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Folly Compounding in America: the stuff of broken empires, Part 2

Posted on April 12th, 2009 in Books,Economy,Entertainment,Environment,General,Health,History,Miscellaneous,Politics,Science,War by Robert Miller

This article on Folly Compounding is the second on this topic; the first was released in December 2008.  The concept behind these articles got underway early last year (2008), about the time that the sub-prime mortgage disaster had gone beyond warm and was headed to a new thermal high. What was unexpected however, was that the new high would go off the charts and require recalibration of our economic instruments. Yet, the election of Obama and the possibility that we might see a reversal of the long-term trend of Folly Compounding, has encouraged some revision of this companion  followup. Indeed,  the possibility for some sort of meaningful recovery, now that we have more rational leadership, has encouraged the spawning of a new third component, which is still hatching in the nursery. If anything,  Obama has shown us that we have a long way to go just to get back to the country we had a few years ago and even that one was terribly flawed. Going back forty years, when a truly more equitable society dominated America, gives one the impression that our country of today seems totally foreign to many of us who can remember the earlier era, and in truth, it is.

The cataclysmic economic events of the last few months have renewed my interest in the long-term explanation about how we got to where we are today and why it all happened. Historians like to write about one particular era of history or one politician, usually a President, to insure good book sales,  and most of these historians write to preserve the mythology of America, like cheerleaders who desperately want to keep the false narratives of our past intact, perhaps just modernized a bit, with a new layer added to the multilayer cake of our deceit. Americans have a deep need to believe in a special version of American history and there are plenty of writers to keep nourishing them with the false interpretations on which the current version of America is based. For the author or historian,  it’s money in the bank if they feed the false narrative, but for those who stray away from the party gospel, sales are likely to be disappointing. A less common historian is the one who attempts to integrate history through a more longitudinal exploration of events, seeking to reveal a more substantive trend that accounts for how the country got to where it is today. This approach is more challenging because it is not a snapshot of an era, but a ponderous collection of lots of snapshots, many of which were never adequately stitched into whole cloth. Sorting fact from fiction is usually a process of deep scholarship. That is why academic historians, who never break the sound barrier of popular publications, provide a more accurate and penetrating account of our own history–it’s gratifying to know we have one. Two different accounts, one for popular consumption and the other for historical accuracy, run in parallel and God help us if they ever collide, for it would be like the predicted explosive clash of antimatter colliding with the matter we call America.

It is the rare historian, writing for lay people, that tries  to find a theme of continuity in the archives and discovers some of the ugly truths of our past, followed by the will to write about them. Those kinds of books that run against the accepted grain of history usually settle on the shelves of academia, often published by the academic presses of universities and if they ever see the light of popularity, they are typically drowned out by public outcry giving them a brief respiratory history. Any historian attempting to reveal a more accurate portrayal of American history, has to begin this more exploratory and factual process with a theory or at least a vague conviction, and then he or she must resist the temptation to deviate from the chosen vector, even though you don’t always end up with the theme that got you started. It is understandable why some historians say there is no history. It’s because  history is a story seen through the eyes of one writer, who always brings a bias of person place and time to the transcribed events and hopes for a preferred outcome–maybe a best seller. They too have mortgage payments to meet. So, history is a stack of opinions written by historians whose judgments change with time to adopt contemporary views which serve as the optical lens through which they evaluate history. As readers of history, we are tossed onto the ocean of thermal currents which provide the continuous disruptive influence of our new horizons. For the author of history, the trick is to catch the subject on the cultural upswing, rather than on the somewhat bleaker downside. Timing means a lot. As a result, some figures judged by our contemporary history will rise or fall depending on the ethical yardstick of the  era and the popularity of the viewpoint.  Because Truman started the Cold War, many Republicans later reached out recidivistically to turn him into more of a hero than his actions would merit.  Chalmers Johnson’s first book of his trilogy “BlowBack” had very meager sales until 9/11 hit and suddenly, it became a best seller (I think it was one of the books that Ron Paul suggested Rudy Giuliani should read following one of their Presidential debates during the Republican primary).  Still, there are differences among history writers, even within the same era.  These differences are sufficient for any member of our culture to choose and find resonating evidence for their own version of American history. Having your own private narrative is now within grasp. If you can’t find your favorite version in a textbook, it will surely show up when Googling. That is one thing the web has done for our culture. It has given stories–like those propagated by the Swift Boaters during John Kerry’s run for the Presidency– a website resource and some sense of plausibility, particularly if you lean in that direction (donations from T. Boone Pickens helped).

Doris Kearns Goodwin (an admitted plagiarist) writes popular history about Presidents and promotes her books as a public cheerleader to keep the American dream  alive and renew the false narratives about contemporary American history. Her subjects are her heroes and she prays at the alter located at the end of the deposit line in the bank.  In contrast, historian Geoffrey Perret in his book “Commander in Chief” achieves a more integrated viewpoint, across the presidential spectrum of the Cold War and beyond and describes those Presidents that took us into unwinnable wars (Truman, Johnson and GW Bush) and through this march, Perret gives his readers a different view of these American leaders. He more properly identifies them as confused, naive Presidents who were sucked into the false narrative of America as the dragon slayer engaged in a life and death struggle with the pervasive communist dragon–the one that McCarthy said could be your next door neighbor. In many ways these three Presidents are victims of America’s propaganda. That propaganda was supposed to be for public consumption only, not for the political leaders that would follow. But oops, that’s how Folly Compounding becomes self-propagating. James Carroll in his book “House of War” provides us with a powerful dialogue, seen through his own eyes, describing how the post-war Pentagon conspired to create and propagate the false narrative about America that we live with today, beginning with the Cold War as the life and death struggle that Americans were asked to believe about their new dilemma in the immediate aftermath of WW II.  That anti-communist narrative,  despite humiliating and falsely identified war experiences in Korea, Vietnam and Iraq, seems to get continuously replenished and updated to preserve America as the “shining city on the hill,” the country whose destiny it is to promote justice and save the planet from all forms of evil (while enriching and extending the grip of international corporatism, with new energies devoted to the privatization of water, just as one example of the never ending reach of these international corporations). Perhaps we are witnessing the end of this iteration of America, but it cannot come too soon. The false narrative of America began at the end of WW II. It only took a hand full of men within our government to lurch  us into a new direction that eventually evolved into our current corporatist state and has proven to be the source of our financial ruin: it was the mother of all Follies.  This false narrative elevated a party and a political system that eventually created Reaganism, which started us down the pathway to our current set of crises, including the deregulated nightmare of globalization, excessive military spending, unsustainable health care costs, trade imbalances and diminishing income levels for the Middle Class, the national epicenter of our creativity.   If we don’t make these connections and see their initiating events as the mother of present Follies and take the cure by replacing our historically false narrative with a more realistic history, we will surely recreate for ourselves sometime in the future, a catastrophe that will look a lot like what we are going through today. Remember that we just finished one stock market bubble and crash in 2001, and now we have a more serious collapse, only seven years later. We let the fixes provided by the New Deal ebb away and returned our economy to the roller coaster ride of boom and bust cycles, whose excursions are rapidly expanding. If we don’t return to a more sane economy, the one we will have will seem more and more like riding on a roller coaster whose track is a perfect damped to undamped oscillator–each high and low will get bigger and bigger, until something finally shuts it all down. If we allow these economic excursions to continue growing, I see little chance that the true mother of all Follies, global climate change can ever be dealt with to any meaningful degree. We won’t be able to afford it and maybe we can’t afford it now–too many pressing wars.

America’s false narratives created by Folly Compounding decisions in the early aftermath of WW II are like a secret, kept in a vault, waiting for the American maturity to reach a state such that they can accept the real version of what happened to them and why. The real narrative of what happened to America lies in vaults with “top secret” stamped on each envelope.  American politicians of today, those few that truly understand our gnarly past,  are afraid to let American citizens know what really happened during WW II and its aftermath that, in reality, have given us the problem set we find on our plate today. We are a country born in war and we continue to use war as our first response to  any challenge. Today, it is not just bad choices about military options that have purged our treasury, but it is also our financial system and our economic mistakes that sucked the wealth out of the middle class to a point where they cannot afford to be the consumers we need to get the economy back to the one we had just a few years ago. From Challenge Magazine “Today, a male in his thirties earns less after taxes than a male in his thirties in 1970. Wages for women have increased, but women have been closing a historical gap that separates them from male workers and continue to earn 80 percent of what their male counterparts earn. Keep in mind that our wages are no longer the highest in the world; we were the highest in the world…but that ended thirty years ago. We became the biggest economy in the world with high wages, because high wages created demand without over-borrowing.” The wage issue is one head of the two-headed monster we created. But we also began generating  Folly Compounding from militarism and Reaganism and both have arrived simultaneously on our doorstep, each of which demands a solution. We can no longer brag about America and we can’t go on until we fix the poorly tuned machine that runs our culture.  But, any solution we apply that doesn’t address both heads of our problem, our wealth distribution disaster and our excessive military spending,   will only give us marginalized results, fixes at the edges, all distractions from the epicenter of the problem.

Remember when we had a temporary fix from the dotcom collapse in 2001? Does anyone remember the Sarbannes-Oxley Act (SOX) of 2002? It was the law that was passed in response to the dotcom market bubble and crash of 2001, in response to Enron, Worldcom and others who cooked their books to make the company look good for the devious purpose of elevating the stock value of the corporation. Though considered to be a major reform and a fix to the crooked way big corporations were doing business, and  passed overwhelmingly by both houses in Congress, it was completely  irrelevant for preventing the housing bubble and collapse we are currently in: it was too narrowly focused and did nothing to fix the core problems that produced our current fiscal crisis. If we allow Congress to fix the problem of market deregulation once again, without input from the public, we will see band-aid after band-aid applied to our financial system with another market bubble and crash looming in our near future. But have you noticed how these crashes get bigger and bigger? The Savings and Loan bubble and crash of the 1980s had a price tag in the $ billions, whereas our current fiscal crisis is hitting the $ trillion water mark.  It was only seven years between the dotcom crash and the housing crash we are in now.  If we can understand that the Cold War we launched at the end of WW II, with its militarism and protective corporatism, combined with excessive powers given to our president, with a covert army and budgets that Congress did not oversee, we can begin to see a solution that must go way beyond another version of Sarbannes-Oxley, which in reality, was just another band-aid.  The risks are too high for us to settle for serial band-aids, which is what Congress is considering today. What we have to change is the culture–the culture of corporatism and militarism that grips our society with an iron fist.  It started out in 1945 as a culture of bombs, but evolved into a culture of corporatism and militarism that has turned to feeding on our own society, gaining profits from acts of privatizing government, charging excessive interest rates on housing and credit cards and hiding the true nature of risks in stocks, bonds and the new “securitized” bundles of confusion.  The drug bill for Medicare is one example of how high profits for drug companies will give us an unsustainable health care bill not too far down the road. How will we compensate? Our government (yes the Obama government) is now contemplating cuts in Social Security. If so, the drug companies will continue to see record profits while Americans sink and slide towards a third-world status. Companies worldwide are now working on the privatization of water. Because these trends began in America, we have the responsibility to fix them before they fester into permanent lesions on the world economy. As just one small step, we should stop drinking bottled water, for if we continue massive consumption of bottled water, with huge profits from its sales, it will remove the pressure we should be placing on our public water utilities to rigidly insist on high quality water made available for all citizens, based on costs we all share.  There are still millions of people who inhabit this planet that do not have access to decent water, something that is shameful for an economic system that likes to brag about its achievements. The strategy for privatization of water is already gaining foothold in third world countries and newly industrialized ones as well, including India. Can you imagine a natural resource like water to become the source of multinational corporate profits? The corporations blindly think of themselves as providing a good public service.

Folly Compounding is the concept that when a country makes mistakes, those mistakes get propagated and earn compound interest because they are not recognized as mistakes per se, or, if they are, no one wants to do anything about them because they are too complex or too controversial to appear solvable. The bigger the error, the more it becomes an Untouchable Folly. Hence, no corrective actions are put into play until the issues become consuming of the national focus or menacing to the country’s  future. Postponing a fix for slavery, for example, and the civil war that resulted from it, illustrate how dislocating and destructive  Folly Compounding can become, when the fix is put off indefinitely.  Of course, we might never have had a country if we tried to fix slavery when our nation was first stitched together as there’s no control available to run the experiment.  Sometimes poorly fixing a problem, taking a short cut, or overdoing the fix can add another layer of Folly Compounding on top of the problem you are trying to solve.  A good example of stacking new Follies on top of old ones is how the onerous peace terms of WW I led directly, twenty years later, to WW II, with a far more devastating effect and a higher toll extracted from all participants.

It is the innate nature of the political process to propagate errors, because fixing them along the way admits that mistakes have been made in the past and that kind of pronouncement usually  means that a political party, the opposite of yours of course,  gets  identified as the cause of the problem, thereby  initiating inter-party friction, national distraction and ultimately precipitating a long smoldering need for retribution. But of course neither party wants to admit that serious mistakes have been made in the past, out of fear that the individual pointing at the errors might get labeled as part of the problem rather than part of the solution–sort of the pot calling the kettle black. After all, in a two party system, who wants to believe that one party actually wants to destroy the country! Well, ever hear of the Republican Party and their “starve the beast” theory of government collapse? The idea behind that concept is that you spin the country into heavy debt, so that it cannot provide the services that you find so odious. The concept was the beginning of Reaganism and remains with us today as one big hangover from GW Bush’s attempt to recreate Reagan’s Presidency.  Hasn’t some of that worked as prescribed? As an example of long-term inter-party paybacks, we can ask what part of the motivation for impeaching Clinton reflected payback for the Democratically controlled Congress that forced Nixon from office, more than two decades earlier?

Of equal importance for understanding Follies is the fact that stopping to fix the old mistakes prevents you from working on your own stuff, the new things you promised, the vision that you believe got you elected. Those things by nature need to be worked on first. Indeed, it is often political suicide to continuously look in the rear view mirror, emphasizing the mistakes of the past, so few politicians ever do it.  Even talking about a psychological profile of the present can be politically dangerous, as Carter’s referral to the “American malaise” may have cost him the election against Reagan in 1979, perhaps with the help of the “October Surprise,” engineered by officials  in the Republican Party (including perhaps Bush I?). As George Will would say, it’s just good politics, even if the American prisoners in Iran had to stay captive for a few more months until after the election (the hostages in Iran were released on the day that Reagan was inaugurated as President in 1980).

The great advantage that Obama has over his predecessors, is that he ran on the idea of extinguishing some of our old Follies, so his election is the only opportunity since the election of FDR to deal with and fix old problems, primarily because they have precipitated a new crisis that can no longer be ignored.  But, more generally, it is only when our Follies of the past burst onto the horizon of the present like an uncontrollable flash flood, a sudden surge of undeniable intensity, that its menacing presence grabs our attention in such a forceful way that it brings the issue front and center as the most  immediate concern, demanding our full attention and challenging our wits. If the Folly was only smoldering before, it now becomes an engulfing flame, an  unmistakable  crisis event, riveting our attention, like the grizzly bear who got into the office room and now has to be dealt with before it deals with us: only then do we have a public outrage and fear which leaves us with no choice but to set aside our hoped for priorities and deal with the unleashed Folly Compounding issues that, if unchecked, seem to promise cultural enslavement. This disruptive character of Folly Compounding usually appears as a financial disaster or a major war looming on the horizon. Bush left us with a Bushel full of these Follies, whose true magnitude we have yet to understand, as we are still trying to sort them out and determine their impact;  not all of them have probably been identified. Sometimes, like the current crisis, war and economic disaster go together. Perhaps they are related. FDR got his twin disasters put on his plate in series, first the depression and then WW II.  But Obama has them all in parallel and a different person might just punt, or at least dodge a few of the more onerous Follies. No President in our history has ever been called upon to address so many Folly Compounding issues, most of which, like health care and Wall Street  have been smoldering and Folly Compounding for decades.

The problems we face today seem more like a bundle of major Follies all wrapped into a non-tidy giant pile, surrounded and protected by a swarm of ferocious African bees. It seems like it’s hard to touch the damn thing without getting stung. And if the bees don’t sting you when you touch the mess, there is the mindless, but ever present press who will do it for you!  What is it about our press that cannot see how the problems we face are those of long duration Folly Compounding issues, that cannot be solved without solving the grand dilemma of our culture for the last 60+ years?  What mind-numbing drug keeps their attention span confined to tiny segments of our history–a few days or weeks allotted for each chunk–history by chunks, with only the last few given any real importance. We still live in the Grand Illusion of an early narrative of American history. Who is protecting Americans from knowing the true narrative of their history? The false one is propagated like a religion, or maybe it is a substitute religion or maybe even the real thing–a real religion I mean. Maybe the born-agains need their religion to make it easier to swallow the large capsule of our false history. It is not easily ingested.

Very few components of our culture seem healthy today. Lots of things need fixing. The very fabric of the nation has been torn and like a child learning to walk, we have to learn how to take some seemingly primitive steps all over again. Hopefully we will learn to redo these small steps again much better than we did before, this time with our eyes wide open. About the only things we make these days that other people want is our high tech stuff, but then our own government prevents the sales of these items for fear of contributing to greater sophistication of our enemies and we have a lot of enemies. So, the ships come into our harbors full of stuff, but they leave empty. Sixty years ago, it was just the opposite. That problems needs to be put at the top of the list.

We can also hope that the synapses and neural networks of our brains, that will be called upon to reshape our culture, have sufficient residual plasticity such that we can engage the warped values of our present culture  and mold them into a new one that works for everyone, not just those participating in a giant cultural Ponzi pyramid whose apex serves the upper 1% of our society. We need to replenish our culture and set things right for the first time in 30-40 years. If we go through the pain, we need to see the gain. But, we aren’t angry enough yet, we’re not in the streets demanding a new lurching our ship of state.

What got destroyed in the last 30-40 years was an economy that, at one time, roughly from 1945 to the early 1970s,  worked for most people. It wasn’t perfect, but it had far more equity than the one we have today. At a time when we had a gradual income tax rate and the highest rate on the wealthiest citizens was 91% under the Eisenhower administration, we had a boom economy and our economic pie was divided in a far more equitable way that what we see today. Clearly letting rich people have too much freedom with their money is dangerous to all of us.  Reaganomics replaced that economy that used to work for us,  with one that worked increasingly for the few at the top and, in retrospect, we now  see how it all got started and how the economic  forces that were  unleashed under Reagan’s two terms in office, started the country on its glide path towards a third world economy for far too many citizens of  America. We arrived at our current state through the process known as  incrementalism, meaning that each step was small enough for us to build up tolerance or adapt, making the next small step more palatable, as the total excursion becomes very large and threatening. Present it all at once and there is no way we would agree to the proposition, but get there in 10,000 steps and it seems to pass through out gut without a wrinkle. Looking back at the magnitude of the tumble we took over the last 30+ years,  we can more clearly see the historic nature of our Folly Compounding, and the breathtaking altitude of the fall. If we had maintained Middle Class income levels where they were in 1970, we wouldn’t have as serious a recession as we are going through because the Middle Class would have more money to behave as consumers and they would not have had to borrow to maintain their consumption levels. Although the decline of the Middle Class began in the 1970s, the first elements of that decline can be traced to events which began at the end of WW II and evolved steadily since then. It’s just a matter of connecting the dots.

Today, as more clarity reaches into the inner sanctum of our consciousness,  it appears that finally, the sheer weight of our Follies over the past 60+  years, has grabbed our focus to a degree that fully occupies the attention mechanisms of our brains. Perhaps this is the good thing about facing so many crises at once. Perhaps now we can recognize the depth of our problems and the fact that many long standing Follies are at the front of the line, in bad need of identity and repair. We need to address so many things, including our economy, our war costs, empire costs,  health care costs and while doing so, begin to restore our country to the one we thought we had not too long ago. That country, now a distant memory for some, once worked better for most people than what we have today. Many opportunities were presented to us to right the ship along the way, but each time we attempted to deal with one of them, new forces presented themselves to delay our restorative actions. Nowhere was this more apparent than with how the Vietnam war destroyed our greatest domestic President–LBJ–and the unraveling of much of his Great Society programs. Medicare, Medicaid and Civil Rights legislation are the great legislative achievements that survived, but LBJ could have done so much more if the Vietnam War hadn’t destroyed his Presidency.

Our new current President, Barack Obama, will spend his entire Presidency fixing the Follies of the past without ever having time to get to his own stuff, the kinds of things he wanted to do when he first decided to run for President. But, we don’t even remember what those things were, for in the middle of his campaign, the bottom fell out of our culture, even though we think of it as an economic collapse.

Who remembers an America that didn’t manufacture automobiles? Wasn’t the auto industry at one time related to a good portion of the jobs in this country and did we ever vote on whether we wanted a “service economy,” or, for that matter, do we even know what a service economy is? One thing we do know about the “service economy” is that it provides lousy, low wage jobs and curtails workers rights. Our acceptance of a “service economy” as an inevitable component to our financial evolution is pure poppycock, and our slide towards that type of economy has been a major Folly on its own.  At no other time in our history have we had to deal with such a vast array of Folly Compounding issues. Fortunately, we have a young energetic President who might be up to the task of fixing some of the more critical Follies, those that are at least palpable.  Perhaps only Abraham Lincoln had a similar kind of confrontation–a confrontation with past Follies.  Shortly after his election, the Civil War started, representing one of the largest and longest Folly Compounding blunders in our history: Lincoln dedicated himself to managing and winning that war while freeing the slaves in the process. But it was just a short time after the Civil War  ended that Lincoln was assassinated. His entire presidency was consumed by fixing a single Folly Compounding issue, one of sweeping  dimensions. For Lincoln it was a Folly of choice that he decided to tackle the slavery problem. He saw the festering wound and knew that it had to be finally fixed. It was not a Folly that consumed him after he was in office, as he walked into it with his eyes wide open. It almost seems that Lincoln was born to solve the mother of all American Follies of that time– slavery in America. In exchange for his service, we deservedly generated a tableau of mythology about Lincoln and his Presidency. Perhaps we will look back on Obama’s presidency and acknowledge that it seems like he was born to solve our new Follies and the Folly Compounding interest created by them. If so, we picked an able man and hopefully a good President. He will need the energy of his youth and wisdom that is almost out of reach for his age. I think we know that much already. But whether he or anyone can do enough things and do them well,  to avoid the distractions that will reduce his efficiency, remains as his greatest challenge, and ours too. Right now,  I think few people would trade places with Obama.  You might notice however,  that Obama doesn’t have the same friends each day. Some go off the ranch to criticize him for one thing, then come back onto the ranch for dinner. Contemporary politics are like that and, after all, we are all economists. We all have an opinion of what we should do economically. That’s what Wall Street will do to you. Today, however,  most of us are Keynesians. Unfortunately, we also have a large number of Democrats and Republicans who practice “Military Keynesianism.” There will be a major political battle over canceling the F-22 fighter jet, a cold war jet that was designed to pit against Soviet jets. But, when this plane was first introduced, the Soviet threat had disappeared, but the jets continued to be manufactured and Lockheed continued to make $ billions through the standard method of weapons procurements–you bid low and let the cost overruns pick up the slack in the bid.

With the election of Barack Obama, we are beginning to see a national leader who has been forced to deal with a whole host of Follies. He has forced all of us to look through the rear view mirror, although we need to look a little further down the road behind us to fully visualize the distant past that initiated the long smoldering events that culminated in our current set of crises. It seems that Obama got elected precisely because he stated his political objectives of fixing overdue Compounded Follies, though he probably didn’t think he would have quite so many to deal with when he got elected. But, at long last, perhaps we have a President who is willing to call things by their right name and blame those forces that created our current mess and hopefully develop a consensus about the guilty party and their collective actions of national destruction. He’s not there yet. He’s still getting his sea legs and no one has yet been daring enough to mention that the mother of all expenses is our military spending, which is 1/3 of our budget (it’s actually far more than that because of hidden expenses, such as the Department of Energy that runs our nuclear arms program–Chalmers Johnson puts our defense spending closer to $ 1.1 trillion). What’s more, military spending does not stimulate the economy to evolve in a usefully, progressive way. It is a stagnant form of consumption and should be contrasted with spending on research to improve energy efficiencies.  Solving the military spending issue will be more difficult than solving health care and the latter is first up on the can-do list for the country.

We are finally beginning to see that the range of these neglected Follies touches every aspect of our lives with an iron grip.  The excessive motility that we feel surging through our gut, mediates such a strong sensation of discomfort, that it grabs our attention and makes us wonder whether we have seen all the Follies on the list–all those that need to be dealt with, or whether others have yet to be discovered. We know this is the year of crisis. We shudder to think that  it might turn out to be the year of further crisis discovery as well. Are we going to be given all the bad news in drip form, through an I-V?   The daily acts of discovery and those of the recent past have awakened us to the possibility that more things are out there. We notice for one thing, we have had to recalibrate our disaster scale. You might remember the savings and loan scandal of the 1980s. For that scandal, our scale was in the $ billions, but for this catastrophe, you might note that we are using the $ trillion scale. Have you recalibrated your instruments?

Despite the misery index remaining high, there is a strong sense that we have seen this happen before; it was transmitted to us through the lore of our parents and when it did happen in the 1930s, we met the challenge and gained prosperity, but it required good people with strong wills and hopefully we have some of those people in place today, beginning with our new President. In the 1930s we took a small government and made it much bigger. Today we have a much larger government but it has lost its focus, such that it serves primarily very narrow interests–it’s the Predator State of James K. Galbraith. Perhaps this time around, we are less naive, less gullible and more visionary about the difference between a good solution and a bad one, about avoiding solutions that don’t start another round of Folly Compounding, by merely kicking the can down the street. But you can’t change your government overnight with a new President. The government he acquired is on autopilot, still doing the kinds of things that Bush set in place. Obama has to be forced to go down new roads he would not ordinarily venture into without constant public demand and pressure. As far as debt is concerned, it is worth remembering that at the the close of WW II, the country had a debt that was about 130% of GDP and the emergence from the war, thanks to government programs like the GI Bill, the growth of labor unions, investments in research and higher education, all provided a long period of growth and prosperity, where the growth outgrew the debt. The new president is trying to replicate that pattern by rebuilding our economy into something new, one that will produce a significant growth with new economic tentacles that, once again, will hopefully allow us to outgrow the debt created by this undertaking. We owned our own debt in 1945, but today our debt is largely owned by other countries, including China. Ironically, the current economic downturn, according to Paul Krugman,  has increased the savings rate of Americans which is in turn helping to finance this new round of public debt. No one knew whether the end of WW II would lead to prosperity or a return to economic despair. But the key to our recovery was that of creating a prosperous Middle Class, through education and government programs like the GI Bill. The root of our creativity is found within this vibrant Middle Class, so that the replenishment of their prosperity will mean a bonanza of new ideas leading to a more creative type of  growth. To make this work, out consumerism will have to be shifted to planetary salvation items and to make that work, we will need vast improvements in our education system and how we finance education. But, to make it all work, it will probably take more investment than what we have made to date and it is unclear whether the political capital exists to make this new economy work for all of us like it should. FDR’s strategy prolonged the depression because he didn’t spend enough. Will we, in the end, do the same?

The current series of Follies are not just those of our financial system, but in the quality and pay of the jobs that we let get away. We need to recapture manufacturing. But we gave away the toys and plastics and bicycles and a lot of electronics  to Japan, China and South Korea, so we have to be far more inventive than we ever have been before. The world at the close of WWII was devastated and shattered, except for the United States, as we took advantage of a non-level playing field. Today that same field is far more level and there are many signs that we allowed our advantages to dissipate through focusing on the wrong set of problems.  For every $ we spent on increasing American military hegemony abroad, we diminished our domestic economic vitality at home. Now we have to get a little more creative on the high tech side and build a new economy based on saving the planet. Maybe then we will have something that China wants to buy.  An objective like that will get rid of giant Folly Compounding and get us back to mini Folly Compounding which is easier to deal with. Subtle advantages or disadvantages in trade policy, if corrected soon are the stuff of mini Follies.  Spending all your resources on the military, with more than 650 bases extended throughout the world–that’s the stuff of giant Folly Compounding and you may notice that the size of the military budget is not yet remotely present in the national dialogue. The most recently announced changes in military spending are a shift in the military budget emphasis, not a reduction.

The Follies that are demanding a solution today, didn’t begin yesterday, or with GW Bush, or even with Ronald Reagan or Jimmy Carter, though each of them contributed to the altered state of our economy and income distribution. The great dismantling of  FDR’s America began shortly after his death in 1945 and eventually led to Reaganism which was the beginning of the end of regulatory practices in our financial community, the termination of usury laws, the demise of labor unions  and the beginning of huge budget deficits that allowed  the Republicans to “starve the beast,” and, in the process,  destroy America’s social contract.

The Follies we face today, and we all know there are lots of them, have their origins at the end of WW II, in which a gigantic lurch in our view of the world and how we would face it, was newly and sharply formulated and promptly implemented, penetrating deep into our culture with a seemingly irreversible thrust that permeated our nuclei and changed the American DNA.  This new world view was an ad hoc viewpoint created by the naivete and poor leadership that suddenly emerged on the death of FDR. Immediately after his death, the emergence of a new hard line attitude towards the Soviet Union took shape, and it was this new attitude that would shape our future course, help to destroy the Soviet Union and secondarily render the United States into a confused, bitterly divided and impotent country. If you ask yourself the question that, after WW II, we supposedly turned ourselves into the Juggernaut of the world as a military power and yet how many wars did we actually win since then? Remember Korea, Vietnam, Iraq and where are we headed in Afghanistan, where 80% of the Pakistanis do not want the American presence in their country? Why do we want to stabilize a country of 30 million, while destabilizing a country of 175 million?

The new Post-war cultural format of dividing the world into two camps, the good guys and the commies, turned out to be an easy sell in America because of the public perception that Americans have about their own country as the “shining city on the hill.” If our leaders are asking us to do this it must be right, it must be part of our great American heritage to go down this new path, even though it scares the hell out of us, with atom bombs and hydrogen bombs and Russian bombers.  Perhaps today,  the shining city model of America is coming to an end, at least as far as the internal model to pursue is concerned. If so, the narrative that replaces it can only  serve the national interests if the entire panoply of the national  arrogance and miscues of the last 60+ years is fully understood and recognized for the impact that it had on us and the destructive influence it had on our government and our social contract.

Folly Compounding exists all around us in the form of an economic meltdown, lack of an adequate broad, health care system, a complex of military-industrial waste, medical-industrial waste and stagnation of the earning power of the Middle Class. And these are just for openers. The social contract that was established in the face of the Great Depression under FDR, has been shattered by thirty years of Reaganism and globalization, which is a euphemistic way of describing wealth transfer from the middle and lower classes to the rich. It’s as if we are taking money away from workers at home to subsidize low wages of Chinese workers. In China, WalMart is still trying to get Chinese wages lowered further to reduce labor costs and increase profits. If you look at the labor conditions in China, you realize that “labor camps” like the ones we had for blacks after the civil war are a good description of the conditions that many Chinese workers live under once they come to the big industrial centers.  One could begin this story by also talking about globalization and do so by mentioning that no single country that experienced economic expansion into a global, Western style economy, did so under the banner of free trade–everyone one of them, including Japan, South Korea and China, established their wealth by the same pathway we did–through manufacturing coupled to protected markets and regulated trade. Those countries in South America that went through the “free market” transition saw their country transformed into one of income stagnation for the Middle Class, income decline for the poor, and huge prosperity for the wealthy with the emergence of American companies who bought and sold the nationals. The introduction of this type of “free market” economy was only made possible through the “Shock Doctrine” of capitalism that Naomi Klein talks about in her book, with the IMF in full compliance for the economic changes that each country had to go through to get loans.  For the United States, it was the design of a global military hegemony that cracked the domestic code at home and progressively gave away our candy store.  Of course, that is only part of the story. Along the way to this brave new world, Americans were asked to give up their constitutional  rights, without ever fully recognizing what was being shattered in the process. With such a large and growing military, it was only natural that we would view our international problems as military problems, a view point that is unlikely to change, or will only change with a huge political fight about priorities and the causes of terrorism. As we became a more militaristic country, the roots of transparency in our government were replaced by secrecy and the  “classified” government stamp became a common way to prevent the public from knowing about embarrassing moments, all of which were described as necessary and fundamental for protecting our threatened nation.  Chalmers Johnson in his trilogy of books about the CIA and our military empire, a person who has inside knowledge of CIA operations, claims that the classification of information by the CIA is mostly to cover up embarrassing excesses of the agency. The process of surrendering our rights as citizens over the past 60+ years has become so routine and axiomatic that we no longer recognize the forces at work that have  precipitated these sea changes in our democratic system. Many who look with some insight into our strained culture of today wonder whether we are simply one terrorist attack away from a military dictatorship, with the new NorthCom of the military ready and waiting for instructions to begin policing the entire country under martial law.

Our military strategy of containment against the Soviets, led to reshaping the American corporation into what it is today, with the giant multinational corporations living under a shield of indifference towards the living conditions at home and the plight of workers in America. After all, multinationals don’t really have a home, perhaps just a place of origin and current residence, which is meaningless for their business model. Our militarism became  inseparable from our corporatism: they are now tightly bundled in a seamless package of military hardware, training foreign troops and mercenaries in America and the obligatory purchase of American made weapons and jet fighters. Hot money travels around the world destabilizing the currencies of countries, pushing them into a fiscal crisis for which they need an IMF or World Bank loan to help them right their own ship. Yet, we allow our own corporations and hedge funds to produce these destabilizing events, for in the end, there are huge sums of money to be made. Ending the Cold War had very little impact on our military expenditures or the size of our military reach. Global military hegemony was our objective after the end of WW II created by the U.S. fabrication of the Cold War with the Soviets. As soon as the Cold War was over, we saw how our global military empire has expanded through NATO and other alliances, such as we strongly bonded with Israel, even to the exclusion of our own interests in the Middle East. Though our global hegemony is beginning to unravel in some places, like South America, and perhaps Iraq, we continue to pursue the same strategy and will not stop that approach until our financial collapse makes it impossible to initiate the old reflexes.

Containment gave cover for the multinational corporatist state and the “predator state” of the modern era. It was far too easy to establish Corporatist America: our country will remain in this state until we forcefully demand a return to better days, when clarity of mission seemed so much more in evidence. The time for full citizenship activism is here. We finally have a President in the form of Barack Obama who will listen, but we need to dramatically grab his attention.  A national “New Social Contract Day,” in which we all take to the streets with our pitchforks in hand should work for openers.

We live in a government today that has gone way beyond the Old Republican insistence of  Laissez-faire into the terminal stages of Reaganism, in which the U.S. Government has become what economist James K. Galbraith refers to as the “Predator State.” It is this Corporatist America that has fused its profit motives with control of our government that most clearly defines the present iteration of our country and it has been consumerism by the middle class that has served as the primary narcotic that allowed this transition to go  smoothly, attended by very little debate.  It is the most prevalent form of cultural opium in the country today. But, despite the high level of the misery index readout and the fear that we may have to once again recalibrate the scale of our disaster, we still have a chance to save the country and return it to the one we used to have, the one that is now a somewhat distant memory. We have a President who might be able to do this, but it will only happen with great public enthusiasm and boisterousness for change.

Connecting the early dots. America started its own version of continental drift or Folly Compounding (FC) at the end of WW II, when, without warning, a dramatic shift in political power allowed the new President, Harry Truman,  to assume authority greatly in excess of what our constitution allowed. The main loss to our constitutional authority was created with the formation of the CIA and the black budgets of the military. Our constitution specifically states that Congress must review the budget, but these new federal agencies, under the control of the President, have never been publicly reviewed or discussed and their operations have been highly protected in the name of “national security.” We still do not know the exact funding level of the CIA, or the resources that go into the black budgets of the military or what that money is used for in any detail. All we know is that past performance with all the CIA blowbacks have dramatically increased the size of our military budget to engage in wars and base deployments, the full story of which has never been revealed. The CIA effectively  gave the President a covert army which carried out many military-style operations that generated  highly embarrassing revelations when they were revealed and left America with an odd understanding of its own history: while Americans were denied an understanding of what was done in their name in practically every country in the world, including those of our allies, the indigenous people against whom our actions were carried out, had no doubt who did what and the seeds were sewn for the “blowbacks” that are with us still today, the most obvious of which is 9/11. Today we have a unique feature of American culture: more people living outside the U.S. know the relevant, post-war history better than most Americans. Americans have fallen victims as a country to one that has been denied knowledge of its own history. Perhaps that is the ultimate in Folly Compounding–the lack of knowledge about the very events that are knocking on the door for solutions that we really don’t have or won’t entertain because we don’t know for sure that we did the things of which we are being accused. We don’t know, but they do.

Last year I was in Costa Rica with my wife Rosemary. We took a tour of one of San Jose with a guide, together with several other Americans.  When our guide was asked superficial questions about the relationship between Costa Rica and the United States, he give chrome-polished responses that made Americans feel good about their country. But, if you asked him privately about the history of the US and Costa Rica, he had a well full of knowledge about the Iran-Contra era and illegal bases that the U.S. established on Costa Rica’s northern region, without ever getting permission from the government of Costa Rica. Here was an individual, our tour guide, who knew far more about the role the U.S. played in South American countries than any American present, including me. I learned a lot about American interventions in Costa Rica just listening to him and later checked to see if I could corroborate his stories, most of which I found to be true, while the others I was unable to gather sufficient information to make a judgment. But, his fund of knowledge was not unusual. As Costa Ricans often say, they tend to like Americans, but not the American government.

It was under Truman’s watch that the early shape of America’s future was put into play. Truman was an innate hardliner on foreign affairs, particularly towards Russia, but a more liberal Democrat on social issues; he was a Missouri “buck stops here” kind of guy who would learn the hard way that he couldn’t have it both ways: letting in the hardliners to dominate his post-war foreign policy would let the very people in that didn’t give a damn about his domestic social policies and aspirations. That mistake would cost him his highest priority domestic objective–a single payer national health care system.  Indeed,  Truman left office puzzled and disappointed that the hard-liners had labeled his health insurance plan, which seemed like a no-brainer to him, as “socialized medicine,” the death knell for any program so labeled in that era, given the hardline attitudes that were drumming up support to confront the Soviets as an evil empire. So right away, right out of the starting gate, we turned down a health care plan and substituted it with a patch work of programs that would eventually create the medical-industrial complex that generated huge profits for some, but insufficient health care for much of the nation,  leaving 47 million Americans uninsured, as of 2009. The National Academy of Sciences estimates that 20,000 people die each year because they do not have access to medical care. Some of these stories are heart-breaking and have appeared on PBS’s Frontline in recent weeks. In one of our greatest Follies, that of choosing military containment over health care, we encouraged the development of a health care system that is unsustainable in its present form. It is one of the top priorities to get fixed: let’s hope that for the first time in our history we fix it and do it well. I think if Obama had campaigned on the slogan “Medicare for All” as Robert Kuttner has suggested, he would have been elected with a huge plebiscite, more than just a good sized victory! In many ways Obama is too cautious, uncertain about the meaning of his political victory and still afraid to confront the neoconservatives.

Truman was a dedicated American who loved the military, but was completely naive about the world around him and very untested as an international leader.   His selection as vice president for FDR’s last election run in 1944, was achieved by the hard liners of the party who feared that then vice president Henry Wallace had leanings that were too favorable towards the Russians in the post-war period. FDR had talked about a warm postwar relationship with “uncle Joe” (Joseph Stalin) but the hardliners were infected with anticommunist bias; they feared that Russia had become a superpower as a result of the war and was aggressively pursuing a takeover of the Eastern European countries (many of whom had invaded Russia during the war).  It was hard line pressure that helped  force Truman onto the ticket, displacing Wallace, who later ran as a Liberal/Progressive candidate for the presidency in 1948, but came in a distant third. One factor that determined Wallace’s defeat was his socialist leanings, as the hardliners were trying to sell the country on the communist threat that was all around us and Wallace was too far left to avoid that label. The selection of Truman as FDR’s running mate in 1943, insured that hardline attitudes would assume the Presidency if FDR died in his last term, which many party members felt was likely. Roosevelt looked terrible in 1944. He looked ashen in his face, smoked excessively, had high blood pressure and was in congestive heart failure. But, somehow he dug deep down into his reserves to try and find the energy to finish the job and live through to the end of the war. Eleanor Roosevelt in particular was looking forward to the end of the war, with her husband still at the helm. She hoped that with the war concluded, FDR could begin setting right many of the social injustices in America she had witnessed through her extensive travels which had given her a unique life outside of the normal political life of a President’s wife. On her plate were issues such as poverty and racial divide. But, Roosevelt lived only until April of 1945, just a few months after the beginning of his record fourth term. His death and the rapid transition to the Truman presidency may have been the single biggest tragedy for the postwar nation, though it has yet to be recognized as such. We are still too romantic about our history. On the other hand, Jeffrey Perret’s book Commander-in-Chief goes a long way towards removing the romanticism from the presidency, replacing it with a dash of cold water in our face through a little reality testing about Truman, Johnson and G.W. Bush. One the hardliners had a foothold on the postwar course of our country, they began to shape social policies. The ultimate irony was found with LB Johnson, whose Presidency was one of great domestic progressivism, large parts of which became unraveled by his war in Vietnam, which he pursued believing that the Vietnamese were nothing more than agents of the Soviets. He was so paranoid about the mounting demonstrations against his presidency that he insisted on the FBI finding the connections between student protests and Russian agents and was frustrated when told that no such relationship existed. Johnson pursued a costly war because he swallowed our post-war mythology about the Soviets wanting to dominate the world. It was as if the first generation of hard line Republicans and Democrats created the Soviet threat and the second and succeeding generations actually believed it. Johnson was one of those–he hated communism and the Soviets he thought were responsible for threatening America.

Truman, who had never been brought into FDR’s inner circle, knew little about the policy discussions that were taking place at the time that FDR suddenly died in April, 1945. He did not know for instance  about the Manhattan project which produced the atomic bomb, despite the fact that the project was nearing its completion.  It is unclear why the Vice President was kept so peripheral to FDR’s political agenda, but then again, it was a short period of time. FDR also kept Truman at arms length during the political campaign of 1943 and Truman was surprised and disappointed that he didn’t have a campaign role of any significance.  But, within weeks of FDR’s death, Truman had started to put his hard line brand on foreign policy issues and did an abrupt turnabout in dealing with Stalin and the Russians, beginning with the issue over Poland. When the Germans opened up their second front by attacking Russia in 1942, then Senator Truman was quoted as saying “good, now we will have Germans Killing Russians and Russians killing Germans.”   He had adopted the hard line attitude towards the Russians because it was regionally endemic to do so and it was immediately apparent when he became president that he was going to tilt the country in a new direction: he was going to lurch our ship of state in a way that had never been done before.  This new direction was, not surprisingly, dominated by the military and individuals, such as James Forestall, who became the first secretary of defense after the war under Truman: he  committed suicide in 1949 by jumping out of the 13th floor of a psychiatric ward in the Bethesda Naval hospital. Many of the emerging militarists that came into authority right after the war  were  in their decision-making capacity only because of the war, not through the electoral process. It was the weakness and inexperience of Truman that allowed these people to convert their private views into public policy.  For that reason, their support of hard line attitudes against the Soviets basically turned the clock back to viewing communism as a mortal enemy to our capitalist system, reaffirming many of the attitudes that had permeated the country during WW I (especially during the Bolshevik revolution, when we sent American troops to fight on Russian soil, in support of the White Russians)  up until the beginning of WW II. It was at the onset of WW II that we had to recognize  Russia as an ally, odious as it might be to some. The two countries were strange bedfellows.  The more liberal voices left over from the FDR administration, including Henry Wallace,  were pushed to the sidelines under Truman. James Byrnes, who became Secretary of State under Truman was a hardliner who made sure that, once successfully developed, the atom bomb would be used against Japan.

One cannot underestimate the importance of the atomic bomb for promoting the cultural lurch that Truman put us through. The sudden availability and use of the atom bomb as our “gadget” for ending the war against Japan, gave us a new weapon. Initially, our military and political leaders regarded the atomic bomb as simply another weapon in the conventional arsenal of weapons, a center piece for the long struggle against the Soviets and their expansionist attitudes towards the rest of the world. The atom bomb was followed by the much more powerful hydrogen bomb and the two together became the fixation center of what we thought would give us long-term hegemony over the Russians. Leslie Groves, the army general in charge of the Manhattan project, argued that the inclusion of the bomb as part of our arsenal would give us a “40 year lead over the Russians who couldn’t build a decent jeep.” Most scientists working on the Manhattan project at the time thought it would take 5-7 years for the Russians to get their own version of the bomb. While Groves represented the military side of the Manhattan program, it was physicist Robert Oppenheimer who directed the scientific and technical aspects of the project until its completion. Later on, by inserting his objections to the development of the hydrogen bomb and trying to warn the country about the dangers of an arms race, he would be censored and removed from influence on government military policies. This was another American Folly that is now coming home to roost, for Oppenheimer’s elimination opened an unfettered path to the beginnings of the giant military-industrial complex that Eisenhower warned us about, despite the fact that Eisenhower himself had contributed to that development. With Oppenheimer out of the way, the arms race with the Soviets could begin in earnest and, as the Soviets detonated their atom bomb, followed by the hydrogen bomb, the race was on to get away from bomber delivery to missile delivery followed by  MIRVs and the weaponization of space.

To cement the public attitudes about the need for the Cold War, one cannot overemphasize the importance of George Kennan. He was a member of the Foreign Service, stationed in Moscow at the end of WW II.  Like many Americans, he was instinctively an anti-communist and viewed Soviet Communism as a source of evil and the center piece to elevate his own visibility within diplomatic circles. To this end, he sent the “Long Telegram” falsely elevating the Russian intentions about world domination, portraying the Russians as the future source of a “messianic apocalypse” and outlining his concept of “containment.” This telegram sent a shock wave through Washington. James Forestall, an Admiral in the Navy saw in Kennan a kindred spirit that could be useful for his own strategies in getting Truman to lurch the ship of state. It was Forestall, a knee jerk anticommunist, whose wife thought that the whole family was being followed by communists,  who had encouraged Truman into his early confrontation with Molotov only weeks after FDR died. Many historians look at the Molotov-Truman confrontation as the beginning of the Cold War. Forestall collaborated with George Kennan to expand his Long Telegram into an article published in 1947 in the journal Foreign Affairs, under  the psuedonym “X.” This single article probably had more to do with generating the Cold War than any other. It alarmed Washington and was taken as the gospel about the Soviet intention in dominating the world and spreading the evils of communism to the four corners of the globe. It was, as author James Carroll states in his book “House of War” “the foundational U.S. mistake of Cold War thinking.” It did not properly distinguish between nationalism and the communist rhetoric of world domination, which was, if anything meant for home consumption. Russia had just been through the most devastating war in its history, with 20 million dead, factories and production dislocated, cities demolished and huge sectors of the country experiencing starvation. Russia was in no position to begin hostile actions against anyone. In fact, Russia was demobilizing, something that the authors of “X” did not consider. But “X” achieved something that the Long Telegram did not.  When Kennan described “containment” he was referring to diplomatic containment, not military containment. But, of course Forestall took his message to mean both and for that reason, a stamp of permanence would be placed on that document as the rationale for the Cold War–it would include both diplomatic and military containment efforts.  Later George Kennan, taken into the Princeton Institute by Oppenheimer, would denounce article “X” as one which was used to advocate something he did not believe in–the need for a military component to the containment policy. Even Truman’s Secretary of State Byrnes was troubled by the confrontational approach that was being hatched by Forrestal and Kennan.  But, it was too late. The die had been cast, Truman sided with Forrestal and the Cold War had begun. But the Cold War did not change any borders. When it ended, the line demarcating the arrival of the Russian armies and the U.S. and British forces remained exactly where is was at the end of WW II. What then did the Cold War bring us?

Early during the development of the atomic bomb, several scientists wanted to share with the Russians the information on the bomb, and have oversight given to the United Nations. Russia it was argued was one of our allies and should be a partner in the development of atomic technology. Of course, the military and political leaders of the country  refused to carry out such a plan, as they conceived of a different strategy.  Once the “bomb” was safely in the arsenal, the American planners thought they had a near permanent lead over the Russians, and that the weapon itself would guarantee hegemony over them on a more or less permanent basis. The two Japanese targets for our two atom bombs, Hiroshima and Nagasaki, were not selected by Truman, but by Groves and to his dying day Truman insisted that both cities were military targets; while these cities did have military troops stationed on them for defensive purposes, the bomb was targeted for the city center, not the military site. The two bombs led to rapid surrender by the Japanese, though they were allowed to retain symbolic leadership by their emperor, their only precondition for surrender before the bombs were dropped. Until the two atom bombs were used, the war against the Japanese homeland had been carried out by the air force, with fire bombing tactics designed  to kill as many civilians as possible. The atom bomb was dropped as a signal to the Russians and Groves admitted as much to the scientists working on the Manhattan project sometime before its completion. There were many attempts by scientists to end the Manhattan project after Germany had lost the war, but Groves managed to thwart those efforts and preserve military control over the weapon. Truman was the captive of the military in terms of strategy for using the new weapon, yet some generals, such as Eisenhower, were against dropping the bomb on Japanese cities. He had seen the carnage of war up close, something air force generals never get to visualize.

Following Truman,  succeeding Presidents have been less and less encumbered by Congress and over time, they have learned that a war footing for the country, a perpetual war state or threat of war, ideally positioned the President in such a way that  he is largely independent of Congress because of the Commander-in-Chief clause of our constitution: under a permanent war footing, based on burgeoning militarism, even a President’s funding demands typically received little scrutiny from Congress. This new environment was initially created by the threat of an everlasting conflict created by dividing the world into two–us and the commies. The last time that any President asked Congress to declare war was FDR and WW II. Truman’s war in Korea was a “police action” and no President since FDR has requested a declaration of war for any one of the many conflicts we have had since. In a way, Congress didn’t mind capitulating because of the presumed titanic nature of the struggle which primae facia demanded secrecy, covert armies, all supported by the black budgets of the CIA and the military. Congressional authority was cumbersome and when you are faced with a cunning enemy, someone that might be your next door neighbor, you needed to have a body of authority that could make quick decisions. You might also note that Bush’s “War on Terror” was designed to be a war without end, designed to confront a human emotion. Fortunately, Barack Obama has officially ended that war and started his own, more limited view of our objectives in the Middle East. Up until the new policy decisions of Obama, we were surely headed for a state of permanent war that Orwell effectively characterized in “1984”–only the timing was a bit off.  Bush’s intention of propagating a never ending war to align the people in favor of the new robber barons of the culture–Enron, Haliburton, Lockheed Martin, together with Blackwater, the latter of whom could make a pretty good impression of Hitler’s Brown Shirts, as they roam the streets of their assignments with impunity from prosecution. Germany in the 1930s? We are partway there–read Naomi Wolf’s articles on American fascism for a little cold water in your face.  Germany in the 1930s; many examples of Ponzi investment schemes such as that of  Bernie Madoff, whose scheme is not altogether different from that of Enron and the economic bubbles that will follow one after the other, now that the principle of Federal bailout for largess has been clearly established. None of this could happen today, if congress had not sold out so willingly and completely to start the imperial presidency through abdication of their constitutional responsibilities, such as reviewing the Federal budget. But many other constitutional freedoms have also been abandoned in favor of state control. The new Department of Homeland Security seems more like a national police force that treats demonstrators at political conventions as if they were terrorist. The introduction of secrecy and devious international schemes to manipulate or topple governments, quickly acquired its true nature and served as the secret American Mantra for our foreign policy:  from Guatemala to Iran to Vietnam to Chile, our policies were always those of supporting hard line authoritarian governments as long as they were against communism. But, of course, we had an economic subscript to all these interventions, so the profit motive was part and parcel of our foreign policy. We supported insurgencies that would topple Democratically elected governments.  And, this war on terror will be difficult for Obama to eliminate from the military roster. His declaration to end the use of  the term “war on terror,” and restrict his actions have given us the prospects of a fresh start on this theme, but these are only prospects. They haven’t reached the substance of reality. Indeed if we could somehow generate a “fresh start” it would mean putting our ship of state into reverse and going back to where we were before 9/11–a still highly militaristic culture with a massive military budget and a long list of military hardware that goes all the way back to the Cold War.

Excessive Presidential Power. The primary reason for excessive presidential power began with the false titanic struggle we created against communism. We entered into this struggle without a significant dialog or debate: we never voted on whether this issue was important to the American Public. It was a hijacking of our government institutions and the ship of state.  No one ever presented a serious alternative.  In the early days of this transition, it was virtually impossible to have a meaningful dialog on the wisdom of this abrupt change in our policies without running the risk of being labeled a traitor to your country. The right wing called all liberals communists and the “Red Scare” under McCarthy stifled any chance of debate. Heavy use of guilt was applied to anyone who doubted the value of the new war, the one that got labeled the Cold War. Most Americans were taught that Russia started the Cold War, without ever reading beyond the milk toast information to learn the real truth, that we started the Cold War, as the right-wing fanatics who had been held in check initially under FDR, suddenly now found a place in policy making and a devotee in the form of one Harry Truman: the Cold War was ours and ours alone. Today, a bronze bust  of James Forestall stands at the entrance of the Pentagon and serves as a reminder to those who understand the tragic paranoia that he inserted into our foreign policy about how few people it took to turn the heat up and produce a fifty year Cold War that became so strongly entrenched in our society, that we have had to continue our military hegemony, primarily because we don’t know how to stop. While we preached that Russia was an expansionist country after the war, Russia was in fact demobilizing–Stalin had to rebuild a badly broken country.

The essence of this article can be summarized in the following way: once we started the Cold War, we had to generate a new mythology about America and the nature of her adversaries. This new mythology, that we were locked into a titanic struggle with communism, with the very survival of our country and our society at great risk, was brought into our purview in such a way that it had a complete victory over opposing  liberals, even though FDR might well have done things very differently. For example to give Stalin reassurance, FDR promised that Russia would have control over the East European states that he had overrun at the close of the war: Churchill was opposed to this, but FDR acknowledged it as reality.  That promise included control of Poland. But, Churchill’s dislike of seeing Britain topple before his eyes as a world power, while Russia assumed the mantra of a superpower, allowed him to take advantage of Truman’s naivete once he assumed office after Roosevelt’s death. At that point Churchill was able to forge a new alliance with Truman to also aid in formulating the Cold War policy. Less than a year after the end of WW II, Churchill gave his famous “iron curtain” speech while visiting Truman in Fulton, Missouri.   But once the false narrative took hold through the force of a major propaganda effort, including the era of McCarthyism, that false narrative then produced a huge transition in Presidential power, as we now needed to rely on the President to carry out all those secret operations that we didn’t want to know anything about. It turns out that the President often didn’t know much about them sometimes either. The war-like state we put ourselves in demanded war-like powers to be assumed by the President. And, “Pow,” we were off to the races. Our style of capitalism was supposedly saved through a hundred thousand episodic assaults on our freedom, our way of government and our way of doing business. The right-wing hardliners that produced this gigantic cultural lurch must have been embarrassed about how easy it was–it was too easy. Where were the liberals? Thus the black budgets of the CIA and the military meant that we began violating our constitution from the get-go because that document calls for a periodic review by Congress of all government expenditures.  But the false narrative cleared the way for Folly Compounding on a scale that can only be appreciated now, as we are finally beginning to drum up the courage to look in the rear view mirror. It is not a pretty picture. Instead of getting a tranquil peace at the end of WW II, we got promised a new form of war of potentially seismic proportions. We lived with a supposed nuclear confrontation for forty years.  We entered into wars that we thought were proxy wars by the Russians, including Korea and Vietnam. Both those wars were unwinnable and notes from Mayo to the Presidents (Truman and Johnson: cites in Perret’s book) convinced them that if it came to a struggle between the Chinese and the Americans, we could not possibly stand up against their army of millions.  To keep the false narrative alive and Folly Compounding moving forward, many naive Presidents who were attracted by the new narrative of America as the world’s only defender of freedom, committed the country and subsequent Presidencies to military expansion and other wars against evil. So, we had Truman, whose decisions were aided by his use of drugs in the White House (as described by Geoffrey Perret’s book “Commander in Chief”), we had Johnson, whose wild excessive patriotism led him into the Vietnam War, even at the cost of destroying his own ambitious social programs; we had Nixon and Reagan who brought and defended shock capitalism and dictatorships to South American countries and finally the Bush presidents, with GW Bush  putting a frightening validity to Orwell’s 1984, as he tried to produce a permanent state of war, a war without borders and a war without end, with him as the only “decider.” A war against an emotion. Even that part of it seemed highly embarrassing to anyone familiar with the English language.

Reaganism started early. Ronald Reagan left the Democratic Party because he sensed a communist threat growing within the party and the screen actors guild of which he was the president. He married a staunch Republican in Nancy and joined the Republican Party to become its standard bearer and the birth father of Reaganism. His anti-communist ideology led him into another ideology that would be named after him, without him ever understanding how or why he did it, or what it really was.  For Reagan, Alzheimer’s was a relief from the excessive toil of looking for the right Rosetta Stone and its associated narrative. He didn’t really believe in the laffer curve and probably didn’t understand it, so Alzheimer’s was his Pepto-Bismol. Yet, all he left behind were supply-siders who believe today that our entire economy is determined by tax policy. How easy was that medication, despite the fact that it has been disproven so many times in so many ways?  But, it remains a narrative for more than half of America.

We moved from an atomic bomb military to an atomic bomb culture to an atomic bomb economy. With the development and dropping of the atom bomb on Hiroshima and Nagasaki in 1945,  Washington suddenly saw a way, a gift from the scientists, not the military,  to dominate the world. But, the first surrender in the new war needed to come from  the American public, including a surrender of our own constitution and the social fabric we had been weaving under FDR for a more relaxed and contemplative life. This was all accomplished too easily by too few people–a handful really.

A landslide transition into Folly Compounding. During this transitional period in which America formed a new world-wide vision of itself, right after WW II, we had to abandon our intuitive grasp of the world as we thought we knew it and get a new version,  a new narrative borrowed and time-stamped from Washington. It would be the first of many. The new world narrative was that Russia, our strong ally during  WW II, and one of the real heroic countries of Frank Capra’s documentaries in the 1940s,  “Why We Fight” had become, or more appropriately, always was, an evil monster and our mortal enemy.  According to this new view, our alliance with the Russians during WW II was an aberration, an unexpected interruption from a struggle that had to be renewed. But this time the renewal would be on our terms, for we had the secret weapon and we didn’t expect that Russia would have something similar for “forty years.” This transition all took place in a matter of weeks to months after FDR died and Truman became our Commander-in-Chief: it was a gigantic national lurch, the first in our lifetime of such magnitude. Nothing the young American culture had done before, prepared it for the mother of all lurches.  Yet, the country was subdued and in a state of shock at the time this new initiative was introduced. A horrific World War had just been completed, with 40-60 million lives lost world-wide; Russia had lost perhaps 20 million of its citizens and now Washington was telling us that a new titanic struggle for our very existence had to be undertaken. According to this silly notion, the country that was completely decimated and nearly destroyed by WW II, was now prepared to engage in treacherous acts to enslave the world and over run American capitalism. The American public was so naive about its own government, that this interpretation was accepted in short order and became the social fabric of the country. Under Truman we didn’t tear down the Pentagon, as FDR had planned, we didn’t prevent the French from going back to Vietnam, as FDR had promised and we didn’t make any attempt to understand Russia needed and in fact was entitled to have control over the border states it had conquered during the war, including some countries that had participated with Germany during the invasion of Russia and the battle of Stalingrad. The lurch led by Truman was shocking, but it would not be the last time we would face a new, counter-intuitive narrative; in this case it was much different than the world we had been prepared to live with under the national music created by FDR. The songs of FDR suggested that a tranquil, peaceful world awaited us at the end of a disastrous war. Truman would prove otherwise.

Finally, what is missing in this narrative is the more objective account of the connections that made the Cold War decision right after WW II of such momentous and determinant influence. The details need to be filled in, but the sequences are easily understood. Our lack of a national health care policy, the destruction of the New Deal, the dismantling of our financial checks and balances, the decay of prosperity of the Middle Class and the incessant reliance on war and military solutions to our problems, can all be traced to the decisions made during the early period of the Truman administration, months into FDR’s fourth term. It might have been a very different world today and we might have had a very different America if FDR had been able to serve out his fourth term in good health and vitality. We can only dream about that other parallel world that might have been.

Then too we can only wonder why FDR didn’t insist on retaining Wallace as his vice president in the campaign of 1944. Wallace was more firmly aware of FDR’s future plans than Truman ever was; I think Truman only met twice with FDR after he was nominated as the vice president.


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Folly Compounding in America: the Stuff of Broken Empires, Part 1

Note: This article has been sitting in my computer for nearly a year, beginning about the time that I felt  the subprime mortgage disaster was likely to be far more serious than we were then led to believe. So, I am bringing it forward now, at a time when it seems, well, more timely. But, while the crisis is self-evident, and its short-term causes are apparent, its long-term origins, the most significant source of understanding how to right our ship,  are not obvious and in fact are not even considered as an item on the discussion table.  As we look increasingly to Google FDR, searching for solutions to fix our fiscal crisis, we should look to Sputnik and our response to that challenge, to see how, just 50 years ago,  we began to invest in our infrastructure of higher education and how that investment can be used to rebuild our economy into a powerhouse based on saving the planet and reducing our dependency on something we don’t have very much of these days–oil.  So here are my thoughts on the issue of how we got to where we are.  I have broken it down into two sections, as I realize that even one of them may be a pill that will prove hard to swallow: FOLLY COMPOUNDING IN AMERICA, PART 1

Folly Compounding (FC) happens when you don’t recognize your error or Folly and allow Folly Interest (FI) to accumulate until you have one big, giant looming Folly that is hard to deal with. By that I mean how a country or a person makes a mistake, perhaps one of great colossal dimensions, though it may not seem so at the time, and then spends a long duration, perhaps a lifetime, or many lifetimes for a country, reaping the misery or the incalculable results of that mistake because the problem wasn’t fixed early on, when it was eminently more fixable. But, by not identifying the problem early in its development, FC is just that: the problem gets bigger and more unmanageable because compound interest on your Folly balloons by margins more than you ever thought possible. It’s like a retirement system in reverse, putting your future into debt rather than building up a nest egg. Instead of getting a check when you retire, you get a bill, maybe a very big one. That, unfortunately is where we seem to be today, this year, right now. Some say it took us less than thirty years to get here, but the reality is far far different. The place we stand today got started after WW II, when we sat at the very top of the heap and committed our most important and first Folly–that of dividing the World in two.

Have we seen this movie before? Today, we are witnessing a replay of the old movie that we saw twenty years ago, called the “Savings and Loan Scandal” which played in American theaters in the 1980s. It was the result of advancement in our free market economy, a result of deregulation of the Savings and Loan Banks. The difference between the new and the old release of the movie is that this time, it’s our entire financial system that we are bailing out and the bill will be proportionately larger. Indeed we are witnessing an almost daily enhancement to the bailout costs as Citi Bank has needed and received financial help and many other banks are known to be teetering. When you couple the bailouts for the financial institutions, with other funds that may be funneled into the American automobile manufacturers, with complete uncertainty as to whether any of these funds will be recovered or repaid, the number reaches into the $ trillions and a seemingly unlimited sea of national debt. And then folks, get ready for the really big one in 20-30 years or so because the bigger they get, the more likely they will have the Federal government as their ultimate guarantor. You saw the problem with Lehman Brothers–they were too small for Federal Bailout. AIG was larger however and seemed to have its sticky fingers in too many different financial pies. The message is clear, get bigger and then you can keep on truckin’. With an FDIC guarantee of $250,000 per deposit, as part of the new bailout agreement, our banks will grow and grow and if someone doesn’t monitor what they do with the largess of all this new money, then the really big one may be still ahead of us. Let’s hope we can fix it now and fix it for good. But, the fix we did earlier started at the wrong end of the problem and in all likelihood, its magnitude may prevent us from fixing the gigantic social problems that need our attention, the most serious of which is our badly broken health care system. But, there is a way out and it is spelled MILITARISM, the solution for which is to shrink the completely insensible budget of the military and eliminate our corrupt and incompetent intelligence system. It doesn’t protect us anyway! But let’s get back to the nature of Follies before we tackle the really big one.

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