Wealth Inequality Worse in U.S. Than in Ancient Rome
Tim De Chant has an interesting post over at his Per Square Mile blog, discussing a recent academic study comparing levels of inequality in Ancient Rome with levels of inequality in today’s America. The scholars, using the Gini Index, found that “the top 1 percent of Roman society controlled 16 percent of the wealth, less than half of what America’s top 1 percent control.”
Over the last 30 years, wealth in the United States has been steadily concentrating in the upper economic echelons. Whereas the top 1 percent used to control a little over 30 percent of the wealth, they now control 40 percent. It’s a trend that was for decades brushed under the rug but is now on the tops of minds and at the tips of tongues.
Since too much inequality can foment revolt and instability, the CIA regularly updates statistics on income distribution for countries around the world, including the U.S. Between 1997 and 2007, inequality in the U.S. grew by almost 10 percent, making it more unequal than Russia, infamous for its powerful oligarchs. The U.S. is not faring well historically, either. Even the Roman Empire, a society built on conquest and slave labor, had a more equitable income distribution.
To determine the size of the Roman economy and the distribution of income, historians Walter Schiedel and Steven Friesen pored over papyri ledgers, previous scholarly estimates, imperial edicts, and Biblical passages. Their target was the state of the economy when the empire was at its population zenith, around 150 C.E. Schiedel and Friesen estimate that the top 1 percent of Roman society controlled 16 percent of the wealth, less than half of what America’s top 1 percent control.
… what we see as the glory of Rome is really just the rubble of the rich, built on the backs of poor farmers and laborers, traces of whom have all but vanished. It’s as though Rome’s 99 percent never existed. Which makes me wonder, what will future civilizations think of us?
Read the full post here.
What I Learned at One of the First Occupations: People’s Park, Berkeley 1969
By Don Pelton
One killed, thousands tear-gassed at People's Park
The recent Occupy Wall Street protests spreading across America — and particularly the violence in Oakland — have made me think again about my experience as a California National Guardsman in a battalion activated by then Governor Ronald Reagan to help quell the riots at People’s Park in Berkeley in May of 1969.
What I learned from that experience is that — in all these demonstrations, whether fundamentally peaceful or not — there are always a few people on each side of the conflict who are hell bent on violence.
I was an undergraduate at UC Berkeley in the late 1950s and early 1960s. By 1969 I was a graduate student in US history at San Jose State College. It felt like a strange irony then when — as a student — I was called to active duty to help quell a student riot (later I’d learn about the provocative, if not riotous behavior of the police). My sympathies were in a constant state of flux during the week we spent in Berkeley.
What was the issue? Wikipedia describes what, in retrospect, must surely have been among the first “occupy” movements:
In 1956, the Regents of the University of California allocated a 2.8-acre (11,000 m2) plot of land containing residences for future development into student housing, parking and offices as part of the university’s “Long Range Plan for Expansion.” At the time, funds were lacking to buy the land, and the plan was shelved until June 1967, when the university acquired $1.3 million to take the land through the process of eminent domain. After taking control of the land, neighborhood residents were evicted and demolition of the existing homes began.
By 1967, the university had altered its plan; the new plan was to build a student parking lot and a playing field on the land. Demolition of the existing residences took more than a year, and the university ran out of development funds, leaving the lot only partially cleared of demolition debris and rubble. It remained in this state for over a year, and as winter began the muddy site became derelict with abandoned cars.
On 13 April 1969, local merchants and residents held a meeting to discuss possible uses for the derelict site. Michael Delacour presented a plan for developing the under-utilized, university-owned land into a public park. This plan was approved by the attendees, but not by the university. Stew Albert, a co-founder of the Yippie Party, agreed to write an article for the local counter-culture newspaper, the Berkeley Barb, on the subject of the park, particularly to call for help from local residents.
Ronald Reagan was already doing his first John Wayne imitation:
During its first three weeks, People’s Park was used by both university students and local residents with Telegraph Avenue merchants appreciative of the community’s efforts to improve the neighborhood. Objections to the expropriation of university property tended to be mild, even among school administrators.
Governor Ronald Reagan had been publicly critical of university administrators for tolerating student demonstrations at the Berkeley campus, and he had received enormous popular support for his 1966 gubernatorial campaign promise to crack down on what was perceived as the generally lax attitude at California’s public universities. Reagan called the Berkeley campus “a haven for communist sympathizers, protesters and sex deviants.” Reagan considered the creation of the park a direct leftist challenge to the property rights of the university, and he found in it an opportunity to fulfill his campaign promise.
Governor Reagan overrode Chancellor Heyns’ May 6 promise that nothing would be done without warning, and on Thursday, 15 May 1969 at 4:30 a.m., he sent 300 California Highway Patrol and Berkeley police officers into People’s Park. The officers cleared an 8-block area around the park while a large section of what had been planted was destroyed and an 8-foot (2.4 m) tall perimeter chain-link wire fence was installed to keep people out and to prevent the planting of more trees, grass, flowers and shrubs.
Bloody Thursday
Arriving in the early afternoon, the protesters were met by the remaining 159 Berkeley and university police officers assigned to guard the fenced-off park site. The protesters opened a fire hydrant, the officers fired tear gas canisters, some protesters attempted to tear down the fence, and bottles, rocks, and bricks were thrown. A major confrontation ensued between police and the crowd. Initial attempts by the police to disperse the protesters were not successful, so more officers were called in from surrounding cities. At least one car was set on fire.
Reagan’s Chief of Staff, Edwin Meese III, a former district attorney from Alameda County, had established a reputation for firm opposition to those protesting the Vietnam War at the Oakland Induction Center and elsewhere. Meese assumed responsibility for the governmental response to the People’s Park protest, and he called in the Alameda County Sheriff’s deputies, which brought the total police presence to 791 officers from various jurisdictions. Under Meese’s direction, the police were permitted to use whatever methods they chose against the crowds, which had swelled to approximately 6,000 people. Officers in full riot gear (helmets, shields and gas masks) obscured their badges to avoid being identified and headed into the crowds with nightsticks swinging .”
Here’s what I remember about Reagan at that time. I remember him going on television and saying, “If they want bloodshed, let them have bloodshed.”
I thought, “Hey, that’s my blood you’re talking about. Who do you think you are, John Wayne?”
The whole experience reminded me of a scene out of Joseph Heller’s novel, Catch-22.
I was sent one day down to the Brigade Headquarters at the Berkeley yacht harbor and — while I was waiting to pick up some papers — I overheard one zealous officer talking to his men:
“Remember men, use the maximum force necessary.”
“Uh, sir,” said one of his men, “don’t you mean ‘The minimum force necessary?’”
“No, private, I said ‘the maximum force necessary,’ and that’s what I mean.”
“Dimwit,” I thought.
One day, several of us drove past People’s Park in a “deuce-and-a-half” (a two-and-a-half-ton Army truck). I was in the back of the truck with a couple of other privates. Two Oakland cops in my platoon, also called to active duty as privates in the Guard, were up front in the cab, next to the driver. As we drove past the protesters, those of us in the back held up the two-fingered peace signal, while the two cops in the cab flipped them off with the familiar one-fingered salute. It was surreal.
The newspapers had been reporting on the riot, and often mentioned “rock-throwing students,” which sounded almost benign.
Then I found out what sort of rocks those were. A Guardsman from another platoon showed me his helmet, which had been hit by a “rock” thrown by one of the students. His helmet had a grapefruit-sized deep indentation in the top where he had been hit by a “rock.” It was clear to me — it would have been clear to anyone who saw it — that without his helmet, he would have suffered a very serious, if not fatal, blow.
From that moment on, I realized that there were idiots on each side of this conflict who were eager to commit serious violence.
Reagan was the most conspicuous idiot on the government side.
A few student idiots, less conspicuous but potentially just as lethal, were willing to discredit their cause by committing violence from their side.
Of course, ultimately the armed forces — police and military — always have more firepower.
What is the lesson for today?
Protester shot in the head with a tear-gas cannister by an Oakland cop.
Most populist uprisings, no matter how legitimate and peaceful in general, usually attract a few fringe hangers-on who are eager to commit lethal violence.
And on the other side, a few rogue cops are often eager to commit more than their share of lethal violence, even against entirely peaceful demonstrators, as in Oakland recently and repeatedly.
We must try not to make generalizations about the issues at stake in these populist uprisings based on the inevitable fringe elements on each side.
And we should remember too that great moral authority accrues to those who — like Ghandi and Martin Luther King — are relentlessly committed to non-violence, no matter how great the provocation.
Remembering FDR’s Engagement with Another Occupation
Reprinted from New Deal 2.0 (October 28, 2011)
By David Woolner
FDR engaged with the Bonus Army instead of cracking down. Today’s mayors should take note.
The violence that broke out in Oakland earlier this week and the wounding of Scott Olsen, a Marine veteran, recalls a similar “occupy movement” involving veterans that took place in Washington at the onset of the Great Depression.
In 1932, thousands of unemployed World War I veterans, desperate from lack of work, converged on Washington, mostly by riding the rails, in support of a bill that would have allowed them to receive immediate cash payment of the war service “bonus” they were due in 1945. The veterans called themselves the “Bonus Army” or “Bonus Expeditionary Force.” By the end of May of that year, more than 20,000 had occupied a series of abandoned buildings near the Washington Mall and a sprawling shantytown they built on the Anacostia Flats not far from the Capitol. On June 15, 1932, the House of Representatives passed a bill in favor of the veteran payments, but as both President Hoover and a majority in the Senate opposed it, the “Bonus bill” went down to defeat two days later.
In the wake of this defeat, roughly 15,000 members of the Bonus Army decided that they would continue their occupation as a protest against the government’s decision. By late July, President Hoover decided it was time to clear the city of the protesters, using four troops of cavalry under the command of General Douglas MacArthur. Late in the afternoon of July 28, General MacArthur’s troops — with sabers drawn — cleared the buildings near the Mall. They then fired tear gas among the men, women, and children encamped in Anacostia (many veterans were accompanied by their families); stormed the area on horseback, driving them out; and intentionally burned the shantytown to the ground in the process. More than 1,000 people were injured in the incident and two veterans and one child died.
In attacking the shantytown, MacArthur had exceeded his orders, which were simply to clear the buildings and surround the camp so as to contain it. But this meant little to the public, who were outraged at the treatment the veterans had received at the hands of the government and furious at Hoover for ordering the operation. Hoover, nevertheless, remained publically unrepentant and refused to apologize to the veterans — moves that contributed greatly to his massive loss to Franklin Roosevelt a few months later.
FDR, for his part, was disgusted by the whole affair. When a smaller group of about 3,000 Bonus Marchers converged on Washington with the same demand a year later, FDR took quite a different approach. Where Hoover had refused to meet with the protesters, FDR invited a delegation to come to the White House. He also provided the marchers housing in an unused army fort, made sure that they were given three meals a day plus medical attention, and sent Eleanor Roosevelt to engage them in further discussions and check on their condition. Not wanting to single out any group for special treatment, in the end he refused to support their demand for the early payment of their pensions. But the men were offered work in the newly formed Civilian Conservation Corps (CCC), which 90 percent accepted. Shortly thereafter the Bonus Marchers voted to disperse, and those that opted to return home rather than join the CCC were given free rail passage.
Perhaps the municipal authorities in Oakland, New York, and elsewhere might learn something from FDR. They could use a lesson on the value of dialogue and the benefits a government that is responsive to the needs — if not the demands — of its citizens.
David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book on U.S.-UK economic relations in the 1930s, entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.
How the Legal System Was Subverted by the Rich
Reprinted from Tomdispatch.com (October 25, 2011)
How the Legal System Was Deep-Sixed and Occupy Wall Street Swept the Land
As intense protests spawned by Occupy Wall Street continue to grow, it is worth asking: Why now? The answer is not obvious. After all, severe income and wealth inequality have long plagued the United States. In fact, it could reasonably be claimed that this form of inequality is part of the design of the American founding — indeed, an integral part of it.
Income inequality has worsened over the past several years and is at its highest level since the Great Depression. This is not, however, a new trend. Income inequality has been growing at rapid rates for three decades. As journalist Tim Noah described the process:
“During the late 1980s and the late 1990s, the United States experienced two unprecedentedly long periods of sustained economic growth — the ‘seven fat years’ and the ‘long boom.’ Yet from 1980 to 2005, more than 80% of total increase in Americans’ income went to the top 1%. Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20%. Yet virtually none of the increase translated into wage growth at middle and lower incomes, an outcome that left many economists scratching their heads.”
The 2008 financial crisis exacerbated the trend, but not radically: the top 1% of earners in America have been feeding ever more greedily at the trough for decades.
In addition, substantial wealth inequality is so embedded in American political culture that, standing alone, it would not be sufficient to trigger citizen rage of the type we are finally witnessing. The American Founders were clear that they viewed inequality in wealth, power, and prestige as not merely inevitable, but desirable and, for some, even divinely ordained. Jefferson praised “the natural aristocracy” as “the most precious gift of nature” for the “government of society.” John Adams concurred: “It already appears, that there must be in every society of men superiors and inferiors, because God has laid in the… course of nature the foundation of the distinction.”
Not only have the overwhelming majority of Americans long acquiesced to vast income and wealth disparities, but some of those most oppressed by these outcomes have cheered it loudly. Americans have been inculcated not only to accept, but to revere those who are the greatest beneficiaries of this inequality.
In the 1980s, this paradox — whereby even those most trampled upon come to cheer those responsible for their state — became more firmly entrenched. That’s because it found a folksy, friendly face, Ronald Reagan, adept at feeding the populace a slew of Orwellian clichés that induced them to defend the interests of the wealthiest. “A rising tide,” as President Reagan put it, “lifts all boats.” The sum of his wisdom being: it is in your interest when the rich get richer.
Implicit in this framework was the claim that inequality was justified and legitimate. The core propagandistic premise was that the rich were rich because they deserved to be. They innovated in industry, invented technologies, discovered cures, created jobs, took risks, and boldly found ways to improve our lives. In other words, they deserved to be enriched. Indeed, it was in our common interest to allow them to fly as high as possible because that would increase their motivation to produce more, bestowing on us ever greater life-improving gifts.
We should not, so the thinking went, begrudge the multimillionaire living behind his 15-foot walls for his success; we should admire him. Corporate bosses deserved not our resentment but our gratitude. It was in our own interest not to demand more in taxes from the wealthiest but less, as their enhanced wealth — their pocket change — would trickle down in various ways to all of us.
This is the mentality that enabled massive growth in income and wealth inequality over the past several decades without much at all in the way of citizen protest. And yet something has indeed changed. It’s not that Americans suddenly woke up one day and decided that substantial income and wealth inequality are themselves unfair or intolerable. What changed was the perception of how that wealth was gotten and so of the ensuing inequality as legitimate.
Many Americans who once accepted or even cheered such inequality now see the gains of the richest as ill-gotten, as undeserved, as cheating. Most of all, the legal system that once served as the legitimizing anchor for outcome inequality, the rule of law — that most basic of American ideals, that a common set of rules are equally applied to all — has now become irrevocably corrupted and is seen as such.
While the Founders accepted outcome inequality, they emphasized — over and over — that its legitimacy hinged on subjecting everyone to the law’s mandates on an equal basis. Jefferson wrote that the essence of America would be that “the poorest laborer stood on equal ground with the wealthiest millionaire, and generally on a more favored one whenever their rights seem to jar.” Benjamin Franklin warned that creating a privileged legal class would produce “total separation of affections, interests, political obligations, and all manner of connections” between rulers and those they ruled. Tom Paine repeatedly railed against “counterfeit nobles,” those whose superior status was grounded not in merit but in unearned legal privilege.
After all, one of their principal grievances against the British King was his power to exempt his cronies from legal obligations. Almost every Founder repeatedly warned that a failure to apply the law equally to the politically powerful and the rich would ensure a warped and unjust society. In many ways, that was their definition of tyranny.
Americans understand this implicitly. If you watch a competition among sprinters, you can accept that whoever crosses the finish line first is the superior runner. But only if all the competitors are bound by the same rules: everyone begins at the same starting line, is penalized for invading the lane of another runner, is barred from making physical contact or using performance-enhancing substances, and so on.
If some of the runners start ahead of others and have relationships with the judges that enable them to receive dispensation for violating the rules as they wish, then viewers understand that the outcome can no longer be considered legitimate. Once the process is seen as not only unfair but utterly corrupted, once it’s obvious that a common set of rules no longer binds all the competitors, the winner will be resented, not heralded.
That catches the mood of America in 2011. It may not explain the Occupy Wall Street movement, but it helps explain why it has spread like wildfire and why so many Americans seem instantly to accept and support it. As was not true in recent decades, the American relationship with wealth inequality is in a state of rapid transformation.
It is now clearly understood that, rather than apply the law equally to all, Wall Street tycoons have engaged in egregious criminality — acts which destroyed the economic security of millions of people around the world — without experiencing the slightest legal repercussions. Giant financial institutions were caught red-handed engaging in massive, systematic fraud to foreclose on people’s homes and the reaction of the political class, led by the Obama administration, was to shield them from meaningful consequences. Rather than submit on an equal basis to the rules, through an oligarchical, democracy-subverting control of the political process, they now control the process of writing those rules and how they are applied.
Today, it is glaringly obvious to a wide range of Americans that the wealth of the top 1% is the byproduct not of risk-taking entrepreneurship, but of corrupted control of our legal and political systems. Thanks to this control, they can write laws that have no purpose than to abolish the few limits that still constrain them, as happened during the Wall Street deregulation orgy of the 1990s. They can retroactively immunize themselves for crimes they deliberately committed for profit, as happened when the 2008 Congress shielded the nation’s telecom giants for their role in Bush’s domestic warrantless eavesdropping program.
It is equally obvious that they are using that power not to lift the boats of ordinary Americans but to sink them. In short, Americans are now well aware of what the second-highest-ranking Democrat in the Senate, Illinois’s Dick Durbin, blurted out in 2009 about the body in which he serves: the banks “frankly own the place.”
If you were to assess the state of the union in 2011, you might sum it up this way: rather than being subjected to the rule of law, the nation’s most powerful oligarchs control the law and are so exempt from it; and increasing numbers of Americans understand that and are outraged. At exactly the same time that the nation’s elites enjoy legal immunity even for egregious crimes, ordinary Americans are being subjected to the world’s largest and one of its harshest penal states, under which they are unable to secure competent legal counsel and are harshly punished with lengthy prison terms for even trivial infractions.
In lieu of the rule of law — the equal application of rules to everyone — what we have now is a two-tiered justice system in which the powerful are immunized while the powerless are punished with increasing mercilessness. As a guarantor of outcomes, the law has, by now, been so completely perverted that it is an incomparably potent weapon for entrenching inequality further, controlling the powerless, and ensuring corrupted outcomes.
The tide that was supposed to lift all ships has, in fact, left startling numbers of Americans underwater. In the process, we lost any sense that a common set of rules applies to everyone, and so there is no longer a legitimizing anchor for the vast income and wealth inequalities that plague the nation.
That is what has changed, and a growing recognition of what it means is fueling rising citizen anger and protest. The inequality under which so many suffer is not only vast, but illegitimate, rooted as it is in lawlessness and corruption. Obscuring that fact has long been the linchpin for inducing Americans to accept vast and growing inequalities. That fact is now too glaring to obscure any longer.
Glenn Greenwald is a former constitutional and civil rights litigator and a current contributing writer at Salon.com. He is the author of two New York Times bestselling books on the Bush administration’s executive power and foreign policy abuses. His just-released book, With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful(Metropolitan Books), is a scathing indictment of America’s two-tiered system of justice. He is the recipient of the first annual I.F. Stone Award for Independent Journalism.
Copyright 2011 Glenn Greenwald
The Tea Party and the Founding Fathers
By Vicki Warner
The rise of a grass-roots protest organization calling itself the Tea Party has aroused my curiosity. The name reminds me of the story every child used to learn in elementary school, along with the Pilgrims and George Washington and the cherry tree – the story of the famous Boston Tea Party in 1773, when American colonists threw chests of tea off of British ships into the sea to protest the high British tax on the tea, leading to the famous slogan “No taxation without representation.” Although the colonies did have a representative in London, Benjamin Franklin, he had no role in British decision-making.
This new Tea Party, as I understand it, wants to return to the ideas, to the Constitution, of the founding fathers. They want, in essence, to throw overboard all that has been added to U. S. government since the days of the original Tea Party. The word “originalist” has been coined to represent this point of view – “an originalist interpretation of the U. S. Constitution,” i.e., looking at the Constitution as the original writers did. But to do this, it would be necessary to see the world as the founding fathers did, to live in the world they lived in. These founding fathers lived in the last part of the 1700s. Benjamin Franklin was an old man – he was born in 1706, Thomas Jefferson, born in 1743, was relatively young. In 1787, several years after the end of the American Revolution, the U. S. Constitution was formally adopted and then ratified by the several states. The world they lived in was vastly different from the world we live in. I decided to take a look at the world of the founding fathers.
Although feudalism, the world of kings, barons and serfs, had declined in the late middle ages, most of the nations of the world were still ruled by kings or emperors. The idea of a nation in which the people were sovereign was unique – the history of democracy shows us that after the Roman Empire broke up, taking with it its Senate of nobles and Assembly of commoners, anything approaching a democratic government disappeared from the face of the earth. The founding fathers realized that all of the problems associated with such a radical departure from traditional ruling structure could not be anticipated and wisely provided for methods of revising and amending the Constitution to compensate for the inevitable changes, leaving us a “Living” Constitution.
At the time of the writing of the U.S. Constitution, the Industrial Revolution had barely started in the textile mills of England. Life was very different before the Industrial Revolution. Most people lived a self-sufficient farming life, without electricity or hot and cold running water. They grew most of their own food, and made most of their own clothes. Most people lived in small towns or villages. Life was centered in communities, and people had to help each other, to depend on each other. Transportation was difficult and slow – there were no paved highways, no cars, no railroad trains, no airplanes. Communicaton was slow – although Ben Franklin made sure that provisions for a post office were included in the Constitution, mail was really snail mail. There were no telephones, no radios, no television, no computers, no e-mail, and no smart phones.
There was no public education – although Thomas Jefferson was an ardent advocate, it wasn’t until 1840 that Horace Mann came along to promote the need for common schooling. Massachuetts and New York, in the early 1850s, were the first states to pass laws requiring public schools. At the time of the writing of the U. S. constitution, education was private, and home-schooling, if any, was the rule. There were private tutors for the wealthy, and Catholic schools for Catholics. Actually, some people were afraid that educating the lower classes would make them dissatisfied with their lot and therefore cause trouble.
The founding fathers were not confronted with the enormous influence of corporations facing the legislators of today. The only major corporations were the two East India Companies sponsored by the Dutch and British governments. The first corporation of any consequence in the U. S. was The Boston Manufacturing Company, an industrial corporation which didn’t come along until 1813.
At the time of the writing of the U. S. Constitution, vast areas of the world had not yet become nations. Russia was still living in the dark ages – serfdom wasn’t abolished until 1861, about the time of our own Civil War. Our closest ties continued to be with England and France, and to a lesser extent, with the rest of Europe. Since information travelled so slowly, it was challenging, though not impossible, to know what was going on in the rest of the world.
At the time of the writing of the U. S. Constitution, England and France were experiencing the revolution in thinking that has been called “The Enlightenment,” a movement that wikipedia describes as a “movement of intellectuals in 18th century Europe that sought to mobilize the power of reason in order to reform society and advance knowledge. It promoted intellectual interchange and opposed intolerance and abuses in Church and state.” At the same time, founding father Thomas Paine was writing his influential book, “Common Sense,” advocating America independence, and Adam Smith was publishing his influential “Inquiry into the Nature and Causes of the Wealth of Nations,” the bible of free-market capitalism. The framers of the Constitution were educated men and were aware of the intellectual ferment of the times. Although ihe U S. Constitution makes no mention of capitalism, nor indeed of any economic system, some historians equate the rise of capitalism with the rise of democracy.
The original seven Articles of the Constitution were concerned first, with the formation of a functioning government uniting the states under a system of three branches, Legislative, Executive. and Judicial, separate but interacting to assure mutual checks and balances; second, with specifying the means of changing the Constitution by Amendment; and third, with declaring the Constitution to be the supreme Law of the Land. The original Constitution did not deal with the individual rights of man – the first ten Amendments to the Constitution, the Bill of Rights, took care of that.
In short, I believe the founding fathers could never in their wildest flights of fancy imagine the world we live in today, nor can we really know how it was to lead the relatively uncomplicated life of the founding fathers, and any attempt to return to the state of mind of the past is futile – to understand it, perhaps, but to live it, no. Given the nature of human beings, one thing we should have in common is mutual respect for individual rights and responsibilities, and by individual, I do not mean an artificial corporate “person,” and the key word is “responsibilities.”
This essay was written by UNA-NC member Vicki Warner earlier this month.
Michael Klare: “The New Thirty Years’ War”
Editor’s Note: I missed this article when it was originally published back in June, but not only is it still current, it will be current and relevant 30 years from now, as will most of Michael Klare’s writings.
Reprinted from Tomdispatch.com (June 26, 2011)
By Michael T. Klare
A 30-year war for energy preeminence? You wouldn’t wish it even on a desperate planet. But that’s where we’re headed and there’s no turning back.
From 1618 to 1648, Europe was engulfed in a series of intensely brutal conflicts known collectively as the Thirty Years’ War. It was, in part, a struggle between an imperial system of governance and the emerging nation-state. Indeed, many historians believe that the modern international system of nation-states was crystallized in the Treaty of Westphalia of 1648, which finally ended the fighting.
Think of us today as embarking on a new Thirty Years’ War. It may not result in as much bloodshed as that of the 1600s, though bloodshed there will be, but it will prove no less momentous for the future of the planet. Over the coming decades, we will be embroiled at a global level in a succeed-or-perish contest among the major forms of energy, the corporations which supply them, and the countries that run on them. The question will be: Which will dominate the world’s energy supply in the second half of the twenty-first century? The winners will determine how — and how badly — we live, work, and play in those not-so-distant decades, and will profit enormously as a result. The losers will be cast aside and dismembered.
Why 30 years? Because that’s how long it will take for experimental energy systems like hydrogen power, cellulosic ethanol, wave power, algae fuel, and advanced nuclear reactors to make it from the laboratory to full-scale industrial development. Some of these systems (as well, undoubtedly, as others not yet on our radar screens) will survive the winnowing process. Some will not. And there is little way to predict how it will go at this stage in the game. At the same time, the use of existing fuels like oil and coal, which spew carbon dioxide into the atmosphere, is likely to plummet, thanks both to diminished supplies and rising concerns over the growing dangers of carbon emissions.
This will be a war because the future profitability, or even survival, of many of the world’s most powerful and wealthy corporations will be at risk, and because every nation has a potentially life-or-death stake in the contest. For giant oil companies like BP, Chevron, ExxonMobil, and Royal Dutch Shell, an eventual shift away from petroleum will have massive economic consequences. They will be forced to adopt new economic models and attempt to corner new markets, based on the production of alternative energy products, or risk collapse or absorption by more powerful competitors. In these same decades, new companies will arise, some undoubtedly coming to rival the oil giants in wealth and importance.
The fate of nations, too, will be at stake as they place their bets on competing technologies, cling to their existing energy patterns, or compete for global energy sources, markets, and reserves. Because the acquisition of adequate supplies of energy is as basic a matter of national security as can be imagined, struggles over vital resources — oil and natural gas now, perhaps lithium or nickel (for electric-powered vehicles) in the future — will trigger armed violence.
When these three decades are over, as with the Treaty of Westphalia, the planet is likely to have in place the foundations of a new system for organizing itself — this time around energy needs. In the meantime, the struggle for energy resources is guaranteed to grow ever more intense for a simple reason: there is no way the existing energy system can satisfy the world’s future requirements. It must be replaced or supplemented in a major way by a renewable alternative system or, forget Westphalia, the planet will be subject to environmental disaster of a sort hard to imagine today.
The Existing Energy Lineup
To appreciate the nature of our predicament, begin with a quick look at the world’s existing energy portfolio. According to BP, the world consumed 13.2 billion tons of oil-equivalent from all sources in 2010: 33.6% from oil, 29.6% from coal, 23.8% from natural gas, 6.5% from hydroelectricity, 5.2% from nuclear energy, and a mere 1.3% percent from all renewable forms of energy. Together, fossil fuels — oil, coal, and gas — supplied 10.4 billion tons, or 87% of the total.
Even attempting to preserve this level of energy output in 30 years’ time, using the same proportion of fuels, would be a near-hopeless feat. Achieving a 40 %increase in energy output, as most analysts believe will be needed to satisfy the existing requirements of older industrial powers and rising demand in China and other rapidly developing nations, is simply impossible.
Two barriers stand in the way of preserving the existing energy profile: eventual oil scarcity and global climate change. Most energy analysts expect conventional oil output — that is, liquid oil derived from fields on land and in shallow coastal waters — to reach a production peak in the next few years and then begin an irreversible decline. Some additional fuel will be provided in the form of “unconventional” oil — that is, liquids derived from the costly, hazardous, and ecologically unsafe extraction processes involved in producing tar sands, shale oil, and deep-offshore oil — but this will only postpone the contraction in petroleum availability, not avert it. By 2041, oil will be far less abundant than it is today and so incapable of meeting anywhere near 33.6% of the world’s (much expanded) energy needs.
Meanwhile, the accelerating pace of climate change will produce ever more damage — intense storm activity, rising sea levels, prolonged droughts, lethal heat waves, massive forest fires, and so on — finally forcing reluctant politicians to take remedial action. This will undoubtedly include an imposition of curbs on the release via fossil fuels of carbon dioxide and other greenhouse gases, whether in the form of carbon taxes, cap-and-trade plans, emissions limits, or other restrictive systems as yet not imagined. By 2041, these increasingly restrictive curbs will help ensure that fossil fuels will not be supplying anywhere near 87% of world energy.
The Leading Contenders
If oil and coal are destined to fall from their position as the world’s paramount source of energy, what will replace them? Here are some of the leading contenders.
Natural gas: Many energy experts and political leaders view natural gas as a “transitional” fossil fuel because it releases less carbon dioxide and other greenhouse gases than oil and coal. In addition, global supplies of natural gas are far greater than previously believed, thanks to new technologies — notably horizontal drilling and the controversial procedure of hydraulic fracturing (“fracking”) — that allow for the exploitation of shale gas reserves once considered inaccessible. For example, in 2011, the U.S. Department of Energy (DoE) predicted that, by 2035, gas would far outpace coal as a source of American energy, though oil would still outpace them both. Some now speak of a “natural gas revolution” that will see it overtake oil as the world’s number one fuel, at least for a time. But fracking poses a threat to the safety of drinking water and so may arouse widespread opposition, while the economics of shale gas may, in the end, prove less attractive than currently assumed. In fact, many experts now believe that the prospects for shale gas have been oversold, and that stepped-up investment will result in ever-diminishing returns.
Nuclear power: Prior to the March 11th earthquake/tsunami disaster and a series of core meltdowns at the Fukushima Daiichi nuclear power complex in Japan, many analysts were speaking of a nuclear “renaissance,” which would see the construction of hundreds of new nuclear reactors over the next few decades. Although some of these plants in China and elsewhere are likely to be built, plans for others — in Italy and Switzerland, for example — already appear to have been scrapped. Despite repeated assurances that U.S. reactors are completely safe, evidence is regularly emerging of safety risks at many of these facilities. Given rising public concern over the risk of catastrophic accident, it is unlikely that nuclear power will be one of the big winners in 2041.
However, nuclear enthusiasts (including President Obama) are championing the manufacture of small “modular” reactors that, according to their boosters, could be built for far less than current ones and would produce significantly lower levels of radioactive waste. Although the technology for, and safety of, such “assembly-line” reactors has yet to be demonstrated, advocates claim that they would provide an attractive alternative to both large conventional reactors with their piles of nuclear waste and coal-fired power plants that emit so much carbon dioxide.
Wind and solar: Make no mistake, the world will rely on wind and solar power for a greater proportion of its energy 30 years from now. According to the International Energy Agency, those energy sources will go from approximately 1% of total world energy consumption in 2008 to a projected 4% in 2035. But given the crisis at hand and the hopes that exist for wind and solar, this would prove small potatoes indeed. For these two alternative energy sources to claim a significantly larger share of the energy pie, as so many climate-change activists desire, real breakthroughs will be necessary, including major improvements in the design of wind turbines and solar collectors, improved energy storage (so that power collected during sunny or windy periods can be better used at night or in calm weather), and a far more efficient and expansive electrical grid (so that energy from areas favored by sun and wind can be effectively distributed elsewhere). China, Germany, and Spain have been making the sorts of investments in wind and solar energy that might give them an advantage in the new Thirty Years’ War — but only if the technological breakthroughs actually come.
Biofuels and algae: Many experts see a promising future for biofuels, especially as “first generation” ethanol, based largely on the fermentation of corn and sugar cane, is replaced by second- and third-generation fuels derived from plant cellulose (“cellulosic ethanol”) and bio-engineered algae. Aside from the fact that the fermentation process requires heat (and so consumes energy even while releasing it), many policymakers object to the use of food crops to supply raw materials for a motor fuel at a time of rising food prices. However, several promising technologies to produce ethanol by chemical means from the cellulose in non-food crops are now being tested, and one or more of these techniques may well survive the transition to full-scale commercial production. At the same time, a number of companies, including ExxonMobil, are exploring the development of new breeds of algae that reproduce swiftly and can be converted into biofuels. (The U.S. Department of Defense is also investing in some of these experimental methods with an eye toward transforming the American military, a great fossil-fuel guzzler,into a far “greener” outfit.) Again, however, it is too early to know which (if any) biofuel endeavors will pan out.
Hydrogen: A decade ago, many experts were talking about hydrogen’s immense promise as a source of energy. Hydrogen is abundant in many natural substances (including water and natural gas) and produces no carbon emissions when consumed. However, it does not exist by itself in the natural world and so must be extracted from other substances — a process that requires significant amounts of energy in its own right, and so is not, as yet, particularly efficient. Methods for transporting, storing, and consuming hydrogen on a large scale have also proved harder to develop than once imagined. Considerable research is being devoted to each of these problems, and breakthroughs certainly could occur in the decades to come. At present, however, it appears unlikely that hydrogen will prove a major source of energy in 2041.
X the Unknown: Many other sources of energy are being tested by scientists and engineers at universities and corporate laboratories worldwide. Some are even being evaluated on a larger scale in pilot projects of various sorts. Among the most promising of these are geothermal energy, wave energy, and tidal energy. Each taps into immense natural forces and so, if the necessary breakthroughs were to occur, would have the advantage of being infinitely exploitable, with little risk of producing greenhouse gases. However, with the exception of geothermal, the necessary technologies are still at an early stage of development. How long it may take to harvest them is anybody’s guess. Geothermal energy does show considerable promise, but has run into problems, given the need to tap it by drilling deep into the earth, in some cases triggering small earthquakes.
From time to time, I hear of even less familiar prospects for energy production that possess at least some hint of promise. At present, none appears likely to play a significant role in 2041, but no one should underestimate humanity’s technological and innovative powers. As with all history, surprise can play a major role in energy history, too.
Energy efficiency: Given the lack of an obvious winner among competing transitional or alternative energy sources, one crucial approach to energy consumption in 2041 will surely be efficiency at levels unimaginable today: the ability to achieve maximum economic output for minimum energy input. The lead players three decades from now may be the countries and corporations that have mastered the art of producing the most with the least. Innovations in transportation, building and product design, heating and cooling, and production techniques will all play a role in creating an energy-efficient world.
When the War Is Over
Thirty years from now, for better or worse, the world will be a far different place: hotter, stormier, and with less land (given the loss of shoreline and low-lying areas to rising sea levels). Strict limitations on carbon emissions will certainly be universally enforced and the consumption of fossil fuels, except under controlled circumstances, actively discouraged. Oil will still be available to those who can afford it, but will no longer be the world’s paramount fuel. New powers, corporate and otherwise, in new combinations will have risen with a new energy universe. No one can know, of course, what our version of the Treaty of Westphalia will look like or who will be the winners and losers on this planet. In the intervening 30 years, however, that much violence and suffering will have ensued goes without question. Nor can anyone say today which of the contending forms of energy will prove dominant in 2041 and beyond.
Were I to wager a guess, I might place my bet on energy systems that were decentralized, easy to make and install, and required relatively modest levels of up-front investment. For an analogy, think of the laptop computer of 2011 versus the giant mainframes of the 1960s and 1970s. The closer that an energy supplier gets to the laptop model (or so I suspect), the more success will follow.
From this perspective, giant nuclear reactors and coal-fired plants are, in the long run, less likely to thrive, except in places like China where authoritarian governments still call the shots. Far more promising, once the necessary breakthroughs come, will be renewable sources of energy and advanced biofuels that can be produced on a smaller scale with less up-front investment, and so possibly incorporated into daily life even at a community or neighborhood level.
Whichever countries move most swiftly to embrace these or similar energy possibilities will be the likeliest to emerge in 2041 with vibrant economies — and given the state of the planet, if luck holds, just in the nick of time.
Michael T. Klare is a professor of peace and world security studies at Hampshire College, a TomDispatch regular, and the author, most recently, of Rising Powers, Shrinking Planet. A documentary movie version of his previous book, Blood and Oil, is available from the Media Education Foundation.
Copyright 2011 Michael T. Klare
Book Launch in Nevada City Council Chamber: Richard Tuttle’s “Nevada City and Beyond: An Unscripted Life”
Richard Tuttle
A day or so ago I received this email from our friend, Dave Comstock, publisher of Comstock Bonanza Press, concerning a “book launch” on October 15th in the Nevada City Council Chamber … of judge Richard E. Tuttle’s book, “Nevada City and Beyond: An Unscripted Life:”
Here’s the announcement Dave sent along with the email:
Tea Party Gets the Constitution Wrong
Reprinted with permission from ConsortiumNews.
The Tea Partiers love to cite the U.S. Constitution as supporting their contempt for the federal government. But they don’t realize that the Constitution represented the most important assertion of central authority in American history, writes Robert Parry.
By Robert Parry
It is now an article of faith in the Tea Party and on the American Right that the Founders wrote the U.S. Constitution to restrict the power of the federal government and protect states’ rights. But that analysis is simply wrong.
Like any government document, the Constitution can only be understood in the context of what it replaced – and why. The Constitution superseded the Articles of Confederation, which guided the new country starting in 1777. The Articles granted broad authority to the states with only a weak national government.
As the Revolutionary War wore on and during the early years of peace, many American leaders – including George Washington, John Adams, James Madison, Alexander Hamilton and Thomas Jefferson – came to view the Articles as unworkable and a threat to the survival of the new nation.
The Continental Army was especially disdainful of the Articles because they didn’t grant taxing authority to the national government and thus – when the states reneged on promised funding, which they did frequently – soldiers were left without pay and munitions.
The answer to this political crisis took shape in 1786 with a growing movement for a much stronger federal government, leading to secret meetings in Philadelphia in 1787 to draft a new governing document, the Constitution.
The Constitution created the framework for a powerful federal authority that could not only declare war and negotiate treaties, but could tax, print money, regulate interstate commerce and undertake a host of other governing activities.
Besides the sweeping federal authority delineated by the Constitution, the document also dropped key language from the Articles of Confederation that had suggested the supremacy of the states.
The Articles had described the United States not as a government or even a nation, but as “a firm league of friendship” among the states “for their common defense, the security of their liberties, and their mutual and general welfare.”
If that suggestion of the states’ supremacy wasn’t clear enough, the Confederation’s Article II declared: “Each state retains its sovereignty, freedom, and independence, and every power, jurisdiction, and right, which is not by this Confederation expressly delegated.” And very few powers were delegated to the federal government.
That powerful states’ rights language was either eliminated by the Constitution or substantially watered down.
The Tenth Amendment Argument
Tea Party activists will often cite the Tenth Amendment to the Constitution as evidence that the Founders were strong advocates for states’ rights, since it says “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
But again the Tea Partiers are missing the point. The Constitution granted broad powers to the federal government – even over the regulation of national commerce – so there were far fewer powers left for the states. The Tenth Amendment amounted to a sop to mollify the anti-federalist bloc that was trying to block ratification of the Constitution by the 13 states.
To further appreciate how modest the Tenth Amendment concession was, you also must compare its wording with Article II of the Confederation. Remember, Article II says “each state retains its sovereignty, freedom, and independence,” while the Tenth Amendment simply says powers not granted to the federal government “are reserved to the States” or individuals.
Stripped out of the new national governing document were the principles of state “sovereignty” and state “independence.” In effect, American “sovereignty” had been transferred to the Republic that the Constitution had created. States were no longer dominant; they were subordinate to “we the people” as represented in the “union,” the United States of America.
Of course, the anti-federalists did not entirely go away, especially when it became clear to the agrarian South that its economic model, based on slavery, was losing ground to the growing industrial power of the North and the influence of the emancipation movement.
In the early 1830s, Southern politicians led the “nullification” challenge to the federal government, asserting that states had the right to nullify federal laws, such as a tariff on manufactured goods. But they were beaten back by President Andrew Jackson who threatened to deploy troops to South Carolina to enforce the federal supremacy established by the Constitution.
In December 1832, Jackson denounced the “nullifiers” and declared ”the power to annul a law of the United States, assumed by one State, incompatible with the existence of the Union, contradicted expressly by the letter of the Constitution, unauthorized by its spirit, inconsistent with every principle on which it was founded, and destructive of the great object for which it was formed.”
Jackson also rejected as “treason” the notion that states could secede if they wished, noting that the Constitution “forms a government not a league,” a reference to the line in the Articles of Confederation that had termed the fledgling United States ”a firm league of friendship” among the states, not a government.
The nullification crisis was defused, but a few decades later, the South’s continued resistance to the constitutional preeminence of the federal government led to secession and the formation of the Confederacy. It took the Union’s victory in the Civil War to firmly settle the issue of the sovereignty of the national Republic over the states.
However, the defeated South still balked at the principle of equal rights for blacks and invoked “states’ rights” to defend segregation during the Jim Crow era. White Southerners had amassed enough political clout, especially within the Democratic Party, to fend off civil rights for blacks.
Ending Segregation
The battle over states’ right was joined again in the 1950s when the federal government finally committed itself to enforcing the principle of “equal protection under the law” as prescribed by the Fourteenth Amendment. Many white Southerners were furious that their system of segregation was being dismantled by federal authority.
The South’s anger was reflected in the prevalence of the Confederate battle flag on pickup trucks and in store windows. White Southerners were expressing the bravado of secession even if it was more tough talk than anything real.
Gradually, the American Right retreated from outright support of racial segregation and muffled the threats of secession (although the idea still surfaces once in a while as it did in recent comments by Texas Gov. Rick Perry).
Instead, the Right has sought to impose a reinterpretation of the Constitution by revising the history of the United States and pretending that the Founders designed the Constitution as a document to establish the supremacy of the states over the federal government.
This revisionist view is now at the heart of the Tea Party movement and has powerful propaganda support from the right-wing news media. Since few Americans understand the reasons for the Constitution – or the fact that it represented a major consolidation of federal power – this right-wing disinformation campaign has proved effective.
Tea Party activists add to the misimpression about the Founders’ intent by dressing in Revolutionary War costumes and channeling the Founders’ supposed hatred of the federal government. The Tea Partiers wave “Don’t Tread on Me” flags as if the American revolutionaries were addressing that to their own government, not the British colonialists.
(Interestingly, the Tea Partiers ignore another common banner of the era, showing a serpent representing the 13 colonies cut into pieces with the instruction, “join or die.” That banner recognized the need of the disparate American states to cooperate as one nation or perish.)
The Right’s so-called “originalist” thinking about the Constitution – how the Founders allegedly disdained federal authority – also ignores the fact that nearly all the Founders were advocates of replacing the Articles of Confederation (the state sovereignty document) with the Constitution.
Among its biggest advocates was George Washington who commanded the Continental Army when it was hamstrung by the lack of resources caused by the absence of federal taxing authority in the Articles of Confederation. Washington presided at the Constitutional Convention and was elected the nation’s first president under the Constitution.
Though the Tea Party doesn’t want to admit it – and it is an inconvenient truth for the American Right – the Constitution represented the most important expansion of federal power in American history.
[For more on these topics, see Robert Parry’s Secrecy & Privilege and Neck Deep, now available in a two-book set for the discount price of only $19. For details, click here.]
Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & ‘Project Truth’ are also available there.
Forgetting Lessons of Keynes and FDR Brings On the ‘Obama Recession’
by David Woolner (Cross-posted from the Roosevelt Institute’s New Deal 2.0)
When FDR ignored the Keynesian tenet that cutting spending in a downturn spells disaster, he paid dearly. Obama is set to relearn this lesson the hard way.
“The economic experiments of President Roosevelt may prove, I think, to be of extraordinary importance in economic history, because for the first time — at least I cannot recall a comparable case — theoretical advice is being taken by one of the rulers of the world as the basis of large-scale action. The possibility of such a remarkable event has arisen out of the utter and complete discredit of every variety of orthodox advice. The state of mind in America which lies behind this willingness to try unorthodox experiments arises out of an economic situation desperate beyond precedent.”
~John Maynard Keynes, January 1934
Just under three quarters of a century ago, a group of conservative economic advisers close to Franklin Roosevelt informed the President that they were worried about the rapid rate of growth in the US economy. Since 1933, when FDR took over at the height of the Great Depression, the economy had been expanding steadily, at an average rate of 14 percent per year. Schooled as most of these advisors were in the tenets of economic orthodoxy (which called for cuts in spending during an economic downturn), and unsure of the effects of the Keynesian-style deficit spending that the administration had been engaged in under the terms of the early New Deal, the President was advised to cut the budget, reduce deficit spending and tighten the money supply as a means to stave off inflation. Heeding their word (and no economist himself), FDR did just that.
The results were an unmitigated disaster.
Thanks to the Administration’s decision to move away from the increasingly Keynesian policies it had been following — policies that saw the unemployment rate fall from a high of 25% in 1933 to 14% by 1937 — FDR launched one of the sharpest economic downturns in American history-the so-called “Roosevelt Recession” of 1937-38. In just a few short months, the GDP declined by 13 percent; industrial production by 33 percent; wages by 35 percent and an estimated four million people lost their jobs. No fool, FDR quickly reversed himself and went back to Congress to seek a massive stimulus bill to put people back to work and repair the damage to the Depression-era economy. Within three months growth had returned and the economy was back on track.
FDR only met John Maynard Keynes once during the 1930s, and after their 1934 meeting both men expressed a certain ambivalence about the other (Keynes said FDR did not know much about economics and Roosevelt said with all of his “numbers” Keynes struck him as more of a mathematician than an economist). But the lessons FDR drew from the 1937-38 recession were clear: cutting federal spending and tightening the money supply in the midst of a deep economic crisis were bad ideas and from this point on his administration pursued economic policies that can only be described as unabashedly Keynesian. FDR may never have publically embraced Keynes’s theories, and in fact preferred to call his subsequent use of massive government borrowing and spending “compensatory fiscal policy,” but the two concepts were virtually identical.
Spurred along by this change of heart and by the growing demands to increase defense spending to meet the challenges of World War II, the federal government borrowed 100s of billions of dollars in the late 1930s and early 40s, while at the same time government expenditures — i.e. stimulus — reached record levels. By the time the United States was fully engaged in the war, federal spending accounted for more than half of the country’s Gross National Product, business was booming and the scourge of unemployment had all but disappeared.
And what were the long term consequences of all of this borrowing and spending? Economic chaos? A sovereign debt and default crisis? No, what followed was more than three decades of postwar economic expansion and the creation of perhaps the best paid and best educated work-force America had ever seen.
The modern middle class was born.
In the past two years we have heard official after official claim that they do not want to repeat “the mistakes of the Great Depression.” Yet the recent behavior of both the Obama Administration and senior members of Congress belies this claim. Rather than fight for economic policies that would stimulate the economy and put people back to work, this Administration — and even many senior democratic party officials — have chosen to ignore the lessons of the past. Instead of focusing on jobs and growth — the real crisis in our economy — they have embraced the sky-is-falling rhetoric of the Republican Party extremists. These fear mongerers and obstructionists have convinced millions of Americans and virtually the entire US media that the key to economic recovery is to slash federal spending. The Administration’s championing of the 39 billion in cuts to the 2010-2011 budget and the recent debacle over the debt ceiling — with an agreement that does nothing to stimulate the economy — are but two sorry examples of this phenomenon.
In 1937 FDR paid a heavy political price for his decision to turn away from Keynesian economics. The democrats lost seats in the 1938 election and FDR’s ability to push through further fundamental reforms in Congress was severely limited from this point forward. Worse still, millions of Americas suffered from the sudden economic downturn that came as a result of these ill-timed and unnecessary cut-backs.
President Obama sells the Budget Control Act of 2011 as a victory for the American people; as an important “first step” in solving the “deficit crisis.” But he has missed a fundamental point: the most effective way to reduce the federal deficit in the long term is to spur economic growth in the short term. He also seems to have lost sight of the fact that the real crisis we face is that roughly 26 million Americans are either under-employed or out of work. This national tragedy could be greatly alleviated by a return to the Keynesian economic policies temporarily abandoned by Franklin Roosevelt three quarters of a century ago. But neither the President nor his colleagues in Congress appear to have the desire or political will to resist the incessant Republican demands to cut spending no matter what the cost to the American people.
It is sad to think that history may be repeating itself. But the apparent decision of this administration to embrace cuts over spending may soon lead the President down the same path that FDR took in 1937. Only this time the “Obama recession” of 2011-2012 will most likely cost the current president his job.
David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute.
Obama Must Read This: FDR’s Speech at Forbes Field, Oct. 1, 1936
ROOSEVELT: Mr. Chairman, Governor Earle, my friends of Pennsylvania:
A baseball park is a good place to talk about box scores. Tonight I am going to talk to you about the box score of the Government of the United States. I am going to tell you the story of our fight to beat down the depression and win recovery. From where I stand it looks as though the game is pretty well “in the bag.”
I am convinced that when Government finance or any other kind of finance is honest, and when all the cards are on the table, 4 there is no higher mathematics about it. It is just plain, scoreboard arithmetic.
When the present management of your team took charge in 1933, the national scoreboard looked pretty bad. In fact, it looked so much like a shut-out for the team that you voted a change of management in order to give the country a chance to win the game. And today we are winning it.
When the new management came to Washington, we began to make our plans—plans to meet the immediate crisis and plans that would carry the people of the country back to decent prosperity.
You and I and everybody else saw the millions out of work, saw the business concerns running in the red, saw the banks closing. Our national income had declined over 50 percent—and, what was worse, it showed no prospect of recuperating by itself. By national income I mean the total of all income of all the 125,000,000 people in this country—the total of all the pay envelopes, all the farm sales, all the profits of all the businesses and all the individuals and corporations in America.
During the four lean years before this Administration took office, that national income had declined from eighty-one billions a year to thirty-eight billions a year. In short, you and I, all of us together, were making forty-three billions—spelled with a “b,” not an “m”—forty-three billion dollars less in 1932 than we made in 1929.
Now, the rise and fall of national income—since they tell the story of how much you and I and everybody else are making-are an index of the rise and fall of national prosperity. They are also an index of the prosperity of your Government. The money to run the Government comes from taxes; and the tax revenue in turn depends for its size on the size of the national income. When the incomes and the values and transactions of the country are on the down-grade, then tax receipts go on the down-grade too. If the national income continues to decline, then the Government cannot run without going into the red. The only way to keep the Government out of the red is to keep the people out of the red. And so we had to balance the budget of the American people be-fore we could balance the budget of the national Government.
That makes common sense, doesn’t it?
The box score when the Democratic Administration came to bat in 1933 showed a net deficit in our national accounts of about $3,000,000,000, accumulated in the three previous years under my predecessor.
National income was in a downward spiral. Federal Government revenues were in a downward spiral. To pile on vast new taxes would get us nowhere because values were going down-and that makes sense too.
On top of having to meet the ordinary expenses of Government, I recognized the obligation of the Federal Government to feed and take care of the growing army of homeless and destitute unemployed.
Something had to be done. A national choice had to be made. We could do one of two things. Some people who sat across my desk in those days urged me to let Nature take its course and to continue a policy of doing nothing. I rejected that advice because Nature was in an angry mood.
To have accepted that advice would have meant the continued wiping out of people of small means—the continued loss of their homes and farms and small businesses into the hands of people who still had enough capital left to pick up those homes and farms and businesses at bankruptcy prices. It would have meant, in a very short time, the loss of all the resources of a multitude of individuals and families and small corporations. You would have seen, throughout the Nation, a concentration of property ownership in the hands of one or two percent of the population, a concentration unequaled in any great Nation since the days of the later Roman Empire.
And so the program of this Administration set out to protect the small business, the small corporation, the small shop, and the small individual from the wave of deflation that threatened them. We realized then, as we do now, that the vast army of small business men and factory owners and shop owners—together with our farmers and workers—form the backbone of the industrial life of America. In our long-range plan we recognized that the prosperity of America depended upon, and would continue to depend upon, the prosperity of them all.
I rejected the advice that was given to me to do nothing for an additional reason. I had promised, and my Administration was determined, to keep the people of the United States from starvation.
I refused to leave human needs solely in the hands of local communities—local communities which themselves were almost bankrupt.
To have accepted that advice would have been to offer breadlines again to the American people, knowing this time, however, that in many places the lines would last far longer than the bread. In those dark days, between us and a balanced budget stood millions of needy Americans, denied the promise of a decent American life.
To balance our budget in 1933 or 1934 or 1935 would have been a crime against the American people. To do so we should either have had to make a capital levy that would have been confiscatory, or we should have had to set our face against human suffering with callous indifference. When Americans suffered, we refused to pass by on the other side. Humanity came first.
No one lightly lays a burden on the income of a Nation. But this vicious tightening circle of our declining national income simply had to be broken. The bankers and the industrialists of the Nation cried aloud that private business was powerless to break it. They turned, as they had a right to turn, to the Government. We accepted the final responsibility of Government, after all else had failed, to spend money when no one else had money left to spend.
I adopted, therefore, the other alternative. I cast aside a do nothing or a wait-and-see policy.
As a first step in our program we had to stop the quick spiral of deflation and decline in the national income. Having stopped them, we went on to restore purchasing power, to raise values, to put people back to work, and to start the national income going up again.
In 1933 we reversed the policy of the previous Administration. For the first time since the depression you had a Congress and an Administration in Washington which had the courage to provide the necessary resources which private interests no longer had or no longer dared to risk.
This cost money. We knew, and you knew, in March, 1933, that it would cost money. We knew, and you knew, that it would cost money for several years to come. The people understood that in 1933. They understood it in 1934, when they gave the Administration a full endorsement of its policy. They knew in 1935, and they know in 1936, that the plan is working.
All right, my friends, let us look at the cost. Since we could not get the money by taxes we borrowed it, and increased the public debt.
President Hoover’s Administration increased the national debt in the net amount of over three billion dollars in three depression years, and there was little to show for it. My Administration has increased the national debt in the net amount of about eight billion dollars and there is much to show for it.
Put that figure of eight billions out here on the scoreboard, and let me tell you where the dollars went.
Over a billion and a half went for payment of the World War Veterans’ Bonus this year instead of in 1945. That payment is now out of the way, and is no longer a future obligation of the Government.
As for the other six and a half billions of the deficit we did not just spend money; we spent it for something. America got something for what we spent—conservation of human resources through C.C.C. camps and through work relief; conservation of natural resources of water, soil and forest; billions for security and a better life. While many who criticize today were selling America short, we were investing in the future of America.
Contrast those expenditures and what we got for them with certain other expenditures of the American people in the years between 1920 and 1930. During that period not merely eight billions but many more billions came out of American pockets and were sent abroad—to foreign countries where the money was used for increasing foreign armaments, for building foreign factories to compete with us, for building foreign dwellings, swimming pools, and slaughter houses, for giving employment to the foreign unemployed—foreign boondoggling, if you will.
Those dollars, billions of them, were just as good American money—just as hard-earned—just as much the reward of our thrift—as the dollars we have spent during these three years at home giving work to the unemployed. Most of those dollars sent abroad are gone for good. Those billions, lost to us under previous Administrations, do not, by the way, include the other billions loaned by the United States to foreign Governments during and immediately after the War.
I ask you the simple question: Has it not been a sounder investment for us during these past three years to spend eight billion dollars for American industry, American farms, American homes and the care of American citizens?
I have used the figure of eight billion dollars as representing the net increase in our national debt. Immediately people will rush into print or run to the microphone to tell you that my arithmetic is all wrong. They will tell you that the increase in the national debt is thirteen billions instead of eight. That is technically and morally just as correct as if someone were to try to scare you about the condition of your bank by telling you all about its liabilities and not telling you about its assets.
That is technically and morally just as correct as telling you good people here in Pennsylvania that none of your bank deposits or insurance policies is sound.
When you are told that the United States Treasury has thirteen billions more of liabilities than it had in 1933, you should also be told that it has six billion dollars of increased assets to set off against these liabilities.
In three years our net national debt has increased eight billions of dollars. But in two years of the recent war it increased as much as twenty-five billion dollars. National defense and the future of America were involved in 1917. National defense and the future of America were also involved in 1933. Don’t you believe that the saving of America has been cheap at that price? It was more than defense—it was more than rescue. It was an investment in the future of America.
And, incidentally, tonight is an anniversary in the affairs of our Government which I wish to celebrate with you and the American people. It is October first, and it marks the end of a whole year in which there has been not a single national bank failure in all the United States. It has been fifty-five years since that kind of record has been established. You and I can take this occasion to rejoice in that record. It is proof that the program has worked.
Compare the scoreboard which you have in Pittsburgh now with the scoreboard which you had when I stood here at second base in this field four years ago. At that time, as I drove through these great valleys, I could see mile after mile of this greatest mill and factory area in the world, a dead panorama of silent black structures and smokeless stacks. I saw idleness and hunger instead of the whirl of machinery. Today as I came north from West Virginia, I saw mines operating, I found bustle and life, the hiss of steam, the ring of steel on steel—the roaring song of industry.
And now a word as to this foolish fear about the crushing load the debt will impose upon your children and mine. This debt is not going to be paid by oppressive taxation on future generations. It is not going to be paid by taking away the hard-won savings of the present generation.
It is going to be paid out of an increased national income and increased individual incomes produced by increasing national prosperity.
The deficit of the national Government has been steadily declining for three years running, although technically this year it did not decline, because we paid the Bonus this year instead of 1945. Without the Bonus the deficit would have declined this year also.
The truth is that we are doing better than we anticipated in 1933. The national income has gone up faster than we dared then to hope. Deficits have been less than we expected. Treasury receipts are increasing. The national debt today in relation to the national income is much less than it was in 1933, when this Administration took office.
The national income was thirty-eight billions in 1932. In 1935 it was fifty-three billions and this year it will be well over sixty billions. If it keeps on rising at the present rate, as I am confident that it will, the receipts of the Government, without imposing any additional taxes, will, within a year or two, be sufficient to care for all ordinary and relief expenses of the Government—in other words, to balance the budget.
The Government of this great Nation, solvent, sound in credit, is coming through a crisis as grave as war without having sacrificed American democracy or the ideals of American life.
Citation: John T. Woolley and Gerhard Peters, The American Presidency Project [online]. Santa Barbara, CA. Available from World Wide Web: http://www.presidency.ucsb.edu/ws/?pid=15149.
