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http://www.truth-out.org/print/4846   Source
    

America in Decline

by: Noam Chomsky, Truthout | Op-Ed
 
 
(Photo: The U.S. Army / Flickr [3])
“It is a common theme” that the United States, which “only a few years ago was hailed to stride the world as a colossus with unparalleled power and unmatched appeal is in decline, ominously facing the prospect of its final decay,” Giacomo Chiozza writes in the current Political Science Quarterly.

The theme is indeed widely believed. And with some reason, though a number of qualifications are in order. To start with, the decline has proceeded since the high point of U.S. power after World War II, and the remarkable triumphalism of the post-Gulf War '90s was mostly self-delusion.

Another common theme, at least among those who are not willfully blind, is that American decline is in no small measure self-inflicted. The comic opera in Washington this summer, which disgusts the country and bewilders the world, may have no analogue in the annals of parliamentary democracy.

The spectacle is even coming to frighten the sponsors of the charade. Corporate power is now concerned that the extremists they helped put in office may in fact bring down the edifice on which their own wealth and privilege relies, the powerful nanny state that caters to their interests.

Corporate power’s ascendancy over politics and society – by now mostly financial – has reached the point that both political organizations, which at this stage barely resemble traditional parties, are far to the right of the population on the major issues under debate.

For the public, the primary domestic concern is unemployment. Under current circumstances, that crisis can be overcome only by a significant government stimulus, well beyond the recent one, which barely matched decline in state and local spending – though even that limited initiative probably saved millions of jobs.

For financial institutions the primary concern is the deficit. Therefore, only the deficit is under discussion. A large majority of the population favor addressing the deficit by taxing the very rich (72 percent, 27 percent opposed), reports a Washington Post-ABC News poll. Cutting health programs is opposed by overwhelming majorities (69 percent Medicaid, 78 percent Medicare). The likely outcome is therefore the opposite.

The Program on International Policy Attitudes surveyed how the public would eliminate the deficit. PIPA director Steven Kull writes, “Clearly both the administration and the Republican-led House (of Representatives) are out of step with the public’s values and priorities in regard to the budget.”

The survey illustrates the deep divide: “The biggest difference in spending is that the public favored deep cuts in defense spending, while the administration and the House propose modest increases. The public also favored more spending on job training, education and pollution control than did either the administration or the House.”

The final “compromise” – more accurately, capitulation to the far right – is the opposite throughout, and is almost certain to lead to slower growth and long-term harm to all but the rich and the corporations, which are enjoying record profits.

Not even discussed is that the deficit would be eliminated if, as economist Dean Baker has shown, the dysfunctional privatized health care system in the U.S. were replaced by one similar to other industrial societies’, which have half the per capita costs and health outcomes that are comparable or better.

The financial institutions and Big Pharma are far too powerful for such options even to be considered, though the thought seems hardly Utopian. Off the agenda for similar reasons are other economically sensible options, such as a small financial transactions tax.

Meanwhile new gifts are regularly lavished on Wall Street. The House Appropriations Committee cut the budget request for the Securities and Exchange Commission, the prime barrier against financial fraud. The Consumer Protection Agency is unlikely to survive intact.

Congress wields other weapons in its battle against future generations. Faced with Republican opposition to environmental protection, American Electric Power, a major utility, shelved “the nation’s most prominent effort to capture carbon dioxide from an existing coal-burning power plant, dealing a severe blow to efforts to rein in emissions responsible for global warming,” The New York Times reported.

The self-inflicted blows, while increasingly powerful, are not a recent innovation. They trace back to the 1970s, when the national political economy underwent major transformations, ending what is commonly called “the Golden Age” of (state) capitalism.

Two major elements were financialization (the shift of investor preference from industrial production to so-called FIRE: finance, insurance, real estate) and the offshoring of production. The ideological triumph of “free market doctrines,” highly selective as always, administered further blows, as they were translated into deregulation, rules of corporate governance linking huge CEO rewards to short-term profit, and other such policy decisions.

The resulting concentration of wealth yielded greater political power, accelerating a vicious cycle that has led to extraordinary wealth for a fraction of 1 percent of the population, mainly CEOs of major corporations, hedge fund managers and the like, while for the large majority real incomes have virtually stagnated.

In parallel, the cost of elections skyrocketed, driving both parties even deeper into corporate pockets. What remains of political democracy has been undermined further as both parties have turned to auctioning congressional leadership positions, as political economist Thomas Ferguson outlines in the Financial Times.

“The major political parties borrowed a practice from big box retailers like Walmart, Best Buy or Target,” Ferguson writes. “Uniquely among legislatures in the developed world, U.S. congressional parties now post prices for key slots in the lawmaking process.” The legislators who contribute the most funds to the party get the posts.

The result, according to Ferguson, is that debates “rely heavily on the endless repetition of a handful of slogans that have been battle-tested for their appeal to national investor blocs and interest groups that the leadership relies on for resources.” The country be damned.

Before the 2007 crash for which they were largely responsible, the new post-Golden Age financial institutions had gained startling economic power, more than tripling their share of corporate profits. After the crash, a number of economists began to inquire into their function in purely economic terms. Nobel laureate Robert Solow concludes that their general impact may be negative: “The successes probably add little or nothing to the efficiency of the real economy, while the disasters transfer wealth from taxpayers to financiers.”

By shredding the remnants of political democracy, the financial institutions lay the basis for carrying the lethal process forward – as long as their victims are willing to suffer in silence.

(Noam Chomsky’s most recent book is ''9-11: Tenth Anniversary.'' Chomsky is emeritus professor of linguistics and philosophy at the Massachusetts Institute of Technology in Cambridge, Mass.)

© 2011 Noam Chomsky

Distributed by The New York Times Syndicate.

 



July 25, 2011

The Tea Party, Right About Everything

By Randall Hoven

The false narrative is that the Tea Party is a bunch of stubborn nuts, if not outright racists.  In truth, the Tea Party has been right about everything, while almost everyone else has been nuts, especially the "experts."

Minimum wage.  One of the first things Democrats did after taking back Congress in 2007 was raise the federal minimum wage 41% from 2007 to 2009.  Result?  The unemployment rate went from 4.4% in May 2007 to 10.1% in 2009.  It is 9.2% even today -- four years later.

As for teens, the unemployment rate went from 14.9% to 27.1%, the highest ever recorded, meaning since 1948.  Today it is still a high 24.5%.  And for blacks: from a low of 7.9% in 2007 to 16.5% in 2010.  It is still a high 16.2%.

The Democrat Congress also decided to apply the same minimum wages to American Samoa.  Results?  Near-decimation of its economy, one that had been based largely on low-cost tuna canning and textile work.

... employment fell 19 percent from 2008 to 2009 ... tuna canning employment fell 55 percent from 2009 to 2010... Average inflation-adjusted earnings fell by 5 percent from 2008 to 2009 and by 11 percent from 2006 to 2009.

Of course, some of the increase in unemployment was a result of the Great Recession.  But the Employment Policies Institute did a study to separate the effects for the most vulnerable group: males aged 16-24 without high school diploma.  EPI's answer: the minimum wage increase killed over 100,000 jobs (31% of the lost jobs) for that demographic.

TARP.  Unless you were a politician or executive of a large bank, you were likely against the Troubled Asset Relief Program.  I would guess that most anyone now calling herself a member of the Tea Party was against TARP in 2008.  But Senator Barack Obama voted for it, along with most of his Democrat colleagues.  Also the top brains of the Stupid Party pushed it: Henry Paulson, George W. Bush, and John McCain.

On October 3, 2008, Congress authorized Treasury Secretary Paulson to use up to $350 billion under TARP to do what was needed to stave off financial disaster.  By December, after using $267B, Paulson said he was done, crisis averted.  (Of course his successor, Tim Geithner, was not done.)

Here's the funny thing: while Paulson was lending out less than $0.3 trillion, the Federal Reserve was lending out over $16T to do about the same thing!  By my calculations, Paulson's TARP slush fund was less than 2% the size of the Federal Reserve's.

Do you think that 2% was critical to staving off financial apocalypse?  (FYI, over 3T of the Fed's emergency loans were to subsidiaries of foreign-owned banks.)

When the dust cleared, the federal government owned two bankrupt car companies and the god-awful home mortgage portfolios of Fannie Mae and Freddie Mac -- entities that had nothing to do with the original purpose of TARP.

Global markets were so enamored with TARP that there was an immediate sell-off of about 20% in global stock markets the moment it went into effect.  I also credit TARP, and McCain's reaction to it, for McCain's loss to Obama.  Ever since, all budget discussions have involved units of trillions instead of mere billions.  The world has not been the same since TARP.

Stimulus.  Opposition to Obama's stimulus was the origin of the Tea Party.  Now we know the story.

How the stimulus was sold: It would create three million jobs or more.  It would keep the unemployment rate under 8%, instead of 9% without a stimulus.  It would cost $787B.  The jobs were shovel-ready.

What really happened: There are 1.2 million fewer jobs now than when the stimulus was passed.  Unemployment went over 10% (vs. prediction of 8%) and is still over 9% (vs. prediction of about 6.8% at this time).  It cost $814B or more.  Maybe 6% of it went to infrastructure projects.  Obama's reaction?  A little joke: "Shovel ready was not as shovel ready as we expected."

Of course, Obama and his minions simply blame this on their underestimating the size of the mess they inherited from Bush.  But that has been studied by economists at the University of Western Ontario and Ohio State University.  The verdict: the stimulus itself cost about one million private-sector jobs; the net job loss was about 595,000.  We'd have been better off without any "stimulus" at all, just as the Tea Party said.

ObamaCare.  ObamaCare was sold as a way to bend the health "cost curve" down.  As it turned out, it is bending the cost curve up -- health care will be more costly than it would have been without ObamaCare.  It's so great that in its first year about 1,500 companies, states, and unions were granted waivers.

ObamaCare strangled the recovery in the crib.  The private sector has been generating only 6,400 jobs per month since it was passed, compared to 67,600 before.  We would never return to pre-recession unemployment levels at the current pace.  ObamaCare is costing us over 60,000 jobs per month.

Drilling moratorium.  According to a new study by IHS Global Insight, merely picking up the pace in granting oil drilling permits would go a long way in producing jobs throughout the US, adding to GDP and reducing dependency on foreign oil sources.  In 2012 alone it could mean 230,000 new jobs, $44B more in GDP, 150 million more barrels of oil, and $15B less in imported oil.

Budgets.  Now we find ourselves in another budget fight, with the Tea Party getting the blame from much of the media and liberal punditry.  The truth is that Democrats have not even written, much less passed, a budget of any kind in over two years; they simply kill everyone else's.

  • The Republican-led House passed a budget on schedule in April.  Senate Democrats voted it down.
  • Obama proposed a budget in February.  The Congressional Budget Office scored it as having a 10-year cumulative deficit of $9.5 trillion.  The Democrat-led Senate voted that down too, 97-0.
  • The House proposed the only written plan for addressing the debt ceiling -- the Cut, Cap and Balance plan.  Senate Democrats voted that down, too.

It shouldn't take a keen insight to see that Senate Democrats are the "Party of No" and the obstacle to resolving budget and debt issues.

Uncertainty and arbitrariness.  Just last December Obama said keeping Bush's tax rates was critical to keeping the recovery going.  He and the Democrat Congress at the time extended them for another two years, plus added over $300 B in additional tax cuts and credits.  Now, just seven months later, Obama insists that any deal to raise the debt ceiling must include tax increases.

Like ObamaCare, the Dodd-Frank bill to regulate all finance in the country is a thousand-page-plus piece of legislation.  As the New York Times understated it just after its passage, "[a] number of the details have been left for regulators to work out." Got it? Those thousand-plus pages did not include the details.

The EPA now has power to regulate every use of fossil fuels in this country, as well as every breath we take, if they so deem.  What will it do with that power?  You get to guess.  If you think it wouldn't do anything too stupid, know that the FDA just outlawed common inhalers for asthma sufferers.  Their reason was, get this, those inhalers are blamed for contributing to upper-atmosphere ozone loss.

Even if you think CFCs contribute to ozone loss, how much do you think the CFCs released by asthma inhalers have to do with it?  And how much is the indirect and ambiguous loss of ozone worth compared to the direct and known suffering of asthma patients?  Such is the wisdom of government regulators.

The list is endless.  If you were thinking of starting a business or making an investment that might not pay off for five or ten years, would you feel like you know the rules and could depend on them?  No, you'd hunker down, which is exactly what everyone with any money left is doing right now.

This jobless recovery is not some mystery.  It is very clearly the result of decisions -- decisions made by Obama and the Democrats.  At every opportunity they grew government, shrank the private sector, and viewed budding enterprises as little more than beasts of burden -- something to whip while healthy and carve up and eat when not.

As Robert Mugabe viewed white-owned farms, Obama views corporations not yet in Chapter 11.

Nothing Democrats did helped; everything they did hurt.  Everything.  Min wage.  TARP.  Stimulus.  ObamaCare.  The Gulf oil spill.  Every budget they ever proposed, written or not.  Every little czar they put in place to spend other people's money and to bully the only productive people still toiling away at the thankless tasks of making stuff and providing jobs.

At every point, the Tea Party and its sympathizers tried to stop these idiocies, only to be called ignorant racists.  You might want to ask yourself why so many people talk of the "Tea Party," whatever that is, the way Lenin and Stalin talked of kulaks and saboteurs, whoever they were.

Do "taxed enough already," "stop spending," and "obey the Constitution" sound that crazy to you?  If so, you might want to think about why you think so.

Randall Hoven can be followed on Twitter.  His bio and previous writings can be found at randallhoven.com.