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Nederlog

October 12, 2015
Crisis: Poor Black Americans, Spies, The Economy, Rich vs Poor, TiSA
 "They who can give up essential 
   liberty to obtain a little temporary
   safety, deserve neither liberty
   nor safety."
 
   -- Benjamin Franklin
   "All governments lie and nothing
   they say should be believed.
"
   -- I.F. Stone
   "Power tends to corrupt, and   
   absolute power corrupts
   absolutely. Great men are        
   almost always bad men."
   -- Lord Acton















Prev- crisis -Next

Sections
Introduction

1.
‘A Pipeline Straight to Jail’
2. Spies and internet giants are in the same business:
     surveillance. But we can stop them

3. The golden age of central banks is at an end – is it time
     for tax and spend?

4. How Such a Rich Country Managed to Have So Many Poor
     People and What We Can Do About It

5.
Did the European Court of Justice Just Torpedo the
     Mother of All US Trade Agreements?

This is a Nederlog of Monday, October 12, 2015.

This is a crisis blog. There are 5 items with 5 dotted links: Item 1 is about an article by Chris Hedges, who sketched the great disadvantages of growing up as a poor black person in the US; item 2 is about an article by John Naughton who claims "we can stop surveillance", which I think is a bit optimistic, at least; item 3 is about an article by
Larry Elliot, about the economy, which is not optimistic; item 4 is about a fine article
by Les Leopold who tries to set up the conditions for a mass movement (this is recommended); and item 5 is about an article by Don Quijones on the European Court of Justice's recent decision, and about the - extremely dangerous - TiSA.

Also, here is a note:

I was yesterday again for quite a while off line without my desiring to be so. At present, it works again, but since the mistake seems to be either due to my provider or to the Thunderbird program (which I need for e-mail, but don't like at all) it is not impossible it may go wrong again. If there is no Nederlog tomorrow, this is the explanation.

1. ‘A Pipeline Straight to Jail’

The first item today is an article by Chris Hedges on Truthdig:

This starts as follows:

The defeat of the Harvard University debate team by a team from the Eastern New York Correctional Facility in the Catskills elucidates a truth known intimately by those of us who teach in prisons: that the failure of the American educational system to offer opportunities to the poor and the government’s abandonment of families and children living in blighted communities condemn millions of boys and girls, often of color, to a life of suffering, misery and early death. The income inequality, the trillions of dollars we divert to the war industry, the flight of manufacturing jobs overseas and the refusal to invest in our infrastructure wrecks life after innocent life.

Yes, indeed. In contrast, there is this:

I spent four years as a graduate student at Harvard University. Privilege, and especially white privilege, I discovered, is the primary prerequisite for attending an Ivy League university. I have also spent several years teaching in prisons. In class after class in prison, there is a core of students who could excel at Harvard. This is not hyperbolic, as the defeat of the Harvard debate team illustrates. But poverty condemned my students before they ever entered school. And as poverty expands, inflicting on communities and families a host of maladies including crime, addiction, rage, despair and hopelessness, the few remaining institutions that might intervene to lift the poor up are gutted or closed.

I agree, but I think I should add that only a small minority would or might excel at Harvard - and I am not saying this because I think black people are less intelligent than white people (I do not), but simply because being intellectually fit for Harvard will apply to only a small minority anyway. And yes, Chris Hedges is quite right Harvard strongly selects on the basis of white privilege: Preferably, you are white and have parents who earn well.

In contrast, this is the sort of background Boris Franklin (who is black and very intelligent) came from:

“There was usually drugs in the homes,” he said. “I had friends whose homes were raided when they were children. Most of the parents were getting high, including my father. I did not know any child who did not have a drug addict in the home. And if a person was not a drug addict he or she was often suffering from some form of mental illness. It seemed everyone was dealing with something. Those who were left with their grandparents were in the best situation. Kids would say they were living with their grandmother. They would never mention their mother or father. I never saw the fathers of most of my friends. They had disappeared or were in jail.”
Incidentally, this is very much worse than my - indeed quite poor - youth. My parents were genuinely poor, but also very intelligent, and very active communists. They also - rare among their class of proletarians, in their time - had a bookcase, which I still have and just measured: A meter broad, 1 meter 20 cm high, with four shelves plus the top row, and that book case was always full, which means that my parents owed over 5 meters of books. (I have about 20 times as many.)

There were no drugs at all when I grew up, apart from alcohol, and my parents rarely drank and never got drunk. Also, while I was poor, I didn't really see so until I was around ten, because everyone I knew was about as poor as I was. And there were some advantages, and one huge one for me was that there was a good public library, from which I could loan 5 books a week (and more if I also read the books my friends loaned, which I often did).

Even so, I learned when 17 and I left high school because "it was fit for imbeciles only", as I said then, that I was rather disadvantaged because my parents, both of whom had to start working at 15 did not have a good intellectual libirary of some thousands of volumes, which would have helped me very much to understand what science, literature, mathematics, physics and history were really like (for the school mostly had misled me) between 10 and 17. And it turned out I had to learn this from age 17 till age 20 or 21 all by myself, but by then I had indeed read away my disadvantaged education.

But compared to Boris Franklin I lived nearly in paradise, indeed, even though intelligent kids with well to do and highly educated parents did usually have from early youth the advantage of a good and extensive bookcase in their houses, which I am quite sure made a large difference between 10 and 20.

Here is more from Boris Franklin:
You learn not to care. We were using a lot of misplaced aggression. That night we were probably fighting somebody. I could feel his pain. You want to get it out? We will get it out. That’s how you dealt with it. That’s how everybody dealt with it. Take it out on somebody else.
Yes, indeed: This is a pretty universal human trait: Unhappy people will tend to make others as unhappy or more unhappy than themselves. And this is also the case if the unhappy people are rich.

Here is Boris Franklin on how the poor are educated:
"The only education the poor are given is one where they get to a place where they learn enough to take orders. They are taught to remember what is said. They are taught to repeat the instructions. There is no thinking involved. We are not taught to think. We are educated just enough to occupy the lowest rung on the social ladder.”
I quite believe him. Also, while the Dutch situation I grew up in was nearly paradisical compared to Boris Franklin's background, the only children I knew from my youth who went to university were the two brothers I was friends with who lived under me until I was 9, who were around 3 years older than I was, but who treated me as an equal, and whose father was not a proletarian worker but a bank clerk with aspirations, and myself.

Everybody else
I knew - quite a lot of people - did not study at a university, and nearly everyone did not finish the  requisite schools to do so (and generally never even started these).

Finally, here is Boris Franklin on the loaning of books to others:

“You have a lot of intellectuals in prison,” he said. “There are people who think about things, who read things, who try to connect the dots. People read psychology and science to see how things fit together. You see libraries in some cells. You hear people say, ‘I got to get my library up.’ You would go from one cell with a library to another. It was like a cult. When you first loan a book to someone in prison you loan a tester. You do not loan a valuable book. If the person who borrows the book reads it and talks about it, then they get another book. 

I like this, but he must have met more genuinely intelligent people than I did. I read extremely much between 17 and 29, and it so happens that I also have a very good conversation, which singles me out when I talk to people. Also, I have been many times complimented on my high intelligence, while I have given reading lists - see e.g. April 4, 2010 - to at least a hundred persons, all of whom were at least intelligent, and many who had been in university.

Well... my experience is that precisely nobody read the books I recommended (all of which were classics in their fields). That is one of the reasons why I think a truly high IQ, which I have, does make a difference. (But no, it doesn't necessarily make one a good,
interesting or worthwile person. And an IQ is at best a very approximate and imprecize estimate of one's scholastic intelligence.)

I agree that is not a happy thought, but - so far as I can see - it is the truth.

2. Spies and internet giants are in the same business: surveillance. But we can stop them

The next article today is by John Naughton on The Guardian:
This starts as follows:

On Tuesday, the European court of justice, Europe’s supreme court, lobbed a grenade into the cosy, quasi-monopolistic world of the giant American internet companies.

It did so by declaring invalid a decision made by the European commission in 2000 that US companies complying with its “safe harbour privacy principles” would be allowed to transfer personal data from the EU to the US.

This judgment may not strike you as a big deal. You may also think that it has nothing to do with you.

Wrong on both counts, but to see why, some background might be useful. The key thing to understand is that European and American views about the protection of personal data are radically different. We Europeans are very hot on it, whereas our American friends are – how shall I put it? – more relaxed.

This is by way of introduction: Persons who read my site regularly know all of this. But I have one additional remark, that makes the situation considerably more serious.

It is that about half of "
our American friends" will have IQs not much higher than 100, and also are not educated well, which makes them not understand most things computers can do, and also makes them misunderstand what computers are.

I think this is quite certain, and indeed this does not only hold for
"our American friends" but for everybody. And this is a huge problem, because these are around half of all computer users, which means that if these things were decided democratically, half of those who are asked an opinion really don't know what they are talking about - and please keep in mind that I don't say they can't use computers:

I say - as with televisions, cars, and most household appliances - they don't understand the basic principles and the power. Finally, whereas this doesn't matter much for
televisions, cars, and most household appliances, it does matter for computers, for their opinions effect everybody's chances on a real and fair internet.

This is about the decision by the European Court of Justice (which is Europe's highest court) and its implications:

On Tuesday, the court decided that the safe harbour agreement was invalid. At which point the balloon went up.

“This is,” writes Professor Lorna Woods, an expert on these matters, “a judgment with very far-reaching implications, not just for governments but for companies the business model of which is based on data flows. It reiterates the significance of data protection as a human right and underlines that protection must be at a high level.”

This is classic lawyerly understatement. My hunch is that if you were to visit the legal departments of many internet companies today you would find people changing their underpants at regular intervals. For the big names of the search and social media worlds this is a nightmare scenario.

I think the language is  - hm, hm - too popular, and indeed I also don't care for companies whose riches depend on theft of private data, though I grant some of these may be in trouble.

Finally, here is some wholly deserved praise for Edward Snowden:

For those of us who take a more detached view of their activities, however, it is an encouraging development. For one thing, it provides yet another confirmation of the sterling service that Snowden has rendered to civil society. His revelations have prompted a wide-ranging reassessment of where our dependence on networking technology has taken us and stimulated some long-overdue thinking about how we might reassert some measure of democratic control over that technology. Snowden has forced us into having conversations that we needed to have.

This is true, but such conversations are sensible only if they are between people who do - at least - have a fair understanding of computers, including programming and mathematics.

To the best of my knowledge, that is at most 5% of those using computers, which
is a real problem.


3. The golden age of central banks is at an end – is it time for tax and spend?

The next article today is by Larry Elliott (<-Wikipedia) on The Guardian:
This is a rather reflective article, of which I will quote some bits. There is more in the article, which I leave to your interests. This is from close to the beginning:
These are indeed weird times. Share prices are rising and so is the cost of crude oil, but the sense in financial markets is that the next crisis is just around the corner. The world is one recession away from a period of stagnation and prolonged deflation in which the challenge would be to avoid a re-run of the Great Depression of the 1930s. That fate was avoided in 2008-09 by strong and co-ordinated policy action: deep cuts in interest rates, printing money, tax cuts, higher public spending, wage subsidies and selective support for strategically important industries. But what would policymakers do in the event of a fresh crisis?
I note that Elliott is the economics editor of The Guardian. As to the last question - "what would policymakers do in the event of a fresh crisis?" - there are two answers: First, it will depend a lot on their own politics. And second, so far as I can see, the rescue plan of 2008-09 mostly failed, and there is little leeway or scope for any other plan.

Here are the opinions of two leading economists:
Larry Summers, the former US Treasury secretary, makes the point that since 2008, the main tool for simulating activity has been monetary policy – a combination of lower interest rates, cheaper currencies and QE – but this is largely played out. Jean-Claude Trichet, the president of the European Central Bank when Lehman Brothers went bust in 2008, believes that an over-reliance on ultra-loose monetary policy is creating the conditions for the next crisis.
And here is Larry Elliott's appreciation of the present situation (by someone who studied the economy well and for a long time):
In many ways, this feels like the summer of 2007, before the markets froze up but when some of the malign consequences of the over-lax regulation of the financial markets were becoming apparent. It also bears some resemblance to the period in the late 1970s between the first and second oil shocks when what looked like a solid enough recovery was built on the shakiest of foundations.
Here is Elliott's appreciation of what the banks can do, followed by the ideas of an economist:
The days when central banks could give the odd tweak to interest rates to keep inflation on target are over. Having told the world that they could fix the crisis, their reputations are on the line.

Goodhart believes slower population growth and ageing populations will alter the balance of power in the labour market. Workers will become scarcer and more valuable. Wages will rise and companies will have the incentive to invest more, raising productivity.
As to the central banks: I think the tricks they have tried have failed, and there
are no new tricks of the kind that have been practised since 2008 (mostly because the interest rates for banks are near zero, which enriched the banks, the bank managers, and their shareholders, but few others, which is precisely the problem).

As to Goodhart: I think he is indulging in economic wishful thinking. The real fact is well expressed by Les Leopold in the next section:
Economic elites will only give up power and wealth when they’re forced to do so by a powerful social movement.
Precisely. (And besides: If "[w]orkers become scarcer" the eventual rise in their wages will only serve a small portion of workers, who anyway are in a minority in modern America.)

Here is Larry Elliott's final sum-up:
Ultra-loose monetary policy, together with tighter supervision of the financial sector, was supposed to minimise the risks of another crash while ensuring that plentiful supplies of cheap money boosted real activity. The opposite has occurred. Wages, productivity and growth have been poor even as investors have taken bigger and bigger risks in the search for high returns. In Trading Places, the Duke brothers get their just desserts. In real life, they have been allowed to take us to the brink of ruin for the second time in less than a decade.  
Yes indeed - and the bankers, who have brought us now "to the brink of ruin" for the second time, also were the ones who profited enormously, while almost no one else who is not rich had his or her real wages increased since 1980.

4. How Such a Rich Country Managed to Have So Many Poor People and What We Can Do About It

The next article today is by Les Leopold on AlterNet:
This is taken from Runaway Inequality: An Activist's Guide to Economic Justice, by Les Leopold. It starts as follows:

The United States is among the richest countries in all of history. But if you’re not a corporate or political elite, you’d never know it. In the world working people inhabit, our infrastructure is collapsing, our schools are laying off teachers, our drinking water is barely potable, our cities are facing bankruptcy, and our public and private pension funds are nearing collapse. We – consumers, students, and homeowners – are loaded with crushing debt, but our real wages haven’t risen since the 1970s.

How can we be so rich and still have such poor services, so much debt and such stagnant incomes?

The answer: runaway inequality – the ever-increasing gap in income and wealth between the super-rich and the rest of us.

That is correct, although it's not just "runaway inequality", but also radical tax cuts for the rich, and a total lack of care and interest of most of the few rich for the poor. But OK: "runaway inequality" is a good brief diagnosis.

Next, there is this on the book's aims:

This book has four aims:

1. Shine a light on economic inequality: It’s worse than you think

For all the talk about economic inequality, most of us have no idea how bad it really is. It’s as if our native sense of justice won’t let us comprehend how outrageously unequal our economy has become and how much worse it’s getting day by day.
I think that is quite correct, and indeed have a kind of proof:



This says from top to bottom how 100% of the wealth in the US is (1) factually divided (2) how it is supposed to be divided and (3) how American people would like to see it divided. (And note that each color represents 20%, from the poorest to the richest.)

I think this is mostly correct, and the relevant point are the huge discrepancies between the three distributions, and especially between (1) and (2).

Runaway inequality is tearing apart the fabric of our society. The super-rich live in a world that no longer requires mutual reliance on common public services. Elites generally don’t use our schools, our roads, our airports. They don’t really care if our infrastructure collapses. We are cracking into two separate societies.
Yes, though one difference between now and - say - 1960 or 1965 is the enormous growth in egoism and greed, which are also proudly and publicly owned, especially with the rich, but also with many who are not rich, but imagine they will be, and who are mostly fairly dumb and fairly egoistic consumers (rather than citizens).

One part of that publicly owned proud greed and egoism is this:

At the same time, the super-rich are able to park trillions of dollars far from the reach of the tax collector. By avoiding and evading taxes, with help from an army of lawyers and bankers, the rich are undermining the government services that the rest of us need.
Yes - and the worst is that hardly any of them are prosecuted: To park trillions - thousands of billions - where the tax can't get at the money is a major crime.

Then there is this:
Runaway inequality undermines the practice of democracy. As the rich get richer and richer, it gets easier and easier for them to buy political favors. They can twist the media, elected officials, and government agencies to do their bidding. They vote with their money, which makes a mockery of our democratic “one vote, one person” creed. We’ll see data showing that elected officials rarely act on the agenda most Americans support. Instead they represent the wishes of the affluent.
It should be added that much of this is new, especilally in the last 15 years, and that much of this is hugely supported by majority decisions of the American Supreme Court,
that in majority works for the rich.
2. Examine the Fading American Dream
(...)
In fact, today the U.S. is the most unequal country in the developed world. We have the most child poverty and homelessness. We have more people in prison than China and Russia. And Americans are less upwardly mobile than most Europeans.
All of which is quite true, to the best of my knowledge - and it seems the European rich are trying to introduce the American system in Europe, in part through following the same
banking policies, and in part through the TTIP and TiSA (see item 5).
3. Empower ourselves with the big picture
(...)
You just can’t get an accurate picture of the economy as a whole through the everyday media or the jumble of internet sources. We hear snippets about stock markets, government debt, trade, unemployment and inflation. What we don’t hear about is the context, substantive explanation, or critical questioning about why any of this is happening and how it relates to our daily lives.
I agree, but this is difficult or impossible to do for many working people without a university education, even if they are quite intelligent. Then again, there is this:
We will see how powerful people chose to dramatically change the economy’s direction a generation ago, and how working people have been paying the price ever since. Runaway inequality is not an act of God. It is the result of a system designed by and for wealthy elites.
Yes, and this also is quite comprehensible to the vast majority, and the reason they don't know it is mostly the combination of a bad education and the phony news that reaches them through the main media.

Next, there is this:
4. Come to a common understanding so we can build a common movement

We offer this, our most ambitious goal, with the utmost humility: We aim to help build a broad-based movement for economic and environmental justice.

Right now, we lack a robust mass movement with the power to reclaim our economy and our democracy to make it work for the 99 percent.

I agree, but one thing that is necessary to achieve "a broad-based movement" is that at least those leading it are not dogmatical, and not more ideological than they need to be: Dogmatism leads to small, fanatic, mostly blind groups, and ideologies are always false and always simplifications. They are necessary, because most men know little else than
ideologies, but they should not be believed, and certainly not be fanatically held.

We will show that runaway inequality is at the root of many of the problems we face, including the meteoric and disastrous rise of the financial sector, defunding of the public sector, environmental destruction, increased racial discrimination, the gender gap in wages and the rise of our mammoth prison population. And we will posit that if we share a clear understanding of runaway inequality – and the basic economic situation we face – we can begin to build a common, broad-based movement for fundamental economic justice that will take on America’s economic elites.
OK - I didn't read the book, but this introduction is quite good, as is the last statement of the article:
Economic elites will only give up power and wealth when they’re forced to do so by a powerful social movement.
I quite agree, and this is also what my father told me, who was for almost 20 years a communist trade unionist and a quite prominent strike leader in Amsterdam.

5. Did the European Court of Justice Just Torpedo the Mother of All US Trade Agreements?

The final article today is by Don Quijones on Naked Capitalism (original at Wolf Street):
This starts as follows:

Europe’s already rocky trading relationship with the U.S. just got a whole lot worse. Thanks to one young man’s battle against one of the world’s biggest tech companies, data traffic underpinning the world’s largest trading relationship has been thrown into jeopardy.

As the Wall Street Journal warns, hanging in the balance could be billions of dollars of trade in the online advertising business, as well as more quotidian tasks such as storing human-resources documents about European colleagues.

This is about Max Schrems, and has been commented on several times in the crisis series.
The following is also old news for those who have read about Schrems:
In response to the ruling, Schrems said it “draws a clear line” by clarifying that mass surveillance “violates our fundamental rights.” The ruling will also directly affect the operations of some 4,500 European and international companies, including U.S. tech giants Alphabet (Google’s newborn parent company), Amazon, Facebook, and Microsoft.
But this is new:

More important still, the ECJ’s ruling could torpedo a sizable chunk of the world’s biggest and most secretive trade agreement currently under negotiation, the so-called Trade in Services Act (TiSA). Allegedly in the late stages of negotiation, TiSA currently has 52 prospective signatory nations (compared to the Trans-Pacific Partnership’s paltry 12). Those nations include both the U.S. and all 28 members of the European Union.

As WOLF STREET previously reported, TiSA appears to have three primary goals: 1) privatize all services; 2) rip up national and regional financial regulations and 3) spread the U.S. approach to data protection — i.e. no protection — around the world.
Which is also why - in combination with American exceptionalism, American aggressiveness, and the extremely unequal division of riches - I think this is best understood as an attempt to set up a worldwide system that is - again in conjunction with the NSA, the GCHQ, the militarized American police, and the many wars the Americans are engaged in -best understood as neo-fascism, where for "fascism" I use the definition of the American Heritage Dictionary:
fascism is: "A system of government that exercises a dictatorship of the extreme right, typically through the merging of state and business leadership, together with belligerent nationalism."
In case you disagree: You may avoid the term altogether, as long as you keep in mind the definition. Incidentally: My diagnosis is not unique, and was reached much earlier by Sheldon Wolin, and the last link moves you to the start of a crisis log I wrote about Wolin's concept of "inverted totalitarianism", while the following link leads you to Wolin's 2003 publication of "A kind of fascism is replacing our democracy".

Here is what the TiSA will create (according to Don Quijones, but I think he is quite right):

If signed, TiSA would set Big Brother (led by the NSA and fellow five-eye partner organizations such as the UK’s GCHQ) free to roam and eavesdrop on a very large part of the globe completely unhindered by national laws or regulations. Multinational corporations from all sides of the Atlantic and Pacific Ocean would also have carte blanche to pry into just about every facet of the working and personal lives of the inhabitants of roughly a quarter of the world’s 200-or-so nations.

At least that was the plan.
That may have been upset (somewhat) by the events sketched at the beginning of the article, but the eventual outcome is far from certain, because the rich have great amounts of money, and also control most of the media including the press.

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