Tuesday, February 15, 2011

Inequality Causes Crashes and upheavals...

Inequality, Fraud, Wars and utter corruption Cause Crashes and severe upheavals...and more !!!

If you think that only liberals are concerned about inequality....,

In his definitive study of the Great Depression, The Great Crash, 1929, John Kenneth Galbraith wrote:

There seems little question that in 1929, modifying a famous cliché, the economy was fundamentally unsound. This is a circumstance of first-rate importance. Many things were wrong, but five weaknesses seem to have had an especially intimate bearing on the ensuing disaster. They are:

(1) The bad distribution of income. In 1929 the rich were indubitable rich. The figures are not entirely satisfactory, but it seems certain that the five per cent of the population with the highest incomes in that year received approximately one-third of all income. The proportion of personal income received in the form of interest, dividends, and rent – the income, broadly speaking, of the well-to-do – was about twice as great as in the years following the Second World War.

This highly unequal income distribution meant that the economy was dependent on a high level of investment or a high level of luxury consumer spending or both. The rich cannot buy great quantities of bread. If they are to dispose of what they receive it must be on luxuries or by way of investment in new plants and new projects. Both investment and luxury spending are subject, inevitably, to more erratic influences and to wider fluctuations than the bread and rent outlays of the $25-week workman. This high bracket spending and investment was especially susceptible, one may assume, to the crushing news from the stock market in October 1929.

Galbraith wrote that in 1954.

Marriner S. Eccles - Federal Reserve chairman from 1934 to 1948 - made a similar point in his 1951 book Beckoning Frontiers:

As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

Numerous prominent economists in government and academia have since agreed that large inequalities can cause - or at least contribute to - financial crises, including:

Paul Krugman and Simon Johnson are also open to the possibility..

In addition, a large and healthy middle class has long been understood to lead to political stability. But America's middle class is being decimated.

Given that revolts are partly being waged in a number of Arabic countries because of inequality, and that inequality in America is worse than Egypt, Tunisia or Yemen, this is a cause for concern. (As NPR notes, inequality in America is now also worse than in many Latin America banana republics.)

As Robert Shiller put it recently:

I think inequality is a huge emerging problem, and that our society has to think about dealing with it in a constructive and real way – not through ‘Let them eat credit,’ [a reference to the "let them eat cake" statement of the soon-to-be-deposed French aristocracy] not through wishful thinking. We have to understand how we get inequality and what we can do about it.

Shiller said in 2009:
To me, I would hope that this would spur public discussion about the structural problem that inequality, economic inequality, has been worsening in the United States and in other countries for 30 years. And it's gotten really -- especially at the high end -- it's gotten really off.

And it's not like we want to level income. I'm not saying spread the wealth around, which got Obama in trouble. But I think, I would hope that this would be a time for a national consideration about policies that would focus on restraining any possible further increases in inequality.

This, I think, is potentially the big problem which is bigger than this whole financial crisis.


If these trends that we've seen for 30 years now in inequality continue for another 30 years, we're going to look like -- it's going to create resentment and hostility. It's not a country that -- we could turn into a country that even the rich would rather not be in.

Renowned behavioral economist Dan Ariely (Duke University) and Michael I. Norton (Harvard Business School) recently demonstrated that everyone - including conservatives - thinks there should be more equality.

Their study found:

Respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution. Most important from a policy perspective, we observed a surprising level of consensus: all demographic groups—even those not usually associated with wealth redistribution such as Republicans and the wealthy—desired a more equal distribution of wealth than the status quo.
Ariely comments:
Taken as a whole, the results suggest to us that there is much more agreement than disagreement about wealth inequality. Across differences in wealth, income, education, political affiliation and fiscal conservatism, the vast majority of people (89%) preferred distributions of wealth significantly more equal than the current wealth spread in the United States. In fact, only 12 people out of 849 favored the US distribution. The media portrays huge policy divisions about redistribution and inequality – no doubt differences in ideology exist, but we think there may be more of a consensus on what's fair than people realize.
How could the media portrayal regarding this issue be so wrong?

Well, for one thing, as a study the Pew Research Center found, the corporate media tends to take Wall Street's view on economics....
The financial sector has been by far the biggest beneficiary of government policies over the past 10 years or so. So the media tends to defer to Wall Street's own arguments against equality.

Many conservatives are, of course, opposed to a redistribution of wealth via raising taxes on the wealthy. The conservative argument is straightforward: people who have worked harder should be able to earn more money by the sweat of their brow. If we tax the wealthy in order to redistribute wealth to help the poor, then no one will be motivated to work hard, as the wealthy will be penalized and the poor can sit back and take hand-outs.

Whether you agree with that argument or not, everyone agrees that a system which uses the power of the state to reward the fraud and gambling of the largest banks and biggest corporations through socialism for the rich and capitalism for everyone else is not free market capitalism, and is downright anti-American.

The bottom line - as conservative blogger Michael Rivero writes - is that too much inequality kills the market:
For an economic system to be a system, money must flow freely at all levels and in all corners. When those in charge of the system decide to so order the mechanisms of the financial sector to drive the money into a single huge pile, the system cease to be a system and a crash becomes inevitable. One might as well force all the blood in your body to stay in the brain. The end result is the same; death for the body....

Go Global with Democracy, Freedom, Independence and Liberty!
From the genocide of Native Americans, to Dresden and Hiroshima, to Palestine, to Vietnam, to Fallujah, Guantanamo, Abu Ghraib, to the successive US/Israeli wars on Lebanon since 48..., to the Infamous White House Murder INC, in the Levant--it would all suggest we've had/have US leaders capable of horrendous crimes and who were little bothered by twinges of conscience.... Meanwhile, the far right and others..., with no trace of irony, speak about "American exceptionalism..."
Democracy, government of, for and by the People- one citizen one vote- is quite opposite of corporate structure that is an authoritarian dictatorship with the single mindedness of making profit in the most efficient manner.

American multinational corporations that grew from our generous and benevolent American Democracy are ungrateful and undemocratic by nature and the People’s interest has always stood in their way from complete rule with utter corruption.... Look at the 30 year anti- democracy movement in Education, government, and the main stream media that has resulted in the erosion of our Bill of Rights and our Constitution...

A host of first string, second string and third string corporate propagandists like Rush Limbaugh, Franchie, Glen Beck, Shawn Hannity, Bill O'reily and even Alex Jones and others, preach anti-democracy venom 24 hours a day to uneducated Americans thereby co-opting any grass root democracy movement...

None of these propagandists will answer the basic Civics question: What form of government are they in favor of to replace our Democracy? The people are so puzzled up with bull-shit from the propagandists they do not even know what a Democracy stands for!

The corporate empire spreading Democracy, Independence, Liberty and Freedom is not on the agenda or in their best interest, although they put on a charade to make it appear that they are in favor of Democracy.
The American multinational corporate empire structure matches perfectly with Communist China’s government corporate structure.... And so be it, the perfect marriage from hell has been consummated and their offspring is World Totalitarian Rule from the boardroom...
'One of the problems and barriers to growth is when you have both the political and economic monopolization of power in a single set of hands.'

These deep thinkers are on the right track but they really need to start looking in the mirror more often.

New Political Awakening = self determination...

Islam and Christianity are evangelistic religions always in conflict that around 1600 settled into an uneasy lines of separation south of Europe, up through the Balkans, across the Hindu Kush and in Asia across the Southern Philippine Islands. In response to this conflict, the Reformation in Europe led to capitalism, science and secularism (i.e. Thomas Jefferson). All tried to understand the world as it really was. This gave a profound advantage to the British. The sun never set on their Empire and their language. After WWII, America tried to take up their mantle. It did a passable job up to 1989. Then in a profound tragedy, as a result of the Eastern European revolution and the collapse of the Soviet Union, the neo-liberals seized power and the United States and the UK made the Great Jump back to Robber Barons, Colonial Wars and the 19th Century.

Four decades ago in SE Asia, there was a profound difference in outlook and temperament between native speakers and those who learned English in school and could communicate clearly in English . There are Islamists who never learned English. They have power locally, maybe nationally, but never internationally. This is why our colonial war against the Taliban is so stupid. Then, there are the English speakers that turn into CIA/MOSSAD Patsy Islamists..... a La false flag attacks of 9/11....

In the 21st Century there are the new secular international English speakers. Since the US and UK have jumped back a century, and are cutting government spending in face of utter greed/corruption, criminality and the Great Recession and continuing the forever wars, there will be millions and millions more unemployed in America, EU, Ireland and Great Britain. They will learn from the secular Egyptians through the internet, facebook and tweeter. The next Western revolutionary generation will take up the Egyptian cry; ‘We are prepared to die because we are already dead.’

We are all Tunisians, Egyptians and Libyans now....???

Moreover, the austerity measures which governments worldwide are imposing to try to plug their gaping deficits (created by throwing trillions at their banks) are causing people world-wide to push back.

of that 2008 year:

Numerous high-level officials and experts warn that the economic crisis could lead to unrest world-wide - even in developed countries:

  • Today, Moody's warned that future tax rises and spending cuts could trigger social unrest in a range of countries from the developing to the developed world, that in the coming years, evidence of social unrest and public tension may become just as important signs of whether a country will be able to adapt as traditional economic metrics, that a fiscal crisis remains a possibility for a leading economy, and that 2010 would be a “tumultuous year for sovereign debt issuers”.
  • The U.S. Army War College warned in 2008 November warned in a monograph [click on Policypointers’ pdf link to see the report] titled “Known Unknowns: Unconventional ‘Strategic Shocks’ in Defense Strategy Development” of crash-induced unrest:
    The military must be prepared, the document warned, for a “violent, strategic dislocation inside the United States,” which could be provoked by “unforeseen economic collapse,” “purposeful domestic resistance,” “pervasive public health emergencies” or “loss of functioning political and legal order.” The “widespread civil violence,” the document said, “would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.” “An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home,” it went on. “Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States. Further, DoD [the Department of Defense] would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance,” the document read.
  • Director of National Intelligence Dennis C. Blair said:
    "The global economic crisis ... already looms as the most serious one in decades, if not in centuries ... Economic crises increase the risk of regime-threatening instability if they are prolonged for a one- or two-year period," said Blair. "And instability can loosen the fragile hold that many developing countries have on law and order, which can spill out in dangerous ways into the international community."***

    "Statistical modeling shows that economic crises increase the risk of regime-threatening instability if they persist over a one-to-two-year period."***

    “The crisis has been ongoing for over a year, and economists are divided over whether and when we could hit bottom. Some even fear that the recession could further deepen and reach the level of the Great Depression. Of course, all of us recall the dramatic political consequences wrought by the economic turmoil of the 1920s and 1930s in Europe, the instability, and high levels of violent extremism.”

    Blair made it clear that - while unrest was currently only happening in Europe - he was worried this could happen within the United States.

    [See also
  • Former national security director Zbigniew Brzezinski warned "there’s going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots."
  • The chairman of the Joint Chiefs of Staff warned the the financial crisis is the highest national security concern for the U.S., and warned that the fallout from the crisis could lead to of "greater instability".
Others warning of crash-induced unrest include:
Unemployment is soaring globally - especially among youth.

And the sense of outrage at the injustice of the rich getting richer while the poor get poorer is also a growing global trend.

Countries worldwide told their people that bailout out the giant banks was necessary to save the economy. But they haven't delivered, and the "Main Streets" of the world have suffered.

As former American senator (and consummate insider) Chris Dodd in 2008:
If it turns out that [the banks] are hoarding, you’ll have a revolution on your hands. People will be so livid and furious that their tax money is going to line their pockets instead of doing the right thing. There will be hell to pay.
Of course, the big banks are hoarding, and refusing to lend to Main Street. In fact, they said that they would. And the same is playing out globally.

As of this month:
Agence France-Press reports today:
The International Monetary Fund stands ready to help riot-torn Egypt rebuild its economy, the IMF chief said Tuesday as he warned governments to tackle unemployment and income inequality or risk war.

No wonder former U.S. National Security Adviser Zbigniew Brzezinski ... warned the Council on Foreign Relations that:

For the first time in human history almost all of humanity is politically activated, politically conscious and politically interactive. There are only a few pockets of humanity left in the remotest corners of the world that are not politically alert and engaged with the political turmoil and stirrings that are so widespread today around the world.


America needs to face squarely a centrally important new global reality: that the world's population is experiencing a political awakening unprecedented in scope and intensity, with the result that the politics of populism are transforming the politics of power. The need to respond to that massive phenomenon poses to the uniquely sovereign America an historic dilemma: What should be the central definition of America's global role?

[T]he central challenge of our time is posed not by global terrorism, but rather by the intensifying turbulence caused by the phenomenon of global political awakening. That awakening is socially massive and politically radicalizing.
It is no overstatement to assert that now in the 21st century the population of much of the developing world is politically stirring and in many places seething with unrest. It is a population acutely conscious of social injustice to an unprecedented degree, and often resentful of its perceived lack of political dignity. The nearly universal access to radio, television and increasingly the Internet is creating a community of shared perceptions and envy that can be galvanized and channeled by demagogic political or religious passions. These energies transcend sovereign borders and pose a challenge both to existing states as well as to the existing global hierarchy, on top of which America still perches.

That turmoil is the product of the political awakening, the fact that today vast masses of the world are not politically neutered, as they have been throughout history. They have political consciousness.


Politically awakened mankind craves political dignity, which democracy can enhance, but political dignity also encompasses ethnic or national self-determination, religious self-definition, and human and social rights, all in a world now acutely aware of economic, racial and ethnic inequities. The quest for political dignity, especially through national self-determination and social transformation, is part of the pulse of self-assertion by the world's underprivileged


We live in an age in which mankind writ large is becoming politically conscious and politically activated to an unprecedented degree, and it is this condition which is producing a great deal of international turmoil.

That turmoil is the product of the political awakening, the fact that today vast masses of the world are not politically neutered, as they have been throughout history. They have political consciousness....
Watch an excerpt:


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