by Morgan Sandquist, a member of the Occupy Wall Street Alternative Banking Group.
Still sitting in our breakfast nook, with the banking industry squinting grumpily back at us through the glare of the morning sun on the perfectly polished granite table top, we can sit back, rest our hands on the table, and rather than shouting what it expects to hear, playing our part in the script of codependency, we can speak, without pleading or rancor, the truths that are beyond the script.
Rather than repeating once again our expectations and the banking industry’s failure to meet them, rather than pleading with it to live up to its obligations and do what’s fair, we can speak of the mundane practical details of our life and our children’s lives after its eventual demise, of the specific process by which everything around us will be sold to pay the ruinous debts for which its insurance will prove woefully inadequate.
We can make of the inevitability something tangible, rather than a vague, abstract threat. We can catalog the likely disposition of all of the banking industry’s prized possessions and family heirlooms, the eventual owners of everything it values. We won’t engage in a debate over whether the inevitable will occur, nor will we revel in the justice of it, because we’ll all suffer.
The banking industry must take responsibility for the laws it has broken and make appropriate restitution, not because we’re vengeful, but because the connection between choices and consequences so necessary to any successful relationship must be restored. And as long as the banking industry is adamant that it can’t or won’t change, and given the suffering that will follow from that refusal, we have no choice but to regretfully plan for our own and our children’s well-being to the extent we can. Should it accuse us of betrayal, our response is that the first step toward an alternative is one the banking industry must take.
I would have liked to title this section of this essay “Recovery,” but I’m not in the position to do that. I can’t speak to outcomes, only to process. I’m neither imaginative nor prescient enough to suggest what the successful results of our efforts might look like, but I have some idea of how those efforts should be undertaken.
I could use the Twelve Steps of Alcoholics Anonymous (“We admitted we were powerless over debt–that our industry had become unmanageable,” and so on) to describe what might follow from the banking industry taking that first step, but that would be a too literal extension of the metaphor.
The truth is that history offers no examples of the sort of transformation that’s now needed. Though addiction and recovery may offer greater insight into our predicament than yet another political or economic analysis, there’s no reason to believe that the situation will stick to that metaphor as it evolves, even as we proceed with what is essentially an intervention.
Gil Scott-Heron famously said, “the revolution will not be televised.” I take this to mean that any real, fundamental change to the workings of our society, won’t be an entertainment offered by revolutionaries to the rest of us. It won’t be achieved if we sit home waiting for someone on television, or now the Internet, to present us with a number we can call or text, a petition we can sign, or a ballot we can fill out. Our opinions will effect nothing, and our agreement is neither solicited nor required.
I offer this essay not to start another in the endless string of conversations about what is to be done, but to prompt you to do it, whatever it will be, even if what you will do proves that everything I’ve written here it categorically incorrect. I also offer this as an explanation of why I’m doing what I’m doing.
Among other things, I’m working with several participants in the Alternative Banking Working Group on a Web application that will allow people in New York City (and, later, the rest of the country) to find credit unions for which they’re eligible (something that turns out to be far more complicated than you might expect). This will facilitate the return of money from banks, where it functions as an addictive substance, to community ownership, where it functions as a tool in the business of that community.
I do this on your behalf as well as my own, but not in your place. What else will be done and what will come of it will be the result of what you do. The Occupy Wall Street movement is entirely open and will become no more or less than what we make of it. Tomorrow’s May Day events will provide people with the chance to find out for themselves what that movement is, how they can become involved, and what it will become.
With events in more than 115 American cities and many more around the world, you should be able to find an event near you (if you’re in New York City, you can even hear more about the prank played on MF Global by the banks).
Take the day off and meet the people with whom you share this struggle, whether you’ve agreed to it or not. If the movement isn’t what you want it to be, it’s incumbent upon you to transform it as necessary. You can sit home waiting for a movement that checks all your boxes to somehow arise and solicit your participation, but so passive an approach is unlikely to accomplish much.
Let’s all get together on May 1st and see how much we can accomplish in this American Spring.
http://mathbabe.org/
Monday, April 30, 2012
Finance in Denial – An Intervention
by Morgan Sandquist, a member of the Occupy Wall Street Alternative Banking Group.
What are we to do with our banking industry, sitting there at the kitchen table in its underwear, drumming on the table with one hand and scratching its increasingly coarse chin with the other in an impossibly syncopated rhythm, letting fly a dizzying stream of assurances, justifications, and accusations, and generally spoiling for a fight that can only be avoided by complete and enthusiastic agreement with a narrative that can be very difficult to follow, let alone make sense of?
Because this is our kitchen too, we have our legal and moral rights. We would be well within those rights to respond to its nonsense with far more coherent and sweeping condemnations of our own. Throwing the bum out in its underwear without so much as a cup of coffee, taking the children, and keeping our share of whatever might be left could certainly be justified.
Though the sense of release offered by those responses is tempting, they’re not likely to be of any practical use. We can’t win an argument with an irrational person, and our share of an insolvent industry is likely to be very little–certainly not enough to feed the children. We have to recognize the hard truth of our implication in the banking industry and its addiction.
This doesn’t mean that we’re responsible for the addiction and its consequences, or that we can make the choice not to continue that addiction on our own, but it does mean that the problem won’t be constructively resolved without our efforts. To the extent that denial is about obscuring the connection between decisions and results, the most effective means of undermining denial is to clarify that connection, and the process of doing that is intervention.
Whether or not its participants are thinking in these terms, Occupy Wall Street, to the extent that it can coherently be referred to as an entity, is in many respects functioning as an intervention into the banking industry’s increasingly untenable addiction to money and debt.
The movement’s core values of transparency, sustainability, and nonviolence reflect the clarity, patience, and compassion needed for an effective intervention.
This is not to say that all of the efforts directed at banks by the movement have been magnanimous or constructive. We have to remember the terrible suffering that has been inflicted upon so many and offer that clarity, patience, and compassion not just to the addict, but also to ourselves as intervenors and to everyone who has been affected by the banking industry.
On the whole, I have been deeply heartened by how this movement has evolved over the last seven months, and though intervention isn’t the easiest or most promising process, it’s one I recognize and know can work (in stark contrast to political revolution). From the beginning, the Occupiers have shown a fearless, poignant spontaneity that’s available only beyond the addiction-centered dynamic of denial, and the banking industry, its enablers, and others still within that dynamic of denial (which, to be fair, has included most of us at one point or another) have responded as would be expected.
The determination and wisdom granted to those who see more clearly is profoundly threatening to those seeking to maintain denial, though of course they wouldn’t be able to say quite why.
The initial objections from the press that Occupy Wall Street was making no demands could be seen as an enabler’s yearning for symptoms that can be isolated and addressed, without admitting to or addressing the addiction from which they arise. To keep calmly and patiently pointing to that underlying cause is simultaneously incomprehensible and maddening to those trapped within denial, and their responses have run the gamut from smug certainty that nothing could possibly be wrong to whistling past the graveyard to ill-conceived and unjustified violence. And the Occupiers’ patience, diligence, and good nature in the face of that decidedly ill will is as textbook an illustration of the process of intervention as we’re likely to see.
It would be all too easy to remain passive in the face of our increasingly delusional, erratic, and combative banking industry. Surely there must be a more palatable alternative to undermining the continued functioning of the complex and highly evolved process that is the core of our economy.
If we force it to rehabilitate, what will happen during that process? Will our economy collapse? When its rehabilitation is complete, will the banking industry be able to function as well as it once did? Or as the banking industry’s enablers would have it: Any attempts to regulate the banking industry will only harm it, making it less effective to all of our detriment; these banks are too important a part of our economy to be allowed to fail; and bankers must continue to receive bonuses for banks to remain competitive.
It’s true that the banking industry has seized upon the process that’s the basis of our economic survival, and that attempts to address the problems of the banking industry cannot be undertaken lightly. But it’s also true that the banking industry has perverted that process, and that attempts to address that won’t prevent our return to some fantasy of efficiency and plenty, though they might prevent the otherwise inevitable, tragic end of the current trajectory left unchecked.
Whatever happens while the banking industry is rehabilitated is unlikely to be worse than what will happen as it continues to indulge in its addiction unaddressed, and it’s unlikely to function any worse upon the completion of its rehabilitation than it is now. As Charles Eisenstein puts it, “any efforts we make today to ‘raise bottom’ for our collectively addicted civilization–any efforts we make to protect or reclaim social, natural, or spiritual capital–will both hasten and ameliorate the crisis.”
Once an addict has reached the point in his or her descent where an intervention is necessary, there’s no realistic possibility of a return to some pre-addiction Golden Age. The apparent paradox that an addict’s life must be destroyed to save it is, stated in those terms, false. The addict’s life only appears to be as yet undestroyed through the lens of denial, and a future life without substance abuse or consequences is an illusion.
But the more gently stated paradox that intervention will cause the addict suffering in the short term to help him or her in the long term is accurate. There are, however, deeper, more intractable paradoxes, and they are those of the psychology of addiction. The process of intervention is often crucial to an addict’s entering rehab and beginning recovery, yet only the addict can decide to enter rehab.
The addict must understand the damage he or she has done in order to stop using but mustn’t succumb to shame, which would simply cause a retreat to the substance. The addict must admit that he or she is powerless over the substance and that life has become unmanageable, but mustn’t surrender to hopelessness and despair, which would sap the considerable motivation needed in the process of recovery. An intervenor must do something, but there’s nothing that can be done. There is no single act, no grand gesture or magic bullet, that can accomplish anything meaningful or lasting. Intervention is a long, unpredictable process requiring superhuman compassion and patience of everyone involved. Prior training or practice in commitment to a process without regard to the outcome of that process is invaluable.
Yes, we can answer the banking industry’s petulant invective in kind, but that won’t fix the problem; the industry will become more defensive and reckless, and we probably wouldn’t end up feeling any better anyway. Our encyclopedic harangue would be cogent, compelling, and convince our friends in the retelling, but no matter how loud we shout it over the banking industry’s coffee cup into that sullen, bloodshot face, it will simply be brushed aside with the wave of a shaky hand and a hoarse grumble, or, worse, it will hit home, and rattled, the banking industry will glare at us and we’ll know that tonight will bring another nihilistic binge of leverage and derivatives, and maybe this time there will be no tomorrow morning. The industry will tell us that we don’t understand, that the pressure it’s under is unimaginable, that life is grim, and that even though it can’t fix that, it should be thanked for what it has accomplished, and that that’s the best it can do. What more could we want? What more could it do? And we can only sigh and shake our head, because we know the simple, honest answer would just fall on deaf ears, and even if it were understood and accepted, the broken soul sitting across the table is in no shape to do anything constructive.
The confrontations shown on television or in the movies, or that you have perhaps participated in yourself, are just part of the larger process of intervention, but they illustrate the themes that inform that larger process. Those themes can best be summarized as connection: the connection between the addict’s choices and the suffering of the addict and those who are around him or her; the connection between addiction and the addict’s choices; and the unbreakable, always available connection between the addict and the intervenors.
Where denial seeks to divide and conquer, intervention seeks to unify and transcend. Intervention doesn’t respond to denial on denial’s terms, but rather reflects reality as it is. It doesn’t engage in the petty distractions of accusations and recriminations, nor does it seek escape from the addict and his or her problems. Intervention shows the addict his or her choices as they’re made, how those choices are determined by addiction, and the consequences that follow from those choices, but it also shows the redemption that’s always available despite those choices and their consequences.
Where denial is deceptive, impulsive, and selfish, intervention is clear, patient, and compassionate. Intervention finally presents the addict with an unavoidable choice between continued deluded suffering and real, sustainable sanity. The addict may or may not respond positively to that choice, but it must continually be presented on the same terms until the addict surrenders his or her denial.
And to induce that surrender, it’s crucial that the addict be offered an alternative to his or her addiction, whether it’s formal rehab, a twelve-step program, methadone, or a recovery dog. It’s important to recognize that even before the addict became physically or emotionally dependent on the substance, that substance met an otherwise unmet need, and leaving it unmet will lead only to relapse.
http://mathbabe.org/
What are we to do with our banking industry, sitting there at the kitchen table in its underwear, drumming on the table with one hand and scratching its increasingly coarse chin with the other in an impossibly syncopated rhythm, letting fly a dizzying stream of assurances, justifications, and accusations, and generally spoiling for a fight that can only be avoided by complete and enthusiastic agreement with a narrative that can be very difficult to follow, let alone make sense of?
Because this is our kitchen too, we have our legal and moral rights. We would be well within those rights to respond to its nonsense with far more coherent and sweeping condemnations of our own. Throwing the bum out in its underwear without so much as a cup of coffee, taking the children, and keeping our share of whatever might be left could certainly be justified.
Though the sense of release offered by those responses is tempting, they’re not likely to be of any practical use. We can’t win an argument with an irrational person, and our share of an insolvent industry is likely to be very little–certainly not enough to feed the children. We have to recognize the hard truth of our implication in the banking industry and its addiction.
This doesn’t mean that we’re responsible for the addiction and its consequences, or that we can make the choice not to continue that addiction on our own, but it does mean that the problem won’t be constructively resolved without our efforts. To the extent that denial is about obscuring the connection between decisions and results, the most effective means of undermining denial is to clarify that connection, and the process of doing that is intervention.
Whether or not its participants are thinking in these terms, Occupy Wall Street, to the extent that it can coherently be referred to as an entity, is in many respects functioning as an intervention into the banking industry’s increasingly untenable addiction to money and debt.
The movement’s core values of transparency, sustainability, and nonviolence reflect the clarity, patience, and compassion needed for an effective intervention.
This is not to say that all of the efforts directed at banks by the movement have been magnanimous or constructive. We have to remember the terrible suffering that has been inflicted upon so many and offer that clarity, patience, and compassion not just to the addict, but also to ourselves as intervenors and to everyone who has been affected by the banking industry.
On the whole, I have been deeply heartened by how this movement has evolved over the last seven months, and though intervention isn’t the easiest or most promising process, it’s one I recognize and know can work (in stark contrast to political revolution). From the beginning, the Occupiers have shown a fearless, poignant spontaneity that’s available only beyond the addiction-centered dynamic of denial, and the banking industry, its enablers, and others still within that dynamic of denial (which, to be fair, has included most of us at one point or another) have responded as would be expected.
The determination and wisdom granted to those who see more clearly is profoundly threatening to those seeking to maintain denial, though of course they wouldn’t be able to say quite why.
The initial objections from the press that Occupy Wall Street was making no demands could be seen as an enabler’s yearning for symptoms that can be isolated and addressed, without admitting to or addressing the addiction from which they arise. To keep calmly and patiently pointing to that underlying cause is simultaneously incomprehensible and maddening to those trapped within denial, and their responses have run the gamut from smug certainty that nothing could possibly be wrong to whistling past the graveyard to ill-conceived and unjustified violence. And the Occupiers’ patience, diligence, and good nature in the face of that decidedly ill will is as textbook an illustration of the process of intervention as we’re likely to see.
It would be all too easy to remain passive in the face of our increasingly delusional, erratic, and combative banking industry. Surely there must be a more palatable alternative to undermining the continued functioning of the complex and highly evolved process that is the core of our economy.
If we force it to rehabilitate, what will happen during that process? Will our economy collapse? When its rehabilitation is complete, will the banking industry be able to function as well as it once did? Or as the banking industry’s enablers would have it: Any attempts to regulate the banking industry will only harm it, making it less effective to all of our detriment; these banks are too important a part of our economy to be allowed to fail; and bankers must continue to receive bonuses for banks to remain competitive.
It’s true that the banking industry has seized upon the process that’s the basis of our economic survival, and that attempts to address the problems of the banking industry cannot be undertaken lightly. But it’s also true that the banking industry has perverted that process, and that attempts to address that won’t prevent our return to some fantasy of efficiency and plenty, though they might prevent the otherwise inevitable, tragic end of the current trajectory left unchecked.
Whatever happens while the banking industry is rehabilitated is unlikely to be worse than what will happen as it continues to indulge in its addiction unaddressed, and it’s unlikely to function any worse upon the completion of its rehabilitation than it is now. As Charles Eisenstein puts it, “any efforts we make today to ‘raise bottom’ for our collectively addicted civilization–any efforts we make to protect or reclaim social, natural, or spiritual capital–will both hasten and ameliorate the crisis.”
Once an addict has reached the point in his or her descent where an intervention is necessary, there’s no realistic possibility of a return to some pre-addiction Golden Age. The apparent paradox that an addict’s life must be destroyed to save it is, stated in those terms, false. The addict’s life only appears to be as yet undestroyed through the lens of denial, and a future life without substance abuse or consequences is an illusion.
But the more gently stated paradox that intervention will cause the addict suffering in the short term to help him or her in the long term is accurate. There are, however, deeper, more intractable paradoxes, and they are those of the psychology of addiction. The process of intervention is often crucial to an addict’s entering rehab and beginning recovery, yet only the addict can decide to enter rehab.
The addict must understand the damage he or she has done in order to stop using but mustn’t succumb to shame, which would simply cause a retreat to the substance. The addict must admit that he or she is powerless over the substance and that life has become unmanageable, but mustn’t surrender to hopelessness and despair, which would sap the considerable motivation needed in the process of recovery. An intervenor must do something, but there’s nothing that can be done. There is no single act, no grand gesture or magic bullet, that can accomplish anything meaningful or lasting. Intervention is a long, unpredictable process requiring superhuman compassion and patience of everyone involved. Prior training or practice in commitment to a process without regard to the outcome of that process is invaluable.
Yes, we can answer the banking industry’s petulant invective in kind, but that won’t fix the problem; the industry will become more defensive and reckless, and we probably wouldn’t end up feeling any better anyway. Our encyclopedic harangue would be cogent, compelling, and convince our friends in the retelling, but no matter how loud we shout it over the banking industry’s coffee cup into that sullen, bloodshot face, it will simply be brushed aside with the wave of a shaky hand and a hoarse grumble, or, worse, it will hit home, and rattled, the banking industry will glare at us and we’ll know that tonight will bring another nihilistic binge of leverage and derivatives, and maybe this time there will be no tomorrow morning. The industry will tell us that we don’t understand, that the pressure it’s under is unimaginable, that life is grim, and that even though it can’t fix that, it should be thanked for what it has accomplished, and that that’s the best it can do. What more could we want? What more could it do? And we can only sigh and shake our head, because we know the simple, honest answer would just fall on deaf ears, and even if it were understood and accepted, the broken soul sitting across the table is in no shape to do anything constructive.
The confrontations shown on television or in the movies, or that you have perhaps participated in yourself, are just part of the larger process of intervention, but they illustrate the themes that inform that larger process. Those themes can best be summarized as connection: the connection between the addict’s choices and the suffering of the addict and those who are around him or her; the connection between addiction and the addict’s choices; and the unbreakable, always available connection between the addict and the intervenors.
Where denial seeks to divide and conquer, intervention seeks to unify and transcend. Intervention doesn’t respond to denial on denial’s terms, but rather reflects reality as it is. It doesn’t engage in the petty distractions of accusations and recriminations, nor does it seek escape from the addict and his or her problems. Intervention shows the addict his or her choices as they’re made, how those choices are determined by addiction, and the consequences that follow from those choices, but it also shows the redemption that’s always available despite those choices and their consequences.
Where denial is deceptive, impulsive, and selfish, intervention is clear, patient, and compassionate. Intervention finally presents the addict with an unavoidable choice between continued deluded suffering and real, sustainable sanity. The addict may or may not respond positively to that choice, but it must continually be presented on the same terms until the addict surrenders his or her denial.
And to induce that surrender, it’s crucial that the addict be offered an alternative to his or her addiction, whether it’s formal rehab, a twelve-step program, methadone, or a recovery dog. It’s important to recognize that even before the addict became physically or emotionally dependent on the substance, that substance met an otherwise unmet need, and leaving it unmet will lead only to relapse.
http://mathbabe.org/
Finance in Denial – The Addiction
By Morgan Sandquist, a member of the Occupy Wall Street Alternative Banking Group.
Is it fair to say that because the quality of the denial surrounding the banking industry’s problems is so similar to that of the denial surrounding addiction, that addiction is therefore the root of those problems and our ongoing failure to adequately address them? Perhaps not, but others have come to describe money, debt, and banking as something very much like addiction for entirely different, and far better argued, reasons.
In Debt: The First Five Thousand Years, David Graeber looks deeply into the anthropological record and finds that money and debt, and, by extension, banking, are all essentially the same thing, and they’re not what most of us understand them to be. Money is certainly not simply the objective store of value and medium of exchange that economists would have us believe it is. Because money is created as debt, its use to finance productive activity means that that activity, whatever it is, must then generate interest to be returned to money’s creators in addition to the money lent.
This has given rise to an industry, even a class of people, that derives its livelihood not from any productive activity of its own, but merely from having money. In Sacred Economics, Charles Eisenstein takes this a step further to show that this overhead cost inherent in all monetarily denominated activities means that the value represented by money must always grow. There is no logical end to what must be monetized–natural resources, ideas, time. Nothing can remain unowned and clear of liens, and that will eventually consume any finite realm:
The dynamics of usury-money are addiction dynamics, requiring an ever-greater dose (of the commons) to maintain normality, converting more and more of the basis of well-being into money for a fix. If you have an addict friend, it won’t do any good to give her “help” of the usual kind, such as money, a car to replace the one she crashed, or a job to replace the one she lost. All of those resources will just go down the black hole of addiction. So too it is with our politicians’ efforts to prolong the age of growth.
I don’t hope to make in a couple of paragraphs the full case that those two authors have made over hundreds of pages, so I’ll just assert it to have been compellingly made: namely, that money, debt, and banking have gone from being a tool that we might use to ease social activities to being the purpose of those activities. They have become an addiction, and because they’re an addiction, all of us who are touched by them have developed a rich and pervasive denial of this fact, its history, and its consequences.
In practical terms, what do we gain by perceiving money, debt, and banking as an addiction and the discourse around them as denial? Speaking for myself, it helps me understand the otherwise inexplicable irrationality behind our ongoing financial decline. I can imagine no other explanation for so much of what we’ve seen in the last few years: the failures to properly address the mortgage and subsequent foreclosure crises; the criminal activities of banks, hedge funds, and ratings agencies, and the spiral of consumer indebtedness; the deeply emotional and often militarized response to people sleeping in an otherwise unused square of concrete in a nocturnally unpopulated commercial district; and, most of all, the general populace’s willing acquiescence to all of this.
It appears only that banking must continue as it is, undisturbed, and nothing must disrupt the use and abuse of debt and money. Though an explanation for the full range of symptoms of the banking crisis, or for the full range of symptoms of any addiction, risks being reductive, without some causal dynamic behind these symptoms, there can be no effective response to them. To prevent something from happening, a cause must be identified and addressed.
Understanding money, debt, and banking as addiction also helps me trust myself and seek a constructive approach to the daunting task of resolving this crisis. As anyone who has ever had to face the full force of shared social and familial evasion can attest, the temptation to surrender to that alternate reality despite his or her better judgment, if only for the sake of civil relations, can be overwhelming.
In the case of the banking industry, that evasion often comes in the form of expert opinion that seeks to persuade not through the substance of the discussion, but through a dependence on credentials and ad hominem dismissal. It’s invaluable to be reminded that such a surrender, regardless of expert arguments, will at best only defer the consequences that we fear. Asking ourselves if, at the addict’s eventual funeral, we’ll be comfortable that we did everything we could is a remarkable inducement to focus. It can also be a powerful inducement to anger, so the understanding that it’s really addiction and denial, not friends and family, that we’re fighting can provide a basis for the compassion we would need to constructively approach such an emotionally volatile undertaking.
Finally, this understanding helps me focus on the ultimate goal of any such effort, rather than becoming sidetracked by pointless diversions.
As I mentioned above, one strategy of denial is to hide the connection between the symptoms of addiction and their real cause. It allows the alcoholic to believe that his or her diabetes and other health issues are the result of poor diet and that his or her depression is genetic or the result of poor parenting. It’s not that an alcoholic necessarily consumes a model diet or was well reared, but addressing just those symptoms allows the alcoholic to keep drinking, and other symptoms will follow from that drinking.
Similarly, it’s not that banks don’t need to be better capitalized, but providing them with capital and liquidity alone allows banks to continue pursuing courses of action that are neither financially nor economically viable.
To effectively address addiction is to prevent further addictive use of the substance. Any effort directed at symptoms will, to the extent they’re effective, simply enable continued substance abuse. It’s only by understanding the nature and extent of denial, navigating its maze, and intervening directly in the use of the substance that one can hope to effectively address addiction, and even then, the odds aren’t in the addict’s favor. And only with a thorough understanding of this dynamic and all of its implications can we hope to intervene effectively in the banking crisis that as of now continues unabated.
http://mathbabe.org/
Is it fair to say that because the quality of the denial surrounding the banking industry’s problems is so similar to that of the denial surrounding addiction, that addiction is therefore the root of those problems and our ongoing failure to adequately address them? Perhaps not, but others have come to describe money, debt, and banking as something very much like addiction for entirely different, and far better argued, reasons.
In Debt: The First Five Thousand Years, David Graeber looks deeply into the anthropological record and finds that money and debt, and, by extension, banking, are all essentially the same thing, and they’re not what most of us understand them to be. Money is certainly not simply the objective store of value and medium of exchange that economists would have us believe it is. Because money is created as debt, its use to finance productive activity means that that activity, whatever it is, must then generate interest to be returned to money’s creators in addition to the money lent.
This has given rise to an industry, even a class of people, that derives its livelihood not from any productive activity of its own, but merely from having money. In Sacred Economics, Charles Eisenstein takes this a step further to show that this overhead cost inherent in all monetarily denominated activities means that the value represented by money must always grow. There is no logical end to what must be monetized–natural resources, ideas, time. Nothing can remain unowned and clear of liens, and that will eventually consume any finite realm:
The dynamics of usury-money are addiction dynamics, requiring an ever-greater dose (of the commons) to maintain normality, converting more and more of the basis of well-being into money for a fix. If you have an addict friend, it won’t do any good to give her “help” of the usual kind, such as money, a car to replace the one she crashed, or a job to replace the one she lost. All of those resources will just go down the black hole of addiction. So too it is with our politicians’ efforts to prolong the age of growth.
I don’t hope to make in a couple of paragraphs the full case that those two authors have made over hundreds of pages, so I’ll just assert it to have been compellingly made: namely, that money, debt, and banking have gone from being a tool that we might use to ease social activities to being the purpose of those activities. They have become an addiction, and because they’re an addiction, all of us who are touched by them have developed a rich and pervasive denial of this fact, its history, and its consequences.
In practical terms, what do we gain by perceiving money, debt, and banking as an addiction and the discourse around them as denial? Speaking for myself, it helps me understand the otherwise inexplicable irrationality behind our ongoing financial decline. I can imagine no other explanation for so much of what we’ve seen in the last few years: the failures to properly address the mortgage and subsequent foreclosure crises; the criminal activities of banks, hedge funds, and ratings agencies, and the spiral of consumer indebtedness; the deeply emotional and often militarized response to people sleeping in an otherwise unused square of concrete in a nocturnally unpopulated commercial district; and, most of all, the general populace’s willing acquiescence to all of this.
It appears only that banking must continue as it is, undisturbed, and nothing must disrupt the use and abuse of debt and money. Though an explanation for the full range of symptoms of the banking crisis, or for the full range of symptoms of any addiction, risks being reductive, without some causal dynamic behind these symptoms, there can be no effective response to them. To prevent something from happening, a cause must be identified and addressed.
Understanding money, debt, and banking as addiction also helps me trust myself and seek a constructive approach to the daunting task of resolving this crisis. As anyone who has ever had to face the full force of shared social and familial evasion can attest, the temptation to surrender to that alternate reality despite his or her better judgment, if only for the sake of civil relations, can be overwhelming.
In the case of the banking industry, that evasion often comes in the form of expert opinion that seeks to persuade not through the substance of the discussion, but through a dependence on credentials and ad hominem dismissal. It’s invaluable to be reminded that such a surrender, regardless of expert arguments, will at best only defer the consequences that we fear. Asking ourselves if, at the addict’s eventual funeral, we’ll be comfortable that we did everything we could is a remarkable inducement to focus. It can also be a powerful inducement to anger, so the understanding that it’s really addiction and denial, not friends and family, that we’re fighting can provide a basis for the compassion we would need to constructively approach such an emotionally volatile undertaking.
Finally, this understanding helps me focus on the ultimate goal of any such effort, rather than becoming sidetracked by pointless diversions.
As I mentioned above, one strategy of denial is to hide the connection between the symptoms of addiction and their real cause. It allows the alcoholic to believe that his or her diabetes and other health issues are the result of poor diet and that his or her depression is genetic or the result of poor parenting. It’s not that an alcoholic necessarily consumes a model diet or was well reared, but addressing just those symptoms allows the alcoholic to keep drinking, and other symptoms will follow from that drinking.
Similarly, it’s not that banks don’t need to be better capitalized, but providing them with capital and liquidity alone allows banks to continue pursuing courses of action that are neither financially nor economically viable.
To effectively address addiction is to prevent further addictive use of the substance. Any effort directed at symptoms will, to the extent they’re effective, simply enable continued substance abuse. It’s only by understanding the nature and extent of denial, navigating its maze, and intervening directly in the use of the substance that one can hope to effectively address addiction, and even then, the odds aren’t in the addict’s favor. And only with a thorough understanding of this dynamic and all of its implications can we hope to intervene effectively in the banking crisis that as of now continues unabated.
http://mathbabe.org/
Occupy Wall Street Sues New York City, JP Morgan #OWS
By Yves Smith
nakedcapitalism.com
One of the continuing and largely unrecognized aspects of the ongoing media coverage of Occupy Wall Street is that police brutality and lesser abuses have been airbrushed out.
In the early days of the movement when the number participating was small, it was overly aggressive policing that put them on the map. YouTube clips of women who were already kettled being pepper sprayed and arrests of people on Brooklyn Bridge went viral. Later arrests from a march across Brooklyn Bridge garnered more sympathy when reconstruction of events showed that the protestors had actually been directly by police to walk on the roadway, setting them up to be incarcerated. The real eye opener was when Oakland police critically wounded Iraq war vet Scott Olsen while using tear gas, rubber bullets, and flash grenades to clear Frank H. Ogawa Plaza, with no evidence of any provocation by the protestors.
The powers that be quickly realized their error. When Zuccotti Park was cleared on November 15 as part of a coordinated, national, quasi military crackdown, journalists were not only kept well away from the park, the few that managed to get inside the cordon were roughed up and arrested despite identifying themselves as members of the media. While there were some videos of police assaulting protestors during this period (see this example), major media fell into line, in many cases cheering the efficiency of the policing. In the case of the New York Times, this appears to have resulted from Times journalists having been embedded in the operation.
The heavy handed assaults and media control is meant to convey the message that defiance is useless. Yet this is turning into a protracted struggle over the legitimacy of authority. We’ve commented before on how these crackdowns consume a lot of tax dollars at a time when municipal budgets are already being cut. And they wind up being even more costly than most imagine, because the courts have generally been sympathetic to protestors who are injured in the course of unwarranted police roughings-up, particularly now that what really happened is caught more often than before on smart phone video cameras. The point is a little police overzealousness over time leads to not cheap settlements.
A less costly but nevertheless important front for pushing back is via suits against police violations of Constitutional rights. Bloomberg reports that two cases were filed today, one against four New York City council members, JP Morgan, Brookfield Properties, and Mayor Bloomberg over the use of excessive force by police and denial of constitutional rights. OWS also filed a separate suit against police chief Ray Kelly by five protestors seeking class action status over detention of protestors when they were “never charged with any violation, misdemeanor or crime.”
This may on the surface appear to be a quixotic salvo against overwhelming police/bureaucratic force. But this is actually part of a war of attrition. The real game here is to undermine the legitimacy of authority by putting a spotlight on their illegitimate actions. As Richard Kline wrote on an earlier post:
One has to erode the legitimacy of those in the wrong before public opinion shifts sufficiently for their efficacy to sag. This isn’t a linear process, which is why polling is really, really stupid about things most of the time. Supposing some of your friends went down and cop just haulded off and slammed them in the kisser with a baton. Do you think they’d sue? Of course. They wouldn’t see the cop as just doing his job: they only see that when he’s doing his job on somebody else. So in fact, they’re _not_ indifferent to injustice but insulated from it.
Part of a social change movement is pulling out handfuls of insulation—or more often about the police burning it. I know that this isn’t a very satisfying rebutal to your concerns, which are real, but the fact is that you do influence people wearing that symbol simply by being a reasonable person endorsing something which isn’t the same tired bullshit. You can’t know the incremental effect you have until the shift comes. And yes, it may take years. In Egypt, they’d been organizing (in far more difficult conditions) for five years before The Big Unwind. The point is for the Occupation Movement to maintain intitiative and keep the pressure on. The authorities only have a limited playbook, and no solutions whatsoever.
It remains to be seen whether the Occupy movement has the staying power to effect or foment lasting change. But with unemployment high (reducing the stakes to participation in protests) and the elites far more keenly interested in the needs of the 1% than those of ordinary citizens, there is plenty of dry timber for a spark to set off a bigger conflagration.
http://www.nakedcapitalism.com/2012/04/occupy-wall-street-sues-new-york-city-jp-morgan-ows.html
nakedcapitalism.com
One of the continuing and largely unrecognized aspects of the ongoing media coverage of Occupy Wall Street is that police brutality and lesser abuses have been airbrushed out.
In the early days of the movement when the number participating was small, it was overly aggressive policing that put them on the map. YouTube clips of women who were already kettled being pepper sprayed and arrests of people on Brooklyn Bridge went viral. Later arrests from a march across Brooklyn Bridge garnered more sympathy when reconstruction of events showed that the protestors had actually been directly by police to walk on the roadway, setting them up to be incarcerated. The real eye opener was when Oakland police critically wounded Iraq war vet Scott Olsen while using tear gas, rubber bullets, and flash grenades to clear Frank H. Ogawa Plaza, with no evidence of any provocation by the protestors.
The powers that be quickly realized their error. When Zuccotti Park was cleared on November 15 as part of a coordinated, national, quasi military crackdown, journalists were not only kept well away from the park, the few that managed to get inside the cordon were roughed up and arrested despite identifying themselves as members of the media. While there were some videos of police assaulting protestors during this period (see this example), major media fell into line, in many cases cheering the efficiency of the policing. In the case of the New York Times, this appears to have resulted from Times journalists having been embedded in the operation.
The heavy handed assaults and media control is meant to convey the message that defiance is useless. Yet this is turning into a protracted struggle over the legitimacy of authority. We’ve commented before on how these crackdowns consume a lot of tax dollars at a time when municipal budgets are already being cut. And they wind up being even more costly than most imagine, because the courts have generally been sympathetic to protestors who are injured in the course of unwarranted police roughings-up, particularly now that what really happened is caught more often than before on smart phone video cameras. The point is a little police overzealousness over time leads to not cheap settlements.
A less costly but nevertheless important front for pushing back is via suits against police violations of Constitutional rights. Bloomberg reports that two cases were filed today, one against four New York City council members, JP Morgan, Brookfield Properties, and Mayor Bloomberg over the use of excessive force by police and denial of constitutional rights. OWS also filed a separate suit against police chief Ray Kelly by five protestors seeking class action status over detention of protestors when they were “never charged with any violation, misdemeanor or crime.”
This may on the surface appear to be a quixotic salvo against overwhelming police/bureaucratic force. But this is actually part of a war of attrition. The real game here is to undermine the legitimacy of authority by putting a spotlight on their illegitimate actions. As Richard Kline wrote on an earlier post:
One has to erode the legitimacy of those in the wrong before public opinion shifts sufficiently for their efficacy to sag. This isn’t a linear process, which is why polling is really, really stupid about things most of the time. Supposing some of your friends went down and cop just haulded off and slammed them in the kisser with a baton. Do you think they’d sue? Of course. They wouldn’t see the cop as just doing his job: they only see that when he’s doing his job on somebody else. So in fact, they’re _not_ indifferent to injustice but insulated from it.
Part of a social change movement is pulling out handfuls of insulation—or more often about the police burning it. I know that this isn’t a very satisfying rebutal to your concerns, which are real, but the fact is that you do influence people wearing that symbol simply by being a reasonable person endorsing something which isn’t the same tired bullshit. You can’t know the incremental effect you have until the shift comes. And yes, it may take years. In Egypt, they’d been organizing (in far more difficult conditions) for five years before The Big Unwind. The point is for the Occupation Movement to maintain intitiative and keep the pressure on. The authorities only have a limited playbook, and no solutions whatsoever.
It remains to be seen whether the Occupy movement has the staying power to effect or foment lasting change. But with unemployment high (reducing the stakes to participation in protests) and the elites far more keenly interested in the needs of the 1% than those of ordinary citizens, there is plenty of dry timber for a spark to set off a bigger conflagration.
http://www.nakedcapitalism.com/2012/04/occupy-wall-street-sues-new-york-city-jp-morgan-ows.html
Bankers Are Still Wrecking Housing Market Fundamentals
By Abigail Caplovitz Field
Regardless of the recent bullish stories on the housing market (examples here, here, here and here), housing market fundamentals are lousy. Demand in the last decade was wildly distorted by banker abandonment of underwriting and appraisals. Now bankers are worsening the crash they created. As a result, prices will just keep falling, and foreclosures cannot lead to clearing the market (regardless of what some say). Foreclosures can only make the problems worse.
Market Distortion From Excess Demand in Bubble Years
As a first step to seeing the problems, let’s get real about how profoundly market-distorting that lender-inflated bubble was. People who could not afford to buy homes, period, were nonetheless given loans, artificially expanding the number of people expressing demand. In addition, people who could have afforded a house, if not the house they purchased, expressed their natural demand in the ‘wrong’ segment of the market. Both distortions combined to spike prices far higher than natural demand would have driven them.
To see the price spike, consider the median and average home prices, nationally, in 1976, 1986, 1996, and 2006, using August values in each year, in constant 2006 dollars:
1976 Median: $156,603 Average: $171,838
1986 Median: $168,306 Average: $208,221
1996 Median: $176,031 Average: $205,198
2006 Median: $243,900 Average: $317,300
That is, across twenty years the median home price increased by about $20,000 and the average by about $35,000. In the next decade–the bubble decade–the median and average prices each grew about three times faster. That’s more froth than Starbucks puts on its biggest latte. And it’s a strong signal of just how far prices have to fall to get to where natural demand would have pushed them.
Excess Supply
But the price peak isn’t the full measure of how far prices need to fall, because supply didn’t remain constant. The price spike drove home builders to add supply beyond what they would have to meet natural demand. This chart from the National Association of Home Builders shows that from 1978-1997 sales of new homes oscillated between approximately 0.4 to 0.8 million homes a year. For twenty years, demand pressure was never great enough to sell more than that in a year. From 1997 through 2007, however, sales went from about 0.8 million to nearly 1.3 million a year and back down to about 0.8 million. That’s 11 years of sales volume that dwarfed the preceding 20.
We’re seeing that part of the market correct, because in 2010 and 2011 more like 0.3 million new houses sold, and that’s roughly the pace this year. But it’s not obvious that three years of below normal sales is enough to balance out that decade of excess. Moreover, all those extra new houses are only one part–a relatively small part–of our current supply excess. Foreclosures have brought far more homes to market, and worse, have far more yet to come, than that new home bulge.
More Foreclosures (Supply) to Come
RealtyTrac data shows foreclosures are increasing again, after slowing down last year. In New York it looks like 100,000 new ones may be coming, based on notices sent in the first quarter of 2012 alone. They’re also on the rise in Pasco County, Florida. But you needn’t look at these stats to understand we’re nowhere near out of the foreclosure crisis yet.
According to the Federal Reserve, about 12 million people owe more than their homes are worth, and CoreLogic reports that falling prices mean their ranks include even new buyers. Being underwater is a strong predictor of default and foreclosure because when life happens (job loss, divorce, illness), the homeowner can’t sell to get out from under the suddenly unaffordable mortgage. In addition, some people will strategically default, like the very wealthy who don’t care about their credit, and people who can otherwise make it work for them.
And then there’s the millions trying to get their loans modified. Banks are forcing far too many of those people into foreclosure even when modification is in everyone’s financial interest. One of many ways the banks turn potential modifications into foreclosures is by wildly overvaluing the home, which skews the critical “net present value” calculation.
Banks Are Manipulating Inventory
Given the grim reality of too many houses at crazy high prices, how come we’re seeing a spate of good housing news stories? Well, those stories reported supply had shrunk so much, prices were rising. One of the most comprehensive was by Nick Tiramos for the Wall Street Journal, detailing that shrunken inventory was leading to some bidding wars in several markets. Local pieces, this Arizona Republic story, continued the theme. Both articles noted that the bidding wars didn’t mean prices had recovered much compared to the bubble years. Nonetheless, if the decreased inventory is for real, the optimism’s justified, right?
Too bad the inventory decrease seems artificial, the result of bank manipulation. Take Phoenix: RealtyTrac identifies 6,611 “bank-owned” properties there. An Arizona realty website lists only 275 for sale. Similarly, Yahoo real estate claims there’s over 8,000 foreclosure properties in Phoenix, but Realtor.com lists less than 4,000 homes of any type. AZHomeonline.net lists a bit over 4,000, plus 312 foreclosures and shortsales. So are the foreclosures in Phoenix on the order of 300 or 6,600? Makes a wee bit of difference when the non-”distressed” market is about 4,000, don’t you think?
(To Tiramos’s credit, his piece acknowledges the good news may not last because of the bank owned backlog; the more cheerleading articles don’t.)
Phoenix isn’t the only place where banks are holding properties off the market. In Portland, Oregon, banks aren’t selling 80% of the homes they own, The Oregonian reports. All the bank owned inventory statewide represents more than a year and half’s supply of houses all by itself, according to a RealtyTrac executive quoted in the piece. If the housing inventory is that distorted in Oregon, what’s it like in the hardest hit states?
By holding off inventory, the banks provide temporary support to prices, but for how long? The inventory will make its way to market–there’s just too many houses held in reserve for the banks to manage and maintain the properties in a market-price optimizing way. Moreover, this artificial control of inventory means foreclosures do not help a market to bottom; foreclosing cannot “clear” the market.
Where Will Future Demand Come From?
The last aspect of our housing market’s broken fundamentals is on the demand side. Specifically, who can buy a house now?
Not many young college graduates and their young families, normally the quintessential first time buyers. By 2008, over 200,000 young people had over $40,000 in student debt each, and given the explosive growth in debt, many more have that much now. In fact, the 1,781,000 students in the class of 2012 average over $25,000 each. Nope, young people won’t be buying homes for a decade or two. Millions of underwater homeowners can neither trade up nor down. Foreclosed former homeowners don’t have the credit or the cash to re-enter the housing market.
In short, current and future demand for housing is likely to be substantially less than historically normal demand, even as prices keep falling and interest rates hover at historic lows. And that’s still true even if the job market comes back, not that there’s any sign of that.
The banks could substantially boost demand by writing all the underwater mortgages down to market value. People would be able to sell, and buy, and millions of foreclosures would be averted. But the chance the banks will take such drastic action is nil. Not essentially nil, like Powerball odds, but nil.
And nil is also the chance that housing is headed toward a broad based recovery, even if some local markets, unhampered by massive bank-owned inventory and large numbers of underwater homes, show sustained improvement.
http://abigailcfield.com/?p=1188
Regardless of the recent bullish stories on the housing market (examples here, here, here and here), housing market fundamentals are lousy. Demand in the last decade was wildly distorted by banker abandonment of underwriting and appraisals. Now bankers are worsening the crash they created. As a result, prices will just keep falling, and foreclosures cannot lead to clearing the market (regardless of what some say). Foreclosures can only make the problems worse.
Market Distortion From Excess Demand in Bubble Years
As a first step to seeing the problems, let’s get real about how profoundly market-distorting that lender-inflated bubble was. People who could not afford to buy homes, period, were nonetheless given loans, artificially expanding the number of people expressing demand. In addition, people who could have afforded a house, if not the house they purchased, expressed their natural demand in the ‘wrong’ segment of the market. Both distortions combined to spike prices far higher than natural demand would have driven them.
To see the price spike, consider the median and average home prices, nationally, in 1976, 1986, 1996, and 2006, using August values in each year, in constant 2006 dollars:
1976 Median: $156,603 Average: $171,838
1986 Median: $168,306 Average: $208,221
1996 Median: $176,031 Average: $205,198
2006 Median: $243,900 Average: $317,300
That is, across twenty years the median home price increased by about $20,000 and the average by about $35,000. In the next decade–the bubble decade–the median and average prices each grew about three times faster. That’s more froth than Starbucks puts on its biggest latte. And it’s a strong signal of just how far prices have to fall to get to where natural demand would have pushed them.
Excess Supply
But the price peak isn’t the full measure of how far prices need to fall, because supply didn’t remain constant. The price spike drove home builders to add supply beyond what they would have to meet natural demand. This chart from the National Association of Home Builders shows that from 1978-1997 sales of new homes oscillated between approximately 0.4 to 0.8 million homes a year. For twenty years, demand pressure was never great enough to sell more than that in a year. From 1997 through 2007, however, sales went from about 0.8 million to nearly 1.3 million a year and back down to about 0.8 million. That’s 11 years of sales volume that dwarfed the preceding 20.
We’re seeing that part of the market correct, because in 2010 and 2011 more like 0.3 million new houses sold, and that’s roughly the pace this year. But it’s not obvious that three years of below normal sales is enough to balance out that decade of excess. Moreover, all those extra new houses are only one part–a relatively small part–of our current supply excess. Foreclosures have brought far more homes to market, and worse, have far more yet to come, than that new home bulge.
More Foreclosures (Supply) to Come
RealtyTrac data shows foreclosures are increasing again, after slowing down last year. In New York it looks like 100,000 new ones may be coming, based on notices sent in the first quarter of 2012 alone. They’re also on the rise in Pasco County, Florida. But you needn’t look at these stats to understand we’re nowhere near out of the foreclosure crisis yet.
According to the Federal Reserve, about 12 million people owe more than their homes are worth, and CoreLogic reports that falling prices mean their ranks include even new buyers. Being underwater is a strong predictor of default and foreclosure because when life happens (job loss, divorce, illness), the homeowner can’t sell to get out from under the suddenly unaffordable mortgage. In addition, some people will strategically default, like the very wealthy who don’t care about their credit, and people who can otherwise make it work for them.
And then there’s the millions trying to get their loans modified. Banks are forcing far too many of those people into foreclosure even when modification is in everyone’s financial interest. One of many ways the banks turn potential modifications into foreclosures is by wildly overvaluing the home, which skews the critical “net present value” calculation.
Banks Are Manipulating Inventory
Given the grim reality of too many houses at crazy high prices, how come we’re seeing a spate of good housing news stories? Well, those stories reported supply had shrunk so much, prices were rising. One of the most comprehensive was by Nick Tiramos for the Wall Street Journal, detailing that shrunken inventory was leading to some bidding wars in several markets. Local pieces, this Arizona Republic story, continued the theme. Both articles noted that the bidding wars didn’t mean prices had recovered much compared to the bubble years. Nonetheless, if the decreased inventory is for real, the optimism’s justified, right?
Too bad the inventory decrease seems artificial, the result of bank manipulation. Take Phoenix: RealtyTrac identifies 6,611 “bank-owned” properties there. An Arizona realty website lists only 275 for sale. Similarly, Yahoo real estate claims there’s over 8,000 foreclosure properties in Phoenix, but Realtor.com lists less than 4,000 homes of any type. AZHomeonline.net lists a bit over 4,000, plus 312 foreclosures and shortsales. So are the foreclosures in Phoenix on the order of 300 or 6,600? Makes a wee bit of difference when the non-”distressed” market is about 4,000, don’t you think?
(To Tiramos’s credit, his piece acknowledges the good news may not last because of the bank owned backlog; the more cheerleading articles don’t.)
Phoenix isn’t the only place where banks are holding properties off the market. In Portland, Oregon, banks aren’t selling 80% of the homes they own, The Oregonian reports. All the bank owned inventory statewide represents more than a year and half’s supply of houses all by itself, according to a RealtyTrac executive quoted in the piece. If the housing inventory is that distorted in Oregon, what’s it like in the hardest hit states?
By holding off inventory, the banks provide temporary support to prices, but for how long? The inventory will make its way to market–there’s just too many houses held in reserve for the banks to manage and maintain the properties in a market-price optimizing way. Moreover, this artificial control of inventory means foreclosures do not help a market to bottom; foreclosing cannot “clear” the market.
Where Will Future Demand Come From?
The last aspect of our housing market’s broken fundamentals is on the demand side. Specifically, who can buy a house now?
Not many young college graduates and their young families, normally the quintessential first time buyers. By 2008, over 200,000 young people had over $40,000 in student debt each, and given the explosive growth in debt, many more have that much now. In fact, the 1,781,000 students in the class of 2012 average over $25,000 each. Nope, young people won’t be buying homes for a decade or two. Millions of underwater homeowners can neither trade up nor down. Foreclosed former homeowners don’t have the credit or the cash to re-enter the housing market.
In short, current and future demand for housing is likely to be substantially less than historically normal demand, even as prices keep falling and interest rates hover at historic lows. And that’s still true even if the job market comes back, not that there’s any sign of that.
The banks could substantially boost demand by writing all the underwater mortgages down to market value. People would be able to sell, and buy, and millions of foreclosures would be averted. But the chance the banks will take such drastic action is nil. Not essentially nil, like Powerball odds, but nil.
And nil is also the chance that housing is headed toward a broad based recovery, even if some local markets, unhampered by massive bank-owned inventory and large numbers of underwater homes, show sustained improvement.
http://abigailcfield.com/?p=1188
Former Greek bank chief jailed in anti-fraud drive
by Harry Papachristou
Reuters
A former bank chief was sentenced to eight years jail on Monday for fraud and forgery, court officials said, the first major conviction resulting from an anti-corruption drive ahead of a parliamentary election on Sunday.
An Athens court convicted Pavlos Psomiadis, former chief of small banking and insurance group Aspis, on charges of forging documents to keep his business afloat.
Corruption and cronyism are endemic in Greece. But no politician or senior businessman had been convicted in recent years, fuelling popular frustration with mainstream parties that pledge to uphold the debt-laden country's international bailout and remain in the euro zone.
"He was found guilty of fraud and forgery," a court official said. The conviction stemmed from a forged letter of credit for over 550 million euros ($729 million) that Psomiadis submitted to regulators in 2009.
Aspis was one of the first business groups to fall prey to the country's economic crisis. T-bank (AMBr.AT), a small lender that emerged from the wreckage of the group, was nationalized late last year under the terms of the country's EU/IMF bailout.
Monday's decision was the latest in a string of judicial moves as angry voters turn to smaller parties to punish the main conservatives and socialists whom they blame for the economic crisis and chronic corruption.
Earlier in April, a former defense minister was jailed pending trial on money laundering and bribery charges.
Last month, a Greek prosecutor filed felony charges against a prominent banker over a financial scandal that led to the EU/IMF-funded nationalization of small lender Proton Bank (PRBr.AT).
Editor's note: We should hire Greek prosecutors in US DOJ
Reuters
A former bank chief was sentenced to eight years jail on Monday for fraud and forgery, court officials said, the first major conviction resulting from an anti-corruption drive ahead of a parliamentary election on Sunday.
An Athens court convicted Pavlos Psomiadis, former chief of small banking and insurance group Aspis, on charges of forging documents to keep his business afloat.
Corruption and cronyism are endemic in Greece. But no politician or senior businessman had been convicted in recent years, fuelling popular frustration with mainstream parties that pledge to uphold the debt-laden country's international bailout and remain in the euro zone.
"He was found guilty of fraud and forgery," a court official said. The conviction stemmed from a forged letter of credit for over 550 million euros ($729 million) that Psomiadis submitted to regulators in 2009.
Aspis was one of the first business groups to fall prey to the country's economic crisis. T-bank (AMBr.AT), a small lender that emerged from the wreckage of the group, was nationalized late last year under the terms of the country's EU/IMF bailout.
Monday's decision was the latest in a string of judicial moves as angry voters turn to smaller parties to punish the main conservatives and socialists whom they blame for the economic crisis and chronic corruption.
Earlier in April, a former defense minister was jailed pending trial on money laundering and bribery charges.
Last month, a Greek prosecutor filed felony charges against a prominent banker over a financial scandal that led to the EU/IMF-funded nationalization of small lender Proton Bank (PRBr.AT).
Editor's note: We should hire Greek prosecutors in US DOJ
This 2nd American Revolution simply affirms US laws, ideals
by Carl Herman
washingtonsblog.com
“Constitutional governments and aristocracies are commonly overthrown owing to some deviation from justice…the rich, if the constitution gives them power, are apt to be insolent and avaricious… In all well-attempered governments there is nothing which should be more jealously maintained than the spirit of obedience to law, more especially in small matters; for transgression creeps in unperceived and at last ruins the state, just as the constant recurrence of small expenses in time eats up a fortune.” – Aristotle, Politics, Book V. 350 B.C.E.
“The people — the people — are the rightful masters of both Congresses, and courts — not to overthrow the Constitution, but to overthrow the men who pervert it.” - “Abraham Lincoln, [September 16-17, 1859] (Notes for Speech in Kansas and Ohio),” Page 2.
As Occupy and related lawful actions approach the endgame of the criminal 1%’s surrenders and/or arrests, it’s important for Americans to understand three things:
1.This 2nd American Revolution simply enforces existing and basic American laws to prevent War Crimes, stop economic looting, and uphold ideals and law in US foundational documents of the Declaration of Independence and the US Constitution.
2.The criminality of the 1% centering in war and money is “emperor has no clothes” obvious with no rational defense possible; the crimes are Orwellian and only possible with cooperation of oligarchic control in political “leadership,” banking/finance to pay the 1%‘s minions, and corporate media to lie and distract the 99%.
3.Peace instead of war, obvious economic solutions for money and public credit instead of debt slavery to banksters (including full-employment for infrastructure), and the unleashing of suppressed technology will quickly end poverty, initiate abundant creativity, and transform this beautiful planet to nourish success for 100% of its inhabitants.
http://www.washingtonsblog.com/2012/04/this-2nd-american-revolution-simply-affirms-us-laws-ideals.html
washingtonsblog.com
“Constitutional governments and aristocracies are commonly overthrown owing to some deviation from justice…the rich, if the constitution gives them power, are apt to be insolent and avaricious… In all well-attempered governments there is nothing which should be more jealously maintained than the spirit of obedience to law, more especially in small matters; for transgression creeps in unperceived and at last ruins the state, just as the constant recurrence of small expenses in time eats up a fortune.” – Aristotle, Politics, Book V. 350 B.C.E.
“The people — the people — are the rightful masters of both Congresses, and courts — not to overthrow the Constitution, but to overthrow the men who pervert it.” - “Abraham Lincoln, [September 16-17, 1859] (Notes for Speech in Kansas and Ohio),” Page 2.
As Occupy and related lawful actions approach the endgame of the criminal 1%’s surrenders and/or arrests, it’s important for Americans to understand three things:
1.This 2nd American Revolution simply enforces existing and basic American laws to prevent War Crimes, stop economic looting, and uphold ideals and law in US foundational documents of the Declaration of Independence and the US Constitution.
2.The criminality of the 1% centering in war and money is “emperor has no clothes” obvious with no rational defense possible; the crimes are Orwellian and only possible with cooperation of oligarchic control in political “leadership,” banking/finance to pay the 1%‘s minions, and corporate media to lie and distract the 99%.
3.Peace instead of war, obvious economic solutions for money and public credit instead of debt slavery to banksters (including full-employment for infrastructure), and the unleashing of suppressed technology will quickly end poverty, initiate abundant creativity, and transform this beautiful planet to nourish success for 100% of its inhabitants.
http://www.washingtonsblog.com/2012/04/this-2nd-american-revolution-simply-affirms-us-laws-ideals.html
The Implosion of Capitalism
By Chris Hedges, Truthdig
When civilizations start to die they go insane. Let the ice sheets in the Arctic melt. Let the temperatures rise. Let the air, soil and water be poisoned. Let the forests die. Let the seas be emptied of life. Let one useless war after another be waged. Let the masses be thrust into extreme poverty and left without jobs while the elites, drunk on hedonism, accumulate vast fortunes through exploitation, speculation, fraud and theft. Reality, at the end, gets unplugged. We live in an age when news consists of Snooki’s pregnancy, Hulk Hogan’s sex tape and Kim Kardashian’s denial that she is the naked woman cooking eggs in a photo circulating on the Internet. Politicians, including presidents, appear on late night comedy shows to do gags and they campaign on issues such as creating a moon colony. “[A]t times when the page is turning,” Louis-Ferdinand Celine wrote in “Castle to Castle,” “when History brings all the nuts together, opens its Epic Dance Halls! hats and heads in the whirlwind! Panties overboard!”
The quest by a bankrupt elite in the final days of empire to accumulate greater and greater wealth, as Karl Marx observed, is modern society’s version of primitive fetishism. This quest, as there is less and less to exploit, leads to mounting repression, increased human suffering, a collapse of infrastructure and, finally, collective death. It is the self-deluded, those on Wall Street or among the political elite, those who entertain and inform us, those who lack the capacity to question the lusts that will ensure our self-annihilation, who are held up as exemplars of intelligence, success and progress. The World Health Organization calculates that one in four people in the United States suffers from chronic anxiety, a mood disorder or depression—which seems to me to be a normal reaction to our march toward collective suicide. Welcome to the asylum.
When the most basic elements that sustain life are reduced to a cash product, life has no intrinsic value. The extinguishing of “primitive” societies, those that were defined by animism and mysticism, those that celebrated ambiguity and mystery, those that respected the centrality of the human imagination, removed the only ideological counterweight to a self-devouring capitalist ideology. Those who held on to pre-modern beliefs, such as Native Americans, who structured themselves around a communal life and self-sacrifice rather than hoarding and wage exploitation, could not be accommodated within the ethic of capitalist exploitation, the cult of the self and the lust for imperial expansion. The prosaic was pitted against the allegorical. And as we race toward the collapse of the planet’s ecosystem we must restore this older vision of life if we are to survive.
The war on the Native Americans, like the wars waged by colonialists around the globe, was waged to eradicate not only a people but a competing ethic. The older form of human community was antithetical and hostile to capitalism, the primacy of the technological state and the demands of empire. This struggle between belief systems was not lost on Marx. “The Ethnological Notebooks of Karl Marx” is a series of observations derived from Marx’s reading of works by historians and anthropologists. He took notes about the traditions, practices, social structure, economic systems and beliefs of numerous indigenous cultures targeted for destruction. Marx noted arcane details about the formation of Native American society, but also that “lands [were] owned by the tribes in common, while tenement-houses [were] owned jointly by their occupants.” He wrote of the Aztecs, “Commune tenure of lands; Life in large households composed of a number of related families.” He went on, “… reasons for believing they practiced communism in living in the household.” Native Americans, especially the Iroquois, provided the governing model for the union of the American colonies, and also proved vital to Marx and Engel’s vision of communism.
Marx, though he placed a naive faith in the power of the state to create his workers’ utopia and discounted important social and cultural forces outside of economics, was acutely aware that something essential to human dignity and independence had been lost with the destruction of pre-modern societies. The Iroquois Council of the Gens, where Indians came together to be heard as ancient Athenians did, was, Marx noted, a “democratic assembly where every adult male and female member had a voice upon all questions brought before it.” Marx lauded the active participation of women in tribal affairs, writing, “The women [were] allowed to express their wishes and opinions through an orator of their own election. Decision given by the Council. Unanimity was a fundamental law of its action among the Iroquois.” European women on the Continent and in the colonies had no equivalent power.
Rebuilding this older vision of community, one based on cooperation rather than exploitation, will be as important to our survival as changing our patterns of consumption, growing food locally and ending our dependence on fossil fuels. The pre-modern societies of Sitting Bull and Crazy Horse—although they were not always idyllic and performed acts of cruelty including the mutilation, torture and execution of captives—did not subordinate the sacred to the technical. The deities they worshipped were not outside of or separate from nature.
Seventeenth century European philosophy and the Enlightenment, meanwhile, exalted the separation of human beings from the natural world, a belief also embraced by the Bible. The natural world, along with those pre-modern cultures that lived in harmony with it, was seen by the industrial society of the Enlightenment as worthy only of exploitation. Descartes argued, for example, that the fullest exploitation of matter to any use was the duty of humankind. The wilderness became, in the religious language of the Puritans, satanic. It had to be Christianized and subdued. The implantation of the technical order resulted, as Richard Slotkin writes in “Regeneration Through Violence,” in the primacy of “the western man-on-the-make, the speculator, and the wildcat banker.” Davy Crockett and, later, George Armstrong Custer, Slotkin notes, became “national heroes by defining national aspiration in terms of so many bears destroyed, so much land preempted, so many trees hacked down, so many Indians and Mexicans dead in the dust.”
The demented project of endless capitalist expansion, profligate consumption, senseless exploitation and industrial growth is now imploding. Corporate hustlers are as blind to the ramifications of their self-destructive fury as were Custer, the gold speculators and the railroad magnates. They seized Indian land, killed off its inhabitants, slaughtered the buffalo herds and cut down the forests. Their heirs wage war throughout the Middle East, pollute the seas and water systems, foul the air and soil and gamble with commodities as half the globe sinks into abject poverty and misery. The Book of Revelation defines this single-minded drive for profit as handing over authority to the “beast.”
The conflation of technological advancement with human progress leads to self-worship. Reason makes possible the calculations, science and technological advances of industrial civilization, but reason does not connect us with the forces of life. A society that loses the capacity for the sacred, that lacks the power of human imagination, that cannot practice empathy, ultimately ensures its own destruction. The Native Americans understood there are powers and forces we can never control and must honor. They knew, as did the ancient Greeks, that hubris is the deadliest curse of the human race. This is a lesson that we will probably have to learn for ourselves at the cost of tremendous suffering.
In William Shakespeare’s “The Tempest,” Prospero is stranded on an island where he becomes the undisputed lord and master. He enslaves the primitive “monster” Caliban. He employs the magical sources of power embodied in the spirit Ariel, who is of fire and air. The forces unleashed in the island’s wilderness, Shakespeare knew, could prompt us to good if we had the capacity for self-control and reverence. But it also could push us toward monstrous evil since there are few constraints to thwart plunder, rape, murder, greed and power. Later, Joseph Conrad, in his portraits of the outposts of empire, also would expose the same intoxication with barbarity.
The anthropologist Lewis Henry Morgan, who in 1846 was “adopted” by the Seneca, one of the tribes belonging to the Iroquois confederation, wrote in “Ancient Society” about social evolution among American Indians. Marx noted approvingly, in his “Ethnological Notebooks,” Morgan’s insistence on the historical and social importance of “imagination, that great faculty so largely contributing to the elevation of mankind.” Imagination, as the Shakespearean scholar Harold C. Goddard pointed out, “is neither the language of nature nor the language of man, but both at once, the medium of communion between the two. ... Imagination is the elemental speech in all senses, the first and the last, of primitive man and of the poets.”
All that concerns itself with beauty and truth, with those forces that have the power to transform us, are being steadily extinguished by our corporate state. Art. Education. Literature. Music. Theater. Dance. Poetry. Philosophy. Religion. Journalism. None of these disciplines are worthy in the corporate state of support or compensation. These are pursuits that, even in our universities, are condemned as impractical. But it is only through the impractical, through that which can empower our imagination, that we will be rescued as a species. The prosaic world of news events, the collection of scientific and factual data, stock market statistics and the sterile recording of deeds as history do not permit us to understand the elemental speech of imagination. We will never penetrate the mystery of creation, or the meaning of existence, if we do not recover this older language. Poetry shows a man his soul, Goddard wrote, “as a looking glass does his face.” And it is our souls that the culture of imperialism, business and technology seeks to crush. Walter Benjamin argued that capitalism is not only a formation “conditioned by religion,” but is an “essentially religious phenomenon,” albeit one that no longer seeks to connect humans with the mysterious forces of life. Capitalism, as Benjamin observed, called on human societies to embark on a ceaseless and futile quest for money and goods. This quest, he warned, perpetuates a culture dominated by guilt, a sense of inadequacy and self-loathing. It enslaves nearly all its adherents through wages, subservience to the commodity culture and debt peonage. The suffering visited on Native Americans, once Western expansion was complete, was soon endured by others, in Cuba, the Philippines, Nicaragua, the Dominican Republic, Vietnam, Iraq and Afghanistan. The final chapter of this sad experiment in human history will see us sacrificed as those on the outer reaches of empire were sacrificed. There is a kind of justice to this. We profited as a nation from this demented vision, we remained passive and silent when we should have denounced the crimes committed in our name, and now that the game is up we all go down together.
http://truth-out.org/opinion/item/8808-when-civilizations-die
When civilizations start to die they go insane. Let the ice sheets in the Arctic melt. Let the temperatures rise. Let the air, soil and water be poisoned. Let the forests die. Let the seas be emptied of life. Let one useless war after another be waged. Let the masses be thrust into extreme poverty and left without jobs while the elites, drunk on hedonism, accumulate vast fortunes through exploitation, speculation, fraud and theft. Reality, at the end, gets unplugged. We live in an age when news consists of Snooki’s pregnancy, Hulk Hogan’s sex tape and Kim Kardashian’s denial that she is the naked woman cooking eggs in a photo circulating on the Internet. Politicians, including presidents, appear on late night comedy shows to do gags and they campaign on issues such as creating a moon colony. “[A]t times when the page is turning,” Louis-Ferdinand Celine wrote in “Castle to Castle,” “when History brings all the nuts together, opens its Epic Dance Halls! hats and heads in the whirlwind! Panties overboard!”
The quest by a bankrupt elite in the final days of empire to accumulate greater and greater wealth, as Karl Marx observed, is modern society’s version of primitive fetishism. This quest, as there is less and less to exploit, leads to mounting repression, increased human suffering, a collapse of infrastructure and, finally, collective death. It is the self-deluded, those on Wall Street or among the political elite, those who entertain and inform us, those who lack the capacity to question the lusts that will ensure our self-annihilation, who are held up as exemplars of intelligence, success and progress. The World Health Organization calculates that one in four people in the United States suffers from chronic anxiety, a mood disorder or depression—which seems to me to be a normal reaction to our march toward collective suicide. Welcome to the asylum.
When the most basic elements that sustain life are reduced to a cash product, life has no intrinsic value. The extinguishing of “primitive” societies, those that were defined by animism and mysticism, those that celebrated ambiguity and mystery, those that respected the centrality of the human imagination, removed the only ideological counterweight to a self-devouring capitalist ideology. Those who held on to pre-modern beliefs, such as Native Americans, who structured themselves around a communal life and self-sacrifice rather than hoarding and wage exploitation, could not be accommodated within the ethic of capitalist exploitation, the cult of the self and the lust for imperial expansion. The prosaic was pitted against the allegorical. And as we race toward the collapse of the planet’s ecosystem we must restore this older vision of life if we are to survive.
The war on the Native Americans, like the wars waged by colonialists around the globe, was waged to eradicate not only a people but a competing ethic. The older form of human community was antithetical and hostile to capitalism, the primacy of the technological state and the demands of empire. This struggle between belief systems was not lost on Marx. “The Ethnological Notebooks of Karl Marx” is a series of observations derived from Marx’s reading of works by historians and anthropologists. He took notes about the traditions, practices, social structure, economic systems and beliefs of numerous indigenous cultures targeted for destruction. Marx noted arcane details about the formation of Native American society, but also that “lands [were] owned by the tribes in common, while tenement-houses [were] owned jointly by their occupants.” He wrote of the Aztecs, “Commune tenure of lands; Life in large households composed of a number of related families.” He went on, “… reasons for believing they practiced communism in living in the household.” Native Americans, especially the Iroquois, provided the governing model for the union of the American colonies, and also proved vital to Marx and Engel’s vision of communism.
Marx, though he placed a naive faith in the power of the state to create his workers’ utopia and discounted important social and cultural forces outside of economics, was acutely aware that something essential to human dignity and independence had been lost with the destruction of pre-modern societies. The Iroquois Council of the Gens, where Indians came together to be heard as ancient Athenians did, was, Marx noted, a “democratic assembly where every adult male and female member had a voice upon all questions brought before it.” Marx lauded the active participation of women in tribal affairs, writing, “The women [were] allowed to express their wishes and opinions through an orator of their own election. Decision given by the Council. Unanimity was a fundamental law of its action among the Iroquois.” European women on the Continent and in the colonies had no equivalent power.
Rebuilding this older vision of community, one based on cooperation rather than exploitation, will be as important to our survival as changing our patterns of consumption, growing food locally and ending our dependence on fossil fuels. The pre-modern societies of Sitting Bull and Crazy Horse—although they were not always idyllic and performed acts of cruelty including the mutilation, torture and execution of captives—did not subordinate the sacred to the technical. The deities they worshipped were not outside of or separate from nature.
Seventeenth century European philosophy and the Enlightenment, meanwhile, exalted the separation of human beings from the natural world, a belief also embraced by the Bible. The natural world, along with those pre-modern cultures that lived in harmony with it, was seen by the industrial society of the Enlightenment as worthy only of exploitation. Descartes argued, for example, that the fullest exploitation of matter to any use was the duty of humankind. The wilderness became, in the religious language of the Puritans, satanic. It had to be Christianized and subdued. The implantation of the technical order resulted, as Richard Slotkin writes in “Regeneration Through Violence,” in the primacy of “the western man-on-the-make, the speculator, and the wildcat banker.” Davy Crockett and, later, George Armstrong Custer, Slotkin notes, became “national heroes by defining national aspiration in terms of so many bears destroyed, so much land preempted, so many trees hacked down, so many Indians and Mexicans dead in the dust.”
The demented project of endless capitalist expansion, profligate consumption, senseless exploitation and industrial growth is now imploding. Corporate hustlers are as blind to the ramifications of their self-destructive fury as were Custer, the gold speculators and the railroad magnates. They seized Indian land, killed off its inhabitants, slaughtered the buffalo herds and cut down the forests. Their heirs wage war throughout the Middle East, pollute the seas and water systems, foul the air and soil and gamble with commodities as half the globe sinks into abject poverty and misery. The Book of Revelation defines this single-minded drive for profit as handing over authority to the “beast.”
The conflation of technological advancement with human progress leads to self-worship. Reason makes possible the calculations, science and technological advances of industrial civilization, but reason does not connect us with the forces of life. A society that loses the capacity for the sacred, that lacks the power of human imagination, that cannot practice empathy, ultimately ensures its own destruction. The Native Americans understood there are powers and forces we can never control and must honor. They knew, as did the ancient Greeks, that hubris is the deadliest curse of the human race. This is a lesson that we will probably have to learn for ourselves at the cost of tremendous suffering.
In William Shakespeare’s “The Tempest,” Prospero is stranded on an island where he becomes the undisputed lord and master. He enslaves the primitive “monster” Caliban. He employs the magical sources of power embodied in the spirit Ariel, who is of fire and air. The forces unleashed in the island’s wilderness, Shakespeare knew, could prompt us to good if we had the capacity for self-control and reverence. But it also could push us toward monstrous evil since there are few constraints to thwart plunder, rape, murder, greed and power. Later, Joseph Conrad, in his portraits of the outposts of empire, also would expose the same intoxication with barbarity.
The anthropologist Lewis Henry Morgan, who in 1846 was “adopted” by the Seneca, one of the tribes belonging to the Iroquois confederation, wrote in “Ancient Society” about social evolution among American Indians. Marx noted approvingly, in his “Ethnological Notebooks,” Morgan’s insistence on the historical and social importance of “imagination, that great faculty so largely contributing to the elevation of mankind.” Imagination, as the Shakespearean scholar Harold C. Goddard pointed out, “is neither the language of nature nor the language of man, but both at once, the medium of communion between the two. ... Imagination is the elemental speech in all senses, the first and the last, of primitive man and of the poets.”
All that concerns itself with beauty and truth, with those forces that have the power to transform us, are being steadily extinguished by our corporate state. Art. Education. Literature. Music. Theater. Dance. Poetry. Philosophy. Religion. Journalism. None of these disciplines are worthy in the corporate state of support or compensation. These are pursuits that, even in our universities, are condemned as impractical. But it is only through the impractical, through that which can empower our imagination, that we will be rescued as a species. The prosaic world of news events, the collection of scientific and factual data, stock market statistics and the sterile recording of deeds as history do not permit us to understand the elemental speech of imagination. We will never penetrate the mystery of creation, or the meaning of existence, if we do not recover this older language. Poetry shows a man his soul, Goddard wrote, “as a looking glass does his face.” And it is our souls that the culture of imperialism, business and technology seeks to crush. Walter Benjamin argued that capitalism is not only a formation “conditioned by religion,” but is an “essentially religious phenomenon,” albeit one that no longer seeks to connect humans with the mysterious forces of life. Capitalism, as Benjamin observed, called on human societies to embark on a ceaseless and futile quest for money and goods. This quest, he warned, perpetuates a culture dominated by guilt, a sense of inadequacy and self-loathing. It enslaves nearly all its adherents through wages, subservience to the commodity culture and debt peonage. The suffering visited on Native Americans, once Western expansion was complete, was soon endured by others, in Cuba, the Philippines, Nicaragua, the Dominican Republic, Vietnam, Iraq and Afghanistan. The final chapter of this sad experiment in human history will see us sacrificed as those on the outer reaches of empire were sacrificed. There is a kind of justice to this. We profited as a nation from this demented vision, we remained passive and silent when we should have denounced the crimes committed in our name, and now that the game is up we all go down together.
http://truth-out.org/opinion/item/8808-when-civilizations-die
Saturday, April 28, 2012
The New American Economy: Concentrating Business Power to Suit an Unequal Society
By Fabius Maximus
economonitor.com
Corporate power is concentrating in America, quite suitable for society with growing inequality of wealth and income. A new business structure for a new society. Today we look at some examples. This is one of the drivers of increasing concentration of wealth and power in America, pushing America from Republic to Plutocracy.
Cartels and monopolies were created in the Gilded Age of the late 19th century, especially during the depressions. Teddy Roosevelt and the great trust-busters restored some competition to the US economy. The New Deal began a new phase of cartelization. Now the US economy has entered a new phase of consolidation – a return to the Gilded age. In its extreme form entire industries fall under the domination of one company, which sucks the oxygen so that everyone else in the entire supply chain gasps for air.
It’s clearest in what’s misleadingly called the technology sector.
•Apple nears dominance over the entire consumer electronics industry. Even the large telecoms must dance to their tune.
•Amazon dominates the publishing business, especially electronic publications. Even the largest retailers and publishers fear them. And they’re expanding fast throughout the e-retail space.
•Google dominates the e-advertising business.
•On a smaller scale, eBay dominates the e-auction business.
More of these will emerge, as deep structural factors drive this trend. Technology today creates “winner take all” network effects. But there are other factors at work. Large companies can wield the patent system as a weapon, buy political protection and tax breaks, get government contracts, suppress unions, and often break the law with impunity. The banks and drug companies (see here for one of countless examples) illustrate these dynamics.
These giants destroy not just small but even large businesses as independent entities – they become dependent satellites, the business equivalent of Marx’s reserve army of the unemployed. Made or broken by whim, with profit margins set for the convenience of the megacorps in their field. The large regional corporations that were the mainstays of local politics and culture in America’s cities become branch offices, radically concentrating the social and economic patterns of the nation. This process has been running for decades, and now enters a new stage.
This trend of concentration on the industry level mirrors trends on the level of individual corporations, as senior officers take an increasing share of not just total wages, but also corporate profits. Their power is a means, not an end — and they as a group apply it to increase their wealth and income. As a result, the senior officers of these companies become plutocrats, members of our small and interconnected ruling elite – rich beyond the imagination of most people. None of their descendents need work for ten generations. Meg Whitman accumulates $1.3 billion as the senior manager at Ebay, and attempts to buy the Governorship of California as 19th century English plutocrats would buy an earldom.
For a more recent example, look at Apple, in this excerpt from a report by Indigo Equity Research (25 April 2012):
When Tim Cook was appointed CEO in August 2011 he was granted 1 million restricted stock units, worth $600 million at a share price of $600. … Also Mr. Cook’s salary was raised to $1.4 million. … Arthur Levinson became Chairman of Apple in 2011; he is also CEO of Genentech and is on the Board of Google.
These are the people who increasingly own America. They run for office (eg, Bloomberg; Senate has become a millionaires club called the US Senate). They buy newspapers and magazine, endow think-tanks, to advocate their views. They fund candidates for President to make their view the law of the land. Their wealth allows them to shape public policy as a hobby. They are becoming America; the rest of us will just live here.
These things do not “just happen.” We allow them to happen. Our actions and inaction will revitalize or destroy the Republic.
economonitor.com
Corporate power is concentrating in America, quite suitable for society with growing inequality of wealth and income. A new business structure for a new society. Today we look at some examples. This is one of the drivers of increasing concentration of wealth and power in America, pushing America from Republic to Plutocracy.
Cartels and monopolies were created in the Gilded Age of the late 19th century, especially during the depressions. Teddy Roosevelt and the great trust-busters restored some competition to the US economy. The New Deal began a new phase of cartelization. Now the US economy has entered a new phase of consolidation – a return to the Gilded age. In its extreme form entire industries fall under the domination of one company, which sucks the oxygen so that everyone else in the entire supply chain gasps for air.
It’s clearest in what’s misleadingly called the technology sector.
•Apple nears dominance over the entire consumer electronics industry. Even the large telecoms must dance to their tune.
•Amazon dominates the publishing business, especially electronic publications. Even the largest retailers and publishers fear them. And they’re expanding fast throughout the e-retail space.
•Google dominates the e-advertising business.
•On a smaller scale, eBay dominates the e-auction business.
More of these will emerge, as deep structural factors drive this trend. Technology today creates “winner take all” network effects. But there are other factors at work. Large companies can wield the patent system as a weapon, buy political protection and tax breaks, get government contracts, suppress unions, and often break the law with impunity. The banks and drug companies (see here for one of countless examples) illustrate these dynamics.
These giants destroy not just small but even large businesses as independent entities – they become dependent satellites, the business equivalent of Marx’s reserve army of the unemployed. Made or broken by whim, with profit margins set for the convenience of the megacorps in their field. The large regional corporations that were the mainstays of local politics and culture in America’s cities become branch offices, radically concentrating the social and economic patterns of the nation. This process has been running for decades, and now enters a new stage.
This trend of concentration on the industry level mirrors trends on the level of individual corporations, as senior officers take an increasing share of not just total wages, but also corporate profits. Their power is a means, not an end — and they as a group apply it to increase their wealth and income. As a result, the senior officers of these companies become plutocrats, members of our small and interconnected ruling elite – rich beyond the imagination of most people. None of their descendents need work for ten generations. Meg Whitman accumulates $1.3 billion as the senior manager at Ebay, and attempts to buy the Governorship of California as 19th century English plutocrats would buy an earldom.
For a more recent example, look at Apple, in this excerpt from a report by Indigo Equity Research (25 April 2012):
When Tim Cook was appointed CEO in August 2011 he was granted 1 million restricted stock units, worth $600 million at a share price of $600. … Also Mr. Cook’s salary was raised to $1.4 million. … Arthur Levinson became Chairman of Apple in 2011; he is also CEO of Genentech and is on the Board of Google.
These are the people who increasingly own America. They run for office (eg, Bloomberg; Senate has become a millionaires club called the US Senate). They buy newspapers and magazine, endow think-tanks, to advocate their views. They fund candidates for President to make their view the law of the land. Their wealth allows them to shape public policy as a hobby. They are becoming America; the rest of us will just live here.
These things do not “just happen.” We allow them to happen. Our actions and inaction will revitalize or destroy the Republic.
Suicides have Greeks on edge before election
By Erik Kirschbaum
Reuters
On Monday, a 38-year-old geology lecturer hanged himself from a lamp post in Athens and on the same day a 35-year-old priest jumped to his death off his balcony in northern Greece. On Wednesday, a 23-year-old student shot himself in the head.
In a country that has had one of the lowest suicide rates in the world, a surge in the number of suicides in the wake of an economic crisis has shocked and gripped the Mediterranean nation - and its media - before a May 6 election.
The especially grisly death of pharmacist Dimitris Christoulas, who shot himself in the head on a central Athens square because of poverty brought on by the crisis that has put millions out of work, was by far the most dramatic.
Before shooting himself during morning rush hour on April 4 on Syntagma Square across from the Greek parliament building, the 77-year-old pensioner took a moment to jot down a note.
"I see no other solution than this dignified end to my life so I don't find myself fishing through garbage cans for sustenance," wrote Christoulas, who has since become a national symbol of the austerity-induced pain that is squeezing millions.
Greek media have since reported similar suicides almost daily, worsening a sense of gloom going into next week's election, called after Prime Minister Lucas Papademos's interim government completed its mandate to secure a new rescue deal from foreign creditors by cutting spending further.
Some medical experts say this form of political suicide is a reflection of the growing despair and sense of helplessness many feel. But others warn the media may be amplifying the crisis mood with its coverage and numbers may only be up slightly.
"The crisis has triggered a growing sense of guilt, a loss of self-esteem and humiliation for many Greeks," Nikos Sideris, a leading psychoanalyst and author in Athens, told Reuters.
"Greek people don't want to be a burden to anyone and there's this growing sense of helplessness. Some develop an attitude of self-hatred and that leads to self-destruction. That's what's behind the increase in suicide and attempted suicide. We're seeing a whole new category: political suicides."
Police said the geology lecturer, Nikos Polyvos, who hanged himself, was distraught because a teaching job offer had been blocked due to a blanket hiring freeze in the public sector.
NATION IN SHOCK
Experts say the numbers are relatively low - less than about 600 per year. But increases in suicides, attempted suicides, the use of anti-depressant medication and the need for psychiatric care are causing alarm in a nation unaccustomed to the problems.
Before the financial crisis began wreaking havoc in 2009, Greece had one of the lowest suicide rates in the world - 2.8 per 100,000 inhabitants. There was a 40 percent rise in suicides in the first half of 2010, according to the Health Ministry.
There are no reliable statistics on 2011 but experts say Greece's suicide rate has probably doubled to about 5 per 100,000. That is still far below levels of 34 per 100,000 seen in Finland or 9 per 100,000 in Germany. Attempted suicides and demand for psychiatric help has risen as Greece struggles to cope with the worst economic crisis since World War Two.
Nikiforos Angelopoulos, a professor of psychiatry, has a busy psychotherapy practice in an upmarket Athens neighborhood. He said the crisis has exacerbated the problems for some already less stable people and estimates that about five percent of his patients have developed problems due to the crisis.
"We're a nation in shock," he said, even though he suspected that it was the media coverage of suicides that had increased dramatically rather than the actual numbers of suicides. He nevertheless says the crisis is behind a notable rise in mental health problems in Greece.
"I had one patient who came in with a severe depression - he owns a furniture making company that got into financial trouble and he had to lay off 20 of his 100 workers," he said. "He couldn't sleep and couldn't eat because of that. He said his good business was being ruined and he couldn't cope anymore."
The furniture maker spent four months in therapy and was also helped by anti-depressants, Angelopoulos said.
"He's better now. He realized what happened just happened. But there are many others who are unstable or psychotic to begin with and the crisis is increasing their anxiety and insecurity."
Angelopoulos, 60, has also suffered himself because about 20 percent of his patients can no longer afford his 100 euro ($130) per hour sessions. Some have asked for a half-price discount while others tell him they simply can't afford to pay anything.
"I never turn people away," he said. "If a patient says to me 'I have no money', I couldn't tell them to go away. I tell them okay you don't have to pay now but remember me later."
HAPPY GREEKS?
There are several possible explanations for Greece's low suicide rate that go beyond the fact that the country has an abundance of sunshine and balmy weather.
To avoid stigmatizing their families, some suicidal Greeks deliberately crash their cars, which police often charitably report as accidents. Families often try to cover up a suicide so their loved ones can be buried because the Greek Orthodox church refuses to officiate at burials of people who commit suicide.
Another important factor behind the low suicide rate is that Greeks have extremely close knit families as well as a highly communicative and expressive culture.
"Greece is a country where everyone will talk to you," said Sideris, the Athens psychoanalyst. "You'll always find someone to share your suffering with and someone's always there to help.
"It's not only the good weather. It's the powerful network of support that has made the suicide rate in Greece so low. It's still there but this crisis is still too much for some people."
Reuters
On Monday, a 38-year-old geology lecturer hanged himself from a lamp post in Athens and on the same day a 35-year-old priest jumped to his death off his balcony in northern Greece. On Wednesday, a 23-year-old student shot himself in the head.
In a country that has had one of the lowest suicide rates in the world, a surge in the number of suicides in the wake of an economic crisis has shocked and gripped the Mediterranean nation - and its media - before a May 6 election.
The especially grisly death of pharmacist Dimitris Christoulas, who shot himself in the head on a central Athens square because of poverty brought on by the crisis that has put millions out of work, was by far the most dramatic.
Before shooting himself during morning rush hour on April 4 on Syntagma Square across from the Greek parliament building, the 77-year-old pensioner took a moment to jot down a note.
"I see no other solution than this dignified end to my life so I don't find myself fishing through garbage cans for sustenance," wrote Christoulas, who has since become a national symbol of the austerity-induced pain that is squeezing millions.
Greek media have since reported similar suicides almost daily, worsening a sense of gloom going into next week's election, called after Prime Minister Lucas Papademos's interim government completed its mandate to secure a new rescue deal from foreign creditors by cutting spending further.
Some medical experts say this form of political suicide is a reflection of the growing despair and sense of helplessness many feel. But others warn the media may be amplifying the crisis mood with its coverage and numbers may only be up slightly.
"The crisis has triggered a growing sense of guilt, a loss of self-esteem and humiliation for many Greeks," Nikos Sideris, a leading psychoanalyst and author in Athens, told Reuters.
"Greek people don't want to be a burden to anyone and there's this growing sense of helplessness. Some develop an attitude of self-hatred and that leads to self-destruction. That's what's behind the increase in suicide and attempted suicide. We're seeing a whole new category: political suicides."
Police said the geology lecturer, Nikos Polyvos, who hanged himself, was distraught because a teaching job offer had been blocked due to a blanket hiring freeze in the public sector.
NATION IN SHOCK
Experts say the numbers are relatively low - less than about 600 per year. But increases in suicides, attempted suicides, the use of anti-depressant medication and the need for psychiatric care are causing alarm in a nation unaccustomed to the problems.
Before the financial crisis began wreaking havoc in 2009, Greece had one of the lowest suicide rates in the world - 2.8 per 100,000 inhabitants. There was a 40 percent rise in suicides in the first half of 2010, according to the Health Ministry.
There are no reliable statistics on 2011 but experts say Greece's suicide rate has probably doubled to about 5 per 100,000. That is still far below levels of 34 per 100,000 seen in Finland or 9 per 100,000 in Germany. Attempted suicides and demand for psychiatric help has risen as Greece struggles to cope with the worst economic crisis since World War Two.
Nikiforos Angelopoulos, a professor of psychiatry, has a busy psychotherapy practice in an upmarket Athens neighborhood. He said the crisis has exacerbated the problems for some already less stable people and estimates that about five percent of his patients have developed problems due to the crisis.
"We're a nation in shock," he said, even though he suspected that it was the media coverage of suicides that had increased dramatically rather than the actual numbers of suicides. He nevertheless says the crisis is behind a notable rise in mental health problems in Greece.
"I had one patient who came in with a severe depression - he owns a furniture making company that got into financial trouble and he had to lay off 20 of his 100 workers," he said. "He couldn't sleep and couldn't eat because of that. He said his good business was being ruined and he couldn't cope anymore."
The furniture maker spent four months in therapy and was also helped by anti-depressants, Angelopoulos said.
"He's better now. He realized what happened just happened. But there are many others who are unstable or psychotic to begin with and the crisis is increasing their anxiety and insecurity."
Angelopoulos, 60, has also suffered himself because about 20 percent of his patients can no longer afford his 100 euro ($130) per hour sessions. Some have asked for a half-price discount while others tell him they simply can't afford to pay anything.
"I never turn people away," he said. "If a patient says to me 'I have no money', I couldn't tell them to go away. I tell them okay you don't have to pay now but remember me later."
HAPPY GREEKS?
There are several possible explanations for Greece's low suicide rate that go beyond the fact that the country has an abundance of sunshine and balmy weather.
To avoid stigmatizing their families, some suicidal Greeks deliberately crash their cars, which police often charitably report as accidents. Families often try to cover up a suicide so their loved ones can be buried because the Greek Orthodox church refuses to officiate at burials of people who commit suicide.
Another important factor behind the low suicide rate is that Greeks have extremely close knit families as well as a highly communicative and expressive culture.
"Greece is a country where everyone will talk to you," said Sideris, the Athens psychoanalyst. "You'll always find someone to share your suffering with and someone's always there to help.
"It's not only the good weather. It's the powerful network of support that has made the suicide rate in Greece so low. It's still there but this crisis is still too much for some people."
Michael Krieger On The Rebirth Of Barter
Via Michael Krieger of 'A Lightning War For Liberty' blog
Justice in the hands of the powerful is merely a governing system like any other. Why call it justice? Let us rather call it injustice, but of a sly effective order, based entirely on cruel knowledge of the resistance of the weak, their capacity for pain, humiliation and misery.
- Georges Bernanos
(1888-1948)
Outwardly we have a Constitutional government. We have operating within our government and political system, another body representing another form of government, a bureaucratic elite which believes our Constitution is outmoded.
- Senator William Jenner
(1908-1985) U.S. Senator (IN-R)
The Final Act of the Uruguay Round, marking the conclusion of the most ambitious trade negotiation of our century, will give birth – in Morocco – to the World Trade Organization, the third pillar of the New World Order, along with the United Nations and the International Monetary Fund.
- Government of Morocco
April, 1994 Source: New York Times, full page ad by the government of Morocco
The Rebirth of Barter
One of the most important articles I have read this week comes from Forbes contributor Gordon Chang. In it he states that China is preparing to avoid U.S. sanctions on Iran by paying for oil with gold. Not only that but he also mentions that China has already been bartering with Iran to get a hold of petroleum. He states:
So how can Beijing keep both Iran’s ayatollahs and President Obama happy at the same time? Simple, the Chinese can avoid the U.S. sanctions through barter. China has already been trading its produce for Iran’s petroleum, but there is only so much gai lan and bok choy the Iranians can eat. That’s why Iran is also accepting, among other goods, Chinese washing machines, refrigerators, toys, clothes, cosmetics, and toiletries.
The barter trade works, but Iran needs cash too. As it is being cut off from the global financial system, the next best thing is gold. So we should not be surprised that in late February the Iranian central bank said it would accept that metal as payment for oil. Last year, China imported $21.7 billion in Iranian oil and exported $14.8 billion in goods and services. As the NDAA goes into effect, look for Beijing to ship gold to Iran to make up the difference.
Thus, the leadership in America in its infinite stupidity has actually accelerated the demise of the U.S. dollar as the world’s reserve currency. After its “kinetic action” in Libya succeeded in toppling the regime there, Washington’s geopolitical hubris grew and it has attempted to muscle Iran into a corner. Instead, all it has done is alienated our “allies” that need Iranian oil to survive and in the process quickened a move away from the dollar to settle certain transactions. Read Gordon’s article here.
In a similar move on a more micro level, the government of Spain in a similar desperation has banned the use of cash transactions above 2,500 euros (read this great article here on it). How do you think citizens are going to respond to this? People are already in the streets. They are not pleased with what is going on. Then the government is going to tell them they can’t use cash amongst themselves so that the authorities can track every single thing they do and bleed them with taxes until they are slaves on a banker plantation. Everything is going to go black market and to a barter system. It will happen country by country as governments get increasingly desperate and the authoritarian clamp down continues. It will happen on an increasing level until all of these house of cards bureaucratic states fail and something new is reborn. In case you haven’t seen it yet, this one town in Greece is already leading the way. This story outlines what will be a mega trend globally over the next decade.
Justice in the hands of the powerful is merely a governing system like any other. Why call it justice? Let us rather call it injustice, but of a sly effective order, based entirely on cruel knowledge of the resistance of the weak, their capacity for pain, humiliation and misery.
- Georges Bernanos
(1888-1948)
Outwardly we have a Constitutional government. We have operating within our government and political system, another body representing another form of government, a bureaucratic elite which believes our Constitution is outmoded.
- Senator William Jenner
(1908-1985) U.S. Senator (IN-R)
The Final Act of the Uruguay Round, marking the conclusion of the most ambitious trade negotiation of our century, will give birth – in Morocco – to the World Trade Organization, the third pillar of the New World Order, along with the United Nations and the International Monetary Fund.
- Government of Morocco
April, 1994 Source: New York Times, full page ad by the government of Morocco
The Rebirth of Barter
One of the most important articles I have read this week comes from Forbes contributor Gordon Chang. In it he states that China is preparing to avoid U.S. sanctions on Iran by paying for oil with gold. Not only that but he also mentions that China has already been bartering with Iran to get a hold of petroleum. He states:
So how can Beijing keep both Iran’s ayatollahs and President Obama happy at the same time? Simple, the Chinese can avoid the U.S. sanctions through barter. China has already been trading its produce for Iran’s petroleum, but there is only so much gai lan and bok choy the Iranians can eat. That’s why Iran is also accepting, among other goods, Chinese washing machines, refrigerators, toys, clothes, cosmetics, and toiletries.
The barter trade works, but Iran needs cash too. As it is being cut off from the global financial system, the next best thing is gold. So we should not be surprised that in late February the Iranian central bank said it would accept that metal as payment for oil. Last year, China imported $21.7 billion in Iranian oil and exported $14.8 billion in goods and services. As the NDAA goes into effect, look for Beijing to ship gold to Iran to make up the difference.
Thus, the leadership in America in its infinite stupidity has actually accelerated the demise of the U.S. dollar as the world’s reserve currency. After its “kinetic action” in Libya succeeded in toppling the regime there, Washington’s geopolitical hubris grew and it has attempted to muscle Iran into a corner. Instead, all it has done is alienated our “allies” that need Iranian oil to survive and in the process quickened a move away from the dollar to settle certain transactions. Read Gordon’s article here.
In a similar move on a more micro level, the government of Spain in a similar desperation has banned the use of cash transactions above 2,500 euros (read this great article here on it). How do you think citizens are going to respond to this? People are already in the streets. They are not pleased with what is going on. Then the government is going to tell them they can’t use cash amongst themselves so that the authorities can track every single thing they do and bleed them with taxes until they are slaves on a banker plantation. Everything is going to go black market and to a barter system. It will happen country by country as governments get increasingly desperate and the authoritarian clamp down continues. It will happen on an increasing level until all of these house of cards bureaucratic states fail and something new is reborn. In case you haven’t seen it yet, this one town in Greece is already leading the way. This story outlines what will be a mega trend globally over the next decade.
Locking down an American workforce
by Steve Fraser and Joshua B. Freeman
mondediplo.com
Sweatshop labor is back with a vengeance. It can be found across broad stretches of the American economy and around the world. Penitentiaries have become a niche market for such work. The privatization of prisons in recent years has meant the creation of a small army of workers too coerced and right-less to complain.
Prisoners, whose ranks increasingly consist of those for whom the legitimate economy has found no use, now make up a virtual brigade within the reserve army of the unemployed whose ranks have ballooned along with the U.S. incarceration rate. The Corrections Corporation of America and GEO, two prison privatizers, along with a third smaller operator, G4S (formerly Wackenhut), sell inmate labor at subminimum wages to Fortune 500 corporations like Chevron, Bank of America, AT&T, and IBM.
These companies can, in most states, lease factories in prisons or prisoners to work on the outside. All told, nearly a million prisoners are now making office furniture, working in call centers, fabricating body armor, taking hotel reservations, working in slaughterhouses, or manufacturing textiles, shoes, and clothing, while getting paid somewhere between 93 cents and $4.73 per day.
Rarely can you find workers so pliable, easy to control, stripped of political rights, and subject to martial discipline at the first sign of recalcitrance — unless, that is, you traveled back to the nineteenth century when convict labor was commonplace nationwide. Indeed, a sentence of “confinement at hard labor” was then the essence of the American penal system. More than that, it was one vital way the United States became a modern industrial capitalist economy — at a moment, eerily like our own, when the mechanisms of capital accumulation were in crisis.
A Yankee invention
What some historians call “the long Depression” of the nineteenth century, which lasted from the mid-1870s through the mid-1890s, was marked by frequent panics and slumps, mass bankruptcies, deflation, and self-destructive competition among businesses designed to depress costs, especially labor costs. So, too, we are living through a twenty-first century age of panics and austerity with similar pressures to shrink the social wage.
Convict labor has been and once again is an appealing way for business to address these dilemmas. Penal servitude now strikes us as a barbaric throwback to some long-lost moment that preceded the industrial revolution, but in that we’re wrong. From its first appearance in this country, it has been associated with modern capitalist industry and large-scale agriculture.
And that is only the first of many misconceptions about this peculiar institution. Infamous for the brutality with which prison laborers were once treated, indelibly linked in popular memory (and popular culture) with images of the black chain gang in the American South, it is usually assumed to be a Southern invention. So apparently atavistic, it seems to fit naturally with the retrograde nature of Southern life and labor, its economic and cultural underdevelopment, its racial caste system, and its desperate attachment to the “lost cause.”
As it happens, penal servitude — the leasing out of prisoners to private enterprise, either within prison walls or in outside workshops, factories, and fields — was originally known as a “Yankee invention.”
First used at Auburn prison in New York State in the 1820s, the system spread widely and quickly throughout the North, the Midwest, and later the West. It developed alongside state-run prison workshops that produced goods for the public sector and sometimes the open market.
A few Southern states also used it. Prisoners there, as elsewhere, however, were mainly white men, since slave masters, with a free hand to deal with the “infractions” of their chattel, had little need for prison. The Thirteenth Amendment abolishing slavery would, in fact, make an exception for penal servitude precisely because it had become the dominant form of punishment throughout the free states.
Nor were those sentenced to “confinement at hard labor” restricted to digging ditches or other unskilled work; nor were they only men. Prisoners were employed at an enormous range of tasks from rope- and wagon-making to carpet, hat, and clothing manufacturing (where women prisoners were sometimes put to work), as well coal mining, carpentry, barrel-making, shoe production, house-building, and even the manufacture of rifles. The range of petty and larger workshops into which the felons were integrated made up the heart of the new American economy.
Observing a free-labor textile mill and a convict-labor one on a visit to the United States, novelist Charles Dickens couldn’t tell the difference. State governments used the rental revenue garnered from their prisoners to meet budget needs, while entrepreneurs made outsized profits either by working the prisoners themselves or subleasing them to other businessmen.
Convict Labor in the ‘new South’
After the Civil War, the convict-lease system metamorphosed. In the South, it became ubiquitous, one of several grim methods — including the black codes, debt peonage, the crop-lien system, lifetime labor contracts, and vigilante terror — used to control and fix in place the newly emancipated slave. Those “freedmen” were eager to pursue their new liberty either by setting up as small farmers or by exercising the right to move out of the region at will or from job to job as “free wage labor” was supposed to be able to do.
If you assumed, however, that the convict-lease system was solely the brainchild of the apartheid all-white “Redeemer” governments that overthrew the Radical Republican regimes (which first ran the defeated Confederacy during Reconstruction) and used their power to introduce Jim Crow to Dixie, you would be wrong again. In Georgia, for instance, the Radical Republican state government took the initiative soon after the war ended. And this was because the convict-lease system was tied to the modernizing sectors of the post-war economy, no matter where in Dixie it was introduced or by whom.
So convicts were leased to coal-mining, iron-forging, steel-making, and railroad companies, including Tennessee Coal and Iron (TC&I), a major producer across the South, especially in the booming region around Birmingham, Alabama. More than a quarter of the coal coming out of Birmingham’s pits was then mined by prisoners. By the turn of the century, TC&I had been folded into J.P. Morgan’s United States Steel complex, which also relied heavily on prison laborers.
All the main extractive industries of the South were, in fact, wedded to the system. Turpentine and lumber camps deep in the fetid swamps and forest vastnesses of Georgia, Florida, and Louisiana commonly worked their convicts until they dropped dead from overwork or disease. The region’s plantation monocultures in cotton and sugar made regular use of imprisoned former slaves, including women. Among the leading families of Atlanta, Birmingham, and other “New South” metropolises were businessmen whose fortunes originated in the dank coal pits, malarial marshes, isolated forests, and squalid barracks in which their unfree peons worked, lived, and died.
Because it tended to grant absolute authority to private commercial interests and because its racial make-up in the post-slavery era was overwhelmingly African-American, the South’s convict-lease system was distinctive. Its caste nature is not only impossible to forget, but should remind us of the unbalanced racial profile of America’s bloated prison population today.
Moreover, this totalitarian-style control invited appalling brutalities in response to any sign of resistance: whippings, water torture, isolation in “dark cells,” dehydration, starvation, ice-baths, shackling with metal spurs riveted to the feet, and “tricing” (an excruciatingly painful process in which recalcitrant prisoners were strung up by the thumbs with fishing line attached to overhead pulleys). Even women in a hosiery mill in Tennessee were flogged, hung by the wrists, and placed in solitary confinement.
Living quarters for prisoner-workers were usually rat-infested and disease-ridden. Work lasted at least from sunup to sundown and well past the point of exhaustion. Death came often enough and bodies were cast off in unmarked graves by the side of the road or by incineration in coke ovens. Injury rates averaged one per worker per month, including respiratory failure, burnings, disfigurement, and the loss of limbs. Prison mines were called “nurseries of death.” Among Southern convict laborers, the mortality rate (not even including high levels of suicides) was eight times that among similar workers in the North — and it was extraordinarily high there.
The Southern system also stood out for the intimate collusion among industrial, commercial, and agricultural enterprises and every level of Southern law enforcement as well as the judicial system. Sheriffs, local justices of the peace, state police, judges, and state governments conspired to keep the convict-lease business humming. Indeed, local law officers depended on the leasing system for a substantial part of their income. (They pocketed the fines and fees associated with the “convictions,” a repayable sum that would be added on to the amount of time at “hard labor” demanded of the prisoner.)
The arrest cycle was synchronized with the business cycle, timed to the rise and fall of the demand for fresh labor. County and state treasuries similarly counted on such revenues, since the post-war South was so capital-starved that only renting out convicts assured that prisons could be built and maintained.
There was, then, every incentive to concoct charges or send people to jail for the most trivial offenses: vagrancy, gambling, drinking, partying, hopping a freight car, tarrying too long in town. A “pig law” in Mississippi assured you of five years as a prison laborer if you stole a farm animal worth more than $10. Theft of a fence rail could result in the same.
Penal Servitude in the Gilded Age North
All of this was only different in degree from prevailing practices everywhere else: the sale of prison labor power to private interests, corporal punishment, and the absence of all rights including civil liberties, the vote, and the right to protest or organize against terrible conditions.
In the North, where 80% of all U.S. prison labor was employed after the Civil War and which accounted for over $35 billion in output (in current dollars), the system was reconfigured to meet the needs of modern industry and the pressures of “the long Depression.” Convict labor was increasingly leased out only to a handful of major manufacturers in each state. These textile mills, oven makers, mining operations, hat and shoe factories — one in Wisconsin leased that state’s entire population of convicted felons — were then installing the kind of mass production methods becoming standard in much of American industry. As organized markets for prison labor grew increasingly oligopolistic (like the rest of the economy), the Depression of 1873 and subsequent depressions in the following decades wiped out many smaller businesses that had once gone trawling for convicts.
http://www.amazon.com/gp/product/03... Today, we talk about a newly “flexible economy,” often a euphemism for the geometric growth of a precariously positioned, insecure workforce. The convict labor system of the nineteenth century offered an original specimen of perfect flexibility.
Companies leasing convicts enjoyed authority to dispose of their rented labor power as they saw fit. Workers were compelled to labor in total silence. Even hand gestures and eye contact were prohibited for the purpose of creating “silent and insulated working machines.”
Supervision of prison labor was ostensibly shared by employers and the prison authorities. In fact, many businesses did continue to conduct their operations within prison walls where they supplied the materials, power, and machinery, while the state provided guards, workshops, food, clothing, and what passed for medical care. As a matter of practice though, the foremen of the businesses called the shots. And there were certain states, including Nebraska, Washington, and New Mexico, that, like their Southern counterparts, ceded complete control to the lessee. As one observer put it, “Felons are mere machines held to labor by the dark cell and the scourge.”
Free market industrial capitalism, then and now, invariably draws on the aid of the state. In that system’s formative phases, the state has regularly used its coercive powers of taxation, expropriation, and in this case incarceration to free up natural and human resources lying outside the orbit of capitalism proper.
In both the North and the South, the contracting out of convict labor was one way in which that state-assisted mechanism of capital accumulation arose. Contracts with the government assured employers that their labor force would be replenished anytime a worker got sick, was disabled, died, or simply became too worn out to continue.
The Kansas Wagon Company, for example, signed a five-year contract in 1877 that prevented the state from raising the rental price of labor or renting to other employers. The company also got an option to renew the lease for 10 more years, while the government was obliged to pay for new machinery, larger workshops, a power supply, and even the building of a switching track that connected to the trunk line of the Pacific Railway and so ensured that the product could be moved effectively to market.
Penal institutions all over the country became auxiliary arms of capitalist industry and commerce. Two-thirds of all prisoners worked for private enterprise.
Today, strikingly enough, government is again providing subsidies and tax incentives as well as facilities, utilities, and free space for corporations making use of this same category of abjectly dependent labor.
The New Abolitionism
Dependency and flexibility naturally assumed no resistance, but there was plenty of that all through the nineteenth century from workers, farmers, and even prisoners. Indeed, a principal objective in using prison labor was to undermine efforts to unionize, but from the standpoint of mobilized working people far more was at stake.
Opposition to convict labor arose from workingmen’s associations, labor-oriented political parties, journeymen unions, and other groups which considered the system an insult to the moral codes of egalitarian republicanism nurtured by the American Revolution. The specter of proletarian dependency haunted the lives of the country’s self-reliant handicraftsmen who watched apprehensively as shops employing wage labor began popping up across the country. Much of the earliest of this agitation was aimed at the use of prisoners to replace skilled workers (while unskilled prison labor was initially largely ignored).
It was bad enough for craftsmen to see their own livelihoods and standards of living put in jeopardy by “free” wage labor. Worse still was to watch unfree labor do the same thing. At the time, employers were turning to that captive prison population to combat attempts by aggrieved workers to organize and defend themselves. On the eve of the Civil War, for example, an iron-molding contractor in Spuyten Duyvil, north of Manhattan in the Bronx, locked out his unionized workers and then moved his operation to Sing Sing penitentiary, where a laborer cost 40 cents, $2.60 less than the going day rate. It worked, and Local 11 of the Union of Iron Workers quickly died away.
Worst of all was to imagine this debased form of work as a model for the proletarian future to come. The workingman’s movement of the Jacksonian era was deeply alarmed by the prospect of “wage slavery,” a condition inimical to their sense of themselves as citizens of a republic of independent producers. Prison labor was a sub-species of that dreaded “slavery,” a caricature of it perhaps, and intolerable to a movement often as much about emancipation as unionization.
All the way through the Gilded Age of the 1890s, convict labor continued to serve as a magnet for emancipatory desires. In addition, prisoners’ rebellions became ever more common — in the North particularly, where many prisoners turned out to be Civil War veterans and dispossessed working people who already knew something about fighting for freedom and fighting back. Major penitentiaries like Sing Sing became sites of repeated strikes and riots; a strike in 1877 even took on the transplanted Spuyten Duyvil iron-molding company.
Above and below the Mason Dixon line, political platforms, protest rallies, petition campaigns, legislative investigations, union strikes, and boycotts by farm organizations like the Farmers Alliance and Grange cried out for the abolition of the convict-lease system, or at least for its rigorous regulation. Over the century’s last two decades, more than 20 coal-mine strikes broke out because of the use of convict miners.
The Knights of Labor, that era’s most audacious labor movement, was particularly exercised. During the Coal Creek Wars in eastern Tennessee in the early 1890s, for instance, TC&I tried to use prisoners to break a miners’ strike. The company’s vice president noted that it was “an effective club to hold over the heads of free laborers.”
Strikers and their allies affiliated with the Knights, the United Mine Workers, and the Farmers Alliance launched guerilla attacks on the prisoner stockade, sending the convicts they freed to Knoxville. When the governor insisted on shipping them back, the workers released them into the surrounding hills and countryside. Gun battles followed.
The death of convict leasing
In the North, the prison abolition movement went viral, embracing not only workers’ organizations, sympathetic rural insurgents, and prisoners, but also widening circles of middle-class reformers. The newly created American Federation of Labor denounced the system as “contract slavery.” It also demanded the banning of any imports from abroad made with convict labor and the exclusion from the open market of goods produced domestically by prisoners, whether in state-run or private workshops. In Chicago, the construction unions refused to work with materials made by prisoners.
By the latter part of the century, in state after state penal servitude was on its way to extinction. New York, where the "industry" was born and was largest, killed it by the late 1880s. The tariff of 1890 prohibited the sale of convict-made wares from abroad. Private leasing continued in the North, but under increasingly restrictive conditions, including Federal legislation passed during the New Deal. By World War II, it was virtually extinct (although government-run prison workshops continued as they always had).
At least officially, even in the South it was at an end by the turn of the century in Tennessee, Louisiana, Georgia, and Mississippi. Higher political calculations were at work in these states. Established elites were eager to break the inter-racial alliances that had formed over abolishing convict leasing by abolishing the hated system itself. Often enough, however, it ended in name only.
What replaced it was the state-run chain gang (although some Southern states like Alabama and Florida continued private leasing well into the 1920s). Inmates were set to work building roads and other infrastructure projects vital to the flourishing of a mature market economy and so to the continuing process of capital accumulation. In the North, the system of “hard labor” was replaced by a system of “hard time,” that numbing, brutalizing idleness where masses of people extruded from the mainstream economy are pooled into mass penal colonies. The historic link between labor, punishment, and economic development was severed, and remained so... until now.
Convict leasing rises again
"Now," means our second Gilded Age and its aftermath. In these years, the system of leasing out convicts to private enterprise was reborn. This was a perverse triumph for the law of supply and demand in an era infatuated with the charms of the free market. On the supply side, the U.S. holds captive 25% of all the prisoners on the planet: 2.3 million people. It has the highest incarceration rate in the world as well, a figure that began skyrocketing in 1980 as Ronald Reagan became president. As for the demand for labor, since the 1970s American industrial corporations have found it increasingly unprofitable to invest in domestic production. Instead, they have sought out the hundreds of millions of people abroad who are willing to, or can be pressed into, working for far less than American workers.
As a consequence, those back home — disproportionately African-American workers — who found themselves living in economic exile, scrabbling to get by, began showing up in similarly disproportionate numbers in the country’s rapidly expanding prison archipelago. It didn’t take long for corporate America to come to view this as another potential foreign country, full of cheap and subservient labor — and better yet, close by.
What began in the 1970s as an end run around the laws prohibiting convict leasing by private interests has now become an industrial sector in its own right, employing more people than any Fortune 500 corporation and operating in 37 states. And here’s the ultimate irony: our ancestors found convict labor obnoxious in part because it seemed to prefigure a new and more universal form of enslavement. Could its rebirth foreshadow a future ever more unnervingly like those past nightmares?
Today, we are being reassured by the president, the mainstream media, and economic experts that the Great Recession is over, that we are in “recovery” even though most of the recovering patients haven’t actually noticed significant improvement in their condition. For those announcing its arrival, “recovery” means that the mega-banks are no longer on the brink of bankruptcy, the stock market has made up lost ground, corporate profits are improving, and notoriously unreliable employment numbers have improved by several tenths of a percent.
What accounts for that peculiarly narrow view of recovery, however, is that the general costs of doing business are falling off a cliff as the economy eats itself alive. The recovery being celebrated owes thanks to local, state, and Federal austerity budgets, the starving of the social welfare system and public services, rampant anti-union campaigns in the public and private sector, the spread of sweatshop labor, the coercion of desperate unemployed or underemployed workers to accept lower wages, part-time work, and temporary work, as well as the relinquishing of healthcare benefits and a financially secure retirement — in short, to surrender the hope that is supposed to come with the American franchise.
Such a recovery, resting on the stripping away of the hard won material and cultural achievements of the past century, suggests a new world in which the prison-labor archipelago could indeed become a vast gulag of the downwardly mobile.
mondediplo.com
Sweatshop labor is back with a vengeance. It can be found across broad stretches of the American economy and around the world. Penitentiaries have become a niche market for such work. The privatization of prisons in recent years has meant the creation of a small army of workers too coerced and right-less to complain.
Prisoners, whose ranks increasingly consist of those for whom the legitimate economy has found no use, now make up a virtual brigade within the reserve army of the unemployed whose ranks have ballooned along with the U.S. incarceration rate. The Corrections Corporation of America and GEO, two prison privatizers, along with a third smaller operator, G4S (formerly Wackenhut), sell inmate labor at subminimum wages to Fortune 500 corporations like Chevron, Bank of America, AT&T, and IBM.
These companies can, in most states, lease factories in prisons or prisoners to work on the outside. All told, nearly a million prisoners are now making office furniture, working in call centers, fabricating body armor, taking hotel reservations, working in slaughterhouses, or manufacturing textiles, shoes, and clothing, while getting paid somewhere between 93 cents and $4.73 per day.
Rarely can you find workers so pliable, easy to control, stripped of political rights, and subject to martial discipline at the first sign of recalcitrance — unless, that is, you traveled back to the nineteenth century when convict labor was commonplace nationwide. Indeed, a sentence of “confinement at hard labor” was then the essence of the American penal system. More than that, it was one vital way the United States became a modern industrial capitalist economy — at a moment, eerily like our own, when the mechanisms of capital accumulation were in crisis.
A Yankee invention
What some historians call “the long Depression” of the nineteenth century, which lasted from the mid-1870s through the mid-1890s, was marked by frequent panics and slumps, mass bankruptcies, deflation, and self-destructive competition among businesses designed to depress costs, especially labor costs. So, too, we are living through a twenty-first century age of panics and austerity with similar pressures to shrink the social wage.
Convict labor has been and once again is an appealing way for business to address these dilemmas. Penal servitude now strikes us as a barbaric throwback to some long-lost moment that preceded the industrial revolution, but in that we’re wrong. From its first appearance in this country, it has been associated with modern capitalist industry and large-scale agriculture.
And that is only the first of many misconceptions about this peculiar institution. Infamous for the brutality with which prison laborers were once treated, indelibly linked in popular memory (and popular culture) with images of the black chain gang in the American South, it is usually assumed to be a Southern invention. So apparently atavistic, it seems to fit naturally with the retrograde nature of Southern life and labor, its economic and cultural underdevelopment, its racial caste system, and its desperate attachment to the “lost cause.”
As it happens, penal servitude — the leasing out of prisoners to private enterprise, either within prison walls or in outside workshops, factories, and fields — was originally known as a “Yankee invention.”
First used at Auburn prison in New York State in the 1820s, the system spread widely and quickly throughout the North, the Midwest, and later the West. It developed alongside state-run prison workshops that produced goods for the public sector and sometimes the open market.
A few Southern states also used it. Prisoners there, as elsewhere, however, were mainly white men, since slave masters, with a free hand to deal with the “infractions” of their chattel, had little need for prison. The Thirteenth Amendment abolishing slavery would, in fact, make an exception for penal servitude precisely because it had become the dominant form of punishment throughout the free states.
Nor were those sentenced to “confinement at hard labor” restricted to digging ditches or other unskilled work; nor were they only men. Prisoners were employed at an enormous range of tasks from rope- and wagon-making to carpet, hat, and clothing manufacturing (where women prisoners were sometimes put to work), as well coal mining, carpentry, barrel-making, shoe production, house-building, and even the manufacture of rifles. The range of petty and larger workshops into which the felons were integrated made up the heart of the new American economy.
Observing a free-labor textile mill and a convict-labor one on a visit to the United States, novelist Charles Dickens couldn’t tell the difference. State governments used the rental revenue garnered from their prisoners to meet budget needs, while entrepreneurs made outsized profits either by working the prisoners themselves or subleasing them to other businessmen.
Convict Labor in the ‘new South’
After the Civil War, the convict-lease system metamorphosed. In the South, it became ubiquitous, one of several grim methods — including the black codes, debt peonage, the crop-lien system, lifetime labor contracts, and vigilante terror — used to control and fix in place the newly emancipated slave. Those “freedmen” were eager to pursue their new liberty either by setting up as small farmers or by exercising the right to move out of the region at will or from job to job as “free wage labor” was supposed to be able to do.
If you assumed, however, that the convict-lease system was solely the brainchild of the apartheid all-white “Redeemer” governments that overthrew the Radical Republican regimes (which first ran the defeated Confederacy during Reconstruction) and used their power to introduce Jim Crow to Dixie, you would be wrong again. In Georgia, for instance, the Radical Republican state government took the initiative soon after the war ended. And this was because the convict-lease system was tied to the modernizing sectors of the post-war economy, no matter where in Dixie it was introduced or by whom.
So convicts were leased to coal-mining, iron-forging, steel-making, and railroad companies, including Tennessee Coal and Iron (TC&I), a major producer across the South, especially in the booming region around Birmingham, Alabama. More than a quarter of the coal coming out of Birmingham’s pits was then mined by prisoners. By the turn of the century, TC&I had been folded into J.P. Morgan’s United States Steel complex, which also relied heavily on prison laborers.
All the main extractive industries of the South were, in fact, wedded to the system. Turpentine and lumber camps deep in the fetid swamps and forest vastnesses of Georgia, Florida, and Louisiana commonly worked their convicts until they dropped dead from overwork or disease. The region’s plantation monocultures in cotton and sugar made regular use of imprisoned former slaves, including women. Among the leading families of Atlanta, Birmingham, and other “New South” metropolises were businessmen whose fortunes originated in the dank coal pits, malarial marshes, isolated forests, and squalid barracks in which their unfree peons worked, lived, and died.
Because it tended to grant absolute authority to private commercial interests and because its racial make-up in the post-slavery era was overwhelmingly African-American, the South’s convict-lease system was distinctive. Its caste nature is not only impossible to forget, but should remind us of the unbalanced racial profile of America’s bloated prison population today.
Moreover, this totalitarian-style control invited appalling brutalities in response to any sign of resistance: whippings, water torture, isolation in “dark cells,” dehydration, starvation, ice-baths, shackling with metal spurs riveted to the feet, and “tricing” (an excruciatingly painful process in which recalcitrant prisoners were strung up by the thumbs with fishing line attached to overhead pulleys). Even women in a hosiery mill in Tennessee were flogged, hung by the wrists, and placed in solitary confinement.
Living quarters for prisoner-workers were usually rat-infested and disease-ridden. Work lasted at least from sunup to sundown and well past the point of exhaustion. Death came often enough and bodies were cast off in unmarked graves by the side of the road or by incineration in coke ovens. Injury rates averaged one per worker per month, including respiratory failure, burnings, disfigurement, and the loss of limbs. Prison mines were called “nurseries of death.” Among Southern convict laborers, the mortality rate (not even including high levels of suicides) was eight times that among similar workers in the North — and it was extraordinarily high there.
The Southern system also stood out for the intimate collusion among industrial, commercial, and agricultural enterprises and every level of Southern law enforcement as well as the judicial system. Sheriffs, local justices of the peace, state police, judges, and state governments conspired to keep the convict-lease business humming. Indeed, local law officers depended on the leasing system for a substantial part of their income. (They pocketed the fines and fees associated with the “convictions,” a repayable sum that would be added on to the amount of time at “hard labor” demanded of the prisoner.)
The arrest cycle was synchronized with the business cycle, timed to the rise and fall of the demand for fresh labor. County and state treasuries similarly counted on such revenues, since the post-war South was so capital-starved that only renting out convicts assured that prisons could be built and maintained.
There was, then, every incentive to concoct charges or send people to jail for the most trivial offenses: vagrancy, gambling, drinking, partying, hopping a freight car, tarrying too long in town. A “pig law” in Mississippi assured you of five years as a prison laborer if you stole a farm animal worth more than $10. Theft of a fence rail could result in the same.
Penal Servitude in the Gilded Age North
All of this was only different in degree from prevailing practices everywhere else: the sale of prison labor power to private interests, corporal punishment, and the absence of all rights including civil liberties, the vote, and the right to protest or organize against terrible conditions.
In the North, where 80% of all U.S. prison labor was employed after the Civil War and which accounted for over $35 billion in output (in current dollars), the system was reconfigured to meet the needs of modern industry and the pressures of “the long Depression.” Convict labor was increasingly leased out only to a handful of major manufacturers in each state. These textile mills, oven makers, mining operations, hat and shoe factories — one in Wisconsin leased that state’s entire population of convicted felons — were then installing the kind of mass production methods becoming standard in much of American industry. As organized markets for prison labor grew increasingly oligopolistic (like the rest of the economy), the Depression of 1873 and subsequent depressions in the following decades wiped out many smaller businesses that had once gone trawling for convicts.
http://www.amazon.com/gp/product/03... Today, we talk about a newly “flexible economy,” often a euphemism for the geometric growth of a precariously positioned, insecure workforce. The convict labor system of the nineteenth century offered an original specimen of perfect flexibility.
Companies leasing convicts enjoyed authority to dispose of their rented labor power as they saw fit. Workers were compelled to labor in total silence. Even hand gestures and eye contact were prohibited for the purpose of creating “silent and insulated working machines.”
Supervision of prison labor was ostensibly shared by employers and the prison authorities. In fact, many businesses did continue to conduct their operations within prison walls where they supplied the materials, power, and machinery, while the state provided guards, workshops, food, clothing, and what passed for medical care. As a matter of practice though, the foremen of the businesses called the shots. And there were certain states, including Nebraska, Washington, and New Mexico, that, like their Southern counterparts, ceded complete control to the lessee. As one observer put it, “Felons are mere machines held to labor by the dark cell and the scourge.”
Free market industrial capitalism, then and now, invariably draws on the aid of the state. In that system’s formative phases, the state has regularly used its coercive powers of taxation, expropriation, and in this case incarceration to free up natural and human resources lying outside the orbit of capitalism proper.
In both the North and the South, the contracting out of convict labor was one way in which that state-assisted mechanism of capital accumulation arose. Contracts with the government assured employers that their labor force would be replenished anytime a worker got sick, was disabled, died, or simply became too worn out to continue.
The Kansas Wagon Company, for example, signed a five-year contract in 1877 that prevented the state from raising the rental price of labor or renting to other employers. The company also got an option to renew the lease for 10 more years, while the government was obliged to pay for new machinery, larger workshops, a power supply, and even the building of a switching track that connected to the trunk line of the Pacific Railway and so ensured that the product could be moved effectively to market.
Penal institutions all over the country became auxiliary arms of capitalist industry and commerce. Two-thirds of all prisoners worked for private enterprise.
Today, strikingly enough, government is again providing subsidies and tax incentives as well as facilities, utilities, and free space for corporations making use of this same category of abjectly dependent labor.
The New Abolitionism
Dependency and flexibility naturally assumed no resistance, but there was plenty of that all through the nineteenth century from workers, farmers, and even prisoners. Indeed, a principal objective in using prison labor was to undermine efforts to unionize, but from the standpoint of mobilized working people far more was at stake.
Opposition to convict labor arose from workingmen’s associations, labor-oriented political parties, journeymen unions, and other groups which considered the system an insult to the moral codes of egalitarian republicanism nurtured by the American Revolution. The specter of proletarian dependency haunted the lives of the country’s self-reliant handicraftsmen who watched apprehensively as shops employing wage labor began popping up across the country. Much of the earliest of this agitation was aimed at the use of prisoners to replace skilled workers (while unskilled prison labor was initially largely ignored).
It was bad enough for craftsmen to see their own livelihoods and standards of living put in jeopardy by “free” wage labor. Worse still was to watch unfree labor do the same thing. At the time, employers were turning to that captive prison population to combat attempts by aggrieved workers to organize and defend themselves. On the eve of the Civil War, for example, an iron-molding contractor in Spuyten Duyvil, north of Manhattan in the Bronx, locked out his unionized workers and then moved his operation to Sing Sing penitentiary, where a laborer cost 40 cents, $2.60 less than the going day rate. It worked, and Local 11 of the Union of Iron Workers quickly died away.
Worst of all was to imagine this debased form of work as a model for the proletarian future to come. The workingman’s movement of the Jacksonian era was deeply alarmed by the prospect of “wage slavery,” a condition inimical to their sense of themselves as citizens of a republic of independent producers. Prison labor was a sub-species of that dreaded “slavery,” a caricature of it perhaps, and intolerable to a movement often as much about emancipation as unionization.
All the way through the Gilded Age of the 1890s, convict labor continued to serve as a magnet for emancipatory desires. In addition, prisoners’ rebellions became ever more common — in the North particularly, where many prisoners turned out to be Civil War veterans and dispossessed working people who already knew something about fighting for freedom and fighting back. Major penitentiaries like Sing Sing became sites of repeated strikes and riots; a strike in 1877 even took on the transplanted Spuyten Duyvil iron-molding company.
Above and below the Mason Dixon line, political platforms, protest rallies, petition campaigns, legislative investigations, union strikes, and boycotts by farm organizations like the Farmers Alliance and Grange cried out for the abolition of the convict-lease system, or at least for its rigorous regulation. Over the century’s last two decades, more than 20 coal-mine strikes broke out because of the use of convict miners.
The Knights of Labor, that era’s most audacious labor movement, was particularly exercised. During the Coal Creek Wars in eastern Tennessee in the early 1890s, for instance, TC&I tried to use prisoners to break a miners’ strike. The company’s vice president noted that it was “an effective club to hold over the heads of free laborers.”
Strikers and their allies affiliated with the Knights, the United Mine Workers, and the Farmers Alliance launched guerilla attacks on the prisoner stockade, sending the convicts they freed to Knoxville. When the governor insisted on shipping them back, the workers released them into the surrounding hills and countryside. Gun battles followed.
The death of convict leasing
In the North, the prison abolition movement went viral, embracing not only workers’ organizations, sympathetic rural insurgents, and prisoners, but also widening circles of middle-class reformers. The newly created American Federation of Labor denounced the system as “contract slavery.” It also demanded the banning of any imports from abroad made with convict labor and the exclusion from the open market of goods produced domestically by prisoners, whether in state-run or private workshops. In Chicago, the construction unions refused to work with materials made by prisoners.
By the latter part of the century, in state after state penal servitude was on its way to extinction. New York, where the "industry" was born and was largest, killed it by the late 1880s. The tariff of 1890 prohibited the sale of convict-made wares from abroad. Private leasing continued in the North, but under increasingly restrictive conditions, including Federal legislation passed during the New Deal. By World War II, it was virtually extinct (although government-run prison workshops continued as they always had).
At least officially, even in the South it was at an end by the turn of the century in Tennessee, Louisiana, Georgia, and Mississippi. Higher political calculations were at work in these states. Established elites were eager to break the inter-racial alliances that had formed over abolishing convict leasing by abolishing the hated system itself. Often enough, however, it ended in name only.
What replaced it was the state-run chain gang (although some Southern states like Alabama and Florida continued private leasing well into the 1920s). Inmates were set to work building roads and other infrastructure projects vital to the flourishing of a mature market economy and so to the continuing process of capital accumulation. In the North, the system of “hard labor” was replaced by a system of “hard time,” that numbing, brutalizing idleness where masses of people extruded from the mainstream economy are pooled into mass penal colonies. The historic link between labor, punishment, and economic development was severed, and remained so... until now.
Convict leasing rises again
"Now," means our second Gilded Age and its aftermath. In these years, the system of leasing out convicts to private enterprise was reborn. This was a perverse triumph for the law of supply and demand in an era infatuated with the charms of the free market. On the supply side, the U.S. holds captive 25% of all the prisoners on the planet: 2.3 million people. It has the highest incarceration rate in the world as well, a figure that began skyrocketing in 1980 as Ronald Reagan became president. As for the demand for labor, since the 1970s American industrial corporations have found it increasingly unprofitable to invest in domestic production. Instead, they have sought out the hundreds of millions of people abroad who are willing to, or can be pressed into, working for far less than American workers.
As a consequence, those back home — disproportionately African-American workers — who found themselves living in economic exile, scrabbling to get by, began showing up in similarly disproportionate numbers in the country’s rapidly expanding prison archipelago. It didn’t take long for corporate America to come to view this as another potential foreign country, full of cheap and subservient labor — and better yet, close by.
What began in the 1970s as an end run around the laws prohibiting convict leasing by private interests has now become an industrial sector in its own right, employing more people than any Fortune 500 corporation and operating in 37 states. And here’s the ultimate irony: our ancestors found convict labor obnoxious in part because it seemed to prefigure a new and more universal form of enslavement. Could its rebirth foreshadow a future ever more unnervingly like those past nightmares?
Today, we are being reassured by the president, the mainstream media, and economic experts that the Great Recession is over, that we are in “recovery” even though most of the recovering patients haven’t actually noticed significant improvement in their condition. For those announcing its arrival, “recovery” means that the mega-banks are no longer on the brink of bankruptcy, the stock market has made up lost ground, corporate profits are improving, and notoriously unreliable employment numbers have improved by several tenths of a percent.
What accounts for that peculiarly narrow view of recovery, however, is that the general costs of doing business are falling off a cliff as the economy eats itself alive. The recovery being celebrated owes thanks to local, state, and Federal austerity budgets, the starving of the social welfare system and public services, rampant anti-union campaigns in the public and private sector, the spread of sweatshop labor, the coercion of desperate unemployed or underemployed workers to accept lower wages, part-time work, and temporary work, as well as the relinquishing of healthcare benefits and a financially secure retirement — in short, to surrender the hope that is supposed to come with the American franchise.
Such a recovery, resting on the stripping away of the hard won material and cultural achievements of the past century, suggests a new world in which the prison-labor archipelago could indeed become a vast gulag of the downwardly mobile.
Friday, April 27, 2012
Yamarone - We Are Literally Witnessing a Collapse
kingworldnews.com
On the heels of the release of the Fed statement and the Bernanke press conference, today King World News interviewed Richard Yamarone, senior economist at Bloomberg Brief. He has consulted for monetary and fiscal policymakers and served as an adviser to major U.S. corporations. Yamarone also held senior positions for major international and domestic money center and investment banks. When asked what’s really happening with the US economy, Yamarone responded, “I think people are just running out of money. We have contracting, real disposable incomes. Most of the job creation that we have is from minimum wage type jobs.”
Richard Yamarone continues:
“I’m fortunate enough to travel and speak to chambers of commerce with 300 to 500 people in the audience. They all tell me, ‘Hey, listen, I am letting go of workers. I’m hiring them back at a fraction of what I used to pay them.’
You hear from the other side, ‘Hey, I finally got a job after two years of being unemployed. I used to make $100,000 (each year), now I’m making $45,000 or now I’m working part time.’ Or (you hear), ‘I used to make $500,000 and now I’m making $200,000 or making $125,000.’....
“So you are actually seeing this collapse, contracting on a real basis, of real disposable personal incomes. If you don’t have the money, you can’t facilitate expenditures. So that’s the core of the problem. That’s what’s really going on in the US economy.
You don’t listen to what all of these bigger numbers coming across the screen tell you. You talk to the people who are running the country. 99.7% of all employer firms in this country are small businesses. So when they speak, you have to listen.
You have to listen to what the small businesses are telling you and right now they are telling you, ‘Hey, I’m the head of a 3rd or 4th generation, 75 or 100 year old business, and I’ve got to shut the doors’ or ‘I’ve got to let people go. And if I’m hiring anybody back, it’s only on a temporary basis.’
Sometimes they do this through a hiring firm so that they can sidestep paying unemployment benefit insurance. So that’s what’s really going on at the grassroots level of the economy. Very, very, grossly different from what you’re seeing in some of these numbers coming out in earnings releases.”
Yamarone also added: “Monetary policy is very different from the days when we were an industrial behemoth. If you look at the first eight recessions after World War II, when we were a big manufacturer, back then, if the Fed saw a problem they cut rates and boom, manufacturers sparked up their idled plants and factories.
In fact, the first eight recessions after World War II, it took, on average, twenty months for us to respond and get all of the jobs that we lost during the recession back. So, in a little less than two years the Fed policy response would get all of the jobs back.
However, you look at the last two recessions, in ’90/’91 and the 2001 recession, they were jobless recoveries. We don’t respond to monetary policy the same way because we are no longer that manufacturing behemoth. So the Fed cuts rates at the first sign of trouble and it takes, during those recessions, forty months for us to get back all of the jobs we would lose.
In this current recession, we are not even close (to getting the jobs back) and that’s 50 months and counting.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/26_Yamarone_-_We_Are_Literally_Witnessing_a_Collapse.html
On the heels of the release of the Fed statement and the Bernanke press conference, today King World News interviewed Richard Yamarone, senior economist at Bloomberg Brief. He has consulted for monetary and fiscal policymakers and served as an adviser to major U.S. corporations. Yamarone also held senior positions for major international and domestic money center and investment banks. When asked what’s really happening with the US economy, Yamarone responded, “I think people are just running out of money. We have contracting, real disposable incomes. Most of the job creation that we have is from minimum wage type jobs.”
Richard Yamarone continues:
“I’m fortunate enough to travel and speak to chambers of commerce with 300 to 500 people in the audience. They all tell me, ‘Hey, listen, I am letting go of workers. I’m hiring them back at a fraction of what I used to pay them.’
You hear from the other side, ‘Hey, I finally got a job after two years of being unemployed. I used to make $100,000 (each year), now I’m making $45,000 or now I’m working part time.’ Or (you hear), ‘I used to make $500,000 and now I’m making $200,000 or making $125,000.’....
“So you are actually seeing this collapse, contracting on a real basis, of real disposable personal incomes. If you don’t have the money, you can’t facilitate expenditures. So that’s the core of the problem. That’s what’s really going on in the US economy.
You don’t listen to what all of these bigger numbers coming across the screen tell you. You talk to the people who are running the country. 99.7% of all employer firms in this country are small businesses. So when they speak, you have to listen.
You have to listen to what the small businesses are telling you and right now they are telling you, ‘Hey, I’m the head of a 3rd or 4th generation, 75 or 100 year old business, and I’ve got to shut the doors’ or ‘I’ve got to let people go. And if I’m hiring anybody back, it’s only on a temporary basis.’
Sometimes they do this through a hiring firm so that they can sidestep paying unemployment benefit insurance. So that’s what’s really going on at the grassroots level of the economy. Very, very, grossly different from what you’re seeing in some of these numbers coming out in earnings releases.”
Yamarone also added: “Monetary policy is very different from the days when we were an industrial behemoth. If you look at the first eight recessions after World War II, when we were a big manufacturer, back then, if the Fed saw a problem they cut rates and boom, manufacturers sparked up their idled plants and factories.
In fact, the first eight recessions after World War II, it took, on average, twenty months for us to respond and get all of the jobs that we lost during the recession back. So, in a little less than two years the Fed policy response would get all of the jobs back.
However, you look at the last two recessions, in ’90/’91 and the 2001 recession, they were jobless recoveries. We don’t respond to monetary policy the same way because we are no longer that manufacturing behemoth. So the Fed cuts rates at the first sign of trouble and it takes, during those recessions, forty months for us to get back all of the jobs we would lose.
In this current recession, we are not even close (to getting the jobs back) and that’s 50 months and counting.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/26_Yamarone_-_We_Are_Literally_Witnessing_a_Collapse.html
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