Rediscovering the Magic of Antitrust

July 23rd, 2021

Break ’em Up; Recovering our Freedom from Big Ag, Big Tech, and Big Money, Zephyr Teachout, 2020

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This is a compact must read book. Here are some highlights:

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Antitrust Can’t Bust a Monopoly of Ideas WSJ

The highest and best goals of America–equality and freedom–require government to protect citizens from any group or any person wielding too much power. We used to do pretty well, using antitrust, campaign finance laws, public utility regulation, labor laws, and other anti-monopoly tools. But in recent years, our government has failed on all these fronts. Meanwhile, corporations have disabled key institutions designed to protect against arbitrary power.

After the crash of 2008, the impunity of elite networks was on full display when no banker was jailed for lawless activity. Pharmaceutical and big tech corporations regularly get away with laughably trivial fines for their major violations of the law…Public courts have been replaced by arbitration in which judges are paid by corporations, reasons aren’t given, and no one knows what happens.

Unelected “megalomaniac President” Zuckerberg: “In a lot of ways Facebook is more like a government than a traditional company.” Facebook “set up a more democratic or community-oriented process that reflects the values of people around the world.”

The will to power is connected to the desire for material accumulation, but it is made of something different, and Zuckerberg clearly has it. The ability to affect the lives of everyone on earth, to know everything about them, to shift elections, to change the practice of democracy–these are not unforeseen by-products of a business plan. They are not an accident. They are the point.

People in power are more likely to interrupt, to look away when others speak, to touch others inappropriately, to say what they want, to take risks…They are more likely to be rude, hostile, and humiliating. They are more impulsive,more self-centered in their choices, which they make obliviously, because they are less able to read other people’s reactions. People in power rely more on stereotypes when making judgments about others, with less awareness of unique or individual traits. They aren’t good at describing the interior lives of others, and are bad at guessing what others want or feel.

Researcher Jake Dunagan: “The experience of power might be thought of as having someone open up your skull and take out that part of your brain so critical to empathy and and socially-appropriate behavior.”

Denmark has appointed an ambassador to deal directly with the quasi governments of Google, Facebook, and Amazon.

At the heart of (Antonin) Scalia logic in the Gilmer case, and entire series of cases involving arbitration agreements, is a fantasy of choice–a fantasy that relies on a nonexistent power dynamic and and set of unavailable non-arbitration options…Scalia’s contract logic reflects neoliberalism, a powerful ideology in American legal thought. Neoliberalism is defined by a deep skepticism of democratic institutions, which it treats as corrupt and unreliable, and a mirror-image faith in market institutions, which it treats as responsible and reliable. For most of Anglo-American history, a whole series of principles shaped contract enforcement. Corrupt contracts weren’t enforced, and contracts with real power imbalances were not enforced. The neoliberal view is that freedom of contract should be presumed and contracts almost always enforced…If you sign a contract, the presumption is that you signed it freely, and freedom is treated as a formal matter, not a contextual one…Was Scalia cynically serving big business or naively imagining a world that didn’t exist?

Political parties are being replaced by corporate-run institutions. Big corporations, which consider political strategy essential to their overall strategy, increasingly use the tools of authoritarianism–centralized regimes, opposition suppression, forced public displays of alignment–to hold on to their power, and they do it in the name of free speech. A persistent paranoia has naturally slipped into politics as these institutions are corroded, and this has led millions to flee politics as quickly and quietly as possible, and millions of others to embrace the nihilism of Donald Trump and Fox News.

The cutting edge of monopoly racism is, as with so much else, in big tech companies, where a toxic combination of power and opaque bias is repackaged and defended as neutral algorithms…When doing web searches, poor people are shown worse jobs and apartments, while elites with purchasing power get access to real estate deals and better employment opportunities…Google, Facebook, Amazon, and Apple pose unique race bias dangers in two ways. First, they are among the few companies with the resources to extract and exploit publicly available datasets in combination with their own data, creating data monopolies. Second, their choices about what data they use to serve what content have uniquely powerful impacts on everyone in society…Finally, they don’t just passively allow bias, they make money off it.

Researcher Marshall Steinbaum:

“Permitting consolidation and vertical integration and control in supply chains has made labor markets less competitive and worsened outcomes for workers, which is in direct contradiction to the (untested) economic assumptions that motivated the Chicago School’s antitrust takeover in the first place.” Monopoly turns out to be a major driver of inequality…With the massive collapse of an economy into sectors that are each dominated by corporate monopolies, workers may be in great demand, but they are not in a good position to bargain for a fair portion of the value they create…In simple terms, “Capital won, labor lost.”

Wall street has been a driving force behind the gutting of antitrust laws, because when it is allowed, monopoly power is a means of taking a big chunk of money and multiplying it, without adding any value. Access to seed capital, combined with bad antitrust policy, meant big unearned profits…Warren Buffet, one of the richest men in the world, has made his money by investing in already-monopolized industries…He invests in closed markets, monopolies, and oligarchies…He prefers businesses with substantial “moats”, or, as a friend of his called it, “unregulated toll bridges.”

Business school graduates today are taught to invest in the areas where antitrust fails.

In 1967, the Chicago School of Economics launched an all-out war against American predation rules…after President Reagan (in the 1980’s) installed new judges, and economic departments were flooded with Chicago School scholars, the new theory won…The new court decisions did not get rid of predatory pricing laws as a concept, but they made it so difficult to prove a predatory pricing claim that in practice any lawsuit became nearly a dead letter.

The monopoly-predation-subsidy-capital cycle goes like this:
1. The promise of monopoly power attracts excess capital investment;
2. with that investment, the company can engage in predatory pricing to push out competitors and win subsidies;
3. only the biggest companies win individual company subsidies, which they use to push out remaining competitors and reinvest in politics.
4. they then use the investment in politics to block antitrust and influence tax code;
5. without being subject to antitrust and having to pay taxes, they can promise more monopolistic behavior and attract more capital investment.

These new judges–including Justice Antonin Scalia and judges Frank Easterbrook and Richard Posner, the biggest defenders of big business–overturned decades of case law. They treated all mergers as presumptively positive. They effectively wrote predatory pricing out of the Clayton Antitrust Act, concluding that almost any price-cutting was good for customers–even if price-cutting was designed to push out competitors and monopolize a market. They reinterpreted antitrust laws as consumer price-protection tools. They rejected a vision that these laws were designed to curb despotism. They rewrote hundreds of years of contract law, excising the power analysis that once accompanied contract interpretation.

Clinton, Bush, and Obama all presided over an ongoing merger wave that would have horrified any 1960’s judge. From 1992 to 2016, antitrust was not even in the Democratic Party platform.

In sum, from 1980 to today, antitrust was triply depoliticized. First, courts treated the body of antitrust laws as if they were designed only to serve consumer welfare, not growth and abuses of political power in the private realm. Second, practitioners of antitrust–prosecutors, judges, and law professors–depoliticized their own roles, allowing technically trained economists to make the big judgements about what society should look like. They deferred to professional elite economists, whose jargon is complicated and whose claims to special knowledge make it hard for people to feel comfortable challenging them. Giving economists the final say also allowed practitioners to avoid responsibility and to treat decisions as if they were required by abstract laws instead of as hard political decisions that shape power in society. Third, and most bizarrely, these same practitioners treated antitrust as if it were a job for courts, not Congress.

We are in the early stages of a major battle to reinvigorate the anti-monopoly movement. There are huge toolboxes of existing laws that can be enforced right now; a lot of bad Supreme Court precedents that can be overturned by congress; and new laws that need to be passed to address weaknesses in the old laws and new obstacles. The new antitrust era, to meet the crisis of concentration we now face, will require us to do all three.

The Federal Trade Commission–right now– can also play a critical role in changing basic competition rules. As Sandeep Vaheesan argued in a significant article in 2017, the FTC has substantial power, to define the scope of federal laws. Congress, anticipating changing business practices and changing methods of unfairness, purposefully gave the FTC the power to define “unfair methods of competition.” Executive agencies have enormous discretion to act, as Vaheesan points out, the FTC can and should change merger law by making mergers presumptively illegal in competitive markets, and should lay out particular clear, bright line rules–like speed limits– against certain kinds of “vertical” behavior, like when Tyson forces farmers to use building firms it prefers.

The next president (Biden), in particular will have outsized power when it comes to antitrust; she (or he) can unilaterally promulgate new merger rules, directing the FTC to adopt clear guidelines that declare that it will oppose mergers of a certain size and percentage of the market. The new guidelines for the Department of Justice and the FTC can adopt the posture that policing conduct violations is a top priority. They can strongly signal that they won’t stand for a few small changes, but will require structural reorganization.

Even with strong enforcement, we need new laws. Congress should start by overturning all the bad decisions made by Reagan judges. That alone would serve to sharpen the swords of the laws already on the books.

When people are allowed to amass great pools of capital, one of two things happens; The logic of investment overcomes the moral sensibilities of the people who hold the investments, and the investments agents’ instructions to maximize profit sever the moral relationships between people and their impact on the world. Or the logic of power overcomes the moral sensitivities of those who hold too much power, and they start governing from a place of whimsy and self-importance, disconnected from human reality and unable to honestly perceive the world over which they trample. Both outcomes lead to destruction, instability, and cruelty.

For today’s neoliberal economist, market freedom does not mean moral action or thought in the commercial realm, it only frees the buyer and seller from state interference; the only morality in a market lies in cheaper consumer goods. Efficiency has become more than a value, it’s become something approaching an unhealthy, elite obsession.

As (Langston) Hughes understood, the biggest, most powerful dream of America, the one we can’t forget, the one that underpins the right to eat, breathe clean air, have dignity, is the dream that people, not kings or lords or dukes, should govern themselves. The basic dream of America is the fight against illegitimate power. Money is not a legitimate source of political power. The only source of legitimate power over others–the power to imprison, the power to tax, the power to make decisions–flows from we the people.

Monopolies, Created Deserts, and Warren Buffets

July 9th, 2021

Monopolized; Life in the Age of Corporate Power, David Dayen, 2021

This book is one of the most depressing, even apocalyptic in recent memory. It is also well researched, organized, and important.
Each chapter addresses an industry segment that has fallen to monopoly: Airlines, Big Agriculture, Journalism and media, Broadband Internet, Opioid medication, Banks, Offshoring essential products, Amazon and Google, Hospitals Supply chains, Rental Housing after 2008, Prisons and Immigrant detention. The book is focused on monopolies in each of these segments. Warren Buffet is mentioned as a significant investor in monopolies in each chapter. Dayen estimates that twelve mega-billionaires like Warren Buffet effectively control the entire US economy today. What can these handful of men possibly do with the wealth they have accumulated? This is from Jeff Bezos, currently the wealthiest:

The only way I can see to deploy this much financial resource is by converting my Amazon winnings into space Travel

Tesla’s Elon Musk seems to share Bezos’ sentiment. Dayen — “Our overlords literally shoot money into space while millions around them suffer.” Here is Buffet;

We think in terms of that moat and the ability to keep its width and its impossibility of being crossed.


Dayen — “Morningstar offers an economic moat index fund of the twenty companies with the highest walls around their businesses.”

The average age of a farmer in America is fifty-eight. In Iowa, 60 percent of all farm owners are over the age of sixty-five; just 1 percent are thirty-four or younger. More than half of all Iowa farmland is rented out, and the startup costs of land, machinery, and other inputs are a huge barrier to entry. A substantial number of farm owners are elderly widows who inherited the land. As they pass on, Iowa could be transformed.

As Iowa and other agricultural states empty out and businesses close, the states turn into people less deserts. Mono culture (single crop) farming with huge chemical inputs are transforming formerly fertile land into barren deserts. Deserts can take many forms and empty farmland is only the first discussed here.

The news deserts created primarily by the dominance of Facebook and Google and by the crippling of the media business model have grave implications for democracy…it’s undeniable that corruption spreads, conspiracies are fostered, and truth is obscured where journalism is absent.

This is the curse of bigness in San Francisco, a city so teeming with money that nobody can afford to open a store to take it…But the truth is that the San Francisco Bay Area is the nation’s second-most dense…Big money has created a vicious spiral: a winner-take-all city keeps accumulating vacant lots, dead-eyed commuters drive for hours to their barely affordable homes, landords must keep rents astronomically high to cover their own astronomically high loans. The concentration of extreme wealth isn’t just bad for the losers in depressed counties and towns. It’s bad for the winners.

Urban deserts are not limited to Flint and Detroit Michigan, to Oakland California and Philadelphia and Baltimore. Try living in today’s San Francisco. Several of my son’s San Francisco old high school friends are living lives as nomads in the city, complete with vans.

In telecommunications including cellphone and broadband America is a disgrace with the highest prices and lowest quality and service anywhere in the world. At America’s founding, postal service was guaranteed to every American. FDR’s Tennessee Valley Authority (TVA) together with massive western dam projects guaranteed electrical power to every American. At one time every American was guaranteed phone service. Dayen describes Chattanooga, a big beneficiary of the TVA, and its TVA run utility the Electric Power Board (EPB) which decided to upgrade using fiber optics to improve the reliability of its electric grids. In 2007 EPB decided to offer fiber optics to every home in its service area paid for by a $219.8 million bond. Comcast sued to stop the plan alleging illegal cross-subsidy of electric rate payer funds. Comcast lost and residents of EPB’s service area have access to gigabit broadband access supporting phone and internet service. If you are not in EPB’s service area you are in the communications desert.
I live in the heart of Phoenix Arizona and have access to Centurylink’s (baby Bell) DSL “service” of 16MB sometimes at a cost of about $50 per month. I have a grandfathered T-Mobile prepaid phone that gets no signal at my home even after the T-Mobile Sprint merger. I can make phone calls from my home via Android wifi on my T-Mobile phone or via voice over IP (VOIP) through google voice.
I live five miles from Phoenix’s TV Towers but receive no over the air (OTA) signals for any major network on my TV. Using advanced rooftop antennas and signal amplifiers, I used to be able to receive 5 major networks 95 miles line-of-site to the towers on Mount Lemon near Tucson. Continued reduction in transmit power by network operators has reduced reception to 3 major networks today. Even these 3 are sensitive to weather. I tried to raise the issue of reduced OTA transmitter power over the publicly owned airwaves with newly elected Senator Mark Kelly and was blown off by staff members.
If you live in rural America chances are you have no access to broadband. Urban Americans may typically have two “options” for broadband, your baby bell or surviving phone company and one cable operator. Both will have atrocious customer service and questionable reliability and unconscionable low speeds. Somewhere in a streaming chain, maybe the local broadband supplier is able to restrict speeds or break a stream altogether. We could get better service almost anywhere in the world. Most Americans live in a communications desert.

Dayen talks about the mergers and acquisitions (M&A) banking business that came into it’s own in the 1960s. Today it is a huge industry dominated by the six too big to fail banks.

As of 2019, the six biggest banks–JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley–control $10.5 trillion in financial assets. These banks also happen to be serial transnational criminal enterprises, paying $182 billion in (inadequate) penalties for rap sheets of incomparable length. Few of the violations even relate to the financial crisis’s run-up and aftermath, though those were significant. Incidents of debt collection fraud, market rigging, money laundering, misrepresentations to clients, kickback schemes, and unlawful securities sales all occurred after the crisis.

The media has focused on stock buyback after tax reductions and record profits but gives little attention to the bigger story; mergers of corporations into ever larger and more unaccountable monopolies. The six big banks are key players in these mergers pocketing huge fees for their services. Goldman Sachs, in one merger featured in the book involving United Natural Foods Inc. (UNFI), continued to change the terms of the merger to favor themselves and even created and sold derivatives for hedge funds wanting to bet against the merger.

Mergers in the health care industry, especially hospitals has created large healthcare deserts in America. Hedge funds often buy hospitals for their real estate value and close them after gutting their operations. Millions of Americans are left with few options and long travel distances and time to seek services.

Monopolies create highly vulnerable supply chains often with sole source and offshore production. Dayen talks about an acute shortage of saline drip bags (cost $1) because production in sole source Puerto Rico was disrupted. This failure disrupted services in hospitals across the country. Covid19 protective equipment like masks, shields, gowns, etc. were simply not available for months. Then there are sole source parts like faulty batteries for the F-35 $100 million fighter jets that made them unable to escape Hurricane Michael in 2018. All current US Weapons systems are dependent on parts from China! Supply deserts are disruptive and dangerous and we are inundated in them.

Ten million American homes were lost to foreclosure as a result the 2008 financial subprime disaster. Dayen has an earlier book Chain of Title focusing on the struggle of American’s being illegal foreclosed on as a result of the massive production of fake documents purporting to support the existence of loans. Aaron Glantz in 2019 published Homewreckers, showing the macro side of how all these illegally foreclosed homes ended up in the hands of hedge funds and other bottom feeders and were removed permanently from the American supply of individually owned homes. Dayen here talks about how these new owners, without experience in real estate rentals and without any regard for the law or people converted these homes into badly or unmaintained rentals and profited from illegal fees, penalties, evictions, and extortion while the huge inventory of once livable single family homes are turned into slums. These few corporations make the Trumps and Kushners of the world look like petty thugs. Meantime, Americans looking to buy homes find limited options and soaring prices. Welcome to the housing desert.

We know how to handle monopolies. You restore the interpretation of the antitrust laws to cover the full spectrum of harms, beyond just consumer welfare. Then you break up dangerous concentrations of economic power, block mergers that would excessively consolidate markets, regulate natural monopolies as public utilities, structurally separate functions where necessary, intervene in the public interest so citizens are protected and empowered, and vigilantly examine markets to prepare for monopolies to emerge again. Maybe that sounds impossible in the abstract. But it is entirely possible under existing law that either hasn’t been enforced in decades or has been misinterpreted for decades. We have over a century of experience with both successfully preventing unnecessary concentrations and failing to do so. The mechanisms are clear; getting the political class to enforce them is the stumbling block.

Latex, Diamonds, Charles Taylor, Austerity, Ebola, The Perfect Storm

May 22nd, 2021

Fevers, Feuds, and Diamonds, Ebola and the Ravages of History, Paul Farmer, 2020

Young Paul Farmer and Future World Bank President Kim Jim Yong in Haiti


Ebola was not simply a deadly disease; it was the manifestation of neolibereralism as an affliction, which wrecks havoc in the world’s most vulnerable societies. –Ibrahim Abdullah and Ismail Rashid, Understanding West Africa’s Ebola Epidemic: Toward a Political Economy, 2017





Charles Taylor Liberian Warlord

There can be no understanding of this medical wasteland, and its vulnerability to Ebola, without knowledge of the shared and distinct histories… Their shared history has long involved rapacious extraction and forced labor regimes. Rapacity on this scale requires and foments violence, resulting in more illness and injury…That’s (colonial rule) where control-over-care strategies originated…In the first part of the twentieth century at least, black doctors were shunted aside or formally excluded from the colonial medical services…Many West Africans still harbor memories of campaigns to isolate (and sometimes destroy) settlements afflicted by smallpox, cholera, and vector-borne diseases such as plague, malaria, and trypanosomiasis. In the course of many of these epidemics, and for a century or more, funerals and wakes were banned, travel restrictions imposed, and punitive measures (from fines to incarceration) routine. Medical care was not…After independence, tardy efforts of link disease control to care were nonetheless under way in Guinea and Sierra Leone and, to a lesser extent, Liberia. But health expenditures of any sort remained a tiny fraction of postcolonial national budgets. That fraction shrank further when their governments signed on to structural adjustment programs (austerity) — and geared up for war…Neglectful policies first written by the sanitarians of fading colonial governments have left a disastrous imprint, but other disastrous policies were advanced by development institutions claiming to represent the poor, or frail or failed states. Few of these ventriloquists were natives of West Africa…Externally imposed austerity meant that governments lost much of their scant capacity to engage in anything resembling caregiving.

Commentary on most epidemics sends history down the drain. That’s no accident. Surely the successful rebranding of European empires as “Western democracies” and the inevitable focus on “local” disasters of African politics or epidemiology stand as impressive examples of willed amnesia. This entire process of shrugging off human agency — a.k.a. history — lets external actors and forces off the hook, allowing expatriate pundits and self-dealing global bureaucrats to argue that local greed and tribal grievance are the primary cause of independent Africa’s woes, including its poor economic, political, social, and physical health. But those without shelter are of course obliged to pay closer attention to the clouds above.

…if you want to address the delivery problems, you need a social medicine incorporating staff, stuff, space, and systems. But Western Africa, like the northern Congo, has not known this sort of social medicine, because of the extractive arrangements that I’ve described in the previous four chapters; slavery, racism, colonialism, and war. Its medical and public-health systems have failed repeatedly to delivery on the promise of discovery.

Ebola, like Marburg has received scant attention from the best basic scientists and clinical researchers, and from the world’s largest research based pharmaceutical concerns, for a simple reason: there’s not much money in it.

The critical step in preventing future epidemics will be finding ways of delivering vaccines and therapies to those who need them — and who need them in part because they live in a clinical desert that was created when their predecessors were enslaved and subjugated so that people and nations in other parts of the world could amass great wealth and prosperity.

Public-health nihilism and its control-over-care variant retain their force largely among the poor living in what are now called low-income countries. These countries are, of course, the former colonies; strains of the paradigm run rampant within them, and in the field now widely known as global-health.

The postcolonial world still suffers from control-over-care logic, and from the plague. In the Indian state of Gujarat, population forty-five million, plague killed hundreds in the 1990s–with the diamond polishing city of Surat the epicenter of a major outbreak in 1994.

One of the few happy aftermaths of the Western Ebola epidemic has been the development of what appears to be be a safe and protective vaccine… We can expect the usual debates about whether further and different clinical trials are needed, and which regulatory hurdles must be cleared before it and other vaccines are licenses, and by which agencies…Ebola-nomics is sure to influence these discussions, since the disease’s victims, like those sickened by cholera and plague, are mostly poor people of color, as are their primary caregivers.

…Ebola and other public-health calamities strike most often in places from which human capital and raw materials have been extracted for centuries. From the rural reaches of Haiti and Rwanda, from the prisons of Siberia, and from the slums of urban Peru; for thirty years, I’ve been pointing out how the epidemics that people have suffered in these places have arisen because of the inequalities — political, economic, and medical –that such extraction invariably worsens.

Diapers Power and Poverty

May 13th, 2021

Broke in America; Seeing, Understanding, and Ending U.S. Poverty, Joanne Samuel Goldblum and Colleen Shaddox, 2021

This book provides a road map to a better America, Jeffrey Sachs

Well organized book is a clear explanation of why poverty is a systemic failure, a result of decades of intentional bad policy decisions in the U.S.

Part 1 Basic Needs covers chapters on Water: Running Dry; Food: Hungry in America; Housing: No Place to be Poor; Power: Shut Off; Transportation: Access Denied; Hygiene; A Problem Swept under the rug; Health: Health does not equal Health Care.

Part 2 discusses the many forms of oppression -covers chapters on Racism: Stealing Homes; Sexism: Women’s Work; Denial of Political Power: Government Not of, by or for the people; Mental Health Discrimination: Poverty is Trauma; High-Poverty Schools: Class Matters.

Part 3 Discusses solutions: Possibilities: The Poor Don’t Need to be with you Always; and Advocacy: Making Change.

Stacks of diapers and dollars isolated on a white background.

Author Goldblum illustrates the power of organizing, creating The National Diaper Bank Network, which has given out more than two hundred million diapers since it started. Diaper cost for the poor illustrates the often hidden problems that government is failing to address with its botched policies.

But ultimately, poverty is a problem that can be easily and quickly solved, but only by government taking bold action. The best thing is that solving poverty would have enormous positive economic consequences for the country as a whole. Our collective political stupidity in failing to properly address poverty is mind boggling.

How the US Senate Cripples the Federal Government

April 6th, 2021

Kill Switch; The Rise of the Modern Senate, Adam Jentleson, 2021

Harry Reid with Jentleson

Jentleson was an aide to former Democratic Senate majority leader Harry Reid of Nevada.

James Madison

The first black slaves arrived in Virginia in 1619, one year before the Mayflower. This book is primarily the story about how white men, terrified of the possibility that they would one day be in the minority, fought a four hundred year war to assure that despite their inevitable eventual status as a minority could still find ways to maintain control of the US government. Their first attempts to create such a government resulted in the Articles of Confederation and Perpetual Union which went into effect in 1781. This confederation of states was so dysfunctional because of minority obstruction due to the super-majority requirements that a new basis of government was required. A convention was called in 1787 and a new form of government under the Constitution was formed in 1789. James Madison and Alexander Hamilton in the Federalist Papers called for a government based exclusively on the principal of majority rule. To get the support of southern white slaveholders (white supremacists) the great compromise was to create a senate where each state was allocated two senators serving for 6 year terms with 1/3 being elected each 2 years. In 1789 Virginia was 14 times the population of Delaware. Today California is 70 times the population of Wyoming making the US Senate the most malapportioned legislature in the world. Another part of the great compromise was to reserve super-majorities for impeachment, treaties with foreign nations, and amendments to the Constitution. The signers believed they had created a Senate where the majority ruled. Time has proved them wrong.

Slavery is a positive good John C Calhoun

In the nineteenth century, obstructionist minorities invented the filibuster to give themselves the power to defy the majority. In the twentieth century, under the banner of “unlimited debate”, southerners made the filibuster into a super-majority hurdle.

From the end of reconstruction in 1877 until 1964, the only bills that were ever stopped by filibuster were civil rights bills.

The Johnson Treatment

Lyndon Johnson and Harry Reid created leadership structures capable of making the formerly leaderless institution march in lockstep behind a leader’s agenda…Mitch McConnell paired those tools of control with the filibuster to give reactionary, wealthy, white, anti-choice conservatives (WWAC) minority veto power over everything the majority attempts to accomplish.

After two successive elections (2004-2008) in which broad, diverse majorities of voters had delivered unmistakable rejections of Republican governance, McConnell was claiming equal standing for a group of forty-one Republicans he led—of whom thirty-six were men and thirty-nine white.

Over the past few decades, changes to the Senate’s rules have meant that senators representing as little as 11 percent of the population can deliver the obstructionist agenda these white, conservative voters desire, blocking progress across most issues…This group is not just a minority, it is a super-minority.

The new rules and procedures rendered the old-style talking filibuster (Mr Smith Goes to Washington Movie 1939 James Stewart) antiquated. While there were now multiple tracks, there was still only one Senate floor. When a senator blocked one track with a filibuster, the Senate switched to another track to move forward with other business; the moving track became the main track, and the filibuster got pushed from the floor…The silent filibuster is also the result of leaders coming to rely on what are known as “unanimous consent” agreements of UCs…a UC is an all-encompassing agreement that governs every aspect of the Senate floor; when votes will occur, what amendments will be voted on, how long each vote will last, and so on.

With the UC the Senate can hold twenty votes in twenty minutes, or set the vote threshold at ten votes to pass a bill. The downside is that a single senator can block any UC.

Obama had promised to fix our broken politics, but the modern Senate made it easy for McConnell to impose gridlock.

The 2010 Citizens United v. Federal Election Commission Supreme court decision unleashed massive secretive outside money increasing midterm election funding from $70 million to $310 million, most of it flowing rightward. The 2010 midterms saw the ascendance of the disorganized Tea Party joined by the well organized and funded Koch brothers political machine.

Merrick Garland nomination

He (McConnell) had the foresight to open the floodgates to corporate cash, and to use the blockade of Garland (Obama Supreme court nominee) to unify the Tea Party base with the GOP establishment. He pioneered the blanket deployment of the filibuster, far beyond anything contemplated by previous leaders. But McConnell followed generations of white supremacist southern obstructionists who had come before him. Ever since John Calhoun set foot in the Senate, they fought against Madison’s vision of a majority ruled institution, forging new ways to impose their will on a country where progress threatened their power.

No One is Illegal Anti imperialist Organizing in Canada

March 16th, 2021

Undoing Border Imperialism, Harsh Walia, 2013



Walia refers to North America by its folklore Native American name Turtle Island. She refers to Vancouver as Indigenous Coast Salish territories. The No One is Illegal (NOII) movement often chants No One is Illegal, Canada is Illegal. Walia is a long-haul anti imperialist revolutionary with impressive intellect. Highly recommended but wish the publisher, AK Press of Oakland (Edinburgh) had not produced a pocket version with unreadably small print. Phoenix Library has only one copy of this important book.

On many days, fighting against border imperialism is like swimming in glue or grieving against gravity. But I remember all the battles we have won and the shifting terrain for migrant justice movements that has centered the voices and experiences of our immigrant, refugee, and non status communities within the broader social movements. In the words of Davis, “What we manage to do each time we win a victory is not so much to secure change once and for all, but rather to create terrains for struggle.”

Within movement building, the strengthening of external alliances and facilitating internal leadership both require a strong grounding in antioppresssion analysis and practice. Antioppresssion analysis attempts to examine and address the varied – often unintentional and invisible – effects of systemic marginalization and differential power dynamics between individuals, groups, and communities by providing a a critical analysis of the intersecting lived realities of race, class, gender, sexuality, and ability.

“Democracy is not, to begin with, a form of State. it is in the first place, the reality of the power of the people that can never coincide with the form of a State. There will always be a tension between democracy as the exercise of a shared power of thinking and acting, and the State, whose very principle is to appropriate this power.”- Jacques Ranciere Democracy is not, to begin with, a form of State

“What we want is democracy and inclusion of all – not in a nation, a state, or an identity that always presupposes exclusion – but in a life in common.” – Carlos Fernandez, Meredith Gill, Imre Szeman, and Jessica Whyte, Erasing the Line, or, the Politics of the Border.

Why don’t we alter the frames of the question, asking, instead, what feminism actually means and whether feminism, both as a political movement and analytical tool, is amenable to Islam and religious identity and practice? Anti imperialist movements reject the white man’s (and woman’s) burden – or what author Teju Cole characterizes as the “White Savior Industrial Complex” – represented by state interventions and certain progressive movements, to rescue women, children, and queers from their so called backward traditions. By challenging the ideologies of superiority and uniformity underlying cultural imperialism, anti-imperialist movements diversify and hence decolonize our understanding of how coercion is experienced.

Is Progressive Capitalism Possible

January 28th, 2021

People, Power, and Profits, Progressive Capitalism For An Age of Discontent, Joseph E. Stiglitz, 2020

Stiglitz is an optimist believing that the enormous concentration of wealth and income (23 people own 50% of the world’s total wealth) can be corrected with a more equal distribution brought about by political action. Thomas Piketty shares Stiglitz’s concern with income and wealth inequality but Piketty’s optimism is based on the study of history and how fast enormously significant and rapid changes have occurred in the past. It’s unclear what the basis for Stiglitz’s optimism is. He talks extensively about how unhappy large majorities of American citizens are, but how this can be translated into meaningful political change is unclear given how broken our current political system is.

Progressive International Elizabeth Goméz Alcorta Yanis Varoufakis Noam Chomsky

Japanese Translation

By 2018, those soaring ideas seem finally to have crashed to Earth. The 2008 financial crisis showed that capitalism wasn’t all that it was supposed to be–it seemed neither efficient nor stable. Then came a rash of statistics showing that the main beneficiaries of the growth of the last quarter century were those at the very top.

The elites had ignored the plight of too many Americans as they pushed for globalization and liberalization, including the financial markets, promising that all would benefit from these “reforms”. But the promised benefits never materialized for most citizens. Globalization hastened de industrialization, leaving behind a majority of citizens, especially the less educated, and of these, especially the men.

Financial market liberalization led to the 2008 financial crisis,the worst economic downturn since the Great Depression that began in 1929. Yet while tens of millions around the world lost their jobs, and millions of Americans lost their homes, none of the major financial executives who brought the global economy to the brink of ruin were held accountable. None served time; rather they were rewarded with mega-bonuses.

No wonder that in the aftermath of the economic failures we have described…there developed a skepticism of the elites and of the knowledge institutions from which they had supposedly derived their wisdom (Chicago School)…good academics had pointed out that globalization could actually lead to lower wages of unskilled workers…unless the government took strong counterveiling measures. They had pointed out that financial liberalization would lead to instability.

Hayek Friedman Reagan Thatcher
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…Swedes knew that a prosperous country required a high level of public expenditures, on infrastructure, education, technology, and social protection, and that the government needed revenues to sustainably finance these expenditures.

The truly greedy and shortsighted in the 1 percent have come to understand that the globalization, financialization, and other elements of the current economic rulebook are not supported by the vast majority of Americans…these super rich have thus formulated a three part strategy: deception, disenfranchisement, and disempowerment.

A misshapen economy creates misshapen individuals and a misshapen society

In economics,it will require both regulating the market and doing what the market can’t do. We will have to get over the shibboleths that markets on their own are self-regulating, efficient, stable, or fair, or that government is inevitably inefficient…we have to save capitalism from itself. We have to construct a new social contract that enable everyone in our rich country to live a decent, middle-class life.

Nor is an economy doing well if GDP goes up, but meanwhile the environment is deteriorating and resources are being depleted. A country living off the past and not investing in the future–or destroying its children’s environmental heritage–is one in which the generation is doing well at the expense of its descendants.

Finance was central to the creation of today’s economic, social, and political malaise: in the economic crisis that America endured for almost a decade as well as in the increase in inequality and the slowing of growth. Resources–including some of the most talented young people–went into finance rather than into strengthening the real economy.

The bank bailout of 2008 itself showed the power of the banks. They had caused the crisis, yet government provided massive largess to the banks and the bankers–without any sense of accountability for the crisis they had created, and with miserly help for the workers and homeowners who seemed but collateral in the financier’s war of greed.

Over the past half century, (some) economists have come to a deeper understanding of the circumstances in which some form of collective action is needed to ensure the attainment of societal objectives–and which markets by themselves fail to produce efficient or fair outcomes…in the absence of regulations, individuals will fail to take into account the cost of their pollution in their economic calculus. Market on their own produce too much pollution, inequality, and unemployment, but too little basic research.

Banks know how to take advantage of others through predatory and deceptive lending. Large banks engage in excessive risk-taking, knowing that they are too big to fail, so that if they run into a problem, they will be rescued.

There can only be trust if there is a belief that the political system is fair, and that our leaders are not just working for themselves. Nothing destroys trust so much as hypocrisy and gaps between what leaders promise and what is delivered…We had created a system where the inequalities in justice seemed as wide as those in income, wealth, and power. No wonder that so many Americans were angry.

Restraint to Reclaim the Internet

October 31st, 2020

Reset: Reclaiming the Internet for Civil Society, Ronald J. Deibert, 2020

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Deibert is professor of Political Science and founder and director of the Citizen Lab at the Monk School of Global Affairs and Public Policy, University of Toronto. He is also co-founder and a principal investigator of the OpenNet Initiative and Information Warfare Monitor projects. He was one of the founders and former VP of global policy and outreach for Psiphon.

A central theme of this book is the growth and dominance of Surveillance Capitalism by a handful of enormously rich and powerful companies and individuals.

Today it is virtually impossible to protect yourself from privacy encroachment via the Internet even using tools like Tor or end to end encryption like that found on Signal and WhatsApp. When Citizen Lab researchers cross international borders they must totally erase their Chromebooks to prevent seizure of their work. Much of Citizen Labs work is uncovering security and privacy vulnerabilities in existing Internet products such as Zoom with vulnerable camera and microphone control and the big hack of 2020. A huge problem with the Internet is its dependency on multiple layers of independently developed software deployed without adequate attention to security issues and problems. Governments may compound the security problem by requiring exploitable back doors, promoting faulty encryption that they can break, or the forced disclosure of encryption keys as a precondition for use in their jurisdictions.

Using Privacy Badger, Deibert found fifteen trackers on LinkedIn and a comparable number of trackers on the New York Times “Privacy Project” site.

As I write this book, the nerves of our World Brain are vibrating with full-on assaults on truth, science, ethics, and civility.
It’s a perfect storm–tools that enable precise details about people’s preferences and habits; Sophisticated machines that can swiftly analyze and then manipulate data as points of leverage around human emotions; unethical companies willing to do anything for a profit; and clandestine government agencies that lack public accountability but do have big budgets and a blank cheque to use social media as an experimental laboratory for their dark arts. The potential implications of this perfect storm should be profoundly unsettling for everyone concerned about democracy, the public sphere, and human rights.

Receiving special attention here is Isreali-based NSO Group and their flagship spyware Pegasus which the Saudi government used to spy on Saudi dissident and exile in Canada student Omar Abdulaziz and his friend Jamal Khashoggi. Citizen Lab had a bead on the number of Pegasus infected phones and realized that one of those phones was in Montreal. Going door to door with a short list of Saudi dissidents in Montreal, they uncovered the needle in the haystack Omar Abdulaziz and were able to confirm that his phone was infected. It is more than likely that information from this infected phone informed Saudi intelligence of Omar’s conversations with Khashoggi and may well have led to Khashoggi’s assassination by MBS.

Deibert estimates that 90% of the most active campaigners in the 2011 Arab Spring have vanished, in large part due to the use of NSO Group’s spyware.

Citizen Lab was able to infect an Iphone with Pegasus spyware in a laboratory environment and to reverse engineer Pegasus itself.

The spyware was extraordinarily sophisticated; it included exploits that took advantage of three separate flaws in Apple’s operating system that even Apple was unaware of at the time…After disclosing the vulnerabilities to Apple, which pushed out a security patch to more than one billion users, and publishing our report on targeting Mansoor, we reverse engineered Pegasus and began scanning for and monitoring NSO’s infrastructure and government client base.

Finding exploitable flaws in operating systems can be sold for as much as $1 million.

Also receiving special attention is China’s security apparatus courtesy of the Chinese government obsession with the Tibetan refugees settled in Dharamsala particularly with the Dalai Lama. Deibert representing Citizen Lab made numerous trips to Dharamsala and had a personal audience with the Dalai Lama. Citizen Lab’s history studying GhostNet goes back to 2009 when China’s large-scale electronic espionage program used to spy on individuals, organizations, and governments was discovered. The threat actors breached 1,295 computers in 103 countries over a two-year period, predominately focusing on governments in Southeast Asia. Citizen Lab’s first report on GhostNet was issued in 2009.

…recent years have brought about a disturbing descent into authoritarianism, fueled by and in turn driving income inequality in grotesque proportions and propelling the rise of a kind of transnational gangster economy. There is today a large and influential class of kleptocrats spread across the globe and supported by a professional service industry of lawyers, shell companies, accountants, and PR firms, the members of which move seamlessly between the private sector and agencies of the state…They thrive by victimizing innocent others, undermining individuals and organizations that seek to hold them to account, and using the power of the state for personal gain. There is no jurisdiction that is immune to corruption and authoritarian practices–only greater or lesser degrees of protection against them.

…In fact, the most disturbing dynamics are playing themselves out within normally liberal democratic countries. Hyper-militarized policing practices that draw on big data and AI-enabled surveillance tools are creating states on steroids…Meanwhile the constraints on abuse of power seem quaint and old-fashioned, as if constructed for a different time and context. We now have twenty-first century policing practices with nineteenth and twentieth century checks and balances.

The growing critical commentary on social media and surveillance capitalism is at a stage similar to the environmentalism of the 1960s and 1970s. The works of Shoshana Zuboff, Siva Vaidhyanathan, Bruce Schneier, and others are, in this respect, the social media equivalent of Rachel Carson’s Silent Spring, Barry Commoner’s The Closing Circle, and Paul Ehrlich’s The Population Bomb. They have dissected what’s wrong and have helped wake us up to a serious pathology, but they have yet to carve out a confident alternative way to organize ourselves.

Commenting on Europe’s GDPR and California’s Consumer Privacy Act, Deibert says “However promising, these statutes on their own are not so much prompting a fundamental behavior shift as they are further trivializing informed consent.”

Thanks to the Snowden disclosures, we now know that a flawed encryption protocol was foisted clandestinely on much of the world by the U.S., Canadian, and U.K. signals intelligence agencies, which enable them to crack the code of their adversaries communications. Critical infrastructure throughout the world depended on the integrity of the protocol. It’s unclear how many governments or criminals knew of and exploited it, or whether people were harmed in the process–but it is conceivable some malfeasance took place because of it.

Deibert takes us into a brief history of “republicanism” from the Greeks to the U.S. founding fathers, to today. “…One shorthand way to think about republican political theory is to take virtually anything that Republican Senate majority leader Mich McConnell advocates and think of the exact opposite of that position.”

Critical to the proper functioning of civil society is an educated and fully informed, enlightened citizenry. With this in mind, Deibert presents the mission statement of his own University.

The University of Toronto is dedicated to fostering an academic community in which the learning and scholarship of every member may flourish, with vigilant protection for individual human rights, and a resolute commitment to the principles of equal opportunity, equity and justice…
Within the unique university context, the most crucial of all human rights are the rights of freedom of speech, academic freedom, and freedom of research. And we affirm that these rights are meaningless unless they entail the right to raise deeply disturbing questions and provocative challenges to the cherished beliefs of society at large and of the university itself…
It is this human right to radical, critical teaching and research and which the University has a duty above all to be concerned; for there is no one else, no other institution and no other office, in our modern liberal democracy, which is the custodian of the most precious and vulnerable right of the liberated human spirit.

Herbert Marshall McLuhan (July 21, 1911 – December 31, 1980) was a Canadian philosopher, whose work is among the cornerstones of the study of media theory. He joined the University of Toronto in 1946 and taught there until his death. Harold Adams Innis (1894 – 1952) was a Canadian professor of political economy at the University of Toronto and the author of seminal works on media, communication theory, and Canadian economic history.

Ron Deibert follows in an important tradition at the University of Toronto.

US Anticommunist Extermination Programs 1945-2000

September 1st, 2020

The Jakarta Method, Washington’s Anticommunist Crusade & the Mass Murder Program that Shaped Our World, Vincent Bevins, 2020

Zhou Enlai Nehru Nasser Sukarno Nehru

In 1955 President Sukarno of Indonesia organized a conference of the leaders of the non aligned third world nations (former colonies) held in Bandung Java Indonesia. The conference was attended by representatives of 29 former colonial nations. Notable attendees in addition to Sukarno were Jawaharlal Nehru of India, Gamal Abdel Nasser of Egypt, and Zhou Enlai of China. The core principles of the Bandung Conference were political self-determination, mutual respect for sovereignty, non-aggression, non-interference in internal affairs, and equality. US Secretary of State John Foster Dulles (older brother of Allen Dulles) was strongly opposed to the conference. The Bandung conference represented the high point of the attempt to forge cooperation among non aligned third world nations.

This book features two contrasting Americans, Frank Wisner who worked for Allen Dulles in the WWII OSS and after at the CIA as Dulles’ master of covert (black ops) operations until Wisner killed himself in 1965; and Howard P. Jones, who served as US Ambassador to Indonesia from 1958 to 1964 and as Chancellor of the East West Center University of Hawaii from 1965 to 1968. President Truman wanted the CIA to serve as intelligence gatherers only, so Allen Dulles maneuvered Frank Wisner into position as OPC Chief and by 1952 OPC was operating 47 overseas stations operating out of US embassys and consulates and employed 3000 people. Wisner is the mastermind behind the early 1953 Iran coup (executed by Kermit Roosevelt) and the Guatemala coup of 1954 and every black ops through the 1964 Brazilian coup and the 1965 Indonesian coup.

Unlike Wisner, who was a die hard crusader, Jones had a completely different approach to the rest of the world. Rather than viewing every situation in terms of a black and white global struggle, he sought to engage deeply with the complexities of each situation.

Sukarno with Jones

Jones played an important role in repairing the damaged caused to United States-Indonesian relations by the Eisenhower Administration’s covert support for the failed PRRI/Permesta regional uprisings in Sumatra and the Celebes. Following the capture of an American pilot Allen Lawrence Pope (in 1958) who was participating in a Central Intelligence Agency (CIA) black op in support of the Permesta rebels, Jones portrayed Pope as an American “paid soldier of fortune” and expressed his regret at the involvement of an American.

JFK traveled widely after WWII, visiting Indonesia twice. When JFK became President he told Jones that Jones was solely in charge of relations with Sukarno and Indonesia. Reeling from the Bay of Pigs disaster, JFK no longer trusted the CIA and wanted Jones to have a hand free of interference from CIA black ops. After JFK’s assassination, LBJ, with almost no international experience but listening to JFK’s holdover advisors, stopped all cooperation with Sukarno and recalled Ambassador Jones. The CIA now had a free hand to move forward with overthrowing the Sukarno government and attacking the PKI communist party of Indonesia, at the time the third largest communist political party behind China and the Soviet Union. The coup began on Sept. 30, 1965 and on October 2, an unknown (except to key US policy makers) army general Suharto took over the government. On Oct 5, Ambassador Howard Green cabled the State Department:

Spread the story of PKI’s guilt, treachery and brutality (this priority effort is perhaps most needed immediate assistance we can giver army if we can find way to do it without identifying it as solely or largely US effort). .. The army now has the opportunity to move against Communist Party if it moves quickly…”It’s now or never.”

On Oct 29 Frank Wisner killed himself.

On Nov 22, D.N. Aidit, leader to PKI in Central Java was arrested and executed. The military reported and Newsweek published Aidit’s confession that the PKI planned to take over the country. His confession was impossible and a part of an anticommunist black propaganda operation.

In Jan. 1966, Bobby Kennedy was the only American politician to speak up:

We have spoken out against the inhuman slaughters perpetrated by the Nazis and the Communists. But will we speak out also against the inhuman slaughter in Indonesia, where over 100,000 alleged Communists have not been perpetrators but victims

What followed was a state sponsored massacre and genocide of a million Indonesians, many ethnic Chinese. These events are largely unknown in the US although a 2012 documentary The Act of Killing and a companion 2014 documentary The Look of Silence raised awareness for some Americans and others around the world. Indonesia is the only country that engaged in genocide and never attempted an accounting or reconciliation.

…in the years 1945-1990, a loose network of US-backed anticommunist extermination programs emerged around the world, and they carried out mass murder in at least twenty-two countries. there was no central plan, no master control room where the whole thing was orchestrated, but I think that the extermination programs in Argentina, Bolivia, Brazil, Chile, Columbia, East Timor, El Salvador, Guatemala, Honduras, Indonesia, Iraq, Mexico, Nicaragua, Paraguay, the Philippines, South Korea, Sudan, Taiwan, Thailand, Uruguay, Venezuela, and Vietnam should be seen as interconnected and a crucial part of the US victory in the Cold War… The men carrying out purposeful executions of dissidents and unarmed civilians learned from one another. Sometimes they even named their operations after other programs they sought to emulate. I found evidence indirectly linking the metaphor “jakarta”, taken from the largest and most important of these programs, to at least eleven countries. But even the regimes that were never influenced by that specific language would have been able to see, very clearly, what the Indonesian military had done and the success and prestige it enjoyed in the West afterwards.

Following are the conclusions of Harvard historian Odd Arne Westad:

We can see the Cold War as the global circumstances under which the vast majority of the world’s countries moved from direct colonial rule to something else, to a new place in a new global system. If we view it this way, then there is not a simple winner/loser binary between the United States and the Soviet Union. In the third world, there were many paths each country could take; more importantly, most of them are still on the specific path that was shaped and taken during the Cold War

The primary subject of this book is the CIA led mass murder programs designed to eliminate communist and any left leaning populations, but Bevins does spend some attention on the enormous economic pressures the US is able to exert on any government it is trying to undermine. The combination of trade policy, withholding of capital investment and International Monetary Fund (IMF) Neo-Liberal lending can bring any third world economy to its knees without any resort to CIA inspired mass murder programs. Neo-Liberal policies first found their experimental base in the 1972-3 Chili coup when several Chili native Chicago School graduates took charge of Chili’s economy under Pinochet and invited their professor Milt Friedman to advice them. Since that time, Neo-Liberal Chicago School economics have dominated most of the first world approach to the third world and Southern Europe and Ireland.

This book is very personal to this reader. In June 1965, I arrived as a graduate student grantee at the East West Center to work on a masters degree in International Relations with a goal of becoming a State Department diplomat. Chancellor (Ambassador) Howard Jones arrived at the East-West Center a month later.
Under the grant, students from the US and Asia study at the University of Hawaii for one year and then are granted a one year field trip in Asia or America. I passed the foreign service exam in Hawaii and was scheduled for an oral interview in Karachi Pakistan. There were a number of students from Indonesia at the Center and we all socialized so I was somewhat aware of events in Indonesia as they unfolded.

Hotel Indonesia Kempinski built by Sukarno in 1962

When I left Hawaii, I had heard that as many as a half million Indonesians, many of them of Chinese ancestry had been killed. Sometime in late 1966, I arrived in Jakarta for a couple of week visit. I was met by an American from the Embassy who claimed to be there by chance. I am sure he was sent specifically to escort me. He insisted I was required to stay at the Intercontinental Hotel (five star, now Hotel Indonesia Kempinski) and was required to arrange any travel through the official travel agency located in the hotel’s arcade. The nightly room cost alone put a huge dent in my monthly travel stipend. Then I got lucky. The young Indonesian woman at the travel agency, realizing I knew Indonesian students studying in Hawaii arranged a great itinerary; by bus and train to Bandung, then on to Yogyakarta (the old pre-colonial capital). During the train trip to Yogyakarta, I met a young, Dutch trained military officer who was on his way to his wedding. He invited me meet his beautiful fiancee and to the reception, an Indonesian feast. From there I traveled by bus to the coast where I boarded a WWII landing craft to cross to Bali. All hotels were Dutch colonial era with ceiling fans. In Bali, plans were underway for a massive tourist buildup with an enlarged airport and numerous beachfront hotels. Outrigger canoes were arriving from Hawaii and Hawaiians were busily training Balinese for the expected tourists. There were nightly gamelan tourist performances in Denpasar but if I walked away from town guided by the gongs, I could find natural events in the nearby villages. I met an engineer living in a beachfront cottage who was working on the airport expansion. I then flew back to Jakarta where I explored for a few more days. At no point did anyone mention the killings. Bevins says that one of the Bali tourist hotels is called Ku De Ta, which he thinks may be Indonesian humor. It is possible this hotel and others have been built on mass beach front burial grounds. Bali experienced the highest level of killings per capita anywhere in Indonesia.

I met other US diplomats on my travels and quickly concluded that the State Department was not for me. One of my professors in Hawaii was a Bengal Communist who introduced me to several Indian Communist Labor leaders. I met one in Delhi who told me about a labor demonstration scheduled for that day. I got a bicycle rickshaw and dropped by the demonstration on my way to an evening party at the US Embassy. The demonstration was met by armed police who opened fire and killed a number of demonstrators. That evening I asked a reporter from Time Magazine and several diplomats about the demonstration and the killings and no-one had heard anything. A month later, while I was in Calcutta, a Communist labor leader told me about an upcoming general strike. A few days later, Calcutta was completely shut down by a massive, coordinated labor strike. In the 1967 general election the Communist Party won a majority in the state of Kerala. India somehow was spared the “jakarta” mass extermination experience. I later met diplomats and their wives in Katmandu who were all miserable and disappointed with their career paths. I never showed up for my Karachi interview and have never regretted that decision.

John Maynard Keynes vs laissez-faire: a history

August 11th, 2020

The Price of Peace; Money, Democracy, and the Life of John Maynard Keynes, Kachary D. Carter, 2020

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Three Conscientious Objectors in 1915 Bertrand Russell, John Maynard Keynes, Lytton Stratchey

As a freshman at Cambridge University, Keynes was invited to join a secretive club, the Apostles, a sort of graduate seminar and dinner party where one member would present a paper. Keynes represented a new generation of Edwardians, leading a sexual revolution with Lytton Strachey, contrasting with the older Victorians like Bertrand Russell. Stratchey wrote of Keynes to Leonard Woolf in 1905, “He analyses with amazing persistence and brilliance. I never met so active a brain (I believe it’s more active than either (G.E.) Moore’s or Russell’s)…he perpetually frightens me.” Bertrand Russell wrote: “Keynes’s intellect was the sharpest and clearest that I have ever known. When I argued with him, I felt that I took my life in my hands, and I seldom emerged without feeling something of a fool.” An artistic grouping, Bloomsbury was born around 1905 at the house where Virginia (Woolf) and her sister Vanessa lived. Apostles Keynes, Leonard Woolf, Lytton Stratchey, E.M. Forster, Clive Bell and others moved to London. In 1906 Keynes took a job at the India Office where he worked on Indian currency and monetary policy.

In 1914, as WWI started, an obscure genius known to some in government from his India Office days, John Maynard Keynes, was summoned to London by Treasury and the Bank of England. Witnessing banker’s pursuit of their own narrow concerns during a bank run crisis, where Bankers focused on their own short-term pecuniary profit, abandoning all thought of “the honour of our old traditions or future good name”, Keynes concluded that political oversight of the bankers was needed. Keynes conceived a solution which Treasury and Parliament blessed that foreign bills could be redeemed for gold but domestic needs including those of the banks would be met with a new alternative paper currency. The plan worked and the run was stopped.

Keynes was invited to Paris for the WWI treaty of peace negotiations. Disturbed by the Allied demand for massive reparations that were unrealistic , Keynes proposed that Germany be allowed to issue bonds guaranteed against default by the Allied governments. Keynes was not privy to the negotiations drawing new borders and breaking up the Ottoman Empire so doesn’t appear aware of the division of oil reserves among the Allies. When Wilson rejected Keynes “Grand Scheme”, Keynes resigned from the peace negotiations and penned maybe his most influential work in 1919, “The Economic Consequences of the Peace” which Carter describes as:

…provincial, shortsighted, vicious, and in many respects deeply unfair polemic. It is also a masterpiece and very likely the most influential work Keynes ever put his name to—a furious tirade against the autocracy, war, and weak politicians. It is at once a howl of rage directed against the most powerful men in the world and an ominous prophecy of the violence that would again sweep the continent in the years to come.

Keynes wrote:

The resulting international system created at Versailles was extremely fragile and would only function if workers believed in it, and workers would not believe in it unless it worked. Break the collective faith in a better tomorrow, and workers will walk off the job, riot in protest, or worse.

The principle of accumulation based on inequality was a vital part of the pre-war order of Society and of progress as we then understood it. This principle depended on unstable psychological conditions, which it may be impossible to recreate. It was not natural for a population, of whom so few enjoyed the comforts of life, to accumulate so hugely. The war has disclosed the possibility of consumption to all and the vanity of abstinence to many.

Bolshevism in Russia was already known to all as an alternative to La Belle Epoque. All over Europe, but particularly in Germany conditions were ripe for the rise of a strongman. Without jobs, food, a sense of purpose, and confidence in a better tomorrow, Europe was already on the path to another war.

Keynes formalized his political theory of economics with three lectures in 1926 “The General Theory of Employment, Interest and Money“,”The End of Laissez-Faire“, and “A Short View of Russia“. Overlooked in Britain even though Bloomsbury loved them, they formed the core of a unique, practical political theory that the United States would apply on a vast scale during the great depression and WWII.

In 1930, Keynes published “A Treatise on Money” an assault on the ability of central bank interest rates to affect investment. Keynes suggested that the state spend money on public works since domestic investment was the problem. This direct assault on laissez-faire caused Austrian Friedrich von Hayek to pen two part indictment of the book. Milton Friedman later claimed von Hayek encourage a do nothing policy that did harm by recommending that “you just have to let the bottom drop out of the world.” Keynes himself responded to von Hayek; “one of the most frightful muddles I have ever read.”

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Franklin D. Roosevelt in his inaugural address in 1933 said

Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men…They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish…The money changers have fled from their high seats in the temple of our civilization. We may now restore the temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

In his first 100 days FDR created the FDIC, the SEC, the TVA, and the Agricultural Adjustment Administration.
Felix Frankfurter, a friend of Keynes and appointee to the US Supreme Court in 1939, delivered a letter from Keynes to FDR and arranged meetings for Keynes in 1934 with key administration players not totally on board with Keynesian ideas. One player Keynes met was John Kenneth Galbraith who was running the office of price administration. Galbraith described the meeting as the Pope visiting the lowly village priest. Keynes largely found himself preaching to the choir.
FDR met Keynes and thought him politically naive about the President’s relationship with Wall Street. FDR believed a banking industry hostile to his reforms was driving up interest rates on government debt by sitting out Treasury bill auctions. “There is a practical limit to what the Government can borrow– especially because the banks are offering passive resistance in most of the large centers,” Keynes did make progress with Fed Chairman Eccles who understood the need to keep interest rates low to help the government spend its way out of the Depression.

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In 1936 Keynes published his most important work “The General Theory of Employment, Interest and Money“, a work that Carter calls the most important work in economics in 160 years, to be compared with the monuments of Aristotle, Thomas Hobbes, Edmund Burke, and Karl Marx.

It is a theory of democracy and power, of psychology and historical change, a love letter to the power of ideas. The book is dangerous because it demonstrates the necessity of power. It is a liberation book because it re-framed the central problem at the heart of modern economics as the alleviation of inequality, pivoting away from the demands of production and the incentives facing the rich and powerful that had occupied economists for centuries. It is a frustrating book because it is written in novel abstractions, argued in convoluted sentences and dense equations. And it it a work of genius because it proves a simple truth that, once offered, seems obvious: Prosperity is not hard-wired into human beings; it must be orchestrated and sustained by political leadership.

Keynes said of the genius of Sir Issac Newton:

Newton could hold a problem in his mind for hours and days and weeks until it surrendered to him its secret. Then being a supreme mathematical technician he could dress it up, how you will, for purposes of exposition, but it was his intuition which was preeminently extraordinary…The proofs, for what they are worth, were, as I have said, dressed up afterwards–they were not the instrument of discovery.

Explaining his own method in The General Theory Keynes says:

The object of our analysis is, not to provide a machine, or method of blind manipulation, which will furnish an infallible answer, but to provide ourselves with an organized and orderly way of thinking out particular problems…Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and inter-dependencies of the real world in a maze of pretensions and unhelpful symbols.

The term macroeconomics hadn’t even been coined. Keynes not only invented modern economics, he invented the modern economist and placed him at the top of the new intellectual power structure. The book is a collaborative work done by the Cambridge “Circus” an almost cult like group with its own private language. The two most important contributors beyond Keynes were Joan Robinson and Richard Kahn. Carter says Robinson is the most important economist never to have won a Nobel prize in economics. Two of her students Amartya Sen and Joseph Stiglitz were honored with the Nobel prize. In fact she was only named full professor at Cambridge in 1965, thirty years after publication of her most significant work for which she is not credited. Carter likens Joan Robinson to Rosalind Franklin who discovered the double helix of DNA and was never recognized. Joan Robinson’s published contributions to economics continued until her death in 1983. Much of the The General Theory is incomprehensible. The book is difficult and obscure because Keynes wanted it to be. Its sheer ugliness created a small industry of interpreters. Two economists won Nobel prizes for interpreting the work.


<> <> Joan Robinson and Richard F Kahn

Keyesian economics found its first real world application during the FDR years. For Joan Robinson “The economic theory which was developed in America was a return to pre-Keynesian doctrines that smothered everything important in Keynes.” For Richard Kahn, the re-engineering of The General Theory into mathematics was a Faustian bargain–a fatal turn that would ultimately lead to Keynes being discredited.

In June 1942, Keynes was rewarded for his service with a hereditary peerage. On 7 July his title was gazetted as Baron Keynes, of Tilton, in the County of Sussex.

Maynard’s wife Lydia was a principal ballet dancer with Ballets Russes under Diaghilev and partnered with Nijinsky

Lydia partnered by Vaslav Nijinsky
There is a youtube video of Lydia dancing with George Balanchine in 1929.

Bretton Woods agreement 1944-1972 Lydia was 5’0″ Maynard was 6’7″

In 1944 Keynes attended the Bretton Woods conference in New Hampshire to hammer out a new international economic system. The Mount Washington Hotel overlooked the Ammonoosuc River where Keynes’s wife Lydia bathed nude each morning.
Keynes called for a new Supernational Bank to regulate the global money supply, currency, and trade flows. This international central bank would issue “Supernational Bank money (SBM) to national central banks like the Federal Reserve, the Bank of England, and their other counterparts throughout the world. These national central banks would borrow SBM from the Supernational Bank as a matter of course as they conducted their ordinary monetary policy operations.
The Supernational Bank would allow nations to grapple with domestic problems without resorting to deflation. Nations would never have to worry about running out of money in an emergency, because the Supernational Bank would always be there to provide money on reasonable terms. No government would have to intentionally create unemployment to resolve a currency or trade problem. Under the old system, when loans became unavailable for any reason–war, banking instability, bad monetary policy, a stock market bubble, or a simple disinterest in foreign lending–the only way a country running a trade deficit to fix its situation would be to force down the price of its goods in foreign markets. Ultimately it would resort to deflation and mass unemployment to do so. Keynes argued the surplus nations were not injured by countries that ran deficits. While the deficit country ran up large financial debts, the surplus country enjoyed fat export trade that employed its workers and raised the standard of living.
What the world also needed was an international authority that could punish countries for running a persistent trade deficit or a persistent trade surplus. Keynes proposed an International Clearing Union (ICU). Each participating central bank would open an account with the ICU. International trade payments would be made through those accounts, using a new international currency called Bancor that the ICU would create at will. When a country ran a persistent deficit or a persistent surplus, the ICU would require it to revalue its currency to bring the system back toward balance. The revaluations would be up or down to a limit of 5%.

Unfortunately for Keynes’s vision, Harry Dexter White, the US representative of the FDR administration arrived at Bretton Woods with a plan already formulated and the US had the clout to get its way. Keynes’s plan had been rejected before the conference even began. Instead all nations that joined the Bretton Woods project would agree to make their currencies convertible into dollars at a fixed exchange rate. The dollar only would be convertible into gold at a price later fixed at $35 per ounce. An International Monetary Fund (IMF) would be established to provide emergency loans in a crisis. A World Bank would be created to assist with post war reconstruction.

Instead of an international regulatory apparatus, Keynes got a gold standard with a bailout fund. White spend much of his time at the conference trying to secure USSR participation. He failed and the USSR never ratified the Bretton Woods agreement. Britain was broke and Keynes could do nothing about the outcome of the conference. Keynes died on Easter Sunday 1946.

The backlash against FDR’s New Deal and War powers was led by the bankers, wall street, and the corporate American elite. Undermining Keynesian economics combined the McCarthy era Communist scare accusations, the rise of the Ayn Rand inspired libertarian movement emphasizing unfettered individual freedom (freedom from government interference), and the resurgence of laissez-faire (market fundamentalism) economics centered at the Chicago School with von Mises and von Hayek and the London School of Economics.
Chicago School graduate Paul Samuelson wrote the textbook Economics: An Introductory Analysis, first published in 1948 that became the principal introduction to economics for generations of American students including this reader. While incorporating some Keynesian ideas, Samuelson was careful to couch these ideas in the long tradition of market fundamental economics. Some labeled Samuelson a neo-Keynesian .

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In 1958 Galbraith published his sensational The Affluent Society where the economics of scarcity had been replaced by an economy of abundance able to meet the needs of everyone with advertising used to encourage further consumption. Galbraith noted that great inequality still existed in America. The book had an immediate and wide spread impact on economic discussion which Carter calls similar to the impact of Thomas Piketty’s Capital in the Twenty-First Century, a history of inequality of income and wealth in France, Britain, and America. Galbraith was perhaps the best known member of the JFK brain trust. Expecting a cabinet appointment, Galbraith was instead named ambassador to India, then under Nehru and the Congress party. Galbraith was a vocal opponent of US involvement in Vietnam so likely JFK wanted to isolate him to quiet his opposition.

In 1972, Nixon shocked the world announcing the end of the post war Bretton Wood system. The gold standard was abandoned and massive monetary and fiscal stimulus programs were launched with low interest rates and business tax cuts. A 10% import tariff would be imposed and price controls put into place. Carter doesn’t discuss it but the US had moved from a trade creditor nation to a trade deficit nation by the late 1960’s. Strongest of the Creditors were Germany and Japan. Sometime about 1971, a young London School of Economics educated Paul Volcker penned a three page secret memo to his boss Henry Kissinger suggesting that foreign nations should be encouraged to have the United States recycle their surpluses through Wall Street. Yanis Varoufakis claims to have seen this secret memo, but the reality is that approximately 70% of all foreign trade surpluses, including China, are now recycled by the United States. Thus a new industry, financialization, which today dominates the US economy was created.

Volcker was named Fed Chairman by Jimmy Carter in 1979. He promptly raised interest rates to an unprecedented peak of 20%. Volcker had turned the Federal Reserve into the primary instrument of US economic policy to fight inflation. Further creative uses of the Fed would be used in the 2008 banking crisis.

The final nails in the coffin of New Deal economic mechanisms occurred under Bill Clinton taking the advise of Bob Rubin and Larry Summers. The Glass-Steagall act was repealed allowed the merger of banks with wall street to create too big to manage financial monsters. Then Clinton declared that there was no need to regulate Wall Street created derivatives that were at the heart of the 20008 sub prime mortgage crisis. Carter points out that the credit default swap (CDS) was the most explosive of these new derivatives. The CDS was a form of insurance whereby a default of an insured derivative would pay the holder. There was no requirement that the entity taking out the insurance actually owned the derivative insured.

The Obama administration was economically scammed by Tim Geithner and Larry Summers. The big banks were bailed out, Glass-Steagall was not reinstated, no banker was prosecuted for their illegal activities. And, according to Carter, 9.3 million lost their homes with government doing virtually nothing to preserve home ownership. A $75 billion plan designed to save 4 million homes never happened. The money was allocated but never spent. The family loss of homes contributed greatly to the increase in unemployment during this time.
Democratic Representative Dennis Cardoza of California in 2011 exclaimed:

For the life of me, I can’t figure out why a community organizer who says he cares about families, who says he cares about communities, has turned his back on one of the biggest problems in America.

Keynes believed that an enlightened management of the economy to produce widespread prosperity and job security would alleviate the problems of unrest that lead to revolutions either communist or fascist. Today the world has the highest level of inequality ever measured.

In 2008, Joseph Stiglitz calculated that if the $48 trillion global economy were simply divided among every one of its inhabitants, a family of four world receive $28,000, high enough to end poverty in every country. Carter calculated that the 2018 economy of $85.8 trillion economy and 7.5 billion people would yield an income of $45,000 for each family of four. “The economic problem of humanity is no longer a problem of production but of distribution–inequality.

Keynes was a conscientious objector dedicated to the elimination of the causes of war. Yet the history of the US after WWII was one of almost continuous real armed conflict and a continuous succession of virtual wars: the cold war til 1992, the war on drugs, and the war on terror after 9/11, The later two were not wars against state actors but against amorphous largely hidden force scattered globally. State actors found themselves invariably drawn into all these virtual wars often with terrible consequences. In real shooting wars with armies, Korea was fought to a draw; Vietnam was lost at a cost of more than 1 million lives; Afghanistan and Iraq never end; Syria and Libya appear to be without resolution. In foreign policy, the US, starting in 1953 and continuing to this day, assist in the overthrow of governments in country after country. The US today is the world’s greatest threat to stability and peace.

As Piketty documents, we are living in a period of unprecedented inequality of income and wealth. Carter concludes, the US government has remained, with the exception of Bill Clinton, stubbornly Keynesian but Keynesian principals are applied only during ever escalating economic crises. Applying Keynesian solutions in government policy sporadically and blind to people’s suffering serves only to rescue the oligarchs from their own incompetence and crimes. This malignant phenomenon has been named “Corporate Socialism“. The failures of the 2008 banking crisis highlighted the bankruptcy of Market Fundamentalist views of the world. Without extensive, enlightened, humane state management, unfettered capitalism is capable of generating enormous instability and suffering that only the state can correct. As an optimist foresees, the global economy, properly managed by the state, is capable of reducing income and wealth inequality and improve the lives and quality of life of everyone on earth, and eliminate war.

A bit of trivia; Keynes was 6’7″, Galbraith was 6’9″ and Volcker was 6’7″.