Sunday, June 24, 2012

"Do We All Work for Central Bankers?" CNBC Admits We're All Slaves

How the US Government, Banks, Prison-Industrial Complex, Corrupt Officials, Businesses, Law Enforcement, Racists and the CIA Profit From Illegal Drugs

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US Banks Love Real Dollars, and Illegal Drug Money Comes in Cash

A recent article in The Guardian UK offers evidence that "while cocaine production ravages countries in Central America, consumers in the US and Europe are helping developed economies grow rich from the profits."

According to The Guardian UK story, the study by two Colombian professors found that "2.6% of the total street value of cocaine produced remains within the country [Columbia], while a staggering 97.4% of profits are reaped by criminal syndicates and laundered by banks, in first-world consuming countries."

One of the researchers, Alejandro Gaviria said: "We know that authorities in the US and UK know far more than they act upon. The authorities realize things about certain people they think are moving money for the drug trade - but the DEA [US Drug Enforcement Administration] only acts on a fraction of what it knows."

"It's taboo to go after the big banks," added Gaviria's co-researcher Daniel Mejía. "It's political suicide in this economic climate, because the amounts of money recycled are so high."

Since Wachovia Bank (now owned by Wells Fargo) was levied a fine in 2010 (but no criminal charges) for money laundering hundreds of millions (perhaps billions) of illegal drug cartel dollars, there does not appear to be any large crackdown on the practice in the United States, although lip service is often given to coming down hard on money laundering.

Indeed, more than one analyst has speculated that the billions of dollars in drug cash are vitally important to US banks because so many of their financial assets are tied up in non-fluid assets.

According to a 2011 article in AlterNet:

Antonio Maria Costa, former executive director of the United Nations Office on Drugs and Crime said in 2008, "there's evidence to suggest that proceeds from drugs and crimes were the only liquid investment capital for banks in trouble of collapsing [during the financial crisis]."

If billions of dollars in drug money rescued banks and other financial institutions from closing down then it's reasonable to argue that the economy itself is addicted to drugs.

As professor Dale Scott noted in his book, American War Machine: Deep Politics; the CIA Global Drug Connection: "A US Senate ... banking committee reportedly estimated that between $500 billion and $1 trillion dollars are laundered each year through banks worldwide, with approximately half of that amount funneled through US Banks."

In the '70s and '80s, Miami became known as a city that was experiencing an economic renaissance based on the flow of illegal drug money (mostly from Colombia at the time) into the city. But the cash didn't just get laundered through banks; it was used to buy legitimate businesses; condos; houses; investments; and more than likely a lot of corrupt law enforcement, custom and government officials.

Estimated $50 Billion in Illegal Drug Sales From Mexico Can Only Occur With US Corruption

In interviews, Truthout has been told again and again that the chain of distribution for illegal drugs is changing. Whereas before it was divided primarily among Mafia families in big cities, the Latin American cartels have now set up networks within the US.

But one thing hasn't changed; it still takes a lot of corruption to buy off virtual domestic impunity for the kingpins overseeing the domestic sale of prohibited drugs. Searching Google, you can find everything from Transportation Security Administration agents paid off to let drugs pass through airport checks, to cops who look the other way or actually steal the drug money, to border patrol agents letting drugs pass through, to local government officials overlooking illegal activity.

However, rarely does one come across the arrest and prosecution of a kingpin in the United States, or of a high-level law enforcement official in a major city or a politician being indicted. Does this mean that powerful individuals in the government and law enforcement are all squeaky clean as $50 billion in illegal drugs go whizzing through America, day in and day out? Not likely.

The emphasis of the DEA, FBI and the Department of Homeland Security is on catching the "guppies" without appearing to be working their way up to the people running the wholesale-to-retail illicit drug business in the US or their protectors. (In Latin America, however, the US is all about catching kingpins, although that doesn't often happen.)

For instance, the El Paso Times reported last year that "two former law enforcement officers allege that they cannot get anyone to investigate allegations that the Mexican drug cartels have corrupted US law officers and politicians in the El Paso border region.... Gonzales and Dutton allege that the FBI dropped them after 'big names' on the US side of the border began to surface in the drug investigations."

David Ramirez rose up the ranks of the Border Patrol to become a special agent at the Department of Homeland Security. He just wrote a book, "Beneath the Same Sky," a candid analysis of the borderland drug war. Interviewed by the Texas Tribune, he described US customs corruption matter-of-factly:

I can only tell you my experiences and what I saw. It was the lure of the money and as I write in the book, they offer this inspector $50,000 for what I call a "wave" - a loaded vehicle to come through the port. And they guaranteed them five vehicles a week so you are talking that kind of money, which is tempting. You have to be a man or a woman who knows their moral ground to say, "No. I am not doing it...."

"It's capitalism, I would think - supply and demand," Ramirez said further. "The demand for the drug is here and then we say, 'Okay Mexico or Latin America, fix your problem over there, but we still want our drugs.'"

Different Interests in the US Financially Gain From the War on Drugs

It's not just that some law enforcement officials are corrupt. They don't need to be for police departments to make money from arresting minor drug offenders.

Police departments around the nation gain from laws that allow the seizing of assets that the law enforcement officers allege may be related to drug crime, without even a court case involved. The libertarian CATO institute wrote about this practice that allows the agencies to use the proceeds from the confiscated money or property to enlarge departmental budgets. The report is called "Forfeit for Profit: The Abuse of Civil Asset Forfeiture."

Law enforcement agencies can also get extra money from federal grants if they show a high number of arrests related to drug use and selling, so it is of financial value to the department to arrest as many people for drug related offenses as possible.

Neill Franklin is executive director of Law Enforcement Against Prohibition (LEAP). He calls this change to an emphasis on arrests of the drug user as a "shift to the numbers game" for police departments to receive more funding. Franklin, a 34-year law enforcement veteran of the Maryland State Police and Baltimore Police Department, said, "we worked in predominantly white areas, yet most of our cases and lock ups were minorities. There were very few cases in the outlying areas that involved whites."

Franklin told Truthout:

"Over my career I saw a shift to a war on the users of drugs. In the '70s when I worked narcotics it was about working your way up the chain of the sellers to the kingpins. That's how it was. As we got further into the '80s and '90s, we attacked the demand side. We concentrated on locking up the usual street corner suspects and before we knew it we had quadrupled the incarceration rate and most of that increase was from us arresting users. A lot of the small time dealers sell drugs because they need to support their habit of selling drugs. The day of the law enforcement concentrating on kingpins has gone. It's all about increasing the numbers of arrests."

To Franklin this brings up the question of why privatized prison companies are simultaneously benefiting financially from the increased incarceration, a subject that has been analyzed many times on Truthout. If the Correction Corporation of America needs a 90 percent capacity rate to make a profit on a prison, then you need to put the bodies in the beds. Franklin pointed out that the profiteering doesn't end with the prison business. There is the drug testing industry, parole officers, prosecutors, police, lawyers, rehabilitation counselors, psychologists etc. Arresting minor drug offenders, in short, is big business.

Race, Drugs, Incarceration and the New Jim Crow

Michelle Alexander, author of the paradigm-shifting book on racism through the criminalization of being a black male, "The New Jim Crow," recently wrote a commentary in The Guardian UK in which she persuasively argues that "the US war on drugs created a whole new generation of the dispossessed, with millions of black people denied their rights."

Alexander wrote of the racist impact of the war on drugs in the black community, particularly among young black males:

The uncomfortable truth, however, is that crime rates do not explain the sudden and dramatic mass incarceration of African Americans during the past 30 years. Crime rates have fluctuated over the last few decades - they are currently at historical lows - but imprisonment rates have consistently soared. Quintupled, in fact. And the vast majority of that increase is due to the "war on drugs" and the "get tough movement." Drug offenses alone accounted for about two-thirds of the increase in the federal inmate population, between 1985 to 2000, and more than half of the increase in the state prison population.

The drug war has been brutal, but those who live in white communities have little clue to the devastation wrought. This war has been waged almost exclusively in poor communities of color, even though studies consistently show that people of all colors use and sell illegal drugs at remarkably similar rates. In fact, some studies indicate that white youths are significantly more likely to engage in illegal drug dealing than black youths. They also have about three times the number of drug-related visits to the emergency room as their African American counterparts.

That is not what you would guess, though, when entering our nation's prisons and jails, overflowing as they are with black and brown drug offenders. In some states, African Americans comprise 80-90% of all drug offenders sent to prison....

Again, not so. President Ronald Reagan officially declared the current drug war in 1982, when drug crime was declining, not rising. From the outset, the war had little to do with drug crime and nearly everything to do with racial politics. The drug war was part of a grand and highly successful Republican party strategy of using racially coded political appeals on issues of crime and welfare to attract poor and working-class white voters who were resentful of, and threatened by, desegregation, busing and affirmative action.

If you follow Alexander's analysis to its logical conclusion, the war on drugs in the United States fulfills a racist stereotype by disproportionately sending black males (and black women) to jails, where they are branded and marginalized as felons, while white users of illegal drugs - proportionately - are treated much more leniently by law enforcement and the judicial system.

This policy misleadingly confirms stereotypes of blacks that racists love, even though they are put in prison for offenses that are nonviolent in nature and that are driven by poverty, social neglect and incentivized police department arrest numbers.

But it also serves another important purpose. When poor, stereotyped members of society can only find an entrepreneurial future in the illegal drug business, or use drugs as self-medication to allow them to escape the squalidness of vast swathes of urban America that hold little opportunity of employment, the government does not have to attend to building neighborhoods and creating jobs. Drugs become the opiate of the masses, as meth also has in many poor, rural white communities.

As with the 50,000-plus mostly poor Mexicans who have died in the failed war on drugs, certain lives are deemed of less value in the US - and if there is big money to be made out of the drug trade, it's going to end up in banks and business ventures, not in the hood (with few exceptions). The undesirable resourceless drug users are both profitable and expendable.

US Hegemony and Military Control Over Latin America and the CIA

An established journalist, Gary Webb, wrote a series of articles for the San Jose Mercury-News in 1996 with a shocking account of how the CIA, during the Reagan administration, allowed cocaine to freely be flown into the US (particularly crack cocaine) in return for drug cartel cooperation with funding and arming the Contras against the Sandinistas in the Nicaraguan civil war. At first, the series was a bombshell, but then the CIA fought back through established Eastern newspapers and the Mercury-News retracted the series.

Webb, however, wrote an even more in-depth and credible account of the CIA condoning drugs entering the US in a 1999 book: "Dark Alliance: The CIA, the Contras and the Crack Cocaine Explosion." However, his reputation was so slandered by CIA flacks that he eventually committed suicide in 2004. Subsequent reports, after his death, corroborated the credibility of his investigative account.

It is not the only allegation of the US turning a blind eye or even politically using drugs entering the US as foreign policy strategic tools. Right now, the US is more or less ignoring the surge in poppy growth in Afghanistan so as not to complicate its precarious role in that nation - and the economic need of farmers there. President George Herbert Walker Bush, who headed the CIA for a time, didn't object to Panamanian dictator Manuel Noriega's (he was a highly paid CIA asset) role in the drug trade until Noriega started to go rogue on US foreign policy, thus being perceived as becoming a threat to the Canal Zone.

In "Beyond Bogota: Diary of a Drug War Journalist," Garry M. Leech described how the US focus on attacking the growing of cocaine in the Marxist FARC-controlled area is counterproductive, because the right-wing paramilitary area in Columbia grows more and sells it at a cheaper rate. Translated, this means that the US government is more concerned about the political threat of FARC (Fuerzas Armadas Revolucionarias de Colombia, the Revolutionary Armed Forces of Colombia) than how much cocaine ends up in the United States.

The drug war in Latin America offers the opportunity to increase US military hegemony and thus preserve markets where the US can dominate governments and obtain cheap labor and natural resources (particularly mining and oil). It also sews death, fear and chaos that stifle populist revolts against oligarchical and military rule.

Drug Cartels Are Headed by Pirate Businessmen Marketing a Commodity in Demand and the American Corporate Class Loves Supply Side Entrepeneurs

Minus the gruesome violence in their host countries, drug cartels are just illegal businessmen, so the business class in the US can relate to them, as can the CIA. They are aggressive, ruthless and greedy, not unlike some of their bankers on Wall Street.

The cost of a drug war to achieve geopolitical objectives then is immense in the loss of life, the breakdown of civil society in the nations affected in Latin America, and in the moral grounding, racial injustice and credibility of our governmental and business institutions.

Eric E. Sterling, who wrote many of the severe anti-drug laws while serving as former assistant counsel to the House Judiciary Committee, indicated second thoughts in a recent Forbes commentary:

Excluding the significant markets in methamphetamine, Ecstasy, psychedelics and other drugs, this is a criminal retail market in the range of $300 billion annually. Most of the markup is at the retail level. This enormous market is evidence that our efforts to stop the drug supply create the incentives that have grown a global criminal infrastructure of countless drug prohibition enterprises....

All over the world, drug organizations depend upon corrupting border guards, customs inspectors, police, prosecutors, judges, legislators, cabinet ministers, military officers, intelligence agents, financial regulators and presidents and prime ministers. Businesses cannot count on the integrity of government officials in such environments.

And corrupted we have become, while publically taking the moral high ground and precipitating a blood bath in Latin America.

Previous installments in the Truthout on the Mexican Border Series Include:

"The US War on Drug Cartels in Mexico Is a Deadly Failure"

"The Border Wall: The Last Stand at Making the US a White Gated Community"

"Murder Incorporated: Guns, the NRA and the Politics of Violence on the Mexican Border"

"A Poet's Pain Launches a Peace Movement in Mexico"

"The School of the Americas, the CIA and the US-Condoned Cancer of Torture Continue to Spread in Latin America, Including Mexico"

"Who Is Killing the Journalists in Mexico?"

"Latina Leaders of Texas Colonias Help Remake Shantytowns Into Empowered Communities"

Corporate Profits Just Hit An All-Time High, Wages Just Hit An All-Time Low

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In case you need more confirmation that the US economy is out of balance, here are three charts for you.

1) Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from "too much regulation" and "too many taxes." Maybe little companies are, but big ones certainly aren't).

2) Fewer Americans are working than at any time in the past three decades. One reason corporations are so profitable is that they don't employ as many Americans as they used to.

3) Wages as a percent of the economy are at an all-time low. This is both cause and effect. One reason companies are so profitable is that they're paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" are other companies' revenue.

In short, our current system and philosophy is creating a country of a few million overlords and 300+ million serfs.

That's not what has made America a great country. It's also not what most people think America is supposed to be about.

So we might want to rethink that.

Biodiversity and the Environment: Silent Spring For Us?

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With her 1962 book, Silent Spring, Rachel Carson got DDT and other synthetic pesticides banned and saved bird life. Today it is humans who are directly threatened by
technologies designed to extract the maximum profit at the lowest private cost and the maximum social cost from natural resources.

Once abundant clean water has become a scarce resource. Yet, in the US ground water and surface water are being polluted and made unusable by mountain top removal mining, fracking and other such “new technologies.” Ranchers in eastern Montana, for example, are being forced out of ranching by polluted water.

Offshore oil drilling and chemical farming run-off have destroyed fisheries in the Gulf of Mexico. In other parts of the world, explosives used to maximize short-run fish catches have destroyed coral reefs that sustained fish life. Deforestation for short-run agricultural production results in replacing bio-diverse rain forests with barren land. The “now generation” is leaving a resource scarce planet to future generations.

Nuclear power plants are thoughtlessly built in earthquake and tsunami zones. Spent fuel rods are stored within the plants, a practice that adds their destructive potential to a catastrophic accident or act of nature.

The newest threat comes from genetically modified seeds that produce crops resistant to herbicides. The active ingredient in Monsanto’s Roundup herbicide is glyphosate, a toxic element that now contaminates groundwater in Spain and according to the US Geological Survey is now “commonly found in rain and streams in the Mississippi River Basin.”

In 2011 Don Huber, a plant pathologist and soil microbiologist, wrote to the US Secretary of Agriculture about the unexpected consequences of GMOs and the accompanying herbicides. He cited adverse effects on critical micronutrients, soil fertility, and the nutritional value of foods. He cited the impairment of metabolic pathways that prevents plants from accumulating and storing minerals, such as iron, manganese, and zinc, minerals important for liver function and immune response in animals and people. He cited toxic effects on the microorganisms in the soil that have disrupted nature’s balance and resulted in large increases in plant diseases. He cited livestock deaths from botulism, premature animal aging, and an increase in animal and human infertility.

In an interview, Huber said that the power of agri-business has made it almost impossible to do research on GMOs and that regulatory agencies with the responsibility of protecting the public are dependent on the industry’s own self-serving studies and have no independent objective science on which to base a regulatory decision.

In short, in order to secure bumper crops for several years, we are destroying the fertility of soil, animal and human life.

Mankind has been destroying the world for a long time. In his fascinating book,1493, Charles C. Mann describes the adverse effects on the environment, people, and civilizations of the globalism unleashed by Christopher Columbus. These include the international transfer of human and plant diseases, deforestation, destructions of peoples and empires, and the impact on distant China of Spanish new world silver.

Mann provides a history lesson in unintended and unexpected consequences resulting from the actions of elites and of those that elites dominated. The Chinese government fixed taxation in terms of the quantity of silver, but the importation of Spanish silver inflated prices (decreased the value of a given quantity of silver) and left the government without sufficient revenues.

A successor government or dynasty evicted Chinese from the coast in order to deprive pirates of resources. The displaced millions of people deforested mountainsides in order to sustain themselves with terrace agriculture. The result of deforestation was floods that not only washed away the terraces but also the crops in the fertile valleys below. Consequently, floods became one of China’s greatest challenges to its food supply.

The first slaves were conquered new world natives, but the “Indians” had no immunity to European diseases. The second wave of slaves were European whites, but the Europeans had no immunity to malaria and yellow fever. By default slavery fell to blacks, many of whom had immunity to malaria and yellow fever. Thus, a black workforce could survive the infected environments and newly created wetlands in which to raise sugarcane, wetlands that were ideal homes for malaria and yellow fever bearing mosquitoes. Mann, of course, is merely reporting, not justifying black or any slavery.

Mann points out that the lowly mosquito had a large impact on American history. The Mason-Dixon Line roughly splits the East Coast into two zones, the South in which disease carrying mosquitoes were an endemic threat, and the north in which malaria was not a threat. In the South, a person who survived childhood and grew into an adult had acquired immunity. Northerners had no such protection.

This had enormous consequences when Northern armies invaded the South. Mann reports that “disease killed twice as many Union troops as Confederate bullets or shells.” Between the summers of 1863 and 1864, the official annual infection rate for what was called “intermittent fevers” was 233 percent. The average northern soldier
was felled more than twice. In one year 361,968 troops were infected. Most of the deaths from malaria were indirect. The disease so badly weakened the troops that they died from dysentery, measles or strep infection.

The mosquito was the South’s most powerful ally and so prolonged the war, despite the vast numerical superiority of the Union force, that Lincoln was forced to take action that he opposed and declare emancipation of slaves. Thus, Mann writes, it is not farfetched to conclude that blacks were freed by the very malaria mosquito that had caused blacks to be the preferred workforce.

Mann shows that long before the birth of capitalism, greed drove men to barbarous treatment of their fellows. He also shows that policies, whether driven by greed or by well-intended socio-political design, inevitably had unexpected consequences. His multi-faceted history well illustrates the old adage, “the well laid plans of mice and men often go awry.”

The old world’s colonization of the new world devastated new world peoples, but the new world bit back with the spread of the potato blight to Europe and Spanish and European inflation.

Environmental destruction resulted mainly from deforestation and soils washed away by consequent floods. Prior to modern technology and toxic chemicals, the planet survived mankind.

Today the prospects for the planet are different. The human population is vast compared to earlier times, putting far more pressure on resources, and the disastrous consequences of new technologies are unknown at the time that they are employed, when the focus is on the expected benefits. Moreover, these costs are external to the business, corporation, or economic unit. The costs are inflicted on the environment and on other humans and other animal life. The costs are not included when the business calculates its profit and return on its investment. The external costs of fracking, mountain top removal mining, chemical farming, and GMOs could exceed the value of the marketable products.

Businesses have no incentive to take these costs into account, because to do so reduces their profits and could indicate that the full cost of production exceeds the value of the output. Governments have proven to be largely ineffective in controlling external costs, because of the ability of private interests to influence the decisions of government. Even if one country were to confront these costs, other countries would take advantage of the situation. Companies that externalize some of their costs can undersell companies that internalize all of the costs of their production. Thus, the planet can be destroyed by the short-term profit and convenience interests of one generation.

The main lesson that emerges from Mann’s highly readable book is that people today have no better grasp of the consequences of their actions than superstitious and unscientific people centuries ago. Modern technological man is just as easily bamboozled by propaganda as ancient man was by superstition and ignorance.

If you doubt that the peoples of Western civilization live in an artificial reality created by propaganda, watch the documentary on psyops at! The documentary does a good job despite wandering off into a couple of side issues on which it takes one-sided positions. It is a bit heavy on blaming the rich, and overlooks that Stalin, for example, had plenty of propaganda and wasn’t looking to make himself a billionaire. Not all the rich are against the people. Billionaires Roger Milliken and Sir James Goldsmith fought against jobs offshoring and globalism, which increases the powerlessness of the people vis-a-vis the elites. Both spoke for the people to no avail.

The documentary also blames the Constitution for limiting the participation of the mass of the people in governing themselves without acknowledging that the Constitution restricted the power of government and guaranteed civil liberty by making law a shield of the people instead of a weapon in the hands of the government. It is not the Constitution’s fault, or the fault of Founding Father James Madison, that the American people succumbed to propaganda by Bush and Obama and gave up their civil liberty in order to be “safe” from “Muslim terrorists.”

The documentary shows that propaganda is a form of mind control, and controlled minds are indeed the American predicament.

In 1962 Rachel Carson caught Monsanto off guard and thus gained an audience. Today she would not get the same attention. Ready and waiting psyops would go into operation to discredit her. I just read an article by an economist who wrote that economists have decided that environmentalism is a religion, in other words, an unscientific belief system that preaches “religious values.” This demonstrates what little importance economists attribute to external costs and the ability of externalized costs to destroy the productive power of the planet. Thus, the question, “silent spring for us?” is not merely rhetorical. It is real.

Prisons, Privatization, Patronage

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Over the past few days, The New York Times has published several terrifying reports about New Jersey’s system of halfway houses — privately run adjuncts to the regular system of prisons. The series is a model of investigative reporting, which everyone should read. But it should also be seen in context. The horrors described are part of a broader pattern in which essential functions of government are being both privatized and degraded.

First of all, about those halfway houses: In 2010, Chris Christie, the state’s governor — who has close personal ties to Community Education Centers, the largest operator of these facilities, and who once worked as a lobbyist for the firm — described the company’s operations as “representing the very best of the human spirit.” But The Times’s reports instead portray something closer to hell on earth — an understaffed, poorly run system, with a demoralized work force, from which the most dangerous individuals often escape to wreak havoc, while relatively mild offenders face terror and abuse at the hands of other inmates.

It’s a terrible story. But, as I said, you really need to see it in the broader context of a nationwide drive on the part of America’s right to privatize government functions, very much including the operation of prisons. What’s behind this drive?

You might be tempted to say that it reflects conservative belief in the magic of the marketplace, in the superiority of free-market competition over government planning. And that’s certainly the way right-wing politicians like to frame the issue.

But if you think about it even for a minute, you realize that the one thing the companies that make up the prison-industrial complex — companies like Community Education or the private-prison giant Corrections Corporation of America — are definitely not doing is competing in a free market. They are, instead, living off government contracts. There isn’t any market here, and there is, therefore, no reason to expect any magical gains in efficiency.

And, sure enough, despite many promises that prison privatization will lead to big cost savings, such savings — as a comprehensive study by the Bureau of Justice Assistance, part of the U.S. Department of Justice, concluded — “have simply not materialized.” To the extent that private prison operators do manage to save money, they do so through “reductions in staffing patterns, fringe benefits, and other labor-related costs.”

So let’s see: Privatized prisons save money by employing fewer guards and other workers, and by paying them badly. And then we get horror stories about how these prisons are run. What a surprise!

So what’s really behind the drive to privatize prisons, and just about everything else?

One answer is that privatization can serve as a stealth form of government borrowing, in which governments avoid recording upfront expenses (or even raise money by selling existing facilities) while raising their long-run costs in ways taxpayers can’t see. We hear a lot about the hidden debts that states have incurred in the form of pension liabilities; we don’t hear much about the hidden debts now being accumulated in the form of long-term contracts with private companies hired to operate prisons, schools and more.

Another answer is that privatization is a way of getting rid of public employees, who do have a habit of unionizing and tend to lean Democratic in any case.

But the main answer, surely, is to follow the money. Never mind what privatization does or doesn’t do to state budgets; think instead of what it does for both the campaign coffers and the personal finances of politicians and their friends. As more and more government functions get privatized, states become pay-to-play paradises, in which both political contributions and contracts for friends and relatives become a quid pro quo for getting government business. Are the corporations capturing the politicians, or the politicians capturing the corporations? Does it matter?

Now, someone will surely point out that nonprivatized government has its own problems of undue influence, that prison guards and teachers’ unions also have political clout, and this clout sometimes distorts public policy. Fair enough. But such influence tends to be relatively transparent. Everyone knows about those arguably excessive public pensions; it took an investigation by The Times over several months to bring the account of New Jersey’s halfway-house-hell to light.

The point, then, is that you shouldn’t imagine that what The Times discovered about prison privatization in New Jersey is an isolated instance of bad behavior. It is, instead, almost surely a glimpse of a pervasive and growing reality, of a corrupt nexus of privatization and patronage that is undermining government across much of our nation.

A Global Slide Into Depression

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It is now coming on close to four years since the collapse of Lehman Brothers in the autumn of 2008. The events of the past several months underscore two fundamental features of the crisis that emerged out of the subsequent financial collapse: 1) that it is systemic, not temporary; and 2) that it is global, affecting every country in the world. Globally integrated capitalism has created a globally integrated catastrophe.

This week, a series of economic figures were released confirming this analysis. Hopes from bourgeois commentators that the debt crisis in Europe could be offset by economic growth in Germany, or that weakness in the West as a whole could be counterbalanced by strong production in Asia, are being dashed with each passing day.

In fact, production in both Germany and China is contracting, in large part due to falling exports. According to Thursday’s figures, Germany’s composite purchasing managers index hit a three-year low, falling to 48.5 in June from 49.3 a month before. The HSBC China Manufacturing Purchasing Managers’ Index likewise fell to 48.1 in June, down from 48.4 in May. It was the eighth consecutive month of readings below 50, indicating contraction.

Other major “developing” economies are doing no better. India’s economy grew only 5.3 percent in the first quarter of the year, its lowest growth rate in nine years and down nearly four percentage points from 2011. The Brazilian Central Bank said last week that the country’s economy probably contracted in April compared with a year earlier, the first such yearly decline since late 2009.

In the United States, the center of world capitalism, the Obama administration is seeking to cover over with honeyed words what is clearly a sharp downturn, following a largely nonexistent “recovery.” The Federal Reserve reported this week that all the basic indicators of economic health have slowed since March, but proposed no serious measures in response.

Corporations are freezing hiring and banks are cutting off loans under conditions of mass unemployment. This week, the number of Americans filing new claims for unemployment benefits remained at very high levels. The four-week moving average for new claims is at its highest since December. According to the Labor Department, the number of available jobs dropped by 325,000 in April, the single biggest monthly decline since September 2008.

Europe reels from one crisis to the next. The stock market surge following the bank bailout of Spain hardly lasted a day before the prevailing sense of gloom in financial circles returned. The general sense of political paralysis was compounded by the ill-fated outcome of the G20 summit in Mexico, which was supposed to conclude with a common agreement on Europe, but in fact ended in discord among the major powers.

Amidst the perplexity in ruling circles, and in the face of bitter and growing conflicts between the major powers, the bourgeoisie does have a conception of how it will respond to the crisis: with the most ruthless, determined and unending assault on the working class. It has reacted to each phase of the crisis with bank bailouts and ever more savage austerity, in effect orchestrating the largest upward transfer of wealth in modern history. The crisis is expressed in the most bitter class warfare.

What has happened to Greece shows the working class of the world what is being prepared in every country. A quarter of the workforce is unemployed—including more than half of the country’s youth—and Athens Wednesday saw thousands lining up for a distribution of free produce in a scene that evoked the Great Depression of the 1930s.

On Thursday, MSCI, a global stock index compiler, said it has put Greece’s economy on review to become the first country in the world to be downgraded from the status of a developed country to a “developing” one.

The reference to “developing” is, however, entirely misplaced. World capitalism, through the giant banks, is inflicting on the working class of Greece a shock reversal in their conditions of life. As one economic commentator noted, “In a sense they really need a new category, blown-up developed markets.” The representatives of the ruling class are acknowledging that their actions are producing a historic retrogression.

In January 2008, several months before the collapse of Lehman Brothers and amidst growing signs of a collapse of the US housing bubble, the World Socialist Web Site explained, “The turbulence in world financial markets is the expression of not merely a conjunctural downturn, but rather a profound systemic disorder which is already destabilizing international politics.” Hopes promoted by bourgeois commentators that somehow a new global equilibrium, a new basis for world economic growth, could be found, have been dashed. The crisis is, in the most profound sense of the term, a crisis of the world capitalist system.

The global character of the crisis requires a global response from the working class. It is a basic premise of Marxism that the workers of every country are united by their common class interests, interests that are determined by their common relationship to the capitalist system of production. This is true now more than ever. The ruling class, in its ruthless defense of a failed economic system, demonstrates with each passing day the burning necessity for world revolution.