The War of the Banks Against the People

Michael Hudson writes at Counterpunch, "Europe’s Deadly Transition from Social Democracy to Oligarchy":

What banks want is for the economic surplus to be paid out as interest, not used for rising living standards, public social spending or even for new capital investment. Research and development takes too long. Finance lives in the short run. This short-termism is self-defeating, yet it is presented as science. The alternative, voters are told, is the road to serfdom: interfering with the “free market” by financial regulation and even progressive taxation.

There is an alternative, of course. It is what European civilization from the 13th-century Schoolmen through the Enlightenment and the flowering of classical political economy sought to create: an economy free of unearned income, free of vested interests using special privileges for “rent extraction.” At the hands of the neoliberals, by contrast, a free market is one free for a tax-favored rentier class to extract interest, economic rent and monopoly prices. ...

If the euro breaks up, it is because of the obligation of governments to pay bankers in money that must be borrowed rather than created through their own central bank. Unlike the United States and Britain which can create central bank credit on their own computer keyboards to keep their economy from shrinking or becoming insolvent, the German constitution and the Lisbon Treaty prevent the central bank from doing this.

The effect is to oblige governments to borrow from commercial banks at interest. This gives bankers the ability to create a crisis – threatening to drive economies out of the Eurozone if they do not submit to “conditionalities” being imposed in what quickly is becoming a new class war of finance against labor.

One of the three defining characteristics of a nation-state is the power to create money. A second characteristic is the power to levy taxes. Both of these powers are being transferred out of the hands of democratically elected representatives to the financial sector, as a result of tying the hands of government.

The third characteristic of a nation-state is the power to declare war. What is happening today is the equivalent of warfare – but against the power of government! It is above all a financial mode of warfare – and the aims of this financial appropriation are the same as those of military conquest: first, the land and subsoil riches on which to charge rents as tribute; second, public infrastructure to extract rent as access fees; and third, any other enterprises or assets in the public domain. ...

Bankers do not want to take responsibility for bad loans. This poses the financial problem of just what policy-makers should do when banks have been so irresponsible in allocating credit. But somebody has to take a loss. Should it be society at large, or the bankers? ...

At least in the most badly indebted countries, European voters are waking up to an oligarchic coup in which taxation and government budgetary planning and control is passing into the hands of executives nominated by the international bankers’ cartel.

Energy and Equity, by Ivan Illich (excerpts)

"El socialismo puede llegar solo en bicicleta." (Socialism can arrive only by bicycle)

—José Antonio Viera-Gallo, Assistant Secretary of Justice in the government of Salvador Allende

A low-energy policy allows for a wide choice of life-styles and cultures. If, on the other hand, a society opts for high energy consumption, its social relations must be dictated by technocracy and will be equally degrading whether labeled capitalist or socialist.
===The possibility of a third option is barely noticed. While people have begun to accept ecological limits on maximum per capita energy use as a condition for physical survival, they do not yet think about the use of minimum feasible power as the foundation of any of various social orders that would be both modern and desirable. Yet only a ceiling on energy use can lead to social relations that are characterized by high levels of equity.
===What is generally overlooked is that equity and energy can grow concurrently only to a point. Below a threshold of per capita wattage, motors improve the conditions for social progress. Above this threshold, energy grows at the expense of equity. Further energy affluence then means decreased distribution of control over that energy.
===Even if nonpolluting power were feasible and abundant, the use of energy on a massive scale acts on society like a drug that is physically harmless but psychically enslaving. A community can choose between Methadone and “cold turkey”—between maintaining its addiction to alien energy and kicking it in painful cramps—but no society can have a population that is hooked on progressively larger numbers of energy slaves and whose members are also autonomously active.
===By exporting their crisis and by preaching the new gospel of puritan energy worship, the rich do even more damage to the poor than they did by selling them the products of now outdated factories. As soon as a poor country accepts the doctrine that more energy more carefully managed will always yield more goods for more people, that country locks itself into the cage of enslavement to maximum industrial outputs. Inevitably the poor lose the option for rational technology when they choose to modernize their poverty by increasing their dependence on energy. Inevitably the poor deny themselves the possibility of liberating technology and participatory politics when, together with maximum feasible energy use, they accept maximum feasible social control.
===Participatory democracy demands low-energy technology, and free people must travel the road to productive social relations at the speed of a bicycle.
===Enforced dependence on auto-mobile machines then denies a community of self-propelled people just those values supposedly procured by improved transportation.
===Extremes of privilege are created at the cost of universal enslavement.
===The habitual passenger ... believes that the level of democratic process correlates to the power of transportation and communications systems. He has lost faith in the political power of the feet and of the tongue. As a result, what he wants is not more liberty as a citizen but better service as a client. He does not insist on his freedom to move and to speak to people but on his claim to be shipped and to be informed by media. He wants a better product rather than freedom from servitude to it.
===Beyond a critical speed, no one can save time without forcing another to lose it.
===At each new level, the concentration of power must produce its own kind of rationale. So, for example, the reason that is usually given for spending public money to make a man travel more miles in less time each year is the still greater investment that was made to keep him more years in school.
===Acceleration inevitably concentrates horsepower under the seats of a few and compounds the increasing time lack of most commuters with the further sense that they are lagging behind.
===The need for unequal privilege in an industrial society is generally advocated by means of an argument with two sides. The hypocrisy of this argument is clearly betrayed by acceleration. Privilege is accepted as the necessary precondition for improving the lot of a growing total population, or it is advertised as the instrument for raising the standards of a deprived minority. In the long run, accelerating transportation does neither. It only creates a universal demand for motorized conveyance and puts previously unimaginable distances between the various layers of privilege. Beyond a certain point, more energy means less equity.
===Social classification by levels of speed enforces a net transfer of power: the poor work and pay to get left behind. But if the middle classes of a speed society may be tempted to ignore discrimination, they should not neglect the rising marginal disutilities of transportation and their own loss of leisure. High speeds for all mean that everybody has less time for himself as the whole society spends a growing slice of its time budget on moving people. Vehicles running over the critical speed not only tend to impose inequality, they also inevitably establish a self-serving industry that hides an inefficient system of locomotion under apparent technological sophistication.
===But as long as any system of vehicles imposes itself on the public by top speeds that are not under political control, the public is left to choose between spending more time to pay for more people to be carried from station to station, and paying less taxes so that even fewer people can travel in much less time much farther than others.
===A branch of industry does not impose a radical monopoly on a whole society by the simple fact that it produces scarce products, or by driving competing industries off the market, but rather by virtue of its acquired ability to create and shape the need which it alone can satisfy.
===The proposal of a limit to speed within this order of magnitude engenders stubborn opposition. It exposes the addiction of industrialized men to ever higher doses of energy, while it asks those who are still sober to abstain from something they have yet to taste.
===People are born almost equally mobile. Their natural ability speaks for the personal liberty of each one to go wherever he or she wants to go. Citizens of a society founded on the notion of equity will demand the protection of this right against any abridgment. It should be irrelevant to them by what means the exercise of personal mobility is denied, whether by imprisonment, bondage to an estate, revocation of a passport, or enclosure within an environment that encroaches on a person’s native ability to move in order to make him a consumer of transport. This inalienable right of free movement does not lapse just because most of our contemporaries have strapped themselves into ideological seat belts.
===Transportation can abridge traffic in three ways: by breaking its flow, by creating isolated sets of destinations, and by increasing the loss of time due to traffic. I have already argued that the key to the relation between transport and traffic is the speed of vehicles. I have described how, past a certain threshold of speed, transport has gone on to obstruct traffic in these three ways. It blocks mobility by cluttering up the environment with vehicles and roads. It transforms geography into a pyramid of circuits sealed off from one another according to levels of acceleration. It expropriates life-time at the behest of speed.
===At unlimited top speed neither public ownership of the means of transportation nor technical improvements in their control can ever eliminate growing and unequal exploitation.
===A country can be classified as overindustrialized when its social life is dominated by the transportation industry, which has come to determine its class privileges, to accentuate its time scarcity, and to tie its people more tightly to the tracks it has laid out for them.
===Underequipment keeps people frustrated by inefficient labor and invites the enslavement of man by man. Overindustrialization enslaves people to the tools they worship, fattens professional hierarchs on bits and on watts, and invites the translation of unequal power into huge income differentials. It imposes the same net transfers of power on the productive relations of every society, no matter what creed the managers profess, no matter what rain-dance, what penitential ritual they conduct.
===The reconquest of power starts with the recognition that expert knowledge blinds the secretive bureaucrat to the obvious ...
===There are two roads from where we are to technological maturity: one is the road of liberation from affluence; the other is the road of liberation from dependence. Both roads have the same destination: the social restructuring of space that offers to each person the constantly renewed experience that the center of the world is where he stands, walks, and lives.
===Such a process amounts to public guardianship over a means of production to keep this means from turning into a fetish for the majority and an end for the few. ... A society that tolerates the transgression of this threshold inevitably diverts its resources from the production of means that can be shared equitably and transforms them into fuel for a sacrificial flame that victimizes the majority.

St. Olaf Wind Turbine

While gathering information about the wind turbine at St. Olaf College in Northfield, Minnesota, one finds a detailed record of the first 3 years of its operation.

The turbine became operational on Sept. 19, 2006. Over the 1st 3 years, its average production was 22.9% of capacity (not a little short of the 41.5% projected). The calculated electricity savings over the 1st 3 years was $210,132.72.

The cost of the project was reported to have been $2.5 million, and the maintenance contract costs $36,000/yr.

Therefore, it would take 73.5 years to recover those costs.

Since industrial wind turbines are supposed to last 20 years and in practice last a much shorter time, someone is paying a lot of money for only a very big and noisy symbol.

vestas 1.65-MW
350' total height
total wt: 220 tons
base: reinforced concrete, 52' diam., 7.5' thick at center, >2 million lbs.
tower: 220', 116 tons
nacelle: 57 tons
rotor and blades: 47 tons
blades: each 130', 8.3 tons
rotor speed: 14.3 rpm
wind speed blades start turning: 7.8 mph
wind speed for max capacity: 29 mph
shut-down wind speed: 44.7 mph for 10 min, 53.7 mph for 1 min, or 71.6 mph for 1 s

wind power, wind energy, wind turbines, environment, environmentalism

The creditor class v. humanity

There are a couple of excellent history articles at Counterpunch this weekend:

Debt Slavery – Why It Destroyed Rome, Why It Will Destroy Us Unless It’s Stopped by MICHAEL HUDSON

Wall Street’s Failed 1934 Coup by MICHAEL DONNELLY

Historical Trends in Income Inequality

From "A Guide to Statistics on Historical Trends in Income Inequality" by Chad Stone, Hannah Shaw, Danilo Trisi, and Arloc Sherman, November 28, 2011, Center on Budget and Policy Priorities:

The broad facts of income inequality over the past six decades are easily summarized:

• The years from the end of World War II into the 1970s were ones of substantial economic growth and broadly shared prosperity.
• Incomes grew rapidly and at roughly the same rate up and down the income ladder, roughly doubling in inflation-adjusted terms between the late 1940s and early 1970s.
• The income gap between those high up the income ladder and those on the middle and lower rungs — while substantial — did not change much during this period.
• Beginning in the 1970s, economic growth slowed and the income gap widened.
• Income growth for households in the middle and lower parts of the distribution slowed sharply, while incomes at the top continued to grow strongly.
• The concentration of income at the very top of the distribution rose to levels last seen more than 80 years ago (during the "Roaring Twenties").
• Wealth (the value of a household's property and financial assets net of the value of its debts) is much more highly concentrated than income, although the wealth data do not show a dramatic increase in concentration at the very top the way the income data do. ...

From Athens Polytechnic to UC Davis

Linda Katehi a few months ago helped to end Greek restrictions on police entering university campuses. She was a student at Athens Polytechnic during the 1973 uprising there which led to the downfall of the military junta. What a disturbed individual.

http://johnquiggin.posterous.com/athens-polytechnic-comes-to-uc-davis

Goldman Sachs taking over Europe

Goldman Sachs has already established itself at the reins of the U.S. government (e.g., director of the National Economic Council Robert Rubin under Clinton, Treasury Secretary Henry Paulson under Bush, and Timothy Geithner, president of the NY Federal Reserve Bank under Bush and Treasury Secretary under Clinton and Obama's chief economic adviser and former National Economic Council director Larry Summers, who was also Treasury Secretary under Bush); they are increasingly part of Europe's governments as well, as reported in "What price the new democracy? Goldman Sachs conquers Europe", The Independent, 18 Nov. 2011.

For example, Italy's new prime minister, Mario Monti, was on the GS board of international advisers. (He is also European Chairman of the Trilateral Commission.) Greece's new prime minister, Lucas Papademos, ran Greece's Central Bank when it made derivatives deals with GS to hide size of Greece's debt. (He too, is a member of the Trilateral Commission.) The head of Greece's debt management agency, Petros Christodoufou, is a GS alumus. The new head of the European Central Bank, Mario Draghi, was vice chairman and managing director of GS International.

One is compelled to wonder how much of the Euro crisis was actually manufactured by Goldman Sachs to maintain the U.S. dollar's dominance as world currency.

See also "Just Another Goldman Sachs Take Over" by Paul Craig Roberts.