The Political and Business Institutions as Obstacles to Civilization's Resilience: Part II
Out of the Woods, into Civilization by irvintustin
Civilization is based on the idea—as both Thomas Hobbes and Jean Rousseau expressed so long ago in Leviathan and in The Social Contract, respectively—that we will live safer, more “commodious” lives in concert than by ourselves, because nature is a rough neighborhood.[i] It is hard to go it alone. The role of the political—as an instrument of society—is for people to band together and consciously consider what is the best way to organize, behave, and allocate, what are ultimately, finite resources. The more democratic the society, the proportionally more people get a say in this conception and decision-making. However, much of our every day reality has been removed from the collective discussion.
For, while economics and politics are entwined at every level, Americans have (until recently perhaps) accepted the notion that they are not. They have accepted the American myth that there exists a “free market” that works for the benefit of all, if left unfettered by government. The citizen, in this altered reality, can resolve social issues—such as abortion, civil rights, school prayer, school curriculum, the drinking age, etc.—through the voting booth. Economic issues, on the other hand, belong to the consumer in us. We vote by what we buy and boycott. In the supermarket, not in the ballot box. One is a public affair, the second is a private one. One is the job of the citizen, the second that of the consumer.[ii] One signifies an individual choice of consumption, the other a public action that is a microcosm of what we believe society should be about. The problem here, of course, is that these do not exist in separate spheres, except perhaps in the minds of Americans. In accepting this false dichotomy and voluntarily limiting their own power as citizens, Americans enfeeble themselves and abrogate their “unalienable rights” proclaimed in the Declaration of Independence. Life, liberty, and the pursuit of happiness are not consumables. They require the vigilance of an informed citizenry that is active in the affairs of society, of government, and of the economy.[iii] However, as Robert Reich has noted, Americans do not ever have a discussion that clearly annunciates the difference between the two very different roles.[iv]
An 1846 painting by George Caleb Bingham showing a polling judge administering an oath to a voter
With the same measure that Americans give away their power, business takes it. For the oligarchs and elite have no illusions about the enmeshment of government and business.[v] What we eat, drink, and breathe, the quality of our health care and of our very homes, the energy that heats our homes and powers our cars, the vehicles of our transportation, and the media through which we communicate, where we work and what kind of work we do, the clothes we wear, the entertainment we imbibe, the quality of our schools, roads, hospitals, waterways, and air, as well as the everyday products that surround us—in all these matters Americans have lost a say. They increasingly belong to the decisions made in corporate boardrooms. And accordingly, in Carroll Quigley’s terms, the political and economic instruments whose existence was derived from a perceived service to society have turned into self-serving institutions.
This political cartoon depicts robber barons, including Jay Gould and Russell Sage, sitting atop workers. Stock Montage/Getty Images
They have perpetuated their power by joining forces; by negating the shrewd observation of America’s founders, whereby power requires checks and balances. Rather than serving as checks on each other, government and corporate players have colluded. Indeed, they are basically the same people. Not only in the old-school manner of being of the same socio-economic class with similar interests, worldviews, and friends. But in a newer sense, where the elite players at the highest levels move from business to politics (and the military) and back again in what is euphemistically referred to as the “revolving doors” of the elite.[vi]
Trump 2016 campaign CEO Steve Bannon exits an elevator in the lobby of Trump Tower. The former Breitbart News executive and vice-president at Goldman Sachs is now Trump’s chief White House strategist. photo: Getty
In the two great American debacles of this century’s first decade—the Iraq War and the Great Recession—the oligarchs and institutions’ elite were the only winners, as the elites hopped about between institutions, garnering high position, making history, and collecting status and ridiculous amounts of money. For the Iraq War, the elites of government and corporations (such as Halliburton, Bechtel, DynCorp, the Carlyle Group, and Kellogg, Brown & Post) melded and mingled. The players included the biggest names of the time—Dick Cheney, Henry Kissinger, Paul Bremer, Richard Perle, George Shultz, Casper Weinberger, Donald Rumsfeld, Jim Baker, and the entire pedigree of the Bush family, including the two president Georges, “Uncle Bucky,” and George II’s brothers Neil and Marvin.[vii] The depth and breadth of the subterfuge, financial gain, and conspiracy (literally “to breath together”) goes well beyond the scope of this writing, taking books and websites of analysis to unravel and describe. We will note, however, that there still has been no credible evidence of ties between Saddam Hussein and Al-Qaeda or that Iraq had posed any danger to the United States prior to the 2003 “war.” We will further note that the cost of the war will reverberate for decades. War is Sell, as the saying goes. Three trillion dollars worth, in this case.[viii] This figure does not include the cost to Iraq’s economy or speak to the resources wasted or the social services that will not be rendered or the infrastructure that will not be built.[ix] It does not take into account, of course, the existential horror and suffering of the hundreds of thousands of Iraqis and Americans killed and maimed, of the four hundred thousand Iraqis displaced from their homes, of the two hundred thousand Iraqi refugees, or of the obliteration of Iraqi infrastructure and society.[x]
Tent City in Los Angeles. The U.S. Financial crises is causing growing communities of recently Homeless People, because of house foreclosures. Such tent areas in the U.S. are reminscent of displaced refugee areas abroad.
In the Great Recession that officially began in December of 2007, this time it was the Americans and other First Worlders who lost their jobs and homes.[xi] By 2011, 1.2 million Americans had lost their homes to foreclosure, over eight million had lost jobs, and collectively eight trillion dollars of wealth (albeit mostly bubble real estate wealth) had disappeared from their lives.[xii] On the other hand, the elite financial institutions, whose casino-like shenanigans had created the meltdown of the economic system, fared quite well. In one of the largest upward redistributions of wealth, at least eleven trillion dollars of American tax-payer money has been committed to bail out the financial institutions and over three trillion has been actually invested.[xiii] At least, that was the official version.
Bankers who are blamed for the financial crisis. (L-R) Goldman Sachs CEO Lloyd Blankfein, JPMorgan Chase CEO Jamie Dimon, Bank of New York Mellon CEO Robert Kelly, Bank of America CEO Ken Lewis and State Street CEO Ronald Logue. Photo: Chip Somodevilla/Getty Images
Then in November of 2011, the Bloomberg Markets magazine reported that it had found, after going through 29,000 pages of Fed documents obtained under the Freedom of Information Act, that the Federal Reserve had actually secretly loaned over $7.7 trillion to the world’s largest banks.[xiv] Secretly loaned. Not even Congress knew anything about this largest of loans in history. The amount was ten times larger than the $700 billion TARP bank bailout that had gotten all the press. And unlike the much maligned TARP, these secret loans had no strings attached. Sure, we expect this sort of thing in Banana Republics, but how could this happen in America? Well, quite oddly, one might think, the corporate elite of the financial institutions are the very same who make the political decisions about finance.
The Federal Reserve is the complex central banking system of the United States, which is ostensibly “independent” of both government and business.[xv] According to its Board of Governors, the Fed’s “…monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government.”[xvi] But as Kevin Drum noted in Mother Jones magazine, “The 12 regional Federal Reserve Banks—including the all-important branch in New York City—are governed by boards of directors dominated by bankers chosen by… [you guessed it] the banks themselves.” [xvii] That is, the institution responsible for doling out taxpayer money is independent of the taxpayer, but closely tied to the banks. The world’s elite players had devised one more way (remember, for example, the electoral college and the appointments to the Supreme Court) to keep society’s major power positions out of the hands of the citizen. Okay, no wonder the financial institutions were the big winners in the Great Recession.
REFERENCES
[i] Rousseau, J.J. (1761) The Social Contract and Discourse on the Origin of Inequality. Pocket Books, New York, edited by L.G. Crocker (1977).
[ii] For an incisive analysis of this perceived dichotomy see Barber, B.R. (1995) Jihad vs. McWorld: How Globalism and Tribalism are Reshaping the World, Ballantine Books, New York. For a sense of the oligarchy's machinations in creating this myth, see the excellent work by Jane Mayer (2016) Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right. Doubleday, New York.
[iii] David Orr (2004:124) noted that one of the major obstacles to an informed citizenry that will effectively face the challenges of the future is “the widespread belief that citizenship requires little or nothing of us.” This attitude surely favors those who benefit the status quo. (Orr, D.W. (2004) Earth in Mind: On Education, Environment, and the Human Prospect. Island Press, Washington D.C.)
[iv] For two who have given much thought to this issue see Barber (1995) and Reich, R.B. (2007) Supercapitalism: The Transformation of Business, Democracy, and Everyday Life. Alfred A. Knopf, New York..
[v] See, for example, Winters, J.A. (2011) Oligarchy. Cambridge University Press, New York.
[vi] For an impressive set of lists of people who have shuffled about between government and industry see Opensecrets.org web page “Revolving Door” at http://www.opensecrets.org/revolving/.
[vii] Of the many great works included are: Cherbonnier (2001), Lohr (2002), Fidler and Catan, (2003a, 2003b), Johnson (2004:144), Palta (2004), Perkins (2004:79), Ruppert (2004), Pringle (2005), Berman (2006), Corpwatcher (2006), Phillips (2006:68-96), Glantz (2007), Klein (2004a, 2004b, 2007), Wedel (2009).
Cherbonnier, A. (2001, October 3) Republican-controlled Carlyle Group poses serious Ethical Questions for Bush Presidents, but Baltimore Sun ignores it, The Baltimore Chronicle and The Sentinel.
Lohr, S. (2002, November 22) Gerstner to be Chairman of Carlyle Group, New York Times.
Fidler, S., and Catan, T. (2003a, November 28) More Neil Bush Wheeler-Dealer Details: Consultant on Iraq Contracts Employed President’s Brother, The Financial Times (UK).
Fidler, S., and Catan, T. (2003b, December 12) Businessmen use Bush ties in Mideast, Financial Times (UK).
Johnson, C. (2004) The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic. Metropolitan Books, New York.
Palta, R. (2004, March/April) No Bush Left Behind, Mother Jones. Available at http://motherjones.com/politics/2004/03/no-bush-left-behind. Accessed December 22, 2011.
Perkins, J. (2004) Confessions of an Economic Hit Man. Barrett-Koehler Publishers, Inc., San Francisco, CA.
Ruppert, M.C. (2004) Crossing the Rubicon: The Decline of the American Empire at the End of the Age of Oil. New Society Publishers, Gabriola Island, BC, Canada.
Pringle, E. (2005, January 31) Jeb, Marvin & Neil, Scoop Independent News.
Berman, M. (2006) Dark Ages America: The Final Phase of Empire, W.W. Norton and Company, New York.
Corpwatcher (2006, January 5) The Bush Family’s War Profiteering, Houston Independent Media Center.
Phillips, K. (2006) American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century. Viking, New York.
Glantz (2007, February 1) U.S. Agency Finds New Waste and Fraud in Iraqi Rebuilding Projects, New York Times,
Klein N. (2004a, October 12) James Baker's Double Life, The Nation.
Klein N. (2004b, October 28) Carlyle Covers Up, The Nation.
Klein, N. (2007) The Shock Doctrine: The Rise of Disaster Capitalism, Metropolitan Books, New York.
Wedel, J.R. (2009) Shadow Elite: How the World’s New Power Brokers Undermine Democracy, Government, and the Free Market, Basic Books, New York.
[viii] Stiglitz, J.E., and Bilmes, L.J. (2008) The Three Trillion Dollar War: The True Cost of the Iraq Conflict, W.W. Norton and Company, New York..
[ix] Besides the destruction to infrastructure, Iraq was put into debt from loans and grants from the IMF and World Bank (Klein, 2004).
[x] Glanz (2007), Stiglitz and Bilmes (2008).
[xi] NBER (National Bureau of Economic Research) (2008) Determination of the December 2007 Peak in Economic Activity.
[xii] Schoen (2010), Dorfman, D. (2011), Isidore (2010, 2011). According to Ivry, Keoun and Kuntz (2011) 3.6 million homes had been foreclosed between August 2007 and November 2011.
Schoen, J.W. (2010, April 8) Study: 1.2 million households lost to recession, msnbc.com.
Dorfman, D. (2011, January 9) The Jobs lost in the Great Recession May Return… by 2018, Huffington Post. Available at http://www.huffingtonpost.com/dan-dorfman/lost-jobs-may-be-back-by-_b_806363.html. Accessed November 13, 11.
[xiii] Goldman (2009), Pittman and Ivry (2009). Naomi Prins (2011:5) argues that total bailout comes closer to thirteeen trillion dollars.
Goldman, D. (2009) CNNMoney.com’s Bailout Tracker, CNNMoney.
Ivry, B., Keoun, B., and Kuntz, P. (2011, November 27) Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress, Bloomberg Markets Magazine.
Prins, N. (2011) It Takes a Pillage: An Epic Tale of Power, Deceit, and the Untold Trillions. John Wiley & Sons, Inc., Hoboken, NJ.
[xiv] Ivry, Keoun and Kuntz (2011). The Clearing House Association—the nation’s oldest and largest banking association—fought the Bloomberg lawsuit for disclosure all the way up to the Supreme Court.
[xv] Independence from both government and business is important for the legitimacy of the central bank. Government ties would allow politicians to politicize their powerful relationship through their decisions, and business ties would—and have, as we see here—benefited the participants and their institutions.
[xvi] Board of Governors of the Federal Reserve System. Available at http://www.federalreserve.gov/faqs/about_14986.htm.
[xvii] Drum, K. (2010, Jan/Feb) Capital City, Mother Jones, pp. 37-79.
