Deconstruction of the Myths

It is with almost divine providence that exactly one year to the day after Rudy Giuliani stood before the nation and declared "thank God George Bush is president" we would find ourselves watching in horror as thousands of American citizens fell destitute, first to a natural disaster, then to a federal one.

It was August 30, 2004, the opening night of the Republican convention, when Mr. Giuliani gave the headline speech that would set the theme for the rest of the days to follow: George Bush is a resolute leader. George Bush will keep us safe.

But on the first anniversary of that speech, as the long feared nightmare of a flooded New Orleans became a reality, it was clear that we are not safe.

Indeed, every night of last summer's convention, as one speaker after another belied the perils of trusting our nation's security to any lesser protector than George Bush, can be marked by it's own anniversial adducation of the contrary.

On Rudy's Tuesday, the day after New Orleans began to flood, and New Orleanians began to drown, we find George Bush flying to Coronado, Ca. to plug the leak in his Iraq war support. As Mayor Ray Nagin tells WWL radio that federal officials "don't have a clue what's going on down here", the president is photographed attempting to play a guitar.

Wednesday was Arnold's night to lay out "why America is safer with George W. Bush as president" and marks the return of the president from his vacation in Crawford, TX. New Orleans, fully flooded and descending into chaos and despair, sees little or no sign of federal intervention. Some did, however, see Air Force One fly over earlier in the day.

Thursday brings us the vitriolic Senator Zell Miller who declares George Bush "the man I trust to protect my most precious possession: my family", and Vice President Cheney who informs us that the president "gets up each and every day determined to keep our great nation safe." But on this day, one year later, it has become obvious to even Bush's ardent supporters that something is severely wrong with the federal response. As it becomes clear that people who survived the hurricane are now dying from abandonment, Bush tells Diane Sawyer that no one "anticipated the levees would breach."

Friday, Sep 2. Final night of the convention: "I am running for President with a clear and positive plan to build a safer world and a more hopeful America." Five days after the flooding of New Orleans began, National Guard troops begin arriving. The AP reports that a "mix of cheering and swearing has greeted National Guardsman pouring into New Orleans." Stranded victims continue to die waiting for rescue.

Of course, some of us knew all along that the image being projected of George Bush was just as fictitious as his National Guard service. But the fickle media, always a sucker for a good show, declared the convention a "masterpiece".

Perhaps if any good comes out of Katrina, it will be the realization by those in the media that elections are not just about the horse race. Perhaps they'll realize that those we put in positions of power, and the decisions they make, have real effects. Not just in remote, foreign lands, but right here at home. Perhaps next time they'll check that reality bears resemblance to the myth.

But the myth of the right's pre-eminence in all things security related, which was never supported by evidence anyway, is not the only one found gasping beneath the waves of Lake Pontchartrain. The aftermath of Hurricane Katrina has exposed the tepid foundation of conservative thought itself: that society as a whole functions better when its participants pursue their own self interest over the interest of society. Of course, the mathematician John Nash disproved this abject fallacy decades ago for which he won a Nobel Prize. But inevitably, the forces of nature, incommensurate to human frailty, speak far more persuasively than some obscure college thesis.

This isn't the first disaster to lay bare the fundamental flaw, even inhumanity of conservatism. Just last year, in the wake of Hurricane Charley, Florida's Republican Attorney General Charlie Crist announced he would "vigorously target" those engaging in "price gouging." And he did, bringing numerous suits against vulturous businesses including Days Inn.

But isn't price gouging just the free market at work? And isn't Mr. Crist's vigorous pursuit of gougers a blatant admission of the limits of a free market to expedite our higher, moral obligations to our fellow human beings?

Some conservatives must think so. Ideologues to the end, or just sensing the threat to their very existence, they have constructed "arguments" for why gouging is not the vile, unethical exploitation of the destitute, but actually a benefit. They argue that gouging provides the market incentive for outside providers to sweep in and take advantage of the high demand thus flooding the market and ultimately lowering prices. So disaster consumers get needed supplies and services that they may not otherwise have had and eventually the normalization of prices from the abundance of supply.

There are too many flaws in this reasoning to address here, so I will just point out the most glaring: disaster victims don't have time for the market to work itself out, they need food, housing and medical supplies now. It's just one of the pitfalls of being a disaster victim.

Fortunately, the vast majority of people don't need to labor over such ideological fixations. They just know that charging a family who has just lost everything to a hurricane $50 for water is nothing less than monstrous. This is why the overwhelmingly Republican, Florida legislature has still not repealed the 1992 anti-gouging law. They wouldn't dare.

So this begs the larger question: If it is wrong to gouge the victims of a hurricane, why is it okay to gouge the sick and elderly? Is not over a million people with terminal cancer or AIDS a national disaster? Or is their only difference the political influence of the gougers?

The sudden onslaught of a disaster such as Hurricane Katrina evokes our humanity and compels us to respond. But Katrina also exposed a hidden disaster which has been playing out in slow motion for many years: poverty. This disaster kills far more people than Katrina ever could. Indeed, without it, Katrina would have killed far fewer than it did.

But poverty is a hidden disaster. Hidden from television, hidden from our gated communities, stashed away in prison cells. The press has just had an epiphany, "Where did all those poor people come from?" But they've always been there. Living out the disaster that is our two-class system. All across America, our two Americas.

And this exposes the most glaring flaw: to sustain itself, conservativism relies on the invisibility of weakest among us. The other America, always conveniently out of sight.

Katrina has proven that most people, when confronted with tragedy, will respond with compassion and humanity. They will open their homes and their hearts to those in need and even support government funded reconstruction and "socialist" price controls. Decency trumps ideology every time.

So why do we allow so many to perish every day at the hands of poverty? If the millions of Americans, destitute, sick, homeless had met their fate suddenly, in real time as have the victims of Katrina, would we not be just as appalled at the government's failure to respond? To keep them safe? Beneath all of this lies a deeper truth: George Bush's apathetic response to the people of New Orleans is merely an extension of his, and his party's apathy to the plight of millions of Americans who were already suffering.

Encapsulating that apathy perfectly was the recent statement by Barbara Bush: "And so many of the people in the arena here, you know, were underprivileged anyway, so this--this (she chuckles slightly) is working very well for them."

Hopefully this disaster in the Gulf will compel us to revisit what kind of America we want to live in and the role that democratic government has in shaping it. Conservativism professes that man only achieves by striving for profit. That without greed, there can be no good. But we have seen, in the story of Hurricane Katrina, a thousand contraventions to that lie. When we look in the mirror, do we really want to see the face of Barbara Bush, or do we want to see the faces of those many compassionate Americans who selflessly acted to relieve the suffering of others while expecting nothing in return?

The Wolves Among Us

If you can block out the movie production of Troy long enough to think about the legend of Troy, remind yourself of what that story really says. It says that the enemy within is a far graver threat than the one outside your gates. It says that traitors, turncoats, spies and general wolves in sheep's clothing will cause more damage than all the armies combined.

This is, of course, because it is always easier to destroy something from the inside.

Keep this in mind when considering the wisdom of focusing solely on the Republicans while ignoring the wolves that currently occupy our hen-house. Wolves like the ones who voted for CAFTA, the bankruptcy bill, or the energy bill.

How can so many Democrats vote for legislation that goes against everything the Democratic party stands for and expect to get away with it? Because they know we'll let them.

They know that as election time rolls around, we will flock in droves to defeat the evil Republicans so that they won't pass such legislation as CAFTA, the bankruptcy bill, or the energy bill.

They know that many of us will argue that we need to be a big tent party and not benefit the Republicans our internal strife. That our only objective is to get back into power so we can pass CAFTA, the bankruptcy bill, or the energy bill. At least then we'll have the fancy congressional offices again.

Meanwhile, the corporations and their lobbyists are laughing their way to the bank. They actually benefit from the Democrat's and Republican's pre-occupation with each other. They love the culture war. They love Plame-gate. They love everything that takes our eyes off the ball while they quietly amass all of the wealth and power into their few hands. And they know that they can count on neither Republicans or Democrats to interfere.

It's funny. Most people know that our politicians are bought and paid for. We know that Big Money is really pulling all the strings. But who knows who Big Money really is? Who are these people who are actually running the country from the back rooms of Washington? Here's a clue, none of them are named Karl.

In our quest to "take our country back" and restore power to the people, wouldn't it be wise to know who we're taking it back from? Here's a clue, it ain't George Bush.

And meanwhile, our people continue on their mass migration to the services sector. According to the Dept. of Labor, service sector jobs are the only thing keeping Bush's employment numbers out of the red. The SEIU is the largest and fastest growing labor union in the country. Yes, we are well on our way to waiterdom. Unfortunately, only so many can serve frappes to the 2% of the population that owns everything.

And then there is the Democratic Party®. I put that little trademark symbol there to get a point across. The Democratic party is more than a group or organization of people. It is a trademark. It is a core set of beliefs that are encoded into those two words.

We all have variations on those core beliefs. And we all have different ways of describing them. And indeed, those beliefs have evolved and expanded over the last century. But always, always at it's root, the brand Democratic Party has stood for protecting average Americans. It has stood for protecting and empowering the many against the tyranny of the few. Whether manifest in the fight for civil rights, progressive taxation, the protection of the elderly, or the disassembly and regulation of monopolistic corporations, there has always been a consistent, underlying statement beneath every act: America, under Democratic watch, will not allow the interests of the monied few to prevail over the commonwealth of the many. It has been so since its inception.

And then came the DLC. Like wedding brokers with solicitation of the dowry, they showed us a new way. With an endless supply of crisp, corporate cash, they forged a pact. Let our sheep graze pittantly in the electoral pasture and we'll give the wolves the keys to the hen-house.

And the Third Way began. And when the wolves rewarded the sheep with the installation of one of their own into the presidency, the sheep were so overjoyed that they stopped guarding the hen-house altogether. The wines of glory spilt over as the wolves and sheep celebrated their thirst. Good days would surely follow.

But out here in the real world, good days did not follow. Jobs, whole towns dried up and frittered away. Many families struggled to survive working three jobs. Urban and working class neighborhoods began to resemble combat zones. Small businesses failed as corporate chains moved in with scale advantage and third world imports. Public schools became holding cells for disadvantaged youth while prison occupation reached record highs. Suicide rates also reached record highs. As did drug and alcohol abuse as the sheep found their own good days in substance and television induced oblivion.

And, almost without notice, we awoke to find the brand, Democratic Party®, had lost its meaning. The leadersheep no longer spoke about the plight of the commonwealth. To many, they were starting to sound like wolves themselves. Then large flocks began to mistrust their party's alliance with the wolves. Many stayed home on election day. Many others formed their own party. And the sheep's long sworn enemy, the pigs, began to grow in power.

You see, the pigs alliance with the wolves went back to the beginning of time. And the sheep feared that alliance. They saw how the wolves would protect the pigs as they tried to hog all the food so that, at a time of the wolves choosing, the pigs would sacrifice one of their own to the wolves feast.

But the wolves found it difficult to elect a pig. No matter how many bows and ribbons they adorned, they still looked like pigs.

But when the sheep saw other sheep drinking with the wolves, the pigs no longer looked so bad. This is a new era, some would say. We are all wolves now.

The wolves also bought up all the TV channels, so they were able to make the pigs look like ponies. And everyone loves ponies.

And yet some of the sheep were not fooled. They said, "that's not a pony, that's a pig. And those aren't sheep. They're wolves in sheep's clothing." And they vowed to fight the wolves in sheep's clothing. But the other sheep cried out in horror. "How can you turn on your own? Don't you realize these are sheep? We must all stick together. A bad sheep is better than a good pig", they would say.

But the wise sheep knew better. They knew that the wolves in sheep's clothing were worse than plain wolves or the worst pigs. They remembered the legend of the pony, long told around the water hole. It was the story of how the wolves and the pigs had once conspired to build a giant pony to give to the sheep. But it was not a pony. It was a giant meat packer.

And yet, when they tried to warn the other sheep, they would not listen. They did not remember the legend of the pony. And they believed that if it was covered in wool, it was good. No matter where that wool came from.

To be continued...

There is nothing new in American politics. There is no Third Way. This is the same story mankind has been living out for eons. It is the age old struggle between the wolves and the sheep, retold for the new millennium. The ponies are only prettier in the television lights.

Our founding fathers fought the wolves and won. American history is speckled with such fights. Not all victorious.

But in our immense history I can find no fight more imperative, no threat to the average American so grave as the one we are witnessing now. Animal metaphors aside, the watchers and the keepers have all been turned. Every institutional protection of the common man has either fallen or is under siege.

There is only one intuitional agent left to our defense: democracy. And the only democratic institution which has any hope of providing The People with remedy is the Democratic party.

We can be a big tent on a lot of issues. But on one central point there can be no compromise: Democrats, in all their affairs, must as their final, chosen allegiance, serve the interest of ordinary Americans. Service to any other is betrayal.

Update [2005-7-31 2:50:4 by TocqueDeville]: A note about purity.

Thomas Jefferson founded the Democratic party to empower the commoners. He saw the inevitable inclination of wealth and power to accumulate into the hands of the few at the expense of the many. His Party of the People was its remedy.

The root principle I have laid out above is not my invention. It is what, historically, the Democratic party has stood for since its inception. To claim that the expectation of our party to adhere to that principle -- and to solely represent the interest of common Americans -- reflects some form of ideological “purity” is bane Sophism.

The Democratic party, until recent times, has always stood for protecting common Americans against the potential tyranny of the few. And while such language may be somewhat out of vogue, it has never been more applicable. Looking out for the common man is to Democrats what “lower taxes” and “less government” are to Republicans. If you do not know this, then you are either too young to remember, ignorant of history, or worse.

Corporate Immorality and Comparative Advantage

In his diary, "How to Create High-Paying Jobs and Slow Outsourcing bonddad implies that anyone who believes that corporations are "inherently evil" is not a member of the "reality based community." He calls such broad brush characterizations the language of socialists or communists.

To this I ask, how bout this guy:

"We must crush in its birth the aristocracy of our moneyed corporations, which dare already to bid defiance to the laws of our country."

Or how about this guy:

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country...corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."

Or this guy referring to corporations in a speech:

"The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That is, in essence, fascism - ownership of government by an individual, by a group, or by any other controlling power. Among us today a concentration of private power without equal in history is growing."

So, who are these unrealistic, commie socialists? Thomas Jefferson, Abraham Lincoln, and Franklin Roosevelt respectively.

The dangers of corporate power

From the beginning of our republic, wise men have understood the danger of corporations. In fact, to a large degree, our country was birthed in revolt from corporate power, specifically, the India Trading Company and the Central Bank of London.

But time elapses and people forget their history and the forces of greed and corruption manifest, yet again, in the form of corporate oligarchy.

I have spent most of my adult life studying and writing about corporate power and I can tell you unequivocally, it is immoral. And liking, or even needing one of their products does not alter that fact.

Actually, the corporation, in its pure state, is not immoral, it is amoral. The corporate objective does not include the values of good or evil. It has only the cold, objective value of maximizing profits.

But human beings cannot truly be amoral. We are not passive entities. "To be" requires action in every instance. And action always affects something and someone else. "To be" a human being, we must always choose actions that do or do not cause harm. That are morally right or wrong. There's just no way around it.

But the corporate model ignores such moral considerations. Like an insect machine, it merely strives towards its objective, maximize profits.

You can see the amorality=immorality of corporate hegemony by the way corporate culture responds to one of its own trying to "do the right thing." Such extracurricular
considerations are almost always viewed as hostile to the prime directive.

Can generally "good" people participate in an inherently immoral system. Of course. But not without costs. Every year, 60 Minutes broadcast some report from a corporate whistle-blower who has finally reached an epiphany. They can no longer detach their own personal morality from their function in the amoral system.

Non-locality: Amorality's Evil Twin

And this leads to the heart of what is wrong with not only the corporate system, but all centralized, authoritarian systems including communists, socialists and even some democratic states: non-locality.

Non-locality is a physics term referring to action at a distance. Almost all the evils of men can be measured in their capacity to conduct action at a distance.

For example, poisoning the water supply of thousands of people right from your Wall St. office with a phone call. Or making the decision to destroy an entire city's economy over lunch.

In the most human terms, non-locality means never having to look the person who's child you gave leukemia in the eye. Or the old couple who's pension fund you evaporated. And that really sums up the evil of the modern, corporate world: the absence of accountability.

We have become so corporatized -- or institutionalized in the case of centralized, non-local state rule -- that we aren't even aware of our own detachment from our fellow man. This has never been more evident than in our health care system:

A woman in distress calls the doctors office complaining about chest pains and nausea and the first thing she hears the receptionist say is, "Do you have health insurance?" I did not make this up.

Was the receptionist evil? No, she was over institutionalized.

Quite simply, we have become inhuman. Our ever increasing interaction with the corporate system has left us dehumanized and disempowered.

Socialism: Non-locality's Other Evil Twin

Bonddad called blanket anti-corporatism language socialist or communists. I disagree.

Socialism, in almost all previous incarnations, is even worse action at a distance with no accountability. And that is what is evil: action without accountability, never having to look anyone in the eye, non-locality. At least corporations have some profit motive not to screw you over too blatantly. Centralized bureaucracies often do not.

Of course, I don't care for broad brushes much either. But exactly the same thing I abhor about the corporate model, non-democratic, centralized control without accountability, is a recurring them in both communists and socialists states.

It is indeed true that some systems function better centralized. These systems always involve few moving parts. Like the electric grid. And it is true that some action must take place at a distance. America is a big country. But the only way to ward off the inherent dangers of such systems is strong democratic oversight. Again, accountability.

Christian Conservatism Meets Corporate Amoralism

The great irony of the modern right-wing is the new alliance of the moral Christian conservative and the amoral corporate economic model. Corporate amorality, which again is immoral, has permeated our culture. The new faith of free market as Darwinian, social management has all but replaced our basest obligation to help and protect each other. And just as in the days of Christ, the followers have littered the alter with the icons of consumerism.

It is the altruism-is-evil sociopathy of Ayn Rand and Leo Strauss: any government action that is not limited to defense or the facilitation of commerce is socialism, that has infiltrated the Christian right. They parade their patriotism as faith while condemning the government of the people dictated by our constitution. One evangelical Christian argued to me that Christ, the miracle healer of the sick, would never have given free healthcare to the poor.

The Corporate Christian's Nemesis: Democracy

Under the American Constitution, Democracy is the medium through which human "good" is manifest. Democratic government is the sole mechanism by which we solve our collective problems, localize our plight and hold to account those agents we employ on our behalf. And we must fight to the death any system that rises up in spite of it.

Only through the strong superimposition of democratic will can we allow corporations to exist. For without it, the they will rise up like a vine weed and choke off the fruits of our collective good. We can already see the reach of that vine in every chamber of our government. Strangling the people's will.

It is not socialism to employ the agency of democracy to secure the interest of the commonwealth. It is what common people do.

Factors of Deportation

This brings me to David Ricardo and the theory of comparative advantage, another venture bonddad treated us to. Does it occur to bonddad that when Ricardo and Adam Smith were developing their trade theories, the primary form of communication was the letter? The primary form of transportation was a horse? Commercial transportation was limited to trains and boats?

What has changed? The non-localization of so called factors of production. Or the globalization thereof. Specialization localization is all but nonexistant now. We can move factors of production in a year. Robotic machination has also negated the theory of comparative advantage. Now, through the wonders of technology, anyone can hit the "On" button.

Is it not clear that this changes everything? Comparative advantage is an obsolete concept. The only "advantage" left is the limitations of labor rights and environmental regulation. Otherwise, we are all equal now.

Now, speaking of the reality based community, how about the simple fact that reality is no longer conforming to classical economic theories? Nothing Bill Clinton or Al Gore sold to the country has come true. We have at least a 600 billion dollar per year trade deficit. And this does not include the labor deficit.

Some day, historians will certainly view 21st century economists as crackpots practicing pseudoscience. Why wait?

Peer pressure and rigid academic discipline, not to mention Wall Street pressure, have compelled modern economists to close their eyes to the real condition of our economy. A condition that can only be described as savage.

Think outside the box. Go to the old part of your town and look at the architecture. Why can we no longer afford to create these structures? Why can we no longer afford to have excellent schools in excellent, inspiring buildings? Why do we not have state of the art infrastructure with high-speed rails and maintenance free roads. It appears we can't even afford to protect our children from the decimation of our air and water.

Why can't we even afford to have enough police to stop crime? All over the country, police don't even respond to anything less than a felony.

The United States is the richest country in the world in natural recourses. We have the cream of the crop. Water, energy, minerals, agriculture, even people. We should be, at this time in history, creating a super society.

Instead, we endure the fight-over-scraps economy. Like rats in the sewer, our local mayors, police, school boards, transportation boards are left fighting over scraps of funds from an economic system that is completely geared towards monied interests getting a bigger and bigger piece of the pie the commonwealth decays.

Ask yourself, what does it say about an economists who claims all is rosy while we have schools whose roofs leak, who can't afford books, who cant afford enough teachers? While the policies that have allowed the Central Banks and Corporations to accumulate 90% of the wealth in this country have left the rest of us fighting over scraps.

Bill Clinton assured Americans that we could compete in a global labor market with our higher skills and training. Aside from the fact that, as Bill Gates said, our schools don't produce high skilled laborers, even if they did, we still can't compete. How much higher skilled can we be than computer programmers? Where is the demand for Quantum Physicists?

One day, future historians will look back with absurdity that a country, a world so rich could allow so many to suffer and stagnate. That we had not the wherewithal to channel our resources to create a sustainable, prosperous civilization for everyone. Why can't we see that absurdity now? Is TV so good that we settle for scraps?

The essence of the American spirit is not to accept what is and endure it, but to see what can be and make it. I suggest we apply that principle to our economic views. We have more choices than the laissez fair capitalism and socialism duality. Perhaps it's time for Democratic Economics.

Senate Votes to Gut the New Deal and No One Notices

The Senate, with bipartisan support, voted to repeal one of the most hard fought and important components of FDR's New Deal Tuesday and there's narily a mention of it anywhere.

The component I'm referring to is PUHCA (Public Utility Holding Company Act of 1935). Both the Senate and House bills repeal this historic measure. And though it's not as big as repealing Social Security, it comes awefully close.

Get this straight people: This is the most important legislation to pass the Senate in years. It is a green-light for a return of the energy monopolies of the 20s and 30s. It is a green-light for the kind of market manipulation and price gouging that Enron engaged in in California -- except on a national scale.

Repeal of PUHCA is where all the money is (over one trillion dollars) in this bill, and after searching Google news for "PUHCA", I got 11 hits. This is clear testimony that the modern press is either too corrupt or too incompetent to do their jobs. Make no mistake, repeal of PUHCA is an historic dismantling of FDR's New Deal, a windfall for the energy and investment lobbies, and it will do more to effect our economy and our way of life than any other piece of Bush's energy bill.

What is the Public Utility Holding Company Act and why does it matter?

Excerpted from PUHCA for Dummies: An Electricity Blackout and Energy Bill Primer by Lynn Hargis Former FERC Assistant General Counsel, Electric Rates

Q. What exactly does PUHCA do?

A. PUHCA: (1) limits the geographic spread (therefore, size) of utility holding companies, the kinds of business they may enter, the number of holding companies over a utility in a corporate hierarchy, and their capital structure; (2) controls the amount of debt (thus, cost of capital), dividends, loans and guarantees based on utility subsidiaries (so the parents can't loot or bankrupt the utility subsidiary), and the securities that parent companies may issue; (3) regulates self-dealing among affiliate companies and cross-subsidies of unregulated businesses by regulated businesses; (4) controls acquisitions of other utilities and other businesses; and, (5) limits common ownership of both electric and natural gas utilities.

Q. (Sarcastically) Is that all?

A. Actually, no. PUHCA also limits the activities (and campaign contributions) of officers and directors of holding companies, has control over their accounts, books and records, and regulates them in a number of other ways.

Should Billionaires and Huge Oil Companies Own Our Public Utilities?

Q. Why do Warren Buffet and ChevronTexaco want to get rid of PUHCA?

A. PUHCA does not allow them to own and control utilities unless they give up their other businesses. (They can passively invest in them now.)

Q. Are you kidding? ChevronTexaco would have to give up its oil business? Buffet would have to give up Berkshire/Hathaway?

A. Correct. PUHCA was enacted because huge holding companies were using secure utility revenues to finance and guarantee other, riskier business ventures around the world, and 53 utility holding companies went bankrupt from 1929 to 1936 after the banks called in their loans.

Q. So PUHCA protects the financial health of public utilities that supply our electricity and retail natural gas?

A. Yes, by controlling their parent companies. Of course, PUHCA was also designed to reduce over-concentration of economic power in just a few companies. The top five oil companies now control 50 percent of oil production in the U.S. If they also controlled public utilities, they would be too powerful for any government to regulate.

What can we expect after PUHCA repeal

Here, we're very fortunate not to have to break out our crystal balls. We merely need to look at what happened after a 1992 exemption was passed into law:

Perhaps the most impressive display of PUHCA's powers is the effect of one simple amendment made to the statute in 1992, the exemption from PUHCA of certain power plants that sold energy exclusively for resale. This was supposed to just create a little competition among power suppliers; instead, it effectively took generation out of the control of state commissions, who had always regulated it, and put it into the hands of FERC, which, to this day, has no statutory authority over generation plants.

This PUHCA partial repeal created power marketers, and ultimately the electricity deregulation debacle in California, the Enron bankruptcy, and the bankruptcies and huge debt of numerous utilities all over the United States. Congress' decisions to amend PUHCA to allow utilities to invest in telecoms and foreign utilities have been equally or even more disastrous to utility finances.

What else can we expect?

Energy Monopolies From Here and Abroad

Anyone will be able to buy your local utility company. And they will be able to use your local utility company as collateral on risky investment thereby subjecting your local utility to excessive risk. Just like Enron.

China will be able to buy your local utility company too just as they are attempting to buy Unocal. But don't worry. Your bill will almost certainly still be in English.

Aside from turning our already chaotic (from partial repeal of PUHCA) energy market into the wild west of trade speculation, one of the biggest threats will be consolidation and centralization.

In anticipation of the repeal of PUHCA, a wave of utility mergers has already been announced, including one by Warren Buffett. His holding company, Berkshire Hathaway, has a subsidiary named MidAmerican Energy Holdings, which has announced a deal to buy gas and electricity utility PacifiCorp for $9.4 billion and merge it with its Iowa utility, MidAmerican. The resulting utility would control electric and gas utilities from the Pacific Ocean to the Great Lakes. This purchase would not be possible under PUHCA, which promotes local control and effective state regulation over public utilities by confining the utilities owned by any holding company to a "single integrated system" operating within "a single region" of the country.

"FERC is deregulating wholesale electric rates on the theory that there will be increasing competition among electric suppliers," according to the letter. "This can hardly be the case if a handful of electric and natural gas holding companies can control the vast majority of the utilities in the United States."

A Threat to Our Economy

For this I'll refer back to PUHCA for Dummies:

It's the Economy, Dummy

Q. What does a utility law have to do with stocks, loans and the economy?

A. The last time there was no PUHCA we had a Great Depression. The stock market crash started it, but the collapse of the utility holding companies caused the depression to go on and on into the 1930s.

Q. Oh yeah? Why did a bunch of utility owners matter?

A. Utility stocks were held by a very large number of people, as they are now. When the holding companies crashed, both large and small investors lost tens of millions of dollars in investments.

Q. Well, why did the utility companies crash? People still needed electricity, even in a depression.

A. Exactly. It was the parent companies, or "holding" companies that owned or held stock in the utilities, that collapsed because of their non-utility investments.

Q. And that was because ...

A. There is something about electric and natural gas utilities, with their captive, rate-paying consumers, that is irresistible to venture capitalists. They want to use those guaranteed revenues to invest in risky, potentially high-profit, non-utility schemes. They want to keep the profits, and have the utility's customers bear the risks and assume the debt (certainly, that's what Westar Energy's executives had in mind, according to the Kansas Corporation Commission, see below). The holding companies of the late 1920s and early 1930s were so highly leveraged (had so much debt), all supported by the operating utilities at the bottom of the corporate pyramid, that when the banks called in the loans after the crash of 1929, the utility holding companies went down in a heap. The economic consequences for the country were severe.

It's really quite simple. Energy is not another commodity to be traded like widgets. Aside from the fact that it is a natural monopoly with captive consumers, energy is the engine of our economy. Without affordable, reliable energy, no other commodities could be reasonably produced.

What PUHCA has done for the last 70 years is to provide a firm foundation on which the rest of the economy can thrive. Once you attach our energy market to the tides of the rest of the markets, you set yourself up for extreme disaster as we experienced with the Great Depression.

There is a reason why seventy-six national and state public interest organizations came together to plead congress not to repeal the Public Utility Holding Company Act. It is quite possibly the single biggest cause for the economic stability we've enjoyed for the last 70 years.

Democrats Who Voted To Gut FDR's New Deal - Again

Akaka (D-HI)
Baucus (D-MT)
Bayh (D-IN)
Biden (D-DE)
Bingaman (D-NM)
Boxer (D-CA)
Byrd (D-WV)
Cantwell (D-WA)
Carper (D-DE)
Clinton (D-NY)
Conrad (D-ND)
Dayton (D-MN)
Dorgan (D-ND)
Durbin (D-IL)
Feinstein (D-CA)
Harkin (D-IA)
Inouye (D-HI)
Johnson (D-SD)
Kennedy (D-MA)
Kerry (D-MA)
Kohl (D-WI)
Landrieu (D-LA)
Leahy (D-VT)
Levin (D-MI)
Lincoln (D-AR)
Mikulski (D-MD)
Murkowski (R-AK)
Murray (D-WA)
Nelson (D-NE)
Obama (D-IL)
Pryor (D-AR)
Reid (D-NV)
Rockefeller (D-WV)
Salazar (D-CO)
Sarbanes (D-MD)
Stabenow (D-MI)

Update [2005-6-29 19:59:13 by TocqueDeville]: I really should have included the Democrats who voted Nay:

Corzine (D-NJ)
Feingold (D-WI)
Lautenberg (D-NJ) Nelson (D-FL)
Reed (D-RI)
Schumer (D-NY)
Wyden (D-OR)

Worshipping the Free Market God

The experiment began in the 70s with the idea, propulgated by the likes of Milton Friedman, that free markets could solve all of societies ills. The role of the Nation State, as well as of democracy itself, became second place to the miracles of the market. The traditional functions of regulation, imposed democratically to ensure the interest of public good, would now be relegated to market forces which would ensure the public good through Darwinistic selection. Those who survive and prosper do so because they provide the most service or good. Privatization of utilities such as power and water would usher in a new era of competition and lower prices for consumers. Lifting off burdonsome government regulations would free the markets to naturally select and economies would flourish.

This never happened.

Joseph Stigletz, Nobel Prize winning, former chief economist for the World Bank began to notice a pattern. Everywhere the experiment was implemented, economic disaster occured. Throughout the 80s and the 90s, all across Africa and South America the free marketeers, through the mechanisms of the IMF and the World Bank, got to try out their theories: deregulate, denationalize, privatize.

They didn't work. Facts:

"In perhaps the most comprehensive such study to date, Scorecard on Globalization 1980-2000, Mark Weisbrot, Dean Baker and other researchers at the Center for Economic and Policy Research documented that economic growth and rates of improvement in life expectancy, child mortality, education levels and literacy all have declined in the era of global corporatization (1980-2000) compared to the years 1960-1980. From 1960-1980 many countries maintained protectionist policies to insulate their economies from the international market to nurture their domestic industries and allow them to become competitive. Those policies are the same ones on which U.S. economic prosperity was built.

The Scorecard findings include:

Slower economic growth for countries at all income levels;

A negative growth rate for the poorest countries;

For moderately wealthy countries, income growth declined from 100% increase per capita between 1960-1980 to a 21% increase in the last two decades;

Reduced progress in education as evidenced by declining school enrollment rates and literacy. Slower growth in domestic spending correlates to decreased educational spending;

An overall slowdown in reducing infant and child mortality and in improving overall life expectancy (this is not necessarily an indicator of policy failure--it could be a natural flattening of progress curve).

You don't have to go to Argentina to see the wrath of the Free Market God.

Yet despite these facts, proponents of Globalization, like members of a cult, ignore evidence for ideology. Here in the U.S., the neoliberal conservatives (neocons) are driving the "free market is God" ideology right off a cliff. With every indicator of failure, they respond "more".

Take the California energy crisis. This is one of the few areas where they got to try out their experiments in the U.S. By promising cheaper prices for consumers through deregulation and market selection, they lobbied and passed legislation to try out their theories. Result? In one day, electricity prices rose 7000%. No, that's not a typo. In the end they had to call in the regulators again. But not before Enron and others milked Californians for over $7 Billion.

How did they do it? The profiteered on the fact that electricity, unlike widgets, is not something you can do without. So they colluded and schemed and basically held California's electricity for ransom. Result? Spikes in prices and blackouts.

The free marketization of natural monopolies such as water and power is utterly stupid, but the free marketization of medicine is immoral. Just like water, healthcare is not optional. And yet the priest of the free market expect the forces of consumer demand to apply to kidney transplants and tonsilectomies. But they really don't expect that. They're just out to make a buck. So they falsely claim that profit incentives have created the best healthcare system in the known world. Meanwhile, 45,000,000 (45 million) Americans have to crowd into emergency rooms to get treatment and if you need something severe like a new kidney, tough luck.

Democrats: going right along.

Like Californians, all Americans are being taken for a free market ride. At every turn the neocons are trying to perform their ideologically driven, factually challenged experiment here. And the Democrats are going right along. The party of FDR has shed of it's old skin as the party of the people for a new, Gobalization friendly sheen.

But in doing so, they have also shed the post-New Deal, anti-corporate, highly regulatory policies that oversaw the greatest economic prosperity in the history of the world and led, for the first time, to the creation of the middle-class.

By bellying up to the free market alter, Democrats have largely lost their reason for existing. And it shows. For the past few decades, with the exception of civil rights and social issues, Democrats have been hard pressed to define a unifying principle. The Democratic agenda has consisted of issues: education, prescription drugs for seniors, choice or now gay marriage. But a fundamental principle around which to coalesce has been awash in inconsistencies and contradictions. The old principles of economic justice and progressive populism have given way to corporate appeasment and economic abiguity. The principles of FDR's New Deal and Johnson's Great Society have been replaced by Clintonian Machiavellianism and the myth of Globalization as vehicle for the spread of democratic prosperity.

And while the liberal left and the religious right have been fighting over partial birth abortions, endowment for the arts, and gay marriage, the corporate center have been driving off with the furniture.

This has led to an exodus from the Democratic party of progressives who no longer feel they can support policies that continue to allow the accumulation of wealth and power into corporations while devouring the poor and working class. And the exodus will spread. As free market reforms failed in South America and elsewhere, they will fail here as well. And there is nothing in our history to indicate that we are protected from the fate of those other failed countries: civil unrest, riots, military intervention. If you believe that we are fundamentally different from those in Argentina and elswhere, I suggest you look at the streets of Boston after a Celtics upset.

The inevitable outcome of extreme economic diparity is social instability. And as all of the evidence indicates, the inevitable outcome of Globalization is extreme economic disparity.

Globalization vs. Democracy

Of all the outcomes of Globalization, none is more dangerous than the subversion of democracy. Just as corporate influence is corrupting the democratic process here at home, it corrupts smaller, less institutionalized countries tenfold. But if bribery of officials and CIA covert operations are the old way of globalizing, then the new way is the WTO and GATS. The WTO is a way to give the undemocratic imposition of the corporate agenda a bit of legitimacy. Kind of like Disney in Vegas. And GATS is the new law that makes it all happen.

Globalization vs. U.S. Constitution

The General Agreement on Trade in Services (GATS) Article VI.4 says that governments have a duty to hold "a balance between two potentially conflicting priorities: promoting trade expansion versus protecting the regulatory rights of governments." But who determines this balance between democratically enacted regulation and the promotion of trade expapansion? The democratically elected leglislature? The democratically elected president?

No.

A mysterious entity called the GATS Disputes Panel decides where the balance is drawn. Who is the GATS Disputes Panel? If you can find a list of it's members anywhere we'd sure like to have it. But using a criterion called the "necessity test", the GATS Disputes Panel has the authority to override U.S. legislation if it finds that leglislation causes an unnecessary burdone to the promotion of free trade.

Keep in mind, none of the trade agreements -- NAFTA, GATS, and GATT -- are debated or voted on democratically. They are negotiated in closed session and signed in closed session. So we now have an undemocratic body that has regulatory override authority over not just the United States government but over all participating countries.

Globalization is Dead

There are still many advocates of Globalization. But the tide is turning. The breakdown of the Free Trade Area of the Americas (FTAA) negotions last year is one example. Countries such as New Zealand, Venezuela, and Maylasia have said no to the God of the Free Market and the new Globalization order and have seen their economies rebound as a result. Other countries are beginning to notice.

As John Ralston Saul points out,

Once belief is gone, the churches begin to empty. You could see this accelerating disbelief in bankruptcy court in December 2001, when, as if in the last scene of an old-fashioned bedroom farce, the "inevitability" of Global corporate leadership came face to face with Enron, filing for government protection from its private debts.

Globalization is already dead. It's just a question of how long we want to drag it's corpse around.