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'Across
our country, millions of people of ordinary means can’t afford decent
housing,' says Bill Moyers during the lastest episode of Moyers & Company
which details the astronomical luxury of new residential buildings in
New York City as a way to explore the trend of economic inequality
taking place all over the country and across the globe. (Image:
Screebgrab with overlay)
Some
people say inequality doesn’t matter. They are wrong. All we have to do
to see its effects is to realize that all across America millions of
people of ordinary means can’t afford decent housing.
As wealthy investors and buyers drive up real estate values, the
middle class is being squeezed further and the working poor are being
shoved deeper into squalor — in places as disparate as Silicon Valley
and New York City.
On the latest episode of Moyers & Company this week,
host Bill Moyers points to the changing skyline of Manhattan as the
physical embodiment of how money and power impact the lives and
neighborhoods of every day people. Soaring towers being built at the
south end of Central Park, climbing higher than ever with apartments
selling from $30 million to $90 million, are beginning to block the
light on the park below. Many of the apartments are being sold at those
sky high prices to the international super rich, many of whom will only
live in Manhattan part-time – if at all — and often pay little or no
city income or property taxes, thanks to the political clout of real
estate developers.
Watch the full episode:
“The real estate industry here in New York City is like the oil
industry in Texas,” affordable housing advocate Jaron Benjamin says,
“They outspend everybody… They often have a much better relationship
with elected officials than everyday New Yorkers do.” Meanwhile, fewer
and fewer middle and working class people can afford to live in New York
City. As Benjamin puts it, “Forget about the Statue of Liberty. Forget
about Ellis Island. Forget about the idea of everybody being welcome
here in New York City. This will be a city only for rich people.”
At the end of the show Bill says: “Tell us if you’ve seen some of
these forces eroding the common ground where you live. Perhaps, like
some of the people in our story, you’re making your own voice heard.
Share these experiences at the BillMoyers.com or in the comments section here.
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.
You probably don’t know me, but like you I am one of those .01%ers, a proud and unapologetic capitalist. I have founded, co-founded and funded more than 30 companies across a range of industries—from itsy-bitsy ones like the night club I started in my 20s to giant ones like Amazon.com, for which I was the first nonfamily investor. Then I founded aQuantive, an Internet advertising company that was sold to Microsoft in 2007 for $6.4 billion. In cash. My friends and I own a bank. I tell you all this to demonstrate that in many ways I’m no different from you. Like you, I have a broad perspective on business and capitalism. And also like you, I have been rewarded obscenely for my success, with a life that the other 99.99 percent of Americans can’t even imagine. Multiple homes, my own plane, etc., etc. You know what I’m talking about. In 1992, I was selling pillows made by my family’s business, Pacific Coast Feather Co., to retail stores across the country, and the Internet was a clunky novelty to which one hooked up with a loud squawk at 300 baud. But I saw pretty quickly, even back then, that many of my customers, the big department store chains, were already doomed. I knew that as soon as the Internet became fast and trustworthy enough—and that time wasn’t far off—people were going to shop online like crazy. Goodbye, Caldor. And Filene’s. And Borders. And on and on.
Realizing that, seeing over the horizon a little faster than the next guy, was the strategic part of my success. The lucky part was that I had two friends, both immensely talented, who also saw a lot of potential in the web. One was a guy you’ve probably never heard of named Jeff Tauber, and the other was a fellow named Jeff Bezos. I was so excited by the potential of the web that I told both Jeffs that I wanted to invest in whatever they launched, big time. It just happened that the second Jeff—Bezos—called me back first to take up my investment offer. So I helped underwrite his tiny start-up bookseller. The other Jeff started a web department store called Cybershop, but at a time when trust in Internet sales was still low, it was too early for his high-end online idea; people just weren’t yet ready to buy expensive goods without personally checking them out (unlike a basic commodity like books, which don’t vary in quality—Bezos’ great insight). Cybershop didn’t make it, just another dot-com bust. Amazon did somewhat better. Now I own a very large yacht.
But let’s speak frankly to each other. I’m not the smartest guy you’ve ever met, or the hardest-working. I was a mediocre student. I’m not technical at all—I can’t write a word of code. What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?
I see pitchforks.
At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country—the 99.99 percent—is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.
But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day. Our country is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.
And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.
If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.
Many of us think we’re special because “this is America.” We think we’re immune to the same forces that started the Arab Spring—or the French and Russian revolutions, for that matter. I know you fellow .01%ers tend to dismiss this kind of argument; I’ve had many of you tell me to my face I’m completely bonkers. And yes, I know there are many of you who are convinced that because you saw a poor kid with an iPhone that one time, inequality is a fiction.
Here’s what I say to you: You’re living in a dream world. What everyone wants to believe is that when things reach a tipping point and go from being merely crappy for the masses to dangerous and socially destabilizing, that we’re somehow going to know about that shift ahead of time. Any student of history knows that’s not the way it happens. Revolutions, like bankruptcies, come gradually, and then suddenly. One day, somebody sets himself on fire, then thousands of people are in the streets, and before you know it, the country is burning. And then there’s no time for us to get to the airport and jump on our Gulfstream Vs and fly to New Zealand. That’s the way it always happens. If inequality keeps rising as it has been, eventually it will happen. We will not be able to predict when, and it will be terrible—for everybody. But especially for us.
***
The most ironic thing about rising inequality is how completely unnecessary and self-defeating it is. If we do something about it, if we adjust our policies in the way that, say, Franklin D. Roosevelt did during the Great Depression—so that we help the 99 percent and preempt the revolutionaries and crazies, the ones with the pitchforks—that will be the best thing possible for us rich folks, too. It’s not just that we’ll escape with our lives; it’s that we’ll most certainly get even richer.
The model for us rich guys here should be Henry Ford, who realized that all his autoworkers in Michigan weren’t only cheap labor to be exploited; they were consumers, too. Ford figured that if he raised their wages, to a then-exorbitant $5 a day, they’d be able to afford his Model Ts.
What a great idea. My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. And yours too.
It’s when I realized this that I decided I had to leave my insulated world of the super-rich and get involved in politics. Not directly, by running for office or becoming one of the big-money billionaires who back candidates in an election. Instead, I wanted to try to change the conversation with ideas—by advancing what my co-author, Eric Liu, and I call “middle-out” economics. It’s the long-overdue rebuttal to the trickle-down economics worldview that has become economic orthodoxy across party lines—and has so screwed the American middle class and our economy generally. Middle-out economics rejects the old misconception that an economy is a perfectly efficient, mechanistic system and embraces the much more accurate idea of an economy as a complex ecosystem made up of real people who are dependent on one another.
Which is why the fundamental law of capitalism must be: If workers have more money, businesses have more customers. Which makes middle-class consumers, not rich businesspeople like us, the true job creators. Which means a thriving middle class is the source of American prosperity, not a consequence of it. The middle class creates us rich people, not the other way around.
On June 19, 2013, Bloomberg published an article I wrote called “The Capitalist’s Case for a $15 Minimum Wage.” Forbeslabeled it “Nick Hanauer’s near insane” proposal. And yet, just weeks after it was published, my friend David Rolf, a Service Employees International Union organizer, roused fast-food workers to go on strike around the country for a $15 living wage. Nearly a year later, the city of Seattle passed a $15 minimum wage. And just 350 days after my article was published, Seattle Mayor Ed Murray signed that ordinance into law. How could this happen, you ask?
It happened because we reminded the masses that they are the source of growth and prosperity, not us rich guys. We reminded them that when workers have more money, businesses have more customers—and need more employees. We reminded them that if businesses paid workers a living wage rather than poverty wages, taxpayers wouldn’t have to make up the difference. And when we got done, 74 percent of likely Seattle voters in a recent poll agreed that a $15 minimum wage was a swell idea.
The standard response in the minimum-wage debate, made by Republicans and their business backers and plenty of Democrats as well, is that raising the minimum wage costs jobs. Businesses will have to lay off workers. This argument reflects the orthodox economics that most people had in college. If you took Econ 101, then you literally were taught that if wages go up, employment must go down. The law of supply and demand and all that. That’s why you’ve got John Boehner and other Republicans in Congress insisting that if you price employment higher, you get less of it. Really?
The thing about us businesspeople is that we love our customers rich and our employees poor.
Because here’s an odd thing. During the past three decades, compensation for CEOs grew 127 times faster than it did for workers. Since 1950, the CEO-to-worker pay ratio has increased 1,000 percent, and that is not a typo. CEOs used to earn 30 times the median wage; now they rake in 500 times. Yet no company I know of has eliminated its senior managers, or outsourced them to China or automated their jobs. Instead, we now have more CEOs and senior executives than ever before. So, too, for financial services workers and technology workers. These folks earn multiples of the median wage, yet we somehow have more and more of them.
The thing about us businesspeople is that we love our customers rich and our employees poor. So for as long as there has been capitalism, capitalists have said the same thing about any effort to raise wages. We’ve had 75 years of complaints from big business—when the minimum wage was instituted, when women had to be paid equitable amounts, when child labor laws were created. Every time the capitalists said exactly the same thing in the same way: We’re all going to go bankrupt. I’ll have to close. I’ll have to lay everyone off. It hasn’t happened. In fact, the data show that when workers are better treated, business gets better. The naysayers are just wrong.
Most of you probably think that the $15 minimum wage in Seattle is an insane departure from rational policy that puts our economy at great risk. But in Seattle, our current minimum wage of $9.32 is already nearly 30 percent higher than the federal minimum wage. And has it ruined our economy yet? Well, trickle-downers, look at the data here: The two cities in the nation with the highest rate of job growth by small businesses are San Francisco and Seattle. Guess which cities have the highest minimum wage? San Francisco and Seattle. The fastest-growing big city in America? Seattle. Fifteen dollars isn’t a risky untried policy for us. It’s doubling down on the strategy that’s already allowing our city to kick your city’s ass.
It makes perfect sense if you think about it: If a worker earns $7.25 an hour, which is now the national minimum wage, what proportion of that person’s income do you think ends up in the cash registers of local small businesses? Hardly any. That person is paying rent, ideally going out to get subsistence groceries at Safeway, and, if really lucky, has a bus pass. But she’s not going out to eat at restaurants. Not browsing for new clothes. Not buying flowers on Mother’s Day.
Is this issue more complicated than I’m making out? Of course. Are there many factors at play determining the dynamics of employment? Yup. But please, please stop insisting that if we pay low-wage workers more, unemployment will skyrocket and it will destroy the economy. It’s utter nonsense. The most insidious thing about trickle-down economics isn’t believing that if the rich get richer, it’s good for the economy. It’s believing that if the poor get richer, it’s bad for the economy.
I know that virtually all of you feel that compelling our businesses to pay workers more is somehow unfair, or is too much government interference. Most of you think that we should just let good examples like Costco or Gap lead the way. Or let the market set the price. But here’s the thing. When those who set bad examples, like the owners of Wal-Mart or McDonald’s, pay their workers close to the minimum wage, what they’re really saying is that they’d pay even less if it weren’t illegal. (Thankfully both companies have recently said they would not oppose a hike in the minimum wage.) In any large group, some people absolutely will not do the right thing. That’s why our economy can only be safe and effective if it is governed by the same kinds of rules as, say, the transportation system, with its speed limits and stop signs.
Wal-Mart is our nation’s largest employer with some 1.4 million employees in the United States and more than $25 billion in pre-tax profit. So why are Wal-Mart employees the largest group of Medicaid recipients in many states? Wal-Mart could, say, pay each of its 1 million lowest-paid workers an extra $10,000 per year, raise them all out of poverty and enable them to, of all things, afford to shop at Wal-Mart. Not only would this also save us all the expense of the food stamps, Medicaid and rent assistance that they currently require, but Wal-Mart would still earn more than $15 billion pre-tax per year. Wal-Mart won’t (and shouldn’t) volunteer to pay its workers more than their competitors. In order for us to have an economy that works for everyone, we should compel all retailers to pay living wages—not just ask politely.
We rich people have been falsely persuaded by our schooling and the affirmation of society, and have convinced ourselves, that we are the main job creators. It’s simply not true. There can never be enough super-rich Americans to power a great economy. I earn about 1,000 times the median American annually, but I don’t buy thousands of times more stuff. My family purchased three cars over the past few years, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. I bought two pairs of the fancy wool pants I am wearing as I write, what my partner Mike calls my “manager pants.” I guess I could have bought 1,000 pairs. But why would I? Instead, I sock my extra money away in savings, where it doesn’t do the country much good.
So forget all that rhetoric about how America is great because of people like you and me and Steve Jobs. You know the truth even if you won’t admit it: If any of us had been born in Somalia or the Congo, all we’d be is some guy standing barefoot next to a dirt road selling fruit. It’s not that Somalia and Congo don’t have good entrepreneurs. It’s just that the best ones are selling their wares off crates by the side of the road because that’s all their customers can afford.
So why not talk about a different kind of New Deal for the American people, one that could appeal to the right as well as left—to libertarians as well as liberals? First, I’d ask my Republican friends to get real about reducing the size of government. Yes, yes and yes, you guys are all correct: The federal government is too big in some ways. But no way can you cut government substantially, not the way things are now. Ronald Reagan and George W. Bush each had eight years to do it, and they failed miserably.
Republicans and Democrats in Congress can’t shrink government with wishful thinking. The only way to slash government for real is to go back to basic economic principles: You have to reduce the demand for government. If people are getting $15 an hour or more, they don’t need food stamps. They don’t need rent assistance. They don’t need you and me to pay for their medical care. If the consumer middle class is back, buying and shopping, then it stands to reason you won’t need as large a welfare state. And at the same time, revenues from payroll and sales taxes would rise, reducing the deficit.
This is, in other words, an economic approach that can unite left and right. Perhaps that’s one reason the right is beginning, inexorably, to wake up to this reality as well. Even Republicans as diverse as Mitt Romney and Rick Santorum recently came out in favor of raising the minimum wage, in defiance of the Republicans in Congress.
***
One thing we can agree on—I’m sure of this—is that the change isn’t going to start in Washington. Thinking is stale, arguments even more so. On both sides.
But the way I see it, that’s all right. Most major social movements have seen their earliest victories at the state and municipal levels. The fight over the eight-hour workday, which ended in Washington, D.C., in 1938, began in places like Illinois and Massachusetts in the late 1800s. The movement for social security began in California in the 1930s. Even the Affordable Health Care Act—Obamacare—would have been hard to imagine without Mitt Romney’s model in Massachusetts to lead the way.
Sadly, no Republicans and few Democrats get this. President Obama doesn’t seem to either, though his heart is in the right place. In his State of the Union speech this year, he mentioned the need for a higher minimum wage but failed to make the case that less inequality and a renewed middle class would promote faster economic growth. Instead, the arguments we hear from most Democrats are the same old social-justice claims. The only reason to help workers is because we feel sorry for them. These fairness arguments feed right into every stereotype of Obama and the Democrats as bleeding hearts. Republicans say growth. Democrats say fairness—and lose every time.
But just because the two parties in Washington haven’t figured it out yet doesn’t mean we rich folks can just keep going. The conversation is already changing, even if the billionaires aren’t onto it. I know what you think: You think that Occupy Wall Street and all the other capitalism-is-the-problem protesters disappeared without a trace. But that’s not true. Of course, it’s hard to get people to sleep in a park in the cause of social justice. But the protests we had in the wake of the 2008 financial crisis really did help to change the debate in this country from death panels and debt ceilings to inequality.
It’s just that so many of you plutocrats didn’t get the message.
Dear 1%ers, many of our fellow citizens are starting to believe that capitalism itself is the problem. I disagree, and I’m sure you do too. Capitalism, when well managed, is the greatest social technology ever invented to create prosperity in human societies. But capitalism left unchecked tends toward concentration and collapse. It can be managed either to benefit the few in the near term or the many in the long term. The work of democracies is to bend it to the latter. That is why investments in the middle class work. And tax breaks for rich people like us don’t. Balancing the power of workers and billionaires by raising the minimum wage isn’t bad for capitalism. It’s an indispensable tool smart capitalists use to make capitalism stable and sustainable. And no one has a bigger stake in that than zillionaires like us.
The oldest and most important conflict in human societies is the battle over the concentration of wealth and power. The folks like us at the top have always told those at the bottom that our respective positions are righteous and good for all. Historically, we called that divine right. Today we have trickle-down economics.
What nonsense this is. Am I really such a superior person? Do I belong at the center of the moral as well as economic universe? Do you?
My family, the Hanauers, started in Germany selling feathers and pillows. They got chased out of Germany by Hitler and ended up in Seattle owning another pillow company. Three generations later, I benefited from that. Then I got as lucky as a person could possibly get in the Internet age by having a buddy in Seattle named Bezos. I look at the average Joe on the street, and I say, “There but for the grace of Jeff go I.” Even the best of us, in the worst of circumstances, are barefoot, standing by a dirt road, selling fruit. We should never forget that, or forget that the United States of America and its middle class made us, rather than the other way around.
Or we could sit back, do nothing, enjoy our yachts. And wait for the pitchforks.
A report by Jeremy Scahill in The Nation (“Blackwater’s
Black Ops,” 9/15/2010) revealed that the largest mercenary army in the
world, Blackwater (now called Xe Services) clandestine intelligence
services was sold to the multinational Monsanto. Blackwater was renamed
in 2009 after becoming famous in the world with numerous reports of
abuses in Iraq, including massacres of civilians. It remains the largest
private contractor of the U.S. Department of State “security services,”
that practices state terrorism by giving the government the opportunity
to deny it.
Many military and former CIA officers work for Blackwater or related
companies created to divert attention from their bad reputation and make
more profit selling their nefarious services-ranging from information
and intelligence to infiltration, political lobbying and paramilitary
training – for other governments, banks and multinational corporations.
According to Scahill, business with multinationals, like Monsanto,
Chevron, and financial giants such as Barclays and Deutsche Bank, are
channeled through two companies owned by Erik Prince, owner of
Blackwater: Total Intelligence Solutions and Terrorism Research Center.
These officers and directors share Blackwater.
One of them, Cofer Black, known for his brutality as one of the
directors of the CIA, was the one who made contact with Monsanto in 2008
as director of Total Intelligence, entering into the contract with the
company to spy on and infiltrate organizations of animal rights
activists, anti-GM and other dirty activities of the biotech giant.
Contacted by Scahill, the Monsanto executive Kevin Wilson declined to comment, but later confirmed to The Nation
that they had hired Total Intelligence in 2008 and 2009, according to
Monsanto only to keep track of “public disclosure” of its opponents. He
also said that Total Intelligence was a “totally separate entity from Blackwater.”
However, Scahill has copies of emails from Cofer Black after the
meeting with Wilson for Monsanto, where he explains to other former CIA
agents, using their Blackwater e-mails, that the discussion with Wilson
was that Total Intelligence had become “Monsanto’s intelligence arm,” spying on activists and other actions, including “our people to legally integrate these groups.” Total Intelligence Monsanto paid $127,000 in 2008 and $105,000 in 2009.
No wonder that a company engaged in the “science of death” as
Monsanto, which has been dedicated from the outset to produce toxic
poisons spilling from Agent Orange to PCBs (polychlorinated biphenyls),
pesticides, hormones and genetically modified seeds, is associated with
another company of thugs.
Almost simultaneously with the publication of this article in The Nation, the Via Campesina
reported the purchase of 500,000 shares of Monsanto, for more than $23
million by the Bill and Melinda Gates Foundation, which with this action
completed the outing of the mask of “philanthropy.” Another association
that is not surprising.
It is a marriage between the two most brutal monopolies in the
history of industrialism: Bill Gates controls more than 90 percent of
the market share of proprietary computing and Monsanto about 90 percent
of the global transgenic seed market and most global commercial seed.
There does not exist in any other industrial sector monopolies so vast,
whose very existence is a negation of the vaunted principle of “market
competition” of capitalism. Both Gates and Monsanto are very aggressive
in defending their ill-gotten monopolies.
Although Bill Gates might try to say that the Foundation is not
linked to his business, all it proves is the opposite: most of their
donations end up favoring the commercial investments of the tycoon, not
really “donating” anything, but instead of paying taxes to the state
coffers, he invests his profits in where it is favorable to him
economically, including propaganda from their supposed good intentions.
On the contrary, their “donations” finance projects as destructive as
geoengineering or replacement of natural community medicines for
high-tech patented medicines in the poorest areas of the world.
What a coincidence, former Secretary of Health Julio Frenk and Ernesto Zedillo are advisers of the Foundation.
Like Monsanto, Gates is also engaged in trying to destroy rural
farming worldwide, mainly through the “Alliance for a Green Revolution
in Africa” (AGRA). It works as a Trojan horse to deprive poor African
farmers of their traditional seeds, replacing them with the seeds of
their companies first, finally by genetically modified (GM). To this
end, the Foundation hired Robert Horsch in 2006, the director of
Monsanto. Now Gates, airing major profits, went straight to the source.
Blackwater, Monsanto and Gates are three sides of the same figure:
the war machine on the planet and most people who inhabit it, are
peasants, indigenous communities, people who want to share information
and knowledge or any other who does not want to be in the aegis of
profit and the destructiveness of capitalism.
Over the past several years, entities
closely linked to the private security firm Blackwater have provided
intelligence, training and security services to US and foreign
governments as well as several multinational corporations, including
Monsanto, Chevron, the Walt Disney Company, Royal Caribbean Cruise Lines
and banking giants Deutsche Bank and Barclays, according to documents
obtained by The Nation. Blackwater's work for corporations and
government agencies was contracted using two companies owned by
Blackwater's owner and founder, Erik Prince: Total Intelligence
Solutions and the Terrorism Research Center (TRC). Prince is listed as
the chairman of both companies in internal company documents, which show
how the web of companies functions as a highly coordinated operation.
Officials from Total Intelligence, TRC and Blackwater (which now calls
itself Xe Services) did not respond to numerous requests for comment for
this article.
One of the most incendiary details in the documents is that
Blackwater, through Total Intelligence, sought to become the "intel arm"
of Monsanto, offering to provide operatives to infiltrate activist
groups organizing against the multinational biotech firm.
Governmental recipients of intelligence services and counterterrorism
training from Prince's companies include the Kingdom of Jordan, the
Canadian military and the Netherlands police, as well as several US
military bases, including Fort Bragg, home of the elite Joint Special
Operations Command (JSOC), and Fort Huachuca, where military
interrogators are trained, according to the documents. In addition,
Blackwater worked through the companies for the Defense Intelligence
Agency, the Defense Threat Reduction Agency and the US European Command.
On September 3 the New York Times reported that Blackwater
had "created a web of more than 30 shell companies or subsidiaries in
part to obtain millions of dollars in American government contracts
after the security company came under intense criticism for reckless
conduct in Iraq." The documents obtained by The Nation reveal
previously unreported details of several such companies and open a rare
window into the sensitive intelligence and security operations
Blackwater performs for a range of powerful corporations and government
agencies. The new evidence also sheds light on the key roles of several
former top CIA officials who went on to work for Blackwater.
The coordinator of Blackwater's covert CIA business, former CIA
paramilitary officer Enrique "Ric" Prado, set up a global network of
foreign operatives, offering their "deniability" as a "big plus" for
potential Blackwater customers, according to company documents. The CIA
has long used proxy forces to carry out extralegal actions or to shield
US government involvement in unsavory operations from scrutiny. In some
cases, these "deniable" foreign forces don't even know who they are
working for. Prado and Prince built up a network of such foreigners
while Blackwater was at the center of the CIA's assassination program,
beginning in 2004. They trained special missions units at one of
Prince's properties in Virginia with the intent of hunting terrorism
suspects globally, often working with foreign operatives. A former
senior CIA official said the benefit of using Blackwater's foreign
operatives in CIA operations was that "you wouldn't want to have
American fingerprints on it."
While the network was originally established for use in CIA
operations, documents show that Prado viewed it as potentially valuable
to other government agencies. In an e-mail in October 2007 with the
subject line "Possible Opportunity in DEA—Read and Delete,"
Prado wrote to a Total Intelligence executive with a pitch for the Drug
Enforcement Administration. That executive was an eighteen-year DEA
veteran with extensive government connections who had recently joined
the firm. Prado explained that Blackwater had developed "a rapidly
growing, worldwide network of folks that can do everything from
surveillance to ground truth to disruption operations." He added, "These
are all foreign nationals (except for a few cases where US persons are
the conduit but no longer 'play' on the street), so deniability is built
in and should be a big plus."
In November 2007 officials from Prince's companies developed a
pricing structure for security and intelligence services for private
companies and wealthy individuals. One official wrote that Prado had the
capacity to "develop infrastructures" and "conduct ground-truth and
security activities." According to the pricing chart, potential
customers could hire Prado and other Blackwater officials to operate in
the United States and globally: in Latin America, North Africa,
francophone countries, the Middle East, Europe, China, Russia, Japan,
and Central and Southeast Asia. A four-man team headed by Prado for
countersurveillance in the United States cost $33,600 weekly, while
"safehouses" could be established for $250,000, plus operational costs.
Identical services were offered globally. For $5,000 a day, clients
could hire Prado or former senior CIA officials Cofer Black and Robert
Richer for "representation" to national "decision-makers." Before
joining Blackwater, Black, a twenty-eight-year CIA veteran, ran the
agency's counterterrorism center, while Richer was the agency's deputy
director of operations. (Neither Black nor Richer currently works for
the company.)
As Blackwater became embroiled in controversy following the Nisour
Square massacre, Prado set up his own company, Constellation Consulting
Group (CCG), apparently taking some of Blackwater's covert CIA work with
him, though he maintained close ties to his former employer. In an
e-mail to a Total Intelligence executive in February 2008, Prado wrote
that he "recently had major success in developing capabilities in Mali
[Africa] that are of extreme interest to our major sponsor and which
will soon launch a substantial effort via my small shop." He requested
Total Intelligence's help in analyzing the "North Mali/Niger terrorist
problem."
In October 2009 Blackwater executives faced a crisis when they could
not account for their government-issued Secure Telephone Unit, which is
used by the CIA, the National Security Agency and other military and
intelligence services for secure communications. A flurry of e-mails
were sent around as personnel from various Blackwater entities tried to
locate the device. One former Blackwater official wrote that because he
had left the company it was "not really my problem," while another
declared, "I have no 'dog in this fight.'" Eventually, Prado stepped in,
e-mailing the Blackwater officials to "pass my number" to the "OGA
POC," meaning the Other Government Agency (parlance for CIA) Point of
Contact.
What relationship Prado's CCG has with the CIA is not known. An early
version of his company's website boasted that "CCG professionals have
already conducted operations on five continents, and have proven their
ability to meet the most demanding client needs" and that the company
has the "ability to manage highly-classified contracts." CCG, the site
said, "is uniquely positioned to deliver services that no other company
can, and can deliver results in the most remote areas with little or no
outside support." Among the services advertised were "Intelligence and
Counter-Intelligence (human and electronic), Unconventional Military
Operations, Counterdrug Operations, Aviation Services, Competitive
Intelligence, Denied Area Access...and Paramilitary Training."
Through Total Intelligence and the Terrorism Research Center,
Blackwater also did business with a range of multinational corporations.
According to internal Total Intelligence communications, biotech giant
Monsanto—the world's largest supplier of genetically modified
seeds—hired the firm in 2008–09. The relationship between the two
companies appears to have been solidified in January 2008 when Total
Intelligence chair Cofer Black traveled to Zurich to meet with Kevin
Wilson, Monsanto's security manager for global issues.
After the meeting in Zurich, Black sent an e-mail to other Blackwater
executives, including to Prince and Prado at their Blackwater e-mail
addresses. Black wrote that Wilson "understands that we can span
collection from internet, to reach out, to boots on the ground on legit
basis protecting the Monsanto [brand] name.... Ahead of the curve info
and insight/heads up is what he is looking for." Black added that Total
Intelligence "would develop into acting as intel arm of Monsanto." Black
also noted that Monsanto was concerned about animal rights activists
and that they discussed how Blackwater "could have our person(s)
actually join [activist] group(s) legally." Black wrote that initial
payments to Total Intelligence would be paid out of Monsanto's "generous
protection budget" but would eventually become a line item in the
company's annual budget. He estimated the potential payments to Total
Intelligence at between $100,000 and $500,000. According to documents,
Monsanto paid Total Intelligence $127,000 in 2008 and $105,000 in 2009.
Reached by telephone and asked about the meeting with Black in
Zurich, Monsanto's Wilson initially said, "I'm not going to discuss it
with you." In a subsequent e-mail to The Nation, Wilson
confirmed he met Black in Zurich and that Monsanto hired Total
Intelligence in 2008 and worked with the company until early 2010. He
denied that he and Black discussed infiltrating animal rights groups,
stating "there was no such discussion." He claimed that Total
Intelligence only provided Monsanto "with reports about the activities
of groups or individuals that could pose a risk to company personnel or
operations around the world which were developed by monitoring local
media reports and other publicly available information. The subject
matter ranged from information regarding terrorist incidents in Asia or
kidnappings in Central America to scanning the content of activist blogs
and websites." Wilson asserted that Black told him Total Intelligence
was "a completely separate entity from Blackwater."
Monsanto was hardly the only powerful corporation to enlist the
services of Blackwater's constellation of companies. The Walt Disney
Company hired Total Intelligence and TRC to do a "threat assessment" for
potential film shoot locations in Morocco, with former CIA officials
Black and Richer reaching out to their former Moroccan intel
counterparts for information. The job provided a "good chance to impress
Disney," one company executive wrote. How impressed Disney was is not
clear; in 2009 the company paid Total Intelligence just $24,000.
Total Intelligence and TRC also provided intelligence assessments on
China to Deutsche Bank. "The Chinese technical counterintelligence
threat is one of the highest in the world," a TRC analyst wrote, adding,
"Many four and five star hotel rooms and restaurants are live-monitored
with both audio and video" by Chinese intelligence. He also said that
computers, PDAs and other electronic devices left unattended in hotel
rooms could be cloned. Cellphones using the Chinese networks, the
analyst wrote, could have their microphones remotely activated, meaning
they could operate as permanent listening devices. He concluded that
Deutsche Bank reps should "bring no electronic equipment into China."
Warning of the use of female Chinese agents, the analyst wrote, "If you
don't have women coming onto you all the time at home, then you should
be suspicious if they start coming onto you when you arrive in China."
For these and other services, the bank paid Total Intelligence $70,000
in 2009.
TRC also did background checks on Libyan and Saudi businessmen for
British banking giant Barclays. In February 2008 a TRC executive
e-mailed Prado and Richer revealing that Barclays asked TRC and Total
Intelligence for background research on the top executives from the
Saudi Binladin Group (SBG) and their potential "associations/connections
with the Royal family and connections with Osama bin Ladin." In his
report, Richer wrote that SBG's chair, Bakr Mohammed bin Laden, "is well
and favorably known to both arab and western intelligence service[s]"
for cooperating in the hunt for Osama bin Laden. Another SBG executive,
Sheikh Saleh bin Laden, is described by Richer as "a very savvy
businessman" who is "committed to operating with full transparency to
Saudi's security services" and is considered "the most vehement within
the extended BL family in terms of criticizing UBL's actions and
beliefs."
In August Blackwater and the State Department reached a $42 million
settlement for hundreds of violations of US export control regulations.
Among the violations cited was the unauthorized export of technical data
to the Canadian military. Meanwhile, Blackwater's dealings with
Jordanian officials are the subject of a federal criminal prosecution of
five former top Blackwater executives. The Jordanian government paid
Total Intelligence more than $1.6 million in 2009.
Some of the training Blackwater provided to Canadian military forces
was in Blackwater/TRC's "Mirror Image" course, where trainees live as a
mock Al Qaeda cell in an effort to understand the mindset and culture of
insurgents. Company literature describes it as "a classroom and field
training program designed to simulate terrorist recruitment, training,
techniques and operational tactics." Documents show that in March 2009
Blackwater/TRC spent $6,500 purchasing local tribal clothing in
Afghanistan as well as assorted "propaganda materials—posters, Pakistan
Urdu maps, etc." for Mirror Image, and another $9,500 on similar
materials this past January in Pakistan and Afghanistan.
According to internal documents, in 2009 alone the Canadian military
paid Blackwater more than $1.6 million through TRC. A Canadian military
official praised the program in a letter to the center, saying it
provided "unique and valid cultural awareness and mission specific
deployment training for our soldiers in Afghanistan," adding that it was
"a very effective and operationally current training program that is
beneficial to our mission."
This past summer Erik Prince put Blackwater up for sale and moved to
Abu Dhabi, United Arab Emirates. But he doesn't seem to be leaving the
shadowy world of security and intelligence. He says he moved to Abu
Dhabi because of its "great proximity to potential opportunities across
the entire Middle East, and great logistics," adding that it has "a
friendly business climate, low to no taxes, free trade and no out of
control trial lawyers or labor unions. It's pro-business and
opportunity." It also has no extradition treaty with the United States.
2. On Monday, a Senate subcommittee releases a report on the tax avoidance used by Caterpillar,
the giant Peoria, Ill.-based heavy equipment manufacturer, which cut
its tax bill by $2.4 billion over the past 13 years by allotting $8
billion in revenues from its parts division to a subsidiary in
Switzerland, where only 65 of the division’s 8,500 employees work. In an
email exchange about whether this was appropriate, a managing director
at PricewaterhouseCoopers, which was paid $55 million to concoct this
arrangement, said:
“What the heck, we’ll all be retired when this audit comes up on
audit…Baby boomers have their fun, and leave it to the kids to pay for
it.”
3. On Tuesday, House Budget Chairman Paul Ryan releases the
latest version of the famous Ryan budget. To make up for tax reductions
for the wealthy, the budget calls for very deep cuts
in spending on Medicaid, food stamps and discretionary spending, which
includes research and development, transportation and infrastructure.
Amtrak would lose its $1 billion in already-meager annual subsidies and
have to rely entirely on fare-box revenue.
4. On Wednesday, the Supreme Court releases a 5-4 ruling in McCutcheon v. Federal Election Commission,
eliminating caps on how much total money ultra-rich donors can give to
candidates, parties and PACs in a given election cycle. Where donors had
previously been limited to giving $123,200 to candidates and parties in
a given cycle, they can now give as much as $3.6 million.
Chief Justice John Roberts writes: “Spending large sums of money in
connection with elections, but not in connection with an effort to
control the exercise of an officeholder’s official duties, does not give
rise to quid pro quo corruption.” Celebrating the ruling, House Speaker
John Boehner says, “I’m all for freedom, congratulations.”
5. On Thursday morning, the Wall Street Journalruns an op-ed by one of the best-known mega-donors, Charles Koch, who with his brother backs Americans for Prosperity, which spent $122 million leading up to the 2012 campaign and has already spent more than $30 million in the past six months
attacking Obamacare and Democratic senators up for reelection this
fall. In the op-ed, Koch explains his heavy spending by warning of the
“collectivists” threatening to take over the country. “The fundamental
concepts of dignity, respect, equality before the law and personal
freedom are under attack by the nation’s own government,” he writes.
6. Later on Thursday morning, between 9 and 10 a.m., part of the overhead electric line that powers the Acela train comes down onto the tracks
near Bowie, Maryland, between Washington, D.C. and Baltimore. Virtually
all train traffic between Baltimore and Washington shuts down for hours
as undermanned crews struggle to repair the line, thereby severely
hampering traffic in the Washington to Boston Northeast corridor that
carries 750,000 passengers on 2,000 trains per day and also spelling panic for the Thursday afternoon rail commuters heading north out of Washington.
A
southbound commuter train from Baltimore to Washington on Thursday
morning that was caught just behind the downed lines and a stalled Acela
takes four hours and 20 minutes to make the 40 mile journey, one that
normally takes an hour. German tourists on the train sit bewildered
about what could possibly be happening. Passengers have the consolation
of listening to several proudly Republican lawyer/lobbyists on board
loudly voicing their opinions on the delay. One declares it is the fault
of President Obama, who is “in way over his head.” Another declares
that the lack of credible information from the conductor is “just like
Benghazi.”
One passenger is left thinking that this country could
use some more spending on infrastructure, transportation and the general
commonweal. Yes, that risks being “collectivist” and would be opposed
by a casino magnate with vast holdings in Macau and would leave less for
top-bracket tax cuts in the Ryan budget. But heck, it would also mean
some more business for Caterpillar, which might even be prevailed upon
to keep some of its income stateside, thus helping pay for said
investment in the future of the greatest nation on earth.
"REPORT: Everything You Need To Know About The Koch Brothers"
Our guest blogger is Tony Carrk, Policy Director for Progress Central.
Today, the Center for American Progress Action Fund released a report
shedding light on the vast Koch network and how it operates. The report
shows that Charles and David Koch have used the considerable wealth
(they are worth a combined $44 billion) to push policies that put their
profits ahead of the interests of most Americans.
The report finds:
Grassroots organizing for big business. The Koch
brothers use their considerable wealth to bankroll the right wing,
including the Tea Party. This serves the purpose of furthering not only
their right-wing ideology but also their bottom line. Koch
Industries has a lot to gain from gutting government oversight and
electing candidates who oppose government regulation, especially in
the oil-and-gas industry.
$85 million to 85 think tanks. Identification of at
least $85 million the Koch brothers have given to at least 85
right-wing think tanks and advocacy groups over the past decade and
a half.
State organizing. The Koch brothers are active at
the state level, spending $5.2 million on candidates and ballot
measures in 34 states since 2003. They donated directly to 13 governors
that won election last year.
Over 70% of the GOP Freshman. The Kochs donated directly to 62 of the 87 members of the House GOP freshman class.
2012. The Kochs are not going away. In fact, they
have already pledged to raise $88 million for the 2012 election and
have started scheduling events for potential Republican presidential
candidates.
This report is intended to be a guide to help progressives map out
the vast network of influence the Koch brothers have built over the last
decades. By exposing the Koch brothers’ agenda and shedding light on
how they operate, progressives can force a public debate that will show
that the Koch brothers are outside the mainstream of most Americans and
that they are putting their self-interest and right wing agenda ahead of
middle-class families.
I’ve
been writing about what we politely call “inequality” since the
mid-1990s, but one day about ten years ago, when I was traveling the
country lecturing about the toxic curlicues of right-wing culture, it
dawned on me that maybe I had been getting the entire story wrong. All
the economic developments that I spent my days bemoaning—the obscene
enrichment of the CEO class, the assault on the regulatory state, the
ruination of average people—were very possibly not what I thought they
were. When I talked about these things, I assumed they were an outrage,
an affront to the affluent nation I still believed we were; once the
scales fell from our eyes and Americans figured out what was happening, I
argued, we would yell “stop,” bring this age of folly to a close, and
get back to middle-class prosperity as usual.
What hit me that day
was the possibility that my happy, postwar middle-class world was the
exception, and that the plutocracy we were gradually becoming was the
norm. Maybe what was happening to us was a colossal reversion to a
pre-Rooseveltian mean, and all the trappings of ordinary life that had
seemed so solid and so permanent when I was young—the vast suburbs and
the anchorman’s reassuring baritone and the nice appliances that filled
the houses of the working class—were aberrations made possible by an
unusual balance of political forces maintained only by the enormous
political efforts of its beneficiaries.
Maybe the gravity of
history pulled in the exact opposite direction of what I had always
believed. If so, the question was not, “When will we get back to the
right order of things,” but rather, “Would we ever stop falling?”
Today,
of course, the situation has grown vastly worse. The subject of
inequality is discussed everywhere; there are think tanks and academic
conferences dedicated to it; it has become socially permissible for
polite people to wonder about the obscene gorging of those at the top.
Sooner or later the question that everyone asks, upon discovering just
how much of what Americans produce goes to the imbeciles in the
penthouses and executive suites, is this: How much further can this thing go?
The
One Percent have already broken every record for wealth-hogging set by
their ancestors, going back to the dawn of record-keeping in 1913. But
what if it all just keeps going? How much fatter can the fat cats get
before they hit some kind of natural limit? Before the invisible thumb
of history presses down on the other side of the scale and restores
balance?
That
we are very close to such a limit—that the contradictions inherent in
the system will automatically be its undoing—is an idea much in the air
of late. Not many still subscribe to Marx’s dialectical vision of
history, in which inevitable worker immiseration would be followed, also
inevitably, by a revolutionary explosion, but there are other
inevitabilities that seem equally persuasive today. We hear much, for
example, about how inequality contributed to the housing bubble and the financial crisis, how it has brought us an imbalanced economy that cannot survive.
It
reminds me of the once-influential theory of inequality advanced by the
economist Simon Kuznets, who thought that capitalist societies simply
became more egalitarian as they matured—a theory that is carefully
debunked by economist Thomas Piketty in his new book,
“Capital in the Twenty-First Century.” It also reminds me of the
theories of the economist Ravi Batra, who in 1987 predicted a “Great Depression of 1990” because (among other things) inequality would have by then had reached what he believed to be unsustainable levels.
It
is an attractive fantasy, this faith that some kind of built-in
restraint will stop all this from going too far. Unfortunately, what it
reminds me of the most are the similar mechanisms that Democrats like to
dream about on those occasions when the Republican Party has won
another election. As the triumphant wingers stand athwart the
unconscious bodies of their opponents, beating their chests and
bellowing for some new and awesomely destructive tax cut, a liberal’s
heart turns longingly to such chimera as pendulum theory, or
thirty-year-cycle theory, or the theory of the inevitable triumph of the
center. Some great force will fix those guys, we mumble. One of these days, they’ll get their comeuppance.
But
the cosmic cavalry never shows up. No deus ex machina will arrive to
rescue the middle-class society, either. The economic system is always in some sort of crisis or another; somehow it always manages to survive.
One
of the ways it manages to survive, in fact, is by working the public
into paroxysms of fear at those who proclaim the inevitable destruction
of the system. I refer here not only to the Republicans’ routine
deploring of “class war,” by which they mean any criticism of
plutocracy, but also to the once-influential right-wing radio host Glenn
Beck, who in 2009 and 2010 was just about the only one in America who
thought to take seriously the obscure French anarchist tract, “The
Coming Insurrection.” Night after night in those dark days, Beck would
use the book to terrify his vast audience of seniors and
goldbugs—anarchy was right around the corner!—and to this day you can
still find the tract on the reading lists of 9/12 clubs across the
country.
Let us not forget that it was thanks to the energetic
activity of those 9/12 clubs and the closely aligned Tea Party that the
obvious and conventional — and maybe even inevitable — response to the 2008 catastrophe was not the response the public chose. According to an important recent paper by
the sociologists Clem Brooks and Jeff Manza, the orthodox poli-sci
theory of economic downturn holds that voters “turn away from
unregulated markets and demand more government in times of economic
downturn and rising unemployment.” But in the downturn of the last few
years, people reacted differently: “Rather than the recession
stimulating new public demands for governent, Americans gravitated
toward lower support for government responsibility for social and
economic problems.” And they swept in the Republican Congress of 2010, a
result that, according to Brooks and Manza, has much to do with the
hyperbolic conservatism of partisan organizations like Fox News.
A
second irony, worth noting in passing, is that the right-wing offensive
against public pensions, which began as soon as the Republican wave
landed, has been carried on under the banner of historical determinism,
with everyone agreeing that the rich are going to get their way with the
unions and that no alternative exists. (“Detroit pension cuts were
inevitable, city consultant testifies,” screams a typical headline on the subject.)
*
None
of this is to deny, of course, that concentrated wealth will have
certain predictable social effects, in addition to the brutal primary
effect of screwing you and yours permanently. Inequality will most
definitely bring further corruption of our political system, which will
in turn lead to further deregulation and bailouts, which will eventually
allow epidemics of fraud and failure. It will definitely bring an
aggravated business cycle, with crazy booms and awful busts. We know
these things will happen because this is what has happened in our own
time. But that doesn’t mean the situation will somehow cease to function
as a matter of course, or that leading capitalists will be converted to
Keynesianism en masse and start insisting on better oversight of Wall
Street.
The ugly fact that we must face is that this thing can go much farther still.
Plutocracy shocks us every day with its viciousness, but that doesn’t
mean God will strike it down. The middle-class model worked much better
for about ninety-nine percent of the population, but that doesn’t make
it some kind of dialectic inevitability. You can build a plutocratic
model that will stumble along just fine, like it did in the nineteenth
century. It requires different things: instead of refrigerators for all,
it needs bought legislatures and armies of strikebreakers—plus bailouts
for the big banks when they collapse under the weight of their stupid
loans, an innovation of our own time. All this may be hurtful,
inefficient, and undemocratic, but it won’t dismantle itself all on its
own.
That is our job. No one else is going to do it for us.
Thomas Frank is a Salon politics and culture columnist.
His many books include "What's The Matter With Kansas," "Pity the
Billionaire" and "One Market Under God." He is the founding editor of
The Baffler magazine.
