Where We Are Now

By Dan Kervick

Margaret Thatcher is dead.

Thatcher and Ronald Reagan were seminal conservative politicians who came to power in 1979 and 1980 at the end of a period of profound transformation in the Anglo-American world.   A postwar system forged in war, and built on a broad foundation of industrial labor, rising middle class prosperity, and an active government hand in economic development was transforming itself socially and economically into something quite different.

Many of the increasingly well-educated and aspirational children of the postwar workforce were moving out of industrial labor and into a variety of non-labor services and professions, seeding the new social antagonisms and divisions these kinds of class shifts always entail.  With a globalizing economy, industrial production moved toward cheaper and less protected labor abroad, and the labor security that had once been so prized by the public came to be seen by many as something standing in the way of low consumer prices and economic dynamism.   An unpopular American war brought the era of universal male draft registration to an end, further widening the social gap between those with multiple economic options and those for whom military service was one of the few available escapes from a bleak economic future.  At the same time, the prosperous and mobile economies of the developed world, with their ravenous hunger for fossil fuels, had become dependent for their energy resources on politically unstable regimes outside their borders, making them vulnerable to costly energy supply shocks.   By the time Thatcher and Reagan came along, the postwar egalitarian and labor-centered order was moribund, and the two conservative leaders were able to tip it over.  The equality-minded left found itself without a programmatic alternative to the old consensus framework that had built a prosperous, deep and secure middle class on the wreckage of the depression and the industrial foundation laid down by the war.   To some extent that vacuum on the left still exists.

Now, in 2008, we’re at the end of a similar cycle.  But this time what is ending is the political order that Thatcher and Reagan themselves helped build.  The collapse of 2008 has shown us a nakedly bankrupt and dysfunctional neoliberal system: a financialized and poorly regulated predator economy organized to funnel money to parasites collecting rents on the output of others whose aspirations are systematically squashed.  The system has given us unprecedented social inequality along with prolonged and seemingly permanent unemployment at levels that would once have been considered an appalling national scandal for all but the most incompetently run banana republics.  The system is loosely supervised by political elites who are alienated from their electorates and who rarely even pretend to serve the voters anymore.  These politicians are often little more than rent collecting bag men for the ownership class they work for.  A laughably unpopular US Congress occupies itself with performing obstructionist services for its paymasters and positively revels in its unresponsiveness to national needs.  The major media personalities and channels, employees of the small percentage of people who own the country, try to spread a veneer of normality over the gathering debacle, and distract the masses with pseudo-reality entertainments aimed at inculcating feelings of inferiority, humiliation and subordination.  And the events in Europe seem more demented by the day, as the mad inquisitors of the Euro-da-fé continue their persecution of the unfortunate.

But these reactionary responses from the plutocracy are unsustainable and deluded.  Eventually, enterprising and alert politicians will seize both the ripe political opportunities that are now open to them and the moral high-ground, and will start to put together broad-based movements to sweep out the detritus of the old order.   Certainly this kind of innovation and risk-taking will not come from the current cohort of leaders.   Barack Obama’s political strategy seems to be to make himself as useful as possible to the stakeholders in the existing order, and to try to breathe new, sustaining life into the faltering ancien régime.  Along with his fellow-conservative fellow-leaders in Europe – David Cameron and Angela Merkel – Obama will surely go down as one of the more incompetent and obtusely destructive national executives in modern history.   In addition to being grossly unsuited to meeting the challenges of the times, Obama’s administration is also corrupt.  The most brazen crimes have gone unprosecuted; and wide-open political opportunities for progressive reform and change have been perverted to redound to the benefit of the super-rich.  The media poobahs opt to hand out bravery awards for this kind of obsequious pandering to the plutocracy, and Obama will no doubt be rewarded handsomely after 2017 with foundation grants, lucrative speaking engagements and other forms of corporate booty for services rendered.

The plutocracy has learned something important from the collapse of 2008 and its aftermath.  If you cause a depression; if you loot and exploit the vulnerable to enrich yourselves while spreading the gap between rich and poor; and if you even go so far as to steal the homes and other assets of your victims in broad daylight, then mainstream parties of the contemporary West will do nothing to stop you.  So it’s now open season on the less affluent portions of the population of the United States and Europe, who happen to be a majority.   For a few years now, the sincerely progressive members of these parties have been so stunned and wrong-footed by the enormity of the unfolding betrayals that they have lost themselves in denial and misplaced anger at critics.  They are also paralyzed by fear, convinced by their leaders that there is always something worse over the horizon, and that the leaders’ lesser brand of evil is the only thing standing between the public and a political fate worse than death.  But this ruse is beginning to wear off.  Even though Obama has long signaled his eager desire to chip away at social insurance programs, shrink the public sector and punish the vulnerable, many of his supporters refused to accept the plain meaning of his words.   But his recent direct assault on Social Security and Medicare seems to have shocked many of the remaining faithful into finally recognizing the obvious.  While stockholder profits soar and the gap between rich and the rest expands, Obama has concluded that the elderly and the sick are getting too much money.

Millions of genuinely progressive and instinctively optimistic people still have a vision of the world they want to help create, and are ready to get busy creating it.  But they are saddled with a political establishment that lacks the courage, integrity and basic honesty to help them, and is in the pocket of the stakeholders in the unraveling neoliberal rackets.   While the situation might seem bleak, I think we have just been going through the early Hoover-like phase of political response to the second Great Depression.  The governments that will begin to take shape in the decade ahead will take the initiative to spearhead economic development behind a new progressive economic strategy driven by active government engagement and citizen involvement.  They will make it the public’s business to provide employment to each and every person who wants to participate in building the better future to come.  They will finally take up the task of building a new and more sustainable society organized around work, solidarity, shared prosperity, equality, and a reinvigorated participatory democracy.

39 responses to “Where We Are Now

  1. Tristan Lanfrey

    …fellow-leaders in Europe – David Cameron and Andrea Merkel -…

    I think you mean Angela Merkel.

  2. Selfishness. Reagan and Thatcher policies raised selfishness to a new level. It became good economics to take what you could from others.

  3. julian firth

    I admire your optimism about the decade to come, but short of civil insurrection, what will it take ? The sweat-brow process of democratic change brings with it the lurking spore of entitlement that corrupts the very structures it constructs. Only Fire.

    • Yes, 1776 needs to be revisited. Anyone who believes things are better than they were in that seminal-period of our country is naive. A rereading of the Declaration of Independence will shock most Americans from their self-imposed denial of today’s slide into serfdom and corporate fascism….the modern authority of the Crown.

  4. “The governments that will begin to take shape in the decade ahead will take the initiative to spearhead economic development behind a new progressive economic strategy driven by active government engagement and citizen involvement. They will make it the public’s business to provide employment to each and every person who wants to participate in building the better future to come. ”

    Hope is Dope.

  5. The last paragraph is utopian wishful thinking. You can’t even get a consensus like this in a large percentage of families, let alone a nation as big and diverse as is ours. How, pray tell, could this be achieved on an infinitely greater scale? Kill all the malcontents that don’t wish to come along for the utopian ride?

    • It’s not utopian. It has happened before. From 1929-32 the plutocracy was just as firmly entrenched as it is now, but the country was about to embark on two decades of major social and political transformation that created a prosperous and secure middle class, a much higher degree of income equality and unprecedented national wealth.

      • You’re correct in the sense that we had about a 40 year period of general economic stability/tranquility, the latter of which I experienced and in various ways miss immensely. But in the end it was merely a relatively transient moment. I don’t see how anything resembling that experience can be reclaimed ( especially in the US) given the cut throat polarized state of our nation. Thus, in light of the present reality, your vision, while being commendable, is largely utopian.

        • Well I think pretty much everything in history is transitory. There is no final victory. The plutocratic empire will always fight back, and so they just have to be challenged and defeated again and again.

          • The problem now though is that there are no organised socialist or communist parties that progressive unions can threaten to support over the Democratic party, as there were in FDR’s day.

            Even progressive unions are thin on the ground.

      • Agree with Malmo.

        Recall how the New Deal came to be. FDR campaigned on a promise to balance the budget. He was pro-Wall Street. He was not a progressive when he took office in 1933. That evolved slowly, in part because of the threat of a 3rd party challenge from populist Huey Long, in part due to the influence of Eleanor, and in part due to what seems to be a sincere change of heart.

        If FDR had run as a progressive in 1932, the party machine would have never let him get the nomination.

        I would not hold my breath waiting for another FDR to run as a pro-business candidate and then evolve into a progressive. More likely, the country will continue to shift to the right, because that’s what countries usually do when times are bad. Look at what is happening in Europe, with the rise of Golden Dawn. That’s our future.

      • But Dan, the big difference is that the USSR existed in 1929-32. Its ideals may already have been dead by then, but its existence ensured that the plutocracy in the US and elsewhere was scared, and the threat of communism forced FDR to do something to prevent communism from taking root in the US. I can’t see a similar wild card in the mix today, though maybe one will appear when the next Wall St. meltdown takes place. Obama’s policies have virtually guaranteed us another Grand, er, Great Recession in the fairly near future.

    • Well, perhaps your side of the pond, admittedly a world leader in propagandising the population in neo-liberal nastiness, needs nevertheless to be reminded of 1945 Britain & the landslide victory for a genuinely radical, reforming Labour government. Against all bile & vitriol that Tories could throw (& their Press), bankrupted by a war supposedly ‘won’ by the Iconic (but Tory) Churchill, the National Health Service (NHS) was born. So was the welfare state, unemployment benefits & universal free education including maintenance grants to attend University.

      Of course, political parties that actually represent the interests of the majority of citizens are long gone – but if any return, there is much support quietly waiting for them.

      Great piece Dan!

      Many thanks to you & all your colleagues here, UMKC & abroad for all the efforts you put in. These ideas are spreading steadily, have no doubt 🙂

  6. So well written and articulated, Dan. It astounds me how such a large percentage of people around the world have been so completely convinced by the far right’s dystopian ideology that dismantling society and selling it off is the moral thing to do. Their public relations strategy has so swamped oracles like yourself and those who are progressive or even in the middle as far as political ideology goes.

    I have to give credit to the far right though on how well they incorporated lessons learned from the S&L crisis of the 80’s, the Enron-type malfeasance of the 90’s, and global financial crisis of the 2000’s into their deceitful messaging today. Each decade since the 80’s kind of fits with the parable of the frog, where the water has gotten hotter and hotter and a larger and larger percentage of people still don’t jump out of the water. Maybe we just need a few more enlightened billionaires who want to fund the progressive public relations narrative that counters the legion of delusional and morally bankrupt billionaires who fund the far right’s regressive public relations narrative.

    I hope you are correct, Dan, where you say in the coming decade we will begin to see engaged governments (that have integrity too) and active citizens. If we don’t, then the parable of the frog will come true. If so, we all might want to checkout a Charles Dickens book from the library to remind ourselves of what dystopia looks like. Oh wait, we won’t have libraries then, just online bookstores and private book collections.

    • Thanks Bob. The right has succeeded wildly in getting everyone to hate government so much that even many progressives now seem unwilling to mobilize themselves in a coordinated way to use democratic institutions to gain control over their society. Giving up and dropping out, and embracing various kinds of extreme localism and individualistic alienation and disaffection seems to be a point of pride in some progressive corners. This is just the perpetual re-creation of the right-wing approach to life. Creating weak national states with weak individuals and weak local communities embracing “do it yourself” ethos is a recipe for plutocratic domination.

      • Oh please. Government/s has, have, done more than their fair share of turning the masses off to their historical violent concentration of power, especially national governments. Still, virtually all of the left and right prefers national government to one degree or another. People of both left and right persuasion hate government where they feel abused by its overreach, but still prefer government at the national level nonetheless, so you should chill on labeling this a singularly right wing phenomena.

        The giving up and dropping out population is miniscule, although I sympathize with many of their gripes. You act as if there is no cause and effect to their sentiments–that they are irrational. Nonsense. The only question most people have is just how large should government be. You apparently want a totalist technocratic regime. I and probably 300 million Americans don’t. Label us as you will, the only way you are going to get your super state is by force. I won’t lose sleep over the unlikely prospect of it ever coming to pass.

        • Malmo, the thing that used to divide the left and the right throughout most of the 20th century was that the left wanted to use government to promote equality and social justice, to generate full employment, to firmly regulate industry and finance, to redistribute wealth and bring down robber-barons, and to create a national social insurance program (sometimes misleadingly called the “safety net”), while the right wanted the government to do nothing but maintain basic law and order and protect property rights, while leaving everyone alone to tend to their own business and carry on free enterprise.

          I have no idea what a “totalist technocratic regime” is in your mind. I support a mix of public ownership and private ownership, public enterprise and private enterprise, regulation and freedom. But I do want a more activist federal government run by an engaged democratic citizenry that takes charge of its economic and social future and takes actual steps to make that future happen rather than just dreaming that a good future will come to pass if the government leaves everyone alone.

          I agree people have reason to feel abused by government. For one thing the federal government fought two unpopular and bloody wars during the past half century. These experiences have traumatized and alienated the citizenry from their own government, and given ammunition to the libertarian perspective that conceives the government as some sort of evil alien invader, rather than the thing that democratic citizens are supposed to be running. On the left this has led to the rise of a broadly Chomskyan stance of ineffective moralistic hectoring coupled with occasional and only sporadically effective demonstrations, “actions” and petitioning, rather than a serious effort to mobilize and organize for the purpose of achieving sustained and effective political power. The result has been four decades of growing conservative rule. Even following a major economic collapse in 2008 – something that should have been a major opportunity for the left – the result has been a growth in plutocratic power. The Chomskyan, left-libertarian approach hasn’t been working. The left has neutered itself, and as a result corporate power and social inequality have grown, and continue to grow.

          I think there are only two choices for Americans: fight or surrender. Americans either have to find a way to mobilize and become their government by reanimating its corrupted democratic institutions, or they will have to resign themselves to a country without much justice or decency, run by a military and corporate leviathan despoiling the environment and destroying the planet’s future, turning corporate serfdom into the price of a decent living, where the best one can hope for is a certain amount of private space in which you can scratch out a tolerable personal existence.

          • Nicely stated.

          • Paul Boisvert

            Hi, Dan,
            Your post is excellent as far as it goes, as cogent and eloquent a brief for social democracy as one can imagine. But, like all defenses of social democracy, the real problem, the elephant in the room, is rarely stated (in the case of your post, never once stated): to understand the problem, one needs to use the c-word: capitalism.

            A commenter below mentions Orwell, missing the mark, I think. The truly Orwellian phenomenon today is that we live in a completely, utterly capitalist world, beset with massive problems, all of which are increasingly obviously heading us toward permanent planetary chaos and suffering…yet almost never is there a suggestion that perhaps the two are related: that capitalism IS the problem, and that attempts to “regulate” it are missing the point. Regulating capitalism is like deciding to have several lions and tigers as housepets (because they are exciting and “dynamic”), and hoping to “regulate” them (after all, Siegfried and Roy were able to regulate their big cats…oops, until their version of the “crisis” hit…).

            Capitalism is the latest and most successful way a ruling class, by exercising ownership and control of the means of production, uses its huge excess of power to exploit the labor of, and thus oppress, the vast majority of workers in society. Attempts to “regulate” that power, without explicitly stating that the systemic power itself is wholly evil, will be met with…um, that power, which will easily defeat such attempts, by corrupting and coercing and co-opting and propagandizing against any democratic attempts to reign it in (sound familiar?). Better not to waste time, and rather get started on the (difficult, of course) task of doing away with capitalist power completely.

            Temporary diminutions in the power of capitalists occur every now and then, but they don’t last–the power will reassert itself soon enough: maybe not today, maybe not tomorrow, but soon, and for the rest of your life… The postwar minor and temporary diminution of capitalist power in the US lasted for 35 years, then rapidly melted away under Reagan and Thatcher, and has not been in evidence for the last 35 years, as things have gotten worse and worse…

            To say this was caused by the failure of “the left” is backwards: global capitalists used their vast excess of power to induce wage competition and outsourcing and destroy unions, and the left simply didn’t have enough power (at the time, nor yet today) to counteract capital’s vastly excessive power. One doesn’t just decide, “hey, I’m a leftist, I think I’ll just prevent corporations from opening call centers in India.”, any more than a player on the Chicago Cubs just decides, “hey, I think I’ll just try harder and we’ll win all our games.” The other teams have more power, and they’ll beat the Cubs’ asses until that changes.

            So how to eliminate capitalist power in the long run? The long-term point is to acknowledge the evil of capitalism–explicitly, up front–and work not to reign in capitalism, but to change the capitalist system to one that meets human social needs, in a democratic fashion (thus, not by returning to the undemocratic USSR model.) This entails democratic socialism, not social democracy. The former, like the latter, would end plutocracy and inequality and the mad, cancerous growth required by capitalism that literally threatens to poison the entire planet in so many ways…but the latter, unlike the former, is doomed to failure, as is having lions and tigers as housepets.

            The test case is social-democratic Scandinavia, which has so far fared better than other capitalist countries in terms of social justice–while still tolerating millions of people living in very undeserved and wholly unjust inequality that would outrage you or most social democrats if it were happening to YOUR son or daughter or mother. I think the evidence shows that Scandinavia, even if one were willing to permanently accept its slightly-less-flawed-than-other-capitalist-countries level of injustice, is almost certainly a temporary historical bubble in an otherwise capitalist world dungeon, free riding on capitalist exploitation elsewhere across the globe. Scandinavia has already moved to the right, politically, slowly but surely, and my prediction, like that of most socialists and marxists, is that relatively soon, attempts to regulate capitalism in Scandinavia, as limitedly successful as they have been, will continue to slowly but surely founder there as they have elsewhere, as global capitalist competition drags all downwards in a race towards the bottom.

            And, of course, I predict that attempts to raise the US or the rest of the world to even the Scandinavian level of mildly reduced injustice, will also continue to founder, if they continue to be based on “regulating” the systemic and fundamental cause of the problems in the first place: capitalism.

            I think you’re inaccurate in your description of “the thing that used to divide the left and right”…worldwide, the division, up until 1989, was the difference between capitalism and its opposite: socialism. The reason there is no “alternative” for the “left” (by which I assume you mean pro-capitalist “progressives” in the US and Europe) today is that there is (believed to be) no alternative to capitalism these days–when the USSR imploded, because its “socialism” had never been democratic, the right seized the day to claim TINA: There Is No Alternative. But there is–another world is possible, but unless it is NOT a capitalist world, it won’t be any better than the current one, and, in fact, given capitalism’s inexorable logic of growth (= resource depletion and entropic pollution of every sort), global wage arbitrage, and privatization of the third-world commons, it will be a far worse one for most people.

            None of which is reason to give up hope–I’m as optimistic as you are, Dan, but for different reasons. Eventually I think people’s eyes (here, and globally) will open about capitalism, probably only when things have gotten a lot worse, and then a true (labor-based, i.e. union-based, though current unions may have to morph or re-organize for this to happen) movement of organizing for real societal change will begin to gain traction. One reason I, as a socialist, support MMT is that it clarifies how capitalism could be best run, but also how socialism will also have to be run, on a fiscal and monetary basis. And oh, that Job Guarantee–be still, my beating heart: pure socialism! But these wonderful features that make MMT rational are precisely the ones that capitalists will oppose–that’s why I don’t believe MMT can/will ever be implemented in a capitalist society. I support it because people who see its evident worth and rationality, yet see that capitalist rulers still wholly oppose it, will (I hope) come to see that a capitalist society is not the answer.

            Of course, predictions are difficult–especially about the future… If I’m wrong, and social democracy, however flawed and unjust, proves both achievable on a permanent basis, and to be the maximum that can be achieved, fair enough–MMT would still have to be a part of any such maximally just capitalist society. But of course I think that a “just capitalist” society is an oxymoron… 🙂

            I realize that the MMT/NEP/etc. bloggers are largely social democrats, and am not disparaging your work–quite the contrary, I wholly admire it, since if people can’t understand why MMT makes sense even in a capitalist world, they certainly won’t understand why we need to eventually get to socialism. I did take a bit of umbrage at the disparagement of Chomsky in your comment, though–he, like everyone on the real (hard) “left”, is explicitly anti-capitalist, so if you want to disparage him, you at least need to explicitly acknowledge and engage with the content of his critique, and explain fully why you think that TINA to capitalism…

            I’m not sure what you think the way to make a “serious effort to mobilize and organize” is that Chomsky has been impeding–but as a union leader myself, I can assure you that it won’t happen without an increasingly strong (and unionized, in some form) labor movement (which Chomsky of course wholly endorses!). But labor unions are under attack by every legal, political, economic, and propagandistic maneuver that capitalists have up their sleeves–the attacks are very real and extremely powerful and have had a devastating effect. The attackers hold more power than the unions, and, like more powerful attackers everywhere, the more powerful attackers hurt the ones they attack, not vice versa. That may change in the future, if material conditions change substantially, but the success of the attacks so far has not been due to Noam Chomsky!

            If my union (a local of NEA) were to try to become far more militant than we are, we would instantly meet a concerted attack from all sources of corporate and media power in our area–unionized teachers are now widely regarded as lazy overpaid leeches. And of course we full-timers are confronted with a vast reserve army of underpaid adjuncts eager (and deservedly so) to take our jobs–again undercutting our power, and pitting various workers against each other. We simply don’t have the power (currently) to do much more than “hold our own” in a society that is dominated by rich corporations exercising the power that capitalism gives them–again, capitalism is the problem.

            At any rate, when arguments are underpinned by an implicit belief that TINA to capitalism, it is usually treated as simply an axiom. As far as I can see, there is no evidence for it. My goal is to use MMT and other forms of logic and evidence to make many more people come to question it in the future. I hope you agree there may be some value in such questioning!

            • There is a lot here and I am pressed for time, but one point: the union-based system of protecting worker rights and incomes sometimes has the drawback that it becomes an uneconomic guild system more focused on protecting jobs than protecting labor. What I mean is that the global economy is constantly evolving, and the things a national economy produces and the way it produces them, have to evolve along with the world. The focus should never be on attempting to freeze some existing industrial structure into place. You can fully protect the way of life of the working individual without putting a bubble of protection around whatever job that individual happens to have, or the industry that individual works in.

              Industries change, jobs change, companies come and go. The focus should be on making sure that workers are easily able to move from private sector enterprise to public enterprise and back again, without losing their place in society, their health care, their earning ability, their retirement security – none of that. Protect workers, not the jobs that those workers happen to have at any given time. Run an active, ongoing public enterprise program that can absorb workers and put them to work at a good salary doing important work for the public good whenever the private sector falters, but then has the ability to re-stimulate the private sector innovation and place people back there as it expands. Focus more on public employment programs rather than public assistance programs.

              I don’t think we should be relying on systems of company pensions, 401Ks etc. to fund retirement. It’s a waste, and it divides the citizenry into different groups, experiencing envy and antagonism among themselves. There should be a single, national retirement system that provides more than just retirement insurance, but is capable of funding retirement 100%. A person’s retirement benefits should have nothing to do with whatever company they happen to be working for. Same with health care.

              Increase top marginal tax rates dramatically to establish a de facto income ceiling. With universal employment at a minimum government wage, the floor takes care of itself. We can debate the appropriate size of the socially permissible income gap. But I personally think it should be no greater than 5 to 1.

              There should also be limits on private corporation size, along with reformed corporate governance driven by employees working with the municipalities, states and the federal government – not absent stockholders who are only owners and don’t work for the company.

              As the union system declined, neoliberalism came in with the focus on economic flexibility and dynamism, but without the protection for workers, the protection for society from unregulated corporations, or the commitment to economic equality. What the left needed to come forward with a program like the above, which was more focussed on national systems rather than specific union systems for specific industries. In the US at least, this did not really happen.

            • Paul,

              The point I was making by using Orwell, was to illustrate that the US main stream media is both owned by capitalists and serves corporate interests as its primary function. Six large international corporations own the US mainstream media, who depend on corporate advertising for their existence. Any deviation from the Washington consensus in their programming, would result in a sharp reduction in their revenue streams. The media thus supports the 1% while pretending that the US is a democracy with two political parties at loggerheads with each other. This is of course complete fiction, since they both serve the interests of a wealthy elite to the detriment of the 99% of the population, which has resulted in reduced wages, increased unemployment, falling consumer purchasing power and falling tax revenues, while at the same time increasing the need for the social safety net. This widens the gap between rich and poor and is causing social unrest. Three million US citizens are in jail, half of whom are there for non violent “crimes”. Fifty million need food stamps and Medicaid to get by. This is obviously no way the run a country, which purports to be the richest and most advanced in the world.

  7. Dan,
    thank you for this very perceptive essay on the current state of affairs worldwide. Might I suggest that it deserves a wider audience, in say the Huffpost or the Guardian, where it would undoubtedly be more widely read and commented upon.

  8. The next transformational president on the scale of FDR will have to offer Democracy at workplace.

  9. I think we want the same thing, I really do. What I do, however, is separate the general public from the political ideologues who are the mover and shakers, whether left or right in orientation. Most people are a mix of political ideologies. They aren’t rabid anything. I myself have a mix of libertarian, conservative, liberal, anarchist woven into a whole. I’m far from being alone. That’s why the left right divide bothers me at an everyman level. The reason politics operates in a narrow band, left or right , is because that’s the sweet spot that appeals to the masses. Nobody gets even close to exactly what they desire, and virtually everybody feels alienated in some way. Consensus building in this pluralistic society thus becomes increasingly difficult under the cloud of so many competing individual worldviews. It was different in the 60’s. Civility along with general a consensus was largely a reality. Those days are far behind us. I see nothing in the future that will change the present dynamic, but especially so in melting pot America.

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  12. The following is CHAPTER 21 from my recently published book on the Australian Constitution, “A Constitutional Journey” which analyses the curren Australian Constitution that to this day, is still one part of a 9 part Act of the British Parliament. That of course, makes a mockery of anyone trying to claim Australia is a sovereign and independent nation. It also puts us in breach of the membership rules of the UN. However, this Chapter does look at some of the practical aspects related to Dan’s vision for the future, and hence, I thought it might be useful.


    To quote Henry C K Liu, from Asia Times Online, “The real wealth of nations are people…without people there is no economy”
    While this is true as far as it goes, there needs to be a recognition of who owns the nation’s wealth. A nation can have an economy and be wealthy under a dictatorship, but in that case, the wealth is owned by the authorities in charge.
    In a democracy, where people have a certain amount of freedom to make choices, the wealth of the nation can reside in their hands, depending on the type of economic system they accept.
    This is where the Constitution of a nation must play a crucial role in defining the type of economic and political system that best serves the people and the society.
    The No. 1 reason politicians have little real concern about making decisions on spending other people’s money is because; they don’t have to suffer the consequences. Even if they get kicked out of office they go out on the gravy train so, financially, it makes no difference to them if their decisions are bad. Unless people have a stake in the outcome of an event, they are less concerned about choosing wisely or having to take responsibility for the consequences of ill-conceived projects.
    This is especially so with politicians who make decisions for political reasons rather than a logical assessment of the facts. People need to ask themselves whether there is a way to make politicians, and their advisors, more accountable for their decisions.
    One way we might accomplish this goal is through our Constitution. There are four principle areas that need to be addressed that would go a long way in alleviating many present day problems.
    • Whether we like it or not, our society runs on ‘money’, and if you don’t have it, it becomes difficult to survive. Because economic factors dominate the way we live, the first step is to ensure everyone has a proper understanding of the financial parameters that control the system. What this means is that the Government has the responsibility to ensure the financial system of the nation functions in the best interests of the people, and not for the exclusive benefit of the financial industry. As mentioned above, our present Constitution, as bad as it is, does authorise the Government, – as per section 51- “to make laws for the peace, order and good government of the Commonwealth with respect to”, amongst other things, “currency, coinage and legal tender”, and it also includes, “the issue of paper money”. In a monetary sovereign nation, such as Australia, our fiat currency is actually backed by the physical assets of the Commonwealth Government. This too is recognised in Section 51(iv), which states, “Borrowing money on the public credit of the Commonwealth”. However, the Constitution does not specify any parameters in respect to controlling and quantifying the amount of currency the Government, and the private sector, is allowed to create. As explained above, provided there is a direct link to the productive/consumption capacity of the nation that would be the basis of the necessary controls. The principle role of “money” is to serve as a convenient tool for the exchange of goods – in other words, it is a ‘ticket system’. Money facilitates trading in an infinite variety of ways and provides people with the flexibility that is impossible with the barter system. Increasing production is the definition of a growing economy and that increase demands an expanding ‘money’ supply to allow for its consumption. If the production is not going to be consumed, the end result is a waste of both resources and energy. A ‘sound’ money supply really has nothing to do with gold or silver, or any other physical metal, as it is directly related to the physical assets associated with the production of goods and services. Although gold and silver have played a historical role in the issue of money, they did so because of their physical properties and before the widespread adoption of the, more convenient, ‘paper’ money. Initially, ‘paper’ money was convertible to designated ‘hard’ currency, which traditionally, would have been gold and silver. With the development of the fractional reserve system, the bankers found it very easy to create ‘paper’ money well in excess of the amount of gold or silver they had on hand. It is this uncontrolled creation of “money” that is the fundamental flaw in the way the current financial system operates. The amount of gold or silver available to a society is, actually, immaterial to the amount of ‘money tickets’ needed to cater for the production and consumption requirements of any given society. It is quite ridiculous to say that a society can only create a money supply if it has a store of gold. The productive capacity of a society is what defines the quantity of money needed to ensure consumption. The quantity of gold has nothing to do with the level of production needed for a modern society. While the banking fraternity fully endorse this argument, they do that on the basis of not wanting any effective controls on the amount of money they can create. Too many modern Governments have conceded to these demands of the bankers and have allowed them free rein. If the process is reversed and the Government becomes the source for creating ‘new money’, and that source is strictly tied to the production capacity of the society, the whole scenario changes. A growing economic activity does require an adequate source of capital which, in the field of private enterprise, can be handled by the private banking sector. Provided this sector observes prudent lending practices and conforms to adequate reserve requirements, they should be able to generate sufficient public confidence in their operations. What is needed here is a very clear distinction between commercial banking and investment banking. While defined limits could be placed on the operation of commercial banking, particularly in respect to customer and project credit worthiness, the marketing and speculatory practices of the investment banking sector must be at the bank’s, and their customer’s, own risk. Public finance should be reserved for the public banking sector, which could provide the necessary investment funds, at cost to the Government and municipal organisations, in accordance with independently assessed cost/benefit analysis for any proposed projects or services. If this financing is coupled to properly managed budgets, taking into account loan repayments, the public sector would avoid the commitment to unnecessary interest charges relating to bond issues and borrowing from the private sector. The banking system currently enjoys extensive Government protection because they are seen to provide an essential public service. There is a need for these services and the places where people can store their money, plus access certain types of debt products. Currently, Government protection is provided by way of guaranteeing deposits, bailing out the banks when they are in trouble, and granting privileged access to the Government bond issues. With proper prudential regulations, and productivity related controls on the creation of ‘new money’, there would be no need for this type of protection. Since de-regulation of the banking industry, it has become common practice for banks to speculate in derivatives and other dubious financial products that are flooding the market. Many deregulated banks have lost sight of any public role and this provides a very strong argument to justify the reintroduction of a genuine public banking option. The creation of the original Commonwealth Bank of Australia, in 1912, proved highly successful in demonstrating the benefits of a public banking service. Proper examinations and legitimate audits would be part of the regulations involving the operations of public banking besides specifying the services they must provide. Public banking is totally supported by the assets of the Government, and this creates a level of confidence divorced from market speculation. Private Banks have fought hard to operate in a field of minimum regulation and divorced from any restraints that inhibit their ability to speculate for the purpose of maximising profits. In a free enterprise economy, there is nothing intrinsically wrong with this, provided it is done honestly and doesn’t involve fraudulent practices, insider trading, or deliberate deception. However, if private banks wish to speculate in any of the non-productive products created by their industry, they should do it at their own risk and without Government support. They should take out appropriate insurance with private insurance companies if they need to protect their depositors. Such insurance companies, in turn, must comply with adequate prudential and regulatory requirements. At present, banks in this line of business are subsidised by their respective governments thus benefiting directly from the public purse. This same proposition applies to Hedge Funds whose initial primary purpose was for commercial protection against price and exchange variations. Today, these funds have largely become a form of speculation and the bulk of fund transactions are motivated by speculative profit rather than protection.
    • The next step is to understand how the fiat currency system of a monetary sovereign nation really works. Government finance in the macro economy cannot be compared to household finance in the micro economy. Private and household spending can only occur through earning an income, using savings, and/or borrowing, which means they must finance their spending prior to the fact. Clearly, the private sector has budget choices and cannot permanently sustain increasing debt. Government spending is exactly the opposite because, a Government, as the issuer of the currency, is not inherently revenue constrained and can simply spend without the necessity of seeking funds in advance. That’s why it is completely irresponsible to compare the micro budget of a household with the macroeconomic budget of a government.
    State Governments do not have monetary sovereignty, and therefore, are in the micro economic category and need to operate their budgets on the same principles as a household. However, each State has the right to set up their own State Bank, and in effect, use the State government’s income as the reserve for creating credit in exactly the same way as do the private banks. Very few people inside the government, the economic profession, and especially among the financial commentators, seem to have any understanding of the distinction between the micro and macro economic realities nor the tremendous benefits to be gained by each State having their own State Bank.
    In the same way a family provides for the future, all Government budgets must include provision for servicing planned infrastructure projects, allocating funds for committed obligations and having a contingency account for emergency relief. Every sort of budget, whether it’s the State or Commonwealth budget, does need to be related to a publicly announced and approved 5 year plan. Such a plan would provide the nation with a clear picture and direction they need to follow to achieve their future goals. To date, Australian politics has never tried to deliver a road map for the future, because the political culture seems incapable of thinking beyond the next election. Most forward planning tends to be of an adhoc nature and is seldom publicised as a comprehensive package, capable of garnering popular public support.
    If every budget is tailored to a clearly understood forward plan and realistic growth projections, politicians would be curtailed in burdening future generations with unserviceable debt.
    • The third principle, if we are going to accept the proposition that a government is essential, is to find a logical way to control the functioning of this organisation. It seems a valid argument that everyone who has the right to vote has a shared responsibility for the government they help put in office. In consequence, that responsibility implies they should all share in the burdens of government. In effect, the voters become stakeholders in the government and this emphasises the need for people to have an awareness of how important it is to know and understand ‘their’ Constitution. The Constitution is the primary law for establishing what the Government, and its instrumentalities, can and cannot do. This is why it is imperative that the people should become involved in the formulating of any new Constitution, if and when, we finally have the courage to properly divorce our political ties to the British Parliament. The people’s assets and income are part and parcel of their freedom. A man cannot have his liberty without his property and the right to his earnings, and in every rational sense; each person is their own best judge of how to use those assets and abilities. One of the few good aspects of the present Australian Constitution is Section 128. This requires a Referendum passed by a majority of the voters AND a majority of the States, supposedly, for any changes to the Constitution. As every politician will tell you, a successful referendum is notoriously difficult for any Government wishing to increase their powers. But, I am convinced, any referendum aimed at addressing the abuse of those powers, or limiting the reach of Government, would have little difficulty in being passed by the people of Australia
    • The fourth principle is to set out the essential controlling mechanisms in our Constitutional to properly limit what our elected representatives, the Government and a High Court, can legally do. In this respect, a practical system of Citizens’ Recall would provide an excellent tool for the people to take appropriate action against an elected, or appointed representative, if it can be proven they have abused their authority or acted dishonestly.

    Everything in this vision for a new age hinges on the people’s acceptance of a practical, understood and viable Constitution that clearly spells out the philosophy we wish to adopt for our nation. That Constitution is the primary law to which the elected representatives, the Government, and the Courts, must abide and stand accountable.
    That Constitution is the most important piece of paper in all our lives and, if we wish to live in a democracy and cherish our freedom, each of us need to fully understand the principles we endorse in that Constitution.
    The Constitution is not a tool to be manipulated by politicians; it is not simply a legal document to be interpreted by any High Court without reference to its philosophic foundations, but it is the tool which must be used to protect the rights and freedoms of the nation’s people.
    The Constitution must always be the property of the people and serve as the fundamental law by which the people can control and limit the ‘powers’ they are prepared to concede to their elected and appointed representatives.
    If a nation cannot create and live by a proper people’s Constitution, it will have no choice but to live under the dictates of its Government, its public service and its arbitrary legal system.

  13. Hope is a Shield!
    Lower the shield and you have given up, probably lost the battle without a fight.
    Losing a battle or two is different to losing the War!

  14. If you want a picture of the future, imagine a boot stamping on a human face–for ever. — O’Brien to Winston Smith in George Orwell’s 1984

    • That sounds like it was copied from Jack London’s ‘The Iron Heel.’

    • http://en.wikipedia.org/wiki/Doublethink

      The media is using double think and double speak in order to deliberately confuse most of the electorate as being good for them.

      “The power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them… To tell deliberate lies, while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just as long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies – all this is indispensably necessary. Even in using the word doublethink, it is necessary to exercise doublethink. For by using the word one admits that one is tampering with reality; by a fresh act of doublethink one erases this knowledge; and so on indefinitely, with the lie always one leap ahead of the truth.

      Orwell explains that the Party could not protect its iron power without degrading its people with constant propaganda. Yet knowledge of this brutal deception, even within the Inner Party itself, could lead to the implosion of the State. Although Nineteen Eighty-Four is most famous for the Party’s pervasive surveillance of everyday life, this control means that the population of the US – all of it and including the ruling elite – could be controlled and manipulated merely through the alteration of everyday thought and language. Newspeak is the method for controlling thought through language; doublethink is the method of directly controlling thought.

  15. Masterpiece Dan…. rsp,

  16. Pingback: Where We Are Now | Heterodox economics | Scoop.it

  17. Great speech by Glenda Jackson in the British House of Commons on the social, economic and spiritual legacy of Margaret Thatcher – with a nice jab at the end by the Speaker.

  18. Stephen Nightingale

    A Warren will be a better flag-bearer for this enterprise than a Clinton.

    But to turn the corner on what constitutes worthwhile work, and force TPTB agreement to funding – or at least acquiescing to – fuller employment schemes at high wages, will require a rather sophisticated sell job.
    – The manufacturing revolution could happen only because the (agrarian) land-owners bankrolled it, and benefitted disproportionately.
    – The post-Industrial revolution happened because FDR – WWII – Socialism and democracy made it happen.
    – We’re in the situation now where the gains to productivity are retained by the manufacturing and financial ownership interests. So long as they are comfortable with where we are (and where they are), a post-post-industrial settlement is stillborn.
    What would it look like, a world of higher wage, more worthwhile occupation? there’s a few ways it could go:
    Timesizing is one way.
    – Crank up the education, crank up the R&D is another way.
    – The pursuit of Excellence, Quality of output, and pride of workmanship is another.
    – Least likely is to give first right of use of the Per Capita GDP gains directly to individual citizens, to determine whether they want to do something constructive or … just hang out.

    When and how this new social compact is going to be precipitated: I cannot see yet.

    • For now, I prefer not to focus on politicians. Although it sounds trite, change is going to have to come from the ground up. It’s premature to look for some political star politician to lead the way. On the other hand, I think it is pretty clear at this point that Clinton and the Rubinites will never be the right folks.