American Mercenaries

BLACKWATER FOUNDER REMAINS FREE AND RICH WHILE HIS FORMER EMPLOYEES GO DOWN ON MURDER CHARGES

Featured photo - Blackwater Founder Remains Free and Rich While His Former Employees Go Down on Murder Charges

A federal jury in Washington, D.C., returned guilty verdicts against four Blackwater operatives charged with killing more than a dozen Iraqi civilians and wounding scores of others in Baghdad in 2007.

The jury found one guard, Nicholas Slatten, guilty of first-degree murder, while three other guards were found guilty of voluntary manslaughter: Paul Slough, Evan Liberty, and Dustin Heard. The jury is still deliberating on additional charges against the operatives, who faced a combined 33 counts, according to the Associated Press. A fifth Blackwater guard, Jeremy Ridgeway, had already pleaded guilty to lesser charges and cooperated with prosecutors in the case against his former colleagues. The trial lasted ten weeks and the jury has been in deliberations for 28 days.

The incident for which the men were tried was the single largest known massacre of Iraqi civilians at the hands of private U.S. security contractors. Known as “Baghdad’s bloody Sunday,” operatives from Blackwater gunned down 17 Iraqi civilians at a crowded intersection at Nisour Square on September 16, 2007. The company, founded by secretive right-wing Christian supremacist Erik Prince, pictured above, had deep ties to the Bush Administration and served as a sort of neoconservative Praetorian Guard for a borderless war launched in the immediate aftermath of 9/11.

While Barack Obama pledged to reign in mercenary forces when he was a senator, once he became president he continued to employ a massive shadow army of private contractors. Blackwater — despite numerous scandals, congressional investigations, FBI probes and documented killings of civilians in both Iraq and Afghanistan — remained a central part of the Obama administration’s global war machine throughout his first term in office.

Just as with the systematic torture at Abu Ghraib, it is only the low level foot-soldiers of Blackwater that are being held accountable. Prince and other top Blackwater executives continue to reap profits from the mercenary and private intelligence industries. Prince now has a new company, Frontier Services Group, which he founded with substantial investment from Chinese enterprises and which focuses on opportunities in Africa. Prince recently suggested that his forces at Blackwater could have confronted Ebola and ISIS. “If the administration cannot rally the political nerve or funding to send adequate active duty ground forces to answer the call, let the private sector finish the job,” he wrote.

None of the U.S. officials from the Bush and Obama administrations who unleashed Blackwater and other mercenary forces across the globe are being forced to answer for their role in creating the conditions for the Nisour Square shootings and other deadly incidents involving private contractors. Just as the main architect of the CIA interrogation program, Jose Rodriguez, is on a book tour for his propagandistic love letter to torture, Hard Measures: How Aggressive CIA Actions After 9/11 Saved American Lives, so too is Erik Prince pushing his own revisionist memoir,Civilian Warriors: The Inside Story of Blackwater and the Unsung Heroes of the War on Terror.

While the Blackwater verdict is an important and rare moment of accountability in an overwhelmingly unaccountable private war industry, it does not erase the fact that those in power—the CEOs, the senior officials, the war profiteers—walk freely and will likely do so for the rest of their lives.

What is so seldom discussed in public discourse on the use of mercenaries are the stories of their victims. After the Nisour Square massacre, I met with Mohammed Kinani, whose 9-year-old son, Ali, was the youngest person killed by Blackwater operatives that day. As he and his family approached the square in their car:

“[T]hey saw one armored vehicle and then another, with men brandishing machine guns atop each one,” Mohammed recalls. The armored cars swiftly blocked off traffic. One of the gunners held both fists in the air, which Mohammed took as a gesture to stop. “Myself and all the cars before and behind me stopped,” Mohammed says. “We followed their orders. I thought they were some sort of unit belonging to the American military, or maybe just a military police unit. Any authority giving you an order to stop, you follow the order.” It turns out the men in the armored cars were neither U.S. military nor MPs. They were members of a Blackwater team code-named Raven 23.

As the family waited in traffic, two more Blackwater vehicles became visible. Mohammed noticed a family in a car next to his—a man, woman and child. The man was staring at Mohammed’s car, and Mohammed thought the man was eyeing Jenan. “I thought he was checking my sister out,” Mohammed remembers. “So I yelled at him and said, ‘What are you looking at?’” Mohammed noticed that the man looked frightened. “I think they shot the driver in the car in front of you,” the man told him.

Mohammed scanned the area and noticed that the back windshield of the white Kia sedan in front of him was shattered. The man in the car next to Mohammed began to panic and tried to turn his car around. He ended up bumping into a taxi, and an argument ensued. The taxi driver exited his car and began yelling. Mohammed tried to break up the argument, telling the taxi driver that a man had been shot and that he should back up so the other car could exit. The taxi driver refused and got back into his vehicle.

At that point, an Iraqi police officer, Ali Khalaf Salman, approached the Kia sedan, and it started to slowly drift. The driver had been shot, and the car was gliding in neutral toward a Blackwater armored car. Salman, in an interview, described how he tried to stop it by pushing backward. He saw a panicked woman inside the car; she was clutching a young man covered in blood who had been shot in the head. She was shrieking, “My son! My son! Help me, help me!” Salman remembered looking toward the Blackwater shooters. “I raised my left arm high in the air to try to signal to the convoy to stop the shooting.” He said he thought the men would cease fire, given that he was a clearly identified police officer.

“As the officer was waving, the men on the armored cars started shooting at that car,” Mohammed says. “And it wasn’t warning shots; they were shooting as in a battle. It was as though they were in a fighting field. I thought the police officer was killed. It was insane.” Officer Salman managed to dive out of the way as the bullets rained down. “I saw parts of the woman’s head flying in front of me,” recalled his colleague, Officer Sarhan Thiab. “They immediately opened heavy fire at us.”

That’s how the Nisour Square massacre began.

“What can I tell you?” Mohammed says, closing his eyes. “It was like the end of days.”

Mohammed would later learn that the first victims that day, in the white Kia, were a young Iraqi medical student, Ahmed Haithem Al Rubia’y, and his mother, Mahassin, a physician. Mohammed is crystal clear that the car posed no threat. “There was absolutely no shooting at the Blackwater men,” he says. “All of a sudden, they started shooting in all directions, and they shot at everyone in front of them. There was nothing left in that street that wasn’t shot: the ground, cars, poles, sidewalks; they shot everything in front of them.” As the Blackwater gunners shot up the Rubia’ys’ vehicle, Mohammed said, it soon looked like a sieve “due to how many bullet holes it had.” A Blackwater shooter later admitted that they also fired a grenade at the car, causing the car to explode. Mohammed says the Blackwater men then started firing across the square. “They were shooting in all directions,” he remembers. He describes the shooting as “random yet still concentrated. It was concentrated and focused on what they aimed at and still random as they shot in all directions.”

One of the Blackwater shooters was on top of an armored vehicle firing an automatic weapon, he says. “Every time he would finish his clip, he would throw it on the ground and would load another one in and would start shooting again, and finish the new one and replace it with another.” One young Iraqi man got out of his car to run, and as he fled, the Blackwater shooter gunned him down and continued firing into his body as it lay on the pavement, Mohammed says. “He was on the ground bleeding, and they’re shooting nonstop, and it wasn’t single bullets.” The Blackwater shooter, he says, would fire at other Iraqis and cars and then return to pump more bullets into the dead man on the ground. “He sank in his own blood, and every minute the [Blackwater shooter] would shoot left and right and then go back to shoot the dead man, and I could see that his body would shake with every bullet. He was already dead, but his body was still reacting to the bullets. [The shooter] would fire at someone else and then go back to shoot at this dead man.” Shaking his head slowly, Mohammed says somberly, “The guy is dead in a pool of blood. Why would you continue shooting him?”

In his vehicle, as the shooting intensified, Mohammed yelled for the kids to get down. He and his sister did the same. “My car was hit many times in different places. All I could hear from my car was the gun shots and the sound of glass shattering,” he remembers. Jenan was frantic. “Why are they shooting at us?” she asked him. Just then, a bullet pierced the windshield, hitting Jenan’s headrest. Mohammed shows me a photo of the bullet hole.

As gunfire rained on the SUV, Jenan grabbed Mohammed’s hair, yanked his head down and covered him with her body. “My young sister was trying to protect me by covering me with her body, so I forced myself out of her grip and covered her with my body to protect her. It was so horrific that my little sister, whom I’m supposed to protect, was trying to protect me.” Mohammed managed to slip his cellphone from his pocket and was going to call his father. “It’s customary that when in agony before death, you ask those close to you to look after your loved ones,” he says. Jenan demanded that Mohammed put down the phone, reminding him that their father had had two strokes already. “If he hears what’s happening, he’ll die immediately,” she said. “Maybe he’ll die before us.”

At that moment, bullets pierced the SUV through the front windshield. A bullet hit the rearview mirror, causing it to whack Mohammed in the face. “We imagined that in a few seconds everyone was going to die–everyone in the car, my sister and I and our children. We thought that every second that passed meant one of us dying.” He adds, “We remained still, my sister and I. I had her rest her head on my lap, and my body was on top of her. We’d sneak a peek from under the dashboard, and they continued shooting here and there, killing this one and that one.”

And then the shooting stopped.

Kinani thought his family had somehow miraculously survived the massacre. But then the silence of the aftermath was shattered by relatives in his car shouting, “Ali is shot! Ali is shot!”

Mohammed rushed around to Ali’s door and saw that the window was broken. He looked inside and saw his son’s head resting against the door. He opened it, and Ali slumped toward him. “I was standing in shock looking at him as the door opened, and his brain fell on the ground between my feet,” Mohammed recalls. “I looked and his brain was on the ground.” He remembers people yelling at him, telling him to get out while he could. “But I was in another world,” he says. Then Mohammed snapped back to consciousness. He put Ali back in the car and placed his hand over his son’s heart. It was still beating. He got in the driver’s seat of his car, tires blown out, radiator damaged, full of bullets, liquids leaking everywhere, hoping still that he could save [Ali’s] life. Somehow he managed to get the car near Yarmouk Hospital, right near the square. He picked up Ali and ran toward the hospital. He nearly collapsed on the road, and an Iraqi police officer took Ali from his arms and ran him into the hospital.

Mohammed checked that the other children were safe and then dashed to the hospital. “I entered the emergency room, and blood was everywhere, dead people, injured people everywhere,” he remembers. “My son was in the last bed; the doctor was with him and had already hooked him with an IV line.” As Mohammed stood by Ali’s bed, the doctor told him that Ali was brain dead. “His heart is beating,” the doctor said, “and it will continue to beat until he bleeds out and dies.” The doctor told him that if there were any hope to be found, it would require taking Ali in an ambulance to a neurological hospital across town. The fastest route meant that they had to pass through Nisour Square. Iraqi police stopped them and told them they could not pass. “The US Army is here and won’t let you through,” the officer told them. The driver took an alternate route and was going so fast the ambulance almost crashed twice. When they got to the hospital, Mohammed offered to pay the driver–at least for the gas, which is customary. The driver refused. “No, I would like to donate blood to your son if he needs it,” he told Mohammed. A few moments later, Mohammed stood with a doctor who told him there was nothing they could do. Ali was dead.

Filmmaker Richard Rowley and I produced a 30 minute documentary on the Nisour Square massacre and the story of Ali Kinani for Democracy Now! and The Nation magazine:

 

Naked Capitalism on Stock Market Manipulation

Goldman Makes It Official That the Stock Market Is Manipulated, Buybacks Drive Valuations

Yves Smith

It’s remarkable that this Goldman report, and its writeup on Business Insider, is being treated with a straight face. The short version is current stock price levels are dependent on continued stock buybacks. Key sections of the story:

Goldman Sachs’ David Kostin believes a temporary pullback may explain why the S&P 500 has tumbled from its all-time high of 2,019 on Sept. 19.

“Most companies are precluded from engaging in open-market stock repurchases during the five weeks before releasing earnings,” Kostin notes. “For many firms, the beginning of the blackout period coincided with the S&P 500 peak on September 18. So the sell-off occurred during a time when the single largest source of equity demand was absent. Buybacks dip during earnings reporting months, which have seen 1.2 points higher realized volatility than in other months during the past 25 years.”…

“We expect companies will actively repurchase shares in November and December,” he writes. “Since 2007, an average of 25% of annual buybacks has occurred during the last two months of the year.”

cotd-buybacks-volatility

Notice how the bulk of buybacks are concentrated in the fourth quarter, with the obvious intent of goosing prices at year end so as to lead to higher executive pay for “increasing shareholder value”? In fact, these companies are being gradually liquidated. Issuing debt, which public companies have done in copious volumes since the crash, and using it to buy shares is dissipating corporate assets. They are over time shrinking their businesses. That is also reflected in aggressive headcount cuts and cost-saving measures. Even though analysts like to tout the cash that companies have sitting on their balance sheets as a source of potential investment, as we’ve discussed in previous posts, public companies are so terrified of even a quarterly blip in earnings due to incurring expenses relating to long-term investments that they’d rather do nothing, or go the inertial path of cutting costs to show higher profits.

But with borrowing the big source of this corporate munificence to the share-owning classes, this is a self-limiting game. But the end game could be a long time in coming. First, you have economists who believe that the stock market directly drives consumer spending, echoing the Fed’s confidence in the wealth effect. For instance, see this argument from Roger Farmer (hat tip Bruegel blog):

There is a close relationship between changes in the value of the stock market and changes in the unemployment rate one quarter later. My research here, and here shows that a persistent 10% drop in the real value of the stock market is followed by a persistent 3% increase in the unemployment rate. The important word here is persistent. If the market drops 10% on Tuesday and recovers again a week later, (not an unusual movement in a volatile market), there will be no impact on the real economy. For a market panic to have real effects on Main Street it must be sustained for at least three months.

Yves here. The problem is that correlation is not causation. Significant and sustained stock market declines are almost always the result of Fed tightening. The usual lag between an interest rate cycle turn and a stock market peak historically was roughly four months, but in our new normal of seemingly permanent heavy-duty central bank meddling, old rules of thumb are to be used with great caution. Nevertheless, Greenspan was obsessed with what drove stock prices, and the Fed is unduly solicitous of asset price levels, no doubt because people like Janet Yellen have to leave their DC bubble in order to meet actual unemployed people.

Mike Whitney reminds those who manage to miss it that the Fed is so concerned about the actual and psychological impact of stock market prices that it immediately talked investors into getting back into the pool when the market started misbehaving badly last week. From Counterpunch:

For those readers who still think that the Fed doesn’t meddle in the markets: Think again. Friday’s stock surge had nothing to do with productivity, price, earnings, growth or any of the other so called fundamentals. It was all about manipulation; telling people what they want to hear, so they do exactly what you want them to do. The pundits calls this jawboning, and the Fed has turned it into an art-form. All [St. Louis Fed President James] Bullard did was assure investors that the Fed “has their back”, and , sure enough, another wild spending spree ensued. One can only imagine the backslapping and high-fives that broke out at the Central Bank following this latest flimflam….

It’s too bad the Fed can’t put in a good word for the real economy while they’re at it. But, oh, I forgot that the real economy is stuffed with working stiffs who don’t warrant the same kind of treatment as the esteemed supermen who trade stocks for a living. Besides, the Fed doesn’t give a rip about the real economy. If it did, it would have loaded up on infrastructure bonds instead of funky mortgage backed securities (MBS). The difference between the two is pretty stark: Infrastructure bonds put people to work, circulate money, boost economic activity, and strengthen growth. In contrast, MBS purchases help to fatten the bank accounts of the fraudsters who created the financial crisis while doing bupkis for the economy. Guess who the Fed chose to help out?

Do you really want to know why the Fed isn’t going to end QE? Here’s how Nomura’s chief economist Bob Janjuah summed it up:

“I want to remind readers of a message that may be buried in the past: When QE1 ended, the S&P 500 fell just under 20% in a roughly three-month period before the QE2 recovery.

When the QE2 ended, the S&P 500 fell about 20% in a three-month period before the next Fed-inspired bounce (aided by the ECB). QE3 is ending this month…”

Is that why the Fed started jawboning QE4, to avoid the inevitable 20 percent correction?

Whitney continues with one of our favorite tropes: that all QE has done is elevate asset prices. That has not led to a recovery in anything much beyond the balance sheets of the top cohorts and the income of the top 1%. Even worse, it has provide cover for the Administration falling in with investor-favoring austerity, in the form of reducing deficit spending when it ought to be increasing it to take up the considerable and costly slack in the economy.

It’s not surprising to see the Fed double down on a failed strategy. The central bank had apparently finally recognized in 2013 that QE was not helping the real economy, and they needed to exit the policy to reduce the resulting economic distortions. But they lost their nerve during last summer’s taper tantrum, and turned cowardly again in response to a mere stock market hissy fit.

The Fed believes that what is good for the wealthy is good for the US, and that when they are in danger of suffering financially, the central bank should break glass and administer monetary relief. Even though the Fed may think it is serious about ending QE and eventually raising rates, as they say in Venezuela, “They have changed their minds, but they have not changed their hearts.”

Naked Capitalism: Welcome to the Third World

The Mixed International Picture on Poverty and Inequality

Posted on October 17, 2014 by

Yves here. As much as readers may already have an intuitive grasp of the story told in this post, data can help define its contours better. Here we see that the rising tide of global growth has not lifted all boats. The gains of the once-poor in China and India have come at the expense of the what used to be the middle class in more developed countries. Reducing poverty has not been a zero sum game. This post also omits another key piece: the rise and rise of an uber-wealthy class.

By Leith van Onselen who has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs. You can follow him on Twitter at twitter.com/leithvo. Originally published at MacroBusiness

The Economist has published a neat new chart showing the extent of global wealth inequality, drawing on data from Credit Suisse’s latest global wealth report:

Global wealth poverty

According to The Economist:

GLOBAL wealth has increased from $117 trillion in 2000 to $262 trillion this year. That comes to $56,000 for each adult on earth. But the fortune is far from evenly distributed… Today 94.5% of the world’s household wealth is held by 20% of the adult population…

Wealth is so unevenly distributed, that you need just $3,650 (less debts) to count yourself among the richest half of the world’s population. A mere $77,000 brings you among the wealthiest 10%. And just $798,000 puts you into the ranks of the 1%…

Taking a global perspective, the data is more encouraging, with recent research from World Bank researchers, Christoph Lakner and Milanovic Branko, arguing that there has been an overall reduction in poverty via a redistribution of wealth from richer to poorer countries, which has been achieved through greater inequality within rich nations (i.e. a transfer from the poor and middle classes to rich plutocrats). From VOX:

A ‘quasi non-anonymous’ growth incidence curve in Figure 2… shows how the country/deciles that were poor, middle-class, rich, etc. in 1988 performed over the next 20 years…

People around the median almost doubled their real incomes. Not surprisingly, 9 out of 10 such ‘winners’ were from the ‘resurgent Asia’. For example, a person around the middle of the Chinese urban income distribution saw his or her 1988 real income multiplied by a factor of almost 3; someone in the middle of the Indonesian or Thai income distribution by a factor of 2, Indian by a factor of 1.4, etc.

It is perhaps less expected that people who gained the least were almost entirely from the ‘mature economies’ – OECD members that include also a number of former communist countries. But even when the latter are excluded, the overwhelming majority in that group of ‘losers’ are from the ‘old, conventional’ rich world. But not just anyone from the rich world. Rather, the ‘losers’ were predominantly the people who in their countries belong to the lower halves of national income distributions. Those around the median of the German income distribution have gained only 7% in real terms over 20 years; those in the US, 26%. Those in Japan lost out in real terms…

Real income changes poverty

The striking association of large gains around the median of the global income distribution – received mostly by the Asian populations – and the stagnation of incomes among the poor or lower middle classes in rich countries, naturally opens the question of whether the two are associated…

Real per capita China poverty

While the real income of the US 2nd decile has increased by some 20% in a quarter century, the income of China’s 8th decile has been multiplied by a factor of 6.5. The absolute income gap, still significant five years ago, before the onset of the Great Recession, has narrowed substantially.

…if we take a simplistic, but effective, view that democracy is correlated with a large and vibrant middle class, its continued hollowing-out in the rich world would, combined with growth of incomes at the top, imply a movement away from democracy and towards forms of plutocracy.

An updated paper by the World Bank, released last week, also found that global poverty has improved significantly since 1990, whereby “the number of people living in extreme poverty has halved, to around one billion people, or 14.5 percent of the world’s population”. Again, the key drivers of these gains since 1990 are the rise of China and India, which together account for around one third of the global population.

Overall, one’s views on whether inequality and poverty is worsening probably depends upon where one lives. The rapid growth in Asia that has lifted billions out of poverty has been a remarkable achievement. However, this has been achieved, in part, at the expense of lower-to-middle income earners in the developed world, where the middle classes have been hollowed-out.

The World Bank’s argument about the hollowing-out of the middle class in advanced economies, implying a movement away from democracy towards plutocracy, is also supported by a report published earlier this year from Oxfam.  Oxfam found that the richest 1% increased their share of income in 24 out of 26 countries for which data was available between 1980 and 2012, with the wealthiest 1% in the US capturing 95% of post-financial crisis growth since 2009, whereas the bottom 90% became poorer (see below charts).

Richest poverty

 

Richest share income

 

 

Oxfam also warned that the increasing concentration of economic resources in the hands of fewer people (the “plutocrats”) presents a major threat to political and economic systems. In particular, people are becoming increasingly separated by economic and political power, leading to heightened social tensions and increasing the risk of societal breakdown. Laws are also increasingly favouring the rich, driven by a “power grab” by wealthy elites, who have co-opted the political process to rig the rules of the economic system in their favour.

Unfortunately for those living in rich nations, inequality is likely to worsen before it gets better, as improvements in technology and robotics places at risk a large number of skilled jobs, hollowing-out the middle class even further and increasing returns to owners of capital at the expense of labour.

Poverty and Ebola

GADOAUG1

OTHERS SAY: JOSEPHUS WEEKS SPECIAL TO DALLAS MORNING NEWS

Ebola did not have to kill my uncle

On Friday, Sept. 25, 2014, my uncle Thomas Eric Duncan went to Texas Health Presbyterian Hospital Dallas. He had a high fever and stomach pains. He told the nurse he had recently been in Liberia.

But he was a man of color with no health insurance and no means to pay for treatment, so within hours he was released with some antibiotics and Tylenol.

Two days later, he returned to the hospital in an ambulance. Two days after that, he was finally diagnosed with Ebola. Eight days later, he died alone in a hospital room.

Now, Dallas suffers. Our country is concerned. Greatly. About the lack of answers and transparency coming from a hospital whose ignorance, incompetence and indecency has yet to be explained.

I write this on behalf of my family because we want to set the record straight about what happened and ensure that Thomas Eric did not die in vain. So, here’s the truth about my uncle and his battle with Ebola.

Thomas Eric Duncan was cautious. Among the most offensive errors in the media during my uncle’s illness are the accusations that he knew he was exposed to Ebola — that is just not true. Eric lived in a careful manner, as he understood the dangers of living in Liberia amid this outbreak.

And while the stories of my uncle helping a pregnant woman with Ebola are courageous, Thomas Eric personally told me that never happened. Like hundreds of thousands of West Africans, carefully avoiding Ebola was part of my uncle’s daily life.

And I can tell you with 100 percent certainty: Thomas Eric would have never knowingly exposed anyone to this illness.

Thomas Eric Duncan was a victim of a broken system. The biggest unanswered question about my uncle’s death is why the hospital would send home a patient with a 103-degree fever and stomach pains who had recently been in Liberia.

Some speculate that this was a failure of the internal communications systems. Others have speculated that antibiotics and Tylenol are the standard protocol for a patient without insurance.

The hospital is not talking. Until then, we are all left to wonder. What we do know is that their error affects all of society. Their bad judgment or misjudgment sent my uncle back into the community for days with a highly contagious case of Ebola. And now all health care workers who care for my uncle could potentially be exposed.

Their error set the wheels in motion for my uncle’s death and additional Ebola cases, and their ignorance, incompetence or indecency has created a national security threat for our country.

Finally, what is most difficult for us — Thomas Eric’s mother, children and those closest to him

— to accept is the fact that our loved one could have been saved.

From his botched release from the emergency room to his delayed testing and delayed treatment and the denial of experimental drugs that have been available to every other case of Ebola treated in the U.S., the hospital invited death every step of the way.

When my uncle was first admitted, the hospital told us that an Ebola test would take three to seven days.

Miraculously, the deputy who was feared to have Ebola just last week was tested and had results within 24 hours.

The fact is, nine days passed between my uncle’s first ER visit and the day the hospital asked our consent to give him an experimental drug — but despite the hospital’s request they were never able to access these drugs for my uncle. [Editor’s note: Hospital officials have said they started giving Duncan the drug brincidofovir on Oct. 4.] He died alone. His only medication was a saline drip.

For our family, the most humiliating part of this ordeal was the treatment we received from the hospital. For the 10 days he was in the hospital, they not only refused to help us communicate with Thomas Eric, but they also acted as an impediment.

The day Thomas Eric died, we learned about it from the news media, not his doctors.

Our nation will never mourn the loss of my uncle, who was in this country for the first time to visit his son, as my family has. But our nation and our family can agree that what happened at Texas Health Presbyterian Hospital Dallas must never happen to another family.

In time, we may learn why my uncle’s initial visit to the hospital was met with such incompetence and insensitivity. Until that day comes, our family will fight for transparency, accountability and answers, for my uncle and for the safety of the country we love.

WEEKS IS A U.S.ARMY AND IRAQ WAR VETERAN WHO LIVES IN NORTH CAROLINA.

Thom Hartmann on the Disaster of Privatization

A Red Privatization Horror Story

Conservatives and libertarians have been saying for a long, long time that if we just get rid of government and replace it with the private sector, everything will run a whole lot better.

The idea is that since the main goal of all private corporations is to make money, they’ll be much more willing than the government is to cut costs and eliminate waste. The result, conservatives and libertarians say, will be more efficient, responsible, and responsive services. That’s the theory, at least.

In reality, privatization of public services has been a total disaster wherever it’s been tried. And, as a new report from the Center for Media and Democracy shows, it’s also created huge opportunities for fraud and corruption. The report, which was released today and is titled “Pay to Prey,” focuses on how Republican governors in states all across the country used the cover of privatization to enrich campaign donors and political cronies. The worst culprits include some the biggest names in Republican politics.

In Florida Governor Rick Scott has made growing for-profit education one of his top priorities. And, in doing so, he helped out his political buddies and donors while screwing over Florida’s students. One of the biggest winners in Scott’s privatization push, for example, was an ALEC-linked company called K12, Inc. that got actually an “F” from Florida’s education department.

In Pennsylvania, Governor Tom Corbett has given huge legal contracts for defending his state’s voter ID suppression law to some of his top donors. Corbett is also trying to privatize Pennsylvania’s state liquor stores, a move that would mean big bucks for corporate allies like Walmart and Sheetz, a local gas station chain.

And in Michigan, Governor Rick Snyder has handed prison food services over to corporate giant Aramark. While the move has meant big bucks for Aramark, the report suggests it’s been an absolute disaster in every other possible way. Meals are infested with maggots, employees have been caught having sex with inmates, and now there are reports that one Aramark employee actually tried to hire a prisoner to kill someone for him. All in all, not a pretty picture.

These horror stories are a perfect example of why privatization is such a bad idea. Ultimately, private corporations are only interested in making money and are only really accountable to their shareholders, not “We the People.” The way they see it, it doesn’t matter if prisoners have to eat rotten meat, if students get a crappy education, or if for-profit hospitals like the ones in Texas don’t have proper staffing. All that matters is making a quick buck, and if that means screwing over the public, then so be it.

The disaster of privatization in places like Florida, Michigan, and Pennsylvania clearly shows us how public issues – things having to do with the commons – like education, healthcare, and criminal justice are just too important to outsource to corporations. And Republicans will never change their mind about selling the commons off to the highest bidder, because from the Republican point of view, these aren’t scandals or horror stories, they’re success stories.

All their talk about how privatization will make government more efficient is just cover for what they really want to do: enrich their corporate cronies and replace “We the People” with “our friends the billionaires.” It really is that simple. For Republicans, privatization is just a business opportunity. And they don’t care about the damage privatization does to our society because privatization destroys the one thing standing between them and the total corporate takeover of our democracy: our government. When you think of it that way, everything makes a lot more sense.

Our second president, John Adams, once said that “Government is instituted for the common good; for the protection, safety, prosperity and happiness of the people; and not for the profit, honor, or private interest of any one man, family, or class of men.” Adams was right, of course, but today’s Republicans see it the exact opposite way. For them, government is there to be looted.

Every time some Republican governor proposes letting private corporations run our schools or our prisons, it’s really only because, as Harry Truman said, “The Republicans believe in taking care of big business first and letting the little fellow take care of himself.” With a few exceptions like Teddy Roosevelt, it’s been that way since the 1880s, and probably always will be.

Jim Hightower on Mr. Good Hair

Hightower: The Scariest Thing About Political Fearmongers Is Themselves

Ebola-infected Islamic terrorists are not, in fact, sneaking across the border carrying weapons of mass destruction.

Photo Credit: Shutterstock/Christopher Halloran

One thing you can say about Rick Perry is that he sticks to his guns. If one of his policy proposals turns out to be dumb, by gollies, he will double-down on dumb.

For example, in his current re-run for the GOP presidential nomination, the “Oops” governor has repositioned himself as an expert on border security. As such, he milked a lot of political PR out of this summer’s surge of migrant children crossing our southern border illegally. Never mind that they were desperate to escape the abject poverty, rapes, murders and gang cultures that confronted them every day in their Central American homelands, Perry used their plight as a chance to foment fear and pose as a superhero “seal the border” candidate.

Perry was on Fox News howling for federal troops, declaring that, “This is a natural disaster,” and putting himself in front of the Tea Party fear brigade that was screeching about Ebola virus and the other pandemic diseases these wretched urchins might bring in.

But, darn it, the surge of young migrants was coming to an end … and so was Perry’s dumb rationale for slamming and locking our nation’s southwest door. No problem for Rick, though — he simply reached for dumber. Instead of children, his latest bugaboo is — believe it or not — Islamic terrorists.

In August, Perry warned that murderous militants from the ISIS “could be” penetrating into the U.S. from Mexico. Could be? Well, he conceded, there’s “no clear evidence” of it — but BE AFRAID, BE VERY AFRAID! The “expert” said that people “from countries with terrorist ties” are crossing into our country. Really? Yes, he said, citing “three individuals from Ukraine” who were caught. Uh, Rick … Ukraine is not a country “with terrorist ties.”

Never mind the facts; he went on to scold Obama for failure to put more border agents in place and use unmanned drones to bolster security there. Apparently no one told the newly minted border expert that Obama proposed those same measures last year, but Perry’s fellow Republicans killed the bill.

Perry is scary. And what’s worse, he thinks he is presidential material. But he is not the only bonehead on the loose, regurgitating their own paranoia and propaganda to advance their doleful agenda of fear.

Take Duncan Hunter … please! This self-promoting bozo of a Congress critter constantly goes off louder than a car alarm on the fritz, honking and squealing about some bugaboo he’s dreamed up. In a recent Fox News episode, the far-right California congressman was in full-panic mode, wailing that Islamic State terrorists were entering our country from Mexico, “ISIS is coming across the Southern border,” he panted. “I know that at least 10 ISIS fighters have been caught coming across the Mexican border in Texas,” he breathlessly asserted, adding sternly that while the 10 got caught, “you know there’s going to be dozens more that did not get caught.”

Really? How does he know that? Mr. Fearmongerer won’t say, refusing to reveal his “sources.” Meanwhile, the Department of Homeland Security calls his claim of an ISIS intrusion from Mexico “Categorically false … not supported by any credible intelligence or the facts on the ground.”

Of course, facts are not a shield against right-wing delusions, and Hunter is not about to believe anything said by Homeland officials working in the administration of the man he considers Satan incarnate, Barack Obama. But — oopsy-daisy — the Republican-led Department of Public Safety in Texas also looked into his foam-at-the-mouth warnings, reporting in an email to state legislators that “DPS does not have any information to confirm (Hunter’s) specific statements.”

It’s embarrassing to learn that boneheads like this are actually taking up space in the United States Congress. No wonder they never get anything done. Duncan shouldn’t be in Congress — he ought to be sitting in a dunking booth at a state fair. Next the Perry-Duncan team will warn us that Ebola-infected Islamic terrorists are sneaking across the border carrying Weapons of Mass Destruction!

Jim Hightower is a national radio commentator, writer, public speaker, and author of the new book, “Swim Against the Current: Even a Dead Fish Can Go With the Flow.” (Wiley, March 2008) He publishes the monthly “Hightower Lowdown,” co-edited by Phillip Frazer.

 

Humor: The Borowitz Report

CNN Defends New Slogan

By

Photograph by Angela Weiss/Getty

NEW YORK (The Borowitz Report)—The president of CNN Worldwide, Jeff Zucker, attempted on Wednesday to defuse the brewing controversy over his decision to change the network’s official slogan from “The Most Trusted Name in News” to “Holy Crap, We’re All Gonna Die.”

“This exciting new slogan is just one piece of our over-all rebranding strategy,” Zucker said. “Going forward, we want CNN to be synonymous with the threat of imminent death.”

He added that the network expected to see strong ratings growth as a result of having the words “Holy Crap, We’re All Gonna Die” on-screen twenty-four hours a day.

Part of Zucker’s new strategy was on display during Tuesday’s edition of the network’s signature program, “The Situation Room,” in which a visibly ill-at-ease Wolf Blitzer appeared dressed as The Grim Reaper.

“That’s a work in progress,” Zucker said about Blitzer’s makeover. “But once Wolf gets comfortable swinging that scythe, he’s going to be amazing.”

 

 

Common Dreams: Our Bloated Military Budget

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Critics to Obama: ‘Draconian Cuts’ Have Been to US Public Services, Not War Budget

 Though U.S. military spending is at historic highs, Obama suggests nearly non-existent cuts are going too far.

 President Obama pictured during his first visit to the Pentagon since becoming President January 28, 2009. (Photo: DOD/public domain)

 President Obama pictured during his first visit to the Pentagon since becoming President January 28, 2009. (Photo: DOD/public domain)

President Obama’s comments on Wednesday that U.S. military spending is under threat of “draconian” cuts were met with immediate rebuke from analysts, who say the poor are bearing the brunt of austerity while the war budget remains largely untouched. That the president’s comments came in the midst of the expansion of the costly U.S.-led war against Iraq and Syria sparked concern that the president could be signaling further escalation to come.

“The fact that President Obama is talking about military cuts right now, just as he is escalating the war in Syria and Iraq, is a very dangerous sign that he might be anticipating escalations that would be even more costly than the current round of bombings, drone strikes, special operations, and relatively small numbers of boots on the ground,” said Phyllis Bennis, director of the New Internationalism Project at the Institute for Policy Studies, in an interview with Common Dreams.

Addressing the Pentagon leadership Wednesday, Obama stated, “We have done some enormous work, and I want to thank everybody sitting around this table to continue to make our forces leaner, meaner, more effective, more tailored to the particular challenges that we’re going to face in the 21st century. But we also have to make sure that Congress is working with us to avoid, for example, some of the draconian cuts that are called for in sequestration.”

His statements echo those of Defense Secretary Chuck Hagel, who argued in March that that military sequestration jeopardizes “America’s traditional role as a guarantor of global security, and ultimately our own security.”

Hawkish lawmakers from both sides of the aisle have been using the expanding U.S. war on Iraq and Syria to argue against U.S. military spending cuts. “If we don’t replace the cuts in sequestration, we’re going to compromise our ability to be successful against ISIL and other emerging threats,” said Sen. Lindsey Graham.

“The supposed slashing leaves the military budget higher than all but a couple of years of the budget since World War II.”—Miriam Pemberton, Institute for Policy StudiesRaed Jarrar, policy impact coordinator for the American Friends Service Committee, told Common Dreams, “The crisis within Iraq and Syria is being used to promote the vision that the world is a scary place, we need more weapons to protect ourselves, and the military is facing these crazy cuts. But the premise that we have military cuts is not accurate. Obama’s remarks signal there will not be any push-back from the White House.”

Mattea Kramer, research director at National Priorities Project, argues in a March articlethat the Pentagon, in fact, is “crying wolf.” When it went into effect in March 2013, sequestration was supposed to cut $54.6 billion from the $550 billion Pentagon budget. But thanks to intervention from Congress, as well as the Pentagon’s manipulation of budgeting rules, the Pentagon only ended up cutting $31 billion from its 2013 budget, explains Kramer.

The 2014 budget tells a similar story. Sequestration was supposed to slash $54.6 billion from the military budget in 2014, but thanks to a deal between lawmakers, and war funding from other stashes—including extra congressional funds and the “Overseas Contingency Operations” budget—the 2014 budget was only cut by $3.4 billion, less than one percent. “After two years of uproar over mostly phantom cuts, 2015 isn’t likely to bring austerity to the Pentagon either,” Kramer writes.

Miriam Pemberton, research fellow at the Institute for Policy Studies, told Common Dreams that the “the supposed slashing leaves the military budget higher than all but a couple of years of the budget since World War II.”

The U.S. continues to spend more on the military than the next 11 countries combined, and for the year 2015, 45 percent of U.S. income tax money is slated to go to current and past military spending. Meanwhile, domestic public services—from cancer research to the Head Start program to domestic violence shelters—face real austerity. Furthermore, as Pemberton and Ellen Powell point out in an Institute for Policy Studies report released last month, U.S. spending to address the climate crisis lags far behind military spending: between 2008 to 2013, climate change spending grew from 1 percent of military spending to 4 percent.

“The Pentagon’s budget remains bloated, and it gets much too big a chunk out of our tax dollars,” said Bennis. “The really draconian impact of sequestration cuts have been felt by working people and poor people across the United States far more than it has by the Pentagon.”

LUV News: The Roots of Jihad

The start of the following piece reminded me of Vietnam 48 years ago, when, as a young man, I traveled to combat units gathering information for USARV and MACV headquarters, daily shot at and in fear for my life.  One day a couple of my fellow soldiers were griping and a sergeant nearby said “You shouldn’t have volunteered.”  In shock they replied, “We didn’t volunteer, we were drafted.”  The sergeant immediately shot back, “You could have gone to prison, you could have committed suicide but no, you volunteered.”

One night at a place called Phan Rang I was waiting for an aircraft called a caribou, standing on a runway created for the first brigade of the 101st Airborne division, the Screaming Eagles, when I found myself in a conversation with a man who looked to be Cambodian, but who spoke fluent English.  He told me he was about to go into Cambodia on a mission for the CIA with his soldiers.  I looked around and there were hundreds dressed like him, extending into the darkness.  When I asked if he was Cambodian he replied he was Vietnamese of Cambodian descent, as were the others of his regiment– they were pretending to be Cambodian for this mission.

Then something caught my eye in the darkness and made me uneasy.  He was wearing a necklace of human body parts.  Looking around I noticed the others had similar “jewelry.”  I made an excuse to get away from him and wandered off to wait for my plane alone, thinking “These people are on our side, these people are on our side.”

I was an ignorant kid raised to believe the USA represented the good guys.  The following piece begins with our Cambodian atrocities of that time and continues into our ongoing ones   –Jack Balkwill

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From Pol Pot to ISIS

by JOHN PILGER

In transmitting President Richard Nixon’s orders for a “massive” bombing of Cambodia in 1969, Henry Kissinger said, “Anything that flies on everything that moves”.  As Barack Obama ignites his seventh war against the Muslim world since he was awarded the Nobel Peace Prize, the orchestrated hysteria and lies make one almost nostalgic for Kissinger’s murderous honesty.

As a witness to the human consequences of aerial savagery – including the beheading of victims, their parts festooning trees and fields – I am not surprised by the disregard of memory and history, yet again.  A telling example is the rise to power of Pol Pot and his Khmer Rouge, who had much in common with today’s Islamic State in Iraq and Syria (ISIS). They, too, were ruthless medievalists who began as a small sect. They, too, were the product of an American-made apocalypse, this time in Asia.

According to Pol Pot, his movement had consisted of “fewer than 5,000 poorly armed guerrillas uncertain about their strategy, tactics, loyalty and leaders”. Once Nixon’s and Kissinger’s B52 bombers had gone to work as part of “Operation Menu”, the west’s ultimate demon could not believe his luck.

The Americans dropped the equivalent of five Hiroshimas on rural Cambodia during 1969-73. They levelled village after village, returning to bomb the rubble and corpses. The craters left monstrous necklaces of carnage, still visible from the air. The terror was unimaginable. A former Khmer Rouge official described how the survivors “froze up and they would wander around mute for three or four days. Terrified and half-crazy, the people were ready to believe what they were told … That was what made it so easy for the Khmer Rouge to win the people over.”

A Finnish Government Commission of Enquiry estimated that 600,000 Cambodians died in the ensuing civil war and described the bombing as the “first stage in a decade of genocide”.  What Nixon and Kissinger began, Pol Pot, their beneficiary, completed.  Under their bombs, the Khmer Rouge grew to a formidable army of 200,000.

ISIS has a similar past and present. By most scholarly measure, Bush and Blair’s invasion of Iraq in 2003 led to the deaths of some 700,000 people — in a country that had no history of jihadism. The Kurds had done territorial and political deals; Sunni and Shia had class and sectarian differences, but they were at peace; intermarriage was common. Three years before the invasion, I drove the length of Iraq without fear. On the way I met people proud, above all, to be Iraqis, the heirs of a civilization that seemed, for them, a presence.

Bush and Blair blew all this to bits. Iraq is now a nest of jihadism. Al-Qaeda — like Pol Pot’s “jihadists” — seized the opportunity provided by the onslaught of Shock and Awe and the civil war that followed. “Rebel” Syria offered even greater rewards, with CIA and Gulf state ratlines of weapons, logistics and money running through Turkey. The arrival of foreign recruits was inevitable. A former British ambassador, Oliver Miles, wrote recently, “The [Cameron] government seems to be following the example of Tony Blair, who ignored consistent advice from the Foreign Office, MI5 and MI6 that our Middle East policy – and in particular our Middle East wars – had been a principal driver in the recruitment of Muslims in Britain for terrorism here.”

ISIS is the progeny of those in Washington and London who, in destroying Iraq as both a state and a society, conspired to commit an epic crime against humanity. Like Pol Pot and the Khmer Rouge, ISIS are the mutations of a western state terror dispensed by a venal imperial elite undeterred by the consequences of actions taken at great remove in distance and culture. Their culpability is unmentionable in “our” societies.

It is 23 years since this holocaust enveloped Iraq, immediately after the first Gulf War, when the US and Britain hijacked the United Nations Security Council and imposed punitive “sanctions” on the Iraqi population – ironically, reinforcing the domestic authority of Saddam Hussein. It was like a medieval siege. Almost everything that sustained a modern state was, in the jargon, “blocked” — from chlorine for making the water supply safe to school pencils, parts for X-ray machines, common painkillers and drugs to combat previously unknown cancers carried in the dust from the southern battlefields contaminated with Depleted Uranium.

Just before Christmas 1999, the Department of Trade and Industry in London restricted the export of vaccines meant to protect Iraqi children against diphtheria and yellow fever. Kim Howells, a medical doctor and parliamentary Under-Secretary of State in the Blair government, explained why. “The children’s vaccines”, he said, “were capable of being used in weapons of mass destruction”. The British Government could get away with such an outrage because media reporting of Iraq – much of it manipulated by the Foreign Office — blamed Saddam Hussein for everything.

Under a bogus “humanitarian” Oil for Food Programme, $100 was allotted for each Iraqi to live on for a year. This figure had to pay for the entire society’s infrastructure and essential services, such as power and water.  “Imagine,” the UN Assistant Secretary General, Hans Von Sponeck, told me, “setting that pittance against the lack of clean water, and the fact that the majority of sick people cannot afford treatment, and the sheer trauma of getting from day to day, and you have a glimpse of the nightmare. And make no mistake, this is deliberate. I have not in the past wanted to use the word genocide, but now it is unavoidable.”

Disgusted, Von Sponeck resigned as UN Humanitarian Co-ordinator in Iraq. His predecessor, Denis Halliday, an equally distinguished senior UN official, had also resigned. “I was instructed,” Halliday said, “to implement a policy that satisfies the definition of genocide: a deliberate policy that has effectively killed well over a million individuals, children and adults.”

A study by the United Nations Children’s Fund, Unicef, found that between 1991 and 1998, the height of the blockade, there were 500,000 “excess” deaths of Iraqi infants under the age of five. An American TV reporter put this to Madeleine Albright, US Ambassador to the United Nations, asking her, “Is the price worth it?” Albright replied, “We think the price is worth it.”

In 2007, the senior British official responsible for the sanctions, Carne Ross, known as “Mr. Iraq”, told a parliamentary selection committee, “[The US and UK governments] effectively denied the entire population a means to live.”  When I interviewed Carne Ross three years later, he was consumed by regret and contrition. “I feel ashamed,” he said. He is today a rare truth-teller of how governments deceive and how a compliant media plays a critical role in disseminating and maintaining the deception. “We would feed [journalists] factoids of sanitised intelligence,” he said, “or we’d freeze them out.”

On 25 September, a headline in the Guardian read: “Faced with the horror of Isis we must act.”  The “we must act” is a ghost risen, a warning of the suppression of informed memory, facts, lessons learned and regrets or shame. The author of the article was Peter Hain, the former Foreign Office minister responsible for Iraq under Blair. In 1998, when Denis Halliday revealed the extent of the suffering in Iraq for which the Blair Government shared primary responsibility, Hain abused him on the BBC’s Newsnight as an “apologist for Saddam”. In 2003, Hain backed Blair’s invasion of stricken Iraq on the basis of transparent lies. At a subsequent Labour Party conference, he dismissed the invasion as a “fringe issue”.

Now Hain is demanding “air strikes, drones, military equipment and other support” for those “facing genocide” in Iraq and Syria. This will further “the imperative of a political solution”. Obama has the same in mind as he lifts what he calls the “restrictions” on US bombing and drone attacks. This means that missiles and 500-pound bombs can smash the homes of peasant people, as they are doing without restriction in Yemen, Pakistan, Afghanistan and Somalia — as they did in Cambodia, Vietnam and Laos. On 23 September, a Tomahawk cruise missile hit a village in Idlib Province in Syria, killing as many as a dozen civilians, including women and children. None waved a black flag.

The day Hain’s article appeared, Denis Halliday and Hans Von Sponeck happened to be in London and came to visit me. They were not shocked by the lethal hypocrisy of a politician, but lamented the enduring, almost inexplicable absence of intelligent diplomacy in negotiating a semblance of truce. Across the world, from Northern Ireland to Nepal, those regarding each other as terrorists and heretics have faced each other across a table. Why not now in Iraq and Syria.

Like Ebola from West Africa, a bacteria called “perpetual war” has crossed the Atlantic. Lord Richards, until recently head of the British military, wants “boots on the ground” now. There is a vapid, almost sociopathic verboseness from Cameron, Obama and their “coalition of the willing” – notably Australia’s aggressively weird Tony Abbott — as they prescribe more violence delivered from 30,000 feet on places where the blood of previous adventures never dried. They have never seen bombing and they apparently love it so much they want it to overthrow their one potentially valuable ally,  Syria. This is nothing new, as the following leaked UK-US intelligence file illustrates:

“In order to facilitate the action of liberative [sic] forces … a special effort should be made to eliminate certain key individuals [and] to proceed with internal disturbances in Syria. CIA is prepared, and SIS (MI6) will attempt to mount minor sabotage and coup de main [sic] incidents within Syria, working through contacts with individuals… a necessary degree of fear… frontier and [staged] border clashes [will] provide a pretext for intervention… the CIA and SIS should use… capabilities in both psychological and action fields to augment tension.”

That was written in 1957, though it could have been written yesterday. In the imperial world, nothing essentially changes. Last year, the former French Foreign Minister Roland Dumas revealed that “two years before the Arab spring”, he was told in London that a war on Syria was planned.  “I am going to tell you something,” he said in an interview with the French TV channel LPC, “I was in England two years before the violence in Syria on other business. I met top British officials, who confessed to me that they were preparing something in Syria … Britain was organising an invasion of rebels into Syria. They even asked me, although I was no longer Minister for Foreign Affairs, if I would like to participate … This operation goes way back. It was prepared, preconceived and planned.”

The only effective opponents of ISIS are accredited demons of the west – Syria, Iran, Hezbollah.  The obstacle is Turkey, an “ally” and a member of Nato, which has conspired with the CIA, MI6 and the Gulf medievalists to channel support to the Syrian “rebels”, including those now calling themselves ISIS. Supporting Turkey in its long-held ambition for regional dominance by overthrowing the Assad government beckons a major conventional war and the horrific dismemberment of the most ethnically diverse state in the Middle East.

A truce – however difficult to achieve – is the only way out of this imperial maze; otherwise, the beheadings will continue. That genuine negotiations with Syria should be seen as “morally questionable” (the Guardian) suggests that the assumptions of moral superiority among those who supported the war criminal Blair remain not only absurd, but dangerous.

Together with a truce, there should be an immediate cessation of all shipments of war materials to Israel and recognition of the State of Palestine. The issue of Palestine is the region’s most festering open wound, and the oft-stated justification for the rise of Islamic extremism. Osama bin Laden made that clear. Palestine also offers hope. Give justice to the Palestinians and you begin to change the world around them.

More than 40 years ago, the Nixon-Kissinger bombing of Cambodia unleashed a torrent of suffering from which that country has never recovered. The same is true of the Blair-Bush crime in Iraq. With impeccable timing, Henry Kissinger’s latest self-serving tome has just been released with its satirical title, “World Order”. In one fawning review, Kissinger is described as a “key shaper of a world order that remained stable for a quarter of a century”. Tell that to the people of Cambodia, Vietnam, Laos, Chile, East Timor and all the other victims of his “statecraft”.  Only when “we” recognise the war criminals in our midst will the blood begin to dry.

http://www.counterpunch.org/2014/10/08/from-pol-pot-to-isis/

Naked Capitalism on Fairy-Tale Reaganomics

Masaccio: The Shaky Foundation of Neoliberal Economics – Life-Cycle Savings

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Posted on October 8, 2014 by

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Yves here. Readers may know that we regularly savage neoliberal economics, which we often refer to as “mainstream economics.” For instance, that’s why we so often take aim at Paul Krugman, who despite his leftist inclinations, never takes them very far because he is intellectually hostage to a flawed, destructive orthodoxy.

We wrote an entire book, ECONNED, devoted to what is wrong with neoliberal economics and how fealty to its precepts produced the global financial crisis. Other economists, such as Steve Keen in his Debunking Economics, have provided even more exhaustive critiques.

Here masaccio makes a point that the many enthusiastic reviewers of Piketty’s Capital in the 21st Century have skipped over, namely, that his book indicts orthodox approaches and conclusions. Masaccio then focuses on a glaring example of where neoliberal economic theory does not match up with behavior, in its life cycle savings theory.

By Ed Walker, who writes as masaccio at Firedoglake. You can follow him at Twitter at @MasaccioFDL, and here’s his author page at Firedoglake.

In the US only one economic theory gets a hearing in any policy discussion. That theory, neoliberalism, has gotten a 42 year tryout, beginning with the inauguration of Ronald Reagan and running forward through today. It has proved to be wholly and totally wrong, and the more firmly politicians grabbed onto it, the worse things got. The final collapse, the Great Crash, could have been a sign that this theory is comprehensively wrong, and that we desperately need a new set of ideas for coping with the destruction. Instead, President Obama, chose to hire courtiers like Larry Summers, the Bankers’ Man at the Fed, Timothy Geithner, and a coterie of disciples of Robert Rubin to advise him. Together, they did everything they could to restore the power of the financial sector at the expense of millions of us. Within a few months, the neoliberals were back at it, demanding tax cuts and less government, insisting on crushing beleaguered homeowners, handing out more tax cuts, stripping the unemployment compensation of the involuntarily unemployed, and generally swaggering around like they owned the place. The neoliberal crowd won every single battle over the way the government responded to the nightmare. How is it possible for such a destructive theory to survive, let alone triumph in the wake of its disastrous results?

One reason among many is that practically everyone of every social class in the US is a true believer in one or another bastardized version of free market capitalism. The elites normally ignore the views of the lower class, those in the bottom 50% who have no wealth, but in the case of economics, it serves the interests of the richest that the poorest are the biggest supporters of rampant capitalism. Among the top half, there is near-universal support for neoliberal economics, in both of the mainstream parties, and in the media. The only difference seems to be the intensity with which those views are held, and the amount of pain they are willing to inflict on others in pursuit of the neoliberal vision.

A lot of college-educated people took one or two introduction to economics courses, and that was enough to cement in their minds the basic theories and the basic approach to the field. So, when they hear people talk about markets, they remember those simple graphs, and those simple exercises, and nod their heads wisely.

A lot of what we were taught in intro econ seems like common sense. The ideas are simple and catchy, and they seem to fit in with what we were told by our parents, and what little we then knew of the world. If the stories didn’t seem to quite fit our first jobs, we didn’t really notice, we just treated our new information as if it were a special case, and continued assuming that the rest of the world was different, more like our econ courses. In the aftermath of the Great Crash, it was much easier to blame someone for the problem, rather than question the basic theory. It was the savers in China, the greedy masses ready to lie to get in on the American Dream, or any one of the myriad excuses offered by the neoliberals and their flacks, all of who sprang into action to distract us from questioning the basis of their theories.

That helps explain why Capital in the Twenty-First Century by Thomas Piketty was such a sensation. Piketty gave US economics a try as a young grad student at MIT. He doesn’t think much of it, with its “childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences.” 32. He shows how data can be pulled from old archives, sorted, cleaned up, and organized into useful forms. From these forms, we can learn what happened. From history and literature, we can see how people lived in those periods, and we can draw useful inferences.

That’s so different from the US form of the subject, where what to the layman looks like complicated math (it isn’t) pushes us away from our own examination of the ideas and towards acceptance of academic scholarship. We don’t think we can do better than the academics because we think they have some special expertise. The media treat these people like Possessors of the Truth, and delight in explaining how smart Larry Summers is, and how lucky we are to have him and his ilk handing out advice to politicians and hedge fund leaders.

We learn from Piketty that most of the assumptions that form the basis of economic theory are not tested against actual data. They rest on simple assertion accompanied by lots of hand-waving. Even the definitions are arbitrary, and shift about as needed to fit the theory. Academic advancement rests on coming up with some kind of intuition about the nature of the economy, and restating it in mathematical symbols to see if it fits with the existing pile of similar studies. Here’s a bald example:

The prudential regulation and supervision of the financial sector are meant to reduce systemic risk and other risks that arise from asymmetric information. They may therefore be of benefit to the regulated financial institutions themselves: precisely because of the systemic features of a financial system, each individual institution has an interest in the soundness of others. Hence, an institution may welcome regulations even if they impose compliance costs in the form of higher operating expenses and restrictions on its portfolio choices. The model presented here formalizes this intuition, and indeed suggests that in some instances financial institutions or at least a dominant group of institutions may favor regulations that are excessively restrictive relative to the social optimum.

That conclusion could just as easily have been drawn from the first two sentences. The math added nothing.

Throughout Capital, Piketty takes swipes at the assertions of neoliberal economic theory. He certainly isn’t the first person to suggest that individual intuitions of neoliberal economics are wrong. But he identifies so many that it begins to call into question the entire edifice of a theory that is obviously a failure in the real world. And, he postulates a new idea: that data can be used to test out the assumptions and even replace assumptions with facts. Reliance on data carries with it the message that we can’t assume that the future will be like the past, so our answers are always provisional. Finally, he arms the willing reader with the confidence to take on the entrenched economic elites.

As an example, let’s consider the life-cycle consumption theory of Franco Modigliani, which won him the economics version of the Nobel Prize. It says that people save in the present so they can consume later. In this theory, saving is a way to smooth out consumption over a lifetime; you consume less today so you’ll have money later when you need it, for college expenses for your children, unemployment, illness or retirement. This intuition is used today by economists such as Simon Wren-Lewis and Angus Deaton. The latter, a professor at Princeton, produced a paper in 2005 extolling the theory and claiming that was a powerful insight into the way things work. Among other things, it is used to create consumption functions.

Piketty takes it up in Chapter 11, discussing the amount of national wealth attributable to inheritance as compared to the wealth attributable to savings from labor income. Modgliani put out a couple of papers in the mid 80s arguing that as little as 20-30% of the total wealth of the US was the result of inheritance or lifetime gifts. Piketty thinks it’s higher. In his discussion, he points out that the theory implies that by the time of death, you have little or nothing left over to pass on to your heirs. It also implies that the elderly spend down their wealth in the years before their deaths. You don’t need to be an econometrician to check this out for yourself. There is plenty of recent data that anyone can find to check for themselves.

First, we know that the net worth of the bottom half of the population by income is very low. According to the 2013 Fed Survey of Consumer Finances, the median net worth of the lowest quartile is negative, and the median net worth of the next higher quartile is $31,300, down from $34,500 in the 2010 Survey. According to a different 2013 survey by the Federal Reserve, 52% of respondents would not be able to come up with $400 for an emergency without selling something or borrowing. About half of respondents have no plans for how they will retire. Obviously this half of the population isn’t saving, so the theory can’t be right as to them.

At the other end of the spectrum, we find the wealthiest decile, whose median net worth was $1.88 million according to the 2013 SCF. Few of these people will spend all their assets. Almost all will leave substantial wealth to their children and grandchildren, through bequests or through large lifetime gifts.

Somewhere in the 50th to the 90th percentiles there is no doubt a group of people who are saving, either for college for their kids, emergencies, or retirement. According to the 2013 Survey, about 60% of households in the third quartile saved money, and about 70% in the 75th to the 90th percentiles saved money. In the top decile, 80% were savers. For this purpose, paying down debt, including unsecured debt, counts as savings. These figures do not support the life-cycle hypothesis.

The Survey doesn’t support the prediction that the elderly spend down their wealth. About half the households with a head of household 65 or older were savers. That’s pretty much the opposite of the theory. There’s a study by the Chicago Fed reviewing data from Asset and Health Dynamics of the Oldest Old, data collected in surveys by workers at the University of Michigan. They started with about 7500 participants over the age of 70, including about 2500 older than 80, and about 800 spouses younger than 70, Data collection began in 1995, and the population was surveyed every two years.

The Chicago Fed study looks at the period 1995 to 2002. The principle result is that households in which no one died during the period did not consume their wealth, but instead adjusted their consumption to maintain their wealth. Households in which there was a death saw a decrease in wealth. In those households, the average wealth was $120K at the beginning of the period, dropping to about $60K at death. In the whole sample, average wealth among married was about $345,000. If their wealth decreased at the same rate in the period before death of both spouses, we might conservatively estimate that the total loss would be about $120K (which doesn’t allow for any additional accumulation of wealth). That supports the idea of some dissaving among the oldest almost all of it in the last year of life, but it also means that most who have wealth to start with end up with substantial wealth.

In sum, the data doesn’t support the life-cycle consumption theory. It might be a good idea, and lots of us might try a bit of it, but the facts say that most of us don’t do it. Let’s stop using it as an assumption. We should think of it as a bit of the Jenga Pile of neoliberal economics that we were able to pull out. How much do you have to pull out before the whole thing collapses?