Archive for January, 2017

The second shoe drops

When the Soviet Union collapsed on December 26, 1991 worn out and bankrupt from decades of Cold War and a seemingly endless involvement in Afghanistan, I remember wondering when the other shoe would drop. Tomorrow, January 20, 2017, it will do so.

With the demise of the USSR, Russians experienced the first real taste of democracy in their thousand-year history. But that was short lived as a few people, oligarchs as they were known, became fabulously wealthy privatizing the assets of the state economy, basically looting the bones of the old order. With wealth came political power and the oligarchs conspired to put a compliant former KGB officer, Vladimir Putin, into the position of a modern tsar, an autocrat accountable only to his billionaire patrons.

Meanwhile, in the United States, the election of Ronald Reagan ushered in an era of unprecedented transfer of wealth from ordinary Americans to the very wealthy through tax cuts, massive borrowing, and financial legerdemain. The top 0.1% of Americans cashed in the equity built up in the country over generations through leveraged buyouts and the dismantling of profitable companies. They even stole the equity in the homes of middle and working class Americans by stoking refinance fever leading to a housing bubble that burst leaving the banking class ever wealthier and ordinary people deeply in debt. In 1981, when Reagan took office, the US had nearly the lowest level of wealth inequality in the world; by 2017 we were the third least equal country in the world.

Money, of course, has no patriotic loyalty. American billionaires are no different than Russian ones and they all share the same goal: domination of the world for personal profit. So, it should come as no surprise that Russia’s plutocratic leader would conspire to put into the American presidency someone who shares his avarice and disdain for ordinary citizens. And it should not surprise anyone that US President-elect Donald Trump is eager to dismantle NATO, the only thing standing in the way of Russia reestablishing hegemony in Eastern Europe. His choice of a Secretary of State with close business ties to Russia is another indication of the collusion among the oligarchs of East and West.

In 1991, it seemed as though the United States had won the Cold War and brought democracy to Russia. In fact, age-old Russian autocracy prevailed and, with the inauguration tomorrow of Donald J. Trump, has brought the United States to heel.

Rest in Peace United States of America. Born July 4, 1776. Died January 20, 2017 of a self-inflicted wound suffered on November 8, 2016.

We live in interesting times.

The “good” news

For the most part, I am an optimist. I believe in the basic goodness of people and their general good intentions. Lately I have had to try to reconcile those beliefs with the election of Donald Trump to the presidency of the United States. I think I have finally made some sense of it.

Since Ronald Reagan took office in January 1981 I have watched with dismay as trillions of dollars have been transferred from average Americans and their progeny to the top tier of the super wealthy. The total net worth of the US population is around $86T of which $37T is held by the top 1%. In 1979, the top 1% had a combined net worth of about $2T which represented 24% of the total net worth of $8T. Adjusted for inflation, the net worth of the wealthiest 1% grew from $7T to $37T while the total net worth of all Americans went from $28T to $86T. In other words, 52% of the increase in wealth went to the top 1%.

Where did that $58T in increased net worth come from? Well, some $20T was borrowed, more than $3T of it from the Social Security payments of working Americans. Much of the rest represents financial legerdemain funded in in part by deferred maintenance of our national infrastructure.  According to the American Society of Civil Engineers we need to spend nearly $4T in the next few years just to stay even. Estimates of the cost of developing a current state-of-the-art infrastructure range as high as $20T. So basically, the very wealthy have stolen some $40T from average Americans since Reagan began the looting. And that does not include the $1.5T in student loan debt or the $1T in credit card debt that average people have incurred while taxes on the wealthy were cut time and again.

So what does this have to do with the election of Donald Trump? Well, a lot as it turns out. By the early 1990s working class people were beginning to feel the pinch of job losses and stagnant wages as companies downsized or moved manufacturing overseas. Republicans under Newt Gingrich shifted the blame from the wealthy to the very poorest Americans, mostly African Americans they claimed were lazy welfare cheats. White America responded by giving the GOP control of Congress which they used to accelerate the theft. Through the early 2000s as the cost of needless wars soared and further weakened the economy, the GOP sponsored the Tea Party to capitalize on the distress of the working class by again blaming those even more disadvantaged. Meanwhile the wealthy were stealing the equity from people’s homes through re-finance mania leading to the economic crash of 2007/2008. The right blamed the mortgage crisis on the Community Redevelopment Act, claiming that banks were forced to make loans to unqualified black people. Rural whites, who had been duped into using their houses as virtual piggy banks through repeated cash-out refinancing, ate that up. The election of the first more-or-less black president, Barack Obama, was the final straw for redneck America; their anger stoked by endless whispering that he was a secret Muslim born overseas. Republican-dominated state legislatures nationwide launched a campaign to disenfranchise as many minority voters as possible. Meanwhile, Russian president Putin, seeing an opportunity to bring the US to its knees without firing a shot, ordered a covert disinformation campaign to elect Donald Trump. Now the US and Russia were both to be led by corrupt oligarchs. The triumph of the wealthy, begun in 1980, was now complete.

By now you are probably asking why I am optimistic.  Like I said, I have faith in the basic goodness of people. The shamelessness with which Trump is larding his cabinet with incompetent billionaires intent on crushing everything the US has accomplished in the past century will soon have its effect. The economy will stall and go into recession as it has under every Republican president since Taft. The promised jobs will not return from China and Mexico but prices will skyrocket as Trump alienates our trading partners upon whom we rely for nearly all of our consumer goods. His belligerent foreign policy will see the US embroiled in more regional wars and subject to more terror attacks. His attacks on blacks, the LGBT community, Latinos, Muslims, and others will almost certainly lead to civil unrest and quite likely widespread rioting. In short, Trump will crash the ship of state into the rocks of public outrage. The outcome will be the collapse of Reaganism that has dominated US politics for a generation. If we are lucky, sane heads will prevail, the Democratic and Republican parties will both field rational candidates and our ship of state will right itself in good order. If not, we are likely to have to endure a period of fascism like Germany did on its way from a belligerent monarchy to a social democracy. But whatever the short term outcome, it seems certain that Trump’s election will have been the bitter pill that saves the US in the long run. And that will be a good thing.