greydog

Linda Ross aka greydog is a native Chicagoan who lives and works in Prague. greydog is the founder and editor of 99GetSmart.

Jul 182017
 

By Michael Nevradakis, 99GetSmart

Originally published at MintPressNews

Ancient Greece is perhaps best known for its contributions to mankind in the areas of philosophy, architecture, and science. But a modern-day economist suggests that some of the economic practices that were used in ancient times could help to solve Greece’s current debt crisis.

A man waves a Greek flag in front of the Greek Parliament during a rally against new austerity measures in Athens, May 18, 2017. (AP/Yorgos Karahalis)

A man waves a Greek flag in front of the Greek Parliament during a rally against new austerity measures in Athens, May 18, 2017. (AP/Yorgos Karahalis)

ATHENS (Interview) — Closing in on a full decade in duration, the Greek economic crisis is unprecedented in the modern history of economically-developed nations. During this period, Greece’s GDP has declined by over a quarter, unemployment has skyrocketed to record levels, salaries and pensions have been decimated and a significant percentage of Greece’s population, particularly its young university graduates, have migrated abroad.

Four separate memorandum packages that allegedly “bailed out” Greece have instead squeezed the economy to its limits through the imposition of harsh austerity measures, cuts, and privatizations even of profitable public assets. Meanwhile, most of the “bailout” funds, which are actually monies that have been loaned to Greece, have been routed right back to European banks, with very little of that money actually entering the Greek economy.

MintPress News recently spoke with economist and author Spiros Lavdiotis in an interview that initially aired on Dialogos Radio in two parts in May and June. Lavdiotis is a former analyst for the Bank of Canada and has written several books and articles on the Greek economic situation during the crisis. He has also extensively researched the economics of ancient Greece and the connections of ancient philosophy with modern-day economic challenges.

In this interview, Lavdiotis discusses austerity, the present-day Greek economic situation, the reasons why he believes Greece must exit the eurozone and the manner in which it can do so, while also explaining what ancient Greece can teach us about dealing with debt today.

MintPress News (MPN): Share with us a few words about austerity as an economic doctrine, and how this doctrine developed.

Spiros Lavdiotis (SL): The modern form of austerity developed in the meeting of Toronto of the G20 [in 2010]. There was a split in the opinion, in that high-level meeting. The Americans espoused the principles of Keynesianism in trying to recover from the financial crisis of 2008, when the whole of the financial system collapsed, particularly after the bankruptcy of Lehman Brothers in September 2008. Together with the United States in espousing the principles of Keynes were India, Russia, and China. At the same time, the Europeans split from this idea. They thought that in order to save their own weak financial system, that austerity is the only way to do it.

The crisis that started in the United States with the subprime loans and developed in a snowball fashion, to a great extent it disseminated its waves to the European system, which was weaker than the U.S. system. [The fact is] that the eurozone does not have and is not built on sound principles. It is a legal construction which is incomplete because there is no political union, banking union, or financial union. There is no such thing, it was simply a “reverse creation,” starting from a legal structure of the monetary union, and then trying to instigate a political union. It’s very unusual, it’s never happened in the history of civilization.

As a result, when the crisis came, everything fell apart. They didn’t know what to do. In a bulletin which was issued by the European Central Bank (ECB) in May 2010, they admitted that they were in a state of complete collapse. They didn’t have any mechanism, nothing. So they tried to save themselves—particularly the Germans, who had the biggest exposure to the system, the German and the French banks. They decided not to apply Keynesian principles and to follow austerity.

Greek Prime Minister George Papandreou, right, welcomes the head of the International Monetary Fund Dominique Strauss-Kahn at his office in Athens on Dec. 7, 2010. Strauss-Kahn was in Greece to negotiate terms of the repayment of the three-year euro110 billion ($150 billion) bailout loan intended to saved the debt-ridden country from default. (AP/Thanassis Stavrakis)

Greek Prime Minister George Papandreou, right, welcomes the head of the International Monetary Fund Dominique Strauss-Kahn at his office in Athens on Dec. 7, 2010. Strauss-Kahn was in Greece to negotiate terms of the repayment of the three-year euro110 billion ($150 billion) bailout loan intended to saved the debt-ridden country from default. (AP/Thanassis Stavrakis)

Austerity is a dangerous policy because it means that a country has financial problems due to the budget and due to deficits in the foreign exchange, in other words in the balance of payments. In order to alleviate itself, it has to impose austerity measures. How does this work? The theory says, through “confidence.” What does “confidence” mean? The theory says that when people and investors see that there is stability and the country can be saved, then “confidence” is going to build. These are unbelievable things. That’s why the measures of austerity were called “friendly to growth” measures. There is no such thing! These things never work.

In Greece, they miscalculated the “multiplier effects” of the policies which they imposed on debt and incomes. As a result, the Greek economy collapsed completely. In the second year of the imposition of the austerity measures, in 2011, GDP collapsed by 7 percent. All these measures were called “reforms,” but were not reforms. They killed the economy, salaries, pensions.

I remind you that in Greece, 50 percent of the national income arises from pensions. It was a total catastrophe. The unemployment rate, from 7.8 percent, shot up to 28 percent, and it is still measured artificially at 23 percent. This is a dismal situation. People have no hope about finding jobs, and they immigrate. The immigration rate has surpassed more than 600,000 people, from which 250,000 are educated people with degrees who are unable to find anything decent [in Greece].

Overall, the GDP from 2008 until now has fallen by 28 percent. This is the longest, in time and magnitude, drop in growth in economic terms of any developed country. This has never happened before. Even in the Great Depression in the United States, unemployment reached 25 percent and it took only three years to start recovering.

MPN: Why is there such a great insistence on economic austerity, such as in the case of Greece, and are there any examples that you can identify where any country was able to emerge from a financial crisis and return to growth as a result of austerity?

SL: Not to my knowledge. Herbert Hoover tried to impose austerity, and in two years the situation was very severe. There is no such example in the history of economics. I do not know how they developed this type of “friendly to growth” austerity. This is unbelievable, this is a myth, there is no such thing. They have tried to save the financial system of Europe, which was collapsing, and at the same time Germany went ahead and accepted this because it wants to keep the European free trade zone intact.

As you know, there are only nine EU countries which do not participate in the eurozone. The main thing was for Germany to maintain the primacy of its export power. In order to do that in this modern era, you have to maintain the financial system following the principles of free trade, the three basic principles of the Maastricht Treaty: freedom of commerce, freedom of services, and freedom of labor, and of course that presupposes the freedom of capital.

The euro is based on irrevocable exchange. In other words, it’s not like the Bretton Woods agreement, [based on] the gold standard. If a country was in a fundamental disequilibrium, they could devalue up to 10 percent and get out more easily from the predicament. Now with the euro, you cannot. As long as you entered with an exchange that was determined then, that’s it, there’s nothing you can do. It’s like an iron chain, and if you cannot fit from the very beginning—as was the case in Greece—but the European Union knew that, that the Greeks were cooking the numbers.

But the Germans wanted to sell frigates and planes to Greece, the same with the French, and therefore they closed their eyes. They wanted to have Greece there, due to the fact that they could expand their own markets to Greece, due to the different economic and industrial development of the country while at the same time not having to be afraid of devaluation. That was the main goal of Germany.

At the beginning, Germany was exporting two-thirds of their products to European countries. Then it shifted and started exporting to Asia, with its biggest market being China. But just remember that even now, exports constitute 46 percent of Germany’s GDP. They had the power to institute this policy, and the Greek politicians decided to protect the banks. This was a mistake. There were always interlocking interests between the politicians and the banking system in Greece, but I think it was also ignorance, they didn’t know the extent of that relationship in passing the losses of the banking system to the Greek taxpayer.

The amounts are tremendous. They involve a sum of 240-plus billion euros. [By comparison], Greece has a GDP of 175 billion euros. You have a small economy producing 175 billion euros [of economic activity] and you transfer 240 billion in banking system losses that have nothing to do with the Greek economy, this is close to 150 percent of GDP. This would be the same as a $25 trillion bank recapitalization in the United States.

The United States can still print money though, but in the eurozone, all the countries have to give up their monetary sovereignty. It was given to the EU, where in effect you had only one institution, the ECB, and therefore you are transferring all the rights of creating money to one institution which then, in order for you to have money, they will [fund] you by charging interest, but not directly to the member-states, only to the banking systems. The state, to finance its expenditures and the coverage of all programs for health and for welfare and whatever expenses were necessary for the state, had to borrow.

And to borrow from whom? Because the ECB does not directly lend to states, it had to borrow from the private sector, and the private sector had to borrow the funds from the ECB, which was charging interest. The commercial banks then had to charge extra interest to lend money to the Greek state. What happened then? The Greek state had to charge taxpayers with higher taxes to cover these expenditures. Greece entered the European Monetary Union in 2002. By 2008 we were already bankrupt, but they simply did not announce it to the public.

Internationally they did not know that the problem of the Greek state was mostly the banking system. They were talking about “corrupt Greeks.” Yes, there were corrupt Greeks, and the politicians are very corrupt in Greece, this is acknowledged, but the politicians never behaved in placing the common good ahead of themselves.

Right now we are faced, according to the latest budget, with more than 563 billion euros—which is the sum of all of the debt that occurred due to all the banking losses which entered the Greek budget—because there is no fiscal union in Europe.

MPN: “Seisachtheia” is a concept that many are not familiar with. It is also the topic of one of your books. Tell us about this ancient Greek concept and what it may teach us about debt today.

SL: There are a lot of similarities with what happened then, in the 6th century BC, in ancient Athens, with what is happening now. Back then, ancient Athens was in a great economic ordeal due to the fact that the wealth of the city was accumulated among the richest people, and the richest people of that period were landowners. They charged interest between 16 and 36 percent for those who did not have money and wanted to borrow money.

If an agrarian wanted to cultivate the fields, which were all owned by the landowners, they either had to pay one-sixth of the gross cultivation to them as a rent, or they had to go and borrow at the aforementioned rates. Eventually, it was impossible. If there was a bad crop one year, how could they give the one-sixth to the landowner? Therefore they had to borrow and they were going bankrupt.

In this Feb. 2, 2016 photo farmers stand behind a makeshift fire in front of tractors, near Kerdilia, Greece. Combine a rapidly aging population, a depleted work force and leaky finances and any country’s pension system would be in trouble. For debt-hobbled, unemployment-plagued Greece, it’s a nightmare.(AP/Giannis Papanikos)

In this Feb. 2, 2016 photo farmers stand behind a makeshift fire in front of tractors, near Kerdilia, Greece. Combine a rapidly aging population, a depleted work force and leaky finances and any country’s pension system would be in trouble. For debt-hobbled, unemployment-plagued Greece, it’s a nightmare.(AP/Giannis Papanikos)

At that time in history, it was not instituted to give land or other items as collateral. You were placing as collateral your own body, your wife, and your children. So if you were unable to pay, the debtor was given the right by law—not only in Greece but in all ancient regions, including Asia Minor, Sumeria, and Iraq—to be captured and sold as a slave. A famous site for slave exchanges at that time was the island of Aegina, just outside the port of Piraeus.

Solon was the highest official elected by the Athenians to solve this problem, because they were evacuating, just like right now the Greeks are evacuating Greece because they cannot find jobs. This is a very serious situation here in Greece because there isn’t even unemployment insurance. They say there is, but right now there are more than 1,200,000 people officially unemployed, and they pay unemployment insurance for less than 10 percent. And what kind of unemployment insurance? Its 260 euros per month, and only 10 percent [of the unemployed], or 117,000 people, get unemployment insurance.

This is the European system, which exists because there is no law or regulation or principle within the EU, particularly in the eurozone, which gives a right to work. While in the United States the Federal Reserve law says that all monetary policy will be in accordance to maximum employment, price stability and low long-term interest rates. The constitution, according to the Maastricht treaty, of the ECB says there is only one goal, and that goal is price stability. That’s it. Nothing about employment, they don’t even care about it.

This is why Greeks have to immigrate because at the same time there is no law to determine the minimum wage rate, which is the level at which a human being can survive decently. There is now a law which determines that the minimum wage rate for unskilled labor is 486 euros per month. Just think about all of you who are living in Canada or in the United States or Australia and you visit Greece. Is it possible, with 486 euros per month, for a person to live decently?

No, they cannot. You’re reduced to a pauper. It is undeclared slavery. And even the salaries, even as a civil servant, the monthly salaries are lower than that in many instances. As the minister of labor in Greece has announced, about 125,000 people are employed with a salary of fewer than 100 euros per month.

I say this because the situation in Greece is really very severe, and it’s not an accident that recently a report released by the Cologne Institute of Economic Research has said that Greece is in last place of all EU nations in terms of its poverty level, which has reached 40 percent. That’s not far from what the International Monetary Fund (IMF) acknowledged with the data of 2015, [showing] the poverty level in Greece then as 36 percent.

However, people think this is not important, particularly academics who completely dismiss all these things and say that we must remain in the eurozone, without taking into consideration the severe economic situation and the predicament that many people are in and the suffering that keeps going.

[In ancient Greece], Solon resolved those problems. The Athenians were deserting Athens and the fields were uncultivated. As a result, even the rich people said that a solution had to be found. The city was on the verge of civil war. So they elected Solon because he was famous for his integrity and knowledge and because he was middle class, not rich and not poor. Therefore, the rich trusted him and the poor also trusted him, because when he was young he showed characteristics of patriotism.

Solon enacted the “seisachtheia,” and this word remained for centuries, and even now as a word it is extremely powerful. It means “I remove the weight of debts.” It was the first macroeconomic plan that was instituted in the history of civilization. The first thing that Solon thing was institute laws which abolished lending by placing your body as collateral. That was the first time such a law was established in the history of humanity. That’s why Solon’s name remains today as such a significant light in the development of human civilization.

The next thing that he did was to devalue the Athenian currency at the time, which was the Greek drachma. He devalued the Greek drachma to make the foreign trade of Athens more competitive. At the same time, he created incentives for people to come and work in Athens, from other cities that were highly developed, promising to issue Athenian citizenship.

He tried to augment or develop foreign trade in the context that the exports of the city had to be equalized with imports. Solon was the person who instituted the principle that, in order for a country to have self-sufficiency and to be an independent nation, the revenues achieved from exports have to be equalized with the revenues given to imports. This was something that no Greek state politicians have achieved since Greece became an independent nation.

Solon was the person who instituted the “church of the demos,” meaning direct democracy. Officials were directly elected by the people, and Solon was elected as an archon of Athens for 21 years continuously because back then you were elected for one year. This was enough time for him to take [Athens] out of its economic morass and to develop its place as one of the highest civilized nations of the ancient period.

MPN: How and in what way could Greece denounce its public debt, and what does international law and international legal precedent foresee for the issue of its debt?

SL: It is very difficult to really try to eliminate the debt legally, because there is no international law which establishes the principles between creditors and debtors when nations are involved. International law, and every state have bankruptcy laws that concern companies and individuals, but in terms of international law, there are no specific principles [for nations]. This is why a national delegation, the debtor, has to sit down with creditors and determine bilaterally how they’re going to resolve this issue, because nobody can benefit by squeezing the other, like what is happening right now to Greece.

Protesting hospital staff sit in front of a wall that they built at the entrance of the Greek Finance Ministry with a banner depicting Greek Prime Minister Alexis Thipras , Deputy Health Minister Pavlos Polakis and Greek Finance Minister Euclid Tsakalotos wearing ties reading in Greek ''Ministry of broken promises" and " We drown in debt and bailouts" in central Athens. (AP/Petros Giannakouris)

Protesting hospital staff sit in front of a wall that they built at the entrance of the Greek Finance Ministry with a banner depicting Greek Prime Minister Alexis Thipras , Deputy Health Minister Pavlos Polakis and Greek Finance Minister Euclid Tsakalotos wearing ties reading in Greek ”Ministry of broken promises” and ” We drown in debt and bailouts” in central Athens, June 16, 2017. (AP/Petros Giannakouris)

Greeks have nothing to do with the losses of the banks. They’re responsible for about 70 billion [euros] due to corrupt politicians, but 70 billion is manageable because it is less than 50 percent of GDP. Why does the Greek taxpayer have to pay because of irregularities and anomalies in the eurozone, due to the fact that this is a legal institution and is not a political or fiscal union? Why do the Greek people have to pay for all these losses?

There is no international law that can resolve this issue, and this is one of the reasons why we have a big advantage, legally and ethically, to tell them that we’re stopping payments because our country is impoverished, we’re in a humanitarian crisis, why should we pay unilaterally? When you make a deal of lending and borrowing, you have two parties. Why do banks get excluded and the borrower has to carry all the weight? It’s unbelievable.

The banks did all this damage because they invested in toxic bonds in various futures markets, in securitized products which they didn’t even understand, and they carried enormous losses, hundreds of billions, and they’ve placed it on the shoulders of a small country with a GDP of 175 billion euros. What type of justice is this? With the Greek situation and the suffering imposed on all Greeks, who are not all crooks, why should they be destroyed economically?

This is going to take more a generation, to put Greece back where it was. And probably not even that because right now, Greece’s national income and GDP growth are below 2003 levels. Greece has lost about 15 years. But in terms of moral values and general values, they’ve been completely demoralized. Only 3 percent of the public now believes in politicians. This is why this situation is not going to go away either. It’s the biggest economic crime that has ever been committed.

How is it possible for all these losses, which involve not just the Greek banks but also the German banks, the French banks, the Dutch banks, to have been passed only to Greece? The international system is connected, through the euro, which creates an international platform for capital to move freely from one country to another. At any time, any money can be transferred from Athens to Berlin, from Berlin to Frankfurt, from Frankfurt to Paris. All of these losses were in the end sustained by the Greeks because the politicians accepted this. This is why it’s going to be an issue that’s going to last, because the sums are huge.

According to the [Greek] national budget, which was voted and passed in December 2016, it has receipts from credit money—in other words, borrowed money—of 563 billion euros. The total budget of the Greek state, in other words, is 614 billion euros, while the revenues of the Greek state are 50 billion euros, of which 46 billion comes from taxes. This is 320 percent more than the GDP of Greece, and it’s signed by the Greek president and by the minister of finance! How is it possible to claim that Greece is benefiting from this money while at the same time the economy has collapsed by more than 28 percent?

You can understand here, the impasse and the unfairness and what has happened to the Greek state. A lot of people outside [Greece] have realized this. They are talking about the looting of Greece, because now in order to [pay the debt], they are saying to Greece that it has to sell all the public assets. Now we have to sell what our fathers and our ancestors tried to create. They fought for this land, now they have to sell it to pay interest upon interest which has already been paid.

Since we have entered the memorandums, we have paid over 60 billion euros [in interest], and they call this “solidarity.” And according to the new calculations, the payments the Greek state [is responsible for] up to 2030 total 160 billion euros just in interest. This is usury! This is one of the most extreme forms of usury. How is it possible to survive? Everything is going to fall apart.

If in the epoch of Solon they were escaping Athens to save their skins and not to be sold as slaves, here [in Greece] no decent person can remain. This is the situation of the eurozone, the legal laws that were passed creating this union which have nothing to do with humanity. It’s simply an interest scheme, a payment scheme for those countries that are richer. And the countries that are richer are the countries of northern Europe. This is why southern Europe has almost collapsed, and we’ll see this year whether Italy can save their own banking system.

MPN: Would it be correct to say that Greece would be able to undertake unilateral action to declare a stoppage of payments or to denounce or write down the debt once it leaves the eurozone and returns to a national domestic currency?

SL: We should remember that we [Greece] are a member of the eurozone. In other words, we cannot take unilateral action. The de jure bankruptcy of the nation will take place while the country is still a member of the eurozone. In other words, the government can declare a moratorium, a temporary stoppage of payments of six months to foreign lenders. At the same time, the government can immediately start negotiations with the European authorities: the European Commission and the ECB.

The main problem of the Greek debt is that the Greek debt that has been accumulated, [placed] in the budget of 2016, having the signature of the Greek state, amounts to 563 billion euros, which are credit receipts. The lenders forced the Greek government to pass all future debt of the Greek state [into the budget], and the problem, the time schedule of the Greek debt [repayment] is stretched to 2060. The ratio of debt to GDP exceeds 320 percent.

This amount, most of it—about 95 percent—has not accumulated due to the extravagance and excesses of the Greek state. Ninety-five percent of it is debt which has been incurred by the banking system as a whole, not just Greek banks, but also the whole eurozone system, involving mainly German and French banks who have lent to the Greek banks. Therefore, these payments are related to the whole eurozone system and not to the Greek state alone. Yet the taxpayers of the Greek state [are on the hook].

For that reason, we [can] expose all of the official records through a task force appointed by experts from other states—an international task force—that will verify what was published recently, one year ago by the Technical University of Berlin, which determined that the two initial memorandums, involving amounts [totaling] 240 billion euros that were given to the Greek state and named “bailouts,” weren’t given to bail out Greece. They were given to bail out the banking system!

According to this study, less than 5 percent has gone to the Greek economy, and the rest, about 95.5 percent, went for the repayment of the debt and losses of the banking system of Europe as a whole. That’s the problem that was created due to the inflexibility of the euro system. Because the euro has an irrevocable exchange rate, and after the global crisis in 2008, which was actually a financial crisis, it was impossible for the eurozone to cope with this.

For some reason, politicians accepted this, for the losses of the entire euro system to be taken by Greece, to be paid by the Greek taxpayers, while these losses involved the whole system, because the eurozone system is a system which is very incomplete, has many faults. It’s a creation where they put the carriage in front and the horse in the back.

MPN: What happens in the event that Greece does not find that the Europeans are willing to negotiate on the issue of the debt?

SL: In my view that would be almost impossible and it would be irresponsible, because Greece represents a huge bomb of debt. If they do not accept [a write-down], they’re going to expose the whole system to great dangers, due to the systemic risk that is involved in the banking system. The European banks are not only connected with the Greek banks, which are bankrupt, but also with the American banks – which according to certain financial analysts are exposed to a tune of more than 3 trillion euros to the European banks. Therefore, some analysts say that the Greek case is like Lehman Brothers squared.

This is why it’s so dangerous. This actually explains the political stance of previous governments in joining hands with the European authorities, for Greeks to bear this huge burden that doesn’t belong to them. As I said, 95 percent of the loans [given to Greece] are to save the banks and not the Greek state.

MPN: Recently, we have again begun to hear murmurs about the possibility of “Grexit,” as well as statements from various sources, such as the Hellenic Federation of Enterprises, and a joint statement by 14 Greek economists who are based outside of Greece, about the many “dangers” and “perils” of a Greek exit from the eurozone, and the economic “catastrophe” that would follow. How do you respond to these claims, and to this fear that is being repeatedly expressed?

SL: That’s why they don’t want Greece to get out from the eurozone, precisely for their own benefit. Greece holds a huge bomb of debt. Most of it, the Greek public was not responsible for. There were losses due to the imperfections in the architecture of the European system, and these losses have to be divided and shared by the other countries, not only by Greece. Greece and the Greek taxpayer are not responsible to pay taxes, a 24-percent value-added tax (VAT) and enormous prices for gasoline. Now we pay more than 1.50 euros for a liter of gasoline. How is it possible for this country to develop? It cannot.

Everybody is terrified of a Greek exit, but Greece has to exit in order to save itself. But Germany doesn’t want that. Why? Because of the domino effect, because of the systemic risk of the banking system. Germany wants to save their own system, a banking system which is also in terrible shape. [Germany] wants to maintain its status and the benefits that it gets from the eurozone.

The eurozone is a platform where all countries give up their monetary sovereignty and there is no convertibility of the euro. It is an irrevocable exchange, and therefore Germany has a uniform platform to export its own goods, to mobilize its great exporting machine, without having to fear a country devaluing. Since, from the very beginning, it was the net exporter, it was obvious that through time, all the wealth would be accumulated [in] Germany.

Right now, Germany sits on hundreds of billions of euros of net surpluses. Germany is following a neo-mercantalist model and has a tremendous benefit by exporting those goods. The other countries that have deficits, eventually they have to borrow the funds from the German surpluses. But Germany doesn’t do that. It makes direct investments in other countries, like Greece.

FILE - In this Sunday, Oct. 18, 2015 file photo, a man walks past street art depicting Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel in Athens, Greece. Tsipras' decision to sign off on a bailout led to many in his left-wing Syriza party to quit in protest.

A man walks past street art depicting Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel in Athens, Greece. Tsipras’ decision to sign off on a bailout led to many in his left-wing Syriza party to quit in protest.

Right now, OTE [the formerly state-owned telecommunications company of Greece] doesn’t belong to Greece. Greece doesn’t have even 1 percent of shares in OTE. The majority of OTE now belongs to Deutsche Telekom, and the rest belongs to other international funds. Greece has no position there. Can you imagine if [there is a national emergency], what happens?

It is a fact that they call this “privatization,” but Deutsche Telekom is not a private company. It belongs to the German Federation. It’s a public institution. Similarly, [Greece] recently sold 14 airports to a German company [Fraport] that belongs to the German state, it’s not a private company. The [Athens international airport] Eleftherios Venizelos was sold initially to Germans, to Hochtief. Forty percent remains with the Greek state, but this [is also up for privatization]. But we already sold 14 airports. Why were they sold? Because we have to pay interest on the loans that have been imposed on us.

This is a situation where, I think, a decent politician with integrity can go ahead and try to tell the creditors “enough is enough, we have to settle this issue,” not to accept all these conditions just because Germany doesn’t want to resolve the issue because it has [upcoming] elections and because [German finance minister] Schäuble says that “debt is debt” and that it must be repaid. No, debt is not debt in this particular case, because [Greece] did not create that debt! You created it and passed it to us!

That’s why the banks are bankrupt, because the central bank decided, in order to fight the Greek people and to humiliate them, [prior to] the referendum of July 2015, to close the Greek banks. There is not even a legal definition to give the ECB the power to close the banks. Similarly, they closed the banks because they tried to affect the vote of the electorate. It was so obvious to close the banks and destroy all of the accounts, and nothing was said internationally!

The stocks of the banking issues in the Athens Stock Exchange had three “limit downs” consecutively, [a loss of] 30 percent. They lost 90 percent of their value, people were destroyed, firms were closed, and nobody said anything, people were waiting in line at ATMs to get money, [feeling] threatened and [worried] that they would be unable to feed themselves. They internationally humiliated the Greeks. Why did this happen? To frighten [the public] in order to [stay in] the eurozone.

The same tactic [is being used] now. Even though we have defaulted before, such as with the phony “PSI” [a “haircut” on Greek bonds enacted in late 2011 and early 2012] that supposedly “saved” Greece. By doing that, [this brought] the second memorandum, a loan of 130 billion euros. This did not save Greece. This money went, again, to recapitalize banks and to pay the debts that the Greek banks had from borrowed funds from the French and the German banks.

The creditor has a responsibility when lending money and therefore must accept losses from the borrower. But unfortunately this is not the story, and this is why “Grexit” is so important.

MPN: One option that we have been hearing about from analysts is the possibility of introducing a dual or parallel currency in Greece. What is the distinction between a dual or parallel currency on the one hand, and a national domestic currency on the other hand? And what would be the consequences of introducing a dual or parallel currency?

SL: First of all, a dual or parallel currency in Greece doesn’t solve the problem. This is simply a gimmick. The ECB has the monopoly power and according to the laws of the ECB, there is no such law or ordinance which allows nations to create a second currency. That would violate the principles of the treaty. That’s why the ECB [designed this system], to have control over the issue of money. For them, they have only one goal: price stability. Therefore, how would it be possible to give Greece the right to create a parallel currency when, at the same time, Italy is almost ready to default?

The debt-for-GDP [in Italy] now exceeds 132 percent, but at the same time, because Italy is a huge economy—it exceeds 2.3 trillion euros in debt—if something happens to Italy, the whole system is finished. It finishes because this is actually what they have developed in the eurozone with this primary purpose of the ECB to have the absolute control of money. It’s like creating another gold standard, and the gold standard died because it created so many anomalies and irregularities in the international system, and wealth inequalities.

Given this experience and given the fact that the eurozone is built on a gold standard—[one] based on fiat currency, which gives the right to the ECB to create unlimited money, like right now with the quantitative easing, it has already purchased one trillion-plus euros in securities. But Greece is not allowed [to participate in the quantitative easing program]. Why? Because they want to subjugate this nation in the form of “reforms.” These are not reforms! Simply, they didn’t purchase the Greek securities, just to make Greece pay the interest [to the ECB], and to subjugate and demoralize Greece, to not be able to provide resistance.

All this talk of dual currencies, all this is just to create a sundry understanding of the situation, providing false expectations that this can save the situation. It cannot save the situation. Nothing can really be saved or be improved by introducing this type of [dual or parallel currency] system, but I don’t think it will be introduced.

The only solution is the national currency, because then you are going to take back the power of creating your own money, and together with this, taking back the freedom of your country and getting out from this system, like England [with Brexit]. England has established the existing monetary system. That system is called the British model, where at the top of this system is the Bank of England. Now they see that system is collapsing and they’re leaving [the EU], because they created that system.

At that time [when this system was created], England prevailed globally because it established the gold standard. Having an advanced industrial [and shipping] sector, they were able to control other nations economically. At the same time, as with India, taking surplus value from India to England, and establishing the gold standard in a position to control deficit nations and [be paid] interest, because they did not have gold, like Greece.

Remember John Maynard Keynes. Interest reproduces so fast. “Tokos” [the Greek word for “interest”] means “to bring something into existence.” Aristotle said that it was hated by the whole society, because it creates [wealth] with no effort. The same thing has been instituted now. The Greek state gave the power to the ECB, and this ECB, through usury mechanisms, lends to the Greek state, but the Greek state pays double interest to the ECB and to the commercial banks because the ECB is not a lender of last resort! This abolishes the basic principle of central banks. That’s a function of a central bank, to be a provider of last resort funds if something goes wrong in the system. The ECB does the opposite!

The Cyprus situation shows exactly what I’m trying to say. This is why it’s crazy to talk about parallel currencies. What happened in Cyprus? One day, because [the ECB] did not properly supervise the banking system—which is one of the duties of the central bank, to have good supervision—and there were certain irregularities with certain banks, like Marfin Bank and the Bank of Cyprus. Instead of helping [Cyprus] alleviate the problem, the [ECB] went and did the so-called “bail-in.” A “bail-in” means “to capture,” to go and take money out of accounts. Whoever had their money in Cyprus banks, above 100,000 euros, lost money.

This is the situation, the banking institution that Greece wants? This is extraction, an extraction mechanism! This is like the old tyrants of Syracuse, which if you did not obey his order—and I mention this because Plato went there to educate him, and he didn’t like what Plato was saying, so he wanted to kill him. His supervisors intervened and he was sold as a slave in Aegina, and since then he was recovered from an old student and he was saved. The same thing [exists] in the eurozone.

I think all of these plans [for a dual or parallel currency] were publicized more to confuse the public.

MPN: Describe the steps that Greece could follow in order to depart from the eurozone in an orderly fashion, to transition to a national domestic currency and to avoid the dangers that many believe Greece would face, such as devaluation, high inflation or difficulty importing goods.

SL: A number of these things are a creation of imagination. Let me provide the basic steps of the exit of Greece from the eurozone and the adaptation of a national currency, based on two fundamental premises. First, that democratic institutions are maintained, and the constitution of the country, and second, that there is political will. Now, [those] are very important, fundamental assumptions, which right now do not exist. This is the system of exit for Greece, under the assumption that a light finally comes to the brains of the Greek politicians. If that happens, these are the steps that should be taken.

The country is declared in a “state of necessity,” and Article 44 of the Greek constitution is implemented, which means that after the suggestion of the council of ministers, which the prime minister presides over, power is transferred to the president of the nation. This declaration of the “state of necessity” is not required to be passed through the current representative assembly.

Then, the president declares a temporary stoppage of payments, an international moratorium. That moratorium is going to take a period of six months. During these six months, there is a plan for the reconstruction of the country—because it will be a reconstruction, it is economic devastation. So, at the same time when you declare a stoppage of payments—and this is going to be only for the foreign lenders, internally everything is going to be okay—this saves about six billion euros that are being paid in interest at this time, but also we stop payments of capital.

Therefore, we’ll have the ability to feed the nation and also to maintain salaries and pensions at the same level, because at this particular stage there is a slight surplus in the national accounts. Then we’ll have the benefit that we save six billion euros in interest payments, which would go directly to the reconstruction of the country and programs of employment.

This is what’s most important, to alleviate poverty and unemployment. That’s the primary thing, and that requires, of course, great coordination, to employ the people and to stop or to minimize the scourge of [outward] immigration. We need our educated people. This country cannot survive with old people, which continuously this is the case. It’s an aging population in Greece.

Then at the same time, we establish various capital controls, because we need the capital to remain here and not be exported abroad. Those are the major steps that should be taken simultaneously with a declaration of the nation in a “state of necessity.” It should not frighten [anybody], it’s a normal procedure which is [a result of] the extraordinary crisis taking place right now in Greece. Also it gives you the power to [declare] illegal all the measures that were taken through the austerity measures, which were based not on law, not on humanity, not anything, they were just horizontal measures [impacting] everybody without taking into consideration the principles of justice.

By placing the country in a “state of necessity,” immediately you can re-institute laws which would completely determine the unacceptability or the illegality of the existing laws of the memorandums, including the first memorandum of May 2010, the second memorandum of 2012, and the third memorandum of 2015, a total of 236 billion euros. Out of this sum, only 5 percent went to the Greek economy and for reducing poverty. Ninety-five percent went to payments. Those are known facts.

The third step after this is that you [create] a commission. We have to institute an agency which will go on to audit the Greek debt and to be confirmed officially, through the help of a task force of international [experts], to be a completely objective commission to determine which is the lawful debt and which is the unethical, unacceptable and odious debt.

In the meantime, the country, through its own people—Greek officials—start negotiations with the European authorities, whether this is the European Commission, the Eurogroup or the ECB. Of course, all those discussions have to take place when, first, the Bank of Greece is completely nationalized. This is important, because the Bank of Greece is a company and 92 percent of the shareholders are not yet known to the Greek public. This is an offense to the democratic spirit of the Greek people.

At the same time, things are not so straight, they are highly complicated because of the collapse of the Greek banks, the ECB has lent about 73 billion to “save” the banks after the fact, meaning that initially it was not accepting Greek state bonds as collateral. As a result, the banks could not really find funds to finance growth or to finance projects for businesses. [The ECB] did that, again, just to indicate that they are the power and they determine all political consequences in Greece. They decided to do so when the international public was misled that SYRIZA was a “radical left” party.

[Soon after SYRIZA] was elected on Jan. 25, 2015, the ECB, on Feb. 4, went and declared unilaterally that Greek bonds, the bonds of the Greek state, are not acceptable, they are junk bonds. That meant that they were not accepted as collateral. So the banks would not be borrowing money from the ECB, and therefore the loan activity in Greece has fallen apart, going into [negative territory]. That further aggravated the situation.

Therefore, this situation should be taken into consideration, and that’s why the banks, initially, should go to a bank holiday. It’s a necessary thing that has to be done. The banking system is going to be closed, because you need to protect whatever savings there are.

This is the situation, and I’m sure that this is inconceivable to all of you living abroad, that this is the European model of a monetary system, but it’s not a monetary system. It’s an extractive system that lives on the blood of small and [minimally-]industrialized countries.

The next step after the banks are placed on a necessary bank holiday is the nationalization of the Bank of Greece, like the Bank of England, [which was] nationalized in 1946 and the Bank of Canada was nationalized in 1938. It’s to the benefit of all the parties to agree on this, [since] this whole situation is explosive. Why is it explosive? Because that huge amount that is owned by Greece, that exists 560 billion euros, it is something that can trigger like a bomb and the whole monetary system can collapse.

It would be another situation like the great global financial crisis of 2008, and the reason is that the U.S. system is interconnected with the European system. According to the latest reports, the U.S. banks have exposures of more than $3 trillion in European banks.

That’s the situation, that’s why it’s very important, that’s why everybody is talking about the Greek exit, because if Greece decides to pull the trigger then there’s going to be a very dangerous situation around the European, the Italian banking system. Italy has exposure of more than 2.3 trillion euros. If something happened there, then the whole European monetary system is going to collapse. We have power, in other words.

If one considers the benefits of this nation and the people that live in Greece, then we can achieve tremendous results. At the same time, in order to avoid this chaotic situation which a lot of people and particularly the academics are [predicting] but which is not going to be chaotic, but a normal situation after so many years in another currency, simply we will establish a three-month freeze of salaries and prices, so as not to have the problem of inflation.

Let me tell you how we’re going to determine the first exchange rate between the drachma and the euro. The initial exchange rate is introduced at parity, one new drachma equals one euro. This is the conversion [rate] for all accounts. All the loans now would be paid in Greek new drachmas, and whatever accounts remain in the banks, in the form of accounting—in other words, electronic money—those remain in euros, but simply whatever money is [withdrawn] is paid in new drachmas.

In other words, what you do is you stamp the existing euros with an indication that this is a new drachma. All the money, therefore, that is circulating outside the banks, [becomes] new drachmas, until the new currency is ready. So there is no problem with changing the existing banking system in Greece or the ATM system. Everything remains the same, we simply stamp the existing euros into a new currency. So a 10-euro bill becomes 10 drachmas. Salaries, again, are frozen, the same for prices, for a three-month period.

People queue in front of a bank for an ATM as a man lies on the ground begging for change, in Athens. (AP/Thanassis Stavrakis)

People queue in front of a bank for an ATM as a man lies on the ground begging for change, in Athens. (AP/Thanassis Stavrakis)

This is not something new. President Nixon did this in 1971 when he decided to get out of the fixed relationship of the dollar with gold. Then, the relationship was that one ounce of gold equaled 35 dollars. This was the beginning of the collapse of the Bretton Woods agreement, as he let the dollar be exchanged in the free markets. This was very successful, because the U.S. had problems at that time because it lost the Vietnam War and they were experiencing deficits, like Greece.

All these myths that a vacuum will follow, this is nonsense, because at this stage, the Greek trade balance account is balanced, because the imports are equal to the exports. We export 25 billion euros’ worth, we import about 40 [billion euros], but the difference is covered by services, and the services are tourism and the shipping fleet that Greece has, one of the greatest shipping fleets in the world. Knowing from Solon that the expenses of imports are covered by exports, this means that we have currency, foreign currency to pay [for our imports].

Again, we should remember [that during] the bankruptcy, we are still in the eurozone. You don’t go to the drachma [immediately]. This is a six-month period [of transition]. At the same time, you have the money to feed your people and to buy medicine, to buy oil, to buy whatever items are needed and are not produced in Greece.

And in the meantime, you save the six billion euros [in interest payments]. We don’t pay them any capital for the repayment of debt, and according to the Bank of Greece’s latest report, we still have foreign exchange funds right now, which are mostly in gold—about 5 billion euros. Therefore, from where does all this fear arise?

It’s going to take two or three months until the first newly-produced drachmas are placed in the market. Don’t think it’s a huge amount of money, cash, that is floating in the market. It’s about 20 billion euros. It’s enough, this money, to be circulating around, because multiplied by the velocity effect of money, it’s enough to start motivating the Greek economy. Here we do not have that either, everything is collapsing, the velocity is collapsing, because they’re taking out [money] by taxes.

Taxes destroy money, they do not create money. Paying the unfair interest to the Europeans that they call “solidarity,” six billion euros is an enormous amount with the multiplier effect. So simply, it requires guts. Freedom requires to be courageous and to be just, and I would add to this, to really work hard to achieve this objective.

Those are the most important measures. Just to add: in order for the new drachma to get validity, immediately you institute a law through which only the Greek drachma is acceptable as a payment to the Greek tax authorities. This is something that was said by Aristotle, [who] said that money is the creation of the law. That’s why it’s called “nomisma,” from “nomos” [the Greek word for “law”]. Itis a product of law and not of nature.

All these are myths that there’s going to be a collapse, that [the new currency] will not be accepted. Why won’t be accepted if the tax office accepts the money at the same rate as one euro? As long as it’s accepted at [a ratio of] one for one, why is the market not going to accept it?

One of the benefits during this period is that we will be able to lower tax rates. This is very important, to bring out the necessary steps for motivating foreign capital, but also the growth and development of businesses, because you are going to print the money to recapitalize.

All this ideological bias, that the euro is the only solution for Greece, is completely disastrous. It’s no solution. It’s the only catastrophic element for the complete elimination of the Greek state eventually. This is an extraction mechanism and a mechanism where all the loans, if you are not able to pay them, you are going to pay them by selling the public assets of the country.

Those are the basic steps. As long as it’s understood that it’s going to take a couple of months before the new national currency is cut, in Greece from Holargos [location of Greece’s mint], and still has the old machines through which the drachma was circulated. It’s going to take some time, but as long as there is patience and a belief that our freedom and future prosperity is based on reacquiring the capacity to create our own money, then the last necessary thing is that we and the European authorities understand that we have to find, together, a solution. Otherwise, it’s going to be a situation where everybody loses.

I conclude with the hope that finally, a light comes to the brains of the Greek politicians.

michael-120x120ABOUT THE AUTHOR
Michael Nevradakis

Michael Nevradakis is a Ph D candidate in media studies at the University of Texas at Austin and a US Fulbright Scholar presently based in Athens, Greece.

Jul 132017
 

By James Petras, 99GetSmart

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Introduction

Over the past quarter century progressive writers, activists and academics have followed a trajectory from left to right – with each presidential campaign seeming to move them further to the right. Beginning in the 1990’s progressives mobilized millions in opposition to wars, voicing demands for the transformation of the US’s corporate for-profit medical system into a national ‘Medicare For All’ public program. They condemned the notorious Wall Street swindlers and denounced police state legislation and violence. But in the end, they always voted for Democratic Party Presidential candidates who pursued the exact opposite agenda.

Over time this political contrast between program and practice led to the transformation of the Progressives. And what we see today are US progressives embracing and promoting the politics of the far right.

To understand this transformation we will begin by identifying who and what the progressives are and describe their historical role. We will then proceed to identify their trajectory over the recent decades.

We will outline the contours of recent Presidential campaigns where Progressives were deeply involved.

We will focus on the dynamics of political regression: From resistance to submission, from retreat to surrender.

We will conclude by discussing the end result: The Progressives’ large-scale, long-term embrace of far-right ideology and practice.

Progressives by Name and Posture

Progressives purport to embrace ‘progress’, the growth of the economy, the enrichment of society and freedom from arbitrary government. Central to the Progressive agenda was the end of elite corruption and good governance, based on democratic procedures.

Progressives prided themselves as appealing to ‘reason, diplomacy and conciliation’, not brute force and wars. They upheld the sovereignty of other nations and eschewed militarism and armed intervention.

Progressives proposed a vision of their fellow citizens pursuing incremental evolution toward the ‘good society’, free from the foreign entanglements, which had entrapped the people in unjust wars.

Progressives in Historical Perspective

In the early part of the 20th century, progressives favored political equality while opposing extra-parliamentary social transformations. They supported gender equality and environmental preservation while failing to give prominence to the struggles of workers and African Americans. They denounced militarism ‘in general’ but supported a series of ‘wars to end all wars’.  Theodore Roosevelt and Woodrow Wilson embodied the dual policies of promoting peace at home and bloody imperial wars overseas. By the middle of the 20th century, different strands emerged under the progressive umbrella. Progressives split between traditional good government advocates and modernists who backed socio-economic reforms, civil liberties and rights.

Progressives supported legislation to regulate monopolies, encouraged collective bargaining and defended the Bill of Rights.

Progressives opposed wars and militarism in theory … until their government went to war.

Lacking an effective third political party, progressives came to see themselves as the ‘left wing’ of the Democratic Party, allies of labor and civil rights movements and defenders of civil liberties.

Progressives joined civil rights leaders in marches, but mostly relied on legal and electoral means to advance African American rights.

Progressives played a pivotal role in fighting McCarthyism, though ultimately it was the Secretary of the Army and the military high command that brought Senator McCarthy to his knees.

Progressives provided legal defense when the social movements disrupted the House Un-American Activities Committee.

They popularized the legislative arguments that eventually outlawed segregation, but it was courageous Afro-American leaders heading mass movements that won the struggle for integration and civil rights.

In many ways the Progressives complemented the mass struggles, but their limits were defined by the constraints of their membership in the Democratic Party.

The alliance between Progressives and social movements peaked in the late sixties to mid-1970’s when the Progressives followed the lead of dynamic and advancing social movements and community organizers especially in opposition to the wars in Indochina and the military draft.

The Retreat of the Progressives

By the late 1970’s the Progressives had cut their anchor to the social movements, as the anti-war, civil rights and labor movements lost their impetus (and direction).

The numbers of progressives within the left wing of the Democratic Party increased through recruitment from earlier social movements. Paradoxically, while their ‘numbers’ were up, their caliber had declined, as they sought to ‘fit in’ with the pro-business, pro-war agenda of their President’s party.

Without the pressure of the ‘populist street’ the ‘Progressives-turned-Democrats’ adapted to the corporate culture in the Party. The Progressives signed off on a fatal compromise: The corporate elite secured the electoral party while the Progressives were allowed to write enlightened manifestos about the candidates and their programs … which were quickly dismissed once the Democrats took office. Yet the ability to influence the ‘electoral rhetoric’ was seen by the Progressives as a sufficient justification for remaining inside the Democratic Party.

Moreover the Progressives argued that by strengthening their presence in the Democratic Party, (their self-proclaimed ‘boring from within’ strategy), they would capture the party membership, neutralize the pro-corporation, militarist elements that nominated the president and peacefully transform the party into a ‘vehicle for progressive changes’.

Upon their successful ‘deep penetration’ the Progressives, now cut off from the increasingly disorganized mass social movements, coopted and bought out many prominent black, labor and civil liberty activists and leaders, while collaborating with what they dubbed the more malleable ‘centrist’ Democrats. These mythical creatures were really pro-corporate Democrats who condescended to occasionally converse with the Progressives while working for the Wall Street and Pentagon elite.

The Retreat of the Progressives: The Clinton Decade

Progressives adapted the ‘crab strategy’: Moving side-ways and then backwards but never forward.

Progressives mounted candidates in the Presidential primaries, which were predictably defeated by the corporate Party apparatus, and then submitted immediately to the outcome.

The election of President ‘Bill’ Clinton launched a period of unrestrained financial plunder, major wars of aggression in Europe (Yugoslavia) and the Middle East (Iraq), a military intervention in Somalia and secured Israel’s victory over any remnant of a secular Palestinian leadership as well as its destruction of Lebanon!

Like a huge collective ‘Monica Lewinsky’ robot, the Progressives in the Democratic Party bent over and swallowed Clinton’s vicious 1999 savaging of the venerable Glass Steagall Act, thereby opening the floodgates for massive speculation on Wall Street through the previously regulated banking sector. When President Clinton gutted welfare programs, forcing  single mothers to take minimum-wage jobs without provision for safe childcare, millions of poor white and minority women were forced to abandon their children to dangerous makeshift arrangements in order to retain any residual public support and access to minimal health care. Progressives looked the other way.

Progressives followed Clinton’s deep throated thrust toward the far right, as he out-sourced manufacturing jobs to Mexico (NAFTA) and re-appointed Federal Reserve’s free market, Ayn Rand-fanatic, Alan Greenspan.

Progressives repeatedly kneeled before President Clinton marking their submission to the Democrats’ ‘hard right’ policies.

The election of Republican President G. W. Bush (2001-2009) permitted Progressive’s to temporarily trot out and burnish their anti-war, anti-Wall Street credentials. Out in the street, they protested Bush’s savage invasion of Iraq (but not the destruction of Afghanistan). They protested the media reports of torture in Abu Ghraib under Bush, but not the massive bombing and starvation of millions of Iraqis that had occurred under Clinton. Progressives protested the expulsion of immigrants from Mexico and Central America, but were silent over the brutal uprooting of refugees resulting from US wars in Iraq and Afghanistan, or the systematic destruction of their nations’ infrastructure.

Progressives embraced Israel’s bombing, jailing and torture of Palestinians by voting unanimously in favor of increasing the annual $3 billion dollar military handouts to the brutal Jewish State. They supported Israel’s bombing and slaughter in Lebanon.

Progressives were in retreat, but retained a muffled voice and inconsequential vote in favor of peace, justice and civil liberties. They kept a certain distance from the worst of the police state decrees by the RepublicanAdministration.

Progressives and Obama: From Retreat to Surrender

While Progressives maintained their tepid commitment to civil liberties, and their highly ‘leveraged’ hopes for peace in the Middle East, they jumped uncritically into the highly choreographed Democratic Party campaign for Barack Obama, ‘Wall Street’s First Black President’.

Progressives had given up their quest to ‘realign’ the Democratic Party ‘from within’: they turned from serious tourism to permanent residency.  Progressives provided the foot soldiers for the election and re-election of the warmongering ‘Peace Candidate’ Obama. After the election, Progressives rushed to join the lower echelons of his Administration. Black and white politicos joined hands in their heroic struggle to erase the last vestiges of the Progressives’ historical legacy.

Obama increased the number of Bush-era imperial wars to attacking seven weak nations under American’s ‘First Black’ President’s bombardment, while the Progressives ensured that the streets were quiet and empty.

When Obama provided trillions of dollars of public money to rescue Wall Street and the bankers, while sacrificing two million poor and middle class mortgage holders, the Progressives only criticized the bankers who received the bailout, but not Obama’s Presidential decision to protect and reward the mega-swindlers.

Under the Obama regime social inequalities within the United States grew at an unprecedented rate. The Police State Patriot Act was massively extended to give President Obama the power to order the assassination of US citizens abroad without judicial process. The Progressives did not resign when Obama’s ‘kill orders’ extended to the ‘mistaken’ murder of his target’s children and other family member, as well as unidentified bystanders. The icon carriers still paraded their banner of the ‘first black American President’ when tens of thousands of black Libyans and immigrant workers were slaughtered in his regime-change war against President Gadhafi.

Obama surpassed the record of all previous Republican office holders in terms of the massive numbers of immigrant workers arrested and expelled – 2 million. Progressives applauded the Latino protestors while supporting the policies of their ‘first black President’.

Progressive accepted that multiple wars, Wall Street bailouts and the extended police state were now the price they would pay to remain part of the “Democratic coalition’ (sic).

The deeper the Progressives swilled at the Democratic Party trough, the more they embraced the Obama’s free market agenda and the more they ignored the increasing impoverishment, exploitation and medical industry-led opioid addiction of American workers that was shortening their lives. Under Obama, the Progressives totally abandoned the historic American working class, accepting their degradation into what Madam Hillary Clinton curtly dismissed as the ‘deplorables’.

With the Obama Presidency, the Progressive retreat turned into a rout, surrendering with one flaccid caveat: the Democratic Party ‘Socialist’ Bernie Sanders, who had voted 90% of the time with the Corporate Party, had revived a bastardized military-welfare state agenda.

Sander’s Progressive demagogy shouted and rasped on the campaign trail, beguiling the young electorate. The ‘Bernie’ eventually ‘sheep-dogged’ his supporters into the pro-war Democratic Party corral. Sanders revived an illusion of the pre-1990 progressive agenda, promising resistance while demanding voter submission to Wall Street warlord Hillary Clinton. After Sanders’ round up of the motley progressive herd, he staked them tightly to the far-right Wall Street war mongering Hillary Clinton. The Progressives not only embraced Madame Secretary Clinton’s nuclear option and virulent anti-working class agenda, they embellished it by focusing on Republican billionaire Trump’s demagogic, nationalist, working class rhetoric which was designed to agitate ‘the deplorables’. They even turned on the working class voters, dismissing them as ‘irredeemable’ racists and illiterates or ‘white trash’ when they turned to support Trump in massive numbers in the ‘fly-over’ states of the central US.

Progressives, allied with the police state, the mass media and the war machine worked to defeat and impeach Trump. Progressives surrendered completely to the Democratic Party and started to advocate its far right agenda. Hysterical McCarthyism against anyone who questioned the Democrats’ promotion of war with Russia, mass media lies and manipulation of street protest against Republican elected officials became the centerpieces of the Progressive agenda. The working class and farmers had disappeared from their bastardized ‘identity-centered’ ideology.

Guilt by association spread throughout Progressive politics. Progressives embraced J. Edgar Hoover’s FBI tactics: “Have you ever met or talked to any Russian official or relative of any Russian banker, or any Russian or even read Gogol, now or in the past?” For progressives, ‘Russia-gate’ defined the real focus of contemporary political struggle in this huge, complex, nuclear-armed superpower.

Progressives joined the FBI/CIA’s ‘Russian Bear’ conspiracy: “Russia intervened and decided the Presidential election” – no matter that millions of workers and rural Americans had voted against Hillary Clinton, Wall Street’s candidate and no matter that no evidence of direct interference was ever presented. Progressives could not accept that ‘their constituents’, the masses, had rejected Madame Clinton and preferred ‘the Donald’. They attacked a shifty-eyed caricature of the repeatedly elected Russian President Putin as a subterfuge for attacking the disobedient ‘white trash’ electorate of ‘Deploralandia’.

Progressive demagogues embraced the coifed and manicured former ‘Director Comey’ of the FBI, and the Mr. Potato-headed Capo of the CIA and their forty thugs in making accusations without finger or footprints.

The Progressives’ far right- turn earned them hours and space on the mass media as long as they breathlessly savaged and insulted President Trump and his family members. When they managed to provoke him into a blind rage … they added the newly invented charge of ‘psychologically unfit to lead’ – presenting cheap psychobabble as grounds for impeachment. Finally! American Progressives were on their way to achieving their first and only political transformation: a Presidential coup d’état on behalf of the Far Right!

Progressives loudly condemned Trump’s overtures for peace with Russia, denouncing it as appeasement and betrayal!

In return, President Trump began to ‘out-militarize’ the Progressives by escalating US involvement in the Middle East and South China Sea. They swooned with joy when Trump ordered a missile strike against the Syrian government as Damascus engaged in a life and death struggle against mercenary terrorists. They dubbed the petulant release of Patriot missiles ‘Presidential’.

Then Progressives turned increasingly Orwellian: Ignoring Obama’s actual expulsion of over 2 million immigrant workers, they condemned Trump for promising to eventually expel 5 million more!

Progressives, under Obama, supported seven brutal illegal wars and pressed for more, but complained when Trump continued the same wars and proposed adding a few new ones. At the same time, progressives out-militarized Trump by accusing him of being ‘weak’ on Russia, Iran, North Korea and China. They chided him for his lack support for Israel’s suppression of the Palestinians. They lauded Trump’s embrace of the Saudi war against Yemen as a stepping-stone for an assault against Iran, even as millions of destitute Yemenis were exposed to cholera. The Progressives had finally embraced a biological weapon of mass destruction, when US-supplied missiles destroyed the water systems of Yemen!

Conclusion

Progressives turned full circle from supporting welfare to embracing Wall Street; from preaching peaceful co-existence to demanding a dozen wars; from recognizing the humanity and rights of undocumented immigrants to their expulsion under their ‘First Black’ President; from thoughtful mass media critics to servile media megaphones; from defenders of civil liberties to boosters for the police state; from staunch opponents of J. Edgar Hoover and his ‘dirty tricks’ to camp followers for the ‘intelligence community’ in its deep state campaign to overturn a national election.

Progressives moved from fighting and resisting the Right to submitting and retreating; from retreating to surrendering and finally embracing the far right.

Doing all that and more within the Democratic Party, Progressives retain and deepen their ties with the mass media, the security apparatus and the military machine, while occasionally digging up some Bernie Sanders-type demagogue to arouse an army of voters away from effective resistance to mindless collaboration.

Jul 082017
 

By James Petras, 99GetSmart

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Introduction

Throughout the US and European corporate and state media, right and left, we are told that ‘populism’ has become the overarching threat to democracy, freedom and … free markets. The media’s ‘anti-populism’ campaign has been used and abused by ruling elites and their academic and intellectual camp followers as the principal weapon to distract, discredit and destroy the rising tide of mass discontent with ruling class-imposed austerity programs, the accelerating concentration of wealth and the deepening inequalities.

We will begin by examining the conceptual manipulation of ‘populism’ and its multiple usages. Then we will turn to the historic economic origins of populism and anti-populism. Finally, we will critically analyze the contemporary movements and parties dubbed ‘populist’ by the ideologues of ‘anti-populism’.

Conceptual Manipulation

In order to understand the current ideological manipulation accompanying ‘anti-populism’ it is necessary to examine the historical roots of populism as a popular movement.

Populism emerged during the 19th and 20th century as an ideology, movement and government in opposition to autocracy, feudalism, capitalism, imperialism and socialism. In the United States, populist leaders led agrarian struggles backed by millions of small farmers in opposition to bankers, railroad magnates and land speculators. Opposing monopolistic practices of the ‘robber barons’, the populist movement supported broad-based commercial agriculture, access to low interest farm credit and reduced transport costs.

In 19th century Russia, the populists opposed the Tsar, the moneylenders and the burgeoning commercial elites.

In early 20th century India and China, populism took the form of nationalist agrarian movements seeking to overthrow the imperial powers and their comprador collaborators.

In Latin America, from the 1930s onward, especially with the crises of export regimes, Brazil, Argentina, Bolivia and Peru, embraced a variety of populist, anti-imperialist governments. In Brazil, President Getulio Vargas’s term (1951-1954) was notable for the establishment of a national industrial program promoting the interests of urban industrial workers despite banning independent working class trade unions and Marxist parties. In Argentina, President Juan Peron’s first terms (1946-1954) promoted large-scale working class organization, advanced social welfare programs and embraced nationalist capitalist development.

In Bolivia, a worker-peasant revolution brought to power a nationalist party, the Revolutionary Nationalist Movement (MNR), which nationalized the tin mines, expropriated the latifundios and promoted national development during its rule from 1952-1964.

In Peru, under President Velasco Alvarado (1968-1975), the government expropriated the coastal sugar plantations and US oil fields and copper mines while promoting worker and agricultural cooperatives.

In all cases, the populist governments in Latin America were based on a coalition of nationalist capitalists, urban workers and the rural poor. In some notable cases, nationalist military officers brought populist governments to power. What they had in common was their opposition to foreign capital and its local supporters and exporters (‘compradores’), bankers and their elite military collaborators. Populists promoted ‘third way’ politics by opposing imperialism on the right, and socialism and communism on the left. The populists supported the redistribution of wealth but not the expropriation of property. They sought to reconcile national capitalists and urban workers. They opposed class struggle but supported state intervention in the economy and import-substitution as a development strategy.

Imperialist powers were the leading anti-populists of that period. They defended property privileges and condemned nationalism as ‘authoritarian’ and undemocratic. They demonized the mass support for populism as ‘a threat to Western Christian civilization’. Not infrequently, the anti-populists ideologues would label the national-populists as ‘fascists’ … even as they won numerous elections at different times and in a variety of countries.

The historical experience of populism, in theory and practice, has nothing to do with what today’s ‘anti-populists’ in the media are calling ‘populism’. In reality, current anti-populism is still a continuation of anti-communism, a political weapon to disarm working class and popular movements. It advances the class interest of the ruling class. Both ‘anti’s’ have been orchestrated by ruling class ideologues seeking to blur the real nature of their ‘pro-capitalist’ privileged agenda and practice. Presenting your program as ‘pro-capitalist’, pro-inequalities, pro-tax evasion and pro-state subsidies for the elite is more difficult to defend at the ballot box than to claim to be ‘anti-populist’.

‘Anti-populism’ is the simple ruling class formula for covering-up their real agenda, which is pro-militarist, pro-imperialist (globalization), pro-‘rebels’ (i.e. mercenary terrorists working for regime change), pro crisis makers and pro-financial swindlers.

The economic origins of ‘anti-populism’ are rooted in the deep and repeated crises of capitalism and the need to deflect and discredit mass discontent and demoralize the popular classes in struggle. By demonizing ‘populism’, the elites seek to undermine the rising tide of anger over the elite-imposed wage cuts, the rise of low-paid temporary jobs and the massive increase in the reserve army of cheap immigrant labor to compete with displaced native workers.

Historic ‘anti-populism’ has its roots in the inability of capitalism to secure popular consent via elections. It reflects their anger and frustration at their failure to grow the economy, to conquer and exploit independent countries and to finance growing fiscal deficits.

The Amalgamation of Historical Populism with the Contemporary Fabricated Populism

What the current anti-populists ideologues label ‘populism’ has little to do with the historical movements.

Unlike all of the past populist governments, which sought to nationalize strategic industries, none of the current movements and parties, denounced as ‘populist’ by the media, are anti-imperialists. In fact, the current ‘populists’ attack the lowest classes and defend the imperialist-allied capitalist elites. The so-called current ‘populists’ support imperialist wars and bank swindlers, unlike the historical populists who were anti-war and anti-bankers.

Ruling class ideologues simplistically conflate a motley collection of right-wing capitalist parties and organizations with the pro-welfare state, pro-worker and pro-farmer parties of the past in order to discredit and undermine the burgeoning popular multi-class movements and regimes.

Demonization of independent popular movements ignores the fundamental programmatic differences and class politics of genuine populist struggles compared with the contemporary right-wing capitalist political scarecrows and clowns.

One has only to compare the currently demonized ‘populist’ Donald Trump with the truly populist US President Franklin Roosevelt, who promoted social welfare, unionization, labor rights, increased taxes on the rich, income redistribution, and genuine health and workplace safety legislation within a multi-class coalition to see how absurd the current media campaign has become.

The anti-populist ideologues label President Trump a ‘populist’ when his policies and proposals are the exact opposite. Trump champions the repeal of all pro-labor and work safety regulation, as well as the slashing of public health insurance programs while reducing corporate taxes for the ultra-elite.

The media’s ‘anti-populists’ ideologues denounce pro-business right-wing racists as ‘populists’. In Italy, Finland, Holland, Austria, Germany and France anti-working class parties are called ‘populist’ for attacking immigrants instead of bankers and militarists.

In other words, the key to understanding contemporary ‘anti-populism’ is to see its role in preempting and undermining the emergence of authentic populist movements while convincing middle class voters to continue to vote for crisis-prone, austerity-imposing neo-liberal regimes. ‘Anti-populism’ has become the opium (or OxyContin) of frightened middle class voters.

The anti-populism of the ruling class serves to confuse the ‘right’ with the ‘left’; to sidelight the latter and promote the former; to amalgamate right-wing ‘rallies’ with working class strikes; and to conflate right-wing demagogues with popular mass leaders.

Unfortunately, too many leftist academics and pundits are loudly chanting in the ‘anti-populist’ chorus. They have failed to see themselves among the shock troops of the right. The left ideologues join the ruling class in condemning the corporate populists in the name of ‘anti-fascism’. Left-wing writers, claiming to ‘combat the far-right enemies of the people’, overlook the fact that they are ‘fellow-travelling’ with an anti-populist ruling class, which has imposed savage cuts in living standards, spread imperial wars of aggression resulting in millions of desperate refugees-not immigrants –and concentrated immense wealth.

The bankruptcy of today’s ‘anti-populist’ left will leave them sitting in their coffee shops, scratching at fleas, as the mass popular movements take to the streets!

James Petras is author of The End of the Republic and the Delusion of Empire, Extractive Imperialism in the Americas: Capitalism’s New Frontier (with Henry Veltmeyer), and The Politics of Empire: The US, Israel and the Middle East. Read other articles by James, or visit James’s website.

Jul 032017
 

By , 99GetSmart

The Justice March (Photo: Edgar Şar)

The Justice March (Photo: Edgar Şar)

Triggered in Ankara by the arrest of the main Turkish opposition deputy Berberoğlu, the march for Adalet (justice) is now heading towards Istanbul and growing each day.

On June 14, Kemal Kılıçdaroğlu, the leader of Turkey’s main opposition Republican People’s Party (CHP), announced that he and his supporters were to embark on a march from Ankara to Istanbul, a distance of 450 kilometres. What is now known as a “Justice March” has been organized to protest the arrest of a former journalist and CHP deputy Enis Berberoğlu, who was sentenced to 25 years in jail on spying charges.

Holding a single banner bearing the word adalet (justice), Kılıçdaroğlu said that Turkey was facing a dictatorial regime that puts parliamentarians, journalists and academics in prison. “We do not want to live in a country where there is no justice,” he added. The march is expected to last 24 days and will end at Maltepe Prison in Istanbul, where Berberoğlu is now being held.

Kılıçdaroğlu has often been criticized for his passivity and inability to exercise an influential opposition against the anti-democratic moves of the Erdogan government, especially after the controversial constitutional referendum of April 16, which turned the Turkish parliamentary democracy into an authoritarian presidential system. The referendum was won by a narrow margin and, due to the scandal of “unstamped ballots”, half of the population in the “No camp” has trouble believing in the veracity of the referendum results.

In fact, Turkey’s recent adventures with justice are not specifically related to the controversial referendum results. On July 20, 2017 it will be the first anniversary of the State of Emergency Rule that was declared following last year’s dramatic coup attempt on July 15. This past year under the State of Emergency Rule has been marked by injustices, human rights abuses and freedom violations on an unprecedented scale. According to official figures, nearly 50.000 people, thereof 15 members of parliament, have been arrested, at least 150.000 civil servants have been dismissed and more than 170 journalists are in prison.

Kılıçdaroğlu has been calling July 20 a “civilian coup” staged by the government with the declaration of the State of Emergency Rule.

Justice March” marks the first instance in the history of the Republic, where the leader of the main opposition party embarks on a protest march of such a long distance. For many Turks, who believe that they were treated unjustly by the State of Emergency and who cannot take any legal action because of it,the adalet march has become an event of unique significance.

The pursuit of justice was able to unite larger segments of the society, which feel excluded and exposed to injustice both in front of the law even in their everyday life. Additionally, the Justice March seems to bring many opposition groups together, including the pro-Kurdish Peoples’ Democratic Party (HDP), other political parties, labour unions, bar associations along with the half of the Turkish population who voted “No” in the referendum.

CHP announced that it would no longer restrict its democratic struggle to the parliamentary opposition and is determined to have more presence in the streets. In this respect, the march may help consolidate the CHP’s role as the main opposition force against Erdogan’s tightening grip on Turkey.

This aricle is co-authored by Seren Selvin Korkmaz.

147.thumbnailAbout the author

Edgar Şar is a PhD student in Political Science at the European University Institute. He received his BA from Marmara University and his MA from Bogazici University. He is the co-founder and co-director of academic studies of Political and Social Research Institute of Europe. His current research focuses on secularism and democratization in the Middle East.

Jun 282017
 

By James Petras, 99GetSmart

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Introduction

The most striking feature of recent elections is not ‘who won or who lost’, nor is it the personalities, parties and programs. The dominant characteristic of the elections is the widespread repudiation of the electoral system, political campaigns, parties and candidates.

Across the world, majorities and pluralities of citizens of voting age refuse to even register to vote (unless obligated by law), refuse to turn out to vote (voter abstention), or vote against all the candidates (boycott by empty ballot and ballot spoilage).

If we add the many citizen activists who are too young to vote, citizens denied voting rights because of past criminal (often minor) convictions, impoverished citizens and minorities denied voting rights through manipulation and gerrymandering, we find that the actual ‘voting public’ shrivel to a small minority.

As a result, present day elections have been reduced to a theatrical competition among the elite for the votes of a minority. This situation describes an oligarchy – not a healthy democracy.

Oligarchic Competition

Oligarchs compete and alternate with one another over controlling and defining who votes and doesn’t vote. They decide who secures plutocratic financing and mass media propaganda within a tiny corporate sector. ‘Voter choice’ refers to deciding which preselected candidates are acceptable for carrying out an agenda of imperial conquests, deepening class inequalities and securing legal impunity for the oligarchs, their political representatives and state, police and military officials.

Oligarchic politicians depend on the systematic plundering Treasury to facilitate and protect billion dollar/billion euro stock market swindles and the illegal accumulation of trillions of dollars and Euros via tax evasion (capital flight) and money laundering.

The results of elections and the faces of the candidates may change but the fundamental economic and military apparatus remains the same to serve an ever tightening oligarchic rule.

The elite regimes change, but the permanence of state apparatus designed to serve the elite becomes ever more obvious to the citizens.

Why the Oligarchy Celebrates “Democracy”

The politicians who participate in the restrictive and minoritarian electoral system, with its predetermined oligarchic results, celebrate ‘elections’ as a democratic process because a plurality of voters, as subordinate subjects, are incorporated.

Academics, journalists and experts argue that a system in which elite competition defines citizen choice has become the only way to protect ‘democracy’ from the irrational ‘populist’ rhetoric appealing to a mass of citizens vulnerable to authoritarianism (the so-called ‘deplorables’). The low voter turn-out in recent elections reduces the threat posed by such undesirable voters.

A serious objective analysis of present-day electoral politics demonstrates that when the masses do vote for their class interests — the results deepen and extend social democracy. When most voters, non-voters and excluded citizens choose to abstain or boycott elections they have sound reasons for repudiating plutocratic-controlled oligarchic choices.

We will proceed to examine the recent June 2017 voter turnout in the elections in France, the United Kingdom and Puerto Rico. We will then look at the intrinsic irrationality of citizens voting for elite politicos as opposed to the solid good sense of the popular classes rejection of elite elections and their turn to extra-parliamentary action.

Puerto Rico’s Referendum

The major TV networks (NBC, ABC and CBS) and the prestigious print media (New York Times, Washington Post, and Financial Times) hailed the ‘overwhelming victory’ of the recent pro-annexationist vote in Puerto Rico. They cited the 98% vote in favor of becoming a US state!

The media ignored the fact that a mere 28% of Puerto Ricans participated in the elections to vote for a total US takeover. Over 77% of the eligible voters abstained or boycotted the referendum.

In other words, over three quarters of the Puerto Rican people rejected the sham ‘political elite election’. Instead, the majority voted with their feet in the streets through direct action.

France’s Micro-Bonaparte

In the same way, the mass media celebrated what they dubbed a ‘tidal wave’ of electoral support for French President Emmanuel Macron and his new party, ‘the Republic in March’. Despite the enormous media propaganda push for Macron, a clear majority of the electorate (58%) abstained or spoiled their ballots, therefore rejecting all parties and candidates, and the entire French electoral system. This hardly constitutes a ‘tidal wave’ of citizen support in a democracy.

During the first round of the parliamentary election, President Macron’s candidates received 27% of the vote, barely exceeding the combined vote of the left socialist and nationalist populist parties, which had secured 25% of the vote. In the second round, Macron’s party received less then 20% of the eligible vote.

In other words, the anti-Macron rejectionists represented over three quarters of the French electorate. After these elections a significant proportion of the French people – especially among the working class –will likely choose extra-parliamentary direct action, as the most democratic expression of representative politics.

The United Kingdom: Class Struggle and the Election Results

The June 2017 parliamentary elections in the UK resulted in a minority Conservative regime forced to form an alliance with the fringe Democratic Unionist Party (DUP), a far-right para-military Protestant party from Northern Ireland. The Conservatives received 48% of registered voters to 40% who voted for the Labor Party. However, 15 million citizens, or one-third of the total electorate abstained or spoiled their ballots. The Conservative regime’s plurality represented 32% of the electorate.

Despite a virulent anti-Labor campaign in the oligarch-controlled mass media, the combined Labor vote and abstaining citizens clearly formed a majority of the population, which will be excluded from any role the post-election oligarchic regime despite the increase in the turnout (in comparison to previous elections).

Elections: Oligarchs in Office, Workers in the Street

The striking differences in the rate of abstention in France, Puerto Rico, and the UK reflect the levels of class dissatisfaction and rejection of electoral politics.

The UK elections provided the electorate with something resembling a class alternative in the candidacy of Jeremy Corbyn. The Labor Party under Corbyn presented a progressive social democratic program promising substantial and necessary increases in social welfare spending (health, education and housing) to be funded by higher progressive taxes on the upper and upper middle class.

Corbyn’s foreign policy promised to end the UK’s involvement in imperialist wars and to withdraw troops from the Middle East. He also re-confirmed his long opposition to Israel’s colonial land-grabbing and oppression of the Palestinian people, as a principled way to reduce terrorist attacks at home.

In other words, Corbyn recognized that introducing real class-based politics would increase voter participation. This was especially true among young voters in the 18-25 year age group, who were among the UK citizens most harmed by the loss of stable factory jobs, the doubling of university fees and the cuts in national health services.

In contrast, the French legislative elections saw the highest rate of voter abstention since the founding of the 5th Republic. These high rates reflect broad popular opposition to ultra-neoliberal President Francois Macron and the absence of real opposition parties engaged in class struggle.

The lowest voter turn-out (72%) occurred in Puerto Rico. This reflects growing mass opposition to the corrupt political elite, the economic depression and the colonial and semi-colonial offerings of the two-major parties. The absence of political movements and parties tied to class struggle led to greater reliance on direct action and voter abstention.

Clearly class politics is the major factor determining voter turnout. The absence of class struggle increases the power of the elite mass media, which promotes the highly divisive identity politics and demonizes left parties. All of these increase both abstention and the vote for right-wing politicians, like Macron.

The mass media grossly inflated the significance of the Right’s election victories of the while ignoring the huge wave of citizens rejecting the entire electoral process. In the case of the UK, the appearance of class politics through Jeremy Corbyn increased voter turnout for the Labor Party. However, Labor has a history of first making left promises and ending up with right turns. Any future Labor betrayal will increase voter abstention.

The established parties and the media work in tandem to confine elections to a choreographed contest among competing elites divorced from direct participation by the working classes. This effectively excludes the citizens who have been most harmed by the ruling class’ austerity programs implemented by successive rightist and Social Democratic parties.

The decision of many citizens not to vote is based on taking a very rational and informed view of the ruling political elites who have slashed their living standards often by forcing workers to compete with immigrants for low paying, unstable jobs. It is deeply rational for citizens to refuse to vote for within a rigged system, which only worsens their living conditions through its attacks on the public sector, social welfare and labor codes while cutting taxes on capital.

Conclusion

The vast majority citizens in the wage and salaried class do not trust the political elites. They see electoral campaigns as empty exercises, financed by and for plutocrats.

Most citizens recognize (and despise) the mass media as elite propaganda megaphones fabricating ‘popular’ images to promote anti-working class politicians, while demonizing political activists engaged in class-based struggles.

Nevertheless, elite elections will not produce an effective consolidation of right-wing rule. Voter abstention will not lead to abstention from direct action when the citizens recognize their class interests are in grave jeopardy.

The Macron regime’s parliamentary majority will turn into an impotent minority as soon as he tries carry out his elite promise to slash the jobs of hundreds of thousands of French public sector workers, smash France’s progressive labor codes and the industry-wide collective bargaining system and pursue new colonial wars.

Puerto Rico’s profound economic depression and social crisis will not be resolved through a referendum with on 27% of the voter participation. Large-scale demonstrations will preclude US annexation and deepen mass demands for class-based alternatives to colonial rule.

Conservative rule in the UK is divided by inter-elite rivalries both at home and abroad. ‘Brexit’, the first step in the break-up of the EU, opens opportunities for deeper class struggle. The social-economic promises made by Jeremy Corbyn and his left-wing of the Labor Party energized working class voters, but if it does not fundamentally challenge capital, it will revert to being a marginal force.

The weakness and rivalries within the British ruling class will not be resolved in Parliament or by any new elections.

The demise of the UK, the provocation of a Conservative-DUP alliance and the end of the EU (BREXIT) raises the chance for successful mass extra-parliamentary struggles against the authoritarian neo-liberal attacks on workers’ civil rights and class interests.

Elite elections and their outcomes in Europe and elsewhere are laying the groundwork for a revival and radicalization of the class struggle.

In the final analysis class rule is not decided via elite elections among oligarchs and their mass media propaganda. Once dismissed as a ‘vestige of the past’, the revival of class struggle is clearly on the horizon.

Jun 272017
 

By Michael Nevradakis, 99GetSmart

Originally published at MintPressNews:

A homeless person changes clothes outside a bank in central Athens. Nearly one-in-four Greeks are unemployed and receive no benefits. Poverty rates have surged here since the start of the crisis in late 2009, with nearly 36 percent of the country living in financial distress. (AP/Thanassis Stavrakis)

A homeless person changes clothes outside a bank in central Athens. Nearly one-in-four Greeks are unemployed and receive no benefits. Poverty rates have surged here since the start of the crisis in late 2009, with nearly 36 percent of the country living in financial distress. (AP/Thanassis Stavrakis)

ATHENS (Analysis)– It has become an increasingly common sight on Greek streets, even in formerly prosperous neighborhoods. Elderly—and sometimes not so elderly—individuals rummaging through rubbish bins in search of scraps of food to eat. Beggars are now practically a universal sighting in Athens and other large cities.

More and more young Greeks are migrating abroad by the day, contributing to a “brain drain” that has totaled approximately 500,000 individuals since the onset of the crisis. In my neighborhood in central Athens, several parked cars are filled to the brim with a life’s worth of possessions, packed in boxes by individuals who have likely lost their homes and livelihoods and who now call their automobiles home. Everywhere, abandoned cars and motorcycles rust away on curbsides and sidewalks.

In another universe, the Greek coalition government comprised of the “leftist” SYRIZA and the “patriotic” Independent Greeks political parties is celebrating. Greece has, at the recently-concluded Eurogroup summit, once again been “saved.” In this latest agreement, an 8.6 billion euro tranche of “bailout” funds—a loan (not a “handout”) which had already been promised to Greece in previous agreements—was released and a long-delayed review of Greece’s “progress” under the austerity mechanisms was finally completed. Quite a cause for celebration!

Or is it? Out of the 8.6 billion, 7.7 billion euros will initially be disbursed, out of which 6.9 billion will be immediately paid back to Greece’s lenders: the European Central Bank, the International Monetary Fund and bondholders. In exchange for the release of these funds, which will be funneled right back to those who are releasing them, Greece’s government has agreed to achieve a primary budget surplus of 3.5 percent of its GDP annually through 2023, and thereafter to maintain primary budget surpluses of 2 percent annually from 2023 until 2060.

Until 2023, the Greek government has agreed to pay 27 billion euros (15 percent of Greece’s GDP) in debt service alone, and that figure increases to a 36 billion euro annual sum until 2060.

For the uninitiated: what does a primary budget surplus actually mean? It means that the state spends less than it receives in revenue. While this may sound like a fiscally prudent policy direction for Greece or any country to take, what this actually means in plain language is that in an economy that is shrinking, as with Greece, the amount of money being spent by the state each year on investment, social services, salaries, pensions and other vital services will perpetually decrease, furthering the austerity death spiral.

To provide some perspective, the IMF itself considers a primary budget surplus of 1.5 percent “realistic,” while the Central Bank of Greece, 92 percent of whose shareholders are not known, considers 2 percent a “realistic” target. In a study by economists Barry Eichengreen and Ugo Panizza that examined economic performance across 235 countries, it was found that there were only 36 cases in which countries were able to maintain a primary budget surplus of 3 percent of GDP for a five-year period, and only 17 cases where countries maintained a primary budget surplus of 3 percent of GDP across an eight-year period. Germany, often touted for its fiscal prudence, was not one of these countries.

For the SYRIZA-led regime in Greece, this is a cause for celebration. Prime Minister Alexis Tsipras publicly announced that “we got what we wanted” through this deal, which points the way towards Greece’s exit from the “supervision” of its lenders.

The newspaper Avgi, an official party organ of SYRIZA, announced for the upteenth time Greece’s impending “exit” from the economic crisis. And the Greek government is publicly touting the upcoming return of Greece to the international financial markets, ironically celebrating the prospect of Greece once again being able to attain more debt via borrowing, likely at usurious terms.

Unfortunately for Tsipras and his government, German Finance Minister Wolfgang Schäuble acted as a party pooper, putting a damper on the celebrations. Speaking publicly after the Eurogroup deal was reached, Schäuble stated that the agreement, which followed what were claimed by the Greek government to be fierce negotiations, was reached three weeks prior but was delayed because the Greek government requested additional time for PR reasons—in other words, to claim that hard negotiations took place.

Pensions, salaries see cuts as austerity steamrolls ahead

Indeed, if the rhetoric of the SYRIZA-led government is a guide to go by, then the successes have kept on coming. In February, the SYRIZA government reached yet another deal with its lenders to once again release “bailout” loan funds that already had been pledged to Greece from previous austerity agreements.

In this agreement, the government claimed that “not one euro” of new austerity would be enacted, as any austerity measures and cuts (including interventions to the tax system, which were previously claimed by the government to be “red lines” in its “negotiations” with lenders) would be offset by countermeasures in other areas, euphemistically referred to as “neutral fiscal balance” and “zero-sum fiscal interventions.”

In a “read my lips, no new taxes” moment for the Greek government, these declarations of “zero-sum fiscal interventions” and the “end of austerity” had only just barely been uttered when a host of new austerity measures were unveiled. Initially announced at 3.6 billion euros, these austerity measures now total 14.2 billion euros’ worth of cuts.

These include further reductions of 18 percent to already battered pensions, as well as salary cuts, tax increases, a cut in health expenditures, a further reduction of 50 percent to heating oil subsidies (in a country where the majority of households already cannot afford heating oil and have reverted to fireplaces and makeshift furnaces to keep warm), a reduced tax-free threshold and an increase in tax contributions, and the freeing up of home foreclosures and auctions.

Protesting hospital staff sit in front of a wall that they built at the entrance of the Greek Finance Ministry with a banner depicting Greek Prime Minister Alexis Thipras , Deputy Health Minister Pavlos Polakis and Greek Finance Minister Euclid Tsakalotos wearing ties reading in Greek ''Ministry of broken promises" and " We drown in debt and bailouts" in central Athens. (AP/Petros Giannakouris)

Protesting hospital staff sit in front of a wall that they built at the entrance of the Greek Finance Ministry with a banner depicting Greek Prime Minister Alexis Thipras , Deputy Health Minister Pavlos Polakis and Greek Finance Minister Euclid Tsakalotos wearing ties reading in Greek ”Ministry of broken promises” and ” We drown in debt and bailouts” in central Athens. (AP/Petros Giannakouris)

In exchange, “countermeasures” that will be enacted in 2019 will only take place if Greece meets “fiscal targets” up until then, include minor tax cuts (such as a 70-euro reduction to the “unified property tax” which SYRIZA, prior to ascending to power, denounced as “unconstitutional”) and offering school lunches.

The Greek government, along with its bosses in Brussels and Berlin, continue to insist that tax increases will help, despite all economic evidence to the contrary. While revenues from the value-added tax (VAT) were at 16.3 billion euros when the VAT rate was at 19 percent, those revenues declined to 14.4 billion euros when the VAT was increased to 21 percent, and dropped further to 13.7 billion euros when the VAT was increased again to 23 percent. Today, the VAT for most goods and services is at 24 percent amidst an economic depression that has shown no real signs of abating.

While the SYRIZA-led government is congratulating itself for putting an end to austerity, the aforementioned unified property tax, which according to SYRIZA’s pre-election rhetoric was unconstitutional and to be abolished, will remain in effect at least until 2031. One year ago, in June 2016, a 7,500-page omnibus bill ratified by the Greek government without any debate transferred ownership of all of Greece’s public assets (ranging from water utilities to prime beachfront parcels of land) to a fund controlled by the European Stability Mechanism for the next 99 years.

The same bill also reduced the parliament to playing a rubber-stamp role, as it annulled the ability of the Greek parliament to formulate a national budget or to pass tax legislation, with automatic cuts to be activated if fiscal targets agreed upon with the country’s lenders are not met. Foreign experts working on the implementation of the austerity measures and privatizations in Greece were also, as of 2016, granted immunity from prosecution. If all of this seems exaggerated or far-fetched, consider a recent remark by the European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici, who stated that “[The EU] often decide[s] Greece’s fate, in place of the Greeks.”

Move toward cashlessness benefiting “too big to fail” institutions

As all of this is taking place, Greek businesses—particularly small businesses—are being burdened further, required as of July 27 to install “point of sale” (POS) card readers and to accept payments via credit, debit or prepaid cards. Another law, which came into effect on January 1, pushes consumers towards card payments by setting a minimum threshold of spending at least 10 percent of one’s income via card in order to attain a somewhat higher tax-free threshold.

In a country where capital controls restricting withdrawals from bank accounts and ATMs have been in effect since June 2015, cash is being further withdrawn from the marketplace and is being delivered to a banking system that has already been recapitalized three times and is likely on its way towards a fourth taxpayer-funded “bailout,” keeping with the fine tradition of financial institutions that are said to be “too big to fail.” We are told, of course, that this is for society’s own good, in order to combat “tax evasion” and other terrible things.

As all of this has taken place, 14 profitable Greek regional airports of strategic and economic importance have been privatized—ironically by being sold to Fraport, itself owned by the German public sector. The port of Piraeus, one of the largest in Europe, has been completely privatized; sold for a pittance to Chinese-owned Cosco. Greek water and power utilities, having been transferred to the aforementioned fund controlled by the ESM, are among the next assets slated for privatization.

Foreclosures of homes are slated to be expanded to primary residences, leaving many households at risk of ending up on the streets, while come September, foreclosures are slated to take place electronically, in accordance with the Greek government’s agreements with its lenders. It should be noted that foreclosure auctions that take place in Greek civil courts each Wednesday have become one of the few remaining battlegrounds where citizens are actively, and often quite successfully, pushing back against one of the products of the economic crisis, preventing many foreclosures from occurring. Switching to electronic foreclosures would eliminate this “inconvenience.”

People queue in front of a bank for an ATM as a man lies on the ground begging for change, in Athens. (AP/Thanassis Stavrakis)

People queue in front of a bank for an ATM as a man lies on the ground begging for change, in Athens. (AP/Thanassis Stavrakis)

Other “inconveniences” are also being done away with in swift fashion. In August 2016, police in the city of Katerini arrested a father of three for selling doughnuts without a license, fining him 5,000 euros for the offense. In another case, a vendor selling roasted chestnuts in the city of Thessaloniki was surrounded by 15 police officers and arrested for the high offense of operating without a license. In the meantime, Greek television and radio stations—almost the entirety of which are vehemently pro-EU and pro-austerity and which greatly impact public opinion—operate without valid broadcast licenses.

The SYRIZA government, elected in part on pledges to “nip oligarchs in the bud” (including taking care of the issue of unlicensed broadcasters), has instead allowed oligarchs to shift their money to offshore tax havens, while collectively treating ordinary citizens and small business owners as being guilty of tax evasion. Former finance minister with the center-right New Democracy political party Gikas Hardouvelis was recently acquitted in court for failure to submit a declaration of assets.

In a December 2015 interview, Finance Minister Euclid Tsakalotos stated that the SYRIZA-led government “didn’t have time to go after the rich.” Unlicensed chestnut vendors, apparently, are another matter altogether, as are activists against the environmentally destructive and economically dubious gold mining operations in north Greece’s Skouries that are being conducted by Eldorado Gold with a Greek oligarch, Giorgos Bobolas.

In late May, the physically disabled 77-year-old Thodoros Karavasilikos was issued a 12-month suspended jail sentence for, apparently, physically assaulting 10 riot police officers in a protest against the Skouries mining operations. Furthering this war on the elderly, Dimitris Kammenos, a member of parliament with the “patriotic” Independent Greeks party which is co-governing with SYRIZA, stated in a televised interview in April that 100 euros that were being slashed from pensions were “better off being taken by the state” than to be “given by pensioners to their grandchildren to go out and have coffee.”

Civil unrest on the rise amid economic uncertainty

It can be argued that being a Greek citizen is a great disadvantage in Greece at the present time. In the blighted Athens suburb of Menidi, an 11-year-old Greek child was apparently killed by a stray bullet, said to have been fired from a residence of a Roma family. Civil unrest has followed in the area between the Greek and Roma populations, to which the SYRIZA-led government has somehow responded by proposing that Roma children be allowed to enter Greek universities and the police academy without taking entrance exams.

A protester reacts next to a flare outside the the Interior Ministry as thousands of striking municipal workers demonstrate in central Athens, June 22, 2017. Union officials want the left-led government to grant full-time, permanent state jobs to municipal workers employed on short-term contracts that have expired or are about to expire. (AP/Petros Giannakouris)

A protester reacts next to a flare outside the the Interior Ministry as thousands of striking municipal workers demonstrate in central Athens, June 22, 2017. Union officials want the left-led government to grant full-time, permanent state jobs to municipal workers employed on short-term contracts that have expired or are about to expire. (AP/Petros Giannakouris)

While migrants in Greece are receiving 400 euro monthly subsidies (greater than many salaries and pensions in present-day Greece) and free housing, thanks to assistance from the EU and numerous “well-meaning” non-governmental organizations, the same sensitivity has not been displayed to victims of a recent earthquake that severely impacted the island of Lesvos, one of the primary entry points for migrants. Instead, Kyriakos Mitsotakis, the leader of the center-right New Democracy, the main opposition party in Greece which is favored to win the next national elections whenever they take place, promised those whose homes were destroyed by the quake a two-year waiver of the unified property tax, should his party be elected.

Tourism, however, is said to be saving the day. Greece is said to be receiving record numbers of visitors, and the Eleftherios Venizelos International Airport in Athens is receiving a record number of passengers. These statistics are often repeated by the government and by Tourism Minister Elena Kountoura of the Independent Greeks political party, the minority partner in Greece’s coalition government. What is not said is who these tourists are, or what their real impact on the economy is.

Many of these tourists are visiting the country on package travel deals booked with overseas travel agencies, flying to and from Greece on foreign-owned charter airlines and staying in hotels which themselves are often owned by foreigners. Many of these hotels offer “all-inclusive” hospitality packages, often offering the very lowest-quality imported food and drink products in order to slash costs. While foreigners get to enjoy Greek resorts and sunshine at bargain rates, austerity-hit Greeks, battered by the crisis, cannot afford to—nor are they offered the same low rates provided to foreign visitors.

Most tourists on “all-inclusive” deals rarely venture away from their hotels, and businesses in tourist regions, ranging from convenience stores to restaurants, are seeing business suffer while their tax burden continues to increase. In a recent visit to Rhodes, one of Greece’s pre-eminent tourist destinations, I observed that the Old Town of Rhodes, perhaps the top tourist destination on the island, was almost deserted at 10:30 p.m. on a Friday night in a country that “stays up all night.” Tourists remained largely locked away in their all-inclusive resorts.

Greece’s “boom times” for tourism are evident by the country’s lack of a national air carrier, which has been the case ever since the previously state-owned Olympic Airlines was dismantled at the behest of the EU and purportedly for violating the European Commission’s competition rules. The privately-owned near-monopoly that has replaced it, Aegean Airlines, has somehow managed not to run afoul of such rules.

While Greece, one of Europe’s top destinations, does not possess any wide-body aircraft, countries such as Serbia and Rwanda do and are running nonstop flights to the United States. Aegean Airlines may not have long-haul flights, but it has delivered much-vaunted “foreign investment”—often touted as the cure-all for Greece’s economic ills, despite a major privatization push since the 1990s, which did not stop the crisis—as 25 percent of the airline is reportedly being purchased by Hainan Airlines of China.

Tourism Minister Elena Kountoura, apropos of nothing, recently brought us back to 2015 and to the referendum which took place that year, where 62 percent of voters rejected an EU-proposed austerity plan—only for the result to be overturned within days, as the SYRIZA-led government turned around and agreed to an even harsher austerity package, known as the third memorandum agreement, than the one voters had rejected.

The SYRIZA-led government has since agreed to a fourth memorandum agreement, but according to Kountoura, the negotiation that occurred in 2015 that led to the third memorandum—chock-full of austerity measures and the privatization of profitable assets—prevented 16 billion euros’ worth of austerity measures from being enacted.

No end in sight for bleak austerity

Unfortunately, two years after the “triumphant” referendum and rejection of austerity—which was promptly overturned and replaced with even harsher austerity—there seems to be no light at the end of the tunnel for the beleaguered nation. Nor does a political “savior” appear to exist. The aforementioned New Democracy party is part and parcel of the corrupt political duopoly, along with PASOK, which ruled Greece for 40 years after the fall of the military junta in 1974, and is vehemently pro-EU and pro-austerity (as long as they are the ones implementing the austerity and pro-Europe policies, instead of SYRIZA).

In previous elections, political “renegade” Vasilis Leventis and his Centrists’ Union political party were elected to parliament—likely as a protest vote. Leventis is famous for his supposed crusades against corruption and the two-party system, and for wishing cancer upon former Prime Ministers Kostantinos Mitsotakis (father of the current New Democracy leader) and Andreas Papandreou (father of George Papandreou, prime minister when Greece was led into the IMF-EU “bailout” and austerity regime) on live television in 1993.

A motorcyclist looks on as he drives next to a pile of garbage in Piraeus, near Athens, on Monday, June 26, 2017. Municipality workers have been on strike for almost a week , hindering trash collection across the country. (AP/Petros Giannakouris)

A motorcyclist looks on as he drives next to a pile of garbage in Piraeus, near Athens, on Monday, June 26, 2017. Municipality workers have been on strike for almost a week , hindering trash collection across the country. (AP/Petros Giannakouris)

Today, Leventis is calling for the installation of a “government of technocrats” (much like the non-elected government led by banker Loucas Papademos in late 2011 and 2012, which passed the second memorandum agreement with no popular mandate) and who has also stated recently that Greece “does not deserve to have its debt restructured.”

In reality, the entirety of parliament—despite the eight political parties which comprise it and which create the facade of political pluralism—can be described as being pro-austerity, pro-euro, and pro-EU. The same can be said of smaller political parties, currently outside of parliament and vying to gain public support.

These include parties founded by Panagiotis Lafazanis and Zoe Konstantopoulou—who as part of the first SYRIZA government of January-September 2015 voted in favor of numerous pro-memorandum and pro-austerity pieces of legislation and in favor of the pro-Europe corrupt former government minister Prokopis Pavlopoulos as president of the Hellenic Republic, who recently stated that Greece will remain in the EU “indefinitely and irrevocably.”

Two years after saying “no” to austerity, this is the state of affairs in Greece today. Poverty, fear, unemployment and a continued brain drain, as well as corruption, lies, and above all, an undying attachment to the EU and the Eurozone, at least on the part of the almost complete entirety of the country’s political class. That’s life today in a modern-day EU debt colony.

Jun 222017
 

By Michael Nevradakis, 99GetSmart

Originally published at MintPressNews:

A man makes a transaction at an automated teller machine (ATM) of a Piraeus Bank  branch in Athens, Greece. (AP/Yorgos Karahalis)

A man makes a transaction at an automated teller machine (ATM) of a Piraeus Bank branch in Athens, Greece. (AP/Yorgos Karahalis)

ATHENS (Analysis)– Day by day, we’re moving towards a brave new world where every transaction is tracked, every purchase is recorded, the habits and preferences of everyone noted and analyzed. What I am describing is the “cashless society,” where plastic and electronic money are king, while banknotes and coins are abolished.

“Progress” is, after all, deemed to be a great thing. In a recent discussion, I observed on an online message board regarding gentrification in my former neighborhood of residence in Queens, New York, the closure of yet another longtime local business was met by one user with a virtual shrug: “Who needs stores when you have Amazon?”

This last quote is, of course, indicative of the brick-and-mortar store, at least in its familiar form. In December 2016, Amazon launched a checkout-free convenience store in Seattle — largely free of employees, but also free of cash transactions, as purchases are automatically charged to one’s Amazon account. “Progress” is therefore cast as the abolition of currency, and the elimination of even more jobs, all in the name of technological progress and the “convenience” of saving a few minutes of waiting at the checkout counter.

Still insist on being old-fashioned and stuck behind the times, preferring to visit brick-and-mortar stores and paying in cash? You may very well be a terrorist! Pay for your coffee or your visit to an internet cafe with cash? Potential terrorist, according to the FBI. Indeed, insisting on paying with cash is, according to the United States Department of Homeland Security, “suspicious and weird.”

The European Union, ever a force for positive change and progress, also seems to agree. The non-elected European Commission’s “Inception Impact Assessment” warns that the anonymity of cash transactions facilitates “money laundering” and “terrorist financing activities.” This point of view is shared by such economists as the thoroughly discredited proponent of austerity Kenneth Rogoff, Lawrence Summer (a famed deregulator, as well as eulogizer of the “godfather” of austerity Milton Friedman), and supposed anti-austerity crusader Joseph Stiglitz, who told fawning participants at the World Economic Forum in Davos earlier this year that the United States should do away with all currency.

Logically, of course, the next step is to punish law-abiding citizens for the actions of a very small criminal population and for the failures of law enforcement to curb such activities. The EU plans to accomplish this through the exploration of upper limits on cash payments, while it has already taken the step of abolishing the 500-euro banknote.

The International Monetary Fund (IMF), which day after day is busy “saving” economically suffering countries such as Greece, also happens to agree with this brave new worldview. In a working paper titled “The Macroeconomics of De-Cashing,” which the IMF claims does not necessarily represent its official views, the fund nevertheless provides a blueprint with which governments around the world could begin to phase out cash. This process would commence with “initial and largely uncontested steps” (such as the phasing out of large-denomination bills or the placement of upper limits on cash transactions). This process would then be furthered largely by the private sector, providing cashless payment options for people’s “convenience,” rather than risk popular objections to policy-led decashing. The IMF, which certainly has a sterling track record of sticking up for the poor and vulnerable in society, comforts us by saying that these policies should be implemented in ways that would augment “economic and social benefits.”

The IMF’s Greek experiment in austerity

These suggestions, which of course the IMF does not necessarily officially agree with, have already begun to be implemented to a significant extent in the IMF debt colony known officially as Greece, where the IMF has been implementing “socially fair and just” austerity policies since 2010, which have resulted, during this period, in a GDP decline of over 25 percent, unemployment levels exceeding 28 percent, repeated cuts to what are now poverty-level salaries and pensions, and a “brain drain” of over 500,000 people — largely young and university-educated — migrating out of Greece.

Protesters against new austerity measures hold a placard depicting Labour Minister George Katrougalos as the movie character Edward Scissorhands during a protest outside Zappeion Hall in Athens, Friday, Sept. 16, 2016. The placard reads in Greek"Katrougalos Scissorhands".

Protesters against new austerity measures hold a placard depicting Labour Minister George Katrougalos as the movie character Edward Scissorhands during a protest outside Zappeion Hall in Athens, Friday, Sept. 16, 2016. The placard reads in Greek”Katrougalos Scissorhands”.

Indeed, it could be said that Greece is being used as a guinea pig not just for a grand neoliberal experiment in both austerity, but de-cashing as well. The examples are many, and they have found fertile ground in a country whose populace remains shell-shocked by eight years of economic depression. A new law that came into effect on January 1 incentivizes going cashless by setting a minimum threshold of spending at least 10 percent of one’s income via credit, debit, or prepaid card in order to attain a somewhat higher tax-free threshold.

Beginning July 27, dozens of categories of businesses in Greece will be required to install aptly-acronymized “POS” (point-of-sale) card readers and to accept payments by card. Businesses are also required to post a notice, typically by the entrance or point of sale, stating whether card payments are accepted or not. Another new piece of legislation, in effect as of June 1, requires salaries to be paid via direct electronic transfers to bank accounts. Furthermore, cash transactions of over 500 euros have been outlawed.

In Greece, where in the eyes of the state citizens are guilty even if proven innocent, capital controls have been implemented preventing ATM cash withdrawals of over 840 euros every two weeks. These capital controls, in varying forms, have been in place for two years with no end in sight, choking small businesses that are already suffering.

Citizens have, at various times, been asked to collect every last receipt of their expenditures, in order to prove their income and expenses — otherwise, tax evasion is assumed, just as ownership of a car (even if purchased a decade or two ago) or an apartment (even if inherited) is considered proof of wealth and a “hidden income” that is not being declared. The “heroic” former Finance Minister Yanis Varoufakis had previously proposed a cap of cash transactions at 50 or 70 euros on Greek islands that are popular tourist destinations, while also putting forth an asinine plan to hire tourists to work as “tax snitches,” reporting businesses that “evade taxes” by not providing receipts even for the smallest transactions.

All of these measures, of course, are for the Greeks’ own good and are in the best interest of the country and its economy, combating supposedly rampant “tax evasion” (while letting the biggest tax evaders off the hook), fighting the “black market” (over selling cheese pies without issuing a receipt, apparently), and of course, nipping “terrorism” in the bud.

As with the previous discussion I observed about Amazon being a satisfactory replacement for the endangered brick-and-mortar business, one learns a lot from observing everyday conversations amongst ordinary citizens. A recent conversation I personally overheard while paying a bill at a public utility revealed just how successful the initial and largely uncontested steps enacted in Greece have been.

In the line ahead of me, an elderly man announced that he was paying his water bill by debit card, “in order to build towards the tax-free threshold.” When it was suggested to him that the true purpose of encouraging cashless payments was to track every transaction, even for a stick of gum, and to transfer all money into the banking system, he and one other elderly gentleman threw a fit, claiming “there is no other way to combat tax evasion.”

The irony that they were paying by card to avoid taxation themselves was lost on them—as is the fact that the otherwise fiscally responsible Germany, whose government never misses an opportunity to lecture the “spendthrift” and “irresponsible” Greeks, has the largest black market in Europe (exceeding 100 billion euros annually), ranks first in Europe in financial fraud, is the eighth-largest tax haven worldwide, and one of the top tax-evading countries in Europe.

Also lost on these otherwise elderly gentlemen was a fact not included in the official propaganda campaign: Germans happen to love their cash, as evidenced by the fierce opposition that met a government plan to outlaw cash payments of 5,000 euros or more. In addition, about 80 percent of transactions in Germany are still conducted in cash. The German tabloid Bild went as far as to publish an op-ed titled “Hands off our cash” in response to the proposed measure.

Global powers jumping on cashless bandwagon

Nevertheless, a host of other countries across Europe and worldwide have shunned Germany’s example, instead siding with the IMF and Stiglitz. India, one of the most cash-reliant countries on earth, recently eliminated 86 percent of its currency practically overnight, with the claimed goal, of course, of targeting terrorism and the “black market.” The real objective of this secretly planned measure, however, was to starve the economy of cash and to drive citizens to electronic payments by default.

Indians stand in line to deposit discontinued notes in a bank in Jammu and Kashmir, India,, Dec. 30, 2016. India yanked most of its currency bills from circulation without warning on Nov. 8, delivering a jolt to the country's high-performing economy and leaving countless citizens scrambling for cash. (AP/Channi Anand)

Indians stand in line to deposit discontinued notes in a bank in Jammu and Kashmir, India,, Dec. 30, 2016. India yanked most of its currency bills from circulation without warning on Nov. 8, delivering a jolt to the country’s high-performing economy and leaving countless citizens scrambling for cash. (AP/Channi Anand)

Iceland, a country that stands as an admirable example of standing up to the IMF-global banking cartel in terms of its response to the country’s financial meltdown of 2008, nevertheless has long embraced cashlessness. Practically all transactions, even the most minute, are conducted electronically, while “progressive” tourists extol the benefits of not being inconvenienced by the many seconds it would take to withdraw funds from an ATM or exchange currency upon arrival. Oddly enough, Iceland was already largely cashless prior to its financial collapse in 2008—proving that this move towards “progress” did nothing to prevent an economic meltdown or to stop its perpetrators: the very same banks being entrusted with nearly all of the money supply.

Other examples of cashlessness abound in Europe. Cash transactions in Sweden represent just 3 percent of the national economy, and most banks no longer hold banknotes. Similarly, many Norwegian banks no longer issue cash, while the country’s largest bank, DNB, has called upon the public to cease using cash. Denmark has announced a goal of eliminating banknotes by 2030. Belgium has introduced a 3,000-euro limit on cash transactions and 93 percent of transactions are cashless. In France, the respective percentage is 92 percent, and cash transactions have been limited to 1,000 euros, just as in Spain. Outside of Europe, cash is being eliminated even in countries such as Somalia and Kenya, while South Korea — itself no stranger to IMF intervention in its economy — has, similarly to Greece, implemented preferential tax policies for consumers who make payments using cards.

Aside from policy changes, practical everyday examples also exist in abundance. Just try to purchase an airline ticket with cash, for instance. It remains possible — but is also said to raise red flags. In many cases, renting an automobile or booking a hotel room with cash is simply not possible. The aforementioned Department of Homeland Security manual considers any payment with cash to be “suspicious behavior” — as one clearly has something to hide if they do not wish to be tracked via electronic payment methods. Ownership of gold makes the list of suspicious activities as well.

Just as the irony of Germany being a largely cash-based society while pushing cashless policies in its Greek protectorate is lost on many Greeks, what is lost on seemingly almost everyone is this: something that is new doesn’t necessarily represent progress, nor does something different. Something that is seemingly easier, or more convenient, is not necessarily progress either. But for many, “technological progress,” just like “scientific innovation” in all its forms and without exception, has attained an aura of infallibility, revered with religious-like fervor.

People queue in front of a bank for an ATM as a man lies on the ground begging for change, in Athens. (AP/Thanassis Stavrakis)

People queue in front of a bank for an ATM as a man lies on the ground begging for change, in Athens. (AP/Thanassis Stavrakis)

Combating purported tax evasion is also treated with a religious-like fervor, even while ordinary citizens — such as the two aforementioned gentlemen in Greece — typically seek to minimize their outlays to the tax offices. Moreover, while such measures essentially enact a collective punishment regardless of guilt or innocence, corporations and oligarchs who utilize tax loopholes and offshore havens go unpunished and are wholly unaffected by a switch to a cashless economy in the supposed battle against tax evasion.

This is evident, for instance, in the case of “LuxLeaks,” which revealed the names of dozens of corporations benefiting from favorable tax rulings and tax avoidance schemes in Luxembourg, one of the original founding members of the EU. European Commission President Jean-Claude Juncker, formerly the prime minister of Luxembourg, has faced repeated accusations of impeding EU investigations into corporate tax avoidance scandals during his 18-year term as prime minister. Juncker has defended Luxembourg’s tax arrangements as legal.

At the same time, Juncker has shown no qualms in criticizing Apple’s tax avoidance deal in Ireland as “illegal,” while having been accused himself of helping large multinationals such as Amazon and Pepsi avoid taxes. Moreover, he has openly claimed that Greece’s Ottoman roots are responsible for modern-day tax evasion in the country. He has not hesitated to unabashedly intervene in Greek electoral contests, calling on Greeks to avoid the “wrong outcome” in the January 2015 elections (where the supposedly anti-austerity SYRIZA, which has since proven to be boldly pro-austerity, were elected).

He also urged the Greek electorate to vote “yes” (in favor of more EU-proposed austerity) in the July 2015 referendum — where the overwhelming result in favor of “no” was itself overturned by SYRIZA within a matter of days. In the European Union today, if there’s something that can be counted on, it’s the blatant hypocrisy of its leaders. Nevertheless, proving that old habits of collaborationism die hard in Greece, the rector of the law school of the state-owned Aristotle University in Thessaloniki awarded Juncker with an honorary doctorate for his contribution to European political and legal values.

Cashless policies bode poorly for the future

Where does all this lead though? What does a cashless economy actually mean and why are global elites pushing so fervently for it? Consider the following: in a cashless economy without coins or banknotes, every transaction is tracked. Buying and spending habits are monitored, and it is not unheard of for credit card companies to cancel an individual’s credit or to lower their credit rating based on real or perceived risks ranging from shopping at discount stores to purchasing alcoholic beverages. Indeed, this is understood to be common practice. Other players are entering the game too: in late May, Google announced plans to track credit and debit card transactions.

Claudia Lombana, PayPal's shopping specialist, stamps a guest's passport as he visits the travel section of PayPal's Cashless Utopia in New York (Victoria Will/AP)

Claudia Lombana, PayPal’s shopping specialist, stamps a guest’s passport as he visits the travel section of PayPal’s Cashless Utopia in New York (Victoria Will/AP)

More to the point though, a cashless economy doesn’t just mean that financial institutions, large corporations, or the state itself can monitor all transactions that are occurring. It also means that the entirety of the money supply — itself now existing only in “virtual” form — will belong to the banking system. Not one cent will exist outside of the banking system, as physical currency will simply not be in circulation. The banking system — and others — will be aware not just of every transaction, but will be in possession of all of our society’s money supply, and will even have the ability to receive a percentage of every transaction that is taking place.

So what happens if your spending habits or your choice of travel destinations raises “red flags”? What happens if you run into hard times economically and miss a few payments? What happens if you are deemed to be a political dissident or liability – perhaps an “enemy of the state”? Freezing a bank account or confiscating funds from accounts can take place almost instantaneously. Users of eBay and PayPal, for instance, are quite aware of the ease with which PayPal can confiscate funds from a user’s account based simply on a claim filed against that individual.

Simply forgetting one’s password to an online account can set off an aggravating flurry of calls in order to prove that your money is your own — and that’s without considering the risks of phishing and of online databases being compromised. Many responsible credit card holders found that their credit cards were suddenly canceled in the aftermath of the “Great Recession” simply due to perceived risk. And if you happen to be an individual deemed to be “dangerous,” you can be effectively and easily frozen out of the economy.

Those thinking that the “cashless revolution” will also herald the return of old-style bartering and other communal economic schemes might also wish to reconsider that line of thinking. In the United States, for instance, bartering transactions are considered taxable by the Internal Revenue Service. As more and more economic activity of all sorts takes place online, the tax collector will have an easier time detecting such activity. Thinking of teaching your child to be responsible with finances? That too will have a cost, as even lemonade stands have been targeted for “operating without a permit.” It’s not far-fetched to imagine that particularly overzealous government authorities could also target such activity for “tax evasion.”

In Greece, while oligarchs get to shift their money to offshore tax havens without repercussion and former Finance Minister Gikas Hardouvelis has been acquitted for failure to submit a declaration of assets, where major television and radio stations operate with impunity without a valid license while no new players can enter the marketplace and where ordinary households and small businesses are literally being taxed to death, police in August 2016 arrested a father of three with an unemployed spouse for selling donuts without a license and fined him 5,000 euros. In another incident, an elderly man selling roasted chestnuts in Thessaloniki was surrounded by 15 police officers and arrested for operating without a license.

Amidst this blatant hypocrisy, governments and financial institutions love electronic money for another reason, aside from the sheer control that it affords them. Studies, including one conducted by the American Psychological Association, have shown that paying with plastic (or, by extension, other non-physical forms of payment) encourage greater spending, as the psychological sensation of a loss when making a payment is disconnected from the actual act of purchasing or conducting a transaction.

But ultimately, the elephant in the room is whether the banking system even should be entrusted with the entirety of the monetary supply. The past decade has seen the financial collapse of 2008, the crumbling of financial institutions such as Lehman Brothers in the United States and a continent-wide banking crisis in Europe, which was the true objective behind the “bailouts” of countries such as Greece — saving European and American banks exposed to “toxic” bonds from these nations. Italy’s banking system is currently teetering on dangerous ground, while the Greek banking system, already recapitalized three times since the onset of the country’s economic crisis, may need yet another taxpayer-funded recapitalization. Even the virtual elimination of cash in Iceland did not prevent the country’s banking meltdown in 2008.

Should we entrust the entirety of the money supply to these institutions? What happens if the banking system experiences another systemic failure? Who do you trust more: yourself or institutions that have proven to be wholly irresponsible and unaccountable in their actions? The answer to that question should help guide the debate as to whether society should go cashless.

Jun 182017
 

By James Petras, 99GetSmart

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You can’t build socialism with dollar signs in your eyes”

— Fidel Castro

Introduction

Many experts and commentators describe the political process in Latin America as one of ‘alternating right and left governments’. Journalists focus on the abrupt regime changes from democratic to authoritarian; from neo-liberal to progressive programs; and from oligarchs to populists.

The financial media present the ‘right’s’ socially regressive policies and strategies as ‘reforms’, a euphemism for the re-concentration of wealth, profits and property into the hands of foreign and domestic oligarchs.

Leftwing intellectuals and journalists paint an image of socio-economic transformations under Latin America’s ‘left’ regimes where ‘the people’ take power, income is redistributed and growth flourishes.

The rise and demise of left and right regimes are typically attributed to ‘economic mismanagement, social crisis, political manipulation and erroneous strategic policies’.

Orthodox economists, under the presumption that greater profits ‘create’ the foundation for long-term stability and growth, prescribe a series of ‘structural reforms’. ‘Structures’ refer to measures and institutions, which strengthen the organization of the governing elite and their socio-economic backers.

A deeper analysis of both left and right wing perspectives shows that the basic understandings are flawed; there are fundamental misunderstandings regarding the long-term, large-scale continuity of the developmental process crossing political persuasions.

As a result, the left and right socio-economic classes and political elites exaggerate the dynamics of development while profoundly underestimating its ‘stasis’ or resistance to change.

The most striking aspect of Latin American development is not the change of regimes, but the stable continuities of the (1) class structure, (2) ownership of the strategic sectors of the economy, (3) rates of profit, (4) pattern of foreign trade and (5) principal recipients of state credit.

Viewed from this perspective, it is clear that leftwing as well as rightwing electoral victories result in mere incremental changes in the ownership of the means of production, finances and distributions. The basic structures remain intact.

Increases in progressive taxes by the left, as well as tax cuts by the right, are puny compared with the large-scale pervasive tax evasion by the elite. Massive capital flight to offshore holdings offset any increase in public revenue. Capital flight and the transfer of export earnings to overseas subsidiaries in low tax countries distort any real redistribution of income.

As a result, ‘progressive’ taxes fail to reduce real upper class income. Any increase in income for workers and salaried employees result from volatile cyclical economic shifts, which are subject to abrupt reversals undermining medium term improvements in livelihood.

For example, progressive re-distributive programs are based on the size and scope of commodity prices, which, in turn, increase or reduce consumption. This is best understood as a function of the domestic structural continuities and the volatility of global demand for agro-mineral exports. When progressive regimes face the challenge of rising unemployment, income inequalities and economic crisis, regime shift occurs with the ‘rise of the right’ exacerbating the economic crisis and social regression.

The negative indicators, seen during a cyclical downturn when a left regime is in power, become more acute with the ascendency of the right. Structural continuities persisting under both progressive and rightist regimes, and not specific policies, account for this lack of real change.

The socio-economic downturns under progressive regimes, which is usually related to decreased global commodity demand, are largely responsible for the electoral victory of succeeding right-wing regimes.

The continued socio-economic declines, under rightist regimes, inevitably lead to a renewed crisis, as is happening in Brazil and Argentina.

In all cases, class and economic continuities under left regimes are much more important in determining their trajectories and their short and medium-term incremental improvements. Likewise the rise and decline of rightwing regimes are based on electoral victories linked to the gross opportunism of the established oligarchical classes seeking fast gains and quick flight. Regimes may change with dizzying frequency but the state and class power remain constant.

Corruption: The Engine of Left and Right Growth

A sober review of Brazil’s corruption nexus between the PT (Lula) and the oligarchy leads to the following observations:

Inequalities are based on large-scale, long-term corruption linking new progressive leaders with traditional rightwing politicians and elite economic actors.

Coalitions or partnerships between left and right parties and leaders represent kleptocracy, not democracy.

It is clear that the greater the dependency on revenues from the extractive sector (minerals, oil and gas), the more intense the party competition, the more pervasive the corruption and the wider the web of kleptocrats.

The more intense competition between the elite and Party, the less the people have any access to the economic pie defining class society.

Corruption greases the wheels of political campaigns, elections and strategic appointments within state institutions, whether ‘progressive’ or ‘rightist’.

In other words, electoral politics and ‘free markets’ function smoothly and without turmoil when the competing parties engage in a mutually compatible coalition of corruption facilitating big business contracts.

Despite uprisings, electoral change of regimes, and palace coups, this immutable system of mutually shared corruption reduces the possibility of any real working-class based transformations.

Institutionalized corruption turns ‘dissent’ into vehicles for recycling politicos between progressives and rightists.

The more the kleptocratic regimes ‘change’ the greater the continuity of class structure and economic ownership. Plus ça change …!

While popular movements and trade unions struggle and organize, searching for alternatives, their political leaders eagerly anticipate forming elite consensus and coalitions to share public office and public loot.

Outgoing rightwing regimes leave a legacy of public debts, corruption, privatized public resources and obligations to powerful domestic and foreign bankers who control the commanding heights of the economy. The incoming leftist regimes agree to assume all the debt and obstacles and none of the assets and gains.

The political decision by left regimes to accommodate this legacy eliminates the possibility of implementing basic changes and confines their policy to incremental, symbolic gestures passing as ‘change’.

It is the left’s choice to adapt itself to the kleptocratic legacy and not their progressive ideology or working class voters, which defines the real political-economic and class character of the ‘popular regimes’.

To illustrate and document the ‘transitions’ to piece-meal adjustments forward and backwards in Latin America, it is necessary to outline the ‘political turning points’ and how they were subverted.

The Democratic Option

With the demise of the military and authoritarian regimes between the 1960’s and 1980’s, the domestic and foreign ruling classes faced the real prospects of ceding political power and losing strategic ownership and wealth. In reality, the ruling class gave up very little and gained infinitely more. Socio-economic changes were aborted: the politicos of the left and right negotiated a convenient pact with the military and business elite. The left received political office, patronage and minimal incremental changes. In exchange, the entire class and property system remained intact.

The authoritarian transition to electoral pacts precluded any democratic option. Worse, the socio-economy accommodations among foreign and domestic business elites and the upwardly mobile middle class politicos ensured the continuation of the onerous and repressive class structure.

Cooption of elected officials opened the door for deeper and more inclusive forms of corruption and broadened the net of political patronage to include trade union leaders and the increasingly ambitious operatives from the NGO sector.

The Debt Crises and the Debt Default

Business-military regimes profited from corrupt multimillion-dollar arms purchases and padded their overseas bank accounts from the high interest loans they signed with foreign and domestic bankers. Because these loans were not used for public projects, the debt should have been reneged as illegal by subsequent popular-leftist regimes. Instead, the tax-paying workers and employees were left to pay off the loans.

The illegal debts totally constrained the incoming electoral regimes, precluding policies aimed at domestic growth, including increases in investments and consumption.

Numerous investigations have demonstrated the corrupt nature of the debt process: Loans, borrowed by the Treasury, were transferred to overseas private accounts. This should have served as the legal bases to reject payments to the lenders. However, the business-military borrowers, who were responsible for the illicit debt, were exonerated by successive right-left electoral coalitions.

The left-right political pacts quickly rejected any idea of defaulting on the debt because of their eagerness to take office. The possibility of ending the onerous debt payments was shut down. Instead, these regimes adopted more austerity programs, prolonged debt payments and the intensification of the neo-liberal agenda.

The Golden Age of Rightist-Imperial Plunder: the 1990’s

The elected left-right ‘coalition’ regimes, the continued payment of illegal debt and the ruling class austerity programs quickly led to hard rightwing regimes.

Inflation, accompanying the policies of the combined popular-right ‘consensus’ governments led to the collapse of the ‘electoral left’ and the rise of the neo-liberals.

Thousands of the most lucrative banking, manufacturing, transport and extractive national industries were ‘privatized’ to foreign and domestic oligarchs, often in corrupt crony-ridden deals.

Bankers, landowners, real estate and media moguls prospered.

Meanwhile, landless peasants, industrial workers and debtors were exploited and dispossessed.

Western imperial centers, led by the ‘Bill’ Clinton regime, pushed for Wall Street-brokered regional trade and investment pacts.

In the United States, the decade of the 1990’s would be celebrated as the ‘golden age’ of imperial plunder of Latin America’s agro-mineral wealth, the exploitation of its labor and the dispossession of its rural communities. A mega-wave of financial swindles and IMF-imposed ‘stabilization pacts’ wiped out the savings of millions of small business-people and salaried employees, while consolidating the political and economic power of the oligarchy.

The grossly corrupt ‘presidential troika’ of Carlos Saul Menem in Argentina, Henrique Fernando Cardoso in Brazil and Gonzalo Sanchez de Losada in Bolivia, replaced the stable demand-side economic policies, including import-substitution industrialization, with supply-side programs, emphasizing agro-mineral exports and imperial-centered integration policies.

The neo-liberal, imperial-centered, privatized politico-economic regimes lasted less than a decade, but the damage of such pillage to the national economies would last much longer.

The multiple economic imbalances and the institutionalization of large-scale entrenched business-state corruption have undermined competition, efficiency, innovation and any chance for sustained growth.

Vast outflows of profits and interest (pillage flowing to US bank accounts) have undermined production and savings needed to finance growth.

The predictable collapse of this criminal ‘new order’ of agro-mineral exports (pillage), tax evasion and the business-political kleptocracy led to sharp socio-political polarization, state repression and eventually the popular overthrow of these klepto-imperial regimes – Clinton’s ‘Golden Age Partners’.

Mass struggles arose, led by grassroots movements linking the urban unemployed, rural farm workers, the downwardly mobile public and private sector employees, bankrupt small business people and middle class debtors and mortgage holders. These broad based movements directly challenged the pillage.

The catastrophic economic consequences of the ‘neo-liberal’ imperial-centered rule led to the possibility of left regimes riding on the back of mass protest.

Popular Uprising and the Left-Business Pact

The downfall of the neo-liberal regimes of the 1990’s brought left political parties and leaders to the foreground. These emerging leaders of the ‘progressive left’ would replace the ‘old neo-liberal’ right as the new partners of the business, agro-mineral and banking elite – while the academic world celebrated the ‘rising red tide’.

The ‘new pact’ promised to preserve the power of the big business firms and the holdings of national and foreign banks. Most important, the social class hierarchy was unchanged. The ‘left’ took the reins of the kleptocratic networks to finance their own elections and facilitate the upward mobility of a rising left political and NGO elite.

The marriage of incremental reforms and populist ideology (21stcentury ‘revolutionary’ demagogy) with oligarchic klepto-capitalism led to both the election of leftist leaders and the demobilization of the populace. A new left political oligarchy was born to enrich itself at the public trough.

Parasitical rentiers continued to evade taxes as ‘left’ bureaucrats looked the other way. The public-private petro-swindlers stuffed the pockets of the new political leaders. The left would secure needed parliamentary votes, as well as allies from the technocratic elite, united in a common goal of rapidly plundering the public treasury.

The global commodity boom, which lasted from 2003 to 2011, fueled the left’s largess in the form of poverty programs and other minimalist measures. Business elites prospered, minimum wages increased and social expenditures, especially ‘survival baskets for the poor’ surged with great fanfare. Worldwide, left academics performed victory dances in this greatly over-rated ‘red tide’.

The left political pact with capital did not lead to the growth of new productive forces to sustain rising incomes for workers and farmers. There were no new technological inputs in the economy. Instead they mounted flashy pharaonic ‘prestige projects’ linked to corrupt contracts to crony capitalists which devoured the growing public revenues from the commodity boom. The patronage machine had never functioned more smoothly!

Predictably, the uncritical left academics celebrated these new ‘radical’ regimes while ignoring mass corruption and right-left alliances. The critics who identified the precarious nature of the regimes’ economic foundations were dismissed or ridiculed.

The collapse of the commodity boom, the growth of massive fiscal deficits, the reversal of the small consumer gains, the loss of access to cheap credit and the visible entrenched corruption within the public-private partnerships provoked mass discontent and protests.

This gave the rightwing political parties the opportunity to ‘clean house’ by ousting their erstwhile partners from the left, reverse the minimalist social pacts and bring back the ‘Golden Age of the 1990’s’. Striking a moral posture against leftist corruption, they abandoned the coalition and took power.

The Left Catastrophe: 2015-2018

In Brazil and Argentina, ‘democratic electoral’ transition meant simply that the klepto-left would be replaced by a more ‘efficient’ klepto-right. Brazilian President Dilma Roussef was ‘impeached’ by a Congress of thieves and her kleptocrat supremo Vice-President Michel Temer assumed power. Argentine President Cristina Fernandez Kirchner was succeeded by Mauricio Macri.

Throughout these changes, the banking, petroleum, construction and meat-packing klepto-oligarchy manages to operate with the same mafia principles regardless of the ‘tint’ of the presidency: Lucrative contracts, captured markets and record profits continue to allow the flow of illicit payoffs to the rightwing presidents, without interruption.

Left academics have ignored the nature of the klepto-state and its pervasive networks of corruption. Many held their noses and dived right into the lie-factories, in exchange for privileged access to the mass media (publicity, talk shows, intellectual and cultural ‘round tables’, etc.), invitations to fancy gatherings at the presidential palace, speaking engagements abroad and an ever-expanding source of side-line income as professors, columnists, advisers, and publicists.

The oligarchs’ marriage of convenience with the left, and their prolonged honeymoon, was financed by million-dollar bribes to the left-right political allies. In exchange, the oligarchs received billions of dollars of lucrative state contracts.

When the Left agro-mineral model collapsed, many of their voters turned to street protests.

The oligarchs and the rightwing parties knew the time was ripe to dump the left presidents. They deftly seized total political power to further concentrate their economic wealth, property and social control over labor.

Kleptocracy in Transition: From ‘Progressive’ to Rightwing

In the last few years, the ascendant rightwing political parties and leaders have implemented their most retrograde agenda: This includes raiding pension funds, raising the retirement age and cutting the budget for social security, public education, and housing and health programs. The oligarchs and the Wall Street bankers seemed too eager to strip the public corpse.

In Brazil, the rightwing alliance’s ambitious plan to seize power by ‘criminalizing’ the left may have backfired.

The right relied on the judiciary for its peaceful return to power. This began successfully with the prosecution and ouster of the left regime through the courts. However the courts did not stop there: They proceeded to investigate, arrest and jail elected politicians from the right creating a crisis of state.

Over one thousand nine hundred congress people, senators, cabinet ministers, public sector executive officers, governors and mayors from right to left have faced or are facing investigation and arrest, including the newly-imposed rightist president Michel Temer in Brazil and the mega-swindler, President of Argentina Mauricio Macri.

Initially, foreign and domestic bankers, speculators and investors, as well as the financial press celebrated the return of the right. The stock markets soared and all made ready for the grand privatizing fiesta of the public sector. When the courts continued to pursue the rightwing politicians and bureaucrats, the pervasive nature of state klepto capitalism was exposed. Members of the business elite joined their politico-partners in jail, and investors pulled out their capital. The press’ celebration of the ‘return of the free market’ faded to a whisper.

As the rightist regimes’ elected leaders went on trial, the klepto ‘market’ economies collapsed. The ‘reformist’ (regressive) business agenda, which had depended on effective presidential power linking klepto-patronage to legislation, retreated. Without their accustomed diet of corruption, elected officials fled. Judges and prosecutors  investigated and undermined the authority of the new rightist regimes.

Faced with weakened and discredited presidential authority, the urban trade unions, rural social movements, students and the unemployed woke up and marched on the presidential palace.

The validity of the elections by rightist majorities has been undermined. Faced with jail for large-scale bribery and fraud, leading executives of the largest conglomerates bargained with the courts, implicating their business partners, party leaders, congress-people and cabinet ministers.

The right wing’s rapid rise and demise has sown consternation among the kleptocratic oligarchy. In just two years, the courts have done more to undermine the power of the oligarchy-business-rightist political nexus than an entire decade of leftist klepto-political rule during the celebrated ‘red tide’!

While in power, the elected left did nothing to dismantle the large-scale kleptocracy they had inherited from the previous rightist regimes of Menem,and De La Rua (Argentina), Cardoso (Brazil) and Sanchez de Losada (Bolivia). This was because they expected to take control of the network and profit from the existing system of business-political pacts.

The left regimes did not end alliances among corrupt bankers and the agro-business elite because it might undermine their own ‘development model’.

Instead, the left appointed its own pliable functionaries to key ministries to mediate and ensure co-operation within the system of klepto-profit sharing.

Only when the business-rightist pact emerged to undermine and eject the elected leftists from power, were they charged with corruption.

To avoid prosecution for business-rightist corruption, the oligarchs gladly shifted their bribe machinery from the right to the left (and vice versa).

The business-left alliance, based on corruption and demagogy, ensured the continued success of neo-liberal extractive capitalism – until the global financial crisis and the collapse of commodity prices ended the happy fiesta.

As the commodity bubble collapsed and the left regimes were forced to borrow heavily to finance their own political survival, deficit spending, corruption, economic stagnation, unemployment and rising deficits which provoked a broad array of opposing forces. These ranged from bankers and investors, to trade unions and informal workers. At no point did the left consider the alternative of fundamentally transforming the agro-mineral economies. Instead they borrowed from the international and domestic banks, slashed social programs and imposed regressive austerity programs – all to maintain their political power.

Corrupt capitalism is the only functional form of capitalism in Latin America to day. It is based on exploiting public resources and government contracts to promote ‘accumulation’. The ‘class struggle’ has been replaced by tri-partite kleptocratic alliances among business, trade unions and the state. In this era, elite deals have replaced class struggle … temporarily.

The Return of the Class Struggle and the Demise of the Klepto-Left

Class struggle returned with the arrest and discredit of the klepto-capitalists and their klepto-left allies.

The rightists’ return to power exploded in their own faces because they reproduced and deepened kleptocratic economies. Their brazen boasts, which seemed to pronounce “all power to the biggest swindlers and political bribe takers”, quickly radicalized the populace.

Beyond the Demise of the Right: Fake and Real Alternatives

The demise of the right and its ‘premature’ departure from power are not the product of a class uprising or mass protests. The judicial system has led the way and forced their retreat.

For this reason, the replacement of the right is an open question.

The business, banking and imperial elites clearly favor a reshuffle of personalities and the trotting out of a new ‘honest face’ to pursue their rightist agenda.

An electoral ‘free-for-all’, where popular left kleptocratic and charismatic leaders emerge, is the left’s choice.

A third alternative would be the recently discredited left returning to office, crippled by ongoing investigations and tied to the old business and political alliances.

None of these ‘alternatives’ will end klepto-capitalist power and practice. None will satisfy mass discontent.

In the wings, there is always the possibility of a ‘moralizing military coup’, led by a military-business-imperial junta, to clear the streets and impose temporary stability. Such a ‘coup’ would be unable to revive economic growth and reverse the socio-economic slide into klepto-capitalism. Moreover, it would unify the unemployed kleptocratic politicos and NGO executives into a ‘peoples’ coalition of ‘democratic opposition forces promising prosperity and freedom’ to buy and sell votes and offices.

The real alternative in Latin America can only emerge and succeed if it begins by rejecting the klepto-left and turns to new ways of selecting leaders and building parties and movements. Direct action, workplace and street occupations, confrontations and the encirclement of banks and MNC headquarters and the implementation of debt and mortgage defaults – all linked to the immediate demands of workers, employees and professionals – can build the foundations of alternative power.

Democratic leadership depends on electoral politics under the control of popular constituent assemblies. They must reject corporate funding. Elected officials’ salaries must be turned over to the movements, which will pay office holders at a scale close to the wage and salaried workers they represent.

Left transformations begin with agrarian reforms and continue through the modernization of production, marketing, processing and linkages to socialized banking and credit systems. Indigenous communities should be incorporated in popular assemblies with rights and representation.

Left programs, which center on nationalizing banks and foreign trade, should build community-controlled banks and credit agencies.

Productive and commercial employment should be based on permanent jobs.

Community-based alliances with employees and workers associations must link up with multi-issue, class-based, gender and ecology movements.

Military industries should be reconverted to domestic production and linked to environmental protection.

Robust investigations and prosecution of corporate tax evasion, capital flight to tax havens by speculators and hedge funds should proceed with due speed.

Convicted bank swindlers and bribe-taking politicians should be punished with mandatory maximum sentences.

The demands and programs, tactics and strategies flowing from a growing educated work force can transform ‘free time’ into learning, leisure, family and friendships.

Local and national defense forces guarding national borders from imperial penetration, drug cartels and criminal gangs should replace the bloated security state and corrupt oligarch-linked military elite.

Technological innovations, including artificial intelligence and robotics, should reduce working hours and increase workplace safety while retaining workers to manage, monitor and innovate the productive process.

Left governments should focus on direct people-to-people diplomacy over and against the elite-led diplomatic deceptions that lead to wars.

Elite ethno-religious groups expressing loyalty to foreign powers and acting as agents against the interests of their homeland should leave and resettle in the country of their chosen loyalties.

Throughout Latin America, left corruption reflects the deep continuities of ownership by the banking, industrial, agro-mineral elites. Left regimes, which choose to link economic growth and investment to the corruption of public agencies and dubious public-private partnerships, are doomed to crisis and defeat.

The illegal enrichment of left political decision-makers results in greater social inequalities because they distribute the pillaged public funds and potential tax revenues into the accounts of private and party elites.

Costly competitive election campaigns are based on corrupt deals. Illicit contracts lead to criminal profits, which lead to the illegal flight of capital to foreign bank accounts.

There is no difference between corruption through ‘bribery’, as in Latin America, and corruption through ‘legal’ multi-billion dollar lobbies in North America: Both purchase politicians and legislation and subvert the interests of the people.

In conclusion and to re-phrase Fidel Catro: ‘You cannot build radical social democracy with dollar signs in your eyes.’ Free market capitalism can only operate through klepto-capitalist, not popular democratic, principles

Corruption flourishes in the context of a monopolized elite mass media and high cost elections under the dictates of capital. Kleptocratic rule is fundamental to capitalism because it promotes the dispossession of small farmers and businesses and the exploitation of workers. Behind and accompanying all great fortunes are enormous and ever growing swindles involving the degeneration of public officials. Corruption is the driving force and very heart of capitalism!

Appendix

Billion-dollar corruption payoffs by just one giant Brazilian construction multi-national, Odebrecht, involved at least eleven Latin American countries, including both left and right regimes.

Brazil’s giant multi-national meat packer, JBS, and the public-private oil company, Petrobras, bribed at least a dozen regimes in Latin America.

Rightwing kleptocracies  bribed by Odebrecht

Panama

Mexico

Colombia

Guatemala

Peru

Dominican Republic

Brazil (1993-2002) and (2016- )

Argentina (1990-2001, 2016-)

Leftwing kleptocracies

Argentina (2002-2016)

Venezuela (1999-2017)

Ecuador (2008-2016)

Brazil (2003-2016)

The United States leads all the world’s kleptocracies in terms of bribes by lobbies, and financial swindlers and money-laundering banks and illegal payoffs by oil and gas companies to politicians and officials.

Brazil’s largest oil (Petrobras), iron ore (Vale), and meat packing (JBS) multi-national corporations financed their overseas acquisitions and markets through bribes financed by low interest loans from the state development bank (BNDES).

Close to one hundred Petrobras officials and political leaders have been convicted and jailed for taking bribes from contractors and developers, including the Treasury Secretary of the ‘Workers Party’.

JBS, the worlds’ second leading beef and pork processor and leading cattle feeder, paid a 3.4 billion dollar fine because it bribed regulators to allow the shipment of contaminated meat products to the US (Walmart), China and throughout Latin America. In a deal with prosecutors, Joesley Batista, CEO of JBS released recordings of Michel Temer, Brazil’s current right-wing president, demanding bribes from the conglomerate to avoid federal prosecution.

During the rightwing Cardoso regime, the initial privatization of Vale, the world’s largest iron mine, was accomplished through grotesque bribes and money laundering.

Leftwing President Lula da Silva allowed klepto-privatization of Vale to move forward. Lula even called for more and bigger Brazilian multi-national swindles. Upon taking office in 2003, President Lula da Silva unrolled the ‘red carpet’ for the business elite, stating that “it is time for Brazilian businessmen to abandon their fear of becoming multi-national businessmen”. The newly emboldened kleptocratic Brazilian conglomerates proceeded to ‘fearlessly’ bribe their way throughout the markets of Latin America, Asia and US. Lula subsequently served as overseas emissary to promote corrupt Petrobras oil contracts with Angola, Venezuela and Ecuador.

Jun 012017
 

By James Petras, 99GetSmart

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On a scale not seen since the ‘great’ world depression of the 1930’s, the US political system is experiencing sharp political attacks, divisions and power grabs. Executive firings, congressional investigations, demands for impeachment, witch hunts, threats of imprisonment for ‘contempt of Congress’ and naked power struggles have shredded the façade of political unity and consensus among competing powerful US oligarchs.

For the first time in US history, the incumbent elected president struggles on a daily basis to wield state power. The opposition-controlled state (National Public Radio) and corporate organs of mass propaganda are pitted against the presidential regime. Factions of the military elite and business oligarchy face off in the domestic and international arena. The oligarchs debate and insult each other. They falsify charges, plot and deceive. Their political acolytes, who witness these momentous conflicts, are mute, dumb and blind to the real interests at stake.

The struggle between the Presidential oligarch and the Opposition oligarchs has profound consequences for their factions and for the American people. Wars and markets, pursued by sections of the Oligarchs, have led opposing sections to seek control over the means of political manipulation (media and threats of judicial action).

Intense political competition and open political debate have nothing to do with ‘democracy’ as it now exists in the United States.

In fact, it is the absence of real democracy, which permits the oligarchs to engage in serious intra-elite warfare. The marginalized, de-politicized electorate are incapable of taking advantage of the conflict to advance their own interests.

What the ‘Conflict’ is Not About

The ‘life and death’ inter-oligarchical fight is not about peace!

None of the factions of the oligarchy, engaged in this struggle, is aligned with democratic or independent governments.

Neither side seeks to democratize the American electoral process or to dismantle the grotesque police state apparatus.

Neither side has any commitment to a ‘new deal’ for American workers and employees.

Neither is interested in policy changes needed to address the steady erosion of living standards or the unprecedented increase in ‘premature’ mortality among the working and rural classes.

Despite these similarities in their main focus of maintaining oligarchical power and policies against the interests of the larger population, there are deep divisions over the content and direction of the presidential regime and the permanent state apparatus.

What the Oligarchical Struggle is About

There are profound differences between the oligarch factions on the question of overseas wars and ‘interventions’.

The ‘opposition’ (Democratic Party and some Republican elite) pursues a continuation of their policy of global wars, especially aimed at confronting Russian and China, as well as regional wars in Asia and the Middle East. There is a stubborn refusal to modify military policies, despite the disastrous consequences domestically (economic decline and increased poverty) and internationally with massive ethnic cleansing, terrorism, forced migrations of war refugees to Europe, and famine and epidemics (such as cholera and starvation in Yemen).

The Trump Presidency appears to favor increased military confrontation with Iran and North Korea and intervention in Syria, Venezuela and Yemen.

The ‘Opposition’ supports multilateral economic and trade agreements, (such as TTP and NAFTA), while Trump favors lucrative ‘bilateral’ economic agreements. Trump relies on trade and investment deals with Saudi Arabia and the Gulf Emirates and the formation of an aggressive military ‘axis’ (US-Saudi Arabia-Israel -Gulf Emirates) to eventually overthrow the nationalist regime in Iran and divide the country.

The ‘Opposition’ pursues wars and violent ‘regime change’ to replace disobedient ‘tyrants’ and nationalists and set up ‘client governments’, which will provide bases for the US military empire. Trump’s regime embraces existing dictators, who can invest in his domestic infrastructure agenda.

The ‘opposition’ seeks to maximize the role of Washington’s global military power. President Trump focuses on expanding the US role in the global market.

While both oligarchical factions support US imperialism, they differ in terms of its nature and means.

For the ‘opposition’, every country, large or small, can be a target for military conquest. Trump tends to favor the expansion of lucrative overseas markets, in addition to projecting US military dominance.

Oligarchs: Tactical Similarities

The competition among oligarchs does not preclude similarities in means and tactics. Both factions favor increased military spending, support for the Saudi war on Yemen and intervention in Venezuela. They support trade with China and international sanctions against Russia and Iran. They both display slavish deference to the State of Israel and favor the appointment of openly Zionist agents throughout the political, economic and intelligence apparatus.

These similarities are, however, subject to tactical political propaganda skirmishes. The ‘Opposition’ denounces any deviation in policy toward Russia as ‘treason’, while Trump accuses the ‘Opposition’ of having sacrificed American workers through NAFTA.

Whatever the tactical nuances and similarities, the savage inter-oligarchic struggle is far from a theatrical exercise. Whatever the real and feigned similarities and differences, the oligarchs’ struggle for imperial and domestic power has profound consequence for the political and constitutional order.

Oligarchical Electoral Representation and the Parallel Police State

The ongoing fight between the Trump Administration and the ‘Opposition’ is not the typical skirmish over pieces of legislation or decisions. It is not over control of the nation’s public wealth. The conflict revolves around control of the regime and the exercise of state power.

The opposition has a formidable array of forces, including the national intelligence apparatus (NSA, Homeland Security, FBI, CIA, etc.) and a substantial sector of the Pentagon and defense industry. Moreover, the opposition has created new power centers for ousting President Trump, including the judiciary. This is best seen in the appointment of former FBI Chief Robert Mueller as ‘Special Investigator’ and key members of the Attorney General’s Office, including Deputy Attorney General Rob Rosenstein. It was Rosenstein who appointed Mueller, after the Attorney General ‘Jeff’ Session (a Trump ally) was ‘forced’ to recluse himself for having ‘met’ with Russian diplomats in the course of fulfilling his former Congressional duties as a senior member of the Senate Foreign Relations Committee. This ‘recusal’ took significant discretionary power away from Trump’s most important ally within the Judiciary.

The web of opposition power spreads and includes former police state officials including mega-security impresario, Michael Chertoff (an associate of Robert Mueller), who headed Homeland Security under GW Bush, John Brennan (CIA), James Comey (FBI) and others.

The opposition dominates the principal organs of propaganda -the press (Washington Post, Financial Times, New York Times, and Wall Street Journal), television and radio (ABC, NBC, CBS and PBS/ NPR), which breathlessly magnify and prosecute the President and his allies for an ever-expanding web of unsubstantiated ‘crimes and misdemeanors’. Neo-conservative and liberal think tanks and foundations, academic experts and commentators have all joined the ‘hysteria chorus’ and feeding frenzy to oust the President.

The President has an increasingly fragile base of support in his Cabinet, family and closest advisers. He has a minority of supporters in the legislature and possibly in the Supreme Court, despite nominal majorities for the Republican Party.

The President has the passive support of his voters, but they have demonstrated little ability to mobilize in the streets. The electorate has been marginalized.

Outside of politics (the ‘Swamp’ as Trump termed Washington, DC) the President’s trade, investment, taxation and deregulation policies are backed by the majority of investors, who have benefited from the rising stock market. However, ‘money’ does not appear to influence the parallel state.

The divergence between Trumps supporters in the investment community and the political power of the opposition state is one of the most extraordinary changes of our century.

Given the President’s domestic weakness and the imminent threat of a coup d’état, he has turned to securing ‘deals’ with overseas allies, including billion-dollar trade and investment agreements.

The multi-billion arms sales to Saudi Arabia and the Gulf Emirates will delight the military-industrial complex and its hundreds of thousands of workers.

Political and diplomatic ‘kowtowing’ to Israeli Prime Minister Netanyahu should please some American Zionists.

But the meetings with the EU in Brussels and with the G7 in Siciliy failed to neutralize Trump’s overseas opposition.

NATO’s European members did not accept Trump’s demands that they increase their contribution to the alliance and they condemned his reluctance to offer unconditional US military support for new NATO members. They showed no sympathy for domestic problems.

In brief, the President’s overseas supporters, meetings and agreements will have little impact on the domestic correlation of forces.

Moreover, there are long-standing ties among the various state apparatuses and spy agencies in the EU and the US, which strengthen the reach of the opposition in their attacks on Trump.

While substantive issues divide the Presidential and Opposition oligarchs, these issues are vertical, not horizontal, cleavages – a question of ‘their’ wars or ‘ours’.

Trump intensified the ideological war with North Korea and Iran; promised to increase ground troops in Afghanistan and Syria; boosted military and advisory support for the Saudi invasion of Yemen; and increased US backing for violent demonstrations and mob attacks in Venezuela.

The opposition demands more provocations against Russia and its allies; and the continuation of former President Obama’s seven wars.

While both sets of oligarchs support the ongoing wars, the major difference is over who is managing the wars and who can be held responsible for the consequences.

Both conflicting oligarchs are divided over who controls the state apparatus since their power depends on which side directs the spies and generates the fake news.

Currently, both sets of oligarchs wash each other’s ‘dirty linen’ in public, while covering up for their collective illicit practices at home and abroad.

The Trump’s oligarchs want to maximize economic deals through ‘uncritical’ support for known tyrants; the opposition ‘critically’ supports tyrants in exchange for access to US military bases and military support for ‘interventions’.

President Trump pushes for major tax cuts to benefit his oligarch allies while making massive cuts in social programs for his hapless supporters. The Opposition supports milder tax cuts and lesser reductions in social programs.

Conclusion

The battle of the oligarchs has yet to reach a decisive climax. President Trump is still the President of the United States. The Opposition forges ahead with its investigations and lurid media exposés.

The propaganda war is continuous. One day the opposition media focuses on a deported student immigrant and the next day the President features new jobs for American military industries.

The emerging left-neo-conservative academic partnership (e.g. Noam Chomsky-William Kristol) has denounced President Trump’s regime as a national ‘catastrophe’ from the beginning. Meanwhile, Wall Street investors and libertarians join to denounce the Opposition’s resistance to major tax ‘reforms’.

Oligarchs of all stripes and colors are grabbing for total state power and wealth while the majority of citizens are labeled ‘losers’ by Trump or ‘deplorables’ by Madame Clinton.

The ‘peace’ movement, immigrant rights groups and ‘black lives matter’ activists have become mindless lackeys pulling the opposition oligarchs’ wagon, while rust-belt workers, rural poor and downwardly mobile middle class employees are powerless serfs hitched to President Trump’s cart.

Epilogue

After the blood-letting, when and if President Trump is overthrown, the State Security functionaries in their tidy dark suits will return to their nice offices to preside over their ‘normal’ tasks of spying on the citizens and launching clandestine operations abroad.

The media will blow out some charming tid-bits and ‘words of truth’ from the new occupant of the ‘Oval Office’.

The academic left will churn out some criticism against the newest ‘oligarch-in-chief’ or crow about how their heroic ‘resistance’ averted a national catastrophe.

Trump, the ex-President and his oligarch son-in-law Jared Kushner will sign new real estate deals. The Saudis will receive the hundreds of billions of dollars of US arms to re-supply ISIS or its successors and to rust in the ‘vast and howling’ wilderness of US-Middle East intervention. Israel will demand even more frequent ‘servicing’ from the new US President.

The triumphant editorialists will claim that ‘our’ unique political system, despite the ‘recent turmoil’, has proven that democracy succeeds … only the people suffer!

Long live the Oligarchs!

James Petras is author of The End of the Republic and the Delusion of Empire, Extractive Imperialism in the Americas: Capitalism’s New Frontier (with Henry Veltmeyer), and The Politics of Empire: The US, Israel and the Middle East. Read other articles by James, or visit James’s website.