Social security cuts: Work until you drop

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Social security cuts: Work until you drop

Apr10 by Systemic Disorder

A social movement to preserve Social Security has never been as urgent as it is today. Tempting as it might be to send a dictionary to the White House explaining the difference between “compromise” and “capitulation,” we should not be overly generous — Barack Obama’s intention to gut Social Security is not so much a pre-emptive capitulation as it is yet another demonstration of his adherence to neoliberal ideology.

By now, such a demonstration should not be necessary. Remember that one of the president’s first appointments was Lawrence Summers, who once wrote a memo while chief economist at the World Bank advocating industries creating toxic waste be transferred to Africa because the continent is “vastly UNDER-polluted” (emphasis in original). Professor Summers’ appointment in 2008 as President Obama’s leading economic adviser after his career of promoting Reaganite, neoliberal policies, including leading the Clinton administration’s deregulation of banking and scrapping of regulations for derivative contracts, set the tone for what was to come.

Let us not fall out of our chairs — neoliberal austerity is a bipartisan policy. Voters alternate between their dominant parties in North America, Europe and the Asia-Pacific region, yet the train stays in motion. Fans of the movie Avatar likely remember an early scene in which Sigourney Weaver’s character mocks the macho, militaristic approach of the Marines who intend to unilaterally take the mineral “unobtainium” from the Pandora natives by bulldozing their homes and forest. Her intention was to negotiate with the natives and have them agree to give up their homes and forest.

Note that there was no difference in the goal of the Marines, exemplar of the conservative approach, and that of the would-be negotiator, representative of the supposedly more enlightened approach. I remember thinking to myself while watching Avatar that Ms. Weaver’s character represented the Democratic Party wing of neoliberalism. Indeed, Democrats and their “left-of-center” counterparts among the world’s advanced capitalist countries — even parties in Europe that call themselves “socialist” — routinely implement ever more harsh policies that punish working people to further enrich the wealthy.

So we have something here bigger than Barack Obama and whatever character flaws he might be perceived as possessing. Republicans want to privatize Social Security — the ultimate dream of Wall Street and good for industrialists, too, as retirements become a quaint relic of the past. More people are forced to remain in the job market longer; more competition for jobs means lower wages and more profits. President Obama simply wants to phase this in more slowly.

Photo by A. Blackman, England

Specifically, President Obama is unilaterally offering Republicans the first step in the gutting of Social Security — reducing benefits. His method to do this is to change the formula for calculating cost-of-living increases from the standard Consumer Price Index to a different methodology known as the “Chained Consumer Price Index,” under which the rate of inflation is lower.

In the standard CPI, the basket of goods used to calculate inflation does not change. In the “Chained CPI,” items that rise in price are substituted with a cheaper product under the theory that consumers will switch to lower-priced alternatives. That may sometimes be so, but such actions do not alter the fact that the desired product is more expensive and thus represents the true extent of inflation. Nor does it account for the fact that many high-cost expenses, such as rent and electricity, don’t have readily available alternatives.

If they want inflation to be less, they shall make it so

This substitution of the standard CPI for the “Chained CPI” is a long-standing demand of Right-wing ideologues, and President Obama has offered it to them on a silver platter. The New York Times, the first to report of the proposed Social Security cuts (and which, uncharacteristically, called the cuts cuts instead of using a euphemism), anonymously quoted Obama administration officials who intimated that this was part of an elaborate plan to force Republicans in Congress to agree to modest tax increases. The Times quoted an official as claiming:

“That means … that the things like [Chained] C.P.I. that Republican leaders have pushed hard for will only be accepted if Congressional Republicans are willing to do more on revenues.”

But the president’s offer contains far more cuts for working people and retirees than attempts to make corporations and the wealth pay taxes at a slightly more reasonable level. The Times reported:

“He will propose more than $600 billion in new revenues — his last offer had called for $1.2 trillion in taxes — mostly by limiting to 28 percent the deductions that individuals in higher tax brackets can claim. Congress has ignored that idea in past years. Deficits would be reduced another $930 billion through 2023 as a result of spending cuts and other cost-saving changes to domestic programs. … Mr. Obama’s proposed spending reductions include about $400 billion from health programs and $200 billion from other areas, including farm subsidies, federal employee retirement programs, the Postal Service and the unemployment compensation system.”

That sounds like a whole lot of new austerity. Austerity hasn’t been working out so well in Europe, where, for instance, eurozone unemployment is at 12 percent and rising. That, sadly, is not the point. The ongoing economic crisis is an opportunity for corporate executives and financiers to push through what they’ve always wanted anyway. An oft-quoted summation of this thinking was offered several years ago by Stephen Moore of the far right Club for Growth and the Cato Institute: “Social Security is the soft underbelly of the welfare state. If you can jab your spear through that, you can undermine the whole welfare state.”

Both groups are dedicated to cutting taxes for corporations and putting an end to any social safety net. The Club for Growth founder is connected to groups like the Heritage Foundation and to Tea Party impresario Dick Armey, while the Cato Institute recently experienced a power struggle in which the billionaire Koch brothers, David and Charles, ousted the leadership for being insufficiently severe. Cato sent six alumni to the Bush II/Cheney administration, four of whom served on the latter’s Orwellian named “Commission to Strengthen Social Security.”

A better slogan than ‘work until you drop’

Because “work until you drop” is not an effective slogan to rally people to your side, Wall Street financiers and those opposed to social safety nets float scare stories that Social Security will soon run out of money, and you’d do better putting all your money in the stock market. Neither is true. Let’s start with the second of these two mythologies. In 2005, I researched the historical performance of the U.S. stock market for an article published in Z Magazine and found that the gains are small, when adjusted for inflation, and the gains only materialize when bubbles are near their peak.

As bubbles peak about once every 35 years, it is difficult to time these just right. When adjusted for inflation, the Dow Jones Industrial Average — the ultimate index of stock-market health and which has its components continually adjusted so as to replace low-performing stocks with high-performing ones — was below its 1929 peak as late as 1991. Here are some long-term results:

• The Dow peaked at 995 in February 1965. Adjusted for inflation, that was 42 percent more than it was worth at its previous bubble peak in 1929, not so impressive when it took 36 years to get there.
• The ensuring crash bottomed out in December 1974. At this point, the Dow, adjusted for inflation, was worth only half of what it was worth in 1929 and little more than one-third of its 1965 peak.
• The most recent crash bottomed out in March 2009, at which point the Dow was three percent below its 1965 peak, adjusted for inflation.
• Yesterday’s Dow closing of 14,673, when adjusted for inflation, is almost precisely double that of its 1965 peak, but a 100 percent gain over 48 years isn’t terribly dazzling.

And with the price/earnings, or P/E, ratio, of the S&P 500 Index now at 18.35, stocks are again over-valued when measured historically. The ratio’s average, calculated back to 1872, is 14. Five times in history this ratio, which is a company’s yearly profit divided by one share, has surpassed 20; each time was followed by a crash.

The biggest canard, however, is how financial chicken littles frame their case. The claim that Social Security will run out of money in perhaps three decades is based on predicting a low rate of future stock-market gains while the claim that privatizing Social Security will produce more money is based on predicting a rate of future stock-market gains double that of the former rate.

There are examples of privatizing social security systems, and the results have been a bonanza for financiers and disastrous for retirees. In Chile, where the privatization was done at the end of a gun barrel during the Pinochet dictatorship, a worker who retired in 2005 received less than half of what he or she would have received had he or she been able to stay in the old system. The six companies that administer the private plans, not coincidentally, constitute one of Chile’s most profitable industries.

It took tens of thousands of deaths, and hundreds of thousands of arrests, torture sessions, “disappearances” and exiles to implement Milton Friedman’s Chicago School shock therapy in Chile. Nowadays, such levels of violence are not necessary as elected governments implement neoliberalism in a series of measured doses, and four decades of incessant propaganda has acculturated the peoples of the world to the ahistorical idea that “there is no alternative.” Violence nonetheless remains the system’s handmaiden, as the coordinated crushing of the Occupy Wall Street movement and the tolerated rise of fascist groups like Golden Dawn in Greece demonstrate.

There is an alternative — ceasing to placing your hopes in parties that disagree only over the best method to implement neoliberalism, whether the one’s candidate sneers at “government-dependent” voters or the other’s candidate makes speeches vowing to tackle inequality while acting to make it worse. Change comes social movements, not from elections.

http://systemicdisorder.wordpress.com/2013/04/10/social-security-cuts-work-until-you-drop/

The intellectual dead end of liberalism

Jun12 by Systemic Disorder

The vacuous concept of the “third way” having degenerated into neoliberal idolatry, modern liberalism has reached its end. Sweeping pronouncements are ordinarily to be avoided, but the revelations of not only the Obama administration’s extraordinary spying campaign but the Democratic Party marching in lockstep with Republicans to celebrate it ought to be the coup de grâce.

(I’m using North American terminology for today; readers in the rest of the world can substitute “social democratic” for “liberal.”) Some difference remains between Democrats and Republicans on social issues, but that gap is shrinking and exists at all only due to social activism. Without pressure from below, that difference might not amount to much, either. The difference arises from the extraordinary social extremism of U.S. conservatism, unique among the mainstream parties of the world’s advanced capitalist countries.

North American liberals and European social democrats have a long history of capitulation — we see the same patterns, whether it is Bill Clinton (and now Barack Obama) in the United States, Tony Blair in Britain, Gerhard Schröder in Germany, Jean Chrétien in Canada & etc. There is something much larger at work than President Obama’s lack of resolve. The sobering conclusion is that his world view is not so different from that of George W. Bush. Democrats have much in common with Republicans.

But, but, but — what about Washington’s notorious gridlock? The rewards of office are at stake and, just like professional athletes, professional politicians who make it to the top levels are highly competitive. They like to win, a rather human emotion, and with a distinct lack of seriousness in tackling any real issue — political, economic or environmental — winning is about the only thing that matters. Fight, team, fight!

The Obama administration’s record

Liberalism has ceased to possess ideas, however much individual liberals may yearn for alternatives. A partial list of Obama administration “achievements” makes for depressing reading:

• Not simply keeping the Guantánamo Bay gulag open but force-feeding prisoners (torture by any realistic standard).
• Stepping up the war against dissent through violent suppression of the Occupy movement organized by the Department of Homeland Security, waves of arrests and harassment of anarchists in the Pacific Northwest and harsh reprisals against government whistleblowers, among other offensives.
• Widespread collection of telephone calls.
• The gargantuan collection of personal information from online communications.
• A president arrogating to himself the right to unilaterally kill people anywhere in the world, without a pretense of legal procedure.
• A continual weakening of women’s fundamental rights to control their own bodies, often by making unilateral capitulations to Republican demands before negotiating.
• A total failure to reign in “too big to fail” banks and a total failure to prosecute any financial industry executive for the chicanery that precipitated the financial collapse of 2008 and the ongoing stagnation.
• Unquestioning acceptance of financial industry perspectives on economic matters.
• Elevation of corporate maximization of profits above all other human considerations, embodied in a steady stream of one-sided trade agreements, the most dangerous one yet the Trans-Pacific Partnership being negotiated in secrecy, with only corporate executives privy to the text.

Let’s not pin this on the personality of one person. Each fresh outrage by the Obama administration is met by a shrug of the shoulders or outright support by Democrats. They are nearly unanimous in their approval of the National Security Agency. They are already united behind policies that exist, regardless of the ideology attached to them, to funnel ever more wealth upward. These two tendencies are not independent of one another.

There are various reasons that can be assigned as to the cause of the Democratic Party’s — and, thus, liberalism’s — steady march rightward: Dependence on corporate money, corruption, domination of the mass media by the Right, philosophical and economic myopia, cowardliness. Although these factors form a significant portion of the answer to the puzzle, an underlying cause has to be found in the exhaustion of North American liberalism. Similar to social democracy, it is trapped by a fervent desire to stabilize an unstable capitalist system.

The political and intellectual leaders of liberalism believe they can discover the magic reforms that will make it all work again. They do have criticisms, even if they are afraid of saying them too loud, but are hamstrung by their belief in the capitalist system, which means, today, a belief in neoliberalism and austerity, no matter what nice speeches they may make.

The Right, on the other hand, loudly advocates policies that are anathema to the working people who form the overwhelming majority but have the mass media, an array of institutions and the money to saturate society with their preferred policies. But, perhaps most importantly, they have something they believe in strongly — people who are animated by an ideal, however perverted, are motivated to push for it with all their energy.

In contrast, those who are conflicted between their belief in something and their acknowledgment that the something needs reform, and are unable to articulate a reform, won’t and can’t stand for anything concrete, and ultimately will capitulate. When that something can’t be fundamentally changed through reforms, what reforms are made are ultimately taken back, and society’s dominant ideas are of those who can promote the hardest line thanks to the power their wealth gives them, it is no surprise that the so-called reformers are unable to articulate any alternative. With no clear ideas to fall back on, they meekly bleat “me, too” when the world’s industrialists and financiers, acting through their corporations, think tanks and the “market,” pronounce their verdict on what is to be done.

Suppressing dissent is big business

And let us not be fooled by libertarian opposition to government spying; libertarians are among those most strongly rooted in the system. Although any opposition to the National Security Agency’s Stasi state is welcome, libertarians are motivated by an irrational hatred of government — they would rather have the market decide all social questions. But the market is merely the aggregate interests of the most powerful industrialists and financiers. Moreover, the market has already weighed in — security is big business, a high-profit sector worth hundreds of billions of dollars a year that exists solely as the result of government largesse.

City police departments are now equipped as armies; a web of federal agencies works closely with local law enforcement focused on squelching dissent; and seemingly bottomless sums of money are doled out to finance a network of spying agencies, a proliferation of cameras in public spaces and the militarization of police departments and investigatory agencies.

That is big business, indeed, as a quick summary demonstrates:

• Lockheed Martin, a military contractor, earned US$2.7 billion on revenues of $47 billion. More than 80 percent of its revenue comes from the U.S. government, mostly from the Department of Defense.
• Northrop Grumman, a military contractor, earned $2 billion on revenues of $25 billion. Most of its business is with the U.S. government, with much of the rest from various other governments.
• Boeing, a producer of military aircraft and missile equipment, earned $3.9 billion on revenues of $81 billion. The U.S. government is a primary customer.
• Booz Allen Hamilton earned $219 million on revenues of $5.8 billion. One-quarter of its revenue came from work for U.S. spying agencies and 98 percent of its revenues comes from work for the U.S. government. Booz Allen had employed whistleblower Edward Snowden.

U.S. government military spending for fiscal year 2014 is projected to account for more than $1.3 trillion, or 47 percent of the federal government’s budget, according to an analysis prepared by the War Resisters League. (The War Resisters calculation includes past military spending not counted toward the regular military budget by the government.)

A government is not an abstract entity; it is an expression‎ of the social forces within a society. The U.S. government — the Obama administration, past administrations and the “permanent government” of the security apparatus and the various bureaucracies — is the enforcer for industrialists’ and financiers’ dominant institutions — corporations — and many of those corporations profit handsomely from the equipment, materiel and services they sell to the government that provides their muscle. This is bankrupt, whether the liberal or conservative version.

http://systemicdisorder.wordpress.com/2013/06/12/dead-end-liberalism/