We have been in a steady economic decline for decades. The Canadian political philosopher John Ralston Saul detailed this decline in his 1992 book "Voltaire's Bastards: The Dictatorship of Reason in the West." David Cay Johnston exposed the mirage and rot of American capitalism in "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You With the Bill)," and David C. Korten, in "When Corporations Rule the World" and "Agenda for a New Economy," laid out corporate malfeasance and abuse. But our universities and mass media, entranced by power and naively believing that global capitalism was an unstoppable force of nature, rarely asked the right questions or gave a prominent voice to those who did. Our elites hid their incompetence and loss of control behind an arrogant facade of specialized jargon and obscure economic theories.
The lies employed to camouflage the economic decline are legion. President Ronald Reagan included 1.5 million U.S. Army, Navy, Air Force and Marine service personnel with the civilian work force to magically reduce the nation's unemployment rate by 2 percent. President Bill Clinton decided that those who had given up looking for work, or those who wanted full-time jobs but could only find part-time employment, were no longer to be counted as unemployed. This trick disappeared some 5 million unemployed from the official unemployment rolls. If you work more than 21 hours a week-most low-wage workers at places like Wal-Mart average 28 hours a week-you are counted as employed, although your real wages put you below the poverty line. Our actual unemployment rate, when you include those who have stopped looking for work and those who can only find part-time jobs, is not 8.5 percent but 15 percent. A sixth of the country is now effectively unemployed. And we are shedding jobs at a faster rate than in the months after the 1929 crash.
The consumer price index, used by the government to measure inflation, is meaningless. To keep the official inflation figures low the government has been substituting basic products it once measured to check for inflation with ones that do not rise very much in price. This sleight of hand has kept the cost-of-living increases tied to the CPI artificially low. The New York Times' consumer reporter, W.P. Dunleavy, wrote that her groceries now cost $587 a month, up from $400 a year earlier. This is a 40 percent increase. California economist John Williams, who runs an organization called Shadow Statistics, contends that if Washington still used the CPI measurements applied back in the 1970s, inflation would be 10 percent.
The corporate state, and the political and intellectual class that served the corporate state, constructed a financial and political system based on illusions. Corporations engaged in pyramid lending that created fictitious assets. These fictitious assets became collateral for more bank lending. The elite skimmed off hundreds of millions in bonuses, commissions and salaries from this fictitious wealth. Politicians, who dutifully served corporate interests rather than those of citizens, were showered with campaign contributions and given lucrative jobs when they left office. Universities, knowing it was not good business to challenge corporatism, muted any voices of conscience while they went begging for corporate donations and grants. Deceptive loans and credit card debt fueled the binges of a consumer society and hid falling wages and the loss of manufacturing jobs.
The Obama administration, rather than chart a new course, is intent on re-inflating the bubble. The trillions of dollars of government funds being spent to sustain these corrupt corporations could have renovated our economy. We could have saved tens of millions of Americans from poverty. The government could have, as consumer activist Ralph Nader has pointed out, started 10 new banks with $35 billion each and a 10-to-1 leverage to open credit markets. Vast, unimaginable sums are being placed into these dirty corporate hands without oversight. And they will use this money as they always have-to enrich themselves at our expense.
"You are going to see the biggest waste, fraud and abuse in American history," Nader warned when I asked about the bailouts. "Not only is it wrongly directed, not only does it deal with the perpetrators instead of the people who were victimized, but they don't have a delivery system of any honesty and efficiency. The Justice Department is overwhelmed. It doesn't have a tenth of the prosecutors, the investigators, the auditors, the attorneys needed to deal with the previous corporate crime wave before the bailout started last September. It is especially unable to deal with the rapacious ravaging of this new money by these corporate recipients. You can see it already. The corporations haven't lent it. They have used some of it for acquisitions or to preserve their bonuses or their dividends. As long as they know they are not going to jail, and they don't see many newspaper reports about their colleagues going to jail, they don't care. It is total impunity. If they quit, they quit with a golden parachute. Even [General Motors CEO Rick] Wagoner is taking away $21 million."
There are a handful of former executives who have conceded that the bailouts are a waste. American International Group Inc.‘s (AIG) former chairman, Maurice R. Greenberg, told the House Oversight and Government Reform Committee on Thursday that the effort to prop up the firm with $170 billion has "failed." He said the company should be restructured. AIG, he said, would have been better off filing for Chapter 11 bankruptcy protection instead of seeking government help.
"These are signs of hyper decay," Nader said from his office in Washington. "You spend this kind of money and do not know if it will work."
"Bankrupt corporate capitalism is on its way to bankrupting the socialism that is trying to save it," Nader added. "That is the end stage. If they no longer have socialism to save them then we are into feudalism. We are into private police, gated communities and serfs with a 21st century nomenclature."
We will not be able to raise another 3 or 4 trillion dollars, especially with our commitments now totaling some $12 trillion, to fix the mess. It was only a couple of months ago that our expenditures totaled $9 trillion. And it was not long ago that such profligate government spending was unthinkable. There was an $800 billion limit placed on the Federal Reserve a year ago. The economic stimulus and the bailouts will not bring back our casino capitalism. And as the meltdown shows no signs of abating, and the bailouts show no sign of working, the recklessness and desperation of our capitalist overlords have increased. The cost, to the working and middle class, is becoming unsustainable. The Fed reported in March that households lost $5.1 trillion, or 9 percent, of their wealth in the last three months of 2008, the most ever in a single quarter in the 57-year history of record keeping by the central bank. For the full year, household wealth dropped $11.1 trillion, or about 18 percent. These figures did not record the decline of investments in the stock market, which has probably erased trillions more in the country's collective net worth.
The bullet to our head, inevitable if we do not radically alter course, will be sudden. We have been borrowing at the rate of more than $2 billion a day over the last 10 years, and at some point it has to stop. The moment China, the oil-rich states and other international investors stop buying treasury bonds the dollar will become junk. Inflation will rocket upward. We will become Weimar Germany. A furious and sustained backlash by a betrayed and angry populace, one unprepared intellectually and psychologically for collapse, will sweep aside the Democrats and most of the Republicans. A cabal of proto-fascist misfits, from Christian demagogues to simpletons like Sarah Palin to loudmouth talk show hosts, who we naively dismiss as buffoons, will find a following with promises of revenge and moral renewal. The elites, the ones with their Harvard Business School degrees and expensive vocabularies, will retreat into their sheltered enclaves of privilege and comfort. We will be left bereft and abandoned outside the gates.
Chris Hedges writes a regular column for Truthdig.com. Hedges graduated from Harvard Divinity School and was for nearly two decades a foreign correspondent for The New York Times. He is the author of "American Fascists: The Christian Right and the War on America."