Please Keep the Cold War on Ice

"Thirteen years after the end of the Soviet Union, the American press establishment seemed eager to turn Ukraine's protested presidential election on November 21 [2004] into a new cold war with Russia."
-Stephen Cohen

Things have been happening in the last several months whose importance really cannot be overstated. The new Cold War seems to be beginning to heat up and we could be closer to having the world's two primary nuclear-armed powers come to blows than at anytime since the 1962 Cuban Missile Crisis.

All of this stuff going on in Iraq and Syria, with the murderous Islamic fundamentalist group ISIS or ISIL or the Islamic State or whatever the hell they keep changing their name to, is tragic and horrific and worthy of attention but let's not kid ourselves. For those countries that are neither occupied by ISIS nor are the immediate neighbors of those who are, the possible fallout from the tug-of-war in Ukraine is infinitely more important. Especially considering the events that may follow could turn my use of the word 'fallout' literal.

Like in the time period referred to in Cohen's above quote, the western mainstream media has not been doing very good work if their job is to objectively educate the public regarding important world issues. Just like during the 2004 Orange Revolution in Ukraine, their goal appears to be convincing the people of the West of the necessity of conflict with Russia. If you've been following the news, you probably know the general narrative being produced is that Russian president Vladamir Putin is the new Adolf Hitler and that the Crimean province in Ukraine that Russia took is Putin's Sudetenland.

For those unfamiliar with the history, Sudetenland was a piece of Czechoslovakia that contained ethnic Germans. Hitler said these Germans were being mistreated by the Czech majority and then used this as a pretext for invasion and annexation, eventually of the whole country. The logic follows that we should have stopped Hitler at this point and that Putin's taking of Crimea and interference in the Ukrainian civil war on the side of the ethnically Russian Ukrainians shows he has the same imperialistic goals as Hitler.

Now there is some truth to this. Putin has indeed sided with his own ethnic group in another sovereign country in a way that violates said country's sovereignty. He did take Crimea from Ukraine and is assisting the ethnic Russians in the east and south to fight the forces of the new government in Kiev. However, the argument starts to break down there. 

First, a bit of history you probably already know. Crimea was actually legally part of Russia until relatively recently. The Crimean peninsula was given to the Ukrainian Soviet Socialist Republic in 1954 by Soviet leader Nikita Khrushchev as a gesture of good faith to Ukrainian nationalists who did not want to be part of the USSR. Since both Russia and Ukraine were controlled by Moscow, transferring ownership seemed like a cost-nothing gift that would slightly shift the bureaucratic burden and hopefully appease the nationalists. In 1997, six years after the collapse of the USSR, Ukraine and Russia struck a deal that Crimea would remain as part of Ukraine but Russia would lease its military base there in Sevastopol, home of the Russian Black Sea Fleet.

Back to the Hitler comparison. People often note the failure of the appeasing Hitler's strategy as he just took advantage of the additional time to prepare Germany for what was to come. The opposite has been true for Putin. Putin had no issue leaving Ukraine alone as a sovereign state until the 2014 revolution took out Ukraine's democratically elected president, Victor Yanukovych, and replaced him with a western-backed group in Kiev, some of whom are vehemently anti-Russian. One of their first acts was to try and pass legislation that would delegitimize Russian as an official language including in parts of the country where it was the primary language of the majority.

Now, Yanukovych was certainly corrupt and I likely would have been amongst the rebels trying to boot him from office. The new Ukrainian chief prosecutor accuses him of having stolen $100 billion dollars from the government before being forced to flee. That number is probably inflated but even a fraction of that is way more than the bankrupt country can afford.

In addition, Putin didn't mind him in power since he was in many ways a Russian puppet. The most commonly cited reason for the revolution was Yanukovych bowing to Russian pressure to back away from a free-trade deal with the European Union as it would have brought Ukraine into the West's sphere of influence and farther from Russia's. It's hard to know if Yanukovych did this because his support base in Ukraine was primarily from the ethnic Russians or whether Putin leaned on him and threatened to once again turn off the natural gas that they rely on Russia for. What was clear was that in exchange for dropping this EU deal, Russia would provide Ukraine with natural gas at $268.50 per thousand cubic meters instead of the previous $465. This price reduction was undone when Yanukoyvich was ousted in February, 2014.

That Ukraine gets one-third of its natural gas from Russia speaks of the interconnectedness of the two countries. Ukraine has basically always been within Russia's sphere of influence. Ancient Kiev was considered the heart of Ancient Russia. Some people have compared Ukraine to an island in a sea of Russia. When Russia is strong and their sea is rising, Ukraine disappears as an independent entity. When Russia is weak, Ukraine emerges from the water. As of 2001, 17.3% of Ukrainians identified as ethnically Russian, about 8.3 million people.

Seeing the removal of Yanukovych from government as a coup, many Russian Ukrainians in the Crimean peninsula, as well as in the east and south of Ukraine, did not support the new government and considered it a fraud. As they had not supported the Kiev rebellion against the leader that they had elected nor participated in the creation of the new government, the Supreme Council of Crimea voted to return to the Russian Federation in March, 2014. The West claimed the vote as invalid since there were Russian troops on the ground and stating that Crimea cannot unilaterally secede from its host-country. Russia vetoed any action by the UN to act against the secession, claimed the vote was legitimate and that Russia is allowed troops in Crimea under the current lease agreement with Ukraine. 

Russia also used the western-backed unilateral secession of Kosovo from Serbia/Yugoslavia as precedent. As of 2001, almost 60% of Crimeans identified as ethnically Russian so while the vote can hardly be considered legitimate due to the high likelihood of Russian intimidation, it would not be surprising if they had chosen to return to the Russian sphere following the formation of the new Ukrainian government.

Why are these ethnic Russians so against the new government that they would want to leave the Ukraine entirely? It basically comes down to a split that had occurred in Ukraine during WWII. Many in the west of Ukraine had sided with the Nazi's when they occupied the country. Most of these were nationalists, like western Ukrainian hero Stepan Bandera. These nationalists originally sided with Hitler due to dreams of being free of the USSR coupled with a sympathy for German notions of selective breeding to achieve 'purity' which meant intense racism towards Poles, Jews and Roma people. They even formed an entire Ukrainian volunteer division of the SS. This German/Ukrainian nationalist alliance was mostly short-lived, however, as Germany did not provide the desired autonomy and deported many Ukrainians to become slave labor. A full 4.5 million Ukrainians would later side with the Red Army in their fight against the Nazis.

The interesting thing is that there are many Ukrainians today who still consider the WWII nationalists as heroes. This seems to include the celebration of their less savory aspects such as wearing swastikas and murdering large numbers of Jews and Poles. These people had allied with an invading Hitler because they hated the Russians controlling their county that much and that they found they had more in common with fascist thinking than communist thought. 

Today, the western media has finally started acknowledging that the new Kiev government we've been supporting has some neo-Nazi elements to it, at least in the form of the shock-troopers being used to fight the separatists in the east and south. NBC reported on Germany discussing seeing SS battalion runes on the helmets of pro-government militias, a long New York Times piece passingly mentions the fact Kiev forces are flying a swastika, a Macleans piece discussing the Ukrainian pro-government paramilitary group, Pravyy Sektor (Right Sector), mentions they have a sign on their door reading "Nazis only."

The fact that the whole conflict has been blamed on Putin putting his own people into the east and south as part of a plan to conquer Ukraine without our media bothering to mention Nazi sympathies amongst the new government until now is troubling. Anyone paying attention to the revolution has been aware from the start that far-right nationalist groups had taken a disproportionate amount of power in the new government as they were the most disciplined and well-armed of the groups fighting the Yanukovych government.

Svoboda, the All-Ukrainian Union, emerged from an effort starting in 2004 by the new party leader, Oleh Tyahnybok, to tone down the rhetoric and moderate the image of the Social-National Party of Ukraine, a play on German National-Socialism (Nazis). Before the name change, the party had flown what appeared to be a swastika as their logo. Tyahnybok was booted from their parliamentary faction for calling for Ukrainians to fight the "Moscovite-Jewish mafia" and celebrated the Organization of Ukrainian Nationalists for their fight against "Moscovites, Germans, Jews and other scum who wanted to take away our Ukrainian state." In 2013, the World Jewish Congress labelled them as "neo-Nazis" and asked for them to be banned by European countries.

Worryingly:

In 2010, Svoboda’s official forum posted a statement reading: “To create a truly Ukrainian Ukraine in the cities of the East and South…we will need to cancel parliamentarism, ban all political parties, nationalise the entire industry, all media, prohibit the importation of any literature to Ukraine from Russia...completely replace the leaders of the civil service, education management, military (especially in the East), physically liquidate all Russian-speaking intellectuals and all Ukrainophobes (fast, without a trial shot. Registering Ukrainophobes can be done here by any member of Svoboda), execute all members of the anti-Ukrainian political parties....”

In 2012, Svoboda managed to get just under 10.5% of the votes in the national election, giving them 38 of out 450 parliamentary seats. Following their usefulness in the 2014 revolution, Svoboda members came into several key positions including Vice Prime Minister and ministers of ecology, agriculture, education and most importantly, defence.

Clearly these are fairly scary guys in real positions of power. Is it any surprise that Russian Ukrainians would be scared of this new government overthrowing the one they had elected fairly? It seems they were justified in being so because the death toll from the fighting has reached about 36 people a day with some pretty horrific massacres occurring against civilians. Would this have happened if the east and south hadn't tried to secede? Hard to tell.

What is clear is that the western media should have been informing us of this situation instead of simply blaming Putin. Ukraine is likely going to fragment in half now. If people had known the historical context, we could possibly have put pressure on our leaders to force the new Kiev government to agree to a diplomatic solution like Putin was suggesting and the separatists in Ukraine were demanding.

Of course, a revolution in a country doesn't give others a right to take pieces of it or to provide military support to people fighting the new government there, regardless of ethnicity. However, this is where things get a little RealPolitik because this wasn't simply a case of Russia punishing Ukraine for throwing out their man although I don't doubt that this appealed to Putin.

When the USSR was collapsing in '90, the Cold War was ending and the Warsaw Pact that held the Soviet countries under Moscow's control was no longer in force. This allowed former USSR states to become independent and negotiations were in effect to allow the reunification of Berlin and entry of Germany into NATO. Although denied later, Jack Matlock, the then-US ambassador to Moscow, said that in exchange for these concessions, they had given the Russians a "clear commitment" that the western alliance would not take advantage of Russian weakness by moving eastward. Hans-Dietrich Genscher, the German foreign minister in 1990, was caught saying on a recording that "We are aware that NATO membership for a unified Germany raises complicated questions. For us, however, one thing is certain: NATO will not expand to the east." Just to be clear this applied to all of NATO, he added "As far as the non-expansion of NATO is concerned, this also applies in general."

This promise, never put into an official treaty with the USSR, was broken and in 1999, the former Soviet countries of Hungary, Poland and the Czech Republic were allowed in. In 2004, former Soviet states Bulgaria, Estonia, Latvia, Lithuania, Romania and Slovakia were allowed in. Albania would follow in 2009. The West insists the promise was never permanent, Russia argues it was. Now the Russians fear that Ukraine will join NATO and they shall be completely boxed in on their west flank.

You may notice a good chunk of the countries, and the only two members who share a boarder with Russia, Latvia and Estonia, joined NATO in 2004. Arguably the re-ignition of the Cold War was another tragic side-effect of George W. Bush's 2003 Iraq invasion. After the fall of the Iron Curtain, Russia was no longer an ideological enemy of the West. Communism had failed and Russia's transition was to a crooked, oligarchic capitalism which the West could live with and that resulted in some profitable business opportunities for some of their companies. Russia's business community began to integrate itself with its European counterparts and NATO seemed to be finished, having completed its mandate of stopping the spread of communism and expansion of the USSR.

Following 9/11, Russia’s dealings with its own Islamic fundamentalist problem in Chechnya meant that they could sympathize with the attack on America and provided the US logistical support in their attack on Afghanistan. In 2001, Bush stated about Putin that "I looked the man in the eye. I found him to be very straight forward and trustworthy and we had a very good dialogue. I was able to get a sense of his soul. He's a man deeply committed to his country and the best interests of his country and I appreciate very much the frank dialogue and that's the beginning of a very constructive relationship." This should have been the end of the potentially all-life ending conflict with Russia.

Unfortunately, this bonding moment was not to last. The Bush administration attacked Iraq and Russia would not support the move, correctly in retrospect, earning them some enmity and restarting efforts to box Russia in via a Ballistic Missile Defense (BMD) spread throughout Europe. The US originally claimed the missile shield was to block Iranian or North Korean nukes but have now been blunt that it is also designed to prevent any attacks from Russia. Arguably they were never to stop Iranian or North Korean missiles as neither possess anything that could cross such distances.

The majority of NATO, including Germany, have opposed designing the shield to box in Russia after reassuring them for years that it was not Russian-oriented. They believe it is needlessly provocative and will throw off the balance of power that has so-far prevented nuclear war. Essentially, they are worried it will turn the balanced Mutually Assured Destruction (MAD) into Russian Assured Destruction which could either trigger a preemptive strike by the US, believing they won't face retaliation, or cause Russia to strike out first before the shield is complete.

The attitude of the US towards Russia is explained in some key points of the original leaked Wolfowitz Doctrine:  

[We continue to recognize that collectively the conventional forces of the states formerly comprising the Soviet Union retain the most military potential in all of Eurasia; and we do not dismiss the risks to stability in Europe from a nationalist backlash in Russia or efforts to reincorporate into Russia the newly independent republics of Ukraine, Belarus, and possibly others....We must, however, be mindful that democratic change in Russia is not irreversible, and that despite its current travails, Russia will remain the strongest military power in Eurasia and the only power in the world with the capability of destroying the United States.]

[Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union. This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power.]

[We must maintain the mechanism for deterring potential competitors from even aspiring to a larger regional or global role.]

The followup Bush Doctrine, drawing much from the Wolfowitz Doctrine, makes special emphasis on preemptive strikes as mentioned in one of Bush's speeches to US troops:

"Our security will require transforming the military you will lead — a military that must be ready to strike at a moment's notice in any dark corner of the world. And our security will require all Americans to be forward-looking and resolute, to be ready for preemptive action when necessary to defend our liberty and to defend our lives [Emphasis Mine]."

Essentially, the goal was to maintain the post-USSR status quo with the US on top. Preemptive strikes were deemed an acceptable tool to protect US interests and keep other players from trying to grow above what the US deemed to be their stations.

Now, some of this is fair. Being on the lookout for reemerging Russian nationalism or any attempts to retake former USSR territories makes sense. However, while acknowledging that Russia still has the weapons necessary to destroy the US, and probably the whole friggin' world, the US seems bent on provoking them with missile shields aimed at them and the expansion of NATO and NATO weapons right up to their boarders. This destabilizes what has been a traditionally balanced situation that allowed the Cold War to remain cold. The USSR's ideology may have, thankfully, lost the battle for global domination. That doesn't mean that Russia was willing to lie down and be walked on and they have the nukes to ensure they don't have to be. This US notion that Russia should just accept they lost and allow unchecked US hegemony over them seems childish and unrealistic in addition to extremely dangerous.

So how does this continued Cold War posturing involve Ukraine? Well, Ukraine shares Russia's largest boarder on its western side; 8 million self-identifying Russians live in Ukraine; they have a tightly linked history that makes Ukraine joining NATO an insufferable blow to Russian pride and finally, Crimea contains Russia's only Black Sea and warm-water port.

Of course, none of this makes Ukraine less sovereign or excuses Russian tampering in it. It does, however, give Russia some justification for their actions in the vein of self-defence. It was clear early on that the US was pushing for the ousting of Yanukovych. US Assistant Secretary of State Victoria Nuland was caught on tape saying the US had spent $5 billion in Ukraine to "promote democracy." A released Wikileaks cable shows that this is standard operating procedure, the funding of non-government organizations within other countries to oppose and try and dispose of regimes they dislike. $5 billion in a country with an economy like Ukraine can buy a lot of government opposition.

Nuland was later caught again on tape, this time deciding the new Ukrainian prime minister should be Arseniy Yatseniuk only to have him, surprise surprise, wind up as the new prime minister. From this, it's clear the US had an agenda in Ukraine and wasn't simply a passive observer. Without going into whatever designs the US has for Ukraine (although it's worth noting that US Vice President Joe Biden's son now works for Ukraine's largest oil company), considering their recent moves to eliminate Russian ally Bashar Al-Assad in Syria, this seems to be just another attempt to follow the Wolfowitz Doctrine and corner in a potential opponent. The recent "pivot to Asia" also fits this mold by trying to militarily surround China.

What is scary now is that the US population is starting to believe it is the United States' responsibility to protect Ukraine from Russia and the media has allowed them to believe that Russian involvement there is simply imperialistic, an attempt to conquer their neighbor and eventually rebuild the USSR. The Hitler comparison is then brought up so people think that we have to be "tough" and "not appease" Putin since it will just make him stronger or something.

And let's just be honest about something here. Does anyone think for a second that the US would tolerate a foreign power messing around in Canada or Mexico like the US is doing in Ukraine? The answer is a pretty easy no. Heck, when there was a revolution in Grenada, that was seen favorably by the majority of the population there, the US invaded and restored the previous regime. The justification was that they felt some American university students there were at risk of being held hostage. Invading a country to defend your own people from a revolution that may be hostile to them. Sound familiar?

People are even suggesting letting Ukraine into NATO so that any Russian involvement would trigger article five of the NATO charter meaning full-out war. Another idea suggested is putting US tripwire troops there. For those who don't know, tripwire troops are basically sacrificial troops whose job it is to get killed when the enemy moves in, triggering war with the ones who killed them. There have been US tripwire troops between North and South Korea for years. The difference is that if North Korea attacked South Korea and killed US troops, the US would nuke North Korea and North Korea may nuke Seoul. If the same thing happened with Russia, that is quite likely the end of life on Earth.

The main problem here is a lack of diplomacy which seems to be intentional. Following the shooting down of Malaysian flight MH-17, the US government and western media began trumpeting that it was Russian-backed separatists and Putin's fault indirectly if not directly. They did this without evidence until a group of retired US intelligence officials calling themselves Veteran Intelligence Professionals for Sanity published an open letter to Obama. The letter asked him to can the accusations until there was proof since wild accusations designed to build the public into a frothing rage makes diplomacy impossible.

Just like when US Secretary of State John Kerry was accusing Assad of gassing his own people in Syria only to be proven incorrect, the intelligence veterans singled him out as especially irresponsible, stating: “In charging Russia with being directly or indirectly responsible, Secretary of State John Kerry has been particularly definitive. Not so the evidence. His statements seem premature and bear earmarks of an attempt to poison the jury pool.”

When tensions are high between nuclear armed powers, diplomacy is the only rational solution to problems. However, Ukraine refuses to negotiate with its eastern and southern parts and the US refuses to negotiate with Russia. Fortunately, German Chancellor Angela Merkel has been keeping communication lines open with Putin but she can't resist US pressure to apply sanctions to Russia. Which is dangerous. Remember the old saying, "When goods stop crossing boarders, troops will soon replace them." Europe's reliance on Russia's natural gas means they will try to limit the damage to Russia but stupid things can happen when the tension is ratcheted up this high.

When the media is trying to build a narrative that your enemy is Hitler in order to sell news, people start to become less rational and politicians start to believe it even if they know its not really true. Personally, I don't want to die in a nuclear holocaust because the media sensationalized us to war with Russia instead of providing needed context, rational voices and actual facts.

AS

Inequality Kills the Golden Goose

"This is a very dangerous drift in our American thinking. Kristallnacht was unthinkable in 1930; is its descendent 'progressive' radicalism unthinkable now?"
-Tom Perkins

There's been a lot of talk about inequality lately. Obama made it the main focus in his State of the Union address and the Canadian Liberals have made it a central plank of their electoral platform. Really, there just seems to be a lot of discussion around it since the report came out stating that 85 people have the same amount of wealth as the bottom half of the world's population.

Naturally, alongside this comes discussions regarding class warfare and rich-bashing. At least there are discussions about there being discussions about it. I haven't actually heard any more it than the norm but it's apparently been enough to make billionaire investor Tom Perkins make the badly thought-out statement above that tries to compare the treatment received by the wealthy today and the treatment of the Jews in Nazi Germany.

Kristallnacht, also known as The Night of Broken Glass, was an attack on Jewish property in 1938 by riled up Germans and Austrians that the governments ignored. Over a thousand synagogues were burned and about 7000 Jewish businesses destroyed. At least 91 Jews were killed.

People have been piling in on Perkins for the poorly thought out statement and he has since apologized, as he should, because let's face it, Nazi comparisons are generally stupid unless people are getting systematically mass-executed. And they're not. At least not over wealth discrepancies. None of the main bankers, who are the focal point of the anger against the super wealthy, have even been sent to prison for their roles in the financial meltdown of 2008.

But is there anything to what Perkins suggests? Maybe. In the US, a Gallup poll showed that 67% of Americans are unsatisfied with the distribution of wealth which is unsurprising considering they live in the most unequal of all the developed societies.

Forbes states that: "One report by Pulitzer Prize winning journalist David Cay Johnston conducted for Tax Analysts found incomes of the bottom 90% of Americans grew only $59 (adjusted for inflation) from 1966 to 2011, while incomes for the top 10% rose by $116,071."

It's even worse than that considering that most Americans aren't even aware how unequal things really are. One study showed that Americans believed the richest 20% of their countrymen possessed about 59% of the wealth. The number is actually 84%, leaving just 16% of the nation's wealth for the other 80% of the population.

Canada is a bit better off in this regard although by no means totally safe since inequality is growing annually. Since 1976, only the top 20% of Canadians increased their share of the income pie. Between 1998 and 2007, the richest 1% of Canadians took home a third of income growth. Although basically all the developed countries have experienced a rise in inequality in the last 20 years, Canada has managed to be the sixth most unequal country out of the 17. This means that in 2010 and adjusted for redistributive programs, the top fifth of Canadians captured 39.1% of the gains, the second fifth captured 23.2% and the bottom fifth captured 7.3%.

All around, I think these numbers are not too shabby. If they stayed like this, it wouldn't be terrible. Equal enough to maintain consumer spending and decent lifestyles for everyone while allowing incentives to try and make it to the top.

America certainly has it worse which is probably why Occupy Wall Street didn't start as Occupy Bay Street. Occupy Wall Street showed that many people are pretty annoyed with the 1%. However, I think it's safe to say that this annoyance is aimed at a pretty small group of people, a group many would refer to as the parasitic rich. I have yet to hear anyone suggesting Bill Gates or Warren Buffet or Brad Pitt or Beyoncé or doctors or entrepreneurs who create useful stuff or other rich people along those lines should be strung up from lampposts.

Fraudulent bankers - yes. People who use their wealth to try and buy elections for politicians who will distort the laws in their favor - yes. Useful and decent rich people? Nah, not seeing it.

Certainly, people like the Koch brothers get a lot of flak. They inherited their massive wealth and spend a lot of it trying to influence government and voters in ways that are rarely totally honest and are generally at odds with democracy. You may remember that they essentially hijacked the Tea Party movement soon after its creation while trying to keep it a secret that they were funding it. Many in the Tea Party thought that they were just an independent group, angry with a too-big government and its alliance with special interests. However, the Koch's simply considered them useful idiots because they liked their minimal government stance which would mean reduced taxes and regulations.

Either way, back to inequality. Is inequality an issue that needs to be resolved? Personally, I'd say it needs to be tempered because trying to stamp it out completely is a really bad idea. Communism and a lack of incentives results in something that has historically been shown to be pretty terrible. They say a rising tide lifts all boats and they are right. Capitalism and its incentive structure and decentralized planning is needed for resources to be allocated efficiently and for affluence for the masses.

That said, inequality passed a certain threshold causes some serious problems. It becomes more like a rising tide when most of the boats are anchored to the bottom.

First, inequality is unstable for societies. Small hunter-gatherer societies always had to be basically egalitarian because they could not survive the societal stresses and internal resentments that came from people having too much more than other people, even social status. One way anthropologists have written that tribal groups would achieve this was by downplaying the roles of their biggest contributors. The other men would do things like stating that the massive boar the best hunter had killed was just a runt and not anything to be proud of. This keeps egos in check and makes the less successful less resentful. Everyone would still be aware of the hierarchy and who contributed what but there was no flaunting of social status symbols that would start fights.

When this resentment gets too severe and is combined with real or perceived scarcity of resources, even large-scale societies get pretty crazy, especially if people start reading stuff about fairness and the rights of workers and such. The Chinese Great Leap Forward, the French Revolution, the Soviet Bolshevik Revolution. Lots of rich people got killed as well as plenty of others who just got caught in the cross-fire of revolutionary madness. If people are feeling the pinch too heavily while seeing others bask in the lap of luxury, they tend to get a little murderous.

The truly epically rich, the 0.000001% are generally so disconnected from the masses that they are like a different species. Everything about their lives will be different from that of a normie. In the same way we tend to see animals as less than humans since we can't communicate, the uber-rich will see the poor as less than themselves since they don't communicate with them.

Some Aboriginal groups up north are forced to cull stray dogs in their communities every so often to keep them from getting out of control and dangerously feral. However, people also treat their own pets like a part of the family and would never hurt it because you know it and love it and don't want to see it suffer. This is what needs to happen with the poor. The rich need to know of them in more than the abstract or else they won't really mind having them suffer. Close-gated communities create a dangerous Us vs Them mentality by inadvertently dehumanizing those on the outside.

Second, inequality is unhealthy for societies. In their work, The Spirit Level: Why Equal Societies Almost Always do Better, Richard Wilkinson and Kate Pickett show that in societies where wealth is more equally distributed, the population is better off in almost every way. They compare countries with each other but what I found more useful was their comparison of US states since there would be less cultural and geographical differences that could explain these outcomes than there would be between countries.

Essentially, inequality was linked to worse physical health, mental health, drug abuse, education levels, imprisonment rates, obesity, social mobility, community trust, physical violence, teenage pregnancies, and child well-being. Only suicide was more common in more equal societies, likely because it's harder to blame others when things go wrong in a society that is kept more equal.

It might be worth noting that Denmark, the most equal of the 17 developed countries discussed earlier, is also the happiest country in the world according to the the people's response to a survey. Next was Norway, the second most equal. It mixes up a little bit after that but the general trend remains that more equal countries have happier people. Canada's actually sixth most happy so we're happier than our inequality should dictate while our southern neighbor is seventeenth which is exactly how happy they should apparently be. 

Interestingly, New York was one of the outlier states in The Spirit Level in that it has high inequality but suffers less from the problems of inequality compared to other US states. Perhaps this is because the rich and poor intermingle much more in New York City than elsewhere in the country?

Either way, I'm pretty sure a lot of the negatives associated with inequality come down to our basic biology. Humans, like everything else alive, are hard-wired to reproduce. Reproducing requires social status. Alpha males have high social status and get to mate a lot; males down the ladder not so much. This means those who pursue and are designed for greater social status get to reproduce more which means we are genetically bred to fixate on social status. Nowadays, social status is based heavily on money and the things it buys.

When you see rich people gallivanting in luxury on Entourage and see advertising for stuff aimed at a much wealthier group than one you'll likely ever be a part of, it's stressful. You start thinking you need to be like those people and have that stuff to gain social status in order to reproduce. Doesn't matter if you already have a spouse and can make kids if you want, we're biologically wired to want to move up that ladder.

Small hunter-gatherer groups needed to stay egalitarian or resentment would stress out the group and cause dangerous conflict. Nowadays, seeing rich, high-status people in the media can create this resentment as well. However, you can't do anything against that person to resolve it. Instead, the stress that this creates has to either be internalized or aimed at people you have power over.

Which sucks because this leads to all kinds of mental and physical health issues, crime, drug abuse, people snapping violently on their families and friends, violent fights with strangers triggered in an attempt to not lose face and what social status they do possess.

People confident with their social status are much less likely to have these issues. For the better off male, their social status is secured by their economic station and education, not by notions of toughness or wearing expensive bling which is often purchased with crime money. This also applies to women although generally to a less extreme degree.


Unique to women is the underage pregnancy tendencies. Females from lower socioeconomic levels are much more likely to get teen-pregnant. They also tend to have less education and employment prospects which aren't improved by having the child. However, raising a baby is often seen as something they can do to gain their credentials as a grownup regardless.

The real problem with all of this is that it tends towards systemic traps for the poor. Of course, any group on the wealth spectrum will produce some people who don't get jobs or educations or get too into drugs or crime. The issue is that the negative stresses of inequality upon the poor combine with the influence of the people surrounding them who are also damaged by it. If your brother in your rich family is a criminally-inclined drug abuser despite your parents best efforts, the worst he will likely do is hurt himself and inconvenience everyone else. It's doubtful that your son will take after him with all of the other positively-influencing people in your family available to mimic.

However, if everyone around you is hurting and stressed due to your crappy location in the societal pecking-order, the number of good influences will likely be greatly reduced and your idea of normal may not be super useful for getting out of poverty. This is how ghettos form and why they are so hard to undo.

Anyway, the third reason for avoiding inequality is economic. Simply put, it's bad economics when a lot of people don't have money to buy stuff. Capitalism relies on people buying stuff. My dollar spent is your dollar of profit.

I'm not sure who said it and can't find it right now but somebody said that "Capitalism is like poker. It's human nature to want all the chips but if you get them, the game is over."

Which is true. We've forgotten some central lessons from earlier in the 20th century. Inequality was peaking in its lead up to the Great Depression and peaked again in the lead up to the financial crisis of 2008 and has actually gotten worse since. This earlier failure of capitalism fed directly into fascism and communism. There is again a rise in right-wing populism in the European countries who are still suffering from the crisis and a reemerging militarism in Japan whose economic situation is still bleak.

One of the main problems has been the continued dominance of a bastardized version of supply-side economics, a type equated with low marginal tax rates and reduced regulations. Prior to that, demand-side economics was employed, an outgrowth of Keynesian economics that tried to achieve full employment as its goal. However, in the 70's came stagflation, the new phenomenon of inflation at a time of little economic growth and high unemployment. Economist Paul Craig Roberts, one of the brains behind supply-side, recently posted an explanation of why it was needed and why it worked in curing stagflation which I won't go into here.

He also explains why it was not supposed to become the new permanent economic paradigm. Referred to by George H. W. Bush as "voodoo economics" and often known as 'trickle-down economics,' its base concept of reducing all regulations and taxes on 'job creators' was promptly embraced by the political and economic elite as the new model to use since it massively increased their share of the pie at the expense of everyone else. Alongside this was the off-shoring of manufacturing jobs and the decoupling of wages from corporate profits and productivity gains.

Due to all of this, the consumer spending power required to maintain the required capitalist growth indefinitely is simply not there. Marx had actually predicted this earlier. People tend to get jittery when Marx is mentioned because his ideas of socialism and communism were taken and used to justify such horrible atrocities and authoritarian states. However, it's important to remember that he didn't know how socialism would possibly turn out. No one did, it had never been enacted anywhere. What Marx did understand though was capitalism. He also understood its self-destructive contradictions which is why he felt socialism would have to be better.

One of the main contradictions was that of Overproduction and Underconsumption. He knew that capitalists would always try to undercut each other by pursuing productivity gains via automation and greater organization efficiencies that would require paying less people to do the work. Walmart terminating 1.4 jobs for every low-wage job it creates is a good example of this. This means that as more productive capacity builds up, there will be less customers able to purchase the goods. Profits will fall alongside investment and eventually the system will seize up.

On one hand, this increased efficiency through reduction of employees could be seen as a good thing considering that you can have less people doing the work that used to require more, leaving the excess people to do other necessary work. However, this is only the case if other jobs are available and training and social assistance is there to help them transition. Otherwise you just wind up with more people requiring social assistance from already broke governments and more resources to deal with the societal fallout that comes with unemployment.

You may remember with NAFTA, 2.3 million Mexican farmers were forced out of farming in a country desperate for jobs when they could not compete with the more efficient and subsidized US agricultural industry. On one hand, those people were now free to do other useful things. On the other, there was no transition infrastructure in place for them. Many of them wound up working with the drug cartels, separating from their families to work in the low-wage US-owned factories along the boarder, or trying to escape into the US.

For capitalism to continue working for the masses, a return to an emphasis on creating demand is necessary. This means paying for transitional employment training for those whose skills are no longer relevant.

What is clear is that labor is going to become less and less valuable in the near future. The movement towards fairly divvying up the economic pie needs to really get its act together because this concentration of economic power is also a concentration of political and military power.

Once this economic power is absolute and unified, which it could potentially already be, there will likely be no more chance for the masses to decide how the economic pie is sliced or whether they get a piece.

At that point, whether the Masters of the Universe choose to share it will be entirely up to them.

AS

Knowing the Difference Between Right and Chong

"Political parties don't work when people just announce what they are doing and expect everyone else to follow."
-Tony Abbott

It turns out it is super easy to do the job of a newspaper editor. Well, at least the part of it that involves thinking up corny wordplay for the title of pieces. In this case, the title is referring to Michael Chong, the courageous Member of Parliament from Wellington-Halton Hills, Ontario. This crusading gentleman has put forward the quite interesting Bill C-559. This bill, short-titled The Reform Act, 2013, would reduce the stranglehold of party leaders while massively increasing the rights of MPs, something many Canadians feel is long overdue.

Personally, I don't even like the idea of political parties. There was nothing originally about them in any of the constitutions of Anglo tradition. They force elected representatives to often go against the wishes of their constituents in order to fulfill a larger party strategy. However, they also are basically inevitable. If we don't have overt alliances between candidates who cooperate and share resources, we will have secret ones. This will put those who try to go without them at a distinct disadvantage anyway. So parties are here to stay. Can we make them more democratic? Chong hopes so.

Essentially, Chong's bill would edit the Elections Act and Parliament of Canada Act in some pretty major ways. It would provide a pretty substantial rebalancing of powers between the Prime Minister's Office and Parliament as well as reducing the power of opposition leaders to control their own MPs. It would do this through via three main changes:

First, since 1970, any party riding choosing a candidate to run under their political party's umbrella has needed the signature of the party leader. This meant no one could run for office except as an independent without the boss' permission. This requirement would be removed, allowing the choice of candidate to ultimately lie with the party riding association through 'nomination officers' that they elect.

Second, the House of Commons caucuses would be allowed to trigger a leadership review vote if 15 percent of the caucus decides to. If so, a secret ballot vote would be triggered which could replace the leader of the party if a simple 50 percent plus one of the caucus desired it. For the layman, a caucus just refers to a group of parliament members from within the same party. The Senate, being unelected, would not be included in these votes. Technically, there was nothing stopping parties from doing this before. For example, Joe Clark had a leadership review pushed on him. However, it would formalize this power which has previously been rarely employed, likely making it more common.

Third, the Commons caucuses would also be able to review their own MPs and choose to eject or readmit them with the same voting procedure, 15 percent to trigger and 50 percent plus one to confirm. This right will no longer be possessed by the party leader. In addition, if anyone had been ejected from the caucus but was selected by the nomination officer to run and then got elected, they would automatically be reinstated.

Some people have suggested that this bill is a revolt against the overtly caucus-controlling Stephen Harper. Others say it specifically isn't since it wouldn't actually take effect until after the next election. Either way, I suspect he appreciates the timing since it wouldn't make him the only Conservative recently in revolt against his boss' management style that makes the majority of the public's elected representatives into little more than rubber stamps. That this bill has even a faint hope of passing is only thanks to Harper's style of managing and how the current Senate Spending scandal has weakened his position and credibility.

Canada's Prime Ministers, unlike US Presidents, control the way their party votes in parliament except for rare free-votes. This means our leaders are basically unaccountable and totally free to do what they will when they have a majority. Harper has been seen as taking that a step further and limiting the rights of elected MPs to even discuss issues without the PMO's permission.

You may remember back in March when Conservative MP, Mark Warawa of BC, asked the Speaker of the House of Commons to see if his parliamentary privileges were being violated. What happened is his right to a one-minute statement in the Commons was taken away without explanation. Warawa is an opponent of abortion on the grounds that it is discriminatory against girls due to the prevalence of sex-selective abortions. It's likely he was planning to speak on this and other socially Conservative MPs backed his right to speak freely on it.

Understandably, Harper does not want his party discussing abortion as its fate is essentially already decided in Canada and a no-win issue for Harper. However, it did anger many that their MP was not allowed to represent them on an issue important to them.

You may also remember back in June that the very principled Alberta MP, Brent Rathgeber, left the Conservative caucus. He did this after his bill to publicly release civil-servant salaries was watered down by party leadership. Rathgeber would state:

“I’m obviously very, very disappointed both with the government position and certainly with the [committee’s Conservative] colleagues, many of whom philosophically support this legislation unequivocally, but seemed powerless to resist the instructions that were given to them by the [Prime Minister’s Office], by the whip or wherever the final instructions came from.”

Anyway, regardless of why Chong wants this bill, is it a good one?

Well, yes and no. The general thrust is certainly good. Party leaders should not be all powerful. They should not be allowed to squash internal debate and silence outspoken MPs just to improve election results by making the party appear more unified.

In the case of Justin Trudeau, he was basically chosen as leader of the Liberals through social media. Many of those supporters who were allowed to choose him as leader were not even registered or able to vote for him. This means that Trudeau was chosen by many who were not real party members then and may still not be now. Should he have ultimate power over elected Liberal MPs who have been chosen at the voting booth by the real party faithful? Probably not.

As Andrew Coyne notes, the idea that party leaders should only lead with the confidence of their caucus is a normal one in the Westminster parliamentary tradition. Canada is fairly unique in often allowing leaders to hang onto power over their party even once they've become despised and seen as a liability.

Australia recently saw their Labour Party leader Julia Gillard agree to a vote that would see her removed from her leadership role if she lost. Polls had shown Labour was going to be trounced in the next election and a change was seen as necessary by her party. She lost and promptly stepped down. It might also be worth mentioning she was actually the Prime Minister at the time. The same thing happened with Margaret Thatcher during her days as Prime Minister of Britain. Her party decided to give her the boot and replaced her within the span of a few days. This method may seem extreme to Canadians but it is the norm outside of us, is extremely cost effective, and keeps leaders constantly accountable.

Although having a leader removed from power who was chosen by the party en mass may seem undemocratic, it's important to remember that the MPs choosing to do so are elected. If MPs can't get rid of them then they are unaccountable until another party convention is held which may be quite a while. This also strengthens the MPs position via the leader which is good. Leaders should have to take their caucuses seriously and listen to their complaints and demands.

That being said, some changes to the bill would improve it. The 15% thresh-hold is too low to call a review of leadership vote. It should be raised to at least 25%. With the current division of Commons seats, the Conservatives could have one with 24 members supporting, the NDP with 15, and the Liberals with a measly 6. It's possible that small factions of a party may try and replace their leader with one of their own group just so they could be the new cabinet members with the prestige and perks that come with it. This wouldn't help democracy and would wreak havoc on any parties ability to internally cooperate.

As Chantal Herbert notes, at least three Prime Ministers would probably have seen party mutinies with such a small number needed to force a leadership review vote. Harper would have over his 2006 decision to have a Quebec nation resolution in the House or possibly his continued opposition to discussing abortion laws. Brian Mulroney might have over his support of official bilingualism. Jean Chretien likely would have over his conflict with Paul Martin's group of Libs.

Another issue is that moving leader-choosing power away from delegates or party members to MPs is that choosing the leader may become more regionally determined and unbalanced. Since all areas have some delegates/party members of each party, all areas have a say in determining their leader proportional to their support. With MPs able to determine leadership, some areas will elect no MPs of a certain party due to limited support there and will thus have no say in whether leaders get replaced.

Something would also need to be set-up in the case that a local riding association becomes hijacked and winds up totally in opposition to its parent party. This isn't super likely but could be a major problem. Some system for the party as a whole to take a vote and decertify a specific riding association may be necessary. Obviously the vote would require a large majority, maybe 75-80 percent in order to do so.


There is also the issue of this bill overriding individual party's traditional rights to organize how they see fit. In a way, that is undemocratic and parties should be allowed to organize however they choose. However, no party will individually want to organize in the way this bill suggests unless forced. Giving MPs additional rights to speak their minds and weakening the leaders ability to control their message would weaken a parties electoral chances. They would seem more fragmented, like they actually are, and less lean/mean. That's why it needs to be applied across the board so no one can reject it and gain unfair advantage.

In any case, now is a good time to be pushing the bill. Harper's on the ropes with the Senate scandal and cannot be seen fighting against MP rights. Trudeau and Mulcair won't like it but won't be able to go against it either. They've already suggested they like the general thrust but would like to tweak it which is fair. If they agree to let their people vote on it freely, Harper will have to support it as well.

The MPs will be a little scared voting for it for a couple reasons. First, if it passes, the greater MP freedom from their leader's threats will mean that they really are responsible to their constituents. This costs them plausible deniability to their electorate when they done screwed up. Also, they know that voting for this bill is essentially suggesting they may be open to replacing their leaders. If it fails, the bosses will likely remember how people voted. Like Omar Little from the Wire knows, "You come at the king, you best not miss."

Overall, this will mean a change in how we think about electing our party leaders. It will mean that we really are electing and trusting our MPs, not voting for the leader who will become PM. There will be definitely be serious unintended consequences of the bill in its current form and it will require a lot of intelligent debate.

I'll be honest, I respect fiscal conservatism. Canada needs a healthy dose of it. However, although I've approved of some of the stuff he has gotten done, I'm not a big Harper fan. His leadership style has been poisonous to healthy non-partisan dialogue and has concentrated far too much power in his own PMO office.

The fact the bill is getting all the hype it is and might actually pass proves that others agree with me. There's a certain irony that Stephen Harper may be responsible for decentralizing power within Canada.

I suspect he hasn't failed to notice that.

AS

Protesting the Other: Kiev to Brussels to Moscow

“Disobedience is the true foundation of liberty. The obedient must be slaves.”
-Henry David Thoreau

Some people are protesting right now.

Which is good.

People need to protest in order to demonstrate they care enough about something - anything! - to get off their butts and put themselves out there to change it. Even if it's not a super important issue, getting together with a bunch of other concerned citizens and showing you aren't apathetic keeps the authorities honest plus ensures the protestors are practiced for when greater challenges arise. Government should always fear its people.

With Nelson Mandela freshly buried, I have to wonder if it isn't some of his spirit infecting those protestors out in the streets of Ukraine. Mandela's apartheid experience made it clear that systems could change if a social injustice was great enough and your determination didn't waver. His experiences also demonstrated to him that attempting great change can rarely rely totally on legal and compliant means. Sometimes disobeying unjust authority and accepting the consequences is necessary to awaken that higher and better part of our consciousness. Visible martyrs personify and actualize issues that most of us would ignore if they remained safety abstract.

Of course, not all protests are equal and few are aimed at fixing situations as obviously evil as segregating a nation down racial lines into first and second-class citizens.

For instance, the Quebec student protests in 2012 over mildly raised tuition garnered very little support. I mean, it's always good to see students protesting because there are so many deserving issues and they are the demographic in the best situation to do so and with the most to lose through inaction. Still, I think it made everyone a little bit pissed off to see students from the most heavily-subsidized province with the lowest tuition rates whining like that. It's pretty much impossible for a protest to be seen as deserving when you are asking for additional government funds to be given to your group which is already seen as privileged.

The Idle No More protests which began roughly a year ago have also failed to gather much widespread support. In their case, it's not because they didn't have important issues to talk about. The situation on many reserves is horrific and everyone agrees it needs to change. The environmental impact of fracking also needs to be discussed as the chemical run-off and dangerously high levels of methane it can produce in people's drinking water are both extremely troubling.

No, they mostly lost their support in how they went about their protests. Although many were peaceful, a large chunk behaved more like the reckless Black Bloc protestors than the peaceful Occupy Wall Street ones. Some intimidated and hassled journalists which guarantees bad media coverage. Some of the protests blocked main roads and hugely inconvenienced random normal people trying to go about their day instead of targeting government or relevant institutions and industries. This reduced support amongst the general population. There was also a racial component in that the Idle No More protests were, or at least made it easy to be depicted as, xenophobic against non-First Nations. A more inclusive approach would likely have been more successful.

Anyway, so what's with the protests going on in Ukraine. Just for the record, it is no longer referred to as "the Ukraine." They dropped the 'the' when gaining independence in 1991.

Basically, there is a struggle for Ukraine going on between Brussels and Moscow. Both the European Union and the Russians want to bring the country into their economic spheres. Earlier, it seemed that the country was moving towards greater ties with the West but threats from Russia has caused Ukrainian President Viktor Yanukovych, on November 21st, to back-out of the comprehensive association and free-trade agreement they had negotiated with the EU over the last few years.

While the EU was trying to lure Ukraine over with some carrots, Russia was making more progress with some fancy stick-work. Ukraine with its 46 million people is facing gas and debt bills of $17 billion due next year and has a total debt of about $124 billion. Do to disputes between the two countries over the cost of the natural gas Ukraine was buying from Russia, Ukraine has been suggesting it will cut down gas imports, even threatening that “Ukraine may stop buying gas altogether at that price.”

Ukraine was hoping to continue using its position of being courted by both Russia and the EU, playing them off against each other to get a better deal from both. Russia took this poorly and had followed up by threatening to basically bankrupt Ukraine if they went ahead with the EU deal. They would raise gas prices even higher as Ukraine went into the winter or even potentially shut it off completely since Russia provides one-third of their domestically-used supply. This threat may seem familiar as Russia had turned off the gas in both 2006 and 2009 over financial disputes between their respective state-owned energy companies.

Russia also threatened heavy tariffs and trade checks on Ukrainian exports which is a problem because Russia takes about a quarter of them, worth some $18 billion annually. Despite rapidly strengthening trade ties with the EU, Ukraine cannot afford to have Russia stop taking it imports. There have already been some difficulties in getting certain exports into Russia such as chocolate which isn't surprising considering that temporarily banning imports from former Soviet-states in order to apply pressure is something they've done before.

Russia considers Ukraine to be a fundamental piece of the plan for the Eastern Partnership program, unofficially referred to as the Eurasian Union, a proposed political and economic rival to the EU, US, and China. Unsurprisingly, Russia is the main engine behind the idea, the brainchild of Vladimir Putin. Critics are concerned that a new Cold War may emerge alongside a new USSR which would potentially include Russia, Armenia, Belarus, Kazakhstan, Krygyzstan, and Tajikistan. Kazakhstan and Belarus already signed an agreement with Russia in 2011 and the Union will be fully operational by 2015. Other countries with historic ties that may be invited are Finland, Hungary, the Czech Republic, Bulgaria, Vietnam, Mongolia, Cuba, and Venezuela.

If Ukraine stays away from the EU, Russia will be willing to lower its gas prices, keep trade walls down, and even provide needed loans, funds Russia has available but the struggling EU does not. President Yanukovych asked the EU negotiators whether they could supply enough benefits and loans to offset the consequences of not going with Russia. He was told no and saw that he really had no options here, at least until Ukraine gains some energy self-sufficiency.

There is a lot of resentment in Ukraine against Russia, what with the centuries of brutal oppression. The northwest and center of Ukraine is predominately ethnically and linguistically Ukrainian while the southeast is much more tied to Russia. Ukraine's election results are basically divided this way and this important decision of choosing to either side with the West or with Russia is thus split this way as well. All things considered, it makes for a very divided country where the two halves don't even speak the same language. A poll suggests about 45% of Ukrainians want stronger ties to the EU while 14% said they want to join the Eurasian Union. The rest are undecided.

Kiev is the capital of Ukraine and located in the northern region. This is where the vast majority of the protests have been occurring. Angry at a bad economy, the perceived electoral fraud that brought Yanukovych to power in 2010, government corruption, the continued imprisonment of former Prime Minister Yulia Tymoshenko, and the move away from the West after their leadership caved in to Putin's demands, protestors have been rioting for the last couple of weeks with the blessing of opposition parties.

The protests have many reminiscing of the 2004 Orange Revolution when similar massive protests in Kiev managed to have a fraudulent election overturned. Yanukovych was the main focus in those ones as well, having beaten out opponent Viktor Yushchenko only to have the results recalled and thrown out after accusations of corruption, intimidation and direct voter fraud.

Two days ago, 500,000 thousand protestors were going at it, calling for the president's resignation and smashing a statue of Lenin to show their anger with Russia and anything that smacks of the old USSR-Ukraine relationship. Opposition leader and former heavyweight boxing champion Vitaly Klitschko claimed that yesterday, opposition headquarters was raided by masked men who smashed up their servers. Today, police are scuffling harder with the protestors after being quite calm and composed since clashes on Nov. 30th threatened to explode the situation into something worse.

Either way, the protests seem to be making their mark. Yanukovych is back talking with the EU about the association agreement and has said he could sign it if Europe can give better financial conditions to lessen the negative effects of Russia's response. This association agreement is not EU membership though and I don't think the EU has the ability or the will to compete with Russia on this. They have neither the carrots nor the sticks Russia has. For the time being, it looks like Russia will take Ukraine back into its sphere and that's the cold hard reality. The problem is that Ukraine is screwed either way. If they go with the EU, Russia will cut off gas during the winter and society will destabilize. If they don't go with the EU, the protestors who hate Russia will freak out and society will destabilize.

The worst part is that this all could have been handled differently so that Russia wasn't put into such a face-saving, all-or-nothing position. Russia has tried to cozy up to and repair relations with the West on several occasions and has been refused, ensuring the Cold War mentality remains. In 1990, Gorbachev asked to have a united Germany be in NATO as well as the Warsaw Pact. Thatcher and Bush Senior refused.

After 9/11, Russia supported the US in everything, even allowing US military bases to expand into what was traditionally Soviet territory. It tried to use its new and improved relationship with the US to improve relations with all of NATO and come out of its isolationist mentality. However, after differences emerged in how the countries wanted to fight terrorism and Russia heading the opposition to the illegal Iraq invasion alongside Germany and France, the US undid all the gains in relations when it started to plan the construction of a missile defense shield in Eastern Europe. Also, NATO was hinting it would offer membership to Georgia and Ukraine, two countries immediately within Russia's sphere, without improving relations with Russia. Russia logically saw this as a threat. 

A third failed chance to improve relations with Russia and prevent this kind of 'us vs them' mentality is probably the stupidest. Yanukovych invited Russia to join in on the EU-Ukraine negotiations when it was clear Russia didn't want to be left out. Brussels had refused, turning the whole thing from a trade negotiation that could have improved relations all-around and let each group know their interests were represented into a pissing contest that it seems Russia is winning.


Ironically, it seems that the Ukrainian ties to the West will only be allowed to strengthen if the West improves its own ties with the East.

So maybe everyone will win.

Or maybe the ol' Cold War mentality will split Ukraine down the middle.

AS

Usury-R-Us

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
-Henry Ford

With the J. P. Morgan Chase settlement finally decided, now seems as good a time as any to discuss those most hated of all villains: Bankers.

Generally seen as undeserving of their truly obscene wealth, most people instinctively distrust their skill at jumping their horse over your front line to checkmate you on turn two when you were pretty sure you were playing checkers.

We don't understand most of what they do is what I'm trying to say there.

Also, realize that I am primarily talking about US investment bankers. Canada's banks did pretty well through the crash, primarily because Paul Martin had rejected deregulating the banks as finance minister. Instead, alone amongst the Group of 8, Canada tightened loan-loss and reserve requirements while disallowing major bank mergers. This he did while being criticized by the banks and Stephen Harper, both of whom felt it would put the Canadian financial sector at a disadvantage globally. Fortunately, they were very wrong and Canada came out in a pretty strong position bank-wise.

After the 2008 financial collapse, which was primarily brought about by greed and fraud within the banking sector, it was unclear whether the economy would recover at all. Understandably, there were a lot of people mad. In 2009, Obama spoke to the bankers and made it clear that: "My administration is the only thing between you and the pitchforks."

Fortunately for them, Obama did a damn good job of getting between them and the pitchforks to the point that none of them outside Lehman Brothers actually had to suffer at all. In fact, while 2 million Americans were losing their jobs at the end of 2008 due to the crisis, 2009 would prove to be Wall Street's best year ever. Amidst a $175 billion dollar taxpayer-funded bailout for 9 of the major banks, $32.6 billion of it was being used to provide bonuses even though 'the talent' had only managed to achieve massive losses. Despite the financial sector providing 20% of Obama's campaign funds in 2008, more than any president for the last 20 years, even he had to put his foot down and complain about the obscene culture of huge bonuses for bankers who almost destroyed capitalism.

It was this pro-Main Street, anti-Fat Cat rhetoric that would cause Wall Street to support Romney for the 2012 election, providing him $61 million and only $18.7 million to Obama. Now, I can hear you say, "Surely this lack of support and this record-breaking $13 billion dollar fine for J. P. Morgan shows that the Obama administration is finally getting tough on financial crime and taking the crooked bankers to task!"

Well, it doesn't. And don't call me Shirley.

This fine is unfortunately far less consequential than it sounds and accomplishes nothing except providing a good sound-bite that Obama is 'taking on the bankers'. Essentially, this settlement is their punishment for engaging in criminal fraud and routinely overstating the quality of mortgages it sold to investors. This includes bad loans made by Washington Mutual and Bear Stearns, two firms purchased by JP Morgan during the crash. 26-27% of the loans they packaged did not meet the guidelines investors had demanded but they knowingly lied and said they did.

This payment is likely to just be one of many as there are at least 9 other government probes into JP Morgan for various other illegal behavior. In fact, they just finished up another $4.5 billion dollar settlement with 21 institutional investors who they had ripped off. Clearly a very ethical institution. The bank currently has $23 billion set aside to deal with these other approaching litigations.

The problems with this approach to punishing banks is that it doesn't actually make them stop the behavior. First of all, the settlement doesn't actually include an admission of wrong doing. This means it can work as a shield against other lawsuits. In fact, upon announcing the $13 billion dollar settlement, their stock price would increase roughly $12 billion since smooth legal sailing was assumed from then out. Second, potentially as much as $9 billion of the settlement is tax deductible which seems to defeat the purpose. Third and most importantly, no one is going to jail.

This is a big problem because the company is raking in much more money from these illegal behaviors than it is being required to pay in fines. Thus, fines just become a cost of doing business that may possibly hurt shareholders but won't affect those who choose to commit crimes. Which means they have no reason to not commit crimes. Which is ridiculous.

In 1995, bank regulators referred 1,837 cases to the justice department. In 2006, that had fallen to 75. It has been clear for a while that when a bank breaks the law, it is generally not treated like a crime. During the late 1980's savings and loans scandal, more than 800 bank officials went to jail. This time around? None. Some fines have been paid by those who knowingly committed fraud after investigations by the Securities and Exchange Commission but there has been no jail time. It was argued this was because restoring stability was goal number one and arresting major bank executives for their crimes could destabilize the recovery.

Of course this is nonsense. The top people who agreed to break the law should not be considered "too big to jail." Working for a business should not grant immunity to the law anymore than Nazis were protected for "just following orders."

Being asked to return what you stole is not a deterrent, especially if you don't have to return all of it. Locking the bosses up and promoting somebody else would not somehow destabilize the system. It would increase trust in the system since people would know you play by the written rules or suffer actual consequences.

Even worse is that the Dodd-Frank Wall Street Reform and Consumer Protection Act was gutted. This was supposed to be the big piece of consumer-protecting legislation designed specifically to prevent this whole sloppy mess from happening again. Matt Taibbi over at the Rolling Stone provides a grim narrative of how it was done and how friggin' impossible it is in the US to successfully pass and keep legislation desired by voters but that is opposed by a wealthy industry. This means that their is basically a zero chance of getting in legal trouble for breaking banking laws and basically no law to break anyway.

It isn't surprising that Obama sides with Wall Street when you consider he stacked his administration with Wall Street insiders. He was even been trying to put Larry Summers in charge of the Federal Reserve when Ben Bernanke steps down in 2014. This is despite Summers being an idiot who was partially responsible for the deregulating of the derivatives market that lead to this collapse in the first place. Fortunately, the Senate raised too much of a ruckus and this clown has to go away.

The Obama administration, the banks, and almost all the state attorney generals were desperately trying to prevent prosecution and prevent those defrauded from being properly reimbursed. They had agreed to a $20 billion dollar settlement for the crimes that left millions homeless and almost caused another great depression. The $20 billion would go towards "loan modifications and possibly counseling for homeowners." This is an obscenely small amount considering how much money was lost to investors due to illegal practices. In 2008, the state pension of Florida alone lost $62 billion due to investing in these fraudulently packed securities.

Fortunately, New York's Attorney General Eric Scheiderman was a principled man and refused the settlement and stalled the process. When he did so, Kathryn Wylde, a board member of the Federal Reserve who is supposed to represent the public, would state:

"It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street - love 'em or hate 'em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible."

That's a pretty messed up quote for someone who is being paid by the public to work for the public good. What they were doing was clearly illegal. I'm not sure what else it needs to be in order to be indefensible.

Since then, things have generally gotten worse. Andrew Huszar, a former Federal Reserve official, has admitted that the Quantitative Easing program the US has engaged in, to 'stabilize the economy,' is really only benefiting the banks at the expense of the public. The program has basically consisted of the US central bank, the Federal Reserve, creating money to purchase treasury bonds and mortgage-backed securities from the banks in order to lower interest rates and free up funds to lend to Main Street. Currently, it is creating about $85 billion a month in order to buy up bonds and has bought over $4 trillion worth in the last 5 years.

As Huszar notes, this hasn't worked and the banks aren't creating more loans. It brought down the cost for Wall Street to make loans but they have simply been pocketing the difference and using it to speculate, therefore raising prices and causing a new bubble. The Fed has admitted that the return on this massive $4 trillion dollar investment has been, at most, a few points of GDP growth and possibly even as little as $40 billion.

Because of this nonsense, the big US banks have seen their stock prices triple since March of 2009 and made them even more concentrated and risk-prone than before. 0.2% of the banks have been able to buy up smaller ones and now own 70% of US bank assets. In addition, it killed the urgency of dealing with the problematic US economy which is only producing low-wage jobs at home.  

Simply handing out the cash in the form of infrastructure job programs would have been a much more logical solution. Inflation would have been a bit of a problem but it would certainly have beat this alternative. It's what FDR did during the Great Depression and it spread the wealth around enough to reboot the economy. Quantitative Easing has done the opposite and concentrated wealth so that income inequality hasn't been this bad since the end of the Roaring Twenties, right before the world fell into said Great Depression. One percent of the population owns 40% of the wealth while the bottom 80% get by with 7%. That means the richest 400 Americans have the same wealth as the bottom 150 million. That doesn't bode well for the future of the country.

It's also worth noting that that both Canada and the US have messed up central banking systems. The publicly-owned Bank of Canada was established in 1935 and allows the federal government to borrow money at almost no interest. This borrowing helped us escape the Great Depression and fund WWII. It also allowed for many amazing Canadian achievements without bankrupting the country. These include the Trans-Canada Highway, McDonald-Cartier freeway, St. Lawrence Seaway, various subway lines and airports as well as funding our universal healthcare system and Canadian Pension Plan.

In the 70's, high inflation was the result of the OPEC oil shocks and a tendency in governments to pursue full employment through monetary policy. Together, these would drastically raise the price of all goods and services. This situation would cause our various governments to follow the advice of the International Basel Committee, a think-tank composed of the central bank governors of the G10, and start borrowing almost exclusively from private sources. It was argued that this wouldn't cause further inflation since it is old money being recycled instead of new money being added.

However, this is debatable since now it is just the private banks creating money through fractional reserve lending. They don't lend out the principle which means they are just creating cash, and inflation, the same way the central bank would. Except we have to pay interest on it.

Canada now only uses its central bank for between 1% and 5% of its financing needs. This is a big problem as it puts the Canadian government in debt to private banks when there is no need to. This means we are all in debt to private banks since the Fed's debt is our debt. Between 1935 and 1974, there was almost no inflation except for during WWII. However, wars are always inflationary so this can be considered a blip.

The fact is that money lent by the Bank of Canada to the Canadian government would only be temporarily inflationary. The inflation would go away once the debt was repaid and the cash was removed from the money supply, same as when private bank loans are repaid. This means we could borrow to pay our bills without interest.

This would of course be difficult since it would mean challenging the private-banking structure. However, the advantages would be enormous. In fact, between Confederation and when we switched to borrowing from private banks instead of our central bank (1867-1974), our public debt level only reached $21 billion.

After 1974, our debt level increased 20% annually, reaching $563 billion in 1997. There was a Auditor General report which noted that of the accumulated net debt of $423 billion in 1993, only $37 billion was principal. The rest was compound interest payments, payments there was no reason to make. It is estimated that between 1974 and today, we have needlessly paid over one trillion dollars in interest.

Of course, people are right that there are pretty terrible examples of governments going insane with the printing press. Germany during the 20's, Zimbabwe recently, Chile during the early 70's, etc. Each experienced brutal inflation due to having too much cash around. However, each of those countries had reasons for their hyperinflation that Canada would not face. Germany was making massive reparation payments to Britain and France for its role in WWI, Zimbabwe is a basket-case with insane leadership, and Chile was going through a socialist revolution under Salvador Allende where he fixed prices of goods too low and raised wages by decree. This resulted in too much money chasing too little goods. Canada is safe from all those problems.

This makes the idea of having to pay massive interest payments when we don't have to because we don't think we can handle the responsibility of printing our own money kind of a lame cop-out. If we passed legislation saying that we could only have the Bank of Canada buy a limited amount of Canadian government bonds yearly and that they had to be repaid the next year from tax revenue, we could avoid the massive interest payments to private banks with no risk of hyperinflation.

The United States has an even weirder system. They needed a central bank to prevent various banking crises and got one in 1913 when the Federal Reserve Act was passed. It was pushed through under President Woodrow Wilson two days before Christmas when most of Congress was not there. The main problem with it is that the Federal Reserve Bank is actually a privately owned corporation with stocks owned by member banks that cannot be traded or sold.

However, knowing which banks own it is difficult since it won't tell and has stated that it doesn't need to respond to Freedom of Information Act requests since it is "not an agency" of the federal government. However, it is known that some of its member banks are at least partially foreign owned. This means that the US Federal Reserve is partially owned by foreign citizens and governments.

Either way, the Federal Reserve buys US government bonds and T-bills and provides the US treasury with money. The profits made by the Federal Reserve doing this are given back to the US treasury except for an annual 6% dividend on their paid-in capital stock. I honestly have no idea what this 6% dividend works out to and am having trouble finding out. Please mention in the comments if you can.

Now, the Fed's policy of Quantitative Easing has consisted of the Federal Reserve printing money to buy treasury bonds/bills and toxic bank assets in the hopes of pushing down interest rates and making banks solvent enough to lend. As explained by Andrew Huszar, we already know that the QE policy has only benefited the biggest banks who are not lending any more but are instead buying up smaller banks and speculating. Also worth noting is that it is these biggest banks who are also the member banks that make up the Federal Reserve. Which means the Federal Reserve which is made up of the biggest banks has chosen to implement policies that only benefit the biggest banks. That's not suspicious.

What is clear is that the Federal Reserve is not controlled by the people whose money is made in its name. Between December 2007 and July 2010, the Fed gave out secret loans at almost no interest to various corporations to a sum of $16.1 trillion dollars. The link to the Government Accounting Office's audit showing who got it is here.  

Now, just a few useful quotes on private banking and paying interest when creating your countries own money:

Thomas Edison on the Federal Reserve system:

"That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt.
 
Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 — that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we 
simply add 120 to 150 per cent, to the stated cost.

But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good."

Benjamin Franklin on producing own money:

"That is simple. In the Colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay no one." 

Benjamin Franklin declaring that the cause of the Revolutionary War was the poverty in the colonies resulting from the British Parliament demanding they stop using Colonial Scrip and instead use gold and silver borrowed from the English bankers with interest:

“The Colonies would gladly have borne the little tax on tea and other matters had it not been the poverty caused by the bad influence of the English bankers on the Parliament, which has caused in the Colonies hatred of England and the Revolutionary War.”

Thomas Jefferson on private central banks:

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs."

William Mackenzie King on private central banks:

"Once a nation parts with the control of its currency and credit, it matters not who makes the nations laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to government and recognized as its most sacred responsibility, all talk of sovereignty of parliament and of democracy is idle and futile."

Overall, I think I've made my point that the big private banks are taking us to the cleaners. Productivity keeps increasing but the benefits keep getting more and more concentrated. My advice for everyone is two-fold.

First, join a credit union that supports your local economy, has less fees, and is more democratic in nature than corporate banks.

Second, push for a change for governments to begin borrowing, at least partially, interest-free money from their central banks to pay their debts. The money saved in interest payments should prevent countries from going deep enough into debt that printing to cover it would cause much inflation. After the government debt to the central bank is repaid, the money is destroyed and the inflation is gone. Make sure debt-minimizing legislation is passed simultaneously to avoid government spending sprees and hyperinflation.
 
Man, banks and money are complicated. But I think everyone knows we're being robbed. There is a reason the major religions and most older empires have all opposed usury, or the charging of interest on debt, beyond a very limited amount.

I doubt that this is the correct answer and I know I'm missing a bunch of unintended consequences but it seems the current system is unsustainable, prone to crisis, and needs to change.


AS