THE FATE OF CIVILIZATIONS
PART V: FASCISM
"Democracy is the theory that the common people know what
they want - and deserve to get it good and hard!" H. L. Mencken
Any discussion of causes for the collapse of an empire and threats to civilization
would be remiss if it did not include an analysis of what’s happening right
now to the American Empire. That is the subject for this chapter. The risk
in describing a current event is that it will inevitability lack perspective,
and it is fraught with the temptation to insert opinions instead of facts.
I have tried to prevent this chapter from becoming a “political rant” but
I know it still has that flavor. Forgive me for caring passionately for my
America went from being the world’s biggest lender nation (peaking in 1981)
to the biggest debtor nation in less than 2 decades (passing from creditor
to debtor in 1984). When this happened, accompanied by a host of other troubling
changes, everyone should have been asking “why.” Interesting forces must
have been at work to account for such a switch. Can these forces be understood
well enough to assess the possibility that America’s economy and stature
as an empire are on a path to collapse?
The chapter reviews American history with frequent reference to two theoretical
sub-themes. My hope is that the two theories will be supported so convincingly
that when my historical review arrives at the “present” I can use the theories
to extrapolate America’s future.
Theory 1: Review of Group Selection Theory
This section will review Chapter 11’s discussion of a sociobiological group
selection theory used to account for changes in individual behavior as conditions
fluctuate between war and peace. It serves as essential background for understanding
a trend in America that began in the 1980s.
One enduring principle of evolution is that the strong rarely miss an opportunity
to exploit the weak. The exceptions are few, but significant. The strong
refrain from exploiting the weak in three situations: 1) when related individuals
are involved, 2) among friends with a history of reciprocal relationships,
and finally 3) when one’s tribe is at war with a rival tribe this exploitation
is rare for intra-tribal interactions. This last situation was described
in Chapter 11 in great detail, and it will be reviewed here because it is
a crucial ingredient for understanding America’s current predicament.
When a tribe is at war with a neighboring tribe individuals are “programmed”
to act altruistically by becoming unquestioning patriotic warriors. Individuals
also refrain from any intra-tribal behaviors that are likely to weaken the
tribe, and jeopardize the outcome of the ongoing conflict. Any tribe in which
this does not happen cannot survive, so through a “group selection” way of
thinking we expect that all tribes that survive in such an environment will
consist of individuals that act this way.
After the tribal conflict is resolved, perhaps with one tribe achieving decisive
victory over its rival, inter-tribal relations will be peaceful. The victorious
tribe may in fact achieve such overwhelming dominance over its newly enlarged
realm that it can be called an empire. During this prolonged interlude of
peace the need disappears for patriotic altruism. There is also diminished
need for intra-tribal good behavior since the overall strength of the tribe
will not affect the survival of its members. The intra-tribal component of
this theory can be summarized by stating that there are rewards for genes
predisposing for intra-tribal niceness during warfare and there are rewards
for genes predisposing for intra-tribal nastiness during peaceful conditions.
Since the alternations between war and peace and war, etc., can often be
shorter than a lifetime, which is much too short for gene pools to evolve,
human brains must be pre-wired to produce these condition-based behaviors.
This pattern for human behavior is supported by game theory simulations (Choi
and Bowles, 2007) and also a careful re-reading of recorded history (Turchin,
2007). In order to understand its relevance today I need to review how it
came about at the transition between human pre-history and recorded history.
Humans must have lived in tribes for millions of years. Chimpanzees live
in their version of tribes, and they wage war with their neighbors, so it
is not unreasonable to assume that humans have lived this way since the time
of the human/chimpanzee split, about 6 million years ago.
The size of human tribes was probably limited by a nomadic lifestyle as well
as hunting and gathering conditions, with numbers probably in the 20 to 50
range (chimpanzees live in troops of about 10 members). Group selection pressures
are probably insignificant for such small tribes. Like chimpanzees, where
males often join neighboring troops, an individual’s fate is not determined
as strongly by the fate of one’s tribe when it is small.
Probably sometime about 50,000 years ago, when tool making became a full-time
occupation for a designated artisan in most tribes, and when division of
labor for other tribal tasks may have begun, the size of human tribes must
have grown. Tribal cohesion would have greater rewards when this interdependence
of membership was important. A tribe could only sustain a large size when
it had specialized roles. And large tribal size was important when tribes
engaged in warfare. Whereas small tribes had been organized “democratically”
these larger tribes needed coordinated leadership to respond effectively
during inter-tribal warfare. I envision that tribal size was in the 50 to
150 size range from about 50,000 years ago until the end of the Pleistocene
(12,000 years ago). A tribal chief may have been identified for directing
warfare; during peaceful intervals the “chief” may not have had especially
important privileges, and decisions may have been made democratically.
During the Holocene (starting ~12,000 years ago), which is an inter-glacial
with a warmer climate, there were new opportunities for supporting large
tribes. Agriculture was one path to growth, and marauding agricultural communities
was another. Inter-tribal warfare may have been more frequent and the fate
of individuals may have been tied more to the fate of one’s tribe. An intuitive
understanding of “all for one, and one for all” would have been an asset
for all tribal members. Greater powers would have to be given to the tribal
chief, who may have recruited his favorite and most loyal companions to help
him during battle and maybe during peaceful interludes. The democratic form
of coordinating tribal activities would yield to a more “leader controlled”
tribal structure. During the Holocene, as some tribes thrived and others
were decimated, there would emerge a new tribal structure in which a strong
leader could count on the loyalty and obedience of the others. Any tribe
that embraced individual rights and a deliberate process of reaching a consensus
before taking any action would simply disappear.
Theory 2: Emergence of Strong Central Leadership During Holocene
Feudalism was a form of social organization created to offer protection of
workers (peasants) by warriors who took their direction from powerful, land-controlling
rulers (kings) whose claim to power is based on their past performance as
a warrior. The king acted as if the land belonged to the kingdom that he
ruled. He allowed the peasant farmer to cultivate a portion of land in exchange
for a tax on the produce and sometimes an obligation to join with warriors
when called upon to defend the kingdom. This arrangement was made necessary
by the incessant threat of marauding bands.
Since it is “the man with the hoe” where almost all production begins there
is a sense of unfairness inherent in feudalism. The warrior is not a producer,
nor is the king and his cronies. The peasant producers resemble a herd of
cattle who are protected because they provide sustenance for their keepers.
It would probably be fair to say that the poor peasants are exploited by
those with power.
But for the powerless peasant the deal may be good, even though there’s no
alternative. By himself he can’t protect his storage of crops, so a tax on
them in exchange for security seems fair. The land he tills can’t be protected
from stronger neighbors in search of greater production, so the arrangement
of tilling an agreed upon portion of the king’s land is a safe alternative.
The underlying worry that kept the peasant in his place was fear; the fear
of marauders, the fear of invasion by neighboring kingdoms and the fear of
intimidating take-over by his nearby fellow peasants. As long as this quasi-enslaved
peasant works hard he can count on surviving.
The willing peasant is helped by having the slave’s mental attitude. Were
he to rebel, as some surely did, the alternative lifestyle would be risky
and he would have fewer grandchildren. Inexorably, over 12,000 years, a peasant
class of men evolved who instinctively accepted this feudal social order.
Feudalism has appeared in many cultures, so the readiness to form a feudal
society could almost be called a “human universal.” Feudalism involves two
mutually-dependent populations: the masses of semi-enslaved, semi-impoverished
peasants and the minority of wealthy leaders and the defenders that they
command. We should not be surprised to find in 21st Century men a residue
of readiness for these two attitudes and a feudal form of governance.
The Founding Fathers of America were fed up with England’s overbearing rule.
King George III tried to extract money from the American colonies. When colonists
objected to his excessive taxes he was enraged by their disobedience and
believed they should be dealt harshly. The “Tea Act of 1773” unfairly favored
the monopoly power of a British company, the East India Company. The pattern
of King George’s dealings with the colonists was clear, and there was no
hiding the fact that the colonists were being exploited in order to favor
the monarchy and a large British company. King George over-played his hand
and eventually lost everything at the conclusion of the American Revolutionary
War in 1783 (he was later called “the king who lost America”).
Thomas Jefferson, the primary author of the Declaration of Independence (1776),
wanted America to be an experiment in democracy. He had no use for “allegiance
to a monarchy.” Amazingly, some colonists preferred to be ruled by King George
III. They were referred to as “royalists” and also “conservatives” since
they wanted to “conserve” a monarchy form of governance.
Jefferson and Alexander Hamilton had a long-standing disagreement about the
ability of ordinary people to sustain a democratic form of government. Jefferson
believed that educated people could be trusted to govern themselves wisely,
and that eventually the world would rid itself of monarchies and dictators.
Hamilton called this wishful thinking because he believed human nature lacked
the requisite wisdom to sustain a form of democratic self-governance.
The Constitution was written (1787) with safeguards against abuse of power.
For example, it included a ban on monopolies in commerce (prompted by their
experience with the East India Company). Many of its provisions were aimed
at preventing a repeat of the abuses suffered under the British monarchy.
The creation of three branches of government was supposed to achieve this.
The Constitution can be viewed as a reaction to a history of only monarchies
and dictatorships stretching back 2000 years to the first great experiment
with democracy in Greece.
19th Century America
If history is viewed as a swinging back and forth between power of the wealthy
and power of the people, then late 18th Century America was surely a swing
toward the latter. However, the late 19th Century had an opposite swing.
After the Civil War (1861-1865) some businesses grew powerful enough to influence
the US Congress, and undermine the moral attitude of the executive branch.
This time is referred to as the American “Gilded Age.” When it was in full
swing (1877 to 1893) extravagant wealth for the few contrasted with poverty
for the many. The most memorable wealthy few are referred to as “robber barons”
(e.g., Rockefeller, Vanderbilt, Carnegie and Morgan). They manipulated
the federal government in ways that benefited them greatly, with no regard
for the workers who sustained their enterprises. The government was too weak
and unmotivated to prevent unethical financial manipulations. Labor abuses
led to uprisings and the beginning of unions. This movement ushered in a
“progressive era” (1896 to 1920). Slow progress was made in the areas of
worker’s rights (e.g., child labor laws) and reversing other social injustice
issues (e.g., women’s right to vote).
The Roaring Twenties
The 1920’s decade has so many take-home lessons that are relevant for this
chapter that I will give it plenty of attention. As this section illustrates,
history does repeat itself!
The Progressive Era is partly responsible for the booming economy of the
1920s. The Roaring Twenties was a time of unleashed creativity, leading to
many inventions, new businesses, and advances in literature, art, music and
entertainment. America’s image of itself is that this is where any entrepreneur
could prosper and achieve the American Dream. The optimistic belief that
prosperity was in store for everyone overshadowed the growing disparity of
wealth between the rich and the middle class.
President Calvin Coolidge (1923–1929) was naively optimistic about the economy
as he proclaimed “The business of America is business.” But the so-called
“Coolidge Prosperity” had not benefited everyone. The disparity between rich
and poor grew throughout the 1920s. By 1929 the top 0.1% of Americans had
a combined income equal to the bottom 42% (Brookings Institute, 1981). Businesses
were not regulated sufficiently. Businesses, it seems, never ask to be regulated.
Speculation in the stock market was viewed by those who had money to invest
as the path to greater wealth. The stock market was also not regulated sufficiently.
On October 24, 1929 the stock market “crashed” and in 3 weeks had plunged
40%. During the ensuing Great Depression the unemployment rate reached 25%.
According to Gusmorino (1996) “The federal government contributed to the
growing gap between the rich and middle-class. Calvin Coolidge’s administration
(and the conservative-controlled government) favored business and as a result
the wealthy who invested in these businesses.” He goes on to write
“…the Revenue Act of 1926 … reduced federal income and inheritance taxes
dramatically. … In effect, [a wealthy person] was able to lower federal taxes
such that a man with a million dollar annual income had his federal taxes
reduced from $600,000 to $200,000.”
The Reagan to Cheney administrations resemble the Coolidge administration.
There are other resemblances, and since this will play an important part
of this chapter’s argument I will use the rest of this section to paraphrase
key points in an article by Gusmorino (cited above, also at http://gusmorino.com/pag3/greatdepression/).
All quotes in the rest of this section are from Gusmarino.
Productivity increased 32% during the 1920s whereas wage earners only saw
an income increase of 8%. “… the bulk benefit of the increased productivity
went into corporate profits…” “It was not that the surplus products of industrialized
society were not wanted, but rather that [the poor could not afford to buy
them, whereas] the wealthy were satiated [after] spending [only] a small
portion of their income.”
“Throughout such a period of imbalance, the U.S. came to rely upon two things
for the economy to remain on an even keel: credit sales and luxury spending
and investment from the rich.” “One obvious solution to the problem of the
vast majority of the population not having enough money … was to let [them]
buy products on credit. The concept of buying now and paying later caught
on quickly. By the end of the 1920’s 60% of cars and 80% of radios were bought
on installment credit. … Installment credit … created artificial demand for
products which people could not ordinarily afford.” At the time of the crash
“80% of Americans had no savings at all.”
Sound familiar? (The marketplace reinvented credit purchasing to maintain
corporate sales after President Ronald Reagan started busting unions, causing
workers to lose purchasing power – as described by Thom Hartmann on his radio
“While America was prospering in the 1920's, European nations were struggling
to rebuild themselves after the damage of war.” The US had loaned European
nations over $7 billion during the war, and during the 1920’s the rate of
loans rose to $1.25 billion per year. “Of these funds, more than 90% were
used by the European allies to purchase US goods.” One wonders if US corporations
were looking for markets to supplement the dwindling buying power of Americans
and cleverly influenced the government to subsidize them through a good-sounding
scheme of foreign aid.
After the crash “the middle-class and poor stopped buying things with installment
credit for fear of losing their jobs and not being able to pay the interest.
As a result, industrial production fell…” (If Americans were smart they’d
start doing this now.)
Want to hear a sanitized version of what caused the crash? Economists (whose
infamous adherence to the idiotic model that “individuals are guided in their
personal decisions by rational thought” should discredit most of what they
say) tell us that “The Federal Reserve kept the money supply tight, because
they feared the runaway inflation that they saw devastating postwar Germany.
So they over-corrected. They should have let the money supply increase slowly.
And the other cause was the Hawley-Smoot tariff act, which was protectionist.
The word that the US was about to tax foreign imports spread globally and
caused other countries to erect trade barriers, so everyone suffered from
the loss of trade.” (Tom McDonough, private communication)
Before proceeding with a recapitulation of the 1930’s recovery I want to
highlight what I think is the take-home lesson of what happened to the economy
of the Roaring Twenties. When corporations earned large profits they didn’t
share them with workers. This led to a shortage of people who could afford
to buy those products. The demand for products was there, but the ability
to pay for them was not. The marketplace was creative, however, for it promoted
installment credit purchasing. This stratagem had the temporary effect of
maintaining purchases and corporate profits. But optimism, based on years
of a booming economy, kept people from recognizing that the economy was really
unstable and prone to failure, until it actually failed.
No single company can be blamed for the crash. Most of them behaved in their
short-term interest, oblivious to the possibility that they were “killing
the goose that lays the golden egg.” A better metaphor for the tragedy that’s
possible when everyone pursues their self interest would be Garrett Hardin’s
“Tragedy of the Commons.” In his 1968 article Hardin describes a hypothetical
situation of a pasture that is grazed by many flocks of sheep; each flock
owner is faced with the decision of whether to add more sheep to his flock.
From the owner’s perspective adding one sheep to a flock increases his income
by an amount proportional to his flock size increase. Since each owner thinks
the same way they all can be expected to increase their herd size. At some
point the pasture’s capacity is exceeded, and starts to become over-grazed.
Still, it makes sense for each flock owner to add one more sheep because
the increment of overgrazing from an additional sheep is small (being proportional
to the total of sheep grazing) whereas the benefit is proportional to the
increment of the owner’s flock size. Eventually the pasture is not suitable
for any sheep, and all sheep die. The lesson from this hypothetical exercise
is that it is in the long-term benefit for all flock owners to come together
to create an agreement concerning each person’s behavior so that all may
continue to benefit from the pasture’s potential. If we apply this lesson
to the companies in the 1920’s they should have been regulated by a government
that brought them together to formulate a behavior that would promote financial
survival of them all, as well as any other social benefits – such as the
welfare of American society. In other words, market forces cannot be trusted
to fix all problems, and government is sometimes needed to provide solutions.
Government is not “the enemy” – it can be the solution. This lesson was either
forgotten during the Reagan administration (1981–1989), or it was intentionally
ignored for the short-term gain of corporate leaders with inexcusable disregard
for societal welfare.
There are so many parallels to the present American economy that I had goose
bumps while reading parts of the Gusmarino article.
The underlying “human universal” that accounts for this sad episode in American
history is that humans are capable of short-term greed; when the rich have
the opportunity to exploit the weak, they will.
The Great Depression
When Herbert Hoover accepted the Republican party’s nomination for President
(1928) he declared “We in America today are nearer to the final triumph over
poverty than ever before in the history of any land. The poorhouse is vanishing
from among us.” In his inaugural address March, 1929 (just 7 months before
“the crash”) he continued this happy talk with “Ours is a land rich in resources;
stimulating in its glorious beauty; filled with millions of happy homes;
blessed with comfort and opportunity.” It is likely that he believed his
speeches. After all, “on the surface” the economy was booming. But the waters
were deep, and turmoil was rising inexorably to the surface.
After the crash Hoover reassured America that the economy was sound. This
is what leaders say when things falter. They’re not simply trying to comfort
their suffering followers, they probably actually believe their optimistic
pronouncements. After all, their beliefs are like a religion, and it’s unthinkable
that their religion could be wrong. Hoover’s religion was Republicanism,
or conservatism, which has at its core the idea that as long as the wealthy
aristocrats prosper the rest of the kingdom will be OK. It’s what today is
called “trickle down” economics. The mechanism by which this trickle down
is supposed to occur is called a “free market.” Only someone with religious
fervor could believe that the free market will solve all problems. As Hoover
repeated, we just have to wait for market forces to right our economy.
Homelessness swelled as bank failures wiped out savings and unpaid mortgages
led to foreclosures. Some people lived in old crates and shacks called shantytowns,
which were also referred to as “Hoovervilles” as a bitter reference to the
fact that Hoover refused to give government assistance to the unemployed.
He repeated his belief that the economy was sound and that public confidence
would soon lead to business investments and job creation. But why should
a business expand production when their warehouse was full of merchandise
that no one could afford to buy? When this didn’t seem to work Hoover tried
raising taxes thinking that a balanced federal budget would help. But this
strategy only made things worse because it reduced discretionary income,
as anyone should have predicted. Hoover refused to believe that it was right
to help people outright because that would undermine their self-reliance.
Everything Hoover tried failed because he only tried things that were compatible
with his conservative economic principles.
Again, we should be reminded of the great Holocene experiment that favored
men who embraced a concentration of power at the top of the super-tribe.
The king knows best, especially during inter-super-tribe conflicts. During
peaceful interludes the notion of kingly infallibility was turned to a feudal
economic order for society, as if recovering strength for the next challenge
from beyond the kingdom’s borders. Human evolution is slow, and royal abuses
of power may not have been checked by mutations within the genome or the
meme belief systems. I like to view people as inclined to embrace one of
the two major approaches to how a society should govern itself. The original
idea is that everyone should be involved in reaching a consensus (e.g., the
Japanese management style). The other is that decisions should come from
above, from leaders, from the gods! Little people should not question the
gods, nor should they question the king.
I have no doubt about my inclination! The king’s infallibility is as much
an illusion as all the gods that humans have invented. Both repositories
of wisdom are “imposters” – dangerous, malicious imposters. I also have little
faith in the consensus form of governance, for the same reasons as Alexander
Hamilton. Most humans lack critical thinking skills; they latch onto whatever
beliefs they are guided to by genetic predisposition and tribal taboos, and
they behave in ways that are a confusion of what was adaptive in the ancestral
environment and what seems to make sense within a modern paradigm.
Hoover’s inclinations are obvious; he was so Republicanized that during his
term as president the market forces he believed in, the ones that he interpreted
as signifying a fundamentally “sound economy,” just kept making things worse.
Most of the world was also in its own economic depression, thanks to World
War I and minimal real help from America. Consequently, in America’s time
of need there was no one to help. (I’ll come back to this point in a later
section.) Hoover was “king” and he had no answers. The deepest depression
year was 1933, when Hoover left office and Franklin D. Roosevelt (FDR) took
over as president.
It is ironic that FDR was born into aristocratic wealth. His outlook should
have been like Hoover’s. But maybe he had the pre-Holocene genes that distrusted
concentrated power. Or maybe his personal experience with “polio” changed
his outlook, and sensitized him to the suffering of others.
FDR showed that government, when properly used, could be “the solution” just
as starkly as the previous administrations showed that government could be
“the problem.” If government didn’t try new things then unchecked market
forces would simply continue grinding down the little guy and a continuing
depression would bring the American experiment in democracy to an end. The
common theme of FDR’s “New Deal” was a shift from serving big business to
serving working-class people.
FDR moved quickly to impose overdue regulations on banks and the stock market.
Minimum wage and maximum work hour laws were passed (June, 1933). Jobs were
created by the government under the Public Works Administration (WPA). The
Social Security Administration was created in 1935 to provide a minimum of
financial assistance during retirement, unemployment or disability. Labor
unions were treated with less hostility than during the Republican administrations.
Other public works were created, such as the Tennessee Valley Authority,
which not only created jobs they also improved living standards in the rural
areas surrounding the TVA. Banking was made safer by his creation of the
FDIC. Throughout all these massive government initiatives FDR was concerned
about federal budget deficits. This concern made him somewhat cautious, but
a growing resentment by Republicans put the brakes on his innovative programs
starting in his second term (1937).
There is still argument whether FDR’s progressive programs were responsible
for bringing America out of depression, or whether the immense budget deficit
spending and job creation demanded by World War II was mostly responsible.
However, there is no argument that from 1933 onward America’s depression
was less painful than it would have been without FDR.
FDR provided strong leadership to a nation in economic crisis that might
otherwise have floundered and faded from world relevance amid starvation
and misery. His hopeful, moderate policies also prevented people from flocking
to the American fascists and communists, who could have created a dictatorship.
Where Hoover was a weak leader who was clueless about what to do, FDR understood
the essential nature of what had to be done and he was persuasive in getting
on with needed changes. Part of FDR’s persuasiveness was his ability to appeal
directly to working people, to allay their fears, nurture hope and renew
national optimism. This is called “leadership.” The entrenched business community
hated FDR, and resisted his programs as strongly as they could. Even some
of FDR’s friends from the aristocratic wealthy class called him a traitor.
FDR achieved success by switching government’s main mission from partnering
with business to partnering with people. And under FDR “We the people” usually
prevailed over wealthy conservatives who resisted people policies.
Theory and Reality During the 1920’s and 1930’s
Let’s pause for a moment and consider if the Roaring Twenties and the Great
Depression are compatible with the two theories that are an underlying theme
for this chapter.
The 1920’s were a time of peace following a world war. According to Theory
#1 patriotic altruism during the war years should have been replaced by the
pursuit of individual fulfillment during the following peaceful years. A
frequent theme of 1920’s social commentary is that individual liberation
and the pursuit of pleasure became tiresome; a purposeless life emptied the
soul of meaning. Ennui and aimlessness, amid hedonistic diversions, pervade
the literature (e.g., The Great Gatsby). The new rich felt no social obligation
for others. This, indeed, is what Theory #1 predicts should have happened
during the 1920’s.
The 1930’s somewhat resemble a time of war, when most people are suffering
as if besieged by an outside enemy. Compassion is rediscovered; those for
whom food and housing are scarce receive help from those better off (but
only from the residual of the middle class, for prospering wealthy people
were inclined to ignore other people’s suffering). FDR tapped into a groundswell
of dissatisfaction with the laissez-faire policies of the previous decade
when he appealed in 1933 for people to vote for a leader who will ask for
sacrifice from those who are “able to help” lend a hand to those who are
unable to help themselves through no fault of their own. This altruistic
response to a national need is what Theory #1 predicts.
Theory #2 also fares well when comparing these two decades. During the 1920’s
regulations were lax and the strong took advantage of opportunities to exploit
the weak. Business influenced government, creating a partnership that was
so obviously corrupt that muckraking journalism had a “field day” exposing
it (e.g., H. L. Mencken). If corporations could have installed a figurehead
king to rule over America they would have done it. The wealthy aristocrats
would have welcomed an American counterpart to King George III in order to
more efficiently enslave workers and dominate world commerce.
During the 1930’s FDR might be likened to a king, considering his expansive
use of executive power to make bold changes. FDR might even be described
as a beneficent dictator. However, FDR respected the powers of the other
two branches of government, which did at times deal him defeat. More importantly,
FDR worked to move wealth and power from the wealthy few to the many in poverty.
Since his actions had the sanction of most Americans, it is fairer to say
that FDR returned the country closer to the pre-Holocene tribal democracy
in which decisions are made by consensus.
The American involvement in World War II technically began when Japan bombed
Pearl Harbor (1941). Years before this event FDR was concerned about the
looming war in both Europe and the Pacific but he was unable to mobilize
the American people to prepare for it. Massive war spending that began in
1942 gave a boost to employment and the economy generally. Factories that
had been building cars at a slow pace swiftly switched to producing tanks
for which there was unlimited demand. (With “full employment” the WPA and
other employment programs were discontinued.) War material was shipped to
the British (under the Lend-Lease Act) before America was officially at war
with Germany. FDR did not require payment for these shipments, which contrasted
with the way Coolidge pretended to help European countries during the 1920’s.
FDR died April, 1945, a few months before the Allies won the war.
The Democratic Party dominated American politics from 1933 until about 1968,
thanks to the effectiveness of FDR’s three presidential terms of office during
the first 12 years of this period. The middle class prospered throughout
the 1940’s, 1950’s, 1960’s and 1970’s, and FDR can take credit for that too.
I have first-hand knowledge of America starting in the 1950’s, for I started
college in 1957. My family was middle class and I recall the excitement of
getting a television, a new family car every few years, and a general sense
that society was stable. The Cold War was always in the background of our
thinking, and the ever-present concern about atomic warfare with Russia instilled
in everyone a serious side. Sputnik prompted the University of Michigan to
offer an Honors Program to help catch up with the Russians in space technology,
which I took advantage of.
Some of my college reading assignments accused my generation of being disengaged
from social issues and political activism, and being overly concerned with
individual pursuit of material wealth. We were accused of being too willing
to wear a “gray flannel suit” and work obediently for a large company. In
retrospect this was merely the quiet before the storm, which was unleashed
in the next decade.
“The Sixties” is sometimes defined as 1963 to 1973. I’ll treat the beginning
General Dwight Eisenhower was courted by both the Democratic and Republican
parties before he decided to run as a Republican (1952). The Eisenhower administration
(1953-1961) has stood the test of time. He was experienced in assessing intelligence
reports, and he correctly assessed Soviet missile capability as less of a
threat than popularly believed. He launched the Space Race with Russia by
establishing NASA (1958). He also initiated the building of a national freeway
system (in case the military were to need it).
Eisenhower was not the traditional Republican, since he embraced much of
FDR’s New Deal. He expanded Social Security coverage and established the
Department of Health, Education and Welfare. He enforced school integration,
prevailing over the resistance of the Arkansas governor (1957).
In the 1950s the president of General Motors captured the essence of how
to promote corporate interests when he said ”What’s good for General Motors
is good for America.” Perhaps this famous quotation influenced Eisenhower
as he wrote his 1961 televised speech about the military/industrial complex.
He feared that large industries that serve military hardware needs would
have so much influence over the government that they would dictate spending
decisions without being held accountable to voters. By this time American
corporations had been growing for two decades, and they might have been emboldened
to explore the limits of their growth potential. One of those limits for
factories is the cost of labor. At this time workers were feeling pretty
good about their prosperity, thanks to laws that protected unions. A collision
was unavoidable, and the tumultuous Sixties were when it occurred.
If Eisenhower were alive today he would expand his military/industrial complex
fear to include the influence of all large corporations, not just the military
ones. Large corporations share the same “personality” by making opportunities
that benefit them at the expense of anyone else sucker enough to subsidize
them. The new industries to fear include pharmacy, health, insurance, banking
(including credit), mortgage lenders – and others (discussed below).
The presidency of Jack Kennedy (1961-1963) symbolized the rising influence
of a younger generation, a passing of the torch of power from an older generation
(Eisenhower) to a younger one. Eisenhower would always be General Eisenhower,
the man who led the Allies to victory in World War II, while Kennedy was
all about future possibilities. Lyndon Johnson’s presidency (1963-1969),
which began after Kennedy’s assassination, succeeded in passing many of Kennedy’s
I recall remarking to a friend in the mid-1960’s that this time would be
remembered as the best of all times in both American and world history. America
was prosperous, the Cold War had not produced a nuclear holocaust, and there
were indications that in the future American society might coarsen and become
unstable. I believe that subsequent history has confirmed my assessment.
Prosperity in America just kept growing after World War II. Babies born after
the war were raised by parents who remembered the Great Depression and wartime
sacrifices, and they vowed to save their children from these deprivations.
There was a temptation to “spoil” the children, and those born between 1945
and 1950 were college age starting in 1963. It is more than a coincidence
that this is when college age students exhibited an excess of irresponsibility,
a mocking of their parent’s work ethic and a rebellion against conformity.
Drugs, hanging out, mocking society and protesting anything embraced by the
Establishment created a generation gap like no other.
Gone were the accusations hurled at my generation, those born just before
the war and during, that we were too quiet and disengaged from public affairs,
or that we were preoccupied with material wealth, or a desire to work obediently
as a Company Man. I was fascinated by the undisciplined, free-thinking lifestyle
of those just a few years younger than me. The questioning of authority,
and especially the government, became a constant irritant for the Establishment,
comprised of a generation that came immediately before mine.
Being in that transition generation, between those older than me in the Establishment
and the younger hippies, predisposed me to see both sides of the arguments.
I continued my work on the space program with NASA government “establishment”
funds while socializing with some of the hippies. My sympathies were divided,
for although I could not endorse irresponsible lifestyles I nevertheless
agreed with the younger generation about one of the most important things
that irritated them: a compulsory draft that forced peace-loving young men
to take-up arms for killing foreigners who didn’t threaten America.
The entire Vietnam War struck me as immoral. The so-called “domino theory”
neglected nationalism considerations, borne out by subsequent events, so
one alternative explanation that I found attractive was that the war benefited
the military-industrial complex.
It is probably always true that whichever class of a society is favored by
the greatest growth of wealth, that class will increase its influence in
changing the society. During the Sixties, as before, the middle class grew
in wealth and influence, and it is natural that this would scare the Establishment.
Other things besides losing influence must have scared the Establishment;
the very stability of society appeared to be threatened. Just consider that
political assassinations felled Jack Kennedy, Martin Luther King and Bobby
Kennedy. The disenfranchised of society rioted in Los Angeles, Newark and
Detroit. Whereas during the Great Depression there was cause for concern
over the country’s survival due to an economy that seemed resistant to cure,
during the late Sixties there must have been the same concern that was instead
based on growing social instability.
This concern over social instability may have been a factor in the election
of the first true Republican since Herbert Hoover, Richard Nixon. He was
elected president in 1968, the year of the aforementioned race riots and
assassinations. Nixon promised to end the war in Vietnam and achieve social
stability by restoring “law and order.” Barry Goldwater had sparked a resurgence
of interest in reviving Republican control of government 4 years earlier,
but when he campaigned (1964) the hippy/Establishment culture war had only
begun and was not a paramount issue for voters. Goldwater rejected the New
Deal progressivism that had brought America out of the Great Depression.
Although Nixon won the election largely over a desire to end social instability,
he was also a beneficiary of what Goldwater started.
Nixon was accused of being an Imperial President (Schlesinger, 1973) because
of his exercise of more power than allowed by the Constitution. His original
transgressions were intended to bring the Vietnam War to an end by expanding
the war to nearby countries without the required Congressional knowledge
or approval. Later Nixon expanded his powers to domestic issues. Congress
passes budgets and the president can sign or veto them. Nixon assumed powers
not in the Constitution to reward and punish those who agreed and disagreed
with him. He also selectively enforced laws. Some of the Nixon administration
offences include “burglary, forgery, illegal wiretapping and electronic surveillance,
perjury, obstruction of justice, destruction of evidence, tapering with witnesses,
giving and taking bribes and conspiracy to involve government agencies in
illegal actions” (wikipedia). His inept cronies were caught illegally wiretapping
Democrats at the Watergate Hotel, and this led to an unraveling of his presidency
and his resignation (1974).
Many aspects of Nixon’s presidency resembled rule by royalty, by King Richard
Nixon. The Constitution was written to prevent what Nixon tried to get away
with; thank goodness for the ineptness of his cronies!
Gerald Ford was Vice-President when Nixon resigned, so he completed Nixon’s
term as president (1974-1977).
Probably because Nixon had “blown it” for the Republicans the election of
1978 went to Democrat Jimmy Carter. I believe his presidency (1977-1981)
has been unfairly maligned, and I suspect this is due to a re-writing of
history by Republicans. Carter is the only US president to win a Nobel Peace
Prize (2002). He created a Department of Energy, and promoted conservation
and new energy technology development for the goal of achieving energy independence.
During his administration oil imports were reduced 50%. He is also known
for his human rights activism.
Carter’s interest in achieving oil independence was largely a response to
the 1973 OPEC decision to reduce oil exports in order to increase profits
from the ensuing shortage. This occurred during the Nixon administration,
but Nixon never addressed the matter. Peak oil production in America occurred
in the middle of the 1970’s, so American oil producers were handicapped in
ramping up production to stave off rising oil prices. The economies of 20th
Century advanced countries ran on energy produced by oil, which mostly explains
why Carter’s administration was burdened by high inflation, high unemployment,
slow growth and an increasing federal budget deficit. A “malaise” pervaded
the country near the end of Carter’s term. In short, OPEC ruined Carter’s
The Reagan Era, the 1980’s
President Ronald Reagan is the protagonist of this chapter. He aspired to
be the Coolidge of the 1980’s. His attempt to unflinchingly pursue conservative
policies that threaten to destroy the middle class ran into just one problem:
the rest of the world was prospering and had money to loan credit companies
so that Americans could buy, buy, buy until they dropped – in 2008.
Well, I’m getting ahead of my story, so let’s start over with Reagan’s election
in 1980. Reagan won the election because Carter was pursuing long-term solutions
and Americans demanded short-term solutions. When Reagan said “It’s Morning
in America” that’s just what voters wanted to hear as a counter to the Carter
malaise. Reagan was charming, he could speak well, he made jokes, and never
mind that he set in motion ruinous policies as Governor of California.
As governor of California he was cheered by voters who liked his pledge “to
send the welfare bums back to work” and “to clean up the mess at Berkeley.”
In order to lower taxes he disbanded mental hospitals, which had the effect
of filling the jails with people the jail staff weren’t prepared to deal
Reagan’s presidential campaign echoed his California governorship, whose
disastrous consequences were not apparent to national voters. He stated that
“Government is not the solution to our problems; government is the problem.”
What a clever line, for anyone who can’t think. He therefore won the election
Reagan was a conservative’s dream-come-true. Half a year into his administration
the federal air traffic controllers went on strike, so he fired them, thus
sending a message to employers that they could confront unions. Also during
his first year in office he lowered taxes by amounts that ranged from 20%
for the wealthiest to 3% for the lowest income bracket. The underlying theory
for this imbalance is called “trickle-down” economics, which assumes the
wealthy will invest their savings in job-creating businesses which will benefit
the poor. An alternative explanation for tax cuts that favored the wealthy
is to consider who funded his campaign then recall the old saying that “you
dance with the one that brung ya.”
In 1986 Reagan signed a second tax reducing bill, which lowered the top tax
rate from 50% to 28% while the bottom rate was raised from 11% to 15%. In
addition, interest on credit card debt could no longer be declared as a deduction,
which hit poor people harder. Capital gains were taxed at a lower rate, which
helped wealthy investors. The same tax act increased incentives for investing
in home ownership versus home rental, which also favored the wealthy. Changes
were made to the Alternative Minimum Tax that had the effect of increasing
taxes for the middle-class, with ever-increasing effect as inflation raised
What an amazing feat for Reagan to have lowered wealthy taxes from 70% to
28%, while raising rates at the low end of the income scale, and all in just
5 years! Did this Reverse Robin Hood tactic improve the American economy?
While it’s true that the rate of inflation and jobless rate came down, tax
revenues also came down at the same time that federal expenditures went up.
The budget deficit just kept getting worse during the Reagan years. The federal
government had to borrow to pay for the national debt, which grew from $0.7
trillion to $3.0 trillion during his presidency.
A hallmark of his administration is that he did what corporations wanted:
union-busting, less government regulation of business, lower taxes for the
wealthy and disregard for anti-trust laws. Working people started losing
their good-paying jobs and had to settle for lower-paying ones, median income
stagnated and eventually decreased, employee benefits began to erode (health
insurance and retirement funding). Families headed by two wage-earners became
the norm, and job security worsened. Downsizing while promoting overtime
allowed employers to save on health care costs. The working classes became
docile for they feared that complaining could jeopardize the jobs they had.
Social stability was achieved, and labor costs for corporations were reduced.
Corporations achieved some of these savings by lobbying lawmakers and infiltrating
the executive branch of government. Corporate mergers were allowed to happen
in defiance of monopoly laws. “Trickle down” didn’t happen, because corporations
aren’t motivated to help workers, they’re motivated to exploit them, wherever
that exploitation is easiest and cheapest. Instead of “trickle down” the
American economy had become “trickle up” – with the wealthy able to steal
from the poor.
In 1981 the US was at its peak as a creditor nation. During the last six
Reagan years America became the world's largest debtor nation, with an economy
increasingly owned and controlled by foreign investors from across two oceans.
In the 23 years since 1981 America changed from having a $3.3 billion credit
standing to having a $2.5 trillion debt owed to mostly foreign investors.
The turning point from creditor nation to debtor nation occurred in 1984,
just 3 years after Reagan took office. (Reader, judge for yourself whether
President Reagan deserves the nostalgic accolades that Republicans heap upon
him as they campaign against Democrats in 2008.)
One of the most interesting economic tricks of the 1980’s relates to consumer
credit card purchasing. As Thom Hartmann explains (on his radio shows), the
immediate effect of busting unions and creating opportunities for businesses
to exploit ways to lower wages is that ordinary consumers had less money
for buying the products businesses were trying to sell. This situation resembled
the Coolidge years, for the same reasons, and some clever people recognized
this as a business opportunity. Why not restore credit purchasing by offering
credit cards (the new technology twist) for “buy now, pay later.” It worked
during the 1920’s, so let’s try it again. The credit industry grew, and grew,
until today it is a $30 billion dollar industry. Personal savings during
the past 25 years have undergone the same changes that occurred during the
1920’s, from positive to negative. Investors from around the world have come
to America to keep the credit industry funded, thinking that this was a good
investment opportunity. And it has been a good investment opportunity, for
the government has allowed the industry to charge “usury” rates.
I stated earlier that Reagan aspired to be the Coolidge of the 1980’s. You
may wonder why Reagan did not produce an economic collapse like the Great
Depression. The answer is that during the 1920’s the rest of the world was
still suffering from World War I and they could not loan money to alleviate
the American debt and domestic credit crisis. During the 1980’s the rest
of the world was prospering, and they could help Reagan continue his fiscally
irresponsible policies, and they could buy American credit card debt. This
postponed the day of reckoning by 25 years, as I will describe in a later
There’s another way of viewing Reagan if you are most interested in a long-term
campaign of returning America to that conservative dream of being ruled by
a wealthy elite. The shortest path to “royal rulership” is to ally the government
with corporations and create policies that benefit corporations. There’s
a small matter of disregarding common people. The trick in doing this is
to fool the middle class into thinking the government is doing things for
them. Instead of declaring honestly that measures are being taken to “starve
the beast” that helps the needy by creating a debt that requires drastic
reductions in social benefits, the conservatives pitch the merits of individual
ownership and getting the government out of the way for economic growth.
As corporate lobbyists draft laws that benefit their corporate employer,
and contribute to the campaigns of congressmen who pass those laws, the government
is transformed from being “of, by and for the people” to one that is “of,
by and for corporations.” There’s a name for this kind of government; it’s
Benito Mussolini defined fascism as “…a system of government that exercises
a dictatorship of the extreme right, typically through the merging of state
and business leadership, together with belligerent nationalism.” I’ll discuss
his references to “dictatorship” and “belligerent nationalism” in a later
section (“The Cheney Administration”). For now, focus attention on the reference
to “merging of state and business leadership.” In the shortest path to royal
rulership the first step is to form an alliance with corporations, and this
was Reagan’s greatest accomplishment.
I hereby confess to voting for Republicans until I saw Reagan’s actions as
president during his first term. For his second term election I started voting
for Democrats. This year, 2008, I will not vote, for reasons given in the
I have noted that Democrats dominated American politics from FDR’s election
in 1932 until Nixon’s election in 1968. Since then American politics has
been dominated by Republicans. Reagan was wildly popular during the election
following his two terms, in 1988, when George H. W. Bush (Bush Senior) won.
Bush had been Reagan’s vice-president for 8 years and the American people
were clueless about the slow-ticking economic time-bomb that this administration
Bush Senior had a single term presidency (1989-1993). His first task was
to get control of the national debt, that had tripled during Reagan’s tenure.
He and the Republicans wanted to reduce spending while Democrat-controlled
Congress wanted to raise taxes. His efforts to do both ended with more tax
increases than budget cuts, and this caused Republicans to feel betrayed.
This set the stage for Bill Clinton’s election win in 1992.
The Bill Clinton Years
Bill Clinton’s presidency (1993-2001) began just as the American economy
was recovering from a mild recession that kept Bush Senior from being re-elected.
During his first year in office he supported and signed NAFTA (North American
Free Trade Agreement). This may be one of his gravest mistakes, for it accelerated
American job losses. His administration wanted to reform health care but
well-organized lobbyists (AMA and health industry) got in the way. One of
his successes was lowering taxes for the poor and raising them slightly for
the wealthy. During most of his two terms the Republicans controlled Congress,
and this hampered what he could accomplish. Nevertheless, the economy
grew dramatically during his second term due largely to the internet and
speculation in the high technology sector. By the end of Clinton’s presidency
the federal budget was balanced and the national debt had been paid off,
leaving a surplus. Al Gore was vice-president for both terms and he played
a major role in reducing the size of government. It’s ironic that the Democrats
were able to accomplish two key goals that Republicans claim as theirs: reducing
the size of government and balancing the budget to the point of creating
The Cheney Era
The election of 2000 was nasty by anyone’s account. Karl Rove had refined
the winning use of dirty and divisive politics from the days he helped George
Bush Junior win the Texas governorship. Rove had set as a goal delivering
Texas to the Republican party, and he was amazingly successful in this. His
tactics were so unethical that even George Bush Senior kept him at arm’s
length. The Rove-orchestrated smear of Senator John McCain during the Republican
primary campaign was adept, and it knocked McCain out of the running. Even
ignoring the voting irregularities in Ohio and Florida, it is a credit to
Rove that he propelled Bush to a close-call vote against a more articulate,
more experienced and more intelligent Al Gore. The outcome was eventually
decided by the U.S. Supreme Court.
Because subsequent events have shown that vice-president Dick Cheney has
played a very important role “behind the scenes,” and some think his influence
exceeded Bush Junior’s, I will refer to the following 8 years as the Cheney
Era. Bush Jr. acted as a figurehead, or, as the campaign touted, someone
“regular folk” would like to have a beer with.
The Cheney Era has been the least concealed attempt to recapture “royal rulership”
of any previous Republican administration, including the one that created
the Great Depression by Calvin Coolidge. It is generally recognized that
the Bush family has a history of elitism (Philips, 2002), so it was not surprising
when Cheney began maneuvering to expand the power of the Executive branch
of government. Cheney uses the term “unitary executive theory” to justify
giving the president final decision over all actions by the Executive branch
of government. Other behaviors of the Cheney administration expand on this,
the most egregious of which are “signing statements” that specify what parts
of a newly passed law by Congress the president intends to execute. Every
year of their two terms has seen a growth of presidential power under Cheney.
The federal budget surplus that the Cheney administration inherited was returned
to the taxpayers in the form of a $1.35 trillion tax cut, which almost exclusively
benefited the wealthy – especially when secondary effects are taken into
account. Cheney sold the tax cut with the following slight of words “the
surplus is not the government’s money.” Because a recession was looming Treasury
Secretary Paul O’Neill opposed the tax cut, claiming it would worsen the
budget deficit and threaten Social Security. But if that was one of the purposes
for the tax cut, O’Neill’s argument must have just strengthened their resolve
to go through with them – which they did. O’Neill describes a conversation
with Cheney thus: Cheney says to O'Neill, "Reagan proved that deficits don't
matter. We won the midterm elections. Our due is another big tax cut. (from
the 2004 book The Price of Loyalty by Ron Suskind, about Paul O’Neil’s rocky
tenure as Treasury Secretary). The federal debt rose every year of the Cheney
administration, to a current value of $9.5 trillion.
Cheney wanted to loosen regulation of industry, and two of those to benefit
were the mortgage and investment industries. Sub-prime interest mortgages
were promoted during the second term (Federal Reserve Chairman Alan Greenspan
did not object) and they were issued to home buyers regardless of ability
to pay (some without jobs or down payment), and the mortgage loans were bundled
and sold as highly rated “derivatives.” When owners began to default on mortgage
payments and their property was foreclosed (starting in 2007) there was confusion
about who owned the property. Executives of mortgage companies guilty of
unethical financial dealings nevertheless collected large salaries and bonuses,
even as some of those companies went bankrupt.
Much of the Cheney “royalization” project was done using lobbyists who drafted
legislation that Congressmen would promote in exchange for campaign contributions.
There are many examples; consider the following.
The Medicare Act of 2003 created a drug insurance program to be offered by
private insurance companies that would compete for the privilege of offering
this supplement to Medicare. It passed in Congress after a long, arm-twisting
session with irregular procedures, well past the midnight hour, with a provision
that the price of drugs could not be negotiated by the private insurance
companies. This law, which has greatly benefited the pharmacy industry, is
the kind of legislation that the pharmacy lobbyists would have drafted if
they could have, and they most likely did.
Cheney must hate Social Security. He began with a first step for its dismantlement
the idea of allowing contributors to divert part of their Social Security
payment obligation to a personal account in the stock market. This was given
the nice-sounding name of “personal ownership.” But since it was promoted
at a time when the stock market was faltering the idea aroused broad public
disdain and it went nowhere. This legislation would have greatly benefited
investors on Wall Street, and it might have been drafted by their lobbyists.
Early in the first term Cheney convened a secret Energy Task Force meeting
to create an energy policy. The list of participants has never been released,
but given its supply-side, oil oriented structure one can speculate that
oil company executives were in attendance.
The Cheney position on global warming, which they slyly refer to as “climate
change” (thanks to Frank Lunts), is that it may be a natural climate cycle
so it is premature to enter into any international treaties (e.g., the Kyoto
Protocol) that would restrict CO2 emissions or regulate industry.
Words can deceive, and that’s what was done with the “Clear Sky Initiative”
(another sly title that misleads), an amendment to the Clean Air Act (that
Cheney’s administration reluctantly inherited). This regulation-emasculating
legislation failed to be enacted by Congress so Cheney implemented key provisions
by instructing the EPA (Environmental Protection Agency) to proceed with
NOx, SO2 and mercury trading; this questionable administrative procedure
led to a court challenge.
The EPA systematically censored reports it was mandated by Congress to issue
in a way that made it seem like industry regulation was not necessary. Climate
scientist Jim Hansen was ordered to not speak candidly at public scientific
meetings because his message was clearly at variance with what the Cheney
administration wanted to believe. Even NASA is guilty of implementing some
of the administration’s “clearance before speaking” directives. It is easy
to imagine that the oil, coal and electric utility industries lobbied for
Every business must like cheap labor. There’s nothing wrong with this, but
is it legal to urge the Executive to hamper enforcement of illegal immigration
in order to have a large pool of compliant workers? The “undocumented alien”
(UDA) will not complain about job safety, overwork, low pay and they will
not unionize. The Cheney attitude of neglecting to enforce employer sanctions
was a “dream come true” for the poultry, meat packing, agriculture, construction
and landscaping (gardening) industries. The Democrats in Congress also like
illegal immigration because Mexicans tend to vote Democratic. The assumption
is that after hordes of Mexicans make it to America they will become American
citizens through amnesty legislation, which most Democrats and Republicans
want. But the UDAs create a burden on local communities, for they use emergency
rooms for their routine medical care, they have lots of children who attend
schools paid for with property taxes, they steal people’s identification
(mostly Social Security numbers), they cause high-speed chases that lead
to frequent deadly accidents and they trash rural pathways to their transportation
rendezvous sites. I live 7 miles from the Arizona/Mexico border and I understand
these problems. The Republican business people are as guilty as the Democratic
Party for neglecting these problems.
Within days after the 9/11 Saudi Arabian Islamic terrorists flew airplanes
into the World Trade Center buildings and the Pentagon, Senator John McCain
renewed his call for attacking Iraq. He advocated bombing, not an invasion
at that time, and his rationale was to scare Middle Eastern countries into
“not messing with America.” He didn’t claim that the terrorists had been
helped by Iraq’s Saddam Hussein. Cheney, Rumsfeld and Bush, however, had
been talking about invading Iraq since the first month of the Cheney administration,
and their plan was for an invasion. The real motivation for such an invasion
may never be made public, but speculation includes a desire to have access
to Iraq’s oil fields (a boon for oil company business). The 9/11 attacks
gave Cheney and Rumsfeld the excuse for invading that they wanted. Cheney
heavy-handedly interfered with the CIA investigation of any possible links
between the 9/11 attackers and Iraq, and made unprecedented visits to the
CIA that are described by intelligence officials as intimidating. Selling
the war took 1½ years, and the final step was to convince the United
Nations that Iraq had weapons of mass destruction poised for use in ways
that would interrupt Saudi Arabian oil production and lead to global recession.
Cheney’s aide “Scooter” Libby drafted a speech for Secretary of State Colin
Powell to deliver at the UN, with only a few days left for fact-checking.
Powell’s credibility was exploited shamelessly, and he must view his speech
before the UN as the most embarrassing day of his life. The speech did the
job, for the UN passed a resolution, which was Cheney’s “green light” for
The FDA (Federal Drug Administration) is supposed to regulate the pharmaceutical
industry. Instead, they protect and promote it. Drug testing, that used to
be conducted by independent laboratories, is now conducted by the pharmaceutical
company that manufactures the drug. As a result drug side effects are usually
discovered after it has been on the market and billions of dollars have been
made from it. Cheap alternatives to drugs are disparaged by bogus experimental
trials. When a patent drug approaches the date when it should become “generic”
the FDA allows a small change to be made that resets the calendar.
It has been estimated that over 100,000 deaths can be attributed to drugs
that are taken as prescribed by a doctor (to the extent that charlatans are
wearing white coats the above statistic may be more of an indictment of doctors
than the pharmaceutical industry.)
There are so many regrettable actions taken by the Cheney administration
that books could be written about them, and have been. My purpose here is
to recount some of the ones that illustrate Cheney’s attempt to grab power
from Congress, ignore the Constitution, favor corporations, retrench on New
Deal advances for the middle class and the poor, and bring America closer
to a “proto-fascist state” headed by the president as a dictator/king.
These are strong accusations. They deserve a review to show how my chapter’s
theme is supported by the Cheney administration. But before doing that, let’s
ask how America fared during the Cheney Era.
During the Cheney administration the national debt almost doubled, from $6
trillion to $9.5 trillion in early 2008 (about $100,000 per family). This
will take decades to pay off, assuming the American economy does not slip
into another recession. This burden will fall on future generations, maybe
some not yet born.
A report in 2005 stated that Americans spent $42 billion more than they earned,
and the most recent report from the Commerce Department found savings rates
at a negative one percent, the lowest since the Great Depression, and down
from 11 percent after WWII. An update for 2008 would show a far worse savings
rate. Only four times have savings rates fallen so low: The other two were
during the Great Depression when a quarter of the workforce was unemployed
and Americans spent their savings for essentials such as food and rent.
E. Manning writes the following (TNTalk.). “Many millions of jobs … have
been moved to distant locations outside the U.S. where labor costs are significantly
reduced. …Multiple times, Congressional measures have been considered to
restrain the federal government from granting contracts to companies that
send work overseas. The Bush Administration has consistently opposed the
legislation. The administration has continually supported tax incentives
to outsource jobs overseas. … The government has worked as a partner to stem
public scrutiny of job outsourcing with no federal reporting requirements
for outsourced jobs. Multinational corporate America is fearful over a public
backlash of opinion that would prevent them from exercising complete autonomy
over their corporate work forces. … The Brookings Institute [estimates] that
outsourced re-employed workers recover 47 cents of every dollar that they
used to earn.”
Ohio has seen a loss of 209,000 jobs, or 3.7%, during the first 7 years of
the Cheney administration. The US job loss during this period was 19.5%.
61% of Americans fear job loss due to outsourcing. In 2004 the head of the
president’s Council of Economic Advisors, Gregory Mankiw, described the advantages
to US companies for outsourcing jobs overseas. Mankiw said “When a good or
service is produced more cheaply abroad, it makes more sense to import it
than make or provide it domestically.” “…outsourcing is just a new way of
doing international trade. …that’s a good thing.” Federal Reserve Chairman
Alan Greenspan defended Mankiw.
A typical worker in a Chinese factory earns ~50 cents per hour, without the
protection of workplace safety regulations or limits on overtime. Chinese
factories also have fewer environmental laws to deal with. How can American
workers compete with workers in Communist China? From the standpoint of a
manufacturing company it would be a good thing to use slave labor, or maybe
invent a machine that could reduce their labor costs to zero by dispensing
entirely with workers. It would make sense for a company to adopt such a
cost-saving change, but only if very few other companies did the same. After
all, if there were no jobs for workers anywhere, who would buy the products?
The “free market” left to itself cannot handle this situation; this is a
role for governments, which, after all, are supposed to represent the interests
of all the people.
The trade deficit in early 2006 was $817 billion, and rising each year. About
a third of this imbalance was due to trade with China. Foreign interests
hold about $2 trillion. More than half of US Treasury bonds are bought by
foreigners. US companies and infrastructure are being purchased by foreigners
with the American dollars that just keep accumulating in their bank accounts.
The unemployment rate is rising as I write. It now stands at 6.1% (mid-2008).
When discouraged former workers are included the rate is ~ 10.3%. For reference,
during the Great Depression it reached 25%. Because of American worker wage
losses the credit industry generates over $30 billion in annual profits.
David Walker, the US Comptroller General (who audits the federal budget books)
has been traveling throughout the country warning Americans about the dire
economic situation. Here are some comments that I found on the internet (apologies
for not keeping track of the sources). “Foreign governments and investors
now hold fully half of the United States' total outstanding debt, making
Washington susceptible to a new form of geopolitical conflict” “Japan and
China are America's two biggest lenders. Great Britain is third, followed
by a bloc of oil-producing states including Iran, Kuwait, Saudi Arabia and
Libya.” “So in trade and military disputes, China, as America's No. 2 lender,
holds considerable influence.” “Foreign lenders, Bixby notes, can demand
conditions - or threaten to stop buying U.S. Treasury securities, or even
dump their existing holdings outright. To lure other buyers of Washington's
debt, U.S. interest rates would then have to rise sharply, throttling the
nation's economy.” "It means foreigners have more leverage on us and we have
less leverage on them," Walker said. "You have to pay attention to your bankers."
“If the US could no longer borrow as it has been doing, interests rates would
skyrocket, home values would plummet, people would lose their jobs, and government
services would have to be cut drastically. Shantytowns could spring up, making
America look more like Haiti and South America.” "I'm sure that people during
the Roman Empire never thought that Rome would fall," Walker said in an interview
last week. "I don't think we should assume that we are too big to fail."
“All…agree it's a fantasy to argue that the U.S. can grow its way out of
its debt,” Bixby said. "The economy would have to grow at an implausible
Critical Review of the Cheney Era
During the Cheney Era government power flowed to the presidency at the expense
of other parts of the Executive branch and also at the expense of a “rubber
stamp” Congress. Many laws were passed that appear to have been drafted by
corporate lobbyists, and may have been coordinated by Cheney’s office. The
effect of the laws has been to loosen regulations affecting corporations,
lower corporation taxes and allow them to exploit cheap labor in foreign
countries. The Cheney administration’s neglect of enforcing employer sanctions
for hiring illegal aliens allows corporations to exploit workers by paying
lower wages and neglecting safety regulations. Laws that encourage globalization
led to job outsourcing to countries with cheaper labor (which began with
Clinton’s NAFTA, to be fair to Cheney). Tax law changes favored wealthy individuals
and punished poor and middle class wage earners. Credit card purchasing allowed
strapped wage earners to stay afloat, but because the credit industry is
allowed to charge usurious interest rates many people are driven to bankruptcy.
Health insurance continued to rise much faster than other family budget items,
and this may be due to an unwillingness to resist laws drafted by pharmaceutical
industry lobbyists that reduce competition. America’s energy policy continues
to be based on oil, with minimal funding of alternative and renewable energy
technologies. The median family income (with an ever-growing number of two
wage earners) has decreased slightly during the Cheney Era, while the top
1% have enjoyed unprecedented income increases.
As an aside, Jamie Johnson produced a movie “The One Percent” that documents
attitudes of the wealthy. He is descended from the founder of Johnson &
Johnson, and belongs to the wealthy class himself, so he had access to America’s
wealthiest people for the movie. In a recent web post (http://www.huffingtonpost.com/jamie-joh)
he remarks that some of the wealthiest are looking forward to a recession
for selfish reasons! It will result in a “thinning of the aristocratic ranks”
and lower prices for luxury goods that they have had to pay more for in recent
years. In other words, the ultra-rich resent the very-rich, and the poor
others can just go fly a kite! Johnson writes “…under the threat of hard
times the mega-wealthy aren't feeling a greater responsibility to reflect
upon the problems surrounding the growing wealth gap; they are, in fact,
trying to fatten their wallets and further insulate their lifestyles. I had
hoped that foreboding economic circumstances would have caused the ultra-rich
to think not just of themselves and increasing their own personal affluence.
Unfortunately, however, too many of them lack concern and without this concern,
the divisive imbalance will only worsen with recession.” I highly recommend
viewing the above URL for it contains more damning evidence than I could
include here. This rare insight into how the very wealthy think, and how
little regard some of them have for ordinary people, helps explain why corporate
executives can do some of the shameful things they do. It may also account
for the radical core beliefs of the hard-core Republican conservatives, like
Over and over, during the Cheney Era, the wealthy have prospered while the
poor and middle class have suffered. This cannot be an accident; it has to
be the result of policy changes that are part of a long-term project to return
America to a less democratic, more authoritarian form of governance by the
When America declared independence from England 232 years ago there were
many who preferred to be ruled by King George III. These “royalists” had
a resurgence during the Gilded Age of the 19th Century. And another resurgence
during the Roaring Twenties. Their most recent resurgence occurred during
the Reagan to Cheney era.
Government has become a better partner with business than at any time since
1929. The 9 years that led to the Great Depression resemble the 25 years
since Reagan became president. The slowness of the present economic decline
is due to the ability of the rest of the world to loan money to America.
But America is now so deep in debt that the outcomes for these two periods
may eventually be the same.
The American government is no longer “Of the People, By the People and For
the People.” Instead, the government is “Of Corporations, By Corporations
and For Corporations.” America has quietly created its own version of a Proto-Fascist
Let’s review Mussolini’s definition of Fascism to see how accurate my indictment
is: “…a system of government that exercises a dictatorship of the extreme
right, typically through the merging of state and business leadership, together
with belligerent nationalism.” The word “dictatorship” is partially fulfilled
because Cheney uses his figurehead president to issue signing statements
that overrule Congress. The “merging of state and business leadership” is
almost completely fulfilled, thanks to the common practice of lobbyists drafting
laws that elected congressmen are expected to pass (in exchange for campaign
contributions). And “belligerent nationalism” was demonstrated by the way
America installed a new regime in Iran in the 1970’s; by the American CIA
assisted assassination of Chile’s socialist president Allende in order to
pave the way for murderer Pinochet to take power; and by America’s unwarranted
invasion of Iraq with dubious provocation. I think this demonstrates “belligerent
America’s evolution to a proto-fascist state may have gone too far to be
reversed. Once again in the history of humans, power wins! The strong have
figured out a way to steal from the poor, and they’ve done it so quietly
that the poor don’t even realize that they’ve been victimized. So naturally
the poor are unaware of who’s been doing the stealing. The victim’s pockets
were picked so expertly that with their clueless vote the pick-pocketers
continue to enjoy everlasting opportunities for continuing their scam.
Will America Avoid a Great Depression?
The question to ask now is “Will America descend into another Great Depression?”
Let’s review the similarities of the 1920’s and the 25-year Reagan/Cheney
● During the 1920’s, businesses achieved 32% productivity gains but wages
increased only 8%. During the Reagan/Cheney era business productivity rose
40% but for 72% of workers wages declined. A new force came into play during
the Reagan/Cheney era: corporations fired American workers and hired cheap
● During the 1920’s, median savings dwindled to negative values just before
the Crash. During the Reagan/Cheney era median savings dwindled from positive
values to -1%. In 2005 the poorest 10% of families had a negative net
● During the 1920’s, installment credit purchasing increased as a solution
to falling purchases and filling warehouses. During the Reagan/Cheney era
the credit industry boomed for the same reasons, reaching $30 billion per
● During the 1920’s, Republicans controlled government and they empowered
their “rule” through corrupt and immoral stratagems. During the Reagan/Cheney
era the same occurred.
● During the 1920’s, the income gap between rich and poor grew to the staggering
state in which 0.1% of people controlled the same wealth as the lowest 42%.
I don’t have the 2008 statistic for the top 0.1%, but in 2008 the top 1%
controlled about half of America’s wealth (Jamie Johnson, 2008). During the
21 years from 1984 to 2005 the top 2% of American families doubled their
wealth while the bottom 25% lost wealth (corrected for inflation). During
the Reagan/Cheney era, the ratio of a Fortune 500 CEO earnings to the average
worker’s earnings changed from 40:1 to 424:1 (Allan Ornstein, 2008). In 2006
the top 1% earned 20.3% of all income.
● During the 1920’s, “…the Revenue Act of 1926 … reduced federal income and
inheritance taxes dramatically.” In just 5 years Reagan lowered taxes for
the wealthy from 70% to 28%, while raising rates at the low end of the income
Had enough? If you want to be scared some more, go back and re-read the section
on the Roaring Twenties, and note the many similarities to the Reagan/Cheney
Theoretical Extrapolation of Current Trends
This penultimate section of the chapter is a valiant if not foolhardy attempt
to predict the future of America using the two theories that underpin the
Theory #1 states that during times of war, or times of extreme hardship that
resemble war, people are likely to sacrifice themselves on behalf of the
over-riding goal of tribal survival. For maybe 50,000 years this meant that
at the onset of inter-tribal conflict ordinary men would become patriotic
warriors and everyone else would support them with whatever patriotic acts
strengthened the tribe. The theory also states that in times of peace tribal
survival is not threatened, which releases people from patriotic duty. With
the breakout of peace people can be expected to act in ways that I have described
as “nasty and selfish.” This includes a form of greed accompanied by an unwillingness
to share one’s good fortune with those who made it possible, as well as a
mocking indifference to the poverty and suffering of others. Everyone who
can will aspire to wealth, and those who succeed will continue to exploit
those who have not succeeded.
Theory #2 states that the last 12,000 years of conflict between super-tribes,
that can decimate the losing tribe, evolution has favored people who are
programmed to prefer a form of governance in which decisions are made from
the top by a strong leader. Nevertheless, there is also a minority (of pre-Holocene
“throwbacks”) who are inclined to prefer a more democratic form of governance
in which the people make decisions that regulate how everyone is to behave,
regardless of their strength.
Maybe these two theories can be combined into the following prediction: During
war (or times of extreme hardship) people demand strong leadership for coordinating
the efforts of everyone else, who in turn are all deemed essential for the
group effort to survive. During times of peace people want to be left alone
to pursue their own aspirations to prosper. But those who prosper the most
(achieve wealth) take advantage of their power to exploit and subdue the
others. Since most people are susceptible to being followers (because following
during war is essential) they may follow when it is not in their best interest
to follow. The danger of this is especially great when a powerful leader
is very clever at redefining which social condition is operative. This can
lead to an unwanted leadership that neglects the aspirations of everyone
who lacks power.
The illegitimate leader situation is self-limiting, because a society requires
the productive labors of that “man with the hoe” and if his hoe is taken
from him he cannot produce. Every empire is destined to collapse following
corrupt leadership. After the collapse the productive peasant reclaims control
of his life and it is his responsibility to figure out how to prosper, and
in the process maybe create another empire. This implies that history can
be viewed as a pendulum that swings back and forth between the two states.
The pace of the pendulum’s swing may vary greatly.
Let’s review how the pendulum has swung during America’s 232 years as a country.
It will be convenient to invent terms for referring to the two extreme states
of the pendulum. How about “producer” and “parasite.”
Starting with the War of Independence, which is “producer,” we see a slow
swing to the “parasite” state called the “Gilded Age” (1877-1893). During
the “Progressive Era” (1896-1920) the pendulum swung back to “producer.”
The 1920’s saw a fast swing to “parasite,” culminating in 1929. The New Deal
era of FDR saw a swing back to “producer” – which endured until Nixon’s election
(1968). Slowly the pendulum swung in the “parasite” direction until it got
a big boost from Reagan, which caused the parasitic movement to accelerate.
With Cheney the pendulum has swung to a “parasite” state that is about as
far as it can go. What, we now ask, what will the pendulum do next?
At the risk of overusing a metaphor, I allege that there’s no guarantee that
the pendulum will keep swinging. When it goes too far in the “parasite” direction
it may be “caught” and held there.
You may have thought that I was going to predict that the pendulum would
soon swing in the “producer” direction. This would be good, but for this
to happen the corrupt leadership would have to “return the hoe to that man
who wants his hoe.” If the wealthy Americans refuse to give that man his
hoe, America could become a fascist state!
This happened in Italy and Germany 75 years ago, and it happened in Japan
During the Reagan/Cheney interval America’s wealthiest people have prospered
from productive labors that have shifted ever-so-slowly, but irreversibly,
to workers in third world countries. The American worker has had his hoe
taken from him by the parasites, and those parasites have given the hoe to
But the parasites “made a deal with the devil” as they did this. The producers
overseas have started to own America. It’s more accurate to say that the
overseas governments have begun to own America. Those overseas governments
are also prone to exploit their workers, and when American corporations wanted
the labors of workers in those overseas countries the governments saw an
opportunity for improving their wealth, so they allowed the corporations
to locate their factories there. America now has “its hands tied.” It cannot
object to anything our creditors want. If China wants to take over Taiwan,
they can do it with impunity. If Saudi Arabia wants to buy controlling interest
in profitable American companies, the laws will be changed to allow that
rather than risk financial ruin.
Little by little America will become fractured into pieces that resemble
colonies belonging to many other countries. China will own mines that produce
the minerals they need, they will buy farms that grow the wheat, and the
cattle ranches that used to provide meat to Americans will ship the meat
to China. America will become a source of resources that will flow to our
creditor nations, and Americans will be working for foreign employers. It
will be a reverse of the present situation where Chinese workers make Nike
sneakers for export to America.
Order will have to be maintained in America for our colony status to remain
valuable to our creditor nations, and this may be done by the American parasites
using a fascist fist. Cheney is suited for this job, but as he retires there
will be other Cheneys eager to exercise fascist discipline.
The grim portrait of America’s future may not happen. I hope it doesn’t happen.
But it may happen!
Prospectus for America
I mentioned earlier that I was not going to vote in the 2008 elections. This
is because I believe America’s fate is sealed, and nothing can turn around
the inevitable slide to fascism.
McCain/Palin might actually be good for Planet Earth! The sooner America
slips into depression, the sooner our Earth will be relieved of a profligate
polluter and destroyer of nature.
It’s frustrating to see things about America the way I do. Sometimes, when
I feel a pang of optimism, I hope that I’m wrong. But I always come back
to this unhappy picture. Imagine standing at the bow of the Titanic, seeing
an iceberg, shouting warnings to the others on the ship, but no one listens!
That’s how I feel.
American voters have lost the right for a winning place in the world. When
voters get what they want, they deserve what they get – “good and hard” as
Mencken would say. Long-term prosperity has to be earned, and the pursuit
of short-term prosperity by taking short-cuts has a deservedly uncomfortable
end point. If I were younger, I would try to relocate to New Zealand. But
as a retiree, nestled on a small acreage in the Arizona countryside, I shall
sit back to watch the unraveling of a country that I once loved.
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