Hegemony and Its Dilemmas

Tuesday, February 14, 2012 by TomDispatch
“Losing” the World: American Decline in Perspective, Part 1

by Noam Chomsky

Significant anniversaries are solemnly commemorated -- Japan’s attack on the U.S. naval base at Pearl Harbor, for example. Others are ignored, and we can often learn valuable lessons from them about what is likely to lie ahead. Right now, in fact.

At the moment, we are failing to commemorate the 50th anniversary of President John F. Kennedy’s decision to launch the most destructive and murderous act of aggression of the post-World War II period: the invasion of South Vietnam, later all of Indochina, leaving millions dead and four countries devastated, with casualties still mounting from the long-term effects of drenching South Vietnam with some of the most lethal carcinogens known, undertaken to destroy ground cover and food crops.

The prime target was South Vietnam. The aggression later spread to the North, then to the remote peasant society of northern Laos, and finally to rural Cambodia, which was bombed at the stunning level of all allied air operations in the Pacific region during World War II, including the two atom bombs dropped on Hiroshima and Nagasaki. In this, Henry Kissinger’s orders were being carried out -- “anything that flies on anything that moves” -- a call for genocide that is rare in the historical record. Little of this is remembered. Most was scarcely known beyond narrow circles of activists.

When the invasion was launched 50 years ago, concern was so slight that there were few efforts at justification, hardly more than the president’s impassioned plea that “we are opposed around the world by a monolithic and ruthless conspiracy that relies primarily on covert means for expanding its sphere of influence” and if the conspiracy achieves its ends in Laos and Vietnam, “the gates will be opened wide.”

Elsewhere, he warned further that “the complacent, the self-indulgent, the soft societies are about to be swept away with the debris of history [and] only the strong... can possibly survive,” in this case reflecting on the failure of U.S. aggression and terror to crush Cuban independence.

By the time protest began to mount half a dozen years later, the respected Vietnam specialist and military historian Bernard Fall, no dove, forecast that “Vietnam as a cultural and historic entity… is threatened with extinction...[as]...the countryside literally dies under the blows of the largest military machine ever unleashed on an area of this size.” He was again referring to South Vietnam.

When the war ended eight horrendous years later, mainstream opinion was divided between those who described the war as a “noble cause” that could have been won with more dedication, and at the opposite extreme, the critics, to whom it was “a mistake” that proved too costly. By 1977, President Carter aroused little notice when he explained that we owe Vietnam “no debt” because “the destruction was mutual.”

There are important lessons in all this for today, even apart from another reminder that only the weak and defeated are called to account for their crimes. One lesson is that to understand what is happening we should attend not only to critical events of the real world, often dismissed from history, but also to what leaders and elite opinion believe, however tinged with fantasy. Another lesson is that alongside the flights of fancy concocted to terrify and mobilize the public (and perhaps believed by some who are trapped in their own rhetoric), there is also geostrategic planning based on principles that are rational and stable over long periods because they are rooted in stable institutions and their concerns. That is true in the case of Vietnam as well. I will return to that, only stressing here that the persistent factors in state action are generally well concealed.

The Iraq war is an instructive case. It was marketed to a terrified public on the usual grounds of self-defense against an awesome threat to survival: the “single question,” George W. Bush and Tony Blair declared, was whether Saddam Hussein would end his programs of developing weapons of mass destruction. When the single question received the wrong answer, government rhetoric shifted effortlessly to our “yearning for democracy,” and educated opinion duly followed course; all routine.

Later, as the scale of the U.S. defeat in Iraq was becoming difficult to suppress, the government quietly conceded what had been clear all along. In 2007-2008, the administration officially announced that a final settlement must grant the U.S. military bases and the right of combat operations, and must privilege U.S. investors in the rich energy system -- demands later reluctantly abandoned in the face of Iraqi resistance. And all well kept from the general population.

Gauging American Decline
With such lessons in mind, it is useful to look at what is highlighted in the major journals of policy and opinion today. Let us keep to the most prestigious of the establishment journals, Foreign Affairs. The headline blaring on the cover of the December 2011 issue reads in bold face: “Is America Over?”

The title article calls for “retrenchment” in the “humanitarian missions” abroad that are consuming the country’s wealth, so as to arrest the American decline that is a major theme of international affairs discourse, usually accompanied by the corollary that power is shifting to the East, to China and (maybe) India.

The lead articles are on Israel-Palestine. The first, by two high Israeli officials, is entitled “The Problem is Palestinian Rejection”: the conflict cannot be resolved because Palestinians refuse to recognize Israel as a Jewish state -- thereby conforming to standard diplomatic practice: states are recognized, but not privileged sectors within them. The demand is hardly more than a new device to deter the threat of political settlement that would undermine Israel’s expansionist goals.

The opposing position, defended by an American professor, is entitled “The Problem Is the Occupation.” The subtitle reads “How the Occupation is Destroying the Nation.” Which nation? Israel, of course. The paired articles appear under the heading “Israel under Siege.”

The January 2012 issue features yet another call to bomb Iran now, before it is too late. Warning of “the dangers of deterrence,” the author suggests that “skeptics of military action fail to appreciate the true danger that a nuclear-armed Iran would pose to U.S. interests in the Middle East and beyond. And their grim forecasts assume that the cure would be worse than the disease -- that is, that the consequences of a U.S. assault on Iran would be as bad as or worse than those of Iran achieving its nuclear ambitions. But that is a faulty assumption. The truth is that a military strike intended to destroy Iran’s nuclear program, if managed carefully, could spare the region and the world a very real threat and dramatically improve the long-term national security of the United States.”

Others argue that the costs would be too high, and at the extremes some even point out that an attack would violate international law -- as does the stand of the moderates, who regularly deliver threats of violence, in violation of the U.N. Charter.

Let us review these dominant concerns in turn.

American decline is real, though the apocalyptic vision reflects the familiar ruling class perception that anything short of total control amounts to total disaster. Despite the piteous laments, the U.S. remains the world dominant power by a large margin, and no competitor is in sight, not only in the military dimension, in which of course the U.S. reigns supreme.

China and India have recorded rapid (though highly inegalitarian) growth, but remain very poor countries, with enormous internal problems not faced by the West. China is the world’s major manufacturing center, but largely as an assembly plant for the advanced industrial powers on its periphery and for western multinationals. That is likely to change over time. Manufacturing regularly provides the basis for innovation, often breakthroughs, as is now sometimes happening in China. One example that has impressed western specialists is China’s takeover of the growing global solar panel market, not on the basis of cheap labor but by coordinated planning and, increasingly, innovation.

But the problems China faces are serious. Some are demographic, reviewed in Science, the leading U.S. science weekly. The study shows that mortality sharply decreased in China during the Maoist years, “mainly a result of economic development and improvements in education and health services, especially the public hygiene movement that resulted in a sharp drop in mortality from infectious diseases.” This progress ended with the initiation of the capitalist reforms 30 years ago, and the death rate has since increased.

Furthermore, China’s recent economic growth has relied substantially on a “demographic bonus,” a very large working-age population. “But the window for harvesting this bonus may close soon,” with a “profound impact on development”: “Excess cheap labor supply, which is one of the major factors driving China's economic miracle, will no longer be available.”

Demography is only one of many serious problems ahead. For India, the problems are far more severe.

Not all prominent voices foresee American decline. Among international media, there is none more serious and responsible than the London Financial Times. It recently devoted a full page to the optimistic expectation that new technology for extracting North American fossil fuels might allow the U.S. to become energy independent, hence to retain its global hegemony for a century. There is no mention of the kind of world the U.S. would rule in this happy event, but not for lack of evidence.

At about the same time, the International Energy Agency reported that, with rapidly increasing carbon emissions from fossil fuel use, the limit of safety will be reached by 2017 if the world continues on its present course. “The door is closing,” the IEA chief economist said, and very soon it “will be closed forever.”

Shortly before the U.S. Department of Energy reported the most recent carbon dioxide emissions figures, which “jumped by the biggest amount on record” to a level higher than the worst-case scenario anticipated by the International Panel on Climate Change (IPCC). That came as no surprise to many scientists, including the MIT program on climate change, which for years has warned that the IPCC predictions are too conservative.

Such critics of the IPCC predictions receive virtually no public attention, unlike the fringe of denialists who are supported by the corporate sector, along with huge propaganda campaigns that have driven Americans off the international spectrum in dismissal of the threats. Business support also translates directly to political power. Denialism is part of the catechism that must be intoned by Republican candidates in the farcical election campaign now in progress, and in Congress they are powerful enough to abort even efforts to inquire into the effects of global warming, let alone do anything serious about it.

In brief, American decline can perhaps be stemmed if we abandon hope for decent survival, prospects that are all too real given the balance of forces in the world.

“Losing” China and Vietnam
Putting such unpleasant thoughts aside, a close look at American decline shows that China indeed plays a large role, as it has for 60 years. The decline that now elicits such concern is not a recent phenomenon. It traces back to the end of World War II, when the U.S. had half the world’s wealth and incomparable security and global reach. Planners were naturally well aware of the enormous disparity of power, and intended to keep it that way.

The basic viewpoint was outlined with admirable frankness in a major state paper of 1948 (PPS 23). The author was one of the architects of the New World Order of the day, the chair of the State Department Policy Planning Staff, the respected statesman and scholar George Kennan, a moderate dove within the planning spectrum. He observed that the central policy goal was to maintain the “position of disparity” that separated our enormous wealth from the poverty of others. To achieve that goal, he advised, “We should cease to talk about vague and... unreal objectives such as human rights, the raising of the living standards, and democratization,” and must “deal in straight power concepts,” not “hampered by idealistic slogans” about “altruism and world-benefaction.”

Kennan was referring specifically to Asia, but the observations generalize, with exceptions, for participants in the U.S.-run global system. It was well understood that the “idealistic slogans” were to be displayed prominently when addressing others, including the intellectual classes, who were expected to promulgate them.

The plans that Kennan helped formulate and implement took for granted that the U.S. would control the Western Hemisphere, the Far East, the former British empire (including the incomparable energy resources of the Middle East), and as much of Eurasia as possible, crucially its commercial and industrial centers. These were not unrealistic objectives, given the distribution of power. But decline set in at once.

In 1949, China declared independence, an event known in Western discourse as “the loss of China” -- in the U.S., with bitter recriminations and conflict over who was responsible for that loss. The terminology is revealing. It is only possible to lose something that one owns. The tacit assumption was that the U.S. owned China, by right, along with most of the rest of the world, much as postwar planners assumed.

The “loss of China” was the first major step in “America’s decline.” It had major policy consequences. One was the immediate decision to support France’s effort to reconquer its former colony of Indochina, so that it, too, would not be “lost.”

Indochina itself was not a major concern, despite claims about its rich resources by President Eisenhower and others. Rather, the concern was the “domino theory,” which is often ridiculed when dominoes don’t fall, but remains a leading principle of policy because it is quite rational. To adopt Henry Kissinger’s version, a region that falls out of control can become a “virus” that will “spread contagion,” inducing others to follow the same path.

In the case of Vietnam, the concern was that the virus of independent development might infect Indonesia, which really does have rich resources. And that might lead Japan -- the “superdomino” as it was called by the prominent Asia historian John Dower -- to “accommodate” to an independent Asia as its technological and industrial center in a system that would escape the reach of U.S. power. That would mean, in effect, that the U.S. had lost the Pacific phase of World War II, fought to prevent Japan’s attempt to establish such a New Order in Asia.

The way to deal with such a problem is clear: destroy the virus and “inoculate” those who might be infected. In the Vietnam case, the rational choice was to destroy any hope of successful independent development and to impose brutal dictatorships in the surrounding regions. Those tasks were successfully carried out -- though history has its own cunning, and something similar to what was feared has since been developing in East Asia, much to Washington’s dismay.

The most important victory of the Indochina wars was in 1965, when a U.S.-backed military coup in Indonesia led by General Suharto carried out massive crimes that were compared by the CIA to those of Hitler, Stalin, and Mao. The “staggering mass slaughter,” as the New York Times described it, was reported accurately across the mainstream, and with unrestrained euphoria.

It was “a gleam of light in Asia,” as the noted liberal commentator James Reston wrote in theTimes. The coup ended the threat of democracy by demolishing the mass-based political party of the poor, established a dictatorship that went on to compile one of the worst human rights records in the world, and threw the riches of the country open to western investors. Small wonder that, after many other horrors, including the near-genocidal invasion of East Timor, Suharto was welcomed by the Clinton administration in 1995 as “our kind of guy.”

Years after the great events of 1965, Kennedy-Johnson National Security Adviser McGeorge Bundy reflected that it would have been wise to end the Vietnam war at that time, with the “virus” virtually destroyed and the primary domino solidly in place, buttressed by other U.S.-backed dictatorships throughout the region.

Similar procedures have been routinely followed elsewhere. Kissinger was referring specifically to the threat of socialist democracy in Chile. That threat was ended on another forgotten date, what Latin Americans call “the first 9/11,” which in violence and bitter effects far exceeded the 9/11 commemorated in the West. A vicious dictatorship was imposed in Chile, one part of a plague of brutal repression that spread through Latin America, reaching Central America under Reagan. Viruses have aroused deep concern elsewhere as well, including the Middle East, where the threat of secular nationalism has often concerned British and U.S. planners, inducing them to support radical Islamic fundamentalism to counter it.

The Concentration of Wealth and American Decline
Despite such victories, American decline continued. By 1970, U.S. share of world wealth had dropped to about 25%, roughly where it remains, still colossal but far below the end of World War II. By then, the industrial world was “tripolar”: US-based North America, German-based Europe, and East Asia, already the most dynamic industrial region, at the time Japan-based, but by now including the former Japanese colonies Taiwan and South Korea, and more recently China.

At about that time, American decline entered a new phase: conscious self-inflicted decline. From the 1970s, there has been a significant change in the U.S. economy, as planners, private and state, shifted it toward financialization and the offshoring of production, driven in part by the declining rate of profit in domestic manufacturing. These decisions initiated a vicious cycle in which wealth became highly concentrated (dramatically so in the top 0.1% of the population), yielding concentration of political power, hence legislation to carry the cycle further: taxation and other fiscal policies, deregulation, changes in the rules of corporate governance allowing huge gains for executives, and so on.

Meanwhile, for the majority, real wages largely stagnated, and people were able to get by only by sharply increased workloads (far beyond Europe), unsustainable debt, and repeated bubbles since the Reagan years, creating paper wealth that inevitably disappeared when they burst (and the perpetrators were bailed out by the taxpayer). In parallel, the political system has been increasingly shredded as both parties are driven deeper into corporate pockets with the escalating cost of elections, the Republicans to the level of farce, the Democrats (now largely the former “moderate Republicans”) not far behind.

A recent study by the Economic Policy Institute, which has been the major source of reputable data on these developments for years, is entitled Failure by Design. The phrase “by design” is accurate. Other choices were certainly possible. And as the study points out, the “failure” is class-based. There is no failure for the designers. Far from it. Rather, the policies are a failure for the large majority, the 99% in the imagery of the Occupy movements -- and for the country, which has declined and will continue to do so under these policies.

One factor is the offshoring of manufacturing. As the solar panel example mentioned earlier illustrates, manufacturing capacity provides the basis and stimulus for innovation leading to higher stages of sophistication in production, design, and invention. That, too, is being outsourced, not a problem for the “money mandarins” who increasingly design policy, but a serious problem for working people and the middle classes, and a real disaster for the most oppressed, African Americans, who have never escaped the legacy of slavery and its ugly aftermath, and whose meager wealth virtually disappeared after the collapse of the housing bubble in 2008, setting off the most recent financial crisis, the worst so far.

[Note: Part 2 of Noam Chomsky’s discussion of American decline, “The Imperial Way,” will be posted tomorrow.]

Turning Poverty into an American Crime

Tuesday, August 9, 2011 by TomDispatch.com
Nickel and Dimed (2011 Version)
by Barbara Ehrenreich

I completed the manuscript for Nickel and Dimed in a time of seemingly boundless prosperity. Technology innovators and venture capitalists were acquiring sudden fortunes, buying up McMansions like the ones I had cleaned in Maine and much larger. Even secretaries in some hi-tech firms were striking it rich with their stock options. There was loose talk about a permanent conquest of the business cycle, and a sassy new spirit infecting American capitalism. In San Francisco, a billboard for an e-trading firm proclaimed, “Make love not war,” and then -- down at the bottom -- “Screw it, just make money.”

When Nickel and Dimed was published in May 2001, cracks were appearing in the dot-com bubble and the stock market had begun to falter, but the book still evidently came as a surprise, even a revelation, to many. Again and again, in that first year or two after publication, people came up to me and opened with the words, “I never thought...” or “I hadn’t realized...”

To my own amazement, Nickel and Dimed quickly ascended to the bestseller list and began winning awards. Criticisms, too, have accumulated over the years. But for the most part, the book has been far better received than I could have imagined it would be, with an impact extending well into the more comfortable classes. A Florida woman wrote to tell me that, before reading it, she’d always been annoyed at the poor for what she saw as their self-inflicted obesity. Now she understood that a healthy diet wasn’t always an option. And if I had a quarter for every person who’s told me he or she now tipped more generously, I would be able to start my own foundation.

Even more gratifying to me, the book has been widely read among low-wage workers. In the last few years, hundreds of people have written to tell me their stories: the mother of a newborn infant whose electricity had just been turned off, the woman who had just been given a diagnosis of cancer and has no health insurance, the newly homeless man who writes from a library computer.

At the time I wrote Nickel and Dimed, I wasn’t sure how many people it directly applied to -- only that the official definition of poverty was way off the mark, since it defined an individual earning $7 an hour, as I did on average, as well out of poverty. But three months after the book was published, the Economic Policy Institute in Washington, D.C., issued a report entitled “Hardships in America: The Real Story of Working Families,” which found an astounding 29% of American families living in what could be more reasonably defined as poverty, meaning that they earned less than a barebones budget covering housing, child care, health care, food, transportation, and taxes -- though not, it should be noted, any entertainment, meals out, cable TV, Internet service, vacations, or holiday gifts. Twenty-nine percent is a minority, but not a reassuringly small one, and other studies in the early 2000s came up with similar figures.

The big question, 10 years later, is whether things have improved or worsened for those in the bottom third of the income distribution, the people who clean hotel rooms, work in warehouses, wash dishes in restaurants, care for the very young and very old, and keep the shelves stocked in our stores. The short answer is that things have gotten much worse, especially since the economic downturn that began in 2008.

Post-Meltdown Poverty

When you read about the hardships I found people enduring while I was researching my book -- the skipped meals, the lack of medical care, the occasional need to sleep in cars or vans -- you should bear in mind that those occurred in the best of times. The economy was growing, and jobs, if poorly paid, were at least plentiful.

In 2000, I had been able to walk into a number of jobs pretty much off the street. Less than a decade later, many of these jobs had disappeared and there was stiff competition for those that remained. It would have been impossible to repeat my Nickel and Dimed “experiment,” had I had been so inclined, because I would probably never have found a job.

For the last couple of years, I have attempted to find out what was happening to the working poor in a declining economy -- this time using conventional reporting techniques like interviewing. I started with my own extended family, which includes plenty of people without jobs or health insurance, and moved on to trying to track down a couple of the people I had met while working on Nickel and Dimed.

This wasn’t easy, because most of the addresses and phone numbers I had taken away with me had proved to be inoperative within a few months, probably due to moves and suspensions of telephone service. I had kept in touch with “Melissa” over the years, who was still working at Wal-Mart, where her wages had risen from $7 to $10 an hour, but in the meantime her husband had lost his job. “Caroline,” now in her 50s and partly disabled by diabetes and heart disease, had left her deadbeat husband and was subsisting on occasional cleaning and catering jobs. Neither seemed unduly afflicted by the recession, but only because they had already been living in what amounts to a permanent economic depression.

Media attention has focused, understandably enough, on the “nouveau poor” -- formerly middle and even upper-middle class people who lost their jobs, their homes, and/or their investments in the financial crisis of 2008 and the economic downturn that followed it, but the brunt of the recession has been borne by the blue-collar working class, which had already been sliding downwards since de-industrialization began in the 1980s.

In 2008 and 2009, for example, blue-collar unemployment was increasing three times as fast as white-collar unemployment, and African American and Latino workers were three times as likely to be unemployed as white workers. Low-wage blue-collar workers, like the people I worked with in this book, were especially hard hit for the simple reason that they had so few assets and savings to fall back on as jobs disappeared.

How have the already-poor attempted to cope with their worsening economic situation? One obvious way is to cut back on health care. The New York Times reported in 2009 that one-third of Americans could no longer afford to comply with their prescriptions and that there had been a sizable drop in the use of medical care. Others, including members of my extended family, have given up their health insurance.

Food is another expenditure that has proved vulnerable to hard times, with the rural poor turning increasingly to “food auctions,” which offer items that may be past their sell-by dates. And for those who like their meat fresh, there’s the option of urban hunting. In Racine, Wisconsin, a 51-year-old laid-off mechanic told me he was supplementing his diet by “shooting squirrels and rabbits and eating them stewed, baked, and grilled.” In Detroit, where the wildlife population has mounted as the human population ebbs, a retired truck driver was doing a brisk business in raccoon carcasses, which he recommends marinating with vinegar and spices.

The most common coping strategy, though, is simply to increase the number of paying people per square foot of dwelling space -- by doubling up or renting to couch-surfers.

It’s hard to get firm numbers on overcrowding, because no one likes to acknowledge it to census-takers, journalists, or anyone else who might be remotely connected to the authorities.

In Los Angeles, housing expert Peter Dreier says that “people who’ve lost their jobs, or at least their second jobs, cope by doubling or tripling up in overcrowded apartments, or by paying 50 or 60 or even 70 percent of their incomes in rent.” According to a community organizer in Alexandria, Virginia, the standard apartment in a complex occupied largely by day laborers has two bedrooms, each containing an entire family of up to five people, plus an additional person laying claim to the couch.

No one could call suicide a “coping strategy,” but it is one way some people have responded to job loss and debt. There are no national statistics linking suicide to economic hard times, but the National Suicide Prevention Lifeline reported more than a four-fold increase in call volume between 2007 and 2009, and regions with particularly high unemployment, like Elkhart, Indiana, have seen troubling spikes in their suicide rates. Foreclosure is often the trigger for suicide -- or, worse, murder-suicides that destroy entire families.

“Torture and Abuse of Needy Families”

We do of course have a collective way of ameliorating the hardships of individuals and families -- a government safety net that is meant to save the poor from spiraling down all the way to destitution. But its response to the economic emergency of the last few years has been spotty at best. The food stamp program has responded to the crisis fairly well, to the point where it now reaches about 37 million people, up about 30% from pre-recession levels. But welfare -- the traditional last resort for the down-and-out until it was “reformed” in 1996 -- only expanded by about 6% in the first two years of the recession.

The difference between the two programs? There is a right to food stamps. You go to the office and, if you meet the statutory definition of need, they help you. For welfare, the street-level bureaucrats can, pretty much at their own discretion, just say no.

Take the case of Kristen and Joe Parente, Delaware residents who had always imagined that people turned to the government for help only if “they didn’t want to work.” Their troubles began well before the recession, when Joe, a fourth-generation pipe-fitter, sustained a back injury that left him unfit for even light lifting. He fell into a profound depression for several months, then rallied to ace a state-sponsored retraining course in computer repairs -- only to find that those skills are no longer in demand. The obvious fallback was disability benefits, but -- catch-22 -- when Joe applied he was told he could not qualify without presenting a recent MRI scan. This would cost $800 to $900, which the Parentes do not have; nor has Joe, unlike the rest of the family, been able to qualify for Medicaid.

When they married as teenagers, the plan had been for Kristen to stay home with the children. But with Joe out of action and three children to support by the middle of this decade, Kristen went out and got waitressing jobs, ending up, in 2008, in a “pretty fancy place on the water.” Then the recession struck and she was laid off.

Kristen is bright, pretty, and to judge from her command of her own small kitchen, probably capable of holding down a dozen tables with precision and grace. In the past she’d always been able to land a new job within days; now there was nothing. Like 44% of laid-off people at the time, she failed to meet the fiendishly complex and sometimes arbitrary eligibility requirements for unemployment benefits. Their car started falling apart.

So the Parentes turned to what remains of welfare -- TANF, or Temporary Assistance to Needy Families. TANF does not offer straightforward cash support like Aid to Families with Dependent Children, which it replaced in 1996. It’s an income supplementation program for working parents, and it was based on the sunny assumption that there would always be plenty of jobs for those enterprising enough to get them.

After Kristen applied, nothing happened for six weeks -- no money, no phone calls returned. At school, the Parentes’ seven-year-old’s class was asked to write out what wish they would present to a genie, should a genie appear. Brianna’s wish was for her mother to find a job because there was nothing to eat in the house, an aspiration that her teacher deemed too disturbing to be posted on the wall with the other children’s requests.

When the Parentes finally got into “the system” and began receiving food stamps and some cash assistance, they discovered why some recipients have taken to calling TANF “Torture and Abuse of Needy Families.” From the start, the TANF experience was “humiliating,” Kristen says. The caseworkers “treat you like a bum. They act like every dollar you get is coming out of their own paychecks.”

The Parentes discovered that they were each expected to apply for 40 jobs a week, although their car was on its last legs and no money was offered for gas, tolls, or babysitting. In addition, Kristen had to drive 35 miles a day to attend “job readiness” classes offered by a private company called Arbor, which, she says, were “frankly a joke.”

Nationally, according to Kaaryn Gustafson of the University of Connecticut Law School, “applying for welfare is a lot like being booked by the police.” There may be a mug shot, fingerprinting, and lengthy interrogations as to one’s children’s true paternity. The ostensible goal is to prevent welfare fraud, but the psychological impact is to turn poverty itself into a kind of crime.

How the Safety Net Became a Dragnet

The most shocking thing I learned from my research on the fate of the working poor in the recession was the extent to which poverty has indeed been criminalized in America.

Perhaps the constant suspicions of drug use and theft that I encountered in low-wage workplaces should have alerted me to the fact that, when you leave the relative safety of the middle class, you might as well have given up your citizenship and taken residence in a hostile nation.

Most cities, for example, have ordinances designed to drive the destitute off the streets by outlawing such necessary activities of daily life as sitting, loitering, sleeping, or lying down. Urban officials boast that there is nothing discriminatory about such laws: “If you’re lying on a sidewalk, whether you’re homeless or a millionaire, you’re in violation of the ordinance,” a St. Petersburg, Florida, city attorney stated in June 2009, echoing Anatole France’s immortal observation that “the law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges...”

In defiance of all reason and compassion, the criminalization of poverty has actually intensified as the weakened economy generates ever more poverty. So concludes a recent study from the National Law Center on Poverty and Homelessness, which finds that the number of ordinances against the publicly poor has been rising since 2006, along with the harassment of the poor for more “neutral” infractions like jaywalking, littering, or carrying an open container.

The report lists America’s ten “meanest” cities -- the largest of which include Los Angeles, Atlanta, and Orlando -- but new contestants are springing up every day. In Colorado, Grand Junction’s city council is considering a ban on begging; Tempe, Arizona, carried out a four-day crackdown on the indigent at the end of June. And how do you know when someone is indigent? As a Las Vegas statute puts it, “an indigent person is a person whom a reasonable ordinary person would believe to be entitled to apply for or receive” public assistance.

That could be me before the blow-drying and eyeliner, and it’s definitely Al Szekeley at any time of day. A grizzled 62-year-old, he inhabits a wheelchair and is often found on G Street in Washington, D.C. -- the city that is ultimately responsible for the bullet he took in the spine in Phu Bai, Vietnam, in 1972.

He had been enjoying the luxury of an indoor bed until December 2008, when the police swept through the shelter in the middle of the night looking for men with outstanding warrants. It turned out that Szekeley, who is an ordained minister and does not drink, do drugs, or cuss in front of ladies, did indeed have one -- for “criminal trespassing,” as sleeping on the streets is sometimes defined by the law. So he was dragged out of the shelter and put in jail.

“Can you imagine?” asked Eric Sheptock, the homeless advocate (himself a shelter resident) who introduced me to Szekeley. “They arrested a homeless man in a shelter for being homeless?”

The viciousness of the official animus toward the indigent can be breathtaking. A few years ago, a group called Food Not Bombs started handing out free vegan food to hungry people in public parks around the nation. A number of cities, led by Las Vegas, passed ordinances forbidding the sharing of food with the indigent in public places, leading to the arrests of several middle-aged white vegans.

One anti-sharing law was just overturned in Orlando, but the war on illicit generosity continues. Orlando is appealing the decision, and Middletown, Connecticut, is in the midst of a crackdown. More recently, Gainesville, Florida, began enforcing a rule limiting the number of meals that soup kitchens may serve to 130 people in one day, and Phoenix, Arizona, has been using zoning laws to stop a local church from serving breakfast to homeless people.

For the not-yet-homeless, there are two main paths to criminalization, and one is debt. Anyone can fall into debt, and although we pride ourselves on the abolition of debtors’ prison, in at least one state, Texas, people who can’t pay fines for things like expired inspection stickers may be made to “sit out their tickets” in jail.

More commonly, the path to prison begins when one of your creditors has a court summons issued for you, which you fail to honor for one reason or another, such as that your address has changed and you never received it. Okay, now you’re in “contempt of the court.”

Or suppose you miss a payment and your car insurance lapses, and then you’re stopped for something like a broken headlight (about $130 for the bulb alone). Now, depending on the state, you may have your car impounded and/or face a steep fine -- again, exposing you to a possible court summons. “There’s just no end to it once the cycle starts,” says Robert Solomon of Yale Law School. “It just keeps accelerating.”

The second -- and by far the most reliable -- way to be criminalized by poverty is to have the wrong color skin. Indignation runs high when a celebrity professor succumbs to racial profiling, but whole communities are effectively “profiled” for the suspicious combination of being both dark-skinned and poor. Flick a cigarette and you’re “littering”; wear the wrong color T-shirt and you’re displaying gang allegiance. Just strolling around in a dodgy neighborhood can mark you as a potential suspect. And don’t get grumpy about it or you could be “resisting arrest.”

In what has become a familiar pattern, the government defunds services that might help the poor while ramping up law enforcement. Shut down public housing, then make it a crime to be homeless. Generate no public-sector jobs, then penalize people for falling into debt. The experience of the poor, and especially poor people of color, comes to resemble that of a rat in a cage scrambling to avoid erratically administered electric shocks. And if you should try to escape this nightmare reality into a brief, drug-induced high, it’s “gotcha” all over again, because that of course is illegal too.

One result is our staggering level of incarceration, the highest in the world. Today, exactly the same number of Americans -- 2.3 million -- reside in prison as in public housing. And what public housing remains has become ever more prison-like, with random police sweeps and, in a growing number of cities, proposed drug tests for residents. The safety net, or what remains of it, has been transformed into a dragnet.

It is not clear whether economic hard times will finally force us to break the mad cycle of poverty and punishment. With even the official level of poverty increasing -- to over 14% in 2010 -- some states are beginning to ease up on the criminalization of poverty, using alternative sentencing methods, shortening probation, and reducing the number of people locked up for technical violations like missing court appointments. But others, diabolically enough, are tightening the screws: not only increasing the number of “crimes,” but charging prisoners for their room and board, guaranteeing they’ll be released with potentially criminalizing levels of debt.

So what is the solution to the poverty of so many of America’s working people? Ten years ago, when Nickel and Dimed first came out, I often responded with the standard liberal wish list -- a higher minimum wage, universal health care, affordable housing, good schools, reliable public transportation, and all the other things we, uniquely among the developed nations, have neglected to do.

Today, the answer seems both more modest and more challenging: if we want to reduce poverty, we have to stop doing the things that make people poor and keep them that way. Stop underpaying people for the jobs they do. Stop treating working people as potential criminals and let them have the right to organize for better wages and working conditions.

Stop the institutional harassment of those who turn to the government for help or find themselves destitute in the streets. Maybe, as so many Americans seem to believe today, we can’t afford the kinds of public programs that would genuinely alleviate poverty -- though I would argue otherwise. But at least we should decide, as a bare minimum principle, to stop kicking people when they’re down.

Debt Ceiling Deal Will Cost 1.8 Million Jobs In 2012

(Here is even more proof that the politicians leading the Republican and Democratic parties are fundamentally clueless regarding legislating the nation into recovery from this "small 'd' depression." They are the loyal servants of their wealthy masters, and it shows. With the real unemployment rate, the U6, at 16.2%, this economy can ill afford another 1.8 million lost jobs. Because all these lost jobs aren't coming back--they get replaced by 1/4 as many minimum waged jobs. Mad yet? Come on! And that will seal the end of Obama's feeble presidency. Though, I'm not looking forward to President Perry, either.--jef)

By Marie Diamond on Aug 2, 2011

The Economic Policy Institute, a top nonpartisan think tank, estimates that the deal struck this weekend to raise the nation’s debt limit will end up costing the economy 1.8 million jobs by 2012. Today the Senate is expected to approve the package passed yesterday by the House and send it to President Obama. But while the unemployment rate remains above 9% (U3--the more accurate U6 is 16.2%) the deal does nothing to address chronic joblessness.


The agreement would reduce spending by at least $1 trillion over 10 years, but even the near-term cuts could shrink already sluggish GDP growth by 0.3% in 2012. According to EPI, the plan “not only erodes funding for public investments and safety-net spending, but also misses an important opportunity to address the lack of jobs.” In particular, the immediate spending cuts and the “failure to continue two key supports to the economy (the payroll tax holiday and emergency unemployment benefits for the long term unemployed) could lead to roughly 1.8 million fewer jobs in 2012.”

Top economists and CEO’s have also weighed in against the deal and said that GOP concessions to the Tea Party will cost our economy dearly. Pimco CEO Mohamed El-Erian warned that the deal will lead to less growth, more unemployment, and more inequality. Nobel Prize-winning economist Paul Krugman called the plan “a disaster” and “an abject surrender” that will “depress the economy even further.”

The Center for American Progress’s Michael Ettlinger and Michael Linden argue that while the deal “goes straight in the wrong direction,” Congress can redeem itself by using the so-called “super committee” mandated by the bill to focus on job creation. The committee, made up of six Republicans and six Democrats, is tasked with finding an additional $1.5 trillion of deficit reduction over the next 10 years, and must report a plan by Thanksgiving.

Linden and Ettlinger write, “It’s especially important for the committee to produce a plan that creates jobs and spurs growth because the committee’s proposals will come on top of a set of already-dramatic spending cuts that will have adverse economic consequences.”

The Floundering of QE 2

Down With the Ship? 
By MIKE WHITNEY

Was Friday's job's report the final nail in the coffin for QE2? 

It should be. After all, how is Fed chairman Ben Bernanke going to convince people that his bond purchasing program is working when payrolls rose by a measly 54,000 and the unemployment rate climbed back to 9.1 percent? It'll take a lot more than fast-talk to sell that load of horse-manure. The truth is, QE2 has been a total bust and the BLS's report is just the icing on the cake. Just look at the data; it's as grim as anything we've seen in the last two years. Here's a clip from an article titled "Disastrous US jobs report points to deepening slump" that will give the reader some idea of how bad things really are:

"The Economic Policy Institute (EPI), a liberal Washington think tank, explained Friday that the official unemployment figure masked an even grimmer reality. It pointed out that the labor force participation rate remained at its lowest point of the recession and that the labor force in May was smaller than it was a year ago, by about 500,000 workers, even though the working-age population grew by 1.9 million in that period.

"Consequently," it noted, "the proportion of the population that is in the labor force is now 0.7 percentage points below where it was a year ago. If the labor force participation rate had held steady over the last year, there would be roughly 1.8 million more workers in the labor force right now. Instead, they are on the sideline. If these workers were in the labor force and were counted among the unemployed, the unemployment rate would be 10.1 percent right now instead of 9.1 percent. In other words, the improvement in the unemployment rate over the last year (from 9.6 percent to 9.1 percent) is due to would-be workers deciding to sit out the economic storm". ("Disastrous US jobs report points to deepening slump", World Socialist Website)

So, the only reason the stats look as good as they do (which isn't very good at all) is because people are throwing in the towel and calling it "quits" altogether. So much for the American dream, eh?

And there's an interesting twist to the BLS report that readers may not have noticed. The reason the jobs picture is so bleak, is because the "austerity crazed" government has been laying people off while the economy is still struggling which is making things even worse. This is from the Streetlight blog:

"The government sector of the economy continued to make the jobs picture worse. May was the seventh month in a row during which government layoffs undid some of the work of the private sector in creating jobs. Since January 2009, government employment has shrunk in 21 of 29 months -- and without temporary hiring for the Census, it would probably have shrunk in 25 of the last 29 months.

This steady reduction in government employment is a form of contractionary fiscal policy.....If government employment were simply keeping up with population growth in the US, we would expect to see about 17 to 18 thousand more state and local government jobs each month. Instead employment has shrunk by an average of 15 thousand jobs per month since the start of 2009....

In other words, in the absence of the sharp cutbacks in government spending that have been prevalent in the US over the past year or two, about 1.3 million additional people would be working now compared to 8 months ago, rather than the actual job growth we've experienced over that time of about 1 million - a 30% difference. That's a pretty tough headwind to fight, especially for an economy that's already struggling." ("Contractionary Fiscal Policy and the US Job Market", The Streetlight blog)

So, if the government hadn't been foolishly slashing jobs in the middle of a Depression, 1.3 million more people would still be working today. How's that for shooting yourself in the foot? Remember, the easiest way to prime the pump is to make sure that people aren't fired during a slump. That's Rule #1. But, of course, the deficit hawks have already won that scrimmage, so it's probably pointless to even talk about it. 

And this isn't just about employment either; it's about distribution, too. As economist David Rosenberg points out in a recent post at Zero Hedge "the labor share of national income has fallen to its lowest level in modern history - down to 57.5% in the first quarter from 57.6% in the fourth quarter of last year, 57.8% a year ago, and 59.8% when the recovery began." 

What does that mean? It means all the gains in productivity are going to the fatcats in the front office while workers are scraping by on fewer and fewer crumbs. It means working people are getting reamed again bigtime.

But, then, Bernanke promises to level the playing field with QE2, right? Everyone who wants a job will be able to find one and it'll be Happytime in America again. At least, that's what he intimated in his op-ed in the Washington Post before the program kicked off in November. Here's an excerpt:

"The Federal Reserve's objectives ---- are to promote a high level of employment and low, stable inflation.....Low and falling inflation indicate that the economy has considerable spare capacity, implying that there is scope for monetary policy to support further gains in employment without risking economic overheating.....the Federal Reserve has a particular obligation to help promote increased employment..... Steps taken this week should help us fulfill that obligation." ("What the Fed did and why: supporting the recovery and sustaining price stability", Ben Bernanke, Washington Post)

So, has QE2 lowered unemployment?

Nope.

Reduced spare capacity? 

Not much.

Increased inflation?

Slightly. 

So, it was all baloney; QE2 didn't really do anything except send gas and food prices skyrocketing. (which has further crimped consumption) 

But that's not how Bernanke sees it. According to him the program has worked spectacularly. Here's the Fed chief crowing about the miraculous effects of QE2:

"Equity prices have risen significantly, volatility in the equity market has fallen, corporate bond spreads have narrowed, and inflation compensation ...has risen to historically more normal levels." (Bloomberg)

Yipee. Another freebie for the investor class! And we're supposed to be grateful for that? What about the jobs you promised? What about stimulating the economy and putting people back to work? Wasn't that how you sold QE2 to the American people in your op-ed, Mr. Bernanke? 

It was all lies. Every word of it. Here's how Cullen Roche sums it up over at Pragmatic Capitalism:

"QE2 didn't monetize anything. It didn't cause the money supply to explode. It didn't really do anything except cause a great deal of confusion and generate an enormous amount of speculation in financial markets that now appears to be contributing to turmoil and strife around the globe......

Where we saw a real impact was in commodity prices, general price speculation and the financing pyramid.....Rates have meandered up and down and up and down without a care in the world for the Fed's $600B purchase program. In other words, the program had no impact on rates." ("The QE3 conundrum", Pragmatic Capitalism)

QE2 has been a total flop. The rise in stock prices was a reaction to the temporary increase in corporate earnings which fueled investor optimism. That was a one-time deal caused by trimming expenses and laying off workers. Now production costs are rising at the worst possible time, when all the other economic indicators are beginning to sag. Current data shows weakness throughout the economy, which is why stocks are falling. Expect the worst.

Bad ideas have a way of outlasting their shelf-life. (Especially when people in positions of power have ulterior motives.) Quantitative easing should be put to rest once and for all. It hasn't lowered interest rates, increased GDP, boosted employment, or sparked another credit expansion. The plan has failed. Time to move on.

House Republican Budget will cost 700,000 jobs by end of 2012

Monday, February 28, 2011 by The Hill
Economist's Fodder for Dems: $61 Billion Cut Would Cost 700K Jobs
by Eric Wasson

A new report out Monday from Moody’s Analytics economist Mark Zandi estimates that the House-passed seven-month spending bill, which cuts $61 billion in spending, would cost 700,000 jobs by the end of 2012.

Zandi’s report echoes one by the left-leaning Economic Policy Institute, which concluded the GOP bill would cost 800,000 jobs. He predicts that this year the bill could cost 400,000 jobs and run the risk of another recession. Goldman Sachs has found that it could cause as much as a 2 percent loss in economic growth.

Zandi estimates that the CR would reduce real growth in gross domestic product by 0.5 percent in 2011 and by 0.2 percent in 2012.

Congressional Democrats will be sure to cite new estimate as they argue against cuts to spending this year.

House Republicans argue that their bill should become law as part of a “cut and grow” strategy that they say, by removing uncertainty about higher taxes to pay for government spending, would spur spending by businesses.

A spokesman for House Speaker John Boehner (R-Ohio) discredited Zandi.

"The fact that a relentless cheerleader for the failed 'stimulus' - which the Democrats who run Washington claimed would keep unemployment below eight percent - refuses to understand that ending the spending binge will help the private sector create jobs is sad, but not surprising," said Boehner spokesman Michael Steel.

Zandi, who backed the 2009 Obama stimulus plan, also concludes that allowing the spending fight to cause a lengthy government shutdown would do deep damage to the economy.

“The economy is much improved and should continue to gain traction, but the coast is not clear; it won’t be until businesses begin hiring aggressively enough to meaningfully lower the still-high unemployment rate. The economy is adding between 100,000 and 150,000 per month — but it must add closer to 200,000 jobs per month before we can say the economy is truly expanding again,” he argues.

“Imposing additional government spending cuts before this has happened, as House Republicans want, would be taking an unnecessary chance with the recovery,” he states.

Zandi’s report echoes one by the left-leaning Economic Policy Institute, which concluded the GOP bill would cost 800,000 jobs. Goldman Sachs has found that it could cause as much as a 2 percent loss in economic growth.

He argues that long-term deficits need to be tackled, but that government borrowing is not crowding out private investment at this point, so reducing spending would not have the effect of quickly expanding credit for the private sector.

Zandi tells investors that he predicts both sides will find a compromise that cuts less than House Republicans are demanding, and that the economy will be able to absorb that compromise.

Summers, Unapologetic To The Bitter End

by Dan Froomkin     Monday, December 13, 2010 by Huffington Post

In his final public remarks as head of President Obama's National Economic Council on Monday morning, Larry Summers had nothing bad to say about himself.

Summers shrugged off efforts by two reporters to get him to express regrets about his two-year tenure, during which big banks thrived, but ordinary Americans suffered.

"The president has said many, many times that none of us can rest or be satisfied with anything like the current level of joblessness, with anything like the income gap between what people could be earning and what they are earning," Summers said at the liberal Economic Policy Institute, a somewhat unusual setting for his swan song.

Despite the preponderance of progressives in the audience, the passive conditional past subjunctive was about as close as Summers would come to saying he was sorry. "That's where one would have liked to have seen more rapid progress," he said.

But then came the "but": "One does need to recognize that relative to what was really very widely feared, the outcome has been a good deal better," he said.

Summers set a reasonable bar for himself in his prepared remarks, stating, "It is by what happens to the middle class that our economic policies must be judged."

By that measure, it's hard to see how those policies could be considered successful.

But perhaps the problem is that Summers' critics just aren't as smart as he was.

"Would I like the results to be even better than they have been on a number of different dimensions? Of course," he said. "But I think the president is right to take pride in what has been averted. And that is not easy always for people to understand. But I think it is something that is very important."

It's also too early for post-mortems, he said, opting to "leave that to others" until he's had more time to mull things over. "I look forward very much to being able to step back and think about some of the very important questions that we talked about today," he said.

Despite Summers' public refusal to indulge in critical retrospection, his host on Monday, Economic Policy Institute president Larry Mishel, said that at a recent lunch, the ex-president of Harvard was somewhat more forthcoming. "In private, Larry said he heavily pushed for more demand-side action, including aid to the states, unemployment benefits and more infrastructure," Mishel told HuffPost. "Though looking back, he would have also liked to have pushed a large jobs tax credit."

In his speech, Summers said much more needs to be done. He argued strongly in favor of increased government spending to create more economic demand. "There cannot be any question that the constraint on our economy now and for the next several years will be the lack of demand," he said. "Without rapid recovery, all of our other goals will be compromised."

Stimulus needs to be followed by a period of deficit reduction, he said -- but he was vague as to when the nation should shift from one phase to the other.

Summers continued to insist, as he did last week, that the approval of Obama's tax-cut deal is an economic necessity, though he said even more government action is needed. "The tax compromise will help, but not enough," he said.

The next step, he said, is investment in infrastructure. "A sustained effort to rebuild America should be at the top of Washington's priority list next year," he said.

If there was any humility on display Monday, it was when Summers made reference to how he took his White House post after an extremely rocky and unfortunate tenure at Harvard, where the faculty revolted against his perceived arrogance and alleged misogyny, and where one of his financial decisions cost the university's endowment $1 billion.

"I was one of the very few people," he said, "who came to Washington to get out of politics."

Keeping the Financial People Happy

It's Too Bad Keynes Didn't Write in English
By DEAN BAKER

Keynes explained the dynamics of an economy in a prolonged period of high unemployment more than 70 years ago in The General Theory. Unfortunately, it seems that very few of the people in policymaking positions in the United States or Europe have heard of the book. Otherwise, they would be pushing economic policy in the exact opposite direction that it is currently headed.

Most of the wealthy countries have now made deficit reduction the primary focus of their economic policy. Even though the United States and many euro zone countries are projected to be flirting with double-digit unemployment for years to come, their governments will be focused on cutting deficits rather than boosting the economy and creating jobs.

The outcome of this story is not pretty. Cutting deficits means raising taxes and/or cutting spending. In either case, it means pulling money out of the economy at a time when it is already well below full employment. This can lower deficits, but it also means lower GDP and higher unemployment.

This might be okay if we could show some benefit from lower deficits, but this is a case of pain with no gain. Ostensibly, there will be a lower interest rate burden in future years, but even this is questionable. First, the contractionary policy being pursued by the deficit hawks will slow growth and lead to lower inflation or possibly even deflation. It is entirely possible that the debt to GDP ratio may actually end up higher by following their policies than by pursuing more expansionary policy.

In other words, we may end up with smaller deficits and therefore accumulate less debt, but we may slow GDP growth even more. The burden of the debt depends on the size of the economy and in the scenario where we do more to slow GDP growth than the growth of the debt, then we end up with a higher interest rate burden, not a lower one.

The other reason why we may not end up with a lower interest rate burden is that we need not issue debt to finance the budget deficits. Countries like the United States and the United Kingdom that control their central banks can simply have the central banks buy up the bonds used to finance the deficits. In this story, the interest payments on the bonds are paid to the central bank, which is in turn refunded to the government. This means that there is no interest burden created by these deficits.

If that sounds impossible, then it’s necessary to pick up Keynes again. The economies of Europe and the United States are not suffering from scarcity right now. They are suffering from inadequate demand. This means that if governments run deficits, and thereby expand demand, the economy has the capacity to fill this demand. The decision of central banks to expand the money supply by buying bonds simply leads to an increase in output, not to inflation.

The idea that there is some direct link between the money supply and inflation is absurd on its face. Do any businesses raise their prices because the Fed has put money into circulation? How many businesses even have a clue as to how much money is in circulation? In the real world, prices are set by supply and demand. If any business tried to raise their prices just because the Fed has put more money into circulation they would soon find themselves wiped out by the competition – at least as long as we are in this situation of having enormous excess supply.

This story should be old hat to those who have studied Keynes. In a period of high unemployment, like the present, governments can literally just print money. Not only will this put people back to work, this process can also lay the basis for stronger growth in the future by creating better infrastructure, more energy efficient buildings, supporting research and development of clean energy and improving the education of our children.

Unfortunately, our political leaders don’t give a damn about mundane issues like unemployment and economic growth. It is far easier for them to bandy silly clichés about fiscal responsibility and generational equity, even though the policies they are pushing are 180 degrees at odds with anything that will help our children or grandchildren. Their main concern is to push policies that keep the financial industry happy. And 10 million unemployed never bothered anyone at Goldman Sachs, just ask Fabulous Fabio.