Why Can't the Unemployed Get Off Their Couches? And Eight Other Critical Questions for Americans

Tuesday, 03 June 2014
By Peter Van Buren, TomDispatch

Last year eight Americans -- the four Waltons of Walmart fame, the two Koch brothers, Bill Gates, and Warren Buffett -- made more money than 3.6 million American minimum-wage workers combined. The median pay for CEOs at America's large corporations rose to $10 million per year, while a typical chief executive now makes about 257 times the average worker's salary, up sharply from 181 times in 2009. Overall, 1% of Americans own more than a third of the country’s wealth.

As the United States slips from its status as the globe's number one economic power, small numbers of Americans continue to amass staggering amounts of wealth, while simultaneously inequality trends toward historic levels. At what appears to be a critical juncture in our history and the history of inequality in this country, here are nine questions we need to ask about who we are and what will become of us. Let's start with a French economist who has emerged as an important voice on what’s happening in America today.

1) What does Thomas Piketty have to do with the 99%?

French economist Thomas Piketty’s surprise bestseller, Capital in the Twenty-First Century, is an unlikely beach read, though it’s selling like one. A careful parsing of massive amounts of data distilled into “only” 700 pages, it outlines the economic basis for the 1%-99% divide in the United States. (Conservative critics, of course, disagree.)

Just in case you aren’t yet rock-bottom certain about the reality of that divide, here are some stats: the top 1% of Americans hold 35% of the nation's net worth; the bottom 80%, only 11% percent. The United States has such an unequal distribution of wealth that, in global rankings, it falls among the planet’s kleptocracies, not the developed nations that were once its peers. The mathematical measure of wealth-inequality is called "Gini," and the higher it is, the more extreme a nation's wealth-inequality. The Gini for the U.S. is 85; for Germany, 77; Canada, 72; and Bangladesh, 64. Nations more unequal than the U.S. include Kazakhstan at 86 and the Ukraine at 90. The African continent tips in at just under 85. Odd company for the self-proclaimed “indispensable nation.”

Piketty shows that such inequality is driven by two complementary forces. By owning more of everything (capital), rich people have a mechanism for getting ever richer than the rest of us, because the rate of return on investment is higher than the rate of economic growth. In other words, money made from investments grows faster than money made from wages. Piketty claims the wealth of the wealthiest Americans is rising at 6%-7% a year, more than three times as fast as the economy the rest of us live in.

At the same time, wages for middle and lower income Americans are sinking, driven by factors also largely under the control of the wealthy. These include the application of new technology to eliminate human jobs, the crushing of unions, and a decline in the inflation-adjusted minimum wage that more and more Americans depend on for survival.

The short version: A rising tide lifts all yachts.

 

2) So why don't the unemployed/underemployed simply find better jobs?

Another way of phrasing this question is: Why don't we just blame the poor for their plight? Mention unemployment or underemployment and someone will inevitably invoke the old "pull yourself up by your bootstraps" line. If workers don't like retail or minimum-wage jobs, or if they can't find good paying jobs in their area, why don’t they just move? Quit retail or quit Pittsburgh (Detroit, Cleveland, St. Louis) and...

Move to where to do what? Our country lost one-third of all decent factory jobs -- almost six million of them -- between 2000 and 2009, and wherever "there" is supposed to be, piles of people are already in line. In addition, many who lost their jobs don't have the means to move or a friend with a couch to sleep on when they get to Colorado. Some have lived for generations in the places where the jobs have disappeared. As for the jobs that are left, what do they pay? One out of four working Americans earn less than $10 per hour. At 25%, the U.S. has the highest percentage of low-wage workers in the developed world. (Canada and Great Britain have 20%, Japan under 15%, and France 11%.)

One in six men, 10.4 million Americans aged 25 to 64, the prime working years, don't have jobs at all, a portion of the male population that has almost tripled in the past four decades. They are neither all lazy nor all unskilled, and at present they await news of the uncharted places in the U.S. where those 10 million unfilled jobs are hidden.

Moving “there” to find better work isn't an option.

3) But aren't there small-scale versions of economic “rebirths” occurring all over America?

Travel through some of the old Rust Belt towns of this country and you’ll quickly notice that “economic rebirth” seems to mean repurposing buildings that once housed factories and shipping depots as bars and boutiques. Abandoned warehouses are now trendy restaurants; a former radiator factory is an artisanal coffee shop. In other words, in a place where a manufacturing plant once employed hundreds of skilled workers at union wages, a handful of part-timers are now serving tapas at minimum wage plus tips.

In Maryland, an ice cream plant that once employed 400 people with benefits and salaries pegged at around $40,000 a year closed its doors in 2012. Under a "rebirth" program, a smaller ice cream packer reopened the place with only 16 jobs at low wages and without benefits. The new operation had 1,600 applicants for those 16 jobs. The area around the ice cream plant once produced airplanes, pipe organs, and leather car seats. No more. There were roughly 14,000 factory jobs in the area in 2000; today, there are 8,000.

General Electric’s Appliance Park, in Louisville, Kentucky, employed 23,000 union workers at its peak in 1973. By 2011, the sputtering plant held onto only about 1,800 workers. What was left of the union there agreed to a two-tier wage scale, and today 70% of the jobs are on the lower tier -- at $13.50 an hour, almost $8 less than what the starting wage used to be. A full-time worker makes about $28,000 a year before taxes and deductions. The poverty line for a family of four in Kentucky is $23,000. Food stamp benefits are available to people who earn up to 130% of the poverty line, so a full-timer in Kentucky with a family still qualifies. Even if a worker moved to Kentucky and lucked out by landing a job at the plant, standing on your tiptoes with your lips just above sea level is not much of a step up.

Low paying jobs are not a rebirth. 

 

4) Can't people just get off their couches and get back to work?

There are 3.8 million Americans who have been out of work for 27 weeks or more. These are the country’s long-term unemployed, as defined by the Department of Labor. Statistically, the longer you are unemployed, the less likely it is that you'll ever find work again. Between 2008 and 2012, only 11% of those unemployed 15 months or more found a full-time job, and research shows that those who do find a job are less likely to retain it. Think of it as a snowball effect: more unemployment creates more unemployable people.

And how hard is it to land even a minimum-wage job? This year, the Ivy League college admissions acceptance rate was 8.9%. Last year, when Walmart opened its first store in Washington, D.C., there were more than 23,000 applications for 600 jobs, which resulted in an acceptance rate of 2.6%, making the big box store about twice as selective as Harvard and five times as choosy as Cornell.

Telling unemployed people to get off their couches (or out of the cars they live in or the shelters where they sleep) and get a job makes as much sense as telling them to go study at Harvard. 

 

5) Why can't former factory workers retrain into new jobs?

Janesville, Wisconsin, had the oldest General Motors car factory in America, one that candidate Obama visited in 2007 and insisted would be there for another 100 years. Two days before Christmas that year and just before Obama's inauguration, the plant closed forever, throwing 5,000 people out of work. This devastated the town, because you either worked in the plant or in a business that depended on people working in the plant. The new president and Congress quickly paid for a two-million-dollar Janesville retraining program, using state community colleges the way the government once used trade schools built to teach new immigrants the skills needed by that Janesville factory a century ago.

This time around, however, those who finished their retraining programs simply became trained unemployables rather than untrained ones. It turned out that having a certificate in “heating and ventilation” did not automatically lead to a job in the field. There were already plenty of people out there with such certificates, never mind actual college degrees. And those who did find work in some field saw their take-home pay drop by 36%. This, it seems, is increasingly typical in twenty-first-century America (though retraining programs have been little studied in recent years).

Manufacturing is dead and the future lies in a high-tech, information-based economy, some say. So why can't former factory workers be trained to do that? Maybe some percentage could, but the U.S. graduated 1,606,000 students with bachelor's degrees in 2014, many of whom already have such skills.

Bottom Line: Jobs create the need for training. Training does not create jobs. 

 

6) Should we cut public assistance and force people into the job market?

At some point in any discussion of jobs, someone will drop the nuclear option: cut federal and state benefits and do away with most public assistance. That'll motivate people to find jobs -- or starve. Unemployment money and food stamps (now called the Supplemental Nutrition Assistance Program, or SNAP) encourage people to be lazy. Why should tax dollars be used to give food to people who won't work for it? “If you’re able-bodied, you should be willing to work,” House Majority Leader Eric Cantor said discussing food stamp cuts.

The problem with such statements is 73% of those enrolled in the country’s major public benefits programs are, in fact, from working families -- just in jobs whose paychecks don’t cover life’s basic necessities. McDonald’s workers alone receive $1.2 billion in federal assistance per year.

Why do so many of the employed need food stamps? It’s not complicated. Workers in the minimum-wage economy often need them simply to survive. All in all, 47 million people get SNAP nationwide because without it they would go hungry.

In Ohio, where I did some of the research for my book Ghosts of Tom Joad, the state pays out benefits on the first of each month. Pay Day, Food Day, Mother’s Day, people call it. SNAP is distributed in the form of an Electronic Bank Transfer card, or EBT, which, recipients will tell you, stands for “Eat Better Tonight.” EBT-friendly stores open early and stay open late on the first of the month because most people are pretty hungry come the Day.

A single person with nothing to her name in the lower 48 states would qualify for no more than $189 a month in SNAP. If she works, her net monthly income is multiplied by .3, and the result is subtracted from the maximum allotment. Less than fifty bucks a week for food isn’t exactly luxury fare. Sure, she can skip a meal if she needs to, and she likely does. However, she may have kids; almost two-thirds of SNAP children live in single-parent households. Twenty percent or more of the child population in 37 states lived in “food insecure households” in 2011, with New Mexico (30.6%) and the District of Columbia (30%) topping the list. And it's not just kids. Households with disabled people account for 16% of SNAP benefits, while 9% go to households with senior citizens.

Almost 22% of American children under age 18 lived in poverty in 2012; for those under age five, it’s more than 25%. Almost 1 in 10 live in extreme poverty.

Our system is trending toward asking kids (and the disabled, and the elderly) to go to hell if they're hungry. Many are already there.

7) Why are Walmart and other businesses opposed to SNAP cuts?

Public benefits are now a huge part of the profits of certain major corporations. In a filing with the Securities and Exchange Commission, Walmart was oddly blunt about what SNAP cuts could do to its bottom line:

“Our business operations are subject to numerous risks, factors, and uncertainties, domestically and internationally, which are outside our control. These factors include... changes in the amount of payments made under the Supplemental Nutrition Assistance Plan and other public assistance plans, [and] changes in the eligibility requirements of public assistance plans.”

How much profit do such businesses make from public assistance? Short answer: big bucks. In one year, nine Walmart Supercenters in Massachusetts received more than $33 million in SNAP dollars -- more than four times the SNAP money spent at farmers' markets nationwide. In two years, Walmart received about half of the one billion dollars in SNAP expenditures in Oklahoma. Overall, 18% of all food benefits money is spent at Walmart.

Pepsi, Coke, and the grocery chain Kroger lobbied for food stamps, an indication of how much they rely on the money. The CEO of Kraft admitted that the mac n’ cheese maker opposed food stamp cuts because users were “a big part of our audience.” One-sixth of Kraft’s revenues come from food stamp purchases. Yum Brands, the operator of KFC, Taco Bell, and Pizza Hut, tried to convince lawmakers in several states to allow its restaurants to accept food stamps. Products eligible for SNAP purchases are supposed to be limited to “healthy foods.” Yet lobbying by the soda industry keeps sugary drinks on the approved list, while companies like Coke and Pepsi pull in four billion dollars a year in revenues from SNAP money.

Poverty is big business.

8) Should We Raise the Minimum Wage?

One important reason to raise the minimum wage to a living one is that people who can afford to feed themselves will not need food stamps paid for by taxpayers. Companies who profit off their workers' labor will be forced to pay a fair price for it, and not get by on taxpayer-subsidized low wages. Just as important, people who can afford to feed themselves earn not just money, but self-respect. The connection between working and taking care of yourself and your family has increasingly gone missing in America, creating a society that no longer believes in itself. Rock bottom is a poor foundation for building anything human.

But won't higher wages cause higher prices? The way taxpayers functionally subsidize companies paying low-wages to workers -- essentially ponying up the difference between what McDonald's and its ilk pay and what those workers need to live via SNAP and other benefits -- is a hidden cost squirreled away in plain sight. You're already paying higher prices via higher taxes; you just may not know it.

Even if taxes go down, won't companies pass on their costs? Maybe, but they are unlikely to be significant. For example, if McDonald’s doubled the salaries of its employees to a semi-livable $14.50 an hour, not only would most of them go off public benefits, but so would the company -- and yet a Big Mac would cost just 68 cents more. In general, only about 20% of the money you pay for a Big Mac goes to labor costs. At Walmart, increasing wages to $12 per hour would cost the company only about one percent of its annual sales.

Despite labor costs not being the most significant factor in the way low-wage businesses set their prices, one of the more common objections to raising the minimum wage is that companies, facing higher labor costs, will cut back on jobs. Don’t believe it.

The Los Angeles Economic Round Table concluded that raising the hourly minimum to $15 in that city would generate an additional $9.2 billion in annual sales and create more than 50,000 jobs. A Paychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington, which also has the highest statewide minimum wage in the nation. The area with the highest percentage of annual job growth was San Francisco, the city with the highest minimum wage in the nation. Higher wages do not automatically lead to fewer jobs. Many large grocery chains, including Safeway and Kroger, are unionized and pay well-above-minimum wage. They compete as equals against their non-union rivals, despite the higher wages.

Will employers leave a state if it raises its minimum wage independent of a nationwide hike? Unlikely. Most minimum-wage employers are service businesses that are tied to where their customers are. People are not likely to drive across state lines for a burger. A report on businesses on the Washington-Idaho border at a time when Washington’s minimum wage was nearly three bucks higher than Idaho’s found that the ones in Washington were flourishing.

While some businesses could indeed decide to close or cut back if the minimum wage rose, the net macro gains would be significant. Even a small hike to $10.10 an hour would put some $24 billion a year into workers' hands to spend and lift 900,000 Americans above the poverty line. Consumer spending drives 70% of our economy. More money in the hands of consumers would likely increase the demand for goods and services, creating jobs.

Yes, raise the minimum wage. Double it or more. We can't afford not to.

9) Okay, after the minimum wage is raised, what else can we do?

To end such an article, it’s traditional to suggest reforms, changes, solutions. It is, in fact, especially American to assume that every problem has a "solution." So my instant suggestion: raise the minimum wage. Tomorrow. In a big way. And maybe appoint Thomas Piketty to the board of directors of Walmart.

But while higher wages are good, they are likely only to soften the blows still to come. What if the hyper-rich like being ever more hyper-rich and, with so many new ways to influence and control our political system and the economy, never plan to give up any of their advantages? What if they don't want to share, not even a little more, not when it comes to the minimum wage or anything else?

The striking trend lines of social and economic disparity that have developed over the last 50 years are clearly no accident; nor have disemboweled unions, a deindustrialized America, wages heading for the basement (with profits still on the rise), and the widest gap between rich and poor since the slavery era been the work of the invisible hand. It seems far more likely that a remarkably small but powerful crew wanted it that way, knowing that a nation of fast food workers isn’t heading for the barricades any time soon. Think of it all as a kind of “Game of Thrones” played out over many years. A super-wealthy few have succeeded in defeating all of their rivals -- unions, regulators, the media, honest politicians, environmentalists -- and now are free to do as they wish.

What most likely lies ahead is not a series of satisfying American-style solutions to the economic problems of the 99%, but a boiling frog’s journey into a form of twenty-first-century feudalism in which a wealthy and powerful few live well off the labors of a vast mass of the working poor.

Once upon a time, the original 99% percent, the serfs, worked for whatever their feudal lords allowed them to have. Now, Walmart “associates” do the same. Then, a few artisans lived slightly better, an economic step or two up the feudal ladder. Now, a technocratic class of programmers, teachers, and engineers with shrinking possibilities for upward mobility function similarly amid the declining middle class. Absent a change in America beyond my ability to imagine, that's likely to be my future -- and yours.

Back to the Dark Ages of Feudalism

The Crushing Force of Capitalism
by GILBERT MERCIER


History never repeats itself, but from time to time, consciously or not, some influential men attempt to force us into the monstrosity of their imaginary time machines to try to reverse decades, and in the case of feudalism, almost a millenium of social progress. The mid-20th century brought the years of collective psychosis of Adolf Hitler’s “thousand year Reich,” and more recently what can be viewed as the United States of America’s imperialist manifesto or so-called “Project for the New American Century”, concocted in 1997 but still in effect today under the current administration, with the self-proclaimed objective to “promote American global leadership” resolutely and by military force, if necessary.

Montesquieu and his colleagues of the mid-18th century, such as Voltaire, Diderot and Rousseau of the Age of Enlightenment, denounced feudalism as being a system exclusively dominated by aristocrats who possess all financial, political and social power. During that time, which incubated the French Revolution and built its ideological foundations, feudalism became synonymous with the French monarchy. To the Enlightenment writers, feudalism symbolized everything that was wrong with a system based on birth privilege, inequality and brutal exploitation. In August 1789, shortly after the takeover of La Bastille on July 14, one of the first action of the Assemblee Constituante was to proclaim the official abolition of the “feudal regime.”

Ironically, feudalism is making a comeback in the latest evolution and under the impulse of predatory global capitalism. After all, Karl Marx, in the mid-19th century, considered feudalism to be a precursor of capitalism. Typically a feudal system can be defined as a society with inherited social rank. In the Middle Ages, wealth came exclusively from agriculture: the aristocracy strictly assumed ownership of the land while the serfs provided the labor.

The feudal system of the Dark Ages was the social and economic exploitation of peasants by lords. This led to an economy always marked by poverty, sometimes famine, extreme exploitation and wide gaps between rich and poor. The feudal era relation of a serf to his lord is essentially identical to the relation of a so-called WalMart associate to a heir of the Walton family. If one looks objectively at the power stratum in the US circa 2013, and the one of, let’s say, France circa 1750, it is hard to ignore the startling similarity. For example, attendance at Ivy-League schools in the US is principally an inherited privilege; the same can be said for elected positions in Congress. The concept of dynasties rules, not personal merit.

A powerful network of oligarchs worldwide seems to be pursuing the objective to set back the social clock to before the era of Enlightenment so as to return us to the Dark Ages of lords and serfs: a new era of global slavery to benefit Wall Street’s “masters of the universe.” Compared to the Middle Ages, today’s servitude is more insidious: the International Monetary Fund (IMF), World Bank, and many private banks operate like mega drug dealers. The IMF and World Bank do so with countries, while the banks do so with individuals. Once Greece, Detroit or John Doe is addicted to its fix — loans in this case — the trick is done. After a while, money must be borrowed even to service the debt.

In a recent cynical opinion piece titled “Detroit, the New Greece”, New York Times columnist and Nobel-prize winning economist Paul Krugman reasoned more like a callous Wall Street operator than someone with the self-proclaimed humanist “conscience of a liberal” by casually calling Detroit a “victim of market forces.”

“Sometimes the losers from economic change are individuals whose skills have become redundant; sometimes they are companies serving a market niche that no longer exist; and sometimes they are whole cities that lose their place in the economic ecosystem,” writes Krugman, forgetting Greece in his laundry list of “innocent victim of these mysterious “market forces.” Krugman concludes his paragraph with: “Decline happens,” as if this is a physical phenomenon, like gravity or magnetism. Like most of the leading international economists, Krugman has adamantly supported the North America Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). Detroit and Greece are not some sort of collateral damage of “market forces” in Krugman’s “decline happens” scenario. Detroit was demolished wholesale by NAFTA, and Greece was enticed to borrow money to join the EURO zone.

The IMF itself recently conceded that the policies it has implemented for Greece resulted in “notable failures.” The IMF failed to push for an immediate restructuring of Greece’s debt, but didn’t prevent money owed by the country before 2010 to private-sector creditors from being fully repaid at the onset of the fiscal crisis. Greece’s overall debt level remained the same, except it was now owned to the Euro-zone taxpayers and the IMF instead of banks and hedge funds. Both Greece and Detroit were targets of a predatory capitalism that sought to downgrade and then shut down all public sectors of an economy.

The “market forces” are not physical phenomena; they are the hyenas and vultures from Wall Street who dismantle and then feed on the carcasses of a city or country. Decline does not just happen; it is engineered by the corporate entities of global capitalism to maximize profit without regard for human costs. It is ultimately up to us, for the common good of human kind, to put wrenches into the well-oiled wheels of this global corporate machine that is breaking our backs by grinding and crushing our accomplishments of more than 250 years to return us to the servitude of feudalism.

The Great Economic Misdirection

Off With Their Heads, Redux

by ROB URIE

 

A central challenge for left critiques of capitalism as it exists today is the distance between the mythologies that craft understanding of the issues for the great majority and more probable explanations based on examination and analysis. The issues are that concentrated wealth is claims on social resources; that wealth ‘creation’ is an artifact of particular arrangement of social circumstances / relations and that wealth distribution is the social distribution of economic and political power. Concentrated wealth as it exists is hardly likely to distribute this power away from itself. And conspicuously missing is class-consciousness in any revolutionary sense amongst the poor and middle classes whose circumstances in the ‘developed’ West are in rapid decline. Taken together this is a formula for escalating consolidation of economic and political power against people who have little apparent understanding of the economic forces that are overtaking them. Were it not for the risk of growing political and economic dysfunction and its likely effects in social and environmental catastrophes— wars for resources to benefit the residual plutocracy, the inability to address global warming because doing so lowers corporate ‘profits’ and the increasing immiseration of a broadening swath of the socially dis-empowered, concern might rightly be considered effete.

For instance, a survey of public perceptions of wealth distribution undertaken by Michael Norton and Dan Ariely in 2011 found wide disparities between wealth distribution as it is perceived and as it actually is. Even that study grossly understated the concentration of income and wealth because the researchers were working with overly broad categories—quintiles, or fifths, of wealth distribution when the real concentration is at the very top. On the other side of public perceptions is the tiny group of very wealthy who see their wealth, even inherited wealth, as deserved, and who frame challenges to the idea that it is in psychological terms, as ‘envy.’ Adding to social misdirection is the mainstream economic frame that views concentrated ‘capital’ in some confused conflagration of money, quasi-money and things as the prerequisite to economic production. The predominant economic mythologies surrounding income and wealth distribution clearly work the service of the very rich.

Graph (1) above: Most people have no conception of how concentrated incomes and wealth are at the very top. When Norton and Ariely (link above) asked people what they believed this concentration to be respondents tended to underestimate concentration in the top 20%. Illustrated above is that even within the top 10% of incomes average executive compensation is so great that the average top incomes are barely visible. With the extremes illustrated in this graph as evidence, looking at the issue in quintiles, as Norton and Ariely did, obscures more than it illuminates. But this written, the authors found that even when viewed in quintiles there was broad objection to such concentrated incomes and wealth. One can only imagine responses if the issue were more precisely framed. Sources are the Federal Reserve Survey of Consumer Finances and Forbes. Units are in thousands of dollars.

Capitalist mythology has it that incomes and wealth are largely ‘earned.’ This myth unites the wages of the poor and middle classes in social understanding with those of the very wealthy in a hierarchy of justly differentiated outcomes—the incomes and wealth of hedge fund managers and corporate executives are perceived to be analogous to the paychecks received by truck drivers and service workers, only larger. In fact, through expression of social power in ‘public’ policies that decide which industries get subsidized and bailed out and through granting monopoly and cartel privileges to favored industries and industrialists, the incomes and wealth of the wealthy are not commensurate with the wages of labor in either type or scale. The contrived division of economic and political power that is a central precept of capitalist democracy serves to hide the role of concentrated wealth in crafting ‘political’ decisions that benefit the already wealthy. This is the central factor driving perceptions of political dysfunction in the West when the political system is working just as the plutocracy wishes it to work.

Graph (2) above: The growth of finance and the rise in financial asset prices has played a large role in inflating executive compensation. Captive Boards of Directors grant huge stock options to corporate executives who now earn hundreds of times more than their workers do. The mythology that the stock market reflects the ‘true’ value of companies ignores the role of the Federal government and the Federal Reserve in subsidizing corporate profits and in raising stock prices through monetary policies specifically designed to do so. Source: Forbes.

One reasonably well-known example of the public sources of corporate ‘profits’ is Wal-Mart, which is dependent upon government subsidies of both its customers and its employees. The heirs to the Wal-Mart ‘fortune’ are individually amongst the richest people in the world. Wal-Mart employees are the largest beneficiaries of Medicaid and food stamp expenditures in a number of states and the company has admitted (link above) that its sales and revenues are dependent on food stamp (SNAP– Supplemental Nutrition Assistance Program) payments to its customers. Another way of saying this is that many Wal-Mart employees couldn’t afford to work for the company if Federal and state governments weren’t subsidizing their paychecks and many of its customers couldn’t afford to shop at Wal-Mart if they didn’t receive food assistance. Left un-addressed is the use of coerced and / or sweatshop labor to manufacture the products Wal-Mart and the rest of ‘retail’ America sells. The use of overseas labor requires a subsidized global infrastructure for the transfer of resources, a standing army to assure repatriation of profits and the social means of coercing labor at ‘profitable’ wages. Historical examples of this latter tendency can be seen in U.S. military invasions throughout Central and South America and Haiti when the institution of higher minimum wages was threatened.

Graph (3) above: The pretense / premise of Western economics is that ‘we are all in this economy together.’ This was / is the improbable foundation that has kept variations on ‘trickle-down’ economics alive in economics departments across the West. Without apparent irony or much public comment is that executive compensation and the need for food assistance have risen in tandem since the 1980s. The need for food assistance is evidence of severe poverty. Not illustrated is the rapid increase in those living at half of the poverty level or less since financial asset prices and executive compensation began to ‘recover’ in 2009. Sources: U.S. Department of Agriculture and Forbes.

As can be seen in Graph (2) above, in addition to government bailouts, subsidies and protections that boost corporate profits, a rising stock market also contributes to inflated executive compensation. Many people believe / assume that the stock market is unaffected by ‘external’ factors and therefore reflects ‘true’ market values for company stock. In fact, in recent decades the ‘monetary’ policies of the Federal Reserve have been designed to inflate the values of financial assets.  Low interest rates affect the price of the borrowing (leverage) used to buy financial assets on margin and quantitative easing (QE) is the direct purchase of financial assets by the Federal Reserve. Interest rates intentionally kept low by former Fed Chair Alan Greenspan inflated the dot-com and housing bubbles and the policies of subsequent Fed Chairs Ben Bernanke and Janet Yellen have re-inflated financial asset prices since 2009. There is nothing ‘natural’ about these sequential bubbles. Through the role that rising stock prices play in inflating executive compensation and the salaries and bonuses of bankers and hedge fund managers a tiny group of connected insiders has been made wealthy beyond the conception of most people. And the low interest rate policies of the Federal Reserve can also be seen as a subsidy of corporate profits through lowering the borrowing costs of corporations.

Graph (4) above: There are multiple ways of valuing the stock market. Most of those in use today incorporate the extreme valuations of the dot-com bubble of the 1990s and 2000s thereby making recent valuations appear more typical than they really are. When compared to long term corporate earnings (CAPE—Cyclically Adjusted Price Earnings) ‘cycles’ over one-hundred and thirty-five years of stock market history today’s valuations are very far above typical valuation levels and are currently at levels only seen a few times before in history at bubble peaks. With executive compensation coming from bubble level stock market valuations corporate executives can try to claim that they’ve ‘earned’ their compensation. But the more plausible explanation is that the Federal Reserve and a financial system run amok are far more responsible for it. Source: Robert Shiller.

Graph (5) above: Part of the explanation that the Federal Reserve gives for policies favoring the rise in financial asset prices is the ‘wealth effect,’ the tendency for people to spend more because they feel richer when stock prices rise. While some statistical analyses suggest that this may be true, who benefits from rising stock markets are the people who own stocks. As is illustrated above, the richest twenty-percent of households own almost all of the stock market. Again, as with income distribution, the true concentration of ownership of financial assets is at the very top of the top ten percent. Federal Reserve policies to raise stock prices overwhelmingly benefit already wealthy households. As Graph (3) illustrates, the contention that everyone benefits from policies to make the rich richer faces the reality that extreme poverty is rising as the rich are being made richer.

The great misdirection of Western economics in recent decades is conflation of financial wealth with economic ‘value’ creation. Apparently left unconsidered by much of the ‘income inequality’ crowd is that were financial asset prices to implode, as they did in 2001 and again in 2008, some fair proportion of the mechanism of concentrated income and wealth distribution would implode with it. This goes far in explaining the complete devotion of the political and financial establishments to resurrecting banking and finance since 2008 while ignoring the plight of the vast majority on the other side of this system. Many of the homes of the housing boom and bust are still standing but under new ownership by the financiers who took them, the role of finance in economic production exists as facilitator and not as producer. The role of facilitator could come straight from Western governments through their ability to create and distribute fiat currency ‘out of thin air.’ That this wasn’t the route taken from 2008 forward illustrates the control that the existing plutocracy has over ‘political’ policies. The real tragedy is still underway— the incapacity for social and environmental reconciliation without major social upheaval. Anyone who doubts this should spend time with the flaccid hallucinations posed as economic ‘explanation’ coming from the banker ghettoes in New York and London.

Techno-Fascism (NSA) and the Obama Administration

Shaping the Totalitarian Mindset
by NORMAN POLLACK


History is a holistic political-structural process, Marx’s dialectical framework notwithstanding, because even allowing for contradiction there are successive stages of integration, from each of which conflicting tendencies are generated. There is nothing deterministic here, merely the assertion that reality has a unified character, whether or not experiencing social struggle. And in America, regrettably not, upper groups maintaining internal economic-ideological supremacy, beginning, I suspect, from the late-19th century, and progressively tightening its control over society through time up to and including the present. This is not an empty formula that radicals have learned through rote—the experience of gradually shrinking boundaries within which to achieve social change becomes apparent on an almost daily basis, the rapidity of the process now sufficient cause for alarm—yet met with false consciousness below, constant movements toward confrontation and war both to instill among the populace loyalty, consensus, silence, and among upper groups, the impetus for militarism and capitalist expansion (themselves structurally integrated), false consciousness above of another sort: a pathological quest for global dominance of the international system when that system itself no longer fears America.

America in decline, or even in not absolute terms, but rather, within a world system that in power terms is becoming de-centered (a multipolar framework), is losing its way, becoming desperate, striking out at real and imagined enemies (some from the past, as in an anticommunism never put to rest), tempted to manufacture crises as a way of preserving domestic cohesion, paramount for clinging to the unilateral military dominance to which it had been accustomed since World War 2, or at least its symbols if not its substance. Decline is never hospitable ground for democracy, particularly a democracy that requires, as a condition of its functioning, a permanent state of war—where we have been since perhaps the Korean War; and hence, a questionable democracy at best, and since the Bush-Obama years no longer subject to debate. I say, the shrinking boundaries on a daily basis for achieving social change: Therefore, let’s go back several days to three separate signs bearing out the foregoing discussion, all, I believe, interrelated, because rooted in the needs of an American capitalism struggling to protect its hegemonic status on top the global pyramid.

I

In my CounterPunch article, “FBI Authorized Cyberattacks: Further Signs of Unfolding Fascism,” (May 6), we met Hector Monsegur, a true American PATRIOT, as advertised by, and from the standpoint of, the US government, one whom, because the FBI, through harsh threats of criminal prosecution against the hacker group, Anonymous, had been turned (gleefully, it would seem) him into an informer helping to direct the Bureau’s cyberwarfare campaign against foreign governments and corporations. In the USG’s telling, i.e., the federal prosecutor’s drawn indictment to the Court (praising him to the hilt for his cooperation in implicating the other members of the group—Jeffrey Hammond, for one, serving a 10-year sentence), he moves from Patriot to National Hero for the big snitch and tech-savvy assistance in what amounts to highly illegal attacks, not least because obviously stretching the FBI’s actions beyond US boundaries as well as the nature of the espionage (although possibly cleansed through the Patriot Act responsible for still more gross violations of civil liberties and international law).

With this background, we move to last week in illustration of Obama’s full-court press toward incipient if not also actualized fascism. I say “Obama,” because in this case the FBI but more important a discussion to follow on NSA, one finds a direct projection of/from the government; neither one, again, especially NSA, can be dismissed simply as a “rogue” agency, and instead reflect the pith of Administration policy: pursuit of continued global hegemony through solidification, beyond obviously powerful military forces, of a National Security State, a prime requirement being the practice of surveillance at home and abroad. One of the tests of a democratic polity is accountability at the very top—and regrettably America has neither, the lack of the latter testifying to the absence of the former.

Conversely, the situation now worsens, each daily flagrancy, as in the violation and near-destruction of privacy, equally, rule of law, in government’s working toward that end, reveals the deadly metastasizing of American institutions in general, the courts, Congress, ultimately the people: ramifying consequences of cynicism, corruption, and, to be more charitable than the situation warrants, false consciousness, all in the service of ruling groups integrated in the form of financial-industrial-commercial-military elites, with what is now termed the political class (a designation I find, as to its role and independent power, a nifty slogan yet wholly inadequate ) merely their man/maid servants, for an older generation of radicals, then, following Veblen, the Swiss Guards of the Vested Interests, servicing their needs in domestic and foreign policy.

Take the last week in May (let’s skip over the “political class” in favor of the institutionalized structure of power, starting with POTUS in collaboration with the FBI and CIA), here our friend Monsegur (known by the alias “Sabu”), the Guardian (June 1) in its subhead saying it all: “Authorities credit Hector Xavier Monsegur with helping them cripple Anonymous in lenient sentence of time served.” He gets off—the corruption of the courts noted above. Monsegur, the Guardian reports, “who by the US government’s calculations participated in computer hacker attacks on more than 250 public and private entities at a cost of up to $50m in damages, was released from a Manhattan courtroom on Tuesday after the judge saluted his ‘extraordinary cooperation’ with the FBI.”

Who is more guilty in this farce, Monsegur, or Loretta Preska, chief judge of the federal district court of the southern district of New York, is a moot question, and, standing behind her, the FBI’s crass practices of intimidation from which the federal court system looks away or actively praises. Monsegur had faced “a maximum sentence according to official guidelines of more than 26 years.” Nope. In pronouncing sentence the judge “repeatedly praised what she called his ‘truly extraordinary cooperation,” providing USG “sophisticated and complex assistance” enabling it “to pierce the secrecy surrounding LutzSec [a UK and US hacker group that had broken away from Anonymous] and successfully prosecute its members.” Informant on others, FBI cyberwarrior par excellence—not a hero, however, to members of Anonymous, which, as one told the Guardian: “Monsegur is, first and foremost a criminal; the FBI’s cyber crime task force are his co-conspirators. While operating under their supervision, Monsegur committed numerous felonies which should in no way be excused due to his protected informant status.”

Well-put, and to me, chalk up another score for fascism, the leading domestic federal law-enforcement agency in the commission of crimes, turning those it prosecutes for criminal punishment into informants in exchange for leniency—while in addition pursuing more sinister ends, to wit, seeking (as does mass surveillance itself) to cow the populace into submission. Here the Anonymous spokesperson is right on target: “The FBI continues to use captured informants, who commit egregious crimes in pursuit of reduced sentences, for the sole purpose of creating ‘examples’ to frighten the public. They do this with the hope of pacifying online dissent and snuffing out journalistic investigations into the US government’s misconduct.” This is what I meant by the metastasizing effects of government policy on behalf of global hegemony and domestic social control, both defining a unified whole. (Hammond, convicted, operated under Monsegur’s direction, “launch[ing] cyber-attacks around the world,” and then sentenced because failing to be turned. In addressing the court, he told Preska: “The government celebrates my conviction and imprisonment, hoping that it will close the door on the full story. I took responsibility for my actions, by pleading guilty, but WHEN WILL THE GOVERNMENT BE MADE TO ANSWER FOR ITS CRIMES?” (my caps.)

Monsegur went on to secure convictions of others. In the court memorandum disclosing how Hammond was caught, an obvious case of entrapment, it becomes clear that Monsegur “had been put at the hub of a vast web of surveillance,” for it was revealed that while he remained in New York, he “’engaged in online chats with Hammond (who was then in Chicago), while coordinating with FBI agents in New York, physical surveillance teams deployed in Chicago, and an electric surveillance unit in Washington DC.’” When in June 2011 the FBI came knocking on his door, “[h]is transformation from a hacker legend into an informant was instantaneous—he agreed to cooperate with the government immediately,” to which, at sentencing, Preska was in fulsome praise, the quickness allowing the FBI to move against LutzSec before its members could be warned. As a UC Hastings law professor (obviously not John Yoo of White House Counsel torture-authorization fame), summarizing Monsegur’s work for the FBI in launching attacks against foreign governments, stated: a sting operation for a crime already in motion was one thing, but it was quite another, “’when you contribute to the creation, inducement and execution of a crime that never was. Particularly when those crimes may very well affect our foreign policy.’” Welcome Team FBI USA, Obama coach-cheerleader, etc.

II

Turning next to the NSA, one sees techno-fascism in full parade-dress, massive surveillance, here, facial recognition data, now combined with practically every other conceivable means of collecting and storing information on Americans—and as much as possible, globally. (Hayden, Alexander, Clapper, the whole leadership crew, past, present, future, listen up: how about the measurement, via forced registration, of men’s private parts—in millimeters, of course, to ensure accuracy in order to intimidate against dissent, facilitate government prosecution, induce apathy toward and complicity with public policy, therefore carrying further the purposes of massive surveillance? Seemingly, no stone can be left unturned in discovering and uprooting subversion.) Here, James Risen and Laura Poitras—both of whom deserve and have earned the respect of those committed to civil liberties—in their New York Times article, “N.S.A. Collecting Millions of Faces from Web Images,” (May 31), present a breaking story in what one might call a chapter in runaway fascism, particularly odious on top of everything else, including, if I may digress to establish the spirit of government making facial recognition a viable tool of the megalomaniac NSA in its quest to obliterate privacy in world-dimensional terms.

I press for small details to illumine the institutional core of repression, here a societal pattern, if we keep to the short-term, which has been well-established since the enshrinement of Sect. 25 of the Patriot Act (with that Act legitimating so much of government policy, one wonders why any demurral about naming fascism for what it is—the signs, from militarism, to surveillance, to financial-corporate concentration, to xenophobic and ethnocentric mental patterns, all around us and germane to the public acceptance of hegemonic goals). Charlie Savage’s NYT article, “U.S. Seeks to Censor More of Memo That Approved Drone Strike on American,” (May 28), refers both to Obama’s personally authorized assassination of a US citizen, Anwar al-Awlaki—drone assassination, as I see it, itself a form of, even prime example of, techno-fascism, the pressing of a button halfway around the world to leave a blood spat where a human being once stood—and the white-collar version of techno-fascism of the more routine kind, REDACTION, as a means of protecting government from the charge of, and evidence demonstrating, war crimes. He does not call either, a war crime; emphasis is on cover-up as a general proposition of hiding illegality.

Obama-Holden, the Castor-Pollux of Censorship, have, short of rewriting the Constitution, done all in their power to forestall condemnation for the killing of an American citizen without an indictment, the right to counsel, a jury trial of his/her peers, due process in all its manifold accordance of rights, and instead—no boots on the ground—murder via impersonal technological magic, an Obama favorite, given his usage far exceeding that of his predecessor (metastasizing, in this case, down to the nitty-gritty of conducting warfare, already plagued with atrocities enough). Savage writes: “One week after the Obama administration said it would comply with a federal appeals court ruling ordering it to make public portions of a Justice Department memo that signed off on the targeted killing of a United States citizen, the administration is now asking the court for permission to censor additional passages of the document.” Disgraceful, no, nauseating—why? Not only the stall-tactic, but that the death-authorization was a SECRET MEMO, only seeing the light of day through being forced through an FIA lawsuit. Suppose the memo were allowed to stand, and then gather motion as binding precedent: the killing of citizens, whether on grounds of national security or, say, anticommunism, or counterterrorism, would be standard operating procedure. Hide the memo, it stinks to high heaven!

The designated driver/culprit, the memo’s principal author, fresh from Harvard Law (an ideal soul mate of Obama, who as president of the Law Review had not written an article for it—HLS, what a staggering decline since the days of Holmes and Roscoe Pound), is David Barron, confirmed the week before “to an appeals court judgeship,” what he had been to DOJ Monsegur had been to FBI, complicit through direct involvement in murder. The memo, July 16, 2010, al-Awlaki struck down in Yemen September 2011, it was only the ACLU-NYT suit seeking the memo’s public disclosure that got us this far. Savage: “The Justice Department said it would soon disclose a version of the memo with the additional passages it wants to keep redacted blocked out. It said the additional passages discussed classified fact not legal reasoning.”

Classification, the mother of all redactions, has been the handy device behind which the Obama government hides, and the basis for its forays into somewhat clumsy storm-trooper-like attacks on whistleblowers via the Espionage Act. This is truly an embarrassment, if not outright sign of fascism.

In January 2013 a Federal District Court judge “ruled that the government could withhold the memo from the public entirely,” which was overturned this past April by a panel of the US Court of Appeals for the Second Circuit (NY), ruling “that the government must make public portions of the memo that lay out legal analysis, though not facts based on classified intelligence.” Even this did not satisfy USG which in a new filing claimed that what “the court had designated for public release contained further information that should be exempt from disclosure.” An assistant US attorney—DOJ at all times up to its neck in fighting disclosure—chastised the higher court, essentially for its stupidity (its decision based on “inadvertence or mistake”) and moved “to keep its entire motion seeking additional redactions SECRET” (my caps.), a nerviness I should think beyond the pale, to which the court denied “that request” and said “that as much of the motion as possible would have to be made public.” The court then went one step further, revealing “new details about several previous rounds of then-secret negotiations between the court and the government, dating back to February [2014], over what would be redacted.”

The National Security State can be seen here to vitiate the rule of law, secrecy being in the DNA of the Executive permeating through all its agencies and bureaus, not least, DOJ. Will we ever get the truth? A week ago Solicitor General Verrilli Jr. said with release of the memo another appeal for redaction would follow, including the identity of the agency responsible for al-Awlaki’s killing—which everyone knows was the CIA. A disheartening conclusion: “Although it is widely known that the C.I.A. operates drones, including from a base in Saudi Arabia, and that it participated in the operation that killed Mr. Awlaki, the Obama administration still officially treats that information as secret.”

III

Nor is it especially forthcoming about the mass collection of facial recognition data. We return to Risen and Proteus and the discussion of an NSA practice that is not really new, only newly revealed—be it noted–through the Snowden disclosures (their import, more vital, in exposing government usurpation than ever thought possible). The reporters state that NSA “is harvesting huge numbers of images of people from communications that it intercepts through its global surveillance operations for use in sophisticated facial recognition programs, according to top-secret documents.” As indicated before, no area of human identity is safe from government spying. To see a brief list of sources is to gain a sense of the range of surveillance. They write: “The spy agency’s reliance on facial recognition technology has grown significantly over the last four years as the agency has turned to new software to exploit the flood of images included in emails, text messages, social media, videoconferences and other communications, the N.S.A. documents reveal.” (Without Snowden’s revelations, here as with so much else, we would be in the dark, which government, demonstrated by its actions, prefers, the attacks on him from Obama down showing the fear of revelations.) For NSA, technology summons the future—perhaps why I thought of the title, techno-fascism, as though a window had been opened to the utter destruction of privacy, and for Obama, particularly, a pseudo-sophisticated concept of warfare, in effect, that pushing buttons can rule the world. They observe further: “Agency officials believe that technological advances could revolutionize the way that the N.S.A. finds intelligence targets around the world, the documents show. The agency’s ambitions for this highly sensitive ability and the scale of its effort have not previously been disclosed.”

What are we speaking of? “The agency intercepts ‘millions of images per day’—including about 55,000 ‘facial recognition quality images,’” an NSA document summarizes from 2011, as part of enlarging “its mission of tracking suspected terrorists” in what amounts to a dystopian wave-of-the-future position. A 2010 document calls for adopting a “full-arsenal approach,” beyond “traditional communications,” so as to include “biographic and biometric information,” the latter especially not unlike what had been heard in the eugenics movement at the turn of the last century. Whatever the surveillance methods of choice, the act itself does not change, nor the permissiveness of acting: “It is not clear how many people around the world, and how many Americans, might have been caught up in the effort. Neither federal privacy laws nor the nation’s surveillance laws provide specific protections for facial images.” But the phrase of choice in these operations, from whatever source, is SCOOP UP, in turn giving on to a sense of range and scope: “Given the N.S.A.’s foreign intelligence mission, much of the imagery would involve people overseas whose data was scooped up through cable taps, Internet hubs and satellite transmissions.” We expect this from the bulk collection of metadata, but THIS is somehow different, a stripping away of identity per se. A wondrous world of possibilities for repression awaits, as a Carnegie Mellon researcher perhaps unwittingly describes: “’There are still technical limitations [on the total erosion of privacy], but the computational power keeps growing, and the databases keep growing, and the algorithms keep improving.’”

It is fair to say that NSA joins CIA, FBI, FISA Court–but why stop there?—president, Congress, judiciary (with few exceptions), in hunting down human aspiration and social democracy as threats to an America determined to keep its priorities straight: the greatest military the world has ever seen, increasing class differentiation with concentrated wealth confined to a numerically infinitesimal upper group matched symmetrically by a disproportionately growing underclass (a perfect pyramid in the making), and to fill in what is becoming essentially a moral void, a flourishing authoritarianism taking form and expression in global hegemony, intervention, counterrevolution. Painless, at least to the American people, should techno-fascism have its way—with, of course, one catch: fascism of every sort becomes self-devouring, hatred of others, either because they’re different or fail to see the splendiferous light about America, is finally channeled inward as self-hatred, something all of the surveillance and images cannot prevent and probably only accelerate.
MY New York Times Comment on the Risen-Poitras article, same date, follows:

Facial recognition data–in the words of Joseph Welch to Joe McCarthy, “Have you no shame, sir?”, applies equally today, if not more so, addressed to NSA under precisely the same circumstances: the abrogation of American civil liberties.

What is this country coming to? A Surveillance State, National Security State, and, if a may, proto-Totalitarian State–for what else can be said of a government sponsoring the total destruction of privacy of its own people, and attempting the same for the world?

In a society where such destruction is passively accepted–an outrageous assault on human dignity, people simply taking it, is another useful description of totalitarianism. All three branches of government are complicit, each in its own way, in this assault on human dignity. Political party, here bipartisan consensus; Executive, integral part of Obama’s enlargement of power; judiciary, FISAC a travesty, Supreme Court culpable in allowing an/or promoting the invasion of rights.

Facial recognition data merely the next step in a cumulative series of abuses accompanied by the supineness of government to check its own USURPATION. There appear to be no checks left, leaving the nation defenseless against its own inner devils, starting from a pathological anticommunism that has morphed into counterterrorism, with a heavy dose of militarism, xenophobia, and resentment about facing the challenges of a now multipolar world.
A decentralized world structure is seen as abhorrent.

House's Gutted USA FREEDOM Act

May 20, 2014 | By Mark Jaycox and Nadia Kayyali and Lee Tien


EFF and Other Civil Liberties Organizations Call on Congress to Support Uncompromising Reform

Since the introduction of the USA FREEDOM Act, a bill that has over 140 cosponsors, Congress has been clear about its intent: ending the mass collection of Americans' calling records. Many members of Congress, the President's own review group on NSA activities, and the Privacy and Civil Liberties Oversight Board all agree that the use of Section 215 to collect Americans' calling records must stop. Earlier today, House Leadership reached an agreement to amend the bipartisan USA FREEDOM Act in ways that severely weaken the bill, potentially allowing bulk surveillance of records to continue. The Electronic Frontier Foundation cannot support a bill that doesn't achieve the goal of ending mass spying. We urge Congress to support uncompromising NSA reform and we look forward to working on the Senate's bipartisan version of the USA FREEDOM Act.

Passing the bill out of the Judiciary Committee for a vote on the House floor is an important sign that Rep. Bob Goodlatte, Rep. Jim Sensenbrenner, and other leaders of the House are engaging in a conversation over NSA reform. We are glad that the House added a clause to the bill clarifying the content of communications cannot be obtained with Section 215. Unfortunately, the bill's changed definitions, the lack of substantial reform to Section 702 of the Foreign Intelligence Surveillance Amendments Act, and the inability to introduce a special advocate in the FISA Court severely weakens the bill.

In particular, we are concerned with the new definition of "specific selection term," which describes and limits who or what the NSA is allowed to surveil. The new definition is incredibly more expansive than previous definitions. Less than a week ago, the definition was simply "a term used to uniquely describe a person, entity, or account.” While that definition was imperfect, the new version is far broader.1 The new version not only adds the undefined words "address" and "device," but makes the list of potential selection terms open-ended by using the term "such as." Congress has been clear that it wishes to end bulk collection, but given the government's history of twisted legal interpretations, this language can't be relied on to protect our freedoms.

Further, the bill does not sufficiently address Section 702 of the Foreign Intelligence Surveillance Amendments Act. We are specifically concerned that the new language references "about" searches, which collect and review messages of users who do not even communicate with surveillance targets.Congress must include reforming Section 702 in any NSA reform. This includes stopping the NSA from searching illegally collected Americans' communications, stopping the suspicionless "about" surveillance, and ensuring companies can report on the exact number of orders they receive and the number of users affected.

We are encouraged by Senator Leahy's commitment to continue with the more comprehensive version of the USA FREEDOM Act over the summer and look forward to working towards NSA reform in the Senate.
1. The bill reads “(2) Specific selection term.—The term ‘specific selection term’ means a discrete term, such as a term specifically identifying a person, entity, account, address, or device, used by the Government to limit the scope of the information or tangible things sought pursuant to the statute authorizing the provision of such information or tangible things to the Government.

Real ID Online? New Federal Online Identity Plan Raises Privacy and Free Speech Concerns

Coauthored by Seth Schoen

The White House recently released a draft of a troubling plan titled "National Strategy for Trusted Identities in Cyberspace" (NSTIC). In previous iterations, the project was known as the "National Strategy for Secure Online Transactions" and emphasized, reasonably, the private sector's development of technologies to secure sensitive online transactions. But the recent shift to "Trusted Identities in Cyberspace" reflects a radical — and concerning — expansion of the project’s scope.

The draft NSTIC now calls for pervasive, authenticated digital IDs and makes scant mention of the unprecedented threat such a scheme would pose to privacy and free speech online. And while the draft NSTIC "does not advocate for the establishment of a national identification card" (p. 6), it’s far from clear that it won’t take us dangerously far down that road. Because the draft NSTIC is vague about many basic points, the White House must proceed with caution and avoid rushing past the risks that lay ahead. Here are some of our concerns.

Is authentication really the answer?

Probably the biggest conceptual problem is that the draft NSTIC seems to place unquestioning faith in authentication — a system of proving one's identity — as an approach to solving Internet security problems. Even leaving aside the civil liberties risks of pervasive online authentication, computer security experts question this emphasis. As prominent researcher Steven Bellovin notes:


The biggest problem [for Internet security] was and is buggy code. All the authentication in the world won't stop a bad guy who goes around the authentication system, either by finding bugs exploitable before authentication is performed, finding bugs in the authentication system itself, or by hijacking your system and abusing the authenticated connection set up by the legitimate user. All of these attacks have been known for years.

A Real ID Society?

The draft NSTIC says that, instead of a national ID card, it "seeks to establish an ecosystem of interoperable identity service providers and relying parties where individuals have the choice of different credentials or a single credential for different types of online transactions," which can be obtained "from either public or private sector identity providers." (p. 6) In other words, the governments want a lot of different companies or organizations to be able to do the task of confirming that a person on the Internet is who he or she claims to be.

Decentralized or federated ID management systems are possible, but like all ID systems, they definitely pose significant privacy issues. 1 There’s little discussion of these issues, and in particular, there’s no attention to how multiple ID's might be linked together under a single umbrella credential. A National Academies study, Who Goes There?: Authentication Through the Lens of Privacy, warned that multiple, separate, unlinkable credentials are better for both security and privacy (pp. 125-132). Yet the draft NSTIC doesn’t discuss in any depth how to prevent or minimize linkage of our online IDs, which would seem much easier online than offline, and fails to discuss or refer to academic work on unlinkable credentials (such as that of Stefan Brands, or Jan Camenisch and Anna Lysyanskaya).

Providing a uniform online ID system could pressure providers to require more ID than necessary. The video game company Blizzard, for example, recently indicated it would implement a verified ID requirement for its forums before walking back the proposal only after widespread, outspoken criticism from users.

Pervasive online ID could likewise encourage lawmakers to enact access restrictions for online services, from paying taxes to using libraries and beyond. Website operators have argued persuasively that they cannot be expected to tell exactly who is visiting their sites, but that could change with a new online ID mechanism. Massachusetts recently adopted an overly broad online obscenity law; it takes little imagination to believe states would require NSTIC implementation individuals to be able to access content somehow deemed to be "objectionable."

Anonymity

The draft NSTIC "envisions" that a blogger will use "a smart identity card from her home state" to "authenticate herself for . . . [a]nonymously posting blog entries." (p. 4) But how is her blog anonymous when it’s directly associated with a state-issued ID card?

The proposal mistakenly conflates trusting a third party to not reveal your identity with actual anonymity — where third parties don’t know your identity. When Thomas Paine anonymously published Common Sense in 1776, he didn’t secretly register with the British Crown.

Indeed, the draft NSTIC barely recognizes the value of anonymous speech, whether in public postings or private email, or anonymous browsing via systems like Tor. Nor does it address issues about re-identification, e.g. the ability to take different sets of de-identified data and link them so as to re-identify individuals.

Bellovin credits the draft NSTIC for suggesting the use of attribute credentials rather than identity credentials — that is, using credentials that could establish that you're authorized to do something without saying who you are. But, as he puts it, "We need ways to discourage collection of identity information unless identity is actually needed to deliver the requested service," and the draft NSTIC doesn't seem to address this.
Privacy, Identity Theft and Surveillance

The draft NSTIC seems to presuppose widespread use of smart ID cards. In one example, it envisions that an individual will use "a smart identity card from her home state" to "authenticate herself for a variety of online services," presumably modeled upon driver’s licenses. (p. 4)

One major concern, acknowledged briefly in the draft, is whether people's computers can really be secure enough to be used for these purposes — smart ID cards or no smart ID cards. As noted above, the vast majority of privacy and authentication vulnerabilities stem from buggy software, and when a computer is trivial to compromise, its users’ credentials are easy to steal. The NSTIC proposal could, in fact, decrease user privacy and enable identity theft: once a user’s digital ID is stolen, it could be used to both pose as the user and access all the user’s accounts and data.

Consider, for example, the proposal to use a state digital ID card to access health records and online banking. What happens next time you lose your wallet?

Furthermore, by consolidating your credentials, the NSTIC plan may provide the government with a centralized means of surveilling your online accounts. And if the government issues your digital ID itself, it won’t even need to approach a third party with any kind of legal process before surveilling you.

The draft NSTIC also mentions the development of a public-key infrastructure (PKI). (pp. 15, 27) We support good, widespread encryption, which could allow people to get correct public keys reliably and possibly cut down on phishing, spam, fraud, and pretexting. But as Bruce Schneier and Carl Ellison have explained, doing PKI properly isn’t easy.2 All of their concerns apply, in some form, to the NSTIC proposal.

Another concern that’s emerged recently is whether governments could coerce certificate authorities in a PKI to issue false credentials in order to facilitate surveillance. Chris Soghoian and Sid Stamm have reported on an industry claim that governments could get "court orders" giving them access to falsified cryptographic credentials. This threat seems greater if the government itself is running the PKI.

Much more could be said. The NSTIC is only a draft, and the Department of Homeland Security and the White House sought public input online through July 19th. Because of the importance of this issue, EFF has joined with a coalition of concerned civil liberties group to ask the Administrations for a longer comment period and a way to submit more detailed comments. We hope and expect that this will be only the beginning of a public debate about ID management online.

1. See, e.g., Susan Landau et al., Achieving Privacy in a Federated Identity Management System.
2. See Ten Risks of PKI: What You're Not Being Told about Public Key Infrastructure

US Government Begins Rollout Of Its 'Driver's License For The Internet'

from the seizing-the-(wrong)-moment dept

An idea the government has been kicking around since 2011 is finally making its debut. Calling this move ill-timed would be the most gracious way of putting it.

A few years back, the White House had a brilliant idea: Why not create a single, secure online ID that Americans could use to verify their identity across multiple websites, starting with local government services. The New York Times described it at the time as a "driver's license for the internet."

Sound convenient? It is. Sound scary? It is.

Next month, a pilot program of the "National Strategy for Trusted Identities in Cyberspace" will begin in government agencies in two US states, to test out whether the pros of a federally verified cyber ID outweigh the cons.

The NSTIC program has been in (slow) motion for nearly three years, but now, at a time when the public's trust in government is at an all time low, the National Institute of Standards and Technology (NIST -- itself still reeling a bit from NSA-related blowback) is testing the program in Michigan and Pennsylvania. The first tests appear to be exclusively aimed at accessing public programs, like government assistance. The government believes this ID system will help reduce fraud and overhead, by eliminating duplicated ID efforts across multiple agencies.

But the program isn't strictly limited to government use. The ultimate goal is a replacement of many logins and passwords people maintain to access content and participate in comment threads and forums. This "solution," while somewhat practical, also raises considerable privacy concerns.

[T]he Electronic Frontier Foundation immediately pointed out the red flags, arguing that the right to anonymous speech in the digital realm is protected under the First Amendment. It called the program "radical," "concerning," and pointed out that the plan "makes scant mention of the unprecedented threat such a scheme would pose to privacy and free speech online."

And the keepers of the identity credentials wouldn't be the government itself, but a third party organization. When the program was introduced in 2011, banks, technology companies or cellphone service providers were suggested for the role, so theoretically Google or Verizon could have access to a comprehensive profile of who you are that's shared with every site you visit, as mandated by the government.

Beyond the privacy issues (and the hints of government being unduly interested in your online activities), there are the security issues. This collected information would be housed centrally, possibly by corporate third parties. When hackers can find a wealth of information at one location, it presents a very enticing target. The government's track record on protecting confidential information is hardly encouraging.

The problem is, ultimately, that this is the government rolling this out. Unlike corporations, citizens won't be allowed the luxury of opting out. This "internet driver's license" may be the only option the public has to do things like renew actual driver's licenses or file taxes or complete paperwork that keeps them on the right side of federal law. Whether or not you believe the government's assurances that it will keep your data safe from hackers, keep it out of the hands of law enforcement (without a warrant), or simply not look at it just because it's there, matters very little. If the government decides the positives outweigh the negatives, you'll have no choice but to participate.

http://s3.documentcloud.org/documents/1153382/nsticstrategy-041511.pdf

The Ultimate Guide to the Invisible Web

Search engines are, in a sense, the heartbeat of the internet; “googling” has become a part of everyday speech and is even recognized by Merriam-Webster as a grammatically correct verb. It’s a common misconception, however, that googling a search term will reveal every site out there that addresses your search. In fact, typical search engines like Google, Yahoo, or Bing actually access only a tiny fraction – estimated at 0.03% – of the internet. The sites that traditional searches yield are part of what’s known as the Surface Web, which is comprised of indexed pages that a search engine’s web crawlers are programmed to retrieve.

So where’s the rest? The vast majority of the Internet lies in the Deep Web, sometimes referred to as the Invisible Web. The actual size of the Deep Web is impossible to measure, but many experts estimate it is about 500 times the size of the web as we know it.

Deep Web pages operate just like any other site online, but they are constructed so that their existence is invisible to Web crawlers. While recent news, such as the bust of the infamous Silk Road drug-dealing site and Edward Snowden’s NSA shenanigans, have spotlighted the Deep Web’s existence, it’s still largely misunderstood.

Search Engines and the Surface Web

Understanding how surface Web pages are indexed by search engines can help you understand what the Deep Web is all about. In the early days, computing power and storage space was at such a premium that search engines indexed a minimal number of pages, often storing only partial content. The methodology behind searching reflected users’ intentions; early Internet users generally sought research, so the first search engines indexed simple queries that students or other researchers were likely to make. Search results consisted of actual content that a search engine had stored.

Over time, advancing technology made it profitable for search engines to do a more thorough job of indexing site content. Today’s Web crawlers, or spiders, use sophisticated algorithms to collect page data from hyperlinked pages. These robots maneuver their way through all linked data on the Internet, earning their spidery nickname. Every surface site is indexed by metadata that crawlers collect. This metadata, consisting of elements such as page title, page location (URL) and repeated keywords used in text, takes up much less space than actual page content. Instead of the cached content dump of old, today’s search engines speedily and efficiently direct users to websites that are relevant to their queries.

To get a sense of how search engines have improved over time, Google’s interactive breakdown “How Search Works” details all the factors at play in every Google search. In a similar vein, Moz.com’s timeline of Google’s search engine algorithm will give you an idea of how nonstop the efforts have been to refine searches. How these efforts impact the Deep Web is not exactly clear. But it’s reasonable to assume that if major search engines keep improving, ordinary web users will be less likely to seek out arcane Deep Web searches.

How is the Deep Web Invisible to Search Engines?

Search engines like Google are extremely powerful and effective at distilling up-to-the-moment Web content. What they lack, however, is the ability to index the vast amount of data that isn’t hyperlinked and therefore immediately accessible to a Web crawler. This may or may not be intentional; for example, content behind a paywall or a blog post that’s written but not yet published both technically reside in the Deep Web.
Some examples of other Deep Web content include:

• Data that needs to be accessed by a search interface
• Results of database queries
• Subscription-only information and other password-protected data
• Pages that are not linked to by any other page
• Technically limited content, such as that requiring CAPTCHA technology
• Text content that exists outside of conventional http:// or https:// protocols

While the scale and diversity of the Deep Web are staggering, it’s notoriety – and appeal – comes from the fact that users are anonymous on the Deep Web, and so are their Deep Web activities. Because of this, it’s been an important tool for governments; the U.S. Naval research laboratory first launched intelligence tools for Deep Web use in 2003.

Unfortunately, this anonymity has created a breeding ground for criminal elements who take advantage of the opportunity to hide illegal activities. Illegal pornography, drugs, weapons and passports are just a few of the items available for purchase on the Deep Web. However, the existence of sites like these doesn’t mean that the Deep Web is inherently evil; anonymity has its value, and many users prefer to operate within an untraceable system on principle.

Just as Deep Web content can’t be traced by Web crawlers, it can’t be accessed by conventional means. The same Naval research group to develop intelligence-gathering tools created The Onion Router Project, now known by its acronym TOR. Onion routing refers to the process of removing encryption layers from Internet communications, similar to peeling back the layers of an onion. TOR users’ identities and network activities are concealed by this software. TOR, and other software like it, offers an anonymous connection to the Deep Web. It is, in effect, your Deep Web search engine.

But in spite of its back-alley reputation there are plenty of legitimate reasons to use TOR. For one, TOR lets users avoid “traffic analysis” or the monitoring tools used by commercial sites, for one, to determine web users’ location and the network they are connecting through. These businesses can then use this information to adjust pricing, or even what products and services they make available.

According to the Tor Project site, the program also allows people to, “[...] Set up a website where people publish material without worrying about censorship.” While this is by no means a clear good or bad thing, the tension between censorship and free speech is felt the world over; the Deep Web. The Deep Web furthers that debate by demonstrating what people can and will do to overcome political and social censorship.

Reasons a Page is Invisible

When an ordinary search engine query comes back with no results, that doesn’t necessarily mean there is nothing to be found. An “invisible” page isn’t necessarily inaccessible; it’s simply not indexed by a search engine. There are several reasons why a page may be invisible. Keep in mind that some pages are only temporarily invisible, possibly slated to be indexed at a later date.

• Engines have traditionally ignored any Web pages whose URLs have a long string of parameters and equal signs and question marks, on the off chance that they’ll duplicate what’s in their database – or worse – the spider will somehow go around in circles. Known as the “Shallow Web,” a number of workarounds have been developed to help you access this content.
• Form-controlled entry that’s not password-protected. In this case, page content only gets displayed when a human applies a set of actions, mostly entering data into a form (specific query information, such as job criteria for a job search engine). This typically includes databases that generate pages on demand. Applicable content includes travel industry data (flight info, hotel availability), job listings, product databases, patents, publicly-accessible government information, dictionary definitions, laws, stock market data, phone books and professional directories.
• Passworded access, subscription or non subscription. This includes VPN (virtual private networks) and any website where pages require a username and password. Access may or may not be by paid subscription. Applicable content includes academic and corporate databases, newspaper or journal content, and academic library subscriptions.
• Timed access. On some sites, like major news sources such as the New York Times, free content becomes inaccessible after a certain number of pageviews. Search engines retain the URL, but the page generates a sign-up form, and the content is moved to a new URL that requires a password.
• Robots exclusion. The robots.txt file, which usually lives in the main directory of a site, tells search robots which files and directories should not be indexed. Hence its name “robots exclusion file.” If this file is set up, it will block certain pages from being indexed, which will then be invisible to searchers. Blog platforms commonly offer this feature.
• Hidden pages. There is simply no sequence of hyperlink clicks that could take you to such a page. The pages are accessible, but only to people who know of their existence.

Ways to Make Content More Visible

We have discussed what type of content is invisible and where we might find such information. Alternatively, the idea of making content more visible spawned the Search Engine Optimization (SEO) industry. Some ways to improve your search optimization include:

• Categorize your database. If you have a database of products, you could publish select information to static category and overview pages, thereby making content available without form-based or query-generated access. This works best for information that does not become outdated, like job postings.
• Build links within your website, interlinking between your own pages. Each hyperlink will be indexed by spiders, making your site more visible.
• Publish a sitemap. It is crucial to publish a serially linked, current sitemap to your site. It’s no longer considered a best practice to publicize it to your viewers, but publish it and keep it up to date so that spiders can make the best assessment of your site’s content.
• Write about it elsewhere. One of the easiest forms of Search Enging Optimization (SEO) is to find ways to publish links to your site on other webpages. This will help make it more visible.
• Use social media to promote your site. Link to your site on Twitter, Instagram, Facebook or any other social media platform that suits you. You’ll drive traffic to your site and increase the number of links on the Internet.
• Remove access restrictions. Avoid login or time-limit requirements unless you are soliciting subscriptions.
• Write clean code. Even if you use a pre-packaged website template without customizing the code, validate your site’s code so that spiders can navigate it easily.
• Match your site’s page titles and link names to other text within the site, and pay attention to keywords that are relevant to your content.

How to Access and Search for Invisible Content

If a site is inaccessible by conventional means, there are still ways to access the content, if not the actual pages. Aside from software like TOR, there are a number of entities who do make it possible to view Deep Web content, like universities and research facilities. For invisible content that cannot or should not be visible, there are still a number of ways to get access:

• Join a professional or research association that provides access to records, research and peer-reviewed journals.
• Access a virtual private network via an employer.
• Request access; this could be as simple as a free registration.
• Pay for a subscription.
• Use a suitable resource. Use an invisible Web directory, portal or specialized search engine such as Google Book Search, Librarian’s Internet Index, or BrightPlanet’s Complete Planet.

Invisible Web Search Tools

Here is a small sampling of invisible web search tools (directories, portals, engines) to help you find invisible content. To see more like these, please look at our Research Beyond Google article.

• A List of Deep Web Search Engines – Purdue Owl’s Resources to Search the Invisible Web
• Art – Musie du Louvre
• Books Online – The Online Books Page
• Economic and Job Data – FreeLunch.com
• Finance and Investing – Bankrate.com
• General Research – GPO’s Catalog of US Government Publications
• Government Data – Copyright Records (LOCIS)
• International – International Data Base (IDB)
• Law and Politics – THOMAS (Library of Congress)
• Library of Congress – Library of Congress
• Medical and Health – PubMed
• Transportation – FAA Flight Delay Information