Flassbeck Economics
The Great Paradox: Liberalism Destroys the Market Economy
Heiner Flassbeck
An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
Throughout the Cold War, Washington intervened multiple times in Guatemala, funded a rampaging army, ran cover for the death squads that its own security agents—like Longan—helped create, and signaled that it would turn a blind eye to genocide. Even before Ronald Reagan’s 1980 election, two retired generals with prominent roles in his campaign traveled to Central America and told Guatemalan officials that “Mr. Reagan recognizes that a good deal of dirty work has to be done” (for this quote, see Allan Nairn’s report “Controversial Reagan Campaign Links With Guatemalan Government and Private Sector Leaders,” published by the Council on Hemispheric Affairs on October 30, 1980). Once in office, Reagan supplied munitions and training to the Guatemalan Army to carry out that dirty work (despite a ban on military aid imposed during the Carter administration, since existing contracts were exempt from that ban). Reagan was steadfast in his moral backing for Guatemala’s génocidaires, calling de facto head of state Gen. Efraín Ríos Montt, who seized power in a coup in the spring of 1982, “a man of great personal integrity” and “totally dedicated to democracy.”….
“Secret” documents, recently declassified by the Reagan presidential library, reveal senior White House officials reengaging a former CIA “proprietary,” The Asia Foundation, in “political action,” an intelligence term of art for influencing the actions of foreign governments.
The documents from 1982 came at a turning-point moment when the Reagan administration was revamping how the U.S. government endeavored to manipulate the internal affairs of governments around the world in the wake of scandals in the 1960s and 1970s involving the Central Intelligence Agency’s global covert operations.
Instead of continuing to rely heavily on the CIA, President Reagan and his national security team began offloading many of those “political action” responsibilities to “non-governmental organizations” (NGOs) that operated in a more overt fashion and received funding from other U.S. government agencies.
But secrecy was still required for the involvement of these NGOs in the U.S. government’s strategies to bend the political will of targeted countries. If the “political action” of these NGOs were known, many countries would object to their presence; thus, the “secret” classification of the 1982 White House memos that I recently obtained via a “mandatory declassification review” from the archivists at the Reagan presidential library in Simi Valley, California.
In intelligence circles, “political action” refers to a wide range of activities to influence the policies and behaviors of foreign nations, from slanting their media coverage, to organizing and training opposition activists, even to setting the stage for “regime change.”...
[For more on the Murdoch connection, see Consortiumnews.com’s “Rupert Murdoch: Propaganda Recruit.”]The dialectic at work?
NED and Freedom House often work as a kind of tag-team with NED financing NGOs inside targeted countries and Freedom House berating those governments if they try to crack down on U.S.-funded NGOs.
For instance, on Nov. 16, 2012, NED and Freedom House joined together to denounce a law passed by the Russian parliament requiring Russian recipients of foreign political money to register with the government. Or, as NED and Freedom House framed the issue: the Russian Duma sought to “restrict human rights and the activities of civil society organizations and their ability to receive support from abroad. Changes to Russia’s NGO legislation will soon require civil society organizations receiving foreign funds to choose between registering as ‘foreign agents’ or facing significant financial penalties and potential criminal charges.”
Of course, the United States has a nearly identical Foreign Agent Registration Act that likewise requires entities that receive foreign funding and seek to influence U.S. government policy to register with the Justice Department or face possible fines or imprisonment.
But the Russian law would impede NED’s efforts to destabilize the Russian government through funding of political activists, journalists and civic organizations, so it was denounced as an infringement of human rights and helped justify Freedom House’s rating of Russia as “not free.”
The Russian government’s concerns were not entirely paranoid. On Sept. 26, 2013, Gershman, in effect, charted the course for the crisis in Ukraine and the greater neocon goal of regime change in Russia. In a Washington Post op-ed, Gershman called Ukraine “the biggest prize” and explained how pulling it into the Western camp could contribute to the ultimate defeat of Russian President Vladimir Putin.
“Ukraine’s choice to join Europe will accelerate the demise of the ideology of Russian imperialism that Putin represents,” Gershman wrote. “Russians, too, face a choice, and Putin may find himself on the losing end not just in the near abroad but within Russia itself.”
The long history of the U.S. government interfering covertly or semi-covertly in the politics of countries all over the world is the ironic backdrop to the current frenzy over Russia-gate and Russia’s alleged dissemination of emails that undermined Democratic presidential nominee Hillary Clinton’s campaign.
The allegations are denied by both Putin and WikiLeaks editor Julian Assange who published the Democratic emails – and the U.S. government has presented no solid evidence to support the accusations of “Russian meddling” – but if the charges are true, they could be seen as a case of turnabout as fair play.
Except in this case, U.S. officials, who have meddled ceaselessly with their “political action” operations in countries all over the world, don’t like even the chance that they could get a taste of their own medicine.
Ludwig Watzal: After WW II, hardly any coup d’état or organized uprising happened without the helping hand of the CIA. As I understood your book, in the last 25 years, the CIA got quite a few so-called little helpers in the form of NGOs. Please, could you elaborate on that?
William Engdahl: During the Reagan Presidency very damaging scandals were becoming public about CIA dirty operations around the world. Chile, Iran, Guatemala, the top secret MK-Ultra project, the student movement during the Vietnam War to name just a few. To take the spotlight away from them, CIA Director Bill Casey proposed to Reagan creating a “private” NGO, a kind of cut-out that would pose as private, but in reality, as one of its founders the late Allen Weinstein said in a later interview to the Washington Post, “doing what the CIA did, but privately.” This was the creation of the NGO named National Endowment for Democracy in 1983. Soon other Washington-steered NGOs were added like the Freedom House or the Soros Open Society Foundations, the United States Institute of Peace and so forth….
Of course, not all NGOs are doing the work of the CIA. I focus on the ones with a hidden political agenda, who, as I describe in the book, have weaponized human rights and the word democracy for devious ends....
LW: If you could give the NGOs a piece of advice, what would you tell them?
WE: For the honest persons who may have got caught up in nice rhetoric about values, human rights and such, I would suggest looking more closely at the money trail feeding your given NGO.
Liu’s admirers seldom discuss at length their hero’s other major views. Among other things, he supported the US invasions of Iraq and Afghanistan. He backed the Vietnam and Korean wars even long after they ended, in a 2001 essay. Despite the immeasurable human-rights abuses of those conflicts, Liu stated in his “Lessons from the Cold War” that “the free world led by the US fought almost all regimes that trampled on human rights.” He insisted: “The major wars that the US became involved in are all ethically defensible.” Liu Xiaobo also admired Israel’s positions in the Middle East’s, saying the Palestinians were “often the provocateurs.”
Worse, to Chinese sensibilities, was perhaps his advocacy of all-out Westernization for China. He told an interviewer in 1988 that “to choose Westernization is to choose to be human.” Reported Britain’s Guardian newspaper: “He also faulted a television documentary, He Shang, or River Elegy, for not thoroughly criticizing Chinese culture and not advocating Westernization enthusiastically enough: ‘If I were to make this I would show just how wimpy, spineless and fucked-up [weisuo, ruanruo, caodan] the Chinese really are’. Liu considered it most unfortunate that his monolingualism bound him in a dialogue with something ‘very benighted [yumei] and philistine [yongsu],’ the Chinese cultural sphere … In a well-known statement of 1988, Liu said: ‘It took Hong Kong 100 years to become what it is. Given the size of China, certainly it would need 300 years of colonization for it to become like what Hong Kong is today. I even doubt whether 300 years would be enough’.”Counterpunch
In one of the most euphoric praises for Donald Trump and the president-elect's fledgling administration to date, overnight Bridgewater founder Ray Dalio said economic changes under the Trump administration may be more dramatic than shifts from “the socialists to the capitalists” in the U.K., U.S. and Germany from 1979 to 1982, and predicted that "we are about to experience a profound, president-led ideological shift that will have a big impact on both the US and the world."
Comparing Trump to Margaret Thatcher, Ronald Reagan and Helmut Kohl, Dalio said the incoming administration may have a much bigger impact on the U.S. economy than can be measured by tax changes and fiscal spending. The Trump era could “ignite animal spirits” and attract productive capital.
In his summary of Trump's economic policies, Dalio urges readers to read Ayn Rand "as her books pretty well capture the mindset. This new administration hates weak, unproductive, socialist people and policies, and it admires strong, can-do, profit makers. It wants to, and probably will, shift the environment from one that makes profit makers villains with limited power to one that makes them heroes with significant power."…
By and large, deal-maker businessmen will be running the government. Their boldness will almost certainly make the next four years incredibly interesting and will keep us all on our toes.The difference between Trump and Thatcher/Reagan seems to be populism. The US and UK are not emerging from a previous period of social democracy (New Deal) or democratic socialism (Old Labour). The US and UK are reacting politically to the inequality resulting from Reagan and Thatcher that goes under the rubric of neoliberalism. Bill Clinton and Barack Obama were more like Ronald Reagan than FDR, or even Nixon. Tony Blair was much more in the mold of Margaret Thatcher than Harold Wilson. Trump realizes that he has two years to do something significant for the middle class workers that voted him in, or his power base will crumble. If there is not significant economic improvement for workers in the 2020 campaign, he will lose his bid for reelection. Moreover, he will face a vicious opposition that will try to stymie his every move. Theresa May is in a similar position in the UK.
Overall though, I see Trump as having been elected due to voters angry about declining income growth and job security, particularly in the rust belt states that had voted for Obama in 2008 and 2012. That means Trump needs to appeal to this group in some discernible way to be successful. He even said so himself on election night, talking of having only two years to make his mark. He might be able to appeal to them on cultural grounds the way Republicans have done in the past. I don’t see that being effective though given the angst still evident after seven years of recovery. But supply side isn’t going to do it either unless Trump can create enough growth that it reaches deep into the rust belt where all the manufacturing jobs have been lost. His interventions against individual companies like Carrier can only go so far. At the end of the day, he has to deliver jobs and income.Credit Writedowns
Donald Trump’s economic adviser Stephen Moore told a group of top Republicans last week that they now belong to a fundamentally different political party.
Moore surprised some of the Republican lawmakers assembled at their closed-door whip meeting last Tuesday when he told them they should no longer think of themselves as belonging to the conservative party of Ronald Reagan.They now belong to Trump’s populist working-class party, he said.
A source briefed on the House GOP whip meeting — which Moore attended as a guest of Majority Whip Steve Scalise — said several lawmakers told him they were taken aback by the economist’s comments.
“For God’s sake, it’s Stephen Moore!” the source said, explaining some of the lawmakers’ reactions to Moore’s statement. “He’s the guy who started Club for Growth. He’s Mr. Supply Side economics.”
“I think it’s going to take them a little time to process what does this all mean,” the source added of the lawmakers. “The vast majority of them were on the wrong side. They didn’t think this was going to happen.”
Asked about his comments to the GOP lawmakers, Moore told The Hill he was giving them a dose of reality.
“Just as Reagan converted the GOP into a conservative party, Trump has converted the GOP into a populist working-class party,” Moore said in an interview Wednesday. “In some ways this will be good for conservatives and in other ways possibly frustrating.”...
“Reagan ran as an ideological conservative. Trump ran as an economic populist,” he said.
“Trump’s victory,” Moore added, “turned it into the Trump party.”Sound of heads exploding in the background.
During her political prime in the 1980s, Thatcher said she was out to change the soul, to change the conceptual universe in which people live, and her idea that “there is no alternative” (TINA) became so deeply embedded in our psyches and in our consciousness that it seems we could no longer imagine that there is an alternative to capitalism.
The neoliberalism of Thatcher was characterized by deregulation (especially in the financial sector), the suppression of labor, attacks on trade unions, and the privatization of state-owned corporations. Both Thatcher and Ronald Reagan oversaw the shift toward a more laissez-faire version of capitalism, which in effect reversed the post-1929 movement towards increased state-intervention and social-democratic capitalism.
It is long overdue that we lay this TINA concept to rest.…Consortium News
Trump’s statement sounds a lot like Modern Monetary Theory (MMT), a tenet of economists who believe in de-emphasizing the need for deficit reduction because the U.S. controls its own currency. Balanced budgets, to MMTers, take money out of the hands of ordinary Americans who can put it to more productive use through job creation and consumer spending. The deficit only matters once you reach full employment, when overheated consumer demand can lead to inflation. But we’re nowhere near that point right now, meaning there’s plenty of room for deficits, without any possibility of default.
One MMT advocate, Stephanie Kelton of the University of Missouri-Kansas City, worked for Bernie Sanders in the Senate and now advises his campaign. But even Sanders emphasizes deficit reduction, by promoting higher taxes on the wealthy and Wall Street transactions. Kelton’s worldview, and in this instance Trump’s, goes far beyond even Sanders’s comfort level on the issue.…
If the deficit really doesn’t matter, Democrats would have to live up to their image as the party of the people, and work to provide better opportunities for them. And they would have to spend federal money to do it. Behind the mockery of Trump’s monetary positions is the truth that mainstream Democrats aren’t prepared for the implications of an MMT world. They would rather hold off the left by claiming that their hands are tied because of the deficit.
Such moderation makes the wealthy funders of Democratic campaigns far more comfortable, and it leads many in the media to laud Democrats as the more responsible, serious party. But such cuts don’t lead to more jobs, higher wages, and a better life; spending on infrastructure or health care or education does. Democrats should listen again to Trump’s stray remark for the grain of truth in it: Deficits don’t matter. The sooner the party realizes that, the better off its constituents will be.Right on, bro! Power to the people!
The Vermont senator’s success so far demonstrates the end of the politico-ideological cycle opened by the victory of Ronald Reagan at the 1980 elections.One might say the same for Jeremy Corbyn and Margaret Thatcher.
During Palme’s tenure, there were more than a hundred antisubmarine alerts: the media reported stories of people witnessing Soviet frogmen manipulating something near a Swedish naval base and published undersea tracks left by the mysterious submarines.
Every time, the USSR was blamed, and although it denied everything, no one believed it. From 1981 to 1983, the number of Swedes who perceived a Soviet threat increased from 27% to 83%.…
From the Archive: The U.S. political/media system is awash in propaganda drowning any rational debate about crucial foreign policy issues. But how did that happen? A key turning point was the Reagan administration’s pushback against public skepticism over Vietnam and CIA scandals of the 1970s, Robert Parry wrote in 2010.Parry wrote:
In the 1980s, CIA propaganda experts and military psy-war specialists oversaw the creation of special programs aimed at managing public perceptions in both targeted foreign countries and the United States, according to declassified documents at Ronald Reagan’s Presidential Library.
These documents – discovered in 2010 – buttress previously disclosed evidence that President Reagan’s CIA Director William J. Casey played a key behind-the-scenes role in pushing this political action initiative, which recruited well-heeled private-sector conservatives to subsidize the secretive government operations.
CIA Director William Casey.
The documents show that Casey used a senior CIA propaganda and disinformation specialist named Walter Raymond Jr., who was placed inside the National Security Council in 1982, to oversee the project and to circumvent legal prohibitions against the CIA engaging in propaganda that might influence U.S. public opinion or politics.
Though Raymond formally quit the CIA after going to the NSC, documents from Raymond’s personal NSC files reveal that he often passed on recommendations regarding the propaganda initiative after meetings at CIA headquarters in Langley, Virginia, or after conversations with Casey himself.
In one Nov. 4, 1982, “secret” memo, Raymond described Casey reaching out to right-wing mogul Richard Mellon Scaife, who was already working with other conservative foundation executives to fund right-wing publications, think tanks and activist groups seeking to shift U.S. politics to the Right.
Raymond told then NSC advisor William P. Clark that “Bill Casey asked me to pass on the following thought concerning your [scheduled] meeting with Dick Scaife, Dave Abshire [then a member of the President’s Foreign Intelligence Advisory Board], and Co.
“Casey had lunch with them today and discussed the need to get moving in the general area of supporting our friends around the world.”
Besides a desire to “invigorate international media programs,” Casey wanted to help U.S.-based organizations, such as Freedom House, that could influence American attitudes about foreign challenges, Raymond said.
“The DCI [Director of Central Intelligence] is also concerned about strengthening public information organizations in the United States such as Freedom House,” Raymond told Clark. “To do this we have identified three overt tracks:
“–enhanced federal funding;
“–the Democracy Project study (although publicly funded this will be independently managed);
“–private funds.”
“A critical piece of the puzzle is a serious effort to raise private funds to generate momentum. Casey’s talk with Scaife and Co. suggests they would be very willing to cooperate.”
(In the following years, Freedom House emerged as a major recipient of funding from the U.S. government’s National Endowment for Democracy, which was founded in 1983....)Broadening the deep state created in the Truman administration. This would be combined with the Brzezinski doctrine land down in the Carter administration for achieving US global hegemony under neoliberalism. Global history since then is the story of the unfolding of the globalization project and the creation of the American Empire.
In the 1980s, CIA propaganda experts and military psy-war specialists oversaw the creation of special programs aimed at managing public perceptions in both targeted foreign countries and the United States, according to declassified documents at Ronald Reagan’s Presidential Library....Any wonder why Russia and india have passed laws regulating the activities of NGOs? If you are still wondering or don't agree, you probably haven't read the full article.
Indeed, the evidence suggests that the Casey-Raymond media operations of the 1980s helped bring the Washington press corps to its knees, where it has remained most of the time through today.
To soften up the Washington press corps, Reich’s S/LPD targeted U.S. journalists who reported information that undermined the administration’s propaganda themes. Reich sent his teams out to lobby news executives to remove or punish out-of-step reporters – with a disturbing degree of success.And, of course, this is part of the "intelligence" that is being presented to Congress. It's operations masquerading as intelligence. This actually accounts for the "intelligence failures" of the CIA. They weren't intelligence failures at all, they were very success operations that "went bad" in CIA jargon.
Bureaucratic deception was also part of the secret operations inside the NSC. In the mid-1980s, I was told by one senior NSC official that a key early document laying the groundwork for raising money for the contra war in defiance of a congressional prohibition was marked as a “non-paper,” so it would not be regarded as an official document (even though it clearly was).
Similarly, Raymond sent one Nov. 28, 1986, memo to an unnamed CIA officer reminding him to attend what Raymond called “the next non-group meeting.” So it appears that Reagan’s NSC sought to get around requirements for safeguarding historical records by circulating “non-papers” and meeting in “non-groups.”You have to admire their creativity anyway.
That meant, however, that the American people never got to read the chapter’s stunning conclusion: that the Reagan administration had built a domestic covert propaganda apparatus managed by a CIA disinformation specialist working out of the National Security Council.
“One of the CIA’s most senior covert action operators was sent to the NSC in 1983 by CIA Director [William] Casey where he participated in the creation of an inter-agency public diplomacy mechanism that included the use of seasoned intelligence specialists,” the chapter’s conclusion stated.
“This public/private network set out to accomplish what a covert CIA operation in a foreign country might attempt – to sway the media, the Congress, and American public opinion in the direction of the Reagan administration’s policies.”Consortium News
Denied crucial information about Syria, the American people are being led toward the precipice of another Middle East war, guided by neocons and liberal hawks who are set on “regime change” even if that means a likely victory for Sunni terrorists, writes Robert Parry.Robert Parry, Sleepwalking to Another Mideast Disaster
We should be considering the Greece and Ukraine crises together. If only the news media would allow that…
There is something tragically irrational driving both of these crises. The genesis of each, at least nominally, is the question of whether markets serve society or it is the other way around. Economic conflict, then, has been transformed into humanitarian disasters. This is what Greece and Ukraine have most fundamentally in common.
It is in search of a logical explanation of the illogic at work in these two crises that something else, something larger, emerges to bring them into a coherent whole. Washington has so many wars going now, none declared, one can hardly keep the list current. But the most sustained and havoc-wreaking of them is unreported. This is the war for neoliberal supremacy across the planet. Greece and Ukraine are best viewed as two hot fronts in this war, a sort of World War III none of us ever imagined.
Neoliberalism is our Frankenstein. The thought holds for two reasons. At its core it is profoundly undemocratic, never mind that the English and American variants of democracy are the mulch from which it arises. It is also unrelentingly absolutist: Because it is intimately related to the myth of America’s providential exception, neoliberalism can tolerate no alternative. Were another idea of political economy to flourish it would expose premodern myth as premodern myth.…Good snapshot of the birth and development of liberalism from classical to progressive on one hand and neoliberal on the other. Smith is well-informed both about history and current affairs, and he summarizes the essentials.