Who Rules the World? (8 page)

For Egypt, a comparable course was barred by British power. Lord Palmerston declared that “no ideas of fairness [toward Egypt] ought to stand in the way of such great and paramount interests” of Britain as preserving its economic and political hegemony, expressing his “hate” for the “ignorant barbarian” Muhammad Ali, who dared to seek an independent course, and deploying Britain’s fleet and financial power to terminate Egypt’s quest for independence and economic development.
15

After World War II, when the United States displaced Britain as global hegemon, Washington adopted the same stand, making it clear that the United States would provide no aid to Egypt unless it adhered to the standard rules for the weak—which the United States continued to violate, imposing high tariffs to bar Egyptian cotton and causing a debilitating dollar shortage, as per the usual interpretation of market principles.

It is small wonder that the “campaign of hatred” against the United States that concerned Eisenhower was based on the recognition that the United States supports dictators and blocks democracy and development, as do its allies.

In Adam Smith’s defense, it should be added that he recognized what would happen if Britain followed the rules of sound economics, now called “neoliberalism.” He warned that if British manufacturers, merchants, and investors turned abroad, they might profit but England would suffer. But he felt that they would be guided by a home bias, so that as if by an “invisible hand” England would be spared the ravages of economic rationality.

The passage is hard to miss. It is the one occurrence of the famous phrase “invisible hand” in
The Wealth of Nations
. The other leading founder of classical economics, David Ricardo, drew similar conclusions, hoping that what is called “home bias” would lead men of property to “be satisfied with the low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations”—feelings that, he added, “I should be sorry to see weakened.”
16
Their predictions aside, the instincts of the classical economists were sound.

THE IRANIAN AND CHINESE “THREATS”

The democratic uprising in the Arab world is sometimes compared to Eastern Europe in 1989, but on dubious grounds. In 1989, the democratic uprising was tolerated by the Russians, and supported by Western power in accord with standard doctrine: it plainly conformed to economic and strategic objectives, and was therefore a noble achievement, greatly honored, unlike the struggles at the same time “to defend the people’s fundamental human rights” in Central America, in the words of the assassinated archbishop of El Salvador, one of the hundreds of thousands of victims of the military forces armed and trained by Washington.
17
There was no Mikhail Gorbachev in the West throughout those horrendous years, and there is none today. And Western power remains hostile to democracy in the Arab world for good reasons.

Grand Area doctrines continue to apply to contemporary crises and confrontations. In Western policymaking circles and political commentary, the Iranian threat is considered to pose the greatest danger to world order and hence must be the primary focus of U.S. foreign policy, with Europe trailing along politely.

Years ago, Israeli military historian Martin van Creveld wrote that “the world has witnessed how the United States attacked Iraq for, as it turned out, no reason at all. Had the Iranians not tried to build nuclear weapons, they would be crazy,” particularly when they are under constant threat of attack, in violation of the UN Charter.
18

The United States and Europe are united in punishing Iran for its threat to “stability”—in the technical sense of the term, meaning conformity to U.S. demands—but it is useful to recall how isolated they are; the nonaligned countries have vigorously supported Iran’s right to enrich uranium. The major regional power, Turkey, voted against a U.S.-initiated sanctions motion in the Security Council, along with Brazil, the most admired country of the global South. Their disobedience led to sharp censure, not for the first time: Turkey had been bitterly condemned in 2003 when the government followed the will of 95 percent of its population and refused to participate in the invasion of Iraq, thus demonstrating its weak grasp of democracy, Western-style.

While the United States can tolerate Turkish disobedience—though with dismay—China is harder to ignore. The press warns that “China’s investors and traders are now filling a vacuum in Iran as businesses from many other nations, especially in Europe, pull out,” and in particular, that China is expanding its dominant role in Iran’s energy industries.
19
Washington is reacting with a touch of desperation. The State Department warned China that if it wants to be accepted in the “international community”—a technical term referring to the United States and whoever happens to agree with it—then it must not “skirt and evade international responsibilities, [which] are clear”: namely, follow U.S. orders.
20
China is unlikely to be impressed.

There is also much concern about the growing Chinese military threat. A recent Pentagon study warned that China’s military budget is approaching “one-fifth of what the Pentagon spent to operate and carry out the wars in Iraq and Afghanistan”—a fraction of the U.S. military budget, of course. China’s expansion of military forces might “deny the ability of American warships to operate in international waters off its coast,” the
New York Times
added.
21

Off the coast of China, that is; it has yet to be proposed that the U.S. should eliminate military forces that deny the Caribbean to Chinese warships. China’s lack of understanding of the rules of international civility is further illustrated by its objections to plans for the advanced nuclear-powered aircraft carrier
George Washington
to join naval exercises a few miles off China’s coast, giving it the alleged capacity to strike Beijing.

In contrast, the West understands that such U.S. operations are all undertaken to defend “stability” and its own security. The liberal
New Republic
expresses its concern that “China sent ten warships through international waters just off the Japanese island of Okinawa.”
22
That is indeed a provocation—unlike the fact, unmentioned, that Washington has converted the island into a major military base in defiance of vehement protests by the people of Okinawa. That is not a provocation, on the standard principle that we own the world.

Deep-seated imperial doctrine aside, there is good reason for China’s neighbors to be concerned about its growing military and commercial power.

While Grand Area doctrine still prevails, the capacity to implement it has declined. The peak of U.S. power was after World War II, when it had literally half the world’s wealth. But that naturally declined, as other industrial economies recovered from the devastation of the war and decolonization took its agonizing course. By the early 1970s, the U.S. share of global wealth had fallen to about 25 percent, and the industrial world had become tripolar: North America, Europe, and East Asia (then Japan-based).

There was also a sharp change in the U.S. economy in the 1970s, toward financialization and export of production. A variety of factors converged to create a vicious cycle of radical concentration of wealth, primarily in the top fraction of one percent of the population—mostly CEOs, hedge-fund managers, and the like. That leads to the concentration of political power, hence state policies to increase economic concentration: fiscal policies, rules of corporate governance, deregulation, and much more. Meanwhile the costs of electoral campaigns skyrocketed, driving the parties into the pockets of concentrated capital, increasingly financial: the Republicans reflexively, the Democrats—by now what used to be moderate Republicans—not far behind.

Elections have become a charade, run by the public relations industry. After his 2008 victory, Obama won an award from the industry for the best marketing campaign of the year. Executives were euphoric. In the business press they explained that they had been marketing candidates like other commodities since Ronald Reagan, but 2008 was their greatest achievement and would change the style in corporate boardrooms. The 2012 election cost over $2 billion, mostly in corporate funding, and the 2016 election is expected to cost twice that.
23
Small wonder that Obama selected business leaders for top positions in his administration. The public is angry and frustrated, but as long as the doctrine described by Muasher prevails, that doesn’t matter.

While wealth and power have narrowly concentrated, for most of the population real incomes have stagnated and people have been getting by with increased work hours, debt, and asset inflation, regularly destroyed by the financial crises that began as the regulatory apparatus was dismantled starting in the 1980s.

None of this is problematic for the very wealthy, who benefit from the “too big to fail” government insurance policy. That government insurance is no small matter. Considering just the ability of banks to borrow at lower rates, thanks to the implicit taxpayer subsidy, Bloomberg News, citing an International Monetary Fund working paper, estimates that “taxpayers give big banks $83 billion a year”—virtually their entire profit, a matter that is “crucial to understanding why the big banks present such a threat to the global economy.”
24
Furthermore, the banks and investment firms can make risky transactions, with rich rewards, and when the system inevitably crashes, they can run to the nanny state for a taxpayer bailout, clutching their copies of F. A. Hayek and Milton Friedman.

That has been the regular process since the Reagan years, each crisis more extreme than the last—for the public population, that is. Real unemployment is at depression levels for much of the population, while Goldman Sachs, one of the main architects of the current crisis, is richer than ever. It quietly announced $17.5 billion in compensation for 2010, with CEO Lloyd Blankfein receiving a $12.6 million bonus, while his base salary more than tripled.
25

It wouldn’t do to focus attention on such facts as these. Accordingly, propaganda must seek to blame others, like public sector workers, with their fat salaries and exorbitant pensions: all fantasy, on the model of Reaganite imagery of black mothers being driven in their limousines to pick up welfare checks, and other models that need not be mentioned. We all must tighten our belts—almost all, that is.

Teachers are a particularly good target, as part of the deliberate effort to destroy the public education system from kindergarten through the universities by privatization—again, a policy that is good for the wealthy, but a disaster for the population as well as the long-term health of the economy, though that is one of the externalities that is put to the side insofar as market principles prevail.

Another fine target, always, is immigrants. That has been true throughout U.S. history, even more so at times of economic crisis, and exacerbated now by a sense that our country is being taken away from us: the white population will soon become a minority. One can understand the anger of aggrieved individuals, but the cruelty of the policy is shocking.

Who are the immigrants targeted? In eastern Massachusetts, where I live, many are Mayans fleeing the aftermath of the virtual genocide in the Guatemalan highlands carried out by Reagan’s favorite killers. Others are Mexican victims of Clinton’s North American Free Trade Agreement (NAFTA), one of those rare government agreements that managed to harm working people in all three of the participating countries. As NAFTA was rammed through Congress over popular objection in 1994, Clinton also initiated the militarization of the U.S.-Mexican border, previously fairly open. It was presumably understood that Mexican campesinos cannot compete with highly subsidized U.S. agribusiness, and that Mexican businesses would not survive competition with U.S. multinationals, which must be granted “national treatment” under the mislabeled “free-trade” agreements—a privilege granted only to corporate persons, not those of flesh and blood. Not surprisingly, these measures led to a flood of desperate refugees and to rising anti-immigrant hysteria on the part of the victims of state-corporate policies at home.

Much the same appears to be happening in Europe, where racism is probably more rampant than in the United States. One can only watch with wonder as Italy complains about the flow of refugees from Libya, the scene of the first post–World War I genocide, in the newly liberated east, at the hands of Italy’s Fascist government. Or when France, still today the main protector of the brutal dictatorships in its former colonies, manages to overlook its hideous atrocities in Africa while French president Nicolas Sarkozy warns grimly of the “flood of immigrants” and Marine Le Pen objects that he is doing nothing to prevent it. I need not mention Belgium, which may win the prize for what Adam Smith called “the savage injustice of the Europeans.”

The rise of neofascist parties in much of Europe would be a frightening phenomenon even if we were not to recall what happened on the continent in the recent past. Just imagine the reaction if Jews were being expelled from France to misery and oppression, and then witness the nonreaction when the same is happening to the Roma, also victims of the Holocaust and Europe’s most brutalized population.

In Hungary, the neofascist party Jobbik gained 21 percent of the vote in national elections, perhaps unsurprising when three-quarters of the population feels that they are worse off than under Communist rule.
26
We might be relieved that in Austria the ultraright Jörg Haider won only 10 percent of the vote in 2008, were it not for the fact that the Freedom Party, outflanking him from the right, won more than 17 percent.
27
(It is chilling to recall that, in 1928, the Nazis won less than 3 percent of the vote in Germany.
28
) In England, the British National Party and the English Defence League, on the ultraracist right, are major forces.