OBAMA’S WATERGATE

THE reported targeting by the Internal Revenue Service of opponents of conservative organizations seeking tax-exempt status has led some to revisit the long history of presidents, or their administrations, using tax regulations to punish enemies. Some have drawn comparisons with the crimes of Watergate, when President Richard M. Nixon loosed the I.R.S. on an array of Democrats (including potential challengers to his re-election in 1972). Another example, parallel to the current episode, came in 1961, when President John F. Kennedy, alarmed by the growing strength of right-wing groups, “asked the director of audits at the I.R.S. to gather intelligence on organizations receiving tax exemptions,” as Rick Perlstein wrote in “Before the Storm,” his 2001 history of Barry M. Goldwater’s 1964 presidential campaign.

Related

There is no evidence as yet that President Obama ordered ideological targeting of this kind, and in his news conference last week he called the abuses, if real, “contrary to our traditions.”

In any event, the impulse to uncover a top-down operation misses a larger point. The conspiracy talk of the moment reflects the broader unease many Americans, left and right, feel not just toward the I.R.S. but toward the federal government and the outsize part it plays in our daily lives. At times it can seem an abstract, distant force, bent on its own aggrandizement, often at the expense of individual citizens.

It is in this light that the report released last week by the Treasury Department’s inspector general is best understood. As deplorable as the steps taken by I.R.S. officers seem to have been — involving, as a Wall Street Journal editorial put it, “aggressive and burdensome questionnaires as part of the process of applying for tax-exempt status” — the report indicates that, whatever motives may have driven the wrongdoers, their modus operandi was not to violate established procedures but to execute them with excessive zeal. Rather than secretly sabotaging the targeted groups, they seem to have ensnared them in dense thickets of red tape. It is a frustration many of us have experienced when dealing with government agencies, above all the I.R.S., which not only takes our money but then also makes us mail the check to an address we need a map to locate.

With its colossal size and tentacular reach, 100,000 employees working in more than 1,000 offices across the country, the I.R.S. is “the largest law-enforcement agency in the nation,” a character remarks in David Foster Wallace’s satirical novel “The Pale King,” a best seller when it was published in 2011.

Largely set in an imagined regional I.R.S. office in Peoria, Ill. — it could easily stand in for the Cincinnati office where the current abuses occurred — “The Pale King” explores the bewildering minutiae of the tax code and those who enforce it while also capturing the hostility toward the agency that runs through much of American thinking.

AS one character, an I.R.S. officer, explains, “We’re the government, its worst face — the rapacious creditor, the stern parent.” The menace comes in the day-to-day workings of a bureaucracy that functions far from view, accountable only to itself. This is an argument conservatives have made for many years, dating back as far as the political theories of James Burnham, whose 1941 book “The Managerial Revolution” was an early classic on an emerging new governing class, the “bureaucratic elite.”

“The firmest representatives of the New Deal are not Roosevelt or the other conspicuous ‘New Deal politicians,’ ” Mr. Burnham wrote, but the often faceless people who drafted its regulatory policies, the “younger group of administrators, experts, technicians, bureaucrats who have been finding places throughout the state apparatus.”  It is a description easily applied to the I.R.S. functionaries now under investigation.

It was conservatives who, seizing on this argument, first depicted the I.R.S. as a symbol of the overweening state, acting against the nation’s founding principles of “limited government,” taxation its blunt instrument of oppression. It is a belief many of today’s activists share.

A.H. Beesley

“When in any country the small-farmer class is being squeezed off the land; when its labourers are slaves or serfs; when huge tracts are kept waste to minister to pleasure; when the shibboleth of art is on every man’s lips, but ideas of true beauty in very few men’s souls; when the business-sharper is the greatest man in the city, and lords it even in the law courts; when class-magistrates, bidding for high office, deal out justice according to the rank of the criminal; when exchanges are turned into great gambling-houses, and senators and men of title are the chief gamblers; when, in short, ‘corruption is universal, when there is increasing audacity, increasing greed, increasing fraud, increasing impurity, and these are fed by increasing indulgence and ostentation; when a considerable number of trials in the courts of law bring out the fact that the country in general is now regarded as a prey, upon which any number of vultures, scenting it from afar, may safely light and securely gorge themselves; when the foul tribe is amply replenished by its congeners at home, and foreign invaders find any number of men, bearing good names, ready to assist them in robberies far more cruel and sweeping than those of the footpad or burglar’–when such is the tone of society, and such the idols before which it bends, a nation must be fast going down hill.

A more repulsive picture can hardly be imagined. A mob, a moneyed class, and an aristocracy almost equally worthless, hating each other, and hated by the rest of the world; Italians bitterly jealous of Romans, and only in better plight than the provinces beyond the sea;  more miserable than either, swarms of slaves beginning to brood over revenge as a solace to their sufferings; the land going out of cultivation; native industry swamped by slave-grown imports; the population decreasing; the army degenerating; http://ws.affiliately.com/goto?aaID=nejecf-20&aaMarketplace=com&url=http://jessescrossroadscafe.blogspot.com/wars waged as a speculation, but only against the weak; provinces subjected to organized pillage; in the metropolis childish superstition, whole sale luxury, and monstrous vice.

The hour for reform was surely come. Who was to be the man?”

A.H. Beesley, The Gracchi Marius and Sulla, 1921

The mouthpieces in the media are maintaining a steady drumbeat against gold and silver.  The real economy wallows in official and financial corruption.

From discussion with friends in Japan, it seems that a version of a striking financial recovery in the US is being painted by the government and the media there, that seems to be at odds with the reality which the common American is facing. I am informed that a similar situation exists in the UK,  but with much less effect.   Who dares to question the sanctification of such success, and the power of an Empire?

http://ws.affiliately.com/goto?aaID=nejecf-20&aaMarketplace=com&url=http://jessescrossroadscafe.blogspot.com/

 

Financial Media Celebrates Apple’s Tax Evasion Bond Deal by Yves Smith

As is par for the course, the financial media is telling a story about a major US company from the perspective of the investing classes, rather than the broader public.

The poster child is the New York Times’ Dealbook, in a story titled “To Satisfy Its Investors, Cash-Rich Apple Borrows Money.” It third paragraph reads:

Apple’s return to the debt markets raises a riddle: Why would a company with so much cash even bother to issue debt?

A full seven paragraphs later, the article gets around to the last, and arguably the most important reason:

By raising cheap debt for the shareholder payout, Apple also avoids a potentially big tax hit. About two-thirds of Apple’s cash — about $102 billion — sits overseas in lower-tax jurisdictions. If it returned some of that cash to the United States to reward its investors, it could have significant tax consequences for the company. In some ways, the bond issue is a response to that tax situation.

“In some ways” is an understatement. A simple Google search shows stories going back several years of how Apple has been pushing for a tax holiday so it can repatriate its overseas stash. One example is a February 2011 report from electronista, Demands come despite federal budgetary crisis:

A variety of technology corporations are among those pressuring the US government to give them a preferential tax break, sources tell Fortune. Apple, Cisco, Pfizer and Duke Energy are specifically named as lobbying politicians for a tax “holiday” in regards to repatriated cash. Whereas the companies would normally be obligated to pay 35 percent, their goal is allegedly to pay just 5 percent.

 

ILLUMINATI?

Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world’s largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that’s trillion, with a “t”) worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it “dwarfs by orders of magnitude any financial scam in the history of markets.”

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world’s largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world’s largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps…

Read the entire story here.

SEQUESTER THIS!

SEQUESTER THIS!The question is no longer whether the automatic spending cuts of budget “sequestration” will start to take effect on Friday. The question is how long lawmakers are willing to let those cuts stay in place. That, in turn, will depend on how quickly—and how severely—the cuts affect people’s lives.

President Obama and his allies predict dire consequences, for the economy and for a wide array of government services. On Sunday, they released a report detailing how the cuts would play out in particular states. Kids in Georgia wouldn’t get their vaccines, defense contractors in Texas would lose work, teachers in Ohio would end up on furlough—the list goes on. Republicans and their allies have answered by suggesting the administration is exaggerating. “Over the next ten years, the sequester amounts to a $1.16 trillion cut, or roughly 3 cents on every federal dollar,” National Review editor Rich Lowry wrote on Friday. “If we can’t squeeze a couple of pennies out of every dollar, we might as well begin our great national bankruptcy proceedings right now.”

Sorry, but squeezing a couple of pennies out of every dollar in the next year is a terrible idea. In absolute terms, government spending is significantly higher than it was a decade ago. But that’s largely a product of two factors. One is health care, the cost of which the government shoulders mostly through Medicare and Medhttp://www.newrepublic.com/article/112521/sequester-how-low-can-spending-go?utm_source=The+New+Republic&utm_campaign=b65a6b2c0f-TNR_Daily_022613&utm_medium=emailicaid. The other is a temporary burst of spending from the Recovery Act, which was designed to stop the economy from collapsing in 2009. That spending is mostly finished anyway. And the sequester cuts woudln’t meaningfully reduce health care spending, though they would cut Medicare reimbursements. They would primarily affect “discretionary” spending, which includes everything from workplace safety inspections to defense spending to Head Start. As the graph here shows, discretionary spending—measured as a percentage of gross domestic product—is already lower than it was when Obama took office.1 The sequester cuts would reduce it further. At those historically low levels, severe cuts to government services are virtually inevitable, whether or not they are precisely the ones that the administration is predicting.2

Michael M. Thomas’ Solution to the Crisis Now, if only anyone had listened….

A trillion here, a trillion there.

A trillion for TARP, a trillion for TALF.

Throw in what’s in the “stimulus” package and you’re probably at close to $3 trillion.

So why not simply distribute $25,000 tax free to every U.S. taxpayer? There are 100 million of us, in round figures, so we’re talking about $2.5 trillion, give or take.

This is what two friends and I asked each other over lunch a Three Guys last week. After we got through the usual preliminaries, such as where can one buy hemlock these days, given that our actuarial matchup (two of us are over 70) with our resources leaves us as upside-down as the most strapped Corona del Mar mortgage victim, we started talking about the economy and how to rescue it.

Clearly, these institutional rescue plans are going nowhere. The pricing dichotomy – Uncle Sam either pays too little or too much – seems intractable and the recipients are surely undeserving. Even though there have been two big distress sales of toxic assets – by Merrill Lynch last fall and Legg Mason last week – at around 20 cents on the dollar, which might represent a pricing benchmark, I just don’t think the taxpayer should be put in the business of writing a “make whole” for either pigs or vultures, who in many cases may now be one ad the same. That is capitalism’s tragic paradox, unseen by Adam Smith, probably understood by Marx: the people who cause crashes frequently profit from them.

The problem is, everyone’s hanging around looking for a deal from the government that’ll yield a deal that’s better than fair to everyone except the taxpayer, and Geithner and his small and doughty band know it (the Treasury increasingly reminds me of Fort Zinderneuf in Beau Geste, with dead bodies propped up in the gun ports and Gary Cooper scuttling from post to post, firing at a superior force of Bedouins.) And the “infrastructure” solution, as I see it, is simply open-ended flapdoodle capable of inciting limitless political foolishness and private-sector thievery. Let’s not import Iraq back home.

Institutionally, what should be done immediately is to separate the good assets from the dubious. In the case of the “banks,” hive off depositary operations and wealth management from trading and arbitrage. At AIG, put a fence around the real insurance operations and let the CDS commitments go. Wipe out derivatives contracts that had no real third-party assets at risk (possibly as much as $30 trillion of “naked” puts,) that were nothing more or less than bets against the solvency and credit rating of insurers like AIG and Lehman, and let the rest negotiate settlements as best they can. All the crap can go into what I heard one English financial analyst on WNYC call “a giant international cesspit,” and let the scavengers fight over it like rats in a garbage dump. Isn’t this the kind of market solution propounded by (speaking of rats) the likes of Larry Kudlow?

The more I see what’s going on now, the better I think I grasp what really happened in the Depression. Why, by late 1940, there was so little trading and deal volume on Wall Street that people like my father, a 34-year-old partner at Lehman Brothers, enlisted in the U.S. Navy, figuring that FDR was going to get us into a war with Hitler and he might as well have a commission.

History proved Joe Thomas right in his assessment of his President’s intentions. By then, FDR probably understood that there was only one solution to the nation’s precarious economic condition: jobs, jobs, jobs. And that nothing would provide jobs – in the military, on the home front – more efficaciously than a war. And so it proved. Moreover, when the war was won, Washington grasped that millions of disemployed service people and defense workers might represent a brand new social and economic crisis and came up with the G.I.Bill. As opposed to the U.K., which sent its newly-demobbed Tommies back down the pits and got a Labor Government for its pains. I know of no more powerful example of the difference between the way a capitalist democracy is supposed to work and the way it isn’t . I should add my opinion that Ms. Pelosi (surely there can never have been a worse Speaker!) and other Capitol Hill idiots would never have devised a G.I. Bill, not in a millennium!

So let’s go back to the “Three Guys” scheme, as history will doubtless christen it. At $2.5 trillion, the money’s about the same as Washington plans to spend. Any way you cut it, relief is going to be funded in the people’s money, so why not let the people decide how to spend it? To some taxpayers, $25,000 will be a lot of money and will be spent on life’s necessities or to ease household financial crises: to pay off debts, to pay tuition, to catch up on mortgages. Others may use a sum like this as a down payment on a house. Businesses can be launched on $25K. To some, $25K won’t be that big a deal, so they’ll invest it or put it into a bank. Along the way, as it passes from hand to hand, as one person’s expenditure becomes another’s revenue and profit, it will become taxable, and Uncle will start to recapture his investment.

It really doesn’t matter how and where it gets spent and saved, because never forget, children, that every dollar spent is somewhere saved. The key is to keep that money hopping. To keep breaking it up into pieces, and moving those pieces along. If it coagulates in financial companies anxious to build up capital to support their CDO/CDS garbage, the main if not the entire purpose of the exercise is defeated. And this is exactly what is happening now.

It has got to stop. Parents of my generation were raised to understand that children are not to be rewarded for bad behaviors. Sadly, that view has faded. It’s time to turn back the clock and give the money to the 99,000,000 of us that had nothing to do with this mess!

Read more at http://www.nakedcapitalism.com/2013/02/michael-m-thomas-solution-to-the-crisis.html#ppIrMSiAIfh2YE6t.99

The Second-Mortgage Shell Game

IN January, federal regulators announced an $8.5 billion agreement with 10 mortgage servicers to settle claims of foreclosure abuses, including bungled loan modifications and the wrongful evictions of borrowers who were either current on their payments or making reduced monthly payments.The Second-Mortgage Shell Game

Under the deal, announced by the Federal Reserve and the Office of the Comptroller of the Currency, the mortgage servicers will pay $3.3 billion to borrowers who went through foreclosure in 2009 and 2010 and an additional $5.2 billion to reduce the principal or the monthly payments of borrowers in danger of losing their homes.

Those numbers might look impressive, but the deal is far too modest to be a credible deterrent to reckless foreclosure practices.

Consider the last big mortgage settlement. Last February, the federal government and 49 state attorneys general reached a $25 billion deal with the country’s five largest mortgage servicers — Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC). They promised to help save homeowners from unnecessary foreclosure.

A year later, it’s clear that the settlement hasn’t worked as planned. Banks have dragged their feet in modifying first mortgages, much less agreeing to forgive part of the principal on homes that are underwater. In fact, the deal contained a few flaws. It has allowed banks to push homeowners into short sales, an alternative to foreclosure whereby the distressed homeowner sells the property for less than the debt that is owed. Not all short sales are bad — some homeowners are happy to walk away with the debt cleared — but as a matter of social policy, the program has failed to keep people in their homes.

BANKSTERS

The deal was announced quietly, just before the holidays, almost like the government was hoping people were too busy hanging stockings by the fireplace to notice. Flooring politicians, lawyers and investigators all over the world, the U.S. Justice Department granted a total walk to executives of the British-based bank HSBC for the largest drug-and-terrorism money-laundering case ever. Yes, they issued a fine – $1.9 billion, or about five weeks’ profit – but they didn’t extract so much as one dollar or one day in jail from any individual, despite a decade of stupefying abuses.

People may have outrage fatigue about Wall Street, and more stories about billionaire greedheads getting away with more stealing often cease to amaze. But the HSBC case went miles beyond the usual paper-pushing, keypad-punching­ sort-of crime, committed by geeks in ties, normally associated­ with Wall Street. In this case, the bank literally got away with murder – well, aiding and abetting it, anyway.

Read more: http://www.rollingstone.com/politics/news/gangster-bankers-too-big-to-jail-20130214#ixzz2L4zXRNY2
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Walmart Execs Sweat Slow February Sales

Higher payroll taxes “go against our customers’ wallet,” Family Dollar Chief Executive Officer Howard Levine said on a Jan. 3 conference call. “Clearly, they do not have as much for discretionary purchases than they did.”

Wal-Mart’s Geiger in his e-mail urged employees to improve business by “fixing something that could really make a difference to our performance.” He quoted Tim Yatsko, the company’s executive vice president of global sourcing, saying: “We need to ‘stop the stupid.’”

Wal-Mart U.S. CEO Bill Simon said during a Feb. 1 officers meeting, the minutes of which were attached to Geiger’s e-mail, that the troubled economy leaves little room for internal errors.

“In an environment like this, we can’t afford to hurt ourselves,” Simon said, according to the minutes. “Self- inflicted wounds are our biggest risk and our toughest enemy.”

Walmart Execs Sweat Slow February Sales

War Is the Health of the State ( from THE STATE )

Randolph Bourne

Randolph Bourne

Randolph Silliman Bourne (May 30, 1886 – December 22, 1918) was a progressive writer and “leftist intellectual”[1] born in Bloomfield, New Jersey, and a graduate of Columbia University. Bourne is best known for his essays, especially his unfinished work “The State,” discovered after his death.

Life and works

Bourne’s articles appeared in journals including The Seven Arts and The New Republic.

World War I divided American progressives, pitting an anti-war faction, including Bourne and Jane Addams, against a pro-war faction led by the pragmatist philosopher and educational theorist John Dewey. Bourne was a student of Dewey at Columbia, but he took issue with Dewey’s idea of using the war as a tool with which to spread democracy. In his pointedly-titled 1917 essay “Twilight of Idols” he invoked the progressive pragmatism of Dewey’s contemporary William James to argue that America was using democracy as an end to justify the war, but that democracy itself was never examined. While he had been a follower of Dewey originally, he felt that Dewey had betrayed his democratic ideals by focusing only on the facade of a democratic government rather than on the ideas behind democracy that Dewey had once professed to respect.

Bourne was greatly influenced by Horace Kallen‘s 1915 essay “Democracy Versus the Melting-Pot,” and argued, like Kallen, that Americanism ought not to be associated with Anglo-Saxonism. In his 1916 article “Trans-National America,” Bourne argued that the US should accommodate immigrant cultures into a “cosmopolitan America,” instead of forcing immigrants to assimilate to Anglophilic culture.

Bourne died in the Spanish flu pandemic after the war. His ideas have been influential in the shaping of postmodern ideas of cosmopolitanism and multiculturalism, and recent intellectuals such as David Hollinger have written extensively on Bourne’s ideology. John Dos Passos, an influential American modernist writer, eulogized Bourne in the chapter “Randolph Bourne” of his novel 1919 and drew heavily on the ideas presented in War Is The Health of the State in the novel.————————————————————————————————————————

 

 

To most Americans of the classes which consider themselves significant the war [World War I] brought a sense of the sanctity of the State which, if they had had time to think about it, would have seemed a sudden and surprising alteration in their habits of thought. In times of peace, we usually ignore the State in favor of partisan political controversies, or personal struggles for office, or the pursuit of party policies. It is the Government rather than the State with which the politically minded are concerned. The State is reduced to a shadowy emblem which comes to consciousness only on occasions of patriotic holiday.

Government is obviously composed of common and unsanctified men, and is thus a legitimate object of criticism and even contempt. If your own party is in power, things may be assumed to be moving safely enough; but if the opposition is in, then clearly all safety and honor have fled the State. Yet you do not put it to yourself in quite that way. What you think is only that there are rascals to be turned out of a very practical machinery of offices and functions which you take for granted. When we say that Americans are lawless, we usually mean that they are less conscious than other peoples of the august majesty of the institution of the State as it stands behind the objective government of men and laws which we see. In a republic the men who hold office are indistinguishable from the mass. Very few of them possess the slightest personal dignity with which they could endow their political role; even if they ever thought of such a thing. And they have no class distinction to give them glamour. In a republic the Government is obeyed grumblingly, because it has no bedazzlements or sanctities to gild it. If you are a good old-fashioned democrat, you rejoice at this fact, you glory in the plainness of a system where every citizen has become a king. If you are more sophisticated you bemoan the passing of dignity and honor from affairs of State. But in practice, the democrat does not in the least treat his elected citizen with the respect due to a king, nor does the sophisticated citizen pay tribute to the dignity even when he finds it. The republican State has almost no trappings to appeal to the common man’s emotions. What it has are of military origin, and in an unmilitary era such as we have passed through since the Civil War, even military trappings have been scarcely seen. In such an era the sense of the State almost fades out of the consciousness of men.

With the shock of war, however, the State comes into its own again. The Government, with no mandate from the people, without consultation of the people, conducts all the negotiations, the backing and filling, the menaces and explanations, which slowly bring it into collision with some other Government, and gently and irresistibly slides the country into war. For the benefit of proud and haughty citizens, it is fortified with a list of the intolerable insults which have been hurled toward us by the other nations; for the benefit of the liberal and beneficent, it has a convincing set of moral purposes which our going to war will achieve; for the ambitious and aggressive classes, it can gently whisper of a bigger role in the destiny of the world. The result is that, even in those countries where the business of declaring war is theoretically in the hands of representatives of the people, no legislature has ever been known to decline the request of an Executive, which has conducted all foreign affairs in utter privacy and irresponsibility, that it order the nation into battle. Good democrats are wont to feel the crucial difference between a State in which the popular Parliament or Congress declares war, and the State in which an absolute monarch or ruling class declares war. But, put to the stern pragmatic test, the difference is not striking. In the freest of republics as well as in the most tyrannical of empires, all foreign policy, the diplomatic negotiations which produce or forestall war, are equally the private property of the Executive part of the Government, and are equally exposed to no check whatever from popular bodies, or the people voting as a mass themselves.

The moment war is declared, however, the mass of the people, through some spiritual alchemy, become convinced that they have willed and executed the deed themselves. They then, with the exception of a few malcontents, proceed to allow themselves to be regimented, coerced, deranged in all the environments of their lives, and turned into a solid manufactory of destruction toward whatever other people may have, in the appointed scheme of things, come within the range of the Government’s disapprobation. The citizen throws off his contempt and indifference to Government, identifies himself with its purposes, revives all his military memories and symbols, and the State once more walks, an august presence, through the imaginations of men. Patriotism becomes the dominant feeling, and produces immediately that intense and hopeless confusion between the relations which the individual bears and should bear toward the society of which he is a part.

The patriot loses all sense of the distinction between State, nation, and government. In our quieter moments, the Nation or Country forms the basic idea of society. We think vaguely of a loose population spreading over a certain geographical portion of the earth’s surface, speaking a common language, and living in a homogeneous civilization. Our idea of Country concerns itself with the non-political aspects of a people, its ways of living, its personal traits, its literature and art, its characteristic attitudes toward life. We are Americans because we live in a certain bounded territory, because our ancestors have carried on a great enterprise of pioneering and colonization, because we live in certain kinds of communities which have a certain look and express their aspirations in certain ways. We can see that our civilization is different from contiguous civilizations like the Indian and Mexican. The institutions of our country form a certain network which affects us vitally and intrigues our thoughts in a way that these other civilizations do not. We are a part of Country, for better or for worse. We have arrived in it through the operation of physiological laws, and not in any way through our own choice. By the time we have reached what are called years of discretion, its influences have molded our habits, our values, our ways of thinking, so that however aware we may become, we never really lose the stamp of our civilization, or could be mistaken for the child of any other country. Our feeling for our fellow countrymen is one of similarity or of mere acquaintance. We may be intensely proud of and congenial to our particular network of civilization, or we may detest most of its qualities and rage at its defects. This does not alter the fact that we are inextricably bound up in it. The Country, as an inescapable group into which we are born, and which makes us its particular kind of a citizen of the world, seems to be a fundamental fact of our consciousness, an irreducible minimum of social feeling.

Now this feeling for country is essentially noncompetitive; we think of our own people merely as living on the earth’s surface along with other groups, pleasant or objectionable as they may be, but fundamentally as sharing the earth with them. In our simple conception of country there is no more feeling of rivalry with other peoples than there is in our feeling for our family. Our interest turns within rather than without, is intensive and not belligerent. We grow up and our imaginations gradually stake out the world we live in, they need no greater conscious satisfaction for their gregarious impulses than this sense of a great mass of people to whom we are more or less attuned, and in whose institutions we are functioning. The feeling for country would be an uninflatable maximum were it not for the ideas of State and Government which are associated with it. Country is a concept of peace, of tolerance, of living and letting live. But State is essentially a concept of power, of competition: it signifies a group in its aggressive aspects. And we have the misfortune of being born not only into a country but into a State, and as we grow up we learn to mingle the two feelings into a hopeless confusion.

The State is the country acting as a political unit, it is the group acting as a repository of force, determiner of law, arbiter of justice. International politics is a “power politics” because it is a relation of States and that is what States infallibly and calamitously are, huge aggregations of human and industrial force that may be hurled against each other in war. When a country acts as a whole in relation to another country, or in imposing laws on its own inhabitants, or in coercing or punishing individuals or minorities, it is acting as a State. The history of America as a country is quite different from that of America as a State. In one case it is the drama of the pioneering conquest of the land, of the growth of wealth and the ways in which it was used, of the enterprise of education, and the carrying out of spiritual ideals, of the struggle of economic classes. But as a State, its history is that of playing a part in the world, making war, obstructing international trade, preventing itself from being split to pieces, punishing those citizens whom society agrees are offensive, and collecting money to pay for all.

Government on the other hand is synonymous with neither State nor Nation. It is the machinery by which the nation, organized as a State, carries out its State functions. Government is a framework of the administration of laws, and the carrying out of the public force. Government is the idea of the State put into practical operation in the hands of definite, concrete, fallible men. It is the visible sign of the invisible grace. It is the word made flesh. And it has necessarily the limitations inherent in all practicality. Government is the only form in which we can envisage the State, but it is by no means identical with it. That the State is a mystical conception is something that must never be forgotten. Its glamour and its significance linger behind the framework of Government and direct its activities.

Wartime brings the ideal of the State out into very clear relief, and reveals attitudes and tendencies that were hidden. In times of peace the sense of the State flags in a republic that is not militarized. For war is essentially the health of the State. The ideal of the State is that within its territory its power and influence should be universal. As the Church is the medium for the spiritual salvation of man, so the State is thought of as the medium for his political salvation. Its idealism is a rich blood flowing to all the members of the body politic. And it is precisely in war that the urgency for union seems greatest, and the necessity for universality seems most unquestioned. The State is the organization of the herd to act offensively or defensively against another herd similarly organized. The more terrifying the occasion for defense, the closer will become the organization and the more coercive the influence upon each member of the herd. War sends the current of purpose and activity flowing down to the lowest level of the herd, and to its most remote branches. All the activities of society are linked together as fast as possible to this central purpose of making a military offensive or a military defense, and the State becomes what in peacetimes it has vainly struggled to become — the inexorable arbiter and determinant of men’s business and attitudes and opinions. The slack is taken up, the cross-currents fade out, and the nation moves lumberingly and slowly, but with ever accelerated speed and integration, toward the great end, toward the “peacefulness of being at war,” of which L.P. Jacks has so unforgettably spoken.

The classes which are able to play an active and not merely a passive role in the organization for war get a tremendous liberation of activity and energy. Individuals are jolted out of their old routine, many of them are given new positions of responsibility, new techniques must be learned. Wearing home ties are broken and women who would have remained attached with infantile bonds are liberated for service overseas. A vast sense of rejuvenescence pervades the significant classes, a sense of new importance in the world. Old national ideals are taken out, re-adapted to the purpose and used as universal touchstones, or molds into which all thought is poured. Every individual citizen who in peacetimes had no function to perform by which he could imagine himself an expression or living fragment of the State becomes an active amateur agent of the Government in reporting spies and disloyalists, in raising Government funds, or in propagating such measures as are considered necessary by officialdom. Minority opinion, which in times of peace, was only irritating and could not be dealt with by law unless it was conjoined with actual crime, becomes, with the outbreak of war, a case for outlawry. Criticism of the State, objections to war, lukewarm opinions concerning the necessity or the beauty of conscription, are made subject to ferocious penalties, far exceeding in severity those affixed to actual pragmatic crimes. Public opinion, as expressed in the newspapers, and the pulpits and the schools, becomes one solid block. “Loyalty,” or rather war orthodoxy, becomes the sole test for all professions, techniques, occupations. Particularly is this true in the sphere of the intellectual life. There the smallest taint is held to spread over the whole soul, so that a professor of physics is ipso facto disqualified to teach physics or to hold honorable place in a university — the republic of learning — if he is at all unsound on the war. Even mere association with persons thus tainted is considered to disqualify a teacher. Anything pertaining to the enemy becomes taboo. His books are suppressed wherever possible, his language is forbidden. His artistic products are considered to convey in the subtlest spiritual way taints of vast poison to the soul that permits itself to enjoy them. So enemy music is suppressed, and energetic measures of opprobrium taken against those whose artistic consciences are not ready to perform such an act of self-sacrifice. The rage for loyal conformity works impartially, and often in diametric opposition to other orthodoxies and traditional conformities, or even ideals. The triumphant orthodoxy of the State is shown at its apex perhaps when Christian preachers lose their pulpits for taking in more or less literal terms the Sermon on the Mount, and Christian zealots are sent to prison for twenty years for distributing tracts which argue that war is unscriptural.

War is the health of the State. It automatically sets in motion throughout society those irresistible forces for uniformity, for passionate cooperation with the Government in coercing into obedience the minority groups and individuals which lack the larger herd sense. The machinery of government sets and enforces the drastic penalties; the minorities are either intimidated into silence, or brought slowly around by a subtle process of persuasion which may seem to them really to be converting them. Of course, the ideal of perfect loyalty, perfect uniformity is never really attained. The classes upon whom the amateur work of coercion falls are unwearied in their zeal, but often their agitation instead of converting, merely serves to stiffen their resistance. Minorities are rendered sullen, and some intellectual opinion bitter and satirical. But in general, the nation in wartime attains a uniformity of feeling, a hierarchy of values culminating at the undisputed apex of the State ideal, which could not possibly be produced through any other agency than war. Loyalty — or mystic devotion to the State — becomes the major imagined human value. Other values, such as artistic creation, knowledge, reason, beauty, the enhancement of life, are instantly and almost unanimously sacrificed, and the significant classes who have constituted themselves the amateur agents of the State are engaged not only in sacrificing these values for themselves but in coercing all other persons into sacrificing them.

War — or at least modern war waged by a democratic republic against a powerful enemy — seems to achieve for a nation almost all that the most inflamed political idealist could desire. Citizens are no longer indifferent to their Government, but each cell of the body politic is brimming with life and activity. We are at last on the way to full realization of that collective community in which each individual somehow contains the virtue of the whole. In a nation at war, every citizen identifies himself with the whole, and feels immensely strengthened in that identification. The purpose and desire of the collective community live in each person who throws himself wholeheartedly into the cause of war. The impeding distinction between society and the individual is almost blotted out. At war, the individual becomes almost identical with his society. He achieves a superb self-assurance, an intuition of the rightness of all his ideas and emotions, so that in the suppression of opponents or heretics he is invincibly strong; he feels behind him all the power of the collective community. The individual as social being in war seems to have achieved almost his apotheosis. Not for any religious impulse could the American nation have been expected to show such devotion en masse, such sacrifice and labor. Certainly not for any secular good, such as universal education or the subjugation of nature, would it have poured forth its treasure and its life, or would it have permitted such stern coercive measures to be taken against it, such as conscripting its money and its men. But for the sake of a war of offensive self-defense, undertaken to support a difficult cause to the slogan of “democracy,” it would reach the highest level ever known of collective effort.

For these secular goods, connected with the enhancement of life, the education of man and the use of the intelligence to realize reason and beauty in the nation’s communal living, are alien to our traditional ideal of the State. The State is intimately connected with war, for it is the organization of the collective community when it acts in a political manner, and to act in a political manner towards a rival group has meant, throughout all history — war.

There is nothing invidious in the use of the term “herd” in connection with the State. It is merely an attempt to reduce closer to first principles the nature of this institution in the shadow of which we all live, move, and have our being. Ethnologists are generally agreed that human society made its first appearance as the human pack and not as a collection of individuals or of couples. The herd is in fact the original unit, and only as it was differentiated did personal individuality develop. All the most primitive surviving tribes of men are shown to live in a very complex but very rigid social organization where opportunity for individuation is scarcely given. These tribes remain strictly organized herds, and the difference between them and the modern State is one of degree of sophistication and variety of organization, and not of kind.

Psychologists recognize the gregarious impulse as one of the strongest primitive pulls which keeps together the herds of the different species of higher animals. Mankind is no exception. Our pugnacious evolutionary history has prevented the impulse from ever dying out. This gregarious impulse is the tendency to imitate, to conform, to coalesce together, and is most powerful when the herd believes itself threatened with attack. Animals crowd together for protection, and men become most conscious of their collectivity at the threat of war. Consciousness of collectivity brings confidence and a feeling of massed strength, which in turn arouses pugnacity and the battle is on. In civilized man, the gregarious impulse acts not only to produce concerted action for defense, but also to produce identity of opinion. Since thought is a form of behavior, the gregarious impulse floods up into its realms and demands that sense of uniform thought which wartime produces so successfully. And it is in this flooding of the conscious life of society that gregariousness works its havoc.

For just as in modern societies the sex instinct is enormously oversupplied for the requirements of human propagation, so the gregarious impulse is enormously oversupplied for the work of protection which it is called upon to perform. It would be quite enough if we were gregarious enough to enjoy the companionship of others, to be able to cooperate with them, and to feel a slight malaise at solitude. Unfortunately, however, this impulse is not content with these reasonable and healthful demands, but insists that like-mindedness shall prevail everywhere, in all departments of life. So that all human progress, all novelty, and nonconformity, must be carried against the resistance of this tyrannical herd instinct which drives the individual into obedience and conformity with the majority. Even in the most modern and enlightened societies this impulse shows little sign of abating. As it is driven by inexorable economic demand out of the sphere of utility, it seems to fasten itself ever more fiercely in the realm of feeling and opinion, so that conformity comes to be a thing aggressively desired and demanded.

The gregarious impulse keeps its hold all the more virulently because when the group is in motion or is taking any positive action, this feeling of being with and supported by the collective herd very greatly feeds that will to power, the nourishment of which the individual organism so constantly demands. You feel powerful by conforming, and you feel forlorn and helpless if you are out of the crowd. While even if you do not get any access of power by thinking and feeling just as everybody else in your group does, you get at least the warm feeling of obedience, the soothing irresponsibility of protection.

Joining as it does to these very vigorous tendencies of the individual — the pleasure in power and the pleasure in obedience — this gregarious impulse becomes irresistible in society. War stimulates it to the highest possible degree, sending the influences of its mysterious herd-current with its inflations of power and obedience to the farthest reaches of the society, to every individual and little group that can possibly be affected. And it is these impulses which the State — the organization of the entire herd, the entire collectivity — is founded on and makes use of.

There is, of course, in the feeling toward the State a large element of pure filial mysticism. The sense of insecurity, the desire for protection, sends one’s desire back to the father and mother, with whom is associated the earliest feelings of protection. It is not for nothing that one’s State is still thought of as Father or Motherland, that one’s relation toward it is conceived in terms of family affection. The war has shown that nowhere under the shock of danger have these primitive childlike attitudes failed to assert themselves again, as much in this country as anywhere. If we have not the intense Father-sense of the German who worships his Vaterland, at least in Uncle Sam we have a symbol of protecting, kindly authority, and in the many Mother-posters of the Red Cross, we see how easily in the more tender functions of war service, the ruling organization is conceived in family terms. A people at war have become in the most literal sense obedient, respectful, trustful children again, full of that naïve faith in the all-wisdom and all-power of the adult who takes care of them, imposes his mild but necessary rule upon them and in whom they lose their responsibility and anxieties. In this recrudescence of the child, there is great comfort, and a certain influx of power. On most people the strain of being an independent adult weighs heavily, and upon none more than those members of the significant classes who have had bequeathed to them or have assumed the responsibilities of governing. The State provides the convenientest of symbols under which these classes can retain all the actual pragmatic satisfaction of governing, but can rid themselves of the psychic burden of adulthood. They continue to direct industry and government and all the institutions of society pretty much as before, but in their own conscious eyes and in the eyes of the general public, they are turned from their selfish and predatory ways, and have become loyal servants of society, or something greater than they — the State. The man who moves from the direction of a large business in New York to a post in the war management industrial service in Washington does not apparently alter very much his power or his administrative technique. But psychically, what a transfiguration has occurred! His is now not only the power but the glory! And his sense of satisfaction is directly proportional not to the genuine amount of personal sacrifice that may be involved in the change but to the extent to which he retains his industrial prerogatives and sense of command.

From members of this class a certain insuperable indignation arises if the change from private enterprise to State service involves any real loss of power and personal privilege. If there is to be pragmatic sacrifice, let it be, they feel, on the field of honor, in the traditionally acclaimed deaths by battle, in that detour to suicide, as Nietzsche calls war. The State in wartime supplies satisfaction for this very real craving, but its chief value is the opportunity it gives for this regression to infantile attitudes. In your reaction to an imagined attack on your country or an insult to its government, you draw closer to the herd for protection, you conform in word and deed, and you insist vehemently that everybody else shall think, speak, and act together. And you fix your adoring gaze upon the State, with a truly filial look, as upon the Father of the flock, the quasi-personal symbol of the strength of the herd, and the leader and determinant of your definite action and ideas.

The members of the working classes, that portion at least which does not identify itself with the significant classes and seek to imitate it and rise to it, are notoriously less affected by the symbolism of the State, or, in other words, are less patriotic than the significant classes. For theirs is neither the power nor the glory. The State in wartime does not offer them the opportunity to regress, for, never having acquired social adulthood, they cannot lose it. If they have been drilled and regimented, as by the industrial regime of the last century, they go out docilely enough to do battle for their State, but they are almost entirely without that filial sense and even without that herd-intellect sense which operates so powerfully among their “betters.” They live habitually in an industrial serfdom, by which, though nominally free, they are in practice as a class bound to a system of machine-production the implements of which they do not own, and in the distribution of whose product they have not the slightest voice, except what they can occasionally exert by a veiled intimidation which draws slightly more of the product in their direction. From such serfdom, military conscription is not so great a change. But into the military enterprise they go, not with those hurrahs of the significant classes whose instincts war so powerfully feeds, but with the same apathy with which they enter and continue in the industrial enterprise.

From this point of view, war can be called almost an upper-class sport. The novel interests and excitements it provides, the inflations of power, the satisfaction it gives to those very tenacious human impulses — gregariousness and parent-regression — endow it with all the qualities of a luxurious collective game which is felt intensely just in proportion to the sense of significant rule the person has in the class division of his society. A country at war — particularly our own country at war — does not act as a purely homogeneous herd. The significant classes have all the herd-feeling in all its primitive intensity, but there are barriers, or at least differentials of intensity, so that this feeling does not flow freely without impediment throughout the entire nation. A modern country represents a long historical and social process of disaggregation of the herd. The nation at peace is not a group, it is a network of myriads of groups representing the cooperation and similar feeling of men on all sorts of planes and in all sorts of human interests and enterprises. In every modern industrial country, there are parallel planes of economic classes with divergent attitudes and institutions and interests — bourgeois and proletariat, with their many subdivisions according to power and function, and even their interweaving, such as those more highly skilled workers who habitually identify themselves with the owning and the significant classes and strive to raise themselves to the bourgeois level, imitating their cultural standards and manners. Then there are religious groups with a certain definite, though weakening sense of kinship, and there are the powerful ethnic groups which behave almost as cultural colonies in the New World, clinging tenaciously to language and historical tradition, though their herdishness is usually founded on cultural rather than State symbols. There are even certain vague sectional groupings. All these small sects, political parties, classes, levels, interests, may act as foci for herd-feelings. They intersect and interweave, and the same person may be a member of several different groups lying at different planes. Different occasions will set off his herd-feeling in one direction or another. In a religious crisis he will be intensely conscious of the necessity that his sect (or sub-herd) may prevail, in a political campaign, that his party shall triumph.

To the spread of herd-feeling, therefore, all these smaller herds offer resistance. To the spread of that herd-feeling which arises from the threat of war, and which would normally involve the entire nation, the only groups which make serious resistance are those, of course, which continue to identify themselves with the other nation from which they or their parents have come. In times of peace they are for all practical purposes citizens of their new country. They keep alive their ethnic traditions more as a luxury than anything. Indeed these traditions tend rapidly to die out except where they connect with some still unresolved nationalistic cause abroad, with some struggle for freedom, or some irredentism. If they are consciously opposed by a too invidious policy of Americanism, they tend to be strengthened. And in time of war, these ethnic elements which have any traditional connection with the enemy, even though most of the individuals may have little real sympathy with the enemy’s cause, are naturally lukewarm to the herd-feeling of the nation which goes back to State traditions in which they have no share. But to the natives imbued with State-feeling, any such resistance or apathy is intolerable. This herd-feeling, this newly awakened consciousness of the State, demands universality. The leaders of the significant classes, who feel most intensely this State compulsion, demand a 100 percent Americanism, among 100 percent of the population. The State is a jealous God and will brook no rivals. Its sovereignty must pervade every one, and all feeling must be run into the stereotyped forms of romantic patriotic militarism which is the traditional expression of the State herd-feeling.

Thus arises conflict within the State. War becomes almost a sport between the hunters and the hunted. The pursuit of enemies within outweighs in psychic attractiveness the assault on the enemy without. The whole terrific force of the State is brought to bear against the heretics. The nation boils with a slow insistent fever. A white terrorism is carried on by the Government against pacifists, socialists, enemy aliens, and a milder unofficial persecution against all persons or movements that can be imagined as connected with the enemy. War, which should be the health of the State, unifies all the bourgeois elements and the common people, and outlaws the rest. The revolutionary proletariat shows more resistance to this unification, is, as we have seen, psychically out of the current. Its vanguard, as the I.W.W., is remorselessly pursued, in spite of the proof that it is a symptom, not a cause, and its persecution increases the disaffection of labor and intensifies the friction instead of lessening it.

But the emotions that play around the defense of the State do not take into consideration the pragmatic results. A nation at war, led by its significant classes, is engaged in liberating certain of its impulses which have had all too little exercise in the past. It is getting certain satisfactions, and the actual conduct of the war or the condition of the country are really incidental to the enjoyment of new forms of virtue and power and aggressiveness. If it could be shown conclusively that the persecution of slightly disaffected elements actually increased enormously the difficulties of production and the organization of the war technique, it would be found that public policy would scarcely change. The significant classes must have their pleasure in hunting down and chastising everything that they feel instinctively to be not imbued with the current State enthusiasm, though the State itself be actually impeded in its efforts to carry out those objects for which they are passionately contending. The best proof of this is that with a pursuit of plotters that has continued with ceaseless vigilance ever since the beginning of the war in Europe, the concrete crimes unearthed and punished have been fewer than those prosecutions for the mere crime of opinion or the expression of sentiments critical of the State or the national policy. The punishment for opinion has been far more ferocious and unintermittent than the punishment of pragmatic crime. Unimpeachable Anglo-Saxon Americans who were freer of pacifist or socialist utterance than the State-obsessed ruling public opinion, received heavier penalties and even greater opprobrium, in many instances, than the definitely hostile German plotter. A public opinion which, almost without protest, accepts as just, adequate, beautiful, deserved, and in fitting harmony with ideals of liberty and freedom of speech, a sentence of twenty years in prison for mere utterances, no matter what they may be, shows itself to be suffering from a kind of social derangement of values, a sort of social neurosis, that deserves analysis and comprehension.

On our entrance into the war, there were many persons who predicted exactly this derangement of values, who feared lest democracy suffer more at home from an America at war than could be gained for democracy abroad. That fear has been amply justified. The question whether the American nation would act like an enlightened democracy going to war for the sake of high ideals, or like a State-obsessed herd, has been decisively answered. The record is written and cannot be erased. History will decide whether the terrorization of opinion and the regimentation of life were justified under the most idealistic of democratic administrations. It will see that when the American nation had ostensibly a chance to conduct a gallant war, with scrupulous regard to the safety of democratic values at home, it chose rather to adopt all the most obnoxious and coercive techniques of the enemy and of the other countries at war, and to rival in intimidation and ferocity of punishment the worst governmental systems of the age. For its former unconsciousness and disrespect of the State ideal, the nation apparently paid the penalty in a violent swing to the other extreme. It acted so exactly like a herd in its irrational coercion of minorities that there is no artificiality in interpreting the progress of the war in terms of the herd psychology. It unwittingly brought out into the strongest relief the true characteristics of the State and its intimate alliance with war. It provided for the enemies of war and the critics of the State the most telling arguments possible. The new passion for the State ideal unwittingly set in motion and encouraged forces that threaten very materially to reform the State. It has shown those who are really determined to end war that the problem is not the mere simple one of finishing a war that will end war.

For war is a complicated way in which a nation acts, and it acts so out of a spiritual compulsion which pushes it on, perhaps against all its interests, all its real desires, and all its real sense of values. It is States that make wars and not nations, and the very thought and almost necessity of war is bound up with the ideal of the State. Not for centuries have nations made war; in fact the only historical example of nations making war is the great barbarian invasions into southern Europe, the invasions of Russia from the East, and perhaps the sweep of Islam through northern Africa into Europe after Mohammed’s death. And the motivations for such wars were either the restless expansion of migratory tribes or the flame of religious fanaticism. Perhaps these great movements could scarcely be called wars at all, for war implies an organized people drilled and led: in fact, it necessitates the State. Ever since Europe has had any such organization, such huge conflicts between nations — nations, that is, as cultural groups — have been unthinkable. It is preposterous to assume that for centuries in Europe there would have been any possibility of a people en masse (with their own leaders, and not with the leaders of their duly constituted State) rising up and overflowing their borders in a war raid upon a neighboring people. The wars of the Revolutionary armies of France were clearly in defense of an imperiled freedom, and, moreover, they were clearly directed not against other peoples, but against the autocratic governments that were combining to crush the Revolution. There is no instance in history of a genuinely national war. There are instances of national defenses, among primitive civilizations such as the Balkan peoples, against intolerable invasion by neighboring despots or oppression. But war, as such, cannot occur except in a system of competing States, which have relations with each other through the channels of diplomacy.

War is a function of this system of States, and could not occur except in such a system. Nations organized for internal administration, nations organized as a federation of free communities, nations organized in any way except that of a political centralization of a dynasty, or the reformed descendant of a dynasty, could not possibly make war upon each other. They would not only have no motive for conflict, but they would be unable to muster the concentrated force to make war effective. There might be all sorts of amateur marauding, there might be guerrilla expeditions of group against group, but there could not be that terrible war en masse of the national State, that exploitation of the nation in the interests of the State, that abuse of the national life and resource in the frenzied mutual suicide, which is modern war.

It cannot be too firmly realized that war is a function of States and not of nations, indeed that it is the chief function of States. War is a very artificial thing. It is not the naïve spontaneous outburst of herd pugnacity; it is no more primary than is formal religion. War cannot exist without a military establishment, and a military establishment cannot exist without a State organization. War has an immemorial tradition and heredity only because the State has a long tradition and heredity. But they are inseparably and functionally joined. We cannot crusade against war without crusading implicitly against the State. And we cannot expect, or take measures to ensure, that this war is a war to end war, unless at the same time we take measures to end the State in its traditional form. The State is not the nation, and the State can be modified and even abolished in its present form, without harming the nation. On the contrary, with the passing of the dominance of the State, the genuine life-enhancing forces of the nation will be liberated. If the State’s chief function is war, then the State must suck out of the nation a large part of its energy for its purely sterile purposes of defense and aggression. It devotes to waste or to actual destruction as much as it can of the vitality of the nation. No one will deny that war is a vast complex of life-destroying and life-crippling forces. If the State’s chief function is war, then it is chiefly concerned with coordinating and developing the powers and techniques which make for destruction. And this means not only the actual and potential destruction of the enemy, but of the nation at home as well. For the very existence of a State in a system of States means that the nation lies always under a risk of war and invasion, and the calling away of energy into military pursuits means a crippling of the productive and life-enhancing processes of the national life.

All this organization of death-dealing energy and technique is not a natural but a very sophisticated process. Particularly in modern nations, but also all through the course of modern European history, it could never exist without the State. For it meets the demands of no other institution, it follows the desires of no religious, industrial, political group. If the demand for military organization and a military establishment seems to come not from the officers of the State but from the public, it is only that it comes from the State-obsessed portion of the public, those groups which feel most keenly the State ideal. And in this country we have had evidence all too indubitable how powerless the pacifically minded officers of State may be in the face of a State obsession of the significant classes. If a powerful section of the significant classes feels more intensely the attitudes of the State, then they will most infallibly mold the Government in time to their wishes, bring it back to act as the embodiment of the State which it pretends to be. In every country we have seen groups that were more loyal than the king — more patriotic than the Government — the Ulsterites in Great Britain, the Junkers in Prussia, l’Action Française in France, our patrioteers in America. These groups exist to keep the steering wheel of the State straight, and they prevent the nation from ever veering very far from the State ideal.

Militarism expresses the desires and satisfies the major impulse only of this class. The other classes, left to themselves, have too many necessities and interests and ambitions, to concern themselves with so expensive and destructive a game. But the State-obsessed group is either able to get control of the machinery of the State or to intimidate those in control, so that it is able through use of the collective force to regiment the other grudging and reluctant classes into a military program. State idealism percolates down through the strata of society; capturing groups and individuals just in proportion to the prestige of this dominant class. So that we have the herd actually strung along between two extremes, the militaristic patriots at one end, who are scarcely distinguishable in attitude and animus from the most reactionary Bourbons of an Empire, and unskilled labor groups, which entirely lack the State sense. But the State acts as a whole, and the class that controls governmental machinery can swing the effective action of the herd as a whole. The herd is not actually a whole, emotionally. But by an ingenious mixture of cajolery, agitation, intimidation, the herd is licked into shape, into an effective mechanical unity, if not into a spiritual whole. Men are told simultaneously that they will enter the military establishment of their own volition, as their splendid sacrifice for their country’s welfare, and that if they do not enter they will be hunted down and punished with the most horrid penalties; and under a most indescribable confusion of democratic pride and personal fear they submit to the destruction of their livelihood if not their lives, in a way that would formerly have seemed to them so obnoxious as to be incredible.

In this great herd machinery, dissent is like sand in the bearings. The State ideal is primarily a sort of blind animal push toward military unity. Any difference with that unity turns the whole vast impulse toward crushing it. Dissent is speedily outlawed, and the Government, backed by the significant classes and those who in every locality, however small, identify themselves with them, proceeds against the outlaws, regardless of their value to the other institutions of the nation, or to the effect their persecution may have on public opinion. The herd becomes divided into the hunters and the hunted, and war enterprise becomes not only a technical game but a sport as well.

It must never be forgotten that nations do not declare war on each other, nor in the strictest sense is it nations that fight each other. Much has been said to the effect that modern wars are wars of whole peoples and not of dynasties. Because the entire nation is regimented and the whole resources of the country are levied on for war, this does not mean that it is the country qua country which is fighting. It is the country organized as a State that is fighting, and only as a State would it possibly fight. So literally it is States which make war on each other and not peoples. Governments are the agents of States, and it is Governments which declare war on each other, acting truest to form in the interests of the great State ideal they represent. There is no case known in modern times of the people being consulted in the initiation of a war. The present demand for “democratic control” of foreign policy indicates how completely, even in the most democratic of modern nations, foreign policy has been the secret private possession of the executive branch of the Government.

However representative of the people Parliaments and Congresses may be in all that concerns the internal administration of a country’s political affairs, in international relations it has never been possible to maintain that the popular body acted except as a wholly mechanical ratifier of the Executive’s will. The formality by which Parliaments and Congresses declare war is the merest technicality. Before such a declaration can take place, the country will have been brought to the very brink of war by the foreign policy of the Executive. A long series of steps on the downward path, each one more fatally committing the unsuspecting country to a warlike course of action, will have been taken without either the people or its representatives being consulted or expressing its feeling. When the declaration of war is finally demanded by the Executive, the Parliament or Congress could not refuse it without reversing the course of history, without repudiating what has been representing itself in the eyes of the other States as the symbol and interpreter of the nation’s will and animus. To repudiate an Executive at that time would be to publish to the entire world the evidence that the country had been grossly deceived by its own Government, that the country with an almost criminal carelessness had allowed its Government to commit it to gigantic national enterprises in which it had no heart. In such a crisis, even a Parliament which in the most democratic States represents the common man and not the significant classes who most strongly cherish the State ideal, will cheerfully sustain the foreign policy which it understands even less than it would care for if it understood, and will vote almost unanimously for an incalculable war, in which the nation may be brought well nigh to ruin. That is why the referendum which was advocated by some people as a test of American sentiment in entering the war was considered even by thoughtful democrats to be something subtly improper. The die had been cast. Popular whim could only derange and bungle monstrously the majestic march of State policy in its new crusade for the peace of the world. The irresistible State ideal got hold of the bowels of men. Whereas up to this time, it had been irreproachable to be neutral in word and deed, for the foreign policy of the State had so decided it, henceforth it became the most arrant crime to remain neutral. The Middle West, which had been soddenly pacifistic in our days of neutrality, became in a few months just as soddenly bellicose, and in its zeal for witch-burnings and its scent for enemies within gave precedence to no section of the country. The herd-mind followed faithfully the State-mind and, the agitation for a referendum being soon forgotten, the country fell into the universal conclusion that, since its Congress had formally declared the war, the nation itself had in the most solemn and universal way devised and brought on the entire affair. Oppression of minorities became justified on the plea that the latter were perversely resisting the rationally constructed and solemnly declared will of a majority of the nation. The herd coalescence of opinion which became inevitable the moment the State had set flowing the war attitudes became interpreted as a prewar popular decision, and disinclination to bow to the herd was treated as a monstrously antisocial act. So that the State, which had vigorously resisted the idea of a referendum and clung tenaciously and, of course, with entire success to its autocratic and absolute control of foreign policy, had the pleasure of seeing the country, within a few months, given over to the retrospective impression that a genuine referendum had taken place. When once a country has lapped up these State attitudes, its memory fades; it conceives itself not as merely accepting, but of having itself willed, the whole policy and technique of war. The significant classes, with their trailing satellites, identify themselves with the State, so that what the State, through the agency of the Government, has willed, this majority conceives itself to have willed.

All of which goes to show that the State represents all the autocratic, arbitrary, coercive, belligerent forces within a social group, it is a sort of complexus of everything most distasteful to the modern free creative spirit, the feeling for life, liberty, and the pursuit of happiness. War is the health of the State. Only when the State is at war does the modern society function with that unity of sentiment, simple uncritical patriotic devotion, cooperation of services, which have always been the ideal of the State lover. With the ravages of democratic ideas, however, the modern republic cannot go to war under the old conceptions of autocracy and death-dealing belligerency. If a successful animus for war requires a renaissance of State ideals, they can only come back under democratic forms, under this retrospective conviction of democratic control of foreign policy, democratic desire for war, and particularly of this identification of the democracy with the State. How unregenerate the ancient State may be, however, is indicated by the laws against sedition, and by the Government’s unreformed attitude on foreign policy. One of the first demands of the more farseeing democrats in the democracies of the Alliance was that secret diplomacy must go. The war was seen to have been made possible by a web of secret agreements between States, alliances that were made by Governments without the shadow of popular support or even popular knowledge, and vague, half-understood commitments that scarcely reached the stage of a treaty or agreement, but which proved binding in the event. Certainly, said these democratic thinkers, war can scarcely be avoided unless this poisonous underground system of secret diplomacy is destroyed, this system by which a nation’s power, wealth, and manhood may be signed away like a blank check to an allied nation to be cashed in at some future crisis. Agreements which are to affect the lives of whole peoples must be made between peoples and not by Governments, or at least by their representatives in the full glare of publicity and criticism.

Such a demand for “democratic control of foreign policy” seemed axiomatic. Even if the country had been swung into war by steps taken secretly and announced to the public only after they had been consummated, it was felt that the attitude of the American State toward foreign policy was only a relic of the bad old days and must be superseded in the new order. The American President himself, the liberal hope of the world, had demanded, in the eyes of the world, open diplomacy, agreements freely and openly arrived at. Did this mean a genuine transference of power in this most crucial of State functions from Government to people? Not at all. When the question recently came to a challenge in Congress, and the implications of open discussion were somewhat specifically discussed, and the desirabilities frankly commended, the President let his disapproval be known in no uncertain way. No one ever accused Mr. Wilson of not being a State idealist, and whenever democratic aspirations swung ideals too far out of the State orbit, he could be counted on to react vigorously. Here was a clear case of conflict between democratic idealism and the very crux of the concept of the State. However unthinkingly he might have been led on to encourage open diplomacy in his liberalizing program, when its implication was made vivid to him, he betrayed how mere a tool the idea had been in his mind to accentuate America’s redeeming role. Not in any sense as a serious pragmatic technique had he thought of a genuinely open diplomacy. And how could he? For the last stronghold of State power is foreign policy. It is in foreign policy that the State acts most concentratedly as the organized herd, acts with fullest sense of aggressive-power, acts with freest arbitrariness. In foreign policy, the State is most itself. States, with reference to each other, may be said to be in a continual state of latent war. The “armed truce,” a phrase so familiar before 1914, was an accurate description of the normal relation of States when they are not at war. Indeed, it is not too much to say that the normal relation of States is war. Diplomacy is a disguised war, in which States seek to gain by barter and intrigue, by the cleverness of wits, the objectives which they would have to gain more clumsily by means of war. Diplomacy is used while the States are recuperating from conflicts in which they have exhausted themselves. It is the wheedling and the bargaining of the worn-out bullies as they rise from the ground and slowly restore their strength to begin fighting again. If diplomacy had been a moral equivalent for war, a higher stage in human progress, an inestimable means of making words prevail instead of blows, militarism would have broken down and given place to it. But since it is a mere temporary substitute, a mere appearance of war’s energy under another form, a surrogate effect is almost exactly proportioned to the armed force behind it. When it fails, the recourse is immediate to the military technique whose thinly veiled arm it has been. A diplomacy that was the agency of popular democratic forces in their non-State manifestations would be no diplomacy at all. It would be no better than the Railway or Education commissions that are sent from one country to another with rational constructive purpose. The State, acting as a diplomatic-military ideal, is eternally at war. Just as it must act arbitrarily and autocratically in time of war, it must act in time of peace in this particular role where it acts as a unit. Unified control is necessarily autocratic control. Democratic control of foreign policy is therefore a contradiction in terms. Open discussion destroys swiftness and certainty of action. The giant State is paralyzed. Mr. Wilson retains his full ideal of the State at the same time that he desires to eliminate war. He wishes to make the world safe for democracy as well as safe for diplomacy. When the two are in conflict, his clear political insight, his idealism of the State, tells him that it is the naïver democratic values that must be sacrificed. The world must primarily be made safe for diplomacy. The State must not be diminished.

What is the State essentially? The more closely we examine it, the more mystical and personal it becomes. On the Nation we can put our hand as a definite social group, with attitudes and qualities exact enough to mean something. On the Government we can put our hand as a certain organization of ruling functions, the machinery of lawmaking and law-enforcing. The Administration is a recognizable group of political functionaries, temporarily in charge of the government. But the State stands as an idea behind them all, eternal, sanctified, and from it Government and Administration conceive themselves to have the breath of life. Even the nation, especially in times of war — or at least, its significant classes — considers that it derives its authority and its purpose from the idea of the State. Nation and State are scarcely differentiated, and the concrete, practical, apparent facts are sunk in the symbol. We reverence not our country but the flag. We may criticize ever so severely our country, but we are disrespectful to the flag at our peril. It is the flag and the uniform that make men’s heart beat high and fill them with noble emotions, not the thought of and pious hopes for America as a free and enlightened nation.

It cannot be said that the object of emotion is the same, because the flag is the symbol of the nation, so that in reverencing the American flag we are reverencing the nation. For the flag is not a symbol of the country as a cultural group, following certain ideals of life, but solely a symbol of the political State, inseparable from its prestige and expansion. The flag is most intimately connected with military achievement, military memory. It represents the country not in its intensive life, but in its far-flung challenge to the world. The flag is primarily the banner of war; it is allied with patriotic anthem and holiday. It recalls old martial memories. A nation’s patriotic history is solely the history of its wars, that is, of the State in its health and glorious functioning. So in responding to the appeal of the flag, we are responding to the appeal of the State, to the symbol of the herd organized as an offensive and defensive body, conscious of its prowess and its mystical herd strength.

Even those authorities in the present Administration, to whom has been granted autocratic control over opinion, feel, though they are scarcely able to philosophize over, this distinction. It has been authoritatively declared that the horrid penalties against seditious opinion must not be construed as inhibiting legitimate, that is, partisan criticism of the Administration. A distinction is made between the Administration and the Government. It is quite accurately suggested by this attitude that the Administration is a temporary band of partisan politicians in charge of the machinery of Government, carrying out the mystical policies of State. The manner in which they operate this machinery may be freely discussed and objected to by their political opponents. The Governmental machinery may also be legitimately altered, in case of necessity. What may not be discussed or criticized is the mystical policy itself or the motives of the State in inaugurating such a policy. The President, it is true, has made certain partisan distinctions between candidates for office on the ground of support or nonsupport of the Administration, but what he means was really support or nonsupport of the State policy as faithfully carried out by the Administration. Certain of the Administration measures were devised directly to increase the health of the State, such as the Conscription and the Espionage laws. Others were concerned merely with the machinery. To oppose the first was to oppose the State and was therefore not tolerable. To oppose the second was to oppose fallible human judgment, and was therefore, though to be depreciated, not to be wholly interpreted as political suicide.

The distinction between Government and State, however, has not been so carefully observed. In time of war it is natural that Government as the seat of authority should be confused with the State or the mystic source of authority. You cannot very well injure a mystical idea which is the State, but you can very well interfere with the processes of Government. So that the two become identified in the public mind, and any contempt for or opposition to the workings of the machinery of Government is considered equivalent to contempt for the sacred State. The State, it is felt, is being injured in its faithful surrogate, and public emotion rallies passionately to defend it. It even makes any criticism of the form of Government a crime.

The inextricable union of militarism and the State is beautifully shown by those laws which emphasize interference with the Army and Navy as the most culpable of seditious crimes. Pragmatically, a case of capitalistic sabotage, or a strike in war industry would seem to be far more dangerous to the successful prosecution of the war than the isolated and ineffectual efforts of an individual to prevent recruiting. But in the tradition of the State ideal, such industrial interference with national policy is not identified as a crime against the State. It may be grumbled against; it may be seen quite rationally as an impediment of the utmost gravity. But it is not felt in those obscure seats of the herd mind which dictate the identity of crime and fix their proportional punishments. Army and Navy, however, are the very arms of the State; in them flows its most precious lifeblood. To paralyze them is to touch the very State itself. And the majesty of the State is so sacred that even to attempt such a paralysis is a crime equal to a successful strike. The will is deemed sufficient. Even though the individual in his effort to impede recruiting should utterly and lamentably fail, he shall be in no wise spared. Let the wrath of the State descend upon him for his impiety! Even if he does not try any overt action, but merely utters sentiments that may incidentally in the most indirect way cause someone to refrain from enlisting, he is guilty. The guardians of the State do not ask whether any pragmatic effect flowed out of this evil will or desire. It is enough that the will is present. Fifteen or twenty years in prison is not deemed too much for such sacrilege.

Such attitudes and such laws, which affront every principle of human reason, are no accident, nor are they the result of hysteria caused by the war. They are considered just, proper, beautiful by all the classes which have the State ideal, and they express only an extreme of health and vigor in the reaction of the State to its nonfriends.

Such attitudes are inevitable as arising from the devotees of the State. For the State is a personal as well as a mystical symbol, and it can only be understood by tracing its historical origin. The modern State is not the rational and intelligent product of modern men desiring to live harmoniously together with security of life, property, and opinion. It is not an organization which has been devised as pragmatic means to a desired social end. All the idealism with which we have been instructed to endow the State is the fruit of our retrospective imaginations. What it does for us in the way of security and benefit of life, it does incidentally as a by-product and development of its original functions, and not because at any time men or classes in the full possession of their insight and intelligence have desired that it be so. It is very important that we should occasionally lift the incorrigible veil of that ex post facto idealism by which we throw a glamour of rationalization over what is, and pretend in the ecstasies of social conceit that we have personally invented and set up for the glory of God and man the hoary institutions which we see around us. Things are what they are, and come down to us with all their thick encrustations of error and malevolence. Political philosophy can delight us with fantasy and convince us who need illusion to live that the actual is a fair and approximate copy — full of failings, of course, but approximately sound and sincere — of that ideal society which we can imagine ourselves as creating. From this it is a step to the tacit assumption that we have somehow had a hand in its creation and are responsible for its maintenance and sanctity.

Nothing is more obvious, however, than that every one of us comes into society as into something in whose creation we had not the slightest hand. We have not even the advantage, like those little unborn souls in The Blue Bird, of consciousness before we take up our careers on earth. By the time we find ourselves here we are caught in a network of customs and attitudes, the major directions of our desires and interests have been stamped on our minds, and by the time we have emerged from tutelage and reached the years of discretion when we might conceivably throw our influence to the reshaping of social institutions, most of us have been so molded into the society and class we live in that we are scarcely aware of any distinction between ourselves as judging, desiring individuals and our social environment. We have been kneaded so successfully that we approve of what our society approves, desire what our society desires, and add to the group our own passionate inertia against change, against the effort of reason, and the adventure of beauty.

Every one of us, without exception, is born into a society that is given, just as the fauna and flora of our environment are given. Society and its institutions are, to the individual who enters it, as much naturalistic phenomena as is the weather itself. There is, therefore, no natural sanctity in the State any more than there is in the weather. We may bow down before it, just as our ancestors bowed before the sun and moon, but it is only because something in us unregenerate finds satisfaction in such an attitude, not because there is anything inherently reverential in the institution worshiped. Once the State has begun to function, and a large class finds its interest and its expression of power in maintaining the State, this ruling class may compel obedience from any uninterested minority. The State thus becomes an instrument by which the power of the whole herd is wielded for the benefit of a class. The rulers soon learn to capitalize the reverence which the State produces in the majority, and turn it into a general resistance toward a lessening of their privileges. The sanctity of the State becomes identified with the sanctity of the ruling class, and the latter are permitted to remain in power under the impression that in obeying and serving them, we are obeying and serving society, the nation, the great collectivity of all of us. . . .

RANDOLPH  BOURNE
1918


First part of an essay entitled “The State,” which was left unfinished at Bourne’s untimely death in 1918.

Bourne’s distinctions between State and Government and between State and Nation are sometimes a little too neat, and his stress on the State’s intimate connection with war tends to obscure its more “normal” ongoing role as enforcer of the economic system during peacetime. While he recognizes that war cannot be abolished without abolishing the State, he is less clear (or at least less explicit) about the fact that the State cannot be abolished without abolishing capitalism. With this qualification, I think his essay is one of the most lucid analyses of the patriotic hysteria that springs up with astonishing rapidity in times of war, and that has usually proved far more powerful than the rational arguments of its radical opponents. I drew on it in some passages of The War and the Spectacle.

Though Bourne sympathized with the IWW and the more radical socialist currents of his day, his social perspective seems to have been along the more eclectic liberal-humanistic lines of later figures such as Lewis Mumford. Two good collections of his writings are War and the Intellectuals (Harper, 1964) and The Radical Will (Urizen, 1977). Another online Bourne article, The War and the Intellectuals (1917), examines the virtually unanimous capitulation of even the most “progressive” American intellectuals to support of American’s entry into World War I. Bourne was one of the few honorable exceptions. Twenty-five years later, when Kenneth Rexroth and his comrades formed an antiwar group during World War II, they named it the Randolph Bourne Council.

No copyright. “War Is the Health of the State” is now in the public domain and may be reproduced freely.

FDR saved capitalism from itself

Fireside Chat 6: On Government and Capitalism (September 30, 1934)

Franklin Delano Roosevelt

Three months have passed since I talked with you shortly after the adjournment of the Congress. Tonight I continue that report, though, because of the shortness of time, I must defer a number of subjects to a later date.

Recently the most notable public questions that have concerned us all have had to do with industry and labor and with respect to these, certain developments have taken place which I consider of importance. I am happy to report that after years of uncertainty, culminating in the collapse of the spring of 1933, we are bringing order out of the old chaos with a greater certainty of the employment of labor at a reasonable wage and of more business at a fair profit. These governmental and industrial developments hold promise of new achievements for the nation.

Men may differ as to the particular form of governmental activity with respect to industry and business, but nearly all are agreed that private enterprise in times such as these cannot be left without assistance and without reasonable safeguards lest it destroy not only itself but also our processes of civilization. The underlying necessity for such activity is indeed as strong now as it was years ago when Elihu Root said the following very significant words:

“Instead of the give and take of free individual contract, the tremendous power of organization has combined great aggregations of capital in enormous industrial establishments working through vast agencies of commerce and employing great masses of men in movements of production and transportation and trade, so great in the mass that each individual concerned in them is quite helpless by himself. The relations between the employer and the employed, between the owners of aggregated capital and the units of organized labor, between the small producer, the small trader, the consumer, and the great transporting and manufacturing and distributing agencies, all present new questions for the solution of which the old reliance upon the free action of individual wills appear quite inadequate. And in many directions, the intervention of that organized control which we call government seems necessary to produce the same result of justice and right conduct which obtained through the attrition of individuals before the new conditions arose.”

It was in this spirit thus described by Secretary Root that we approached our task of reviving private enterprise in March, 1933. Our first problem was, of course, the banking situation because, as you know, the banks had collapsed. Some banks could not be saved but the great majority of them, either through their own resources or with government aid, have been restored to complete public confidence. This has given safety to millions of depositors in these banks. Closely following this great constructive effort we have, through various Federal agencies, saved debtors and creditors alike in many other fields of enterprise, such as loans on farm mortgages and home mortgages; loans to the railroads and insurance companies and, finally, help for home owners and industry itself.

In all of these efforts the government has come to the assistance of business and with the full expectation that the money used to assist these enterprises will eventually be repaid. I believe it will be.

The second step we have taken in the restoration of normal business enterprise has been to clean up thoroughly unwholesome conditions in the field of investment. In this we have had assistance from many bankers and businessmen, most of whom recognize the past evils in the banking system, in the sale of securities, in the deliberate encouragement of stock gambling, in the sale of unsound mortgages and in many other ways in which the public lost billions of dollars. They saw that without changes in the policies and methods of investment there could be no recovery of public confidence in the security of savings. The country now enjoys the safety of bank savings under the new banking laws, the careful checking of new securities under the Securities Act and the curtailment of rank stock speculation through the Securities Exchange Act. I sincerely hope that as a result people will be discouraged in unhappy efforts to get rich quick by speculating in securities. The average person almost always loses. Only a very small minority of the people of this country believe in gambling as a substitute for the old philosophy of Benjamin Franklin that the way to wealth is through work.

In meeting the problems of industrial recovery the chief agency of the government has been the National Recovery Administration. Under its guidance, trades and industries covering over ninety percent of all industrial employees have adopted codes of fair competition, which have been approved by the President. Under these codes, in the industries covered, child labor has been eliminated. The work day and the work week have been shortened. Minimum wages have been established and other wages adjusted toward a rising standard of living. The emergency purpose of the N. R. A. was to put men to work and since its creation more than four million persons have been re-employed, in great part through the cooperation of American business brought about under the codes.

Benefits of the Industrial Recovery Program have come, not only to labor in the form of new jobs, in relief from over-work and in relief from under-pay, but also to the owners and managers of industry because, together with a great increase in the payrolls, there has come a substantial rise in the total of industrial profits – a rise from a deficit figure in the first quarter of 1933 to a level of sustained profits within one year from the inauguration of N. R. A.

Now it should not be expected that even employed labor and capital would be completely satisfied with present conditions. Employed workers have not by any means all enjoyed a return to the earnings of prosperous times; although millions of hitherto under- privileged workers are today far better paid than ever before. Also, billions of dollars of invested capital have today a greater security of present and future earning power than before. This is because of the establishment of fair, competitive standards and because of relief from unfair competition in wage cutting which depresses markets and destroys purchasing power. But it is an undeniable fact that the restoration of other billions of sound investments to a reasonable earning power could not be brought about in one year. There is no magic formula, no economic panacea, which could simply revive over-night the heavy industries and the trades dependent upon them.

Nevertheless the gains of trade and industry, as a whole, have been substantial. In these gains and in the policies of the Administration there are assurances that hearten all forward-looking men and women with the confidence that we are definitely rebuilding our political and economic system on the lines laid down by the New Deal – lines which as I have so often made clear, are in complete accord with the underlying principles of orderly popular government which Americans have demanded since the white man first came to these shores. We count, in the future as in the past, on the driving power of individual initiative and the incentive of fair private profit, strengthened with the acceptance of those obligations to the public interest which rest upon us all. We have the right to expect that this driving power will be given patriotically and whole-heartedly to our nation.

We have passed through the formative period of code making in the National Recovery Administration and have effected a reorganization of the N. R. A. suited to the needs of the next phase, which is, in turn, a period of preparation for legislation which will determine its permanent form.

In this recent reorganization we have recognized three distinct functions. First, the legislative or policy making function. Second, the administrative function of code making and revision and, third, the judicial function, which includes enforcement, consumer complaints and the settlement of disputes between employers and employees and between one employer and another.

We are now prepared to move into this second phase, on the basis of our experience in the first phase under the able and energetic leadership of General Johnson.

We shall watch carefully the working of this new machinery for the second phase of N. R. A., modifying it where it needs modification and finally making recommendations to the Congress, in order that the functions of N. R. A. which have proved their worth may be made a part of the permanent machinery of government.

Let me call your attention to the fact that the National Industrial Recovery Act gave businessmen the opportunity they had sought for years to improve business conditions through what has been called self-government in industry. If the codes which have been written have been too complicated, if they have gone too far in such matters as price fixing and limitation of production, let it be remembered that so far as possible, consistent with the immediate public interest of this past year and the vital necessity of improving labor conditions, the representatives of trade and industry were permitted to write their ideas into the codes. It is now time to review these actions as a whole to determine through deliberative means in the light of experience, from the standpoint of the good of the industries themselves, as well as the general public interest, whether the methods and policies adopted in the emergency have been best calculated to promote industrial recovery and a permanent improvement of business and labor conditions. There may be a serious question as to the wisdom of many of those devices to control production, or to prevent destructive price cutting which many business organizations have insisted were necessary, or whether their effect may have been to prevent that volume of production which would make possible lower prices and increased employment. Another question arises as to whether in fixing minimum wages on the basis of an hourly or weekly wage we have reached into the heart of the problem which is to provide such annual earnings for the lowest paid worker as will meet his minimum needs. We also question the wisdom of extending code requirements suited to the great industrial centers and to large employers, to the great number of small employers in the smaller communities.

During the last twelve months our industrial recovery has been to some extent retarded by strikes, including a few of major importance. I would not minimize the inevitable losses to employers and employees and to the general public through such conflicts. But I would point out that the extent and severity of labor disputes during this period has been far less than in any previous, comparable period.

When the businessmen of the country were demanding the right to organize themselves adequately to promote their legitimate interests; when the farmers were demanding legislation which would give them opportunities and incentives to organize themselves for a common advance, it was natural that the workers should seek and obtain a statutory declaration of their constitutional right to organize themselves for collective bargaining as embodied in Section 7 (a) of the National Industrial Recovery Act.

Machinery set up by the Federal government has provided some new methods of adjustment. Both employers and employees mast share the blame of not using them as fully as they should. The employer who turns away from impartial agencies of peace, who denies freedom of organization to his employees, or fails to make every reasonable effort at a peaceful solution of their differences, is not fully supporting the recovery effort of his government. The workers who turn away from these same impartial agencies and decline to use their good offices to gain their ends are likewise not fully cooperating with their government.

It is time that we made a clean-cut effort to bring about that united action of management and labor, which is one of the high purposes of the Recovery Act. We have passed through more than a year of education. Step by step we have created all the government agencies necessary to insure, as a general rule, industrial peace, with justice for all those willing to use these agencies whenever their voluntary bargaining fails to produce a necessary agreement.

There should be at least a full and fair trial given to these means of ending industrial warfare; and in such an effort we should be able to secure for employers and employees and consumers the benefits that all derive from the continuous, peaceful operation of our essential enterprises.

Accordingly, I propose to confer within the coming month with small groups of those truly representative of large employers of labor and of large groups of organized labor, in order to seek their cooperation in establishing what I may describe as a specific trial period of industrial peace.

From those willing to join in establishing this hoped-for period of peace, I shall seek assurances of the making and maintenance of agreements, which can be mutually relied upon, under which wages, hours and working conditions may be determined and any later adjustments shall be made either by agreement or, in case of disagreement, through the mediation or arbitration of state or federal agencies. I shall not ask either employers or employees permanently to lay aside the weapons common to industrial war. But I shall ask both groups to give a fair trial to peaceful methods of adjusting their conflicts of opinion and interest, and to experiment for a reasonable time with measures suitable to civilize our industrial civilization.

Closely allied to the N. R. A. is the program of Public Works provided for in the same Act and designed to put more men back to work, both directly on the public works themselves, and indirectly in the industries supplying the materials for these public works. To those who say that our expenditures for Public Works and other means for recovery are a waste that we cannot afford, I answer that no country, however rich, can afford the waste of its human resources. Demoralization caused by vast unemployment is our greatest extravagance. Morally, it is the greatest menace to our social order. Some people try to tell me that we must make up our minds that for the future we shall permanently have millions of unemployed just as other countries have had them for over a decade. What may be necessary for those countries is not my responsibility to determine. But as for this country, I stand or fall by my refusal to accept as a necessary condition of our future a permanent army of unemployed. On the contrary, we must make it a national principle that we will not tolerate a large army of unemployed and that we will arrange our national economy to end our present unemployment as soon as we can and then to take wise measures against its return. I do not want to think that it is the destiny of any American to remain permanently on relief rolls.

Those, fortunately few in number, who are frightened by boldness and cowed by the necessity for making decisions, complain that all we have done is unnecessary and subject to great risks. Now that these people are coming out of their storm cellars, they forget that there ever was a storm. They point to England. They would have you believe that England has made progress out of her depression by a do-nothing policy, by letting nature take her course. England has her peculiarities and we have ours but I do not believe any intelligent observer can accuse England of undue orthodoxy in the present emergency.

Did England let nature take her course? No. Did England hold to the gold standard when her reserves were threatened? No. Has England gone back to the gold standard today? No. Did England hesitate to call in ten billion dollars of her war bonds bearing 5 percent interest, to issue new bonds therefore bearing only 3 1/2 percent interest, thereby saving the British Treasury one hundred and fifty million dollars a year in interest alone? No. And let it be recorded that the British bankers helped. Is it not a fact that ever since the year 1909, Great Britain in many ways has advanced further along lines of social security than the United States? Is it not a fact that relations between capital and labor on the basis of collective bargaining are much further advanced in Great Britain than in the United States? It is perhaps not strange that the conservative British press has told us with pardonable irony that much of our New Deal program is only an attempt to catch up with English reforms that go back ten years or more.

Nearly all Americans are sensible and calm people. We do not get greatly excited nor is our peace of mind disturbed, whether we be businessmen or workers or farmers, by awesome pronouncements concerning the unconstitutionality of some of our measures of recovery and relief and reform. We are not frightened by reactionary lawyers or political editors. All of these cries have been heard before. More than twenty years ago, when Theodore Roosevelt and Woodrow Wilson were attempting to correct abuses in our national life, the great Chief Justice White said:

“There is great danger it seems to me to arise from the constant habit which prevails where anything is opposed or objected to, of referring without rhyme or reason to the Constitution as a means of preventing its accomplishment, thus creating the general impression that the Constitution is but a barrier to progress instead of being the broad highway through which alone true progress may be enjoyed.”

In our efforts for recovery we have avoided on the one hand the theory that business should and must be taken over into an all-embracing Government. We have avoided on the other hand the equally untenable theory that it is an interference with liberty to offer reasonable help when private enterprise is in need of help. The course we have followed fits the American practice of Government – a practice of taking action step by step, of regulating only to meet concrete needs – a practice of courageous recognition of change. I believe with Abraham Lincoln, that “The legitimate object of Government is to do for a community of people whatever they need to have done but cannot do at all or cannot do so well for themselves in their separate and individual capacities.”

I still believe in ideals. I am not for a return to that definition of Liberty under which for many years a free people were being gradually regimented into the service of the privileged few. I prefer and I am sure you prefer that broader definition of Liberty under which we are moving forward to greater freedom, to greater security for the average man than he has ever known before in the history of America.

 

RELATED:

FDR saved capitalism in eight days – Slate Magazine

SO GOD MADE A BANKER

http://ws.affiliately.com/goto?aaID=nejecf-20&aaMarketplace=com&url=http://www.marketwatch.com/

To be read in the voice of Paul Harvey.

And on the eighth day God looked down on his planned paradise and said, “I need someone who can flip this for a quick buck.”

So God made a banker.

God said, “I need someone who doesn’t grow anything or make anything but who will borrow money from the public at 0% interest and then lend it back to the public at 2% or 5% or 10% and pay himself a bonus for doing so.”

So God made a banker.

God said, “I need someone who will take money from the people who work and save, and use that money to create a dotcom bubble and a housing bubble and a stock bubble and an oil bubble and a commodities bubble and a bond bubble and another stock bubble, and then sell it to people in Poughkeepsie and Spokane and Bakersfield, and pay himself another bonus.”

So God made a banker

Debt Ceiling: How John Boehner Outplayed Obama

If Boehner succeeds in closing the deal as he, with a critical assist from Senate Minority Leader McConnell, seems about to do he will go down in history as having brought about “the moment when the rise of the oceans (of debt) began to slow” … and our republic “began to heal.” If so John Boehner will deserve to be more than a Republican, conservative, and tea party, hero. He will go up in popular esteem, and down in history, as the master who staunched Washington’s hemorrhaging of America’s wealth.

Debt Ceiling: How John Boehner Outplayed Obama

 

 

“All I can hope to teach my son is to tell the truth and fear no man…

“All I can hope to teach my son is to tell the truth and fear no man…

If none of us ever read a book that was “dangerous,” had a friend who was “different,” or joined an organization that advocated “change,” we would all be just the kind of people Joe McCarthy wants…

The only thing that counts is the right to know, to speak, to think — that, and the sanctity of the courts. Otherwise it’s not America.

No one man can terrorize a whole nation unless we are all his accomplices.”

Edward R. Murrow, speech to his CBS News staff, 1954

Edward R Murrow

Obama’s Declaration Of Collectivism

Senate Minority Leader Mitch McConnell likened Obama’s speech to a declaration of the end of the era of small government. “One thing is clear from the president’s speech,” he said, “The era of liberalism is back.” I agree.

But again I say it’s Obama’s misunderstanding of the Founders’ intent that is the most troubling. Equality of opportunity is the American ideal. Equality of results and income-leveling is foreign to the American ideal.

As conservatives and Republicans regroup, and as they seek to achieve a better America, I hope they keep the opportunity principle uppermost in their minds.

Obama’s Declaration Of Collectivism – Larry Kudlow, RealClearMarkets

Obama’s Witch Doctor Economists Propose Reducing the Federal Deficit By Spending More

In Economics 101, students learn that net investment equals net saving as an identity (that is, as a matter of definition).  An economy can only invest as much as it has access to saving. Economics 101 students also learn that the three sources of net saving are: private saving, saving from abroad, and government dissaving.

The latest figures show a net private saving of $1,193 billion, savings from abroad of $493 billion, and government dissaving of minus $1,255 billion, leaving only $430 billion of net saving for net investment. Of this, $344 billion went for private investment the rest for government investment (in structures, buildings and inventory). From a private saving pool of over $1.5 trillion, only $344 billion was left over for private investment after the government deficit.

In effect, the government deficit cost the economy one trillion dollars in private investment that could but did not take place! Economists have long called this public “crowding out” of private investment. In return for crowding out, the government paid about forty cents on each dollar of entitlements, general government, public education, GM and Chrysler bailouts, Solyndras, agricultural subsidies, and so on down the list.

Witch-doctor economists, like Obama and Summers, believe that the loss of private investment is no big deal. Government can direct this money to better things. Their central planners can allocate its diverted savings to produce more growth, prosperity and happiness than the private sector’s new drilling rigs, office buildings, assembly lines, Silicon Valley startups, new apartment complexes, private research labs, and new plants and equipment ever could.

Try selling that argument to anyone with common sense.

You Can’t Fix the Deficit with More Deficits

 

Uh-Oh: Small Investors Propel Stocks

…many investors have been hesitant about entering the market because of the slow recovery of the economy. Now, a number of recent data points suggests that the recovery may be gaining traction. This week, new claims for unemployment benefits fell to the lowest level in five years.

Even many optimistic strategists say that a short-term break from the market rally is likely until there are more indications that the economy is growing. And given that January is historically a strong month for stocks, more bearish analysts have said the recent rally is likely to fade. One drag on growth could come from the recent increase in payroll taxes.

There is also a sizable contingent of investors who think that the European debt crisis and United States fiscal position still represent significant threats.

But Russ Koesterich, the chief investment strategist at BlackRock, said that the current threats were “mundane” in comparison to what investors faced the last few years. “We’re not talking about big crises anymore,” he said.

Uh-Oh: Small Investors Propel Stocks

He had a Dream too

RFK Triumphant

The BIS calls for a revolution in economics

In the last four decades, there have been only a handful of central bank and Treasury papers that I thought genuinely added to human knowledge. The economic-oriented departments within governments have in general been even more dominated by neoclassical orthodoxy than academic departments – and for good, bureaucratic reasons.

>> Read More…

AMAZON BASIN IN DANGER

A view of the forest in French Guyana near Dorlin, on Dec. 1, 2012. (Jody Amiet/AFP/Getty Images)

A view of the forest in French Guyana near Dorlin, on Dec. 1, 2012. (Jody Amiet/AFP/Getty Images)

A massive drought almost eight years ago is still affecting the Amazon rainforest to this day, according to a new study released by NASA’s Jet Propulsion Laboratory.

The continued impact of the 2005 drought, which is still affecting an area in the Amazon about the size of the state of California, could possibly be the first telltale signs “of potential large-scale degradation due to climate change,” NASA said in a press release. The laboratory analyzed satellite data collected between 2000 and 2009, before coming up with their assessment.

A total of 270,000 square miles of old-growth forest were affected when the mega-drought hit the Amazon rainforest, which is one of the most biodiverse regions in the world, leading to devastating impacts.

“This mega-drought caused widespread changes to the forest canopy that were detectable by satellite. The changes suggest dieback of branches and tree falls, especially among the older, larger, more vulnerable canopy trees that blanket the forest,” NASA said.

It said that while rainfall levels recovered in subsequent years, there was another large-scale drought that took place in 2010. Half the forest that was damaged by the 2005 drought had not yet recovered by the time the next one hit, the space agency said.

“The biggest surprise for us was that the effects appeared to persist for years after the 2005 drought,” study co-author Yadvinder Malhi of the University of Oxford, said in a statement. “We had expected the forest canopy to bounce back after a year with a new flush of leaf growth, but the damage appeared to persist right up to the subsequent drought in 2010.”

AMAZON

Exploring Markets

s it really feasible that there can be a single theory of ‘the market’ that encapsulates everything from tomatoes to CEOs to houses? Engineers do not think they can apply the same theory to every fluid, and similarly, it is not unreasonable to suggest markets might function very differently depending on what is being bought and sold. In this post, I’ll set out a couple of alternative interpretations of supply and demand for different markets. I developed these alternative approaches based on some well known real world observations.

A few caveats:

(1) I am not interested in deriving these schedules ‘rigorously’ from arbitrary axioms about individual behaviour. Such an approach is unnecessary as phenomena may be emergent, and it always seems to run into problems.

(2) These models should really only be interpreted as working for individual markets on a small scale, as large scale feedback effects render this type of analysis irrelevant.

(3) I am aware that there is no such thing as a demand or supply ‘curve’ in reality. Perhaps the fact that I feel the need to reduce everything to intersecting lines is a testament to how much neoclassical economics has polluted my thought. I am undecided as to whether I regard the supply-demand framework as a useful tool that can be adapted in certain circumstances, or as something that needs to be done away with entirely. I’m sure heterodox readers can give me many reasons demand-supply as a concept is not worth keeping. In any case, I regard these examples as interesting, and at the very least they are a good way to take economists on on their own turf.

(4) Finally, I apologise for my drawings, which were constructed on MS Paint.

Asset Markets

It is an observed reality that asset prices and demand are often positively related, since in many cases an asset is purchased for no other reason than selling it later on at a higher price. Price increases can act a signal for later price increases, and the opposite is also true. Hence, we will posit a positively sloped demand curve for this model. This relationship will also be exponential: at low prices, the effects will be relatively small ,but as prices spiral , the effect will get larger and larger. Since the supply of assets is relatively inelastic (in the case of land, perfectly inelastic), the supply curve will be a steep upward sloping line.

THE MARKET? WHICH MARKET?

The Eurozone and Greece

IS IT OVER?

A journalist from Chile’s El Mercurio just put two questions to me:  (1) Is the Eurozone safe? and (2) Is Greece stabilising? Here are my answers:

1)  Are the threats over the Eurozone’s survival over?

Certainly not. The serious design faults of the Eurozone remain intact. The promised decoupling of the banking crisis from the debt crisis has been ditched. All moves toward debt mutualisation or for a central Eurozone budget have been suspended. The ECB’s bond purchasing program (OMT) remains in the sphere of the imagination, a purely phantom program whose announcement-effect cannot continue forever. Meanwhile, recession in the Eurozone’s centre and depression in the periphery is eating away at the heart of Europe’s social economy.

2)  Is the economic situation in Greece getting better (considering that the risk premium is lower than few months ago and the local stock market is going up)?

Greece has been given a reprieve, in the sense that it has been told that all discussion of being thrown out of the Eurozone is over – at least for now. Thus, the panic caused by the ‘conversion’ risk (i.e. assets being redenominated in drachmas) has passed and, thus, the stock exchange has moved upward. However, the falling yields of the Greek bonds mean absolutely nothing for two reasons: First, after the recent debt buyback, Greek banks hold no GGBs and, therefore, the GGBs’ increased value does not help the Greek banking sector in the slightest. Secondly, the Greek state is not issuing new bonds, which means that the Greek state cannot benefit from the falling yields. The only beneficiaries are the hedge funds that purchased the 35 billions of GGBs that remain in play and are trading them with each other for speculative reasons. Meanwhile, Greece’s social economy is continuing to collapse, with a defunct banking sector ensuring a dearth of credit even for profitable firms, unemployment reaching world record levels, and aggregate demand that is continuing to shrink. In brief, the stabilisation of Greece’s financial markets is in sharp contrast to the continuing tailspin of its social economy.

WHAT MIGHT

Have Been

Real News Network has run an occasional series based on an interview with Peter Kuznick on what he calls “untold history,” which are important junctures in American history that are airbrushed out of the mainstream narrative. Here, Paul Jay and Kuznick continue their discussion of Roosevelt’s wildly popular vice president Henry Wallace and how he was shoved aside in favor of Harry Truman (see here for the previous segment in this series).
More at The Real News

Read more at http://www.nakedcapitalism.com/2013/01/untold-history-the-coup-against-wallace-and-what-might-have-been.html#BEBkw3avc49bqqwW.99

An Important Interview

I once again had the chance to speak with the legendary Don Coxe, Chairman of Coxe Advisors LLP, which collaborates with and advises BMO Global Asset Managementa $105 billion arm of the $540 billion BMO Financial Group.

It was an incredibly powerful interview, covering topics from his 20th anniversary and final edition of “Basic Points”, entitled, “The Final Problem”.

These topics included: the sustained delivery of “financial heroin” into global markets, the “rigged” environment of government growth, and the utility of gold as a weapon during dark financial times.

Starting out with, Don spoke to the growing symptoms which one could interpret as the death of capitalism, in saying, “When you’ve got a situation of governments that are running monstrous deficits, are able to borrow at zero…the basic bloodstream mechanisms of capitalism are seriously at risk.” He further added, “The basic system is being rigged in favor of expanding [the] size of government. If you expand the size of government at a time when the economy is not growing, what that means is, that the socialist forces are gaining strength. There’s something that’s got to happen to change that.”

Don recounted a fascinating story from his father’s service during WW II and it’s relevance to today’s financial environment. He said, “[My father] was cited for doing more battlefield anesthetics than any other Canadian doctor during WW II… he said the skill was…you had to decide who needed heroin [which was the only thing that worked for those desperately wounded and screaming in pain], rather than morphine…So you put them on heroin knowing it was a high-risk thing…and the other thing that was the skill, was knowing when enough healing had been done that you took them off the heroin and put them on morphine.”

“If you kept them on the heroin too long, they would not be able to go back and be risk-taking soldiers[and their lives would be destroyed].”

In connecting his father’s story to today’s financial environment, Don said, “I was on a platform with David Dodge, shortly after he ceased to be governor of the Bank of Canada, we were speaking to an audience in Denver. He was talking about the necessity to get off the zero interest rates very fast, because of the long-term damage [it] could do. So when I got up to speak, I told the story about my father and said, ‘Zero interest rates are financial heroin.’ [Dodge's] head just jerked, and he turned and said to me, ‘That is a wonderful analogy!’”

“My fear,” Don continued, “is that year after year…we’re going to have a whole situation where everybody has become used to these zero interest rates, and what happens when you try to restore normal interest rates? Will the economy have been so undermined…that it wont be able to deliver and function, when you’re actually pricing money the way you’ll eventually have too, which is in relation to risk?”

Concluding with his thoughts on gold, Don said,“There’s no [historical] precedent for this…When what lies ahead of you is ‘no-mans land’…you probably want to go in with a gun. If we’re going into economic no-mans land, what you say is, ‘What’s the only asset out there which for as long as we have recorded history has been used as a medium for buying goods and services, and investments? That’s gold.”

“No matter how this story turns out, I don’t believe it can turn out in a way that is going to be disadvantageous to those that have gold…[in fact] The next time people make serious money on gold, it will come a midst a major kind of shock.”

Once again, this was a powerful interview with one of the legendary investors of our time, and it is required listening for serious investors and market students.

To listen to the interview, left click the following link and/or right click and “save target as” or “save link as” to to your desktop:

>>Interview with Don Coxe (MP3)

Wall Street Thanks You For Your Service, Mr. Geithner

“The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”

Peter Drucker

I would of course add ‘with self-serving dishonesty’ to Mr. Drucker’s prescription. But I think in a better age that sort of thing was understood.

The manner in which the financial crisis was handled, and is still being managed, is a policy error that will be studied by history, and hopefully the next school of Economics that will rise out of the ashes of their failure to provide meaningful reform for what really went wrong.

The worst of the economists and politicians have been acting as hacks in support of a massive fraud for the usual benefits.   And some of what we might have hoped would be the better ones have been mindlessly applying old remedies, or at least a portion of them without understanding and admitting the underlying problems, caught up in a credibility trap of dull atavism and careerism.

The intellectual and political leadership of this generation has been weighed and found wanting. A great generation often produces one that lapses into crisis, before the next rises to the challenge of the occasion.

So I have some hope that a new school of Economics and policy making will rise out of the abject failure of the old.  Not a school that has better and more intricate tools, broader power, and flashier gimmicks, but one that aspires to wisdom and virtue, especially the value of open honesty.

“The best lack all conviction, while the worst are filled with passionate intensity.”

This crisis has been all about the failure of the best to uphold their oaths, and to let justice be done, at the urging of the worst. And now they compound their errors and dissemble in their embarrassment and shame. Or at least those who are still capable of feeling such emotions.

There will be no real and sustainable recovery without reform.

The Guardian
Wall Street thanks you for your service, Tim Geithner
By Dean Baker
11 January 2013

Treasury Secretary Timothy Geithner’s departure from the Obama administration invites comparisons with Klemens von Metternich. Metternich was the foreign minister of the Austrian empire who engineered the restoration of the old order and the suppression of democracy across Europe after the defeat of Napoleon.

This was an impressive diplomatic feat – given the widespread popular contempt for Europe’s monarchical regimes. In the same vein, protecting Wall Street from the financial and economic havoc they brought upon themselves and the country was an enormous accomplishment.

During his tenure as head of the New York Fed and then as treasury secretary, most, if not all, of the major Wall Street banks would have collapsed if the government had not intervened to save them. This process began with the collapse of Bear Stearns, which was bought up by JP Morgan in a deal involving huge subsidies from the Fed.

The collapse of Lehman Brothers, a second major investment bank, started a run on the three remaining investment banks that would have led to the collapse of Merrill Lynch, Morgan Stanley, and Goldman Sachs if the Fed, FDIC, and treasury had not taken extraordinary measures to save them. Citigroup and Bank of America both needed emergency facilities established by the Fed and treasury explicitly for their support, in addition to all the below market-rate loans they received from the government at the time. Without this massive government support, there can be no doubt that both of them would currently be operating under the supervision of a bankruptcy judge.

Of the six banks that dominate the US banking system, only Wells Fargo and JP Morgan could conceivably have survived without hoards of cash rained down on them by the federal government. Even these two are questionmarks, since both helped themselves to trillions of dollars of below market-rate loans, in addition to indirectly benefiting from the bailout of the other banks that protected many of their assets.

Had it not been for Geithner and his sidekicks, therefore, we would have been permanently rid of an incredibly bloated financial sector that haunts the economy like a horrible albatross…

Read the entire article here.