The Wretched of the Earth, Indeed

The UN's annual A-to-Z of global wealth, poverty, health and education highlighted in its 20th anniversary edition that despite "growth surges" in the Asia-Pacific region, it is becoming ever more difficult to break into the rich club of nations.

Oil-rich Norway -- with its 81.0 years of life expectancy, average annual income of 58,810 dollars and 12.6 years of schooling -- has now topped the Human Development Index (HDI) for all but two years since 2001.

Australia, New Zealand, the United States and Ireland took the following places in the top five. Zimbabwe came bottom of the 169 nations ranked, behind Mozambique, Burundi, Niger and Democratic Republic of Congo.

Zimbabwe, where in stark contrast life expectancy is just 47 years and per capita income 176 dollars, has come bottom of the table for the past five years.

DR Congo, Zambia and Zimbabwe have seen their HDI value fall below 1970 levels in the four decades since, said the study.

"These countries offer lessons on the devastating impact of conflict, the AIDS epidemic and economic and political mismanagement," said UNDP administrator Helen Clarke, the former New Zealand prime minister.

Now, I understand that Ms. Clarke is referring to the reasons why those countries' HDI levels have fallen since 1970 and is not really commenting on how they got there in the first place, but isn't the more trenchant lesson on the devastating impact of being colonized by a European nation? I wonder what the HDI level would be for an aggregate of all peoples living in North American Native reservations?

Crisis Continued

Two recent pieces on economic goings on from Uncle Noam, neither of course appearing in the mainstream US press, one article from The Irish Times, which includes an interesting discussion of the current US election, the other an interview with Simone Bruno that touches on Obama and McCain as well. He doesn't go into the who-did-what and what-should-the-Tresury-have-done specifics of the meltdown because, I imagine, the broader context is more important. The Cliff Notes stab at it is essentially that the US is a state-capitalist economy (despite the mythology, Ronald Reagan was the most protectionist, anti-free trade US President of the last century), the public subsidizes enormous profit for narrow sectors of society, the financial liberalization that took place around 30 years ago predictably increased the regularity and depth of financial crises, this is largely because financial markets systematically underprice risk (a feature built in to the system), there will inevitably be major reforms of the financial system (including increased regulation), however, the structure underlying the basic institutions will not be changed. As he grimly puts it:

There is no threat to state capitalism. Its core institutions will remain basically unchanged and even unshaken. They may rearrange themselves in various ways with some conglomerates taking over others and some even being semi-nationalized in a weak sense, without infringing much on private monopolization of decision making. Still, as things stand now, property relations and the distribution of power and wealth won't alter much though the era of neoliberalism operative for roughly thirty five years will surely be modified in a significant fashion.

It's not all doom and gloom, however. Chomsky offers some important perspective:

"Politics is the shadow cast on society by big business," concluded America's leading 20th century social philosopher John Dewey, and will remain so as long as power resides in "business for private profit through private control of banking, land, industry, reinforced by command of the press, press agents and other means of publicity and propaganda".

The United States effectively has a one-party system, the business party, with two factions, Republicans and Democrats. There are differences between them. In his study Unequal Democracy: The Political Economy of the New Gilded Age, Larry Bartels shows that during the past six decades "real incomes of middle-class families have grown twice as fast under Democrats as they have under Republicans, while the real incomes of working-poor families have grown six times as fast under Democrats as they have under Republicans".

Differences can be detected in the current election as well. Voters should consider them, but without illusions about the political parties, and with the recognition that consistently over the centuries, progressive legislation and social welfare have been won by popular struggles, not gifts from above.

Those struggles follow a cycle of success and setback. They must be waged every day, not just once every four years, always with the goal of creating a genuinely responsive democratic society, from the voting booth to the workplace.

An extraordinarily and historically sad day

Our government has dramatically increased the public's subsidization of the banking and financial services industry. A major victory for the business party comes shortly after another one of the coordinated, public-affairs events the business party's warring factions stage quadrennially. Some thoughts from former chief economist of the Senate Banking Committee, Robert Johnson (he also plays a mean guitar):

I think this bill, five weeks before an election, is illustrating for the American people, when there are two currencies of power—votes and money—that even at this time, when the power of votes is at its cyclical high, meaning just before the election, they are almost laughing at the American people, in the—by the nature and structure of this bill. This is a very sad result.

***

They can, what I would say, use the crisis anxiety of the market fragileness to, how would I say, accomplish their aims on behalf of money and do no service for the public. We have no mortgage relief in this bill whatsoever.

***

They always say in the headlines now, it was “heads they win, tails you lose,” like that’s something looking backwards. It’s heads, Wall Street won yesterday; tails, the taxpayer lose now. But the structure of this bill, which depends upon buying overpriced assets, means heads, tomorrow, in a recovery, the banking industry wins again, and the population, the taxpayers who supported them in this bill, don’t go with them.

***

[The bailout] went up by roughly $150 billion for those kinds of special pork-related projects. Now, what you’re seeing is the Congress and the Senate are daring the American people to get mad and throw them out. As David Sirota said in his first book, Hostile Takeover, this isn’t about choosing between Rs and Ds; this is about a bipartisan money machine working against the population. They’re daring you. They’re daring you to turn out in five weeks and, in essence, support challengers against incumbents, because the incumbents are the ones responsible for doing this bill.

John Kenneth Galbraith wasn't kidding when he said, "in America, the only respectable form of socialism is socialism for the rich."

photo 6 or video 1: the world's first perfect song or how i learned to stop worrying about state-sponsored class warfare and love dogs

Many goings on lately: an absolutely enlightening piece on Democracy Now! about the House's initial failure to pass the inevitable corporate bailout (PS - Bruce Marks is my new homey); NHL heavyweight the NY Rangers miraculously though predictably come from behind to defeat KHL also-ran Metallurg Magnitogorsk in the inaugural Victoria Cup in beautiful Bern (PS - the best KHL teams equal the good NHL teams on big ice and it makes for spectacular hockey); and perhaps most importantly (at least in terms of escapism), a new TV on the Radio album this week (PS - it is phenomenal and not hyperbolic to be deemed the best album I've heard in a long time). Special recognition for my current favorite song of all-time, "Love Dog" ("lonely little love dog, no one knows the name of"): my experimentally clunky yet sincere ode to this ridiculously great song and an even more ridiculous dog:

Socializing cost, privatizing profit, screwing everybody

Apparently, there's been something going on with the nation's economy lately. The BBC gave Noam Chomsky very limited time or space to make some broad points, all of which he has written on extensively in the past. Some snippets:

Markets have inherent and well-known inefficiencies. One factor is failure to calculate the costs to those who do not participate in transactions. These "externalities" can be huge. That is particularly true for financial institutions.

Their task is to take risks, calculating potential costs for themselves. But they do not take into account the consequences of their losses for the economy as a whole.

Hence the financial market "underprices risk" and is "systematically inefficient," as John Eatwell and Lance Taylor wrote a decade ago, warning of the extreme dangers of financial liberalization and reviewing the substantial costs already incurred - and also proposing solutions, which have been ignored.

He also discusses the Clinton administration's repeal of the Glass-Steagall act of 1933,

thus freeing financial institutions "to innovate in the new economy," in Clinton's words -- and also "to self-destruct, taking down with them the general economy and international confidence in the US banking system," financial analyst Nomi Prins adds.

The more important point remains, however:

The unprecedented intervention of the Fed may be justified or not in narrow terms, but it reveals, once again, the profoundly undemocratic character of state capitalist institutions, designed in large measure to socialise cost and risk and privatize profit, without a public voice.

That is, of course, not limited to financial markets. The advanced economy as a whole relies heavily on the dynamic state sector, with much the same consequences with regard to risk, cost, profit, and decisions, crucial features of the economy and political system.

And just today Goldman Sachs and Morgan Stanley have agreed to become bank-holding companies subject to tighter regulation, essentially bringing back Glass-Steagall.