In an age of illusion, the guise of truth is often heresy
By Darryl Schoon
February 15, 2009 "Financial Sense" -- -The gathering of the world’s economic elites in Davos, Switzerland is a reflection of the reigning power dynamic of the modern world. Officially titled, the World Economic Forum, Davos is sponsored by the world’s most powerful and wealthy corporations and presents itself as a “not-for-profit” entity.
However, if you believe the annual gathering in Davos is not-for-profit, you probably also believe that JFK died of natural causes while sightseeing in Dallas. Those who attend Davos—the Davo’tees of Mammon—are the winners in the game of capitalism, a game based on debt controlled by bankers through their issuance of credit.
Investment bankers by virtue of their privileged position at the spigots of credit haveover the years garnered for themselves a disproportionate slice of the world’s wealth. The best description of their wealth is from a banker himself, Sir Josiah Stamp, at the time in1927 the 2nd richest man in England and former head of The Bank of England:
Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.
The fact that in 2008 bankers became victims in the game they created has profound implications for capitalism itself. Capitalism, which began in 1694 with the issuance of debt-based money from The Bank of England, has now over three hundred years later reached its last and final stage.
Capitalism is not ending because those enslaved by bankers revolted. Capitalism is ending because the bankers’ insatiable greed destroyed the mechanism by which bankers indebt others. The sad truth is that those enslaved by debt still wish to remain the slaves of bankers and pay the cost of [their] own slavery [and] let them [the bankers] continue to create money.
Although debtors fervently hope the bankers’ system of debt will continue, they will not have a say in the matter. Neither will the bankers. Davos will never again be the same.
DAVOS & THE LAST GASP OF CAPITALISM
The World Economic Forum in Davos was founded in 1971, the same year in which all currencies became fiat, sic not backed by gold or silver. Perhaps this is coincidence. Perhaps not.
Nonetheless, Davos will be always associated with the end of capitalism where the charade of the banker’s paper money was revealed to be what it was, a confidence game where in the end everyone would lose everything—including the bankers.
The charade/con-game actually began in 1694 when the Bank of England was granted the right to issue England’s coinage in the form of paper money. This paper money was declared to be as good as gold or silver coins. Of course, it wasn’t; but in the beginning it was much better than it was to be later.
Previous to 1694 the bankers were known as goldsmiths who profited by charging interest on the loaning of gold and silver coins. After 1694, the goldsmiths, now called bankers, profited by charging interest on the loaning of paper money, and thus the true alchemy of modern finance was born.
The substitution of paper “money” for gold and the charging of interest on such “money” is the secret of the banker’s wealth. It is also the secret of capitalism as it is the process whereby bankers’ indebt others (businesses, consumers, governments, etc.) through the loaning of paper “money” created by central banks resulting in paper IOUs, IOUs which are then resold as investments to savers, savers being all who need to protect the value of their paper “money” from eroding because of the constant inflation of the paper money supply by bankers.
That such a system has lasted over three hundred years is extraordinary; but it was not until the 20th century when the linkage between paper money and gold began to fail that the problems inherent in paper money systems became more apparent.
England, the major recipient and beneficiary of the banker’s paper money for the previous two hundred years, had been very careful to maintain the fiction that paper money was as good as gold or silver. But in the next century, the 20th, the US the surrogate successor to England, was to be far less considerate of the considerable and questionable “gift” bequeathed to it by England’s bankers.
In 1933, the US government by executive order confiscated the gold of all Americans thus ending the belief that paper money was interchangeable with gold and silver and was therefore a trustworthy medium of exchange.
This confiscation of gold by the US was to be later repeated on an international level. But instead of only forcing Americans to abandon gold as it had in 1933, in 1971 the US would force the entire world to do so.
CONFIDENCE IN PAPER MONEY BECOMES A CON
By the end of WWII, the US had accumulated the largest amount of monetary gold reserves in history; and under the 1944 Bretton-Woods Agreement, the US dollar was to be convertible upon demand to gold and all currencies were to be tied to the US dollar. Thus, through the gold-convertible US dollar, the international monetary system was stable and anchored to gold.
But by 1971, the US had overspent its entire hoard of gold. In 1958 alone, US gold reserves fell by 10 %. The reason is between 1949 and 1971 US overseas military expenditures and US overseas corporate expansion had left far more dollars in the hands of foreign nations than the US had gold to exchange.
In their book, The Commanding Heights (1997 ed., pp. 60-64), Daniel Yergin and Joseph Stanislaw explain what happened next:
But the growing U.S. balance-of-payments deficit meant that foreign governments were accumulating large amounts of dollars -- in aggregate volume far exceeding the U.S. government's stock of gold. These governments, or their central banks, could show up at any time at the "gold window" of the U.S. Treasury and insist on trading in their dollars for gold, which would precipitate a run. The issue was not theoretical. In the second week of August 1971, the British ambassador turned up at the Treasury Department to request that $3 billion be converted into gold.
…The gold window was to be closed. Arthur Burns argued vociferously against it, warning, "Pravda would write that this was a sign of the collapse of capitalism." Burns was overruled. The gold window would be closed. But this would accentuate the need to fight inflation; for shutting the gold window would weaken the dollar against other currencies, thus adding to inflation by driving up the price of imported goods. Going off the gold standard and giving up fixed exchange rates constituted a momentous step in the history of international economics.
The previous sentence bears repeating;
Going off the gold standard and giving up fixed exchange rates constituted a momentous step in the history of international economics.
Yergin and Stanislaw were right. It was to be a momentous—and ultimately fatal step—for as a result of the US default on its international gold obligations, all currencies in the world instantly became fiat.
The security that gold and silver afforded the use of paper money would be no more—and when a con game is being run, nothing, absolutely nothing is more important than confidence.
The last and most critical piece in the banker’s carefully constructed charade was eliminated by the US when it overspent it entire gold reserves leaving the international monetary system bereft of any intrinsic value. Only monetary momentum and residual confidence has allowed paper-based capitalist economies to function since the last vestige of gold was removed in 1971.
Now, the postponed but inevitable destructive consequences of 1971 are about to make the demolition of the World Trade Center Twin Towers and Building 7 look like a spring day in Paris. A collapse of world economies caused by the default on trillions of dollars of paper debts and obligations has never before happened. Soon, it will.
The consequences will be as devastating as they will be widespread as personal savings will be wiped out. Personal savings entrusted to banks have been invested in the same paper IOUs, sic bonds, owned by pension funds, investment funds, and insurance companies all over the world.
Savers forced by the constant depreciation of paper money have given their savings to banks, pension funds, insurance companies and investment funds in the hopes of salvaging the value of those savings. But those hopes will prove to be false as the escalating financial collapse reveals such investments, e.g. corporate, government and consumer IOUs, to be increasingly worthless.
Governments that allowed this crisis to occur will then be forced to indemnify such losses in order to maintain civil and social order. But, when done, the indemnification of trillions of dollars of lost savings will cause what remains of the international monetary system to collapse.
Paper “money” is but a paper tiger and when exposed to the twin disasters of economic deflation and central bank hyperinflation, fiat “money” will ultimately revert to its intrinsic value—zero.
PANDORA’S BOX AND THE RISE AND FALL OF DAVOS
Economies built on credit and debt are by nature unstable. Caught between cycles of expansion and contraction, they are also vulnerable to the vagaries of man and the dictates of nature, i.e. war, famine, greed, drought, etc.
When the backing of gold was finally removed from paper money, it was the final straw that was to bring down the bankers’ house of cards. But before the house of cards collapsed, capitalism was to erupt in one last display of shameless glory.
The 25 years between 1982 and 2007 was the longest expansion in capitalism’s history. It was, however, to be its last; for the expansion was built on misallocated and historically excessive amounts of credit—and Davos occupied center stage in the display of this excessive “achievement”.
It is natural that at the end of the banker’s system, bankers would have garnered the largest share of the spoils and so it was, at least for a short while. The greatest spectacle of Davos was in 2007, the momentary triumph of bankers standing atop the world of global commerce whose profits and productivity they had increasingly purloined as their own.
The triumph of the bankers, however, was to be as short as it was spectacular. The era of billion dollar bonuses paid to bankers was to occur at the apogee of their triumph, a triumph that was to be as short as it was lucrative, for soon after, both banks and the capital markets would collapse.
DAVOS THEN AND NOW
In January 2008 when I wrote Davos, Debt & Systemic Failure, the August credit contraction was but six months old. But that year, the escalating effects of the credit contraction were to sweep through Wall Street, the City, and the world’s financial centers with the same destructive ferocity as the recent wildfires in Melbourne, Australia.
In the previous year, 2007, it had appeared the endless liquidity provided by central banks would ensure endless profits for investment bankers. How wrong they were. But, at the time, they didn’t know it. Soon, they would.
This is an excerpt from my 2008 article Davos, Debt & Systemic Failure which explains why it would be only a matter of time before the foundations of capital markets would fail:
Davos, Debt & Systemic Failure
When West Meets East
The preferred diet of most Davos attendees is a fusion inspired composition of individual, government, and corporate debt combined with a free-market frisee of lax regulatory oversight held together by a roux of central bank credit that dissolves instantly when paired with matching counter-party risk.
The January 2008 gathering in Davos, Switzerland at the World Economic Forum is similar to the 1957 meeting in Palermo, Sicily of American and Sicilian Cosa Nostra crime families who met to discuss mutual problems and opportunities. The notable difference being that those in the Cosa Nostra live outside the law; while those at the World Economic Forum in Davos make them.
Those in Davos, however, share with the Cosa Nostra a common problem—the success of both depends on inherently unstable systems. The Cosa Nostra model is based on violence and greed which is both its strength and weakness. Capitalism, the source of wealth for those in Davos, is based on greed and leveraged debt, a combination as powerful and effective as the system of the Cosa Nostra—and just as unstable.
WHEN SYSTEMS FAIL
Unstable systems can function for years without serious problems. But over time, unstable systems will always break down. We are witness to such a systemic failure today. Global credit markets are slowing and contracting. The capitalist system responsible for economic expansion and wealth is in disarray.
Debt, in capitalist systems, is a wondrous device. That is, until it can’t be paid back. Under capitalism, credit fuels expansion but it does so at a cost. As capitalism expands, credit becomes debt and the greater the expansion, the greater the debt.
EXPANSION BEGETS DEMISE
Capitalism’s fatal flaw is apparent only in its later stages. As capitalism matures, its inherent systemic instability manifests. The very expansion of capitalism sets in motion its demise. The Achilles heel of capitalism is its perpetual need to expand.
Only perpetual capital expansion can create sufficient capital flows to service and retire previously created debts, the amounts of which are always increasing because of the accruing compound interest being charged. While any slowdown is cause for worry, a contraction bodes far worse.
FEAR IN DAVOS
WHAT A DIFFERENCE A YEAR MAKES
One year ago, the mood at Davos was one of quiet, almost smug, confidence. The on-going economic expansion appeared to be endless, the profits of investment bankers skimmed off the top of productive enterprise was greater than ever. Private equity, the investment banker’s equivalent of flipping real estate, was the hottest game in town.
It is no longer. Today in Davos, the scent of Armani is now mixed with the acrid smell of anxiety produced by falling markets and uncertain futures. Concern has replaced confidence. The major phernome in Davos today is fear.
Davos will not be the same next year. If you’re planning on going, be sure to take some air freshener.
That was then. Now, the major phernome in Davos is panic. Wall Street institutions such as Bear Stearns and Lehman Bros. have vanished into thin air (appropriately Davos is the highest city in Europe) and the financial sector, formerly the king of predators, is struggling to survive. Air freshener will be no more effective at Davos than central bank credit will be successful at reversing now deflating economies.
CENTRAL BANKS AND SYSTEMIC COLLAPSE
Central banks are now engaged in a life and death struggle, a struggle which they cannot win. When the US removed gold from the fictional foundation of central bank fiat currencies, the death warrant of fiat currencies was signed. The execution itself would be only a matter of time.
The central bank struggle to maintain the fiction that paper money is as good as gold is as doomed as the hope that more central bank credit will solve the problem that too much central bank credit created.
The last and only remaining hope of central banks is to prolong the value of paper money by the use of smoke and mirrors in order to hide their declining value. The strategy is to remove as much evidence of that decline as possible.
There is perhaps no better description of the central banks strategy than the following excerpt from Peter Warburton’s April 2001 essay, The Debasement Of World Currency--It Is Inflation But Not As We Know It:
Central banks are engaged in a desperate battle on two fronts
What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.
[Note: Warburton’s explanation of central bank strategy is important, to wit: “Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.”]
It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November, I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil and commodity markets? Probably, no more than $200 billion, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital so flagrantly that if the central banks were to lose the fight on the first front, then their stock would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil and commodity prices.
[Note: Here, Warburton has given us the motive underlying the investment bank role in keeping commodity prices low. This especially pertains to gold as gold is the traditional measure of monetary distress.]
Central banks, and particularly the US Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years [since 1994]. Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.
Again, in this instance, Warburton’s last sentence bears repeating:
“For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.”
Warburton wrote the above in April 2001 and the relevance of Warburton’s commentary is even greater today than it was then. Then, the two central bank objectives were: (1) making sure bond investors continue to finance the private sector bond market, and (2) making sure a technical break in the Dow Jones did not occur.
Now, both have happened despite the best efforts of central banks. The 2007 credit contraction froze the corporate bond markets where the private sector obtains most of its financing and the second objective, to keep the Dow from breaking down, was violated in October and September of 2008. Systemic collapse as predicted by Warburton is now in the process of occurring.
Where does this leave the central bankers? In my opinion, they had better start looking for jobs. As long as people believe bankers can solve their problems, they will continue to be employed. But when people finally understand the role bankers played in the current crisis, they and their cohorts in government may very well be indicted for their unconscionable plundering at the public trough and, also now for the added insult of destroying the trough when done plundering.
When this era has ended, it is not known what bankers will do as bankers are notoriously bad businessmen. Bankers achieve their considerable success not by entrepreneurial talent but by their unique proximity to credit and their ability to leverage that proximity into excessive profit. Stripped of this advantage, bankers would be forced to earn a living on a level playing field—an ability which has never before been tested.
THE ASCENT OF GOLD
Professor Antal Fekete stated when the price of gold begins to move rapidly upwards towards its final highs, it will be a time of tragedy; for when gold explodes upwards, the economies built around paper money and paper assets will collapse. The human suffering then and afterwards will be immense.
The smoke and mirror attempts of central bank to postpone the inevitable day of reckoning have failed. The smoke is now clearing from the central banks’ purposive obfuscation of economic truths and their mirrors which previously reflected pure fiction are now broken and muddied.
It is now only a matter of time before people realize what has occurred in the absence of their understanding. The considerable bill is now due and owing for all debts incurred at the bankers’ window. It will be paid.
Already, gold and silver coins have disappeared from the supplies of retail dealers as the public increasingly seeks to protect the declining value of what they have saved. Soon, the same will be true for the 1,000 ounce gold bullion bars being purchased by the very wealthy.
The day people realize that paper money is worthless is the day economic activity as we know it will come to a halt. What happens next has happened before. Barter begins the movement of goods and services until a trustworthy medium of exchange arises to take the place of the bankers’ debased paper.
Currency collapse is a reoccurring story. Because we denied its reality does not mean it would not happen. Denial is very powerful but, in the end, it changes nothing except the ability to effectively respond.
Our wish that gold achieve its rightful price level in today’s accelerating crisis is tempered by our realization that when that day is reached, the human carnage and suffering will be without precedence. It is best, then, to buy gold and silver whenever possible and to wait patiently for things to unfold as they will. And they shall.
ECONOMIC TRUTHS
In his wonderful and final and most readable book (at least for me), Grunch of Giants, (Design Science Press, 1983) Buckminster Fuller writes about the history of power and money in a way that explains our present economic system.
Bucky’s word “Grunch” is an acronym for gross (GR) universal (UN) cash heist (CH) and the word Giant is a reference to modern corporations and those who control them. On page 18, Bucky recounts a conversation with one of the “giants”, a friend of his who was a scion of the JP Morgan family.
He said to me, “Bucky, I am very fond of you, so I am sorry to have to tell you that you will never be a success. You go around explaining in simple terms that which people have not been comprehending, when the first law of success is, “never make things simple when you can make them complicated.”
The roots of modern economics are intertwined with institutional deceit on a massive scale because the material rewards are so great. Therefore, the attempt to ascertain the truth about money is not an easy task; and it is not made easier by those who benefit by its deceit.
This is why the discussion of ideas antithetical to those in positions of power are now found only at the edges of society. Writers and readers alike must search for truth in books not easily found, such as Buckminster Fuller’s Grunch of Giants (out of print, still available at www.bfi.org, Peter Warburton’s Debt & Delusion—Central Bank Follies That Threaten Economic Disaster (reissued and currently available in a deluxe edition from WorldMetaView Press) and Bernard Lietaer’s The Future of Money (published in 1999 by Random House and never made available in the US, currently out of print).
Those in power maintain their power because those without power do not understand the power dynamics operant in the world in which they live. Thus, the economic control over the many for the benefit of the few has continued irrespective of the form the economy takes.
We are at the end of an extraordinary epoch, the end of the age of credit. In 1981, Bucky Fuller predicted the collapse of the present power structures in tandem with an unprecedented crisis that would transform humanity.
That time, the collapse of the world power structures, has now arrived. Transformation comes next; and when the crisis finally passes—and it will—tomorrow will be a far better day. Awareness, community, faith and a bit of gold and silver will be invaluable in the days to come
mandag den 16. februar 2009
onsdag den 11. februar 2009
Chomsky om finanskrisen og protektionismen bag retorikken
Noam Chomsky is a noted linguist, author, and foreign policy expert. Sameer Dossani interviewed him about the global economic crisis and its roots.
SAMEER DOSSANI: In any first year economics class, we are taught that markets have their ups and downs, so the current recession is perhaps nothing out of the ordinary. But this particular downturn is interesting for two reasons: First, market deregulation in the 1980s and 1990s made the boom periods artificially high, so the bust period will be deeper than it would otherwise. Secondly, despite an economy that's boomed since 1980, the majority of working class U.S. residents have seen their incomes stagnate — while the rich have done well most of the country hasn't moved forward at all. Given the situation, my guess is that economic planners are likely to go back to some form of Keynesianism, perhaps not unlike the Bretton Woods system that was in place from 1948-1971. What are your thoughts?
NOAM CHOMSKY: Well I basically agree with your picture. In my view, the breakdown of the Bretton Woods system in the early 1970s is probably the major international event since 1945, much more significant in its implications than the collapse of the Soviet Union.
From roughly 1950 until the early 1970s there was a period of unprecedented economic growth and egalitarian economic growth. So the lowest quintile did as well — in fact they even did a little bit better — than the highest quintile. It was also a period of some limited but real form of benefits for the population. And in fact social indicators, measurements of the health of society, they very closely tracked growth. As growth went up social indicators went up, as you'd expect. Many economists called it the golden age of modern capitalism — they should call it state capitalism because government spending was a major engine of growth and development.
In the mid 1970s that changed. Bretton Woods restrictions on finance were dismantled, finance was freed, speculation boomed, huge amounts of capital started going into speculation against currencies and other paper manipulations, and the entire economy became financialized. The power of the economy shifted to the financial institutions, away from manufacturing. And since then, the majority of the population has had a very tough time; in fact it may be a unique period in American history. There's no other period where real wages — wages adjusted for inflation — have more or less stagnated for so long for a majority of the population and where living standards have stagnated or declined. If you look at social indicators, they track growth pretty closely until 1975, and at that point they started to decline, so much so that now we're pretty much back to the level of 1960. There was growth, but it was highly inegalitarian — it went into a very small number of pockets. There have been brief periods in which this shifted, so during the tech bubble, which was a bubble in the late Clinton years, wages improved and unemployment went down, but these are slight deviations in a steady tendency of stagnation and decline for the majority of the population.
Financial crises have increased during this period, as predicted by a number of international economists. Once financial markets were freed up, there was expected to be an increase in financial crises, and that's happened. This crisis happens to be exploding in the rich countries, so people are talking about it, but it's been happening regularly around the world — some of them very serious — and not only are they increasing in frequency but they're getting deeper. And it's been predicted and discussed and there are good reasons for it.
About 10 years ago there was an important book called Global Finance at Risk, by two well-known economists John Eatwell and Lance Taylor. In it they refer to the well-known fact that there are basic inefficiencies intrinsic to markets. In the case of financial markets, they under-price risk. They don't count in systemic risk — general social costs. So for example if you sell me a car, you and I may make a good bargain, but we don't count in the costs to the society — pollution, congestion and so on. In financial markets, this means that risks are under-priced, so there are more risks taken than would happen in an efficient system. And that of course leads to crashes. If you had adequate regulation, you could control and prevent market inefficiencies. If you deregulate, you're going to maximize market inefficiency.
This is pretty elementary economics. They happen to discuss it in this book; others have discussed it too. And that's what's happening. Risks were under-priced, therefore more risks were taken than should have been, and sooner or later it was going to crash. Nobody predicted exactly when, and the depth of the crash is a little surprising. That's in part because of the creation of exotic financial instruments which were deregulated, meaning that nobody really knew who owed what to whom. It was all split up in crazy ways. So the depth of the crisis is pretty severe — we're not to the bottom yet — and the architects of this are the people who are now designing Obama's economic policies.
Dean Baker, one of the few economists who saw what was coming all along, pointed out that it's almost like appointing Osama bin Laden to run the so-called war on terror. Robert Rubin and Lawrence Summers, Clinton's treasury secretaries, are among the main architects of the crisis. Summers intervened strongly to prevent any regulation of derivatives and other exotic instruments. Rubin, who preceded him, was right in the lead of undermining the Glass-Steagall act, all of which is pretty ironic. The Glass-Steagall Act protected commercial banks from risky investment firms, insurance firms, and so on, which kind of protected the core of the economy. That was broken up in 1999 largely under Rubin's influence. He immediately left the treasury department and became a director of Citigroup, which benefited from the breakdown of Glass-Steagall by expanding and becoming a "financial supermarket" as they called it. Just to increase the irony (or the tragedy if you like) Citigroup is now getting huge taxpayer subsidies to try to keep it together and just in the last few weeks announced that it's breaking up. It's going back to trying to protect its commercial banking from risky side investments. Rubin resigned in disgrace — he's largely responsible for this. But he's one of Obama's major economic advisors, Summers is another one; Summer's protégé Tim Geithner is the Treasury Secretary.
None of this is really unanticipated. There were very good economists like say David Felix, an international economist who's been writing about this for years. And the reasons are known: markets are inefficient; they under-price social costs. And financial institutions underprice systemic risk. So say you're a CEO of Goldman Sachs. If you're doing your job correctly, when you make a loan you ensure that the risk to you is low. So if it collapses, you'll be able to handle it. You do care about the risk to yourself, you price that in. But you don't price in systemic risk, the risk that the whole financial system will erode. That's not part of your calculation.
Well that's intrinsic to markets — they're inefficient. Robin Hahnel had a couple of very good articles about this recently in economics journals. But this is first year economics course stuff — markets are inefficient; these are some of their inefficiencies; there are many others. They can be controlled by some degree of regulation, but that was dismantled under religious fanaticism about efficient markets, which lacked empirical support and theoretical basis; it was just based on religious fanaticism. So now it's collapsing.
People talk about a return to Keynesianism, but that's because of a systematic refusal to pay attention to the way the economy works. There's a lot of wailing now about "socializing" the economy by bailing out financial institutions. Yeah, in a way we are, but that's icing on the cake. The whole economy's been socialized since — well actually forever, but certainly since the Second World War. This mythology that the economy is based on entrepreneurial initiative and consumer choice, well ok, to an extent it is. For example at the marketing end, you can choose one electronic device and not another. But the core of the economy relies very heavily on the state sector, and transparently so. So for example to take the last economic boom which was based on information technology — where did that come from? Computers and the Internet. Computers and the Internet were almost entirely within the state system for about 30 years — research, development, procurement, other devices — before they were finally handed over to private enterprise for profit-making. It wasn't an instantaneous switch, but that's roughly the picture. And that's the picture pretty much for the core of the economy.
The state sector is innovative and dynamic. It's true across the board from electronics to pharmaceuticals to the new biology-based industries. The idea is that the public is supposed to pay the costs and take the risks, and ultimately if there is any profit, you hand it over to private tyrannies, corporations. If you had to encapsulate the economy in one sentence, that would be the main theme. When you look at the details of course it's a more complex picture, but that's the major theme. So yes, socialization of risk and cost (but not profit) is partially new for the financial institutions, but it's just added on to what's been happening all along.
Double Standard
DOSSANI: As we consider the picture of the collapse of some of these major financial institutions we would do well to remember that some of these same market fundamentalist policies have already been exported around the globe. Specifically, the International Monetary Fund has forced an export-oriented growth model onto many countries, meaning that the current slowdown in U.S. consumption is going to have major impacts in other countries. At the same time, some regions of the world, particularly the Southern Cone region of South America, are working to repudiate the IMF's market fundamentalist policies and build up alternatives. Can you talk a little about the international implications of the financial crisis? And how is it that some of the institutions responsible for this mess, like the IMF, are using this as an opportunity to regain credibility on the world stage?
CHOMSKY: It's rather striking to notice that the consensus on how to deal with the crisis in the rich countries is almost the opposite of the consensus on how the poor countries should deal with similar economic crises. So when so-called developing countries have a financial crisis, the IMF rules are: raise interest rates, cut down economic growth, tighten the belt, pay off your debts (to us), privatize, and so on. That's the opposite of what's prescribed here. What's prescribed here is lower interest rates, pour government money into stimulating the economy, nationalize (but don't use the word), and so on. So yes, there's one set of rules for the weak and a different set of rules for the powerful. There's nothing novel about that.
As for the IMF, it is not an independent institution. It's pretty much a branch of the U.S. Treasury Department — not officially, but that's pretty much the way it functions. The IMF was accurately described by a U.S. Executive Director as "the credit community's enforcer." If a loan or an investment from a rich country to a poor country goes bad, the IMF makes sure that the lenders will not suffer. If you had a capitalist system, which of course the wealthy and their protectors don't want, it wouldn't work like that.
For example, suppose I lend you money, and I know that you may not be able to pay it back. Therefore I impose very high interest rates, so that at least I'll get that in case you crash. Then suppose at some point you can't pay the debt. Well in a capitalist system it would be my problem. I made a risky loan, I made a lot of money from it by high interest rates and now you can't pay it back? Ok, tough for me. That's a capitalist system. But that's not the way our system works. If investors make risky loans to say Argentina and get high interest rates and then Argentina can't pay it back, well that's when the IMF steps in, the credit community's enforcer, and says that the people of Argentina, they have to pay it back. Now if you can't pay back a loan to me, I don't say that your neighbors have to pay it back. But that's what the IMF says. The IMF says the people of the country have to pay back the debt which they had nothing to do with, it was usually given to dictators, or rich elites, who sent it off to Switzerland or someplace, but you guys, the poor folks living in the country, you have to pay it back. And furthermore, if I lend money to you and you can't pay it back, in a capitalist system I can't ask my neighbors to pay me, but the IMF does, namely the US taxpayer. They help make sure that the lenders and investors are protected. So yes it's the credit community's enforcer. It's a radical attack on basic capitalist principles, just as the whole functioning of the economy based on the state sector is, but that doesn't change the rhetoric. It's kind of hidden in the woodwork.
What you said about the Southern Cone is exactly right. For the last several years they've been trying to extricate themselves from this whole neoliberal disaster. One of the ways was, for example Argentina simply didn't pay back its debts, or rather restructured them and bought some of it back. And folks like the President of Argentina said that "we're going to rid ourselves of the IMF" through these measures. Well, what was happening to the IMF? The IMF was in trouble. It was losing capital and losing borrowers, and therefore losing its ability to function as the credit community's enforcer. But this crisis is being used to restructure it and revitalize it.
It's also true that countries are driven to commodity export; that's the mode of development that's designed for them. Then they will be in trouble if commodity prices fall. It's not 100% the case, but in the Southern Cone, the countries that have been doing reasonably well do rely very heavily on commodity export, actually raw material export. That's even true of the most successful of them, Chile, which is considered the darling. The Chilean economy has been based very heavily on copper exports. The biggest copper company in the world is CODELCO, the nationalized copper company — nationalized by President Salvador Allende and nobody has tried to privatize it fully since because it's such a cash cow. It has been undermined, so it controls less of the copper export than it has in the past, but it still provides a large part of the tax base of the Chilean economy and is also a large income producer. It's an efficiently run nationalized copper company. But reliance on copper export means you're vulnerable to a decline in the price of commodities. The other Chilean exports like say, fruit and vegetables which are adapted to the U.S. market because of the seasonal differences — that's also vulnerable. And they haven't really done much in developing the economy beyond reliance on raw materials exports — a little, but not much. The same can be said for the other currently successful countries. You look at growth rates in Peru and Brazil, they're heavily dependent on soy and other agricultural exports or minerals; it's not a solid base for an economy.
One major exception to this is South Korea and Taiwan. They were very poor countries. South Korea in the late 1950s was probably about the level of Ghana today. But they developed by following the Japanese model – violating all the rules of the IMF and Western economists and developing pretty much the way the Western countries had developed, by substantial direction and involvement of the state sector. So South Korea, for example built a major steel industry, one of the most efficient in the world, by flatly violating the advice of the IMF and the World Bank, who said it was impossible. But they did it through state intervention, directing of resources, and also by restricting capital flight. Capital flight is a major problem for a developing country, and also for democracy. Capital flight could be controlled under Bretton Woods rules, but it was opened up in the last 30 years. In South Korea, you could get the death penalty for capital flight. So yes, they developed a pretty solid economy, as did Taiwan. China is a separate story, but they also radically violated the rules, and it's a complex story of how it's ending up. But these are major phenomena in the international economy.
Government Investment
DOSSANI: Do you think the current crisis will offer other countries the opportunity to follow the example of South Korean and Taiwan?
CHOMSKY: Well, you could say the example of the United States. During its major period of growth – late 19th century and early 20th century – the United States was probably the most protectionist country in the world. We had very high protective barriers, and it drew in investment, but private investment played only a supporting role. Take the steel industry. Andrew Carnegie built the first billion-dollar corporation by feeding off the state sector — building naval vessels and so on — this is Carnegie the great pacifist. The sharpest period of economic growth in U.S. history was during the Second World War, which was basically a semi-command economy and industrial production more than tripled. That model pulled us out of the depression, after which we became far and away the major economy in the world. After the Second World War, the substantial period of economic growth which I mentioned (1948-1971) was very largely based on the dynamic state sector and that remains true.
Let's take my own institution, MIT. I've been here since the 1950s, and you can see it first hand. In the 1950s and 1960s, MIT was largely financed by the Pentagon. There were labs that did classified war work, but the campus itself wasn't doing war work. It was developing the basis of the modern electronic economy: computers, the Internet, microelectronics, and so on. It was all developed under a Pentagon cover. IBM was here learning how to shift from punch-cards to electronic computers. It did get to a point by the 1960s that IBM was able to produce its own computers, but they were so expensive that nobody could buy them so therefore the government bought them. In fact, procurement is a major form of government intervention in the economy to develop the fundamental structure that will ultimately lead to profit. There have been good technical studies on this. From the 1970s until today, the funding of MIT has been shifting away from the Pentagon and toward the National Institute of Health and related government institutions. Why? Because the cutting edge of the economy is shifting from an electronics base to a biology base. So now the public has to pay the costs of the next phase of the economy through other state institutions. Now again, this is not the whole story, but it's a substantial part.
There will be a shift towards more regulation because of the current catastrophe, and how long they can maintain the paying off banks and financial institutions is not very clear. There will be more infrastructure spending, surely, because no matter where you are in the economic spectrum you realize that it's absolutely necessary. There will have to be some adjustment in the trade deficit, which is dramatic, meaning less consumption here, more export, and less borrowing.
And there's going to have to be some way to deal with the elephant in the closet, one of the major threats to the American economy, the increase in healthcare costs. That's often masked as "entitlements" so that they can wrap in Social Security, as part of an effort to undermine Social Security. But in fact Social Security is pretty sound; probably as sound as its ever been, and what problems there are could probably be addressed with small fixes. But Medicare is huge, and its costs are going way up, and that's primarily because of the privatized healthcare system which is highly inefficient. It's very costly and it has very poor outcomes. The U.S. has twice the per capita costs of other industrialized countries and it has some of the worst outcomes. The major difference between the U.S. system and others is that this one is so heavily privatized, leading to huge administrative costs, bureaucratization, surveillance costs and so on. Now that's going to have to be dealt with somehow because it's a growing burden on the economy and its huge; it'll dwarf the federal budget if current tendencies persist.
South America
DOSSANI: Will the current crisis open up space for other countries to follow more meaningful development goals?
CHOMSKY: Well, it's been happening. One of the most exciting areas of the world is South America. For the last 10 years there have been quite interesting and significant moves towards independence, for the first time since the Spanish and Portuguese conquests. That includes steps towards unification, which is crucially important, and also beginning to address their huge internal problems. There's a new Bank of the South, based in Caracas, which hasn't really taken off yet, but it has prospects and is supported by other countries as well. MERCOSUR is a trading zone of the Southern cone. Just recently, six or eight months ago, a new integrated organization has developed, UNASUR, the Union of South American Republics, and it's already been effective. So effective that it's not reported in the United States, presumably because it's too dangerous.
So when the U.S. and the traditional ruling elites in Bolivia started moving towards a kind of secessionist movement to try to undermine the democratic revolution that's taken place there, and when it turned violent, as it did, there was a meeting of UNASUR last September in Santiago, where it issued a strong statement defending the elected president, Evo Morales, and condemning the violence and the efforts to undermine the democratic system. Morales responded thanking them for their support and also saying that this is the first time in 500 years that South America's beginning to take its fate into its own hands. That's significant; so significant that I don't even think it was reported here. Just how far these developments can go, both dealing with the internal problems and also the problems of unification and integration, we don't know, but the developments are taking place. There are also South-South relations developing, for example between Brazil and South Africa. This again breaks the imperial monopoly, the monopoly of U.S. and Western domination. China's a new element on the scene. Trade and investment are increasing, and this gives more options and possibilities to South America. The current financial crisis might offer opportunities for increasing this, but also it might go the other way. The financial crisis is of course harming — it must harm — the poor in the weaker countries and it may reduce their options. These are really matters which will depend on whether popular movements can take control of their own fate, to borrow Morales' phrase. If they can, yes there are opportunities.
SAMEER DOSSANI: In any first year economics class, we are taught that markets have their ups and downs, so the current recession is perhaps nothing out of the ordinary. But this particular downturn is interesting for two reasons: First, market deregulation in the 1980s and 1990s made the boom periods artificially high, so the bust period will be deeper than it would otherwise. Secondly, despite an economy that's boomed since 1980, the majority of working class U.S. residents have seen their incomes stagnate — while the rich have done well most of the country hasn't moved forward at all. Given the situation, my guess is that economic planners are likely to go back to some form of Keynesianism, perhaps not unlike the Bretton Woods system that was in place from 1948-1971. What are your thoughts?
NOAM CHOMSKY: Well I basically agree with your picture. In my view, the breakdown of the Bretton Woods system in the early 1970s is probably the major international event since 1945, much more significant in its implications than the collapse of the Soviet Union.
From roughly 1950 until the early 1970s there was a period of unprecedented economic growth and egalitarian economic growth. So the lowest quintile did as well — in fact they even did a little bit better — than the highest quintile. It was also a period of some limited but real form of benefits for the population. And in fact social indicators, measurements of the health of society, they very closely tracked growth. As growth went up social indicators went up, as you'd expect. Many economists called it the golden age of modern capitalism — they should call it state capitalism because government spending was a major engine of growth and development.
In the mid 1970s that changed. Bretton Woods restrictions on finance were dismantled, finance was freed, speculation boomed, huge amounts of capital started going into speculation against currencies and other paper manipulations, and the entire economy became financialized. The power of the economy shifted to the financial institutions, away from manufacturing. And since then, the majority of the population has had a very tough time; in fact it may be a unique period in American history. There's no other period where real wages — wages adjusted for inflation — have more or less stagnated for so long for a majority of the population and where living standards have stagnated or declined. If you look at social indicators, they track growth pretty closely until 1975, and at that point they started to decline, so much so that now we're pretty much back to the level of 1960. There was growth, but it was highly inegalitarian — it went into a very small number of pockets. There have been brief periods in which this shifted, so during the tech bubble, which was a bubble in the late Clinton years, wages improved and unemployment went down, but these are slight deviations in a steady tendency of stagnation and decline for the majority of the population.
Financial crises have increased during this period, as predicted by a number of international economists. Once financial markets were freed up, there was expected to be an increase in financial crises, and that's happened. This crisis happens to be exploding in the rich countries, so people are talking about it, but it's been happening regularly around the world — some of them very serious — and not only are they increasing in frequency but they're getting deeper. And it's been predicted and discussed and there are good reasons for it.
About 10 years ago there was an important book called Global Finance at Risk, by two well-known economists John Eatwell and Lance Taylor. In it they refer to the well-known fact that there are basic inefficiencies intrinsic to markets. In the case of financial markets, they under-price risk. They don't count in systemic risk — general social costs. So for example if you sell me a car, you and I may make a good bargain, but we don't count in the costs to the society — pollution, congestion and so on. In financial markets, this means that risks are under-priced, so there are more risks taken than would happen in an efficient system. And that of course leads to crashes. If you had adequate regulation, you could control and prevent market inefficiencies. If you deregulate, you're going to maximize market inefficiency.
This is pretty elementary economics. They happen to discuss it in this book; others have discussed it too. And that's what's happening. Risks were under-priced, therefore more risks were taken than should have been, and sooner or later it was going to crash. Nobody predicted exactly when, and the depth of the crash is a little surprising. That's in part because of the creation of exotic financial instruments which were deregulated, meaning that nobody really knew who owed what to whom. It was all split up in crazy ways. So the depth of the crisis is pretty severe — we're not to the bottom yet — and the architects of this are the people who are now designing Obama's economic policies.
Dean Baker, one of the few economists who saw what was coming all along, pointed out that it's almost like appointing Osama bin Laden to run the so-called war on terror. Robert Rubin and Lawrence Summers, Clinton's treasury secretaries, are among the main architects of the crisis. Summers intervened strongly to prevent any regulation of derivatives and other exotic instruments. Rubin, who preceded him, was right in the lead of undermining the Glass-Steagall act, all of which is pretty ironic. The Glass-Steagall Act protected commercial banks from risky investment firms, insurance firms, and so on, which kind of protected the core of the economy. That was broken up in 1999 largely under Rubin's influence. He immediately left the treasury department and became a director of Citigroup, which benefited from the breakdown of Glass-Steagall by expanding and becoming a "financial supermarket" as they called it. Just to increase the irony (or the tragedy if you like) Citigroup is now getting huge taxpayer subsidies to try to keep it together and just in the last few weeks announced that it's breaking up. It's going back to trying to protect its commercial banking from risky side investments. Rubin resigned in disgrace — he's largely responsible for this. But he's one of Obama's major economic advisors, Summers is another one; Summer's protégé Tim Geithner is the Treasury Secretary.
None of this is really unanticipated. There were very good economists like say David Felix, an international economist who's been writing about this for years. And the reasons are known: markets are inefficient; they under-price social costs. And financial institutions underprice systemic risk. So say you're a CEO of Goldman Sachs. If you're doing your job correctly, when you make a loan you ensure that the risk to you is low. So if it collapses, you'll be able to handle it. You do care about the risk to yourself, you price that in. But you don't price in systemic risk, the risk that the whole financial system will erode. That's not part of your calculation.
Well that's intrinsic to markets — they're inefficient. Robin Hahnel had a couple of very good articles about this recently in economics journals. But this is first year economics course stuff — markets are inefficient; these are some of their inefficiencies; there are many others. They can be controlled by some degree of regulation, but that was dismantled under religious fanaticism about efficient markets, which lacked empirical support and theoretical basis; it was just based on religious fanaticism. So now it's collapsing.
People talk about a return to Keynesianism, but that's because of a systematic refusal to pay attention to the way the economy works. There's a lot of wailing now about "socializing" the economy by bailing out financial institutions. Yeah, in a way we are, but that's icing on the cake. The whole economy's been socialized since — well actually forever, but certainly since the Second World War. This mythology that the economy is based on entrepreneurial initiative and consumer choice, well ok, to an extent it is. For example at the marketing end, you can choose one electronic device and not another. But the core of the economy relies very heavily on the state sector, and transparently so. So for example to take the last economic boom which was based on information technology — where did that come from? Computers and the Internet. Computers and the Internet were almost entirely within the state system for about 30 years — research, development, procurement, other devices — before they were finally handed over to private enterprise for profit-making. It wasn't an instantaneous switch, but that's roughly the picture. And that's the picture pretty much for the core of the economy.
The state sector is innovative and dynamic. It's true across the board from electronics to pharmaceuticals to the new biology-based industries. The idea is that the public is supposed to pay the costs and take the risks, and ultimately if there is any profit, you hand it over to private tyrannies, corporations. If you had to encapsulate the economy in one sentence, that would be the main theme. When you look at the details of course it's a more complex picture, but that's the major theme. So yes, socialization of risk and cost (but not profit) is partially new for the financial institutions, but it's just added on to what's been happening all along.
Double Standard
DOSSANI: As we consider the picture of the collapse of some of these major financial institutions we would do well to remember that some of these same market fundamentalist policies have already been exported around the globe. Specifically, the International Monetary Fund has forced an export-oriented growth model onto many countries, meaning that the current slowdown in U.S. consumption is going to have major impacts in other countries. At the same time, some regions of the world, particularly the Southern Cone region of South America, are working to repudiate the IMF's market fundamentalist policies and build up alternatives. Can you talk a little about the international implications of the financial crisis? And how is it that some of the institutions responsible for this mess, like the IMF, are using this as an opportunity to regain credibility on the world stage?
CHOMSKY: It's rather striking to notice that the consensus on how to deal with the crisis in the rich countries is almost the opposite of the consensus on how the poor countries should deal with similar economic crises. So when so-called developing countries have a financial crisis, the IMF rules are: raise interest rates, cut down economic growth, tighten the belt, pay off your debts (to us), privatize, and so on. That's the opposite of what's prescribed here. What's prescribed here is lower interest rates, pour government money into stimulating the economy, nationalize (but don't use the word), and so on. So yes, there's one set of rules for the weak and a different set of rules for the powerful. There's nothing novel about that.
As for the IMF, it is not an independent institution. It's pretty much a branch of the U.S. Treasury Department — not officially, but that's pretty much the way it functions. The IMF was accurately described by a U.S. Executive Director as "the credit community's enforcer." If a loan or an investment from a rich country to a poor country goes bad, the IMF makes sure that the lenders will not suffer. If you had a capitalist system, which of course the wealthy and their protectors don't want, it wouldn't work like that.
For example, suppose I lend you money, and I know that you may not be able to pay it back. Therefore I impose very high interest rates, so that at least I'll get that in case you crash. Then suppose at some point you can't pay the debt. Well in a capitalist system it would be my problem. I made a risky loan, I made a lot of money from it by high interest rates and now you can't pay it back? Ok, tough for me. That's a capitalist system. But that's not the way our system works. If investors make risky loans to say Argentina and get high interest rates and then Argentina can't pay it back, well that's when the IMF steps in, the credit community's enforcer, and says that the people of Argentina, they have to pay it back. Now if you can't pay back a loan to me, I don't say that your neighbors have to pay it back. But that's what the IMF says. The IMF says the people of the country have to pay back the debt which they had nothing to do with, it was usually given to dictators, or rich elites, who sent it off to Switzerland or someplace, but you guys, the poor folks living in the country, you have to pay it back. And furthermore, if I lend money to you and you can't pay it back, in a capitalist system I can't ask my neighbors to pay me, but the IMF does, namely the US taxpayer. They help make sure that the lenders and investors are protected. So yes it's the credit community's enforcer. It's a radical attack on basic capitalist principles, just as the whole functioning of the economy based on the state sector is, but that doesn't change the rhetoric. It's kind of hidden in the woodwork.
What you said about the Southern Cone is exactly right. For the last several years they've been trying to extricate themselves from this whole neoliberal disaster. One of the ways was, for example Argentina simply didn't pay back its debts, or rather restructured them and bought some of it back. And folks like the President of Argentina said that "we're going to rid ourselves of the IMF" through these measures. Well, what was happening to the IMF? The IMF was in trouble. It was losing capital and losing borrowers, and therefore losing its ability to function as the credit community's enforcer. But this crisis is being used to restructure it and revitalize it.
It's also true that countries are driven to commodity export; that's the mode of development that's designed for them. Then they will be in trouble if commodity prices fall. It's not 100% the case, but in the Southern Cone, the countries that have been doing reasonably well do rely very heavily on commodity export, actually raw material export. That's even true of the most successful of them, Chile, which is considered the darling. The Chilean economy has been based very heavily on copper exports. The biggest copper company in the world is CODELCO, the nationalized copper company — nationalized by President Salvador Allende and nobody has tried to privatize it fully since because it's such a cash cow. It has been undermined, so it controls less of the copper export than it has in the past, but it still provides a large part of the tax base of the Chilean economy and is also a large income producer. It's an efficiently run nationalized copper company. But reliance on copper export means you're vulnerable to a decline in the price of commodities. The other Chilean exports like say, fruit and vegetables which are adapted to the U.S. market because of the seasonal differences — that's also vulnerable. And they haven't really done much in developing the economy beyond reliance on raw materials exports — a little, but not much. The same can be said for the other currently successful countries. You look at growth rates in Peru and Brazil, they're heavily dependent on soy and other agricultural exports or minerals; it's not a solid base for an economy.
One major exception to this is South Korea and Taiwan. They were very poor countries. South Korea in the late 1950s was probably about the level of Ghana today. But they developed by following the Japanese model – violating all the rules of the IMF and Western economists and developing pretty much the way the Western countries had developed, by substantial direction and involvement of the state sector. So South Korea, for example built a major steel industry, one of the most efficient in the world, by flatly violating the advice of the IMF and the World Bank, who said it was impossible. But they did it through state intervention, directing of resources, and also by restricting capital flight. Capital flight is a major problem for a developing country, and also for democracy. Capital flight could be controlled under Bretton Woods rules, but it was opened up in the last 30 years. In South Korea, you could get the death penalty for capital flight. So yes, they developed a pretty solid economy, as did Taiwan. China is a separate story, but they also radically violated the rules, and it's a complex story of how it's ending up. But these are major phenomena in the international economy.
Government Investment
DOSSANI: Do you think the current crisis will offer other countries the opportunity to follow the example of South Korean and Taiwan?
CHOMSKY: Well, you could say the example of the United States. During its major period of growth – late 19th century and early 20th century – the United States was probably the most protectionist country in the world. We had very high protective barriers, and it drew in investment, but private investment played only a supporting role. Take the steel industry. Andrew Carnegie built the first billion-dollar corporation by feeding off the state sector — building naval vessels and so on — this is Carnegie the great pacifist. The sharpest period of economic growth in U.S. history was during the Second World War, which was basically a semi-command economy and industrial production more than tripled. That model pulled us out of the depression, after which we became far and away the major economy in the world. After the Second World War, the substantial period of economic growth which I mentioned (1948-1971) was very largely based on the dynamic state sector and that remains true.
Let's take my own institution, MIT. I've been here since the 1950s, and you can see it first hand. In the 1950s and 1960s, MIT was largely financed by the Pentagon. There were labs that did classified war work, but the campus itself wasn't doing war work. It was developing the basis of the modern electronic economy: computers, the Internet, microelectronics, and so on. It was all developed under a Pentagon cover. IBM was here learning how to shift from punch-cards to electronic computers. It did get to a point by the 1960s that IBM was able to produce its own computers, but they were so expensive that nobody could buy them so therefore the government bought them. In fact, procurement is a major form of government intervention in the economy to develop the fundamental structure that will ultimately lead to profit. There have been good technical studies on this. From the 1970s until today, the funding of MIT has been shifting away from the Pentagon and toward the National Institute of Health and related government institutions. Why? Because the cutting edge of the economy is shifting from an electronics base to a biology base. So now the public has to pay the costs of the next phase of the economy through other state institutions. Now again, this is not the whole story, but it's a substantial part.
There will be a shift towards more regulation because of the current catastrophe, and how long they can maintain the paying off banks and financial institutions is not very clear. There will be more infrastructure spending, surely, because no matter where you are in the economic spectrum you realize that it's absolutely necessary. There will have to be some adjustment in the trade deficit, which is dramatic, meaning less consumption here, more export, and less borrowing.
And there's going to have to be some way to deal with the elephant in the closet, one of the major threats to the American economy, the increase in healthcare costs. That's often masked as "entitlements" so that they can wrap in Social Security, as part of an effort to undermine Social Security. But in fact Social Security is pretty sound; probably as sound as its ever been, and what problems there are could probably be addressed with small fixes. But Medicare is huge, and its costs are going way up, and that's primarily because of the privatized healthcare system which is highly inefficient. It's very costly and it has very poor outcomes. The U.S. has twice the per capita costs of other industrialized countries and it has some of the worst outcomes. The major difference between the U.S. system and others is that this one is so heavily privatized, leading to huge administrative costs, bureaucratization, surveillance costs and so on. Now that's going to have to be dealt with somehow because it's a growing burden on the economy and its huge; it'll dwarf the federal budget if current tendencies persist.
South America
DOSSANI: Will the current crisis open up space for other countries to follow more meaningful development goals?
CHOMSKY: Well, it's been happening. One of the most exciting areas of the world is South America. For the last 10 years there have been quite interesting and significant moves towards independence, for the first time since the Spanish and Portuguese conquests. That includes steps towards unification, which is crucially important, and also beginning to address their huge internal problems. There's a new Bank of the South, based in Caracas, which hasn't really taken off yet, but it has prospects and is supported by other countries as well. MERCOSUR is a trading zone of the Southern cone. Just recently, six or eight months ago, a new integrated organization has developed, UNASUR, the Union of South American Republics, and it's already been effective. So effective that it's not reported in the United States, presumably because it's too dangerous.
So when the U.S. and the traditional ruling elites in Bolivia started moving towards a kind of secessionist movement to try to undermine the democratic revolution that's taken place there, and when it turned violent, as it did, there was a meeting of UNASUR last September in Santiago, where it issued a strong statement defending the elected president, Evo Morales, and condemning the violence and the efforts to undermine the democratic system. Morales responded thanking them for their support and also saying that this is the first time in 500 years that South America's beginning to take its fate into its own hands. That's significant; so significant that I don't even think it was reported here. Just how far these developments can go, both dealing with the internal problems and also the problems of unification and integration, we don't know, but the developments are taking place. There are also South-South relations developing, for example between Brazil and South Africa. This again breaks the imperial monopoly, the monopoly of U.S. and Western domination. China's a new element on the scene. Trade and investment are increasing, and this gives more options and possibilities to South America. The current financial crisis might offer opportunities for increasing this, but also it might go the other way. The financial crisis is of course harming — it must harm — the poor in the weaker countries and it may reduce their options. These are really matters which will depend on whether popular movements can take control of their own fate, to borrow Morales' phrase. If they can, yes there are opportunities.
Juraprofessor Majorie Cohn om extraordinary renditions
Juraprofessor Majorie Cohn, har skrevet en veloplagt kommentar til den tilsyneladende fortsættelse af CIAs extraordinary renditions program under den nuværende Obama-administration.
A Call to End All Renditions
by Marjorie Cohn
Binyam Mohamed, an Ethiopian residing in Britain, said he was tortured after being sent to Morocco and Afghanistan in 2002 by the U.S. government. Mohamed was transferred to Guantánamo in 2004 and all terrorism charges against him were dismissed last year. Mohamed was a victim of extraordinary rendition, in which a person is abducted without any legal proceedings and transferred to a foreign country for detention and interrogation, often tortured.
Mohamed and four other plaintiffs are accusing Boeing subsidiary Jeppesen Dataplan, Inc. of flying them to other countries and secret CIA camps where they were tortured. In Mohamed’s case, two British justices accused the Bush administration of pressuring the British government to block the release of evidence that was “relevant to allegations of torture” of Mohamed.
Twenty-five lines edited out of the court documents included details about how Mohamed’s genitals were sliced with a scalpel as well as other torture methods so extreme that waterboarding “is very far down the list of things they did,” according to a British official quoted by the Telegraph (UK).
The plaintiffs’ complaint quotes a former Jeppesen employee as saying, “We do all of the extraordinary rendition flights – you know, the torture flights.” A senior company official also apparently admitted the company transported people to countries where they would be tortured.
Obama’s Justice Department appeared before a three-judge panel of the Ninth U.S. Circuit Court of Appeals Monday in the Jeppesen lawsuit. But instead of making a clean break with the dark policies of the Bush years, the Obama administration claimed the same “state secrets” privilege that Bush used to block inquiry into his policies of torture and illegal surveillance. Claiming that the extraordinary rendition program is a state secret is disingenuous since it is has been extensively documented in the media.
“This was an opportunity for the new administration to act on its condemnation of torture and rendition, but instead it has chosen to stay the course,” said the ACLU’s Ben Wizner, counsel for the five men.
If the judges accept Obama's state secrets claim, these men will be denied their day in court and precluded from any recovery for the damages they suffered as a result of extraordinary rendition.
Two and a half weeks before Obama’s representative appeared in the Jeppesen case, the new President had signed Executive Order 13491. It established a special task force “to study and evaluate the practices of transferring individuals to other nations in order to ensure that such practices comply with the domestic laws, international obligations, and policies of the United States and do not result in the transfer of individuals to other nations to face torture or otherwise for the purpose, or with the effect, of undermining or circumventing the commitments or obligations of the United States to ensure the humane treatment of individuals in its custody or control.”
This order prohibits extraordinary rendition. It also ensures humane treatment of persons in U.S. custody or control. But it doesn’t specifically guarantee that prisoners the United States renders to other countries will be free from cruel, inhuman or degrading treatment that doesn’t amount to torture. It does, however, aim to ensure that our government’s practices of transferring people to other countries complies with U.S. laws and policies, including our obligations under international law.
One of those laws is the International Covenant on Civil Political Rights (ICCPR), a treaty the United States ratified in 1992. Article 7 of the ICCPR prohibits the States Parties from subjecting persons “to torture or to cruel, inhuman, or degrading treatment or punishment.” The UN Human Rights Committee, which is the body that monitors the ICCPR, has interpreted that prohibition to forbid States Parties from exposing “individuals to the danger of torture or cruel, inhuman or degrading treatment or punishment upon return to another country by way of their extradition, expulsion or refoulement.”
Order 13491 also mandates, “The CIA shall close as expeditiously as possible any detention facilities that it currently operates and shall not operate any such detention facility in the future.” The order does not define “expeditiously” and the definitional section of the order says that the terms ‘detention facilities’ and ‘detention facility’ “do not refer to facilities used only to hold people on a short-term, transitory basis.” Once again, “short term” and “transitory” are not defined.
In his confirmation hearing, Attorney General Eric Holder categorically stated that the United States should not turn over an individual to a country where we have reason to believe he will be tortured. Leon Panetta, nominee for CIA director, went further last week and interpreted Order 13491 as forbidding “that kind of extraordinary rendition, where we send someone for the purposes of torture or for actions by another country that violate our human values.”
But alarmingly, Panetta appeared to champion the same standard used by the Bush administration, which reportedly engaged in extraordinary rendition 100 to 150 times as of March 2005. After September 11, 2001, President Bush issued a classified directive that expanded the CIA’s authority to render terrorist suspects to other States. Former Attorney General Alberto Gonzales said the CIA and the State Department received assurances that prisoners will be treated humanely. “I will seek the same kinds of assurances that they will not be treated inhumanely,” Panetta told the senators.
Gonzales had admitted, however, “We can’t fully control what that country might do. We obviously expect a country to whom we have rendered a detainee to comply with their representations to us . . . If you’re asking me, ‘Does a country always comply?’ I don’t have an answer to that.”
The answer is no. Binyam Mohamed’s case is apparently the tip of the iceberg. Maher Arar, a Canadian born in Syria, was apprehended by U.S. authorities in New York on September 26, 2002, and transported to Syria, where he was brutally tortured for months. Arar used an Arabic expression to describe the pain he experienced: “you forget the milk that you have been fed from the breast of your mother.” The Canadian government later exonerated Arar of any terrorist ties. In another instance, thirteen CIA operatives were arrested in Italy for kidnapping an Egyptian, Abu Omar, in Milan and transporting him to Cairo where he was tortured.
Panetta made clear that the CIA will continue to engage in rendition to detain and interrogate terrorism suspects and transfer them to other countries. “If we capture a high-value prisoner,” he said, “I believe we have the right to hold that individual temporarily to be able to debrief that individual and make sure that individual is properly incarcerated.” No clarification of how long is “temporarily” or what “debrief” would mean.
When Sen. Christopher Bond (R-Mo.) asked about the Clinton administration’s use of the CIA to transfer prisoners to countries where they were later executed, Panetta replied, “I think that is an appropriate use of rendition.” Jane Mayer, columnist for the New Yorker, has documented numerous instances of extraordinary rendition during the Clinton administration, including cases in which suspects were executed in the country to which the United States had rendered them. Once when Richard Clarke, President Clinton’s chief counter-terrorism adviser on the National Security Council, “proposed a snatch,” Vice-President Al Gore said, “That’s a no-brainer. Of course it’s a violation of international law, that’s why it’s a covert action. The guy is a terrorist. Go grab his ass.”
There is a slippery slope between ordinary rendition and extraordinary rendition. “Rendition has to end,” Michael Ratner, president of the Center for Constitutional Rights, recently told Amy Goodman on Democracy Now!: “Rendition is a violation of sovereignty. It’s a kidnapping. It’s force and violence.” Ratner queried whether Cuba could enter the United States and take Luis Posada, the man responsible for blowing up a commercial Cuban airline in 1976 and killing 73 people. Or whether the United States could go down to Cuba and kidnap Assata Shakur, who escaped a murder charge in New Jersey.
Moreover, “renditions for the most part weren’t very productive,” a former CIA official told the Los Angeles Times. After a prisoner was turned over to authorities in Egypt, Jordan or another country, the CIA had very little influence over how prisoners were treated and whether they were ultimately released.
The U.S. government should disclose the identities, fate, and current whereabouts of all persons detained by the CIA or rendered to foreign custody by the CIA since 2001. Those who ordered renditions should be prosecuted. And the special task force should recommend, and Obama should agree to, an end to all renditions.
© JURIST Legal News and Research Services, Inc., 2009
Marjorie Cohn is a professor at Thomas Jefferson School of Law and president of the National Lawyers Guild. She is the author of Cowboy Republic: Six Ways the Bush Gang Has Defied the Law. Her new book, Rules of Disengagement: The Politics and Honor of Military Dissent (with Kathleen Gilberd), will be published in April 2009. Her articles are archived at www.marjoriecohn.com.
Tre historiske citater.
"...the gradual extension of our settlements will as certainly cause the savage, as the wolf, to retire; both being beast of prey, tho' they differ in shape" (G. Washington in 1783)
"...if ever we are constrained to lift the hatchet against any tribe, we will never lay it down till that tribe is exterminated, or driven beyond..." (T. Jefferson in 1807)
"...the cruel massacres they have committed on the women and children of our frontiers taken by surprise, will oblige us now to pursue them to extermination, or drive them to new seats beyond our reach" (T. Jefferson in 1813)
"...if ever we are constrained to lift the hatchet against any tribe, we will never lay it down till that tribe is exterminated, or driven beyond..." (T. Jefferson in 1807)
"...the cruel massacres they have committed on the women and children of our frontiers taken by surprise, will oblige us now to pursue them to extermination, or drive them to new seats beyond our reach" (T. Jefferson in 1813)
Et interessant spørgsmål til præsidenten, men intet svar.
følgende er to spørgsmål som Helen Thomas fra Huffington Post stillede Barack Obama ved hans første pressemøde. Bemærk hvordan han behændigt undgår at svare på det sidste af spørgsmålene.
Question: Mr. President, do you think that Pakistan and -- are maintaining the safe havens in Afghanistan for these so-called terrorists? And, also, do you know of any country in the Middle East that has nuclear weapons?
Obama: Well, I think that Pakistan -- there is no doubt that, in the FATA region of Pakistan, in the mountainous regions along the border of Afghanistan, that there are safe havens where terrorists are operating.
And one of the goals of Ambassador Holbrooke, as he is traveling throughout the region, is to deliver a message to Pakistan that they are endangered as much as we are by the continuation of those operations and that we've got to work in a regional fashion to root out those safe havens.
It's not acceptable for Pakistan or for us to have folks who, with impunity, will kill innocent men, women and children. And, you know, I -- I believe that the new government of Pakistan and -- and Mr. Zardari cares deeply about getting control of the situation. We want to be effective partners with them on that issue.
Om drone-angrebene indenfor Pakistans grænser.
Under Obama-administrationen har en foreløbig udenrigspolitisk konsekvens været at der er blevet dræbt ca. 20 civile indenfor Pakistans grænser grundet de ubemandede droner som bruges til at angribe opfattede fjender i det nordlige Pakistan, grænsende op til Afghanistan. Den Pakistanske premierminister ønsker USAs brug af drone-angrebene stoppet, og gjorde endvidere gældende, i et interview med CNN's Christiane Amanpour:
"I want to put on record that we do not have any agreement between the government of the United States and the government of Pakistan,"
http://edition.cnn.com/2009/WORLD/asiapcf/01/28/davos.pakistan.pm/
Den legendariske amerikanske journalist Bill Moyers havde forleden på sit tv-show en interessant udveksling med den udenrigspolitiske historiker Marilyn Young og en tidligere embedsmand i Pentagon ved navn Pierre Sprey, hvor de ubemandede drone-angreb indenfor Pakistans grænser blev diskuteret. Som Pierre Sprey gør opmærksom på, vil drone-angrebene med stor sandsynlighed virke kontraproduktivt ift. målet om via disse at bekæmpe talebanere i det pakistanske grænseområde, idet disse netop vil have den modsatte effekt ifa. øget opbakning til modstandskampen mod såvel USA som deres allierede i den pakistanske regering.
http://www.counterpunch.org/moyers02032009.html
Den australske militære rådgiver til USA, Dr. Kilcullen, som har bistået med rådgivning til Petreaus og Rice i Irak, kommer med en tilsvarende vurdering.
http://blog.wired.com/defense/2009/02/kilcullen-says.html
"I want to put on record that we do not have any agreement between the government of the United States and the government of Pakistan,"
http://edition.cnn.com/2009/WORLD/asiapcf/01/28/davos.pakistan.pm/
Den legendariske amerikanske journalist Bill Moyers havde forleden på sit tv-show en interessant udveksling med den udenrigspolitiske historiker Marilyn Young og en tidligere embedsmand i Pentagon ved navn Pierre Sprey, hvor de ubemandede drone-angreb indenfor Pakistans grænser blev diskuteret. Som Pierre Sprey gør opmærksom på, vil drone-angrebene med stor sandsynlighed virke kontraproduktivt ift. målet om via disse at bekæmpe talebanere i det pakistanske grænseområde, idet disse netop vil have den modsatte effekt ifa. øget opbakning til modstandskampen mod såvel USA som deres allierede i den pakistanske regering.
http://www.counterpunch.org/moyers02032009.html
Den australske militære rådgiver til USA, Dr. Kilcullen, som har bistået med rådgivning til Petreaus og Rice i Irak, kommer med en tilsvarende vurdering.
http://blog.wired.com/defense/2009/02/kilcullen-says.html
tirsdag den 10. februar 2009
Change?
Den generelt interessant forfatningsadvokat og kommentator ved salon.com, Glenn Greenwald har de sidste par dage haft nogle interessante kommentarer til obama-administrations sikkerhedspolitik, som synes at være en 180 graders kovending, fra retorikken under valgkampen - som var stærkt kritisk overfor Bush-administrationens magtpraksis i sikkerhedspolitiske sager omhandlende ofrene for de såkaldte renditions, hvor man simpelthen nægtede ofrene en fri rettergang med statens sikkerhed som påskuddet - til nu hvor selvsamme tvivlsomme begrundelse tages i brug.
læs mere her.
http://www.salon.com/opinion/greenwald/2009/02/10/obama/print.html
http://www.salon.com/opinion/greenwald/2009/02/09/state_secrets/index.html
Derudover er der selvfølgelig hele Israel-politikken, som bestemt ikke synes at have forandret sig den mindste smule, idet Hillary Clinton ved et pressemøde i state dept. igår udtalte:
"...we have a very clear policy toward Hamas, and Hamas knows the conditions that have been set forth. They must renounce violence. They must recognize Israel. And they must agree to abide by prior agreements that were entered into by the Palestinian Authority.
We are just at the beginning of this deep and consistent engagement that we are part of, that Senator Mitchell is leading for our Administration, but our conditions with respect to Hamas have not and will not change. It is our hope that the work that needs to be done to move the parties toward an effort to settle many of the disputes that they currently confront will be effective. But Hamas knows that it must stop the rocket fire into Israel. There were rockets yesterday, there were rockets this morning. And it is very difficult to ask any nation to do anything other than defend itself in the wake of that kind of consistent attack. So that's not new news. You know what our position is. It is something that the President has set forth.
We are not able to, you know, look into the future to see whether there will be changes on the part of Hamas that would meet our conditions. But you know, certainly, that would be a clear path for them to follow. We are going to report to the President in the next day. And, you know, we'll have more to say as this process moves forward. But again, I want to thank Senator Mitchell for undertaking one of the most difficult assignments that anyone could be willing to shoulder.
And we want to send a clear message, as he did, both listening and responding during the last week, that the United States is committed to this path, and we are going to work as hard as we can over what period of time is required to try to help the parties make progress together. So thank you all very much."
http://www.state.gov/secretary/rm/2009a/02/115864.htm
Israels angreb på hvad der i sin essens er verdens største fængsel, med en befolkningstæthed som Hong Kong og en fattigdom som i Mozambique, er selvfølgelig at betragte som selvforsvar, mens Hamas må droppe al vold og anerkende Israel.
Det bliver interessant at se hvad Hillary og resten af administrationen har af kommentarer, når Netanyahu imorgen, hvis alt går som forventet, vinder valget, idet Netanyahu ønsker at fortsætte overgrebene på Gaza's civilbefolkning, og bestemt ikke anerkender nogen idé om en palæstinensisk
stat. Hvis alt går som jeg regner med, vil hykleriet ingen ende tage, men lad os nu se.
Den tidligere omtalte Greenwald har i øvrigt også en interessant kommentar til den amerikanske politik ift. Israel som uddyber det jeg netop har skrevet.
http://www.salon.com/opinion/greenwald/2009/02/09/israel/index.html"
sidst men ikke mindst, et lille interview med den kontroversielle amerikansk-jødiske intellektuelle Norman Finkelstein, der har måtte vinke sin akademiske karriere pænt farvel pga. sin åbenmundede kritik af Israels aggressivitet.
læs mere her.
http://www.salon.com/opinion/greenwald/2009/02/10/obama/print.html
http://www.salon.com/opinion/greenwald/2009/02/09/state_secrets/index.html
Derudover er der selvfølgelig hele Israel-politikken, som bestemt ikke synes at have forandret sig den mindste smule, idet Hillary Clinton ved et pressemøde i state dept. igår udtalte:
"...we have a very clear policy toward Hamas, and Hamas knows the conditions that have been set forth. They must renounce violence. They must recognize Israel. And they must agree to abide by prior agreements that were entered into by the Palestinian Authority.
We are just at the beginning of this deep and consistent engagement that we are part of, that Senator Mitchell is leading for our Administration, but our conditions with respect to Hamas have not and will not change. It is our hope that the work that needs to be done to move the parties toward an effort to settle many of the disputes that they currently confront will be effective. But Hamas knows that it must stop the rocket fire into Israel. There were rockets yesterday, there were rockets this morning. And it is very difficult to ask any nation to do anything other than defend itself in the wake of that kind of consistent attack. So that's not new news. You know what our position is. It is something that the President has set forth.
We are not able to, you know, look into the future to see whether there will be changes on the part of Hamas that would meet our conditions. But you know, certainly, that would be a clear path for them to follow. We are going to report to the President in the next day. And, you know, we'll have more to say as this process moves forward. But again, I want to thank Senator Mitchell for undertaking one of the most difficult assignments that anyone could be willing to shoulder.
And we want to send a clear message, as he did, both listening and responding during the last week, that the United States is committed to this path, and we are going to work as hard as we can over what period of time is required to try to help the parties make progress together. So thank you all very much."
http://www.state.gov/secretary/rm/2009a/02/115864.htm
Israels angreb på hvad der i sin essens er verdens største fængsel, med en befolkningstæthed som Hong Kong og en fattigdom som i Mozambique, er selvfølgelig at betragte som selvforsvar, mens Hamas må droppe al vold og anerkende Israel.
Det bliver interessant at se hvad Hillary og resten af administrationen har af kommentarer, når Netanyahu imorgen, hvis alt går som forventet, vinder valget, idet Netanyahu ønsker at fortsætte overgrebene på Gaza's civilbefolkning, og bestemt ikke anerkender nogen idé om en palæstinensisk
stat. Hvis alt går som jeg regner med, vil hykleriet ingen ende tage, men lad os nu se.
Den tidligere omtalte Greenwald har i øvrigt også en interessant kommentar til den amerikanske politik ift. Israel som uddyber det jeg netop har skrevet.
http://www.salon.com/opinion/greenwald/2009/02/09/israel/index.html"
sidst men ikke mindst, et lille interview med den kontroversielle amerikansk-jødiske intellektuelle Norman Finkelstein, der har måtte vinke sin akademiske karriere pænt farvel pga. sin åbenmundede kritik af Israels aggressivitet.
søndag den 1. februar 2009
Centralisme: Linksamling om ligheder mellem centralistiske magtkontruktioner.
MASSEFÆNGSLINGER.
Nazi-Tyskland.
http://en.wikipedia.org/wiki/List_of_German_concentration_camps
http://en.wikipedia.org/wiki/Ghettos_in_Nazi-occupied_Europe
Sovjetunionen.
http://en.wikipedia.org/wiki/List_of_Gulag_camps
http://en.wikipedia.org/wiki/Forced_labor_of_Hungarians_in_the_Soviet_Union
USA.
http://en.wikipedia.org/wiki/Blacksite
http://en.wikipedia.org/wiki/Guantanamo_Bay_detention_camp
http://en.wikipedia.org/wiki/US_Prisons
http://en.wikipedia.org/wiki/Prisoner-of-war_camp
http://knowledgerush.com/kr/encyclopedia/Japanese_American_internment/
Kina.
http://knowledgerush.com/kr/encyclopedia/Laogai/
POLITISK POLITI OG ANDRE KONTROL-FORANSTALTNINGER.
Nazi-Tyskland.
Schutzstaffel - http://en.wikipedia.org/wiki/Schutz_Staffel
USA.
FBI - http://en.wikipedia.org/wiki/Fbi#Controversies_and_criticism
Patriot Act - http://en.wikipedia.org/wiki/Patriot_act#Controversy
PROPAGANDA.
http://en.wikipedia.org/wiki/Propaganda
http://en.wikipedia.org/wiki/Nazi_propaganda
http://en.wikipedia.org/wiki/Ministry_of_Public_Enlightenment_and_Propaganda
http://en.wikipedia.org/wiki/United_States_Information_Agency
http://www.iisg.nl/~landsberger/
http://www.globalissues.org/article/157/war-propaganda-and-the-media
http://www.psywar.org/leaflets.php
http://en.wikipedia.org/wiki/Propaganda_in_the_Soviet_Union
http://en.wikipedia.org/wiki/Edward_Bernays#Propaganda
Nazi-Tyskland.
http://en.wikipedia.org/wiki/List_of_German_concentration_camps
http://en.wikipedia.org/wiki/Ghettos_in_Nazi-occupied_Europe
Sovjetunionen.
http://en.wikipedia.org/wiki/List_of_Gulag_camps
http://en.wikipedia.org/wiki/Forced_labor_of_Hungarians_in_the_Soviet_Union
USA.
http://en.wikipedia.org/wiki/Blacksite
http://en.wikipedia.org/wiki/Guantanamo_Bay_detention_camp
http://en.wikipedia.org/wiki/US_Prisons
http://en.wikipedia.org/wiki/Prisoner-of-war_camp
http://knowledgerush.com/kr/encyclopedia/Japanese_American_internment/
Kina.
http://knowledgerush.com/kr/encyclopedia/Laogai/
POLITISK POLITI OG ANDRE KONTROL-FORANSTALTNINGER.
Nazi-Tyskland.
Schutzstaffel - http://en.wikipedia.org/wiki/Schutz_Staffel
USA.
FBI - http://en.wikipedia.org/wiki/Fbi#Controversies_and_criticism
Patriot Act - http://en.wikipedia.org/wiki/Patriot_act#Controversy
PROPAGANDA.
http://en.wikipedia.org/wiki/Propaganda
http://en.wikipedia.org/wiki/Nazi_propaganda
http://en.wikipedia.org/wiki/Ministry_of_Public_Enlightenment_and_Propaganda
http://en.wikipedia.org/wiki/United_States_Information_Agency
http://www.iisg.nl/~landsberger/
http://www.globalissues.org/article/157/war-propaganda-and-the-media
http://www.psywar.org/leaflets.php
http://en.wikipedia.org/wiki/Propaganda_in_the_Soviet_Union
http://en.wikipedia.org/wiki/Edward_Bernays#Propaganda
whistleblowing on surveillance
Visit msnbc.com for Breaking News, World News, and News about the Economy
onsdag den 21. januar 2009
Making Media Democratic
Robert W. McChesney - artiklen er fra 1998, men stadig ret relevant.
The American media system is spinning out of control in a hyper-commercialized frenzy. Fewer than ten transnational media conglomerates dominate much of our media; fewer than two dozen account for the overwhelming majority of our newspapers, magazines, films, television, radio, and books. With every aspect of our media culture now fair game for commercial exploitation, we can look forward to the full-scale commercialization of sports, arts, and education, the disappearance of notions of public service from public discourse, and the degeneration of journalism, political coverage, and children's programming under commercial pressure.
For democrats, this concentration of media power and attendant commercialization of public discourse are a disaster. An informed, participating citizenry depends on media that play a public service function. As James Madison once put it, "A popular government without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy, or perhaps both." But these democratic functions lie beyond the reach of the current American media system. If we are serious about democracy, then, we need to work aggressively for reform.
What kind of reform? In broad terms, we need to reduce the current degree of media concentration, and, more immediately, blunt its effects on democracy. More specifically, we need special incentives for nonprofits, broadcast regulation, public broadcasting, and antitrust. I present these proposals as the start of a debate about media reform, not as ultimate solutions. I am sure that spirited discussion will improve these ideas: my immediate concern is to get that discussion started. I will not dwell here on the weaknesses of the current US media system, beyond summarizing arguments that I (and many others) have made elsewhere. The point here is to begin answering the natural follow-up to such criticisms: "If the status quo is so bad, what do you propose that would be better?"
Media and Democracy
The case for media reform is based on two propositions. First, media perform essential political, social, economic, and cultural functions in modern democracies. In such societies, media are the principal source of political information and access to public debate, and the key to an informed, participating, self-governing citizenry. Democracy requires a media system that provides people with a wide range of opinion and analysis and debate on important issues, reflects the diversity of citizens, and promotes public accountability of the powers-that-be and the powers-that-want-to-be. In short, the media in a democracy must foster deliberation and diversity, and ensure accountability.
Second, media organization-patterns of ownership, management, regulation, and subsidy-- i s a central determinant of media content. This proposition is familiar from discussions of media in China and the former Soviet Union. For those countries, the idea that the media could promote deliberation, diversity, and accountability, while being effectively owned and controlled by the Communist Party, was not even worth refuting. Similarly, we are not surprised to hear that when cronies of the Mexican government owned the country's only TV station, television news coverage was especially favorable to the ruling party.
In the United States, in contrast, analysis of the implications of private ownership and advertising support for media content has been limited. For much of the second half of the twentieth century, Americans have heard that we have no reason to be concerned about corporate ownership of media or dependence on commercial advertising because market competition forces commercial media to "give the people what they want," and journalistic professionalism protects the news from the biases of owners and advertisers as well as journalists themselves.
Such views now seem very dubious. Consider first the alleged benefits of competition. The main media markets-- film, TV, magazines, music, books, cable, newspapers-- are all oligopolies or semi-monopolies with severe barriers to new entrants. Moreover, media economics make it virtually impossible for a firm to be dominant in just one sector. Because of opportunities that come with having properties in different media markets, the largest media firms all have rushed to establish conglomerates over the past decade. Time Warner, for example, is one of the top five US or global leaders in film production, TV show production, cable TV channels, cable TV systems, movie theater ownership, book publishing, music, and magazine publishing. It also has amusement parks, retail stores, and professional sport teams. Disney, too, seems to have mastered the logic of conglomeration: its animated films Pocahantas and Hunchback of Notre Dame were only marginal successes at the box office, with roughly $100 million in gross US revenues, but both films will generate close to $500 million in profit for Disney, once it has exploited all other venues: TV shows on its ABC network and cable channels, amusement park rides, comic books, CD-ROMs, CDs, and merchandising (through 600 Disney retail stores). Firms without these options simply cannot compete in this market, which is why animation is the province of only the largest media giants. This example is extreme, but it sharply underscores the fundamental principle.
These observations about conglomeration, however, barely begin to explain just how noncompetitive the media market is-if we take "competitive" in the economics textbook sense. Firms in specific markets do directly compete, at times ferociously. But these firms are also each other's best customers, as when a film studio sells its product for presentation to a broadcast network's cable channel. Moreover, to reduce risk and competition, the largest media firms have turned to "equity joint ventures" in the 1990s. Under such arrangements, media giants share the ownership of a specific media project: Fox Sports Net is jointly owned by Rupert Murdoch's News Corporation and John Malone's TCI; the Comedy Central cable channel is co-owned by Time Warner and Viacom. Murdoch explains the logic behind joint ventures as only he can: "We can join forces now, or we can kill each other and then join forces." The nine largest American media firms have, on average, joint ventures with nearly six of the other eight giants. Murdoch's News Corp. has at least one joint venture with every single one of them.
In such noncompetitive markets, the claim that media firms "give the people what they want" is unconvincing. The firms have enough market power to dictate the content that is most profitable for them. And the easy route to profit comes from increasing commercialism-larger numbers of ads, greater say for advertisers over non-advertising content, programming that lends itself to merchandising, and all sorts of cross promotions with non-media firms. Consumers may not want such hyper-commercialism, but they have little say in the matter. So we have a 50 percent increase in the number of commercials on network TV in the past decade; the development of commercially-saturated kids' programming as arguably the fastest-growing and most profitable branch of the TV industry in the 1990s; becoming standard in motion pictures. The flip side of this commercialism is the decline of public service-of the notion that there is any purpose to our media except to make money for shareholders.
Under such conditions, journalistic norms can hardly be expected to stem the commercial tide. Contemporary commercial journalism is essentially a mix of crime stories, celebrity profiles, consumer news pitched at the upper middle class, and warmed over press releases. Bookstores are filled with dispirited reports by former editors and journalists bemoaning the brave new world of corporate journalism. Journalist unions are very important in this regard, by protecting journalistic norms from the commercial interests of the owners. But without other measures to weaken corporate media power, unions are not likely to be able to resist pressures from the current media system.
For democrats, then, media competition and journalistic norms do not suffice for deliberation, diversity, and accountability. If media are central to the formation of a participating and informed citizenry, and if media organization influences media performance, then issues about ownership, regulation, and subsidy need to be matters of public debate. But such debate has been almost non-existent in the United States. Even in broadcasting, where the publicly owned airwaves are licensed to private users, the public has never had any meaningful participation in the formation of policy.
Consider the Telecommunications Act of 1996. The law it replaced, the Communications Act of 1934, regulated telephony, radio, and television. The 1996 Act provides the basis for determining the course of radio, television, telephony, the Internet-indeed virtually all aspects of communication as we shift over to digital technologies. Its guiding premise is that the market should rule communication, with government assistance. The politics of the Act consisted largely of powerful corporate communication firms and lobbies fighting behind the scenes to get the most favorable wording. That the corporate sector would control all communication was a given; the only fight was over which sectors and which firms would get the best deals. The public was for the most part unaware of these debates. The drafting and struggles over the Telecommunications Act of 1996 were hardly discussed in the news media, except in the business and trade press, where the legislation was covered as a story of importance to investors and managers, not citizens, or even consumers.
The results of the Telecommunications Act, with its relaxation of ownership restrictions to promote competition across sectors, have been little short of disastrous. Rather then produce competition, a far-fetched notion in view of the concentrated nature of these markets, the law has paved the way for the greatest period of corporate concentration in US media and communication history. The seven Baby Bells are now four-if the SBC Communications purchase of Ameritech goes through-with more deals on the way. In radio, where ownership restrictions were relaxed the most, the entire industry has been in upheaval, with 4,000 of the 11,000 commercial stations being sold since 1996. In the 50 largest markets, three firms now control access to over half the radio audience. In 23 of those 50 markets, the three largest firms control 80 percent of the radio audience. The irony is that radio, which is relatively inexpensive and thus ideally suited to local independent control, has become perhaps the most concentrated and centralized medium in the United States.
No doubt the United States needed a new communications law. Digital technologies are undermining the traditional distinctions between media and communication sectors that formed the basis for earlier communication regulation. But the legislation we ended up with reflects the failed process that produced it.
False Starts
Because corporate control and the role of advertising are effectively off-limits to public discussion, reformers have faced limited options. Hence they have tended to press for mild reforms that do not threaten corporate and advertiser hegemony. And because these mild reforms generate little enthusiasm from the broad public, media activists have put little effort into organizing popular support for their efforts. The result is an "inside-the-beltway," low-political-stakes style of public interest lobbying. For example, in 1997 some media activists claimed victory when the Federal Communications Commission began requiring broadcasters to do three hours a week of educational programming for kids. The problem with this "victory" was that these educational programs would all remain commercially sponsored with ultimate control in the hands of business interests.
Other reformers have turned to "civic" or "public" journalism, a well- intentioned attempt to reduce the sensationalism and blatant political manipulation of mainstream journalism. Unfortunately, the movement completely ignores the structural factors of ownership and advertising that have led to the attack on journalism. Public journalism, not surprisingly, is averse to "ideological" approaches to the news, and therefore encourages a boringly "balanced" and soporific newsfare. Claiming to give readers news they think is important to their lives, advocates of public journalism may in fact be assisting in the process of converting journalism into the type of consumer news and information that delights the advertising community.
Still others have joined the media literacy movement. The idea here is to educate people to be skeptical and knowledgeable users of the media. Media literacy has considerable potential so long as it involves explaining how the media system actually works, and leads people to work for a better system. But a more conventional wing of the movement implicitly accepts that commercial media "give the people what they want." So the media literacy crowd's job is to train people to demand better fare. The resulting strategy may simply help to prop up the existing system. "Hey, don't blame us for the lousy stuff we provide," the corporate media giants will say. "We even bankrolled media literacy to train people to demand higher quality fare. The morons simply demanded more of what we are already doing."
While media literacy has an important role to play in media reform, civic journalism has been at best a mixed blessing. Some observers credit civic journalism, which is widespread in North Carolina, with helping in Jesse Helms's 1996 re-election. Why? Because civic journalism was ill-equipped to generate tough questions, or press politicians to answer them. So Helms got a cakewalk from the press, barely having to defend his record.
The evidence is clear: if we want a media system that produces fundamentally different results, we need solutions that address the causes of the problems; have to address issues of media ownership, management, regulation, and subsidy. Our goal should be to craft a media system that reduces the power of a handful of enormous corporations and advertisers to dominate the media culture. But no one will press for reform until we have some ideas worth debating. The ultimate trump card of the status quo is the claim that any change in our media system will invariably lead to darkness at noon. The purpose of the balance of this article is to establish that there are indeed several workable proposals for media reform that will expand, not contract, freedom and will energize our culture and democracy.
Media Reform Proposals
Building nonprofit and noncommercial media. The starting point for media reform is to build up a viable nonprofit, noncommercial media sector. Such a sector currently exists in the United States, and produces much of value, but it is woefully small and underfunded. It can be developed independent of changes in laws and regulations. For example, foundations and organized labor could and should contribute far more to the develop of nonprofit and noncommercial media. Labor, in particular, has to be willing to subsidize radio, television, Internet, and print media. Moreover, labor cannot seek to micromanage these media and have them serve as its PR agents. For independent media to flourish, they must have editorial integrity.
Sympathetic government policies could also help foster a nonprofit media sector, and media reform must work to this end. Government subsidies and policies have played a key role in establishing lucrative commercial media. Since the 19th century, for example, the United States has permitted publications to have quality, high speed mailing at relatively low rates. We could extend this principle to lower mailing costs for a wider range of nonprofit media, and/or for media that have little or no advertising. Likewise we could permit all sorts of tax deductions or write-offs for contributions to nonprofit media. Dean Baker of the Economic Policy Institute has developed a plan for permitting taxpayers to take up to $150 off their federal tax bill, if they donate the money to a nonprofit news medium. This would permit almost all Americans to contribute to nonprofit media-not just those with significant disposable incomes-and help create an alternative to the dominant Wall Street/Madison Avenue system.
Public Broadcasting. Establishing a strong nonprofit sector to complement the commercial giants is not enough. The costs of creating a more democratic media system simply are too high. Therefore, it is important to establish and maintain a noncommercial, nonprofit, public radio and television system. The system should include national networks, local stations, public access television, and independent community radio stations. Every community should also have a stratum of low-power television and micropower radio stations.
The United States has never experienced public broadcasting in the manner of Japan, Canada, and Western Europe. In contrast to the US, public broadcasting there has been well funded and commissioned to serve the entire population. In the United States, public broadcasting has always been underfunded, and effectively required to provide only programming that is not commercially viable. As a result, public broadcasters typically provide relatively unattractive programming to fringe audiences, hardly a strategy for institutional success. Moreover, Congress has been a watchdog to see that public broadcasting did not expand the range of ideological discourse beyond that provided by the commercial broadcasters. In sum, public broadcasting in the United States has been handcuffed since its inception. Still, it has developed a devoted following. This following has provided enough vocal political support to keep US public broadcasting from being effectively privatized, but most of this toothpaste is now out of the tube. Public radio and television are increasingly dependent upon corporate grants and "enhanced underwriting," a euphemism for advertising. The federal subsidy only accounts for some 15 percent of public broadcasting revenues. Indeed, public broadcasting, by the standard international definition, no longer exists in the United States. Instead, we have nonprofit commercial broadcasting, closely linked to the corporate sector, with the constant threat of right-wing political harassment if public stations step out of line.
We need a system of real public broadcasting, with no advertising, that accepts no grants from corporations or private bodies, and that serves the entire population, not merely those who are disaffected from the dominant commercial system and have to contribute during pledge drives. Two hurdles stand in the way of such a system. The first is organizational: How can public broadcasting be structured to make the system accountable and prevent a bureaucracy impervious to popular tastes and wishes, but to give the public broadcasters enough institutional strength to prevent implicit and explicit attempts at censorship by political authorities? The second is fiscal: Where will the funds come from to pay for a viable public broadcasting service? At present, the federal government provides $260 million annually. The public system I envision-which would put per capita US spending in a league with, for example, Britain and Japan-may well cost $5-10 billion annually.
There is no one way to resolve the organizational problem, and perhaps an ideal solution can never be found. But there are better ways, as any comparative survey indicates. One key element in preventing bureaucratic ossification or government meddling will be to establish a pluralistic system, with national networks, local stations, community and public access stations, all controlled independently. In some cases direct election of officers by the public and also by public broadcasting employees may be appropriate, whereas in other cases appointment by elected political bodies may be preferable. As for funding, I have no qualms about drawing the funds for fully public radio and television from general revenues. There is an almost absurd obsession with generating funds for public broadcasting from everywhere but the general budget, on the bogus premise that public broadcasting cannot be justified as a public expense. In view of radio and television's importance in our lives, it clearly deserves a smidgen of the money we use to build entirely unnecessary weapons systems. We subsidize education, but the government now subsidizes media only on behalf of owners. We should seek to have a stable source of funding, one that cannot be subject to manipulation by politicians with little direct interest in the integrity of the system.
A powerful public radio and television system could have a profound effect on our entire media culture. It could lead the way in providing the type of public service journalism that commercialism is now killing off. This might in turn give commercial journalists the impetus they need to pursue the hard stories they now avoid. It could have a similar effect upon our entertainment culture. A viable public TV system could support a legion of small independent filmmakers. It could do wonders for reducing the reliance of our political campaigns upon expensive commercial advertising. It is essential to ensuring the diversity and deliberation that lie at the heart of a democratic public sphere.
Regulation. A third main plank is to increase regulation of commercial broadcasting in the public interest. Media reformers have long been active in this arena, if only because the public ownership of the airwaves gives the public, through the FCC, a clear legal right to negotiate terms with the chosen few who get broadcast licenses. Still, even this form of media activism has been negligible, and broadcast regulation has been largely toothless, with the desires of powerful corporations and advertisers rarely challenged.
Experience in the United States and abroad indicates that if commercial broadcasters are not held to high public service standards, they will generate the easiest profits by resorting to the crassest commercialism, and will overwhelm the balance of the media culture. Moreover, standard-setting will not work if commercial broadcasters are permitted to "buy" their way out of public service obligations; the record shows that they will eventually find a way to reduce or eliminate these payments. Hence the most successful mixed system of commercial and public broadcasting in the world was found in Britain from the 1950s to the 1980s. It was successful because the commercial broadcasters were held to public service standards comparable to those employed by the BBC; some scholars even argue that the commercial system sometimes outperformed the BBC as a public service broadcaster. The British scheme worked because commercial broadcasters were threatened with loss of their licenses if they did not meet public service standards. (Regrettably, Thatcherism, with its mantra that the market can do no wrong, has undermined the integrity of the British broadcasting system.)
In three particular areas, broadcast regulation can be of great importance. First, advertising should be strictly regulated or even removed from all children's programming (as in Sweden). We must stop the commercial carpetbombing of our children. Commercial broadcasters should be required to provide several hours per week of ad-free kids' programming, to be produced by artists and educators, not Madison Avenue hotshots.
Second, television news should be taken away from the corporate chiefs and the advertisers and turned over to journalists. Exactly how to organize independent ad-free children's and news programming on commercial television so that it is under the control of educators, artists, and journalists will require study and debate. But we should be able to set up something that is effective.
As for funding this public service programming, I subscribe to the principle that it should be subsidized by the beneficiaries of commercialized communication. This principle might be applied in several ways. We could charge commercial broadcasters rent on the electromagnetic spectrum they use to broadcast. Or we could charge them a tax whenever they sell the stations for a profit. In combination these mechanisms could generate well over a billion dollars annually. Or we could tax advertising. Some $200 billion will be spent to advertise in the United States in 1998, $120 billion of which will be in the media. A very small sales tax on this or even only on that portion that goes to radio and television could generate several billion dollars. It might also have the salutary effect of slowing down the commercial onslaught on American social life. And it does not seem like too much to ask of advertisers who are permitted otherwise to marinate most of the publicly owned spectrum in commercialism.
Third, political candidates should receive considerable free airtime on television during electoral campaigns. In addition, paid TV advertising by candidates should either be strictly regulated or banned outright, as the exorbitant cost of these ads (not to mention their lame content) has virtually destroyed the integrity of electoral democracy here. If they cannot be banned, or even reduced by regulation, then perhaps a provision should be made that if a candidate purchases a TV ad, his or her opponents will all be entitled to free ads of the same length on the same station immediately following the paid ad. This would prevent rich candidates from buying elections. I suspect it would pretty much eliminate the practice altogether.
Even in these pro-market times, the corporate media have been unable to rid the public of its notion that commercial broadcasters should be required to serve the public as well as shareholders and advertisers. Hence, when commercial broadcasters were able to force the FCC in 1997 to give them (at no cost) massive amounts of new spectrum so they could begin digital TV broadcasting, the Clinton administration established the Gore Commission to recommend public service requirements to be met by broadcasters in return for this gift. Following the contours of US media politics, the Gore Commission has been little short of a farce, with several industry members stonewalling all but the lamest proposals. But we can hope that the Gore Commission will generate some more serious public service proposals, and provide the basis for a public education campaign and subsequent legislation to give them the force of law.
Antitrust.. The fourth strategy for creating a more democratic media system is to break up the largest firms and establish more competitive markets, thus shifting some control from corporate suppliers to citizen consumers. By all accounts, the current antitrust statutes are not satisfactory, and if antitrust is ever to be applied to media it will require a new statute, similar in tone to the seminal Clayton and Sherman Acts, that lays out the general values to be enforced by the Justice Department and the Federal Trade Commission. The objective should be to break up such media conglomerates as Time Warner, News Corporation, and Disney, so that their book publishing, magazine publishing, TV show production, movie production, TV stations, TV networks, amusement parks, retail store chains, cable TV channels, cable TV systems, etc. all become independent firms. With reduced barriers-to-entry in these specific markets, new firms could enter.
The media giants claim that their market power and conglomeration make them more efficient and therefore able to provide a better product at lower prices to the consumer. There is not much evidence for these claims, though it is clear that market power and conglomeration make these firms vastly more profitable. Moreover, even if one accepts that antitrust would lead to a less efficient economic model, perhaps we should pay that price to establish a more open and competitive marketplace. In view of media's importance for democratic politics and culture, they should not be judged by purely commercial criteria.
Antitrust is the wild card in the media reform platform. It has tremendous appeal across the population and is usually the first idea citizens suggest when they are confronted with the current media scene. But it is unclear whether antitrust legislation could be effectively implemented. And even if it does prove effective, the system would remain commercial, albeit more competitive. It would not, in other words, reduce the need for the first three proposals.
Not to Worry?
The fundamental flaws in our corporate-dominated, commercial media system are widely appreciated. Unfortunately, there is also a rush to assert that the Internet should silence our fears. Because the Internet is open to all at relatively low prices, the hegemony of media giants and advertisers will soon end, to be replaced by a wide-open, decentralized, diverse, fast-changing, and competitive media culture. Best of all, this result is implicit in the Internet's digital network technology, and will not require government regulation. Indeed, the mainstream consensus-strongly endorsed by the Clinton administration's Internet policy-is that government regulation alone could prevent the Internet from working its magic.
Though the Internet and digital communication in general are certainly creating a radical change in our media and communication systems, the results may not be a more competitive market or more democratic media. Indeed, the evidence to date suggests that as the Internet becomes a commercial medium, the largest media firms are most likely to succeed. The media giants can plug digital programming from their other ventures into the Web at little extra cost. To generate an audience, they can promote their Web sites incessantly on their traditional media holdings. The leading media "brands" have been the first to charge subscription fees for their Web offerings; indeed, they may be the only firms for which this is even an alternative. The media giants can (and do) arrange to have their advertisers agree to advertise on their Web sites. The media giants can also use their market power and brand names to get premier position in Web browser software. The new Microsoft Internet Explorer 4.0 offers 250 highlighted channels, and the "plum positions" belong to Disney and Time Warner. Netscape and Pointcast are making similar arrangements. Moreover, approximately half the venture capital for Internet content start-up companies comes from established media firms; they want to be able to capitalize on profitable new applications as they emerge. In addition, the evidence suggests that in the commercialized Web, advertisers will have increased leverage over content because of the number of choices before them.
When these market considerations are taken together, it is difficult to imagine the growth of a competitive digital media marketplace in which small suppliers overwhelm corporate giants. Digital communication will cause considerable dislocation, but not a revolution. And in the end, the content of the digital communication world will appear quite similar to the content of the pre-digital world.
Ironically, the most striking feature of digital communication may well be not that it opened up competition in communication markets, but that it has promoted consolidation by undermining traditional distinctions between radio, television, telecommunication, and computer software. In the 1990s, almost all the media giants have entered into joint ventures or strategic alliances with the largest telecom and software firms. Time Warner is connected to several of the US regional (Bell) telephone giants, as well as to AT&T and Oracle. It has a major joint venture with US West. Disney, likewise, is connected to several major US telecommunication companies, as well as to America Online. News Corp. is partially owned by WorldCom (MCI) and has a joint venture with British Telecom. Microsoft, as one analyst noted, seems to be in bed with everyone. In due course the global media cartel may become something of a global communication cartel.
So how does the rise of the Internet alter my proposals for structural media reform? Very little. There are, of course, some specific policy reforms we should seek for the Internet: for example, guaranteeing universal public access at low rates, perhaps for free, and assuring links for nonprofit Web sites on the dominant browsers and commercial sites. But in general terms, we might do better to regard the Internet as the corporate media giants regard it: as part of the emerging media landscape, not its entirety. So when we create more and smaller media firms, when we create public and community radio and television networks and stations, when we create a strong public service component to commercial news and children's programming, when we use government policies to spawn a nonprofit media sector, all these efforts will have a tremendous effect on the Internet's development as a mass medium. Why? Because Web sites will not be worth much if they do not have the resources to provide a quality product. And all the new media that result from media reform will have Web sites as a mandatory aspect of their operations, much like the commercial media. By creating a vibrant and more democratic "traditional" media culture, we will go a long way toward doing the same with the Web.
Conclusion
Imagine a world in which scores, even hundreds, of media firms operate in markets competitive enough to permit new entrants. Imagine a world with large numbers of public, community, and public access radio and television stations and networks, with enough funding to produce high quality products. Imagine a world where the public airwaves provide compelling journalism, children's programming, and political candidate information, with control vested in people dedicated to public service. Imagine a world where creative government fiscal policies enable small nonprofit and noncommercial media to sprout and prosper, providing some semblance of a democratic public sphere.
Though imaginable, this world seems wholly implausible-and not only because of the political muscle of the corporate media and communications lobbies. Over the past generation, "free market" neoliberals have understood the importance of media as an instrument of social control far better than anyone else. The leading conservative foundations have devoted considerable resources to reducing journalistic autonomy and ideological diversity and pushing media in a more explicitly pro-business direction. The pro-market political right understood that if big business dominated the main fora for political education and debate, then public scrutiny of business would be markedly reduced. These same "free market" foundations fight any public interest component to media laws and regulations, oppose any form of noncommercial and nonprofit media, and lead the battle to ensure that public broadcasting stays within narrow ideological boundaries. In short, we had a major political battle over media for the past generation, but only one side showed up. The results are clear, and appalling.
But now there are signs that the battle for the control of our media is about to be joined. Organizations such as Fairness & Accuracy in Reporting (FAIR), the media watch group, have boomed in the 1990s, and local media watch/media activism groups have blossomed in Denver, New York, Chicago, Los Angeles, Seattle and elsewhere since 1995. In 1998 the Rainbow/PUSH coalition made media reform one of its two major organizing drives, holding regional conferences on the subject across the nation. Members of the Congressional Black Caucus and the Congressional Progressive Caucus have agreed to draft and sponsor legislation in each of the areas mentioned earlier. Organized labor, especially media unions, have shown increased interest in and support for the issue. All of this would have been unthinkable only five years ago. It follows the trend around the world in the late 1990s, where media reform has become an indispensable part of democratic political movements. But we still have a long way to go. Large sectors of the population that are disadvantaged by the media status quo and who should be among media reform's strongest advocates-educators, librarians, parents, journalists, small businesses, laborers, artists, kids, political dissidents, progressive religious people, minorities, feminists, environmentalists-are scarcely aware that the issue even exists to be debated. The corporate media lobby is so strong that victory seems farfetched in the current environment, especially when the corporate news media show little interest in publicizing the issue.
Winning major media reform, then, will require the sort of political strength that comes with a broader social movement to democratize our society. We need to see that media reform is a staple of all progressive politics, not just a special interest cause. And media reform may have broad political appeal. Some "cultural conservatives" may be open to calls to reduce the hyper-commercialism of our media culture. And strongly pro-market democrats may recognize that media is an area where the crude application of market principles has produced disastrous "externalities." In sum, the train of media reform is leaving the station. If we value democracy we have no choice but to climb aboard.
The American media system is spinning out of control in a hyper-commercialized frenzy. Fewer than ten transnational media conglomerates dominate much of our media; fewer than two dozen account for the overwhelming majority of our newspapers, magazines, films, television, radio, and books. With every aspect of our media culture now fair game for commercial exploitation, we can look forward to the full-scale commercialization of sports, arts, and education, the disappearance of notions of public service from public discourse, and the degeneration of journalism, political coverage, and children's programming under commercial pressure.
For democrats, this concentration of media power and attendant commercialization of public discourse are a disaster. An informed, participating citizenry depends on media that play a public service function. As James Madison once put it, "A popular government without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy, or perhaps both." But these democratic functions lie beyond the reach of the current American media system. If we are serious about democracy, then, we need to work aggressively for reform.
What kind of reform? In broad terms, we need to reduce the current degree of media concentration, and, more immediately, blunt its effects on democracy. More specifically, we need special incentives for nonprofits, broadcast regulation, public broadcasting, and antitrust. I present these proposals as the start of a debate about media reform, not as ultimate solutions. I am sure that spirited discussion will improve these ideas: my immediate concern is to get that discussion started. I will not dwell here on the weaknesses of the current US media system, beyond summarizing arguments that I (and many others) have made elsewhere. The point here is to begin answering the natural follow-up to such criticisms: "If the status quo is so bad, what do you propose that would be better?"
Media and Democracy
The case for media reform is based on two propositions. First, media perform essential political, social, economic, and cultural functions in modern democracies. In such societies, media are the principal source of political information and access to public debate, and the key to an informed, participating, self-governing citizenry. Democracy requires a media system that provides people with a wide range of opinion and analysis and debate on important issues, reflects the diversity of citizens, and promotes public accountability of the powers-that-be and the powers-that-want-to-be. In short, the media in a democracy must foster deliberation and diversity, and ensure accountability.
Second, media organization-patterns of ownership, management, regulation, and subsidy-- i s a central determinant of media content. This proposition is familiar from discussions of media in China and the former Soviet Union. For those countries, the idea that the media could promote deliberation, diversity, and accountability, while being effectively owned and controlled by the Communist Party, was not even worth refuting. Similarly, we are not surprised to hear that when cronies of the Mexican government owned the country's only TV station, television news coverage was especially favorable to the ruling party.
In the United States, in contrast, analysis of the implications of private ownership and advertising support for media content has been limited. For much of the second half of the twentieth century, Americans have heard that we have no reason to be concerned about corporate ownership of media or dependence on commercial advertising because market competition forces commercial media to "give the people what they want," and journalistic professionalism protects the news from the biases of owners and advertisers as well as journalists themselves.
Such views now seem very dubious. Consider first the alleged benefits of competition. The main media markets-- film, TV, magazines, music, books, cable, newspapers-- are all oligopolies or semi-monopolies with severe barriers to new entrants. Moreover, media economics make it virtually impossible for a firm to be dominant in just one sector. Because of opportunities that come with having properties in different media markets, the largest media firms all have rushed to establish conglomerates over the past decade. Time Warner, for example, is one of the top five US or global leaders in film production, TV show production, cable TV channels, cable TV systems, movie theater ownership, book publishing, music, and magazine publishing. It also has amusement parks, retail stores, and professional sport teams. Disney, too, seems to have mastered the logic of conglomeration: its animated films Pocahantas and Hunchback of Notre Dame were only marginal successes at the box office, with roughly $100 million in gross US revenues, but both films will generate close to $500 million in profit for Disney, once it has exploited all other venues: TV shows on its ABC network and cable channels, amusement park rides, comic books, CD-ROMs, CDs, and merchandising (through 600 Disney retail stores). Firms without these options simply cannot compete in this market, which is why animation is the province of only the largest media giants. This example is extreme, but it sharply underscores the fundamental principle.
These observations about conglomeration, however, barely begin to explain just how noncompetitive the media market is-if we take "competitive" in the economics textbook sense. Firms in specific markets do directly compete, at times ferociously. But these firms are also each other's best customers, as when a film studio sells its product for presentation to a broadcast network's cable channel. Moreover, to reduce risk and competition, the largest media firms have turned to "equity joint ventures" in the 1990s. Under such arrangements, media giants share the ownership of a specific media project: Fox Sports Net is jointly owned by Rupert Murdoch's News Corporation and John Malone's TCI; the Comedy Central cable channel is co-owned by Time Warner and Viacom. Murdoch explains the logic behind joint ventures as only he can: "We can join forces now, or we can kill each other and then join forces." The nine largest American media firms have, on average, joint ventures with nearly six of the other eight giants. Murdoch's News Corp. has at least one joint venture with every single one of them.
In such noncompetitive markets, the claim that media firms "give the people what they want" is unconvincing. The firms have enough market power to dictate the content that is most profitable for them. And the easy route to profit comes from increasing commercialism-larger numbers of ads, greater say for advertisers over non-advertising content, programming that lends itself to merchandising, and all sorts of cross promotions with non-media firms. Consumers may not want such hyper-commercialism, but they have little say in the matter. So we have a 50 percent increase in the number of commercials on network TV in the past decade; the development of commercially-saturated kids' programming as arguably the fastest-growing and most profitable branch of the TV industry in the 1990s; becoming standard in motion pictures. The flip side of this commercialism is the decline of public service-of the notion that there is any purpose to our media except to make money for shareholders.
Under such conditions, journalistic norms can hardly be expected to stem the commercial tide. Contemporary commercial journalism is essentially a mix of crime stories, celebrity profiles, consumer news pitched at the upper middle class, and warmed over press releases. Bookstores are filled with dispirited reports by former editors and journalists bemoaning the brave new world of corporate journalism. Journalist unions are very important in this regard, by protecting journalistic norms from the commercial interests of the owners. But without other measures to weaken corporate media power, unions are not likely to be able to resist pressures from the current media system.
For democrats, then, media competition and journalistic norms do not suffice for deliberation, diversity, and accountability. If media are central to the formation of a participating and informed citizenry, and if media organization influences media performance, then issues about ownership, regulation, and subsidy need to be matters of public debate. But such debate has been almost non-existent in the United States. Even in broadcasting, where the publicly owned airwaves are licensed to private users, the public has never had any meaningful participation in the formation of policy.
Consider the Telecommunications Act of 1996. The law it replaced, the Communications Act of 1934, regulated telephony, radio, and television. The 1996 Act provides the basis for determining the course of radio, television, telephony, the Internet-indeed virtually all aspects of communication as we shift over to digital technologies. Its guiding premise is that the market should rule communication, with government assistance. The politics of the Act consisted largely of powerful corporate communication firms and lobbies fighting behind the scenes to get the most favorable wording. That the corporate sector would control all communication was a given; the only fight was over which sectors and which firms would get the best deals. The public was for the most part unaware of these debates. The drafting and struggles over the Telecommunications Act of 1996 were hardly discussed in the news media, except in the business and trade press, where the legislation was covered as a story of importance to investors and managers, not citizens, or even consumers.
The results of the Telecommunications Act, with its relaxation of ownership restrictions to promote competition across sectors, have been little short of disastrous. Rather then produce competition, a far-fetched notion in view of the concentrated nature of these markets, the law has paved the way for the greatest period of corporate concentration in US media and communication history. The seven Baby Bells are now four-if the SBC Communications purchase of Ameritech goes through-with more deals on the way. In radio, where ownership restrictions were relaxed the most, the entire industry has been in upheaval, with 4,000 of the 11,000 commercial stations being sold since 1996. In the 50 largest markets, three firms now control access to over half the radio audience. In 23 of those 50 markets, the three largest firms control 80 percent of the radio audience. The irony is that radio, which is relatively inexpensive and thus ideally suited to local independent control, has become perhaps the most concentrated and centralized medium in the United States.
No doubt the United States needed a new communications law. Digital technologies are undermining the traditional distinctions between media and communication sectors that formed the basis for earlier communication regulation. But the legislation we ended up with reflects the failed process that produced it.
False Starts
Because corporate control and the role of advertising are effectively off-limits to public discussion, reformers have faced limited options. Hence they have tended to press for mild reforms that do not threaten corporate and advertiser hegemony. And because these mild reforms generate little enthusiasm from the broad public, media activists have put little effort into organizing popular support for their efforts. The result is an "inside-the-beltway," low-political-stakes style of public interest lobbying. For example, in 1997 some media activists claimed victory when the Federal Communications Commission began requiring broadcasters to do three hours a week of educational programming for kids. The problem with this "victory" was that these educational programs would all remain commercially sponsored with ultimate control in the hands of business interests.
Other reformers have turned to "civic" or "public" journalism, a well- intentioned attempt to reduce the sensationalism and blatant political manipulation of mainstream journalism. Unfortunately, the movement completely ignores the structural factors of ownership and advertising that have led to the attack on journalism. Public journalism, not surprisingly, is averse to "ideological" approaches to the news, and therefore encourages a boringly "balanced" and soporific newsfare. Claiming to give readers news they think is important to their lives, advocates of public journalism may in fact be assisting in the process of converting journalism into the type of consumer news and information that delights the advertising community.
Still others have joined the media literacy movement. The idea here is to educate people to be skeptical and knowledgeable users of the media. Media literacy has considerable potential so long as it involves explaining how the media system actually works, and leads people to work for a better system. But a more conventional wing of the movement implicitly accepts that commercial media "give the people what they want." So the media literacy crowd's job is to train people to demand better fare. The resulting strategy may simply help to prop up the existing system. "Hey, don't blame us for the lousy stuff we provide," the corporate media giants will say. "We even bankrolled media literacy to train people to demand higher quality fare. The morons simply demanded more of what we are already doing."
While media literacy has an important role to play in media reform, civic journalism has been at best a mixed blessing. Some observers credit civic journalism, which is widespread in North Carolina, with helping in Jesse Helms's 1996 re-election. Why? Because civic journalism was ill-equipped to generate tough questions, or press politicians to answer them. So Helms got a cakewalk from the press, barely having to defend his record.
The evidence is clear: if we want a media system that produces fundamentally different results, we need solutions that address the causes of the problems; have to address issues of media ownership, management, regulation, and subsidy. Our goal should be to craft a media system that reduces the power of a handful of enormous corporations and advertisers to dominate the media culture. But no one will press for reform until we have some ideas worth debating. The ultimate trump card of the status quo is the claim that any change in our media system will invariably lead to darkness at noon. The purpose of the balance of this article is to establish that there are indeed several workable proposals for media reform that will expand, not contract, freedom and will energize our culture and democracy.
Media Reform Proposals
Building nonprofit and noncommercial media. The starting point for media reform is to build up a viable nonprofit, noncommercial media sector. Such a sector currently exists in the United States, and produces much of value, but it is woefully small and underfunded. It can be developed independent of changes in laws and regulations. For example, foundations and organized labor could and should contribute far more to the develop of nonprofit and noncommercial media. Labor, in particular, has to be willing to subsidize radio, television, Internet, and print media. Moreover, labor cannot seek to micromanage these media and have them serve as its PR agents. For independent media to flourish, they must have editorial integrity.
Sympathetic government policies could also help foster a nonprofit media sector, and media reform must work to this end. Government subsidies and policies have played a key role in establishing lucrative commercial media. Since the 19th century, for example, the United States has permitted publications to have quality, high speed mailing at relatively low rates. We could extend this principle to lower mailing costs for a wider range of nonprofit media, and/or for media that have little or no advertising. Likewise we could permit all sorts of tax deductions or write-offs for contributions to nonprofit media. Dean Baker of the Economic Policy Institute has developed a plan for permitting taxpayers to take up to $150 off their federal tax bill, if they donate the money to a nonprofit news medium. This would permit almost all Americans to contribute to nonprofit media-not just those with significant disposable incomes-and help create an alternative to the dominant Wall Street/Madison Avenue system.
Public Broadcasting. Establishing a strong nonprofit sector to complement the commercial giants is not enough. The costs of creating a more democratic media system simply are too high. Therefore, it is important to establish and maintain a noncommercial, nonprofit, public radio and television system. The system should include national networks, local stations, public access television, and independent community radio stations. Every community should also have a stratum of low-power television and micropower radio stations.
The United States has never experienced public broadcasting in the manner of Japan, Canada, and Western Europe. In contrast to the US, public broadcasting there has been well funded and commissioned to serve the entire population. In the United States, public broadcasting has always been underfunded, and effectively required to provide only programming that is not commercially viable. As a result, public broadcasters typically provide relatively unattractive programming to fringe audiences, hardly a strategy for institutional success. Moreover, Congress has been a watchdog to see that public broadcasting did not expand the range of ideological discourse beyond that provided by the commercial broadcasters. In sum, public broadcasting in the United States has been handcuffed since its inception. Still, it has developed a devoted following. This following has provided enough vocal political support to keep US public broadcasting from being effectively privatized, but most of this toothpaste is now out of the tube. Public radio and television are increasingly dependent upon corporate grants and "enhanced underwriting," a euphemism for advertising. The federal subsidy only accounts for some 15 percent of public broadcasting revenues. Indeed, public broadcasting, by the standard international definition, no longer exists in the United States. Instead, we have nonprofit commercial broadcasting, closely linked to the corporate sector, with the constant threat of right-wing political harassment if public stations step out of line.
We need a system of real public broadcasting, with no advertising, that accepts no grants from corporations or private bodies, and that serves the entire population, not merely those who are disaffected from the dominant commercial system and have to contribute during pledge drives. Two hurdles stand in the way of such a system. The first is organizational: How can public broadcasting be structured to make the system accountable and prevent a bureaucracy impervious to popular tastes and wishes, but to give the public broadcasters enough institutional strength to prevent implicit and explicit attempts at censorship by political authorities? The second is fiscal: Where will the funds come from to pay for a viable public broadcasting service? At present, the federal government provides $260 million annually. The public system I envision-which would put per capita US spending in a league with, for example, Britain and Japan-may well cost $5-10 billion annually.
There is no one way to resolve the organizational problem, and perhaps an ideal solution can never be found. But there are better ways, as any comparative survey indicates. One key element in preventing bureaucratic ossification or government meddling will be to establish a pluralistic system, with national networks, local stations, community and public access stations, all controlled independently. In some cases direct election of officers by the public and also by public broadcasting employees may be appropriate, whereas in other cases appointment by elected political bodies may be preferable. As for funding, I have no qualms about drawing the funds for fully public radio and television from general revenues. There is an almost absurd obsession with generating funds for public broadcasting from everywhere but the general budget, on the bogus premise that public broadcasting cannot be justified as a public expense. In view of radio and television's importance in our lives, it clearly deserves a smidgen of the money we use to build entirely unnecessary weapons systems. We subsidize education, but the government now subsidizes media only on behalf of owners. We should seek to have a stable source of funding, one that cannot be subject to manipulation by politicians with little direct interest in the integrity of the system.
A powerful public radio and television system could have a profound effect on our entire media culture. It could lead the way in providing the type of public service journalism that commercialism is now killing off. This might in turn give commercial journalists the impetus they need to pursue the hard stories they now avoid. It could have a similar effect upon our entertainment culture. A viable public TV system could support a legion of small independent filmmakers. It could do wonders for reducing the reliance of our political campaigns upon expensive commercial advertising. It is essential to ensuring the diversity and deliberation that lie at the heart of a democratic public sphere.
Regulation. A third main plank is to increase regulation of commercial broadcasting in the public interest. Media reformers have long been active in this arena, if only because the public ownership of the airwaves gives the public, through the FCC, a clear legal right to negotiate terms with the chosen few who get broadcast licenses. Still, even this form of media activism has been negligible, and broadcast regulation has been largely toothless, with the desires of powerful corporations and advertisers rarely challenged.
Experience in the United States and abroad indicates that if commercial broadcasters are not held to high public service standards, they will generate the easiest profits by resorting to the crassest commercialism, and will overwhelm the balance of the media culture. Moreover, standard-setting will not work if commercial broadcasters are permitted to "buy" their way out of public service obligations; the record shows that they will eventually find a way to reduce or eliminate these payments. Hence the most successful mixed system of commercial and public broadcasting in the world was found in Britain from the 1950s to the 1980s. It was successful because the commercial broadcasters were held to public service standards comparable to those employed by the BBC; some scholars even argue that the commercial system sometimes outperformed the BBC as a public service broadcaster. The British scheme worked because commercial broadcasters were threatened with loss of their licenses if they did not meet public service standards. (Regrettably, Thatcherism, with its mantra that the market can do no wrong, has undermined the integrity of the British broadcasting system.)
In three particular areas, broadcast regulation can be of great importance. First, advertising should be strictly regulated or even removed from all children's programming (as in Sweden). We must stop the commercial carpetbombing of our children. Commercial broadcasters should be required to provide several hours per week of ad-free kids' programming, to be produced by artists and educators, not Madison Avenue hotshots.
Second, television news should be taken away from the corporate chiefs and the advertisers and turned over to journalists. Exactly how to organize independent ad-free children's and news programming on commercial television so that it is under the control of educators, artists, and journalists will require study and debate. But we should be able to set up something that is effective.
As for funding this public service programming, I subscribe to the principle that it should be subsidized by the beneficiaries of commercialized communication. This principle might be applied in several ways. We could charge commercial broadcasters rent on the electromagnetic spectrum they use to broadcast. Or we could charge them a tax whenever they sell the stations for a profit. In combination these mechanisms could generate well over a billion dollars annually. Or we could tax advertising. Some $200 billion will be spent to advertise in the United States in 1998, $120 billion of which will be in the media. A very small sales tax on this or even only on that portion that goes to radio and television could generate several billion dollars. It might also have the salutary effect of slowing down the commercial onslaught on American social life. And it does not seem like too much to ask of advertisers who are permitted otherwise to marinate most of the publicly owned spectrum in commercialism.
Third, political candidates should receive considerable free airtime on television during electoral campaigns. In addition, paid TV advertising by candidates should either be strictly regulated or banned outright, as the exorbitant cost of these ads (not to mention their lame content) has virtually destroyed the integrity of electoral democracy here. If they cannot be banned, or even reduced by regulation, then perhaps a provision should be made that if a candidate purchases a TV ad, his or her opponents will all be entitled to free ads of the same length on the same station immediately following the paid ad. This would prevent rich candidates from buying elections. I suspect it would pretty much eliminate the practice altogether.
Even in these pro-market times, the corporate media have been unable to rid the public of its notion that commercial broadcasters should be required to serve the public as well as shareholders and advertisers. Hence, when commercial broadcasters were able to force the FCC in 1997 to give them (at no cost) massive amounts of new spectrum so they could begin digital TV broadcasting, the Clinton administration established the Gore Commission to recommend public service requirements to be met by broadcasters in return for this gift. Following the contours of US media politics, the Gore Commission has been little short of a farce, with several industry members stonewalling all but the lamest proposals. But we can hope that the Gore Commission will generate some more serious public service proposals, and provide the basis for a public education campaign and subsequent legislation to give them the force of law.
Antitrust.. The fourth strategy for creating a more democratic media system is to break up the largest firms and establish more competitive markets, thus shifting some control from corporate suppliers to citizen consumers. By all accounts, the current antitrust statutes are not satisfactory, and if antitrust is ever to be applied to media it will require a new statute, similar in tone to the seminal Clayton and Sherman Acts, that lays out the general values to be enforced by the Justice Department and the Federal Trade Commission. The objective should be to break up such media conglomerates as Time Warner, News Corporation, and Disney, so that their book publishing, magazine publishing, TV show production, movie production, TV stations, TV networks, amusement parks, retail store chains, cable TV channels, cable TV systems, etc. all become independent firms. With reduced barriers-to-entry in these specific markets, new firms could enter.
The media giants claim that their market power and conglomeration make them more efficient and therefore able to provide a better product at lower prices to the consumer. There is not much evidence for these claims, though it is clear that market power and conglomeration make these firms vastly more profitable. Moreover, even if one accepts that antitrust would lead to a less efficient economic model, perhaps we should pay that price to establish a more open and competitive marketplace. In view of media's importance for democratic politics and culture, they should not be judged by purely commercial criteria.
Antitrust is the wild card in the media reform platform. It has tremendous appeal across the population and is usually the first idea citizens suggest when they are confronted with the current media scene. But it is unclear whether antitrust legislation could be effectively implemented. And even if it does prove effective, the system would remain commercial, albeit more competitive. It would not, in other words, reduce the need for the first three proposals.
Not to Worry?
The fundamental flaws in our corporate-dominated, commercial media system are widely appreciated. Unfortunately, there is also a rush to assert that the Internet should silence our fears. Because the Internet is open to all at relatively low prices, the hegemony of media giants and advertisers will soon end, to be replaced by a wide-open, decentralized, diverse, fast-changing, and competitive media culture. Best of all, this result is implicit in the Internet's digital network technology, and will not require government regulation. Indeed, the mainstream consensus-strongly endorsed by the Clinton administration's Internet policy-is that government regulation alone could prevent the Internet from working its magic.
Though the Internet and digital communication in general are certainly creating a radical change in our media and communication systems, the results may not be a more competitive market or more democratic media. Indeed, the evidence to date suggests that as the Internet becomes a commercial medium, the largest media firms are most likely to succeed. The media giants can plug digital programming from their other ventures into the Web at little extra cost. To generate an audience, they can promote their Web sites incessantly on their traditional media holdings. The leading media "brands" have been the first to charge subscription fees for their Web offerings; indeed, they may be the only firms for which this is even an alternative. The media giants can (and do) arrange to have their advertisers agree to advertise on their Web sites. The media giants can also use their market power and brand names to get premier position in Web browser software. The new Microsoft Internet Explorer 4.0 offers 250 highlighted channels, and the "plum positions" belong to Disney and Time Warner. Netscape and Pointcast are making similar arrangements. Moreover, approximately half the venture capital for Internet content start-up companies comes from established media firms; they want to be able to capitalize on profitable new applications as they emerge. In addition, the evidence suggests that in the commercialized Web, advertisers will have increased leverage over content because of the number of choices before them.
When these market considerations are taken together, it is difficult to imagine the growth of a competitive digital media marketplace in which small suppliers overwhelm corporate giants. Digital communication will cause considerable dislocation, but not a revolution. And in the end, the content of the digital communication world will appear quite similar to the content of the pre-digital world.
Ironically, the most striking feature of digital communication may well be not that it opened up competition in communication markets, but that it has promoted consolidation by undermining traditional distinctions between radio, television, telecommunication, and computer software. In the 1990s, almost all the media giants have entered into joint ventures or strategic alliances with the largest telecom and software firms. Time Warner is connected to several of the US regional (Bell) telephone giants, as well as to AT&T and Oracle. It has a major joint venture with US West. Disney, likewise, is connected to several major US telecommunication companies, as well as to America Online. News Corp. is partially owned by WorldCom (MCI) and has a joint venture with British Telecom. Microsoft, as one analyst noted, seems to be in bed with everyone. In due course the global media cartel may become something of a global communication cartel.
So how does the rise of the Internet alter my proposals for structural media reform? Very little. There are, of course, some specific policy reforms we should seek for the Internet: for example, guaranteeing universal public access at low rates, perhaps for free, and assuring links for nonprofit Web sites on the dominant browsers and commercial sites. But in general terms, we might do better to regard the Internet as the corporate media giants regard it: as part of the emerging media landscape, not its entirety. So when we create more and smaller media firms, when we create public and community radio and television networks and stations, when we create a strong public service component to commercial news and children's programming, when we use government policies to spawn a nonprofit media sector, all these efforts will have a tremendous effect on the Internet's development as a mass medium. Why? Because Web sites will not be worth much if they do not have the resources to provide a quality product. And all the new media that result from media reform will have Web sites as a mandatory aspect of their operations, much like the commercial media. By creating a vibrant and more democratic "traditional" media culture, we will go a long way toward doing the same with the Web.
Conclusion
Imagine a world in which scores, even hundreds, of media firms operate in markets competitive enough to permit new entrants. Imagine a world with large numbers of public, community, and public access radio and television stations and networks, with enough funding to produce high quality products. Imagine a world where the public airwaves provide compelling journalism, children's programming, and political candidate information, with control vested in people dedicated to public service. Imagine a world where creative government fiscal policies enable small nonprofit and noncommercial media to sprout and prosper, providing some semblance of a democratic public sphere.
Though imaginable, this world seems wholly implausible-and not only because of the political muscle of the corporate media and communications lobbies. Over the past generation, "free market" neoliberals have understood the importance of media as an instrument of social control far better than anyone else. The leading conservative foundations have devoted considerable resources to reducing journalistic autonomy and ideological diversity and pushing media in a more explicitly pro-business direction. The pro-market political right understood that if big business dominated the main fora for political education and debate, then public scrutiny of business would be markedly reduced. These same "free market" foundations fight any public interest component to media laws and regulations, oppose any form of noncommercial and nonprofit media, and lead the battle to ensure that public broadcasting stays within narrow ideological boundaries. In short, we had a major political battle over media for the past generation, but only one side showed up. The results are clear, and appalling.
But now there are signs that the battle for the control of our media is about to be joined. Organizations such as Fairness & Accuracy in Reporting (FAIR), the media watch group, have boomed in the 1990s, and local media watch/media activism groups have blossomed in Denver, New York, Chicago, Los Angeles, Seattle and elsewhere since 1995. In 1998 the Rainbow/PUSH coalition made media reform one of its two major organizing drives, holding regional conferences on the subject across the nation. Members of the Congressional Black Caucus and the Congressional Progressive Caucus have agreed to draft and sponsor legislation in each of the areas mentioned earlier. Organized labor, especially media unions, have shown increased interest in and support for the issue. All of this would have been unthinkable only five years ago. It follows the trend around the world in the late 1990s, where media reform has become an indispensable part of democratic political movements. But we still have a long way to go. Large sectors of the population that are disadvantaged by the media status quo and who should be among media reform's strongest advocates-educators, librarians, parents, journalists, small businesses, laborers, artists, kids, political dissidents, progressive religious people, minorities, feminists, environmentalists-are scarcely aware that the issue even exists to be debated. The corporate media lobby is so strong that victory seems farfetched in the current environment, especially when the corporate news media show little interest in publicizing the issue.
Winning major media reform, then, will require the sort of political strength that comes with a broader social movement to democratize our society. We need to see that media reform is a staple of all progressive politics, not just a special interest cause. And media reform may have broad political appeal. Some "cultural conservatives" may be open to calls to reduce the hyper-commercialism of our media culture. And strongly pro-market democrats may recognize that media is an area where the crude application of market principles has produced disastrous "externalities." In sum, the train of media reform is leaving the station. If we value democracy we have no choice but to climb aboard.
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