The Politics of Demofascism and Self-Immolation

Demofascism, people oppressing people, as well as self-immolation in various forms--ecological, economic or suicidal--have become major features in global politics. Muslim extremists call the U.S. the "Great Satan" and promise "death to Americans" while American pundits call for ethnic cleansing of the Palestinians and advocate killing the leaders in Muslim nations and converting the population to Christianity. Both sides are intensely provocative which reciprocally entails demofascist and self-immolative policies.

In 1950, Truman, enlisting multilateralism and collective security, termed the Korean War a "U. N. police action." After 9/11, Bush, deserting multilateralism and collective security and strongly embarking upon unilateralism and pre-emption, relentlessly called his policy against terrorism a "war." He said it would last 5, 10, l5 years. Lately, he indicated it may last "generations." His desertion of collective security increased the unilateral insecurity of the U.S.. As it turned out, unprecedented deception and blunders of historic proportion were committed that ultimately benefited Al Qaeda.

Osama bin Laden pretends to express democratic sentiments that cross international boundaries and that aim to bring democracy to royalist Arabic countries. Bush, too, promises to bring democracy to the Middle East. Both want the same and pretend to serve the masses. Yet, the supporters of both practice demofascism. Both missed alternatives which would have been far less costly and much more acceptable. Osama, instead of murdering 3000 innocent people, could have maintained the tradition of non-violence of Martin Luther King and Mahatma Gandhi. He chose not to. Bush, instead of using military brutality to impose democracy in a most undemocratic fashion, could have used a fraction of its monetary cost to secure the favor of Afghans and Iraqis. So far, the war costs each year have been roughly equal to the annual GDP of Afghanistan and Iraq!! A mere fraction of this could have been used to sway the population into any direction Bush had wanted. As it evolved, the costs constitute a form of economic self-immolation for the U.S.

With false promises and lots of self-delusions and with plenty of propaganda, each side gained sufficient popular support to become demofascist. Mixed in with religious extremism on both sides, the resulting witch's brew has all the hallmarks of a long-term modified equivalent of another Cold-Hot War lasting decades and costing trillions, on top of the heavy loss of lives and serious ecological degradation.

In any case, after 9-11 the following considerations were either neglected or not sufficiently enlisted:

--- The massive 9-11 tragedy has a history which must be analyzed for guidance in curing terrorism. Demonization on both sides precludes understanding and the emergence of a sound policy preventing future terrorism.

---After 9/11, two hundred nations extended sympathy and offered help. French newspapers headlined "we're all Americans now." This historically unprecedented global diplomatic support should have been used for an international police action to track down Osama and prevent terrorism. Instead, it was squandered by Bush's ulterior motives of converting the struggle against terrorism into a war against Saddam. Serious conservative and liberal experts have exhaustively exposed Bush's war mongering. Long before 9-11, he subordinated the State Department to the Department of Defense and abused and manipulated the CIA . A compliant media either supported him or failed catastrophically in exposing the massive deception.

---Osama bin Laden and Saddam despised each other. One is a religious extremist and the other a secularist who restrained the clergy. By removing Saddam, Bush did a favor to Osama who was able to recruit, among others, Zarquawi. By disbanding the Iraqi army, Al Qaeda got another ally to form a larger insurgency.

---An exit strategy never existed due to oil interests and the building of permanent bases and the absurd notion sold by Paul Wolfowitz that oil revenues would pay for the war. Unlike the Gulf War of '91, which was fully paid by foreign governments, this war will be paid by the U.S. taxpayers.

----To bring democracy to Iraq assumes that if such were to materialize it would be pro-American. It's almost certain that popular sentiments will be anti-American for a long time to come given all that has happened to Iraq since 1991. Bush seems to be totally unaware of this absurdity.

----The military is very effective in defeating its counterparts of other nations It cannot easily, if at all, defeat a guerrilla war that is rooted in large popular support and that has acquired the features of chaotic sectarian strife and demofascist suicidal criminality whose strategic defense appears to be self-immolation! The prospects of winning this "war" are as good as having won past "wars" against crime and drugs. Superpower militarism of "Shock and Awe" that does not know whom it is fighting, how many, where, when, how long and with what, transmogrifies into military dinosaurism. In turn, this encourages the opponent to expand hit and run “swarming,” suicide tactics, criminality and chaos. The current mess proves that an international police action would have been a better policy.

---- To prevent the spread of nuclear weapons and WMD to Iran or other nations is a commendable policy. But, it becomes hypocritical if Bush is not enacting a global policy of removing ALL of them, including ours. Otherwise Al Qaeda could attack us to enact Bush's policy! To facilitate de-nuclearization, Bush should expose ALL of the horrible burdens associated with nuclear arms by disclosing, among other facts, that environmental scientists estimated that one million Americans had already died of cancer before ’79 resulting from America's nuclear stockpiles. Moreover, the cost of safely disposing of all nuclear contamination--clams in the Columbia river have plutonium in them and radioactive dust has been reported in the attics of homes close to the Hanford nuclear facility-- will be in the trillions. Does Iran want to emulate this form of America's self-immolation?

---Bush’s attempt to secure the borders of Iraq is bizarre and farcical if he intentionally neglects securing U.S. borders.

---With the U.S. stuck in another endless war, it is allowing a massive shift of wealth from itself to foreign economies while suffering all sorts of negative diplomatic consequences that cause, no doubt, vodka and rice wine to be uncorked in Moscow and Beijing.

--- An economy that is the world's largest debtor economy will not be able to sustain a global empire. Refocusing on domestic priority to facilitate a 20-year-long needed American economic miracle to remove slumerica would have terrific favorable consequences not just domestically but also in foreign policy. If not, demofascism and self-immolation will be stopped due to their massive monetary costs, ecological degradation and increasing diseases.

BOOM MARKET TOOK MONEY FROM THE MASSES

BOOM MARKET TOOK MONEY FROM THE MASSES

published 7-12-02

In 1990, at the beginning of the longest economic expansion, about 25 percent of Americans owned shares in the stock markets. By the end of the 10-year boom, about 55 percent did so. Communism disappeared and a massive reallocation of resources from the military to other sectors helped fuel the high-tech information revolution which, in turn, boosted productivity tremendously.

The Gross Domestic Product was booming. Consequently, it seemed to make sense to invest in energy companies like Enron and Halliburton or in WorldCom and Global Crossing, giants of the Internet and telecommunication revolution that was spinning itself around the globe. Initial Public Offerings proliferated and provided ample opportunities to partake in the growing economic pie. The expansion seemed endless, causing some observers to speculate that economic recessions were relegated forever to the dustbin of history. Some Wall Street pundits predicted that the Dow Index would be propelled to 36,000.

The chairman of the Federal Reserve, Alan Greenspan, spoke of the "wealth effect," that is to say the rising market made shareholders feel richer, spend more and save less. William Seidman, head of the Resolution Trust Corp., which dealt with the Savings and Loan scandals of the '80s, predicted the most intense economic expansion ever. High entrepreneurial innovations and labor mobility would assure it. Conventional statistics such as GDP growth, retail sales, job figures, inventory and consumer confidence proved Seidman to be correct. For their part, members of Congress, like Dodd, Lieberman and Tauzin, praised the stock option method of rewarding corporate CEOs for their productivity as "unique" and "truly American." The media, in turn, saw new markets and offered plenty of new TV programs focusing on the booming stock markets and the new high tech companies which supplied an endless parade of newfangled electronic products and computer gadgets that made Bill Gates super-rich among the super rich. Unlike the boom and bust of the railroad and power companies of the 19th century and the radio, automobile and stock market boom of the Roaring '20s, this was a New Economy.

But was it really a New Economy and did the tens of millions who were drawn into the markets get wealthier? And, above all, did the booming GDP benefit those who did not enter the market? A closer analysis tells a different story than conventional statistics do. Contrary to Greenspan, a direct "wealth effect" from the booming stock market did not and cannot exist. If person A buys shares of WorldCom at $10 per share and sells them at $60 to person B, A will indeed have a 500 percent capital gain and may spend more. Yet B shifted his wealth to A, bought high and will spend less. If he kept his shares, he is now burdened by horrible losses. He will spend even less. Involuntarily, he activates the poverty effect which neutralizes the wealth effect. Hence, stock market trading merely rearranges the economic pie. It does not directly enlarge it. For this reason, the buying and selling of shares is not included in GDP calculations.

Moreover, the Dow Index, vigorously used to sell shares and brag about how rich investors could become if they would only join the roaring bulls of the '90s, is of dubious value. It started more than 100 years ago as 12 industrial stocks, later expanded to 30. Over time, some of these corporations went bankrupt, were replaced with others, were merged, etc. so that the current Dow Index is composed mostly of non-industrials. Thus, it cannot be consistent with itself, compares apples with oranges and is mostly used for capturing new customers and entertaining current ones. Essentially, valid and true quantifiable measurements are almost impossible. To accept the Dow Index as scientifically valid is an absurdity. In spite of this, millions intensely reified it--and reification of such indices is a modern form of superstition, that is to say, the pretense of knowing more than one actually does. Never mind its conceptual weakness, the soaring Dow Index gathered in the sheep so that their wool could be shorn.

The booming GDP also produced more and more jobs. Nearly everyone viewed the New Economy as a model for all other advanced economies. Surely, it proved that the broad masses, even those not participating in the markets, were also getting rapidly wealthier. But again, a closer look leads to another conclusion. Household and family net worth, the only true indicator of wealth, did not rise at all from 1990 to '95 and had actually declined relative to inflation since 1974. After '95, it rose only marginally relative to inflation and adjusted for hours worked and for the rising numbers of breadwinners per family. In contrast, the incomes of the Fortune 500 CEOs exploded into the stratosphere. In 1980, their annual income was about 45 times the average worker's income. By 1990, that had risen to about 90 times. Boosted by stock options and outright fraud, it peaked in 2000 at an incredible 480 times the average annual worker's income. While the workers' income remained tied to economic productivity, the CEOs' income became hopelessly divorced from either economic productivity or merit. It reflected corruption, fraud and a form of institutionalized theft. In other advanced economies, the relation between the workers' income to the CEOs' income stayed in the 20 to 25 range (as it was in the U.S. in '65), reflecting more closely economic productivity. This fact forces those who were entrapped by the hysterical enthusiasm about the booming GDP and stock markets to ponder the question whether American CEOs are really 20 times (!) more productive than Japanese or European CEOs or whether their explosively rising incomes really meant an expansion of criminality substituting for economic productivity.

Other important economic indicators also reflected the fate of the broad masses more accurately than consumer confidence, retail sales and GDP growth statistics: l. the increasing number of people living in trailer houses, 2. the changing ratio of assets to income and 3. affordability of home ownership. They shed additional light on the question whether or not the booming GDP and stock markets really made the masses wealthier.

In 1960, according to census figures, of 180 million Americans, about 1.4 million lived in trailer homes. Every census thereafter showed a massive increase. By 2000, about 20 million out of 280 million lived in trailer homes. While the population, over a 40 year period, grew by 55 percent, the number of those living in marginal housing rose by a factor of about 14 times! If this pattern were to continue into the next 40 years, then by 2040, out of a possible 434 million Americans, about 285 million would be living in trailer houses. Indeed, it could be said, that trailer homes are America's future and the core of the American dream or reality. The so-called booming '90s did not reverse the trend nor did it reduce the number of slum houses.

In the 1950s, the ratio of assets to income for a typical family was about $8000 to $4000 or a 2-1 ratio. In spite of the booming '60s, '80s and especially during the first half of the roaringly booming '90s, this ratio actually declined somewhat. It meant that in spite of the rising stock markets and more wives working and an expanding work week, the masses were not benefiting much, if at all. The ratio improved somewhat in the second half of the booming '90s though without doubt it has declined drastically in the last two years. Home ownership between 1940 and 1960 rose substantially from 43 percent to 62 percent. Since then, it has been flat or risen only marginally in spite of more breadwinners per family and more working hours per year. A new house could be bought in the '50s for about 2.5 times the annual income. This factor rose substantially over the decades. In some regions, it is as high as 8 to 10. Affordability of home ownership has declined noticeably, forcing more to live in marginal trailer houses.

Taking it all into account, future economic historians will focus on the poverty effect of the booming stock markets and how it was used to transfer wealth from the masses, who entered the markets by the tens of millions, to the wealthy. This transfer of wealth was made possible by IPOs, stock options, broker's fees and the fact that the rich and the insiders, having access to superior information, bailed out of the markets before the masses. The latter took the poverty effect. They will trickle out of the markets and are unlikely to re-enter it soon. In the end, their reduced spending will ripple through the economy for years to come.

"Sig" Sutterlin teaches at Indian Hills Community College. He has been a Senior Fulbright Scholar in Europe, has published a book on international diplomacy and has received a special recognition award from the International Network of Trade for an essay on international trade.