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Random Thoughts
California,
Dying Canary in The Coal Mine
by
Gaurang Bhatt, MD
 During the early phases of the industrial revolution in Britain, when
there were no protection rights for coal miners, technology was poor and
digging coal hazardous, the miners hung a birdcage with a singing bird
like a canary in their underground work area. A build up of noxious
gases like carbon monoxide, carbon dioxide or methane would deprive the
canary of oxygen. It would stop singing and die providing the miners
with an early warning system like our satellites or NORAD.
California with a 1.8 trillion dollar economy (eighth largest in the
world) makes up twelve percent of the US GDP and nearly 10% of its
population. It has 12% unemployment, a 24 billion dollar budget deficit
for the fiscal year starting this July, a bickering highly partisan but
almost balanced (Democrats and Republicans) legislature with term
limits, gerrymandered voting districts (a la Tom Delay) and a
requirement for a two-thirds majority for passing tax hikes and annual
budgets. In other words it is a microcosm of Washington DC with its
corrupt Congress and inept president without the power to print
unlimited money and barred from declaring bankruptcy.
It has a constitutional privilege of holding voter referenda on issues
and thus passes laws by popular demand without matching votes for
funding the programs. Like all states and nations it has an uninformed,
unintelligent and apathetic majority electorate, too exhausted from
making a basic living and time constrained to understand issues. The
media as in all the world, are lazy, timid and not smart enough to
enlighten the public because of being beholden to, intimidated or bribed
by their corporate owners. This is why manipulating crooks or idiots
like Bush and Cheney can get away with fooling the public by saying that
deficits don�t matter.
For democracy to be an effective good government you need a vigilant
free press and an informed, educated and participating electorate.
Otherwise the elected officials will enrich themselves, secure their
reelection and pass laws to benefit their financiers, impoverish the
powerless majority and bankrupt the nation. Truman did that by scaring
the American public by falsifying the power and intentions of the
Soviets with support and instigation by a bunch of seriously paranoid
officials ranging from his cabinet to diplomats and political pundits.
Eisenhower despite his farewell warnings about the military industrial
complex, promoted wasteful military spending and pursued self-defeating
policies for the long run in Iran, Guatemala and elsewhere.
Kennedy was a great talker like Obama, but without substance. He mired
us in Vietnam. Johnson�s lies and fiscally irresponsible guns and butter
policy without raising taxes, forced the lying and crooked Nixon to shut
the gold window, devalue the dollar and escalate the war in Southeast
Asia. Bumbling Ford who bought the presidency by a probable quid pro quo
for promising to pardon Nixon was followed shortly by a control freak
Carter who birthed our Nemesis, the Mujahedin by being guided by the
severely psychologically traumatized in childhood, Brzezinski.
A smooth talking Reagan probably having early Alzheimer�s and thus
capable of communicating at the intelligence level of the American
public and assured of the backing of moneyed interests by his reverse
Robin Hood financial policies, set the nation on the course of
irresponsible fiscal bankruptcy. Bush Sr., Clinton and Bush Jr.
completed the de-industrialization of America. The only truth that Bush
Jr. spoke and accomplished was spreading democracy to the Middle East.
To him goes the credit of teaching the Iranian Mullahs how to
successfully rig elections, as he did in 2000 and 2004. He did spread
his brand of a rigged election democracy to Iran.
The US has an old history of democracy falling prey to populist
sentiments. Early after its birth there was the Shay rebellion in
Massachusetts where farmers agitated to have their debts squashed.
Shortly thereafter was the Whiskey Rebellion in western Pennsylvania
when farmers agitated against an increased tax on whiskey, easier to
transport east, compared to the more bulky barley. Both these rebellions
were squashed by military force by Washington. A similar uprising may
occur by the common citizens suffering home foreclosures but has been
squashed by the US Senate serving as prostitutes for the banks.
Professor Elizabeth Warren gave a TV interview about her book �Two
Income Trap� some years ago and mentioned how Hillary, who as first lady
had been supportive of the rights of credit card holders, turned around
180 degrees as a New York Senator, to pass the new bankruptcy bill,
which required some mandatory repayment of debts even after bankruptcy,
probably because her campaign received sizable contributions from the
big money center New York banks.
California with its population like that of the nation, wanting more and
more government benefits without the will or intention to pay for them,
and at the mercy of corrupt, selfish legislators only interested in
their tenure, is a harbinger of the fate of the nation. Police, firemen,
teachers, nurses will be laid off, services like recreation parks,
healthcare and education will be severely downsized and the economy will
worsen by falling jobs, falling incomes, falling tax receipts, falling
home prices. The end result will be the Wal-mart down spiral. That would
be the opposite of Henry Ford�s statement that he wanted to pay his
workers high enough wages so that they could buy the cars they made.
The transfer of manufacturing to China and services to India, mainly to
increase corporate profits and share prices, to enrich the managers by
cashing in on an obscene number of options often illegally backdated,
and the shifting of the headquarters of US corporations to a Bermuda or
Cayman Island post box to escape US income taxes with the blessings of
the idiotic Congress and President under the false banner of free trade,
is not consistent with David Ricardo�s analysis of the advantage of free
trade, because its assumptions of restriction of capital movements,
pre-requisite of full employment in the trading nations are not met.
Thus lower wages and lax environmental laws with their tilted playing
field makes it pure mercantilism. In the case of America and China there
is not even justification to give it a Friedreich List twist of an
industrialized nation fooling an agricultural nation and keeping it at
the lower rung of the ladder (See books by Ha Joon Chang). The US
Congress, to enrich the corporate executives on whose money they are
dependent for election, are willingly selling out the nation by keeping
it stuck at the base of the ladder and allowing other nations, some of
whom are unfriendly rivals, to step on our heads to ascend the ladder as
they kick the US down.
In every nation, close to half the population has limited skills and
education and need service jobs which must be performed locally within
the nation. By outsourcing for toys, textiles, televisions etc., such
people have a bleak future. Cheaper wages and well educated Chinese,
Indian and East European workers are threatening the earnings and jobs
of accountants, lawyers, doctors, programmers, reporters and financial
analysts. Is the US going to become a nation of hamburger flippers and
derivative traders? De-leveraging by the debt ridden consumer is
jeopardizing the jobs of sales clerks in department stores and servers
in restaurants.
The public is fooled by the constant barrage of dishonest newsmaker
pundits hallucinating about green shoots. This is to enrich the big
banks whose major profits come from proprietary trading. They announce
upgrades and downgrades on stocks, while regulatory agencies like the
SEC turn a blind eye to the front loading positions taken by the firms
prior to the rating changes. Those firms who rate stocks should be
forbidden from proprietary trading. Collusion between such groups is one
of the causes of the mortgage securities debacle. Geithner, Summers and
their ilk, whose both hands are stuck in the cookie jar, are hardly the
regulators that would watch out for the public interest and welfare.
They are as impartial regulators, as the US is an impartial peace broker
and referee in the Israeli Palestinian dispute.
The only workable solution to the US economic crisis is for the US to
run decades of trade and possibly even budget surpluses. That would
require a large dollar devaluation, reduced consumption, increased
savings and the willingness of our trade partners to markedly increase
consumption. China is unlikely to do so because it is not an ally and it
needs to run huge trade surpluses by exporting, to provide employment
for its teeming masses, to avoid political unrest and assure the
illegitimate rule of its kleptocratic pseudo-communist oligarchy. Even
our friends like Taiwan, Singapore, Japan, South Korea and even Germany
are dependent on exports and unlikely to be willing to run huge trade
deficits with us. Lastly, what the hell do we make that the rest of the
developed world really wants? I don�t hear the canary singing, maybe
only the cannibal cockroach politicians will be the sole survivors as
they thrive in smoke filled rooms without oxygen, honesty or decency.
June 28,
2009
Image under license with
Gettyimages.com
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