The New Golden Age

a revolution against political corruption and economic chaos

by Ravi Batra

Palgrave/Macmillan, 2007, paperback


In one form or another; U.S. economists espouse the well-know trickle-down economics, or what may be called tricklism, whereby prosperity is supposed to seep, drop by drop, from the top down to the bottom. Such thinking nurtures policies that worsen disparities in income and wealth.

* 20 percent of the population in advanced economies consumes more than 80 percent of the world's output.

* Less than a thousand millionaires have as much wealth as the poorest 2.5 billion people of the planet.

* In 1999, the world's richest 200 people had a net worth of $1 trillion, while 582 million people earned an income of $146 billion.

an editorial in the Athens News

[G.W.] Bush is fundamentally pro-business. This isn't necessarily a bad thing, if leavened with common sense, compassion and independent thought. Bush's corporate reflex, however, never fails. On any given issue, if corporate interest is a factor, that's the way he's going to go. This explains his environmental and health-care policies, where energy companies, utilities, pharmaceutical companies and the insurance industry call the shots. He reflexively takes the corporate side, then roots around for a folksy-sounding rationale to explain why, once again, he's taken up against the public interest.

a quotation from 'Finance and Corruption in America',

American government is corrupt. Those who have enough money can almost get anything they want from our government, whether it is tax breaks, or subsidies, or policies and laws changed, removed, or added.

Foreign investors are involved hugely in our housing market. Mortgage loans have broken record after record in recent years, and the bulk of this money has been provided by foreign individuals and institutions. They have been buying mortgage-backed security (MBS) assets, which have exposed them to the whims of the housing industry. In the past, foreign investors bought U.S. government bonds, which are among the safest of investments. But the purchase of trillions of dollars of MBS assets has exposed foreign investors to an unprecedented level of risk. If the housing market collapses, or even slows down, these investors could suffer unacceptable losses due to homebuyers' defaults. At that point, the entire global financial system could unravel in a hurry. The foreign investors would then stampede out of U.S. asset markets, and trigger a worldwide meltdown. At present this scenario seems rather far-fetched, but the rate at which Americans are borrowing money from abroad could make it possible in the near future.

The Economist magazine, June 2005

The worldwide rise in home prices is the biggest bubble in history. Prepare for the economic pain when it pops. Never before have real house prices risen so fast, for so long, in so many countries.

The oil market is now cornered by five major companies - Exxon-Mobil, Chevron-Texaco, British Petroleum-Amoco-Arco, Royal Dutch Shell and Conoco-Phillips.

OPEC is no longer what it used to be; it supplies only 38 percent of global oil output, but Big Oil controls over 60 percent of gasoline production and distribution in the United States. However, Big Oil controls only 21 percent of natural gas production, which makes gas more competitive than oil.

In the new millennium, oil costs escalated even though supply jumped with demand, because by 2000 the oil industry had cornered the market, with the Five Bullies [Exxon-Mobil, Chevron-Texaco, British Petroleum-Amoco-Arco, Royal Dutch Shell and Conoco-Phillips] controlling over 60 percent of refinery output.

Tyson Slocum, research director of Public Citizen's energy program, Senate testimony, September 2005

Recent mergers in the domestic oil refining industry have consolidated control over gasoline, making it easier for a handful of companies to price-gouge consumers.

This price-gouging has not only been officially documented, but it is also evident in the record profits enjoyed by large oil companies. Since 2001, the five largest oil refining companies operating in America... have recorded $228 billion in profits. While of course America's tremendous appetite for gasoline plays a role, uncompetitive practices by oil corporations are a cause-and not OPEC or environmental laws-of high gasoline prices around the country.

In 1999, U.S. oil refiners made 22.8 cents for every gallon of gasoline refined from crude oil. By 2004, they were making 40.8 cents for every gallon of gasoline refined, a 79 percent jump.

Tyson Slocum, research director of Public Citizen's energy program, Senate testimony, September 2005

Although federal investigators found ample evidence of oil companies intentionally withholding supplies from the market in the summer of 2000, the government has not taken any action to prevent recurrence.

A congressional investigation uncovered internal memos written by major oil companies operating in the U.S. discussing their successful strategies to maximize profits by forcing independent refineries out of business, resulting in tighter refinery capacity. From 1995-2002, 97 percent of the more than 920,000 barrels of oil per day of capacity that has been shut down were owned by smaller, independent refiners. An internal Mobil document helps explain.., the need to prevent the independent refiner from operating.

The operating strategy of the Five Bullies [Exxon-Mobil, Chevron-Texaco, British Petroleum-Amoco-Arco, Royal Dutch Shell and Conoco-Phillips] is to force independent refiners out of business, tighten gasoline supplies, and then jack up the price. Finally, when the profit skyrockets, take ads in newspapers to claim that the profit is reasonable

Ever since 2000, big money has targeted the oil market, which is cornered by just a few corporations that can be counted on to ensure lofty crude and gasoline prices. Energy investments are now high on the list of hedge funds, which speculate profusely in the energy futures market. The oil price has stayed up for so long that it is now moving into the realm of superspeculation.

Hedge funds are now generating artificial demand for oil. They spend billions every day to buy up oil futures, hoping the price will go up in the near term. Their purchases add to the normal global demand for petroleum products and tend to inflate the cost of energy.

Tyson Slocum, research director of Public Citizen's energy program, Senate testimony, September 2005

Contracts representing hundreds of millions of barrels of oil are traded every day on the London and New York trading exchanges. An increasing share of this trading, however, has been moving off regulated exchanges such as the New York Mercantile Exchange (NYMEX) and into unregulated Over-the-Counter (OTC) exchanges. The Bank of International Settlements estimates that in 2004, the global OTC market has grown to over $248 trillion... Traders operating on exchanges like NYMEX are required to disclose significant details of their trades to federal regulators. But traders in OTC exchanges are not required to disclose such information, allowing companies like Goldman Sachs, Morgan Stanley and hedge funds to escape federal oversight and more easily engage in manipulation strategies.

Are big fund managers manipulating the futures markets? From what we have seen in the past, the answer must be yes... Hedge funds are one reason that crude is now so expensive even though there is no physical shortage of oil anywhere in the world.


The Law of the Social Cycle - discovered by P.R. Sarkar, historian and philosopher - categorized people as warriors, intellectuals, acquisitors, and laborers.

Every civilization, or mature society is made up of four classes, each consisting of people whose behavior and predilections reflect the predominance of a certain type of mind. There is a bit of the acquisitive instinct in most of us, but only a few constantly chase money and make it their life's goal. We all covet living comforts and social respect, but some of us pursue them through physical skills, some through intellectual excellence and some by starting a business after saving a good deal of money.

... In the annals of every civilization, modern or ancient, eastern or western, early medieval or postmedieval, Sarkar posits that "The era of laborers is followed by the era of warriors, the era of warriors by the era of intellectuals, and the era of intellectuals by the era of acquisitors, culminating in a social revolution - such a social evolution is the infallible Law of Nature."

... a civilization starts out in the age of laborers , where there is no state or any kind of government, and then moves up into the age of warriors ... in the age of warriors ... the martial class consolidates its power and expands its influence over the years; people's respect for the warriors also gradually rises at that time. Around the peak, the warrior rule is more or less unchallenged; most people then covet a career in the army.

Following the peak, warriors' influence and social respect begin to decline ... the warrior rule is overthrown by society's scholars, who then start the age of intellectuals... The intellectuals are dethroned by acquisitors, who then win over the hearts and minds of the populace... in the downward phase of the acquisitive era, acquisitors have to share power with laborers, thereby starting the laborer or the acquisitive-cum-labor age.

Warriors are good at warfare and in expanding the realm of their kingdoms, but they are inept in managing their domains. They need experts in administering the territories that they capture on the battlefield. Such experts come from the class of intellectuals.

When the intellectual mentality comes to dominate society there is a ~great shift in many aspects of life. People's love of fun, adventure and sports may give way to asceticism, austerity and the quest for a good afterlife; or it may be replaced by new-found interest in scholarship and analytical pursuits in which theories are debated and mastered for their own sake. Women are subordinated, and poverty stalks the land. In the same way, when the acquisitors come to power, the public's lifestyle cannot but change in numerous ways.

... political power slowly passes into the hands of wealthy landlords or businessmen. Thus begins the age of acquisitors in which the principal power source is land or wealth. In other words, the era of acquisitors arises either as feudalism or as capitalism in every society.

... the intellectuals have a crucial role to play. As in any era, most of them do what comes naturally to them-that is, they invent dogmas rationalizing the hegemony of the dominant class... they justify the supremacy of the acquisitive class behind the cloak of individual rights, liberty and social justice. In reality, however, such lofty principles are overtly flouted, and are usually observed only when the nation faces a crisis or when it serves the interests of the acquisitors.

In return, the wealthy offer patronage to the intellectuals...

... in the age of acquisitors, most sections perform services for the wealthy, with the intellectual class justifying the acquisitors' rule, the warrior class entertaining them in sports and fighting their wars, and the laborer doing physical labor for them. In all civilizations, the acquisitive class has consisted of such disparate groups as money lenders, merchants, landlords and businessmen. longer does a keen f intellect, by itself, bring political power and attendant perks; instead the power base shifts to the money-chasing intellect.

Salient features of the era of acquisitors include the following:

1. Family ties loosening with the rise of individualism
2. Rising crime rates
3. Increasing prostitution and pornography
4. Growing aversion toward mental and physical discipline
5. Rising materialism and interest in money
6. Rising atheism and disrespect for religion
7. Continued low status of women
8. Highly decentralized government
9. The rise of reason, science and technology
10. Rising standard of living and rising wealth concentration
11. Frequent warfare based on competition for resources and markets
12. At the end, acquisitors' tyranny, poverty, general malaise and the near anarchy of the laborer age.

... with the change in society dominant mentality comes a major change in the public's thinking and lifestyle. As the intellectuals lose power, their old theories go down the drain with them. New theories, offered by a different group of scholars, are born. Once the theocratic age of intellectuals ends, religion no longer has the same hold on people as before. Individualism begins to replace the earlier communal thinking.

... The government of the acquisitive age differs sharply from that of previous eras. Political authority was highly centralized during the age of warriors and somewhat centralized in the age of the intellectuals, as absolutist kings or authoritarian priests dominated the social order. The acquisitors fear a centralized rule, because such a system can force them to share their wealth with the state and the poor, Such incidents are not that uncommon in the eras of warriors and intellectuals So whenever acquisitors come to power, political authority is gradually decentralized; there is no single, absolute or unchallenged source of power any more. And the degree of decentralization only increases over time, leading to the rise of many localized power groups.

The chief hallmark of the acquisitive age is a sharp improvement in the economy relative to the previous age. As the noose of rules and regulations loosens, and as people become more interested in the present life, they start thinking about bettering their living standard. The quest for money leads to new inventions and technologies, which raise worker productivity as well as profits. In the beginning everyone benefits from technological discoveries, and the public is very happy with the new system. People have greater freedom, enjoy a better lifestyle and welcome an end to warrior and intellectual tyranny. The living standard remains high for a long time, and the other classes make a living by working for the affluent.

... As time passes, increasing levels of wealth become concentrated in the hands of the elite, and the general living standard starts to decline. The ruling elite are indeed the wealthiest in every age, but when acquisitors are on top national wealth gets even more concentrated in fewer hands. This is because the acquisitive class, by its very nature, seeks to hoard money. It is never enough for them. A millionaire wants to become a centimillionaire, a centimillionaire a billionaire, a billionaire a mega-billionaire. Toward the end of this age, the entire state machinery seems to be working to make the rich richer, and the poor poorer.

... In spite of major differences in their inherent qualities, all classes make roughly equal contributions to the well-being of society. Without the warriors there would be no law and order, which is crucial to happiness and prosperity; without the intellectuals there would be no conceptualization of human rights, liberty and justice, and we would all still be oppressed by dictators; without acquisitors the economy would be in a poor state; and without laborers there would not be much production.

... Once certain intellectuals discover that hoarding money and starting a business are keys to social prestige and political influence, they quickly learn the art of entrepreneurship from the acquisitors, and with their superior intellect eventually come to dominate the arteries of government. This usually happens after the acquisitors have caused a major economic crisis, and then the baton of leadership passes into the hands of intellectual acquisitors. That is when the engine of exploitation runs full speed. This is because the intellectual acquisitor combines in one brain the cunning of the bad intellectual and the greed of the acquisitor.

... The salient feature of the era of intellectual acquisitors is that the ruling elite amass wealth but make people believe that such an endeavor is good for society. For instance, they cut taxes for themselves while raising taxes for other classes, and yet are able to convince the public that such economic policies are in society's best interest. Or they may persuade you that God has blessed them with opulence so that they can take care of the indigent. They have the intellect to make you feel better even as they hit you.

... There comes a point when intellectual acquisitors are virtually unchallenged; that's when the process of wealth concentration runs full throttle, with the rich getting richer and the poor getting poorer at incredible speeds. The boundless greed and hypocrisy of acquisitive intellectuals ultimately torments the majority of people. Salaries go down, and the bulk of society is forced to devote much of its time to making money. Warriors and intellectuals then have to become laborers because they have little time left for the finer pursuits of life. They have to labor hard to support themselves and their children. The intellectual's inherent love for art, music, painting and philosophy gives way to routine work all day long to provide the means for family survival. The warrior's innate predilection for adventure and sport is replaced by overtime work to make ends meet. The vast majority of society comes to adopt the laborers' way of living and thinking.

Only two classes then remain-acquisitors and laborers, or the haves and have-nots. The age of acquisitors eventually turns into the age of laborers, which may now be called the acquisitive-cum-labor age, in which the acquisitive intellectual is dominant. But many traits of the first era of laborers come to afflict society, which essentially gets divided into two groups, one consisting of all the wealthy acquisitors, and the other comprising the destitute and the middle class. The poor include the physical workers, and the middle class includes those erstwhile warriors and intellectuals now forced into toiling long hours for their survival.

For a while, people suffer through the deceit and exploitation of the reigning class. They maintain their lifestyle by increasingly getting into debt. Acquisitors now have a field day. They make money left and right. They enrich themselves through their control over businesses, farms and factories, and through lending money to the other classes.

This is the time that creates a group of disgruntled laborers from the former warriors and intellectuals. New leaders emerge from this group. Fed up with the status quo, one day they overthrow the ruling elite with the help of the masses, culminating in a social revolution of workers. It is through this process that the social cycle starts anew.

If the leaders of this revolution were formerly intellectuals, the change is peaceful; if they were formerly warriors, there is much bloodshed. In any case, rebelling against the elite is not easy; it takes immense courage to oppose a regime and become revolutionary. So those who muster such courage, no matter what their initial grouping, are the true soldiers, who then start another warrior age, which begins with an ascending or magnanimous phase. With the return of the warrior mentality, many features of the first eras of warriors make a comeback, but some novel and progressive institutions also appear because of inevitable social evolution through time. Once again the acquisitors, having lost their credibility, go back to a lower status. The public remembers their acts of oppression and imposes restraints on their acquisitiveness. This way the social cycle goes on and on.

An acquisitor is someone whose intellect runs mostly after money or wealth, and when the wealthy become politically prominent by purchasing the services of the other three classes, the acquisitive era begins. Most of the intellectuals then change their tune and offer ideas that justify the primacy of the rich, while the warriors fight wars and anarchy to protect the wealth of the opulent.

European scholars define [feudalism as] a society in which the political and economic power is primarily in the hands of rich landlords, while people serve them in terms of well-defined contractual obligations. Everyone is a vassal to someone, including the overlord, who is a vassal to his king. According to historians E M Burns and P L Ralph:

Feudalism may be defined as a structure of society in which the powers of government are exercised by private barons over persons economically dependent on them. It is a system of overlordship and vassalage in which the right to govern is a contractual relationship involving reciprocal obligations.

Feudal nobles enjoy the power of government simply because their people are economically dependent on them. This is precisely what defines an age of acquisitors, who rule not because of their / superior intellect or physical strength but because of their command over the means of production, which in those days was based primarily on land. Thus the second half of the Middle Ages, lasting from the tenth to the fourteenth century, was an acquisitive age.

It goes without saying that feudalism was not the same everywhere in Europe. Even democracy today is not the same everywhere in the Western world. While Britain has a prime minister as its chief, the United States has a president. In the same way feudalism differed from place to place. In some places kings were powerful and the central authority was strong, but such scenarios were more exceptions than rules. Even powerful kings had to appease their landlords, such as dukes, barons, earls and margraves. Indeed some of the landlords had more land and property than their king. Similarly today the U.S. president has to defer to his wealthy supporters.

Popular theories change to appeal to the interests of the dominant class.

Historically, whenever the acquisitive era has appeared in the West, the government has been decentralized and in their self-interest the intellectuals have offered new theories to rationalize the social supremacy of the wealthy.

[During the second half of the Middle Ages - 10th to 14th centuries], most regions in Europe were organized in [a] segmentary way. A region usually had a king at the top of the hierarchy, but his power was limited; the real authority belonged to his vassals-the dukes and barons-who in turn provided protection to their vassals, including the priests and army officers, commonly called knights. The knights in turn were obligated to take care of their vassals, the peasants and the serfs.

In feudal society, therefore, kings and nobles were the dominating acquisitors, priests and philosophers the intellectuals, knights the warriors, and peasants and serfs the laborers.

The rise of the West was catastrophically interrupted by the bubonic plague of 1348. Over a third of the population succumbed, giving rise to a tremendous shortage of labor. The so-called Black Death was the worst pandemic in European history. This episode could not but shake the very foundations of feudalism, which had all along rested on the slippery slope of an excess labor supply.

The population blight doubly hurt the landlords. Rents sank for their surplus land, while wages soared. The nobles responded by rescinding the freedoms they had granted the serfs under commutation and tried to reinstate the labor obligations as rental payments. The peasants, of course, resisted vigorously. Peasant revolts broke out all over Europe, with massive destruction of life and property. These rebellions were crushed with intense brutality, but the relatively cozy world of the overlords was irrevocably disrupted. It is not difficult to see parallels to the West of today, where the more equitable wealth distribution of a generation ago has vastly eroded, and economies are fragile enough to be shattered by a chance event such as a plague. Could we be on the verge of another cycle of chaos and disruption?'


Two colonial empires ... one modern (the British) and the other ancient (the Roman), reveal four common traits. First, the empire is created through the force of arms, either by military officers or by commercial interests. Second, the ruling nation extracts cheap labor from its colonies. Third, the colonies run trade surpluses that raise the living standard of their rulers. Finally, the language, institutions and culture of the victors spread across imperial territories.

The Chinese economy has become dependent on U.S. trade, and the United States is increasingly dependent on the Chinese holdings of American government bonds.

Cheap labor comes to America in two ways. Immigration to the country, legal and illegal, expands the U.S. labor supply and restrains domestic wages. Illegal immigrants coming mostly from Mexico and Latin America work for subsistence wages; were it not for their influx, American wages would be much higher.

... American multinationals employ thousands of workers in Latin America, Asia and Africa, paying local wages that are just a fraction of U.S. salaries. Products made by this labor force, which includes child labor forbidden in the United States, are then imported into the country, further depressing U.S. wages ... this practice generates exorbitant profits for the multinationals and exceptionally high incomes for their executives.

America' pays for its import surplus, the excess of imports over exports, through paper dollars, and its only visible cost is the cost of printing the money.

More [$100] bills are in circulation outside than within the United States.

The world exchanges its quality goods for paper dollars and then invests its dollars back into U.S. stocks and bonds.

In today's business empire, America is at the center, while most other countries are the surrounding provinces. The United States does not appoint the governors of these states, but the rulers of such states see their self-interest aligned with the interest of the American elite. Japan's ruling party wants a prosperous and stable America so it can keep its export machine alive, prevent a rise in joblessness, and thus maintain its power. Hence the Bank of Japan continues to pile up American bonds, keeping U.S. interest rates low and the economy strong; China, Europe, OPEC and others do the same. They help perpetuate their own power base and the power base of the elite in the United States.

The world already owns trillions of dollars of American assets, yet it keeps accumulating more. The export surplus nations have, in fact, become U.S. business colonies. You may call this the American colonization of the world economy. 'the interesting part is that all this is a purely voluntary arrangement.

As foreign individuals and central banks purchase U.S. bonds, they end up investing billions of dollars in the American economy every year. This is the secret of U.S. economic growth since the early 1980s. However, almost all the foreign money goes into American consumption, for which the bill has to come due someday, perhaps in the near future.

The interests of the rich in America are linked to those of the rich in other nations. The surplus goods and services from the rest of the world flow at little direct cost into the center, which is the United States. The foreigners accept dollars, which are cheap to printout there could be high indirect costs related to this practice in the future, because it is now generating economic chaos in the form of financial imbalances around the globe. Thus the elite of all nations are trying to preserve the American business empire ... it is a corrupting process that keeps wages low and profits high all over the world. It is an artificial arrangement that magnifies income and wealth inequalities around the globe, and contains the seeds of self-destruction.

The Social Security program has been earning a growing surplus that has been used to finance the federal budget deficit.

U.S. multinationals are in a class of their own. Their top managers, the CEOs, have the highest salaries in the world pan, Germany, France and England also have global corporations, but managers there earn about a third of what their U.S. counterparts make.

Economic Policy Institute

U.S. CEOs earn three times the average of CEOs in the 13 other advanced countries for ( which there are comparable data. Only in one country, Switzerland, are 7 CEOs paid even as much as 50 percent of what the average U.S. CEO makes.

According to the Federal Reserve, while the CEO compensation in Britain was 22 times the pay of an average worker in 2004, in the United States it was 170 times, and in Japan only 11 times.

Big business in America, as in other democracies, owns politicians. In fact both Democrats and Republicans are beholden to the wealthy.

The business elite in America are as greedy and ruthless as feudalistic barons. Even when they take their company into bankruptcy and extract large wage concessions from workers, they award themselves millions in salaries. The word "CEO" now is synonymous with crookedness. Money controls U.S. politics as never before. As a result, the tax burden has gradually shifted from the wealthy onto the backs of the poor and the middle class.

From 1950 to 1980, the top-bracket income tax rate ranged from 70 to 90 percent, while the Social Security tax imposed on lower incomes varied from 4 to 9 percent. By 2005 the top income tax rate was down to 35 percent, but the Social Security tax had jumped to 15.3 percent. Such are the tangible benefits that moneyed donors receive from politicians.

The vast majority of intellectuals, concerned about their careers and comforts, act to justify the status quo and offer theories that promote the self-interest of the ruling class.

History is witness to the rise of countless dogmas that were false, illogical and self-serving, yet, drawing upon the zealous backing of established scholars, remained popular for centuries, until unmasked by a few brave souls.

Today CEOs and wealthy businessmen are the ruling elite in the Western world, especially the United States. Their donations finance elections and even education, which they are constantly saying has to adapt itself to the needs of the market (that is, be molded to inculcate their views). It should come as no surprise therefore that the theories offered by economists rationalize the self-interest of big business and the wealthy. Overtly, of course, such theories claim to benefit society and the public's well-being. But covertly, they do just the opposite: they make the great mass of people poorer while making the rich fabulously richer.

The theories offered by economists rationalize the self-interest of big business and the wealthy ... claim to benefit society and the public's well-being. But covertly, they do just the opposite: they make the great mass of people poorer while making the rich fabulously richer.

The theories offered by economists rationalize the self-interest of big business and the wealthy.

Money rules; the vast majority of the public shares the acquisitive mentality of the intellectual elite, even if they prey upon the people. Greed dominates not only politicians but also scholars. Most experts want to amass as much money as the CEOs and lawmakers, so they offer ideas that please the affluent.

Why don't elite economists ever want to reduce payroll, gasoline and sales taxes? Why do they always want to cut income and corporate taxes? Why do some Ivy League experts always want to slash tax rates on capital gains and dividends? Why is their theory silent about the beneficial effects of cuts for low-income people? The reason is simple: these other rate cuts won't offer much benefit to the rich, so well-paid economists working for the affluent see no investment and growth benefits from such reductions. If the experts urged consideration of tax cuts for the middle and lower classes, their colleges would likely starve for donations from the CEOs.

Why does the well-paid economist insist that outsourcing is good for America? Perhaps because his own job is not outsourced?

Nowadays, increased profits mean increased bonuses and payouts for company executives, not more American jobs.

The U.S. economy has recovered since 2001, and real GDP has been . growing, but only low-paying jobs are being created. As a result, average family income has decreased by $1,500. This has rarely happened in the United States before: GDP growth coexisting with a declining living standard. Outsourcing is chiefly to blame. Yet elite economists keep touting the practice; they are in effect on the payrolls of multinational corporations whose CEOs earn millions in salaries and perks, and who offer their hirelings research grants, endowed chairs and lucrative consulting contracts.

Big-shot economists have several things in common: they all hold prestigious positions and endowed chairs, and they all love out-sourcing and tax cuts for the wealthy. Money talks loudly and the distinguished economists quietly listen, but in the process they offer ideas that are slowly killing the middle class. They sell the self-interest of the wealthy as sound economic policy, and in the process serve their own self-interest.

When someone's work previously done in America is awarded to a low-wage worker abroad, the fired American worker is either unemployed for a while, or has to accept another job at a lower salary. In both cases the worker's spending and thus consumer demand falls, which means some American-made goods will go unsold, causing further layoffs in the process. This is the indirect job loss from outsourcing. Who benefits? The company, its CEO and the Ivy League economists.

The elite economists backed free trade in full knowledge that it creates poverty in America.

During the 1990s, a new scourge arrived for workers in the form of outsourcing, which has been spreading like wildfire since 2000. Now U.S. companies are demanding increasing concessions from labor unions and older workers so the companies can compete with lower wages abroad. Not just lucrative wages, but health benefits as well as pensions are disappearing.

Roper poll

72 percent of Americans view company executives as just plain thugs.

[Richard] Nixon and [Spiro] Agnew ... were involved in an unpopular conflict - the Vietnam War. But unlike Bush and Cheney, they did not shortchange the soldier. They did not cut taxes in wartime. Now the soldier is making all the sacrifices, while the acquisitive elite enjoy galloping incomes and tax windfalls at the expense of the warriors' toil and blood.

Nations with a trade surplus send their dollars back to the United States as fast as they acquire them, because if they don't, the dollar will plummet relative to their currencies. Then Americas import surplus will fall sharply, sending shock waves through the economies of China, Japan and Europe.

In theory this process could endure indefinitely, because it is in the self-interest of the global economy to remain America's colony. But it is a house of cards that will only take a minor hit to collapse in a turbulent world. With Iraq, oil and housing as looming disasters, only a miracle will keep the dollar stable. It is more likely than not that the greenback will crash by the end of this decade, which will further stoke the fires of inflation. This is because each nation's goods are valued in its own currency. So if foreign currencies appreciate sharply, then the dollar prices of foreign goods will soar, as will U.S. inflation.

Economics watch

Globalization watch

Home Page