Not unexpectedly, it required a major disaster to awaken former Federal Chairman, Alan Greenspan, to the long overdue reality that the free-market, free enterprise economic model fails to trickle down wealth to the poor and near poor but concentrates wealth at the top.

The free market model or Neoliberalism was developed by Friedrich Hayek and Milton Friedman at the Chicago School of Economics Chicago where it became an axiom that the private sector was the key to long-term economic stability.  Neoliberalism has gradually become the prevailing economic conventional wisdom in the United States and has been foisted on most countries through pressure from the United States or through the IMF and World Bank, America’s secret instrument of exploitation.

Simply stated, free-markets, a system with as little government interference as possible in the operation of market mechanisms, have been allowed to operate with increasing privatization and deregulation and a minimum of government transfers.  In theory, when free-market economics operates at peak efficiency, the so-called fabled “invisible hand”, coined by Adam Smith, was empowered to distribute wealth to all deserving citizens.  The theory of the “invisible hand” must be one of the most distorted ideas in the history of economics.  Adam Smith did not mean nor imply that people should be deserted by the government to fend for themselves but rather that all peoples’ needs must be met.

The deregulation of the banking system and the privatization of the Federal Reserve in 1913 are at the root of the current financial crisis and have paved the way for unfettered greed  to trigger the virtual collapse of that system.  The collapse spells the end of any credibility for the notion that by investing wealth at the top it will automatically reach the bottom.

Managing the money supply, interest rates, and exchange rates, or the monetary system, is a vital function in the economy and should serve the public interest in a democratic society.  Since it is privately owned, the Federal Reserve is almost entirely independent of the government consisting of twelve regional Federal Reserve Banks located in major U.S. cities in twelve regions and organized in a similar fashion to private banks whose shareholders consist of private banks in each district.

As well, funding for the Federal Reserve System is independent of the government and depends on interest earnings on its portfolio of investments.  Its decisions do not need to be ratified by either the president or Congress.

Instead of protecting consumers in recent years, the Federal Reserve has adopted policies that have supported large financial institutions in their frenzied, greedy pursuit of wealth ultimately pulling the rug out from under the economy.  While deregulated financial institutions were offering mortgages at initially low interest rates to high risk borrowers, the Federal Reserve was expanding the money supply and lowering interest rates to facilitate this feeding frenzy.  Eager homebuyers flocked to their nearest bank to borrow money at the ostensibly bargain basement interest rates and without the need to meet stiff credit requirements.  Mortgage-debt in 2000 was $4.8 trillion while in 2006 it rose to $9.3 trillion.  When borrowers began defaulting on their mortgages, banks that had used the mortgages as collateral to borrow for investments in other risky instruments were suddenly unable to meet their obligations.  The downward spiral into total collapse was well underway.

If the Federal Reserve had been a public institution, it might have implemented a different set of policies to avert the disastrous bubble that has now burst.

Another way in which the Federal Reserve has become complicit in the financial crisis is through its non-interventionist approach to the proliferation of very risky financial instruments known as derivatives.  With risky mortgages backing further risky, highly-leveraged investment in derivatives, the calamitous outcome was inevitable.

In addition, deregulating the financial system created the conditions which engendered the financial crisis by transforming commercial banks, whose primary purpose was to serve as a safe place for consumers to deposit their money, into investment institutions where risk-taking for profits was the central objective.  Now, consumers hard-earned money was now being deposited into apparently safe institutions when, in fact, it had indirectly become the source of funds for greedy investors who were willing to take risks to earn large profits.

Regulation of the banking system was solidified in the Glass-Steagall Act of 1933 which prohibited a commercial bank from owning speculative financial institutions.  It imposed restrictions on the integration of banking, insurance and stock-trading companies to protect the consumer from losing their money through risky investments.

Since the 1980s, the banking and investment sector has been pressuring Congress to repeal the Glass-Steagall Act to afford them the opportunity to increase their profits by using depositor’s money to back risky investments.  Their efforts succeeded when Congress passed the Gramm-Leach-Bliley Act in 1999 which repealed Glass-Steagall and allowed commercial bankers to underwrite and trade instruments of a highly risky nature.  It also lifted most restraints on the monopolization of the institutions in the financial sector of the economy.

To compound the problem of deregulating banks, Congress passed an amendment to an appropriations bill which deregulated derivatives.  Derivatives are an extremely risky investment which is highly leveraged.  Banks would now be free through their investment arm to risk depositors’ money in an investment that should be reserved for those who want to gamble large profits at the risk of large losses.

By deregulating the banking system, freeing derivatives from regulation, and creating a privately owned Federal Reserve System paved the way for the financial crisis which is not only destabilizing the American financial system but the global one as well.  Deregulation and privatization are two of the main pillars in the free market economic system and their failure is proof that the non-wealthy members of society are adversely affected.  In this case, it is clear that privatization and deregulation were not intended to benefit the non-oligarchical members of society but to create opportunities for large accumulations of wealth.  The only hope of ending the financial crisis and avoiding another one is to reform the system to protect all the people.

State of Darkness: US Genocides since 1945.

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Apparently 37,276,000 (U.S. Census Bureau, 2007) Americans are not considered to be human, have no value and hence unworthy of any consideration in the formulation of policy.  Just as cats and dogs are regulated by the government for unacceptable behavior but are not the recipients of any government transfers, those living in poverty are perpetually mired in a morass of neglect and indifference by all levels of government who often discover that the only free “public housing tract” (Mumia Abu Jamal) available to them, is prison.

Partly to blame for this paucity of government assistance is the neoliberal ideology which dictates that the “invisible” hand of the omnigenerous, omnibenevolent, and omnicompassionate market will distribute sufficient wealth to those who are deserving and hardworking.  Perhaps those who worship at the alter of free markets ought to read The Wealth of Nations more carefully and add The Theory of Moral Sentiments also by Adam Smith to their reading list.  Since poverty is a social construct as demonstrated by those countries who view the poor as people who are victims of the system, both leadership candidates should commit themselves to policies that transcend tokenism.  For example, Barack Obama, arguably the more progressive of the two candidates, should rethink is constant and annoying reference to the middle class when discussing the hardships which Americans are undergoing.

Poverty in the United States is not an inevitable outcome of capitalism as is evident when the poverty rates of Western industrialized countries are compared.  Examining child poverty rates in 26 OECD countries in 2007, based on children living below national poverty lines, reveals that the United States has a rate of 21.9%, second last to Mexico.  Poverty rates in countries who actually believe in egalitarian economic policies include: Demark (2.4%); Finland (2.8%); Norway (3.4%); Sweden (4.2%); Switzerland (6.8%); and France (7.5%).  Egalitarian economic policies are not based on communist ideology but rather on a sense of fairness, decency and compassion.

One of the measures related to poverty is the unemployment rate which is much lower in many OECD countries than in the United States although it is important to bear in mind that the unemployment statistic itself is very flawed, for example treating the working poor as if they earn a sufficient income to support their families.  According to the OECD, in August 2008, the U.S. has an unemployment rate of 5.68% compared to Austria at 3.30%, Denmark at 2.9%, the Netherlands at 2.60%, Korea at 3.2%, Japan at 4.15%, Australia 4.08%, Luxembourg at 4.2%, and the Czech Republic at 4.30%.

Hidden behind these statistics on unemployment are the 75,873,000 (Bureau of Labor Statistics, 2007) people who are working at or below the minimum wage.  Since the recent increase to $5.85 per hour, the minimum wage had been stuck at $5.15 an hour since 1997 which adds up to $10,712 a year or $6,000 below the poverty line.  In fact, the minimum wage lags far behind cost of living increases given that the current minimum is $3.50 lower in purchasing power since 1960.

One of the critical explanations for the depth of poverty in the United States is the ideological opposition to transfer payments for individuals who are struggling.  This opposition is a consequence of the religious commitment to Neoliberalism which encourages each individual to maximize his wealth to benefit society as a whole.  It must be noted that there is no similar anathema to transfers to defense industries or to corporations in the form of tax breaks, subsidies, deregulation, guaranteed loans, and bailouts.  Adam Smith’s invisible hand seems to slap those in need and reward those who are wealthy while applying the dogma adhered to rigidly by the disciples of Milton Freidman.

According to OECD statistics for 2003, the United States ranks 28th out of 31 countries in the percentage of GDP devoted to social spending such as healthcare, education and pensions.  Only Ireland, Korea and Mexico spent a lower percentage of GDP on social spending.  On the other hand, Sweden spent 31.3%, France 28.7%, Germany 27.3% and Belgium 26.5%.   Low social spending explains the high poverty rate in the U.S. as well as the very high infant mortality rate.  Out of 18 European countries, Japan and Canada, the U.S. had the highest number of deaths per 1000 live births (OECD, 2007).  The U.S. had 6.9, Finland 3, France 3.8, Germany 3.9, Norway 3.1, Portugal 3.5 and Sweden 2.4.

Despite the statistics exposing the severity of poverty in the United States and an understanding of the unconscionable mental, physical and emotional consequences of poverty, not to mention the long-term costs to society, past presidents and the two candidates for the next presidency seem to assign a very low priority to this tragic problem.

Obama’s solutions to reduce poverty include raising the minimum wage to $9.50 by 2011.  First of all, $9.50 will mean that a minimum wage worker will still be below the poverty line as well as falling further behind the cost of living for three more years.  It seems that when the financial and banking sector are in a state of crisis, it only takes weeks to agree to a $700 billion package but when the problem is poverty there doesn’t seem to be enough money to fund the necessary programs and the poor will just have to wait until 2011 to scrounge around for the few crumbs that Obama can scrape together.

Obama promises to reform the Child and Dependent Care Tax Credit but families that pay almost nothing in taxes because their income is too low will barely benefit.  His promise to give families up to 50% credit for their child care expenses is too vague to offer any hope.  Many European countries and several provinces in Canada pay close to 100% of day care expenses for those who need it.

The real problem is that the government has no real intention to redistribute wealth in any meaningful way.  Redistribution of wealth is well beyond the boundaries of legitimate economic policy in American political culture.  It’s radical, extreme and subversive.  It’s probably a threat to the security of the United States.

State of Darkness: US Complicity in Genocide since 1945

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As voters in the United States are entertained either by the minutia of electoral politics anticipating the next gaffe by Sarah Palin or the latest frivolous update on the artificial and superficial lives of magazine-created celebrities, people in Africa are suffering from a myriad of crises for which the Western World is largely responsible and which we now ignore at our own peril.  Both the media and the two candidates for president ignore Africa because the public has not been stirred by enlightened discourse on events on that continent.

The dystopian catastrophe in Africa has been bypassed by the egregiously tendentious news coverage of the mainstream media resulting in an uninformed public.  One of the reasons that the corporate media is underreporting the cataclysm in Africa derives from the fact the US and other European countries are inextricably complicit in the myriad of humanitarian disasters from which these countries suffer.  Having exploited and wreaked havoc in these countries, the US, for example, discards them as quasi-colonies which have outlived their usefulness.

The African crises are multifaceted and involve human rights violations, starvation, disease, rape, child soldiering and conflicts on a massive scale.  Without the attention of the major powers, an apocalyptic tragedy is inevitable.  Exploited by the major powers, and the United States in particular, Africa has been plunged into an abyss so deep that lifelines are almost out of reach.  U.S efforts to alleviate the suffering are largely inadequate given the scale of the problem and given American responsibility for causing the suffering in the first place.

According to the UN Food and Agricultural Organization (FAO), 27 sub-Saharan nations, where 200 million people are malnourished, are in desperate need of help.  As well, the FAO issued a warning about the tragedy that will result from ongoing conflicts, civil strife, refugee movements, and returnees in 15 of the 27 nations.  To demonstrate the predominant ignorance in the United States about the humanitarian crisis in Africa, two of the 27 countries, the Congo and Somalia, will be examined in detail.

The crisis in the Democratic Republic of Congo (DRC) has been referred to as the “Forgotten Crisis” or the first “World War” in Africa.  American interventions in the DRC are, to a large extent, responsible for the conflicts, rapes, disease and starvation which reached its apogee between 1998 and 2002 when 3.5 million people died and 2.3 million displaced.

American involvement was critical in 1960 when Patrice Lumumba became the first democratically-elected head of State in the DRC.  Lumumba vowed to remain neutral during the Cold War and was committed to implementing social and economic policies to improve the lives of the Congolese people.  Unfortunately for the DRC, Lumumba was unacceptable to American leaders who first collaborated in the assassination of Lumumba, then installed and supported the brutal, corrupt dictator, Mobutu Sese Seko, for 32 years.  Between 1965 and 1991, Mobutu received $1.5 billion in U.S. economic and military aid in exchange for American corporations gaining control over more of Zaire’s (Mobutu renamed the Congo) resources such as gold, diamonds, coltan, cobalt and uranium.  Mobutu’s plundering of the treasury enriched his own wealth which ranked third in the world, while one-third of Zaire’s citizens died from malnutrition.

In 1996 and again in 1998, Ugandan and Rwandan forces invaded the Congo with the support of the United States to steal resources from the Congo.  A UN study released in April 2001 reports that Uganda and Rwanda were looting the resources of the Eastern Congo and illegally exporting them to Western nations.  In addition to the theft of resources, Ugandan and Rwandan troops slaughtered civilians and raped women and children.  According to a Harvard Press Release in 2007, “In some regions of the Eastern DRC, as many as 70% of girls and women of all ages have been raped or sexually.

mutilated…Many women are abandoned by their families and become homeless and destitute, often with their children in tow.”

The invisible heavy hand of American intervention in Somalia can be traced back to Cold War geopolitics but deepened in 1980 when the U.S. signed an arms deal with Somalia which granted American forces the right to use Somalia bases.  As well, Somalia received $680 million in aid, approximately $200 million of which was designated for military purposes.  Siad Barre, the military dictator at the time, spent about one-fifth of Somalia’s budget on arms.  Human Rights Watch reported that during the late 1980s, U.S.-supported Barre killed 50,000 civilians and forced another million to become refugees.

After Barre’s ouster in 1991, the Islamic Courts Union (ICU), a group of Sharia courts with grassroots support were opposed by clans consisting of warlords.  All opposing sides were unable to agree on the composition of a new government.  A civil war ensued between the ICU and US-sponsored warlords leaving Somalia without a stable government and 350,000 dead from disease, starvation, and civil war.

In its infinite wisdom, the U.S. launched one of its notorious “humanitarian” interventions in Somalia in 1992 which resulted in disaster when the American doctrine of exceptionalism justified the attempted overthrow of the government in Mogadishu resulting in between 6,000 and 10,000 deaths of mostly women and children.   Called “Operation Restore Hope”, its ostensible purpose was to deploy 30,000 marines in Somalia to protect food convoys from the violence of the ongoing civil war.  In fact, the U.S. Administration feared that the ICU was a terrorist organization and might form the government in Mogadishu.  In addition, American oil companies such as Amoco, Chevron, and Conoco had exclusive rights to explore for oil on tens of millions of acres of land in Somalia.  Significantly, Conoco offered to hand over its Mogadishu corporate headquarters for use as the American embassy.  As well, Somalia’s 1,800 mile coast is strategically valuable as a citadel to oversee the shipping lanes between the red sea and Indian Ocean used by the Middle East to ship its oil.  “Operation Restore Hope” ended in humiliation and defeat for American forces but there was no winner as Somalia was plunged into a paroxysm of violence.

Consequently, for the next 15 years, Somalia was plunged into a civil war in which no combination of factions could form a stable government and where all peace agreements or truces were ephemeral.  During this period, thousands of civilians became refugees and thousands more were murdered by one of the many factions vying for power.

After both UN and American forces had withdrawn from Somalia in 1995, Mohamed Farak Aidid declared himself president but continual fighting among factions resulted in his death on August 1, 1996.  The same pattern repeated itself with different factions of warlords opposing the Islamic courts in a deadly struggle to establish supremacy.  In June 7, 2006, Islamic leaders were in control of Mogadishu but were challenged by a counter-offensive of warlords who were supported by the U.S.  American support was fuelled by fear that Somalia might become a Muslim nation.  As well, the CIA was working with Ethiopia who was preparing to invade Somalia for the purpose of destroying the ICU.

With the support of the United States, Ethiopia launched an attack on Somalia by bombing several towns, followed by a number of battles between the Islamic and Ethiopian troops.  By January 1, 2007, the Somali government and Ethiopian troops destroyed the last major stronghold of the ICU.

Exacerbating the violence, U.S. airstrikes began attacking targets where suspected terrorists where located.  As practiced in Afghanistan and Iraq, airstrikes minimize American casualties but are anything but surgically accurate, killing mostly civilians in their wake.  In January 2007, U.S. bombers attacked retreating Islamists, reminiscent of the attacks on Iraqi soldiers retreating from Kuwait.

Ongoing civil war and Ethiopian invasions have been responsible for starvation, rape, assaults, refugees, child soldiering, not to mention the obstacles faced by those who have been attempting to provide humanitarian aid.

Interminable violence forced 400,000 people to abandon their homes in Mogadishu before 2007, whereas in the next year, a further 700,000 became refugees.  UN agencies currently estimate that in Mogadishu alone, sixty percent of its residents have become refugees.

The food crisis has been triggered by increased transportation costs, conflict related disruptions in the distribution of food, rising food prices and massive displacement of Somalis due to ubiquitous violence.  According to UN surveys, acute malnutrition ranges between fourteen percent and twenty-five percent depending on the region.  Estimates on the number of people in need of humanitarian assistance lies between 1.5 and 2 million people.  Amnesty International reports that U.S.-backed Ethiopian troops have routinely slit the throats of civilians, brutally raped women of all ages, and destroyed entire neighborhoods suspected of harboring terrorists.

By supporting the warlords and Ethiopians, the United States shares responsibility for the humanitarian crisis.  American support consisted of supplying air and naval power to the Ethiopian military and deploying Special Forces Units on the ground in order to ensure the neutralization of the Islamic Courts Union.

Twenty-five other African nations are experiencing similar tragedies bur Americans are unaware of their connection to the problems in Africa.  For example, thirty percent of the children in the Congo are not in school but mining for coltan which is an essential ingredient in the manufacture of electronic products.  As we consume more and more computers, cell phones, and televisions, more children will be needed to mine coltan while, at the same time, greater violence will ensue as nations compete for another ever-diminishing resource.  Despite the scope of the humanitarian crisis, Americans are unable to recognize the relationship between their obsession with consumption and entertainment and the suffering of the people in Africa.

Latest Book: State of Darkness: US Complicity in Genocides since 1945

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Despite the unfortunate fact that presidential debates depend mostly on impressions, images and perceptions, the real purpose, namely the substance of the debating points of each candidate, is unattainable in a medium that has been referred to the “glass teat” or one that encourages us to “amuse ourselves to death”.  A careful examination of the memorized answers and retorts to each innocuous question reveals the appalling absurdities of the policies advocated by each candidate.  In addition, the format of the debate and the choice of moderator preclude any real truths surfacing from these artificial exchanges.

McCain’s response to the question about how Main Street will recover from the bailout to the large institutional investors, was a proposed a payout to mortgage holders in danger of losing their homes.  This response is absurd on two levels.  The bailout was a monstrous failure for the very reason that the package was handed out to the very institutions that caused the crisis in the first place and not to the people who were suffering as a result.  McCain was proposing that on top of the $700 billion gift to the corporate criminals whose recklessness and irresponsibility created the crisis, he would pay out further funds to those who held tenuous mortgages.  Did anyone bother to ask about his plan to finance this proposal given the huge debt and deficit dragging down the economy?  Furthermore, did anyone point out that McCain had been constantly accusing Obama of being a liberal over spender and that McCain’s package would cost far more that Obama’s earmarks.

Obama correctly identified healthcare as a right but did not even hint at a universal single-payer system which has been adopted by all other Western democracies.  There was no reference to a plan to rescue those living in poverty or near poverty who can’t afford medical insurance.  Obama seems to divide the American people into two classes; the wealthy and the middle class.  Apparently the 85 million people living in poverty or near poverty are somehow not deserving of even an honorable mention in Obama’s policies.

On the question of energy, both candidates are living in the past advocating clean coal, nuclear energy and offshore drilling.  Conservation and alternate forms of energy were limited to a cursory mention rather than the main focus of an energy plan for the future.

Foreign policy is where both candidates fail miserably to understand the realities in Iraq, Afghanistan and Pakistan.  Neither seems to realize that the Afghani people now support the Taliban because they are attempting to drive the murderous, heathen occupiers from their land and that the Taliban are gaining strength and control more than 50% of the country.  Furthermore, America’s allies, the warlords, have not improved the lives of women or anyone else for that matter.  At least the Taliban stopped the opium trade whereas the warlords have captured 90% of the world market.  In addition, it is astounding that neither candidate seems to be aware of the negotiations in Saudi Arabia between the Afghanistan government and the Taliban.  Encouraging and supporting the peace negotiations would seem to be a far more effective and civilized tactic rather than sending more troops to kill more innocent people.

Setting aside McCain’s reference to “that one” and his passive aggressive attacks on Obama and Obama’s composure and ability to focus his eyes on McCain the entire time during which he was speaking, the substance of the debate could induce a nation-wide state of depression and longing for a third candidate who is critical of corporate power and the proclivity of both Obama and McCain to prostrate themselves at the alter of corporate money and influence.   Wait a minute.  There is such a candidate, namely Ralph Nader.  Unfortunately, the perception of the American people is that he is a lunatic and radical who is not to be trusted.  Is something upside down?

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