Deregulation Resurrected American Economic Insecurity
By Paul Craig Roberts
- The US might not be in a Great Depression, but economic
insecurity has nevertheless returned to America.
John N. Gray, a distinguished intellect and retired professor of
intellectual history at the London School of Economics,
disagrees with the view that “the end of history” has placed
humanity on a course of ethical and economic progress. History,
Gray believes, is not progressing to a higher stage. Instead,
humanity is repeating the same follies and is destined to endure
the same disasters. It is the Enclosures, the Repeal of the Corn
Laws, and the Poor Law Act of 1834 all over again.
The problem is humans themselves. They are not questioning
beings. “Human beings use the power of scientific knowledge to
assert and defend the values and goals they already have.”
Instead of ethics and politics having advanced with the growth
of knowledge, we are experiencing today state terror and murder
on unprecedented scale as Washington kills people with drones
and invasions in seven countries and threatens others. The US
claims to be the democratic “light unto the world,” the
“indispensable nation,” but it has resurrected in violation of
its own law and international law the torture dungeons of the
unaccountable governments of medieval Europe.
Few people see the disconnect between the propaganda about the
goodness of America and the evil that its government practices.
Torture was banned. Its practice was made the act of a war
criminal government. But the Bush and Obama regimes have
resurrected torture as a defense of the state against citizens
who reveal its crimes and against those who resist its
The CIA official who revealed that the US government was
torturing detainees in violation of US and international law,
John Kiriakou, was subjected to wrongful prosecution and
sentenced to prison. The elected officials who approved the
torture and those who conducted the torture remain free of all
charges to torture again.
Bradley Manning, the US soldier who did his duty under the
military code and revealed US war crimes that were ignored by
his superiors had all of his constitutional rights violated and
is now being tried on trumped-up and false charges. The US
government claims that by telling the truth Manning aided the
“enemies of the United States.”
The US government is so corrupt that it doesn’t realize the
self-damnation of declaring the truth to be against it. Some
“light unto the world” Washington is.
The myths to which Americans subscribe are resulting in their
social, political, and economic destruction. In
False Dawn: The Delusions Of Global Capitalism, John Gray
lays out the destructive consequences of the free market
Gray demonstrates that the libertarian belief that free markets
are something that the government suppresses and takes away from
us is contradicted by the historical fact that “free markets are
creatures of state power, and persist only so long as the state
is able to prevent human needs for security and the control of
economic risk from finding political expression.”
Free unregulated markets have existed only during short periods
of history when state power and economic conditions were
conducive to the imposition of unregulated markets. Unregulated
markets existed for awhile in Victorian England, and Clinton,
Bush, Obama, Thatcher and politicians in Australia, and New
Zealand have removed regulation from various economic activities
from the 1980s through the present.
The evidence is in and piles up daily. Instability is on the
rise, and with it has come economic insecurity. Homelessness is
increasing. In the last decade, New York City has experienced a
73 percent increase in homelessness, while the net worth of the
city’s mayor has risen to $27 billion.
Deregulation of the financial system produced such massive
instability that the Federal Reserve had to lend the banks $16
trillion (a sum equal to US national debt). The Federal Reserve
is in the fourth year of monetizing $1 trillion annually of US
debt, raising the specter of dollar devaluation and inflation.
Once great manufacturing cities, such as Detroit, are in steep
decline. Real interest rates are negative, depriving retirees of
interest income. The high unemployment rate of recent university
graduates, despite an alleged economic recovery, proves that
education is no longer the answer. Millions of jobs have
disappeared. Unemployment is high. Poverty has increased as has
the number of Americans on food stamps. The once vibrant
American middle class is disappearing. The blue-collar working
class is being proletarianized. Labor arbitrage across national
borders has destroyed millions of US manufacturing and
professional service jobs such as software engineering. What was
formerly the incomes of millions of Americans was turned into
incomes for Chinese, Indians, and into capital gains for
shareholders and mega-million dollar bonuses for the corporate
CEOs who offshored the Americans’ jobs and banked the lower
labor costs as profits. One result has been a massive increase
in US income and wealth inequality. The US now has the worst
economic inequality of all developed countries and one of the
worst in the entire world. This 6 minute video will give you a
Another result has been the shrinking of the American consumer
market and the reliance on debt instead of income gains to keep
the economy going, an expedient now exhausted by the high debt
levels of American households.
The lost tax revenues from offshoring now threaten social
institutions put in place decades ago in order to reduce
economic insecurity and improve social cohesion. Social Security
and Medicare are under attack, but not the wars that are the
vehicle for spreading US hegemony and “democratic capitalism.”
Even the concept of a career is vanishing as the pace of
economic instability forces people into ever different jobs if
they can find replacements for the ones they lose. Free
unregulated markets disconnect economic activity from human
well-being. As Gray says, markets are supposed to serve man, not
man the market.
The neoconservative belief that America possesses the only true
way--”democratic capitalism”--is a delusion. Gray shows that
“democracy and the free market are rivals, not allies.” Free
markets are not sustainable in a democracy, because free markets
erode stability, security, and social cohesion. Free markets
existed for a short time in Victorian England, because “the
franchise was small and the overwhelming majority of the
population was excluded from political participation.” Gray
concludes that the American project of constructing a worldwide
free market in an age of democratic government requires the
instabilities and insecurities that free markets create to be
protected from democratic politics and insulated from correction
We see everywhere in the West the effort to insulate the
political process from the people it governs. In the US, the two
political parties represent the few powerful private interests
that supply their campaign funds. In the EU, Brussels is using
the sovereign debt crisis to compromise the sovereignty of the
member countries and remove their accountability to the people.
In the US, Homeland Security has purchased a billion rounds of
ammunition and 3,000 tanks. These purchases are not directed at
the rare or nonexistent terrorist, but at the US population.
They are Washington’s response to the social and political
instability for which deregulation has set the stage.
Gray concludes that a global free market is a project destined
to fail, and its casualty list will be long. Insecurities will
rise everywhere as globalism sets countries against one another
in geo-political struggles to control dwindling natural
resources that no country or institution has any responsibility
to conserve. History is returning, and the neoconservatives will
be remembered, if at all, as another utopian movement, a
collection of bloody fools.
Gray’s conclusion is consistent with the trends that Gerald
Celente forecasts: currency wars, trade wars, political
upheavals, and hot wars.
Libertarians will be the last to comprehend that the return of
crony capitalism, robber barons, and economic insecurity is the
direct consequence of a quarter century of deregulation. As I
show in my new book,
The Failure of Laissez Faire Capitalism And Economic Erosion Of
The West, it is the failure of the latest laissez faire
experiment that has saddled us with crony capitalism. Monopoly
concentration and rule by the few, not Libertarian nirvana, is
what deregulation and unbridled greed produce.
Craig Roberts was Assistant Secretary of the Treasury for
Economic Policy and associate editor of the Wall Street Journal.
He was columnist for Business Week, Scripps Howard News Service,
and Creators Syndicate. He has had many university appointments.
His internet columns have attracted a worldwide following. His
The Failure of Laissez Faire Capitalism and Economic Dissolution
of the West is now available.
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