Martial Law, the Financial Bailout, and War
Our archival historians have not yet fully understood either paradox, or the forces behind them. And as the philosopher George Santayana famously observed, "Those who cannot remember the past are condemned to repeat it."38
The Future: Military Escalation Abroad and at Home?
Like both Kennedy and Carter, Barack Obama is a complex mix of hopeful and depressing qualities. Among the latter are his unqualified desire to “finish” (i.e., “win”) the war in Afghanistan, and his support, along with his party’s, for the final version of the Paulson bailout. In my view they go together.
Like the government negotiated resolution of the savings-and-loan-scandal of the 1980s, the financial bailout undisguisedly taxed the public wealth of the republic to protect and even enrich those who for some time had been undeservedly enriching themselves. Old-line leftists might see nothing unusual about this: it conforms to their analysis of how the capitalist state has always worked.
But it is only characteristic of the American state since the Reagan revolution of the 1980s. Before that time governmental policies were more likely to be directed towards helping the poor; afterwards the ideology of free-market literalism, even under Clinton, was invoked in numerous ways for the enriching of the rich.
The result of these government policies has been summarized by Prof. Edward Wolff:
We have had a fairly sharp increase in wealth inequality dating back to 1975 or 1976. Prior to that, there was a protracted period when wealth inequality fell in this country, going back almost to 1929. So you have this fairly continuous downward trend from 1929, which of course was the peak of the stock market before it crashed, until just about the mid-1970s. Since then, things have really turned around, and the level of wealth inequality today is almost double what it was in the mid-1970s…..
Up until the early 1970s, the U.S. actually had lower wealth inequality than Great Britain, and even than a country like Sweden. But things have really turned around over the last 25 or 30 years. In fact, a lot of countries have experienced lessening wealth inequality over time. The U.S. is atypical in that inequality has risen so sharply over the last 25 or 30 years.39
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Past excesses of American wealth, as in the Gilded Age and the 1920s, have been followed by political reforms, such as the income tax, to reduce wealth and income disparity. But as Kevin Phillips has warned, this type of reform must happen again soon, or it may not happen at all:
As the twenty-first century gets underway, the imbalance of wealth and democracy in the United States is unsustainable. . . . Either democracy must be renewed, with politics brought back to life, or wealth is likely to cement a new and less democratic regime—plutocracy by some other name.40
Judged by this criterion, the Paulson bailout as passed was not just an opportunity missed; it was a radical leap in the wrong direction. It is not reassuring that the bailout was passed with the support of Obama and the Democratic Party. This is rather a sign that plutocracy will not be seriously challenged by either party in their present state.
Warren Buffett may have been correct in saying that the bailout was necessary. But it is not hard to think of reforms that should have accompanied it:
1) there should have been transparency, not secrecy
2) public funds should not have been made available for bonuses or dividends (The richest 10 percent of Americans own 85 percent of all stock).41
And as a bailout for the automobile industry is debated, two more reforms seem self-evident:
3) any reduction in income should not affect workers alone, but all levels of employees equally
4) as has often been suggested, a limit should be established by law to the maximum ratio of the highest remuneration to the lowest in any industry – perhaps a ratio of twenty to one.
I am not making these obvious suggestions with any expectation that they will be passed or seriously debated. The plutocratic corruption of both our parties makes such a prospect almost unthinkable.
What I do want to contemplate is the serious prospect of war. America escaped from the depression of the 1890s with the Spanish-American War.42 It only escaped the Great Depression of the 1930s with the Second World War. There was even a recession in the late 1940s from which America only escaped with the Korean War. As we face the risk of major depression again, I believe we inevitably face the danger of major war again.
In the meantime, some aspects of the financial meltdown, although they arose for many reasons and were not the result of some conspiratorial cabal, may be prolonged because of their utility to the war-minded. Consider that, from the perspective of maintaining America’s imperial thrust into Afghanistan (and even Pakistan), the financial crisis has had some desired consequences:
1) The dollar’s value against other international currencies, notably the euro, has improved, thus improving America’s balance of payments and also offsetting the threat to the dollar’s important role as the primary unit of international trade.
2) Thanks to the determined international marketing of overvalued derivatives based on predatory lending, the resulting financial crisis has been internationalized, with economies elsewhere suffering even greater shocks than the United States. This has relatively improved America’s capacity to finance a major war effort overseas (which has always had a major impact on the U.S. balance of payments).
3)
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The price of oil has plummeted from $147 a barrel last July to under $40, thus weakening the economies of Russia, China, and especially Saudi Arabia, the country whose international foundations have been supporting Al Qaeda.
The Afghan situation is grim, but it is not hopeless. Two skilled observers, Barnett R. Rubin and Ahmed Rashid, have proposed a political solution for the entire region that would promise greater security for the entire area than Obama’s ill-considered proposal to send 20,000 more U.S. troops.43 In Rashid’s words,
President-elect Obama and Western leaders have to adopt a comprehensive approach that sees the region [with Afghanistan's neighbors, including Pakistan, India, Russia, China, Iran, and the former Soviet states] as a unit with interlocking development issues to be resolved such as poverty, illiteracy and weak governance. There has to be a more comprehensive but more subtle approach to democratising the region and forcing powerful but negative stakeholders in local power structures – such as the drug mafias – either to change their thinking or be eliminated.44
That observers with such recognized status are offering a sensible political solution does not provide me with much optimism. For three decades now Barnett Rubin has been offering sound advice on Iran and Afghanistan to Washington, only to be ignored by those lobbying for covert operations and military solutions. This dialectic is reminiscent of the Vietnam War, where for over a decade reasonable proposals to demilitarize the conflict were similarly ignored.
I repeat that the future is unpredictable. But I fear that Obama’s proposal to send 20,000 additional troops will carry the day, with its predictable consequences of a wider war in both Afghanistan and Pakistan.45 With this I also fear an increased use of the U.S. Army to control protests by the American people.
I earnestly hope that my fears are misplaced. Time will tell.
NOTES
1.WCAX, Burlington, Vermont – December 22, 2008, http://www.wcax.com/Global/story.asp?S=9567271. Cf. CNBC, October 30, 2008, http://www.cnbc.com/id/27423117: “`You can get paid $30 million under this program,’ says Michael Kesner, who heads Deloitte Consulting’s executive compensation practice. `There’s no limit on what you can get paid.’”
2 John Dunbar, AP, October 25, 2007, http://biz.yahoo.com/ap/081025/meltdown_evolving_bailout.html .
3.David Hirst, “Fox joins battle cry for details of US bail-out,” BusinessDay, December 24, 2008, http://www.businessday.com.au/business/fox-joins-battle-cry-for-details-of-us-bailout-20081223-74eh.html?page=-1.
4 http://phoenix.bizjournals.com/phoenix/stories/2008/12/15/daily34.html.
5. http://www.blacklistednews.com/news-2367-0-13-13–.html.
6. Rep. Brad Sherman, in the House, 8:07 EST PM, October 2, 2008, http://www.youtube.com/watch?v=HaG9d_4zij8&NR=1. Rep. Sherman later issued the following clarification: “I have no reason to think that any of the leaders in Congress who were involved in negotiating with the Bush Administration regarding the bailout bill ever mentioned the possibility of martial law — again, that was just an example of extreme and deliberately hyperbolic comments being passed around by members not directly involved in the negotiations.” Cf. Rep. Sherman on Alex Jones show, http://www.youtube.com/watch?v=_bH1mO8qhCs. .
7 Army Regulation 500-3, Emergency Employment of Army And Other Resources, Army Continuity Of Operations (COOP) Program, http://www.wikileaks.org/leak/us-army-reg-500-3-continuity-2001.pdf, emphasis added. Cf. Tom Burghardt, “Militarizing the `Homeland’ in Response to the Economic and Political Crisis: NORTHCOM’s Joint Task Force-Civil Support,” GlobalResearch, October 11, 2008, http://www.globalresearch.ca/index.php?context=va&aid=10534 .
8 Peter Dale Scott, The Road to 9/11: Wealth, Empire, and the Future of America (Berkeley and Los Angeles: University of California Press, 2007), 183-87; cf. James Mann, The Rise of the Vulcans: The History of Bush’s War Cabinet (New York: Viking, 2004), 138-45,
9 Scott, The Road to 9/11, 183-87.
10 Ritt Goldstein , “Foundations are in place for martial law in the US,” Sydney Morning Herald, July 27 2002, http://www.smh.com.au/articles/2002/07/27/1027497418339.html.
11 Peter Dale Scott, The Road to 9/11, 240-41.
12 Scott, The Road to 9/11, 60-61.
13 Robert Parry, “Henry Kissinger, Eminence Noire,” ConsortiumNews, December 28, 2008, http://www.consortiumnews.com/2008/122808.html: “Kissinger, … – while serving as a peace-talk adviser to the Johnson administration – made obstruction of the peace talks possible by secretly contacting people working for Nixon, according to Seymour Hersh’s 1983 book, The Price of Power [p. 21].
14 Hersh, Price of Power, 18. Cf. Jim Hougan, Spooks: The Haunting of America (New York: William Morrow, 1978), 435: “Kissinger, married to a former Rockefeller aide, owner of a Georgetown mansion whose purchase was enabled only by Rockefeller gifts and loans, was always the protégé of his patron, Nelson R[ockefeller], even when he wasn’t directly employed by him.”
15 Scott, The Road to 9/11, 93-118.
16 Scott, The Road to 9/11, 82-87, 91, 104-05.
17 “Brigade homeland tours start Oct. 1,” Army Times, September 30, 2008, http://www.armytimes.com/news/2008/09/army_homeland_090708w/. Cf. Michel Chossudovsky, “Pre-election Militarization of the North American Homeland, US Combat Troops in Iraq repatriated to `help with civil unrest,’"GlobalResearch, September 26, 2008, http://www.globalresearch.ca/index.php?context=va&aid=10341.
18 Agence France-Presse, December 17, 2008, http://www.google.com/hostednews/afp/article/ALeqM5iTBOy3JF8pVAthIthq8C1NrMf4Cg.
19 http://phoenix.bizjournals.com/phoenix/stories/2008/12/15/daily34.html.
20 Remarks Of Sen. Patrick Leahy, National Defense Authorization Act For Fiscal Year 2007
Conference Report, Congressional Record, September 29, 2006, http://leahy.senate.gov/press/200609/092906b.html.
21 Eliot Spitzer, “Predatory Lenders’ Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers,” Washington Post, February 14, 2008; A25, http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html?nav=hcmodule . Three months earlier, on November 8, 2007, Governor Spitzer and New York Attorney General Andrew Cuomo had published a joint letter to Congress, “calling for continued federal action to combat subprime lending practices” (http://www.state.ny.us/governor/press/1108071.html).
22 David Johnston and Philip Shenon, “U.S. Defends Tough Tactics on Spitzer,” New York Times, March 21, 2008.
23 “Why Eliot Spitzer was assassinated: The predatory lending industry had a partner in the White House,” Brasscheck TV, March 2008, http://brasschecktv.com/page/291.html.
24 Greg Palast, “Eliot’s Mess: The $200 billion bail-out for predator banks and Spitzer charges are intimately linked,” Air America Radio’s Clout, March 14, 2008,
http://www.gregpalast.com/elliot-spitzer-gets-nailed/
25 Without suggesting that the scandal was in any way centrally orchestrated or directed, it can be argued that the scandal was permitted to drag on so long because it was allowing profits from the illegal drug traffic to recapitalize the American economy and strengthen the beleaguered U.S. dollar.
26 Joseph E. Stiglitz and Linda J. Bilmes, The Three Trillion Dollar War: The True Cost of the Iraq Conflict (New York: W.W. Norton, 2008). Cf. Joseph Stiglitz and Linda Bilmes, “The three trillion dollar war,” The Times (London), February 23, 2008, http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article3419840.ece: “On the eve of war, there were discussions of the likely costs. Larry Lindsey, President Bush’s economic adviser and head of the National Economic Council, suggested that they might reach $200 billion. But this estimate was dismissed as “baloney” by the Defence Secretary, Donald Rumsfeld. His deputy, Paul Wolfowitz, suggested that postwar reconstruction could pay for itself through increased oil revenues. Mitch Daniels, the Office of Management and Budget director, and Secretary Rumsfeld estimated the costs in the range of $50 to $60 billion, a portion of which they believed would be financed by other countries. (Adjusting for inflation, in 2007 dollars, they were projecting costs of between $57 and $69 billion.) The tone of the entire administration was cavalier, as if the sums involved were minimal.”
27 Charles R. Morris, The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash (New York: PublicAffairs, 2008).
28 Joint Vision 2020, http://www.dtic.mil/jointvision/jvpub2.htm; Scott, The Road to 9/11, 20, 24. “Full spectrum dominance” repeated what had been outlined earlier in a predecessor document, Joint Vision 2010 of 2005, but with new emphasis on the statement that “the United States must maintain its overseas presence forces” (Joint Vision 2020, 6). Cf. Joint Vision 2010, 4, www.dtic.mil/jv2010/jvpub.htm: “We will remain largely a force that is based in the continental United States.”
29 Project for the New American Century, Rebuilding America’s Defenses, http://www.newamericancentury.org/RebuildingAmericasDefenses.pdf; Scott, The Road to 9/11, 23-24, 191-93.
30 Rebuilding America’s Defenses, 51, 75.
31 “War in Iraq,” BarackObama.com, http://www.barackobama.com/issues/iraq/ .
32 See e.g. Andrew Bacevich, Newsweek, December 8, 2008, http://www.newsweek.com/id/171254: “In Afghanistan today, the United States and its allies are using the wrong means to pursue the wrong mission. Sending more troops to the region, as incoming president Barack Obama and others have suggested we should, will only turn Operation Enduring Freedom into Operation Enduring Obligation. Afghanistan will be a sinkhole, consuming resources neither the U.S. military nor the U.S. government can afford to waste.” Cf. PBS, Frontline, “The War Briefing,” October 28, 2008, http://www.pbs.org/wgbh/pages/frontline/warbriefing/view/.
33 For the role of the Rhodes-promoted Jameson Raid in instigating the Boer War, see Elizabeth Longford, Jameson’s Raid: The Prelude to the Boer War (London: Weidenfeld and Nicolson, 1982).
34 Gordon M. Goldstein, Lessons in Disaster: McGeorge Bundy and the Path to War in Vietnam (New York: Times Books/Henry Holt, 2008).
35 John Newman, JFK and Vietnam: Deception, Intrigue, and the Struggle for Power (New York: Warner Books, 1992), 375-77, 434-35, 447; Peter Dale Scott, The War Conspiracy: JFK, 9/11, and the Deep Politics of War (Ipswich, MA: Mary Ferrell Foundation Press, 2008), 25-26, 28.
36 Ofira Seliktar, Failing the Crystal Ball Test: The Carter Administration and the Fundamentalist Revolution in Iran (Westport, CN: Praeger, 2000), 52.
37 Brzezinski later boasted that his “secret operation was an excellent idea. It drew the Russians
into the Afghan trap” (“Les Révélations d’un ancien conseiller de Carter,” interview with
Zbigniew Brzezinski, Le Nouvel Observateur, January 15–21, 1998, http://www.globalresearch.ca/articles/BRZ110A.html; French version:
http://www.confidentiel.net/breve.php3?id_breve=1862; quoted at length in Peter Dale Scott, Drugs, Oil, and War: The United States in Afghanistan, Colombia, and Indochina (Lanham, MD: Rowman & Littlefield, 2003), 35). For my negative assessment of what some have described as the CIA’s most successful covert operation, see The Road to 9/11, 114-37.
38 George Santayana, Life of Reason, Reason in Common Sense (New York: Scribner’s, 1905), 284.
39 Edward Wolff, “The Wealth Divide: The Growing Gap in the United States Between the Rich and the Rest,” Multinational Monitor, May 2003, http://www.thirdworldtraveler.com/America/Wealth_Divide.html. Cf. Edward Wolff, Top Heavy: The Increasing Inequality of Wealth in America and What Can Be Done About It (New York: New Press, 2002).
40 Kevin Phillips, Wealth and Democracy: A Political History of the American Rich (New York: Broadway Books, 2002), 422; quoted in Scott, The Road to 9/11, 3.
41 Wolff, “The Wealth Divide.”
42 For McKinley’s mercantilist “large policy” as a response to depression, see Philip Sheldon Foner, The Spanish-Cuban-American War and the Birth of American Imperialism, 1895-1902 (New York: Monthly Review Press, 1972).
43 Barnett R. Rubin and Ahmed Rashid, “From Great Game to Grand Bargain: Ending Chaos in Afghanistan and Pakistan,” Foreign Affairs, November/December 2008, http://www.foreignaffairs.org/20081001faessay87603-p40/barnett-r-rubin-ahmed-rashid/from-great-game-to-grand-bargain.html.
44 Ahmed Rashid, “Obama’s huge South Asia headache,” BBC, January 2, 2009, http://news.bbc.co.uk/2/hi/south_asia/7788321.stm,
45 Cf. Zia Sarhadi, “America’s "good war" turns into quicksand,” MediaMonitors, January 5, 2009, http://usa.mediamonitors.net/content/view/full/58114: “Obama’s announcement to send 20,000 additional troops to the `good war’ in Afghanistan has been greeted by the Taliban with glee. They regard it as an opportunity to attack a `bigger army, bigger target and more shiny new weapons to take from the toy soldiers.’ American generals have talked in terms of 40,000 to 100,000 additional troops, levels that are simply not available. America’s killing of hundreds of Afghan civilians in indiscriminate aerial attacks has been the most effective recruiting tool for the Taliban. Even those Afghans not keen on seeing the Taliban back in power are appalled by the level of brutality inflicted on civilians.”
