Shock Doctrine and Wisconsin and Michigan

Author Naomi Klein wrote a book a few years ago called Shock Doctrine.  It is a powerful antidote to the pro-free markets, pro-globalization stories of authors such as Daniel Yergin and Stanislaw who wrote Commanding Heights.  I wish Shock Doctrine were a full-length video to juxtaposition against Commanding Heights. In the book, Klein documents how repeatedly over a 40 year period various crises have been exploited by right-wing, free-market fundamentalists to implement policies that could not be implemented via ordinary democratic means.  Further, Klein documents how the exploitation of these crises was not accidental. It was intentional. Amy Goodman notes of the book:

In it, she reveals how those in power use times of crisis to push through undemocratic, radical, free market economic policies.

The book, published in early 2008, mostly deals with crises in other countries. Some were political, some economic, some war-related, and some natural disasters. It is a disturbing and yet riveting tale.  The “reforms” forced through in country after country inevitably work to the benefit of the global elite corporations and banks. Yet in the book most of the crises and forced “reforms” are in either poor or developing countries. It’s possible to read the book and think that we in the developed, industrialized countries are immune to such anti-democratic exploitation of either real or contrived crises.  Yes, Klein offers the example of Katrina striking New Orleans to illustrate that it “can happen here”, yet it’s possible to think not. Now it’s time to think again.

Now it’s 2011 and the crises have come to the U.S. and other developed countries. In the U.K., a new conservative government has chosen to whip up a fear of a sovereign debt crisis. “We don’t want to be like Greece”, despite the reality that the U.K., having it’s own currency, can never be in the circumstances Greece is.  They are exploiting the fear of crisis to mount a massive dismantling of public benefits that would not otherwise be possible. A dismantling they didn’t explain prior to the election.

But what I want to observe is that Shock Doctrine tactics have come to the U.S.  In Congress, Republicans are claiming the government is “broke” despite the evidence that the government can borrow unlimited amounts at near-zero interest rates and despite the fact that the U.S. cannot go “broke”. But they are using this supposed “crisis” to try to reduce or dismantle a fundamentally sound, socially beneficial program like Social Security. Heck, even if there were a budget crisis for the government, Social Security isn’t the cause and cutting isn’t the solution.  Yet the tactic here is pure shock doctrine.

I’ve mentioned before how we’re seeing Shock Doctrine in Wisconsin, Ohio, and other states that are attempting to repeal collective bargaining rights for public workers and to bust unions is pure Shock Doctrine. There is now an extensive interview with Naomi Klein where she talks about these events:

we are seeing right-wing ideologues across the country using economic crisis as a pretext to really wage a kind of a final battle in a 50-year war against trade unions, where we’ve seen membership in trade unions drop precipitously. And public sector unions are the last labor stronghold, and they’re going after it. And these governors did not run elections promising to do these radical actions, but they are using the pretext of crisis to do things that they couldn’t get elected promising to do.

And, you know, that’s the core argument of and the thesis of the book, is not that there’s something wrong with responding to a crisis decisively. Crises demand decisive responses. The issue is this backhanded attempt to use a crisis to centralize power, to subvert democracy, to avoid public debate, to say, “We have no time for democracy. It’s just too messy. It doesn’t matter what you want. We have no choice. We just have to ram it through.” And we’re seeing this in 16 states. I mean, it’s impossible to keep track of it. It’s happening on such a huge scale.

Teachers’ unions are getting the worst of it. March 8th was International Women’s Day. This is—you know, as you pointed out on your show, it’s overwhelmingly women who are providing the services that are under attack. It’s not just labor that’s under attack; it’s the services that the labor is providing that’s under attack: it’s healthcare, it’s education, it’s those fundamental care-giving services across the country, which could be profitable if they were privatized.

Later in the interview, Klein touches on what’s happening here in Michigan. In Michigan we have Governor Rick Snyder, a man who won a landslide by specifically not telling anyone what he planned to do other than “re-invent” Michigan.  Yet within days of taking office he announces plans to raise taxes on senior citizens and poor people. He further cuts state funding of local governments and school districts. Then he and the Republican legislature pass a new law to allow the governor to appoint an “emergency financial manager” with dictatorial powers to take over any local government or school district in financial trouble. All of this it is claimed is necessary because of a budget “crisis”.  Yet the budget “crisis” is itself largely the result of Snyder’s own proposal to repeal existing business taxes and replace them with business taxes that collect much less money.  It’s a crisis that Snyder largely creates and then proposes to “solve” by repealing voters rights’ to run their own local governments.

AMY GOODMAN: Well, let me ask you about Michigan. About a thousand people rallied in Michigan—

NAOMI KLEIN: Yeah.

AMY GOODMAN:—reminiscent of Wisconsin. Talk about the proposal there.

NAOMI KLEIN: … there’s so much going on that these extraordinary measures are just getting lost in the shuffle. But in Michigan, there is a bill that’s already passed the House. It’s on the verge of passing the Senate. And I’ll just read you some excerpts from it. It says that in the case of an economic crisis, that the governor has the authority to authorize the emergency manager—this is somebody who would be appointed—to reject, modify or terminate the terms of an existing contract or collective bargaining agreement, authorize the emergency manager for a municipal government—OK, so we’re not—we’re talking about towns, municipalities across the state—to disincorporate. So, an appointed official with the ability to dissolve an elected body, when they want to.

AMY GOODMAN: A municipal government.

NAOMI KLEIN: A municipal government. And it says specifically, “or dissolve the municipal government.” So we’ve seen this happening with school boards, saying, “OK, this is a failing school board. We’re taking over. We’re dissolving it. We’re canceling the contracts.” You know, what this reminds me of is New Orleans after Hurricane Katrina, when the teachers were fired en masse and then it became a laboratory for charter schools. You know, people in New Orleans—and you know this, Amy—warned us. They said, “What’s happening to us is going to happen to you.”

Think of the power now concentrated in the Governor.  If any local government or school district doesn’t do what Governor Snyder wants, if the local voters don’t want their schools run the way Snyder does, then Snyder cuts the funding to the school district/city.  They fall into “financial trouble”.  Snyder appoints a crony as financial manager.  The financial manager can go so far as to privatize the entire city and dissolve the entire existence of the city.  So much for popular will and voters speaking in a democracy.  Meanwhile, Snyder, the Governor becomes a very, very powerful man. And power can always be converted into great wealth.  Welcome to the banana republic and crony capitalism. Outcomes no voter would support if given a choice. Courtesy of the Shock Doctrine.

Prank Phone Call Reveals the Real Wisconsin Governor

Governor Scott Walker in Wisconsin gets totally pranked and reveals a lot.  No, it’s not about the money. It’s about busting the unions and he’ll lie if he has to.  From Yves Smith, the author of Econned and a blogger extrordinaire  at naked capitalism :

The Beast’s “David Koch” Speaks to Wisconsin Governor Walker

I was alerted about and listened to this recorded phone conversation between a caller claiming to be David Koch and Walker a couple hours ago and did not post it then over concern that might not be real. However, the governor’s office has issued a press release attempting to defend the governor’s half of the conversation. Per reader Doug Smith, who pinged me about the official statement:

Here’s the press release from Walker’s office:

The Governor takes many calls everyday. Throughout this call the Governor maintained his appreciation for and commitment to civil discourse. He continued to say that the budget repair bill is about the budget. The phone call shows that the Governor says the same thing in private as he does in public and the lengths that others will go to disrupt the civil debate Wisconsin is having.

I listened to the full tape. Walker said nothing at all that would indicate his appreciation for civil discourse. For example, at one point he describes a gambit under consideration where he’d invite the 14 Senators to join him in a conversation. Walker says ‘not a negotiation, a conversation’. Then he goes on to describe the purpose of this conversation: if they can get the 14 into a room, the law may support the notion that the session has officially begun — at which point, even if the 14 leave again, the quorum for the session would be there and the Republicans can move forward with votes even in the absence of the 14 Dems. Walker says, he’d be happy to have the 14 ’scream at him for an hour’ if he could accomplish this legal tactic.

Civil discourse? Not a whiff of that in anything Walker said when he thought he was speaking to Koch.

Oh, at one point after “Koch” suggested Walker bring a baseball bat to the possible meeting, Walker did say “I’ve got on in my office. A Slugger”.

You can listen below:

 

 

Why Isn’t Wall Street in Jail? | Rolling Stone Politics

The headline says it all.

Why Isn’t Wall Street in Jail?

Financial crooks brought down the world’s economy — but the feds are doing more to protect them than to prosecute them

via Why Isn’t Wall Street in Jail? | Rolling Stone Politics.

It’s all about cronyism and revolving-door regulation.  There’s no way the feds can compete with the money the banks put out there, so probably the only way to stop this kind of crookedness is to keep the banks from getting so big in the first place.  We used to have laws about that – antitrust, Glass-Steagall, etc.

Fox, Hen House, Economic Advisors

President Obama, in his never ending desperate quest to be accepted by Congressional Republicans as being just like them, even if it means abandoning the changes he was elected to lead, has changed his lead economic advisors.  Simon Johnson in the NY Times observes:

President Obama is embarked on a major charm offensive with the business sector, as seen, for example, in the appointments of William M. Daley (formerly of JPMorgan Chase, now White House chief of staff) and Jeffrey R. Immelt (chairman and chief executive of General Electric and now also the president’s top outside economic adviser).

This should not be an uphill struggle – much of the corporate sector, particularly bigger and more global businesses, is doing well in terms of profits and presumably, at the highest levels, compensation. But when exactly will this approach deliver jobs and reduce unemployment? And does it increase risks for the future?

Republican rhetoric over the last two years was relentless in its assertion that the Obama administration was antibusiness. Supposedly, this White House attitude undermined private sector confidence and limited investment.

Simon also points out that corporate profits, and the financial, banking and multi-nationals in particular, have recovered quite nicely from the recession. Indeed, profits for them not only returned to record levels but recovered from the recession in record time. According to the President, our challenge is create jobs. I would certainly have to agree, as I’ve noted here and here. But these appointments don’t appear to help.  These guys have been part of the problem. They’re not part of the solution.  Catherine Rampell of the NY Times agrees:

In the wake of Jeffrey Immelt’s ascent to the chairmanship of President Obama’s jobs council, some commentators have questioned whether the leader of General Electric, a company that has sharply reduced its United States payrolls over the years, is the best person to be orchestrating a jobs revival.

Among executives of multinational companies, Mr. Immelt is hardly alone in having presided over a major reduction in domestic jobs amid a major increase in foreign jobs. Witness the following chart, which shows changes in domestic and foreign employment at American multinational companies from 1998 through 2008 (that is, the decade leading up to the financial crisis):

The chart is taken from testimony by Martin Sullivan, an economist and contributing editor with Tax Analysts, in a discussion of how international tax rules favor foreign, rather than domestic, job creation, especially by United States multinationals.

So the CEO of one of the largest multinationals on the planet is now advising the President on jobs creation.  The same guy who led that company to move thousands of jobs out of the U.S. and create new ones in other countries.But it’s not enough that Immelt’s the wrong guy to ask about how to create jobs.  The President is asking the fox for advise about protecting the hens.

Rampell also points out how one of Immelt’s pet proposal that he’s been pushing for a long time is for a “tax holiday” that allows U.S. based multinationals to repatriate foreign profits to the U.S. without paying tax.  In many cases the “foreign profits” of these multinationals are actually U.S.-earned profits that have been laundered through foreign subsidiaries using a variety of tax dodges and artificial internal transfer prices (see Dutch Sandwich for one example of how Google got it’s U.S. tax rate down to 2.4%).  So at a time when we are supposedly concerned about the deficit, the President is turning to one of the biggest tax dodgers around: GE.

To add further injury, let’s consider the inherent conflicts of interest.  GE, despite it’s recognizable brand name among consumers and it’s heritage as Thomas Edison’s creation, is not a the entreneurial industrial competitor it once was generations ago.  GE doesn’t  really compete in capitalistic free markets for consumers’ attention to make it’s money. GE works the government.  One of GE’s largest subsidiaries is also one of the largest military contractors dependent on the pentagon military budget. Up next is the power generation division is dependent on subsidies for the promotion of clean and renewable energy. Another huge subsidiary is the medical devices  unit which sells primarily to hospitals and doctors who in turn bill Medicare and health insurers – and healthcare spending is driving the fed government spending. The NBC subsidiary depends on the FCC for favorable decisions and protection from competition. And finally, the last major subsidiary is the financial services unit which benefitted from the bank bailouts.  Let’s face it, GE is a giant that depends primarily on the federal government for support. Yet, not only is Immelt, the GE CEO in a position to have the President’s ear on economic and budget issues, he’s doing it without resigning from GE. Can we all say “conflict of interest” folks?

The other appointee, William M. Daley, is resigning (for now) his position as a senior executive with JPMorgan Chase, the monster bank that the Feds bailed out and then they fought financial reform.  Let’s be real. Daley’s job lasts at most 2 years. Then he needs another job. He knows that. He also knows JP Morgan Chase will likely hire him back at a much increased salary – if he gives advice to the President favorable to JP Morgan Chase.

This isn’t representative democracy.  This isn’t even rule by some technocratic advisors.  This is crony capitalism, rule by an oligarchy.

“Change”: I don’t think this word means what they think it means.

From the Huffington Post:

Hmmm. This isn’t exactly confidence inspiring.

Tim Geithner’s new nominee for number two at the Treasury Department, Neal Wolin, played a key role in drafting legislation in the late 1990s deregulating the banking system, a former Treasury Department official confirms to us.

We aren’t going to fix the mess in banking (and the economy) by turning to the same cast of characters whose lack of vision and deregulatory ideology got us into the mess.