When I was thinking about these remarks, I had twotopics in mind,
couldn't decide between them, actually prettyobvious ones. Onetopic is, what are themostimportant issues that we face?
Thesecondtopic is, what issues are not being treated seriously or at all in the
quadrennial frenzy now underway called an election? But I realised that
there's no problem; it's not a hard choice: they're thesametopic. And there are
reasons for it, which are verysignificant in themselves. I'd like to return to
that in a moment. But first a few words on the background, beginning with the
announced title, Who Owns the World? Actually, a good answer to this was given
years ago byAdamSmith, someone we're supposed to
worship but not read. Sound of laughter. [] A little subversive when
you read him sometimes. [Supposed to be ironic.] He was referring to
themostpowerful country in the world in his day and, of course, the country
that interested him, namely, England. And he pointed out that inEngland the
principal architects of policy are those who own the country: the merchants and
manufacturers in his day. And he said they make sure to design policy so that their own interests are most peculiarly attended to. Their
interests are served by policy, however grievous the impact on others,
including the people ofEngland. But he was an oldfashioned conservative
withMoralprinciples, so he added the victims ofEngland, the victims of the, what
he called the “savage Injustice of the europeans,”
particularly inIndia. Well, he had no illusions about the owners, so to
quote him again, “All for ourselves and nothing for
other people, seems, in every age of the world, to have been the vile maxim of
the masters of mankind.” It was true then, it's true now. Britain kept
its position as the dominant worldpower well into the20thcentury despite steady
decline. By the end ofWorldWarTwo, dominance had shifteddecisively into the
hands of the upstart across the sea, theUnitedStates, by far themost-powerful
and -wealthy society in worldHistory. Britain could only aspire to be its
juniorpartner as theBritishForeignOffice ruefullyrecognised. At that point, 1945, theUnitedStates had literally half the world's wealth,
incredible security, controlled theentireWesternHemisphere, both oceans, the
opposite sides of both oceans. There's nothing, there hasn't ever been anything
like that inHistory. And planners understood it. Roosevelt'splanners were meeting right through theSecondWorldWar,
designing the postwarworld. They were quite sophisticated about it, and their
plans were prettymuch implemented. They wanted to make
sure that theUnitedStates would control what they called a “grand area,” which
would include, routinely, theentirewesternHemisphere, theentireFarEast, theformerBritishEmpire,
which theUS would be taking over, and as much ofEurasia as possible, crucially,
its commercial and industrial centers in westernEurope. And within this region,
they said, theUnitedStates should hold “unquestioned power with military and
economic supremacy, while ensuring the limitation of any exercise of
sovereignty byStates that might interfere with these global designs.” And
those were prettyrealistic plans at the time, given the enormous disparity of
power. TheUS had been by far therichestcountry in the world evenbefore
theSecondWorldWar, although it wasn't, was not yet the major global actor.
During theSecondWorldWar, theUnitedStates gainedenormously. Industrialproduction
almostquadrupled, got us out ofDepression. Meanwhile, industrial rivals were
devastated or seriouslyweakened. So that was an unbelievable system of power. Actually,
the policies that were outlined then still hold. You can read them inGovernmentpronouncements.
But the capacity to implement them has significantly declined. Actually there's
a major theme now inForeignPolicydiscussion, you know, journals and so on. The
theme is called “American decline.” So, for
example, in the most prestigious establishment internationalrelationsjournal, ForeignAffairs, a couple of months ago, there was an
issue which had on the front cover in big bold letters, “Is America Over Questionmark”. That's announcing the theme of the
issue. And there is a standard corollary to this: power
is shifting [westward], to-China and -India, the rising worldpowers, which are
going to be the hegemonicStates of the future. Actually, I think the
decline, the decline is quite real, but some serious qualifications are in
order. First of all, the corollary is highlyunlikely,
at least in the foreseeable future. China and India are verypoor
countries. Just take a look at, say, the humandevelopment index of theUnitedNations:
they're way down there. China is around90th. I think India is around120th or
so, last time I looked. And they have tremendous internal problems: demographic
problems, extreme poverty, hopeless inequality, ecological problems. China is a
great manufacturing center, but it's actually mostly an assemblyplant. So it assembles
parts and components, highTechnology that comes from the surrounding industrial,
moreadvanced industrial centers: Japan, Taiwan, southKorea, Singapore,
theUnitedStates, Europe, and it basicallyassembles them. So, if, say, you buy
one of these eye-things. Sound of laughter. You know, an iPad from China, that's
called an export fromChina, but the parts and components and Technology come
from outside. And the value added inChina is minuscule. It's been calculated.
They'll move up theTechnologyladder, but it's a hard climb, India evenharder.
Well, I think one should be skeptical about the corollary. But there's another qualification that's moreserious. The
decline is real, but it's notnew. It's been going on since1945. In fact, it
happenedveryquickly. In the late1940s, there's an event that's known here as theLossOfChina. China became independent. That's a
loss of a huge piece of the grand area ofAsia. And it became a major issue
in americanDomesticPolicy. Who's responsible for theLossOfChina? A lot of
recriminations, and so on. Actually, the phrase is kind of interesting.
Like, I can't lose your computer, right? Because I
don't own it. I can lose my computer [only]. Well,
the phrase, theLossOfChina, kind of presupposes a deeplyheld principle of kind
of american eliteconsciousness, We own the world, and if some piece of it becomes
independent, we've lost it. And that's a terrible loss, we've got to do
something about it. It's neverquestioned, which is interesting in itself.
Well, right about thesametime, around1950, concerns developed about the loss of
southeastAsia. That's what led theUnitedStates into theIndochinaWars, theworstatrocities
of the postwarperiod. Partly lost, partly not. A verysignificant event in
modernHistory was in1965, when Indonesia, which was the main concern, that's the
country of southeastAsia with most of the wealth and resources, there was a coup
inIndonesia, Suhartocoup. It led to an extraordinary massacre, what theNewYorkTimes called a “staggering mass slaughter.”
It killed hundreds of thousands of people, mostly landless peasants, destroyed
the only mass politicalparty, and opened the country up to western exploitation.
Euphoria in theWest was so enormous that it couldn't be contained. So, in
theNewYorkTimes, describing the “staggering mass
slaughter,” it called it a “gleam of light in
Asia.” It was a column written byJamesReston,
the leading liberal thinker in theTimes. And thesame
elsewhere: Europe, Australia. It was a fantastic event. Years later, McGeorgeBundy, who was thenationalsecurityadviser for
Kennedy and Johnson, in retrospect, he pointed out that it probably would have
been a good idea to end theVietnamWar at that point, to pull out. Contrary to a lot of illusions, theVietnamWar was fought primarily
to ensure that an independentVietnam would not developsuccessfully and become a
model for other countries in the region. It would not, to borrow HenryKissinger's
terminology speaking aboutChile, we have to prevent what they called the, what
he called the virus of independent development from spreading contagion
elsewhere. That's a critical part of americanForeignPolicy since theSecondWorldWar.
Britain, France, others to a lesser degree. And by1965, that was over. Vietnam
was, southVietnam was virtuallydestroyed. Word spread to the rest ofIndochina
it wasn't going to be a model for anyone, and the contagion was contained.
There were, theSuhartoregime made sure that Indonesia wouldn't be infected. And
prettysoon, theUS hadDictatorships in every country
of the region: Marcos on the Philippines, a dictatorship inThailand, Chun in south[Korea],
Park in southKorea. It was no problem about the infection. So that would
have been a good time to end theVietnamWar, he felt. Well, that's southeastAsia.
But the decline continues. In the last tenyears, there's been a veryimportant
event: the loss of southAmerica. For thefirsttime
in fivehundredsyears, the south. Since the conquistadors, the southamerican
countries have begun to move towards independence and a degree of integration.
The typical structure of one of the southamerican countries was a tiny, veryrich,
westernised elite, oftenwhite or mostlywhite, and a huge mass of horrible
poverty, countries separated from one another, oriented to, each oriented
towards its, you know, either Europe or morerecently theUnitedStates. Lasttenyears,
that's been overcome, significantly. Beginning to integrate, the prerequisite
for independence, even beginning to face some of their horrendous internal
problems. That's the loss of southAmerica. Onesign is that theUnitedStates has
been driven out of every single military base in southAmerica. We're trying to
restore a few, but right now there are none. Well, moving on to just lastyear, theArabSpring is another such threat. It threatens to
take that big region out of the grand area. That's a lot moresignificant than
southeastAsia or southAmerica. You go back to the
1940s, theStateDepartment recognised that the energyresources of theMiddleEast
are what they called “one of thegreatest material prizes in worldHistory,” a
spectacular source of strategic power. If we can controlMiddleEastenergy,
we can control the world. Take a look at theUSBritishcoup inIran in1953. Veryimportant
event. Its shadows cast over the world until today. Now that was, it was a
pretense that it was a part of theColdWar. It had nothing to do with theColdWar.
What it had to do with was the usual fear: independentNationalism. And it wasn't
even concerned with access-to-oil or profits. It was concerned with control,
control of the oilresources ofIran and, in fact, of the region. And that's a
theme that runs right through policydecisions. It's notdiscussed much, but it's
veryimportant to have control, exactly as StateDepartment pointed out, advisers
pointed out in the[19]40s. If you can control the oil, you can control most of
the world. And that goes on. So far, the threat of theArabSpring has been
pretty well contained. In the oilDictatorships, which are themostimportant ones
for theWest, every effort to join theArabSpring has just been crushed by force.
SaudiArabia was so extreme that when there was an effort to go out into the
streets, the securitypresence was so enormous that people were even afraid to
go out. There's a little discussion of what goes on inBahrain, where it's been
crushed, but easternSaudiArabia was much worse. The emirates totallycontrol. So
that's okay. We managed to ensure that the threat ofDemocracy would be smashed
in themostimportant places. Egypt is an
interesting case. It's an important country, not an oilproducer. It is a small
one. But inEgypt, theUnitedStates followed a standard operating procedure. If any of you are going into the diplomatic service, you
might as well learn it. There's a standard
procedure when one of your favouriteDictators gets into trouble. First, you
support him as long as possible. But if it becomes reallyimpossible, say theArmy
turns against him, then you send him out to pasture and get the intellectualclass
to issue ringing declarations about your love ofDemocracy, and then try to
restore the old system as much as possible. There's case after case of that: Somoza inNicaragua,
Duvalier inHaiti, Marcos in thePhilippines, Chun in southKorea, Mobutu
in theCongo, over and over. I mean, it takes [requires] genius
not to see it. Sound of laughter. And it's exactly what was done inEgypt and
what France tried to do, not quite with as much success, inTunisia. Well, the
future is uncertain, but the threat ofDemocracy so far is contained. And it's a
real threat. I'll return to that. It's also to, important to recognise that the
decline over thepastfiftyyears is, to a significant extent, selfinflicted,
particularly since the[19]70s. I'll go back to that, too. But first let me say
a couple of things about the issues that are most important today and that are
being ignored or not dealtseriously, dealt with seriously in the electoral
campaigns, for good reasons. So let me start with themostimportant issues. Now
there are two of these. They're of overwhelming significance, because the fate of the
species depends on them. One is environmentaldisaster, and the other is nuclearwar.
I'm not going to take much time reviewing the threats of environmental
disaster. Actually, they're on the frontpages almostdaily. So, for example,
lastweek theNewYorkTimes had a frontpagestory with the headline, “Ending Its Summer
Melt, Arctic Sea Ice Sets a New Low That Leads to Warnings.” The melting this
summer was far faster than was predicted by the sophisticated computer models
and themostrecent UnitedNationsreport. It's now predicted that the summer ice
might be gone by 2020. It was assumed before that it may be 2050. They quoted
scientists who said this is “a prime example of the builtinConservatism of
[our] climateforecasts. As dire [the warnings are] about the longterm
consequences of heattrappingemissions ... many of [us] fear [that] they may
still be underestimating the speed and severity of the impending changes.”
Actually, there's a climatechangestudyprogram atMIT, where I am. They've been
warning about this for years, and repeatedly have been proven right.
TheTimes report discusses, briefly, the severe attack, the severe impact of all
of this on the globalclimate, and it adds, “But Governments have not responded to the
change with any greater urgency about limiting greenhouseemissions. To the
contrary, their main response has been to plan for exploitation of newlyaccessible
minerals in theArctic, including drilling for moreoil.” That is, to
accelerate the catastrophe. Sound of cheer. It's quite interesting. It
demonstrates an extraordinary willingness to sacrifice the lives of our children
and grandchildren for shortterm gain, or perhaps an equallyremarkable
willingness to shut our eyes so as not to see impending peril. These things you
sometimesfind with young infants: something looks dangerous, close my eyes and
won't look at it. Well, there is another possibility. I mean, maybe humans are
somehow trying to fulfill a prediction of great american biologist who
diedrecently, ErnstMayr. He argued years ago that intelligence seems to be
a lethal mutation. Sound of laughter. He, and he had some prettygood evidence.
There's a notion of biological success, which is how many of you are there
around. You know, that's biological success. And he pointed out that if you
look at the tens of billions of species in human, in worldHistory, the
ones that are very successful are the ones that mutate very quickly, like
bacteria, or the ones that have a fixed ecological niche, like beetles. They
seem to make out fine. But as you move up the scale of what we call intelligence,
success declinessteadily. When you get up to mammals, it's verylow. There are
very few of them around. I mean, there's a lot of cows, it's only because we
domesticate them. When you get to humans, it's the same. 'Til very recently,
muchtoorecent a time to show up in any evolutionary accounting, humans were
veryscattered. There were plenty of other hominids, but they disappeared,
probablybecause humans exterminated them, but nobody knows for sure. Anyhow,
maybe we're trying to show that humans just fit into the general pattern. We can exterminate
ourselves, too, the rest of the world with us, and we're hell bent on it right
now. Well, let's turn to the elections. Both politicalparties demand
that we make the problem worse. In2008, both partyplatforms devoted some space
to how theGovernment should address climatechange. Today, the. In the
Republican platform, the issue has essentiallydisappeared. But the platform
does demand that Congress take quick action to prevent
theEnvironmentalProtectionAgency from regulating greenhousegases. So let's make
sure to make it worse. And it also demands that we open theAlaska'sArcticRefuge
to drilling, I'm quoting now, “in order to take advantage
of all of our american godgiven resources.” You can't disobey god, after
all. Sound of laughter. On environmental policy, the program says, “We must restore scientific integrity to our public research
institutions and remove political incentives from publiclyfunded research.”
All that's a code word for climateScience: stop funding climateScience. Romney himself says there's no scientific consensus, so
we should support more-debate and -investigation within the scientific community,
but no action, except to act to make the problems worse. Well, what about the democrats? They concede that there's a
problem and advocate that we should work toward an agreement to set emissionslimits
in unison with other emerging powers. But that's it. No action. And, in
fact, as Obama has emphasised, we have to work hard
to gain what he calls onehundredyears of energyindependence by exploiting
domestic or canadian resources by fracking or other elaborateTechnologies.
Doesn't
ask what the world would look like in onehundredyears. So, there are
differences. The differences are basically about how enthusiastically the
lemmings should march towards the cliff. Sound of laughter. Let's turn to thesecond
major issue: nuclearwar. That's also on the
frontpages daily, but in a way, that would seem outlandish to some independent
observer viewing what's going on onEarth, and in fact does seem outlandish to a
considerable majority of the countries of the world. Now, the current threat,
not for thefirsttime, is in theMiddleEast, focusing onIran. The general picture in theWest is veryclear: it's far
toodangerous to allowIran to reach what's called “nuclearcapability.” That is,
the capability enjoyed by many powers, dozens of them, to produce nuclearweapons
if they decide to do so. As to whether they've decided, USintelligence
says it doesn't know. TheInternationalAtomicEnergyAgency just produced its mostrecent
report a couple weeks ago, and it concludes, I'll quote it, “it cannot demonstrate the absence of undeclared nuclear-material
and -activities in Iran.” Now, that is, it can't demonstrate something
which cannot, a condition that can't be satisfied. There's no way to
demonstrate the absence of the work, that's convenient, therefore Iran must be
denied the right to enrich uranium, that's guaranteed to every power that
signed theNonProliferationTreaty. Well, that's the picture in theWest. That's
not the picture in the rest of the world. As you know, I'm sure, there was just
a meeting of theNonAlignedMovement, that's large
majority of the countries in the world and representing most of the world's
population, a meeting inTehran. And once again, not for thefirsttime, they
issued a ringing declaration of support forIran'sright to enrich uranium, right
that every country has that signed theNonProliferationTreaty. Prettymuch thesame
is true in the arab world. It's interesting. I'll return to that in a moment. There
is a basic reason for the concern. It was expressedsuccinctly byGeneralLeeButler.
He's the former head of theUSStrategicCommand, which controls nuclearweapons
and nuclearstrategy. He wrote that “It is dangerous in
the extreme that in the cauldron of animosities that we call theMiddleEast, onenation
should arm itself with nuclearweapons, which may inspire other nations to do
so.” GeneralButler, however, was not referring toIran; he was referring toIsrael, the
country that ranks highest in european polls as the most dangerous country in
the world, right above Iran, and not incidentally, in the arab world,
where the public regard theUnitedStates as the second mostdangerous country
right afterIsrael. In the arab world, Iran, though disliked, ranks far lower as
a threat. Among the populations, that is, not theDictatorships. With regard to
iranian nuclearweapons, nobody wants them to have them, but in many polls,
majorities, sometimes considerable majorities, have said that the region would
be moresecure if Iran had nuclearweapons, to balance those of their major
threats. Now, there's a lot of commentary in the westernMedia, in journals, about
arab attitudes towardsIran. And what you read,
commonly, is that the arabs want decisive action againstIran, which is true of
theDictators. It's not true of the populations. But
who cares about the populations, what are calleddisparagingly, the arab street?
We don't care about them. Now that's a reflection of the extremelydeep contempt
forDemocracy among westernelites, I mean, so deep that it can't be perceived.
You know, it's just kind of like reflexive. The study of popular attitudes in
the arab world, and there is very extensive study by western polling agencies, it
revealsveryquickly why theUS and its allies are so concerned about the threat
ofDemocracy and are doing what they can to prevent it. Just take. They
certainly don't want attitudes like those I just indicated to become policy,
while of course issuing rousing statements about our passionate dedication toDemocracy.
Those are relayed-obediently by reporters and commentators. Well, unlike Iran, Israel refuses to allow inspections at all, refuses to join
theNonProliferationTreaty, has hundreds of nuclearweapons, has advanced
deliverysystems. Also, it has a long record of violence and repression. It has
annexed and settled conquered territories illegally, in violation
ofSecurityCouncilorders, and many acts of aggression; fivetimes against Lebanon
alone, no credible pretext. In theNewYorkTimes
yesterday, you can read that theGolanHeights are disputed territory, theSyrianGolanHeights.
There is aUNSecurityCouncilResolution, 497, which is unanimous, declaring
Israel's annexation of theGolanHeights illegal and demanding that it be
rescinded. And in fact, it's disputed only inIsrael
and in theNewYorkTimes, which in fact is reflecting actualUSpolicy, not
formalUSpolicy. Iran has a record of aggression. too.
In the last several hundredyears, it has invaded and conquered a couple of arab
islands. Now that was under theShah, USimposedDictator withUSsupport. That's actually theonlycase in several hundredyears.
Meanwhile, the severe threats of attack continue, you've just been hearing them
at theUN, from theUnitedStates, but particularly Israel. There is a reaction to
this at thehighestlevel in theUnitedStates. LeonPanetta, SecretaryOfDefense, he
said that we don't want to attackIran, we hope that Israel won't attackIran,
but Israel is a sovereign country, and they have to make their own decisions
about what they'll do. You might ask what the reaction would be if you reverse
the cast of characters. And those of you who have antiquarian interests might
remember that there's a document called theUnitedNationsCharter, the foundation
of modernInternationalLaw, which bars the threat or use of force in
international affairs. Now, there are two rogueStates, UnitedStates and Israel,
for whom, which regard theCharter and InternationalLaw as just a boring
irrelevance, so, do what they like, and that's accepted. Well, these are not
just words; there is an ongoing war, includes Terrorism, assassination of
nuclearscientists, includes economicwar. US-threats, not international ones, US-threats
have cutIran out of the international financialsystem. Western military analysts identify
what they call “weapons of finance” as acts of war that justify violent
response. When they're directed against us, that is. Cutting Iran out of
globalfinancialmarkets is different. TheUnitedStates is openly carrying out
extensive cyberwar againstIran. That's praised. ThePentagon regards cyberwar as
an equivalent to an armed attack, which justifies military response, but that's
of course when it's directed against us. The leading liberal figure in
theStateDepartment, HaroldKoh, he's the top StateDepartment
legal adviser, he says that cyberwar is an act of war
if it results in significant destruction, like the attacks against iranian
nuclearfacilities. And such acts, he says, justify force in selfdefense. But,
of course, he means only attacks against theUnitedStates or its clients.
Well, Israel's lethal armory, which is enormous, includes advanced submarines,
recentlyprovided byGermany. These are capable of carrying Israel's nucleartipped
missiles, and these are sure to be deployed in thePersianGulf or nearby if
Israel proceeds with its plans to bombIran or, more likely, I suspect, to try
to set up conditions in which theUnitedStates will do so. And theUnitedStates,
of course, has a vast array of nuclearweapons all over the world, but surrounding
the region, from theMediterranean to theIndianOcean, including enough firepower in
thePersianGulf to destroy most of the world. Another story that's in
the news right now is the israeli bombing of the iraqi
reactor inOsirak, which is suggested as a model for israeli bombing ofIran.
It's rarelymentioned, however, that the bombing of theOsirakreactor didn't end
SaddamHussein's nuclearweaponsprogram. It initiated it. There was no program
before. And theOsirakreactor was notcapable of producing uranium for nuclearweapons.
But, of course, after the bombings, Saddam immediatelyturned to developing a
nuclearweaponsprogram. And if Iran is bombed, it's almostcertain to proceed
just as SaddamHussein did after theOsirakbombing. In a few weeks, we'll be
commemorating the 50th anniversary of “themostdangerous
moment in humanHistory.” Now, those are the words of historian, Kennedyadviser,
ArthurSchlesinger. He was referring, of course,
to theOctober1962MissileCrisis, “themostdangerous
moment in humanHistory.” Others agree. Now, at that time, Kennedy raised the
nuclearalert to the secondhighestlevel, just short of launching weapons. He
authorizedNATOaircraft, with Turkish or other pilots, to take off, fly toMoscow
and drop bombs, setting off a likely nuclearconflagration. At the peak of the
missilecrisis, Kennedy estimated the probability of nuclearwar at perhaps 50percent.
It's a war that would destroy theNorthernHemisphere, PresidentEisenhower had
warned. And facing that risk, Kennedy refused to agree publicly to an offer byKruschev
to end the crisis by simultaneous withdrawal of Russian missiles fromCuba and
USmissiles fromTurkey. These were obsolete missiles. They were already
being replaced by invulnerable Polarissubmarines. But it was felt necessary to
firmly establish the principle that Russia has no right to have any offensive
weapons anywhere beyond the borders of theUSSR, even to defend an ally
againstUSattack. That's now recognised to be the prime reason for deploying
missiles there, and actually a plausible one. Meanwhile, theUnitedStates
must retain the right to have them all over the world, targeting-Russia or -China
or -(any other enemy). In fact, in1962, the United. We just recentlylearned,
theUnitedStates had just secretlydeployed nuclear missiles toOkinawa aimed atChina.
That was a moment of elevated regional tensions. All of that is veryconsistent
with grand area conceptions, the ones I mentioned that were developed
byRoosevelt'splanners. Well, fortunately, in 1962, Kruschev backed down. But the world
can't be assured of such sanity forever. And particularly
threatening, in my view, is that intellectual opinion, and even scholarship, hailKennedy'sbehaviour
as his finest hour. My own view is it's one of theworstmoments inHistory. Inability to face
the truth about ourselves is all too common a feature of the intellectual
culture, also personal life, has ominous implications. Well, tenyearslater, in1973, during theIsraelArabWar,
HenryKissinger called a highlevel nuclearalert. The purpose was to warn the russians
to keep hands off while he was, so we've recentlylearned, he was
secretlyinformingIsrael that they were authorised to violate the ceasefire that
had been imposedjointly by theUS and Russia. When Reagan came into office a
couple of years later, theUnitedStates launched operations probing russian
defenses, flying in toRussia to probe defenses, and simulating air and naval
attacks, meanwhile placingPershingmissiles inGermany that had a
fiveminuteflighttime to russian targets. They were providing what the CIA
called a “supersudden firststrike capability”. The russians, not surprisingly,
were deeplyconcerned. Actually, that led to a major warscare in1983. There have been
hundreds of cases when humanintervention aborted a firststrikelaunch just
minutes before launch. Now, that's after automated systems gave false alarms. We
don't have russian records, but there's no doubt that their systems are far
moreaccidentprone. Actually, it's a near miracle that nuclearwar has been
avoided so far. Meanwhile, India and Pakistan have come close to
nuclearwar several times, and the crises that led to that, especially Kashmir,
remain. Both India and Pakistan have refused to sign theNonProliferationTreaty,
along withIsrael, and both of them have receivedUSsupport for development of
their nuclearweaponsprograms, actually, until today, in the case ofIndia, which
is now aUSally. War threats in theMiddleEast, which could becomeReality verysoon,
once again escalate the dangers. Well, fortunately, there's a way out of this,
a simple way. There's a way to mitigate, maybe end, whatever threat Iran is
alleged to pose. Verysimple, Move towards establishing a nuclearweaponsfreezone in
theMiddleEast. Now, the opportunity is coming again this december.
There's an international conference scheduled to deal with this proposal. It
has overwhelming international support, including, incidentally, a majority of
the population inIsrael. That's fortunately. Unfortunately, it's blocked by
theUnitedStates and Israel. A couple of days ago, Israel announced that it's
not going to participate, and it won't consider the matter until there's a
general regional peace. Obama takes thesamestand. He alsoinsists that any
agreement must excludeIsrael and even must exclude calls for other nations,
meaning theUS, to provide information about israeli nuclearactivities. TheUnitedStates and Israel can delay regional peace
indefinitely. They've been doing that for thirtyfiveyears onIsraelPalestine,
virtual international isolation. It's a long, important story that I
don't have time to go into here. So, therefore, there's no hope for an easy way
to end what theWest regards as themostsevere current crisis. No way unless
there's largescale public pressure. But there can't be largescale public
pressure unless people at least know about it. And theMedia have done a stellar
job in averting that danger: nothing reported about the conference or about any
of the background, no discussion, apart from specialistarmscontroljournals
where you can read about it. So, that blocks the easy way to end theworst
existing crisis, unless people somehow find a way to break through this. Well,
turning to the election, there’s an unanimity in ignoring all of this, not a
word. Theonlyissue discussed is, Should theUnitedStates agree
withIsrael’sposition? Israel’sposition is that theUS should establish a
redline. A redline should be iranian capability to produce nuclearweapons, the
capability vast number of countries have. So if they reach capability, we
should bomb them. That’s Israel’sposition. It’s also the position oftheUSSenate.
A couple of days ago, Senate declared that ninety-to-one, theoneexception was RandPaul,
ninety-to-one, theUnitedStates must acceptIsrael’sposition, establish a redline
at capability, contrary to theWhiteHouse. Well, that’s themostimportant
international issue. There’s also quite crucial
domestic issues. Themostserious is there are roughlytwentythreemillionspeople
unemployed, underemployed, or just given up. That’s a real catastrophe
for the people themselves. Their lives are destroyed, their families are
destroyed, and for theEconomy huge resources notused. That does enter the
election. The republicans have an answer to this.
We should enrich the rich. You don’t use the word rich anymore. There’s
an euphemism. They’re called the jobcreators. Sound of laughter. They don’t
create any jobs, but that’s the way you refer to the rich. Sometimes they’re
called the makers, not the takers. So who are the takers? Well, that’s easy. The big bank are, for example, enormous takers. They
get thirtybillionsUSD a year from just theGovernmentinsurancepolicy alone, toobigtofailpolicy.
Some estimate it about sixtybillionsUSD. Superrich are
incredible takers. You just take a look at the taxbreaks. Taxbreaks amount to
more than sevenpercent ofGDP, GrossDomesticProduct. That’s twofifth as large as
the entire federalGovernment. The taxbreaks are overwhelminglyregressive,
favouring the rich. And how do they achieve that nice
outcome? “By lobbying-heavily and -systematically, contributing to
politicalcampaigns.” I’m quoting that
radical rag, ForeignAffairs. There are many other regressive devices, PattonLaws designed to radicallyincrease the price of
drugs, and others. Researchandevelopmentprocurement,
old techniques for enriching the private sector. Particularlysignificant since
the1970s, big change in the way theEconomy works then. Particularlysignificant since
then are financialinstitutions. There is a role for banks in aState-capitalistEconomy. So
for example, what a bank is supposed to do is, take your deposit, and decide to
lend it somebody who wants to do something with it, like you know, buy a car,
send the kids to college, start a business, buy a house, whatever it might be. That’s
the function of banks. And it was prettywell filled during the great
growthperiod, sometimescalled the golden age, [19]50s and [19]60s, enormous growthperiod
prettyegalitarian. At that time, theNewDeallegislation still prevailed, including
a fair amount of regulation, so there were no financial crisis. Since the1970s, that’s all changed. There’s been a huge
explosion of financialinstitutions, mostlydedicated to financial manipulations.
Take a look at the businesspage of theNewYorkTimes today. There’s a big
debate about whether they should be some regulation on superfast automated
trading, you know, when you cut the trade by microsecond or something, maybe
beat somebody else out, which is causing all kinds of problems. And Europe,
Australia and Canada are trying to clam down on it, theUnitedStates is hanging
back, but there’s plenty of this. By2007, financialinstitutions
literallyreached fortypercent of corporateprofits. What’s the impact of this
on theEconomy? Actually, before the recent crash, there was verylittle study of
it. The reason is there was a kind of religious doctrine. Doctrines is, Markets know best, so it had to be beneficial. So you’re a welltrained economist, you just don’t
look at it. After the crash, there was a kind of a change of mood
somewhat. So prominent international economist wrote, I’m quoting, “An emerging
consensus is developing among the economists on the need for macrocredential supervision
of financialmarkets. There’s a growing recognition that our financialsystem is
running a doom’sdaycycle. Whenever it fails, we rely on black’smoney and
fiscalpolicy to bail it out. This response teaches the financialsector a lesson,
Take large gambles to get paidhandsomely, and don’t worry about the costs.
They’ll be paid by the taxpayers through bailsouts and lost jobs. And the
financialsystem is thus resurrected to gamble again and to fail again.” I’m quotingBarryEichengreen and
SamuelJohnson, an
economist among you all know that they are among themostrespected financial and
international economists. The system is a “doomloop” in words of the official
of theBankOfEngland, who is responsible for the financial stability. After the
crisis, a number of veryprominent economists did start to write about it. There’s
an issue of the journal ofAcademyOfArtsAndScience that had articles byBenjaminFriedman atHarvard,
RobertSolo-w atMIT,
aNobellaureat, they both pointed out that there haven’t been much in the way of
study of impact of financialinstitutions. They didn’t say why, but the reason
is theReligion. And they said, if you look at it, they said, When you look at
it carefully, it looks like they impose a significant costs onEconomy. Themostrespected
commentator in the englishspeaking world, MartinWolf oftheFinancialTimes, he
went wellbeyond that. He said, “Outofcontrol
financialsector is eating out modernEconomy from the inside, just as the larva
of the spiderwasps eats out the host which it has been laid. Banks as
presentlyconstituted and managed cannot
be trusted to perform any publiclyimportant function. Today’sbanks represent
the incarnation of profitsseeking behaviour, taken to its logical limits in
which theonlyquestion asked by the senior staff is, What can they get away with?”
That’s not a spokesperson for
theOccupyMovement. It’s themostrespected financial correspondent in
theenglishspeaking world, quite conservative MartinWolf. Actually, there’s a study by two leading economists, one of them nobel laureats, Paul** and George**, who
found that themostlucrative strategy for executives at big bank would be to
loot them to pay themselves, knowing fullwell that theGovernment, meaning the
taxpayer, moved in to save them from bankruptcy. That was
twentyyearsago. It’s a lot worse today. There are some limited steps
to try to deal with this, but they are being beaten back byArmies of lobbyists.
Well, that’s the takers. What about the makers, the workingpeople? They’re
under constant attack. Fiscalpolicies and tradepolicis are designed to
undermine manufacturing to set workers in competition with each other around
the world, with the poorest to drive down the wages. Meanwhile, to protect the
professionals, they are given all kinds of protections. They’re not supposed to
compete. Unions are under terrific attack. It’s been going on since the1940s, but in the last
generation, it’s been veryharsh. Employers have been basicallytold they
can violate theLaws at will, and of course, they’re following it. That
was Reagan. Clinton which
led to tripled firing of organisers illegally. Clinton added his own method, it was calledNAFTA. NAFTA gave opportunities for employers
to threaten to move plants toMexico in order to break strikes. That’s illegal,
of course, but when you have a criminalState, it’s fine to act illegal.
[Accurate.] That under NAFTAstudy, that led to verysharp increase in breaking
strikes illegally. By now, they practically don’t exist. Private sector
unionisation is down to sevenpercent. Public
workers have so far defended themselves, but they’re under terrific attack. I
have no time to go into it, but I should mention that Obama takes part in it.
All of this has been accelerated under strong rightwing backlash that took
place, backlash against the[19]60s, took place in early[19]70s. Major change in
the nature oftheEconomy towards financialisation leading to what I described
and offshoring. That led veryquickly to concentration of wealth, concentration
of wealth leads to concentration of politicalpower almostreflexively, that
leads to legislation to enhance to process, the vicious cycle. Fiscalpolicy,
deregulation, rules of corporate governance, quite a lot, so the vicious cycle
goes on, and it leads to what theOccupy’sslogan, which has now become
prevalent, onepercent-ninetyninepercentdistinction. Actually, onepercent is wrong. It’s morelike
pointonepercent-versus-therest. If you look at incomedistributions,
highlyconcentrated in the fraction of onepercent. CEOs, hedgefundmanagers, and
so on. For the majority, it’s stagnation and decline. Meanwhile,
cost of elections have skyrocketed. SupremeCourt just has given its help
a couple of times. There are studies of outcome by some verygood
politicalscientists. Themostrecent one, a good book byMartinGilens concludes that seventypercent of the public are “powerless to
shapeGovernmentpolicy,” his phrase. Meanwhile, the rich get what they
want, and theMechanisms are by no means obscure. This has changed the
politicalparties. The republicans some time ago
abandoned any pretense of being a normal parliamentary party, they’re just
dedicated lockstep, with the kind of cathechism everyone has to repeat, towards
the service to the superrich and corporatesector. You can’t get
votes that way. So they’ve been compelled to mobilise
the sectors of the population that have alwaysbeen there and are substantial, but
were neverpoliticallymobilised before. TheUnitedStates is, as you know,
unusuallyreligious [and] fundamentalist country, off the international
spectrum. I mean, almost half of the population thinks the world was created a
couple of thousand years ago, with all the fossils and everything else. Sound
of laughter. About a third of the population believes that every word in
theBible is literallytrue. Twothirds expect theSecondComing, half of them in
their lifetime, and on and on. I don’t think there’s anything like this close
to it anywhere in the world. That goes far back. Actually, goes to the
colonists, but it’s alwaysbeen there. It’s neverreallybeen mobilised as a
politicalforce. Now, it is, and for good reasons. You’ve got to get voters somehow. There is
also a nativist tradition. People are afraid that they’re coming after us. It’s
amazing to watch. So RandPaul, who is a young
libertarian hero in theSenate. Right now, he’s organising a campaign to try to
get people to block theSmallArmsTreaty at theUnitedNations.
It’s
an important treaty. Small arms are massacring people all over the world. Almosteightypercent
of them come from theUnitedStates. He has a rationale. He says that theArmsControlTreaty is a plot by
theUnitedNations and the socialist radicals [like]-Obama and -Clinton to try to
take away our arms. So when theUN comes to attack us, we won’t be able to
defend ourselves. Sound of laughter. You
can’t find this anywhere in the world, you know. Nothing remotelylike it.
But these sectors are there, they’ve been around, it’s
an old tradition. They’re now being mobilised, because there’s no other way to get
votes. And that’s why you get what you’ve just
seen in republican primaries. I mean, near lunacy. People in the rest of
the world are looking at this, and can’t believe what’s happening to the
country. Well, what’s happening is quite understandable. When one of the
politicalparties abandons any pretense of being a parliamentary party, just
serves the superrich, lockstep-uniformity. There’s no other way for them to
survive. They’ve got to mobilise these sectors to get votes. That’s what’s
happening. It’s commonlysaid that moderate republicans have disappeared, which
is notquite true. They’re now centrist democrats. And DemocraticParty
has veered to the right as well, seeking thesamecorporatedollars, not quite as
fast. There’s a recent study byEconomicPolicyInstitute,
that’s major source of reliable information and analysis of theEconomy. The
recent study is calledFailureByDesign. It reviews
the data simple. It’s worth reading. It’s a verysimple presentation of a lot of
data. It reviews the data on the impact of the socalled neoliberal policies in
the past generation, which includes astonishing concentration of wealth, while
wages and incomes have stagnated or declined, workinghours have increased far
beyondEurope. The weak benefitsystem has eroded. This,
incidentally, in the therichest and themostpowerful in theHistory with
extraordinary advantages. The authors of the
study point out that the failure that they refer to is classbased. So
the designers, they’ve achieved spectacular success. And they alsostress that it is designed, that is, there have been
alternative policies, they’re alwayspossible, they stillare, but it will take
the kind of activism that brought about theNewDeal, progressive steps in the[19]60s,
back in the muchearlier days, in order to do something about this. Progress doesn’t
come as the gift from above. PostgoldenageEconomy, the one reviewed by
this pamphlet, it’s actuallyenacting a nightmare that was envisaged by the
classical economists, AdamSmith and DavidRicardo.
Both of them recognised, they’re talking aboutEngland, of course, they
recognised that if british merchants and manufacturers invested abroad and relied
on imports, they would profit, but England would suffer. Both of them hoped that
these consequences would be averted by what’s called in
the literature homebias, that is, the preference to do business in the
homecountry, and see the homecountry grow and develope. “Therefore, as if by
invisible hand, England would be saved from the ravages of the globalmarkets.” Actually,
that’s theoneoccurence of the famous phrase,
InvisibleHand, inSmith’sclassic, TheWealthOfTheNations. It’s prettyhard to
miss. It’s theonlyoccurrence. And it’s basically an argument against neoliberal
globalisation. DavidRicardo, successor, hoped that, thanks to homebias, I’m
quoting him now, “most men of property would be satisfied with the low rate of
profits in their own country, rather than seek a moreadvantageous employment for
their wealth in foreign nations, feelings that I would be sorry to see weakened.”
Samepoint essentially. Actually, that one was brought to light, I didn’t know
it before, an important book on globalisation that was produced here byPoliticalEconomyResearchInstitute.
In the past thirtyyears, (AdamSmith’s masters of mankind) have abandoned sentimental
concerns for the welfare of their own society, concentrating instead on
shortterm gain, huge bonuses, the country be damned, as long as the powerful
nannySate remains intact to serve their interests. The developing picture is
veryaptlydescribed in a brochure for investors that was
produced byCitiGroup, a huge investment bank, and so on, once again
feeding into publicprofits. That’s been doing that regularly for thirtyyears in
a cycle of risky loans, huge profits, crash, bailout by
the public. Banksanalysts, in a brochure for investors, they describe the
world that’s dividing into twoblocks. One of which which they call plutonomy, then there’s the rest, the vast majority. Now
sometimes, they’re called the global precariat, those
who are living a precarious existence whether or not they’re luckyenough to get
employment. In theUnitedStates, they’re subject to growing workerinsecurity.
That, if you didn’t know, is the basis for the healthyEconomy. FederalReservechair,
AlanGreenspan, explained that toCongress while
he was lauding his performance in economic management. Actually, that’s the
real shift in globalsociety. Not to-China and -India, but to global plutonomy.
And CitiGroupanalysts understand it. They advised
investors to focus on the veryrich, where all the action is. They have
something called the plutonomystockbasket, which is
the investment on things that the rich want. And they point out that
it’s far outperform old index of developed markets since1985. That’s when theReaganThatcher
economic programs of enriching the veryrich and punishing the rest were taking
off. And by shredding the remnants of politicalDemocracy, the master
alsolay the basis for carrying the lethal process forward, and will continue to do
so as long as their victims are willing to suffer in silence, which is always a
choice, never a necessity. Thanks.
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