Friday, February 20, 2009

Harvard and Northwestern Economists: GOP tax cuts and resulting emergence of the elite class caused the financial crisis

by Len Hart, The Existentialist Cowboy

The financial crisis results directly from inequitable GOP tax cuts which have benefited only the GOPs elite base. The effect is that of a US economy 'contracting' with each tax cut. The scheme was conceived and promoted by American fascists --the big banks, the GOP, the MIC and the CIA. The result: the US economy is among the most inequitable economies in the world. Growing disparities between rich and poor were at one time associated only with a developing Third World or Latin American 'Banana Republics'. Now --it is clear that they are behind America's imminent fall. [See: Screw the Big Banks! Bailout the Small Depositors!]

The wealthy have always used many methods to accumulate wealth, but it was not until the mid-1970s that these methods coalesced into a superbly organized, cohesive and efficient machine. After 1975, it became greater than the sum of its parts, a smooth flowing organization of advocacy groups, lobbyists, think tanks, conservative foundations, and PR firms that hurtled the richest 1 percent into the stratosphere.
...
The origins of this machine, interestingly enough, can be traced back to the CIA. This is not to say the machine is a formal CIA operation, complete with code name and signed documents. (Although such evidence may yet surface — and previously unthinkable domestic operations such as MK-ULTRA, CHAOS and MOCKINGBIRD show this to be a distinct possibility.) But what we do know already indicts the CIA strongly enough. Its principle creators were Irving Kristol, Paul Weyrich, William Simon, Richard Mellon Scaife, Frank Shakespeare, William F. Buckley, Jr., the Rockefeller family, and more. Almost all the machine's creators had CIA backgrounds.

During the 1970s, these men would take the propaganda and operational techniques they had learned in the Cold War and apply them to the Class War. Therefore it is no surprise that the American version of the machine bears an uncanny resemblance to the foreign versions designed to fight communism. The CIA's expert and comprehensive organization of the business class would succeed beyond their wildest dreams. In 1975, the richest 1 percent owned 22 percent of America’s wealth. By 1992, they would nearly double that, to 42 percent — the highest level of inequality in the 20th century.
How did this alliance start? The CIA has always recruited the nation’s elite: millionaire businessmen, Wall Street brokers, members of the national news media, and Ivy League scholars. During World War II, General "Wild Bill" Donovan became chief of the Office of Strategic Services (OSS), the forerunner of the CIA. Donovan recruited so exclusively from the nation’s rich and powerful that members eventually came to joke that "OSS" stood for "Oh, so social!"
Another early elite was Allen Dulles, who served as Director of the CIA from 1953 to 1961. Dulles was a senior partner at the Wall Street firm of Sullivan and Cromwell, which represented the Rockefeller empire and other mammoth trusts, corporations and cartels. He was also a board member of the J. Henry Schroeder Bank, with offices in Wall Street, London, Zurich and Hamburg. His financial interests across the world would become a conflict of interest when he became head of the CIA. Like Donavan, he would recruit exclusively from society’s elite.
By the 1950s, the CIA had riddled the nation’s businesses, media and universities with tens of thousands of part-time, on-call operatives. Their employment with the agency took a variety of forms, which included:
  • Leaving one's profession to work for the CIA in a formal, official capacity.
  • Staying in one's profession, using the job as cover for CIA activity. This undercover activity could be full-time, part-time, or on-call.
  • Staying in one's profession, occasionally passing along information useful to the CIA.
  • Passing through the revolving door that has always existed between the agency and the business world.
Historically, the CIA and society’s elite have been one and the same people. This means that their interests and goals are one and the same as well. Perhaps the most frequent description of the intelligence community is the "old boy network," where members socialize, talk shop, conduct business and tap each other for favors well outside the formal halls of government.
--Steve Kangas, The Origins of the Overclass
Since Ronald Reagan's infamous tax cut of 1982, "conservatives" have been fond of talking about a 'great Reagan Recovery' which they cite as proof of "Reaganomics", 'trickle-down theory', otherwise called supply-side economics. It is not just bullshit! I believe that it is deliberate bullshit, a bald-faced lie cooked up inside a right wing 'think tank'! With 'Reaganomics', the government itself became nothing more than a shakedown scheme, a competitor with the mob.

It must be pointed out that following the tax cut, the nation plunged into recession, the worst since Herbert Hoover's Great Depression of 1929. Nevertheless, conservatives will persist in citing a three percent growth rate following two years of severe recession as proof that "wealth trickles down". This assertion fails to address key questions.

Who benefited from the recovery?

How long did it take for the nation to regain lost ground?

Did Reagan's tax cuts bring about more growth than would have normally occurred?
The record shows that the growth rate was 3% between 1979 and 1989 --the same as the growth rate between 1973 and 1979! There was, then, no improvement with "voodoo economics" than without it. There was no "Reagan recovery"! Wealth did not trickle down! Wealth moved, flowing upward at alarming but predictable, exponential rates.

Reagan did not perform nearly so well as Jimmy Carter, who is, in fact, among the nation's best 'performing' Presidents in terms of the growth of GDP and jobs. Everything said by the right wing about Carter is a bald face lie! Carter ranks number two on the list of best Presidents since World War II. From that same list, the top five are Democrats. The bottom three are goppers.
However hard you may look, you will not find in the official stats any confirmation of GOP/Reaganomics whatsoever. Go to the Bureau of Labor Statistics, the Census Bureau, the BEA! You will find, rather, confirmation of a more pernicious trend: the rich began to get even richer.

With the ascension of Ronald Reagan, the poor began to lose ground at alarming rates. It seems almost to have been deliberate. The late Steve Kangas believed it was deliberate just as I believe that the war against Iraq continues to be a payoff to robber barons that make up the Military/Industrial complex.

In my last article [Screw the Big Banks! Bailout the Small Depositors!], I charged that obscene income and wealth disparities, having the effect of effectively removing trillions of dollars from the US economy are to blame for the current 'financial crisis'. Lately, I have discovered additional support for my position in the work Robert J. Gordon, Northwestern University and NBER Ian Dew-Becker, Harvard University.
... we identify a second of market-driven incomes which do not share super-star elements of audience magnification, namely lawyers and investment bankers including hedge fund managers. Third are the CEOs which differ because their incomes are not driven by the market but by decisions of their peers, with the presumption of self-serving reciprocity. We devote particular attention to conflicting papers endorsing alternatively a market-driven and management-power-driven explanation of the explosion of CEO relative pay. Why are American incomes at the very top increased so much relative to incomes below the 90th percentile and also relative to top incomes in Europe and Japan? In this paper we distinguish three types of top-level incomes. The first group consists of super-stars, driven by the market demand for sports and entertainment stars where media have magnified the reach of the very top individuals, and where the effort of the worker is the same whether the audience is a single person or ten million people. Second, we identify a second of market-driven incomes which do not share super-star elements of audience magnification, namely lawyers and investment bankers including hedge fund managers. Third are the CEOs which differ because their incomes are not driven by the market but by decisions of their peers, with the presumption of self-serving reciprocity. We devote particular attention to conflicting papers endorsing alternatively a market-driven and management-power-driven explanation of the explosion of CEO relative pay.

--Unresolved Issues in the Rise of American Inequality [PDF], Robert J. Gordon, Northwestern University and NBER Ian Dew-Becker, Harvard University
How is it possible that an entire nation is so easily brainwashed? The question answers itself and the operative word is 'brainwashed'.

Journalism is a perfect cover for CIA agents. People talk freely to journalists, and few think suspiciously of a journalist aggressively searching for information. Journalists also have power, influence and clout. Not surprisingly, the CIA began a mission in the late 1940s to recruit American journalists on a wide scale, a mission it dubbed Operation MOCKINGBIRD. The agency wanted these journalists not only to relay any sensitive information they discovered, but also to write anti-communist, pro-capitalist propaganda when needed.
The instigators of MOCKINGBIRD were Frank Wisner, Allan Dulles, Richard Helms and Philip Graham. Graham was the husband of Katherine Graham, today’s publisher of the Washington Post. In fact, it was the Post’s ties to the CIA that allowed it to grow so quickly after the war, both in readership and influence. (8)
MOCKINGBIRD was extraordinarily successful. In no time, the agency had recruited at least 25 media organizations to disseminate CIA propaganda. At least 400 journalists would eventually join the CIA payroll, according to the CIA’s testimony before a stunned Church Committee in 1975. (The committee felt the true number was considerably higher.) The names of those recruited reads like a Who's Who of journalism:

  • Philip and Katharine Graham (Publishers, Washington Post)
  • William Paley (President, CBS)
  • Henry Luce (Publisher, Time and Life magazine)
  • Arthur Hays Sulzberger (Publisher, N.Y. Times)
  • Jerry O'Leary (Washington Star)
  • Hal Hendrix (Pulitzer Prize winner, Miami News)
  • Barry Bingham Sr., (Louisville Courier-Journal)
  • James Copley (Copley News Services)
  • Joseph Harrison (Editor, Christian Science Monitor)
  • C.D. Jackson (Fortune)
  • Walter Pincus (Reporter, Washington Post)
  • ABC
  • NBC
  • Associated Press
  • United Press International
  • Reuters
  • Hearst Newspapers
  • Scripps-Howard
  • Newsweek magazine
  • Mutual Broadcasting System
  • Miami Herald
  • Old Saturday Evening Post
  • New York Herald-Tribune
Perhaps no newspaper is more important to the CIA than the Washington Post, one of the nation’s most right-wing dailies. Its location in the nation’s capitol enables the paper to maintain valuable personal contacts with leading intelligence, political and business figures. Unlike other newspapers, the Post operates its own bureaus around the world, rather than relying on AP wire services. Owner Philip Graham was a military intelligence officer in World War II, and later became close friends with CIA figures like Frank Wisner, Allen Dulles, Desmond FitzGerald and Richard Helms. He inherited the Post by marrying Katherine Graham, whose father owned it.
--Steve Kangas, The Origins of the Overclass
This so-called 'bailout' is a daylight theft which has already netted the GOP elite some 1.5 trillion dollars in bailout monies. So --where's the money now? Where's the recovery? Where are the culprits hiding out? Why has there been no investigation of this monumental fraud, a fraud that makes Enron look like a Sunday School picnic --or at the very least a dress rehearsal?

Only the big banks have benefited. None of the money has trickled-down; the economy continues to 'contract' at an annualized rate of 3.8 percent. This time, the plan may backfire. Fat cats are scrambling to escape a black hole of their own creation. True to their evil natures, however, the GOP elite are not above putting the screws to you as they themselves get sucked past the event horizon.

Already the goppers have renewed their assault on the Social Security trust fund, the government's only success story. The smart money 'bailed out' long ago. What's left is a mad melee in search of a federal bail out. The profits have been taken. The best that can be hoped for now is 1) the end of the GOP; 2) that only the crooked architects of this disaster are victimized by it. Alas--that's too much to ask. Cynically, the world just doesn't seem to work like that.
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