For those who are interested in the real world, a look at the
actualHistory suggests some adjustment, a modification of free market theory,
to what we might call "really existing free market theory." That is,
the one that's actuallyapplied, nottalked about. And the principle of
reallyexisting freemarkettheory is: freemarkets are fine for you, but not for
me. That's, again, near a universal. So you, whoever you may be, you have to
learn responsibility, and be subjected to market discipline, it's good for your
character, it's ToughLove, and so on and so forth. But me, I need the
nannyState, to protect me from marketdiscipline, so that I'll be able to rant
and rave about the marvels of the free market, while I'm getting
properlysubsidised and defended by everyone else, through the nannyState. And
also, this has to be riskfree. So I'm perfectlywilling to make profits, but I
don't want to take risks. If anything goes wrong, you bail me out. So, if
ThirdWorlddebt gets out of control, you socialise it. It's not the problem of
the banks that made the money. When the S&Ls collapse, you know, same
thing. The public bails them out. When american investmentfirms get into
trouble because the mexican bubble bursts, you bail out GoldmanSachs. And, the
latest Mexicobailout, and on and on. I mean, there's case after case of this.
In fact of the leading, top, hundred leading transnationals in theFortunelist
of transnationals, there was a recent study of how
they, how they related to theStates in which they, they're all somewhere, you know,
so they're all mostly here, in some NationalState, it turns out that all
hundred of them had benefited from industrial policies, meaning,
Stateintervention in their behalf. All hundred had benefited from theState in
which they're based. And twenty of the hundred had been saved from total
disaster, that is, collapse, by just Statebailout. When people talk
about globalisation of theEconomy, remember that the nannyState has to be
verypowerful in order to bail out the rich. And nothing is changing in that regard.
Twenty out of a hundred, again, were saved from collapse by this, including a
number here. Well, that's reallyexisting Freemarkettheory. There are many
examples of it quite close to home. So, we could start with our own Governor, GovernorWeld, who is described by the BostonGlobe as a libertarian with a
religious belief in freemarkets. And then a couple of days
later, they reported that through various scams he had, his administration was
able to sharplyincrease federal subsidies toMassachusetts, so that, way beyond
what they were before, so that he could parade as a fiscalconservative. And
that's prettycommon. Just the year before, you may recall, if you have long
memories, they had to closeGeorgesBank, therichestfishingarea in the world,
because it was being overfished, thanks to a combination of deregulation and
subsidies to the fishingindustry, which have that odd consequence that you tend
to get overfishing. So it looked as if the groundfish were wiped out, and they
had to close it off. It didn't take
long for the religious libertarian fanatic, WilliamWeld, to take
thenextjetplane down toWashington, hat in hand, asking for a federal bailout.
They wanted the federalGovernment to declare it a
natural disaster. And the reason was, as he explained, with, presumably, some
scientists in tow, that there was some strange kind of predatory fish.
Sound of laughter. Which no one had yet found, but they would find it, don't
worry. So some kind of predatory fish had come and, sort of, wiped out all the,
you know, theCod and theHaddock, and all those things. So it was a
naturaldisaster, and therefore the general public had to, sort of, pay off the
results of deregulation and subsidising the fishingindustry. Well, that's the
way to be a libertarian with religious fervor. Another one is the leader of the
conservative revolution, NewtGingrich. Nobody is
morepassionate about the market than he is, in particular about what he, his
own district, which he calls a NormanRockwellworld of jetplanes and
fiberoptics, as indeed it is. Except, if you ask where jetplanes and
fiberoptics came from, you discover that the public paid for them, and
stillpays for them. And in fact, he manages to get more federal subsidies for
his district than any suburbancounty in the country outside the federalsystem.
So, you can haveConservatism flowering among the malls, and so on. Or you can
go back to theReaganites, who were also
verypassionate about freemarkets for everyone else. Meanwhile, they boasted to the american businesscommunity correctly,
that they had done more, that they had instituted moreprotection than any
postwar american administration, in fact, more than all of them combined.
They had doubled importrestrictions, blocking, and helped, and poured public
funds into major industries to enable them to recapitalise, to protect the, in
fact reconstruct, the steelindustry, and the automotiveindustry, and
semiconductors, and so on, which would have disappeared if they had opened the
markets. TheThatcherites inEngland were about
thesame. Governmentexpenditures relative toGNP stayed prettyconstant, although
anything that went to the general population collapsed. Meanwhile, militaryindustry shot up, armssales were booming, that's all
publiclysubsidised stuff, armssales to nice guys like-SaddamHussein and
-GeneralSuharto, and others. Well, that's reallyexisting
freemarkettheory. What are the core policies? Well, theWashingtonConsensus,
which is basicallydesigned for theThirdWorld to make it that way and keep it
that way, it's now being applied not just to theThirdWorld countries, but to
the rich industrial societies, with theUnitedStates and Britain in the lead.
However, it's with a twist. Since it's being applied at home, this is really
existing freemarkettheory that's being applied at home, meaning nuanced. So,
powerfulGovernment to protect the rich, and marketdiscipline and ToughLove for
everyone else. And you see that veryclearly. Go through the various elements of
theWashingtonConsensus. Thefirstone is to, about reducingGovernment.
Well, that's false. We're notreducingGovernment, we're switching it. Shifting
it around. So, social spending is indeed way down since the1970s when this
stuff started, accelerated after 1980, but it was starting in themid70s. The
kind of a benchmark example is AFDC, the main supportsystem. That was cut virtually in half from about1970to1990 with obvious
effects on poor families and children, and so on. It was a part of a
general war against women and children that was conducted by the conservatives
under the name of familyvalues. It's interesting that they were able to get
away with that. It tells you something about the intellectualculture. Well, one
part was the reduction ofAFDC from, by roughly
half from about1970 to about1990. It's now, essentiallygone. That's, the purpose of that, as you know,
is so that sevenmillions, couple of million, I think fiveorsixmillionkids,
average sevenyearsold can learn responsibility. That's part ofToughLove.
Meanwhile, another part of theGovernment has been verystable, and in fact is going
up, namely, thePentagonsystem, which remains at
approximatelyColdWarlevels. In fact, it's higher now than it was underNixon,
although, you know, the big enemy has disappeared, which tells you exactly how
much, tells a rational person at least, exactly how much they were worried
about the russian threat. Not only does it remain
atColdWarlevels, but it's going up under the initiative of the
fiscalconservatives. TheHeritageFoundation, which, you know, sort of a
rightwingfoundation that designs the budget for theGingrichArmy, are calling
for an increase in thePentagonsystem, as is Gingrich, as indeed was Clinton. So
that goes up. And I should say that cutting of social spending. Social spending
is being cutverysharply, verymuch over public opposition. At the time of the
1994 congressional election, you know, the big landslide, over sixty of the
public wanted socialspending to increase, okay? It went verysharply down. What
about thePentagonspending going up? Well that's, the public is (six to one)
opposed to that, which gives you some one, oneaspect of a big picture about
what's happening to americanDemocracy, and somewhat of a change, not a huge
change. [skip] The, so one part of the system is going up, Pentagonspending.
Another part is going down, socialspending. And thesame is true in other
domains. Like, for example, legal aid for the poor is
being slashed and virtuallydestroyed. On the other hand, the securitysystem, theState, Governmentsecuritysystem, State
and Federal, that's going up. So, prisons are going way up. The
prisonpopulation, crime hasn't really, hasn't changed for about twentyyears,
but. And incidentally, UScrimerates are not off the
spectrum, contrary to what a lot of people believe. Crimerates are sort of at, toward the high end of the
industrial world, but not off the spectrum, with oneexception, namely,
murderwithguns, but that's a special feature of american society, which doesn't
have to do with crimerates. Apart from that, crimerates are kind of
toward the high end, not going up. The prisonpopulation
tripled during theReganyears. It's going up evenfaster now. And I think
the reason is another aspect of the Third World model, namely, the superfluous population. There is a big superfluous
population, they don't contribute to wealth protection. Well, we're civilised
folks. We're not like the people that we fund inColombia who go out and murder
them. So, we throw them into jail. And that's going way up evenmore. And
there's also kind of like a sidebenefit to this. Putting moreandmorepeople in
jail, and in fact, under harsher and harsher conditions, is a technique of
socialcontrol for everybody else. I mean when you're, if you're, you know,
someday down the road if you decide to run aDictatorship, and you want to
reallyharm people, it's kind of likeHitler inGermany or something, you know
that you're going to carry out policies that are going to cause people a lot of
harm, you've got to control them somehow. And there aren't many ways to do it.
Everyone hits on the same ways. What you do is engender
fear and hatred, and you know, make them hate the guy who looks a little
different, or whatever it may be, and then you punish those bad guys because
they're reallyawful, and, you punish them reallyhard, and so on, and
that makes people evenmorefrightened. You can just see that happening right
around you. And building up the perception of crime.
Crime has a, like a, what they call in
literarytheory a subtext, you're supposed to understand, criminal has the word,
little word black in front of it. Just like welfare mother, you know black.
Rich blackwelfaremother. Sound of laughter. And criminal means, you
know, that blackguy who's coming after you. So what you want to do is, this has
the dual effect of getting rid of the superfluous population, basically unskilled
workers, close raceclasscorrelation. And also demonising them, so everybody
else is scared and frightened and they'll be willing to accept what's happening
to them too, and not look at where the source is. So that part of the, the
drugwar is basically for this, it has almost nothing to do with drugs, but it
has plenty to do with criminalising an unwanted population, and scaring
everybody else. [Skip] And so does the harshening of
prisonconditions, which is really, it's. TheUnitedStates is off the map
on this. We're in violation of international conventions, constantlycondemned
inHumanRightsforums, and getting muchworse. The
reinstitution of chaingangs was of course bitterlycondemned. But you
know, that's that badSouth, Alabama. Well, it's now [in]Illinois.
TheStateSenateOfIllinois last, a week or two ago legislated chaingangs. Not for
violent criminals, incidentally. For people who are found with drugs, or, you
know, robbed a store, or something like that. TheChicagopress pointed out that
this carries a, this is kind of reminiscent ofSlavery. But the legislator, the
Senator, StateSenator who put it through [Who?]
said that this is just another aspect of what he calledToughLove. And then he
explained that some people work better under humiliation.
So it's reallygood to restore elements ofSlavery, and again, the subtext is
everybody else gets scarred. You know, those guys have to walk around like
slaves in chains, we must be in real danger, so therefore, we'll accept what's
happening to us. That's theLogic. [skip] So prisons are going up and it's. And
that has a lot of sidebenefits apart from just getting rid of the superfluous
population. It is a source of cheap labor. So,
prisonlabour is going way up. Cheap labour, you don't have to worry about
unions, no benefits, they don't get out of line. And that also,
naturallyundercuts wages elsewhere. So what, just like forcing
welfaremothers to work. You know, raising children isn't work, as
anybody knows who's had children, so you have to drive them to work. Kind of
like people who go to, you know, FidelityInvestment to figure out scams about
how to deal with the securitymarket. You reallywant these people to work. But
since there's no jobs for them, they're going to work at lowpaid or
publiclysubsidised wages, which will undercut other wages. The same with
prisonlabour. In fact, the scale of prisonconstruction,
which is a kind of Keynesian stimulus to theEconomy anyway, but its scale has
become so enormous that even highTechindustry, you know, the guys who are usually
just ripping off thePentagonsystem, they're beginning to look at it, figuring
out, recognising that highTechsurveillancedevices, and so on, may be another
way to, sort of, get. To transfer public funds to make sure that
highTechindustry keeps moving. It's reached, it's not at the scale of
thePentagon, but it's going up. Well, that's oneaspect of what's called
reducingGovernment. ModifyingGovernment, to be moreprecise. Another aspect of
it is what's called devolution, reducing, moving
Governmental power from the Federal to the State level. And that has a
kind of a rationale which you hear all over the time, place. For example, there
was an op-ed a couple of weeks ago in theNewYorkTimes
byJohnCogan, HooverInstitute atStanford, who has pointed out what he
called a philosophical issue that divides theDemocrats
from theRepublicans. The philosophical issue is that the democrats believe in bigGovernment and entitlements, and
the republicans believe in getting power down closer to the people, to
theStates, because they're kind of populisttypes. Well, it takes about
maybe threesecondsthought to recognise, realise that moving power down to
theStates, in funding and so on, is just moving it away from the people for a
perfectlyelementary reason: there's a hidden part of the system, of the
powersystem that you're not supposed to know about or think about, and that's
private power. Now, it takes a big corporation, like
say, GeneralElectric or Microsoft to sort of pressure theFederalGovernment, but
even middlesizedguys have no problems withStateGovernments, they can control
them quiteeasily. And in case anyone was toodull to figure this out by
themselves, the same day as Cogan's op-ed in theNewYorkTimes, which is a
typical one, there was a story in theWallStreetJournal aboutMassachusetts,
which had a headline that read, “What Fidelity
Investment Wants, It Usually Gets.”, okay? And then the story went on to
say that FidelityInvestment, thebiggestinvestment firm inMassachusetts, wanted
evenmore-subsidy and -support from theStateGovernment than it alreadygets, and
it was threatening if it didn't it would move over the border toRhodeIsland,
where it just owns the place. So therefore, the passionatelylibertarianGovernor
quicklyrearranged, you know, taxsubsidies, and one thing or another, so that
Fidelity got what it wanted. Well, Fidelity couldn't have done that with the
federalGovernment. It couldn't have said, you know, You give us even more or
we're going to move to Switzerland or something. Sound of laughter. I mean,
other guys can do it maybe, but notFidelity. Raytheon,
which is thebiggestmanufacturingproducer, did the same thing. Raytheon,
incidentally Fidelity is not, it's not that Fidelity is poor, they just
announced recordprofits a couple days ago. Same with Raytheon, just announced
recordprofits, but you know, having big problems, so they wanted evenbigger
taxsubsidy, and direct subsidy, and taxwriteoffs, which just means transfer of
taxes to, from theMA, and they threatened that if they didn't get them they
were going to go toTN, so of course they got them. The legislature passed a
specialLaw giving what they called defenseindustry specialextra subsidies. Notice that Raytheon is publiclysubsidised in thefirstplace.
That's where its money comes from. But now it has to be
additionallysubsidised so that its profits will be evenhigher than the
recordprofits it just made. Same withFidelity. And that's the kind of
game anybody can, you know, even way down to muchsmaller businesses can play
with theStates. The consequences of devolution are quitestraightforward. It
means that any funding that goes to, say, block grants that go to theStates,
you can be reasonablyconfident that they'll end up in the deep pockets of
richpeople, not, you know, in the hands of hungry children or poor mothers or
anything like that. That's how you get power down to the people. Okay, that's
devolution. In fact, quitegenerally, when you look at it, what's called
Governmentcutting is more or less costtransfer. It's almostneverreduction,
sometimes it's increase. So let's take what's, take Healthreform. Reform is a
word you always ought to watch out for. Like when Mao started the cultural
revolution, it wasn't called a reform. Reform is a change that you're supposed
to like. And watch, as soon as you hear the word reform, you kind of reach for
your wallet and see who's lifting it. Anyhow, there are things calledHealthreforms. And Healthreforms are supposed
to, you know, cutGovernmentcosts. Well, they do cut one kind of cost, but of
course they raise another kind of cost. There's a veryrespectable outfit called
theNationalBipartisanLeadershipCouncil,
headed by twoexPresidents, Ford and Carter, and
it just did a study of the costtransfereffects of the plannedHealthreforms. It concluded that they would add about tenbillionsUSD a year
extracosts, but those extracosts will come from wages and higher premiums,
which means it's a highlyregressive tax on the poor. Highlyregressive
tax, you know, if it comes from wages and premiums, of course. And that's
tenbillionsUSD a year. They alsoestimated that it will increase the number of
uninsured by fifteen-to-twentypercent up by, this is by the year 2002. So up to
about fiftyfourmillions by the year2002. Well, that's a cost. A big cost,
unmeasurable cost. And so you find all the way across the board. And
furthermore it's no big secret. So, like, theWallStreetJournal
had a headline which pointed out that, when the reforms were, you know,
moving throughCongress, it said, “Rich Gain, Poor Lose,
Tradeoffs for the Middle Class.” okay? Which is right. That's exactly
what the reforms are intended to do. You have to remember, by middleclass, they
mean the people right below the veryrich. So they don't mean the median, you
know, they're not talking about people with thirtythousand a year income, they
mean, so what it really means is, Great for the rich, superrich, tradeoffs for
the nearrich, ToughLove for everybody else, which is mosteveryone. When you close public hospitals and that sort of thing,
you knowexactly who's going to suffer. Well, let's go to, what are, take
say, NY, which has a conservativeGovernor and a
conservativeMayor. And they're carrying out veryextensive conservative taxcuts,
because they're fiscalconservatives. The taxcuts, theNewYorkTimes pointed out
in a small item, all benefit business. So, by accident, all the taxcuts benefit
business. Well, there are also taxincreases, which are compensating for the
taxcuts. But they don't call them taxincreases. What they call them is, the
phrase is, Reduction of subsidies for public
transportation and for tuition in public universities. Well, subsidy is
another interesting word, kind of like reform. It's
a subsidy if public funds are used for public purposes. That's called a
subsidy. It's notcalled a subsidy when they go to
private wealth. That's reform. So the, so they're cutting down subsidies
for public transportation. Well, that's just a tax. If you pay twentypercent
more for getting on the subway, that's a tax. Same if you pay higher tuition at
citycollege. And that's a highlyregressive tax. So, who rides the subways, and
who goes to citycollege? So what they're doing is shifting, cutting taxes for
business, for the rich, and increasing taxes for the poor, which are going to
compensate for that. And that's called fiscalConservatism and
cuttingGovernment. Well, so it is across the board. Take, I'll come to other
examples, but if you think about it, all the. Take a look, a close look at the
things that are called cuttingGovernment, and you notice that they
quitecharacteristically have this property. Thenextelement of
theWashingtonConsensus is making the taxsystem
moreregressive. Ok, we don't have to talk about that, it's statedopenly.
The thing that isn't statedopenly is the reason. This is supposed to be in
order to increase investment and give everyone jobs. But it's a reallyweird way
to do that. I mean, the country is alreadyawash in capital. The people whose
taxes are being cut don't know what to do with their money. If you want to increase growth, there's another approach that
might be used, Stimulate weakdemand by progressive taxes, that is, put
moremoney into the hands of people who can spend it. That increases
growth, that would increase growth, but that's not the right way to do it. The
right way to do it is by cutting financial gains so that you can have
evenmorespeculation against currencies. The, so that's thesecondpart, make the
taxsystem moreregressive. What about deregulation?
Well, sameeffect. Deregulation is a costshiftingmeasure. So for example if you
deregulate. If you allow industries to, as they have done already, to deposit toxicwastes without
cost, because you have deregulation, it increases their profits, but it also
increases water- and sewage-rates, which is a regressive tax on everybody else
who's got to pay that. Also, it has further costs. Some of them you can't
estimate. For example, the costs in, say, Health, and quality of life, and so
on. No way to give numbers to those. And
there's also going to be the eventual cost of cleanup. But that's going to be a
public cost, remember. Incidentally, a good one, because when you clean up the
wastes, that increases theGrossNationalProduct, and we all like to see that go
up. But, the public will pay those costs. So what it is is just another form of
radical costshifting: increase wealth for the rich, and decrease it for
everyone else. So, it fits the experiment'sdesign. In general, it's kind of
like a shortterm profitgain for some, a verysmall some, and a big cost for everyone
else. What about deregulating the labourmarket?
Well, sameprocess. Actually that was done by simply criminalbehavior. The best
review of this I know is inBusinessWeek. TheReaganadministration,
as they point out, essentiallyinformed the corporateworld that they were not
going to enforce theLaws. There areLaws, you know, much hatedLaws like
theWagnerAct that give you the right to organise, and theReaganadministration
simplyinformed business they weren't going to enforce them. So the number of
illegal firings went up by about a factor of six. And similarly across the
board. They alsoinformed business they were not going
to enforce theOSHAregulations, HealthAndSafetyRegulations. So the number
of days lost to injury, and the number of injuries, and so on, also shot up.
And in fact, that was a great way to undermine unions, and the right to
organise, a whole pile of policies like that, which was part of deregulating
labourmarkets. Another part of deregulation of labourmarkets is to make them more, what's called moreflexible.
Meaning, you don't have any security and no guarantee, the number of
temporaryworkers goes right up, way up, no benefits, you neverknow if you're going to
have a job tomorrow. That's reallygood for theEconomy.
That's good for having jobs. Some of themostprofitable corporations, the ones
whose- way up on theFortune500list, and booming, are the ones that, what they
call, sell manpower, you know, likeManpowerIncorporated.
Selling temps, which is terrific for making labourmarkets flexible. It happens
to destroy everybody'slife, but that doesn't reallymatter. It's, again, the
similarity to theThirdWorld is veryclose. Back in nineteen, this is what's
called economichealth. When you, when this is carried, happens, you call it an
economicmiracle, another technical term. So for example, Brasil. There's a terrific economicmiracle under the
neoNaziGenerals that we installed with great selfadulation back in the[19]60s.
And by1971, it had become the latinamerican darling of the businesscommunity.
And thePresident, theGeneral who ran the place, pointed
out that theEconomy is doing fine, it's just that the people aren't.
Well we just, we have a NobelPrizewinner, who just won theNobelPrize lastyear,
lasttime, RobertLucas ofChicago, and he was
interviewed by theWallStreetJournal and said, We've
been doing great, and have been for a long time. He didn't even bother
to add what the brasilian general did. It's only the people who aren't doing
well. What he means by We is the topfivepercent or maybe toptenpercent, and
that's right. We've been doing great, we're doing fine, theEconomy's fine. By
now we don't evenworry about the fact that the people aren't doing so well. I
won't bother repeating theStatistics, which you know, and he
knowsperfectlywell. Okay, that's economicmiracles. We're now beginning to get
one ourselves. What about privatisation? Well,
again, the effects of that are obvious. So, say, in the latest economicmiracle inMexico, privatisation meant, as usual, Handing over public assets to friends of thePresident, or,
you know, other rich people, or international investors at a fraction of their
cost. And in fact, inMexico, the number of billionaires during the
economicmiracle went up evenfaster than the percentage of people on the
povertyline, as some were doing well, and the people didn't happen to be doing
so well. In fact, it was a catastrophe for them even before the collapse. So
that's privatisation. What about propertyrights, increase
of propertyrights? That's veryimportant, in fact it's a critical aspect
of the what are called misleadingly theFreeTradeAgreements, which actually have
strong protectionist elements in them. TheUruguayRound and NAFTA, and so on.
And one of them is increase of intellectualpropertyrights. I won't go into the
details, but what it amounts to is guaranteeing that
major corporations have a monopoly on theTechnology and Knowledge of the
future. And they extended those to the, by various devices, so that it's about fiftyyears before you
can interfere with owned property, which comes from public subsidy,
usuallythrough research, and then is handed over to some private corporation,
and nobody else is allowed to touch it. So increasing
propertyrights has a big effect. Highlyprotectionist measure which is central
to the new tradeagreements, and has a longlasting effect, way down the road on
organizing the internationalEconomy in who gains and who loses. Last element of
theWashingtonConsensus is reducing tradebarriers. And
here there's another scam that you ought to keep your eyes on. What's called
trade inEconomics is a veryodd notion. So, for example, if FordMotorCompany moves parts fromIndiana toIL for assembly, and
then moves them back toIndiana, that's notcalled trade. But if FordMotorCompany
takes parts made inIndiana and moves them across the border toMexico, where you
can get muchcheaper labour and you don't have to worry about, you know,
pollution and so on, and they get reassembled inMexico and then sent back to,
say, IL for valueadded, that's called exports and imports. It never had
anything to do with the mexicanEconomy, or, in fact, anyEconomy, it was all
internal to theFordMotorCompany, but it's exports and imports. So, how big an
element is that? Well, about fiftypercent ofUStrade. So about fiftypercent of what's calledUStrade is actually internal to
individual corporations. Meaning, controlled by a veryvisible hand with
all sorts of methods around for distortion of markets, and you know, robbery,
and so on and so forth. About thesame forJapan. And for the world, you know,
it's hard to get numbers, but what's estimated for the world is around
fortypercent of trade. Agreements like, say, theUruguayRound, you know, GATT,
if that increases what's called trade, what it actually does is increase
investor-rights, that is, it increases the power of transnationalcorporations.
You have to really look prettyclosely to figure out what the effect is on trade
in any meaningful sense. For example, it may increase crossborderoperations,
but decrease trade, in a meaningful sense of trade, meaning something that's
not under the control of, kind of, corporateMercantilism. Going on with this,
it's perhaps worth noticing that theveryconcept
of-Capitalism and -markets, has virtuallydisappeared. So for example, if
you take the current issue ofForeignAffairs, there's an article byJosephNye
of theKennedySchool, I think maybe he's Dean of theKennedySchool, who explains
that there's a big new weapon in the hands of american diplomats. American
diplomats, he says, has a, diplomacy has a force multiplier. And the reason is
because of the attraction ofDemocracy and freemarketenthusiasms in
theUnitedStates. That's given, those things have given theUS a real force
multiplier. Then he spells it out. It comes fromColdWarinvestments in
highTechnology: electronics, aviation, telecommunications, and so on. That's
our freemarketenthusiasms and Democracy. Well, where did electronics and, you
know, aviation and telecommunications come from? Well, from public funds. They
didn't have anything to do with the freemarket. They came from public funds,
which were transferred to highTechnologyindustry, under the conscious guise,
deceit of security. And it was conscious. So, Truman's
firstSecretary of theAirForce, back in 1948, pointed out to Congress
that "the word to use is not subsidy. The word to
use is security." And in fact the whole system was designed that
way, and stays that way. So that's the tribute to-Democracy and -freemarkets.
The tribute to-Democracy and -freemarkets is, You rob the public by deceit to
pay, put to enrich the rich. That's
freemarkets and Democracy. And it's published without comment. Another
article in, and probably nobody notices, you know, because the concept
ofCapitalism, just like the concept ofDemocracy, is just gone. Nobody knows
what it is. Democracy means, Deceive people into doing
what the rich people want. And markets means, Making sure, make sure the public
subsidise the rich. Or to take another example, take, say, theWallStreetJournal, which you'd think would be the
last holdout of somebody who remembers what Capitalism is. Well they had a
front, lead article a couple of weeks ago, on various strategies that States,
meaning, like, StatesOfTheUnion, were using to try to be morebusinessfriendly.
And they picked twoexamples, VA and MA, who are
sort of competing to see who can most sponsor entrepreneurial values, and be
mostbusinessfriendly, and so on. And they said, well for a while it looked
like, they have somewhat different strategies, that's why they were describing
them. For a while MA was doing better, then it turned out VA is doing better,
now VA is doing better, they're morebusinessfriendly, moregungho about
business, and so on. All right, you read the article. Turns out it's not VA and
MA. What it is, is the suburbs ofWDC, some of which are inVA, and the others of
which are inMA. And what are the two business strategies, entrepreneurial
strategies? Well, the suburbs ofWDC figured they could rip off the
NationalInstituteOfHealth and others to develop Biologybased industries, so
they were looking forBioTechnology, and so on. They figured that's going to be
the big cashcow. And VA, which is more business friendly, decided that the old
cashcow, thePentagon, would probably be thebestway to rip off public funds. So
they were concentrating on electronics and telecommunications, and so on. And
it turned out that VA had the betterstrategy, the better businessstrategy. They
made a better guess about which public funds to rob. And that's what it means
to have entrepreneurial values. And it's, again, reported without comment. This
just continues virtuallywithout a break. TheNew, I'll give you one last
example. TheNewYorker had a rather good article,
actually. You know the, by now the story about what's happening to theEconomy
and to the population, which used to be what, you know, crazies on the left
talked about, it's now, sort of, hit the public, you know, so you can, you read
it in the newspapers. TheNewYorker had an article in which they reviewed the
figures on decline of real wages, and you know, increase in profits, and the
story you're familiar with, by a guy namedThomasCassidy. Wasn't a bad article,
actually, he sort of repeated the familiar facts. And then he ended up by
saying, Look, no one's to blame for this, it's just the
market in its infinite and mysterious wisdom. It just has these effects and
there's nothing you can do about it. Then he gave threeexamples,
exactlythreeexamples in the article, of the market in its infinite and
mysterious wisdom, namely: Grumman, McDonaldDouglass, and HughesAircraft. Maybe
this is some kind of subtle irony that I'm missing, but these are three
prototypes of publiclysubsidized corporations. Grumman, Hughes,
McDonaldDouglass? They wouldn't exist for twominutes if it wasn't for huge public
subsidy. So that's the market in
its infinite and mysterious wisdom. When Clinton was announcing his grand vision of the free
marketfuture at theAPECconference inSeattleWA,
he did the same thing. It was in theBoeingterminal, that's
where he announced it, and he gave Boeing, Boeing, as the example of the grand
vision of the free marketfuture, and there were big headlines in all the
newspapers, and a lot of applause about our love of the free market, and so on.
It's unnecessary to comment. But it is kind of
interesting. What it means is, that the concept of Capitalism and markets has
disappeared as fully as the concept ofDemocracy, which is an interesting fact
about the modern period, and a kind of a natural effect of, you know, of
applying theWashingtonConsensus at home, because you really have to drive out
any understanding of what's going on, namely, that it's really existing free
markets that are being imposed. Well, all of these current measures share one
fundamental principle, and I guess we're at the heart of it. Well, two related fundamental principles. One is, They transfer
wealth to the wealthy. And thesecond is, They transfer decisionmakingpower to
the wealthy. So, all of them have the effect, just think them through,
what all, every one of them has the effect of putting morepower to make
decisions into the hands of unaccountable privateTyrannies, what we call
corporations. Basicallytotalitarian institutions, but they're
mostlyunaccountable. And that's the effect. Think through the examples. Every
case of theWashingtonConsensus applied at home has exactly this effect. And a good part of the propagandasystem has
thesamegoal. In this case, surelyconscious. So
the propagandasystem is designed, has been for years, to
demonise unions, which makes a lot of sense. Unions are a democratising
force in which the mass, one of the few ways in which the large mass of the
population can pool limited resources and work together for some commonGood. So
that's that Bad thing, Democracy. So naturally you want to demonise and destroy
unions, and that's been going on forever. And
the other leading propagandatheme, and I don't mean by that, you know, like,
just what you hear in the newspapers- read in the newspapers and so on, like
the entertainmenindustry and Television and everything else, is antiPolitics. Meaning, setting up a picture, it's
called antiPolitics, the picture, but a veryspecific kind of antiPolitics, you
have to establish the image, you know, get into people's heads, that theGovernment is the enemy, the federalGovernment.
StateGovernments are okay, because they can be sort of controlled by business
anyway, so it doesn't matter. But the federalGovernment is sometimes a little
toobig to be pushed around, so it's the enemy. And it cannot be, nobody can dream of the possibility,
that theGovernment is of, by, and for the people. That's impossible. It's
an enemy to be hated and feared. Not that there aren't a lot of things wrong
with it, but that's not, what's wrong with it, from their point of view, is it
has a big defect. It's potentiallyinfluenceable by the
population, and bigenough to stand up against private power. And that's
the defect. So you have to regard it as the
enemy. It cannot be of, by, and for the people. It's a kind of a, ThemVersusUs
business. Them is theGovernment, which is the enemy. Us is all of us nice
people, you know, sober workingman, his loyal wife, maybe extra job these days.
The hardworking executive toiling twentyhours a day, you know, for the benefit
of all, the friendly banker who's out there trying to find, to give you money.
That's Us. Sound of laughter. And then there's Them. Them is the outsiders, the
unamericans, you know, the agitators, the unionorganisers, bigGovernment, and
so on. And it's sort of, UsVersusThem. That's the picture. That has been rammed into people's heads for at least
fiftyorsixtyyears by intensive propaganda everywhere. Movies, Television,
textbooks, just constant. And not by accident. This is, this part is all
extremelyconscious. We have a huge publicrelationsindustry which spends
billionsUSD a year, dollars a year on exactly this sort of thing, and
consciously. They eventell you about it. Well why is it happening now, not,
say, thirtyyears ago? Oneproposal is, It's the market in its mysterious wisdom.
We can put that aside. This is perfectlyconscious socialpolicy, and also,
hence, under socialcontrol. Second is, We live in leanandmeantimes, we've got to tighten our belts.
Complete nonsense. I mean, all you have to do is look at the businesspress.
They're just ecstatic, you know, and have been for years. BusinessWeek just came out a couple of days ago with
the annual issue on the top onethousandcorporations. The headline is, “1995 Was One for the Books.” America's Most, and
subline: “America's Most Valuable Companies Grew Even
More Valuable by a Record Thirty Five Percent.” That's these
leanandmeantimes we're in. Another headline in BusinessWeek reads, “The Problem Now, What to Do with All That Cash”.
Sound of laughter. As the coffers of corporateAmerica are overflowing with surging
profits. Another one talks about theGovernment, reallygreatGovernment. It says,
“theGingrichCongress represents a milestone for
business, never before have so many goodies been showered so enthusiastically
on america's entrepreneurs.” The headline of that one, incidentally, is “Return to the Trenches.” You know, like, we've got to
ask more, feeding frenzy has to go on from the nannyState. FortuneMagazine, you know the other big business
journal, I mean, they can't even find the adjectives in the last couple of
years to describe what's going on. Oneyear it's
"dazzling", you know. Thenextyear "stupendous." I
mean, I'm waiting for theFortune500issue to see what adjectives they come out
with next week. What they've been, doubledigit profitgrowth for an unheralded
four years, with prettystagnant sales, and, fortunately, wages going down. CEOsalaries are going through the roof, and it's uncorrelated
with performance. That's another interesting aspect of it. There have
been, now, studies of it, so it's just some other thing, it has nothing to do
with markets, or anything else. The, I mean, while wages continue to decline,
as does familyincome, and so on. Well, you know,
nobody who even looks at the businesspress can believe that there are
leanandmeantimes. As I said, the country's just awash with capital. Their
problem is they don't know what to do with it. So therefore, get more. Another theme that's around now is, you have to have
what's called downsising in order to be competitive. Well,
theBureauOfLabourStatistics came out with its figures, up to thelastyear they
have them for it, 1993, from1983to1993 the category of
executives, managers, and administrative personnel grew thirtypercent.
Okay, that's downsising. The fastest growing
whitecollarpopulation happens to be securityguard. Well yeah, that's
connected with turning it into a ThirdWorldcountry. You take a walk down
SanSalvador, you know, you'll see plenty of securityguards. You know,
richpeople have to be protected. And furthermore, all these prisons you're
throwing people into, they need securityguards. So yeah, there's, they're
administrative personnel, and that's increasing, but so are, same in
corporations. So there's no downsising going on, except for workingpeople.
That's quite different. Why is it happening now? Anyway those are. Let's go
back to why it's happening now. Well, fact is,
it's alwaysgoing on, just depending on the weapons at hand. Business, american business
particularly, is highlyclassconscious, and veryopen about it incidentally. And
it's alwaysfighting a bitter classwar. You
go back onecenturyago, into what were called
theGay90s, when incidentally, the internationalEconomy was about as, the
internationalEconomy was pretty much as, like it is now in terms of capitalflows
and so on, it hasn't become moreglobalised in terms of trade and capitalflow
and so on, than it was then, maybe less so. About a
century ago, it looked as if the game was over. You know, they were talking
about the end ofHistory, perfection had been reached in
theDevil-take-the-hindmost society, where everybody's for themselves, and
enrich yourselves, and so on. It was monstrous for the workingpeople.
Verybrutal in fact, here. That was onecentury ago. Well,
you know, it didn't end. You know, inEurope particularly, the socialcontract
was slowlyimposed not easily. It didn't happen here. By theRoaring20s, as they were called, labour had no voice. This
is the, you know, the age of massproduction of automobiles, and so on. Labour
was out of it. It was a businessrunsociety almostcompletely, and it looked
permanent. Again, you know, utopia of the masters, end ofHistory, all this
talk. In the nineteenthirties, it proved to
be wrong. There was a lot of popular organising, popular protest. It rammed
through elements of the socialcontract that had been achieved inEurope
decadesearlier. And that just caused hysteria in the businesscommunity. You
read the businesspress, it was talking about, you know, the hazard facing
manufacturers, and, the rising politicalpower of the masses, and, how we're
going to face disaster unless we figure out some way to reverse this, and
control their minds, and control them, and so on. A
huge propagandacampaign began right after theWagnerAct was passed, 1935.
In the, in those, in the nexttwoyears theNationalAssociationOfManufacturers,
it's publicrelationsbudget multiplied by a factor of twenty, as they recognised
that force alone is not going to be enough. TheUS has a veryviolent
laborHistory, and plenty of workers were getting killed, but it was clear that
this wasn't going to be enough. They had to have huge propaganda. It was sort
of put on, that's when all this
harmonybusiness that I was talking about got designed. You know, it's a specific
design as to how to carry out what they called scientific methods of
strikebreaking by controlling communities, and so on. Well, it was put on hold
during the war, and then it picked up right after theSecondWorldWar was over,
with an enormous propagandacampaign. I mean, you can't believe the scale until
you look at it, and the purpose was veryexplicit. The purpose was to “win the everlasting battle for the minds of men,” which have
to be indoctrinated with the capitalist story, as we sell our preferred way of
life, and on and on. These are all just quotes from
mainstreamPRliterature. And it was very substantial, and aimedprecisely at what
I described. They describe what they're doing, and you can see it in the
propaganda, the schools, the entertainmentindustry, everything else. Well, what happened in the1970s? What happened is, there were some changes in the
internationalEconomy, and in Technology and so on, which just put new weapons
into the hands of the masters. One crucial
factor, which everyone points to, is an enormous growth
in financial capital, financial transactions, it just boomed, shortrange
financial transactions. That came about, partly, because of the
dismantling of the postwar BrettonWoodssystem of regulated currencies which
kind of made currencies free-floating. TheNixonadministration just dismantled
it. Partly it came about for technical reasons. I mean, the
telecommunicationsrevolution, which was of course publiclysubsidised, at that
point made it possible to transfer funds veryrapidly. So, like, you can, by now
it's estimated at around a trillion dollars a day just shift up and back from
onemarket to another, veryshort term transactions. All aimed, and at a huge,
and, aimed at something: they're all aimed at low growth and high profits and
low wages. And that's, that is a factor that's driving policy in that
direction. I don't think it's by any means an uncontrollable factor, but it is
a, it's definitely a factor. And that's just put a lot, and this, the changes
in the composition of capital transactions are verystriking. Around, from about maybe, the time when you have
data, like, latenineteenthcentury up until about1970,
rough estimate was that about ninetypercent of capitaltransfers had to do with
the realEconomy, you know, with investment and trade, tenpercentspeculation.
By1990, the figures had reversed. By 1995, the latestUNCTAD, you know,
UNEconomicCommissionestimate was about fivepercent realEconomy,
ninetyfivepercentspeculation, shortterm speculation, like, against currencies,
which is, essentially, aimed at driving down growth and increasing profits and
lowering wages. This was understoodveryquickly by the late 70s. And
there were proposals made, for example byJamesTobin,
Yaleeconomist NobelPrizewinner, at
anAmericanEconomicAssociationPresidentialAddress1978, simply, suggested a
simple reform, Low tax, verylow tax, on shortterm financialtransactions, just
to slow it down, you know, throw a little sand in the gears. Probably work,
it's been called theTobinTax, but it's
notgetting anywhere, because the weapon is a veryimportant one. That weapon has
been usedveryefficiently for all the purposes that have been described. And
there are other things. Is it out control? There’s nothing we can do? Well,
there’s no reason to believe that. I mean, Elementary reforms, likeTobinTax, could
have, maybe have big effect. Furthermore moreglobally, all of these
interchanges, as I mentioned,
internationalEconomy is notmoreintegrated than it was onehundredyearsago
by most measures. In fact, less in many respects. And the
transactions that are going on are mostlywithin big threeregions,
theUnitedStates, Japan and Europe. That’s under politicalontrol, that’s not out
of politicalcontrol. Democratic societies in these three areas could
control this. The idea that it’s somehow, you know, impossible to control all
over the world, it’s just nottrue. You look at the flows, they’re internal to
highlydeveloped rich societies, where theoretically there are
democraticGovernments [which] could impose all sorts of restriction.
Furthermore, all this talk about corporateGreed and
everything is reallycrucially beside the point in my point of view. I think it
should be recognised it is a verydeep regression from what workingpeople and a
lot of others understandverywell well over onecentury ago. Talk about Greed is nonsense. Corporations are Greed by their
nature. They’re nothing else. They’re instruments for interfering with markets
to maximise profit and wealth and marketcontrol. You can’t make them more or
less greed. I mean maybe, you can force. It’s like taking a totalitarianState
and asking it to be lessbrutal. Yeah maybe, you can get totalitarianState lessbrutal,
but that’s not the point. The point is, Not the totalitarianState to be
lessbrutal, But to get rid of it. Sound of applaud. Like
onehundredandfiftyyears ago, that was understood. I mean, if you read the
labour press, there was a verylively press right around here, Lowell, Lawrence,
places like that, run by artisans and what they called factorygirls, women from
farms working there, and they weren’t askingAutocracy to be lessbrutal. They
were saying, Get rid of it. In fact, that makes perfect sense. These are humaninstitutions, nothing grave in stone about
them. They were created early in this century with their present powers. They
come from thesame intellectual roots as the other forms ofTotalitarianism,
namely Stalinism and Fasicism. They have no morelegitimacy than they do.
So it’s not a. Yeah, let’s makeAutocracy lessbrutal, that’s a shortterm
possibility. But we should have the sophistication of the factorygirls ofLowell
onehundredandfiftyyearsago and recognise that this is just degrading and
intolerable, and as they put it, Those who work in the mill should own it,
along with everything else, and that’s Democracy. We don’t haveDemocracy.
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