Snooping and the Demise of "Hope and Change"

You've got to marvel at the industry of Cold Warriors and their offspring constantly reminding us of the state security measures-- real or imagined-- suffered by the inhabitants of the former Eastern European socialist countries. Books, movies, television and anecdotes have deeply embedded in the minds of people in the US the notion that life in Eastern Europe was under oppressive monitoring with spies lurking everywhere. Countless reports of visits to socialist countries told of the suspicions or hunches or impressions of being followed, watched, or overheard. I was always disappointed, in my admittedly infrequent visits to Eastern Europe or Cuba, that I never shared these experiences. I was either incredibly myopic or deemed not nearly as worthy of attention as were others.

Outside of the minority of US citizens who systematically question every “truth” endorsed and proclaimed by official circles, most people feel secure in believing that “we” don't do what “they” do or did. In fact, the certitude of our superiority in respecting privacy, speech, and beliefs serves as a pillar of the mythology of the land of the free.

Of course many of us on the left know better. We know first hand that the US security services operate without restraint or oversight. We know that every significant anti-war movement, every committee in solidarity with the victims of US imperialism, every party to the left of the Democrats, and even every renegade celebrity earns the attention of the US secret police agencies. We know that the tens of thousands of operatives employed and the huge budgets granted are not there for occasional or aberrant spying, but for systematic surveillance and monitoring of anyone perceived as challenging the ruling class consensus. We know that, whenever the need is felt, laws are passed that violate or stretch the intent of the Constitution. And extra-legal means-- easily concealed from the public-- are also common.

But you don't have to be among that select group to know what security services do. You don't have to be an anti-war activist to know that FBI files do not magically appear, but are created through surveillance and informants. The sordid history of the FBI, especially during the Hoover era, is available for all to see. Congressional committees have exposed enough of the chicanery, illegal activity, and violence of the security agencies to give everyone but the willfully blind an idea of just how fragile our privacy and personal integrity are under this self-styled democracy.

Yet liberals-- occupying a political category brazenly drawing its name from “liberty”-- have woefully fallen short in confronting the rise and expansion of the intrusive, Orwellian surveillance state, a process that only accelerated since the Second World War. The fears of the Cold War provided a handy excuse for government intrusion into the lives of hundreds of thousands of US citizens, driving such august institutions as the American Civil Liberties Union into backsliding and equivocation.

We saw it again in the uprisings of the 1960s, when even more presumably innocent citizens became the object of surveillance by a myriad of federal, state, and municipal spy agencies. Once again, the response was loud and clamorous on the part of the liberal establishment, but to little effect. Only Nixon's outrageous near-coup and the persistence of a few members of the normally somnolent media saved us from even further devolving toward a repressive, intrusive state in the early 1970s.

A further step towards a police state arrived with the so-called “War on Terror.” Few in the liberal establishment defied the hysterical surrender of the rights to privacy, speech, or association that ensued. In fact, most joined conservatives in a race to empower the security agencies with money, manpower, and legislation.

Oddly, those who find it so easy to identify snooping in foreign lands are conveniently blind to that malignancy in their own neighborhoods.

And now comes the Snowden affair.

The Nation magazine pens a headline, “A Modern Day Stasi State,” really a gratuitous slap at the former German Democratic Republic, to characterize the Snowden revelations of massive and comprehensive surveillance by the NSA. The truth is that nothing that the GDR security services could have possibly envisioned parallels the collection of every electronic communication by every US citizen. Perhaps the liberals at The Nation draw some perverse satisfaction from the false belief that other countries have gone to the same lengths to monitor their unsuspecting and innocent citizens.

And in an editorial commentary (“Snoop Scoops”) by Hendrik Hertzberg, The New Yorker magazine attempts to simultaneously maintain three pathetically weak excuses for the Administration's secretive spying programs: first, the Snowden revelations expose nothing new-- we already knew about the NSA programs; second, the NSA collects the content, but doesn't examine it; and third, there is nothing illegal about the NSA surveillance.

The best that can be said for the Hertzberg apology is that maybe his boss, the old Cold Warrior David Remnick, forced him to write this nonsense. The fact that one could follow threads and leaks to learn of NSA programs hardly excuses the absence of the topic in most mainstream media and popular discussion. Hertzberg glaringly fails to point to any effort on the part of his magazine to discuss the NSA surveillance. Moreover, if everyone knew about the programs, how do we account for the hysterical response of the Administration, its cronies (Senator Feinstein called Snowden a “traitor”), and apologists? How do we account for the criminal charges against Edward Snowden? For revealing something everybody knew?

Clearly this is a sleazy sidestepping of the profound dangers raised by the government's license to snoop.

Only the terminally gullible would believe that the content of collected data lies untouched in NSA electronic files. With nearly one and a half million government employees and contractors enjoying top secret clearance, surely a few would be tempted to check the e-mails or phone calls of their neighbors, ex-lovers, or rivals. Hertzberg takes literally the assurances of the same people who have been trying desperately to keep NSA activity from public scrutiny.

I suppose one could equally say that “nothing illegal” occurred in Nazi Germany, given that laws were passed enacting or enabling nearly all of the carnage inflicted by the fascist regime. In truth, the vast powers granted by the Patriot Act and the secret kangaroo courts legitimizing NSA acts guarantee that legality washes over anything and everything that government agencies do or could do, as they equally would sanction the SS or Gestapo in the Third Reich.

Indeed, our moment is not so remote from those moments preceding the consolidation of fascist rule in Italy or Germany. Like those times, liberals and social democrats are temporizing, excusing, and denying the assault on privacy, personal security, association, and dissent.

The true history of those times-- not the convenient history that blames the staunchest opponents of fascism, the Communists-- points to the treason and capitulation of bourgeois politicians who sought to compromise, outsmart, or neutralize the tide of fascism. Similarly, our liberal politicians populating the Democratic Party (with a few notable, courageous exceptions) rush to establish their security bona fides by endorsing the expansion of the police state. They show the same misplaced confidence in their ability to restrain or control the uncontrollable.

Amplifying the hesitation of liberals is the embarrassing role of the Obama Administration in the construction of the NSA police state. After giving their undivided, unqualified support to the candidacy of hope, change, and the restoration of liberal values, the liberal establishment finds itself in the uncomfortable position of defending the trappings of a police state or, conversely, righteously attacking their designated standard bearer. This dilemma has driven liberals to such outrageous statements as Hertzberg's: “The critics [of the NSA] have been hard put to point to any tangible harm that has been done to any particular citizen,” a statement worthy of a self-satisfied burgher in Munich in 1934.

Particularly bruised by the Snowden revelations are those pseudo-radicals who have unceasingly called for a love fest with the Democratic Party as a response to the “fascist danger.” How does one enlist those who we now know have crafted and implemented fascist-like policies as partners in stopping fascism? Surely embracing them as anti-fascist allies borders on insanity.

Perhaps it is only fitting that those seduced by the pied piper of hope and change have arrived at this juncture. However, we have lost far too much ground to this political silliness. There is too much at stake. We deserve better.

Zoltan Zigedy

zoltanzigedy@gmail.com

The Global Economy: A Midyear Snapshot

What happens to the US economy when the Federal Reserve stops printing money to buy mortgage based securities, treasury notes, and other bonds? What happens when that body stops injecting 85 billion dollars into the US economy every month?

These questions torture the economic pundits in the mainstream press.

Contrary to what most believe there has been no recovery. The reports from the other principal global economies have been dismal, recording stagnation or anemic growth. In the mean time, the US economy has been sustained by forced feeding. The Federal Reserve quietly prints notes and takes around 85 billion dollars worth of various securities off the market and parks them on the Fed's balance sheets. The announced reasons for this action are to keep interest rates low, attracting borrowers, and to thus stimulate business growth and job creation. An unannounced consequence of the 85 billion dollar injection has been a surge in equity markets and housing prices. Since both stock portfolios and home values are the principal components in the psychological “wealth effect” -- the subjective, personal sense of financial well-being -- they have spurred the impression of recovery and consumer confidence. Behind this conjured image of recovery, the US economy continues to stagnate and erode.

Whenever the Federal Reserve has suggested that it might slow or end this life-support, markets have dropped precipitously.

Obviously, the Federal Reserve program, dubbed “quantitative easing,” is a back-door stimulus program. Not a stimulus program of the New Deal type, not public works and public jobs, but more a reclamation of the garbage piled up after the massive, destructive party thrown by the financial sector and a rekindling of the pre-crisis euphoria. No one in the political establishment, neither Republican nor Democrat, had the stomach for a full-blown New Deal program, nor did they have any desire to pass even a little of the cost of a fix-up on to their corporate masters.

So the task of recovery fell in the lap of the Federal Reserve, an ostensibly independent non-political body. The Federal Reserve is not political, except when it is. While it can't be dictated to by the branches of government, its make-up of ivy league professors and financial industry veterans guarantees loyalty to corporate moguls. It also keeps an ear open to the powerful as well as the rich. On occasion the Fed even hears the voices from the barricades, but only when they are at the barricades!

It shares that “independence “ with the Supreme Court. Like the Supreme Court, the Fed gets occasionally chastised when it either missed or failed to get the message of a ruling class change in policy.

All central banks boast of their independence, but all listen closely for a shift in political favor. The Central Bank of Japan recently demonstrated its fealty to political change. With the election of Shinzo Abe as Prime Minister, the Bank relented to his pressure and began a policy of quantitative easing with the goal of doubling Japan's money supply in two years. Abe, a right-wing nationalist, advocates purchasing securities and bonds through a speed-up of the Bank's printing presses, but makes no effort to conceal his real goal: radically reducing the exchange rate of the national currency, the Yen.

Like his foreign policy initiatives, Abe's currency policy is a bold act of aggression, in this case, economic aggression. A weak yen makes Japanese manufacturing products cheaper in global markets, giving Japan a competitive edge against other global manufacturers. The rise of Japanese nationalism has not gone unnoticed by other Asian powers. Chinese demonstrators have trashed Japanese cars in a way reminiscent of similar spectacles in the US decades ago. Japanese automobile sales have dropped sharply in the PRC.

While retaliation may well be on the horizon, the Abe policies have brought a sharp drop in the Yen's value, but also great volatility in Asian equity markets.

Similarly, for all the US Federal Reserve's aggressiveness in printing money, the stock market's surge and the recovery of housing prices have masked serious issues plaguing the real US economy.

[June 2: “Investors have ignored poor economic news as stocks have risen... The Basil, Switzerland based Bank of International Settlements said... that central banks' policies of record low interest rates and monetary stimulus had helped investors “tune out” bad news-- every time an economic indicator disappointed, traders simply took that as confirmation that central banks would continue to provide stimulus.” as reported by Fox News.]

Disposable personal income growth is collapsing, for example. Excepting the 2008-2009 collapse, disposable personal income growth was lower in 2012 than any time since 1959 and is trending even lower in 2013. Not surprisingly, the personal savings rate-- a rate that grew dramatically after the frivolity leading to the 2008-2009 collapse-- has now dropped sharply. Clearly, workers are taking home less while reducing their savings to pay the bills. While unsustainable, this tact has buoyed consumer spending.

[May 31: The Commerce Department reported a .2% pull back in consumer spending for April, 2013.]

Manufacturing production in the US has declined for three of the last four months. Caterpillar Inc., a bell weather of the basic manufacturing sector, has witnessed factory orders of machines, calculated on a rolling three-month average, decline steadily throughout 2012, moving into negative territory at year's end.

Hyper-exploitation in 2009, in the form of unprecedented gains of productivity growth, pulled the US economy from its nadir. But since 2009, productivity gains have slackened with a substantial decline in the last quarter of 2012 and only a very modest recovery in the first quarter of 2013. Consequently, anemic corporate revenue growth is increasingly crimping earnings, once again threatening the rate of profit.

Pressures on profit are demonstrated by the falling yield on junk bonds. The demand for yield-- the never-ending search for a higher rate of profit-- has driven the yield on the riskiest investments lower than at any time in recent memory (a leading high-yield bond index records a return below 5%, the lowest since records began in 1983!). Conversely, treasury bonds, once popular as a safe haven, are now commanding greater and greater yield despite the fact that the Federal Reserve gobbles them up and removes them from bond markets. Obviously, investors do not want safe Treasuries; investors do want risky junk bonds! The gap between Treasury yields and junk bond yields are narrower than any time since 2007. Are we skating on the same thin ice, the same crisis of accumulation?

Accelerating private debt in Asia suggests that much of the capital seeking higher profit growth rates has landed there. But Asia is not the hot bed of growth that it was a few years ago. The mounting private debt in Asian economies supports risky, speculative projects and services like commercial and residential real estate. With international trade tepid, these once export-leading countries are attempting to sustain growth through speculation and the hope of global recovery. The new Chinese leadership seems determined to reduce the role of the state sector, market regulation, and public financing, the very factors that allowed the PRC to painlessly weather the global crisis. They are determined to entrust the fate of the economy to global markets. The simultaneous shrinking of government debt and the explosion of private debt underline this policy shift.

[May 31: The Reserve Bank of India reported the lowest annual GDP growth rate in a decade for the end of the fiscal year, March 31.]

The once robust South American economies are also slowing. Exports to the PRC are declining and exports to the EU are on the skids, retarding growth throughout the region. Stagnant growth presents new challenges to the conservative neo-liberal regimes on the continent as well as the more progressive social democratic governments. Nor do South American economies offer any relief, as they have until recently, to the global economy.

And, of course, Europe is in a depression-- a deep and profound depression. The EU as a unity faces both centrifugal and centripetal forces that challenge any policy resolution. Moreover, the major parties – conservative, liberal, and social democratic-- have exhausted their policy toolboxes. Until a new road is chosen, the European Union will only drag the world economy towards a similar fate.

[May 31: Eurostat reports the EU unemployment rate reached a new high-- 12.2% in April-- the highest level ever recorded since euro-wide tracking began in 1995.]

The global economy faces two stubborn challenges: first, a crisis of accumulation and second, an insufficiency of global demand. They are, of course, inter-related, continuation of the 2008-2009 collapse, and immune to conventional treatment. The vast inequalities of wealth and the resultant massive accumulation of capital hungering for investment opportunities (driven by Marx's tendency for the rate of profit to fall) stand at the center of the lingering crisis. Capital continues to seek increasingly risky and unproductive profit schemes, schemes that strangle productive, socially useful (but unprofitable!) activities. At the same time, the crisis has immiserated millions and idled a vast mass of human capital. Left with limited resources and limitless insecurities, these casualties of the crisis have necessarily reduced their patterns of consumption. A shrinkage in global demand followed.

Some still harbor illusions of taming capitalism and slaking its thirst for profit. As the years of crisis continue, it looks more and more like the beast must be slaughtered.

Zoltan Zigedy

zoltanzigedy@gmail.com