THIS BLOG HAS MOVED AND HAS A NEW HOME PAGE.

Entries for March 2008

March 31, 2008

The propaganda machine-7: The rise of think tanks

(For previous posts in this series, see here.)

As I said in the previous post, a key development in the growth of the propaganda machine over the last three decades has been the growth in the number of so-called 'think tanks'.

So what exactly is a 'think tank' and what does it do? If you look at how they are portrayed in the major media, you will get the impression that they are non-university based organizations that perform the same kinds of study and research functions that universities do. But that is misleading. Think tanks are essentially propaganda operations disguised as academic ones, which allows propagandists and ideologues to pretend that they are disinterested academics. They are far closer to Madison Avenue advertising firms than they are to university departments. As the website SourceWatch says:

A Think Tank is an organization that claims to serve as a center for research and/or analysis of important public issues. In reality, many think tanks are little more than public relations fronts, usually headquartered in state or national seats of government and generating self-serving scholarship that serves the advocacy goals of their industry sponsors.
. . .
Of course, some think tanks are more legitimate than that. Private funding does not necessarily make a researcher a shill, and some think-tanks produce worthwhile public policy research. In general, however, research from think tanks is ideologically driven in accordance with the interests of its funders.

Think tanks are funded primarily by large businesses and major foundations. They devise and promote policies that shape the lives of everyday Americans: Social Security privatization, tax and investment laws, regulation of everything from oil to the Internet. They supply experts to testify on Capitol Hill, write articles for the op-ed pages of newspapers, and appear as TV commentators. They advise presidential aspirants and lead orientation seminars to train incoming members of Congress.

Think tanks have a decided political leaning. There are twice as many conservative think tanks as liberal ones, and the conservative ones generally have more money. This is no accident, as one of the important functions of think tanks is to provide a backdoor way for wealthy business interests to promote their ideas or to support economic and sociological research not taking place elsewhere that they feel may turn out in their favor. Conservative think tanks also offer donors an opportunity to support conservative policies outside academia, which during the 1960s and 1970s was accused of having a strong "collectivist" bias.

The goal of many of these think-tanks is to provide a right-wing alternative to what they assert is a left-wing bias in academia, but their larger goal is to dominate the media and shift it rightward by alleging that the media and academic has a left-wing bias and flooding the market with their point of view.

The think tanks work hard to make themselves look and sound like academia, so that they can exploit the reputation for careful study and scholarly objectivity that universities have accumulated over the centuries. They create job titles like Senior Research Scholars and Fellows and even give them names that sound like endowed chairs. In universities, endowed chairs are usually awarded to highly distinguished scholars who have an exemplary research and publishing history. But such titles are intellectually cheap at think tanks. For example, Charles Murray at the AEI, who co-authored The Bell Curve has the title of 'W. H. Brady Scholar', which makes him sound like he has earned academic credibility the same way that the holder of an endowed chair in a university has. But he does not have to have done anything of the sort. One does not have to earn those titles by publishing in academic journals and meet the scholarly criteria set by one's peers. All one has to do is to please one's bosses which means having the willingness and ability to say well whatever they want you to say.

Politicians and businesses find think tanks to be useful since they can get pseudo-scholarly support from them for almost any policy they wish to implement. As Plain Dealer reporter Tom Brazaitis said: "Modern think tanks are nonprofit, tax-exempt, political idea factories where donations can be as big as the donor's checkbook and are seldom publicized. . .Technology companies give to think tanks that promote open access to the internet. Wall Street firms donate to think tanks that espouse private investment of retirement funds." If a business or politician wants some scholarly-looking study to support some policy, think tanks are only too eager to oblige, as long as they get paid. Thus the universities, the usual source for at least somewhat dispassionate research and analysis, can be bypassed.

The American Enterprise Institute (AEI), one of the oldest right-wing think tanks, is a preferred choice since it is by now a well-known name. For example, during the time that the tobacco industry was disputing the scientific consensus that smoking was a killer, they commissioned AEI to produce a 'study' to try and discredit the strong scientific evidence of the link between smoking and death.

Global warming provides another example. There is an emerging scientific consensus (though not unanimous) that this is a serious problem requiring urgent action to reverse the trend. But businesses find this issue irksome because efforts to combat warming constrain their ability to maximize profits. So how can you discredit global warming? You get a sympathetic think tank to generate opposing views, to supposedly provide 'balance', by cherry-picking data to support your desired conclusions.So the AEI offered $10,000 to scientists to write against global warming. They have the money and the impetus to do such things because ExxonMobil CEO Lee Raymond is on the AEI board of trustees and the company gave AEI approximately $925,000 between 1998 and 2003.

The idea is to use the think tanks to create in the public's mind that there is disagreement and controversy over whatever the issue is and thus defer any action until a 'solution' is found. The real goal is to delay action for as long as possible.

These are classic examples of how businesses and politicians use these think tanks to advance specific agendas.

Next: The difference between academia and think tanks.

POST SCRIPT: Madness caused by religion

These are the kinds of news reports that make me furious.

An 11-year-old girl died from diabetes after her parents prayed for her recovery rather than calling for medical assistance.

Madeline Neumann died on Sunday in Wisconsin, from an undiagnosed but treatable ailment.

Dan Vergin, the local police chief, said she had been ill for a month, suffering symptoms such as nausea, vomiting, excessive thirst, loss of appetite and weakness.

"She just got sicker and sicker until she was dead," he said.

Even after her death, her parents, Dale and Leilani Neumann, who did not belong to any organised faith, prayed over her body in the hope that she might be resurrected.

This is what 'faith' does to people. It robs them of basic thought. And even after this appalling tragedy, the parents cannot draw the proper lesson. Blinded and brainwashed by religion, they reach exactly the wrong conclusion.

Mr Vergin said the couple, who run a coffee shop in Wausau, had blamed her death on their lack of faith. (my emphasis)

"They have a little Bible study of a few people," said Mr Vergin. "These are not bizarre people."

Police chief Vergin, sad to say, is probably right. The parents are not "bizarre" in the sense of being unusual in their beliefs. They are not even bad people. They are merely carrying out what religious leaders have always told them is a good thing: just put your faith in god and all will be well.

And as a result, their daughter, whom I am sure they loved dearly, is dead.

March 28, 2008

The propaganda machine-6: The Powell memo and its aftermath

(For previous posts in this series, see here.)

Lewis Powell's confidential 1971 memo to the US Chamber of Commerce laid out the framework that was largely followed by the business community in the subsequent decades. In it he admits quite frankly that the media and academia are already owned or controlled by big business interests and expresses puzzlement as to why they are not using that power more overtly to serve their own interests.

Here are some excerpts from the memo:

No thoughtful person can question that the American economic system is under broad attack . . . We are not dealing with sporadic or isolated attacks from a relatively few extremists or even from the minority socialist cadre. Rather, the assault on the enterprise system is broadly based and consistently pursued. It is gaining momentum and converts . . . .The most disquieting voices joining the chorus of criticism come from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians.
. . .
One of the bewildering paradoxes of our time is the extent to which the enterprise system tolerates, if not participates in, its own destruction.

The campuses from which much of the criticism emanates are supported by (i) tax funds generated largely from American business, and (ii) contributions from capital funds controlled or generated by American business. The boards of trustees of our universities overwhelmingly are composed of men and women who are leaders in the system.

Most of the media, including the national TV systems, are owned and theoretically controlled by corporations which depend upon profits, and the enterprise system to survive.

He then argues that the business community should organize and take specific action to control the discourse in its favor, based on a carefully thought out, long range strategy, and be willing to pour considerable financial resources into it.

What specifically should be done? The first essential -- a prerequisite to any effective action -- is for businessmen to confront this problem as a primary responsibility of corporate management.

The overriding first need is for businessmen to recognize that the ultimate issue may be survival -- survival of what we call the free enterprise system, and all that this means for the strength and prosperity of America and the freedom of our people.
. . .
Strength lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.

Powell went on to outline what should be done on campuses, in secondary schools, in the media, and in the courts to combat what he clearly viewed as a menace. Among other things, he recommended the creation of a 'staff of scholars' sympathetic to business interests who would be prolific in writing articles and books and thus flood the market with that point of view. He also recommended creating a pro-business 'staff of speakers' and 'speakers bureaus' that would be able to similarly flood campuses and the media with their point of view.

The Powell memo became the basis on which we saw the rapid proliferation in the 1970s of so-called 'think tanks' (i.e., the 'staff of scholars'). Right-wing business leaders and foundations started pouring money into this kind of activity to support the activities of an increasingly large number of people to enable them to eventually have an impact on policy and the media. What has become apparent in the decades following the Powell memo is that there are a large number of very wealthy very right-wing people who are willing to spend large sums of money to support mouthpieces who will espouse the kinds of views they want to be disseminated.

Before long, there was an alphabet soup of right wing foundations, think tanks, and institutes, all dedicated to flooding college campuses and the media with right-wing views, while all the while complaining that those institutions had a pervasive left-wing bias. Before the Powell memo, only the Hoover Institute at Stanford (1919) and the American Enterprise Institute (1943) played that role in a significant way. After the Powell memo, businesses and wealthy right-wing interests started pouring money into creating an alternative to academic scholarship and as a result, the 1970s saw the explosion of right-wing so-called 'think tanks'. The Heritage Foundation was set up in 1973, the Cato Institute in 1977, the Manhattan Institute in 1978, and many more later.

It was necessary, though, to create a cadre of intellectuals who would understand that their role was to propagate this pro-business message and who could occupy all these new positions that were being created and to do all the writing and speaking that were called for. So business groups poured money into privately funded right-wing campus newspapers and other publications to serve as kind of a farm system to develop the skills in selected young people so that they could play the roles assigned to them. These people were supported as they obtained advanced degrees and started working in the think tanks that began sprouting like mushrooms.

One could think of the whole project as essentially a privately funded welfare program for right-wingers.

An article in the National Review describes the early days of this process that shows how this policy was carried out on campuses. In 1978 William Simon, who had been President Ford's Treasury secretary, and Irving Kristol, a founder of neo-conservatism, established the Institute for Educational Affairs (IEA).

The institute would "seek out promising Ph.D. candidates and undergraduate leaders, help them establish themselves through grants and fellowships and then help them get jobs with activist organizations, research projects, student publications, federal agencies or leading periodicals."
. . .
The IEA received significant start-up funds from corporations such as Dow Chemical, Coca-Cola, and General Electric.
. . .
The IEA ended up playing a pivotal role in the rise of conservative college papers founded in the early Eighties. The new decade saw the founding of, to name just a few, The Dartmouth Review, The Michigan Review, The Primary Source at Tufts, The Harvard Salient, The Princeton Tory, The Oregon Commentator, and The Virginia Advocate. IEA also organized conferences where the editors of these new papers could connect, as well as learn more about journalism.

This was just one of the early efforts. But because of the farm system established by identifying and funding and grooming young people on college campuses, there are now enough people who are both able and willing to play that role, and are well-rewarded for doing so. It is precisely within this framework that the third-tier pundits have found their niche. But in a sense they are just the entertainers while the people in the think tanks are the ones who really develop the conservative and neo-conservative pro-business agenda. These people and places became the sources of targeted attacks on the media and the universities.

Next: What is a think tank and how do they function?

POST SCRIPT: The 'good' war reexamined

World War II grows in misty memory as the last major 'good war'. As such, it has served a valuable role in justifying other wars. Each new enemy of the US is now routinely identified as the new Hitler driven by the desire to control the whole world. This was the rhetoric used against Saddam Hussein and Iraq and is now being used against Ahmadinejad and Iran.

A recent review by Mark Kurlansky of Nicholson Baker's Human Smoke: The Beginnings of World War II, the End of Civilization says that the book debunks the myth that World War II was a 'good' war.

According to the myth, British and American statesmen naively thought they could reason with such brutal fascists as Germany's Hitler and Japan's Tojo. Faced with this weakness, Hitler and Tojo tried to take over the world, and the United States and Britain were forced to use military might to stop them.

Rather than Roosevelt and Churchill being doughty fighters against fascism reluctantly drawn into a major war, the book argues that they were a rabid warmongers and anti-Semites who until very late in the game were quite friendly towards Hitler and the fascists. What Roosevelt and Churchill were really concerned about was defeating communism.

Kurlansky ends his review:

Read Human Smoke. It may be one of the most important books you will ever read. It could help the world to understand that there is no Just War, there is just war -- and that wars are not caused by isolationists and peaceniks but by the promoters of warfare.

You can read an interview with Baker here and an except from his book here.

March 27, 2008

The propaganda machine-5: The Fairness Doctrine and the Powell memo

(For previous posts in this series, see here.)

Three factors discussed so far in the creation of the propaganda machine are the rise of 24/7 cable news networks, nationwide talk radio enabled by satellite communications and toll-free numbers, and the relaxation of media ownership rules that resulted in the concentration of ownership.

The fourth factor in the creation of the propaganda machine was the elimination of the 'Fairness Doctrine' in 1987 that resulted in media outlets being allowed to become explicitly and overtly and consistently partisan and ideological. As Steve Rendall says, that doctrine, adopted in 1949, tried to at least limit the extent to which public airwaves could be hijacked by narrowly commercial or partisan interests or by those seeking to use them exclusively for their own profit.

[The Fairness Doctrine] required broadcasters to devote some of their airtime to discussing controversial matters of public interest, and to air contrasting views regarding those matters. Stations were given wide latitude as to how to provide contrasting views: It could be done through news segments, public affairs shows or editorials.
. . .
There are many misconceptions about the Fairness Doctrine. For instance, it did not require that each program be internally balanced, nor did it mandate equal time for opposing points of view. And it didn’t require that the balance of a station’s program lineup be anything like 50/50.
. . .
The Fairness Doctrine simply prohibited stations from broadcasting from a single perspective, day after day, without presenting opposing views.

After the repeal of this doctrine during the Reagan administration, media outlets gave up any pretence to being neutral on public policy matters. This opened the way to stations broadcasting Rush Limbaugh and his clones for hour after hour. As Robert McChesney says in his book The Problem of the Media (2003):

Talk radio has not only stormed into prominence on the AM dial but it also "tends to run the gamut from conservative . . . to very conservative," as one reporter characterized it. "There are 1,500 conservative radio talk show hosts," the conservative activist Paul M. Weyrich boasts. "The ability to reach people with our message is like nothing we have ever seen before." The right wing dominance of broadcasting is demonstrated by the shift of groups such as Reed Irvine's Accuracy in Media and Phyllis Schlafley's Eagle Forum. Back in the 1970s and 1980s they crusaded for the Fairness doctrine – which required broadcasters to present contrasting perspectives on politics – as a way to battle liberal bias on the airwaves; since the ascendance of Rush Limbaugh et al. these groups now oppose the Fairness Doctrine. (p. 116)

In fact, on March 11, 2008, Bush said that he would veto any legislation incorporating the Fairness Doctrine.

For all their bluster about the 'liberal bias' in the media, the people who make this charge know it is not true.

"There's been a massive change in the media in this country in the last fifteen years," Rush Limbaugh exulted. "Now it's 2002 and the traditional liberal media monopoly does not exist anymore." But such celebratory comments are usually confined to more private back-slapping sessions. The dominating conservative pundits still sing the incessant refrain that the media are dominated by . . . liberals." (McChesney, p. 116)

This drumbeat is so steady that the media has internalized it (we will look more closely into this phenomenon in a later posting) and now goes out of its way to placate conservatives by giving their voices a lot of prominence. In 2001, CNN's chief Walter Isaacson even went to the extent of asking conservatives how his network could be made more palatable to them. (McChesney, p. 116)

The fifth major factor in the rise of the propaganda machine may the most important one since it forms the foundation on which the other four were built. It is the deliberate policy set into motion in the 1970s to push media determinedly to the right.

To understand how this last but most important development came about, we need to go back in time to the late 1960s and look at how events during those turbulent years were perceived.

[C]onservative critics blamed the liberal media for losing the Vietnam war and for fomenting dissent in the United States. Pro-business foundations were aghast at what they perceived as anti-business sentiment prevalent among Americans, especially middle-class youth who had typically supplied a core constituency. Mainstream journalism – which, in reporting the activities of official sources, was giving people like Ralph Nader sympathetic exposure – was seen as turning Americans away from business. At that point the political Right, supported by its wealthy donors, began to devote enormous resources to criticizing and intimidating the news media. This was a cornerstone of the broader campaign to make the political culture more pro-business and more conservative. (McChesney, p. 111)

Leaders in the conservative business community felt that action had to be taken to counter this trend. In 1971, Lewis Powell (then a corporate lawyer) was invited by his friend, the Director of the US Chamber of Commerce, to analyze the problem and make recommendations for how to deal with it. Powell submitted a confidential memo just two months before he was nominated to the Supreme Court by President Nixon.

UC Berkeley professor of linguistics and cognitive science George Lakoff, who has written extensively about the importance of the way that political issues get framed in public policy debates, says that Powell reported that "all of our best students are becoming anti-business because of the Vietnam War, and that we needed to do something about it. Powell's agenda included getting wealthy conservatives to set up professorships, setting up institutes on and off campus where intellectuals would write books from a conservative business perspective, and setting up think tanks."

This memo was instrumental in setting in motion a whole program aimed at dominating the discourse in both academia and media with a decidedly pro-business message.

Next: What the Powell memo actually said and what actions emanated from it.

POST SCRIPT: Gay scientists isolate gene that causes Christianity

(Thanks to OneGoodMove.)

March 26, 2008

Capitalist Christianity and prophetic Christianity

(For the two previous posts in this series, see here and here.)

The manufactured outrage over Barack Obama's former pastor Jeremiah Wright's comments shows the extent to which capitalist Christianity has taken over in America. In this version, Christianity is presented as some kind of self-help program, a lifestyle choice, that is designed to make you feel good about yourself. In this approach, you just have to say some slogan about accepting Jesus as your personal lord and savior, and bingo! you have automatically become a Good Person, guaranteed a place in heaven. This version of Christianity does not deal exclusively with heaven, though. It is also believed that god wants you to be rich and prosperous, so one has it nice both here and in the hereafter. Being poor or sick or otherwise troubled is seen as a sign that you are somehow unworthy or have failed god in some way.

The clergy who endorse this capitalist Christianity ignore the prophetic tradition of preachers, going all the way back to the Old Testament. The true meaning of 'prophet' in the Bible is not someone who primarily foretells the future, as is popularly thought, but someone who reveals the truth. Preachers in this tradition saw their role as to shine a harsh light on injustice and on their own people's evil actions, and demand that they repent and change their behavior or god would punish them severely. Read any of those Old Testament prophets' thundering denunciations of Israel and you will see that Wright's damning of America after listing all its crimes fall squarely within that tradition. Take the prophet Amos, for example:

This is what the LORD says:

"For three sins of Israel,
even for four, I will not turn back my wrath.
They sell the righteous for silver,
and the needy for a pair of sandals.
They trample on the heads of the poor
as upon the dust of the ground
and deny justice to the oppressed.
. . .
Now then, I will crush you
as a cart crushes when loaded with grain." (Amos 2:6,7,13)

This kind of message (that oppressing the poor and otherwise swerving from the path of justice is guaranteed to bring down god's wrath) is rarely heard today in the megachurches of the dominant classes, the world of comfortable capitalist Christianity. Such a message is aimed squarely at those with a smug sense of their own virtue and would make people uncomfortable. The people hearing it may not come back and give generously to the church or may find a new church that preaches a more soothing message. That would be bad because in capitalist Christianity, increasing your market share of well-to-do believers is everything.

But this prophetic message finds great resonance in the churches of oppressed people throughout the world because they know exactly what it means to be exploited like the people championed by Amos. They wait for the day when god will punish those who have oppressed them. Liberation theology finds a warmer reception in the developing world than in the developed.

The boundaries of this great divide between the churches of capitalist Christianity and prophetic Christianity largely overlaps with the boundaries between white and black churches and this is why white people are surprised when the curtain that separates the two is occasionally raised.

Chris Britt, editorial cartoonist of the Springfield Journal Register captures the acute disconnect between the way that white people and black people view the racial situation in America.

britt-cartoon-3-19.jpg

As Obama said in his speech:

For the men and women of Reverend Wright's generation, the memories of humiliation and doubt and fear have not gone away; nor has the anger and the bitterness of those years. That anger may not get expressed in public, in front of white co-workers or white friends. But it does find voice in the barbershop or around the kitchen table.

People who as a group have not experienced a long history of cruel oppression may not fully appreciate the depth of anger and bitterness that echoes down generation after generation as personal stories of atrocities are passed on, getting slightly more diffuse each time but never quite going away. I know this from my own experience, even though I do not think that I am normally an angry or bitter person. Even though the British left Sri Lanka before I was born, there are times when I feel anger and bitterness against the British for the deep divisions they deliberately created in their colonies that have later resulted in ethnic wars. I would find it laughable if anyone said to me that the British possessed an Essential Goodness and that their colonial occupation was benign. There are also times when I feel deep anger and resentment against my country of birth Sri Lanka for the way that the Tamil minority has been treated, and still continues to be treated by the majority community.

It is easy for the members of the community that caused the injustices to say that we should let bygones be bygones, but those emotional scars run deep and cannot be removed by mere words. This anger is normally kept under control but given the right triggers, can bubble to the surface.

When Wright listed the harmful actions that the US has taken against other people, especially in the Middle East, and said that the attacks of 9/11 were the consequence of such acts, he was merely articulating the 'blowback' political analysis of people like Chalmers Johnson, an analysis which is widely accepted by serious policy analysts as the correct motivation for the attacks of 9/11, except that Wright was framing that political analysis in the context of religious punishment for sins. (See Justin Raimondo for a good analysis of the political content of Wright's sermons.)

When Jerry Falwell and Pat Robertson said that the events of 9/11 were god's punishment for America's tolerance of homosexuality and abortion, they were making a similar point to Wright, but with a different target. The significant difference is that Falwell and Robertson were laying the blame at powerless individuals (like gays and those receiving and providing abortions) as causes of that crime and hence got off lightly. Wright, unlike Falwell and Robertson, was challenging the very myth of America's Essential Goodness and aiming his criticisms straight at the actions of the military-business-political-media complex that rules America. That is why he has been vilified in ways that Falwell and Robertson were not.

Wright is not the first black preacher to say such things and will not be the last. When Wright said right after the events of 9/11, "We bombed Hiroshima, we bombed Nagasaki and we nuked far more than the thousands in New York and the Pentagon, and we never batted an eye. We have supported state terrorism against the Palestinians and the black South Africans, and now we are indignant. Because the stuff we have done overseas has now been brought back into our own front yard. America's chickens are coming home to roost", and when he also said "We bombed Cambodia, Iraq, and Nicaragua, killing women and children while trying to get public opinion turned against Castro and Ghadhafi . . . We put [Nelson] Mandela in prison and supported apartheid the whole 27 years he was there", he was following up on similar analyses made by Martin Luther King, Jr. (another preacher in the prophetic tradition) in the context of the Vietnam war, suggesting that god would rain down punishment on America for its political sins.

King said in a sermon in 1968:

God didn't call America to do what she's doing in the world now. God didn't call America to engage in a senseless, unjust war as the war in Vietnam. And we are criminals in that war. We've committed more war crimes almost than any nation in the world, and I'm going to continue to say it. And we won't stop it because of our pride and our arrogance as a nation.

But God has a way of even putting nations in their place. The God that I worship has a way of saying, "Don't play with me." He has a way of saying, as the God of the Old Testament used to say to the Hebrews, "Don't play with me, Israel. Don't play with me, Babylon. Be still and know that I'm God. And if you don't stop your reckless course, I'll rise up and break the backbone of your power." And that can happen to America.

King was murdered just two months after delivering that sermon.

Of course, where preachers like Wright and King and Falwell and Robertson, followers of capitalist Christianity and prophetic Christianity alike, all make a mistake is in thinking that they all know what god wants and what god does, even if they are each saying things that contradict the others.

God is not going to solve the problem of deep racial divisions in America, Sri Lanka, Rwanda, or anywhere else in the world, because god does not exist. That is our responsibility.

Obama's speech provides a small window of opportunity to start that process. We have to open that window wider and walk through it.

POST SCRIPT: The little girl is all grown up

Some readers may have seen the 'telephone at 3:00 am' ad that Hillary Clinton made that suggested that Obama did not have the experience to handle crises. It turns out that the images of sleeping children used in that ad were from stock footage filmed eight years ago.

Ironically, one the children in that ad is now eighteen and is campaigning for Obama. She has made a new ad that you can see below:

March 25, 2008

The myth of Essential Goodness

One of the things that would amuse me if it did not have such serious consequences is that white people in America are always shocked, just shocked, when they get even a glimpse of the anger and resentment that exists among many black people about they way they have been treated and still continue to be treated in this country.

The reason for this perpetual state of surprise is that many white people tend to unquestioningly accept a powerful myth: that America is the one country in the world possessed of an Essential Goodness, bestowed by god. They believe that not only do Americans as individuals possess this quality (that they mysteriously acquire simply by being born within its geographical boundaries), but that the nation as a whole, this political entity, collectively possesses this same quality. The possession of this Essential Goodness is believed to make America morally superior to every other country.

Of course we committed genocide against the Native Americans, we institutionalized and perpetuated a long and brutal slavery, along with lynchings and murders, we have killed millions and millions of people in many small countries under the pretence of defending and spreading democracy, but it is held that all that is in the past and anyway were done by a few misguided individuals a long time ago and is not a reflection on the people as a whole. Despite all that history, the myth persists that we are and always have been, Essentially Good, and that anyone who challenges that myth in any way is spreading a vicious and hateful lie that is borderline treasonous. People who adhere to that myth cannot seem to wrap their minds around the idea that other ethnic groups, with a history of being oppressed, might not find it so compelling.

This powerful myth serves as the basis of a sense of self-identity that is thought to be uplifting but is actually dangerous because it can lead to arrogance, blindness, hubris, and an unwillingness to learn from the harsh lessons of history. A paper in Psychological Review showed that individuals, groups, and even nations that think highly of themselves without any real basis for doing so, resort to violence when they do not receive the inflated respect they feel they are entitled to. High self-esteem that is unsupported by actual achievements or abilities turns out to be harmful. (Roy F. Baumeister, Laura Smart, Joseph M. Boden, Relation of Threatened Egotism to Violence and Aggression: The Dark Side of High Self-Esteem, Psychological Review, 1996, vol. 103, No. 1, 5-33.)

America's politicians pander to this powerful and corrosive myth since it conveniently enables them to always get the benefit of the doubt of the public when they do something obviously wrong. Since America is Essentially Good, people think that there must be a benevolent reason for any action taken by its government and are eager to seize on any excuse to believe in its good intent. The public acceptance of the weak, almost non-existent, and obviously fraudulent case made for the invasion of Iraq is a case in point.

The brutal fact that history reveals, and which so many of us seem unwilling to accept, is that no people are special, no people are possessed of an Essential Goodness. Not the Germans who were passive in the face of the murder of Jews during World War II, not the Americans who were passive during the murder an estimated half million Vietnamese, not the Ethiopians who were passive during the destruction of Eritrea, not the Hutus who were passive during the murder of the Tutsis, with the list being continued almost indefinitely.

The hardest lesson for us to accept is that we are just like other people.

The commonly heard opening phrase "Only in America can . . ." is a symptom of this belief in American exceptionalism. That preamble is usually followed by a boast that can almost always easily shown to be false, but the truth is immaterial to the speaker of such sentiments. He is appealing to the myth about our Essential Goodness and thus cannot be challenged. Even Barack Obama appealed to this myth in his otherwise exemplary speech on race. He did this to distinguish himself from his former pastor Jeremiah Wright because Wright had committed the one unforgivable sin in American political discourse, a sin even worse than blasphemy, even worse than denying the Holy Spirit, which the Bible tells us is the only unforgivable sin. By listing all the crimes that he felt America had committed and then saying "Not God bless America, God damn America", Wright had denied the Essential Goodness of America, denied that god had a special place in his heart for America and would always take its side.

For these words, he has been vilified by those who were looking for a reason, any reason, to fan racist flames and discredit Obama as a candidate. I think that a commenter at Talking Points Memo said it best

What drives me crazy is how this could have been avoided so easily if Wright was the slightest bit media-savvy. Had he merely controlled his tongue and limited himself to advocating an attack on Iran to encourage massive worldwide Muslim attacks leading to a fulfillment of the biblical prophecy of end-times and bringing about Armageddon and the summary slaughter of every Jew, Muslim, Catholic, and non-believer on the planet while rapturing him and his flock up to heaven, then followed it up by denouncing Catholics as cult members and blaming Hurricane Katrina on gay people, this story wouldn't be metastasizing like this. One five minute milquetoast repudiation by Obama and it would all be behind him.

But what does Wright do instead? He spews this vile "God damn America" bile. What a psycho.

In the next post, I will look at the prophetic tradition in which Wright's sermon is embedded.

Next: Capitalist Christianity versus prophetic Christianity

POST SCRIPT: Hilarious story

I wrote before that the intelligent design creationists were going to release a documentary called Expelled: No Intelligence Allowed where they continue their whining about how these mean scientists are saying nasty things about their nice theory.

Biologist and blogger P.Z. Myers, who has been a fierce critic of intelligent design creationism and was interviewed for the film, has an absolutely hilarious story about what happened to him when he went to see a prescreening of the film. I don't want to spoil it for you. Just read his post.

Also, don't forget today's screening of The God Delusion Debate between Richard Dawkins and John Lennox in Strosacker Auditorium at 7:00 pm.

UPDATE: After the screening, Richard Dawkins and P. Z. Myers share a good laugh at what happened.


March 24, 2008

Barack Obama's speech on race

As readers of this blog know, I have not been an enthusiastic supporter of Barack Obama, voting for him in the Ohio primary as the default choice since the alternative of Hillary Clinton is much worse in comparison, and John McCain is truly awful.

But I was really impressed by the speech he gave last Tuesday on race, triggered by the ridiculous flap over some words spoken by the former pastor of his church. If you haven't seen the speech, you can join the three million people who have viewed it on YouTube or read the full transcript.

The speech was quite extraordinary both for the things he did not say and do as well as for the things he said and did. It was a long speech, lasting about forty minutes, but it was not a stem-winder with resounding phrases. There were no jokes, no innuendo, no digs at political opponents. While there was applause from the audience on a few occasions, there were no built-in, cued-up, applause lines, like one sees in campaign speeches or the awful State of the Union addresses. In fact, Obama seemed to prefer no applause at all and seemed to want to just get on with it. There were no rhetorical flourishes, no crescendos, no dramatic modulations, not even very many memorable phrases.

In his understated and low-key speech, Obama used just one rhetorical device, the pause, and he used it extremely well in a way that reminded me of Harold Pinter's memorable 2005 Nobel Prize acceptance speech which I have discussed earlier.

Obama quietly delivered a powerful message about the state of race relations in the US and how the way it is currently conducted poisons everything and everyone it touches and of the need to change that situation.

For once we had a major political figure talk like an adult about the serious issue of race. Even more impressive, he seemed to be assuming that the audience also consisted of adults. What made the event so extraordinary, and at the same time reflects so poorly on the state of our political discourse, was that such events are so rare.

He spoke about one issue that I have repeatedly emphasized, how race and other issues are almost always deliberately discussed in inflammatory ways, so that they become distractions from vital issues, and he issued a challenge to the media and to us to change that. He did not take a Pollyannaish view of race or try to disavow the people or history that are integral to dealing with it. Instead he correctly said that we need to know and understand that history if we are ever to overcome it.

The fact is that the comments that have been made and the issues that have surfaced over the last few weeks reflect the complexities of race in this country that we've never really worked through - a part of our union that we have yet to perfect. And if we walk away now, if we simply retreat into our respective corners, we will never be able to come together and solve challenges like health care, or education, or the need to find good jobs for every American.

Understanding this reality requires a reminder of how we arrived at this point. As William Faulkner once wrote, "The past isn't dead and buried. In fact, it isn't even past." We do not need to recite here the history of racial injustice in this country. But we do need to remind ourselves that so many of the disparities that exist in the African-American community today can be directly traced to inequalities passed on from an earlier generation that suffered under the brutal legacy of slavery and Jim Crow.

But what was most important in the speech was the indictment of the media about how they cover race and politics and the challenge that he issued to them and us to talk like adults about race, a topic that is at once so ephemeral (after all, the concept of race has no biological standing) and yet so important.

This is where we are right now. It's a racial stalemate we've been stuck in for years. Contrary to the claims of some of my critics, black and white, I have never been so naïve as to believe that we can get beyond our racial divisions in a single election cycle, or with a single candidacy - particularly a candidacy as imperfect as my own.
. . .
For we have a choice in this country. We can accept a politics that breeds division, and conflict, and cynicism. We can tackle race only as spectacle - as we did in the OJ trial - or in the wake of tragedy, as we did in the aftermath of Katrina - or as fodder for the nightly news. We can play Reverend Wright's sermons on every channel, every day and talk about them from now until the election, and make the only question in this campaign whether or not the American people think that I somehow believe or sympathize with his most offensive words. We can pounce on some gaffe by a Hillary supporter as evidence that she's playing the race card, or we can speculate on whether white men will all flock to John McCain in the general election regardless of his policies.

We can do that.

But if we do, I can tell you that in the next election, we'll be talking about some other distraction. And then another one. And then another one. And nothing will change.

That is one option. Or, at this moment, in this election, we can come together and say, "Not this time."

We have to look to comedian Jon Stewart who, between the jokes, gives one of the most adult media reactions to the speech.

The reactions to Obama's speech are interesting. Those who would never have voted for him anyway have been nitpicking it to death but in the process come off looking petty. But he put in a tricky position those who pride themselves on being at least somewhat enlightened. If they continue to harp on Wright's words, they will be acknowledging that they really don't want the kind of discussion Obama is calling for but simply want to continue to use race as a divisive tool. Even Fox News's Chris Wallace was so embarrassed by his colleagues on his own network over their relentless focus on precisely the kind discussion that Obama deplored that he publicly took them to task for it. It seemed like even he had had enough.

We can only hope that this speech will change the way that race is discussed in America.

In the next post, I will say more about the context in which Obama's speech came to be delivered.

POST SCRIPT: The God Delusion Debate

Case's Campus Freethought Alliance (CFA), in partnership with the Case InterVarsity Christian Fellowship, will present a screening of The God Delusion Debate beginning at 7 p.m. on Tuesday, March 25 in Strosacker Auditorium. The program features biologist Richard Dawkins, who needs no introduction, debating points from his book The God Delusion with John Lennox, a mathematician, philosopher of science, and a Christian.

You can see just the opening to the debate here. In the interests of time, this 20-minute introduction explaining the debate set up and having the debaters give brief biographies of themselves will not be shown at the event.

At 8:30, immediately, following the screening, there will be refreshments and then a panel discussion.

For more information about the program and CFA, see here.

March 21, 2008

The propaganda machine-4: Major developments in its creation

(For previous posts in this series, see here.)

The third tier pundits are a byproduct of five significant developments in media ownership and control.

The first is the rise of 24/7 cable news networks that has created a voracious demand for people to fill all that airtime. There is just not enough real news to report, and creating good investigative reports on important topics costs money which eats into profits. There is a limit to how much time one can spend on celebrity gossip. Even coverage of Britney Spears can get stale. The supply of attractive young women who go missing, another source of endless cable news media fascination, is also limited. As a result, the cable news networks depend heavily on talk shows since having people give opinions costs little money. But the people who have studied issues in depth and have informed opinions based on deep knowledge tend to be academics but they have jobs that require them to teach and do research and thus are not readily available at a moment's notice to come and talk about the day's events, assuming they even wanted to. This leaves a niche for a large number of professional pundits whose job is to be at the media's beck and call. The third tier pundits fill that niche.

The second development that facilitated the growth of the propaganda machine is the rise of talk radio. Along with cable news TV, it came to prominence in the late 1980s as a result of satellite technology, and its functioning was greatly aided by the increasing use of toll free phone numbers (which originated in 1967), which enabled nationwide call-in shows to become popular.

A third factor is the increasing concentration of media ownership in a few hands. As former dean of the University of California-Berkeley Graduate School of Journalism Ben Bagdikian says in his book The Media Monopoly (1997):

With each passing year ... the number of controlling firms in all these media has shrunk: from fifty corporations in 1984 to twenty-six in 1987, followed by twenty-three in l990, and then, as the borders between the different media began to blur, to less than twenty in 1993. In 1996 the number of media corporations with dominant power in society is closer to ten. In terms of media possessions and resources, the newest dominant ten are Time Warner, Disney, Viacom, News Corporation Limited (Murdoch), Sony, Tele-Communications, Inc., Seagram (TV, movies, cable, books, music), Westinghouse, Gannett, and General Electric.

As Robert McChesney says in his book The Problem of the Media (2003, p. 224-235), in the late 19th and early twentieth centuries, the issue of what to do with the power of corporations, including media, was a burning issue. There were many alternative models that were possible that would have allowed for diverse views in the media. But the government, under the powerful influence of corporations, decided to allow private, profit-making entities to rule the media. They were aided in this by one of the most controversial Supreme Court decisions ever, the 1886 ruling of County of Santa Clara v. Southern Pacific Railroad Company which was erroneously interpreted as granting personhood (and thus constitutional rights protections) to corporations. In other words, it is now widely (but erroneously) assumed that the Supreme Court has ruled that corporations have the same rights as you and me, although they have much greater powers than us. (After all, they can be in many places at once, have much greater resources of all kinds, and live far longer than people).

The media giants had long-chafed at the limits placed on the number of media outlets that could be owned by a single entity. Even though the Federal Communication Commission was very sympathetic to media owners and wanted to accommodate them, overturning those restrictions proved to be difficult because the general public had an intuitive sense that such restrictions were a good thing and opposed moves to remove them. But Bill Clinton in 1996 had legislation passed that eliminated the caps on the number of radio stations that companies could own nationally and as a result, "Almost overnight, the radio industry's structure was turned upside down. Well over half the stations were sold until a few massive firms like Clear Channel (owner of more than 1,200 stations) and Viacom came to rule the roost." (McChesney, p. 231)

Of course, you are not likely to find the media reporting on this topic extensively. The media is quite shy about revealing the extent of its own reach and power and dominance.

Next: The other two developments: the Fairness Doctrine and the Powell memo

POST SCRIPT: Arthur C. Clarke

Arthur C. Clarke died on Tuesday at the age of 90 in his adopted country of Sri Lanka, where he had lived since 1956. I am not a huge fan of the science fiction genre in general but I liked the writings of Clarke, who was grounded in good science, although he never went to college. You can see the list of his scientific predictions here. The one that came true most spectacularly being the idea of geosynchronous communication satellites. [UPDATE: Commenter Vasantha corrects me and says that Clarke went back to college after serving in World War II and earned a first class degree (the highest category awarded by British universities) in physics and mathematics.]

I had the pleasure of meeting Clarke when I was teaching at the University of Colombo. I was teaching an optics course and wanted to show the students holograms, which were somewhat of a novelty in the early 1980s. I tried to make one in the physics department darkroom but failed miserably. I heard that Clarke had some and went to his home to see if I could borrow one. He was very friendly, and in addition to lending me a few holograms, he also enthusiastically talked about science.

Clarke's death reminded me of how much pleasure I derived from two of his books Childhood's End and Rendezvous with Rama and Stanley Kubrik's terrific film 2001: A Space Odyssey, all of which I experienced long ago while I was in college. I plan to enjoy them again soon.

March 20, 2008

Two somber anniversaries

Yesterday, March 19, 2008 saw the fifth anniversary of the tragic invasion of Iraq by the US, a deliberate act of aggression against a country that had posed no threat whatsoever to it, an action that is going to have serious negative consequences for US power an influence in the world, both militarily and economically. Historians looking back might see that as a watershed event, a peak in the power hubris of a country. Apart from the appalling death and destruction that has been wreaked on the people of Iraq, with hundreds of thousands of Iraqis dead and injured and vast numbers of internal and external refugees, the invasion of Iraq has also brought to the surface the decline of US economic power.

But three days earlier saw the 40th anniversary of another military action, the massacre that took place on March 16, 1968 in the Vietnamese village of My Lai. I have described before the details of this awful event when the soldiers of Charlie Company led by Lt. William Calley went into that doomed village, rounded up over three hundred and fifty civilians, old men and women and children, herded them into ditches and sprayed them with machine gun fire. There were no Vietnamese men of fighting age present and no reports of the US troops being fired upon before they unleashed their barrage.

A US helicopter pilot Hugh Thompson came across the scene while the massacre was in its final stages and at great risk to himself and his two man crew put down his helicopter between the soldiers and the victims and said that he would shoot the US troops if they killed any more civilians. He then rescued the few remaining survivors of the carnage and flew them away. Although he reported the incident to his superiors, no action was taken. An ambitious young army officer named Colin Powell was one of those who persuaded his superiors that nothing had happened that was worth investigating.

Some time later, another military veteran Ron Ridenour heard about the event from a soldier in Charlie Company and was horrified by the story. He started telling the Congress, the White House and the Pentagon, anyone who would listen, urging that action be taken. Finally, in September 1989, William Calley was charged with the crime, but there was no publicity at all.

The My Lai massacre exploded into public consciousness in November of that year when a young investigative reporter named Seymour Hersh heard of this story, dug around until he got the facts, and broke the story. In this fascinating interview on the radio program On the Media Hersh describes how he tracked Calley down.

(You can hear a longer unedited interview and read the transcript here.)

Calley was convicted of the murder of 22 civilians but President Nixon ordered that he be released pending his appeal, and eventually commuted his sentence to time already served. So in the end, Calley served just three and a half years of house arrest for this appalling crime. This is of course consistent with the general policy that 'our' people are deserving of every excuse for committing any atrocity while the life of the 'enemy' is worth next to nothing. As General William Westmoreland, commander of US forces in Vietnam said "The Oriental doesn't put the same high price on life as does a Westerner. Life is plentiful. Life is cheap in the Orient." So what if some Vietnamese here or there are murdered?

We see that same disregard for Iraqi lives now that we saw then for Vietnamese lives. The US military refuses to count the number of Iraqis killed by them, let alone the number that have died from all the other acts of violence since the war began. This has been left to independent investigators who put the number of Iraqi dead at around one million.

Calley's defense was that he was just following orders and there is some evidence that there had been a deliberate policy by the US military to indiscriminately kill everyone who lived in areas that were supposedly controlled by the enemy. In a recent article Gareth Porter looks at an internal report done by General William Peers in late 1969 as a result of the My Lai outcry. The report found that "the troops who entered My Lai and three other hamlets of the village of Son My had been led to believe that everyone in the village should be killed. Testimony before the Peers inquiry also showed that the platoon leaders involved in the operation had been given that same message by two company commanders."

But no one high up in the chain of command was ever prosecuted for those murders. In fact, the events at My Lai were far from unique. The infamous Tiger Force squads had orders to kill every one they found in certain areas, regardless of whether they were civilians or not.

As recounted by members of the Tiger Force who were present, and reported by Pulitzer Prize-winning Toledo Blade journalists Michael Sallah and Mitch Weiss, Westmoreland told them, "[I]f there are people who are out there – and not in the camps – they're pink as far as we're concerned. They're Communist sympathizers. They were not supposed to be there."

That message gave the Tiger Force officers the idea that they were authorized to kill anyone who chose to remain in Viet Cong base areas. Sallah and Weiss found that Tiger Force had carried out no fewer than 19 killing sprees against civilians in "specified strike zones." The unit commanders justified the wanton murder of civilians to Army investigators by explaining that the creation of a free fire zone gave U.S. troops the right to "kill anything that moved."

Another article goes into more detail:

From February to September 1967, the US Army's "Tiger Force" commando unit murdered hundreds of civilians, mainly in Quang Ngai province, according to research compiled by Army investigators in the 1970s, and verified by reporters Michael Sallah and Mitch Weiss in 2003.

No memorial commemorates the victims of Tiger Force, and the massacres the unit committed do not figure in Vietnamese history texts.

In 2006, Nicholas Turse, then a graduate student at Columbia University, found that declassified documents showed US military investigators had verified 320 reports of atrocities committed by US troops in Vietnam, not including the massacres at My Lai. Investigators had failed to corroborate some 500 other reports.

The reports which turned out to be true included massacres of dozens of civilians in Quang Nam province in late 1967 by B Company of the Army's 1st Battalion, 35th Infantry, 4th Infantry Division.

Some soldiers returning from Vietnam were so traumatized by what they had done and seen done that in 1971 that they organized the Winter Soldiers hearings, where they gave their personal testimonies. It is now available as a documentary with that same name. I have seen it and the stories they tell are sad and horrifying.

The soldiers recounted story after story of the appalling things that were committed routinely by the soldiers on the Vietnamese. And the brutality was indiscriminate, against old and young and infants, men and women, combatants and civilians. People were pushed out of helicopters, they were raped, they were tortured and killed in cold blood, in ways that sicken you. Entire villages were routinely and systematically destroyed. One person testified that while their truck passed a group of five little children, one child gave made a rude gesture at them. The truck slowed and the soldiers killed all the children in a volley of fire.

The soldiers spoke of a brutal culture that pervaded the entire military. Their superior officers deliberately kept vague as to what the soldiers could and could not do but did not reprimand anyone for anything, even if they witnessed these atrocities. As a result, each soldier soon developed the attitude that all Vietnamese were fair game, that anything could be done to them and there would not be any consequences. And they knew that their superiors knew and approved and even carried out these acts.

The events at My Lai, far from being an aberration by "a few bad apples" (the standard reaction by the Pentagon and official Washington to such revelations) were, in the words of the soldiers, SOP (standard operating procedure).

The media in 1971 pretty much ignored the explosive revelations at the Winter Soldier hearings, deciding that the people did not need to hear about the awful things done in their name by their own soldiers in a war prosecuted by their own government. And history is repeating itself. Right now there is another set of hearings going on, again under name of Winter Soldiers, with soldiers who have served in Iraq and Afghanistan recounting the awful things that they did. And once again, the major media is ignoring them. But you can find it on alternative news sites like Democracy Now and The Real News Network.

This is what war does. Even perfectly ordinary young people, given a lethal weapon and thrust into the middle of a hostile population whom they do not know and whose language they do not speak, frightened that any person they meet might want to kill them, can easily end up becoming either killers or the abettors of killers. And those who like Calley had psychopathic tendencies to begin with can become monsters.

Seymour Hersh describes what the mother of one of the soldiers who took part in the My Lai massacre told him when he went to interview her son.

"I gave them a good boy and they sent me back a murderer."

This is what war does to people.

POST SCRIPT: Iraq retrospective

Here is a good multimedia retrospective of the Iraq war, put together by the Reuters wire service from their reporters in the field.

March 19, 2008

Ignoring the elephants

Presidential elections involve two distinct phases. In the first phase, the Villagers drive out of the race anyone who might even remotely threaten the power and privileges of the pro-business/pro-war single party oligarchy that runs the country. Once that is achieved, then the Villagers create major controversies over personal and social issues, so that the electorate gets really fired up and angry and think that important issues are at stake, and not notice that the game is already over. (See here and here for who the Villagers are and the role they play.)

We are now comfortably in that second phase of the process. There is little to choose from between Obama and Clinton in terms of policy differences and so we have this ridiculous amount of attention being paid to statements made by their supporters and other trivialities. When the Democratic nominee is finally determined, we will then see the same kind of intense attention on trivial issues between the two party nominees.

As I said in a 2006 post on election year politics:

As a result, the overture to familiar strains of election year sloganeering are being heard, following a similar pattern. In the months leading to November, one can expect to hear a lot about the following: gay marriage, abortion, immigrants, flag burning, English-only rhetoric, UN bashing, estate tax repeal, and assisted suicide.

All these issues (except for immigration and the estate tax) share the characteristic that they are largely symbolic and directly affect only a tiny minority of people. They have little relevance to the actual lives of most people, but they do aim straight at the emotional core of the base and provide many opportunities to push people's buttons and make them angry. And expect to hear lots of talk about god and religion, perhaps involving those old faithfuls such as displaying the ten commandments in public places or the pledge of allegiance or prayer in schools and similar church-state separation issues.

However, I would not be surprised if a completely unexpected, but equally trivial, new issue emerges suddenly, since the ones I have listed are, like, so-o-o-o 2004, and the extremist base loves fresh raw meat.

That has happened. Look at the kinds of media coverage that the race now gets. The big issues that the country faces are the wars in Iraq and Afghanistan and the threat of a US attack on Iran; the hundreds of thousands of dead and injured in Iraq and the massive number of displaced people and refugees; the large and continuing budget and trade deficits; the rapid decline in the value of the dollar against other major currencies; the threat of an imminent recession; the crisis facing many homeowners due to the subprime debacle; the shakiness of the US banking system because of that same issue; and the spiraling cost of health care and the lack of coverage for over forty million people, a large fraction of whom are children.

These are all signs that the US has gotten itself into a tailspin. Paul Craig Roberts spells out the magnitude of the problems that have been created. All these issues affect each and every one of us, either directly or indirectly, and have major long-term consequences. Whoever becomes president in November will inherit a financial and military mess that will require very tough and unpopular decisions.

And yet, how much coverage do we have of the candidates' views on these topics and what their priorities and plans are for dealing with them? Take for example the unprecedented actions by the Federal Reserve to bail out the big investment banks that made lots of money but now are in serious trouble. What are the candidates' views on this situation? What would they do as president? Do they approve of this kind of government intervention in the financial sector?

We are clearly not going to get any kind of adult talk on this issue from the current president. Last Friday, when the Bear Stearns news was rocking global financial markets, Bush talked to a group of economists at the Economic Club of New York who, along with people around the world, were presumably anxious to hear what the government's response would be. According to a reporter present, what they heard would have given them the impression of a president who was either in fantasyland, oblivious to what is going on around him or completely out of his depth.

[Y]ou had to wonder what the international financial community makes of a country whose president could show up to talk economics in the middle of a liquidity crisis and kind of flop around the stage as if he was emcee at the Iowa Republican Pig Roast.

We’re really past expecting anything much, but in times of crisis you would like to at least believe your leader has the capacity to pretend he’s in control.
. . .
Our credit markets are foundering, and all we’ve got is a guy who looks like he’s ready to kick back and start the weekend.
. . .
[T]his economic crisis has been going on for months, and all the president could come up with sounded as if it had been composed for a Rotary Club and then delivered by a guy who had never read it before.

He then spoke about his Big Plan: sending checks of $600 to everyone! Oh yes, that should definitely turn things around. Oh, and he's also totally against congressional earmarks now, though he was fine with them while the Republicans controlled Congress. That was pretty much it. One wonders if there are any adults in this administration.

Here is Jon Stewart on the economic mess and Bush's speech:

Meanwhile, on Friday itself Wall Street investors started a steady drumbeat demanding that the Fed cut interest rates once again at its regular meeting on Tuesday, by another huge amount, perhaps even as high as one percentage point. The Fed duly obliged cutting rates by a quarter point on Sunday, itself a highly unusual action, and then followed with a further cut of ¾ point on Tuesday. The stock markets duly soared upwards again.

Cutting interest rates by large amounts might please Wall Street investors, at least in the short run, but it has consequences for the long term. Doing so while European rates stay high results in the dollar, already at record lows, sinking even further. This will raise the price of oil and other imports, increasing the rate of inflation and aggravating the trade deficit. All this makes foreign investors even more wary of dollar-based investments, which may make it harder to sell them US treasury bonds to finance the deficits.

The investments made by investment banks like Bear Stearns are highly leveraged, meaning that they buy securities with just a small amount as down payment and finance the rest, just like the way we buy houses with a small down payment and finance the rest with a mortgage. The difference is that when buying a house (in normal times) the down payment is usually 10 to 20% and the value of the collateral (the house) is worth more than the loan, so that if the borrower can't repay the loan, the lender can still recover the money by selling that asset.

In the case of Bear Stearns, it is estimated that the size of its purchases outnumbered its actual assets by a ratio of 28-to 1, meaning that it bought securities for 28 times the value of the actual cash it put into the purchase. The balance was borrowed. Usually these banks sell these highly leveraged securities long before the loan is due to be repaid and thus are able to repay the debt. But in this case, nobody wants to buy their securities. When the bills came due, the banks could not sell and thus had no money, which is why the bank had a liquidity crisis. When the Fed came to the rescue by guaranteeing these securities, it was essentially saying that they would pay up if the value of the securities did not rise again and creditors came for their money.

Hanging over everyone is the uncertainty. How many other big banks are holding on to how much mortgage backed securities? How much did they leverage? How far is the Federal Reserve willing to go in using taxpayer money to prop up these banks?

On Monday the biggest commercial bank in Cleveland, National City Bank, lost 43% of its value in one day, fueled by suspicions that it was holding a large amount of now worthless mortgage-backed securities. Before 1999, commercial banks were restricted by the Glass-Steagall Act from taking the kinds of risks that investment banks take, because the government insured the deposits of those banks and did not want to underwrite excessive risk taking. That act was passed in 1933 in the wake of the Great Depression because banks had been making highly speculative investments and thus caused the crash. But in 1999 Congress and Bill Clinton removed that barrier and now the rot that has infected the investment banks has spread into the commercial banking sector also.

As the days go by, watch for more volatility, fueled by rumors.

POST SCRIPT: The God Delusion Index

Answer this series of questions and calculate the extent of your own God Delusion.


March 18, 2008

Yet another federal bailout for the rich

Last Tuesday, the Federal Reserve Board said that it would guarantee up to $300 billion worth of the highly devalued assets held by those banks that had been speculating in the subprime real estate market, thus enabling those banks to borrow money because of the federal guarantee. Nobody else would accept the subprime mortgage portfolios as collateral for loans. So in effect the taxpayers were being put on the hook if the loans could not be repaid. The stock market that day reacted with glee, skyrocketing upwards. (I explained what was going on here.)

That party ended on Friday. The big investment bank Bear Stearns said that it could not meet its obligations and requested a loan from another big investment bank JPMorgan Chase. The latter, unlike the general public, was aware of the nature of the assets held by Bear Stearns and said nothing doing, unless the Federal Reserve was willing to guarantee that loan too. The Fed, always eager to please the big financial interests on Wall Street, readily agreed and in a single day the whole transaction was approved. This is pretty amazing speed when you consider that $30 billion of taxpayer money was involved.

But the news of Bear Stearns' troubles, which came just two days after a cheery message of confidence by its head just two days earlier that everything was just fine and dandy, sent jitters down the spine of investors who wondered how bad the situation really was and what dark secrets existed in the vaults of other big financial institutions.

They found out on Sunday when it was announced that JPMorgan Chase was actually buying Bear Stearns for the astoundingly low price of $2 per share, with the Fed once again guaranteeing the transaction. Just last year that stock had been trading at $172 per share. In just one year, the bank had lost almost 99% of its value, a collapse of Enron-sized proportions, but this time affecting one of the oldest and largest investment banks in the country. The total cost to JPMorgan Chase to buy this former financial powerhouse was only $236 million. Given that the Bear Stearns' fancy headquarters building alone was estimated to be worth about a billion dollars, this fire sale price indicates that Bear Stearns was in even more terrible shape than previously thought.

To understand what is going on here, we need to know that banks invest the money deposited in them to make money for themselves and their depositors. They do this by buying and selling securities of various types. But they are expected to keep a certain percentage of that money in cash to meet the routine demands of depositors who need to withdraw money for whatever reason. As long as not too many people want too much money at once, the banks are said to have sufficient 'liquidity' and the system works well. Even if the banks run out of cash, they can get short-term loans from the Fed or other banks using their securities as collateral. The interest on these loans is what is called the 'discount rate' and it is much less than the interest that we pay on loans. These kinds of loans are routinely done and are meant to ease any short-term liquidity problems.

But if there are suspicions that a bank is in trouble, that can lead to a stampede of depositors all demanding their money at the same time and we have a 'run' on the bank. If the banks cannot convert enough of their securities to cash or raise large enough loans, it can go bankrupt. This can happen even if a bank is perfectly sound. All it requires is a rumor of trouble to cause a run.

It was to prevent such problems that the FDIC system was set up. This said that whatever happened to a bank, the government would guarantee to reimburse depositors up $100,000 each. This was meant to reassure depositors so that they need not panic and withdraw their money suddenly. This is what possibly saved Countrywide Bank last year when it was discovered to have had huge losses by investing in subprime portfolios. I, for example, have an account at Countrywide but did not panic and ask for my money back when I heard the news of its troubles, precisely because of the guarantee.

In return for this government guarantee, the commercial banks have to submit to supervision by the government to make sure that they are not making too many risky investments, though we see in the case of Countrywide that the system is not foolproof.

But investment banks like Bear Stearns are not like the commercial banks ordinary people deal with. There are two kinds of investors in banks like Bear Stearns, those who buy shares in the bank and those who give the bank their money to manage. These banks are outside the FDIC system and the federal government has not previously assumed any responsibility for them or their depositors. Those banks are not like the ones where most ordinary people have accounts. These are meant for very wealthy investors for whom $100,000 is just pocket money. It is presumed that these wealthy depositors and investors are financially savvy people who are capable of evaluating for themselves the risks involved and do not need the government to protect their interests.

These investment banks can and do take much greater risks with their investments in return for much higher rates of return than we get on our checking and savings account. This is capitalism in theory, where there is supposed to be a correlation between risk and reward.

But the trouble was that Bear Stearns was one of the worst culprits causing the subprime mortgage debacle, underwriting many of the transactions and causing the inflation in values of those securities that had little relationship to the actual value of the properties. So when the party ended, they got stuck holding a lot of securities which they had paid high prices for and which were now worthless. When investors started suspecting that things were not going well and started trying to take out their money, Bear Stearns did not have the money and could not sell its securities to raise anywhere near enough money, and nobody would lend them money using those worthless securities as collateral.

Except the government. In an unprecedented move, the Federal Reserve decided that they would intervene to try and prop up, at least partially, Bear Stearns so that it did not go bankrupt by offering guarantees for loans given to it, essentially putting an artificial value on its securities. In essence, the government is using taxpayers' money to try and protect the wealthy financial interests associated with these investment banks. It is true that the people who held shares in Bear Stearns have lost money due to declining share prices but there is little the government can do about that. But by guaranteeing the value of the mortgage collateral, it bought those investors some time

So rather than seeing capitalism in practice what we have is capitalism in theory but a perverse socialism in practice, where the risk is borne by all taxpayers but the benefits in the form of profits accrue to just a few. All those people in government and business who preach financial discipline to the poor and say that people should be held accountable for their decisions, tend to conveniently change their tune when it is themselves or their friends who are affected.

I have shown this clip by British comedians John Bird and John Fortune before but I am showing it again because they describe precisely how we got into this mess and mention by name Bear Stearns and discuss the two funds owned by them that lie at the heart of their problems.

It is unnerving that two comedians in another country in October 2007 could finger the problem that is just now rocking the financial markets in the US.

Once again, I am not an economist so people who are more knowledgeable can chime in with corrections.

March 17, 2008

The propaganda machine-3: The third tier pundits' role and purpose

(For previous posts in this series, see here.)

In my previous post in this series, I described the kinds of arguments put out by some of the better-known third tier pundits. You can probably discern a characteristic common to all of them. They start by identifying an enemy (people or ideas) and then throw everything at it, using any spurious argument they can think up, hoping that something will stick. Their purpose seems to be to fill the airways and print media with noise and confusion. The idea is not to make a cogent case but to create a fog through which the public is encouraged to see the designated enemy as vaguely disreputable even if no one can say exactly why. One enemy they have agreed upon is 'liberal', a word with an honorable ancestry but now so muddied that they can use it in almost any way they like. So they assert that liberals are weak, fascistic, atheistic, immoral, anti-American, terrorist-loving appeasers. It does not even matter if their assertions contradict one another. The third tier pundits are glib and have a superficial cleverness that seems to be convincing to some people but they lack good rhetorical forensic skills, instead using the equivalents of sledgehammers.

By swarming through the media in large numbers like locusts, the third tier pundits convey the misleading impression that they represent a sizeable segment of opinion, even the mainstream, and their style of argumentation (narrowly focused, using rudeness, sarcasm, and ridicule as substitutes for arguments) is such that it makes for 'good' TV for those weaned on sports and reality shows. For some reason, people seem to enjoy political talk shows in which people talk fast and interrupt and yell at each other. Such programs are not suitable for reasoned discussion. In that noise, the lack of actual evidence and logical arguments and, more importantly, any truly alternative opinions are not immediately apparent. The Iraq war, for example, was sold to the American people by hucksters like these all yelling out fake arguments about the dangers posed by Iraq and not being challenged to produce the evidence or to defend their weak logic.

The third tier pundits can confidently behave like this knowing that they will rarely encounter a knowledgeable interviewer or program host who will hold them accountable or ask them to back up their statements with anything resembling facts or a line of coherent reasoning. As a result, this kind of vacuous hit-and-run punditry has become commonplace in the US. People can say absurd things on TV or on the radio, not be challenged by their interviewers, and then go on to make some new charge the next day. After doing this for years, it is easy to fall into the trap of thinking that one is untouchable.

But sometimes they trip up. Ann Coulter encountered a Canadian interviewer Bob McKeown who actually challenged her on the facts and did not back down in the face of her repeated assertions of something that was false. You have to watch the video of the exchange to see the deer-in-the-headlights look she gets when she is challenged, and her desperate attempts to bluster her way out of an embarrassing situation. She was clearly not expecting this. But interviewers rarely hold their interviewees accountable in this way. (I wrote about this particular Coulter incident earlier.)

So why do third-tier pundits exist at all if their contribution to the public discourse is not just zero but actually negative? How is it that such obviously unserious people get so much space and airtime in the major media outlets? How come they seem to sell so many books so that this tripe even gets on best-seller lists?

It would be a mistake to think of these people as coming into being spontaneously or because of some talent they possess or even by sheer accident. The third tier pundits are a front for more important developments occurring elsewhere. If you use a circus metaphor, the third tier pundits are like the clowns who are brought out to distract and amuse the audience while the set is being changed. They are primarily entertainers whose purpose is to fill up the air time on radio and TV to the exclusion of more knowledgeable voices. By expressing extreme views in an inflammatory way, they put into circulation ideas that their more 'respectable' ideological allies cannot, allowing the more dangerous warmongering ideologues (William Kristol, Charles Krauthammer, Michael Ledeen, etc.) to sound reasonable. They draw the fire of their ideological opponents, making them spend all their time and energy refuting their bizarre charges.

There are a host of well-funded foundations and think tanks and media outlets which are willing to hire these third tier pundits and let them loose as front line troops in the media war to persuade the public that policies that in reality will harm them are good for them. The antennae of the third tier pundit brigade are carefully tuned to pick up the cues about what their patrons want. Want the public to support an attack on a country like Iraq that never threatened the US? Want to provide tax cuts for rich people? Want to prevent the introduction of a single-payer health care system? Want to eliminate the estate tax so that inherited wealth can accumulate even more rapidly? Want to privatize social security and cut back on Medicare? Want to undermine public education? Want to take away even the little support that poor people get from the government? If the US oligarchy wants any or all of these things to be advocated, whom are they going to call? The third tier pundits of course. In a flash, they will come storming out of their luxury penthouse barracks, laptops blazing, occupying all the vantage points in the media so that more thoughtful voices are squeezed out, leaving little room for reasoned discussion.

By this technique, almost any crackpot idea becomes fodder for 'serious' discussion. A Tom Tomorrow cartoon, as usual, makes the point succinctly.

As a result of such repeated media exposure, the third tier pundits become, like Paris Hilton, famous just for being famous, although they have little of substance to contribute.

What is significant about them is not their contribution to the political discourse, but that they are visible markers of the underlying media structure. In the next post in this series, I will discuss five significant developments in media ownership and control that have resulted in the current media climate that enables this phenomenon to occur.

POST SCRIPT: "We own the world"

Noam Chomsky analyzes the current state of discussions in the mainstream media about US foreign policy and says that the analyses only make sense if you start out with the assumption that the US owns the world.

March 14, 2008

Dog whistle politics

In an article written in 2000, William Greider said something that really stuck in my mind: "An enduring truth, a wise friend once explained to me, is that important social change nearly always begins in hypocrisy."

This is very true. When we look back at the improvement in our attitudes to race and gender, at some point indulging in crude stereotypes, offensive humor, and derogatory remarks against this or that hitherto discriminated group becomes seen as unacceptable behavior and the people making them are viewed as ignorant and become ostracized, outside the bounds of decent society. As a result, we then go through a long period when people who harbor such offensive views feel forced to hide them or even say things that are opposite to what they truly feel. As Greider says "[T]he powerful are persuaded to say the appropriate words, that is, to sign a commitment to higher values and decent behavior."

Because the views of these people may not have truly changed, they sometimes reveal their true feelings only amongst people whom they think share these views, which is why one occasionally finds situations where people say things to friends and families and members of private organizations that leak out to the wider public and caused outrage.

But this period of hypocrisy seems to be an important step is social progress for two reasons. In the short term as Greider points out, this hypocritical commitment to merely say the words serves as a lever to create actual change. "Then social activists must spend the next ten years pounding on them, trying to make them live up to their promises or persuading governments to enact laws that will compel them to do so." In the longer term, the elimination of such statements in public means that a new generation of young people grows up which takes these statements of equal rights at face value as the true values of society and tries to abide by them.

IIn the case of women and blacks, those movements to establish their equal rights have made significant enough progress that although equality has not been reached, any politician vying for major office who now makes a derogatory remark about blacks or women would be committing political suicide. In the case of gay rights, I think we have just recently entered the era of hypocrisy, in which people who make blatant anti-gay statements are viewed negatively. This gives me confidence that within the next decade gays will gain significantly in their struggle to be accepted as equals.

But while entering the era of hypocrisy may be a necessary step in social progress, there is no denying that there still exists significant numbers of people who still cling on their outdated and bigoted views and politicians know this. And a vote by a bigot counts just as much as one by one who is more enlightened. So how does one appeal to such voters without being seen as bigoted too? Thus we see the birth of 'dog whistle' politics. This is where politicians use code words and phrases that seem to say the 'right' thing while the real goal is give a nod and a wink to those who understand what those coded words mean. For example, saying that you want to preserve 'the sanctity of marriage' doesn't mean that you will ban divorce or adultery or stamp out prostitution. It is code, meant to appeal to anti-gay voters, to tell them that that you share their opposition to gays getting the same rights that heterosexual people take for granted.

When it became clear that a woman and an African American were serious contenders for the Democratic party nomination, I expected to see a major resurgence of dog-whistle politics as other candidates tried to tap the reservoir of anti-women and anti-black voters without seeming to be themselves bigoted. As this is a risky strategy, such coded signals are often assigned to surrogates who can be jettisoned if the strategy backfires.

If you have been following the news, you will have noticed that we are already seeing that happen. Ever since she fell behind in the race, it has been suspected that Hillary Clinton has been trying to use race as a divisive issue and even on occasion comparing Obama unfavorably to McCain, suggesting that he, unlike the two of them, is 'not ready' for the job. This is tapping into the feeling amongst some voters that black people are still somehow incompetent, that they should 'know their place,' that they should wait until the time is right for them. Martin Luther King was very familiar with this delaying tactic. In his famous 1963 letter from the Birmingham jail, he wrote:

For years now I have heard the word "Wait!" It rings in the ear of every Negro with piercing familiarity. This "Wait" has almost always meant "Never."

I am not surprised by this development. I wrote on February 20 about Hillary Clinton: "She, like her husband, is ruthless in the pursuit of power, so do not be surprised if she and her surrogates start using all manner of innuendo and dirty tricks against Obama if the race for the Democratic nomination continues to be close and she is in danger of losing."

The latest salvo is the extraordinary assertion by Clinton's advisor Geraldine Ferraro (a member of Clinton's finance committee and an advisor to her campaign) that Barack Obama has an advantage because he is black! That is like saying that Helen Keller was lucky to be both blind and deaf since otherwise people would have belittled her achievements.

What is more ironic is that this was said by the same woman who was herself accused back in 1984 (when she was selected by Democratic presidential candidate Walter Mondale as his running mate) that the main reason she got the nod was because she was a woman. Furthermore, Ferraro seemed to be saying the opposite in 2006 when she said, "I think it's more realistic for a woman [to be elected president] than it is for an African-American . . .There is a certain amount of racism that exists in the United States — whether it's conscious or not it's true." She added, "Women are 51 percent of the population."

Kevin Drum makes a good point:

Implicit in Ferraro's statement is the idea that if Obama were a charismatic young white guy, there's no way he'd be getting any attention. And that's just plain crackers. Charismatic young John F. Kennedy won the presidency in 1960. His brother, charismatic young Robert F. Kennedy, attracted huge support in 1968 and might have become president as well if he hadn't been assassinated. Charismatic young Gary Hart nearly stole the 1984 Democratic nomination from Walter Mondale. And charismatic young Bill Clinton won the presidency in 1992.

Being young and charismatic has been a pretty good combination in the Democratic Party for the past 50 years. And being against the Iraq war from the start is a pretty is a pretty good credential in the Democratic Party this year.

Some wags have suggested that Ferraro was actually right when she said that "if Obama was a white man, he would not be in this position" because if that were the case, he would have wrapped up his party's nomination a long time ago.

Although Clinton has apologized for Ferraro's remarks, Ferraro herself, although she has resigned from her post as fundraiser and advisor, has refused to apologize and in fact has stoutly defended her comments. Jonathan Cohn suggests that Clinton is using Ferraro to play dog-whistle politics, to send out racial messages in code to white voters who resent affirmative action, in the hopes that this will win their votes in the Pennsylvania primary. Cohn has advice for how Obama should deal with this:

So the Obama campaign has every right to be frustrated with the Clinton campaign's reaction. But that doesn't mean they would be smart to keep talking about it.
. . .
Dwelling on that probably won't help the Obama campaign in Pennsylavnia, particularly given the racial voting patterns yesterday's Mississippi result confirmed.

A cynic--ok, maybe even a non-cynic--might suggest that's precisely why the Clinton campaign isn't moving more swiftly to cut ties with Ferraro. Either way, though, Obama would be well advised to change the subject. He should force Clinton to answer questions about something in her record or policies--or try and shift the focus over to McCain.

JoAnn Wypijewski describes how the Clintons operate, providing further evidence for the charge that the Clintons are ruthless political infighters, willing to sacrifice people and principles, and even hard-fought political gains for social justice, in their pursuit of power.

It is going to be a nasty election.

POST SCRIPT: The exhaustingly long election season

After a flurry of elections we now have, according to the schedule of primaries, to wait six weeks for the next primary on April 22 in Pennsylvania. After that there are a series of primaries almost every week until the final one on June 3.

It seems to me that a rational system would have started the whole primary process about three months later than it did this year, so that we would have reasonably spaced elections until the party conventions in August.

March 13, 2008

More on bubble economics

Dean Baker (co-director of the Center for Economic and Policy Research in Washington, DC) argues that the US is heading towards a recession, if not already in one, and he says that the main cause is the collapse of the housing bubble and not the spending on the Iraq war, though that is not helping either.

The villains in this story are the economists who somehow couldn't see an $8 trillion housing bubble, the banks that fueled the bubble with bad and often predatory loans, the regulatory institutions that did nothing to prevent the growth of the bubble and the spread of predatory loans, and most of all, Alan Greenspan and the Fed who blessed the whole thing.

We have to hold these folks responsible for their bubble economics. The best place to start would be to remove them from positions where they are still making economic policy.

On Tuesday, we saw the Federal Reserve decide to pump $200 billion into the financial system to try and alleviate the crisis and it sent stock prices soaring that day.

I didn't understand exactly what they did or how it was supposed to work because the news was reported in a very obscure way. Fortunately for people like me, in another article Baker explains clearly what is going on here and argues that the media is not characterizing this action for what it really is: a federal bailout of the banks that were partly responsible for this mess.

Can’t the media find any economists who don’t think that handing hundreds of billions of taxpayer dollars to the big banks and the incredibly rich people who own and manage them is a good idea? Apparently not, given the coverage so far to the Fed’s proposal to lend $200 billion to the banks using mortgage backed securities as collateral.

The workings of the Fed and the financial markets can appear complicated, so let’s simplify matters a bit to make it more clear what is going on here. Suppose that it was suddenly discovered that much of the wealth held by the country’s leading financial institutions was in fact counterfeit. Instead of having hundreds of billions of dollars of real currency in their vaults, institutions like Citigroup, Merrill Lynch, and Bears Stearns actually had hundreds of billions of dollars of counterfeit currency. Suppose further that the public did not know exactly who held what in terms of counterfeit currency, only that all of them had a lot of it. (The point here is that these banks hold mortgage backed securities, many of which are only worth a fraction of their face value, and therefore can be viewed as the equivalent of counterfeit currency.)

In such circumstances, investors would be very reluctant to accept the credit of any of the major financial institutions. They couldn’t know whether most of their assets were in fact counterfeit, and they were dealing with a bankrupt institution, or whether the counterfeit currency was only a limited share of the wealth, which would not jeopardize the institution’s ability to meet its obligations.

This is in fact the credit squeeze that we’ve have recently witnessed. The spread between the interest rates on a wide variety of assets and the interest rate on safe assets (U.S. government debt) has soared. As a result, the Fed’s effort to stimulate the economy, by lowering the federal funds rate, has been largely unsuccessful because other interest rates have remained high.

In response to this situation the Fed today announced that it would lend $200 billion to banks and other financial firms, accepting mortgage backed securities as collateral. This is effectively the same as saying that the Fed is going to lend money to banks and accept the counterfeit currency as collateral, treating it just as though it were real money.

The intended effect of this policy is to convince other investors that the counterfeit currency is in fact real currency, or at the very least that there is a really huge sucker out there (the Fed) which is prepared to treat the counterfeit currency as real currency.

So how does this story play out? Well, insofar as the Fed is successful, the counterfeit currency retains its value for a while longer. This allows Citigroup, Merrill Lynch, Bears Stearns and the rest of the big boys more time to dump their counterfeit currency on suckers who haven’t figured out how the game is played.

It is possible that they won’t be able to find enough suckers, in which case these banks will end up defaulting on their loans and the Fed (i.e. the government) has lost tens or hundreds of billions dollars paying good money for counterfeit currency. Alternatively, perhaps the big boys are successful and can offload enough of their counterfeit money to restore themselves to solvency before the music stops. Then the Fed is repaid, but the counterfeit money now sits in the hands of other, less informed, or less inside, investors.

You should really read the whole of this excellent article.

Baker shows how once again, we have the Federal Reserve colluding with the government to use taxpayer money to protect and enrich the wealthiest people in the country.

POST SCRIPT: The work of Satan

Almost everyone has had encounters with those annoying little plastic containers of milk that always seem to squirt onto your clothes when you try to open them. Stephen Fry and Hugh Laurie deal with this menace appropriately.


March 12, 2008

The propaganda machine-2: Examples of third tier pundit work

(For previous posts in this series, see here.)

One does not have to go very deep to understand why third tier pundits are not worth spending much time on. In making my criticisms of them, I have to confess that I do not take the time to read these people's books, so readers will have to take that into account in weighing my comments on them. Fortunately there are people among the first-tier pundits and other commentators who freely and voluntarily take on this truly thankless task and document the bankruptcy of these people and their ideas. You couldn't pay me enough to waste my time reading their books when there are so many worthwhile books to read. I have read enough articles written by them and about them and watched some interviews, sufficient I think to judge their caliber. It is of course theoretically possible that if I spend the hours necessary to wade through all the prolific output of these third tier pundits, I may find that they have produced works of extreme profundity and elegance that their critics have overlooked. But given the evidence from their other works, I would put the chances of that about as close to zero as you can imagine.

Take for example Jonah Goldberg. He has recently published a book arguing, if you can believe it, that fascism is an outgrowth of liberalism. In a review, Brad Reed says that early on in the book Goldberg apparently acknowledges that he could not really define fascism and he revealed a lack of awareness of its historical roots. That small problem might have stopped you or me from pursuing the idea of writing a book on the topic but Goldberg's ignorance actually served his purposes since he could then argue, on the basis of the most tenuous links, that almost anything was fascistic. He lists things that some fascists liked (organic food, vegetarianism) which are also liked by some of the people in America he dislikes and presto! this makes those people fascists. As Jon Stewart pointed out, by that line of reasoning one could argue that mustaches are symbols of fascism since Hitler had one. See his interview on The Daily Show where Stewart quickly exposes the vacuity of his arguments.

Goldberg's book has deservedly been received with hoots of derision. Even conservatives are embarrassed. As this article in the conservative Taki's Magazine says:

One of the stranger aspects of contemporary American "mainstream conservatism" is the obsession with "fascism," a political philosophy one might have supposed was safely buried under the rubble of 1945 Europe . . . The need to label everything conservatives oppose as "fascist" hardly stops with Osama bin Laden and his ilk. Goldberg sees FDR and the New Deal as "fascist," even though FDR was far more eager to wage war against Hitler than was the contemporary American Right . . . Goldberg and his admirers also seem not to fully appreciate that what so thoroughly discredited fascism was not the domestic policies of Mussolini's Italy, but the aggressive wars waged by the Fascist dictators, culminating in the horrific Nazi crimes of World War II . . . In other words, even though those [i.e., like Goldberg] who like invading other countries have often also liked building up the state and curtailing freedom at home, crusading around the world for "democracy" and invading foreign countries at will is now okay and definitely not "fascist"—as long as you still want to repeal the "death tax."

Moving along the rogue's gallery of third tier pundits, we come to Hall-of-Famer Michelle Malkin. She authored a book actually approving the internment of all Japanese-Americans (including children!) during World War II, an act that is now widely seen as one of the most shameful governmental policies in recent history and for which the government in 1988 formally apologized. She has also been arguing for racial, religious, and nationality profiling to be taken against all people of Middle Eastern origins and of the Islamic faith. She is constantly scaremongering about the threat posed by Muslims.

Her most recent book argues that liberals are more unhinged (her preferred term is 'moonbats') than the rest of the population.

The level of her analyses can be judged by the following clip that she herself proudly produced. This cheerleader clip has been a big hit on YouTube, but perhaps not for the reasons she hoped.

Can you believe your eyes? Are we supposed to take people like her seriously?

And of course, Ann Coulter has mastered the art of gaining attention by saying outrageous things that will get her noticed. The very titles of her books (How to talk to a liberal (if you must) and Godless: The church of liberalism) are good indications of the level at which these people pitch their discourse. I will not waste much time arguing that her work is worthless because I think that has been well established by others.

Dinesh D'Souza wrote a book that blamed American liberals, going all the way back to FDR for the events of 9/11. How did he arrive at that breathtaking conclusion? By arguing that liberals in America, with their permissive attitudes, had caused the moral decline of the US. The fear that this US-inspired decadence would pollute the Middle East so inflamed the Islamic radicals in al Qaeda that they decided to punish America by flying planes into building. In order to combat this, he argues that traditional conservative Americans should join up with traditional conservative Muslims to fight the liberals and their pursuit of moral decline. Really, that's his argument. How is one expected to respond to such idiocy?

Incidentally, when third tier pundits like D'Souza speak of 'moral decline', you can be sure that they are referring to sexual sins. Genocide or racism or sexism or homophobia or the abuse of power or the neglect of the underprivileged do not seem to trouble their moral sensibilities.

Watch this interview on The Colbert Report. People like D'Souza have so self-awareness that he does not seem to realize that Stephen Colbert is having immense fun at his expense and that he is being made to look ridiculous

The silliness of D'Souza's arguments is truly breathtaking. Alan Wolfe reviewing D'Souza's book says: "Like his hero Joe McCarthy, he has no sense of shame. He is a childish thinker and writer tackling subjects about which he knows little to make arguments that reek of political extremism. His book is a national disgrace, a sorry example of a publishing culture more concerned with the sensational than the sensible."

Wolfe's words apply equally well to all the third-tier pundits.

Next in the series: The special media niche that the third tier pundits occupy

POST SCRIPT: In praise of bad musicianship

Have you ever listened with envy to an orchestra and thought it looked like a lot of fun but sighed with regret that you didn't have anywhere close to the talent or skill to play alongside such accomplished musicians? Well, there are a lot of us like that out there but one enterprising group in Scotland has decided that they are going to play anyway. They have created what they call the Really Terrible Orchestra where lack of skill is no barrier to participation.

They seem to be a hit, playing to capacity audiences, and have even made a CD with original compositions. This idea may catch on.

March 11, 2008

Technology guerilla warfare

One of the interesting things about technology is the way that it creates a kind of arms race between those who quickly adopt new technologies and those who feel that it impinges on their own freedom and want to thwart them. We know, for example, that the radar guns used by traffic police have spawned detectors that can tell drivers who like to speed when such devices are in use, leading to more sophisticated devices being developed for police, and so on. In this case, the radar detectors were being used by people who were trying to break the law for their own benefit and increasing the risk to other users of the road.

What we are seeing now is the rise of a kind of guerilla action by ordinary citizens who are not trying to break the law for some narrow interest but are instead reacting to the way their own private spaces are being violated by the use of technology by others.

Take cell-phone jammers. There are now devices that you can apparently purchase that will disrupt all cell phone transmissions within a limited area, ranging from a radius of about 30 feet up to a mile. Using these devices is illegal in the US.

We have all been subjected to involuntarily overhearing the private conversations of others because they insist on talking loudly into their cell phones in public places. At the very least it is annoying and sometimes it is downright uncomfortable. There is something about hearing a one-sided conversation that is very distracting, more so than overhearing a conversation between two real people where you can hear both sides. I wonder whether it is because when we hear only one side, we cannot help but try to figure out, like a puzzle, what the other person is saying in response, and that requires a higher level of mental engagement. I know that when I am trying to read, hearing the voices on a TV screen that I cannot see is more distracting than hearing a radio, and I think that it is because with TV there are information gaps in the audio that are filled by the unseen video and my mind cannot help but try to fill those gaps to make sense of what I am hearing.

(As an aside, I read somewhere that this practice of talking loudly into a cell phone in a public place is peculiar to the US and that in some other countries such as England people speak more softly. I don't know if this is generally true. I have only one data point. My cousin who lives in England visited the US recently and I called her on her cell phone. She seemed to be whispering into the phone and I asked her if she was losing her voice and she replied that she was speaking softly because she was using her cell phone in a public place. I advised her that since she was in America she should follow the local custom and yell into the phone so that people across the street, or even the next county, could hear what she had to say.)

The fact that the Federal Communications Commission (FCC) was considering allowing the use of cell phones on planes was something that struck many with horror because plane rides are already unpleasant experiences. They can be really boring unless you are a person who is comfortable having just your own mind for a companion, and I feared that almost everyone would use that time to chat loudly with others using their cell phones, resulting in a nightmare for people like me who dislike plane rides but at least see them as opportunities to read or write undisturbed. Fortunately, it seems like the FCC has shelved that plan.

The best part of my jury service was that the room where the jury pool waited until we were needed had a 'quiet room' which had no TVs and no cell phones were allowed, and people who spoke did so very briefly and quietly. I spent a lot of time there. We need more such spaces in public spaces where people have no choice but to be there.

Another guerilla technology device is one that turns off televisions in public places. TVs are now everywhere where people are forced to wait as advertisers try to grab the attention of captive audiences. I find this really annoying, almost on a par with cell-phone conversations. TV programmers try to grab your attention with rapid switches in sound level, music, and so on, so that you are constantly jarred into acknowledging their presence. I recall having to change planes in Chicago and I wanted a quiet place to read a book but I could not find a place nearby to sit and read that was outside the audio range of a TV monitor. It was infuriating. But there are now devices that you can use to turn off any TV between 20 and 50 feet away. Of course, these are illegal too.

As the use of cell phones and TVs in public places increase, there is bound to be a backlash against this increased noise pollution and the lack of quiet spaces. Already, one sees signs in buildings telling people that they are in a 'no cell phone zone'. Another possible development might parallel what happened with smoking. Just like restaurants and other public places adopted no-smoking areas, we might soon be asked whether we want to be in a cell-phone/TV or no cell phone/TV area. Even outright bans on cell phones in restaurants have been considered.

For those bothered by the fact that hidden cameras are all over the place recording our every movement, I now read that people can buy or construct a simple infra-red device that makes them unidentifiable by the ubiquitous spycams. (Thanks to The Progressive Review.)

If the issue of the proper level of respect for people's privacy is not addressed in some way, I predict that there will be an even greater rise in this kind of guerilla technology use, with people deciding that they have to take action themselves, even if illegal, to protect their privacy and their space.

POST SCRIPT: How the mighty are fallen

Last Saturday, a little-known physicist named Bill Foster won the special congressional election to fill former Speaker Dennis Hastert's seat when the latter abruptly decided to retire. Foster joins fellow physicists Rush Holt (D-NJ) and Vern Ehlers (R-IL) in Congress. Foster made universal health care and praising the European and Canadian models a central feature of his campaign, opposed the plan to grant retroactive immunity to telecommunication companies, and tied his opponent Republican James Oberweis to Bush's policies.

Sensing an embarrassing defeat in the offing for a high profile seat that had always been considered strongly Republican, the National Republican Congressional Committee poured $1.2 million into this race, almost 20% of their available funds, but their candidate still lost handily 53%-47%.

So the congressional seats of two people (Tom DeLay and Hastert), who as recently as 2006 were seen as really powerful figures in Washington, are now both in Democratic hands.

What alarms Republicans are these signs that the voters are completely disenchanted with them and this might spell disaster for the party in the November elections, in both houses of Congress and the presidency. It is also interesting that Obama made a campaign ad for Foster and McCain made one for Oberweis.

March 10, 2008

The propaganda machine-1: The third tier pundits

When I was interviewed recently on Blog Talk Radio about my 2005 posts about the people I call third tier pundits and the baleful influence that they have on political discourse, I didn't really have the time to go more deeply into how it is that they got to play the particular role they currently play. It would be a mistake to think that they are merely the flotsam brought to the surface by media currents. They play a vacuous but integral part in a propaganda machine.

Third tier pundits are those people who occupy almost the bottom rung of the punditry world, the value of their contributions rising just barely above that of the people who write graffiti on bathroom walls. The most prominent examples of this species are people like Michelle Malkin, Ann Coulter, Jonah Goldberg, and Dinesh D'Souza but unfortunately there are many, many more. In fact, it seems like there is a seemingly endless supply of such people, available at a moment's notice to appear on TV and radio and fill up newspaper op-ed space or the shelves of bookstores, spouting a predictable line of nonsense. But while they add little, they fill a significant niche in the media world and it is interesting to see what the purpose of that niche is and how they fit into the overall structure of the media. As Jonathan Schwarz says about the whole species:

A few weeks ago I wrote something comparing Michelle Malkin's moral and intellectual standards to those of Holocaust deniers. But I also said Malkin has no significance in and of herself; every country has people as strange and confused and angry as she is. What matters is that normal societies leave them to fulminate in their parents' basement. In contrast, troubled societies let them organize "conferences" and guest host national television programs.

In an absolute sense these third tier pundits are not important because they have nothing important to say. But understanding how they became a ubiquitous presence can give us insights into how the media is currently structured. The next series of posts will focus on this topic.

The first tier pundits are those people who actually have useful things to say. They often have deep specialized knowledge in some area. They are grounded in reality and data, do careful analyses, have a good historical and global perspective, and are not narrowly blinkered by nationalistic or jingoistic sentiments. They are not quick to rush to judgment and often have their own sources and do some original reporting and thus have new information to add to their thoughtful analyses. These people tend to write for opinion magazines (both online and traditional) that do not have huge circulations and a few of them sometimes appear on TV talk shows, though not the high profile ones. Their names tend to be not very well known to the general public, being familiar mostly to political junkies.

Some of the first tier pundits are Noam Chomsky, Norman Solomon, Howard Zinn, Edward Herman, Glenn Greenwald, Matt Taibbi, Katha Pollitt, Matthew Yglesias, Steve Benen, Juan Cole, Stephen Zunes, Robert Jensen, Jonathan Schwarz, the pseudonymous Digby, Justin Raimondo, Ken Silverstein, Jim Lobe, Ray McGovern, Bill and Kathleen Christianson, Greg Sargent, Josh Marshall, Paul Craig Roberts, and Alexander Cockburn. (In writing this partial list, it struck me that there were only three women in it and (as far as I know) no people of color. I am not sure why that is. Have I overlooked some people or is punditry more appealing to men? Or is this another instance of women and minorities having to struggle to break through traditional barriers?)

The second tier pundits are far less informative but much better known than the first tier. They consist of widely syndicated columnists who have regular access to the op-ed pages of the major news outlets. They appear often on the high-profile TV talk shows. These are people such as David Brooks, Maureen Dowd, George Will, Charles Krauthammer, David Broder, etc. Their names are usually familiar to those members of the general public who follow politics even casually. They are people who consider themselves and each other to be 'serious' commentators. They do not use inflammatory language. They are courted by political figures who desperately want their approval.

But notwithstanding their serious tone, as I have discussed before, their analyses are most often shallow and greatly inferior to those of the first-tier pundits. They do, however, serve an important ideological purpose, which is to limit the range of 'acceptable' opinion to the narrow piece of turf bounded by their views, and to advance the agenda of the pro-war/pro-business party that runs the country. While the analyses of these people tends to be ideologically driven, lack content, and sometimes don't even make much sense, reading them is not entirely a waste of time since they give you a good sense of what the agenda of the ruling class is, what they want you to think.

The third tier pundits are near the bottom of the barrel. They are to journalism and political analyses what Paris Hilton is to acting, i.e., people who have become well known for reasons that have nothing to do with any intrinsic ability but, as a result of our celebrity-obsessed culture which assumes that if one is well known there must be a reason, have now have become fixtures on the public stage. They are a waste of time and airspace and their views range between the silly and the despicable.

Next in the series: Examples of third tier punditry

POST SCRIPT: Believing myths

Forget about who can answer the phone at 3:00am. Hillary Clinton was interviewed in June 2007 on the Christian Broadcasting Network and said the following:

Reporter: Can I ask you theologically, do you believe that the resurrection of Jesus actually happened, that it actually historically did happen?

Clinton: Yes, I do.

So here in the 21st century we have a potential president who believes in something that violates scientific laws, not to mention plain common sense. The sad thing is that not only are such questions considered reasonable to ask but that every candidate for any major elected office in the US would probably feel obliged to answer the same way, even if they felt that these were absurd things to believe in. They probably can not even evade the question by saying that religion is a private affair, because that would lead to the sneaking suspicion that they are rational and scientific thinkers, who use logic and evidence to come to their conclusions, and we can't have that in a president, can we?

You can read the full transcript of the interview here.

March 07, 2008

The phony Social Security crisis-4: What needs to be done

(For previous posts in this series, see here.)

While Social Security is not in a crisis, it does require periodic adjustments to make it work, as the economy and demographics of the population change. It can be made solvent with minor tinkering at the edges such as removing entirely the cap on payroll tax income or increasing the rate of taxation by small amounts or by lowering the annual cost-of-living increases in benefits or, in the worst case, by slightly reducing the benefits. We are not facing the catastrophe the doomsayers predict.

The major problem with Social Security is not with the retirement benefits part but with rapidly rising Medicare costs. Currently the Social Security tax (the part that goes towards retirement benefits) is 12.4% of income up to the cap, which is $102,000 for 2008. The tax rate for Medicare is 2.9% of your gross income. Your employer pays half of this 15.3% total, unless you are self-employed in which case you are responsible for the entire amount.

It is the Medicare costs that are already outstripping Medicare revenues and rising rapidly, and thus straining the government's finances. But this is largely a health care costs problem, caused by the hugely wasteful profit-making health system that currently exists in the US that has resulted in per capita costs that are at least twice as much as the costs in other developed countries and yet produces worse results. Introducing a single-payer system like that which exists in France or Canada would result in savings, greater ability to control costs, and better health care overall. (See the series of posts on health care where these arguments are presented in more detail.)

As far as Social Security is concerned, one thing that could and should be done immediately is to remove the cap on incomes that are taxed for Social Security. The existence of this cap means that people earning more than that pay no Social Security taxes at all on the extra income, and thus pay a smaller proportion of their total income into Social Security than those making less than the cap. Thus the richer you are, the smaller the fraction of your income that goes towards Social Security, making it a very regressive tax.

Social Security and Medicare are programs that can be made solvent for a long time. The 'problem', such as it is, is that the way to do so goes against the dreams of those ideologues who want to privatize Social Security funds and preserve the huge exploitative profits of the health care and health insurance industries. These people have sought to divert more and more wealth to a very few.

So how have their plans worked out? Very well, it turns out. The share of the income of the rich has been increasing at a rapid pace at the same time that their share of taxes has been decreasing. The March 5, 2008 issue of the Wall Street Journal reports:

The nation's top 400 taxpayers reported a total of $85.6 billion of income on their federal income-tax returns for 2005 -- an average of $213.9 million apiece, according to Internal Revenue Service data obtained by The Wall Street Journal.

Just to make the cutoff to join this exclusive club, you had to report income of at least $100.3 million, up sharply from $74.5 million the previous year. The average income among the top 400 in 2004 was $172.8 million.
. . .
Indeed, the top 400 taxpayers have greatly increased their share of individuals' income since the mid-1990s. The group accounted for 1.15% of total income in 2005, up from 1.02% the prior year -- and more than twice as large as its 0.49% share a decade earlier. It's the highest percentage since the early 1990s, which is as far back as the IRS data go.
. . .
The average federal income-tax rate for the group was 18.23% . . . well below the average income-tax rate of nearly 30% back in 1995,

As the article points out, the way the data was collected actually underestimates the wealth since it takes into only the adjusted gross income (AGI).

The assault on Social Security is part of the generalized rhetorical attacks on all public services, including public education, Medicare, Medicaid, and welfare by those who would seek to destroy them. A key strategy in this war is to portray all government as bureaucratic, wasteful, and incompetent. Bush's contribution to this war was to appoint to high positions people who were either actually incompetent (so that they would mess things up, feeding into perceptions of a useless government) or those who were ideologically committed to having the government avoid its obligations.

My worry is that the pro-war/pro-business interests and the Wall Street investment classes may think that they have got all the goodies that they are likely to get from Republican administrations and think that they need a Democratic administration and Congress to be able to overcome the grassroots opposition to attempts to subvert Social Security, Medicare, Medicaid, and all the other government services that try to provide a much needed social safety net.

This is why even greater vigilance will be needed if and when Democrats take control of government. Bill Clinton got away with a lot of things because he was able to talk populism while acting in the interests of Wall Street. That should not be allowed to happen again.

POST SCRIPT: Telephone opera

As readers of this blog know, I am not a big fan of television. But one of my favorite TV programs is Sesame Street. It can't be beaten for its unique combination of great music with clever lyrics, genuine humor, education, and positive messages, all without being preachy. I used to watch it almost every day when my children were younger and now, thanks to YouTube, I can watch again some of my favorite segments.

In this sketch, Placido Flamingo and other Muppets affectionately parody opera.

March 06, 2008

The phony Social Security crisis-3: More realistic views of the alleged 'crisis'

(For previous posts in this series, see here.)

In deciding whether Social Security is in trouble or not, it is important to bear in mind different measures. Let us start by assuming that no changes at all are made in the system and that current projections for future demographics hold for the next fifty years. This is a very big 'if' indeed, but a starting point for analysis. The alarmists look at the year in which projected Social Security benefits paid out in that year exceed the revenues from the payroll tax that same year. That is expected to occur around 2018. But that alone does not constitute a crisis. Social Security has been running a surplus all these years so by that time the trust fund will have about 3.7 trillion dollars in reserve. This fund earns interest and the interest can be used to supplement the payouts following the year when the expenditures start to exceed the revenues. At a 4.5% interest rate on the US treasury bonds, the accumulated trust fund can generate an annual growth of about $170 billion due to interest alone. Using this interest to pay benefits can be done for some time during which the size of the trust fund will remain the same or will still be increasing, though more slowly.

There will then come a year when the addition of the interest to the payroll tax revenues is not sufficient to cover the cost of the expenditures. The trust fund principal will then have to be used to pay benefits and will thus start to decrease. The worst-case scenario is having all the trust fund be used up, which is quite far into the future, somewhere around 2050. Actually, this scenario is actually the original Social Security model. It was designed as a pay-as-you-go system, with each year's payroll tax revenues going to meet that same year's benefits expenditures, without running up big surpluses or deficits.

But there is no reason to think that even this 'worst-case' scenario is inevitable. Dean Baker and Mark Weisbrot, co-directors for the Center for Economic and Policy Research, in their book Social Security: The Phony Crisis demolish the scaremonger arguments about Social Security by those who would love to turn over all that money to investors to speculate with. In an op-ed article, they write a detailed point-by-point rebuttal of all the myths propagated and conclude:

The latest Social Security trustees' report, whose numbers even the White House uses, predicts that the Social Security program can pay all promised benefits for the next 38 years—with no changes at all. The June 2004 estimate from the nonpartisan Congressional Budget Office projects that Social Security can pay all promised benefits without changes for even longer, until 2052. That's nearly half a century.

And we are supposed to be worried about this?
. . .
The bottom line is that Social Security is more financially sound today than it has been throughout most of its 69-year history, according to Social Security trustees' numbers.
. . .
The impending crisis of Social Security is a myth. Without it, however, Bush's initiative to slash benefits and partially privatize the program wouldn't have a prayer.

Economist Paul Krugman has also challenged the myth of a Social Security crisis, and his article is worth quoting extensively:

Inside the Beltway, doomsaying about Social Security — declaring that the program as we know it can't survive the onslaught of retiring baby boomers — is regarded as a sort of badge of seriousness, a way of showing how statesmanlike and tough-minded you are.
. . .
But the "everyone" who knows that Social Security is doomed doesn't include anyone who actually understands the numbers. In fact, the whole Beltway obsession with the fiscal burden of an aging population is misguided.

As Peter Orszag, the director of the Congressional Budget Office, put it in a recent article co-authored with senior analyst Philip Ellis: "The long-term fiscal condition of the United States has been largely misdiagnosed. Despite all the attention paid to demographic challenges, such as the coming retirement of the baby-boom generation, our country's financial health will in fact be determined primarily by the growth rate of per capita health care costs."

How has conventional wisdom gotten this so wrong? Well, in large part it's the result of decades of scare-mongering about Social Security's future from conservative ideologues, whose ultimate goal is to undermine the program.

Thus, in 2005, the Bush administration tried to push through a combination of privatization and benefit cuts that would, over time, have reduced Social Security to nothing but a giant 401(k). The administration claimed that this was necessary to save the program, which officials insisted was "heading toward an iceberg."

But the administration's real motives were, in fact, ideological. The anti-tax activist Stephen Moore gave the game away when he described Social Security as "the soft underbelly of the welfare state," and hailed the Bush plan as a way to put a "spear" through that soft underbelly.

Fortunately, the scare tactics failed. Democrats in Congress stood their ground; progressive analysts debunked, one after another, the phony arguments of the privatizers; and the public made it clear that it wants to preserve a basic safety net for retired Americans.
. . .
Social Security isn't a big problem that demands a solution; it's a small problem, way down the list of major issues facing America, that has nonetheless become an obsession of Beltway insiders. And on Social Security, as on many other issues, what Washington means by bipartisanship is mainly that everyone should come together to give conservatives what they want.

Orszag, Krugman, Baker, and Weisbrot point their fingers at the real problem, which is the out-of-control rise in health care costs. Of the 15.3% of the income below the cap that goes as payroll taxes (half of which is paid by employers), 2.9% goes towards Medicare. It is these rapidly rising health care costs that will cause huge budgetary problems in the future, not paying Social Security retirement benefits.

Scaring us about Social Security serves the purpose of diverting out attention from the very real problem of high health care costs. After all, the administration and Congress are completely in the pockets of the health care industry (the insurance and pharmaceutical companies and the hospital and doctors lobbies) and they want to avoid for as long as possible the fact that a government-run single-payer system of financing health care is the only long-term solution to this problem.

Next: What needs to be done

POST SCRIPT: This woman is very upset

Before he started playing the doctor in the current TV series House, Hugh Laurie played goofy characters in comedies on British TV. Here he plays a hapless TV news reporter in a sketch from the BBC TV show A Bit of Fry and Laurie.


March 05, 2008

The phony Social Security crisis-2: Double talk on Social Security

(For previous posts in this series, see here.)

We currently see this curious double-talk taking place about the US bonds that form the assets of the Social Security trust fund. When trying to scare people about Social Security, people in this administration talk about the bonds in the trust fund being 'worthless' pieces of paper. But when trying to actually sell the bonds in international markets to finance its deficits, the government talks about how robust the US economy is. Like all double-talking politicians, the two different faces are presented to two different audiences, with the hope that the audiences will not overlap.

The scaremongering is aimed directly at the domestic audience because they are the ones who need to be frightened into allowing Social Security funds be released into the hands of private investors, thus enormously enriching Wall Street. The reassuring language about the strength of the US economy and its undoubted ability to honor its debts is addressed to the foreign entities that buy US treasury bonds to finance the deficits.

In April 2005, just after the 2004 presidential election and when he had high hopes of persuading people to privatize Social Security in his second term, George W. Bush made an extraordinary speech in which he sneered that the trust fund only contained IOUs.

I have just come from the Bureau of Public Debt. . . . I went there because I'm trying to make a point about the Social Security trust. You see, a lot of people in America think there's a trust, in this sense -- that we take your money through payroll taxes and then we hold it for you, and then when you retire, we give it back to you. But that's not the way it works.

There is no "trust fund," just IOUs that I saw firsthand.
. . .
The office here in Parkersburg stores those IOUs. They're stacked in a filing cabinet. Imagine -- the retirement security for future generations is sitting in a filing cabinet.

Yes, imagine that! He saw the IOUs first hand, otherwise he would never have believed that this was happening! Who knows, someday it might get even worse and be just an entry in a computer spreadsheet, so we wouldn't even have the sheets of paper to fall back on!

Former New York Times business reporter David Cay Johnson in his book Perfectly Legal: The covert system to rig our tax system to benefit the super rich – and cheat everybody else (2003) describes an even earlier effort to denigrate the Social Security trust fund.

[On June 19, 2001] Just 12 days after Bush signed his tax cut bill, Treasury Secretary Paul H. O'Neill gave a speech at the top of the World Trade Center. He spoke to the Coalition for American Financial Security, an organization of investment managers who want to replace part of Social Security with private investment accounts, from which they would collect fees costing many times the current costs of administering Social Security.

"I come to you as managing trustee of Social Security," O'Neill said. "Today we have no assets in the trust fund. We have promises of the good faith and credit of the United States government that benefits will flow."

All Americans had, he said again and again, was "someone else's promise" that the pieces of paper held by the Social Security Administration would be paid off with hard dollars by the United States government. And the implication was that the unsecured debt might not be paid. (p. 127)

This is quite an amazing thing: The highest officials in the US government saying that others should not depend on the government to honor its financial obligations. It is the equivalent of saying that the IRS may in the future no longer accept US currency as payment for taxes owed but would demand euros instead. Of course, only rubes like us were supposed to believe that message. If the international financial markets truly believed it might happen, they would immediately sell all their US bond holdings, the US could not longer finance its deficits by selling those very same bonds in the global markets, and the US would be facing a complete economic disaster.

So when talking to other governments and the financial markets, the government makes a complete about-face and talks about how strong the US economy is and how the 'full faith and credit of the US government' has never been more solid.

David Cay Johnson shows that manufacturing a Social Security scare to enrich already wealthy people is not a new phenomenon. The first version of Social Security was created in 1935 but it has been tinkered with ever since. In 1972, Congress passed legislation creating the Supplementary Security Income (SSI) program and significantly increasing Social Security benefits, such as introducing automatic Cost-of-Living-Adjustments (COLAs). In addition:

The bill creating the SSI program also contained important provisions for increasing Social Security benefits for certain categories of beneficiaries (primarily aged widows and widowers). It also provided: a minimum retirement benefit; [and] an adjustment to the benefit formula governing early retirement at age 62 for men, in order to make it consistent with that for women[.]
. . .
The separate bill creating automatic COLAs also provided for automatic increases in the earnings subject to Social Security taxes and an automatic adjustment in the wage-base used in calculating benefits.

Of course, the increase in benefits meant increased costs and created long term solvency problems. So new legislation was passed in 1977 that reduced benefits and raised the payroll tax to its current value. As a result of the formula that was used, this initially increased revenues by small amounts but eventually the surpluses became large enough that between 1983 and 2003, while the sum of the government deficits for those twenty years (i.e., the excess of expenditure over revenues for those years alone) was $5.4 trillion, the addition to the national debt (i.e., the total accumulated amount of all deficits over all time) was 'only' $3.6 trillion. The $1.8 trillion difference was due to the fact that the Social Security account was running up huge annual surpluses. (Johnson, p. 123)

This Social Security surplus was used to create a false sense of the country being flush with money and this enabled Ronald Reagan in 1981 to push through his tax cuts for the rich. The Social Security surplus was used to hide the true costs of the massive tax giveaway to wealthy people.

In 1983 there was glitch in that Social Security ran a small deficit due to the fact that 10 million people were then out of work and thus payroll tax revenues were down. While most people felt that this was a short-term problem that would go away when the economy revived, others like Wall Street favorite Alan Greenspan (then chairman of the Federal Reserve Board) tried to panic people into thinking that Social Security was in crisis and Congress again passed new rules reducing benefits again and raising the retirement age in the future. This resulted in Social Security starting to run up surpluses again.

The siphoning away of the Social Security surplus to benefit the rich was repeated during the George W. Bush administration. The federal government was running a total budget surplus at the time that he came into office in 2000, and again this was largely due to the Social Security surplus. In fact, between 1999 and 2002, Social Security revenues exceeded expenditures by $640 billion. Bush used this surplus to to hide the true cost of the huge 'temporary' tax cuts for the rich pushed through by him in 2001. More than half of the $1.3 trillion that those tax cuts cost the government went to the richest 1% of the population. (Johnson, p. 127)

Bush is now making a last ditch effort to make those tax cuts permanent as his parting gift to his wealthy base, before he ignominiously leaves office with the title of Worst President Ever. (That serial panderer John McCain supports this policy of making the tax cuts permanent although he originally opposed the tax cuts.) So again what we have is that they are taking advantage of the revenue surpluses produced by the Social Security payroll tax (which is mostly paid by poor and middle class people) to fund huge tax giveaways for the very wealthy. It is Robin Hood in reverse, a welfare state for the rich.

This Non Sequitur cartoon by Wiley says it all.

Next: More realistic views of Social Security's future.

POST SCRIPT: My radio interview

A podcast of my interview last Saturday on Blog Talk Radio can be heard here.

March 04, 2008

Some campaign thoughts

Today is voting day in the Ohio, Texas, Vermont and Rhode Island primaries, and is as good a day as any to discuss the nature of the race.

This day is being breathlessly marketed as a crucial, decisive, make-or-break day, just like the Potomac primaries day before that, or Super Tuesday before that, or the New Hampshire primary before that. On the basis of the results, reporters will declare that one candidate has the momentum and start urging the other candidates to drop out of the race just because they think those candidates are unlikely to win. Why do the reporters care? The candidates have every right to continue for as long as they can or want to without being accused of somehow ruining the process by staying in. Why not just let the voters decide when they have had enough of a candidate? As a result of the elections, if Obama or Clinton or Huckabee or Paul refuse to concede and decide to go on to Pennsylvania on April 22 and even after that until the final elections on June 3, let them do so without being hounded to get out. Even if Huckabee (say) has no mathematical chance of winning his party's nomination, surely the voters in the remaining states have a right to express their preference for him if they want to?

On another point, with the final primary being on June 3, there will be almost two whole months before the party conventions. So as a result of all the leapfrogging that took place with so many states trying to get in early, we will now have the summer doldrums where nothing happens for two months. Couldn't they all have started about six weeks later?

I have not been writing about the significance of the Democratic presidential nominee being, for the first time, either a woman or an African-American. Not that this isn't an important development but before we sprain our elbows patting ourselves on the back, it might be good to realize that this is long, long overdue. After all, many other countries have elected both women and minorities as heads of state much earlier. My own country of origin (Sri Lanka) elected the world's first female executive head of state way back in 1960, when Sirimavo Bandaranaike became prime minister.

Our reaction here shouldn't be "Isn't this great?" but "Why did it take so long?"

But progress is progress, however belated, and should be welcomed. At the very least, this development should put to rest tiresome discussions about whether the US is 'ready' for a woman or minority president.

But just at the moment when the possibility of a female US President is being savored, along comes this extraordinarily silly article in the Washington Post by Charlotte Allen in which she argues in support of all the absurd negative female stereotypes that we have long striven to eliminate from our discourse, such as that women are dumb, bad at math, looks-obsessed, shoe-fetishizing airheads, governed exclusively by their emotions, who can't even drive properly.

The editor of the section of the newspaper in which the article ran now says it was meant to be tongue-in-cheek, but the first rule in humor and satire is to be funny. If you are not, people have a right to take what you are saying as intended to be serious. There are suspicions that this explanation was a story designed to protect themselves from the furious denunciations the article received. What is the Post going to do as a follow up? Run another 'tongue-in-cheek' article by an African-American arguing that black people really are stupid and lazy and shiftless?

Charlotte Allen should get some tips from Dave Barry, who is a great example of a writer who exploits all kinds of stereotypes for humor and you are never in any doubt as to his intent. His classic essay The Difference Between Men and Women is a brilliant example of how to use gender stereotypes to humorous effect.

Finally, just the day before the primary elections, we in Ohio were deluged with poll results about the Democratic race, with conflicting predictions. What is the point of such last-minute poll results? It does not help the campaigns since it is too late for the campaigns to do anything with this information. Are the polls meant to influence voters? What kind of voter would choose a candidate on the basis of a last minute poll? Frankly, I cannot think of any good reason to release such last-minute polls except that the polling outfits think that real point of elections is to see which of them is better at predicting election results, so that elections become a test of the polls.

POST SCRIPT: Save the economy! Buy more junk!

Berkeley Breathed's excellent comic strip Opus comments on the absurd 'economic stimulus package' that our wise leaders in government have come up with.

March 03, 2008

The phony Social Security crisis-1: Understanding the system

There are many who would have you believe that Social Security is in dire straits and that it will go broke soon, so that younger people who are paying into it now will not get any benefits when they retire. While Social Security regularly requires tinkering to remain solvent, this kind of rhetoric is misleading but has been systematically promoted to make young people think that they are being swindled by the old, and thus generate intergenerational warfare. It is the tried-and-true divide-and-rule strategy. The goal is to scare people into agreeing to give private investors access to the money in the Social Security trust fund. (For a fascinating history of how the various forms of social safety nets, including eventually the Social Security system, came about, see here.)

Social Security is designed as a 'pay as you go' system, with the money being taken in now in so-called payroll or employment taxes (officially called FICA taxes) going to pay the benefits of those currently retired. It is presently running a surplus (i.e., each year it takes in more money than it spends) so that there is an increasing accumulation of reserve funds in the account, which is called the 'trust fund'.

The confusing thing about understanding the government budget is that since Social Security is not an independent financial entity, the money that comes in as Social Security revenue is not kept separately from other government revenues, i.e., the 'trust fund' is not a separate vault of cash. What the government collects as revenue in any form (Social Security taxes, Medicare taxes, income taxes, import duties, etc.) can be used to fund general government expenditures.

But that does not mean that the trust fund is a fiction. How the government gains access to the money in the trust fund is by using that money to buy US government treasury bonds and what the Social Security trust fund holds is not cash but these government bonds. The trust fund reserves are thus in the form of government guarantees to honor its financial obligations, no different from the government's obligations to honor its treasury bills, currency, and other forms of IOUs.

What is required by law is that the trust fund be accounted for separately and it is thus said to be "off-budget". So the government is required by law to keep separate accounts for Social Security and the rest. But when government budgets are presented to the public, the government likes to mix the two budgets (Social Security and the rest) together (i.e., make Social Security "on budget") so that the annual Social Security budget surpluses that go into the trust fund can be used to hide the huge annual deficits that are being run up elsewhere, the latter caused by massive tax giveaways to the rich, spending huge amounts on needless wars (thus subsidizing the military-industrial complex), and the runaway health care costs that are endangering Medicare.

So the trust fund is being used (in terms of book-keeping sleight-of-hand) to hide the scale of the huge budget deficits being run up in the rest of the government. The real problem is not with Social Security but the way that the government has been fiscally irresponsible overall.

The future solvency of Social Security depends on projections of future revenues (which depends on the size of the workforce and its levels of income) and future payouts (which depends on the projected number of future retirees and their longevity).

One of the planks on which the scaremongering about Social Security is based is the indubitable fact that the percentage of retirees will increase shortly due to baby-boomer retirements, thus projecting increased payouts without comparable increases in revenue.

The other plank that people have used is the well-known fact that the trust fund consists, as I discussed above, not of actual cash but of US treasury bonds. They argue that the Social Security trust fund, although rich on paper, contains nothing more than 'worthless' government IOUs.

But this is absurd. The belief that the US can honor those and similar bonds that the government sells to other countries is what keeps the dollar as the world's reserve currency and is what makes foreign governments purchase those bonds, without which the US could not finance its deficits. The net foreign debt owed by the US to foreign entities and held by them in the form of such bonds has risen from $311 billion in 1994 (4.4% of GDP) to $2.4 trillion in 2004 (23% of GDP).

If these US government treasury bonds ever do become truly 'worthless', as alleged by the scaremongers, that would mean that the US government has become unable to honor its debt obligations. That would signal that the entire US economy has totally collapsed and that the US dollar has ceased to have any value. If such an unlikely scenario as the failure to honor to its government bonds were to ever come about, this would lead to global economic upheavals on an unprecedented scale, since all these foreign governments and other entities would also be holding worthless pieces of paper and we would then have far more serious matters to worry about than Social Security.

This does not mean that there should be complacency. A watchful eye needs to be kept on the solvency of Social Security and the rest of the government's budget. There are indeed reasons for concern. The continuing massive deficits and the decline in value of the dollar (last week saw it reach record low levels against the euro) are a source for global concern about the health of the US economy and have led to grumblings and some talk of switching to the euro as the world's reserve country. But those alarms have not reached major proportions as yet. The idea that the US government might default on its debt obligations (and thus leave the Social Security trust fund truly worthless) is not even being considered.

Next: Double talk on Social Security

POST SCRIPT: Why Obama’s message seems more effective than Clinton’s

Bob Harris has a perceptive take on a significant difference between the rhetoric coming from the Clinton and Obama camps.