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When You’re Cutting Social Security, ‘Wealthy’ Begins at $25K

By Jim Naureckas | FAIR | February 21, 2013

Here’s a proposal for Social Security that was on the New York Times‘ op-ed page yesterday (2/20/13):

The top third of beneficiaries (by lifetime income) [would] receive no annual cost-of-living adjustment in retirement. The middle third would get half of today’s adjustment, and the bottom third would receive the same annual increase they do now. Such a reform…would reduce Social Security spending by more than a tenth over a decade and fix the program’s long-term financing.

This is part of Paul Ryan adviser Yuval Levin‘s attempt to find “common ground” on the entitlement issue: “Both sides should agree at least to spend less money on the wealthy.” So who are these “wealthy” people who would be getting a benefit cut equal to the rate of inflation every year? According to the  SSA, about 34 percent of people over 65 have family incomes of $50,000.

Now, you can argue about what “wealthy” is, but I think you would find pretty widespread agreement on what wealthy isn’t: $50,000 a year. If you sent the New York Times an op-ed outlining your plan to balance the budget by raising taxes on “wealthy” people who make 50k a year or more, it would be put in the same pile that gets the submissions about Elvis’s UFO diet. But when you’re talking about cutting entitlements, if you want to call those people “wealthy,” that’s perfectly reasonable.

But wait! Those aren’t the only people who are getting too much from the government and need to have their benefits cut–the middle third of the elderly are also “wealthy” and need their benefits cut–but by only half the rate of inflation per year. The ones making more than $50,000 must be the super-wealthy, the regular wealthy make…between $25,000 and $50,000, roughly.

For comparison purposes, the poverty line for a family of four is $23,350. Talk about a shrinking middle class!

This idea of “means testing” as a painless way to solve the supposed entitlement crisis is very popular among wealthy pundits. It’s not hard to understand why. One of the principles Levin suggests we should all be able to agree on is “give less to the wealthy rather than take more from them.”

OK, so let’s say you’re wealthy–not Levin’s pretend wealthy, but truly super-rich, in the top 0.01 percent of income.  Average income in this group is about $24 million a year. So you can easily afford to give up their whole Social Security paycheck. If you’ve paid in the maximum possible amount and retire at 66, that’s $2,513 a month–or $30,582 a year. You have sacrificed for your country.

But let’s say that instead of taking away your Social Security check, we tax your income–which comes entirely in the form of investment income, since you’re a wealthy retiree–at the rate for regular income rather than at the special lower fat-cat rate. So instead of paying (very roughly) $4.8 million in federal income tax, you’ll be paying about $9.5 million.

Now, you can surely afford to live on $14.5 million a year rather than $19.2 million–just as you can afford to give up your Social Security check. Somehow, though, making the latter sacrifice is probably going to seem more appealing.

And the thing is, there aren’t that many really wealthy people who won’t miss their Social Security checks–so in order to save any appreciable amount of money, you have to take a substantial chunk away from people who actually aren’t very wealthy at all. That’s a principle we can all agree on. All of us making $24 million a year, anyway.

February 22, 2013 Posted by | Deception, Mainstream Media, Warmongering | , , , , , | Leave a comment

Reporting Ahead of Ecuadorean Elections Fits a Familiar Narrative

By Dan Beeton | CEPR Americas Blog | February 17, 2013

International media reporting ahead of Ecuador’s elections today has sounded familiar themes, understating the achievements of the Rafael Correa government and attributing Ecuador’s recent economic and social progress to “luck” or happenstance, and high oil prices. Correa is depicted as an enemy of press freedom, despite the fact that Ecuadorean media is uncensored and the majority of it opposes the government; and despite his granting of political asylum to Julian Assange. He is also depicted as a member of Latin America’s “bad left” who has ambitions of regional leadership should “bad left” leader Hugo Chávez succumb to illness or otherwise be unable to continue in office.

A common theme in press accounts is that the Correa administration’s social programs are “funded by the country’s oil proceeds.” While some reporting has gone deeper and noted that “Correa has taken on big business and media groups, imposing new contracts on oil companies and renegotiating the country’s debt while touting his poverty reduction efforts,” others have not. “High prices for oil exports resulted in higher revenues which the government invested in social programs and public infrastructure,” the Christian Science Monitor reported in a Friday article. The New York Times’  William Neuman presented a contradictory picture of the economic importance of Ecuador’s petroleum sector, writing that “Ecuador is the smallest oil producer in the Organization of the Petroleum Exporting Countries, yet oil sales account for about half of the country’s income from exports and about a third of all tax revenues, according to the United States Energy Information Administration,” just before stating in the next paragraph that “Mr. Correa has taken advantage of high oil prices to put money into social programs, earning him immense popularity, especially among the country’s poor.”

Petroleum exports have been important to Ecuador’s economy for a long time; this did not suddenly come about with Correa. While Correa was favored by high oil prices during most of his six years in office, the collapse of oil prices in 2008 was a major blow to the economy.  Also, an important change during Correa’s first term has been the Ecuadorean government’s relationship with foreign oil companies. Correa notably has driven a much harder bargain than his predecessors, “imposing a windfall profits tax for concessions made to companies for the exploitation of domestic natural resources” that “raised over $500 million for the government in 2010,” as our latest paper notes. A raft of financial and regulatory reforms have also put a considerable amount of revenue in the government’s coffers, contributing to the increase  from 27 percent of GDP in 2006 to more than 40 percent in 2012. Stimulus spending – 5 percent of GDP in 2009 – boosted the economy and allowed Ecuador to get through the global recession with minimal damage, losing only about 1.3 percent of GDP during three quarters of recession, despite being one of the hardest hit countries in the hemisphere by external shocks. Non-petroleum sectors such as construction, commerce and services have also been important drivers of growth in recent years, including in 2011, when Ecuador had some of the highest real GDP growth in the region at 7.8 percent, second only to Argentina in South America.

As we have pointed out, this additional revenue has in turn allowed the Correa government to ramp up social spending in ways that are significantly improving Ecuadoreans’ living standards. While much news coverage has reported that state spending has boosted Correa’s popularity and may explain his huge lead (some 20 – 50 percentage points, according to polls) over his opponents coming into the election, some reporting has characterized this – as with last year’s election coverage of Venezuela’s state spending– as a form of vote-buying. “Public policies and subsidies are needed to temporarily keep certain sectors content,” the Christian Science Monitor quotes an analyst as saying. “[T]hey also give him votes.” The Associated Press described this as state “largesse,” a term that Merriam-Webster’s dictionary defines as “liberal giving (as of money) to or as if to an inferior; also: something so given.” The media seems at times to forget that the purpose of economic development is to raise peoples’ living standards.

The New York Times presented Ecuador’s recent economic progress by using a passive voice: “[Correa] has governed during a period of relative prosperity,” which not only understates the impact of the Correa administration’s policies but also the challenges presented over the past several years – most notably the global recession, which collapsed not only oil prices but remittances, on which Ecuador was also heavily dependent.

Some reporting has understated some of the ways in which the government’s policies have impacted Ecuadoreans’ lives. For example, the Associated Press reported that “The bulk of [Correa’s] backers are poor and lower-middle class Ecuadoreans who in 2010 represented 37 and 40 percent, respectively, of the country’s population according to the World Bank.” Bloomberg’s Nathan Gill, meanwhile, wrote:

As the head of a nation where about one in three of its 15.4 million citizens live in poverty, Correa defaulted on $3.2 billion of bonds in 2008 and pushed through laws nationalizing the country’s oil reserves during his first two terms in office. While the moves provided short-term gains, the 49-year-old Correa, an ally of Venezuela’s Hugo Chavez, is now paying the cost with stagnant crude output and declines in private investment needed to boost slumping growth.

In fact, as we noted in our new paper, “The national poverty rate fell to 27.3 percent as of December 2012, 27 percent below its level in 2006,” (before Correa came to office). (The New York Times’ Neuman noted this accomplishment: “In a country of 14.6 million people, about 28 percent lived in poverty in 2011, down from 37 percent in 2006, the year before Mr. Correa took office, according to World Bank data.”)

Nor are Ecuador’s recent gains “short term,” as Gill described them. The data shows sustained progress on reducing unemployment and poverty, for example.

Other common themes include that Correa has clamped down on freedom of press. Such statements are often ironically followed by mention of Correa’s granting of political asylum to Wikileaks founder Julian Assange, such as in the Christian Science Monitor sub-header “President Correa has been criticized internationally for limiting press freedoms and granting Julian Assange asylum in Ecuador’s London embassy.” Readers of AFP might be led to believe Assange was granted asylum in order to “irritat[e] the United States …after the anti-privacy group released tens of thousands of secret US military and diplomatic reports.”

Press coverage has emphasized that Correa is “an ally of Venezuela’s Hugo Chavez,” rather than a friend or “ally” of Brazilian President Dilma Rousseff, for example. This meme positions Correa as “part of a group of leftist presidents in the region that include Mr. Chávez in Venezuela and Evo Morales in Bolivia,” also known as the “bad left” in Washington policy circles and among media commentators. (Brazil has always been considered part of the “good left,” despite the Brazilian government’s longstanding support for Chávez, Morales and other “bad left” leaders and opposition to various U.S. government projects and policies.)

Another theme has been whether Correa seeks to be – or has the potential to be – a “successor” to the “ailing” Hugo Chávez in a “regional leadership role.” The New York Times’ Neuman wrote on Friday that “[A new four-year term] may also give Mr. Correa a chance to raise his international profile. With the ailing president of Venezuela, Hugo Chávez, sidelined by cancer, Mr. Correa is arguably the most vocal leftist leader in the region.” No evidence for Correa’s supposed regional leadership ambitions is presented, other than that “He made international headlines last year when he defied Britain by granting asylum to Julian Assange, the founder of WikiLeaks.”

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February 18, 2013 Posted by | Deception, Economics, Mainstream Media, Warmongering | , , , , , | Leave a comment

Light on the Dark Side of Dorner’s Rampage

wikimedia

By Linn Washington Jr. – This can’t be happening – 02/11/201

On September 10, 2012 the Los Angeles Times published an article with the headline: “LAPD to hold meetings on use of force policies.”

Top Los Angeles police officials announced those community meetings to counter growing criticism about videoed brutality incidents involving LA police officers in the preceding months, that article noted.

On November 24, 2012 The Daily Beast posted an article with the headline: “In Los Angeles, Questions of Police Brutality Dog LAPD” reporting abuse incidents by officers of that department placed under federal oversight between 2001 and 2009 after repeated brutality and corruption scandals.

Over two months after that Daily Beast posting about LAPD brutality a fired LAPD officer unleashed a murderous rampage as revenge against his claimed unfair firing by the LAPD.

That former LAPD cop, military veteran Christopher Dorner, claimed his attack campaign was retaliation against retaliation LAPD personnel directed against him for his reporting a 2007 brutality incident he observed while on duty.

LAPD officials found Dorner’s brutality claim against a policewoman unfounded and fired him for filing false statements. The father of the alleged victim said his mentally ill son confirmed Dorner’s account.

LA police officials contend that man sustained facial injuries from falling into some bushes while resisting arrest by Dorner, not from the female officer’s kick.

Despite the recent record of brutality detailed in news coverage last fall, a New York Times article on the Dorner rampage inferred brutality by Los Angeles police – brutality that sparked two of America’s most destructive urban riots – was not a current problem.

The last sentence in the seventh paragraph of that February 7, 2013 New York Times article stated: “Mr. Dorner laid out grievances against a police department that he said remained riddled with racism and corruption, a reference to a chapter of the department’s history that, in the view of many people, was swept aside long ago.”

That ‘view’ of many people cited in the NY Times article obviously did not include the views of the dozens participating in an October 2012 demonstration against police brutality outside the LAPD headquarters.

On October 22, 2012 the Los Angeles Times published an article with the headline: “Downtown L.A. streets closed by protest at LAPD headquarters.”

Yes, the 1992 riots that rocked LA following the state court acquittal of the four LA police officers charged in the videoed savaging of Rodney King – a disturbance causing over $1-billion in damages and claiming 53 lives – arguably qualifies as long-ago.

But long-ago does not apply to incidents within the past year like the woman kicked in her groin by a female LAPD officer in July 2012 who died minutes later while hog-tied inside a patrol car.

That ‘view’ cited in the NY Times article is not shared by victims of the incidents triggering those LAPD brass community meetings like the skate boarder suckered punched by police, the nurse slammed to the ground by two officers who gave each other a fist-bump for their take-down and the handcuffed man shot by police.

While ‘many people’ certainly believe or want-to-believe LAPD brutality is long gone, perhaps by reforms implemented during that federal oversight, news media accounts pushing that view without balance of companion context comprise an element (albeit small) in the constant framing of police brutality as isolated incidents instead of long standing, systemic procedure by police across America.

At least that NY Times article referenced racism and brutality unlike many media entities that reported Dorner’s rampage without providing context beyond his crazed reaction to his firing.

The March 1968 Kerner Commission Report on sixties-era urban riots – the majority triggered by police abuse incidents including the deadly 1965 LA Watts Riots – criticized the news media for failing to “analyze and report adequately on racial matters” in America that included coverage of festering grievances like police brutality.

Compounding context-deficient coverage, news media reportage on police brutality rarely examines the central role played by prosecutors in perpetuating the problem.

The Los Angeles DA’s Office pushed one case protecting alleged police misconduct all the way to the U.S. Supreme Court, where in 2006 that court’s conservative majority issued a ruling experts said eroded protections for whistle-blowing public employees.

The case involved a veteran LA prosecutor who said supervisors retaliated against him arising from his exposing improprieties by a deputy during a drug investigation. Those supervisors pursued the drug prosecution despite those improprieties and then bashed the whistle-blower for providing the defense details of the improprieties as required by law.

That 11/12 Daily Beast article began with an anecdote about LA city prosecutors declining to charge officers caught lying about a December 2010 incident where a woman was beaten and tazed by four officers, one of whom videoed the incident.

Fired Officer Dorner alleged that his LAPD problems began in July 2007 when his training officer, a female, kicked a man during an arrest outside a hotel. Dorner claimed that training officer and their immediate supervisor compelled him to fudge his official report omitting the kicking, according to court findings.

LAPD officials found Dorner guilty of making false statements relying largely on an Internal Affairs investigation. The IA investigator interviewed the training officer and two hotel employees but neither Dorner nor the victim according to an October 2011 California state appellate court ruling that upheld a trial court ruling rejecting Dorner’s appeal of his 2009 LAPD firing.

LAPD officials, in their administrative proceeding, faulted Dorner for failing to immediately report the alleged kicking incident. Officials brushed aside Dorner’s stated fears of backlash for exposing that alleged misconduct and his having quickly reported that incident privately to two LAPD supervisors he knew whom he also had told about racial slurs directed at him during his police academy training.

Officials also claimed Dorner manufactured the brutality complaint to maliciously deflate an adverse performance evaluation he suspected he would receive from his training officer.

LAPD officials have initiated a reexamination of Dorner’s firing since the rampage began.

Dorner, in an online manifesto posted before his rampage, criticized the fact that officers involved in both the Rodney King and other brutality scandals were promoted not penalized.

An analysis of the Dorner incident prepared by Drexel University professor George Ciccariello-Maher and Mike King, a PhD candidate at UC Santa Cruz reminded that brutality against non-whites remains a “structural function” of the LAPD.

“It is the commonness of excuses for police abuse/murder, the erasure of the victims as collateral damage that should be highlighted when trying to make sense of this broken, rogue, former Los Angeles cop,” Ciccariello-Maher and King wrote.

Photo – credit Wikipedia
Related Articles:

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10 Shocking U.S. Police Brutality Videos Caught on Surveillance Cameras

February 11, 2013 Posted by | Civil Liberties, Ethnic Cleansing, Racism, Zionism, Subjugation - Torture | , , , , , | Leave a comment

Yet Another Estimate of When Iran Will Have the Bomb

By Kevin Jon Heller | Opinio Juris | January 29, 2013

McClatchy reports that Israel now believes Iran will not be able to produce a nuclear weapon until 2015 or 2016.  That is progress of a sort; Netanyahu had previously been claiming that Iran would have the bomb no later than late summer 2013 — around six months from now.  But Israel is still insisting that Iran is only two or three years away from nuclear capability, so I think it is useful to recall and update the timeline I mentioned early last year of breathless Israeli and Western claims about Iran’s nuclear program:

1984: West German intelligence sources claim that Iran’s production of a bomb “is entering its final stages.” US Senator Alan Cranston claims Iran is seven years away from making a weapon.

1992: Israeli parliamentarian Benjamin Netanyahu tells the Knesset that Iran is 3 to 5 years from being able to produce a nuclear weapon.

1995: The New York Times reports that US and Israeli officials fear “Iran is much closer to producing nuclear weapons than previously thought” – less than five years away.  Netanyahu claims the time frame is three to five years.

1996: Israeli Prime Minister Shimon Peres claims Iran will have nuclear weapons in four years.

1998: Former Secretary of Defense Donald Rumsfeld claims Iran could build an ICBM capable of reaching the US within five years.

1999: An Israeli military official claims that Iran will have a nuclear weapon within five years.

2001: The Israeli Minister of Defence claims that Iran will be ready to launch a nuclear weapon in less than four years.

2002: The CIA warns that the danger of nuclear weapons from Iran is higher than during the Cold War, because its missile capability has grown more quickly than expected since 2000 – putting it on par with North Korea.

2003: A high-ranking Israeli military officer tells the Knesset that Iran will have the bomb by 2005 — 17 months away.

2006: A State Department official claims that Iran may be capable of building a nuclear weapon in 16 days.

2008: An Israeli general tells the Cabinet that Iran is “half-way” to enriching enough uranium to build a nuclear weapon and will have a working weapon no later than the end of 2010.

2009: Israeli Defense Minister Ehud Barak estimates that Iran is 6-18 months away from building an operative nuclear weapon.

2010: Israeli decision-makers believe that Iran is at most 1-3 years away from being able to assemble a nuclear weapon.

2011: An IAEA report indicates that Iran could build a nuclear weapon within months.

2013: Israeli intelligence officials claim that Iran could have the bomb by 2015 or 2016.

The McClatchy articles quotes an Israeli intelligence officer as asking “Did we cry wolf too early?” That’s amusing: Israel (and the West) have been crying wolf over Iran’s nuclear capability for nearly three decades.

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February 10, 2013 Posted by | Deception, Mainstream Media, Warmongering, Timeless or most popular, Wars for Israel | , , , | Leave a comment

David Brooks Flunks International Relations Theory 101

By Daniel Warner | NYTX | February 10, 2013

David Brooks’ op-ed piece in the February 9 International Herald Tribune – the global edition of the New York Times – is an insult to any serious student of international relations and political theory as well as to Yale University. As part of a course at Yale on Grand Strategy that he is “taking part in” – Brooks does not say if he is a student in the course or teaching the course – the editorialist wheels out the 16th century Florentine political philosopher Niccolo Machiavelli’s The Prince  to justify the use of drones. Citing passages often used by Realists to justify whatever action fits their aims above and beyond moral considerations, Brooks says that “in the real world, a great leader is called upon to create a civilized order for the city he serves. To create that order, to defeat the forces of anarchy and savagery, the virtuous leader is compelled to do hard things, to take, as it were, the sins of the situation upon himself…Sometimes bad acts produce good outcomes. Sometimes a leader has to love his country more than his soul.”

Brooks’ caricature of Machiavelli allows him to pose a dilemma that has appeared regularly in Realist literature as a binary division between idealism and realistic power politics that is now couched in terms of using drones. “Do I have to be brutal to protect the people I serve? Do I have to use drones, which sometimes kill innocent children, in order to thwart terror and save the lives of my own?” Brooks asks. The political theorist Michael Walzer wrote about this dilemma as “The Problem of Dirty Hands”.

If I were grading Brooks as a student, I would begin by noting in the margins of his paper that his understanding of Machiavelli is terribly superficial. Machiavelli’s advice to the Prince must be understood in the context of the time and place, as R.B.J. Walker has brilliantly shown in “The Prince and ‘the pauper’”. Renaissance life, as sophisticated as it was culturally, was centuries before the codification of public international law, the Geneva Conventions on international humanitarian law, the Genocide Convention, etc. The limited world of the Italian city-states in no way resembles today’s global society. To compare advising the ruler of a small city-state in 16th century Italy with advising President Obama today on the use of drones (or whatever else Brooks can imagine would be justified) is like comparing apples and oranges. Although Brooks praises the fact that “we’ve inherited an international order that restrains conflict,” he cannot go beyond that statement to see that the international order that he praises also restrains the killing of non-combattants by drones, just as it restrains torture. The very basis of that order, and what distinguishes the civilized from the barbaric, is adherence to international law, not the projection of naked power.

David Brooks’ use of Machiavelli is not deserving of a serious first year college student (Will he next be quoting Thucydides’ Melian Dialogue to justify nuking a country when negotiations fail?). Yale’s political science department has long been a leader in the field. By quoting Machiavelli as he does, and then to add legitimacy to the quotations by citing his presence at Yale, Brooks disqualifies himself as a competent student and no more than a simplistic power politics Realist who has no right to whisper in the ear of the Prince, let alone be an editorialist for an institution that considers itself the paper of record.

Mr. Brooks, I do hope you will do better on your next paper. This one is not up to serious standards. You fail.

 ~

Daniel Warner is a political scientist living in Geneva, Switzerland, and the author of “An Ethic of Responsibility in International Relations”. Daniel is a contributing writer to NYTX’s “Geneva Dateline” column.

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February 10, 2013 Posted by | Mainstream Media, Warmongering, Subjugation - Torture, Timeless or most popular, Wars for Israel | , , , , , , , | Leave a comment

An ‘Informal Arrangement’ to Not Report the News

By Peter Hart | FAIR | February 6, 2013

Today the Washington Post  (2/6/13) reported some news that it’s known for years, but had decided not tell us until now: The CIA has a drone base in Saudi Arabia.

Their rationale for withholding this information was simple: The government didn’t want them to. And from what the Post is telling us today, they weren’t the only ones.

After explaining that Anwar al-Awlaki was killed by an attack  “carried out in part by CIA drones flown from a secret base in Saudi Arabia,” the paper explains:

The Washington Post had refrained from disclosing the location at the request of the administration, which cited concern that exposing the facility would undermine operations against an Al-Qaeda affiliate regarded as the network’s most potent threat to the United States, as well as potentially damage counterterrorism collaboration with Saudi Arabia.

So why did the Post finally report this news today?

The Post learned Tuesday night that another news organization was planning to reveal the location of the base, effectively ending an informal arrangement among several news organizations that had been aware of the location for more than a year.

So there was an “informal arrangement among several news organizations” not to report important news because the government felt that it could make things difficult for them.

It would appear that “another news organization” is the New York Times, which reported today:

The first strike in Yemen ordered by the Obama administration, in December 2009, was by all accounts a disaster. American cruise missiles carrying cluster munitions killed dozens of civilians, including many women and children. Another strike, six months later, killed a popular deputy governor, inciting angry demonstrations and an attack that shut down a critical oil pipeline.

Not long afterward, the CIA began quietly building a drone base in Saudi Arabia to carry out strikes in Yemen. American officials said that the first time the CIA used the Saudi base was to kill Mr. Awlaki in September 2011.

The fact that the Post was keeping something secret was known in 2011, as FAIR noted (FAIR Blog, 7/27/11), quoting the paper:

The agency is building a desert airstrip so that it can begin flying armed drones over Yemen. The facility, which is scheduled to be completed in September, is designed to shield the CIA’s aircraft, and their sophisticated surveillance equipment, from observers at busier regional military hubs such as Djibouti, where the JSOC drones are based.

The Washington Post is withholding the specific location of the CIA facility at the administration’s request.

As FAIR also pointed out then, this was reminiscent of another decision by the Post to withhold news. In 2005, the paper delivered an explosive story about “black sites” where CIA was interrogating suspects–places where, in many cases, the agency could reasonably expect the prisoners to be tortured. The Post’s valuable expose was undercut by its decision not to name the countries involved. As the paper explained:

The Washington Post is not publishing the names of the Eastern European countries involved in the covert program, at the request of senior U.S. officials. They argued that the disclosure might disrupt counterterrorism efforts in those countries and elsewhere and could make them targets of possible terrorist retaliation.

This week, a new report from the Open Society Institute documented that more than 50 countries were involved in the CIA “extraordinary rendition” program. It’s certainly possible that some countries might have stopped helping the U.S. government torture people if it had been made known that they were doing so.

Likewise, it’s possible that Saudi Arabia will stop allowing the CIA to use its territory to conduct a secret drone war against a third country now that the secret is out. But the possibility that news might affect the world is not a reason to stop doing journalism. Indeed, it’s the best reason to do journalism.

 UPDATE: The Times’ public editor Margaret Sullivan has weighed in on her blog (2/6/13), and what’s most notable is the opinion of the paper’s managing editor Dean Baquet, since it basically confirms the point we were making above:

The government’s rationale for asking that the location be withheld was this: Revealing it might jeopardize the existence of the base and harm counterterrorism efforts.  “The Saudis might shut it down because the citizenry would be very upset,” he said.

Mr. Baquet added, “We have to balance that concern with reporting the news.” 

So the Times believes that it should refrain from reporting news that people in Saudi Arabia might object to–especially if it wound up complicating our government’s plans to launch military attacks from their country.

February 7, 2013 Posted by | Deception, Mainstream Media, Warmongering, Timeless or most popular | , , , , , , , | Leave a comment

The Reporters Who Got Iraq So Wrong

By Peter Hart | FAIR | February 6, 2013

Ten years ago today, Colin Powell made the Bush administration’s case for going to war against Iraq. Much of what he said about Iraq’s threats to the United States was false. But the media coverage gave the opposite impression, and most of the pundits and journalists who promoted the justifications for the war paid no price for their failures.

As FAIR reported at the time, even before the Powell address there were reasons to be skeptical of the administration’s claims.  On February 4, 2003, FAIR published “Iraq’s Hidden Weapons: From Allegation to Fact,” which made the point that “it has not been demonstrated that Iraq continues to hold unconventional weapons.”  FAIR criticized coverage like that of the New York Times (2/2/03), which asserted that “nobody seriously expected Mr. Hussein to lead inspectors to his stash of illegal poisons or rockets, or to let his scientists tell all.”

As the FAIR release concluded:

The media convey to the public the impression that the alleged banned weapons on which the Bush administration rests its case for war are known to exist, and that the question is simply whether inspectors are skillful enough to find them.

Powell’s address was instrumental in pushing a faulty media line on Iraq’s WMDs further. That much was clear in the coverage right after his appearance at the United Nations, as FAIR documented on February 10 in “A Failure of Skepticism in Powell Coverage.”

In Andrea Mitchell‘s report on NBC Nightly News (2/5/03), Powell’s allegations became actual capabilities of the Iraqi military: “Powell played a tape of a Mirage jet retrofitted to spray simulated anthrax, and a model of Iraq’s unmanned drones, capable of spraying chemical or germ weapons within a radius of at least 550 miles.”

Dan Rather, introducing an interview with Powell (60 Minutes II, 2/5/03), shifted from reporting allegations to describing allegations as facts: “Holding a vial of anthrax-like powder, Powell said Saddam might have tens of thousands of liters of anthrax. He showed how Iraqi jets could spray that anthrax and how mobile laboratories are being used to concoct new weapons.” The anthrax supply is appropriately attributed as a claim by Powell, but the mobile laboratories were something that Powell “showed” to be actually operating.

Commentator William Schneider on CNN Live Today (2/6/03) dismissed the possibility that Powell could be doubted: “No one disputes the findings Powell presented at the U.N. that Iraq is essentially guilty of failing to disarm.” When CNN‘s Paula Zahn (2/5/03) interviewed Jamie Rubin, former State Department spokesperson, she prefaced a discussion of Iraq’s response to Powell’s speech thusly: “You’ve got to understand that most Americans watching this were either probably laughing out loud or got sick to their stomach. Which was it for you?”

If you turn to FAIR’s “Iraq and the Media: A Critical Timeline” (3/19/07), you see that February 6 Washington Post op-ed page had Mary McGrory writing: “I don’t know how the United Nations felt about Colin Powell’s ‘J’accuse’ speech against Saddam Hussein. I can only say that he persuaded me, and I was as tough as France to convince.” She added that she “heard enough to know that Saddam Hussein, with his stockpiles of nerve gas and death-dealing chemicals, is more of a menace than I had thought.”

And Richard Cohen (2/6/03) announced that the debate was over:

 The evidence he presented to the United Nations–some of it circumstantial, some of it absolutely bone-chilling in its detail–had to prove to anyone that Iraq not only hasn’t accounted for its weapons of mass destruction but without a doubt still retains them. Only a fool–or possibly a Frenchman–could conclude otherwise.

Obviously, the fools and Frenchmen were correct. And as FAIR documented, independent-minded journalists were reporting that some of the administration’s claims did not stand up to scrutiny. The Associated Press had a detailed look at the state of Iraq intelligence on January 18. The skepticism and good judgment of those reporters (and others) should have been the rule, not the exception, if journalists had been doing their jobs.

But most journalists did a different job. And most of them faced no consequences whatsoever for being so disastrously wrong.

February 6, 2013 Posted by | Deception, Mainstream Media, Warmongering | , , , , , , | Leave a comment

Legal Review of Presidential Power to Engage in Preemptive Cyber Strikes to Remain Secret

By Kevin Gosztola | FDL | February 4, 2013

A recently published story from the New York Times reports a “secret legal review” has been conducted on the use of cyber warfare by the United States. It concluded President Barack Obama has “the broad power to order a preemptive strike if the United States detects credible evidence of a major digital attack looming from abroad.”

Unnamed officials involved in the review inform that the administration is moving in the coming weeks to “approve the nation’s first rules for how the military can defend, or retaliate, against a major cyber attack.” These rules, according to David Sanger and Thom Shanker, will “govern how the intelligence agencies can carry out searches of faraway computer networks for signs of potential attacks on the United States.” If the president approves a strike, the government will be able to “attack adversaries by injecting them with destructive code — even if there is no declared war.”

It further adds, “The Pentagon would not be involved in defending against ordinary cyberattacks on American companies or individuals, even though it has the largest array of cybertools. Domestically, that responsibility falls to the Department of Homeland Security, and investigations of cyberattacks or theft are carried out by the FBI.”

The Times story points out the rules—like the rules “governing drone strikes”—are highly classified and will be kept secret. The officials from the administration providing details spoke “on condition of anonymity because they were not authorized to talk on the record.” They selectively leaked a scant amount of details on evolving cyber warfare policy to allay concerns about this power the administration is claiming.

One official claimed the US had been “restrained in its use of cyberweapons” and said, “There are levels of cyberwarfare that are far more aggressive than anything that has been used or recommended to be done.” A “senior American official” said cyberweapons were as powerful as nuclear weapons and “should be unleashed only on the direct orders of the commander in chief.” The official added the decision to launch cyber operations will rarely be made by someone at a level “below the president,” which means “‘automatic’ retaliation if a cyber attack on America’s infrastructure is detected” has reportedly been “ruled out.”

The story suggests the Obama administration had their best and brightest minds think about preemptive attack and the ramifications of launching such strikes on a country. “One senior official” said a country could “claim it was innocent” and undermine the “justification for the attack” because it would be “very hard to provide evidence to the world that you hit some deadly dangerous computer code.” They also thought through “‘what constitutes reasonable and proportionate force’ in halting or retaliating against a cyber attack,” according to another official.

The leaking of details on the “secret legal review” comes just over a week after the Washington Post reported the FBI was engaging in a fishing expedition for journalistic communications as part of an investigation into the sources of leaks on Stuxnet or Olympic Games, the cyber warfare against Iranian nuclear enrichment facilities that was launched by Obama (which Sanger published details on in a major story in June of last year and also described in detail in his book, Confront & Conceal).

It is a bit appalling that officials are speaking without authorization when it is known the FBI has spent the past six or seven months prying into the communications of government employees, who were sources for the Times story.

Back in November, the Post reported the White House was engaged in “the most extensive” effort “to date to wrestle with what constitutes an ‘offensive’ and a ‘defensive’ action in the rapidly evolving world of cyberwar and cyberterrorism.” This “secret legal review” may or may not be a result of this effort that was authorized by Presidential Policy Directive 20 to make it possible for the United States military to respond more aggressively to “thwart cyberattacks on the nation’s web of government and private computer networks.” But, given what Ellen Nakashima reported, the secret directive was to “establish” a “broad and strict set of standards to guide the operations of federal agencies.” It was also to, for the first time, make “a distinction between network defense and cyber operations to guide officials charged with making often rapid decisions when confronted with threats.”

As I wrote, the “secret policy” was to map out a process for vetting “operations outside government and defense networks” and ensuring “US citizens’ and foreign allies’ data and privacy are protected and international laws of war are followed.” As one senior administration official told the Post, “What it does, really for the first time, is it explicitly talks about how we will use cyber operations…Network defense is what you’re doing inside your own networks. . . .Cyber operations is stuff outside that space, and recognizing that you could be doing that for what might be called defensive purposes.”

On May 30, 2011, the Wall Street Journal reported the Pentagon had “concluded that computer sabotage from another country” could “constitute an act of war.” WSJ suggested this would open the door to responding to sabotage with “traditional military force.” These details came from a formal cyber strategy the Pentagon had put together for responding to cyber threats to critical infrastructure. One imperious military official was quoted, “If you shut down our power grid, maybe we will put a missile down one of your smokestacks.”

About a week ago, the Pentagon announced it would be expanding its “cyber security unit.” Glenn Greenwald detailed how the force that was expected to go from 900 to over 4000 individuals would continue a trend of “disguising aggression as ‘defense.’”

The Pentagon now has a policy, a “cyber security” policy authorized by a presidential directive has now pushed for the development of policy and  a “secret legal review” has grappled with questions and determined preemptive strikes on countries’ infrastructure could be carried out if the president orders such attacks.

What we know about the legal questions Obama has grappled with is all secret. The development of “cybersecurity” policy or cyber warfare policies indicate a further expansion of the body of secret law under Obama.

The government has secret legal opinions on when it can and cannot kill US citizens with drones. Senator Ron Wyden of Oregon has made requests to view these opinions but the Obama administration has refused to let him see targeted killing memos, even though he is by law supposed to view them so he can conduct oversight. The ACLU has requested these memos be released but a judge ruled that the government was within its right under FOIA to not release the legal interpretations.

The Foreign Intelligence Surveillance Court makes rulings authorizing warrantless surveillance under the FISA Amendments Act (FAA). Despite efforts by Senator Jeff Merkley of Oregon to amend the reauthorization of the FAA at the end of 2012, this was rejected by the Obama administration (even though the administration had previously indicated to Wyden it would be open to a process of making the court’s secret rulings public in some form).

The government also has secret interpretations of at least one section of the PATRIOT Act—Section 215. The ACLU’s Alexander Abdo said they make it possible for “the government to get secret orders from a special surveillance court (the FISA Court) requiring Internet service providers and other companies to turn over ‘any tangible things.’” (Not to mention the fact that there are national security directives issued by President George W. Bush that to this day remain secret and could have been released at least in summary form.)

The administration’s argument for keeping the “rules” or legal basis is that sources or methods would be revealed that would make it easier for adversaries to attack the United States. That is simply an argument to provide cover for the fact that the government wants wide latitude to be able to respond without being constrained by the law or politics. It is possible to inform the public of when the administration thinks the government has the power to launch attacks and go through several hypothetical scenarios. The reality is the government just does not want to do that because, if the scenario occurred and the administration responded differently, there could be controversy if it was found out they did not follow the “rules.”

Finally, like with the drone program, President Barack Obama is presiding over the creation and development of a power that previous presidents never imagined having. The national security state is effectively appointing him and all future presidents the proverbial judge, jury and executioner when it comes to cyber warfare.

There is no indication that any group of members in Congress or judicial body will have to approve of a preemptive strike before it is carried out. As has become typical, the president wants to be able to conduct war without needing authorization.

The policy will expand the imperial presidency and the public and civil society organizations, which have a distinct interest in knowing what the government is doing, will be kept in the dark on what is legal and illegal in cyber operations. The Congress will barely make any effort to defend its right to provide oversight of this new power. And any future details on this power will mostly come from selective leaks provided by officials, who do not think they will face repercussions for talking to the press. The policy itself, the rules for cyber war, will remain concealed.

February 5, 2013 Posted by | Militarism, Progressive Hypocrite | , , , , | Leave a comment

The Fantasies of David Brooks

By JOHN W. FARLEY | CounterPunch | January 17, 2013

David Brooks, conservative pundit at the New York Times, reviewed a new book (The World Until Yesterday: What Can We Learn from Traditional Societies?) by geographer Jared Diamond in the Sunday January 13 NYT. Under the title Tribal Lessons, Brooks discusses warfare between pre-state tribal societies in New Guinea.  Between April and September 1961, a series of battles between rival tribal alliances, using spears and arrows, killed total of 0.14% of  the total population of the tribal alliances.

Brooks informs the readers of the New York Times that “As a share of the total population, that’s a higher casualty rate than Europe, Japan, China, or America suffered during the world wars.”  Brooks goes on to say that “The highest war-related death rates for modern societies (Russia and Germany during the 20th century) are only a third of the average death rates of tribal societies. Modern societies average war-related death rates that are about one-tenth a high as tribal societies.”

That didn’t sound right to me, so I decided to do some fact checking on Wikipedia, looking up casualties (military and civilian) during the First and Second World War.

During the First World War, many countries suffered losses far greater than Brooks’ 0.14%, including the UK (2.19%), France (4.29%, Germany (3.82%), and the Russian Empire (1.89% to 2.14%). The heaviest percentage losses were suffered by Romania (9.33%), the Ottoman Empire (13.72%) and Serbia (16.11%).  The United States escaped with 0.13%. The Central Powers (Austria-Hungary,  Bulgaria, German Empire, and Ottoman Empire) averaged 5%, while the Entente Powers (including the U.S.) averaged 1.19%. The Second World War was even bloodier: Wikipedia lists casualties for Germany (8 to 10.5%), the Soviet Union (13.88%), Japan (3.67 to 4.37% ), and China (1.93% to 3.86%).

Notice that the combined losses in both world wars for Russia/Soviet Union is 16%, which according to Brooks is “only a third of the average death rates of tribal societies”. That would imply that the death rates of tribal societies at 16% x 3 = 48%, instead of Brooks’ number of 0.14%. Brooks’ error is a factor of 343 (!!)

Brooks’ concludes that “the most obvious difference between us is that pre-state tribal societies are just a lot more violent.”  Not if you do the math right. Actually, the most obvious difference is that modern industrial societies at war are just a whole lot more violent than tribal societies.

The New York Times employs fact-checkers. Did anybody ever fact-check Brooks’ review? Apparently not.

The NYTimes employs statistician Nate Silver, author of the 2012 book The Signal and The Noise: Why So Many Predictions Fail, But Some Don’t. Mr. Silver can do math, and Silver can pull up Wikipedia on his computer. The Times should hire Nate Silver to babysit for David Brooks.

This is not the first offense for David Brooks. A dozen years ago, Brooks’ 2001 article in the  Atlantic Monthly, “One Nation, Slightly Divisible”  explored the cultural differences between Red State America and Blue State America.  Brooks’ article was widely praised. However, when journalist Sasha Issenberg  fact-checked it in a 2004 article in Philly Magazine, Issenberg found that many of Brooks’ generalizations were false, and much of his “research” was invented out of whole cloth.

January 17, 2013 Posted by | Deception, Mainstream Media, Warmongering, Militarism | | Leave a comment

Iran is guilty because… we say so

left i on the news | January 09, 2013

The U.S. is ramping up pressure on the American public to accept an attack on Iran, with not one but two stories in today’s news. It wasn’t enough to accuse Iran of producing nuclear weapons based on no evidence, now we’re throwing into the mix accusations of cyberattacks and hostage taking as well.In perhaps the more serious charge, an AP story accuses Iran of holding retired FBI agent Robert Levinson, who disappeared in 2007 on an Iranian island. Iran has repeatedly denied holding Levinson, which would seem reasonable on two counts — one, they never denied holding the three American hikers, nor journalist Roxanna Saberi; why would they deny holding Levinson? And two, considering they have made no demands for a “spy swap” or anything of the sort, to what end would they be holding him?

Logic, of course, doesn’t deter the U.S. authorities who planted this story. And what exactly is their “evidence”? “The tradecraft used to send those items [videos and pictures of the hostage] was too good, indicating professional spies were behind them.” An example of that “professional tradecraft”? They used a cybercafe to send the video and never used that email address again! Oh, the amazing professionalism! The wondrous “tradecraft” of anyone who could pull off such a daring feat! Yes, you read right, this is the evidence on which “the U.S. government’s best intelligence analysis” says that Iran is holding Levinson.

The second story comes with an equal lack of significant evidence. The U.S. government (through the accommodating auspices of the New York Times) is accusing Iran of being behind recent DDoS attacks on American online banking sites. And here comes the “evidence”:

American officials have not offered any technical evidence to back up their claims, but computer security experts say the recent attacks showed a level of sophistication far beyond that of amateur hackers. Also, the hackers chose to pursue disruption, not money: another earmark of state-sponsored attacks, the experts said.

Again, two things. One, amateur hackers are pretty much capable of doing anything these days. And two, many amateur hacking attacks, probably most of them, are done for the purpose of disruption, not money.The most interesting aspect of this story is actually this admission:

American intelligence officials…claim Iran is waging the attacks in retaliation for Western economic sanctions and for a series of cyberattacks on its own systems.

Needless to say, Iran would be perfectly justified in doing so, given that the U.S. is waging an all-out non-military war against Iran. It’s no accident that sanctions are referred to as “tightening the noose.” U.S. “officials” even admit that the sanctions are “designed to…threaten the country with economic collapse.” This is war, and Iran would be perfectly justified in retaliating by a lot more serious means than these cyberattacks. That said, it must be noted again that the “evidence” that Iran is behind these attacks borders on the laughable.But the U.S. government is not laughing. It is deadly serious in its intent to bring down the Iranian government, and remove from the world one more pole of independence from imperialism.

January 10, 2013 Posted by | Deception, Mainstream Media, Warmongering | , , , , , | Leave a comment

Brennan’s Support for Torture Is Not an ‘Accusation’

By Jim Naureckas | FAIR | January 7, 2013

The New York Times’ Scott Shane (1/7/13), reporting on the news that President Barack Obama plans to nominate his terrorism adviser John Brennan to be head of the CIA, writes:

The president had considered naming Mr. Brennan to head the CIA when he took office in 2009. But some human rights advocates protested, claiming that as a top agency official under President George W. Bush, Mr. Brennan had supported, or at least had failed to stop, the use of interrogation techniques like waterboarding that are widely considered to be torture. Mr. Brennan denied those accusations but withdrew from consideration, and Mr. Obama gave him the advisory position, which did not require Senate confirmation.

That Brennan was a supporter of torture is not a claim or an accusation, though–it’s a matter of public record. As we pointed out after Brennan’s name was withdrawn in 2009, here’s what he had to say to CBS News in 2007 (Early Show, 11/2/07):

The CIA has acknowledged that it has detained about 100 terrorists since 9/11, and about a third of them have been subjected to what the CIA refers to as enhanced interrogation tactics, and only a small proportion of those have in fact been subjected to the most serious types of enhanced procedures…. There have been a lot of information that has come out from these interrogation procedures that the agency has in fact used against the real hard-core terrorists. It has saved lives. And let’s not forget, these are hardened terrorists who have been responsible for 9/11, who have shown no remorse at all for the deaths of 3,000 innocents.

If the words “support” and “torture” have any meaning, then Brennan is supporting torture there. This is another example of how in order to be an “objective” reporter, you have to deny that there’s any such thing as objective reality.

Related article

January 7, 2013 Posted by | Mainstream Media, Warmongering, War Crimes | , , , , , , , | Leave a comment

Latvia’s Economic Disaster as a Neoliberal Success Story

By Jeffrey Sommers and Michael Hudson | Naked Capitalism | January 3, 2013

A generation ago the Chicago Boys and their financial supporters applauded General Pinochet’s anti-labor Chile as a success story, thanks mainly to its transformation of their Social Security into Employee Stock Ownership Plans (ESOPs) that almost universally were looted by the employer grupos by the end of the 1970s. In the last decade, the Bush Administration, seeking a Trojan Horse to privatize Social Security in the United States, applauded Chile’s disastrous privatization of pension accounts (turning many over to US financial institutions) even as that nation’s voters rejected the Pinochetistas largely out of anger at the vast pension rip-off by high finance.

Today’s most highly celebrated anti-labor success story is Latvia. Latvia is portrayed as the country where labor did not fight back, but simply emigrated politely and quietly. No general strikes, nor destruction of private property or violence, Latvia is presented as a country where labor had the good sense to not make a fuss when faced with austerity.  Latvians gave up protest and simply began voting with their backsides (emigration) as the economy shrank, wage levels were scaled down, and where tax burdens remained decidedly on the backs of labor, even though recent token efforts have been made to increase taxes on real estate. The World Bank applauds Latvia and its Baltic neighbors by placing them high on its list of “business friendly” economies, even though at times scolding their social regimes as even too harsh for the Victorian tastes of the international financial institutions.

Can this really be a model for the United States or Europe’s remaining social democracies? Or is it simply a cruel experiment that cannot readily be emulated in larger countries un-traumatized by Soviet era memories of occupation? One can only dream …

But the dream is attractive enough. In a page one The New York Times feature article accompanying that paper’s celebration of the Obama Administration’s Fiscal Cliff commitment to budget cutting, Andrew Higgins provides the latest attempt to applaud Latvia’s economic and demographic plunge as the “Latvian Miracle.” The newspaper thus has fallen in line with the surrealistic Orwellian attempts to depict Latvia’s austerity and asset stripping as an economic success as rendered in the brochures distributed by the Institute for International Finance (the now notorious Peterson bank lobby “think tank”) and international financial institutions from the IMF to the European Union banking bureaucracy. What they mean by “success” is slashing wage levels and leaving the tax burden primarily on labor and lightly on capital gains, without spurring a revolution or even Greek style general strikes. The success is one of psy-ops and engineering of consent Edward Bernays style, rather than of successful economic policy.

Latvia is the country that has come closest to imposing the Steve Forbes tax and finance model advanced during his failed Presidential campaign: a two-part tax on wages and social benefits that are near the highest in the world, while real estate taxes are well below US and EU averages.  Meanwhile, capital gains are lightly taxed, and the country has become successful as a capital flight and tax avoidance haven for Russians and other post-Soviet kleptocrats that has permitted Latvia to “afford” de-industrialization, depopulation and de-socialization.

Higgins’ article nurtures two enduring misperceptions of the Latvian Crash of 2008 cultivated by its government advisors picked from the ranks of global bank lobbyists and austerity hawks. First, this star pupil of the international financial community “proves” that austerity works. Second, Latvians have accepted austerity at the polls. A Potemkin Village of austerity progress has been built by neoliberal lobbyists such as Anders Aslund for visiting journalists and policymakers.  In the main, these visitors have accepted this Theresienstadt-like “tour” for reality.

Typically trafficked tales of Latvia as a Protestant morality play (an image we presented in our June Financial Times article on Latvia) depict plucky but stoic Balts confronting the crisis and wage reductions not with Mediterranean histrionics, but by getting busy with work. This idea appeals to certain smug middle-class prejudices and stereotypes in countries whose populations have not had to suffer economic experiments in neoliberal horror. While there is some truth in the characterization of Balts as taciturn and slow to protest, the cultural traits argument is a poor attempt at developing a short hand for explaining Latvia’s situation. They are authored by people bereft of an on-the-ground understanding of what has happened to Latvia.  Meanwhile, “work” (employment) would be nice, Latvia’s unemployment remains high at 14.2% despite a significant portion of its population having departed the country.

Anyone with actual experience in Latvia will see the dissonance between myth and reality regarding the government’s response to the crisis. First, Latvians most emphatically did protest both the corruption and proposed austerity following the fall 2008 crash. This was most evident at the massive January 13, 2009 protest in Riga attended by 10,000 people. This was followed by a series of protests by students, teachers, farmers, pensioners and health workers in the next months.

It is not in the character of neoliberal regimes to be sympathetic to such protests, peaceful or not. Committed monetarists, they were not going to yield on policy. So Latvians moved on to the next stage of protest.

‘No People, No Problem’: the Great Latvian Exodus

A harsh austerity regime was imposed and protests did abate. What happened?

In a word, emigration. At least 10% of Latvians have left since EU accession in 2004 and access to the Schengen Zone. This exodus accelerated following the economic crash in late 2008. The problem was evinced in one Latvian student protest placard that read, “the last student out at the airport, please turn off the lights!”  Latvia’s population is small enough for the bigger EU countries to absorb its departing workforce. And on balance, the nation has been experiencing emigration since its independence from the Soviet Union in 1991, when neoliberal policies replaced a failing Soviet economy. Yet, rather than lessening over time as one would expect, Latvia, which can ill afford emigration, saw people leaving in ever greater numbers nearly two decades out from independence.

Latvians were reproducing at replacement rates when the USSR collapsed. Its 2.7 million population in 1991 dwindled to an official 2.08 million in 2010 through a combination emigration and a financial environment too precarious to permit marriage and children. And, this “official” number from the 2010 census is quite optimistic. Demographic reports originally showed a figure of 1.88 million in 2010.  Some Latvian demographers even stated their belief that this lower number was inflated.  Latvian demographers report government pressure on census takers to come up with a number above the psychologically significant 2 million threshold. This success (yet another neoliberal Potemkin Village illusion) reportedly was achieved, in part, by using a government website to count Latvians as resident in the country even when they were just visiting to see relatives or check on property.  Regardless of the veracity of the lower or higher numbers, both are unsustainably low and represent a slow euthanizing of the country. While many Russians quickly left at Latvia’s independence, most subsequent emigrants have done so for economic reasons. Within a half-year of the initial protests, emigration accelerated and the number of children born in the country plunged as Latvia’s economy crashed and its government intensified fiscal austerity.

Austerity’s defenders rejoin that the country had two national elections and could have changed economic course. But they spin the details that explain just why Latvia’s policymaking elite have managed to remain remarkably constant over the past twenty years. Latvia’s two parliamentary elections both before and since the crisis have turned on endless ethnic politics. Austerity policy has been associated with mostly ethnic Latvian parties, while more social democratic alternatives have been associated with ethnic Russian parties. To be sure, both ethnic communities were divided over economic policy, but it was mainly the ethnic framing of economic policy that ensured austerity policies would prevail in a country still traumatized by the Soviet occupation and divided over what economic policy to take in the wake of the 2008 crisis.

Latvia’s economic collapse was the deepest of any nation when the financial bubble burst in 2008. Hot money flows had inflated its property markets to world-high levels, thanks to its neoliberal minimal taxation of real estate that was the complemented by onerous taxation of labor. Given how deep the plunge was, there was room for the inevitable bounce up thereafter – hailed as a recovery.

When one looks at the details, the so-called recovery was much centered on four sectors. First, is Latvia’s correspondent (offshore) banking sector that attracts and processes capital flight. Already a site for illicit transfer of Soviet oil and metals to world markets before independence, Latvia became a major destination for oligarch hot money. The Latvian port of Ventspils was an export terminal for Russian oil, providing foreign exchange that was a Soviet and later Russian embezzler’s dream.  Figures such as the notorious Grigory Loutchansky of Latvia and his Nordex became notorious for money laundering.  Even Americans were involved, such as  Loutchansky’s partner, Marc Rich (later pardoned by Bill Clinton) who later took over the Nordex operation. The Latvian government signaled its intentions to defend this offshore banking sector at all costs (including imposing austerity on its people) when it bailed out Latvia’s biggest offshore bank, Parex. European Commission and IMF authorities gave a massive foreign loan for Latvia that in part enabled the government to function after bailing out Parex and thus its correspondent (offshore) accounts and continued payment of above-market interest rates to “favored” (read: “well connected”) customers.

Although not in the league with London, New York and Zurich as a criminogenic flight capital center, Latvia has carved out a substantial niche in the global money laundering system. According to Bloomberg: “As non-European inflows into Cyprus stagnate, about $1.2 billion flooded into Latvia in the first half of the year. Non-resident deposits are now $10 billion, about half the total, regulators say, exceeding 43 percent in Switzerland, according to that nation’s central bank.” These are big amounts in view of the fact that Latvia has only about a quarter of Switzerland’s population and merely a tenth of its GDP.  While this activity might make many bankers rich, it does little to develop Latvia’s economy.  Moreover, it represents a beggar thy neighbor policy that permits Latvia to benefit from taking capital out of developing post-Soviet neighboring countries.

Second, Latvia’s emergency response to the crisis was to ratchet up clear cutting of forests. Latvia inherited massive woodland reserves from the Soviet policy of converting farmland to forest. Export growth in this category reflects asset stripping post-Soviet style. That patrimony is being drawn down. While significant, one must remember that given Latvia’s far northern latitude, it takes fifty to a hundred years to replace trees to maturity. So this resource cannot be indefinitely sustained. Moreover, the move to develop more value-added processing of Latvia’s forests has been frustratingly slow. Promises by the chief consumers of Latvian logs (e.g., Sweden and others) to process logs into timber, paper and other products, have mostly been talk, with little action.

Third, the fact that Latvia’s neoliberalized economy has been de-industrialized over the past two decades means that nearly any increase in post-crash manufacturing represents growth in percentage terms. Latvia has nearly no effective labor protections, and only the weakest unions to advocate for decent working conditions and salaries (or even sometimes to be paid at all). Wages can be pushed down from what already were poverty levels, while businesses deploy labor in any fashion they see fit, without regulatory structures to protect workers. Simultaneously, Latvia’s labor costs are far higher than are economically necessary, thanks to the punishingly high set of labor and social taxes designed to keep capital gains and real estate taxes comparatively low. Even so, wages and “flexibility” have made Latvian labor cheap enough to encourage some enterprise. Yet, there are also real centers of innovation and entrepreneurial talent, but they mostly succeed in spite of Latvian government policy, not by support from it.

Europe’s recent star export performers on a percent basis have been Latvia and Greece – a metric that makes sense only as a bounce up from a big post crash. Latvia’s per capita purchasing power is well below that of even Greece. The modest uptick in manufacturing and exports is positive, but Latvia still is ranked last in Europe for innovation and R&D investment as percentages of GDP. The lack of investment in innovation, combined with anti-labor tax and finance policy, thus limits manufacturing’s potential for much faster growth as Latvian labor costs are higher than needed, due to regressive taxation.

Fourth, there has been growth in the previously underdeveloped agricultural and transit sectors. This has been encouraged by food-price inflation in recent years and better policy and planning from the Ministry of Transportation. Although transit historically has been among the most corrupt parts of the Latvian economy and government, centers of excellence have emerged in that ministry that have leveraged up Latvia’s transit potential. Russia’s agreement to use its rail lines to permit supply of American troops in Afghanistan via Latvian ports hasn’t hurt either.

The most revealing part of the New York Times’ mostly puff piece on behalf of budget cutting that can be seen as a model for America to grin and bear the coming austerity, only comes in the concluding comments by economists in Latvia who reported: “The idea of a Latvian ‘success story’ is ridiculous.” “Latvia is not a model for anybody.” “You can only do this in a country that is willing to take serious pain for some time and has a dramatic flexibility in the labor market.” In short, it can’t be done in any real democracy.

For governments able to ignore the will of the people (an expanding trend in rich developed countries), the Latvian model can only be applied if one’s country is:

– Small enough, willing enough, and able to let at least 10% of population emigrate, headed by the most talented and multilingual freshly minted graduates;

– Demographically secure enough to see family formation, marriage and birth rates plummet;

– An ethnically divided population that enables politicians to play the ethnic card to distract population from economic issues; and

– A depoliticized Post-Soviet population willing to give up protest after short period.

Any larger country attempting this level of austerity would need to find an outlet for the some 10% of its people leaving. For the United States, that would mean countries willing to take 20 million American workers. Last time the authors checked, neither Canada nor Mexico had the willingness or capacity to take these numbers, and not enough American students have yet studied Mandarin to do China’s laundry.

Latvia still has a well-educated population with highly developed design sensibilities. Its skilled workers are known for their creativity and attention to detail.  With better economic policy, less anti-labor tax policy, less subsidy of real estate and finance and more investment in innovation – the opposite of what The New York Times celebrates as Latvia’s success story – it could replicate the successes of its Scandinavian neighbors. The alternative is for its neoliberalized economy to produce “recovery” in a way reminiscent of Tacitus’ characterization, put in the mouth of the Celtic chieftain Calgacus before the battle of Mons Graupius: Rome’s victories “make a desert and they call it peace.” Neoliberals call austerity and emigration “stability” and even economic growth and recovery, as long as people don’t complain or demand an alternative.

Michael Hudson was Professor of Economics and Director of Research at the Riga Graduate School of Law. He is a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His book summarizing his economic theories, The Bubble and Beyond, is available on Amazon. His latest book is Finance Capitalism and Its Discontents.  He can be reached via his website, mh@michael-hudson.com

Jeffrey Sommers is visiting faculty at the Stockholm School of Economics in Riga. He is an Associate Professor of Political Economy & Public Policy at the University of Wisconsin – Milwaukee.

The authors have advised Latvian politicians and government officials up to the Prime Minister level.  Both have published extensively in the Latvian press.  Additionally, they have written for  The Financial Times, The Guardian, and several other text, radio, and television media.

Sommers is co-editor and author with Charles Woolfson for the forthcoming Routledge Press volume, The Contradictions of Austerity:  The Socio-Economic Costs of the Neoliberal Baltic Model, of which Hudson has a contributing chapter.

January 3, 2013 Posted by | Deception, Economics, Mainstream Media, Warmongering, Timeless or most popular | , , , | Leave a comment

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