Empire of Illusion (30 page)

The advantage of false statistics to the corporations is huge. An artificial inflation rate, one far lower than the real rate, keeps down equitable interest payments on bank accounts and certificates of deposit. It masks the deterioration of the American economy. The fabricated statistics allow corporations and the corporate state to walk away from obligations tied to real adjustments for inflation. These statistics mean that less is paid out in Social Security and pensions. These statistics reduce the interest on the multitrillion-dollar debt. Corporations never have to pay real cost-of-living increases to their employees.

The lies employed to camouflage the economic decline have been in place for several decades. President Ronald Reagan included 1.5 million U.S. Army, Navy, Air Force, and Marine service personnel with the civilian work force to magically reduce the nation's unemployment rate by 2 percent. President Clinton decided that those who had given up looking for work, or those who wanted full-time jobs but could find only part-time employment, were no longer to be counted as unemployed. His trick disappeared some 5 million unemployed from the official unemployment rolls. If you work more than twenty-one hours a week—most low-wage workers at places like Wal-Mart average twenty-eight hours a week—you are counted as employed, although your real wages put you below the poverty line. Our actual unemployment rate, when you include those who have stopped looking for work and those who can find only poorly paid part-time jobs, is not 8.5 percent but 15 percent. A sixth of the country was effectively unemployed in May of 2009. And we were shedding jobs at a faster rate than in the months after the 1929 crash.

Individualism is touted as the core value of American culture, and yet most of us meekly submit, as we are supposed to, to the tyranny of the corporate state. We define ourselves as a democracy, and meanwhile voting rates in national elections are tepid, and voting on local issues is often in the single digits. Our elected officials base their decisions not on the public good but on the possibility of campaign contributions and lucrative employment on leaving office. Our corporate elite tell us government is part of the problem and the markets should regulate themselves—and then that same elite plunders the U.S. Treasury when they trash the economy. We insist we are a market economy, one based on the principles of capitalism and free trade, and yet the single largest sectors of international trade are armaments and weapons systems. There is a vast and growing disconnect between what we say we believe and what we do. We are blinded, enchanted, and finally enslaved by illusion.

It was the economic meltdown of Yugoslavia that gave us Slobodan Milosevic. It was the collapse of the Weimar Republic that vomited up Adolf Hitler. And it was the breakdown in czarist Russia that opened the door for Vladimir Lenin and the Bolsheviks. Financial
collapses lead to political extremism. The rage bubbling up from our impoverished and disenfranchised working class presages a looming and dangerous right-wing backlash. I spent two years traveling the country to write a book on the Christian Right called
American Fascists: The Christian Right and the War on America
. I visited former manufacturing towns where for many the end of the world is no longer an abstraction. They have lost hope. Fear and instability have plunged the working classes into profound personal and economic despair, and, not surprisingly, into the arms of the demagogues and charlatans of the radical Christian Right who offer a belief in magic, miracles, and the fiction of a utopian Christian nation. And unless we rapidly re-enfranchise our dispossessed workers into the economy, unless we give them hope, our democracy is doomed.

In his book
Collapse,
economist Jared Diamond lists five factors that can lead to social decay, including a failure to understand and to prevent causes of environmental damage; climate change; depredations by hostile neighbors; the inability of friendly neighbors to continue trade; and finally, how the society itself deals with the problems raised by the first four factors. A common failing involved in the last item is the dislocation between the short-term interests of elites and the longer-term interests of the societies the elites dominate and exploit.

His last point is crucial. Corruption, mismanagement, and political inertia by an elite, which is beyond the reach of the law, almost always result in widespread cynicism, disengagement, apathy, and finally rage. Those who suffer the consequences of this mismanagement lose any loyalty to the nation and increasingly nurse fantasies of violent revenge. The concept of the common good, mocked by the behavior of the privileged classes, disappears. Nothing matters. It is only about “Me.”

As the public begins to grasp the depth of the betrayal and abuse by our ruling class; as the Democratic and Republican parties expose themselves as craven tools of our corporate state; as savings accounts, college funds, and retirement plans become worthless; as unemployment skyrockets and home values go up in smoke, we must prepare for the political resurgence of reinvigorated right-wing radicals including those within the Christian Right. The engine of the Christian Right—
as is true for all radical movements—is personal and economic despair. And despair, in an age of increasing shortages, poverty and hopelessness, will be one of our few surplus commodities.

But our collapse is more than an economic and political collapse. It is a crisis of faith. The capitalist ideology of unlimited growth has failed. It did not take into account the massive depletion of the world's resources, from fossil fuels to clean water to fish stocks to soil erosion, as well as overpopulation, global warming, and climate change. It failed to understand that the huge, unregulated international flows of capital and assault on manufacturing would wreck the global financial system. An overvalued dollar (which could soon deflate); wild tech; stock and housing financial bubbles; unchecked greed; the decimation of our manufacturing sector; the empowerment of an oligarchic class; the corruption of our political elite; the impoverishment of workers; a bloated military and defense budget; and unrestrained credit binges are consequences of a failed ideology and conspire to bring us down. The financial crisis may soon become a currency crisis. This second shock will threaten our financial viability. We let the market rule. Now we are paying for it.

In his book
The Great Transformation
, written in 1944, Karl Polanyi laid out the devastating consequences—the depressions, wars, and totalitarianism—that grow out of a so-called self-regulated free market. He grasped that “fascism, like socialism, was rooted in a market society that refused to function.” He warned that a financial system always devolved, without heavy government control, into a Mafia capitalism—and a Mafia political system—which is a good description of our power elite.

Polanyi, who fled fascist Europe in 1933 and eventually taught at Columbia University, wrote that a self-regulating market turned human beings and the natural environment into commodities, a situation that ensures the destruction of both society and the natural environment. He decried the free market's assumption that nature and human beings are objects whose worth is determined by the market. He reminded us that a society that no longer recognizes that nature and human life have a sacred dimension, an intrinsic worth beyond monetary value, ultimately commits collective suicide. Such societies cannibalize themselves until they die. Speculative excesses and growing
inequality, he wrote, always destroy the foundation for a continued prosperity.

We face an environmental meltdown as well as an economic meltdown. This would not have surprised Polanyi. Polar ice caps are melting. Sea levels are rising. The planet is warming at an alarming rate. Droughts are destroying croplands. Russia's northern coastline has begun producing huge quantities of toxic methane gas. Scientists with the International Siberian Shelf Study describe what they saw along the coastline recently as “methane chimneys” reaching from the sea floor to the ocean's surface. Methane, locked in the permafrost of Arctic land-masses, is being released at an alarming rate as average Arctic temperatures rise. Methane is a greenhouse gas twenty-five times more powerful than carbon dioxide. The release of millions of tons of it will only accelerate the rate of global warming.

Those who run our corporate state have fought environmental regulation as tenaciously as they have fought financial regulation. They are responsible, as Polanyi predicted, for our personal impoverishment and the impoverishment of our ecosystem. We remain addicted, courtesy of the oil, gas, and automobile industries and a corporate-controlled government, to fossil fuels. Species are vanishing. The great human migration from coastlines and deserts has begun. And as temperatures continue to rise, huge parts of the globe will become uninhabitable. The continued release of large quantities of methane, some scientists have warned, could asphyxiate the human species. NASA climate scientist James Hansen has demonstrated that any concentration of carbon dioxide greater than 350 parts per million in the atmosphere is not compatible with maintenance of the biosphere on the “planet on which civilization developed and to which life on earth is adapted.” To halt this self-immolation, he has determined, the world must stop burning coal by 2030—and the industrialized world well before that—if we are to have any hope of ever getting the planet back down below that 350 number. And in the United States coal supplies half of our electricity.

Democracy is not an outgrowth of free markets. Democracy and capitalism are antagonistic entities. Democracy, like individualism, is based not on personal gain but on self-sacrifice. A functioning democracy must often defy the economic interests of elites on behalf of
citizens, but this is not happening. The corporate managers and government officials trying to fix the economic meltdown are pouring money and resources into the financial sector because they are trained only to manage and sustain the established system, not change it.

Saul writes that the first three aims of the corporatist movement in Germany, Italy, and France during the 1920s, those that went on to become part of the fascist experience, were “to shift power directly to economic and social interest groups, to push entrepreneurial initiative in areas normally reserved for public bodies,” and to “obliterate the boundaries between public and private interest—that is, challenge the idea of the public interest.” It sounds depressingly familiar.

The working class, which has desperately borrowed money to stay afloat as real wages have dropped, now face years, maybe decades, of stagnant or declining incomes without access to new credit. The national treasury, meanwhile, is being drained on behalf of speculative commercial interests. The government—the only institution citizens have that is big enough and powerful enough to protect their rights—is becoming weaker, more anemic, and increasingly unable to help the mass of Americans who are embarking on a period of deprivation and suffering unseen in this country since the 1930s. Creative destruction, Joseph Schumpeter understood, is the essential fact about unfettered capitalism.

“You are going to see the biggest waste, fraud, and abuse in American history,” Ralph Nader told me when I asked about the bailouts. “Not only is it wrongly directed, not only does it deal with the perpetrators instead of the people who were victimized, but they don't have a delivery system of any honesty and efficiency. The Justice Department is overwhelmed. It doesn't have a tenth of the prosecutors, the investigators, the auditors, the attorneys needed to deal with the previous corporate crime wave before the bailout started last September. It is especially unable to deal with the rapacious ravaging of this new money by these corporate recipients. You can see it already. The corporations haven't lent it. They have used some of it for acquisitions or to preserve their bonuses or their dividends. As long as they know they are not going to jail, and they don't see many newspaper reports about their colleagues going to jail, they don't care. It is total impunity. If they
quit, they quit with a golden parachute. Even [General Motors CEO Rick] Wagoner is taking away $21 million.”

There are a handful of former executives who have conceded that the bailouts are a waste. The former chairman of American International Group Inc. (AIG), Maurice R. Greenberg, told the House Oversight and Government Reform Committee that the effort to prop up the firm with $170 billion has “failed.” He said the company should be restructured. AIG, he said, would have been better off filing for Chapter 11 bankruptcy protection instead of seeking government help.

“These are signs of hyper-decay,” Ralph Nader said from his office in Washington. “You spend this kind of money and do not know if it will work.”

“Bankrupt corporate capitalism is on its way to bankrupting the socialism that is trying to save it,” he added. “That is the end stage. If they no longer have socialism to save them, then we are into feudalism. We are into private police, gated communities, and serfs with a twenty-first-century nomenclature.”

We will not be able to raise another $3 or $4 trillion, especially with our commitments now totaling more than $12 trillion, to fix the mess. It was not long ago that such profligate government spending was unthinkable. There was an $800 billion limit placed on the Federal Reserve. The economic stimulus and the bailouts will not bring back our casino capitalism. And as the meltdown shows no signs of abating, and the bailouts show no sign of working, the recklessness and desperation of our capitalist overlords have increased. The cost to the working and middle class is becoming unsustainable. The Fed reported that households lost $5.1 trillion, or 9 percent, of their wealth in the last three months of 2008, the most ever in a single quarter in the fifty-seven-year history of record-keeping by the central bank. For the full year, household wealth dropped $11.1 trillion, or about 18 percent. These figures did not record the decline of investments in the stock market, which has probably erased trillions more in the country's collective net worth.