The history of the neocon takeover of the USA – a 4 part analysis; Vineyard of the Saker

Americans should know by now that their country’s wars are fertile ground for biased, one-sided, xenophobic, fake news and the United States has been in a permanent state of war since 1941.

Sadly true.


239 Years Ago, Adam Smith Predicted Fury of Seattle Business at CEO Who Pays Workers Well

For the quotes, mostly, click here to read the whole thing and get the links to the Adam Smith volumes:
239 Years Ago, Adam Smith Predicted Fury of Seattle Business at CEO Who Pays Workers Well.

But here are the quotes:

But if Smith were alive today he’d be considered a crazy radical. In addition to his claim about employers, here are some other things he wrote in The Wealth of Nations:

• “All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” Book III, Chapter III

• “Men of inferior wealth combine to defend those of superior wealth in the possession of their property, in order that men of superior wealth may combine to defend them in the possession of theirs. … Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.” Book V, Chapter I

• “High profits tend much more to raise the price of work than high wages. … Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.” Book I, Chapter IX

• “The proposal of any new law or regulation of commerce which comes from [business], ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public …” Book I, Chapter XI

• “The rate of profit … is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin.” Book I, Chapter XI

• “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Book I, Chapter X

I’m not sure how exactly the U.S. right came to love Adam Smith so much. I guess they just never read him.


Austrian Religion, like most religions, never dies..

Due to a recent invasion of my IRC channel on Freenode — ##political_reality — of amateur devotees of, I feel compelled to bring them up to date on some of the policy recommendations of one of their favorite heroes, Friedrich Hayek, from Robert Solow:

One Tea Party activist reported that his group’s goal is to fill Congress with Hayekians. This project is unlikely to go smoothly if the price of admission includes an extensive reading of Hayek’s writings. As Davidson remarks, some of Hayek’s ideas would not go down well at all with the American far right: among them is a willingness to entertain a national health care program, and even a state-provided basic income for the poor.

The source of confusion here is that there was a Good Hayek and a Bad Hayek. The Good Hayek was a serious scholar who was particularly interested in the role of knowledge in the economy (and in the rest of society). Since knowledge—about technological possibilities, about citizens’ preferences, about the interconnections of these, about still more—is inevitably and thoroughly decentralized, the centralization of decisions is bound to generate errors and then fail to correct them. The consequences for society can be calamitous, as the history of central planning confirms. That is where markets come in. All economists know that a system of competitive markets is a remarkably efficient way to aggregate all that knowledge while preserving decentralization.

But the Good Hayek also knew that unrestricted laissez-faire is unworkable. It has serious defects: successful actors reach for monopoly power, and some of them succeed in grasping it; better-informed actors can exploit the relatively ignorant, creating an inefficiency in the process; the resulting distribution of income may be grossly unequal and widely perceived as intolerably unfair; industrial market economies have been vulnerable to excessively long episodes of unemployment and underutilized capacity, not accidentally but intrinsically; environmental damage is encouraged as a way of reducing private costs—the list is long.

and later…

THE GOOD HAYEK was not happy with the reception of The Road to Serfdom. He had not meant to provide a manifesto for the far right. Careless readers ignored his rejection of unqualified laissez-faire, and the fact that he reserved a useful, limited economic role for government. He had not actually claimed that the descent into serfdom was inevitable. There is no reason to doubt Hayek’s sincerity in this (although the Bad Hayek occasionally made other appearances).

Furthermore, Hayek actually foresaw the result of the misuse of his work and sensibly Hayek rejected the idea of dispensing with central banking.

Hayek argued that commercial banks in a competitive system produce “the same effect” as an overissuing central bank because, faced with an increase in the demand for loans, the banks characteristically expand the quantity of loans (by increasing their liabilities relative to their reserves) (147). They do not simply ration an unchanging volume of loans (by raising their loan rate of interest); by expanding, they hold the market rate of interest below the increased natural rate of interest…

One argument I had recently involved the rate of interest. With the Fed now paying little to no interest on bonds, the argument went that this held interest rates “artificially low.” In the first place, the government choosing *not* to inject money in the form of dividends into the market would seem to be in line with what these guys say they want–and in the second place, whatever interest rate results when such support is withdrawn has to be the private market’s “natural rate”, obviously. Which, much to Austrian chagrin, appears to be zero or below. The only direction it can go is up, unless the markets want to pay for the government to protect their cash. Which they actually do on occasion.

Hayek set forth his thesis on the discoordinating character of competitive banking as follows:

If in the course of our investigation, it is possible to prove that the rate of interest charged by the banks to their borrowers is not promptly adjusted to all changes in the economic data (as it would be if the volume of money in circulation were constant)—either because the supply of bank credits is, within certain limits, fundamentally independent of changes in the supply of savings, or because the banks have no particular interest in keeping the supply of bank credit in equilibrium with the supply of savings (there goes “loanable funds”–zap) and because it is, in any case, impossible to do so—then we shall have proved that, under the existing credit organization, monetary fluctuations must inevitably occur and must represent an immanent feature of our economic system.

Hayek’s thought on this is illustrated now by Steve Keen’s modeling of banking behavior, much of which doesn’t include governments.

Oddly, readers of the above-mentioned never seem to have ever heard of these facts. Like many religions, they don’t actually *read* the works of their gods.


Taking Care of Business

Taking Care of Business
Citizenship and the Charter of Incorporation
by Richard L. Grossman and Frank T. Adams

For a short time after the Revolution, the nation kept corporations on a very tight leash, but over time Supreme court ruling ate away at the protections, granting corporations rights that exceeded that of the average citizen, and doing nothing to rein in their power and greed:

Contests over charters and the chartering process were not abstractions. They were battles to control labor, resources, community rights, and political sovereignty…

A New Jersey newspaper wrote in an editorial typical of the 1830s: “the Legislature ought cautiously to refrain from increasing the irresponsible power of any existing corporations, or from chartering new ones,” else people would become “mere hewers of wood and drawers of water to jobbers, banks and stockbrokers.”

With these and other prophetic warnings still ringing in their ears, citizens began to feel control over their futures slipping out of their communities and out of their hands. Corporations were abusing their charters to become conglomerates and trusts. They were converting the nation’s treasures into private fortunes, creating factory systems and company towns. Political power began flowing to absentee owners intent upon dominating people and nature.

As the nation moved closer to civil war, farmers were forced to become wage earners. Increasingly separated from their neighbors, farms and families, they became fearful of unemployment — a new fear which corporations quickly learned to exploit.

In factory towns, corporations set wages, hours, production processes and machine speeds. They kept blacklists of labor organizers and workers who spoke up for their rights. Corporate officials forced employees to accept humiliating conditions, while the corporations agreed to nothing.


Recognizing that workers were building a social movement, industrialists and bankers pressed on, hiring private armies to keep workers in line. They bought newspapers and painted politicians as villains and businessmen as heroes. Bribing state legislators, they then announced legislators were corrupt, that they used too much of the public’s resources and time to scrutinize every charter application and corporate operation.

Sound familiar?

Corporate advocates campaigned to replace existing chartering laws with general incorporation laws that set up simple administrative procedures, claiming this would be more efficient. What they really wanted was the end of legislative authority over charters.

Cynically adopting the language of early charter opponents, corporate owners and their lawyers attacked existing legislative charters as special privileges. They called for equal opportunity for all entrepreneurs, making it seem as if they were asking that everyone have the same chance to compete.

This is especially poignant to me, because I heard them using similarly Orwellian arguments in the 70’s against unions and for NAFTA…

But these corporations were not just ordinary individual entrepreneurs. They were large accumulations of capital, and getting larger. By 1860, thousands of corporations had been chartered — mostly factories, mines, railroads and banks.

Government spending during the Civil War brought these corporations fantastic wealth. Corporate managers developed the techniques and the ability to organize production on an ever grander scale. Many corporations used their wealth to take advantage of war and Reconstruction years to get the tariff, banking, railroad, labor and public lands legislation they wanted.

And their behavior hasn’t changed since. Our entire history is one of fighting to get free of and remain free of corporate control of government. The revolution was as much a battle against the big trading companies as against the King of England.

Flaunting new wealth and power, corporate executives paid “borers” to infest Congress and state capitals, bribing elected and appointed officials alike. They pried loose from the public trust more and more land, minerals, timber and water. Railroad corporations alone obtained over 180 million free acres of public lands by the 1870s, along with many millions of dollars in direct subsidies.

Little by little, legislators gave corporations limited liability, decreased citizen authority over corporate structure, governance, production and labor, and ever longer terms for the charters themselves.

Corporations rewrote the laws governing their own creation. They “left few stones unturned to control those who made and interpreted the laws . . .”


Corporations owned resources, production, commerce, trade, prices, jobs, politicians, judges and the law. Over the next half century, as a United States congressional committee concluded in 1941, “The principal instrument of the concentration of economic power and wealth has been the corporate charter with unlimited power . . .”

Today, many U.S. corporations are transnational. No matter how piratical or where they roam, the corrupted charter remains the legal basis of their existence.

And this is where we are now. Corporations again, after a slight diminution in power after the New Deal until Reagan began deregulating and busting unions, have unlimited power to destroy land, climate, production, incomes, food, air, water and government. This is a rights issue though. We fought and obtained rights for each of us over time. The Article V convention movement is gaining steam out there, which is probably the ultimate cure for this. This is entirely a grassroots job, though. We can expect no help and cooperation from above.