Sunday, December 5, 2010

Status Quo America by Various Authors

“You have to realize that what they ( The Republicans) are trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom* is not government sponsorship of economic progress and rising living standards, it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.”

-Michael Hudson, Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research, and who is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.

*[The Road To Serfdom refers to the book by Friedrich August Hayek CH (8 May 1899 – 23 March 1992). an Austrian-born economist and philosopher best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought, one of the main intellectual props of American conservatives. However, while The Road to Serfdom is "a war cry against central planning," it appears to include a lukewarm support for a free market system and laissez-faire capitalism, with Hayek even going so far as to say that "probably nothing has done so much harm to the liberal cause as the wooden insistence of some neo- liberals on certain rules of thumb, above all of the principle of laissez-faire capitalism".In the book, Hayek writes that the government has a role to play in the economy through the monetary system, work-hours regulation, and institutions for the flow of proper information; "there is no reason why...the state should not help to organize a comprehensive system of social insurance."]


"Health care per se is not a market; if you draw a supply-and-demand diagram for health care there is no quantity to put on the horizontal axis and no price to record on the vertical axis. It is not a commodity that is bought and sold at a given price on an open market. Proposals to introduce market forces in health care are largely concerned not with the provision of health care itself but with the provision of health insurance.

The intrinsic costs of providing insurance are relatively low. There are no expensive inputs to purchase, no uncertainty of design or technology to be concerned with. The major inputs are personnel and computing capacity. There are few major issues of innovation; unlike the rapid changes characteristic of medical practice, the service of providing insurance to pay for them does not evolve rapidly. A successful private insurance company follows an ancient formula; it stratifies its clientele by risk class and charges premiums adapted to each class. The most successful companies are generally those that manage to exclude the riskiest clients.

Public universal health insurance schemes like Medicare do not evaluate risk. Since they are universal, they do not need to. Therefore, they save the major cost of providing private health care insurance. They pay their personnel at civil service salary scales and are under no obligation to return a dividend to shareholders or meet a target rate of return. Insurance in general is therefore intrinsically a service that the public sector can competently provide at lower cost than the private sector, and from the standpoint of an entire population, selective private provision of health insurance is invariably inferior to universal public provision.

Private health insurance companies would not exist except for their political capacity to forestall the creation of universal public systems, backed by their almost unlimited capacity to sow confusion among the general public over the basic economic facts. Liberals who support anything less than a common, public insurance pool have no argument. They are simply tugging their forelocks and bending their knee before the bastion of private power...not even offering another another glass of the proverbial liberal small beer.

The reliance on private insurers makes universal coverage unaffordable."

James K. Galbraith,Lyndon B. Johnson School of Public Affairs and at the Department of Government, University of Texas at Austin. He is also a Senior Scholar with the Levy Economics Institute of Bard College. -


"Consider this: it is not unlawful for a United States bank to receive funds derived from alien smuggling, fraud, racketeering, handling stolen property, contraband, environmental crimes, trafficking in women, transport for illegal sexual activity, slave trading- and many other evils....Can this really be true?...

I could not believe it at first, and I checked. But it is true. The only catch is this the crimes must be committed abroad. U.S. anti-money laundering laws involve a long list of prohibitions on proceeds from crimes- including the above- committed at home, but a very short list for those committed overseas. Welcoming dirty money is profitable for American companies, and it helps fill the current-account deficit. And Europeans, it seems, are hardly better behaved... but how big is the problem?

Try this for size. the OECD reckons that about half of all the world's cross-border trade involves structures for concealing money, involving about 70 tax havens (the French call them 'fiscal paradises"), as corporations and rich individuals shuffle profits around to avoid taxes and for yet more nefarious reasons. Assets held offshore by rich individuals, beyond the reach of effective taxation, equal one-third of global assets- or $11 trillion, conservatively estimated, costing governments over $250 billion a year in tax revenues. This is more than twice the global aid budget for developing countries. The Cayman Islands (pop. 45,000) claims to be the world's fifth largest financial center. A U.S. Senate report estimated - when the problem was smaller- that up to a trillion dollars is laundered through banks each year, half of it through U.S. banks.

There are basically three forms of dirty money. One is criminal money: from drug dealing, say, or slave trading or terrorism. The next is corrupt money, like the late former Nigerian dictator Sani Abacha's looted oil billions. The third form, commercial money- what out finest companies and richest individuals hide from our tax collectors- is bigger. The point- and this is crucial- is that these three forms of dirty money use exactly the same mechanisms and subterfuges: tax havens, shell banks,shielded trusts, anonymous foundations, dummy corporations, mispricing schemes and the like all administered by the "pinstripe infrastructure" of mainstream banks, lawyers, and accountants.... U.S. Treasury officials told Raymond Baker that in a good year they caught 0.1 percent of illicit inflows into the country- a 99.9 percent failure rate.

In this parallel secret universe the world's biggest and richest individuals and firms- News Corporation, Citigroups, and, yes ExxonMobil-can quite legally cut themselves loose from pesky full taxation and grow explosively, leaving smaller competitors, who pay their full dues along with the rest of us, choking in the dust. This undermines the very notion of capitalism: the big companies;' advantage has nothing to do with the quality or price of what they produce. If you are worried about the power of big global corporations, don't always attack them directly, but attack bank secrecy instead.

Much of the problem could be eliminated with a few well-aimed legislative strokes. One might make it a criminal offense for U.S. Banks to receive proceeds of overseas slavery, say, or credit fraud. Another might forbid banks from operating in jurisdictions where they are protected from foreign tax and judicial authorities. There are others. What is missing is political will.

One adversary will be what Eva Joly* calls the "media-industrial complex"- news outlets that themselves shuffle huge profits around tax havens to avoid taxes.

- Nicholas Shaxson; associate fellow with the Royal Institute of International Affairs (Chatham House) in London].

*On 7 June 2009, Joly was elected as a French member of the European Parliament on the Ile de France "Europe Écologie" list, on which she was 2nd to Daniel Cohn-Bendit. She is chair of the Committee on Development.

Joly will most likely run for president of France, election 2012. As of Oct. 2010, she is a nominee with in Europe Écologie ("Green party") to be their candidate for the upcoming election.

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