To Galt’s Gulch They Go

MammonThomas Frank writes in the latest Baffler:

There was a time when Atlas would frown and the world of nations would tremble. He was as mighty as Zeus and as petulant as a teenager. His wrath was irresistible, and he was easily provoked. Badmouth him and he might just drop his burden and walk away. Elect someone he didn’t approve of and he’d put a lightning bolt up your ass.

Chile learned the hard way about minding the feelings of the business-class god. In 1970 that country selected as president one Salvador Allende, a socialist of the old school who quickly set about nationalizing banks, telecom concerns, and so on. American companies naturally feared these developments and laid plans to push the country down a different path. They would withdraw investments, executives mused; they would halt purchases of Chilean goods; and they would persuade others to do the same. President Richard Nixon, who was clearly thinking along the same lines, told his CIA director to “make the economy scream.”

And scream it did. Still, these were the early days of collective capitalist action, and there was a certain brutality and clumsiness to the proceedings. Not every American firm doing business in Chile went along with the program—the high-minded banks, for example, squealed about their policy of “non-involvement in the political affairs of the countries where they do business.” And in the end, Atlas’s goals for the Southern Cone were achieved only by means of an ugly military coup.

In later years, Atlas would grow more subtle in expressing himself, more refined. When François Mitterrand was elected president of France in 1981—another socialist pursuing an array of nationalizations and expanded rights for labor—there was no need for a junta of generals to intervene. Mitterrand pumped the depressed French economy full of Keynesian stimulus, but his nationalizations were too much to take: the private sector simply refused to play along. The New York Times spoke of an “investment strike,” rich Frenchmen moved abroad, and Mitterrand himself moaned about a guerre sociale conducted by the bosses. This socialist was no Salvador Allende: he came into office at the head of a good-sized majority, he presided over one of the largest economies in the world, and he was fully committed to the American-led security program of the era. But none of that mattered to peevish Atlas.

It took only two years for Mitterrand to capitulate. In 1983 he embarked on his famous economic U-turn, one of the most depressing episodes in the entire gloomy history of the neoliberal conquest. Economic orthodoxy returned to France in triumph. Entrepreneurs were celebrated. Labor unions went into a decline from which they have never recovered.

A similar episode took place in those days in Jamaica, where the socialist prime minister, Michael Manley, pleaded with the business community to invest, but without result: their mistrust was simply too great. Another unfolded in Canada, where large national corporations, according to one witness, threatened to pick up their marbles and go home unless Pierre Trudeau’s government abandoned plans to close certain tax loopholes.

And finally America itself got a taste of Atlas’s power. The immortal remark Bill Clinton addressed to his economic advisers shortly after being elected president in 1992—“You mean to tell me that the success of the program and my reelection hinges on the Federal Reserve and a bunch of fucking bond traders?”—will stand forever as testimony to the power of the visible hand. Seven years later, the administration had been converted to the cause so utterly that it now rationalized the things Atlas did to states that dared to regulate: “In a global economy where capital can be invested anywhere,” quoth vice president Al Gore in 1999, “red tape is like an economic noose that says: if you send your investments here, we’re going to strangle them with bureaucracy, inefficiency, and forms, fees, and requirements you can barely even understand.” Even for Americans, certain conventional acts of public administration were now beyond the horizon of the permissible. By 1999, not even a red-baiter like Richard Nixon would have been able to escape the wrath of the business god, thanks to his worshipful hours at the altar of Keynesianism. Just let the infidel try his wage and price controls in the decade of “globalization,” and it’d be his economy that would scream.

Read more here.

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  • alizardx

    “no one is making the economy scream over here.”

    Perhaps it’s because the US resident portion of the billionaire class is too busy partying like it’s 1789 to care? Lots of people screaming, but the media owned by those people aren’t paid to notice, and the creative class aka hipsters is collectively / effectively on the payrolls of the superwealthy whether they realize it or not. In the bubbles like SF and Silicon Valley where the poor can’t afford to live, everyone they see around them is making money like them.

    The article is a good analysis right up to the present. The author mistakes what the business page and its TV and online equivalents say for what’s going on around him.

    Of course the billionaire class isn’t really going Galt. The evidence that they won is all around us. In the position they are in, why would they want to rock the boat? Their whines that “We, the rich are under threat” are echoed by the institutes and academics they own, and republished as fact by the mass media they own. The public information space is turned into a public disinformation space under the control of the people who funded the recommendations of the 1971 Powell Memo. They bought control of the mainstream political dialogue decades ago.

    The updated version is funded by people like Koch and Theil. Buy control of the fringe movements like Libertarianism and Futurism and there’s no place for people to get ideas about any possible alternatives to neoliberal centrism. So the discussion isn’t about whether government’s sole purpose should be to facilitate upward transfer of wealth, it’s about different ways to implement this so the “benefits of trickle-down” can be received by all. The voices that warn we’re being pissed on, not rained on get marginalized.

    The real “sequester” isn’t Federal budget, it’s within the bank accounts of the billionaire class who have collectively decided they don’t want to pay to maintain the society that makes it possible for them to accumulate wealth and pass it along to the next generation. Science funding and upkeep of bridges and other public infrastructure are less important than what’s in their bank accounts and invested in “dark pools”.

    The planet as a whole is in a slow motion economic train wreck. The indexes that determine the movements of trillions of dollars every day (LIBOR, FX rates) are gamed for the benefit of financial institutions, how many CEOs are going to jail? Global warming is just one driver of ecological collapse. How are the bees doing?

    An empire declines and falls when the wealthy collectively realize that governments can be used as a wealth extraction tool and use this to ensure their world is run exclusively for their short-term benefit. In ancient times, their soothsayers and priests told them “It’s different this time, you can shit in everyone’s nest including your own and get wealthier and not die”. Now, these yes men have PhDs.

    The global transnational elite are a single point of failure for the world. And they’re dealing with the rumblings under them of potential serious trouble by demonizing the messengers of bad news and creating a climate of fear with dissent suppression technology like PRISM, instead of finding the real problems and using the money they’ve extracted from us to fix them. Whistleblowers are called spies and traitors. Is there an affirmative civic, patriotic duty to follow wealthy lemmings into the ocean?

    We all live in the billionaire Galt Gulch whether we like it or not. And it’s run exactly as one would expect. Billionaires on top, dumping raw sewage and their thrown-out junk. The valley is filling up. When everyone else has drowned, they’ll be wondering how to exchange their wealth for food. For how this plays out, read “Collapse”.

  • BuzzCoastin

    World Bank Insider Blows Whistle on Corruption, Federal Reserve
    http://x2t.com/Federal-Reserve
    is
    a very good description of how the whirled’s bankster cartel works right now
    nothing new
    but a substantiation of most bankster conspiracy theories

    • alizardx

      For those who prefer “mainstream” sources, simply go to Rolling Stone and read Matt Taibbi.

      • BuzzCoastin

        I think Matt did a great job that went nowhere
        but this info source is about as mainstream as you can get
        an insider lawyer with 20 years on the job at the World Bank
        the fact that it shows up in marginalized “news” sources
        indicates how really inside it is

    • rhetorics_killer

      “a substantiation of most bankster conspiracy theories”

      The very fact they gather everyday inside closed rooms where they plan actions and choose paths, considering the amount of money they handle, turns bankers into de facto conspirators. They can deal with a lot of things like triggering major crisis and solve them (up to a point), wreck nation-wide economies like in Greece and Spain recently, fill positions into governments’ inner-circles. Banking is in itself conspiracy.

      • BuzzCoastin

        it’s a good point
        and I’d like to take it a little further
        the banking system itself is main culprit
        and the banksters are its pawns
        it’s pretty much luck of the draw who ends up at the top
        usually not the brightest bulb in the pack either

        the banking system is an elaborate slight of hand
        which gets to set it’s own absurd rules
        while risking nothing
        truly the emperor is naked
        and hardly anybody sees it

      • Ittabena

        Agreed, fractional reserve banking is legalized theft. And everybody gets a share in being a victim.

    • Ittabena

      Nice article (well, you know), have to finish it after work though.

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