Sunday, August 19, 2012

Economic Recovery Is Weakest Since World War II

Weakest recovery: Damaged by housing bust, government cuts, this economic comeback lags others

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The recession that ended three years ago this summer has been followed by the feeblest economic recovery since the Great Depression.

Since World War II, 10 U.S. recessions have been followed by a recovery that lasted at least three years. An Associated Press analysis shows that by just about any measure, the one that began in June 2009 is the weakest.

The ugliness goes well beyond unemployment, which at 8.3 percent is the highest this long after a recession ended.

Economic growth has never been weaker in a postwar recovery. Consumer spending has never been so slack. Only once has job growth been slower.

More than in any other post-World War II recovery, people who have jobs are hurting, too: Their paychecks have fallen behind inflation.

Many economists say the agonizing recovery from the Great Recession, which began in December 2007 and ended in June 2009, is the predictable consequence of a housing bust and a grave financial crisis.

Credit, the fuel that powers economies, evaporated after Lehman Brothers collapsed in September 2008. And a 30 percent drop in housing prices erased trillions in home equity and brought construction to a near-standstill.

So any recovery was destined to be a slog.

"A housing collapse is very different from a stock market bubble and crash," says Nobel Prize-winning economist Peter Diamond of the Massachusetts Institute of Technology. "It affects so many people. It only corrects very slowly."

The U.S. economy has other problems, too. Europe's troubles have undermined consumer and business confidence on both sides of the Atlantic. And the deeply divided U.S. political system has delivered growth-chilling uncertainty.

The AP compared nine economic recoveries since the end of World War II that lasted at least three years. A 10th recovery that ran from 1945 to 1948 was not included because the statistics from that period aren't comprehensive, although the available data show that hiring was robust. There were two short-lived recoveries — 24 months and 12 months — after the recessions of 1957-58 and 1980.

Here is a closer look at how the comeback from the Great Recession stacks up with the others:

—FEEBLE GROWTH

America's gross domestic product — the broadest measure of economic output — grew 6.8 percent from the April-June quarter of 2009 through the same quarter this year, the slowest in the first three years of a postwar recovery. GDP grew an average of 15.5 percent in the first three years of the eight other comebacks analyzed.

The engines that usually drive recoveries aren't firing this time.

Investment in housing, which grew an average of nearly 34 percent this far into previous postwar recoveries, is up just 8 percent since the April-June quarter of 2009.

That's because the overbuilding of the mid-2000s left a glut of houses. Prices fell and remain depressed. The housing market has yet to return to anything close to full health even as mortgage rates have plunged to record lows.

Government spending and investment at the federal, state and local levels was 4.5 percent lower in the second quarter than three years earlier.

Three years into previous postwar recoveries, government spending had risen an average 12.5 percent. In the first three years after the 1981-82 recession, during President Ronald Reagan's first term, the economy got a jolt from a 15 percent increase in government spending and investment.

This time, state and local governments have been slashing spending — and jobs. And since passing President Barack Obama's $862 billion stimulus package in 2009, a divided Congress has been reluctant to try to help the economy with federal spending programs. Trying to contain the $11.1 trillion federal debt has been a higher priority.

Since June 2009, governments at all levels have slashed 642,000 jobs, the only time government employment has fallen in the three years after a recession. This long after the 1973-74 recession, by contrast, governments had added more than 1 million jobs.

—EXHAUSTED CONSUMERS

Consumer spending has grown just 6.5 percent since the recession ended, feeblest in a postwar recovery. In the first three years of previous recoveries, spending rose an average of nearly 14 percent.

It's no mystery why consumers are being frugal. Many have lost access to credit, which fueled their spending in the 2000s. Home equity has evaporated and credit cards have been canceled. Falling home prices have slashed home equity 49 percent, from $13.2 trillion in 2005 to $6.7 trillion early this year.

Others are spending less because they're paying down debt or saving more. Household debt peaked at 126 percent of after-tax income in mid-2007 and has fallen to 107 percent, according to Haver Analytics. The savings rate has risen from 1.1 percent of after-tax income in 2005 to 4.4 percent in June. Consumers have cut credit card debt by 14 percent — to $865 billion — since it peaked at over $1 trillion in December 2007.

"We were in a period in which we borrowed too much," says Carl Weinberg, chief economist at High Frequency Economics. "We are now deleveraging. That's a process that slows us down."

—THE JOBS HOLE

The economy shed a staggering 8.8 million jobs during and shortly after the recession. Since employment hit bottom, the economy has created just over 4 million jobs. So the new hiring has replaced 46 percent of the lost jobs, by far the worst performance since World War II. In the previous eight recoveries, the economy had regained more than 350 percent of the jobs lost, on average.

During the 1981-82 recession, the U.S. lost 2.8 million jobs. In the three years and one month after that recession ended, the economy added 9.8 million — replacing the 2.8 million and adding 7 million more.

Never before have so many Americans been unemployed for so long three years into a recovery. Nearly 5.2 million have been out of work for six months or more. The long-term unemployed account for 41 percent of the jobless; the highest mark in the other recoveries was 22 percent.

Gregory Mann, 58, lost his job as a real estate appraiser three years ago. "Basically, I am looking for anything," he says. He has applied to McDonald's, Target and Nordstrom's.

"Nothing, not even a rejection letter," he says.

His wife, a registered nurse, has lost two jobs in the interim — and just received an offer to work reviewing medical records near Atlanta.

"We are broke and nearly homeless," he says. "If this job for my wife hadn't come through, we would be out on the street come Sept. 1 or would have had to move in with relatives."

Federal Reserve Chairman Ben Bernanke has called long-term unemployment a "national crisis." The longer people remain unemployed, the harder it is to find work, Bernanke has said. Skills erode, and people lose contact with former colleagues who could help with the job search.

—SHRINKING PAYCHECKS

Usually, workers' pay rises as the economy picks up momentum after a recession. Not this time. Employers don't have to be generous in a weak job market because most workers don't have anywhere to go.

As a result, pay raises haven't kept up with even modest levels of inflation. Earnings for production and nonsupervisory workers — a category that covers about 80 percent of the private, nonfarm workforce — have risen just over 6.2 percent since June 2009. Consumer prices have risen nearly 7.2 percent. Adjusted for inflation, wages have fallen 0.8 percent. In the previous five recoveries —the records go back only to 1964 — real wages had gone up an average 1.5 percent at this point.

Falling wages haven't hurt everyone. Lower labor costs helped push corporate profits to a record 10.6 percent of U.S. GDP in the first three months of 2012, according to the Federal Reserve Bank of St. Louis. And those surging profits helped lift the Dow Jones industrials 54 percent from the end of June 2009 to the end of last month. Only after the recessions of 1948-49 and 1953-54 did stocks rise more.

Stock investments may be coming back, but savings are still getting squeezed by the rock-bottom interest rates the Fed has engineered to boost the economy. The money Americans earn from interest payments fell from nearly $1.4 trillion in 2008 to barely $1 trillion last year — a drop of more than $370 billion, or 27 percent. That amounts to shrinking income for many retirees.

Washington isn't doing much to help the economy. An impasse between Obama and congressional Republicans brought the U.S. to the brink of default on the federal debt last year —a confrontation that rattled financial markets and sapped consumer and business confidence.

Given the political divide, businesses and consumers don't know what's going to happen to taxes, government spending or regulation. Sharp tax increases and spending cuts are scheduled to kick in at year's end unless Congress and the White House reach a budget deal.

In the meantime, it's difficult for consumers to summon the confidence to spend and businesses the confidence to hire and expand. Never in the postwar period has there been so much uncertainty about what policymakers will do, says Steven Davis, an economist at the University of Chicago Booth School of Business: "No one is sure what will actually happen."

As weak as this recovery is, it's nothing like what the U.S. went through in the 1930s. The period known as the Great Depression actually included two severe recessions separated by a recovery that lasted from March 1933 until May 1937.

It's tough to compare the current recovery with the 1933-37 version. Economic figures comparable to today's go back only to the late 1940s. But calculations by economist Robert Coen, professor emeritus at Northwestern University, suggest that things were far bleaker during the recovery three-quarters of a century ago: Coen found that unemployment remained well above 10 percent — and usually above 15 percent — throughout the 1930s.

Only the approach and outbreak of World War II — the ultimate government stimulus program — restored the economy and the job market to full health.

26 US Companies Paid More To CEOs Than In US Tax

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Twenty-six big U.S. companies paid their CEOs more last year than they paid the federal government in tax, according to a study released Thursday by a liberal-leaning think tank.

The study, by the Institute for Policy Studies, said the companies, including AT&T, Boeing and Citigroup, paid their CEOs an average of $20.4 million last year while paying little or no federal tax on ample profits, according to regulatory filings.

Some companies cited in the study said it was misleading. They also said they took advantage of tax deductions and credits designed to free up money for companies to spend in ways that stimulate the economy.

On average, the 26 companies generated pretax net income of more than $1 billion in the U.S., the study said.

The study blasted tax rules allowing unlimited deductions for CEO "performance-based" pay, like many stock options. It said the five biggest performance payers among the 26 companies took $232 million of these deductions last year.

Among the "kingpins" it criticized was CEO James McNerney Jr. of Boeing. It said he got $18.4 million in pay last year while his company received a tax refund of $605 million.

The study also laid into Citigroup for paying CEO Vikram Pandit $14.9 million while the bank received a net $144 million in tax benefits.

Eighteen of the 26 companies received cash back or credits to apply against tax in the future, according to the report.

The study, a 45-page attack on the corporate tax code, said deductions and credits are allowing companies to lavish big pay packages on executives so they can cut their tax bills while Washington gets less money in a time of trillion-plus deficits.

"Our nation’s tax code has become a powerful enabler of bloated CEO pay," the study said.

To calculate tax, the study used companies’ own math based on accounting rules. Regulators require companies to estimate their tax bill and disclose it in public documents for investors.

The tax filings the companies make to the government, typically in September, are private and can differ from the estimate.

Another problem is that the study doesn’t count tax the company plans to pay but has deferred to future years. The authors argue that deferred tax can be put off indefinitely.

Charles Bickers, a Boeing spokesman, said that the company’s federal tax bill, including deferred tax, was $1.3 billion last year, not a net credit, as the think tank’s study found.

Boeing did lower its tax, in part by using a popular tax credit encouraging companies to spend more on research and development. Bickers said that helped the company hire 11,000 people in the U.S. last year.

"Boeing supports a simpler, more competitive tax code. At the same time, we have put the R&D tax credit to exactly the use it was designed — creating U.S. jobs in a high-value, advanced technology industry," he said in a statement.

The Institute for Policy Studies said Boeing would have spent the money on R&D without the credit.

In addition to performance-pay deductions and R&D credits, the report criticized the use of tax havens that allow technology companies, for instance, to assign intellectual-property rights to shell companies in the Cayman Islands, so they can run profits through them and avoid taxes. It noted that 26 companies have a combined 537 subsidiaries in tax-haven countries.

The study also cited accelerated depreciation on investments, which allows a company to take deductions for big-ticket purchases in one year, as opposed to over several years. That cuts taxes in the first year.

The study said AT&T used accelerated depreciation to save $5.2 billion on its 2011 taxes while paying CEO Randall Stephenson $18.7 million last year.

Sarah Lubman, an AT&T spokeswoman, said the point of accelerated depreciation is to encourage companies to make investments. She said AT&T made $20 billion in investments last year, helping to "drive the economy and support good-paying jobs."

She also said that the deductions won’t be available to take in future years, which should increase taxes.

A Citigroup spokeswoman noted that the company lost money in 2008 and 2009 and used the losses to offset taxes on profits this year.

Startling Evidence That Central Banks And Wall Street Insiders Are Rapidly Preparing For Something BIG

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If you want to figure out what is going to happen next in the financial markets, carefully watch what the insiders are doing. Those that are "connected" have access to far better sources of information than the rest of us have, and if they hear that something big is coming up they will often make very significant moves with their money in anticipation of what is about to happen. Right now, Wall Street insiders and central banks all around the globe are making some very unusual moves. In fact, they appear to be rapidly preparing for something really big. So exactly what are they up to? In a previous article entitled "Are The Government And The Big Banks Quietly Preparing For An Imminent Financial Collapse?", I speculated that they may be preparing for a financial meltdown of some sort. As I noted in that article, more than 600 banking executives have resigned from their positions over the past 12 months, and I have been personally told that a substantial number of Wall Street bankers have been shopping for "prepper properties" this summer. But now even more evidence has emerged that quiet preparations are being made for an imminent financial collapse. That doesn't guarantee that something will happen or won't happen. Like any good detective, we are gathering clues and trying to figure out what the evidence is telling us.

Why Is George Soros Selling So Much Stock And Buying So Much Gold?

I am certainly not a fan of George Soros. He has funneled millions upon millions of dollars into organizations that are trying to take America in the exact wrong direction.

However, I do recognize that he is extremely well connected in the financial world. Soros is almost always ahead of the curve on financial matters, and if something big is going to go down George Soros is probably going to know about it ahead of time.

That is why it is very alarming that he has dumped all of his banking stocks and that he is massively hoarding gold. The following is from shtfplan.com....

In a harbinger of what may be coming our way in the Fall of 2012, billionaire financier George Soros has sold all of his equity positions in major financial stocks according to a 13-F report filed with the SEC for the quarter ending June 30, 2012.

Soros, who manages funds through various accounts in the US and the Cayman Islands, has reportedly unloaded over one million shares of stock in financial companies and banks that include Citigroup (420,000 shares), JP Morgan (701,400 shares) and Goldman Sachs (120,000 shares). The total value of the stock sales amounts to nearly $50 million.

What’s equally as interesting as his sale of major financials is where Soros has shifted his money. At the same time he was selling bank stocks, he was acquiring some 884,000 shares (approx. $130 million) of Gold via the SPDR Gold Trust.

Why would you dump over a million shares of stock in major banks and purchase more than 100 million dollars worth of gold?

Well, it would make perfect sense if you believed that a collapse of the financial system was about to happen.

Earlier this year, George Soros told the following to Newsweek....

“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”

It looks like he is putting his money where his mouth is.

Perhaps even more disturbing is what he believes is coming after the financial collapse....

As anger rises, riots on the streets of American cities are inevitable. “Yes, yes, yes,” he says, almost gleefully. The response to the unrest could be more damaging than the violence itself. “It will be an excuse for cracking down and using strong-arm tactics to maintain law and order, which, carried to an extreme, could bring about a repressive political system, a society where individual liberty is much more constrained, which would be a break with the tradition of the United States.”

That doesn't sound good.

George Soros has told us what he believes is going to happen, and now he is making moves with his money that indicate that he is convinced that it is actually about to start happening.

But he is not the only one that has been busy accumulating gold.

Billionaire John Paulson (the one that made 20 billion dollars on the subprime mortgage meltdown) has been buying gold like crazy and his company now "has 44 percent of its $24 billion fund exposed to bullion."

So why are Soros and Paulson buying up so much gold?

Central Banks Are Also Hoarding Gold

According to the World Gold Council, the amount of gold bought by the central banks of the world absolutely soared during the second quarter of 2012. The 157.5 metric tons of gold bought by the central banks of the world last quarter was an increase of 62.9 percent from the first quarter of 2012 and a 137.9 percent increase from the second quarter of 2011.

Prior to 2009, the central banks of the world had been net sellers of gold for about two decades. But now that has totally changed, and last quarter central banks stocked up on gold in quantities that we have not seen before....

At 157.5 metric tons, gold buying among central banks came in at its highest quarterly level since the sector became a net buyer of the precious metal in the second quarter of 2009, data in the organization's quarterly Gold Demand Trends report show.

So why have the central banks of the world become such gold bugs?

Is there something they aren't telling us?

Rampant Insider Selling

Wall Street insiders have been dumping a whole lot of stock this year.

In my previous article, I linked to a CNN article from back in April....

First quarter earnings have been decent, if not spectacular. And many corporate executives are issuing cautiously optimistic guidance for the rest of the year.

But while insiders' lips are saying one thing, their wallets are saying another. The level of insider selling among S&P 500 (SPX) companies is the highest in nearly 10 years. That is not good.

A lot of insiders appear to be getting out at the top of the market while the getting is still good.

Other insiders appear to be bailing out before the bottom falls out from beneath them.

Just check out what has been happening to Facebook stock. It hit another new record low on Thursday as insiders dumped stock. The following is from a CNN article....

Facebook's life as a public company has been a nightmare from day one, and the pain continued on Thursday as some company insiders got their first chance to dump shares.

Facebook stock hit a new intra-day low of $19.69 Thursday morning, and ended the day 6.3% lower at $19.87.

Sadly, Facebook has now lost close to half of its value since the IPO.

Will Facebook end up being the poster child for the irrational stock market bubble that we have seen over the past couple of years?

Overall, retail investors have been very busy pulling money out of stocks in recent weeks.

The following are the net inflows to equity funds over the past five weeks (in millions of dollars) according to ICI....

7/11/2012: -537

7/18/2012: 637

7/25/2012: -2,999

8/1/2012: -6,866

8/8/2012: -3,684

According to the figures above, more than 10 billion dollars has been pulled out of equity funds over the past two weeks alone.

So does this mean anything?

Maybe.

Maybe not.

But it is very interesting and it bears watching.

Why Does The U.S. Government Need So Much Ammunition?

In my previous article, I also noted that the U.S. government appears to be very rapidly making preparations for something really big.

This week, it was revealed that the Social Security Administration plans to buy 174,000 hollow point bullets which will be delivered to 41 different locations all over America.

Now why in the world does the Social Security Administration need 174,000 bullets?

And why do they need hollow point bullets? Those bullets are designed to cause as much damage to internal organs as possible.

But of course this is only the latest in a series of very large purchases of ammunition by U.S. government agencies. The following is from a recent article by Paul Joseph Watson....

Back in March, Homeland Security purchased 450 million rounds of .40-caliber hollow point bullets that are designed to expand upon entry and cause maximum organ damage, prompting questions as to why the DHS needed such a large amount of powerful bullets merely for training purposes.

This was followed by another DHS solicitation asking for a further 750 million rounds of assorted bullets, including 357 mag rounds that are able to penetrate walls.

Now why in the world would the government need over a billion rounds of ammunition?

If it was the U.S. military I could understand this. You can burn through a whole lot of ammunition fighting wars.

But this makes no sense - unless they believe that big trouble is coming.

Personally, I wouldn't blame them for getting prepared. Our economy continues to fall apart and there are signs of social decay everywhere around us.

The American people are more frustrated and more angry than at any other time in modern history. This upcoming election is only going to cause Americans to become even more angry and even more divided.

All it would take is just the right "spark" to cause this country to erupt.

It could be the upcoming election.

It could be the collapse of the financial system.

Or it might be something else.

But the conditions are definitely there for it to happen.

Unfortunately, the American public is never told to prepare because authorities never want "to panic" the general population.

We are always the last to know, and that stinks.

So don't wait for someone to come on the television and announce that a crisis is happening.

If you wait that long, it will be too late.

Instead, open up your eyes and think for yourself.

We all need to work hard to get prepared for the coming crisis while we still can.

As you can see, Wall Street insiders, the U.S. government and the central banks of the world are busy getting prepared.

Don't put your head in the sand.

The warning signs are there and time is running out.

The Global 1% - Exposing the Transnational Ruling Class

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This study asks: Who are the the world’s One percent power elite?

And to what extent do they operate in unison for their own private gains over benefits for the 99 percent?

We examine a sample of the 1 percent: the extractor sector, whose companies are on the ground extracting material from the global commons, and using low-cost labor to amass wealth. These companies include oil, gas, and various mineral extraction organizations, whereby the value of the material removed far exceeds the actual cost of removal.We also examine the investment sector of the global 1 percent: companies whose primary activity is the amassing and reinvesting of capital. This sector includes global central banks, major investment money management firms, and other companies whose primary efforts are the concentration and expansion of money, such as insurance companies.

Finally, we analyze how global networks of centralized power—the elite 1 percent, their companies, and various governments in their service—plan, manipulate, and enforce policies that benefit their continued concentration of wealth and power. We demonstrate how the US/NATO military-industrial-media empire operates in service to the transnational corporate class for the protection of international capital in the world.


The Occupy Movement has developed a mantra that addresses the great inequality of wealth and power between the world’s wealthiest 1 percent and the rest of us, the other 99 percent. While the 99 percent mantra undoubtedly serves as a motivational tool for open involvement, there is little understanding as to who comprises the 1 percent and how they maintain power in the world. Though a good deal of academic research has dealt with the power elite in the United States, only in the past decade and half has research on the transnational corporate class begun to emerge.[i]

Foremost among the early works on the idea of an interconnected 1 percent within global capitalism was Leslie Sklair’s 2001 book, The Transnational Capitalist Class.[ii] Sklair believed that globalization was moving transnational corporations (TNC) into broader international roles, whereby corporations’ states of orgin became less important than international argreements developed through the World Trade Organization and other international institutions. Emerging from these multinational corporations was a transnational capitalist class, whose loyalities and interests, while still rooted in their corporations, was increasingly international in scope. Sklair writes:

The transnational capitalist class can be analytically divided into four main fractions: (i) owners and controllers of TNCs and their local affiliates; (ii) globalizing bureaucrats and politicians; (iii) globalizing professionals; (iv) consumerist elites (merchants and media). . . . It is also important to note, of course, that the TCC [transnational corporate class] and each of its fractions are not always entirely united on every issue. Nevertheless, together, leading personnel in these groups constitute a global power elite, dominant class or inner circle in the sense that these terms have been used to characterize the dominant class structures of specific countries.[iii]

Estimates are that the total world’s wealth is close to $200 trillion, with the US and Europe holding approximately 63 percent. To be among the wealthiest half of the world, an adult needs only $4,000 in assets once debts have been subtracted. An adult requires more than $72,000 to belong to the top 10 percent of global wealth holders, and more than $588,000 to be a member of the top 1 percent. As of 2010, the top 1 percent of the wealthist people in the world had hidden away between $21 trillion to $32 trillion in secret tax exempt bank accounts spread all over the world.[iv] Meanwhile, the poorest half of the global population together possesses less than 2 percent of global wealth.[v] The World Bank reports that, in 2008, 1.29 billion people were living in extreme poverty, on less than $1.25 a day, and 1.2 billion more were living on less than $2.00 a day.[vi] Starvation.net reports that 35,000 people, mostly young children, die every day from starvation in the world.[vii] The numbers of unnecessary deaths have exceeded 300 million people over the past forty years. Farmers around the world grow more than enough food to feed the entire world adequately. Global grain production yielded a record 2.3 billion tons in 2007, up 4 percent from the year before—yet, billions of people go hungry every day. Grain.org describes the core reasons for ongoing hunger in a recent article, “Corporations Are Still Making a Killing from Hunger”: while farmers grow enough food to feed the world, commodity speculators and huge grain traders like Cargill control global food prices and distribution.[viii] Addressing the power of the global 1 percent—identifying who they are and what their goals are—are clearly life and death questions.

It is also important to examine the questions of how wealth is created, and how it becomes concentrated. Historically, wealth has been captured and concentrated through conquest by various powerful enities. One need only look at Spain’s appropriation of the wealth of the Aztec and Inca empires in the early sixteenth century for an historical example of this process. The histories of the Roman and British empires are also filled with examples of wealth captured.

Once acquired, wealth can then be used to establish means of production, such as the early British cotton mills, which exploit workers’ labor power to produce goods whose exchange value is greater than the cost of the labor, a process analyzed by Karl Marx in Capital.[ix] A human being is able to produce a product that has a certain value. Organized business hires workers who are paid below the value of their labor power. The result is the creation of what Marx called surplus value, over and above the cost of labor. The creation of surplus value allows those who own the means of production to concentrate capital even more. In addition, concentrated capital accelerates the exploition of natural resources by private entrepreneurs—even though these natural resources are actually the common heritage of all living beings.[x]

In this article, we ask: Who are the the world’s 1 percent power elite? And to what extent do they operate in unison for their own private gains over benefits for the 99 percent? We will examine a sample of the 1 percent: the extractor sector, whose companies are on the ground extracting material from the global commons, and using low-cost labor to amass wealth. These companies include oil, gas, and various mineral extraction organizations, whereby the value of the material removed far exceeds the actual cost of removal.

We will also examine the investment sector of the global 1 percent: companies whose primary activity is the amassing and reinvesting of capital. This sector includes global central banks, major investment money management firms, and other companies whose primary efforts are the concentration and expansion of money, such as insurance companies.

Finally, we analyze how global networks of centralized power—the elite 1 percent, their companies, and various governments in their service—plan, manipulate, and enforce policies that benefit their continued concentration of wealth and power.

The Extractor Sector: The Case of Freeport-McMoRan (FCX)

Freeport-McMoRan (FCX) is the world’s largest extractor of copper and gold. The company controls huge deposits in Papua, Indonesia, and also operates in North and South America, and in Africa. In 2010, the company sold 3.9 billion pounds of copper, 1.9 million ounces of gold, and 67 million pounds of molybdenum. In 2010, Freeport-McMoRan reported revenues of $18.9 billion and a net income of $4.2 billion.[xi]

The Grasberg mine in Papua, Indonesia, employs 23,000 workers at wages below three dollars an hour. In September 2011, workers went on strike for higher wages and better working conditions. Freeport had offered a 22 percent increase in wages, and strikers said it was not enough, demanding an increase to an international standard of seventeen to forty-three dollars an hour. The dispute over pay attracted local tribesmen, who had their own grievances over land rights and pollution; armed with spears and arrows, they joined Freeport workers blocking the mine’s supply roads.[xii] During the strikers’ attempt to block busloads of replacement workers, security forces financed by Freeport killed or wounded several strikers.

Freeport has come under fire internationally for payments to authorities for security. Since 1991, Freeport has paid nearly thirteen billion dollars to the Indonesian government—one of Indonesia’s largest sources of income—at a 1.5 percent royalty rate on extracted gold and copper, and, as a result, the Indonesian military and regional police are in their pockets. In October 2011, the Jakarta Globe reported that Indonesian security forces in West Papua, notably the police, receive extensive direct cash payments from Freeport-McMoRan. Indonesian National Police Chief Timur Pradopo admitted that officers received close to ten million dollars annually from Freeport, payments Pradopo described as “lunch money.” Prominent Indonesian nongovernmental organization Imparsial puts the annual figure at fourteen million dollars.[xiii] These payments recall even larger ones made by Freeport to Indonesian military forces over the years which, once revealed, prompted a US Security and Exchange Commission investigation of Freeport’s liability under the United States’ Foreign Corrupt Practices Act.

In addition, the state’s police and army have been criticized many times for human rights violations in the remote mountainous region, where a separatist movement has simmered for decades. Amnesty International has documented numerous cases in which Indonesian police have used unnecessary force against strikers and their supporters. For example, Indonesian security forces attacked a mass gathering in the Papua capital, Jayapura, and striking workers at the Freeport mine in the southern highlands. At least five people were killed and many more injured in the assaults, which shows a continuing pattern of overt violence against peaceful dissent. Another brutal and unjustified attack on October 19, 2011, on thousands of Papuans exercising their rights to assembly and freedom of speech, resulted in the death of at least three Papuan civilians, the beating of many, the detention of hundreds, and the arrest of six, reportedly on treason charges.[xiv]

On November 7, 2011, the Jakarta Globe reported that “striking workers employed by Freeport-McMoRan Copper & Gold’s subsidiary in Papua have dropped their minimum wage increase demands from $7.50 to $4.00 an hour, the All-Indonesia Workers Union (SPSI) said.”[xv] Virgo Solosa, an official from the union, told the Jakarta Globe that they considered the demands, up from the (then) minimum wage of $1.50 an hour, to be “the best solution for all.”

Workers at Freeport’s Cerro Verde copper mine in Peru also went on strike around the same time, highlighting the global dimension of the Freeport confrontation. The Cerro Verde workers demanded pay raises of 11 percent, while the company offered just 3 percent.

The Peruvian strike ended on November 28, 2011.[xvi] And on December 14, 2011, Freeport-McMoRan announced a settlement at the Indonesian mine, extending the union’s contract by two years. Workers at the Indonesia operation are to see base wages, which currently start at as little as $2.00 an hour, rise 24 percent in the first year of the pact and 13 percent in the second year. The accord also includes improvements in benefits and a one-time signing bonus equivalent to three months of wages.[xvii]

In both Freeport strikes, the governments pressured strikers to settle. Not only was domestic militrary and police force evident, but also higher levels of international involvement. Throughout the Freeport-McMoRan strike, the Obama administration ignored the egregious violation of human rights and instead advanced US–Indonesian military ties. US Secretary of Defense Leon Panetta, who arrived in Indonesia in the immediate wake of the Jayapura attack, offered no criticism of the assault and reaffirmed US support for Indonesia’s territorial integrity. Panetta also reportedly commended Indonesia’s handling of a weeks-long strike at Freeport-McMoRan.[xviii]

US President Barack Obama visited Indonesia in November 2011 to strengthen relations with Jakarta as part of Washington’s escalating efforts to combat Chinese influence in the Asia–Pacific region. Obama had just announced that the US and Australia would begin a rotating deployment of 2,500 US Marines to a base in Darwin, a move ostensibly to modernize the US posture in the region, and to allow participation in “joint training” with Australian military counterparts. But some speculate that the US has a hidden agenda in deploying marines to Australia. The Thai newspaper The Nation has suggested that one of the reasons why US Marines might be stationed in Darwin could be that they would provide remote security assurance to US-owned Freeport-McMoRan’s gold and copper mine in West Papua, less than a two-hour flight away.[xix]

The fact that workers at Freeport’s Sociedad Minera Cerro Verde copper mine in Peru were also striking at the same time highlights the global dimension of the Freeport confrontation. The Peruvian workers are demanding pay rises of eleven percent, while the company has offered just three percent. The strike was lifted on November 28, 2011.[xx]

In both Freeport strikes, the governments pressured strikers to settle. Not only was domestic militrary and police force evident, but also higher levels of international involvement. The fact that the US Secretary of Defense mentioned a domestic strike in Indonesa shows that the highest level of power are in play on issues affecting the international corporate 1 percent and their profits.

Public opinion is strongly against Freeport in Indonesia. On August 8, 2011, Karishma Vaswani of the BBC reported that “the US mining firm Freeport-McMoRan has been accused of everything from polluting the environment to funding repression in its four decades working in the Indonesian province of Papau. . . . Ask any Papuan on the street what they think of Freeport and they will tell you that the firm is a thief, said Nelels Tebay, a Papuan pastor and coordinator of the Papua Peace Network.”[xxi]

Freeport strikers won support from the US Occupy movement. Occupy Phoenix and East Timor Action Network activists marched to Freeport headquarters in Phoenix on October 28, 2011, to demonstrate against the Indonesian police killings at Freeport-McMoRan’s Grasberg mine.[xxii]

Freeport-McMoRan (FCX) chairman of the board James R. Moffett owns over four million shares with a value of close to $42.00 each. According to the FCX annual meeting report released in June 2011, Moffett’s annual compensation from FCX in 2010 was $30.57 million. Richard C. Adkerson, president of the board of FCX, owns over 5.3 million shares. His total compensation in was also $30.57 million in 2010 Moffett’s and Adkerson’s incomes put them in the upper levels of the world’s top 1 percent. Their interconnectness with the highest levels of power in the White House and the Pentagon, as indicated by the specific attention given to them by the US secretary of defense, and as suggested by the US president’s awareness of their circumstances, leaves no doubt that Freeport-MacMoRan executives and board are firmly positioned at the highest levels of the transnational corporate class.

Freeport-McMoRan’s Board of Directors

James R. Moffett—Corporate and policy affiliations: cochairman, president, and CEO of McMoRan Exploration Co.; PT Freeport Indonesia; Madison Minerals Inc.; Horatio Alger Association of Distinguished Americans; Agrico, Inc.; Petro-Lewis Funds, Inc.; Bright Real Estate Services, LLC; PLC–ALPC, Inc.; FM Services Co.

Richard C. Adkerson—Corporate and policy affiliations: Arthur Anderson Company; chairman of International Council on Mining and Metals; executive board of the International Copper Association, Business Council, Business Roundtable, Advisory Board of the Kissinger Institute, Madison Minerals Inc.

Robert Allison Jr.—Corporate affiliations: Anadarko Petroleum (2010 revenue: $11 billion); Amoco Projection Company.

Robert A. Day—Corporate affiliations: CEO of W. M. Keck Foundation (2010 assets: more than $1 billion); attorney in Costa Mesa, California.

Gerald J. Ford—Corporate affiliations: Hilltop Holdings Inc, First Acceptance Corporation, Pacific Capital Bancorp (Annual Sales $13 billion), Golden State Bancorp, FSB (federal savings bank that merged with Citigroup in 2002) Rio Hondo Land & Cattle Company (annual sales $1.6 million), Diamond Ford, Dallas (sales: $200 million), Scientific Games Corp., SWS Group (annual sales: $422 million); American Residential Cmnts LLC.

H. Devon Graham Jr.—Corporate affiliations: R. E. Smith Interests (an asset management company; income: $670,000).

Charles C. Krulak—Corporate and governmental affiliations: president of Birmingham-South College; commandant of the Marine Corp, 1995–1999; MBNA Corp.; Union Pacific Corporation (annual sales: $17 billion); Phelps Dodge (acquired by FCX in 2007).

Bobby Lee Lackey—Corporate affiliations: CEO of McManusWyatt-Hidalgo Produce Marketing Co.

Jon C. Madonna—Corporate affiliations: CEO of KPMG, (professional services auditors; annual sales: $22.7 billion); AT&T (2011 revenue: $122 billion); Tidewater Inc. (2011 revenue: $1.4 billion).

Dustan E. McCoy—Corporate affiliations: CEO of Brunswick Corp. (revenue: $4.6 billion); Louisiana-Pacific Corp. (2011 revenue: $1.7 billion).

B. M. Rankin Jr.—Corporate affiliations: board vice chairman of FCX; cofounder of McMoRan Oil and Gas in 1969.

Stephen Siegele—Corporate affiliations: founder/CEO of Advanced Delivery and Chemical Systems Inc.; Advanced Technology Solutions; Flourine on Call Ltd.

The board of directors of Freeport-McMoRan represents a portion of the global 1 percent who not only control the largest gold and copper mining company in the world, but who are also interconnected by board membership with over two dozen major multinational corporations, banks, foundations, military, and policy groups. This twelve-member board is a tight network of individuals who are interlocked with—and influence the policies of—other major companies controlling approximately $200 billion in annual revenues.

Freeport-McMoRan exemplifies how the extractor sector acquires wealth from the common heritage of natural materials—which rightfully belongs to us all—by appropriating the surplus value of working people’s labor in the theft of our commons. This process is protected by governments in various countries where Freeport maintains mining operations, with the ultimate protector being the military empire of the US and the North Atlantic Treaty Organization (NATO).

Further, Freeport-McMoRan is connected to one of the most elite transnational capitalist groups in the world: over 7 percent of Freeport’s stock is held by BlackRock, Inc., a major investment management firm based in New York City.

The Investment Sector: The Case of BlackRock, Inc.

Internationally, many firms operate primarily as investment organizations, managing capital and investing in other companies. These firms often do not actually make anything except money, and are keen to prevent interference with return on capital by taxation, regulations, and governmental interventions anywhere in the world.

BlackRock, based in Manhattan, is the largest assets management firm in the world, with over 10,000 employees and investment teams in twenty-seven countries. Their client base includes corporate, public, union, and industry pension plans; governments; insurance companies; third-party mutual funds; endowments; foundations; charities; corporations; official institutions; sovereign wealth funds; banks; financial professionals; and individuals worldwide. BlackRock acquired Barclay Global Investors in December of 2009. As of March 2012, BlackRock manages assets worth $3.68 trillion in equity, fixed income, cash management, alternative investment, real estate, and advisory strategies.[xxiii]

In addition to Freeport-McMoRan, BlackRock has major holdings in Chevron (49 million shares, 2.5 percent), Goldman Sachs Group (13 million shares, 2.7 percent), Exxon Mobil (121 million shares, 2.5 percent), Bank of America (251 million shares, 2.4 percent), Monsanto Company (12 million shares, 2.4 percent), Microsoft Corp. (185 million shares, 2.2 percent), and many more.[xxiv]

BlackRock manages investments of both public and private funds, including California Public Employee’s Retirement System, California State Teacher’s Retirement System, Freddie Mac, Boy Scouts of America, Boeing, Sears, Verizon, Raytheon, PG&E, NY City Retirement Systems, LA County Employees Retirement Association, GE, Cisco, and numerous others.

According to BlackRock’s April 2011 annual report to stockholders, the board of directors consists of eighteen members. The board is classified into three equal groups—Class I, Class II, and Class III—with terms of office of the members of one class expiring each year in rotation. Members of one class are generally elected at each annual meeting and serve for full three-year terms, or until successors are elected and qualified. Each class consists of approximately one-third of the total number of directors constituting the entire board of directors.

BlackRock has stockholder agreements with Merrill Lynch & Co., Inc., a wholly owned subsidiary of Bank of America Corporation; and Barclays Bank PLC and its subsidiaries. Two to four members of the board are from BlackRock management; one director is designated by Merrill Lynch; two directors, each in a different class, are designated by PNC Bank; two directors, each in a different class, are designated by Barclays; and the remaining directors are independent.

BlackRock’s Board of Directors

Class I Directors (terms expire in 2012):

William S. Demchak—Corporate affiliations: senior vice chairman of PNC (assets: $271 billion); J. P. Morgan Chase & Co. (2011 assets: $2.2 trillion).

Kenneth B. Dunn, PhD—Corporate and institutional affiliations: professor of financial economics at the David A. Tepper School of Business at Carnegie Mellon University; former managing director of Morgan Stanley Investment (assets: $807 billion).

Laurence D. Fink—Corporate and institutional affiliations: chairman/CEO of BlackRock; trustee of New York University; trustee of Boys Club of NY.

Robert S. Kapito—Corporate and institutional affiliations: president of BlackRock; trustee of Wharton School University of Pennsylvania.

Thomas H. O’Brien—Corporate affiliations: former CEO of PNC; Verizon Communications, Inc. (2011 revenue: $110 billion).

Ivan G. Seidenberg—Corporate and policy affiliations: board chairman of Verizon Communications; former CEO of Bell Atlantic; Honeywell International Inc. (2010 revenue: $33.3 billion); Pfizer Inc. (2011 revenue: $64 billion); chairman of the Business Roundtable; National Security Telecommunications Advisory Committee; President’s Council of the New York Academy of Sciences.[xxv]

Class II Directors (terms expire in 2013):

Abdlatif Yousef Al-Hamad—Corporate and institutional affiliations: board chairman of Arab Fund for Economic and Social Development (assets: $2.7 trillion); former Minister of Finance and Minister of Planning of Kuwait, Kuwait Investment Authority. Multilateral Development Banks, International Advisory Boards of Morgan Stanley, Marsh & McLennan Companies, Inc., American International Group, Inc. and the National Bank of Kuwait.

Mathis Cabiallavetta—Corporate affiliations: Swiss Reinsurance Company (2010 revenue: $28 billion); CEO of Marsh & McLennan Companies Inc. (2011 revenue: $11.5 billion); Union Bank of Switzerland-UBS A.G. (2012 assets: $620 billion); Philip Morris International Inc. (2010 revenue: $27 billion).

Dennis D. Dammerman—Corporate affiliations: General Electric Company (2012 revenue: $147 billion); Capmark Financial Group Inc. (formally GMAC); American International Group (AIG) (2010 revenue: $77 billion); Genworth Financial (2010 assets: $100 billion); Swiss Reinsurance Company (2012 assets: $620 billion); Discover Financial Services (2011 revenue: $3.4 billion).

Robert E. Diamond Jr.—Corporate and policy affiliations: CEO of Barclays (2011 revenue: $32 billion); International Advisory Board of the British-American Business Council.

David H. Komansky—Corporate affiliations: CEO of Merrill Lynch (division of Bank of America 2009) (2011 assets management: $2.3 trillion); Burt’s Bees, Inc. (owned by Clorox); WPP Group plc (2011 revenue: $15 billion).

James E. Rohr—Corporate affiliations: CEO of PNC (2011 revenue: $14 billion).

James Grosfeld—Corporate affiliations: CEO of Pulte Homes, Inc. (2010 revenue: $4.5 billion); Lexington Realty Trust (2011 assets: $1.2 billion).

Sir Deryck Maughan—Corporate and policy affiliations: Kohlberg Kravis Roberts (2011 assets: $8.6 billion); former CEO of Salomon Brothers from 1992 to 1997 a Chairman of the US-Japan Business Council; GlaxoSmithKline plc (2011 revenue: $41 billion); Thomson Reuters Corporation (2011 revenue: $13.8 billion).

Thomas K. Montag—Corporate affiliations: president of Global Banking & Markets for Bank of America (2011 revenue: $94 billion); Merrill Lynch (division of Bank of America, 2009; 2011 assets management: $2.3 trillion); Goldman Sachs (2011 revenue: $28.8 billion).

Class III Directors (terms expire in 2014):

Murry S. Gerber—Corporate affiliations: executive chairman of EQT (2010 revenue: $1.3 billion); Halliburton Company.

Linda Gosden Robinson—Corporate affiliations: former CEO of Robinson Lerer & Montgomery; Young & Rubicam Inc.; WPP Group plc. (2011 revenue: $15 billion); Revlon, Inc. (2011 revenue: $1.3 billion).

John S. Varley—Corporate affiliations: CEO of Barclays (2011 revenue: $32 billion); AstraZeneca PLC (2011 revenue: $33.5 billion).

BlackRock is one of the most concentrated power networks among the global 1 percent. The eightteen members of the board of directors are connected to a significant part of the world’s core financial assests. Their decisions can change empires, destroy currencies, and impoverish millions. Some of the top financial giants of the capitalist world are connected by interlocking boards of directors at BlackRock, including Bank of America, Merrill Lynch, Goldman Sachs, PNC Bank, Barclays, Swiss Reinsurance Company, American International Group (AIG), UBS A.G., Arab Fund for Economic and Social Development, J. P. Morgan Chase & Co., and Morgan Stanley.

A 2011 University of Zurich study, research completed by Stefania Vitali, James B. Glattfelder, Stefano Battiston at the Swiss Federal Institute, reports that a small group of companies—mainly banks—wields huge power over the global economy.[xxvi] Using data from Orbis 2007, a database listing thirty-seven million companies and investors, the Swiss researchers applied mathematical models—usually used to model natural systems—to the world economy. The study is the first to look at all 43,060 transnational corporations and the web of ownership between them. The research created a “map” of 1,318 companies at the heart of the global economy. The study found that 147 companies formed a “super entity” within this map, controlling some 40 percent of its wealth. The top twenty-five of the 147 super-connected companies includes:

1. Barclays PLC*

2. Capital Group Companies Inc.

3. FMR Corporation

4. AXA

5. State Street Corporation

6. J. P. Morgan Chase & Co.*

7. Legal & General Group PLC

8. Vanguard Group Inc.

9. UBS AG

10. Merrill Lynch & Co. Inc.*

11. Wellington Management Co. LLP

12. Deutsche Bank AG

13. Franklin Resources Inc.

14. Credit Suisse Group*

15. Walton Enterprises LLC

16. Bank of New York Mellon Corp

17. Natixis

18. Goldman Sachs Group Inc.*

19. T Rowe Price Group Inc.

20. Legg Mason Inc.

21. Morgan Stanley*

22. Mitsubishi UFJ Financial Group Inc.

23. Northern Trust Corporation

24. Société Générale

25. Bank of America Corporation*

* BlackRock Directors

Notably, for our purposes, BlackRock board members have direct connections to at least seven of the top twenty-five corporations that Vitali et al. identify as an international “super entity.” BlackRock’s board has direct links to seven of the twenty-five most interconnected corporations in the world. BlackRock’s eighteen board members control and influence tens of trillions of dollars of wealth in the world and represent a core of the super-connected financial sector corporations.

Below is a sample cross section of key figures and corporate assets among the global economic “super entity” identified by Vitali et al.

Other Key Figures and Corporate Connections within the Highest Levels of the Global Economic “Super Entity”

Capital Group Companies—Privately held, based in Los Angeles, manages $1 trillion in assets.

FMR—One of the world’s largest mutual fund firms, managing $1.5 trillion in assets and serving more than twenty million individual and institutional clients; Edward C. (Ned) Johnson III, Chairman and CEO.

AXA—Manages $1.5 trillion in assets, serving 101 million clients; Henri de Castries, CEO AXA, and Director, Nestlé (Switzerland).

State Street Corporation—Operates from Boston with assest management at $1.9 trillion; directors include Joseph L. Hooley, CEO of State Street Corporation; Kennett F. Burnes, retired chairman and CEO of Cabot Corporation(2011 revenue: $3.1 billion).

JP Morgan/Chase (2011 assets: $2.3 trillion)—Board of directors: James A. Bell, retired executive VP of The Boeing Company; Stephen B. Burke, CEO of NBC Universal, and executive VP of Comcast Corporation; David M. Cote, CEO of Honeywell International, Inc.; Timothy P. Flynn, retired chairman of KPMG International; and Lee R. Raymond, retired CEO of Exxon Mobil Corporation.

Vanguard (2011 assets under management: $1.6 trillion)—Directors: Emerson U. Fullwood, VP of Xerox Corporation; JoAnn Heffernan Heisen, VP of Johnson & Johnson, Robert Wood Johnson Foundation; Mark Loughridge, CFO of IBM, Global Financing; Alfred M. Rankin Jr., CEO of NACCO Industries, Inc., National Association of Manufacturers, Goodrich Corp, and chairman of Federal Reserve Bank of Cleveland.

UBS AG (2012 assets: $620 billion)—Directors include: Michel Demaré, board member of Syngenta and the IMD Foundation (Lausanne); David Sidwell, former CFO of Morgan Stanley.

Merrill Lynch (Bank of America) (2011 assets management: $2.3 trillion)—Directors include: Brian T. Moynihan, CEO of Bank of America; Rosemary T. Berkery, general counsel for Bank of America/Merrill Lynch (formerly Merrill Lynch & Co., Inc), member of New York Stock Exchange’s Legal Advisory Committee, director at Securities Industry and Financial Markets Association; Mark A. Ellman, managing director of Credit Suisse, First Boston; Dick J. Barrett, cofounder of Ellman Stoddard Capital Partners, MetLife, Citi Group, UBS, Carlyle Group, ImpreMedia, Verizon Communications, Commonewealth Scientific and Industrial Research Org, Fluor Corp, Wells Fargo, Goldman Sachs Group.

The directors of these super-connected companies represent a small portion of the global 1 percent. Most people with assets in excess of $588,000 are not major players in international finance. At best, they hire asset management firms to produce a return on their capital. Often their net worth is tied up in nonfinancial assets such a real estate and businesses.

Analysis: TCC and Global Power

So how does the transnational corporate class (TCC) maintain wealth concentration and power in the world? The wealthiest 1 percent of the world’s population represents approximately forty million adults. These forty million people are the richest segment of the first tier populations in the core countries and intermittently in other regions. Most of this 1 percent have professional jobs with security and tenure working for or associated with established institutions. Approximately ten million of these individuals have assets in excess of one million dollars, and approximately 100,000 have financials assets worth over thirty million dollars. Immediately below the 1 percent in the first tier are working people with regular employment in major corporations, government, self-owned businesses, and various institutions of the world. This first tier constitutes about 30–40 percent of the employed in the core developed countries, and some 30 percent in the second tier economies and down to 20 percent in the periphery economies (sometimes referred to as the 3rd world). The second tier of global workers represents growing armies of casual labor: the global factory workers, street workers, and day laborers intermittently employed with increasingly less support from government and social welfare organizations. These workers, mostly concentrated in the megacities, constitute some 30–40 percent of the workers in the core industrialized economies and some 20 percent in the second tier and peripheral economies. This leaves a third tier of destitute people worldwide ranging from 30 percent of adults in the core and secondary economies to fully 50 percent of the people in peripherial countries who have extremely limited income opportunities and struggle to survive on a few dollars a day. These are the 2.5 billion people who live on less than two dollars a day, die by the tens of thousands every day from malnutrition and easily curible illnesses, and who have probably never even heard a dial tone.[xxvii]

As seen in our extractor sector and investment sector samples, corporate elites are interconnected through direct board connections with some seventy major multinational corporations, policy groups, media organizations, and other academic or nonprofit institutions. The investment sector sample shows much more powerful financial links than the extractor sample; nonetheless, both represent vast networks of resources concentrated within each company’s board of directors. The short sample of directors and resources from eight other of the superconnected companies replicates this pattern of multiple board corporate connections, policy groups, media and government, controlling vast global resources. These interlock relationships recur across the top interconnected companies among the transnational corporate class, resulting in a highly concentrated and powerful network of individuals who share a common interest in preserving their elite domination.

Sociological research shows that interlocking directorates have the potential to faciliate political cohesion. A sense of a collective “we” emerges within such power networks, whereby members think and act in unison, not just for themselves and their individual firms, but for a larger sense of purpose—the good of the order, so to speak.[xxviii]

Transnational corporate boards meet on a regular basis to encourage the maximunization of profit and the long-term viability of their firm’s business plans. If they arrange for payments to government officials, conduct activities that undermine labor organizations, seek to manipulate the price of commodies (e.g. gold), or engage in insider trading in some capacity, they are in fact forming conspiratorial alliances inside those boards of directors. Our sample of thirty directors inside two connected companies have influence with some of the most powerful policy groups in the world, including British–American Business Council, US–Japan Business Council, Business Roundtable, Business Council, and the Kissinger Institute. They influence some ten trillion dollars in monetery resouces and control the working lives of many hundreds of thousands of people. All in all, they are a power elite unto themselves, operating in a world of power elite networks as the de facto ruling class of the capitalist world.

Moreover, this 1 percent global elite dominates and controls public relations firms and the corporate media. Global corporate media protect the interests of the 1 percent by serving as a propaganda machine for the superclass. The corporate media provide entertainment for the masses and distorts the realities of inequality. Corporate news is managed by the 1 percent to maintain illusions of hope and to divert blame from the powerful for hard times.[xxix]

Four of the thirty directors in our two-firm sample are directly connected with public relations and media. Thomas H. O’Brien and Ivan G. Seidenberg are both on the board of Verizon Communications, where Seidenberg serves as chairman. Verizon reported over $110 billion in operating revenues in 2011.[xxx] David H. Komansky and Linda Gosden Robinson are on the board of WPP Group, which describes itself as the world leader in marketing communications services, grossing over $65 billion in 2011. WPP is a conglomerate of many of the world’s leading PR and marketing firms, in fields that include advertising, media investment management, consumer insight, branding and identity, health care communications, and direct digital promotion and relationship marketing.[xxxi]

Even deeper inside the 1 percent of wealthy elites is what David Rothkopf calls the superclass. David Rothkopf, former managing director of Kissinger Associates and deputy undersecretary of commerce for international trade policies, published his book Superclass: the Global Power Elite and the World They Are Making, in 2008.[xxxii] According to Rothkopf, the superclass constitutes approximately 0.0001 percent of the world’s population, comprised of 6,000 to 7,000 people—some say 6,660. They are the Davos-attending, Gulfstream/private jet–flying, money-incrusted, megacorporation-interlocked, policy-building elites of the world, people at the absolute peak of the global power pyramid. They are 94 percent male, predominantly white, and mostly from North America and Europe. These are the people setting the agendas at the Trilateral Commission, Bilderberg Group, G-8, G-20, NATO, the World Bank, and the World Trade Organization. They are from the highest levels of finance capital, transnational corporations, the government, the military, the academy, nongovernmental organizations, spiritual leaders, and other shadow elites. Shadow elites include, for instance, the deep politics of national security organizations in connection with international drug cartels, who extract 8,000 tons of opium from US war zones annually, then launder $500 billion through transnational banks, half of which are US-based.[xxxiii]

Rothkoft’s understanding of the superclass is one based on influence and power. Although there are over 1,000 billionaires in the world, not all are necessarily part of the superclass in terms of influencing global policies. Yet these 1,000 billionaires have twice as much wealth as the 2.5 billion least wealthy people, and they are fully aware of the vast inequalities in the world. The billionaires and the global 1 percent are similar to colonial plantation owners. They know they are a small minority with vast resources and power, yet they must continually worry about the unruly exploited masses rising in rebellion. As a result of these class insecurities, the superclass works hard to protect this structure of concentrated wealth. Protection of capital is the prime reason that NATO countries now account for 85 percent of the world’s defense spending, with the US spending more on military than the rest of the world combined.[xxxiv] Fears of inequality rebellions and other forms of unrest motivate NATO’s global agenda in the war on terror.[xxxv] The Chicago 2012 NATO Summit Declaration reads:

As Alliance leaders, we are determined to ensure that NATO retains and develops the capabilities necessary to perform its essential core tasks collective defence, crisis management and cooperative security—and thereby to play an essential role promoting security in the world. We must meet this responsibility while dealing with an acute financial crisis and responding to evolving geo-strategic challenges. NATO allows us to achieve greater security than any one Ally could attain acting alone.

We confirm the continued importance of a strong transatlantic link and Alliance solidarity as well as the significance of sharing responsibilities, roles, and risks to meet the challenges North-American and European Allies face together . . . we have confidently set ourselves the goal of NATO Forces 2020: modern, tightly connected forces equipped, trained, exercised and commanded so that they can operate together and with partners in any (emphaisis added) environment.[xxxvi]

NATO is quickly emerging as the police force for the transnational corporate class. As the TCC more fully emerged in the 1980s, coinciding with the collapse of the Union of Soviet Socialist Republics (USSR), NATO began broader operations. NATO first ventured into the Balkans, where it remains, and then moved into Afghanistan. NATO started a training mission in Iraq in 2005, has recently conducted operations in Libya, and, as of July 2012, is considering military action in Syria.

It has become clear that the superclass uses NATO for its global security. This is part of an expanding strategy of US military domination around the world, wherby the US/NATO military-industrial-media empire operates in service to the transnational corporate class for the protection of international capital anywhere in the world.[xxxvii]

Sociologists William Robinson and Jerry Harris anticipated this situation in 2000, when they described “a shift from the social welfare state to the social control (police) state replete with the dramatic expansion of public and private security forces, the mass incarceration of the excluded populations (disproportionately minorities), new forms of social apartheid . . . and anti-immigrant legislation.”[xxxviii] Robinson and Harris’s theory accurately predicts the agenda of today’s global superclass, including

—President Obama’s continuation of the police state agendas of his executive predecessors, George W. Bush, Bill Clinton, and George H. W. Bush;

—the long-range global dominance agenda of the superclass, which uses US/NATO military forces to discourage resisting states and maintain internal police repression, in service of the capitalist system’s orderly maintenance;

—and the continued consolidation of capital around the world without interference from governments or egalitarian social movements.[xxxix]

Furthermore, this agenda leads to the further pauperization of the poorest half of the world’s population, and an unrelenting downward spiral of wages for everyone in the second tier, and even some within the first tier.[xl] It is a world facing economic crisis, where the neoliberal solution is to spend less on human needs and more on security.[xli] It is a world of financial institutions run amok, where the answer to bankruptcy is to print more money through quantitative easing with trillions of new inflation-producing dollars. It is a world of permanent war, whereby spending for destruction requires even more spending to rebuild, a cycle that profits the TCC and its global networks of economic power. It is a world of drone killings, extrajudicial assassinations, and death and destruction, at home and abroad.

As Andrew Kollin states in State Power and Democracy, “There is an Orwellian dimension to the Administration’s (Bush and later Obama) perspective, it chose to disregard the law, instead creating decrees to legitimate illegal actions, giving itself permision to act without any semblances of power sharing as required by the Constitution or international law.”[xlii]

And in Globalization and the Demolition of Society, Dennis Loo writes, “The bottom line, the fundamential division of our society, is between, on the one hand, those whose interests rest on the dominance and the drive for monopolizing the society and planet’s resources and, on the other hand, those whose interests lie in the husbanding of thoses resources for the good of the whole rather than the part.”[xliii]

The Occupy movement uses the 1 percent vs. 99 percent mantra as a master concept in its demonstrations, disruptions, and challenges to the practices of the transnational corporate class, within which the global superclass is a key element in the implementation of a superelite agenda for permanent war and total social control. Occupy is exactly what the superclass fears the most—a global democratic movement that exposes the TCC agenda and the continuing theater of government elections, wherein the actors may change but the marquee remains the same. The more that Occupy refuses to cooperate with the TCC agenda and mobilizes activists, the more likely the whole TCC system of dominance will fall to its knees under the people power of democractic movements.

Peter Phillips is a professor of sociology at Sonoma State University and president of the Media Freedom Foundation/Project Censored.

Kimberly Soeiro is a sociology student at Sonoma State University, library researcher, and activist.

Special thanks to Mickey Huff, director of Project Censored, and Andy Roth, associate director of Project Censored, for editing and for important suggestons for this article.

Notes

[i] For a more scholarly background on this subject, the following are required reading: C. Wright Mills, The Power Elite, New York, Oxford University Press, 1956; G. Willian Domhoff, Who Rules America 6th edition, Boston, McGraw Hill Higher Education, 2009; William Carroll, The Making of a Transnational Capitalist Class, Zed Books, 2010.

[ii] Leslie Sklair, The Transnational Capitalist Class, Oxford, UK, Blackwell, 2001.

[iii] Leslie Sklair, “The Transnational Capitalist Class And The Discourse Of Globalization,” Cambridge Review of International Affairs, 2000, http://www.theglobalsite.ac.uk/press/012sklair.htm

[iv] Tax Havens: Super-rich hiding at least $21 trillion, BBC News, July 22, 2012, http://www.bbc.co.uk/news/business-18944097

[v] Tyler Durgen, A Detailed Look At Global Wealth Distribution, 10/11/10, http://www.zerohedge.com/article/detailed-look-global-wealth-distribution.

[vi] “World Bank Sees Progress Against Extreme Poverty, But Flags Vulnerabilities,” World Bank, Press Release No. 2012/297/Dec., February 29, 2012, http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:23130032~pagePK:64257043~piPK:437376~theSitePK:4607,00.html.

[vii] Mark Ellis, The Three Top Sins of the Universe, http://www.starvation.net/.

[viii] “Corporatons are Still Making a Killing from Hunger,” April 2009, Grain, http://www.grain.org/article/entries/716-corporations-are-still-making-a-killing-from-hunger.

[ix] On the extraction of surplus-value from labor, see Karl Marx, Capital, Vol. 3 (New York and London: Penguin, 1991[1894]).

[x] See, e.g., Paul Burkett, Marx and Nature: A Red and Green Perspective (New York: St. Martins, 1999), Chapter 6; for additional information on the Fair Share of the Common Heritage see, http://www.fairsharecommonheritage.org/.

[xi] Freeport-McMoRan Copper and Gold, Notice of Annual Meeting of Stockholders, June 15, 2011, document April 28, 2001, www.ecocumentview.com/FCX_MTG.

[xii] “Freeport Indonesia Miners, Tribesmen Defend Road Blockades,” Reuters Africa, November 4, 2011, http://af.reuters.com/article/metalsNews/idAFL4E7M410020111104.

[xiii] “Police Admit to Receiving Freeport ‘Lunch Money,’” Frank Arnaz, Jakarta Globe, October 28, 2011,

http://www.thejakartaglobe.com/news/police-admit-to-receiving-freeport-lunch-money/474747.

[xiv] “Indonesia must investigate mine strike protest killing,” Amnesty International News, October 10, 2011, http://www.amnesty.org/en/news-and-updates/indonesia-must-investigate-mine-strike-protest-killing-2011-10-10; West Papua Report, November 2011, http://www.etan.org/issues/wpapua/2011/1111wpap.htm.

[xv] Camelia Pasandaran, “Striking Freeport Employees Lower Wage Increase Demands,”Jakarta Globe, | November 7, 2011, http://www.thejakartaglobe.com/business/striking-freeport-employees-lower-wage-increase-demands/476800.

[xvi] Alex Emery, “Freeport Cerro Verde, Workers Sign Three-Year Labor Accord,” Bloomberg News,

December 22, 2011, http://mobile.bloomberg.com/news/2011-12-22/freeport-cerro-verde-peru-workers-sign-three-year-labor-accord.

[xvii] Eric Bellman and Tess Stynes, “Freeport-McMoRan Says Pact Ends Indonesia Strike,” Wall Street Journal, December 14, 2011, http://online.wsj.com/article/SB10001424052970203893404577098222935896112.html.

[xviii] John Pakage, “When there is no guarantee of the security of life for the people of Papau,” West Papua Media Alerts, March 1, 2012, http://westpapuamedia.info/tag/freeport-McMoRan/.

[xix] “Reasons to go the Darwin,” The Nation (Thailand), November 30, 2011, http://www.nationmultimedia.com/opinion/Reasons-to-go-to-Darwin-30170893.html

[xxi] Karishma Vaswani, “US Firm Freeport Struggles to Escape Its Past in Papua,” BBC News, Jakarta,

http://www.bbc.co.uk/news/world-asia-pacific-14417718.

[xxii] Phoenix Arizona, October 28, 2011, Youtube report: http://www.youtube.com/watch?v=CvJxy2GvOHE.

[xxiii] BlackRock About Us: http://www2.blackrock.com/global/home/AboutUs/index.htm.

[xxiv] Data for this section is drawn for StreetInsider.com.

[xxv] Data for the corporations listed in this section comes fron the annual report at each corporation’s website. Biography information was gained from the FAX annual report to investors and online biographies for individuals wihen available.

[xxvi] Stefania Vitali, James B. Glattfelder, and Stefano Battiston, “The Network of Global Corporate Control,” PLoS ONE, October 26, 2011, http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0025995.

[xxvii] Willian Robinson and Jerry Harris, “Towards a Global Ruling Class? Globalization and the Transnational Capitalist Class, Science and Society 64, no. 1 (Spring 2000).

[xxviii] Val Burris, “Interlocking Directorates and Political Cohesion Among Corporate Elites,” American Journal of Sociology 3, no. 1 (July 2005).

[xxix] Peter Phillips and Mickey Huff, “Truth Emergency: Inside the Military-Industrial Media Empire,” Censored 2010 (New York: Seven Stories Press, 2009), 197–220.

[xxx] Verizon Financials 2012, http://www22.verizon.com/investor/ Hoovers describes Verizon as, “the #2 US telecom services provider overall after AT&T, but it holds the top spot in wireless services ahead of rival AT&T Mobility.” Hoovers Inc. http://www.hoovers.com/company/Verizon_Communications_Inc/rfrski-1.html.

[xxxi] WPP: http://www.wpp.com/wpp/about/wppataglance/.

[xxxii] David Rothkopf, SuperClass: the Global Power Elite and the World They are Making (New York: Farrar, Straus, and Giroux, 2008).

[xxxiii] Peter Dale Scott, American War Machine, Deep Politics, the CIA Global Drug Connection, and the Road to Afghanistan (Lanham, MD: Rowman & Littlefield Publishers, 2010). See also Censored Story #22, “Wachovia Bank Laundered Money for Latin American Drug Cartels,” in Chapter 1.

[xxxiv] David Rothkopf, Superclass, Public Address: Carnegie Endowment for International Peace, April 9, 2008.

[xxxv] NATO: Defence Against Terrorism Programme, http://www.nato.int/cps/en/SID-EBFFE857-6607109D/natolive/topics_50313.htm?selectedLocale=en.

[xxxvi] NATO, Summit Declaration on Defence Capabilities: Toward NATO Forces 2020, May 20, 2012, http://www.nato.int/cps/en/SID-1CE3D0B6-393C986D/natolive/official_texts_87594.htm.

[xxxvii] For an expanded analysis of the history of US “global dominance,” see Peter Phillips, Bridget Thornton and Celeste Vogler, “The Global Dominance Group: 9/11 Pre-Warnings & Election Irregularities in Context,” May 2, 2010, http://www.projectcensored.org/top-stories/articles/the-global-dominance-group/ and Peter Phillips, Bridget Thornton, and Lew Brown, “The Global Dominance Group and U.S. Corporate Media,” Censored 2007 (New York: Seven Stories, 2006), 307–333.

[xxxviii] Willian Robinson and Jerry Harris, “Towards a Global Ruling Class? Globalization and the Transnational Capitalist Class, Science and Society 64, no. 1 (Spring 2000).

[xxxix] John Pilger, The New Rulers of the World (New York: Verso, 2003).

[xl] Michel Chossudovsky and Andrew Gavin Marshall, eds., The Global Economic Crisis (Montréal: Global Research Publishers, 2010).

[xli] Dennis Loo, Globalization and the Demolition of Society (Glendale, CA: Larkmead Press, 2011).

[xlii] Andrew Kolin, State Power and Democracy (New York: Palgrave MacMillan,c2011), 141.

[xliii] Loo, Globalization, op cit., 357.