[Peace-discuss] trying times? - John Williams

Sun Aug 15 09:04:17 CDT 2010

  "The history of all hitherto existing society is the history of class 
struggles."  The goal of our politics is to bring those struggles to an end - 
"establish justice, insure domestic tranquility, provide for the common defense, 
promote the general welfare, and secure the blessings of liberty to ourselves 
and our posterity" - but they nevertheless still exist and provide the motive 
force (not always perspicuously) for our daily politics.

The current Great Recession is the culmination of thirty years of the conscious 
politics of neoliberalism, which was a counterattack by the ownership class 
against the demands for social democracy and the welfare state that they had 
been forced to concede after WWII.  Andrew Mellon, Secretary of the Treasury in 
the Harding, Coolidge, and Hoover administrations, said that "During a 
depression, assets return to their rightful owners." (He meant himself and his 
friends.) The people's political struggle in the 1930s and again today is to 
prevent that from happening, insofar as possible.

Of course the dominant class, who understand the situation, don't want that 
understanding spread abroad.  What if the mass of the population should realize 
that a class struggle was underway?  James Madison, the architect of the 1787 
constitution, wrote that the purpose of that document was to "protect the 
minority of the opulent against the majority."

Madison's system works remarkably well two centuries later. We have a small 
active political class - about 20% of the population (roughly those who went to 
good colleges - in America more than elsewhere, class is established by formal 
education, which is why it's corrupt) and two dominant business parties to 
champion and effect policies substantially to the right of those favored by a 
majority of the population.

But the difference between the policies of the parties and the interests of the 
people is covered by the one real innovation of the American 20th century, 
public relations. "The twentieth century was characterized by three developments 
of great political importance: the growth of democracy, the growth of corporate 
power, and the growth of corporate propaganda as a means of protecting corporate 
power against democracy''.

The point of the party system is precisely to obscure the class struggle, so 
it's difficult to see how the struggle would be permitted to generate a third 
(or second) party.  It's true that e.g. European ruling classes in the 20th 
century had to concede explicitly working-class parties, but they were quickly 
recaptured for the dominant classes (cf. the Labour party in the UK). And the US 
has never had to make that concession. The only successful third party in US 
history - the Republicans - arose from a split in the ruling class so serious 
and fundamental that it resembled an international war (cf. France and Germany 
in 1914).

I don't therefore see "the development of a major third party that could knock 
out either the Republicans or the Democrats as a second party." It is however 
true that "pocketbook issues tend to dominate elections"; that's why economic 
issues have to be spun so: "corporate propaganda [is] a means of protecting 
corporate power against democracy.''

I think the current deficit scare is like that.  It's economic McCarthyism.  The 
notion of an unpayable debt and an a corresponding runaway inflation is like the 
threat of a Communist takeover in the US fifty  years ago - designed to deflect 
real public "pocketbook" demands.

It's also true that "Unemployment will be [is] a lot worse than most people 
expect. Housing will continue to suffer in terms of weak demand."  But inflation 
is unlikely, while deflation is a real possibility. US monetary authorities are 
attempting to titrate the matter so that "assets return to the rightful owners" 
rather than to the people.

The government pleads poverty to justify the assaults on Medicare and Social 
Security, but it doesn't face bankruptcy. The principal result of thirty years 
of neoliberalism has been an immense and accelerating concentration of wealth in 
very few hands.  The first tactical victory in the current class struggle would 
be a tax on that wealth.

Consider the richest one per cent of US citizens. In 2009, their investible 
assets - i.e, not including their primary residence, art works, collectibles, 
etc. - totaled over $12 trillion. In that year, the total US budgetary deficit 
was $1.7 trillion.  Had the US government levied an economic emergency tax of 
15% on only investible assets (i.e., not entire net worth) in excess of $1 
million, it could could have covered the entire 2009 deficit.  And of course 99% 
of the population would have been exempted from that tax.

There are reasons for the US government to run some deficit, as Keynes 
explained, but it's also better to tax the necessary funds from the rich than to 
borrow them - and pay interest on them. It's only the successful class struggle 
by the American rich over the past generation that has seen the degree of 
equality of wealth - which peaked in the late 1960s - fall back to the 
inequality that obtained before the 1929 crash. Neoliberalism has so far been a 
winning strategy in the American class struggle.

Encouraging panic about the deficit and inflation is its current form. It's 
fueling the Obama administration's attack on "entitlement programs."  (Language 
of course is a weapon in the struggle: what if Social Security and Medicare were 
instead called "economic justice" programs - or "reparations"?) If we want to 
reverse the massive redistribution of wealth "upwards" over the last generation, 
the way to do is by taxing wealth, not borrowing it.

Those tea-partiers who say they're "taxed enough already" are certainly right.  
And the tea-partier who carried a sign saying "Government hands off my 
Medicare!" was ridiculed only by those (common in the media) who were serving 
the interests of the wealthy. The demand is quite correct.

On 8/15/10 1:57 AM, E.Wayne Johnson wrote:
>  The circumstance is open for the development of a major third party
>  that could knock out either the Republicans or the Democrats as a
>  second party. Over time, pocketbook issues tend to dominate
>  elections. If things are going well, if people are prosperous, they
>  ignore the corruption in political circles as being just part of the
>  system. But when they're hurting, they turn out the bastards and look
>  to put in some change. We sure need change. I can tell you that. It's
>  not just one party. Both major parties have an equal share of guilt
>  in what's unfolding. Whichever one is in power keeps making it
>  worse...
>
>  Unemployment will be a lot worse than most people expect. Housing
>  will continue to suffer in terms of weak demand. But in this crazy,
>  almost perverse circumstance, the renewed weakness to a large extent
>  will help push us into higher inflation. Real estate tends to do
>  better with higher inflation, but it's not going to be a happy
>  circumstance for anyone.
>
>  The government is effectively bankrupt. Using GAAP accounting
>  principles, the annual deficit is running in the range of $4 trillion
>  to $5 trillion. That's beyond containment. The government can't cover
>  it with taxes. They'd still be in deficit if they took 100% of
>  personal income and corporate profits. They'd also still be in
>  deficit if they cut every penny of government spending except for
>  Social Security and Medicare. Washington lacks the will to slash its
>  social programs severely, to change its approach to ever bigger
>  government. The only option left going forward is for the government
>  eventually to print the money for the obligations it cannot otherwise
>  cover, which sets up a hyperinflation...
>
>  Read more: http://www.theenergyreport.com/pub/na/7005 Again, putting
>  aside election year politics and such, the banking industry will need
>  further bailout as solvency issues come to a head again. The federal
>  deficit is going to balloon. It's going to blow up much worse than
>  any formulas would give you, and Treasury funding needs will
>  explode....
>
>
>
>
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