An Untold Story

In his new book, Bad Money, Kevin Phillips says that the staggering transformation of our financial institutions between 1987 and 2007 is one of the “greatest stories never told.” Among other things that period saw the financial sector of the economy replace manufacturing as the largest segment of the Gross Domestic Product (GDP). This was due in part to the increasing deregulation of the financial sector allowing the major financial institutions to invent new “products” with no regulatory oversight and evaluation. Among these products was the bundling of mortgages, which were then sold to investors as securities. The debts of millions of homeowners were thus commodified and placed on a speculative market. Speculation is the preeminent source for disassociating finance from reality. My question is, “Was this an unforeseen accident?”

In an article in the April 28, 2008 Dissent Mag blog by Michael Hudson (Dr. Hudson was Dennis Kucinich’s Chief Economic Advisor) quotes the Wall Street Journal as follows, “Even the Wall Street Journal expressed surprise. Jon Hilsenrath noted the seeming irony: “In August 1999, as the tech-stock bubble was worsening, Alan Greenspan stood before central-banking colleagues in Jackson Hole, Wyo., and argued it wasn’t the central bank’s job to prevent asset bubbles. All it could do was clean up the mess after the bubble had burst.” On the contrary, the commentator noted, the Fed could have slowed the bubble by raising interest rates and boosting margin requirements on stock trading during the tech bubble. Mr. Greenspan could have heeded the advice of Fed Governor Ed Gramlich to slow and regulate subprime mortgage lending. Instead, Mr. Greenspan’s–and Mr. Paulson’s–idea was simply to clean up the bubble’s debt aftermath by bailing out Wall Street.” My point is that Greenspan knew exactly what the trouble was and elected to do nothing about it. Why? I believe it is clear that Greenspan callously allowed the financial community to milk every last dollar out of a failing market at the expense of millions of ordinary people. Contrary to the practice of corporate financiers, Republican politicians and the Democratic Leadership Council, the function of Greenspan’s Federal Reserve agency was to protect the American citizens from financial rapaciousness, not to help the financial community destroy the well being of millions and the credibility of their government. And that is my point. I suspect that this debacle has as at least one of its goals to further weaken government and thereby the only leverage the vast majority of Americans have for dealing with the enormously powerful multinational corporations that would dominate them and use them and their resources for their own purposes – not incidentally as soldiers.

I am also reading Broken Government, a book by John Dean. Dean describes in considerable detail how the Republicans have systematically and in defiance of Constitutionally mandated separation of the powers of government acted with an arbitrariness not seen before. The nexus of Dean’s concern is the disregard for “process” in the conduct of our governing bodies and that a proper concern for process is essential to a democratic government. He argues that the current belief in Washington and in the mainstream media is that citizens are not interested in process, only in results, actual or supposed. He offers substantial evidence that, to the contrary, people are very interested in the process of government. The failure of the media and politicians to focus on process has allowed the Republicans to massively and recklessly reorganize the federal government in the interests of corporations and to suppress a protesting public. I ask why this radical shift to unprecedented and unconstitutional arbitrariness in the exercise of our government? You may recall that the House under Newt Gingrich literally shut down the Federal government by denying any funding. This was unprecedented and while of short duration caused chaos. Again, under Tom Delay, Democrats representing at least half the population were routinely shut out of legislative committee meetings and were not informed of arbitrary votes, sometimes held at midnight, so that only Republicans were present. Notice that all trade agreements, and in this with the complicity of the DLC, have been negotiated without the representation of ordinary citizens. Labor unions were kept out of the process. These agreements, created at the behest of the corporate world, can overrule laws passed by a country’s representative legislature. Does democracy count for so little in what is supposed to be its most congenial home? And once more, when Dick Cheney met secretly with oil executives to divide up the oil reserves expected to fall under U. S. control with the invasion of Iraq, Cheney refused to divulge the content of those privately-reached agreements on the grounds of executive privilege. Why the pervasive secrecy of the Republican administration? I suggest that these things happened because corporate America wanted to reshape government to serve their interests only, which requires the destruction of democratic government.

My fundamental question is whether there is a connection between the refusal by Alan Greenspan to deal with the mortgage crisis and let the financial corporations reap as much profit as possible on the one hand and on the other the rampant arbitrariness of Republican governance. Could both of these phenomena constitute an effort to create a radically unregulated environment for corporate enterprise. This raises the fundamental question of whether there is a corporate interest in the destruction of our government and its ability to serve the people. This would be more than fascism. This would be the substitution of the top down dictatorial structure of corporations for the bottom up consent of the governed structure of democratic government. With this privatization of government functions everything would be done for profit, which is to say for those with the money to generate that profit. I used to think that corporations wanted to use our government, especially the military, for their own purposes. It now seems to me that they want to replace government by privatizing its functions for profit, including the military.

Grover Norquist, a power in the neocon movement, has openly declared he wants to destroy our government and turn its operations over to the private sector. Given the Republican’s pronounced antipathy to government, what better way to do it then by overburdening it with debt and excessive tax breaks for the wealthy? One of the favorite mantras of the business sector has been the notion of “creative destruction,” which is deemed to be a good thing. Hence we have seen over the last thirty five years or so the repeated arbitraging of viable businesses simply because the purchasing arbitrager saw a way to make money by breaking up a business, i.e. destroying it, and selling its parts. It would not surprise me that the corporate world sees government in much the same light. In this case they would break up government and privatize the pieces all of which would operate for profit. I do not think, in view of all the evidence, ranging from corporate attacks on social security to their domination of foreign governments for resources form oil to bananas, that such an enterprise is beyond multinational corporate consideration and possibly within their current practice.

As an indication of how dangerous this situation can be, not only to our civil liberties and Constitutional rights, but to human lives and the welfare of the planet, it is useful to take into consideration an observation by Kevin Phillips. He notes that Iran and Venezuela have begun to accept euros and yen rather than dollars for their oil. This can be the beginning of a shift away from the dollar as the dominant world currency and with it the power to control world finances. Could this rather than the asserted nuclear weapons capability of a small country be the real source of the call to war against Iran? Note that this call is not only that of Bush/Cheney, but increasingly of Democrats such as Hillary Clinton. We live in VERY complex times and are exceptionally vulnerable to manipulation. In times like these caution and a vigorous demand for truth before action are in order. These are the times that can precipitate monumental disaster.

Bob Newhard

Our Hollowed Out Society

This country in its economics (finance replacing manufacturing), culture (sensations replacing thought) and politics (trivia replacing substance) is a mere shell of its former self. It is the politics that I wish to explore here.

The anomaly is that this country and this planet have never faced a more daunting future and we know it. In the face of this we let the powers that be parade the equivalent of small town gossip as relevant political debate. Do the people of this nation and this world mean so little to our politicians and political parties that they are prepared to write them off to further a blind pursuit of power? As a democratic people we must stop this nonsense. We must define the issues, not the politicians. It is our future not theirs that matters. Our politics refuses to deal with this very real world and this very real future. Why?

In the depths of that question lies the most disturbing and dangerous of realities; a giant nation bereft of purpose except stalking about the earth with the only resource it has left – its military. After sixty plus years of the greatest societal affluence the world has ever known the American people have lost their grasp on reality. They have been saturated with a massive daily dose of delusive advertising (about 3,000 ads a day). Their technology has created a virtual world on television, and increasingly on the Internet, that routinely subverts their connection to reality. The absolute ludicrousness of the April 16^th ‘debate’ between Obama and Clinton amply illustrates this. This want of connection to reality fosters dangerous fantasies, whether of values destructive of human well being (there shall be no abortion or birth control as increasing human populations devastate the planet and destroy the future for their progeny), foreign relations (war is more productive than negotiation.), or politics (spin is more important than truth or relevance.) The danger lurking in this state of affairs is that the American people will either let their very powerful government devastate the rest of the world or, if panicked by the impending chaos, look for a scapegoat, say China and follow some white-horse-mounted deliverer into World War III, which will be the War to End All Wars, because there will be no one left to fight World War IV.

The only reality operative in our society as a whole is the pain and suffering of a declining economy and that for reasons that most American’s cannot comprehend. At least the progressives of the 19^th century understood the source of their suffering. William Cullen Bryant’s “Cross of Gold” speech was directed at the wealthy and the corporations. We no longer have a political party much less a prominent politician who will stand for the people against the wealthy.

One of the missions of progressives is to restore the sense of reality to this society. This is a precondition for any substantive improvement. Unfortunately, if the PDA web site is any indicator, so-called progressive democrats have expressed no outrage at ABC’s Clinton-Obama ‘debate’. These progressives seem too caught up in Democratic Party politics to be outraged at ABC’s deliberate effort to trivialize this country’s politics by substituting school-yard taunting for the massive national and global problems that should be the focus of our presidential debates. My suspicion is that the last thing corporations, including media corporations, want to see is a serious discussion of these overriding issues because such a discussion would inevitably point to corporate front groups such as the World Bank, the IMF and the variety of corporate-dictated trade agreements. Real progressives would be pointing the finger of accusation at the corporate media for this glaring travesty of their legal obligation to provide useful public information in exchange for their very profitable use of the public’s airwaves.

Bob Newhard

The Age of Fundamentalism

For reasons I am not sure I thoroughly understand, fundamentalism has shown up vigorously in this “advanced” stage of human history. It is not just in religion. It also has become predominant in economics and popular culture. It poses, in my judgment, an insidious and significant danger to a democratic society.

Religious fundamentalism is now found world wide. Christian fundamentalism is rampant in the United States, as is Muslim fundamentalism from the Mideast to Indonesia and Western China and Hindu fundamentalism has reversed that society’s effort to be secular. In all of these places it has already produced very destructive conflicts. It is an enemy of reason and science and its dogmatic rigidity makes it extremely inflexible at a time that is, and increasingly will be, demanding societal multiculturalism and reliance on the freedom to think and speak that science demands of itself and of the society that would produce the needed scientists.

In economics we have a rampant fundamentalist “free market” capitalism in which the operating assumption is a rigid laissez faire with no room for the regulation and transfer of wealth to society as a whole rather than a few exceptionally wealthy people. This has resulted in gross inequities and the largest gap between the rich and the poor since the Gilded Age of the late 19^th century. This is an economics that has forgotten its origins in political economy.

In popular culture there is mass participation in violent video games whose violence is justified in the context of good versus evil. Even the police have adopted the good guys/bad guys dichotomy of children. There is no room for the complexity of human beings. They must be classified one or the other. This leads to gross injustice and the largest prison population next to China’s.

As J. B. Bury points out in his book A History of Freedom of Thought, democracy is a very fragile form of government. The vast majority of civilized history has been autocratic. Fundamentalism, by its very nature, is autocratic. The modern surge of fundamentalism can, if successful, return us to a latter day form of the Dark Ages, in which curiosity, the passion for understanding, and the freedom of inquiry and expression they require will be lost. Samuel P. Huntington, who would have us believe in a clash of civilizations between East and West, is mistaken. Our basic problem is the clash of fundamentalism and freedom.

We must understand that fundamentalism, whether religious, economic, political or cultural, is an enemy of democracy and must be resisted wherever it occurs. If American’s understood this they would not be gulled so easily by religious fundamentalism seeking to dominate society under the guise of the freedom of religion. When one’s freedom of religion aims at the submission or demise of other religions, it is no longer operating under the freedom of religion provision of the Constitution.

A further point and one addressed by Sara Robinson in a two part essay titled Two Kinds of Americans: Us Versus Them to be found on the Internet at www.ourfuture.org, is the use of fundamentalism to divide and thereby rule a society. In the essay Robinson details how the Republican Party deliberately departed from a 25 year shared governance in 1968 and set out on a path to gain power by using racist fundamentalism to divide the country and thereby destroy the common good that had been the focus of United States governance since FDR’s New Deal. I strongly recommend reading the essay the second part of which is due to be published on the same web site on Tuesday April 8, 2008.

To my mind progressives have to make fighting fundamentalism in all its forms a focus of their effort. They should no more shy about bringing fundamentalist religion to task for its antidemocratic intentions and practices than they are about fighting fundamentalist economics.

Bob Newhard

Obama and the Ramifications of Racism

In his speech of March 18th Barack Obama opened a gate through which Americans, if they are sufficiently mature, can enter the path to social cohesiveness. The significance of this opportunity can be understood by delineating the profound negative impacts of racism on our society.

When trying to identify and understand these ramifications a useful question is what would America look like if it were all white? Let us begin with social services. Using this test requires absolute honesty in assessing these consequences.

Health care: All modern affluent countries, except the United States, now have some form of national health care. Many have suggested that our lack is due to our rugged western idea of self sufficiency, Why then does Canada, with the same frontier experience, have national health care? I think a better case can be made that it is due to racism. There are too many racists that believe the primary beneficiaries of such a system would be not just the poor, which all countries have, but blacks and by implication any others of different skin hue. It was Ronald Reagan who made political hay by referring to “welfare queens” and thereby soliciting race to attack much needed social services. Would Bill Clinton have been able to convert welfare into workfare if the poor had been all white? Which is to say would compassion, not to mention the need for social stability, not have been extended further if welfare recipients were all white? We have 40 million uninsured children, would that be the case if they were all white? In brief we do not have national health insurance substantially because of racism.

Crime and imprisonment: The proportion of African Americans in our prisons far outnumbers their proportion of the population. Why? First I will suggest, is that it is easier to imprison a black person because of racism. Additionally the majority of those in prison these days are due to drug related incidents. Is it not clear that our drug laws have created a large, but illegal, economy by which the poor can get some of the benefits of a rich society? Is not a substantial portion of the poor black? One need only ask whether if these drug offenders were all white would we have such harsh sentences and such a minor emphasis on remedial treatment? Would we not be much more circumspect in defining drug crimes lest our children wind up in prison? Is there not a lesson to be learned from Great Britain, in which until the influx of dark skinned people from the erstwhile colonies after World War II, the police carried no guns? I think it is clear that crime has been defined and prosecuted by reference to race. We can attribute a substantial proportion of our crime as well as the enormous investment in our prison system to racism.

Education: If this society were all white would we, the wealthiest nation on earth, tolerate the run down schools still found in the separate-but-equal states in the South and dark skinned poor ghettoes of the North? Why the white flight that devastated so many urban schools? A society’s future hangs on the quality of its children’s education, yet we have left this increasingly to private wealth focused on the children of the affluent. What is the real reason for charter schools? Because of racism we are sacrificing the education of our young and the future of our society.

Foreign affairs: If this country can resolve, or at least substantially mitigate, its racism it will then be in a position to resume a leadership role in our planet’s development. We can once again make the Declaration of Independence available as a stimulus for human rights.

The military. After the Vietnam War the American military decided to never again deal with the popular uprising that put an end to their Vietnam enterprise. They persuaded the politicians to authorize an all volunteer military. Among the various nefarious outcomes of that decision, it placed the burden of staffing the military on the poor who, in search of sustenance and a future, saw the opportunity for improving their situation. That the military knew that the burden would fall disproportionately on people of color because of their high percentage of the poor, is evidenced by the vigorous effort they have made against discrimination. The military could not function with the level of divisiveness found in the population as a whole. However, the result is that the people we send to kill and be killed are disproportionately people of color.

Politics: As long as racism remains unaddressed the body politic will remain divided and the common people, lacking the power of cohesion, will remain the manipulated pawns of wealth and its multifarious minions.

This is, of course, just a sampling of the profound consequences of racism for Americans and their society. The price paid in alienation, personal ambivalences and distrust is even more extensively pervasive than the factors listed above. We in the United States constitute a critical experiment as a foretaste of what is going to be required to bring our planet’s population together to solve our mutual problems such as global warming and overpopulation. If mankind cannot make it in this wealthiest of countries, what hope is there for the rest of the world?

Sixty five years ago Gunnar Myral in his epic study for the Carnegie Foundation titled An American Dilemma: The Negro Problem and Modern Democracy pointed out that racism was central to America’s future. It found that the fundamental weakness in the American democracy was the deep conflict between the liberalism expressed in our founding documents and the pervasive role of slavery in the economic development of our society.

I think it is evident that Barack Obama is prepared to lead this nation toward a mitigation of this centuries-old, massively debilitating, affliction. It is possible, if those of good will and good sense are energetic enough, to turn the 2008 election into a process to begin healing this deep wound in our society, which in consequence, would do much to address these other issues that dominate this election.

Bob Newhard

A Nation of War Lovers

While we are kept focused on terrorism both abroad and at home, there is I believe, a deeper reason why our country continues to engage in war. It goes beyond imperialism, beyond fighting terrorism, beyond even an uncontrollable thirst for oil. I suggest the United States and its citizens have become addicted to war. We have become economically, culturally, and psychologically addicted.

We may deny it. But let’s look at the evidence.

Economic addiction

Our economy, to a huge extent, depends upon military expenditures. Straight up, as expressed in the United States budget for 2007, the Department of Defense (A euphemism for what used to be called the War Department.) appropriation is $439.3 billion. However, this does not include that portion of the Department of Energy budget devoted to developing and maintaining our nuclear capability nor does it include the cost of caring for the veterans of our wars in the Veteran’s Administration budget, nor does it include the direct appropriations for the Afghanistan and Iraq wars; this total is about 626.1 billion dollars. All this money, of course creates jobs as it did in Hitler’s Germany. All of these expenditures ripple through the economy providing jobs and income for all kinds of businesses from grocery stores to small tangential manufacturers. I have yet to find a study tracing all the economic implications of the military budget. I think it would show we are far more dependent upon the military than we think we are. To get a feel for the implications of this kind of influence it is useful to think of what our society would look and feel like if those expenditures were directed to the environmental, educational, and social necessities of the United States and the world. All people engaged in such efforts could believe they were contributing to a better world instead of hiding out from the terrorists we continue to produce. Considerations of this sort come closer to getting at the true cost of militarism.

Cultural addiction:

Sixty-six years (1941 to 2007) of a standing army have had deep cultural effects. One study has indicated that the military is the most trusted institution of our society. See a series of recent polls at http://www.pollingreport.com/institut.htm; this despite the distrust of many of the Founding Fathers. A fundamental concern of the Constitutional Convention was the existence of a standing army. The following is from the manual of the U. S. Army Officer Candidate School. “In the Constitutional Convention, there was still traditional fear of a standing army, which excited the opponents of a strong government. In truth, the military clauses of the Constitution follow a cautious compromise course between the hopes of those who favored greater military strength and the fears of those who anticipated a military despotism.”

Popular culture has, through advertising, become a significant influence on young people. In 2006 the military had an advertising and recruitment budget of 1.4 billion dollars. Thus you see frequent ads of tanks galloping over terrain and technological whiz-bang combat environments directed at young people. The Army even has an online videogame (http://www.americasarmy.com/) introducing young people to war and combat. The Marines have an auxiliary called the Young Marines who are clothed in combat fatigues and boots and carry simulated rifles all in the stated interest of developing their character. One can become a Young Marine at age eight. This, I suggest, is pernicious cultural penetration of the worst form, reminding one of the Hitler Youth.

Psychological addiction:

Kurt Vonnegut wrote a piece in 1983 titled The Worst Addiction of Them All. In it he compared the addiction of what he called “war preparers” to that of alcohol and gambling addicts. There is a psychological rush as a new war is prepared for. Barbara Tuchman, in her book on Europe preceding World War I noted that English and German university students in their get-togehers openly acknowledged that they would likely be going to war with each other and viewed it as a great adventure. This nation has been kept on the edge of war or at war for over sixty years. I suggest it has become addicted to the continuing excitement as demonstrated in the best selling videogames.

Some time ago I saw a documentary about a coffee farmer in Africa. He had hired a local tribe to harvest his coffee. However, the men of the tribe soon found cause to go to war with an adjacent tribe leaving the women to (disgustedly) pick the coffee. The documentary showed the men chasing each other with spears in the presence of the women picking coffee. There were deaths involved.

I mention these to illustrate the profound human compulsion for war. However, this inclination has been amplified by technology and in the United States, as earlier in various European countries, by a lust for empire. Initially it did not seem so. Our infant nation had suffered enough at the hands of the British Empire. Washington warned against foreign entanglements. But as population increased and greed found fertile ground in the wilderness to the west we manufactured the myth of Manifest Destiny and set about decimating the indigenous peoples. It did not look like imperialism because it was done within our own self-declared borders. However within thirty five years of the country’s founding we promulgated the Monroe Doctrine by which the countries of the world were notified that we would not tolerate their colonialism in the western hemisphere, in effect declaring the whole hemisphere our colony. We were off to the imperial races. In that short a time we had forgotten what the Founding Fathers understood so well.

What to do? Kurt Vonnegut states that we as a nation should do as alcoholics and gamblers do as the first stage of recovery. We need to admit that we have this addiction. As part of thi, I think the history books we require our children to read should demonstrate the honesty of Howard Zinn’s People’s History of the United States. We should insist on honesty in our media. We should begin to use our resources to improve the lot of mankind, which is the best defense any nation can deploy. Can this be done to any effective extent? After World War II the United States, understanding that World War II was a consequence of the deprivations that the Treaty of Versailles ending World War I imposed upon the German people, created the Marshall Plan. We saw the need for a world body representing all peoples of the world, hence the United Nations. In doing these things we were acknowledging the earlier mistakes. The time is long overdue when we should undertake the same reassessment regarding our propensity toward war.

Bob Newhard

On Having No Good Options in Iraq

It is becoming rather clear that the United Sates has no good option in Iraq. The future, if the United States stays there, will be continued violence. Our presence in any form will be resented. If we leave quite probably tribal and ethnic conflict will break out, perhaps spreading to adjacent countries. What to do? There is enormous gravity to this question. Large numbers of people are likely to be killed and maimed either way. This is a question we all need to explore. As citizens of this presumed democracy that is ours, not just that of the experts, if we are serious about taking our country back. As we consider the matter we should, in my judgment, seek guiding principles and the major steps they entail. Few of us know enough to be specific. The following are some of my thoughts.

First we have to show the world that Bush, by his lying to the American people, did not have their approval for this unprovoked war. Bush’s impeachment is necessary if there is to be any credibility to our intentions and, hence, any chance of mitigating continued violence in Iraq and the Mideast.

Second, having distanced ourselves from that calloused monster, we must use the moral space we create to bring in the United Nations, representing the world community not just the United States.

Third, we must provide funds to repair the damage we have caused. These funds should be administered by the United Nations not the United States to make it clear we are not once again manipulating Iraq’s destiny.

Fourth, we must use our influence in the United Nations to create a conference of Middle East countries, encouraged by the world’s major powers, to develop a plan for Middle East coexistence. This may include formation of a regional trading block using their oil to establish a unified presence in the concert of nations. This would do much, in my judgment, to assuage the harm western countries have done over the last hundred years in treating these people as adjuncts to western imperialism. Such a conference must include Israel, but without United States sponsorship. In this connection the liberal element of Israeli politics should be encouraged by the world community as a way of facilitating the unified presence mentioned above. Where that liberal presence is found in Muslim countries it should also be encouraged. For too long the United States, under the thrall of corporate imperatives for profit, has sided with the conservative elements in these countries. Indeed we overthrew Mossadegh , the popularly elected head of a Democratic Iran and installed the tyrannical Shah to prevent the nationalization of their oil by the Iranians. However, these countries cannot be brought into the world community while practicing the barbarities of Islamic fundamentalism. Similarly, to make ourselves credible in the world community we shall have to demonstrate that the United States is not run by Christian fundamentalists. We will never have the human consensus necessary for world peace from a bunch of religious fundamentalists, whether Christian, Islamic, Hindu, etc. Religious fundamentalism is an enemy of world peace. In brief, the United States, after its egregious attack on Iraq, its abrogation of the Geneva Conventions, its withdrawal from the Kyoto Treaty, its withdrawal of family planning services in a planet being made uninhabitable by overpopulations, and many other violations of common decency, has incurred a great debt to humanity.

It will be said that we cannot do all of this. First of all we should have thought of that before we unleashed our killing machine. Second, it will be said that we don’t have the resources to do this. In that regard we had the resources to rejuvenate Europe after World War II. Third we need to learn to live with much less for environmental purposes. Let us use those savings to restore the basics we have destroyed. Fifth, it will be said that such an effort is far too complex to accomplish. Again, we should have thought of that before we unleashed the war mongers and greed heads on that small nation. This, in my judgment, is what we must undertake if we are ever to be a positive presence in the world.

It will be said that this whole enterprise goes against human nature as we know it Human beings may, on occasion, be moral, but nations never. This level of humility and concern for others cannot be expected of any nation. I suggest that those of this persuasion look honestly at the alternative, keeping in mind what we have done. Obviously the above proposal is imperfect as is and lacks anything approaching adequte detail, but its underlying premise that the United States owes this world’s peoples, especially those of the Middle East an enormous debt is, I think, beyond doubt.

Bob Newhard

Taxing in Defense of Democracy

I take it as an axiom that capitalism and democracy are fundamentally antagonistic. Democracy is a method for dealing with power, which is the substance of government. The primary method for distinguishing one government from another is how the government’s power is allocated. In monarchies and tyrannies the power resides in one person. In oligarchies it resides in a few people. In democracies it is distributed to all the citizens of the society being governed. Capitalism, on the other hand, is based on wealth. Left untrammeled, the wealthy are in a stronger position to acquire more wealth than is the rest of society. Thus the economic processes of capitalism inevitably lead to concentrations of wealth and hence power. Regulation is therefore necessary to insure that capitalism does not destroy democracy.

We are living through an excellent example of this process. Ronald Reagan began his presidency in 1981 with a promise to revitalize the economy by “getting government off our backs”, his slogan for massive deregulation of business. Most economists agree that productivity did increase very substantially and prices dropped. In brief the capitalist economy was substantially set free to operate in its own terms. However, the fiscal value of the increased productivity was very unevenly distributed. Increasingly the wealth generated went to the wealthy and eventually to what some economists now call the super rich. This process has gone on until we now have the largest gap between the rich and the poor since the end of the 19^th century. This mass movement of wealth to the very few resulted in huge investments in the political process by the wealthy. A massive industry of corporate lobbyists developed to target the wealth of the few on the representatives of the many. As a result the government increasingly reflected the desires of the wealthy. Today the process has gone so far that our legislatures increasingly disregard citizens’ expressed desires to pander to the interests of the wealthy. We have just experienced an election in which the electorate strongly expressed its desire to end the war in Iraq, but those elected on this platform have failed to carry out as clear a mandate as is politically possible. Likewise, the demand for impeachment of Bush and Cheney elicited statements from Democratic leaders that they would pursue this objective. Having won election they promptly declared that impeachment was off the table. Finally, after 35 years of largely unregulated capitalism and the creation of an extremely wealthy miniscule minority we have a regime that has and is attacking our democracy as vigorously as Reagan earlier attacked economic regulation. Up to this point we, as a nation, have tolerated the destruction of our liberties and rights at a pace and to an extent not seen before in this society. We can be imprisoned on the say so of one person. We have no assurance of habeas corpus. Citizens are being encouraged to distrust each other as they are told that Al Queada is training Americans for terrorist attacks. We have even reached the point where one Democratic presidential candidate, Hillary Clinton, has called another Democratic presidential candidate Barack Obama “too liberal.” Bush senior demonized “L” word when campaigning against Michael Dukakis . Now we have it being used by Democrats to attack each other. The sum total of this process is that in thirty years we have gone from a functioning democracy to an incipient fascism and the instrument has been wealth. Well over two millennia ago Aristotle argued that the well lived life requires an adherence to “balance.” We do not seem to understand that democracy is in constant tension between the productivity of capitalism and anti-democratic results it will produce if left unchecked. We need in this country to explicitly acknowledge and teach in our schools that a primary function of government in a democracy is to insure that wealth does not become overwhelming and therefore a fundamental responsability of government is to redistribute a democracy-saving portion of the wealth annually generated to the society. This is what European courtiers have done. This is what we need to do.

This is where the issue of taxes, otherwise not that high on the progressive flagpole, becomes very interesting. In brief, how shall we tax to protect and optimize democracy?

Taxation like economics is regarded as a dismal subject. As such it seldom reaches the rear burner, much less the front burner of progressive thinking. This I believe is a fundamental mistake. Conservatives have made taxes a political mantra. Progressives need not only to show the democratic necessity of taxes but their use to improve life and its opportunities for all citizens. We often see taxes as a source of revenue, but seldom as a means for insuring the continuance of democracy.

To my mind what is needed is some reasonably common measure for equitably determining taxable wealth. From this point of view it would be useful to get beyond possessed assets as a focus for taxing wealth. The consequences for the environmental and social costs of wealth need to be factored in. For example, a recent study published in Science News for January 24, 2007 examined the ecological “footprint” of the wealthy nations of the world compared to that of the poor countries and found that the cost to poor countries substantially exceeded their debt to the rich countries. Interestingly, to obtain an equitable basis for making their comparisons, the researchers used a conceptual device known as the international dollar, which adjusts for purchasing power around the world. As an aside Lester Brown has proposed shifting taxes from labor’s income tax to environmental impact which would both slow down that impact and produce funds to begin repairing the damage we have caused.

After World War II many European countries implemented tax programs that insure a reasonable check on excessive growth in wealth. While the effort was to insure that a significant portion of their gross national product went to social programs, including health, education and quality of life programs, it had the effect of insuring continued democracy as well. Taxes were high, but social benefits were extensive. Take home lesson: it was this demand for social services that was resisted by and led to the ouster of Winston Churchill the enormously popular Conservative wartime leader.

An example of how things go awry when tax laws are not adequately focused on preventing excessive wealth accumulation is the tax exemption for mortgage interest. Decades ago this exemption was provided so that poorer people could more easily afford to become home owners. However, because the tax was proportional to the cost of the home and hence the amount of the mortgage, it was used by the wealthy to buy ever more expensive housing, thereby increasing the cost of housing and thus increasingly depriving the less wealthy from access to housing, the exact opposite of the intended outcome. The law, keeping in mind the need to preserve democracy, should have had a declining deductible as cost increased.

Taxing fiscal activities is also necessary to protect democracy because activities, notably investing, can move money and hence power around the globe at the speed of electrons. Keeping wealth in this fluid environment means that the wealthy can suck wealth from a country before its citizens know what is happening. Read the book Confessions of an Economic Hit Man by John Perkins to get a feel for how this is done. This has been a prime feature of institutions such as the World Bank and the International Monetary Fund. By requiring poor countries to accommodate the desires of wealthy corporations in order to get the money they need, they are forced to privatize and thus lose control of major social assets such as wage support, guaranteed retirement benefits, etc. By depriving the poor of their share of the gross national product the wealthy of this world have not only rearranged national economies to benefit themselves, they have also weakened the citizenry’s ability to protect or promote democracy.

It is high time that progressives think out a tax system focused on human welfare. The conservatives continue their anti-tax mantra. Progressives need to demonstrate that the Reaganesque approach caries the seeds of democratic destruction.

Bob Newhard