We're Doing It Wrong

Chapter 9 Mile

Detroit is bankrupt. Or not. Or it is. Regardless, the city that provided the American Dream's 20th century engine has fallen victim to the 21st century version. By now you've likely heard most of the stats: it was the 5th most populous city in America in 1950 with over 1.8 million (and only a couple hundred thousand short of 3rd), today only about 700,000 remain, nearly a quarter million have left in the past decade alone; half the parks have closed since 2008; 78,000 vacant structures and 60,000 vacant land parcels; 40% of the streetlights are out and the city has just 36 ambulances, of which generally no more than 14 are in operation at any given time, and there about 12,000 fires a year to go along with the highest violent crime rate in the US (why not bust a cap in someone's ass for a few bucks when you can get a pizza delivered faster than it takes the cops to respond, about 58 minutes compared to the 11 minute national average and only 8.7% of the cases are solved compared to 30.5% nationwide); tax collections are down 20% over the past five years and the official unemployment rate stands at 18% which is misleadingly low as less than half of those over 16 are actually working. Oh, and there's $18 billion in debt growing by a few hundred million a year. You know the script by now, cue the neoliberal-agenda-advancing blame game chorus of big government, corrupt politicians, greedy unions and gold-plated pension plans because, as we know, this is an isolated incident that the free market will clean up with its invisible hand, just another black swan, nothing that even an awful Hollywood movie could've predicted:

Er, you mean..., no, it can't be so simp..., seriously? ROBOCOP 2! It couldn't have at least copied the script from the original? Is it really just a transparent attempt to sell off what remains of the commonweal and maybe establish an Ayn Randian tax-free "commonwealth" for our modern day John Galts on Belle Isle selling citizenship at $300,000 a head in hopes of becoming a 'Midwest Tiger' to compete with the Asian Tiger of Singapore? Wait, no, this just seems like a thinly veiled attempt to impose an anarcho-capitalistic future on all of us, after all, $37 million, that's just monopoly money, Omni Consumer Products (OCP) doesn't really exist and we all know there's no such thing as robocops to come and save the day! Alas, that's the point, science fiction isn't meant to read as an instructional manual but a warning. The dream has become a nightmare we must wake from and realize that Detroit is but a microcosm of the defunct American model that celebrates profitability rather than society, individuality over solidarity and conformity but not equality. Otherwise, they'll keep turning up the heat by adding zeroes to the bill, turn OCP into an acronym for Oligarch Controlled Polity while their semi-autonomous drones circle the skies keeping us in line.
 
What's Going On? First off, there is a lot of blame to spread around and it's easy to get lost in detail and fail to separate cause from effect, especially as so many of the latter are easily packaged and sold as the former. Corrupt politicians such as Kwame Kilpatrick taking kickbacks or a city run by a one-party government sure look like causes, but they're not. Even the more obvious culprits such as the '67 race riots and the resultant white-flight or the cities susceptibility to disaster due to the lack of economic diversity that comes with being a one-industry town were nothing but manifestations of the root of the problem. Ditto the city's 60% poverty rate for children and the 50% of the population reported to be functionally illiterate. No, we've gotta go way back, maybe not as far as Adam Smith or David Ricardo as it isn't capitalism itself we need to castigate nor even to Henry Ford's first assembly line to find the cause of Detroit's decline. It might seem a bit unfair and facile but let's simplify things and point the finger at poor old Simon Kuznets and his work developing the first comprehensive set of measures of national income, what we know today as GNP and GDP.

Wait, bear with me a moment as not only will it take at least that long to explain how something as mundane and seemingly practical could be the cause of Motown's meltdown but the reality is Simon saw the great danger of his work from the get go and therefore seems a very good place to start the explanation. In his first report to the US Congress in a section titled "Uses and Abuses of National Income Measurements" he warned:

The valuable capacity of the human mind to simplify a complex situation in a compact characterization becomes dangerous when not controlled in terms of definitely stated criteria. With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification. [...]

All these qualifications upon estimates of national income as an index of productivity are just as important when income measurements are interpreted from the point of view of economic welfare. But in the latter case additional difficulties will be suggested to anyone who wants to penetrate below the surface of total figures and market values. Economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income. The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.

Pretty prescient stuff for an economist. Unsurprisingly, we failed to heed his warnings and this one number (well, two, GNP and GDP are different) and more specifically making sure it's constantly climbing has become the primary purpose of public policy. In fact, as economics and finance have come to completely rule our lives it's become an unhealthy obsession, the disease of our civilization.

Again, we need to pause and explain ourselves. Growth is good up to a point; there is no denying that life has been improved for billions thanks to the benefits accrued by advancements owed to growth. However,  we need to ask ourselves what is the point of growth if not to improve our quality of life? Now, there's a tricky term, "quality of life", how to measure growth against something so seemingly subjective? Living standards quickly devolves to "material living standards" and how many iPads everyone has. Happiness? Sounds good, but tough to quantify. Satisfaction? Ditto. All equally slippery. So let's start simple and graph the relationship of life expectancy versus per capita GDP in various countries. (More complete country chart can be found here.)

The first thing that jumps out is the near vertical rise on the left side as life expectancy quickly rises along with GDP. However, it's hard to miss the diminishing 'bang for the buck' we get from raising GDP, to the point that it seems to not have much effect after as little as $10,000 per head, hello Costa Rica. Interesting but so what, right? Well, we were originally trying to find the cause for Detroit's demise, but this is our first peek into the likely cause of not only the troubles there plus in Greece, Stockton, CA, Portugal, Jefferson County, Al, , Cyprus and those to come from Baltimore to California to Italy but also into what ails much of the west as efforts around the world for the past 75 years have focused on one thing: increasing GDP.

Superstition

Us humans are amazing in so many ways but one of our biggest failings is the inability to let go of strongly held beliefs, especially when they've explained so much, and worked so well, for so long. GDP and economics is no exception as cognitive dissonance and groupthink combine to create blind spots. Especially in America where after first beginning to recover from the Great Depression and then emerging virtually unscathed from World War II to find itself the only running engine to power the world's economy, GDP continued marching upwards. A key to remember at this point is that much of this period of strong growth coincided with a huge reduction in income (and wealth) inequality as much of the fruits of growth was spread from the penthouse executive board room to the basement boiler room. Also worth noting are the words of the foremost economist of the era, John Maynard Keynes, who upon seeing the tremendous opportunities made possible by growth, predicted that the working week would be cut to perhaps 15 hours a week, with people choosing to have far more leisure time as their material needs were satisfied. Incredibly, his optimistic prediction that (material) living standards in "progressive countries" would be between four and eight times higher was made in 1930, a year into the Great Depression! Sadly, this latter prediction has proved true (living standard in developed western economies will have risen about eightfold by 2030) while the former has fallen flat on its face.

You're probably wondering what all this has to do with Detroit, right? One word, hyphenated or not, like Jay Z: neoliberalism. It has not only robbed us of real progress but also ensures there will be many more Detroits and Greeces to come. See, growth, like so much that tastes good at first but eventually turns poisonous, became addictive. All was good up to the 1970s when the United States' unchallenged position as the colossus of the capitalist world came under assault. Rising international competition (read: Japan) as other nations had finally recovered their industrial base after the war coupled with multiple oil shocks as the Arab world awoke to the rape of their resources in return for peanuts led to declining productivity and profitability along with rampant inflation and unemployment, stagflation. Oh, there was a little war they lost too. The corresponding loss in confidence in the dollar also forced Nixon to end its convertibility to gold and take the world into the little understood world of fiat currencies. About the same time as growth seemed to be stalling, the Club of Rome's The Limits of Growth was making Malthusian claims on the unsustainability of infinite growth. The US was ripe for a revolution and they got it in neoliberalism.

The popular myth is that Ronald Reagan and Margaret Thatcher rode in to save the day. Of course they were nothing but marionettes and we all know that a marionette's puppeteer is called a manipulator and so it should come as no surprise that they also manipulated us. From neoliberal prophet Friedrich Hayek and his Mount Pelerin Society the poison oozed through Milton Friedman into the University of Chicago to spill out into the world via thinktanks spewing propaganda to be transmitted by their media lackeys and forced onto the rest of the world by the IMF, World Bank and WTO. America has the Heritage Foundation, the Cato Institute and the American Enterprise Institute while the UK's versions include the Adam Smith Institute, the Institute of Economic Affairs and the Centre for Policy Studies founded in 1974 by Thatcher's mentor, Keith Joseph. Despite their benign sounding names, these are radical organizations with almost nothing to do with the likes of Adam Smith who understood something about Moral Sentiments and the dangers of private monopolies and everything to do with Hayek, Friedman and Rand and their belief in extreme individualism or social Darwinism. Freedom could only be achieved through economic liberalization meaning free trade, privatization, deregulation and relying on markets to provide public services.

No party on either side of the Atlantic has a monopoly on this evil. Democrat Jimmy Carter began the deregulation of the banking and transportation sectors. His party's Bill Clinton tag teamed with Labour's Tony Blair in devising the "third way" in a failed attempt to reconcile neoliberal economics with a commitment to social justice. This was always just smoke and mirrors to fool the unwashed masses as neoliberalism is inimical to the public good as it is always secondary to the market, an ideology wedded to the belief that the market should be the organizing principle for all political, social and economic considerations. As the benefits of citizenship are allocated on the basis of perceived economic utility to the state, corporations are considered the primary citizens while individuals are seen as consumers first and citizens second, peripheral ones at that. Corporations and those in the 1% are portrayed as job creators while the bottom 20% are framed as economic leeches siphoning off financial benefits they don't deserve when it is the opposite that is true as economic policy is designed to distribute wealth upward. Tax breaks and subsidies for corporations and the wealthy are called market incentives while benefits to the poor, aged or disabled are framed as entitlements. However, rather than withering away, as neoliberal theory would have it, the state has instead grown as it plays an active role in the introduction, implementation and reproduction of neoliberalism.

The Tracks Of My Tears
Yeah, yeah, you're still wondering what all this has to do with Detroit going from being the city with the highest median income to bankruptcy in half a century and what it means to America and the rest of us. History has already been rewritten to tell us high wages and benefits were Henry Ford's idea when in fact they were fought for and won through struggle and solidarity. World War II had cemented Detroit's industrial importance as the Arsenal of Democracy and it seemed a place which was proof of capitalism's ability to generate and maintain a large middle class. The illusion was short-lived as jobs were already flowing out of the city to the suburbs in the 1950s just as the migration of African Americans to the city was increasing, lured by the promise of freedom and opportunity denied to them in Jim Crow's last, desperate days. Instead they were welcomed by white flight, residential segregation and deindustrialization; rising racial tension, ghettoization and joblessness was a recipe for disaster which erupted in the 1967 rebellion. In addition to dollar loss this of course kicked white flight into high gear resulting in the loss of much of the city's tax base. Throw in the oil shocks of the early 70s and their influence on changing consumer requirement and the failure of the auto industry to adapt and you had a city that needed a saviour but instead got no succour.

It's no coincidence that Detroit's decline coincides with that of America as the US had the most wealth for the parasite of neoliberalism to feed off and Detroit was its richest and most vulnerable city. Back in 1960, GM was not only the city's but the nation's largest employer and paid an average hourly wage of $50 in today's dollars, including health and pension benefits; today Walmart has assumed the mantle and pays $8.81 and a third of the workers work less than 28 hours a week and don't qualify for benefits. The ratio of CEO-to-worker pay has ballooned more than 1000% since 1950, from around 20 to 1 to over 200 to 1 (1,795 to 1 at JC Penney). Not only that but the highest tax rate faced by those CEOs was 91%; today it's under 40%. It was those CEOs at the big 3 who made the decisions that sped the demise of Detroit (GM’s Geo Metro 40 miles/gallon for $9,740 in 1991; today GM offers the Volt for $39,145 that requires you to plug it in AND put gas in it to only get 37 miles/gallon) aided and abetted by the neoliberal policies of maintaining short term growth at the cost of long term prosperity. Specifically, it was the financialization of the economy, the pursuit of 'free trade' policies and the war on drugs which sealed the fate of the city.

Neoliberalism is predicated on decreasing the individual's reliance on the state thus increasing their initiative to pull themselves up by the bootstraps. The problem is it is impossible for those mired in poverty to do this when they don't even have any shoes - ie. education, healthcare, adequate nutrition, employment opportunities. Meanwhile, those with closets already overflowing with footwear have their shoes shod whenever they need it. Er, let's try to explain that a bit better starting with the election of Ronald Reagan and the belief that income inequality was a prerequisite to growth. Not only was it seen to provide incentive to work harder but it raised the savings rate at the top and as the rich have a lower marginal propensity to consume than the poor it would therefore accelerate investment. Additionally, demand for new products almost always emerged from among the rich and it was them alone who could afford the cost involved in research and development thus enriching them should augment innovation. In 1981, the Budget Reconciliation Act along with the Recovery Tax Act introduced across the board tax cuts favoring the redistribution of income to the rich, deregulated monopolistic industries and began the war on the poor by reversing many of the social gains made over the previous 50 years. The shooting war, however, came with his war on drugs.

War (What's it Good for?)
Sometimes numbers are staggering enough on their own and require no explanation. When the explanation is every bit as distressing, well, then you've got the American prison industrial complex. Only China comes close to the US in prison population and only Russia approaches them in percentage of the population incarcerated. Though only comprising 5% of the world's population, the US has 25% of the world's prisoners, about 1% of the population is trapped in the system and the total number has increased 700% since 1970. Yes, it's been a booming industry that's seen $300 billion spent since 1980 to expand the prison system. Not only does it provide employment for the gatekeepers, it reduces the eligible workers counted in the unemployment rate. The poor, worth almost nothing to our corporate masters on the streets, can generate revenues of $30-$40 thousand a year behind bars. Unsurprisingly, almost half of federal prisoners are in for drug related offenses. The bipartisan love of war is illustrated by Clinton's signing of the crack cocaine sentencing guideline bill which targeted the poor black community by making crack cocaine convictions exponentially longer than those for powder cocaine. It gets even worse when you realize it was the CIA who introduced crack into inner-cities to fund waging war in Central America. Prison privatization has brought the market into play with the law while prison labour is a pretty attractive alternative for those looking for a, um, captive work force.

We shouldn't ignore that more traditional method of sacrificing the money and lives of the poor for the glorification and enrichment of the wealthy. Much like neoliberalism, the idea that war is good for the economy and therefore beneficial is a societal sickness that has been perpetuated by myth makers who mysteriously profit from this delusion. Here we should pause once again to consider the suicidal tendency involved in believing that GDP growth is a good thing. Did you know for example that the Gulf of Mexico oil spill added about $300 to the average Americans income? The bloated prison system adds about $125. The US medical system isn't the most expensive in the world (while getting worse results than most of the 'advanced' economies) because they like having millions die for lack of basic care (we hope), but because it adds more zeroes to the bottom line and GDP. Add in a bit of conspicuous consumption, insanely priced education and the trillions wasted on war and suddenly it's pretty easy to understand why even though the size of the US economy has doubled since 1970, overall well-being has declined. Reagan pumped up the gravy train flowing from the public to the private purse, Bush the elder began the family tradition of bombing Iraq, Clinton, though he oversaw a reduction in military spending still indulged in some explosions, Dubya, yeah, he almost doubled the amount spent to kill people and Obama has put a smiley face on murder by remote control.

Signed, Sealed, Delivered
It was Bush the elder who got the NAFTA ball rolling and kept the Uruguay Round of trade talks alive but it was Clinton's signature that brought NAFTA and the WTO to life and sealed Detroit's doom. The agreement turned North America into a 'free' trade continent which Clinton promised would promote "more growth, more equality, better preservation of the environment, and a greater possibility of world peace". Oh, and it would create 200,000 jobs. Well, he was only a little over a million off as a report by the Economic Policy Institute documented that 879,280 jobs were "displaced" due to the deal. Thanks to it and other free trade deals pushed on the public to promote growth, the exciting game of labor arbitrage has been played for the past few decades, a game always won by big business as profits are padded at the expense of labor as salaries are slashed and jobs outsourced. While employment protections are rarely included in these deals, NAFTA provided a template for investor protections which effectively remove sovereignty from signing states.When you wonder why neither the public nor your government can ban Monsanto crops to prevent the loss of agricultural diversity or Bayer from killing the bees we depend on for pollination or Chevron from poisoning the water table by fracking you'll be sure to find a clause in one of the corporate written free trade deals one of your governments sold to you as necessary for economic growth.

As mentioned a few hundred paragraphs above, it's rarely those on the throne making the decisions; therefore, its the stories of those who do that make for the grist in this modern day cautionary tale. Clinton's Secretary of the Treasury Robert Rubin was one such Grima Wormtongue. Time Magazine would have us believe he was part of the Committee to Save the World (that's him on the left) when his face should have instead been pasted on a wanted poster. See, the crowning blow in this whole story was the financialization of the economy, a process that has allowed the illusion of economic growth to continue by simply feeding off existing wealth and borrowing from the future. For his service in the creation of the TBTF, TBTJ (too big to fail, too big to jail) bank, he was paid $126 million by the same financial institution whose very existence his policies made possible, Citigroup. Clinton's signing of both the Rubin championed Gramm-Leach-Bliley Act which repealed Glass-Steagall which had kept gambling separate from banking, and the Commodity Futures Modernization Act which prevented the regulation of financial derivatives delivered the coup de grace for Detroit and the rest of us leading us as they did directly to the 2008 financial crisis.

A spike in prices at the pump killing demand for the SUVs that had temporarily saved them combined with the financial crisis bankrupted two of the three Detroit automakers, GM and Chrysler. The same crisis collapsed the Ponzi scheme run by banks that relied on a constant stream of new mortgages to be bundled and securitized and left millions homeless. As this predatory lending targeted African Americans, both Detroit and its residents were among the hardest hit. With an ever-shrinking tax base to support an immutable city infrastructure, budgetary problems have plagued Detroit for the last 20 years. Besides a brief respite in the mid-90s when it was falsely believed that new casinos and stadiums could reverse the city's fiscal problems, the city has been burdened with a junk debt rating. In an attempt to balance the budget, the combination of rising taxes and cuts in services drives out residents and businesses while the erosion to basic social services leads to a drop in home values and rising crime. Desperate politicians become an easy mark for the wizards of Wall Street who seem to offer a way out, and besides, when the bills come due they'll most likely be out of office. While the sheer audacity of the fleecing of Detroit is dwarfed by that of Alabama's Jefferson County bankruptcy tale courtesy of JP Morgan, Detroit could have done without a $2.7 billion bill for borrowing $1.4 billion in 2005 thanks to bankster interest rate swaps and derivatives.

Here's where the morality tale gets good. This financing deal was needed to fill a gap in the city's defined benefit pension funding, the kind that provide a guaranteed annual income after retirement. Public employees paid for those pensions with lower wages while working; n other words they accepted less then to get some later. But get this: governments consistently underfund their pension plans. In Detroit, the gap's about $3.5 billion, but nationwide all levels of government are about $1 trillion short. Not so bad, as Paul Krugman would have us believe, until you consider to come up with this figure necessitates an 8% average return on invested pension assets. D'oh! Not that whole growth thing again. It gets worse. Listening or reading to much of the MSM hype (always stating the $9.2 billion shortfall which includes unfunded health care obligations) one could easily get the impression that there is a movement afoot to convince the public these pensioners are greedy bastards who don't deserve a dime. The bankruptcy process will determine which creditors get paid back and in what order, pension plans justifiably fear they may fall to the bottom of the pile, because you know, society thinks giving $19,000 a year to someone who picked up garbage his whole life isn't as important as paying off banks and hedge funds.

There's the rub. It's true. Go read the comment thread on any article about the Detroit bankruptcy and you'll soon see that Joe Sixpack has been convinced that bailing out banks is/was good as they add to the economy while pensioners are bad as they subtract. They wouldn't consider the continuing bank bailout, as in the quantitative easing program that sees the Fed give banks $85 billion a month in interest free green pieces of paper in exchange for other pieces of paper, could pay off Detroit's debt four times over each month. Nor do they see anything bizarre about a city entering bankruptcy subsidizing a billionaire's hockey team's arena that will see the city pick up almost half of the $650 million tab because corporate welfare is called market incentives and I'm sure that the money sucked out of schools, parks and you know, quality of life things to build Ford Field for the Lions and Comerica Park for the Tigers in the past dozen years has worked out great; a bunch of spanking new stadiums for those who fled to the suburbs and therefore not paying for them  to come in to the city and enjoy while the only chance to see the inside for those paying for them will be if they're selling foam fingers and foamy beers.

Money (That's What I Want)

The press reports unemployment is falling, which is true, but the warped measurement is meaningless as employment isn't rising enough to even keep up with population growth. It's not just an insufficient number of jobs, it's the kind of jobs being created; the low-paying, menial, dead end sort without any benefits. In fact, 60% of the jobs lost during the recession were classified as mid-wage while 58% of the job gains since are low-wage. This wage suppression is great for companies like WalMart who get to have their workforce subsidized by the government as most of their worker earn so little they often qualify for government assistance; tax payers pay on average almost $1 million per store. All this means wealth is flowing up at an ever-increasing rate; 121% of the income gains since 2009 have gone to the 1% (yes it's possible as they've scooped a portion of the rest of the population's pie) while corporate profits are at all-time record levels and wages are at all-time lows. Zooming out from America, the wealth gap between countries is also widening, globally the richest 300 people own more wealth than the poorest 3 billion; the richest 1% have accumulated some 43% of the world's wealth, while the bottom 80% of the planet's inhabitants have just 6% between them. Guess which group is stashing up to $32 trillion in tax havens, effectively removing wealth from circulation.

Cognitive dissonance seems to be hiding the realization that the American Dream is dead, at least in the old idea of each successive generation living better than the previous. This is because neoliberalism is great at pumping up bubbles upon which the rich float while the rest sink with the pop; it's no longer true that a rising tide lifts all boats. Privatization, deregulation, globalization, robotization, computerization and financialization have transformed western capitalism from industrial to financial. In other words we've moved from a system which produced nothing in itself but derived profit from the value created by the exploitation of labour to a system that simply squeezes profit out of existing assets. The former system was able to thrive using the old panem et circenses gambit but with the latter, present system, eventually they'll be no more crumbs to toss to the masses. Suicide rates are already skyrocketing among baby boomers as economic insecurity pushes people over the edge and now their pensions are being circled by the sharks. Meanwhile the young face the choice of fighting for a job at McDonald's or going to university so they can add to the $1.2 trillion in student loan debt and cross their fingers they can get an unpaid apprenticeship position when they're done.

Instead of realizing we're all in this together though, those manipulating puppetmasters will pull our strings using the old techniques of, among many others, media manipulation (I'll scratch your back if you scratch mine), fear (terrorists!), divide and conquer (it's those greedy unions and pensioners!), patriotism ('Murica, F#ck Yeah!) and of course debt servitude to maintain control of the flock. Lockeed was bailed out because they build stuff to blow people up, Chrysler's been bailed out a couple of times, GM once, they build Godcars don't you know, the airlines had to be because of, you know, terrorism and the banks, well, without the banks, we know the whole world as we know it would have ended. What about New York City's bailout in 1975? Well, that's different than Detroit, because, well, it would create moral hazard this time, or something. What's that? What about Mexico? No, they didn't bailout Mexico in order to save face after NAFTA was signed, did they? Yep. But not Detroit.

ABC
Solutions? Well, there's a few out there. The first step, however, is the realization that we're doing it wrong. An economy based on debt (issued by bankers, not government) inevitably collapses on itself. Henry Ford himself said "[i]t is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning". New money is continually lent into existence at the push of a button so that existing debt can be repaid, but by necessity there is always more debt than money to pay it back. The dog chasing his tail leads to the need for infinite growth, an impossibility on a finite planet thanks to our enemy of diminishing returns, entropy. We've got to realize we already have enough known oil and gas reserves to kill ourselves and stop exploiting tar sands, shale gas and the Arctic. We need to refuse to pay a 280,000% markup for our most important resource, water. The purpose of economic policy shouldn't be to stimulate growth but to facilitate life. A transition to a steady state, non growth economy must eventually occur, the question is do we want to move that way gradually of our own choice or have it (or far worse) foisted upon us by the inevitable collapse of the system.

Alternatives to the constant drum beat of growth have been proposed such as Bhutan's Gross National Happiness, the New Economics Foundation's Happy Planet Index, and the Social Progressive Imperative's Social Progress Index. No growth or steady state economic policies need to be explored if we want to get off our suicidal treadmill. Perhaps once the US has been knocked off its perch atop the global GNP rankings by China sometime in the next decade we'll finally de-emphasize its importance. The chant of 'We're #2!" just doesn't have the same allure. America will still lead in such prestigious areas as anxiety disorders, obesity (well, Mexico might have passed them), incarceration rates, small arms ownership, health care cost, and energy use. Huh, taken together with the other effects of Detroit's problems mistaken for its cause, such as that 50% literacy rate and other societal diseases prevalent in America, one can make a case for simply finding a way to better spread the wealth than grow it. It seems we should take a lesson from the extreme wealth of Bloomfield Hills and Grosse Pointe and extreme poverty of most of Detroit co-existing in an urban metropolitan area. Yes, in fact if I remember right there's a chart that shows the relationship between income inequality and an index of health and societal problems constructed by a couple of epidemiologists. Yeah, perhaps we should look at this a little closer, or maybe we'll save that for next time.

A Crack in the Curtain

Wizard of Oz: pay no attention to man behind curtain

Imagine how differently the Wizard of Oz would have ended if Dorothy and the gang had listened to that order from the great and powerful wizard behind the curtain. The scarecrow wouldn't have gotten his brain, the lion, courage, the tinman his heart and of course Dorothy may never have made it back home to Kansas. Well, ignoring the machinations of the wizard behind the curtain is exactly what the world has been doing for the past three decades. Even when the smoke and mirrors machine malfunctioned as another financial bubble burst in 2008, instead of holding the wizard to account and then fixing the mess he'd caused, we allowed him to hold us hostage for ransom. He demanded we prop him back up and put things back the way he wanted. So, unsurprisingly, here we are more than three years later hearing the same demands as then, except this time we're bailing out entire nations as we transferred all of the losses the wizard should have paid onto the backs of sovereign states giving the wizard even more power than he ever had before.

Oh, I know, we shouldn't be surprised, after all, that's what we've been trained to do; hide our heads under the covers and hope that everything bad just goes away while the wizard takes care of things for us so we can keep living as we did before. The past decade has been particularly demoralizing as we've allowed terrorists to not only take over the economy and financial markets but to hold our environment hostage and spread a global war that has necessitated trading in many of our civil rights. The wizard is no fool, he knows how to push our buttons, pulling levers and cranking wheels to produce the thunder and lightning that manufactures consent to his demands regardless of the cost. Yet no matter how hard we try to appease him, the wizard will never be satisfied, the witch's broom today, 50% of our GDP tomorrow, each command creating a new catastrophe leading to a new demand in an endless chain. Bailouts, oil spills, wars and Patriot Acts (check out this infographic) all have the perverse result of leading to the next emergency as the wizard's warriors - politicians, economists and the mainstream media - hype the next threat. It seemed for awhile we'd never learn our lesson, yet perhaps we've been given a second chance to peek behind the curtain and finally have the conversation we should have had three years ago.

Yes, the Arab Spring that flowed into Europe as the Indignados finally washed up on the shores of America on September 17th. Occupy Wall Street seems to have signaled to the rest of the world that even Americans can see we're heading in the wrong direction, galvanizing the globe into action as the occupy movement went viral on October 15th. Simultaneous protests in 951 cities in 82 countries don't happen every day you know, especially for something as amorphous as this, where there is no leader nor concrete demands. Instead, it's a general feeling that we're no longer in control; ballot boxes are meaningless when the wizard dictates our range of choices while free markets have become the wizard's money laundering service thanks to corporate lobbying for deregulation and government handouts. It's impossible to pin down what the protesters want which drives those who don't understand batty. Lol'd into passive acceptance by cute cats and TV talking heads whose job it is to propogate the very social, political and economic infrastructure the movement wants to tear down. The strength of the occupy movement is simply it's presence, Toto pulling back the curtain on a system of the 1%, by the 1% and for the 1%. We understand that Wall Street is but one player (albeit an important one) in a global system in which finance, state, and entities like the World Bank, the IMF, and multinationals worldwide work for the benefit of an elite few, all at the cost of the rest of us, perpetuating a global system of slavery, war, and inequality.

"There are no conditions of life to which a man cannot get accustomed, especially if he sees them accepted by everyone around him." Tolstoy - 1877

Here we are three years into the financial crisis, great recession, lesser depression or whatever you want to call it and we're still no closer to getting out of it. In fact, if we listen to those unelected officials the system has empowered to guide us to safety, things are in fact looking positively apocalyptic. US Treasury Secretary Tim Geithner warns of "cascading defaults", "bank runs" and "catastrophic risk". The International Monetary Fund says "the global economy is in a dangerous new phase" while World Bank President Robert Zoellick warns that Europe, Japan, and the U.S. are in such danger, they’re threatening to "drag down not only themselves, but the global economy." Those elected are no more reassuring; Obama deflects the US failure to accomplish anything by telling Europe they are "scaring the world" so the G20 finance ministers meet again and again to point fingers while Merkozy huddle together to formulate another plan to further enslave the Greeks and the Polish finance minister warns of war if we allow the EU to break up. This all sounds eerily familiar, doesn't it? Preparing us for the next crisis moment when we'll have to do everything in our power to save the world economy; it's just like October 2008 all over again.

"There is no alternative" - Margaret Thatcher

In fact we're in a worse place today because we're still chasing the delusion of perpetual GDP growth and using debt as a propellant. A five thousand year old habit driving a much newer idea; even the Babylonians had debt but it took an American, Simon Kuznets in 1937, to come up with a catch-all number to measure a nation's production. It has become the measuring stick by which we gauge our success and just as importantly, is used in the calculation of how much debt we can service. Thanks to the charity shown to the banks, the level of aggregate net government debt in the world rose from $23 trillion in 2007 to $34 trillion in 2010 and IMF forecasts indicate the level will reach $48 trillion in 2015. The ratio of world debt to world GDP rose from 44 percent in 2007 to 59 percent in 2010, and is expected to climb to 65 percent in 2015. Oh, and the total of outstanding ‘bets’ in the leveraged, optioned, securitized derivatized casino in all likelihood exceeds a quadrillion (yeah, $1,000,000,000,000,000)

"The shock doctrine is the use of fear to push the public into allowing policies that they would not normally accept." Naomi Klein; The Shock Doctrine: The Rise of Disaster Capitalism

Every crisis, real or invented, offers opportunity, and disaster capitalism thrives on taking advantage of catastrophes. Whether it's structural adjustment in Latin America, shock and awe in Iraq or the big bang in London, each shock treatment, while sold as a free market initiative, has the result of concentrating wealth and power in the hands of the few. Since being blackmailed back in 2008 it's impossible to put a number on how much private loss we've socialized. Hundreds of billions quickly turned into trillions in a dizzying display of support when the wizard called for it. Emergency lending programs, near zero financing at the Fed discount window, the Troubled Asset Relief Program, the Financial Stability Plan, the European Financial Stability Facility or a mere $16 trillion in secret Federal Reserve loans to everyone from McDonald's to the South Korean Central Bank. Well, seeing as the goal of all this was to keep the debt Ponzi scheme from collapsing, not help society, I guess they can claim mission accomplished. Banks that were too big to fail are bigger; the largest six financial institutions in the United States now have assets equivalent to 60% of total US GDP. As Senator Richard Durbin, an Illinois Democrat, bluntly said in 2009, despite having caused the crisis, these same financial firms "are still the most powerful lobby on Capitol Hill. And they, frankly, own the place."

Bailout beneficiary Bank of America can transfer $75 trillion from their derivative division at Merrill Lynch to deposits so they are backstopped by the American taxpayer through the FDIC, start charging customers $5/month to use their own money, layoff 40000 employees and give a $6 million and a $5 million payout to a couple of departing executives all in the same month. Oh, don't try to close your account there or Citibank, otherwise you're bound to get arrested. Executive pay at the 200 biggest US companies last year went up by an average 23% over 2009, the median executive salary was $10.8 million. Even after being saved by the taxpayers, of the 100 highest-paid chief executives in the United States in 2010, 25 took home more pay than their company paid in federal corporate income taxes. Coincidentally, the collective net worth of members of Congress rose 25% in the past two years, an increase of more than $2 billion. Directors' pay at the largest UK companies was up an average of 50% in 2010. Meanwhile, the average American family's household net worth declined 23% between 2007 and 2009.

You don't need to understand the processes of cognitive dissonance, epistemic closure, conformation or anchoring bias to know why so many accept and even defend a broken system. Upton Sinclair put it best, "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!". Most of us are lucky if we have time to read the morning headlines before rushing off to work, we've got mortgages, car loans, student loans, home entertainment system loans and credit cards to pay off don't you know? While those shiny gizmos bought from Wal-Mart on Chinese credit along with all real wealth, from buildings to oil and pigs, are subject to the inescapable entropy law of thermodynamics and will rot, rust, or wear out with age, money and debt, as accounting devices invented by humans, are subject only to the laws of mathematics. Like a latter-day priesthood, with abstruse equations in place of latin texts, the bankers and economists dominate the discourse, convincing us that it's all too complicated when in fact "the process by which banks create money is so simple that the mind is repelled." We have sat powerlessly and watched all the king's horses and all the king's men try to put the Humpty-Dumpty banking cartel together again through a series of bailouts, zero-interest loans, and mergers and acquisitions which have done nothing but make the original problem worse.

"Thus did a handful of rapacious citizens come to control all that was worth controlling in America. Thus was the savage and stupid and entirely inappropriate and unnecessary and humorless American class system created. Honest, industrious, peaceful citizens were classed as bloodsuckers, if they asked to be paid a living wage. And they saw that praise was reserved henceforth for those who devised means of getting paid enormously for committing crimes against which no laws had been passed. Thus the American dream turned belly up, turned green, bobbed to the scummy surface of cupidity unlimited, filled with gas, went bang in the noonday sun." - Kurt Vonnegut, God Bless You, Mr. Rosewater

Ah, the original problem. Take a look in the mirror. Yep, you're probably looking at it. This world wasn't created overnight and it won't be fixed by writing a letter to the editor or to your government representative. We allowed ourselves to be sold an impossible dream, we made a deal with the devil in which we sold our souls for an IOU. We gave up our homes, pensions, education, unions and freedom in exchange for the easy life where housing prices always went up, we didn't have to do any dirty work, our kids would go to the best schools and we could all retire at 55 while the wizards of Wall Street made it all happen. We could maintain an affluent, equitable society without any maintenance of the infrastructure through the magic of technology driven efficiency. These wizards not only had our ear but they whispered sweet nothings into our leaders' ears as well and together we allowed them to take control. Thus neoliberalism came to rule the world in a whirlwind of privatization, deregulation, free trade and tax cuts for everyone. Technology, efficiency and most importantly, finance, would take care of everything while assuming that rule of law, infrastructure and basic decency just happen. A few among us saw the warning signs, their cautionary tales simply became how-to-manuals on how to succeed as Gordon Gecko was transformed into the ideal and we somehow imagined we could all be Paris Hilton.

"When people stop believing in God, they don't believe in nothing - they believe in anything." - G.K. Chesterton

We've killed all our gods but one and now it's killing us. Over the past couple hundred years we've transformed the once quirky humanities subject of political economy into the science of economics, and not just a normative one but positive, a science that describes things as they are, not simply the way we want them to be. Heck, we even pretend it has its own Nobel Prize which was never Alfred's intention. Just as traditional religions often find the most vulnerable among us the most susceptible to conversion, western society was a ripe target for proselytization forty years ago. We had seemingly hit the limits of growth as ecological catastrophe loomed alongside the stagflation created by the oil crisis, while Watergate, Vietnam and the failure of price controls had shaken our faith in government. This opened the door for a new faith, where economic growth would come from unleashing the power of the market by relying on individual greed. Milton Friedman became more powerful than elected officials thanks to his prophecies while his disciples took over the levers of the world's economies, going so far as overthrowing sovereign nations, and created a neoliberal world order.

"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today." - Laurence J. Peter

The problem is that it's all built on an edifice of lies and assumptions that just don't hold true. Do you believe that everybody has the same access to information or that we all make decisions to maximize our utility? That we make rational choices and have rational addictions? How can you believe in an efficient market and still base rewards on random luck and call it skill? The promise of stability by risk management has done the opposite from the get-go thanks to the wizards we empowered and their hocus pocus. Walter Wriston and Citicorp (later bank then group) knew how to deal with all those extra dollars floating around thanks to the oil shock - invest them in South America. Poof - the Latin American debt crisis. The magic of the Garn–St.Germain Depository Institutions Act of 1982 produced the Savings & Loans Crisis and the 1987 market crash. The incantation of deregulation brought the junk bonds of Michael Milken and the insider trading of Ivan Boesky that destroyed real wealth by enabling leveraged buy-outs which created instant billionaires out of nothing. The 1990s sorcery of derivatives and sophisticated hedging techniques promising low risk investment returns with little money down produced the explosion at Proctor and Gamble and Orange County in 1994. Voodoo economics prescriptions created and worsened the East Asian Financial Crisis in 1997, the Russian rouble crash of 1998 while the internet bubble had to pop eventually every bit as much as the tulip market more that 350 years before. The repeal of Glass-Steagall, low-interest rates and the easy money facilitated from raising money from pension and mutual funds alongside dictators and small investors were all pieces in the puzzle leading to the mortgage crisis in 2007 that caused the financial crisis that is still with us in 2011. Oh, did I forget Enron, WorldCom, Nortel, AIG, Arthur Anderson, Tyco...yeah, just can't trust the government, less regulation must be the way to go.

"An economist is someone who sees something working in practice and asks whether it would work in principle." - Stephen M. Goldfeld

How can a model predict anything when the variables don't have any sense and have changed beyond recognition over time. The Kennedy administration wanted to lower unemployment so they invented the term 'discouraged worker' which disappeared millions of job seekers. Johnson created the 'unified budget', which rolls surplus Social Security funds into the general budget, where they are spent but then not reported as part of the deficit. Nixon stipped out food and fuel to give us the "core inflation" measure we normally use today which is like reporting inflation ex-inflation. In 1996, Clinton further mangled the meaning by giving us substitution, weighting, and hedonics, where the basket of goods measured from year to year changes as it is now assumed that when the price of something rises, people will switch to something cheaper (hot dogs for salmon), goods and services that are rising most rapidly in price get a lower weighting under the assumption that people will use less of those things and adjusts for quality improvements, especially those that lead to greater enjoyment or utility of the product (iPad2 over iPad1). GDP figures meanwhile are just as meaningless as they include trillions in imputations, which assume economic value had been created but no actual transactions took place. Examples include the 'value' that the owner of a house receives by not having to pay themselves rent or the benefits from receiving free checking accounts. Oh, yeah, the magic of hedonics boosts the GDP too. Even if we had perfectly reliable numbers to plug into economic models, we'd still get the wrong results thanks to the wonders of model calibration in which the dismal science simply reinvents the wheel each time the cart crashes. Is it any wonder that nearly every economist was blindsided by the financial crisis?

On the first day God created the sun - so the Devil countered and created sunburn. On the second day God created sex - in response the Devil created marriage. On the third day God created an economist. This was a tough one for the Devil, but in the end and after a lot of thought he created a second economist!

Instead of altering their views to fit the facts, economists simply alter the facts to fit their views. Thus, we get jokes played on us such as the Laffer Curve which theorized government revenue goes up when taxes are decreased and rationalized tax cuts. The laugh is on the poor who are looking for the wealth that was supposed to trickle down while the rich keep laughing all the way to the bank. Neoliberal driven deregulation has led to free trade agreements under the guise of comparative advantage that simply allow production to be shifted to slave labor countries and the CEO to award themselves for their ingenuity. To add insult to injury, the modern day gurus tasked with manipulating these numbers to argue for government policy are inevitably recruited from the largest financial institutions and return to the private banking world through a revolving door. So, not only are we relying on the equivalent of the alchemist to make gold out of copper and engineer economic stimulus or the astrologer to chart the skies and predict the future, these charlatans have every incentive to create policies that benefit the JP Morgan and Goldman Sachs of the world.

We've highlighted the inequality created by the crony capitalism here many times but one of the spin-offs of the new awakening enabled by the protests is even the mainstream press has been forced to report on the carnage that was apparent even before 2008. You know, like the 400 wealthiest Americans having a greater combined net worth than the bottom 150 million, yeah the top 1% of Americans possess more wealth than the entire bottom 90%. Even in the good times of debt bubbles, the 'Bush expansion' from 2002 to 2007, 65% of economic gains went to the richest 1%.  Preferential tax treatment has helped drive the U.S. to its worst level of income inequality since the Great Depression, with the nation ranking more unequal than the Ivory Coast, Ethiopia, and Pakistan. Since 1979, "the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled." All this is bad news even for those who think winning is determined by GDP as Robert H. Frank's "The Darwin Economy" cites a study showing that among 65 industrial nations, the more unequal ones experience slower growth on average. Likewise, individual countries grow more rapidly in periods when incomes are more equal, and slow down when incomes are skewed, as seen in the US where they enjoyed considerable equality from the 1940s through the 1970s with accompanying strong growth. Since then inequality has surged, and growth has slowed.

Continent color-coded correlation by country b/w GINI & life expectancy

The IMF wrote last month that "the recent global economic crisis, with its roots in U.S. financial markets, may have resulted, in part at least, from the increase in inequality," and argued that "equality appears to be an important ingredient in promoting and sustaining growth." Another IMF paper said "The crisis is the ultimate result, after a period of decades, of a shock to…two groups of households, investors who account for 5% of the population, and whose bargaining power increases, and workers who account for 95% of the population." The 5%, broadly speaking, lend to the 95%, and in so doing gain still greater wealth and power. The shock comes when the creditor class suddenly realizes that the borrowers are drowning in debt and cannot possibly absorb any more. At that point, financial assets connected to consumer debt are dumped and prices crash, much as they did in 2007. The authors added, "To our knowledge, our framework is the first to provide an internally consistent mechanism linking the empirically observed rise in income inequality…and the risk of a financial crisis." It gets worse, as shown by Wilkinson and Pickett in "The Spirit Level" that inequality also causes shorter, unhealthier and unhappier lives as it is a driver in increasing the rate of infant mortality, teenage pregnancy, violence, obesity, imprisonment and addiction. The USA is already experiencing a drop in life expectancy in poorer regions while the UK and most visibly, Greece, are proof that the austerity measures being forced on populations as a result of socializing bank losses leads to social ills such as soaring suicide rates, prostitution, and ultimately violence.

Of course what we're witnessing is mainly a youth awakening. Not only do they have the most energy and technological savvy but also are the ones getting screwed the most and will have to live with the ecological consequences of our growth addicted culture. Society tells us that if we go to school and get a degree we can write our own ticket. We're supposed to be a meritocracy where effort and a little bit of luck puts us on the path to the American Dream: a house, 2.4 kids, dog in the backyard and a nice middle-class life. Instead, many are trapped in the nightmare of debt servitude as the combination of youth unemployment, over 40% in many places, and student loan debt which will haunt them for the rest of their lives. The amount of student loans taken out in the US each year has doubled over the past decade to $100 billion (after adjusting for inflation!) and the total outstanding has doubled in the past five years, surpassed total credit card debt, and will pass the $1 trillion mark before the end of the year. Yeah, another fraudulent credit bubble we all know will eventually burst! Here's the kicker: student loans cannot be disposed of even in bankruptcy thanks the the bankruptcy reform act of 2005. Not only does our system enslave nation's to debt (welcome to the club Libya!) we get our own populations when they're young.

Turning colleges and universities into profit seeking corporations has not only turned them into machines to generate revenues for faculty, research scientists, theorists and facilities but has also turned education into a simple monetary investment with no guarantees. When this is seen alongside the closed intellectual circle formed between universities, business and government (hello Larry Summers!) it's no wonder the system is only capable of producing drones who don't have the ability to think critically. Conformity is valued over ingenuity driving the best and brightest to study finance and economics in hopes of going to Wall Street to move numbers around and make money. instead of philosophy or science. This brain drain will continue, leaving us with no alternative unless society learns to value education as an essential ingredient toward a more complete populace instead of a mechanism for enrichment for the few at the expense of the many.

While students in Europe don't need to enslave themselves to get a higher education as it is considered the human right that it is (with the glaring exception of the UK), their countries' sovereign debt, particularly the PIIGS, has subjugated the entire continent. Each crisis in confidence leads to renewed market attacks resulting in constant emergency meetings which issue renewed demands for national austerity in order to qualify for ever growing debt-packages to pile onto the existing debt. We're warned the interconnectedness of the world's financial markets means that the failure of one node in the global debt payment merry-go-round could cause a replay of the Lehman Brothers collapse in 2008. Yet, ultimately, countries such as Greece will have to jump off  as the very austerity demanded in exchange for new debt makes it increasingly difficult to pay as economic growth is retarded. If you take the macro view of debt and investment, it can only be a stable (sustainable) scenario when it is actually being used to build systems that will produce more tangible wealth: That way debt is multiplied and repaid, with interest. Taking Greece again as the example, one can see most of the new debt is simply going to old debt.

Logic, ever bit as much as the protests from Stygmata Square to Wall Street, has shifted the conversation over the past couple of years from the impossibility toward the inevitability of default. Don't be fooled though, we'll keep waking up to "I Got You Babe" just like Bill Murray in Groundhog Day, but it'll be sung by the duo of Merkozy with the Chinese singing backup instead of Sonny and Cher and every morning will be a little worse than the previous. The latest deal to save Greece and the eurozone through a combination of begging the weaker banks to raise $100 billion in capital, borrowing a trillion from wherever they can find it and bribing the private bondholders to take a 50% haircut is too little too late no matter how much they sing the praises of fixing a debt problem with more debt now that Greece has been scalped. In this bizarro world, omniscient markets soar and bond spreads narrow on news that a credit event, which would have required the payout on billions of euros in credit default swaps, has been avoided as the imposition on the debt holders is called voluntary and it's normal watching Sarkozy beg the Chinese to become Europe's master.


First they ignore you, then they laugh at you, then they fight you, then you win. - Mahatma Gandhi (purportedly)

A big question is what took so long? We forget that popular protests took a few years to develop even after the Great Depression and there's always the 400% increase in the use of anti-depressants over the past two decades. There's also the memory of how the US government responded then or just a few years ago to protests they don't like. Besides, after the first round of financial terrorism in 2008, the elite astroturfed a Faux News promoted faux-populist movement to channel the rage away from the corporate culprits onto their lackies, the US government. Compared with the Tea Party media coverage, Occupy Wall Street was ignored early on, it took a bit of police brutality to whet the appetite of the public. Once it became clear the protesters weren't going away, the politicians and the press followed the playbook by mocking, attacking and demeaning those involved. Eric Cantor, the House majority leader, denounced "mobs" and "the pitting of Americans against Americans". The GOP presidential candidates weighed in, with Mitt Romney accusing the protesters of waging "dangerous, class warfare" while Herman Cain called them "anti-American". Senator Rand Paul did his best to one-up the wingnuts by worrying aloud that the protesters will start seizing iPads, because the protesters believe rich people don’t deserve to have them. If you were listening to the talking heads on CNBC, you learned that the protesters "let their freak flags fly" and are "aligned with Lenin". On Faux News, Sean Hannity told one occupier she didn't "believe in freedom" while Ann Coulter called the Wall Street occupation "The beginning of totalitarianism." If you're unlucky enough to be exposed to the corporate propaganda of CNN, you might have caught former bankster, current bankster fiancee and all-around evil tool of the banking cartel Erin Burnett's expose revealing...well, her vapidness. Seriously? The US made $20 billion on the TARP bailout? Um, no, more like lost around $100 billion. Oh, and I guess she just forgot about the $1.5 trillion still owed for those Fed loans.

If the occupy protests in the US were to be broken up today (under a hail of rubber bullets, tear gas and flash bangs like in Oakland) they could already claim victory. Fed Chairman Ben Bernanke said he "can't blame" protesters for being angry. Republican leader of the House, John "I pass tobacco kickbacks out on the congressional floor" Boehner has said that he understands the "frustrations" driving the Occupy Wall Street movement. Dick Cheney, possibly the single best exemplar of why such protests are so necessary has said when he looks at Wall Street, he sees "a group of people that I fundamentally disagree with on a lot of things" - particularly "where they wield political influence." Later in the same interview though he cautioned against claims that his former company Halliburton wields too much influence, "We’ve got to be careful, I’m always a little bit leery of conspiracy theories". Of course it was Cheney's influence wielding that brought riches to his former company Halliburton through first war in Iraq and then inserting the Halliburton loophole into the 2005 Energy Act to exempt his and other gas companies from environmental regulation to allow the practice of hydraulic fracturing to wreak havoc on lives and the environment.

Mitt Romney suddenly expressed "worry" for the 99%, Eric Cantor admitted "there is too much income disparity" after they learned a Time magazine poll found 54% of Americans support the protests. They have forced the scarecrow public to at least take a look at the state of the world we've allowed to be created as the story of income inequality, crony capitalism and purchased politicians has spilled out of the blogosphere into the mainstream media, giving the tinman heart to break the vicious circle that has led to a culture that celebrates death and violence by igniting a virtuous spiral as interest leads to more investigation and discussion on how to change the direction we're headed. Together we can find the courage of a lion to take away the wizards' system of privilege (from the Latin privi legere i.e."private law"; a special right, immunity, or exemption granted to persons in authority or office to free them from certain obligations or liabilities) that has created a two-tier legal system. President's turn the world into a battlefield to assassinate even their own citizens while profit-driven privatized prisons have delivered the highest prison population in the world thanks to a war on drugs but we punish rent-seeking parasites pittances for pillaging out patronage. We all knew something wasn't quite right before but could only suspect that others felt it too as we've become so isolated from one another, in our cubicle, car or confessional. Only by coming together to share ideas and experiences can we turn ideas into action. Toto has given us one last chance to get Dorothy back to Kansas.

Perversely, our system of representative democracy and free markets has created the authoritarian oligarchy we live in as the idea of representation is used to legitimize the vast decision-making powers of the ruling elite. It took humanity over 10,000 years to give democracy a shot and now that we're a few hundred years into the experiment many think the present system is programmed into our DNA. However, democracy clearly isn't viable in the context of extreme instability and social inequality, in which 1% of the population owns and polices the other 99%. A central tenant of the Occupy/Indignado movement is a call to end the corrupt occupations of western democracies by a system of corporate lobbying and campaign financing along with the takeover of decision making by unelected bureaucrats. We're still in the early dawn of the Citizens United decision to allow unlimited corporate political spending but the need for revolution rather than just evolution is already obvious, the evidence that spending money lobbying Congress means higher corporate profits is mainstream knowledge. Bailouts, lobbyists, campaign donations and a revolving door between corporate boardrooms and positions in government are just a few of the signs.

Robert Rubin moves from Goldman Sachs to Treasury Secretary where he led the charge for financial deregulation that culminated in the repeal of Glass-Steagall which broke the barriers between banking, investment and insurance setting the stage for the financial crisis. Oh yeah, then he raked in $128 million as a payoff from Citigroup, a company who owes its existence to the laws he shaped. Legislation intended to rein in Wall Street such as the Frank-Dodd bill has no chance of having any teeth when bank lobbyists spend hundreds of millions to ensure it doesn't. Citizens United has codified the fact that money does talk ensuring corporate persons have the only voices that count in getting people elected. Legality is determined by justices with conflicts of interest, presidents are elected if Wall Street says so and congressmen only hear their corporate benefactors. When people are given the chance to have their say, it is ignored when unelected elites deem their words to be meaningless until we say what they want us to. Unelected bureaucrats in Brussels and Frankfurt not only dictate austerity for all but force constitutions to be amended, labour laws to be relaxed and pensions to be slashed.

In the pay to play world of politics, legislators should dress like Nascar drivers wearing the logos of the corporations they take their orders from, mostly Big Oil, Big Pharma and Big Bank. The top lobbying firms and super PACs determine who gets elected and then the policies they pass. The media reflects this by reporting on the never-ending election cycle like a horse race determined more by money than policy. It's simply a self-fulfilling prophecy that corporate profits reach new record levels quarter after quarter, industry after industry as US Bank announces record profit while about 10 million mortgages are estimated to be underwater (the house is worth less than the loan) and home prices continue to fall. Unemployment will never come down as long as free trade agreements are crafted to serve the interests of multinational corporations instead of the people. Of course Dave Hartnett, the permanent secretary for tax at HM Revenue & Customs in the UK is the most wined and dined public servant in the land, he ensures Vodafone and the banks don't have to pay their fair share of taxes. How else would we explain the shrinking share of corporate taxation in overall tax revenue at a time of record deficits caused by the very same firms paying for all the wine. Over the past 5 years, while GE made $26 billion in profits in the US, it received a $4.1 billion refund from the IRS; $19 million was paid to Chevron for making $10 billion in profits in 2009 while Exxon made $19 billion the same year and received a cheque for $156 million from Uncle Sam. In response to the We Are the 99% Tumblr, rightwing nuts created the We Are the 53% (sorry for not linking to a hate site) to spread the false meme that 47% of Americans don't pay taxes while the fact is the poor pay a bigger share of their income in other taxes, particularly the highly regressive payroll tax, than the rich. Over 1,400 millionaires paid no income taxes in 2009 while Warren Buffett wants to be taxed more as he pays less than his secretary and hedge fund managers who made $1 billion last year now pay a lower effective tax rate than many nurses

Meanwhile this corrupt economic machine has also created an insatiable military industrial complex that necessitates the creation of enemies, real and imagined. Even rightwing nuts become "weaponized Keynesians" believing in government's ability to create jobs as long as it means building bombs instead of bridges. The voice of the 99% was ignored on February 15, 2003 when upward of 15 million people in sixty countries marched together to try to stop Dubya from finishing his dad's work in Iraq. Maybe by creating occupied territories at home we can force the spotlight onto the other Occupied Territories, helped by the authorities who use the very firepower deployed by the IDF on Palestinians in American cities such as Oakland and somehow reveal the hypocrisy of our leaders' efforts to negotiate a settlement which simply allows Israel to build illegal settlements. The 1% reap the rewards while the ranks of the 99% provide the fodder for the machine; the rich don't fight in the wars they create, just profit from them. Prime Minister's cut their teeth playing lapdog to superpowers by marching their country off to war before earning their payday playing the part for JPMorgan with foreign dictators who we help murder after their usefulness has worn off. The cost of funding the Pentagon and operations in Iraq every year is more than the rest of the world spends on defense and almost double what the US spends on education, health, housing and transport combined.

That's why despite the celebration of the assassination of Osama bin Laden, an enemy Reagan created, the perpetual war on terror isn't any closer to ending. Much of the west is still in an unwinnable war in Afghanistan that has slipped into it's second decade. Iraq festers. The Cameron/Sarkhozy war against Berlusconi, er, I mean the nine months of NATO bombing the hell out of Libya, oops, I mean limited kinetic operation protecting the people of Bengazi from the regime we chose to change by murdering, yikes, I mean helped hunt down so a future terrorist, whoops, freedom fighter could kill him in cold blood, in Libya is just a stepping stone to AFRICOM. All a necessary part of the package, exploded bombs and missiles need to be replaced, on credit preferably. Anyone else notice how quick the TNG got a central bank up in running in the previously debt free country of Libya? Let's not even talk about how troops landing in Uganda is just a geopolitical chest thumping for the Chinese who are busy buying up and building the continent. Won't it be fun when the US and China are forced into the inevitable confrontation, probably over Taiwan or maybe debt collection when the debt jubilee is finally declared.

What's that? Debt Jubilee? No, I'm not talking about the party Dorothy can wear those ruby red shoes to but what I'd like to see the occupy movement deliver. Never heard of it? Well, if you've heard of the Rosetta Stone, you should know all about it. Still no? The term Rosetta Stone is now used in other contexts as the name for the essential clue to a new field of knowledge. But the decree issued at Memphis in 196 BC on behalf of Ptolemy V written in three scripts, ancient Egyptian hieroglyphs, Demotic, and Ancient Greek that solved the mystery of hieroglyphics, could also hold the key to the Greek, student, underwater homeowner and economic woes of much of the world. On the occasion of his coming of age and ascending the throne, the 13-year-old Pharoah declared a general amnesty which included wiping the slate clean of debt. Once upon a time, a creditor would seize the debtor’s livestock and vineyard, perhaps even his children to be enslaved as household servants, until the debts were repaid. If the failure of borrowers persisted, the wealthy lenders would wind up owning all the property, with the peasants reduced to tenant farmers on the land they had once owned. The negative cycle stopped when the peasants could no longer borrow because they had nothing left for lenders to claim in default. Economic life at that point was frozen or depressed, no longer functioning. Sound familiar (for those lacking in imagination, replace cars, small businesses and homes for livestock, vineyards and children)

As recorded in the bible, every seven (or fifty depending on interpretation) years, ancient Hebrew societies solved the cycle of debt accumulation, along with the flip side of power concentration, by declaring a general forgiveness called the year of jubilee. David Graeber, author of Debt: The First 5,000 Years, thinks this tradition was likely influenced by the Babylonians who issued clean slate edicts whenever debt accumulation threatened social crisis. We've been trained to scoff at such a suggestion and modern economists will decry the moral hazard that would result. Our times call for more civilized answers, such as bailing out banks and quantitative easing, printing money to give to those who caused the crisis instead of facing the reality that the inequality caused partially by debt is what's causing the economic malaise. We need to learn Charlie Chaplin's lesson from the Great Dictator that "Our knowledge has made us cynical; our cleverness, hard and unkind. We think too much and feel too little. More than machinery, we need humanity. More than cleverness, we need kindness and gentleness."

An indebted country has a moral obligation to default on that loan if paying it would mean starving its people. Extreme austerity is a trap. Defaulting is not that big of a deal. They did it in the 1980's with the Brady bonds. They did it in Brazil, in Argentina. Those countries got re-established, and here we are 20 years later. It's not the end of the world. Banks have been going out of business for centuries. Look at the United States, the British were constantly loaning money for railroad construction, canal construction, there were booms and busts. They lost money. And they'd come back two years later and do it all over again. So the idea that because some big banks go under its the end of the world is not just morally wrong, it's historically wrong. It's not how banking and economic history has worked. Some economists study inequality and what drives it. Others study financial fragility and macroeconomic volatility. But the two subjects are seldom addressed as underlying cause and effect. Gross concentrations of money at the top help explain why the system eventually stalls out. This is a basic insight that ought to inform the agenda for recovery.

Hopefully you're asking yourself how I could propose a recovery and return to perpetual economic growth in the west when it's clearly impossible, after all, nothing grows forever. It's become obvious to all but the blind that infinite growth on a finite planet is ecological suicide. We seem to be on the horns of a seemingly intractable dilemma - without growth, we spiral into poverty; with it, we deplete the planet. Either way, we lose. But who's to say we can't have prosperity without growth? To stave off unemployment, we shorten the workweek to roughly four days, creating more jobs, we also set up higher taxes on the rich and more public services for the poor, and impose a carbon tax to fill government coffers and discourage the use of fossil fuels y voila! John Stuart Mill argued that growth was necessary only up to the point where everyone enjoyed a reasonable standard of living; likewise in 1930, John Maynard Keynes predicted that possibly as soon as his grandchildren's time the economy wouldn't need to grow (pdf) further to meet our basic needs; even Adam Smith acknowledged that it might be possible for an economy to max out its natural resources and stop growing. Yet since the conclusions of the Club of Rome in the 1960s that the world would eventually reach The Limits to Growth was attacked and delegitimized by the powers that be, not much attention has been paid to zero-growth economics.

Yet here we've been offered the perfect opportunity to wake up to the fact that we've probably already hit the limit, after all, today's measurement of health, GDP, measures all economic activity, including everything from oil spills to car accidents, both of which hugely boost economic activity. Worse, we have no way of measuring the negative impact we are having on future generations, such as the production of greenhouse gasses. All told, we are most likely already experiencing real negative growth. Besides, shouldn't the aim be to happiness? Yet despite GDP doubling in the US since 1957, the proportion of people who say they are very happy has barely budged. It seems happiness suffers from diminishing and then zero returns after about $75,000 (non-PDF). The Kingdom of Bhutan has already made the switch to GNH, Gross National Happiness as the yardstick by which the nation's success is judged. The upsurge of recent interest has given us Peter Victor's 2008 Managing Without Growth, and last December's Prosperity Without Growth (pdf) by Tim Jackson, economics commissioner for the UK's Sustainable Development Commission that have both good and bad news. People will benefit as efficiencies will bring about an explosion in free time allowing us to reconnect with our friends and families and most importantly nature, which itself will benefit from the lowering of consumerism. Sadly, however, you won't be able to buy a new iPhone every six-months and the zombie walk at the mall will become a bed-time story about the olden-days.

"Let’s treat this beautiful movement [Occupy] as if it is most important thing in the world. Because it is. It really is." - Naomi Klein

As the world welcomes it's seven billionth human it's high time we stop being trapped by what is, we've got to push for what ought to be. The underlying principle is that the powerful will do whatever they have to do to protect their interests. If you do not threaten those interests, you are free to do as you wish. If what you do somehow threatens that power, then the powerful will beat, arrest, or kill you. A piece of paper is not going to stop that even if it says constitution or bill of rights at the top as many occupy protesters from New York to Denver and Oakland have found out. Just as waking from a deep slumber can shock the system and seem disturbing, the process of realizing that when you live in a country that only allows you to exercise your rights in free speech zones you don't have real freedom. That's why this movement demands more than change along the edges. Obama's proposal to lower the maximum number of years and percentage of income to pay student loans from 30 to 25 years and 15 to 10%, the 50% haircut for Greek bondholders, letting the Bush tax cuts for the rich expire, or some kind of Tobin tax on financial transactions - all great ideas but are just bribes to keep the game the same, the slow bleeding of the patient for the benefit of the wizard. We've gotta go big or go home - if we want to get home like Dorothy that is.

"Still, if you will not fight for the right when you can easily win without bloodshed; if you will not fight when your victory will be sure and not too costly; you may come to the moment when you will have to fight with all the odds against you and only a precarious chance of survival. There may be a worse case. You may have to fight when there is no hope of victory, because it is better to perish than to live as slaves." - Churchill, Winston; The Second World War, Volume I: The Gathering Storm