A guest editorial courtesy of our super smart friend, Charles Hugh Smith. This essay is cross-posted from his essential Of Two Minds blog. Buy his book, Survival+
The guilty are powerful and free, the innocent burdened and oppressed: that is injustice.
There is a fundamental injustice that is poisoning the soul of the nation, and if it is not openly addressed then the nation will face the explosive consequences of institutionalized injustice.
Simply put, it is this: those responsible for the nation’s financial crisis and its catastrophic after-effects are not paying for the consequences of their actions—it is the innocent, those who were not responsible, who are paying the price.
You can call it whatever you want: the Anarchy of the Super-Rich (as per Paul Farrell), the Financial Power Elite, the financial Oligarchy, Plutocracy or Corporatocracy, or the unprecedented concentration of financial wealth and political power in a financialized post-industrial economy. Whatever you call it, we all know this class of financiers and its minions got away with high financial crimes.
Do the crime, do the time—unless it’s “white-collar” financial crime on a vast scale. Then you might pay a wrist-slap fine (a few million dollars from your treasure of embezzled hundreds of millions) and then you’re free to go on your merry way.
The after-effects are not just the losses which can be totalled on a calculator: the really catastrophic losses are to the foundations of democracy and the economy. Democracy has been subverted—oh please, spare us the happy-story propaganda about “reform” and “the system worked”—and the economy has been incentivized to favor poisonously addictive financialization and the shadow institutions of corruption, fraud, embezzlement, favoritism, collusion and misrepresentation of risk. This might be summarized as the protection of vested interests, engineered and overseen by the partnership of the ever more intrusive Central State and the nation’s Financial Power Elite.
The Central State, designed to protect the citizenry from an oppressive monarchy or Elite, now protects this Elite from the citizenry. That is how thoroughly the injustice has been institutionalized.
There is a second part to this fundamental injustice: look who will pay for the bailouts, guarantees and the interest on the borrowed trillions. Not the banks and bankers, to be sure. Who will pay? Those who the Central State can easily tap: taxpayers who earn most of their income from wages, and those politically weak players dependent on government payments.
Now that the bills of the bailout are coming due, the State isn’t going after GE for more taxes. Heavens no—if you try that, the Panzer Division of GE’s tax avoidance army would overrun you. No, the politically easy thing to do is raise taxes on wage earners and trim entitlements, because all the government needs to do is send down the orders and it is done: the taxes are withheld and the bennies trimmed.
To go after the Power Elite is just too difficult. They have the tax attorneys, the lobbyists, the campaign fundraisers, and all the rest.
The U.S. is just a third world kleptocracy on an Imperial scale. I explored the parallels with the Roman Empire in Survival+: the Elites increasingly avoided military service and taxation, the bedrock of Roman power, while the taxes on the middle class rose to such heights that this productive class was basically driven into serfdom. The bottom layer of State dependents was placated and made complicit with bread and circuses—yes, Rome had a vast “welfare state” and much of Rome’s population received free bread to keep them quiet and pliant.
That is of course a road to ruin: let the Elite plunder at will, protected by the Imperial Central State, tax the productive class to fund the armed forces and free bread, and then buy off the lower class with bread and circuses.
The only successful model of reconciliation and justice we have is the “truth commissions” in other post-oppression autocratic kleptocracies. In countries that were deeply divided and poisoned by institutionalized injustice and exploitation, the healing process requires a public, transparent “truth commission” in which the guilty are brought forth to confess their sins against the innocent and face the consequences of their actions.
If a society cannot rouse itself to cleanse the fundamental injustice at the heart of its institutions, then it is effectively choosing self-destruction.
So far, the U.S. is pursuing the Roman Imperial model with an institutional zeal unmatched since Rome’s fall.
Embedded institutional injustice has a price, a price which rises with every passing day of propaganda and prevarication. Some day the bill will come due and a terrible price paid in full. For those in power, the only concern is that it not be today or tomorrow.
Below, Charles Hugh Smith discusses his book Survival +