Major Bush Themes in Intensifying Class Warfare




O

ne
of the world’s wonders is that the reelected Bush now has the
power to carry out an agenda that will be hurtful to the material
interests of a majority of the 59 million who gave him their vote.
For these voters this will no doubt be offset by the psychic satisfaction
of sticking it to those East and West coast elites, pointy-headed
professors, uppity blacks, and gays, helped along by their unawareness
of the glee at Bush’s victory by the East and West coast bankers
and transnational corporate leaders, and other major ultra-elite
beneficiaries of Bush’s various crusades. The Bush voters will
also have the pleasure of giving pain to those degenerate and threatening
foreigners who were responsible for 9/11 or who have failed to support
us in our global efforts at self-defense, exporting freedom, and
helping our friends fight against terrorism. 


Looked
at more coldly, a large fraction of these Bush voters will be victims
of the most blatant class warfare since the 1920s as Bush’s
plans entail the active destruction of a welfare state that had
been built during and after the Great Depression, as well as advancing
a program of class warfare extending across the globe. Much of the
warfare is open for all to see, as the appointments to regulatory
positions are systematically fox-in-chicken-house and revolving
door selections, and the laws passed on an almost daily basis involve
tax breaks and subsidies to business, loosened regulations and steady
cuts in welfare state allocations and coverage that had helped what
Thorstein Veblen called the “underlying population” (in
contrast with the “substantial citizens”). This is all
accomplished successfully because the Democrats don’t protest
very vigorously and the mainstream media have normalized the conflict-of-interest
and class warfare process and don’t make a big fuss over it.
They don’t give it the kind of attention and indignation they
reserve for Iran’s nuclear program threat or, as in the Clinton
years, Clinton’s affair with Monica Lewinsky. The Democrats
(and media), like the Republicans, serve the substantial citizens,
not the underlying population.  


In
his second inaugural speech and follow-up Bush has featured three
major programs, two domestic and one global, that he intends to
press in his second term: a shift from entitlements to an “ownership
society,” actions to solve the alleged Social Security crisis,
and a drive to bring freedom and liberty everywhere in the interest
of U.S. safety and security. Each of these is a program for an intensified
class war, scantily clothed in Bush rhetoric. 



Ownership Society 



I

t
was a longstanding democratic ideal to have property widely owned,
with a world of small proprietors, hopefully making for social stability
and a substantive democracy, one not overpowered by economic inequality.
This is hardly what George Bush has in mind. He rules only because
of the great inequality that has made U.S. democracy nominal; he
has even acknowledged publicly that the rich constitute his constituency
“base.” 


He
certainly has no plans to reduce inequality at the expense of Bush
Pioneers—in fact, his main policies past and present have been
designed to increase inequality and service the Pioneers and other
substantial citizens.



To
increase ownership on the part of the underlying population would
require, first and foremost, increasing their after-tax incomes
so as to permit them to save and acquire financial assets and real
property. That would call for strengthening unions and protecting
their organizational efforts. It would call for policies discouraging
investment and outsourcing abroad and the use of intimidating capital
flight threats in labor-management bargaining. It would call for
tax policies in favor of people with low incomes. It would call
for raising the minimum wage. It would demand a strengthening of
the safety net to enable people to avoid immediate plunges into
the low-wage labor market. 


As
Bush’s policies on each of these points has been hurtful to
ordinary people, real wages have stagnated, the middle class has
been shrinking, poverty levels have increased, and savings rates
have fallen while credit dependence has grown. In short, under his
programs the basis of widening ownership has diminished, while ownership
by the rich has grown and become more concentrated (for an analysis
and useful data, Holly Sklar, “Pox Americana,”

Z Magazine

,
January 2005). 


So
Bush policies in the past have run counter to development of an
“ownership society” in any democratic sense (widening
and less concentrated ownership) and made ordinary citizens more
dependent on “entitlements” and the shrinking safety net
for protection against unemployment, illness, and an impoverished
old age. His main current proposal for enlarging the ownership society
is his plan for large Social Security benefit cuts, combined with
the partial privatization of the program. That plan will change
the nature of some of the paper claims Social Security beneficiaries
will hold, but their gaining this sliver of ownership will be part
of a plan to reduce their income and seriously damage an institutional
arrangement that has brought them major benefits. 


“Entitlements”
is a code word for government-run and tax-funded mechanisms to protect
and give some degree of security to the underlying population. They
are created via a democratic political process and are thus subject
to influence by the underlying population. An “ownership society”
is a code term for a privatized society, where decisions are made
by substantial citizens like corporate managers, large stockholders,
and banks, alone, outside the orbit of influence of the underlying
population. Bush is pushing us toward an exclusively undemocratic
world of ownership control while trying to make it sound very populist
and democratic. It is part of the propaganda façade covering
over his assault on the major entitlements program, Social Security,
as part of a larger program of class warfare attacks on all instruments
helpful to the underlying population. 



The Social Security “Crisis” 



B

ush
has repeatedly claimed that Social Security is in “crisis,”
which is a lie in the same class as his lie that Saddam had weapons
of mass destruction that threatened U.S. national security. The
alleged crisis is based on the possibility that the Social Security
system will have exhausted its reserves by 2042 or 2052 and will
then have to depend only on regular Social Security tax inflows,
unless at that point adjustments are made in tax revenues or benefits.
But 2042 is 37 years in the future and even then the program will
be able to pay beneficiaries more than they receive now (in real,
inflation-adjusted dollars) based on its regular and continued tax
take. Greater productivity growth could move the exhaustion date
out to 75 years and beyond, and changes in the cap on Social Security
payments and Social Security tax increases smaller than those required
in the past would also solve the problem. 


The
crisis is a complete fraud and absolutely nothing has to be done
to keep the system intact for many decades. All the arguments proving
otherwise, such as the claims that the system will fail because
of the rising ratio of seniors to workers or that it is imperiled
because the system’s assets are only in the form of IOUs, collapse
under the slightest scrutiny (see Dean Baker and Mark Weisbrot,
“Social Security ‘Reform’: A Solution in Search of
a Problem,” www.cepr.net). Dean Baker has pointed out that
an extrapolation of the observable upward trend in costs of prisons
would show a really large budget crisis arising from this source
within several decades, but the establishment politicians and media
are not crying “crisis” and featuring “reform.”
The plausible explanation of the difference is that the substantial
citizens support the prison-industrial-complex and its work (as
they do the military-industrial complex and its work), whereas they
have been pained by the rising tax costs of “entitlements”
whose benefits accrue so heavily to ordinary citizens, including
protections against hyper-“flexible” labor markets.





The
Social Security system also has two other defects from the standpoint
of the right wing. First, it is a highly successful and highly efficient
government program, with administrative costs of 0.6 percent of
benefits, in contrast with insurance industry management costs of
15-30 percent. This is bad from the right-wing viewpoint as it flies
in the face of the ideological assumption of inherent government
inefficiency and suggests that government control and operation
might sometimes be a very good idea. The usual right-wing method
of undermining a well-run regulatory operation by defunding and
the imposition of managers hostile to the service is not practicable
in the case of Social Security. The only solution is convincing
the public that there is a crisis and using this as a basis for
slashing benefits and destroying the system by privatization as
fast as can be arranged. 


The
second right-wing objection to the existing Social Security system
is that the private securities industry, a set of very substantial
citizens, is deprived of huge revenues that would flow from private
accounts. The industry has tried to avoid publicity as to its special
interest in the case, but it is clear, acknowledged, and helps push
the politicians to act on its behalf. 


That
the privatized accounts will help the beneficiaries is a sick joke.
For one thing it will be part of a program of curtailed benefits.
For another, the administrative costs of managing small private
accounts will be large and encroach on or wipe out any higher return
benefits. Those prospective higher returns have been grossly exaggerated;
although the stock market has provided a real annual return of about
7 percent over the last 75 years, no economist has been able to
show anything similar to this going forward under the Social Security
Trustees’ projections for future economic growth (see Paul
Krugman, “Many Unhappy Returns,”

NYT

, February
1, 2005). As a system of social insurance Social Security also helps
millions of disabled people, widows, and children and the likelihood
that they will continue to be protected as the Social Security system
is dismantled by the “godly” right wing is exceedingly
small. 


The
“crisis” is a fraud and cover for an attack on a well-working
system highly beneficial to ordinary citizens. It doesn’t need
any “reform” whatsoever, only protection from the reformers
whose motives are financial self-interest and the desire to implement
a reactionary ideology that serves a narrow elite. The proposed
reforms are a form of class warfare. 



Global Imposition of Freedom—Cover for Global Class Warfare 



B

ush
has found that perpetual war under the guise of a war on the 9/11
perpetrators, or a war on terror, and including even straightforward
wars of aggression, is a political winner. As the lies used as rationales
for the war on Iraq disintegrated, Bush still found political sustenance
in the need to support our troops, rallying around the flag, the
feeling that the U.S. doesn’t turn tail and run away from a
painful conflict, and that we have “responsibilities”
to the Iraqis who we have liberated, but not provided a stable environment.
Thus, despite the scores of brazen lies and even a costly and failed
invasion-occupation, Bush was able to win reelection as the leader
best suited to deal with “security” problems that he had
bungled and exacerbated to a remarkable degree.





Perpetual
war has been essential to Bush to sustain his internal program as
well as his policies abroad. As Veblen pointed out 100 years ago,
war is “the most promising factor of cultural discipline….
It makes for a conservative animus on the part of the populace…[and]
directs the popular interest to other, nobler, institutionally less
hazardous matters than the unequal distribution of wealth”
(

Theory of Business Enterprise

, 1904). With Bush working
strenuously to increase the inequality of distribution of wealth,
that factor of cultural discipline has been much needed to implement
his class war at home. At a later date Veblen also noted, “An
illustrious politician has said that ‘you cannot fool all the
people all the time,’ but in a case where the people in question
are sedulously fooling themselves all the time the politicians can
come near achieving that ideal result” (

Absentee Ownership

,
1923). The politicians now have a great deal of help from the mass
media in the sedulous fooling process. 


In
his second inaugural address, possibly inspired by the political
payoff obtained even by a failed war of aggression, Bush has declared
war on the world, although the specifics remain vague and the targets
are not yet announced. It is expressed in warm terms—a primary
Bush goal of bringing “freedom” everywhere, with the meaning
of the word and the specifics of application left a bit vague, no
doubt to be firmed up later. But it isn’t just our benevolence
involved—we must do this to protect our own safety and security. 


The
safety and security angle carries the pitiful giant concept to a
new and hilarious level. Just as the United States had to topple
the governments of Guatemala (1954), Grenada (1983), and Nicaragua
(1981-1990) to remove their dire threats to U.S. National Security,
so now any non-democracy anywhere is a threat because we know that
only democracies like our own are entirely peaceable and pose no
threat to anyone—which Bush says as he poses that threat to
anyone he chooses to declare evil, presumably based on the kind
of solid information like Saddam’s huge WMD arsenal that he
typically employs before unleashing the cruise missiles. 


Freedom
is an even fuzzier word than democracy and may include democracy,
but also may be referring to the freedom of capital to move around
and be free of encumbrances like taxes and restrictions on abuses
of the environment and labor. Neoliberalism is a “freedom”
movement, but confined to the freedom and rights of capital. The
Chicago Boys  (i.e., University of Chicago economists, many
of whom advised the Pinochet government) were quite enthused with
Pinochet’s Chile as he was freeing markets from government
intervention—at least those forms hurtful to the interests
of capital—and making labor markets “free” of trade
unions and thus more “flexible.” The destruction of democracy
in Chile was actually a prerequisite for full-scale neoliberal freedom,
and was completely acceptable to the Boys (including Milton Friedman)
and their government and corporate community. This pattern was institutionalized,
with democracy and human rights often overturned with U.S. assistance
in the interest of a more favorable climate of investment; the inverse
correlation between U.S. aid and human rights (including democratic
institutions) has been repeatedly demonstrated (see my

Real Terror
Network

, chapter 3, for data and citations). There is surely
no reason to believe that these priorities have been altered under
the leadership of George Bush, a devoted spokesman of the corporate
community and military-industrial complex. 


Historically
the United States has been strongly in favor of democratization,
at least formal democratization, but only in cases where the regimes
in question were looked on with disfavor for other reasons. Guatemala
in the years 1947-54 was remarkably democratic, but it was a budding
welfare state and not subservient to the United Fruit Company and
the U.S. ambassador, so it was overthrown by U.S. actions, whereas
the prior Ubico dictatorship and the profoundly undemocratic counterinsurgency
state sequel were treated kindly. Venezuelan dictators were never
destabilized by U.S. governments, nor are the undemocratic Saudi,
Kuwaiti, Pakistani, or Uzbekistan governments today, but the Bush
administration has worked assiduously to destabilize the Chavez
government of Venezuela, which is elected and as democratic as any
in Latin America.





It
is true that the numerous dictatorships that the United States helped
bring into existence and supported warmly years ago—remember
Vice-President George Bush’s 1985 toast to Philippines dictator
Ferdinand Marcos: “We love you, sir…we love your adherence
to democratic rights and processes”—have given way to
civilian and elected governments, and that the United States has
partially replaced the use of imposed dictatorships with the support
of “democracy movements,” as in the recent Ukraine case.
But this transformation reflects the fact that the dictators successfully
brought their countries into the spider’s web of the global
capitalist economy so that they were no longer needed to do the
job of democracy containment. The web and the associated institutional
changes in the global economy have caused electoral democracies
to lose democratic substance and to become de facto servants of
external forces—friendly governments, banks, other foreign
lenders, trade agreements and the World Trade Organization, and
international financial institutions (IMF, World Bank). Foreign
control no longer needs to be overt; it can work with trade and
other rules, loans and loan agreements, heavy foreign penetration
of the economy and political and cultural institutions, the normal
workings of financial markets, and the desire to maintain the goodwill
of governments that lend, control the IFIs, provide subsidies, impose
quotas and tariffs, and may even have military bases in the country.
Much of this is not new, but a throwback to earlier techniques of
maintaining an “informal empire,” as described in John
Gallagher’s and Ronald Robinson’s “The Imperialism
of Free Trade,”

Economic History Review

(1953). 


It
has been a notorious fact that in the last several decades social
democratic politicians who have won office have almost uniformly
failed to carry out their electoral promises to their mass constituencies.
They have either sold out in advance or found it expedient to adapt
quickly to non-constituency forces to avoid seriously damaging consequences:
money and capital flight and sharp rises in interest rates and cuts
in investment, losses in subsidies from abroad, adverse changes
in foreign tariffs and quotas, threatened cutbacks in IMF support,
and even threats of political upheaval partly encouraged from abroad
(as in Venezuela). So getting countries deeply involved in the global
capitalist economy, and in military alliances with the Western great
powers, makes for shriveled democracies with neoliberal constraints
built into their political economies. 


In
short, getting into power governments that will enter the spider’s
web and abide by the spider’s rules is a useful substitute
for putting into power a Pinochet or Marcos. It permits class warfare
to be imposed by the spider, with the reluctant or sometimes enthusiastic
cooperation of indigenous leaders (e.g., Lula in Brazil, Menem in
Argentina). Meanwhile the population can still vote and, while many
are cynical about the limited options and likely betrayal of the
underlying population to come, the ability to vote and the electoral
promises, not to be fulfilled, makes for quiescence. This process
under the straitjacket will sometimes allow the more aggressive
agent of the substantial citizens to consolidate power and even
threaten the democratic forms themselves—as in this here United
States. 


It
should be noted, however, that the spider’s web may be weakening
its grip in Latin America, with victim countries Argentina and Venezuela
in rebellion against the spider, numerous electoral revolts (Brazil,
Uruguay, Ecuador, and Bolivia) that may yield fruit in time with
greater collective awareness of common interests, and even an Argentine
and Venezuelan plan for a new Latin American TV network to counter-balance
CNN en Espanol and other corporate propaganda on TV. May such resistance
grow and spread.





Edward S. Herman
is an economist and author of many articles and books.