Essay: Anatomy of the Deep State


Themilliniumreport

by Mike Lofgren

Rome lived upon its principal till ruin stared it in the face. Industry is the only true source of wealth, and there was no industry in Rome. By day the Ostia road was crowded with carts and muleteers, carrying to the great city the silks and spices of the East, the marble of Asia Minor, the timber of the Atlas, the grain of Africa and Egypt; and the carts brought out nothing but loads of dung. That was their return cargo.

The Martyrdom of Man by Winwood Reade (1871)


There is the visible government situated around the Mall in Washington, and then there is another, more shadowy, more indefinable government that is not explained in Civics 101 or observable to tourists at the White House or the Capitol. The former is traditional Washington partisan politics: the tip of the iceberg that a public watching C-SPAN sees daily and which is theoretically controllable via elections. The subsurface part of the iceberg I shall call the Deep State, which operates according to its own compass heading regardless of who is formally in power. [1]

During the last five years, the news media have been flooded with pundits decrying the broken politics of Washington. The conventional wisdom has it that partisan gridlock and dysfunction have become the new normal. That is certainly the case, and I have been among the harshest critics of this development. But it is also imperative to acknowledge the limits of this critique as it applies to the American governmental system. On one level, the critique is self-evident: In the domain that the public can see, Congress is hopelessly deadlocked in the worst manner since the 1850s, the violently rancorous decade preceding the Civil War.


Yes, there is another government concealed behind the one that is visible at either end of
Pennsylvania Avenue, a hybrid entity of public and private institutions ruling the country…


As I wrote in The Party is Over, the present objective of congressional Republicans is to render the executive branch powerless, at least until a Republican president is elected (a goal that voter suppression laws in GOP-controlled states are clearly intended to accomplish). President Obama cannot enact his domestic policies and budgets: Because of incessant GOP filibustering, not only could he not fill the large number of vacancies in the federal judiciary, he could not even get his most innocuous presidential appointees into office. Democrats controlling the Senate have responded by weakening the filibuster of nominations, but Republicans are sure to react with other parliamentary delaying tactics. This strategy amounts to congressional nullification of executive branch powers by a party that controls a majority in only one house of Congress.

Despite this apparent impotence, President Obama can liquidate American citizens without due processes, detain prisoners indefinitely without charge, conduct dragnet surveillance on the American people without judicial warrant and engage in unprecedented — at least since the McCarthy era — witch hunts against federal employees (the so-called “Insider Threat Program”). Within the United States, this power is characterized by massive displays of intimidating force by militarized federal, state and local law enforcement. Abroad, President Obama can start wars at will and engage in virtually any other activity whatsoever without so much as a by-your-leave from Congress, such as arranging the forced landing of a plane carrying a sovereign head of state over foreign territory. Despite the habitual cant of congressional Republicans about executive overreach by Obama, the would-be dictator, we have until recently heard very little from them about these actions — with the minor exception of comments from gadfly Senator Rand Paul of Kentucky. Democrats, save a few mavericks such as Ron Wyden of Oregon, are not unduly troubled, either — even to the extent of permitting seemingly perjured congressional testimony under oath by executive branch officials on the subject of illegal surveillance.

These are not isolated instances of a contradiction; they have been so pervasive that they tend to be disregarded as background noise. During the time in 2011 when political warfare over the debt ceiling was beginning to paralyze the business of governance in Washington, the United States government somehow summoned the resources to overthrow Muammar Ghaddafi’s regime in Libya, and, when the instability created by that coup spilled over into Mali, provide overt and covert assistance to French intervention there. At a time when there was heated debate about continuing meat inspections and civilian air traffic control because of the budget crisis, our government was somehow able to commit $115 million to keeping a civil war going in Syria and to pay at least £100m to the United Kingdom’s Government Communications Headquarters to buy influence over and access to that country’s intelligence. Since 2007, two bridges carrying interstate highways have collapsed due to inadequate maintenance of infrastructure, one killing 13 people. During that same period of time, the government spent $1.7 billion constructing a building in Utah that is the size of 17 football fields. This mammoth structure is intended to allow the National Security Agency to store a yottabyte of information, the largest numerical designator computer scientists have coined. A yottabyte is equal to 500 quintillion pages of text. They need that much storage to archive every single trace of your electronic life.

Yes, there is another government concealed behind the one that is visible at either end of Pennsylvania Avenue, a hybrid entity of public and private institutions ruling the country according to consistent patterns in season and out, connected to, but only intermittently controlled by, the visible state whose leaders we choose. My analysis of this phenomenon is not an exposé of a secret, conspiratorial cabal; the state within a state is hiding mostly in plain sight, and its operators mainly act in the light of day. Nor can this other government be accurately termed an “establishment.” All complex societies have an establishment, a social network committed to its own enrichment and perpetuation. In terms of its scope, financial resources and sheer global reach, the American hybrid state, the Deep State, is in a class by itself. That said, it is neither omniscient nor invincible. The institution is not so much sinister (although it has highly sinister aspects) as it is relentlessly well entrenched. Far from being invincible, its failures, such as those in Iraq, Afghanistan and Libya, are routine enough that it is only the Deep State’s protectiveness towards its higher-ranking personnel that allows them to escape the consequences of their frequent ineptitude. [2]

How did I come to write an analysis of the Deep State, and why am I equipped to write it? As a congressional staff member for 28 years specializing in national security and possessing a top secret security clearance, I was at least on the fringes of the world I am describing, if neither totally in it by virtue of full membership nor of it by psychological disposition. But, like virtually every employed person, I became, to some extent, assimilated into the culture of the institution I worked for, and only by slow degrees, starting before the invasion of Iraq, did I begin fundamentally to question the reasons of state that motivate the people who are, to quote George W. Bush, “the deciders.”

Photo: Dale Robbins

Cultural assimilation is partly a matter of what psychologist Irving L. Janis called “groupthink,” the chameleon-like ability of people to adopt the views of their superiors and peers. This syndrome is endemic to Washington: The town is characterized by sudden fads, be it negotiating biennial budgeting, making grand bargains or invading countries. Then, after a while, all the town’s cool kids drop those ideas as if they were radioactive. As in the military, everybody has to get on board with the mission, and questioning it is not a career-enhancing move. The universe of people who will critically examine the goings-on at the institutions they work for is always going to be a small one. As Upton Sinclair said, “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

A more elusive aspect of cultural assimilation is the sheer dead weight of the ordinariness of it all once you have planted yourself in your office chair for the 10,000th time. Government life is typically not some vignette from an Allen Drury novel about intrigue under the Capitol dome. Sitting and staring at the clock on the off-white office wall when it’s 11:00 in the evening and you are vowing never, ever to eat another piece of takeout pizza in your life is not an experience that summons the higher literary instincts of a would-be memoirist. After a while, a functionary of the state begins to hear things that, in another context, would be quite remarkable, or at least noteworthy, and yet that simply bounce off one’s consciousness like pebbles off steel plate: “You mean the number of terrorist groups we are fighting is classified?” No wonder so few people are whistle-blowers, quite apart from the vicious retaliation whistle-blowing often provokes: Unless one is blessed with imagination and a fine sense of irony, growing immune to the curiousness of one’s surroundings is easy. To paraphrase the inimitable Donald Rumsfeld, I didn’t know all that I knew, at least until I had had a couple of years away from the government to reflect upon it.

The Deep State does not consist of the entire government. It is a hybrid of national security and law enforcement agencies: the Department of Defense, the Department of State, the Department of Homeland Security, the Central Intelligence Agency and the Justice Department. I also include the Department of the Treasury because of its jurisdiction over financial flows, its enforcement of international sanctions and its organic symbiosis with Wall Street. All these agencies are coordinated by the Executive Office of the President via the National Security Council. Certain key areas of the judiciary belong to the Deep State, such as the Foreign Intelligence Surveillance Court, whose actions are mysterious even to most members of Congress. Also included are a handful of vital federal trial courts, such as the Eastern District of Virginia and the Southern District of Manhattan, where sensitive proceedings in national security cases are conducted. The final government component (and possibly last in precedence among the formal branches of government established by the Constitution) is a kind of rump Congress consisting of the congressional leadership and some (but not all) of the members of the defense and intelligence committees. The rest of Congress, normally so fractious and partisan, is mostly only intermittently aware of the Deep State and when required usually submits to a few well-chosen words from the State’s emissaries.

I saw this submissiveness on many occasions. One memorable incident was passage of the Foreign Intelligence Surveillance Amendments Act of 2008. This legislation retroactively legalized the Bush administration’s illegal and unconstitutional surveillance first revealed by The New York Times in 2005 and indemnified the telecommunications companies for their cooperation in these acts. The bill passed easily: All that was required was the invocation of the word “terrorism” and most members of Congress responded like iron filings obeying a magnet. One who responded in that fashion was Senator Barack Obama, soon to be coronated as the presidential nominee at the Democratic National Convention in Denver. He had already won the most delegates by campaigning to the left of his main opponent, Hillary Clinton, on the excesses of the global war on terror and the erosion of constitutional liberties.

As the indemnification vote showed, the Deep State does not consist only of government agencies. What is euphemistically called “private enterprise” is an integral part of its operations. In a special series in The Washington Post called “Top Secret America,” Dana Priest and William K. Arkin described the scope of the privatized Deep State and the degree to which it has metastasized after the September 11 attacks. There are now 854,000 contract personnel with top-secret clearances — a number greater than that of top-secret-cleared civilian employees of the government. While they work throughout the country and the world, their heavy concentration in and around the Washington suburbs is unmistakable: Since 9/11, 33 facilities for top-secret intelligence have been built or are under construction. Combined, they occupy the floor space of almost three Pentagons — about 17 million square feet. Seventy percent of the intelligence community’s budget goes to paying contracts. And the membrane between government and industry is highly permeable: The Director of National Intelligence, James R. Clapper, is a former executive of Booz Allen Hamilton, one of the government’s largest intelligence contractors. His predecessor as director, Admiral Mike McConnell, is the current vice chairman of the same company; Booz Allen is 99 percent dependent on government business. These contractors now set the political and social tone of Washington, just as they are increasingly setting the direction of the country, but they are doing it quietly, their doings unrecorded in the Congressional Record or the Federal Register, and are rarely subject to congressional hearings.

Photo: Dale Robbins

Washington is the most important node of the Deep State that has taken over America, but it is not the only one. Invisible threads of money and ambition connect the town to other nodes. One is Wall Street, which supplies the cash that keeps the political machine quiescent and operating as a diversionary marionette theater. Should the politicians forget their lines and threaten the status quo, Wall Street floods the town with cash and lawyers to help the hired hands remember their own best interests. The executives of the financial giants even have de facto criminal immunity. On March 6, 2013, testifying before the Senate Judiciary Committee, Attorney General Eric Holder stated the following: “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.” This, from the chief law enforcement officer of a justice system that has practically abolished the constitutional right to trial for poorer defendants charged with certain crimes. It is not too much to say that Wall Street may be the ultimate owner of the Deep State and its strategies, if for no other reason than that it has the money to reward government operatives with a second career that is lucrative beyond the dreams of avarice — certainly beyond the dreams of a salaried government employee. [3]

The corridor between Manhattan and Washington is a well trodden highway for the personalities we have all gotten to know in the period since the massive deregulation of Wall Street: Robert Rubin, Lawrence Summers, Henry Paulson, Timothy Geithner and many others. Not all the traffic involves persons connected with the purely financial operations of the government: In 2013, General David Petraeus joined KKR (formerly Kohlberg Kravis Roberts) of 9 West 57th Street, New York, a private equity firm with $62.3 billion in assets. KKR specializes in management buyouts and leveraged finance. General Petraeus’ expertise in these areas is unclear. His ability to peddle influence, however, is a known and valued commodity. Unlike Cincinnatus, the military commanders of the Deep State do not take up the plow once they lay down the sword. Petraeus also obtained a sinecure as a non-resident senior fellow at the Belfer Center for Science and International Affairs at Harvard. The Ivy League is, of course, the preferred bleaching tub and charm school of the American oligarchy. [4]

Petraeus and most of the avatars of the Deep State — the White House advisers who urged Obama not to impose compensation limits on Wall Street CEOs, the contractor-connected think tank experts who besought us to “stay the course” in Iraq, the economic gurus who perpetually demonstrate that globalization and deregulation are a blessing that makes us all better off in the long run — are careful to pretend that they have no ideology. Their preferred pose is that of the politically neutral technocrat offering well considered advice based on profound expertise. That is nonsense. They are deeply dyed in the hue of the official ideology of the governing class, an ideology that is neither specifically Democrat nor Republican. Domestically, whatever they might privately believe about essentially diversionary social issues such as abortion or gay marriage, they almost invariably believe in the “Washington Consensus”: financialization, outsourcing, privatization, deregulation and the commodifying of labor. Internationally, they espouse 21st-century “American Exceptionalism”: the right and duty of the United States to meddle in every region of the world with coercive diplomacy and boots on the ground and to ignore painfully won international norms of civilized behavior. To paraphrase what Sir John Harrington said more than 400 years ago about treason, now that the ideology of the Deep State has prospered, none dare call it ideology. [5] That is why describing torture with the word “torture” on broadcast television is treated less as political heresy than as an inexcusable lapse of Washington etiquette: Like smoking a cigarette on camera, these days it is simply “not done.”

Photo: Dale Robbins

After Edward Snowden’s revelations about the extent and depth of surveillance by the National Security Agency, it has become publicly evident that Silicon Valley is a vital node of the Deep State as well. Unlike military and intelligence contractors, Silicon Valley overwhelmingly sells to the private market, but its business is so important to the government that a strange relationship has emerged. While the government could simply dragoon the high technology companies to do the NSA’s bidding, it would prefer cooperation with so important an engine of the nation’s economy, perhaps with an implied quid pro quo. Perhaps this explains the extraordinary indulgence the government shows the Valley in intellectual property matters. If an American “jailbreaks” his smartphone (i.e., modifies it so that it can use a service provider other than the one dictated by the manufacturer), he could receive a fine of up to $500,000 and several years in prison; so much for a citizen’s vaunted property rights to what he purchases. The libertarian pose of the Silicon Valley moguls, so carefully cultivated in their public relations, has always been a sham. Silicon Valley has long been tracking for commercial purposes the activities of every person who uses an electronic device, so it is hardly surprising that the Deep State should emulate the Valley and do the same for its own purposes. Nor is it surprising that it should conscript the Valley’s assistance.

Still, despite the essential roles of lower Manhattan and Silicon Valley, the center of gravity of the Deep State is firmly situated in and around the Beltway. The Deep State’s physical expansion and consolidation around the Beltway would seem to make a mockery of the frequent pronouncement that governance in Washington is dysfunctional and broken. That the secret and unaccountable Deep State floats freely above the gridlock between both ends of Pennsylvania Avenue is the paradox of American government in the 21st century: drone strikes, data mining, secret prisons and Panopticon-like control on the one hand; and on the other, the ordinary, visible parliamentary institutions of self-government declining to the status of a banana republic amid the gradual collapse of public infrastructure.

The results of this contradiction are not abstract, as a tour of the rotting, decaying, bankrupt cities of the American Midwest will attest. It is not even confined to those parts of the country left behind by a Washington Consensus that decreed the financialization and deindustrialization of the economy in the interests of efficiency and shareholder value. This paradox is evident even within the Beltway itself, the richest metropolitan area in the nation. Although demographers and urban researchers invariably count Washington as a “world city,” that is not always evident to those who live there. Virtually every time there is a severe summer thunderstorm, tens — or even hundreds — of thousands of residents lose power, often for many days. There are occasional water restrictions over wide areas because water mains, poorly constructed and inadequately maintained, have burst. [6] The Washington metropolitan area considers it a Herculean task just to build a rail link to its international airport — with luck it may be completed by 2018.

It is as if Hadrian’s Wall was still fully manned and the fortifications along the border with Germania were never stronger, even as the city of Rome disintegrates from within and the life-sustaining aqueducts leading down from the hills begin to crumble. The governing classes of the Deep State may continue to deceive themselves with their dreams of Zeus-like omnipotence, but others do not. A 2013 Pew Poll that interviewed 38,000 people around the world found that in 23 of 39 countries surveyed, a plurality of respondents said they believed China already had or would in the future replace the United States as the world’s top economic power.

The Deep State is the big story of our time. It is the red thread that runs through the war on terrorism, the financialization and deindustrialization of the American economy, the rise of a plutocratic social structure and political dysfunction. Washington is the headquarters of the Deep State, and its time in the sun as a rival to Rome, Constantinople or London may be term-limited by its overweening sense of self-importance and its habit, as Winwood Reade said of Rome, to “live upon its principal till ruin stared it in the face.” “Living upon its principal,” in this case, means that the Deep State has been extracting value from the American people in vampire-like fashion.

We are faced with two disagreeable implications. First, that the Deep State is so heavily entrenched, so well protected by surveillance, firepower, money and its ability to co-opt resistance that it is almost impervious to change. Second, that just as in so many previous empires, the Deep State is populated with those whose instinctive reaction to the failure of their policies is to double down on those very policies in the future. Iraq was a failure briefly camouflaged by the wholly propagandistic success of the so-called surge; this legerdemain allowed for the surge in Afghanistan, which equally came to naught. Undeterred by that failure, the functionaries of the Deep State plunged into Libya; the smoking rubble of the Benghazi consulate, rather than discouraging further misadventure, seemed merely to incite the itch to bomb Syria. Will the Deep State ride on the back of the American people from failure to failure until the country itself, despite its huge reserves of human and material capital, is slowly exhausted? The dusty road of empire is strewn with the bones of former great powers that exhausted themselves in like manner.

Photo: Dale Robbins

But, there are signs of resistance to the Deep State and its demands. In the aftermath of the Snowden revelations, the House narrowly failed to pass an amendment that would have defunded the NSA’s warrantless collection of data from US persons. Shortly thereafter, the president, advocating yet another military intervention in the Middle East, this time in Syria, met with such overwhelming congressional skepticism that he changed the subject by grasping at a diplomatic lifeline thrown to him by Vladimir Putin. [7]

Has the visible, constitutional state, the one envisaged by Madison and the other Founders, finally begun to reassert itself against the claims and usurpations of the Deep State? To some extent, perhaps. The unfolding revelations of the scope of the NSA’s warrantless surveillance have become so egregious that even institutional apologists such as Senator Dianne Feinstein have begun to backpedal — if only rhetorically — from their knee-jerk defense of the agency. As more people begin to waken from the fearful and suggestible state that 9/11 created in their minds, it is possible that the Deep State’s decade-old tactic of crying “terrorism!” every time it faces resistance is no longer eliciting the same Pavlovian response of meek obedience. And the American people, possibly even their legislators, are growing tired of endless quagmires in the Middle East.

But there is another more structural reason the Deep State may have peaked in the extent of its dominance. While it seems to float above the constitutional state, its essentially parasitic, extractive nature means that it is still tethered to the formal proceedings of governance. The Deep State thrives when there is tolerable functionality in the day-to-day operations of the federal government. As long as appropriations bills get passed on time, promotion lists get confirmed, black (i.e., secret) budgets get rubber-stamped, special tax subsidies for certain corporations are approved without controversy, as long as too many awkward questions are not asked, the gears of the hybrid state will mesh noiselessly. But when one house of Congress is taken over by tea party Wahhabites, life for the ruling class becomes more trying.

If there is anything the Deep State requires it is silent, uninterrupted cash flow and the confidence that things will go on as they have in the past. It is even willing to tolerate a degree of gridlock: Partisan mud wrestling over cultural issues may be a useful distraction from its agenda. But recent congressional antics involving sequestration, the government shutdown and the threat of default over the debt ceiling extension have been disrupting that equilibrium. And an extreme gridlock dynamic has developed between the two parties such that continuing some level of sequestration is politically the least bad option for both parties, albeit for different reasons. As much as many Republicans might want to give budget relief to the organs of national security, they cannot fully reverse sequestration without the Democrats demanding revenue increases. And Democrats wanting to spend more on domestic discretionary programs cannot void sequestration on either domestic or defense programs without Republicans insisting on entitlement cuts.

So, for the foreseeable future, the Deep State must restrain its appetite for taxpayer dollars. Limited deals may soften sequestration, but agency requests will not likely be fully funded anytime soon. Even Wall Street’s rentier operations have been affected: After helping finance the tea party to advance its own plutocratic ambitions, America’s Big Money is now regretting the Frankenstein’s monster it has created. Like children playing with dynamite, the tea party and its compulsion to drive the nation into credit default has alarmed the grown-ups commanding the heights of capital; the latter are now telling the politicians they thought they had hired to knock it off.

The House vote to defund the NSA’s illegal surveillance programs was equally illustrative of the disruptive nature of the tea party insurgency. Civil liberties Democrats alone would never have come so close to victory; tea party stalwart Justin Amash (R-MI), who has also upset the business community for his debt-limit fundamentalism, was the lead Republican sponsor of the NSA amendment, and most of the Republicans who voted with him were aligned with the tea party.

Reactions: Tim Wu on Silicon Valley

The final factor is Silicon Valley. Owing to secrecy and obfuscation, it is hard to know how much of the NSA’s relationship with the Valley is based on voluntary cooperation, how much is legal compulsion through FISA warrants and how much is a matter of the NSA surreptitiously breaking into technology companies’ systems. Given the Valley’s public relations requirement to mollify its customers who have privacy concerns, it is difficult to take the tech firms’ libertarian protestations about government compromise of their systems at face value, especially since they engage in similar activity against their own customers for commercial purposes. That said, evidence is accumulating that Silicon Valley is losing billions in overseas business from companies, individuals and governments that want to maintain privacy. For high tech entrepreneurs, the cash nexus is ultimately more compelling than the Deep State’s demand for patriotic cooperation. Even legal compulsion can be combatted: Unlike the individual citizen, tech firms have deep pockets and batteries of lawyers with which to fight government diktat.

This pushback has gone so far that on January 17, President Obama announced revisions to the NSA’s data collection programs, including withdrawing the agency’s custody of a domestic telephone record database, expanding requirements for judicial warrants and ceasing to spy on (undefined) “friendly foreign leaders.” Critics have denounced the changes as a cosmetic public relations move, but they are still significant in that the clamor has gotten so loud that the president feels the political need to address it.

When the contradictions within a ruling ideology are pushed too far, factionalism appears and that ideology begins slowly to crumble. Corporate oligarchs such as the Koch brothers are no longer entirely happy with the faux-populist political front group they helped fund and groom. Silicon Valley, for all the Ayn Rand-like tendencies of its major players, its offshoring strategies and its further exacerbation of income inequality, is now lobbying Congress to restrain the NSA, a core component of the Deep State. Some tech firms are moving to encrypt their data. High tech corporations and governments alike seek dominance over people though collection of personal data, but the corporations are jumping ship now that adverse public reaction to the NSA scandals threatens their profits.

The outcome of all these developments is uncertain. The Deep State, based on the twin pillars of national security imperative and corporate hegemony, has until recently seemed unshakable and the latest events may only be a temporary perturbation in its trajectory. But history has a way of toppling the altars of the mighty. While the two great materialist and determinist ideologies of the twentieth century, Marxism and the Washington Consensus, successively decreed that the dictatorship of the proletariat and the dictatorship of the market were inevitable, the future is actually indeterminate. It may be that deep economic and social currents create the framework of history, but those currents can be channeled, eddied, or even reversed by circumstance, chance and human agency. We have only to reflect upon defunct glacial despotisms such as the USSR or East Germany to realize that nothing is forever.

Reactions: Juan Cole on the Vulnerability of the Network

Throughout history, state systems with outsized pretensions to power have reacted to their environments in two ways. The first strategy, reflecting the ossification of its ruling elites, consists of repeating that nothing is wrong, that the status quo reflects the nation’s unique good fortune in being favored by God and that those calling for change are merely subversive troublemakers. As the French ancien régime, the Romanov dynasty and the Habsburg emperors discovered, the strategy works splendidly for a while, particularly if one has a talent for dismissing unpleasant facts. The final results, however, are likely to be thoroughly disappointing.

The second strategy is one embraced to varying degrees and with differing goals, by figures of such contrasting personalities as Mustafa Kemal Atatürk, Franklin D. Roosevelt, Charles de Gaulle and Deng Xiaoping. They were certainly not revolutionaries by temperament; if anything, their natures were conservative. But they understood that the political cultures in which they lived were fossilized and incapable of adapting to the times. In their drive to reform and modernize the political systems they inherited, their first obstacles to overcome were the outworn myths that encrusted the thinking of the elites of their time.

As the United States confronts its future after experiencing two failed wars, a precarious economy and $17 trillion in accumulated debt, the national punditry has split into two camps. The first, the declinists, sees a broken, dysfunctional political system incapable of reform and an economy soon to be overtaken by China. The second, the reformers, offers a profusion of nostrums to turn the nation around: public financing of elections to sever the artery of money between the corporate components of the Deep State and financially dependent elected officials, government “insourcing” to reverse the tide of outsourcing of government functions and the conflicts of interest that it creates, a tax policy that values human labor over financial manipulation and a trade policy that favors exporting manufactured goods over exporting investment capital.

Mike Lofgren on the Deep State Hiding in Plain Sight

All of that is necessary, but not sufficient. The Snowden revelations (the impact of which have been surprisingly strong), the derailed drive for military intervention in Syria and a fractious Congress, whose dysfunction has begun to be a serious inconvenience to the Deep State, show that there is now a deep but as yet inchoate hunger for change. What America lacks is a figure with the serene self-confidence to tell us that the twin idols of national security and corporate power are outworn dogmas that have nothing more to offer us. Thus disenthralled, the people themselves will unravel the Deep State with surprising speed.



[1] The term “Deep State” was coined in Turkey and is said to be a system composed of high-level elements within the intelligence services, military, security, judiciary and organized crime. In British author John le Carré’s latest novel, A Delicate Truth, a character describes the Deep State as “… the ever-expanding circle of non-governmental insiders from banking, industry and commerce who were cleared for highly classified information denied to large swathes of Whitehall and Westminster.”  I use the term to mean a hybrid association of elements of government and parts of top-level finance and industry that is effectively able to govern the United States without reference to the consent of the governed as expressed through the formal political process.

[2] Twenty-five years ago, the sociologist Robert Nisbet described this phenomenon as “the attribute of No Fault…. Presidents, secretaries and generals and admirals in America seemingly subscribe to the doctrine that no fault ever attaches to policy and operations. This No Fault conviction prevents them from taking too seriously such notorious foul-ups as Desert One, Grenada, Lebanon and now the Persian Gulf.” To his list we might add 9/11, Iraq, Afghanistan and Libya.

[3] The attitude of many members of Congress towards Wall Street was memorably expressed by Rep. Spencer Bachus (R-AL), the incoming chairman of the House Financial Services Committee, in 2010: “In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

[4] Beginning in 1988, every US president has been a graduate of Harvard or Yale. Beginning in 2000, every losing presidential candidate has been a Harvard or Yale graduate, with the exception of John McCain in 2008.

[5] In recent months, the American public has seen a vivid example of a Deep State operative marketing his ideology under the banner of pragmatism. Former Secretary of Defense Robert M. Gates — a one-time career CIA officer and deeply political Bush family retainer — has camouflaged his retrospective defense of military escalations that have brought us nothing but casualties and fiscal grief as the straight-from-the-shoulder memoir from a plain-spoken son of Kansas who disdains Washington and its politicians.

[6] Meanwhile, the US government took the lead in restoring Baghdad’s sewer system at a cost of $7 billion.

[7] Obama’s abrupt about-face suggests he may have been skeptical of military intervention in Syria all along, but only dropped that policy once Congress and Putin gave him the running room to do so. In 2009, he went ahead with the Afghanistan “surge” partly because General Petraeus’ public relations campaign and back-channel lobbying on the Hill for implementation of his pet military strategy pre-empted other options. These incidents raise the disturbing question of how much the democratically elected president — or any president — sets the policy of the national security state and how much the policy is set for him by the professional operatives of that state who engineer faits accomplis that force his hand.

Mike Lofgren is a former congressional staff member who served on both the House and Senate budget committees. His book about Congress, The Party is Over: How Republicans Went Crazy, Democrats Became Useless, and the Middle Class Got Shafted, appeared in paperback on August 27, 2013.

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You’ve Heard People Compare #Trump to Hitler. So We Asked a Woman Who Was Born in Nazi Germany…


Independent Journal Review

By Justen Charters

A popular talking point on the left is that Donald Trump has things in common with Hitler.


But is this the case? Independent Journal Review decided to speak to a woman born in Nazi Germany about the comparison.

We talked with Marion Ingeborg Andrews, who goes by Inga. She was born in Dusseldorf, Germany, in 1940 during Hitler’s reign.

While most kids were playing with friends, Andrews was hiding in air raid shelters and helping to clean up the rubble from destroyed buildings to rebuild her city.

Inga Andrews

Andrews said:

“What is going on in this country is giving me chills. Trump is not like Hitler. Just because a leader wants order doesn’t mean they’re like a dictator.

What reminds me more of Hitler than anything else isn’t Trump, it’s the destruction of freedom of speech on the college campuses — the agendas fueled by the professors.

That’s how Hitler started, he pulled in the youth to miseducate them, to brainwash them, it’s happening today.”

Andrews drove home her point further for the younger generation:

Getty Images/Frederic J. Brown

“It saddens me that we are teaching garbage in the schools and in the college. We don’t teach history anymore. History repeats itself over and over.

The kids out there today haven’t ever lived through a war like I did. I remember sitting in a rock pile, cleaning rocks, to rebuild Germany. I remember eating maple leaves and grass to survive.”

She later made it to the U.S. when her mother married an American, but her journey wasn’t without hurdles. 

Inga Andrews

“It took six years because she had worked in Germany. It took six years to clear her to be able to be married. Then when you married an American, because we were the enemy, you had to wait.

We had to go from Heidelberg to Bremerhaven where another camp was. This camp was run by the U.S. military. They vetted us in both places. There were all these German brides with their children and families who had to be vetted again for three of four days before they could get on the ship.

The ship we took was the U.S.S. Washington. We arrived in New York in March of 1953. My mother, Meta Weinbach, and I still had the last name Muller.

So we had a vetting process like what we are going through now because you have to have this to make the country safe.”

Then Andrews had some choice words for the protesters in the streets destroying property:

“America needs to grow up. The young people who are rioting and destroying property, who have no respect for elders and freedom of speech, I was so proud to become a citizen of this country.”

She opened up about how she accepted American culture and values:

Inga Andrews

Andrews continued on about her desire to become an American:

“At school, they put me in first grade even though I was a teenager because I didn’t speak English. The teachers would take time at their lunch time to teach us how to speak English.

But they came to find out that I was hiding in the bathroom stall with my legs up eating my braunschweiger and onion sandwich, so nobody would talk to me.

Still, I had a burning desire to be an American. I went to night school to learn English. I would practice English without a German accent. I didn’t want to be German. I wanted to be an American.

When I was fourteen, I was working in a drug store reading comic books. Through reading comic books, I developed my English skills.

We would go to the malls and we wouldn’t speak our foreign language, we would speak English. Because we believed we needed to honor the country that opened its doors for us. It was rude to do otherwise.”

Andrews returned to the present day with a message for those attacking freedom of speech:

“Professors shouldn’t be telling their students to go after freedom of speech. They should be telling them that this is the greatest country in the world.

The demonstrators can’t tell you why they’re demonstrating. I’m not a Republican. I’m not a Democrat. I just want the country to be at peace.

I see what is happening here reflecting some of the things we saw in Germany, and it’s terrifying. It’s sad. But it’s not because of Trump. It’s because of poor education.

Trump is not like Hitler. The theory that he is is propaganda. Yes, I lived through some of Nazi Germany, but all you have to do is read some books about that period to see how wrong that theory is.”

She finished by sharing a personal story.

“I had an aunt who was in the Olympics. My aunt got all this extra stuff from Hitler and was surrounded by this propaganda,” she said, before explaining how she couldn’t keep a relationship with her aunt. “I couldn’t have anything to do with her. Even after the war, she was calling the Jewish people, of whom I was friends with, ‘dirty Jews.’”

“My point in saying all this is that if people aren’t able to see outside of one world view, that’s what happens,” Andrews concluded. “They buy the propaganda. And that’s what is happening today. And if people aren’t educated properly and given the ability to think freely — we will repeat that history.”

Due to numerous inquiries into the authenticity of Inga’s story, she’s provided Independent Journal Review with several pieces of proof to back up her claims.

Her mother, Meta Weinbach’s passport:

Inga Andrews

Inga Andrews

Evidence of their time in Heidelberg:

Inga Andrews

Inga with her father Heinz Muller during World War II:

Inga Andrews

The postcard she received upon boarding the S.S. Washington. Andrews’s family rode first class:

Inga Andrews

Her American step-father George Weinbach:

Inga Andrews

Upon sending these pieces of proof to back up her story, Andrews told us, “It’s exactly what I’ve been saying. Some people want to see through one world view, so they couldn’t even believe the story I lived.”

 

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House of Lords told to back Brexit bill or face being abolished ??


RT

Downing Street is attempting to play down a warning that the House of Lords could be abolished if peers try to block the Brexit bill.

The bill, which gives the government the authority to activate Article 50, starting the formal process of leaving the EU, was approved by 494 votes to 122 in the Commons, keeping the government’s March timetable to trigger Brexit talks on track.

The bill, which was put forward by Prime Minister Theresa May’s government after the Supreme Court ruled she must consult Parliament before triggering Brexit negotiations, now moves to the House of Lords.

A government source told the BBC the Lords will face a call to be abolished if it opposes the bill. “If the Lords don’t want to face an overwhelming public call to be abolished they must get on and protect democracy and pass this bill,” the source said.

On Thursday, a Number 10 source distanced the government from that view, saying peers had an important duty in scrutinizing and debating the bill “and we welcome them exercising this role.”

Following Wednesday night’s vote, Brexit secretary David Davis called on peers to do their “patriotic duty.” He told unelected peers not to try and change the simple two-clause bill as it was passed by MPs unamended and “reflected the will of the people.”

Davis says the government had seen a series of attempts to alter the European Union (Notification of Withdrawal) Bill before MPs overwhelmingly voted in favor of passing it unchanged.

Asked by Sky whether the House of Lords would face recriminations if it amended the bill, he said: “The simple thing is the Lords is a very important institution.

“I expect it to do its job and to do its patriotic duty and actually give us the right to go on and negotiate that new relationship [with the EU].”

Speaking on the BBC’s Newsnight program, Tory MP Suella Fernandes said a refusal to pass the bill would “call into question the position of the House of Lords.”

Peter Hain, a Labour peer who was also appearing on the program, replied: “Bring it on.”

Hain says he will vote against the bill if the two amendments he is planning are rejected. The former Cabinet minister wants to maintain the open border between Northern Ireland and the Republic of Ireland, which he describes as “crucial to the peace process,” as well as keeping the UK’s membership of the single market.

“I was appointed by the Labour Party – two-thirds of Labour voters voted to remain within the European Union, they need to be respected.”

The bill will be debated in the House of Lords after peers return from recess on February 20.

If no changes are made, the bill will go straight to royal assent, allowing Article 50 to be triggered and starting the process of leaving the EU. If changes are made, peers will pass it back to the Commons.

 

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Donald J. Trump and The Deep State


GlobalResearch

On February 3, 2017, the Wall Street Journal reported President Trump’s plans to pave the way for a broad rollback of the recent financial reforms of Wall Street.[1] Although no surprise, the news was in ironic contrast to the rhetoric of his campaign, when he spent months denouncing both Ted Cruz and Hillary Clinton for their links to Goldman Sachs, even when his campaign’s Financial Chairman was a former Goldman Sachs banker, Steve Mnuchin (now Trump’s Treasury Secretary).

Trump was hardly the first candidate to run against the banking establishment while surreptitiously taking money from big bankers. So did Hitler in 1933; so did Obama in 2008. (In Obama’s final campaign speech of 2008, he attacked “the greed and irresponsibility of Wall Street.”[2] But it was revealed later that Wall Street bankers and financial insiders, chiefly from Goldman Sachs, had raised $42.2 million for Obama’s 2008 campaign, more than for any previous candidate in history.)[3]

However, Trump’s connections to big money, both new (often self-made) and old (mostly institutional) were not only more blatant than usual; some were also possibly more sinister. Trump’s campaign was probably the first ever to be (as we shall see) scrutinized by the FBI for “financial connections with Russian financial figures,” and even with a Russian bank whose Washington influence was attacked years ago, after it was allegedly investigated in Russia for possible mafia connections.[4]

Trump’s appointment of the third former Goldman executive to lead Treasury in the last four administrations, after Robert Rubin (under Clinton) and Hank Paulson (under Bush), has reinforced recent speculation about Trump’s relationship to what is increasingly referred to as the deep state. That is the topic of this essay.

But we must first see what is really meant by ‘the deep state”.

What Is Meant by the Deep State?

Since 2007, when I first referred to a “deep state” in America, the term has become a meme, and even the topic of a cautious essay in The New York Times.[5] Recently it has been enhanced by a new meme, “the ’deep state’ versus Trump,” a theme that promoted Donald Trump as a genuine outsider, and entered the electoral campaign as early as August 2016.[6]

Trump reinforced this notion when he expressed opposition to America’s international defense alliances and trade deals that both traditional parties had long supported, as well as by his promise to “drain the Washington swamp.” It was encouraged again post-election by Trump’s longtime political advisor Roger Stone, formerly of the Washington lobbying firm Black, Manafort, Stone, and Kelly, once a major feature of that swamp.[7]

But those who saw the election as a contest between outsider Trump and a “deep state” tended to give two different meanings to this new term. On the one hand were those who saw the deep state as “a conglomerate of insiders” incorporating all those, outside and inside the traditional state, who “run the country no matter who is in the White House…and without the consent of voters.”[8] On the other were those who, like Chris Hedges, limited the “deep state” to those perverting constitutional American politics from the margin of the Washington Beltway — “the security and surveillance apparatus, the war machine.”[9]

But both of these simplistic definitions, suitable for campaign rhetoric, omit the commanding role played by big money — what used to be referred to as Wall Street, but now includes an increasingly powerful number of maverick non-financial billionaires like the Koch brothers. All serious studies of the deep state, including Mike Lofgren’s The Deep State and Philip Giraldi’s Deep State America as well as this book, acknowledge the importance of big money.[10]

It is important to recognize moreover, that the current division between “red” and “blue” America is overshadowed by a corresponding division at the level of big money, one that contributed greatly to the ugliness of the 2016 campaign. In The American Deep State (p. 30), I mention, albeit very briefly, the opposition of right-wing oilmen and the John Birch Society “to the relative internationalism of Wall Street.”[11] That opposition has become more powerful, and better financed, than ever before.

It has also evolved. As I noted in The American Deep State, (p. 14), the deep state “is not a structure but a system, as difficult to define, but also as real and powerful, as a weather system.” A vigorous deep state, like America, encompasses dynamic processes continuously generating new forces within it like the Internet — just as a weather system is not fixed but changes from day to day.

The Current Divisions in America and Its Wealth

Three days before the inauguration of Donald Trump, “Frontline” on PBS began a two-part program, “Divided States of America,” documenting how the polarization of American public opinion has contributed to both stagnation in Washington and widespread popular anger, on both the left and the right, against the traditional two-party system.

The Frontline show failed to address the major role played by money in aggravating this public division. For example, it followed many popular accounts in tracing the emergence of the tax-revolt Tea Party to the apparently spontaneous call on February 19, 2009, by CNBC reporter Rick Santelli in Chicago, for a “tea party,” in response to President Barack Obama’s expensive bailouts.[12]

However, this event (on the floor of the Chicago Mercantile Exchange, a deep state institution) was not only staged, it had been prepared for in advance. A domain name, chicagoteaparty.org, had been registered for it in 2008, before Obama had even been elected.[13] Jane Mayer has conclusively demonstrated the role in the funding groups behind the Tea Party played by the brothers Charles and David Koch, who in 2014 were two of the ten richest people on earth, worth a combined $32 billion as owners of the largest private oil company in America.[14]  (Today their wealth is estimated at $84 billion.)

More important, as Mayer pointed out,

the Tea Party was not “a new strain” in American politics. The scale was unusual, but history had shown that similar reactionary forces had attacked virtually every Democratic president since Franklin Roosevelt. Earlier business-funded right-wing movements, from the Liberty League [of the 1930s] to the John Birch Society to [Richard Mellon] Scaife’s [anti-Clinton] Arkansas Project, all had cast Democratic presidents as traitors, usurpers, and threats to the Constitution. The undeniable element of racial resentment that tinged many Tea Party rallies was also an old and disgracefully enduring story in American politics.[15]

The Kochs’ lavish funding of the Tea Party, along with anti-tax candidates and climate-change deniers, was only one more phase in what I described in 1996 as

an enduring struggle between “America Firsters” and “New World Order” globalists, pitting, through nearly all of this [20th] century, the industry-oriented (e.g. the National Association of Manufacturers) against the financial-oriented (e.g. the Council on Foreign Relations), two different sources of wealth.[16]

A decade later Trump has revived the slogan of “America First!”, and vowed to reconsider both NATO and multilateral trade. Both factions are still there today; but, as we shall see, both now have international connections.

Read further…

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#Trump is no fascist. He is a champion for the forgotten millions#


Guardian

Obama promised solutions but let the people down. Is it any surprise that they voted for real change?


4886

Donald Trump supporters stand for the national anthem during a ‘Make America Great Again’ concert in Washington last month. Photograph: Evan Vucci/AP


Amid the ongoing protests against President Trump, calls for “resistance” among Democratic politicians and activists, and the overheated rhetoric casting Trump and his supporters as fascists and xenophobes, an outsider might be forgiven for thinking that America has been taken over by a small faction of rightwing nationalists.

America is deeply divided, but it’s not divided between fascists and Democrats. It’s more accurate to say that America is divided between the elites and everybody else, and Trump’s election was a rejection of the elites.

That’s not to say plenty of Democrats and progressives don’t vehemently oppose Trump. But the crowds of demonstrators share something in common with our political and media elites: they still don’t understand how Trump got elected, or why millions of Americans continue to support him. Even now, recent polls show that more Americans support Trump’s executive order on immigration than oppose it, but you wouldn’t know it based on the media coverage.

Support for Trump’s travel ban, indeed his entire agenda for immigration reform, is precisely the sort of thing mainstream media, concentrated in urban enclaves along our coasts, has trouble comprehending. The fact is, many Americans who voted for Trump, especially those in suburban and rural areas across the heartland and the south, have long felt disconnected from the institutions that govern them. On immigration and trade, the issues that propelled Trump to the White House, they want the status quo to change.

During his first two weeks in office, whenever Trump has done something that leaves political and media elites aghast, his supporters cheer. They like that he told Mexican president Enrique Peña Nieto he might have to send troops across the border to stop “bad hombres down there”. They like that he threatened to pull out of an Obama-era deal to accept thousands of refugees Australia refuses to admit. They want him to dismantle Dodd-Frank financial regulations for Wall Street and rethink US trade deals. This is why they voted for him.

The failure to understand why these measures are popular with millions of Americans stems from a deep sense of disconnection in American society that didn’t begin with Trump or the 2016 election. For years, millions of voters have felt left behind by an economic recovery that largely excluded them, a culture that scoffed at their beliefs and a government that promised change but failed to deliver.

Nowhere is this disconnection more palpable than in the American midwest, in places such as Akron, a small city in northeast Ohio nestled along a bend in the Little Cuyahoga river. Its downtown boasts clean and pleasant streets, a minor league baseball park, bustling cafes and a lively university. The people are friendly and open, as midwesterners tend to be. In many ways, it’s an idyllic American town.

Except for the heroin. Like many suburban and rural communities across the country, Akron is in the grip of a deadly heroin epidemic. Last summer, a batch of heroin cut with a synthetic painkiller called carfentanil, an elephant tranquilliser, turned up in the city. Twenty-one people overdosed in a single day. Over the ensuing weeks, 300 more would overdose. Dozens would die.

The heroin epidemic is playing out against a backdrop of industrial decline. At one time, Akron was a manufacturing hub, home to four major tyre companies and a rising middle class. Today, most of that is gone. The tyre factories have long since moved overseas and the city’s population has been steadily shrinking since the 1960s. This is what Trump was talking about when he spoke of “American carnage” in his inaugural address.

Akron is not unique. Cities and towns across America’s rust belt, Appalachia and the deep south are in a state of gradual decline. Many of these places have long been Democratic strongholds, undergirded by once-robust unions.

On election day, millions of Democrats who voted for Barack Obama in 2008 and 2012 cast their votes for Trump. In those earlier elections, these blue-collar Democrats were voting for change, hoping Obama would prioritise the needs of working Americans over the elites and special interests concentrated in Washington DC and Wall Street.

For many Americans, Hillary Clinton personified the corruption and self-dealing of the elites. But Trump’s election wasn’t just a rejection of Clinton, it was a rejection of politics as usual. If the media and political establishment see Trump’s first couple of weeks in office as a whirlwind of chaos and incompetence, his supporters see an outsider taking on a sclerotic system that needs to be dismantled. That’s precisely what many Americans thought they were doing eight years ago, when they put a freshman senator from Illinois in the White House. Obama promised a new way of governing – he would be a “post-partisan” president, he would “fundamentally transform” the country, he would look out for the middle class. In the throes of the great recession, that resonated. Something was clearly wrong with our political system and the American people wanted someone to fix it.

After all, the Tea Party didn’t begin as a reaction against Obama’s presidency but that of George W Bush. As far as most Americans were concerned, the financial crisis was brought on by the excesses of Wall Street bankers and the incompetency of our political leaders. Before the Tea Party coalesced into a political movement, the protesters weren’t just traditional conservatives who cared about limited government and the constitution. They were, for the most part, ordinary Americans who felt the system was rigged against them and they wanted change.

But change didn’t come. What they got was more of the same. Obama offered a series of massive government programmes, from an $830bn financial stimulus, to the Affordable Care Act, to Dodd-Frank, none of which did much to assuage the economic anxieties of the middle class. Americans watched as the federal government bailed out the banks, then the auto industry and then passed healthcare reform that transferred billions of taxpayer dollars to major health insurance companies. Meanwhile, premiums went up, economic recovery remained sluggish and millions dropped out of the workforce and turned to food stamps and welfare programmes just to get by. Americans asked themselves: “Where’s my bailout?”

At the same time, they saw the world becoming more unstable. Part of Obama’s appeal was that he promised to end the unpopular wars in Iraq and Afghanistan, restore America’s standing in the international community and pursue multilateral agreements that would bring stability. Instead, Americans watched Isis step into the vacuum created by the US withdrawal from Iraq in 2011. They watched the Syrian civil war trigger a migrant crisis in Europe that many Americans now view as a cautionary tale. At home, Isis-inspired terrorist attacks took their toll, as they did in Europe. And all the while Obama’s White House insisted that everything was going well.

Amid all this, along came Trump. Here was a rough character, a boisterous celebrity billionaire with an axe to grind. He had palpable disdain for both political parties, which he said had failed the American people. He showed contempt for political correctness that was strangling public debate over contentious issues such as terrorism. He struck many of the same populist notes, both in his campaign and in his recent inaugural address, that Senator Bernie Sanders did among his young socialist acolytes, sometimes word for word.

In many ways, Trump’s agenda isn’t partisan in a recognisable way – especially on trade. Almost immediately after taking office, Trump made good on a promise that Sanders also made, pulling the US out of the Trans-Pacific Partnership and proclaiming an end to multilateral trade deals. He also threatened US companies with a “border tax” if they move jobs overseas. These are not traditional Republican positions but they do appeal to American workers who have watched employers pull out of their communities and ship jobs overseas.

Many traditional Republicans have always been uncomfortable with Trump. They fundamentally disagree with his positions on trade and immigration. Even now, congressional Republicans are revolting over Trump’s proposed border wall, promising to block any new expenditures for it. They’re also uncomfortable with Trump personally. For some Republicans, it was only Trump’s promise to nominate a conservative supreme court justice to replace Justice Antonin Scalia that won their votes in the end – a promise Trump honoured last week by nominating Judge Neil Gorsuch, a judge very much in Scalia’s mould.

Once Trump won the nomination at the Republican national convention, most Republican voters got on board, reasoning that whatever uncertainty they had about Trump, the alternative – Clinton – was worse.

In many ways, the 2016 election wasn’t just a referendum on Obama’s eight years in the White House, it was a rejection of the entire political system that gave us Iraq, the financial crisis, a botched healthcare law and shocking income inequality during a slow economic recovery. From Akron to Alaska, millions of Americans had simply lost confidence in their leaders and the institutions that were supposed to serve them. In their desperation, they turned to a man who had no regard for the elites – and no use for them.

In his inaugural address, Trump said: “Today, we are not merely transferring power from one administration to another or from one party to another, but we are transferring power from Washington, DC, and giving it back to you, the people.” To be sure, populism of this kind can be dangerous and unpredictable, But it doesn’t arise from nowhere. Only a corrupt political establishment could have provoked a political revolt of this scale. Instead of blaming Trump’s rise on racism or xenophobia, blame it on those who never saw this coming and still don’t understand why so many Americans would rather have Donald Trump in the White House than suffer the rule of their elites.

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Francesco Ferrara’s 19th Century War on Taxation


FEE

Alberto Mingardi

With a public debt to GDP ratio at 132% and general government spending at 51% of GDP, Italy can’t be mistaken for a beacon of classical liberalism. Things may have gone differently, had the country listened to its classical liberal economists. They had diagnosed some of the country’s most resilient problems with clarity and courage. Though often forgotten, they are still a source of inspiration. This is certainly the case of Francesco Ferrara.

Francesco Ferrara (1810–1900) was the most prominent Italian economist of the 19th century. A Sicilian, born in Palermo in 1810 of a family of modest origins, he entered the world of studies and politics as a statistician. In 1848, he took part in the Sicilian uprising. He was jailed briefly and later elected to the newly established Sicilian parliament. He was subsequently dispatched to Turin as part of a mission to offer the crown of Sicily to the Duke of Genoa, the brother of the Piedmontese king. When the House of Bourbon re-established its hold on Sicily, the envoys remained in Turin, to persist in their efforts to free Sicily. In 1852, the Bourbons condemned Ferrara to “perpetual exile” (Faucci). Later, in the unified Italy, Ferrara was briefly a cabinet minister and a member of the Italian tax court. In his forceful and prolific writings, the principles of individualism and economic liberalism were “glorified always and everywhere” (Weinberger). Commenting on Ferrara’s prose, Einaudi called him a “wizard” who “enthused thousands of mature men and ardent youths, making them fall in love with economic science”.

Ferrara was appointed to the chair in Political Economy at the University of Turin. He was widely engaged in policy debates and in 1858 was suspended from active teaching, as he frequently used his lectures to denounce the government and its policies—including the government’s monopoly in education. This prohibition to enter classrooms did not hamper Ferrara’s creativity and scholarship. He later taught in Pisa and eventually in Venice, after having served in a number of public offices.

Ferrara is best remembered for the remarkable publication series Biblioteca dell’economista, a far-reaching program of translations aimed at making the latest economic literature available to Italians. … In all, 26 books were published (two series of thirteen books each), most prefaced by a long introduction by Ferrara himself. These introductions were both biobibliographical and critical, full of insights. James M. Buchanan wrote of Ferrara’s introductions:

On the whole his criticisms are excellent by modern criteria, and he anticipated many of the neo-classical contributions. … He was forceful in his emphasis that value theory must be based on individual behavior, his whole construction departing from what he called “the economic action,” the author of such action being the individual who feels, thinks, and wants. … Ferrara was perhaps the first economist completely to shed all of the mercantilistic trappings in his rejection of economics as the science of wealth.

Not unlike the ‘Austrian’ economists, Ferrara trumpeted subjective value and was skeptical of the efforts to mathematize economics. He was critical of Ricardian economics and was heavily indebted to the French: Bastiat, who he considered a “hero and martyr in his battles for economic freedom” (Faucci), Antoine Destutt de Tracy, and especially Jean-Baptiste Say. Like Say, he based his view of the entrepreneurial function on a “knowledge-based approach” (Bini). He opposed intellectual property rights as a form of government-granted monopoly (for Ferrara, “a patent is the lottery win of industrious men”), endorsed free banking, and favored Italian unification but opposed the development of a strong, centralized Italian state. Ferrara maintained that centralization was not a price worth paying for unification: “I place my hopes in the unity of the Italian nation, but I cannot conceal that I am frightened by the centralization urges that manifest themselves everywhere whenever the Italian unification is mentioned, nor would I hesitate to proclaim that, in my opinion, a divided Italy is preferable to a centralized one.”

Besides the Biblioteca dell’economista, Ferrara engineered efforts to spread liberal ideas in Italy, including the publication of different journals in the Kingdom of Sardinia (one was called L’economista echoing the British Economist) and the establishment of the Società Adamo Smith in 1874, to bring together the intellectual devotees of free trade.

In the realm of politics, Italy moved increasingly in the opposite direction. In 1878 Italy abandoned Cavour’s free trade policies by introducing a modest tariff. In 1881, it embarked on a large program of naval construction, and in 1884 an Italian ‘industrial policy’ debuted with the creation of the Terni steel mills. In 1887, Italy got a new protectionist tariff, the second highest in Europe, for the sake of protecting not only infant industries but also agriculture. The rapid undoing of Cavour’s free trade policies is emblematic of a cause of a longstanding feature of Italian classical liberalism, namely its disenchantment with politics. It is hard to take politics seriously when the talk and conduct of political actors appear so capricious.

Ferrara was already well aware that “At the end of the day, all governments are a minority”. The downside of the representative system was that it enabled governing elites to manufacture an illusion of participation in collective choices, an illusion that greatly facilitated government spending:

The representative system is characterized by this serious flaw, that it can effortlessly become an instrument of delusion. The people is less loath to pay, when it deludes itself into believing that its taxes—as they are assented to by its representatives, whose interests are purportedly the same as its own—are for this only reason warranted by inescapable necessities. A large number of instances presented by modern history teach us how easily the good faith of peoples can be abused and reveal the covert motive that made not a few governments to reckon that, ultimately, it was in their own interest to suffer the establishment of deliberative assemblies, as a means to get rid of the odious appearance of oppressors of their own people and to enjoy the pleasure of spending large sums… When the administration has made an outlay unavoidable, majorities tend to feel obliged to allow it.

Buchanan highlights Ferrara as an important figure in starting the scienza delle finanze, the Italian tradition of public finance theory. “The ‘economic’ conception of fiscal activity was, to Ferrara, an ideal. In the actual state of the world, Ferrara considered that the levy of taxes tended to be oppressive and constituted the ‘great secret through which tyranny is organized.’ … Ferrara was intensely critical of the view, which had been expressed by German writers, that merely because tax revenues are transformed into public spending and are returned to the economy, society does not undergo a net loss” (Buchanan).

Scholars in the Italian tradition tried to develop a scientific definition of taxation, distinguishing two sorts: taxation necessary for financing for a limited government, and taxation that was essentially predatory. In its “purest meaning,” the imposta (tax) would be “the price—and a slim one—of the great benefits that the social state, the organized state offers to each of us”. Given the immense utility provided by the social state (that is: by the organization of law and order in society), such a price could be understood as something that would be paid voluntarily by each taxpayer. Since “Any tax is ultimately equivalent to a prevented consumption and a prescribed one in its stead,” and so it all boils down to the question whether “the substituted consumption is more or less productive than the prevented one”. For Ferrara, the cornerstone of the problems of taxation is the economic use of taxes, the fact that government should operate in a parsimonious way.

But if taxation can be theoretically understood as a fee, Ferrara was fully aware that historical evidence pointed in another direction:

In its philosophical concept, the organized state is the great reason that exalts the notion of taxation; in its historical understanding, however, taxation is the great secret that organizes tyranny… And if in its philosophical understanding the term “contribution” does appears to be truer and worthier, in its historical understanding I invite you to change it, but only to call it “scourge.”

Looking realistically at the dry facts of history, one sees taxation as the propellant of arbitrary government:

Would you like to fathom how a swarm of parasites and harlots can exist in the royal courts? Why ignorance and intrigue are exalted and knowledge and virtue are rejected and derided? How comes it that in a temperate government a bad minister can make the houses of parliament to be in thrall of his will? And representatives and newspapers can be found to conceal his faults and incompetence? Taxation contains and explains the whole riddle. Taxation is the great source of everything a corrupt government can devise to the detriment of the peoples. Taxation supports the spy, encourages the faction, dictates the content of newspapers.


This piece was excerpted and adapted from Alberto Mingardi, Classical Liberalism in Italian Economic Thought, from the Time of Unification, Econ Journal Watch 14(1), January 2017

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ECB Draghi Admits EU May Breakup For First Time


Davos Exposing #EU’s Date with Destiny

 
The EU Parliament elected a new speaker last week in an unusually hotly contested vote that could strengthen Euroskeptic forces at a time when the EU faces Brexit and questions about its future role. Meanwhile, Europe’s leaders were going at each other’s throats in Davos as the dispute over how to stop the EU from collapsing exposed divisions that are deep within Europe following the British withdrawal.
 
Dutch Prime Minister Mark Rutte lashed out at the whole idea of a single federalized government for Europe. “The whole idea of an ever-closer Europe has gone, it’s buried,” Rutte said. A single government ending European wars has been a highly dangerous romantic fantasy. What they fail to comprehend is that one government will fan the flames of division. Rutte continued his warning, “The fastest way to dismantle the EU is to continue talking about a step-by-step move towards some sort of superstate.”
 
 

Draghi Admits EU May Breakup For First Time

draghai-euro-crisis
For the first time, the head of the European Central Bank, Mario Draghi, has conceded the possibility that the EU may fall apart. Draghi came out and said that any member leaving the Eurozone would need to settle its claims or debts with the bloc’s payments system before severing ties. This statement reveals the heated discussion at Davos and the rift that is beginning to spread. This statement, released on Friday, was made in a letter to two Italian lawmakers in the European Parliament.
 
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