Bulletin N° 370
Subject: ON THE HISTORY OF THE FUTURE.
2 October 2008
Dear Colleagues and Friends of CEIMSA,
The cultural hegemony of the ruling class has receded slightly during the past week, in the face of outrage by the masses of American people who are insisting on democratic control over their lives and their money, in an attempt to protect themselves against further corporate abuses of power. The rapport de force which is gathering momentum in the US is not going to disappear soon, and for the next many months and perhaps years I predict we will see the rise of a counterculture insisting on, among other things, economic reforms that would put an end to the shameless milking of the population to the exclusive advantage of a few at the top of the heap of humanity.
The flurry of recent articles and communications received by CEIMSA speak eloquently to the determination to correct the economic injustices and political abuses that have characterized our era since the Thatcher/Reagan counter-revolution of the 1980s.
The 7 items below offer readers information and analysis of the growing global economic crisis. In addition to these items, the current newsletter from Information Clearing House : "Not One Dime!," provides important new perspectives on the development of social class struggle in the United States, as lawmakers continue to make new laws in an attempt to protect capital and to stabilize inequality and poverty in American society. It would appear by all accounts that a grassroots democratic movement is underway in the U.S., with wide cultural and political implications for the future of the nation.
Item A. is a message from song-writer and social critic Lawrence McGuire offering reliable sources of information for social change.
Item B. is a series of comments by Independent candidate for the US presidency, Ralph Nader, who offers us a worms-eye view (from the bottom up) of the system and how it doesn't work.
Item C. is an article first published in the Guardian by author George Monbiot on the newly enhanced Corporate Welfare State.
Item D. is a video broadcast of an international conference featuring democratic socialist historian Howard Zinn, in which he discusses "United States Foreign Policy and Intervention in the Middle East" held at Harvard Law School.
Item E. is an article by economist and activist, Bruce Marks, founder of Neighborhood Assistance Corporation of America, in which he discusses the subprime theft by a class of international capitalist speculators out to pillage the world's poor and disadvantaged, including those living in the United States of America.
Item F. is an article by Houston-born author and community organizer, Jonathan Tasini, on the housing bubble-inspired financial credit crunch and the sharks who stand to gain high private profits from this public catastrophe.
Item G. is an article on the "Future in Latin America," by long-time CEIMSA associate, Noam Chomsky.
In addition, we offer CEIMSA readers the 30-minute segment from "MAKING CONTACT, " a weekly international radio program which on 16 April 2008 featured Adam Hochschild, author and lecturer at UC Berkeley Graduate School of Journalism, and Naomi Klein, author, journalist and syndicated-columnist, discussing "Cracks in the Edifice" :
from George Monbiot :
Date: 1 October 2008
Subject: The Corporate Welfare State.
Any subsidies eventually given to the monster banks of Wall Street will be as American as apple pie and obesity. The sums demanded may be unprecedented, but there is nothing new about the principle: corporate welfare is a consistent feature of advanced capitalism. Only one thing has changed: Congress has been forced to confront its contradictions.
According to Senator Jim Bunning, the proposal to purchase $700bn of dodgy debt by the US government was "financial socialism, it is un-American". The economics professor Nouriel Roubini called George Bush, Henry Paulson and Ben Bernanke "a troika of Bolsheviks who turned the USA into the United Socialist State Republic of America". Bill Perkins, the venture capitalist who took out an ad in the New York Times attacking the plan, called it "trickle-down communism".
They are wrong. Any subsidies eventually given to the monster banks of Wall Street will be as American as apple pie and obesity. The sums demanded may be unprecedented, but there is nothing new about the principle: corporate welfare is a consistent feature of advanced capitalism. Only one thing has changed: Congress has been forced to confront its contradictions.
One of the best studies of corporate welfare in the US is published by my old enemies at the Cato Institute. Its report, by Stephen Slivinski, estimates that in 2006 the federal government spent $92bn subsidising business. Much of it went to major corporations such as Boeing, IBM and General Electric.
The biggest money crop - $21bn - is harvested by Big Farmer. Slivinski shows that the richest 10% of subsidised farmers took 66% of the payouts. Every few years, Congress or the administration promises to stop this swindle, then hands even more state money to agribusiness. The farm bill passed by Congress in May guarantees farmers a minimum of 90% of the income they've received over the past two years, which happen to be among the most profitable they've ever had. The middlemen do even better, especially the companies spreading starvation by turning maize into ethanol, which are guzzling billions of dollars' worth of tax credits.
Slivinski shows how the federal government's Advanced Technology Program, which was supposed to support the development of technologies that are "pre-competitive" or "high risk", has instead been captured by big businesses flogging proven products. Since 1991, companies such as IBM, General Electric, Dow Chemical, Caterpillar, Ford, DuPont, General Motors, Chevron and Monsanto have extracted hundreds of millions from this programme. Big business is also underwritten by the Export-Import Bank: in 2006, for example, Boeing alone received $4.5bn in loan guarantees.
The government runs something called the Foreign Military Financing programme, which gives money to other countries to purchase weaponry from US corporations. It doles out grants to airports for building runways and to fishing companies to help them wipe out endangered stocks.
But the Cato Institute's report has exposed only part of the corporate welfare scandal. A new paper by the US Institute for Policy Studies shows that, through a series of cunning tax and accounting loopholes, the US spends $20bn a year subsidising executive pay. By disguising their professional fees as capital gains rather than income, for example, the managers of hedge funds and private equity companies pay lower rates of tax than the people who clean their offices. A year ago, the House of Representatives tried to close this loophole, but the bill was blocked in the Senate after a lobbying campaign by some of the richest men in America.
Another report, by a group called Good Jobs First, reveals that Wal-Mart has received at least $1bn of public money. Over 90% of its distribution centres and many of its retail outlets have been subsidised by county and local governments. They give the chain free land, they pay for the roads, water and sewerage required to make that land usable, and they grant it property tax breaks and subsidies (called tax increment financing) originally intended to regenerate depressed communities. Sometimes state governments give the firm straight cash as well: in Virginia, for example, Wal-Mart's distribution centres receive handouts from the Governor's Opportunity Fund.
Corporate welfare is arguably the core business of some government departments. Many of the Pentagon's programmes deliver benefits only to its contractors. Ballistic missile defence, for example, which has no obvious strategic purpose and is unlikely ever to work, has already cost the US between $120bn and $150bn. The US is unique among major donors in insisting that the food it offers in aid is produced on its own soil, rather than in the regions it is meant to be helping. USAid used to boast on its website that "the principal beneficiary of America's foreign assistance programs has always been the United States. Close to 80% of the USAid's contracts and grants go directly to American firms." There is not and has never been a free market in the US.
Why not? Because the congressmen and women now railing against financial socialism depend for their re-election on the companies they subsidise. The legal bribes paid by these businesses deliver two short-term benefits for them. The first is that they prevent proper regulation, allowing them to make spectacular profits and to generate disasters of the kind Congress is now confronting. The second is that public money that should be used to help the poorest is instead diverted into the pockets of the rich.
A report published last week by the advocacy group Common Cause shows how bankers and brokers stopped legislators banning unsustainable lending. Over the past financial year, the big banks spent $49m on lobbying and $7m in direct campaign contributions. Fannie Mae and Freddie Mac spent $180m in lobbying and campaign finance over the past eight years. Much of this was thrown at members of the House financial services committee and the Senate banking committee.
Whenever congressmen tried to rein in the banks and mortgage lenders they were blocked by the banks' money. Dick Durbin's 2005 amendment seeking to stop predatory mortgage lending, for example, was defeated in the Senate by 58 to 40. The former representative Jim Leach proposed re-regulating Fannie Mae and Freddie Mac. Their lobbyists, he recalls, managed in "less than 48 hours to orchestrate both parties' leadership" to crush his amendments.
The money these firms spend buys the socialisation of financial risk. The $700bn the government was looking for was just one of the public costs of its repeated failure to regulate. Even now the lobbying power of the banks has been making itself felt: on Saturday the Democrats watered down their demand that the money earned by executives of companies rescued by the government be capped. Campaign finance is the best investment a corporation can make. You give a million dollars to the right man and reap a billion dollars' worth of state protection, tax breaks and subsidies. When the same thing happens in Africa we call it corruption.
European governments are no better. The free market economics they proclaim are a con: they intervene repeatedly on behalf of the rich, while leaving everyone else to fend for themselves. Just as in the US, the bosses of farm companies, oil drillers, supermarkets and banks capture the funds extracted by government from the pockets of people much poorer than themselves. Taxpayers everywhere should be asking the same question: why the hell should we be supporting them?
from Howard Zinn :
Date: 5 September 2008
Subject: Confronting Empire
This a one part of the Confronting Empire: Five Years of War in Iraq Lecture Series, at Harvard Law School, held on March 17-19, 2008.
With Professors Irene Gendzier and Howard Zinn
HLS Justice for Palestine, and
Unbound: Harvard Journal of the Legal Left.
Confronting Empire 3/5
United States Foreign Policy and Intervention in the Middle East
by Howard Zinn
(Recorded and Edited by Charngchi Way)
from Bruce Marks :
Date: 30 September 2008
Subject: The founder and CEO of NACA, the Neighborhood Assistance Corporation of America.
Providing loans to low and moderate income people and those who are considered to be subprime borrowers. Information on mortgage services and national.
from Jonathan Tasini :
Date: 1 October 2008
Subject: Social Class Struggle.
More than 24.5 percent of all Americans earn poverty wages ($9.60 or less) - 10 percent of all Americans-15 million Americans-earn $6.79 or less - 33.3 percent of African American workers and 39.3 of Hispanic workers earn poverty wages.
There is a great economic emergency looming in our country. But, it seems to me that weor at least our elected leadershave only looked at one side of the crisis, that of the housing bubble-inspired financial credit crunch. By doing so, we’ve missed the bigger picture and the solutions needed. So, here is one person’s take on the Emergency Economic Bailout package that will heal the economy.
As quick background, let’s consider this:
24.5 percent of all Americans earn poverty wages ($9.60 or less)
10 percent of all Americans15 million Americansearn $6.79 or less
33.3 percent of African American works and 39.3 of Hispanic workers earn poverty wages.
The share of our entire national income hoarded by the top one percent is, as of 2005, 21.8 percent. The last time it was that high was in 1928 (23.9)just as the Great Depression was about to hit with its full fury.
We accept poverty as a fact of life in this countrypartly because workers have not gotten the fair share of their hard work over the past three decades (in Republican and Democratic Administrations). If productivity and wages had kept their historic link (meaning, as workers were more productive, that translated into higher paychecks), the MINIMUM WAGE in the country would be $19.12. Yes, $19.12.
At the recent new minimum wage of $6.55 an hour, if you worked every single day, 40 hours a week, with no vacations, no holidays, no health care and no pension, you would earn the grand sum of $13.624. The POVERTY LEVEL for a family of three is $17,600.
47 million Americans have no health care and tens of millions more have inadequate or costly health care that can bankrupt them.
Since 1978, the number of defined-benefit plansthat means, pensions that give retirees a promised monthly amountplummeted from 128,041 plans covering some 41 percent of private-sector workers to only 26,000 today. It’s a Dog Food Retirement future for millions of people.
All those numbers above do relate to the more narrow crisis in a very specific way: without being able to rely on their paychecks to survive, a lot of people got sucked into the housing bubble mania as an economic coping mechanism. Home equity credit lines substituted for decent pay, retirement and affordable, quality health care. And we know the rest.
So, here is what I think is a more comprehensive economic rescue plan, all of which should be attached to any new "bailout" proposal:
1. Immediately raise the minimum wage to $10 an hour, with additional increases over the fives years following raising the minimum wage to $20, which will begin to return some justice and return to workers’ sweat of the brow.
2. Pass HR676, Medicare for All legislation to (Rep. John Conyers is the main sponsor of the bill). Aside from the moral issue of covering every single American and making health care a right not a privilege, it would save the economy hundreds of billions of dollars and immediately make American-based companies competitive around the world with companies operating from countries with national health care.
3. Create a national guaranteed universal pension plan, backed by the government, so people can be sure that their retirement years will not be threatened by the wild swings of Wall Street.
4. Repeal the Bush tax cuts now and raise the top two income tax rates to 40% and 45%, add a new 50% income tax bracket for those with taxable income over $1 million, and tax investment income as ordinary income. Frankly, that is pretty modest and should only be the first step in rediscovering a progressive taxation systembut it will still raise several hundred billion dollars this year to finance a variety of public investments. The very people who have enriched themselves in the deregulation orgy of the past couple of decades should pay to repair the country.
5. A couple of years ago, when I was involved in a little political race of my own, I latched on to this idea: a tiny transactions tax on stock sales. It would be so miniscule that the small investors would never feel it, say, 0.25 percent of the sale. It would raise about $150 billion. Wall Street benefits from government protections, not the least of which is a regulatory system (oh, there I go using that "regulation" word, which now seems to be back in vogue) that prevents, in theory, fraud and crazy speculation (ok, so that doesn’t always work out well). Plus, such a tax might also exercise some restraint, perhaps modest, on the wild and crazy big trades made on rumors and the thirst for a quick buck. But, the main point is shared responsibility. You live in this society and, so, you make a contribution. And that contribution is relatively modest and relatively painless.
6. The Employee Free Choice Act. There is no better middle-class jobs program than unionization. Period.
The point of these suggestions is not just moral but common, economic sense. The way to avoid, to some extent, speculation and crazy amounts of debt is to take away the victims that are preyed on by banks, unscrupulous investors and free-market pirates. If a person has a decent income, real health care, a secure retirement and a government that can invest in the country, he or she is less likely to feel the need to latch on to risky investments and get-rich-quick schemes (also known as day-trading).
My guess is the American people would feel pretty good about a deal that included the above. To those, I’d add two specific pieces about the current mess:
First, any investment of money in banks is done on a debt-for-equity swap. No bailouts. As Nouriel Roubini and my friend Dean Baker have both pointed out, there is no justification or economic logic to bailout banks as a solution to the crisis we find ourselves in. Roubini writes, in arguing that the buying up bad assets is the exception, not the rule, and:
Social Summit for the Latin American and Caribbean Unity
by Noam Chomsky
During the past decade, Latin America has become the most exciting region of the world. The dynamic has very largely flowed from right where you are meeting, in Caracas, with the election of a leftist president dedicated to using Venezuela's rich resources for the benefit of the population rather than for wealth and privilege at home and abroad, and to promote the regional integration that is so desperately needed as a prerequisite for independence, for democracy, and for meaningful development. The initiatives taken in Venezuela have had a significant impact throughout the subcontinent, what has now come to be called "the pink tide." The impact is revealed within the individual countries, most recently Paraguay, and in the regional institutions that are in the process of formation. Among these are the Banco del Sur, an initiative that was endorsed here in Caracas a year ago by Nobel laureate in economics Joseph Stiglitz; and the ALBA, the Bolivarian Alternative for Latin America and the Caribbean, which might prove to be a true dawn if its initial promise can be realized.
The ALBA is often described as an alternative to the US-sponsored "Free Trade Area of the Americas," though the terms are misleading. It should be understood to be an independent development, not an alternative. And, furthermore, the so-called "free trade agreements" have only a limited relation to free trade, or even to trade in any serious sense of that term; and they are certainly not agreements, at least if people are part of their countries. A more accurate term would be "investor-rights arrangements," designed by multinational corporations and banks and the powerful states that cater to their interests, established mostly in secret, without public participation or awareness. That is why the US executive regularly calls for "fast-track authority" for these agreements - essentially, Kremlin-style authority.
Another regional organization that is beginning to take shape is UNASUR, the Union of South American Nations. This continental bloc, modeled on the European Union, aims to establish a South American parliament in Cochabamba, a fitting site for the UNASUR parliament. Cochabamba was not well known internationally before the water wars of 2000. But in that year events in Cochabamba became an inspiration for people throughout the world who are concerned with freedom and justice, as a result of the courageous and successful struggle against privatization of water, which awakened international solidarity and was a fine and encouraging demonstration of what can be achieved by committed activism.
The aftermath has been even more remarkable. Inspired in part by developments in Venezuela, Bolivia has forged an impressive path to true democratization in the hemisphere, with large-scale popular initiatives and meaningful participation of the organized majority of the population in establishing a government and shaping its programs on issues of great importance and popular concern, an ideal that is rarely approached elsewhere, surely not in the Colossus of the North, despite much inflated rhetoric by doctrinal managers.
Much the same had been true 15 years earlier in Haiti, the only country in the hemisphere that surpasses Bolivia in poverty - and like Bolivia, was the source of much of the wealth of Europe, later the United States. In 1990, Haiti's first free election took place. It was taken for granted in the West that the US candidate, a former World Bank official who monopolized resources, would easily win. No one was paying attention to the extensive grass-roots organizing in the slums and hills, which swept into power the populist priest Jean-Bertrand Aristide. Washington turned at once to undermining the feared and hated democratic government. It took only a few months for a US-backed military coup to reverse this stunning victory for democracy, and to place in power a regime that terrorized the population with the direct support of the US government, first under president Bush I, then Clinton. Washington finally permitted the elected president to return, but only on the condition that he adhere to harsh neoliberal rules that were guaranteed to crush what remained of the economy, as they did. And in 2004, the traditional torturers of Haiti, France and the US, joined to remove the elected president from office once again, launching a new regime of terror, though the people remain unvanquished, and the popular struggle continues despite extreme adversity.
All of this is familiar in Latin America, not least in Bolivia, the scene of today's most intense and dangerous confrontation between popular democracy and traditional US-backed elites. Archaeologists are now discovering that before the European conquest, Bolivia had a wealthy, sophisticated and complex society - to quote their words, "one of the largest, strangest, and most ecologically rich artificial environments on the face of the planet, with causeways and canals, spacious and formal towns and considerable wealth," creating a landscape that was "one of humankind's greatest works of art, a masterpiece." And of course Bolivia's vast mineral wealth enriched Spain and indirectly northern Europe, contributing massively to its economic and cultural development, including the industrial and scientific revolutions. Then followed a bitter history of imperial savagery with the crucial connivance of rapacious domestic elites, factors that are very much alive today.
Sixty years ago, US planners regarded Bolivia and Guatemala as the greatest threats to its domination of the hemisphere. In both cases, Washington succeeded in overthrowing the popular governments, but in different ways. In Guatemala, Washington resorted to the standard technique of violence, installing one of the world's most brutal and vicious regimes, which extended its criminality to virtual genocide in the highlands during Reagan's murderous terrorist wars of the 1980s - and we might bear in mind that these horrendous atrocities were carried out under the guise of a "war on terror," a war that was re-declared by George Bush in September 2001, not declared, a revealing distinction when we recall the implementation of Reagan's "war on terror" and its grim human consequences.
In Guatemala, the Eisenhower administration overcame the threat of democracy and independent development by violence. In Bolivia, it achieved much the same results by exploiting Bolivia's economic dependence on the US, particularly for processing Bolivia's tin exports. Latin America scholar Stephen Zunes points out that "At a critical point in the nation's effort to become more self-sufficient [in the early 1950s], the U.S. government forced Bolivia to use its scarce capital not for its own development, but to compensate the former mine owners and repay its foreign debts."
The economic policies forced on Bolivia in those years were a precursor of the structural adjustment programs imposed on the continent thirty years later, under the terms of the neoliberal "Washington consensus," which has generally had disastrous effects wherever its strictures have been observed. By now, the victims of neoliberal market fundamentalism are coming to include the rich countries, where the curse of financial liberalization is bringing about the worst financial crisis since the Great Depression of the 1930s and leading to massive state intervention in a desperate effort to rescue collapsing financial institutions.
We should note that this is a regular feature of contemporary state capitalism, though the scale today is unprecedented. A study by two well-known international economists 15 years ago found that at least twenty companies in the top Fortune 100 would not have survived if they had not been saved by their respective governments, and that many of the rest gained substantially by demanding that governments "socialise their losses." Such government intervention "has been the rule rather than the exception over the past two centuries," they conclude from a detailed analysis. [Ruigrok and von Tulder]
We might also take note of the striking similarity between the structural adjustment programs imposed on the weak by the International Monetary Fund, and the huge financial bailout that is on the front pages today in the North. The US executive-director of the IMF, adopt ing an image from the Mafia, described the institution as "the credit community's enforcer." Under the rules of the Western-run international economy, investors make loans to third world tyrannies, and since the loans carry considerable risk, make enormous profits. Suppose the borrower defaults. In a capitalist economy, the lenders would incur the loss. But really existing capitalism functions quite differently. If the borrowers cannot pay the debts, then the IMF steps in to guarantee that lenders and investors are protected. The debt is transferred to the poor population of the debtor country, who never borrowed the money in the first place and gained little if anything from it. That is called "structural adjustment." And taxpayers in the rich country, who also gained nothing from the loans, sustain the IMF through their taxes. These doctrines do not derive from economic theory; they merely reflect the distribution of decision-making power.
The designers of the international economy sternly demand that the poor accept market discipline, but they ensure that they themselves are protected from its ravages, a useful arrangement that goes back to the origins of modern industrial capitalism, and played a large role in dividing the world into rich and poor societies, the first and third worlds.
This wonderful anti-market system designed by self-proclaimed market enthusiasts is now being implemented in the United States, to deal with the very ominous crisis of financial markets. In general, markets have well-known inefficiencies. One is that transactions do not take into account the effect on others who are not party to the transaction. These so-called "externalities" can be huge. That is particularly so in the case of financial institutions. Their task is to take risks, and if well-managed, to ensure that potential losses to themselves will be covered. To themselves. Under capitalist rules, it is not their business to consider the cost to others if their practices lead to financial crisis, as they regularly do. In economists' terms, risk is underpriced, because systemic risk is not priced into decisions. That leads to repeated crisis, naturally. At that point, we turn to the IMF solution. The costs are transferred to the public, which had nothing to do with the risky choices but is now compelled to pay the costs - in the US, perhaps mounting to about $1 trillion right now. And of course the public has no voice in determining these outcomes, any more than poor peasants have a voice in being subjected to cruel structural adjustment programs.
A basic principle of modern state capitalism is that cost and risk are socialized, while profit is privatized. That principle extends far beyond financial institutions. Much the same is true for the entire advanced economy, which relies extensively on the dynamic state sector for innovation, for basic research and development, for procurement when purchasers are unavailable, for direct bail-outs, and in numerous other ways. These mechanisms are the domestic counterpart of imperial and neocolonial hegemony, formalized in World Trade Organization rules and the misleadingly named "free trade agreements."
Financial liberalization has effects well beyond the economy. It has long been understood that it is a powerful weapon against democracy Free capital movement creates what some international economists have called a "virtual parliament" of investors and lenders, who can closely monitor government programs and "vote" against them if they are considered irrational: for the benefit of people, rather than concentrated private power. They can "vote" by capital flight, attacks on currencies, and other devices offered by financial liberalization. That is one reason why the Bretton Woods system established by the US and UK after World War II instituted capital controls and regulated currencies. The Great Depression and the war had aroused powerful radical democratic currents, taking many forms, from the anti-fascist resistance to working class organization. These pressures made it necessary to permit social democratic policies. The Bretton Woods system was designed in part to create a space for government action responding to public will - for some measure of democracy, that is. John Maynard Keynes, the British negotiator, considered the most important achievement of Bretton Woods to be establishment of the right of governments to restrict capital movement. In dramatic contrast, in the neoliberal phase after the breakdown of the Bretton Woods system, the US Treasury now regards free capital mobility as a "fundamental right," unlike such alleged "rights" as those guaranteed by the Universal Declaration of Human Rights: health, education, decent employment, security, and other rights that the Reagan and Bush administrations have dismissed as "letters to Santa Claus," "preposterous," mere "myths."
In earlier years the public had not been much of a problem. The reasons are reviewed by Barry Eichengreen in his standard scholarly history of the international monetary system. He explains that in the 19th century, governments had not yet been "politicized by universal male suffrage and the rise of trade unionism and parliamentary labor parties." Therefore the severe costs imposed by the virtual parliament could be transferred to the general population. But with the radicalization of the general public during the Great Depression and the anti-fascist war, that luxury was no longer available to private power and wealth. Hence in the Bretton Woods system, "limits on capital mobility substituted for limits on democracy as a source of insulation from market pressures." It is only necessary to add the obvious corollary: with the dismantling of the system from the 1970s, functioning democracy is restricted. It has therefore become necessary to control and marginalize the public in some fashion, processes that are particularly evident in the more business-run societies like the United States. The management of electoral extravaganzas by the Public Relations industry is one illustration.
The primary victims of military terror and economic strangulation are the poor and weak, within the rich countries themselves and far more brutally in the South. But times are changing. In Venezuela, in Bolivia, and elsewhere there are promising efforts to bring about desperately needed structural and institutional changes. And not surprisingly, these efforts to promote democracy, social justice, and cultural rights are facing harsh challenges from the traditional rulers, at home and internationally.
For the first time in half a millennium, South America is beginning to take its fate into its own hands. There have been attempts before, but they have been crushed by outside force, as in the cases I just mentioned and other hideous ones too numerous and too familiar to review. But there are now significant departures from a long and shameful history. The departures are symbolized by the UNASUR crisis summit in Santiago just a few days ago. At the summit, the presidents of the South American countries issued a strong statement of support for the elected Morales government, which as you know is under attack by the traditional rulers: privileged Europeanized elites who bitterly oppose Bolivian democracy and social justice and, routinely, enjoy the firm backing of the master of the hemisphere. The South American leaders gathering at the UNASUR summit in Santiago declared "their full and firm support for the constitutional government of President Evo Morales, whose mandate was ratified by a big majority" -- referring, of course, to his overwhelming victory in the recent referendum. Morales thanked UNASUR for its support, observing that "For the first time in South America's history, the countries of our region are deciding how to resolve our problems, without the presence of the United States."
A matter of no slight significance.
The significance of the UNASUR support for democracy in Bolivia is underscored by the fact that the leading media in the US refused to report it, though editors and correspondents surely knew all about it. Ample information was available to them on wire services.
That has been a familiar pattern. To cite just one of many examples, the Cochabamba declaration of South American leaders in December 2006, calling for moves towards integration on the model of the European Union, was barred from the Free Press in the traditional ruler of the hemisphere. There are many other cases, all illustrating the same fear among the political class and economic centers in the US that the hemisphere is slipping from their control.
Current developments in South America are of historic significance for the continent and its people. It is well understood in Washington that these developments threaten not only its domination of the hemisphere, but also its global dominance. Control of Latin America was the earliest goal of US foreign policy, tracing back to the earliest days of the Republic. The United States is, I suppose, the only country that was founded as a "nascent empire," in George Washington's words. The most libertarian of the Founding Fathers, Thomas Jefferson, predicted that the newly liberated colonies would drive the indigenous population "with the beasts of the forests into the Stony Mountains," and the country will ultimately be "free of blot or mixture," red or black (with the return of slaves to Africa after eventual ending of slavery). And furthermore, it "will be the nest, from which all America, North and South, is to be peopled," displacing not only the red men but the Latin population of the South.
These aspirations were not achieved, but control of Latin America remains a central policy goal, partly for resources and markets, but also for broader ideological and geostrategic reasons. If the US cannot control Latin America, it cannot expect "to achieve a successful order elsewhere in the world," Nixon's National Security Council concluded in 1971 while considering the paramount importance of destroying Chilean democracy. Historian David Schmitz observes that Allende "threatened American global interests by challenging the whole ideological basis of American Cold War policy. It was the threat of a successful socialist state in Chile that could provide a model for other nations that caused concern and led to American opposition," in fact direct participation in establishing and maintaining the terrorist dictatorship. Henry Kissinger warned that success for democratic socialism in Chile might have reverberations as far as southern Europe - not because Chilean hordes would descend on Madrid and Rome, but because success might inspire popular movements to achieve their goals by means of parliamentary democracy, which is upheld as an abstract value in the West, but with crucial reservations.
Even mainstream scholarship recognizes that Washington has supported democracy if and only if it contributes to strategic and economic interests, a policy that continues without change through all administrations, to the present.
These pervasive concerns are the rational form of the domino theory, sometimes more accurately called "the threat of a good example." For such reasons, even the tiniest departure from strict obedience is regarded as an existential threat that calls for a harsh response: peasant organizing in remote communities of northern Laos, fishing cooperatives in Grenada, and so on throughout the world. It is necessary to ensure that the "virus" of successful independent development does not "spread contagion" elsewhere, in the terminology of the highest level planners.
Such concerns have motivated US military intervention, terrorism, and economic warfare throughout the post-World War II era, in Latin America and throughout much of the world. These are leading features of the Cold War. The superpower confrontation regularly provided pretexts, mostly fraudulent, much as the junior partner in world control appealed to the threat of the West when it crushed popular uprisings in its much narrower Eastern European domains.
But times are changing. In Latin America, the source is primarily in moves towards integration, which has several dimensions. One dimension of integration is regional: moves to strengthen ties among the South American countries of the kind I mentioned. These are now just beginning to reach to Central America, which was so utterly devastated by Reagan's terror wars that it had mostly stayed on the sidelines since, but is now beginning to move. Of particular significance are recent developments in Honduras, the classic "banana republic" and Washington's major base for its terrorist wars in the region in the 1980s. Washington's Ambassador to Honduras, John Negroponte, was one of the leading terrorist commanders of the period, and accordingly was appointed head of counter-terrorist operations by the Bush administration, a choice eliciting no comment. But here too times are changing. President Zelaya declared that US aid does not "make us vassals" or give Washington the right to humiliate the nation, and has improved ties with Venezuela, joining Petrocaribe, and in July, joining the Alba as well.
Regional integration of the kind that has been slowly proceeding for several years is a crucial prerequisite for independence, making it more difficult for the master of the hemisphere to pick off countries one by one. For that reason it is causing considerable distress in Washington, and is either ignored or regularly distorted in the media and other elite commentary.
A second form of integration is global: the establishment of South-South relations, and the diversification of markets and investment, with China a growing and particularly significant participant in hemispheric affairs. Again, these developments undercut Washington's ability to control what Secretary of War Henry Stimson called "our little region over here" at the end of World War II, when he was explaining that other regional systems must be dismantled, while our own must be strengthened.
The third and in many ways most vital form of integration is internal. Latin America is notorious for its extreme concentration of wealth and power, and the lack of responsibility of privileged elites for the welfare of the nation. It is instructive to compare Latin America with East Asia. Half a century ago, South Korea was at the level of a poor African country. Today it is an industrial powerhouse. And much the same is true throughout East Asia. The contrast to Latin America is dramatic, particularly so because Latin America has far superior natural advantages. The reasons for the dramatic contrast are not hard to identify. For 30 years Latin America has rigorously observed the rules of the Washington consensus, while East Asia has largely ignored them. Latin American elites separated themselves from the fate of their countries, while their East Asian counterparts were compelled to assume responsibilities. One measure is capital flight: in Latin America, it is on the scale of the crushing debt, while in South Korea it was so carefully controlled that it could bring the death penalty. More generally, East Asia adopted the modes of development that had enabled the wealthy countries to reach their current state, while Latin America adhered to the market principles that were imposed on the colonies and largely created the third world, blocking development.
Furthermore, needless to say, development of the East Asian style is hardly a model to which Latin America, or any other region, should aspire. The serious problems of developing truly democratic societies, based on popular control of all social, economic, political and cultural institutions, and overturning structures of hierarchy and domination in all aspects of life, are barely even on the horizon, posing formidable and essential tasks for the future.
These are huge problems within Latin America. They are beginning to be addressed, though haltingly, with many internal difficulties. And they are, of course, arousing bitter antagonism on the part of traditional sectors of power and privilege, again backed by the traditional master of "our little region over here." The struggle is particularly intense and significant right now in Bolivia, but in fact is constant in one or another form throughout the hemisphere.
The problems of Latin America and the Caribbean have global roots, and have to be addressed by regional and global solidarity along with internal struggle. The growth of the social forums, first in South America, now elsewhere, has been one of the most encouraging steps forward in recent years. These developments may bear the seeds of the first authentic international, heralding an era of true globalization - international integration in the interests of people, not investors and other concentrations of power. You are right at the heart of these dramatic developments, an exciting opportunity, a difficult challenge, a responsibility of historic proportions.