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Sat

04

Apr

2009

State of the nations
Saturday, 04 April 2009 09:38
by Jim Miles

There are several large problems that afflict the globe in a major way today, with the economy being the prime time concern receiving the vast majority of the governmental/corporate/media attention. Global climate change seems to have dropped off the mainstream media’s agenda. Similarly, the global war on terror is much less in the spotlight, although here in Canada with four recent deaths from IEDs a quick flurry of ‘support the troops sympathy’ and ‘good news from Afghanistan ’ flashed on the screens. These are the big three: the economy, global climate change, and the war on terror.

Each one is generally treated separately and other ‘minor’ problems come into focus occasionally, but the reality behind them is that they are all directly involved with one another. The unifying reality behind all three is the cult of consumer consumption based on extracting as much as possible from the earth’s resources in an unsustainable way. Another way think of it is of too many people vying for insufficient resource wealth for all of the world to continue living as modelled by the “American” way of life, a way of life in which consumption is the means and the end.

It should be obvious to anyone attending beyond the headlines and beyond the scope of mainstream analysis in general: that consuming energy at our current rate; that consuming it with the thin plastic debt supported mainly by foreign countries; that the purchase and use of all that is not necessary but is a created need by the propaganda of the transnational corporation’s desire to enrich themselves, with only the necessary crumbs to keep the masses satisfied; that the military necessity of capturing and guarding those resources; and that the final product of all those resources is some form of catastrophe for the environment, whether it be species decline, global warming, or pollution of land and air; then the only conclusion that can be reached is that we are self-destructing from our own greed and arrogance as we destroy landscapes and cultures around the world.

With the end of the criminal Bush government a great deal of hope was stirred within the minds and hearts of people around the globe who witnessed the success of Barak Obama’s election campaign, placing the first black U.S. citizen into its highest governmental position. That feat in itself is significant – to a degree – but for all the talk of hope and courage and “American can do” spirit, the first months of the presidency have been long on talk, hopeful talk, forward looking talk, but little in the way of real change.

As seen by the paragraph before the preceding, it is quite a mouthful to fit a one size fits all problem around the globe. It is difficult to deal with, and while certain people can manage a global perspective, and while only a few are capable of taking global action, to everyone else remains a narrower focus, made necessary by only being able to deal with a much smaller range of action at any given time. Unfortunately, those who are in position to take global action are either not acting, or are continuing to repeat previous actions that supported their own elite position and that of their cronies to remain at the top of the consumptive resource heap, well above and removed from the garbage heap they create while doing so.


I write with a sense of wonder that so many of the people in power either wilfully do not see the inter-relationships, or are ignorant of the relationships between the economy, the environment, and war. Or, as with most politicians, they simply do not have the mental capacity to deal with information that unsettles their predisposed view of the world and their comfortable positions within their respective national and broader global social structure. No one can see it all, no one can do it all, but striving to grasp a humanitarian, environmentally friendly global perspective needs to be a much bigger goal for individuals and society at large. Combine that with positive action at a local level, a ground up democracy, rather than a top down plutocracy, and gains will be made. This then is the state of the world as I see it, divided into its separate realms. Even being separated for discursive purposes, the realms remain woven together through real elements of cash flows, resource harvesting and usage, and more nebulous elements of foreign and domestic policies of the U.S. and many other countries.

I The economy

The economy is the current big item, one that threatens to overwhelm concerns about the environment and conceal the nastiness of the ongoing global war on resources. Even as I write, there has been a surge in the stock market that has many pundits hopeful, although having been bitten fiercely by their inability to predict the level of the downturn, most are being guarded as to their predictions – and yes, after the weeks surge, the continuing downturn. Within the economic problems are glimpses of what could be done to alleviate many other concerns.

The most amazing aspect of the whole economic mess – perhaps this should not be amazing considering the true nature of the beast – is that all the trillions of dollars being spent to alleviate the recession are tax payer dollars going to the corporate heads who placed us in this mess in the first place. All the supposed expertise of the Clinton era advisors that populate the new administration is being used to bail out the corporations, banks and finance companies that created the financial mess.

I am not sure what they do not understand – or perhaps what I do not understand. The economy is still a “finance economy” based on no real production of goods and services (other than the paper circle of financial services). The economy is still being touted as “consumer spending” when the enormous debt problems of the government and the citizens remain unresolved (while those of the corporations are resolved by the huge bailout) and the main way to solve the economic problems is, bizarrely, to open more credit and get people spending more money they do not have.

The economy is an imagined one of workers producing goods for purchase, but the reality is far different. There is no agricultural class of any size any more, most agriculture has been co-opted by huge agro-corporations. The people who in former times used to populate the agricultural fields were released for labour intensive work in the factories that created real products and true wealth (although they more often than not did not receive their fair share of the wealth they created). Now we find ourselves in a generation where the productive industrial/factory work has gone to markets where labour is even cheaper – and further, many IT companies, many finance companies are outsourcing their service requirements as well.

If the jobs do not return, if the mortgages continue to fail, who is going to be asking for credit and be willing to put themselves even further into debt in order to get the economy rolling again? Having the government buy up all that debt will not necessarily lead to re-employment; nor will ‘shovel ready’ jobs create any significant financial boost if the money gained is used to save for an uncertain future and buy down current debt, neither of which creates the much worshipped capitalist “growth” ethic.

Enter China

Another problem crops up with the bail out money. If new money is used to buy it up, money printed by the Federal Reserve System, the inflationary pressure on the dollar will increase, making it of less value (this helped the Spanish Crown to pay off its large empirical debt after its wars and plunders in Europe and abroad). If that happens, currency traders in places where the U.S. debt is held – China, Japan, Taiwan - could start getting rid of their dollar reserves.

Similarly, if Treasury Bills are being sold to investors to support a debt that has neither the industrial capacity nor a well-valued currency beneath it to support the paper wealth, foreign investors in U.S. debt may start wishing their investment interest was elsewhere other than the U.S. financial markets. With China being one of the major holders of U.S. debt (one trillion according to the figure I read today), and one of the major exporters of consumer goods to the U.S. markets, it becomes a double-edged dagger. And as the reality of the economy cannot escape its entanglements with war and foreign policy, China could assume significant leverage in both global economic matters as well as in the resource wars and political rivalries that are battling out in the Middle East and South Asia right now.

One of the wonders of the internet is the ability to read news from around the world uncensored by the timid self-censoring eye of the U.S. media. Suggestions arise in Asian media about the Chinese dealings with the U.S., following their own quiet course, providing “suggestions” to the U.S. as to what they would like to see develop in the Middle East, while letting the U.S. continue with its bombast and rhetoric about democracy and freedom and terrorism. China of course is not too concerned about the niceties of controlling terror, but when it comes to their own geopolitical back yard, they are concerned about the disasters that could arise from continued U.S. occupation and wars in the region. The Chinese are not fools – I would bet that if they had to pull the plug on U.S. finances and let the U.S. economy go down the drain in order to maintain some geostrategic balance, they would not hesitate to do so. Before that, they would be much more in favour of ‘encouraging’ the U.S. to proceed in a manner that would stabilize the region as much as possible in China’s favour, in return for which they would still support the U.S. debt. [1]

This is connecting into the realm of resource wars and the global economy, but before more fully immersing thoughts into the war arena, a few more comments on global economics come to mind.

No free markets

Simply put there are none, never has been. Although what was hoped for was almost what they got, the free flow of investment money around the world and in and out of whatever investment devices could be dreamed up without any over-riding financial regulations. That was the goal of the international corporations colluding for world governance, which in a sense they have achieved, as they seem to operate above and beyond any national government. However the current economic crisis has put some large dents into the corporate end of things.

As for the rest of us, we have to live with all sorts of constraints and rules and regulations that are neither fair, free, nor transparent, but that is the life inside the corporations as well. That for me is one of the full ironies of this “free trade – free market” nonsense. It does not exist yet it is these decidedly non-democratic, non-free, non-transparent corporations that call for the rest of us to believe in them. Added to that are the International Monetary Fund (IMF) and the World Bank (and their related think tank the Organization for Economic Cooperation and Development - OECD), and their manipulations via restructuring plans and loan requirements that essentially harvest the wealth of the country to which they are applied, keeping the workers and labourers indentured to slave wages with only minimal or no benefits and working condition rules while the elites of the country pay off the endless debt by being forced into selling export products, usually meaning mono-crop agricultural produce and mineral resources. Now that’s another large mouthful, and another large impetus towards abandoning the Washington Consensus and capitalism.

Unfortunately for the beleaguered world economy, just when the IMF appeared to be on its last legs, calls for help have been received from Iceland and other European countries whose economies are being wrecked by their own foolishness in buying into the U.S. inspired speculative markets. The reality of its destructive effect on social services will begin again, this time rather than in some poor third world country, now in a neighbourhood near you. Canada’s government rather arrogantly overstates the strength of our local economy, because for whatever reason (partly being government regulations) they did not buy into the speculative dream (although had the Harper government had a simple majority, deregulation more than likely would have followed). With eighty-five per cent of our economy based on U.S. markets, Canada’s economic downturn will be as long as the U.S. downturn, except for a few choice areas such as the Alberta tar sands developments.

While Canada escapes the grip of the IMF, other countries now have to deal with the requisite depreciation of their social networks budgets in the areas of health, education, and retirement benefits in order to pay of their huge loans. Argentinian style default seems like a rational decision under these conditions.

Capitalism at fault

In general, capitalism is at fault. I am not against individual’s making their living and creating their own wealth through their own business. However, unfettered capitalism, the dream of the worlds Reaganites and Thatcherites, involving large national and supranational corporations with little if any regard for either human social structures or the environment in which they live, necessitates poverty and environmental destruction in order to maintain its ingathering of the world’s wealth. It has been the history of corporations - starting with empirical land companies or royal land charters such as the East India Company, The Governor and Company of Adventurers of England trading into Hudson's Bay (HBC – now U.S. owned), and others – to fight with their respective national protectors for the wealth and resources of “discovered” and deeded territories.

That is a literal fight, as no empire, no business empire, has ever survived without the backing of an army, a navy, or an air force. There is general if quiet admission the “American Empire” operates with the “hidden fist” of the military. Any intelligent observer of U.S. history knows that the hidden fist is not really that hidden, not to the occupied or dominated indigenous territories. It has been quite obvious in the many little wars and interventions – overt and covert - around the world that have kept the local population - or more correctly their controlling elites - amenable to corporate U.S. control, from the banana republics of Central America through to the oil republics of central Asia. Once again the argument on the economy enters the realm of the military.

Without surprise. The extent of U.S. military bases around the world is common knowledge to most readers of current events. The U.S. dominance of air space is a given, without which their ready victories in Iraq and Afghanistan would have been a lot bloodier, and their lengthy occupations would have had a lot more U.S. troops killed and injured although with less ‘collateral damage’ from airstrikes. Okay, I am over the boundary from economics into the realm of the military, but one last comment on economics before leaping fully into this territory – the economists themselves.

Economists


There have been very few economists who seem to have any rational view of the world economy (by economists I include everyone from the local financial advisors on up through the banking system to the government ‘bankers’ and further through to all the academic economists in our schools and think tanks). None in the wrong places at the wrong time (most of them) were able to foresee the collapse of the system based on huge extended debt derivatives, or more basically, on an economy based on promoting more and more consumptive debt to create the captilalist’s artificial mantra of “growth”, a statistical lie set in a finite world of limited resources. It would be fine if all that financial wheeling and dealing was limited to the world of arcane invented statistics and forged mathematical formulas [2] but they do have real world effects, on the social and physical environments of people in all countries, the wealthy and the expoited.

A recent essay by James K. Galbraith [3] provided a good outline of the current crisis and some suggested solutions. What attracted my attention was his comment on economists: “Economists are a cautious group, and in any extreme situation the midpoint of professional opinion is bound to be wrong.[Italics in original]” Chances are both of the endpoints are bound to be wrong as well, as economics is not a science as much as it is claimed to be, and is about as successful at predicting human behaviour as para-psychology and astrology.

Galbraith’s argument is good, but his final word is filtered through his U.S. patriotic lenses, as he indicates that while the U.S. may be in recession it will not go the way of Argentina and Indonesia (two IMF bankrupted economies). This is “Because the rest of the world recognizes that the United States performs certain indispensable functions, including acting as the lynchpin of collective security and a principal source of new science and technology.” Indispensable? More U.S. exceptionalism. Hardly the lynchpin of collective security, unless one is thinking of corporate security and U.S. military global military pre-eminence, certainly not for the security of the indigenous peoples of the world and independent national aspirations which are squashed any time they do not fit the U.S. corporate agenda. Hardly the principal source of new technology - I would argue that as China rises, as China turns its economy inwards to its internal market of 750 million (providing they are also intelligent enough to offer wage increases that allow them to buy the goods – a Ford Motor Company plan for the Chinese), and as it increases its military/scientific efforts with its space program that it too will provide a huge source of science and technology. The Chinese are not stupid, do not underestimate them.

An opposing view of the U.S. market/financial/technological strength is presented by Paul Craig Roberts, former Assistant Secretary of the Treasury, who looks at it all with “The US…dependent on imports for energy, manufactured goods including clothes and shoes, and advanced technology products.” [4] Not the ‘stuff’ of a strong economy. Nor is the economy strengthened by the huge sums of the bailouts for the corporate financial world in order to sustain the elite in their positions of wealth, while passing the burden of the debt onto the shoulders of the taxpayers.

Current U.S. plans on the economy are based on the shakiness of these illustrious economists who put us into this mess in the first place. Al-Jazeera’s take on the Geithner plan asks the question, “Who is providing the deep thinking about the economic architecture? He is not an economist; president Obama is not an economist."[5] Perhaps that is a good thing, but only if they do not pretend to be economists and pretend, to dare, to hope, that they do understand the economy.

Twice now I have entered into the realm of the military while discussing the global economy. It cannot be avoided as they are united in many areas. However, I now turn my attention to a focus on the military, which of course means I will cross back over into economic matters going the other way. It cannot be avoided.

[1] for starters, try here as an article/site with a good overview and good links to many of the problems entangling China and the U.S. in the Middle East and South Asia. Asia Times On-Line also provides a fairly coherent different perspective on Asian/American topics.

[2] see Miles, “The dismal science becomes gloomier” Axis of Logic, September 16, 2008.

[3] Galbraith, James K. “No Return to Normal - Why the economic crisis, and its solution, are bigger than you think.”

[4] Roberts, Paul Craig. “Is the bailout breeding a bigger crisis?” Counterpunch, March 26, 2009.

[5] ____________ “US plans to buy up 'toxic' assets
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