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The First Real Russian Retaliation for American Sanctions

2014 April 4
by Ian Welsh

It starts:

Rosneft has recently signed a series of big contracts for oil exports to China and is close to signing a “jumbo deal” with Indian companies. In both deals, there are no US dollars involved. Reuters reports, that Russia is close to entering a goods-for-oil swap transaction with Iran that will give Rosneft around 500,000 barrels of Iranian oil per day to sell in the global market. The White House and the russophobes in the Senate are livid and are trying to block the transaction because it opens up some very serious and nasty scenarios for the petrodollar. If Sechin decides to sell this Iranian oil for rubles, through a Russian exchange, such move will boost the chances of the “petroruble” and will hurt the petrodollar.

It can be said that the US sanctions have opened a Pandora’s box of troubles for the American currency. The Russian retaliation will surely be unpleasant for Washington, but what happens if other oil producers and consumers decide to follow the example set by Russia? During the last month, China opened two centers to process yuan-denominated trade flows, one in London and one in Frankfurt. Are the Chinese preparing a similar move against the greenback? We’ll soon find out.

The US has, to use the phrase du jour, a great deal of “privilege” because the US dollar is the standard unit of trade, most significantly, trade in oil.  If you get frozen out of the dollar, you get frozen out of a large part of the world economy.  American sanctions can virtually destroy a country, as banks, even non-American banks, won’t do business with a country the Treasury department has forbidden doing business with.

Breaking that—moving to a multilateral world, or to a world where trading in Yuan is just as acceptable, goes a long way to breaking American power. In general, the Europeans will follow the US lead, so moving to the Euro provides no protection from America.  But moving to the Yuan and the Ruble, does.  Pricing large oil transaction in rubles also helps protect the Russian currency from large moves: if the ruble drops too much, people will go into it if you can buy oil in rubles, and the Russians are opening a futures operation as well, meaning traders can make that play, even if the US doesn’t like it.

Of course, the US could go harder in sanctions, making it difficult to take those winnings and get them back into dollars or Euros, but if the trade is large enough, Chinese and Oilarchy banks will clean the money and hide the flows.  London and New York will then want to get in on it, and will, through their offshore subsidiaries in various banking havens.

Note also the poke in the eye: the deal to take Iranian oil and sell it as Russian oil, bypassing the sanctions against Iran.

All of this is far more harmful to America’s real interests than any sanction the US has so far imposed on Russia.


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The Decline of Europe

2014 April 2
by Ian Welsh

While the US is the hegemonic state, and the sicknesses of the world largely emanate from it, Europe is falling apart as well, it is simply doing so more slowly–unless  you are Greece, Portugal or Spain.

Europe has unquestionably swung right, and England in particular was entirely complicit in the great financial collapse.  Neither were Germany, or France or pretty much everyone else not involved.

Germany’s behaviour since the financial collapse has been disgusting and cruel.

Nonetheless, the northern Europeans, overall, have done a better job than the US.  They have made mistakes, one of which was playing along with Bush–there was an opportunity around 04 to put the boots to America, as Europe, to break America’s hegemonic power.  Europe was too scared to take the chance, and as a result America has rebounded and Europe has grown weaker–in large part because they also have refused to discipline their bankers, and because they have decided to cannibalize the weak sisters.

Everyone in the developed world, with the small and essentially irrelevant exception of Iceland, and perhaps the Scandinavians except  Sweden, is going in the wrong direction.  Apparent exceptions, like Germany, are only apparent.  Germany’s exports are reliant on the Euro being lower than it otherwise would be because of weak sister nations in the Euro.  Germany is cannibalizing the South of Europe to stay prosperous, but it’s not a sustainable situation.

The Scandinavians, overall, are handling things best, with the Swedes the worst of the bunch.  They have privatized a great deal, they have not been able to handle immigration well, and have developed an underclass.

England is completely dependent on the financial industry for its survival, having, under Thatcherism and the Labor governments which continued Thatcherism, completely destroyed its industrial base.  Ireland is a basket case, whose politicians repeatedly betrayed its citizens in the aftermath of the financial collapse in order to bail out banks at maximum cost to their own population.

France has been complicit in Germany’s crimes and seems not to understand that they can’t have their socialist policies in a Europe where everyone doesn’t break the rich.  The Greeks are victims, but they rolled over: they had a chance to vote for Syriza, but believed the Troika’s lies that if they just played along it wouldn’t be so bad.  They failed to understand that to Germans and French, they aren’t actually Europeans and need not be treated as such.

Italy suffered a coup when Mario Monti was put in power without an election and imposed austerity.  To be sure, his predecessor was a scumbag, but he was, y’know, elected.

Spain, again, made the mistake of bailing out banks.

You never borrow money from the Troika to bail out your bankers. All it does is add more unpayable debt and thus increase the depth of austerity.

Europe is on a downward trend.  They started from a better place than the US (universal healthcare, decent welfare systems), but that does not alter the trajectory.  Their fall is an odd mixture of an insistence on keeping the EU together, while refusing to actually make the EU a proper federal state and take care of everyone in it.  As it stands, the EU does not make sense: most countries, including Greece, Italy, Spain and Portugal, but not limited to them, would be better off leaving it.  Or, frankly, the rest of the EU should kick Germany out, and erect tariffs against their goods.

England should be kicked out as well, for serial bad behaviour.

It is impossible, right now, to regulate the world economy in any way beneficial to ordinary citizens of the majority of states.  The doctrine of free trade, which is really about free financial flows and deregulation of labor, has made actual economic policy almost impossible unless a  country finds a way to opt out of the neoliberal consensus (aka. China), or use its structure to their (temporary) advantage (aka. Germany.)

Everyone is going to have to learn that impoverishing other nations is not a sustainable path to wealth.  We are destroying countries at a ferocious rate: Afghanistan, Pakistan, Iraq, Egypt, Libya, Syria, Greece, Portugal, the Ukraine; with many others tottering and in clear decline (Spain and Italy, for example).

Europe is not immune to these trends; nor immune to the policies which cause them. In fact Europe has become a major force for idiot austerity and for destroying nations, as the core states sacrifice the South in hopes that the Gods of austerity will spare them.

They won’t.

The Endless Apologia

2014 April 1
by Ian Welsh

Enough.

I have heard enough.

Those of us in the West live in democracies.  Those democracies are not perfect, but they admit the possibility of organized change.

There are three levels to this.

The first, and most superficial, is voting on election day from a slate of candidates chosen for you by other people.  Though superficial, it is not meaningless.  Electing Nixon mattered. Electing Reagan twice, mattered.  Electing Bush in 2004 and having the election close enough to steal in 2000, mattered.  This also matters in local elections, in the Senate and the House or whatever your legislative body is.  Fairly consistently, for almost 40 years, the more conservative candidates have been more likely to win.

The second level is the first level of production: the primaries.  You can join a party, and vote for which candidate is placed before the public.  Again, consistently, the more conservative candidates have won.  In 2008 Obama was the right most of the major candidates.  The truly liberal candidates weren’t even considered “viable” and never stood a chance, even though 2008 was the year that almost anyone could have won as a Democrat.

The third level is creating the candidates, taking over an existing party, or creating a new party.  All of these are possible, all of them can be done.

In theory.

Also, in practice, if enough people really wanted to do it, wanted it enough to do it.

They don’t.

We are consumers.  We are a consumer society.  Consumer are not producers.  We choose from the options presented to us, we do not make our own options.  Whoever controls the menu, controls a consumer society utterly. You can choose between Neoliberals 1,2 & 3.

But even as consumers, Westerners have failed. Again, we have very often chosen the rightmost candidate of those offered to us. Our political parties, the primary voters, are even worse.  Fairly often general voters choose the leftmost candidate (even if he’s only left within the context of the same neoliberal policies); primary voters have often been given the choice of real liberals, real left-wingers, and have virtually never put them up as candidate, certainly not for the top slot.

The abject refusal to accept any responsibility as a group or as individuals is at the heart of the problem.  Accepting responsibility means accepting power: people without any power, slaves, have little to no responsibility.  They could not, can not, make a difference.

Refusing responsibility is a way of saying “we have no power to change this.”  If that’s so, you are subjects, slaves, not citizens.

America is what it is, the West is what is, the world is what is, because of Americans, Westerners, and all of us, respectively. It cannot be any other way.

Those of us who live in democracies, in particular, bear more responsibility.  We were given Republics and Democracies, if we could keep them. We either have, in which case we are responsible for what they do, or we have lost them, in which case we are responsible for losing them.

We have choices, and we can make new choices.  If we, again, as a group, fail to do so, then as a group we are responsible for our fate.


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Things Are Different Now

2014 April 1
by Stirling Newberry

Once it was up to the state to do what was required for a good society that corporations would not do.

That time is over.

Today about 10% of the population calls the shots: primary voters, because primaries are the real elections. This is as those in power wanted it: just enough people to thwart any attempt to stampede the election, but little more than that.

There is another side to story, often commented upon, but not paid enough attention to. What our leaders give is the powerto lord it over others: Whites over non-whites, men over women, middle management over workers, and so on. We are made afraid of each other, so that whites are frightened by African-Americans, African-Americans by whites. We resent each other, fear each other, oppress each other, hate each other. This is given to us by our lords.

Only 9% of the population believes Congress is doing a good job, but it doesn’t matter, and it won’t change, because only 10% of the population chooses, and they prefer reactionaries (Obama, for example, was the most right wing of the 3 major Democratic primary candidates.)

What the oligarchs want, and what they have arranged, rather than have most of the population benasty to them, have them be nasty to each other– to waste our time on sports, conquests, and whether the guy ahead of you is white, black, Asian, Muslim, Christian, Bi orGay. As long as we’re fighting amongst ourselves, as long as we see each other as the opposition, and not them, the oligarchs are happy.

But the game is changing, because the oligarchs are turning on each other. Diane Feinstein, one of the firmest friends of the military-industrial complex and the spy industry thought she was an insider. she throughtshe was immune to being spied on, even as she gave permission to spy on ordinary people.

Now she has learned that she’s not on the inside, has never been on the inside, She’s ordinary.

Elites have a pecking order, but there is inside and there is outside. Inside you don’t get spied on; you don’t go to jail for securities fraud; you don’t go to jail for torture and mass-murder.

Feinstein has now realized that she’s outside, not inside.

This pattern is not just amongst elites, but amongst nations. The Ukrainians hated their former leader, so they rose up and got rid of him. But what they are receiving in return is worse than that they had before. This is happening around the world: Ukraine, El Salvador, Libya and Egypt are only a few of the places where uprisings have produced something even worse : where large groups of people have been told they are on the outside of the world order, and must submit to their local oligarchs (the Egyptian military has huge holdings in the economy), or whoever has the power of the gun (as in Libya.)

The world is awash in monstrous people treating other people monstrously; and the pace of nations being destroyed is picking up.

The choice is no longer Democrat or Republican, progressive or conservative: the choice is human or not.

Ukraine’s Unelected Government Imposes IMF Austerity

2014 March 28
by Ian Welsh

This is perhaps best article on what actually happened in the Ukraine and Crimea: the story is a little different than what you’ve been hearing on TV or reading in the newspapers, at least if you’re in most of the West.  The author does leave out some bits (like the Tatars boycotting the Crimean referendum), but overall it’s accurate.

Meanwhile the new PM in the Ukraine is imposing IMF austerity measures, like removing subsidies on Gas (50% increase) and cutting pensions (50%) cut. He says he’s on a Kamikazee mission.  That’s because he’s not elected, so he can do thing that an elected leader could never do.

Which is to say: there is a coup, backed by a popular uprising in the capital, which puts in place an unelected government, which does things that elected governments repeatedly refused to do.  The East and South of the country, which voted in the last elected government, is unhappy with this.

It’s really hard to conclude that Crimea didn’t do the right thing for most of their population by joining Russia.  50% increase in natural gas prices and 50% cut in pensions?  Would you stand still for that? Oh, and the average pension in the Ukraine is—$160/month.  $80 after it’s cut.

The last government may have been a bunch of corrupt assholes, but it’s hard to conclude that taking Russia’s deal of 15 billion dollars and subsidized gas wasn’t, actually, a better deal for most Ukrainians than approximately the same amount of money from the West + IMF austerity.  And these are only some of the measures: the civil service will be slashed, the government natural gas company will be privatized (meaning even higher prices down the road), the ban on selling agricultural land to foreigners will be lifted, and so on.

The EuroMaidan’s legacy won’t just be losing Crimea, it will be turning the Ukraine into Greece.

If I were Crimean, I would have voted yes in the referendum. Russia’s a corrupt oilarchy run by a near-dictator, but it has a stronger economy and better standard of living than the Ukraine, and that’s before the IMF gets through with the Ukraine.

I don’t know what Putin’s going to do.  If NATO membership were truly off the table, he’d be best served by doing nothing more.  Let the Ukrainian’s destroy their own economy through IMF austerity, and in a few years, at least the eastern half of the country will be begging to join Russia.

However, if NATO membership is on the table, and it seems to be, Putin may feel he has no choice to invade.  Problem is, after the West lied to Gorbachev about not expanding NATO, could Putin believe any Western promises if they were given?


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The Age of the Obvious: Thomas Piketty’s Capital

2014 March 27
by Ian Welsh

The economist Thomas Piketty, who along with Emmanuel Saez has done great work on the concentration of income, has written his magnum opus, Capital(pdf).  The title is an obvious reference to Marx’s Kapital, and the book is a huge survey of 200 years of economic history, specifically relating to what Piketty calls Capital.  It is here, as Galbraith points out in his excellent review, where Piketty starts moving away from Marx: for Piketty, capital is just anything that is valued in money: capital is wealth, whereas for Marx it is whatever allows Capitalists to control the means of production, and thus workers.

Piketty’s argument is that:

1) If national income grows slower than capital (wealth, really), then capital tends to concentrate.  If income grow faster than wealth, then capital tends to disperse.

2) Capital grows faster the more of it you have: so if you have a hundred thousand, you get more returns than someone with ten thousand.  A million gets less than a billion, and so on.  This contradicts orthodox economics, with its claim of diminishing returns, but it is a common sense observation of how the world actually works today, and Marx noted the concentration of money and capital in his time.

3) The long term growth rate for wages over the last 200 years has been about 2 to 2.5% (tech increase of a bit over 1%+ population increase).  The long term growth rate for capital (money/wealth), has been 4 to 5%.  There have been periods and places where this is not true, but it is generally true.

4) Wealth is wiped out by war, financial collapse and depression, or it is controlled by confiscatory taxation and inflation.  The good period after the war is thus created by the wars and depression, and the policies that followed from them.

5) The Industrial Revolution created a period where income grew faster than wealth.  That period was extended by the cataclysms of the early 20th century.  But the gains from the Industrial Revolution are mostly gone: once every part of the World has gone through it (China, India, Africa), that’s it—you return to an era where wealth grows faster than income and inequality is thus permanently high.

This is an important book: it marshals a lot of data, and puts it together in a coherent model.

But the model is not as new as it might seem. Piketty spends a lot of time distancing himself from Marx, and well he should, because this argument, even with a different model of what Capital is than Marx used, isn’t that much different from Marx’s view on the concentration of Capital, nor is his view of post – WWII history particularly different from a fairly orthodox reading of it: the financial collapse, depression, and two World Wars destroyed the wealth and thus power of the rich, and made it possible to put in place policies which were hostile to their interests and which made it so that more of national income was distributed to ordinary people.

Low inflation is bad for ordinary people (who tend to borrow) and good for the wealthy (who tend to lend).  Policies since 1979 have favored crushing inflation.  This has increased the power of the rich.

High marginal taxation is good for ordinary people (they don’t pay the taxes, they get the benefit of the money, and the rich are kept weak).

There is no fundamental analysis of the mode of production or the mode of violence, either, and without those you cannot determine how much power various groups have to take a share of the national income.  How many people are needed for production?  How many people are needed for violence?

Piketty’s book is important primarily because it proves the obvious, and this is the age of the obvious.  You must prove, beyond a reasonable doubt, what any educated individual already should know because there is a lot of money in obfuscating the obvious. It pays very well to be a conservative ideologue spouting off about economic freedom, because very rich people want the government to make them rich, bail them out, and not tax them.

Political decisions are important: in 1929 Hoover, the Fed, and later FDR did not bail out the rich.  They were allowed to lose their money, and thus much of their power.  That was a decision: another decision could have been made, and in 2008 it was made: the rich were bailed out.  It was made differently in 2008 because the rich have spent the last 80 odd years obsessing over what went wrong in 1929 that allowed FDR, the New Deal and everything which flowed from it. Ben Bernanke’s entire career was “how do we make sure the rich don’t lose their money so that FDR doesn’t happen.”  He was chosen to be the Fed Chairman precisely to ensure that the next Great Crash, which everyone who wasn’t an idiot knew was coming, wouldn’t wipe out the rich.

The cost of his actions is the actual drop in ordinary Americans wealth and income, the impoverishment of the south of Europe, the austerity in England, the failed Arab Spring, the Ukrainian Maidan revolution, and so on.  Yes, a Great Depression was forstalled, but a long Depression was created instead, and there were other options: other ways to forestall a depression.

History is not inevitable: decisions are made by people that change its outcome.

As for Piketty’s prescription: a wealth tax is fine as far as it goes, but the question isn’t whether the rich should be taxed, the question is how to create a world where they can be taxed.

That question, and questions like how we could increase the technological rate of improvement, increase the power of the commons, allow national policy by dismantling so-called “free trade”, and so on, are not dealt with.

But Piketty’s book is still important, because it proves the obvious beyond a reasonable doubt.  In this it is similiar to the mountain of evidence of climate change.  We can now say that climate change is happening and anyone who denies it is a fool.  Likewise we can now say that allowing returns on unearned wealth to be higher than labor income, in a capitalist economy, leads to high inequality and doesn’t improve the economy.  We should have known that already; we did know it already; now it has been proved to the point where we can say anyone who denies it is a fool.


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How China Can End American Hegemony

2014 March 25
by Ian Welsh

For most of history China has been the most powerful nation in the world, with the largest economy, and the most advanced technology.

That is, in the long run, normal.

Today China rises.  Having been humiliated by the West in the 19th and early 20th century, it has systematically increases its manufacturing base until China is the largest manufacturer in the world.

I concentrate on manufacturing because it and resource extraction are the two things which really matter.  All the software in the world, all the “financial services” don’t matter if you can’t make, mine, or grow what you need.

If you were China, and you wanted to destroy US hegemony, how would you do it?

The simple answer is “control the means of production”.

Right now many US companies manufacture in China: Apple may be located in California, but its manufacturing base is largely in China.  As time goes by, those who make goods, learn how to design them.  As companies more and more offshore and outsource their design, this becomes more and more true.

Companies like Apple can build their goods in China because of patent law: the Chinese may know how to make them,  but it’s illegal to do so.

The logical path for China would be to wait till they have the actual production facilities for every key sector, then break the patents and let the factories (which are already Chinese owned subcontractors, as a rule) make the goods themselves.

If you do this in one fell-swoop, because the facilities no longer exist in the US or Europe to make the goods, the US and, indeed, Western governments are faced with two choices: go into an economic tailspin, or buy from China either way.

The conventional reply to this is “but the Chinese need Western consumers!”

Do they?  Will they forever?  Or can they take their huge population and turn that into a consumer base?  Can they turn various developing countries into consumers of their goods?  Africa, in particular, has been looking more and more to China, because China offers development: building roads and factories and ports and airports, which the West no longer does, at least not without insisting on crippling IMF conditions.  China doesn’t do that, it doesn’t care how other countries run their internal affairs: if they want to subsidize food, that’s fine by China.

Russia, of course, will increasingly turn to China as the West isolates it.  Much of Latin America is already looking towards China, and find Chinese influence far less problematic than American influence, since the Chinese don’t actively try to overthrow their governments.

Will this happen?  Perhaps, perhaps not.  But, increasingly, it is a route open to the Chinese.  They control the actual means of production: the West has very kindly engaged in massive technology and capital transfer to China, moving expertise and the actual production.

One might argue that cooperation is better for China.  But will it always be?  Thanks to massive mismanagement of the economy, the environment and both renewable and non-renewable resources, we are increasingly moving into a period of scarcity.  In a negative sum game, cutting America, which consumes far more than its per capita share of resources off at the knees may be exactly what China needs to do to ensure its own prosperity and survival.

The Surveillance State is About Power, by Matt Stoller

2014 March 24
by Ian Welsh

This post is by Matt Stoller,

originally posted at Tech President.

Since 2000, the American political system has been rocked by the dot.com crash, 9/11, the wars in Iraq and Afghanistan, Hurricane Katrina, the financial collapse, the housing crash, bailouts, and now, Edward Snowden’s revelations of vast government surveillance that served as an unknown institutional backdrop to much of it. Considering the last fourteen years, it’s time we begin trying to understand the relationship between people with lots of guns and people with lots of money.

When I think about surveillance in American culture, I usually start with a literary metaphor, the great American novel, The Great Gatsby. This is a story about Jay Gatsby, a man who grew up poor, made a fortune as a bootlegger, and then built up a myth about how he came from a wealthy family so as to attract the love of his life. It’s a story about identity, and reinvention, the mystery of who we really are.

If F. Scott Fitzgerald wrote The Great Gatsby today, it would be a very different book. Well, it wouldn’t be a book at all. It would be a one-page story about a guy who made up a bunch of lies about himself, and then someone ran a credit check.

To me, that’s what it means to live in a surveillance society. Basic parts of the American story, such as the right to be forgotten, to reinvent yourself — these disappeared over the last sixty years, without a genuinely open debate, as institutions justified by the Cold War became institutions justified by the War on Terror.

What Snowden has given us is the opportunity to really have this debate, anew.

So I want to talk about four myths of the modern surveillance society in which we find ourselves. I define surveillance state as a state in which personal record-keeping is automated and controlled by well-capitalized politically connected institutions.

The Surveillance State Isn’t New
The first myth is that this kind of state is new. Every few years, someone prominent makes a claim that we could fall into a dystopia. From Orwell’s 1984 to Snowden’s “turnkey totalitarianism,” they always say we are on the verge of becoming a different kind of society, one in which your every move is logged and tracked by powerful entities. But we’ve been living in it in one form or another for at least forty years.

At some point, we stopped being on the verge, and got there. And now we’re here. We are in a surveillance state, as per the various warnings we’ve received. But what we’ve found is that totalitarianism is not necessarily related to technological capacity. The most totalitarian state in the world today, that of North Korea, is the least advanced state when it comes to digital technology. And the Nazi regime, while it used a quite advanced information technology infrastructure for the time to track down, categorize, and kill Jews, was a totalitarian regime before it was a technologically sophisticated one.

Still, much of what we do is tracked and digitally archived, and it is being used to make decisions about our lives. In one way or another, this has been the case since at least 1973, when Visa computerized its operation, which was shortly followed by credit reporting agencies. So we should move beyond the question of whether we are building the tools for an authoritarian political state, and start talking about what kind of surveillance state we want. It’s a creepy question, but it’s one we’ve avoided talking about, until now.

What Bright Line?
The second myth is that there is a substantive difference between commercial surveillance and political, or national security surveillance. There isn’t, and there never has been. In fact, it’s pretty clear that building the technology and cultural institutions for a mass surveillance state — data brokers, credit bureaus, credit card companies, the NSA, the FBI, and so forth — has been a key part of our tacit unacknowledged national industrial policy since World War II.

I’ll just tell you a quick story about the politics of this state. In the 1960s, Congress actually had what was called a special subcommittee on invasion of privacy, chaired by a Kennedy ally and Congressman named Neil Gallagher. This subcommittee conducted the first hearing on credit reporting agencies. It also investigated early FBI efforts to computerize government data.

It turns out that the first national credit reporting agency, then known as the Retail Credit Corporation, today known as Equifax, was an ally of J. Edgar Hoover. It conducted the background checks for FBI agents. And it was J. Edgar Hoover or the Treasury department that blackmailed and destroyed the careers of several politicians interested in either commercial or political privacy problems. At one point, in 1971, Congress was on the verge of establishing a standing committee called the Select Committee on Privacy, Human Values, and Democratic Institutions, which Hoover sabotaged.

This was prescient — in the 1970s, many of the laws involving both commercial and political surveillance were put in place. Our privacy laws regarding commercial surveillance and political surveillance are looser than they should be, because the national security apparatus protected the commercial sector from the most aggressive politicians who wanted to protect our privacy.

This alliance continues today, which is detailed in Robert O’Harrow’s wonderful book published in 2005, No Place to Hide . After 9/11, the government went on a buying spree, hiring data brokers like Axciom, Lexus-Nexis, Choicepoint, and so forth to fortify the the intelligence community.

The analogy to the Cold War is clear. After Pearl Harbor, the government repurposed Ford and GM into manufacturers of tanks. During the war, the government subsidized the expansion of our industrial base and created technology like radar, the computer, and atomic power. After 9/11, the government repurposed the data broker industry into parts of the government surveillance apparatus. It subsidized the data industry and helped accelerate the creation of the facial recognition, biometrics, and big data technologies.

And even if you dislike government surveillance, you’d have allies in government. The TOR browser, which the NSA despises, was developed with help from the Navy, and its ongoing development is funded by the State Department. The division between the commercial sector and the public sector might be a convenient rhetorical choice, but it is incoherent as an analytical framework through which to understand the politics of a surveillance society.

The Issue is Power
The third myth is that this is a battle between convenience and privacy. I reject this framework, not because I think we can have both but because it’s a sideshow to the real question of power. For example, industry is rife with what are known as “cooperative databases,” or blacklists. There’s one for insurance companies called CLUE (or ‘Comprehensive Loss Underwriting Exchange’), so these companies can share details about whether you have ever made an insurance claim or whether your dog has been mean to the mailman. There’s another for retailers, who can list the names of their employees they suspect of shoplifting. Agribusiness wants data about the soil of farmers who use its products, so that company can use its monopoly to extract as much as possible from the farmers under its thumb.

An executive at Ford Motor recently said that his company knows when anyone speeds, because it has data from all GPS units installed in cars it sells. This opens up the possibility of just getting rid of speeding altogether, or the creation dynamic speed limits based on weather, and so forth. Questions of data privacy are super-creepy. But it’s not just about convenience, it’s a question of power, and who wields it.

And We Are Not Powerless
And the fourth myth is that we are powerless against this surveillance society. We are not. At all. If you look at how our surveillance society evolved, it’s clear that the public shapes it through a variety of mechanisms. In 1968, the Wall Street Journal was reporting on how insurance companies were discriminating against gay men and sexually active single women — these companies would hire the Retail Credit Corporation to send detectives out and get credit reports on people that wanted insurance. Retail Credit would have their men ask neighbors if the man was a manly man, or if the woman slept around. Then these insurance companies would charge higher prices to these sub-classes, or what’s called ‘discriminatory pricing.”

Retail Credit also worked for corporations and the government, doing similar background checks at all levels. Millions of people were investigated to see if they were sexually deviant, and if they were, they were ripped off economically. With such pervasive surveillance, it’s not a surprise that the Stonewall Riots happened, that the gay rights and women’s rights and civil rights movement happened. And in the 1970s, Congress passed laws – weak laws, but laws nonetheless – prohibiting credit discrimination based on race, creed, gender or religion, often spearheaded by those who also cared about government overreach and questions of privacy. And credit, remember, was the first place where most people interact with algorithms and what we call big data.

The public didn’t fight back against surveillance by demanding less of it, the public fought back against surveillance by making the taboo a non-taboo. One democratic response to surveillance is to acknowledge taboos, and take away the power of the watchers to manipulate you.

We are not powerless, and we never have been.

Obviously I can only touch on a few aspects of what a surveillance society means. Surveillance cuts across national security, antitrust, finance, economics, pricing, information policy, and democratic values. It’s a big big thing. The people with the guns and the people with the money have a common interest in ensuring that they are in control of the surveillance apparatus, and that you have as little access to it as possible.

I mean, I’m sure the Department of Homeland Security would love to be able to read the email of everyone getting on a plane, to make sure that no one is thinking of bombing it. That might or might not be a legitimate usage of surveillance. But then, American Airlines would also like to be able to read your email, so that it can charge $10,000 for a flight if it knows you have to be in Los Angeles tomorrow for your mother’s funeral.

It’s time to start making this surveillance regime explicit, and purpose it for the real social problems we face, like disaster relief, climate change, resource depletion, and so forth. We can do remarkable things with the information we collect and analyze, and we can equally do terrible things with it. But that choice, as always, is up to us.

Matt Stoller is a former political consultant. He writes about history at mattstoller.tumblr.com. Follow him @matthewstoller.

Why is Crimea Such a Great Crisis? It Shouldn’t Be.

2014 March 20
by Ian Welsh

Really, I don’t understand why Crimea rejoining Russia is such a big deal.  While the referendum is dubious, it does seem that the majority of the population generally prefers to be part of Russia.  There have been almost zero casualties, and the Russian troops were mostly welcomed by the population.

Compare this to Kosovo, where there was ethnic cleansing on both sides, a major bombing campaign by the West which killed Serbs and so on. Or Iraq, or Libya, or Syria, or Chechnya, or South Sudan.  In all of those places there was a pile of violence, a lot of people died, got tortured, raped and lost their homes.  All of those, by any rational measure, are greater crises than Russia taking back a region which belonged to it for hundreds of years, whose population wants to go back.

Yes, yes, Munich, blah, blah.  Russia is not strong enough to start a conventional WWIII and win.  They are not insane enough to start a nuclear war.

The correct response to Crimea would be to say “well, it looks like they really do want to leave, they’re yours.”

If you don’t want Western Ukraine to go, then send in a NATO force and/or discuss formal partition of the Ukraine with the Western part immediately joining NATO. If you’re not willing to do that, then shut up.

This crisis is being made a crisis because of a hysterical over-reaction. The US and the EU thought they’d won this round, and moved the Ukraine back into their column. Putin didn’t accept that, and the West is freaking out over behaviour that is less egregious and killing far fewer people than wars that the US has been involved in for over a decade, and which is a cleaner break-off than Kosovo was.

As for setting a precedent, the precedent has been set already: in Kosovo, in South Sudan, in Eritrea and so on.  National borders are not inviolable if the population doesn’t want to stay in them, and can make their point militarily or has an ally who can make the point militarily.


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We already have rationing coupons

2014 March 19
by Ian Welsh

they’re called money.

One of the things we’re going to have to do if we want a prosperous and somewhat egalitarian society that doesn’t drive humans into extinction is actually manage our resources.

That’s going to mean rationing, rationally.  When you bring that up people are “that won’t fly”, but the thing is, we already ration virtually everything through money.  Even in countries with universal health care, rest assured that the rich get better care than the poor.  Generally a lot better care.  People go hungry, there are homeless people, and so on.

The thing is, with moderately sane rationing, most people will be better off and a hundreds of millions will be a LOT better off.  We have more than enough food to feed everyone on the planet; food that rots; and the reason we don’t feed people is that we ration by money.  The US has five times as many empty homes as it does homeless people, the EU two times as many—rationing by money is failing.  It is not putting people who need goods we have an excess supply off  together with those goods; and it is putting people who would be better off without excess goods together with those goods. (aka. the obesity epidemic.)

The fact is that we have overcapacity to produce a lot of things, and there is no particular reason why everybody shouldn’t have those things; but we also are producing too much of stuff that’s going to kill us: like oil and natural gas, carcinogens and plastic that is choking the oceans.

So we have people who could be productive, who aren’t, because they can’t get what they need even though we produce a surplus; then we have people who are productive but we’d better off if they stopped producing, because the negatives they are creating are hurting and killing more people than the upside.

If we don’t learn to manage bottlenecks, sinks (like the ability of the atmosphere to absorb carbon) and both renewable and non-renewable resources we’re in real danger of killing ourselves, and even if we do manage to survive as a species, we are leaving a lot of people homeless, hungry and hating their lives who don’t need to be.


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