Thursday, January 08, 2009


The immense scale of the financial catastrophe in the United States has provided a window of opportunity, one in which citizens are so frightened they may insist that what economist James K. Galbraith calls the predator state be beaten back. The predator state, defined, means government as taken over by interests which have no goal other than the accumulation of profit for themselves. Although there's plenty of blame to spread around, Galbraith chiefly attributes it to the professionalization of looting backed by the power of government as a way of business in corporate America, common sense defying deregulation and eight years of the Bush administration.

Two basic examples predator state action stick out, but Galbraith writes in his book of the same title that one can't turn around without noticing the plundering of markets, natural resources, or arms of the government originally created to help people.

One very obvious one has been the Bush adminstration's collaboration with the US auto industry on fuel efficiency standards, revised downward to protect Detroit auto-makers from superior competition from Japan. When the state of California attempted to mandate its own tailpipe emission standards in 2007, the Environmental Protection Agency was ordered by the White House to block the state rebellion which, because California is such a huge market, would have compelled Detroit to improve its fleet nationwide. This seemed like a good protectionist rigging until early summer when soaring gas prices soured the American consumer on new pickup trucks and SUVs made to predator state standards. Although gas prices are now way down, another blow arrived when the financial crisis, itself a product of a series of predator state actions, destroyed consumer lending. With car buyers unable to get loans, Detroit has been delivered to the door of colossal failure.

However, the only discernible move to dismantle this framework came recently when California congressman Henry Waxman replaced Michigan Democrat John Dingell as chairman of the House Energy and Commerce Committee. Dingell was effectively a fixer for Detroit, viewing efforts to mitigate global warming as a threat to American business. Indeed, in today's Los Angeles Times business section one reads an article on fuel efficiency standards, even the meager ones imposed during the Bush administration, being touted as a substantial and unreasonable hardship on the US auto industry. "[It] would cost the industry an estimated $47 billion to comply with standards," reads the Times. "There's no question that the rule will come with a significant cost to manufacturers," a spokesman for the Alliance of Automobile Manufacturers told the newspaper.

[For the millions of Americans who watched the BCS bowl games, another good illustration of what predator state policy buys you came in a flood of manly commercials for V8-equipped pickup trucks, asininely advertised as fuel efficient because they get a paltry 20 MPG.]

Obviously, Galbraith's book was written before any of this happened. But he notes repeatedly that predator state action makes markets inherently unstable. Eventually, their bubbles burst and many are maimed. If, for instance, the US auto industry goes under, a great many people who had nothing to do with its bad faith actions in the domestic market are going to be pulled down with it.

The other keystone example was the US government's handling of New Orleans after Katrina in 2005.

"In the corporate republic that resides over the predator state, nothing is done for the common good," Galbraith writes in "The Predator State." "Hurricane Katrina illustrates this perfectly, as Bush gave contracts to Halliburton and at the same time tied up efforts to restore the city," he continues. The poor "were dispersed," the population "an afterthought. "Several hundred thousand Democratic voters were scattered to the hinterlands of Texas and Georgia, where they would no longer hold
swing votes."

In the recent election, Louisiana, a state which logically had every reason to punish the GOP and veer blue actually went the other way and became more red because those most affected by the disaster had been expelled.

These two acts, as well as others which many can now discern, are not accidents, Galbraith insists. They constitute a system, one in which opponents of regulation take control of government institutions and employ them to fatten bank accounts. The US as a high-rent kleptocracy is a concept which occasionally comes to mind while reading this. As for Galbraith, at one point he briefly mentions, in comparison, Chile under the dictator, Pinochet. One had the freedom to shop in Chile, it is dryly noted, while business interests enriched themselves through the government.

Naturally, the predator state -- if not reversed -- has serious implications with regards to national security. Specifically, one can look at the war on terror.

Galbraith writes that there is a strong worldwide perception that the war is a fraud. The perception, caused by US actions, has been extremely damaging to the country's reputation and interest. If you've read this blog and my writings in other places on the subject over the last decade, it's an impression that's been difficult to avoid, one regularly fostered by evidence that the US private sector and academia largely view and act like the war against radical Islam is simply a marvelous business opportunity.

However, in the United States this has mostly been kept off the frontpages by showing only the tails-you-lose side of the coin, a kind of magic trick in which fear and the perception that the country faces a constant implacable enemy capable of utterly destroying us all are constants. This has been for the advantage of what Galbraith calls the Bush Beltway Bubble, those industries and operations -- the energy sector, businesses involved with national security and the military -- which thrived after 9/11.

Predator state policies, for example, seem to drive action in Pakistan. The average person can make little of a strategy in which small numbers of terrorists (or whoever is unlucky enough to be made a target by bad intelligence) are randomly incinerated other than that it's one which assures the corporate makers and maintainers of unmanned aerial vehicles and missiles a solid growth market. No one can seriously believe that pinprick Predator strikes make Pakistan more stable or less of a breeding and staging ground for terrorism and rabid anti-Americanism.

But with the election of Barack Obama, one can make the fair assumption that worldwide and domestic realities have eroded much of the stock wisdoms about this fight. For instance, a think-tank "expert" writing that an electromagnetic pulse attack launched from a missile offshore "might mean the end of the United States and most likely the Free World" may have sounded almost sane a year or two after 9/11. However, in light of daily front page fiscal woes, it looks like only one thing: an opinion piece at the Wall Street Journal, authored by someone on the missile defense gravy train, perhaps perceived as a defense milk cow threatened by a new administration.

An even better explication of how the predator state works in the war on terror comes by way of Judith Miller, now herself perceived as an infamous fraud stemming from her front page stories on WMD's in Iraq.

Driven from the New York Times, Miller continues to write, generally for right wing agencies. A recent piece from the City Journal, the organ of the Manhattan Institute, discusses national biodefense, unintentionally limning the outlines of predator state action: experts, pretending to offer sage advice, chosen from the ranks of those who have been most vigorously involved in expediting the transfer of funds from public coffers to private sector clients, making sure that the biodefense industry has escaped from oversight and fiscal control.

In this case, one reads the recommendations of Tara O'Toole, an expert of some note from the Center for Biosecurity at the University of Pittsburgh Medical Center who has regularly appeared before Congress and the media to promise the most dire outcomes, lobbied for money, and run staged bioterror exercises tilted toward the absolute worst cases in order to overawe policy makers, transformed into an independent panelist appointed to review the action of the super-biodefense lab called the National Biodefense Analysis and Countermeasures Center when it opens in 2009.

Another terror industry lobbyist, Parney Albright, is asked for his opinion on whether or not "the billions allocated to biodefense are being spent wisely." This is a rich one, for reasons which will be explained.

Albright, identified as a national security consultant by Miller, is most recently listed as managing director of the Civitas Group, which advertises as a DC consulting firm. In newspapers, however, it's been shown as business for the moving of public funds to the private sector by way of homeland security contracts, enabled through its practice of recruiting administrators from the Dept. of Homeland Security.

Albright started as an influential Assistant Secretary at Homeland Security. During this period, some noted that there was a remarkable exodus from the agency as officers moved directly to good jobs as directors of security companies in the private sector. At the same time, government conflict-of-interest rules were altered so officials who left the department for the anti-terror industry could get around law which prevented them from lobbying former colleagues and subordinates for at least a year after their departure.

Miller's article, with the inclusion of Albright, illustrates a classic synergy of predator state activity: The advisor on how money is to be doled out wisely is from a corporate entity not concerned with whether the doling out is wise or not, just that it is doled out.

Most telling, though, is a statement from an official given anonymity by Miller.

"We now know, as Hurricane Katrina demonstrated, that the federal government would have to take the lead in a true bioterror emergency," the unknown person says.

Since, yes, we do know how the federal response to Katrina turned out -- hundreds of thousands of people displaced, contracts given to the usual well-positioned cronies, habitation destroyed and not rebuilt -- it's either a Freudian slip of the tongue or an indication that the person uttering it is out of their mind. If the reaction to Hurricane Katrina is to be taken as an example of federal response to a crisis, the common sense interpretation is that if it's extrapolated to a bioterror emergency or some interesting disaster caused by the proliferation of people given access to exotic diseases, the only thing to be guaranteed will be that the body bags will be priced way beyond fair market value and there will be oceans of tears.

While the results of deregulation and predation are abundantly obvious to Americans now experiencing the economic crisis, the same things are not so clear in the business of counter-terrorism and national security. While it may be safe to now conclude that the predator state urge to turn Social Security over to private investment would be met with brickbats and lynch mobs, one can't draw the same conclusion when it comes to areas which are further away from the front page. It will be a challenge to the Obama administration to reverse even parts of it.


Blogger Rick Noll said...

Wow, seems like you have hit the nail on the head, Dick. You have the ability to cut through the BS, and show not only vast knowledge of the bioterrorists that "threaten our existence", but also the shrewd parasites who finacially exploit this for personal gain, all the while retaining a firm grasp of complex economic issues AND supplying us with hellbent rock and roll! Us Pennsyltuckians would do well to have you back on board as a card-carrying member of our elite gang! There's no place like home.

3:41 PM  
Anonymous Anonymous said...

If there is a natural disaster in Chicago (ex., blizzard) we blame local government. The bucks stops at the mayor's office, not the prez. As F-Up FEMA's response to Katrina, Mayor "Cable Guy" Nagin could only breakdown before the media while Governor Blanco sacrificed her political career to fix ALL of Louisiana, not just those affilicted in New Orleans.

6:33 PM  
Anonymous Operator said...

Well put, though lacking in one regard - what remedy do the people of a predator (or parasite) state have?

The established channels will likely remain under the control of kleptocrats' lackeys for some time to come.

8:11 PM  
Blogger George Smith said...

Well, right off there must be a universal recognition that this is a problem, not just a political point of view. Which -- in the recent past -- is how it's usually dismissed.

One obvious place to start is to not do the usual practice of appointing lobbyists and lackeys from industry to positions in government where they'll be in control of "oversight" of their industries. When I see the word "experience" being used to protest someone's lack of fitness for a current position, it often seems now simply as code for preservation of the predator state status quo.

In the past, there have been public mechanisms for getting rid of the rascals. In today's LA Times -- specifically the business section, it is written:

"But Depression history does give us a template for a public shaming: The so-called Pecora hearings into the 1929 stock market crash ... Pecora had no patience for bankers such as J. P. Morgan, who swore they'd had only the public's interest at heart when they inflated the stock market bubble. He laid out for the world how America's financial institutions, which had stood for 'safety, strength, prudence and high-mindedness' and were supposedly led by men 'possessing almost mythical business genius and forsight' had relied instead on 'legal technicians and complaisance of government authorities' to cheat the average investor and foment the Great Crash ... Pecora's chief target was Charles A. Mitchell, chairman of the National City Bank -- precursor of Citigroup, one of the least prudent banks in the current mess ... Mitchel was never indicted ... but Pecora made sure his reputation for probity was exposed as a complete sham. National City fired him after the hearings.'"

Congress does precious little of this now. No one ever quite gets the castigation they deserve, enough to banish them from the public and private sector permanently.

There is also some role for the media to play. And that's to point these things out. More often. Way more often.

As to the coming adminstration, it is not free of taint. Re the biodefense industry, it's the same old song and dance. See here.

12:51 PM  

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