Not Even the World is "Too Big to Fail" Any Longer

Noam Chomsky has an interesting article published in al Jazeera that reveals the trouble we're all in so long as we're under the rule of ideologues like our own Exalted Ruler and what passes today for the US Congress.  Here are some excerpts.

From the outset of the war in 1939, Washington anticipated that it would end with the US in a position of overwhelming power. High-level State Department officials and foreign policy specialists met through the wartime years to lay out plans for the postwar world. They delineated a "Grand Area" that the US was to dominate, including the Western hemisphere, the Far East, and the former British empire, with its Middle East energy resources. As Russia began to grind down Nazi armies after Stalingrad, Grand Area goals extended to as much of Eurasia as possible, at least its economic core in Western Europe. Within the Grand Area, the US would maintain "unquestioned power," with "military and economic supremacy," while ensuring the "limitation of any exercise of sovereignty" by states that might interfere with its global designs. The careful wartime plans were soon implemented.

It was always recognised that Europe might choose to follow an independent course. NATO was partially intended to counter this threat. As soon as the official pretext for NATO dissolved in 1989, NATO was expanded to the East in violation of verbal pledges to Soviet leader Mikhail Gorbachev. It has since become a US-run intervention force, with far-ranging scope, spelled out by NATO Secretary-General Jaap de Hoop Scheffer, who informed a NATO conference that "NATO troops have to guard pipelines that transport oil and gas that is directed for the West," and more generally to protect sea routes used by tankers and other "crucial infrastructure" of the energy system.

Grand Area doctrines clearly license military intervention at will. That conclusion was articulated clearly by the Clinton administration, which declared that the US has the right to use military force to ensure "uninhibited access to key markets, energy supplies, and strategic resources," and must maintain huge military forces "forward deployed" in Europe and Asia "in order to shape people's opinions about us" and "to shape events that will affect our livelihood and our security."


...While Grand Area doctrine still prevails, the capacity to implement it has declined. The peak of US power was after World War II, when it had literally half the world's wealth. But that naturally declined, as other industrial economies recovered from the devastation of the war and decolonisation took its agonising course. By the early 1970s, the US share of global wealth had declined to about 25 per cent, and the industrial world had become tripolar: North America, Europe, and East Asia (then Japan-based).

There was also a sharp change in the US economy in the 1970s, towards financialisation and export of production. A variety of factors converged to create a vicious cycle of radical concentration of wealth, primarily in the top fraction of 1 per cent of the population - mostly CEOs, hedge-fund managers, and the like. That leads to the concentration of political power, hence state policies to increase economic concentration: fiscal policies, rules of corporate governance, deregulation, and much more. 

Meanwhile the costs of electoral campaigns skyrocketed, driving the parties into the pockets of concentrated capital, increasingly financial: the Republicans reflexively, the Democrats - by now what used to be moderate Republicans - not far behind.

Elections have become a charade, run by the public relations industry. After his 2008 victory, Obama won an award from the industry for the best marketing campaign of the year. Executives were euphoric. In the business press they explained that they had been marketing candidates like other commodities since Ronald Reagan, but 2008 was their greatest achievement and would change the style in corporate boardrooms. The 2012 election is expected to cost $2bn, mostly in corporate funding. Small wonder that Obama is selecting business leaders for top positions. The public is angry and frustrated, but as long as the Muasher principle prevails, that doesn't matter.

While wealth and power have narrowly concentrated, for most of the population real incomes have stagnated and people have been getting by with increased work hours, debt, and asset inflation, regularly destroyed by the financial crises that began as the regulatory apparatus was dismantled starting in the 1980s.

None of this is problematic for the very wealthy, who benefit from a government insurance policy called "too big to fail." The banks and investment firms can make risky transactions, with rich rewards, and when the system inevitably crashes, they can run to the nanny state for a taxpayer bailout, clutching their copies of Friedrich Hayek and Milton Friedman.

That has been the regular process since the Reagan years, each crisis more extreme than the last - for the public population, that is. Right now, real unemployment is at Depression levels for much of the population, while Goldman Sachs, one of the main architects of the current crisis, is richer than ever. It has just quietly announced $17.5bn in compensation for last year, with CEO Lloyd Blankfein receiving a $12.6m bonus while his base salary more than triples.

Systemic risk in the financial system can be remedied by the taxpayer, but no one will come to the rescue if the environment is destroyed. That it must be destroyed is close to an institutional imperative. Business leaders who are conducting propaganda campaigns to convince the population that anthropogenic global warming is a liberal hoax understand full well how grave is the threat, but they must maximize short-term profit and market share. If they don't, someone else will.

This vicious cycle could well turn out to be lethal. To see how grave the danger is, simply have a look at the new Congress in the US, propelled into power by business funding and propaganda. Almost all are climate deniers. They have already begun to cut funding for measures that might mitigate environmental catastrophe. Worse, some are true believers; for example, the new head of a subcommittee on the environment who explained that global warming cannot be a problem because God promised Noah that there will not be another flood.

If such things were happening in some small and remote country, we might laugh. Not when they are happening in the richest and most powerful country in the world. And before we laugh, we might also bear in mind that the current economic crisis is traceable in no small measure to the fanatic faith in such dogmas as the efficient market hypothesis, and in general to what Nobel laureate Joseph Stiglitz, 15 years ago, called the "religion" that markets know best - which prevented the central bank and the economics profession from taking notice of an $8tn housing bubble that had no basis at all in economic fundamentals, and that devastated the economy when it burst.

...As long as the general population is passive, apathetic, diverted to consumerism or hatred of the vulnerable, then the powerful can do as they please, and those who survive will be left to contemplate the outcome.