Dissonant Notes

Wednesday, December 1, 2010

Capitalism Unbound: Clinton's Collaboration, the Economic Bailout and a New Era for Neoliberalism

"In the financial institutions, which by now dominate the economic system, the management level repeatedly acts in ways which will destroy their own institutions if it'll increase their benefits, and benefits are not small. You know, you take a look at the revenue of, say, Goldman Sachs - a very high percentage of it just goes to payment of management and bonuses. There was a time traditionally - say, GM in the 1950s - it was trying to develop a consumer base that would be loyal and lasting and they were thinking in terms of an institution that would remain and grow and thrive in the society. By now, a lot of the investment firms - bankers, hedge funds - are perfectly happy to destroy what they're in and come out with huge, tremendous benefits. That's a new stage of capitalism."

 Noam Chomsky

"We serve them. I teach the blatant Latin language. I speak the tongue of a race the acme of whose mentality is the maxim: time is money. Material domination."

"Ulysses" James Joyce

We are in a new era. Future historians may argue about when the change occurred, but all will agree that by 2010 the last remnants of a certain way of living had all but disappeared. Some may mark the election of Nixon as the beginning of the new era, or the first stirrings of what was to come. Others will point to the '80's, the era of Reagan and Thatcher, as the true dawning of the new age. I prefer, however, to see the election of William Jefferson Clinton as the actual changeover point, as one epoch gave way to another. Why the election of Clinton? It marked the point where the Democrats shed any connection with anything remotely Centrist. They had never been left wing in any real sense of the term, but many Democrats had a strong attachment to the idea of civic duty, of a government that provided a safety net for it's most vulnerable citizens. These principles never stemmed from Marxist ideals, but more from a moral sense that, without such a safety net, poverty, disease and barbarism would surely follow. From this mindset came the New Deal, America's most overt attempt at social welfare. Now, here's a quick question: which president enacted the Personal Responsibility and Work Opportunity Act, ending American welfare as we know it, cutting welfare more than any previous Republican president had dared to? Which president enacted the Illegal Immigration Reform and Immigrant Responsibility Act which, amongst other things, allowed potential deportees to be held for as long as two years before facing an immigration board, at which point they had to pay their own legal fees if they wished to be properly represented? Which president repealed the Glass-Steagall Act and legislated the Commodities Futures Modernization Act, two accomplishments that all but set into motion the financial crisis still affecting America's (and by extension the world's) economic status? If you haven't guessed by now, I'll tell you. It was Bill Clinton. Not George W. or Bush Sr or Reagan. No, it was Democrat Bill Clinton, the same president who also ratified NAFTA after Bush Sr ran out of time while trying to push it through. Wait, he didn't start a war you say? That's because he never had to deal with 9/11. In 1998 he bombed a Sudanese pharmaceutical plant, killing only one but destroying 60% of Sudan's pharmaceutical supplies, based on flimsy evidence that it was producing chemical weapons. Later that year came Operation Desert Fox, whereupon Iraq was bombed for four days after failing to comply with UN Security Council resolutions regarding the production of Weapons of Mass Destruction. So you're telling me this man wouldn't have launched a war in reaction to 9/11?

Put simply, he marks the point where the Democrats became just as right wing as the Republicans. Granted, they didn't have far to go, but with Clinton the transition was complete. Cutting any ties with social concerns, Clinton marketed the Democrats as business-friendly and willing to do whatever it took to ensure monetary backing from Corporations. The New Deal was truly dead, and in it's place was a president who was basically a highly paid Corporate power broker, working to open up markets and grease all the right palms. His intelligence and charisma appealed to the vanity of Democrats who imagined themselves intelligent and charismatic, as opposed to the boorish and slow-witted Republicans. In other words, Democrats didn't exactly disagree with the policies of Bush and Son, more the manner in which they were carried out. With a heartfelt and calculated explanation from Clinton the actions wouldn't seem half as bad. Clinton had the financial backing of Corporate America, without which presidential victory is impossible, and did exactly as he was hired to do. The reality is that nobody with any kind of power or influence opposes Corporate America's agenda, with the squabbles among Democrats and Republicans largely the result of both trying to prove that they are more business-friendly than the other. On some social issues, for example abortion, there is disagreement, but in terms of fiscal policy they both accept Corporate sponsorship with abandon, doing everything in their power to advance the Corporate cause.

The other major event which ushered in the new era was the worldwide economic collapse of 2008. Instead of curtailing the gross irresponsibility that led to the collapse, the governments of the world did the opposite. They rewarded it. In America the Emergency Economic Stabilization Act allowed for the creation of the Troubled Asset Relief Program (TARP), legislation that allocated the government $700 billion in order to rescue America's financial institutions. Most was paid back, with the cost to the taxpayer amounting to $25 billion. No small amount, but this tells only a small part of the story. Government bailouts went on in other forms, mostly without the public's knowledge. Costs rose into the trillions with Neil Barofsky, the Inspector General of TARP, admitting before Congress in 2009 that the total bill for the bailouts could be as high as $23.7 trillion. (It's almost impossible to tell just how much the government has spent thus far, with various news outlets giving figures that range from $4 trillion to $12 trillion). Let me remind you that, as reported in the Wall Street Journal, Citigroup received $45 million from TARP and proceeded to give bonuses out to numerous employees. (738 employees each got a $1 million bonus, 176 each got a $2 million bonus, 124 each got a $3 million bonus and 143 each got bonuses that ranged from $4 million to $10 million). Now let's contrast the bailout number with welfare costs, that scourge of America which is bankrupting the nation. Conservative think tank The Heritage Foundation reports that between 1965 and 2000 the American government spent $8.29 trillion on welfare, adjusted for inflation. So in order to save the financial institutions of America the government could potentially spend around three times the amount spent on welfare over 35 years.

Still, there is a budget crisis. The government must make some tough decisions. Why is the government facing a budget crisis? In 2008 an article in the New York Times reported that two out of every three Corporations in America paid zero income tax between 1998 and 2005. The number of Corporations in America amounted to 1.3 million. Could this have anything to do with the budget crisis? A good question, except nobody has thought to ask the government. With the Bush tax cuts still threatening to remain in place the people who will suffer are, as usual, the poorest and most vulnerable members of society. Funding for welfare continues to be cut, funding for public schools continues to be cut, Social Security continues to be cut, but who benefits? Not the poor, obviously. Not the working class and middle class, as real wages have been all but stagnant since the 1970's (Conservative economists point to the 66% increase in consumption since the early 70's as proof that real wages are growing, ignoring the fact that debt has steadily increased since the 1970's with the average adult carrying around $3,752 in revolving debt as of February 2010. This figure does not include installment loans.) Between 1973 and 2006 the bottom 99 percent of American workers saw their average income increase by a mere 8.5 percent, with most of those increases coming from the top earners in that 99 percent bracket. The richest 1 percent saw their average income rise by 190 percent. (For you Democrats out there, the presidency of Clinton gave the top 1 percent a 59 percent increase in average income, while under George W. they managed only a 13 percent increase).  All this points to the fact that cutting taxes and cutting welfare did not save the US economy, yet our solution is to continue to cut taxes and cut welfare, as to suggest anything else makes one a Marxist intent on destroying the freedoms of all Americans. The destruction of freedoms is right around the corner, though, but it's not coming from Marxists.

The presidency of Barack Obama has shown him to be part of the New Democrat mindset initiated by Clinton. Competing for Corporate funding, Obama is definitely from the Clinton mold, surrounding himself with the same economic advisers as his Democratic predecessor. Promising to end the war in Afghanistan while running for office, he changed his mind upon becoming president, launching more drone attacks in 2009 than George W. did in eight years. 2009 was also the year that brought about the most recorded civilian deaths in Afghanistan, with UN reports giving the death toll for noncombatants as 2,412, as opposed to 700 in 2007 and 1160 in 2008. The Obama bailout continued the job begun by George W. Bush, which meant rewarding the very institutions that caused the whole problem in the first place. What do you call a society that rewards those whose actions almost led to it's destruction? Insane? Perhaps, but the outcome was predictable given the intimate relationship between big business and government. Those running for Congress are generally businesspeople, often millionaires, sometimes billionaires. The idea that government serves any other master outside of the business sector should now be considered a joke. To reiterate, the collapse happened despite Bush tax cuts, despite a massive reduction in welfare costs. The collapse happened because of the current economic philosophy which still reigns in America, not in spite of it. The collapse happened because banks and Corporations weren't happy with merely having control over our actual money, they also wanted money which we didn't have, so banks were allowed to create copious amounts of credit (which amounts to the creation of money from thin air), and give loans out to people who had no hope of repaying them. They were allowed to trade and gamble on commodities in quantities that may or may not have borne any relation to how much of that commodity actually existed (look up futures contract). On top of that, they were allowed to do all this with less and less regulation from the government. My constant mentioning of Bill Clinton and Barack Obama is not to say that all of this is solely their fault. The economy has been steadily deregulated since the presidency of Richard Nixon and continued through the presidencies of Carter and Reagan. My point is, though, that there has been no real difference between Democrats and Republicans in recent years. Their disagreements represent disagreements among the wealthiest members of American society, and are mainly social in origin. Take for example the abortion issue again. Not all of the wealthiest families agree on whether it is immoral or not, some being socially liberal, so it is open to political debate. Neither Democrat nor Republican, however, questions the logic of unrestrained wealth accumulation (I'm hesitant to call it Capitalism, as it isn't in the true sense of the word, but as a catch-all term it will have to do) and indeed both parties do all they can to further the endeavors of the business class. So where does that leave Democracy?

As everyone knows, Corporations and banks are not democratic institutions. What do Corporations and banks want? Money, and the easier it is to get, and the less personal risk involved, the better. As Chomsky and others have noted, though, we are in a new phase of Capitalism where even the Corporations and banks can be thrown to the wolves as long as the CEO's and big money investors can walk away with monumental rewards. What incentive did high earning Citigroup employees have for acting in the companies best interests knowing full well that regardless of the outcome they would receive millions of dollars in bonuses? The answer, obviously, is none. So what are we to make of this bold new phase of Capitalism? High finance has finally loosed itself from all restraints. Morals play no part, patriotism plays no part and now even company loyalty plays no part, with employees leaping from Corporation to Corporation like some economic version of musical chairs, making sure that each parting of the ways is accompanied by outrageous bonuses, regardless of whether their time spent at any particular Corporation was profitable for the company or not. Personal wealth accumulation is untethered, and as such cannot be controlled by any force, least of all governments. Let's say that the American government felt that Corporations were not paying their way and decided to make them pay more in taxes. What would those Corporations do? Simple, they would close up shop in America and go elsewhere, easily finding a Corporate-friendly government willing to cut them a break (like, say, Ireland, who just received a massive bailout from the EU as they were basically bankrupt, but who nevertheless promised Corporations that they would not increase Corporate taxes, which are the lowest in Europe). We are essentially in mythic times, with the CEO's, managers and investors playing the role of the gods on Mount Olympus. We must do everything in our power to appease them or they will destroy our economy and take away our jobs. They appear to have even fewer morals than those gods of old and are willing to do just about anything if it means greater wealth. We must make sacrifices to them, work for less pay, demand less rights, lest they become angry and move their offices to a third-world country where the workers have no rights at all. The government is powerless to stop them, but that would imply that they wish to. On the contrary, the government works hand-in-hand with the business class to ensure bigger returns for all. Again I ask, where does that leave Democracy?

The short answer is that it leaves it helpless and redundant. The push from the business sector for lower taxes and less money for welfare and public schools means that general starvation and no public schools remains a real possibility 20 years from now. Try raising taxes and see what happens. The problem, as far as business elites are concerned, is that Western workers have too many rights. Workers need to be competitive, and if they keep demanding higher pay and protection, well then they just can't compete with Indian and Chinese peasants who will work for almost nothing, and with no job guarantees. While right-wing Christians complain that gay marriage and slack morality is to blame for the destruction of family values, households are being torn apart by the demands of the modern Capitalist agenda. Enterprising individuals must follow the money, go where the jobs are, even if it means taking your family to another new city, and your children being enrolled  in another new school. Modern Capitalism cares nothing for family values, or indeed loyalty to anything other than personal wealth accumulation. The voice that opposes these developments has no place in the American Democratic system, simply because running a successful campaign is so expensive that it requires Corporate backing, and Corporations only give to those who will back their agenda. Let's take the public perception of business ethics against those who claim welfare. Criticise the actions of the business class and you will be told that, sure, there are some bad apples, but overall they are decent, moral people. Find a case of somebody claiming welfare illegitimately and it becomes par for the course to label everyone who claims welfare as some kind of lazy, morally repugnant leech. One simply cannot discuss Unions in America, as everyone "knows" that they are run by corrupt, power-hungry demagogues. Yet the unscrupulous actions of the business elite threatened to destroy the economic foundations of the global economy, in the process causing millions of jobs to be lost all over the planet. How did we react to such actions? We gave them even more power. 

There is no serious political debate. Raising taxes kills jobs. End of debate. Even though the money saved by Corporations from less taxes more often than not goes either to personal wealth or the gross underpayment of third-world citizens, the same mindset continues unabated. The business elites feel no loyalty to America. They are loyal only to those who can, for now, promise the highest returns with the lowest amount of risk involved. If anyone balks at such an idea, why did the global collapse happen, and how did the perpetrators end up benefiting most? This is no conspiracy theory, this is economic reality. Let me be clear, I have no inherent problem with a regulated market that provides safety nets for the weakest members of society, one which recognises such notions as civic duty, and sees education and health care as basic rights for a hard working populace. I see only disaster and immorality in subjecting people to Social Darwinism in order that the weak and less intelligent may be punished with highly unpleasant and shorter lives. It's hard to see what can stop the momentum, though, other than the complete collapse of the Western economies. Until then, ordinary citizens of America will have less and less control of their lives as their rights are sacrificed to make them more competitive in the global economy. Safety nets will be removed so people will have no choice but to starve or work for less pay and less employment guarantees. The global economic disaster has, if anything, allowed the business elites to gain a firmer grip on the political trajectory of not only America but the entire global economy. We are more dependent than ever on the unprincipled activities of those whose only goal is greater personal wealth. As I said, the only thing I see bringing this situation to an end is the collapse of society as we know it. I'm not sure how things will look on the other side of that collapse, and in almost every way our lives right now will still be better than those in the immediate aftermath of such a disaster. The fact remains, though, that as of now there is little to no real antagonism toward current economic philosophies. To be sure there are voices of opposition, but they are largely ignored or labeled extremist. Our Democracy exists in name only, with all of the major decisions that affect our lives being made by undemocratic institutions that care nothing for our personal situations or our rights. For now we still have many of the rights put in place by politicians who were forced to implement them or risk an angry populace. As these erode we will be forced more and more to succumb to the demands of a global marketplace, and in doing so we will lose the last of the hard won guarantees that strong, brave and clear sighted citizens insisted we would need lest we become modern day serfs. Until such individuals rise again and are given a real opportunity to have their voices heard we will continue down our current path, a path that can lead only to servitude and dependency, the very antithesis of liberty and freedom.


I would like to acknowledge the excellent book "The Mendacity of Hope: Barack Obama and the Betrayal of American Liberalism" by Roger D. Hodge which provided many of the facts and figures, and the inspiration, for large parts of this essay. I would also like to acknowledge the unending inspiration given by the works of Noam Chomsky.

The exploits of William Jefferson Clinton are for the most part common knowledge and can be verified by various online biographies. I offer up the following sources for specific statistics and dollar amounts mentioned above:

Sudanese pharmaceutical plant bombing
TARP to cost only $25 Billion
Neil Barofsky's testimony
True cost of TARP
True cost of TARP

Citigroup bonuses
Cost of welfare
Corporations not paying tax
Revolving debt figures
Increase in consumption
Income and wealth inequality
Obama drone attacks
Civilian deaths in Afghanistan, 2009
Ireland's corporate tax rate


  1. Not that Obama turned out to be any better, but I remember trying to remind my friends who were avid Hillary supporters in 2008 about how voices on the Left (e.g. The Nation) were disenchanted with the Clintons by the late 1990s; and though it's not a perfect movie, I love Warren Beatty's "Bulworth" as kind of an angry populist reaction to the Right direction the "Left" was taking during that time. You're right; American doesn't really have a Left. I enjoyed reading this.

  2. I think many basically decent minded people want so much to oppose what they see as the Republican agenda that they see no choice but to accept the worst of the Democrats failings in order that the occasional small victory is achieved. For instance, Democrats are much more likely to support gay rights, so when it comes to tactical voting traditional Democrats oftentimes feel so helpless in regards to the economic issues that they feel the only way to make a difference is to vote on that one issue and essentially ignore everything else. It's understandable, and I consider gay rights to be one of the most important issues of our times, but there's nothing particularly left wing about gay rights. It is more often than not framed as a libertarian issue anyway, in an attempt to appeal to the "No Big Government" mindset. Ironically, though, it is the "No Big Government" mindset that hands new victories to Corporate America on a regular basis. Thanks for reading, though. I wrote it with an unbearable pessimism and a feeling that nothing can save us from the road we are on. I really hope I'm wrong.

  3. Phenomenal work, as usual, my friend. And I think the fact that Democrats are more likely to support things like gay and reproductive rights makes their rightward swerve in economic philosophy all the more despicable. In a sense, they're holding women and gays hostage while they hand our democracy over to their campaign donors.
    Come to think of it, I might have just stumbled on the real reason for their apparent inability to achieve any meaningful legislative victories in this area: if they are actually successful, what the hell do they run on next time?
    If you haven't already, I urge you to check out Matt Taibbi's "Griftopia," and if you read one chapter, read the second one, which traces the rises of Alan Greenspan, and the resultant dynamiting of the bulwarks between our economy and the kind of rapacious neo-feudalism we now see developing in this country. The chapter title is "The Biggest Asshole in the Universe." It's well worth a lunch break or two.

  4. I saw the same thing happen in the UK when Tony Blair "modernised" the Labour party. Left wing individuals increasingly stuck with the Labour party, despite the party's complete abandonment of any connection with old Labour's principles. The Labour party knew very well these same people would never, ever, vote Conservative, so they disregarded them. Soon enough many started defending New Labour's actions simply because they were being criticised by the Conservative party, and anyway, anything was (supposedly) better than the Conservatives.

  5. And yet I wonder who you voted for in 2008?

    Democracy is complicated isn't it? Oh wait, it's not. America is a conservative country, so both parties have shifted slightly to the right. It's not because of some political mastermind, it's a reaction to what people want.

  6. Wonder no more. I am a Permanent Resident and therefore am not allowed to vote, and yet I am taxed to the fullest. When you get the chance to read my essay and comment on any of the points I made, I'd love to hear them. I must have missed the popular vote that gave Bush and Obama unlimited funding to save the financial institutions of America, the same institutions which clearly cannot exist in any kind of free market reality. Untold numbers of Americans want their homes to go into foreclosure, while making sure that Billionaires are given extra money. Only ordinary people should be subjected to the "free market". The rich get a get out of jail free card. You're telling me that's what people want? Call me crazy, but it almost seems like that's not what everyday people want, but it is what the richest residents of America want. That's obviously not true,though, seeing as the rich have zero influence on formation of policy. They just give money to presidential candidates to be nice.

  7. Yeah, this is pretty bleak, Wallace... But enjoyable as always.

  8. Thanks Jerry. Bleak but enjoyable. I'll take that.

  9. The Bush tax cuts are apparently not just threatening to remain in place, but are almost certain to be extended, thus ending any chance of me ever voting for a Democrat again. I needed to kick the habit anyway.

    It also seems likely that Democrats will go after Social Security some time next year. I don't know how Obama expects to win re-election after that, but as your essay points out, what does it matter?

  10. Here's a nice addendum:


    Clinton is truly the gift that keeps on giving.