The End of the American Empire
I write about our dying empire just about every day in my links posts. But given the debt limit debate and Friday’s S&P downgrade, I wanted to look at four pieces that examine where we are more closely (note, all of these are well worth reading in full–do click through to read them).
There are two issues to grapple with: first, with the undeniable evidence that our government has become a clusterfuck, we have become incapable of taking obvious steps–like taking the profit motive out of our health care system or taxing the wealthy that just got a giant government bailout–that we need for the well-being of the country. At this level, S&P’s downgrade makes sense.
But then there’s the question of why we let a thoroughly discredited entity like the S&P be the one to dictate whether we merit our world leadership position or not. That’s not just a question of letting one of the agencies that created the bubble retain any position of authority in the world afterwards (though, again, the fact we left the rating agencies in place after the crash is another sign our governance has failed), but also why a nation-state would let a corrupted entity like S&P do so in the first place.
Therein lies the paradox here: the downgrade is at once a real measure of the collapse of our governance, one of the best symptoms of it, and a key piece of evidence of why our governance is failing. So what’s going on?
This column at Spiegel Online looks on this as a problem of culture. It argues the US has left “the West.”
America has changed. It has drifted away from the West.
The country’s social disintegration is breathtaking. Nobel economist Joseph Stiglitz recently described the phenomenon. The richest 1 percent of Americans claim one-quarter of the country’s total income for themselves — 25 years ago that figure was 12 percent. It also possesses 40 percent of total wealth, up from 33 percent 25 years ago. Stiglitz claims that in many countries in the so-called Third World, the income gap between the poor and rich has been reduced. In the United States, it has grown.
Economist Paul Krugman, also a Nobel laureate, has written that America’s path is leading it down the road to “banana-republic status.” The social cynicism and societal indifference once associated primarily with the Third World has now become an American hallmark. This accelerates social decay because the greater the disparity grows, the less likely the rich will be willing to contribute to the common good. When a company like Apple, which with €76 billion in the bank has greater reserves at its disposal than the government in Washington, a European can only shake his head over the Republican resistance to tax increases. We see it as self-destructive.
The same applies to America’s broken political culture. The name “United States” seems increasingly less appropriate. Something has become routine in American political culture that has been absent in Germany since Willy Brandt’s Ostpolitik policies of rapprochement with East Germany and the Soviet Bloc (in the 1960s and ’70s): hate. At the same time, reason has been replaced by delusion. The notion of tax cuts has taken on a cult-like status, and the limited role of the state a leading ideology.
Now, it is true that America’s political culture has been hijacked, and that those who have hijacked it used hatred as a way to convince others to act against self-interest. But that’s what (perhaps) distinguishes us from Europe; that’s what explains why we, a country with our own currency, can be in as dire a situation as Europe with its common currency. Moreover, I’m skeptical whether, mere weeks after the terrorist attack in Norway, Europe should really be lecturing the US about hate.
Craig Murray looks elsewhere–at the military we feed at the expense of feeding our own people. He takes some impolite but understandable pleasure out of the way events will soon mark an end to the US empire.
That China now views the risks to world trade from the US’ indebtedness, to outweigh the potential loss in value of its own dollar reserves, is the tipping point that spells the inevitable beginning of the end of the US empire.
The reserve currency system has since 1795 allowed empires to be built on the economic output of weaker powers. If you achieve sufficient economic power and control of resources that yours is the currency everyone holds, you can print as much of it for yourself as you like and the devaluation effects are spread around not just your economy, but everyone else who holds your deposits. Being the reserve currency is a license to print money. Both the British and the Americans used this position to build military forces which could dominate both formal and informal empires. Both eventually experienced overreach, with military expenditure pushing deficit finance to the point of implosion. Then you lose reserve currency status.
It happened to the British and now it is happening to the Americans.
The colossal 4.7% a year of its wealth the US throws away on defence and security expenditure (broadly defined) – more than double the European average – is a huge factor in US indebtedness. There is an extraordinary failure to mention this in the mainstream media.
And he’s right. It’s not so much that China has made a gamble that it can financially afford to ease off the dollar. Rather, China (and Russia, which of course is in nowhere near as strong a position as China) have gambled that this is the moment to press for power, to challenge US hegemony in the world.
But to replace it with what?
To answer that question, I think you have to look at what it means that the S&P, not China itself, is driving this moment. In a piece that also links to a bunch of other worthwhile posts, zunguzungu notes the following on what S&P’s downgrade says about power.
But even to ask that question — it seems to me — is to invest with legitimacy and explanatory power an underlying premise that I do not accept: that a “Nationally recognized statistical rating organization” having such profound power over our government’s economic policy has or could have anything to do with “deserve,” or that there could be a “right” or “wrong” way for them to use their power. I don’t concern myself with that question, because it would be like a death-penalty abolitionist trying to answer whether a murderer deserved to get the chair: whether or not a particular person committed murder is something completely different than whether a murderer deserves to be executed. An opinion on the facts do not dictate a judgement of the moral imperative, nor should they be confused with each other.
After all, it’s obviously the case that our current government is dysfunctional and useless, divided as it is between those who want to destroy government’s social use and those who will not stand up for it. But as Kathy Gill observes, McGraw-Hill owns S&P, and this is who owns McGraw-Hill:
And whether or not McGraw-Hill itself has particular ties with the Bush family — or has a particular interest in driving the politics in this direction — are important questions that I can’t answer, and only point us towards a simpler way of addressing the problem: Standard and Poor’s is a self-interested corporate entity and it is acting in accordance with what it perceives its self-interest to be, in precisely the way that self-interested corporate entities will consistently do. To ask whether a privately owned corporate entity is passing the correct judgment on our political process is to obscure that underlying, anti-democratic fact. They have the power to do so because they’ve been given it: a “Nationally Recognized Statistical Rating Organization” must be “nationally recognized” for its ratings to have the force that it has, and the way the system of financial regulation is constituted is what defines that force. If you’re so inclined, you could even argue that this is all a good thing. God speed to you. As for me, to the secular theology of a “just market,” I am somewhere between a practical agnostic and an angry atheist. The finance market is certainly real and powerful, but the only important question is whether we think the self interest of these kinds of entities is the same as that of the American people, how we will regulate their ability to make decisions, and whether we will continue to cede them the power that they presently have and are using to impose their will on the US’s political economy.
While I definitely think Jane and Scarecrow and Stoller are right that the S&P is doing something here other than just weighing the governance of the US, I think the implications of the fact they are succeeding are more important. MacroBusiness goes further. It argues that this is about whether our world will be governed by states, or by corporations. (h/t Yves)
The idiotic ideological battle in Washington over the debt ceiling was yet more evidence of the failure of governance in Western economies, which is the real crisis. Then, after the stock market carnage of last week, the attention was focussed, reasonably enough, on government’s MANAGEMENT skills — how good they are at being efficient bureaucrats pulling levers in the financial system and in keeping debt levels under control.
But this crisis goes much deeper than that. In a sense the Tea Partiers are right. This is a POLITICAL battle over the state’s right to be a state.
That was the lesson from last week’s debacle in the US Congress. It was argued that if no deal could be struck, then the ratings agencies will reduce the US government’s AAA rating. This then happened, with Standard & Poor’s downgrading America’s debt to AA+.
Who exactly are these ratings agencies? Oh, those corrupted, easily deluded companies who are to sane analysis what a croupier at a roulette table is to an insurance policy. They showed in the lead up to the GFC that they go to the highest bidder and that they have little or no credibility. Suddenly these private companies have authority over the US government?
[snip]
They are nevertheless a symptom of a much deeper, long term issue — the replacement of the nation state with the market state, as historian and professor of law Phillip Bobbitt describes it. The issue is not about big government or small government, although they are certainly issues in a country that is rapidly losing its middle class. The problem is whither government itself? So successful has been the attack of the libertarian market worshippers, there is no government worthy of the name in the Western post-industrial financial system.
Mind you, I think we’re headed where Bobbitt deluded himself we would not go: to corporations governing, not just “market-states.” One of the major flaws in Bobbitt’s work was an unwillingness to consider the possibility the state would fall.
It looks, increasingly, like it might. Not only have ratings agencies and those that back them coerced an increasing number of advanced democracies to renege on the promises that lie at the heart of the democratic nation-states, but in the US especially, the ideology behind this process has made common sense, necessary decisions politically impossible.
It’s unclear where this is going to end (in a sense, I’m more interested in the contest between China’s corporate-driven governance and advancing power versus the banksters than I am in China versus the US).
But I am amused by the spectacle that has resulted. In response to the panic of a fascist-friendly mogul, Silvio Berlusconi, the G7 is holding desperate talks this weekend to try to stave off the assault of the debt-rating agencies on their countries. In addition to Berlusconi, those desperate talks will feature a pack of neoliberals–Obama, Cameron, Sarkozy, and Merkel–frantic to somehow put the genie they embraced back in the bottle.
Yes, recent events probably represent the beginning of the end of the American empire. But that empire represented more than just US affluence and power. It also represented a version of “the West” that has gotten out of control, that has burst free of the nation-states that first harnessed it.
I am reading The Shock Doctrine. This article is completely in concert with the book: the destruction of the government in service to private profit; the wiping out of the benefits to the many by benefitting the few.
Wow, Marcy, you never cease to amaze me! Thanks for this.
Corporations are people, too…sociopathic people, but real people. /s
At present, corporations only exist because sovereign nations say they exist. While it’s true that corporate entities are forcing the political structures of nation states to become suzerain to the corporate will, how will corporations become sovereign entities if the nation state should fail? If they take on the full host of responsibilities and institutions from which nation states derive sovereignty, they necessarily become states themselves (though precariously unstable, having not even real estate to back their claims). Otherwise, they need non-corporate states to enforce contracts, support a currency, protect their interests, etc.
Behind it all, somebody has to wield the gun, and that somebody needs to have an allegiance to the sovereign that goes well beyond mercenary. They have to believe that they are defending their civilization; what it means to be human, their version of the truth. Parenthetically, I would argue that it has been the assault on truth that has driven the American political process off the cliff, not hate, which is just a byproduct of people who disagree about what is true.
@Ken Muldrew: Some questions:
How would you define this? if the state can’t control borders anymore (they can’t and in many cases refuse to try), then are they still a state? Are are the “responsibilities” you include? Well-being of the people? Because on that point, the modern democracies are backing away, if not failing. Or is it just protection?
Why the need for this allegiance? At times in the past, it has worked fine. All you need is a steady source of revenue and corporations obviously have that. And equally important question is that, now that our “state” military is completely dependent on mercenaries, given that our intelligence network is too, what does that mean for the ability of our so-called state national security apparatus to still serve the interest of the state? That is, if our spooks’ lives depend on Blackwater’s guys, what is their oath to the state worth (and is an oath to break the law in secret an oath worth that much)?
Your point about contracts is important. But when you say “enforce contracts,” it could be one of two things. A state can enforce contracts with the norm of rule of law–basically buy-in from everyone that rule of law exists and general acceptance of that buy-in, such that actual force is only rarely needed to enforce the “law.” But what happens when it becomes obvious that the “rule of law” no longer exists–that banks, for example, will never be punished for stealing your home, but that you will be punished for stealing a corporation’s “copyright”? At that point, the consensus-driven adherence to rule of law breaks down, and the “state” has to start using force generally to enforce things like contracts. How does the Russian mafia enforce its contracts–because they do! Does their ability to enforce their contracts make them a sovereign?
I absolutely agree we’re in a transition, and it’s not clear where we’ll end up. I have suggested I think we’re headed to a feudal type of society, where social order is imposed not through an allegiance to nationalism and buy-in on rule of law (which is won by the kind of social contract that the modern democracies are in the process of dismantling), but one where buy-in is an exchange of physical security for tithes, and where a deliberately fostered insecurity means those providing the physical security have to offer nothing more than that security to get their money.
Rule of Law—————————–Rule of Force
Where on the spectrum are we now? Where are we headed?
Thank you, EW! I was up until the wee hours today, trying to address what you are covering in my own, more rudimentary way. I snagged jscrd.com and jscord.com because I was so surprised Obama so brazenly gave away the store.
Great post, Ken Muldrew!
EW—very good post, thank you, and thank you for the links to the different think-pieces from Germany and the UK. I’ve been doing a little digging since Friday night in the history of S & P ratings of U.S. public debt. The news reports say that S & P’s downgrade is the first since the firm began rating US long-term debt in 1941. That’s a bit inaccurate. 1941 is when two different firms, Standard Statistical and Poor’s Investor Services, merged to make S & P. Standard had been rating US bonds since 1917. The firm did downgrade US treasuries in 1932 when the public debt reached $30 billion and Congress had voted the WWI vets a “soldiers bonus,” which Hoover vetoed. Standard viewed that policy as unsustainable. That was just as much a meddling in domestic policy and politics as the events of this week. One other meddling—Moody’s estimated in 1932 that ending prohibition would add $370 million to national tax receipts. That, too, was taking a position on one of the leading social issues of the day, and the “drys” howled. I’d say that the rating agencies, at times of crisis, are pliable and will be used as cats-paws by others.
Oops! I meant jscdr , not “rd”….
I found that Larry King’s replacement, Piers Morgan, is of a political orientation far to the left of others at CNN, save for Jack Cafferty. It is with great disappointment that I watch Piers allow Dave Ramsey to propagandize his rightest message, entirely unchallenged.
Time for the Radicals; Craig Murray; 8/7/11
http://www.craigmurray.org.uk/archives/2011/08/time-for-the-radicals/
@joberly: Can you clarify: Did Standard downgrade because COngress voted the soldier’s bonus? Or because Hoover vetoed it? I assume it was the former, not the latter?
@bmaz: We’re at the point where it is becoming increasingly apparent that the state has forsworn rule of law, but at a point before a lot of people then do the obvious thing–to take matters into their own hands.
@emptywheel: This is going to be interesting in a 2nd Amendment armed up mecca like the US.
@bmaz: Yep. Then again, it already is.
“It argues that this is about whether our world will be governed by states, or by corporations.”
I think you have the tense wrong here EW, I think “will be” needs to be replaced by “is”. When the panic-stricken G7 meet, does anyone seriously believe that the first order of business will be federally-led investigations of S&P by our so-called western democracies? Will investigators in all countries seize S&P’s records, review emails, look over their decision making processes that gave us worthless AAA mortgage-backed securities and now a downgrade in US treasuries? I wouldn’t hold my breath.
Will there be similar investigations of the banksters who created, sold, and then used the mortgage-backed economic crisis to make obscene virtual profits for themselves? Unlikely.
Further, Liz Fowler (D/R-Wellpoint) already wrote and oversaw the passage of our shiny new healthcare law. Corporate governance IS our present tense. We are there.
One other thing… I understand why you use the framing of the Decline and End of the American Empire. However, I think that is ultimately a good thing. The worry and concern is the Decline and End of American Democracy. The public has lost control of its government institutions and it is not clear to me how we will wrest control back from those who stole them from us.
@emptywheel:
If the state is the instrument of the ruling class, what’s to keep the class from destroying the state and the rule of law — though not use of the force of law enforcement to defend the ruling class’s privileges? We’ve got a problem.
@bmaz: I think it remains to be seen whether the judiciary will finally put a stop to an out-of-control executive branch. I am heartened that the Vance and Doe cases are proceeding, but the courts have turned a blind eye to executive abuses for so long, it is hard to imagine a significant shift to the left on your scale from its current rightward position.
@phred: Actually, that crypto-fascist Berlusconi DID seize S&P documents, just as it was turning Italy into Greece. It will be interesting to see how that arch conservative deals with the conservatism of the neoliberals he’s working with.
@emptywheel: Just remember: Dan Quayle’s Freedom Group, part of Cerberus Capital Management, owns Remington and most of the other firearms manufacturers in the US, and Winchester is just a brand name manufactured under license by FN Herstal, an originally-Belgian outfit. Most domestic US ammunition manufacture is in similarly concentrated ownership.
And the price of ammunition has doubled (or more) since 2001. When you can find it.
Just keep that in mind.
@phred: I’m agnostic on whether the end of the American empire is a good or bad thing–how things will end up is too unclear. If the world disintegrates into war-lordism on a massive scale, then the American empire might be preferable. If, say, Brazil pushes for a new global governance that balances the interests of the masses against those trying to control them, it might be okay. Point is, for all the American empire’s downsides, the loss of it could end up being very very horrible.
@emptywheel: In response to your reply at 12:23 p.m.
Yep, Berlusconi did raid S&P, but do you think Obama, Merkel, Sarkozy et al. will follow suit, while the EU/IMF is busily trying to shove austerity down everyone’s throat? I remain skeptical of that outcome despite the G7 being all in a tizzy. As for Berlusconi, he strikes me less as an adherent to any particular philosophy and more as an opportunistic self-serving megalomaniac.
And in response to your reply at 12:25 p.m. …
I was unclear about my desire for the end of the American empire. It is not a desire to see it replaced with something even worse (clearly, very real possibilities as you point out), but out of a desire to see a serious readjustment of our priorities from those of a global militaristic empire, to that of a powerful country heavily invested in its own infrastructure and domestic priorities that plays nicely with others on the global stage. I would also like a picnic and a pony ; )
@phred: Yeah–not sure where you’re gonna get that pony. I’m not sure it’s on offer.
And agree about the megalomaniac. That’s why I keep coming back to Berlusconi. They know they have to save him, and he wants to save a particular vision of Italy, not just the existing order.
Besides, Berlusconi is the one Bush buddy that has survived–he knows were a whole lot of bodies are buried.
@Ken Muldrew:
I would very much include the well-being of the people. The survival of the people (protection) comes first, but if the governing entity requires the support of the people to enforce its claim of sovereignty, then the people need to feel that this social contract is the best they can get.
It is very hard to think of issues of nationalism and sovereignty divorced from geography. The diaspora Jews are the only example that comes to mind, and their survival was due solely to allegiance to their culture and beliefs (their “truth”). But they had to live somewhere and so had to split their allegiance.
The state can no longer control borders because of the negative economic impact of restricting trade. The state could still do it if they wanted to, but the citizens would suffer mightily in response (and this would crush their allegiance, or at least so any political calculation would tell you, hence it’s not an option for pols in a democracy).
Although dependent on mercenaries, who could easily be bought by another state or corporation, these mercenaries are far from being the biggest kid in the sandbox. There is still overwhelming force of arms behind the contracts that the US military has with mercenary firms. Allegiance to the state is still a pretty big deal in the regular military (and among all those citizens who “support the troops”).
A suzerain, for sure, and they do rely on some of the authority of the Russian government to back up their claim of suzerainty. If the people were certain that the government was going to crush the mafia, they would hesitate before paying any protection money. In the absence of institutions of justice that have the force of history behind them (part of the buy-in comes from the sense of timelessness that institutions can develop), a government must use more primitive methods for keeping the population in check.
But there is no capitalism in this society. Tithes are antithetical to a market for consumer goods, so I don’t really see how this society benefits corporations. A capitalist economy requires a very large, intrusive government that shapes citizens for their role as economic agents. You need a literate, knowledgeable, and flexible work force to create goods, and a demand for those goods, for a market economy to work (yes, the tea-partiers are decidedly anti-capitalism, though perhaps unwittingly so). Why should corporations want to dismantle the market economy?
@emptywheel: At present, I concur that we are precious short of ponies. Still, they are around, if we could just figure out where the bastards have hidden them and figure out how to spring ’em loose ; )
Wouldn’t it be funny if Berlusconi becomes the savior of Europe ; ) Just as I was thankful for the TeaGOP for killing (well, postponing at any rate) President TeaCup’s plans to gut SS and Medicare, I might wake up thankful to Berlusconi one day. Politics sure does make strange bedfellows…
Sorry, my 22 was a reply to Emptywheel at 4. I’m not sure how I messed up the attributions.
@Ken Muldrew: Since when are corporations capitalists?
Not for a very long time. Which is part of the reason why BOTH the Dem and GOP are talking about “job creators” in the absence of the demand for products–much to the detriment of the economic well-being of those who still think this is a capitalist democracy.
I’m not sure your point about the Jews and nationalism is, nor whether you believe there is a geographic tie to a suzerain.
I think I may disagree with a lot more you say here–such as the reason why the state refuses to police the border. But I think a lot of it comes down to your suggestion that corporations are actually engaging in capitalism right now, with an actual interest in markets. Plus the geographic question.
@phred: Right. Ironically, I think the neoliberals will have more of a problem with Berlusconi than they did with Greek and Spanish socialists.
It’s a weird world we live in.
@phred: Well, it is not just the courts. Much of “executive power” is considered to be “political questions” the courts do not like to delve into. Every bit as historically significant to this equation you seek to balance is Congress. That was one of the real points behind my aversion to the “Use the 14th” clamorers and what I was trying to convey a week ago in my post on that. Congress itself is, by intended design of the Founders, every bit the check of the Executive that the Courts are; maybe more so.
Yet Congress has become more of a relentless obstructor of the Executive (really even independent of the “partisan” war) than designed check and balance; that process has blocked policy directive by the Executive, but allowed unbelievable expansion of raw power in the Executive. Neither Bush/Cheney nor Obama has any problem with this nature of things it appears (it was actually Cheney’s professed goal). Point being, it is much, much more than the courts.
And it is at root, of course, the people who clearly are either to uneducated and/or too oblivious and distracted by crap to effect and enforce the moral and political will the system of governance contemplates. This is why I laugh at the naivete of those who cry that “we need a new Constitution” or “we need a new this or that”. Our constitutional form of governance actually works shockingly well in principle, but craven and corrupt leaders of a disaffected and oblivious citizenry can corrupt and overcome any form of governance. And that is where we are.
By the way, how in the world did Kurt Schmoke get on that graphic? I always kind of liked that dude!
@bmaz: Thanks bmaz. I see your point, but I think Congress is a lost cause already. I think they stopped functioning as a governing body years ago and instead act solely to prop up their respective parties electoral prospects, including acting as absolute apologists for or in opposition to (to varying degrees) the President on the basis of his party affiliation. Given that our professional fundraisers in Congress no longer write legislation themselves either individually or collectively, but rather defer to that written by lobbyists, it is hard to argue that Congress is functioning at all as imagined in the founders’ vision of checks and balances.
Since Congress is clearly no longer functioning as it should and the President has given carte blanche to lawless conduct, the courts remain the last possibility to stem the tide. If they fail to do so, due to their reluctance to weigh in on “political questions”, then I fail to see how we resurrect our democracy within the framework of our current system.
I also do not view voters with the same level of contempt as you. When voters are given two choices in the voting booth, that in fact are not real choices, as both options represent the interests of the oligarchs, then how are we to expect any change in governance on the basis of voting alone?
And if voting won’t deliver change, then what options are there? Mass demonstrations may or may not be effective, e.g., Egypt v. Greece, but there is a lot more evidence that demonstrations are not given either the coverage nor the political weight they deserve in western “democracies”. Then what? General strikes? Armed insurrection? Both incur such very very high costs to those who take such steps that I would not fault the voting public for not choosing those alternatives. Not yet, anyway.
I remain hopeful (despite all appearances to the contrary) that more palatable options remain. That said, I haven’t any idea what those options are. I’m hoping folks smarter than me can help us find a way out of this mess…
scribe:
Cerberus Capital: Literally Blood-Sucking the Poor to Make Their …www.alternet.org/…/cerberus_capital:_literally_blood-sucking_the_… –
Jan 9, 2010 – How one company made $1.8 billion by paying peanuts to human plasma donors, and then manipulated the market by restricting supply to the …
Cerberus Capital: Literally Blood-Sucking the Poor to Make Their Billions
January 9, 2010 |
Cerberus Capital, one of Wall Street’s most notoriously ruthless leveraged-buyout firms (or “private equity firms” in PC-speak), recently made a $1.8 billion killing on its human plasma investment, a company called Talecris. Talecris was purchased for a mere $82.5 million just four years earlier, meaning Cerberus made 23 times its investment on human plasma.
This was accomplished by the most savage, heartless means possible: by paying peanuts to impoverished human plasma donors, who increasingly come from Mexican border towns to blood-pumping stations set up on the American side, jacking up the price of plasma by restricting supply (a lawsuit filed by the Federal Trade Commission accused Cerberus Plasma Holdings of “operat[ing] as an oligopoly”), and then selling the refined products to the most desperately ill—patients suffering from hemophilia, severe burns, multiple sclerosis and autoimmune deficiencies.
The products cost so much—one, IVIG (intravenous immunoglobulin) cost twice the price of gold as of last summer—that American health insurance companies have been dropping or denying their policyholders in increasing numbers, endangering untold numbers of people.
NOTE: Gives an entirely new meaning to vampire capitalism and blood money.
(Cont.):
Profiting from ruined American lives is nothing new to Cerberus. Cerberus is the same shady fund that bought Chrysler and GMAC in 2007 and drove them into the ground, blamed everything on unions (even after firing 30,000 Chrysler employees), and dumped the companies onto American taxpayers—but only after lining up tens of billions in taxpayer-funded bailout funds. Cerberus is led by some of the most aggressive “free market” Republicans of our time. The chairman of Cerberus is former Treasury Secretary John Snow, who oversaw the destruction of America’s economy while serving under Bush from 2003 to 2006, bragging during his tenure, “We are the envy of the world.”
Snow bragged again in 2007 after Cerberus acquired Chrysler, “Over 25 years ago, when Chrysler faced bankruptcy, it turned to the United States government for assistance. Today, Chrysler again faces new financial challenges. But it is private investment stepping in to inject much-needed support.” A year later, Snow was running around Washington begging and screaming for government handouts.
Joining Snow as international chairman for Cerberus is former Republican Vice President Dan Quayle, the pampered imbecile who couldn’t spell “potato” correctly. Two more perfect vampires couldn’t have been invented than Quayle and Snow for the America of the Bush Era—peanut-brained, sleazy jerks.
The top vampire in Cerberus is the fund’s founder, billionaire Stephen Feinberg, a major Republican Party campaign donor with a hardcore fetish for Harleys and big guns. Supposedly Feinberg was very uncomfortable with taking all those socialism-esque billions from American taxpayers. The New York Times described him as “a longtime free-market enthusiast and a Republican who never envisioned himself needing the government for help.”
@Gitcheegumee:
Just remember, George HW Bush’s handpicked Vice President, as well as George W Bush’s first Treasury Secretary (John Snow) are among the MFsIC at Cerberus.
Monopolizing both bullets and blood. Whod’a thunk?
I guess the Internet with its fuzzy network paradigm of distributed thought has shown me how to turn to the standard print media, then, and read At the sensationalist ‘content’. My sense is that the Republican party has morphed from a bastion of traditional aristocrats, some with smarts, into a vacuum for the undereducated, at least nominally. Also, there are political pressures on centrist Democratic party figures, of the usual sort, but accentuating less the mindless variety of hype which has become the Republicans’ most significant new approach to organizing voters, or, where it serves Republican aims, to inject disorganization so voters stay hyped and incidentally devoiced. I kind of agree with @bmaz, that there are survival factors in the new equations of polity; or, that is my understanding of part of that commentary.
But I would not count my S+P marbles just yet in this competition. I think it is right that S+P’s has become only a voice; and there are quite a few good textbook publishers besides McGraw-Hill. I would venture, even, that the last library shelf of McG-H dedicated tomes I pored over, in the 80s, clearly was inferior to, and more shallow and generalist than, the issue of numerous other publishers. What’s occurring is sometimes best observed near-by. I disagree with urban concern about 2A modern jurisprudence, though much of it is sloppy; though it is an issue that fairly does not involve or interest me. Yet, there are local textural variations in that regard, as well. While not doing macroeconomics, much, I tend to appreciate views of some thinkers who address that lofty sphere with proactive and historically comprehendable presentations, such as an article which on the macro scale appears to be discussing the benefit of arms control treaties, there, despite its prosaic title in its pathname. The article links to a nice NYTimes graphic showing two comparison scales of US debt on a timeline, by presidency, and next to it the dedicated revenue streams which get applied to paydown debt for armaments. Taking a more distant view of the chart, it is easy to visualize its meaning for the US economy, projecting outcome, say, on a 10-year perspective, or, maybe, looking at the likely configuration of arms expenditures as proportions of national budgets after 10 more presidencies have passed. Though something disquieting about the graphic’s abstracted portent in that regard in a way looks like the balancesheets which produced the countries which became known as the Newly Independent States thru the Gorbachev-Yeltsin epochs. I have not studied the history closely enough to understand that part of the world economy and the cold wars as manifestations of arms race politics, though I think the Harcourt linked article might be forecasting meaningful acceleration of various arms races unless economists convince politicians to slow the competition for the sake of balancing governments’ international indebtedness.
scribe:
I was thinking the same thing. Wonder if Cerberus has any MIC contracts to supply the plasma to miltary?
@emptywheel: Corporations are, as you say, not in the business of competing in a free market when they have other means of flourishing at their disposal. But they are inherently consumerist, or at least enough of them are to make a market for consumer goods essential to their survival. Furthermore, the mythology of a free market is even more important to corporations as part of the basis from which they derive political power. No doubt individual corporations would rather work on government contracts derived from tithes but economic decisions have to be made somehow. Absent a market of any sort, how will resources be allocated in the neo-feudalist economy?
My point about the Jews was whether you can have a nation without a state, and whether that says anything about whether you can have a state without some claim to a piece of land (along with the people and resources that are located there). Sovereignty has always had a geographical basis (suzerainty less so) with the nation-state tying sovereignty to nationalism: to the allegiance of the population toward their shared values and culture. The corporate-state cannot have the geographical component, so my question is from where can it derive sovereignty? Especially if corporations abandon the mythology of the market. Then even the meanest tea-partier is likely to think twice before throwing their allegiance behind the corporation. If they are to be truly feudalist and simply demand obedience in return for protection, then how are these people and resources divided up between corporations other than by staking a claim to the land in question (and defending that claim)?
@Ken Muldrew:
I think one point that should be considered when evaluating the capitalist nature of the modern corporate class is the wonder of indebtedness.
Indebtedness is really just a way of extracting rent, and once you go down that path you don’t really care whether or not people are “consuming.” So I would characterize corporations that actually produce consumer items as “less evil”* than the meta-capitalism of the FIRE sector, which is really capitalism at all anymore.
And, to close the circle, there is no difference between tithing and rent.
*BUT… still evil. :)
@Petro:
“is really capitalism” = “isn’t really capitalism”
@JohnLopresti: The point is: McGraw-Hill is defining what constitutes educational success by writing the tests which are used to score conformity to educational success. Their textbooks, crap though they might be, will knit perfectly with the predeermined vision of what constitutes educational success. And that vision is a pliable, stupid, easily led (by modern advertising and cognitive psychologists) band of idiots for whom the mere idea of better, more intellectual life is incomprehensible and who will tremble at the mere thought of beingcut off from their minimum wage buttonpushing (if they’re lucky) jobs.
@scribe:
Yes.
@Ken Muldrew: I’m quite certain the geography not only isn’t necessary at this point, but isn’t possible. We’re a globe of diasporas right now, and while the concept of nation does unify some of them (back to the Russna–or at east East European–mafia), it’s not clear we have much besides the other at this point to define these spaces.
I DO think localities may be a point of refuge form this madness, with face-to-face and communal ties as the glue. But they will have to be very resilient, even while not having any material resources the corporations will want to exploit.
Considering the message, Dr. Krugman really blew an opportunity to hammer home his continuing thesis of jobs, jobs, jobs, …
Instead of dropping names (Apple, or any of the other 29 or so companies with more cash than the US [1]) to take a quick poke at the lousy economic leadership in the White House, he could have used the Apple example to show that investment works. Apple is making its money by selling the stuff it builds and by investing in the infrastructure to support those things it builds.
He could have put up a quick aside about the large data / support centers Apple has recently built in North Carolina or how manufacturing is being brought back from Asia to South America (I would really like to see it here in the US, but we still have not escaped the model set in place by Texas Instruments when they decided electronics research should be done ‘here’ and manufacturing done ‘there’.) [2]
He could have used Apple’s recent decision to build their state of the art, new headquarters in Cupertino as an example of how taxing big companies contributes to communities well being (at the city council meetings to decide whether Apple could go ahead with the design, it is reported that one council member asked whether Apple would give the city free WiFi as as a deal sweetener, Steve Jobs is said to have replied they would be happy to if Apple could get a lower tax rate. It turns out that Apple is Cupertino’s largest tax provider and the new building will provide massive amounts of tax revenue to the city while it is being built and from the large number of people that will work there [3].).
Dr. Krugman could have contrasted this with large companies that are hoarding Scrooge McDuck piles of cash, jobs, jobs, jobs. What a lost opportunity, given the focus and free publicity the debt debate has given talking heads, to use the company whose name he dropped to broadly illustrate that Keynesian economic ideas work, jobs, jobs, jobs …
Notes:
[1] http://thinkprogress.org/economy/2011/07/18/271513/29-companies-more-cash-than-treasury/
[2] http://iphone.appleinsider.com/articles/11/04/12/foxconn_plans_to_assemble_apples_ipad_in_brazil_by_end_of_november.html
[3] http://www.macrumors.com/2011/06/08/steve-jobs-pitches-cupertino-on-new-apple-campus/
Aloha, EW and bmaz…! Check out this great bit of news…! The Spy Who Billed Me Comes in from the Cold…
I can’t wait…! ;-)
Tuttle!!! We have missed you bro!
@bmaz: Sorry that I’ve been remiss in greeting ya’ll in your new digs…! *g*
I truly miss the real Trash Talking threads of late…! *heh* There’s nothing like the biggest Rivalry ever to start a new one, eh…? FTFY…!
@CTuttle: Don’t wait!
RJ Hillhouse says an ISI walk-in informant turned in OBL:
Bin Laden Turned in by Informant — Courier Was Cover Story
@MadDog: F*ck me…! Splat indeed…!
this a fine, informative, thought-provoking essay.
that acknowledged,
an interesting contemporary fad in american journalism is writing in the present time about large-scale social or environmental events as if one were a historian reviewing events that occurred 50, 100, 250 years ago, instead of being a contemporary observer/actor (a sort of heisenberg principle of human understanding).
what is evident at the present is that the u.s. economic system and the u.s. political system are not functioning well, and have not functioned well thru eight years of bush and 2+ of obama (and appear unlikely to function any better thru the next year and a half, though that could change).
whether this dysfunction is part of a long-term trend or is a short-term trend is not and cannot be clear to any of us.
as for the phrase “american empire”, i didn’t think the u.s. had, or ever intended to have, an empire, except in as much as acceding to people or societies with great wealth and great power comes naturally to humans.
china i suspect could be properly described as working on building a chinese empire.
what i think can be accurately said, in systems terms, is that we have an extremely damaging wealth/elections imbalance in the political section of our society.
at the very least, this wealth/elections imbalance needs urgently to be addressed.
@orionatl: china i suspect could be properly described as working on building a chinese empire.
Do you suppose…? They’ve only been at it for at least 3 Millenia, and counting…! ;-)
Btw, they’ve been quite successful at it too…!
@orionatl:
Maybe it just has that “empire” vibe for people outside of the U.S. From Chalmers Johnson’s Nemesis:
China? Please explain.
orionatl:
Oh, Orion,come on, doncha think Emperor Obama has a certain “je ne sais quoi ” to it? *G*
@Ken Muldrew:
I wonder if the Pentagon has lost the paperwork for some of them. (When you don’t know what you actually have, it’s time to go through your stock and get rid of the stuff you aren’t using and have maybe forgotten you even had.)
@Brian Silver: Great question. Good topic for a long essay.
I’d say we’re seeing the rise to ascendancy of a segment of the ruling class that is no longer satisfied with sharing power with other sectors of society.
This has been made easier after the downfall of the Soviet empire and the demise of the socialist ideal, no matter how tarnished by the reality of the Eastern European communist states.
@Ken Muldrew:
i should not have to explain the obvious.
china needs resources. they are working their way thru south asia, east asia, africa, and latin america developing raw materials/infrastructure deals with countries whose resources they need.
now imagine a time when one of these countries says, “no thanks, we will sell our special/rare resource to the highest bidder, to the americans, etc.
what would you expect?
i’d expect a word war, a money war, a military threats war, and if naught else worked, and the supplies materials were needed, a war-kind-of-war with a 100 million soldiers – fight them army ants, would you?.
the u.s.’s economic and military associations are more a matter of a peculiar american “morality” and of treaties, and rarely, until cheny and iraq, a matter of desired raw materials.
a comparison of the disposition of the u.s. navy and air force to the brits +100 years ago should not be accepted as equal at face value; in fact, seems facile to me, as does the quote from chalmers johnson.
the british at that time were a mercantile empire, which controlled, lock-stock-and-barrel, dozens of colonies, as did the french, though with fewer and more islands, with the italians and germans coming late to the game (oh, hell the cats are playing games on the desk and i can’t see the damned screen very well).
the u.s. is neither an empire in any conventional use of the phrase, nor inclined by its open, chaotic politics and inclination to xenophobia and isolationism to be an “empire”.
if you want to call the u.s “imperialist”, an “empire”, “colonialist”, i have no problem with your using language that pleases you. but what pleases you may not accurately reflect history.
OT, but I haven’t seen any dueling reports on Perry’s prayer-fest on Saturday, was the attendance really what was reported at the 100k level?
@rugger9: No, 25,000-30,000
@rugger9:
Reuters said the organizers’ estimate was ‘more than 30,000’. Use salt.
EW,
Thanks for this incredibly important essay. It should be required reading in political science and economics courses across the country, and should be the center of many debates. The fate of the World is literally hanging in the balance, and I don’t think that I’m exaggerating.
I wish the “spotlight” feature was available, so I could broadcast it to media. We need the “fourth estate” more than ever.
Bob in AZ
EW,
We have already seen the emergence of the Trans-national state (NATO) behaving much like the empires of old in places like Libya. NATO even has transnational governance structures. However, one could argue that NATO is “nothing but” the naked hand of American imperialism. Are the Corporations manipulating NATO like they are manipulating most countries? Or is the more important supra-national structure the International Monetary Fund, which forces Corporatist ideas about solvency, debt, etc. on those countries that have to throw themselves on the IMF’s mercy?
How does what you’re saying relate to Globalization?
Bob in AZ
@Bob Schacht: Heh, spotlight has not worked for squat for years; not even worth having anymore. Was a great idea when it started though.
Terrific essay Mz. Wheeler, thanks.
Gotta remember to click in here daily . . . you sure got a lot goin ON daily . . . . *G*
*twothumbsup*
N kudos to the many deep and thoughtful comments also, regarding the post. Lotta talent hanging around this new water cooler . . .
Bernhard’s been back to Moon Over Alabama for a while now.
Hilhouse is back.
N Emptywheel is dealin hard n fast . . .
Cheaper n a Masters or Ph.D program . . . with more value, too, methinks . . . ;-)
Corporations get their money from people choosing to buy their product. If we all turn our back on everything corporate made – direct all our consumption to only locally made – we can make corporations moot. And i mean ALL products, even electricity. With peak oil, we are going to have to make changes anyway, i’m making changes now with a tinge of revenge in my motivation. I’m installing a masonry heater and i’m going to make bread for my neighbors. And to the MsOTU – go f*ck yourselves.
my view on the inevitability of american decline is encapsulated here:
http://www.nytimes.com/2011/08/08/opinion/credibility-chutzpah-and-debt.html?hp
what we lack is a president competent to met the political exigencies of our times.
we now have learned that we do not have that in president obama.
@Gitcheegumee:
i do, and it brings to mind the work of an american playwright.
@Ken Muldrew:
Ken writes: “At present, corporations only exist because sovereign nations say they exist. While it’s true that corporate entities are forcing the political structures of nation states to become suzerain to the corporate will, how will corporations become sovereign entities if the nation state should fail? If they take on the full host of responsibilities and institutions from which nation states derive sovereignty, they necessarily become states themselves (though precariously unstable, having not even real estate to back their claims). Otherwise, they need non-corporate states to enforce contracts, support a currency, protect their interests, etc.”
Your premise seems to discount the multinational corporations which seem to exist “out there” in the ether of capital flows facilitated by offshore havens. So, multinational corporations only exist because… why? When a nation state fails, what effect does that have on multinationals that exist in such nebulous areaa?
orionatl:
I have posted on several occasions in the past about Hutchison Whampoa,Li Ka Shing and the significance of these entities to the Panama Canal.(HW controls ports at both ends of the Panama Canal…both Atlantic and Pacific.)
Also, the Carlyle Group’s very recent $$$$$$ investment in Chinese built, Panamax deep draft vessels to navigate the Panama Canalis of note.
One of the most inclusive pieces I have read about the history of(and possible future military implications of) this Chinese domination of this Panamanian region is in this article-just superb:
The Menges’ Americas Report: China’s Control of the Panama Canal …themengesproject.blogspot.com/…/chinas-control-of-panama-canal… – CachedOct 6, 2008 – National Security Implications of Chinese Control of the Panama Canal Now that Hutchison Whampoa controls both ends of the Panama Canal …
NOTE: I recently read where there was legislation enacted that Mandarin must be taught in the public schools,there.
@Gitcheegumee:
wow, i had no idea. that is china getting deep into a relationship with a country and with control of a major trade arterial.
tx
oATL:
I have a more recent development that may also be of interest:
14 February 2011
Colombia has announced it is negotiating with China to build an alternative to the Panama Canal.The proposed transport route is intended to promote the flow of goods between Asia and Latin America. The plan is to create a “dry canal” where the Pacific port of Buenaventura would be linked by rail, across Colombia, to the Atlantic Coast.
Trade between Colombia and China has increased from $10m in 1980 to more than $5bn last year.
The announcement came from the Colombian president, Juan Manuel Santos, who told the Financial Times that the project was “a real proposal… and it is quite advanced”.
China has been increasing its involvement across Latin America to feed a growing need for raw materials and commodities.
According to BBC Bogota correspondent Jeremy McDermott, President Santos has departed from the emphasis on security of his predecessor Alvaro Uribe. Mr Uribe’s Democratic Security Policy, backed by US military aid, is credited with halving the numbers of Marxist rebels and pushing them into the more remote jungles and mountains.
NOTE: The date of this report is interesting.
Exchanging Valentines?
BBC News – China and Colombia announce ‘alternative Panama Canal’www.bbc.co.uk/news/business-12448580 –
Feb 14, 2011 – Colombia has announced it is to promote trade with Asia by building an alternative to the Panama Canal with China.
Interpol denies Colombia request to issue arrest warrant to spy chief
Thursday, 04 August 2011 09:21
Toni Peters
Colombia’s National Police Commander Oscar Naranjo confirmed that the General Secretary of Interpol chose not to issue a red notice – a provisional arrest warrant with a view to extradition – to Del Pilar Hurtado who is charged with illegally wiretapping Supreme Court magistrates, government opponents, journalists and human rights campaigners during the Uribe administration.
“With the date July 26, the Office of Judicial Affairs of the Secretary General of Interpol in Lyon, has communicated to Colombia that for reasons related to statutes of the organization, it will not proceed with the emission of an immediate capture order against Maria del Pilar Hurtado,” reported newspaper El Espectador.
Read more: http://www.colombiareports.com/colombia-news/news/18098…
——————————————————————————–
To say the least, it’s very difficult to avoid concluding that Uribe, Martinelli or perhaps certain U.S. personalities are likely involved in motivating this decision by pulling the right strings, though I imagine there was little to be expected anyway, particularly after Panama had already granted asylum to Mrs. Hurtado.
Americans have not figured out something really important about their government and that is, they don’t have one. The whole idea of government is really a big socialist plot. Imagine a group of people by, for and of the people working together make a nation grow strong together in all dimensions.
A corporation on the other hand is only trying to make as much money as it can. That is what the corporation law dictates. What used to be called the government of the USA is now a corporation. Live with it. So trying to tell the “corporation formally known as the government” how to behave as a good social citizen is a waste of time when it only wants money and power. Why not try to tell Coke not to use sugar in its products because it’s bad for health. Why not try to tell Boeing not to make weapons. Why not try to…. You get the idea. The only way to change the situation is (and we are seeing this beginning to happen around the world, for civil disobedience leading to a change in systems and processes that promote social values for all the people. Where financial wealth is equitably distributed (not necessarily equally) where a middle class is in control, not the upper class. Where corporate law is changed so that business must respect people and the environment above that of capital returns. So I wish Americans would stop pretending that they have a government when the reality of it is that they don’t. Was that too harsh?
Ew “But then there’s the question of why we let a thoroughly discredited entity like the S&P be the one to dictate whether we merit our world leadership position or not. That’s not just a question of letting one of the agencies that created the bubble retain any position of authority in the world afterwards (though, again, the fact we left the rating agencies in place after the crash is another sign our governance has failed), but also why a nation-state would let a corrupted entity like S&P do so in the first place.”
This is about as absurd as it gets.
EW can you please write about that 2.5 trillion that the banks are sitting on that keeps being mentioned in the MSM. Is that from the bank bail out coup? Is that taxpayers money that they are sitting on?
If that is the case. Why is it that the Prez or congress has not demanded that they put that dough back into the US economy
Over at Chris Matthews Hardball Blog (been over there for a couple of years). Met him at the Libby trial. He was open to my questions. Talked with him again at the Dem convention in Denver. Matthews actually came down off the MSNBC stage and mixed it up with the peasants. Actually seems genuinely interested. Rachel Maddow, Keith Olberman never mixed it up with the crowd. Kept their distance. Really have never had the feeling that either of these talking heads are interested in what the common folk have to say
Some questions on the debt ceiling:
1. Today on Washington Journal a caller mentioned that a Chinese rating system had lowered the status of the US credit rating and that in part Standard and Poors rating change was in response to that as well as the political harangueing that has gone on the last few months about the debt ceiling issue
What can you tell us about the Chines rating system claim?
2. Can you discuss Standards and Poors credibility issue a bit more.
3. Also more about what Standards and Poors sense of what it says about Republicans not being willing to raise revenues through higher taxes for the wealthy.
4. Also heard that Ryan, McConnell and Portman tried to put into legislation that for every dime raised their had to be equal cuts. That Standard and Poors had reacted to this effort
5. Will there be open door access to the process of the 12 on the committee? Who they meet with? Lobbyist etc? Sunlight on the process?
6. 65% of Americans support raising taxes on the wealthy (not sure of the number defining wealthy) why is it that congress is ignoring this. 52% of Republicans polled support the raising of taxes
7. Please discuss the American publics confidence in congress default more please. Do they care?
8. It is logical to a peasant that if the debt is out of control that spending needs to be cut. Yet every hot shot economist keeps saying this is not the time to cut spending…that we need to pull ourselves out of this hole. Please keep having Krugman and Prof Reisch (sp) on to keep explaining why. Also what about Jospeh Stigletz……Naomi Klein
Also can you please have former CIA middle east analyst and former Bush (43) administration official (quit just before the invasion of Iraq) Flynt Levertt on your program to discuss Iran. He has the most incredible website RACE FOR IRAN as well as a member of the New American Foundation. He and his wife and team bring reason and facts to the situation with Iran. Please please please do not start repeating unsustantiated claims about Iran like Rachel Maddow has constantly done. Have Mr. Leverett on. You will like and respect him.
As well as Marcy Wheeler (PhD in Political Science. Blog name EMPTYWHEEL.NET. Joe and Valerie Plame Wilson said that Marcy knew more about Plamegate (the investigation and trial) than they did. She is an amazing investigative reporter, fact finder. She is brilliant on many issues. Used to work for the auto industry. She has focused her investigative genius on torture, Plamegate, invasion of Iraq and accountability etc. I know you would really like and respect her genius and commitment to detail, research and facts. She did make onto MSNBC’s David Schuster’s afternoon program once but said something about our members of congress being more interested in investigating lies about BJ’s more than intelligence snowjobs (my line actually) She tells the truth but sometimes too honestly. She is brilliant. I know you would keep having her back and I am sure you can ask her and she would honor your request not to say bj.
EMPTYWHEEL.NET. She might even be smarter and quicker than you.
PLEASE CONTACT CHRIS MATTHEWS SO WANT TO SEE AND HEAR EW IN THE MSM AGAIN (know she can control the bj comments,even though many of us loved it because ew does not mess around when she is getting down to the core of an issue) I think Ew and Chris Matthews could really stir up the dust
http://hardballblog.msnbc.msn.com/_news/2011/08/05/7267593-the-chris-matthews-jobs-program#comments
@dqueue:
Multinationals exist because nations cooperatively sponsor their existence. Offshore havens are still states, even if they are much weaker than the corporate entities who have their headquarters in those states. Remember, Emptywheel was not saying that nation states are acting as puppets to corporations (like Eastern European governments under the old Soviet Union) but rather that some new sovereign entity has arisen that exists apart from any geographical foundation. Presumably these new entities are just using the remnants of nation states for whatever blood can be squeezed from them, but if I understand her correctly, they will continue to thrive even after the nation states dissolve (along with national currencies, legal institutions (such as they are), military defense of land, property and financial security, and many, many more institutions that currently reside in the state). I don’t understand how this can work, but that is almost certainly due to a lack of imagination on my part.