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Class War For Idiots / January 26, 2011

austerity

This article was first published in Alternet.

Now that the shock of the Gabrielle Giffords shooting is starting to wear off and the country is returning to its normal insanity again, we’re back to facing a far worse, far more serious, and far more violent threat than mere rampage shootings:  “Austerity.”

The DC-Wall Street power circuit has already decided for the rest of us that “Austerity” is the Big Word that will define the 2011 political agenda. Austerity is what the oligarch-sponsored Tea Party demanded, what the Republicans are promising to deliver now that they’re in control of drafting the budget, and what the Obama Administration is going to try to enact as part of their neo-Clinton triangulation strategy. They’re backed by the Establishment media, which has been hammering home the same message for months now: Austerity is the answer to our problems—problems that were created by the same Establishment that wants to make us scream in pain again, but that’s beside the point here. The way this “austerity” debate has been framed in all the major media outlets, anyone pushing for austerity cuts and “pain” is automatically labeled “courageous”—which is an odd way of defining courage, since not a single rich politician or pundit pushing for “austerity” will actually suffer that pain, and most will profit from it. But that’s what counts as “courage” in our era. These same media elites used words like “courage” and “bold” to describe how Vietnam War deserters sent other people’s kids to die in Iraq—it was “courageous” because these warmongering draft-dodgers didn’t pander to the protesters in the streets or popular opinion. (Of course by this standard, that would make the world’s worst, most undemocratic tyrants the most courageous leaders in the world.)

Since we’re so shamelessly obsequious already, why not just come out and admit that the word “courageous” means “anything a billionaire ever says or does or approves of”? It’s only a matter of time before we’ll be reading articles that will look like this:

“WITCHITA, KS (AP) — Charles Koch isn’t afraid to tell it like it is in order to get things done. Last week, when Mr. Koch ordered his butlers to wipe the specks of dust off of his shoes before fucking off out of his face or he’ll have them sleeping in cardboard boxes for the rest of their short miserable lives, some were outraged by the free-market billionaire’s bold, courageous choice of words. Sure, it didn’t win Koch many friends among his staff of servants, but Mr. Koch doesn’t believe that running a billionaire estate is about pandering to his servants. That would be too easy–and would lead his servants down the road to serfdom. For their sake and for the sake of freedom, Koch courageously explained, what mattered most was getting that speckle of dust off his shoes before Justice Scalia arrived for a game of croquet. This reporter, for one, was so impressed by Mr. Koch’s courage that he felt impelled to kneel down on the floor and lick Mr. Koch’s shoes—where this reporter observed the tongue-prints of many an enterprising reporter, economist and think-tank analyst before him, proof that most reasonable people today agree that Mr. Koch’s shoes taste like courage.” *

Indeed. By this logic, if they’re the courageous ones, then that means that the opposite of courage is we, the cowardly masses of lazy slobs, who need to be whipped into shape with a steady lashing of the “austerity” whip. We prove our unworthiness whenever we call for “Austerity for the Rich” which is of course the opposite of courage. That’s called “class war”—exactly the sort of totalitarian fascism one would expect from slobs like us who don’t understand that if taxes on billionaires are raised to the same tax rates paid by Manpower temp clerks, then we’re well on the road to Stalinist GULAGs and Nazi death camps.

gimp1

Gimp-onomics: If you like pain, you’ll love austerity programs

That’s why they need to administer austerity punishments in-advance—we brought it on ourselves, it’s all our fault. Which might be fine and all, if only austerity worked. That’s what makes this insanity something so beyond-insanity that it defies description: the historical record tells a very different, disastrous story about austerity programs. These measures almost always end in the worst worst-case-scenario imaginable: economic disaster, violence, and repression.

Let’s start with the most catastrophic of all austerity programs in history—the one austerity program none of the Austerity Snake Oil peddlers want you to know about. It was the disastrous austerity program tested out in Germany way back in 1930, under Chancellor Heinrich Bruning, himself an austere centrist. The Depression was just spreading around the globe, and Bruning, backed by Germany’s industry titans, believed that Germany would only recover with a strong currency, which he tethered to the gold standard, and a balanced budget through brutal cuts in wages, pensions and unemployment benefits, and hikes in taxes and fees. Bruning learned austerity as a doctoral student at the London School of Economics—which nurtured and promoted free-market whores like Friedrich von Hayek and the “Austrian School” of austerity favored by today’s ruling class, and piped out to the rest of us through the editorial pages of the Wall Street Journal and the vast libertarian nomenklatura. Bruning applied the von Hayek medicine to Germany, and the resulting backlash was so intense that Bruning suspended parliamentary democracy and ruled by emergency decree, setting a fine example for the next guy who took power. After just two years of “austerity” measures, Germany’s economy had completely collapsed: unemployment doubled from 15% in 1930 to 30% in 1932, protests spread, and Bruning was finally forced out. Just two years of austerity, and Germany was willing to be ruled by anyone or anything except for the kinds of democratic politicians that administered “austerity” pain. So in 1932’s elections, the Nazis and the Communists came out on top—and by early 1933, with Hitler in charge, Germany’s fledgling democracy was shut down for good.

That should have sealed the coffin on “austerity” and “Austrian Economics,” but somehow von Hayek and his fellow Austrian aristocrats who were forced to flee from the fruits of their economic programs, did a complete revision of history and retold that same story as if the very opposite of reality had happened. Once they were safely in England and America, sponsored and funded by oligarch grants, hacks like von Mises and von Hayek started pushing a revisionist history of the collapse of Weimar Germany blaming not their austerity measures, but rather big-spending liberals who were allegedly in charge of Germany’s last government. Somehow, von Hayek looked at Chancellor Bruning’s policies of massive budget cuts combined with pegging the currency to the gold standard, the policies that led to Weimar Germany’s collapse, policies that became the cornerstone of Hayek’s cult—and decided that Bruning hadn’t existed. That instead Hitler came to power because Germany’s government grew too fat even as Bruning enacted massive spending cuts, its currency a mere paper currency even though Bruning kept it tied to gold, the German people a bunch of spoiled welfare queens living too high on the socialist hog when in fact they were starving in the streets suffering from unbearable pay cuts, and that these profligate German fat-cat pensioners and unemployment-insurance-queens were so hellbent on enjoying their government handouts that they elected a Nazi, fired up the gas chambers, and launched a world war. Sure it makes no fucking sense whatsoever, but nothing about austerity logic makes sense.

hayek-reagan

Reagan and Hayek laugh at Americans: “So long as you call it ‘freedom’ you can steal all you want from the fools! Bwah-hah-hah!”

Austerity programs and gold-backed currencies were the cause of enormous pain, violence, and disaster throughout the West in the early 1930s: In England, austerity measures led to one of the biggest mutinies in Britain’s military history since the time of the French Revolution, the Invergordon Mutiny of 1931, when up to half of the Royal Navy rose up against austerity cuts, took over ships and sent fears of a Bolshevik revolution throughout the country. The mutiny and strikes worked somewhat: Britain was finally forced to abandon the gold standard, and wage cuts were softened.

(As a counter example—Sweden, just about the only country that adopted a “mixed economy” model, suffered far less from the Great Depression which affected the whole world; unlike the austerity-dosing countries, Sweden and was already back on its feet and booming by 1932.)

Take a look at just about any austerity program over the past century, and the record is always the same: economic destruction, political destruction, and violence. Take Venezuela, for example: Ever wonder why Venezuelans chose Hugo Chavez? What made Venezuelans so radicalized that they’d to turn to a Fidel Castro groupie to save them? Austerity is what happened, austerity cooked up in Washington by the same financial elite that we’re now facing today.

In February, 1989, Venezuela elected as president a candidate, Carlos Andres Perez, who campaigned as a populist-liberal who promised voters he would fight against the IMF and World Bank, who were trying to force an austerity program on the country. They believed Perez because the last time he was president, in the 1970s, he’d nationalized the oil industry as well as American iron ore interests.

But Perez was a fraud, a fake-liberal who’d secretly sold himself to bankster oligarchs and conned the voters, sort of like a certain president today. Three weeks after winning the election, the same fake-populist, President Perez, rammed through an austerity program written by the IMF that sparked immediate mass protests. Perez did what all austerity-lovers did: he declared a state of emergency and suspended the Constitution, and called out the security forces, who massacred at least 1,000 Venezuelan protesters, perhaps as many as 3,000. (While everyone in the West knows about the comparatively smaller massacre in Tienamen Square that same year, few here have ever heard about this massacre, which Venezuelans call “The Caracazo.”) Naturally, this con-job and massacre was an example of “courage”—that’s how IMF’s Michel Camdessus described Perez’s decision to massacre protesters. Here’s an article from 1989:

I.M.F. Position On Venezuela

Special to the New York Times
Published: March 09, 1989

WASHINGTON, March 8 — The International Monetary Fund’s managing director, Michel Camdessus, asserts that economic stabilization measures in Venezuela ”are proving even more painful” because they were ”too long postponed.”

He made the comment in a letter written on Monday, just days after unrest caused by tough economic measures led to up to 375 deaths in Venezuela.

Mr. Camdessus praised the new Government of President Carlos Andres Perez for its ”courage” in embracing an economic shock program that was designed to increase economic efficiency, and said the I.M.F. would support it ”with all the influence at its disposal.” But he rejected charges from Mr. Perez that the I.M.F. was at least partly responsible for last week’s disturbances because it had recommended some of the revamping measures.

Notice the same twisted rhetoric used then as we see today: The elites who impose austerity and slaughter civilians and declare states of emergency to protect IMF programs are labeled “courageous,” while the people who are killed don’t get so much as a column inch devoted to them, they don’t even get the dignity of proper death counts if they died making America’s free-marketeers look bad. Also, they can’t take responsibility for their fuck-ups: notice how President Perez blames Camdessus, and Camdessus blames an alternative history that could have been had only previous leaders been “courageous” too and enacted these insane price hikes and wage cuts earlier.

Venezuela’s austerity programs created greater poverty, richer oligarchs, worse corruption, and the inevitable backlash in the form of Hugo Chavez, who staged a coup in 1992 that almost succeeded…and later won the presidency through the ballot box. Perez had to flee to Miami with his family to avoid being put on trial for the massacre; he died just last month in shame.

Austerity programs in the ex-Communist Soviet countries led to similar disastrous results: As I wrote about in The Nation, Larry Summers oversaw Lithuania’s austerity program in the early 1990s, sparking overnight the world’s highest suicide rate, economic misery, and a backlash that made Lithuania the very first country in the former Communist bloc to vote the Communists back into power–anything to stop the pain.

In Russia, austerity measures dictated by the same Hayek groupies in the IMF led to a complete financial market meltdown, a 60% collapse in the GDP, the untimely deaths of millions, and of course the requisite President Yeltsin ruling by decree, bombing his own parliament, then finally snuffing democracy by handing the Kremlin over to his crony, Vladimir Putin.

The Russian economists who helped design their austerity program spent a lot of time learning from Friedrich von Hayek’s favorite austerity-program-cured country on earth, the Chile of Generalissimo Augusto Pinochet (South Africa’s apartheid regime came a close second in Hayek’s austere little Austrian heart). That austerity program, implemented in 1975 under the advice of von Hayek and Milton Friedman, was implemented AFTER the brutal massacres and destruction of democracy, a clever reversal of the usual formula: Pinochet overthrew the democratically-elected president, Salvadore Allende, in 1973, massacred roughly 3,000 opponents and locked up and tortured countless more, providing the perfect conditions for von Hayek’s austerity measures. In 1975, those measures were implemented, and the results were, naturally, catastrophic: GDP collapsed almost 15% in just one quarter, while unemployment soared from 3% under Allende to 20 percent. The economy didn’t reach 1971 levels until the end of the 1970s—and then the whole house of Austrian-economics cards collapsed two years later. But the good thing for Chileans was, they didn’t have to go through the trauma of massacres and end-of-democracy, since that was already served up in-advance: it was like giving the people free-market dessert before the main course. By the end of it all, Chile was left with a new class of massively-enriched financial oligarchs, the public sector unions in tatters, and one of the world’s worst wealth inequalities.

But you don’t hear about that much, not outside of the subculture of crunchy anti-globalization protesters and Naomi KIein fans. PR works, folks. Thanks to inane but heavily-funded propaganda, Hayek’s experiment in Chile is constantly called a success story: When a private mining firm was too inefficient and corrupt to rescue its own trapped miners last year, the private company got the state mining company to bail its trapped workers out…nevertheless, the story we Americans got through rags like the Wall Street Journal was that the rescue of the miners was somehow “proof” that Hayek and Friedman’s free-market experiments that Generalissimo Pinochet tested out on Chile were somehow responsible for saving those trapped miners. The logic goes like this: The private company got their miners trapped and couldn’t rescue them; the state mining company rescued them; therefore, free unfettered markets rescued the trapped miners. It’s the logic that Hayek used to argue that phantom Big Government New Dealers brought about the Nazis, rather than Bruning’s austerity measures.

We Americans alone among the world are the only suckers who take it on faith that Pinochet performed an economic miracle in Chile.

Now, at last, the same austerity programs that have led to massacres, wars, pain and catastrophe all over the world are finally coming home to the very people and country they were intended to poison all along.

Why now, you ask? Why, after all the economic destruction and inequality that resulted from decades from deregulation, privatization, slashing taxes on the rich, and relentless bashing of evil big-government—why would we adopt a far more purified, radical version of the same disastrous free-market program? Why would we have to take more pain medicine from the same people who already poisoned us?

Simple: Because we’re weakened after having our wells poisoned by free-market, libertarian ideology over the past three decades. We’re weaker, poorer, we’ve turned against the unions and the government, the only two potential sources of counter-power to billionaires and corporations—what predator wouldn’t move in for the kill at this very moment? Now’s the perfect time take everything that Austrian economics offers to its practitioners. Plundering the weak and shooting them in their heads when they resist—that’s the definition of “courage” to America’s degenerate ruling class.

*     *     *

* = I thought I was making a funny with that fake Kochjob, but then I ran across this real-life throating in the Wall Street Journal by the paper’s “senior economics writer” and founder of the Koch-funded Club For Growth, Stephen Moore:

WICHITA, Kan. — Meet Charles Koch. Philosopher, engineer, self-trained economist, libertarian activist, philanthropist — and the CEO of Koch Industries, a $60 billion, 80,000-employee empire, which just recently became the largest and most profitable privately held company in America.

But you’ve probably never heard of it.

Neither Charles Koch nor his firm are household names. Mr. Koch (pronounced “coke”) has managed to live in relative obscurity despite being one of the richest men on the planet, with a net worth estimated at $14 billion. He is a man of modesty who craves none of the fame or public adulation that seems to preoccupy other members of the billionaires’ club.

Yet celebrity seems to intrude. On the day I visit the company’s Kansas headquarters, his office is atwitter over a recent issue of Forbes magazine featuring the world’s billionaires. The issue includes a glossy photo of Charles Koch smiling contentedly, and right below him on the page is a picture of a slightly better known titan: Oprah. Running in company like that is bound to bump up Mr. Koch’s public profile — whether he likes it or not.

My mission, then, is to unwrap at least a few of the secrets of his success.

Hoo-wee, open the windows, tell the kids to hide in their bedrooms–seriously, I’ve read steamy erotica opening chapters in my day, but Stephen Moore may just be the Danielle Steele of free-market rim-jobbing hagiography.

Mark Ames is the author of Going Postal: Rage, Murder and Rebellion: From Reagan’s Workplaces to Clinton’s Columbine and Beyond.

 

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53 Comments

Add your own

  • 1. Trevor  |  August 15th, 2011 at 6:26 am

    Given the proven failure of austerity, you have to wonder if the guys at the top are really just lucky morons. For all their fruity financial formulas, they can’t grasp the simple fact that when all the serfs suffer, it cuts deeply into their bottom line.

    Then again, maybe they’re just evil and get boners at the sight of starving brown people…

  • 2. Matt Dubuque  |  November 17th, 2011 at 4:40 pm

    Why do you call Chavez a “Castro Groupie”?

    That’s pathetic.

    Castro has been RAILING against austerity since 1982. He coined the term “casino economy” back then when derivatives were in their infancy.

    What were YOU doing in 1982?

  • 3. Garygoddmn  |  November 20th, 2011 at 1:22 pm

    At one point, Hayek said he approved of some kinds of social welfare, that wealthy societies could afford it. Today’s politics are beyond Hayek, and meaner.

    For anyone interested, Kevin Carson explains how ACTUAL free markets help the poor, but not faux “free markets” run by a corporate state and approved cartels.

    THE IRON FIST BEHIND THE INVISIBLE HAND
    Corporate Capitalism As a State-Guaranteed System of Privilege
    Mutualist.Org: Free Market Anti-Capitalism
    http://www.mutualist.org/id4.html

    INTRODUCTION. Manorialism, commonly, is recognized to have been founded by robbery and usurpation; a ruling class established itself by force, and then compelled the peasantry to work for the profit of their lords.

    But no system of exploitation, including capitalism, has ever been created by the action of a free market. Capitalism was founded on an act of robbery as massive as feudalism. It has been sustained to the present by continual state intervention to protect its system of privilege, without which its survival is unimaginable.

    The current structure of capital ownership and organization of production in our so-called “market” economy, reflects coercive state intervention prior to and extraneous to the market.

    From the outset of the industrial revolution, what is nostalgically called “laissez-faire” was in fact a system of continuing state intervention to subsidize accumulation, guarantee privilege, and maintain work discipline.


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