PLANNING BOARD TELLS GOLF PROTESTERS TO STFU !!
Memo to the CIA: You may not be prepared for time-travel, but welcome to 2025 anyway! Your rooms may be a little small, your ability to demand better accommodations may have gone out the window, and the amenities may not be to your taste, but get used to it. It's going to be your reality from now on.
Okay, now for the serious version of the above: In November 2008, the National Intelligence Council (NIC), an affiliate of the Central Intelligence Agency, issued the latest in a series of futuristic publications intended to guide the incoming Obama administration. Peering into its analytic crystal ball in a report entitled Global Trends 2025, it predicted that America's global preeminence would gradually disappear over the next 15 years -- in conjunction with the rise of new global powerhouses, especially China and India. The report examined many facets of the future strategic environment, but its most startling, and news-making, finding concerned the projected long-term erosion of American dominance and the emergence of new global competitors. "Although the United States is likely to remain the single most powerful actor [in 2025]," it stated definitively, the country's "relative strength -- even in the military realm -- will decline and U.S. leverage will become more constrained."
That, of course, was then; this -- some 11 months into the future -- is now and how things have changed. Futuristic predictions will just have to catch up to the fast-shifting realities of the present moment. Although published after the onset of the global economic meltdown was underway, the report was written before the crisis reached its full proportions and so emphasized that the decline of American power would be gradual, extending over the assessment's 15-year time horizon. But the economic crisis and attendant events have radically upset that timetable. As a result of the mammoth economic losses suffered by the United States over the past year and China's stunning economic recovery, the global power shift the report predicted has accelerated. For all practical purposes, 2025 is here already.
Many of the broad, down-the-road predictions made in Global Trends 2025 have, in fact, already come to pass. Brazil, Russia, India, and China -- collectively known as the BRIC countries -- are already playing far more assertive roles in global economic affairs, as the report predicted would happen in perhaps a decade or so. At the same time, the dominant global role once monopolized by the United States with a helping hand from the major Western industrial powers -- collectively known as the Group of 7 (G-7) -- has already faded away at a remarkable pace. Countries that once looked to the United States for guidance on major international issues are ignoring Washington's counsel and instead creating their own autonomous policy networks. The United States is becoming less inclined to deploy its military forces abroad as rival powers increase their own capabilities and non-state actors rely on "asymmetrical" means of attack to overcome the U.S. advantage in conventional firepower.
No one seems to be saying this out loud -- yet -- but let's put it bluntly: less than a year into the 15-year span of Global Trends 2025, the days of America's unquestioned global dominance have come to an end. It may take a decade or two (or three) before historians will be able to look back and say with assurance, "That was the moment when the United States ceased to be the planet's preeminent power and was forced to behave like another major player in a world of many competing great powers." The indications of this great transition, however, are there for those who care to look.
Six Way Stations on the Road to Ordinary Nationhood
Here is my list of six recent developments that indicate we are entering "2025" today. All six were in the news in the last few weeks, even if never collected in a single place. They (and other events like them) represent a pattern: the shape, in fact, of a new age in formation.
1. At the global economic summit in Pittsburgh on September 24th and 25th, the leaders of the major industrial powers, the G-7 (G-8 if you include Russia) agreed to turn over responsibility for oversight of the world economy to a larger, more inclusive Group of 20 (G-20), adding in China, India, Brazil, Turkey, and other developing nations. Although doubts have been raised about the ability of this larger group to exercise effective global leadership, there is no doubt that the move itself signaled a shift in the locus of world economic power from the West to the global East and South -- and with this shift, a seismic decline in America's economic preeminence has been registered.
"The G-20's true significance is not in the passing of a baton from the G-7/G-8 but from the G-1, the U.S.," Jeffrey Sachs of Columbia University wrote in the Financial Times. "Even during the 33 years of the G-7 economic forum, the U.S. called the important economic shots." Declining American leadership over these last decades was obscured by the collapse of the Soviet Union and an early American lead in information technology, Sachs also noted, but there is now no mistaking the shifting of economic power from the United States to China and other rising economic dynamos.
2. According to news reports, America's economic rivals are conducting secret (and not-so-secret) meetings to explore a diminished role for the U.S. dollar -- fast losing its value -- in international trade. Until now, the use of the dollar as the international medium of exchange has given the United States a significant economic advantage: it can simply print dollars to meet its international obligations while other nations must convert their own currencies into dollars, often incurring significant added costs. Now, however, many major trading countries -- among them China, Russia, Japan, Brazil, and the Persian Gulf oil countries -- are considering the use of the Euro, or a "basket" of currencies, as a new medium of exchange. If adopted, such a plan would accelerate the dollar's precipitous fall in value and further erode American clout in international economic affairs.
One such discussion reportedly took place this summer at a summit meeting of the BRIC countries. Just a concept a year ago, when the very idea of BRIC was concocted by the chief economist at Goldman Sachs, the BRIC consortium became a flesh-and-blood reality this June when the leaders of the four countries held an inaugural meetingin Yekaterinburg, Russia.
The very fact that Brazil, Russia, India, and China chose to meet as a group was considered significant, as they jointly possess about 43% of the world's population and are expected to account for 33% of the world's gross domestic product by 2030 -- about as much as the United States and Western Europe will claim at that time. Although the BRIC leaders decided not to form a permanent body like the G-7 at this stage, they didagree to coordinate efforts to develop alternatives to the dollar and to reform the International Monetary Fund in such a way as to give non-Western countries a greater voice.
3. On the diplomatic front, Washington has been rebuffed by both Russia and China in its drive to line up support for increased international pressure on Iran to cease its nuclear enrichment program. One month after President Obama cancelled plans to deploy an anti-ballistic missile system in Eastern Europe in an apparent bid to secure Russian backing for a tougher stance toward Tehran, top Russian leaders are clearly indicating that they have no intention of endorsing strong new sanctions on Iran. "Threats, sanctions, and threats of pressure in the current situation, we are convinced, would be counterproductive," declared the Russian foreign minister, Sergey V. Lavrov, following a meeting with Secretary of State Hillary Clinton in Moscow on October 13th. The following day, Russian Prime Minister Vladimir Putin said that the threat of sanctions was "premature." Given the political risks Obama took in canceling the missile program -- a step widely condemned by Republicans in Washington -- Moscow's quick dismissal of U.S. pleas for cooperation on the Iranian enrichment matter can only be interpreted as a further sign of waning American influence.
4. Exactly the same inference can be drawn from a high-level meeting in Beijing on October 15th between Chinese Prime Minister Wen Jiabao and Iran's first vice president, Mohammed Reza Rahimi. "The Sino-Iran relationship has witnessed rapid development as the two countries' leaders have had frequent exchanges, and cooperation in trade and energy has widened and deepened," Wen said at the Great Hall of the People. Coming at a time when the United States is engaged in a vigorous diplomatic drive to persuade China and Russia, among others, to reduce their trade ties with Iran as a prelude to toughened sanctions, the Chinese statement can only be considered a pointed rebuff of Washington.
5. From Washington's point of view, efforts to secure international support for the allied war effort in Afghanistan have also met with a strikingly disappointing response. In what can only be considered a trivial and begrudging vote of support for the U.S.-led war effort, British Prime Minister Gordon Brown announced on October 14th that Britain would add more troops to the British contingent in that country -- but only 500 more, and only if other European nations increase their own military involvement, something he undoubtedly knows is highly unlikely. So far, this tiny, provisional contingent represents the sum total of additional troops the Obama administration has been able to pry out of America's European allies, despite a sustained diplomatic drive to bolster the combined NATO force in Afghanistan. In other words, even America's most loyal and obsequious ally in Europe no longer appears willing to carry the burden for what is widely seen as yet another costly and debilitating American military adventure in the Greater Middle East.
6. Finally, in a move of striking symbolic significance, the International Olympic Committee (IOC) passed over Chicago (as well as Madrid and Tokyo) to pick Rio de Janeiro to be the host of the 2016 summer Olympics, the first time a South American nation was selected for the honor. Until the Olympic vote took place, Chicago was considered a strong contender, especially since former Chicago resident Barack Obama personally appeared in Copenhagen to lobby the IOC. Nonetheless, in a development that shocked the world, Chicago not only lost out, but was the city eliminated in the very first round of voting.
"Brazil went from a second-class country to a first-class country, and today we began to receive the respect we deserve," said Brazilian President Luiz Inácio Lula da Silva at a victory celebration in Copenhagen after the vote. "I could die now and it already would have been worth it." Few said so, but in the course of the Olympic decision-making process the U.S. was summarily and pointedly demoted from sole superpower to instant also-ran, a symbolic moment on a planet entering a new age.
On Being an Ordinary Country
These are only a few examples of recent developments which indicate, to this author, that the day of America's global preeminence has already come to an end, years before the American intelligence community expected. It's increasingly clear that other powers -- even our closest allies -- are increasingly pursuing independent foreign policies, no matter what pressure Washington tries to bring to bear.
Of course, none of this means that, for some time to come, the U.S. won't retain the world's largest economy and, in terms of sheer destructiveness, its most potent military force. Nevertheless, there is no doubt that the strategic environment in which American leaders must make critical decisions, when it comes to the nation's vital national interests, has changed dramatically since the onset of the global economic crisis.
Even more important, President Obama and his senior advisers are, it seems, reluctantly beginning to reshape U.S. foreign policy with the new global reality in mind. This appears evident, for example, in the administration's decision to revisit U.S. strategy on Afghanistan.
It was only in March, after all, that the president embraced a new counterinsurgency-oriented strategy in that country, involving a buildup of U.S. boots on the ground and a commitment to protracted efforts to win hearts and minds in Afghan villages where the Taliban was resurgent. It was on this basis that he fired the incumbent Afghan War commander, General David D. McKiernan, replacing him with General Stanley A. McChrystal, considered a more vigorous proponent of counterinsurgency. When, however, McChrystal presented Obama with the price tag for the implementation of this strategy -- 40,000 to 80,000 additional troops (over and above the 20,000-odd extra troops only recently committed to the fight) -- many in the president's inner circle evidently blanched.
Not only will such a large deployment cost the U.S. treasury hundreds of billions of dollars it can ill afford, but the strains it is likely to place on the Army and Marine Corps are likely to be little short of unbearable after years of multiple tours and stress in Iraq. This price would be more tolerable, of course, if America's allies would take up more of the burden, but they are ever less willing to do so.
Undoubtedly, the leaders of Russia and China are not entirely unhappy to see the United States exhaust its financial and military resources in Afghanistan. Under these circumstances, it is hardly surprising that Vice President Joe Biden, among others, iscalling for a new turn in U.S. policy, foregoing a counterinsurgency approach and opting instead for a less costly "counter-terrorism" strategy aimed, in part, at crushing Al Qaeda in Pakistan -- using drone aircraft and Special Forces, rather than large numbers of U.S. troops (while leaving troop levels in Afghanistan relatively unchanged).
It is too early to predict how the president's review of U.S. strategy in Afghanistan will play out, but the fact that he did not immediately embrace the McChrystal plan and has allowed Biden such free rein to argue his case suggests that he may be coming to recognize the folly of expanding America's military commitments abroad at a time when its global preeminence is waning.
One senses Obama's caution in other recent moves. Although he continues to insist that the acquisition of nuclear weapons by Iran is impermissible and that the use of force to prevent this remains an option, he has clearly moved to minimize the likelihood that this option -- which would also be plagued by recalcitrant "allies" -- will ever be employed.
On the other side of the coin, he has given fresh life to American diplomacy, seeking improved ties with Moscow and approving renewed diplomatic contact with such previously pariah states as Burma, Sudan, and Syria. This, too, reflects a reality of our changing world: that the holier-than-thou, bullying stance adopted by the Bush administration toward these and other countries for almost eight years rarely achieved anything. Think of it as an implicit acknowledgement that the U.S. is now descending from its status as the globe's "sole superpower" to that of an ordinary country. This, after all, is what ordinary countries do; they engage other countries in diplomatic discourse, whether they like their current governments or not.
So, welcome to the world of 2025. It doesn't look like the world of our recent past, when the United States stood head and shoulders above all other nations in stature, and it doesn't comport well with Washington's fantasies of global power since the Soviet Union collapsed in 1991. But it is reality.
For many Americans, the loss of that preeminence may be a source of discomfort, or even despair. On the other hand, don't forget the advantages to being an ordinary country like any other country: Nobody expects Canada, or France, or Italy to send another 40,000 troops to Afghanistan, on top of the 68,000 already there and the 120,000 still in Iraq. Nor does anyone expect those countries to spend $925 billion in taxpayer money to do so -- the current estimated cost of both wars, according to theNational Priorities Project.
The question remains: How much longer will Washington feel that Americans can afford to subsidize a global role that includes garrisoning much of the planet and fighting distant wars in the name of global security, when the American economy is losing so much ground to its competitors? This is the dilemma President Obama and his advisers must confront in the altered world of 2025.
Take the case of the top three war contractors, Lockheed Martin, Boeing and Northrop Grumman. These companies have engaged in 108 instances of misconduct since 1995 and have paid fines or settlements totaling nearly $3 billion. In 2007 they won some $77 billion in federal contracts. Or consider pharmaceutical giant Pfizer, which in September paid $2.3 billion to settle a slew of criminal and civil cases, including Medicaid fraud. According to the Justice Department, this was "the largest healthcare fraud settlement" in its history. Yet Pfizer made more than $40 billion in profits last year and won $73 million in federal contracts in 2007; it continues to do robust business with the government. Not bad for a "corporate felon."
Unfortunately, neither Pfizer nor the largest US military contractors are targets of significant Congressional action. Instead it's ACORN, a community organization that trains and advocates for poor and working-class Americans. Over the past fifteen years, ACORN has received just $53 million in federal funds, much of it for low-income housing. Despite--or perhaps because of--its efforts to empower some 500,000 member families, ACORN was the subject of a sting video produced by a right-wing activist that featured a fake pimp and prostitute seeking tax advice. The group swiftly fired the handful of employees who were entrapped, but that didn't put an end to the storm. Fox News aired the video repeatedly, and right-wing astroturf operative Rick Berman set up a Rotten ACORN website. The campaign was wildly successful. In mid-September all but seventy-five House Democrats and seven senators voted with their Republican colleagues to bar the group from receiving federal funds.
ACORN, like all organizations receiving federal dollars, should be subject to Congressional scrutiny. But ACORN was clearly singled out for political reasons. Those Democrats who voted for the "defund ACORN" bill should be required to explain their reasoning to their constituents, particularly when so few of them have taken substantive actions to apply the ACORN standard to corporate criminals with real rap sheets.
A small but growing number of lawmakers are fighting to confront out-of-control corporations. Here are three legislative initiatives that stand out:
Florida Representative Alan Grayson is spearheading calls for fraudulent military contractors to be defunded under the anti-ACORN legislation. He points to Halliburton's misconduct and its "extreme and gross negligence...putting in showers in Iraq that end up electrocuting soldiers, and feeding them poisoned water." The federal funding ACORN has received over the past twenty years, Grayson says, "is roughly equal to what the taxpayer paid to Halliburton each day during the war in Iraq."
The credit crunch is getting worse on Main Street, despite a Wall Street bailout now in the trillions of dollars. The Federal Reserve's charts show that "base money" is rapidly expanding—meaning coins, paper money, and commercial banks' reserves with the central bank. But the money isn't getting where it needs to go to stimulate economic growth: into the bank accounts of American businesses and consumers. The Fed has been pumping out money to the banks, and their reserves have been growing at unprecedented rates, but the money supply in the real economy has been declining.
According to Ambrose Evans-Pritchard, writing last month in the UK Telegraph, U.S. bank credit and M3 (the broadest measure of the money supply) contracted over the summer at rates comparable to the onset of the Great Depression. In the summer quarter, U.S. bank loans fell at an annual pace of almost 14 percent. "There has been nothing like this in the USA since the 1930s," said Professor Tim Congdon of International Monetary Research. "The rapid destruction of money balances is madness."
Chartered banks are allowed to create credit on their books equal to many times their deposit base, but lately they haven't been doing it. In more normal times, one dollar in base money has been fanned by the banks into $8.50 in loans. Today, one dollar in base money produces only one dollar in loans. Although the Fed has been frantically pushing cash into the banks, it can't make them lend to consumers.
This is not because the banks are trying to be difficult. If they had prudent loans on which to turn a profit and the capital base to do it, they no doubt would. But their books have been choked with toxic assets, destroying their capital positions; and the "shadow lenders" who once took subprime loans off their books have gotten wise to the scam and gone away. Bankers who know the endangered state of their own books don't trust each other, so money is tight all around. And the Fed has already dropped interest rates as low as they can go, so it has no more leverage with which to entice borrowers.
The Fed may have played all its cards, but state and local governments still hold a few aces. Some local politicians are looking into the feasibility of opening their own publicly-owned banks, providing them with their own credit machines. A new publicly owned bank would have a clean set of books, untainted by the Wall Street addiction to gambling in complex derivatives; and its profits would go back to the local government and community, rather than being siphoned off in exorbitant salaries, bonuses, and dividends. A publicly-owned bank could funnel credit where it is needed most, directly into the local economy.
One legislator who is considering a publicly-owned bank is Bruno Barreiro, County Commissioner for Miami-Dade County in Florida. In a September 23 article titled "Capital Sources: Recession Steers Banks Away from Business as Usual", The Daily Business Review reported that Miami-Dade is planning to conduct a feasibility study proposing alternatives for becoming its own depository. Said the journal:
"Barreiro notes that throughout the year, a portion of the county's $7.5 billion operating budget is deposited with outside financial institutions in return for an interest rate. However, he feels that given the instability of many banks, the county might be better off going into such a business on its own."
Brian Bandell, writing in The South Florida Business Journal on September 11, reported that Barreiro is concerned that bank accounts are insured by the FDIC for only up to $250,000. The county often has over $50 million in a single account. If the county were to open its own depository institution, it could safeguard against these losses.
However, said Bandell, Barreiro is not proposing to allow the institution to make loans. Rather, the state's money would be invested conservatively in Treasury bonds. The problem with that approach, said Miami banking analyst Kenneth Thomas, is that it would be a challenge to get good interest rates for the county's deposits without making loans. "There's a reason most other municipalities aren't doing it," he said.
In stopping short of making loans, the county could be missing a major business opportunity. The average interest rate on U.S. government bonds is currently 3.35 percent. If the funds in Miami-Dade's operating budget were deposited in the county's own bank, the money could serve as a reserve fund to support at least nine times that sum in loans. Assuming an average interest rate of 5 percent on these loans, the county could increase its revenues by over 1,000 percent (earning 45 percent interest instead of 3.35 percent). [A fuller explanation and references are available here.]
Economist Farid Khavari, a Democratic candidate for governor of Florida in 2010, is proposing a Bank of the State of Florida (BSF) that would take full advantage of the potential of a bank charter. It would not only act as a depository for the state's funds but would actually make loans to Floridians at much lower interest rates than they are getting now. Among other benefits, the BSF could open up frozen credit markets, save homeowners many thousands of dollars in payments, produce major revenues for the state, and allow the state's own debts to be refinanced at much lower rates. All those benefits are possible, says Khavari, because of the "fractional reserve" banking system used by all banks when they make loans. As he explained in a July 29 article in Reuters:
"Using the fractional reserve regulations that govern all banks, we can earn billions per year for Florida's treasury, while saving thousands of dollars per year for Florida homeowners...For $100 in deposits, a bank can create $900 in new money by making loans. So, the BSF can pay 6% for CDs, and make mortgage loans at 2 percent. For $6 per year in interest paid out, the BSF can earn $18 by lending $900 at 2 percent for mortgages.
"The BSF can be started at no cost to taxpayers, and will be a permanent engine driving Florida's economy. We can refinance state and local projects at 3 percent, saving taxpayers billions and balancing state and local budgets without higher taxes."
The state would earn $15,000 per $100,000 of mortgage, at a cost of about $1,700; the homeowner would save $88,000 in interest and pay for the home 15 years sooner. "Our bank will save people about seven years of their pay over the course of 30 years, just on interest costs," Khavari said. "We should work to support ourselves and our families, not the banks...What we have now...makes everyone work for a few greedy fat cats."
This sort of healthy public competition for the private banking monopoly has earlier precedents, going back to the colony of Pennsylvania in Benjamin Franklin's day. Before Pennsylvania founded its own bank, the province was having difficulty attracting settlers, because there was a shortage of money with which to conduct trade. The settlers could get credit only by borrowing from British bankers at a hefty 8% interest, and even those loans were hard to come by. The provincial government then got the bright idea of printing its own paper money and lending it to the farmers at 5% interest. When credit became cheaper and more freely available, the local economy flourished.
The only state that owns its own bank today is North Dakota. North Dakota is also one of only two states (along with Montana) on track to meet their budgets by 2010. It currently has the lowest unemployment rate in the country and the largest budget surplus it has ever had, tallying in at $1.3 billion. Why this cold and isolated farming state should be doing so well when other states are teetering on bankruptcy has been the subject of several TV commentaries, including a spoof by Conan O'Brien on NBC's Tonight Show, which attributed it to theft from tourists by local farmers. But North Dakota's real secret seems to be that it has escaped the Wall Street credit debacle. The state has generated its own credit through its own publicly-owned bank for nearly a century.
The Bank of North Dakota (BND) was founded in 1919, when a political party called the Non Partisan League succeeded in uniting farmers suffering from an earlier credit crisis. The BND's website states that the bank was originally formed to create additional competition in the credit industry, while providing a local source of capital for state investment and development. The BND avoids opposition from other banks by partnering with them in loan projects. According to the bank's website:
"The primary deposit base of the BND is the State of North Dakota. All state funds and funds of state institutions are deposited with the bank as required by law...Use of the banks' earnings are at the discretion of the state legislature. As an agent of the state it can make subsidized loans to spur development...[It] underwrites municipal bonds for all of the political units in the state, and has been one of the leading banks in the nation in the number of student loans issued. The bank also serves as the state's ‘Mini Fed'...As a result of the banks' services, it enjoys widespread support among the public and the independent banking community."
The private banking system is in systemic failure, and the public is waking up to the fact. We have been fleeced by Wall Street; banks are not providing loans; and our savings are no longer secure. The publicly owned Bank of North Dakota has provided an alternative model that has worked remarkably well for nearly a century.
The BND has been around for so long, however, that skeptics can write off the state's remarkable success to other factors. A modern-day public bank that quickly turned its flagging local economy around could set a precedent that was irrefutable. If Florida were to establish a successful public banking model, it could blaze a trail out of the economic wilderness for local governments everywhere.
NASA crashed two space craft into the Moon earlier today on a quest to prove once and for all if water exists on the moon in any quantities worth exploiting. It will be several weeks before the results are known. Check out the story @ the title link.
Far from surrendering to immediate Republican outrage and demands for apology, Grayson stood firmly by his stance, teasing his opponents that he'll apologise, but "to the dead and their families" for government's failure to improve the system. In fact, Grayson has since stepped up his rhetoric in a recent media blitz, calling Republicans "knuckle-dragging Neanderthals" and "a lie factory" whose only approach to policy is obstructionism. By failing to produce a counter-proposal in the following days, Republicans have effectively proven Grayson's point.
This kind of pugnacious spirit is common among Republicans but very rare among Democrats, which is largely why Democrats so often get trampled in legislative battles where they have the upper-hand politically, intellectually, morally, historically and inopinion polls. Grayson's star power has surged since his remarks. While the GOP has designated him public enemy number one, Grayson has lit up the Democratic base.
What's unique about Grayson is that he's passionate about championing liberal causes, and he forcefully calls out the lies of his Republican opponents and the vapidity oftoday's conservative movement. With the significant rightward shift of the Democratic party in the last few decades, progressives are hardly represented in American government any longer. Though there are a few notable exceptions, none have quite the determination Grayson showed this week.
In the last 30 years, Republicans have yanked America further to the right than was once conceivable. Democrats have been complicit in this. Many Democrats sat idly by – if not supported – Republicans starting unnecessary and destructive wars, violating the Constitution and international law, redistributing wealth upward from the working poor to the rich, letting tens of millions lose their health care, and actively ignoring the threat of global climate change.
Democrats have effectively allowed Republicans to morph the word "liberal" from an adjective into a smear. This continues today, despite the fact that conservatives have steered America to one of its darkest places yet. President Obama's self-consciouslyconciliatory approach plays right into this meme. The zeal with which Republicans continue to promote their agenda, despite its immense failures, provides a stark contrast to the tepid Democratic spirit.
This is why Grayson is not a typical Democrat, and why he's exactly what Democrats have needed for a long time. The party dominates the House, has a filibuster-proof majority in the Senate, and boasts a popular president – yet continues to get pushed around the bullied by the GOP, which is less popular than ever and has no serious proposals for solving today's problems. What gives? A lack of fortitude.
Capping an era of great political cynicism and unprecedented domination of money in politics, progressives have lost their footing and have tumbled behind conservatives, facing an increasingly steeper mountain to climb as Democrats continue to capitulate to the perpetrators of these quandaries. In an age where campaign contributions from wealthy, narrow interest groups are so critical to political survival, the incentive for ordinary Democrats is to play the game, not change it.
With the Democratic party slowly morphing into a watered-down Republican party, progressives have grown increasingly cynical of politics. Many feel little incentive to vote or participate in the political process. A Grayson-like fervor for liberal causes can help recapture this waning enthusiasm, perhaps eventually motivating Democrats to be real progressives again.
The internet age provides as much potential for political self-harm as it does opportunity, but Grayson seems happy to take the heat in his stride. Democrats need representatives who genuinely believe in liberal values, who have the courage to fight for their beliefs, and who won't prioritise political expediency over doing their job the right way. "We need Democrats with guts," Grayson said of the whole matter. He's right.
Click on the title link and take a look @ Frank Rich of the NY Times article today. It's becoming more and more apparent that unfortunately the Obama admin. is NOT living up to it's own billing of "Change we can believe in." Frank's scathing critique of what exactly is going wrong in DC these days might surprise you. For those of us that read Orwell's "Animal Farm" however it's really not shocking @ all.
Last week's Group of 20 (G20) meeting in Pittsburgh brought together leaders from the most significant players in the global economy and charged them with renovating the financial system at the heart of the economic crisis. Change was on the agenda, and the heads of state claimed to deliver. As the summit concluded, The New York Timeshailed the meeting's final statement as a momentous shift, reporting that "Leaders of G20 Vow to Reshape Global Economy."
Unfortunately, the changes left off the table at the summit were far more significant than the modest reforms actually debated, and the few alterations that did make it into the final agreement are likely to be further watered down in implementation. Even the most common-sense reforms are being met with determined corporate opposition. Indeed, given the depths of the collapse one year ago and the volume of public outcry for change, the real surprise is how little transformation has yet taken place.
Many of the items on the Pittsburgh agenda were not bad in themselves. They were merely limited in scope and under siege by lobbyists. The G20 moved in the right direction by announcing that it would require banks and other financial institutions to have greater capital reserves. Mandating that a bank keep more in reserve for every dollar it lends out makes it less likely that the institution will be caught short and need a bailout. While such a change may sound arcane, it could mark a significant break from the past if done right and made part of broader regulations. After all, leveraging assets in order to obtain greater profits — whereby overextended firms made high-risk wagers with ever-greater amounts other people's money — went far in provoking the crisis.
While higher capital ratios and greater oversight would limit this kind of wanton speculation, the G20 statement is short on specifics about the actual requirements that financial institutions would be made to respect. And, sadly, the determined opposition of European bankers will likely keep changes to minimal levels. The difficulty with implementing even this most minor and reasonable of reforms shows how entrenched corporate power remains in post-crisis policymaking.
This bodes ill for the prospects of other heralded changes. On Wall Street's behalf, the Obama administration worked to curtail a French and German push for caps on executive pay — specifically controls on the outrageous bonuses given to top bankers whose institutions have lost billions. As a result, the G20 agreement forgoes any hard limits on compensation. It instead promotes guidelines that would somewhat delay when bankers receive their multi-million dollar payouts. Ostensibly designed to focus executives on long-term performance, this substitute measure is a far weaker alternative.
Why is the Obama administration going to bat for Wall Street firms at international meetings? It's hard to say, especially since this has not produced any apparent goodwill at home. Despite the White House's efforts on their behalf, the financial industry is fervently opposing the president's proposed Consumer Financial Protection Agency, which would protect Americans from predatory lending by credit card and mortgage companies. A representative of the U.S. Chamber of Commerce's Center for Capital Markets recently explained to McClatchy that the Chamber is "spending about $2 million on ads, educational efforts, and a grassroots campaign to kill the agency."
Such backlash against reform suggests that the global economy is still being run like a gambling hall. The betting limits at some tables may be modestly reduced and payouts to the highest of high-rollers slightly reined in, but we have not strayed far from Harrah's or the MGM Grand.
The G20 is only one component of the global economy's management. As it turns out, the activities of other bodies compromise the G20's declarations of reform. While agreements at the G20 are notoriously lacking in enforcement, financial institutions that can discipline and punish — such as the International Monetary Fund (IMF) and World Trade Organization (WTO) — appear notably unreformed and unrepentant.
After a previous meeting of the G20 in London last April, British Prime Minister Gordon Brown announced, "the old Washington consensus is over." However, key tenets of market fundamentalist economic policy that defined this consensus — including fiscal austerity and pro-corporate deregulation — still prevail.
At the April G20 meeting, world leaders vowed to provide as much as $1.1 trillion in new resources to the developing world to blunt the impact of economic downturn. However, much of this funding has yet to materialize, and only a fraction of it is slated to go to low-income countries (rather than middle-income states). Moreover, the bulk of these resources are to be channeled through the IMF, which has typically demanded that recipients of its loans accept harsh neoliberal polices as a condition of receiving money. While Fund officials claim to have changed with the times by relaxing "conditionality" and easing their previously stern attitudes toward countries that dare to buck the neoliberal Washington Consensus, many of their recent loans suggest that, in practice, their conversion has been quite limited.
A recent report from the Center for Economic Policy Research indicates that the IMF "has tied pro-cyclical, contractionary economic conditions on Eastern European countries to sorely needed loans." While struggling economies are desperately in need of government social spending and monetary stimulus, IMF agreements with Latvia, Hungary, and Ukraine demand slashed budgets and policy restrictions that look a lot like the "structural adjustment" of old. In advance of the April G20 summit, Gordon Brown had admitted, "Too often our responses to past crises have been inadequate or misdirected, promoting economic orthodoxies that we ourselves have not followed and that have condemned the world's poorest to a deepening crisis of poverty." Sadly, the IMF has yet to demonstrate that it is truly breaking from this established pattern.
The WTO is not helping things either, especially when it comes to reviving financial regulation that can protect the public good. As Lori Wallach, director of Public Citizen's Global Trade Watch Division, observed last week, "the G20 leaders have announced a very perplexing plan of action that calls for reregulation of the financial sector to try to avoid the next economic crisis while simultaneously calling for completion of the WTO Doha Round, which would require additional financial deregulation, including new WTO limits on accounting standards through a text the disgraced Arthur Andersen firm had a hand in formulating." New "free trade" rules may prohibit countries from shielding themselves from exotic derivates such as credit default swaps or from capping the size of mega-banks that threaten to take down the entire system when they fail.
That the G20 is not undertaking a more serious transformation of global financial structures might reflect the power of continued corporate lobbying. It does not, however, reflect a lack of good ideas. A broad array of financial experts and civil society organizations — ranging from the Stiglitz Commission tasked with making recommendations to the UN, to grassroots coalitions such as Put People First, the Citizens' Trade Campaign, and the labor network Global Unions — have advocated for sensible and needed reforms that could be easily enacted if the political will existed.
One example is the "Tobin Tax" — a small tax on international financial transfers first advocated in the 1970s by Nobel economist James Tobin as a way of cooling speculation on foreign currencies. ATTAC (the Association for the Taxation of financial Transactions for the Aid of Citizens), a leading organization for globalization activism in many parts of Europe, takes its name from this proposal and has pushed for it for over a decade. A version of the tax recently gained an even higher profile in Europe owing to the support of Adair Turner, the head of the British Financial Services Authority, which regulates UK banking. Oxfam argues that, beyond discouraging short-term gambling on currencies, a tax as small as 0.005% could raise between $33 billion and $50 billion per year. This pool of money could support sustainable development in places where the majority of people are still living on less than $2 per day.
Reform proposals also include debt cancellation for countries in the global South. Many poorer nations must spend substantial portions of their budgets on interest payments to the North rather than serve populations hit hard by the crisis. Often, their debts were unjust to begin with, accumulated by dictators who have since been thrown out of power. In most cases the countries' citizens have already sent back payments that dwarf the original loans. Rather than having to submit to the IMF to receive new loans, poorer countries should be allowed to keep their own resources as part of a just stimulus program.
Reflecting the widespread agreement that no corporation should be "too big to fail," citizen advocates have pushed for a much more aggressive application of antitrust and anti-monopoly laws. In this vein, the Stiglitz Commission recommended the creation of a "Global Competition Authority" to provide "adequate oversight of these large institutions" and to "limit their size and the extent of their interactions." These suggestions have a strong grounding in the public interest but are of course anathema to corporate chiefs. Accordingly, they have thus far remained off the table at the G20.
A final demand is that real steps be taken to make the global economic system more democratic. Although leaders at the Pittsburgh summit lauded themselves for moving key discussions from the G8 to the larger G20 — which includes regional powers such as China, India, and Brazil — the international financial institutions with real muscle remain woefully undemocratic. The IMF is a perfect example. The United States, with a 17% voting share, retains the ability to veto all key decisions, because these require an 85% majority. In recent years the IMF has made high-profile announcements of changes to its voting structure. These changes, however, amount to token shifts of a few percentage points from still-dominant wealthy nations to countries such as China.
Ultimately, the goal of economic reforms must not merely be to revive a system that, until its bubbles burst, produced extraordinary wealth for a fortunate few. Rather, it must be to create living wage jobs and slash inequality. Yet that end is unlikely to be achieved if control of economic decision-making remains forever in the hands of the privileged. While the G20 has invited some new members into the club, decisions about the global economy are still made in elite and exclusive venues, where bailed-out executives still matter far more than the world's poor. In changing this, democracy will have to be a means as well as an end. For as long as the bankers rule, we will have little chance of breaking from a dispiriting state of affairs: casino capitalism as usual.
