Showing posts with label great recession. Show all posts
Showing posts with label great recession. Show all posts

Sunday, April 28, 2013

Recovery for the 7 Percent

April 28, 2013 — Paul Craig Roberts

“From the end of the recession in 2009 through 2011 (the last year for which Census Bureau wealth data are available), the 8 million households in the U.S. with a net worth above $836,033 saw their aggregate wealth rise by an estimated $5.6 trillion, while the 111 million households with a net worth at or below that level saw their aggregate wealth decline by an estimated $600 billion.” ~ Pew Research, An Uneven Recovery, by Richard Fry and Paul Taylor.

Since the recession was officially declared to be over in June 2009, I have assured readers that there has been no recovery. Gerald Celente, John Williams (shadowstats.com), and no doubt others have also made it clear that the alleged recovery is an artifact of an understated inflation rate that produces an image of real economic growth.

Now comes the Pew Research Center with its conclusion that the recession ended only for the top 7 percent of households that have substantial holdings of stocks and bonds. The other 93% of the American population is still in recession.

The Pew report attributes the recovery for the affluent to the rise in the stock and bond markets, but does not say what caused these markets to rise.

The stock market’s recovery does not reflect rising consumer purchasing power and retail sales. The labor force is shrinking, not growing. Job growth lags population growth, and the few jobs that are created are primarily dead-end jobs in lowly paid domestic services. Retail sales adjusted for inflation and real median household income have been bottom bouncing since 2009.

To the extent that there is profit growth in US corporations, it comes from labor cost savings from offshoring US jobs and from bringing in foreign workers on work visas. By lowering labor costs, corporations boost profits and thereby capital gains for those 7 percent who have large holdings of financial assets. Those in the 93 percent who are displaced by foreign workers experience income reductions. This transfer of the incomes of the 93 percent to the 7 percent via jobs offshoring and work visas is the reason for the stark rise in US income inequality.
Another source of the stock market’s rise is the Federal Reserve’s policy of quantitative easing, that is, the printing of $1,000 billion dollars annually with which to support the too-big-to-fail banks’ balance sheets and to finance the federal budget deficit. The cash that the Fed is pouring into the banks is not finding its way into business and consumer loans, but the money is available for the banks to speculate in derivatives and stock market futures. Thus, the Fed’s policy, which is directed at keeping afloat a few oversized banks, also benefits the 7 percent by driving up the value of their stock portfolios.

The reason bond prices are so high that real interest rates are negative is that the Fed is purchasing $1,000 billion of mortgage-backed “securities” and US Treasury debt annually. The lower the Fed forces interest rates, the higher go bond prices. If you are among the 7 percent, the Fed has produced capital gains for your bond portfolio. But if you are a saver among the 93 percent, you are losing purchasing power because the interest you receive is less than the rate of inflation.

The Pew report puts it this way: Since the “recovery” that began in June 2009, wealthy households experienced a 28 percent rise in their net worth, while everyone else lost 4 percent of their assets.

Is this the profile of a democracy in which government serves the public interest, or is it the profile of a financial aristocracy that uses government to grind the population under foot?

Friday, March 1, 2013

The Missing Recovery

March 1, 2013 | Paul Craig Roberts

Officially, since June 2009 the US economy has been undergoing an economic recovery from the December 2007 recession. But where is this recovery? I cannot find it, and neither can millions of unemployed Americans.

The recovery exists only in the official measure of real GDP, which is deflated by an understated measure of inflation, and in the U.3 measure of the unemployment rate, which is declining because it does not count discouraged job seekers who have given up looking for a job.

No other data series indicates an economic recovery. Neither real retail sales nor housing starts, consumer confidence, payroll employment, or average weekly earnings indicate economic recovery.

Neither does the Federal Reserve’s monetary policy. The Fed’s expansive monetary policy of bond purchases to maintain negative real interest rates continues 3.5 years into the recovery. Of course, the reason for the Fed’s negative interest rates is not to boost the economy but to boost asset values on the books of “banks too big to fail.”

The low interest rates raise the prices of the mortgage-backed derivatives and other debt-related assets on the banks’ balance sheets at the expense of interest income for retirees on their savings accounts, money market funds, and Treasury bonds.

Despite recovery’s absence and the lack of job opportunities for Americans, Republicans in Congress are sponsoring bills to enlarge the number of foreigners that corporations can bring in on work visas. The large corporations claim that they cannot find enough skilled Americans. This is one of the most transparent of the constant stream of lies that we are told.

Foreign hires are not additions to the work force, but replacements. The corporations force their American employees to train the foreigners, and then the American employees are discharged. Obviously, if skilled employees were in short supply, they would not be laid off. Moreover, if the skills were in short supply, salaries would be bid up, not down, and the 36% of those who graduated in 2011 with a doctorate degree in engineering would not have been left unemployed. The National Science Foundation’s report, “Doctorate Recipients From U.S. Universities,” says that only 64% of the Ph.D. engineering graduates found a pay check.

As I have reported on numerous occasions for many years, neither the payroll jobs statistics nor the Bureau of Labor Statistics’ job projections show job opportunities for university graduates. But this doesn’t stop Congress from helping US corporations get rid of their American employees in exchange for campaign donations.

There was a time not that long ago when US corporations accepted that they had obligations to their employees, customers, suppliers, the communities in which they were located, and to their shareholders. Today they only acknowledge obligations to shareholders. Everyone else has been thrown to the wolves in order to maximize profits and, thereby, shareholders’ capital gains and executive bonuses.

By focusing on the bottom line at all costs, corporations are destroying the US consumer market. Offshoring jobs reduces labor costs and raises profits, but it also reduces domestic consumer income, thus reducing the domestic market for the corporation’s products. For awhile the reduction in consumer income can be filled by the expansion of consumer debt, but when consumers reach their debt limit sales cannot continue to rise. The consequence of jobs offshoring is the ruination of the domestic consumer market.

Today the stock market is high not from profits from expanding sales revenues, but from labor cost savings.

US economic policy has been focused away from the real problems and onto a consequence of those problems–the large US budget deficit. As no interest group wants to be gored, Congress has been unable to deal with the trillion dollar plus annual budget deficit, the continuation of which raises the specter of dollar collapse and inflation.

John Maynard Keynes made it clear long ago, as has Greece today, that trying to reduce the ratio of debt to GDP by austerity measures doesn’t work.
Among the countries in the world the US is in a unique position. It not only has its own central bank to provide the money necessary to finance the government’s deficit, but also the money that is provided, the US dollar, is the world’s reserve currency used to settle international accounts among all nations and, thus, always in demand. The dollar thus serves as the world’s transaction currency and also as a store of value for countries with trade surpluses who invest their surpluses in US Treasury bonds and other dollar-denominated assets.

Without the support that the reserve currency status gives to the dollar’s exchange value (its price in foreign currencies), the enormous expansion in the quantity of dollars produced by the Fed’s years of quantitative easing would have resulted in a drop in the dollar’s exchange value, a rise in interest rates, and a rise in inflation. Since my time in government, the US has become an export-dependent economy, and export-dependent economies are subject to domestic inflation when the currency loses exchange value.

To sum up, the corporations’ focus on the bottom line has disconnected US incomes from the production of the goods and services that the American people consume, thus weakening and ultimately destroying the domestic consumer market. The Fed’s focus on saving banks, which mindless deregulation allowed to become “too big to fail,” has created a bond market bubble of negative real interest rates and a dollar bubble in which the dollar’s exchange rate has not declined in keeping with the large increase in its supply. Both the corporations and the Fed have created a stock market bubble based on profits obtained from labor arbitrage (the substitution of cheaper foreign labor for US labor) and from banks speculating with the money that the Fed is providing to them.

This situation is untenable. Sooner or later something will pop these bubbles, and the consequences will be horrendous.

Friday, February 8, 2013

The Age of Austerity

States Brace for Coming Cuts
by SHAMUS COOKE


The Great Recession
has quietly devastated public services on a state-by-state basis, with Republican and Democratic governors taking turns leading the charge. Public education has been decimated, as well as health care, welfare, and the wages and benefits of public sector workers. The public sector itself is being smashed. Since the recession began, states have made combined austerity cuts of at least $337 billion, according to the Center of Budget and Policy Priorities

The 2012-2013 budget deficits for 34 states resulted in $55 billion in cuts, according to the Center of Budget and Policy Priorities. The coming budgets for 2013-2014 that begins on July 1st is becoming clear as well, and the deficits are rolling in by the billions: Connecticut, Minnesota, Maryland, New York, Oregon, Washington, and many others have large deficits projected.

You’d expect after years of austerity cuts to public services, state politicians would think of new ways to raise revenue from those who can afford it — the wealthy and corporations. Not so. The cuts that began as a consequence of the 2008 recession are set to continue; raising revenue from the wealthy is “off the table” for Republicans and Democrats alike.
The pattern of budget cuts has revealed that the age-old distinction between Republican and Democrat has evaporated on the state level. The state budget trends — what’s getting funded and what’s not — are similarly aligned across the country. Both parties have merged their state-level agendas into a singular focus on “economic growth,” a bi-partisan euphemism meaning “corporate profits.”

Below is the bi-partisan funding trends for the states that began with the 2008 recession and continue to this day:

1) The Attack on Public Employees and Pension “Reform”

It wasn’t long ago that everyone understood that the states’ budget crises was caused in part by the recession, itself caused by the big banks and greedy corporations, and in part by the politicians continuing willingness to lower taxes on the rich. Now the corporate media and politicians have re-written history: suddenly it’s “greedy” public workers and their “lavish” pensions that are bankrupting the states. Two years ago it was the health care of public employees that was bankrupting the states, which resulted in large cuts to workers in many states.

The pre-recession pension system was working fine, but it, too, suffered under the bank-caused financial crisis; pension returns sank and right-wing economists projected ruin for the states in the future (they conveniently assumed that recession era rates would continue forever, thus under-funding the system).

Democratic governors are now as eager as their Republican counterparts to destroy the pensions of public employees. Democratic politicians in Oregon, Washington, California, New Jersey, Illinois, Rhode Island, New Hampshire, Maryland, Massachusetts, and several other states are leading the charge to erode the last bastion of retirement security for working people, while continuing to lay off public employees by the thousands. This national shrinkage of state governments is a long-standing right-wing dream: the smaller the state, the greater the “growth opportunities” for corporations that take over privatized public services and the lower their taxes since a smaller state requires less revenue for operating expenses.

2) Education Reform

The National Governors Association (NGA) spoke for both political parties when announcing a renewed focus on education funding for the states during the annual “state of the states” address. The funding is necessary because schools across the country are expecting an influx of students, while school districts everywhere have been starved funds by the ongoing austerity cuts; the system has been literally crumbling. But the new funding is to be used for the undermining and destruction of public education, since it is based on Obama’s pro-corporate Race to the Top education “reform” where charter schools replace public schools.

Democrats and Republicans are in complete agreement over Obama’s education policy, which closes “failing schools,” (those in poor neighborhoods), opens privately run, non-union charter schools, and fires “bad teachers,” (typically those who teach poor students). The whole system is based on standardized testing, which poorer students will spend most of their education preparing for, (those who don’t drop out from sheer boredom). Bi-partisan education reform targets teacher unions while privatizing education — the Democrats have adopted the ideas from the right-wing think tanks of the 1990s.

3) Raising Revenue – But Not From the Wealthy or Corporations

Many states have implemented — or are planning to implement — a variety of taxes that disproportionally affect working and poor people, including increased sales taxes, alcohol, tobacco and other “sin” taxes, not to mention increases in different fees, from state parks to driver registration.

At the same time that these taxes have been upped, a consistent clamor has been raised by the media and politicians to lower the taxes for corporations, give them new subsidies or “freeze” their already-low taxes so that future tax increases will be impossible. In Oregon the Democratic governor declared a “special session” emergency in order to ensure that NIKE’s super low tax status would be frozen in place for decades, outside the reach of the public, which might want to raise corporate taxes to fund public services.

Democrat and Republican controlled states are equally competing for the adoration of corporations by lavishing a never-ending flow of taxpayer money on them, while “guaranteeing” them “investment security,” i.e., promising low taxes and an open spigot of taxpayer money. This is the basis for several states implementing “right to work” laws that target unions for destruction, while also attempting to “revamp the tax code,” which is a euphemism for lowering corporate taxes.

4) Welfare Reform: Attacking the Safety Net

Waging war against the safety net is like picking a fight with road kill — the states’ safety net is already disfigured beyond recognition, but the bi-partisan assault nevertheless continues. Bill Clinton started welfare “reform” as president, and the 2008 Great Recession accelerated the attack on those in poverty. The year 2011 was a devastating one for welfare, now called Temporary Assistance to Needy Families (TANF).

According to the Center on Budget and Policy Priorities:
In 2011, states implemented some of the harshest cuts in recent history for many of the nation’s most vulnerable families with children who are receiving assistance through [TANF] … The cuts affect 700,000 low-income families that include 1.3 million children; these families represent over one-third of all low-income families receiving TANF nationwide.

But these TANF “reforms” continue, to the detriment of the neediest. Newly released budgets in several states — including California and Oregon — further tighten the program, a relentless boa-like constriction that’s already suffocated millions of the country’s poorest citizens. Typically TANF reform either lowers the monthly payment, shortens the time one can receive benefits, or raises the standards for staying in the program.

Before the giant TANF cuts in 2011, the program was already shrunken such that TANF only assisted 28 families for every 100 in poverty — the ludicrous definition of “poverty” being a family of four that makes only $22,000 or less.

There is a direct link between the assault on TANF and the rising poverty levels in the United States. Cutting TANF in a time of mass unemployment means consciously consigning millions of families to grinding poverty, hunger, homelessness, and the many other barbarisms associated with extreme poverty.

It wasn’t long ago that the Democrats understood that the government can and should create jobs, especially during a recession. But now the Democratic Party has fully adopted the economics of Reaganism. As a result, the only “job creators” now recognized are the corporations. This bi-partisan agreement not to tax the rich and use the revenue for public spending to create jobs — hiring more teachers, firefighters, roads and parks workers, etc. — is unnecessarily prolonging the job crisis, ensuring more years of deficits and a deeper gouging of the public sector.

These cuts are having a devastating effect on public sector unions, the last bastion of union strength in the country. These unions are being weakened to such an extent that stripping them of their right to collectively bargain — the nail in the coffin — becomes a real possibility. No state is safe from this threat.

If unions don’t unite with community groups to demand that public services be fully funded by taxing the wealthy and corporations, the cuts will continue, communities will feel helpless, inequality will continue to spiral out of control, and working people will be further subjected to the policies of the 1%, now implemented in chorus by Republicans and Democrats alike. But, of course, this means that the unions will have to break with the suicidal strategy of relying on the Democrats for handouts. Time and again the Democrats have demonstrated their willingness to sacrifice the needs of working people in order to curry favor with the rich and corporations, their greatest benefactors when it comes to election campaign contributions.

Friday, October 12, 2012

Triumph of the Wrong: The GOP's Austerity Plan for America

Friday, October 12, 2012 by The New York Times
by Paul Krugman

In these closing weeks of the campaign, each side wants you to believe that it has the right ideas to fix a still-ailing economy. So here’s what you need to know: If you look at the track record, the Obama administration has been wrong about some things, mainly because it was too optimistic about the prospects for a quick recovery. But Republicans have been wrong about everything.

About that misplaced optimism: In a now-notorious January 2009 forecast, economists working for the incoming administration predicted that by now most of the effects of the 2008 financial crisis would be behind us, and the unemployment rate would be below 6 percent. Obviously, that didn’t happen.

Why did the administration get it wrong? It wasn’t exaggerated faith in the power of its stimulus plan; the report predicted a fairly rapid recovery even without stimulus. Instead, President Obama’s people failed to appreciate something that is now common wisdom among economic analysts: severe financial crises inflict sustained economic damage, and it takes a long time to recover.

This same observation, of course, offers a partial excuse for the economy’s lingering weakness. And the question we should ask given this unpleasant reality is what policies would offer the best prospects for healing the damage. Mr. Obama’s camp argues for an active government role; his last major economic proposal, the American Jobs Act, would have tried to accelerate recovery by sustaining public spending and putting money in the hands of people likely to use it. Republicans, on the other hand, insist that the path to prosperity involves sharp cuts in government spending.

And Republicans are dead wrong.

The latest devastating demonstration of that wrongness comes from the International Monetary Fund, which has just released its World Economic Outlook, a report combining short-term prediction with insightful economic analysis. This report is a grim and disturbing document, telling us that the world economy is doing significantly worse than expected, with rising risks of global recession. But the report isn’t just downbeat; it contains a careful analysis of the reasons things are going so badly. And what this analysis concludes is that a disproportionate share of the bad news is coming from countries pursuing the kind of austerity policies Republicans want to impose on America.

O.K., it doesn’t say that in so many words. What the report actually says is: “Activity over the past few years has disappointed more in economies with more aggressive fiscal consolidation plans.” But that amounts to the same thing.

For leading Republicans have very much tied themselves to the view that slashing spending in a depressed economy — “fiscal consolidation,” in I.M.F.-speak — is good, not bad, for job creation. Soon after the midterm elections, the new Republican majority in the House of Representatives issued a manifesto on economic policy — titled, “Spend less, owe less, grow the economy” — that called for deep spending cuts right away and pooh-poohed the whole notion that fiscal consolidation (yes, it used the same term) might deepen the economy’s slump. “Non-Keynesian effects,” the manifesto declared, would make everything all right.

Well, that turns out not to be remotely true. What the monetary fund shows is that the countries pursing the biggest spending cuts are also the countries that have experienced the deepest economic slumps. Indeed, the evidence suggests that in brushing aside the standard view that spending cuts hurt the economy in the short run, the G.O.P. got it exactly wrong. Recent spending cuts appear to have done even more harm than most analysts — including those at the I.M.F. itself — expected.

Which brings us to the question of what form economic policies will take after the election.

If Mr. Obama wins, he’ll presumably go back to pushing for modest stimulus, aiming to convert the gradual recovery that seems to be under way into a more rapid return to full employment.

Republicans, however, are committed to an economic doctrine that has proved false, indeed disastrous, in other countries. Nor are they likely to change their views in the light of experience. After all, facts haven’t gotten in the way of Republican orthodoxy on any other aspect of economic policy. The party remains opposed to effective financial regulation despite the catastrophe of 2008; it remains obsessed with the dangers of inflation despite years of false alarms. So it’s not likely to give up its politically convenient views about job creation.

And here’s the thing: if Mitt Romney wins the election, the G.O.P. will surely consider its economic ideas vindicated. In other words, politically good things may be about to happen to very bad ideas. And if that’s how it plays out, the American people will pay the price.

Thursday, September 13, 2012

Numbers, Analysis Show 30 Years of Failed US Economic Policy


Census numbers show persistent poverty, falling wages, and rising inequality
The latest US Census Bureau numbers on poverty, income inequality, and healthcare, coupled with newly released economic analysis of US public policy reveals the reality and the reasons behind the persistent rut of the poverty-stricken, the working-poor, and the middle class in America.

More than three years after the collapse of the housing bubble, the federal government's bailout of Wall Street, and the start of the Great Recession, the US poverty rate remains persistently high with nearly 1 in 5 Americans living at or below the poverty line, according to new figures released on Wednesday by the US Census Bureau.

In addition, the numbers show rampant joblessness, stagnant or falling wages among workers, household incomes that continue to fall, and an inequality gap that continues to grow.

Meanwhile, the Economic Policy Institute released their annual review of US economic policy which includes a wide variety of data on family incomes, wages, jobs, unemployment, wealth, and poverty that allow for a clear, unbiased understanding of the economy’s effect on the living standards of working Americans.

As the Census reports, "the nation's official poverty rate in 2011 was 15.0 percent, with 46.2 million people in poverty. After three consecutive years of increases, neither the poverty rate nor the number of people in poverty were statistically different from the 2010 estimates."

New data on the continued rise in inequality—where income inequality increased by 1.6 percent between 2010 and 2011—prompted Robert Greenstein, President of the Center on Budget and Policy Priorities, to underscore that the nation's wealthiest should begin to share in the sacrifices that will be needed to correct the economy in the coming years.

"Given the need for substantial sacrifice and the skewing of income gains to those at the top," he said in a statement, "it is difficult to justify extending the rather lavish tax cuts for high-income individuals that policymakers enacted in 2001 and 2003, which average $129,000 a year for people who make over $1 million a year, according to the Urban-Brookings Tax Policy Center."

The Economic Policy Institute, which on Tuesday released its 12th annual "State of Working America" report, listed the key numbers from the Census report:

Poverty

  • 15.0%: The share of the population in poverty in 2011
  • 21.9%: The percent of children under 18 in poverty
  • 46.2 million: The number of people in poverty in 2011
  • $22,811: The poverty threshold for a family of four with two children
  • 44.0%: The share of the poor population in “deep poverty,” or below half the poverty line
  • 2.3 million: The number of people unemployment insurance kept out of poverty in 2011
  • 21.4 million: The number of people Social Security kept out of poverty in 2011
  • 5.7 million: How many fewer people would be in poverty if the Federal Earned Income Tax Credit was included in the Census definition of money income
  • 3.9 million: How many fewer people would be in poverty if food stamps (SNAP) were added to money income

Income

  • -1.7%, +5.1%: The change in average household income between 2010 and 2011 for the middle 20 percent, and the top 5 percent, respectively. The disparity means income inequality increased in 2011. 
  • $7,887, -12.4%: The decline in median working-age household income from 2000 to 2011 in level terms and percentage terms, respectively 
  • $6,518, -16.8%: The decline in median African-American household income from 2000 to 2011 in level terms and percentage terms, respectively 
  • $4,695, -10.8%: The decline in median Hispanic household income from 2000 to 2011 in level terms and percentage terms, respectively 
  • $50,622, $48,202:  Median earnings for a man working fulltime, full year in 1973 and 2011, respectively 
  • $28,699, $37,118:  Median earnings for a female working fulltime, full year in 1973 and 2011, respectively
Putting the Census numbers in the context of public policy in their new report, EPI explains how economic policies, including policymakers’ actions and failures to act, have continuously undercut the ability of workers to benefit from economic growth in the United States. Its primary findings include:
  • America’s vast middle class has suffered a “lost decade” and faces the threat of another. The wages of typical Americans, including college graduates, are lower today than they have been in over a decade. Because hourly wages and compensation failed to grow after the 2001 recession, household incomes had declined even before the Great Recession. Furthermore, forecasts of high unemployment for many years ahead suggest that another lost decade for typical American workers and their families, as measured by wages and income, has already begun.
  • Income and wage inequality have risen sharply over the last 30 years. Income inequality has grown sharply since 1979, a fact that is universally recognized by researchers. The trends that have driven this growing inequality in overall incomes are growing concentration of both capital income (the returns to financial assets) and labor income (wages and benefits), as well as a shift from labor income toward capital income.
  • Rising inequality is the major cause of wage stagnation for workers and of the failure of low- and middle-income families to appropriately benefit from growth. The typical worker has not benefited from productivity growth since 1979, though there has been sufficient economic growth to provide a substantial across-the-board increase in living standards. Instead, higher earners have reaped a disproportionate share of wage income, and the top one percent of households have received a disproportionate share of all income growth. Aside from the period of strong growth in the late-1990s, wages for low-and middle-wage workers were stagnant from 1979 to 2007, and incomes for lower- and middle-class households grew slowly.
  • Economic policies caused increased inequality of wages and incomes. Inequality between the very top wage earners and all others grew from 1979 to 2011 except during stock declines, driven by growing executive compensation and an expanded and increasingly highly-paid financial sector. Inequality between the top wage earners and middle-wage earners also grew from 1979 to 2011. A number of policies played a role in this growth, including those that: (1) targeted rates of unemployment too high to provide reliably tight labor markets for low- and middle-wage workers; (2) hastened global integration of the U.S. economy without protecting U.S. workers; (3) failed to manage destructive international trade imbalances; (4) allowed employer practices hostile to unions to flourish; (5) privatized and deregulated industry, including the financial sector; and (6) eroded labor standards. Inequality between middle-wage earners and the lowest wage earners grew only in the 1980s, fueled by the erosion of the purchasing power of the minimum wage and, again, the targeting of rates of unemployment that were too high. Tax and budget policies have compounded the inequalities that have been generated in market-based, pre-tax incomes.
  • Claims that growing inequality has not hurt middle-income families are flawed. Some recent studies have suggested that measures of comprehensive income since 1979 show that middle-income families have seen adequate income growth. Rather, incomes for the middle class have not grown as fast as average incomes, and middle-income growth was much slower between 1979 and 2007 than it was between 1947 and 1979. Furthermore, more than half of the income growth between 1979 and 2007 was made up of government transfers, which reflects the strength of programs like Social Security, Medicare and Medicaid, not the strength of the labor market. In fact, higher household labor earnings can be traced to increasing work hours, not higher wages. Finally, the data on comprehensive incomes are technically flawed because they count rapidly rising health expenditures made on behalf of households by employers and the government as income, without taking excessive health care inflation into account.
  • Growing income inequality has not been offset by increased mobility. There is no evidence that mobility—changes in economic status from one generation to the next—has increased to offset rising inequality, and some research shows a decline.
  • Inequalities persist by race and gender. Key economic measures, including unemployment, wealth, and poverty (particularly child poverty), continue to show staggering disparities by race and ethnicity. Gender disparities also persist, and while gaps in labor market outcomes have closed in recent decades, a number have done so because men lost ground, not because women gained it.
“The State of Working America, 12th Edition” includes new and compelling data on:
Income
  • the components of the Congressional Budget Office’s “comprehensive income” growth for the middle class (health care insurance, wages, pensions, work hours, government benefits)
  • the growth of capital income by income group and the growing concentration of capital incomes
Mobility
  • the stagnation of economic mobility
  • the poor performance of the U.S. economy in international rankings of mobility
Wages
  • flat or falling wages for college graduates in almost every occupation over the past 10 years
  • wage trends by education, decile, gender, and race/ethnicity
  • the growth of wage inequality for the three key wage gaps: between the top one percent and others, between the top and middle (95/50 wage gap), and between the middle and bottom (50/10 wage gap)
  • the impact of rising health care costs on wage growth and wage inequality
  • the factors driving the gap between productivity and median hourly compensation growth
  • the role of the financial sector and CEO compensation in fueling the top one percent’s income growth
Jobs
  • the extent to which changes in the labor force participation rate are due to the weak economy or are structural/demographic
  • why current unemployment is cyclical and not structural
Wealth
  • the decline of median wealth between 1983 and 2010 (while wealth at the top grew strongly)
  • the collapse of wealth in African American and Hispanic households
  • the role of housing equity’s collapse on middle class wealth
  • the increasing concentration of stock ownership
Poverty
  • the factors driving high poverty and low-end wages
  • the large role income inequality plays in growing poverty (as opposed to demographic factors like family formation)
  • the contribution of longer work hours to low-income families’ income
  • the relatively small role tax and transfer policy plays in reducing poverty in the U.S. in comparison to peer countries
  • high child poverty rates in comparison to peer countries

Myths About Job Creation and the Private Sector

by MARK VORPAHL
 
The issue of unemployment and underemployment loomed above the hype of both the Republican and Democratic Party conventions with the cold stare of a harsh judge. Many promises and dubious claims were made from the respective party podiums, but no real solutions were put forward.

Despite the antagonistic posturing between Obama and Romney, both stand by the “free market” commandment that it is the business of the private sector to create jobs, not the government. That is, the effects of the Great Recession will not be reversed until the big business owners invest in job creating ventures that they can make a profit from. In order to encourage them to make these investments it is necessary to fatten their financial reserves with bail outs, low interest loans, minuscule tax rates, and so on.

In short, the policies emanating from the belief that the private sector will rescue workers from the jobs crisis are variations of the discredited trickle down theory where the wealth built up at the top through government funded corporate welfare will somehow find its way into the pockets of working Americans.

Romney is an unapologetic supporter of this discredited scheme. While candidate Obama criticizes such an approach in order to get votes, nevertheless, as President, this has been the guiding philosophy of his actions. He has provided trillions of dollars in bailouts and loans to Wall Street, declared himself open to cuts to Social Security, Medicare, and Medicaid, supported the privatization of public schools through the “Race to the Top” program of charter schools, extended the Bush tax cuts for the rich, and the list goes on.

What have been the results? Ninety three percent of the economic growth that has occurred since the economic crisis went into the pockets of the top 1%.[i] Big business is sitting on $2 trillion in profits without reinvesting them.[ii] Side by side with this enrichment, high unemployment and underemployment persist and 58 percent of new jobs pay under $13.83 per hour.[iii]

The private sector is not coming to the economy’s rescue. Rather, those in the private sector are taking advantage of the crisis to enrich themselves at the expense of workers. Neither Romney or Obama are proposing an alternative course, only variations of the same failed approach.

The private sector did eventually help to lead the nation out of the deep recessions of the 1970s and 1980s. However, the Great Recession is much more profoundly structural in its nature. Conditions are worse today, and policies that depend on the private sector to create good jobs will only exacerbate the fundamental problems that led to the Great Recession and allow its results to continue to devastate the lives of tens of millions.

One difference is that today wealth is vastly more concentrated into fewer hands. The top richest 400 individuals have more net worth than the bottom 60 percent of all Americans.[iv] Six members of the Walton family behind Walmart have, by themselves, as much wealth as the bottom 150 million.[v]

These few are the most powerful owners of the private sector. This elite’s outlook is far removed from that of the majority. Because they are so powerful, they own a good part of both political parties. And because they are sitting on such vast financial reserves, they are less inclined to risk it on investments that provide jobs.

Their top goal is to generate as much short-term profit as possible for themselves. The long-term effects of how they do this are of no concern to them. If they can make more through destructive trickery rather than putting people to work making commodities, all the better.

The opportunities for such trickery have grown in parallel with the rapid expansion of the financial sector over the last thirty years. This is indicated by the fact that trade in U.S. equity (stock) markets grew from $1.671 trillion, or 13.1 percent of the US GDP in 1970, to $14.222 trillion, or 144.9 percent of the US GDP in 2000.[vi]

Profit has increasingly been made through financial schemes rather than production and trade. The problem developing out of this is not only a minimalization of job creating investment, it turns the economic system into a giant casino for the mega rich at the cost to society as a whole.

It was the growth of financial speculation that led to economic bubbles, particularly in housing, which helped make the collapse of 2008 so deep and lasting. The destructive possibilities of the financial sector’s activities continue unchecked. The banks have lobbied tenaciously to prevent any restrictive regulation. In fact, just last month the Securities and Exchange Commission abandoned efforts to tighten regulations on money market funds. All those who follow the financial sector agree that nothing substantial has been done to prevent a monumental financial disaster that will require an even bigger bailout than before.

Even more alarming has been the growth in derivatives trading. Paul Wilmott, an economic quantitative analyst, has estimated that the total amount of derivatives being played in the markets is $1.2 trillion — 20 times the amount of money currently in the global economy. Despite the enormous risk the exposure to such debt puts the economy in, financiers continue to realize more short-term profit through these investments than job creating production in manufacturing.

The main players in the private sector are not interested in job creating investment. The reality is that workers are too broke to buy much, therefore demand is too weak for big business to realize profits by making more goods. Better from the big business elite’s perspective to hoard trillions and invest in financial speculation, though it puts the world economy in peril.

In contrast to the claims of both Obama and Romney — and both of them know better — the private sector will not create the jobs necessary to lift workers out of the Great Recession. No matter how many incentives big business is showered with, there will not be enough to overcome the limits the profit motive places on investment, given the concentration of wealth, growth in financial speculation, and the lack of demand resulting from workers’ impoverishment.

The private sector is the problem, not the solution for the jobs crisis. It will take investment in the public sector to create full employment and lift up the economy. This investment can be funded by taxing corporations to the point where our nation is facing surpluses rather than deficits. Owners of immense wealth have for too long been let off the hook from paying their fair share.

There is no shortage of work that desperately needs to be done. Industries need to be retooled to reverse climate change. Our infrastructure needs to be maintained and, in many cases, rebuilt. Public education needs to be improved and expanded rather than privatized. Social services and health care need to be made available for everyone who needs them.

Unfortunately, this is exactly the opposite of the approach of both presidential candidates and their corporate funded parties. Workers need to wrest control of the economy from the 1% by building a politically independent mass social movement to place our needs, such as a federal jobs program to create full employment, on the front stage.

All progressive changes that have benefited the vast majority have been the result of such struggles. Our salvation from the Great Recession lies in forging the necessary grass roots/workers unity to rediscover our power to set the political agenda.
Notes. 
[i] “The Rich Get Richer” by Steven Rattner http://www.nytimes.com/2012/03/26/opinion/the-rich-get-even-richer.html?_r=1
[ii] “US firms hoarding $2 trillion” by John Aidan Byrnehttp://www.nypost.com/p/news/business/hoarding_cash_Yzfk2c8aK1wAPrZCRdEVnJ
[iii] “The low-wage jobs explosion” by Tami Luhby http://money.cnn.com/2012/08/31/news/economy/low-wage-jobs/index.html
[iv] “Michael Moore says 400 Americans have more wealth than half of all Americans” by Politifacthttp://www.politifact.com/wisconsin/statements/2011/mar/10/michael-moore/michael-moore-says-400-americans-have-more-wealth-/
[v] “Wal-Mart Heiress’s Art Museum a Moral Blight” by Jeffery Goldberg http://www.businessweek.com/news/2011-12-19/wal-mart-heiress-s-art-museum-a-moral-blight-jeffrey-goldberg.html
[vi] “Financialization” Wikipedia http://en.wikipedia.org/wiki/Financialization

Tuesday, August 28, 2012

Tax the Rich or Privatize the State?

by SHAMUS COOKE
 
The Great Recession and its possible continuance has brought the issue of privatization to the forefront of American politics. But most Americans aren’t even aware that this debate is happening, because the media and politicians aren’t using the word “privatization;” instead less threatening substitutes are used to ram through a corporate agenda that aims to massively transform public resources into corporate profit.

The mass privatization frenzy is the corporate solution to the budget crises occurring on the city, state, and national level — crises caused by the recession that the banks and corporations created themselves, and are now positioning themselves to benefit from again, beyond the infamous bailouts.

The effects of the recession will continue for years, and the already slowing economy is exacerbating these effects, most notably the bankrupting of government budgets. Politicians from the Democratic and Republican parties both holler that “there is no money,” and therefore massive cuts have to be made to public services, while public employees must either be laid off or have their wages destroyed.

But another corporate solution to this corporate-caused problem is now proceeding full speed ahead: Urban Infrastructure Banks. Under this scheme, the funding of publicly-run infrastructure — roads, bridges, public buildings, etc. — will be taken out of the public realm and transferred to the corporations, who will fund these projects as long as they profit from them.

The right-wing Economist Magazine explains:
“The private sector will invest money in projects and get it back in the shape of tolls, user fees, premium pricing or even tax breaks.”
So essentially, a big bank will front a city the money — presumably at a giant discount — to buy a road or bridge; the tolls charged will go to the bank with interest (profit), while the bank is also likely to get tax-exempt status for its profit. The bank will also have a profit motive to do the cheapest possible maintenance work, if any at all. Working people will thus pay more to use these services so that the banks can make a profit.

This nefarious right-wing plot is being pushed hardest and fastest by the Democratic Party. The Mayor of Chicago, Obama’s former Chief of Staff Rahm Emanuel, is the poster boy for city privatization. Again from the Economist:
“…Mr Emanuel wants to spend about $7 billion to rebuild the city of Chicago — on everything from streets, to parks, to the water system, schools, commuter rail and the main airport… The city will finance the running costs of the [Urban infrastructure] trust itself to the tune of $2.5m. Several financial institutions are already lined up to make investments totalling $1.7 billion, among them Macquarie Infrastructure and Real Assets, Ullico, Citibank and JPMorgan.”
Democrats everywhere were inspired by Rahm’s corporate crusade to privatize Chicago, so much so that Bill Clinton organized a national conference of Democratic Party mayors to promote the idea. This from the official press release of the Clinton Global Initiative:  
“I was thrilled when Rahm Emanuel set up America’s first urban infrastructure bank in Chicago, and I see this ongoing conversation among America’s mayors as an important step towards finding a workable model that can be replicated in every other city around the country,” said [former] President Clinton. “My hope is that coming out of this meeting, mayors will realize that attracting private investment in their cities’ roads, bridges, water and sanitation systems, waste to energy projects, and new electrical grids is an idea that will put people to work, stimulate the local economy, and increase the value and quality of life of their cities in the long term.”
Obama, too, has caught the fire of public infrastructure privatization, and has proposed a plan for the federal level.

This privatization debate has already entered the realm of other cherished social programs — Medicare, Social Security, and public education — under the catchword of “choice.”  

Obama’s misnamed Race to the Top education plan consciously aims to privatize public education in a more blunt manner than Bush dared, as it awards states money if they create privately run charter schools.

And while the Democrats shed fake tears about the Republicans’ plan to privatize Medicare, the giant Medicare cuts that the Democrats have already proposed imply a total re-structuring of the program, i.e., its privatization. Any publicly run program that is underfunded — and thus requires individuals to pay extra for the baseline service — can be considered half privatized.

The alternative to this bi-partisan privatization madness is to drastically raise taxes on the wealthy and corporations to pre-Reagan levels. It is a deliberate lie to say that “there is no money” to fund public programs. Taxes have shrunk for the wealthy and corporations for decades, thus causing these budget deficits that working people are made to pay for.

President Obama has made “taxing the rich” one of the pillars of his election campaign, but all he promises to do is to remove the Bush tax cuts for the rich — the same promise he broke after the last election. But Obama combines his “tax the rich” slogan with promises to balance the national budget by making massive cuts to social programs: Obama’s proposed budget included $3 trillion in cuts, including hundreds of millions of cuts in Medicare and other social programs.

Therefore, labor and community groups need to put forward a completely independent demand to tax the rich and corporations, including the demand of NO CUTS to social services. There is enough money in the United States to fully fund a national jobs program, Social Security, Medicare, public education and all vital social programs. But this money has accumulated in the hands of the top 1%, who must be taxed at 70 percent or higher for the benefit of all working people. All forms of income and wealth of the 1% must be “on the table” for taxation.

Thursday, June 21, 2012

The Recession Politicians Don't Want to Talk About

The Real Story of the Housing Crash
by DEAN BAKER

The economy is certain to occupy center stage in the presidential race this fall. Unfortunately neither Governor Romney nor President Obama are likely to give us an accurate account of the economic problems we are now facing.

Romney’s efforts seem intended to convince the public that President Obama has turned the country into the Soviet Union, with government bureaucrats shoving aside business leaders to take the commanding role in the economy. He will have lots of money to make this case, which he will need since it is so far from reality.

Corporate profits are at their highest share as a percentage of the economy in almost 50 years. The share of profits being paid in taxes is near its post-World War II low. The government’s share of the economy has actually shrunk in the Obama years, as has government employment. Perhaps Romney can convince the public that the private sector is being crushed by burdensome regulation and taxes, but that has nothing to do with reality.

Unfortunately President Obama’s economic advisors have not been much more straightforward with the American people, never offering a clear explanation of why the economy has taken so long to recover. They have pointed out that economies often take long to recover from the effects of a financial crisis like to the one we experienced in the fall of 2008, but that is not an explanation for why we have not recovered.

The basic story is actually quite simple. The housing bubble had been driving the economy prior to the recession. It created demand through several channels. A near-record pace of housing construction added about 2 percentage points of GDP to annual demand or more than $300 billion in the current economy.

The $8 trillion in ephemeral housing wealth created by the bubble led to a huge surge in consumption. Tens of millions of people borrowed against bubble-generated equity or decided that they didn’t need to save for retirement. When house prices were going up 15-20 percent a year, the house was doing the saving. The result was a huge consumption boom on the order of 4 percent of GDP or $600 billion a year.

In addition, there was a bubble in non-residential real estate that followed in the wake of the housing bubble. This raised non-residential construction above its normal levels by close to 1 percent of GDP or $150 billion a year.

Adding these sources of demand together, the bubble generated well over $1 trillion in annual demand at its peak in 2005-2007. When the bubble burst, this $1 trillion in annual demand vanished as well. That is the central story of the downturn.

To recover we must find some way to replace this demand; however that is not easy. People will not go back to their old consumption patterns because they know they need to save more. Tens of millions of people have much less wealth than they expected at this point in their lives after they saw the equity in their homes largely vanish. Tens of millions of baby boomers are approaching retirement with almost nothing but their Social Security to support them.

Given the huge loss of wealth from the collapse of the housing bubble it is not reasonable to expect consumption to rise to fill the demand gap. It doesn’t make much more sense to expect investment to do the job. Historically, investment in equipment and software has been close to 8 percent of GDP. It is pretty much back to that level today. To fill the demand gap created by the collapse of the housing bubble the investment share of GDP would have to nearly double to 14 percent.

This would be almost impossible to imagine at any time, but it is especially far-fetched at a time when much of the economy is operating far below its capacity. Businesses are unlikely to spend a lot of money expanding their facilities when the existing capacity is sitting idle regardless of how nice we are to job creators.

Over a longer term we can expect that net exports will fill the demand gap. If we bring our huge trade deficit close to balance by selling more abroad and importing less it will provide a substantial boost to demand. However this will require that the dollar fall in value relative to the currencies of our trading partners, making U.S. products more competitive. That is a process that will take time. With many of trading partners also in severe slumps, we cannot expect any major improvement in our trade balance in the immediate future.

This leaves government as the only remaining source of demand. This is not a question of whether we prefer the government or the private sector. We need the government sector to fill the gap in demand because the private sector will not do it. And that will be true no matter how much we love the private sector and its job creators.

Until we get our trade deficit closer to balance we will need large government deficits to fill the gap in demand created by the housing bubble. That is the simple reality that neither party seems anxious to tell the people.

Thursday, June 14, 2012

Romney's Wacky Jobs Chart

Job chart in Romney’s economic plan seems wrong

I was asked to comment on the speech Mitt Romney made in front of the Business Roundtable, so I decided to do some light background reading: Believe in America: Mitt Romney’s Plan for Jobs and Economic Growth.(pdf)

I noticed something odd in the jobs section of the plan—this chart (ripped directly from the Romney PDF):




I know jobs numbers and recoveries, and these looked wrong to me. For one, the absolute peak-to-trough employment loss following 2007’s Great Recession was 8.8 million jobs (between Jan. 2008 and Feb. 2010)  not the 8.9 million that the chart claims.

And given that this is the peak job loss, this means, by definition, that anything measured after this trough couldn’t be negative, as the chart implies. I also know that the U.S. economy didn’t begin adding jobs after the 2001 recession until the second half of 2003, so the 2001 numbers looked off, too.

So I decided to do the chart correctly—actually show job losses during the official recessions (i.e., not just employment peak to trough) and the 24 months following and sure enough:



Romney’s numbers are all slightly off, which is odd.

Odder is that the respective performance of the recoveries following the 2001 and 2007-2009 recession are reversed. Look closely at the the last two sets of bars in the respective figures.
The Romney chart  has jobs growing in the first 24 months of recovery following the 2001 recession, but shrinking in the first 24 months following the 2007-2009 recession. That’s the opposite pattern of what actually occurred—jobs shrank for the first two years after the 2001 recession and grew modestly in the first two years after the 2007-2009 recession.

I’ll note that we also tried to match the Romney numbers with quarterly data, with household-survey employment counts, with household-adjusted-for-payroll concepts survey data … nothing worked.

A little curious as to what’s going on here.

And since there’s been lots of discussion about the relative health of the private and public sectors, here’s the correct graph for private-sector jobs only.


Friday, May 18, 2012

Where are the Missing Five Million Workers?


by Laura Flanders

"Where have all the workers gone?" David Wessel of the Wall St. Journal wondered about the labor force this week:

“In the past two years, the number of people in the U.S. who are older than 16 (and not in the military or prison) has grown by 5.4 million. The number of people working or looking for work hasn't grown at all.”

So, where have all the workers gone? Have they retired, suspended their labors temporarily, or are they languishing on public assistance? Asks Wessel.

There are some other possibilities. Since the crash of 2008 there’s no question that millions of Americans have indeed stopped looking for a job. But that doesn’t necessarily mean they’re not working. Look around, it’s much more likely that the officially “unemployed” are busy, doing their best to make ends meet in whatever ways they can. Sex-work, drugs and crime spring to mind, but the underground or “shadow” economy includes all sorts of off-the-books toil. From baby-sitting, bartering, mending, kitchen-garden farming, and selling goods in a yard sale, all sorts of people -- from the tamale seller on your corner, to the dancer who teachers yoga – are all contributing to the underground economy along with  “employed” who pay them for their wares.

The “underground” is always with us. For better and often for worse, it’s how marginalized populations tend to survive —often not very well. (Think of the old, the young, the formerly incarcerated, or foreign.)

In recessions – surprise, surprise– “irregular” employment grows. Consider recent stories from Greece, about wageless public “workers” swopping skills, and trading food for teaching.

Austrian economist, Friedrich Schneider, an expert in underground economies, has documentd a surge in shadow economy activity in 2009 and ’10 in Europe. University of Wisconsin-Madison economist Edgar Feige has been doing his best to follow what’s happened here.

Tracking the gap between reported and unreported income in the US since 1940, Feige finds:



Measuring unreported data is not easy, but from Feige’s graph one thing is clear: there’s as much unreported income swirling around the US today as there was in WWII under rationing, and that number’s not going down with any speed.

Unreported income matters to the IRS because those “unreported” dollars are lost revenue for the taxman. (In 2001, the Internal Revenue Service estimates it was losing $345 billion in tax revenue. In 2009, according to Feige, that estimate could be approaching $600 billion.)

A shrinking workforce matters to policy makers too, as Wessel explains:

"Figuring out how many of those now on the job-market sidelines are likely to come back onto the field matters to gauging the current state of the economy, to fashioning the right remedy for the sluggish recovery and to evaluating prospects for economic growth, which hinge, in part, on an expanding labor force."

Getting a more accurate picture of our economy matters for another reason too. For one thing, ever since Adam Smith, we (at least we in the West) have been taught there is one set of rules, and one viable economy: the “end of history” economy of jobs and wages, profits and losses, and round the world trading on the stock market.  The reality is, as farmer/science writer Sharon Astyk put it recently, what “the economy” is not the only economy.

“Let us remind ourselves that the informal economy is, in fact, the larger part of the world's total economy. When you add in the domestic and household economy of the world's households, the subsistence economy, the barter economy, the volunteer economy, the "under the table" economy, the criminal economy and a few other smaller players, you get something that adds up to 3/4 of the world's total economic activity. The formal economy - the territory of professional and paid work, of tax statements and GDP - is only 1/4 of the world's total economic activity.”

Looking ahead at our employment and energy future, it’s not at all clear what the economy will look like in years to come. With fewer dirty satanic mills to labor in, regular Joe and Jane workers are going to have find income that doesn’t depend on them transmuting into celebrities or high-rolling mobsters of high finance. What are they going to do? For those who believe that stocks and bonds and 9-5 jobs are the only economy there is, the pictures dire.

For others, there’s a world of possibility ahead. Gar Alperovitz and his colleagues at the Democracy Collaborative are about to launch a series on the upsurge of thinking that’s currently happening about different ways in which people might support themselves and restructure the political and economy. They point to the exploding interest in “new economy” conferences and the array of real-world experiments, from solar-powered businesses to worker-owned cooperatives and state-owned banks.

“History dramatizes the implacable power of the existing institutions—until, somehow, that power gives way to the force of social movements. Most of those in the 'New Economy' movement understand the challenge as both immediate and long term: how to put an end to the most egregious social and economically destructive practices in the near term; how to lay foundations for a possible transformation in the longer term.” Writes Alperovitz in the first of five articles.

Could it be that the old economy is losing its grip, not only on our lives, but also on our ideas? There is much – much – more to come.

American Empire and the Future

by PAUL L. ATWOOD
 
 
The Great Recession is the worst economic crisis since the Great Depression and, like the aftermath of Katrina, or the BP calamity, or the invasions of Iraq and Afghanistan, is a man-made disaster. Many signs point to worse tidings. Many of us who live in this the most advanced capitalist country are indoctrinated at an early age to believe our system is by far the most efficient and best ever created, especially if we are affluent and live well. We tend to believe it obeyed the laws of evolution toward ever higher form, more or less as we imagine the human species itself. We go to lengths to ignore the fact that our system began as the brainchild of a minority that imposed its will by brute force against others who had good reason to oppose it. It is impossible to separate our republican form of government from our economic system. As former Secretary of State John Hay put matters as far back as the 19th Century: “This is a government of the people, by the people, and for the people no longer. It is government of corporations by corporations.”  It has been the case since the American Revolution, and remains the case, that the American government has been owned and operated by the financial and corporate elites and government policies, and most definitely foreign policy, are largely their agendas set out for their interests. Bankers and immense industrial corporations largely run the global show, backed by the Executive, Congress and the Supreme Court, America’s gargantuan military power and the connivance of corporate media.
 
As a culture we deliberately ignore the brutal genesis of American capitalism, feeding ourselves Disney fantasies about religious freedom etc. The origin of the modern American corporation is to be found in the Plymouth and Virginia companies. Childish mythologies aside, these were established as profit-making entities and to make their claim upon the so-called New World these new enterprises required systematic plunder of lands and resources from natives, and their virtual annihilation in the original colonies, ethnic cleansing, cheap white labor in the form of indentured servitude, and ultimately the importation of African slaves. The American capitalist system was therefore premised at its outset by murder and de facto aggression, and human bondage, the very sins for which we condemn others today. Many of our early American heroes were slaveholders and war mongers par excellence.

Some of us are old enough to remember when we condemned the communists for their “slave societies,” believing that our own slavery was somehow an aberration instead of the absolute prerequisite to establish today’s American way of life. Our system’s continued success still requires these critical factors. We still have slaves but now we don’t have to see them. They toil on plantations, mines and factories hidden away in far continents, victims of centuries of western plunder, today camouflaged  as “globalism.” We employ terms like “neo-colonialism” but pretend this term does not apply to us. What else was Cuba before Castro but an American satrapy? What else South Vietnam, South Korea, Dominican Republic, Iran before 1979, Philippines, Guatemala, El Salvador, Nicaragua and many others?  Why else has the US invaded Iraq and Afghanistan but to try to secure the world’s remaining second largest deposit of oil and to acquire oil and natural gas from Central Asia in the very backyards of our rivals China and Russia? As Edward Said asked, “if the principal product of Iraq were broccoli would the U.S. be in Iraq?”

Victims of our wars are dismissed under the Orwellian rubric of “collateral damage” committed accidently in the “fog of war.” While our government now goes to some lengths to ensure that the worst of such crimes are committed by proxies wherever possible, when all else fails we send in our own armed forces. As reports from Iraq and now Afghanistan and Pakistan and Yemen and Somalia show daily, our pilotless predators wreak a terrible slaughter on civilians. Our Army and Marine Corps do not exist to protect and defend our shores but to enter other nations and force them to our will.

We Americans hide from such uncomfortable facts largely by ignoring them, believing the lies we are told, or by fantasizing that we are a new chosen people, or the redeemers of a benighted world.  We have constructed a mass delusion that our way of life represents the most advanced civilization in human existence despite the fact that its perpetuation has required the deaths quite literally of many millions as it took shape, the wholesale violation of the very values we claim, and the destruction of the very resources and environment that made the “American way of life” possible in the first place.

Any trust in this system is really a kind of fundamentalism; many want to believe that all of this was ordered on high, perhaps encoded in our genes at the very dawn of humanity, its inevitability impressed in the Book of Time.

As in all fundamentalist faiths we have created a set of myths about why we go to war and these myths center on the falsehood that we do so to protect and defend noble values, and principles, and our superior way of life; never for the reasons others wage war, such as lebensraum, or to seize resources, or to prevent others from exercising their ‘right’ to self-determination should that impede our “interests.”

In American public culture enemies have always been presented as aggressors against an intrinsically peace loving people who take up the sword only, ONLY, because our antagonists have left us no alternative. Thus, it is always the other who bears the opprobrium for anything the US has done in the name of national “defense.” Think, say, of the atomic bombings of Hiroshima and Nagasaki, or the carpet bombing of South Vietnam, or the more recent destruction of Fallujah where white phosphorus, a chemical  banned under international law, and depleted uranium was used on civilians to awful effect causing a plague of cancers. All of these were brought on by the iniquities of our enemies, or so we claim… 

Yet not a single war in American history has at bottom NOT been one of choice. And we never go to war against any nation capable of wreaking havoc on us. No, we ravage only those who lie helpless before us.  The American way of war has been hailed culturally as “exceptional” and humane and just and necessary for the defense of profound human values and ideals, and thus a model for the rest of humanity…but the truth stands naked in the neo-colonies.

This has been especially true since the US assumed ownership of the Western capitalist system in 1945 and has used armed violence against many nations, either overtly or covertly, to expand it to the entire world, thereby building new roads so to speak, all leading to our New Rome.

In these almost innumerable wars, interventions, covert ops, assassinations etc. since the end of World War II the US has killed millions in places too numerous to list here, all of course in the name of progress and humanity.

The American empire that most Americans are persuaded does NOT exist began as an outpost of British imperialism, and now occupies the dominant position among the nations of our planet. One of the American goals of WWII was to knock Britain from its perch… to play Rome to Britain’s Athens as it were. Today American armed forces are in at least 170 of the 192 nations comprising the United Nations, and American ships, aircraft and satellites are deployed to every corner of the terrasphere, stratosphere, ionosphere, and outer space. The reach of American empire is a quantum leap in power beyond anything ever seen on planet earth.

Empire by definition is one core nation living at the expense of many others. Clearly, in terms of the distribution of wealth and resources, mal-distributed as they are domestically, most roads today lead to the United States.  Yet a “perfect storm” of merging crises is gathering force that has every possibility to undo the American imperial project and, indeed, prove catastrophic for human civilization across the globe.

Empire, and the American neo-empire today, has always relied at bottom on armed force and that in turn has always been dependent on advantages in the technology of war. Since at least the turn of the 19th Century, when the emergence of modern capitalism fostered the Industrial Revolution, military and economic advantage has required access to ever greater quantities of energy. To a significant extent both World Wars were global imperial competitions for the control of oil. Until 1945 the US was self-sufficient in energy but used so much petroleum supplying its war machine and those of the United Kingdom and Soviet Union, that in order to maintain our enormously bloated way of life we became dependent on oil in other nations.

Since then the American armed juggernaut has been deployed often, if not primarily, to protect access to petroleum in other people’s countries, to fuel our army, navy and air force, to safeguard the trading routes and shipping lanes to transport the black gold, all for the benefit of American living standards.

Our swollen way life is inconceivable without oil, and other hydrocarbons. Yet, the absolute reliance on the substances is slowly but indisputably poisoning and suffocating the very systems they enabled to arise, and the day draws near when the Age of Oil will end because of declining reserves and increasing costs.

Consider Peak Oil. A concerned geologist at Columbia named Hubbert began to worry about how long oil would last and he predicted that American production would peak about 1973. He was correct. Since 1859 the US has used half of its oil and now the other half will be consumed in the next 50 years, though it will undoubtedly be so expensive well before that many will have to choose between heat and food. He also predicted global oil production to peak about now and most analysts agree that his prediction is correct.

Americans have always relied upon ingenuity and technological fixes to solve problems but in this case the likelihood that hydrogen, biofuels, solar or cold fusion will ever replace petroleum and natural gas is slim. The U.S. is the Saudi Arabia of coal but reverting to that fuel will entail other collateral damage. Some, like James Lovelock, argue that nuclear power could save the advanced nations from total collapse but opposition to that is widespread especially after the events in Japan last spring.

Thus, intensifying competition for access to fossil energy reserves is inexorably leading to increasing armed conflict, and, ironically, the armies in conflict will not be capable of combat without the very energy they are fighting to protect, thereby hastening the disappearance of this energy source, and therefore exacerbating the very problems that in truth cannot be resolved by war. A case in point is the fact that American and NATO forces in Afghanistan now consume a million gallons of fuel per day!

The release of carbon and other byproducts of burning coal, oil, and gas has altered the world’s ocean and atmospheric systems, while the industrial processes have also ravaged landscapes, rivers, overturned settled ways of life, and polluted cities. The net result is increasingly catastrophic climate change, just as climate scientists have predicted, leading to intensifying social problems like drought, floods, famine, increased disease, and the mass migration of populations. All of these are sure to lead, in turn, to more armed violence globally, and will unless a massive shift in consciousness takes place with an equal commitment to change.

While there are numerous Cassandra voices prophesying these outcomes the real issue before us is whether we have the will to see and take the necessary action before it is too late.
President Obama was elected primarily on the basis of his promise to end the war in Iraq. Is anyone fooled by his withdrawal that is not a withdrawal? And what of the uncounted but very numerous cohorts of “contractors,” like Blackwater/Xe, many of whom are highly paid former Special Forces operatives with “trigger time” who will employ their martial skills while remaining in Iraq? These privatized troops cost far more than the pay scale for regular troops.

For what other purpose will these mercenaries remain than to ensure that this long coveted, yet incipient neo-colony remains in the American orbit and provides its only natural resource?
One of the first measures undertaken by the Bush Administration was to create a National Energy Policy Development Group headed by the chief spokesman of the oil industry, one Richard Cheney. No access to their records or discussions has ever been allowed but their actions surely indicate that the energy chief executives are mightily aware of Peak Oil. Their policy? Not conservation; no crash program of alternative energy sources, no commitment to work with the international community for peaceful solution. NO! The policy is clearly to invade other countries and seize their energy reserves and/or the means to transport them. For all President Obama’s rhetoric there really is no Plan B.

The U.S.-NATO induced civil war in Libya has been won by rebels opposed to the ousted and now departed Gaddaffi. The rationale provided by the United Nations and Obama was that a “no fly zone’ was necessary to prevent the slaughter of Libyan civilians and that would be the limit of American intervention. The 7-month long bombardment of Libya’s cities resulted in a massive humanitarian catastrophe, the very outcome the intervention was supposed to prevent.

It is clear that even before this intervention was  announced to the public the U.S already had CIA and Special Forces operatives on the ground in Eastern Libya. The intelligence analysis institute STRATFOR  published a map of foreign oil concessions in Libya. The vast bulk are in Eastern Libya, now  liberated from Gaddaffi’s grasp and soon to be made more profitably available to Western energy conglomerates. As South Carolina Senator Lindsay Graham put it nakedly “Let’s get in on the ground. There is a lot of money to be made in the future in Libya. 
Lot of oil to be produced. Let’s get on the ground and help the Libyan people establish a democracy and a functioning economy based on free market principles.” The “humanitarian” pretext stands naked in its hypocrisy. No such intervention has been deemed necessary in Bahrain or Yemen, or conspicuously, Saudi Arabia where repressive governments have killed numerous civilians demonstrating against those governments for the obvious reasons that these countries’ dictatorships cooperate with the American agenda in the region.

President Obama was elected on the strength of his opposition to the War in Iraq and his promise to end it. Yet in his recent speech declaring the Iraq War at an end he asserted that the original purpose was to disarm terrorists, the false claim made by his predecessor. Thus Obama has adopted the very narrative of the Bush deceptions. Bear in mind that Obama has always been in the camp of that section of the elite who saw the invasion as a blow to a very specific international order that would weaken the American position and overall agenda in the world.

Read his speeches made as a senator before his candidacy. He feared the real American agenda to keep consuming the lion’s share of vital global resources was endangered by Bush’s cowboy tactics, and could lead to conflict with people who could do real damage, like Russia and China. His actions as president show he is not morally opposed to bombing and killing barefoot civilians who employ donkeys or camels as their mode of transport. That has continued unabated at his command. He claims to lose sleep over the deaths of American troops. At first he said that he was serious about withdrawing from Afghanistan in July of 2011. Then the date has been moved up to 2014, now it is 2024. At best Obama seems the captive of the real government behind the scenes.

If you’ve never heard of Col. Fletcher Prouty that would not be an accident. He testified before the United States Senate Select Committee to Study Governmental Operations with Respect to Intelligence Activities, otherwise known as the Church Committee during the mid-1970s that revealed, among other things, the CIA’s assassination squads and its secret alliance with the Mafia. He blew minds with his description of the Secret Government behind the scenes. Prouty was a distinguished career military officer who in the last third of his career was deeply involved in the so-called intelligence community. He was go-between for the Joint Chiefs of Staff, the Defense Intelligence Agency, and the CIA, and he reminds us that the CIA emerged directly from Wall Street at its birth in 1947. Prouty was a consummate insider who spilled the beans. At the time his remarkable book The Secret Team was deep-sixed by the very secret team he revealed. It has recently been re-published by a small press and is available.  Read it and learn how our government’s foreign policy is really shaped and by whom and for what. As Prouty shows, this intelligence, military, and “national security” network is really a combine of  those entities known popularly as High Finance, the Military Industrial Complex,  and Big Media.

Prouty emphasizes that this secret government behind the scenes is not a tiny cabal comprised of the Illuminati or Tri-lateral Commission or Bilderbergers, or Council on Foreign Relations though they do play roles. Rather, each faction of the Financial-Military-Industrial- Intelligence-Congressional-Media Complex has self-interests, large-scale benefits, and its future existence to protect. No one is initiated into these agencies unless vetted very carefully, and that would be especially true of party nominations for president. While disputes arise between factions and can be intense, on rock bottom interests, like access to energy reserves and control of resources and markets, and on maintaining the dollar as the world reserve currency, each collaborates with the others in symbiotic and synergistic relationships. The clearest example is the war (Iraq and Afghanistan, and Pakistan, Iran, Somalia, Yemen, Libya and Venezuela are essentially the same war!). Virtually all factions of the Secret Government support it, if for somewhat different reasons.

An example is the recent revelation that the Federal Reserve Bank printed 40 billion dollars and sent it to Iraq in 2003 where most of it promptly disappeared. This action clearly indicates that the nation’s chief bankers were part of the broad conspiracy among the behind-the-scene elites to invade Iraq, for conspiracy it was since Iraq had nothing to do with the events of 9-11, as the Bush Administration claimed. Masquerading as a government agency the Fed is really the nerve center of a consortium of the nation’s largest and most important banks. Fed officials acted in secrecy as always. Why they acted as they did should be thoroughly analyzed and revealed.

This Secret Team has certainly never served the people, though it claims to do so as our national defense team (against enemies it creates!). For at least the last century its members have come to believe the president is its servant and most definitely not the other way around. As even ultra-conservative spokesman George Will said publically on a Sunday talk show: America has always been ruled by its aristocracy. It has never been about democracy but about which section of the elite will rule at any given time. Or as Noam Chomsky avers: There is only one political party, the Corporate party, with two separate wings.

Of course this Secret Government’s chieftains, no matter their past history, believe themselves to be omniscient and infallible. To take just the current crisis, the CIA itself fostered the rise of Islamic extremism during the Cold War because it believed this force would obstruct communism and prevent Arab and Muslim nationalism from achieving independence of western control, especially over oil. The CIA actually fostered Ayatollah Khomeini in Iran as the strategic answer to Iranian communists; as well as the Muslim Brotherhood in Egypt to thwart Nasserism, or Arab nationalism; and the mujahideen in Afghanistan who morphed into the Taliban and al Qaeda. As the CIA itself said the eruption of Islamic militancy in opposition to the hand that fed it was “Blowback” of the first magnitude. When the Carter Administration national security chief, and current background adviser to Obama, Zbigniew Brzezinski, armed the Mujahideen in 1988 in order precisely to draw in Soviet troops, Brzezinski infamously declared: “That secret operation was an excellent idea. It had the effect of drawing the Russians into the Afghan trap and you want me to regret it?… I wrote to President Carter: ‘We now have the opportunity of giving to the USSR its Vietnam War’…What is more important to the history of the world? The Taliban or the collapse of the Soviet empire? Some stirred up Moslems or the liberation of Central Europe and the end of the Cold War?”

Stirred up Moslems indeed!

President Obama said clearly during his campaign that he would focus on Afghanistan in order to prevent the return of the Taliban and al Qaeda, thereby enhance American national security, and ensure that another 9-11 could never be planned and orchestrated from that country. We know now of a serious split between al Qaeda and the Taliban prior to 9-11 because of the latter’s fear of American retaliation. We know, also, that the Taliban have no desire to attack the United States itself, only those Americans on Afghan soil. American actions are clearly destabilizing Pakistan, thereby portending a far greater threat in terms of Pakistan’s nuclear weapons. So what is the United States REALLY seeking to accomplish in Afghanistan? Again, the claim of a “humane” intent is preposterous. American actions in both Afghanistan and Pakistan, especially attacks by pilotless drones that kill numerous civilian by-standers, do more for Al Qaeda’s and the Taliban’s recruiting than anything done by themselves.

If Bob Woodward’s recent book, Obama’s War, is to be believed the president desires to withdraw from Afghanistan but is being thwarted at every turn by the military, the CIA and even Hillary Clinton. I’m sure that Obama, having been cultivated and financed by major financial corporations still wishes to gain American access to the energy reserves of central Asia but the issue is whether that goal will be utterly compromised by policies based on raw force. It appears that the devotees of military solution are winning that argument but it is a doomed prospect and one that is fraught with danger.

When the Red Army finally left Afghanistan in the early 90s that tragic place descended into civil war while the US washed its bloody hands and walked away. Even so, as the Taliban came to dominate and as it committed terrible atrocities like public beheadings, and stonings of women, the CIA, Enron, and Unocal continued to negotiate with these extremists for a pipeline to carry oil and natural gas through Afghanistan to Pakistan and the Indian Ocean. If the Taliban were to regain power over all of Afghanistan and offer a guarantee for the pipeline, I’m quite sure the US would crawl right back into bed with them no matter their brutality with no shame and excuses aplenty for public consumption, just as was the case in the 1990s. But given the damage wrought by US armed intervention today a deal with the Taliban is probably all but impossible, and the US will never be able to impose its own  puppet able to guarantee the original US goal.

The real issue facing the so-called “advanced” nations and now China, India and the Asian tigers is that cheap oil is running out. Extracting oil will become ever more difficult and expensive and at some future point will be so costly that it will cause essentially a collapse of globalism with real depression here in the US. The fact that oil commerce is denominated in dollars while the value of the dollar steadily declines also presages a future in which the dollar may be toppled as the world currency, thus leading to widespread inflation and certain critical shortages of basics.

Widespread suffering will be endemic, unless an alternative source of energy is found able to sustain our way of life. But that is extremely unlikely. Coal and natural gas can compensate to some degree but since our luxurious and wasteful way of life is based on oil and since we see our many profligate luxuries as necessities, the industries that support them will fail, and that will lead to mass unemployment, cold winters indoors and the absence of air-conditioning in summer, not to mention starvation in what we like to think of as the “backward” nations, and hunger here since our supermarket cornucopia requires hydrocarbon for fertilizers and pesticides. Miracle cures like bio-fuels and hydrogen are wishful thinking. Nuclear power could maintain the electrical grid but the recent meltdown in Japan may make that hope insurmountable despite Obama’s continuing support for a nuclear renaissance.  Green technologies are unlikely to fill the void on time to avert the falling economic and political dominoes, if ever.

The US government’s real energy policy up to now has been to support energy corporations to exploit oil as usual and gain control over such reservoirs still existing. Congress is the creature of oil and other hydrocarbon corporations and their financiers…largely to protect their profit margins, and there is no plan for the day when the Age of Oil ends with a crash. Again natural gas and coal can maintain some of the richer nations at a much lower standard of living but this will result in widespread social upheaval leading to more international tension…not to mention an intensification of global warming

American foreign policy is premised today on garnering as much control over shrinking energy resources as possible…and to protect this access strategically. The various military commands are deployed primarily for this reason. Note that a new military command with responsibility for Africa has been created. The opportunity to create new military bases for AFRICOM is one of the prime reasons the U.S. is now in Libya. Note the recent incursion of American “advisors’ into Uganda and Sudan. Nigeria now provides a third of American needs, and Angola and other smaller nations have reservoirs that are targets for U.S. control. Obviously our attempt to gain control of the lion’s share of Middle East oil and especially of oil and natural gas in the Caspian and Central Asian regions will bring us into serious conflict with those nations that see these as their back yard – namely China and Russia and India and Pakistan. Imagine our response if China were to inject 150,000 troops into Mexico, the number two supplier of our domestic needs, or Venezuela, with the clear intention of siphoning these reserves to themselves?

Al Qaeda does not constitute an “existential threat” to the US and most real terrorist threats can be dealt with by police methods as the last decade has shown. It is well known in Washington but not among the public that the Taliban told al Qaeda not to attack the US from Afghanistan before 9-11. The fact that al Qaeda did so created a break between the two groups. The Afghan Taliban itself cannot threaten the US, and has never declared any intention to do so. But when Americans kill Muslims in Muslim lands we do far more to create terrorists than anything al Qaeda could do on its own. Meanwhile, attacks on Pakistan have promoted a separate Pakistani Taliban, and that faction has vowed to wreak vengeance on America, though its capacity to do so remains limited. The Pakistani Taliban, coupled with American air assaults, could destabilize Pakistan, and perhaps foster a takeover by Islamic fundamentalist junior officers. Recall that Pakistan possesses nuclear weapons.

Meanwhile, the public is frightened and off balance and paying through the nose for endless deployments. None of this four trillion dollar war (as Nobel economist Joseph Stiglitz, and Harvard professor Linda Bilmes now estimate) has been paid. Our children, and grandchildren, if they are lucky to have a future worthy of the name, will spend their working lives paying off these debts at jobs that won’t reflect degrees in higher education.  Meanwhile, the various elements of the secret team are currently reaping the benefits of deficit spending and the national debt and they feel sure that eventually the real price will be paid by those who sacrifice their lives and by taxpayers forced ever more into bankruptcy, foreclosure and unemployment.

The current wars will fail to achieve their goals. Premised as they are on lies they are in fact crimes against the peoples of the region, crimes intended to take advantage of their weaknesses and reward American energy and financial corporations and secondarily we citizens of the empire who insist on maintaining a failing way of life. It is the same ancient game of beggar our neighbors to advantage ourselves. In neither Iraq nor Afghanistan will the US achieve control of shrinking energy reserves for essentially the same reason it could not control Vietnam, the very war waged upon their peoples ostensibly to “liberate” them recruits more opponents. Moreover, the attempt to do so will result ever more tensions with the Muslim world and the other nations that need energy too.

In other words, the global climate is heating up in more ways than one. The conditions for another global war are present, and let us not ignore the fact that the last one was waged with toys compared to the present.

President Obama has said that he wants to see a “nuclear free Middle East. That would require the nuclear disarmament of Israel. Yet Obama goes along with the pretense of all his predecessors and refuses to acknowledge that Israel has these Weapons of Mass Destruction. If, indeed Iran is building nuclear weapons why wouldn’t it given the fear of Israel’s, or of America’s in the Persian Gulf, of Russia’s to the north, of Pakistan’s to the east? A world in which some nations declare their entitlement to such horrific weapons is a world in which many others tremble and come to reason that their only protection lies in possessing such themselves.

As international tensions rise over shrinking resources, and the ravages of climate change, the more likely a hair trigger mentality will arise. Hiroshima was the handwriting on the wall. As these demonic weapons increase sooner or later they will be used.

That is, unless the American people force our policies toward sanity, and come to focus on what our rhetoric has claimed we stand for all along.

Congressman Barney Frank has stated that the current economic crisis could be resolved by simply reducing the size and mission of the military. To be sure, the U.S. could defend itself against any existential threat with a tenth of our current military budget,. But the real threats perceived by elites are to their control of resources and markets. Such a redirection of resources could ameliorate economic crisis significantly but only for a time. The issue still remains the energy future, especially depletion and the effects of discharging hydrocarbon effluents into the atmosphere in the first place, and the growing likelihood of spreading violence. By all measures the American government and the public appear intent to hang on to our way of life no matter the consequences. That way of life is inherently profligate and unsustainable. We have altered the climate to the extent that ravaging events like the recent floods in Pakistan, vast forest fires in Russia, Hurricane Katrina, water shortages, and desertification are mere warnings. The worse all such conditions become the more social and political instability with severe danger of armed violence.

Our policies in the future must center on a crash program of conservation of energy, even if this means draconian limits imposed by law such as smaller more fuel efficient vehicles, and heating devices, and restrictions on air-conditioning and banning plastic containers etc. Both the nuclear power and coal industries are ramping up pressure since they know that natural gas, which at present provides most electricity, is also depleting and we need to educate people to be aware of what will happen without secure electricity. Simultaneously we need a Manhattan Project “cubed” and focused on alternative energy. Above all the crying need is for international cooperation in conservation, for cooperation into research into alternative energy sources, and mutual disarmament treaties and agreements to avoid conflict over shrinking resources. The alternative is the worsening probability of a third global war. Yet at present we have only Plan A: Armed intervention.

Alternatives can occur ONLY if the public awakens to the coming storm. We cannot depend on the corporate media to educate us; they are allied with their major clients, not the public, and they are deliberately withholding bad news for fear of stampeding the stock markets into panic. We must get the word out ourselves and make it clear that we will not accept or cooperate with business as usual from Congress or the presidency. That will have to mean more militancy throughout this nation than seen since the 1960s, or really even the 1930s.  Unfortunately I fear this will require even deeper crisis before we begin to awaken to the danger ahead.

Bibliography  

Nafeez Mosaddeq Ahmed, Behind the War on Terror: Western Secret Strategy and the Struggle for Iraq (New Society Publishers, 2003) Following the U.S. declaration of a “war on terror,” Washington hawks were quick to label Iraq part of an “axis of evil.” After a tense build-up, in March 2003 the United States and Britain invaded Iraq, purportedly to protect Western publics from weapons of mass destruction (WMD). But was this the real reason, or simply a convenient pretext to veil a covert agenda? Ahmed shows that economic considerations prompted US-UK to invade Iraq. The US has become vulnerable to energy shocks with domestic production unable to cope with increasing demand. This has led to occasional blackouts in places like California. Prior to Iraq war America’s oil inventories fell to the lowest level since 1975 with the country on the verge of drawing oil from ‘Strategic Petroleum Reserve.’ Iraq under Saddam Hussein was becoming what author says a ‘ swing producer.’ In other words he was turning oil tap on and off whenever Baghdad felt that such a policy was suiting its interests. Hussein even contemplated removing Iraqi oil from the market for extended periods of time which would have sent crude oil prices soaring.

Robert Dreyfuss, Devil’s Game: How the United States Helped Unleash Fundamentalist Islam (NY, Metropolitan Books, 2006)       In an effort to thwart the spread of communism, the U.S. has supported–even organized and funded–Islamic fundamentalist groups, a policy that has come back to haunt post-cold war geopolitics. Drawing on archival sources and interviews with policymakers and foreign-service officials, Dreyfuss traces this ultimately misguided approach from support for the Muslim Brotherhood in Egypt in the 1950s, the Ayatollah Khomeini in Iran, the ultra-orthodox Wahhabism in Saudi Arabia, and Hamas and Hezbollah to jihads in Afghanistan and Osama bin Laden. Fearful of the appeal of communism, the U.S. saw the rise of a religious Right as a counterbalance. Despite the 9/11 terrorist attacks and the declared U.S. war on terrorism in Iraq, Dreyfuss notes continued U.S. support for Iraq’s Islamic Right. He cites parallels between the cultural forces that have promoted the religious Right in the U.S and the Middle East and notes that support from wealthy donors, the emergence of powerful figures, and politically convenient alliances have contributed to Middle Eastern hostilities toward the U.S. 

William Engdahl, A Century of War: Anglo-American Oil Politics and the New World Order  (London, Pluto Press, 2004) This book is a gripping account of the murky world of the international oil industry and its role in world politics. Scandals about oil are familiar to most of us. From George W. Bush’s election victory to the wars in Iraq and Afghanistan, US politics and oil enjoy a controversially close relationship. The US economy relies upon the cheap and unlimited supply of this single fuel. William Engdahl takes the reader through a history of the oil industry’s grip on the world economy. His revelations are startling.

Zbigniew Brzezinski The Grand Chessboard: American Primacy And Its Geostrategic Imperatives (NY, Basic Books, 1998)            President Carter’s former National Security Adviser, and now an informal adviser to President Obama, bragged that he had drawn the Soviets into their debacle in Afghanistan: ”What is most important to the history of the world? Some stirred up Moslems or the liberation of Central Europe and the end of the Cold War?” As his title indicates the fate of nations and their peoples are relegated to game theory. If America is to play the game of geo-strategic chess who are the pawns? 

Richard Heinberg, The Party’s Over: Oil, War and the Fate of Industrial Societies (New Society Publishers, 2005)        The world is about to run out of cheap oil and change dramatically. Within the next few years, global production will peak. Thereafter, even if industrial societies begin to switch to alternative energy sources, they will have less net energy each year to do all the work essential to the survival of complex societies. We are entering a new era, as different from the industrial era as the latter was from medieval times… Heinberg places this momentous transition in historical context, showing how industrialism arose from the harnessing of fossil fuels, how competition to control access to oil shaped the geopolitics of the twentieth century and how contention for dwindling energy resources in the twenty-first century will lead to resource wars in the Middle East, Central Asia and South America…he also recommends a “managed collapse” that might make way for a slower-paced, low-energy, sustainable society in the future. 

Michael Klare, Rising Powers, Shrinking Planet (NY, Holt, 2009)  Looking at the “new international energy order,” author and journalist Klare (Resource Wars) finds America’s “sole superpower” status falling to the increasing influence of “petro-superpowers” like Russia and “Chindia.” Klare identifies and analyzes the major players as well as the playing field, positing armed conflict and environmental disaster in the balance. Currently in the lead is emerging energy superpower Russia, which has gained “immense geopolitical influence” selling oil and natural gas to Europe and Asia; the rapidly-developing economies of China and India follow. Klare also warns of the danger of a new cold-war environment.

James Howard Kunstler, The Long Emergency: Surviving the End of Oil  etc. (NY, Grove Press, 2005)  It used to be thought that only environmentalists and paranoids warned about the world running out of oil and the future it could bring: crashing economies, resource wars, social breakdown, agony at the pump…Americas dependence on oil is too pervasive to undo quickly…meanwhile we’ll have our hands full dealing with soaring temperatures, rising sea levels and mega-droughts brought on by global climate change. (The Washington Post).

James Lovelock, The Vanishing Face of Gaia: A Final Warning (New York, Basic Books, 2010)  Presents evidence of a dire future for our planet. The controversial originator of Gaia theory (which views Earth as a self-regulating, evolving system made of organisms, the surface, the ocean and the atmosphere with the goal always to be as favorable for contemporary life as possible) proposes an even more inconvenient truth than Al Gore’s. The eminent 91-year-old British scientist challenges the scientific consensus of the United Nations Intergovernmental Panel on Climate Change. It is too late to reverse global warming, he says, and we must accept that Earth is moving inexorably into a long-term “hot state.” Most humans will die off, and we must prepare havens. He points out that sea levels are rising significantly faster than models predicted. Lovelock advocates solar thermal and nuclear power as the best substitutes for burning fossil fuels, and he suggests emergency global geo-engineering projects that might cool the planet. But Lovelock also avows today’s ecological efforts are futile. This is a somber prophecy written with an authority that cannot be dismissed.

L. Fletcher Prouty, The Secret Team: The CIA and Its Allies in Control of the United States and the World (Skyhorse Publishing 2008)       A retired colonel of the U.S. Air Force, served as the chief of special operations for the Joint Chiefs of Staff during the Kennedy years. He was directly in charge of the global system designed to provide military support for the clandestine activities of the CIA. Prouty’s CIA exposé, was first published in the 1970s, but virtually all copies of the book disappeared upon distribution, purchased en masse by shady “private buyers.” Certainly Prouty’s amazing allegations—that the U-2 Crisis of 1960 was fixed to sabotage Eisenhower-Khrushchev talks, and that President Kennedy was assassinated to keep the U.S., and its defense budget, in Vietnam—cannot have pleased the CIA.

Michael Ruppert, Confronting Collapse: The Crisis of Energy and Money in a Post Peak Oil World (Chelsea Green Publishing, 2009)           Ruppert confronts the stark realities of a world of declining oil production, poses vital questions of our complex oil-dependent supply chains and challenges us-people and politician alike-to build a sustainable world with what remains of our resources.
Julian Darley, Author, High Noon for Natural Gas, Founder of Post Carbon Institute 

Michael J. Sullivan, American Adventurism Abroad: Invasions, Interventions, and Regime Changes Since 1945 (Wiley Blackwell, 2007).
Traces US foreign policy from the late 1940s through the past six years of America’s ‘war on terror,’ and examines the impact of its repeated militaristic meddling into developing nations. Intended as a reference tool for undergraduates the author estimates that at least 7.1 million human beings have died as a direct result of these U.S. operations, most of them civilians.