Wednesday, June 26, 2013
The Accounting System #12: Electronic Money Takes Over
previous: Unraveling in 1930 and the New Deal
But in the 1930's ubiquitous accounting was being held back by the sheer amount of human effort needed to produce accurate accountings. In addition to adding machines (bulky, mechanical predecessors to today’s electronic calculators), there was some mechanized counting and data manipulation using punch-card machines. After World War II the accounting machines used by humans to do data entry and calculation started a cycle of major upgrades. The machines now known as computers were invented during the war. The new computers could do more than arithmetic: they could be programmed to manipulate numbers and information in almost limitless ways. Starting around 1950 they became available to the largest corporations for accounting and data processing.
With the computer revolution the accounting system itself began to be virtualized. Records and programs were first kept on punch cards or punched paper tapes, then as years passed on magnetic tape, on magnetic disks, and then on hard disk drives. The rules of accounting could be written in computer programming code. Humans still made the rules, and understood the rules, but the code itself had no material substance to it at all. Accounting programming code could be printed out, or viewed on a machine, but its essence was just an arrangement of electric charges or anything else that could represent numbers and symbols.
Money — abstract, virtual, accounting money — began to be transferred between banks using electronic means, tracked by the computerized accounting systems. Various methods were used, but the important thing was that such transfers were accounted for. Otherwise someone could create (or destroy) money in an account by making a phony transfer. More directly, if the accounting system did not catch such errors or cheats, money could be created or destroyed just by changing the balance numbers in accounts.
By 2010, an American could still write paper checks, but once they entered the banking system they would be virtualized. Cancelled paper checks were no longer returned to their writers. In 2002 Germany started phasing out paper checks altogether, and other nations followed suit. An increasing percentage of transactions are done using credit cards or electronic direct transfers to and from bank accounts.
Money is now electronic, and The Accounting System, with its myriad tentacles, must be totally trustworthy or the entire global economy would be at risk. While identity thieves and computer hackers continue to find chinks in the armor of the System, so far it has been reasonably reliable. Errors in accounts are eventually detected and dealt with. People generally trust that the electronic dollars they put in their accounts will be available to withdraw and use later. Creditors, including the banks themselves, trust that they can keep track of loans and, if necessary, courts will trust their electronic records proving indebtedness. [Contracts may be on paper, and signed by human hands, especially for larger deals like mortgages, but even contracts and signatures are moving to electronic formats.]
Next: to be continued
[The Accounting System, Your Fate is in the Cloud, is a work in progress by William P. Meyers, ©2013]
Monday, June 24, 2013
Dutch Bicycles, Netherlands Imperialism, and Overpopulation
Doubtless following up on stories first published in the Netherlands, the New York Times reported in The Dutch Prize Their Pedal Power ... [June 20, 2013] that there are so many bicycles in Amsterdam that they are a major problem. They outnumber cars 4 to 1. Finding room to park the bikes is a problem.
Memory refresh: The Dutch are citizens of The Netherlands, which are also known as Holland, although technically Holland is only part of the Netherlands. To the south is Belgium, to the east Germany, and the North Sea separates it from England.
The Netherlands encompasses only 16,000 square miles, but has a population of near 17 million, or over 1000 people per square mile. It is a wealthy country, with the world's 17 largest economy. GDP (gross domestic product) per person is around $46,000.
Rather than focusing on how an "ecological" solution like bicycles can become a problem, start with the more interesting question: how did the Netherlands get so rich?
There is no doubt the modern Dutch are industrious. So are a lot of people's who are nowhere near as rich as the Dutch. What else made the difference?
In the 1400's the Dutch elite was already prospering through trade, capital accumulation, and the creation of a flexible financial system. They were not a prosperous, however, as the elites of Turkey, India, China and the other truly rich nations of that era. They were also ruled by larger nations: by Burgundy until 1477 and then by Spain, followed by an 80-year long war for independence. Despite the war, perhaps partly because of it, traders and capitalists in the Netherlands prospered.
Around the same time the Spanish were exploring and conquering the Americas, the Portuguese opened trade routes around Africa to India and East Asia. The Portuguese were better at pillaging than trading, and relied on Italian banks for financing their tiny trading fleets. The Dutch merchants took a look at that trade, built a much larger fleet (they had much more capital to invest) and went out to trade and plunder.
During the 1600's the Dutch brought the riches (traded and raided) of Asia to Europe. The Dutch established a small empire, but emphasized creating trading centers over large-scale colonization.
Eventually, in the 1700's, with their larger populations and equally piratical appetites the French and English caught up with the Dutch and surpassed them. The Dutch empire stopped expanding and they lost bits and pieces of it to other imperialists. They did maintain the Dutch East Indies and were the only Europeans allowed to trade with Japan until 1854.
The decline in colonizing efforts did not turn the Netherlands into a backwater. The Dutch had large industries including shipbuilding. They had excellent scientists and scholars. But their key edge over rivals was finance capital. Amsterdam was the place to go to borrow money if you could not raise it in your own markets. The Dutch often cooperated with British merchants, but they also financed the American Revolution. As the world changed they moved money around, at interest, and just kept growing wealthier.
The idea that The Netherlands was some peace-loving nation trampled on by Germans in World Wars I and II is only half-true. They were a war-loving nation with a long history of abusing weaker peoples outside of Europe. During World War II the Japanese liberated or granted independence to many nations that had become colonies (including the U.S. colony, the Philippines). Thus the Dutch East Indies became Indonesia. But the Dutch tried to used force to take back the colony between 1945 and 1949.
While they were killing Indonesians, the Dutch also had a baby boom after World War II. Capital was put back to work, so the economy expanded rapidly as well.
In a global context The Netherlands is not all that important today. The number of bicycles in Holland are dwarfed by the number of bicycles in China. But on a per-person basis the Dutch consume bigger pieces of the world's pie than most global inhabitants. They have their claws in industry and agriculture around the globe. There is no ill-intent involved. You are probably reading this using a computer made with semiconductor chips made with vastly expensive machines designed and made in the Netherlands (then shipped to Taiwan).
If you are among the globally well-off, whether in China or the United States or wherever, a similar analysis can be applied to you. You may be smart and work hard, but the real secret of your success is your access to finance capital. Your intentions may be good, but you are destroying the earth.
We need to return the human population of the earth to a sustainable level. I support policies that further that goal, including women's reproductive rights and reworking the tax code to discourage families with more than one child.
Memory refresh: The Dutch are citizens of The Netherlands, which are also known as Holland, although technically Holland is only part of the Netherlands. To the south is Belgium, to the east Germany, and the North Sea separates it from England.
The Netherlands encompasses only 16,000 square miles, but has a population of near 17 million, or over 1000 people per square mile. It is a wealthy country, with the world's 17 largest economy. GDP (gross domestic product) per person is around $46,000.
Rather than focusing on how an "ecological" solution like bicycles can become a problem, start with the more interesting question: how did the Netherlands get so rich?
There is no doubt the modern Dutch are industrious. So are a lot of people's who are nowhere near as rich as the Dutch. What else made the difference?
In the 1400's the Dutch elite was already prospering through trade, capital accumulation, and the creation of a flexible financial system. They were not a prosperous, however, as the elites of Turkey, India, China and the other truly rich nations of that era. They were also ruled by larger nations: by Burgundy until 1477 and then by Spain, followed by an 80-year long war for independence. Despite the war, perhaps partly because of it, traders and capitalists in the Netherlands prospered.
Around the same time the Spanish were exploring and conquering the Americas, the Portuguese opened trade routes around Africa to India and East Asia. The Portuguese were better at pillaging than trading, and relied on Italian banks for financing their tiny trading fleets. The Dutch merchants took a look at that trade, built a much larger fleet (they had much more capital to invest) and went out to trade and plunder.
During the 1600's the Dutch brought the riches (traded and raided) of Asia to Europe. The Dutch established a small empire, but emphasized creating trading centers over large-scale colonization.
Eventually, in the 1700's, with their larger populations and equally piratical appetites the French and English caught up with the Dutch and surpassed them. The Dutch empire stopped expanding and they lost bits and pieces of it to other imperialists. They did maintain the Dutch East Indies and were the only Europeans allowed to trade with Japan until 1854.
The decline in colonizing efforts did not turn the Netherlands into a backwater. The Dutch had large industries including shipbuilding. They had excellent scientists and scholars. But their key edge over rivals was finance capital. Amsterdam was the place to go to borrow money if you could not raise it in your own markets. The Dutch often cooperated with British merchants, but they also financed the American Revolution. As the world changed they moved money around, at interest, and just kept growing wealthier.
The idea that The Netherlands was some peace-loving nation trampled on by Germans in World Wars I and II is only half-true. They were a war-loving nation with a long history of abusing weaker peoples outside of Europe. During World War II the Japanese liberated or granted independence to many nations that had become colonies (including the U.S. colony, the Philippines). Thus the Dutch East Indies became Indonesia. But the Dutch tried to used force to take back the colony between 1945 and 1949.
While they were killing Indonesians, the Dutch also had a baby boom after World War II. Capital was put back to work, so the economy expanded rapidly as well.
In a global context The Netherlands is not all that important today. The number of bicycles in Holland are dwarfed by the number of bicycles in China. But on a per-person basis the Dutch consume bigger pieces of the world's pie than most global inhabitants. They have their claws in industry and agriculture around the globe. There is no ill-intent involved. You are probably reading this using a computer made with semiconductor chips made with vastly expensive machines designed and made in the Netherlands (then shipped to Taiwan).
If you are among the globally well-off, whether in China or the United States or wherever, a similar analysis can be applied to you. You may be smart and work hard, but the real secret of your success is your access to finance capital. Your intentions may be good, but you are destroying the earth.
We need to return the human population of the earth to a sustainable level. I support policies that further that goal, including women's reproductive rights and reworking the tax code to discourage families with more than one child.
Wednesday, June 5, 2013
Estes Kefauver, Organized Crime, and Politics
There's a dirty little secret of the 1950's that neither the Democratic Party propagandists nor the Republican Party propagandists want you to remember. For both parties the 1950s were a shining era. A Republican, Dwight D. Eisenhower, was President for most of the decade, but the New Deal was still largely intact and the Democrats often controlled Congress. Both parties consider the 1950's a time of greatness, when the economy prospered, America ruled most of the world, and people were modest and hard-working.
Estes Kefauver was a Senator from Tennessee and he wanted to be President. He knew a little bit about vice, particularly the games of poker and flirting. Within the Democratic Party he was seen as too conservative by northern liberals and too liberal by southern conservatives.
In 1950 Senator Kevauver decided to have a committee investigate organized crime on a national scale. As far as the mainstream media was concerned, organized crime had been busted up after Prohibition. Sure, illegal gambling and prostitution still existed, and there were some junkies in most major cities who had to get their junk from somewhere, but crime just was not on the agenda.
Despite having a committee loaded with at least two Senators with mob connections and a marginally competent staff, Estes not only found organized criminal organizations in each of 14 cities he looked at, but in each city the political machine, and the police, were closely tied in with the mob.
Television was still fairly new in 1950s, but millions of sets existed and the Senate hearings were televised. It is estimated that 30 million Americans watched New York City crime boss Frank Costello testify, or rather dodge questions. Willie Moretti of New Jersey answered too many questions, and was gunned down in October 1951.
Kefauver exposed but he also protected. He was surprised at the wrath of top elected Democrats from Harry Truman on down. He carefully underplayed the political corruption angle. During the hearings he inexplicably deposited $25,000 in his bank (about $250,000 in today's money) and found another $10,500 to pay off a mortgage. One of his own chief campaign contributors was exponsed as a numbers boss in Knoxville. When hearings in Chicago ignored Democratic Party leaders having become millionaires in public offices having only small salaries, it was rumorred that they had a picture of him doing a Chicago prostitute.
All lines of inquiry seemed to lead in one direction: Las Vegas. In November 1950 the Kefauver Committee arrived in Los Vegas. The nation was newly at war in Korea and the Repubicans had just picked up five seats in the U.S. Senate (one was Richard Nixon) and twenty-eight in the House of Representatives. Kefauver was blamed by Democratic Party leaders for the defeat. Then the hand-selected mob frontmen, casino owners and public officials alike, denied knowing anything about organized crime or even the amount of money skimmed out of the casinos' takes before accounting was done and taxes paid.
Kefauver drew no conclusions from the testimony in Las Vegas. He had been defeated.
Today only students of organized crime read the old Kefauver report. That generation of top mobsters is dead. The political machines are less corrupt in some places, more corrupt in others, and the widespread legalization of gambling has. It is no accident that Barack Obama has happily focused on radical Islam rather than on organized crime, since he is the packaged product of the Chicago political machine. He has continued to support the anti-marijuana laws despite overwhelming grassroots support for legalization because he is protecting the black market profits of his allies.
You can read the Committe report at: American MAFIA, Kefauver Committee Final Report.
While unpopular with elected Democrats, Estes Kefauver was popular with voters. In the 1952 New Hamphire Primary he defeated President Truman, who then dropped out of the race. Kefauver won 12 of 15 primaries, but back then delegates to national conventions were mainly chosen by party machines. The same mob-ridden machines that Kefauver exposed. Adlai Stevenson, another mob-friendly but liberal Illinois politician, got the nomination. In the end the Republican Dwight ("Ike") Eisenhower won the Presidency. In 1956 Kefauver stomped Stevenson in the primaries at first, but later Stevenson, awash in campaign donations, won Oregon, Florida and California. Stevenson was nominated, and Ike was re-elected.
Kefauver died in 1963. No major, nationwide, public investigation into the links between organized criminal activity and politics has taken place since 1950.
This essay is largely based on Chapters 6 and 7 of The Money and the Power
by Sally Denton and Roger Morris. Also David Halberstam's The Fifties
.
Estes Kefauver was a Senator from Tennessee and he wanted to be President. He knew a little bit about vice, particularly the games of poker and flirting. Within the Democratic Party he was seen as too conservative by northern liberals and too liberal by southern conservatives.
In 1950 Senator Kevauver decided to have a committee investigate organized crime on a national scale. As far as the mainstream media was concerned, organized crime had been busted up after Prohibition. Sure, illegal gambling and prostitution still existed, and there were some junkies in most major cities who had to get their junk from somewhere, but crime just was not on the agenda.
Despite having a committee loaded with at least two Senators with mob connections and a marginally competent staff, Estes not only found organized criminal organizations in each of 14 cities he looked at, but in each city the political machine, and the police, were closely tied in with the mob.
Television was still fairly new in 1950s, but millions of sets existed and the Senate hearings were televised. It is estimated that 30 million Americans watched New York City crime boss Frank Costello testify, or rather dodge questions. Willie Moretti of New Jersey answered too many questions, and was gunned down in October 1951.
Kefauver exposed but he also protected. He was surprised at the wrath of top elected Democrats from Harry Truman on down. He carefully underplayed the political corruption angle. During the hearings he inexplicably deposited $25,000 in his bank (about $250,000 in today's money) and found another $10,500 to pay off a mortgage. One of his own chief campaign contributors was exponsed as a numbers boss in Knoxville. When hearings in Chicago ignored Democratic Party leaders having become millionaires in public offices having only small salaries, it was rumorred that they had a picture of him doing a Chicago prostitute.
All lines of inquiry seemed to lead in one direction: Las Vegas. In November 1950 the Kefauver Committee arrived in Los Vegas. The nation was newly at war in Korea and the Repubicans had just picked up five seats in the U.S. Senate (one was Richard Nixon) and twenty-eight in the House of Representatives. Kefauver was blamed by Democratic Party leaders for the defeat. Then the hand-selected mob frontmen, casino owners and public officials alike, denied knowing anything about organized crime or even the amount of money skimmed out of the casinos' takes before accounting was done and taxes paid.
Kefauver drew no conclusions from the testimony in Las Vegas. He had been defeated.
Today only students of organized crime read the old Kefauver report. That generation of top mobsters is dead. The political machines are less corrupt in some places, more corrupt in others, and the widespread legalization of gambling has. It is no accident that Barack Obama has happily focused on radical Islam rather than on organized crime, since he is the packaged product of the Chicago political machine. He has continued to support the anti-marijuana laws despite overwhelming grassroots support for legalization because he is protecting the black market profits of his allies.
You can read the Committe report at: American MAFIA, Kefauver Committee Final Report.
While unpopular with elected Democrats, Estes Kefauver was popular with voters. In the 1952 New Hamphire Primary he defeated President Truman, who then dropped out of the race. Kefauver won 12 of 15 primaries, but back then delegates to national conventions were mainly chosen by party machines. The same mob-ridden machines that Kefauver exposed. Adlai Stevenson, another mob-friendly but liberal Illinois politician, got the nomination. In the end the Republican Dwight ("Ike") Eisenhower won the Presidency. In 1956 Kefauver stomped Stevenson in the primaries at first, but later Stevenson, awash in campaign donations, won Oregon, Florida and California. Stevenson was nominated, and Ike was re-elected.
Kefauver died in 1963. No major, nationwide, public investigation into the links between organized criminal activity and politics has taken place since 1950.
This essay is largely based on Chapters 6 and 7 of The Money and the Power
by Sally Denton and Roger Morris. Also David Halberstam's The Fifties.
The Accounting System #11: The Great Unraveling of 1930
previous: #10, The Federal Reserve and Accounting Money
In short, in 1930 the economic system unraveled because of the way it was built. The previous upward spiral of increasing economic activity was enabled by the ability of the banking system to expand both deposits and loans. Over time, however, many people had withdrawn deposits from banks to buy stocks, while others took loans from banks that were used to buy stocks. When stock prices started dropping (because enough people had realized it was a fool's game), people could no longer easily take money out of the market like they could take it out of a bank deposit. For loans to be repaid more stocks needed to be sold, and when stocks became relatively worthless, deposits had to be drained to make loan payments or for ordinary expenses. Loans and deposits, accounting money, disappeared rapidly, even when there was plenty of cash to facilitate cash transactions.
At the end stage banks could not collect on loans (because so many people had lost their jobs), and so had to use reserves to pay depositors who wanted to make withdrawals. When reserves were gone, the accounting rules said the banks had to close. There was no deposit insurance, so accounting money in the form of deposits, simply disappeared. Suddenly self-accounting with cash seemed like a better idea than bank accounting with numbers in ledgers.
We are largely trained to forget that there was one large, industrialized nation whose economy did not collapse in the 1930s. In the U.S.S.R. (essentially Russia) there was no stock market to collapse, and state banks and most of the economy were all government-owned. The government had total control of the accounting system. Despite the other defects (even atrocities) of the Communist system, there was a realization that money, the economy, and accounting were all human creations, and it was possible to run a command economy with some success (although command economies also have very high failure rates. It mostly depends on the commanders).
The New Deal can be fairly said to replace the free market economy of the United States by a command economy supervised by the government. In the end it took the increased demand created by World War II to get the American economy on its feet, and the legacy of the New Deal was not a command economy but a re-engineered free market economy. Some of the changes had little to do with the accounting system, but two made noteworthy changes.
While most of the bubble in stock market prices was simple human folly, there was also fraudulent accounting at some corporations that was used to jack up stock prices. The SEC (Securities and Exchange Commission) was created in 1934 to attempt to insure that investments traded in public markets were neither fraudulent or manipulated. Among other reforms, the accounting of individual listed corporations now had to be audited by a (hopefully) independent auditor, and reported to all investors at least quarterly in a standardized format. Their accountants and their auditors were giving accounting rules they had to follow, Generally Accepted Accounting Principles (GAAP). This standardization of the accounting system meant that any person, not just accountants, could learn to read and understand any American business accounting statement.
The creation of the Social Security system would have long-term repercussions far beyond what was originally envisioned. Because many Americans were alive who had the same name, each person who paid into or received money from the system was given a Social Security Number. Later this number would come to be used as a national, individual identity number, thus vastly enlarging the domain of The Accounting System.
Next: #12 Electronic Money Takes Over
[The Accounting System, Your Fate is in the Cloud, is a work in progress by William P. Meyers, ©2013]
In short, in 1930 the economic system unraveled because of the way it was built. The previous upward spiral of increasing economic activity was enabled by the ability of the banking system to expand both deposits and loans. Over time, however, many people had withdrawn deposits from banks to buy stocks, while others took loans from banks that were used to buy stocks. When stock prices started dropping (because enough people had realized it was a fool's game), people could no longer easily take money out of the market like they could take it out of a bank deposit. For loans to be repaid more stocks needed to be sold, and when stocks became relatively worthless, deposits had to be drained to make loan payments or for ordinary expenses. Loans and deposits, accounting money, disappeared rapidly, even when there was plenty of cash to facilitate cash transactions.
At the end stage banks could not collect on loans (because so many people had lost their jobs), and so had to use reserves to pay depositors who wanted to make withdrawals. When reserves were gone, the accounting rules said the banks had to close. There was no deposit insurance, so accounting money in the form of deposits, simply disappeared. Suddenly self-accounting with cash seemed like a better idea than bank accounting with numbers in ledgers.
We are largely trained to forget that there was one large, industrialized nation whose economy did not collapse in the 1930s. In the U.S.S.R. (essentially Russia) there was no stock market to collapse, and state banks and most of the economy were all government-owned. The government had total control of the accounting system. Despite the other defects (even atrocities) of the Communist system, there was a realization that money, the economy, and accounting were all human creations, and it was possible to run a command economy with some success (although command economies also have very high failure rates. It mostly depends on the commanders).
The New Deal can be fairly said to replace the free market economy of the United States by a command economy supervised by the government. In the end it took the increased demand created by World War II to get the American economy on its feet, and the legacy of the New Deal was not a command economy but a re-engineered free market economy. Some of the changes had little to do with the accounting system, but two made noteworthy changes.
While most of the bubble in stock market prices was simple human folly, there was also fraudulent accounting at some corporations that was used to jack up stock prices. The SEC (Securities and Exchange Commission) was created in 1934 to attempt to insure that investments traded in public markets were neither fraudulent or manipulated. Among other reforms, the accounting of individual listed corporations now had to be audited by a (hopefully) independent auditor, and reported to all investors at least quarterly in a standardized format. Their accountants and their auditors were giving accounting rules they had to follow, Generally Accepted Accounting Principles (GAAP). This standardization of the accounting system meant that any person, not just accountants, could learn to read and understand any American business accounting statement.
The creation of the Social Security system would have long-term repercussions far beyond what was originally envisioned. Because many Americans were alive who had the same name, each person who paid into or received money from the system was given a Social Security Number. Later this number would come to be used as a national, individual identity number, thus vastly enlarging the domain of The Accounting System.
Next: #12 Electronic Money Takes Over
[The Accounting System, Your Fate is in the Cloud, is a work in progress by William P. Meyers, ©2013]
Sunday, June 2, 2013
Late Stage Imperialism, Class, and America's Future
"Like a poor beggar, raileth on the rich.
Well, whiles I am a beggar, I will rail
And there is no sin but to be rich;"
—William Shakespeare, King John, Act II
I was an infant in the late 1950's, and in the early 60's I was sure the world was about to end. I lived in Florida during the Cuban Missile Crisis. If that were not bad enough, I was still a pre-teen when I heard predictions that even if there were no nuclear war, there would be an ecological crisis that would surely destroy civilization.
Half a century later the nuclear weapons are still at the ready. The world's population has climbed, species have disappeared, and global warming has been added to the potential ingredients for catastrophe.
In the seventies I hoped for a political revolution in the U.S. with the working class coming out on top, but not led by a dictator. When I graduated from college the world was deep in recession. Jobs were hard to come by, so I took ones that no one else in their right mind wanted. I sure as hell would rather have starved as a bum than move back in with my parents. But even at minimum wage, even at part time, I could get by on my own, often living in a group house with a bunch of roommates.
For a few years it has been obvious that the U.S. economy is in trouble, and with a kind of trouble that no political party wants to admit to. The trouble is in history itself, and history cannot be changed, nor can politicians or most citizens face it honestly. The trouble is complex, but not so complex that it cannot be outlined in this essay. The solutions offered by the main political parties (and the wings within these parties) are not going to work, because they refuse to admit to the essential features of the problems facing us. I include here the Democratic Party, Republican Party, Green Party, and Libertarian Party.
Let's just suppose you want to know what is going on, even though you won't be able to do anything about it, because 300 million of your fellow American citizens are wandering around a circus of mirrors, wondering why good times are getting scarcer no matter how hard they pray to Jesus, Keynes, Ayn Rand or Rachel Carson.
Most Americans today think Brits are a cutely accented people with a very sweet Queen leading them in High Tea. But from roughly 1500 until shortly after World War II the Brits ran the largest, most brutal, most barbaric empire in global history. Which brings us to Franklin Delano Roosevelt, or FDR.
Imbued with schooling in the Latin classics, even before the American Revolution some members of our ruling class longed to be the center of a new, global empire. FDR today is beloved by Democrats and hated by Republicans for New Deal economic policies and bureaucracies that never die, but that was and is a side show. FDR's true importance was that he fulfilled the imperialist dreams of the founding fathers.
FDR was quite clever. He had learned much from his uncle, former President Teddy Roosevelt, and from the architect of modern American and global racism, President Woodrow Wilson. FDR served as Wilson's Assistant Secretary of the Navy (1913 to 1920), which traditionally was the front-line post for U.S. imperialist plotting. From uncle Teddy he learned how to prepare to take advantage of a situation, and from uncle Woodrow he learned how to wait until other imperialist powers were exhausted fighting each other before committing American troops.
Hence, Britain, Germany, and Russia bombed each other's factories pretty well before Japan finally recognized a war that already existed (American soldiers were fighting Japanese soldiers in China before Pearl Harbor) and forced FDR's hand. FDR had already been building a vast armada to invade China and Japan, but much of it was sunk at the Battle of Pearl Harbor. With ten times the industrial capacity of Japan and with Communist Russia having already stopped the German advance, it was mainly a matter of time and willingness to spill blood to capture Germany, China and Japan before the Red Army could.
Russia did pretty well during World War II, but the British Empire collapsed. So did the Dutch Empire (did you even know the Netherlands had a empire, also know for its cruelty to natives?) and the French Empire. But in all the world only one nation had not lost a single factory to bombs. It was the United States of America. Thank you FDR.
In 1946 everyone wanted American food and other aid, and so no one could afford to set protective tariff barriers against U.S. goods. U.S. factories and corporations went wild. We took over French and British colonial puppet governments by offering them higher bribes than their old oppressors could. We lost China and Eastern Europe to communism, but by 1950 the effective American Empire was larger than the British Empire had ever been.
Working class Americans benefited. Corporations could be generous to newly-recognized unions because profits were flooding in from all over the world. Still remembering the Depression, workers and business people alike worked hard to push Prosperity to greater heights. Almost everyone (except for some oppressed minority groups) could own a suburban home, a car or two, a television, telephone, stereo, lawnmower, and the usual furnishings. College education became the rule, not the exception.
The Unions attributed prosperity to their forcing the Bosses to pay higher wages; they did not want to look at imperialism. The Business guys (this was pre-feminism) attributed prosperity to the Free Markets and their own cleverness. They did not want to look at imperialism. The Democratic Party and Republican Parties did not want to look at imperialism's effects on the American economy, they just wanted credit for prosperity. Within the U.S. everyone could agree that U.S. global dominance was a kind, protective sort of dominance. Our dictators were good men who were protecting their people from the horrors of Communism. We sent aid packages to show our benevolence. Anything said to the contrary was Communist propaganda.
The only people who talked about imperialism were the American Communists. Until around 1960 they were almost all in the Communist Party U.S.A., a pro-Stalin organization, and few people listened to them. In the 1960's a bunch of smaller communist, anarchist, and socialist groups thrived for a while, but they mostly collapsed after the end of the Vietnam War, and with them any analysis of imperialism.
Meanwhile, due to improvements in medicine and agricultural science, the human population of the world mounted rapidly. It was great for business. Each newly added human was a consumer and potential worker.
New trends emerged between 1970 and 2010 that gradually changed the global balance of power. The U.S., although defeated in Vietnam, maintained much of its economic empire and military clout, but was unable and uninterested in overtly conquering the entire world even after the collapse of the U.S.S.R. and its allied regimes. But the most important trend was re-industrialization both inside and outside the Empire, and a coincidental relative de-industrialization of the U.S. It was simple: producing profits became easier outside the U.S. than within as each decade passed.
Global industrialism, including mechanization of agriculture, has led to the degradation of the environment almost everywhere, but most notably in China. With China now trying hard to clean up its own environment, and labor costs rising, the rapid expansion of the Chinese economy is already slowing down. Other nations will absorb most new factories that are built to serve the global economy.
Neither the Democratic Party nor the Republican Party is willing to tax our non-American subjects to pay for the costs of imperialism. The U.S. federal budget is now in perpetual deficit, yet domestic government services are rapidly disintegrating. Almost all union workers now are government employees. Even the agricultural sector is under constant attack by drought, roundup-ready weeds, global warming, and symptoms like honeybee colony collapse.
The problem is not just that the Democrats and Republicans are deadlocked in Congress, resulting in a do-nothing government. The problem is that even if one party had its way, its solutions would not work. None of the solutions on the table are designed to work to revive a late-stage imperialist economy. Just like nothing the British did could revive their economy as their empire collapsed between 1945 and 1960. The world went on, and eventually the British adjusted, but they were no longer the world's richest rich people with the world's best paid workers.
The first real decision to be made is whether to maintain the empire, downsize it, or abandon it. From a purely economic viewpoint, each option has its merits. Maintaining the empire would work if we admitted we run an empire and imposed substantial taxes on our foreign subjects. Downsizing would work if we could shuck the most expensive and indefensible subjects, but even with a smaller military we would still need impose taxes. If nations rebelled against the taxes, we would probably have to abandon them.
Abandoning the entire empire would likely work out best in the long run, but it also abandons the easy fix of taxing our subjects. Today we still have very significant industrial, agricultural, and educational capacity in the 50 states (I am assuming Puerto Rican independence is an economic no-brainer). As bad as our natural environment is, it is in better shape than that of many other nations. Yet in international competition we have few advantages because of the stupidity of our business class and legacy costs of imperialism (the national debt).
We would still need to either decide on a national course. How can every person capable of work be given a productive role in a post-imperialist scenario? I don't think the welfare-state model, in which more of the pie is doled out to the indolent, can lead to anything but further decline. The goal of full and productive (as opposed to make-work) employment could be achieved within a democratic and largely free-market framework if the government would show a bit of backbone when necessary. Local, State, and federal government should be free to set up businesses as needed to address needs underserved by existing businesses. After an incubation period the ownership of such businesses should be transferred to the employees of the businesses.
It is absolutely essential, however, that the U.S. reduce its population. There cannot be prosperity for all on a limited supply of natural resources when the population keeps climbing, or even at the current level. This policy would doubtless include economic guidance. I would advocate free public education only for 2 children per family, and no tax deductions beyond the 2nd child either. If only a few people have more than 2 children, enough women will have no or only one children, and the population should trend to long-term sustainable levels.
Of course, I know this won't happen. The working class of the U.S. is as infected with fantasies as the capitalist class and the middle class. The leaders of the working class, middle class, and capitalist class are clueless. They were deceived by the easy fruits of imperialism. Those fruits are disappearing. Instead of waking up and learning how to plant an orchard, Americans demand that the fruit just keep appearing on the table. And politicians give them what they demand: pipe dreams.
Well, whiles I am a beggar, I will rail
And there is no sin but to be rich;"
—William Shakespeare, King John, Act II
I was an infant in the late 1950's, and in the early 60's I was sure the world was about to end. I lived in Florida during the Cuban Missile Crisis. If that were not bad enough, I was still a pre-teen when I heard predictions that even if there were no nuclear war, there would be an ecological crisis that would surely destroy civilization.
Half a century later the nuclear weapons are still at the ready. The world's population has climbed, species have disappeared, and global warming has been added to the potential ingredients for catastrophe.
In the seventies I hoped for a political revolution in the U.S. with the working class coming out on top, but not led by a dictator. When I graduated from college the world was deep in recession. Jobs were hard to come by, so I took ones that no one else in their right mind wanted. I sure as hell would rather have starved as a bum than move back in with my parents. But even at minimum wage, even at part time, I could get by on my own, often living in a group house with a bunch of roommates.
For a few years it has been obvious that the U.S. economy is in trouble, and with a kind of trouble that no political party wants to admit to. The trouble is in history itself, and history cannot be changed, nor can politicians or most citizens face it honestly. The trouble is complex, but not so complex that it cannot be outlined in this essay. The solutions offered by the main political parties (and the wings within these parties) are not going to work, because they refuse to admit to the essential features of the problems facing us. I include here the Democratic Party, Republican Party, Green Party, and Libertarian Party.
Let's just suppose you want to know what is going on, even though you won't be able to do anything about it, because 300 million of your fellow American citizens are wandering around a circus of mirrors, wondering why good times are getting scarcer no matter how hard they pray to Jesus, Keynes, Ayn Rand or Rachel Carson.
Most Americans today think Brits are a cutely accented people with a very sweet Queen leading them in High Tea. But from roughly 1500 until shortly after World War II the Brits ran the largest, most brutal, most barbaric empire in global history. Which brings us to Franklin Delano Roosevelt, or FDR.
Imbued with schooling in the Latin classics, even before the American Revolution some members of our ruling class longed to be the center of a new, global empire. FDR today is beloved by Democrats and hated by Republicans for New Deal economic policies and bureaucracies that never die, but that was and is a side show. FDR's true importance was that he fulfilled the imperialist dreams of the founding fathers.
FDR was quite clever. He had learned much from his uncle, former President Teddy Roosevelt, and from the architect of modern American and global racism, President Woodrow Wilson. FDR served as Wilson's Assistant Secretary of the Navy (1913 to 1920), which traditionally was the front-line post for U.S. imperialist plotting. From uncle Teddy he learned how to prepare to take advantage of a situation, and from uncle Woodrow he learned how to wait until other imperialist powers were exhausted fighting each other before committing American troops.
Hence, Britain, Germany, and Russia bombed each other's factories pretty well before Japan finally recognized a war that already existed (American soldiers were fighting Japanese soldiers in China before Pearl Harbor) and forced FDR's hand. FDR had already been building a vast armada to invade China and Japan, but much of it was sunk at the Battle of Pearl Harbor. With ten times the industrial capacity of Japan and with Communist Russia having already stopped the German advance, it was mainly a matter of time and willingness to spill blood to capture Germany, China and Japan before the Red Army could.
Russia did pretty well during World War II, but the British Empire collapsed. So did the Dutch Empire (did you even know the Netherlands had a empire, also know for its cruelty to natives?) and the French Empire. But in all the world only one nation had not lost a single factory to bombs. It was the United States of America. Thank you FDR.
In 1946 everyone wanted American food and other aid, and so no one could afford to set protective tariff barriers against U.S. goods. U.S. factories and corporations went wild. We took over French and British colonial puppet governments by offering them higher bribes than their old oppressors could. We lost China and Eastern Europe to communism, but by 1950 the effective American Empire was larger than the British Empire had ever been.
Working class Americans benefited. Corporations could be generous to newly-recognized unions because profits were flooding in from all over the world. Still remembering the Depression, workers and business people alike worked hard to push Prosperity to greater heights. Almost everyone (except for some oppressed minority groups) could own a suburban home, a car or two, a television, telephone, stereo, lawnmower, and the usual furnishings. College education became the rule, not the exception.
The Unions attributed prosperity to their forcing the Bosses to pay higher wages; they did not want to look at imperialism. The Business guys (this was pre-feminism) attributed prosperity to the Free Markets and their own cleverness. They did not want to look at imperialism. The Democratic Party and Republican Parties did not want to look at imperialism's effects on the American economy, they just wanted credit for prosperity. Within the U.S. everyone could agree that U.S. global dominance was a kind, protective sort of dominance. Our dictators were good men who were protecting their people from the horrors of Communism. We sent aid packages to show our benevolence. Anything said to the contrary was Communist propaganda.
The only people who talked about imperialism were the American Communists. Until around 1960 they were almost all in the Communist Party U.S.A., a pro-Stalin organization, and few people listened to them. In the 1960's a bunch of smaller communist, anarchist, and socialist groups thrived for a while, but they mostly collapsed after the end of the Vietnam War, and with them any analysis of imperialism.
Meanwhile, due to improvements in medicine and agricultural science, the human population of the world mounted rapidly. It was great for business. Each newly added human was a consumer and potential worker.
New trends emerged between 1970 and 2010 that gradually changed the global balance of power. The U.S., although defeated in Vietnam, maintained much of its economic empire and military clout, but was unable and uninterested in overtly conquering the entire world even after the collapse of the U.S.S.R. and its allied regimes. But the most important trend was re-industrialization both inside and outside the Empire, and a coincidental relative de-industrialization of the U.S. It was simple: producing profits became easier outside the U.S. than within as each decade passed.
Global industrialism, including mechanization of agriculture, has led to the degradation of the environment almost everywhere, but most notably in China. With China now trying hard to clean up its own environment, and labor costs rising, the rapid expansion of the Chinese economy is already slowing down. Other nations will absorb most new factories that are built to serve the global economy.
Neither the Democratic Party nor the Republican Party is willing to tax our non-American subjects to pay for the costs of imperialism. The U.S. federal budget is now in perpetual deficit, yet domestic government services are rapidly disintegrating. Almost all union workers now are government employees. Even the agricultural sector is under constant attack by drought, roundup-ready weeds, global warming, and symptoms like honeybee colony collapse.
The problem is not just that the Democrats and Republicans are deadlocked in Congress, resulting in a do-nothing government. The problem is that even if one party had its way, its solutions would not work. None of the solutions on the table are designed to work to revive a late-stage imperialist economy. Just like nothing the British did could revive their economy as their empire collapsed between 1945 and 1960. The world went on, and eventually the British adjusted, but they were no longer the world's richest rich people with the world's best paid workers.
The first real decision to be made is whether to maintain the empire, downsize it, or abandon it. From a purely economic viewpoint, each option has its merits. Maintaining the empire would work if we admitted we run an empire and imposed substantial taxes on our foreign subjects. Downsizing would work if we could shuck the most expensive and indefensible subjects, but even with a smaller military we would still need impose taxes. If nations rebelled against the taxes, we would probably have to abandon them.
Abandoning the entire empire would likely work out best in the long run, but it also abandons the easy fix of taxing our subjects. Today we still have very significant industrial, agricultural, and educational capacity in the 50 states (I am assuming Puerto Rican independence is an economic no-brainer). As bad as our natural environment is, it is in better shape than that of many other nations. Yet in international competition we have few advantages because of the stupidity of our business class and legacy costs of imperialism (the national debt).
We would still need to either decide on a national course. How can every person capable of work be given a productive role in a post-imperialist scenario? I don't think the welfare-state model, in which more of the pie is doled out to the indolent, can lead to anything but further decline. The goal of full and productive (as opposed to make-work) employment could be achieved within a democratic and largely free-market framework if the government would show a bit of backbone when necessary. Local, State, and federal government should be free to set up businesses as needed to address needs underserved by existing businesses. After an incubation period the ownership of such businesses should be transferred to the employees of the businesses.
It is absolutely essential, however, that the U.S. reduce its population. There cannot be prosperity for all on a limited supply of natural resources when the population keeps climbing, or even at the current level. This policy would doubtless include economic guidance. I would advocate free public education only for 2 children per family, and no tax deductions beyond the 2nd child either. If only a few people have more than 2 children, enough women will have no or only one children, and the population should trend to long-term sustainable levels.
Of course, I know this won't happen. The working class of the U.S. is as infected with fantasies as the capitalist class and the middle class. The leaders of the working class, middle class, and capitalist class are clueless. They were deceived by the easy fruits of imperialism. Those fruits are disappearing. Instead of waking up and learning how to plant an orchard, Americans demand that the fruit just keep appearing on the table. And politicians give them what they demand: pipe dreams.
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