Sunday, April 10, 2011

Divide et impera

"Divide and conquer" is as old as the hills, which is why it's rendered above in Latin. The imperial Romans used it and so have all successful rulers of mankind. It's a classic strategy for gaining and holding on to power.

In the classless U.S. we call it class warfare, and it's been operating brilliantly since the era of Andrew Jackson to keep us headed in the direction of plutocracy. It's a simple formula: I resent you for making $7,500 bucks a year more than I do, you resent some guy for having a "Cadillac" healthcare plan, that guy resents me for not being "under water" on my mortgage, still another guy resents both of us for our "gold-plated" pensions.

It's chump change they've got us squabbling over, folks. Sure, public employee unions are by no means "heroic laborers" in the mold of coal miners, longshoremen, weavers, textile workers, teamsters or steelworkers. But that doesn't mean they're the enemy either. However "lavish" (compared to what?) the deals union leaders have cut with their state employers, it's just stupid to scapegoat other working people as the cause of all our financial woes. For one thing, they're not. For another, it's class-warfare, divide-and-conquer rhetoric, and we're falling for it. Again.

We need more unions, in fact, not fewer. Most existing unions may well be corrupt, job-destroying slush funds for politicians - but they are among the last forms of self-organization We the People have. A society without grass-roots, local, voluntary associations (if you ever studied history, they used to call them Friendly Societies, and along with churches and synagogues they were the origin of credit unions, savings and loans, insurance companies, unemployment and disability compensation, fire departments, schools, hospitals, homeless shelters and many other fine things) is a society already divided and conquered. Think thrice before you support breaking up Big Labor. Organize yourself instead of disorganizing others.

Another example of that insidious D&C rhetoric: The New York Times is not what you'd think of as a populist broadsheet, so when it runs articles like "Enriching a Few at the Expense of Many" (April 10, 2011), you have to wonder. Companies should exist, the article argues, for the benefit of shareholders, not insiders. Shareholders and investors are the owners of a company; "excessive" executive pay robs these owners of their fair share of company profits and may even bankrupt the company in the end.

The general outrage at "Wall Street" in the wake of the Great Recession of 2008-present takes a similar form. People feel they have the right to condemn private corporations for "overcompensating" their CEOs and other top employees. The government should "do something" about it.

Hell, the government would love to. They're always trying to take over the private sector and dictate its every move. The populist ressentiment spawned by the 2008 crash finds favor with an administration whose upper reaches are more populated than ever by literally dozens of revolving-door alumni of Goldman Sachs, Lehman Brothers, Merrill Lynch, etc. Capitalism for the ruling class, socialism for the masses - that's what we need to be looking at, not who got some chump-change million-dollar bonus. If shareholders own these companies, let them deal with how much the brass gets compensated. It's amazing how laserlike people's attentiveness becomes when their own money's at stake.

The point is, rich people aren't the problem. Personal wealth is not the problem. Most of us want to get rich; just because someone else is rich doesn't mean you can't be rich as well. Not only do most rich people get rich from being smart and inventing things and processes - and then invest their riches to create goods and services and jobs - but people ascend to riches and topple from riches all the time. It is not a static category.

More crucially, there's a difference between being powerful and just being rich. The powerful are rich, but not all the rich are powerful. Archimedes, the famed Greek mathematician and inventor, once stated that if he had a place to stand and a lever long enough, he could move the earth itself. It's not how much personal wealth you possess, but whether you are in a position or are motivated to leverage it: to wield it like an instrument, a weapon to force "change," to crush opponents, to buy loyalties, to suborn consciences, to seed the media with Big Lies, to scare off advertisers and investors and supporters, to sap the value of currencies, to suck dry any remaining pockets of independent power, to orchestrate fictitious conflicts, to betray secrets, to corrupt ideals - and to rip off the little people of all nations.

Some of these leveragers aren't even super wealthy. All they've done is maneuver themselves into top decision-making spots at big foundations and trusts and hedge funds. A few billion bucks in the right hands is a great force-multiplier, a major magnifier of intent.

To return to the financial crisis, the state could gouge all the "excessive" cash out of every millionaire and all 400 billionaires in America, and that still wouldn't cover the interest on our sovereign debt for a single year. And the following year when the state returned for more, there would remain neither golden eggs nor geese for them to seize.

We need to ask different questions and quit lapsing into the same old tired whinging about who's "working class" and who's "bourgeois," who's "underprivileged" and who's "overprivileged." I frankly can't think of anyone more overprivileged than a U.S. congressman, except maybe the president. The main question we need to ask is:

To whom do we owe this amazing treasure trove of $14+ trillion? Who are they, where do they live, and where did they get those trillions - quadrillions - to lend to us and to the rest of the world? What do they expect for their unwanted largesse?

Here's the compound interest formula:
It's an exponential function.
It adds up dizzylingly fast.
And it's all perfectly legal!

The U.S. economy is now the biggest Ponzi scheme in the history of the planet. It works something like this:

The government demands to spend fantastic amounts of money on whatever Good Works pop into its head. The money is created out of thin air by the Federal Reserve. The government then owes the money to the Fed (and our close friend China, among others). The government taxes individuals and businesses to pay back the debt - or actually, just the interest on the debt, or debt service, because they are in no position to pay back principal at this point. So the Fed gets repaid with real money in exchange for the fiat, ersatz, unsecured, digitized currency they've issued. This is a major way the transfer of wealth from working people - blue collar, white collar, professional, small business and corporate - occurs.

The debt service portion of the budget is far more untouchable than entitlement and defense spending. At least the latter two budget segments are mentioned as cuttable now and again. Debt forgiveness is unmentionable. Unthinkable!

But what would happen if we tried to renegotiate or even repudiate all that accumulated, compounded, usurious indebtedness, all those loans so heedlessly made in our and our children's and our grandchildren's names? What would happen if we declared bankruptcy, defaulted, just walked away? Who would come after us? The IRS? That handful of old guys at the Fed? The tanned septuagenarians of the Council on Foreign Relations, World Bank, IMF, Trilateral Commission, Club of Rome or Bilderberg Group?

Where are their legions? Do they command an armed force, which after all is what lurks behind all "promises to pay" and the "full faith and credit" of the financial system? Would their behest be enough to send troops on the march against fellow Americans?

The only threat mentioned when - horror of horrors - anyone brings up the "specter of default" on the sovereign debt is that the banks would quit lending to us. Perfect! We don't want to borrow any more. We didn't want to borrow any more $14 trillion ago!

Some believe we need our own billionaire, a People's billionaire, someone who can't be bought and can't be ruined by the scratch of a pen like the rest of us can, who will represent the little people of this country and stand up for us against the Great Indebtors. This is the allure of a Perot, a Bloomberg or a Trump.

But maybe we don't need such a savior. Maybe we can walk away, just walk away and see what happens. File Chapter 7-11 or whatever number it is. Push the reset button. Do-over. Clear the screen and reboot. You can come out now, all is forgiven ...

Is any banker going to starve because Citigroup took a bath on its bad investments? More likely a whole lot of little people will starve if we don't get out from under those suspiciously sacred obligations.

Forgive and forget: it could be our only way out.