anger and affection” and to what degree you feel those things daily. In other words, they measured how happy or sad people were over time compared to how much cash they brought home. They did this by checking if the subjects were consistently able to experience the richness of existence, by whether they were tasting the poetic marrow of life.

The researchers discovered money is indeed a major factor in day-to-day happiness. No surprise there. You need to make a certain amount, on average, to be able to afford food, shelter, clothing, entertainment and the occasional Apple product, but what spun top hats around the country was their finding that beyond a certain point your happiness levels off. The happiness money offers doesn’t keep getting more and more potent – it plateaus. The research showed that a lack of money brings unhappiness, but an overabundance does not have the opposite effect.

According to the research, in modern America the average income required to be happy day-to-day, to experience “emotional well being” is about $75,000 a year. According to the researchers, past that point adding more to your income “does nothing for happiness, enjoyment, sadness, or stress.” A person who makes, on average, $250,000 a year has no greater emotional well-being, no extra day-to-day happiness, than a person making $75,000 a year. In Mississippi it is a bit less, in Chicago a bit more, but the point is there is evidence for the existence of a financiohappiness ceiling. The super-wealthy may believe they are happier, and you may agree, but you both share a delusion.

If you don’t already have it, money can improve your life and make you happier, but once you have enough to go to Red Lobster on Tuesday night without worrying about paying the water bill that month, you’re good to go. Or, as Henry David Thoreau once said, “A man is rich in proportion to the number of things which he can afford to let alone.” In the modern United States the ability to let most things alone, according to Kahneman and Deaton’s research, costs about $75,000 a year.

If you find that hard to believe, you aren’t alone. A study in 2011 at Cornell asked Americans which they would rather have, more money or more sleep. Most people said more money. In a choice between either $80,000 a year, normal work hours, and about eight hours of sleep a night versus $140,000 a year, routine overtime, and six hours of nightly dreams – the majority of people went with the cash. It’s unfortunate, because although it looks good on paper and feels right in your gut, the research has never agreed. No matter how you turn it, the science says once your basic needs are taken care of, money and other rewards don’t make you happier, and you can appreciate why after examining a psychological jewel called the overjustification effect. To understand it, we must travel to 1973 when a group of psychologists poisoned a few children’s love of drawing in the name of science.

Throughout the 20th century, as psychology came into its own as a scientific discipline, many psychologists emerged from the halls of academia and ascended to the rank of celebrity after delivering open-palmed scientific slaps to the face of mankind. Sigmund Freud got people talking about the unconscious and the malleable, hidden world of desires and fears. Carl Jung put the ideas of archetypes, introversion, and extroversion into our vocabulary. Abraham Maslow gave us a hierarchy of needs including hugs and sex. Timothy Leary fed Harvard students psychedelic mushrooms and advocated that an entire generation should use LSD to “turn on, tune in, and drop out.” There are many more, but in the 1970s, B.F. Skinner was the rock star of psychology.

Skinner and his boxes made the cover of Time magazine in 1971 underneath the ominous proclamation, “We Can’t Afford Freedom.” His research into behaviorism had made its way into the public consciousness, and he was intent on using his celebrity to convince all of humanity there was no such thing as free will. You’ve seen his findings in practice. The Supernanny and The Dog Whisperer reward desired behavior and either punish or ignore undesired behavior – and they get impressive results. Skinner could make birds do figure eights on his command, or train them to pilot guided missiles. He invented climate-controlled baby boxes in which infants never cried. He created teaching machines that still influence user interfaces today. But, he also scared a romantic generation of freedom seekers into thinking freedom might be an illusion.

Skinner said all human thoughts and behaviors were just reactions to stimuli – conditioned responses. To believe as Skinner did is to believe everything you do is part of seeking a reward or avoiding a punishment. Your entire life is just a stack of evolutionarily selected against quirks and desires seasoned with programmed interests and fears. There is no self. There is no one in control. Those things are illusions, side effects of a complex nervous system observing its own actions and cognitions. In light of this, Skinner advocated we build a society through setting goals and then condition people toward those goals through positive reinforcement. Skinner didn’t trust human beings not to be lazy, greedy, and violent. Humans, he said, were inclined to seek and reinforce status through institutions, class warfare, and bloodshed. People can’t be trusted with freedom, he told the world. Psychology could instead design systems to condition people toward positive goals that ensure the best possible quality of life for all.

As you might imagine, the proclamation humans have no soul, or at least no special spark, caused a great deal of mental indigestion. Many psychologists resisted the idea that you are nothing more than chemical reactions on top of physical laws playing themselves out no differently than a rock slide crashing down the side of a mountain or a tree converting sunlight and carbon dioxide into wood. Skinner claimed what goes on inside your head is irrelevant, that the environment, the stuff outside your skull determines behavior, thoughts, emotions, beliefs and so on. It was a bold and terrifying claim to many, so science set about the task of picking it apart.

Among those who wanted to know if the mind was just a pile of reactions to rewards and punishments were psychologists Mark Lepper, Daniel Greene and Richard Nisbett. They wondered if thinking about thinking played a bigger role than the behaviorists suggested. In their book, The Hidden Costs of Reward, they detail one experiment in particular which helped pull psychology out from under what they called Skinner’s “long shadow.”

In 1973, Lepper, Greene and Nisbett met with teachers of a preschool class, the sort that generates a steady output of macaroni art and paper-bag vests. They arranged for the children to have a period of free time in which the tots could choose from a variety of different fun activities. Meanwhile, the psychologists would watch from behind a one-way mirror and take notes. The teachers agreed, and the psychologists watched. To proceed, they needed children with a natural affinity for art. So as the kids played, the scientists searched for the ones who gravitated toward drawing and coloring activities. Once they identified the artists of the group, the scientists watched them during free time and measured their participation and interest in drawing for later comparison.

They then divided the children into three groups. They offered Group A a glittering certificate of awesomeness if the artists drew during the next fun time. They offered Group B nothing, but if the kids in Group B happened to draw they received an unexpected certificate of awesomeness identical to the one received by Group A. The experimenters told Group C nothing ahead of time, and later the scientists didn’t award a prize if those children went for the colored pencils and markers. The scientists then watched to see how the kids performed during a series of playtimes over three days. They awarded the prizes, stopped observations, and waited two weeks. When they returned, the researchers watched as the children faced the same the choice as before the experiment began. Three groups, three experiences, many fun activities – how do you think their feelings changed?

Well, Group B and Group C didn’t change at all. They went to the art supplies and created monsters and mountains and houses with curly-cue smoke streams crawling out of rectangular chimneys with just as much joy as they had before they met the psychologists. Group A, though, did not. They were different people now. The children in Group A “spent significantly less time” drawing than did the others, and they “showed a significant decrease in interest in the activity” as compared to before the experiment. Why?

The children in Group A were swept up, overpowered, their joy perverted by the overjustification effect. The story they told themselves wasn’t the same story the other groups were telling. That’s how the effect works.

Self-perception theory says you observe your own behavior and then, after the fact, make up a story to explain it. That story is sometimes close to the truth, and sometimes it is just something nice that makes you feel better about being a person. For instance, researchers at Stanford University once divided students into two groups. One received a small cash payment for turning wooden knobs round and round for an hour. The other group received a generous payment for the same task. After the hour, a researcher asked students in each group to tell the next person after them who was about to perform the same boring task that turning knobs was fun and interesting. After that, everyone filled out a survey in which they were asked to say how they truly felt. The people paid a pittance reported the study was a blast. The people paid well reported it was awful. Subjects in both groups lied to the person after them, but the people paid well had a justification, an extrinsic reward to fall back on. The other group had no safety net, no outside justification, so they invented one inside. To keep from feeling icky, they found solace in an internal justification – they thought, “you know, it really was fun when you think about.” That’s called the insufficient justification effect, the yang to overjustification’s yin. In telling themselves the story, the only difference was the size of the reward and whether or not they felt extrinsically or intrinsically motivated. You are driven at the fundamental level in most everything you choose to do by either intrinsic or extrinsic goals.

Intrinsic motivations come from within. As Daniel Pink explained in his excellent book, Drive, those motivations often include mastery, autonomy, and purpose. There are some things you do just because they fulfill you, or they make you feel like you are becoming better at a task, or that you are a master of your destiny, or that you play a role in the grand scheme of things, or that you are helping society in some way. Intrinsic rewards demonstrate to yourself and others the value of being you. They are blurry and difficult to quantify. Charted on a graph, they form long slopes stretching into infinity. You strive to become an amazing cellist, or you volunteer in the campaign of an inspiring politician, or you build the starship Enterprise in Minecraft.

Extrinsic motivations come from without. They are tangible baubles handed over for tangible deeds. They usually exist outside of you before you begin a task. These sorts of motivations include money, prizes and grades, or in the case of punishment, the promise of losing something you like or gaining something you do not. Extrinsic motivations are easy to quantify, and can be demonstrated in bar graphs or tallied on a calculator. You work a double shift for the overtime pay so you can make rent. You put in the hours to become a doctor hoping your father will finally deliver the praise for which you long. You say no to the cheesecake so you can fit into those pants at the Christmas party. If you can admit to yourself that the reward is the only reason you are doing what you are doing – the situps, the spreadsheet, the speed limit – it is probably extrinsic.

Whether a reward is intrinsic or extrinsic helps determine the setting of your narrative – the marketplace or the heart. As Dan Ariely writes in his book, Predictably Irrational, you tend to unconsciously evaluate your behavior and that of others in terms of social norms or market norms. Helping a friend move for free doesn’t feel the same as helping a friend move for $50. It feels wonderful to slip into the same bed with your date after getting to know them and staying up one night making key lime cupcakes and talking about the differences and similarities between Breaking Bad and The Wire, but if after all of that the other person tosses you a $100 bill and says, “Thanks, that was awesome,” you will feel crushed by the terrible weight of market norms. Payments in terms of social norms are intrinsic, and thus your narrative remains impervious to the overjustification effect. Those sorts of payments come as praise and respect, a feeling of mastery or camaraderie or love. Payments in terms of market norms are extrinsic, and your story becomes vulnerable to overjustification. Marketplace payments come as something measurable, and in turn they make your motivation measurable when before it was nebulous, up for interpretation and easy to rationalize.

The deal the children struck with the experimenters ruined their love of art during playtime, not because they received a reward. After all, Group B got the same reward and kept their desire to draw. No, it wasn’t the prize but the story they told themselves about why they chose what they chose, why they did what they did. During the experiment, Group C thought, “I just drew this picture because I love to draw!” Group B thought, “I just got rewarded for doing something I love to do!” Group A thought, “I just drew this to win an award!” When all three groups were faced with the same activity, Group A was faced with a metacognition, a question, a burden unknown to the other groups. The scientists in the knob-turning study and the child artists study showed Skinner’s view was too narrow. Thinking about thinking changes things. Extrinsic rewards can steal your narrative.

As Lepper, Greene and Nisbett wrote, “engagement in an activity of initial interest under conditions that make salient to the person the instrumentality of engagement in that activity as a means to some ulterior end may lead to decrements in subsequent, intrinsic interest in the activity.” In other words, if you are offered a reward to do something you love and then agree, you will later question whether you continue to do it for love or for the reward.

In 1980, David Rosenfield, Robert Folger and Harold Adelman at Southern Methodist University revealed a way you can defeat the overjustification effect. Seek employers who dole out reward – paychecks, bonuses, promotions, etc. – based not on quotas or task completions but instead based on competence. They ran an experiment in which they told subjects the goal was to find fun and interesting ways to improve vocabulary skills in schools. They placed participants in two categories and two groups per category. In one category, subjects would be paid for being good at their task. In the other category, the subjects would be paid for completing a task. The subjects received 26 dice with letters on their faces instead of dots and a stack of index cards each with 13 random letters. The subjects hit a timer and used their dice to make words from the letters on the cards. Once they had used nine letters or spent a minute-and-a-half trying, they moved on to the next index card and kept repeating until the experiment ended. It was difficult but fun, and as the players kept going they started to improve in their abilities.

In the payment for competence category, Group A was told they were being payed based on how well they did compared to the average score. In Group B, the subjects were told the same thing, but there was no mention of any reward. In the payment for completion category, the scientists told Group C each completed puzzle would increase their payout, and Group D was told they would be paid by the hour.

After the games, the experimenters pretended to tally up the subjects’ scores and showed Groups A and B how well they did. No matter how they actually performed, the scientists told half of Groups A and B they did poorly and half they were amazing at the game. Groups C and D, the ones who were paid for completions, were also split. Half got low pay and half high pay. The subjects then filled out a questionnaire and sat alone in the room with the dice and cards for three minutes. During that alone time the real study began. The scientists wanted to see who would keep playing the game for fun and for how long.

The people in Groups A and B, the ones who were paid for being better than average, they picked up the game and played it for over two minutes, but slightly less than that if they were told they weren’t that good. The people in groups C and D, the ones paid for completions, didn’t play it for fun for as long as did the people in the competency groups, and they tended to play longer the less they were paid.

The results of the study suggested when you get rewarded based on how well you perform a task, as long as those reasons are made perfectly clear, rewards will generate that electric exuberance of intrinsic validation, and the higher the reward, the better the feeling and the more likely you will try harder in the future. On the other hand, if you are getting rewarded just for being a warm body, no matter how well you do your job, no matter what you achieve, the electric feeling is absent. In those conditions greater rewards don’t lead to more output, don’t encourage you to strive for greatness. Overall, the study suggested rewards don’t have motivational power unless they make you feel competent. Money alone doesn’t do that. With money, when you explain to yourself why you worked so hard, all you can come up with is, “to get paid.” You come to believe you are being coerced, paid off, bought out. In the absence of what the scientists called “competency feedback” there is no story to tell yourself that paints you as a badass. Quotas and overtime and hourly pay don’t offer such indications of competency. Bonuses based on a reaching a specific number of completions or reaching a quantified goal make you feel like a machine.

If you pay people to complete puzzles instead of paying them for being smart, they lose interest in the game. If you pay children to draw, fun becomes work. Payment on top of compliments and other praise and feeling good about personal achievement are powerful motivators, but only if they are unexpected. Only then can you continue to tell the story that keeps you going; only then can you still explain your motivation as coming from within.

Consider the story you tell yourself about why you do what you do for a living. How vulnerable is that tale to these effects?

Maybe your story goes like this: Work is just a means to an end. You go to work; you get paid. You exchange effort for survival tokens and the occasional steampunk thong from Etsy. Work is not fun. Work pays bills. Fun happens at places that are not work. Your story is in no danger if that’s how you see things. In an environment like that Skinner’s assumptions hold true, you will only work as hard as is necessary to keep getting paychecks. If offered greater rewards, you’ll work harder for them.

Maybe your story goes like this though: I love what I do. It changes lives. It makes the world a better place. I am slowly becoming a master in my field, and I get to choose how I solve problems. My bosses value my efforts, depend on me, and offer praise. In that scenario, rewards just get in the way of your job. As Kahneman’s and Deaton’s study about happiness showed, once you earn enough to be happy day-to-day, motivation must come from something else. As Kahneman and Deaton’s research into happiness and money showed, the only material reward worth seeking once you have a bed, running water and access to microwave popcorn, are tributes, symbols to all of your merit, stuff that demonstrates your effectance to yourself and others. Ranks, degrees, gold stars, trophies, Nobel Prizes and Academy Awards – these are shorthand indicators of your competence. Those rewards amplify your internal motivations; they build your self-esteem and strengthen your feelings of self-efficacy. They show you’ve leveled up in the real world. Achievement unlocked. They help you construct a personal narrative you enjoy telling.

The overjustification effect threatens your fragile narratives, especially if you haven’t figured out what to do with your life. You run the risk of seeing your behavior as motivated by profit instead of interest if you agree to get paid for something you would probably do for free. Conditioning will not only fail, it will pollute you. You run the risk of believing the reward, not your passion, was responsible for your effort, and in the future it will be a challenge to generate enthusiasm. It becomes more and more difficult to look back on your actions and describe them in terms of internal motivations. The thing you love can become drudgery if that which can’t be measured is transmuted into something you can plug into TurboTax.

Apple Driving Workers to Threaten Mass Suicide?

2012-01-26T20:24:00.002-06:00

The Pathologies of the Modern Corporation
By Robert Cruickshank, AlterNet
January 26, 2012

Here in my household, we are swimming in Apple products. We have four iPhones, although only three of them are currently in use. We have an iPod and an iPad. We have a MacBook and a MacBook Air (on which this post is currently being composed). We have two iBooks in storage, along with my iMac, which dates to the summer of 2000. It still boots up and works just fine.

I’m not an Apple fanboy. I just prefer products that work well, rarely ever crash, and help me create value. Apple products meet those needs perfectly, whereas most PCs I’ve used simply don't.

If those were the only things I cared about in life, I wouldn’t give those products a second thought. But there’s more to life than a functional piece of consumer electronics. Those items should exist to help me do the things in life that I want to do, to help me live a better life. They’re tools, not ends.

Even that’s not sufficient. One of my main goals in life is to build a better world, to ease suffering, end oppression, and provide equality – all in order that others may have the freedom to pursue their own dreams. A well-designed product can certainly help that process along. But what if the way that product is made actually undermines those broader goals? Suddenly, there’s a problem.

In the last year or two, it’s become increasingly clear that the way Apple makes its products is deeply flawed. Working conditions at the factory which makes most of their products – Foxconn in Shenzhen, China – are so appalling that workers engaged in a rash of suicides in 2010 to ameliorate their own suffering. Earlier this year workers threatened mass suicide over pay and working conditions. And of course, there’s the fact that Apple makes these products overseas rather than in the United States, where unemployment remains at some of the highest levels we’ve seen since the Great Depression.

Here in the 21st century, it should be clear to us that better technology is not sufficient to build the kind of better lives and society that we want. If it were, we wouldn’t be in a position of mass unemployment, widespread suffering, and a democracy in decay. Social institutions, including workplaces and corporations, have to be full partners in building a democratic, empowered, and equal society.

Most corporations, however, don’t see themselves that way – including Apple. Today’s New York Times took a look at Apple, America And A Squeezed Middle Class, curious to see why Apple no longer manufactures its products in the US and what the impact is on our prosperity. They found that Apple builds in China in large part because they have a narrow focus on their products and their profits, and disdain wider concerns for the good of society. When an unnamed Apple executive was asked about their role in addressing America’s economic problems, their response was revealing:

They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.

“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

That quote is perhaps the best encapsulation of the pathologies of the modern American corporation. In fact, Apple does have an obligation to solve America’s problems. Everyone who lives in this country has that obligation. And corporations have that obligation too. If they don’t want to help make things better, then they shouldn’t exist.

The notion that companies exist only to generate profit or build a specific few set of products is corrosive. Those profits and products serve the rest of society. And as a part of that society, companies and their executives exist to make that society a better place. If they are engaged in a set of practices that make society worse off, then those actions are indefensible and need to be changed.

For the last 30 years, American businesses have been devoted to a single-minded pursuit of maximizing short-term profits. Unsurprisingly, this has had profound ripple effects throughout the rest of society. The economy became focused on those profits, and so with it followed politics, culture, and our values as a civilization.

By now it should be clear to everybody that while this works well for the small elite that has hoarded all these profits – the so-called “1%” – it has utterly failed to provide a happy and fulfilled life for everyone else.

This is true not only of the American workers who have lost their jobs due to outsourcing, it’s true of the workers around the world who have those jobs now. Those workers aren’t villains – if anything they’re even worse off. Foxconn’s chairman not only compared his workforce to animals, he suggested he might learn good management techniques from a Taiwanese zoo.

The NYT article talks about one of the reasons Apple likes Foxconn is because the factory is willing to push its workers not just to the breaking point, but well beyond it, in service to Apple’s profits and product demands. The NYT article described Steve Jobs’ 2007 rant about the iPhone needing an unscratchable glass surface within six weeks, and how Foxconn went about fulfilling that need:

In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.

Was that necessary? Certainly not. That might not sound as bad as other reported abuses, but the situation is likely much worse at Apple’s suppliers, with overwork and other forms of employment fraud being rampant.

As William K. Black explains at Alternet, this is a good example of what may be a widespread tolerance for fraud in the global economy:

These frauds take place abroad, but they harm employees at home. Mitt Romney explains that Bain had to slash wages and pensions to save firms located in the U.S. who had to meet competition from foreign anti-employee control frauds. The damage from foreign anti-employee control frauds drives the domestic attack on U.S. manufacturing wages. Bad ethics increasingly drive good ethics out of the markets and manufacturing jobs out of the U.S. and into more fraud-friendly nations.

One only needs to look at the widespread fraud that underlay the housing bubble of the ’00s to see further evidence for these claims.

Apple likes to think of itself as a model corporation. But as we saw above, their attitude is the same as that of many other businesses – that only the product and the profits matter, with all other elements of human life and social good being unimportant. The NYT article implicitly endorses this view by framing Apple’s decisions as being driven by the marketplace:

It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.

In fact, the article explains that Apple is the world’s most profitable company, so clearly there is room to give. I would personally pay $65 more per iPhone if I knew it was going to American workers. I’m an internationalist, and so I’m also willing to pay more if I knew it was going to create better pay and better working conditions for the Foxconn workers in Shenzhen.

The NYT suggests that it’s not just profit motive that drives Apple’s unwillingness to bring jobs back to the States, but the lack of a skilled workforce and existing factory capacity:

But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.

The NYT treats this as a kind of historic accident, a consequence of the marketplace. But it is in fact the product of 30 years of deliberate American government policy to deskill our workforce and send their jobs overseas so that the top 1% of our society can enjoy greater profits.

Nowhere in the article is the notion of an “industrial policy” described. China spends vast sums of money to develop, promote and protect its manufacturing sector. The United States has not only done no such thing, at least not since 1980, but has instead spent its money and used its laws and policies to encourage the deindustrialization of this country. This is not a market failure but a deliberate outcome of specific political choices.

There is nothing stopping the United States from shifting our current industrial policy away from “doing everything we can to help the 1% get richer” and toward “doing everything we can to promote the development of a manufacturing sector that employs a lot of people, paying good wages with good working conditions.” Well, nothing except the political power of the 1% – and the hegemony of neoliberal ideology, which holds that “the market” should decide who wins and who loses in life, rather than all of us collectively deciding that there’s no reason anyone should ever have to “lose” at all.

The United States could and should spend money to provide job training to help create a workforce that can build the products that make a 21st century society go. We can and should spend money to help make it easier to build sustainable, environmentally responsible factories. We can and should pass laws to ensure those factories are run by a democratic workforce, ideally by a cooperative, rather than by a large corporation focused on profits rather than the social good.

If companies are complaining about costs, we can help solve that problem without letting them fall back on the extremely damaging “solution” of simply cutting their workers’ pay, benefits, or even their jobs. Universal health care, funded through taxation, would mean a company like Apple would not have to include that cost in deciding when and where to hire. The same holds true of universal defined-benefit pensions – an augmented version of Social Security – as well as better schools and a freight and passenger transportation infrastructure that was not dependent on expensive oil.

Those things would not necessarily have to benefit just large corporations. They could provide the basis for people to innovate for themselves, for cooperatives to start setting up shop in the US and begin to design and build things like smartphones.

Changes to the way our companies operate, including eliminating the laws requiring them to maximize shareholder value and instead focus on operating in a way that makes society better, are also key pieces of building a better 21st century prosperity.

If all we want out of life is an iPhone, then we can just continue on the present path. But for those of us who know we can and should aspire to much more fulfilling things, it’s time we started figuring out how to change the global economy, rather than let it continue undermining our values and our lives.